PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for the DG
Investor Series mutual funds, which covers the six-month period from March 1,
1996 through August 31, 1996. This combined format helps the funds achieve
greater efficiencies by reducing printing and mailing expenses.
The report begins with a discussion with each fund's portfolio manager, followed
by a complete list of holdings and financial statements.
Please note the following highlights for each fund in the DG Investor Series
over the six-month reporting period:
- - Reflecting a degree of volatility that occurred in certain sectors of the
stock market during the six-month reporting period, the DG EQUITY FUND total
return was -0.93%. The fund paid income totaling $0.08 per share. Of course,
short-term, periodic fluctuations in value are to be expected when investing
in stocks. Please note that over the long term, the fund has performed well,
producing a total return of 16.78%* for the one-year period ending August 31,
1996. And, since its inception on August 3, 1992, the fund has achieved an
annualized total return of 12.23%.* Net assets reached $408.3 million at the
end of the reporting period.
- - DG OPPORTUNITY FUND produced a total return of 11.96%* for the reporting
period through strong price increases among the fund's holdings. The fund's
net asset value rose from $12.79 on the first day of the period to $14.32 on
the last day. At the end of the reporting period, net assets stood at $72
million.
- - DG LIMITED TERM GOVERNMENT INCOME FUND paid dividends totaling $0.27 per
share. The fund's shorter-maturity portfolio helped cushion the fund's share
price against rising rates that impacted longer-maturity bonds. As a result,
the fund achieved a positive total return of 1.55%.* Net assets stood at $89.4
million.
- - DG GOVERNMENT INCOME FUND, a portfolio of U.S. government securities, paid
dividends totaling $0.29 per share. The fund's share price was impacted by
rising interest rates that caused bond prices to decline. As a result, the
fund's total return was -0.43%.* Net assets stood at $224.6 million.
- - DG MUNICIPAL INCOME FUND rewarded tax-sensitive investors with federally
tax-free dividends totaling $0.24 per share and capital gains of $0.01 per
share.** Reflecting a rising interest rate environment that impacted bond
prices during the period, the fund's total return was -0.46%.* At the end of
the reporting period, net assets reached $46.4 million.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so an investor's shares, when redeemed, may
be worth more or less than their original cost. Total returns quoted above
are based on net asset value and do not reflect the maximum sales charge.
Total returns based on the maximum sales charge for the six-month period are
as follows: DG Opportunity Fund, 8.08%; DG Equity Fund, -4.43% (one-year
period, 12.66% and since inception, 11.27%); DG Municipal Income Fund,
-2.47%; DG Government Income Fund, -2.41%; and DG Limited Term Government
Income Fund, -0.48%.
** Income may be subject to the federal alternative minimum tax and state and
local taxes.
- --------------------------------------------------------------------------------
- - A convenient way for investors to pursue daily income on their ready cash, DG
U.S. GOVERNMENT MONEY MARKET FUND paid dividends totaling $0.02 per share. Net
assets stood at $229.5 million.*
Thank you for pursuing your financial goals through DG Investor Series. You have
our commitment to provide the highest level of service as we keep you informed
about your progress.
Sincerely,
LOGO
Edward C. Gonzales
President
October 15, 1996
* Although money market funds seek to maintain a stable net asset value of $1.00
per share, there is no assurance that they will be able to do so. An
investment in the fund is not insured or guaranteed by the U.S. government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
DG EQUITY FUND
The first half of our DG Equity Fund's fiscal year exhibited little of last
year's 13% first half sparkle. Rather, we struggled (unsuccessfully) over the
six-month reporting period merely to keep our heads above some suddenly very
choppy and treacherous investment seas. Our long term benchmark--the S&P 500
Index*--and our management style benchmark--the S&P 500/BARRA Growth
Index**--faired only slightly better over this admittedly very short term period
but did, at least, manage to post positive returns.
To be sure, the degree of our underachievement was modest enough and the
measurement period too short to be meaningful. Nevertheless, the fact that both
of these important benchmarks outperformed our fund causes us some process
control-related concern. Admittedly, this aberration--if that is what it is--is
not a first. We've experienced these anomalies over similarly shortened periods
in the past. However, now as before, we feel encouraged to pursue an additional
in-depth portfolio analysis to assure complete fidelity to our stated investment
approach. This planned micro-management review is part and parcel of our ongoing
management process and is but one facet of our rigorous, but routine, attention
to our shareholder's best interests. Preliminary indications--so far--hint at
"selection" as the under-performance culprit with "sector emphasis" a
co-conspirator.
