- --------------------------------------------------------------------------------
DG
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OPPORTUNITY
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FUND
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(A Portfolio of DG Investor Series)
SUPPLEMENT TO PROSPECTUS
DATED JULY 26, 1994
January 31, 1995
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
23321N608
G00930-01 (1/95)
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A. Please insert the following "Financial Highlights" table as page 2 of the
prospectus following the "Summary of Fund Expenses" and before the section
entitled "General Information." In addition, please add the heading
"Financial Highlights" to the Table of Contents page after the heading
"Summary of Fund Expenses."
DG OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
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(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30, 1994*
----------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.95
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INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------
Net investment income 0.02
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Net realized and unrealized gain (loss) on investments (0.49)
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Total from investment operations (0.47)
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LESS DISTRIBUTIONS
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Dividends to shareholders from net investment income (0.02)
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NET ASSET VALUE, END OF PERIOD $10.46
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TOTAL RETURN** (4.47%)
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RATIOS TO AVERAGE NET ASSETS
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Expenses 0.80%(a)
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Net investment income 0.42%(a)
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Expense waiver/reimbursement (b) 1.81%(a)
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SUPPLEMENTAL DATA
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Net assets, end of period (000 omitted) $30,337
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Portfolio turnover rate 10%
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</TABLE>
* Reflects operations from October 1, 1994 (date of initial public investment)
to November 30, 1994 (unaudited). For the period from July 21, 1994 (start of
business) to September 30, 1994, net investment income aggregating $0.02 per
share ($7,823) was distributed to Deposit Guaranty National Bank.
** Based on net asset value, which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) 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)
B. Please replace the third sentence of the first paragraph of the section
entitled "Investment Policies", on page 2 of the prospectus, with the
following:
"The Fund attempts to select companies whose potential for capital appreciation
exceeds that of larger capitalization stocks, commensurate with increased risk."
C. Please replace the section entitled "When-Issued and Delayed Delivery
Transactions", on page 5 of the prospectus with the following:
"WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Fund purchases securities with payment and delivery
scheduled for a future time. The seller's failure to complete these transactions
may cause the Fund to miss a price or yield considered to be advantageous.
Settlement dates may be a month or more after entering into these transactions,
and the market values of the securities purchased may vary from the purchase
prices. Accordingly, the Fund may pay more or less than the market value of the
securities on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments."
D. Please add the following paragraph to the section entitled "Lending of
Portfolio Securities" on page 5 of the prospectus:
"There is the risk that when lending portfolio securities, the securities may
not be available to the Fund on a timely basis and the Fund may, therefore, lose
the opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action."
E. Please add the following sentence to the end of the second paragraph of the
section entitled "Investment Risks" on page 6 of the prospectus:
"The prices of fixed income securities fluctuate inversely to the direction of
interest rates."
F. Please replace the second sentence of the section entitled "Portfolio
Turnover", on page 6 of the prospectus, with the following:
"During the period from October 1, 1994 (date of initial public investment),
through November 30, 1994, the Fund's portfolio turnover rate was 10%."
G. Please add the following as the third paragraph of the section entitled
"Adviser's Background" on page 8 of the prospectus:
"As part of their regular banking operations, Deposit Guaranty National Bank and
Commercial National Bank, the Fund's sub-adviser, may make loans to public
companies. Thus, it may be possible, from time to time, for the Fund to hold or
acquire the securities of issuers which are also lending clients of Deposit
Guaranty National Bank or Commercial National Bank. The lending relationships
will not be a factor in the selection of securities."
H. On page 10 and the inside back cover of the prospectus, please change
references to the Fund's legal counsel to "Dickstein, Shapiro & Morin,
L.L.P." and change references to the Fund's Independent Auditors to "KPMG
Peat Marwick LLP."
I. Please add the following paragraph to the section entitled "Voting Rights" on
page 17 of the prospectus:
As of January 6, 1995, Deposit Guaranty National Bank, acting in various
capacities for numerous accounts, was the owner of record of 2,941,744.39 shares
(99.34%) of the Fund, and therefore, may, for certain purposes, be deemed to
control the Fund and be able to affect the outcome of certain matters presented
for a vote of shareholders.
