SUNBURST
SHORT-INTERMEDIATE
GOVERNMENT
BOND FUND
[Graphic representation of Sunburst logo omitted]
MUTUAL FUNDS ARE NOT BANK DEPOSITS OR SEMI-ANNUAL REPORT
OBLIGATIONS, ARE NOT GUARANTEED BY ANY BANK, March 31, 1995
AND ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR
ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN
MUTUAL FUNDS INVOLVES INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
This report is authorized for distribution to
prospective investors only when preceded or
accompanied by the Fund's prospectus which
contains facts concerning its objective and
policies, management fees, expenses and
other information.
This fund is made available to you through
Sunburst Bank. Federated Securities Corp.
is the distributor of the fund.
867094104
G01111-01 (5/95)
Dear Shareholder:
I am pleased to present the Semi-Annual Report of the Sunburst Short-
Intermediate Government Bond Fund for the reporting period ended March 31,
1995. This report provides you with complete financial information for the
Fund, including a list of investments and the Fund's financial statements.
At the end of the reporting period, assets in the Fund amounted to $8.5
million. The Fund paid more than $257,000 in dividends, or $0.22 per share
during this period.
Of particular note was a special meeting of Fund shareholders held on December
16, 1994. There were 1,286,317 total outstanding shares eligible to vote at
the meeting, based on the record date of November 4, 1994. The shareholders
approved all of the following items:
WITHHELD
AGENDA AUTHORITY
ITEM FOR AGAINST ABSTAIN TO VOTE
1. To approve or disapprove a new Investment Advisory Contract between
Sunburst Bank, Mississippi, and the Fund:
1,278,617 1,520 4,686
2. To elect the Board of Trustees:
John F. Donahue 1,284,823 0
John T. Conroy 1,284,823 0
William J. Copeland 1,284,823 0
James E. Dowd 1,284,823 0
Lawrence D. Ellis, M.D. 1,284,823 0
Edward L. Flaherty, Jr. 1,284,823 0
Edward C. Gonzales 1,284,823 0
Peter E. Madden 1,284,823 0
Gregor F. Meyer 1,284,823 0
Wesley W. Posvar 1,284,823 0
Marjorie P. Smuts 1,284,823 0
In addition, the Board of Trustees has been increased by two, and Thomas G.
Bigley and John E. Murray, Jr. were appointed to serve as Trustees.
As always, thank you for your confidence in the Sunburst Short-Intermediate
Government Bond Fund as a way to take advantage of the potential of government
bonds. We will continue to keep you informed on your investment as we remain
committed to delivering the highest level of personal service.
Sincerely,
Edward C. Gonzales
President
May 15, 1995
SUNBURST SHORT-INTERMEDIATE GOVERNMENT BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1995 (UNAUDITED)
Principal
Amount Value
U.S. Government Obligations--98.4%
$446,845 Federal Home Loan Bank, 6.00%, 2/1/1999 $431,058
800,000 Federal Home Loan Bank, 6.10%, 5/24/1996 795,048
561,027 Federal National Mortgage Association, 5.50%, 523,152
10/1/2000, Pool# 217756
913,541 Federal National Mortgage Association, 5.50%, 851,868
10/1/2000, Pool# 243738
400,000 Tennessee Valley Authority, 4.60%, Series 1993E, 384,972
12/15/1996
1,000,000 U.S. Treasury Notes, 4.625%, 2/15/1996 984,740
1,600,000 U.S. Treasury Notes, 5.50%, 9/30/1997 1,550,816
2,000,000 U.S. Treasury Notes, 5.75%, 10/31/1997 1,946,360
1,000,000 U.S. Treasury Notes, 6.00%, 10/15/1999 959,240
Total Investments (identified cost, $8,777,591) $8,427,254 +
+ The cost of investments for federal tax purposes amounts to
$8,777,591. The unrealized depreciation of investments on a federal
tax basis amounts to $350,337, which is comprised entirely of
depreciation at March 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($8,564,245) at
March 31, 1995.
