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MONEY MARKET PORTFOLIO PROSPECTUS
[DENVER INVESTMENT ADVISORS WESTCORE FUNDS LOGO]
PROSPECTUS FOR
THE MONEY MARKET PORTFOLIO* OF
COMPASS CAPITAL FUNDS(SM)
*The Money Market Portfolio is a portfolio of Compass Capital Funds(SM)
managed by PNC Asset Management Group, Inc.
and is available to Westcore Investors
for investment and exchanges.
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SUPPLEMENTAL INSTRUCTIONS
FOR WESTCORE INVESTORS
The following supplemental instructions are provided for Westcore investors who
wish to purchase or exchange shares of the Money Market Portfolio described in
the attached prospectus through an account at State Street Bank & Trust Company
("SSB"). SSB also serves as transfer agent for the Westcore Funds. Westcore
investors owning shares in the Money Market Portfolio have full exchange
privileges with the Westcore Funds, as well as the additional convenience of
checkwriting. With your money market account, you may, for example, write
checks on or automatically add to your balance, as well as exchange all or a
portion of your balance into one or more of the Westcore Funds. The minimum
amount of checks written on a money market account is $250.
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PURCHASES, REDEMPTIONS & EXCHANGES
MINIMUM INITIAL AND SUBSEQUENT PURCHASES: There is no minimum initial
investment if investors choose an automatic monthly investment option.
Otherwise, the minimum initial investment is $1,000 ($250 for participants in
IRAs and similar retirement accounts). The minimum subsequent and automatic
monthly investment for all accounts is $50.
REGULAR TRANSACTIONS: Purchases and redemptions by mail should be sent to
Westcore/SSB as follows:
VIA REGULAR MAIL: VIA EXPRESS/OVERNIGHT MAIL:
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Westcore/SSB Westcore/SSB
P.O. Box 8319 2 Heritage Drive
Boston, Massachusetts 02266-8319 North Quincy, Massachusetts 02171
Please make checks payable to Westcore/SSB. Purchases by check will be
processed at the 12:00 noon Eastern time net asset value determination
occurring on the next business day after your order is received and accepted by
Westcore/SSB. Please note that third party checks will not be accepted.
Signature guarantees are required for written redemptions.
WIRE, TELEPHONE, AND EXCHANGE PROCEDURES: Wire purchases, telephone redemptions
and exchanges will be processed at the 12:00 noon Eastern time net asset value
determination next occurring after your order is received and accepted by
Westcore/SSB. An order will not be accepted unless payment is received by
Westcore/SSB in acceptable form and in sufficient time to reasonably allow for
entry of the order before such determination. Purchases by wire may be accepted
only for existing accounts. Investors redeeming by wire may be charged a wire
fee. Wire redemption proceeds are generally transmitted by Westcore/SSB to
Westcore investors on the next business day following the date of redemption.
Exchanges into a Westcore Fund will be processed at Westcore's net asset value
determination next occurring after the 12:00 noon net asset value determination
time when your money market fund account is processed, and exchanges into your
money market fund account will be processed at the Money Market Portfolio's
12:00 noon net asset value determination next occurring after your Westcore
account is processed. Please call 1-800-392-CORE for additional information and
instructions regarding wire purchase, telephone redemption, and exchange
procedures.
OTHER INFORMATION -- RETIREMENT PLANS: IRAs, SEP-IRAs, and other such plans are
charged an annual fee of $10 per account, including any Westcore Funds account,
up to a maximum of $30 per taxpayer identification number. The annual fee, if
not earlier paid, is usually deducted in January or upon redemption of the
account.
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WESTCORE INVESTOR SERVICE REPRESENTATIVE
1-800-392-CORE (2673)
For additional information on these or other options, or to purchase, exchange
or redeem shares, please call a Westcore Investor Service Representative toll
free at 1-800-392-CORE (2673).
The above are supplemental transaction instructions and
are not part of the prospectus.
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THE MONEY MARKET PORTFOLIOS SERVICE SHARES January 1, 1997
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The COMPASS CAPITAL FUND Family consists of 30 portfolios
and has been structured to include many different investment
styles across the spectrum of money market investments so
that investors may participate across multiple disciplines
in order to seek their long-term financial goals. This
Prospectus describes the Service Shares of one of those
portfolios (the "Portfolio"):
- Money Market Portfolio
This Prospectus contains information that a prospective
investor needs to know before investing. Please keep it for
future reference. A Statement of Additional Information
dated January 1, 1997 has been filed with the Securities and
Exchange Commission (the "SEC"). The Statement of Additional
Information may be obtained free of charge from the Fund by
calling (800) 441-7764. The Statement of Additional
Information, as supplemented from time to time, is
incorporated by reference into this Prospectus.
SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, PNC BANK, NATIONAL ASSOCIATION
OR ANY OTHER BANK AND ARE NOT 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 THE PORTFOLIOS INVOLVE INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. THERE
CAN BE NO ASSURANCE THAT THE PORTFOLIOS WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
2
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THE MONEY MARKET PORTFOLIO OF COMPASS CAPITAL FUNDS
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<TABLE>
<S> <C> <C>
COMPASS CAPITAL PORTFOLIO LIPPER PEER GROUP
Money Market Money Market Instrument Funds
PNC Asset Management Group, Inc. ("PAMG") serves as the Fund's
investment adviser. PNC Institutional Management Corporation
("PIMC") serves as the sub-adviser to the Portfolio as described
in this Prospectus.
</TABLE>
UNDERSTANDING THE This Prospectus has been crafted to provide detailed,
COMPASS CAPITAL accurate and comprehensive information on the Portfolio. We
MONEY MARKET intend this document to be an effective tool as you explore
PORTFOLIO different directions in money market investing. You may wish
to use the table of contents on page 4 to find a description
of the Portfolio, including the investment objective,
portfolio management style, risks and charges and expenses.
CONSIDERING THE There can be no assurance that any mutual fund will achieve
RISKS IN MONEY its investment objective, or that the Portfolio will be able
MARKET INVESTING to maintain a stable net asset value of $1.00 per share. The
Portfolio may invest in U.S. dollar-denominated instruments
of foreign issuers or municipal securities backed by the
credit of foreign banks, which may be subject to risks in
addition to those inherent in U.S. investments. See "What
Additional Investment Policies And Risks Apply?"
INVESTING IN THE For information on how to purchase and redeem shares of the
COMPASS CAPITAL Portfolio, see "How Are Shares Purchased And Redeemed?" and
FUNDS "What Special Purchase And Redemption Procedures May Apply?"
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ASKING THE KEY QUESTIONS
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
What Are The Expenses Of The Portfolio?...................... 5
What Are The Portfolio's Financial Highlights?............... 6
What Is The Portfolio?....................................... 8
What Additional Investment Policies And Risks Apply?......... 10
What Are The Portfolio's Fundamental Investment
Limitations?............................................... 13
Who Manages The Fund?........................................ 14
How Are Shares Purchased And Redeemed?....................... 17
What Special Purchase And Redemption Procedures May Apply?... 19
How Is Net Asset Value Calculated?........................... 21
How Frequently Are Dividends And Distributions Made To
Investors?................................................. 22
How Are Fund Distributions Taxed?............................ 23
How Is The Fund Organized?................................... 24
How Is Performance Calculated?............................... 25
How Can I Get More Information?.............................. 26
</TABLE>
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WHAT ARE THE EXPENSES OF THE PORTFOLIO?