J. Please insert the following financial statements beginning as page 20 of the
prospectus. In addition, please add the heading "Financial Statements" to the
Table of Contents page immediately before "Addresses".
DG OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994
(UNAUDITED)
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<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCK--92.9%
- -----------------------------------------------------------------------------------
AIR TRANSPORTATION--3.0%
-------------------------------------------------------------------
100,000 Mesa Airlines, Inc. $ 918,750
------------------------------------------------------------------- -----------
BROADCASTING--1.0%
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23,000 New World Communications 299,000
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CAPITAL GOODS--2.8%
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28,125 Molex, Inc. 854,297
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COMMUNICATIONS EQUIPMENT--2.3%
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40,000 Mobile Telecommunications 695,000
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CONSUMER DURABLES--3.0%
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62,000 River Oaks Furniture, Inc. 899,000
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CONSUMER SERVICES--2.6%
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24,000 Hollywood Entertainment Corp. 798,000
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ENERGY--4.6%
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17,300 Devon Energy Corp. 333,025
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15,000 Oceaneering International, Inc. 176,250
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19,000 Quaker State Corp. 261,250
-------------------------------------------------------------------
44,700 Stone Energy Co. 625,800
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Total 1,396,325
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FINANCIAL SERVICES--13.8%
-------------------------------------------------------------------
23,600 A. G. Edwards, Inc. 407,100
-------------------------------------------------------------------
39,000 CCP Insurance, Inc. 575,250
-------------------------------------------------------------------
40,000 Commercial Bankshares, Inc. 500,000
-------------------------------------------------------------------
</TABLE>
DG OPPORTUNITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCK--CONTINUED
- -----------------------------------------------------------------------------------
FINANCIAL SERVICES--CONTINUED
-------------------------------------------------------------------
42,000 Coral Gables Federal Corp., Inc. $ 714,000
-------------------------------------------------------------------
5,000 Equicredit Corp. 149,375
-------------------------------------------------------------------
34,000 Morgan Keegan, Inc. 437,750
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8,000 T. Rowe Price & Associates, Inc. 234,000
-------------------------------------------------------------------
33,000 Stewart Enterprises, Inc. 783,750
-------------------------------------------------------------------
13,000 United Companies Financial Corp. 393,250
------------------------------------------------------------------- -----------
Total 4,194,475
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HEALTH CARE--8.4%
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81,000 Clintrials Research, Inc. 698,625
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33,000 Community Health Systems, Inc. 808,500
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10,000 Isolyser, Inc. 170,000
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32,000 Ren Corp. USA 444,000
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20,000 Renal Treatment Centers, Inc. 420,000
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Total 2,541,125
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HOSPITAL SUPPLY & MANAGEMENT--2.7%
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64,000 Ornda Healthcorp 832,000
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HOTELS AND GAMING--2.7%
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78,000 Casino America, Inc. 672,750
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31,000 Casino Magic Corp. 155,000
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Total 827,750
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PUBLISHING--0.4%
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8,000 Dimac Corp. 107,000
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RETAIL--20.4%
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54,000 Advanced Promotion 303,750
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46,000 Cato Corp. 345,000
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50,000 Checkers Drive-In Restaurants 146,875
-------------------------------------------------------------------
65,000 The Good Guys, Inc. 780,000
-------------------------------------------------------------------
</TABLE>
DG OPPORTUNITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCK--CONTINUED
- -----------------------------------------------------------------------------------
RETAIL--CONTINUED
-------------------------------------------------------------------
67,000 Hechinger, Co. $ 686,750
-------------------------------------------------------------------
39,500 Landry's Seafood Restaurant, Inc. 1,076,375
-------------------------------------------------------------------
75,000 Longhorn Steaks, Inc. 675,000
-------------------------------------------------------------------
31,000 Outback Steakhouse, Inc. 798,250
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44,000 Pollo Tropical, Inc. 451,000
-------------------------------------------------------------------
1,500 Sports Authority, Inc. 34,125
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50,000 Stein Mart, Inc. 812,500
