<PAGE> 1
THE PNC(R) FUND
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
November 3, 1995
Dear Shareholder:
We are pleased to present the Annual Report to Shareholders of The PNC Fund
covering the year ended September 30, 1995. This report includes security
listings and performance results for the money market portfolios of The PNC
Fund.
ECONOMIC HIGHLIGHTS:
Economic growth continued to slow during the second quarter as the impact
from the interest rate rise during 1994 worked its way through the system. The
most recent revision to second quarter real GDP growth was 1.3%, a dramatic
change from the 5.1% experienced in the fourth quarter of 1994 and the 2.7% in
the first quarter of 1995.
While the Fed is concerned about the deceleration in growth, they cannot
overlook the 100 basis point decline in interest rates at the front end of the
yield curve that has occurred in 1995 and the possibility that it has
re-stimulated the economy. A reacceleration in consumer spending could
significantly reduce inventories and lead to a resumption in manufacturing
activity. In fact, there are several indications that economic growth may be
rekindling. Factory orders, durable goods orders, retail sales and housing all
rebounded in mid-summer. Existing home sales rose 4.7% while new home sales
jumped 19.9%, the largest increase since January 1992. Lastly, consumer
confidence remains relatively high, buoyed by a soaring stock market.
The year-long rise in short-term interest rates ended in July, when the Fed
lowered the federal funds rate from 6% to 5.75%. This reversal in monetary
policy was widely anticipated and represented the Fed's belief that
"inflationary pressures have receded enough to accommodate a modest adjustment
in monetary conditions." The Fed's move also helped to flatten the short end of
the yield curve, correcting a sharply inverted position where one day
investments offered the highest yields at 6%, while six-month investments were
sometimes lower by 50 basis points or more. The Fed did not further ease policy
at its August or September meetings.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY PNC BANK, NATIONAL ASSOCIATION OR ANY OTHER BANK AND SHARES ARE NOT FEDERALLY
INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENTS IN SHARES OF THE FUND
INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED. THERE CAN BE NO ASSURANCE THAT THE PORTFOLIOS WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
<PAGE> 2
Although the technical factors that shape the rate cycle in the short-term
municipal money market remained largely in place, there were a number of issues
over the last year that created a higher than usual degree of uncertainty during
this period. The significant issues included the potential for imposition of new
regulations by the Securities and Exchange Commission, speculation about the
possibility of a flat tax, national sales tax, or other major changes in the tax
code, and, of course, the Orange County, California debacle. All of these
factors tended to argue in favor of increased caution on the part of portfolio
managers. In terms of portfolio strategy, this translated into an emphasis on
shorter average weighted maturities. In addition, underlying and reinforcing
this cautious policy was a string of interest rate increases by the Federal
Reserve that offered little incentive to extend maturities. Currently, as the
economic indicators have turned more mixed, the extent and direction of future
Fed policy moves has become the subject of much debate in the marketplace.
Average maturities of money market funds have been increasing recently, but it
remains to be seen whether or not the Federal Reserve has successfully
engineered a soft landing for the economy.
In the year's final quarter, the outlook for the economy is improving and
inflation remains subdued. A return to a non-inflationary growth rate of
2.5-3.0%, may give the Fed sufficient comfort to ease policy again before the
end of the year.
We appreciate your investment in The PNC Fund and we look forward to
continuing to serve your investment needs.
PNC INSTITUTIONAL MANAGEMENT CORPORATION
<PAGE> 3
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF THE MUNICIPAL MONEY MARKET
PORTFOLIOS OF THE PNC FUND
During the fiscal year ended September 30, 1995, 100% of the dividends paid
by each of the following Municipal Money Market Portfolios were exempt-interest
dividends for purposes of federal income taxes and free from such taxes.
However, the percentage of these dividends which must be included in federal
alternative minimum taxable income for purposes of determining any liability for
the alternative minimum tax is as follows: Municipal Money Market Portfolio
17.2%, Ohio Municipal Money Market Portfolio 30.4%, Pennsylvania Municipal Money
Market Portfolio 33.2%, North Carolina Municipal Money Market Portfolio 12.4%
and Virginia Municipal Money Market Portfolio 21.3%.
In January 1996, you will be furnished with a schedule showing the
percentage breakdown by state or U.S. possession of the source of interest
earned by each Portfolio in 1995.
2
<PAGE> 4
THE PNC(R) FUND
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- -------- ------------
<S> <C> <C> <C>
BANK NOTES -- 1.3%
Mellon Bank
6.22% 11/01/95 $ 25,000 $ 25,000,209
------------
(Cost $25,000,209)
CERTIFICATES OF DEPOSIT -- 16.9%
BANKS -- 10.2%
ABN-AMRO Bank N.V.
5.66% 10/11/95 25,000 24,960,694
Credit Suisse
5.63% 12/11/95 50,000 50,000,000
First National Bank of Boston
5.75% 11/01/95 40,000 40,000,000
5.64% 01/08/96 50,000 50,000,000
Huntington National Bank
of Ohio
5.76% 11/02/95 25,000 24,999,980
------------
189,960,674
------------
YANKEE DOLLAR -- 6.7%
Banque National de Paris
7.025% 02/09/96 25,000 25,001,313
Commerzbank
5.63% 12/12/95 25,000 25,000,000
Societe Generale
5.77% 01/08/96 50,000 50,000,000
Westpac Banking Corp.
5.85% 06/04/96 25,000 25,000,000
------------
125,001,313
------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $314,961,987) 314,961,987
------------
COMMERCIAL PAPER -- 38.5%
BANKS -- 9.5%
Abbey National North
America Corp.
5.62% 10/03/95 25,000 24,992,194
AMRO N.A. Finance, Inc.
5.52% 10/02/95 25,000 24,996,167
6.16% 01/02/96 10,000 9,840,867
Citicorp
6.75% 10/02/95 50,000 49,990,625
Commerzbank
5.48% 12/11/95 17,500 17,310,864
5.67% 03/29/96 25,000 24,291,250
Svenska Handelsbanken, Inc.
5.65% 12/15/95 25,000 24,705,729
------------
176,127,696
------------
CHEMICALS -- 3.4%
E.I. Du Pont de Nemours & Co.
6.04% 10/03/95 20,000 19,993,289
6.07% 01/10/96 20,000 19,659,406
5.58% 07/18/96 25,000 23,872,375
------------
63,525,070
------------
CREDIT INSTITUTIONS -- 15.2%
Bass Finance Ltd.
5.75% 12/15/95 25,754 25,445,489
BMW US Capital Corp.
5.72% 10/23/95 66,300 66,068,245
5.70% 11/02/95 30,000 29,848,000
Corporate Asset Funding, Inc.
6.06% 11/06/95 17,000 16,896,980
6.25% 12/26/95 10,000 9,850,694
Ford Motor Credit Corp.
5.65% 12/12/95 25,000 24,717,500
McKenna Triangle National Corp.
5.70% 12/08/95 25,000 24,730,833
Preferred Receivables Funding
Corp.
5.90% 11/21/95 28,125 27,889,922
5.50% 04/01/96 28,800 27,994,800
Xerox Credit Corp.
5.66% 11/14/95 28,000 27,806,302
------------
281,248,765
------------
FINANCE -- 3.2%
Alcatel Alsthom, Inc.
5.72% 11/20/95 35,000 34,721,944
Saint Michael Finance Ltd.
5.63% 02/28/96 25,000 24,413,542
------------
59,135,486
------------
GLASS -- 1.3%
Newell Co.
5.98% 10/10/95 25,000 24,962,625
------------
PHARMACEUTICALS -- 4.6%
American Home Products Corp.
5.74% 10/06/95 20,000 19,984,056
5.73% 10/10/95 40,000 39,942,700
Glaxo Wellcome PLC
5.71% 11/22/95 25,000 24,793,806
------------
84,720,562
------------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 5
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ------- ------------
<S> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
SECURITY BROKERS & DEALERS -- 1.3%
Merrill Lynch & Co.
5.92% 02/02/96 $ 25,000 $ 24,490,222
------------
TOTAL COMMERCIAL PAPER
(Cost $714,210,426) 714,210,426
------------
CORPORATE BONDS -- 0.7%
METAL & MINING
Aluminum Co. of America
4.625% 02/15/96 12,350 12,288,306
------------
(Cost $12,288,306)
MEDIUM TERM NOTES -- 4.4%
CREDIT INSTITUTIONS -- 0.5%
General Motors Acceptance Corp.
8.25% 08/01/96 10,000 10,187,473
------------
FINANCE -- 1.6%
General Electric Capital Corp.
7.625% 07/24/96 5,000 5,067,404
IBM Credit Corp.
6.00% 08/26/96 25,000 24,998,202
------------
30,065,606
------------
SECURITY BROKERS & DEALERS -- 2.3%
Merrill Lynch & Co.
6.44% 05/15/96 15,000 15,000,000
6.05% 08/19/96 27,000 27,000,000
------------
42,000,000
------------
TOTAL MEDIUM TERM NOTES
(Cost $82,253,079) 82,253,079
------------
TIME DEPOSITS -- 2.7%
Chemical Bank
6.50% 10/02/95 50,000 50,000,000
------------
(Cost $50,000,000)
VARIABLE RATE OBLIGATIONS -- 21.1%
BANKS -- 5.6%
First Union National Bank of
North Carolina
6.56%** 10/02/95 50,000 50,000,000
Morgan Guaranty Trust
6.07%** 10/02/95 55,000 54,971,801
------------
104,971,801
------------
SECURITY BROKERS & DEALERS -- 11.1%
Bear Stearns & Co. Inc.
6.045%** 10/02/95 20,000 20,000,000
6.075%** 10/02/95 35,000 35,000,000
5.47%** 10/03/95 15,000 15,000,000
Goldman Sachs Group, L.P.
6.1875%** 10/06/95 47,000 47,000,000
Lehman Brothers Holdings, Inc.
5.975%** 12/06/95 50,000 50,000,000
Merrill Lynch & Co.
6.25%** 10/02/95 25,000 25,002,938
Morgan Stanley Group
5.9125%** 10/18/95 15,000 15,000,000
------------
207,002,938
------------
STUDENT LOAN MARKETING ASSOCIATION -- 4.4%
5.44%** 10/03/95 25,000 25,000,000
5.48%** 10/03/95 20,000 20,000,000
5.49%** 10/03/95 21,000 20,996,613
5.50%** 10/03/95 15,000 14,993,866
------------
80,990,479
------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $392,965,218) 392,965,218
------------
REPURCHASE AGREEMENTS -- 13.5%
Lehman Government
Securities, Inc.
6.70% 10/02/95 125,000 125,000,000
(Agreement dated 09/29/95
to be repurchased at
$125,069,792. Collateralized
by $119,975,000 U.S. Treasury
Notes 6.875% to 7.125% due
08/31/99 to 09/30/99. The
value of the collateral is
$127,436,622.)
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 6
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- -------- ------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
Morgan Stanley & Co.
6.54% 10/02/95 $125,000 $125,000,000
------------
(Agreement dated 09/29/95 to
be repurchased at
$125,068,125. Collateralized
by $128,180,000 Federal
National Mortgage Association
and Federal Home Loan Mortgage
Corporation 5.12% to 8.40% due
10/05/95 to 06/30/04 and U.S.
Treasury Notes 6.25% due
08/31/00. The value of the
collateral is $127,582,394.)
TOTAL REPURCHASE AGREEMENTS
(Cost $250,000,000) 250,000,000
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
-----------
<S> <C> <C>
INFINITY CASH RESERVE -- PRIME -- 0.9%
(Cost $16,748,613) 16,748,613 16,748,613
--------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $1,858,427,838*) 100.0% 1,858,427,838
LIABILITIES IN EXCESS OF
OTHER ASSETS (0.0%) (42,092)
------ --------------
NET ASSETS (Equivalent to
$1.00 per share based on
654,157,670 Institutional
shares, 1,194,038,553
Service shares, 10,184,915
Series A Investor shares
and 26,892 Series B
Investor shares
outstanding) 100.0% $1,858,385,746
===== ==============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE,
SERIES A INVESTOR AND SERIES B INVESTOR
SHARE
($1,858,385,746 / 1,858,408,030) $1.00
</TABLE> =====
- ---------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of September 30, 1995, and maturities shown are
the longer of the next interest readjustment date or the date the principal
amount owed can be recovered through demand.
See accompanying notes to financial statements.
5
<PAGE> 7
THE PNC(R) FUND
MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------ ------------
<S> <C> <C> <C>
ALABAMA -- 0.4%
Mobile County IDB (Alabama Power
Company Project) Series 1994 DN
4.85%** 10/01/95 $1,400 $ 1,400,000
------------
ALASKA -- 0.4%
Valdez Marine Terminal Refunding
(Atlantic Richfield Company
Transportation Project) Series
1994A TECP
3.75% 10/23/95 1,325 1,325,000
------------
ARIZONA -- 6.9%
Apache County IDA (Tucson
Electric and Power Project)
Series 1981A DN
4.375%** 10/07/95 2,300 2,300,000
Maricopa County PCR (Arizona
Public Service Company Palo
Verde Project) Series 1994F DN
4.85%** 10/01/95 2,800 2,800,000
Pima County IDA (Tucson Electric
Power Company Project) Series
1982A DN
4.35%** 10/07/95 11,900 11,900,000
Pima County IDA (Tucson Electric
Power Company Project) Series
1983A DN
4.35%** 10/07/95 5,000 5,000,000
------------
22,000,000
------------
CALIFORNIA -- 1.3%
Los Angeles County Series 1995
TRAN
4.50% 07/01/96 4,000 4,018,614
------------
COLORADO -- 4.4%
City & County of Denver Airport
System Subordinated Series
1990B MB
4.75% 10/05/95 2,000 2,000,000
City & County of Denver Airport
System Subordinated Series
1990C MB
4.25% 10/02/95 4,000 4,000,000
City & County of Denver Airport
System Subordinated Series
1990D MB
4.60% 10/06/95 3,000 3,000,000
City & County of Denver Airport
System Subordinated Series
1990E MB
4.75% 10/05/95 2,375 2,375,000
4.60% 10/06/95 2,700 2,700,000
------------
14,075,000
------------
CONNECTICUT -- 0.8%
Connecticut Housing Finance
Authority (Housing Mortgage
Finance Program Project) Series
1993E Subseries E-1 MB
4.40% 11/15/95 2,500 2,500,000
------------
DELAWARE -- 1.8%
Delaware Economic Development
Authority (Normaco of Delaware,
Inc. Project) Series 1984 DN
4.30%** 10/07/95 5,600 5,600,000
------------
DISTRICT OF COLUMBIA -- 0.2%
District of Columbia (The
American University Project)
Series 1985 DN
4.35%** 10/07/95 700 700,000
------------
FLORIDA -- 1.6%
Dade County (Youth Fair &
Exposition Project)
Series 1995 DN
4.40%** 10/07/95 5,000 5,000,000
------------
GEORGIA -- 3.7%
Burke County Development
Authority PCR (Georgia Power
Company Plant Vogtle Project)
Series 1994 DN
4.85%** 10/01/95 4,300 4,300,000
Fulton County Development
Authority (Georgia Tech
Athletic Association Project)
Series 1995 DN
4.40%** 10/07/95 7,500 7,500,000
------------
11,800,000
------------
HAWAII -- 2.1%
Hawaii Refunding Topstar
Custodial Receipts Series
1993CC DN
4.50%** 10/07/95 6,700 6,700,000
------------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 8
MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ----- ------------
<S> <C> <C> <C>
ILLINOIS -- 14.9%
Chicago Gas Supply (Peoples Gas
& Light Company Project) Series
1993B MB
4.95% 12/01/95 $2,000 $ 2,000,000
Cook County GO (Health Fund
Project) Series 1995A MB
3.85% 02/07/96 3,000 3,000,000
Illinois Development Finance
Authority (Foundation For
Safety & Health Project) Series
1992 DN
4.35%** 10/07/95 5,600 5,600,000
Illinois Development Finance
Authority IDB (Royal
Continental Box Company
Project) Series 1995A DN
4.65%** 10/07/95 1,100 1,100,000
Illinois Development Finance
Authority IDRB (6 West Hubbard
Street Project) Series 1986 DN
4.10%** 10/07/95 3,410 3,410,000
Illinois Education Facilities
Authority (Art Institute of
Chicago Project)
Series 1995 DN
4.40%** 10/07/95 3,000 3,000,000
Illinois Educational Facilities
Authority (Depaul University
Project) Series 1992CP-1 DN
4.50%** 10/07/95 5,000 5,000,000
Illinois GO (Custodial Receipts
172) Series 1995 DN
4.44%** 10/07/95 5,000 5,000,000
Illinois Health Facilities
Authority (Evanston Hospital
Corporation Project) Series
1985B MB
4.65% 02/15/96 3,000 3,000,000
Illinois Health Facilities
Authority (Revolving Fund
Pooled Financing Program
Project) Series 1985C DN
4.40%** 10/07/95 5,000 5,000,000
Illinois Housing Development
Authority Multi Family Housing
(Williamsburg Project) Series
1995 DN
6.00%** 10/07/95 1,000 1,000,000
Illinois Series 1995 RAN
4.50% 06/10/96 5,000 5,020,473
Tinley Park Multi-Family Housing
Mortgage Refunding (Edgewater
Walk Phase IIIA & IIIB Project)
Series 1994 DN
4.35%** 10/07/95 1,000 1,000,000
Village of North Aurora IDA
(Oberweis Dairy Incorporated
Project) Series 1995 DN
4.55%** 10/07/95 3,000 3,000,000
Village of Schiller Park IDRB
(Victor Products Corporation
Project) Series 1995 DN
4.75%** 10/07/95 1,500 1,500,000
------------
47,630,473
------------
INDIANA -- 0.3%
Indiana Housing Finance
Authority Series 1994C MB
4.00% 07/01/96 1,000 1,000,000
------------
KENTUCKY -- 1.5%
Clark County PCR (Eastern
Kentucky Power Cooperative
Project) Series 1984J-2 MB
4.15% 10/16/95 855 855,094
Maysville Solid Waste Disposal
Facilities (Inland Container
Corporation Project) Series
1992 MB
4.00% 11/01/95 4,000 4,000,000
------------
4,855,094
------------
LOUISIANA -- 3.1%
Louisiana GO Topstar Custodial
Receipts Series 1993A-6 DN
4.50%** 10/07/95 3,000 3,000,000
Parish of West Baton Rouge
Industrial District #3 (Dow
Chemical Company Project)
Series 1994B DN
4.45%** 10/01/95 500 500,000
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 9
MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ----- ------------
<S> <C> <C> <C>
LOUISIANA (CONTINUED)
Plaquemines Port Harbor &
Terminal District of Marine
Terminal Facilities Refunding
(Electro-Coal Transfer
Corporation Project) Series
1985C MB
3.80% 03/14/96 $6,325 $ 6,325,000
------------
9,825,000
------------
MARYLAND -- 1.3%
Maryland Economic Development
Corporation (Pooled Financing
Municipal Bonds Fund Project)
Series 1995 DN
4.45%** 10/07/95 4,000 4,000,000
------------
MICHIGAN -- 4.1%
Michigan Underground Storage
Tank Financial Assurance
Authority Series 1995I DN
4.35%** 10/07/95 11,200 11,200,000
Northville IDA (Thrifty
Northville Project) Series 1984
DN
4.60%** 10/07/95 2,000 2,000,000
------------
13,200,000
------------
MISSOURI -- 2.0%
Kansas City IDA (Mid America
Health Services Project) Series
1984 DN
4.60%** 10/07/95 4,500 4,500,000
Missouri Environmental
Improvement & Energy Resource
Authority PCR (Monsanto Company
Project)
Series 1988 DN
4.40%** 10/07/95 2,050 2,050,000
------------
6,550,000
------------
NEBRASKA -- 0.6%
Nebraska Investment Finance
Authority Multifamily Loan
(Apple Creek Associates
Project) Series 1985A DN
4.00%** 10/07/95 1,900 1,900,000
------------
NEW HAMPSHIRE -- 2.7%
New Hampshire IDA Solid Waste
Disposal Facility (United
Illuminating Company Project)
Series 1990A MB
3.85% 03/01/96 7,000 7,000,000
New Hampshire Single Family
Housing Finance Authority
(Mortgage Acquisition Project)
Series 1995F-1 MB
4.30% 11/01/95 1,500 1,500,000
------------
8,500,000
------------
NEW JERSEY -- 3.0%
New Jersey Economic Development
Authority (Keystone Project)
Series 1992 MB
3.45% 10/10/95 2,140 2,140,000
New Jersey Economic Development
Authority Natural Gas
Facilities (New Jersey Natural
Gas Company Project) Series
1995A DN
4.30%** 10/01/95 1,500 1,500,000
New Jersey Economic Development
Authority Natural Gas
Facilities (New Jersey Natural
Gas Company Project) Series
1995B DN
4.20%** 10/01/95 2,000 2,000,000
New Jersey Topstar Custodial
Receipts Series 1992D DN
4.35%** 10/07/95 4,000 4,000,000
------------
9,640,000
------------
NEW YORK -- 2.1%
New York City Series 1995A RAN
4.50% 04/11/96 3,800 3,811,199
New York Energy Research &
Development Authority PCR
(Rochester Gas & Electric
Company Project)
Series 1984 DN
3.70%** 10/07/95 3,000 3,000,000
------------
6,811,199
------------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 10
MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ----- ------------
<S> <C> <C> <C>
NORTH CAROLINA -- 2.8%
Charlotte Airport Series 1993A
DN
4.35%** 10/07/95 $5,100 $ 5,100,000
North Carolina Educational
Facilities Finance Agency
(Duke University Project)
Series 1991B DN
4.35%** 10/07/95 1,900 1,900,000
Person County Industrial
Facilities Authority PCR
(Carolina Power & Light Company
Project) Series 1992A DN
4.35%** 10/07/95 2,000 2,000,000
------------
9,000,000
------------
NORTH DAKOTA -- 1.0%
Mercer County (United Power
Association Project) Pooled
Series 1995A MB
3.90% 03/01/96 3,300 3,300,000
------------
OHIO -- 3.8%
Avon City Series 1995 BAN
4.14% 07/03/96 870 871,512
Franklin County Hospital
(Holy Cross Health System
Corporation Project)
Series 1995 DN
4.20%** 10/07/95 2,200 2,200,000
Richland County Series 1995 BAN
4.25% 12/14/95 3,000 3,002,708
Stark County Series 1995-2 BAN
4.18% 06/20/96 3,000 3,004,769
Toledo Improvement GO Notes
Series 1995-2
3.89% 05/15/96 3,000 3,000,718
------------
12,079,707
------------
OKLAHOMA -- 3.0%
Muskogee Industrial Trust PCR
(Oklahoma Gas & Electric
Company Project)
Series 1995A DN
4.40%** 10/07/95 9,700 9,700,000
------------
OREGON -- 0.9%
Klamath Falls Electric (Salt
Caves Hydroelectric Project)
Series 1995E MB
4.40% 05/01/96 3,000 3,000,000
------------
PENNSYLVANIA -- 2.8%
Emmaus General Authority
Series 1989 Subseries F-5 DN
4.50%** 10/07/95 4,700 4,700,000
Geisinger Authority Health
System Series 1992B DN
4.75% ** 10/02/95 4,200 4,200,000
------------
8,900,000
------------
PUERTO RICO -- 0.1%
Government Development Bank
Adjusted Refinancing
Series 1985 DN
3.80%** 10/07/95 300 300,000
------------
RHODE ISLAND -- 0.3%
Rhode Island Housing & Mortgage
Finance Corporation Home
Ownership Opportunity Series
17-C MB
4.40% 02/01/96 1,000 1,000,000
------------
SOUTH DAKOTA -- 2.9%
Lawrence County PCR (Homestake
Mining Company Project) Series
1983 DN
4.30%** 10/07/95 7,200 7,200,000
South Dakota Housing Development
Authority (Homeownership
Mortgage Project) Series 1994H
MB
4.95% 12/13/95 2,000 2,000,000
------------
9,200,000
------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 11
MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ----- ------------
<S> <C> <C> <C>
TENNESSEE -- 4.3%
Montgomery County Public
Building Authority GO
(Tennessee County Loan Pool
Project) Series 1995 DN
4.45%** 10/07/95 $8,600 $ 8,600,000
Montgomery County Public
Building Authority Pooled
Financing GO (Montgomery County
Loan Project) Series 1995 DN
4.45%** 10/07/95 5,000 5,000,000
------------
13,600,000
------------
TEXAS -- 10.9%
Angelina and Neches River
Authority Solid Waste Disposal
(Temple Eastex, Inc. Project)
Series 1993 MB
3.95% 10/23/95 2,700 2,700,000
3.90% 10/27/95 4,600 4,600,000
Austin Higher Education
Authority (St. Edwards
University Project) Series 1995
DN
4.50%** 10/07/95 2,000 2,000,000
Brazos River Harbor Navigation
District (Dow Chemical Company
Project) Series 1991 MB
3.85% 11/21/95 6,000 6,000,000
Houston Water & Sewer System
Series A MB
3.90% 11/15/95 2,500 2,500,000
San Antonio Electric & Gas
Systems Series A TECP
3.90% 10/12/95 5,000 5,000,000
San Antonio Housing Finance
Corporation (Wellington Place
Apartments Project) Series
1995A DN
4.55%** 10/07/95 2,945 2,945,000
Texas Series 1995A TRAN
4.75% 08/30/96 9,000 9,057,220
------------
34,802,220
------------
UTAH -- 0.3%
Utah Housing Finance Agency
(Single Family Mortgage
Project) Series 1993C DN
4.45%** 10/07/95 1,000 1,000,000
------------
VERMONT -- 0.8%
Vermont Educational & Health
Buildings Finance Agency (VHA
of New England Capital Asset
Financing Program Project)
Series 1985G DN
4.20%** 10/07/95 2,560 2,560,000
------------
VIRGINIA -- 1.3%
Culpeper Town IDA Residential
Care Facility (Virginia Baptist
Homes Project) Series 1992 DN
4.45%** 10/07/95 2,370 2,370,000
Fairfax County IDA (Fairfax
Hospital System Project) Series
1988A DN
4.30%** 10/07/95 1,100 1,100,000
Prince William County IDA PCR
(Virginia Electric & Power
Company Project) Series 1986 MB
3.80% 11/01/95 300 300,000
Roanoke IDA (Roanoke Memorial
Hospitals Carillon Health
System Project) Series 1995C DN
4.20%** 10/07/95 100 100,000
York County IDA PCR (Virginia
Electric & Power Company
Project) Series 1985 MB
3.80% 11/01/95 200 200,000
------------
4,070,000
------------
WASHINGTON -- 1.1%
Yakima County Public Corporation
(Jeld-Wen, Inc. Project) Series
1988 DN
4.35%** 10/07/95 3,540 3,540,000
------------
WEST VIRGINIA -- 2.5%
West Virginia Housing
Development Fund Interim
Financing Notes Series 1995F MB
3.85% 11/01/95 7,916 7,916,000
------------
WISCONSIN -- 1.9%
Racine School District Series
1995 TRAN
4.50% 08/23/96 6,000 6,023,152
------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 12
MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
------------
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $319,021,459*) 99.9% $319,021,459
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.1% 405,829
------ ------------
NET ASSETS (Equivalent $1.00 per
share based on 53,783,292
Institutional shares,
265,659,375 Service shares and
19,936 Series A Investor shares
outstanding) 100.0% $319,427,288
====== ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
SERIES A INVESTOR SHARE
($319,427,288 / 319,462,603) $1.00
=====
- ---------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of September 30, 1995,
and the maturities shown are the longer of the next
interest readjustment date or the date the principal
amount owed can be recovered through demand.
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 13
THE PNC(R) FUND
GOVERNMENT MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- -------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 27.3%
FEDERAL FARM CREDIT
BANK -- 4.5%
6.07% 10/06/95 $ 20,000 $ 20,029,400
5.60% 07/01/96 10,000 9,992,723
------------
30,022,123
------------
FEDERAL HOME LOAN
BANK BONDS -- 3.0%
6.787% 02/15/96 10,000 10,003,898
5.78% 09/05/96 10,000 10,006,532
------------
20,010,430
------------
FEDERAL HOME LOAN BANK
CONSOLIDATED DISCOUNT
NOTES -- 8.1%
5.50% 10/06/95 25,000 24,980,903
5.52% 12/29/95 15,000 14,795,300
5.41% 01/18/96 15,000 14,754,296
------------
54,530,499
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION DISCOUNT
NOTES -- 3.6%
5.50% 02/08/96 25,000 24,503,472
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION DISCOUNT
NOTES -- 8.1%
5.61% 10/10/95 10,000 9,985,975
5.60% 11/03/95 25,000 24,871,667
5.56% 02/15/96 20,000 19,576,822
------------
54,434,464
------------
TOTAL AGENCY OBLIGATIONS
(Cost $183,500,988) 183,500,988
------------
MEDIUM TERM NOTES -- 5.7%
FEDERAL NATIONAL
MORTGAGE ASSOCIATION
5.50% 10/03/95 10,000 10,000,000
6.46% 03/27/96 6,530 6,555,241
5.59% 06/21/96 10,000 9,990,839
5.62% 07/02/96 5,000 4,992,263
5.8125% 09/27/96 7,000 6,997,923
------------
TOTAL MEDIUM TERM NOTES
(Cost $38,536,266) 38,536,266
------------
VARIABLE RATE OBLIGATIONS -- 24.7%
FEDERAL HOME LOAN BANK
BONDS -- 8.2%
6.09%** 10/01/95 25,000 24,999,867
5.6125%** 10/30/95 20,000 19,985,893
5.655%** 11/02/95 10,000 9,997,630
------------
54,983,390
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION NOTES -- 5.2%
6.45%** 10/02/95 25,000 24,991,091
5.50%** 10/03/95 10,000 10,000,000
------------
34,991,091
------------
STUDENT LOAN MARKETING
ASSOCIATION NOTES -- 11.3%
5.46%** 10/03/95 5,000 4,998,013
5.47%** 10/03/95 5,000 5,000,000
5.48%** 10/03/95 5,000 5,000,000
5.49%** 10/03/95 6,000 6,000,000
5.51%** 10/03/95 5,000 5,001,001
5.54%** 10/03/95 20,000 19,993,132
5.64%** 10/03/95 15,600 15,641,233
5.665%** 10/03/95 4,000 4,006,532
5.715%** 10/03/95 5,825 5,845,116
6.08%** 07/01/96 5,000 5,010,079
------------
76,495,106
------------
TOTAL VARIABLE RATE OBLIGATIONS
(Cost $166,469,587) 166,469,587
------------
REPURCHASE AGREEMENTS -- 42.4%
Lehman Government Securities, Inc.
6.70% 10/02/95 119,900 119,900,000
(Agreement dated 09/29/95
to be repurchased at
$119,966,944. Collateralized
by $117,930,000 U.S.
Treasury Notes 6.375%
to 8.0% due 06/30/99
to 08/31/99. The value
of the collateral is
$122,269,253.)
</TABLE>
See accompanying notes to financial statements.
12
<PAGE> 14
GOVERNMENT MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- -------- ------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
Morgan Stanley & Co.
6.54% 10/02/95 $100,000 $100,000,000
(Agreement dated 09/29/95
to be repurchased at
$100,054,500. Collateralized
by $126,115,000 Federal
National Mortgage
Association 4.78% to 10.0%
due 11/01/95 to 08/11/99 and
$575,000 U.S. Treasury Notes
6.25% due 05/31/00. The
value of the collateral is
$103,077,526.)
Swiss Bank Corp.
6.45% 10/02/95 65,200 65,200,000
------------
(Agreement dated 09/29/95
to be repurchased at
$65,235,045. Collateralized
by $56,027,000 U.S. Treasury
Notes and Bonds 6.875% to
11.250% due 03/31/97 to
02/15/15. The value of the
collateral is $66,505,678.)
TOTAL REPURCHASE AGREEMENTS
(Cost $285,100,000) 285,100,000
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $673,606,841*) 100.1% 673,606,841
LIABILITIES IN EXCESS OF
OTHER ASSETS (0.1%) (822,793)
------ ------------
NET ASSETS (Equivalent to $1.00
per share based on
120,538,084 Institutional
shares, 550,949,434 Service
shares and 1,285,385 Series A
Investor shares outstanding) 100.0% $672,784,048
====== ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
SERIES A INVESTOR SHARE
($672,784,048 / 672,772,903) $1.00
=====
</TABLE>
- ---------------
* Aggregate cost for Federal income tax purposes.
** Rates shown are the rates as of September 30, 1995 and the maturities shown
are the longer of the next interest readjustment date or the date the
principal amount owed can be recovered through demand.
See accompanying notes to financial statements.
13
<PAGE> 15
THE PNC(R) FUND
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------ -----------
<S> <C> <C> <C>
OHIO -- 98.4%
Belmont County Series 1995 BAN
4.34% 08/30/96 $ 500 $ 501,271
Brooklyn City Series 1995 BAN
4.25% 06/06/96 2,000 2,003,962
Butler County (Waterworks
Improvement Project) Series 1995C
BAN
4.12% 03/15/96 1,000 1,001,853
Cuyahoga County (St. Lukes
Hospital Project) Series 1990 DN
4.40% ** 10/07/95 400 400,000
Delaware County IDRB
(Air Waves, Inc., Project)
Series 1995 DN
4.60% ** 10/07/95 1,000 1,000,000
Erie County IDRB (Brighton
Manor Company Project)
Series 1986 DN
4.60% ** 10/07/95 3,000 3,000,000
Franklin County IDRB (Alco
Standard Corp. Project) Series
1994 DN
4.50% ** 10/07/95 2,000 2,000,000
Green County IDRB (Ashford Center
Project) Series 1995 DN
4.55% ** 10/07/95 2,400 2,400,000
Greene County IDRB (AFC Stamping &
Production, Inc. & Barsplice
Products Project) Series 1995 DN
4.15% ** 10/07/95 1,000 1,000,000
Hamilton County (Cincinnati
Performing Arts Center Project)
Series 1995 DN
4.45% ** 10/07/95 1,650 1,650,000
Lucas County IDRB (Vega
Industries, Inc. Project) Series
1995 DN
4.70% ** 10/07/95 2,265 2,265,000
Mason City School District Series
1995 BAN
4.33% 12/19/95 3,700 3,704,927
Montgomery County Series 1995 BAN
5.00% 10/27/95 1,000 1,000,625
Muskingum County Hospital
Facilities (Bethesda Care Systems
Project) Series 1991 DN
4.50% ** 10/07/95 1,800 1,800,000
Ohio Air Quality Development
Authority (JMG Funding L.P.
Project) Series 1994B DN
4.50% ** 10/04/95 3,000 3,000,000
Ohio Air Quality Development
Authority (PPG Industries, Inc.
Project) Series 1988A DN
4.20% ** 10/07/95 3,000 3,000,000
Ohio Housing Finance Agency
Multifamily Housing (Lincoln Park
Assoc. Project) Series 1985 MB
4.40% 11/01/95 700 700,000
Ohio State Environmental
Improvement PCRB (U.S. Steel
Corp. Project) Series 1986 DN
4.55% ** 10/07/95 1,000 1,000,000
Ohio State IDRB (Anomatic Corp.
Project) Series 1994 DN
4.75% ** 10/05/95 1,420 1,420,000
Ohio State Water Authority Solid
Waste Disposal (American Steel &
Wire Corporation) Series 1995 DN
4.50% ** 10/07/95 7,600 7,600,000
Ohio Water Development Authority
PCRB (Duquesne Light Co. Project)
Series 1988 TECP
3.95% 10/13/95 2,000 2,000,000
Orville County (Orville Hospital
Project) Series 1990 DN
4.45% ** 10/07/95 1,735 1,735,000
Portage County IDRB (Lovejoy
Industries Project)
Series 1994 DN
4.75% ** 10/07/95 1,190 1,190,000
Richland County Series 1995 BAN
4.25% 12/14/95 2,000 2,001,805
Sandusky County IDRB (Brighton
Manor Co. Project)
Series 1986 DN
4.60% ** 10/07/95 1,000 1,000,000
Solon City IDRB (Cleveland Twist
Drill Company Project) Series
1995 DN
4.65% ** 10/07/95 1,800 1,800,000
Stark County Series 1995 BAN
4.15% 04/03/96 1,000 1,001,468
4.18% 06/20/96 1,000 1,001,590
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 16
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ------ ----------
<S> <C> <C> <C>
OHIO (CONTINUED)
Student Loan Funding Corporation
Series 1990 DN
4.50% ** 10/07/95 $4,400 $ 4,400,000
Summit County IDRB (Austin
Printing Company, Inc. Project)
Series 1994 DN
4.70% ** 10/07/95 650 650,000
Summit County IDRB (Forest
Manufacturing Project) Series
1994 DN
4.70% ** 10/05/95 500 500,000
Tipp County Series 1995 BAN
4.20% 03/05/96 2,595 2,595,536
Toledo GO Series 1995-1 BAN
5.00% 10/12/95 2,000 2,000,364
Toledo Improvement GO Notes Series
1995-2
3.89% 05/15/96 3,000 3,000,718
Toledo Ohio School District
(Cashflow Program Certificates)
Series 1995 BAN
4.52% 06/28/96 2,000 2,008,876
Trumbull County IDRB (ATD
Corporation Project)
Series 1995 DN
4.60% ** 10/07/95 2,000 2,000,000
University of Cincinnati Series
1995S RAN
4.25% 08/28/96 900 901,962
Westlake Economic Development
(Oaks Development Company
Project) Series 1994 DN
4.55% ** 10/07/95 2,000 2,000,000
Wooster IDRB (Allen Group, Inc.
Project) Series 1985 DN
4.35% ** 10/04/95 200 200,000
----------
72,434,957
----------
VIRGIN ISLANDS -- 1.4%
Virgin Islands Housing Finance Authority
Single Family Revenue Series 1995B MB
4.375% 02/01/96 1,000 1,000,000
----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $73,434,957*) 99.8% 73,434,957
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.2% 176,214
------ ----------
NET ASSETS (Equivalent to $1.00 per
share based on 23,679,764
Institutional shares, 49,859,050
Service shares and 74,642 Series A
Investor shares outstanding) 100.0% $73,611,171
====== ==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
SERIES A INVESTOR SHARE
($73,611,771 / 73,613,456) $1.00
=====
</TABLE>
- ---------------
* Aggregate cost for Federal Tax purposes.
** Rates shown are the rates as of September 30, 1995, and the maturities shown
are the longer of the next interest readjustment date or the date the
principal amount owed can be recovered through demand.
See accompanying notes to financial statements.
15
<PAGE> 17
THE PNC(R) FUND
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------- ------------
<S> <C> <C> <C>
PENNSYLVANIA -- 94.3%
Allegheny County (Duquesne Light
Co. Project) Series 1992 MB
4.75% 11/30/95 $ 6,000 $ 6,000,000
Allegheny County (Duquesne Light
Co. Project) Series 1990 MB
4.40% 12/07/95 5,000 5,000,000
Allegheny County Higher
Education Building Authority
(University of Pittsburgh
Project) Series 1985C DN
4.30%** 10/07/95 2,290 2,290,000
Allegheny County IDA (Allegheny
General Hospital Project)
Series 1995B DN
4.10%** 10/07/95 1,500 1,500,000
4.10%** 10/04/95 600 600,000
Allegheny County IDA (Duquesne
Light Co. Project) Series 1992A
MB
4.80% 10/17/95 2,000 2,000,000
Beaver County IDA PCRB (Duquesne
Light Co. Project) Series 1990A
DN
4.35%** 10/07/95 5,100 5,100,000
Beaver County IDA PCRB (Duquesne
Light Co. Project) Series 1990B
DN
4.35%** 10/07/95 4,500 4,500,000
Beaver County IDA PCRB (Duquesne
Light Co. Project) Series 1990C
MB
3.70% 11/14/95 2,500 2,500,000
Beaver County IDA PCRB (Duquesne
Light Co. Project) Series 1993A
MB
3.85% 10/24/95 1,500 1,500,000
3.90% 10/24/95 4,900 4,900,000
3.60% 11/17/95 300 300,000
Beaver County IDA PCRB (Toledo
Edison Project) Series 1992E MB
3.85% 03/06/96 5,250 5,250,000
Beaver County IDA PCRB Series
1993A MB
3.80% 12/18/95 2,300 2,300,000
Bedford County IDA IDRB (Sepa,
Inc. Facility Project) Series
1985 DN
4.40%** 10/07/95 2,000 2,000,000
Berks County IDA (Grafika
Commercial Printing, Inc.)
Series 1995 DN
4.85%** 10/07/95 1,195 1,195,000
Berks County IDA (Sixth and Penn
Street Project) Series 1988 DN
4.40%** 10/07/95 200 200,000
Berks County IDA (Lutheran Home
at Topton Project) Series 1995
DN
4.375%** 10/07/95 1,200 1,200,000
Bradford County IDA (Guthrie Inn
Project) Series 1984 DN
3.80%** 10/02/95 2,200 2,200,000
Bucks County IDA (SHV Real
Estate, Inc. Project) Series
1985 DN
4.30%** 10/07/95 1,300 1,300,000
Bucks County IDA (Sundstrand
Corp. Project) Series 1991 DN
4.40%** 10/07/95 1,505 1,505,000
Cambria County IDA Resource
Recovery (Cambria Cogen Co.
Project) Series 1989V DN
4.45%** 10/07/95 18,800 18,800,000
Cambria County IDA Resource
Recovery (Cambria Cogen Co.
Project) Series 1991V DN
4.45%** 10/07/95 4,400 4,400,000
Carbon County IDA (Panther Creek
Partner Project) Series 1990A
MB
3.60% 10/13/95 1,355 1,355,000
3.85% 10/24/95 6,550 6,550,000
3.90% 10/24/95 1,400 1,400,000
3.95% 11/10/95 5,000 5,000,000
3.80% 11/17/95 800 800,000
3.90% 11/17/95 500 500,000
3.70% 12/18/95 300 300,000
3.80% 12/18/95 4,010 4,010,000
</TABLE>
See accompanying notes to financial statements.
16
<PAGE> 18
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------- ------------
<S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Chester County DTC TECP
3.75% 10/06/95 $10,800 $ 10,800,000
City of Philadelphia, GO MB
3.85% 10/04/95 1,000 1,000,000
4.00% 10/04/95 3,500 3,500,000
Cumberland County IDA IDRB (Lane
Enterprises, Inc. Project)
Series 1994 DN
4.85%** 10/07/95 1,000 1,000,000
Cumberland County Municipal
Authority (Presbyterian Homes
Project) Series 1993A DN
4.40%** 10/07/95 6,000 6,000,000
Delaware County IDA PCRB (B.P.
Oil, Inc. Project) Series 1995
DN
4.75%** 10/01/95 2,000 2,000,000
Delaware County IDA PCRB (PECO
Energy Project) Series 1988 MB
3.50% 10/06/95 6,050 6,050,000
3.70% 11/09/95 4,200 4,200,000
3.85% 12/08/95 1,150 1,150,000
Delaware County IDA Solid Waste
(Scott Paper Co. Project)
Series 1984A DN
4.50%** 10/07/95 2,700 2,700,000
Delaware County IDA Solid Waste
(Scott Paper Co. Project)
Series 1984C DN
4.50%** 10/07/95 1,100 1,100,000
Delaware County IDA Solid Waste
(Scott Paper Co. Project)
Series 1984D DN
4.40%** 10/07/95 1,200 1,200,000
Delaware County IDA Solid Waste
(Scott Paper Co. Project)
Series 1984E DN
4.40%** 10/07/95 5,600 5,600,000
East Hempfield Township IDA
(Yellow Freight System, Inc.
Project) Series 1985 DN
4.40%** 10/07/95 500 500,000
Emmaus General Authority Pooled
Loan Series 1989B-10 DN
4.45%** 10/07/95 1,600 1,600,000
Emmaus General Authority Pooled
Loan Series 1989C-7 DN
4.45%** 10/07/95 2,000 2,000,000
Emmaus General Authority Pooled
Loan Series 1989D-10 DN
4.45%** 10/04/95 600 600,000
Emmaus General Authority Pooled
Loan
Series 1989D-11 DN
4.45%** 10/02/95 1,600 1,600,000
Emmaus General Authority Pooled
Loan Series 1989F (Marine
Midland LOC) DN
4.45%** 10/07/95 3,700 3,700,000
Lehigh County IDA PCRB
(Allegheny Electric Co-op, Inc.
Project) Series 1985A DN
4.30%** 10/07/95 1,100 1,100,000
Lehigh County Sewer Authority
Series 1985B DN
4.30%** 10/07/95 180 180,000
Lehigh County Water Authority
Series 1984 DN
4.30%** 10/07/95 6,545 6,545,000
Littlestown IDA (Hanover House
Industries Project) Series 1987
DN
4.45%** 10/07/95 2,000 2,000,000
Montgomery County Higher
Education and Health Authority
Hospital Series 1988 DN
4.30%** 10/07/95 4,700 4,700,000
Montgomery County IDA (H.P.
Cadwallander, Inc. Project)
Series 1995 DN
4.85%** 10/07/95 1,150 1,150,000
Montgomery County IDA
(PECO Energy Co. Project)
Series 1994A MB
3.75% 10/11/95 2,000 2,000,000
Montgomery County IDA
(PECO Energy Project) Series
1994B MB
3.65% 10/24/95 2,000 2,000,000
Montgomery County IDA (Three
Valley Square Associates
Project) Series 1987 DN
4.40%** 10/07/95 2,800 2,800,000
</TABLE>
See accompanying notes to financial statements.
17
<PAGE> 19
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------- ------------
<S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Montgomery County IDA PCRB (PECO
Energy Series) 1994A MB
3.75% 10/26/95 $ 3,380 $ 3,380,000
Montgomery County IDA PCRB
Series 1994B MB
3.50% 10/13/95 4,350 4,350,000
Northampton County IDRB
(Citizens Utilities Project)
Series 1991 DN
3.20%** 10/12/95 2,000 2,000,000
Northeastern Hospital and
Education Authority (Wyoming
Valley Health Care Project)
Series 1994A DN
4.375%** 10/07/95 4,000 4,000,000
Northumberland County IDA
(Furman Farms, Inc.) Series
1995A DN
4.40%** 10/07/95 1,225 1,225,000
Northumberland County IDA
Resource Recovery (Foster
Wheeler Mt. Carmel Project)
Series 1987A DN
4.45%** 10/07/95 4,000 4,000,000
Northumberland County IDA
Resource Recovery (Foster
Wheeler Mt. Carmel Project)
Series 1987B DN
4.45%** 10/07/95 590 590,000
Pennsylvania Economic
Development Financing Authority
(Wendt Dunnington Co. Project)
Series 1995G DN
4.50%** 10/07/95 1,250 1,250,000
Pennsylvania Energy Development
Authority
(B&W Ebensburg Project) Series
1986 DN
4.45%** 10/07/95 3,590 3,590,000
Pennsylvania Energy Development
Authority
(B&W Ebensburg Project) Series
1988 DN
4.45%** 10/07/95 2,800 2,800,000
Pennsylvania Energy Development
Authority
(Piney Creek Project) Series
1986A DN
4.50%** 10/04/95 6,900 6,900,000
Pennsylvania Energy Development
Authority
(Piney Creek Project) Series
1986C DN
4.50%** 10/07/95 2,700 2,700,000
Pennsylvania Higher Education
Assistance Agency Student Loan
Series 1984A DN
4.50%** 10/04/95 5,650 5,650,000
4.10%** 10/07/95 2,000 2,000,000
Pennsylvania Higher Education
Assistance Agency Student Loan
Series 1988A DN
4.50%** 10/07/95 10,100 10,100,000
Pennsylvania Higher Education
Assistance Agency Student Loan
Series 1988B DN
4.50%** 10/07/95 14,700 14,700,000
Pennsylvania Higher Education
Assistance Agency Student Loan
Series 1988C DN
4.50%** 10/07/95 1,700 1,700,000
Pennsylvania Higher Education
Assistance Agency Student Loan
Series 1988E DN
4.50%** 10/07/95 100 100,000
Pennsylvania Higher Education
Facility Authority (Temple
University Project) Series 1984
DN
4.75%** 10/01/95 2,100 2,100,000
Philadelphia Authority IDRB
(Commercial Development Airport
Hotel Project) Series 1990 DN
4.40%** 10/07/95 1,400 1,400,000
Philadelphia Gas Works
Series B TECP
3.85% 11/10/95 3,000 3,000,000
3.70% 11/15/95 6,000 6,000,000
3.80% 11/17/95 2,100 2,100,000
3.65% 12/18/95 1,000 1,000,000
</TABLE>
See accompanying notes to financial statements.
18
<PAGE> 20
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------- ------------
<S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Philadelphia Hospital & Higher
Educational Facility Authority
(Children's Hospital Project)
Series 1992 DN
4.75%** 10/01/95 $ 2,700 $ 2,700,000
Philadelphia IDA (30th Street
Station Project) Series 1987 DN
4.05%** 10/07/95 6,900 6,900,000
Radnor Township
Series 1995 TRAN
6.00% 12/29/95 1,500 1,503,493
Sayre Health Care Facility
Authority (VHA Capital
Financing Project) Series 1985A
DN
4.20%** 10/07/95 1,300 1,300,000
Sayre Health Care Facility
Authority (VHA Capital
Financing Project) Series 1985B
DN
4.20%** 10/07/95 2,235 2,235,000
Sayre Health Care Facility
Authority (VHA Capital
Financing Project) Series 1985C
DN
4.20%** 10/07/95 2,400 2,400,000
Sayre Health Care Facility
Authority (VHA Capital
Financing Project) Series 1985D
DN
4.20%** 10/07/95 100 100,000
Sayre Health Care Facility
Authority (VHA Capital
Financing Project) Series 1985F
DN
4.20%** 10/07/95 3,200 3,200,000
Sayre Health Care Facility
Authority (VHA Capital
Financing Project) Series 1985I
DN
4.20%** 10/07/95 2,600 2,600,000
Sayre Health Care Facility
Authority (VHA Capital
Financing Project) Series 1985K
DN
4.20%** 10/07/95 4,400 4,400,000
Schuylkill County IDA Resource
Recovery (Gilberton Power
Project) Series 1985 DN
4.45%** 10/07/95 8,700 8,700,000
Schuylkill County IDA Resource
Recovery (Kaytee Products, Inc.
Project) Series 1995 DN
4.60%** 10/07/95 4,000 4,000,000
Schuylkill County IDA Resource
Recovery (Northeastern Power
Co. Project) Series 1985 DN
4.50%** 10/01/95 1,400 1,400,000
Schuylkill County IDA Resource
Recovery (Northeastern Power
Co. Project) Series 1986B DN
4.60%** 10/01/95 23,700 23,700,000
University of Pittsburgh
Commonwealth System of Higher
Education (University Capital
Project) Series 1989A DN
3.90%** 10/07/95 500 500,000
Venango IDA Resource Recovery
Series 1993 MB
3.60% 10/13/95 1,300 1,300,000
3.85% 10/24/95 3,150 3,150,000
3.90% 10/24/95 1,500 1,500,000
3.90% 11/17/95 2,475 2,475,000
3.80% 12/18/95 2,250 2,250,000
Washington County Authority
Lease Series 1985 DN
4.40%** 10/04/95 19,000 19,000,000
York County IDA PCRB
(Allied Signal Inc., Project)
Series 1993 DN
4.40%** 10/07/95 1,000 1,000,000
York County IDA PCRB
(PECO Energy Co. Project)
Series 1993A DN
4.20%** 10/07/95 2,000 2,000,000
------------
360,178,493
------------
</TABLE>
See accompanying notes to financial statements.
19
<PAGE> 21
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------- ------------
<S> <C> <C> <C>
PUERTO RICO -- 5.6%
Puerto Rico Government
Development Bank Refunding
Series 1985 DN
3.80%** 10/07/95 $11,750 $ 11,750,000
Puerto Rico Housing, Bank and
Finance Agency (Commonwealth
Appropriations Loan Insurance
Claims) Series 1993 MB
3.75% 12/01/95 2,000 2,000,000
Puerto Rico Industrial Medical
and Higher Education and
Environmental Pollution Control
Facilities Authority (Ana G.
Mendez Foundation Project)
Series 1985 DN
4.45%** 10/07/95 5,500 5,500,000
Puerto Rico Industrial, Medical
and Higher Education and
Environmental Pollution Control
Facilities Authority Series
1988 (Bank of Tokyo LOC) DN
3.35% 10/06/95 2,000 2,000,000
------------
21,250,000
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $381,428,493*) 99.9% 381,428,493
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.1% 474,924
------ ------------
NET ASSETS (Equivalent to $1.00
per share based on 233,414,203
Institutional shares,
147,740,008 Service shares and
750,535 Series A Investor shares
outstanding) 100.0% $381,903,417
====== ============
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND
SERIES A INVESTOR SHARE
($381,903,417 / 381,904,746) $1.00
=====
- -------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of September 30, 1995 and
the maturities shown are the longer of the next
interest readjustment date or the date the principal
amount owed can be recovered through demand.
</TABLE>
See accompanying notes to financial statements.
20
<PAGE> 22
THE PNC(R) FUND
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------ -----------
<S> <C> <C> <C>
NORTH CAROLINA -- 98.0%
Asheville Certificates of
Participation Series 1993A DN
4.30%** 10/07/95 $1,500 $ 1,500,000
Bladen County Industrial
Facilities and Pollution Control
Financing Authority Resource
Recovery (BCH Energy L.P.
Project) Series 1993 DN
4.45%** 10/07/95 2,000 2,000,000
Catawba County Industrial
Facilities and Pollution Control
Financing Authority (WSMP, Inc.
Project) Series 1992 DN
4.60%** 10/07/95 500 500,000
Charlotte Airport Revenue
Refunding Series 1993A DN
4.35%** 10/07/95 300 300,000
Durham County Public Improvement
Series 1993 DN
4.30%** 10/07/95 2,350 2,350,000
Durham Public Improvement Series
1993 DN
4.30%** 10/07/95 3,535 3,535,000
Green County Industrial Facilities
and Pollution Control Financing
Authority (Federal Paper Board
Company, Inc. Project) Series
1989 DN
4.45%** 10/07/95 1,100 1,100,000
Green County Industrial Facilities
and Pollution Control Financing
Authority IDA (Snow Hill Tape
Corporation Project) Series 1995
DN
4.50%** 10/07/95 2,000 2,000,000
Greensboro Certificates of
Participation (Greensboro
Coliseum Complex Improvement
Project) Series 1995A DN
4.30%** 10/07/95 1,000 1,000,000
Greensboro Public Improvement
Series 1994B DN
4.30%** 10/07/95 850 850,000
Guilford County Industrial
Facilities and Pollution Control
Financing Authority (U.S. Label
Corporation Project) Series 1995
DN
4.50%** 10/07/95 500 500,000
Iredell County Industrial
Facilities and Pollution Control
Financing Authority (Purina
Mills, Inc. Project) Series 1995
DN
4.35%** 10/07/95 4,000 4,000,000
Lenoir County Industrial
Facilities and Pollution Control
Financing Authority Resource
Recovery (Carolina Project)
Series 1995 DN
4.45%** 10/07/95 4,000 4,000,000
Mecklenburg County GO DN
4.25%** 10/07/95 500 500,000
Mecklenburg County GO DN
4.25%** 10/07/95 2,000 2,000,000
Mecklenburg County Industrial
Facilities and Pollution Control
Financing Authority (Otto
Industries, Inc. Project) Series
1988 DN
4.60%** 10/07/95 2,350 2,350,000
New Hanover County Industrial
Facilities and Pollution Control
Financing Authority (Interroll
Corp. Project) Series 1989 DN
4.60%** 10/05/95 1,395 1,395,000
North Carolina Agricultural
Finance
Authority Agricultural
Development
(Harvey Fertilizer & Gas
Company Project)
Series 1995 DN
4.50%** 10/07/95 1,740 1,740,000
North Carolina Eastern Municipal
Power Agency TECP
3.60% 12/07/95 3,500 3,500,000
North Carolina Eastern Municipal
Power Agency Power System Series
1988B TECP
3.80% 10/19/95 1,000 1,000,000
3.75% 11/16/95 2,600 2,600,000
North Carolina Education
Facilities Finance Agency (The
Bowman Gray School of Medicine
Project) Series 1990 DN
4.40%** 10/07/95 700 700,000
</TABLE>
See accompanying notes to financial statements.
21
<PAGE> 23
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------ -----------
<S> <C> <C> <C>
NORTH CAROLINA (CONTINUED)
North Carolina Educational
Facilities Finance Agency
(Duke University Project)
Series 1991B DN
4.35%** 10/07/95 $1,400 $ 1,400,000
North Carolina Industrial
Facilities and Pollution Control
Financing Authority Qualified
Small Issue Industrial (GVK
America, Inc. Project) Series
1990 MB
5.00% 12/01/95 2,970 2,970,000
North Carolina Medical Care
Commission (Baptist Hospital
Project) Series 1992B DN
4.40%** 10/07/95 2,400 2,400,000
North Carolina Medical Care
Commission (Park Ridge Hospital
Project) Series 1988 DN
4.35%** 10/07/95 4,000 4,000,000
North Carolina Medical Care
Commission (Pooled Equipment
Financing Project) Series 1985 DN
4.20%** 10/07/95 800 800,000
North Carolina Medical Care
Commission (Pooled Financing
Project) Series 1986 A2 DN
4.35%** 10/07/95 1,600 1,600,000
North Carolina Medical Care
Commission Hospital (Duke
University Hospital Project)
Series 1985D DN
4.35%** 10/07/95 300 300,000
North Carolina Medical Care
Community Hospital (Moses H. Cone
Memorial Hospital Project) Series
1995 DN
4.40%** 10/07/95 2,100 2,100,000
North Carolina Municipal Power
Agency TECP
3.90% 10/27/95 3,000 3,000,000
Person County Industrial
Facilities and Pollution Control
Financing Authority Solid Waste
Disposal (Carolina Power & Light
Project) Series 1986 DN
4.60%** 10/01/95 300 300,000
Surry County GO Series 1995 BAN
4.25% 10/25/95 3,680 3,680,280
Union County Industrial Facilities
and Pollution Control Financing
Authority IDRB (Square D Company
Project) Series 1988 DN
4.40%** 10/07/95 2,500 2,500,000
University of North Carolina
Chapel Hill School of Medicine
Ambulatory Care Clinic Series
1990 DN
4.35%** 10/07/95 400 400,000
Wake County Industrial Facilities
and Pollution Control Financing
Authority (Carolina Power & Light
Project) Series 1990A DN
4.50%** 10/07/95 300 300,000
Wake County Industrial Facilities
and Pollution Control Financing
Authority (Carolina Power &
Light) Series 1985C DN
4.50%** 10/07/95 1,000 1,000,000
Wake County Industrial Facilities
and Pollution Control Financing
Authority PCR (Carolina Power &
Light Company Project) Series
1990A MB
4.00% 10/04/95 3,500 3,500,000
Wake County GO Series 1993 MB
4.20% 04/01/96 3,000 2,996,365
Wilson County Industrial
Facilities Pollution Control
Financing Authority (Chip
Project) Series 1989 DN
4.60%** 10/07/95 1,000 1,000,000
Winston-Salem Certificates of
Participation (Risk Acceptance
Management Corp.) Series 1988 DN
4.35%** 10/07/95 500 500,000
Winston-Salem Water and Sewer
System Series 1994 DN
4.30%** 10/07/95 2,800 2,800,000
-----------
76,966,645
-----------
</TABLE>
See accompanying notes to financial statements.
22
<PAGE> 24
NORTH CAROLINA MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------ -----------
<S> <C> <C> <C>
PUERTO RICO -- 0.5%
Puerto Rico Industrial Medical and
Environmental Higher Education
Pollution Control Facilities
Funding Authority (Ana G. Mendez
Project) Series 1985 DN
4.45%** 10/07/95 $ 400 $ 400,000
-----------
VIRGIN ISLANDS -- 1.2%
Virgin Islands Housing Finance
Authority Single Family Revenue
Series 1995 MB
4.375% 02/01/96 1,000 1,000,000
-----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $78,366,645*) 99.7% 78,366,645
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.3% 199,881
------ -----------
NET ASSETS (Equivalent to $1.00 per
share based on 76,673,335
Institutional shares, 1,840,489
Service shares and 52,699 Series A
Investor shares outstanding) 100.0% $78,566,526
====== ===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND SERIES
A INVESTOR SHARE
($78,566,526 / 78,566,523) $1.00
=====
</TABLE>
- -------------
* Aggregate cost for Federal tax purposes.
** Rates shown are the rates as of September 30, 1995, and the maturities shown
are the longer of the next interest readjustment date or the date the
principal amount owed can be recovered through demand.
See accompanying notes to financial statements.
23
<PAGE> 25
THE PNC(R) FUND
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------ -----------
<S> <C> <C> <C>
VIRGINIA -- 86.5%
Alexandria IDA Adjustable Tender
Resource Recovery (Alexandria
Arlington Waste-to-Energy
Facility) Series 1986A DN
4.65%** 10/01/95 $1,200 $ 1,200,000
Charles County IDA Solid Waste
(Chambers Development Virginia
Project) Series 1989 DN
4.60%** 10/07/95 1,100 1,100,000
Chesterfield County GO Series 1986
MB
7.10% 07/15/96 250 260,058
Chesterfield County IDA PCR
(Virginia Electric & Power Co.)
Series 1985 MB
3.80% 12/08/95 500 500,000
Chesterfield County IDA PCR
(Virginia Electric & Power Co.)
