BOND PORTFOLIOS
SEMI-ANNUAL
REPORT
TO SHAREHOLDERS
MARCH 31, 1997
COMPASS CAPITAL FUNDS (LOGO)
[GRAPHIC OMITTED]
PURE INVESTMENT STYLE SM
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* NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE *
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(LOGO OMITTED) COMPASS CAPITAL FUNDS
BOND PORTFOLIOS
(BULLET) LOW DURATION BOND
(BULLET) INTERMEDIATE GOVERNMENT
BOND
(BULLET) INTERMEDIATE BOND
(BULLET) CORE BOND
(BULLET) GOVERNMENT INCOME
(BULLET) MANAGED INCOME
(BULLET) INTERNATIONAL BOND
(BULLET) TAX-FREE INCOME
(BULLET) PENNSYLVANIA TAX-FREE
INCOME
(BULLET) NEW JERSEY TAX-FREE
INCOME
(BULLET) OHIO TAX-FREE INCOME
- --------------------------------------------------------------------------------
TABLE OF
CONTENTS
PRESIDENT'S LETTER.................................................... 1
PORTFOLIO SUMMARIES
LOW DURATION BOND............................................... 2
INTERMEDIATE GOVERNMENT BOND.................................... 3
INTERMEDIATE BOND............................................... 4
CORE BOND....................................................... 5
GOVERNMENT INCOME............................................... 6
MANAGED INCOME.................................................. 7
INTERNATIONALBOND............................................... 8
TAX-FREE INCOME................................................. 9
PENNSYLVANIA TAX-FREE INCOME.................................... 10
NEW JERSEY TAX-FREE INCOME...................................... 11
OHIO TAX-FREE INCOME............................................ 12
STATEMENT OF NET ASSETS/SCHEDULE OF INVESTMENTS.................14-33
CORE BOND STATEMENT OF NET ASSETS & LIABILITIES................. 24
INTERNATIONAL BOND STATEMENT OF NET ASSETS & LIABILITIES........ 30
TAX-FREE INCOME STATEMENT OF NET ASSETS & LIABILITIES...........34-40
PORTFOLIO FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS........................................42-43
STATEMENTS OF CHANGES IN NET ASSETS.............................44-47
FINANCIAL HIGHLIGHTS............................................48-55
NOTES TO FINANCIAL STATEMENTS...................................56-70
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COMPASS CAPITAL FUNDS (LOGO OMITTED)
PRESIDENT'S LETTER
March 31, 1997
Dear Shareholder:
We welcome the opportunity to present the March 31, 1997 semi-annual
report for your Compass Capital Funds. In addition to providing you with a
summary of the financial markets on the pages immediately following, we have
included a summary for each Compass Capital portfolio that includes a review of
your fund's investment approach, recent portfolio management activity and
performance.
WHAT HAPPENED IN THE ECONOMY AND FINANCIAL MARKETS.
The past six months have again given both stock and bond investors
positive returns. However, as I mentioned in my November letter, the staggering
returns of 1995 and 1996 are unlikely to be repeated in 1997.
The stock market exhibited significant volatility during the first quarter
of 1997, as the Dow Jones Industrial Average reached its all-time high in
mid-March before falling over 7% by quarter-end. Likewise, the domestic bond
market has taken on an increasingly negative tone as stronger economic data and
resultant inflation fears have caused interest rates to rise significantly since
mid-February. Consequently, the Federal Reserve increased the Fed funds target
rate by 1/4% as a pre-emptive strike at inflation.
OUR THOUGHTS ON THE ECONOMY.
Although we expect economic strength to continue through mid-year,
inflation has remained relatively low. While we believe that additional interest
rate increases by the Fed may be necessary to subdue economic growth to a more
sustainable rate of 2.25%-2.50%, we do not believe that 1997 will be a repeat of
the dramatic rise in short term interest rates that we witnessed in 1994.
Rather, we expect that the Federal Reserve's proactive monetary policy should
keep inflationary pressures constrained.
WHAT THIS MEANS TO INVESTORS.
The recent market turbulence underscores the importance of developing a
long-term investment strategy based on your specific financial goals. Though
each investor's financial situation and risk tolerance are unique, the common
thread among all successful long-term investment strategies is a commitment to
BEING INVESTED at all times. Additionally, recent market performance has
reminded us that a diversified portfolio can potentially enhance returns in
addition to reducing volatility. For example, as the U.S. markets retreated over
the past few months, international stocks and bonds have posted strong gains,
most notably in the emerging markets. In fact, total returns for emerging market
stocks in the first quarter of 1997 were nearly four times those of their U.S.
counterparts, emphasizing the potential benefit of a diversified portfolio.
This report is just one of the many ways we are continually striving to
provide our shareholders with the information necessary to make informed
investment decisions. We would like to thank you for your continued confidence
in the Compass Capital Funds and look forward to helping you reach your
long-term investment goals.
Sincerely,
[/s/ KAREN H. SABATH]
Karen H. Sabath
PRESIDENT, COMPASS CAPITAL GROUP, INC.
1
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COMPASS CAPITAL FUNDS (LOGO OMITTED)
LOW DURATION BOND
PORTFOLIO
PORTFOLIO SUB-ADVISOR:
BLACKROCK FINANCIAL MANAGEMENT, INC.
TOTAL ASSETS (3/31/97):
$228.6 MILLION
PERFORMANCE BENCHMARK:
MERRILL LYNCH 1-3 YEAR TREASURY INDEX
INVESTMENT APPROACH*:
PURSUES A TOTAL RETURN THAT EXCEEDS THE TOTAL RETURN OF ITS BENCHMARK
WHILE PROVIDING MONTHLY INCOME BY INVESTING IN SECURITIES RATED AAA BY A MAJOR
RATING AGENCY OR ISSUED BY THE U.S. GOVERNMENT OR GOVERNMENT AGENCY. THE
PORTFOLIO EMPHASIZES SECURITIES WITH MATURITIES FROM 3 TO 5 YEARS.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE MANAGER SIGNIFICANTLY REDUCED THE PORTFOLIO'S TREASURY/AGENCY
ALLOCATION, REDEPLOYING ASSETS INTO SPREAD PRODUCT (WHICH YIELDS A PREMIUM OVER
TREASURIES) SUCH AS MORTGAGE-BACKED SECURITIES AND ASSET-BACKED SECURITIES.
(BULLET) WITHIN THE ASSET-BACKED SECURITY SECTOR, THE PORTFOLIO HAS BEEN
EMPHASIZING MANUFACTURED HOUSING AND HIGHER-QUALITY AUTO LOAN BONDS DUE TO THEIR
ATTRACTIVE YIELD SPREADS OVER MORTGAGE AND CORPORATE ALTERNATIVES.
* EFFECTIVE MAY 15, 1997, THE INVESTMENT POLICIES OF THE COMPASS CAPITAL LOW
DURATION BOND PORTFOLIO WILL CHANGE TO PERMIT THE INVESTMENT OF UP TO 20% OF
THE PORTFOLIO'S ASSETS IN SECURITIES RATED BELOW INVESTMENT GRADE AND UP TO AN
ADDITIONAL 20% OF THE PORTFOLIO'S ASSETS IN NON-DOLLAR FIXED INCOME
SECURITIES.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
LOW DURATION BOND PORTFOLIO AND THE MERRILL 1-3 YEARTREASURY
INDEX FROM INCEPTION AND AT EACH FISCAL YEAR END.
CHART
[GRAPHIC OMITTED]
BELOW ARE THE PLOT POINTS FOR LOW DURATION BOND PORTFOLIO:
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS
7/17/92 10,000 10,000 9,550 10,079
9/30/92 10,079 10,079 9,626 10,137
12/31/92 10,137 10,137 9,681 10,295
3/31/93 10,495 10,295 9,831 10,468
6/60/93 10,468 10,468 9,997 10,620
9/30/93 10,620 10,620 10,143 10,711
12/31/93 10,711 10,711 10,229 10,691
3/31/94 10,691 10,691 10,210 10,713
6/30/94 10,713 10,713 10,230 10,837
9/30/94 10,837 10,837 10,349 10,860
12/31/94 10,860 10,860 10,371 11,214
3/31/95 11,214 11,214 10,709 11,521
6/30/95 11,521 11,521 11,002 11,767
9/30/95 11,767 11,767 11,238 12,001
12/31/95 12,001 12,001 11,461 12,004
3/31/96 12,023 12,009 11,464 12,115
6/30/96 12,149 12,125 11,570 12,298
9/30/96 12,347 12,313 11,745 12,537
12/31/96 12,610 12,565 11,980 12,556
3/31/97 12,668 12,614 12,021 12,295
INVESTOR C CLASS MERRILL 1-3 YEAR TREASURY INDEX
7/17/92 10,079 10,000
9/30/92 10,137 10,298
12/31/92 10,295 10,317
3/31/93 10,468 10,545
6/60/93 10,620 10,658
9/30/93 10,711 10,811
12/31/93 10,691 10,875
3/31/94 10,713 10,820
6/30/94 10,837 10,829
9/30/94 10,860 10,936
12/31/94 11,214 10,936
3/31/95 11,521 11,304
6/30/95 11,767 11,666
9/30/95 12,001 11,841
12/31/95 12,004 12,140
3/31/96 12,115 12,180
6/30/96 12,298 12,303
9/30/96 12,537 12,506
12/31/96 12,556 12,743
3/31/97 12,654 12,828
FOR PERIOD ENDING MARCH 31, 1997
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AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------ --------------
Institutional Class 5.36% 5.15%
Service Class 5.04% 5.06%
Investor A Class (Load Adjusted) 1.72% 4.33%
Investor A Class (NAV) 4.87% 4.60%
Investor B Class (Load Adjusted) -0.11% 4.50%
Investor B Class (NAV) 4.60% 4.95%
Investor C Class 3.55% 4.95%
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THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 7/17/92; SERVICE AND INVESTOR A
SHARES, 1/13/96; INVESTOR B SHARES, 11/18/96; AND INVESTOR C SHARES, 2/24/97.
SEE "NOTE ONPERFORMANCE INFORMATION" ON PAGE 13 FOR FURTHER INFORMATION ON HOW
PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
2
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COMPASS CAPITAL FUNDS (LOGO OMITTED)
INTERMEDIATE GOVERNMENT BOND
PORTFOLIO
PORTFOLIO SUB-ADVISOR:
BLACKROCK FINANCIAL MANAGEMENT, INC.
TOTAL ASSETS (3/31/97):
$145.0 MILLION
PERFORMANCE BENCHMARK:
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT INDEX
INVESTMENT APPROACH:
PURSUES CURRENT INCOME CONSISTENT WITH THE PRESERVATION OF CAPITAL BY
INVESTING IN SECURITIES RATED AAA BY A MAJOR RATING AGENCY OR ISSUED BY THE U.S.
GOVERNMENT OR GOVERNMENT AGENCY. THE PORTFOLIO EMPHASIZES SECURITIES WITH
MATURITIES FROM 5 TO 10 YEARS.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE MANAGER SIGNIFICANTLY REDUCED THE PORTFOLIO'S TREASURY/AGENCY
ALLOCATION, REDEPLOYING ASSETS INTO SPREAD PRODUCT (WHICH YIELDS A PREMIUM OVER
TREASURIES) SUCH AS MORTGAGE-BACKED SECURITIES AND ASSET-BACKED SECURITIES.
(BULLET) WITHIN THE ASSET-BACKED SECURITY SECTOR, THE PORTFOLIO HAS BEEN
EMPHASIZING MANUFACTURED HOUSING AND HIGHER-QUALITY AUTO LOAN BONDS DUE TO THEIR
ATTRACTIVE YIELD SPREADS OVER MORTGAGE AND CORPORATE ALTERNATIVES.
(BULLET) THE PORTFOLIO INITIATED A POSITION IN THE NEWLY ISSUED TREASURY
INFLATION PROTECTED SECURITIES, WHICH THE MANAGER BELIEVES OFFER GOOD RELATIVE
VALUE.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
INTERMEDIATE GOVERNMENT BOND PORTFOLIO AND THE LEHMAN
INTERMEDIATE GOVERNMENT INDEX FROM INCEPTION AND AT
EACH FISCAL YEAR END.
CHART
[GRAPHIC OMITTED]
BELOW ARE THE PLOT POINTS FOR INTERMEDIATE GOVERNMENT BOND PORTFOLIO:
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS
4/20/92 10,000 10,000 9,550
6/30/92 10,276 10,276 9,813
9/30/92 10,714 10,714 10,232
12/31/92 10,626 10,626 10,148
3/31/93 10,986 10,986 10,492
6/30/93 11,218 11,218 10,713
9/30/93 11,452 11,448 10,933
12/31/93 11,454 11,447 10,927
3/31/94 11,181 11,166 10,659
6/30/94 11,043 11,022 10,521
9/30/94 11,097 11,070 10,533
3/31/95 11,567 11,524 10,999
6/30/95 12,056 12,002 11,455
9/30/95 12,239 12,173 11,619
12/31/95 12,597 12,520 11,959
3/31/96 12,531 12,445 11,871
6/30/96 12,607 12,511 11,929
9/30/96 12,831 12,723 12,126
12/31/96 13,153 13,033 12,417
3/31/97 13,150 13,021 12,399
LEHMAN INTERMEDIATE
INVESTOR B CLASS INVESTOR C CLASS GOVERNMENT INDEX
4/20/92 10,000 10,000 10,000
6/30/92 10,276 10,276 10,000
9/30/92 10,714 10,714 10,746
12/31/92 10,626 10,626 10,746
3/31/93 10,986 10,986 10,746
6/30/93 11,218 11,218 10,746
9/30/93 11,448 11,448 11,567
12/31/93 11,442 11,442 11,567
3/31/94 11,161 11,161 11,567
6/30/94 11,016 11,016 11,567
9/30/94 11,030 11,030 11,383
3/31/95 11,517 11,517 11,857
6/30/95 11,995 11,995 12,411
9/30/95 12,166 12,166 12,605
12/31/95 12,523 12,523 13,026
3/31/96 12,430 12,430 12,919
6/30/96 12,491 12,491 13,006
9/30/96 12,698 12,698 13,229
12/31/96 12,981 12,981 13,535
3/31/97 12,680 12,939 13,531
FOR PERIOD ENDING MARCH 31, 1997
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AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------ --------------
Institutional Class 4.94% 5.69%
Service Class 4.63% 5.48%
Investor A Class (Load Adjusted) 0.23% 4.55%
Investor A Class (NAV) 0.45% 5.42%
Investor B Class (Load Adjusted) -0.59% 4.92%
Investor B Class (NAV) 4.09% 5.34%
Investor C Class 3.05% 5.34%
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THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 4/20/92; INVESTOR A SHARES,
5/11/92; SERVICE SHARES, 7/29/93; INVESTOR C SHARES, 10/8/96; AND INVESTOR B
SHARES, 10/11/96. SEE "NOTE ONPERFORMANCE INFORMATION" ON PAGE 13 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
3
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
INTERMEDIATE BOND
PORTFOLIO
PORTFOLIO SUB-ADVISOR:
BLACKROCK FINANCIAL MANAGEMENT, INC.
TOTAL ASSETS (3/31/97):
$330.7 MILLION
PERFORMANCE BENCHMARK:
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE INDEX
INVESTMENT APPROACH:
PURSUES CURRENT INCOME CONSISTENT WITH THE PRESERVATION OF CAPITAL BY
INVESTING IN SECURITIES RATED BBB OR HIGHER BY A MAJOR RATING AGENCY OR DEEMED
BY THE MANAGER TO BE OF COMPARABLE CREDIT QUALITY. THE PORTFOLIO EMPHASIZES
SECURITIES WITH MATURITIES FROM 5 TO 10 YEARS.
RECENT PORTFOLIO MANAGEMENT
ACTIVITY:
(BULLET) THE MANAGER SIGNIFICANTLY REDUCED THE PORTFOLIO'S TREASURY/AGENCY
ALLOCATION, REDEPLOYING ASSETS INTO SPREAD PRODUCT (WHICH YIELDS A PREMIUM OVER
TREASURIES) SUCH AS MORTGAGE-BACKED SECURITIES, ASSET-BACKED SECURITIES AND
CORPORATE BONDS.
(BULLET) WITHIN THE ASSET-BACKED SECURITY SECTOR, THE PORTFOLIO HAS BEEN
EMPHASIZING MANUFACTURED HOUSING AND HIGHER-QUALITY AUTO LOAN BONDS DUE TO THEIR
ATTRACTIVE YIELD SPREADS OVER MORTGAGE AND CORPORATE ALTERNATIVES.
(BULLET) THE PORTFOLIO INITIATED A POSITION IN THE NEWLY ISSUED TREASURY
INFLATION PROTECTED SECURITIES, WHICH THE MANAGER BELIEVES OFFER GOOD RELATIVE
VALUE.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
INTERMEDIATE BOND PORTFOLIO AND THE LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/CORPORATE INDEX FROM INCEPTION AND
AT EACH FISCAL YEAR END.
CHART
[GRAPHIC OMITTED]
BELOW ARE THE PLOT POINTS FOR INTERMEDIATE BOND PORTFOLIO:
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS
9/15/93 10,010 10,010 9,510
12/31/93 9,954 9,945 9,448
3/31/94 9,675 9,660 9,177
6/30/94 9,592 9,572 9,093
9/30/94 9,655 9,628 9,145
12/31/94 9,644 9,611 9,129
3/31/95 10,044 10,003 9,502
6/30/95 10,498 10,447 9,919
9/30/95 10,696 10,363 10,089
12/31/95 11,051 10,983 10,417
3/31/96 10,966 10,890 10,334
6/30/96 11,046 10,962 10,397
9/30/96 11,241 11,147 10,568
12/31/96 11,527 11,422 10,825
3/31/97 11,522 11,408 10,807
LEHMAN INTERMEDIATE
GOVERNMENT/CORPORATE INDEX
9/15/93 10,021
12/31/93 10,037
3/31/94 9,833
6/30/94 9,774
9/30/94 9,854
12/31/94 9,843
3/31/95 10,274
6/30/95 10,788
9/30/95 10,965
12/31/95 11,349
3/31/96 11,255
6/30/96 11,325
9/30/96 11,526
12/31/96 11,809
3/31/97 11,247
FOR PERIOD ENDING MARCH 31, 1997
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AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------ --------------
Institutional Class 5.07% 4.09%
Service Class 4.76% 3.79%
Investor A Class (Load Adjusted) 0.39% 2.52%
Investor A Class (NAV) 4.58% 3.71%
Investor B Class (Load Adjusted) -0.13% 2.67%
InvestorB Class (NAV) 4.58% 3.71%
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THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 9/17/93; SERVICE SHARES, 9/23/93;
AND INVESTOR A SHARES, 5/20/94. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 13
FOR FURTHER INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
4
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
CORE BOND
PORTFOLIO
PORTFOLIO SUB-ADVISOR:
BLACKROCK FINANCIAL MANAGEMENT, INC.
TOTAL ASSETS (3/31/97):
$377.6 MILLION
PERFORMANCE BENCHMARK:
LEHMAN BROTHERS AGGREGATE INDEX
INVESTMENT APPROACH:
PURSUES A TOTAL RETURN THAT EXCEEDS THE TOTAL RETURN OF ITS BENCHMARK WHILE
PROVIDING MONTHLY INCOME BY INVESTING IN SECURITIES RATED BBB OR HIGHER BY A
MAJOR RATING AGENCY OR DEEMED BY THE MANAGER TO BE OF COMPARABLE CREDIT QUALITY.
THE PORTFOLIO EMPHASIZES SECURITIES WITH MATURITIES FROM 5 TO 10 YEARS.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE MANAGER MODESTLY REDUCED THE PORTFOLIO'S TREASURY/AGENCY
ALLOCATION, REDEPLOYING ASSETS INTO ASSET-BACKED SECURITIES AND CORPORATE BONDS.
ALLOCATIONS TO MORTGAGE PASS-THROUGHS WERE ALSO REDUCED DUE TO FEARS OF PRICE
WEAKNESS IN THE SECTOR.
(BULLET) WITHIN THE ASSET-BACKED SECURITY SECTOR, THE PORTFOLIO HAS BEEN
EMPHASIZING MANUFACTURED HOUSING AND HIGHER-QUALITY AUTO LOAN BONDS DUE TO THEIR
ATTRACTIVE YIELD SPREADS.
(BULLET) THE PORTFOLIO INITIATED A POSITION IN THE NEWLY ISSUED TREASURY
INFLATION PROTECTED SECURITIES, WHICH THE MANAGER BELIEVES OFFER GOOD RELATIVE
VALUE.
COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT IN THE COREBOND PORTFOLIO
AND THELEHMANAGGREGATE INDEX FROM
INCEPTION AND AT EACH FISCAL YEAR END.
CHART
[GRAPHIC OMITTED]
BELOW ARE THE PLOT POINTS FOR CORE BOND PORTFOLIO:
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS
12/09/92 10,000 10,000 9,600
12/31/92 10,033 10,033 9,581
3/31/93 10,416 10,416 9,947
6/30/93 10,688 10,688 10,207
9/30/93 11,021 11,021 10,525
12/31/93 11,005 11,005 10,510
3/31/94 10,715 10,715 10,233
6/30/94 10,612 10,612 10,135
9/30/94 10,695 10,695 10,214
12/31/94 10,749 10,749 10,265
3/31/95 11,269 11,269 10,762
6/30/95 11,931 11,931 11,394
9/30/95 12,166 12,166 11,619
12/31/95 12,703 12,703 12,131
3/31/96 12,405 12,399 11,838
6/30/96 12,473 12,466 11,895
9/30/96 12,722 12,706 12,118
12/31/96 13,157 13,134 12,518
3/31/97 13,121 13,088 12,469
INVESTOR B CLASS INVESTOR C CLASS LEHMAN AGGREGATE INDEX
12/09/92 10,000 10,000 10,000
12/31/92 10,033 10,033 10,192
3/31/93 10,416 10,416 10,487
6/30/93 10,688 10,688 10,751
9/30/93 11,021 11,021 11,010
12/31/93 11,005 11,005 11,123
3/31/94 10,715 10,715 10,574
6/30/94 10,612 10,612 10,760
9/30/94 10,695 10,695 10,605
12/31/94 10,749 10,749 10,866
3/31/95 11,269 11,269 11,349
6/30/95 11,931 11,931 11,848
9/30/95 12,166 12,166 12,265
12/31/95 12,703 12,703 12,707
3/31/96 12,396 12,396 12,329
6/30/96 12,432 12,432 12,503
9/30/96 12,642 12,642 12,980
12/31/96 13,035 13,035 13,120
3/31/97 12,959 12,959 13,007
FOR PERIOD ENDING MARCH 31, 1997
------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------ --------------
Institutional Class 5.77% 6.51%
Service Class 5.46% 6.44%
Investor A Class (Load Adjusted) 1.12% 5.38%
Investor A Class (NAV) 5.33% 6.38%
Investor B Class (Load Adjusted) -0.16% 5.45%
InvestorB Class (NAV) 4.54% 6.32%
Investor C Class 3.49% 6.20%
------------------------------------------------------------------------------
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 12/9/92; SERVICE SHARES, 1/13/96;
INVESTOR A SHARES, 1/31/96; INVESTOR B SHARES, 3/18/96; AND INVESTOR C SHARES,
2/28/97. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 13 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
5
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
GOVERNMENT INCOME
PORTFOLIO
PORTFOLIO SUB-ADVISOR:
BLACKROCK FINANCIAL MANAGEMENT, INC.
TOTAL ASSETS (3/31/97):
$16.5 MILLION
PERFORMANCE BENCHMARK:
LEHMAN BROTHERS MORTGAGE INDEX/MERRILL LYNCH 10-YEAR TREASURY
INVESTMENT APPROACH:
PURSUES CURRENT INCOME CONSISTENT WITH THE PRESERVATION OF CAPITAL BY
INVESTING IN SECURITIES RATED AAA BY A MAJOR RATING AGENCY OR ISSUED BY THE U.S.
GOVERNMENT OR GOVERNMENT AGENCY. THE PORTFOLIO EMPHASIZES SECURITIES WITH
MATURITIES FROM 10 TO 15 YEARS.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE MANAGER SIGNIFICANTLY REDUCED THE PORTFOLIO'S ADJUSTABLE RATE
MORTGAGE ALLOCATION DUE TO THEIR STRONG PERFORMANCE, REDEPLOYING ASSETS INTO
TREASURY AND AGENCY SECURITIES AND ASSET-BACKED SECURITIES.
(BULLET) WITHIN THE ASSET-BACKED SECURITY SECTOR, THE PORTFOLIO HAS BEEN
EMPHASIZING MANUFACTURED HOUSING AND HIGHER-QUALITY AUTO LOAN BONDS DUE TO THEIR
ATTRACTIVE YIELD SPREADS.
(BULLET) THE PORTFOLIO INITIATED A POSITION IN THE NEWLY ISSUED TREASURY
INFLATION PROTECTED SECURITIES, WHICH THE MANAGER BELIEVES OFFER GOOD RELATIVE
VALUE.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
GOVERNMENT INCOME PORTFOLIO AND THE LEHMAN
MORTGAGE/MERRILL LYNCH 10 YEAR TREASURY INDEX FROM
INCEPTION AND AT EACH FISCAL YEAR END.
CHART
[GRAPHIC OMITTED]
BELOW ARE THE PLOT POINTS FOR GOVERNMENT INCOME PORTFOLIO:
INVESTOR A CLASS INVESTOR B CLASS INVESTOR C CLASS
10/03/94 9,550 10,000 10,000
12/31/94 9,541 9,975 9,975
3/30/95 10,024 10,462 10,462
6/30/95 10,718 11,168 11,168
9/30/95 10,912 11,350 11,350
12/31/95 11,353 11,793 11,793
3/31/96 11,132 11,536 11,536
6/30/96 11,156 11,540 11,540
9/30/96 11,393 11,766 11,766
12/31/96 11,740 12,101 12,101
3/31/97 11,713 11,631 12,053
LEHMAN MORTGAGE/MERRILL
LYNCH 10 YEAR
TREASURY INDEX
10/03/94 10,000
12/31/94 10,037
3/30/95 10,588
6/30/95 11,335
9/30/95 11,537
12/31/95 12,059
3/31/96 11,779
6/30/96 11,887
9/30/96 12,108
12/31/96 12,497
3/31/97 12,368
FOR PERIOD ENDING MARCH 31, 1997
------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR FROM INCEPTION
------ --------------
Investor A Class (Load Adjusted) 0.45% 6.55%
Investor A Class (NAV) 5.22% 8.53%
Investor B Class (Load Adjusted) -0.24% 6.04%
Investor B Class (NAV) 4.46% 7.80%
Investor C Class 3.42% 7.80%
------------------------------------------------------------------------------
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INVESTOR A AND INVESTOR B SHARES, 10/3/94; AND INVESTOR
C SHARES, 2/28/97. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 13 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
6
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
MANAGED INCOME
PORTFOLIO
PORTFOLIO SUB-ADVISOR:
BLACKROCK FINANCIAL MANAGEMENT, INC.
TOTAL ASSETS (3/31/97):
$706.0 MILLION
PERFORMANCE BENCHMARK:
LEHMAN BROTHERS AGGREGATE INDEX
INVESTMENT APPROACH:
PURSUES CURRENT INCOME CONSISTENT WITH THE PRESERVATION OF CAPITAL BY
INVESTING IN SECURITIES RATED BBB OR HIGHER BY A MAJOR RATING AGENCY OR DEEMED
BY THE MANAGER TO BE OF COMPARABLE CREDIT QUALITY. THE PORTFOLIO EMPHASIZES
SECURITIES WITH MATURITIES FROM 5 TO 10 YEARS.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) THE MANAGER MODESTLY DECREASED THE PORTFOLIO'S MORTGAGE
PASS-THROUGH ALLOCATION, REDEPLOYING ASSETS INTO THE ASSET-BACKED SECURITY
SECTOR.
(BULLET) WITHIN THE ASSET-BACKED SECURITY SECTOR, THE PORTFOLIO HAS BEEN
EMPHASIZING MANUFACTURED HOUSING AND HIGHER-QUALITY AUTO LOAN BONDS DUE TO THEIR
ATTRACTIVE YIELD SPREADS.
(BULLET) THE PORTFOLIO INITIATED A POSITION IN THE NEWLY ISSUED TREASURY
INFLATION PROTECTED SECURITIES, WHICH THE MANAGER BELIEVES OFFERS GOOD RELATIVE
VALUE.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
MANAGED INCOME PORTFOLIO AND THE LEHMAN AGGREGATE INDEX
FROM INCEPTION AND AT EACH FISCAL YEAR END.
CHART
[GRAPHIC OMITTED]
BELOW ARE THE PLOT POINTS FOR MANAGED INCOME PORTFOLIO:
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS
11/01/89 10,000 10,000 9,550
12/31/89 10,105 10,105 9,650
3/31/90 10,004 10,004 9,554
6/30/90 10,306 10,306 9,843
9/30/90 10,380 10,380 9,913
12/31/90 10,943 10,943 10,451
3/31/91 11,161 11,161 10,659
6/30/91 11,259 11,259 10,752
9/30/91 11,910 11,910 11,374
12/31/91 12,580 12,580 12,014
3/31/92 12,290 12,290 11,737
6/30/92 12,749 12,749 12,175
9/30/92 13,316 13,316 12,717
12/31/92 13,323 13,323 12,724
3/31/93 14,022 14,022 13,391
6/30/93 14,457 14,457 13,806
9/30/93 14,940 14,940 14,263
12/31/93 14,881 14,862 14,186
3/31/94 14,370 14,343 13,690
6/30/94 14,109 14,079 13,422
9/30/94 14,145 14,104 13,440
12/31/94 14,215 14,166 13,492
3/31/95 14,894 14,835 14,122
6/30/95 15,744 15,671 14,909
9/30/95 16,022 15,935 15,153
12/31/95 16,701 16,602 15,778
3/31/96 16,369 16,260 15,443
6/30/96 16,437 16,315 15,490
9/30/96 16,716 16,580 15,734
12/31/96 17,277 17,123 16,243
3/31/97 17,227 17,060 16,177
LEHMAN AGGREGATE INDEX
11/01/89 10,000
12/31/89 10,027
3/31/90 9,946
6/30/90 10,309
9/30/90 10,397
12/31/90 10,923
3/31/91 11,227
6/30/91 11,411
9/30/91 12,059
12/31/91 12,671
3/31/92 12,509
6/30/92 13,014
9/30/92 13,574
12/31/92 13,609
3/31/93 14,172
6/30/93 14,549
9/30/93 14,928
12/31/93 14,936
3/31/94 14,507
6/30/94 14,357
9/30/94 14,445
12/31/94 14,500
3/31/95 15,231
6/30/95 16,159
9/30/95 16,477
12/31/95 17,179
3/31/96 16,872
6/30/96 16,969
9/30/96 17,281
12/31/96 17,800
3/31/97 17,701
FOR PERIOD ENDING MARCH 31, 1997
------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEAR FROM INCEPTION
------ ------ --------------
Institutional Class 5.24% 6.87% 7.61%
Service Class 4.92% 6.78% 7.47%
Investor A Class (Load Adjusted) 0.04% 5.53% 6.70%
Investor A Class (NAV) 4.75% 6.50% 7.36%
------------------------------------------------------------------------------
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL SHARES, 11/1/89; INVESTOR A SHARES,
2/5/92; AND SERVICE SHARES, 7/29/93. SEE "NOTE ON PERFORMANCE INFORMATION" ON
PAGE 13 FOR FURTHER INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED. THE
COMPARATIVE INDEX FROM PREVIOUS YEARS HAS CHANGED FROM THE SALOMON BROAD
INVESTMENT GRADE INDEX TO THE LEHMAN AGGREGATE TO MORE ACCURATELY REFLECT THE
TYPE OF HOLDINGS OF MANAGED INCOME.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
7
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
INTERNATIONAL BOND
PORTFOLIO
PORTFOLIO SUB-ADVISOR:
BLACKROCK FINANCIAL MANAGEMENT, INC.
TOTAL ASSETS (3/31/97):
$41.8 MILLION
PERFORMANCE BENCHMARK:
SALOMON NON-U.S. HEDGED WORLD GOVERNMENT BOND INDEX
INVESTMENT APPROACH:
PURSUES CURRENT INCOME CONSISTENT WITH THE PRESERVATION OF CAPITAL BY
INVESTING IN INVESTMENT GRADE INTERNATIONAL FIXED INCOME SECURITIES.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) BLACKROCK FINANCIAL MANAGEMENT, INC. ASSUMED MANAGEMENT OF THE
COMPASS CAPITAL INTERNATIONAL BOND PORTFOLIO ON JANUARY 1, 1997.
(BULLET) THE PORTFOLIO REMAINED CURRENCY HEDGED, WHICH AIDED TOTAL RETURNS
DUE TO THE STRONG PERFORMANCE OF THE U.S. DOLLAR VERSUS OTHER MAJOR FOREIGN
CURRENCIES.
(BULLET) THE MANAGER OVERWEIGHTED GERMANY RELATIVE TO OTHER CORE-EUROPEAN
MARKETS WHILE REDUCING THE PORTFOLIO'S ALLOCATION TO HIGHER YIELDING EUROPEAN
MARKETS SUCH AS ITALY AND SPAIN.
(BULLET) RELATIVE VALUE POSITIONS WERE INITIATED IN CANADIAN "REAL RETURN
BONDS" AND DANISH MORTGAGE-BACKED SECURITIES.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE
INTERNATIONAL BOND PORTFOLIO AND THE SALOMON NON-U.S.
HEDGED WORLD GOVERNMENT BOND INDEX FROM INCEPTION AND
AT EACH FISCAL YEAR END.