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3,000 Office Max, Inc. 73,875
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Total 6,183,500
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SHELTER--0.8%
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19,000 Southern Energy Homes, Inc. 239,875
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TECHNOLOGY--12.0%
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31,000 Altera Corp. 1,193,500
-------------------------------------------------------------------
16,000 Emulux Corp. 180,000
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40,000 Gateway 2000, Inc. 875,000
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17,000 Micro Warehouse, Inc. 553,562
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6,500 Olicom 68,250
-------------------------------------------------------------------
65,000 VLSI Technology, Inc. 763,750
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Total 3,634,062
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TRANSPORTATION--3.4%
-------------------------------------------------------------------
35,000 KLLM Transportation Services, Inc. 525,000
-------------------------------------------------------------------
28,000 Swift Transportation, Inc. 504,000
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Total 1,029,000
------------------------------------------------------------------- -----------
UTILITIES--9.0%
-------------------------------------------------------------------
23,500 ALC Communications Corp. 799,000
-------------------------------------------------------------------
38,000 LCI International, Inc. 845,500
-------------------------------------------------------------------
</TABLE>
DG OPPORTUNITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCK--CONTINUED
- -----------------------------------------------------------------------------------
UTILITIES--CONTINUED
-------------------------------------------------------------------
18,000 LDDS Communications, Inc. $ 362,250
-------------------------------------------------------------------
17,000 MFS Communications, Inc. 620,500
-------------------------------------------------------------------
5,000 Trigen Energy Corp. 97,500
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Total 2,724,750
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TOTAL COMMON STOCK (IDENTIFIED COST $29,192,474) 28,173,909
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MUTUAL FUND SHARES--1.0%
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287,500 Lehman Brothers Institutional Funds Group Trust
(at net asset value) 287,500
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REPURCHASE AGREEMENT--6.5%**
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$1,966,268 Eastbridge Capital, Inc., 5.70%, dated 11/30/94, due 12/1/94
(at amortized cost) 1,966,268
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TOTAL INVESTMENTS (IDENTIFIED COST $31,446,242) $30,427,677+
------------------------------------------------------------------- -----------
</TABLE>
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $31,446,242. The
net unrealized depreciation of investments on a federal tax basis amounts to
$1,018,565, which is comprised of $1,439,247 appreciation and $2,457,812
depreciation at November 30, 1994.
Note: The categories of investments are shown as a percentage of net assets
($30,336,847) at
November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
DG OPPORTUNITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994
(UNAUDITED)
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<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (identified and tax cost $31,446,242) $30,427,677
- --------------------------------------------------------------------------------
Interest and dividends receivable 13,988
- --------------------------------------------------------------------------------
Receivable for Fund shares sold 51,636
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Receivable for investments sold 10,313
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Total assets 30,503,614
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LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $137,490
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Payable for Fund shares repurchased 622
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Accrued expenses 28,655
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Total liabilities 166,767
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NET ASSETS for 2,901,484 shares of beneficial interest outstanding $30,336,847
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NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital $31,316,792
- --------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (1,018,565)
- --------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments 25,425
- --------------------------------------------------------------------------------
Undistributed net investment income 13,195
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Total Net Assets $30,336,847
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NET ASSET VALUE (net assets of $30,336,847 / 2,901,484 shares of beneficial
interest outstanding) $ 10.46
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Computation of Offering Price: (100/98 of $10.46) $ 10.67*
- -------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
DG OPPORTUNITY FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JULY 21, 1994 (START OF BUSINESS) TO NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------
Interest income $ 51,868
- ----------------------------------------------------------------------------------
Dividend income 9,568
- ---------------------------------------------------------------------------------- -----------
Total income 61,436
- ----------------------------------------------------------------------------------
EXPENSES--
- ----------------------------------------------------------------------------------