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Below is a summary of the annual operating expenses incurred by Service Shares
of the Portfolio after fee waivers for the fiscal year ended September 30, 1996
as a percentage of average daily net assets. An example based on the summary is
also shown.
<TABLE>
<CAPTION>
MONEY
MARKET
PORTFOLIO
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<S> <C> <C>
ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Advisory fees (after fee waivers)(1) .07%
Other operating expenses .52
--
Administration fees (after fee waivers)(1) .13
Shareholder servicing fee .15
Other expenses .24
--
Total Portfolio operating expenses (after fee waivers)(1) .59%
===
</TABLE>
(1) Without waivers, advisory fees would be .42% and administration fees would
be .15% for the Portfolio. PAMG and the Portfolio's administrators are under
no obligation to waive or continue waiving their fees, but have informed the
Fund that they expect to waive fees as necessary to maintain the Portfolio's
total operating expenses during the remainder of the current fiscal year at
the levels set forth in the table. Without waivers, "Other operating
expenses" would be .54%, and "Total Portfolio operating expenses" would be
.96%.
EXAMPLE
An investor in Service Shares would pay the following expenses on a $1,000
investment assuming (1) a 5% annual return, and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
MONEY MARKET $6 $19 $33 $74
</TABLE>
The foregoing Table and Example are intended to assist investors in
understanding the expenses the Portfolio pays. Investors bear these expenses
either directly or indirectly. They do not reflect any charges that may be
imposed by affiliates of the Portfolio's investment adviser or other
institutions directly on their customer accounts in connection with investments
in the Portfolio. In addition to the compensation itemized above, these
institutions and/or their salespersons may receive certain compensation for the
sale and distribution of shares or for services to the Portfolio. For additional
information regarding such compensation, see "How Are Shares Purchased And
Redeemed? -- Distributor" below and "Investment Advisory, Administration,
Distribution and Servicing Arrangements" in the Statement of Additional
Information.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND OPERATING
EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
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WHAT ARE THE PORTFOLIO'S FINANCIAL HIGHLIGHTS?
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The following financial information has been derived from
the financial statements incorporated by reference into the
Statement of Additional Information, and has been audited by
the Portfolio's independent accountant. This financial
information should be read together with those financial
statements. Further information about the performance of the
Portfolio is available in the Fund's annual shareholder
reports. Both the Statement of Additional Information and
the annual shareholder reports may be obtained from the Fund
free of charge by calling (800) 441-7764.
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FINANCIAL HIGHLIGHTS
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(FOR A SERVICE SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE
PERIOD
YEAR YEAR YEAR YEAR YEAR YEAR 10/4/89(1)
ENDED ENDED ENDED ENDED ENDED ENDED THROUGH
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90
---------- ---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- -------- -------- -------- -------- --------
Income from investment operations
Net investment income 0.0503 0.0534 0.0333 0.0274 0.0391 0.0645 0.0778
Net realized gain (loss) on
investments -- -- -- -- -- -- --
---------- -------- -------- -------- -------- -------- --------
Total from investment
operations 0.0503 0.0534 0.0333 0.0274 0.0391 0.0645 0.0778
---------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Distributions from net investment
income (0.0503) (0.0534) (0.0333) (0.0274) (0.0391) (0.0645) (0.0778)
Distributions from net realized
capital gains -- -- -- -- -- -- --
---------- -------- -------- -------- -------- -------- --------
Total distributions (0.0503) (0.0534) (0.0333) (0.0274) (0.0391) (0.0645) (0.0778)
---------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ======== ======== ======== ========
Total return 5.15% 5.48% 3.37% 2.77% 4.05% 6.64% 8.07%
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period
(in thousands) $1,575,064 $1,194,017 $575,948 $415,328 $838,012 $637,076 $628,075
Ratios of expenses to average
net assets
After advisory/administration
fee waivers 0.59% 0.57% 0.51% 0.59% 0.61% 0.62% 0.62%(2)
Before advisory/administration
fee waivers 0.95% 0.94% 0.92% 0.70% 0.66% 0.67% 0.70%(2)
Ratios of net investment income to
average net assets
After advisory/administration
fee waivers 5.00% 5.35% 3.35% 2.73% 3.86% 6.45% 7.83%(2)
Before advisory/administration
fee waivers 4.64% 4.98% 2.95% 2.62% 3.81% 6.40% 7.75%(2)
</TABLE>
1Commencement of operations of share class.
2Annualized.
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WHAT IS THE PORTFOLIO?
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MONEY MARKET The investment objective of the Money Market Portfolio is to
PORTFOLIO provide as high a level of current interest income as is
consistent with maintaining liquidity and stability of
principal. The Portfolio may invest in a broad range of
short-term, high quality, U.S. dollar-denominated
instruments, such as government, bank, commercial and other
obligations, that are available in the money markets. In
particular, the Portfolio may invest in:
(A) U.S. dollar-denominated obligations issued or supported
by the credit of U.S. or foreign banks or savings
institutions with total assets in excess of $1 billion
(including obligations of foreign branches of such
banks);
(B) high quality commercial paper and other obligations
issued or guaranteed by U.S. and foreign corporations
and other issuers rated (at the time of purchase) A-2
or higher by Standard & Poor's Ratings Group ("S&P"),
Prime-2 or higher by Moody's Investors Service, Inc.
("Moody's"), Duff 2 or higher by Duff & Phelps Credit
Co. ("D&P"), F-2 or higher by Fitch Investors Service,
Inc. ("Fitch") or TBW-2 or higher by Thomson BankWatch,
Inc. ("TBW"), as well as high quality corporate bonds
rated (at the time of purchase) AA or higher by S&P,
D&P, Fitch or TBW or Aa or higher by Moody's;
(C) unrated notes, paper and other instruments that are of
comparable quality as determined by the Portfolio's
sub-adviser under guidelines established by the Fund's
Board of Trustees;
(D) asset-backed securities (including interests in pools
of assets such as mortgages, installment purchase
obligations and credit card receivables);
(E) securities issued or guaranteed as to principal and
interest by the U.S. Government or by its agencies or
instrumentalities and related custodial receipts;
(F) dollar-denominated securities issued or guaranteed by
foreign governments or their political subdivisions,
agencies or instrumentalities;
(G) guaranteed investment contracts issued by highly-rated
U.S. insurance companies;
(H) securities issued or guaranteed by state or local
governmental bodies; and
(I) repurchase agreements relating to the above
instruments.