CHART
[GRAPHIC OMITTED]
BELOW ARE THE PLOT POINTS FOR INTERNATIONAL BOND PORTFOLIO:
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS
7/01/91 10,000 10,000 9,550 10,000
9/31/91 10,360 10,360 9,894 10,360
12/31/91 10,600 10,600 10,123 10,600
3/31/92 10,470 10,470 9,999 10,470
6/30/92 11,008 11,008 10,513 11,008
9/30/92 11,298 11,298 10,789 11,298
12/31/92 11,254 11,254 10,747 11,254
3/31/93 11,717 11,717 11,190 11,717
6/30/93 12,116 12,116 11,571 12,116
9/30/93 12,689 12,689 12,118 12,689
12/31/93 12,977 12,977 12,393 12,977
3/31/94 12,715 12,715 12,143 12,715
6/30/94 12,453 12,453 11,892 12,453
9/30/94 12,369 12,369 11,812 12,369
12/31/94 12,496 12,496 11,933 12,496
3/31/95 13,545 13,545 12,936 13,545
6/30/95 14,054 14,054 13,421 14,054
9/30/95 14,302 14,302 13,658 14,302
12/31/95 14,998 14,998 14,323 14,998
3/31/96 15,051 15,051 14,374 15,051
6/30/96 15,395 15,394 14,697 15,370
9/30/96 16,002 15,989 15,259 15,928
12/31/96 16,590 16,558 15,793 16,442
3/31/97 16,762 16,717 15,938 16,396
SALOMON NON-U.S. HEDGED
INVESTOR C CLASS WORLD GOVERNMENT BOND INDEX EST
7/01/91 10,000 10,000
9/31/91 10,360 10,388
12/31/91 10,600 11,477
3/31/92 10,470 10,921
6/30/92 11,008 11,947
9/30/92 11,298 12,830
12/31/92 11,254 12,024
3/31/93 11,717 12,739
6/30/93 12,116 13,110
9/30/93 12,689 13,817
12/31/93 12,977 13,843
3/31/94 12,715 14,111
6/30/94 12,453 14,351
9/30/94 12,369 14,588
12/31/94 12,496 14,671
3/31/95 13,545 16,790
6/30/95 14,054 17,611
9/30/95 14,302 17,183
12/31/95 14,998 17,540
3/31/96 15,051 17,244
6/30/96 15,370 17,313
9/30/96 15,928 17,877
12/31/96 16,442 18,256
3/31/97 16,563 17,201
FOR PERIOD ENDING MARCH 31, 1997
------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEAR FROM INCEPTION
------ ------ --------------
Institutional Class 11.37% 9.87% 9.39%
Service Class 11.08% 9.81% 9.34%
Investor A Class (Load Adjusted) 5.34% 8.65% 8.34%
Investor A Class (NAV) 10.88% 9.77% 9.31%
Investor B Class (Load Adjusted) 5.09% 9.16% 8.97%
Investor BClass (NAV) 10.04% 9.61% 9.16%
Investor C Class 8.94% 9.61% 9.16%
------------------------------------------------------------------------------
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: SERVICE SHARES, 7/1/91; INVESTOR BSHARES, 4/19/96;
INVESTOR A SHARES, 4/22/96; INSTITUTIONAL SHARES, 6/10/96; AND INVESTOR C
SHARES, 9/11/96. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 13 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
8
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
TAX-FREE INCOME
PORTFOLIO
PORTFOLIO SUB-ADVISOR:
BLACKROCK FINANCIAL MANAGEMENT, INC.
TOTAL ASSETS (3/31/97):
$55.7 MILLION
PERFORMANCE BENCHMARK:
LEHMAN MUNICIPAL BOND INDEX
INVESTMENT APPROACH:
SEEKS A HIGH LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL INCOME TAX BY
INVESTING IN A PORTFOLIO OF MUNICIPAL FIXED INCOME SECURITIES RATED BBB OR
HIGHER BY A MAJOR RATING AGENCY OR DEEMED BY THE SUB-ADVISOR TO BE OF COMPARABLE
CREDIT QUALITY.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) IN LIGHT OF A CAUTIOUS MARKET OUTLOOK, THE MANAGER HAS BEEN
EMPHASIZING CALLABLE PREMIUM BONDS ACROSS THE YIELD CURVE DUE TO THEIR DEFENSIVE
STRUCTURE AND RECENT UNDERVALUATION BY THE MARKETPLACE.
(BULLET) PREMIUMS ALSO CAN PROVIDE MORE INCOME THAN PAR BONDS WHILE TAKING
SIMILAR INTEREST RATE RISK, WHICH AIDS THE PORTFOLIO IN SEEKING TO ENHANCE
DISTRIBUTABLE INCOME.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE TAX
FREE INCOME PORTFOLIO AND THE LEHMAN MUNICIPAL BOND
INDEX FROM INCEPTION AND AT EACH FISCAL YEAR END.
CHART
[GRAPHIC OMITTED]
BELOW ARE THE PLOT POINTS FOR TAX-FREE INCOME PORTFOLIO:
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS
5/14/90 10,000 10,000 9,600
6/30/90 10,117 10,118 9,662
9/30/90 10,139 10,139 9,683
12/31/90 10,513 10,513 10,040
3/31/91 10,720 10,720 10,238
6/30/91 10,919 10,919 10,428
9/30/91 11,296 11,296 10,787
12/31/91 11,708 11,708 11,181
3/31/92 11,776 11,776 11,247
6/30/92 12,215 12,215 11,665
9/30/92 12,504 12,504 11,942
12/31/92 12,744 12,744 12,170
3/31/93 13,246 13,246 12,650
6/30/93 13,708 13,708 13,091
9/30/93 14,200 14,194 13,551
12/31/93 14,411 14,400 13,738
3/31/94 13,430 13,410 12,786
6/30/94 13,614 13,587 12,948
9/30/94 13,661 13,625 12,978
12/31/94 13,455 13,395 12,764
3/31/95 14,555 14,496 13,793
6/30/95 14,810 14,737 14,014
9/30/95 15,242 15,156 14,404
12/31/95 15,941 15,825 15,031
3/31/96 15,806 15,694 14,900
6/30/96 15,953 15,828 15,026
9/30/96 16,378 16,237 15,408
12/31/96 16,852 16,696 15,837
3/31/97 16,838 16,669 15,805
INVESTOR B CLASS INVESTOR C CLASS LEHMAN MUNICIPAL BOND INDEX
5/14/90 10,000 10,000 10,000
6/30/90 10,118 10,118 10,000
9/30/90 10,139 10,139 10,202
12/31/90 10,513 10,513 10,202
3/31/91 10,720 10,720 10,202
6/30/91 10,919 10,919 10,202
9/30/91 11,296 11,296 11,548
12/31/91 11,708 11,708 11,548
3/31/92 11,776 11,776 11,548
6/30/92 12,215 12,215 11,548
9/30/92 12,504 12,504 12,755
12/31/92 12,744 12,744 12,755
3/31/93 13,246 13,246 12,755
6/30/93 13,708 13,708 12,755
9/30/93 14,189 14,189 14,381
12/31/93 14,385 14,385 14,586
3/31/94 13,389 13,389 13,786
6/30/94 13,558 13,558 13,938
9/30/94 13,590 13,590 14,034
12/31/94 13,365 13,365 13,832
3/31/95 14,443 14,443 14,810
6/30/95 14,674 14,674 15,168
9/30/95 15,083 15,083 15,604
12/31/95 15,739 15,739 16,248
3/31/96 15,602 15,602 16,052
6/30/96 15,734 15,734 16,175
9/30/96 16,104 16,104 16,545
12/31/96 16,522 16,522 16,967
3/31/97 16,458 16,458 16,927
FOR PERIOD ENDING MARCH 31, 1997
------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEAR FROM INCEPTION
------ ------ --------------
Institutional Class 6.53% 7.41% 7.86%
Service Class 6.22% 7.20% 7.70%
Investor A Class (Load Adjusted) 1.77% 6.07% 6.95%
Investor A Class (NAV) 6.03% 6.94% 7.59%
Investor B Class (Load Adjusted) 0.73% 6.49% 7.50%
Investor B Class (NAV) 5.48% 6.92% 7.50%
Investor C Class 4.43% 6.92% 7.50%
------------------------------------------------------------------------------
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INVESTOR A SHARES, 5/14/90; INSTITUTIONAL SHARES,
1/21/93; SERVICE SHARES, 7/29/93; INVESTOR B SHARES, 7/18/96; AND INVESTOR C
SHARES, 2/28/97. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 13 FOR FURTHER
INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
9
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
PENNSYLVANIA TAX-FREE INCOME
PORTFOLIO
PORTFOLIO SUB-ADVISOR:
BLACKROCK FINANCIAL MANAGEMENT, INC.
TOTAL ASSETS (3/31/97):
$86.3 MILLION
PERFORMANCE BENCHMARK:
LEHMAN LOCAL GENERAL OBLIGATION INDEX
INVESTMENT APPROACH:
SEEKS A HIGH LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL, PENNSYLVANIA
STATE AND LOCAL INCOME TAX BY INVESTING IN A PORTFOLIO OF MUNICIPAL FIXED INCOME
SECURITIES RATED BBB OR HIGHER BY A MAJOR RATING AGENCY OR DEEMED BY THE
SUB-ADVISOR TO BE OF COMPARABLE CREDIT QUALITY.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) IN LIGHT OF A CAUTIOUS MARKET OUTLOOK, THE MANAGER HAS BEEN
EMPHASIZING CALLABLE PREMIUM BONDS ACROSS THE YIELD CURVE DUE TO THEIR DEFENSIVE
STRUCTURE AND RECENT UNDERVALUATION BY THE MARKETPLACE.
(BULLET) PREMIUMS ALSO CAN PROVIDE MORE INCOME THAN PAR BONDS WHILE TAKING
SIMILAR INTEREST RATE RISK, WHICH AIDS THE PORTFOLIO IN SEEKING TO ENHANCE
DISTRIBUTABLE INCOME.
COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT IN THE PA TAX-FREE INCOME
PORTFOLIO AND LEHMAN LOCAL GO INDEX
FROM INCEPTION AND AT EACH FISCAL YEAR END.
CHART
[GRAPHIC OMITTED]
BELOW ARE THE PLOT POINTS FOR PENNSYLVANIA TAX-FREE INCOME PORTFOLIO:
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS
12/01/92 10,000 10,000 9,600
12/31/92 10,080 10,080 9,626
3/31/93 10,492 10,492 10,020
6/30/93 10,809 10,809 10,322
9/30/93 11,142 11,165 10,667
12/31/93 11,324 11,341 10,841
3/31/94 10,613 10,621 10,159
6/30/94 10,746 10,746 10,284
9/30/94 10,813 10,808 10,337
12/31/94 10,545 10,533 10,069
3/31/95 11,353 11,332 10,828
6/30/95 11,614 11,585 11,064
9/30/95 11,981 11,944 11,400
12/31/95 12,483 12,439 11,867
3/31/96 12,343 12,283 11,716
6/30/96 12,448 12,379 11,802
9/30/96 12,734 12,653 12,059
12/31/96 13,058 12,966 12,353
3/31/97 13,010 12,909 12,294
INVESTOR B CLASS LEHMAN LOCAL GO INDEX
12/01/92 10,000 10,000
12/31/92 10,080 10,124
3/31/93 10,492 10,473
6/30/93 10,809 10,797
9/30/93 11,170 11,132
12/31/93 11,352 11,309
3/31/94 10,638 10,738
6/30/94 10,769 10,879
9/30/94 10,824 10,943
12/31/94 10,518 10,790
3/31/95 11,296 11,448
6/30/95 11,526 11,739
9/30/95 11,859 12,104
12/31/95 12,326 12,517
3/31/96 12,145 12,433
6/30/96 12,212 12,509
9/30/96 12,455 12,803
12/31/96 12,733 12,141
3/31/97 12,397 13,140
FOR PERIOD ENDING MARCH 31, 1997
------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------- --------------
Institutional Class 5.40% 6.27%
Service Class 5.09% 6.07%
Investor A Class (Load Adjusted) 0.76% 4.99%
Investor A Class (NAV) 4.94% 5.99%
Investor B Class (Load Adjusted) -0.55% 4.83%
Investor B Class (NAV) 4.14% 5.57%
------------------------------------------------------------------------------
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL AND INVESTOR A SHARES, 12/1/92; SERVICE
SHARES, 7/29/93; AND INVESTOR B SHARES, 10/3/94. SEE "NOTE ON PERFORMANCE
INFORMATION" ON PAGE 13 FOR FURTHER INFORMATION ON HOW PERFORMANCE DATA WAS
CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
10
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
NEW JERSEY TAX-FREE INCOME
PORTFOLIO
PORTFOLIO SUB-ADVISOR:
BLACKROCK FINANCIAL MANAGEMENT, INC.
TOTAL ASSETS (3/31/97):
$85.2 MILLION
PERFORMANCE BENCHMARK:
LEHMAN LOCAL GENERAL OBLIGATION INDEX
INVESTMENT APPROACH:
SEEKS A HIGH LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL, NEW JERSEY STATE
AND LOCAL INCOME TAX BY INVESTING IN A PORTFOLIO OF MUNICIPAL FIXED INCOME
SECURITIES RATED BBB OR HIGHER BY A MAJOR RATING AGENCY OR DEEMED BY THE
SUB-ADVISOR TO BE OF COMPARABLE CREDIT QUALITY.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) IN LIGHT OF A CAUTIOUS MARKET OUTLOOK, THE MANAGER HAS BEEN
EMPHASIZING CALLABLE PREMIUM BONDS ACROSS THE YIELD CURVE DUE TO THEIR DEFENSIVE
STRUCTURE AND RECENT UNDERVALUATION BY THE MARKETPLACE.
(BULLET) PREMIUMS ALSO CAN PROVIDE MORE INCOME THAN PAR BONDS WHILE TAKING
SIMILAR INTEREST RATE RISK, WHICH AIDS THE PORTFOLIO IN SEEKING TO ENHANCE
DISTRIBUTABLE INCOME.
COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT IN THE NJ TAX-FREE INCOME
PORTFOLIO AND THE LEHMAN LOCAL GO INDEX
FROM INCEPTION AND AT EACH FISCAL YEAR END.
CHART
[GRAPHIC OMITTED]
BELOW ARE THE PLOT POINTS FOR NEW JERSEY TAX-FREE INCOME PORTFOLIO:
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS INVESTOR A CLASS INVESTOR B CLASS LEHMAN LOCAL GO INDEX
<S> <C> <C> <C> <C>
7/01/91 10,000 9,550 10,000 10,000
9/30/91 10,357 9,891 10,357 10,142
12/31/91 10,736 10,253 10,736 10,462
3/31/92 10,775 10,290 10,775 10,494
6/30/92 11,205 10,701 11,205 10,904
9/30/92 11,462 10,946 11,462 11,205
12/31/92 11,691 11,165 11,691 11,440
3/31/93 12,098 11,553 12,098 11,834
6/30/93 12,514 11,951 12,514 12,200
9/30/93 12,867 12,288 12,867 12,579
12/31/93 13,045 12,458 13,045 12,779
3/31/94 12,370 11,813 12,370 12,134
6/30/94 12,504 11,942 12,504 12,292
9/30/94 12,583 12,017 12,583 12,364
12/31/94 12,432 11,873 12,432 12,192
3/31/95 13,195 12,601 13,195 12,936
6/30/95 13,454 12,848 13,454 13,265
9/30/95 13,802 13,181 13,802 13,677
12/31/95 14,289 13,646 14,289 14,143
3/31/96 14,158 13,519 14,156 14,049
6/30/96 14,198 13,546 14,184 14,134
9/30/96 14,445 13,776 14,398 14,466
12/31/96 14,808 14,115 14,725 14,848
3/31/97 14,768 14,072 14,509 14,848
</TABLE>
LEHMAN LOCAL GO INDEX
7/01/91 10,000
9/30/91 10,142
12/31/91 10,462
3/31/92 10,494
6/30/92 10,904
9/30/92 11,205
12/31/92 11,440
3/31/93 11,834
6/30/93 12,200
9/30/93 12,579
12/31/93 12,779
3/31/94 12,134
6/30/94 12,292
9/30/94 12,364
12/31/94 12,192
3/31/95 12,936
6/30/95 13,265
9/30/95 13,677
12/31/95 14,143
3/31/96 14,049
6/30/96 14,134
9/30/96 14,466
12/31/96 14,848
3/31/97 14,848
FOR PERIOD ENDING MARCH 31, 1997
------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEAR FROM INCEPTION
------- ------ --------------
Service Class 4.26% 6.51% 7.02%
Investor A Class (Load Adjusted) -0.07% 5.60% 6.21%
Investor A Class (NAV) 4.09% 6.45% 6.97%
Investor B Class (Load Adjusted) -1.15% 5.91% 6.68%
Investor B Class (NAV) 3.51% 6.34% 6.87%
------------------------------------------------------------------------------
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: SERVICE SHARES, 7/1/91; INVESTOR A SHARES, 1/26/96; AND
INVESTOR B SHARES, 7/2/96. SEE "NOTE ON PERFORMANCE INFORMATION" ON PAGE 13 FOR
FURTHER INFORMATION ON HOW PERFORMANCE DATA WAS CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
11
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
OHIO TAX-FREE INCOME
PORTFOLIO
PORTFOLIO SUB-ADVISOR:
BLACKROCK FINANCIAL MANAGEMENT, INC.
TOTAL ASSETS (3/31/97):
$10.7 MILLION
PERFORMANCE BENCHMARK:
LEHMAN LOCAL GENERAL OBLIGATION INDEX
INVESTMENT APPROACH:
SEEKS A HIGH LEVEL OF CURRENT INCOME EXEMPT FROM FEDERAL, OHIO STATE AND
LOCAL INCOME TAX BY INVESTING IN A PORTFOLIO OF MUNICIPAL FIXED INCOME
SECURITIES RATED BBB OR HIGHER BY A MAJOR RATING AGENCY OR DEEMED BY THE
SUB-ADVISOR TO BE OF COMPARABLE CREDIT QUALITY.
RECENT PORTFOLIO MANAGEMENT ACTIVITY:
(BULLET) IN LIGHT OF A CAUTIOUS MARKET OUTLOOK, THE MANAGER HAS BEEN
EMPHASIZING CALLABLE PREMIUM BONDS ACROSS THE YIELD CURVE DUE TO THEIR DEFENSIVE
STRUCTURE AND RECENT UNDERVALUATION BY THE MARKETPLACE.
(BULLET) PREMIUMS ALSO CAN PROVIDE MORE INCOME THAN PAR BONDS WHILE TAKING
SIMILAR INTEREST RATE RISK, WHICH AIDS THE PORTFOLIO IN SEEKING TO ENHANCE
DISTRIBUTABLE INCOME.
COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT IN THE OH TAX-FREE INCOME
PORTFOLIO AND THE LEHMAN LOCAL GO INDEX
FROM INCEPTION AND AT EACH FISCAL YEAR END.
CHART
[GRAPHIC OMITTED]
BELOW ARE THE PLOT POINTS FOR OHIO TAX-FREE INCOME PORTFOLIO:
INSTITUTIONAL CLASS SERVICE CLASS INVESTOR A CLASS INVESTOR B CLASS
12/01/92 10,000 10,000 9,600 10,000
12/31/92 10,010 10,010 9,560 10,010
3/31/93 10,270 10,270 9,808 10,270
6/30/93 10,561 10,561 10,086 10,561
9/30/93 10,907 10,907 10,420 10,911
12/31/93 11,024 11,014 10,529 11,025
3/31/94 10,346 10,330 9,881 10,347
6/30/94 10,442 10,420 9,973 10,443
9/30/94 10,498 10,469 10,026 10,499
12/31/94 10,310 10,276 9,843 10,281
3/31/95 11,076 11,033 10,568 11,018
6/30/95 11,300 11,249 10,774 11,211
9/30/95 11,625 11,565 11,075 11,503
12/31/95 12,145 12,073 11,560 11,985
3/31/96 11,950 11,870 11,361 11,756
6/30/96 12,046 11,957 11,440 11,815
9/30/96 12,335 12,234 11,700 12,061
12/31/96 12,646 12,533 11,981 12,330
3/31/97 12,612 12,490 11,936 12,014
LEHMAN LOCAL GO INDEX
12/01/92 10,000
12/31/92 10,124
3/31/93 10,473
6/30/93 10,797
9/30/93 11,232
12/31/93 11,309
3/31/94 10,738
6/30/94 10,879
9/30/94 10,943
12/31/94 10,790
3/31/95 11,448
6/30/95 11,739
9/30/95 12,104
12/31/95 12,517
3/31/96 12,433
6/30/96 12,509
9/30/96 12,803
12/31/96 13,141
3/31/97 13,140
FOR PERIOD ENDING MARCH 31, 1997
------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1 YEAR FROM INCEPTION
------ --------------
Institutional Class 5.40% 5.50%
Service Class 5.23% 5.27%
Investor A Class (Load Adjusted) 0.85% 4.29%
Investor A Class (NAV) 5.05% 5.29%
Investor B Class (Load Adjusted) -0.38% 4.08%
Investor B Class (NAV) 4.31% 4.82%
------------------------------------------------------------------------------
THE PERFORMANCE INFORMATION ABOVE INCLUDES INFORMATION RELATING TO EACH CLASS OF
THE PORTFOLIO SINCE THE COMMENCEMENT OF OPERATIONS OF THE PORTFOLIO, RATHER THAN
THE DATE SUCH CLASS WAS INTRODUCED. THE INCEPTION DATES OF THE PORTFOLIO'S SHARE
CLASSES WERE AS FOLLOWS: INSTITUTIONAL AND INVESTOR A SHARES, 12/1/92; SERVICE
SHARES, 7/29/93; AND INVESTOR B SHARES, 10/13/94. SEE "NOTE ON PERFORMANCE
INFORMATION" ON PAGE 13 FOR FURTHER INFORMATION ON HOW PERFORMANCE DATA WAS
CALCULATED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
12
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
NOTE ON PERFORMANCE INFORMATION
The performance information above includes information for each class of
each Portfolio since the commencement of operations of the Portfolio, rather
than the date such class was introduced. Performance information for each class
introduced after the commencement of operations of a Portfolio is therefore
based on the performance history of a predecessor class or predecessor classes.
If a class of shares in a Portfolio (the "Subsequent Class") has more than one
predecessor class, the performance data predating the introduction of the
Subsequent Class is based initially on the performance of the Portfolio's first
operational predecessor class (the "Initial Class"); thereafter, the performance
of the Subsequent Class is based upon the performance of any other predecessor
class or classes which were introduced after the Initial Class and which had
total operating expenses more similar to those of the Subsequent Class. In the
case of Investor A, Investor B, Investor C and Service Shares, the performance
information for periods prior to their introduction dates has not been restated
to reflect the shareholder servicing and processing and/or distribution fees and
certain other expenses borne by these share classes which, if reflected, would
reduce the performance quoted. Accordingly, the performance information may be
used in assessing each Portfolio's performance history but does not reflect how
the distinct classes would have performed on a relative basis prior to the
introduction of these classes, which would require an adjustment to the ongoing
expenses.
Performance information is restated to reflect the current maximum
front-end sales charge (in the case of Investor A Shares) or the maximum
contingent deferred sales charge (in the case of Investor B and Investor C
Shares), and assumes the reinvestment of dividends and distributions. The
maximum front-end sales charges for Investor A Shares are as follows:
Intermediate Government Bond, Intermediate Bond, Core Bond, Tax-Free Income,
Pennsylvania Tax-Free Income, New Jersey Tax-Free Income and Ohio Tax-Free
Income Portfolios -- 4.00%; Government Income and Managed Income Portfolios --
4.50%; Low Duration Bond Portfolio -- 3.00%; and International Bond Portfolio --
5.00%. The maximum contingent deferred sales charge for Investor B Shares and
Investor C Shares of all of the Portfolios is 4.50% and 1.00%, respectively.
The performance information also reflects fee waivers that reduce the
total operating expenses of each Portfolio. The Portfolios' returns would have
been lower if there were not such waivers. PAMG and the Portfolio's
Administrators are under no obligation to waive or continue waiving their fees.
13
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF NET ASSETS
LOW DURATION BOND PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- -------- --------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 11.0%
Refcorp STRIPS
6.33% 10/15/98 $1,250 $ 1,135,725
Tennessee Valley Authority
8.37% 10/01/99 2,000 2,082,500
U.S. Treasury Notes
6.25%*** 03/31/99 8,880 8,848,749
6.50% 08/31/01 4,775 4,731,452
6.62% 02/15/03 6,270 6,244,794
------------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS
(Cost $23,159,281) 23,043,220
------------
MORTGAGE PASS-THROUGHS -- 26.3%
Federal Home Loan Mortgage
Corporation
7.25% 10/01/03 12 11,745
7.37% 03/01/06 190 188,718
7.25% 07/01/06 83 82,643
7.25% 06/01/08 101 100,333
8.25% 06/01/09 146 148,650
8.00% 09/01/11 323 329,199
8.75% 01/01/13 220 226,338
8.00% 10/01/17 462 470,803
6.27% 03/01/20 4,012 3,936,878
6.08% 08/01/20 5,105 5,003,090
Federal National Mortgage Association
6.20% 02/26/01 6,630 6,436,956
6.00% 01/01/04 3,926 3,810,245
6.00% 02/01/04 2,504 2,429,375
7.00% 06/01/04 5,022 4,997,381
6.50% 10/01/05 1,904 1,881,089
16.68% 10/25/06 305 315,809
7.50% 04/01/09 2,989 3,002,694
8.50% 12/01/10 4,606 4,722,752
6.09% 03/01/25 5,963 5,851,305
6.33% 01/01/29 1,640 1,609,357
6.08% 02/01/31 3,106 3,062,503
Government National Mortgage
Association
8.25% 01/15/09 6,488 6,628,602
------------
TOTAL MORTGAGE PASS-THROUGHS
(Cost $56,064,693) 55,246,465
------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 2.0%
Federal Home Loan Mortgage
Corporation, Series 64, Class A (PO)
7.39% 12/15/23 933 905,397
Federal National Mortgage Association,
Series 90-60, Class J
8.40% 04/25/19 126 125,769
Federal National Mortgage Association,
Series 93-108, Class B (PO)
5.65% 12/25/16 1,259 1,212,887
Federal National Mortgage Association,
Series 94-39, Class PB
5.75% 06/25/12 1,787 1,771,427
Kidder Peabody Mortgage Assets Trust,
Series 14, Class B
9.45% 05/01/13 2 2,387
Morgan Stanley Capital I, Series 86-C,
Class U4
9.00% 11/01/06 294 297,081
------------
TOTAL MULTIPLE CLASS MORTGAGE
PASS-THROUGHS
(Cost $4,343,071) 4,314,948
------------
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 11.7%
Bear Stearns Mortgage Securities Inc.,
Series 96-6, Class A2
7.00% 11/20/26 $5,218 $ 5,113,640
MLCC Mortgage Investors, Inc.,
Series 96-B, Class A
5.77%** 07/15/21 4,719 4,736,949
MLCC Mortgage Investors, Inc.,
Series 96-C, Class A
6.00%** 09/15/21 7,378 7,405,674
Prudential Home Mortgage Securities,
Series 94-19, Class A2
7.05% 05/25/24 3,212 3,206,625
Salomon Brothers Mortgage Securities
Inc., Series 96-6B, Class A1
6.04% 04/15/23 2,106 2,102,207
Salomon Brothers Mortgage Securities
Inc., Series 96-6G, Class A1
5.62% 04/15/23 2,003 1,999,209
------------
TOTAL COMMERCIAL MORTGAGE-
BACKED SECURITIES
(Cost $24,639,072) 24,564,304
------------
ASSET BACKED SECURITIES -- 47.9%
Associates Manufactured Housing
Pass Through, Series 96-1, Class A1
6.20% 03/27/03 1,949 1,949,347
Banc One Auto Grantor Trust,
Series 96-A, Class A
6.10% 10/15/02 2,782 2,774,550
Banc One Auto Grantor Trust,
Series 96-B, Class A
6.55% 02/12/03 1,604 1,607,417
Chase Manhattan Auto Owner Trust,
Series 96-C, Class A3
5.95% 11/15/00 2,510 2,488,570
Chase Manhattan Auto Owner Trust,
Series 97-A, Class A3
6.25% 11/15/00 2,400 2,382,000
Chase Manhattan Grantor Trust,
Series 95-A, Class A
6.00% 09/17/01 2,720 2,711,130
Chase Manhattan Grantor Trust,
Series 96-A, Class A
5.20% 02/15/02 4,884 4,813,845
6.61% 09/16/02 3,257 3,258,039
Chevy Chase Auto Receivables Trust,
Series 96-2, Class A
5.90% 07/15/03 4,033 3,990,771
Chevy Chase Auto Receivables Trust,
Series 97-1
6.60% 10/15/03 3,800 3,791,687
Daimler-Benz Vehicle Trust,
Series 96, Class A
5.85% 07/20/03 3,682 3,654,915
EQCC Home Equity Loan Trust,
Series 94-1, Class A
5.80% 03/15/09 2,653 2,543,361
Fifth Third Auto Grantor Trust,
Series 96-B, Class A
6.45% 03/15/02 2,366 2,366,577
Fifth Third Bank Asset Trust,
Series 96, Class A(DOUBLE DAGGER)
6.20% 09/15/01 3,366 3,357,533
First Security Auto Grantor Trust,
Series 97-A, Class A
6.30% 08/15/03 6,325 6,307,211
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
STATEMENT OF NET ASSETS
LOW DURATION BOND PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
ASSET BACKED SECURITIES (CONTINUED)
Ford Credit Auto Lease Trust,
Series 96-1, Class A
5.80% 05/15/99 $4,200 $ 4,168,500
Ford Credit Grantor Trust, Series 95-B,
Class A
5.90% 10/15/00 1,505 1,496,512
General Motors Acceptance
Corporation Grantor Trust,
Series 95-A, Class A
7.15% 03/15/00 5,432 5,469,337
General Motors Acceptance
Corporation Grantor Trust,
Series 97-A, Class A
7.13% 04/01/20 7,586 7,498,273
Honda Auto Receivables Grantor Trust,
Series 95-A, Class A
6.20% 12/15/00 3,343 3,339,962
New York City Trust, Series 96-1,
Class A
6.81% 05/25/05 2,842 2,838,551
Nissan Auto Receivable Grantor Trust,
Series 95-A, Class A
6.10% 08/15/01 4,719 4,704,037
Olympic Automobile Receivables Trust,
Series 97-A, Class A2
6.12% 08/15/00 4,400 4,391,750
People's Bank Credit Card Master Trust,
Series 96-1, Class A
5.58%** 11/15/04 6,200 6,198,834
Premier Auto Trust, Series 93-2,
Class A3
4.90% 10/15/98 176 174,465
Premier Auto Trust, Series 93-6,
Class A2
4.65% 11/02/99 1,529 1,507,810
Student Loan Marketing Association,
Series 97-1, Class A2
5.50% 01/25/10 6,000 5,992,500
The Money Store Business Loan
Backed Certification, Series 97-1,
Class A
6.40%** 04/15/28 5,100 5,109,562
------------
TOTAL ASSET BACKED SECURITIES
(Cost $101,425,703) 100,887,046
------------
CORPORATE BONDS -- 2.7%
Banco Internacio
6.05% 07/16/01 1,968 1,954,546
Lehman Brothers Holdings
7.00% 05/13/99 3,650 3,668,237
------------
TOTAL CORPORATE BONDS
(Cost $5,649,174) 5,622,783
------------
SHORT TERM INVESTMENTS -- 0.7%
Federal Home Loan Bank Discount
Notes
5.80% 04/08/97 1,500 1,500,000
Smith Barney Money Market Fund 180 180,343
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $1,680,276) 1,680,343
------------
VALUE
---------------
TOTAL INVESTMENTS IN
SECURITIES
(Cost $216,961,270*) 102.3% $215,359,109
------------
LIABILITIES IN EXCESS OF
OTHER ASSETS (2.3%) (4,942,472)
----- ------------
NET ASSETS (Applicable to
12,981,400 Institutional shares,
8,441,863 Service shares,
102,106 Investor A shares,
4,305 Investor B shares and
3,239 Investor C shares
outstanding) 100.0% $210,416,637
====== ============
NET ASSET VALUE AND
REDEMPTION PRICE PER
INSTITUTIONAL, SERVICE
AND INVESTOR A SHARE
($210,342,908 (DIVIDE) 21,525,369) $9.77
=====
OFFERING PRICE PER
INSTITUTIONAL AND SERVICE
SHARE $9.77
=====
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($9.77 (DIVIDE) .970) $10.07
======
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
(SUBJECT TO A CONTINGENT DEFERRED
SALES CHARGE OF 4.5%) PER
INVESTOR B SHARE
($42,068 (DIVIDE) 4,305) $9.77
=====
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
(SUBJECT TO A CONTINGENT DEFERRED
SALES CHARGE OF 1.0%) PER
INVESTOR C SHARE
($31,661 (DIVIDE) 3,239) $9.77
=====
- ----------------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 119,277
Gross unrealized depreciation (1,721,438)
=============
$ (1,602,161)
=============
** Rates shown are the rates as of March 31, 1997.
*** Partial principal in the amount of $2,200,000 has been pledged as collateral
for reverse repurchase agreements.
(DOUBLE DAGGER) Principal amount of securities pledged as collateral is $200,000
on 40 long U.S. Treasury Notes future contracts expiring June
1997. The value of such contracts on March 31, 1997 was
$8,185,000, thereby resulting in an unrealized loss of $86,875.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF NET ASSETS
INTERMEDIATE GOVERNMENT BOND PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 28.3%
Small Business Administration
Participation Certificates
7.25% 08/01/16 $2,958 $ 2,919,698
Small Business Administration
6.67% 02/10/06 2,800 2,651,250
7.35% 08/01/06 2,500 2,463,281
7.20% 10/01/16 1,700 1,674,394
U.S. Treasury Bonds
12.75% 11/15/10 3,840 5,241,561
13.87% 05/15/11 2,175 3,162,820
U.S. Treasury Notes
6.25% 03/31/99 8,295 8,265,801
6.37% 03/31/01 2,200 2,174,502
6.62%*** 07/31/01 3,345 3,331,553
6.12% 12/31/01 1,550 1,511,591
6.25% 02/28/02 400 391,564
6.50% 10/15/06 950 921,148
U.S. Treasury Notes (CPI)
3.37% 01/15/07 6,466 6,356,698
------------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS
(Cost $41,900,941) 41,065,861
------------
MORTGAGE PASS-THROUGHS -- 30.0%
Federal Home Loan Mortgage
Corporation 15 Year
7.00% 05/01/02 349 341,068
Federal Home Loan Mortgage
Corporation
7.00% 05/01/16 1,395 1,390,091
8.00% 06/01/17 1,501 1,511,701
6.50% 01/24-06/26 4,217 3,928,326
Federal Home Loan Mortgage
Corporation ARM
6.13%** 09/01/20 3,588 3,515,882
6.08%** 05/01/30 4,503 4,413,387
Federal Housing Association, USGI
7.46% 05/01/21 1,908 1,905,524
Federal National Mortgage Association
10 Year
6.00% 11/03-02/04 4,457 4,305,791
Federal National Mortgage Association
6.50% 10/01/05 1,392 1,375,722
6.50% 10/25/03 5,556 5,406,089
8.50% 12/01/10 3,593 3,697,654
7.26% 01/25/11 2,000 1,996,250
Federal National Mortgage Association
Multi 7-Year
7.77% 07/01/01 3,300 3,356,159
Government National Mortgage
Association 15 Year
7.00% 11/15/07 1,072 1,059,076
Government National Mortgage
Association
9.00% 11/15/17 4,293 4,514,548
7.00% 04/15/26 773 755,903
------------
TOTAL MORTGAGE PASS-THROUGHS
(Cost $44,115,102) 43,473,171
------------
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 8.7%
Collateralized Mortgage Obligation
Trust, Series 36, Class A (PO)
5.00% 10/25/17 $ 950 $ 698,252
Community Program Loan Trust,
Series 87, Class A
4.50% 10/01/18 4,500 3,736,406
Federal National Mortgage Association,
Series 96-T6, Class D
6.72% 02/26/01 5,458 5,377,436
Federal National Mortgage Association,
Series 93, Class A, (PO)
6.00% 11/25/17 1,105 1,027,738
Federal National Mortgage Association,
Series 93, Class B, (PO)
5.00% 08/25/22 1,918 1,718,560
------------
TOTAL MULTIPLE CLASS
MORTGAGE PASS-THROUGHS
(Cost $12,873,748) 12,558,392
------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 0.6%
Structured Asset Securities Corp.,
Series 96, Class A1B
5.75% 02/25/28 823 813,556
(Cost $823,274) ------------
ASSET BACKED SECURITIES -- 28.6%
DISCOVER CARD MASTER TRUST,
SERIES 94-2, CLASS A
5.78%** 04/15/97 3,050 3,076,129
HFC Home Equity Loan Asset Backed
Certificates, Series 93-1, Class A
4.75% 05/20/08 759 754,189
Associates Corporation, Series 96-1,
Class A1
6.20% 03/15/27 1,758 1,758,235
Chase Manhattan Auto Owner Trust,
Series 96-C, Class A3
5.95% 11/15/00 1,565 1,551,638
Chase Manhattan Auto Owner Trust,
Series 97A, Class A3(DOUBLE DAGGER)
6.25% 11/15/00 1,500 1,488,750
Chevy Chase Auto Receivables Trust,
Series 96-1, Class A
6.60% 12/15/02 1,729 1,730,955
Daimler-Benz Vehicle Trust,
Series 96-A, Class A
5.85% 07/20/03 3,596 3,569,917
Fifth Third Bank Asset Trust,
Series 96, Class A
6.20% 09/15/01 3,366 3,357,533
General Motors Acceptance
Corporation, Series 12
7.43% 12/01/21 1,645 1,644,528
Green Tree Financial Corp.