Investment advisory fee $ 48,037
- ----------------------------------------------------------------------
Trustees' fees 180
- ----------------------------------------------------------------------
Administrative personnel and services fees 50,000
- ----------------------------------------------------------------------
Custodian fees 5,592
- ----------------------------------------------------------------------
Portfolio accounting, transfer and dividend disbursing agent fees and
expenses 18,614
- ----------------------------------------------------------------------
Legal fees 2,196
- ----------------------------------------------------------------------
Printing and postage 2,229
- ----------------------------------------------------------------------
Insurance premiums 2,694
- ----------------------------------------------------------------------
Miscellaneous 2,626
- ---------------------------------------------------------------------- --------
Total expenses 132,168
- ----------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------
Waiver of investment advisory fee $48,037
- ------------------------------------------------------------
Waiver of administrative personnel and services fees 43,713
- ------------------------------------------------------------ -------
Net expenses 40,418
- ---------------------------------------------------------------------------------- -----------
Net investment income 21,018
- ---------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) 25,425
- ----------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (1,018,565)
- ---------------------------------------------------------------------------------- -----------
Net realized and unrealized gain (loss) on investments (993,140)
- ---------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations ($ 972,122)
- ---------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
DG OPPORTUNITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30, 1994*
----------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------
Net investment income $ 21,018
- --------------------------------------------------------------------
Net realized gain (loss) on investments ($25,425 net gain, as
computed for federal tax purposes) 25,425
- --------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (1,018,565)
- -------------------------------------------------------------------- -----------------
Change in net assets resulting from operations (972,122)
- -------------------------------------------------------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------
Dividends to shareholders from net investment income (7,823)
- -------------------------------------------------------------------- -----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- --------------------------------------------------------------------
Proceeds from sale of shares 32,917,516
- --------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
dividends declared 168
- --------------------------------------------------------------------
Cost of shares redeemed (1,600,892)
- -------------------------------------------------------------------- -----------------
Change in net assets from Fund share transactions 31,316,792
- -------------------------------------------------------------------- -----------------
Change in net assets 30,336,847
- --------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------
Beginning of period --
- -------------------------------------------------------------------- -----------------
End of period (including undistributed net investment income of
$13,195) $ 30,336,847
- -------------------------------------------------------------------- -----------------
</TABLE>
* For the period from July 21, 1994 (start of business) to November 30, 1994
(unaudited).
(See Notes which are an integral part of the Financial Statements)
DG OPPORTUNITY FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
DG Investor Series (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company.
The Trust consists of six diversified portfolios. The financial statements
included herein present only those of DG Opportunity Fund (the "Fund"). The
financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(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.
<TABLE>
<S> <C>
A. INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale price
reported on national securities exchanges. Unlisted and short-term securities (and
private placement securities) are generally valued at the prices provided by an
independent pricing service. Short-term securities with remaining maturities of sixty
days or less may be valued at amortized cost, which approximates fair market value.
Investments in other regulated investment companies are valued at net asset value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian bank to
take possession, to have legally segregated in the Federal Reserve Book Entry System, or
to have segregated within the custodian bank's vault, all securities held as collateral
in support of repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's underlying collateral to ensure that the value of collateral at
least equals the principal amount of the repurchase agreement, including accrued
interest.
The Fund will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the Trust's adviser
to be creditworthy pursuant to guidelines established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than the
repurchase price on the sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and distributions to
shareholders are recorded on the ex-dividend date. 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").
</TABLE>
DG OPPORTUNITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
D. 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 taxable income. Accordingly, no provisions for federal tax are
necessary.
E. 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.
F. 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 its
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.