Over the reporting period, we persisted in our on-going "nudging" of the
portfolio closer to the intended "high growth" profile we envision as the
optimum configuration. We added a modest number of expected high growth issues
and removed an even more modest number of less attractive issues. In the
process, we reduced our short-term cash position by about one or two percent. As
always, we continue to emphasize the economic sectors typically dominant in a
large-cap growth portfolio. These sectors are the Consumer Non-Durables (such as
foods, beverages and cosmetics), Health Care, Technology, Capital Goods (for
instance, electrical equipment and construction materials), and the Business
Equipment and Services sectors. With interest rates apparently in a
troughing-to-rising phase, the popular Financial Services sector is now even
less appealing to us than is typically the case. Therefore, this sector remains
unrepresented in our portfolio. Should interest rates rise further, as we
expect, our portfolio is likely to suffer both from the adverse effects of
contracting price/earnings multiples as well as unsettling Technology sector
earning per share disappointments of a cyclical (industry specific) nature. If
this short-term view should prove to be correct, quarterly fund returns will
quite likely once again be impacted. Longer-term, however, we believe the
outlook for investment success is substantially intact and encouraging.
* The Standard & Poor's Daily Stock Price Index of 500 Common Stocks is an
unmanaged index of common stocks in industry, transportation, and financial
and public utility companies. Investments cannot be made in an index.
** S&P 500/BARRA Growth Index is a sub-index of the S&P 500 composite index of
common stocks. The index represents approximately fifty percent of the S&P
500 market capitalization and is comprised of those companies with higher
price-to-book ratios (one distinction associated with "growth stocks"). The
index is maintained by Standard and Poor's in conjunction with BARRA, an
investment technology firm. This index is unmanaged, and investments cannot
be made in an index.
- --------------------------------------------------------------------------------
DG OPPORTUNITY FUND
DG Opportunity Fund was established in July 1994 to provide investors with a
diversified portfolio of equity securities of smaller capitalized companies. The
investment objective of the fund is to provide capital appreciation.
Stocks purchased by the fund since February 1996 have been mostly smaller
capitalization issues. The stock selection has been well diversified with some
concentrations being made in the technology, telecommunications, financial, and
retail sectors. The fund's holdings in technology, healthcare, leisure, and
energy sectors have been increased since our last report. The restaurant sector
holdings have been reduced. We anticipate more sector rotation during the next
six months.
The total rate of return (income plus capital appreciation) for the past six
months was 11.96% based on net asset value.* The fund's net assets have
increased from $53.3 million as of February 29, 1996 to $72.1 million as of
August 31, 1996.
DG LIMITED TERM GOVERNMENT INCOME FUND
Interest rates rose significantly for the six-month period ended August 31,
1996. Economic reports showed a growing economy and, while inflation has not
increased in a meaningful manner, the perception among investors was that it
might begin to do so in the near future. The market has been anticipating rate
increases by the Federal Reserve Board to head off an expanding economy. Yields
on 3-, 5-, and 10-year Treasuries increased by 97,100, and 84 basis points,
respectively.
For the six months ended August 31, 1996, the fund's total return was 1.55%
based on net asset value* compared to the Merrill Lynch 1-3 Year Treasury
Index** total return of 1.66%. The fund's duration of 1.54 years and average
maturity of 1.74 years were maintained during the reporting period. U.S.
Treasury securities continue to hold a majority position in the fund. U.S.
agency securities may be utilized more in the future as spreads to Treasuries
have widened, helping to provide a more adequate return for the additional risk.
DG GOVERNMENT INCOME FUND
Interest rates rose significantly for the six-month period ended August 31,
1996. Economic reports showed a growing economy and while inflation has not
increased in a meaningful manner, the perception among investors was that it
might begin to do so in the near future. The market has been anticipating rate
increases by the Federal Reserve Board to head off an expanding economy. Yields
on 3-, 5-, and 10-year Treasuries increased by 97, 100, and 84 basis points,
respectively.
For the six months ended August 31, 1996, the fund's total return was -0.43%
based on net asset value* compared to the Lehman Brothers Government/Corporate
Bond Index** total return of -0.39%. We softened our barbell strategy during
this period. Our duration of 4.73 years and average maturity of 7.95 years
continue to be shorter than the benchmark. U.S. agency securities may be
utilized more in the future as spreads to Treasuries have widened, helping to
provide a more adequate return for the additional risk.
- --------------------------------------------------------------------------------
DG MUNICIPAL INCOME FUND
DG Municipal Income Fund was established in December 1992 to provide investors
with the ability to invest in a diversified portfolio of quality longer term
municipal issues. The investment objective of the fund is to provide dividend
income that is exempt from federal regular income tax.***
Issues purchased by the fund during the last six months consisted largely of
general obligations of states, counties and cities. The fund is currently
managed with a 10.5 year average maturity. The investment adviser believes that
the value in the market is in higher quality municipal issues and continues to
reflect this strategy in the fund's portfolio. The adviser anticipates the
average maturity will be lengthened during the next six months.
