SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934(Amendment No.______)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
Sunburst Funds
(Name of Registrant as Specified In Its Charter)
Federated Investors
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
[ X] Fee previously paid
1.Title of each class of securities to which
transaction applies:
2.Aggregate number of securities to which transaction
applies:
3.Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11:
4.Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is
calculated and state how it was determined.
[ ] Check the box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify
the filing for which the offsetting fee was paid
previously. Identify the previous filing by
registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date File:
SUNBURST FUNDS
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 16, 1994
A special meeting of the shareholders of SUNBURST FUNDS
(the "Trust"), which is comprised of one investment
portfolio, Sunburst Short-Intermediate Government Bond Fund
(the "Fund"), will be held at the Trust's principal offices
on the 19th Floor of Federated Investors Tower, Liberty
Avenue at Grant Street, Pittsburgh, Pennsylvania 15222-3779,
at 2:00 p.m. on December 16, 1994, for the following
purposes:
(1) To approve or disapprove a new Investment Advisory
Contract between Sunburst Bank, Mississippi and the
Trust;
(2) To elect the Board of Trustees; and
(3) To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Trustees have fixed November 4, 1994 as the record
date for determination of shareholders entitled to vote at
this special meeting.
THE ANNUAL REPORT FOR THE SUNBURST SHORT-INTERMEDIATE
GOVERNMENT BOND FUND, DATED SEPTEMBER 30, 1994, IS BEING
MAILED CONCURRENTLY WITH THE PROXY MATERIALS.
By Order of the Trustees
John W. McGonigle
Secretary
November 15, 1994
PLEASE SIGN, DATE AND RETURN THE ENCLOSED
PROXY PROMPTLY TO AVOID ADDITIONAL EXPENSE
YOU CAN HELP THE TRUST AVOID THE NECESSITY AND EXPENSE OF
SENDING FOLLOW-UP LETTERS TO ENSURE A QUORUM BY PROMPTLY
RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO ATTEND
THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED
PROXY SO THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE
SPECIAL MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
SUNBURST FUNDS
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board
of Trustees of the Trust. The proxy is revocable at any
time before it is voted by sending written notice of the
revocation to the Trust or by appearing personally at the
December 16, 1994 special meeting of shareholders ("Special
Meeting"). The cost of preparing and mailing the notice of
meeting, the proxy card, this proxy statement and any
additional proxy material is being borne by the Trust.
Proxy solicitations will be made primarily by mail, but may
also be made by telephone, telegraph, or personal interview
conducted by certain officers or employees of the Trust,
Federated Services Company (the Trust's transfer agent), or
Federated Administrative Services (the Trust's
administrator). In the event that a shareholder signs and
returns the proxy card but does not indicate a choice as to
any of the items on the proxy card, the named proxies will
vote those shares in favor of such proposal(s).
On November 4, 1994, the Trust had outstanding
1,286,317 shares of beneficial interest ("Shares"), all
issued to shareholders of the Trust's only portfolio,
Sunburst Short-Intermediate Government Bond Fund, with each
whole Share being entitled to one vote and fractional Shares
being entitled to fractional votes. Only shareholders of
record at the close of business on November 4, 1994, will be
entitled to notice of and to vote at the Special Meeting. A
majority of the outstanding Shares of the Fund, represented
in person or by proxy, shall be required to constitute a
quorum at the Special Meeting.
For purposes of determining the presence of a quorum
and counting votes on the matters presented, Shares
represented by abstentions and "broker non-votes" will be
counted as present, but not as votes cast, at the Special
Meeting. Under the Trust's Declaration of Trust, the
election of Trustees will be determined on the basis of a
percentage of votes cast at the Special Meeting. Under the
Investment Company Act of 1940, as amended (the "1940 Act"),
the affirmative vote necessary to approve other matters may
be determined with reference to a percentage of votes
present at the Special Meeting, which would have the effect
of treating abstentions and non-votes as if they were votes
against the proposal.
The Fund's Annual Report for the fiscal year ended
September 30, 1994, is being mailed concurrently with this
proxy statement. The Trust's executive offices are located
on the 19th floor of Federated Investors Tower, Grant Street
and Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779.
This proxy statement and the enclosed notice of meeting and
proxy card are first being mailed on or about November 15,
1994.
INTRODUCTION
This Special Meeting is called to approve or disapprove
a new investment advisory contract between the Trust and
Sunburst Bank, Mississippi ("Sunburst") and to elect the
present Board of Trustees.
Consideration of a new investment advisory contract is
being requested on account of the pending acquisition by
Union Planters Corporation ("UPC") of Grenada Sunburst
System Corporation ("GSSC"). According to the terms of the
acquisition, it is contemplated that GSSC will merge with
and into UPC, and all the subsidiaries of GSSC will become
subsidiaries of UPC. The proposed new investment advisory
contract between the Trust and Sunburst would take effect at
the time the acquisition is completed.
Here are some of the factors you should consider in
determining whether to approve the new investment advisory
contract:
o your Board of Trustees has unanimously approved the
new investment advisory contract;
o no change in the Fund's investment objective or
investment policies will take place;
o there will be no change in the fees payable by the
Fund for advisory services; and
o the present Board of Trustees has been advised that
those persons currently responsible for providing
investment advice to the Fund will continue to do so
following the completion of the acquisition.
APPROVAL OR DISAPPROVAL OF A NEW INVESTMENT
ADVISORY CONTRACT ("NEW CONTRACT")
Sunburst, located at 2000 Gateway, P.O. Box 947,
Grenada, Mississippi 38901, serves as investment adviser to
the Fund pursuant to an investment advisory contract dated
October 1, 1993 (the "Present Contract"). Sunburst is a
wholly-owned subsidiary of GSSC, a multi-bank holding
company.
GSSC announced that it had entered into a definitive
Agreement and Plan of Reorganization, dated July 1, 1994, to
be acquired by UPC, a bank holding company headquartered in
Memphis, Tennessee (the "Acquisition"). See "Proposed
Acquisition of Grenada Sunburst System Corporation."
Completion of the transaction contemplated by the
Acquisition will cause Sunburst to become an indirect wholly
owned subsidiary of the resulting company. To the extent
the Acquisition might be deemed to result in a change in
ownership of Sunburst, it would automatically terminate the
Present Contract in accordance with its terms as required by
the 1940 Act. Thus, although Sunburst will remain the
entity responsible for providing investment advisory
services to the Fund following the Acquisition, approval of
the New Contract by the shareholders of the Fund is being
sought in order to avoid any possible issue with respect to
provision of advisory services to the Fund.
On August 25, 1994, the Trustees of the Trust,
including a majority of the Trustees who are not parties to
the investment advisory contract or "interested persons" (as
that term is defined in the 1940 Act) of any such party
(hereafter referred to as "Independent Trustees"),
unanimously approved the New Contract with Sunburst and
directed that it be submitted to shareholders for their
approval. The terms of the New Contract are identical in
all material respects to the Present Contract, except for
the effective date which, in the case of the New Contract,
will be the date of the completion of the Acquisition (the
"Closing Date"). It is currently expected that the Closing
Date will occur on or about December 31, 1994.
Copies of the Present Contract and the New Contract
appear as Exhibits A and B, respectively, to this proxy
statement.