Series 95-7, Class A2
6.15% 11/15/26 1,700 1,697,875
Green Tree Financial Corp.
Series 95-8, Class A5
6.90% 12/15/26 800 783,875
Green Tree Financial Corp.
Series 96-7, Class A1
6.00% 10/15/27 1,873 1,870,364
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
STATEMENT OF NET ASSETS
INTERMEDIATE GOVERNMENT BOND PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
ASSET BACKED SECURITIES (CONTINUED)
MBNA MASTER CREDIT CARD TRUST,
SERIES 97-B, CLASS A
5.59% 08/15/14 $2,500 $ 2,495,313
MLCC Mortgage Investors, Inc.,
Series 96-C, Class A
5.81% 09/15/21 3,873 3,887,979
New York City Tax Lien Trust,
Series 96-1, Class A
6.81% 05/25/05 2,417 2,414,400
Security Pacific Home Equity Loan,
Series 91-1, Class B
8.85% 05/15/98 2,100 2,153,156
Student Loan Marketing Association,
Series 97-1, Classs A2
5.84%** 01/25/10 2,600 2,596,750
The Money Store Home Equity Trust,
Series 95-A3, Class A8
8.12% 06/15/15 1,473 1,506,219
Union Acceptance Corp.,
Series 96, Class A
5.40% 04/07/03 3,211 3,162,555
------------
TOTAL ASSET BACKED SECURITIES
(Cost $41,630,557) 41,500,360
------------
MUNICIPAL BONDS -- 1.3%
Stanislaus County Taxable Pension
Obligation
7.15% 08/15/13 2,000 1,915,000
(Cost $2,000,000)
------------
SHORT TERM INVESTMENTS -- 3.6%
Federal Home Loan Bank Notes
5.80%** 04/08/97 1,000 1,000,000
4.90% 04/27/97 3,000 2,970,000
Smith Barney Money Market Fund 1,234 1,233,868
------------
TOTAL SHORT TERM INVESTMENTS
(COST $5,191,647) 5,203,868
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $148,535,269*) 101.1% 146,530,208
LIABILITIES IN EXCESS OF OTHER
ASSETS (1.1%) (1,534,801)
------ ------------
NET ASSETS (Applicable to 9,273,242
Institutional shares, 4,844,094
Service shares, 571,341 Investor A
shares, 2,703 Investor B shares and
1,276 Investor C shares outstanding) 100.0% $144,995,407
====== ============
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND INVESTOR A SHARE
($144,956,143 (DIVIDE) 14,688,677) $9.87
=====
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $9.87
=====
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($9.87 (DIVIDE) .960) $10.28
======
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE
(SUBJECT TO A CONTINGENT DEFERRED
SALES CHARGE OF 4.5%) PER
INVESTOR B SHARE
($26,672 (DIVIDE) 2,703) $9.87
=====
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE
(SUBJECT TO A CONTINGENT DEFERRED
SALES CHARGE OF 1.0%) PER
INVESTOR C SHARE
($12,592 (DIVIDE) 1,276) $9.87
=====
- ----------------------
* ALSO COST FOR FEDERAL INCOME TAX PURPOSES. THE GROSS UNREALIZED APPRECIATION
(DEPRECIATION) ON A TAX BASIS IS AS FOLLOWS:
Gross unrealized appreciation $ 103,297
Gross unrealized depreciation (2,108,358)
-------------
$ (2,005,061)
=============
** Rates shown are the rates as of March 31, 1997.
*** Partial principal in the amount of $2,100,000 has been pledged as collateral
for reverse repurchase agreements.
(DOUBLE DAGGER) Principal amount of securities pledged as collateral is $200,000
on 136 long U.S. Treasury Notes and 43 short U.S. Treasury Bonds
future contracts expiring June 1997. The value of such contracts
on March 31, 1997 was $18,830,875, thereby resulting in an
unrealized loss of $282,625.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF NET ASSETS
INTERMEDIATE BOND PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
U.S. GOVERNMENT & AGENCY
SECURITIES -- 17.9%
Small Business Administration,
Series 96, Class A
6.67% 02/10/06 $ 3,100 $ 2,935,312
Small Business Administration,
Series 96, Class C
7.35% 08/10/06 3,000 2,955,937
Small Business Administration,
Series 96-20H, Class 1
7.25% 08/01/16 3,944 3,892,931
U.S. Treasury Bonds
12.75%*** 11/15/10 2,395 3,269,151
13.87% 05/15/11 4,750 6,907,307
U.S. Treasury Notes
6.25%*** 03/31/99 10,865 10,826,754
6.87% 07/31/99 7,400 7,458,237
6.25% 01/31/02 960 940,368
#6.25% 02/02/02 5,775 5,653,205
U.S. Treasury Notes (CPI)
3.37% 01/15/07 14,579 14,332,766
-------------
TOTAL U.S. GOVERNMENT &
AGENCY SECURITIES
(Cost $60,329,256) 59,171,968
-------------
MORTGAGE PASS-THROUGHS -- 17.2%
Federal Home Loan Mortgage
Corporation COFI ARM
6.08% 08/01/31 12,346 12,114,419
Federal Home Loan Mortgage
Corporation
6.50% 08/20-02/25 9,675 9,250,928
7.00% 09/01/25 1,759 1,686,805
8.00% 11/01/08 959 971,293
9.00% 12/16-06/21 1,345 1,411,636
Federal Home Loan Mortgage
Corporation 15 Year
8.50% 10/15/98 50 51,999
9.00% 09/97-12/01 171 176,678
9.50% 01/01/05 512 529,991
Federal Housing Adminisration, USGI,
Series 2056
7.46% 05/01/21 2,271 2,268,481
Federal National Mortgage Association
10 Year
6.00% 02/01/04 3,318 3,192,674
Federal National Mortgage Association
Multi-family
6.50% 10/25/03 1,800 1,727,437
7.26% 01/25/11 2,000 1,996,250
Federal National Mortgage Association
7.50% 05/09-10/10 5,415 5,442,255
8.00% 03/01/08 4,596 4,673,718
8.50% 12/01/10 5,067 5,214,641
Federal National Mortgage Association
15 Year
9.50% 03/01/05 21 22,199
Government National Mortgage
Association 15 Year
7.50% 04/07-12/07 2,228 2,241,673
8.00% 05/15/99 153 156,960
Government National Mortgage
Association
9.00% 11/15/17 3,578 3,805,726
-------------
TOTAL MORTGAGE PASS-THROUGHS
(Cost $57,607,518) 56,935,763
-------------
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 10.2%
Community Program Loan Trust,
Series 87-A, Class A4
4.50% 10/01/18 $ 4,800 $ 3,985,500
Federal Home Loan Mortgage
Corporation, Series T-2, Class A
7.00% 01/25/21 2,194 2,106,105
Federal National Mortgage
Association, Series 96-T, Class C
6.20% 02/26/01 7,897 7,667,551
Federal National Mortgage
Association, Series 96-T, Class D
6.72% 02/26/01 9,258 9,121,558
Federal National Mortgage
Association, Series 267,
Class 1 (PO)
6.75% 10/01/24 3,383 2,330,081
Federal National Mortgage
Association, Series 89-16,
Class B (PO)
5.56% 03/25/19 1,826 1,332,676
Federal National Mortgage
Association, Series 93-117, Class B (PO)
6.26% 08/22/22 4,751 4,239,848
Salomon Brothers, Series 96-6B,
Class A1
5.78% 04/15/23 1,436 1,433,323
Salomon Brothers, Series 96-6G,
Class A1
5.85% 04/15/23 1,405 1,402,140
-------------
TOTAL MULTIPLE CLASS MORTGAGE
PASS-THROUGHS
(Cost $34,548,165) 33,618,782
-------------
CORPORATE BONDS -- 24.6%
FINANCE -- 10.9%
AMERICAN SAVINGS BANK
6.62% 02/15/06 1,350 1,261,864
Associates Corp., N.A.
6.68% 09/17/99 3,000 2,984,207
Bear Stearns Capital Trust I
7.00%** 01/15/02 3,300 3,237,432
Chase Manhattan Corp.
6.62% 01/15/98 1,000 1,002,224
Coca-Cola Enterprises
5.71% 03/18/37 3,900 3,886,350
Credit Suisse First Boston
7.75% 05/15/06 1,000 1,009,786
Crestar Financial Capital Trust I
8.16% 12/15/26 2,700 2,586,746
Crestar Financial Corp.
8.25% 07/15/02 1,800 1,855,620
Equitable Surplus Note
6.95% 12/01/05 1,000 956,251
First Maryland Capital Trust I
6.71%** 01/15/27 3,300 3,321,780
Goldman Sachs Group LP
6.25% 02/01/03 2,000 1,892,250
J.P. Morgan & Co.
6.92%** 02/15/12 2,500 2,440,625
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
STATEMENT OF NET ASSETS
INTERMEDIATE BOND PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
CORPORATE BONDS (CONTINUED)
FINANCE (CONTINUED)
MBNA Capital I, Series A
8.27% 12/01/26 $ 1,000 $ 957,344
Meridian Bancorp.
6.62% 06/15/00 1,500 1,481,238
Morgan Stanley Group, Inc.
5.62% 03/01/99 750 735,498
PAINE WEBBER, INC.
7.87% 02/15/03 1,500 1,518,936
Salomon Brothers, Inc.
8.90% 02/15/00 500 522,443
U.S. Bancorp. Putable Asset Trust
5.71%** 11/15/99 4,300 4,301,127
-------------
35,951,721
-------------
INDUSTRIAL -- 4.6%
Anixter, Inc.
8.00% 09/17/03 2,750 2,763,069
Ikon Capital Resources
6.93% 06/07/99 2,400 2,404,625
ITT Corp.
6.75% 11/15/03 3,000 2,839,517
Mobile Energy Services Co.,
1st Mortgage Bond
8.66% 01/01/17 482 479,783
News America Holdings
8.50% 02/15/05 3,000 3,132,505
RJR Nabisco, Inc.
6.70% 06/15/02 2,400 2,329,172
6.85% 06/15/05 300 286,095
7.05% 07/15/07 450 429,492
Texaco Capital Co.
9.00% 12/15/99 500 527,500
-------------
15,191,758
-------------
UTILITY -- 4.6%
CSW Energy
6.87% 10/01/01 3,000 2,940,359
Pennsylvania Power & Light
9.25% 10/01/19 3,100 3,270,500
PECO Energy Co.
5.62% 11/01/01 3,075 2,891,716
Potomac Capital Investment
Management
7.05% 10/02/01 2,550 2,516,005
6.80% 11/01/01 1,300 1,269,974
Texas Utilities Electric Co.
7.37% 08/01/01 2,500 2,519,872
-------------
15,408,426
-------------
YANKEE -- 4.5% Crown Cork & Seal, S.A.
6.75% 12/15/03 3,000 2,900,560
Quebec Province
9.00% 05/08/01 2,150 2,271,429
London Insurance
6.87% 09/15/05 1,000 954,288
Tenaga Nasional Berhad
7.87% 06/15/04 3,500 3,563,491
Vattenfall Treasury
6.00% 06/10/98 5,200 5,170,015
-------------
14,859,783
-------------
TOTAL CORPORATE BONDS
(Cost $82,600,326) 81,411,688
-------------
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
ASSET BACKED SECURITIES -- 34.1%
Amresco Residential Securities
Mortgage Loan Trust, Series 91-1,
Class A
8.10% 04/26/26 $ 2,618 $ 2,588,096
Associates Manufactured Housing,
Series 96-1, Class A
6.20% 12/01/98 2,446 2,446,240
Associates Manufactured Housing,
Series 96-1, Class B
8.00% 02/01/14 2,500 2,484,766
Banc One Auto Grantor Trust,
Series 96-B, Class A(DOUBLE DAGGER)
6.55% 02/15/03 3,466 3,472,020
Chase Manhattan Auto Owner Trust,
Series 96-C, Class A3
5.95% 11/15/00 2,035 2,017,625
Chase Manhattan Auto Owner Trust,
Series 97-A, Class A3
6.25% 11/15/00 2,100 2,084,250
Chevy Chase Auto Receivables Trust,
Series 96-1, Class A
6.60% 12/15/02 3,909 3,913,463
Daimler Benz Vehicle Trust,
Series 96-A, Class A
5.85% 07/20/03 9,162 9,094,788
EQCC Home Equity Loan Trust,
Series 94-1, Class A
5.80% 03/15/09 3,585 3,436,974
Fifth Third Auto Grantor Trust,
Series 96-B, Class A
6.45% 03/15/02 5,442 5,443,127
Fifth Third Bank Asset Trust,
Series 96, Class A
6.20% 09/15/01 4,222 4,212,178
First Bank Corporate Card Master
Trust, Series 97-1, Class A
6.40% 02/15/03 3,265 3,182,355
Fleet Finance Home Equity Trust,
Series 91-2, Class B
8.65% 10/15/06 1,350 1,374,891
Ford Credit Auto Lease Trust,
Series 96-1, Class A
5.80% 05/15/99 5,000 4,962,500
General Motors Acceptace Corp.
7.43% 12/01/21 3,290 3,289,056
Green Tree Financial Corp.,
Series 94-4, Class A1
6.55% 07/15/19 250 249,734
Green Tree Financial Corp.,
Series 94-5, Class A1
6.60% 11/15/19 369 369,562
Green Tree Financial Corp.,
Series 94-A, Class A
6.90% 02/15/04 925 917,224
Green Tree Financial Corp.,
Series 94-B, Class B
7.85% 07/15/04 3,008 3,026,562
Green Tree Financial Corp.,
Series 95-8, Class A5
6.90% 12/15/26 1,600 1,567,750
Green Tree Financial Corp.,
Series 95-A, Class A1
7.25% 07/15/05 5,376 5,323,818
Green Tree Financial Corp.,
Series 96-10, Class B1
7.24% 03/15/07 2,900 2,795,781
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF NET ASSETS
INTERMEDIATE BOND PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
ASSET BACKED SECURITIES (CONTINUED)
Green Tree Financial Corp.,
Series 96-9, Class B1
7.65% 12/20/27 $ 2,400 $ 2,341,500
HFC Home Equity Loan Asset Backed
Certificates, Series 93-1, Class A3
4.75% 05/20/08 1,465 1,455,451
MBNA Master Credit Card Trust,
Series 97-B, Class A
5.53%** 08/15/14 5,500 5,489,687
MLCC Mortgage Investors, Inc.,
Series 96-C, Class A
5.81%** 12/15/21 1,383 1,388,564
MMCA Automobile Trust, Series 95-1,
Class A
5.70% 11/15/00 1,497 1,489,772
New York City Tax Lien Trust,
Series 96-1A, Class A
6.81% 05/25/05 2,090 2,088,130
Olympic Automobile Receivables Trust,
Series 97-A, Class A2
6.12% 08/15/00 4,100 4,092,312
People's Bank Credit Card Master
Trust Series 1996-1, Class A
5.58%** 11/15/04 3,300 3,299,380
Sears Credit Account Master Trust,
Series 96-4, Class A
6.45% 10/15/06 2,585 2,532,863
Student Loan Marketing Association,
Series 97-1
6.05%** 10/25/11 3,600 3,600,000
Student Loan Marketing Association,
Series 97-1, Class A1
5.65%** 10/25/05 1,500 1,499,063
Student Loan Marketing Association,
Series 97-1, Class A2
5.84%** 01/25/10 10,000 9,987,500
The Money Store Home Equity Trust,
Series 95-A3, Class A8
8.12% 06/15/15 2,104 2,151,742
Union Acceptance Corp., Series 96-A,
Class A
5.40% 04/07/03 3,308 3,257,432
-------------
TOTAL ASSET BACKED SECURITIES
(Cost $113,713,765) 112,926,156
-------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 2.3%
CBA Mortgage Corp., Series 93-C1,
Class B
7.77% 12/25/03 1,000 1,011,094
Commerical Manufacturing Acceptance
Corp., Series 96-C2, Class A
7.06%** 09/15/23 2,581 2,547,100
MERRILL LYNCH MORTGAGE INVESTORS, INC.,
SERIES 95-C1, CLASS C
7.46%** 05/25/15 1,200 1,184,440
Resolution Trust Corp., Series 93-C3,
Class D
7.10% 12/25/24 2,011 1,978,496
Structured Asset Securities Corp.,
Series 95-4, Class A
5.75% 02/25/28 847 837,485
-------------
TOTAL COMMERCIAL MORTGAGE-
BACKED SECURITIES
(Cost $7,653,015) 7,558,615
-------------
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
MUNICIPAL BONDS -- 0.9%
New York City Taxable Series E
6.55% 08/01/00 $ 2,900 $ 2,852,875
(Cost $2,900,000) -------------
SHORT TERM INVESTMENTS -- 0.9%
FEDERAL HOME LOAN BANK NOTES
5.80% 04/08/97 1,000 1,000,000
4.90% 04/28/97 2,000 1,980,000
Smith Barney Money Market Fund 69 69,392
-------------
TOTAL SHORT TERM INVESTMENTS
(Cost $3,040,745) 3,049,392
-------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $362,392,790*) 108.1% 357,525,239
LIABILITIES IN EXCESS OF OTHER
ASSETS (8.1%) (26,785,622)
------ -------------
NET ASSETS (Applicable to 30,474,331
Institutional shares, 5,170,567
Service shares and 107,069
Investor A shares outstanding) 100.0% $330,739,617
====== ============
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND INVESTOR A SHARE
($330,739,617 (DIVIDE) 35,751,967) $9.25
=====
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $9.25
=====
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($9.25 (DIVIDE) 0.960) $9.64
=====
- ------------------------
* Also cost for Federal Income tax purposes. The gross unrealized appreciation
(depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 261,276
Gross unrealized depreciation (5,128,827)
-------------
$ (4,867,551)
=============
** Rates shown are the rates as of March 31, 1997.
*** Partial principal in the amount of $25,410,000 has been pledged as
collateral for reverse repurchase agreements. Also pledged as collateral for
reverse repurchase agreements are $1,210,000 of U.S. Treasury Notes at a
rate of 6.25% with a maturity of 07/31/01. These securities were sold and
will settle 04/02/97.
(DOUBLE DAGGER) Principal amount of securities pledged as collateral of $250,000
on 172 long U.S. Treasury Notes and 42 short U.S. Treasury Bonds
future contracts expiring June 1997. The value of such contracts
on March 31, 1997 was $22,534,891, thereby resulting in an
unrealized loss of $418,766.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
SCHEDULE OF INVESTMENTS
CORE BOND PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 52.6%
Federal Housing Administration East
Point Chelsea
10.25% 05/01/33 $ 98 $ 104,281
Federal Housing Administration GNMA
9.00% 10/15/24 480 499,790
9.50% 11/15/26 616 661,497
Federal National Mortgage Association
5.25% 03/25/98 500 495,945
7.55% 04/22/02 250 256,822
5.80% 12/10/03 1,000 938,150
Small Business Administration,
Series 96-1, Class C
7.35% 08/10/06 3,350 3,300,797
Small Business Administration,
Series 97-10, Class A
7.08% 02/10/07 2,000 1,917,187
Small Business Administration,
Series 1997-20B
7.10% 02/01/17 2,625 2,545,840
Student Loan Marketing Association
Series 1997-1, Class CTFS
6.05%** 10/25/11 2,500 2,500,000
Student Loan Marketing Association
Series 1996-4, Class A1
5.60%** 07/25/04 3,955 3,951,410
U.S. Treasury Bonds
12.50% 08/15/14 4,590 6,588,211
7.00% 05/13/26 11,330 10,844,934
#6.75% 08/15/26 21,709 20,595,328
6.50% 11/15/26 1,355 1,248,592
6.62% 02/15/27 5,065 4,773,661
U.S. Treasury Notes
5.87% 01/31/99 11,100 11,001,320
6.25%*** 03/31/99 57,490 57,287,629
#5.87% 11/15/99 15,670 15,421,159
6.37% 03/31/01 30,555 30,200,864
6.50% 08/31/01 9,760 9,670,989
#6.12% 12/31/01 7,530 7,343,406
6.62% 03/31/02 14,410 14,328,584
U.S. Treasury Notes (CPI)
3.37% 01/15/07 21,258 20,899,052
------------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS
(Cost $230,596,361) 227,375,448
------------
MORTGAGE PASS-THROUGHS -- 12.0%
Federal Home Loan Mortgage
Corporation COFI ARM
6.09% 09/01/20 8,104 7,952,145
Federal Home Loan Mortgage
Corporation
8.00% 11/01/15 135 135,792
6.50% 03/01/26 24 22,607
7.00% 03/01/25 884 847,260
7.50% 01/26-10/26 16,739 16,450,500
Federal Home Loan Mortgage
Corporation 15 Year
7.50% 10/01/10 6,855 6,861,427
Federal National Mortgage Association
Multi-Family
6.50% 10/25/03 100 95,969
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
MORTGAGE PASS-THROUGHS (CONTINUED)
Federal National Mortgage Association
7.50% 09/01/10 $ 222 $ 222,309
8.00% 10/09-05/22 189 191,664
9.00% 06/01/24 473 495,077
Government National Mortgage
Association
7.00% 08/25-10/25 3,880 3,703,355
7.50% 02/26-01/27 8,879 8,704,659
8.50% 01/15/10 1,572 1,613,464
9.00% 09/16-12/19 1,351 1,415,640
10.50% 01/15/16 31 33,978
11.00% 05/16-09/19 15 17,152
11.50% 07/15/13 8 8,540
12.00% 01/13-03/15 8 9,216
12.50% 04/15/13 1 1,703
MLCC MORTGAGE INVESTORS, INC.,
SERIES 96-C, CLASS A
5.81%** 09/15/21 3,228 3,239,982
------------
TOTAL MORTGAGE PASS-THROUGHS
(Cost $52,532,161) 52,022,439
------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 3.7%
Community Program Loan Trust,
Series 87-4, Class Z
4.50% 10/01/18 9,850 8,178,578
Federal Home Loan Mortgage
Corporation, Series 1907,
Class LP (PO)
6.65% 06/15/20 1,000 564,062
Federal National Mortgage Association
Series 1993-254, Class C (PO)
7.00% 07/25/23 1,068 710,092
Federal National Mortgage Association
Series 1994-24, Class D (PO)
6.00% 11/25/23 3,278 2,253,637
Federal National Mortgage Association
Series 1996-45, Class E (PO)
6.40% 01/25/24 1,400 754,687
Federal National Mortgage Association
Series 1996-54, Class A (PO)
6.50% 04/25/21 2,151 1,661,614
Federal National Mortgage Association
Series 267, Class 1 (PO)
6.75% 01/25/24 2,370 1,632,264
Salomon Brothers Mortgage Securities,
Series 87-3, Class A (PO)
5.00% 10/23/17 122 88,222
------------
TOTAL MULTIPLE CLASS
MORTGAGE PASS-THROUGHS
(Cost $16,504,160) 15,843,156
------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 1.9%
First Boston Mortgage Securities
Corp., Series 93-M1, Class A
6.75% 09/25/06 117 113,303
Goldman Sachs Mortgage Securities
Corp. II
7.41% 02/15/27 2,841 2,823,711
Merrill Lynch Mortgage Investors,
Inc., Series 92-D, Class A
7.75% 07/15/17 300 303,047
Midland Royalty Acceptance Corp.,
Series 96-C, Class A
7.23% 12/15/26 3,100 3,046,234
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
SCHEDULE OF INVESTMENTS
CORE BOND PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES (CONTINUED)
Paine Webber Mortgage Acceptance
Corp., Series 95-M1, Class A
6.70% 01/15/07 $ 800 $ 783,516
Structured Asset Security Corp.,
Series 1996-CFL, Class X1 (IO)
1.32% 02/25/28 25,391 1,301,280
------------
TOTAL COMMERCIAL MORTGAGE-
BACKED SECURITIES
(Cost $8,477,915) 8,371,091
------------
ASSET BACKED SECURITIES -- 11.5%
Amresco Residential Securities
Mortgage Loan Trust, Series 96-1,
Class A
8.10% 04/26/26 2,618 2,588,096
Associates Manufactured Housing,
Series 1996-1, Class B1
8.00% 02/01/14 2,815 2,797,846
CHASE MANHATTAN GRANTOR TRUST,
SERIES 96-A, CLASS A
5.20% 02/15/02 6,533 6,438,517
CIT Group Securitization Corp.,
Series 95-2, Class B
7.65% 05/15/26 300 275,859
Discover Card Master Trust I,
Series 94-2, Class A
5.77%** 04/15/97 5,000 5,042,835
Discover Card Master Trust I,
Series 96-4, Class A
5.79%** 10/16/13 4,675 4,767,039
GE Capital Mortgage Services,
Series 97-1, Class A
7.78% 03/25/27 1,666 1,647,778
Green Tree Financial Corp.,
Series 93-1, Class A
6.90% 04/15/18 400 396,125
Green Tree Financial Corp.,
Series 93-3, Class B
6.85% 10/15/18 4,000 3,837,500
Green Tree Financial Corp.,
Series 93-4, Class A
7.25% 07/15/05 4,275 4,233,853
6.60% 01/15/19 600 585,000
Green Tree Financial Corp.,
Series 94-5, Class A
7.95% 11/15/19 400 407,750
Green Tree Financial Corp.,
Series 95-7, Class B
7.35% 11/15/26 600 586,312
Green Tree Financial Corp.,
Series 96-2, Class B
7.90% 04/15/27 3,650 3,472,062
Green Tree Financial Corp.,
Series 94-2, Class A
6.45% 05/15/19 1,525 1,527,043
Green Tree Financial Corp.,
Series 97-2, Class B
7.56% 04/15/27 5,000 4,901,562
Green Tree Home Improvement
Loan Trust, Series 94-D, Class M
9.05% 01/15/15 700 740,031
Nissan Auto Receivable Grantor
Trust, Series 95-A, Class A
6.10% 08/15/01 2,407 2,399,059
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
ASSET BACKED SECURITIES (CONTINUED)
Premier Auto Trust, Series 93-2,
Class A
4.90% 10/15/98 $ 705 $ 697,862
The Money Store Home Equity Trust
Series 1995-A3, Class A8
8.12% 06/15/15 2,175 2,223,467
------------
TOTAL ASSET BACKED SECURITIES
(Cost $50,232,026) 49,565,596
------------
CORPORATE BONDS -- 18.1%
FINANCE -- 8.1%
Allmerica Financial Corp.(DOUBLE DAGGER)
7.62% 10/15/25 2,900 2,741,581
Anthem Insurance
9.00% 04/01/27 3,800 3,738,358
Associates Corp. of North America
7.87% 09/30/01 1,000 1,027,290
6.87% 02/01/03 500 490,184
Bank Hawaii Capital
8.25% 12/15/26 1,000 969,036
Barnett Capital Trust I
8.06% 12/01/26 4,200 4,052,330
BT Capital Trust
7.90% 01/15/27 2,425 2,264,934
Crestar Financial Corp.
8.25% 07/15/02 400 412,360
8.16% 12/15/26 3,100 2,969,968
Equitable Life Assurance Co.
7.70% 12/01/15 250 240,199
Firstar Capital Trust
8.32% 12/15/26 2,550 2,508,453
HSBC America
7.80% 12/15/26 1,500 1,397,142
Keycorp Institute
7.82% 12/01/26 3,500 3,292,220
Liberty Mutual Co.
8.50% 05/15/25 300 305,485
Marshall & Ilsley
7.65% 12/01/26 1,000 923,511
MBNA Capital I
8.27% 12/01/26 3,000 2,872,033
Meditrust
7.37% 07/15/00 350 348,605
Mellon Capital II
7.99% 01/15/27 2,700 2,603,947
Metropolitan Life Insurance Co.
6.30% 11/01/03 400 376,312
Morgan Stanley Group, Inc.
6.37% 12/15/03 500 473,878
Norwest Financial, Inc.
5.50% 04/15/98 500 495,801
Salomon Brothers, Inc.
6.70% 12/01/98 450 448,965
------------
34,952,592
------------
INDUSTRIAL -- 5.8%
Caterpillar Financial Services
8.72% 07/21/97 100 100,866
Coca-Cola Enterprises
5.71% 03/18/37 4,950 4,932,675
Ford Capital BV
9.00% 08/15/98 1,000 1,029,774
Ford Motor Credit Corp.
8.00% 06/15/02 1,000 1,038,750
GMAC Pass Thru Trust
6.50% 01/17/00 2,800 2,762,991
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
SCHEDULE OF INVESTMENTS
CORE BOND PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
ORPORATE BONDS (CONTINUED)
INDUSTRIAL (CONTINUED)
H.J. Heinz Co.
5.50% 09/15/97 $ 1,000 $ 997,510
ITT Corp.
6.75% 11/15/03 3,250 3,076,143
7.37% 11/15/15 800 711,067
Nabisco, Inc.
6.85% 06/15/05 1,000 953,649
7.55% 06/15/15 3,175 3,032,434
News America Holdings, Inc.
7.75% 12/01/45 2,000 1,795,000
Texaco Capital
8.26% 09/15/98 1,250 1,283,025
Time Warner
6.10% 12/30/01 3,500 3,280,719
------------
24,994,603
------------
UTILITY -- 1.8%
Bellsouth Telecommunications
6.25% 05/15/03 500 479,044
Chesepeake & Potomic Telephone Co.
5.87% 09/15/99 1,000 979,994
New England Telephone & Telegraph
6.25% 03/15/03 1,000 955,476
Pacific Bell
7.00% 07/15/04 500 490,495
7.12% 03/15/26 1,000 930,297
Southwestern Bell Telephone
7.62% 10/01/13 200 186,806
TECO Energy, Inc.
9.25% 06/19/97 1,000 1,006,250
Texas Utilities Capital Trust
8.17% 01/30/37 2,750 2,652,062
------------
7,680,424
------------
YANKEE -- 2.4%
Abbey National PLC
7.35% 10/15/06 2,025 1,982,001
Hydro-Quebec
7.50% 04/01/16 3,000 2,891,709
Province of Ontario Global Bond
7.37% 01/27/03 500 505,652
Quebec Province
7.50% 07/15/23 1,000 945,374
Vattenfall Treasury
6.00% 06/10/98 4,295 4,270,234
------------
10,594,970
------------
TOTAL CORPORATE BONDS
(Cost $80,527,509) 78,222,589
------------
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
SHORT TERM INVESTMENTS -- 0.1%
Smith Barney Money Market Fund $ 207 $ 206,699
(Cost $206,699) ------------
PUT OPTIONS -- 0.1%
U.S.Treasury Note, 6.25%
1/31/02, expiring 6/17/97 1,840 500,250
(Cost $176,812) ------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(COST $439,253,643*) $432,107,268
============
- --------------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 735,640
Gross unrealized depreciation (7,882,015)
------------
$ (7,146,375)
============
** Rates shown are the rates as of March 31, 1997.
*** Partial principal in the amount of $20,400,000 has been pledged as
collateral for reverse repurchase agreements. Also pledged as collateral
for reverse repurchase agreements are $15,750,000 of U.S. Treasury Notes
at a rate of 6.0% with a maturity of 09/30/98. These securities were sold
and will settle 04/03/97.