Series 1987B MB
3.80% 12/11/95 1,000 1,000,000
Commonwealth of Virginia GO Tax
Exempt Eagle Trust Series 954601
DN
4.49%** 10/07/95 1,000 1,000,000
Culpeper IDA (Baptist Homes)
Series 1992 DN
4.45%** 10/07/95 100 100,000
Fairfax County IDA (Fairfax
Hospital System, Inc.) Series
1993B DN
3.75%** 10/06/95 1,000 1,000,000
Fairfax County IDA (Fairfax
Hospital System, Inc.) Series
1988C DN
4.30%** 10/04/95 300 300,000
Falls Church IDA (Kaiser
Permanente Project) Series 1985
MB
4.10% 11/01/95 500 500,000
Greensville County IDA (Perdue
Farms, Inc. Project) Series 1986
DN
4.55%** 10/01/95 600 600,000
Halifax County IDA PCR (Virginia
Electric & Power Co.) Series 1992
MB
3.90% 12/01/95 2,000 2,000,000
Louden County IDA Residential Care
Facilities (Falcons Landing
Project) Series 1994B DN
4.60%** 10/02/95 1,200 1,200,000
Louisa IDA PCR (Virginia Electric
& Power Co.) Series 1984 MB
3.90% 11/22/95 1,000 1,000,000
Lynchburg IDA Hospital Facilities
(VHA Mid-Atlantic States Capital
Asset Finance Program) Series
1985B DN
4.20%** 10/01/95 100 100,000
Lynchburg IDA Hospital Facilities
(VHA Mid-Atlantic States Capital
Asset Finance Program) Series
1985E DN
4.20%** 10/07/95 1,000 1,000,000
Peninsula Port Authority of
Virginia (CSX Transportation,
Inc. Project) Series 1992 MB
3.85% 11/08/95 1,000 1,000,000
Peninsula Port Authority of
Virginia Coal Terminal (Dominion
Terminal Associates Project)
Series 1987D DN
4.45%** 10/01/95 1,140 1,140,000
Peninsula Port Authority of
Virginia Port Facility (Shell
Coal and Terminal Company) Series
1987 DN
4.45%** 10/01/95 800 800,000
Prince William County Lease
Participation Certificates Series
1995 MB
4.00% 12/01/95 125 125,056
Richmond IDA (Halifax Paper Board
Co. Project) Series 1990 DN
4.60%** 10/07/95 510 510,000
Roanoke IDA (Carillon Health
System) Series 1995C DN
4.20%** 10/07/95 1,200 1,200,000
South Hill IDA (South Hill
Veneers, Inc. Project) Series
1987 DN
4.55%** 10/07/95 600 600,000
</TABLE>
See accompanying notes to financial statements.
24
<PAGE> 26
VIRGINIA MUNICIPAL MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------ -----------
<S> <C> <C> <C>
VIRGINIA (CONTINUED)
Virginia Housing Development
Authority (AHC Service
Corporation -- Woodbury Park
Project) Series 1987A MB
4.50%** 10/07/95 $1,070 $ 1,070,000
Virginia Housing Development
Authority Multi Family Housing
Bonds Series 1991F MB
5.90% 05/01/96 1,300 1,315,095
Virginia Small Business Financing
Authority (Coastal Development
Group Project) Series 1989 DN
4.60%** 10/07/95 195 195,000
Virginia Public School Authority
(Equipment Financing Notes --
Issue III) Series 1995 DN
4.00% 04/01/96 1,000 1,001,707
-----------
21,816,916
-----------
PUERTO RICO -- 12.7%
Government Development Bank Series
1985 DN
3.80%** 10/07/95 200 200,000
Puerto Rico Highway and
Transportation Authority Series
1993X MB
3.80% 10/04/95 1,000 1,000,000
Puerto Rico Housing, Bank and
Finance Agency Commonwealth
Appropriation Loan Insurance
Claims Series 1993 MB
3.75% 12/01/95 1,000 1,000,000
Puerto Rico Industrial Medical and
Environmental Pollution Control
Facilities Authority (Ana G.
Mendez Foundation Project) Series
1985 DN
4.45%** 10/07/95 400 400,000
Puerto Rico Industrial Medical and
Environmental Pollution Control
Facilities Authority (Reynolds
Metals Co. Project) Series 1983
MB
3.75% 09/01/96 600 598,662
-----------
3,198,662
-----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $25,015,578*) 99.2% 25,015,578
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.8% 214,038
------ -----------
NET ASSETS (Equivalent to $1.00 per
share based on 24,408,945
Institutional shares and 820,717
Service shares outstanding) 100.0% $25,229,616
====== ===========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER INSTITUTIONAL AND
SERVICE SHARE
($25,229,616 / 25,229,662) $1.00
=====
- ---------------
* Aggregate cost for federal tax purposes.
** Rates shown are the rates as of September 30, 1995, and
the maturities shown are the longer of the next
interest readjustment date or the date the principal
amount owed can be recovered through demand.
</TABLE>
INVESTMENT ABBREVIATIONS
BAN.......................................................Bond Anticipation Note
DN...................................................................Demand Note
GO............................................................General Obligation
IDA.............................................Industrial Development Authority
IDR...............................................Industrial Development Revenue
IDRB.........................................Industrial Development Revenue Bond
MB................................................................Municipal Bond
PCR....................................................Pollution Control Revenue
PCRB..............................................Pollution Control Revenue Bond
RAN....................................................Revenue Anticipation Note
TAN........................................................Tax Anticipation Note
TECP.................................................Tax-Exempt Commercial Paper
TRAN...........................................Tax and Revenue Anticipation Note
See accompanying notes to financial statements.
25
<PAGE> 27
THE PNC(R) FUND
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
OHIO PENNSYLVANIA
MUNICIPAL GOVERNMENT MUNICIPAL MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest................................. $85,401,428 $ 9,669,227 $36,578,880 $2,569,992 $13,315,990
----------- ----------- ----------- ---------- -----------
Expenses:
Investment advisory fee.................. 6,268,576 1,111,647 2,816,476 295,088 1,568,837
Administration fee....................... 1,886,356 370,549 912,148 98,363 522,945
Custodian fee............................ 239,568 64,588 114,217 20,010 74,280
Transfer agent fee....................... 278,046 65,605 145,559 24,256 75,870
Service fees............................. 2,336,732 624,366 1,585,537 146,311 387,016
Distribution fees........................ 31,409 143 8,770 132 1,199
Legal and audit.......................... 178,309 29,158 71,943 10,584 41,713
Printing................................. 105,025 14,045 39,825 14,181 29,539
Registration fees and expenses........... 222,032 76,595 136,867 5,124 57,693
Organization............................. 3,456 374 469 4,738 4,563
Trustees' fees and officer's salary...... 21,458 4,112 9,483 1,028 5,389
Other.................................... 65,906 7,395 29,174 2,465 8,465
----------- ----------- ----------- ---------- -----------
11,636,873 2,368,577 5,870,468 622,280 2,777,509
Less fees voluntarily waived and expenses
reimbursed............................. (5,417,478) (1,084,021) (2,608,373) (301,055) (1,464,500)
----------- ----------- ----------- ---------- -----------
Total expenses......................... 6,219,395 1,284,556 3,262,095 321,225 1,313,009
----------- ----------- ----------- ---------- -----------
Net investment income..................... 79,182,033 8,384,671 33,316,785 2,248,767 12,002,981
Net realized gain (loss) on investments... (21,648) (12,355) 6,023 -- (1,459)
----------- ----------- ----------- ---------- -----------
Net increase in net assets resulting from
operations............................... $79,160,385 $ 8,372,316 $33,322,808 $2,248,767 $12,001,522
=========== =========== =========== ========== ===========
<CAPTION>
NORTH CAROLINA VIRGINIA
MUNICIPAL MUNICIPAL
MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO
-------------- ------------
<S> <C> <C>
Investment income:
Interest................................. $530,847 $720,445
-------- --------
Expenses:
Investment advisory fee.................. 416,063 85,063
Administration fee....................... 138,688 28,354
Custodian fee............................ 27,356 16,615
Transfer agent fee....................... 51,335 11,696
Service fees............................. 1,334 1,287
Distribution fees........................ 36 --
Legal and audit.......................... 15,259 9,698
Printing................................. 13,766 12,619
Registration fees and expenses........... 10,502 8,871
Organization............................. 5,690 6,005
Trustees' fees and officer's salary...... 1,364 282
Other.................................... 2,880 1,059
---------- --------
684,273 181,549
Less fees voluntarily waived and expenses
reimbursed............................. (490,886) (161,359)
---------- --------
Total expenses......................... 193,387 20,190
---------- --------
Net investment income..................... 3,337,460 700,255
Net realized gain (loss) on investments... 115 (66)
---------- --------
Net increase in net assets resulting from
operations............................... $3,337,575 $700,189
========== ========
</TABLE>
See accompanying notes to financial statements.
26
<PAGE> 28
THE PNC(R) FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MUNICIPAL
MONEY
MARKET
MONEY MARKET PORTFOLIO PORTFOLIO
----------------------------------- ------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED
9/30/95 9/30/94 9/30/95
-------------- -------------- ------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations
Net Investment income................................... $ 79,182,033 $ 33,422,550 $ 8,384,671
Net gain (loss) on investments.......................... (21,648) (16,921) (12,355)
-------------- -------------- ------------
Net increase in net assets resulting from operations.... 79,160,385 33,405,629 8,372,316
-------------- -------------- ------------
Distributions to shareholders from
Net investment income
Institutional Shares.................................... (37,154,478) (15,773,507) (1,414,111)
Service Shares.......................................... (41,703,939) (17,580,544) (6,969,678)
Series A Investor Shares................................ (323,561) (68,499) (882)
Series B Investor Shares................................ (55) -- --
-------------- -------------- ------------
Total distributions to shareholders................. (79,182,033) (33,422,550) (8,384,671)
-------------- -------------- ------------
Capital share transactions................................. 775,145,746 232,315,691 155,432,888
-------------- -------------- ------------
Total increase in net assets........................ 775,124,098 232,298,770 155,420,533
Net assets:
Beginning of period..................................... 1,083,261,648 850,962,878 164,006,755
-------------- -------------- ------------
End of period........................................... $1,858,385,746 $1,083,261,648 $319,427,288
============== ============== ============
<CAPTION>
MUNICIPAL
MONEY
MARKET GOVERNMENT MONEY
PORTFOLIO MARKET PORTFOLIO
------------ -------------------------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED
9/30/94 9/30/95 9/30/94
------------ ------------ ------------
<S> <C> <C> <C>
Increase (decrease) in net assets:
Operations
Net Investment income................................... $ 3,835,438 $ 33,316,785 $ 9,723,460
Net gain (loss) on investments.......................... (19,387) 6,023 13,624
------------ ------------ ------------
Net increase in net assets resulting from operations.... 3,816,051 33,322,808 9,737,084
------------ ------------ ------------
Distributions to shareholders from
Net investment income
Institutional Shares.................................... (774,065) (5,391,744) (1,018,580)
Service Shares.......................................... (3,060,695) (27,836,761) (8,701,808)
Series A Investor Shares................................ (678) (88,280) (3,072)
Series B Investor Shares................................ -- -- --
------------ ------------ ------------
Total distributions to shareholders................. (3,835,438) (33,316,785) (9,723,460)
------------ ------------ ------------
Capital share transactions................................. 30,926,057 260,770,269 213,031,001
------------ ------------ ------------
Total increase in net assets........................ 30,906,670 260,776,292 213,044,625
Net assets:
Beginning of period..................................... 133,100,085 412,007,756 198,963,131
------------ ------------ ------------
End of period........................................... $164,006,755 $672,784,048 $412,007,756
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
27
<PAGE> 29
THE PNC(R) FUND
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
OHIO MUNICIPAL PENNSYLVANIA MUNICIPAL
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
--------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/95 9/30/94 9/30/95 9/30/94
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations
Net investment income........................ $ 2,248,767 $ 1,180,384 $ 12,002,981 $ 2,154,769
Net gain (loss) on investments............... -- (2,285) (1,459) 130
----------- ----------- ------------ ------------
Net increase in net assets resulting from
operations................................. 2,248,767 1,178,099 12,001,522 2,154,899
----------- ----------- ------------ ------------
Distributions to shareholders from Net
investment income
Institutional Shares......................... (614,141) (343,817) (7,756,121) (1,675,898)
Service Shares............................... (1,633,831) (835,590) (4,239,580) (478,057)
Series A Investor Shares..................... (795) (977) (7,280) (814)
----------- ----------- ------------ ------------
Total distributions to shareholders...... (2,248,767) (1,180,384) (12,002,981) (2,154,769)
----------- ----------- ------------ ------------
Capital share transactions...................... 18,996,645 27,351,445 163,103,796 207,640,309
----------- ----------- ------------ ------------
Total increase in net assets............. 18,996,645 27,349,160 163,102,337 207,640,439
Net assets:
Beginning of period.......................... 54,614,526 27,265,366 218,801,080 11,160,641
----------- ----------- ------------ ------------
End of period................................ $73,611,171 $54,614,526 $381,903,417 $218,801,080
=========== =========== ============ ============
<CAPTION>
NORTH CAROLINA MUNICIPAL VIRGINIA MUNICIPAL
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
--------------------------- ------------------------------
FOR THE PERIOD
FOR THE FOR THE FOR THE 7/25/94(1)
YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
9/30/95 9/30/94 9/30/95 9/30/94
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations
Net investment income........................ $ 3,337,460 $ 1,405,051 $ 700,255 $ 57,403
Net gain (loss) on investments............... 115 -- (66) 20
----------- ----------- ----------- -----------
Net increase in net assets resulting from
operations................................. 3,337,575 1,405,051 700,189 57,423
----------- ----------- ----------- -----------
Distributions to shareholders from Net
investment income
Institutional Shares......................... (3,322,447) (1,404,199) (685,237) (57,403)
Service Shares............................... (14,791) (852) (15,018) --
Series A Investor Shares..................... (222) -- -- --
----------- ----------- ----------- -----------
Total distributions to shareholders...... (3,337,460) (1,405,051) (700,255) (57,403)
----------- ----------- ----------- -----------
Capital share transactions...................... 8,893,514 35,537,466 11,398,564 13,831,098
----------- ----------- ----------- -----------
Total increase in net assets............. 8,893,629 35,537,466 11,398,498 13,831,118
Net assets:
Beginning of period.......................... 69,672,897 34,135,431 13,831,118 --
----------- ----------- ----------- -----------
End of period................................ $78,566,526 $69,672,897 $25,229,616 $13,831,118
=========== =========== =========== ===========
</TABLE>
- ---------------
(1) Commencement of operations.
See accompanying notes to financial statements.
28
<PAGE> 30
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
-------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
-------------------------------- ----------------------
FOR THE
PERIOD
YEAR YEAR 8/2/93(1) YEAR YEAR
ENDED ENDED THROUGH ENDED ENDED
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94
-------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ---------- --------
Income from investment operations
Net investment income....................................... 0.0564 0.0359 0.0054 0.0534 0.0333
Net realized gain (loss) on investments..................... -- -- -- -- --
-------- -------- -------- ---------- --------
Total from investment operations........................ 0.0564 0.0359 0.0054 0.0534 0.0333
-------- -------- -------- ---------- --------
Less distributions
Distributions from net investment income.................... (0.0564) (0.0359) (0.0054) (0.0534) (0.0333)
Distributions from net realized capital gains............... -- -- -- -- --
-------- -------- -------- ---------- --------
Total distributions..................................... (0.0564) (0.0359) (0.0054) (0.0534) (0.0333)
-------- -------- -------- ---------- --------
Net asset value at end of period............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========== ========
Total return................................................... 5.79% 3.64% 0.54% 5.48% 3.37%
Ratios/Supplemental data
Net assets at end of period (in thousands).................. $654,157 $502,972 $435,586 $1,194,017 $575,948
Ratios of expenses to average net assets
After advisory/administration fee waivers................. 0.27% 0.25% 0.27%(2) 0.57% 0.51%
Before advisory/administration fee waivers................ 0.64% 0.66% 0.38%(2) 0.94% 0.92%
Ratios of net investment income to average net assets
After advisory/administration fee waivers................. 5.66% 3.64% 3.01%(2) 5.35% 3.35%
Before advisory/administration fee waivers................ 5.28% 3.23% 2.90%(2) 4.98% 2.95%
<CAPTION>
MONEY MARKET PORTFOLIO
--------------------------------
SERVICE CLASS
--------------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
9/30/93 9/30/92 9/30/91
-------- -------- --------
<S> <C> <C> <C>
Net asset value at beginning of period......................... $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income from investment operations
Net investment income....................................... 0.0274 0.0391 0.0645
Net realized gain (loss) on investments..................... -- -- --
-------- -------- --------
Total from investment operations........................ 0.0274 0.0391 0.0645
-------- -------- --------
Less distributions
Distributions from net investment income.................... (0.0274) (0.0391) (0.0645)
Distributions from net realized capital gains............... -- -- --
-------- -------- --------
Total distributions..................................... (0.0274) (0.0391) (0.0645)
-------- -------- --------
Net asset value at end of period............................... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return................................................... 2.77% 4.05% 6.64%
Ratios/Supplemental data
Net assets at end of period (in thousands).................. $415,328 $838,012 $637,076
Ratios of expenses to average net assets
After advisory/administration fee waivers................. 0.59% 0.61% 0.62%
Before advisory/administration fee waivers................ 0.70% 0.66% 0.67%
Ratios of net investment income to average net assets
After advisory/administration fee waivers................. 2.73% 3.86% 6.45%
Before advisory/administration fee waivers................ 2.62% 3.81% 6.40%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
29
<PAGE> 31
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
------------------------------------------------------
SERIES A SERIES B
INVESTOR CLASS INVESTOR CLASS
---------------------------------- --------------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR 1/13/93(1) 9/15/95(1)
ENDED ENDED THROUGH THROUGH
9/30/95 9/30/94 9/30/93 9/30/95
------- -------- -------- ----------
<S> <C> <C> <C> <C>
Net asset value at beginning of period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Income from investment operations
Net investment income................................... 0.0511 0.0308 0.0188 0.0020
Net realized gain (loss) on investments................. -- -- -- --
-------- -------- -------- --------
Total from investment operations.................... 0.0511 0.0308 0.0188 0.0020
-------- -------- -------- --------
Less distributions
Distributions from net investment income................ (0.0511) (0.0308) (0.0188) (0.0020)
Distributions from net realized capital gains........... -- -- -- --
-------- -------- -------- --------
Total distributions................................. (0.0511) (0.0308) (0.0188) (0.0020)
-------- -------- -------- --------
Net asset value at end of period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total return............................................... 5.23% 3.12% 1.89% 0.20%
Ratios/Supplemental data
Net assets at end of period (in thousands).............. $10,185 $ 4,342 $ 49 $ 27
Ratios of expenses to average net assets
After advisory/administration fee waivers............. 0.81% 0.75% 0.67%(2) 1.34%(2)
Before advisory/administration fee waivers............ 1.19% 1.16% 0.78%(2) 1.72%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers............. 5.15% 3.39% 2.62%(2) 4.58%(2)
Before advisory/administration fee waivers............ 4.78% 2.98% 2.51%(2) 4.20%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
30
<PAGE> 32
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET PORTFOLIO
--------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
---------------------------- -------------------
FOR THE
PERIOD
YEAR YEAR 8/2/93(1) YEAR YEAR
ENDED ENDED THROUGH ENDED ENDED
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value at
beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------- --------
Income from
investment operations
Net investment
income............. 0.0364 0.0246 0.0040 0.0334 0.0219
Net realized gain
(loss)............. -- -- -- -- --
------- ------- ------- -------- --------
Total from
investment
operations....... 0.0364 0.0246 .0040 0.0334 0.0219
------- ------- ------- -------- --------
Less distributions
Distributions from
net investment
income............... (0.0364) (0.0246) (0.0040) 0.0334) (0.0219)
Distributions from
net realized capital
gains................ -- -- -- -- --
------- ------- ------- -------- --------
Total
distributions.... (0.0364) (0.0246) (0.0040) (0.0334) (0.0219)
------- ------- ------- -------- --------
Net asset value at
end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======== ========
Total return.............. 3.70% 2.48% 0.40% 3.39% 2.20%
Ratios/Supplemental data
Net assets at end
of period
(in thousands)......... $53,778 $30,608 $39,148 $265,629 $133,358
Ratios of expenses to
average net assets
After advisory/
administration
fee waivers.... 0.27% 0.25% 0.25%(2) 0.57% 0.51%
Before advisory/
administration
fee waivers.... 0.71% 0.73% 0.36%(2) 1.01% 0.99%
Ratios of net investment
income to average
net assets
After advisory/
administration
fee waivers....... 3.64% 2.48% 2.45%(2) 3.35% 2.18%
Before advisory/
administration
fee waivers....... 3.20% 2.01% 2.34%(2) 2.91% 1.71%
<CAPTION>
MUNICIPAL MONEY MARKET PORTFOLIO
----------------------------------
SERVICE CLASS
----------------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
9/30/93 9/30/92 9/30/91
------- --------- -------
<S> <C> <C> <C>
Net asset value at
beginning of period............. $ 1.00 $ 1.00 $ 1.00
------- -------- -------
Income from investment operations
Net investment income.......... 0.0205 0.0281 0.0438
Net realized gain (loss)....... -- -- --
------- -------- -------
Total from investment
operations............... 0.0205 0.0281 0.0438
------- -------- -------
Less distributions
Distributions from net
investment income............ (0.0205) (0.0281) (0.0438)
Distributions from
net realized capital gains... -- -- --
------- -------- -------
Total distributions........ (0.0205) (0.0281) (0.0438)
------- -------- -------
Net asset value at end of period.. $ 1.00 $ 1.00 $ 1.00
======= ======== =======
Total return...................... 2.10% 2.85% 4.47%
Ratios/Supplemental data
Net assets at end of period
(in thousands)................. $93,937 $125,152 $89,312
Ratios of expenses to
average net assets
After advisory/
administration
fee waivers.............. 0.61% 0.63% 0.65%
Before advisory/
administration
fee waivers............. 0.72% 0.68% 0.70%
Ratios of net investment
income to average
net assets
After advisory/
administration
fee waivers............. 2.02% 2.78% 4.40%
Before advisory/
administration
fee waivers............. 1.91% 2.73% 4.35%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
31
<PAGE> 33
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET PORTFOLIO
------------------------------------
SERIES A INVESTOR CLASS
-------------------------------------
FOR THE
PERIOD
YEAR YEAR 11/02/92(1)
ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93
------- -------- --------
<S> <C> <C> <C>
Net asset value at beginning of period............................ $ 1.00 $ 1.00 $ 1.00
------- ------- --------
Income from investment operations
Net investment income.......................................... 0.0311 0.0193 0.0181
Net realized gain (loss) on investments........................ -- -- --
------- ------- --------
Total from investment operations........................... 0.0311 0.0193 0.0181
------- ------- --------
Less distributions
Distributions from net investment income....................... (0.0311) (0.0193) (0.0181)
Distributions from net realized capital gains.................. -- -- --
------- ------- --------
Total distributions........................................ (0.0311) (0.0193) (0.0181)
------- ------- --------
Net asset value at end of period.................................. $ 1.00 $ 1.00 $ 1.00
======= ======= ========
Total return...................................................... 3.15% 1.95% 1 .83%
Ratios/Supplemental data
Net assets at end of period (in thousands)..................... $ 20 $ 41 $ 15
Ratios of expenses to average net assets
After advisory/administration fee waivers.................... 0.79% 0.75% 0.72%(2)
Before advisory/administration fee waivers................... 1.23% 1.23% 0.83%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers.................... 3.08% 2.05% 2.23%(2)
Before advisory/administration fee waivers................... 2.64% 1.58% 2.12%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
32
<PAGE> 34
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET PORTFOLIO
--------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
---------------------------------- ---------------------
FOR THE
PERIOD
YEAR YEAR 8/2/93(1) YEAR YEAR
ENDED ENDED THROUGH ENDED ENDED
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations
Net investment income.................................... 0.0555 0.0357 0.0049 0.0525 0.0331
Net realized gain (loss)................................. -- -- -- -- --
-------- -------- -------- -------- --------
Total from investment operations..................... 0.0555 0.0357 0.0049 0.0525 0.0331
-------- -------- -------- -------- --------
Less distributions
Distributions from net investment income................. (0.0555) (0.0357) (0.0049) (0.0525) (0.0331)
Distributions from net realized capital gains............ -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions.................................. (0.0555) (0.0357) (0.0049) (0.0525) (0.0331)
-------- -------- -------- -------- --------
Net asset value at end of period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return................................................ 5.69% 3.63% 0.49% 5.38% 3.36%
Ratios/Supplemental data
Net assets at end of period (in thousands)............... $120,540 $ 37,519 $ 13,513 $550,959 $372,883
Ratios of expenses to average net assets
After advisory/administration fee waivers.............. 0.27% 0.25% 0.25%(2) 0.57% 0.52%
Before advisory/administration fee waivers............. 0.69% 0.70% 0.38%(2) 0.98% 0.97%
Ratios of net investment income to average net assets
After advisory/administration fee waivers.............. 5.64% 3.69% 3.01%(2) 5.27% 3.42%
Before advisory/administration fee waivers............. 5.22% 3.24% 2.88%(2) 4.85% 2.97%
<CAPTION>
GOVERNMENT MONEY MARKET PORTFOLIO
---------------------------------
SERVICE CLASS
---------------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
9/30/93 9/30/92 9/30/91
-------- -------- --------
<S> <C> <C> <C>
Net asset value at beginning of period...................... $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Income from investment operations
Net investment income.................................... 0.0269 0.0394 0.0627
Net realized gain (loss)................................. -- -- --
-------- -------- --------
Total from investment operations..................... 0.0269 0.0394 0.0627
-------- -------- --------
Less distributions
Distributions from net investment income................. (0.0269) (0.0394) (0.0627)
Distributions from net realized capital gains............ -- -- --
-------- -------- --------
Total distributions.................................. (0.0269) (0.0394) (0.0627)
-------- -------- --------
Net asset value at end of period............................ $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return................................................ 2.72% 4.01% 6.46%
Ratios/Supplemental data
Net assets at end of period (in thousands)............... $185,400 $160,269 $180,776
Ratios of expenses to average net assets
After advisory/administration fee waivers.............. 0.60% 0.62% 0.65%
Before advisory/administration fee waivers............. 0.73% 0.67% 0.70%
Ratios of net investment income to average net assets
After advisory/administration fee waivers.............. 2.68% 3.91% 6.27%
Before advisory/administration fee waivers............. 2.55% 3.86% 6.22%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
33
<PAGE> 35
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET PORTFOLIO
---------------------------------
SERIES A INVESTOR CLASS
---------------------------------
FOR THE
PERIOD
YEAR YEAR 1/14/93(1)
ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93
------- ------- -------
<S> <C> <C> <C>
Net asset value at
beginning of period........... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from investment operations
Net investment income......... 0.0501 0.0309 0.0183
Net realized gain (loss)
on investments.............. -- -- --
------- ------- -------
Total from investment
operations.............. 0.0501 0.0309 0.0183
------- ------- -------
Less distributions
Distributions from net
investment income........... (0.0501) (0.0309) (0.0183)
Distributions from net
realized capital gains...... -- -- --
------- ------- -------
Total distributions....... (0.0501) (0.0309) (0.0183)
------- ------- -------
Net asset value at end
of period..................... $ 1.00 $ 1.00 $ 1.00
======= ======= =======
Total return.................... 5.13% 3.11% 1.85%
Ratios/Supplemental data
Net assets at end of period
(in thousands)............. $ 1,285 $ 1,656 $ 50
Ratios of expenses to
average net assets
After advisory/
administration
fee waivers............ 0.80% 0.75% 0.65%(2)
Before advisory/
administration
fee waivers............ 1.21% 1.20% 0.78%(2)
Ratios of net investment
income to average
net assets
After advisory/
administration
fee waivers............ 5.03% 3.60% 2.57%(2)
Before advisory/
administration
fee waivers............ 4.62% 3.14% 2.44%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
34
<PAGE> 36
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
OHIO MUNICIPAL MONEY MARKET PORTFOLIO
--------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
---------------------------------- ---------------------
FOR THE
PERIOD
YEAR YEAR 6/10/93(1) YEAR YEAR
ENDED ENDED THROUGH ENDED ENDED
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Income from investment operations
Net investment income.................................. 0.0363 0.0252 0.0073 0.0333 0.0225
Net realized gain (loss) on investments................ -- -- -- -- --
------- ------- ------- ------- -------
Total from investment operations................... 0.0363 0.0252 0.0073 0.0333 0.0225
------- ------- ------- ------- -------
Less distributions
Distributions from net investment income............... (0.0363) (0.0252) (0.0073) (0.0333) (0.0225)
Distributions from net realized capital gains.......... -- -- -- -- --
------- ------- ------- -------- -------
Total distributions................................ (0.0363) (0.0252) (0.0073) (0.0333) (0.0225)
------- ------- ------- ------- -------
Net asset value at end of period.......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total return.............................................. 3.69% 2.55% 0.73% 3.38% 2.27%
Ratios/Supplemental data
Net assets at end of period (in thousands)............. $ 23,679 $ 10,521 $ 12,026 $ 49,857 $ 44,066
Ratios of expenses to average net assets
After advisory/administration fee waivers............ 0.27% 0.13% 0.10%(2) 0.57% 0.40%
Before advisory/administration fee waivers........... 0.73% 0.77% 0.83%(2) 1.03% 1.04%
Ratios of net investment income to average net assets
After advisory/administration fee waivers............ 3.66% 2.56% 2.45%(2) 3.35% 2.29%
Before advisory/administration fee waivers........... 3.20% 1.93% 1.72%(2) 2.89% 1.65%
<CAPTION>
OHIO MUNICIPAL MONEY
MARKET PORTFOLIO
-----------------------------------
SERVICE SERIES A
CLASS INVESTOR CLASS
-------- ---------------------
FOR THE FOR THE
PERIOD PERIOD
6/1/93(1) YEAR 10/5/93(1)
THROUGH ENDED THROUGH
9/30/93 9/30/95 9/30/94
-------- ------- --------
<S> <C> <C> <C>
Net asset value at beginning of period.................... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from investment operations
Net investment income.................................. 0.0074 0.0310 0.0199
Net realized gain (loss) on investments................ -- -- --
------- ------- -------
Total from investment operations................... 0.0074 0.0310 0.0199
------- ------- -------
Less distributions
Distributions from net investment income............... (0.0074) (0.0310) (0.0199)
Distributions from net realized capital gains.......... -- -- --
------- ------- -------
Total distributions................................ (0.0074) (0.0310) (0.0199)
------- ------- -------
Net asset value at end of period.......................... $ 1.00 $ 1.00 $ 1.00
======= ======= =======
Total return.............................................. 0.75% 3.15% 2.01%
Ratios/Supplemental data
Net assets at end of period (in thousands)............. $ 15,239 $ 75 $ 28
Ratios of expenses to average net assets
After advisory/administration fee waivers............ 0.23%(2) 0.80% 0.62%(2)
Before advisory/administration fee waivers........... 0.96%(2) 1.26% 1.26%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers............ 2.23%(2) 3.02% 1.94%(2)
Before advisory/administration fee waivers........... 1.50%(2) 2.56% 1.30%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
35
<PAGE> 37
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PENNSYLVANIA MUNICIPAL MONEY MARKET PORTFOLIO
--------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
---------------------------------- ---------------------
FOR THE
PERIOD
YEAR YEAR 6/1/93(1) YEAR YEAR
ENDED ENDED THROUGH ENDED ENDED
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- ------- -------- -------
Income from investment operations
Net investment income.................................. 0.0355 0.0247 0.0078 0.0325 0.0221
Net realized gain (loss) on investments................ -- -- -- -- --
-------- -------- ------- -------- -------
Total from investment operations................... 0.0355 0.0247 0.0078 0.0325 0.0221
-------- -------- ------- -------- -------
Less distributions
Distributions from net investment income............... (0.0355) (0.0247) (0.0078) (0.0325) (0.0221)
Distributions from net realized capital gains.......... -- -- -- -- --
-------- -------- ------- -------- -------
Total distributions................................ (0.0355) (0.0247) (0.0078) (0.0325) (0.0221)
-------- -------- ------- -------- -------
Net asset value at end of period.......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- ------- -------- -------
Total return.............................................. 3.61% 2.49% 0.78% 3.33% 2.24%
Ratios/Supplemental data
Net assets at end of period (in thousands)............. $233,414 $158,102 $ 2,242 $147,739 $ 60,560
Ratios of expenses to average net assets
After advisory/administration fee waivers............ 0.26% 0.16% 0.09%(2) 0.57% 0.42%
Before advisory/administration fee waivers........... 0.68% 0.73% 0.97%(2) 0.99% 0.99%
Ratios of net investment income to average net assets
After advisory/administration fee waivers............ 3.54% 2.64% 2.15%(2) 3.29% 2.31%
Before advisory/administration fee waivers........... 3.12% 2.07% 1.27%(2) 2.87% 1.75%
<CAPTION>
PENNSYLVANIA MUNICIPAL MONEY
MARKET PORTFOLIO
--------------------------------------
SERVICE SERIES A
CLASS INVESTOR CLASS
--------- ---------------------
FOR THE FOR THE
PERIOD PERIOD
6/11/93(1) YEAR 12/28/93(1)
THROUGH ENDED THROUGH
9/30/93 9/30/95 9/30/94
-------- -------- --------
<S> <C> <C> <C>
Net asset value at beginning of period.................... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from investment operations
Net investment income.................................. 0.0074 0.0302 0.0153
Net realized gain (loss) on investments................ -- -- --
------- ------- -------
Total from investment operations................... 0.0074 0.0302 0.0153
------- ------- -------
Less distributions
Distributions from net investment income............... (0.0074) (0.0302) (0.0153)
Distributions from net realized capital gains.......... -- -- --
------- ------- -------
Total distributions................................ (0.0074) (0.0302) (0.0153)
------- ------- -------
Net asset value at end of period.......................... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Total return.............................................. 0.74% 3.06% 1.58%
Ratios/Supplemental data
Net assets at end of period (in thousands)............. $ 8,919 $ 750 $ 139
Ratios of expenses to average net assets
After advisory/administration fee waivers............ 0.32%(2) 0.82% 0.65%(2)
Before advisory/administration fee waivers........... 1.20%(2) 1.24% 1.22%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers............ 2.42%(2) 3.03% 2.11%(2)
Before advisory/administration fee waivers........... 1.54%(2) 2.61% 1.54%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
36
<PAGE> 38
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NORTH CAROLINA MUNICIPAL MONEY
MARKET PORTFOLIO
----------------------------------
INSTITUTIONAL CLASS
----------------------------------
FOR THE
PERIOD
YEAR YEAR 5/4/93(1)
ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93
-------- -------- --------
<S> <C> <C> <C>
Net asset value at beginning of period..................................... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from investment operations
Net investment income................................................... 0.0359 0.0249 0.0097
Net realized gain (loss) on investments................................. -- -- --
------- ------- -------
Total from investment operations.................................... 0.0359 0.0249 0.0097
------- ------- -------
Less distributions
Distributions from net investment income................................ (0.0359) (0.0249) (0.0097)
Distributions from net realized capital gains........................... -- -- --
------- ------- -------
Total distributions................................................. (0.0359) (0.0249) (0.0097)
------- ------- -------
Net asset value at end of period........................................... $ 1.00 $ 1.00 $ 1.00
======= ======= =======
Total return............................................................... 3.65% 2.52% 0.97%
Ratios/Supplemental data
Net assets at end of period (in thousands).............................. $76,673 $69,673 $34,135
Ratios of expenses to average net assets
After advisory/administration fee waivers............................. 0.21% 0.10% 0.10%(2)
Before advisory/administration fee waivers............................ 0.74% 0.76% 0.81%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers............................. 3.61% 2.53% 2.35%(2)
Before advisory/administration fee waivers............................ 3.08% 1.87%(2) 1.64%(2)
<CAPTION>
NORTH CAROLINA MUNICIPAL MONEY
MARKET PORTFOLIO
-------------------------------------------
SERVICE SERIES A
CLASS INVESTOR CLASS
-------------------------- --------------
FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD
11/01/94(4) 4/29/94(1) 2/14/95(1)
THROUGH THROUGH THROUGH
9/30/95 9/30/94 9/30/95
--------- -------- ----------
<S> <C> <C> <C>
Net asset value at beginning of period..................................... $ 1.00 $ 1.00 $ 1.00
------- ------- --------
Income from investment operations
Net investment income................................................... 0.0305 0.0099 0.0194
Net realized gain (loss) on investments................................. -- -- --
------- ------- --------
Total from investment operations.................................... 0.0305 0.0099 0.0194
------- ------- --------
Less distributions
Distributions from net investment income................................ (0.0305) (0.0099) (0.0194)
Distributions from net realized capital gains........................... -- -- --
------- ------- --------
Total distributions................................................. (0.0305) (0.0099) (0.0194)
------- ------- --------
Net asset value at end of period........................................... $ 1.00 $ 1.00 $ 1.00
======= ======= ========
Total return............................................................... 3.11% 0.99% 1.95%
Ratios/Supplemental data
Net assets at end of period (in thousands).............................. $ 1,841 $ -- (3) $ 53
Ratios of expenses to average net assets
After advisory/administration fee waivers............................. 0.55%(2) 0.36%(2) 0.83%(2)
Before advisory/administration fee waivers............................ 1.08%(2) 1.02%(2) 1.36%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers............................. 3.34%(2) 2.54%(2) 3.05%(2)
Before advisory/administration fee waivers............................ 2.81%(2) 1.87%(2) 2.52%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) There were no Service shares outstanding as of September 30, 1994.
(4) Reissuance of shares.
See accompanying notes to financial statements.
37
<PAGE> 39
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
VIRGINIA MUNICIPAL
MONEY MARKET PORTFOLIO
----------------------------------
SERVICE
INSTITUTIONAL CLASS CLASS
--------------------- ----------
FOR THE FOR THE
PERIOD PERIOD
YEAR 7/25/94(1) 10/11/94(1)
ENDED THROUGH THROUGH
9/30/95 9/30/94 9/30/95
-------- --------- ---------
<S> <C> <C> <C>
Net asset value at beginning of period..................... $ 1.00 $ 1.00 $ 1.00
-------- -------- -------
Income from investment operations
Net investment income................................... 0.0368 0.0053 0.0330
Net realized gain (loss) on investments................. -- -- --
-------- -------- -------
Total from investment operations.................... 0.0368 0.0053 0.0330
-------- -------- -------
Less distributions
Distributions from net investment income................ (0.0368) (0.0053) (0.0330)
Distributions from net realized capital gains........... -- -- --
-------- -------- -------
Total distributions................................. (0.0368) (0.0053) (0.0330)
-------- -------- -------
Net asset value at end of period........................... $ 1.00 $ 1.00 $ 1.00
======== ======== =======
Total return............................................... 3.74% 0.53% 3.35%
Ratios/Supplemental data
Net assets at end of period (in thousands).............. $ 24,409 $ 13,831 $ 821
Ratios of expenses to average net assets
After advisory/administration fee waivers............. 0.10% 0.10%(2) 0.40%(2)
Before advisory/administration fee waivers............ 0.95% 1.02%(2) 1.25%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers............. 3.71% 2.89%(2) 3.50%(2)
Before advisory/administration fee waivers............ 2.86% 1.97%(2) 2.65%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
38
<PAGE> 40
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
The PNC Fund (the "Fund") was organized on December 22, 1988 as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company. The Fund
consists of twenty-six separate Portfolios: Money Market Portfolio, Municipal
Money Market Portfolio, Government Money Market Portfolio, Ohio Municipal Money
Market Portfolio, Pennsylvania Municipal Money Market Portfolio, North Carolina
Municipal Money Market Portfolio, Virginia Municipal Money Market Portfolio, New
Jersey Municipal Money Market Portfolio, Value Equity Portfolio, Growth Equity
Portfolio, Small Cap Growth Equity Portfolio, Core Equity Portfolio, Index
Equity Portfolio, Small Cap Value Equity Portfolio, International Equity
Portfolio, International Emerging Markets Portfolio, Balanced Portfolio, Managed
Income Portfolio, Tax-Free Income Portfolio, Intermediate Government Portfolio,
Ohio Tax-Free Income Portfolio, Pennsylvania Tax-Free Income Portfolio,
Short-Term Bond Portfolio, Intermediate-Term Bond Portfolio, International Fixed
Income Portfolio and Government Income Portfolio. As of September 30, 1995, the
New Jersey Municipal Money Market Portfolio and International Fixed Income
Portfolio had not commenced operations. This report relates solely to Money
Market Portfolio, Municipal Money Market Portfolio, Government Money Market
Portfolio, Ohio Municipal Money Market Portfolio, Pennsylvania Municipal Money
Market Portfolio, North Carolina Municipal Money Market Portfolio and Virginia
Municipal Money Market Portfolio (the "Portfolios").
Each Portfolio (except Money Market Portfolio) has three classes of shares,
one class being referred to as the Service shares, one class being referred to
as the Institutional shares and one class being referred to as the Series A
Investor shares. Money Market Portfolio has a fourth class of shares being
referred to as the Series B Investor shares. Series A Investor, Series B
Investor, Institutional and Service shares in a Portfolio represent equal pro
rata interests in such Portfolio, except that they bear different expenses which
reflect the difference in the range of services provided to them. Series A
Investor shares bear the expense of the Series A Distribution and Service Plan
at an annual rate not to exceed .55% of the average daily net asset value of
each Portfolio's outstanding Series A Investor shares. Series B Investor shares
bear the expense of the Series B Distribution Plan at an annual rate not to
exceed .75% of the average daily net asset value of each Portfolio's outstanding
Series B Investor shares. Series B Investor shares also bear the expense of the
Series B Service Plan at an annual rate not to exceed .25% of the average daily
net asset value of each Portfolio's outstanding Series B Investor shares. Under
the Fund's Service Plan, Service shares bear the expense of fees at an annual
rate not to exceed .15% of the average daily net asset value of each Portfolio's
outstanding Service shares. Service shares also bear the expense of a service
fee at an annual rate not to exceed .15% of the average daily net asset value of
each Portfolio's outstanding Service shares for other shareholder support
activities provided by service organizations. Institutional shares do not bear
the expense of the Series A Distribution and Service Plan, the Service Plan, the
Series B Distribution Plan or the Series B Service Plan. The Service, Series A
Investor and Series B Investor classes are currently bearing such respective
expenses at aggregate annual rates of .30% of the average daily net asset value
of Service shares, .50% of the average daily net asset value of Series A
Investor shares and 1.00% of the average daily net asset value of Series B
Investor shares. In addition, Institutional and Service shares bear a Transfer
Agent fee at an annual rate not to exceed .03% and Series A Investor and Series
B Investor shares bear a Transfer Agent fee at an annual rate not to exceed
.10%.
39
<PAGE> 41
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation -- Portfolio securities are valued under the amortized
cost method which approximates current market value. Under this method,
securities are valued at cost when purchased and thereafter, a constant
proportionate amortization of any discount or premium is recorded until the
maturity of the security. Regular review and monitoring of the valuation is
performed in an attempt to avoid dilution or other unfair results to
shareholders. The Fund seeks to maintain the net asset value per share of each
Portfolio at $1.00.
Dividends to Shareholders -- Dividends from net investment income are
declared daily and paid monthly. Net realized short-term capital gains, if any,
will be distributed at least annually.
Federal Taxes -- No provision is made for Federal taxes as it is the Fund's
intention to have each Portfolio continue to qualify as a regulated investment
company and to make the requisite distributions to its shareholders which will
be sufficient to relieve it from Federal income and excise taxes.
Security Transactions and Investment Income -- Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
Federal income tax purposes. Interest income is recorded on the accrual basis.
Fees relating to the Service Plan, the Series A Distribution Plan and Service
Plan, the Series B Distribution Plan and Series B Service Plan, and the Transfer
Agent fee are class specific expenses. Expenses not directly attributable to a
specific Portfolio or class are allocated among all of the Portfolios or classes
of the Fund based on their relative net assets.
Repurchase Agreements -- Money market instruments may be purchased from
banks and non-bank dealers subject to the seller's agreement to repurchase them
at an agreed upon date and price. Collateral for repurchase agreements may have
longer maturities than the maximum permissible remaining maturity of portfolio
investments. The seller will be required on a daily basis to maintain the value
of the securities subject to the agreement at not less than the repurchase
price. The agreements are conditioned upon the collateral being deposited under
the Federal Reserve book-entry system or held in a separate account by the
Fund's custodian or an authorized securities depository.
Organization Costs -- Costs incurred by each Portfolio in connection with
its organization, registration and initial public offering have been deferred
and are being amortized using the straight-line method over a five-year period
beginning on the date on which each Portfolio commenced its investment
activities.
(B) TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to an Investment Advisory Agreement, PNC Institutional Management
Corporation ("PIMC"), a wholly-owned subsidiary of PNC Asset Management Group,
Inc. ("PAMG"), which is in turn a wholly-owned subsidiary of PNC Bank, National
Association ("PNC Bank"), serves as investment adviser for each of the Fund's
Portfolios. PNC Bank serves as the sub-adviser for each of the Funds'
Portfolios. PNC Bank is an indirect wholly-owned subsidiary of PNC Bank Corp.
40
<PAGE> 42
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
For its advisory services, PIMC is entitled to receive fees, computed daily
and payable monthly based on each Portfolio's average daily net assets, at the
following annual rates: .45% of the first $1 billion, .40% of the next $1
billion, .375% of the next $1 billion, and .35% of net assets in excess of $3
billion.
PIMC may, at its discretion, waive all or any portion of its advisory fee
for any Portfolio. For the year ended September 30, 1995, advisory fees and
waivers for each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
------------------- ---------- -------------------
<S> <C> <C> <C>
Money Market Portfolio........................... $6,268,576 $5,217,130 $1,051,446
Municipal Money Market Portfolio................. 1,111,647 921,718 189,929
Government Money Market Portfolio................ 2,816,476 2,327,266 489,210
Ohio Municipal Money Market Portfolio............ 295,088 245,955 49,133
Pennsylvania Municipal Money Market Portfolio.... 1,568,837 1,264,187 304,650
North Carolina Municipal Money Market
Portfolio...................................... 416,063 369,591 46,472
Virginia Municipal Money Market Portfolio........ 85,063 85,063 --
</TABLE>
PIMC pays PNC Bank for its sub-advisory services.
PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of PNC Bank Corp.,
and Provident Distributors, Inc. ("PDI") act as co-administrators for the Fund.
PDI is also the distributor for the Fund. The combined administration fee is
computed daily and payable monthly, based on a percentage of the average daily
net assets of each Portfolio, at the following annual rates: .15% of the first
$500 million, .13% of the next $500 million, .11% of the next $1 billion and
.10% of net assets in excess of $2 billion.
PFPC and PDI may, at their discretion, waive all or any portion of their
administration fees for any Portfolio. For the year ended September 30, 1995,
administration fees and waivers for each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADMINISTRATION FEE WAIVER ADMINISTRATION FEE
------------------- -------- -------------------
<S> <C> <C> <C>
Money Market Portfolio............................. $1,886,356 $200,348 $1,686,008
Municipal Money Market Portfolio................... 370,549 162,303 208,246
Government Money Market Portfolio.................. 912,148 281,107 631,041
Ohio Municipal Money Market Portfolio.............. 98,363 55,100 43,263
Pennsylvania Municipal Money Market Portfolio...... 522,945 200,313 322,632
North Carolina Municipal Money Market Portfolio.... 138,688 114,630 24,058
Virginia Municipal Money Market Portfolio.......... 28,354 28,354 --
</TABLE>
In addition, PNC Bank serves as custodian for each of the Fund's
Portfolios. PFPC serves as transfer and dividend disbursing agent.
PIMC, PFPC and PDI have also voluntarily agreed to reimburse expenses in
the amount of $6,665 with respect to the North Carolina Municipal Money Market
Portfolio and $47,942 with respect to the Virginia Municipal Money Market
Portfolio for the year ended September 30, 1995.
PIMC, PFPC and PDI have also agreed to reimburse each Portfolio for the
amount, if any, by which the total operating and management expenses of such
Portfolio for any fiscal year exceed the most
41
<PAGE> 43
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
restrictive state blue sky expense limitation in effect from time to time, to
the extent required by such limitation. No such reimbursements were necessary
for the year ended September 30, 1995.
(C) CAPITAL SHARES
The Portfolios have each sold and redeemed shares only at a constant net
asset value of $1.00 per share, the number of shares represented by such sales,
acquisitions, reinvestments, and redemptions is the same as the dollar amounts
shown below for such transactions.
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
MUNICIPAL
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
---------------------------------- ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
9/30/95 9/30/94 9/30/95 9/30/94
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class......... $ 1,188,546,232 $ 1,541,859,975 $ 148,945,410 $ 112,801,931
Service Class............... 4,367,213,560 3,340,513,140 944,793,126 626,534,455
Series A Investor Class..... 23,968,550 10,165,172 4,303 57,540
Series B Investor Class..... 27,272 -- -- --
Shares issued in acquisition:
Institutional Class......... -- -- -- --
Service Class............... -- 3,334,564 -- --
Series A Investor Class..... -- -- -- --
Series B Investor Class..... -- -- -- --
Shares issued in reinvestment
of dividends:
Institutional Class......... 6,090 1,406 -- --
Service Class............... 6,071,308 2,125,570 961,327 305,101
Series A Investor Class..... 295,866 54,629 915 619
Series B Investor Class..... -- -- -- --
Shares redeemed:
Institutional Class......... (1,037,357,343) (1,474,467,520) (125,774,118) (121,338,119)
Service Class............... (3,755,203,797) (3,185,344,683) (813,471,594) (587,403,447)
Series A Investor Class..... (18,421,612) (5,926,562) (26,481) (32,023)
Series B Investor Class..... (380) -- -- --
--------------- --------------- ------------- -------------
Net increase.................. $ 775,145,746 $ 232,315,691 $ 155,432,888 $ 30,926,057
=============== =============== ============= =============
</TABLE>
42
<PAGE> 44
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
GOVERNMENT OHIO MUNICIPAL
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
---------------------------------- ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
9/30/95 9/30/94 9/30/95 9/30/94
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class......... $ 919,144,341 $ 228,682,656 $ 122,539,501 $ 125,595,359
Service Class............... 2,569,753,154 1,915,338,460 111,982,459 158,217,405
Series A Investor Class..... 4,597,795 1,753,740 159,749 115,346
Shares issued in reinvestment
of dividends:
Institutional Class......... -- -- 3,239 15,291
Service Class............... 4,210,613 1,768,196 496,048 194,375
Series A Investor Class..... 82,648 1,952 650 909
Shares redeemed:
Institutional Class......... (836,123,978) (204,678,202) (109,384,069) (127,116,173)
Service Class............... (2,395,843,440) (1,729,686,389) (106,687,592) (129,582,395)
Series A Investor Class..... (5,050,864) (149,412) (113,340) (88,672)
--------------- --------------- ------------- -------------
Net increase.................. $ 260,770,269 $ 213,031,001 $ 18,996,645 $ 27,351,445
=============== =============== ============= =============
</TABLE>
<TABLE>
<CAPTION>
PENNSYLVANIA MUNICIPAL NORTH CAROLINA MUNICIPAL
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
---------------------------------- ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
9/30/95 9/30/94 9/30/95 9/30/94
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class......... $ 576,760,145 $ 376,513,609 $ 391,610,480 $ 323,582,453
Service Class............... 301,727,871 130,876,896 5,766,832 648,753
Series A Investor Class..... 933,231 161,583 52,600 --
Shares issued in reinvestment
of dividends:
Institutional Class......... 44,093 4,063 13,036 20,890
Service Class............... 597,907 271,409 7,099 806
Series A Investor Class..... 6,129 595 99 --
Shares redeemed:
Institutional Class......... (501,492,214) (220,657,499) (384,623,190) (288,065,877)
Service Class............... (215,145,532) (79,507,178) (3,933,442) (649,559)
Series A Investor Class..... (327,834) (23,169) -- --
------------- ------------- ------------- -------------
Net increase.................. $ 163,103,796 $ 207,640,309 $ 8,893,514 $ 35,537,466
============= ============= ============= =============
</TABLE>
43
<PAGE> 45
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
VIRGINIA MUNICIPAL
MONEY MARKET PORTFOLIO
-----------------------------
FOR THE
PERIOD
JULY 25,
FOR THE YEAR 19941
ENDED THROUGH
9/30/95 9/30/94
------------- ------------
<S> <C> <C>
Shares sold:
Institutional Class............................................... $ 46,235,242 $15,828,907
Service Class..................................................... 1,960,784 --
Series A Investor Class........................................... -- --
Shares issued in reinvestment of dividends:
Institutional Class............................................... -- --
Service Class..................................................... -- --
Series A Investor Class........................................... -- --
Shares redeemed:
Institutional Class............................................... (35,657,395) (1,997,809)
Service Class..................................................... (1,140,067) --
Series A Investor Class........................................... -- --
------------ -----------
Net increase........................................................ $ 11,398,564 $13,831,098
============ ===========
</TABLE>
- ---------------
1 Commencement of operations.
(D) AT SEPTEMBER 30, 1995, NET ASSETS CONSISTED OF:
<TABLE>
<CAPTION>
OHIO
MUNICIPAL GOVERNMENT MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Capital paid in...................... $1,858,408,030 $319,462,603 $672,772,903 $73,613,456
Accumulated net realized gain (loss)
on investment transactions........... (22,284) (35,315) 11,145 (2,285)
-------------- ------------ ------------ -----------
$1,858,385,746 $319,427,288 $672,784,048 $73,611,171
============== ============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
NORTH
PENNSYLVANIA CAROLINA VIRGINIA
MUNICIPAL MUNICIPAL MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
<S> <C> <C> <C>
Capital paid in...................................... $381,904,746 $78,566,523 $25,229,662
Accumulated net realized gain (loss)
on investment transactions........................... (1,329) 3 (46)
------------ ----------- -----------
$381,903,417 $78,566,526 $25,229,616
============ =========== ===========
</TABLE>
44
<PAGE> 46
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
(E) CAPITAL LOSS CARRYOVER
At September 30, 1995, capital loss carryovers were available to offset
possible future realized capital gains as follows: $22,284 in the Money Market
Portfolio which expire in 2003, $35,315 in the Municipal Money Market Portfolio
which expire in 2003, $2,285 in the Ohio Municipal Money Market Portfolio which
expire in 2002, $1,329 in the Pennsylvania Municipal Money Market Portfolio
which expire in 2003, and $46 in the Virginia Municipal Money Market Portfolio
which expire in 2003.
(F) ACQUISITION OF THE MONEY MARKET PORTFOLIO OF THE PNC FINANCIAL COMMON TRUST
FOR RETIREMENT ASSETS
On December 27, 1993, The PNC Fund acquired all the assets of the Money
Market Portfolio of the PNC Financial Common Trust for Retirement Assets from
the participants of these accounts. The acquisition was accomplished by a
tax-free exchange of assets with a value of $3,334,564 for 3,334,564 shares of
the Service class of the Money Market Portfolio at $1.00 per share.
(G) SUBSEQUENT EVENT
On September 29, 1995 and October 2, 1995 respectively, the Board of
Directors of the Fund ("PNC") and the Board of Trustees of The Compass Capital
Group of Funds ("Compass"), including all of the non-interested members of each
Board, approved an asset purchase agreement between 16 investment portfolios of
PNC and Compass. The agreement, subject to shareholder approval, provides for
the acquisition by PNC of all of the assets and liabilities of each of the
Compass Portfolios in exchange for Service Shares of the PNC Portfolios that
correspond to the Compass Portfolios and the distribution of these PNC Service
Shares to the shareholders of the Compass Portfolios in liquidation of the
Compass Portfolios. The expected effective date of the acquisition is January
1996.
45
<PAGE> 47
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF THE PNC FUND:
We have audited the accompanying statements of net assets of The PNC Fund (Money
Market, Municipal Money Market, Government Money Market, Ohio Municipal Money
Market, Pennsylvania Municipal Money Market, North Carolina Municipal Money
Market, and the Virginia Municipal Money Market Portfolios), as of September 30,
1995, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years (or periods) in
the period then ended, and the financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments held by the
custodian and brokers as of September 30, 1995. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
PNC Fund (Money Market, Municipal Money Market, Government Money Market, Ohio
Municipal Money Market, Pennsylvania Municipal Money Market, North Carolina
Municipal Money Market, and the Virginia Municipal Money Market Portfolios), as
of September 30, 1995 and the results of their operations for the year then
ended, the changes in their net assets for each of the two years (or periods) in
the period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 22, 1995
46
<PAGE> 48
====================================================
Investment Adviser
PNC Institutional Management
Corporation
Wilmington, Delaware 19809
Sub-Adviser and Custodian
PNC Bank, National Association
Philadelphia, Pennsylvania 19101
Co-Administrator and Transfer Agent
PFPC Inc.
Wilmington, Delaware 19809
Co-Administrator and Distributor
Provident Distributors, Inc.
Radnor, Pennsylvania 19087
Counsel
Drinker Biddle & Reath
Philadelphia, Pennsylvania 19107
Independent Accountants
Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania 19103
PNCI-T-01M
====================================================
====================================================
LOGO
THE PNC(R) FUND
MONEY MARKET PORTFOLIO
MUNICIPAL MONEY MARKET PORTFOLIO
GOVERNMENT MONEY MARKET PORTFOLIO
OHIO MUNICIPAL MONEY
MARKET PORTFOLIO
PENNSYLVANIA MUNICIPAL MONEY
MARKET PORTFOLIO
NORTH CAROLINA MUNICIPAL MONEY
MARKET PORTFOLIO
VIRGINIA MUNICIPAL MONEY
MARKET PORTFOLIO
Annual Report to Shareholders
September 30, 1995
====================================================
<PAGE> 49
THE PNC(R) FUND
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
November 3, 1995
Dear Shareholder:
We are pleased to present the Annual Report to Shareholders of The PNC Fund
covering the twelve months ended September 30, 1995. This report includes
securities listings, performance results and market commentary for the fixed
income portfolios of The PNC Fund.
BlackRock Financial Management, Inc. ("BlackRock"), the sub-adviser of the
PNC Fixed Income portfolios, assumed management during the second quarter of
1995. Since assuming management, BlackRock has selectively traded securities to
position the portfolios consistent with the BlackRock's investment strategy and
the investment guidelines of the portfolios.
ECONOMIC HIGHLIGHTS:
The dramatic rally in the capital markets changed the market landscape for
fixed income investors over the fiscal year ended September 30, 1995. As the
economy showed signs of a slowdown early this year, market participants
endlessly debated the direction of monetary policy and hotly contested the
likelihood that a soft landing for the economy had been achieved. The specter of
inflation diminished as economic reports became increasingly pessimistic during
the second quarter. With investor confidence in the value of fixed income
securities renewed, market demand increasingly accelerated.
The rally in the Treasury market began during the fourth quarter of 1994
and continued to accelerate through the first and second quarters of 1995. Over
the past twelve months, interest rates have fallen substantially across the
yield curve. Yield levels on the intermediate portion of the Treasury curve have
fallen nearly 150 basis points as the 10-year Treasury closed at 6.18% on
September 29, 1995. During July and the beginning of August 1995, the rally was
temporarily halted as strong economic data dampened expectations for another
reduction in the Fed funds target rate. At the end of the third quarter,
however, interest rates returned to their 1995 lows as economic data again
signaled slow to moderate growth and dormant inflationary pressures.
We believe the Federal Reserve is likely to cut the Fed funds target rate
during the coming months. While attuned to the possibility of a rejuvenated
economy during the fourth quarter of 1995 and the possibility of accompanying
inflationary pressure, we believe that the fixed income markets offer many
pockets of value to investors in the coming months.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY PNC BANK, NATIONAL ASSOCIATION OR ANY OTHER BANK AND SHARES ARE NOT FEDERALLY
INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENTS IN SHARES OF THE FUND
INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
<PAGE> 50
TAXABLE FIXED INCOME MARKETS:
The market for mortgage-backed securities performed well in September and
throughout much of the third quarter of 1995 as interest rate volatility
declined and supply concerns abated. Allocation to adjustable rate mortgages
(ARMs) was increased across all taxable fixed income portfolios during the
beginning of the third quarter as GNMA ARMs offered excellent value relative to
other short duration securities. During the past several weeks GNMA ARMs have
rallied significantly and the portfolios have been selling into the strength of
market demand.
In addition to increasing allocation to ARMs, the portfolios have been
increasing their allocation to seasoned mortgage-backed securities (those issued
several years ago) as these securities offer excellent prepayment protection
which will be increasingly important if interest rates stay low or trend lower.
Corporate earnings were positive and the market for corporate debt
securities also outperformed Treasuries in the past year despite a large pick up
in new issuance over September. A heavy calendar for issuance remains for the
final quarter of 1995 which may test market demand. Recently, BlackRock has been
selling shorter maturity corporates in the Short-Term Bond, Intermediate-Term
Bond and Managed Income Portfolios in favor of longer maturities, looking to
capitalize on our positive interest rate outlook on the markets.
TAX-EXEMPT MARKET OVERVIEW:
The fourth quarter of 1994 echoed the underperformance that pervaded the
fixed income markets throughout 1994. The municipal market experienced periods
of illiquidity during November 1994 as mutual funds sold securities to meet
redemptions and dealers were reluctant to add to their already large
inventories. However, during the first quarter of 1995, the long-end of the
municipal curve witnessed a dramatic rally as approximately $35 billion in cash
flow from principal and interest payments flooded the long-end of the municipal
market.
The municipal market showed strong performance during the first two
quarters of 1995 but remained overshadowed by the rally in the Treasury market.
During the second quarter, as flat tax and other tax reform discussions caused
investors to be concerned about the long-term valuation of municipal securities,
the shorter end of the municipal yield curve spectrum substantially outperformed
the longer-end.
During the third quarter of 1995, municipals were strong performers versus
their Treasury counterparts primarily due to both a relatively light new
issuance calendar and the muted debate over potential tax reform (or "flat
tax"). Retail buying interest was concentrated in short and intermediate
maturity municipal bonds, as evidenced by 22 and 27 basis point declines,
respectively, in 2- and 5-year AAA General Obligation municipal bonds over the
third quarter. The recent strength of the municipal market is expected to
continue as new issue supply is expected to be light. However, the market for
tax-free fixed income securities remains vulnerable to rhetoric surrounding the
"flat tax" debate.
Within the portfolios, BlackRock has been improving overall credit quality
and has recently reduced the interest rate sensitivity of the municipal
portfolios. In addition, the portfolios have been improving their liquidity by
selling smaller "odd lot" securities in favor of larger issues.
Both the Pennsylvania and the Ohio Tax-Free Income Portfolio have benefited
from a sharp decline in new issuance and increased demand for in-state paper.
The lack of supply combined with the preferential treatment of in-state
securities should lead to continued strong performance of Pennsylvania and Ohio
paper.
We appreciate your investment in The PNC Fund and we look forward to
continuing to serve your investment needs. If you have any questions regarding
The PNC Fund, please feel free to call BlackRock at 800-227-7BFM.
BLACKROCK FINANCIAL MANAGEMENT, INC.