The Present Contract was approved by the Board of
Trustees, including a majority of the Independent Trustees,
on August 26, 1993 and by Federated Administrative Services,
as sole shareholder of the Fund by written unanimous consent
on October 27, 1993. As under the terms of the Present
Contract, the New Contract provides that, subject to the
direction of the Board of Trustees, Sunburst will provide
investment research, advice, management and supervision of
the investments of the Fund and will conduct a continuous
program of investment evaluation and sale or other
disposition and reinvestment of the Fund's assets. For its
services, Sunburst is entitled to receive an annual
investment advisory fee of .74 of 1% of the average daily
net assets of the Fund.
Both the Present Contract and the New Contract provide
that the Fund shall pay all of its own expenses and its
allocable share of Trust expenses. These expenses include
expenses of administrative personnel and services provided
to the Trust by Federated Administrative Services at an
annual rate as described in the Fund's prospectus. Both the
Present Contract and the New Contract provide that Sunburst
may, from time to time, and for such periods as it deems
appropriate, reduce its compensation by voluntarily limiting
the expenses of the Fund. During the fiscal year ended
September 30, 1994, Sunburst earned investment advisory fees
of $74,167 and waived advisory fees in the amount of
$74,167.
If approved by shareholders at this Special Meeting,
the New Contract will continue for two years after it takes
effect, unless terminated, and may be continued from year to
year thereafter by the Board of Trustees or by "Majority
Shareholder Vote" (as defined below). The continuation of
the New Contract must be approved by a majority vote of the
Trustees, including a majority of the Independent Trustees,
cast in person at a meeting called for that purpose.
Sunburst has the right, in any year, to notify the Fund in
writing at least 60 days before the New Contract anniversary
date, that it does not desire a renewal of the New Contract.
The New Contract may be terminated by the Trustees or a
Majority Shareholder Vote at any time without penalty by
giving Sunburst 60 days' written notice. The New Contract
may not be assigned by Sunburst and shall terminate
automatically in the event of an assignment as defined in
the 1940 Act. The New Contract provides that it may be
amended by a vote of both a majority of the Trustees,
including a majority of the Independent Trustees, and by a
Majority Shareholder Vote.
As does the Present Contract, the New Contract provides
that in the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations or
duties under the New Contract, Sunburst shall not be liable
to the Trust or to the Fund or to any shareholder for any
act or omission in the course of, or connected in any way
with, rendering services or for any losses that may be
sustained in the purchase, holding, or sale of any security.
Approval of the New Contract requires the affirmative
vote of: (a) 67% or more of the Shares of the Fund present
at the Special Meeting, if the holders of more than 50% of
the outstanding Shares of the Fund are present or
represented by proxy, or (b) more than 50% of the
outstanding Shares of the Fund, whichever is less ("Majority
Shareholder Vote"). If the New Contract is approved by
shareholders and the Acquisition is completed, the New
Contract will be executed and become effective on the
Closing Date. In the event the Acquisition is not
completed, the Present Contract will continue in accordance
with its terms. If the Acquisition is completed and the New
Contract is not approved by the shareholders of the Trust,
the Board of Trustees will consider what actions should be
taken, including but not limited to requesting that Sunburst
perform investment advisory services without cost until a
new investment advisory contract is approved by the
shareholders.
There are various conditions precedent to the
completion of the Acquisition including approval by the
shareholders of GSSC and UPC, and approval of regulatory
authorities. Shareholders of the Fund are not being asked
to vote on the Acquisition.
PROPOSED ACQUISITION OF GRENADA SUNBURST SYSTEM CORPORATION
The terms of the Acquisition provide that upon
completion of the Acquisition of GSSC with and into UPC, the
outstanding shares of GSSC common stock will be
automatically converted into the right to receive whole
shares of UPC common stock and cash payments for fractional
shares based on an exchange ratio set forth in the terms of
the Acquisition, and each outstanding common share of UPC
will remain outstanding.
Completion of the Acquisition is subject to the
satisfaction of certain conditions including the receipt of
all necessary regulatory approvals and the approval of the
shareholders of UPC and GSSC of the Acquisition. The
acquisition agreement may be terminated and the Acquisition
abandoned at any time prior to the Closing Date by the
mutual consent of UPC and GSSC or upon the occurrence of
other events specified in the acquisition agreement.
Completion of the Acquisition will occur as soon as
practicable after satisfaction or waiver of the applicable
conditions, which the parties anticipate will occur on or
about December 31, 1994.
TRUSTEES' RECOMMENDATIONS AND OTHER INFORMATION
The New Contract was unanimously approved by the Board
of Trustees of the Trust including the Independent Trustees
of the Trust at a meeting held on August 25, 1994. By
approving the New Contract, the Trustees have acted in what
they believe to be the best interest of the shareholders of
the Fund. The Trustees have received from Sunburst and
reviewed such information as the Trustees believe to be
relevant to the Trustees' considerations. In connection
with the approval of the New Contract, the Trustees were
advised by Sunburst that those persons currently responsible
for management of Fund assets will have similar
responsibilities to the Fund subsequent to completion of the
Acquisition. The Trustees considered information relating
to Sunburst and the consolidated entity that would result
from the Acquisition, including present capabilities and
expertise in serving as investment adviser to the Fund, as
well as to other investment companies, as noted below. They
also considered the nature and quality of services provided
by Sunburst, the investment record of the Fund, comparative
data as to the advisory fees and expenses, and such other
information as the Trustees believed to be relevant. The
Trustees also were advised that all mutual fund activities
of the combined entities would be examined subsequent to
completion of the Acquisition in order to determine whether
further efficiencies can be realized.
The Trustees are unable to predict whether changes will
be recommended which would materially impact Fund
operations. The Trustees also considered the fact that no
changes in the compensation payable to Sunburst were
proposed. After consideration of these facts, the Trustees,
including the Independent Trustees, concluded that Sunburst
is fully capable of performing the services contemplated by
the New Contract and recommended that the New Contract be
approved by the shareholders of the Fund.
The 1940 Act provides that in connection with the sale
of any interest in an investment adviser which results in
the "assignment" of an investment advisory contract, an
investment adviser of a registered investment company such
as the Trust, or an affiliated person of such investment
adviser, may receive any amount or benefit if (i) for a
period of three years after the sale, at least 75% of the
members of the Board of Trustees of the investment company
are not interested persons of the new investment adviser or
the predecessor adviser, and (ii) there is no "unfair
burden" imposed on the investment company as a result of
such sale or any express or implied terms, conditions or
understanding applicable thereto. For this purpose, "unfair
burden" is defined to include any arrangement during the two-
year period after the transaction, whereby the investment
adviser or its predecessor or successor investment advisers,
or any interested persons of any such adviser, receives or
is entitled to receive any compensation directly or
indirectly (i) from any person in connection with the
purchase or sale of securities or other property to, from or
on behalf of the investment company other than bona fide
ordinary compensation as principal underwriter for such
company, or (ii) from the investment company or its security
holders for other than bona fide investment advisory or
other services. This provision of the 1940 Act was enacted
by Congress in 1975 to make it clear that an investment
adviser (or an affiliated person of the adviser) can realize
a profit on the sale of the adviser's business subject to
the two safeguards described above. Although it is not
clear that this provision of the 1940 Act would be applied
in connection with the proposed Acquisition, the Board of
Trustees of the Trust has requested and received assurances
from Sunburst that no "unfair burden" will be imposed on the
Trust as a result of the proposed transaction.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS APPROVE THE NEW INVESTMENT
ADVISORY CONTRACT
UNION PLANTERS CORPORATION
Union Planters Corporation is a Tennessee-chartered
corporation, and is registered as a bank holding company and
a savings and loan holding company. Headquartered in
Memphis, Tennessee, UPC is the third largest bank
headquartered in Tennessee and operates 233 banking offices
in Tennessee, Mississippi, Alabama, Arkansas, and Kentucky.
