You create compound shapes using the Pathfinder panel (Window > Object & Layout > Pathfinder). Compound shapes can be made up of simple or compound paths, text frames, text outlines, or other shapes. The appearance of the compound shape depends on which Pathfinder button you choose.

In most cases, the resulting shape adopts the attributes (fill, stroke, transparency, layer, and so on) of the frontmost object. When you subtract shapes, however, objects in the front are deleted. The resulting shape takes on the attributes of the backmost object instead.
When you include a text frame in a compound shape, the shape of the text frame changes, but the text itself stays the same. To alter the text itself, create a compound path using text outlines.

Create a compound shapeYou can work with a compound shape as a single unit or release its component paths to work with each separately. For example, you might apply a gradient fill to a part of the compound shape, but leave the rest of the shape unfilled.

You can also choose a command from the Object > Pathfinder submenu.
Release paths in a compound shape
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