QUALITY, MATURITY All securities acquired by the Portfolio will be determined
AND DIVERSIFICATION at the time of purchase by the Portfolio's sub-adviser,
under guidelines established by the Fund's Board of
Trustees, to present minimal credit risks and will be
"Eligible Securities" as defined by the SEC. Eligible
Securities are (a) securities that either (i) have
short-term debt ratings at the time of purchase in the two
highest rating categories by at least two unaffiliated
nationally recognized statistical rating organizations
("NRSROs") (or one NRSRO if the security is rated by only
one NRSRO), or (ii) are comparable in priority and security
with an instrument issued by an issuer which has such
ratings, and (b) securities that are unrated (including
securities of issuers that have long-term but not short-term
ratings) but are of comparable quality as determined in
accordance with guidelines approved by the Board of
Trustees.
The Portfolio is managed so that the average maturity of all
instruments held by it (on a dollar-weighted basis) will not
exceed 90 days. In no event will the
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Portfolio purchase securities which mature more than 397
days from the date of purchase (except for certain variable
and floating rate instruments and securities collateralizing
repurchase agreements). Securities in which the Portfolio
invests may not earn as high a level of income as longer
term or lower quality securities, which generally have
greater market risk and more fluctuation in market value.
The Money Market Portfolio is classified as a diversified
portfolio under the Investment Company Act of 1940 (the
"1940 Act").
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WHAT ADDITIONAL INVESTMENT POLICIES AND RISKS APPLY?
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CORPORATE AND BANK OBLIGATIONS. To the extent consistent with its investment
objective, the Portfolio may invest in debt obligations of domestic or foreign
corporations and banks, and may acquire commercial obligations issued by
Canadian corporations and Canadian counterparts of U.S. corporations, as well as
Europaper, which is U.S. dollar-denominated commercial paper of a foreign
issuer. Bank obligations may include certificates of deposit, notes, bankers'
acceptances and fixed time deposits. These obligations may be general
obligations of the parent bank or may be limited to the issuing branch or
subsidiary by the terms of the specific obligation or by government regulation.
The Portfolio may also make interest-bearing savings deposits in commercial and
savings banks in amounts not in excess of 5% of its total assets. The
obligations of foreign issuers may involve certain risks in addition to those of
domestic issuers, including higher transaction costs, less complete financial
information, less stringent regulatory requirements and less market liquidity.
Commercial paper issues include securities issued by corporations without
registration under the Securities Act of 1933 (the "1933 Act") in reliance on
the exemption in Section 3(a)(3), and commercial paper issued in reliance on the
so-called "private placement" exemption in Section 4(2) ("Section 4(2) paper").
Section 4(2) paper is restricted as to disposition under the Federal securities
laws in that any resale must similarly be made in an exempt transaction. Section
4(2) paper is normally resold to other institutional investors through or with
the assistance of investment dealers which make a market in Section 4(2) paper,
thus providing liquidity.
U.S. GOVERNMENT OBLIGATIONS. To the extent consistent with its investment
objective, the Portfolio may also purchase obligations issued or guaranteed by
the U.S. Government or its agencies and instrumentalities. Obligations of
certain agencies and instrumentalities of the U.S. Government are backed by the
full faith and credit of the United States. Others are backed by the right of
the issuer to borrow from the U.S. Treasury or are backed only by the credit of
the agency or instrumentality issuing the obligation.
MUNICIPAL OBLIGATIONS. The Portfolio may invest in short-term obligations
issued by or on behalf of states, territories and possessions of the United
States, the District of Columbia, and their political subdivisions, agencies,
instrumentalities and authorities ("Municipal Obligations"). The two principal
classifications of Municipal Obligations are "general obligation" securities and
"revenue" securities. General obligation securities are secured by the issuer's
pledge of its full faith, credit and taxing power for the payment of principal
and interest. Revenue securities are payable only from the revenues derived from
a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise tax or other specific revenue source such as the
user of the facility being financed. Revenue securities include private activity
bonds which are not payable from the unrestricted revenues of the issuer.
Consequently, the credit quality of private activity bonds is usually directly
related to the credit standing of the corporate user of the facility involved.
Municipal Obligations may also include "moral obligation" bonds, which are
normally issued by special purpose public authorities. If the issuer of moral
obligation bonds is unable to meet its debt service obligations from current
revenues, it may draw on a reserve fund, the restoration of which is a moral
commitment but not a legal obligation of the state or municipality which created
the issuer.
Also included within the general category of Municipal Obligations are
participation certificates in a lease, an installment purchase contract, or a
conditional sales contract ("lease obligations") entered into by a state or
political subdivision to finance the acquisition or construction of equipment,
land or facilities. Although lease obligations are not general obligations of
the issuer for which the state or other governmental body's unlimited taxing
power is pledged, certain lease obligations are backed by a covenant to
appropriate money to make the lease obligation payments. However, under certain
lease obligations, the state or governmental body has no obligation to make
these payments in future years unless money is appropriated on a yearly basis.
Although "non-appropriation" lease obligations are secured by the leased
property, disposition of the property in the event of foreclosure might prove
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difficult. These securities represent a relatively new type of financing that is
not yet as marketable as more conventional securities.
The amount of information regarding the financial condition of issuers of
Municipal Obligations may be less extensive than the information for public
corporations, and the secondary market for Municipal Obligations may be less
liquid than that for taxable obligations. Accordingly, the ability of a
Portfolio to buy and sell Municipal Obligations may, at any particular time with
respect to any particular securities, be limited. In addition, Municipal
Obligations purchased by the Portfolio include obligations backed by letters of
credit and other forms of credit enhancement issued by domestic and foreign
banks, as well as other financial institutions. Changes in the credit quality of
these institutions could cause loss to the Portfolio and affect its share price.
Opinions relating to the validity of Municipal Obligations and to the exemption
of interest thereon from Federal or state income tax are rendered by counsel to
the respective issuers or sponsors at the time of issuance. The Fund and its
service providers will rely on such opinions and will not review independently
the underlying proceedings relating to the issuance of Municipal Obligations or
the bases for such opinions.
MORTGAGE-RELATED SECURITIES. Although under normal market conditions it does
not expect to do so, the Portfolio may invest in mortgage-related securities
issued by the U.S. Government or its agencies or instrumentalities or issued by
private companies. Mortgage-related securities may include collateralized
mortgage obligations ("CMOs") issued by the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation or other U.S. Government
agencies or instrumentalities or issued by private companies. In periods of
falling interest rates, the rate of mortgage prepayments tends to increase.
During these periods, the reinvestment of prepayment proceeds by the Portfolio
will generally be at lower rates than the rates on the prepaid obligations.
VARIABLE AND FLOATING RATE INSTRUMENTS. The Portfolio may purchase rated and
unrated variable and floating rate instruments, which may have a stated maturity
in excess of 13 months but will, in any event, permit the Portfolio to demand
payment of the principal of the instrument at least once every 13 months upon
not more than thirty days' notice (unless the instrument is guaranteed by the
U.S. Government or an agency or instrumentality thereof). These instruments may
include variable amount master demand notes that permit the indebtedness
thereunder to vary in addition to providing for periodic adjustments in the
interest rate. Issuers of unrated variable and floating rate instruments must
satisfy the same criteria as set forth above for the Portfolio.