(DOUBLE DAGGER) Principal amount of securities pledged as collateral is
$1,525,000 on 356 Short U.S. Treasury Bonds future contracts
expiring June 1997. The value of such contracts on March 31,
1997 was $38,142,375, thereby resulting in an unrealized gain of
$669,609.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF ASSETS AND LIABILITIES
CORE BOND PORTFOLIO
MARCH 31, 1997 (UNAUDITED)
ASSETS
Investments at value (Cost $439,253,643) ..................... $432,107,268
Interest receivable .......................................... 3,756,717
Principal receivable ......................................... 37,790
Investments sold receivable .................................. 21,816,034
Capital shares sold receivable ............................... 47,511
Futures margin receivable .................................... 54,125
Other assets ................................................. 46,443
------------
TOTAL ASSETS .......................................... 457,865,888
------------
LIABILITIES
Investments purchased payable ................................ 41,788,074
Capital shares redeemed payable .............................. 576
Distributions payable ........................................ 1,946,564
Accrued expenses payable ..................................... 96,838
Deferred dollar roll income .................................. 18,367
Reverse repurchase agreements payable ........................ 36,454,701
------------
TOTAL LIABILITIES ..................................... 80,305,120
------------
NETASSETS (Applicable to 27,245,073 Institutional shares,
12,133,343 Service
shares, 79,973 Investor A shares, 340,876
Investor B shares and 31 Investor C shares outstanding) ...... $377,560,768
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($258,462,970 (DIVIDE) 27,245,073) ... $9.49
=====
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($115,104,789 (DIVIDE) 12,133,343) ......... $9.49
=====
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($758,735 (DIVIDE) 79,973) .............. $9.49
=====
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($9.49 (DIVIDE) 0.960) ....................................... $9.89
=====
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($3,233,979 (DIVIDE) 340,876) ........... $9.49
=====
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($295 (DIVIDE) 31) ...................... $9.49
=====
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
STATEMENT OF NET ASSETS
GOVERNMENT INCOME PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 18.8%
Small Business Administration,
Series: 96-I
7.70% 09/01/16 $ 295 $ 296,580
Small Business Administration,
Series: 96-J
7.20% 10/01/16 450 443,222
U.S. Treasury Bonds
6.75% 08/15/26 175 166,022
U.S. Treasury Notes
6.25% 03/31/99 1,250 1,245,600
6.50% 10/15/06 350 339,371
U.S. Treasury Notes (CPI)
3.50% 01/15/07 621 610,171
-------------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS
(Cost $3,148,990) 3,100,966
-------------
MORTGAGE PASS-THROUGHS -- 103.2%
Federal Home Loan Mortgage
Corporation COFI ARM
6.09%** 10/01/20 402 394,069
Federal Home Loan Mortgage
Corporation 15 Year(DOUBLE DAGGER)
7.00% 08/10-04/11 3,479 3,424,283
7.50% 08/15/11 500 500,469
Federal Home Loan Mortgage
Corporation
7.00% 10/01/25 443 424,271
7.50% 11/25-06/26 3,888 3,819,617
9.00% 06/01/21 786 832,681
Federal National Mortgage Association
15 Year
7.00% 08/10-06/11 555 545,447
Government National Mortgage
Association
6.50% 10/23-12/23 1,252 1,159,501
7.50% 12/15/25 971 952,073
8.50% 06/26-12/26 4,866 4,986,541
-------------
TOTAL MORTGAGE PASS-THROUGHS
(Cost $17,198,851) 17,038,952
-------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 8.4%
Capstead Securities, Corp. IV,
Series 92-1, Class F
8.40% 04/25/19 85 84,832
Federal National Mortgage
Association, Series 96-54 (PO)
5.85% 04/25/21 514 394,060
Merrill Lynch Trust, Series 36, Class D
9.85% 11/01/18 885 904,774
-------------
TOTAL MULTIPLE CLASS MORTGAGE
PASS-THROUGHS
(Cost $1,428,111) 1,383,666
-------------
ASSET BACKED SECURITIES -- 2.1%
Chase Manhattan Grantor Trust, Series 96-B
6.61% 09/15/02 167 167,079
Chevy Chase Auto Receivables Trust, Series 96-2
5.90% 07/15/03 185 183,484
-------------
TOTAL ASSET BACKED SECURITIES
(Cost $350,877) 350,563
-------------
Par
Maturity (000) Value
-------- ---------- ----------------
MUNICIPAL BONDS -- 3.3%
Los Angeles County Taxable Pension
Obligation
8.62% 06/30/06 $ 500 $ 541,875
(Cost $523,482) ------------
SHORT TERM INVESTMENTS -- 22.6%
Federal Home Loan Bank Discount
Notes
5.40% 04/01/97 2,920 2,915,000
Smith Barney Money Market Fund 817 816,546
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $3,729,518) 3,731,546
------------
PUT OPTIONS -- 0.1%
U.S. Treasury Note, 6.25%
1/31/02, expiring 6/17/97 80 21,750
(Cost $7,688) ------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $26,387,517*) 158.5% 26,169,318
LIABILITIES IN EXCESS OF
OTHER ASSETS (Including
$10,310,998 of investment
purchases payable) (58.5%) (9,659,182)
------ ------------
NET ASSETS (Applicable to 397,400
Investor A shares, 1,230,365
Investor B shares and 5,787
Investor C shares outstanding) 100.0% $ 16,510,136
====== ============
NET ASSET VALUE AND REDEMPTION
PRICE PER INVESTOR A SHARE
($4,016,455 (DIVIDE) 397,400) $10.11
======
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($10.11 (DIVIDE) .955) $10.59
======
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE
(SUBJECT TO A CONTINGENT DEFERRED
SALES CHARGE OF 4.5%) PER
INVESTOR B SHARE
($12,435,189 (DIVIDE) 1,230,365) $10.11
======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE
(SUBJECT TO A CONTINGENT DEFERRED
SALES CHARGE OF 1.0%) PER
INVESTOR C SHARE
($58,492 (DIVIDE) 5,787) $10.11
======
- ----------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 47,203
Gross unrealized depreciation (265,402)
-----------
$ (218,199)
===========
** Rates shown are the rates as of March 31, 1997.
(DOUBLE DAGGER) Principal amount of securities pledged as collateral of $745,000
on 9 long U.S. Treasury Notes and 35 short U.S. Treasury Notes
future contracts expiring June 1997. The value of such contracts
on March 31, 1997 was $5,332,094, thereby resulting in an
unrealized gain of $31,422.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF NET ASSETS
MANAGED INCOME PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 33.8%
U.S. Treasury Bonds
7.00% 12/13/26 $ 8,460 $ 8,097,806
6.62% 02/15/27 900 848,232
U.S. Treasury Notes
6.25% 03/31/99 55,250 55,055,514
#5.87% 11/15/99 38,000 37,396,556
6.37% 03/31/01 33,500 33,111,732
#6.12% 12/31/01 32,465 31,660,514
U.S. Treasury Notes (CPI)
3.37% 01/15/07 46,584 45,797,881
Small Business Administration,
Series 96-20B, Class 1
6.37% 02/01/16 6,503 6,123,676
Small Business Administration,
Series 96-20
6.95% 11/10/16 10,000 9,707,857
Small Business Administration,
Series 97-20B, Class 1
7.10% 02/01/17 2,000 1,939,688
Small Business Association,
Series 96-10C
7.35%** 08/10/06 8,700 8,572,219
-------------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS
(Cost $242,241,090) 238,311,675
-------------
MORTGAGE PASS-THROUGHS -- 35.0%
FEDERAL HOME LOAN MORTGAGE
CORPORATION 15 YEAR
6.50% 03/01/11 252 242,648
7.50% 01/10-10/10 2,656 2,662,601
Federal Home Loan Mortgage
Corporation
6.50% 01/26-06/26 3,348 3,119,130
7.00% 11/25-05/06 7,721 7,402,843
7.50% 10/01/20 81,000 81,075,938
7.50% 02/23-09/26 161,430 79,033,910
10.00% 11/15/98 100 109,133
Federal National Mortgage Association
15 Year
7.00% 10/10-06/11 3,460 3,402,584
Federal National Mortgage Association
7.00% 12/01/25 3,399 3,251,461
9.00% 09/20-06/21 4,495 4,763,403
Government National Mortgage
Association
6.50% 10/23-01/24 17,181 15,908,974
7.00% 02/05-03/26 18,209 17,381,115
7.50% 01/23-11/23 22,731 22,283,947
8.50% 07/01-09/01 979 1,004,993
9.00% 06/00-04/01 2,626 2,751,362
9.50% 06/00-12/02 2,409 2,573,789
-------------
TOTAL MORTGAGE PASS-THROUGHS
(Cost $250,539,522) 246,967,831
-------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS -- 3.0%
CAPSTEAD SECURITIES, CORP. IV,
SERIES 92-1, CLASS F
8.40% 04/25/19 252 251,539
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
MULTIPLE CLASS MORTGAGE
PASS-THROUGHS (CONTINUED)
Community Program Loan Trust,
Series 87, Class A4
4.50% 10/01/18 $13,375 $ 11,105,430
Federal National Mortgage
Association, Series 267,
Class 1 (PO)
5.00% 01/25/24 9,220 6,350,377
Federal Home Loan Mortgage
Corporation, Series 1907,
Class LP (PO)
6.65% 06/15/20 2,148 1,211,369
Federal National Mortgage Association,
Series 1993-113, Class B (PO)
6.50% 07/25/23 1,546 967,334
Federal National Mortgage Association,
Series 1996-56, Class E (PO)
5.00% 04/25/23 1,950 993,716
-------------
TOTAL MULTIPLE CLASS
MORTGAGE PASS-THROUGHS
(Cost $22,370,196) 20,879,765
-------------
ASSET BACKED SECURITIES -- 15.1%
Associates Manufactured Housing
Pass-Through, Series 96-1,
Class B
8.00% 03/15/27 1,500 1,490,859
CIT Group Securitization Corp.,
Series 95-2, Class B
7.65% 05/15/26 3,950 3,632,148
Daimler-Benz Vehicle Trust,
Series 1996, Class A
5.85% 07/20/03 14,985 14,874,654
Discover Card Master Trust I,
Series 96-4, Class A
5.81%** 10/16/13 13,950 14,224,641
Equicon Home Equity Loan Trust,
Series 93-1, Class I (IO)
4.66% 02/13/13 17,803 517,385
Equivantage Home Equity Loan Trust
Series, 1996-1, Class A
6.55% 10/25/25 4,146 4,040,188
First Chicage Master Trust II,
Series 92, Class A
6.25% 08/15/99 8,793 8,784,402
Green Tree Financial Corp.,
Series 97-1, Class B1
7.23% 03/02/28 5,300 5,161,703
Green Tree Financial Corp.,
Series 95-7, Class B1
7.35% 11/15/26 3,925 3,835,461
Green Tree Financial Corp.,
Series 97-2, Class A7
7.62% 04/15/27 5,067 4,962,493
Green Tree Financial Corp.,
Series 96-7, Class A6
7.65% 10/15/27 4,725 4,624,594
Green Tree Financial Corp.,
Series 96-5, Class A6
7.75% 07/15/27 7,450 7,463,969
7.75% 06/15/21 4,450 4,456,953
Green Tree Financial Corp.,
Series 94-B, Class A
7.85% 07/15/04 1,399 1,407,351
Green Tree Financial Corp.,
Series 96-2, Class B2
7.90% 04/15/27 2,500 2,378,125
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
STATEMENT OF NET ASSETS
MANAGED INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
ASSET BACKED SECURITIES (CONTINUED)
Green Tree Financial Corp.,
Series 96-8, Class B1
7.95% 01/01/05 $ 3,000 $ 2,990,625
Green Tree Financial Corp.,
Series 96-5, Class A7
8.25% 07/15/27 5,184 5,364,630
New York City Tax Lien Trust
6.81% 05/25/05 3,920 3,915,243
Nissan Auto Receivable Grantor Trust
6.10% 08/15/01 6,135 6,115,248
Standard Credit Card Master Trust,
Series 95-1, Class A
8.25% 01/07/07 5,900 6,240,271
-------------
TOTAL ASSET BACKED SECURITIES
(Cost $108,194,560) 106,480,943
-------------
CORPORATE BONDS -- 27.7%
FINANCE -- 13.2%
AFC Capital Trust I
8.20% 02/03/27 7,800 7,645,214
Associates Corp., N.A.
7.46% 03/28/00 4,000 4,051,492
Bank Hawaii Capital
8.25% 12/15/26 1,900 1,841,169
Barnett Capital Trust I
#8.06% 12/01/26 5,950 5,740,801
BT Capital Trust A
7.90% 01/15/27 6,700 6,257,755
Equitable Life Assurance Society
7.70% 12/01/15 3,500 3,362,791
Finova Capital Corp.
7.40% 05/06/06 4,350 4,302,302
First Security Capital I
8.41% 12/15/26 3,100 3,062,377
Household International Corp.
6.00% 03/15/99 5,000 4,931,250
Keycorp Institute Capital-A
7.82% 12/01/26 6,600 6,208,186
Liberty Mutual Co(DOUBLE DAGGER)
8.50% 05/15/25 4,250 4,327,699
Marshall & Ilsley
7.65% 12/01/26 2,500 2,308,779
MBNA Capital I
8.27% 12/01/26 3,000 2,872,033
Mellon Capital II
7.99% 01/15/27 6,350 6,124,097
Metropolitan Life Insurance Co.
6.30% 11/01/03 3,950 3,716,080
Morgan Stanley Group, Inc.
7.50% 09/01/99 5,000 5,087,500
Paine Webber, Inc.
6.31% 07/22/99 5,000 4,918,900
Salomon, Inc.
8.90% 02/15/00 2,500 2,612,215
U.S. Bancorp Capital Sec.
8.27% 12/15/26 4,400 4,313,924
US Bancorp (PAT)
5.71%** 11/15/99 9,800 9,802,568
-------------
93,487,132
-------------
INDUSTRIAL -- 10.4%
Burlington Industries
7.25% 09/15/05 2,000 1,906,914
Burlington Northern
7.00% 12/15/25 2,000 1,775,779
Coca-Cola Enterprises
5.71% 03/18/37 8,275 8,246,038
Par
Maturity (000) Value
-------- ---------- ----------------
CORPORATE BONDS (Continued)
INDUSTRIAL (CONTINUED)
Georgia Pacific
8.62% 05/15/25 $ 5,000 $ 4,946,226
GMAC Pass-through Trust
6.50% 01/17/00 5,050 4,983,252
Ikon Capital Resources
6.93% 06/07/99 7,300 7,314,068
ITT Corp.
6.75% 11/15/03 7,795 7,378,011
7.37% 11/15/15 1,795 1,595,457
7.75% 11/15/25 5,150 4,515,312
Mobile Energy Services Co.
8.66% 01/01/17 2,071 2,063,068
News America Holdings, Inc.
7.75% 12/01/45 6,290 5,645,275
RJR Nabisco, Inc.
6.85% 06/15/05 4,550 4,339,104
7.05% 07/15/07 1,950 1,862,250
7.55% 06/15/15 4,800 4,584,467
Time Warner Entertainment
7.25% 09/01/08 2,755 2,616,330
Time Warner Pass-through,
Series 144A
6.10% 12/30/01 7,300 6,842,642
Union Pacific Resources
7.50% 02/28/45 3,000 2,836,842
-----------
73,451,035
-----------
UTILITY -- 0.8%
CSW Energy
6.87% 10/01/01 2,250 2,205,269
Pennsylvania Power & Light Co.
9.37% 07/01/21 1,000 1,076,000
Texas Utilities Electric Co.
7.87% 04/01/24 2,925 2,800,607
-------------
6,081,876
-------------
YANKEE -- 3.3%
Fairfax Financial
8.30% 04/15/26 4,400 4,371,472
Israel Electric Corp., LTD
7.87% 12/15/26 2,900 2,788,529
London Life Insurance Co.
6.87% 09/15/05 3,000 2,862,864
Quebec Province
7.12% 02/09/24 8,950 8,089,836
Reliance Industries
9.37% 04/01/97 2,470 2,593,268
Tenaga Nasional
7.50% 11/01/25 1,830 1,708,067
Vattenfall Treasury
6.00% 06/10/98 1,100 1,093,657
-------------
23,507,693
-------------
TOTAL CORPORATE BONDS
(Cost $200,762,233) 196,527,736
-------------
MUNICIPAL BONDS -- 2.1%
Los Angeles County Taxable
Pension Obligation
8.30% 06/30/02 2,000 2,097,500
8.62% 06/30/06 8,300 8,995,125
6.97% 06/30/08 3,855 3,700,800
-------------
TOTAL MUNICIPAL BONDS
(Cost $14,628,793) 14,793,425
-------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF NET ASSETS
MANAGED INCOME PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
COMMERCIAL MORTGAGE-BACKED
SECURITIES -- 2.3%
Commercial Mortgage Acceptance
Corp., Series 1996, C2, Class A
6.29%** 09/15/23 $ 6,516 $ 6,431,427
CS First Boston, Series 95, Class C
7.45% 11/25/27 2,000 1,967,500
Merrill Lynch Mortgage Investors, Inc.,
Series 95-C, Class D
7.86%** 05/25/15 2,200 2,200,451
Merrill Lynch Mortgage Investors, Inc.,
Series 96-C1, Class A2
7.24% 04/25/28 4,713 4,679,862
Morgan Stanley, Series 95, Class D
8.25% 08/15/27 1,000 1,018,662
-------------
TOTAL COMMERCIAL
MORTGAGE-BACKED SECURITIES
(COST $16,448,014) 16,297,902
-------------
PUT OPTIONS -- 0.2%
U.S.Treasury Note, 6.25% 1/31/02,
expiring 6/17/97 3,830 1,065,238
(Cost $368,039) -------------
SHORT TERM INVESTMENTS -- 3.3%
Federal Home Loan Bank Notes
5.32% 04/10/97 8,000 7,920,000
Smith Barney Money Market Fund 15,629 15,629,155
-------------
TOTAL SHORT TERM INVESTMENTS
(Cost $23,556,564) 23,549,155
-------------
VALUE
----------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $879,109,011*) 122.5% $864,873,670
LIABILITIES IN EXCESS OF
OTHER ASSETS (Including
$164,088,940 investments
purchase payable) (22.5%) (158,836,633)
------ ------------
NET ASSETS (Applicable to 48,610,157
Institutional shares, 20,150,341
Service shares and 1,389,605
Investor A shares outstanding) 100.0% $706,037,037
====== ============
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND INVESTOR A SHARE
($706,037,037 (DIVIDE) 70,150,103) $10.06
======
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $10.06
======
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($10.06 (DIVIDE) .955) $10.53
======
- --------------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 1,956,245
Gross unrealized depreciation (16,191,586)
------------
$(14,235,341)
============
** Rates shown are the rates as of March 31, 1997.
(DOUBLE DAGGER) Principal amount of securities pledged as collateral of
$2,550,000 on 1,188 short U.S. Treasury Notes and 84 short U.S.
Treasury Bonds future contracts expiring June 1997. The value of
such contracts on March 31, 1997 was $134,340,375, thereby
resulting in an unrealized gain of $3,402,006.
# Total or partial securities on loan.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
SCHEDULE OF INVESTMENTS
INTERNATIONAL BOND PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
FOREIGN BONDS -- 89.5%
AUSTRALIA -- 7.5%
Australian Government Bond
8.75% 01/15/01 $ 2,340 $ 1,919,977
9.75% 03/15/02 1,100 939,369
------------
2,859,346
------------
Canada -- 5.9%
Nav Canada
6.45% 06/01/04 1,500 1,075,675
Province of Ontario Global Bond
7.50% 01/19/06 1,500 1,134,967
------------
2,210,642
------------
DENMARK -- 7.3%
Danske Kredit
8.00% 10/01/29 10,000 1,573,341
Kingdom of Denmark
7.00% 12/15/04 7,530 1,222,637
------------
2,795,978
------------
FRANCE -- 4.5%
France O.A.T. Principal
0.00% 10/25/08 18,500 1,664,983
------------
Germany -- 18.7%
Bayerische Hypotheken Bank
6.00% 09/13/00 2,000 1,253,597
DEPFA - Bank
5.00% 02/22/01 1,800 1,094,460
Federal National Mortgage
Association Global Bond
6.00% 08/23/00 1,500 947,019
Federal Rebublic of Germany
7.25% 10/21/02 2,350 1,554,691
Republic of Deutschland
6.25% 04/26/06 1,190 735,760
Treuhandanstalt
7.37% 12/02/02 1,700 1,129,664
Westdeutsche Landbank
6.25% 09/15/03 1,100 696,733
------------
7,411,924
------------
ITALY -- 8.7%
Bayerische Vereinsbank
9.65% 08/04/00 2,740,000 1,746,139
European Bank Reconstruction &
Development
9.75% 07/28/00 2,500,000 1,598,815
------------
3,344,954
------------
JAPAN -- 17.0%
Asian Development Bank
3.12% 06/29/05 190,000 1,628,528
Austria Republic
6.25% 10/16/03 115,000 1,170,504
European Investment Bank
3.00% 09/20/06 150,000 1,264,454
Interamerican Development Bank
6.00% 10/30/01 135,000 1,303,115
Japan Development Bank
6.50% 09/20/01 90,000 883,753
KFW International Finance, Inc.
6.00% 11/29/99 50,000 456,861
------------
6,707,215
------------
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
SPAIN -- 0.4%
Spanish Government Bonds
11.30% 01/15/02 $180,000 $ 1,518,358
------------
SWEDEN -- 6.7%
Sweden Government Bond
10.25% 05/05/00 7,900 1,186,689
13.00% 06/15/01 8,200 1,366,841
------------
2,553,530
------------
UNITED KINGDOM -- 12.8%
Abbey National Treasury PLC
8.00% 04/02/03 600 990,701
Bayerische Landesbank
7.87% 12/07/06 1,100 1,794,798
Halifax Building Society PLC
6.50% 02/16/04 450 685,657
United Kingdom Treasury Bonds
8.50% 12/07/05 900 1,561,465
------------
5,032,621
------------
TOTAL FOREIGN BONDS
(Cost $38,132,216) 36,099,551
------------
SHORT TERM INVESTMENTS -- 10.5%
Federal National Mortgage Association
Discount Notes
6.50% 04/01/97 4,220 4,220,000
(Cost $4,220,000) ------------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $42,352,216*) $ 40,319,551
============
- ------------------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 1,059,994
Gross unrealized depreciation (3,092,659)
-----------
$(2,032,665)
===========
** In local currency.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF ASSETS AND LIABILITIES
INTERNATIONAL BOND PORTFOLIO
MARCH 31, 1997 (UNAUDITED)
ASSETS
Investments at value (Cost $42,352,216) ..................... $40,319,551
Cash denominated in foreign currencies (Cost $136,203) ...... 135,926
Cash ........................................................ 12,083
Interest receivable ......................................... 1,073,279
Investments sold receivable ................................. 2,707,428
Capital shares sold receivable .............................. 125,590
Net unrealized appreciation on
forward foreign currency contracts ........................ 421,617
Prepaid expenses ............................................ 14,268
-----------
TOTAL ASSETS ......................................... 44,809,742
-----------
LIABILITIES
Investments purchased payable ............................... 2,497,350
Accrued expenses payable .................................... 18,087
Net unrealized depreciation on
forward foreign currency contracts ........................ 527,368
Distributions payable ....................................... 182,806
-----------
TOTAL LIABILITIES .................................... 3,225,611
-----------
NET ASSETS (Applicable to 3,194,722 Institutional shares,
685,354 Service shares, 27,559 Investor A shares,
29,357 Investor B shares, and 4,633 Investor C shares
outstanding) ................................................ $41,584,131
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($33,704,298 (DIVIDE) 3,194,722) .... $10.55
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($7,230,533 (DIVIDE) 685,354) ............. $10.55
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($290,749 (DIVIDE) 27,559) ............. $10.55
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($10.55 (DIVIDE) 0.950) ..................................... $11.11
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($309,670 (DIVIDE) 29,357) ............. $10.55
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($48,881 (DIVIDE) 4,633) ............... $10.55
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
SCHEDULE OF INVESTMENTS
TAX-FREE INCOME PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- -------- ---------------
MUNICIPAL BONDS -- 98.4%
ALABAMA -- 2.6%
Courtland Ind. Dev. Bd. (Champion
Int. Corp.) Ser. 1992
7.20% 12/01/13 $ 500 $ 539,375
Mobile G.O., Ser. 1996
5.00% 02/15/16 1,000 913,750
-------------
1,453,125
-------------
ARIZONA -- 0.4%
Phoenix G.O., Ser. 1992
6.37% 07/01/13 200 210,250
-------------
COLORADO -- 4.5%
Arapahoe Cnty. Cap. Imp. Trust Fund
Ser. 1986
7.16% 08/31/04 900 585,000
Denver City & Cnty. Aprt. Rev.
Ser. 1991D
7.00% 11/15/25 1,000 1,036,250
Denver City & Cnty. Aprt. Rev.
Ser. 1992
6.75% 11/15/13 500 521,875
Jefferson Cnty. Sch. Dist. G.O.,
Ser. 1992
6.00% 12/15/12 300 309,375
-------------
2,452,500
-------------
CONNECTICUT -- 3.7%
Mashantucket West Pequot Tribe
Spec. Rev. Ser. 1996A-144A
6.40% 09/01/11 2,000 2,030,000
-------------
FLORIDA -- 2.3%
Florida Dep. of Trans. G.O., Ser. 1991
6.25% 07/01/07 400 425,500
Jacksonville Elec. Auth. Rev. Ser. 1997
5.50% 10/01/06 300 309,000
Palm Beach Cnty. Sld. Wst. Auth.
Rev. Ser. 1984A
8.62% 07/01/04 500 519,495
-------------
1,253,995
-------------
GEORGIA -- 2.1%
Georgia G.O., Ser. 1992B
6.30% 03/01/10 310 336,737
Georgia Mun. Elec. Auth. Rev.
Ser. 1992B
6.12% 01/01/14 400 410,000
Gwinnett Cnty. G.O., Ser. 1992
6.00% 01/01/10 400 417,000
-------------
1,163,737
-------------
HAWAII -- 3.4%
Hawaii Harbor Rev. Ser. 1994
6.20% 07/01/08 1,785 1,874,250
-------------
ILLINOIS -- 2.0%
Illinois Ed. Fac. Auth. Rev. Shedd
Aquar. Soc. Ser. 1987A
8.62% 07/01/17 560 575,562
Winnebago & Boone Cnty. G.O.,
(Sch. Dist. No. 205) Ser. 1992C
5.90% 02/01/05 500 525,625
-------------
1,101,187
-------------
Par
Maturity (000) Value
-------- ---------- ----------------
INDIANA -- 1.9%
Indianapolis Int. Apt. Auth. (Federal
Express Corp. Prj.) Ser. 1994
7.10% 01/15/17 $1,000 $ 1,060,000
-------------
KANSAS -- 1.5%
Johnson Cnty. G.O., Internal Insp.
Ser. 1992A
6.00% 09/01/07 400 419,500
Kansas Dept. of Trans. Ser. 1994A
6.00% 09/01/12 400 410,000
-------------
829,500
-------------
KENTUCKY -- 0.6%
Jefferson Cnty. Cap. Prj. Corp.
(Lease Rev.) Ser. 1993A
5.65% 08/15/03 300 312,000
-------------
LOUISIANA -- 2.1%
Orleans Parish Sch. Brd. Ref.
Ser. 1995B
5.20% 02/01/14 1,200 1,132,500
-------------
MARYLAND -- 3.0%
Baltimore Port Fac. Rev.
(E.I. du Pont Co.) Ser. 1984A
6.50% 10/01/11 100 107,250
Maryland Energy Fin. Admin. Sld.
Wst. Disp. Rev. (Rsc. Rec. Imps.)
Ser. 1996
6.45% 12/01/16 1,500 1,535,625
-------------
1,642,875
-------------
MASSACHUSETTS -- 5.5%
Massachusetts Mun. Whsl. Elec. Co.
Pwr. Sply. Sys. Ser. 1996
5.45% 07/01/18 1,500 1,391,250
Massachusetts St. Hlth. & Ed. Fac.
Auth. Rev. Boston Coll. Ser. 1993K
5.25% 06/01/23 1,800 1,649,250
-------------
3,040,500
-------------
MICHIGAN -- 1.7%
Michigan St. Trunk Line Rev.
Ser. 1992B
5.50% 10/01/21 1,000 942,500
-------------
MINNESOTA -- 1.2%
Southern Minnesota Mun. Pwr. Agcy.
Pwr. Sply. Sys. Rev. Ser. 1986C
5.00% 01/01/17 750 669,375
-------------
MISSOURI -- 3.5%
LAKE OF THE OZARKS CNTY. REV.
(MO. BDG. SYS.) SER. 1996
6.25% 12/01/16 2,000 1,952,500
-------------
NEW JERSEY -- 2.6%
South Jersey Port Corp. Rev.
Mar. Term. Ser. 1993
5.60% 01/01/23 1,500 1,438,125
-------------
NEW MEXICO -- 0.2%
Farmington Pol. Ctrl. Rev. Bonds
(Arizona Pub. Ser. Co.)
Ser. 1994B FRDD
3.85%** 04/01/97 100 100,000
-------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
SCHEDULE OF INVESTMENTS
TAX-FREE INCOME PORTFOLIO (CONTINUED)
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
MMUNICIPAL BONDS (CONTINUED)
NEW YORK -- 16.8%
New York City G.O., Ser. 1995A
6.00% 08/01/05 $1,000 $ 1,022,500
New York City G.O., Ser. 1996A
6.00% 08/01/05 1,000 1,022,500
New York City Ind. Dev. Agcy. Spec.
Fac. Rev. (Term. One Group
Assoc. Prj.) Ser. 1994
6.00% 01/01/15 1,000 976,250
New York City Ind. Dev. Agcy.
(Terminal One Group Assn. Prj.)
Ser. 1994
6.00% 01/01/08 360 368,100
New York St. Hsg. Fin. Agcy. Rev.
Ser. 1996A
6.37% 11/01/04 2,000 2,085,000
New York St. Urb. Dev. Corp. Rev.
(Correc. Fac.) Ser. 1993
5.62% 01/01/07 1,000 1,032,500
New York St. Energy Research &
Dev. Poll. Ctrl. RB (New York St.
Elec. & Gas Prj.) Ser. 1994C FRDD
3.65%** 04/01/97 2,700 2,700,000
-------------
9,206,850
-------------
NORTH CAROLINA -- 6.8%
North Carolina Eastern Mun. Pwr.
Agcy. Ser. 1993B
6.00% 01/01/22 2,000 2,015,000
North Carolina Mun. Pwr. Agcy. Rev.
(Catawba Elec. Prj.) Ser. 1988
7.50% 01/01/17 1,350 1,399,518
North Carolina Mun. Pwr. Agcy. Rev.
(Catawba Elec. Prj.) Ser. 1992A
6.00% 01/01/10 300 313,125
-------------
3,727,643
-------------
OHIO -- 2.3%
Cleveland-Cuyahoga Cnty Port.
Auth. Rev. Ser. 1997
6.00% 03/01/07 750 732,188
Columbus Refuse Coal Fired Plant
5-E-L Ser. 1991
6.62% 09/15/01 190 205,200
Ohio Wtr. Dev. Auth. Rev. Clean Wtr.
Ser. 1992
5.65% 12/01/05 300 310,500
-------------
1,247,888
-------------
OREGON -- 0.6%
Portland Swr. Sys. Rev. Ser. 1992A
6.00% 10/01/12 300 310,875
-------------
PENNSYLVANIA -- 7.8%
Beaver Cnty. G.O., Ser. 1996A
5.75% 10/01/15 1,000 1,001,250
Delaware Cnty. Mercy Hosp. Rev.
Ser. 1996
5.75% 12/15/20 2,400 2,241,000
Philadelphia Mun. Auth. Rev.
Ser. 1993D
6.12% 07/15/08 1,000 1,056,250
-------------
4,298,500
-------------
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
MPUERTO RICO -- 4.6%
Puerto Rico Tel. Auth. Rev. Reg.
Linked Savrs. & Ribs. Ser. 1993
5.25% 01/25/07 $2,500 $ 2,515,625
-------------
RHODE ISLAND -- 0.9%
Rhode Island St. Hlth. & Ed. Bldg.
Corp. Rev. Ser. 1996
5.50% 05/15/16 500 478,125
-------------
SOUTH CAROLINA -- 3.5%
Piedmont Mun. Pwr. Agcy. Elec.
Rev. Ser. 1985B
6.25% 01/01/18 500 512,500
Piedmont Mun. Pwr. Agcy. Elec.
Rev. Ser. 1996
6.55% 01/01/16 1,000 1,002,090
South Carolina Pub. Ser. Auth. Rev.
(Santee Cooper Prj.) Ser. 1991D
6.50% 07/01/14 100 105,500
Spartanburg Wtr. Sys. Imp. Rev.
Ser. 1992
6.20% 06/01/09 300 313,875
-------------
1,933,965
-------------
SOUTH DAKOTA -- 1.0%
South Dakota Lease Rev. Tran.
Cert. Ser. 1993A
6.37% 09/01/05 500 535,625
-------------
TEXAS -- 4.3%
Brazos River Auth. Pol. Ctrl. Rev. Coll.
(Texas Util. Elec. Co. Prj.) Ser. 1989
8.25% 01/01/19 1,000 1,066,250
Matagorda Cnty. Nav. Dist. #1
Ser. 1989B
7.70% 02/01/19 700 728,616
University of Texas (Univ. Rev.)
Ser. 1991A
7.00% 08/15/07 500 550,825
-------------
2,345,691
-------------
UTAH -- 0.2%
Salt Lake City Hos. Rev. Ser. 1988A
8.12% 05/15/15 100 116,250
-------------
VERMONT -- 1.9%
Vermont G.O., (Pub. & Sch. Imp.)
Ser. 1990A
6.75% 02/01/08 1,000 1,071,250
-------------
VIRGINIA -- 1.7%
Hampton G.O., Ser. 1995
6.00% 01/15/08 400 421,000
Virginia Hsg. Dev. Auth. Rev.
(Commonwealth Mtg.) Ser. 1995A-1
6.70% 07/01/05 500 523,125
-------------
944,125
-------------
WISCONSIN -- 0.5%
Milwaukee Met. Swr. Dist. G.O.,
Ser. 1992A
6.12% 10/01/03 250 266,563
-------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
SCHEDULE OF INVESTMENTS
TAX-FREE INCOME PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
MUNICIPAL BONDS (CONTINUED)
WYOMING -- 0.7%
Unita Cnty. Pol. Ctrl. Rev. (Chevron
USA Inc. Prj.) Ser. 1993 FRDD
3.80%** 04/01/97 $ 400 $ 400,000
-----------
TOTAL MUNICIPAL BONDS
(Cost $53,350,700) 54,057,894
-----------
SHORT TERM INVESTMENTS -- 1.6%
Smith Barney Tax-Free Money
Market Fund 882 882,304
(Cost $882,304) -----------
TOTAL INVESTMENTS IN
SECURITIES -- 100.0%
(Cost $54,233,004*) $54,940,198
===========
- -----------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $ 890,511
Gross unrealized depreciation (183,317)
---------
$ 707,194
=========
** Rates shown are the rates as of March 31, 1997, and the maturities shown
are the longer of the next interest readjustment date or the date the
principal amount can be recovered through demand.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF NET ASSETS
TAX-FREE INCOME PORTFOLIO
MARCH 31, 1997 (UNAUDITED)
ASSETS
Investments at value (Cost $54,233,004) .............. $54,940,198
Interest receivable .................................. 766,112
Investments sold receivable .......................... 2,758,277
Capital shares sold receivable ....................... 11,000
Prepaid expenses ..................................... 18,197
-----------
TOTAL ASSETS .................................. 58,493,784
-----------
LIABILITIES
Investments purchased payable ........................ 2,481,310
Capital shares redeemed payable ...................... 605
Accrued expenses payable ............................. 60,502
Distributions payable ................................ 228,531
-----------
TOTAL LIABILITIES ............................. 2,770,948
-----------
NET ASSETS (Applicable to 825,772
Institutional shares, 3,831,016
Service shares, 443,251 Investor A shares,
28,678 Investor B shares and 27 Investor C
shares outstanding ................................... $55,722,836
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER INSTITUTIONAL SHARE ($8,971,861 (DIVIDE) 825,772) $10.86
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SERVICE SHARE ($41,623,260 (DIVIDE) 3,831,016) ... $10.86
======
NET ASSET VALUE AND REDEMPTION PRICE
PER INVESTOR A SHARE ($4,815,836 (DIVIDE) 443,251) ... $10.86
======
MAXIMUM OFFERING PRICE PER INVESTOR A SHARE
($10.86 (DIVIDE) 0.960) .............................. $11.31
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 4.5%)
PER INVESTOR B SHARE ($311,584 (DIVIDE) 28,678) ...... $10.86
======
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
(subject to a maximum contingent
deferred sales charge of 1.0%)
PER INVESTOR C SHARE ($295 (DIVIDE) 27) .............. $10.86
======
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
STATEMENT OF NET ASSETS
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
MUNICIPAL BONDS -- 98.5%
PENNSYLVANIA -- 98.2%
Allegheny Cnty. G.O. Ser. 91C-38
6.20% 09/01/01 $ 250 $ 264,062
Allegheny Cnty. Hosp. Dev. Auth. Rev.
(Children's Hosp. Prj.) Ser. 90A
7.00% 07/01/06 500 524,375
Allegheny Cnty. Res. Fin. Auth. Mtg.
Rev. (Single Family Mtg. Prj.)
Ser. 94Y
6.25% 05/01/17 385 392,219
Beaver Cnty G.O. Ser. 96A
5.80% 10/01/17 3,500 3,504,375
Cambria Cnty. Unltd. Tax G.O. Ser. 91
8.25% 06/01/00 500 531,250
Cambria Twp. Wtr. Auth. Ind. Rev. Ser. 93A
6.00% 12/01/02 1,000 1,027,500
Central Bucks Sch. Dist. Unltd. Tax G.O.