UPC had total assets of approximately $6.7 billion as of
June 30, 1994.
Union Planters National Bank, a wholly owned subsidiary
of UPC, acts as investment adviser to The Planters Funds,
which is comprised of one mutual fund, Tennessee Tax-Free
Bond Fund which has an investment advisory fee at an annual
rate equal to 0.75% of the Fund's average daily net assets
and its approximate net assets as of September 30, 1994 are
$38.9 million.
The principal executive officers and directors of UPC
are set forth below. Unless otherwise noted, the position
listed under Principal Occupation is with UPC:
Name Position with UPC Principal Occupation
Benjamin W. Rawlins, Jr. Chairman, CEO, and
Director Chairman and CEO, Union
Planters National Bank
Jackson W. Moore President, COO, and Director None
James A. Gurley Executive Vice President None
John W. Parker Executive Vice President None
and Chief Financial Officer
M. Kirk Walters Senior Vice President, None
Treasurer, and Chief
Accounting Officer
J. F. Springfield Executive Vice President, None
Secretary, and General Counsel
Albert M. Austin Director Chairman, Cannon,
Austin and Cannon,
Inc.
Marvin E. Bruce Director Retired, TBC
Corporation
George W. Bryan Director Senior Vice
President, Sara Lee
Corporation
Robert B. Colbert, Jr. Director Retired,
Signal Apparel Co.,
Inc.
C. J. Lowrance, III Director President, Lowrance
Brothers & Co., Inc.
Stanley D. Overton Director Vice Chairman, Union
Planters National
Bank
Dr. V. Lane Rawlins Director President, Memphis
State University
Mike P. Sturdivant Director President, Duc West
Gin Co., Inc.
Richard A. Trippeer, Jr. Director President,
R.A. Trippeer, Inc.
GRENADA SUNBURST SYSTEM CORPORATION AND SUNBURST
Sunburst Bank, Mississippi, is a wholly-owned
subsidiary of Grenada Sunburst System Corporation, a multi-
bank holding company, both of which are headquartered in
Grenada, Mississippi. Sunburst is a Mississippi banking
corporation chartered under the laws of Mississippi. GSSC
is a corporation chartered under the laws of Delaware, is a
registered bank holding company, and is engaged in banking
and financial service activities through its major operating
areas, which, in addition to Sunburst Bank, Mississippi,
include Sunburst Bank, Louisiana; Sunburst Mortgage
Corporation; Sunburst Financial Group, Inc., a registered
broker-dealer and investment adviser; Sunburst Trust, which
provides asset and investment management; and Rapid Finance,
a small loan company. GSSC provides a full range of
banking, financial and trust services to individuals and
small and commercial businesses through its subsidiaries
operating in 122 locations in 58 communities throughout the
state of Mississippi and in Baton Rouge, Louisiana. GSSC
and its affiliates have been the banking and financial
services business for over 100 years, with approximately
$2.5 billion in total assets as of September 30, 1994. The
adviser has not previously served as an investment adviser
to a registered investment company.
The principal executive officers and directors of
Sunburst are set forth below. Unless otherwise noted, the
position listed under Principal Occupation is with Sunburst:
Name Position with Sunburst Principal Occupation
James T. Boone President, Chief Executive None
Officer and Director
Daniel L. Holland Executive Vice President None
James A. Baker Executive Vice President None
J. Daniel Garrick, III Senior Executive None
Vice President
Don W. Ayres Senior Executive None
Vice President
Jerry A. Pegg Executive Vice President None
James L. Brown Regional Executive None
Thomas H. Carroll, Jr. Regional Executive None
E. Jackson Garner Regional Executive None
Todd Mixon Regional Executive None
Frank W. Smith Senior Executive None
Vice President
L.P. Bays Director Retired
R.E. Beck Director Chairman of the
Board
Charles W. Capps, Jr. Director President,
Capps Insurance
Rev. Merlin Dean Conoway Director District
Superintendent,
Starkville District
United Methodist
Church
Jack deMange Director Retired
C.D. Denton Director President, Denton
Co., Inc.;
President, Cedar
Ridge Dairy;
President, David
Inc.; Partner,
Denton Brothers
W. H. Frazer, Jr. Director Retired President,
Sunburst Bank,
Clarksdale
E. Jack Garner Director President and CEO,
Sunburst Bank,
Jackson
Dr. George Marion Harmon Director President,
Millsaps College
R. Harvey Henderson, Sr. Director Attorney
Julian E. Johnson, Jr. Director President,
Johnson Independent
Co., Inc.
Dorris H. Jones Director Retired Owner, Jones
Men's Wear
Burrell O. McGee Director President, Sunburst
Bank, Leland
Robert C. McNeel Director Investments
G.M. Moore Director Retired Chairman of
the Board
W.A. Percy, II Director Manager, Trail Lake
Enterprises
David E. Pryor Director President, Pryor
Implement Co., Inc.
J.H. Sherard, IV Director Manager and Partner,
John H. Sherard &
Son
Ray K. Smith Director Chairman of the
Executive Committee;
Retired President,
Grenada Sunburst
System Corporation
Thomas Maury Thames, Jr. Director President,
Reeder, Street, &
Thomas, Inc.
Katherine H. Whitaker Director Owner and
Manager, Whitaker
Furniture Company
F. Kent Wyatt Director President, Delta
State University
PORTFOLIO TRANSACTIONS
All portfolio transactions are undertaken on the basis
of their desirability from an investment standpoint.
Subject to review by the Board of Trustees, the investment
adviser makes decisions on and selects brokers or dealers
for portfolio transactions based on their ability to
promptly execute purchase and sale orders at a favorable
price. The Board of Trustees periodically reviews and
monitors the investment adviser's performance. The purchase
of portfolio instruments from and their sale to dealers are
executed with recognized dealers in these portfolio
instruments except when a better execution and price can be
obtained elsewhere.
The investment adviser may select brokers and dealers
who, in addition to meeting the above requirements, also
furnish brokerage and research services. These services may
include advice as to the advisability of investing in
securities, security analyses and reports, economic studies,
industry studies, receipt of quotations for portfolio
valuations and similar services. These services may be
furnished either directly to the Trust, to the investment
adviser, to advisers who are affiliates of the investment
adviser or to accounts advised by those companies. Such
services may be useful to Sunburst in serving both the Fund
and other clients, and, conversely, supplemental information
obtained by the placement of business of other clients may
be useful to Sunburst in carrying out its obligations to the
Fund.
The investment adviser, in selecting brokers or dealers
to execute portfolio transactions, exercises reasonable
business judgment and determines in good faith that
commissions charged by such persons are reasonable in
relationship to the value of the brokerage and research
services provided by such persons, viewed in terms of the
overall responsibilities of the investment adviser and its
affiliated companies with respect to the Trust itself and
the other accounts to which they render investment advice.