REPURCHASE AGREEMENTS. The Portfolio may agree to purchase securities from
broker-dealers and financial institutions subject to the seller's agreement to
repurchase them at an agreed-upon time and price ("repurchase agreements"). The
securities held subject to a repurchase agreement may have stated maturities
exceeding 13 months, so long as the repurchase agreement itself matures in less
than 13 months. Default by or bankruptcy of the seller would expose the
Portfolio to possible loss because of adverse market action or delays in
connection with the disposition of the underlying obligations.
GUARANTEED INVESTMENT CONTRACTS. The Portfolio may make limited investments in
guaranteed investment contracts ("GICs") issued by highly rated U.S. insurance
companies. Under these contracts, the Portfolio makes cash contributions to a
deposit fund of the insurance company's general account. The insurance company
then credits interest to the Portfolio on a monthly basis, which is based on an
index (such as the Salomon Brothers CD Index), but is guaranteed not to be less
than a certain minimum rate. The Portfolio does not expect to invest more than
5% of its net assets in GICs at any time during the current fiscal year.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. The Portfolio may purchase
securities on a "when-issued" basis and may purchase or sell securities on a
"forward commitment" basis. These transactions involve a commitment by the
Portfolio to purchase or sell particular securities with payment and delivery
taking place at a future date (perhaps one or two months later), and permit the
Portfolio to lock in a price or yield on a security it owns or intends to
purchase, regardless of future
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<PAGE> 13
changes in interest rates. When-issued and forward commitment transactions
involve the risk, however, that the price or yield obtained in a transaction may
be less favorable than the price or yield available in the market when the
delivery takes place.
SECURITIES LENDING. The Portfolio may seek additional income by lending
securities on a short-term basis. The securities lending agreements will require
that the loans be secured by collateral in cash, U.S. Government securities or
irrevocable bank letters of credit maintained on a current basis equal in value
to at least the market value of the loaned securities. The Portfolio may not
make such loans in excess of 33 1/3% of the value of its total assets.
Securities loans involve risks of delay in receiving additional collateral or in
recovering the loaned securities, or possibly loss of rights in the collateral
if the borrower of the securities becomes insolvent.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase
agreements for temporary purposes (such as to obtain cash to meet redemption
requests when the liquidation of portfolio securities is deemed disadvantageous
or inconvenient). A reverse repurchase agreement involves a sale by the
Portfolio of securities that it holds concurrently with an agreement by the
Portfolio to repurchase the same securities at an agreed-upon price and date.
Reverse repurchase agreements involve the risk that the market value of the
securities sold by the Portfolio may decline below the price of the securities
the Portfolio is obligated to repurchase.
INVESTMENT COMPANIES. In connection with the management of its daily cash
position, the Portfolio may invest in securities issued by other investment
companies which invest in short-term, high quality debt securities and which
determine their net asset value per share based on the amortized cost or
penny-rounding method of valuation. Securities of other investment companies
will be acquired by the Portfolio within the limits prescribed by the 1940 Act.
As a shareholder of another investment company, the Portfolio would bear, along
with other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory fees and other expenses the Portfolio bears directly in connection with
its own operations.
UNINVESTED CASH RESERVES. The Portfolio may hold uninvested cash reserves
pending investment during temporary defensive periods or if, in the opinion of
the Portfolio's sub-adviser, suitable obligations are unavailable. During normal
market periods, no more than 20% of the Portfolio's assets will be held
uninvested. Uninvested cash reserves will not earn income.
ILLIQUID SECURITIES. The Portfolio will not knowingly invest more than 10% of
the value of its net assets in securities that are illiquid. Variable and
floating rate instruments that cannot be disposed of within seven days, GICs,
and repurchase agreements and time deposits that do not provide for payment
within seven days after notice, without taking a reduced price, are subject to
this 10% limit. The Portfolio may purchase securities which are not registered
under the 1933 Act but which can be sold to "qualified institutional buyers" in
accordance with Rule 144A under the 1933 Act. These securities will not be
considered illiquid so long as the sub-adviser determines that an adequate
trading market exists for the securities. This investment practice could have
the effect of increasing the level of illiquidity in the Portfolio during any
period that qualified institutional buyers become uninterested in purchasing
these restricted securities.
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WHAT ARE THE PORTFOLIO'S FUNDAMENTAL INVESTMENT LIMITATIONS?
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The Portfolio's investment objective and policies may be changed by the Fund's
Board of Trustees without shareholder approval. However, shareholders will be
given at least 30 days' notice before any change to the Portfolio's investment
objective. No assurance can be provided that the Portfolio will achieve its
investment objective.
The Portfolio has also adopted certain fundamental investment limitations that
may be changed only with the approval of a "majority of the outstanding shares
of the Portfolio" (as defined in the Statement of Additional Information).
Several of the Portfolio's fundamental investment policies, which are set forth
in full in the Statement of Additional Information, are summarized below.
The Portfolio may not:
(1) purchase securities (except U.S. Government securities and related
repurchase agreements) if more than 5% of its total assets will be invested
in the securities of any one issuer, except that up to 25% of the
Portfolio's total assets may be invested without regard to this 5%
limitation;
(2) invest 25% or more of its total assets in one or more issuers conducting
their principal business activities in the same industry, except that the
Portfolio will invest at least 25% of its total assets in obligations of
issuers in the banking industry or instruments secured by such obligations
except during temporary defensive periods; and
(3) borrow money except for temporary purposes in amounts up to one-third of the
value of its total assets at the time of such borrowing. Whenever borrowings
exceed 5% of the Portfolio's total assets, the Portfolio will not make any
additional investments.
In accordance with current SEC regulations, the Portfolio intends, as a
non-fundamental policy, to limit its investments in the securities of any single
issuer (other than U.S. Government securities and related repurchase agreements)
to not more than 5% of the value of its total assets at the time of purchase,
except that 25% of the value of its total assets may be invested in any one
issuer for a period of up to three business days. The Portfolio will also limit
its investments in Eligible Securities that are not in the highest rating
category as determined by two NRSROs (or one NRSRO if the security is rated by
only one NRSRO) or, if unrated, are not of comparable quality, to 5% of its
total assets, with investments in any one such issuer being limited to no more
than 1% of its total assets or $1 million, whichever is greater, measured at the
time of purchase.
The investment limitations stated above are applied at the time investment
securities are purchased.
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<PAGE> 15
WHO MANAGES THE FUND?
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES The business and affairs of the Fund are managed under the
direction of the Fund's Board of Trustees. The following
persons currently serve on the Board:
William O. Albertini--Executive Vice President and Chief
Financial Officer of Bell Atlantic Corporation.
Raymond J. Clark--Treasurer of Princeton University.
Robert M. Hernandez--Vice Chairman and Chief Financial
Officer of USX Corporation.