<PAGE> 51
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT
COMPARISON OF CHANGE IN VALUE OF $10,000 IN EACH PNC FIXED INCOME PORTFOLIO
AND ITS RESPECTIVE INDEX COMPARISON FROM INCEPTION AND AT EACH FISCAL YEAR END:
MANAGED INCOME PORTFOLIO
[CHART]
Institutional Class
<TABLE>
<CAPTION>
11/1/89 9/30/90 9/30/91 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
PNC Managed Income 10,000 10,380 11,910 13,316 14,931 14,148 16,025
Salomon Broad Investment Grade Index 10,000 10,413 12,064 13,659 15,222 14,592 16,709
Lehman Government/Corporate Bond Index 10,000 10,413 12,064 13,659 15,222 14,592 16,686
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 13.27%
Five Years 9.07%
From Inception 8.29%
Service Class
<TABLE>
<CAPTION>
7/29/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Managed Income 10,000 10,293 9,776 11,044
Salomon Broad Investment Grade Index 10,000 10,268 9,843 11,268
Lehman Government/Corporate Bond Index 10,000 10,268 9,843 11,255
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 12.97%
From Inception 4.67%
Series A Investor Class
<TABLE>
<CAPTION>
2/4/92 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PNC Managed Income 9,550 10,301 11,550 10,888 12,275
Salomon Broad Investment Grade Index 10,000 10,853 11,974 11,594 13,220
Lehman Government/Corporate Bond Index 10,000 10,853 12,095 11,594 13,258
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 7.68%
From Inception 5.77%
The comparative index from previous years was changed to more accurately reflect
the holdings of the Managed Income Portfolio.
3
<PAGE> 52
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
TAX-FREE INCOME PORTFOLIO
[CHART]
Institutional Class
<TABLE>
<CAPTION>
1/21/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Tax-Free Income 10,000 11,072 10,662 11,893
Lehman Municipal Bond Index 10,000 10,988 10,723 11,919
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 11.54%
From Inception 6.65%
Service Class
<TABLE>
<CAPTION>
7/29/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Tax-Free Income 10,000 10,392 10,019 11,146
Lehman Municipal Bond Index 10,000 10,325 10,076 11,200
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 11.24%
From Inception 5.11%
Series A Investor Class
<TABLE>
<CAPTION>
5/14/90 9/30/90 9/30/91 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
PNC Tax-Free Income 9,550 9,685 10,789 11,940 13,552 12,986 14,413
Lehman Municipal Bond Index 10,000 10,202 11,548 12,755 14,381 14,034 15,599
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 6.03%
Five Years 7.27%
From Inception 7.02%
4
<PAGE> 53
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
INTERMEDIATE GOVERNMENT PORTFOLIO
[CHART]
Institutional Class
<TABLE>
<CAPTION>
4/20/92 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PNC Intermediate Government 10,000 10,714 11,452 11,099 12,240
Lehman Intermediate Government Index 10,000 10,746 11,567 11,393 12,605
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 10.28%
From Inception 6.04%
Service Class
<TABLE>
<CAPTION>
7/29/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Intermediate Government 10,000 10,240 9,892 10,879
Lehman Intermediate Government Index 10,000 10,190 10,037 11,104
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 9.99%
From Inception 3.95%
Series A Investor Class
<TABLE>
<CAPTION>
5/11/92 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PNC Intermediate Government 9,550 10,233 10,878 10,466 11,511
Lehman Intermediate Government Index 10,000 10,588 11,397 11,226 12,419
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 5.08%
From Inception 4.24%
5
<PAGE> 54
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
OHIO TAX-FREE INCOME PORTFOLIO
[CHART]
Institutional Class
<TABLE>
<CAPTION>
12/1/92 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC OH TF Income 10,000 10,910 10,993 11,621
Lehman Local General Obligation Index 10,000 11,131 10,942 12,104
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 10.75%
From Inception 5.45%
Service Class
<TABLE>
<CAPTION>
7/29/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC OH TF Income 10,000 10,335 9,953 10,994
Lehman Local General Obligation Index 10,000 10,285 10,110 11,184
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 10.45%
From Inception 4.45%
Series A Investor Class
<TABLE>
<CAPTION>
12/1/92 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC OH TF Income 9,550 10,420 10,012 11,076
Lehman Local General Obligation Index 10,000 11,131 10,942 12,104
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 5.51%
From Inception 3.67%
Series B Investor Class
<TABLE>
<CAPTION>
10/13/94 9/30/95
-------- -------
<S> <C> <C>
PNC OH TF Income 10,000 10,443
Lehman Local General Obligation Index 10,000 11,062
</TABLE>
TOTAL RETURN
From Inception 4.43%
6
<PAGE> 55
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
[CHART]
Institutional Class
<TABLE>
<CAPTION>
12/1/92 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC PA TF Income 10,000 11,169 10,806 11,982
Lehman Local General Obligation Index 10,000 11,131 10,942 12,104
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 10.81%
From Inception 6.59%
Service Class
<TABLE>
<CAPTION>
7/29/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC PA TF Income 10,000 10,308 10,016 11,069
Lehman Local General Obligation Index 10,000 10,285 10,190 11,184
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 10.51%
From Inception 4.78%
Series A Investor Class
<TABLE>
<CAPTION>
12/1/92 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC PA TF Income 9,550 10,666 10,444 11,391
Lehman Local General Obligation Index 10,000 11,131 10,942 12,104
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 5.37%
From Inception 4.70%
Series B Investor Class
<TABLE>
<CAPTION>
10/3/94 9/30/95
------- -------
<S> <C> <C>
PNC PA TF Income 10,000 10,481
Lehman Local General Obligation Index 10,000 11,062
</TABLE>
TOTAL RETURN
From Inception 4.81%
7
<PAGE> 56
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
SHORT-TERM BOND PORTFOLIO
[CHART]
Institutional Class
<TABLE>
<CAPTION>
9/1/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Short-Term Bond 10,000 10,023 10,022 10,734
Merrill Lynch 1-3 Year Index 10,000 10,032 10,144 10,991
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 7.10%
From Inception 3.46%
Service Class
<TABLE>
<CAPTION>
9/1/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Short-Term Bond 10,000 10,021 9,995 10,676
Merrill Lynch 1-3 Year Index 10,000 10,032 10,144 10,991
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 6.81%
From Inception 3.19%
Series A Investor Class
<TABLE>
<CAPTION>
11/17/93 9/30/94 9/30/95
-------- ------- -------
<S> <C> <C> <C>
PNC Short-Term Bond 9,550 9,508 10,155
Merrill Lynch 1-3 Year Index 10,000 10,087 10,933
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 2.01%
From Inception 0.83%
8
<PAGE> 57
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
INTERMEDIATE-TERM BOND PORTFOLIO
[CHART]
Institutional Class
<TABLE>
<CAPTION>
9/17/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Intermediate-Term Bond 10,000 10,010 9,658 10,697
Lehman Intermediate Government/Corp. Index 10,000 10,021 9,854 10,965
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 10.76%
From Inception 3.36%
Service Class
<TABLE>
<CAPTION>
9/23/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Intermediate-Term Bond 10,000 10,010 9,639 10,647
Lehman Intermediate Government/Corp. Index 10,000 10,021 9,854 10,965
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 10.46%
From Inception 3.15%
Series A Investor Class
<TABLE>
<CAPTION>
5/20/94 9/30/94 9/30/95
------- ------- -------
<S> <C> <C> <C>
PNC Intermediate-Term Bond 9,550 9,585 10,577
Lehman Intermediate Government/Corp. Index 10,000 10,090 11,227
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 5.35%
From Inception 4.18%
9
<PAGE> 58
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
GOVERNMENT INCOME PORTFOLIO
[CHART]
Series A Investor Class
<TABLE>
<CAPTION>
10/3/94 9/30/95
------- -------
<S> <C> <C>
PNC Government Income 9,550 10,914
Lehman Mortgage/Merrill Lynch 10 Year Index 10,000 11,537
</TABLE>
TOTAL RETURN
From Inception 9.14%
Series B Investor Class
<TABLE>
<CAPTION>
10/3/94 9/30/95
------- -------
<S> <C> <C>
PNC Government Income 10,000 10,842
Lehman Mortgage/Merrill Lynch 10 Year Index 10,000 11,537
</TABLE>
TOTAL RETURN
From Inception 8.42%
10
<PAGE> 59
FIXED INCOME ANNUAL REPORT
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF THE PNC FIXED INCOME PORTFOLIOS
During the fiscal year ended September 30, 1995, the PNC Fund declared the
following dividends from net realized capital gains:
<TABLE>
<CAPTION>
SHORT-TERM LONG-TERM
CAPITAL GAIN, CAPITAL GAIN,
PER SHARE PER SHARE
------------- -------------
<S> <C> <C>
Tax-Free Income Portfolio -- $ .0205
</TABLE>
IMPORTANT TAX INFORMATION FOR THE TAX-FREE INCOME, OHIO TAX-FREE INCOME AND
PENNSYLVANIA TAX-FREE INCOME PORTFOLIOS
During the year ended September 30, 1995, 100% of the income dividends paid
by the Tax-Free Income Portfolio, Ohio Tax-Free Income Portfolio and
Pennsylvania Tax-Free Income Portfolio were exempt-interest dividends for
purposes of federal income taxes and free from such taxes. However, the
percentage of these dividends which must be included in federal alternative
minimum taxable income for purposes of determining any liability for the
alternative minimum tax is as follows: Tax-Free Income Portfolio 0.7%, Ohio
Tax-Free Income Portfolio 2.4% and Pennsylvania Tax-Free Income Portfolio 0.2%.
In January 1996, you will be furnished with a schedule showing the annual
percentage breakdown by state or U.S. possession of the source of interest
earned by each Portfolio in 1995.
11
<PAGE> 60
THE PNC(R) FUND
MANAGED INCOME PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 10.9%
FEDERAL HOME LOAN BANK BONDS -- 1.4%
4.605%** 04/27/98 $ 8,000 $ 7,825,000
------------
FEDERAL HOME LOAN MORTGAGE
DISCOUNT NOTE -- 6.3%
6.30% 10/02/95 36,190 36,177,334
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 2.3%
8.25% 12/18/00 12,000 13,068,360
------------
TENNESSEE VALLEY AUTHORITY -- 0.9%
7.318% 05/31/99 5,000 5,175,000
------------
TOTAL AGENCY OBLIGATIONS
(Cost $61,311,161) 62,245,694
------------
MORTGAGE BACKED SECURITIES -- 25.2%
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 5.3%
7.50% 10/01/98 4,357 4,438,811
10.00% 11/15/98 139 149,707
9.00% 09/01/20 5,305 5,553,175
9.00% 06/01/21 1,092 1,143,248
8.00%,
1 yr. CMT ARM 04/01/22 3,210 3,274,019
7.00% TBA 10/01/25 16,000 15,800,000
------------
30,358,960
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 9.2%
7.50% 07/01/99 1,911 1,943,360
7.50% 08/01/99 4,669 4,747,964
7.50% 09/01/99 657 667,907
7.50% 12/01/99 56 57,045
7.00% TBA 10/01/10 4,000 4,010,000
6.50% 07/01/25 7,390 7,137,812
6.50% 08/01/25 5,630 5,437,807
6.50% 09/01/25 2,661 2,570,288
6.50% TBA 10/01/25 22,000 21,202,500
8.001%,
1 yr. CMT ARM 03/01/33 4,993 5,145,437
------------
52,920,120
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 10.7%
9.00% 06/15/00 28 29,814
9.50% 06/15/00 174 185,697
9.00% 08/15/00 3,458 3,643,824
9.00% 04/15/01 256 269,675
6.50%,
1 yr. CMT ARM 05/20/25 18,795 19,053,523
8.00% 06/15/25 207 213,152
8.00% 07/15/25 6,818 7,018,432
7.50%,
1 yr. CMT ARM 04/20/25 206 211,827
7.50%,
1 yr. CMT ARM 06/20/25 7,137 7,332,909
8.50% 07/05/01 349 363,999
8.50% 08/15/01 503 524,714
8.50% 09/15/01 213 222,239
9.50% 12/15/01 4,116 4,337,572
9.50% 12/15/02 949 1,000,303
8.00% 02/15/03 5,719 5,886,970
8.00% 03/15/03 2,329 2,397,749
8.00% 05/15/03 5,511 5,673,361
7.00% 02/15/05 1,363 1,348,383
8.00% 12/15/19 23 23,754
8.00% 07/15/22 53 54,162
8.00% 05/15/23 65 66,533
8.00% 10/15/24 344 354,070
8.00% 01/15/25 282 291,704
8.00% 05/15/25 489 503,701
------------
61,008,067
------------
TOTAL MORTGAGE BACKED SECURITIES
(Cost $144,812,701) 144,287,147
------------
ASSET BACKED SECURITIES -- 4.0%
Merrill Lynch Mortgage
Investors, Inc.
7.90% 05/25/15 2,200 2,202,895
National Credit Card Trust
9.45% 12/31/97 2,520 2,588,292
Prime Credit Card Master Trust
6.75% 10/31/05 5,500 5,566,872
Standard Credit Card Master
Trust
8.25% 01/07/05 5,925 6,493,652
7.25% 04/07/08 6,000 6,213,600
------------
TOTAL ASSET BACKED SECURITIES
(Cost $22,710,949) 23,065,311
------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE> 61
MANAGED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- ------
<S> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 7.7%
Capstead Securities, Corp.
8.40% 01/25/19 $ 1,376 $ 1,382,601
Federal Home Loan Mortgage
Corporation
5.50% 10/15/20 3,000 2,710,193
6.50% 10/15/20 10,000 9,525,000
Federal National Mortgage
Association
8.50% 11/01/95 4,531 4,559,541
6.95% 11/01/98 4,200 4,194,750
7.50% 03/25/00 10,000 10,056,250
6.50% 09/25/02 5,100 4,834,279
Ryland Acceptance Corp.
9.40% 08/01/18 6,150 6,440,203
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $40,394,368) 43,702,817
------------
CORPORATE BONDS -- 27.2%
BANKS -- 2.7%
Comerica Bank
7.25% 10/15/02 6,000 6,277,500
First Union Corp.
6.875% 09/15/05 3,800 3,773,408
National Bank of Canada
8.125% 08/15/04 5,000 5,350,000
------------
15,400,908
------------
CONSTRUCTION -- 0.9%
Centex Corp.
7.375% 06/01/05 5,000 4,956,250
------------
ENERGY & UTILITIES -- 2.2%
Appalachian Power Co.
8.50% 12/01/22 2,150 2,351,563
Idaho Power Co.
8.75% 03/15/27 2,250 2,470,725
Mobile Energy Resources
8.665% 01/01/17 2,150 2,234,925
Texas Utilities Electric Co.
9.75% 05/01/21 5,000 5,737,180
------------
12,794,393
------------
ENTERTAINMENT & LEISURE -- 0.4%
Royal Caribbean Cruises, Ltd.
7.125% 09/18/02 2,100 2,086,875
------------
FINANCE -- 4.2%
Associates Corp, N.A.
7.45% 03/28/00 4,000 4,136,000
FSA Finance
8.31% 06/01/02 2,500 2,556,843
H.F. Ahmanson & Co.
8.25% 10/01/02 1,100 1,204,500
Household International Corp.
6.00% 03/15/99 5,000 4,937,500
Liberty Mutual
8.50% 05/15/25 4,250 4,414,688
New American Capital, Inc.
7.25% 10/12/95 5,200 5,193,500
Tenneco Credit Corp.
10.125% 12/01/97 1,300 1,400,750
------------
23,843,781
------------
FOOD & AGRICULTURE -- 0.8%
Ralston Purina Co.
7.875% 12/15/95 2,800 2,856,000
RJR Nabisco, Inc.
7.05% 07/15/07 1,550 1,528,688
------------
4,384,688
------------
INSURANCE -- 2.1%
London Life Insurance
6.875% 09/15/05 3,000 2,985,000
Metropolitan Life Insurance
6.30% 11/01/03 3,950 3,752,500
Prudential Insurance
7.65% 07/01/07 600 601,500
8.30% 07/01/25 4,900 4,936,750
------------
12,275,750
------------
MANUFACTURING -- 0.9%
Georgia Pacific
8.625% 05/15/25 5,000 5,337,500
------------
MISCELLANEOUS -- 0.0%
Larwin Group -- Participation
in Asset Exchange
8.00% 12/01/99 2 2,302
------------
MOTOR VEHICLES -- 3.0%
Ford Motor Co.
5.58%** 12/26/95 5,000 4,900,000
8.00% 10/01/96 7,000 7,125,999
General Motors Acceptance
Corp.
6.30% 03/31/97 5,000 5,018,750
------------
17,044,749
------------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 62
MANAGED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- -------- ------
<S> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
RETAIL MERCHANDISING -- 0.5%
May Department Stores
8.125% 08/15/35 $ 3,000 $ 3,165,000
------------
SECURITY BROKERS & DEALERS -- 4.9%
Morgan Stanley Group, Inc.
5.70%** 12/09/95 10,000 9,800,000
7.50% 09/01/99 5,000 5,143,750
8.25% 08/15/27 1,000 1,018,089
PaineWebber Group, Inc.
6.31% 07/22/99 5,000 4,850,000
Salomon Brothers, Inc.
5.26% 02/10/99 4,500 4,428,000
8.90% 02/15/00 2,500 2,634,375
------------
27,874,214
------------
TELECOMMUNICATIONS -- 1.8%
AT&T Corp.
6.40% 06/02/99 10,000 10,050,000
------------
TEXTILE -- 0.3%
Burlington Industries
7.25% 09/15/05 2,000 1,997,500
------------
TRANSPORTATION -- 0.5%
Burlington Northern
6.94% 01/01/14 3,300 3,244,715
------------
YANKEE -- 2.0%
Italy -- Global Bond
6.875% 09/27/23 6,200 5,649,750
Westpac Banking Corp.
9.125% 08/15/01 5,000 5,600,000
------------
11,249,750
------------
TOTAL CORPORATE BONDS
(Cost $155,462,601) 155,708,375
------------
TAXABLE MUNICIPAL BONDS -- 1.6%
Los Angeles County Taxable Pension
Obligation
8.62% 06/30/06 8,300 9,078,125
------------
(Cost $8,663,957)
U.S. TREASURY OBLIGATIONS -- 31.0%
U.S. TREASURY BONDS -- 8.8%
10.75% 08/15/05 8,610 11,407,990
7.875% 02/15/21 10,000 11,476,900
7.125% 02/15/23 10,810 11,466,166
7.625% 02/15/25 13,770 15,589,154
------------
49,940,210
------------
U.S. TREASURY NOTES -- 22.2%
5.625% 06/30/97 66,000 65,782,200
6.00% 08/31/97 5,100 5,116,982
6.125% 05/15/98 5,220 5,250,171
5.875% 08/15/98 20,990 20,985,382
6.75% 06/30/99 5,150 5,282,354
6.875% 03/31/00 21,550 22,266,320
7.25% 08/15/04 2,340 2,502,162
------------
127,185,571
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $175,668,488) 177,125,781
------------
<CAPTION>
NUMBER OF
SHARES
--------
<S> <C> <C>
TEMPORARY INVESTMENTS -- 0.0%
Smith Barney Money
Market Fund
(Cost $33,074) 33,074 33,074
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $609,057,299*) 107.6% 615,246,324
LIABILITIES IN EXCESS OF OTHER
ASSETS (Including $50,350,015
of investment purchases
payable) (7.6%) (43,275,653)
-------- ------------
NET ASSETS (Applicable to
42,697,714 Institutional
shares, 11,258,452 Service
shares and 1,153,926 Series A
Investor shares outstanding) 100.0% $571,970,671
======= ============
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 63
MANAGED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
-------
<S> <C>
NET ASSET VALUE AND REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND SERIES A
INVESTOR SHARE ($571,970,671 /
55,110,092) $10.38
======
OFFERING PRICE PER INSTITUTIONAL AND
SERVICE SHARE $10.38
======
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($10.38 / .955) $10.87
======
</TABLE>
- -------------
* Cost for Federal income tax purposes at September 30, 1995 was $609,911,340.
The gross unrealized appreciation (depreciation) on a tax basis is as
follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 7,509,061
Gross unrealized depreciation (2,174,077)
-----------
$ 5,334,984
===========
</TABLE>
** Rates shown are rates as of September 30, 1995, and the maturities shown are
the longer of the next interest readjustment date or the maturity date.
See accompanying notes to financial statements.
15
<PAGE> 64
THE PNC(R) FUND
TAX-FREE INCOME PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- -----------
<S> <C> <C> <C>
ALABAMA -- 4.1%
Courtland Industrial Revenue
Bonds Series 1994
5.90% 02/01/17 $ 500 $ 472,500
-----------
ARIZONA -- 1.8%
Phoenix General Obligation
Bonds Series 1992
6.375% 07/01/13 200 209,500
-----------
COLORADO -- 11.3%
Arapahoe County Capital
Improvement Trust Fund Highway
Capital Appreciation Revenue
Bonds Series 1986 E-470
0.00% 08/31/04 900 501,750
Denver City and County Airport
Revenue Bonds Series 1992
6.75% 11/15/13 500 502,500
Jefferson County School
District General Obligation
Bonds Series 1992
6.00% 12/15/12 300 307,500
-----------
1,311,750
-----------
FLORIDA -- 3.7%
Florida Department of
Transportation General
Obligation Bonds Series 1991
6.25% 07/01/07 400 426,000
-----------
GEORGIA -- 10.1%
Georgia General Obligation
Bonds Series 1992B
6.30% 03/01/10 310 341,388
Georgia Municipal Electric
Authority Revenue Bonds Series
1992B
6.125% 01/01/14 400 409,500
Gwinnett County General
Obligation Bonds Series 1992
6.00% 01/01/10 400 421,500
-----------
1,172,388
-----------
KANSAS -- 7.2%
Johnson County General
Obligation Bonds Series 1992A
(Internal Inspection)
6.00% 09/01/07 400 423,000
Kansas Department of
Transportation Revenue Bonds
Series 1994
6.00% 09/01/12 400 406,000
-----------
829,000
-----------
LOUISIANA -- 0.1%
Louisiana Housing Finance
Authority Revenue Bonds Series
1985A (Single Family Mortgage)
9.375% 02/01/15 15 15,525
-----------
MARYLAND -- 3.5%
Baltimore Port Facility
Industrial Development Revenue
Bonds Series 1984A (E.I.
Dupont Company)
6.50% 10/01/11 100 107,375
Maryland Health & Higher
Education Authority Revenue
Bonds Series 1993 (Johns
Hopkins Hospital)
5.60% 07/01/09 300 301,125
-----------
408,500
-----------
MICHIGAN -- 3.2%
Dickinson County Economic
Development Corporation
Pollution Control Refunding
Revenue Bonds Series 1993
(Champion International Corp.
Project)
5.85% 10/01/18 400 375,000
-----------
NEBRASKA -- 2.7%
Omaha Public Power District
Revenue Bonds Series 1993A
5.50% 02/01/07 300 308,625
-----------
</TABLE>
See accompanying notes to financial statements.
16
<PAGE> 65
TAX-FREE INCOME PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ------ -----------
<S> <C> <C> <C>
NEW JERSEY -- 4.7%
New Jersey Turnpike Authority
Revenue Bonds Series 1991A
6.40% 01/01/02 $ 400 $ 438,000
New Jersey Turnpike Authority
Revenue Bonds Series 1991C
6.50% 01/01/16 100 109,875
-----------
547,875
-----------
NEW MEXICO -- 4.4%
New Mexico State University
Revenue Bonds Series 1994
5.70% 04/01/09 500 507,500
-----------
NEW YORK -- 11.5%
New York City General
Obligation Bonds Series 1993
Subseries B-4
4.65%** 10/03/95 100 100,000
New York City General
Obligation Bonds Series 1995B
7.25% 08/15/07 500 550,000
New York City Industrial
Development Agency Special
Facility Revenue Bonds Series
1994 (Terminal One Group
Association Project)
6.00% 01/01/15 500 483,750
New York City Unlimited Tax
General Obligation Bonds
Series 1992B
4.65%** 10/03/95 200 200,000
-----------
1,333,750
-----------
NORTH CAROLINA -- 2.7%
North Carolina Municipal Power
Agency Revenue Bonds Series
1992A (Catawba Electric)
6.00% 01/01/10 300 314,625
-----------
OHIO -- 7.0%
Ohio Water Development
Authority Revenue Bonds Series
1995 (Steel-Cargill North Star
Broken Hill Project)
6.30% 09/01/20 500 500,625
Ohio Water Development
Authority Revenue Bonds Series
1992 (Clean Water Series)
5.65% 12/01/05 300 316,125
-----------
816,750
-----------
OREGON -- 2.7%
Portland Sewer System Revenue
Bonds Series 1992A
6.00% 10/01/12 300 310,125
-----------
PENNSYLVANIA -- 4.5%
Pennsylvania Economic
Development Financing
Authority Resource Recovery
Revenue Bonds Series 1994D
(Colver Project)
7.15% 12/01/18 500 521,250
-----------
SOUTH CAROLINA -- 3.6%
South Carolina Public Service
Authority Revenue Bonds Series
1991D (Santee Cooper Project)
6.50% 07/01/14 100 103,250
Spartanburg Water Works
Improvement Revenue Bonds
Series 1992
6.20% 06/01/09 300 313,875
-----------
417,125
-----------
TEXAS -- 0.8%
Sabine River Authority
Pollution Control Revenue
Bonds Series 1986
(Southwestern Electric Power
Project)
8.20% 07/01/14 85 88,931
-----------
</TABLE>
See accompanying notes to financial statements.
17
<PAGE> 66
TAX-FREE INCOME PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- -----------
<S> <C> <C> <C>
UTAH -- 1.1%
Salt Lake City Hospital Revenue
Bonds Series 1988A
8.125% 05/15/15 $ 100 $ 122,000
-----------
VIRGINIA -- 3.7%
Hampton General Obligation
Bonds Series 1995
6.00% 01/15/08 400 427,000
-----------
WYOMING -- 4.5%
Sweetwater County Solid Waste
Disposal Revenue Bonds Series
1994A (FMC Corporation
Project)
7.00% 06/01/24 500 516,875
-----------
TOTAL INVESTMENT IN SECURITIES
(Cost $11,096,317*) 98.9% 11,452,594
OTHER ASSETS IN EXCESS OF
LIABILITIES 1.1% 122,574
------- -----------
NET ASSETS (Applicable to 25,532
Institutional shares, 444,256
Service shares and 621,214
Series A Investor shares
outstanding) 100.0% $11,575,168
======= ===========
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND SERIES A INVESTOR SHARE
($11,575,168 / 1,091,002) $10.61
======
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $10.61
======
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($10.61 / .955) $11.11
======
</TABLE>
- -------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $358,411
Gross unrealized depreciation (2,134)
--------
$356,277
========
</TABLE>
** Rates shown are the rates as of September 30, 1995, and the maturities shown
are the longer of the next interest readjustment date or the date the
principal amount owed can be recovered through demand.
See accompanying notes to financial statements.
18
<PAGE> 67
THE PNC(R) FUND
INTERMEDIATE GOVERNMENT PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 21.7%
FEDERAL HOME LOAN BANK BONDS -- 4.6%
5.325% 10/09/95 $ 1,000 $ 1,000,000
6.44% 07/25/97 5,000 5,047,800
4.605%** 04/27/98 3,000 2,934,375
------------
8,982,175
------------
FEDERAL HOME LOAN BANK
DISCOUNT NOTES -- 11.0%
6.25% 10/03/95 21,405 21,397,568
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 5.7%
8.80% 11/10/95 3,000 3,009,990
8.15% 05/11/98 2,500 2,630,825
8.35% 11/10/99 5,000 5,397,000
------------
11,037,815
------------
GUARANTEED EXPORT CREDIT CERTIFICATES -- 0.4%
6.28% 06/15/04 800 791,334
------------
TOTAL AGENCY OBLIGATIONS
(Cost $41,860,204) 42,208,892
------------
MORTGAGE-BACKED SECURITIES -- 37.6%
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 13.2%
7.50% 07/01/99 5,041 5,125,836
7.00% 05/01/02 525 523,789
7.00% 08/01/09 720 718,598
6.50% 09/01/25 8,330 8,046,259
7.00% TBA 10/01/25 8,700 8,591,250
8.00%,
1 yr. CMT ARM 04/01/22 2,587 2,638,874
------------
25,644,606
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 12.4%
7.00% TBA 10/01/10 21,000 21,052,500
8.001%,
1 yr. CMT ARM 03/01/33 2,964 3,055,103
------------
24,107,603
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 12.0%
7.00% 01/15/99 2,177 2,195,850
6.50% 05/01/99 3,538 3,505,073
6.50%,
1 yr. CMT ARM 05/20/25 7,666 7,771,832
7.50%,
1 yr. CMT ARM 05/20/25 9,642 9,907,539
------------
23,380,294
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $73,187,253) 73,132,503
------------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 11.3%
FEDERAL HOME LOAN MORTGAGE
CORPORATION-- 3.5%
6.50% 10/15/96 3,885 3,778,539
7.00% 06/15/97 3,000 2,943,843
------------
6,722,382
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 7.2%
8.50% 08/25/96 1,942 1,954,089
7.50% 03/25/97 5,000 5,046,138
6.50% 09/25/98 5,000 4,739,490
6.00% 08/25/17 1,000 922,500
6.50% 12/25/18 1,324 1,262,666
------------
13,924,883
------------
FIRST BOSTON CORP. MORTGAGE
SECURITIES TRUST -- 0.6%
9.00% 01/20/18 1,205 1,243,433
------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $22,324,152) 21,890,698
------------
ASSET BACKED SECURITIES -- 4.1%
General Motors Acceptance
Corp.
7.15% 03/15/00 3,885 3,928,743
Prime Credit Card Master Trust
6.75% 10/31/05 1,900 1,923,101
Standard Credit Card Master
Trust
8.25% 01/08/07 2,000 2,191,950
------------
TOTAL ASSET BACKED SECURITIES
(Cost $8,042,049) 8,043,794
------------
CORPORATE BONDS -- 1.1%
Atlantic Richfield
Co.
10.25% 07/02/00 2,000 2,170,000
------------
(Cost $2,155,054)
</TABLE>
See accompanying notes to financial statements.
19
<PAGE> 68
INTERMEDIATE GOVERNMENT PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- ------------
<S> <C> <C> <C>
TAXABLE MUNICIPAL BONDS -- 2.6%
Los Angeles County Taxable
Pension Obligation
8.62% 06/30/06 $ 2,750 $ 3,007,812
Stanislaus County Taxable
Pension Obligation
7.15% 08/15/13 2,000 2,032,500
------------
TOTAL TAXABLE MUNICIPAL BONDS
(Cost $4,870,673) 5,040,312
------------
U.S. TREASURY NOTES -- 28.2%
5.625% 06/30/97 38,410 38,283,247
6.125% 05/15/98 2,960 2,977,108
5.875% 08/15/98 8,430 8,428,145
6.75% 05/31/99 5,000 5,127,749
------------
TOTAL U.S. TREASURY NOTES
(Cost $54,746,106) 54,816,249
------------
REPURCHASE AGREEMENTS -- 8.6%
Lehman Brothers, Inc.
6.40% 10/02/95 16,705 16,705,000
------------
(Agreement dated 09/29/95 to
be repurchased at
$16,713,909. Collateralized
by $15,880,000 U.S. Treasury
Notes 7.125% due 09/30/99.
The value of the collateral
is $17,041,855).
(Cost $16,705,000)
<CAPTION>
NUMBER
OF SHARES
---------
<S> <C> <C>
TEMPORARY INVESTMENTS -- 0.0%
Smith Barney Money
Market Fund
(Cost $29,663) 29,663 29,663
------------
TOTAL INVESTMENT IN SECURITIES
(Cost $223,920,154*) 115.2% $224,037,111
LIABILITIES IN EXCESS OF OTHER
ASSETS (Including $32,008,305
of investment purchases
payable) (15.2%) (29,638,357)
------- ------------
NET ASSETS (Applicable
to 13,454,295 Institutional
shares, 4,965,413 Service
shares, and 977,718 Series A
Investor shares outstanding) 100.0% $194,398,754
======= ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL AND SERVICE SHARE
($184,597,045 / 18,419,708) $10.02
======
NET ASSET VALUE AND REDEMPTION PRICE PER
SERIES A INVESTOR SHARE ($9,801,709 /
977,718) $10.03
======
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($10.03 / .955) $10.50
======
</TABLE>
- -------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 872,044
Gross unrealized depreciation (755,087)
---------
$ 116,957
=========
</TABLE>
** Rates shown are the rates as of September 30, 1995, and maturities shown are
the longer of the next interest readjustment date or the maturity date.
See accompanying notes to financial statements.
20
<PAGE> 69
THE PNC(R) FUND
OHIO TAX-FREE INCOME PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- -------- ----------
<S> <C> <C> <C>
OHIO -- 83.1%
Akron, Bath, Copley Joint
Township Revenue Bonds Series
1993 (Hospital District)
5.50% 11/15/03 $ 250 $ 230,625
Berea City School District
Unlimited Tax General Obligation
Bonds Series 1993
7.50% 12/15/03 75 88,500
Brunswick Limited Tax Improvement
General Obligation Bonds Series
1994
6.30% 12/01/05 210 215,513
Butler County Hospital Facilities
Refunding Improvement Revenue
Bonds Series 1991 (Middletown
Regional Hospital)
6.75% 11/15/03 50 53,813
Cleveland Airport System
Improvement Revenue Bonds Series
1994B
5.70% 01/01/04 150 155,063
Cleveland Public Power System
Improvement Revenue Bonds Series
1991B (First Mortgage)
7.00% 11/15/01 100 104,500
Cleveland Regional Sewer District
Pre-refunded Bonds Series 1978
6.75% 05/15/04 60 67,950
Columbus Municipal Airport
Authority Revenue Bonds Series
1994A (Port Columbus
International Airport)
6.00% 01/01/04 150 153,750
Columbus Park, Recreation and Zoo
Unlimited Tax General Obligation
Bonds Series 1986
7.25% 07/01/01 25 28,500
Columbus Sewer Improvement
Unlimited Tax General Obligation
Bonds Series 1991
9.00% 09/15/97 175 191,406
Columbus Sewer Improvement
Unlimited Tax General Obligation
Bonds Series 1992
5.80% 05/01/08 280 294,700
Cuyahoga County Hospital
Improvement Revenue Bonds Series
1989 (Cleveland Clinic
Foundation)
6.75% 12/01/99 200 211,750
Cuyahoga County Hospital
Refunding Revenue Bonds Series
1994A (Fairview General Hospital
Project)
5.50% 02/15/04 200 188,000
Euclid Limited Tax General
Obligation Bonds Series 1995
5.50% 12/01/15 500 485,625
Fairfield City School District
Unlimited Tax General Obligation
Bonds Series 1994
7.45% 12/01/14 300 339,000
Franklin County Hospital Revenue
Refunding and Improvement Bonds
Series 1993 (Doctor's Hospital
Project)
5.875% 12/01/03 330 309,375
Hamilton County Sewer System
Improvement Revenue Bonds Series
1995A
6.00% 12/01/02 500 543,125
Hamilton Waterworks Mortgage
Revenue Bonds Series 1991A
6.40% 10/15/07 25 26,875
Kings Local School District
Unlimited Tax General Obligation
Bonds Series 1994
7.60% 12/01/05 200 224,250
Loveland City School District
Unlimited Tax General Obligation
Bonds Series 1992
6.65% 12/01/02 145 156,056
Medina Unlimited Tax General
Obligation Bonds Series 1986
7.25% 12/01/03 50 57,688
Montgomery County Hospital
Revenue Bonds Series 1989
(Kettering Memorial Hospital)
7.375% 04/01/99 200 219,250
North Royalton City School
District Unlimited Tax General
Obligation Bonds Series 1994
6.625% 12/01/06 100 113,250
</TABLE>
See accompanying notes to financial statements.
21
<PAGE> 70
OHIO TAX-FREE INCOME PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ------ ----------
<S> <C> <C> <C>
OHIO (CONTINUED)
Northwestern Local School
District School Improvement
Unlimited Tax General Obligation
Bonds Series 1994 (Wayne and
Ashland Counties)
7.20% 12/01/10 $ 300 $ 353,625
Ohio Air Quality Development
Authority Revenue Bonds Series
1985 (Dayton Power and Light
Company Project)
9.50% 12/01/95 250 258,438
Ohio Housing Finance Agency
Revenue Bonds Series 1994B-2
(Residential Mortgage)
6.35% 09/01/04 150 151,125
Ohio State Higher Education
Facilities Commission Revenue
Bonds Series 1994 (Ohio
Dominican College)
6.625% 12/01/04 250 256,563
Ohio State Higher Education
Facilities Commission Revenue
Bonds Series 1994 (University of
Dayton Project)
5.80% 12/01/04 250 250,313
Ohio Unlimited Tax General
Obligation Bonds Series 1995
6.00% 08/01/05 225 240,188
Ohio Water Development Authority
Revenue Bonds Series 1995
(Steel-Cargill North Star Broken
Hill Project)
6.30% 09/01/20 500 500,625
Olentangy Local School District
Unlimited Tax General Obligation
Bonds Series 1995A
6.00% 12/01/08 225 238,500
Orville Water System Revenue
Bonds Series 1994
6.00% 11/15/02 50 51,438
Student Loan Funding Corporation
Revenue Bonds Sub-Series 1993A
(Cincinnati)
5.75% 08/01/03 65 66,788
Summit County Hospital Revenue
Bonds Series 1994A (Cuyahoga
Falls General Hospital Project)
6.65% 07/01/14 200 197,750
University of Cincinnati General
Receipts Revenue Bonds Series
R-9
5.60% 06/01/09 75 75,094
Warren County Sewer System
Revenue Bonds Series 1992
6.70% 12/01/02 115 124,775
Worthington City School District
Pre-refunded Unlimited Tax
General Obligation Bonds Series
1989
7.45% 12/01/99 45 51,013
----------
7,274,799
----------
GUAM -- 2.9%
Guam Power Authority Revenue
Bonds Series 1994A
6.625% 10/01/04 250 256,250
----------
PUERTO RICO -- 9.8%
Puerto Rico Commonwealth
Unlimited Tax General Obligation
Bonds Series 1993
5.50% 07/01/13 510 486,413
Puerto Rico Electric Power
Authority Revenue Bonds Series
1995Z
5.50% 07/01/16 400 374,500
----------
860,913
----------
TOTAL MUNICIPAL BONDS 8,391,962
----------
(Cost $8,242,487)
</TABLE>
See accompanying notes to financial statements.
22
<PAGE> 71
OHIO TAX-FREE INCOME PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
-------- ----------
<S> <C> <C>
TEMPORARY INVESTMENTS -- 2.6%
Smith Barney Tax-Free
Money Market Fund 223,647 $ 223,647
----------
(Cost $223,647)
TOTAL INVESTMENTS IN SECURITIES
(Cost $8,466,134*) 98.4% 8,615,609
OTHER ASSETS IN EXCESS OF
LIABILITIES 1.6% 143,406
------ ----------
NET ASSETS (Applicable to 19,883
Institutional shares, 512,269
Service shares, 328,448 Series A
Investor shares and 10,591
Series B Investor shares
outstanding) 100.0% $8,759,015
====== ==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL AND SERVICE SHARE
($5,350,277 / 532,152) $10.05
======
NET ASSET VALUE AND
REDEMPTION PRICE PER
SERIES A INVESTOR SHARE
($3,302,252 / 328,448) $10.05
======
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($10.05 / .955) $10.52
======
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE (SUBJECT
TO A MAXIMUM CONTINGENT DEFERRED
SALES CHARGE OF 5.0%)
PER SERIES B INVESTOR SHARE
($106,486 / 10,591) $10.05
======
</TABLE>
- -------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $216,622
Gross unrealized depreciation (67,147)
--------
$149,475
=========
</TABLE>
See accompanying notes to financial statements.
23
<PAGE> 72
THE PNC(R) FUND
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- -----------
<S> <C> <C> <C>
PENNSYLVANIA -- 90.3%
Allegheny County General
Obligation Bonds Series
1991C-38
6.20% 09/01/01 $ 250 $ 270,312
Allegheny County General
Obligation Bonds
Series 1993C-42
5.00% 10/01/10 1,000 943,750
Allegheny County Hospital
Development Authority Revenue
Bonds (Mercy Hospital) Series
1986
7.375% 04/01/15 750 771,562
Allegheny County Residential
Finance Authority Mortgage
Revenue Bonds Single Family
Series 1994Y
6.25% 05/01/17 400 405,000
Bristol Township School
District Unlimited Tax
General Obligation Bonds
Series 1993A
5.10% 02/15/08 1,000 972,500
Cambria County Unlimited Tax
General Obligation Bonds
Series 1991
8.25% 06/01/00 600 663,000
Central Bucks School District
Unlimited Tax General
Obligation Bonds Series 1993A
5.15% 05/15/08 1,015 995,969
Central Bucks School District
Unlimited Tax General
Obligation Bonds Series 1994A
6.70% 11/15/09 500 563,750
Chester County Unlimited Tax
General Obligation Bonds
Series 1991
6.70% 12/15/04 385 423,019
Crawford Central School
District Unlimited Tax
General Obligation Bonds
Series 1995
5.70% 02/15/10 2,175 2,210,344
5.75% 02/15/11 1,585 1,604,812
Dauphin County General
Authority Revenue Bonds
(A-F School District Pooled
Finance Program) Series 1986
5.30% 06/01/05 535 535,000
5.40% 06/01/06 565 565,000
5.50% 06/01/07 550 547,937
6.85% 06/01/09 800 852,000
Deer Lakes School District
Unlimited Tax General
Obligation Bonds Series 1995
6.35% 01/15/14 1,000 1,031,250
6.45% 01/15/19 1,300 1,343,875
Delaware County Authority
Health Care Revenue Bonds
(Mercy Health Corporation)
Series 1993B
6.00% 11/15/07 1,000 982,500
Erie County Prison Authority
Lease Revenue Bonds
Series 1991
6.25% 11/01/01 500 544,375
Harrisburg Authority Lease
Revenue Bonds Series 1991
6.50% 06/01/04 500 543,125
Indiana County Hospital
Authority Revenue Bonds
Series 1992A
7.125% 07/01/23 1,500 1,526,250
Lancaster County Hospital
Authority Revenue Bonds
(Health Center-Masonic Homes
Project) Series 1994
5.30% 11/15/08 500 478,750
Lebanon County Hospital
Authority Revenue Bonds (Good
Samaritan Hospital Project)
Series 1993
5.55% 11/15/04 355 347,456
6.00% 11/15/09 500 472,500
6.00% 11/15/18 750 687,187
Ligonier Valley School
District Unlimited Tax
General Obligation Bonds
Series 1994
5.65% 03/01/14 2,000 1,977,500
</TABLE>
See accompanying notes to financial statements.
24
<PAGE> 73
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- -----------
<S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Montgomery County Higher
Education and Health
Authority Revenue Bonds
(Frankford Hospital) Series
1986
7.875% 01/01/19 $ 500 $ 531,875
Moon Township Water and Sewer
Authority Revenue Bonds
Series 1994
6.70% 12/01/19 1,000 1,035,000
New Garden Township Sewer
Authority Revenue Bonds
Series 1991
7.00% 03/01/15 420 456,225
Norristown Municipal Waste
Authority Sewer Revenue Bonds
Series 1993
5.125% 11/15/23 2,000 1,787,500
Northampton County Higher
Education Authority Revenue
Bonds (Moravian College)
Series 1994
6.10% 07/01/12 1,950 1,981,687
Northampton County Industrial
Development Authority
Pollution Control Revenue
Bonds (Metropolitan Edison
Co. Project) Series 1995
6.10% 07/15/21 1,000 1,013,750
Northumberland County
Authority Guaranteed Lease
Revenue Bonds Series 1992
6.50% 08/15/07 500 558,750
Pennsbury School District
Unlimited Tax General
Obligation Bonds Series 1994
6.65% 08/15/09 685 744,938
Pennsylvania Commonwealth
Turnpike Revenue Bonds Series
1991L
6.50% 06/01/04 445 485,050
Pennsylvania Economic
Development Financing
Authority Resource Recovery
Revenue Bonds (Colver
Project)
Series 1994D
7.15% 12/01/18 2,000 2,085,000
Pennsylvania Finance Authority
Revenue Bonds (Municipal
Capital Improvement Project)
Series 1993
6.60% 11/01/09 2,760 2,949,750
Pennsylvania Higher
Educational Facilities
Authority Revenue Bonds
(Duquesne University) Series
1991C
6.75% 04/01/20 1,000 1,062,500
Pennsylvania Higher
Educational Facilities
Authority Revenue Bonds
(Philadelphia College of
Textiles and Science) Series
1993
4.95% 02/01/02 255 249,581
5.15% 02/01/04 1,230 1,191,563
5.45% 02/01/07 285 274,313
Pennsylvania Higher
Educational Facilities
Authority Revenue Bonds
(Thomas Jefferson University)
Series 1993A
5.15% 11/01/11 500 468,750
Pennsylvania Housing Finance
Authority Revenue Bonds
(Single Family Mortgage)
Series 1995-46
6.20% 10/01/14 1,000 1,000,000
Pennsylvania Infrastructure
Investment Authority Revenue
Bonds (Pennvest Project)
Series 1990B
6.80% 09/01/10 2,000 2,145,000
Pennsylvania Intergovernmental
Cooperation Authority Special
Tax Revenue Bonds Series 1994
7.00% 06/15/04 500 573,750
Pennsylvania Intergovernmental
Cooperative Authority Special
Tax Revenue Bonds Series 1993
5.25% 06/15/06 1,000 1,007,500
5.75% 06/15/15 1,000 987,500
Pennsylvania Unlimited Tax
General Obligation Bonds
Series 1994A
6.50% 11/01/05 250 270,625
</TABLE>
See accompanying notes to financial statements.
25
<PAGE> 74
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- -----------
<S> <C> <C> <C>
PENNSYLVANIA (CONTINUED)
Philadelphia Hospital and
Higher Education Facilities
Authority Revenue Bonds
(Frankford Hospital) Series
1993A
6.00% 06/01/23 $ 815 $ 720,256
Philadelphia Hospital and
Higher Education Facilities
Authority Revenue Bonds
(Graduate Health Systems)
Series 1993A
5.10% 07/01/98 470 468,825
Philadelphia Hospital and
Higher Educational Facilities
Authority Revenue Bonds
(Friends' Hospital) Series
1993
5.95% 05/01/04 500 497,500
6.20% 05/01/11 500 450,625
Philadelphia Industrial
Development Authority Revenue
Bonds (PGH Development
Corporation) Series 1993
5.25% 07/01/17 1,810 1,658,413
Philadelphia Municipal
Authority Revenue Bonds
Series 1993A
5.625% 11/15/14 2,000 1,942,500
Philadelphia School District
Unlimited Tax General
Obligation Bonds Series 1991A
6.70% 07/01/99 250 270,313
Schuylkill Redevelopment
Authority Commonwealth Lease
Revenue Bonds Series 1991A
7.125% 06/01/13 1,250 1,390,625
Southeastern Pennsylvania
Transportation Authority
Special Revenue Bonds Series
1995A
5.875% 03/01/09 1,230 1,268,438
Washington County Industrial
Development Authority
Pollution Control Revenue
Bonds Series 1993F (Western
Pennsylvania Power Company)
4.95% 03/01/03 2,000 2,012,500
Westmoreland County Industrial
Development Authority Revenue
Bonds Westmoreland Health
Systems) Series 1993A
6.00% 07/01/11 200 204,750
York County Hospital Authority
Revenue Bonds (Hanover
General Hospital) Series
1994A
4.80% 12/01/06 635 618,331
-----------
56,622,406
-----------
NEW YORK -- 0.6%
New York City Municipal Water
Finance Authority Water and
Sewer System Revenue Bonds
Series 1994G
4.40%** 10/02/95 400 400,000
-----------
PUERTO RICO -- 4.0%
Puerto Rico Commonwealth
Unlimited Tax General
Obligation Bonds Series 1993
5.50% 07/01/13 1,750 1,669,063
Puerto Rico Electric Power
Authority Revenue Bonds
Series 1991P
6.75% 07/01/03 250 275,000
Puerto Rico Public Buildings
Authority Revenue Bonds
Series 1992J
6.50% 07/01/03 500 548,750
-----------
2,492,813
-----------
TOTAL MUNICIPAL BONDS
(Cost $58,664,011) 59,515,219
-----------
</TABLE>
See accompanying notes to financial statements.
26
<PAGE> 75
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- -----------
<S> <C> <C>
TEMPORARY INVESTMENTS -- 7.8%
Smith Barney Tax Free Money
Market Fund 4,777,459 $ 4,777,459
Vanguard Pennsylvania Tax-Free
Money Market Fund 100,000 100,000
-----------
(Cost $4,877,459) 4,877,459
-----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $63,541,470*) 102.7% 64,392,678
LIABILITIES IN EXCESS OF
OTHER ASSETS (2.7%) (1,702,694)
----- -----------
NET ASSETS (Applicable to
202,613 Institutional shares,
1,337,927 Service shares
4,142,417 Series A Investor
shares and 388,164 Series B
Investor shares outstanding) 100.0% $62,689,984
====== ===========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL AND SERVICE SHARE
($15,907,664 / 1,540,540) $10.33
======
NET ASSET VALUE AND REDEMPTION PRICE PER
SERIES A INVESTOR SHARE
($42,774,116 / 4,142,417) $10.33
======
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($10.33 / .955) $10.82
======
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE (SUBJECT TO
A MAXIMUM CONTINGENT DEFERRED SALES
CHARGE OF 5.0%) PER SERIES B
INVESTOR SHARE
($4,008,204 / 388,164) $10.33
======
</TABLE>
- -------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $1,107,875
Gross unrealized depreciation (256,667)
----------
$ 851,208
==========
</TABLE>
** Rates shown are the rates as of September 30, 1995, and the maturities shown
are the longer of the next interest readjustment date or the date the
principal amount owed can be recovered through demand.
See accompanying notes to financial statements.
27
<PAGE> 76
THE PNC(R) FUND
SHORT-TERM BOND PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- -----------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 29.1%
FEDERAL FARM CREDIT BANK NOTES -- 13.1%
6.70% 09/30/96 $ 2,000 $ 2,018,480
-----------
FEDERAL HOME LOAN BANK BONDS -- 16.0%
5.325%** 04/08/97 1,500 1,500,000
4.605%** 04/27/98 1,000 978,124
-----------
2,478,124
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $4,476,218) 4,496,604
-----------
MORTGAGE BACKED SECURITIES -- 32.4%
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 7.4%
7.50% 08/01/99 233 237,430
8.00%,
1 yr. CMT ARM 04/01/22 892 909,450
-----------
1,146,880
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 17.4%
7.25% 04/25/96 424 424,040
7.00% TBA 10/01/10 2,000 2,005,000
8.001% 03/01/33 250 257,272
-----------
2,686,312
-----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 7.6%
6.50%,
1 yr. CMT ARM 05/20/25 198 200,562
7.50%,
1 yr. CMT ARM 12/31/01 953 978,800
-----------
1,179,362
-----------
TOTAL MORTGAGE BACKED SECURITIES
(Cost $5,017,626) 5,012,554
-----------
ASSET BACKED SECURITIES -- 10.4%
National Credit Card Trust
9.45% 12/31/97 500 513,550
General Motors Acceptance Corp.
7.15% 03/15/00 544 550,024
John Deere Owner Trust
4.10% 10/15/00 515 509,096
Toyota Motor Credit Auto
Receivable
3.90% 08/17/98 42 41,177
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $1,620,469) 1,613,847
-----------
COLLATERALIZED MORTGAGE OBLIGATION -- 4.5%
Capstead Securities Corp.
8.40% 04/25/19 688 691,301
-----------
(Cost $692,592)
CORPORATE BONDS -- 12.9%
ENERGY & UTILITIES -- 2.4%
Connecticut Light and Power Co.
7.625% 04/01/97 200 204,750
Duke Power Co.
8.00% 11/01/99 150 159,375
-----------
364,125
-----------
FINANCE -- 6.1%
New American Capital, Inc.
7.6875% 10/12/95 100 99,875
PaineWebber Group, Inc.
6.25% 06/15/98 150 147,375
Salomon Brothers, Inc.
5.26% 02/10/99 500 492,000
Tenneco Credit Corp.
10.125% 12/01/97 200 215,500
-----------
954,750
-----------
INDUSTRIALS -- 4.4%
General Motors Acceptance Corp.
7.30% 02/02/98 150 153,188
Ryder System, Inc.
7.66% 09/15/99 500 520,000
-----------
673,188
-----------
TOTAL CORPORATE BONDS
(Cost $1,977,203) 1,992,063
-----------
</TABLE>
See accompanying notes to financial statements.
28
<PAGE> 77
SHORT-TERM BOND PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ----- -----------
<S> <C> <C> <C>
U.S. TREASURY NOTES -- 22.0%
5.625% 06/30/97 $ 3,000 $ 2,990,100
6.00% 08/31/97 200 200,666
6.125% 05/15/98 50 50,289
6.75% 04/30/00 150 154,314
-----------
TOTAL U.S. TREASURY NOTES
(Cost $3,391,754) 3,395,369
-----------
<CAPTION>
NUMBER
OF SHARES
---------
<S> <C> <C>
TEMPORARY INVESTMENTS -- 0.6%
Smith Barney Money
Market Fund
(Cost $96,204) 96,204 96,204
-----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $17,272,066*) 111.9% 17,297,942
LIABILITIES IN EXCESS OF OTHER
ASSETS (Including $2,020,674 of
investment purchases payable) (11.9%) (1,835,806)
------- -----------
NET ASSETS (Applicable
to 883,082 Institutional
shares, 677,806 Service shares
and 32,087 Series A Investor
shares outstanding) 100.0% $15,462,136
======= ===========
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND SERIES A INVESTOR SHARE
($15,462 136 / 1,592,975) $ 9.71
======
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $ 9.71
======
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($9.71 / .955) $10.17
======
</TABLE>
- -------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 52,857
Gross unrealized depreciation (26,981)
--------
$ 25,876
=========
</TABLE>
** Rates shown are the rates as of September 30, 1995 and the maturities shown
are the longer of the next interest readjustment date or the maturity date.
See accompanying notes to financial statements.
29
<PAGE> 78
THE PNC(R) FUND
INTERMEDIATE-TERM BOND PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 5.8%
FEDERAL HOME LOAN BANK BONDS -- 2.2%
5.325% 10/09/95 $ 1,000 $ 1,000,000
6.99% 04/25/97 2,500 2,543,350
------------
3,543,350
------------
FEDERAL HOME LOAN BANK
DISCOUNT NOTES -- 1.2%
4.605%** 04/27/98 2,000 1,956,250
------------
FEDERAL NATIONAL MORTGAGE
CORPORATION -- 2.0%
8.70% 06/10/99 1,000 1,088,700
8.25% 12/18/00 2,000 2,178,060
------------
3,266,760
------------
GUARANTEED EXPORT CREDIT
CERTIFICATES -- 0.4%
6.28% 06/15/04 700 692,417
------------
TOTAL AGENCY OBLIGATIONS
(Cost $9,268,860) 9,458,777
------------
MORTGAGE BACKED SECURITIES -- 29.6%
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 11.2%
9.50% 08/15/97 250 261,633
9.00% 09/15/97 252 262,400
8.50% 08/15/98 170 175,246
8.50% 09/15/98 0 429
9.00% 09/15/98 2 1,592
8.50% 10/15/98 64 66,863
7.50% 07/01/99 455 462,272
7.50% 09/01/99 1,070 1,088,330
7.50% 05/01/00 324 329,706
7.00% 07/15/00 626 629,382
7.00% 08/15/00 1,167 1,172,506
9.00% 12/01/01 63 65,524
9.50% 07/01/03 140 145,934
9.50% 11/01/04 247 257,930
8.50% 01/01/05 1 682
9.50% 01/01/05 255 266,218
9.00% 12/01/16 29 29,699
9.00% 06/01/21 1,843 1,929,233
8.00% 04/01/22 1,783 1,818,900
6.50% 09/01/25 4,410 4,259,784
6.50% TBA 10/01/25 1,000 964,375
7.00% TBA 10/01/25 4,000 3,950,000
------------
18,138,638
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 7.2%
9.00% 08/01/02 120 125,786
9.50% 03/01/05 33 35,050
7.00% TBA 10/01/10 8,800 8,822,000
9.00% 01/01/25 395 413,163
9.00% 03/01/25 497 520,317
9.00% 05/01/25 1,084 1,135,145
9.00% 06/01/25 635 665,182
------------
11,716,643
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 11.2%
8.00% 05/15/99 286 295,110
7.50% 04/15/07 45 45,742
7.50% 06/15/07 37 37,666
7.50% 07/15/07 56 56,787
7.50% 08/15/07 38 38,927
7.50% 10/15/07 74 75,720
7.50% 12/15/07 2,711 2,771,695
6.50%,
1 yr. CMT ARM 05/20/25 4,946 5,014,085
7.50%,
1 yr. CMT ARM 12/31/01 9,642 9,907,539
------------
18,243,271
------------
TOTAL MORTGAGE BACKED SECURITIES
(Cost $47,932,111) 48,098,552
------------
ASSET BACKED SECURITIES -- 5.9%
General Motors
Acceptance Corp.
7.15% 03/15/00 3,108 3,142,995
Merrill Lynch Mortgage
Investors, Inc.
7.50% 05/25/15 1,200 1,201,579
National Credit Card Trust
9.45% 12/31/97 1,000 1,027,100
Prime Credit Card
Master Trust
6.75% 10/31/05 1,500 1,518,238
Standard Credit Card Master
Trust
8.25% 01/08/07 1,350 1,479,566
The Money Store Home
Equity Trust
7.625% 12/15/95 1,275 1,282,843
------------
TOTAL ASSET BACKED SECURITIES
(Cost $9,648,552) 9,652,321
------------
</TABLE>
See accompanying notes to financial statements.
30
<PAGE> 79
INTERMEDIATE-TERM BOND PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------- ------------
<S> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 2.3%
Federal National Mortgage
Association
6.50% 12/25/18 $ 1,324 $ 1,262,666
Ryland Acceptance Corp.
9.40% 08/01/18 2,395 2,526,725
------------
(Cost $3,781,638) 3,789,391
------------
CORPORATE BONDS -- 20.2%
BANKS -- 4.1%
Den Danske Bank
7.25% 06/15/05 1,500 1,496,250
First Union Corp.
6.875% 09/15/05 1,800 1,800,000
Meridian Bancorp
6.625% 06/15/00 1,500 1,494,375
National Westminster Bank
9.45% 05/01/01 1,250 1,412,500
North Carolina National Bank
8.50% 11/01/96 500 513,125
------------
6,716,250
------------
CONSTRUCTION -- 0.9%
Centex Corp.
7.375% 06/01/05 1,400 1,387,750
------------
CREDIT INSTITUTIONS -- 1.0%
Tenneco Credit Corp.
10.125% 12/01/97 1,500 1,616,250
------------
ENERGY & UTILITIES -- 1.3%
Connecticut Light and Power
7.625% 04/01/97 1,488 1,523,340
Mobile Energy Resources
8.665% 01/01/17 500 519,750
------------
2,043,090
------------
ENTERTAINMENT & LEISURE -- 1.1%
Royal Caribbean Cruises
7.125% 09/18/02 1,800 1,788,750
------------
FINANCE -- 5.6%
Factory Stores of America
8.31% 06/01/02 700 715,916
H.F. Ahmanson & Co.
8.25% 10/01/02 1,500 1,642,500
New American Capital, Inc.
7.6875% 10/12/95 1,400 1,398,250
Norwest Financial
8.375% 01/15/00 5,000 5,343,750
------------
9,100,416
------------
FOOD & AGRICULTURE -- 1.1%
RJR Nabisco, Inc.
8.00% 07/15/01 1,400 1,408,750
7.05% 07/15/07 450 443,813
------------
1,852,563
------------
INSURANCE -- 2.2%
London Life Insurance
6.875% 09/15/05 1,000 995,000
Metropolitan Life
6.30% 11/01/03 1,000 950,000
Prudential Insurance
7.65% 07/01/07 1,550 1,553,875
------------
3,498,875
------------
OIL & GAS -- 2.3%
Atlantic Richfield
10.25% 07/02/00 3,000 3,255,000
Texaco Capital Co.
9.00% 12/15/99 500 548,125
------------
3,803,125
------------
TRANSPORTATION -- 0.6%
Burlington Northern
6.94% 01/02/14 1,000 983,247
------------
TOTAL CORPORATE BONDS
(Cost $32,310,253) 32,790,316
------------
MEDIUM TERM NOTES -- 5.5%
FINANCE -- 2.0%
Associates Corp. N.A.
7.45% 03/28/00 1,600 1,654,400
PaineWebber Group, Inc.
7.875% 02/15/03 1,500 1,558,125
------------
3,212,525
------------
</TABLE>
See accompanying notes to financial statements.
31
<PAGE> 80
INTERMEDIATE-TERM BOND PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- ------- ------------
<S> <C> <C> <C>
MEDIUM TERM NOTES (CONTINUED)
SECURITY BROKERS & DEALERS -- 1.3%
Salomon, Inc.
7.59% 01/28/00 $ 500 $ 503,125
8.90% 02/15/00 500 526,875
7.75% 05/15/00 1,000 1,016,250
------------
2,046,250
------------
TRUCKING & FREIGHT -- 2.2%
Ryder Systems, Inc.
7.66% 09/15/99 3,500 3,640,000
------------
TOTAL MEDIUM TERM NOTES
(Cost $8,657,071) 8,898,775
------------
TAXABLE MUNICIPAL BONDS -- 1.6%
Los Angeles County Taxable
Pension Obligation
8.62% 06/30/06 2,300 2,515,625
------------
(Cost $2,400,923)
U.S. TREASURY NOTES -- 33.1%
5.625% 06/30/97 2,700*** 2,691,090
6.00% 08/31/97 28,300 28,394,236
6.125% 05/15/98 4,460 4,485,778
5.875% 08/15/98 8,050*** 8,048,229
6.75% 06/30/99 6,450 6,615,764
6.875% 03/31/00 2,620 2,707,089
7.25% 08/15/04 675 721,777
------------
TOTAL U.S. TREASURY NOTES
(Cost $53,528,168) 53,663,963
------------
REPURCHASE AGREEMENT -- 3.2%
Lehman Brothers
6.40% 10/02/95 5,170 5,170,000
------------
(Agreement dated 9/29/95 to be
repurchased at $5,172,757.
Collateralized by $4,835,000
U.S. Treasury Notes, 8.875% due
11/15/97. The value of the
collateral is $5,274,083).
(Cost $5,170,000)
<CAPTION>
VALUE
------------
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $172,697,576*) 107.2% $174,037,720
LIABILITIES IN EXCESS OF OTHER
ASSETS (Including $2,363,000 of
reverse repurchase agreements
payable) (7.2%) (11,693,286)
------ ------------
NET ASSETS (Applicable to
13,254,430 Institutional shares,
3,893,703 Service shares and
68,597 Series A Investor shares
outstanding) 100.0% $162,344,434
====== ============
NET ASSET VALUE AND REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND SERIES A
INVESTOR SHARE
($162,344,434 / 17,216,730) $9.43
=====
OFFERING PRICE PER INSTITUTIONAL AND
SERVICE SHARE $9.43
=====
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($9.43 / .955) $9.87
=====
</TABLE>
- -------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $1,511,617
Gross unrealized depreciation (171,473)
----------
$1,340,144
==========
</TABLE>
** Rates shown are the rates as of September 30, 1995, and the maturities shown
are the longer of the next interest readjustment date or the maturity date.