Ser. 94A
6.70% 11/15/09 500 548,750
Chester Cnty. Unltd. Tax G.O. Ser. 91
6.70% 12/15/04 385 413,875
Crawford Central Sch. Dist. Unltd. Tax
G.O. Ser. 95
5.75% 02/15/11 1,585 1,604,812
Dauphin Cnty. Gen. Auth. Rev.
(A-F Sch. Dist. Pooled Fin. Prog.)
Ser. 86
5.50% 06/01/07 550 545,187
6.85% 06/01/09 800 848,000
Deer Lakes Sch. Dist. Unltd. Tax G.O.
Ser. 95
6.35% 01/15/14 1,000 1,040,000
6.45% 01/15/19 1,300 1,352,000
Delaware Cnty Auth. Rev. (Mercy Hlth.
Corp. Prj.) Ser. 96
5.75% 12/15/20 3,000 2,801,250
Delaware Cnty. Mem. Hosp. Auth.
Rev. Prj. Ser. 95
5.50% 08/15/19 3,000 2,857,500
Erie Cnty. Prison Auth. Lease Rev.
Ser. 91
6.25% 11/01/01 500 530,000
Harrisburg Auth. Lease Rev. Ser. 91
6.50% 06/01/04 500 535,625
Indiana Cnty Indl Dev Auth Polltn Ctrl
Rev. Bond (N. Y. St. Elec. & Gas Corp.)
Ser. 95A
6.00% 06/01/06 1,000 1,055,000
Lancaster Cnty. Hosp. Auth. Rev.
(Hlth. Center-Masonic Homes Prj.)
Ser. 94
5.30% 11/15/08 500 486,875
Lebanon Cnty. Hosp. Auth. Rev. (Good
Samaritan Hosp. Prj.) Ser. 93
5.55% 11/15/04 355 352,781
Ligonier Valley Sch. Dist. Unltd. Tax
G.O. Ser. 94
5.65% 03/01/14 2,000 1,990,000
Montgomery Cnty. Hghr. Ed. & Hlth.
Auth. Rev. (Beaver Coll.) Ser. 96
5.75% 04/01/12 1,690 1,679,437
Moon Twp. Wtr. & Swr. Auth. Rev.
Ser. 94
6.70% 12/01/19 1,000 1,055,000
New Garden Twp. Swr. Auth. Rev. Ser. 91
7.00% 03/01/15 420 450,450
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
PENNSYLVANIA (CONTINUED)
Northampton Cnty. Hghr. Ed. Auth. Rev.
(Moravian Coll.) Ser. 94
6.10% 07/01/12 $1,950 $ 2,018,250
Northampton Cnty. Ind. Dev. Auth.
Polltn. Ctrl. Rev. (Metropolitan
Edison Co. Prj.) Ser. 95A
6.10% 07/15/21 1,000 1,018,750
Northumberland Cnty. Auth. Comwlth.
Lease Rev. Ser. 91
6.25% 10/15/09 2,500 2,646,875
Pa. Hsg. Fin. Agcy. Amt. Single Family
Ser. 56A
6.05% 10/01/16 2,500 2,484,375
Parkland Sch. Dist. Rev. Ser. 96
5.75% 09/01/14 2,910 2,910,000
Pennsbury Sch. Dist. Unltd. Tax G.O.
Ser. 94
6.65% 08/15/09 685 754,356
Pennsylvania Cert. Part. Bond
Ser. 93A
5.25% 07/01/11 3,290 3,170,737
Pennsylvania Comwlth. Tpke. Rev.
Ser. 91L
6.50% 06/01/04 445 478,931
Pennsylvania Convention Ctr. Rev.
Bond Ser. 94A
6.60% 09/01/09 1,000 1,090,000
Pennsylvania Fin. Auth. Rev.
(Mun. Cap. Imp. Prj.) Ser. 93
6.60% 11/01/09 3,260 3,447,450
Pennsylvania Hghr. Ed. Fac. Auth. Rev.
(Duquesne Univ.) Ser. 91C
6.75% 04/01/20 1,000 1,051,250
Pennsylvania Hghr. Ed. Fac. Auth. Rev.
(Philadelphia Coll. of Textiles &
Science) Ser. 93
5.15% 02/01/04 1,230 1,194,637
Pennsylvania Hsg. Fin. Agcy. Rev.
Bond (Single Family Mtg.)
Series 1994-39B
6.87% 10/01/24 1,500 1,573,125
Pennsylvania Hsg. Fin. Agcy. Rev.
(Rental Hsg) Ser. 92
6.40% 07/01/12 500 512,500
Pennsylvania Ifra. Auth. Rev.
(Pennvest Pool Prog.) Ser. 94
6.00% 09/01/06 1,930 2,057,863
Pennsylvania Ifra. Invest. Auth. Rev.
(Pennvest Prj.) Ser. 90B
6.80% 09/01/10 2,000 2,190,000
Pennsylvania Intrgov. Coop. Auth.
Spec. Tax Rev. (City of Philadelphia
Fdg. Prog.) Ser. 92
6.00% 06/15/02 3,400 3,574,250
Pennsylvania Intrgov. Coop. Auth.
Spec. Tax Rev. (City of Philadelphia
Fdg. Prog.) Ser. 93
5.75% 06/15/15 1,000 977,500
Pennsylvania Intrgov. Coop. Auth.
Spec. Tax Rev. (City of Philadelphia
Fdg. Prog.) Ser. 94
7.00% 06/15/04 500 558,750
Pennsylvania St. G.O. Unltd. Ser. 97A
5.12% 03/15/15 1,500 1,395,000
Pennsylvania St. Hghr. Ed. Fac. Rev.
(Drexel Univ.) Ser. 90
7.25% 05/01/10 500 539,375
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF NET ASSETS
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
MUNICIPAL BONDS (CONTINUED)
PENNSYLVANIA (CONTINUED)
Pennsylvania St. Hghr. Ed. Fac. Rev.
(Susquehanna Univ.) Ser. 90
6.90% 03/01/02 $ 750 $ 773,798
Pennsylvania St. Pub. Sch. Bldg.
Auth. Rev. (Mid Valley Sch. Dist. Prj.)
Ser. 92D
6.25% 01/01/07 500 535,000
Pennsylvania St. Tpke. Comnwlth. Oil
Franchise Tax Rev. Ser. 94A
5.87% 12/01/08 500 520,625
Pennsylvania St. Tpke. Comnwlth.
Tpke. Rev. Ser. 92P
6.00% 12/01/09 500 520,625
Pennsylvania St. Unltd. Tax G.O.
Ser. 93A
5.00% 07/01/15 3,000 2,715,000
Pennsylvania Unltd. Tax G.O. Ser. 94A
6.50% 11/01/05 250 270,000
Philadelphia Prk Auth Rev. Ser. 97
5.40% 09/01/15 1,000 953,750
Philadelphia Auth. for Ind. Dev. Rev.
(Nat. Bd. of Med. Examiners Prj.)
Ser. 92
6.75% 05/01/12 500 533,125
Philadelphia G.O. Ser. 94B
5.90% 11/15/09 2,600 2,700,750
Philadelphia Gas Works Asset Gtd.
Rev. Ser. 94
5.25% 08/01/15 1,500 1,363,125
Philadelphia Mun. Auth. Rev. Ser. 93A
5.62% 11/15/14 2,000 1,962,500
Philadelphia Mun. Auth. Rev. Ser. 93D
6.12% 07/15/08 500 528,125
Philadelphia Sch. Dist. Unltd. Tax G.O.
Ser. 91A
6.70% 07/01/99 250 262,188
Philadelphia Wtr. & Waste Wtr. Rev.
Ser. 93
5.50% 06/15/07 1,250 1,281,250
Philadelphia Wtr. & Waste Wtr. Rev.
Ser. 95
6.75% 08/01/03 500 550,625
6.25% 08/01/11 750 802,500
Pittsburgh G.O. Ser. 92D
6.12% 09/01/17 500 519,375
Pittsburgh G.O. Ser. 95A
5.25% 03/01/11 1,000 968,750
Ringgold Sch. Dist. Rev. Ser. 95
6.20% 02/01/19 500 520,000
Schuylkill Redev. Auth. Comnwlth.
Lease Rev. Ser. 91A
7.12% 06/01/13 1,250 1,373,438
Southeastern Pennsylvania Trans.
Auth. Spec. Rev. Ser. 95A
5.87% 03/01/09 1,230 1,277,663
West Chester Area Sch. Dist. G.O.
Ser. 95
6.20% 09/01/14 1,000 1,052,500
West Mifflin Sanitation Swr. Mun.
Auth. Rev. Ser. 96
5.80% 08/01/26 525 513,188
Westmoreland Cnty. Ind. Dev. Auth.
Rev. (Westmoreland Hlth. Sys. Prj.)
Ser 93A
6.00% 07/01/11 200 204,750
-------------
84,736,947
-------------
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
Puerto Rico -- 0.3%
Puerto Rico Elec. Pwr. Auth.
Rev. Bonds Ser. 91P
6.75% 07/01/03 $ 250 $ 270,313
-------------
TOTAL MUNICIPAL BONDS
(Cost $83,931,576) 85,007,260
-------------
SHORT TERM INVESTMENTS -- 3.2%
Smith Barney Tax Free Money
Market Fund 2,654 2,653,943
Vanguard Pennsylvania Tax-Exempt
Money Fund 100 100,000
-------------
TOTAL SHORT TERM INVESTMENTS
(Cost $2,753,941) 2,753,943
-------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $86,685,517*) 101.7% 87,761,203
LIABILITIES IN EXCESS OF
OTHER ASSETS (1.7%) (1,477,945)
------ -------------
NET ASSETS (Applicable to 469,445
Institutional shares, 3,475,214 Service
shares 3,431,974 Investor A shares
and 919,024 Investor B shares
outstanding) 100.0% $86,283,258
====== ===========
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND INVESTOR A SHARE
($76,724,338 (DIVIDE) 7,376,633) $10.40
======
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $10.40
======
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($10.40 (DIVIDE) .960) $10.83
======
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE
(SUBJECT TO A CONTINGENT DEFERRED
SALES CHARGE OF 4.5%) PER
INVESTOR B SHARE
($9,558,920 (DIVIDE) 919,024) $10.40
======
- ------------------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $1,375,439
Gross unrealized depreciation (299,753)
----------
$1,075,686
==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
STATEMENT OF NET ASSETS
NEW JERSEY TAX-FREE INCOME PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
MUNICIPAL BONDS -- 98.3%
NEW JERSEY -- 91.2%
Absecon Bd. of Ed. G.O., Ser. 92
5.62% 12/15/02 $ 770 $ 792,607
Bergen Cnty. Util. Auth. Wtr. Pol. Ctrl.
Rev. Ser. 92B
5.60% 12/15/03 2,000 2,077,500
Brick Twp. Mun. Util. Auth. Rev.,
Ser. 77
6.75% 12/01/16 1,000 1,110,000
Brigantine G.O., Ser. 92
6.25% 08/01/03 730 783,837
Cherry Hill Township G.O., Ser. 92
6.00% 06/01/06 500 523,750
Dover Township G.O., Ser. 92
6.00% 10/15/03 1,000 1,070,000
Delaware River Joint Toll Bdg. Rev.,
Ser. 92
6.25% 07/01/12 1,400 1,452,500
Edison Township G.O., Ser. 91
6.50% 06/01/04 500 545,000
Essex Cnty. Imp. Auth. Lease Rev.,
Jail & Yth. Hsg. Proj., Ser. 94
6.90% 12/01/14 500 568,750
Essex Cnty. Util. Auth. Sol. Wste. Rev.,
Ser. 96
5.75% 04/01/05 2,000 2,082,500
Evesham Mun. Util. Auth. Rev.,
Ser. 90B
6.80% 07/01/01 1,010 1,017,221
6.85% 07/01/02 1,080 1,087,852
Jersey City Sch. G.O., Ser. 96A
6.00% 10/01/06 1,500 1,591,875
Knowlton Township Bd. of Ed. G.O.,
Ser. 91
6.60% 08/15/11 169 187,167
Lacey Township Wtr. Auth. Rev., Ser. 93
6.00% 12/01/12 1,000 1,035,000
Mercer Cnty. Imp. Rev., Hamilton Bd.
of Ed. Proj., Ser. 92
5.90% 06/01/03 500 525,000
Middlesex Cnty. Import Auth. Rev.,
Ser. 96
5.80% 09/15/13 1,000 990,000
Morristown G.O., Ser. 95
6.40% 08/01/14 500 544,375
New Jersey Econ. Dev. Auth. Rev.,
Invamed Inc. Proj., Ser. 95
6.00% 07/01/06 300 306,000
6.10% 07/01/07 200 204,000
New Jersey Econ. Dev. Auth. Rev.,
Mkt. Trans. Fac. Proj., Ser. 94
5.87% 07/01/11 4,000 4,080,000
New Jersey Econ. Dev. Auth. Rev.,
Performing Arts Ctr. Proj., Ser. 96C
5.75% 06/15/08 3,000 3,116,250
New Jersey Econ. Dev. Auth. Rev.,
Trenton OFC Complex Proj., Ser. 89
6.62% 06/15/01 1,050 1,123,500
New Jersey Econ. Dev. Auth. Rev.,
W.Y. Hldg. Co. Proj., Ser. 95
5.95% 06/01/05 865 869,325
New Jersey Ed. Auth. Rev., Rowan
Coll. Proj., Ser. 96
5.87% 07/01/16 2,185 2,209,581
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
NEW JERSEY (CONTINUED)
New Jersey Hlth. Care Fac. Fin. Auth.
Rev., Cathederal. Hlth. Ctr. Proj.,
Ser. 90
7.25% 02/15/21 $1,000 $ 1,067,500
New Jersey Hlth. Care Fac. Fin. Auth.
Rev., St. Josephs Hosp. Ctr. Proj.,
Ser. 96
5.60% 07/01/07 4,000 4,065,000
New Jersey St. G.O., Ser. 92D
5.90% 02/15/08 3,000 3,131,250
6.00% 02/15/11 2,000 2,125,000
New Jersey St. G.O., Ser. 96
6.00% 07/15/06 3,000 3,213,750
New Jersey St. Hsg. & Mtg. Fin.
Agcy. Rev., Ser. 92A
6.70% 05/01/05 500 527,500
6.70% 11/01/05 1,000 1,055,000
6.95% 11/01/13 750 783,750
New Jersey St. Hwy. Auth. Rev.,
Gard. St. Pkwy., Ser. 92
6.00% 01/01/05 1,350 1,420,875
6.20% 01/01/10 750 804,375
6.25% 01/01/14 500 523,125
New Jersey St. Tpke. Auth. Rev.,
Ser. 91A
6.90% 01/01/14 970 973,405
New Jersey St. Tpke. Auth. Rev.,
Ser. 91C
6.25% 01/01/10 1,350 1,404,000
6.50% 01/01/16 1,000 1,097,500
6.50% 01/01/16 500 535,625
New Jersey St. Trans. Auth. Rev.,
Ser. 95A
5.50% 06/15/11 1,500 1,490,625
New Jersey St. Trans. Auth. Rev.,
Ser. 96B
5.25% 06/15/10 2,000 1,952,500
New Jersey Wstwtr. Rev., Ser. 89B
7.00% 05/15/04 950 1,008,188
New Jersey Wstwtr. Treatment Trust
Rev., Ser. 96C
6.25% 05/15/03 2,500 2,706,250
6.25% 05/15/06 3,000 3,281,250
Newark Bd. of Ed. G.O., Ser. 94
5.87% 12/15/13 1,000 1,018,750
North Bergen Township G.O., Ser. 92
5.90% 08/15/01 500 522,500
North Hudson Swr. Auth. Rev., Ser. 96
6.00% 08/01/05 1,500 1,597,500
North Jersey Wtr. Sply. Rev., Wanaque
Nth. Proj., Ser. 91A
6.50% 11/15/06 510 550,800
Northwest Bergen Cnty. Rev., Ser. 92
5.90% 07/15/06 755 795,581
Ocean Cnty. Util. Auth. Rev., Ser. 95A
6.30% 01/01/12 1,005 1,048,969
Passaic Valley Wtr. Comm. Sply. Rev.,
Ser. 92A
5.95% 12/15/02 500 529,375
Point Pleasant G.O., Ser. 95
5.70% 12/01/03 500 520,000
Port Auth. N.Y. & N.J. Rev., Ser. 95
5.75% 11/01/09 3,275 3,320,031
South Jersey Port. Corp. N.J. Rev.,
Ser. 93
5.60% 01/01/23 1,500 1,441,875
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF NET ASSETS
NEW JERSEY TAX-FREE INCOME PORTFOLIO (CONCLUDED)
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
MUNICIPAL BONDS (CONTINUED)
NEW JERSEY (CONTINUED)
Warren Cnty. Pol. Ctrl. Fin. Auth. Rev.,
Ser. 92B
5.70% 12/01/03 $ 500 $ 527,500
Weehawken Township G.O., Ser.92
6.15% 07/01/04 350 373,188
West Windsor Plainsboro Township
Bd. of Ed. G.O., Ser. 93
5.80% 03/15/06 1,000 1,046,250
Winslow Township Tax G.O., Ser. 92
6.40% 10/01/05 870 933,075
Woodbridge Township G.O., Ser. 92
6.05% 08/15/05 500 525,000
------------
77,810,452
------------
PUERTO RICO -- 7.1%
Puerto Rico Comwlth G.O., Ser. 97
5.37% 07/01/21 3,000 2,857,500
Puerto Rico Elec. Pwr. Auth. Rev.,
Ser. 94S
6.12% 07/01/08 1,000 1,083,750
Puerto Rico Elec. Pwr. Auth. Rev.,
Ser. 94T
5.50% 07/01/20 2,250 2,100,938
------------
6,042,188
------------
TOTAL MUNICIPAL BONDS
(Cost $82,357,336) 83,852,640
------------
SHORT TERM INVESTMENTS -- 3.9%
Smith Barney Tax Free Money
Market Fund 3,301 3,300,810
(Cost $3,300,810) ------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $85,658,146*) 102.2% 87,153,450
Value
----------------
LIABILITIES IN EXCESS OF OTHER
ASSETS (2.2%) $ (1,909,890)
-------- ------------
NETASSETS (Applicable to 7,451,837
Service shares, 79,393
Investor A shares and
37,803 Investor B shares
outstanding) 100.0% $ 85,243,560
====== ============
NET ASSET VALUE AND REDEMPTION
PRICE PER SERVICE AND INVESTOR
A SHARE
($84,817,826 (DIVIDE) 7,531,230) $11.26
======
OFFERING PRICE PER SERVICE
SHARE $11.26
======
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($11.26 (DIVIDE) .960) $11.73
======
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE
(SUBJECT TO A CONTINGENT DEFERRED
SALES CHARGE OF 4.5%) PER
INVESTOR B SHARE
($425,734 (DIVIDE) 37,803) $11.26
======
- -----------------------
* Also cost for Federal Income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $1,654,727
Gross unrealized depreciation (159,423)
----------
$1,495,304
==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
STATEMENT OF NET ASSETS
OHIO TAX-FREE INCOME PORTFOLIO
PAR
AS OF MARCH 31, 1997 (UNAUDITED) MATURITY (000) VALUE
-------- ---------- ----------------
MUNICIPAL BONDS -- 98.3%
OHIO -- 94.4%
Akron Swr. Sys. Rev., Ser. 96
5.87% 12/01/16 $ 500 $ 505,000
Brunswick G.O., Ser. 94
6.30% 12/01/05 210 216,300
Butler Cnty. Hosp. Fac. Rev.,
Middletown Reg. Hosp., Ser. 91
6.75% 11/15/03 50 54,312
Cleveland Apt. Sys. Rev., Ser. 94B
5.70% 01/01/04 150 153,750
Cleveland Packaging Fac. Rev.
Ser. 96
6.00% 09/15/06 500 530,625
Columbus Mun. Apt. Auth. Rev. Port
Columbus Int. Apt. Ser. 94A
6.00% 01/01/04 150 154,687
Columbus Ohio Public Imps., Ser.93
5.35% 09/15/06 600 614,250
Cuyahoga Cnty. Hosp. Rev., Ser. 96
6.00% 01/15/05 500 525,000
Dublin Ohio City Sch. Dist. Ser. 97
5.25% 12/01/14 500 478,750
Fairfield City Sch. Dist. G.O., Ser. 94
7.45% 12/01/14 300 347,625
Franklin Cnty. Health Sys. Rev.
Franciscan Sisters St. Anthony
Proj. Ser. 95 FRDD
3.80%** 04/01/97 400 400,000
Kings Loc. Sch. Dist. G.O., Ser. 94
7.60% 12/01/05 200 224,500
Loveland City Sch. Dist. G.O., Ser. 92
6.65% 12/01/02 145 155,331
Lucas Cnty. G.O., Ser. 96
6.00% 12/01/05 500 533,750
Medina G.O., Ser. 86
7.25% 12/01/03 50 56,062
North Royalton City Sch. Dist. G.O.,
Ser. 94
6.62% 12/01/06 100 111,625
Northwestern Loc. Sch. Dist. G.O.
Wayne & Ashland Cntys., Ser. 94
7.20% 12/01/10 300 350,250
Ohio Air Quality Dev. Auth., Ser. 85A
3.80%** 12/01/15 300 300,000
Ohio G.O., Ser. 95
6.00% 08/01/05 225 239,344
Ohio Hsg. Fin. Agcy. Rev. Res. Mort.,
Ser. 94B-2
6.35% 09/01/04 150 150,375
Ohio Pfc. Higher Ed. Rev., Ser. 92ii-a
5.50% 12/01/07 400 402,000
Ohio St. Bldg. Auth. Correc. Fac.
Ser. 96A
5.25% 10/01/08 500 499,375
Ohio State Bldg. Data Ctr. Rev.
Ser. 93A
5.90% 10/01/07 450 469,125
Ohio State Higher Ed. Fac. Comm.
Rev. Ohio Dominican Coll., Ser. 94
6.62% 12/01/04 250 259,063
PAR
MATURITY (000) VALUE
-------- ---------- ----------------
OHIO (CONTINUED)
Ohio State Tpke. Rev., Ser. 96
6.00% 02/15/05 $ 400 $ 423,500
Ohio State Wtr. Dev. Auth. Rev.
Steel-Cargill North Star Broken Hill
Proj. Ser. 95
6.30% 09/01/20 500 512,500
Olentangy Loc. Sch. Dist. G.O.
Ser. 95A
6.00% 12/01/08 225 237,938
Student Loan Funding Corp. Rev.
Cincinnati, Ser. 93A
5.75% 08/01/03 65 65,325
Summit Cnty. Hosp. Rev. Cuyahoga
Falls Gen. Hosp. Proj., Ser. 94
6.65% 07/01/14 200 204,250
Toledo G.O., Ser. 96
6.00% 12/01/06 500 531,250
Univ. of Toledo Gen. Rec. Rev.,
Ser. 92A
5.90% 06/01/20 425 425,000
------------
10,130,862
------------
PUERTO RICO -- 3.9%
Puerto Rico Elec. Pwr. Auth. Rev.
Ser. 94T
6.12% 07/01/09 400 413,500
------------
TOTAL MUNICIPAL BONDS
(Cost $10,371,519) 10,544,362
------------
SHORT TERM INVESTMENTS -- 0.8%
Smith Barney Tax Free Money
Market Fund 90 90,145
(Cost $90,145) ------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $10,461,664*) 99.1% 10,634,507
OTHER ASSETS IN EXCESS OF
LIABILITIES 0.9% 94,799
------ ------------
NET ASSETS (Applicable to 80,207
Institutional shares, 669,650 Service
shares, 262,980 Investor A shares
and 46,531 Investor B shares
outstanding) 100.0% $ 10,729,306
====== ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF NET ASSETS
OHIO TAX-FREE INCOME PORTFOLIO (CONCLUDED)
AS OF MARCH 31, 1997 (UNAUDITED)
NET ASSET VALUE AND REDEMPTION
PRICE PER INSTITUTIONAL, SERVICE
AND INVESTOR A SHARE
($10,258,036 (DIVIDE) 1,012,837) $10.13
======
OFFERING PRICE PER INSTITUTIONAL
AND SERVICE SHARE $10.13
======
MAXIMUM OFFERING PRICE PER
INVESTOR A SHARE
($10.13 (DIVIDE) .960) $10.55
======
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE
(SUBJECT TO A CONTINGENT DEFERRED
SALES CHARGE OF 4.5%) PER
INVESTOR B SHARE
($471,270 (DIVIDE) 46,531) $10.13
======
- ------------------------
* Also cost for Federal income tax purposes. The gross unrealized
appreciation (depreciation) on a tax basis is as follows:
Gross unrealized appreciation $211,292
Gross unrealized depreciation (38,449)
--------
$172,843
========
** Rates shown are the rates as of March 31, 1997, and the maturities shown
are the longer of the next interest readjustment date or the date the
principal amount can be recovered through demand.