The total rate of return (income plus capital appreciation) for the past six
months was -0.46% based on net asset value. For the same period, the 30-day SEC
yield was 4.51%.*
The fund's 30-day distribution rate as of August 31, 1996, was 4.65% for shares
based on net asset value (4.55% taking into account the sales charge).**** The
fund's net assets increased from $44.5 million on February 29, 1996, to $46.4
million as of August 31, 1996.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
** Merrill Lynch 1-3 Year Treasury Index is an unmanaged index tracking
short-term U.S. government securities between 1 and 2.99 years. The index
is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.
Lehman Brothers Government/Corporate Bond Index is an unmanaged index
comprised of approximately 5,000 issues which include: non-convertible
bonds publicly issued by the U.S. government or its agencies; corporate
bonds guaranteed by the U.S. government and quasi-federal corporations; and
publicly issued, fixed rate, non-convertible domestic bonds of companies in
industry, public utilities, and finance.
Investments cannot be made in an index.
*** Income may be subject to the federal alternative minimum tax and state and
local taxes.
**** Distribution rate reflects actual distribution made to shareholders. It is
calculated by dividing the monthly annualized dividend plus short-term
capital gains, if any, by the average 30-day offering price.
DG EQUITY FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--94.1%
- -----------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES--8.2%
----------------------------------------------------------------
250,000 Automatic Data Processing, Inc. $ 10,406,250
----------------------------------------------------------------
125,000 Donnelley (R.R.) & Sons Co. 4,078,125
----------------------------------------------------------------
70,000 Dun & Bradstreet Corp. 4,033,750
----------------------------------------------------------------
100,000 Electronic Data Systems Corp. 5,450,000
----------------------------------------------------------------
200,000 Pitney Bowes, Inc. 9,650,000
---------------------------------------------------------------- ------------
Total 33,618,125
---------------------------------------------------------------- ------------
CAPITAL GOODS--8.9%
----------------------------------------------------------------
260,000 Dover Corp. 11,407,500
----------------------------------------------------------------
150,000 General Electric Co. 12,468,750
----------------------------------------------------------------
150,000 PPG Industries, Inc. 7,406,250
----------------------------------------------------------------
120,000 Tyco International, Ltd. 5,070,000
---------------------------------------------------------------- ------------
Total 36,352,500
---------------------------------------------------------------- ------------
CONSUMER NON-DURABLES--21.4%
----------------------------------------------------------------
75,000 CPC International, Inc. 5,165,625
----------------------------------------------------------------
250,000 Coca-Cola Co. 12,500,000
----------------------------------------------------------------
60,000 Eastman Kodak Co. 4,350,000
----------------------------------------------------------------
100,000 Gillette Co. 6,375,000
----------------------------------------------------------------
120,000 Heinz (H.J.) Co. 3,780,000
----------------------------------------------------------------
220,000 International Flavors & Fragrances, Inc. 9,460,000
----------------------------------------------------------------
400,000 PepsiCo, Inc. 11,500,000
----------------------------------------------------------------
100,000 Philip Morris Cos., Inc. 8,975,000
----------------------------------------------------------------
120,000 Procter & Gamble Co. 10,665,000
----------------------------------------------------------------
200,000 Sara Lee Corp. 6,300,000
----------------------------------------------------------------
(See Notes to Portfolio of Investments)
</TABLE>
DG EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
----------------------------------------------------------------
160,000 Sysco Corp. $ 5,140,000
----------------------------------------------------------------
75,000 Tambrands, Inc. 3,187,500
---------------------------------------------------------------- ------------
Total 87,398,125
---------------------------------------------------------------- ------------
CONSUMER SERVICES--2.8%
----------------------------------------------------------------
200,000 Disney (Walt) Co. 11,400,000
---------------------------------------------------------------- ------------
HEALTHCARE--17.9%
----------------------------------------------------------------
180,000 Abbott Laboratories 8,122,500
----------------------------------------------------------------
11,230 Aetna Services, Inc. 742,584
----------------------------------------------------------------
80,000 Bristol-Myers Squibb Co. 7,020,000
----------------------------------------------------------------
70,000 Hillenbrand Industries, Inc. 2,266,250
----------------------------------------------------------------
240,000 Johnson & Johnson 11,820,000
----------------------------------------------------------------
160,000 Medtronic, Inc. 8,320,000
----------------------------------------------------------------
160,000 Merck & Co., Inc. 10,500,000
----------------------------------------------------------------
170,000 Pfizer, Inc. 12,070,000
----------------------------------------------------------------
170,000 Schering Plough Corp. 9,498,750
----------------------------------------------------------------