As a practical matter, the benefits inuring to these
companies or accounts are not divisible. To the extent that
the receipt of the above-described services may supplant
services for which the investment adviser might otherwise
have paid, it would, of course, tend to reduce its expenses.
The same is true of services furnished to the Trust and in
turn made available by the Trust to the investment adviser
or its affiliates. The investment adviser does not lower
its fee as a consequence of receiving such services.
During the fiscal year ended September 30, 1994, the
Fund paid no brokerage commissions on brokerage
transactions.
ELECTION OF TRUSTEES
At the Special Meeting, votes will be taken on the
election of the following persons (which comprise the Board
of Trustees as of the record date) as Trustees of the Trust
to hold office until the election and qualification of their
successors. All of the nominees are presently serving as
Trustees. All nominees have served in that capacity
continuously since July 12, 1993, the date the Trust was
created. All nominees have consented to serve if elected.
Election of a Trustee requires the affirmative vote of a
plurality of the votes cast at the Special Meeting.
When elected, the Trustees will hold office during the
lifetime of the Trust except that: (a) any Trustee may
resign; (b) any Trustee may be removed by written
instrument, signed by at least two-thirds of the number of
Trustees prior to such removal; (c) any Trustee who requests
to be retired or who has become mentally or physically
incapacitated may be retired by written instrument signed by
a majority of the other Trustees; and (d) a Trustee may be
removed at any special meeting of the shareholders by a vote
of two-thirds of the outstanding Shares of the Trust. In
case a vacancy shall exist for any reason, the remaining
Trustees may fill such vacancy by appointment of another
Trustee. The Trustees will not fill any vacancy by
appointment if immediately after filling such vacancy, less
than two-thirds of the Trustees then holding office would
have been elected by the shareholders. If, at any time, less
than a majority of the Trustees holding office have been
elected by the shareholders, the Trustees then in office
will call a shareholders' meeting for the purpose of
electing Trustees to fill vacancies. Otherwise, there will
normally be no meeting of shareholders called for the
purpose of electing Trustees.
Principal Occupations
during the past five years,
Name Affiliations and Address Age
John F. Donahue@* Chairman and Trustee, Federated 70
Chairman and Trustee Investors, Federated Advisers,
Federated Management, and
Federated Research; Chairman
and Director, Federated
Research Corp.; Chairman,
Passport Research, Ltd.;
Director, AEtna Life and
Casualty Company; Chief
Executive Officer and Director,
Trustee, or Managing General
Partner of the Funds. Mr.
Donahue is the father of J.
Christopher Donahue, Vice
President of the Trust.
Federated Investors Tower,
Pittsburgh, PA.
Edward C. Gonzales* Vice President, Treasurer, and Trustee, 64
President, Treasurer, Federated Investors;
Trustee Vice President and
Treasurer, Federated Advisers,
Federated Management, Federated
Research, Federated Research
Corp., and Passport Research,
Ltd.; Executive Vice President,
Treasurer, and Director,
Federated Securities Corp.;
Trustee, Federated Services
Company and Federated
Shareholder Services; Chairman,
Treasurer, and Trustee,
Federated Administrative
Services; Trustee or Director
of some of the Funds; Vice
President and Treasurer of the
Funds. Federated Investors
Tower, Pittsburgh, PA.
Principal Occupations
during the past five years,
Name Affiliations and Address Age
John T. Conroy, Jr. President, Investment Properties 57
Trustee Corporation; Senior Vice-
President, John R. Wood and
Associates, Inc., Realtors;
President, Northgate Village
Development Corporation;
Partner or Trustee in private
real estate ventures in
Southwest Florida; Director,
Trustee, or Managing General
Partner of the Funds; formerly,
President, Naples Property
Management, Inc. Wood/IPC
Commercial Department, John R.
Wood and Associates, Inc.,
Realtors, 3255 Tamiami Trail
North, Naples, FL.
William J. Copeland Director and Member of the Executive 76
Trustee Committee, Michael Baker, Inc.;
Director, Trustee, or Managing
General Partner of the Funds;
formerly, Vice Chairman and
Director, PNC Bank, N.A., and
PNC Bank Corp. and Director,
Ryan Homes, Inc. One PNC Plaza-
23rd Floor, Pittsburgh, PA.
James E. Dowd Attorney-at-law; Director, The Emerging 72
Trustee Germany Fund, Inc.; Director,
Trustee, or Managing General
Partner of the Funds; formerly,
Director, Blue Cross of
Massachusetts, Inc. 571
Hayward Mill Road, Concord, MA.
Lawrence D. Ellis, M.D. Hematologist, Oncologist, and Internist, 62
Trustee Presbyterian and Montefiore
Hospitals; Professor of
Medicine and Trustee,
University of Pittsburgh;
Director of Corporate Health,
University of Pittsburgh
Medical Center; Director,
Trustee, or Managing General
Partner of the Funds. 3471
Fifth Avenue, Suite 1111,
Pittsburgh, PA.
Edward L. Flaherty, Jr. Attorney-at-law; Partner, Meyer and 70
Trustee Flaherty; Director, Eat'N Park
Restaurants, Inc., and
Statewide Settlement Agency,
Inc.; Director, Trustee, or
Managing General Partner of the
Funds; formerly, Counsel,
Horizon Financial, F.A.,
Western Region. 5916 Penn
Mall, Pittsburgh, PA.
Peter E. Madden Consultant; State Representative, 52
Trustee Commonwealth of Massachusetts;
Director, Trustee, or Managing
General Partner of the Funds;
formerly, President, State
Street Bank and Trust Company
and State Street Boston
Corporation and Trustee, Lahey
Clinic Foundation, Inc. 225
Franklin Street, Boston, MA.
Gregor F. Meyer Attorney-at-law; Partner, Meyer and 68
Trustee Flaherty; Chairman, Meritcare,
Inc.; Director, Eat'N Park
Restaurants, Inc.; Director,
Trustee, or Managing General
Partner of the Funds; formerly,
Vice Chairman, Horizon
Financial, F.A. 5916 Penn
Mall, Pittsburgh, PA.
Wesley W. Posvar Professor, Foreign Policy and Management 69
Trustee Consultant; Trustee, Carnegie
Endowment for International
Peace, RAND Corporation, OnLine
Computer Library Center, Inc.,
and U.S. Space Foundation;
Chairman, Czecho Slovak
Management Center; Director,
Trustee, or Managing General
Partner of the Funds; President
Emeritus, University of
Pittsburgh; formerly, Chairman,
National Advisory Council for
Environmental Policy and
Technology. 1202 Cathedral of
Learning, University of
Pittsburgh, Pittsburgh, PA.
Marjorie P. Smuts Public relations/marketing consultant; 59
Trustee Director, Trustee, or Managing
General Partner of the Funds.
4905 Bayard Street, Pittsburgh,
PA.
* This Trustee is deemed to be an "interested person" of
the Trust as defined in the Investment Company Act of
1940.
_ Member of the Trust's Executive Committee. The Executive
Committee of the Board of Trustees handles the
responsibilities of the Board of Trustees between
meetings of the Board.