------------------------------------------
INVESTMENT ABBREVIATIONS
ARM Adjustable Rate Mortgage
CMT Constant Maturity Treasury
FRDD FloatingRateDailyDemand
G.O. General Obligations
IO Interest Only
PO Prinicipal Only
------------------------------------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
INTERMEDIATE
LOW DURATION GOVERNMENT INTERMEDIATE CORE GOVERNMENT
BOND BOND BOND BOND INCOME
FOR THE SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest ....................................... $ 7,298,835 $ 5,256,103 $10,696,180 $12,407,238 $ 699,504
----------- ----------- ----------- ----------- ---------
Expenses:
Investment advisory fee ........................ 553,798 397,104 767,933 803,772 39,437
Administration fee ............................. 254,747 182,668 353,249 369,735 18,141
Custodian fee .................................. 27,557 22,116 36,966 44,071 8,797
Transfer agent fee ............................. 36,068 28,371 48,922 51,669 15,329
Service fees ................................... 131,064 72,531 72,138 180,827 24,032
Distribution fees .............................. 2,076 11,828 2,055 9,430 52,504
Legal and audit ................................ 8,226 6,508 12,647 17,607 532
Printing ....................................... 11,775 9,313 13,119 14,522 761
Registration fees and expenses ................. 14,919 19,243 34,872 19,891 16,231
Organization ................................... 9,099 -- 2,273 1,923 2,983
Trustees' fees and officer's salary............. 2,572 2,033 2,865 3,170 166
Other .......................................... 15,672 19,965 16,042 13,939 2,695
----------- ----------- ----------- ----------- ---------
1,067,573 771,680 1,363,081 1,530,556 181,608
Less fees voluntarily waived and
expenses reimbursed .......................... (324,901) (248,448) (443,858) (455,193) (56,186)
----------- ----------- ----------- ----------- ---------
Total operating expenses .................. 742,672 523,232 919,223 1,075,363 125,422
----------- ----------- ----------- ----------- ---------
Interest expense .................................. 342,950 130,883 379,727 1,292,198 70,233
----------- ----------- ----------- ----------- ---------
Total expenses ............................ 1,085,622 654,115 1,298,950 2,367,561 195,655
----------- ----------- ----------- ----------- ---------
Net investment income ............................. 6,213,213 4,601,988 9,397,230 10,039,677 503,849
----------- ----------- ----------- ----------- ---------
Realized and unrealized gain (loss) on
investments and foreign
currency transactions:
Net realized gain (loss) from:
Investment transactions ...................... 1,348,619 1,122,450 1,396,560 4,100,160 122,092
Futures contracts ............................ (39,324) 144,311 244,551 (438,527) (59,153)
Foreign currency transactions and
forward foreign currency
contracts ................................. -- -- -- -- --
Change in unrealized appreciation
(depreciation) from:
Investments .................................. (1,786,916) (1,426,038) (4,140,084) (6,755,011) (244,033)
Futures ...................................... (86,692) (268,352) (421,185) 1,082,490 43,553
Foreign currency transactions and
forward foreign currency
contracts ................................. -- -- -- -- --
----------- ----------- ----------- ----------- ---------
Net gain (loss) on investments and
foreign currency transactions ................... (564,313) (427,629) (2,920,158) (2,010,888) (137,541)
----------- ----------- ----------- ----------- ---------
Net increase in net assets resulting
from operations ................................. $ 5,648,900 $ 4,174,359 $ 6,477,072 $ 8,028,789 $ 366,308
=========== =========== =========== =========== =========
</TABLE>
<TABLE>
<CAPTION>
PENNSYLVANIA NEW JERSEY
MANAGED INTERNATIONAL TAX-FREE TAX-FREE TAX-FREE
INCOME BOND INCOME INCOME INCOME
FOR THE SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest ........................................ $ 26,359,052 $ 1,349,603 $1,480,057 $2,385,773 $2,375,091
------------ ----------- ---------- ---------- ----------
Expenses:
Investment advisory fee ......................... 1,834,348 111,292 129,992 214,978 219,458
Administration fee .............................. 820,289 46,540 59,797 98,890 100,951
Custodian fee ................................... 117,714 30,831 8,317 10,781 11,224
Transfer agent fee .............................. 119,080 8,698 12,008 28,607 21,009
Service fees .................................... 277,083 11,926 57,884 71,560 130,437
Distribution fees ............................... 23,139 1,120 10,074 107,904 2,575
Legal and audit ................................. 31,820 1,406 1,776 3,515 10,658
Printing ........................................ 38,426 2,009 2,543 4,319 4,583
Registration fees and expenses .................. 47,171 14,919 17,405 3,979 3,979
Organization .................................... -- -- -- 1,341 --
Trustees' fees and officer's salary.............. 8,390 439 555 943 1,001
Other ........................................... 50,354 5,525 5,671 6,159 6,234
------------ ----------- ---------- ---------- ----------
3,367,814 234,705 306,022 552,976 512,109
Less fees voluntarily waived and
expenses reimbursed ........................... (935,702) (23,215) (93,350) (126,300) (137,542)
------------ ----------- ---------- ---------- ----------
Total operating expenses ................... 2,432,112 211,490 212,672 426,676 374,567
------------ ----------- ---------- ---------- ----------
Interest expense ................................... 239,650 1,190 -- -- --
------------ ----------- ---------- ---------- ----------
Total expenses ............................. 2,671,762 212,680 212,672 426,676 374,567
------------ ----------- ---------- ---------- ----------
Net investment income .............................. 23,687,290 1,136,923 1,267,385 1,959,097 2,000,524
------------ ----------- ---------- ---------- ----------
Realized and unrealized gain (loss) on
investments and foreign
currency transactions:
Net realized gain (loss) from:
Investment transactions ....................... 5,092,107 503,043 380,981 294,264 196,484
Futures contracts ............................. 3,364,107 -- -- -- --
Foreign currency transactions and
forward foreign currency
contracts .................................. -- 2,897,730 -- -- --
Change in unrealized appreciation
(depreciation) from:
Investments ................................... (12,332,764) (2,394,205) (313,870) (600,674) (186,026)
Futures ....................................... 3,520,222 -- -- -- --
Foreign currency transactions and
forward foreign currency
contracts .................................. -- (299,085) -- -- --
------------ ----------- ---------- ---------- ----------
Net gain (loss) on investments and
foreign currency transactions ................... (356,328) 707,483 67,111 (306,410) 10,458
------------ ----------- ---------- ---------- ----------
Net increase in net assets resulting
from operations ................................. $ 23,330,962 $ 1,844,406 $1,334,496 $1,652,687 $2,010,982
============ =========== ========== ========== ==========
</TABLE>
OHIO
TAX-FREE
INCOME
FOR THE SIX MONTHS ENDED MARCH 31, 1997 (UNAUDITED) PORTFOLIO
----------
Investment income:
Interest ......................................... $275,859
--------
Expenses:
Investment advisory fee .......................... 25,549
Administration fee ............................... 11,753
Custodian fee .................................... 6,300
Transfer agent fee ............................... 3,103
Service fees ..................................... 10,386
Distribution fees ................................ 6,612
Legal and audit .................................. 1,597
Printing ......................................... 504
Registration fees and expenses ................... 1,243
Organization ..................................... 1,229
Trustees' fees and officer's salary............... 109
Other ............................................ 4,117
--------
72,502
Less fees voluntarily waived and
expenses reimbursed ............................ (26,325)
--------
Total operating expenses .................... 46,177
--------
Interest expense .................................... --
--------
Total expenses .............................. 46,177
--------
Net investment income ............................... 229,682
--------
Realized and unrealized gain (loss) on
investments and foreign
currency transactions:
Net realized gain (loss) from:
Investment transactions ........................ 35,484
Futures contracts .............................. --
Foreign currency transactions and
forward foreign currency
contracts ................................... --
Change in unrealized appreciation
(depreciation) from:
Investments .................................... (79,706)
Futures ........................................ --
Foreign currency transactions and
forward foreign currency
contracts ................................... --
--------
Net gain (loss) on investments and
foreign currency transactions .................... (44,222)
--------
Net increase in net assets resulting
from operations .................................. $185,460
========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42 & 43
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LOW DURATION INTERMEDIATE GOVERNMENT
BOND PORTFOLIO BOND PORTFOLIO
------------------------------------------- ----------------------------
FOR THE FOR THE
SIX MONTHS FOR THE PERIOD FOR THE PERIOD SIX MONTHS FOR THE
ENDED 4/1/96 THROUGH 7/1/95 THROUGH ENDED YEAR ENDED
3/31/97 9/30/96 3/31/96 3/31/97 9/30/96
------------ ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income .......................... $ 6,213,213 $ 6,116,432 $ 3,918,728 $ 4,601,988 $ 10,996,883
Net gain (loss) on investment .................. (564,313) (213,372) (2,249,808) (427,629) (2,224,470)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ................... 5,648,900 5,903,060 1,668,920 4,174,359 8,772,413
------------ ------------ ------------ ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Shares ........................... (3,697,730) (2,376,647) (1,842,630)1 (3,113,607) (7,708,808)
Service Shares ................................. (2,294,129) (3,508,349) (2,026,179) (1,366,599) (2,611,126)
Investor A Shares .............................. (25,007) (21,906) (5,132) (160,427) (401,159)
Investor B Shares .............................. (511) -- -- (573) --
Investor C Shares .............................. (136) -- -- (278) --
------------ ------------ ------------ ------------ ------------
Total distribution from net
investment income ........................... (6,017,513) (5,906,902) (3,873,941) (4,641,484) (10,721,093)
------------ ------------ ------------ ------------ ------------
In excess of net investment income:
Institutional Shares ........................... -- -- (164,529)1 -- --
Service Shares ................................. -- -- -- -- --
Investor A Shares .............................. -- -- -- -- --
Investor B Shares .............................. -- -- -- -- --
Investor C Shares .............................. -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total distribution in excess of
net investment income ....................... -- -- (164,529) -- --
------------ ------------ ------------ ------------ ------------
Net realized gains:
Institutional Shares ........................... -- -- (58,282)1 -- --
Service Shares ................................. -- -- -- -- --
Investor A Shares .............................. -- -- -- -- --
Investor B Shares .............................. -- -- -- -- --
Investor C Shares .............................. -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total distributions from net realized gains .... -- -- (58,282) -- --
------------ ------------ ------------ ------------ ------------
Total distributions to shareholders ............ (6,017,513) (5,906,902) (4,096,752) (4,641,484) (10,721,093)
------------ ------------ ------------ ------------ ------------
Capital share transactions .......................... (17,708,999) (6,733,602) 193,173,293 (34,246,251) (12,741,291)
------------ ------------ ------------ ------------ ------------
Total increase (decrease) in net assets ........ (18,077,612) (6,737,444) 190,745,461 (34,713,376) (14,689,971)
------------ ------------ ------------ ------------ ------------
NET ASSETS:
Beginning of period ............................ 228,494,249 235,231,693 44,486,232 179,708,783 194,398,754
------------ ------------ ------------ ------------ ------------
End of period .................................. $210,416,637 $228,494,249 $235,231,693 $144,995,407 $179,708,783
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE CORE
BOND PORTFOLIO BOND PORTFOLIO
-------------------------- ------------------------------------------
FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE PERIOD FOR THE PERIOD
ENDED YEAR ENDED ENDED 4/1/96 THROUGH 7/1/95 THROUGH
3/31/97 9/30/96 3/31/97 9/30/96 3/31/96
------------ ------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income .......................... $ 9,397,230 $ 13,162,932 $ 10,039,677 $ 8,860,584 $ 4,622,227
Net gain (loss) on investment .................. (2,920,158) (2,278,811) (2,010,888) (2,267,710) (7,990,856)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ................... 6,477,072 10,884,121 8,028,789 6,592,874 (3,368,629)
------------ ------------ ------------ ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Shares ........................... (7,990,248) (10,531,863) (6,562,836) (3,574,577) (1,906,399)1
Service Shares ................................. (1,414,104) (2,326,763) (3,666,470) (5,178,248) (2,729,527)
Investor A Shares .............................. (29,330) (45,490) (15,406) (5,121) (228)
Investor B Shares .............................. -- -- (59,370) (15,457) (58)
Investor C Shares .............................. -- -- (1) -- --
------------ ------------ ------------ ------------ ------------
Total distribution from net
investment income ........................... (9,433,682) (12,904,116) (10,304,083) (8,773,403) (4,636,212)
------------ ------------ ------------ ------------ ------------
In excess of net investment income:
Institutional Shares ........................... -- -- -- -- --
Service Shares ................................. -- -- -- -- --
Investor A Shares .............................. -- -- -- -- --
Investor B Shares .............................. -- -- -- -- --
Investor C Shares .............................. -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total distribution in excess of
net investment income ....................... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net realized gains:
Institutional Shares ........................... (349,958) (519,741) (900,868) -- (880,411)1
Service Shares ................................. (69,712) (125,660) (548,738) -- --
Investor A Shares .............................. (1,658) (2,393) (2,549) -- --
Investor B Shares .............................. -- -- (10,003) -- --
Investor C Shares .............................. -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total distributions from net realized gains .... (421,328) (647,794) (1,462,158) -- (880,411)
------------ ------------ ------------ ------------ ------------
Total distributions to shareholders ............ (9,855,010) (13,551,910) (11,766,241) (8,773,403) (5,516,623)
------------ ------------ ------------ ------------ ------------
Capital share transactions .......................... 79,911,231 94,529,679 99,648,267 (13,073,874) 273,598,804
------------ ------------ ------------ ------------ ------------
Total increase (decrease) in net assets ........ 76,533,293 91,861,890 95,910,815 (15,254,403) 264,713,552
------------ ------------ ------------ ------------ ------------
NET ASSETS:
Beginning of period ............................ 254,206,324 162,344,434 281,649,953 296,904,356 32,190,804
------------ ------------ ------------ ------------ ------------
End of period .................................. $330,739,617 $254,206,324 $377,560,768 $281,649,953 $296,904,356
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT MANAGED
INCOME PORTFOLIO INCOME PORTFOLIO
------------------------- ---------------------------
FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED ENDED YEAR ENDED
3/31/97 9/30/96 3/31/97 9/30/96
----------- ----------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income .......................... $ 503,849 $ 832,981 $ 23,687,290 $ 40,383,826
Net gain (loss) on investment .................. (137,541) (318,238) (356,328) (13,284,502)
----------- ----------- ------------ ------------
Net increase (decrease) in net assets
resulting from operations ................... 366,308 514,743 23,330,962 27,099,324
----------- ----------- ------------ ------------
Distributions to shareholders from:
Net investment income:
Institutional Shares ........................... -- -- (17,826,343) (30,992,031)
Service Shares ................................. -- -- (5,866,577) (8,387,287)
Investor A Shares .............................. (136,814) (213,995) (357,853) (669,888)
Investor B Shares .............................. (396,191) (595,251) -- --
Investor C Shares .............................. 1 -- -- --
----------- ----------- ------------ ------------
Total distribution from net
investment income ........................... (533,004) (809,246) (24,050,773) (40,049,206)
----------- ----------- ------------ ------------
In excess of net investment income:
Institutional Shares ........................... -- -- -- --
Service Shares ................................. -- -- -- --
Investor A Shares .............................. -- -- -- --
Investor B Shares .............................. -- -- -- --
Investor C Shares .............................. -- -- -- --
----------- ----------- ------------ ------------
Total distribution in excess of
net investment income ....................... -- -- -- --
----------- ----------- ------------ ------------
Net realized gains:
Institutional Shares ........................... -- -- -- (4,581,107)
Service Shares ................................. -- -- -- (1,264,449)
Investor A Shares .............................. -- (81,209) -- (119,989)
Investor B Shares .............................. -- (277,151) -- --
Investor C Shares .............................. -- -- -- --
----------- ----------- ------------ ------------
Total distributions from net realized gains .... -- (358,360) -- (5,965,545)
----------- ----------- ------------ ------------
Total distributions to shareholders ............ (533,004) (1,167,606) (24,050,773) (46,014,751)
----------- ----------- ------------ ------------
Capital share transactions .......................... 1,906,932 2,245,029 (34,252,758) 187,954,362
----------- ----------- ------------ ------------
Total increase (decrease) in net assets ........ 1,740,236 1,592,166 (34,972,569) 169,038,935
----------- ----------- ------------ ------------
NET ASSETS:
Beginning of period ............................ 14,769,900 13,177,734 741,009,606 571,970,671
----------- ----------- ------------ ------------
End of period .................................. $16,510,136 $14,769,900 $706,037,037 $741,009,606
=========== =========== ============ ============
<FN>
- ----------------
1 Institutional Shares includes all activity of the prior class of shares for
all periods before January 13, 1996, the date of the merger.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44 & 45
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
INTERNATIONAL TAX-FREE
BOND PORTFOLIO INCOME PORTFOLIO
--------------------------------------------- ----------------------------
FOR THE FOR THE
SIX MONTHS FOR THE PERIOD FOR THE PERIOD SIX MONTHS FOR THE
ENDED 2/1/96 THROUGH 3/1/95 THROUGH ENDED YEAR ENDED
3/31/97 9/30/96 1/31/96 3/31/97 9/30/96
----------- -------------- -------------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ......................... $ 1,136,923 $ 1,389,531 $ 2,371,030 $ 1,267,385 $ 1,949,604
Net gain (loss) on investment and
foreign currency related transactions ...... 707,483 594,351 4,801,275 67,111 (17,228)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations .................. 1,844,406 1,983,882 7,172,305 1,334,496 1,932,376
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from:
Net investment income:
Institutional Shares .......................... (3,363,756) (348,627) -- (225,609) (377,242)
Service Shares ................................ (818,242) (602,036) (3,221,772)1 (943,504) (1,297,915)
Investor A Shares ............................. (21,804) (978) -- (113,559) (268,319)
Investor B Shares ............................. (12,343) (633) -- (2,508) (78)
Investor C Shares ............................. (4,732) (14) -- (1) --
----------- ----------- ----------- ----------- -----------
Total distribution from net
investment income .......................... (4,220,877) (952,288) (3,221,772) (1,285,181) (1,943,554)
----------- ----------- ----------- ----------- -----------
Net realized gains:
Institutional Shares .......................... (1,349,956) -- -- -- --
Service Shares ................................ (338,728) -- -- -- --
Investor A Shares ............................. (8,738) -- -- -- --
Investor B Shares ............................. (5,334) -- -- -- --
Investor C Shares ............................. (2,081) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total distributions from net realized gains ... (1,704,837) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total distributions to shareholders ........... (5,925,714) (952,288) (3,221,772) (1,285,181) (1,943,554)
----------- ----------- ----------- ----------- -----------
Capital share transactions .................... 6,616,249 390,815 (11,980,752) 6,279,354 37,830,177
----------- ----------- ----------- ----------- -----------
Total increase (decrease) in net assets ....... 2,534,941 1,422,409 (8,030,219) 6,328,669 37,818,999
----------- ----------- ----------- ----------- -----------
Net assets:
Beginning of period ........................... 39,049,190 37,626,781 45,657,000 49,394,167 11,575,168
----------- ----------- ----------- ----------- -----------
End of period ................................. $41,584,131 $39,049,190 $37,626,781 $55,722,836 $49,394,167
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
PENNSYLVANIA TAX-FREE NEW JERSEY TAX-FREE
INCOME PORTFOLIO INCOME PORTFOLIO
---------------------------- -----------------------------------------------
FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE PERIOD FOR THE PERIOD
ENDED YEAR ENDED ENDED 2/1/96 THROUGH 3/1/95 THROUGH
3/31/97 9/30/96 3/31/97 9/30/96 1/31/96
----------- ----------- ----------- -------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ......................... $ 1,959,097 $ 3,585,054 $ 2,000,524 $ 2,730,257 $ 3,947,696
Net gain (loss) on investment and
foreign currency related transactions ...... (306,410) 438,089 10,458 (2,751,224) 5,660,929
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations .................. 1,652,687 4,023,143 2,010,982 (20,967) 9,608,625
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from:
Net investment income:
Institutional Shares .......................... (106,626) (179,824) -- -- --
Service Shares ................................ (854,181) (1,340,668) (1,994,221) (2,881,377) (3,798,344)2
Investor A Shares ............................. (864,077) (1,875,997) (19,642) (15,162) (1)
Investor B Shares ............................. (172,709) (210,626) (3,945) (271) --
Investor C Shares ............................. -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total distribution from net
investment income .......................... (1,997,593) (3,607,115) (2,017,808) (2,896,810) (3,798,345)
----------- ----------- ----------- ----------- -----------
Net realized gains:
Institutional Shares .......................... -- -- -- -- --
Service Shares ................................ -- -- -- -- --
Investor A Shares ............................. -- -- -- -- --
Investor B Shares ............................. -- -- -- -- --
Investor C Shares ............................. -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total distributions from net realized gains ... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total distributions to shareholders ........... (1,997,593) (3,607,115) (2,017,808) (2,896,810) (3,798,345)
----------- ----------- ----------- ----------- -----------
Capital share transactions .................... 2,717,649 20,804,503 (3,750,202) (6,071,841) (4,677,074)
----------- ----------- ----------- ----------- -----------
Total increase (decrease) in net assets ....... 2,372,743 21,220,531 (3,757,028) (8,989,618) 1,133,206
----------- ----------- ----------- ----------- -----------
Net assets:
Beginning of period ........................... 83,910,515 62,689,984 89,000,588 97,990,206 96,857,000
----------- ----------- ----------- ----------- -----------
End of period ................................. $86,283,258 $83,910,515 $85,243,560 $89,000,588 $97,990,206
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
OHIO TAX-FREE
INCOME PORTFOLIO
-------------------------
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
3/31/97 9/30/96
----------- ----------
(UNAUDITED)
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ......................... $ 229,682 $ 435,219
Net gain (loss) on investment and
foreign currency related transactions ...... (44,222) 77,897
----------- ----------
Net increase (decrease) in net assets
resulting from operations .................. 185,460 513,116
----------- ----------
Distributions to shareholders from:
Net investment income:
Institutional Shares .......................... (14,064) (16,530)
Service Shares ................................ (149,997) (266,806)
Investor A Shares ............................. (61,595) (144,228)
Investor B Shares ............................. (4,933) (4,383)
Investor C Shares ............................. -- --
----------- ----------
Total distribution from net
investment income .......................... (230,589) (431,947)
----------- ----------
Net realized gains:
Institutional Shares .......................... -- --
Service Shares ................................ -- --
Investor A Shares ............................. -- --
Investor B Shares ............................. -- --
Investor C Shares ............................. -- --
----------- ----------
Total distributions from net realized gains ... -- --
----------- ----------
Total distributions to shareholders ........... (230,589) (431,947)
----------- ----------
Capital share transactions .................... 994,398 939,853
----------- ----------
Total increase (decrease) in net assets ....... 949,269 1,021,022
----------- ----------
Net assets:
Beginning of period ........................... 9,780,037 8,759,015
----------- ----------
End of period ................................. $10,729,306 $9,780,037
=========== ==========
<FN>
- ----------------
1 Service Shares includes all activity of the prior class of shares before
February 13, 1996, the date of the merger.
2 Service Shares includes all activity of the prior class of shares for all
periods before January 13, 1996, the date of the merger.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46 & 47
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
ASSET (LOSS) ON DISTRIBUTIONS IN EXCESS FROM NET IN EXCESS
VALUE NET INVESTMENTS FROM NET OF NET REALIZED OF NET
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT INVESTMENT CAPITAL REALIZED
OF PERIOD INCOME AND UNREALIZED) INCOME INCOME GAINS GAINS
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------
LOW DURATION BOND PORTFOLIO
- ---------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 $ 9.79 $0.28 $(0.03) $(0.27) $ -- $ -- $ --
4/1/96 through 9/30/96 9.79 0.28 (0.01) (0.27) -- -- --
7/1/95 through 3/31/96 9.83 0.42 -- (0.41) (0.04) (0.01) --
6/30/95 9.71 0.58 0.13 (0.58) -- (0.01) --
6/30/94 9.96 0.48 (0.25) (0.48) -- -- --
7/17/92 1 through 6/30/93 10.00 0.51 (0.06) (0.49) -- -- --
SERVICE CLASS
10/1/96 through 3/31/97 11 $ 9.79 $0.27 $(0.03) $(0.26) $ -- $ -- $ --
4/1/96 through 9/30/96 9.79 0.26 (0.01) (0.25) -- -- --
1/13/96 1 through 3/31/96 9.91 0.11 (0.12) (0.11) -- -- --
INVESTOR A CLASS
10/1/96 THROUGH 3/31/97 11 $ 9.79 $0.26 $(0.03) $(0.25) $ -- $ -- $ --
4/1/96 through 9/30/96 9.79 0.25 (0.01) (0.24) -- -- --
1/13/96 1 through 3/31/96 9.91 0.10 (0.12) (0.10) -- -- --
INVESTOR B CLASS
11/18/96 1 through 3/31/97 11 $ 9.86 $0.16 $(0.10) $(0.15) $ -- $ -- $ --
INVESTOR C CLASS
2/24/97 1 through 3/31/97 11 $ 9.87 $0.04 $(0.10) $(0.04) $ -- $ -- $ --
- --------------------------------------
INTERMEDIATE GOVERNMENT BOND PORTFOLIO
- --------------------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 $ 9.92 $0.30 $(0.05) $(0.30) $ -- $ -- $ --
9/30/96 10.02 0.58 (0.11) (0.57) -- -- --
9/30/95 9.64 0.58 0.38 (0.58) -- -- --
9/30/94 10.60 0.55 (0.86) (0.55) -- (0.10) --
9/30/93 10.46 0.54 0.16 (0.54) -- (0.02) --
4/20/92 1 through 9/30/92 10.00 0.24 0.46 (0.24) -- -- --
SERVICE CLASS
10/1/96 through 3/31/97 11 $ 9.92 $0.28 $(0.05) $(0.28) $ -- $ -- $ --
9/30/96 10.02 0.56 (0.12) (0.54) -- -- --
9/30/95 9.64 0.56 0.37 (0.55) -- -- --
9/30/94 10.60 0.53 (0.86) (0.53) -- (0.10) --
7/29/93 1 through 9/30/93 10.45 0.09 0.15 (0.09) -- -- --
INVESTOR A CLASS
10/1/96 THROUGH 3/31/97 11 $ 9.92 $0.27 $(0.05) $(0.27) $ -- $ -- $ --
9/30/96 10.03 0.55 (0.13) (0.53) -- -- --
9/30/95 9.64 0.55 0.39 (0.55) -- -- --
9/30/94 10.60 0.53 (0.87) (0.52) -- (0.10) --
9/30/93 10.46 0.54 0.16 (0.54) -- (0.02) --
5/11/92 1 through 9/30/92 10.05 0.24 0.41 (0.24) -- -- --
INVESTOR B CLASS
10/11/96 1 through 3/31/97 11 $ 9.98 $0.22 $(0.11) $(0.22) $ -- $ -- $ --
INVESTOR C CLASS
10/8/96 1 through 3/31/97 11 $ 9.98 $0.22 $(0.11) $(0.22) $ -- $ -- $ --
- ---------------------------
INTERMEDIATE BOND PORTFOLIO
- ---------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 $ 9.32 $0.29 $(0.06) $(0.29) $ -- $(0.01) --
9/30/96 9.43 0.56 (0.09) (0.55) -- (0.03) --
9/30/95 9.05 0.56 0.38 (0.56) -- -- --
9/30/94 10.01 0.54 (0.88) (0.56) -- (0.06) --
9/17/93 1 through 9/30/93 10.00 0.02 (0.01) -- -- -- --
SERVICE CLASS
10/1/96 through 3/31/97 11 $ 9.32 $0.28 $(0.06) $(0.28) $ -- $(0.01) $ --
9/30/96 9.43 0.53 (0.09) (0.52) -- (0.03) --
9/30/95 9.05 0.54 0.38 (0.54) -- -- --
9/30/94 10.01 0.54 (0.91) (0.53) -- (0.06) --
9/23/93 1 through 9/30/93 9.99 -- 0.02 -- -- -- --
INVESTOR A CLASS
10/1/96 THROUGH 3/31/97 11 $ 9.32 $0.27 $(0.06) $(0.27) $ -- $(0.01) $ --
9/30/96 9.43 0.52 (0.09) (0.51) -- (0.03) --
9/30/95 9.05 0.54 0.38 (0.54) -- -- --
5/20/94 1 through 9/30/94 9.23 0.20 (0.17) (0.21) -- -- --
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
<TABLE>
<CAPTION>
RATIO OF NET
NET NET RATIO OF EXPENSES INVESTMENT INCOME
ASSET ASSETS RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
VALUE END OF EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO
END OF TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
PERIOD RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------
LOW DURATION BOND PORTFOLIO
- ---------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 $ 9.77 2.59% $126,852 0.55%2,5 0.84%2 6.04%2 5.74%2 220%
4/1/96 through 9/30/96 9.79 2.70 135,686 0.55 2,5 0.83 2 5.72 2 5.45 2 228
7/1/95 through 3/31/96 9.79 4.25 52,843 0.63 2,5 0.83 2 5.25 2 5.05 2 185
6/30/95 9.83 6.99 44,486 0.57 1.05 6.08 5.60 586
6/30/94 9.71 2.33 31,265 0.57 1.02 4.70 4.25 455
7/17/92 1 through 6/30/93 9.96 4.63 51,611 0.56 2 0.66 2 5.32 2 5.22 2 513
SERVICE CLASS
10/1/96 through 3/31/97 11 $ 9.77 2.44% $ 82,494 0.85%2,5 1.14%2 5.75%2 5.45%2 220%
4/1/96 through 9/30/96 9.79 2.54 91,870 0.85 2,8 1.13 2 5.40 2 5.13 2 228
1/13/96 1 through 3/31/96 9.79 (0.11) 181,670 0.85 2,8 1.05 2 5.25 2 5.05 2 185
INVESTOR A CLASS
10/1/96 THROUGH 3/31/97 11 $ 9.77 2.35%3 $ 997 1.02%2,5 1.32%2 5.61%2 5.31%2 220%
4/1/96 through 9/30/96 9.79 2.46 3 938 1.02 2,8 1.30 2 5.20 2 4.92 2 228
1/13/96 1 through 3/31/96 9.79 (0.15)3 719 1.01 2,8 1.21 2 4.94 2 4.74 2 185
INVESTOR B CLASS
11/18/96 1 through 3/31/97 11$ 9.77 0.73%4 $ 42 1.70%2,5 1.99%2 4.87%2 4.57%2 220%
INVESTOR C CLASS
2/24/97 1 through 3/31/97 11 $ 9.77 (0.52%)4 $ 32 1.64%2,5 1.93%2 4.90%2 4.61%2 220%
- --------------------------------------
INTERMEDIATE GOVERNMENT BOND PORTFOLIO
- --------------------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 $ 9.87 2.49% $ 91,514 0.55%2,6 0.86%2 6.06%2 5.75%2 133%
9/30/96 9.92 4.82 126,312 0.53 9 0.83 6.03 5.73 580
9/30/95 10.02 10.28 134,835 0.42 9 0.79 5.94 5.57 247
9/30/94 9.64 (3.08) 128,974 0.40 0.80 5.48 5.08 9
9/30/93 10.60 6.88 137,065 0.73 0.81 5.23 5.15 80
4/20/92 1 through 9/30/92 10.46 7.14 105,620 0.80 2 0.80 2 5.28 2 5.28 2 38
SERVICE CLASS
10/1/96 through 3/31/97 11 $ 9.87 2.34% $ 47,804 0.85%2,6 1.16%2 5.78%2 5.46%2 133%
9/30/96 9.92 4.51 47,494 0.83 9 1.13 5.73 5.43 580
9/30/95 10.02 9.99 49,762 0.69 9 1.06 5.67 5.30 247
9/30/94 9.64 (3.31) 60,812 0.65 1.05 5.30 4.90 9
7/29/93 1 through 9/30/93 10.60 2.30 15,035 0.67 2 0.75 2 5.14 2 5.06 2 80
INVESTOR A CLASS
10/1/96 THROUGH 3/31/97 11 $ 9.87 2.25%3 $ 5,638 1.02%2,6 1.33%2 5.62%2 5.31%2 133%
9/30/96 9.92 4.36 3 5,903 0.95 9 1.25 5.64 5.35 580
9/30/95 10.03 9.98 3 9,802 0.70 9 1.07 5.67 5.30 247
9/30/94 9.64 (3.36)3 8,508 0.65 1.05 5.24 4.84 9
9/30/93 10.60 6.84 3 7,666 0.76 0.84 5.19 5.11 80
5/11/92 1 through 9/30/92 10.46 6.64 3 1,484 0.80 2 0.80 2 5.28 2 5.28 2 38
INVESTOR B CLASS
10/11/96 1 through 3/31/97 11$ 9.87 1.08%4 $ 26 1.76%2,6 2.07%2 4.82%2 4.51%2 133%
INVESTOR C CLASS
10/8/96 1 through 3/31/97 11 $ 9.87 1.08%4 $ 13 1.68%2,6 2.00%2 4.77%2 4.45%2 133%
- ---------------------------
INTERMEDIATE BOND PORTFOLIO
- ---------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 $ 9.25 2.50% $281,917 0.55%2,7 0.84%2 6.42%2 6.13%2 149%
9/30/96 9.32 5.10 207,909 0.53 7 0.83 6.27 5.97 670
9/30/95 9.43 10.76 124,979 0.47 7 0.81 6.18 5.84 262
9/30/94 9.05 (3.52) 71,896 0.45 0.88 5.54 5.11 92
9/17/93 1 through 9/30/93 10.01 0.10 56,713 0.45 2 0.84 2 4.72 2 4.33 2 4
SERVICE CLASS
10/1/96 through 3/31/97 11 $ 9.25 2.34% $ 47,832 0.85%2,7 1.14%2 6.11%2 5.82%2 149%
9/30/96 9.32 4.79 45,362 0.83 10 1.13 5.98 5.67 670
9/30/95 9.43 10.46 36,718 0.74 10 1.09 5.90 5.55 262
9/30/94 9.05 (3.80) 35,764 0.70 1.13 5.33 4.90 92
9/23/93 1 through 9/30/93 10.01 0.20 91 0.70 2 1.09 2 4.35 2 3.96 2 4
INVESTOR A CLASS
10/1/96 THROUGH 3/31/97 11 $ 9.25 2.26%3 $ 991 1.02%2,7 1.31%2 5.93%2 5.64%2 149%
9/30/96 9.32 4.74 3 935 0.97 10 1.27 5.83 5.53 670
9/30/95 9.43 10.35 3 647 0.76 10 1.11 5.89 5.55 262
5/20/94 1 through 9/30/94 9.05 0.31 3 87 0.85 2 1.28 2 5.35 2 4.92 2 92
</TABLE>
49
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS NET
ASSET (LOSS) ON DISTRIBUTIONS IN EXCESS FROM NET IN EXCESS ASSET
VALUE NET INVESTMENTS FROM NET OF NET REALIZED OF NET VALUE
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT INVESTMENT CAPITAL REALIZED END OF
OF PERIOD INCOME AND UNREALIZED) INCOME INCOME GAINS GAINS PERIOD
====================================================================================================================================
- -------------------
CORE BOND PORTFOLIO
- -------------------
INSTITUTIONAL CLASS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/1/96 through 3/31/97 11 $ 9.55 $0.31 $ -- $(0.32) $ -- $(0.05) $ -- $ 9.49
4/1/96 through 9/30/96 9.61 0.30 (0.06) (0.30) -- -- -- 9.55
7/1/95 through 3/31/96 9.85 0.47 (0.07) (0.47) -- (0.17) -- 9.61
6/30/95 9.36 0.62 0.50 (0.62) -- (0.01) -- 9.85
6/30/94 10.37 0.55 (0.60) (0.55) -- (0.41) -- 9.36
12/9/92 1 through 6/30/93 10.00 0.32 0.37 (0.32) -- -- -- 10.37
SERVICE CLASS
10/1/96 through 3/31/97 11 $ 9.55 $0.29 $ -- $(0.30) $ -- $(0.05) $ -- $ 9.49
4/1/96 through 9/30/96 9.61 0.30 (0.07) (0.29) -- -- -- 9.55
1/13/96 1 through 3/31/96 9.91 0.11 (0.30) (0.11) -- -- -- 9.61