70,000 United Healthcare Corp. 2,703,750
---------------------------------------------------------------- ------------
Total 73,063,834
---------------------------------------------------------------- ------------
RAW MATERIALS--2.8%
----------------------------------------------------------------
75,000 Great Lakes Chemical Corp. 4,312,500
----------------------------------------------------------------
90,000 Lubrizol Corp. 2,553,750
----------------------------------------------------------------
120,000 Morton International, Inc. 4,455,000
---------------------------------------------------------------- ------------
Total 11,321,250
---------------------------------------------------------------- ------------
RETAIL--11.4%
----------------------------------------------------------------
180,000 Albertsons, Inc. 7,627,500
----------------------------------------------------------------
150,000 Home Depot, Inc. 7,968,750
----------------------------------------------------------------
275,000 McDonald's Corp. 12,753,125
----------------------------------------------------------------
(See Notes to Portfolio of Investments)
</TABLE>
DG EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
RETAIL--CONTINUED
----------------------------------------------------------------
240,000 Wal-Mart Stores, Inc. $ 6,360,000
----------------------------------------------------------------
370,000 Walgreen Co. 12,210,000
---------------------------------------------------------------- ------------
Total 46,919,375
---------------------------------------------------------------- ------------
TECHNOLOGY--18.4%
----------------------------------------------------------------
150,000 AMP, Inc. 5,737,500
----------------------------------------------------------------
100,000 (b) Applied Materials, Inc. 2,425,000
----------------------------------------------------------------
85,000 Boeing Co. 7,692,500
----------------------------------------------------------------
200,000 (b) Compaq Computer Corp. 11,325,000
----------------------------------------------------------------
130,000 (b) Digital Equipment Corp. 5,021,250
----------------------------------------------------------------
270,000 Hewlett-Packard Co. 11,812,500
----------------------------------------------------------------
100,000 Intel Corp. 7,981,250
----------------------------------------------------------------
100,000 International Business Machines Corp. 11,437,500
----------------------------------------------------------------
50,000 (b) Microsoft Corp. 6,125,000
----------------------------------------------------------------
100,000 Motorola, Inc. 5,337,500
---------------------------------------------------------------- ------------
Total 74,895,000
---------------------------------------------------------------- ------------
UTILITIES--2.3%
----------------------------------------------------------------
100,000 AT&T Corp. 5,250,000
----------------------------------------------------------------
80,000 Central & SouthWest Corp. 2,110,000
----------------------------------------------------------------
40,000 SBC Communications, Inc. 1,865,000
---------------------------------------------------------------- ------------
Total 9,225,000
---------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $286,101,777) 384,193,209
---------------------------------------------------------------- ------------
(A)REPURCHASE AGREEMENT--5.7%
- -----------------------------------------------------------------------------------
$23,476,209 Eastbridge Capital, 5.25%, dated 8/30/1996, due 9/3/1996 (AT
AMORTIZED COST) $ 23,476,209
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $309,577,986) $407,669,418
---------------------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--86.4%
- -----------------------------------------------------------------------------------
BROADCASTING--1.0%
----------------------------------------------------------------
26,000 (b) Gemstar International Group Ltd. $ 728,000
---------------------------------------------------------------- ------------
BUSINESS EQUIPMENT & SERVICES--0.8%
----------------------------------------------------------------
37,100 (b) Anixter International, Inc. 570,413
---------------------------------------------------------------- ------------
COMMUNICATIONS--4.0%
----------------------------------------------------------------
70,000 (b) Mobile Telecommunication Technologies Corp. 971,250
----------------------------------------------------------------
48,200 (b) Periphonics Corp. 1,940,050
---------------------------------------------------------------- ------------
Total 2,911,300
---------------------------------------------------------------- ------------
COMPUTER-SERVICES--15.6%
----------------------------------------------------------------
58,000 (b) Accent Software International Ltd. 746,750
----------------------------------------------------------------
63,000 (b) Applied Magnetics Corp. 921,375
----------------------------------------------------------------
80,000 (b) Data General Corp. 900,000
----------------------------------------------------------------
50,000 (b) Datastream Systems, Inc. 1,475,000
----------------------------------------------------------------
57,700 (b) Emulex Corp. 793,375
----------------------------------------------------------------
891 First Data Corp. 69,498
----------------------------------------------------------------
95,000 (b) GT Interactive Software 1,615,000
----------------------------------------------------------------
60,000 (b) Harbinger Corp. 1,545,000
----------------------------------------------------------------
45,500 (b) Intergraph Corp. 415,188
----------------------------------------------------------------