"The Funds" and "Funds" mean the following investment
companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; California Municipal Cash
Trust; Cash Trust Series II; Cash Trust Series, Inc.; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Intermediate Government Trust; Federated
Master Trust; Federated Municipal Trust; Federated Short-
Intermediate Government Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated Tax-Free
Trust; Federated U.S. Government Bond Fund; First Priority
Funds; Fixed Income Securities, Inc.; Fortress Adjustable
Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S.
Government Securities, Inc.; Government Income Securities,
Inc.; High Yield Cash Trust; Insight Institutional Series,
Inc.; Insurance Management Series; Intermediate Municipal
Trust; International Series, Inc.; Investment Series Funds,
Inc.; Investment Series Trust; Liberty Equity Income Fund,
Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Term Trust, Inc. - 1999; Liberty Utility
Fund, Inc.; Liquid Cash Trust; Managed Series Trust; The
Medalist Funds: Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities
Income Trust; New York Municipal Cash Trust; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; Portage Funds;
RIMCO Monument Funds; The Shawmut Funds; Short-Term
Municipal Trust; Star Funds; The Starburst Funds; The
Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Trademark Funds; Trust for Financial Institutions; Trust For
Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations;
World Investment Series, Inc.
If any nominee for election as a Trustee named above
shall by reason of death or for any other reason become
unavailable as a candidate at the Special Meeting, votes
pursuant to the enclosed proxies will be cast for a
substitute candidate by the attorneys named therein, or
their substitutes, present and acting at the Special
Meeting. Any such substitute candidate for election as an
interested Trustee shall be nominated by the Executive
Committee of the Board of Trustees. The selection of any
substitute candidate for election as a Trustee who is not an
interested person shall be made by a majority of the
Trustees who are not interested persons of the Trust. The
Board of Trustees has no reason to believe that any nominee
will become unavailable for election as a Trustee.
During the fiscal year ended September 30, 1994, there
were 4 meetings of the Board of Trustees. The Trustees who
are not interested persons of the Trust as a group waived
their fees. The interested Trustees do not receive fees
from the Trust. All Trustees were reimbursed for expenses
for attendance at the meeting.
Other than its Executive Committee, which handles the
Board's responsibilities between meetings of the Board, the
Trust has one Board committee, the Audit Committee.
Generally, the function of the Audit Committee is to assist
the Board in fulfilling its duties relating to the Trust's
accounting and financial reporting practices and to serve as
a direct line of communication between the Board and the
independent auditors. The specific functions of the Audit
Committee include recommending the engagement or retention
of the independent auditors, reviewing with the independent
auditors the plan and the results of the auditing
engagement, approving professional services provided by the
independent auditors prior to the performance of such
services, considering the range of audit and non-audit fees,
reviewing the independence of the independent auditors,
reviewing the scope and results of the Trust's procedures
for internal auditing, and reviewing the Trust's system of
internal accounting controls.
Messrs. Flaherty, Copeland, and Dowd serve on the Audit
Committee. These Trustees are not interested Trustees of
the Trust. During the fiscal year ended September 30, 1994,
there were 4 meetings of the Audit Committee. All of the
members of the Audit Committee were present at the meetings.
Each member of the Audit Committee receives an annual fee of
$100 plus $25 for attendance at each meeting and is
reimbursed for expenses of attendance.
The executive officers of the Trust are elected
annually by the Board of Trustees. Each officer holds the
office until qualification of his successor. The names and
ages (in parentheses) of the executive officers of the Trust
who are not listed above under "Election of Trustees" and
their principal occupations during the last five years are
as follows: J. Christopher Donahue (45), Vice President of
the Trust; is President and Trustee, Federated Investors,
Federated Advisers, Federated Management, and Federated
Research; President and Director, Federated Research Corp.;
President, Passport Research, Ltd.; Trustee, Federated
Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Vice President
of the Funds; Director, Trustee, or Managing General
Partner of some of the Funds. Mr. Donahue is the son of
John F. Donahue, Chairman and Trustee of the Trust. Richard
B. Fisher (71), Vice President of the Trust is Executive
Vice President and Trustee, Federated Investors; Director,
Federated Research Corp.; Chairman and Director, Federated
Securities Corp.; President or Vice President of some of the
Funds; Director or Trustee of some of the Funds. John W.
McGonigle (56), Vice President and Secretary of the Trust;
is Vice President, Secretary, General Counsel, and Trustee,
Federated Investors; Vice President, Secretary, and Trustee,
Federated Advisers, Federated Management, and Federated
Research; Vice President and Secretary, Federated Research
Corp. and Passport Research, Ltd.; Trustee, Federated
Services Company; Executive Vice President, Secretary, and
Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice
President and Director, Federated Securities Corp.; Vice
President and Secretary of the Funds. Margaret P. Tessaro
(47), Vice President and Assistant Treasurer of the Trust;
is Vice President, Federated Administrative Services and
Vice President and Assistant Treasurer of some of the Funds;
formerly, Vice President and Director, Marketing
Communications, Federated Investors. Each of these
executive officers has been an officer of the Trust since
July 12, 1993.
Officers and Trustees own less than 1% of the Fund's
outstanding Shares.
Federated Administrative Services is the Trust's
administrator. For the fiscal year ended September 30,
1994, administrative fees were $105,205, of which $49,350
was waived.
Federated Securities Corp., the principal underwriter
for the Trust, and Federated Administrative Services are
both wholly-owned subsidiaries of Federated Investors.
Their address is Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS APPROVE THE ELECTION OF TRUSTEES
FEDERATED INVESTORS
The following officers and Trustees of Federated
Investors are also executive officers of the Trust. All of
the Class A Shares (Voting) of Federated Investors are owned
by a trust, the trustees of which are: John F. Donahue,
Chairman, Chief Executive Officer and Trustee of Federated
Investors, Rhodora J. Donahue, wife of John F. Donahue, and
J. Christopher Donahue, son of John F. Donahue and
President, Chief Operating Officer and Trustee of Federated
Investors.* Officers and Trustees of the Trust who own
Class B Shares (Non-Voting), their positions with Federated
Investors, and the number of Class B Shares beneficially
owned by such persons (in parentheses) are: John F.
Donahue*, Trustee, Chairman and Chief Executive Officer
(774,653); J. Christopher Donahue*, Trustee, President and
Chief Operating Officer (835,420); Edward C. Gonzales*,
Trustee, Vice President, and Treasurer (400,000); John W.
McGonigle*, Trustee, Vice President, General Counsel, and
Secretary (1,000,000); and Richard B. Fisher*, Trustee, Vice
President and Assistant Secretary (1,280,000).
* The number of shares indicated may include shares
held jointly with spouses or other family members,
shares held by family-owned partnerships or other
business organizations, shares held by spouses and
other family members and/or shares held in trust for
one or more family members. The listed individuals
disclaim beneficial ownership of shares held by
spouses, other family members and trusts, and by
family-owned partnerships or other business
organizations to the extent not owned by them.
INDEPENDENT AUDITORS
Representatives of KPMG Peat Marwick, the independent
auditors for the Trust, are not expected to be present at
the Special Meeting, but, if in attendance, they will be
given the opportunity to make a statement if they so desire
and will otherwise be available should any matter arise
requiring their presence.
OTHER MATTERS AND DISCRETION OF ATTORNEYS NAMED IN THE PROXY
While the Special Meeting is called to act upon any
other business that may properly come before it, at the date
of this proxy statement the only business which the
management intends to present or knows that others will
present is the business mentioned in the Notice of Meeting.