(See Notes which are an integral part of the Financial Statements)
SUNBURST SHORT-INTERMEDIATE GOVERNMENT BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995 (unaudited)
Assets:
Investments in securities, at value (identified and tax cost $ 8,777,591)$
8,427,254
Cash 56,949
Income receivable 113,626
Receivable from Adviser 18,010
Receivable for shares sold 103
Total assets 8,615,942
Liabilities:
Income distribution payable $34,388
Accrued expenses 17,309
Total liabilities 51,697
Net Assets for 897,336 shares outstanding $ 8,564,245
Net Assets Consists of:
Paid in capital $ 9,130,689
Net unrealized depreciation of investments (350,337)
Accumulated net realized loss on investments (216,107)
Total Net Assets $ 8,564,245
Net Asset Value, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
Net Asset Value Per Share ($8,564,245 / 897,336 shares outstanding) $9.54
Offering Price Per Share (100/99 of $9.54)* $9.64
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
SUNBURST SHORT-INTERMEDIATE GOVERNMENT BOND FUND
STATEMENT OF OPERATIONS
Six months ended March 31, 1995 (unaudited)
Investment Income:
Interest $307,640
Expenses:
Investment advisory fee $ 40,850
Administrative personnel and services fee 59,818
Custodian fees 1,921
Transfer agent and dividend disbursing agent fees and expenses16,874
Trustees' fees 2,185
Auditing fees 7,266
Legal fees 3,213
Portfolio accounting fees 26,558
Share registration costs 10,053
Printing and postage 1,003
Insurance premiums 84
Miscellaneous 1,539
Total expenses 171,364
Deduct -
Waiver of investment advisory fee $ 40,850
Reimbursement of other operating expenses 80,816
Total waivers/reimbursements 121,666
Net expenses 49,698
Net investment income 257,942
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments (196,167)
Net change in unrealized appreciation on investments 275,746
Net realized and unrealized gain on investments 79,579
Change in net assets resulting from operations $ 337,521
(See Notes which are an integral part of the Financial Statements)
SUNBURST SHORT-INTERMEDIATE GOVERNMENT BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Period
Ended
Ended
March 31, 1995 Sep
tember 30, (unaudited) 1994*
Increase (Decrease) in Net Assets:
Operations-
Net investment income $ 257,942 $418,728
Net realized loss on investments
($ 196,167 net loss and $ 0, respectively,
as computed for federal tax purposes) (196,167) (19,940)
Net change in unrealized appreciation (depreciation)
275,746 (626,083)
Change in net assets resulting from operations 337,521 (227,295)
Distributions to Shareholders-
Distributions from net investment income (257,942) (418,728)
Share Transactions -
Proceeds from sale of shares 145,631 16,827,878
Net asset value of shares issued to shareholders in
payment of distributions declared 27,274 57,315
Cost of shares redeemed (3,983,751) (4,043,658)
Change in net assets resulting from share transactions(3,810,846)12,841,535
Change in net assets (3,731,267) 12,195,512
Net Assets:
Beginning of period 12,295,512 100,000
End of period $ 8,564,245 $12,295,512
* For the period from September 16, 1993 (start of business) to September 30,
1994.