INVESTOR CLASS A
10/1/96 through 3/31/97 11 $ 9.55 $0.28 $ -- $(0.29) $ -- $(0.05) $ -- $ 9.49
4/1/96 through 9/30/96 9.61 0.28 (0.06) (0.28) -- -- -- 9.55
1/31/96 1 THROUGH 3/31/96 9.99 0.08 (0.38) (0.08) -- -- -- 9.61
INVESTOR CLASS B
10/1/96 through 3/31/97 11 $ 9.55 $0.25 $ -- $(0.26) $ -- $(0.05) $ -- $ 9.49
4/1/96 through 9/30/96 9.61 0.26 (0.07) (0.25) -- -- -- 9.55
3/18/96 1 through 3/31/96 9.58 0.01 0.03 (0.01) -- -- -- 9.61
INVESTOR C CLASS
2/28/97 1 through 3/31/97 11 $ 9.64 $0.04 $(0.10) $(0.04) $ -- $(0.05) $ -- $ 9.49
- ---------------------------
GOVERNMENT INCOME PORTFOLIO
- ---------------------------
INVESTOR A CLASS
10/1/96 THROUGH 3/31/97 11 $10.20 $0.36 $(0.07) $(0.38) $ -- $ -- $ -- $10.11
9/30/96 10.68 0.68 (0.22) (0.66) -- (0.28) -- 10.20
10/3/94 1 through 9/30/95 10.00 0.55 0.68 (0.55) -- -- -- 10.68
INVESTOR B CLASS
10/1/96 through 3/31/97 11 $10.20 $0.32 $(0.07) $(0.34) $ -- $ -- $ -- $10.11
9/30/96 10.68 0.60 (0.21) (0.59) -- (0.28) -- 10.20
10/3/94 1 through 9/30/95 10.00 0.50 0.68 (0.50) -- -- -- 10.68
INVESTOR C CLASS
2/28/97 1 through 3/31/97 11 $10.30 $0.05 $(0.19) $(0.05) $ -- $ -- $ -- $10.11
- ------------------------
MANAGED INCOME PORTFOLIO
- ------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 $10.09 $0.33 $(0.02) $(0.34) $ -- $ -- $ -- $10.06
9/30/96 10.38 0.64 (0.21) (0.62) -- (0.10) -- 10.09
9/30/95 9.79 0.65 0.60 (0.65) (0.01) -- -- 10.38
9/30/94 11.17 0.64 (1.21) (0.64) (0.02) (0.14) (0.01) 9.79
9/30/93 10.74 0.67 0.56 (0.67) -- (0.13) -- 11.17
9/30/92 10.26 0.69 0.48 (0.69) -- -- -- 10.74
SERVICE CLASS
10/1/96 through 3/31/97 11 $10.09 $0.32 $(0.03) $(0.32) $ -- $ -- $ -- $10.06
9/30/96 10.38 0.61 (0.20) (0.60) -- (0.10) -- 10.09
9/30/95 9.79 0.63 0.60 (0.63) (0.01) -- -- 10.38
9/30/94 11.17 0.59 (1.18) (0.62) (0.02) (0.14) (0.01) 9.79
7/29/93 1 through 9/30/93 10.96 0.11 0.21 (0.11) -- -- -- 11.17
INVESTOR A CLASS
10/1/96 THROUGH 3/31/97 11 $10.09 $0.32 $(0.03) $(0.32) $ -- $ -- $ -- $10.06
9/30/96 10.38 0.59 (0.20) (0.58) -- (0.10) -- 10.09
9/30/95 9.79 0.60 0.60 (0.60) (0.01) -- -- 10.38
9/30/94 11.18 0.57 (1.19) (0.60) (0.02) (0.14) (0.01) 9.79
9/30/93 10.74 0.66 0.57 (0.66) -- (0.13) -- 11.18
2/5/92 1 through 9/30/92 10.40 0.46 0.34 (0.46) -- -- -- 10.74
- ----------------------------
INTERNATIONAL BOND PORTFOLIO
- ----------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 $11.71 $0.58 $(0.06) $(1.19) $ -- $(0.49) $ -- $10.55
6/10/96 1 through 9/30/96 11.37 0.21 0.30 (0.17) -- -- -- 11.71
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
<TABLE>
<CAPTION>
RATIO OF NET
NET RATIO OF EXPENSES INVESTMENT INCOME
ASSETS RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
===============================================================================================================================
- -------------------
CORE BOND PORTFOLIO
- -------------------
INSTITUTIONAL CLASS
<S> <C> <C> <C> <C> <C> <C> <C>
10/1/96 through 3/31/97 11 3.14% $258,463 0.55%2,8 0.83%2 7.16%2 6.87%2 297%
4/1/96 through 9/30/96 2.55 162,626 0.55 2,8 0.84 2 6.75 2 6.45 2 308
7/1/95 through 3/31/96 3.93 64,707 0.66 2,8 0.91 2 5.89 2 5.64 2 723
6/30/95 11.79 32,191 0.55 1.75 6.62 5.43 435
6/30/94 (0.69) 12,507 0.55 2.65 5.61 3.51 722
12/9/92 1 through 6/30/93 6.88 7,803 0.55 2 2.44 2 5.57 2 3.68 2 354
SERVICE CLASS
10/1/96 through 3/31/97 11 2.98% $115,105 0.85%2,8 1.13%2 6.89%2 6.61%2 297%
4/1/96 through 9/30/96 2.40 117,207 0.85 2,8 1.14 2 6.33 2 6.04 2 308
1/13/96 1 through 3/31/96 (1.90) 232,040 0.85 2,8 1.10 2 5.46 2 5.21 2 723
INVESTOR CLASS A
10/1/96 through 3/31/97 11 2.90%3 $ 759 1.01%2,8 1.30%2 6.69%2 6.40%2 297%
4/1/96 through 9/30/96 2.363 320 1.02 2,8 1.31 2 6.29 2 6.00 2 308
1/31/96 1 THROUGH 3/31/96 (2.96)3 80 1.02 2,8 1.27 2 5.43 2 5.19 2 723
INVESTOR CLASS B
10/1/96 through 3/31/97 11 2.51%4 $ 3,234 1.75%2,8 2.03%2 5.95%2 5.67%2 297%
4/1/96 through 9/30/96 1.984 1,497 1.72 2,8 2.01 2 5.68 2 5.39 2 308
3/18/96 1 through 3/31/96 (0.33)4 77 1.77 2,8 2.02 2 4.71 2 4.46 2 723
INVESTOR C CLASS
2/28/97 1 through 3/31/97 11 (1.16%)4 $ -- 1.44%2,8 1.72%2 5.66%2 5.38%2 297%
- ---------------------------
GOVERNMENT INCOME PORTFOLIO
- ---------------------------
INVESTOR A CLASS
10/1/96 THROUGH 3/31/97 11 2.81%3 $ 4,016 1.02%2,9 1.75%2 7.87%2 7.14%2 254%
9/30/96 4.43 3 3,651 0.91 9 1.67 8.59 7.83 434
10/3/94 1 through 9/30/95 14.27 3 2,990 0.37 2,9 1.81 2 6.89 2 5.44 2 258
INVESTOR B CLASS
10/1/96 through 3/31/97 11 2.43%4 $ 12,436 1.77%2,9 2.50%2 7.10%2 6.37%2 254%
9/30/96 3.68 4 11,119 1.64 9 2.40 7.81 7.05 434
10/3/94 1 through 9/30/95 13.52 4 10,188 1.05 2,9 2.50 2 6.17 2 4.72 2 258
INVESTOR C CLASS
2/28/97 1 through 3/31/97 11 (1.33)4 $ 58 0.54%2,9 1.27%2 (0.32%)2 (1.05)%2 254%
- ------------------------
MANAGED INCOME PORTFOLIO
- ------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 3.05% $489,245 0.58%2,10 0.84%2 6.60%2 6.35%2 242%
9/30/96 4.33 564,744 0.58 0.81 6.17 5.95 638
9/30/95 13.27 443,148 0.57 0.77 6.44 6.24 203
9/30/94 (5.27) 395,060 0.55 0.77 6.11 5.89 61
9/30/93 12.13 341,791 0.74 0.78 6.25 6.21 72
9/30/92 11.80 314,075 0.80 0.80 6.28 6.28 56
SERVICE CLASS
10/1/96 through 3/31/97 11 2.90% $202,806 0.88%2,10 1.14%2 6.32%2 6.06%2 242%
9/30/96 4.05 165,073 0.88 1.11 5.87 5.65 638
9/30/95 12.97 116,846 0.85 1.05 6.14 5.94 203
9/30/94 (5.49) 67,655 0.80 1.02 5.95 5.73 61
7/29/93 1 through 9/30/93 2.93 15,322 0.80 2 0.84 2 5.83 2 5.79 2 72
INVESTOR A CLASS
10/1/96 THROUGH 3/31/97 11 2.81%3 $ 13,986 1.05%2,10 1.30%2 6.14%2 5.89%2 242%
9/30/96 3.83 3 11,193 1.05 1.29 5.67 5.44 638
9/30/95 12.74 3 11,977 1.05 1.25 5.96 5.76 203
9/30/94 (5.76)3 10,921 1.00 1.22 5.66 5.44 61
9/30/93 12.13 3 7,252 0.84 0.88 6.09 6.05 72
2/5/92 1 through 9/30/92 7.86 3 1,417 0.802 0.802 6.282 6.282 56
- ----------------------------
INTERNATIONAL BOND PORTFOLIO
- ----------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 4.75% $33,703 0.98%2 1.09%2 5.69%2 5.57%2 99%
6/10/96 1 through 9/30/96 4.48 30,882 0.92 2 1.32 2 6.28 2 5.88 2 108
</TABLE>
51
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS NET
ASSET (LOSS) ON DISTRIBUTIONS IN EXCESS FROM NET IN EXCESS ASSET
VALUE NET INVESTMENTS FROM NET OF NET REALIZED OF NET VALUE
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT INVESTMENT CAPITAL REALIZED END OF
OF PERIOD INCOME AND UNREALIZED) INCOME INCOME GAINS GAINS PERIOD
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/96 through 3/31/97 11 $11.71 $ 0.04 $ 0.46 $(1.17) $ -- $(0.49) $ -- $10.55
2/1/96 through 9/30/96 11.39 0.89 (0.29) (0.28) -- -- -- 11.71
3/1/95 through 1/31/96 10.52 0.62 1.13 (0.88) -- -- -- 11.39
2/28/95 10.75 0.62 (0.48) (0.13) -- (0.24) -- 10.52
2/28/94 10.76 0.65 0.46 (0.90) -- (0.22) -- 10.75
2/28/93 10.21 0.52 0.47 (0.30) -- (0.14) -- 10.76
7/1/91 1 through 2/29/92 10.00 0.31 0.26 -- -- (0.36) -- 10.21
INVESTOR A CLASS
10/1/96 through 3/31/97 11 $11.71 $0.68 $(0.19) $(1.16) $ -- $(0.49) $ -- $10.55
4/22/96 1 through 9/30/96 11.37 0.26 0.32 (0.24) -- -- -- 11.71
INVESTOR B CLASS
10/1/96 THROUGH 3/31/97 11 $11.71 $0.68 $(0.24) $(1.11) $ -- $(0.49) $ -- $10.55
4/19/96 1 through 9/30/96 11.36 0.22 0.33 (0.20) -- -- -- 11.71
INVESTOR C CLASS
10/1/96 through 3/31/97 11 $11.71 $0.25 $ 0.19 $(1.11) $ -- $(0.49) $ -- $10.55
9/11/96 1 through 9/30/96 11.58 0.02 0.12 (0.01) -- -- -- 11.71
- -------------------------
TAX-FREE INCOME PORTFOLIO
- -------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 $10.84 $0.28 $ 0.03 $(0.29) $ -- $ -- $ -- $10.86
9/30/96 10.61 0.49 0.28 (0.54) -- -- -- 10.84
9/30/95 10.04 0.53 0.59 (0.53) -- (0.02) -- 10.61
9/30/94 11.31 0.53 (0.93) (0.53) -- (0.34) -- 10.04
1/21/93 1 THROUGH 9/30/93 10.61 0.42 0.70 (0.42) -- -- -- 11.31
SERVICE CLASS
10/1/96 through 3/31/97 11 $10.84 0.27 $ 0.02 $(0.27) $ -- $ -- $ -- $10.86
9/30/96 10.61 0.51 0.23 (0.51) -- -- -- 10.84
9/30/95 10.04 0.50 0.59 (0.50) -- (0.02) -- 10.61
9/30/94 11.31 0.51 (0.93) (0.51) -- (0.34) -- 10.04
7/29/93 1 through 9/30/93 10.97 0.09 0.34 (0.09) -- -- -- 11.31
INVESTOR A CLASS
10/1/96 through 3/31/97 11 $10.84 $0.27 $ 0.01 $(0.26) $ -- $ -- $ -- $10.86
9/30/96 10.61 0.45 0.21 (0.43) -- -- -- 10.84
9/30/95 10.04 0.48 0.59 (0.48) -- (0.02) -- 10.61
9/30/94 11.31 0.48 (0.93) (0.48) -- (0.34) -- 10.04
9/30/93 10.60 0.55 0.83 (0.55) -- (0.12) -- 11.31
9/30/92 10.33 0.58 0.49 (0.59) -- (0.21) -- 10.60
INVESTOR B CLASS
10/1/96 THROUGH 3/31/97 11 $10.84 $0.22 $ 0.02 $(0.22) $ -- $ -- $ -- $10.86
7/18/96 1 through 9/30/96 10.74 0.08 0.10 (0.08) -- -- -- 10.84
INVESTOR C CLASS
2/28/97 1 through 3/31/97 11 $11.04 $0.03 $(0.18) $(0.03) $ -- $ -- $ -- $10.86
- --------------------------------------
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
- --------------------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 $10.44 $0.27 $(0.04) $(0.27) $ -- $ -- $ -- $10.40
9/30/96 10.33 0.52 0.12 (0.53) -- -- -- 10.44
9/30/95 9.82 0.52 0.51 (0.52) -- -- -- 10.33
9/30/94 10.70 0.53 (0.85) (0.53) -- (0.03) -- 9.82
12/1/92 1 through 9/30/93 10.00 0.39 0.73 (0.39) -- (0.03) -- 10.70
Service Class
10/1/96 through 3/31/97 11 $10.44 $0.25 $(0.04) $(0.25) $ -- $ -- $ -- $10.40
9/30/96 10.33 0.50 0.11 (0.50) -- -- -- 10.44
9/30/95 9.82 0.50 0.51 (0.50) -- -- -- 10.33
9/30/94 10.70 0.51 (0.85) (0.51) -- (0.03) -- 9.82
7/29/93 1 through 9/30/93 10.43 0.09 0.28 (0.09) -- (0.01) -- 10.70
INVESTOR A CLASS
10/1/96 through 3/31/97 11 $10.44 $0.23 $(0.03) $(0.24) $ -- $ -- $ -- $10.40
9/30/96 10.33 0.48 0.11 (0.48) -- -- -- 10.44
9/30/95 9.82 0.48 0.51 (0.48) -- -- -- 10.33
9/30/94 10.70 0.52 (0.85) (0.52) -- (0.03) -- 9.82
12/1/92 1 through 9/30/93 10.00 0.42 0.73 (0.42) -- (0.03) -- 10.70
INVESTOR B CLASS
10/1/96 through 3/31/97 11 $10.44 $0.20 $(0.04) $(0.20) $ -- $ -- $ -- $10.40
9/30/96 10.33 0.40 0.11 (0.40) -- -- -- 10.44
10/3/94 1 through 9/30/95 9.82 0.42 0.51 (0.42) -- -- -- 10.33
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
52
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
<TABLE>
<CAPTION>
RATIO OF NET
NET RATIO OF EXPENSES INVESTMENT INCOME
ASSETS RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
SERVICE CLASS
10/1/96 through 3/31/97 11 4.56% $ 7,231 1.28%2 1.42%2 5.40%2 5.28%2 99%
2/1/96 through 9/30/96 5.39 7,836 1.09 2 1.20 2 3.82 2 3.72 2 108
3/1/95 through 1/31/96 16.79 37,627 1.23 2 1.23 2 5.62 2 5.62 2 159
2/28/95 1.50 45,657 1.24 1.24 5.96 5.96 131
2/28/94 10.24 46,888 1.38 1.38 6.00 6.00 128
2/28/93 9.55 38,257 1.30 1.30 6.31 6.31 115
7/1/91 1 through 2/29/92 5.84 27,774 1.33 2 1.37 2 6.79 2 6.75 2 110
INVESTOR A CLASS
10/1/96 through 3/31/97 11 4.45%3 $ 291 1.40%2 1.51%2 5.19%2 5.08%2 99%
4/22/96 1 through 9/30/96 5.13 3 176 1.45 2 1.86 2 5.29 2 4.88 2 108
INVESTOR B CLASS
10/1/96 THROUGH 3/31/97 11 3.98%4 $ 310 2.00%2 2.11%2 4.30%2 4.19%2 99%
4/19/96 1 through 9/30/96 4.90 4 136 2.09 2 2.49 2 4.61 2 4.21 2 108
INVESTOR C CLASS
10/1/96 through 3/31/97 11 4.00%4 $ 49 2.14%2 2.26%2 4.38%2 4.26%2 99%
9/11/96 1 through 9/30/96 1.24 4 19 1.53 2 1.93 2 2.79 2 2.38 2 108
- -------------------------
TAX-FREE INCOME PORTFOLIO
- -------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 2.81% $ 8,972 0.55%2 0.91%2 5.15%2 4.79%2 114%
9/30/96 7.45 8,350 0.55 0.89 5.10 4.78 268
9/30/95 11.54 271 0.52 1.30 5.19 4.41 92
9/30/94 (3.77) 132 0.50 1.73 4.97 3.74 40
1/21/93 1 THROUGH 9/30/93 10.72 675 0.50 2 1.28 2 5.14 2 4.36 2 71
SERVICE CLASS
10/1/96 through 3/31/97 11 2.66% $41,623 0.85%2 1.21%2 4.84%2 4.48%2 114%
9/30/96 7.14 36,161 0.85 1.18 4.88 4.56 268
9/30/95 11.24 4,713 0.80 1.57 4.92 4.15 92
9/30/94 (4.02) 2,109 0.75 1.98 4.75 3.52 40
7/29/93 1 through 9/30/93 3.92 634 0.71 2 1.49 2 4.99 2 4.21 2 71
INVESTOR A CLASS
10/1/96 through 3/31/97 11 2.57%3 $ 4,816 1.02%2 1.38%2 4.67%2 4.31%2 114%
9/30/96 6.94 3 4,873 1.04 1.37 4.67 4.35 268
9/30/95 10.99 3 6,591 1.00 1.78 4.74 3.96 92
9/30/94 (4.19)3 6,972 0.95 2.18 4.53 3.30 40
9/30/93 13.48 3 7,831 0.57 1.36 5.06 4.27 71
9/30/92 10.67 3 7,349 0.53 1.67 5.56 4.42 38
INVESTOR B CLASS
10/1/96 THROUGH 3/31/97 11 2.19%4 $ 312 1.75%2 2.11%2 3.68%2 3.32%2 114%
7/18/96 1 through 9/30/96 1.72 4 10 1.65 2 1.98 2 3.84 2 3.51 2 268
INVESTOR C CLASS
2/28/97 1 through 3/31/97 11 (1.33)%4 $ -- 1.54%2 1.90%2 5.42%2 5.06%2 114%
- -----------------------------
PENNSYLVANIA TAX-FREE INCOME
- -----------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 2.17% $ 4,883 0.55%2 0.84%2 5.01%2 4.71%2 37%
9/30/96 6.29 3,609 0.55 0.85 5.01 4.72 119
9/30/95 10.81 2,092 0.52 0.84 5.23 4.91 66
9/30/94 (2.96) 639 0.39 0.99 5.27 4.67 30
12/1/92 1 through 9/30/93 11.69 256 0.09 2 0.97 2 5.19 2 4.31 2 40
Service Class
10/1/96 through 3/31/97 11 2.02% $36,145 0.85%2 1.14%2 4.70%2 4.40%2 37%
9/30/96 5.97 34,297 0.85 1.15 4.74 4.44 119
9/30/95 10.51 13,815 0.79 1.11 5.04 4.72 66
9/30/94 (3.20) 11,518 0.55 1.15 4.97 4.37 30
7/29/93 1 through 9/30/93 3.54 3,894 0.34 2 0.01 2 4.90 2 4.02 2 40
INVESTOR A CLASS
10/1/96 through 3/31/97 11 1.95%3 $35,696 0.97%2 1.29%2 4.56%2 4.27%2 37%
9/30/96 5.81 3 38,031 1.00 1.30 4.58 4.29 119
9/30/95 10.30 3 42,775 0.98 1.30 4.88 4.56 66
9/30/94 (3.06)3 46,563 0.41 1.01 5.06 4.46 30
12/1/92 1 through 9/30/93 11.69 3 35,934 0.07 2 0.95 2 5.19 2 4.31 2 40
INVESTOR B CLASS
10/1/96 through 3/31/97 11 1.55%4 $ 9,559 1.77%2 2.06%2 3.76%2 3.47%2 37%
9/30/96 5.04 4 7,974 1.74 2.03 3.81 3.51 119
10/3/94 1 through 9/30/95 9.69 4 4,008 1.57 2 1.89 2 4.07 2 3.75 2 66
</TABLE>
53
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET NET GAIN DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS NET
ASSET (LOSS) ON DISTRIBUTIONS IN EXCESS FROM NET IN EXCESS ASSET
VALUE NET INVESTMENTS FROM NET OF NET REALIZED OF NET VALUE
BEGINNING INVESTMENT (BOTH REALIZED INVESTMENT INVESTMENT CAPITAL REALIZED END OF
OF PERIOD INCOME AND UNREALIZED) INCOME INCOME GAINS GAINS PERIOD
====================================================================================================================================
- -----------------------------
NEW JERSEY TAX-FREE PORTFOLIO
- -----------------------------
SERVICE CLASS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/1/96 through 3/31/97 11 $11.27 $0.26 $(0.01) $(0.26) $ -- $ -- $ -- $11.26
2/1/96 through 9/30/96 11.61 0.73 (0.32) (0.75) -- -- -- 11.27
3/1/95 through 1/31/96 10.94 0.46 0.65 (0.44) -- -- -- 11.61
2/28/95 11.31 0.51 (0.36) (0.51) -- (0.01) -- 10.94
2/28/94 11.30 0.54 0.04 (0.54) -- (0.03) -- 11.31
2/28/93 10.46 0.52 0.85 (0.53) -- -- -- 11.30
7/1/91 1 THROUGH 2/29/92 10.00 0.34 0.45 (0.33) -- -- -- 10.46
INVESTOR A CLASS
10/1/96 through 3/31/97 11 $11.27 $0.25 $(0.01) $(0.25) $ -- $ -- $ -- $11.26
2/1/96 through 9/30/96 11.61 0.34 (0.34) (0.34) -- -- -- 11.27
1/26/96 1 through 1/31/96 11.54 -- 0.07 -- -- -- -- 11.61
INVESTOR B CLASS
10/1/96 through 3/31/97 11 $11.27 $0.20 -- $(0.21) $ -- $ -- $ -- $11.26
7/2/96 1 THROUGH 9/30/96 11.15 0.09 0.12 (0.09) -- -- -- 11.27
- ------------------------------
OHIO TAX-FREE INCOME PORTFOLIO
- ------------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 $10.15 $0.24 $(0.01) $(0.25) $ -- $ -- $ -- $10.13
9/30/96 10.05 0.50 0.10 (0.50) -- -- -- 10.15
9/30/95 9.60 0.55 0.45 (0.55) -- -- -- 10.05
9/30/94 10.53 0.53 (0.91) (0.53) -- (0.02) -- 9.60
12/1/92 1 through 9/30/93 10.00 0.36 0.53 (0.36) -- -- -- 10.53
Service Class
10/1/96 through 3/31/97 11 $10.15 $0.23 $(0.02) $(0.23) $ -- $ -- $ -- $10.13
9/30/96 10.05 0.48 0.10 (0.48) -- -- -- 10.15
9/30/95 9.60 0.52 0.45 (0.52) -- -- -- 10.05
9/30/94 10.53 0.49 (0.91) (0.49) -- (0.02) -- 9.60
7/29/93 1 through 9/30/93 10.24 0.09 0.29 (0.09) -- -- -- 10.53
INVESTOR A CLASS
10/1/96 through 3/31/97 11 $10.15 $0.23 $(0.02) $(0.23) $ -- $ -- $ -- $10.13
9/30/96 10.05 0.46 0.10 (0.46) -- -- -- 10.15
9/30/95 9.60 0.52 0.45 (0.52) -- -- -- 10.05
9/30/94 10.53 0.53 (0.91) (0.53) -- (0.02) -- 9.60
12/1/92 1 through 9/30/93 10.00 0.36 0.53 (0.36) -- -- -- 10.53
INVESTOR B CLASS
10/1/96 through 3/31/97 11 $10.15 $0.19 $(0.02) $(0.19) $ -- $ -- $ -- $10.13
9/30/96 10.05 0.38 0.10 (0.38) -- -- -- 10.15
10/13/94 1 THROUGH 9/30/95 9.58 0.42 0.47 (0.42) -- -- -- 10.05
<FN>
1 Commencement of operations of share class.
2 Annualized.
3 Sales load not reflected in total return.
4 Contingent deferred sales load not reflected in total return.
5 Including interest expense, the ratios for investor B and Investor C would
have been 2.15%, and 2.06%, respectively, for the period ended March 31,
1997, the Institutional, Service, and Investor A would have been 0.86%,
1.16%, 1.34%, respectively, for the period ended March 31, 1997, and 0.64%,
0.97%, and 1.12%, respectively, for the period ended September 30, 1996,
and 0.96%, 1.18%, and 1.34%, respectively, for the period ended March 31,
1996. For the periods prior to March 31, 1996, interest income was
presented net of interest expense.
6 Including interest expense, ratios for the Investor B and Investor C would
have been 1.95% and 1.87%, respectively, for the period ended March 31,
1997, the Institutional, Service and Investor A would have been 0.71%,
1.02%, 1.20%, respectively, for the period ended March 31, 1997, and 0.70%,
1.00%, and 1.14%, respectively, for the period ended September 30, 1996,
and 0.42%, 0.69%, and 0.70%, respectively, for the period ended September
30, 1995.
</FN>
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
54
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
<TABLE>
<CAPTION>
RATIO OF NET
NET RATIO OF EXPENSES INVESTMENT INCOME
ASSETS RATIO OF TO AVERAGE RATIO OF NET TO AVERAGE
END OF EXPENSES TO NET ASSETS INVESTMENT INCOME NET ASSETS PORTFOLIO
TOTAL PERIOD AVERAGE NET (EXCLUDING TO AVERAGE NET (EXCLUDING TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
===============================================================================================================================
- -----------------------------
NEW JERSEY TAX-FREE PORTFOLIO
- -----------------------------
SERVICE CLASS
<S> <C> <C> <C> <C> <C> <C> <C>
10/1/96 through 3/31/97 11 2.22% $ 83,924 0.85%2 1.16%2 4.56%2 4.25%2 41%
2/1/96 through 9/30/96 0.15 88,077 0.85 2 1.17 2 4.44 2 4.13 2 109
3/1/95 through 1/31/96 10.35 97,976 0.88 2 0.90 2 4.43 2 4.41 2 26
2/28/95 1.49 96,857 0.79 0.87 4.71 4.63 28
2/28/94 5.18 111,354 0.38 0.86 4.75 4.27 12
2/28/93 13.48 47,169 0.48 1.04 5.04 4.48 16
7/1/91 1 THROUGH 2/29/92 8.02 10,673 0.52 2 1.29 2 5.35 2 4.58 2 0
INVESTOR A CLASS
10/1/96 through 3/31/97 11 2.15%3 $ 894 1.02%2 1.33%2 4.38%2 4.06%2 41%
2/1/96 through 9/30/96 (0.01)3 894 1.01 2 1.33 2 4.29 2 3.98 2 109
1/26/96 1 through 1/31/96 0.63 3 14 1.02 2 1.36 2 2.79 2 2.45 2 26
INVESTOR B CLASS
10/1/96 through 3/31/97 11 1.77%4 $ 426 1.71%2 2.02%2 3.50%2 3.18%2 41%
7/2/96 1 THROUGH 9/30/96 2.04 4 30 1.74 2 2.06 2 3.48 2 3.16 2 109
- ------------------------------
OHIO TAX-FREE INCOME PORTFOLIO
- ------------------------------
INSTITUTIONAL CLASS
10/1/96 through 3/31/97 11 2.25% $ 812 0.55%2 1.07%2 4.83%2 4.32%2 51%
9/30/96 6.12 409 0.51 1.10 4.96 4.37 136
9/30/95 10.75 200 0.12 1.19 5.61 4.54 63
9/30/94 (3.75) 127 0.10 1.49 5.16 3.77 61
12/1/92 1 through 9/30/93 9.10 1,676 0.08 2 2.59 2 4.99 2 2.48 2 36
Service Class
10/1/96 through 3/31/97 11 2.10% $ 6,783 0.85%2 1.37%2 4.55%2 4.04%2 51%
9/30/96 5.80 6,377 0.79 1.38 4.69 4.10 136
9/30/95 10.45 5,150 0.39 1.46 5.39 4.31 63
9/30/94 (4.00) 4,428 0.35 1.74 5.06 3.67 61
7/29/93 1 through 9/30/93 3.68 907 0.32 2 2.83 2 4.71 2 2.20 2 36
INVESTOR A CLASS
10/1/96 through 3/31/97 11 2.01%3 $ 2,663 1.02%2 1.54%2 4.39%2 3.87%2 51%
9/30/96 5.66 3 2,833 0.91 1.50 4.57 3.98 136
9/30/95 10.46 3 3,303 0.38 1.45 5.42 4.35 63
9/30/94 (3.75)3 3,825 0.10 1.49 5.18 3.79 61
12/1/92 1 through 9/30/93 9.10 3 2,386 0.07 2 2.58 2 4.90 2 2.39 2 36
INVESTOR B CLASS
10/1/96 through 3/31/97 11 1.63%4 $ 471 1.72%2 2.23%2 3.50%2 2.98%2 51%
9/30/96 4.87 4 161 1.66 2.26 3.80 3.21 136
10/13/94 1 THROUGH 9/30/95 9.33 4 106 1.17 2 2.25 2 4.48 2 3.41 2 63
<FN>
7 Including interest expense, ratios for the Institutional, Service and
Investor A would have been 0.80%, 1.09%, and 1.26%, respectively for the
period ended March 31, 1997, and 0.83%, 1.14% and 1.27%, respectively, for
the period ended September 30, 1996, and 0.55%, 0.82%, and 0.84%,
respectively, for the period ended September 30, 1995.
8 Including interest expense, ratios for the Investor C would have been
1.44%, for the period ended March 31, 1997, the Institutional, Service,
Investor A, and Investor B would have been 1.34%, 1.67%, 1.80% and 2.54%
respectively, for the period ended March 31, 1997, and 0.80%, 1.08%, 1.27%,
and 2.00%, respectively, for the period ended September 30, 1996, and
0.75%, 0.94%, 1.11%, and 1.86%, respectively, for the period ended March
31, 1996. For the periods prior to March 31, 1996, interest income was
presented net of interest expense.
9 Including interest expense, ratios for the Investor C would have been
0.54%, for the period ended March 31, 1997, Investor A and Investor B would
have been 1.92%, and 2.65%, respectively, for the period ended March 31,
1997, 2.96% and 0.92%, respectively, for the period ended September 30,
1996, and 3.61%, and 1.60%, respectively, for the period ended September
30, 1995.
10 Including interest expense, ratios for the Institutional, Service, and
Investor A would have been 0.65%, 0.94% and 1.11%, respectively, for the
period ended March 31, 1997.
11 Unaudited.
</FN>
</TABLE>
55
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Compass Capital FundsSM ("the Fund") (formerly The PNC(REGISTRATION MARK)
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 currently has 30
publicly-offered portfolios, 11 of which are included in these financial
statements (the "Portfolios"). Each Portfolio is authorized to issue an
unlimited number of shares with a par value of $0.001. Portfolios of the Fund
offer as many as five classes of shares. Shares of all classes of a Portfolio
represent equal pro rata interests in such Portfolio, except that each class
bears different expenses which reflect the difference in the range of services
provided to them. The following table provides a list of the Portfolios included
in this report along with a summary of their respective class-specific fee
arrangements as provided under the Fund's Amended and Restated Distribution and
Service Plan (the "Plan"). Fees are expressed as a percentage of average daily
net asset values of the respective classes.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO SHARE CLASSES
- ------------------------------------------------------------------------------------------------------------------------------------
Institutional Service Investor A Investor B Investor C
- ------------------------------------------------------------------------------------------------------------------------------------
Contractual Actual Contractual Actual Contractual Actual Contractual Actual Contractual Actual
Fees Fees(4) Fees(1) Fees(4) Fees(2) Fees(4) Fees(3) Fees(4) Fees(3) Fees(4)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Low Duration Bond (formerly
Short Government Bond) None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Intermediate Government Bond None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Intermediate Bond None None 0.30% 0.30% 0.50% 0.40% 1.15% N/A 1.15% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Core Bond None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Government Income None None 0.30% N/A 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Managed Income None None 0.30% 0.30% 0.50% 0.40% 1.15% N/A 1.15% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
International Bond None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-Free Income None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% 1.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Tax-Free Income None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
New Jersey Tax-Free Income None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Ohio Tax-Free Income None None 0.30% 0.30% 0.50% 0.40% 1.15% 1.15% 1.15% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) -- the maximum annual contractual fees are comprised of a .15% service fee
and .15% shareholder processing fee.
(2) -- the maximum annual contractual fees are comprised of a .10% distribution
fee, .25% service fee and .15% shareholder processing fee.
(3) -- the maximum annual contractual fees are comprised of a .75% distribution
fee, .25% service fee and .15% shareholder processing fee.
(4) -- the actual fees are as of March 31, 1997.
</FN>
</TABLE>
In addition, Institutional and Service shares bear a Transfer Agent fee at
an annual rate not to exceed .03% and Investor A, Investor B and Investor C
shares bear a Transfer Agent fee at an annual rate not to exceed .10% of the
average daily net assets of such respective classes.
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires the use of management estimates. Actual results could differ from these
estimates.
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.
56
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
DIVIDENDS TO SHAREHOLDERS -- Dividends from net investment income are
declared by each Portfolio each day on "settled" shares (i.e. shares for which
the particular Portfolio has received payment in federal funds) and are paid
monthly. Over the course of a year, substantially all of each Portfolio's net
investment income will be declared as dividends. The amount of the daily
dividend for each Portfolio will be based on periodic projections of its net
investment income. 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 principles related
to the character of income and expense recognition.
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 TRANSLATION -- The books and records of the International
Bond Portfolio are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars on the following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates
of such transactions.
The International Bond Portfolio isolates that portion of gains and losses
on investment securities which is due to changes in the foreign exchange rates
from that which is due to changes in market prices of such securities.
The International Bond Portfolio reports certain foreign currency related
transactions as components of realized and unrealized gains for financial
reporting purposes, whereas such components are treated as ordinary income for
federal income tax purposes.
FORWARD FOREIGN CURRENCY CONTRACTS -- The International Bond Portfolio
enters into forward foreign currency contracts as a hedge against either
specific transactions or portfolio positions. These contracts are adjusted by
the daily exchange rate of the underlying currency and any gains or losses are
recorded as unrealized until the contract settlement date. Such contracts, which
protect the value of the International Bond Portfolio's investment securities
against a decline in the value of currency, do not eliminate fluctuations in the
underlying prices of the securities. They simply establish an exchange rate at a
future date. Also, although such contracts tend to minimize the risk of loss due
to a decline in the value of a hedged currency, at the same time they tend to
limit any potential gain that might be realized should the value of such foreign
currency increase. 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 a foreign currency relative to the
U.S. dollar.
The aggregate principal amounts of the contracts are not recorded as the
International Bond Portfolio intends to settle the contracts prior to delivery.
Under the terms of foreign currency contracts open at March 31, 1997, the
International Bond Portfolio is obligated to deliver or receive currency in
exchange for U.S. dollars as indicated below:
UNREALIZED
VALUE AT FOREIGN
SETTLEMENT CURRENCY CONTRACT MARCH 31, EXCHANGE
DATE BOUGHT AMOUNT 1997 GAIN/(LOSS)
- ---------- --------------------------- ---------- ---------- -----------
5/20/97 Swiss Franc ............... $3,138,083 $3,210,184 $ 72,101
5/20/97 British Pound Sterling .... 3,188,600 3,288,933 100,333
---------- ---------- --------
$6,326,683 $6,499,117 $172,434
========== ========== ========
57
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
UNREALIZED
VALUE AT FOREIGN
SETTLEMENT CURRENCY CONTRACT MARCH 31, EXCHANGE
DATE SOLD AMOUNT 1997 GAIN/(LOSS)
- ---------- --------------------------- ----------- ----------- -----------
4/10/97 Spanish Peso .............. $ 1,719,170 $ 1,771,458 $ (52,288)
4/10/97 Italian Lira .............. 3,472,914 3,555,582 (82,668)
4/16/97 Australian Dollar ......... 2,937,800 2,899,989 37,811
4/16/97 French Franc .............. 1,668,864 1,694,849 (25,985)
5/20/97 Danish Krone .............. 2,873,877 2,907,421 (33,544)
5/20/97 German Deutsche Mark ...... 7,898,659 7,984,333 (85,674)
5/20/97 British Pound Sterling .... 8,159,900 8,386,779 (226,879)
5/20/97 Swedish Krone ............. 2,839,757 2,795,416 44,341
5/20/97 Swiss Franc ............... 3,189,854 3,210,184 (20,330)
6/10/97 Japanese Yen .............. 7,041,667 6,908,769 132,898
6/10/97 Canadian Dollar ........... 2,306,559 2,272,426 34,133
----------- ----------- ---------
$44,109,021 $44,387,206 $(278,185)
=========== =========== =========
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.
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.
REVERSE REPURCHASE AGREEMENTS -- The Fund enters into reverse repurchase
agreements with qualified, third party broker-dealers as determined by and under
the direction of the Fund's Board of Trustees. 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 identifies for segregation certain liquid securities
having a value not less than the repurchase price, including accrued interest,
of the reverse repurchase agreement.
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 a Portfolio'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.
MORTGAGE DOLLAR ROLLS -- Each Portfolio (except the Tax-Free Income,
Pennsylvania Tax-Free Income, New Jersey Tax-Free Income and Ohio Tax-Free
Income Portfolios) may enter into mortgage dollar rolls (principally using
TBA's) in which the Portfolio sells mortgage securities for delivery in the
current month and simultaneously contracts to repurchase similar, but not
identical, securities at an agreed-upon price on a fixed date. The Portfolio
accounts for such dollar rolls as purchases and sales and receives compensation
as consideration for entering into the commitment to repurchase. A Portfolio
must maintain liquid securities having a value not less than the repurchase
price (including accrued interest) for such dollar rolls.
In a "fee" roll, the compensation is recorded as deferred income and
amortized to income over the roll period. In a "drop" roll, the compensation is
paid via a lower price for the security upon its repurchase. The counterparty
receives all principal and interest payments, including prepayments, made in
respect of a security subject to such a contract while it is the holder.
Mortgage dollar rolls may be renewed with a new purchase and repurchase price
fixed and a cash settlement made on settlement date without physical delivery of
the securities subject to the contract. A Portfolio engages in dollar rolls for
the purpose of enhancing its yield, principally by earning a negotiated fee.
58
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
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.
SECURITIES LENDING -- Loans of securities are required at all times to be
secured by collateral at least equal to 102% of the market value of the
securities on loan. However, in the event of default or bankruptcy by the other
party to the agreement, realization and/or retention of the collateral may be
subject to legal proceedings. The market value of securities on loan to brokers
and the value of collateral held by the Fund with respect to such loans
(including rights to draw on letters of credit) at March 31, 1997, is as
follows:
VALUE OF
MARKET VALUE OF COLLATERAL
PORTFOLIO SECURITIES LOANED RECEIVED
--------- ----------------- -----------
Intermediate Bond Portfolio ........... $ 4,082,054 $ 4,185,638
Core Bond Portfolio ................... 37,213,026 39,653,363
Managed Income Portfolio .............. 69,110,750 71,771,875
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.
(B) TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to an Investment Advisory Agreement, PNC Asset Management Group,
Inc. ("PAMG"), a wholly-owned subsidiary of PNC Bank, National Association ("PNC
Bank"), serves as investment adviser for the Portfolios. BlackRock Financial
Management, Inc. ("BlackRock"), a wholly-owned subsidiary of PAMG, serves as
sub-adviser for all of the Portfolios. Morgan Grenfell Investment Services
Limited ("Morgan Grenfell") served as sub-adviser of the
InternationalBondPortfolio prior to December 31, 1996. PAMG, PNC Bank and
BlackRock are indirect wholly-owned subsidiaries of PNC Bank Corp.
For its advisory services, PAMG is entitled to receive fees, computed daily
and paid monthly, at the following annual rates, based on each Portfolio's
average daily net assets:
EACH PORTFOLIO
EXCEPT THE INTERNATIONAL INTERNATIONAL
BOND PORTFOLIO BOND PORTFOLIO
------------------------ --------------
INVESTMENT INVESTMENT
AVERAGE DAILY NET ASSETS ADVISORY FEE ADVISORY FEE
------------------------------ ------------------------ --------------
first $1 billion ............. .500% .550%
$1 billion - $2 billion ...... .450 .500
$2 billion - $3 billion ...... .425 .475
greater than $3 billion ...... .400 .450
59
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
PAMG may, at its discretion, waive all or any portion of its advisory fee
for any Portfolio. For the period ended March 31, 1997, advisory fees and
waivers for each Portfolio were as follows:
GROSS NET ADVISORY
ADVISORY FEE WAIVER FEE
------------ -------- ------------
Low Duration Bond Portfolio ............... $ 553,798 $221,519 $ 332,279
Intermediate Government Bond Portfolio .... 397,104 158,841 238,263
Intermediate Bond Portfolio ............... 767,933 307,173 460,760
Core Bond Portfolio ....................... 803,772 321,509 482,263
Government Income Portfolio ............... 39,437 39,437 --
Managed Income Portfolio .................. 1,834,348 550,304 1,284,044
International Bond Portfolio .............. 111,292 -- 111,292
Tax-Free Income Portfolio ................. 129,992 51,997 77,995
Pennsylvania Tax-Free Income Portfolio .... 214,978 85,991 128,987
New Jersey Tax-Free Income Portfolio ...... 219,458 87,783 131,675
Ohio Tax-Free Income Portfolio ............ 25,549 20,453 5,096
PAMG pays BlackRock fees for its sub-advisory services.
PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of PNC Bank Corp.,
Compass Capital Group, Inc. ("CCG"), an indirect wholly-owned subsidiary of PNC
Bank Corp., and Compass Distributors, Inc. ("CDI") act as co-administrators 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: .23% of the first $500 million, .21% of the next $500
million, .19% of the next $1 billion and .18% of average daily net assets in
excess of $2 billion.
PFPC, CCG and CDI may, at their discretion, voluntarily waive all or any
portion of their administration fees for any Portfolio. For the period ended
March 31, 1997, administration fees and waivers for each Portfolio were as
follows:
GROSS NET
ADMINISTRATION ADMINISTRATION
FEE WAIVER FEE
--------------- -------- --------------
Low Duration Bond Portfolio ....... $254,747 $103,382 $151,365
Intermediate Government Bond
Portfolio ...................... 182,668 89,607 93,061
Intermediate Bond Portfolio ....... 353,249 136,685 216,564
Core Bond Portfolio ............... 369,735 133,684 236,051
Government Income Portfolio ....... 18,141 18,141 --
Managed Income Portfolio .......... 820,289 385,398 434,891
International Bond Portfolio ...... 46,540 23,215 23,325
Tax-Free Income Portfolio ......... 59,797 41,353 18,444
Pennsylvania Tax-Free Income
Portfolio ...................... 98,890 40,309 58,581
New Jersey Tax-Free Income
Portfolio ...................... 100,951 49,759 51,192
Ohio Tax-Free Income Portfolio .... 11,753 5,872 5,881
In addition, PNC Bank serves as custodian for each of the Fund's
Portfolios. PFPC serves as transfer and dividend disbursing agent.