Anthony M. Santomero--Deputy Dean of The Wharton School,
University of Pennsylvania.
David R. Wilmerding, Jr.--Chairman, Gee, Wilmerding &
Associates, Inc.
INVESTMENT ADVISER The Adviser to Compass Capital Funds is PNC Asset Management
AND SUB-ADVISER Group, Inc. ("PAMG"). PAMG was organized in 1994 to perform
advisory services for investment companies, and has its
principal offices at 1600 Market Street, 29th Floor,
Philadelphia, Pennsylvania 19103. PAMG is an indirect
wholly-owned subsidiary of PNC Bank Corp., a multi-bank
holding company. PNC Institutional Management Corporation
("PIMC"), a wholly-owned subsidiary of PAMG, serves as the
Portfolio's sub-adviser. PIMC's principal business address
is 400 Bellevue Parkway, Wilmington, Delaware 19809.
As adviser, PAMG is responsible for the overall investment
management of the Portfolio. As sub-adviser, PIMC is
responsible for the day-to-day management of the Portfolio,
and generally makes all purchase and sale investment
decisions for the Portfolio. PIMC also provides research and
credit analysis. Portfolio transactions for the Portfolio
may be directed through broker/dealers who sell Fund shares,
subject to the requirements of best execution.
For their investment advisory and sub-advisory services,
PAMG and PIMC are entitled to fees, computed daily and
payable monthly, at the annual rates set forth below. All
sub-advisory fees payable to PIMC are paid by PAMG, and do
not represent an extra charge to the Portfolio.
14
<PAGE> 16
MAXIMUM ANNUAL CONTRACTUAL FEE RATE
FOR THE PORTFOLIO (BEFORE WAIVERS)
<TABLE>
<CAPTION>
INVESTMENT SUB-ADVISORY
AVERAGE DAILY NET ASSETS ADVISORY FEE FEE
------------------------------ ------------ ------------
<S> <C> <C>
first $1 billion .450% .400%
$1 billion--$2 billion .400 .350
$2 billion--$3 billion .375 .325
greater than $3 billion .350 .300
</TABLE>
For the twelve months ended September 30, 1996, the
Portfolio paid investment advisory fees at the annual rate
(expressed as a percentage of average daily net assets) of
.07% after voluntary fee waivers.
ADMINISTRATORS Compass Capital Group, Inc. ("CCG"), PFPC Inc. ("PFPC"), and
Compass Distributors, Inc. ("CDI") (the "Administrators")
serve as the Fund's co-administrators. CCG and PFPC are
indirect wholly-owned subsidiaries of PNC Bank Corp. CDI is
a wholly-owned subsidiary of Provident Distributors, Inc.
("PDI"). A majority of the outstanding stock of PDI is owned
by its officers.
The Administrators generally assist the Fund in all aspects
of its administration and operation, including matters
relating to the maintenance of financial records and fund
accounting. As compensation for these services, CCG is
entitled to receive a fee, computed daily and payable
monthly, at an annual rate of .03% of the Portfolio's
average daily net assets, and PFPC and CDI are entitled to
receive a combined fee, computed daily and payable monthly,
at an annual rate of .15% of the first $500 million of the
Portfolio's average daily net assets, .13% of the next $500
million of the Portfolio's average daily net assets, .11% of
the next $1 billion of the Portfolio's average daily net
assets and .10% of the Portfolio's average daily net assets
in excess of $2 billion. From time to time the
Administrators may waive some or all of their administration
fees from the Portfolio.
For information about the operating expenses the Portfolio
paid for the most recent fiscal year, see "What Are The
Expenses Of The Portfolio?"
TRANSFER AGENT, PNC Bank, National Association ("PNC Bank") serves as the
DIVIDEND Portfolio's custodian and PFPC serves as its transfer agent
DISBURSING AGENT and dividend disbursing agent.
AND CUSTODIAN
SHAREHOLDER The Fund intends to enter into service arrangements with
SERVICING institutional investors ("Institutions") (including PNC Bank
and its affiliates) which provide that the Institutions will
render support services to their customers who are the
beneficial owners of Service Shares. These services are
intended to supplement the services provided by the Fund's
Administrators and transfer agent to the Fund's shareholders
of record. In consideration for payment of a shareholder
processing fee of up to .15% (on an annualized basis) of the
average daily net asset value of Service Shares owned
beneficially by their customers, Institutions may provide
one or more of the following services: processing purchase
and redemption requests from customers and placing orders
with the Fund's transfer agent or the distributor;
processing dividend payments from the Fund on behalf of
customers; providing sub-accounting
15
<PAGE> 17
with respect to Service Shares beneficially owned by
customers or the information necessary for sub-accounting;
and providing other similar services. In consideration for
payment of a separate shareholder servicing fee of up to
.15% (on an annualized basis) of the average daily net asset
value of Service Shares owned beneficially by their
customers, Institutions may provide one or more of these
additional services to such customers: responding to
customer inquiries relating to the services performed by the
Institution and to customer inquiries concerning their
investments in Service Shares; assisting customers in
designating and changing dividend options, account
designations and addresses; and providing other similar
shareholder liaison services. Customers who are beneficial
owners of Service Shares should read this Prospectus in
light of the terms and fees governing their accounts with
Institutions.
Conflict-of-interest restrictions may apply to the receipt
of compensation paid by the Fund in connection with the
investment of fiduciary funds in Portfolio shares.
Institutions, including banks regulated by the Comptroller
of the Currency, Federal Reserve Board and state banking
commissions, and investment advisers and other money
managers subject to the jurisdiction of the SEC, the
Department of Labor or state securities commissions, are
urged to consult their legal counsel before entering into
agreements with the Fund.
The Glass-Steagall Act and other applicable laws, among
other things, prohibit banks from engaging in the business
of underwriting securities. It is intended that the services
provided by Institutions under their service agreements will
not be prohibited under these laws. Under state securities
laws, banks and financial institutions that receive payments
from the Fund may be required to register as dealers.
EXPENSES Expenses are deducted from the total income of the Portfolio
before dividends and distributions are paid. Expenses
include, but are not limited to, fees paid to PAMG and the
Administrators, transfer agency and custodian fees, trustee
fees, taxes, interest, professional fees, shareholder
servicing and processing fees, fees and expenses in
registering and qualifying the Portfolio and its shares for
distribution under Federal and state securities laws,
expenses of preparing prospectuses and statements of
additional information and of printing and distributing
prospectuses and statements of additional information to
existing shareholders, expenses relating to shareholder
reports, shareholder meetings and proxy solicitations,
insurance premiums, the expense of independent pricing
services, and other expenses which are not expressly assumed
by PAMG or the Fund's service providers under their
agreements with the Fund. Any general expenses of the Fund
that do not belong to a particular investment portfolio will
be allocated among all investment portfolios by or under the
direction of the Board of Trustees in a manner the Board
determines to be fair and equitable.
16
<PAGE> 18
HOW ARE SHARES PURCHASED AND REDEEMED?