(See Notes which are an integral part of the Financial Statements)
SUNBURST SHORT-INTERMEDIATE GOVERNMENT BOND FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Six Months Ended
March 31, 1995 Period Ended
(unaudited)September 30, 1994 (a)
NET ASSET VALUE, BEGINNING OF PERIOD $9.45 $10.00
Income from investment operations
Net investment income 0.22 0.35
Net realized and unrealized gain
(loss) on investments 0.09 (0.55)
Total from investment operations 0.31 (0.20)
Less distributions
Distributions from net
investment income (0.22) (0.35)
NET ASSET VALUE, END OF PERIOD $9.54 $9.45
Total Return (b) 3.32% (1.99%)
Ratios to average net assets
Expenses 0.90% (c) 0.95% (c)
Net investment income 4.67% (c) 4.17% (c)
Expense waiver/reimbursement (d) 2.20% (c)1.77% (c)
Supplemental data
Net assets, end of period
(000 omitted) $8,564 $12,296
Portfolio Turnover 5% 68%
(a) Reflects operations for the period from November 15, 1993 (date of
initial public investment) to September 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
SUNBURST SHORT-INTERMEDIATE GOVERNMENT BOND FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
(UNAUDITED)
1. ORGANIZATION
Sunburst Short-Intermediate Government Bond Fund (the "Fund") is a diversified
portfolio of the Sunburst Funds (the "Trust"). The Trust is registered under
the Investment Company Act of 1940, as amended ( the "Act"), as an open-end
management investment company.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
Investment Valuations - U.S. government securities are generally valued at
the mean between the over-the-counter bid and asked prices as furnished by
an independent pricing service. Short-term securities with remaining
maturities of sixty days or less at the time of purchase may be valued at
amortized cost, which approximates fair market value.
Investment Income, Expenses and Distributions - Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code"). Distributions to shareholders are recorded on the ex-dividend
date.
Federal Taxes - It is the Fund's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary. Additionally, net capital losses
of $19,940 attributable to security transactions incurred after October 31,
1993 are treated as arising on October 1, 1994, the first day of the Fund's
current taxable year.
When-Issued and Delayed Delivery Transactions - The Fund may engage in when-
issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
Deferred Expenses - The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
Other - Investment transactions are accounted for on the trade date.
SUNBURST SHORT-INTERMEDIATE GOVERNMENT BOND FUND
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3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Board of Trustees (the "Trustees") to
issue an unlimited number of full and fractional shares of beneficial interest
(without par value). Transactions in shares were as follows:
Six Months Period Ended
Ended
March 31, 1995 September 30,
1994*
Shares sold 15,432 1,700,669
Shares issued to shareholders in payment 2,900 5,947
of dividends declared
Shares redeemed (421,896) (415,717)
Net change resulting form share (403,564) 1,290,899
transactions
*For the period from September 16, 1993 (start of business) to September 30,
1994.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Advisory Fee - Sunburst Bank, Mississippi, the Fund's investment
adviser (the "Adviser"), receives for its services an annual investment
advisory fee equal to 0.74 of 1% of the Fund's average daily net assets.
The Adviser may voluntarily choose to waive portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify
or terminate this voluntary waiver and reimbursement at any time at its
sole discretion.
Administrative Fee - Federated Administrative Services ("FAS") provides the
Fund with certain administrative personnel and services. The FAS fee is
based on the level of average aggregate net assets of the Fund for the
period. FAS may voluntarily choose to waive a portion of its fee.
Transfer and Dividend Disbursing Agent and Portfolio Accounting Fees -
Federated Services Company ("FServ") serves as transfer and dividend
disbursing agent for the Fund. The fee is based on the size, type, and
number of accounts and transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on
the level of the Fund's average net assets for the period, plus out-of-
pocket expenses.
Organizational Expenses - Organizational expenses ($37,189) were initially
borne by FAS. The Fund has agreed to reimburse FAS for the organizational
expenses during the five year period following October 28, 1993 (the date
the Fund became effective). For the six months ended March 31, 1995, the
Fund paid $2,409 pursuant to this agreement.
Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
SUNBURST SHORT-INTERMEDIATE GOVERNMENT BOND FUND
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5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
six months ended March 31, 1995, were as follows:
PURCHASES $ 582,750
SALES $4,072,440
6. AGREEMENT AND PLAN OF REORGANIZATION
The Trustees have voted to recommend to the shareholders of the Fund the
approval of an Agreement and Plan of Reorganization, dated April 13, 1995,
whereby, the Federated U.S. Government Securities Fund: 1-3 Years (the
"Federated Fund") would acquire all of the assets of the Fund in exchange for
Institutional Shares of the Federated Fund to be distributed pro rata by the
Fund to its shareholders in complete liquidation and dissolution of the Fund.
The closing date of this reorganization is currently scheduled for June 30,
1995.