PAMG, PFPC, CCG and CDI have also voluntarily agreed to reimburse expenses
in the amount of $1,392 with respect to the Government Income Portfolio for the
period ended March 31, 1997.
60
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
(C) PURCHASES AND SALES OF SECURITIES
For the period ended March 31, 1997, purchases and sales of securities,
other than short-term and government securities, were as follows:
PURCHASES SALES
-------------- --------------
Low Duration Bond Portfolio ................ $ 304,431,713 $ 198,973,410
Intermediate Government Bond Portfolio ..... 106,270,618 91,398,936
Intermediate Bond Portfolio ................ 366,260,509 205,323,306
Core Bond Portfolio ........................ 367,148,687 284,910,282
Government Income Portfolio ................ 42,980,187 42,070,320
Managed Income Portfolio ................... 1,355,554,574 1,260,889,871
International Bond Portfolio ............... 36,812,674 35,434,415
Tax-Free Income Portfolio .................. 63,927,900 59,190,124
Pennsylvania Tax-Free Income Portfolio ..... 24,108,078 23,184,093
New Jersey Tax-Free Income Portfolio ....... 35,809,245 40,249,925
Ohio Tax-Free Income Portfolio ............. 5,658,136 5,096,087
For the period ended March 31, 1997, purchases and sales of government
securities were as follows:
PURCHASES SALES
------------ ------------
Low Duration Bond Portfolio ................ $208,855,321 $298,828,521
Intermediate Government Bond Portfolio ..... 103,771,286 134,829,174
Intermediate Bond Portfolio ................ 242,403,538 273,405,657
Core Bond Portfolio ........................ 744,436,397 694,746,329
Government Income Portfolio ................ 9,125,823 8,255,864
Managed Income Portfolio ................... 794,751,288 750,425,336
International Bond ......................... 1,983,750 1,978,750
61
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(D) CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
LOW DURATION BOND PORTFOLIO
-------------------------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE PERIOD 4/1/96 FOR THE PERIOD 7/1/95
ENDED 3/31/97 (UNAUDITED) THROUGH 9/30/96 THROUGH 3/31/96
--------------------------- --------------------------- ----------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
----------- ---------- ---------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Prior Shares
Exchanged in merger .............. -- $ -- -- $ -- (5,134,946) $ (50,925,592)
Shares sold ...................... -- -- -- -- 2,933,108 28,958,863
Shares issued in reinvestment
of dividends .................. -- -- -- -- 86,191 850,722
Shares redeemed .................. -- -- -- -- (2,408,838) (23,680,688)
----------- ------------ ---------- ------------- ---------- ------------
-- -- -- -- (4,524,485) (44,796,695)
Institutional Shares
Exchanged in merger .............. -- -- -- -- 5,134,946 50,887,316
Shares sold ...................... 3,757,584 37,030,344 9,225,816 89,952,232 416,055 4,146,059
Shares issued in merger .......... -- -- -- -- 940,915 9,405,883
Shares issued in reinvestment
of dividends .................. 62,327 613,418 23,549 229,714 10,535 104,431
Shares redeemed .................. (4,691,462) (46,259,328) (791,967) (7,725,214) (1,106,898) (11,157,065)
----------- ------------ ---------- ------------- ---------- ------------
(871,551) (8,615,566) 8,457,398 82,456,732 5,395,553 53,386,624
Service Shares
Shares sold ...................... 311,424 3,064,649 16,672,550 162,889,478 475,915 4,712,118
Shares issued in merger .......... -- -- -- -- 19,399,025 192,267,748
Shares issued in reinvestment
of dividends .................. 21,900 215,521 57,731 564,224 50,924 503,581
Shares redeemed .................. (1,270,970) (12,510,776) (25,900,305) (252,860,371) (1,376,331) (13,627,909)
----------- ------------ ---------- ------------- ---------- ------------
(937,646) (9,230,606) (9,170,024) (89,406,669) 18,549,533 183,855,538
Investor A Shares
Shares sold ...................... 38,141 375,325 53,769 523,653 39,732 397,522
Shares issued in merger .......... -- -- -- -- 34,465 337,269
Shares issued in reinvestment
of dividends .................. 2,047 20,151 1,958 19,101 301 2,975
Shares redeemed .................. (33,814) (332,766) (33,479) (326,419) (1,014) (9,940)
----------- ------------ ---------- ------------- ---------- ------------
6,374 62,710 22,248 216,335 73,484 727,826
Investor B Shares
Shares sold ...................... 4,399 43,383 -- -- -- --
Shares issued in reinvestment
of dividends .................. 34 335 -- -- -- --
Shares redeemed .................. (128) (1,260) -- -- -- --
----------- ------------ ---------- ------------- ---------- ------------
4,305 42,458 -- -- -- --
Investor C Shares
Shares sold ...................... 3,647 36,000 -- -- -- --
Shares issued in reinvestment
of dividends .................. -- 5 -- -- -- --
Shares redeemed .................. (408) (4,000) -- -- -- --
----------- ------------ ---------- ------------- ---------- ------------
3,239 32,005 -- -- -- --
----------- ------------ ---------- ------------- ---------- ------------
Net increase (decrease) ............... (1,795,279) $(17,708,999) (690,378) $ (6,733,602) 19,494,085 $193,173,293
=========== ============ ========== ============= ========== ============
</TABLE>
62
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT BOND PORTFOLIO
--------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED 3/31/97 (UNAUDITED) 9/30/96
---------------------------------- ----------------------------------
SHARES VALUE SHARES VALUE
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................... 1,136,249 $ 11,354,284 3,580,617 $ 35,995,887
Service Class ................................. 625,733 6,269,196 1,372,028 13,740,362
Investor A Class .............................. 59,486 595,888 140,064 1,399,514
Investor B Class .............................. 2,656 26,509 -- --
Investor C Class .............................. 1,281 12,791 -- --
Shares issued in reinvestment of dividends:
Institutional Class ........................... 4,658 46,651 322,528 3,252,027
Service Class ................................. -- -- 89,356 901,214
Investor A Class .............................. 15,319 153,442 36,588 366,222
Investor B Class .............................. 47 468 -- --
Investor C Class .............................. 5 48 -- --
Shares redeemed:
Institutional Class ........................... (4,594,843) (46,045,900) (4,630,262) (46,321,923)
Service Class ................................. (567,184) (5,676,446) (1,641,252) (16,487,300)
Investor A Class .............................. (98,231) (983,079) (559,603) (5,587,294)
Investor B Class .............................. -- -- -- --
Investor C Class .............................. (10) (103) -- --
---------- ------------ ---------- ------------
Net (decrease) (3,414,834) $(34,246,251) (1,289,936) $(12,741,291)
========== ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE BOND PORTFOLIO
--------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED 3/31/97 (UNAUDITED) 9/30/96
---------------------------------- ----------------------------------
SHARES VALUE SHARES VALUE
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................... 10,399,730 $ 97,870,606 12,073,053 $113,370,659
Service Class ................................. 1,153,965 10,865,778 2,319,939 21,815,444
Investor A Class .............................. 53,816 505,756 57,644 541,668
Shares issued in reinvestment of dividends:
Institutional Class ........................... 35,357 333,043 483,706 4,588,719
Service Class ................................. 5,451 51,351 91,490 867,920
Investor A Class .............................. 3,099 29,151 4,611 43,286
Shares redeemed:
Institutional Class ........................... (2,263,619) (21,250,513) (3,508,326) (32,933,287)
Service Class ................................. (854,935) (8,023,034) (1,439,046) (13,480,000)
Investor A Class .............................. (50,190) (470,907) (30,508) (284,730)
---------- ------------ ---------- ------------
Net increase ....................................... 8,482,674 $ 79,911,231 10,052,563 $ 94,529,679
========== ============ ========== ============
</TABLE>
63
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
CORE BOND PORTFOLIO
-------------------------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE PERIOD 4/1/96 FOR THE PERIOD 7/1/95
ENDED 3/31/97 (UNAUDITED) THROUGH 9/30/96 THROUGH 3/31/96
--------------------------- --------------------------- ----------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
----------- ---------- ---------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Prior Class
Exchanged in merger .............. -- $ -- -- $ -- (4,700,542) $(46,206,171)
Shares sold ...................... -- -- -- -- 1,497,044 14,872,835
Shares issued in reinvestment
of dividends .................. -- -- -- -- 196,492 1,955,692
Shares redeemed .................. -- -- -- -- (260,446) (2,606,563)
---------- ------------ ----------- ------------- ---------- ------------
-- -- -- -- (3,267,452) (31,984,207)
Institutional Class
Exchanged in merger .............. -- -- -- -- 4,700,542 46,582,367
Shares sold ...................... 11,806,474 114,241,240 15,972,754 151,512,501 2,616,796 25,552,564
Shares issued in reinvestment
of dividends .................. 214,502 2,077,520 119,442 1,135,289 27,377 269,114
Shares redeemed .................. (1,806,915) (17,507,790) (5,791,581) (54,781,902) (614,318) (6,135,169)
---------- ------------ ----------- ------------- ---------- ------------
10,214,061 98,810,970 10,300,615 97,865,888 6,730,397 66,268,876
Service Class
Shares sold ...................... 1,129,460 10,917,240 24,290,953 231,789,252 346,922 3,408,413
Shares issued in merger .......... -- -- -- -- 25,643,056 254,122,684
Shares issued in reinvestment
of dividends .................. 68,873 667,440 54,759 522,688 40,334 396,628
Shares redeemed .................. (1,339,526) (12,974,342) (36,205,585) (344,905,834) (1,895,903) (18,771,943)
---------- ------------ ----------- ------------- ---------- ------------
(141,193) (1,389,662) (11,859,873) (112,593,894) 24,134,409 239,155,782
Investor A Class
Shares sold ...................... 53,166 513,676 41,711 395,732 9,091 87,910
Shares issued in reinvestment
of dividends .................. 1,467 14,206 285 2,706 4 40
Shares redeemed .................. (8,163) (78,667) (16,852) (159,534) (736) (7,068)
---------- ------------ ----------- ------------- ---------- ------------
46,470 449,215 25,144 238,904 8,359 80,882
Investor B Class
Shares sold ...................... 209,391 2,021,391 155,168 1,476,084 8,051 77,471
Shares issued in reinvestment
of dividends .................. 3,763 36,448 311 2,944 -- --
Shares redeemed .................. (29,103) (280,395) (6,705) (63,800) -- --
---------- ------------ ----------- ------------- ---------- ------------
184,051 1,777,444 148,774 1,415,228 8,051 77,471
Investor C Class
Shares sold ...................... 31 300 -- -- -- --
Shares issued in reinvestment
of dividends .................. -- -- -- -- -- --
Shares redeemed .................. -- -- -- -- -- --
---------- ------------ ----------- ------------- ---------- ------------
31 300 -- -- -- --
Net increase (decrease) ............... 10,303,420 $ 99,648,267 (1,385,340) $ (13,073,874) 27,613,764 $273,598,804
========== ============ =========== ============= ========== ============
</TABLE>
64
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
<TABLE>
<CAPTION>
GOVERNMENT INCOME PORTFOLIO
--------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED 3/31/97 (UNAUDITED) 9/30/96
---------------------------------- ----------------------------------
SHARES VALUE SHARES VALUE
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Shares sold:
Investor A Class .............................. 130,122 $ 1,339,832 182,347 $ 1,897,315
Investor B Class .............................. 206,141 2,128,640 262,359 2,723,489
Investor C Class .............................. 5,787 58,801 -- --
Shares issued in reinvestment of dividends:
Investor A Class .............................. 12,488 128,997 25,834 269,474
Investor B Class .............................. 22,193 229,263 50,171 524,556
Investor C Class .............................. -- -- -- --
Shares redeemed:
Investor A Class .............................. (103,280) (1,066,266) (130,085) (1,347,617)
Investor B Class .............................. (88,500) (912,335) (176,000) (1,822,188)
Investor C Class .............................. -- -- --
-------- ----------- -------- -----------
Net increase ....................................... 184,951 $ 1,906,932 214,626 $ 2,245,029
======== =========== ======== ===========
</TABLE>
<TABLE>
<CAPTION>
MANAGED INCOME PORTFOLIO
--------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED 3/31/97 (UNAUDITED) 9/30/96
---------------------------------- ----------------------------------
SHARES VALUE SHARES VALUE
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ........................... 4,792,082 $ 49,095,298 17,536,625 $178,831,880
Service Class ................................. 5,587,048 57,296,664 8,904,551 91,416,793
Investor A Class .............................. 1,721,365 17,590,108 305,441 3,146,031
Shares issued in reinvestment of dividends:
Institutional Class ........................... 83,885 859,643 1,660,070 17,311,187
Service Class ................................. 80 819 354,837 3,702,327
Investor A Class .............................. 31,513 322,925 66,577 684,743
Shares redeemed:
Institutional Class ........................... (12,258,449) (125,848,808) (5,901,770) (60,385,014)
Service Class ................................. (1,803,190) (18,493,006) (4,151,437) (42,503,459)
Investor A Class .............................. (1,473,029) (15,076,401) (416,188) (4,250,126)
----------- ------------- ---------- ------------
Net increase (decrease) ............................ (3,318,695) $ (34,252,758) 18,358,706 $187,954,362
=========== ============= ========== ============
</TABLE>
65
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
INTERNATIONAL BOND PORTFOLIO
-------------------------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE PERIOD 2/1/96 FOR THE PERIOD 3/1/95
ENDED 3/31/97 (UNAUDITED) THROUGH 9/30/96 THROUGH 1/31/96
--------------------------- --------------------------- ----------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
----------- ---------- ---------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Prior Class
Exchanged in merger .............. -- $ -- -- $ -- -- $ --
Shares sold ...................... -- -- -- -- 315,538 3,593,223
Shares issued in reinvestment
of dividends ................... -- -- -- -- 140,790 1,586,753
Shares redeemed .................. -- -- -- -- (1,495,630) (17,160,728)
-------- ----------- ---------- ----------- ---------- ------------
-- -- -- -- (1,039,302) (11,980,752)
-------- ----------- ---------- ----------- ---------- ------------
Institutional Class
Exchanged in merger .............. -- -- -- -- -- --
Shares sold ...................... 284,533 3,141,779 2,641,656 30,118,521 -- --
Shares issued in reinvestment
of dividends ................... 360,725 3,892,626 1,056 12,134 -- --
Shares redeemed .................. (88,306) (973,410) (4,942) (56,751) -- --
-------- ----------- ---------- ----------- ---------- ------------
556,952 6,060,995 2,637,770 30,073,904 -- --
-------- ----------- ---------- ----------- ---------- ------------
Service Class
Exchanged in merger .............. -- -- -- -- -- --
Shares sold ...................... 77,243 857,541 3,506,950 39,736,225 -- --
Shares issued in reinvestment
of dividends ................... 73,169 789,561 7,479 84,539 -- --
Shares redeemed .................. (134,382) (1,449,650) (6,146,919) (69,828,926) -- --
-------- ----------- ---------- ----------- ---------- ------------
16,030 197,452 (2,632,490) (30,008,162) -- --
-------- ----------- ---------- ----------- ---------- ------------
Investor A Class
Shares sold ...................... 12,196 132,434 15,076 173,354 -- --
Shares issued in reinvestment
of dividends ................... 2,226 24,050 21 244 -- --
Shares redeemed .................. (1,880) (20,074) (80) (921) -- --
-------- ----------- ---------- ----------- ---------- ------------
12,542 136,410 15,017 172,677 -- --
-------- ----------- ---------- ----------- ---------- ------------
Investor B Class
Shares sold ...................... 18,682 197,098 11,631 133,879 -- --
Shares issued in reinvestment
of dividends ................... 872 9,430 17 196 -- --
Shares redeemed .................. (1,776) (19,899) (69) (795) -- --
-------- ----------- ---------- ----------- ---------- ------------
17,778 186,629 11,579 133,280 -- --
-------- ----------- ---------- ----------- ---------- ------------
Investor C Class
Shares sold ...................... 2,606 30,621 1,643 19,116 -- --
Shares issued in reinvestment
of dividends ................... 384 4,142 -- -- -- --
Shares redeemed .................. -- -- -- -- -- --
-------- ----------- ---------- ----------- ---------- ------------
2,990 34,763 1,643 19,116 -- --
-------- ----------- ---------- ----------- ---------- ------------
Net increase (decrease) ............... 606,292 $ 6,616,249 33,519 $ 390,815 (1,039,302) $(11,980,752)
======== =========== ========== =========== ========== ============
</TABLE>
66
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
<TABLE>
<CAPTION>
TAX-FREE INCOME PORTFOLIO
--------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED 3/31/97 (UNAUDITED) 9/30/96
---------------------------------- ----------------------------------
SHARES VALUE SHARES VALUE
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ............................ 90,468 $ 992,167 1,048,619 $11,425,325
Service Class .................................. 651,657 7,168,193 3,210,017 34,310,198
Investor A Class ............................... 22,524 247,122 32,034 350,965
Investor B Class ............................... 29,660 324,932 931 10,000
Investor C Class ............................... 27 300 -- --
Shares issued in merger:
Institutional Class ............................ -- -- -- --
Service Class .................................. -- -- 2,577,471 28,042,882
Investor A Class ............................... -- -- -- --
Investor B Class ............................... -- -- -- --
Shares issued in reinvestment of dividends:
Institutional Class ............................ -- -- 104 1,120
Service Class .................................. 3,496 38,364 11,741 126,791
Investor A Class ............................... 8,932 98,028 18,717 201,428
Investor B Class ............................... 125 1,373 -- --
Investor C Class ............................... -- -- -- --
Shares redeemed:
Institutional Class ............................ (35,277) (385,974) (303,674) (3,221,356)
Service Class .................................. (161,165) (1,768,569) (2,906,457) (31,020,750)
Investor A Class ............................... (37,904) (414,303) (222,266) (2,396,426)
Investor B Class ............................... (2,038) (22,279) -- --
Investor C Class ............................... -- -- -- --
-------- ----------- ---------- -----------
Net increase ........................................ 570,505 $ 6,279,354 3,467,237 $37,830,177
======== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
PENNSYLVANIA TAX-FREE INCOME PORTFOLIO
--------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED 3/31/97 (UNAUDITED) 9/30/96
---------------------------------- ----------------------------------
SHARES VALUE SHARES VALUE
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ............................ 166,991 $ 1,753,936 437,476 $ 4,614,807
Service Class .................................. 639,413 6,738,386 2,874,431 29,852,257
Investor A Class ............................... 179,613 1,893,167 334,060 3,474,285
Investor B Class ............................... 212,274 2,234,512 423,077 4,400,686
Shares issued in merger:
Institutional Class ............................ -- -- -- --
Service Class .................................. -- -- 1,676,837 17,707,384
Investor A Class ............................... -- -- -- --
Investor B Class ............................... -- -- -- --
Shares issued in reinvestment of dividends:
Institutional Class ............................ -- -- -- --
Service Class .................................. 2,502 26,383 3,966 41,263
Investor A Class ............................... 71,757 756,657 139,571 1,458,004
Investor B Class ............................... 10,227 107,869 11,556 120,479
Shares redeemed:
Institutional Class ............................ (43,221) (458,039) (294,414) (3,067,917)
Service Class .................................. (451,697) (4,761,631) (2,608,165) (27,050,410)
Investor A Class ............................... (461,897) (4,866,271) (973,547) (10,132,270)
Investor B Class ............................... (67,242) (707,320) (59,032) (614,065)
-------- ----------- ---------- ------------
Net increase ........................................ 258,720 $ 2,717,649 1,965,816 $ 20,804,503
======== =========== ========== ============
</TABLE>
67
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
NEW JERSEY TAX-FREE INCOME PORTFOLIO
-------------------------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE PERIOD 2/1/96 FOR THE PERIOD 3/1/95
ENDED 3/31/97 (UNAUDITED) THROUGH 9/30/96 THROUGH 3/31/96
--------------------------- --------------------------- ----------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
----------- ---------- ---------- ------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Prior Class
Exchanged in merger ............... -- $ -- -- $ -- (8,451,862) $(94,366,666)
Shares sold ....................... -- -- -- -- 790,370 8,844,324
Shares issued in reinvestment
of dividends ................... -- -- -- 122,048 1,368,581
Shares redeemed ................... -- -- -- (1,317,562) (14,786,239)
--------- ----------- ---------- ------------- ---------- ------------
-- -- -- -- (8,857,006) (98,940,000)
--------- ----------- ---------- ------------- ---------- ------------
Service Class
Exchanged in merger ............... -- -- 8,219,826 92,127,639 8,451,862 94,366,666
Shares sold ....................... 249,727 2,845,843 84,899 959,061 75,252 843,989
Shares issued in reinvestment
of dividends ................... 53,401 609,239 (8,927,137) (100,070,903) (83,191) (962,039)
Shares redeemed ................... (667,570) (7,606,405) -- -- -- --
--------- ----------- ---------- ------------- ---------- ------------
(364,442) (4,151,323) (622,412) (6,984,203) 8,443,923 94,248,616
--------- ----------- ---------- ------------- ---------- ------------
Investor A Class
Shares sold ....................... 11,042 125,826 112,810 1,272,555 1,237 14,310
Shares issued in reinvestment
of dividends ................... 1,556 17,753 1,001 11,231 -- --
Shares redeemed ................... (12,529) (142,923) (35,724) (401,424) -- --
--------- ----------- ---------- ------------- ---------- ------------
69 656 78,087 882,362 1,237 14,310
--------- ----------- ---------- ------------- ---------- ------------
Investor B Class
Shares sold ....................... 36,991 421,876 5,376 60,000 -- --
Shares issued in reinvestment
of dividends ................... 187 2,138 -- -- -- --
Shares redeemed ................... (2,063) (23,549) (2,688) (30,000) -- --
--------- ----------- ---------- ------------- ---------- ------------
35,115 400,465 2,688 30,000 -- --
--------- ----------- ---------- ------------- ---------- ------------
Net (decrease) ......................... (329,258) $(3,750,202) (541,637) $ (6,071,841) (411,846) $ (4,677,074)
========= =========== ========== ============= ========== ============
</TABLE>
<TABLE>
<CAPTION>
OHIO TAX-FREE INCOME PORTFOLIO
--------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE YEAR ENDED
ENDED 3/31/97 (UNAUDITED) 9/30/96
---------------------------------- ----------------------------------
SHARES VALUE SHARES VALUE
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Shares sold:
Institutional Class ............................ 64,584 $ 665,198 23,824 $ 242,825
Service Class .................................. 108,520 1,114,839 392,400 3,988,131
Investor A Class ............................... 2,886 29,575 19,356 195,385
Investor B Class ............................... 34,287 351,478 4,892 49,500
Shares issued in reinvestment of dividends:
Institutional Class ............................ -- -- 290 2,930
Service Class .................................. -- -- 250 2,521
Investor A Class ............................... 5,657 58,096 12,671 128,646
Investor B Class ............................... 360 3,705 355 3,600
Shares redeemed:
Institutional Class ............................ (24,624) (250,625) (3,750) (38,068)
Service Class .................................. (66,886) (685,808) (276,903) (2,814,297)
Investor A Class ............................... (24,548) (251,568) (81,490) (821,320)
Investor B Class ............................... (3,954) (40,492) -- --
------- ---------- -------- -----------
Net increase ........................................ 96,282 $ 994,398 91,895 $ 939,853
======= ========== ======== ===========
</TABLE>
68
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
(E) AT MARCH 31, 1997, NET ASSETS CONSISTED OF:
<TABLE>
<CAPTION>
LOW INTERMEDIATE
DURATION GOVERNMENT INTERMEDIATE CORE
BOND BOND BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Capital paid-in .................................... $215,488,783 $151,240,907 $335,001,477 $382,706,730
Undistributed net investment income ................ 91,594 52,257 64,320 --
Overdistributed net investment income .............. -- -- -- (140,798)
Accumulated net realized gain (loss) on
investment transactions .......................... (3,474,887) (4,010,872) 960,087 1,469,631
Net unrealized appreciation (depreciation)
on investments ................................... (1,688,853) (2,286,885) (5,286,267) (6,474,795)
------------ ------------ ------------ ------------
$210,416,637 $144,995,407 $330,739,617 $377,560,768
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT MANAGED INTERNATIONAL TAX-FREE
INCOME INCOME BOND INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Capital paid-in .................................... $16,704,788 $717,185,893 $40,221,312 $55,526,190
Overdistributed net investment income .............. (31,865) (363,483) (1,146,711) (5,827)
Distributions in excess of
net investment income ............................ -- (587,175) -- --
Accumulated net realized gain (loss) on
investment transactions .......................... 23,780 629,151 4,705,683 (504,721)
Net unrealized appreciation (depreciation)
on investments ................................... (186,567) (10,827,349) (2,196,153) 707,194
------------ ------------ ------------ ------------
$16,510,136 $706,037,037 $41,584,131 $55,722,836
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
PENNSYLVANIA NEW JERSEY OHIO
TAX-FREE TAX-FREE TAX-FREE
INCOME INCOME INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
<S> <C> <C> <C>
Capital paid-in .................................... $87,114,354 $84,440,883 $10,888,692
Undistributed net investment income ................ -- -- 2,365
Overdistributed net investment income .............. (60,557) (27,486) --
Accumulated net realized gain (loss) on
investment transactions .......................... (1,846,225) (665,141) (334,594)
Net unrealized appreciation (depreciation)
on investments ................................... 1,075,686 1,495,304 172,843
----------- ----------- -----------
$86,283,258 $85,243,560 $10,729,306
=========== =========== ===========
</TABLE>
(F) CAPITAL LOSS CARRYOVERS
At September 30, 1996, capital loss carryovers were available to offset
possible future realized capital gains as follows: $4,554,018 in the Low
Duration Portfolio which expire in the year 2004, $3,887,798 in the Intermediate
Government Bond Portfolio which expire in the year 2004, $1,140,754 in the Core
Bond Portfolio which expire in the year 2004, $1,032 in the Government Income
Portfolio which expire in the year 2004, $844,279 in the Managed Income
Portfolio which expire in the year 2004, $204,724 in the International Bond
Portfolio which expire in the year 2004, $857,093 in the Tax-Free Income
Portfolio which expire in the year 2004, $2,047,106 in the Pennsylvania Tax-Free
Income Portfolio which expire in the year 2004 and $349,829 in the Ohio Tax-Free
Income Portfolio which expire in the year 2004. At September 30, 1996, the
deferred post-October losses were as follows: $230,164 in the Low Duration
Portfolio, $1,403,305 in the Intermediate Government Bond Portfolio, $638,794 in
the Intermediate Bond Portfolio, $29,785 in the Government Income Portfolio,
$4,944,922 in the Managed Income Portfolio, $28,609 in the Tax-Free Income
Portfolio, $90,126 in the Pennsylvania Tax-Free Income Portfolio, $928,457 in
the New Jersey Tax-Free Income Portfolio and $20,249 in the Ohio Tax-Free Income
Portfolio.
69
<PAGE>
(LOGO OMITTED) COMPASS CAPITAL FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(G) MERGER
On September 29, 1995 and October 2, 1995, respectively, the Board of
Trustees of the Fund and the Board of Trustees of The Compass Capital Group of
Funds ("Compass") approved an asset purchase agreement providing for the
transfer of all of the assets and liabilities of Compass to the Fund. At a
special meeting of shareholders held on December 11, 1995, the shareholders of
Compass voted to approve the asset purchase agreement. Pursuant to the asset
purchase agreement, on January 13, 1996 all of the assets and liabilities of
Compass were transferred to the Fund in a tax-free exchange for Service shares
of the Fund, except the assets and liabilities of the Compass International
Fixed Income Fund which were transferred on February 13, 1996. The details of
these business combinations as they relate to the Portfolios are described
below.
On September 29, 1995 and September 28, 1995, respectively, the Board of
Trustees of the Fund and the Board of Directors of The BFM Institutional Trust,
Inc. ("BFM") approved an asset purchase agreement providing for the transfer of
all of the assets and liabilities of BFM to the Fund. At a special meeting of
shareholders held on December 20, 1995, the shareholders of BFM voted to approve
the asset purchase agreement. Pursuant to the asset purchase agreement, on
January 13, 1996 all of the assets and liabilities of BFM's Short Duration
Portfolio and Core Fixed Income Portfolio were transferred to the Fund in a
tax-free exchange for Institutional shares of the Fund. The details of these
business combinations as they relate to the Portfolios are described below.
The following table summarizes certain relevant information of the Fund
prior to and immediately after the above-referenced business combinations.
Unless indicated otherwise, the Fund Portfolio is the accounting survivor. The
new combined funds maintain all the operating history of the accounting
survivor.
<TABLE>
<CAPTION>
THE COMPASS CAPITAL GROUP OF FUNDS
AND BFM INSTITUTIONAL TRUST, INC. COMPASS CAPITAL FUNDS
- ----------------------------------------------------------------- --------------------------------------------------------------
COMBINED
UNREALIZED SHARES NET ASSETS
NET ASSET APPRECIATION NEW ISSUED IN AFTER NAV
SHARES AT VALUE AT (DEPRECIATION) PORTFOLIO BUSINESS BUSINESS PER
FUND NAME 1/13/96 1/13/96 AT 1/13/96 NAME COMBINATION COMBINATION SHARE
- ------------------------ ---------- ------------ -------------- ----------------------- ----------- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Compass Short/ Low Duration Bond1 .... 18,697,730
Intermediate ......... 17,823,988 $185,294,507 $2,323,602 5,134,946 $252,550,348 $9.91
BFM Short Duration ..... 5,134,946 50,887,316 152,254
Compass Fixed Income ... 23,551,686 254,122,684 12,296,000 Core Bond1 ............ 25,643,056
BFM Core Fixed Income .. 4,700,542 46,582,367 496,596 4,700,542 300,705,051 $9.91
Compass International
Fixed Income ......... 3,283,656 37,282,000 743,937 International Bond2,3 . 3,283,656 37,282,000 $11.35
Compass Municipal Bond . 2,613,503 28,042,883 666,296 Tax-Free Income ....... 2,577,471 52,470,771 $10.88
Compass Pennsylvania Pennsylvania
Municipal Bond ....... 1,753,206 17,707,384 261,087 Tax-Free Income ..... 1,676,837 85,209,617 $10.56
Compass New Jersey New Jersey
Municipal Bond ....... 8,451,862 96,739,285 2,320,972 Tax-Free Income2 .... 8,451,862 96,739,285 $11.45
<FN>
- --------------
1 The BFM Institutional Trust, Inc.'s portfolio is the accounting survivor in
this business combination.
2 The Compass Capital Group of Funds portfolio is the accounting survivor in
this business combination.
3 The effective date for this business combination was on February 13, 1996.
</FN>
</TABLE>
(H) SPECIAL MEETING OF SHAREHOLDERS
At a Special Meeting of Shareholders of the International Bond Portfolio
called on December 19, 1996, the shareholders of the International Bond
Portfolio voted to approve the new sub-advisory agreement between PAMG and
BlackRock with respect to the Portfolio as follows:
VOTES FOR VOTES AGAINST ABSTAIN
------------- ------------- -----------
3,026,310.575 29,291.293 112,779.391
70
<PAGE>
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<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
Investment Adviser
PNC Asset Management Group, Inc.
Philadelphia,Pennsylvania 19101
Sub-Adviser -- Low Duration Bond Portfolio, Intermediate Government Bond
Portfolio, Intermediate Bond Portfolio, Core Bond Portfolio, Government Income
Portfolio, Managed Income Portfolio, International Bond Portfolio, Tax-Free
Income Portfolio, Pennsylvania Tax-Free Income Portfolio, New Jersey Tax-Free
Income Portfolio and Ohio Tax-Free Income Portfolio
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
Compass Distributors, Inc.
West Conshohocken, Pennsylvania 19428
Co-Administrator
Compass Capital Group, Inc.
New York, NY 10154
Counsel
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania 19107
Independent Accountants
Coopers & Lybrand,L.L.P.
Philadelphia, Pennsylvania 19103
<PAGE>
COMPASS CAPITAL FUNDS (LOGO OMITTED)
FUND SPECTRUM
COMPASS CAPITAL FUNDS IS A LEADING MUTUAL FUND COMPANY CURRENTLY MANAGING IN
EXCESS OF $12 BILLION IN 30 PORTFOLIOS DESIGNED TO FIT A BROAD RANGE OF
INVESTMENT GOALS. EACH PORTFOLIO IS MANAGED BY RECOGNIZED EXPERTS IN EQUITY,
FIXED INCOME, INTERNATIONAL, AND TAX-FREE INVESTING WHO ADHERE TO A PURE
INVESTMENT STYLE.SM
STOCK PORTFOLIOS
Large Cap Value Equity Small Cap Growth Equity
Large Cap Growth Equity International Equity
Mid-Cap Value Equity International Emerging Markets
Mid-Cap Growth Equity Select Equity
Small Cap Value Equity Index Equity
STOCK & BOND PORTFOLIOS
Balanced
BOND PORTFOLIOS
Low Duration Bond Government Income
Intermediate Government Bond Managed Income
Intermediate Bond International Bond
Core Bond
TAX-FREE BOND PORTFOLIOS
Tax-Free Income New Jersey Tax-Free Income
Pennsylvania Tax-Free Income Ohio Tax-Free Income
MONEY MARKET PORTFOLIOS
Money Market North Carolina Municipal Money Market
U.S. Treasury Money Market Ohio Municipal Money Market
Municipal Money Market Pennsylvania Municipal Money Market
New Jersey Municipal Money Market Virginia Municipal Money Market
SHAREHOLDER PRIVILEGES
24 HOUR ACCOUNT INFORMATION
Call us at 1-800-441-7762, 24 hours a day, 7 days a week to get information
about your account balances, recent transactions and share prices. Note:
Institutional and Service Share Class investors should call 1-800-441-7764.
You can also reach us on the Internet through the World Wide Web by accessing
http://www.compassfunds.com.
EXCHANGE PRIVILEGES
Should your investment goals
change, shareholders in our Investor Class shares may exchange all or part of
their investments into the same share class of any other portfolio of Compass
Capital Funds. (1)
AUTOMATIC INVESTMENT PLANS
Investor Class shareholders who want to invest regularly can arrange to have $50
or more automatically deducted from their checking or savings account and
invested in any of the Compass Capital portfolios.
SYSTEMATIC WITHDRAWAL PLANS
Investor Class shareholders can establish a systematic withdrawal plan and
receive periodic payments, of $100 or more from their Compass Capital
portfolios, as long as their account is at least $1,000.
RETIREMENT PLANS
Shareholders may make investments in conjunction with individual IRA accounts or
rollover IRAs.
GENERAL INFORMATION ABOUT THE COMPASS FUNDS
If you would like additional reports or have questions regarding any of the 30
Compass Capital Funds, please call 1-888-4COMPASS.
(1) Compass Capital Funds reserves the right to modify or terminate the exchange
privileges at any time.
<PAGE>
COMPASS
CAPITAL FUNDS (LOGO)
[GRAPHIC OMITTED]
PURE INVESTMENT STYLE SM
P.O. Box 8907
Wilmington, DE 19899
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.
SR 3/31/97-BP