- --------------------------------------------------------------------------------
DISTRIBUTOR. Shares of the Portfolio are offered on a continuous basis by CDI
as distributor (the "Distributor"). CDI maintains its principal offices at Four
Falls Corporate Center, 6th Floor, West Conshohocken, PA 19428-2961.
The Fund has adopted a distribution plan pursuant to Rule 12b-1 (the "Plan")
under the 1940 Act. The Fund is not required or permitted under the Plan to make
distribution payments with respect to Service Shares. The Plan permits CDI,
PAMG, the Administrators and other companies that receive fees from the Fund to
make payments relating to distribution and sales support activities out of their
past profits or other sources available to them which, subject to applicable
NASD regulations, may include contributions to various non-cash and cash
incentive arrangements to promote the sale of shares, as well as sponsorship of
various educational programs, sales contests and promotions in which
participants may receive reimbursement of expenses, entertainment and prizes
such as travel awards, merchandise and cash. For further information, see
"Investment Advisory, Administration, Distribution and Servicing Arrangements"
in the Statement of Additional Information.
PURCHASE OF SHARES. Service Shares are offered without a sales load to
Institutions acting on behalf of their customers, as well as to certain persons
who were shareholders of Compass Capital Group of Funds at the time of its
combination with The PNC Fund during the first quarter of 1996. Service Shares
will normally be held of record by Institutions or in the names of nominees of
Institutions. Share purchases are normally effected through a customer's account
at an Institution through procedures established in connection with the
requirements of the account. In these cases, confirmations of share purchases
and redemptions will be sent to the Institutions. Beneficial ownership of shares
will be recorded by the Institutions and reflected in the account statements
provided by such Institutions to their customers. Investors wishing to purchase
shares should contact their Institutions.
Service Shares are sold at the net asset value per share next determined after
an order is received by PFPC Inc. ("PFPC"), the Fund's transfer agent. Shares
may be purchased by Institutions on any Business Day. A "Business Day" is any
weekday that the New York Stock Exchange (the "NYSE") and the Federal Reserve
Bank of Philadelphia (the "FRB") are open for business.
Purchase orders for the Portfolio may be placed by telephoning PFPC at (800)
441-7450 no later than 12:00 noon (Eastern Time) on a Business Day. Orders
received before 12:00 noon (Eastern Time) will be executed at 12:00 noon
(Eastern Time). If payment for such orders is not received by 4:00 p.m. (Eastern
Time), the order will be cancelled and notice thereof will be given to the
Institution placing the order. Orders received after 12:00 noon (Eastern Time)
will not be accepted.
Payment for Service Shares must normally be made only in Federal funds or other
funds immediately available to the Fund's custodian. Payment may also, in the
discretion of the Fund, be made in the form of securities that are permissible
investments for the Portfolio. For further information, see the Statement of
Additional Information. The minimum initial investment is $5,000; however,
Institutions may set a higher minimum for their customers. There is no minimum
subsequent investment requirement.
Compass Capital may in its discretion waive the minimum investment amount and
may reject any order for Service Shares.
REDEMPTION OF SHARES. Customers of Institutions may redeem Service Shares in
accordance with the procedures applicable to their accounts with the
Institutions. These procedures will vary according to the type of account and
the Institution involved, and customers should consult their account managers in
this regard. It is the responsibility of Institutions to transmit redemption
orders to PFPC and credit their customers' accounts with the redemption proceeds
on a timely basis. In the case of shareholders holding share certificates, the
certificates must accompany the redemption request.
17
<PAGE> 19
Institutions may place redemption orders by telephoning PFPC at (800) 441-7450.
Shares are redeemed at their net asset value per share next determined after
PFPC's receipt of the redemption order. The Fund, the Administrators and the
Distributor will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. The Fund and its service providers will
not be liable for any loss, liability, cost or expense for acting upon telephone
instructions that are reasonably believed to be genuine in accordance with such
procedures. While the Fund intends to use its best efforts to maintain the
Portfolio's net asset value per share at $1.00, the proceeds paid upon
redemption may be more or less than the amount invested depending upon the net
asset value of a Service Share at the time of redemption.
Payment for redeemed shares for which a redemption order is received by PFPC
before 12:00 noon (Eastern Time) on a Business Day is normally made in Federal
funds wired to the redeeming Institution on the same Business Day, provided that
the Fund's custodian is also open for business. Payment for redemption orders
received between 12:00 noon (Eastern Time) and 4:00 p.m. (Eastern Time) or on a
day when the Fund's custodian is closed is normally wired in Federal funds on
the next Business Day following redemption on which the Fund's custodian is open
for business. The Fund reserves the right to wire redemption proceeds within
seven days after receiving a redemption order if, in the judgment of PAMG, an
earlier payment could adversely affect the Portfolio. No charge for wiring
redemption payments is imposed by the Fund, although Institutions may charge
their customer accounts for redemption services. Information relating to such
redemption services and charges, if any, should be obtained by customers from
their Institution.
During periods of substantial economic or market change, telephone redemptions
may be difficult to complete. Redemption requests may also be mailed to PFPC at
400 Bellevue Parkway, Wilmington, DE 19809.
The Fund may redeem Service Shares in any Portfolio account if the account
balance drops below $5,000 as the result of redemption requests and the
shareholder does not increase the balance to at least $5,000 upon thirty days'
written notice. If a customer has agreed with an Institution to maintain a
minimum balance in his or her account with the Institution, and the balance in
the account falls below that minimum, the customer may be obligated to redeem
all or part of his or her shares in the Portfolio to the extent necessary to
maintain the minimum balance required.
The Fund may also suspend the right of redemption or postpone the date of
payment upon redemption for such periods as are permitted under the 1940 Act,
and may redeem shares involuntarily or make payment for redemption in securities
or other property when determined appropriate in light of the Fund's
responsibilities under the 1940 Act. See "Purchase and Redemption Information"
in the Statement of Additional Information for examples of when such redemption
might be appropriate.
18
<PAGE> 20
WHAT SPECIAL PURCHASE AND REDEMPTION PROCEDURES MAY APPLY?
- --------------------------------------------------------------------------------
Persons who were shareholders of the Cash Reserve Fund of Compass Capital Group
of Funds at the time of its combination with The PNC Fund(R) may also purchase
and redeem Service Shares of the Portfolio for the same account in which they
held shares on that date through the procedures described in this section.
PURCHASES. Purchase orders may be placed through PFPC. The minimum investment
is $100. Purchases through the Automatic Investment Plan described below are
subject to a lower purchase minimum. The name of the Portfolio must appear on
the check or Federal Reserve Draft. Investors may also wire Federal funds in
connection with the purchase of shares. The wire instructions must include the
name of the Portfolio, class of the Portfolio, the name of the account
registration, and the shareholder account number. Before wiring any funds,
however, an investor must call PFPC at (800) 441-7762 in order to confirm the
wire instructions. Purchase orders for shares of the Portfolio that are in
proper form are executed at their net asset value per share next determined
after receipt by the Fund; however, orders will not be executed until payments
not made in Federal funds are converted to Federal funds (which normally occurs
within two Business Days of receipt) unless a creditworthy financial institution
undertakes to pay for an order in Federal funds by 4:00 p.m. (Eastern Time) the
same Business Day an order is placed. Under certain circumstances, the Fund may
reject large individual purchase orders received after 12:00 noon. The Fund may
in its discretion reject any order for shares.