*** Partial principal in the amount of $2,350,000 has been pledged as collateral
for reverse repurchase agreements.
See accompanying notes to financial statements.
32
<PAGE> 81
THE PNC(R) FUND
GOVERNMENT INCOME PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- -----------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 9.6%
FEDERAL HOME LOAN BANK -- 3.7%
4.605%** 04/27/98 $ 500 $ 489,063
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 5.9%
6.30% 10/02/95 770 769,865
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $1,258,982) 1,258,928
-----------
MORTGAGE BACKED SECURITIES -- 36.1%
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 17.6%
7.50% 09/01/99 237 241,468
9.00% 06/01/21 1,092 1,143,698
8.00%,
1 yr. CMT ARM 04/01/22 448 457,405
6.50%,
1 yr. CMT ARM 09/01/25 490 473,309
-----------
2,315,880
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 11.4%
7.00% TBA 10/01/10 650 651,625
6.00% 08/25/17 638 588,555
8.001%,
1 yr. CMT ARM 03/01/33 250 257,270
-----------
1,497,450
-----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 7.1%
6.50% 05/20/25 445 451,268
7.50%,
1 yr. CMT ARM 04/20/25 476 489,399
-----------
940,667
-----------
TOTAL MORTGAGE BACKED SECURITIES
(Cost $4,747,134) 4,753,997
-----------
ASSET BACKED SECURITIES -- 22.9%
First Boston Corp. Mortgage Securities Trust
9.00% 01/20/18 709 737,296
Merrill Lynch Trust
9.85% 11/01/18 885 999,995
Prime Credit Card
Master Trust
6.75% 11/15/05 1,100 1,113,374
Standard Credit Card
Master Trust
8.25% 01/08/07 150 164,396
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $2,929,752) 3,015,061
-----------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 9.5%
Capstead Securities Corp.
8.40% 04/25/19 464 466,282
Ryland Acceptance Corp.
9.40% 08/01/18 750 785,391
-----------
(Cost $1,259,278) 1,251,673
-----------
CORPORATE BONDS -- 2.6%
BANKS
First Union Corp.
6.875% 09/15/05 350 347,551
-----------
(Cost $349,085)
TAXABLE MUNICIPAL BONDS -- 4.1%
Los Angeles County
Taxable Pension
Obligation
8.62% 06/30/06 500 546,875
-----------
(Cost $522,082)
U.S. TREASURY OBLIGATIONS -- 48.2%
U.S. TREASURY BONDS -- 1.1%
7.875% 02/15/21 75 86,077
7.625% 02/15/25 50 56,606
-----------
142,683
-----------
U.S. TREASURY NOTES -- 47.1%
5.625% 06/30/97 800 797,360
6.00% 08/31/97 1,000**** 1,003,330
6.125% 05/15/98 50 50,289
5.875% 08/15/98 960*** 959,789
7.875% 11/15/04 1,876*** 2,088,044
7.50% 02/15/05 1,010 1,100,647
6.50% 05/15/05 200 204,570
-----------
6,204,029
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $6,167,500) 6,346,712
-----------
</TABLE>
See accompanying notes to financial statements.
33
<PAGE> 82
GOVERNMENT INCOME PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- -----------
<S> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $17,233,813*) 133.0% $17,520,797
REVERSE REPURCHASE AGREEMENTS -- (26.3%)
Aubrey Lanston
5.75% 10/05/95 $ 1,710 (1,710,000)
(Agreement dated 09/20/95 to
be repurchased at
$1,714,097. Collateralized
by $1,500,000 U.S.
Treasury Note, 7.875% due
11/15/04. The value of the
collateral is $1,710,000.)
Lehman Brothers
5.5% 10/03/95 754 (753,750)
(Agreement dated 9/22/95 to
be repurchased at
$755,017. Collateralized
by $750,000 U.S. Treasury
Note, 5.875% due 08/15/98.
The value of the
collateral is $753,750.)
Smith Barney
5.7% 10/04/95 1,006 (1,006,250)
(Agreement dated 09/20/95 to
be repurchased at
$1,008,481. Collateralized
by $1,000,000 U.S.
Treasury Note, 6.0% due
08/31/97. The value of the
collateral is $1,006,250.)
TOTAL REVERSE REPURCHASE
AGREEMENTS
(Cost $3,470,000) (3,470,000)
LIABILITIES IN EXCESS OF OTHER
ASSETS (6.7%) (873,063)
------- -----------
NET ASSETS (Applicable to
279,974 Series A Investor
shares and 954,001 Series B
Investor shares outstanding) 100.0% $13,177,734
====== ===========
<CAPTION>
VALUE
-----------
<S> <C>
NET ASSET VALUE AND REDEMPTION PRICE PER
SERIES A INVESTOR SHARE
($2,989,844 / 279,974) $10.68
======
MAXIMUM OFFERING PRICE PER SERIES A
INVESTOR SHARE
($10.68 / .955) $11.18
======
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE (SUBJECT TO A MAXIMUM
CONTINGENT DEFERRED SALES CHARGE OF
5.0%) PER SERIES B INVESTOR SHARE
($10,187,890 / 954,001) $10.68
======
</TABLE>
- -------------
* Also cost for Federal Income Tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is
as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $302,449
Gross unrealized depreciation (15,465)
--------
$286,984
========
</TABLE>
** Rates shown are the rates as of September 30, 1995, and maturities shown
are the longer of the next interest readjustment date or the maturity date.
*** Partial principal in the amount of $2,250,000 has been pledged as
collateral for reverse repurchase agreements.
**** Entire principal amount has been pledged as collateral for reverse
repurchase agreements.
<TABLE>
<S> <C>
------------------------------------------
INVESTMENT ABBREVIATIONS
ARM Adjustable Rate Mortgage
CMT Constant Maturity Treasury
TBA To Be Announced Purchase
------------------------------------------
</TABLE>
See accompanying notes to financial statements.
34
<PAGE> 83
THE PNC(R) FUND
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
OHIO
MANAGED TAX-FREE INTERMEDIATE TAX-FREE
INCOME INCOME GOVERNMENT INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
Investment Income:
Interest................................... $35,836,822 $ 569,240 $ 12,066,990 $ 486,113
----------- ---------- ------------ ---------
Expenses:
Investment advisory fee.................... 2,557,617 49,671 948,836 42,044
Administration fee......................... 1,018,762 19,868 379,534 16,817
Custodian fee.............................. 98,883 12,585 46,733 12,947
Transfer agent fee......................... 105,887 14,679 33,776 10,216
Service fees............................... 245,386 8,543 146,738 13,429
Distribution fees.......................... 50,278 30,269 22,909 8,153
Legal and audit............................ 60,230 1,089 24,361 3,455
Printing................................... 33,556 650 11,725 66
Registration fees and expenses............. 26,237 20,399 31,153 2,500
Organization............................... 131 6,222 2,984 2,471
Trustees' fees and officer's salary........ 8,125 156 3,079 135
Other...................................... 24,203 5,305 13,225 10,183
----------- ---------- ------------ ---------
4,229,295 169,436 1,665,053 122,416
Less fees voluntarily waived
and expenses reimbursed................. (1,034,595) (77,000) (704,419) (90,187)
----------- ---------- ------------ ---------
Total operating expenses................ 3,194,700 92,436 960,634 32,229
----------- ---------- ------------ ---------
Interest Expense............................. -- -- 2,445 --
----------- ---------- ------------ ---------
Total expenses.......................... 3,194,700 92,436 963,079 32,229
----------- ---------- ------------ ---------
Net investment income........................ 32,642,122 476,804 11,103,911 453,884
----------- ---------- ------------ ---------
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss) from
investment transactions................. 7,981,918 (80,406) (3,472,794) (243,297)
Change in unrealized appreciation
of investments.......................... 23,126,890 624,539 10,641,126 620,747
----------- ---------- ------------ ---------
Net gain on investments.................... 31,108,808 544,133 7,168,332 377,450
----------- ---------- ------------ ---------
Net increase in net assets resulting
from operations......................... $63,750,930 $1,020,937 $ 18,272,243 $ 831,334
=========== ========== ============ =========
</TABLE>
See accompanying notes to financial statements.
35
<PAGE> 84
THE PNC(R) FUND
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
PENNSYLVANIA
TAX-FREE SHORT-TERM INTERMEDIATE GOVERNMENT
INCOME BOND TERM BOND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO(1)
------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Investment Income:
Interest.................................. $ 3,493,044 $1,071,446 $ 9,125,256 $ 579,629
------------ ---------- ------------ ----------
Expenses:
Investment advisory fee................... 298,989 89,283 678,209 37,256
Administration fee........................ 119,596 35,713 271,283 14,903
Custodian fee............................. 15,842 16,621 39,889 20,511
Transfer agent fee........................ 35,808 7,880 30,988 16,811
Service fees.............................. 39,127 15,853 98,742 11,145
Distribution fees......................... 213,039 770 1,122 46,290
Legal and audit........................... 7,375 2,289 19,228 800
Printing.................................. 4,489 1,598 11,292 446
Registration fees and expenses............ 5,669 22,483 26,435 17,816
Organization.............................. 2,697 4,380 4,570 8,126
Trustees' fees and officer's salary....... 1,094 402 2,102 107
Other..................................... 12,679 5,673 16,539 220
------------ ---------- ------------ ----------
756,404 202,945 1,200,399 174,431
Less fees voluntarily waived
and expenses reimbursed................ (189,497) (112,584) (467,231) (107,896)
------------ ---------- ------------ ----------
Total operating expenses............. 566,907 90,361 733,168 66,535
------------ ---------- ------------ ----------
Interest expense............................ -- 14,210 109,908 41,198
------------ ---------- ------------ ----------
Total expenses....................... 566,907 104,571 843,076 107,733
------------ ---------- ------------ ----------
Net investment income....................... 2,926,137 966,875 8,282,180 471,896
------------ ---------- ------------ ----------
Realized and unrealized gain (loss)
on investments:
Net realized gain (loss) from
investment transactions................ (1,333,043) (466,914) 1,538,085 337,923
Change in unrealized appreciation
of investments......................... 4,255,669 586,409 4,588,168 286,984
------------ ---------- ------------ ----------
Net gain on investments................... 2,922,626 119,495 6,126,253 624,907
------------ ---------- ------------ ----------
Net increase in net assets resulting
from operations........................ $ 5,848,763 $1,086,370 $ 14,408,433 $1,096,803
============ ========== ============ ==========
</TABLE>
- -------------
(1) For the period October 3, 1994 (commencement of operations) through
September 30, 1995.
See accompanying notes to financial statements.
36
<PAGE> 85
THE PNC(R) FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX-FREE INCOME
MANAGED INCOME PORTFOLIO PORTFOLIO
--------------------------- ------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/95 9/30/94 9/30/95 9/30/94
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations
Net investment income.......................................... $ 32,642,122 $ 24,284,351 $ 476,804 $ 437,596
Net gain (loss) on investments................................. 31,108,808 (44,710,814) 544,133 (902,194)
------------ ------------ ----------- ----------
Net increase (decrease) in net assets resulting from
operations................................................... 63,750,930 (20,426,463) 1,020,937 (464,598)
------------ ------------ ----------- ----------
Distributions to shareholders from
Net investment income
Institutional Shares........................................... (26,544,370) (21,168,266) (7,110) (27,983)
Service Shares................................................. (5,430,486) (2,559,717) (152,612) (66,611)
Series A Investor Shares....................................... (667,266) (556,368) (315,032) (341,872)
------------ ------------ ----------- ----------
Total distributions from net investment income............. (32,642,122) (24,284,351) (474,754) (436,466)
------------ ------------ ----------- ----------
In excess of net investment income
Institutional Shares........................................... (643,455) (955,052) -- --
Service Shares................................................. (131,639) (115,487) -- --
Series A Investor Shares....................................... (16,175) (25,102) -- --
------------ ------------ ----------- ----------
Total distributions in excess of net investment income..... (791,269) (1,095,641) -- --
------------ ------------ ----------- ----------
Net realized gains
Institutional Shares........................................... -- (4,274,701) (191) (21,944)
Service Shares................................................. -- (352,557) (5,402) (31,866)
Series A Investor Shares....................................... -- (108,326) (13,686) (235,722)
------------ ------------ ----------- ----------
Total distributions from net realized gains................ -- (4,735,584) (19,279) (289,532)
------------ ------------ ----------- ----------
In excess of net realized gains
Institutional Shares........................................... -- (439,375) -- --
Service Shares................................................. -- (36,239) -- --
Series A Investor Shares....................................... -- (11,134) -- --
------------ ------------ ----------- ----------
Total distributions in excess of net realized gains........ -- (486,748) -- --
------------ ------------ ----------- ----------
Total distributions to shareholders........................ (33,433,391) (30,602,324) (494,033) (725,998)
------------ ------------ ----------- ----------
Capital share transactions......................................... 68,016,777 160,300,119 1,834,910 1,264,721
------------ ------------ ----------- ----------
Total increase in net assets............................... 98,334,316 109,271,332 2,361,814 74,125
Net assets:
Beginning of year.............................................. 473,636,355 364,365,023 9,213,354 9,139,229
------------ ------------ ----------- ----------
End of year.................................................... $571,970,671 $473,636,355 $11,575,168 $9,213,354
============ ============ =========== ==========
</TABLE>
See accompanying notes to financial statements.
37
<PAGE> 86
THE PNC(R) FUND
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT OHIO TAX-FREE PENNSYLVANIA TAX-FREE
PORTFOLIO INCOME PORTFOLIO INCOME PORTFOLIO
--------------------------- ----------------------- --------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
9/30/95 9/30/94 9/30/95 9/30/94 9/30/95 9/30/94
------------ ------------ ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations
Net investment income................ $ 11,103,911 $ 10,008,303 $ 453,884 $ 367,913 $ 2,926,137 $ 2,792,738
Net gain (loss) on investments....... 7,168,332 (16,040,314) 377,450 (686,251) 2,922,626 (4,792,774)
------------ ------------ ---------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.......... 18,272,243 (6,032,011) 831,334 (318,338) 5,848,763 (2,000,036)
------------ ------------ ---------- ---------- ----------- -----------
Distributions to shareholders from
Net investment income
Institutional Shares................. (7,538,593) (7,450,156) (7,866) (88,527) (75,362) (15,967)
Service Shares....................... (3,019,296) (2,071,221) (259,043) (103,043) (622,721) (490,091)
Series A Investor Shares............. (515,648) (427,436) (184,186) (176,343) (2,145,636) (2,289,938)
Series B Investor Shares............. -- -- (2,789) -- (82,418) --
------------ ------------ ---------- ---------- ----------- -----------
Total distributions from
net investment income.......... (11,073,537) (9,948,813) (453,884) (367,913) (2,926,137) (2,795,996)
------------ ------------ ---------- ---------- ----------- -----------
Net realized gains
Institutional Shares................. -- (1,220,708) -- (4,339) -- (280)
Service Shares....................... -- (251,878) -- (1,752) -- (18,964)
Series A Investor Shares............. -- (68,191) -- (5,046) -- (108,860)
Series B Investor Shares............. -- -- -- -- -- --
------------ ------------ ---------- ---------- ----------- -----------
Total distributions from
net realized gains............. -- (1,540,777) -- (11,137) -- (128,104)
------------ ------------ ---------- ---------- ----------- -----------
Total distributions to
shareholders................... (11,073,537) (11,489,590) (453,884) (379,050) (2,926,137) (2,924,100)
------------ ------------ ---------- ---------- ----------- -----------
Capital share transactions............... (11,093,899) 56,048,683 1,341 4,108,295 1,048,267 23,558,899
------------ ------------ ---------- ---------- ----------- -----------
Total increase (decrease) in
net assets..................... (3,895,193) 38,527,082 378,791 3,410,907 3,970,893 18,634,763
Net assets:
Beginning of year.................... 198,293,947 159,766,865 8,380,224 4,969,317 58,719,091 40,084,328
------------ ------------ ---------- ---------- ----------- -----------
End of year.......................... $194,398,754 $198,293,947 $8,759,015 $8,380,224 $62,689,984 $58,719,091
============ ============ ========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
38
<PAGE> 87
THE PNC(R) FUND
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
INTERMEDIATE-TERM GOVERNMENT
SHORT-TERM BOND BOND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------- --------------------------- ------------
FOR THE
FOR THE FOR THE FOR THE FOR THE PERIOD
YEAR YEAR YEAR YEAR 10/03/94(1)
ENDED ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/95 9/30/94 9/30/95
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations
Net investment income......................... $ 966,875 $ 1,481,277 $ 8,282,180 $ 3,655,792 $ 471,896
Net gain (loss) on investments................ 119,495 (1,622,114) 6,126,253 (5,600,277) 624,907
----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations................... 1,086,370 (140,837) 14,408,433 (1,944,485) 1,096,803
----------- ----------- ------------ ------------ -----------
Distributions to shareholders from
Net investment income
Institutional Shares.......................... (649,680) (1,256,883) (6,107,918) (2,313,063) --
Service Shares................................ (300,937) (219,277) (2,086,482) (1,431,162) --
Series A Investor Shares...................... (16,258) (5,117) (26,612) (531) (116,675)
Series B Investor Shares...................... -- -- -- -- (355,221)
----------- ----------- ------------ ------------ -----------
Total distribution from net
investment income....................... (966,875) (1,481,277) (8,221,012) (3,744,756) (471,896)
----------- ----------- ------------ ------------ -----------
Net realized gains
Institutional Shares.......................... -- -- -- (166,177) --
Service Shares................................ -- -- -- (34,163) --
Series A Investor Shares...................... -- -- -- -- --
Series B Investor Shares...................... -- -- -- -- --
----------- ----------- ------------ ------------ -----------
Total distributions from net realized
gains................................... -- -- -- (200,340) --
----------- ----------- ------------ ------------ -----------
Total distributions to shareholders....... (966,875) (1,481,277) (8,221,012) (3,945,096) (471,896)
----------- ----------- ------------ ------------ -----------
Capital share transactions........................ (8,783,739) 19,189,531 48,409,985 56,832,649 12,552,827
----------- ----------- ------------ ------------ -----------
Total increase (decrease) in net assets... (8,664,244) 17,567,417 54,597,406 50,943,068 13,177,734
Net assets:
Beginning of period........................... 24,126,380 6,558,963 107,747,028 56,803,960 --
----------- ----------- ------------ ------------ -----------
End of period................................. $15,462,136 $24,126,380 $162,344,434 $107,747,028 $13,177,734
=========== =========== ============ ============ ===========
</TABLE>
- -------------
(1) Commencement of operations.
See accompanying notes to financial statements.
39
<PAGE> 88
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MANAGED INCOME PORTFOLIO
----------------------------------------------------------------------
INSTITUTIONAL CLASS
----------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
9/30/95 9/30/94 9/30/93 9/30/92 9/30/91
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year..................... $ 9.79 $ 11.17 $ 10.74 $ 10.26 $ 9.70
-------- -------- -------- -------- --------
Income from investment operations
Net investment income................................. 0.65 0.64 0.67 0.69 0.74
Net gain (loss) on investments
(both realized and unrealized)...................... 0.60 (1.21) 0.56 0.48 0.63
-------- -------- -------- -------- --------
Total from investment operations.................. 1.25 (0.57) 1.23 1.17 1.37
-------- -------- -------- -------- --------
Less distributions
Distributions from net investment income.............. (0.65) (0.64) (0.67) (0.69) (0.73)
Distribution in excess of net investment income....... (0.01) (0.02) -- -- (0.08)
Distributions from net realized capital gains......... -- (0.14) (0.13) -- --
Distributions in excess of net realized gains......... -- (0.01) -- -- --
-------- -------- -------- -------- --------
Total distributions............................... (0.66) (0.81) (0.80) (0.69) (0.81)
-------- -------- -------- -------- --------
Net asset value at end of year........................... $ 10.38 $ 9.79 $ 11.17 $ 10.74 $ 10.26
======== ======== ======== ======== ========
Total return............................................. 13.27% (5.27)% 12.13% 11.80% 14.74%
Ratios/Supplemental data
Net assets at end of year
(in thousands)...................................... $443,148 $395,060 $341,791 $314,075 $ 52,802
Ratios of total expenses to average net assets
After advisory/administration fee waivers........... 0.57% 0.55% 0.74% 0.80% 0.80%
Before advisory/administration fee waivers.......... 0.77% 0.77% 0.78% 0.80% 0.84%
Ratios of net investment income to average net assets
After advisory/administration fee waivers........... 6.44% 6.11% 6.25% 6.28% 7.36%
Before advisory/administration fee waivers.......... 6.24% 5.89% 6.21% 6.28% 7.32%
Portfolio turnover rate.................................. 203% 61% 72% 56% 38%
</TABLE>
See accompanying notes to financial statements.
40
<PAGE> 89
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MANAGED INCOME PORTFOLIO
--------------------------------------------------------------------------------------
SERVICE CLASS SERIES A INVESTOR CLASS
---------------------------------- -----------------------------------------------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR 7/29/93(1) YEAR YEAR YEAR 2/05/92(1)
ENDED ENDED THROUGH ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94 9/30/93 9/30/92
-------- -------- ---------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period... $ 9.79 $ 11.17 $ 10.96 $ 9.79 $ 11.18 $10.74 $10.40
-------- ------- ------- ------- -------- ------ ------
Income from investment operations
Net investment income................. 0.63 0.59 0.11 0.60 0.57 0.66 0.46
Net gain (loss) on investments
(both realized and unrealized)...... 0.60 (1.18) 0.21 0.60 (1.19) 0.57 0.34
-------- ------- ------- ------- ------- ------ ------
Total from investment
operations....................... 1.23 (0.59) 0.32 1.20 (0.62) 1.23 0.80
-------- ------- ------- ------- ------- ------ ------
Less distributions
Distributions from net investment
income.............................. (0.63) (0.62) (0.11) (0.60) (0.60) (0.66) (0.46)
Distribution in excess of net
investment income................... (0.01) (0.02) -- (0.01) (0.02) -- --
Distributions from net realized
capital gains....................... -- (0.14) -- -- (0.14) (0.13) --
Distributions in excess of net
realized gains...................... -- (0.01) -- -- (0.01) -- --
-------- ------- ------- ------- -------- ------ ------
Total distributions............... (0.64) (0.79) (0.11) (0.61) (0.77) (0.79) (0.46)
-------- ------- ------- ------- -------- ------ ------
Net asset value at end of period......... $ 10.38 $ 9.79 $ 11.17 $ 10.38 $ 9.79 $11.18 $10.74
======== ======= ======= ======= ======= ====== ======
Total return............................. 12.97% (5.49)% 2.93% 12.74%(3) (5.76)%(3) 12.13%(3) 7.86%(3)
Ratios/Supplemental data
Net assets at end of period (in
thousands).......................... $116,846 $67,655 $15,322 $11,977 $10,921 $7,252 $1,417
Ratios of total expenses to average
net assets
After advisory/administration fee
waivers........................... 0.85% 0.80% 0.80%(2) 1.05% 1.00% 0.84% 0.80%(2)
Before advisory/administration fee
waivers........................... 1.05% 1.02% 0.84%(2) 1.25% 1.22% 0.88% 0.80%(2)
Ratios of net investment income to
average net assets
After advisory/administration fee
waivers........................... 6.14% 5.95% 5.83%(2) 5.96% 5.66% 6.09% 6.28%(2)
Before advisory/administration fee
waivers........................... 5.94% 5.73% 5.79%(2) 5.76% 5.44% 6.05% 6.28%(2)
Portfolio turnover rate.................. 203% 61% 72% 203% 61% 72% 56%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
See accompanying notes to financial statements.
41
<PAGE> 90
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
TAX-FREE INCOME PORTFOLIO
----------------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
-------------------------------- --------------------------------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR 1/21/93(1) YEAR YEAR 7/29/93(1)
ENDED ENDED THROUGH ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94 9/30/93
------- ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period................... $10.04 $11.31 $10.61 $10.04 $11.31 $10.97
------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income................................. 0.53 0.53 0.42 0.50 0.51 0.09
Net gain (loss) on investments
(both realized and unrealized)...................... 0.59 (0.93) 0.70 0.59 (0.93) 0.34
------ ------ ------ ------ ------ ------
Total from investment operations.................. 1.12 (0.40) 1.12 1.09 (0.42) 0.43
------ ------ ------ ------ ------ ------
Less distributions
Distributions from net investment income.............. (0.53) (0.53) (0.42) (0.50) (0.51) (0.09)
Distributions from net realized capital gains......... (0.02) (0.34) -- (0.02) (0.34) --
------ ------ ------ ------ ------ ------
Total distributions............................... (0.55) (0.87) (0.42) (0.52) (0.85) (0.09)
------ ------ ------ ------ ------ ------
Net asset value at end of period......................... $10.61 $10.04 $11.31 $10.61 $10.04 $11.31
====== ====== ====== ====== ====== ======
Total return............................................. 11.54% (3.77)% 10.72% 11.24% (4.02)% 3.92%
Ratios/Supplemental data
Net assets at end of period (in thousands)............ $ 271 $ 132 $ 675 $4,713 $2,109 $ 634
Ratios of total expenses to average net assets
After advisory/administration fee waivers........... 0.52% 0.50% 0.50%(2) 0.80% 0.75% 0.71%(2)
Before advisory/administration fee waivers.......... 1.30% 1.73% 1.28%(2) 1.57% 1.98% 1.49%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers........... 5.19% 4.97% 5.14%(2) 4.92% 4.75% 4.99%(2)
Before advisory/administration fee waivers.......... 4.41% 3.74% 4.36%(2) 4.15% 3.52% 4.21%(2)
Portfolio turnover rate.................................. 92% 40% 71% 92% 40% 71%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
42
<PAGE> 91
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
TAX-FREE INCOME PORTFOLIO
----------------------------------------------------------------
SERIES A INVESTOR CLASS
----------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
9/30/95 9/30/94 9/30/93 9/30/92 9/30/91
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............................ $10.04 $11.31 $10.60 $10.33 $ 9.91
------ ------ ------ ------ ------
Income from investment operations
Net investment income........................................ 0.48 0.48 0.55 0.58 0.64
Net gain (loss) on investments (both realized and
unrealized)................................................ 0.59 (0.93) 0.83 0.49 0.46
------ ------ ------ ------ ------
Total from investment operations......................... 1.07 (0.45) 1.38 1.07 1.10
------ ------ ------ ------ ------
Less distributions
Distributions from net investment income..................... (0.48) (0.48) (0.55) (0.59) (0.66)
Distributions from net realized capital gains................ (0.02) (0.34) (0.12) (0.21) (0.02)
------ ------ ------ ------ ------
Total distributions...................................... (0.50) (0.82) (0.67) (0.80) (0.68)
------ ------ ------ ------ ------
Net asset value at end of year.................................. $10.61 $10.04 $11.31 $10.60 $10.33
====== ====== ====== ====== ======
Total return.................................................... 10.99%(3) (4.19)%(3) 13.48%(3) 10.67%(3) 11.40%(3)
Ratios/Supplemental data
Net assets at end of year (in thousands)..................... $6,591 $6,972 $7,831 $7,349 $3,510
Ratios of total expenses to average net assets
After advisory/administration fee waivers.................. 1.00% 0.95% 0.57% 0.53% 1.00%
Before advisory/administration fee waivers................. 1.78% 2.18% 1.36% 1.67% 1.89%
Ratios of net investment income to average net assets
After advisory/administration fee waivers.................. 4.74% 4.53% 5.06% 5.56% 6.23%
Before advisory/administration fee waivers................. 3.96% 3.30% 4.27% 4.42% 5.34%
Portfolio turnover rate......................................... 92% 40% 71% 38% 95%
</TABLE>
- -------------
(3) Sales load not reflected in total return.
See accompanying notes to financial statements.
43
<PAGE> 92
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT PORTFOLIO
--------------------------------------------------------
INSTITUTIONAL CLASS
--------------------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR 4/20/92(1)
ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/92
-------- -------- -------- -----------
<S> <C> <C> <C> <C>
Net asset value at beginning of period................................. $ 9.64 $ 10.60 $ 10.46 $ 10.00
-------- -------- -------- --------
Income from investment operations
Net investment income............................................... 0.58 0.55 0.54 0.24
Net gain (loss) on investments (both realized and unrealized)....... 0.38 (0.86) 0.16 0.46
-------- -------- -------- --------
Total from investment operations................................ 0.96 (0.31) 0.70 0.70
-------- -------- -------- --------
Less distributions
Distributions from net investment income............................ (0.58) (0.55) (0.54) (0.24)
Distributions from net realized capital gains....................... -- (0.10) (0.02) --
-------- -------- -------- --------
Total distributions............................................. (0.58) (0.65) (0.56) (0.24)
------- -------- -------- --------
Net asset value at end of period....................................... $ 10.02 $ 9.64 $ 10.60 $ 10.46
======== ======== ======== ========
Total return........................................................... 10.28% (3.08)% 6.88% 7.14%
Ratios/Supplemental data
Net assets at end of period (in thousands).......................... $134,835 $128,974 $137,065 $105,620
Ratios of operating expenses to average net assets
After advisory/administration fee waivers......................... 0.42% 0.40% 0.73% 0.80%(2)
Before advisory/administration fee waivers........................ 0.79% 0.80% 0.81% 0.80%(2)
Ratios of total expenses to average net assets
After advisory/administration fee waivers......................... 0.42% 0.40% 0.73% 0.80%(2)
Before advisory/administration fee waivers........................ 0.79% 0.80% 0.81% 0.80%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers......................... 5.94% 5.48% 5.23% 5.28%(2)
Before advisory/administration fee waivers........................ 5.57% 5.08% 5.15% 5.28%(2)
Portfolio turnover rate................................................ 247% 9% 80% 38%
Amount of reverse repurchase agreements outstanding at end of period
(in thousands)........................................................ $ -0- -- -- --
Average amount of reverse repurchase agreements outstanding during the
period (in thousands)................................................. $ 41 -- -- --
Average number of total shares outstanding during the period (in
thousands)............................................................ 19,383 -- -- --
Average amount of reverse repurchase agreements per share during the
period................................................................ $ 0.00 -- -- --
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
44
<PAGE> 93
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT PORTFOLIO
--------------------------------------------------------------------------------
SERVICE CLASS SERIES A INVESTOR CLASS
---------------------------- ----------------------------------------------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR 7/29/93(1) YEAR YEAR YEAR 5/11/92(1)
ENDED ENDED THROUGH ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94 9/30/93 9/30/92
------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period.......... $ 9.64 $ 10.60 $ 10.45 $ 9.64 $10.60 $10.46 $10.05
------- ------- ------- ------- ------- ------ ------
Income from investment operations
Net investment income........................ 0.56 0.53 0.09 0.55 0.53 0.54 0.24
Net gain (loss) on investments
(both realized and unrealized)............. 0.37 (0.86) 0.15 0.39 (0.87) 0.16 0.41
------- ------- ------- ------- ------ ------ ------
Total from investment operations......... 0.93 (0.33) 0.24 0.94 (0.34) 0.70 0.65
------- ------- ------- ------- ------ ------ ------
Less distributions
Distributions from net investment income..... (0.55) (0.53) (0.09) (0.55) (0.52) (0.54) (0.24)
Distributions from net realized capital
gains....................................... -- (0.10) -- -- (0.10) (0.02) --
------- ------- ------- ------- ------ ------ ------
Total distributions...................... (0.55) (0.63) (0.09) (0.55) (0.62) (0.56) (0.24)
------- ------- ------- ------- ------ ------ ------
Net asset value at end of period................ $ 10.02 $ 9.64 $ 10.60 $ 10.03 $ 9.64 $10.60 $10.46
======= ======= ======= ======= ====== ====== ======
Total return.................................... 9.99% (3.31)% 2.30% 9.98%(3) (3.36)%(3) 6.84%(3) 6.64%(3)
Ratios/Supplemental data
Net assets at end of period (in thousands)... $49,762 $60,812 $15,035 $ 9,802 $8,508 $7,666 $1,484
Ratios of operating expenses to average
net assets
After advisory/administration fee
waivers................................... 0.69% 0.65% 0.67%(2) 0.70% 0.65% 0.76% 0.80%(2)
Before advisory/administration fee
waivers................................... 1.06% 1.05% 0.75%(2) 1.07% 1.05% 0.84% 0.80%(2)
Ratios of total expenses to average
net assets
After advisory/administration fee
waivers................................... 0.69% 0.65% 0.67%(2) 0.70% 0.65% 0.76% 0.80%(2)
Before advisory/administration fee
waivers................................... 1.06% 1.05% 0.75%(2) 1.07% 1.05% 0.84% 0.80%(2)
Ratios of net investment income to average
net assets
After advisory/administration fee
waivers................................... 5.67% 5.30% 5.14%(2) 5.67% 5.24% 5.19% 5.28%(2)
Before advisory/administration fee waivers 5.30% 4.90% 5.06%(2) 5.30% 4.84% 5.11% 5.28%(2)
Portfolio turnover rate......................... 247% 9% 80% 247% 9% 80% 38%
Amount of reverse repurchase agreements
outstanding at end of period (in thousands).... $ -0- -- -- $ -0- -- -- --
Average amount or reverse repurchase agreements
outstanding during the period (in thousands)... $ 41 -- -- $ 41 -- -- --
Average number of total shares outstanding
during the period (in thousands)............... 19,383 -- -- 19,383 -- -- --
Average amount or reverse repurchase agreements
per share during the period.................... $ 0.00 -- -- $ 0.00 -- -- --
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
See accompanying notes to financial statements.
45
<PAGE> 94
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
OHIO TAX-FREE INCOME PORTFOLIO
------------------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
----------------------------------- ----------------------------------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR 12/1/92(1) YEAR YEAR 7/29/93(1)
ENDED ENDED THROUGH ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94 9/30/93
-------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period................. $ 9.60 $10.53 $10.00 $ 9.60 $10.53 $10.24
------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income............................... 0.55 0.53 0.36 0.52 0.49 0.09
Net gain (loss) on investments
(both realized and unrealized).................... 0.45 (0.91) 0.53 0.45 (0.91) 0.29
------ ------ ------ ------ ------ ------
Total from investment operations................ 1.00 (0.38) 0.89 0.97 (0.42) 0.38
------ ------ ------ ------ ------ ------
Less distributions
Distributions from net investment income............ (0.55) (0.53) (0.36) (0.52) (0.49) (0.09)
Distributions from net realized capital gains....... -- (0.02) -- -- (0.02) --
------ ------ ------ ------ ------ ------
Total distributions............................. (0.55) (0.55) (0.36) (0.52) (0.51) (0.09)
------ ------ ------ ------ ------ ------
Net asset value at end of period....................... $10.05 $ 9.60 $10.53 $10.05 $ 9.60 $10.53
====== ====== ====== ====== ====== ======
Total return........................................... 10.75% (3.75)% 9.10% 10.45% (4.00)% 3.68%
Ratios/Supplemental data
Net assets at end of period (in thousands).......... $ 200 $ 127 $1,676 $5,150 $4,428 $ 907
Ratios of total expenses to average net assets
After advisory/administration fee waivers......... 0.12% 0.10% 0.08%(2) 0.39% 0.35% 0.32%(2)
Before advisory/administration fee waivers........ 1.19% 1.49% 2.59%(2) 1.46% 1.74% 2.83%(2)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers......... 5.61% 5.16% 4.99%(2) 5.39% 5.06% 4.71%(2)
Before advisory/administration fee waivers........ 4.54% 3.77% 2.48%(2) 4.31% 3.67% 2.20%(2)
Portfolio turnover rate................................ 63% 61% 36% 63% 61% 36%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
46
<PAGE> 95
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
OHIO TAX-FREE INCOME PORTFOLIO
----------------------------------------------
SERIES B
SERIES A INVESTOR
INVESTOR CLASS CLASS
------------------------------- -------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR 12/1/92(1) 10/13/94(1)
ENDED ENDED THROUGH THROUGH
9/30/95 9/30/94 9/30/93 9/30/95
------- ------- -------- -------
<S> <C> <C> <C> <C>
Net asset value at beginning of period................................. $ 9.60 $10.53 $10.00 $ 9.58
------ ------ ------ -------
Income from investment operations
Net investment income............................................... 0.52 0.53 0.36 0.42
Net gain (loss) on investments (both realized and unrealized)....... 0.45 (0.91) 0.53 0.47
------ ------ ------ -------
Total from investment operations................................ 0.97 (0.38) 0.89 0.89
------ ------ ------ -------
Less distributions
Distributions from net investment income............................ (0.52) (0.53) (0.36) (0.42)
Distributions from net realized capital gains....................... -- (0.02) -- --
------ ------ ------ -------
Total distributions............................................. (0.52) (0.55) (0.36) (0.42)
------ ------ ------ -------
Net asset value at end of period....................................... $10.05 $ 9.60 $10.53 $ 10.05
====== ====== ====== =======
Total return........................................................... 10.46%(3) (3.75)%(3) 9.10%(3) 9.33%(4)
Ratios/Supplemental data
Net assets at end of period (in thousands).......................... $3,303 $3,825 $2,386 $ 106
Ratios of total expenses to average net assets
After advisory/administration fee waivers......................... 0.38% 0.10% 0.07%(2) 1.17%(2)
Before advisory/administration fee waivers........................ 1.45% 1.49% 2.58%(2) 2.25%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers......................... 5.42% 5.18% 4.90%(2) 4.48%(2)
Before advisory/administration fee waivers........................ 4.35% 3.79% 2.39%(2) 3.41%(2)
Portfolio turnover rate................................................ 63% 61% 36% 63%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
(4) Contingent deferred sales load not reflected in total return.
See accompanying notes to financial statements.
47
<PAGE> 96
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
------------------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
--------------------------------- ---------------------------------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR 12/1/92(1) YEAR YEAR 7/29/93(1)
ENDED ENDED THROUGH ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94 9/30/93
------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period................. $ 9.82 $10.70 $ 10.00 $ 9.82 $ 10.70 $ 10.43
------ ------ ------- ------- ------- -------
Income from investment operations
Net investment income............................... 0.52 0.53 0.39 0.50 0.51 0.09
Net gain (loss) on investments
(both realized and unrealized).................... 0.51 (0.85) 0.73 0.51 (0.85) 0.28
------ ------ ------- ------- ------- -------
Total from investment operations................ 1.03 (0.32) 1.12 1.01 (0.34) 0.37
------ ------ ------- ------- ------- -------
Less distributions
Distributions from net investment income............ (0.52) (0.53) (0.39) (0.50) (0.51) (0.09)
Distributions from net realized capital gains....... -- (0.03) (0.03) -- (0.03) (0.01)
------ ------ ------- ------- ------- -------
Total distributions............................. (0.52) (0.56) (0.42) (0.50) (0.54) (0.10)
------ ------ ------- ------- ------- -------
Net asset value at end of period....................... $10.33 $ 9.82 $ 10.70 $ 10.33 $ 9.82 $ 10.70
====== ====== ======= ======= ======= =======
Total return........................................... 10.81% (2.96)% 11.69% 10.51% (3.20)% 3.54%
Ratios/Supplemental data
Net assets at end of period (in thousands).......... $2,092 $ 639 $ 256 $13,815 $11,518 $ 3,894
Ratios of total expenses to average net assets
After advisory/administration fee waivers......... 0.52% 0.39% 0.09%(2) 0.79% 0.55% 0.34%(2)
Before advisory/administration fee waivers........ 0.84% 0.99% 0.97%(2) 1.11% 1.15% 1.22%(2)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers......... 5.23% 5.27% 5.19%(2) 5.04% 4.97% 4.90%(2)
Before advisory/administration fee waivers........ 4.91% 4.67% 4.31%(2) 4.72% 4.37% 4.02%(2)
Portfolio turnover rate................................ 66% 30% 40% 66% 30% 40%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
48
<PAGE> 97
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
-----------------------------------------------------
SERIES B
SERIES A INVESTOR
INVESTOR CLASS CLASS
------------------------------------ ---------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR 12/1/92(1) 10/03/94(1)
ENDED ENDED THROUGH THROUGH
9/30/95 9/30/94 9/30/93 9/30/95
------- ------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value at beginning of period................................... $ 9.82 $ 10.70 $ 10.00 $ 9.82
------- ------- ------- -------
Income from investment operations
Net investment income................................................. 0.48 0.52 0.42 0.42
Net gain (loss) on investments (both realized and unrealized)......... 0.51 (0.85) 0.73 0.51
------- ------- ------- -------
Total from investment operations.................................. 0.99 (0.33) 1.15 0.93
------- ------- ------- -------
Less distributions
Distributions from net investment income.............................. (0.48) (0.52) (0.42) (0.42)
Distributions from net realized capital gains......................... -- (0.03) (0.03) --
------- ------- ------- --------
Total distributions............................................... (0.48) (0.55) (0.45) (0.42)
------- ------- ------- --------
Net asset value at end of period......................................... $ 10.33 $ 9.82 $ 10.70 $ 10.33
======= ======= ======= =======
Total return............................................................. 10.30%(3) (3.06)%(3) 11.69%(3) 9.69%(4)
Ratios/Supplemental data
Net assets at end of period (in thousands)............................ $42,775 $46,563 $35,934 $ 4,008
Ratios of total expenses to average net assets
After advisory/administration fee waivers........................... 0.98% 0.41% 0.07%(2) 1.57%(2)
Before advisory/administration fee waivers.......................... 1.30% 1.01% 0.95%(2) 1.89%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers........................... 4.88% 5.06% 5.19%(2) 4.07%(2)
Before advisory/administration fee waivers.......................... 4.56% 4.46% 4.31%(2) 3.75%(2)
Portfolio turnover rate.................................................. 66% 30% 40% 66%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
(4) Contingent deferred sales load not reflected in total return.
See accompanying notes to financial statements.
49
<PAGE> 98
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SHORT-TERM BOND PORTFOLIO
----------------------------------------------------------------------------------------
SERIES A
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR CLASS
------------------------------ ------------------------------ --------------------
FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD
YEAR YEAR 9/1/93(1) YEAR YEAR 9/1/93(1) YEAR 11/17/93(1)
ENDED ENDED THROUGH ENDED ENDED THROUGH ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94 9/30/93 9/30/95 9/30/94
------- ------- --------- ------- ------- ---------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of
period................................ $ 9.58 $ 10.00 $10.00 $ 9.58 $10.00 $10.00 $ 9.58 $ 9.96
------- ------- ------ ------- ------ ------ ------- -------
Income from investment operations
Net investment income............... 0.53 0.42 0.02 0.50 0.39 0.02 0.50 0.34
Net gain (loss) on investments
(both realized and unrealized).... 0.13 (0.42) -- 0.13 (0.42) -- 0.13 (0.38)
------- ------- ------ ------- ------ ------ ------- -------
Total from investment
operations..................... 0.66 -- 0.02 0.63 (0.03) 0.02 0.63 (0.04)
------- ------- ------ ------- ------ ------ ------- -------
Less distributions
Distributions from net investment
income............................ (0.53) (0.42) (0.02) (0.50) (0.39) (0.02) (0.50) (0.34)
Distributions from net realized
capital gains..................... -- -- -- -- -- -- -- --
------- ------- ------ ------- ------ ------ ------- -------
Total distributions............. (0.53) (0.42) (0.02) (0.50) (0.39) (0.02) (0.50) (0.34)
------- ------- ------ ------- ------ ------ ------- -------
Net asset value at end of period....... $ 9.71 $ 9.58 $10.00 $ 9.71 $ 9.58 $10.00 $ 9.71 $ 9.58
======= ======= ====== ======= ====== ====== ======= =======
Total return........................... 7.10% (0.02)% 0.23% 6.81% (0.26)% 0.21% 6.80%(3) (0.43)%(3)
Ratios/Supplemental data
Net assets at end of period (in
thousands)........................ $ 8,572 $17,619 $3,748 $ 6,579 $6,230 $2,811 $ 311 $ 277
Ratios of operating expenses to
average net assets
After advisory/administration fee
waivers......................... 0.41% 0.40% 0.40%(2) 0.70% 0.65% 0.65%(2) 0.70% 0.65%(2)
Before advisory/administration fee
waivers......................... 1.04% 0.95% 1.42%(2) 1.33% 1.20% 1.67%(2) 1.34% 1.20%(2)
Ratios of total expenses to average
net assets
After advisory/administration fee
waivers......................... 0.50% 0.40% 0.40%(2) 0.79% 0.65% 0.65%(2) 0.79% 0.65%(2)
Before advisory/administration fee
waivers......................... 1.13% 0.95% 1.42%(2) 1.42% 1.20% 1.67%(2) 1.43% 1.20%(2)
Ratios of net investment income to
average net assets
After advisory/administration fee
waivers......................... 5.49% 4.27% 2.92%(2) 5.28% 4.07% 2.57%(2) 5.25% 4.19%(2)
Before advisory/administration fee
waivers......................... 4.86% 3.72% 1.90%(2) 4.65% 3.52% 1.55%(2) 4.62% 3.64%(2)
Portfolio turnover rate................ 192% 113% 0% 192% 113% 0% 192% 113%
Amount of reverse repurchase agreements
outstanding at end of period
(in thousands)........................ $ 0 -- -- $ 0 -- -- $ 0 --
Average amount of reverse repurchase
agreements outstanding during the
period (in thousands)................. $ 242 -- -- $ 242 -- -- $ 242 --
Average number of total shares
outstanding during the period (in
thousands)............................ 1,744 -- -- 1,744 -- -- 1,744 --
Average amount of reverse repurchase
agreements per share during the
period................................ $ 0.14 -- -- $ 0.14 -- -- $ 0.14 --
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
See accompanying notes to financial statements.
50
<PAGE> 99
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INTERMEDIATE-TERM BOND PORTFOLIO
-------------------------------------------------------------------------------------------
SERIES A
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR CLASS
-------------------------------- ------------------------------- -----------------------
FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD
YEAR YEAR 9/17/93(1) YEAR YEAR 9/23/93(1) YEAR 5/20/94(1)
ENDED ENDED THROUGH ENDED ENDED THROUGH ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94 9/30/93 9/30/95 9/30/94
-------- ------- -------- ------- ------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of
period............................... $ 9.05 $ 10.01 $ 10.00 $ 9.05 $ 10.01 $ 9.99 $ 9.05 $ 9.23
-------- ------- ------- ------- ------- ------ ------- ------
Income from investment operations
Net investment income.............. 0.56 0.54 0.02 0.54 0.54 -- 0.54 0.20
Net gain (loss) on investments
(both realized and unrealized)... 0.38 (0.88) (0.01) 0.38 (0.91) 0.02 0.38 (0.17)
-------- ------- ------- ------- ------- ------ ------- ------
Total from investment
operations.................... 0.94 (0.34) 0.01 0.92 (0.37) 0.02 0.92 0.03
-------- ------- ------- ------- ------- ------ ------- ------
Less distributions
Distributions from net investment
income........................... (0.56) (0.56) -- (0.54) (0.53) -- (0.54) (0.21)
Distributions from net
realized capital gains........... -- (0.06) -- -- (0.06) -- -- --
-------- ------- ------- ------- ------- ------ ------- ------
Total distributions............ (0.56) (0.62) -- (0.54) (0.59) -- (0.54) (0.21)
-------- ------- ------- ------- ------- ------ ------- ------
Net asset value at end of period...... $ 9.43 $ 9.05 $ 10.01 $ 9.43 $ 9.05 $10.01 $ 9.43 $ 9.05
======== ======= ======= ======= ======= ====== ======= ======
Total return.......................... 10.76% (3.52)% 0.10% 10.46% (3.80)% 0.20% 10.35%(3) 0.31%(3)
Ratios/Supplemental data
Net assets at end of period (in
thousands)....................... $124,979 $71,896 $56,713 $36,718 $35,764 $ 91 $ 647 $ 87
Ratios of operating expenses to
average net assets
After advisory/administration
fee waivers.................... 0.47% 0.45% 0.45%(2) 0.74% 0.70% 0.70%(2) 0.76% 0.85%(2)
Before advisory/administration
fee waivers.................... 0.81% 0.88% 0.84%(2) 1.09% 1.13% 1.09%(2) 1.11% 1.28%(2)
Ratios of total expenses to average
net assets
After advisory/administration fee
waivers........................ 0.55% 0.45% 0.45%(2) 0.82% 0.70% 0.70%(2) 0.84% 0.85%(2)
Before advisory/administration
fee waivers...................... 0.89% 0.88% 0.84%(2) 1.17% 1.13% 1.09%(2) 1.19% 1.28%(2)
Ratios of net investment income
to average net assets
After advisory/administration fee
waivers........................ 6.18% 5.54% 4.72%(2) 5.90% 5.33% 4.35%(2) 5.89% 5.35%(2)
Before advisory/administration
fee waivers.................... 5.84% 5.11% 4.33%(2) 5.55% 4.90% 3.96%(2) 5.55% 4.92%(2)
Portfolio turnover rate............... 262% 92% 4% 262% 92% 4% 262% 92%
Amount of reverse repurchase
agreements outstanding at end of
period (in thousands)................ $ 2,364 -- -- $ 2,364 -- -- $ 2,364 --
Average amount of reverse repurchase
agreements outstanding during the
period (in thousands)................ $ 1,834 -- -- $ 1,834 -- -- $ 1,834 --
Average number of total shares
outstanding during the period (in
thousands)........................... 14,938 -- -- 14,938 -- -- 14,938 --
Average amount of reverse repurchase
agreements per share during the
period............................... $ 0.12 -- -- $ 0.12 -- -- $ 0.12 --
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
See accompanying notes to financial statements.
51
<PAGE> 100
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
GOVERNMENT INCOME PORTFOLIO
------------------------------------
SERIES A SERIES B
INVESTOR CLASS INVESTOR CLASS
-------------- --------------
FOR THE FOR THE
PERIOD PERIOD
10/03/94(1) 10/03/94(1)
THROUGH THROUGH
9/30/95 9/30/95
-------------- --------------
<S> <C> <C>
Net asset value at beginning of period.................................................... $10.00 $ 10.00
------ -------
Income from investment operations
Net investment income.................................................................. 0.55 0.50
Net gain on investments (both realized and unrealized)................................. 0.68 0.68
------ -------
Total from investment operations................................................... 1.23 1.18
------ -------
Less distributions
Distributions from net investment income............................................... (0.55) (0.50)
Distributions from net realized capital gains.......................................... -- --
------ -------
Total distributions................................................................ (0.55) (0.50)
------ -------
Net asset value at end of period.......................................................... $10.68 $ 10.68
====== =======
Total return.............................................................................. 14.27%(3) 13.52%(4)
Ratios/Supplemental data
Net assets at end of period (in thousands)............................................. $2,990 $10,188
Ratios of operating expenses to average net assets
After advisory/administration fee waivers............................................ 0.37%(2) 1.05%(2)
Before advisory/administration fee waivers........................................... 1.81%(2) 2.50%(2)
Ratios of total expenses to average net assets
After advisory/administration fee waivers............................................ 0.92%(2) 1.60%
Before advisory/administration fee waivers........................................... 2.36%(2) 3.05%
Ratios of net investment income to average net assets
After advisory/administration fee waivers............................................ 6.89%(2) 6.17%(2)
Before advisory/administration fee waivers........................................... 5.44%(2) 4.72%(2)
Portfolio turnover rate................................................................... 258% 258%
Amount of reverse repurchase agreements outstanding at end of period (in thousands)....... $3,475 $ 3,475
Average amount of reverse repurchase agreements outstanding during the period (in
thousands)............................................................................... $ 705 $ 705
Average number of total shares outstanding during the period (in thousands)............... 843 843
Average amount of reverse repurchase agreements per share during the period............... $ 0.84 $ 0.84
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
(4) Contingent deferred sales load not reflected in total return.
See accompanying notes to financial statements.
52
<PAGE> 101
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
The PNC Fund (the "Fund") was organized on December 22, 1988 as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company. The Fund
consists of twenty-six separate Portfolios: Money Market Portfolio, Municipal
Money Market Portfolio, Government Money Market Portfolio, Ohio Municipal Money
Market Portfolio, Pennsylvania Municipal Money Market Portfolio, North Carolina
Municipal Money Market Portfolio, Virginia Municipal Money Market Portfolio, New
Jersey Municipal Money Market Portfolio, Value Equity Portfolio, Growth Equity
Portfolio, Small Cap Growth Equity Portfolio, Core Equity Portfolio, Index
Equity Portfolio, Small Cap Value Equity Portfolio, International Equity
Portfolio, International Emerging Markets Portfolio, Balanced Portfolio, Managed
Income Portfolio, Tax-Free Income Portfolio, Intermediate Government Portfolio,
Ohio Tax-Free Income Portfolio, Pennsylvania Tax-Free Income Portfolio,
Short-Term Bond Portfolio, Intermediate-Term Bond Portfolio, International Fixed
Income Portfolio and Government Income Portfolio. As of September 30, 1995, the
New Jersey Municipal Money Market Portfolio and International Fixed Income
Portfolio had not commenced operations. This report relates solely to Managed
Income Portfolio, Tax-Free Income Portfolio, Intermediate Government Portfolio,
Ohio Tax-Free Income Portfolio, Pennsylvania Tax-Free Income Portfolio,
Short-Term Bond Portfolio, Intermediate-Term Bond Portfolio and Government
Income Portfolio (the "Portfolios").
Each Portfolio has four classes of shares, one class being referred to as
the Service shares, one class being referred to as the Institutional shares, one
class being referred to as the Series A Investor shares and one class being
referred to as the Series B Investor shares. No Series B Investor shares had
been issued for Managed Income Portfolio, Tax-Free Income Portfolio,
Intermediate Government Portfolio, Short-Term Bond Portfolio, and
Intermediate-Term Bond Portfolio through September 30, 1995. Series A Investor,
Series B Investor, Institutional and Service shares in a Portfolio represent
equal pro rata interests in such Portfolio, except that they bear different
expenses which reflect the difference in the range of services provided to them.
Series A Investor shares bear the expense of the Series A Distribution and
Service Plan at an annual rate not to exceed .55% of the average daily net asset
value of each Portfolio's outstanding Series A Investor shares. Series B
Investor shares bear the expense of the Series B Distribution Plan at an annual
rate not to exceed .75% of the average daily net asset value of each Portfolio's
outstanding Series B Investor shares. Series B Investor shares also bear the
expense of the Series B Service Plan at an annual rate not to exceed .25% of the
average daily net asset value of each Portfolio's outstanding Series B Investor
shares. Under the Fund's Service Plan, Service shares bear the expense of fees
at an annual rate not to exceed .15% of the average daily net asset value of
each Portfolio's outstanding Service shares. Service shares also bear the
expense of a service fee at an annual rate not to exceed .15% of the average
daily net asset value of each Portfolio's outstanding Service shares for other
shareholder support activities provided by service organizations. Institutional
shares do not bear the expenses of the Series A Distribution and Service Plan,
the Service Plan, the Series B Distribution Plan or the Series B Service Plan.
The Service, Series A Investor and Series B Investor classes are currently
bearing such respective expenses at aggregate annual rates of .30% of the
average daily net asset value of Service shares, .25% to .45% of the average
daily net asset value of Series A Investor shares and .95% to 1.00% of the
average daily net asset value of Series B Investor shares. In addition,
Institutional and Service shares bear a Transfer Agent fee at an annual rate not
to exceed .03% and Series A Investor and Series B Investor shares bear a
Transfer Agent fee at an annual rate not to exceed .10%.
53
<PAGE> 102
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation -- Portfolio securities for which market quotations are
readily available are valued at market value, which is currently determined
using the last reported sales price. If no sales are reported, as in the case of
some securities traded over-the-counter, portfolio securities are valued at the
mean between the last reported bid and asked prices. Corporate bonds and
tax-exempt bonds are valued on the basis of quotations provided by a pricing
service which uses information with respect to transactions on bonds, quotations
from bond dealers, market transactions in comparable securities and various
relationships between securities in determining value. Short-term obligations
with maturities of 60 days or less are valued at amortized cost which
approximates market value. Discounts and premiums on debt securities are
amortized for book and tax purposes using the effective yield-to-maturity method
over the term of the instrument with the exception of Managed Income Portfolio
which does not amortize discount or premium for tax purposes.
Dividends to Shareholders -- Dividends from net investment income are
declared and paid monthly for each of the Managed Income, Tax-Free Income,
Intermediate Government and Intermediate-Term Bond Portfolios. The net
investment income of each of the Pennsylvania Tax-Free Income, Ohio Tax-Free
Income, Short-Term Bond and Government Income Portfolios is declared daily as a
dividend to investors who are shareholders of such Portfolio at, and whose
payment for share purchases are available to the particular Portfolio in Federal
funds by, the close of business on the day of declaration. Net realized capital
gains, if any, will be distributed at least annually. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes due to differences between generally accepted accounting principles and
tax accounting, related to the character of income and expense recognition.
These differences are primarily due to differing treatments for net operating
losses and mortgage-backed securities.
Federal Taxes -- No provision is made for Federal taxes as it is the Fund's
intention to have each Portfolio continue to qualify as a regulated investment
company and to make the requisite distributions to its shareholders which will
be sufficient to relieve it from Federal income and excise taxes.
Security Transactions and Investment Income -- Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
Federal income tax purposes. Interest income is recorded on the accrual basis.
Fees relating to the Service Plan, the Series A Distribution and Service Plan,
the Series B Distribution Plan and the Series B Service Plan, and the Transfer
Agent fee are class specific expenses. Expenses not directly attributable to a
specific Portfolio or class are allocated among all of the Portfolios or classes
of the Fund based on their relative net assets.
Repurchase Agreements -- Money market instruments may be purchased from
banks and non-bank dealers subject to the seller's agreement to repurchase them
at an agreed upon date and price. Collateral for repurchase agreements may have
longer maturities than the maximum permissible remaining maturity of portfolio
investments. The seller will be required on a daily basis to maintain the value
of the securities subject to the agreement at not less than the repurchase
price. The agreements are conditioned upon the collateral being deposited under
the Federal Reserve book-entry system or held in a separate account by the
Fund's custodian or an authorized securities depository.
54
<PAGE> 103
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
Reverse Repurchase Agreements -- The Fund enters into reverse repurchase
agreements with qualified, third party brokers-dealers as determined by and
under the direction of the Fund's Board of Directors. Interest on the value of
the reverse repurchase agreements issued and outstanding is based upon
competitive market rates at the time of issuance. At the time the Fund enters
into a reverse repurchase agreement, it establishes and maintains a segregated
account with the lender containing liquid high grade securities having a value
not less than the repurchase price, including accrued interest, of the reverse
repurchase agreement.
<TABLE>
<CAPTION>
INTERMEDIATE SHORT-TERM INTERMEDIATE- GOVERNMENT
GOVERNMENT BOND TERM BOND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Average daily balance of
reverse repurchase agreements
outstanding during the period ended
September 30, 1995...................... $ 40,754 $ 241,877 $1,834,281 $ 704,977
Weighted Average Interest Rate............ 6.09% 5.80% 5.85% 5.71%
Maximum Amount of reverse
repurchase agreements outstanding at any
month-end during the period ended
September 30, 1995(1)................... $1,060,327 $2,304,723 $7,889,993 $3,470,000
Percentage of total assets................ 0.53% 12.20% 4.43% 19.36%
Amount of reverse repurchase agreements
outstanding at September 30, 1995....... $ 0 $ 0 $2,363,000 $3,470,000
Percentage of total assets................ 0.00% 0.00% 1.30% 19.36%
</TABLE>
- ---------------
(1) The maximum amount of reverse repurchase agreements outstanding at any
month-end occurred on June 30, 1995, August 31, 1995, June 30, 1995, and
September 30, 1995, respectively.
TBA Purchase Commitments -- The Portfolios may enter into "TBA" (to be
announced) purchase commitments to purchase securities for a fixed price at a
future date, typically not exceeding 45 days. TBA purchase commitments may be
considered securities in themselves, and involve a risk of loss if the value of
the security to be purchased declines prior to settlement date, which risk is in
addition to the risk of decline in the value of the Fund's other assets.
Unsettled TBA purchase commitments are valued at the current market value of the
underlying securities, according to the procedures described under "Security
Valuation" above.
Organization Costs -- Costs incurred by each Portfolio in connection with
its organization, registration and initial public offering have been deferred
and are being amortized using the straight-line method over a five-year period
beginning on the date on which each Portfolio commenced its investment
activities.
55
<PAGE> 104
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
(B) TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to an Investment Advisory Agreement, PNC Institutional Management
Corporation ("PIMC"), a wholly-owned subsidiary of PNC Asset Management Group,
Inc. ("PAMG"), which is in turn a wholly-owned subsidiary of PNC Bank, National
Association ("PNC Bank"), serves as adviser for each of the Fund's Portfolios.
BlackRock Financial Management, Inc. ("BlackRock"), a wholly-owned subsidiary of
PAMG, serves as sub-adviser for the Portfolios. PNC Bank, PAMG, PIMC and
BlackRock are indirect wholly-owned subsidiaries of PNC Bank Corp.
For its advisory services, PIMC is entitled to receive fees at the
following annual rates, computed daily and payable monthly, based on each
Portfolio's average daily net assets: .50% of the first $1 billion, .45% of the
next $1 billion, .425% of the next $1 billion and .40% of net assets in excess
of $3 billion.
PIMC may, at its discretion, waive all or any portion of its advisory fee
for any Portfolio. For the year ended September 30, 1995, advisory fees and
waivers for each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS ADVISORY NET ADVISORY
FEE WAIVER FEE
-------------- -------- --------------
<S> <C> <C> <C>
Managed Income Portfolio.................. $2,557,617 $767,285 $1,790,332
Tax-Free Income Portfolio................. 49,671 49,671 --
Intermediate Government Portfolio......... 948,836 569,302 379,534
Ohio Tax-Free Income Portfolio............ 42,044 42,044 --
Pennsylvania Tax-Free Income Portfolio.... 298,989 137,951 161,038
Short-Term Bond Portfolio................. 89,283 77,473 11,810
Intermediate-Term Bond Portfolio.......... 678,209 335,908 342,301
Government Income Portfolio............... 37,256 37,256 --
</TABLE>
PIMC pays BlackRock fees for its sub-advisory services.
PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of PNC Bank Corp.,
and Provident Distributors, Inc. ("PDI") act as co-administrators for the Fund.
PDI is also the distributor for the Fund. The combined administration fee is
computed daily and payable monthly, based on a percentage of the average daily
net assets of each Portfolio, at the following annual rates: .20% of the first
$500 million, .18% of the next $500 million, .16% of the next $1 billion and
.15% of net assets in excess of $2 billion.