G. OTHER--Investment transactions are accounted for on the trade date.
</TABLE>
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
NOVEMBER 30, 1994*
- --------------------------------------------------------------------- ---------------------
<S> <C>
Shares sold 3,046,769
- ---------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 15
- ---------------------------------------------------------------------
Shares redeemed (145,300)
- --------------------------------------------------------------------- ----------------
Net change resulting from Fund share transactions 2,901,484
- --------------------------------------------------------------------- ----------------
</TABLE>
* For the period July 21, 1994 (start of business) to November 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Deposit Guaranty National Bank, the Fund's investment
adviser (the "Adviser"), receives for its services an annual investment advisory
fee equal to .95 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive all or a portion of its fee. The Adviser can modify
or terminate this voluntary waiver at any time at its sole discretion. Under the
terms of a sub-advisory agreement between the Adviser and the Trust Division of
Commercial National Bank, Commercial National Bank receives an annual fee from
the Adviser equal to .25 of 1% of the Fund's average daily net assets. In
addition, Commercial National Bank may voluntarily choose to reduce its
compensation.
DG OPPORTUNITY FUND
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust 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 Trust. The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders.
FServ also maintains the Trust'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 incurred by the Fund were borne
initially by FAS and are estimated at $30,000. The Fund has agreed to reimburse
FAS for the organizational expenses during the five year period following July
25, 1994 (date the Fund first became effective). For the period ended November
30, 1994, the Fund paid $667 pursuant to this agreement.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1994 were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES $31,147,849
- ------------------------------------------------------------------------------- -----------
SALES $ 1,980,800
- ------------------------------------------------------------------------------- -----------
</TABLE>
DG OPPORTUNITY FUND
(A PORTFOLIO OF DG INVESTOR SERIES)
Supplement to Statement of Additional Information
dated July 26, 1994
A. Please replace the section entitled "When-Issued
and Delayed Delivery Transactions", on page 3 of
the SAI, with the following:
"When-Issued And Delayed Delivery
Transactions
These transactions are made to
secure what is considered to be an
advantageous price or yield for the
Fund. Settlement dates may be a
month or more after entering into
these transactions, and the market
values of the securities purchased
may vary from the purchase prices.
No fees or other expenses, other
than normal transaction costs, are
incurred. However, liquid assets of
the Fund sufficient to make payment
for the securities to be purchased
are segregated on the Fund's records
at the trade date. These assets are
marked to market daily and are
maintained until the transaction has
been settled. The Fund does not
intend to engage in when-issued and
delayed delivery transactions to an
extent that would cause the
segregation of more than 20% of the
total value of its assets.
During the current year, the Fund
does not anticipate investing more
than 10% of its total assets in when-
issued and delayed delivery
transactions."
B. Thomas G. Bigley was elected to be a Trustee on
November 15, 1994. Please insert the following
to the list of officers and Trustees,
immediately after the information for John F.
Donahue, on page 6 of the SAI:
"Thomas G. Bigley
28th Floor
One Oxford Centre
Pittsburgh, PA 15219
Trustee
Director, Oberg Manufacturing Co.;
Chairman of the Board, Children's
Hospital of Pittsburgh; Director,
Trustee or Managing General Partner
of the Funds; formerly, Senior
Partner, Ernst & Young LLP."
C. Please change the addresses of Edward L.
Flaherty, Jr., on page 6 of the SAI, and Gregor
F. Meyer, on page 7 of the SAI, to the
following:
"Henny, Koehuba, Meyer & Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA 15222-1004"
D. Please insert the following after the section
entitled "Fund Ownership" on page 8 of the SAI:
"Officers and Trustees Compensation
Name , Aggregate
Total Compensation
Position With Compensation From
Paid To Trustees From
Trust Trust+
Trust And Fund Complex
John F. Donahue, $ - 0- $ -
0- for the Trust and
Chairman and Trustee 69
investment companies
Thomas G. Bigley, $429
$24,991 for the Trust and
Trustee 50
investment companies
John T. Conroy, Jr., $1,857.75
$136,100 for the Trust and
Trustee 65
investment companies
William J. Copeland, $1,857.75
$136,100 for the Trust and
Trustee 65
investment companies
James E. Dowd, $1,857.75
$136,100 for the Trust and
Trustee 65
investment companies
Lawrence D. Ellis, M.D.,
$1,682.50 $123,600 for the
Trust and
Trustee 65
investment companies
Edward L. Flaherty, Jr.,
$1,857.75 $136,100 for the
Trust and
Trustee 65
investment companies
Edward C. Gonzales, $ -0- $ -
0- for the Trust and
President and Trustee 18
investment companies
Peter E. Madden, $1,424.50
$104,880 for the Trust and
Trustee 65
investment companies
Gregor F. Meyer, $1,682.50
$123,600 for the Trust and
Trustee 65
investment companies
Wesley W. Posvar, $1,682.50
$123,600 for the Trust and
Trustee 65
investment companies
Marjorie P. Smuts, $1,682.50
$123,600 for the Trust and
Trustee 65
investment companies
+The aggregate compensation is provided
for the Trust which is comprised of six
portfolios."