If any other matters lawfully come before the Special
Meeting, and in all procedural matters at said Special
Meeting, it is the intention that the enclosed proxy shall
be voted in accordance with the best judgment of the
attorneys named therein, or their substitutes, present and
acting at the Special Meeting.
If at the time any session of the Special Meeting is
called to order, a quorum is not present in person or by
proxy, the persons named as proxies may vote those proxies
which have been received to adjourn the Special Meeting to a
later date. In the event that a quorum is present but
sufficient votes in favor of one or more of the proposals
have not been received, the persons named as proxies may
propose one or more adjournments of the Special Meeting to
permit further solicitation of proxies with respect to any
such proposal. All such adjournments will require the
affirmative vote of a majority of the Shares present in
person or by proxy at the session of the Special Meeting to
be adjourned. The persons named as proxies will vote those
proxies which they are entitled to vote in favor of the
proposal, in favor of such an adjournment, and will vote
those proxies required to be voted against the proposal,
against any such adjournment. A vote may be taken on one or
more of the proposals in this proxy statement prior to any
such adjournment if sufficient votes for its approval have
been received and it is otherwise appropriate.
The following is a list of shareholders who, to the
best knowledge of the Trust, are the owners of more than 5%
of the outstanding Shares of the Trust as of November 4,
1994: MSBK & Co., Sunburst Bank, Attn: Trust Department,
Jackson, Mississippi, held of record, on behalf of numerous
accounts, approximately 977,207 Shares (75.97%); Stephens
Inc., Little Rock, Arkansas, owned approximately 167,386
Shares (13.01%) (Stephens Inc. acts as shareholder for the
benefit of individual investors); and Capbat & Company,
Sunburst Bank, Attn: Trust Department, Baton Rouge,
Louisiana, held of record, on behalf of numerous accounts,
approximately 131,247 Shares (10.20%).
If you do not expect to attend the Special Meeting,
please sign your proxy card promptly and return it in the
enclosed envelope to avoid unnecessary expense and delay.
No postage is necessary.
By Order of the Trustees
John W. McGonigle
Secretary
November 15, 1994
("PRESENT CONTRACT") EXHIBIT A
SUNBURST FUNDS
INVESTMENT ADVISORY CONTRACT
This Contract is made this 1st day of October, 1993,
between Sunburst Bank, Mississippi, a state-chartered bank,
its principal place of business in Grenada, Mississippi (the
"Adviser"), and Sunburst Funds, a Massachusetts business
trust having its principal place of business in Pittsburgh,
Pennsylvania (the "Trust").
WHEREAS the Trust is an open-end management investment
company as that term is defined in the Investment Company
Act of 1940 and is registered as such with the Securities
and Exchange Commission; and
WHEREAS Adviser is engaged in the business of rendering
investment advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. The Trust hereby appoints Adviser as Investment
Adviser for each of the portfolios ("Funds") of the Trust
which executes an exhibit to this Contract, and Adviser
accepts the appointments. Subject to the direction of the
Trustees of the Trust, Adviser shall provide investment
research and supervision of the investments of the Funds and
conduct a continuous program of investment evaluation and of
appropriate sale or other disposition and reinvestment of
each Fund's assets.
2. Adviser, in its supervision of the investments of
each of the Funds will be guided by each of the Fund's
investment objective and policies and the provisions and
restrictions contained in the Declaration of Trust and By-
Laws of the Trust and as set forth in the Registration
Statements and exhibits as may be on file with the
Securities and Exchange Commission.
3. Each Fund shall pay or cause to be paid all of its
own expenses and its allocable share of Trust expenses,
including, without limitation, the expenses of organizing
the Trust and continuing its existence; fees and expenses of
Trustees and officers of the Trust; fees for investment
advisory services and administrative personnel and services;
fees and expenses of preparing and printing its Registration
Statements under the Securities Act of 1933 and the
Investment Company Act of 1940 and any amendments thereto;
expenses of registering and qualifying the Trust, the Funds,
and shares ("Shares") of the Funds under federal and state
laws and regulations; expenses of preparing, printing, and
distributing prospectuses (and any amendments thereto) to
shareholders; interest expense, taxes, fees, and commissions
of every kind; expenses of issue (including cost of Share
certificates), purchase, repurchase, and redemption of
Shares, including expenses attributable to a program of
periodic issue; charges and expenses of custodians, transfer
agents, dividend disbursing agents, shareholder servicing
agents, and registrars; printing and mailing costs,
auditing, accounting, and legal expenses; reports to
shareholders and governmental officers and commissions;
expenses of meetings of Trustees and shareholders and proxy
solicitations therefor; insurance expenses; association
membership dues and such nonrecurring items as may arise,
including all losses and liabilities incurred in
administering the Trust and the Funds. Each Fund will also
pay its allocable share of such extraordinary expenses as
may arise including expenses incurred in connection with
litigation, proceedings, and claims and the legal
obligations of the Trust to indemnify its officers and
Trustees and agents with respect thereto.
4. Each of the Funds shall pay to Adviser, for all
services rendered to each Fund by Adviser hereunder, the
fees set forth in the exhibits attached hereto.
5. The net asset value of each Fund's Shares as used
herein will be calculated to the nearest 1/10th of one cent.
6. The Adviser may from time to time and for such
periods as it deems appropriate reduce its compensation
(and, if appropriate, assume expenses of one or more of the
Funds) to the extent that any Fund's expenses exceed such
lower expense limitation as the Adviser may, by notice to
the Fund, voluntarily declare to be effective.
7. This Contract shall begin for each Fund as of the
date of execution of the applicable exhibit and shall
continue in effect with respect to each Fund presently set
forth on an exhibit (and any subsequent Funds added pursuant
to an exhibit during the initial term of this Contract) for
two years from the date of this Contract set forth above and
thereafter for successive periods of one year, subject to
the provisions for termination and all of the other terms
and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a
majority of the Trustees of the Trust, including a majority
of the Trustees who are not parties to this Contract or
interested persons of any such party (other than as Trustees
of the Trust), cast in person at a meeting called for that
purpose; and (b) Adviser shall not have notified a Fund in
writing at least sixty (60) days prior to the anniversary
date of this Contract in any year thereafter that it does
not desire such continuation with respect to that Fund. If
a Fund is added after the first approval by the Trustees as
described above, this Contract will be effective as to that
Fund upon execution of the applicable exhibit and will
continue in effect until the next annual approval of this
Contract by the Trustees and thereafter for successive
periods of one year, subject to approval as described above.
8. Notwithstanding any provision in this Contract, it
may be terminated at any time with respect to any Fund,
without the payment of any penalty, by the Trustees of the
Trust or by a vote of the shareholders of that Fund on sixty
(60) days' written notice to Adviser.
9. This Contract may not be assigned by Adviser and
shall automatically terminate in the event of any
assignment. Adviser may employ or contract with such other
person, persons, corporation, or corporations at its own
cost and expense as it shall determine in order to assist it
in carrying out this Contract.
10. In the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the obligations
or duties under this Contract on the part of Adviser,
Adviser shall not be liable to the Trust or to any of the
Funds or to any shareholder for any act or omission in the
course of or connected in any way with rendering services or
for any losses that may be sustained in the purchase,
holding, or sale of any security.