45,200 (b) Interphase Corp. 610,200
----------------------------------------------------------------
40,000 (b) MICROS Systems Corp. 1,000,000
----------------------------------------------------------------
46,000 (b) Structural Dynamics Research Corp. 1,161,500
---------------------------------------------------------------- ------------
Total 11,252,886
---------------------------------------------------------------- ------------
COSMETICS & TOILETRIES--0.4%
----------------------------------------------------------------
32,000 Beauticontrol Cosmetics, Inc. 268,000
---------------------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG OPPORTUNITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT--4.6%
----------------------------------------------------------------
64,200 (b) Affinity Technology $ 690,150
----------------------------------------------------------------
82,100 Kuhlman Corp. 1,354,650
----------------------------------------------------------------
54,000 (b) Ultrak, Inc. 1,282,500
---------------------------------------------------------------- ------------
Total 3,327,300
---------------------------------------------------------------- ------------
FINANCIAL SERVICES--12.8%
----------------------------------------------------------------
18,500 Alex Brown, Inc. 925,000
----------------------------------------------------------------
30,000 Edwards (AG), Inc. 840,000
----------------------------------------------------------------
65,500 (b) Envoy Corp. 2,169,688
----------------------------------------------------------------
49,250 Morgan Keegan & Co., Inc. 615,625
----------------------------------------------------------------
47,500 (b) Olympic Financial Ltd. 1,163,750
----------------------------------------------------------------
46,500 Stewart Enterprises, Inc. 1,581,000
----------------------------------------------------------------
66,000 T. Rowe Price Associates 1,914,000
---------------------------------------------------------------- ------------
Total 9,209,063
---------------------------------------------------------------- ------------
HEALTHCARE--9.9%
----------------------------------------------------------------
108,700 (b) American Healthcorp, Inc. 1,195,700
----------------------------------------------------------------
32,000 (b) ClinTrials, Inc. 1,312,000
----------------------------------------------------------------
56,000 (b) Coventry Corp. 738,500
----------------------------------------------------------------
12,000 (b) HealthCor Holdings, Inc. 138,000
----------------------------------------------------------------
90,000 (b) INAMED Corp. 900,000
----------------------------------------------------------------
70,800 (b) KeraVision, Inc. 1,168,200
----------------------------------------------------------------
103,000 (b) Matria Healthcare, Inc. 759,625
----------------------------------------------------------------
32,600 (b) Vivra, Inc. 982,075
---------------------------------------------------------------- ------------
Total 7,194,100
---------------------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG OPPORTUNITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
HOTELS--3.2%
----------------------------------------------------------------
122,300 (b) Aztar Corp. $ 1,345,300
----------------------------------------------------------------
108,900 (b) Casino American, Inc. 707,850
----------------------------------------------------------------
12,000 (b) Primadonna Resorts, Inc. 243,000
---------------------------------------------------------------- ------------
Total 2,296,150
---------------------------------------------------------------- ------------
INSURANCE--2.7%
----------------------------------------------------------------
73,000 AmVestors Financial Corp. 1,067,625
----------------------------------------------------------------
25,000 (b) Compdent Corp. 856,250
---------------------------------------------------------------- ------------
Total 1,923,875
---------------------------------------------------------------- ------------
MANUFACTURING--1.3%
----------------------------------------------------------------
116,300 (b) Terex Corp. 915,862
---------------------------------------------------------------- ------------
OIL--8.1%
----------------------------------------------------------------
42,000 (b) Energy Ventures, Inc. 1,380,750
----------------------------------------------------------------
105,000 (b) Ensearch Exploration, Inc. 958,125
----------------------------------------------------------------
24,000 (b) Nuevo Energy Co. 897,000
----------------------------------------------------------------
92,000 (b) Pride Petroleum Services, Inc. 1,322,500
----------------------------------------------------------------
69,100 Quaker State Corp. 1,096,962
----------------------------------------------------------------
24,100 (b) Universal Siesmic Associates, Inc. 177,737
---------------------------------------------------------------- ------------
Total 5,833,074
---------------------------------------------------------------- ------------
RETAIL--18.3%
----------------------------------------------------------------
41,000 (b) Action Performance Companies, Inc. 476,625
----------------------------------------------------------------
95,000 (b) Books-A-Million, Inc. 665,000
----------------------------------------------------------------
56,000 CKE Restaurants, Inc. 1,554,000
----------------------------------------------------------------
85,000 Cooker Restaurant Corp. 1,094,375
----------------------------------------------------------------
26,000 (b) Friedmans, Inc., Class A 546,000