56
<PAGE> 105
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
PFPC and PDI may, at their discretion, waive all or any portion of their
administration fees for any Portfolio. For the year ended September 30, 1995,
administration fees and waivers for each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADMINISTRATION ADMINISTRATION
FEE WAIVER FEE
-------------- -------- --------------
<S> <C> <C> <C>
Managed Income Portfolio....................... $1,018,762 $267,310 $751,452
Tax-Free Income Portfolio...................... 19,868 19,868 --
Intermediate Government Portfolio.............. 379,534 135,117 244,417
Ohio Tax-Free Income Portfolio................. 16,817 16,817 --
Pennsylvania Tax-Free Income Portfolio......... 119,596 51,546 68,050
Short-Term Bond Portfolio...................... 35,713 30,989 4,724
Intermediate-Term Bond Portfolio............... 271,283 131,323 139,960
Government Income Portfolio.................... 14,903 14,903 --
</TABLE>
In addition, PNC Bank serves as custodian for each of the Fund's
Portfolios. PFPC serves as transfer and dividend disbursing agent.
PIMC, PFPC and PDI have also voluntarily agreed to reimburse expenses in
the amount of $7,461 with respect to the Tax-Free Income Portfolio, $31,326 with
respect to the Ohio Tax-Free Income Portfolio, $4,122 with respect to the
Short-Term Bond Portfolio and $55,737 with respect to the Government Income
Portfolio for the year ended September 30, 1995.
PIMC, PFPC and PDI have also agreed to reimburse each Portfolio for the
amount, if any, by which the total operating and management expenses of such
Portfolio for any fiscal year exceed the most restrictive state blue sky expense
limitation in effect from time to time, to the extent required by such
limitation. No such reimbursements were necessary for the year ended September
30, 1995.
(C) PURCHASES AND SALES OF SECURITIES
For the year ended September 30, 1995, purchases and sales of securities,
other than short-term and government securities, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ -------------
<S> <C> <C>
Managed Income Portfolio................................ $441,489,544 $293,378,058
Tax-Free Income Portfolio............................... 10,873,258 8,927,338
Intermediate Government Portfolio....................... 136,796,218 110,394,106
Ohio Tax-Free Income Portfolio.......................... 5,242,943 5,501,522
Pennsylvania Tax-Free Income Portfolio.................. 36,766,922 31,880,501
Short-Term Bond Portfolio............................... 14,867,335 20,132,136
Intermediate-Term Bond Portfolio........................ 187,226,922 104,570,116
Government Income Portfolio............................. 18,147,537 7,738,797
</TABLE>
57
<PAGE> 106
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
For the year ended September 30, 1995, purchases and sales of government
securities were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ -------------
<S> <C> <C>
Managed Income Portfolio................................ $703,183,712 $ 704,233,986
Intermediate Government Portfolio....................... 322,216,228 343,006,327
Short-Term Bond Portfolio............................... 16,565,539 17,255,459
Intermediate-Term Bond Portfolio........................ 218,934,200 227,038,969
Government Income Portfolio............................. 20,155,054 14,120,922
</TABLE>
(D) CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
MANAGED INCOME PORTFOLIO
--------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/95 9/30/94
--------------------------- -------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class................... 81,039,235 $ 809,394,059 12,186,561 $124,468,452
Service Class......................... 17,764,304 177,958,649 8,352,936 87,090,065
Series A Investor Class............... 356,045 3,587,731 628,230 6,631,737
Shares issued in acquisition:
Institutional Class................... -- -- 3,649,044 36,599,918
Service Class......................... -- -- -- --
Series A Investor Class............... -- -- -- --
Shares issued in reinvestment of
dividends:
Institutional Class................... 2,491,007 24,875,485 2,074,139 21,617,113
Service Class......................... 395,609 3,967,740 205,275 2,116,342
Series A Investor Class............... 61,685 615,380 59,113 615,438
Shares redeemed:
Institutional Class................... (81,193,145) (810,656,296) (8,140,174) (85,121,512)
Service Class......................... (13,813,314) (137,936,912) (3,017,544) (31,450,922)
Series A Investor Class............... (379,561) (3,789,059) (220,470) (2,266,512)
----------- ------------ ---------- ------------
Net increase............................ 6,721,865 $ 68,016,777 15,777,110 $160,300,119
=========== ============= ========== ============
</TABLE>
58
<PAGE> 107
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
TAX-FREE INCOME PORTFOLIO
--------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/95 9/30/94
--------------------------- -------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class................... 24,770 $ 264,124 30,016 $ 320,369
Service Class......................... 470,326 4,886,018 299,743 3,207,629
Series A Investor Class............... 41,149 418,358 102,083 1,081,748
Shares issued in reinvestment of
dividends:
Institutional Class................... 56 585 3,035 33,037
Service Class......................... 4,229 42,982 4,080 43,401
Series A Investor Class............... 25,911 262,939 43,152 463,438
Shares redeemed:
Institutional Class................... (12,488) (126,996) (79,482) (827,433)
Service Class......................... (240,413) (2,481,706) (149,752) (1,559,420)
Series A Investor Class............... (140,436) (1,431,394) (142,876) (1,498,048)
-------- ----------- -------- -----------
Net increase............................ 173,104 $ 1,834,910 109,999 $ 1,264,721
======== =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT PORTFOLIO
--------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/95 9/30/94
--------------------------- -------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class................... 26,590,354 $ 259,605,434 5,241,062 $ 53,297,377
Service Class......................... 10,448,411 101,923,874 7,063,429 70,892,359
Series A Investor Class............... 267,053 2,604,567 319,769 3,266,107
Shares issued in reinvestment of
dividends:
Institutional Class................... 630,753 6,148,282 515,901 5,204,029
Service Class......................... 227,356 2,209,698 162,581 1,624,604
Series A Investor Class............... 51,849 505,595 48,076 484,534
Shares redeemed:
Institutional Class................... (27,151,217) (264,697,056) (5,308,429) (53,437,379)
Service Class......................... (12,021,173) (117,212,240) (2,334,076) (23,159,926)
Series A Investor Class............... (224,167) (2,182,053) (208,394) (2,123,022)
----------- ------------- ---------- ------------
Net increase (decrease)................. (1,180,781) $ (11,093,899) 5,499,919 $ 56,048,683
=========== ============= ========== ============
</TABLE>
59
<PAGE> 108
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
OHIO TAX-FREE INCOME PORTFOLIO
------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/95 9/30/94
------------------------- -------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class...................... 15,107 $ 149,562 175,112 $ 1,807,527
Service Class............................ 163,992 1,576,763 422,283 4,189,332
Series A Investor Class.................. 34,691 326,770 191,083 1,965,179
Series B Investor Class.................. 10,355 100,009 -- --
Shares issued in reinvestment of dividends:
Institutional Class...................... 217 2,100 5,038 51,291
Service Class............................ 1,987 18,626 3,851 38,380
Series A Investor Class.................. 17,613 170,813 17,230 172,308
Series B Investor Class.................. 236 2,346 -- --
Shares redeemed:
Institutional Class...................... (8,638) (82,274) (326,154) (3,233,385)
Service Class............................ (114,927) (1,115,016) (51,056) (506,812)
Series A Investor Class.................. (122,186) (1,148,358) (36,633) (375,525)
Series B Investor Class.................. -- -- -- --
-------- ----------- -------- ----------
Net increase (decrease).................... (1,553) $ 1,341 400,754 $4,108,295
======== =========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/95 9/30/94
------------------------- -------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class...................... 174,604 $ 1,773,519 64,868 $ 647,801
Service Class............................ 584,628 5,807,836 1,233,208 12,861,509
Series A Investor Class.................. 444,461 4,391,785 2,269,114 23,724,954
Series B Investor Class.................. 384,161 3,817,733 -- --
Shares issued in reinvestment of dividends:
Institutional Class...................... -- -- 325 3,463
Service Class............................ 6,576 62,462 15,516 158,276
Series A Investor Class.................. 179,097 1,806,597 212,735 2,147,477
Series B Investor Class.................. 5,701 57,559 -- --
Shares redeemed:
Institutional Class...................... (37,001) (380,000) (24,130) (253,996)
Service Class............................ (425,531) (4,223,172) (440,397) (4,431,356)
Series A Investor Class.................. (1,223,482) (12,048,917) (1,097,528) (11,299,229)
Series B Investor Class.................. (1,698) (17,135) -- --
---------- ------------ ---------- ------------
Net increase............................... 91,516 $ 1,048,267 2,233,711 $ 23,558,899
========== ============ ========== ============
</TABLE>
60
<PAGE> 109
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
SHORT-TERM BOND PORTFOLIO
--------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/95 9/30/94
--------------------------- -------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class................... 1,254,180 $ 12,017,625 3,720,716 $ 37,120,901
Service Class......................... 455,679 4,369,065 755,330 7,473,735
Series A Investor Class............... 30,062 290,116 29,976 294,033
Shares issued in reinvestment of
dividends:
Institutional Class................... 15,327 146,775 21,968 214,759
Service Class......................... 8,077 76,763 14,450 141,147
Series A Investor Class............... 1,665 15,992 532 5,175
Shares redeemed:
Institutional Class................... (2,226,236) (21,244,232) (2,277,873) (22,096,796)
Service Class......................... (436,513) (4,180,363) (400,419) (3,947,645)
Series A Investor Class............... (28,516) (275,480) (1,632) (15,778)
---------- ------------ ---------- ------------
Net increase (decrease)............... (926,275) $ (8,783,739) 1,863,048 $ 19,189,531
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM BOND PORTFOLIO
--------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
9/30/95 9/30/94
--------------------------- -------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class................... 26,801,698 $ 244,543,588 2,440,016 $ 22,611,998
Service Class......................... 6,336,367 57,979,751 2,720,032 25,860,499
Series A Investor Class............... 66,539 607,535 9,574 87,478
Shares issued in acquisition:
Institutional Class................... 1,103,217 10,414,371 3,673,356 33,684,821
Service Class......................... -- -- 3,055,695 29,793,024
Series A Investor Class............... -- -- -- --
Shares issued in reinvestment of
dividends:
Institutional Class................... 568,561 5,225,884 84,197 768,975
Service Class......................... 159,312 1,458,975 101,940 943,961
Series A Investor Class............... 2,890 26,612 58 531
Shares redeemed:
Institutional Class................... (23,165,781) (211,763,234) (3,917,113) (38,816,847)
Service Class......................... (6,554,873) (59,987,572) (1,933,866) (18,101,776)
Series A Investor Class............... (10,462) (95,925) (2) (15)
----------- ------------- ---------- ------------
Net increase............................ 5,307,468 $ 48,409,985 6,233,887 $ 56,832,649
=========== ============= ========== ============
</TABLE>
61
<PAGE> 110
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
GOVERNMENT INCOME PORTFOLIO
-----------------------------
FOR THE PERIOD
10/3/94(1)
THROUGH
9/30/95
-----------------------------
SHARES VALUE
--------- -----------
<S> <C> <C>
Shares sold:
Series A Investor Class..................................... 300,898 $ 3,068,403
Series B Investor Class..................................... 999,120 10,170,346
Shares issued in reinvestment of dividends:
Series A Investor Class..................................... 10,966 113,720
Series B Investor Class..................................... 18,231 190,601
Shares redeemed:
Series A Investor Class..................................... (31,890) (328,162)
Series B Investor Class..................................... (63,350) (662,081)
--------- -----------
Net increase.................................................. 1,233,975 $12,552,827
========= ===========
</TABLE>
- -------------
(1) Commencement of operations.
(E) AT SEPTEMBER 30, 1995, NET ASSETS CONSISTED OF:
<TABLE>
<CAPTION>
OHIO
MANAGED TAX-FREE INTERMEDIATE TAX-FREE
INCOME INCOME GOVERNMENT INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------- ----------
<S> <C> <C> <C> <C>
Capital paid-in............................ $563,484,289 $11,290,812 $198,228,449 $8,953,207
Undistributed net investment income........ -- 3,124 18,299 --
Distributions in excess of
net investment income.................... (801,436) -- -- --
Accumulated net realized gain (loss)
on investment transactions............... 3,106,358 (75,045) (3,964,951) (343,667)
Net unrealized appreciation
on investments........................... 6,181,460 356,277 116,957 149,475
------------ ----------- ------------ ----------
$571,970,671 $11,575,168 $194,398,754 $8,759,015
============ =========== ============ ==========
</TABLE>
62
<PAGE> 111
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
PENNSYLVANIA
TAX-FREE SHORT-TERM INTERMEDIATE- GOVERNMENT
INCOME BOND TERM BOND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------- -----------
<S> <C> <C> <C> <C>
Capital paid-in............................ $63,459,870 $16,967,692 $160,560,567 $12,552,827
Undistributed net investment income........ -- 2,325 55,893 --
Accumulated net realized gain (loss)
on investment transactions............... (1,621,094) (1,533,757) 387,830 337,923
Net unrealized appreciation
on investments........................... 851,208 25,876 1,340,144* 286,984
----------- ----------- ------------ -----------
$62,689,984 $15,462,136 $162,344,434 $13,177,734
=========== =========== ============ ===========
</TABLE>
- -------------
* Includes $263,549 of unrealized appreciation, at time of acquisition.
(F) CAPITAL LOSS CARRYOVERS
At September 30, 1995, capital loss carryovers were available to offset
possible future realized capital gains as follows: $75,045 in the Tax-Free
Income Portfolio which expire in the year 2003, $1,276,892 in the Intermediate
Government Portfolio which expire in the year 2003, $343,667 in the Ohio
Tax-Free Income Portfolio which expires in the year 2003, $300,925 in the
Pennsylvania Tax-Free Income Portfolio which expires in the year 2003, and
$1,533,757 in the Short-Term Bond Portfolio which expire in the year 2003. At
September 30, 1995, the deferred post-October losses were as follows: $81,707
for the Tax-Free Income Portfolio, $2,688,059 for the Intermediate Government
Portfolio, $218,746 for the Ohio Tax-Free Income Portfolio, $1,352,142 for the
Pennsylvania Tax-Free Income Portfolio, and $464,318 for the Short-Term Bond
Portfolio.
(G) ACQUISITION OF PNC COLLECTIVE FUNDS
On December 28, 1993, The PNC Fund acquired all the assets of the PNC
Financial Common Trust for Retirement Assets Fixed Income Portfolio from
participants of such fund. The acquisition was accomplished by a tax-free
exchange of assets with a value of $29,793,024 for 3,055,695 Service shares of
the Intermediate-Term Bond Portfolio at $9.75 per share. The Fixed Income
Portfolio's net assets on that date included $1,173,313 in unrealized
appreciation of securities.
On May 26, 1994, The PNC Fund acquired all the assets of the PNC Pension
Plan Assets Fixed Income Portfolio from participants of such fund. The
acquisition was accomplished by an exchange of assets with a value of
$22,388,535 for 2,444,163 Institutional shares of the Intermediate-Term Bond
Portfolio at $9.16 per share and a value of $24,915,125 for 2,484,060
Institutional shares of the Managed Income Portfolio at $10.03 per share.
On June 21, 1994, The PNC Fund acquired all the assets of the PNC Incentive
Savings Plan Assets Fixed Income Portfolio from participants of such fund. The
acquisition was accomplished by an exchange of assets with a value of
$11,296,286 for 1,229,193 Institutional shares of the Intermediate-Term Bond
Portfolio at $9.19 per share and a value of $11,684,793 for 1,164,984
Institutional shares of the Managed Income Portfolio at $10.03 per share.
63
<PAGE> 112
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
On June 15, 1995, The PNC Fund acquired all the assets of the Fixed Income
Fund of Portfolios for Diversified Investment from participants of such fund.
The acquisition was accomplished by a tax-free exchange of assets with a value
of $10,414,371 for 1,103,217 Institutional shares of the Intermediate-Term Bond
Portfolio at $9.44 per share. The Fixed Income Fund's net assets on that date
included $263,549 in unrealized appreciation of securities.
(H) SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of Shareholders (the "Meeting") of the Managed Income,
Intermediate Government, Ohio Tax-Free Income, Pennsylvania Tax-Free Income,
Short-Term Bond, Intermediate-Term Bond and Government Income Portfolios was
held on March 29, 1995. At the Meeting, the shareholders of each Portfolio
listed above voted to approve sub-advisory agreements between PIMC and BlackRock
with respect to the Portfolio. The result of the voting with respect to the
approval of BlackRock as sub-adviser for each of the above-referenced Portfolios
was as follows:
<TABLE>
<CAPTION>
PORTFOLIO FOR AGAINST ABSTAIN
- ----------------------------------------------------------- ----------- ------- -------
<S> <C> <C> <C>
Managed Income............................................. 49,082,482 13,104 46,316
Intermediate Government.................................... 18,184,904 31,212 17,073
Ohio Tax-Free Income....................................... 786,976 2,705 8,647
Pennsylvania Tax-Free Income............................... 4,705,437 29,387 109,687
Short-Term Bond............................................ 1,398,018 0 1,614
Intermediate-Term Bond..................................... 14,915,739 18,931 3,767
Government Income.......................................... 519,789 3,892 308
</TABLE>
(I) SUBSEQUENT EVENTS
On September 29, 1995 and October 2, 1995, respectively, the Board of
Directors of the Fund ("PNC") and the Board of Trustees of The Compass Capital
Group of Funds ("Compass"), including all of the non-interested members of each
Board, approved an asset purchase agreement between 16 investment portfolios of
PNC and Compass. The agreement, subject to shareholder approval, provides for
the acquisition by PNC of all of the assets and liabilities of each of the
Compass Portfolios in exchange for Service Shares of the PNC Portfolios that
correspond to the Compass Portfolios and the distribution of these PNC Service
Shares to the shareholders of the Compass Portfolios in liquidation of the
Compass Portfolios. The expected effective date of the acquisition is January
1996.
Additionally, the Board of Directors of The PNC Fund ("PNC") and the Board
of Directors of The BFM Institutional Trust Inc. ("BIT"), including all of the
non-interested members of each Board, recently approved an asset purchase
agreement between three investment portfolios of PNC and BIT. The agreement
provides for the acquisition by PNC of all of the assets and liabilities of each
of the BIT Portfolios in exchange for Institutional Shares of the PNC Portfolios
that correspond to the BIT Portfolios and the distribution of these PNC
Institutional Shares to the shareholders of the BIT Portfolios in liquidation of
the BIT Portfolios. The expected effective date of the acquisition is January
1996.
64
<PAGE> 113
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF THE PNC FUND:
We have audited the accompanying statements of net assets of The PNC Fund
(Managed Income, Tax-Free Income, Intermediate Government, Ohio Tax-Free Income,
Pennsylvania Tax-Free Income, Short-Term Bond, Intermediate Term-Bond, and the
Government Income Portfolios), as of September 30, 1995, and the related
statements of operations for the year (or period) then ended, the statements of
changes in net assets for each of the two years (or periods) in the period then
ended, and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments held by the
custodian and brokers as of September 30, 1995. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
PNC Fund (Managed Income, Tax-Free Income, Intermediate Government, Ohio
Tax-Free Income, Pennsylvania Tax-Free Income, Short-Term Bond, Intermediate
Term-Bond, and the Government Income Portfolios), as of September 30, 1995, and
the results of their operations for the year (or period) then ended, the changes
in their net assets for each of the two years (or periods) in the period then
ended, and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 22, 1995
65
<PAGE> 114
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 115
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 116
- ----------------------------------------------------
- ----------------------------------------------------
Investment Adviser
PNC Institutional Management
Corporation
Wilmington, Delaware 19809
Sub-Adviser
BlackRock Financial Management, Inc.
New York, New York 10154
Custodian
PNC Bank, National Association
Philadelphia, Pennsylvania 19101
Co-Administrator and Transfer Agent
PFPC Inc.
Wilmington, Delaware 19809
Co-Administrator and Distributor
Provident Distributors, Inc.
Radnor, Pennsylvania 19087
Counsel
Drinker Biddle & Reath
Philadelphia, Pennsylvania 19107
Independent Accountants
Coopers & Lybrand, L.L.P.
Philadelphia, Pennsylvania 19103
PNCI-T-01F
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
- ----------------------------------------------------
LOGO
THE PNC(R) FUND
MANAGED INCOME PORTFOLIO
TAX-FREE INCOME PORTFOLIO
INTERMEDIATE GOVERNMENT PORTFOLIO
OHIO TAX-FREE INCOME PORTFOLIO
PENNSYLVANIA TAX-FREE
INCOME PORTFOLIO
SHORT-TERM BOND PORTFOLIO
INTERMEDIATE-TERM BOND PORTFOLIO
GOVERNMENT INCOME PORTFOLIO
Annual Report to Shareholders
September 30, 1995
- ----------------------------------------------------
- ----------------------------------------------------
<PAGE> 117
THE PNC(R) FUND
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
November 3, 1995
Dear Shareholder:
We are pleased to present the Annual Report to Shareholders of The PNC Fund
covering the year ended September 30, 1995. This report includes security
listings and performance results for the equity portfolios of The PNC Fund.
Each equity portfolio focuses on a specific equity investment style. This
array of portfolios enables shareholders to more precisely structure their
investments according to their overall financial goals. These portfolios are
managed with a sophisticated blend of discipline, experience and expertise. The
goal of the PNC equity portfolios is to provide you with consistency as well as
above-average results.
If you have any questions regarding The PNC Fund or the enclosed
information, please contact the Fund at 1-800-422-6538.
We appreciate your participation in The PNC Fund and we welcome
opportunities to better service your needs.
PNC Institutional Management
Corporation
- --------------------------------------------------------------------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY PNC BANK, NATIONAL ASSOCIATION OR ANY OTHER BANK AND SHARES ARE NOT FEDERALLY
INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENTS IN SHARES OF THE FUND
INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
- --------------------------------------------------------------------------------
<PAGE> 118
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF THE EQUITY PORTFOLIOS
During the fiscal year ended September 30, 1995, The PNC Fund declared the
following dividends from realized capital gains:
<TABLE>
<CAPTION>
SHORT-TERM LONG-TERM
CAPITAL GAIN, CAPITAL GAIN,
PER SHARE PER SHARE
------------- -------------
<S> <C> <C>
Value Equity Portfolio $.002 $ .25
Core Equity Portfolio .012 .103
Index Equity Portfolio -- .1235
Small Cap Value Equity Portfolio .23 .3785
International Equity Portfolio -- .36
International Emerging Markets Portfolio .185 --
Balanced Portfolio .065 .07
</TABLE>
FOR CORPORATE SHAREHOLDERS ONLY:
The percentage of dividends from net investment income declared in the
fiscal year ended September 30, 1995, which qualify for the corporate dividends
received deduction is as follows:
<TABLE>
<S> <C>
Value Equity Portfolio 100.0%
Growth Equity Portfolio 96.1
Small Cap Growth Equity Portfolio 100.0
Core Equity Portfolio 95.3
Index Equity Portfolio 100.0
Small Cap Value Equity Portfolio 67.0
International Equity Portfolio 0.0
International Emerging Markets Portfolio 0.0
Balanced Portfolio 45.0
</TABLE>
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF THE INTERNATIONAL EQUITY PORTFOLIO
AND INTERNATIONAL EMERGING MARKETS PORTFOLIO
During the fiscal year ended September 30, 1995, the International Equity
Portfolio distributed $4,311,095 of foreign source income on which the Portfolio
paid foreign taxes of $1,092,230. This information is being furnished to you
pursuant to notice requirements of Sections 853(a) and 855(d) of the Internal
Revenue Code, as amended, and the Treasury Regulations thereunder.
During the fiscal year ended September 30, 1995, the International Emerging
Markets Portfolio distributed $569,990 of foreign source income on which the
Portfolio paid foreign taxes of $39,900. This information is being furnished to
you pursuant to notice requirements of Sections 853(a) and 855(d) of the
Internal Revenue Code, as amended, and the Treasury Regulations thereunder.
2
<PAGE> 119
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT
VALUE EQUITY PORTFOLIO
In absolute terms, investment performance for the Value Equity Portfolio
was quite good for the fiscal year ending September 30, 1995. For the twelve
months, the Institutional Class of the Portfolio returned 25.73% versus a very
strong 29.74% for the S&P 500 during the like time span. The relative return
differential of the Fund compared to the S&P 500 resulted from the fact that
market leadership resided in the technology and financial sectors most of the
year as strong earning gains, lower interest rates and bank mergers stimulated
activity. While the Portfolio was strongly represented in the financial sector,
participation in the technology arena was limited due to generally high
valuation levels.
As the year progressed, rotation into economically sensitive stocks (paper,
chemicals and aluminums) during the spring gave way to a shift of funds into
more defensive issues (drugs, utilities and consumer staples) in the fall, as
concerns about the durability of the cycle emerged. The heavier consumer
weighting in the S&P 500 kept performance in line with the Portfolio during the
second half of the year as the positive contribution from the drugs, financials
and utilities was offset by the underperformance of most economy-related issues.
As the fiscal year came to a close, the Portfolio was continuing to build
its defensive exposure in both telephone and electric utilities with profits
realized from sales in the drug, producer durable and agricultural chemical
sectors of the Portfolio.
Despite present uncertainties, the Portfolio's investment approach will
continue to be heavily influenced by the composition of the large cap value
universe.
Comparison of Change in Value of $10,000 investment in the Value Equity
Portfolio and the Standard & Poor's 500 Composite Stock Price Index ("S&P 500")
from inception and at each Fiscal Year End:
[CHART]
Institutional Class
<TABLE>
<CAPTION>
4/20/92 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PNC Value Equity 10,000 9,881 12,047 12,500 15,715
S&P 500 Index 10,000 10,212 11,539 11,964 15,522
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 25.73%
From Inception 14.00%
[CHART]
Service Class
<TABLE>
<CAPTION>
7/29/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Value Equity 10,000 10,464 10,832 13,584
S&P 500 Index 10,000 10,299 10,678 13,855
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 25.40%
From Inception 15.12%
[CHART]
Series A Investor Class
<TABLE>
<CAPTION>
5/1/92 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PNC Value Equity 9,550 9,438 11,497 11,972 14,891
S&P 500 Index 10,000 10,212 11,536 11,964 15,522
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 19.56%
From Inception 12.36%
3
<PAGE> 120
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
GROWTH EQUITY PORTFOLIO
The Portfolio delivered strong returns over the past year. The
Institutional Class of the Portfolio produced a gain of 29.88% compared to a
29.99% return of the Russell 1000 Index. The Russell 1000 Index will be a better
comparative index than the S&P 500 Index from previous years. The Russell 1000
Index is an unmanaged index that consists of the largest 1000 companies in the
Russell 3000 Index. We were able to achieve these results by managing closely to
our investment style -- investing in large capitalization companies with
reasonable valuations whose growth prospects exceed those of the general
economy -- and through good individual stock selection. Our investments in the
technology, health care, and retail sectors contributed to our good performance,
while our underweightings in the transportation and financial sectors held back
our returns.
Although we believe that we performed well over the past year, in fairness,
we must give some credit to the general stock market for the excellent returns
experienced this year. During 1995 the equity markets enjoyed an environment of
low inflation, falling interest rates, a depreciating dollar, increased
productivity, and rapidly expanding profit margins. These factors lead to robust
stock market returns. The Portfolio participated in most of these favorable
events.
Looking forward, we believe that almost all of the factors underpinning the
strong stock market remain in place. Inflation should remain low, and interest
rates are more likely to fall than to rise. Productivity and profitability
remain strong. Therefore, we remain optimistic about the outlook for the
Portfolio.
We have positioned the Portfolio to be overweighted in the financial and
health care sectors of the market. In addition, we continue to remain somewhat
overweighted in technology, but we have tilted our holdings in technology toward
those stocks with a more defensive nature. As always, we will continue our job
of identifying and investing in companies with strong earnings growth prospects.
We believe that over time, the Portfolio will continue to be rewarded for taking
advantage of these opportunities.
Comparison of Change in Value of $10,000 investment in the Growth Equity
Portfolio, the Russell 1000 Index and S&P 500 Index from inception and at each
Fiscal Year End:
[CHART]
Institutional Class
<TABLE>
<CAPTION>
11/1/89 9/30/90 9/30/91 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
PNC Growth Equity 10,000 10,040 11,995 12,580 15,355 13,658 17,739
Russell 1000 Index 10,000 9,291 12,187 13,533 15,293 15,856 20,852
S&P 500 Index 10,000 9,291 12,187 13,533 15,293 15,856 20,572
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 29.88%
Five Years 12.05%
From Inception 10.17%
[CHART]
Service Class
<TABLE>
<CAPTION>
7/29/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Growth Equity 10,000 10,987 9,748 12,616
Russell 1000 Index 10,000 10,299 10,678 13,801
S&P 500 Index 10,000 10,299 10,678 13,854
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 29.43%
From Inception 11.26%
[CHART]
Series A Investor Class
<TABLE>
<CAPTION>
3/19/92 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PNC Growth Equity 9,550 9,530 11,638 10,252 13,312
Russell 1000 Index 10,000 10,511 11,878 12,315 15,910
S&P 500 Index 10,000 10,511 11,878 12,315 15,977
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 23.43%
From Inception 8.39%
4
<PAGE> 121
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
SMALL CAP GROWTH EQUITY PORTFOLIO
The twelve-month period ending September 30, 1995 was a strong period for
investing in growth stocks, as the technology sector led major indices to record
levels. The Institutional Class of the Portfolio produced a gain of 48.5% for
the period, which compared favorably with the 28.2% gain produced by the Russell
2000 Growth Index during the identical period. The key driver behind this strong
relative outperformance versus our benchmark was the substantial overweighting
in the technology sector.
As of September 30, 1995, the Portfolio continued to have a high
concentration (40%) in the technology sector. We continue to be broadly
diversified within the sector, with the belief that this will help to lower
potential portfolio risk. We saw an increase in volatility at the end of the
period, as profit-taking and seasonal factors began to impact our technology
holdings. We believe, however, that the fundamental story for the sector remains
intact, and that strong third quarter 1995 earnings will provide the necessary
stability for the sector to continue to perform well for the balance of the
calendar year and into 1996. While we will continue to look for ideas to add to
our holdings in the consumer (29%) and health care (20%) sectors, we believe
that a material weighting in the technology sector is consistent with the
Portfolio's charter to invest in the fastest growing, most dynamic areas of the
market.
Comparison of Change in Value of $10,000 investment in the Small Cap Growth
Equity Portfolio and the Russell 2000 Growth Index from inception and at each
Fiscal Year End:
[CHART]
Institutional Class
<TABLE>
<CAPTION>
9/14/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Small Cap Growth 10,000 10,470 10,168 15,099
Russell 2000 Growth Index 10,000 10,141 10,231 13,111
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 48.50%
From Inception 22.30%
[CHART]
Service Class
<TABLE>
<CAPTION>
9/15/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Small Cap Growth 10,000 10,512 10,184 15,086
Russell 2000 Growth Index 10,000 10,141 10,231 13,111
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 48.13%
From Inception 22.29%
[CHART]
Series A Investor Class
<TABLE>
<CAPTION>
9/15/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Small Cap Growth 9,550 10,039 9,704 14,364
Russell 2000 Growth Index 10,000 10,141 10,231 13,111
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 41.32%
From Inception 19.38%
5
<PAGE> 122
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
CORE EQUITY PORTFOLIO
Over the last twelve months, lower interest rates combined with slow and
stable growth in the economy boosted the confidence of the equity markets and
propelled them forward. The equity markets reflected this strength and have
shown significant signs of recovery. Specifically, the technology and financial
sectors of the equity market were especially strong. Merger, acquisition, and
corporate restructuring activities have also had a significant impact on returns
over the last twelve months. Recent announcements by AT&T, Walt Disney, and Dial
Corporation highlight this trend.
Performance of the Institutional Class of the Portfolio was up strongly for
the year ended September 30, 1995, with a total return of 23.76%. The Portfolio
benefited from its exposure to both technology and financial sectors. Dividend
growth continues to lag earnings-per-share growth as companies weigh the
utilization of free cash flows between capital spending, acquisitions, share
repurchase, and dividend increases. The Philip Morris over-20% dividend increase
announced in August verifies the income growth of the Portfolio.
The Core Equity Portfolio remains widely diversified among equity issues
and sectors. The Portfolio invests in approximately 100 individual issues and is
focused on adding value from issue selection, while limiting industry and other
market risks.
Comparison of Change in Value of $10,000 investment in the Core Equity
Portfolio and the S&P 500 from inception and at each Fiscal Year End:
[CHART]
Institutional Class
<TABLE>
<CAPTION>
9/13/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Core Equity 10,000 9,970 10,149 12,560
S&P 500 Index 10,000 9,962 10,329 13,400
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 23.76%
From Inception 11.76%
[CHART]
Service Class
<TABLE>
<CAPTION>
9/15/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Core Equity 10,000 9,970 10,124 12,497
S&P 500 Index 10,000 9,962 10,329 13,400
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 23.43%
From Inception 11.52%
[CHART]
Series A Investor Class
<TABLE>
<CAPTION>
10/13/93 9/30/94 9/30/95
------- ------- -------
<S> <C> <C> <C>
PNC Core Equity 9,550 9,697 11,955
S&P 500 Index 10,000 10,368 13,452
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 17.71%
From Inception 9.53%
6
<PAGE> 123
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
INDEX EQUITY PORTFOLIO
The total return for Institutional Shares of the Index Equity Portfolio for
the year ended September 30, 1995 was 29.30%. This compares with a total return
of 29.74% for the S&P 500 for the same period. The Portfolio seeks to replicate
the performance of the S&P 500 by owning substantially all the stocks in the S&P
500.
As of year end, the Portfolio consisted of between 90-95% equities with the
remainder in cash. However, in an effort to more closely approximate the S&P
500, the cash portion of the Portfolio is hedged using S&P 500 futures. The goal
of the futures position is to provide the Portfolio with the capital
appreciation of the S&P 500. In order to achieve the total return of the S&P
500, the underlying cash is then invested in high quality fixed income
instruments. The combination of the two provides for an approximate return equal
to the S&P 500.
Comparison of Change in Value of $10,000 investment in the Index Equity
Portfolio and the S&P 500 from inception and at each Fiscal Year End:
[CHART]
Institutional Class
<TABLE>
<CAPTION>
4/20/92 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PNC Index Equity 10,000 10,162 11,422 11,773 15,222
S&P 500 Index 10,000 10,212 11,539 11,964 15,522
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 29.30%
From Inception 12.95%
[CHART]
Service Class
<TABLE>
<CAPTION>
7/29/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Index Equity 10,000 10,316 10,603 13,682
S&P 500 Index 10,000 10,299 10,678 13,855
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 28.99%
From Inception 15.50%
[CHART]
Series A Investor Class
<TABLE>
<CAPTION>
6/2/92 9/30/92 9/30/93 9/30/94 9/29/95
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
PNC Index Equity 9,550 9,708 10,897 11,118 14,317
S&P 500 Index 10,000 10,162 11,483 11,906 15,447
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 22.92%
From Inception 11.37%
7
<PAGE> 124
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
SMALL CAP VALUE EQUITY PORTFOLIO
For the fiscal year ending September 30, 1995, the Institutional shares of
the Small Cap Value Equity Portfolio returned 17.43%, underperforming the
Russell 2000 Value Index return of 23.37%.
For the first half of the year, investors preferred the safety and
liquidity of larger companies. It was not until the fourth fiscal quarter that
small cap stocks in general, as measured by the Russell 2000 Value Index,
outperformed their large cap brethren. As the dollar began to strengthen and the
interest rate environment improved, small cap stocks were viewed more favorably.
With the exception of the December quarter, technology has been the
dominant sector in the small cap world for the year. Prior to rebalancing in
June, the Russell 2000 Value Index had a significant weighting in this sector,
making it difficult for the Portfolio which had a much lower weight, to
outperform. Technology was the best performing sector in the Portfolio.
Additionally, strong performance came from the financial sector, much as it did
in larger cap names.
Although small cap growth stocks outperformed value stocks, Provident
Capital Management, focusing on the long term, will continue to follow its value
discipline.
Comparison of Change in Value of $10,000 investment in the Small Cap Value
Equity Portfolio and the Russell 2000 Value Index from inception and at each
Fiscal Year End:
[CHART]
Institutional Class
<TABLE>
<CAPTION>
4/13/92 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PNC Small Cap Value 10,000 10,150 13,232 14,062 16,512
Russell 2000 Index 10,000 9,933 13,225 13,603 16,783
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 17.43%
From Inception 15.56%
[CHART]
Service Class
<TABLE>
<CAPTION>
7/29/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Small Cap Value 10,000 10,651 11,286 13,224
Russell 2000 Index 10,000 10,726 11,009 13,136
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 17.17%
From Inception 13.71%
[CHART]
Series A Investor Class
<TABLE>
<CAPTION>
6/2/92 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PNC Small Cap Value 9,550 9,634 11,998 13,300 15,556
Russell 2000 Index 10,000 9,803 13,052 13,425 16,563
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 11.69%
From Inception 14.18%
[CHART]
Series B Investor Class
<TABLE>
<CAPTION>
10/2/94 9/30/95
------- -------
<S> <C> <C>
PNC Small Cap Value 10,000 11,167
Russell 2000 Index 10,000 12,338
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
From Inception 11.67%
8
<PAGE> 125
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
INTERNATIONAL EQUITY PORTFOLIO
The return for the Institutional Class of the International Equity
Portfolio for the year ended September 30 was 2.46% as against 6.10% for the
Morgan Stanley Capital International Europe, Australia, Far East ("EAFE") Index.
The Portfolio's underperformance is largely attributable to a decline of (4.13)%
in the last fiscal quarter of 1994, which in turn relates to an overweight
position in the Hong Kong and Malaysian markets, coupled with an underweight
stance in Japan. Since the beginning of 1995, the Institutional Shares of the
Portfolio have returned 6.88% vs the EAFE Index's 7.12%.
The first half of 1995 was characterized by a sharp decline in the value of
the dollar against the yen and the 'hard' European currencies, which brought
about a substantial decline in the Japanese market and raised significant
concerns about the sustainability of Japan's fragile recovery. Much of the yen
appreciation and market correction has been reversed in the last three months,
but concerns remain over Japan's financial system.
Europe's markets have been significantly affected by a deceleration in
economic growth over the course of the last six months. Price declines in basic
materials such as plastics, base metals and forest products have reversed much
of last year's strength, convincing some analysts that recession is a near term
threat. Our view is that the inventory and production growth correction now
underway will give way to renewed expansion in 1996. We expect the engine of
growth over the balance of the cycle to be investment in basic industry and
capital goods.
Comparison of Change in Value of $10,000 investment in the International
Equity Portfolio and the EAFE Index from Inception and at each Fiscal Year End:
[CHART]
Institutional Class
<TABLE>
<CAPTION>
4/27/92 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PNC International Equity 10,000 9,939 12,693 14,053 14,399
EAFE Index 10,000 10,333 13,098 14,424 15,301
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 2.46%
From Inception 11.21%
[CHART]
Service Class
<TABLE>
<CAPTION>
7/29/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC International Equity 10,000 10,603 11,703 11,959
EAFE Index 10,000 10,306 11,350 12,041
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 2.19%
From Inception 8.57%
[CHART]
Series A Investor Class
<TABLE>
<CAPTION>
6/2/92 10/25/92 10/25/93 10/25/94 10/25/95
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PNC International Equity 9,550 8,887 11,353 12,516 12,766
EAFE Index 10,000 9,682 12,272 13,514 14,337
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year (2.58)%
From Inception 7.61 %
[CHART]
Series B Investor Class
<TABLE>
<CAPTION>
------- -------
<S> <C> <C>
PNC International Equity 10,000 9,722
EAFE Index 9,722 10,510
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
From Inception (2.78)%
9
<PAGE> 126
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
INTERNATIONAL EMERGING MARKETS PORTFOLIO
Emerging markets have had a difficult environment since the collapse of the
Mexican peso in December of 1994. The Institutional Class of the International
Emerging Markets Portfolio's return for the twelve months ended September 30,
1995 was (19.72)% vs (17.71)% for the Morgan Stanley Capital International
Emerging Markets/Free Index. This index more accurately reflects the emerging
market return than the previous EAFE Index from previous years.
Mexico's crisis of confidence brought with it a deep recession that has
destabilized the capital markets and the banking system. Similarly threatened
has been Argentina, and even Brazil has weakened on its implicit political
vulnerability as a result of the Mexican decline. For Asian emerging markets, it
has been largely concerns over excessive growth (in Malaysia, Thailand,
Indonesia and the Philippines) that has worried markets, in addition to the
slowdown in China brought on by the government's austerity program.
But around the world in emerging economies, an increased consciousness of
risk has lead investors to reassess their valuation parameters. It is clear that
in the initial burst of enthusiasm for emerging market investing in 1992-93,
investors paid too little attention to the political and macroeconomic risks. In
countries from China to India to Turkey, the same forces that are driving reform
and growth may also from time to time produce instability and missteps of
policy. And in 1995, a mixture of currency risk, political uncertainty and the
global slowdown clearly drained confidence from the markets.
The key to renewed outperformance in emerging markets, in our view is a
restoration of confidence, most likely to emerge sometime in 1996 on the basis
of evidence that growth is once again on track, particularly in Mexico and
China, but also in the developed world more generally.
Comparisons of Change in Value of $10,000 investment in the International
Emerging Markets Portfolio, the MSCI Emerging Markets/Free Index and EAFE Index
from Inception and at each Fiscal Year End:
[CHART]
Institutional Class
<TABLE>
<CAPTION>
6/17/94 9/30/94 9/30/95
------- ------- -------
<S> <C> <C> <C>
PNC International Emerging 10,000 10,560 8,478
Morgan Stanley Emerging Index 10,000 12,076 9,937
EAFE Index 10,000 10,016 10,626
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year (19.72)%
From Inception (12.08)%
[CHART]
Service Class
<TABLE>
<CAPTION>
6/17/94 9/30/94 9/30/95
------- ------- -------
<S> <C> <C> <C>
PNC International Emerging 10,000 10,550 8,450
Morgan Stanley Emerging Index 10,000 12,076 9,937
EAFE Index 10,000 10,016 10,626
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year (19.91)%
From Inception (12.31)%
[CHART]
Series A Investor Class
<TABLE>
<CAPTION>
6/17/94 9/30/94 9/30/95
------- ------- -------
<S> <C> <C> <C>
PNC International Emerging 9,550 10,067 8,041
Morgan Stanley Emerging Index 10,000 12,076 9,937
EAFE Index 10,000 10,016 10,626
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year (23.74)%
From Inception (15.64)%
10
<PAGE> 127
THE PNC FUND
ANNUAL INVESTMENT ADVISER'S REPORT (Continued)
BALANCED PORTFOLIO
Performance of the Institutional Class of the Balanced Portfolio was up
strongly for the year ended September 30, 1995 with a total return of 20.32%.
During the same time period, the S&P 500 returned 29.74% and the Salomon Broad
Investment Grade Index returned 14.05%.The Salomon Broad Investment Grade Index
more accurately reflects the corporate and government holdings of the Portfolio
than the Lehman Government/Corporate Index from previous years. Throughout the
majority of the year, the Balanced Portfolio maintained its 65% equity and 35%
fixed income baseline weights. As the equity market was stronger than the fixed
income market, the heavier equity weighting was beneficial.
Over the last twelve months, the equity markets have shown significant
signs of recovery. Specifically, the technology and financial sectors of the
equity market were especially strong. The equity portion of the Portfolio
reflected this strength, returning 24.64% for the twelve months ending September
30, 1995. The Portfolio primarily benefited from a heavier weight in the
financial sector and a modest overweight in technology. Equity investments
remain broadly diversified among industries and sectors with over 70 individual
holdings utilized to disperse risk and maintain trading liquidity. The present
recommended portfolio allocation is 65% equity, 35% fixed income and 0% cash.
The rally in the Treasury market began during the fourth quarter of 1994
and continued to accelerate through the first and second quarters of 1995. Over
the past twelve months, interest rates have fallen substantially across the
yield curve. Yield levels on the intermediate portion of the Treasury curve have
fallen nearly 150 basis points as the 10-year Treasury closed at 6.18% on
September 29, 1995.
The market for mortgage-backed securities performed well in September 1995
and throughout much of the third quarter of 1995 as interest rate volatility
declined and supply concerns abated. Allocation to adjustable rate mortgages
(ARMs) was increased in the Portfolio during the beginning of the third quarter
as GNMA ARMs offered excellent value relative to other short duration
securities.
Corporate earnings were positive and the market for corporate debt
securities also outperformed Treasuries in the past year despite a large pick up
in new issuance over September 1995. A heavy calendar for issuance remains for
the final quarter of 1995 which may test market demand.
11
<PAGE> 128
THE PNC FUND
ANNUAL INVESTMENT ADVISOR'S REPORT (Continued)
Comparison of Change in Value of $10,000 investment in the Balanced
Portfolio, S&P 500, Salomon Broad Investment Grade Index and Lehman
Government/Corporate Index from inception and at each Fiscal Year End:
[CHART]
Institutional Class
<TABLE>
<CAPTION>
5/1/92 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PNC Balanced 10,000 10,623 11,989 11,977 14,410
S&P 500 Index 10,000 10,212 11,539 11,964 15,522
Salomon Broad
Invest Grade Index 10,000 10,774 11,869 11,490 13,105
Lehman Government
Corporate Index 10,000 10,849 12,092 11,891 13,597
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 20.32%
From Inception 11.28%
[CHART]
Service Class
<TABLE>
<CAPTION>
7/29/93 9/30/93 9/30/94 9/30/95
------- ------- ------- -------
<S> <C> <C> <C> <C>
PNC Balanced 10,000 10,366 10,328 12,388
S&P 500 Index 10,000 10,299 10,678 13,855
Salomon Broad
Invest Grade Index 10,000 10,206 9,879 11,268
Lehman Government
Corporate Index 10,000 10,266 10,096 11,545
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 19.94%
From Inception 10.34%
[CHART]
Series A Investor Class
<TABLE>
<CAPTION>
5/14/90 9/30/90 9/30/91 9/30/92 9/30/93 9/30/94 9/30/95
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
PNC Balanced 9,550 8,821 10,942 12,603 14,224 13,959 16,824
S&P 500 Index 10,000 8,985 11,785 13,088 14,789 15,333 19,894
Salomon Broad
Invest Grade Index 10,000 10,555 12,247 13,799 15,202 14,716 16,786
Lehman Government
Corporate Index 10,000 10,413 12,064 13,659 15,222 14,969 17,117
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
One Year 14.51%
Five Years 12.73%
From Inception 10.14%
[CHART]
Series B Investor Class
<TABLE>
<CAPTION>
10/3/94 9/30/95
------- -------
<S> <C> <C>
PNC Balanced 10,000 12,974
S&P 500 Index 10,000 11,397
Salomon Broad
Invest Grade Index 10,000 11,406
Lehman Government
Corporate Index 10,000 11,435
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
From Inception 13.97%
12
<PAGE> 129
THE PNC(R) FUND
VALUE EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCKS -- 96.1%
AEROSPACE -- 5.4%
Allied Signal, Inc. 238,400 $ 10,519,400
Boeing Co. 184,200 12,571,650
United Technologies Corp. 163,550 14,453,731
------------
37,544,781
------------
AIR TRANSPORTATION -- 1.0%
British Airways PLC ADR 100,000 7,137,500
------------
BANKS -- 11.4%
Bank of New York Co., Inc. 197,500 9,183,750
Comerica, Inc. 294,200 10,701,525
CoreStates Financial Corp. 348,426 12,761,102
First Chicago Corp. 242,800 16,662,150
Meridian Bancorp, Inc. 288,900 11,050,425
NationsBank Corp. 148,500 9,986,625
Republic New York Corp. 151,800 8,880,300
------------
79,225,877
------------
CHEMICALS -- 7.2%
Dow Chemical Co. 190,000 14,155,000
E.I. Du Pont
de Nemours & Co. 186,225 12,802,969
IMC Global, Inc. 128,750 8,159,531
Lubrizol Corp. 459,200 14,981,400
------------
50,098,900
------------
COMPUTER & OFFICE EQUIPMENT -- 1.0%
Xerox Corp. 51,200 6,880,000
------------
COMPUTER SOFTWARE & SERVICES -- 1.1%
Stratus Computer, Inc. 283,300** 7,436,625
------------
CONGLOMERATES -- 4.8%
Elf Aquitaine ADR 205,700 6,916,662
ITT Corp. 66,000 8,184,000
Royal Dutch Petroleum Co. 89,000 10,924,750
Ultramar PLC ADR 294,500 6,994,375
------------
33,019,787
------------
ELECTRONICS -- 1.5%
General Electric Co. 162,700 10,372,125
------------
ENERGY & UTILITIES -- 7.0%
Entergy Corp. 264,300 6,904,838
Nipsco 100,000 3,487,500
Ohio Edison Co. 223,900 5,093,725
PECO Energy Co. 446,900 12,792,513
Southern Co. 316,300 7,472,588
Unicom Corp. 425,430 12,869,258
------------
48,620,422
------------
FINANCE -- 3.4%
AMBAC, Inc. 176,400 7,761,600
Dean Witter Discover & Co. 281,936 15,858,900
------------
23,620,500
------------
INSURANCE -- 9.5%
Allstate 215,524 7,624,161
American General Corp. 211,600 7,908,550
American International
Group, Inc. 90,075 7,656,375
AON Corp. 220,300 9,004,762
Chubb Corp. 97,500 9,360,000
General Reinsurance Corp. 36,000 5,436,000
MBIA, Inc. 117,500 8,283,750
Reliastar Financial Corp. 135,000 5,484,375
TIG Holdings, Inc. 194,100 5,216,438
------------
65,974,411
------------
LABORATORY ANALYTICAL INSTRUMENTS -- 0.9%
Beckman Instruments, Inc. 214,600 6,491,650
------------
METAL & MINING -- 1.6%
Phelps Dodge Corp. 179,300 11,228,663
------------
MOTOR VEHICLES -- 6.2%
Chrysler Corp. 216,100 11,453,300
Ford Motor Co. 374,900 11,668,762
General Motors Corp. 182,804 8,568,937
Goodyear Tire & Rubber Co. 298,000 11,733,750
------------
43,424,749
------------
OIL & GAS -- 9.1%
Atlantic Richfield Co. 104,800 11,252,900
Chevron Corp. 150,300 7,308,337
Diamond Shamrock, Inc. 229,400 5,648,975
Exxon Corp. 116,200 8,395,450
Mobil Corp. 74,000 7,372,250
Phillips Petroleum Co. 181,000 5,882,500
Tenneco, Inc. 232,700 10,762,375
Texaco, Inc. 107,300 6,934,263
------------
63,557,050
------------
PAPER & FOREST PRODUCTS -- 2.1%
Federal Paper Board Co., Inc. 157,600 6,047,900
International Paper Co. 200,000 8,400,000
------------
14,447,900
------------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 130
VALUE EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS -- 7.3%
American Home
Products Corp. 165,300 $ 14,029,837
Bristol Meyers Squibb Co. 175,700 12,804,137
Eli Lilly & Co. 116,600 10,479,425
Merck & Co., Inc. 243,750 13,650,000
------------
50,963,399
------------
PLASTIC PRODUCTS -- 0.9%
First Brands Corp. 133,559 6,010,155
------------
RETAIL MERCHANDISING -- 4.7%
Dayton-Hudson Corp. 128,400 9,742,350
Fingerhut Companies, Inc. 395,400 6,375,825
K Mart Corp. 723,000 10,483,500
Sears, Roebuck & Co. 165,500 6,102,813
------------
32,704,488
------------
TELECOMMUNICATIONS -- 5.9%
GTE Corp. 19,700 773,225
NYNEX Corp. 288,300 13,766,325
Sprint Corp. 392,300 13,730,500
U.S. West, Inc. 275,700 12,992,363
------------
41,262,413
------------
TEXTILE -- 0.9%
Fruit of the Loom, Inc. 317,600** 6,550,500
------------
TOBACCO -- 1.1%
UST, Inc. 267,800 7,665,775
------------
TRANSPORTATION -- 2.1%
Conrail Corp. 99,000 6,806,250
Norfolk Southern Corp. 106,100 7,930,975
------------
14,737,225
------------
TOTAL COMMON STOCKS
(Cost $537,826,570) 668,974,895
------------
TEMPORARY INVESTMENTS -- 3.4%
Smith Barney Money
Market Fund
(Cost $23,366,393) 23,366,393
------------
TOTAL INVESTMENTS IN
SECURITIES
(Cost $561,192,963*)
99.5% 692,341,288
OTHER ASSETS IN EXCESS
OF LIABILITIES 0.5% 3,673,175
------ ------------
NET ASSETS (Applicable to
36,513,451 Institutional
shares, 12,272,782 Service
shares and 1,214,898 Series A
Investor shares outstanding) 100.0% $696,014,463
====== ============
NET ASSET VALUE AND REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND SERIES A
INVESTOR SHARE
($696,014,463 / 50,001,131) $13.92
======
OFFERING PRICE PER INSTITUTIONAL AND
SERVICE SHARE $13.92
======
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($13.92 / .955) $14.58
======
</TABLE>
- -------------
* Also for Federal income tax purposes. The gross
unrealized appreciation (depreciation) on a tax basis is
as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $138,690,177
Gross unrealized depreciation (7,541,852)
------------
$131,148,325
============
</TABLE>
** Non-income producing security.
See accompanying notes to financial statements.
14
<PAGE> 131
THE PNC(R) FUND
GROWTH EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS -- 95.7%
ADVERTISING -- 1.9%
Interpublic Group of Cos., Inc. 73,900 $ 2,937,525
Omnicom Group, Inc. 43,900 2,858,988
------------
5,796,513
------------
AEROSPACE -- 1.2%
Allied-Signal, Inc. 78,000 3,441,750
------------
AIR TRANSPORT -- 1.0%
Southwest Airlines 116,000 2,929,000
------------
BANKS -- 1.8%
BankAmerica Corp. 42,000 2,514,750
Boatmen's Bancshares, Inc. 75,000 2,775,000
------------
5,289,750
------------
BEVERAGES -- 3.2%
Anheuser-Busch Cos., Inc. 49,600 3,093,800
Coca-Cola Co. 50,000 3,450,000
Pepsico, Inc. 62,900 3,207,900
------------
9,751,700
------------
BROADCASTING -- 2.1%
Capital Cities ABC, Inc. 25,900 3,046,488
Viacom, Inc. Class B 64,400** 3,203,900
------------
6,250,388
------------
CHEMICALS -- 3.4%
Air Products & Chemicals, Inc. 45,000 2,345,625
E. I. Du Pont
de Nemours & Co. 34,000 2,337,500
Morton International, Inc. 91,000 2,821,000
PPG Industries, Inc. 55,000 2,557,500
------------
10,061,625
------------
COMPUTER & OFFICE EQUIPMENT -- 6.9%
Adaptec, Inc. 72,000** 2,970,000
Compaq Computer Corp. 57,400** 2,776,725
HBO & Co. 42,000 2,625,000
Intel Corp. 76,600 4,605,575
International Business
Machines Corp. 46,700 4,407,313
Xerox Corp. 22,800 3,063,750
------------
20,448,363
------------
COMPUTER SOFTWARE & SERVICES -- 6.0%
Automatic Data Processing, Inc. 42,000 2,861,250
Cisco Systems, Inc. 63,500** 4,381,500
Computer Sciences Corp. 29,000** 1,866,875
First Data Corp. 36,400 2,256,800
Microsoft Corp. 35,400** 3,203,700
Oracle Corp. 86,200** 3,307,925
------------
17,878,050
------------
CONSTRUCTION -- 0.2%
Foster Wheeler Corp. 21,000 742,875
------------
ELECTRONICS -- 15.0%
AMP, Inc. 86,800 3,341,800
Atmel Corp. 109,500** 3,695,625
Emerson Electric Co. 51,600 3,689,400
General Electric Co. 91,900 5,858,625
General Instruments 77,800** 2,334,000
Hewlett Packard Co. 34,200 2,851,425
LSI Logic Corp. 78,000** 4,504,500
Micron Technology, Inc. 52,800 4,197,600
Motorola, Inc. 60,600 4,628,325
Teradyne, Inc. 79,600** 2,865,600
Texas Instruments, Inc. 47,800 3,818,025
Varian Associates, Inc. 55,800 2,957,400
------------
44,742,325
------------
ENTERTAINMENT & LEISURE -- 4.2%
Carnival Corp. Class A 127,000 3,048,000
La Quinta Inns, Inc. 116,000 3,248,000
Marriot International, Inc. 96,000 3,588,000
Walt Disney Co. 44,400 2,547,450
------------
12,431,450
------------
FINANCE -- 6.0%
Dean Witter Discover & Co. 50,400 2,835,000
Federal National Mortgage
Association 27,500 2,846,250
First Financial
Management Corp. 30,000 2,928,750
First USA, Inc. 62,000 3,363,500
Merrill Lynch & Co., Inc. 52,000 3,250,000
Reuters Holdings PLC ADR 53,000 2,802,375
------------
18,025,875
------------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 132
GROWTH EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
FOOD & AGRICULTURE -- 1.2%
CPC International, Inc. 54,000 $ 3,564,000
------------
INSURANCE -- 3.6%
Ace, Ltd. 69,000 2,371,875
American International
Group, Inc. 37,500 3,187,500
American Re Corp. 37,000 1,424,500
General Re Corp. 24,700 3,729,700
------------
10,713,575
------------
MACHINERY & HEAVY EQUIPMENT -- 5.5%
Applied Materials, Inc. 28,700** 2,934,575
Black & Decker Corp. 91,400 3,119,025
Illinois Tool Works, Inc. 77,000 4,533,375
Millipore Corp. 80,000 3,000,000
Parker-Hannifin Corp. 70,600 2,682,800
------------
16,269,775
------------
MEDICAL & MEDICAL SERVICES -- 3.1%
Columbia HCA Healthcare Corp. 40,000 1,945,000
Cordis Corp. 20,700** 1,754,325
Healthsouth Corp. 150,000** 3,825,000
Pacificare Health Systems, Inc.
Class B 25,500 1,734,000
------------
9,258,325
------------
MOTOR VEHICLES -- 1.3%
Cooper Tire & Rubber Co. 70,000 1,697,500
Echlin, Inc. 60,000 2,145,000
------------
3,842,500
------------
PHARMACEUTICALS -- 8.4%
Abbott Laboratories, Inc. 75,000 3,196,875
American Home Products Corp. 33,000 2,800,875
Amgen, Inc. 79,800** 3,980,025
Johnson & Johnson 55,000 4,076,875
Merck & Co., Inc. 55,000 3,080,000
Pfizer, Inc. 56,000 2,989,000
Teva Pharmaceutical
Industries Ltd. ADR 70,400 2,543,200
Warner-Lambert Co. 25,000 2,381,250
------------
25,048,100
------------
PUBLISHING & PRINTING -- 1.0%
McGraw Hill Cos., Inc. 37,000 3,024,750
------------
RESTAURANTS -- 1.0%
McDonalds Corp. 77,000 2,945,250
------------
RETAIL MERCHANDISING -- 8.0%
Albertson's, Inc. 89,000 3,037,125
Kroger Co. 95,200** 3,248,700
Mattel, Inc. 96,062 2,821,821
OfficeMax, Inc. 140,100** 3,397,425
Petsmart, Inc. 100,100** 3,378,375
Service Corp. International 75,000 2,934,375
Staples, Inc. 130,000** 3,672,500
Wal-Mart Stores, Inc. 56,800 1,412,900
------------
23,903,221
------------
SOAPS & COSMETICS -- 4.2%
Avon Products, Inc. 30,000 2,152,500
Dial Corp. 95,000 2,351,250
Gillette Co. 72,000 3,429,000
Procter & Gamble Co. 60,000 4,620,000
------------
12,552,750
------------
TELECOMMUNICATIONS -- 3.5%
AT&T Corp. 110,500 7,265,374
DSC Communications Corp. 55,800** 3,306,150
------------
10,571,524
------------
TOBACCO -- 2.0%
Philip Morris Cos., Inc. 73,500 6,137,250
------------
TOTAL COMMON STOCKS
(Cost $224,041,912) 285,620,684
------------
<CAPTION>
PAR
MATURITY (000)
--------- ---------
<S> <C> <C> <C>
U.S. TREASURY BILLS -- 0.1%
5.265% 12/14/95 $ 300*** 296,678
------------
(Cost $296,753)
AGENCY OBLIGATIONS -- 3.1%
Federal Home Loan Bank
Discount Notes
6.30% 10/02/95 9,145 9,143,400
------------
(Cost $9,143,400)
</TABLE>
See accompanying notes to financial statements.
16
<PAGE> 133
GROWTH EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
------------
<S> <C> <C>
TOTAL INVESTMENTS IN
SECURITIES
(Cost $233,482,065*) 98.9% $295,060,762
OTHER ASSETS IN EXCESS
OF LIABILITIES 1.1% 3,285,207
------- ------------
NET ASSETS (Applicable to
16,239,693 Institutional
shares, 5,897,855 Service
shares, and 771,222 Series A
Investor shares outstanding) 100.0% $298,345,969
======= ============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($211,543,419 / 16,239,693) $13.03
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SERVICE
SHARE
($76,768,861 / 5,897,855) $13.02
======
NET ASSET VALUE AND REDEMPTION PRICE PER
SERIES A INVESTOR SHARE
($10,033,689 / 771,222) $13.01
======
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($13.01 / 955) $13.62
======
</TABLE>
- -------------
* Also cost for Federal income tax purposes. The gross
unrealized appreciation (depreciation) on a tax basis is
as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $62,398,340
Gross unrealized depreciation (819,643)
-----------
$61,578,697
===========
</TABLE>
** Non-income producing security.
*** Principal amount of securities pledged as initial margin
requirement of $250,000 on 25 Standard & Poor's 500
Stock Index futures contracts expiring December 1995.
See accompanying notes to financial statements.