11. This Contract may be amended at any time by
agreement of the parties provided that the amendment shall
be approved both by the vote of a majority of the Trustees
of the Trust, including a majority of the Trustees who are
not parties to this Contract or interested persons of any
such party to this Contract (other than as Trustees of the
Trust) cast in person at a meeting called for that purpose,
and on behalf of a Fund by a majority of the outstanding
voting securities of such Fund.
12. The Adviser acknowledges that all sales literature
for investment companies (such as the Trust) are subject to
strict regulatory oversight. The Adviser agrees to submit
any proposed sales literature for the Trust (or any Fund) or
for itself or its affiliates which mentions the Trust (or
any Fund) to the Trust's distributor for review and filing
with the appropriate regulatory authorities prior to the
public release of any such sales literature, provided,
however, that nothing herein shall be construed so as to
create any obligation or duty on the part of the Adviser to
produce sales literature for the Trust (or any Fund). The
Trust agrees to cause its distributor to promptly review all
such sales literature to ensure compliance with relevant
requirements, to promptly advise Adviser of any deficiencies
contained in such sales literature, to promptly file
complying sales literature with the relevant authorities,
and to cause such sales literature to be distributed to
prospective investors in the Trust.
13. Adviser is hereby expressly put on notice of the
limitation of liability as set forth in Article XI of the
Declaration of Trust and agrees that the obligations
pursuant to this Contract of a particular Fund and of the
Trust with respect to that particular Fund be limited solely
to the assets of that particular Fund, and Adviser shall not
seek satisfaction of any such obligation from any other
Fund, the shareholders of any Fund, the Trustees, officers,
employees or agents of the Trust, or any of them.
14. This Contract shall be construed in accordance
with and governed by the laws of the Commonwealth of
Pennsylvania.
15. This Contract will become binding on the parties
hereto upon their execution of the attached exhibits to this
Contract.
16. The parties hereto acknowledge that Grenada
Sunburst System Corporation has reserved the right to grant
the non-exclusive use of the name "Sunburst" or any
derivative thereof to any other investment company,
investment company portfolio, investment adviser,
distributor or other business enterprise, and to withdraw
from the Trust and one or more of the Funds the use of the
name "Sunburst." The name "Sunburst" will continue to be
used by the Trust and each Fund so long as such use is
mutually agreeable to Grenada Sunburst System Corporation
and the Trust.
EXHIBIT A
to the
Investment Advisory Contract
Sunburst Short-Intermediate Government Bond Fund
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and
Adviser agrees to accept as full compensation for all
services rendered hereunder, an annual investment advisory
fee equal to .74 of 1% of the average daily net assets of
the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of
1/365th of .74 of 1% applied to the daily net assets of the
Fund.
The advisory fee so accrued shall be paid to Adviser
daily.
Witness the due execution hereof this 1st day of
October, 1993.
Attest: SUNBURST BANK, MISSISSIPPI
/s/ Jerry A. Pegg By: /s/ Frank W. Smith
Secretary Vice President
Attest: SUNBURST FUNDS
/s/ John W. McGonigle By: /s/ J. C. Donahue
Secretary Vice President
("NEW CONTRACT") EXHIBIT B
SUNBURST FUNDS
FORM OF
INVESTMENT ADVISORY CONTRACT
This Contract is made this 1st day of January, 1995,
between Sunburst Bank, Mississippi, a state-chartered bank
having its principal place of business in Grenada,
Mississippi (the "Adviser"), and Sunburst Funds, a
Massachusetts business trust having its principal place of
business in Pittsburgh, Pennsylvania (the "Trust").
WHEREAS the Trust is an open-end management investment
company as that term is defined in the Investment Company
Act of 1940, as amended, and is registered as such with the
Securities and Exchange Commission; and
WHEREAS Adviser is engaged in the business of rendering
investment advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. The Trust hereby appoints Adviser as Investment
Adviser for each of the portfolios ("Funds") of the Trust
which executes an exhibit to this Contract, and Adviser
accepts the appointments. Subject to the direction of the
Trustees of the Trust, Adviser shall provide investment
research and supervision of the investments of the Funds and
conduct a continuous program of investment evaluation and of
appropriate sale or other disposition and reinvestment of
each Fund's assets.
2. Adviser, in its supervision of the investments of
each of the Funds will be guided by each of the Fund's
investment objective and policies and the provisions and
restrictions contained in the Declaration of Trust and By-
Laws of the Trust and as set forth in the Registration
Statements and exhibits as may be on file with the
Securities and Exchange Commission.
3. Each Fund shall pay or cause to be paid all of its
own expenses and its allocable share of Trust expenses,
including, without limitation, the expenses of organizing
the Trust and continuing its existence; fees and expenses of
Trustees and officers of the Trust; fees for investment
advisory services and administrative personnel and services;
expenses incurred in the distribution of its shares
("Shares"), including expenses of administrative support
services; fees and expenses of preparing and printing its
Registration Statements under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, and any
amendments thereto; expenses of registering and qualifying
the Trust, the Funds, and Shares of the Funds under federal
and state laws and regulations; expenses of preparing,
printing, and distributing prospectuses (and any amendments
thereto) to shareholders; interest expense, taxes, fees, and
commissions of every kind; expenses of issue (including cost
of Share certificates), purchase, repurchase, and redemption
of Shares, including expenses attributable to a program of
periodic issue; charges and expenses of custodians, transfer
agents, dividend disbursing agents, shareholder servicing
agents, and registrars; printing and mailing costs,
auditing, accounting, and legal expenses; reports to
shareholders and governmental officers and commissions;
expenses of meetings of Trustees and shareholders and proxy
solicitations therefor; insurance expenses; association
membership dues and such nonrecurring items as may arise,
including all losses and liabilities incurred in
administering the Trust and the Funds. Each Fund will also
pay its allocable share of such extraordinary expenses as
may arise including expenses incurred in connection with
litigation, proceedings, and claims and the legal
obligations of the Trust to indemnify its officers and
Trustees and agents with respect thereto.
4. Each of the Funds shall pay to Adviser, for all
services rendered to each Fund by Adviser hereunder, the
fees set forth in the exhibits attached hereto.
5. The net asset value of each Fund's Shares as used
herein will be calculated to the nearest 1/10th of one cent.
6. The Adviser may from time to time and for such
periods as it deems appropriate reduce its compensation
(and, if appropriate, assume expenses of one or more of the
Funds) to the extent that any Fund's expenses exceed such
lower expense limitation as the Adviser may, by notice to
the Fund, voluntarily declare to be effective.
7. This Contract shall begin for each Fund as of the
date of execution of the applicable exhibit and shall
continue in effect with respect to each Fund presently set
forth on an exhibit (and any subsequent Funds added pursuant
to an exhibit during the initial term of this Contract) for
two years from the date of this Contract set forth above and
thereafter for successive periods of one year, subject to
the provisions for termination and all of the other terms
and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a
majority of the Trustees of the Trust, including a majority
of the Trustees who are not parties to this Contract or
interested persons of any such party cast in person at a
meeting called for that purpose; and (b) Adviser shall not
have notified a Fund in writing at least sixty (60) days
prior to the anniversary date of this Contract in any year
thereafter that it does not desire such continuation with
respect to that Fund. If a Fund is added after the first
approval by the Trustees as described above, this Contract
will be effective as to that Fund upon execution of the
applicable exhibit and will continue in effect until the
next annual approval of this Contract by the Trustees and
thereafter for successive periods of one year, subject to
approval as described above.