----------------------------------------------------------------
56,900 (b) Insight Enterprises, Inc. 1,465,175
----------------------------------------------------------------
53,000 Intimate Brands, Inc. 1,060,000
----------------------------------------------------------------
(See Notes to Portfolio of Investments)
</TABLE>
DG OPPORTUNITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
RETAIL--CONTINUED
----------------------------------------------------------------
49,000 (b) Lechters, Inc. $ 245,000
----------------------------------------------------------------
50,000 (b) Longhorn Steaks, Inc. 837,500
----------------------------------------------------------------
25,000 (b) Micro Warehouse, Inc. 671,875
----------------------------------------------------------------
39,000 (b) Papa Johns International, Inc. 1,764,750
----------------------------------------------------------------
60,000 (b) Renters Choice, Inc. 1,057,500
----------------------------------------------------------------
85,000 Sanderson Farms, Inc. 924,375
----------------------------------------------------------------
39,000 (b) Stein Mart, Inc. 814,125
---------------------------------------------------------------- ------------
Total 13,176,300
---------------------------------------------------------------- ------------
TRANSPORTATION--2.2%
----------------------------------------------------------------
35,000 (b) KLLM Transportation Services, Inc. 455,000
----------------------------------------------------------------
86,000 (b) United Transnet, Inc. 1,118,000
---------------------------------------------------------------- ------------
Total 1,573,000
---------------------------------------------------------------- ------------
UTILITIES--1.5%
----------------------------------------------------------------
74,000 (b) Symmetricom, Inc. 1,100,750
---------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $52,307,117) 62,280,073
---------------------------------------------------------------- ------------
(A) REPURCHASE AGREEMENTS--14.1%
- -----------------------------------------------------------------------------------
$ 5,141,900 Eastbridge Capital, Inc., 5.25%, dated 8/30/1996, due 9/3/1996 5,141,900
----------------------------------------------------------------
5,000,000 HSBC Securities, Inc., 5.21%, dated 8/30/1996, due 9/3/1996 5,000,000
---------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (AT AMORTIZED COST) 10,141,900
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $62,449,017) $ 72,421,973
---------------------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG LIMITED TERM GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--19.1%
- -----------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES--1.1%
----------------------------------------------------------------
$ 1,000,000 International Business Machines Corp., 6.375%, 11/1/1997 $ 1,001,890
---------------------------------------------------------------- ------------
CONSUMER NON-DURABLES--2.4%
----------------------------------------------------------------
1,447,000 Kellogg Co., 5.90%, 7/15/1997 1,446,363
----------------------------------------------------------------
725,000 Philip Morris Cos., Inc., 7.50%, 3/15/1997 730,872
---------------------------------------------------------------- ------------
Total 2,177,235
---------------------------------------------------------------- ------------
FINANCIAL SERVICES--3.8%
----------------------------------------------------------------
905,000 American General Finance Corp., 7.15%, 5/15/1997 912,539
----------------------------------------------------------------
1,500,000 Ford Motor Credit Corp., 5.625%, 3/3/1997 1,499,265
----------------------------------------------------------------
1,000,000 Norwest Financial, Inc., 6.25%, 2/15/1997 1,002,650
---------------------------------------------------------------- ------------
Total 3,414,454
---------------------------------------------------------------- ------------
HEALTHCARE--1.4%
----------------------------------------------------------------
1,250,000 Upjohn Co., 5.875%, 4/15/2000 1,210,075
---------------------------------------------------------------- ------------
PHARMACEUTICALS--1.2%
----------------------------------------------------------------
1,000,000 American Home Products, 7.70%, 2/15/2000 1,025,150
---------------------------------------------------------------- ------------
POLLUTION CONTROL--0.8%
----------------------------------------------------------------
723,000 Waste Management, Inc., 6.375%, 7/1/1997 724,967
---------------------------------------------------------------- ------------
PUBLISHING--1.1%
----------------------------------------------------------------
1,000,000 Gannett, Inc., 5.25%, 3/1/1998 984,990
---------------------------------------------------------------- ------------
RETAIL--1.3%
----------------------------------------------------------------
1,136,000 Wal-Mart Stores, Inc., 5.50%, 9/15/1997 1,129,014
---------------------------------------------------------------- ------------
UTILITIES--6.0%
----------------------------------------------------------------
1,000,000 GTE California, Inc., 6.25%, 1/15/1998 995,600
----------------------------------------------------------------
1,000,000 New England Telephone & Telegraph Co., 6.25%, 12/15/1997 999,900
----------------------------------------------------------------
1,500,000 Northern States Power Co., 5.50%, 2/1/1999 1,456,905
----------------------------------------------------------------
(See Notes to Portfolio of Investments)
</TABLE>
DG LIMITED TERM GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------------------------------
UTILITIES--CONTINUED