17
<PAGE> 134
THE PNC(R) FUND
SMALL CAP GROWTH EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS -- 87.1%
BROADCASTING -- 0.7%
Tekelec 65,400** $ 1,471,500
------------
BUSINESS SERVICES -- 6.8%
ABR Information Services 44,700** 1,128,675
Accustaff, Inc. 64,800** 2,381,400
HCIA, Inc. 64,000** 1,648,000
Norrell Corp. 40,900 1,329,250
Paychex, Inc. 14,250 659,063
Quintiles Transnational Corp. 37,000** 2,183,000
Robert Half International, Inc. 62,800** 2,143,050
Sitel Corp. 45,000** 1,102,500
US Delivery Systems, Inc. 70,000** 2,012,500
------------
14,587,438
------------
COMPUTER & OFFICE EQUIPMENT -- 12.3%
Baan Company 28,900** 1,300,500
CBT Group PLC 40,700** 1,943,425
Cognex Corp. 54,500** 2,629,625
Cybex Computer Products Corp. 40,000** 1,000,000
Cycare Systems, Inc. 27,000** 897,750
Datalogix International 20,600** 293,550
Discreet Logic, Inc. 31,400** 1,727,000
EIS International Inc 71,000** 1,269,125
HBO & Co. 26,000 1,625,000
Hummingbird
Communications LTD 35,800** 1,333,550
IMNT Systems, Inc. 44,800** 1,153,600
Integrated Measurement System 29,600** 392,200
Madge Network N.V. 34,300** 1,097,600
Microcom, Inc. 110,000** 2,076,250
Peak Technologies Group 55,000** 1,457,500
Premenos Technology Corp. 9,600** 312,000
Touchstone Software Corp. 15,300** 164,475
U.S. Robotics Corp. 60,000** 5,115,000
Vidioserver, Inc. 20,600** 726,150
------------
26,514,300
------------
COMPUTER SOFTWARE & SERVICES -- 12.5%
Acxiom Corp. 80,000** 2,260,000
American Management
Systems, Inc. 30,900** 826,575
Aspen Technology, Inc. 60,600** 1,818,000
Atria Software, Inc. 87,000** 2,544,750
Davidson & Associates, Inc. 41,000** 1,424,750
Electronics For Imaging Inc. 20,400** 1,461,150
Epic Design Technology, Inc. 47,100** 2,284,350
Fair, Issac & Co., Inc. 27,000 783,000
Macromedia, Inc. 84,400** 4,821,350
Medic Computer Systems, Inc. 29,900** 1,517,425
Netmanage, Inc. 58,300** 1,384,625
Shiva Corp. 37,000** 2,266,250
Softkey International, Inc. 80,000** 3,540,000
------------
26,932,225
------------
ELECTRONICS -- 10.7%
ASM Lithography Holding 33,600** 1,474,200
Electro Scientific Industries,
Inc. 49,300** 1,719,338
FSI International, Inc. 90,000** 2,992,500
Harman International
Industries, Inc. 17,850 874,650
International Rectifier Corp. 54,000** 2,173,500
LAM Research Corp. 22,400** 1,338,400
Memc Electronic Materials 34,900** 946,663
Micrel, Inc. 66,400** 1,859,200
Ontrak Systems, Inc. 3,000** 82,875
Photronics, Inc. 67,500** 2,261,250
Silicon Valley Group, Inc. 40,000** 1,545,000
Telecom Semiconductor, Inc. 45,600** 524,400
Tencor Instruments 22,800** 1,008,900
Tower Semiconductor Ltd. 71,800** 2,333,500
Ultratech Stepper, Inc. 44,000** 1,859,000
------------
22,993,376
------------
ENTERTAINMENT & LEISURE -- 4.3%
Doubletree Corp. 76,000** 1,691,000
Hollywood Entertainment Corp. 54,400** 1,166,200
Regal Cinemas, Inc. 84,600** 3,479,175
Scientific Games
Holding Corp., Inc. 60,000** 2,242,500
Speedway Motorsports, Inc. 27,600** 717,600
------------
9,296,475
------------
FINANCE -- 1.2%
Jayhawk Acceptance Corp. 54,200** 792,675
Recoton Corp. 31,200** 858,000
WFS Financial, Inc. 41,600** 946,400
------------
2,597,075
------------
INSURANCE -- 0.1%
United Dental Care, Inc. 6,100** 183,000
------------
MANUFACTURING -- 0.2%
Southern Energy Homes 31,200** 495,300
------------
</TABLE>
See accompanying notes to financial statements.
18
<PAGE> 135
SMALL CAP GROWTH EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MEDICAL & MEDICAL SERVICES -- 5.4%
American Homepatient, Inc. 50,000** $ 1,275,000
American Oncology
Resources, Inc. 60,000** 2,580,000
Clintrials Research 30,600** 619,650
Medpartners, Inc. 33,100** 1,042,650
Occusystems, Inc. 43,200** 896,400
Orthodontic Centers of
America, Inc. 71,300** 2,299,425
Pediatrix Medical Group Inc. 21,800** 446,900
Phycor, Inc. 70,200** 2,404,350
------------
11,564,375
------------
MEDICAL INSTRUMENTS & SUPPLIES -- 7.7%
Arrow International, Inc. 32,000 1,384,000
Gulf South Medical Supply, Inc. 60,000** 1,477,500
IDEXX Laboratories, Inc. 70,000** 2,607,500
Isolyser Company, Inc. 33,300** 1,136,363
Medisense, Inc. 69,200** 1,669,450
Omnicare, Inc. 50,000 1,950,000
Orthofix International, N.V. 75,000** 1,162,500
Physician Sales & Service, Inc. 28,900** 1,387,200
Steris Corp. 52,000** 2,190,500
Target Therapeutics, Inc. 25,000** 1,750,000
------------
16,715,013
------------
PHARMACEUTICALS -- 1.2%
Dura Pharmaceuticals 90,000** 2,677,500
------------
PUBLISHING & PRINTING -- 1.2%
Gartner Group, Inc. 80,000** 2,620,000
------------
REAL ESTATE -- 0.6%
Storage USA, Inc. 40,000 1,235,000
------------
RESTAURANTS -- 2.0%
Applebee's International, Inc. 36,000** 981,000
Landry's Seafood
Restaurants, Inc. 90,400** 1,627,200
Logan's Roadhouse, Inc. 3,500** 61,250
O'Charley's, Inc. 18,000** 270,000
Papa John's International, Inc. 28,500** 1,282,500
Quality Dining, Inc. 9,700** 177,025
------------
4,398,975
------------
RETAIL MERCHANDISING -- 12.0%
Bed, Bath & Beyond, Inc. 29,600** 902,800
Books-A-Million, Inc. 80,000** 1,410,000
Copart, Inc. 75,000** 1,706,250
Dollar Tree Stores, Inc. 26,300** 894,200
Friedman's, Inc. 86,100** 1,872,675
Global Directmail Corp. 17,000** 418,625
Just For Feet, Inc. 100,350** 3,085,762
Kenneth Cole Productions 55,000** 1,931,875
Mens Warehouse, Inc. 54,300** 1,954,800
Micro Warehouse, Inc. 29,900** 1,367,925
Movie Gallery, Inc. 60,000** 2,565,000
Oakley, Inc. 10,200** 302,175
Petco Animal Supplies, Inc. 46,700** 1,214,200
Piercing Pagoda, Inc. 30,200** 422,800
Quicksilver, Inc. 66,000** 1,790,250
Sunglass Hut International,
Inc. 70,500** 3,525,000
Trend-Lines, Inc. 46,500** 616,125
------------
25,980,462
------------
SANITARY SERVICES -- 2.1%
Sanifill, Inc. 33,900** 1,110,225
United Waste Systems, Inc. 80,500** 3,360,875
------------
4,471,100
------------
SOAPS & COSMETICS -- 0.5%
USA Detergents, Inc. 56,300** 1,168,225
------------
TELECOMMUNICATIONS -- 3.0%
Adtran, Inc. 60,000** 2,085,000
Cascade Communications Corp. 30,000** 1,477,500
Gilat Satellite Networks 75,000** 2,062,500
World Communications, Inc. 23,400** 751,724
------------
6,376,724
------------
TEXTILE -- 2.6%
Authentic Fitness Corp. 30,600** 688,500
Nautical Enterprises 56,000** 1,918,000
St. John Knits, Inc. 30,000 1,462,500
Tommy Hilfiger Corp. 50,000** 1,625,000
------------
5,694,000
------------
TOTAL COMMON STOCKS
(Cost $121,597,638) 187,972,063
------------
</TABLE>
See accompanying notes to financial statements.
19
<PAGE> 136
SMALL CAP GROWTH EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- ------------
<S> <C> <C> <C>
CORPORATE BONDS -- 0.7%
Sholodge, Inc.
7.50% 05/01/04 $ 1,500 $ 1,395,000
------------
(Cost $1,500,000)
AGENCY OBLIGATIONS -- 13.3%
FEDERAL HOME LOAN BANK DISCOUNT
NOTES -- 8.7%
6.30% 10/02/95 18,780 18,776,713
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION DISCOUNT
NOTES -- 4.6%
5.64% 10/04/95 10,000 9,995,300
------------
TOTAL AGENCY OBLIGATIONS
(Cost $28,772,013) 28,772,013
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $151,869,651*) 101.1% 218,139,076
LIABILITIES IN EXCESS OF OTHER
ASSETS (1.1%) (2,272,703)
------- ------------
NET ASSETS (Applicable to
9,687,278 Institutional shares,
4,166,735 Service shares and
490,591 Series A Investor
shares outstanding) 100.0% $215,866,373
======= ============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL SHARE
($145,914,595 / 9,687,278) $15.06
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SERVICE SHARE
($62,604,171 / 4,166,735) $15.02
======
NET ASSET VALUE AND REDEMPTION PRICE PER
SERIES A INVESTOR SHARE
($7,347,607 / 490,591) $14.98
======
MAXIMUM OFFERING PRICE PER SERIES
A INVESTOR SHARE
($14.98 / .955) $15.69
======
</TABLE>
- -------------
* Also cost for Federal income tax purposes. The gross
unrealized appreciation (depreciation) on a tax basis is
as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $66,856,668
Gross unrealized depreciation (587,243)
-----------
$66,269,425
===========
</TABLE>
** Non-income producing security.
See accompanying notes to financial statements.
20
<PAGE> 137
THE PNC(R) FUND
CORE EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS -- 75.4%
AEROSPACE -- 1.9%
Boeing Co. 43,000 $ 2,934,750
United Technologies Corp. 38,000 3,358,250
------------
6,293,000
------------
BANKS -- 3.6%
BankAmerica Corp. 39,000 2,335,125
Boatmen's Bancshares, Inc. 65,000 2,405,000
Citicorp 49,000 3,466,750
NationsBank Corp. 52,000 3,497,000
------------
11,703,875
------------
BEVERAGES -- 1.5%
Coca-Cola Co. 23,500 1,621,500
Pepsico, Inc. 62,000 3,162,000
------------
4,783,500
------------
CHEMICALS -- 3.0%
Air Products & Chemicals, Inc. 47,000 2,449,875
Dow Chemical Co. 30,000 2,235,000
E.I. Dupont
de Nemours & Co. 43,000 2,956,250
PPG Industries, Inc. 29,000 1,348,500
Rohm & Haas Co. 13,000 784,875
------------
9,774,500
------------
COMPUTER & OFFICE EQUIPMENT -- 3.7%
Adaptec, Inc. 53,000 2,186,250
Compaq Computer Corp. 58,000** 2,805,750
Intel Corp. 67,000 4,028,375
International Business
Machines Corp. 33,000 3,114,375
------------
12,134,750
------------
COMPUTER SOFTWARE & SERVICES -- 0.9%
Bay Networks 55,000** 2,935,625
------------
CONSTRUCTION -- 2.6%
Fluor Corp. 37,000 2,072,000
Foster Wheeler Corp. 33,000 1,167,375
Halliburton Co. 56,600 2,363,050
Masco Corp. 100,000 2,750,000
------------
8,352,425
------------
ELECTRONICS -- 6.4%
Emerson Electric Co. 51,000 3,646,500
General Electric Co. 106,100 6,763,875
General Instruments 76,000** 2,280,000
Motorola, Inc. 57,000 4,353,375
Texas Instruments, Inc. 47,000 3,754,125
------------
20,797,875
------------
ENERGY & UTILITIES -- 2.0%
Cinergy Corp. 24,200 674,575
FPL Group, Inc. 27,000 1,103,625
Northern States Power Co.,
Minnesota 20,000 907,500
PECO Energy Co. 79,000 2,261,375
Southern Co. 63,000 1,488,375
------------
6,435,450
------------
ENTERTAINMENT & LEISURE -- 2.1%
Carnival Cruise Lines 130,200 3,124,800
Walt Disney Co. 63,000 3,614,625
------------
6,739,425
------------
FINANCE -- 3.2%
Dean Witter Discover & Co. 56,000 3,150,000
Federal National Mortgage
Association 42,000 4,347,000
Fleet Financial Group, Inc. 75,000 2,831,250
------------
10,328,250
------------
FOOD & AGRICULTURE -- 4.6%
Burlington Northern
Santa Fe Corp. 41,000 2,972,500
CPC International, Inc. 46,000 3,036,000
CSX Corp. 18,200 1,531,075
H.J. Heinz Co. 45,000 2,058,750
Pioneer Hi-Bred
International, Inc. 70,000 3,220,000
Sara Lee Corp. 76,000 2,261,000
------------
15,079,325
------------
INSURANCE -- 4.5%
American International
Group, Inc. 53,500 4,547,500
General Re Corp. 25,000 3,775,000
Humana, Inc. 90,500** 1,821,313
Marsh & Mc-Lennan Cos., Inc. 20,000 1,757,500
United Healthcare Corp. 56,600 2,766,325
------------
14,667,638
------------
MACHINERY & HEAVY EQUIPMENT -- 1.1%
Illinois Tool Works, Inc. 33,000 1,942,875
Novellus System, Inc. 25,000** 1,750,000
------------
3,692,875
------------
MEDICAL & MEDICAL SERVICES -- 0.4%
Columbia Healthcare Corp. 30,000 1,458,750
------------
</TABLE>
See accompanying notes to financial statements.
21
<PAGE> 138
CORE EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
METAL & MINING -- 1.2%
Alumax, Inc. 40,000** $ 1,350,000
Minnesota Mining &
Manufacturing Co. 43,000 2,429,500
------------
3,779,500
------------
MOTOR VEHICLES -- 1.4%
Cummins Engine, Inc. 48,000 1,848,000
Ford Motor Co. 91,000 2,832,375
------------
4,680,375
------------
OIL & GAS -- 5.6%
Atlantic Richfield Co. 24,000 2,577,000
Exxon Corp. 44,800 3,236,800
Kerr-McGee Corp. 57,500 3,191,250
Noble Affiliates, Inc. 69,800 1,840,975
Royal Dutch Petroleum Co. 24,000 2,946,000
Schlumberger LTD. 28,000 1,827,000
Unocal Corp. 94,000 2,679,000
------------
18,298,025
------------
PAPER & FOREST PRODUCTS -- 1.0%
Crown Vantage, Inc. 5,000** 111,250
International Paper Co. 38,000 1,596,000
James River Corp. of Virginia 50,000 1,600,000
------------
3,307,250
------------
PHARMACEUTICALS -- 6.5%
American Home Products Corp. 42,000 3,564,750
Avon Products, Inc. 37,000 2,654,750
Eli Lilly & Co. 39,000 3,505,125
Johnson & Johnson 44,000 3,261,500
Merck & Co., Inc. 52,500 2,940,000
Pfizer, Inc. 55,600 2,967,650
US Healthcare, Inc. 69,000 2,440,875
------------
21,334,650
------------
PUBLISHING & PRINTING -- 2.0%
A.H. Belo Corp. 73,000 2,509,375
McGraw Hill Cos., Inc. 22,000 1,798,500
News Corp. Ltd. ADR 106,000 2,332,000
------------
6,639,875
------------
RESTAURANTS -- 0.4%
Wendy's International, Inc. 67,000 1,415,375
------------
RETAIL MERCHANDISING -- 4.2%
Family Dollar Stores, Inc. 110,000 2,090,000
Home Depot, Inc. 50,000 1,993,750
J. C. Penney Co., Inc. 39,000 1,935,375
Limited, Inc. 110,000 2,090,000
May Department Stores Co. 44,000 1,925,000
Wal-Mart Stores., Inc. 146,000 3,631,750
------------
13,665,875
------------
SOAPS & COSMETICS -- 2.2%
Colgate-Palmolive Co. 55,000 3,664,375
Dial Corp. 140,000 3,465,000
------------
7,129,375
------------
TELECOMMUNICATIONS -- 7.7%
Alltel Corp. 109,000 3,256,375
AT&T Corp. 56,000 3,682,000
Bell Atlantic Corp. 43,000 2,639,125
Frontier Corp. 103,000 2,742,375
GTE Corp. 77,000 3,022,250
Oracle Corp. 92,000 3,530,500
SBC Communications, Inc. 72,000 3,960,000
Vodafone Group 49,000 2,009,000
------------
24,841,625
------------
TOBACCO -- 1.2%
Philip Morris Cos., Inc. 48,000 4,008,000
------------
TRANSPORTATION -- 0.5%
Conrail Corp. 25,500 1,753,125
------------
TOTAL COMMON STOCKS
(Cost $214,295,309) 246,030,313
------------
<CAPTION>
PAR
MATURITY (000)
--------- ---------
<S> <C> <C> <C>
CORPORATE BONDS -- 0.5%
Apache Corp.
6.00% 01/15/02 $ 1,400 1,547,000
(Cost $1,400,000)
------------
U.S. TREASURY BILLS -- 0.8%
5.19% 12/21/95 2,000*** 1,975,872
5.28% 12/21/95 800*** 790,351
------------
TOTAL U.S. TREASURY BILLS
(Cost $2,767,141) 2,766,223
------------
</TABLE>
See accompanying notes to financial statements.
22
<PAGE> 139
CORE EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 23.2%
FEDERAL HOME LOAN BANK DISCOUNT
NOTES -- 9.4%
6.30% 10/02/95 $30,615 $ 30,609,642
FEDERAL HOME LOAN MORTGAGE
CORPORATION DISCOUNT
NOTES -- 13.8%
5.60% 10/05/95 45,000 44,972,000
------------
TOTAL AGENCY OBLIGATIONS
(Cost $75,581,642) 75,581,642
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $294,044,092*) 99.9% 325,925,178
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.1% 401,291
------- ------------
NET ASSETS (Applicable to
20,093,724 Institutional
shares, 7,044,608 Service
shares, and 320,632 Series A
Investor shares outstanding) 100.0% $326,326,469
======= ============
NET ASSET VALUE AND REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND SERIES A
INVESTOR SHARE
($326,326,469 / 27,458,964) $11.88
======
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $11.88
======
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($11.88 / .955) $12.44
======
</TABLE>
- -------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $33,405,313
Gross unrealized depreciation (1,524,227)
-----------
$31,881,086
===========
</TABLE>
** Non-income producing security.
*** Principal amount of securities pledged as initial
margin requirement of $2,570,000 on 257 Standard &
Poor's 500 Stock Index futures contracts expiring
December 1995.
See accompanying notes to financial statements.
23
<PAGE> 140
THE PNC(R) FUND
INDEX EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS -- 97.9%
ADVERTISING -- 0.0%
Interpublic Group of Cos., Inc. 200 $ 7,950
------------
AEROSPACE -- 2.0%
Boeing Co. 12,500 853,124
General Dynamics Corp. 2,900 159,137
Lockheed Martin Corp. 17,353 1,164,820
Mc Donnell Douglas Corp. 3,200 264,800
Northrop Grumman Corp. 2,200 133,924
Rockwell International Corp. 9,400 444,150
Textron, Inc. 3,200 218,400
United Technologies Corp. 4,400 388,850
------------
3,627,205
------------
AIR TRANSPORTATION -- 0.4%
AMR Corp. 2,700** 194,737
Delta Air Lines, Inc. 2,300 159,274
Federal Express Corp. 1,900** 157,700
Southwest Airlines Co. 6,100 154,024
U.S. Air Group, Inc. 2,800** 32,200
------------
697,935
------------
APPAREL -- 0.7%
Brown Group, Inc. 600 11,024
Charming Shoppes, Inc. 4,900 22,050
Gap, Inc. 5,900 212,400
Hartmarx Corp. 1,500 9,000
Limited, Inc. 15,600 296,400
Liz Claiborne, Inc. 3,700 93,424
Nike, Inc. 2,400 266,700
Oshkosh B' Gosh, Inc. 600 9,600
Reebok International, LTD. 3,900 134,062
Russell Corp. 1,900 48,450
Spring Industries, Inc. 600 23,550
Stride Rite Corp. 2,300 26,162
V.F. Corp. 2,200 112,200
------------
1,265,022
------------
AUTOMOTIVE -- 2.5%
Chrysler Corp. 15,300 810,900
Cummins Engine Co., Inc. 1,900 73,150
Dana Corp. 4,700 135,712
Eaton Corp. 2,700 143,100
Echlin, Inc. 2,700 96,524
Ford Motor Co. 42,800 1,332,150
General Motors Corp. 31,600 1,481,250
Genuine Parts Co. 5,000 200,624
Navistar International Corp. 1,620** 19,440
S.P.X. Corp. 600 8,924
Skyline Corp. 600 10,800
Strattec Security Corp. 320** 4,560
T.R.W., Inc. 2,000 148,750
------------
4,465,884
------------
BANKS -- 5.6%
Banc One Corp. 16,045 585,642
Bank of Boston Corp. 6,400 304,800
BankAmerica Corp. 14,712 880,880
Bankers Trust New York Corp. 4,700 330,174
Barnett Banks, Inc. 3,800 215,174
Boatmen's Bancshares, Inc. 7,300 270,100
Chase Manhattan Corp. 7,600 464,550
Chemical Banking Corp. 9,230 561,875
Citicorp 15,800 1,117,850
CoreStates Financial Corp. 6,500 238,062
First Chicago Corp. 3,500 240,187
First Fidelity Bancorp 3,200 216,000
First Interstate Bancorp 2,300 231,724
First Union Corp. 7,660 390,660
Fleet Financial Group, Inc. 7,700 290,674
Keycorp 9,800 335,650
MBNA Corp. 8,650 360,055
Mellon Bank Corp. 6,250 278,905
N.B.D. Bancorp, Inc. 7,250 277,312
Nationalcity Corp. 8,700 268,612
NationsBank Corp. 10,847 729,460
Norwest Corp. 13,900 455,224
Shawmut National Corp. 7,000 235,374
Suntrust Banks, Inc. 4,200 277,724
U.S. Bancorp 4,950 139,837
Wells Fargo & Co. 1,500 278,437
------------
9,974,942
------------
BEVERAGES -- 3.8%
Anheuser-Busch Cos., Inc. 10,700 667,412
Brown-Forman Corp. 3,200 124,400
Coca Cola Co. 52,700 3,636,300
Coors Adolph Co. 1,700 30,493
Pepsico, Inc. 33,500 1,708,500
Seagram Co., Ltd. 14,500 520,187
------------
6,687,292
------------
BROADCASTING -- 0.9%
Capital Cities ABC, Inc. 3,800 446,974
CBS, Inc. 2,300 183,712
Comcast Corp. 11,350 227,000
Cox Communications, Inc. 3,692** 74,762
Tele Communications, Inc. 25,900** 454,868
Viacom, Inc. 5,913 294,171
------------
1,681,487
------------
</TABLE>
See accompanying notes to financial statements.
24
<PAGE> 141
INDEX EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
BUSINESS MACHINES -- 2.0%
D.S.C. Communication Corp. 4,400** $ 260,700
Harris Computer Systems Corp. 90** 1,518
Intergraph Corp. 2,000** 24,250
International Business
Machines Corp. 24,500 2,312,187
Pitney Bowes, Inc. 6,300 264,600
Unisys Corp. 8,300** 65,362
Xerox Corp. 4,000 537,500
------------
3,466,117
------------
BUSINESS SERVICES -- 0.7%
Alco Standard Corp. 1,600 135,600
Automatic Data Processing, Inc. 5,900 401,937
Deluxe Corp. 4,000 132,500
Ecolab, Inc. 2,800 77,350
First Data Corp. 4,700 291,400
John H. Harland Co. 1,500 33,187
Moore Corp., Ltd. 4,600 92,574
National Education Corp. 1,300 10,400
Ogden Corp. 2,000 47,000
Shared Medical Systems Corp. 900 37,350
------------
1,259,298
------------
CHEMICALS -- 3.5%
Air Products & Chemicals, Inc. 4,500 234,562
B.F. Goodrich Co. 1,000 65,874
Dow Chemical Co. 11,600 864,200
E.I. Dupont de Nemours & Co. 25,900 1,780,624
Eastman Chemical Co. 3,125 200,000
Engelhard Corp. 5,637 143,038
F.M.C. Corp. 1,600 121,600
First Mississippi Corp. 1,000 39,874
Great Lakes Chemical Corp. 2,200 148,774
Hercules, Inc. 4,600 266,800
Mallinckrodt Group, Inc. 3,700 146,612
Monsanto Co. 3,900 392,924
Morton International, Inc. 6,100 189,100
Nalco Chemical Co. 3,300 112,612
P.P.G. Industries, Inc. 8,500 395,250
Praxair, Inc. 5,900 157,825
Rohm & Haas Co. 2,200 132,825
Safety-Kleen Corp. 2,700 39,488
Sherwin Williams Co. 4,000 140,000
Sigma Aldrich Corp. 2,300 111,550
Union Carbide Corp. 5,600 222,600
W.R. Grace & Co. 3,500 233,625
------------
6,139,757
------------
COMPUTER AND OFFICE EQUIPMENT -- 4.3%
Amdahl Corp. 5,600** 53,900
Apple Computer, Inc. 4,900 182,525
Autodesk, Inc. 2,300 100,625
Ceridian Corp. 2,000** 88,750
Compaq Computer Corp. 10,800** 522,450
Computer Associates
International, Inc. 9,500 401,375
Computer Sciences Corp. 2,500 160,938
Cray Research, Inc. 1,100** 24,338
Data General Corp. 1,500** 15,563
Digital Equipment Corp. 6,200** 282,875
Intel Corp. 34,200 2,056,275
Microsoft Corp. 24,500** 2,217,250
Novell, Inc. 15,600** 284,700
Oracle Systems Corp. 18,200** 698,425
Silicon Graphics, Inc. 6,600 226,875
Sun Microsystems, Inc. 3,560** 224,280
Tandem Computers, Inc. 5,500** 67,375
------------
7,608,519
------------
CONGLOMERATES -- 0.2%
I.T.T. Corp. 3,500 434,000
------------
CONSTRUCTION -- 1.0%
Armstrong World Industries,
Inc. 1,700 94,350
Centex Corp. 1,300 37,700
Corning, Inc. 8,700 249,038
Fluor Corp. 3,100 173,600
Foster Wheeler Corp. 1,600 56,600
Halliburton Co. 4,500 187,875
Home Depot, Inc. 20,382 812,732
Kaufman & Broad Home Corp. 1,500 18,938
Morrison Knudson Corp. 1,300 10,075
Owens-Corning
Fiberglass Corp. 1,900** 84,788
Pulte Corp. 1,100 31,213
------------
1,756,909
------------
CONSUMER DURABLES -- 0.3%
Bassett Furniture,
Industries, Inc. 750 18,844
Black & Decker Corp. 4,000 136,500
Maytag Corp. 5,100 89,250
Newell Co. 6,400 158,400
Outboard Marine Corp. 700 15,050
Whirlpool Corp. 2,800 161,700
Zenith Electronics Corp. 1,800 15,525
------------
595,269
------------
</TABLE>
See accompanying notes to financial statements.
25
<PAGE> 142
INDEX EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER NON-DURABLES -- 0.3%
Brunswick Corp. 4,300 $ 87,075
Handleman Co. 1,500 13,313
Premark International, Inc. 2,800 142,450
Rubbermaid, Inc. 6,700 185,088
Service Corp. International 4,100 160,413
------------
588,339
------------
CONTAINERS -- 0.1%
Ball Corp. 1,400 41,475
Bemis Co., Inc. 2,300 63,538
Crown Cork & Seal Co., Inc. 3,400 131,750
------------
236,763
------------
DRUGS AND HEALTH CARE -- 7.7%
Abbott Laboratories, Inc. 33,600 1,432,200
Allergan, Inc. 3,000 100,125
Alza Corp. 3,900** 89,700
American Home Products Corp. 13,100 1,111,863
Amgen, Inc. 11,100 553,613
Bristol-Myers Squibb Co. 21,900 1,595,963
Community Psychiatric Centers 2,100 24,675
Eli Lilly & Co. 12,000 1,078,500
Johnson & Johnson 27,300 2,023,613
Manor Care, Inc. 2,950 100,300
Merck & Co., Inc. 44,000 2,464,000
Pfizer, Inc. 26,800 1,430,450
Schering Plough Corp. 15,000 772,500
U. S. Surgical, Corp. 2,700 72,225
UpJohn Co. 6,700 298,988
Warner Lambert Co. 5,500 523,875
------------
13,672,590
------------
ELECTRONICS -- 4.7%
A.M.P., Inc. 10,364 399,014
Advanced Micronic Devices, Inc. 4,000** 116,500
Andrew Corp. 1,725** 105,441
Applied Materials, Inc. 3,000 306,750
E.G.& G., Inc. 2,600 50,700
Emerson Electric Co. 10,600 757,900
General Signal Corp. 2,300 67,275
Harris Corp. 1,800 98,775
Hewlett Packard Co. 20,700 1,725,863
Honeywell, Inc. 5,000 214,375
Johnson Controls, Inc. 1,800 113,850
Loral Corp. 3,100 176,700
Micron Technology, Inc. 8,000 636,000
Motorola, Inc. 24,100 1,840,638
National Semiconductor Corp. 5,800** 160,225
Raytheon Co. 4,900 416,500
Scientific Atlanta Corp. 3,600 60,750
Tektronix, Inc. 1,200 70,800
Teledyne, Inc. 2,600 70,525
Texas Instruments, Inc. 7,200 575,100
Thomas & Betts Corp. 900 58,163
Westinghouse Electric Corp. 18,700 280,500
------------
8,302,344
------------
ENERGY AND RAW MATERIALS -- 2.3%
Baker Hughes, Inc. 5,700 116,138
Dresser Industries, Inc. 7,700 183,838
Eastern Enterprises 900 28,913
Helmerich & Payne, Inc. 1,000 28,125
Royal Dutch Petroleum Co. 22,300 2,737,325
Schlumberger, LTD. 10,600 691,650
USX-Marathon Group, Inc. 12,600 248,850
------------
4,034,839
------------
ENERGY AND UTILITIES -- 4.8%
American Electric
Power Co., Inc. 8,000 291,000
Baltimore Gas & Electric Co. 8,000 207,000
Carolina Power & Light Co. 6,700 225,288
Central & South West Corp. 10,200 260,100
Cinergy Corp. 11,375 317,078
Coastal Corp. 5,850 196,706
Columbia Gas System, Inc. 2,300** 88,838
Consolidated Edison Co., Inc. 9,500 288,563
Consolidated Natural Gas Co. 5,300 213,988
Detroit Edison Co. 5,900 190,275
Dominion Resources, Inc. 7,350 276,544
Duke Power Co. 8,900 386,038
Enron Corp. 10,000 335,000
Enserch Corp. 3,200 52,800
Entergy Corp. 9,900 258,638
F.P.L. Group, Inc. 7,800 318,825
General Public Utilities Corp. 6,400 199,200
Houston Industries, Inc. 5,200 229,450
Niagara Mohawk Power Corp. 6,600 86,625
Nicor, Inc. 2,500 68,125
Noram Energy Corp. 6,000 47,250
Northern States Power Co. 3,200 145,200
Ohio Edison Co. 7,400 168,350
Oneok, Inc. 1,100 25,575
Oryx Energy Co. 4,400 57,200
Pacific Enterprises 3,800 95,475
Pacific Gas & Electric Co. 17,400 519,825
Pacificorp 11,600 220,400
Panhandle Eastern Corp. 6,100 166,225
PECO Energy Co. 10,000 286,250
</TABLE>
See accompanying notes to financial statements.
26
<PAGE> 143
INDEX EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
ENERGY AND UTILITIES (CONTINUED)
Peoples Energy Corp. 1,500 $ 41,250
Public Service Enterprise
Group, Inc. 10,100 300,475
SCECORP 18,900 335,475
Sonat, Inc. 4,100 131,200
Southern Co. 28,300 668,588
Texas Utilities Co. 9,500 331,313
Unicom Corp. 9,600 290,400
Union Electric Co. 6,100 227,988
------------
8,548,520
------------
FINANCE -- 3.4%
Beneficial Corp. 4,200 219,450
Dean Witter Discover & Co. 9,011 506,869
Federal Home Loan
Mortgage Corp. 8,100 559,913
Federal National Mortgage
Association 12,300 1,273,050
Golden West Financial Corp. 4,500 227,250
Great Western Financial Corp. 9,700 230,375
H.F. Ahmanson & Co. 8,900 225,838
Household International, Inc. 5,300 328,600
J.P. Morgan & Co., Inc. 7,600 588,050
Merrill Lynch & Co., Inc. 8,700 543,750
Salomon, Inc. 6,700 256,275
Travelers Group, Inc. 15,647 831,247
Wachovia Corp. 5,300 228,563
------------
6,019,230
------------
FOOD AND AGRICULTURE -- 2.8%
Archer-Daniels-Midland Co. 22,230 341,786
C.P.C. International, Inc. 6,100 402,600
Campbell Soup Co. 10,200 512,550
Conagra, Inc. 9,800 388,325
Fleming Cos., Inc. 1,700 40,800
General Mills, Inc. 6,500 362,375
H.J. Heinz Co. 10,700 489,525
Hershey Foods Corp. 2,700 173,813
Kellogg Co. 8,900 644,138
Pioneer HI Bred
International, Inc. 1,300 59,800
Quaker Oats Co. 5,400 178,875
Ralcorp Holdings, Inc. 2,033** 48,030
Ralston Purina Group 4,000 231,500
Sara Lee Corp. 20,400 606,900
Sysco Corp. 7,700 209,825
W.M. Wrigley Jr., Co. 4,600 232,300
------------
4,923,142
------------
INSURANCE -- 3.5%
Aetna Life & Casualty Co. 4,300 315,513
Alexander & Alexander
Services, Inc. 1,900 46,075
Allstate Corp. 19,189 678,811
American General Corp. 8,800 328,900
American International
Group, Inc. 19,962 1,696,770
Chubb Corp. 2,700 259,200
Cigna Corp. 2,600 270,725
General Re Corp. 2,800 422,800
Jefferson Pilot Corp. 2,250 144,563
Lincoln National Corp. 3,500 164,938
Marsh & Mc Lennan Cos., Inc. 2,400 210,900
Providian Corp. 3,700 153,550
Safeco Corp. 2,000 131,250
St. Paul Cos., Inc. 3,000 175,125
Torchmark Corp. 3,300 139,013
Transamerica Corp. 2,400 171,000
U.S. Life Corp. 1,275 37,294
U.S.F. & G. Corp. 4,200 81,375
United Healthcare Corp. 7,400 361,675
UNUM Corp. 4,700 247,925
US Healthcare, Inc. 6,600 233,475
------------
6,270,877
------------
MACHINERY AND HEAVY EQUIPMENT -- 0.4%
Caterpillar, Inc. 8,800 500,500
Deere & Co. 2,500 203,438
Giddings & Lewis, Inc. 1,600 27,900
Mc Dermott International, Inc. 2,600 51,350
------------
783,188
------------
MANUFACTURING -- 1.2%
AlliedSignal, Inc. 11,300 498,613
Avery Dennison Corp. 2,500 105,000
Masco Corp. 8,600 236,500
Millipore Corp. 2,400 90,000
Minnesota Mining &
Manufacturing Co. 17,600 994,400
Nacco Industries, Inc. 500 29,688
National Service Industries,
Inc. 2,300 67,275
Whitman Corp. 4,800 99,000
------------
2,120,476
------------
MEDIA -- 0.9%
Gannett Co., Inc. 5,600 305,900
King World Productions, Inc. 1,600** 58,600
Knight-Ridder, Inc. 2,300 134,838
New York Times Co. 4,700 128,663
Telecommunications Inc. 8,225 220,019
</TABLE>
See accompanying notes to financial statements.
27
<PAGE> 144
INDEX EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MEDIA (CONTINUED)
Time-Warner, Inc. 16,500 $ 655,875
Tribune Co. 2,200 146,025
------------
1,649,920
------------
MEDICAL AND MEDICAL SERVICES -- 0.1%
Beverly Enterprises, Inc. 3,800 52,250
Tenet Healthcare Corp. 8,800 152,900
------------
205,150
------------
MEDICAL INSTRUMENTS AND SUPPLIES -- 1.1%
Bausch & Lomb, Inc. 2,800 115,850
Baxter International, Inc. 11,600 477,050
Becton, Dickinson & Co. 2,200** 138,325
Biomet, Inc. 5,400 93,150
Boston Scientific Corp. 6,500 277,063
C.R. Bard, Inc. 2,500 76,250
Medtronic, Inc. 9,400 505,250
Perkin Elmer Corp. 2,000 71,250
St. Jude Medical, Inc. 2,100 132,825
------------
1,887,013
------------
METALS AND MINING -- 1.3%
Alcan Aluminum, Ltd. 9,000 291,375
Aluminum Co. of America 6,900 364,838
ASARCO, Inc. 1,900 59,850
Barrick Gold Corp. 14,500 375,188
Cyprus Amax Minerals Co. 4,350 122,344
Echo Bay Mines, Ltd. 5,200 56,550
Homestake Mining Co. 6,500 110,500
Inco, Ltd. 5,600 191,800
Newmont Mining Corp. 3,192 135,660
Phelps Dodge Corp. 2,300 144,038
Placer Dome, Inc. 9,300 244,125
Reynolds Metals Co. 2,000 115,500
Santa Fe Pacific Gold Corp. 5,551** 70,081
------------
2,281,849
------------
OIL DOMESTIC -- 1.6%
Ashland, Inc. 2,800 93,450
Atlantic Richfield Co. 7,000 751,625
Burlington Resources, Inc. 1,000 38,750
Kerr-McGee Corp. 2,300 127,650
Louisiana Land &
Exploration Co. 1,500 53,438
Occidental Petroleum Corp. 13,300 292,600
Pennzoil Co. 2,100 92,138
Phillips Petroleum Co. 10,900 354,250
Rowan Cos., Inc. 3,500** 26,250
Santa Fe Energy
Resources, Inc. 3,980 37,810
Sun Co., Inc. 2,600 66,950
Tenneco, Inc. 7,300 337,625
Unocal Corp. 9,400 267,900
Western Atlas, Inc. 2,200** 104,225
Williams Cos., Inc. 4,557 177,723
------------
2,822,384
------------
OIL INTERNATIONAL -- 4.9%
Amerada Hess Corp. 3,300 160,463
Amoco Corp. 21,400 1,372,275
Chevron Corp. 27,500 1,337,188
Exxon Corp. 47,200 3,410,200
Mobil Corp. 17,500 1,743,438
Texaco, Inc. 10,500 678,563
------------
8,702,127
------------
PAPER AND FOREST PRODUCTS -- 1.8%
Boise Cascade Corp. 1,700 68,638
Champion International, Inc. 3,400 183,175
Crown Vantage, Inc. 380 8,336
Federal Paper Board, Inc. 1,900 72,913
Georgia Pacific Corp. 3,400 297,500
International Paper Co. 10,800 453,600
James River Corp. 3,800 121,600
Kimberly Clark Corp. 6,600 443,025
Louisiana-Pacific Corp. 5,100 123,038
Mead Corp. 2,800 164,150
Potlatch Corp. 1,200 49,050
Scott Paper Co. 5,500 266,750
Stone Container Corp. 4,086 77,634
Temple Inland, Inc. 2,600 138,450
Union Camp Corp. 2,500 144,063
Westvaco Corp. 3,200 146,000
Weyerhaeuser Co. 9,000 410,625
------------
3,168,547
------------
PERSONAL SERVICES -- 0.1%
H&R Block, Inc. 6,000 228,000
------------
PHOTOGRAPHIC EQUIPMENT -- 0.5%
Eastman Kodak Co. 14,100 835,425
Polaroid Corp. 2,100 83,475
------------
918,900
------------
PRODUCER GOODS -- 3.4%
Briggs & Stratton Corp. 1,400 56,350
Cincinnati Milacron, Inc. 1,600 50,400
Cooper Industries, Inc. 6,500 229,125
</TABLE>
See accompanying notes to financial statements.
28
<PAGE> 145
INDEX EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
PRODUCER GOODS (CONTINUED)
Crane Co. 1,350 $ 46,575
Dover Corp. 4,000 153,000
General Electric Co. 60,300 3,844,125
Harnischfeger Industries, Inc. 1,376 45,924
Illinois Tool Works, Inc. 4,800 282,600
Ingersoll Rand Co. 3,900 146,250
Paccar, Inc. 1,800 84,150
Pall Corp. 5,366 124,760
Parker-Hannifin Corp. 3,450 131,100
Raychem Corp. 1,900 85,500
Snap ON, Inc. 2,000 76,000
Stanley Works 1,900 82,413
Timken Co. 1,300 55,413
Trinova Corp. 1,200 40,500
Tyco International, LTD. 2,900 182,700
Varity Corp. 1,490** 66,305
W.W. Grainger, Inc. 1,600 96,600
Worthington Industries, Inc. 4,200 77,175
Zurn Industries, Inc. 500 12,688
------------
5,969,653
------------
PUBLISHING -- 0.8%
American Greetings Corp. 3,400 103,700
Dow Jones & Co., Inc. 3,700 136,438
Dun & Bradstreet Corp. 8,500 491,938
Mc Graw Hill Companies, Inc. 1,600 130,800
Meredith Corp. 1,200 47,700
R.R. Donnelly & Sons, Inc. 6,400 249,600
Times Mirror Co. 6,000 172,500
------------
1,332,676
------------
RAILROADS AND SHIPPING -- 1.1%
Burlington Northern
Santa Fe Corp. 5,748 416,730
C.S.X. Corp. 4,000 336,500
Consolidated Rail Corp. 2,900 199,375
Norfolk Southern Corp. 4,900 366,275
Union Pacific Corp. 8,700 576,375
------------
1,895,255
------------
RESTAURANTS -- 0.8%
Darden Restaurants 8,500 97,750
Luby's Cafeterias, Inc. 1,150 24,725
Mc Donald's Corp. 29,000 1,109,250
Ryan's Family Steak
Houses, Inc. 2,700** 21,263
Shoney's, Inc. 1,900** 20,900
Wendy's International, Inc. 4,800 101,400
------------
1,375,288
------------
RETAIL MERCHANDISING -- 4.4%
Albertsons, Inc. 11,200 382,200
American Stores Co. 6,200 175,925
Brunos Inc. 107 1,221
Circuit City Stores, Inc. 4,500 142,313
Dayton Hudson Corp. 2,400 182,100
Dillard Department Stores, Inc. 5,400 172,125
Giant Food, Inc. 2,800 87,850
Great Atlantic & Pacific
Tea Co., Inc. 1,700 47,600
Harcourt General, Inc. 3,500 146,563
Hasbro, Inc. 4,200 130,725
J.C. Penney Co., Inc. 9,500 471,438
Jostens, Inc. 2,100 49,350
K Mart Corp. 19,000 275,500
Kroger Co. 5,500** 187,688
Longs Drug Stores, Inc. 800 33,200
Lowe's Companies, Inc. 6,800 204,000
Mattel, Inc. 8,362 245,634
May Department Stores Co. 10,300 450,625
Melville Corp. 5,900 203,550
Mercantile Stores Co., Inc. 1,700 76,500
Nordstrom, Inc. 2,800 116,900
Pep Boys-Manny, Moe & Jack 2,900 78,663
Price Costco, Inc. 7,238** 123,951
Rite Aid Corp. 4,000 112,000
Sears, Roebuck & Co. 14,700 542,063
Super Valu, Inc. 3,400 99,875
T.J.X. Cos., Inc. 3,500 41,563
Tandy Corp. 2,000 121,500
Toys "R" Us, Inc. 6,300** 170,100
Wal-Mart Stores, Inc. 91,600 2,278,550
Walgreen Co. 8,800 246,400
Winn-Dixie Stores, Inc. 2,700 160,988
Woolworth Corp. 6,200 97,650
------------
7,856,310
------------
SOAPS AND COSMETICS -- 2.8%
Alberto-Culver Co. 1,200 36,600
Avon Products, Inc. 2,200 157,850
Clorox Co. 2,500 178,438
Colgate-Palmolive Co. 5,400 359,775
Dial Corp. 4,300 106,425
</TABLE>
See accompanying notes to financial statements.
29
<PAGE> 146
INDEX EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
SOAPS AND COSMETICS (CONTINUED)
Gillette Co. 19,500 $ 928,688
International Flavors &
Fragrances, Inc. 3,700 178,525
Procter & Gamble Co. 28,416 2,188,032
Unilever N.V. 6,100 793,000
------------
4,927,333
------------
STEEL -- 0.2%
Armco, Inc. 5,100** 33,150
Bethlehem Steel Corp. 5,000** 70,625
Inland Steel Industries, Inc. 2,100** 47,775
Nucor Corp. 3,300 147,675
USX-US Steel Group, Inc. 3,500 108,500
------------
407,725
------------
TELECOMMUNICATIONS -- 9.1%
Airtouch Communications, Inc. 21,300 652,313
Alltel Corp. 7,800 233,025
Ameritech Corp. 23,100 1,204,088
AT&T Corp. 65,720 4,321,090
Bell Atlantic Corp. 18,400 1,129,300
Bellsouth Corp. 20,900 1,528,313
G.T.E. Corp. 39,900 1,566,075
MCI Communications Corp. 27,600 719,325
Northern Telecom, Ltd. 9,900 352,688
NYNEX Corp. 17,700 845,175
Pacific Telesis Group 17,700 544,275
SBC Communications, Inc. 25,600 1,408,000
Sprint Corp. 14,900 521,500
U.S. West, Inc. 19,500 918,938
------------
15,944,105
------------
TIRES AND RUBBER -- 0.2%
Cooper Tire & Rubber Co. 4,000 97,000
Goodyear Tire & Rubber Co. 6,300 248,063
------------
345,063
------------
TOBACCO -- 2.0%
American Brands, Inc. 7,600 321,100
Philip Morris Cos., Inc. 36,000 3,006,000
U.S.T., Inc. 8,400 240,450
------------
3,567,550
------------
TRAVEL AND RECREATION -- 1.0%
Bally Entertainment Corp. 2,200** 23,925
Fleetwood Enterprises, Inc. 2,200 43,725
Harrahs Entertainment Inc. 3,800 111,150
Hilton Hotels Corp. 1,500 95,813
Marriott International, Inc. 4,800 179,400
Promus Hotel Corp. 2,900** 65,975
Walt Disney Co. 21,800 1,250,775
------------
1,770,763
------------
TRUCKING AND FREIGHT -- 0.2%
Consolidated Freightways, Inc. 1,800 44,550
Pittston Services Group 2,000 54,250
Roadway Services, Inc. 1,800 89,550
Ryder System, Inc. 3,600 91,350
Yellow Corp. 1,100 15,125
------------
294,825
------------
WASTE MANAGEMENT -- 0.5%
Browning-Ferris Industries,
Inc. 8,700 264,263
Rollins Environmental
Services, Inc. 2,800 13,650
WMX Technologies, Inc. 20,800 592,800
------------
870,713
------------
TOTAL COMMON STOCK
(Cost $133,133,449) 173,589,043
------------
PREFERRED STOCK -- 0.0%
MANUFACTURING
Teledyne, Inc. Preferred 80 1,110
------------
(Cost $756)
<CAPTION>
PAR
MATURITY (000)
--------- ---------
<S> <C> <C> <C>
U.S. TREASURY BILLS -- 0.7%
5.215% 12/21/95 $ 1,300*** 1,284,746
(Cost $1,284,746) ------------
AGENCY OBLIGATIONS -- 1.3%
Federal Home Loan Bank
Discount Notes
6.30% 10/02/95 2,375 2,374,584
(Cost $2,374,584) ------------
</TABLE>
See accompanying notes to financial statements.
30
<PAGE> 147
INDEX EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
TEMPORARY INVESTMENTS -- 0.0%
Smith Barney Money
Market Fund
(Cost $5,181) 5,181 $ 5,181
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $136,798,716*) 99.9% 177,254,664
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.1% 215,126
------ ------------
NET ASSETS(Applicable to
8,056,999 Institutional shares,
4,531,249 Service shares and
478,864 Series A Investor
shares outstanding) 100.0% $177,469,790
====== ============
NET ASSET VALUE AND REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE AND SERIES A
INVESTOR SHARE
($177,469,790 / 13,067,112) $13.58
======
OFFERING PRICE PER INSTITUTIONAL AND SERVICE
SHARE
($6,500,597 / 478,864) $13.58
======
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($13.58 / .955) $14.22
======
</TABLE>
- ---------------
* Cost for Federal income tax purposes is $136,871,778. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $42,858,561
Gross unrealized depreciation (2,475,675)
-----------
$40,382,886
===========
</TABLE>
** Non-income producing security.
*** Principal amount of securities pledged as initial margin requirement of
$160,000 on 16 Standard & Poor's 500 Stock Index futures contracts expiring
December 1995.
See accompanying notes to financial statements.
31
<PAGE> 148
THE PNC(R) FUND
SMALL CAP VALUE EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS -- 95.4%
AEROSPACE -- 0.3%
Coltec Industries, Inc. 53,900 $ 646,800
------------
BANKS -- 9.4%
Albank Financial Corp. 81,600 2,448,000
Amfed Financial, Inc. 82,170 2,588,355
Bankatlantic Bancorp, Inc. 101,250 1,936,406
Banknorth Group, Inc. 90,200 2,999,150
Commerce Bancorp, Inc. 198,100 4,729,637
Long Island Bancorp, Inc. 136,400 3,341,800
Mercantile Bankshares Corp. 46,950 1,279,388
Security Capital Corp. 8,200 436,650
Southern National Corp. 73,805 1,937,381
Standard Federal Bancorp. 51,300 2,000,700
------------
23,697,467
------------
CHEMICALS -- 5.9%
Arcadian Corp. 126,600** 2,579,475
Bush Boake Allen, Inc. 135,900** 3,839,174
IMC Global, Inc. 48,000 3,042,000
LSB Industries, Inc. 100,000 512,500
Vigoro Corp. 91,100 3,848,975
WD-40 Co. 25,600 1,081,600
------------
14,903,724
------------
COMPUTER & OFFICE EQUIPMENT -- 5.7%
AST Research, Inc. 136,559** 1,365,590
Bell Micro Products 216,000** 2,484,000
Conner Peripherals, Inc. 193,000** 3,208,624
DH Technology, Inc. 110,000** 3,520,000
GBC Technologies, Inc. 275,700** 2,067,750
Nu-Kote Holdings, Inc. 85,800** 1,866,150
------------
14,512,114
------------
COMPUTER SOFTWARE & SERVICES -- 1.9%
Computer Horizons Corp. 243,000** 4,860,000
------------
CONSTRUCTION -- 2.0%
Beazer Homes USA, Inc. 170,400 2,875,500
BMC West Corp. 161,850** 2,265,900
------------
5,141,400
------------
CONTAINERS -- 1.1%
Brockway Standard Holdings 156,800** 2,704,800
------------
ELECTRONICS -- 9.6%
Belden, Inc. 95,400 2,504,250
Cable Design Technologies 150,700** 4,521,000
Franklin Electronic
Publishers, Inc. 76,000** 2,992,500
Holophane Corp. 125,800 3,459,500
Lattice Semiconductor Corp. 137,500** 5,585,937
Mark IV Industries, Inc. 111,342 2,477,360
Marshall Industries 69,100** 2,608,525
------------
24,149,072
------------
ENTERTAINMENT & LEISURE -- 1.7%
King World Productions, Inc. 62,700** 2,296,388
Royal Caribbean Cruises Ltd. 86,400 2,095,200
------------
4,391,588
------------
FOOD & AGRICULTURE -- 3.3%
Arkansas Best Corp. 70,000 831,250
Daka International, Inc. 184,400** 6,039,100
Sanderson Farms, Inc. 121,500 1,473,188
------------
8,343,538
------------
FURNITURE -- 0.9%
Ethan Allen Interiors, Inc. 103,200** 2,218,800
------------
GLASS -- 1.4%
Libbey, Inc. 146,700 3,502,463
------------
INSURANCE -- 12.3%
American Travellers Corp. 54,100** 1,007,613
Baldwin & Lyons, Inc. 99,900 1,523,475
Commerce Group, Inc. 134,900 2,647,413
First Colony Corp. 75,000 2,025,000
Harleysville Group, Inc. 75,195 2,237,051
Life USA Holding, Inc. 236,400** 2,127,600
National Re Corp. 77,000 2,723,875
Partner Holdings, Ltd. 32,700 809,325
Paul Revere Corp. 70,000 1,321,250
Penncorp Financial Group, Inc. 137,900 3,292,363
Physician Corporation of
America 107,600 1,694,700
Pxre Corp. 93,600 2,550,600
State Auto Financial Corp. 128,800 2,898,000
United Fire & Casualty Co. 46,200 1,709,400
United Wisconsin Services, Inc. 60,800 1,451,600
W.R. Berkley Co. 24,500 1,111,688
------------
31,130,953
------------
JEWELRY -- 0.7%
North American Watch Corp. 100,200 1,816,125
------------
MACHINERY & HEAVY EQUIPMENT -- 12.1%
Alamo Group, Inc. 132,500 2,385,000
Anthony Industries, Inc. 150,790 2,846,161
BW/IP, Inc. 135,400 2,420,275
CMI Corp. 337,000** 2,190,500
DT Industries Inc. 62,500 859,375
</TABLE>
See accompanying notes to financial statements.
32
<PAGE> 149
SMALL CAP VALUE EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MACHINERY & HEAVY EQUIPMENT (CONTINUED)
Harmon Industries, Inc. 151,300 $ 2,156,025
Lydall, Inc. 190,000** 4,726,249
Pentair, Inc. 76,700 3,451,500
Plantronics, Inc. 130,300** 4,739,662
US Can Corp. 182,600** 2,442,275
Velcro Industries N.V. 35,900 2,302,088
------------
30,519,110
------------
MEDICAL & MEDICAL SERVICES -- 1.5%
Mariner Health Group, Inc. 170,000** 2,401,250
North American Biology, Inc. 180,000** 1,485,000
------------
3,886,250
------------
MEDICAL INSTRUMENTS & SUPPLIES -- 1.0%
Beckman Instruments, Inc. 81,800 2,474,450
------------
METAL & MINING -- 3.8%
Mueller Industries, Inc. 65,000** 3,371,875
Rouge Steel Co. 110,000 2,557,500
Wolverine Tube, Inc. 100,000** 3,787,500
------------
9,716,875
------------
MOTOR VEHICLES -- 2.8%
A.O. Smith Corp. 90,000 2,328,750
Masland Corp. 173,700 2,583,788
Stant Corp. 50,400 504,000
TBC Corp. 166,100** 1,598,713
------------
7,015,251
------------
PAPER & FOREST PRODUCTS -- 2.8%
Caraustar Industries, Inc. 159,000 3,180,000
Chesapeake Corp. 85,100 3,074,238
CSS Industries, Inc. 31,900** 733,700
------------
6,987,938
------------
RETAIL MERCHANDISING -- 7.6%
Bombay Company, Inc. 321,000** 2,608,125
Fingerhut Companies, Inc. 148,700 2,397,787
Fred's, Inc. 164,500 1,398,250
J. Baker, Inc. 167,000 1,356,875
Lillian Vernon Corp. 87,600 1,171,650
Nine West Group, Inc. 61,000** 2,775,500
Roberds, Inc. 114,800** 1,435,000
Stop & Shop Companies, Inc. 95,600** 2,234,650
Value City Department
Stores, Inc. 139,600** 1,029,550
Vons Companies Inc. 114,000** 2,707,500
------------
19,114,887
------------
SANITARY SERVICES -- 0.4%
Dames & Moore, Inc. 64,800 1,036,800
------------
TEXTILES -- 5.3%
CHIC By H.I.S., Inc. 178,000** 1,424,000
Cone Mills Corp. 205,500** 2,748,562
Crown Crafts, Inc. 144,000 1,872,000
Jones Apparel Group, Inc. 93,300** 3,323,813
Phillips-Van Heusen Corp. 231,400 2,661,100
Spring Industries, Inc. 36,000 1,413,000
------------
13,442,475
------------
TOBACCO -- 0.9%
Universal Corp. 105,300 2,369,250
------------
TRANSPORTATION -- 1.0%
Midwest Express Holdings 107,900 2,427,750
------------
TOTAL COMMON STOCKS
(Cost $191,233,191) 241,009,880
------------
TEMPORARY INVESTMENTS -- 4.5%
Smith Barney Money
Market Fund
(Cost $11,333,839) 11,333,839 11,333,839
------------
</TABLE>
See accompanying notes to financial statements.
33
<PAGE> 150
SMALL CAP VALUE EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
------------
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $202,567,030*) 99.9% $252,343,719
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.1% 343,767
------ ------------
NET ASSETS (Applicable to
11,105,824 Institutional
shares, 4,047,966 Service
shares, 1,424,503 Series A
Investor shares and 98,118
Series B Investor shares
outstanding) 100.0% $252,687,486
====== ============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER INSTITUTIONAL SHARE
($168,334,030 / 11,105,824) $15.16
======
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SERVICE SHARE
($61,313,371 / 4,047,966) $15.15
======
NET ASSET VALUE AND REDEMPTION PRICE PER
SERIES A INVESTOR SHARE
($21,562,824 / 1,424,503) $15.14
======
MAXIMUM OFFERING PRICE PER SERIES A INVESTOR
SHARE
($15.14 / .955) $15.85
======
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE (SUBJECT TO A MAXIMUM
CONTINGENT DEFERRED SALES CHARGE OF 5.0%)
PER SERIES B INVESTOR SHARE
($1,477,261 / 98,118) $15.06
======
</TABLE>
- -----
* Also cost for Federal income tax purposes. The gross
unrealized appreciation (depreciation) on a tax basis is
as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 63,368,152
Gross unrealized depreciation (13,591,463)
------------
$ 49,776,689
============
</TABLE>
** Non-income producing security.
See accompanying notes to financial statements.
34
<PAGE> 151
THE PNC(R) FUND
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS -- 88.7%
ARGENTINA -- 0.1%
Cia Interamericana de
Automovil 60,493** $ 235,946
------------
AUSTRALIA -- 1.5%
Australia & New Zealand
Banking Group 1,544,500 6,614,400
Orbital Engine Ltd. 244,300 276,780
------------
6,891,180
------------
AUSTRIA -- 0.8%
OMEV AG 38,900 3,620,856
------------
BELGIUM -- 0.6%
Tessenderlo Chemie 7,400 2,690,565
------------
DENMARK -- 0.9%
Teledanmark Series 'B' 78,000 4,030,117
------------
FINLAND -- 0.3%
Kymmene Corp. 45,000 1,389,539
------------
FRANCE -- 6.4%
Bouygues 6,500 747,233
Bouygues Voting Rights 352** 6,903
Christian Dior SA 15,800 1,407,190
Cie de St. Gobain 16,600 2,022,951
Credit Local de France 44,700 3,596,155
Lafarge-Coppee SA 57,200 3,761,828
Marine Wendel 43,090 3,395,739
Seita 159,000 5,780,644
Sylea 41,500 3,691,886
UAF 39,900 4,092,515
------------
28,503,044
------------
GERMANY -- 2.9%
Bankgesellschaft Berlin AG 12,150 3,357,763
Bayer AG 8,110 2,070,481
Mannesmann 17,650 5,770,549
Plettac AG 5,460 1,447,800
------------
12,646,593
------------
HONG KONG -- 3.6%
CDL Hotels 2,021,000 914,929
Cheung Kong 1,045,000 5,690,514
HSBC Holdings PLC 614,000 8,537,484
South China Morning Post 1,708,000 1,010,723
------------
16,153,650
------------
ITALY -- 2.3%
Pirelli SPA 3,000,000** 4,126,394
Saipem SPA 868,800 1,964,758
Sasib SPA 260,300 1,236,989
Telecom Italia Mobile SPA 1,820,000** 3,033,333
------------
10,361,474
------------
JAPAN -- 40.1%
Bridgestone Corp. 447,000 6,630,575
Calsonic 329,000 2,529,748
Chiba Bank 447,000 3,766,347
Daicel Chemical 563,000 3,238,244
Daiwa House Industry 255,000 4,014,127
DDI Corp. 1,050 8,667,003
East Japan Railway Co. 760 3,757,820
Fuji Photo Film Co. 269,000 6,704,642
Horiba 227,000 2,565,489
Inax 277,000 2,764,410
Ito-Yokado Co. Ltd. 141,000 7,796,973
Jusco Co. 104,000 2,487,185
Kao Corp. 168,000 2,085,166
Komatsu Ltd. 533,000 4,281,211
Maruco Co. Ltd. 46,800 2,880,727
Matsushita Electric
Industrial Co. 401,000 6,150,555
Mitsubishi Chemical Corp. 800,000 3,874,874
Mitsubishi Electric Corp. 550,000 4,301,211
Mitsubishi Estate Co. Ltd. 562,000 6,294,854
Mitsubishi Heavy
Industries Ltd. 1,054,000 8,083,148
Mitsubishi Materials Corp. 885,000 4,349,092
Mitsubishi Motors 587,000 4,934,117
Nishimatsu Construction 540,000 6,593,340
Mos Food Services 117,000 3,010,595
NEC Corp. 220,000 3,063,572
Nissan Motor Co. Ltd. 967,000 6,967,084
NTT Data Communications
Systems Co. 2,300 5,361,251
Ricoh Co. 502,000 5,025,066
Rinnai Corp. 164,000 3,607,669
Sankyo Pachinko 62,660 3,812,712
Sanyo Shinpan Finance Co. 48,700 3,577,558
Sekisui Chemical Co. 357,000 4,539,051
Sumitomo Marine & Fire
Insurance Co. 866,000 6,562,725
Suzuki Motor Co. Ltd. 386,000 4,167,709
TDK Corp. 82,000 4,219,980
Teijin Ltd. 452,000 2,166,498
Toda Construction Co. 416,000 3,597,497
</TABLE>
See accompanying notes to financial statements.
