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:
[ X] Preliminary Proxy Statement
[ ] 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):
[ X] $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.
[ ] 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:
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4) Date File:
--PRELIMINARY COPY--
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.
By Order of the Trustees
John W. McGonigle
November 15, 1994 Secretary
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 ________
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 included in this proxy statement as Exhibit C. 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:
your Board of Trustees has unanimously approved the new
investment advisory contract;
no change in the Fund's investment objective or investment
policies will take place;
there will be no change in the fees payable by the Fund for
advisory services; and
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 Grenada Sunburst System Corporation , 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 before 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 _____________ and waived advisory fees in the
amount of ________.
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 before
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.
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 advisory fee of 0.75% and its approximate net assets (in
millions), as of September 30, 1994 are $____.
The principal executive officers and directors of UPC are:
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
James A. Gurley Executive Vice President
John W. Parker Executive Vice President
and Chief Financial Officer
M. Kirk Walters Senior Vice President,
Treasurer, and Chief
Accounting Officer
J. F. Springfield Executive Vice President,
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:
Position with
Name Sunburst Principal Occupation
James T. Boone President,
Chief
Executive
Officer and
Director
Daniel L. Holland Executive Vice
President
James A. Baker Executive Vice
President
J. Daniel Garrick, III Senior
Executive Vice
President
Don W. Ayres Senior Executive
Vice President
Jerry A. Pegg Executive Vice
President
James L. Brown Regional
Executive
Thomas H. Carroll, Jr. Regional
Executive
E. Jackson Garner Regional
Executive
Todd Mixon Regional
Executive
Frank W. Smith Senior Executive
Vice President
L.P. Bays Director Retired
R.E. Beck Director Chairman of the Board,
Sunburst Bank,
Mississippi
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, Sunburst Bank
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, Sunburst Bank,
Mississippi; 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 $______ as commissions on brokerage transactions.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS APPROVE THE NEW INVESTMENT
ADVISORY CONTRACT
ELECTION OF TRUSTEES
At the Special Meeting, votes will be taken on the election
of the following persons 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; Vice
President and
Trustee 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.
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 received fees totaling
_____. 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 $____ .
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 and President (1,961,242); Edward C. Gonzales,
Trustee, Vice President, and Treasurer (400,000); J. Christopher
Donahue*, Trustee and Vice President (711,020); John W.
McGonigle*, Trustee, Vice President, General Counsel, and
Secretary (1,000,000); and Richard B. Fisher*, Trustee and
Executive Vice President (375,000).
* 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. There are no dissenters rights for
shareholders voting against the proposed amendments.
The following is a list of shareholders who, to the best
knowledge of the Trust, are the beneficial owners of more than 5%
of the outstanding Shares of the Trust as of November 4, 1994:
[to be inserted]
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
EXHIBIT C
PORTFOLIO OF INVESTMENTS
AND
FINANCIAL STATEMENTS
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 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)