The Portfolio offers an Automatic Investment Plan ("AIP") whereby an investor in
shares of the Portfolio may arrange for periodic investments in the Portfolio
through automatic deductions from a checking or savings account by completing
the AIP Application Form. The minimum pre-authorized investment amount is $50.
REDEMPTIONS. Shareholders may redeem for cash some or all of their shares of
the Portfolio at any time by sending a written redemption request in proper form
to Compass Capital Funds c/o PFPC Inc., P.O. Box 8907, Wilmington, Delaware
19899-8907.
Except as noted below, a request for redemption must be signed by all persons in
whose names the shares are registered. Signatures must conform exactly to the
account registration. If the proceeds of the redemption would exceed $25,000, or
if the proceeds are not to be paid to the record owner at the record address, or
if the shareholder is a corporation, partnership, trust or fiduciary,
signature(s) must be guaranteed by any eligible guarantor institution. Eligible
guarantor institutions generally include banks, broker/dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies and savings associations.
Generally, a properly signed written request with any required signature
guarantee is all that is required for a redemption. In some cases, however,
other documents may be necessary. Shareholders holding share certificates must
send their certificates with the redemption request. Additional documentary
evidence of authority is required by PFPC in the event redemption is requested
by a corporation, partnership, trust, fiduciary, executor or administrator.
If a shareholder has given authorization for expedited redemption, shares can be
redeemed by telephone and the proceeds sent by check to the shareholder or by
Federal wire transfer to a single previously designated bank account. Once
authorization is on file, PFPC will honor requests by any person by telephone at
(800) 441-7762 or other means. The minimum amount that may be sent by check is
$500, while the minimum amount that may be wired is $10,000. Compass Capital
reserves the right to change these minimums or to terminate these redemption
privileges. If the proceeds of a redemption would exceed $25,000, the redemption
request must be in writing and will be subject to the signature guarantee
requirement described above. This privilege may not be used to redeem shares in
certificated form.
19
<PAGE> 21
During periods of substantial economic or market change, telephone redemptions
may be difficult to complete. Redemption requests may also be mailed to PFPC at
P.O. Box 8907, Wilmington, Delaware 19899-8907.
Compass Capital is not responsible for the efficiency of the Federal wire system
or the shareholder's firm or bank. Compass Capital does not currently charge for
wire transfers. The shareholder is responsible for any charges imposed by the
shareholder's bank. To change the name of the single designated bank account to
receive wire redemption proceeds, it is necessary to send a written request
(with a guaranteed signature as described above) to Compass Capital Funds c/o
PFPC, P.O. Box 8907, Wilmington, Delaware 19899-8907.
Compass Capital reserves the right to refuse a telephone redemption if it
believes it advisable to do so. The Fund, the Administrators and the Distributor
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. Compass Capital, the Administrators and the Distributor
will not be liable for any loss, liability, cost or expense for acting upon
telephone instructions reasonably believed to be genuine in accordance with such
procedures.
Compass Capital offers a Systematic Withdrawal Plan ("SWP") which may be used by
investors who wish to receive regular distributions from their accounts. Upon
commencement of the SWP, the account must have a current value of $10,000 or
more in the Portfolio. Shareholders may elect to receive automatic cash payments
of $100 or more either monthly, every other month, quarterly, three times a
year, semi-annually, or annually. Automatic withdrawals are normally processed
on the 25th day of the applicable month or, if such day is not a Business Day,
on the next Business Day and are paid promptly thereafter. An investor may
utilize the SWP by completing the SWP Application Form which may be obtained
from PFPC.
Shareholders should realize that if withdrawals exceed income dividends their
invested principal in the account will be depleted. To participate in the SWP,
shareholders must have their dividends automatically reinvested. Shareholders
may change or cancel the SWP at any time, upon written notice to PFPC.
20
<PAGE> 22
HOW IS NET ASSET VALUE CALCULATED?
- --------------------------------------------------------------------------------
Net asset value is calculated separately for Service Shares of the Portfolio as
of 12:00 noon (Eastern Time) and 4:00 p.m. (Eastern Time) on each Business Day
by dividing the value of all securities and other assets owned by the Portfolio
that are allocated to its Service Shares, less the liabilities charged to its
Service Shares, by the number of Service Shares outstanding.
The Portfolio seeks to maintain a net asset value of $1.00 per share for
purposes of purchases and redemptions, and values its portfolio securities based
on the amortized cost method of valuation described in the Statement of
Additional Information under "Valuation of Shares." The Portfolio may use a
pricing service, bank or broker/dealer to value its securities.
21
<PAGE> 23
HOW FREQUENTLY ARE DIVIDENDS AND DISTRIBUTIONS MADE TO INVESTORS?
- --------------------------------------------------------------------------------
Shareholders are entitled to dividends and distributions arising from the net
income and capital gains, if any, earned on investments held by the Portfolio.
The Portfolio's net income is declared daily as a dividend. Shareholders whose
purchase orders are executed at 12:00 noon (Eastern Time) receive dividends for
that day. On the other hand, shareholders whose redemption orders have been
received by 12:00 noon (Eastern Time) do not receive dividends for that day,
while shareholders of the Portfolio whose redemption orders are received after
12:00 noon (Eastern Time) do receive dividends for that day.
Dividends are paid monthly by check, or by wire transfer if requested in writing
by the shareholder, within five business days after the end of the month. Net
short-term capital gains, if any, will be distributed at least annually. The
period for which dividends are payable and the time for payment are subject to
change by the Fund's Board of Trustees. The Portfolio does not expect to realize
net long-term capital gains.
Dividends are reinvested in additional full and fractional Service Shares of the
Portfolio, unless a shareholder elects to receive dividends in cash. Such
election, or any revocation thereof, must be made in writing to PFPC, and will
become effective with respect to dividends paid after receipt by PFPC.
22
<PAGE> 24
HOW ARE FUND DISTRIBUTIONS TAXED?
- --------------------------------------------------------------------------------
The Portfolio intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). If
the Portfolio qualifies, it generally will be relieved of Federal income tax on
amounts distributed to shareholders, but shareholders, unless otherwise exempt,
will pay income or capital gains taxes on distributions (except distributions
that are "exempt interest dividends" or are treated as a return of capital),
whether the distributions are paid in cash or reinvested in additional shares.
Distributions paid out of the Portfolio's "net capital gain" (the excess of net
long-term capital gain over net short-term capital loss), if any, will be taxed
to shareholders as long-term capital gain regardless of the length of time a
shareholder holds the shares. All other distributions, to the extent taxable,
are taxed to shareholders as ordinary income.