E. Please insert the following as the second
paragraph of the section entitled "Advisory
Fees" on page 9:
"During the period from July 21,
1994 (start of business) through
November 30, 1994, the Adviser
earned $48,037, all of which was
voluntarily waived."
F. Please replace the section entitled
"Administrative Services", on page 9, with the
following:
"Administrative Services
Federated Administrative Services, a
subsidiary of Federated Investors,
provides administrative personnel
and services to the Fund for a fee
as described in the prospectus. For
the period from July 21, 1994 (start
of business) to November 30, 1994,
the Fund incurred administrative
service costs of $50,000, of which
$43,713 was voluntarily waived."
G. Please insert the following section after the
section entitled "Administrative Services" on
page 9:
"Distribution and Shareholder
Services Plans
These arrangements permit the
payment of fees to financial
institutions to stimulate
distribution activities and services
to shareholders provided by a
representative who has knowledge of
the shareholder's particular
circumstances and goals. These
activities and services may include,
but are not limited to, marketing
efforts; providing office space,
equipment, telephone facilities, and
various clerical, supervisory,
computer, and other personnel as
necessary or beneficial to establish
and maintain shareholder accounts
and records; processing purchase and
redemption transactions and
automatic investments of client
account cash balances; answering
routine client inquiries; and
assisting clients in changing
dividend options, account
designations, and addresses.
By adopting the Distribution Plan,
the Board of Trustees expects that
the Fund will be able to achieve a
more predictable flow of cash for
investment purposes and to meet
redemptions. This will facilitate
more efficient portfolio management
and assist the Fund in pursuing its
investment objectives. By
identifying potential investors
whose needs are served by the Fund's
objectives, and properly servicing
these accounts, it may be possible
to curb sharp fluctuations in rates
of redemptions and sales.
Other benefits, which may be
realized under either arrangement,
may include: (1) providing personal
services to shareholders; (2)
investing shareholder assets with a
minimum of delay and administrative
detail; and (3) enhancing
shareholder recordkeeping systems;
and (4) responding promptly to
shareholders' requests and inquiries
concerning their accounts.
For the period from July 21, 1994
(start of business) to November 30,
1994, no payments were made pursuant
to the Distribution Plan. In
addition, for the period from July
21, 1994 (start of business) to
November 30, 1994, no payments were
made pursuant to the Shareholder
Services Plan."
H. Please add the following sentence to the section
entitled "Brokerage Transactions" on page 9:
"For the period from July 21, 1994 (start
of business) to November 30, 1994, the
Fund paid $9,661 in brokerage commissions
on brokerage transactions."
I. Please insert the following information as the
first paragraph under the section entitled
"Total Return" on page 11:
"The Fund's cumulative total return
from October 1, 1994 (date of
initial public investment) to
November 30, 1994, was (6.35%).
Cumulative total return reflects the
Fund's total performance over a
specific period of time. This total
return assumes and is reduced by the
payment of the maximum sales load.
The Fund's total return is
representative of only four months
of fund activity since the Fund' s
effective date."
J. Please insert the following information as the
first paragraph under the section entitled
"Yield" on page 11:
"The Fund's yield for the thirty day
period ended November 30, 1994, was
(0.02%)."
January 31, 1995
FEDERATED SECURITIES CORP.
Distributor
G00930-02 (1/95)