----------------------------------------------------------------
$ 1,000,000 Pacific Gas & Electric Co., 5.375%, 8/1/1998 $ 976,970
----------------------------------------------------------------
1,000,000 Southern California Edison Co., 5.60%, 12/15/1998 974,420
---------------------------------------------------------------- ------------
Total 5,403,795
---------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $17,046,181) 17,071,570
---------------------------------------------------------------- ------------
U.S. TREASURY NOTES--75.8%
- -----------------------------------------------------------------------------------
9,000,000 5.125%, 3/31/1998 8,853,750
----------------------------------------------------------------
4,000,000 5.125%, 12/31/1998 3,891,720
----------------------------------------------------------------
4,000,000 5.25%, 7/31/1998 3,924,760
----------------------------------------------------------------
2,000,000 5.625%, 6/30/1997 1,996,620
----------------------------------------------------------------
5,000,000 5.625%, 11/30/2000 4,804,800
----------------------------------------------------------------
4,000,000 5.75%, 10/31/1997 3,987,280
----------------------------------------------------------------
8,000,000 6.25%, 1/31/1997 8,024,080
----------------------------------------------------------------
7,000,000 6.50%, 4/30/1997 7,034,720
----------------------------------------------------------------
4,000,000 6.625%, 7/31/2001 3,982,440
----------------------------------------------------------------
4,000,000 6.75%, 6/30/1999 4,024,960
----------------------------------------------------------------
2,000,000 7.50%, 10/31/1999 2,051,840
----------------------------------------------------------------
4,000,000 7.50%, 11/15/2001 4,129,360
----------------------------------------------------------------
7,000,000 8.00%, 10/15/1996 7,022,610
----------------------------------------------------------------
4,000,000 8.00%, 1/15/1997 4,035,639
---------------------------------------------------------------- ------------
TOTAL U.S. TREASURY NOTES (IDENTIFIED COST $69,107,416) 67,764,579
---------------------------------------------------------------- ------------
(A)REPURCHASE AGREEMENT--3.6%
- -----------------------------------------------------------------------------------
3,201,000 Eastbridge Capital, Inc., 5.25%, dated 8/30/1996, due 9/3/1996
(AT AMORTIZED COST) 3,201,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $89,354,597) $ 88,037,149
---------------------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--9.7%
- -----------------------------------------------------------------------------------
BANKING--0.4%
----------------------------------------------------------------
$ 1,000,000 NationsBank Corp., 5.375%, 4/15/2000 $ 949,580
---------------------------------------------------------------- ------------
BUSINESS EQUIPMENT & SERVICES--0.7%
----------------------------------------------------------------
1,500,000 International Business Machines Corp., 6.375%, 11/1/1997 1,502,835
---------------------------------------------------------------- ------------
CONSUMER NON-DURABLES--0.8%
----------------------------------------------------------------
889,000 Anheuser-Busch Cos., Inc., 6.90%, 10/1/2002 872,696
----------------------------------------------------------------
1,000,000 H. J. Heinz Co., 6.75%, 10/15/1999 997,920
---------------------------------------------------------------- ------------
Total 1,870,616
---------------------------------------------------------------- ------------
FINANCIAL SERVICES--1.1%
----------------------------------------------------------------
1,500,000 Ford Motor Credit Corp., 5.625%, 3/3/1997 1,499,265
----------------------------------------------------------------
1,000,000 Norwest Financial, Inc., 6.25%, 2/15/1997 1,002,650
---------------------------------------------------------------- ------------
Total 2,501,915
---------------------------------------------------------------- ------------
HEALTHCARE--0.4%
----------------------------------------------------------------
1,000,000 Upjohn Co., 5.875%, 4/15/2000 968,060
---------------------------------------------------------------- ------------
PHARMACEUTICALS-HEALTH CARE--0.6%
----------------------------------------------------------------
1,400,000 American Home Products, 7.70%, 2/15/2000 1,435,210
---------------------------------------------------------------- ------------
PRINTING & PUBLISHING--0.7%
----------------------------------------------------------------
1,500,000 Gannett, Inc., 5.25%, 3/1/1998 1,477,485
---------------------------------------------------------------- ------------
RAW MATERIALS--0.6%
----------------------------------------------------------------
889,000 DuPont (E.I.) de Nemours & Co., 6.75%, 10/15/2002 872,402
----------------------------------------------------------------
437,000 DuPont (E.I.) de Nemours & Co., 9.15%, 4/15/2000 468,080
---------------------------------------------------------------- ------------
Total 1,340,482
---------------------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------------------------------
RETAIL TRADE--0.7%
----------------------------------------------------------------
$ 437,000 Sears, Roebuck & Co., 9.00%, 9/15/1996 $ 437,664
----------------------------------------------------------------
1,200,000 Wal-Mart, Inc., 5.50%, 9/15/1997 1,192,620
---------------------------------------------------------------- ------------
Total 1,630,284
---------------------------------------------------------------- ------------
SHELTER--0.2%
----------------------------------------------------------------
437,000 Kimberly Clark Corp., 9.125%, 6/1/1997 447,016