35
<PAGE> 152
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
Tokio Marine & Fire
Insurance Co. 770,000 $ 8,313,824
Tokushu Paper Manufacturing
Co. Ltd. 500 4,465
Yamanashi Chuo Bank 134,000 1,406,256
Yamato Transport Co. Ltd 108,000 1,220,585
------------
179,374,955
------------
MALAYSIA -- 2.5%
Edaran Otomobil
Nasional Bhd. 265,000 2,121,013
Malaysian International
Shipping Corp. Ltd. 1,811,000 5,444,610
The New Straits Times
Press Bhd. 1,312,000 3,709,314
------------
11,274,937
------------
NETHERLANDS -- 4.9%
DSM Chemicals 71,100 5,700,431
Fortis Amev NV 111,900 6,519,057
Hollandsche Beton Groep NV 27,500 4,138,308
Internationale Nederlanden
Groep CVA 58,000 3,364,471
KBB 27,400 2,001,748
------------
21,724,015
------------
NEW ZEALAND -- 0.9%
Air New Zealand Ltd. 1,188,000 4,024,552
Fisher & Paykel Ltd. 15,000 46,375
------------
4,070,927
------------
NORWAY -- 0.4%
Helikopter Service 112,000 1,613,499
------------
PORTUGAL -- 0.5%
Espirito Santo Financial
Holdings -- ADR 179,400 2,107,950
------------
SPAIN -- 2.1%
Acesa 85,500 837,015
Asturiana de Zinc 136,000** 1,397,411
Repsol SA ADR 120,000 3,810,000
Sevillana de Electricidad 105,060 681,700
Telefonica de Espana ADR 69,000 2,854,875
------------
9,581,001
------------
SWEDEN -- 1.4%
Cardo AB 115,000** 1,932,648
Svenska Kullager Fabriken
AB 'B' Free 204,000 4,502,467
------------
6,435,115
------------
SWITZERLAND -- 4.3%
Baloise Holding Ltd. 1,893 4,158,281
Ciba-Geigy AG 10,578 8,471,182
Merkur Holding AG 12,380 2,847,946
Sulzer AG 6,680 3,674,202
------------
19,151,611
------------
UNITED KINGDOM -- 12.2%
Albert Fisher 6,254,000 5,233,785
Bank of Ireland 1,125,000 7,087,736
Bass PLC 464,000 4,688,998
B.A.T. Industries 852,901 7,124,205
British Gas 1,535,000 6,435,096
Cable & Wireless PLC 100,000 658,443
MFI Furniture PLC 1,800,000 3,836,970
Powerscreen International 752,000 4,274,669
Scottish Hydro-Electric PLC 620,000 3,367,691
Severn Trent PLC 176,000 1,645,192
T & N PLC 895,000 2,529,637
Tomkins PLC 1,440,000 5,729,875
Yorkshire Water PLC 231,000 2,274,210
------------
54,886,507
------------
TOTAL COMMON STOCKS
(Cost $389,583,563) 396,743,481
------------
PREFERRED STOCK -- 2.8%
GERMANY
GEA AG 13,225 4,607,885
Henkel KGAA 10,000 3,799,062
Spar Handels AG 16,900 4,232,981
------------
TOTAL PREFERRED STOCK
(Cost $11,287,996) 12,639,928
------------
</TABLE>
See accompanying notes to financial statements.
36
<PAGE> 153
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOCAL
CURRENCY VALUE
----------- ------------
<S> <C> <C>
INVESTMENTS IN CURRENCY -- 8.5%
Australian Dollar 51,151 $ 38,635
Austrian Schilling 4,714 469
Belgian Franc 26,274,858 894,920
British Pound Sterling 2,205,119 3,481,882
Danish Krone 1 0
Finnish Mark 700 164
French Franc 4,645,640 943,565
German Deutche Mark 1,201,037 840,297
Hong Kong Dollar 56,254,218 7,276,260
Italian Lira 32,421,190 20,087
Japanese Yen 67,967,953 685,852
Malaysian Ringgit 15,914,026 6,336,967
Netherland Guilder 5,874,516 3,668,134
New Zealand Dollar 37,996 24,994
Norwegian Krone 351,308 55,923
Singapore Dollar 4,428,666 3,114,830
Spanish Peseta 3,339,338 27,017
Swedish Krona 64,948,221 9,369,063
Swiss Franc 1,343,921 1,162,263
------------
TOTAL INVESTMENTS IN CURRENCY
(Cost $37,377,206) 37,941,322
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $438,248,765*) 100.0% $447,324,731
====== ============
</TABLE>
- -------------
* Also cost for Federal income tax purposes. The gross
unrealized appreciation (depreciation) on a tax basis
is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 22,268,098
Gross unrealized depreciation (13,192,132)
------------
$ 9,075,966
============
</TABLE>
** Non-income producing security.
See accompanying notes to financial statements.
37
<PAGE> 154
THE PNC(R) FUND
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments at value (Cost $438,248,765)...................................... $ 447,324,731
Cash.......................................................................... 28,035,815
Dividends and interest receivable............................................. 1,781,121
Investments sold receivable................................................... 5,744,759
Capital shares sold receivable................................................ 1,735,490
Foreign currency contracts receivable......................................... 70,118
Other......................................................................... 15,379
------------
TOTAL ASSETS.......................................................... 484,707,413
------------
LIABILITIES
Investments purchased payable................................................. 46,529,469
Capital shares redeemed payable............................................... 242,443
Accrued expenses payable...................................................... 510,233
------------
TOTAL LIABILITIES..................................................... 47,282,145
------------
NET ASSETS (Applicable to 23,563,626 Institutional shares, 8,008,186 Service
shares, 1,338,381 Series A Investor shares and 81,144 Series B Investor
shares outstanding)........................................................... $ 437,425,268
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER INSTITUTIONAL SHARE
($312,588,415 / 23,563,626)................................................... $13.27
=======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SERVICE SHARE
($106,044,564 / 8,008,186)...................................................... $13.24
=======
NET ASSET VALUE AND REDEMPTION PRICE PER SERIES A INVESTOR SHARE
($17,720,931 / 1,338,381)....................................................... $13.24
=======
MAXIMUM OFFERING PRICE PER SERIES A INVESTOR SHARE ($13.24 / .955).............. $13.86
=======
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
(subject to a maximum contingent deferred sales charge of 5.0%) PER SERIES B
INVESTOR SHARE ($1,071,358 / 81,144).......................................... $13.20
=======
</TABLE>
See accompanying notes to financial statements.
38
<PAGE> 155
THE PNC(R) FUND
INTERNATIONAL EMERGING MARKETS PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS -- 78.4%
ARGENTINA -- 3.8%
Banco Frances del Rio Plata 95,850 $ 685,396
Cia Interamericana de
Automovil 22,116** 86,260
Cia Naviera Perez Companc SA 48,996 214,134
Transportadora de Gas
del Sur SA -- ADR 75,500 792,750
---------
1,778,540
---------
BRAZIL -- 4.2%
Cia Brazil Petro Ipiranga 31,000,000 324,997
Companhia Energetica de Minas
Gerais 20,000,000 384,091
Iochpe Maxion SA -- ADR 5,000 41,200
Telecomunicacoes
Brasileiras SA -- Telebras 20,000,000 797,565
Usinas Sider Minas Gerais 80,000,000 418,722
---------
1,966,575
---------
CHILE -- 1.5%
Enersis SA 27,500 694,375
---------
CHINA -- 2.0%
Hua Xin Cement
Company, Ltd. -- B 2,323,200** 655,142
Shanghai Jintai
Company, Ltd. -- B 400,000** 107,200
Shanghai Yaohua Pilkington
Glass Company, LTD. 151,800 160,908
---------
923,250
---------
COLOMBIA -- 0.9%
Banco Industrial
Colombian -- ADR 30,000 408,750
---------
GREECE -- 2.3%
Alpha Credit Bank 7,000 435,716
Edrassi Psallidas 20,000 313,372
Michaniki SA 15,000 218,930
Sarantis SA 15,000 135,222
1,103,240
---------
HONG KONG -- 1.5%
Qingling Automobiles Company 2,050,000 471,984
Shanghai Haixing Shipping
Company -- H 1,200,000 128,829
Shenzhen North Jianshe
Motorcycle Company, Ltd. 150,000** 97,592
---------
698,405
---------
HUNGARY -- 3.5%
Egis Gyogyszergyar 22,400 592,459
Pannonplast Muanyagipari Rt 47,008 622,574
Pick Szeged Szalamigyar Es
Husuzem Rt 8,257 426,166
---------
1,641,199
---------
INDIA -- 3.1%
Hindalco Industries,
Ltd. -- GDR 15,000** 510,000
Tata Engineering &
Locomotive Co., Ltd. -- GDR 40,000** 930,000
---------
1,440,000
---------
INDONESIA -- 7.4%
PT Bank Dagang Nasional
(Foreign Shares) 350,000 320,640
PT Citra Marga 750,000 711,921
PT Gadjah Tunggal
(Foreign Shares) 400,000 264,901
PT Indah Kiat Pulp & Paper
(Foreign Shares) 204,800 246,393
PT Polysindo Eka Perkasa
(Foreign Shares) 334,500 191,987
PT Semen Cibinong
(Foreign Shares) 200,000 543,046
PT Sinar Mas Agro Resources
Agricultural Production and
Technology Corporation
(Foreign Shares) 508,000 330,817
PT Suparma (Foreign Shares)
900,000 407,285
Shiriram Industrial
Enterprises, Ltd. -- GDR
(Reg. 144A) 70,000 463,750
Shiriram Industrial
Enterprises, Ltd. Warrants
(Reg. 144A) 14,000** 1,750
---------
3,482,490
---------
ISRAEL -- 1.0%
Pec Israel Economic
Corporation -- ADR 18,900** 472,500
---------
KOREA -- 7.6%
Hansol Paper -- GDR 35,573** 764,820
Hyundai Marine & Fire
Insurance Company 4,830** 289,259
Hyundai Motor Company,
Ltd. -- GDR 40,000 780,000
Korea Electric Power
Corporation 21,000** 790,131
Korea Reinsurance 10,000** 502,539
Korea Zinc Co. 15,000** 376,904
</TABLE>
See accompanying notes to financial statements.
39
<PAGE> 156
INTERNATIONAL EMERGING MARKETS PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- -----------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
KOREA (CONTINUED)
LG Information &
Communication 100** $ 7,551
Pohang Iron & Steel Co. 850 73,369
Samsung Electronics -- GDR
(Reg. 144A) 63** 4,410
---------
3,588,983
---------
MALAYSIA -- 9.2%
Asas Dunia Berhad 60,000 199,498
Cement Industries of
Malaysia Berhad 60,000 192,331
Edaran Otomobil
Nasional Berhad 92,000 736,352
Malaysian International
Shipping Corporation Berhad 9,666 25,403
Malaysian International
Shipping Corporation Berhad
(Foreign Shares) 253,000 760,622
Nylex (Malaysia) Berhad 275,000 804,862
Pacific and Orient Berhad 100,000** 298,650
Sistem Televisyen
Malaysia Berhad 200,000 609,246
The New Straits Times Press 236,000 667,224
---------
4,294,188
---------
MEXICO -- 6.0%
Cementos de Mexico SA -- CPO 131,000 496,897
Cementos de Mexico SA -- CPO
ADR 48,800 373,320
Corporacion Geo SA -- B 99,400** 326,400
Empaques Ponderosa SA -- B 1,806** 4,246
Fomento Economico
Mexicano SA -- B 170,000 421,003
Fotoluz Corporacion SA -- B 250,000** 44,671
Grupo Cementos Chihuahua -- B 100,000 86,520
Grupo Financiero Banamex
Accival -- B 133,700 266,981
Grupo Financiero Banamex
Accival -- L 6,685 13,098
Grupo Financiero Banorte -- B 90,000** 111,724
Grupo Herdez SA -- B 500,000** 156,740
Grupo Industrial San Luis CPO 15,000 350,313
Vitro Sociedad Anonima -- ADR 21,600 175,500
---------
2,827,413
---------
PAKISTAN -- 1.5%
Pakistan Investment
Fund, Inc. 40,000 265,000
Pakistan Telecommunications
Corporation -- GDR 4,000** 420,000
---------
685,000
---------
PHILIPPINES -- 4.2%
Alaska Milk Corporation 1,400,000** 284,946
Benpres Holdings
Corporation -- GDR 59,000 448,400
C & P Homes, Inc. 400,000** 249,616
Manlia Mining
Corporation -- B 50,000,000 163,210
Megaworld Properties &
Holdings, Inc. 400,000** 207,373
SM Prime Holdings, Inc. 1,000,000** 299,539
Southeast Asia Cement Holding
2,500,000** 321,621
---------
1,974,705
---------
POLAND -- 0.9%
Debica 30,000** 402,304
---------
PORTUGAL -- 2.0%
Espirito Santo Financial
Holdings -- ADR 61,400 721,450
Sumolis Companhia Industrial
de Frutas E Bebidas SA 20,000 208,000
---------
929,450
---------
SOUTH AFRICA -- 4.1%
Gencor Beherend Beperk, Ltd. 150,000** 558,751
Rustenburg Platinum
Holdings, Ltd. 15,000 326,623
SA Iron & Steel Industrial
Corporation, Ltd. 500,000 540,948
Standard Bank Investment
Corporation Ltd. 15,000 511,504
1,937,826
---------
TAIWAN -- 3.2%
China Steel -- GDR 30,000 552,900
Taiwan Fund, Inc. 42,250 945,344
---------
1,498,244
---------
</TABLE>
See accompanying notes to financial statements.
40
<PAGE> 157
INTERNATIONAL EMERGING MARKETS PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
THAILAND -- 2.9%
Bangkok Bank 500 $ 5,642
Bangkok Steel Industry Co. 231,500 391,392
Post Publishing Company, Ltd. 55,800 225,522
Thai Modern Plastic Industry 384,000 437,935
Thai Stanley Electric
Company, Ltd. 112,500 310,624
----------
1,371,115
----------
TURKEY -- 2.4%
Aksigorta A.S. 2,279,375 320,320
Cimentas 379,000 227,709
Netas Telekomunik 1,000,000 386,965
Tofas -- Turk Otomobil
Fabrikas 1,420,000 208,228
----------
1,143,222
----------
UNITED KINGDOM -- 3.2%
Central European Growth
Fund PLC 1,115,000 774,657
Reliance Industries -- GDS 40,000** 725,200
----------
1,499,857
----------
TOTAL COMMON STOCKS
(Cost $39,891,443) 36,761,631
----------
PREFERRED STOCK -- 6.1%
BRAZIL -- 6.1%
Banco Bradesco SA 60,000,000 572,988
Banco Nacional SA 20,000,000 394,585
Cia Cervejaria Brahma 970,000 393,945
Cia Vale do Rio Doce 5,000,000 836,919
Iochpe Maxion SA 800,000 263,616
Sadia-Concordia SA Industria
E Comercio 400,000 419,771
----------
TOTAL PREFERRED STOCK
(Cost $3,044,272) 2,881,824
----------
<CAPTION>
PAR
MATURITY (000)
---------- -----------
<S> <C> <C> <C>
CONVERTIBLE BONDS -- 1.6%
Far Eastern
Department Stores
3.00% 07/06/01 $ 200 170,250
Yang Ming Marine
Transport, Inc.
2.00% 10/06/99 540 571,050
----------
TOTAL CONVERTIBLE BONDS
(Cost $760,594) 741,300
----------
AGENCY OBLIGATIONS -- 13.7%
Federal Home Loan Bank
Discount Notes
6.30% 10/02/95 6,445 6,443,872
(Cost $6,443,872) ----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $50,140,181*) 99.8% 46,828,627
----------
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.2% 73,320
------ -----------
NET ASSETS (Applicable to
3,579,806 Institutional
shares, 1,836,800 Service
shares and 313,245 Series A
Investor shares outstanding) 100.0% $46,901,947
====== ===========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($29,318,827 / 3,579,806) $8.19
=====
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SERVICE SHARE
($15,020,402 / 1,836,800) $8.18
=====
NET ASSET VALUE AND REDEMPTION PRICE PER
SERIES A INVESTOR SHARE
($2,562,718 / 313,245) $8.18
=====
MAXIMUM OFFERING PRICE PER
SERIES A INVESTOR SHARE
($8.18 / .955) $8.57
=====
</TABLE>
- ---------------
* Also cost for Federal income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross unrealized appreciation $ 1,138,028
Gross unrealized depreciation (4,449,582)
-----------
$(3,311,554)
===========
</TABLE>
** Non income producing security.
See accompanying notes to financial statements.
41
<PAGE> 158
THE PNC(R) FUND
BALANCED PORTFOLIO
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 2.9%
FEDERAL HOME
LOAN BANK -- 0.5%
4.605%**** 04/27/98 $ 1,000 $ 978,125
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 2.4%
6.30% 10/02/95 4,380 4,378,467
------------
TOTAL AGENCY OBLIGATIONS
(Cost $5,356,654) 5,356,592
------------
MORTGAGE BACKED SECURITIES -- 8.6%
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 3.5%
7.50% 07/01/99 909 924,543
9.00% 06/01/21 1,092 1,143,252
6.50% 08/01/25 183 176,821
6.50% 09/01/25 636 613,874
7.00% TBA 10/01/25 3,000 2,962,500
8.001%,
1 yr CMT ARM 03/01/33 499 514,544
------------
6,335,534
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 2.7%
7.00% TBA 10/01/10 4,200 4,210,500
6.50% 09/01/25 651 629,234
------------
4,839,734
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 2.4%
6.50%,
1 yr CMT ARM 05/20/25 2,226 2,256,338
7.50%,
1 yr CMT ARM 06/20/25 1,999 2,054,174
------------
4,310,512
------------
TOTAL MORTGAGE BACKED SECURITIES
(Cost $15,484,983) 15,485,780
------------
ASSET BACKED SECURITIES -- 2.0%
Merrill Lynch Mortgage
Investors, Inc.
7.4968% 05/25/15 450 450,592
National Credit Card Trust
9.45% 12/31/97 750 770,325
Nissan Auto Receivables Grantor
Trust 1994-A
6.45% 03/15/96 899 902,722
Prime Credit Card
Master Trust
6.75% 10/31/05 750 759,119
Standard Credit Card
Master Trust
8.25% 01/08/07 600 657,585
------------
TOTAL ASSET BACKED SECURITIES
(Cost $3,534,838) 3,540,343
------------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 1.4%
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 0.4%
8.25% 10/25/96 750 752,344
------------
RYLAND ACCEPTANCE CORP. -- 1.0%
9.40% 08/01/18 1,700 1,793,500
------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $2,551,223) 2,545,844
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
---------
<S> <C> <C>
COMMON STOCKS -- 61.9%
AEROSPACE -- 2.9%
Allied-Signal, Inc. 17,100 754,538
Boeing Co. 32,200 2,197,650
United Technologies Corp. 25,100 2,218,213
------------
5,170,401
------------
BANKS -- 3.2%
Comerica, Inc. 42,200 1,535,025
First Chicago Corp 22,100 1,516,612
Meridian Bancorp, Inc. 33,200 1,269,900
NationsBank Corp. 22,100 1,486,225
------------
5,807,762
------------
BEVERAGES -- 0.9%
Coca-Cola Co. 25,100 1,731,900
------------
CHEMICALS -- 2.7%
Dow Chemical Co. 19,500 1,452,750
E.I. Dupont de Nemours & Co. 25,400 1,746,250
I.M.C. Global, Inc. 12,100 766,837
Lubrizol Corp. 30,200 985,275
------------
4,951,112
------------
COMPUTER & OFFICE EQUIPMENT -- 3.2%
Compaq Computer Corp. 31,100 1,504,463
Intel Corp. 33,200 1,996,150
Xerox Corp. 17,100 2,297,812
------------
5,798,425
------------
</TABLE>
See accompanying notes to financial statements.
42
<PAGE> 159
BALANCED PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE & SERVICES -- 2.9%
Computer Sciences Corp. 24,100** $ 1,551,437
First Data Corp. 19,100 1,184,200
Microsoft Corp. 18,600** 1,683,300
Stratus Computer, Inc. 30,200** 792,750
------------
5,211,687
------------
CONSTRUCTION -- 1.3%
Fluor Corp. 23,100 1,293,600
Foster Wheeler Corp. 31,200 1,103,700
------------
2,397,300
------------
ELECTRONICS -- 4.5%
A.M.P., Inc. 17,100 658,350
Emerson Electric Co. 22,100 1,580,150
General Electric Co. 43,000 2,741,250
General Instruments Corp. 44,000** 1,320,000
Motorola, Inc. 23,100 1,764,262
------------
8,064,012
------------
ENERGY & UTILITIES -- 1.7%
Entergy Corp. 50,300 1,314,087
PECO Energy Co. 64,500 1,846,313
------------
3,160,400
------------
ENTERTAINMENT & LEISURE -- 1.4%
La Quinta Motor Inns, Inc. 35,200 985,600
Walt Disney Co. 28,100 1,612,237
------------
2,597,837
------------
FINANCE -- 2.8%
Dean Witter Discover & Co. 44,000 2,475,000
Federal National Mortgage
Association 18,100 1,873,350
Fleet Financial Group, Inc. 20,000 755,000
------------
5,103,350
------------
FOOD & AGRICULTURE -- 0.8%
C.P.C. International Co. 9,000 594,000
H.J. Heinz Co. 20,100 919,575
------------
1,513,575
------------
INSURANCE -- 3.6%
Allstate 22,341 790,313
American International Group,
Inc. 29,250 2,486,250
Chubb Corp. 16,100 1,545,600
General Re Corp. 11,100 1,676,100
------------
6,498,263
------------
MACHINERY & HEAVY EQUIPMENT -- 0.6%
Illinois Tool Works, Inc. 18,700 1,100,962
------------
MEDICAL INSTRUMENTS & SUPPLIES -- 0.9%
Beckman Instruments, Inc. 54,300 $ 1,642,575
------------
METAL & MINING -- 1.7%
Minnesota Mining &
Manufacturing Co. 29,000 1,638,500
Phelps Dodge Corp. 24,100 1,509,262
------------
3,147,762
------------
MOTOR VEHICLES -- 1.9%
Chrysler Corp. 19,100 1,012,300
Ford Motor Co. 40,200 1,251,225
General Motors Corp. 24,100 1,129,687
------------
3,393,212
------------
OIL & GAS -- 4.9%
Chevron Corp. 18,100 880,112
Exxon Corp. 29,000 2,095,250
Mobil Corp. 8,000 797,000
Royal Dutch Petroleum Co. 15,600 1,914,900
Tenneco, Inc. 40,300 1,863,875
Unocal Corp. 44,200 1,259,700
------------
8,810,837
------------
PAPER & FOREST PRODUCTS -- 0.6%
International Paper Co. 24,200 1,016,400
------------
PHARMACEUTICALS -- 6.1%
American Home Products Corp. 29,300 2,486,837
Bristol-Myers Squibb Co. 30,100 2,193,538
Eli Lilly & Co. 26,400 2,372,700
Johnson & Johnson 20,100 1,489,913
Merck & Co., Inc. 44,000 2,464,000
------------
11,006,988
------------
PUBLISHING & PRINTING -- 0.9%
McGraw Hill Cos., Inc. 19,100 1,561,425
------------
RESTAURANTS -- 0.7%
McDonald's Corp. 32,200 1,231,650
------------
RETAIL MERCHANDISING -- 2.9%
J.C. Penney Co., Inc. 28,100 1,394,463
K Mart Corp. 97,500 1,413,750
Sears Roebuck & Co. 24,100 888,688
Wal-Mart Stores, Inc. 63,300 1,574,588
------------
5,271,489
------------
SOAPS & COSMETICS -- 1.5%
Colgate Palmolive Co. 22,100 1,472,412
Dial Corp. 51,200 1,267,200
------------
2,739,612
------------
</TABLE>
See accompanying notes to financial statements.
43
<PAGE> 160
BALANCED PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS -- 4.1%
Alltell Corp. 47,200 $ 1,410,100
AT&T Corp. 34,200 2,248,650
NYNEX Corp. 38,200 1,824,050
SBC Communications, Inc. 35,200 1,936,000
------------
7,418,800
------------
TOBACCO -- 1.6%
Philip Morris Cos., Inc. 20,500 1,711,750
UST, Inc. 42,200 1,207,975
------------
2,919,725
------------
TRANSPORTATION -- 1.6%
Conrail Corp. 24,200 1,663,750
Norfolk Southern Corp. 16,100 1,203,475
------------
2,867,225
------------
TOTAL COMMON STOCKS
(Cost $91,987,777) 112,134,686
------------
<CAPTION>
PAR
MATURITY (000)
--------- ---------
<S> <C> <C> <C>
CORPORATE BONDS -- 7.5%
BANKS -- 0.4%
First Union Corp.
6.875% 09/15/05 $ 350 347,551
Meridian Bancorp.
6.625% 06/15/00 450 448,313
------------
795,864
------------
CONSTRUCTION -- 0.3%
Centex Corp.
7.375% 06/01/05 600 594,750
------------
ENERGY & UTILITIES -- 1.1%
Appalachian Power Co.
8.50% 12/01/22 600 656,250
Idaho Power Co.
8.75% 03/15/27 1,000 1,080,243
Mobile Energy Resources
8.665% 01/01/17 300 311,850
------------
2,048,343
------------
ENTERTAINMENT & LEISURE -- 0.3%
Royal Caribbean
7.125% 09/18/02 600 596,250
------------
FINANCE -- 1.2%
Golden West Financial
6.70% 07/01/02 850 848,938
Liberty Mutual
8.50% 05/15/25 750 779,063
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- ------------
<S> <C> <C> <C>
FINANCE (CONTINUED)
New American Capital, Inc.
7.6875% 10/12/95 600 $ 599,250
------------
2,227,251
------------
FOOD & AGRICULTURE -- 0.3%
Nabisco, Inc.
7.05% 07/15/07 180 177,525
Ralston Purina Co.
7.875% 06/15/25 300 306,000
------------
483,525
------------
INSURANCE -- 0.3%
Metropolitan Life
6.30% 11/01/03 300 285,000
Prudential Insurance
8.30% 07/01/25 300 302,250
------------
587,250
------------
MISCELLANEOUS TRANSPORTATION -- 1.8%
Burlington Northern
6.94% 01/02/14 600 589,948
Ryder Systems, Inc.
7.55% 09/15/99 2,500 2,592,500
------------
3,182,448
------------
RETAIL MERCHANDISING -- 0.5%
Factory Stores of America
8.31% 06/01/07 300 306,821
May Department Stores
8.125% 08/15/35 500 527,500
------------
834,321
------------
SECURITY BROKERS & DEALERS -- 0.9%
PaineWebber Group, Inc.
7.875% 02/15/03 1,500 1,558,125
------------
TEXTILE -- 0.1%
Burlington Industries
7.25% 09/15/05 200 199,750
------------
YANKEE -- 0.3%
Italy -- Global Bond
6.875% 09/27/23 500 455,625
------------
TOTAL CORPORATE BONDS
(Cost $13,197,377) 13,563,502
------------
MEDIUM TERM NOTES -- 1.9%
FINANCE -- 1.4%
General Motors
Acceptance Corp.
8.625% 06/15/99 $ 2,400 2,559,000
------------
</TABLE>
See accompanying notes to financial statements.
44
<PAGE> 161
BALANCED PORTFOLIO
STATEMENT OF NET ASSETS (Continued)
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
--------- --------- ------------
<S> <C> <C> <C>
MEDIUM TERM NOTES (CONTINUED)
SECURITY BROKERS & DEALERS -- 0.5%
Salomon, Inc.
7.59% 01/28/00 $ 600 $ 603,750
8.90% 02/15/00 300 316,125
------------
919,875
------------
TOTAL MEDIUM TERM NOTES
(Cost $3,383,685) 3,478,875
------------
MUNICIPAL BONDS -- 0.9%
Los Angeles County Taxable
Pension Obligation
8.62% 06/30/06 1,450 1,586,438
------------
(Cost $1,504,421)
U.S. TREASURY OBLIGATIONS -- 14.2%
U.S. TREASURY BILLS -- 0.0%
5.185% 12/21/95 110*** 108,657
------------
U.S. TREASURY BONDS -- 3.2%
10.75% 08/15/05 1,510 2,000,705
7.875% 02/15/21 800 918,152
7.125% 02/15/23 1,700 1,803,190
7.625% 02/15/25 940 1,064,183
------------
5,786,230
------------
U.S. TREASURY NOTES -- 11.0%
5.625% 06/30/97 8,300 8,272,610
6.125% 05/15/98 2,940 2,956,993
5.875% 08/15/98 410 409,910
6.75% 06/30/99 5,800 5,949,059
6.875% 03/31/00 1,500 1,549,860
7.50% 02/15/05 700 762,825
------------
19,901,257
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $25,611,904) 25,796,144
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $162,612,862*) 101.3% 183,488,204
LIABILITIES IN EXCESS OF
OTHER ASSETS (1.3%) (2,279,578)
--------- ------------
NET ASSETS (Applicable to
1,786,399 Institutional shares,
6,242,256 Service shares and
4,946,071 Series A Investor
shares, and 228,161 Series B
Investor shares outstanding) 100.0% $181,208,626
======= ============
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
INSTITUTIONAL SHARE
($24,524,974 / 1,786,399) $13.73
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SERVICE SHARE
($85,667,623 / 6,242,256)
$13.72
======
NET ASSET VALUE AND REDEMPTION
PRICE PER SERIES A INVESTOR SHARE
($67,891,929 / 4,946,071) $13.73
======
MAXIMUM OFFERING PRICE PER SERIES
A INVESTOR SHARE
($13.73 / .955) $14.38
======
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE (SUBJECT
TO A MAXIMUM CONTINGENT
DEFERRED SALES CHARGE OF 5.0%)
PER SERIES B INVESTOR SHARE
($3,124,100 / 228,161) $13.69
======
- -------------
* Also cost for Federal income tax purposes. The gross
unrealized appreciation (depreciation) on a tax basis
is as follows:
Gross unrealized appreciation $21,935,158
Gross unrealized depreciation (1,059,816)
-----------
$20,875,342
===========
** Non-income producing security.
*** Principal amount of securities pledged as initial
margin requirement of $100,000 on 10 Standard & Poor's
500 Stock Index futures contracts expiring December
1995.
**** Rates shown are the rates as of September 30, 1995, and
the maturities shown are the longer of the next
interest readjustment date or the maturity date.
- ----------------------------------------------
INVESTMENT ABBREVIATIONS
ARM Adjustable Rate Mortgage
CMT Constant Maturity Treasury
TBA To Be Announced Purchase
- ----------------------------------------------
</TABLE>
See accompanying notes to financial statements.
45
<PAGE> 162
THE PNC(R) FUND
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
SMALL CAP
VALUE GROWTH GROWTH CORE
EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment income:
Interest........................................... $ 577,547 $ 1,141,463 $ 1,175,734 $ 1,537,642
Dividends.......................................... 21,172,971 2,894,255 151,279 3,695,899
------------ ----------- ----------- -----------
Total investment income.......................... 21,750,518 4,035,718 1,327,013 5,233,541
------------ ----------- ----------- -----------
Expenses:
Investment advisory fee............................ 3,579,370 1,191,123 755,989 950,739
Administration fee................................. 1,271,441 433,136 274,905 345,723
Custodian fee...................................... 109,189 55,404 53,676 49,977
Transfer agent fee................................. 120,887 55,024 39,771 46,370
Service fees....................................... 360,436 147,489 100,003 172,248
Distribution fees.................................. 52,242 29,015 14,400 7,835
Legal and audit.................................... 78,960 23,748 16,354 18,306
Printing........................................... 43,448 18,167 8,364 7,587
Registration fees and expenses..................... 24,998 51,601 40,997 41,491
Organization....................................... 8,470 38 4,420 4,409
Trustees' fees and officer's salary................ 10,445 3,289 2,022 2,519
Other.............................................. 21,585 15,358 8,017 7,030
------------ ----------- ----------- -----------
5,681,471 2,023,392 1,318,918 1,654,234
Less fees voluntarily waived....................... (934,201) (397,021) (173,925) (316,351)
------------ ----------- ----------- -----------
Total expenses................................... 4,747,270 1,626,371 1,144,993 1,337,883
------------ ----------- ----------- -----------
Net investment income................................ 17,003,248 2,409,347 182,020 3,895,658
------------ ----------- ----------- -----------
Realized and unrealized gain on investments:
Net realized gain from:
Investment transactions.......................... 41,440,252 4,638,334 1,817,093 4,558,058
Futures contracts................................ -- 1,439,190 -- 1,275,669
------------ ----------- ----------- -----------
41,440,252 6,077,524 1,817,093 5,833,727
------------ ----------- ----------- -----------
Change in unrealized appreciation from:
Investments...................................... 87,626,905 56,202,584 57,005,855 31,447,213
Futures contracts................................ -- 30,625 -- 495,700
------------ ----------- ----------- -----------
87,626,905 56,233,209 57,005,855 31,942,913
------------ ----------- ----------- -----------
Net gain on investments............................ 129,067,157 62,310,733 58,822,948 37,776,640
------------ ----------- ----------- -----------
Net increase in net assets
resulting from operations........................ $146,070,405 $64,720,080 $59,004,968 $41,672,298
============ =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
46
<PAGE> 163
THE PNC(R) FUND
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
SMALL CAP
INDEX VALUE INTERNATIONAL
EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ------------
<S> <C> <C> <C>
Investment Income:
Interest........................................................ $ 1,414,709 $ 2,063,409 $ 755,627
Dividends....................................................... 4,955,173 643,002 9,859,498
Foreign taxes withheld.......................................... -- -- (1,092,230)
----------- ----------- -----------
Total investment income....................................... 6,369,882 2,706,411 9,522,895
----------- ----------- -----------
Expenses:
Investment advisory fee......................................... 412,977 1,257,378 2,989,509
Administration fee.............................................. 412,977 457,229 797,202
Custodian fee................................................... 55,349 48,659 543,795
Transfer agent fee.............................................. 34,845 63,324 87,372
Service fees.................................................... 120,497 140,567 245,136
Distribution fees............................................... 15,983 82,381 69,634
Legal and audit................................................. 25,686 27,273 45,729
Printing........................................................ 13,616 15,194 27,471
Registration fees and expenses.................................. 24,999 35,581 56,046
Organization.................................................... 4,892 2,265 1,473
Trustees' fees and officer's salary............................. 3,260 3,644 7,062
Other........................................................... 56,158 13,339 6,696
----------- ----------- -----------
1,181,239 2,146,834 4,877,125
Less fees voluntarily waived.................................... (698,368) (211,899) (705,503)
----------- ----------- -----------
Total expenses................................................ 482,871 1,934,935 4,171,622
----------- ----------- -----------
Net investment income............................................. 5,887,011 771,476 5,351,273
----------- ----------- -----------
Realized and unrealized gain on investments and foreign currency
transactions:
Net realized gain from:
Investment transactions....................................... 17,282,024 12,355,473 21,853,940
Futures contracts............................................. 6,559,320 -- --
Foreign currency related transactions......................... -- -- 2,807,561
----------- ----------- -----------
23,841,344 12,355,473 24,661,501
----------- ----------- -----------
Change in unrealized appreciation (depreciation) from:
Investments................................................... 26,043,093 23,959,796 (19,426,863)
Futures contracts............................................. 39,900 -- --
Foreign currency related transactions......................... -- -- 2,292,647
----------- ----------- -----------
26,082,993 23,959,796 (17,134,216)
----------- ----------- -----------
Net gain on investments and foreign currency transactions......... 49,924,337 36,315,269 7,527,285
----------- ----------- -----------
Net increase in net assets resulting from operations.............. $55,811,348 $37,086,745 $ 12,878,558
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
47
<PAGE> 164
THE PNC(R) FUND
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
INTERNATIONAL
EMERGING
MARKETS BALANCED
PORTFOLIO PORTFOLIO
------------- -----------
<S> <C> <C>
Investment income:
Interest....................................................................... $ 279,812 $ 4,603,258
Dividends...................................................................... 684,262 2,534,226
Foreign taxes withheld......................................................... (39,900) --
----------- -----------
Total investment income...................................................... 924,174 7,137,484
----------- -----------
Expenses:
Investment advisory fee........................................................ 310,834 883,799
Administration fee............................................................. 49,733 321,382
Custodian fee.................................................................. 75,032 46,146
Transfer agent fee............................................................. 21,097 88,890
Service fees................................................................... 23,399 209,459
Distribution fees.............................................................. 10,744 268,321
Legal and audit................................................................ 2,650 19,110
Printing....................................................................... 2,959 10,592
Registration fees and expenses................................................. 24,592 29,778
Organization................................................................... 9,140 6,387
Trustees' fees and officer's salary............................................ 1,377 2,542
Other.......................................................................... 4,895 10,618
----------- -----------
536,452 1,897,024
Less fees voluntarily waived................................................... (60,536) (345,789)
----------- -----------
Total expenses............................................................... 475,916 1,551,235
----------- -----------
Net investment income............................................................ 448,258 5,586,249
----------- -----------
Realized and unrealized gain (loss) on investments and foreign currency
transactions:
Net realized gain (loss) from:
Investment transactions...................................................... 375,172 666,646
Futures contracts............................................................ -- 124,847
Foreign currency related transactions........................................ (138,100) --
----------- -----------
237,072 791,493
----------- -----------
Change in unrealized appreciation (depreciation) from:
Investments.................................................................. (3,603,039) 23,783,998
Futures contracts............................................................ -- (14,400)
Foreign currency related transactions........................................ (2,783) --
----------- -----------
(3,605,822) 23,769,598
----------- -----------
Net gain (loss) on investments and foreign currency transactions................. (3,368,750) 24,561,091
----------- -----------
Net increase (decrease) in net assets resulting from operations.................. $(2,920,492) $30,147,340
=========== ===========
</TABLE>
See accompanying notes to financial statements.
48
<PAGE> 165
THE PNC(R) FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP GROWTH
VALUE EQUITY PORTFOLIO GROWTH EQUITY PORTFOLIO EQUITY PORTFOLIO
---------------------------- --------------------------- --------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/95 9/30/94 9/30/95 9/30/94 9/30/95 9/30/94
------------- ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations
Net investment income........... $ 17,003,248 $ 13,916,548 $ 2,409,347 $ 687,322 $ 182,020 $ 148,211
Net gain (loss) on
investments................... 129,067,157 7,078,395 62,310,733 (12,967,582) 58,822,948 2,067,164
------------- ------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net
assets resulting from
operations.................... 146,070,405 20,994,943 64,720,080 (12,280,260) 59,004,968 2,215,375
------------- ------------ ------------ ------------ ------------ -----------
Distributions to shareholders from
Net investment income
Institutional Shares............ (13,178,740) (12,376,684) (2,327,933) (62,388) (134,031) (10,677)
Service Shares.................. (3,103,505) (1,666,353) (616,352) (1,583) (1,124) (2,037)
Series A Investor Shares........ (296,322) (170,702) (67,622) -- -- (29)
------------- ------------ ------------ ------------ ------------ -----------
Total distributions from net
investment income......... (16,578,567) (14,213,739) (3,011,907) (63,971) (135,155) (12,743)
------------- ------------ ------------ ------------ ------------ -----------
Net realized gains
Institutional Shares............ (11,450,041) (8,108,233) -- (831,835) -- --
Service Shares.................. (2,299,900) (850,677) -- (158,279) -- --
Series A Investor Shares........ (248,638) (106,250) -- (28,957) -- --
------------- ------------ ------------ ------------ ------------ -----------
Total distributions from net
realized gains............ (13,998,579) (9,065,160) -- (1,019,071) -- --
------------- ------------ ------------ ------------ ------------ -----------
Total distributions to
shareholders.............. (30,577,146) (23,278,899) (3,011,907) (1,083,042) (135,155) (12,743)
------------- ------------ ------------ ------------ ------------ -----------
Capital share transactions.......... (112,921,499) 234,949,582 97,002,613 41,981,179 67,115,660 75,416,557
------------- ------------ ------------ ------------ ------------ -----------
Total increase in net
assets.................... 2,571,760 232,665,626 158,710,786 28,617,877 125,985,473 77,619,189
Net assets:
Beginning of period............. 693,442,703 460,777,077 139,635,183 111,017,306 89,880,900 12,261,711
------------- ------------ ------------ ------------ ------------ -----------
End of period................... $ 696,014,463 $693,442,703 $298,345,969 $139,635,183 $215,866,373 $89,880,900
============= ============ ============ ============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
49
<PAGE> 166
THE PNC(R) FUND
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
SMALL CAP VALUE
CORE EQUITY PORTFOLIO INDEX EQUITY PORTFOLIO EQUITY PORTFOLIO
-------------------------- --------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
9/30/95 9/30/94 9/30/95 9/30/94 9/30/95 9/30/94
------------ ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations
Net investment income........... $ 3,895,658 $ 1,557,592 $ 5,887,011 $ 5,453,203 $ 771,476 $ 425,335
Net gain (loss) on
investments................... 37,776,640 (345,348) 49,924,337 (379,721) 36,315,269 10,798,567
------------ ----------- ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations..... 41,672,298 1,212,244 55,811,348 5,073,482 37,086,745 11,223,902
------------ ----------- ------------ ------------ ------------ ------------
Distributions to shareholders from
Net investment income
Institutional Shares............ (2,701,925) (1,101,493) (4,208,433) (5,019,786) (867,157) (193,009)
Service Shares.................. (1,140,724) (541,575) (1,134,278) (575,649) (91,955) (18,404)
Series A Investor Shares........ (35,042) (5,097) (107,929) (52,872) -- (2,894)
Series B Investor Shares........ -- -- -- -- -- --
------------ ----------- ------------ ------------ ------------ ------------
Total distributions from net
investment income......... (3,877,691) (1,648,165) (5,450,640) (5,648,307) (959,112) (214,307)
------------ ----------- ------------ ------------ ------------ ------------
Net realized gains
Institutional Shares............ (722,978) -- (1,653,604) (1,828,819) (7,036,364) (2,608,236)
Service Shares.................. (611,965) -- (329,586) (163,449) (2,075,543) (541,286)
Series A Investor Shares........ (10,239) -- (31,480) (15,147) (823,691) (206,728)
Series B Investor Shares........ -- -- -- -- (23,641) --
------------ ----------- ------------ ------------ ------------ ------------
Total distributions from net
realized gains............ (1,345,182) -- (2,014,670) (2,007,415) (9,959,239) (3,356,250)
------------ ----------- ------------ ------------ ------------ ------------
Total distributions to
shareholders.............. (5,222,873) (1,648,165) (7,465,310) (7,655,722) (10,918,351) (3,570,557)
------------ ----------- ------------ ------------ ------------ ------------
Capital share transactions.......... 191,859,670 28,481,078 (48,630,289) (19,530,455) (4,095,954) 63,383,683
------------ ----------- ------------ ------------ ------------ ------------
Total increase (decrease)
in net assets............. 228,309,095 28,045,157 (284,251) (22,112,695) 22,072,440 71,037,028
Net assets:
Beginning of period............. 98,017,374 69,972,217 177,754,041 199,866,736 230,615,046 159,578,018
------------ ----------- ------------ ------------ ------------ ------------
End of period................... $326,326,469 $98,017,374 $177,469,790 $177,754,041 $252,687,486 $230,615,046
============ =========== ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
50
<PAGE> 167
THE PNC(R) FUND
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
INTERNATIONAL EMERGING
MARKETS PORTFOLIO
INTERNATIONAL EQUITY ------------------------
PORTFOLIO FOR THE BALANCED PORTFOLIO
--------------------------- PERIOD ---------------------------
FOR THE FOR THE FOR THE 6/17/94(1) FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED THROUGH YEAR ENDED YEAR ENDED
9/30/95 9/30/94 9/30/95 9/30/94 9/30/95 9/30/94
------------ ------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations
Net investment income.............. $ 5,351,273 $ 3,079,563 $ 448,258 $ 26,722 $ 5,586,249 $ 3,552,179
Net gain (loss) on investments
and foreign currency related
transactions..................... 7,527,285 16,813,095 (3,368,750) 330,075 24,561,091 (5,517,471)
------------ ------------ ----------- ---------- ------------ ------------
Net increase (decrease) in net
assets resulting from
operations....................... 12,878,558 19,892,658 (2,920,492) 356,797 30,147,340 (1,965,292)
------------ ------------ ----------- ---------- ------------ ------------
Distributions to shareholders from
Net investment income
Institutional Shares............... (2,564,224) (1,219,026) (359,180) -- (821,125) (518,473)
Service Shares..................... (602,030) (170,647) (126,070) -- (2,625,630) (1,491,022)
Series A Investor Shares........... (52,611) (42,840) (18,873) -- (2,128,267) (1,542,512)
Series B Investor Shares........... -- -- -- -- (61,853) --
------------ ------------ ----------- ---------- ------------ ------------
Total distributions from net
investment income............ (3,218,865) (1,432,513) (504,123) -- (5,636,875) (3,552,007)
------------ ------------ ----------- ---------- ------------ ------------
Net realized gains
Institutional Shares............... (7,774,154) (2,844,395) (85,253) -- (223,248) (74,267)
Service Shares..................... (2,155,634) (447,150) (106,636) -- (746,415) (125,603)
Series A Investor Shares........... (429,789) (119,272) (55,511) -- (696,601) (232,282)
Series B Investor Shares........... (14,711) -- -- -- (12,892) --
------------ ------------ ----------- ---------- ------------ ------------
Total distributions from net
realized gains............... (10,374,288) (3,410,817) (247,400) -- (1,679,156) (432,152)
------------ ------------ ----------- ---------- ------------ ------------
Capital
Institutional Shares............... -- -- (18,501) -- -- --
Service Shares..................... -- -- (6,494) -- -- --
Series A Investor Shares........... -- -- (972) -- -- --
------------ ------------ ----------- ---------- ------------ ------------
Total distributions from
capital...................... -- -- (25,967) -- -- --
------------ ------------ ----------- ---------- ------------ ------------
Total distributions to
shareholders................. (13,593,153) (4,843,330) (777,490) -- (7,316,031) (3,984,159)
------------ ------------ ----------- ---------- ------------ ------------
Capital share transactions............. 63,627,948 212,755,730 41,726,944 8,516,188 12,436,803 83,590,431
------------ ------------ ----------- ---------- ------------ ------------
Total increase in net assets... 62,913,353 227,805,058 38,028,962 8,872,985 35,268,112 77,640,980
Net assets:
Beginning of period................ 374,511,915 146,706,857 8,872,985 -- 145,940,514 68,299,534
------------ ------------ ----------- ---------- ------------ ------------
End of period...................... $437,425,268 $374,511,915 $46,901,947 $8,872,985 $181,208,626 $145,940,514
============ ============ =========== ========== ============ ============
</TABLE>
- -------------
(1) Commencement of operations.
See accompanying notes to financial statements.
51
<PAGE> 168
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
VALUE EQUITY PORTFOLIO
--------------------------------------------------
INSTITUTIONAL CLASS
--------------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR 4/20/92(1)
ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/92
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value at beginning of period......................... $ 11.62 $ 11.68 $ 9.78 $ 10.00
-------- -------- -------- --------
Income from investment operations
Net investment income....................................... 0.34 0.27 0.22 0.12
Net gain (loss) on investments
(both realized and unrealized)............................ 2.54 0.16 1.91 (0.24)
-------- -------- -------- --------
Total from investment operations........................ 2.88 0.43 2.13 (0.12)
-------- -------- -------- --------
Less distributions
Distributions from net investment income.................... (0.33) (0.27) (0.23) (0.10)
Distributions from net realized capital gains............... (0.25) (0.22) -- --
-------- -------- -------- --------
Total distributions..................................... (0.58) (0.49) (0.23) (0.10)
-------- -------- -------- --------
Net asset value at end of period............................... $ 13.92 $ 11.62 $ 11.68 $ 9.78
======== ======== ======== ========
Total return................................................... 25.73% 3.76% 21.92% (1.19)%
Ratios/Supplemental data
Net assets at end of period (in thousands).................. $508,273 $577,996 $432,776 $322,806
Ratios of expenses to average net assets
After advisory/administration fee waivers................. 0.67% 0.65% 0.80% 0.85%(2)
Before advisory/administration fee waivers................ 0.81% 0.81% 0.83% 0.85%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers................. 2.68% 2.44% 2.07% 2.62%(2)
Before advisory/administration fee waivers................ 2.53% 2.28% 2.04% 2.62%(2)
Portfolio turnover rate........................................ 12% 11% 11% 13%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
52
<PAGE> 169
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
VALUE EQUITY PORTFOLIO
------------------------------------------------
SERVICE CLASS
------------------------------------------------
FOR THE
PERIOD
YEAR YEAR 7/29/93(1)
ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93
-------- -------- -------
<S> <C> <C> <C>
Net asset value at beginning of period..................................... $ 11.62 $ 11.68 $ 11.21
-------- -------- -------
Income from investment operations
Net investment income................................................... 0.30 0.25 0.04
Net gain (loss) on investments (both realized and unrealized)........... 2.55 0.16 0.48
-------- -------- -------
Total from investment operations.................................... 2.85 0.41 0.52
-------- -------- -------
Less distributions
Distributions from net investment income................................ (0.30) (0.25) (0.05)
Distributions from net realized capital gains........................... (0.25) (0.22) --
-------- -------- -------
Total distributions................................................. (0.55) (0.47) (0.05)
-------- -------- -------
Net asset value at end of period........................................... $ 13.92 $ 11.62 $ 11.68
======== ======== =======
Total return............................................................... 25.4% 3.51% 4.64%
Ratios/Supplemental data
Net assets at end of period (in thousands).............................. $170,832 $105,035 $23,137
Ratios of expenses to average net assets
After advisory/administration fee waivers............................. 0.95% 0.90% 0.91%(2)
Before advisory/administration fee waivers............................ 1.09% 1.06% 0.94%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers............................. 2.40% 2.24% 2.44%(2)
Before advisory/administration fee waivers............................ 2.26% 2.08% 2.41%(2)
Portfolio turnover rate.................................................... 12% 11% 11%
</TABLE>
<TABLE>
<CAPTION>
VALUE EQUITY PORTFOLIO
------------------------------------------------
SERIES A
INVESTOR CLASS
------------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR 5/02/92(1)
ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/92
------- ------- ------- --------
<S> <C> <C> <C> <C>
Net asset value at beginning of period..................................... $ 11.62 $ 11.69 $ 9.78 $10.00
------- ------- ------ ------
Income from investment operations
Net investment income................................................... 0.27 0.23 0.22 0.12
Net gain (loss) on investments (both realized and unrealized)........... 2.56 0.15 1.91 (0.24)
------- ------- ------ ------
Total from investment operations.................................... 2.83 0.38 2.13 (0.12)
------- ------- ------ ------
Less distributions
Distributions from net investment income................................ (0.28) (0.23) (0.22) (0.10)
Distributions from net realized capital gains........................... (0.25) (0.22) -- --
------- ------- ------ ------
Total distributions................................................. (0.53) (0.45) (0.22) (0.10)
------- ------- ------ ------
Net asset value at end of period........................................... $ 13.92 $ 11.62 $11.69 $ 9.78
======= ======= ====== ======
Total return............................................................... 25.22%(3) 3.32%(3) 21.95%(3) (1.19)%(3)
Ratios/Supplemental data
Net assets at end of period (in thousands).............................. $16,910 $10,412 $ 4,865 $ 16
Ratios of expenses to average net assets
After advisory/administration fee waivers............................. 1.11% 1.05% 0.92% 0.85%(2)
Before advisory/administration fee waivers............................ 1.25% 1.21% 0.95% 0.85%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers............................. 2.24% 2.08% 1.96% 2.62%(2)
Before advisory/administration fee waivers............................ 2.10% 1.92% 1.93% 2.62%(2)
Portfolio turnover rate.................................................... 12% 11% 11% 13%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
See accompanying notes to financial statements.
53
<PAGE> 170
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
GROWTH EQUITY PORTFOLIO
---------------------------------------------------
INSTITUTIONAL CLASS
---------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
9/30/95 9/30/94 9/30/93 9/30/92 9/30/91
-------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period............................. $ 10.19 $ 11.58 $ 9.92 $ 10.28 $ 9.98
-------- ------- -------- ------- -------
Income from investment operations
Net investment income........................................... 0.13 0.06 0.06 0.21 0.24
Net gain (loss) on investments (both realized and unrealized)... 2.88 (1.34) 2.07 0.30 1.51
-------- ------- -------- ------- -------
Total from investment operations............................ 3.01 (1.28) 2.13 0.51 1.75
-------- ------- -------- ------- -------
Less distributions
Distributions from net investment income........................ (0.17) (0.01) (0.07) (0.37) (0.32)
Distributions from capital...................................... -- -- (0.01) -- --
Distributions from net realized capital gains................... -- (0.10) (0.39) (0.50) (1.13)
-------- ------- -------- ------- -------
Total distributions......................................... (0.17) (0.11) (0.47) (0.87) (1.45)
-------- ------- -------- ------- -------
Net asset value at end of period................................... $ 13.03 $ 10.19 $ 11.58 $ 9.92 $ 10.28
======== ======= ======== ======= =======
Total return....................................................... 29.88% (11.14)% 22.18% 4.98% 19.47%
Ratios/Supplemental data
Net assets at end of period (in thousands)...................... $211,543 $97,834 $100,049 $58,372 $54,912
Ratios of expenses to average net assets
After advisory/administration fee waivers..................... 0.67% 0.65% 0.81% 0.85% 0.85%
Before advisory/administration fee waivers.................... 0.85% 0.89% 0.87% 0.86% 0.91%
Ratios of net investment income to average net assets
After advisory/administration fee waivers..................... 1.20% 0.62% 0.50% 2.07% 2.59%
Before advisory/administration fee waivers.................... 1.01% 0.38% 0.44% 2.06% 2.53%
Portfolio turnover rate............................................ 55% 212% 175% 162% 211%
</TABLE>
See accompanying notes to financial statements.
54
<PAGE> 171
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
GROWTH EQUITY PORTFOLIO
-----------------------------------
SERVICE CLASS
-----------------------------------
FOR THE
PERIOD
YEAR YEAR 7/29/93(1)
ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93
------- ------- -------
<S> <C> <C> <C>
Net asset value at beginning of period........................................ $ 10.18 $ 11.57 $10.54
------- ------- ------
Income from investment operations
Net investment income...................................................... 0.10 0.03 --
Net gain (loss) on investments (both realized and unrealized).............. 2.87 (1.32) 1.03
------- ------- ------
Total from investment operations....................................... 2.97 (1.29) 1.03
------- ------- ------
Less distributions
Distributions from net investment income................................... (0.13) -- --
Distributions from capital................................................. -- -- --
Distributions from net realized capital gains.............................. -- (0.10) --
------- ------- ------
Total distributions.................................................... (0.13) (0.10) --
------- ------- ------
Net asset value at end of period.............................................. $ 13.02 $ 10.18 $11.57
======= ======= ======
Total return.................................................................. 29.43% (11.20)% 9.77%
Ratios/Supplemental data
Net assets at end of period (in thousands)................................. $76,769 $36,752 $8,606
Ratios of expenses to average net assets
After advisory/administration fee waivers................................ 0.95% 0.90% 0.89%(2)
Before advisory/administration fee waivers............................... 1.13% 1.14% 0.95%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers................................ 0.91% 0.51% (0.03)%(2)
Before advisory/administration fee waivers............................... 0.73% 0.26% (0.09)%(2)
Portfolio turnover rate....................................................... 55% 212% 175%
</TABLE>
<TABLE>
<CAPTION>
GROWTH EQUITY PORTFOLIO
----------------------------------------------
SERIES A
INVESTOR CLASS
----------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR 3/14/92(1)
ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/92
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value at beginning of period........................................ $ 10.16 $11.57 $ 9.92 $10.09
------- ------ ------ ------
Income from investment operations
Net investment income...................................................... 0.08 0.02 0.02 0.08
Net gain (loss) on investments (both realized and unrealized).............. 2.87 (1.33) 2.10 (0.10)
-------- ------ ------ ------
Total from investment operations....................................... 2.95 (1.31) 2.12 (0.02)
-------- ------ ------ ------
Less distributions
Distributions from net investment income................................... (0.10) -- (0.07) (0.15)
Distributions from capital................................................. -- -- (0.01) --
Distributions from net realized capital gains.............................. -- (0.10) (0.39) --
------- ------ ------ ------
Total distributions.................................................... (0.10) (0.10) (0.47) (0.15)
------- ------ ------ ------
Net asset value at end of period.............................................. $ 13.01 $10.16 $11.57 $ 9.92
======= ====== ====== ======
Total return.................................................................. 29.26%(3) (11.38)%(3) 22.08%(3) (0.17)%(3)
Ratios/Supplemental data
Net assets at end of period (in thousands)................................. $10,034 $5,049 $2,362 $ 239
Ratios of expenses to average net assets
After advisory/administration fee waivers................................ 1.11% 1.05% 0.91% 0.85%(2)
Before advisory/administration fee waivers............................... 1.29% 1.29% 0.97% 0.86%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers................................ 0.76% 0.29% 0.18% 2.07%(2)
Before advisory/administration fee waivers............................... 0.58% 0.05% 0.12% 2.06%(2)
Portfolio turnover rate....................................................... 55% 212% 175% 162%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
See accompanying notes to financial statements.
55
<PAGE> 172
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SMALL CAP GROWTH EQUITY PORTFOLIO
-------------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
------------------------------ -----------------------------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR 9/14/93(1) YEAR YEAR 9/15/93(1)
ENDED ENDED THROUGH ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94 9/30/93
-------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period............. $ 10.16 $ 10.47 $ 10.00 $ 10.14 $ 10.47 $ 9.96
-------- ------- ------- ------- ------- ------
Income from investment operations
Net investment income........................... 0.02 0.03 -- (0.01) 0.01 --
Net gain (loss) on investments (both realized
and unrealized)............................... 4.90 (0.33) 0.47 4.89 (0.34) 0.51
-------- ------- ------- ------- ------- ------
Total from investment operations............ 4.92 (0.30) 0.47 4.88 (0.33) 0.51
-------- ------- ------- ------- ------- ------
Less distributions
Distributions from net investment income........ (0.02) (0.01) -- -- -- --
Distributions from net realized capital gains... -- -- -- -- -- --
-------- ------- ------- ------- ------- ------
Total distributions......................... (0.02) (0.01) -- -- -- --
-------- ------- ------- ------- ------- ------
Net asset value at end of period................... $ 15.06 $ 10.16 $ 10.47 $ 15.02 $ 10.14 $10.47
======== ======= ======= ======= ======= ======
Total return....................................... 48.50% (2.89)% 4.70% 48.13% (3.12)% 5.12%
Ratios/Supplemental data
Net assets at end of period (in thousands)...... $145,915 $65,612 $11,310 $62,604 $22,648 $ 911
Ratios of expenses to average net assets
After advisory/administration fee waivers..... 0.75% 0.48% 0.73%(2) 1.03% 0.71% 0.99%(2)
Before advisory/administration fee waivers.... 0.88% 1.04% 1.42%(2) 1.16% 1.27% 1.68%(2)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers..... 0.22% 0.45% (0.11)%(2) (0.07)% 0.21% (0.34)%(2)
Before advisory/administration fee waivers.... 0.09% (0.10)% (0.80)%(2) (0.20)% (0.34)% (1.03)%(2)
Portfolio turnover rate............................ 74% 89% 9% 74% 89% 9%
<CAPTION>
SMALL CAP GROWTH EQUITY PORTFOLIO
-------------------------------------
SERIES A
INVESTOR CLASS
-------------------------------------
FOR THE
PERIOD
YEAR YEAR 9/15/93(1)
ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93
------- ------- -------
<S> <C> <C> <C>
Net asset value at beginning of period............. $10.12 $10.47 $ 9.96
------ ------ ------
Income from investment operations
Net investment income........................... (0.02) -- --
Net gain (loss) on investments (both realized
and unrealized)............................... 4.88 (0.35) 0.51
------ ------ ------
Total from investment operations............ 4.86 (0.35) 0.51
------ ------ ------
Less distributions
Distributions from net investment income........ -- -- --
Distributions from net realized capital gains... -- -- --
------ ------ ------
Total distributions......................... -- -- --
------ ------ ------
Net asset value at end of period................... $14.98 $10.12 $10.47
====== ====== ======
Total return....................................... 48.02%(3) (3.33)%(3) 5.12%(3)
Ratios/Supplemental data
Net assets at end of period (in thousands)...... $7,348 $1,620 $ 41
Ratios of expenses to average net assets
After advisory/administration fee waivers..... 1.20% 0.86% 1.13%(2)
Before advisory/administration fee waivers.... 1.33% 1.42% 1.82%(2)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers..... (0.24)% 0.07% (0.48)%(2)
Before advisory/administration fee waivers.... (0.36)% (0.49)% (1.17)%(2)
Portfolio turnover rate............................ 74% 89% 9%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
See accompanying notes to financial statements.
56
<PAGE> 173
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
CORE EQUITY PORTFOLIO
------------------------------------------------------------------------
INSTITUTIONAL CLASS SERVICE CLASS
-------------------------------- -------------------------------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR 9/13/93(1) YEAR YEAR 9/15/93(1)
ENDED ENDED THROUGH ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/95 9/30/94 9/30/93
-------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period................... $ 9.92 $ 9.97 $10.00 $ 9.92 $ 9.97 $10.00
--------- -------- --------- -------- -------- --------
Income from investment operations
Net investment income................................. 0.22 0.22 0.01 0.22 0.19 --
Net gain (loss) on investments (both realized
and unrealized)..................................... 2.08 (0.04) (0.04) 2.05 (0.04) (0.03)
--------- -------- --------- -------- -------- --------
Total from investment operations.................. 2.30 0.18 (0.03) 2.27 0.15 (0.03)
--------- -------- --------- -------- -------- --------
Less distributions
Distributions from net investment income.............. (0.22) (0.23) -- (0.19) (0.20) --
Distributions from net realized capital gains......... (0.12) -- -- (0.12) -- --
--------- -------- --------- -------- -------- --------
Total distributions............................... (0.34) (0.23) -- (0.31) (0.20) --
--------- -------- --------- -------- -------- --------
Net asset value at end of period......................... $ 11.88 $ 9.92 $ 9.97 $ 11.88 $ 9.92 $ 9.97
========= ======== ========= ======== ======== ========
Total return............................................. 23.76% 1.79% (0.30)% 23.43% 1.55% (0.30)%
Ratios/Supplemental data
Net assets at end of period (in thousands)............ $238,813 $48,123 $69,268 $83,705 $49,293 $ 704
Ratios of expenses to average net assets
After advisory/administration fee waivers........... 0.67% 0.65% 0.65%(2) 0.95% 0.90% 0.90%(2)
Before advisory/administration fee waivers.......... 0.85% 0.93% 0.87%(2) 1.13% 1.18% 1.12%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers........... 2.35% 2.11% 2.17%(2) 2.10% 1.96% 1.92%(2)
Before advisory/administration fee waivers.......... 2.17% 1.82% 1.95%(2) 1.91% 1.68% 1.70%(2)
Portfolio turnover rate.................................. 51% 88% 2% 51% 88% 2%
<CAPTION>
CORE EQUITY PORTFOLIO
---------------------
SERIES A
INVESTOR CLASS
---------------------
FOR THE
PERIOD
YEAR 10/13/93(1)
ENDED THROUGH
9/30/95 9/30/94
------- --------
<S> <C> <C>
Net asset value at beginning of period................... $ 9.92 $ 9.96
------ -------
Income from investment operations
Net investment income................................. 0.20 0.18
Net gain (loss) on investments (both realized
and unrealized)..................................... 2.06 (0.03)
------ -------
Total from investment operations.................. 2.26 0.15
------ -------
Less distributions
Distributions from net investment income.............. (0.18) (0.19)
Distributions from net realized capital gains......... (0.12) --
------ -------
Total distributions............................... (0.30) (0.19)
------ -------
Net asset value at end of period......................... $11.88 $ 9.92
====== =======
Total return............................................. 23.29%(3) 1.54%(3)
Ratios/Supplemental data
Net assets at end of period (in thousands)............ $3,808 $ 601
Ratios of expenses to average net assets
After advisory/administration fee waivers........... 1.12% 1.05%(2)
Before advisory/administration fee waivers.......... 1.30% 1.34%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers........... 1.91% 1.89%(2)
Before advisory/administration fee waivers.......... 1.73% 1.60%(2)
Portfolio turnover rate.................................. 51% 88%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
See accompanying notes to financial statements.