8. Notwithstanding any provision in this Contract, it
may be terminated at any time with respect to any Fund,
without the payment of any penalty, by the Trustees of the
Trust or by a vote of the shareholders of that Fund on sixty
(60) days' written notice to Adviser.
9. This Contract may not be assigned by Adviser and
shall automatically terminate in the event of any
assignment. Adviser may employ or contract with such other
person, persons, Trust, or Trusts at its own cost and
expense as it shall determine in order to assist it in
carrying out this Contract.
10. In the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the obligations
or duties under this Contract on the part of Adviser,
Adviser shall not be liable to the Trust or to any of the
Funds or to any shareholder for any act or omission in the
course of or connected in any way with rendering services or
for any losses that may be sustained in the purchase,
holding, or sale of any security.
11. This Contract may be amended at any time by
agreement of the parties provided that the amendment shall
be approved both by the vote of a majority of the Trustees
of the Trust, including a majority of the Trustees who are
not parties to this Contract or interested persons of any
such party to this Contract (other than as Trustees of the
Trust) cast in person at a meeting called for that purpose,
and, where required by Section 15(a)(2) of the Act, on
behalf of a Fund by a majority of the outstanding voting
securities of such Fund as defined in Section 2(a)(42) of
the Act.
12. The Adviser acknowledges that all sales literature
for investment companies (such as the Trust) are subject to
strict regulatory oversight. The Adviser agrees to submit
any proposed sales literature for the Trust (or any Fund) or
for itself or its affiliates which mentions the Trust (or
any Fund) to the Trust's distributor for review and filing
with the appropriate regulatory authorities prior to the
public release of any such sales literature, provided,
however, that nothing herein shall be construed so as to
create any obligation or duty on the part of the Adviser to
produce sales literature for the Trust (or any Fund). The
Trust agrees to cause its distributor to promptly review all
such sales literature to ensure compliance with relevant
requirements, to promptly advise Adviser of any deficiencies
contained in such sales literature, to promptly file
complying sales literature with the relevant authorities,
and to cause such sales literature to be distributed to
prospective investors in the Trust.
13. Adviser is hereby expressly put on notice of the
limitation of liability as set forth in Article XI of the
Declaration of Trust and agrees that the obligations
pursuant to this Contract of a particular Fund and of the
Trust with respect to that particular Fund be limited solely
to the assets of that particular Fund, and Adviser shall not
seek satisfaction of any such obligation from any other
Fund, the shareholders of any Fund, the Trustees, officers,
employees or agents of the Trust, or any of them.
14. The parties hereto acknowledge that Grenada
Sunburst System Corporation, has reserved the right to grant
the non-exclusive use of the name "Sunburst" or any
derivative thereof to any other investment company,
investment company portfolio, investment adviser,
distributor or other business enterprise, and to withdraw
from the Trust and one or more of the Funds the use of the
name "Sunburst." The name "Sunburst" will continue to be
used by the Trust and each Fund so long as such use is
mutually agreeable to Sunburst Bank, Mississippi and the
Trust.
15. This Contract shall be construed in accordance
with and governed by the laws of the Commonwealth of
Pennsylvania.
16. This Contract will become binding on the parties
hereto upon their execution of the attached exhibits to this
Contract.
EXHIBIT A
to the
Investment Advisory Contract
Sunburst Short-Intermediate Government Bond Fund
For all services rendered by Adviser hereunder, the
above-named Fund of the Trust shall pay to Adviser and
Adviser agrees to accept as full compensation for all
services rendered hereunder, an annual investment advisory
fee equal to 0.74 of 1% of the average daily net assets of
the Fund.
The portion of the fee based upon the average daily net
assets of the Fund shall be accrued daily at the rate of
1/365th of 0.74 of 1% applied to the daily net assets of the
Fund.
The advisory fee so accrued shall be paid to Adviser
monthly.
Witness the due execution hereof this 1st day of
January, 1995.
Attest: SUNBURST BANK, MISSISSIPPI
By:
Secretary Executive Vice President
Attest: SUNBURST FUNDS
By:
Assistant Secretary Vice President
867094104
006782(11/94) SRT 411026
SUNBURST FUNDS
SUNBURST SHORT-INTERMEDIATE GOVERNMENT BOND FUND
SPECIAL MEETING OF SHAREHOLDERS DECEMBER 16, 1994
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned
shareholders of SUNBURST SHORT-INTERMEDIATE GOVERNMENT BOND
FUND, an investment portfolio of SUNBURST FUNDS, hereby
appoint Patricia L. Godlewski, Patricia F. Conner, Scott
Tretter, Suzanne W. Land and Victor R. Siclari, or any one
of them true and lawful attorneys, with power of
substitution of each, to vote all shares of SUNBURST SHORT-
INTERMEDIATE GOVERNMENT BOND FUND, which the undersigned is
entitled to vote, at the Special Meeting of Shareholders to
be held on December 16, 1994, at Federated Investors Tower,
Pittsburgh, Pennsylvania, at 2:00 p.m., and at any
adjournment thereof.
Discretionary authority is hereby conferred as to all other
matters as may properly come before the Special Meeting.
PROPOSALS
(1) To approve or disapprove a new Investment
Advisory Contract between Sunburst Bank, Mississippi
and the Trust;
(2)To elect the Board of Trustees; and
(3)To transact such other business as may properly come
before the meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES.
The attorneys named will vote the Shares represented by this
proxy in accordance with the choice made on this card. IF
NO CHOICE IS INDICATED AS TO ANY MATTER, THIS PROXY WILL BE
VOTED AFFIRMATIVELY ON THE MATTER PRESENTED. The appproval
of each proposal is not contingent on the approval of any
other matter.
PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE IN THE ENCLOSED
ENVELOPE AND RETAIN THE TOP PORTION. PLACE THE BALLOT SO
THAT THE RETURN ADDRESS, LOCATED ON THE REVERSE SIDE OF THE
MAIL-IN-STUB, APPEARS THROUGH THE WINDOW OF THE ENVELOPE.
SUNBURST SHORT-INTERMEDIATE
GOVERNMENT BOND FUND
RECORD DATE SHARES PROXY VOTING MAIL-IN STUB
Please sign EXACTLY as your name(s) appear above. When
signing as attorney, executor, administrator, guardian,
trustee, custodian, etc., please give your full title as
such. If a corporation or partnership, please sign the full
name by an authorized officer or partner. If stock is owned
jointly, all parties must sign.
PROPOSAL (S):
1) FOR ____ AGAINST ____ ABSTAIN ____
PROPOSAL 2: ELECTION
OF TRUSTEES.
To withhold authority
to vote for a nominee, strike
a line through the nominee's
name below:
____ FOR all nominees listed below
____ Vote withheld for all nominees listed
below
____ FOR all nominees listed below (except as
marked to the contrary below)
John F. Donahue John T. Conroy, Jr.
William J. Copeland James E. Dowd
Lawrence D. Ellis, M.D. Edward L. Flaherty, Jr.
Edward C. Gonzales Peter E. Madden
Gregor F. Meyer Wesley W. Posvar
Marjorie P. Smuts
Dated: _______________, 19__
___________________________
___________________________
Signature(s) of Shareholders(s)