The Fund will send written notices to shareholders annually regarding the tax
status of distributions made by the Portfolio. Dividends declared in October,
November or December of any year payable to shareholders of record on a
specified date in those months will be deemed to have been received by the
shareholders on December 31 of such year, if the dividends are paid during the
following January.
This is not an exhaustive discussion of applicable tax consequences, and
investors may wish to contact their tax advisers concerning investments in the
Portfolio. Except as discussed below, dividends paid by the Portfolio may be
taxable to investors under state or local law as dividend income even though all
or a portion of such dividends may be derived from interest on obligations
which, if realized directly, would be exempt from such income taxes. In
addition, shareholders who are non-resident alien individuals, foreign trusts or
estates, foreign corporations or foreign partnerships may be subject to
different Federal income tax treatment. Future legislative or administrative
changes or court decisions may materially affect the tax consequences of
investing in the Portfolio.
23
<PAGE> 25
HOW IS THE FUND ORGANIZED?
- --------------------------------------------------------------------------------
The Fund was organized as a Massachusetts business trust on December 22, 1988
and is registered under the 1940 Act as an open-end management investment
company. On January 12, 1996 the Fund changed its name from The PNC(R) Fund to
Compass Capital Funds(sm). The Declaration of Trust authorizes the Board of
Trustees to classify and reclassify any unissued shares into one or more classes
of shares. Pursuant to this authority, the Trustees have authorized the issuance
of an unlimited number of shares in thirty investment portfolios. Each Portfolio
offers five separate classes of shares -- Institutional Shares, Service Shares,
Investor A Shares, Investor B Shares and Investor C Shares. This prospectus
relates only to Service Shares of the Money Market Portfolio.
Shares of each class bear their pro rata portion of all operating expenses paid
by the Portfolio, except transfer agency fees and amounts payable under the
Fund's Distribution and Service Plan. Because of these "class expenses," the
performance of the Portfolio's Institutional Shares is expected to be higher
than the performance of the Portfolio's Service Shares, and the performance of
both the Institutional Shares and Service Shares of the Portfolio is expected to
be higher than the performance of the Portfolio's three classes of Investor
Shares. The performance of each class of Investor Shares may be different. The
Fund offers various services and privileges in connection with its Investor
Shares that are not generally offered in connection with its Institutional and
Service Shares, including an automatic investment plan, automatic withdrawal
plan and checkwriting. For further information regarding the Fund's
Institutional or Investor Share classes, contact PFPC at (800) 441-7764
(Institutional Shares) or (800) 441-7762 (Investor Shares).
Each share of the Portfolio has a par value of $.001, represents an interest in
the Portfolio and is entitled to the dividends and distributions earned on the
Portfolio's assets as are declared in the discretion of the Board of Trustees.
The Fund's shareholders are entitled to one vote for each full share held and
proportionate fractional votes for fractional shares held, and will vote in the
aggregate and not by class, except where otherwise required by law or as
determined by the Board of Trustees. The Fund does not currently intend to hold
annual meetings of shareholders for the election of trustees (except as required
under the 1940 Act). For a further discussion of the voting rights of
shareholders, see "Additional Information Concerning Shares" in the Statement of
Additional Information.
On November 30, 1996, PNC Bank held of record approximately 70% of the Fund's
outstanding shares, as trustee on behalf of individual and institutional
investors, and may be deemed a controlling person of the Fund under the 1940
Act. PNC Bank is a subsidiary of PNC Bank Corp.
24
<PAGE> 26
HOW IS PERFORMANCE CALCULATED?
- --------------------------------------------------------------------------------
The Portfolio may advertise its "yield," "effective yield" and total return for
Service Shares. These performance figures are based on historical earnings and
are not intended to indicate future performance. "Yield" refers to the income
generated by an investment in the Portfolio's Service Shares over a seven-day
period. This income is then "annualized." That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment.
"Effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the Portfolio's Service Shares is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
The performance of Service Shares of the Portfolio may be compared to the
performance of mutual funds with similar investment objectives and to relevant
indices, as well as to ratings or rankings prepared by independent services or
other financial or industry publications that monitor the performance of mutual
funds. For example, the yield of Service Shares of the Portfolio may be compared
to data prepared by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc. and Weisenberger Investment Company Service. Performance
information may also include evaluations of the Portfolio published in
nationally recognized ranking services, and information as reported by financial
publications such as Business Week, Fortune, Institutional Investor, Money
Magazine, Forbes, Barron's, The Wall Street Journal and The New York Times, or
in publications of a local or regional nature.
Performance quotations for shares of the Portfolio represent past performance
and should not be considered as representative of future results. The yield of
any investment is generally a function of portfolio quality and maturity, type
of investment and operating expenses. Yields will fluctuate and are not
necessarily representative of future results. Any fees charged by affiliates of
the Portfolio's investment adviser or other institutions directly to their
customers' accounts in connection with investments in the Portfolio will not be
included in the Portfolio's calculations of yield and performance.
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<PAGE> 27
HOW CAN I GET MORE INFORMATION?
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Below is a brief description of how investors can easily access information
about the Compass Capital Funds.
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FUND INFORMATION HOURS AVAILABLE PHONE INFORMATION
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MUTUAL FUND SPECIALISTS 9 AM to 6 PM, E.S.T. toll-free 888-4COMPASS
Available to provide performance and market Monday through Friday toll-free 888-426-6727
trends. toll-free 800-388-8734
PORTFOLIO MANAGERS COMMENTARY 9 AM to 6 PM, E.S.T. toll-free 888-4COMPASS
(Audio recording updated periodically) Monday through Friday toll-free 888-426-6727
toll-free 800-388-8734
SHAREHOLDER SERVICES
TELEPHONE ACCESS: 24 Hours, 7 days a week toll-free 800-441-7764
ACCOUNT SERVICE REPRESENTATIVES: 8:30 AM to 5 PM, E.S.T. toll-free 800-441-7764
Available to discuss account balance information, Monday through Friday
mutual fund prospectus, literature and discuss
programs and services available.
PURCHASES AND REDEMPTIONS 8:30 AM to 5 PM, E.S.T. toll-free 800-441-7450
Monday through Friday
WORLD WIDE WEB:
Access general fund information and specific fund 24 Hours, 7 days a week http://www.compassfunds.com
performance. Request mutual fund prospectuses and
literature. Forward mutual fund inquiries.
E-MAIL:
Request prospectuses and literature. Forward 24 Hours, 7 days a week [email protected]
mutual fund inquiries.
WRITTEN CORRESPONDENCE: POST OFFICE BOX ADDRESS STREET ADDRESS
Compass Capital Funds Compass Capital Funds
c/o PFPC Inc. c/o PFPC Inc.
P.O. Box 8907 400 Bellevue Parkway
Wilmington, DE Wilmington, DE 19809
19899-8907
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COMPASS CAPITAL FUNDS
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
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MONEY MARKET PORTFOLIO
THE MONEY
MARKET
PORTFOLIO
SERVICE SHARES
Prospectus
January 1, 1997