57
<PAGE> 174
THE PNC(R) FUND
Financial HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INDEX EQUITY PORTFOLIO
--------------------------------------------
INSTITUTIONAL CLASS
--------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR 4/20/92(1)
ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/92
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Net asset value
at beginning of period....... $ 10.93 $ 11.02 $ 10.08 $ 10.00
-------- -------- -------- --------
Income from investment
operations
Net investment income...... 0.38 0.31 0.27 0.13
Net gain (loss)
on investments
(both realized
and unrealized).......... 2.73 0.03 0.97 0.03
-------- -------- -------- --------
Total from
investment operations 3.11 0.34 1.24 0.16
-------- -------- -------- --------
Less distributions
Distributions from
net investment income..... (0.34) (0.32) (0.28) (0.10)
Distributions from
net realized
capital gains............. (0.12) (0.11) -- --
-------- -------- -------- --------
Total distributions..... (0.46) (0.43) (0.28) (0.10)
-------- -------- -------- --------
Net asset value
at end of period............. $ 13.58 $ 10.93 $ 11.02 $ 10.06
======== ======== ======== ========
Total return................... 29.30% 3.07% 12.40% 1.62%
Ratios/Supplemental data
Net assets
at end of period
(in thousands)............ $109,433 $147,746 $186,163 $175,888
Ratios of expenses
to average net assets
After advisory/
administration
fee waivers........... 0.17% 0.15% 0.40% 0.45%(2)
Before advisory/
administration
fee waivers........... 0.50% 0.52% 0.52% 0.64%(2)
Ratios of net investment
income to average
net assets
After advisory/
administration
fee waivers........... 2.92% 2.72% 2.46% 2.85%(2)
Before advisory/
administration
fee waivers........... 2.59% 2.35% 2.34% 2.66%(2)
Portfolio turnover rate........ 18% 17% 8% 23%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
58
<PAGE> 175
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INDEX EQUITY PORTFOLIO
------------------------------
SERVICE CLASS
------------------------------
FOR THE
PERIOD
YEAR YEAR 7/29/93(1)
ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93
------- ------- -------
<S> <C> <C> <C>
Net asset value
at beginning of period............. $ 10.93 $ 11.02 $ 10.76
------- ------- -------
Income from investment operations
Net investment income............. 0.35 0.29 0.05
Net gain (loss) on investments
(both realized and unrealized).. 2.73 0.02 0.29
------- ------- -------
Total from investment
operations.................. 3.08 0.31 0.34
------- ------- -------
Less distributions
Distributions from
net investment income........... (0.31) (0.29) (0.08)
Distributions from
net realized capital gains...... (0.12) (0.11) --
------- ------- ------
Total distributions........... (0.43) (0.40) (0.08)
------- ------- ------
Net asset value at end of period..... $ 13.58 $ 10.93 $ 11.02
======= ======= =======
Total return......................... 28.99% 2.78% 3.16%
Ratios/Supplemental data
Net assets at end of period
(in thousands).................. $61,536 $27,376 $12,441
Ratios of expenses
to average net assets
After advisory/
administration fee waivers.. 0.45% 0.40% 0.41%(2)
Before advisory/
administration fee waivers.. 0.79% 0.77% 0.53%(2)
Ratios of net investment
income to average net assets
After advisory/
administration fee waivers.. 2.62% 2.49% 3.04%(2)
Before advisory/
administration fee waivers.. 2.28% 2.12% 2.92%(2)
Portfolio turnover rate.............. 18% 17% 8%
<CAPTION>
INDEX EQUITY PORTFOLIO
----------------------------------------------
SERIES A INVESTOR CLASS
----------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR 6/02/92(1)
ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/92
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value
at beginning of period....... $ 10.93 $ 11.02 $ 10.06 $ 10.07
------- ------- ------- -------
Income from investment
operations
Net investment income....... 0.34 0.25 0.27 0.10
Net gain (loss) on
investments (both realized
and unrealized)........... 2.73 0.04 0.96 (0.01)
------- ------- ------- -------
Total from investment
operations............ 3.07 0.29 1.23 0.09
------- ------- ------- -------
Less distributions
Distributions from
net investment income...... (0.30) (0.27) (0.27) (0.10)
Distributions from net
realized capital gains..... (0.12) (0.11) -- --
------- ------- ------- -------
Total distributions...... (0.42) (0.38) (0.27) (0.10)
------- ------ ------- ------
Net asset value
at end of period.............. $ 13.58 $ 10.93 $ 11.02 $ 10.06
======= ======= ======= =======
Total return.................... 28.77%(3) 2.66%(3) 12.33%(3) 0.91%(3)
Ratios/Supplemental data
Net assets at end of period
(in thousands)............. $ 6,501 $ 2,632 $ 1,263 $ 56
Ratios of expenses
to average net assets
After advisory/
administration
fee waivers.............. 0.61% 0.55% 0.49% 0.45%(2)
Before advisory/
administration
fee waivers............... 0.95% 0.92% 0.61% 0.64%(2)
Ratios of net investment
income to average net assets
After advisory/
administration
fee waivers............. 2.44% 2.35% 2.48% 2.85%(2)
Before advisory/
administration
fee waivers............. 2.10% 1.98% 2.36% 2.66%(2)
Portfolio turnover rate.......... 18% 7% 8% 23%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
See accompanying notes to financial statements.
59
<PAGE> 176
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SMALL CAP VALUE EQUITY PORTFOLIO
---------------------------------------
INSTITUTIONAL CLASS
---------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR 4/13/92(1)
ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/92
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value
at beginning of period.......... $ 13.62 $ 13.08 $ 10.14 $ 10.00
-------- ------- ------- -------
Income from investment operations
Net investment income.......... 0.06 0.04 0.04 0.02
Net gain (loss) on
investments (both realized
and unrealized).............. 2.17 0.77 3.02 0.13
-------- ------- ------- -------
Total from investment
operations............... 2.23 0.81 3.06 0.15
-------- ------- ------- -------
Less distributions
Distributions from
net investment income........ (0.08) (0.02) (0.04) (0.01)
Distributions from
net realized capital gains... (0.61) (0.25) (0.08) --
-------- ------- -------- -------
Total distributions........ (0.69) (0.27) (0.12) (0.01)
-------- -------- -------- -------
Net asset value at end of period.. $ 15.16 $ 13.62 $ 13.08 $ 10.14
======== ======== ======== =======
Total return...................... 17.43% 6.28% 30.36% 1.50%
Ratios/Supplemental data
Net assets at end
of period (in thousands)..... $168,334 $168,360 $128,805 $75,045
Ratios of expenses
to average net assets
After advisory/
administration
fee waivers.............. 0.75% 0.73% 0.83% 0.85%(2)
Before advisory/
administration
fee waivers.............. 0.84% 0.85% 0.87% 0.89%(2)
Ratios of net investment
income to average net assets
After advisory/
administration
fee waivers.............. 0.44% 0.28% 0.31% 0.51%(2)
Before advisory/
administration
fee waivers.............. 0.35% 0.16% 0.27% 0.47%(2)
Portfolio turnover rate........... 31% 18% 41% 17%
<CAPTION>
SMALL CAP VALUE EQUITY PORTFOLIO
--------------------------------
SERVICE CLASS
--------------------------------
FOR THE
PERIOD
YEAR YEAR 7/29/93(1)
ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93
------- ------- -------
<S> <C> <C> <C>
Net asset value
at beginning of period.......... $ 13.59 $ 13.08 $ 12.28
------- ------- -------
Income from investment
operations
Net investment income......... 0.02 -- --
Net gain (loss) on
investments (both
realized and unrealized).... 2.18 0.77 0.80
------ ------- -------
Total from investment
operations............... 2.20 0.77 0.80
------ ------- -------
Less distributions
Distributions from
net investment income........ (0.03) (0.01) --
Distributions from net
realized capital gains....... (0.61) (0.25) --
------ ------- -------
Total distributions........ (0.64) (0.26) --
------ ------- -------
Net asset value at end of period.. $ 15.15 $ 13.59 $ 13.08
======= ======= =======
Total return...................... 17.17% 5.96% 6.51%
Ratios/Supplemental data
Net assets at end of period
(in thousands)............... $61,313 $45,372 $21,689
Ratios of expenses to
average net assets
After advisory/
administration
fee waivers............ 1.02% 0.98% 0.99%(2)
Before advisory/
administration
fee waivers.............. 1.12% 1.10% 1.03%(2)
Ratios of net investment
income to average net assets
After advisory/
administration
fee waivers............. 0.16% 0.03% 0.12%(2)
Before advisory/
administratio
fee waivers............. 0.07% (0.09)% 0.08%(2)
Portfolio turnover rate.......... 31% 18% 41%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
60
<PAGE> 177
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SMALL CAP VALUE EQUITY
PORTFOLIO
--------------------------------------------------------------
SERIES A SERIES B
INVESTOR CLASS INVESTOR CLASS
------------------------------------------ --------------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR YEAR 6/02/92(1) 10/3/94(1)
ENDED ENDED ENDED THROUGH THROUGH
9/30/95 9/30/94 9/30/93 9/30/92 9/30/95
------- ------- ------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period..................... $13.58 $13.07 $10.14 $10.06 $13.51
------ ------ ------ ------ ------
Income from investment operations
Net investment income................................... -- (0.01) 0.03 0.02 (0.05)
Net gain (loss) on investments (both
realized and unrealized).............................. 2.17 0.77 3.02 0.07 2.21
------ ------ ------ ------ ------
Total from investment operations.................... 2.17 0.76 3.05 0.09 2.16
------ ------ ------ ------ ------
Less distributions
Distributions from net investment income................ -- -- (0.04) (0.01) --
Distributions from net realized capital gains........... (0.61) (0.25) (0.08) -- (0.61)
------ ------ ------ ------ ------
Total distributions................................. (0.61) (0.25) (0.12) (0.01) (0.61)
------ ------ ------ ------ ------
$10.14 $15.06
Net asset value at end of period........................... $15.14 $13.58 $13.07 $10.14 $15.06
====== ====== ====== ====== ======
Total return............................................... 16.96%(3) 5.93%(3) 30.36%(3) 0.89% 16.95%(4)
Ratios/Supplemental data
Net assets at end of period (in thousands).............. $21,563 $16,884 $9,084 $ 62 $1,477
Ratios of expenses to average net assets
After advisory/administration fee waivers............. 1.18% 1.13% 0.94% 0.85%(2) 1.80%(2)
Before advisory/administration fee waivers............ 1.28% 1.25% 0.98% 0.89%(2) 1.89%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers............. 0.00% (0.11)% 0.19% 0.51%(2) (0.61)%(2)
Before advisory/administration fee waivers............ (0.09)% (0.23)% 0.15% 0.47%(2) (0.70)%(2)
Portfolio turnover rate.................................... 31% 18% 41% 17% 31%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
(4) Contingent deferred sales load not reflected in total return.
See accompanying notes to financial statements.
61
<PAGE> 178
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
----------------------------------------------
INSTITUTIONAL CLASS
----------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR 4/27/92(1)
ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/92
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net asset value at beginning of period...................................... $ 13.44 $ 12.48 $ 9.87 $ 10.00
-------- -------- -------- -------
Income from investment operations
Net investment income.................................................... 0.17 0.15 0.11 0.11
Net gain (loss) on investments (both realized and unrealized)............ 0.13 1.17 2.61 (0.17)
-------- -------- -------- -------
Total from investment operations..................................... 0.30 1.32 2.72 (0.06)
-------- -------- -------- -------
Less distributions
Distributions from net investment income................................. (0.11) (0.11) (0.11) (0.07)
Distributions from net realized capital gains............................ (0.36) (0.25) -- --
-------- -------- -------- -------
Total distributions.................................................. (0.47) (0.36) (0.11) (0.07)
-------- -------- -------- -------
Net asset value at end of period............................................ $ 13.27 $ 13.44 $ 12.48 $ 9.87
======== ======== ======== =======
Total return................................................................ 2.46% 10.71% 27.72% (0.61)%
Ratios/Supplemental data
Net assets at end of period (in thousands)............................... $312,588 $284,905 $131,052 $60,357
Ratios of expenses to average net assets
After advisory/administration fee waivers.............................. 0.97% 0.95% 1.10% 1.20%(2)
Before advisory/administration fee waivers............................. 1.14% 1.14% 1.16% 1.21%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers.............................. 1.42% 1.27% 1.17% 2.59%(2)
Before advisory/administration fee waivers............................. 1.24% 1.08% 1.11% 2.58%(2)
Portfolio turnover rate..................................................... 105% 37% 31% 15%
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
--------------------------------
SERVICE CLASS
--------------------------------
FOR THE
PERIOD
YEAR YEAR 7/29/93(1)
ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93
-------- ------- -------
<S> <C> <C> <C>
Net asset value at beginning of period...................................... $ 13.41 $ 12.47 $ 11.76
-------- ------- -------
Income from investment operations
Net investment income.................................................... 0.11 0.14 0.02
Net gain (loss) on investments (both realized and unrealized)............ 0.16 1.14 0.69
-------- ------- -------
Total from investment operations..................................... 0.27 1.28 0.71
-------- ------- -------
Less distributions
Distributions from net investment income................................. (0.08) (0.09) --
Distributions from net realized capital gains............................ (0.36) (0.25) --
-------- ------- -------
Total distributions.................................................. (0.44) (0.34) --
-------- ------- -------
Net asset value at end of period............................................ $ 13.24 $ 13.41 $ 12.47
======== ======= =======
Total return................................................................ 2.19% 10.36% 6.03%
Ratios/Supplemental data
Net assets at end of period (in thousands)............................... $106,045 $75,174 $11,985
Ratios of expenses to average net assets
After advisory/administration fee waivers.............................. 1.25% 1.20% 1.18%(2)
Before advisory/administration fee waivers............................. 1.42% 1.39% 1.24%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers.............................. 1.16% 1.09% 1.01%(2)
Before advisory/administration fee waivers............................. 0.98% 0.90% 0.95%(2)
Portfolio turnover rate..................................................... 105% 37% 31%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
62
<PAGE> 179
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
---------------------------------------------------------------
SERIES A SERIES B
INVESTOR CLASS INVESTOR CLASS
------------------------------------------ --------------
FOR THE FOR THE
PERIOD PERIOD
YEAR YEAR YEAR 6/02/92(1) 10/03/94(1)
ENDED ENDED ENDED THROUGH THROUGH
9/30/95 9/30/94 9/30/93 9/30/92 9/30/95
------- ------- ------- --------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period....................... $ 13.40 $ 12.47 $ 9.87 $10.68 $13.35
------- ------- ------ ------ ------
Income from investment operations
Net investment income..................................... 0.11 0.12 0.12 0.09 0.05
Net gain (loss) on investments (both
realized and unrealized)................................ 0.13 1.15 2.59 (0.83) 0.16
------- ------- ------ ------ ------
Total from investment operations...................... 0.24 1.27 2.71 (0.74) 0.21
------- ------- ------ ------ ------
Less distributions
Distributions from net investment income.................. (0.04) (0.09) (0.11) (0.07) --
Distributions from net realized capital gains............. (0.36) (0.25) -- -- (0.36)
------- ------- ------ ------ ------
Total distributions................................... (0.40) (0.34) (0.11) (0.07) (0.36)
------- ------- ------ ------ ------
Net asset value at end of period............................. $ 13.24 $ 13.40 $12.47 $ 9.87 $13.20
======= ======= ====== ====== ======
Total return................................................. 2.00%(3) 10.24%(3) 27.72%(3) (6.94)%(3) 1.77%(4)
Ratios/Supplemental data
Net Assets at end of period (in thousands)................ $17,721 $14,433 $3,669 $ 58 $1,071
Ratios of expenses to average net assets
After advisory/administration fee waivers............... 1.40% 1.35% 1.25% 1.20%(2) 2.06%(2)
Before advisory/administration fee waivers.............. 1.58% 1.54% 1.31% 1.21%(2) 2.23%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers............... 0.97% 0.96% 1.27% 2.59%(2) 0.59%(2)
Before advisory/administration fee waivers.............. 0.80% 0.77% 1.21% 2.58%(2) 0.41%(2)
Portfolio turnover rate...................................... 105% 37% 31% 16% 105%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
(4) Contingent deferred sales load not reflected in total return.
See accompanying notes to financial statements.
63
<PAGE> 180
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INTERNATIONAL EMERGING MARKETS
PORTFOLIO
-----------------------------------
SERVICE
INSTITUTIONAL CLASS CLASS
-------------------- -------
FOR THE
PERIOD
YEAR 6/17/94(1) YEAR
ENDED THROUGH ENDED
9/30/95 9/30/94 9/30/95
------- -------- -------
<S> <C> <C> <C>
Net asset value at beginning of period............................................. $ 10.56 $10.00 $ 10.55
------- ------ -------
Income from investment operations
Net investment income........................................................... 0.08 0.03 0.06
Net gain (loss) on investments (both realized and unrealized)................... (2.15) 0.53 (2.15)
------- ------ -------
Total from investment operations............................................ (2.07) 0.56 (2.09)
------- ------ -------
Less distributions
Distributions from net investment income........................................ (0.10) -- (0.08)
Distributions from capital...................................................... (0.01) -- (0.01)
Distributions from net realized capital gains................................... (0.19) -- (0.19)
------- ------ -------
Total distributions......................................................... (0.30) -- (0.28)
------- ------ -------
Net asset value at end of period................................................... $ 8.19 $10.56 $ 8.18
======= ====== =======
Total return....................................................................... (19.72)% 5.60% (19.91)%
Ratios/Supplemental data
Net assets at end of period (in thousands)...................................... $29,319 $2,511 $15,020
Ratios of expenses to average net assets
After advisory/administration fee waivers..................................... 1.78% 1.75%(2) 2.06%
Before advisory/administration fee waivers.................................... 2.02% 2.73%(2) 2.30%
Ratios of net investment income to average net assets
After advisory/administration fee waivers..................................... 1.90% 1.19%(2) 1.72%
Before advisory/administration fee waivers.................................... 1.66% 0.21%(2) 1.48%
Portfolio turnover rate............................................................ 75% 4% 75%
<CAPTION>
INTERNATIONAL EMERGING MARKETS
PORTFOLIO
-------------------------------------
SERVICE SERIES A
CLASS INVESTOR CLASS
--------- ---------------------
FOR THE FOR THE
PERIOD PERIOD
6/17/94(1) YEAR 6/17/94(1)
THROUGH ENDED THROUGH
9/30/94 9/30/95 9/30/94
--------- ------- ---------
<S> <C> <C> <C>
Net asset value at beginning of period............................................. $10.00 $10.54 $10.00
------ ------ ------
Income from investment operations
Net investment income........................................................... 0.02 0.03 0.02
Net gain (loss) on investments (both realized and unrealized)................... 0.53 (2.14) 0.52
------ ------ ------
Total from investment operations............................................ 0.55 (2.11) 0.54
------ ------ ------
Less distributions
Distributions from net investment income........................................ -- (0.05) --
Distributions from capital...................................................... -- (0.01) --
Distributions from net realized capital gains................................... -- (0.19) --
------ ------ ------
Total distributions......................................................... -- (0.25) --
------ ------ ------
Net asset value at end of period................................................... $10.55 $ 8.18 $10.54
====== ====== ======
Total return....................................................................... 5.50% (20.12)%(3) 5.40%(3)
Ratios/Supplemental data
Net assets at end of period (in thousands)...................................... $3,505 $2,563 $2,857
Ratios of expenses to average net assets
After advisory/administration fee waivers..................................... 2.00%(2) 2.20% 2.15%(2)
Before advisory/administration fee waivers.................................... 2.98%(2) 2.44% 3.13%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers..................................... 1.10%(2) 1.54% 0.74%(2)
Before advisory/administration fee waivers.................................... 0.12%(2) 1.30% (0.24)%(2)
Portfolio turnover rate............................................................ 4% 75% 4%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
See accompanying notes to financial statements.
64
<PAGE> 181
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
-------------------------------------------
INSTITUTIONAL CLASS
-------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR 5/1/92(1)
ENDED ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93 9/30/92
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value at beginning of period...................................... $ 11.98 $ 12.42 $ 11.53 $11.01
------- ------- ------- ------
Income from investment operations
Net investment income.................................................... 0.46 0.38 0.30 0.17
Net gain (loss) on investments (both realized and unrealized)............ 1.90 (0.39) 1.15 0.51
------- ------- ------- ------
Total from investment operations..................................... 2.36 (0.01) 1.45 0.68
------- ------- ------- ------
Less distributions
Distributions from net investment income................................. (0.47) (0.37) (0.30) (0.16)
Distributions from net realized capital gains............................ (0.14) (0.06) (0.26) --
------- ------- ------- ------
Total distributions.................................................. (0.61) (0.43) (0.56) (0.16)
------- ------- ------- ------
Net asset value at end of period............................................ $ 13.73 $ 11.98 $ 12.42 $11.53
======= ======= ======= ======
Total return................................................................ 20.32% (0.11)% 12.86% 6.23%
Ratios/Supplemental data
Net assets at end of period (in thousands)............................... $24,525 $17,610 $12,928 $2,501
Ratios of expenses to average net assets
After advisory/administration fee waivers.............................. 0.67% 0.65% 0.80% 0.95%(2)
Before advisory/administration fee waivers............................. 0.88% 0.91% 0.98% 1.51%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers.............................. 3.78% 3.16% 2.89% 3.28%(2)
Before advisory/administration fee waivers............................. 3.56% 2.89% 2.71% 2.72%(2)
Portfolio turnover rate..................................................... 154% 54% 32% 36%
<CAPTION>
BALANCED PORTFOLIO
-------------------------------
SERVICE CLASS
-------------------------------
FOR THE
PERIOD
YEAR YEAR 7/29/93(1)
ENDED ENDED THROUGH
9/30/95 9/30/94 9/30/93
------- ------- -------
<S> <C> <C> <C>
Net asset value at beginning of period...................................... $ 11.98 $ 12.42 $ 12.05
------- ------- -------
Income from investment operations
Net investment income.................................................... 0.44 0.34 0.06
Net gain (loss) on investments (both realized and unrealized)............ 1.88 (0.38) 0.38
------- ------- -------
Total from investment operations..................................... 2.32 (0.04) 0.44
------- ------- -------
Less distributions
Distributions from net investment income................................. (0.44) (0.34) (0.07)
Distributions from net realized capital gains............................ (0.14) (0.06) --
------- ------- -------
Total distributions.................................................. (0.58) (0.40) (0.07)
------- ------- -------
Net asset value at end of period............................................ $ 13.72 $ 11.98 $ 12.42
======= ======= =======
Total return................................................................ 19.94% (0.36)% 3.66%
Ratios/Supplemental data
Net assets at end of period (in thousands)............................... $85,668 $66,024 $15,842
Ratios of expenses to average net assets
After advisory/administration fee waivers.............................. 0.94% 0.90% 0.93%(2)
Before advisory/administration fee waivers............................. 1.16% 1.16% 1.11%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers.............................. 3.49% 2.96% 2.75%(2)
Before advisory/administration fee waivers............................. 3.28% 2.70% 2.57%(2)
Portfolio turnover rate..................................................... 154% 54% 32%
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
See accompanying notes to financial statements.
65
<PAGE> 182
THE PNC(R) FUND
FINANCIAL HIGHLIGHTS (Continued)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
-------------------------------------------
SERIES A
INVESTOR CLASS
-------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
9/30/95 9/30/94 9/30/93 9/30/92
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value at beginning of period.......................................... $ 11.98 $ 12.42 $ 11.53 $10.82
------- ------- ------- ------
Income from investment operations
Net investment income........................................................ 0.43 0.32 0.30 0.34
Net gain (loss) on investments (both realized and unrealized)................ 1.88 (0.38) 1.14 1.22
------- ------- ------- ------
Total from investment operations......................................... 2.31 (0.06) 1.44 1.56
------- ------- ------- ------
Less distributions
Distributions from net investment income..................................... (0.42) (0.32) (0.29) (0.39)
Distributions from net realized capital gains................................ (0.14) (0.06) (0.26) (0.46)
------- ------- ------- ------
Total distributions...................................................... (0.56) (0.38) (0.55) (0.85)
------- ------- ------- ------
Net asset value at end of period................................................ $ 13.73 $ 11.98 $ 12.42 $11.53
======= ======= ======= ======
Total return.................................................................... 19.86%(3) (0.50)%(3) 12.80%(3) 15.17%(3)
Ratios/Supplemental data
Net assets at end of period (in thousands)................................... $67,892 $62,307 $39,529 $8,481
Ratios of expenses to average net assets
After advisory/administration fee waivers.................................. 1.07% 1.05% 0.91% 0.95%
Before advisory/administration fee waivers................................. 1.28% 1.31% 1.09% 1.51%
Ratios of net investment income to average net assets
After advisory/administration fee waivers.................................. 3.38% 2.77% 2.79% 3.28%
Before advisory/administration fee waivers................................. 3.16% 2.51% 2.61% 2.72%
Portfolio turnover rate......................................................... 154% 54% 32% 36%
<CAPTION>
SERIES A SERIES B
INVESTOR INVESTOR
CLASS CLASS
-------- ----------
FOR THE
PERIOD
YEAR 10/03/94(1)
ENDED THROUGH
9/30/91 9/30/95
------- ----------
<S> <C> <C>
Net asset value at beginning of period............................................... $ 9.13 $11.95
------ ------
Income from investment operations
Net investment income............................................................. 0.38 0.33
Net gain (loss) on investments (both realized and unrealized)..................... 1.77 1.93
------ ------
Total from investment operations.............................................. 2.15 2.26
------ ------
Less distributions
Distributions from net investment income.......................................... (0.34) (0.38)
Distributions from net realized capital gains..................................... (0.12) (0.14)
------ ------
Total distributions........................................................... (0.46) (0.52)
------ ------
Net asset value at end of period..................................................... $10.82 $13.69
====== ======
Total return......................................................................... 24.04%(3) 19.38%(4)
Ratios/Supplemental data
Net assets at end of period (in thousands)........................................ $4,265 $3,124
Ratios of expenses to average net assets
After advisory/administration fee waivers....................................... 1.15% 1.72%(2)
Before advisory/administration fee waivers...................................... 1.86% 1.94%(2)
Ratios of net investment income to average net assets
After advisory/administration fee waivers....................................... 3.70% 2.71%(2)
Before advisory/administration fee waivers...................................... 2.99% 2.49%(2)
Portfolio turnover rate.............................................................. 45% 154%(2)
</TABLE>
- -------------
(1) Commencement of operations.
(2) Annualized.
(3) Sales load not reflected in total return.
(4) Contingent deferred sales load not reflected in total return.
See accompanying notes to financial statements.
66
<PAGE> 183
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
The PNC Fund (the "Fund") was organized on December 22, 1988, as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company. The Fund
consists of twenty-six separate Portfolios: Money Market Portfolio, Municipal
Money Market Portfolio, Government Money Market Portfolio, Ohio Municipal Money
Market Portfolio, Pennsylvania Municipal Money Market Portfolio, North Carolina
Municipal Money Market Portfolio, Virginia Municipal Money Market Portfolio, New
Jersey Municipal Money Market Portfolio, Value Equity Portfolio, Growth Equity
Portfolio, Small Cap Growth Equity Portfolio, Core Equity Portfolio, Index
Equity Portfolio, Small Cap Value Equity Portfolio, International Equity
Portfolio, International Emerging Markets Portfolio, Balanced Portfolio, Managed
Income Portfolio, Tax-Free Income Portfolio, Intermediate Government Portfolio,
Ohio Tax-Free Income Portfolio, Pennsylvania Tax-Free Income Portfolio,
Short-Term Bond Portfolio, Intermediate-Term Bond Portfolio, International Fixed
Income Portfolio and Government Income Portfolio. As of September 30, 1995, the
New Jersey Municipal Money Market Portfolio and the International Fixed Income
Portfolio had not commenced operations. This report relates solely to Value
Equity Portfolio, Growth Equity Portfolio, Small Cap Growth Equity Portfolio,
Core Equity Portfolio, Index Equity Portfolio, Small Cap Value Equity Portfolio,
International Equity Portfolio, International Emerging Markets Portfolio and
Balanced Portfolio (the "Portfolios").
Each Portfolio has four classes of shares, one class being referred to as
the Service shares, one class being referred to as the Institutional shares, one
class being referred to as the Series A Investor shares and one class being
referred to as the Series B Investor shares. No Series B Investor shares had
been issued for the Value Equity Portfolio, Growth Equity Portfolio, Small Cap
Growth Equity Portfolio, Core Equity Portfolio, International Emerging Markets
Portfolio and the Index Equity Portfolio through September 30, 1995. Series A
Investor, Series B Investor, Institutional and Service shares in a Portfolio
represent equal pro rata interests in such Portfolio, except that they bear
different expenses which reflect the difference in the range of services
provided to them. Series A Investor shares bear the expense of the Series A
Distribution and Service Plan at an annual rate not to exceed .55% of the
average daily net asset value of each Portfolio's outstanding Series A Investor
shares. Series B Investor shares bear the expense of the Series B Distribution
Plan at an annual rate not to exceed .75% of the average daily net asset value
of each Portfolio's outstanding Series B Investor shares. Series B Investor
shares also bear the expense of the Series B Service Plan at an annual rate not
to exceed .25% of the average daily net asset value of each Portfolio's
outstanding Series B Investor shares. Under the Fund's Service Plan, Service
shares bear the expense of fees at an annual rate not to exceed .15% of the
average daily net asset value of each Portfolio's outstanding Service shares.
Service shares also bear the expense of a service fee at an annual rate not to
exceed .15% of the average daily net asset value of each Portfolio's outstanding
Service shares for other shareholder support activities provided by service
organizations. Institutional shares do not bear the expense of the Series A
Distribution and Service Plan, the Service Plan, the Series B Distribution Plan
or the Series B Service Plan. The Service, Series A Investor and Series B
Investor classes are currently bearing such respective expenses at aggregate
annual rates of .30% of the average daily net asset value of Service shares,
.40% of the average daily net asset value of Series A Investor shares and 1.00%
of the average daily net asset value of Series B Investor shares. In addition,
Institutional and Service shares bear a Transfer Agent fee at an annual rate not
to exceed .03% and Series A Investor and Series B Investor shares bear a
Transfer Agent fee at an annual rate not to exceed .10%.
67
<PAGE> 184
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation -- Portfolio securities for which market quotations are
readily available are valued at market value, which is currently determined
using the last reported sales price. If no sales are reported, as in the case of
some securities traded over-the-counter, portfolio securities are valued at the
mean between the last reported bid and asked prices. Corporate bonds are valued
on the basis of quotations provided by a pricing service which uses information
with respect to transactions on bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities in determining value. Short-term obligations with maturities of 60
days or less are valued at amortized cost which approximates market value.
Discounts and premiums on debt securities are amortized for book and tax
purposes using the effective yield-to-maturity method over the term of the
instrument.
Dividends to Shareholders -- Dividends from net investment income are
declared and paid quarterly for the Portfolios. Net realized capital gains, if
any, will be distributed at least annually. The character of distributions made
during the year from net investment income or net realized gains may differ from
their ultimate characterization for federal income tax purposes due to
differences between generally accepted accounting principles and tax accounting,
related to the character of income and expense recognition. These differences
are primarily due to differing treatments for net operating losses,
mortgage-backed securities, passive foreign investment companies, futures and
forward foreign currency contracts.
Federal Taxes -- No provision is made for Federal taxes as it is the Fund's
intention to have each Portfolio continue to qualify as a regulated investment
company and to make the requisite distributions to its shareholders which will
be sufficient to relieve it from Federal income and excise taxes.
Foreign Currency Transactions -- With respect to the International Equity
Portfolio and International Emerging Markets Portfolio, transactions denominated
in foreign currencies are recorded in the Portfolios' records at the current
prevailing exchange rates. Asset and liability accounts that are denominated in
a foreign currency are adjusted daily to reflect current exchange rates.
Transaction gains or losses resulting from changes in exchange rates during the
reporting period or upon settlement of the foreign currency transaction are
reported in operations for the current period. It is not practical to isolate
that portion of both realized and unrealized gains and losses on investments in
the statement of operations that result from fluctuations in foreign currency
exchange rates. The Portfolios report forward foreign currency contracts and
foreign currency related transactions as components of realized gains for
financial reporting purposes, whereas such components are treated as ordinary
income for Federal income tax purposes.
Security Transactions and Investment Income -- Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
Federal income tax purposes. Interest income is recorded on the accrual basis.
Dividends are recorded on the ex-dividend date. Certain expenses, principally
fees relating to the Service Plan, the Series A Distribution and Service Plan,
the Series B Distribution Plan and the Series B Service Plan, and the Transfer
Agent fee are class specific expenses. Expenses not directly attributable to a
specific Portfolio or class are allocated among all of the Portfolios or classes
of the Fund based on their relative net assets.
68
<PAGE> 185
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
Repurchase Agreements -- Money market instruments may be purchased from
banks and non-bank dealers subject to the seller's agreement to repurchase them
at an agreed upon date and price. Collateral for repurchase agreements may have
longer maturities than the maximum permissible remaining maturity of portfolio
investments. The seller will be required on a daily basis to maintain the value
of the securities subject to the agreement at not less than the repurchase
price. The agreements are conditioned upon the collateral being deposited under
the Federal Reserve book-entry system or held in a separate account by the
Fund's custodian or an authorized securities depository.
Organization Costs -- Costs incurred by each Portfolio in connection with
its organization, registration and initial public offering have been deferred
and are being amortized using the straight-line method over a five-year period
beginning on the date on which each Portfolio commenced its investment
activities.
Futures Transactions -- Certain portfolios may enter into futures contracts
subject to certain limitations. Upon entering into a futures contract, the
Portfolio is required to deposit cash or pledge U.S. Government securities of an
initial margin. Subsequent payments, which are dependent on the daily
fluctuations in the value of the underlying security or securities, are made or
received by the Portfolio each day (daily variation margin) and are recorded as
unrealized gains or losses until the contracts are closed. When the contracts
are closed, the Portfolio records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction and
the Portfolio's basis in the contracts. Risks of entering into futures contracts
include the possibility that there will not be a perfect price correlation
between the futures contract and the underlying securities. Second, it is
possible that a lack of liquidity for futures contracts could exist in the
secondary market, resulting in an inability to close a futures position prior to
its maturity date. Third, the purchase of a futures contract involves the risk
that a Portfolio could lose more than the original margin deposit required to
initiate a futures transaction.
At September 30, 1995, the Growth Equity Portfolio had outstanding 25 long
futures contracts on the S&P 500 Stock Index, expiring December 15, 1995. The
value of such contracts on September 30, 1995 was $7,352,500, thereby resulting
in an unrealized gain of $30,625. Futures transactions entered into for the year
ended September 30, 1995, are summarized as follows:
<TABLE>
<CAPTION>
NUMBER OPENING
OF CONTRACTS VALUE
------------ ------------
<S> <C> <C>
Long Futures Contracts Opened............. 100 $ 27,142,500
Long Futures Contracts Closed............. (75) (19,820,625)
---- -----------
Outstanding Long Futures at
Beginning of period..................... 0 0
---- -----------
End of period........................... 25 $ 7,321,875
==== ===========
</TABLE>
At September 30, 1995, the Core Equity Portfolio had outstanding 257 long
futures contracts on the S&P 500 Stock Index, expiring December 15, 1995. The
value of such contracts on September 30, 1995 was $75,583,700, thereby resulting
in an unrealized gain of $495,700.
69
<PAGE> 186
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
Futures transactions entered into for the year ended September 30, 1995,
are summarized as follows:
<TABLE>
<CAPTION>
NUMBER OPENING
OF CONTRACTS VALUE
------------ ------------
<S> <C> <C>
Long Futures Contracts Opened............. 452 $128,542,550
Long Futures Contracts Closed............. (195) (53,454,550)
----- ------------
Outstanding Long Futures at
Beginning of period..................... 0 0
----- ------------
End of period........................... 257 $ 75,088,000
===== ============
</TABLE>
At September 30, 1995, the Index Equity Portfolio had outstanding 16 long
futures contracts on the S&P 500 Stock Index, expiring December 15, 1995. The
value of such contracts on September 30, 1995 was $4,705,600, thereby resulting
in an unrealized gain of $19,600. Futures transactions entered into for the year
ended September 30, 1995, are summarized as follows:
<TABLE>
<CAPTION>
NUMBER OPENING
OF CONTRACTS VALUE
------------ -------------
<S> <C> <C>
Long Futures Contracts Opened............ 628 $ 164,606,325
Long Futures Contracts Closed............ (619) (161,562,000)
----- ------------
Outstanding Long Futures at
Beginning of period.................... 7 1,641,675
----- ------------
End of period.......................... 16 $ 4,686,000
===== ============
</TABLE>
At September 30, 1995, the Balanced Portfolio had outstanding 10 long
futures contracts on the S&P 500 Stock Index, expiring December 15, 1995. The
value of such contracts on September 30, 1995 was $2,941,000, thereby resulting
in an unrealized loss of $14,400. Futures transactions entered into for the year
ended September 30, 1995, are summarized as follows:
<TABLE>
<CAPTION>
NUMBER OPENING
OF CONTRACTS VALUE
------------ -----------
<S> <C> <C>
Long Futures Contracts Opened.............. 31 $ 8,747,525
Long Futures Contracts Closed.............. (21) (5,792,125)
---- -----------
Outstanding Long Futures at
Beginning of period...................... 0 0
---- -----------
End of period............................ 10 $ 2,955,400
==== ===========
</TABLE>
Forward Foreign Currency Contracts -- International Equity Portfolio may
enter into forward foreign currency contracts to hedge against adverse changes
in the relationship of the U.S. dollar to foreign currencies. At September 30,
1995, the Portfolio had not entered into any forward foreign currency contracts.
70
<PAGE> 187
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
Risks may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of foreign currency relative to the U.S.
dollar.
Other -- Securities denominated in currencies other than U.S. dollars are
subject to changes in value due to fluctuations in exchange rates.
Some countries in which the portfolios invest require governmental approval
for the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially
smaller, less liquid and more volatile than the major securities markets in the
United States. Consequently, acquisition and disposition of securities by the
portfolios may be inhibited. In addition, a significant proportion of the
aggregate market value of equity securities listed on the major securities
exchanges in emerging markets are held by a smaller number of investors. This
may limit the number of shares available for acquisition or disposition by the
Fund.
(B) TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to an Investment Advisory Agreement, PNC Institutional Management
Corporation ("PIMC"), a wholly-owned subsidiary of PNC Asset Management Group,
Inc. ("PAMG"), which is in turn a wholly-owned subsidiary of PNC Bank, National
Association ("PNC Bank"), serves as investment adviser for each of the Fund's
Portfolios. PNC Equity Advisors Company ("PEAC"), a wholly-owned subsidiary of
PAMG, serves as the sub-adviser for the Growth Equity, Small Cap Growth Equity,
Core Equity and Index Equity Portfolios. PNC Bank serves as the sub-adviser for
the Balanced Portfolio. Provident Capital Management, Inc. ("PCM") serves as the
sub-adviser for the Value Equity, Small Cap Value Equity, International Equity
and International Emerging Markets Portfolios. PNC Bank, PAMG, PIMC, PEAC and
PCM are indirect wholly-owned subsidiaries of PNC Bank Corp.
For its advisory services, PIMC is entitled to receive fees at the
following annual rates, computed daily and payable monthly based on each
Portfolio's average daily net assets:
Value Equity, Growth Equity, Small Cap Growth Equity, Core Equity, Small
Cap Value Equity and Balanced Portfolios -- .55% of its first $1 billion, .50%
of the next $1 billion, .475% of the next $1 billion and .45% of net assets in
excess of $3 billion.
Index Equity Portfolio -- .20% of its average daily net assets.
International Equity Portfolio -- .75% of its first $1 billion, .70% of the
next $1 billion, .675% of the next $1 billion and .65% of net assets in excess
of $3 billion.
International Emerging Markets Portfolio -- 1.25% of its first $1 billion,
1.20% of the next $1 billion, 1.155% of the next $1 billion, and 1.10% of net
assets in excess of $3 billion.
71
<PAGE> 188
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
PIMC may, at its discretion, waive all or any portion of its advisory fee
for any Portfolio. For the year ended September 30, 1995, advisory fees and
waivers for each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADVISORY ADVISORY
FEE WAIVER FEE
---------- -------- ----------
<S> <C> <C> <C>
Value Equity Portfolio............................ $3,579,370 $746,727 $2,832,643
Growth Equity Portfolio........................... 1,191,123 324,851 866,272
Small Cap Growth Equity Portfolio................. 755,989 137,615 618,374
Core Equity Portfolio............................. 950,739 259,293 691,446
Index Equity Portfolio............................ 412,977 382,205 30,772
Small Cap Value Equity Portfolio.................. 1,257,378 114,307 1,143,071
International Equity Portfolio.................... 2,989,509 597,902 2,391,607
International Emerging Markets Portfolio.......... 310,834 52,186 258,648
Balanced Portfolio................................ 883,799 241,037 642,762
</TABLE>
PIMC pays PNC Bank, PEAC and PCM fees for their sub-advisory services.
PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of PNC Bank Corp.,
and Provident Distributors, Inc. ("PDI") act as co-administrators for the Fund.
PDI is also the distributor for the Fund. The combined administration fee is
computed daily and payable monthly, based on a percentage of the average daily
net assets of each Portfolio, at the following annual rates: .20% of the first
$500 million, .18% of the next $500 million, .16% of the next $1 billion and
.15% of net assets in excess of $2 billion.
PFPC and PDI may, at their discretion, waive all or any portion of their
administration fees for any Portfolio. For the year ended September 30, 1995,
administration fees and waivers for each Portfolio were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADMINISTRATION ADMINISTRATION
FEE WAIVER FEE
---------- -------- ----------
<S> <C> <C> <C>
Value Equity Portfolio............................ $1,271,441 $187,474 $1,083,967
Growth Equity Portfolio........................... 433,136 72,170 360,966
Small Cap Growth Equity Portfolio................. 274,905 36,310 238,595
Core Equity Portfolio............................. 345,723 57,058 288,665
Index Equity Portfolio............................ 412,977 316,163 96,814
Small Cap Value Equity Portfolio.................. 457,229 97,592 359,637
International Equity Portfolio.................... 797,202 107,601 689,601
International Emerging Markets Portfolio.......... 49,733 8,350 41,383
Balanced Portfolio................................ 321,382 104,752 216,630
</TABLE>
In addition, PNC Bank serves as custodian for each of the Fund's
Portfolios. PFPC serves as transfer and dividend disbursing agent.
PIMC, PFPC and PDI have also agreed to reimburse each Portfolio for the
amount, if any, by which the total operating and management expenses of such
Portfolio for any fiscal year exceed the most restrictive state blue sky expense
limitation in effect from time to time, to the extent required by such
limitation. No such reimbursements were necessary for the year ended September
30, 1995.
72
<PAGE> 189
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
(C) PURCHASES AND SALES OF SECURITIES
For the year ended September 30, 1995, purchases and sales of securities,
other than short-term and government securities, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Value Equity Portfolio.................................. $ 77,743,097 $210,077,922
Growth Equity Portfolio................................. 208,838,780 105,970,653
Small Cap Growth Equity Portfolio....................... 139,869,992 88,812,439
Core Equity Portfolio................................... 219,080,292 72,857,083
Index Equity Portfolio.................................. 11,829,083 70,453,309
Small Cap Value Equity Portfolio........................ 54,044,594 77,062,935
International Equity Portfolio.......................... 448,528,575 386,753,507
International Emerging Markets Portfolio................ 52,299,179 15,095,757
Balanced Portfolio...................................... 147,538,535 109,470,004
</TABLE>
For the year ended September 30, 1995, purchases and sales of government
securities were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Growth Equity Portfolio................................. $ 23,343,191 $ 498,569
Small Cap Growth Equity Portfolio....................... 15,556,450 --
Core Equity Portfolio................................... 71,338,289 1,326,707
Index Equity Portfolio.................................. 27,739,237 47,662,744
Small Cap Value Equity Portfolio........................ 16,953,070 --
Balanced Portfolio...................................... 123,164,546 120,167,601
</TABLE>
73
<PAGE> 190
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
(D) CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
VALUE EQUITY PORTFOLIO
--------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
--------------------------- --------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class................. 39,806,402 $ 485,454,140 12,482,545 $145,402,977
Service Class....................... 13,651,523 167,503,866 11,420,404 133,583,231
Series A Investor Class............. 522,382 6,408,950 549,692 6,421,094
Shares issued in acquisition:
Institutional Class................. -- -- 6,598,466 76,359,690
Service Class....................... -- -- -- --
Series A Investor Class............. -- -- -- --
Shares issued in reinvestment of
dividends:
Institutional Class................. 1,999,048 23,502,361 1,465,316 17,028,775
Service Class....................... 377,633 4,490,590 170,840 1,983,734
Series A Investor Class............. 45,592 539,781 23,783 276,302
Shares redeemed:
Institutional Class................. (55,022,048) (666,165,878) (7,860,051) (91,683,551)
Service Class....................... (10,793,521) (131,676,643) (4,534,339) (53,327,116)
Series A Investor Class............. (248,896) (2,978,666) (93,980) (1,095,554)
----------- ------------- ---------- ------------
Net increase (decrease)............. (9,661,885) $(112,921,499) 20,222,676 $234,949,582
=========== ============= ========== ============
</TABLE>
<TABLE>
<CAPTION>
GROWTH EQUITY PORTFOLIO
------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------------- --------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class.................... 8,949,787 $ 94,077,319 5,402,429 $ 55,921,412
Service Class.......................... 3,489,704 38,638,397 4,235,370 44,688,111
Series A Investor Class................ 398,709 4,341,086 385,847 4,122,589
Shares issued in reinvestment of dividends:
Institutional Class.................... 196,587 2,214,461 50,847 555,756
Service Class.......................... 43,054 483,243 10,725 117,219
Series A Investor Class................ 6,055 67,542 2,650 28,942
Shares redeemed:
Institutional Class.................... (2,504,812) (27,490,603) (4,497,375) (47,960,268)
Service Class.......................... (1,246,828) (13,924,047) (1,377,677) (14,500,982)
Series A Investor Class................ (130,464) (1,404,785) (95,762) (991,600)
---------- ------------ ----------- ------------
Net increase................................ 9,201,792 $ 97,002,613 4,117,054 $ 41,981,179
========== ============ =========== ============
</TABLE>
74
<PAGE> 191
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
SMALL CAP GROWTH EQUITY PORTFOLIO
------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------------- --------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class.................... 5,846,875 $ 73,048,654 6,318,147 $ 61,898,992
Service Class.......................... 2,638,340 32,805,587 2,508,294 24,932,282
Series A Investor Class................ 383,446 4,805,592 199,989 2,012,738
Shares issued in reinvestment of dividends:
Institutional Class.................... 10,636 112,951 289 2,896
Service Class.......................... 70 741 72 716
Series A Investor Class................ -- -- 3 29
Shares redeemed:
Institutional Class.................... (2,627,342) (34,788,122) (941,326) (9,351,176)
Service Class.......................... (704,809) (8,205,498) (362,210) (3,636,495)
Series A Investor Class................ (52,895) (664,245) (43,898) (443,425)
---------- ------------ --------- -----------
Net increase................................ 5,494,321 $ 67,115,660 7,679,360 $ 75,416,557
========== ============ ========= ============
</TABLE>
<TABLE>
<CAPTION>
CORE EQUITY PORTFOLIO
-------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
--------------------------- -------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class.................. 26,941,842 $ 289,698,859 3,234,844 $ 32,284,922
Service Class........................ 8,140,613 85,754,956 4,222,406 41,703,020
Series A Investor Class.............. 274,865 2,910,433 62,504 619,978
Shares issued in acquisition:
Institutional Class.................. -- -- -- --
Service Class........................ -- -- 2,120,797 21,441,256
Series A Investor Class.............. -- -- -- --
Shares issued in reinvestment of
dividends:
Institutional Class.................. 299,078 3,178,860 54,106 536,408
Service Class........................ 130,000 1,334,111 39,095 385,556
Series A Investor Class.............. 4,263 45,281 517 5,097
Shares redeemed:
Institutional Class.................. (11,998,924) (125,982,186) (5,383,666) (53,714,044)
Service Class........................ (6,195,728) (64,879,779) (1,483,259) (14,757,102)
Series A Investor Class.............. (19,091) (200,865) (2,426) (24,013)
----------- ------------- ---------- ------------
Net increase.............................. 17,576,918 $ 191,859,670 2,864,918 $ 28,481,078
=========== ============= ========== ============
</TABLE>
75
<PAGE> 192
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
INDEX EQUITY PORTFOLIO
-------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
--------------------------- -------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class.................. 16,863,208 $ 197,762,422 2,748,481 $ 30,530,750
Service Class........................ 6,120,901 72,357,126 2,738,322 29,856,693
Series A Investor Class.............. 289,994 3,525,169 155,908 1,717,243
Shares issued in reinvestment of
dividends:
Institutional Class.................. 497,279 5,731,282 514,324 5,647,787
Service Class........................ 116,802 1,385,719 57,047 624,860
Series A Investor Class.............. 11,755 139,322 6,194 67,935
Shares redeemed:
Institutional Class.................. (22,819,763) (278,729,292) (6,637,885) (72,216,872)
Service Class........................ (4,210,903) (50,051,366) (1,419,801) (15,374,054)
Series A Investor Class.............. (63,655) (750,671) (35,869) (384,797)
----------- ------------- ---------- ------------
Net increase (decrease)................... (3,194,382) $ (48,630,289) (1,873,279) $(19,530,455)
=========== ============= ========== ============
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP VALUE EQUITY PORTFOLIO
-----------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------------- -------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class..................... 3,247,317 $ 43,889,030 6,053,107 $ 80,712,762
Service Class........................... 1,933,988 26,215,140 2,640,878 35,259,165
Series A Investor Class................. 490,006 6,546,560 652,661 8,700,548
Series B Investor Class................. 99,958 1,340,506 -- --
Shares issued in reinvestment of dividends:
Institutional Class..................... 583,970 7,278,163 136,855 1,781,855
Service Class........................... 142,109 1,768,041 34,742 452,345
Series A Investor Class................. 62,375 773,445 14,918 194,087
Series B Investor Class................. 1,891 23,431 -- --
Shares redeemed:
Institutional Class..................... (5,088,140) (68,414,244) (3,674,313) (48,788,351)
Service Class........................... (1,365,808) (18,476,822) (996,563) (13,349,689)
Series A Investor Class................. (371,340) (4,988,558) (118,889) (1,579,039)
Series B Investor Class................. (3,731) (50,646) -- --
---------- ------------ ---------- ------------
Net increase................................. (267,405) $ (4,095,954) 4,743,396 $ 63,383,683
========== ============ ========== ============
</TABLE>
76
<PAGE> 193
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO
------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
-------------------------- -------------------------
SHARES VALUE SHARES VALUE
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class.................... 7,143,152 $ 90,990,043 10,403,157 $137,086,511
Service Class.......................... 3,963,956 50,508,637 5,340,051 70,470,270
Series A Investor Class................ 576,812 7,365,133 869,084 11,416,406
Series B Investor Class................ 87,040 1,112,573 -- --
Shares issued in acquisition:
Institutional Class.................... -- -- 2,566,789 33,881,621
Service Class.......................... -- -- -- --
Series A Investor Class................ -- -- -- --
Series B Investor Class................ -- -- -- --
Shares issued in reinvestment of dividends:
Institutional Class.................... 677,308 8,488,879 206,166 2,655,420
Service Class.......................... 156,042 1,950,124 27,454 353,613
Series A Investor Class................ 38,670 479,738 12,576 161,981
Series B Investor Class................ 1,195 14,710 -- --
Shares redeemed:
Institutional Class.................... (5,461,130) (70,728,562) (2,476,409) (32,400,362)
Service Class.......................... (1,716,286) (21,971,597) (724,128) (9,567,654)
Series A Investor Class................ (354,475) (4,491,778) (98,546) (1,302,076)
Series B Investor Class................ (7,091) (89,952) -- --
----------- ------------ ---------- ------------
Net increase................................ 5,105,193 $ 63,627,948 16,126,194 $212,755,730
=========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EMERGING EQUITY PORTFOLIO
-------------------------------------------------
FOR THE PERIOD JUNE
FOR THE YEAR ENDED 17, 1994(1) THROUGH
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------------ ---------------------
SHARES VALUE SHARES VALUE
--------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class......................... 3,720,739 $31,597,655 238,035 $2,402,550
Service Class............................... 1,770,541 15,273,076 334,803 3,411,089
Series A Investor Class..................... 104,829 965,262 294,215 2,964,354
Shares issued in reinvestment of dividends:
Institutional Class......................... 35,132 297,045 -- --
Service Class............................... 14,029 121,552 -- --
Series A Investor Class..................... 8,376 74,699 -- --
Shares redeemed:
Institutional Class......................... (413,927) (3,623,170) (173) (1,850)
Service Class............................... (279,961) (2,356,165) (2,612) (27,034)
Series A Investor Class..................... (70,993) (623,010) (23,182) (232,921)
--------- ----------- ------- ----------
Net increase..................................... 4,888,765 $41,726,944 841,086 $8,516,188
========= =========== ======= ==========
</TABLE>
77
<PAGE> 194
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
--------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
-------------------------- --------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class.................. 2,511,895 $ 31,028,569 1,367,828 $ 17,190,809
Service Class........................ 7,589,298 94,169,784 6,873,562 84,853,542
Series A Investor Class.............. 779,591 9,725,800 2,650,204 33,055,064
Series B Investor Class.............. 236,213 2,898,052 -- --
Shares issued in acquisition:
Institutional Class.................. -- -- -- --
Service Class........................ -- -- 1,362,909 17,268,053
Series A Investor Class.............. -- -- -- --
Series B Investor Class.............. -- -- -- --
Shares issued in reinvestment of
dividends:
Institutional Class.................. 76,942 958,206 24,801 302,800
Service Class........................ 261,656 3,251,626 121,007 1,475,817
Series A Investor Class.............. 226,064 2,796,580 142,423 1,746,240
Series B Investor Class.............. 5,578 70,292 -- --
Shares redeemed:
Institutional Class.................. (2,271,997) (28,182,832) (963,835) (12,093,104)
Service Class........................ (7,118,747) (88,401,222) (4,122,713) (50,677,486)
Series A Investor Class.............. (1,259,763) (15,706,295) (774,539) (9,531,304)
Series B Investor Class.............. (13,630) (171,757) -- --
---------- ------------ ---------- ------------
Net increase.............................. 1,023,100 $ 12,436,803 6,681,647 $ 83,590,431
========== ============ ========== ============
</TABLE>
- -------------
(1) Commencement of operations.
78
<PAGE> 195
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
(E) AT SEPTEMBER 30, 1995, NET ASSETS CONSISTED OF:
<TABLE>
<CAPTION>
SMALL CAP
VALUE EQUITY GROWTH EQUITY GROWTH EQUITY CORE EQUITY INDEX EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Capital paid-in............................. $522,450,910 $231,158,568 $154,269,874 $288,485,633 $113,464,636
Undistributed net investment income......... 460,964 -- 182,334 17,967 515,059
Accumulated net realized gain (loss) on
investment transactions, futures contracts
and foreign exchange contracts............ 41,954,264 5,578,079 (4,855,260) 5,446,083 23,014,547
Net unrealized appreciation (depreciation)
on investment transactions, futures
contracts and foreign exchange
contracts................................. 131,148,325 61,609,322 66,269,425 32,376,786 40,475,548
------------ ------------ ------------ ------------ ------------
$696,014,463 $298,345,969 $215,866,373 $326,326,469 $177,469,790
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL INTERNATIONAL
VALUE EQUITY EQUITY EMERGING MARKETS BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------- ---------------- ------------
<S> <C> <C> <C> <C>
Capital paid-in....................................... $191,762,697 $ 402,705,084 $ 50,217,165 $159,513,926
Undistributed net investment income................... 124,163 7,045,321 -- --
Accumulated net realized gain (loss) on investment
transactions, futures contracts and foreign exchange
contracts........................................... 11,023,937 17,937,257 -- 833,758
Net unrealized appreciation (depreciation) on
investment transactions, futures contracts and
foreign exchange contracts.......................... 49,776,689 9,737,606 (3,315,218) 20,860,942
------------ ------------- ------------ ------------
$252,687,486 $ 437,425,268 $ 46,901,947 $181,208,626
============ ============= ============ ============
</TABLE>
(F) CAPITAL LOSS CARRYOVERS
At September 30, 1995, a capital loss carryover of $4,855,260, which
expires in the year 2002 was available to offset possible future realized
capital gains in the Small Cap Growth Equity Portfolio.
(G) ACQUISITION OF COLLECTIVE FUNDS
On December 28, 1993, The PNC Fund acquired all the assets of the Equity
Portfolio of the PNC Financial Common Trust for Retirement Assets from the
participants of these Trusts. The acquisition was accomplished by a tax-free
exchange of assets with a value of $21,441,256 for 2,120,797 Service shares of
the Core Equity Portfolio at $10.11 per share. The Equity Portfolio's net assets
on that date had $2,089,340 in unrealized appreciation.
79
<PAGE> 196
THE PNC(R) FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
SEPTEMBER 30, 1995
On December 28, 1993, The PNC Fund acquired all the assets of the Asset
Allocation Portfolio of the PNC Financial Common Trust for Retirement Assets
from the participants of these Trusts. The acquisition was accomplished by a
tax-free exchange of assets with a value of $17,268,053 for 1,362,909 Service
shares of the Balanced Portfolio at $12.67 per share. The Asset Allocation
Portfolio's net assets on that date had $1,491,666 in unrealized appreciation.
On May 26, 1994, The PNC Fund acquired all the assets of the PNC Pension
Plan Assets Equity Portfolio from the participants of such fund. The acquisition
was accomplished by an exchange of assets with a value of $53,018,086 for
4,570,525 Institutional shares of the Value Equity Portfolio at $11.60 per share
and a value of $33,881,621 for 2,566,789 Institutional shares of the
International Equity Portfolio at $13.20 per share.
On June 21, 1994 The PNC Fund acquired all the assets of the PNC Incentive
Savings Plan Assets Equity Portfolio from the participants of such fund. The
acquisition was accomplished by an exchange of assets with a value of
$23,341,604 for 2,027,941 Institutional shares of the Value Equity Portfolio at
$11.51 per share.
(H) SUBSEQUENT EVENT
On June 23, 1995, the Board of Directors of the Fund approved a change to
the PNC Index Equity Portfolios (the "Portfolio") fundamental investment
limitations to permit the Portfolio to invest all of its assets in shares of
another open-end management investment company having substantially all the same
investment objective, policies and limitations as the Portfolio, subject to
shareholder approval. The expected effective date of the change is January 1996.
On September 29, 1995 and October 2, 1995, respectively, the Board of
Directors of the Fund ("PNC") and the Board of Trustees of The Compass Capital
Group of Funds ("Compass"), including all of the non-interested members of each
Board, approved an asset purchase agreement between 16 investment portfolios of
PNC and Compass. The agreement provides for the acquisition by PNC of all of the
assets and liabilities of each of the Compass Portfolios in exchange for Service
Shares of the PNC Portfolios that correspond to the Compass Portfolios and the
distribution of these PNC Service Shares to the shareholders of the Compass
Portfolios in liquidation of the Compass Portfolios. The expected effective date
of the acquisition is January 1996.
80
<PAGE> 197
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF THE PNC FUND:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the International Equity Portfolio of The PNC
Fund, and the statements of net assets of the Value Equity, Growth Equity, Small
Cap Growth Equity, Core Equity, Index Equity, Small Cap Value Equity,
International Emerging Markets and Balanced Portfolios of The PNC Fund as of
September 30, 1995, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years (or
periods) in the period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments held by the
custodian and brokers as of September 30, 1995. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
PNC Fund (International Equity, Value Equity, Growth Equity, Small Cap Growth
Equity, Core Equity, Index Equity, Small Cap Value Equity, International
Emerging Markets, and Balanced Portfolios), as of September 30, 1995, and the
results of their operations for the year then ended, the changes in their net
assets for each of the two years (or periods) in the period then ended, and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 22, 1995
81
<PAGE> 198
[THIS PAGE INTENTIONALLY LEFT BLANK]
82
<PAGE> 199
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Investment Adviser
PNC Institutional Management
Corporation
Wilmington, Delaware 19809
Sub-Adviser -- Value Equity Portfolio
Small Cap Value Equity Portfolio,
International Equity Portfolio and
International Emerging Markets Portfolio
Provident Capital Management, Inc.
Philadelphia, Pennsylvania 19103
Sub-Adviser -- Growth Equity Portfolio,
Small Cap Growth Equity Portfolio, Core
Equity Portfolio and Index Equity Portfolio
PNC Equity Advisors Co.
Philadelphia, Pennsylvania 19101
Sub-Adviser -- Balanced Portfolio and
Custodian
PNC Bank, National Association
Philadelphia, Pennsylvania 19101
Co-Administrator and Transfer Agent
PFPC Inc.
Wilmington, Delaware 19809
Co-Administrator and Distributor
Provident Distributors, Inc.
Radnor, Pennsylvania 19087
Counsel
Drinker Biddle & Reath
Philadelphia, Pennsylvania 19107
Independent Accountants
Coopers & Lybrand, L.L.P.
Philadelphia, Pennsylvania 19103
PNCI-T-01E
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[LOGO]
THE PNC(R) FUND
VALUE EQUITY PORTFOLIO
GROWTH EQUITY PORTFOLIO
SMALL CAP GROWTH EQUITY PORTFOLIO
CORE EQUITY PORTFOLIO
INDEX EQUITY PORTFOLIO
SMALL CAP VALUE EQUITY PORTFOLIO
INTERNATIONAL EQUITY PORTFOLIO
INTERNATIONAL EMERGING MARKETS
PORTFOLIO
BALANCED PORTFOLIO
Annual Report to Shareholders
September 30, 1995
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