---------------------------------------------------------------- ------------
TECHNOLOGY SERVICES--0.2%
----------------------------------------------------------------
437,000 Texas Instruments, Inc., 9.25%, 6/15/2003 481,185
---------------------------------------------------------------- ------------
UTILITIES--3.3%
----------------------------------------------------------------
1,000,000 Alabama Power Co., 6.75%, 2/1/2003 963,310
----------------------------------------------------------------
1,500,000 GTE California, Inc., 6.25%, 1/15/1998 1,493,400
----------------------------------------------------------------
1,500,000 New England Telephone & Telegragh Co., 6.25%, 12/15/1997 1,499,850
----------------------------------------------------------------
1,500,000 Northern States Power Co., 5.50%, 2/1/1999 1,456,905
----------------------------------------------------------------
1,000,000 Pacific Gas and Electric Co., 6.25%, 3/1/2004 931,860
----------------------------------------------------------------
1,000,000 Southern California Edison Co., 5.625%, 10/01/2002 915,450
---------------------------------------------------------------- ------------
Total 7,260,775
---------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $22,029,142) 21,865,443
---------------------------------------------------------------- ------------
U.S. TREASURY--84.5%
- -----------------------------------------------------------------------------------
TREASURY BONDS--17.7%
----------------------------------------------------------------
10,000,000 6.875%, 8/15/2025 9,605,500
----------------------------------------------------------------
9,000,000 7.125%, 2/15/2023 8,847,900
----------------------------------------------------------------
7,000,000 7.25%, 8/15/2022 6,977,460
----------------------------------------------------------------
7,000,000 7.50%, 11/15/2016 7,167,230
----------------------------------------------------------------
7,000,000 7.625%, 11/15/2022 7,285,320
---------------------------------------------------------------- ------------
Total 39,883,410
---------------------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. TREASURY--CONTINUED
- -----------------------------------------------------------------------------------
TREASURY NOTES--66.8%
----------------------------------------------------------------
$ 9,000,000 5.75%, 9/30/1997 $ 8,977,050
----------------------------------------------------------------
8,000,000 5.75%, 10/31/2000 7,731,280
----------------------------------------------------------------
10,000,000 5.75%, 8/15/2003 9,397,300
----------------------------------------------------------------
10,000,000 5.875%, 7/31/1997 9,996,400
----------------------------------------------------------------
8,000,000 5.875%, 2/15/2004 7,538,800
----------------------------------------------------------------
10,000,000 5.875%, 11/15/2005 9,282,400
----------------------------------------------------------------
9,000,000 6.125%, 5/15/1998 8,978,310
----------------------------------------------------------------
9,000,000 6.50%, 8/15/2005 8,737,560
----------------------------------------------------------------
5,000,000 7.00%, 7/15/2006 5,020,400
----------------------------------------------------------------
9,000,000 7.125%, 10/15/1998 9,135,540
----------------------------------------------------------------
10,000,000 7.50%, 10/31/1999 10,259,200
----------------------------------------------------------------
10,000,000 7.50%, 5/15/2002 10,348,200
----------------------------------------------------------------
10,000,000 7.75%, 1/31/2000 10,341,000
----------------------------------------------------------------
9,000,000 7.75%, 2/15/2001 9,358,290
----------------------------------------------------------------
7,000,000 7.875%, 8/15/2001 7,331,940
----------------------------------------------------------------
8,000,000 8.00%, 1/15/1997 8,071,280
----------------------------------------------------------------
9,000,000 8.00%, 5/15/2001 9,461,160
---------------------------------------------------------------- ------------
Total 149,966,110
---------------------------------------------------------------- ------------
TOTAL U.S. TREASURY (IDENTIFIED COST $195,489,162) 189,849,520
---------------------------------------------------------------- ------------
(A)REPURCHASE AGREEMENTS--4.5%
- -----------------------------------------------------------------------------------
$10,051,900 Eastbridge Capital, Inc., 5.25%, dated 8/30/1996, due 9/3/1996
(AT AMORTIZED COST) $ 10,051,900
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $227,570,204) $221,766,863
---------------------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING(C) VALUE
- ----------- ----------------------------------------------------- ---------- ------------
<C> <C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--96.8%
- ------------------------------------------------------------------------
ALABAMA--3.3%
-----------------------------------------------------
$ 500,000 Huntsville, AL, GO LT Warrants (Series A), 6.00%
(Original Issue Yield: 6.325%), 11/1/2012 AA $ 513,085
-----------------------------------------------------
1,000,000 Jefferson County, AL, Sewer Revenue Bonds, 6.00%
(Original Issue Yield: 6.30%), 9/1/2013 A1 1,010,430
----------------------------------------------------- ------------
Total 1,523,515
----------------------------------------------------- ------------
ARIZONA--2.2%
-----------------------------------------------------
1,000,000 Phoenix, AZ, GO UT Refunding Bonds (Series C), 4.90%
(Original Issue Yield: 5.00%), 7/1/2008 AA+ 965,010
----------------------------------------------------- ------------
CALIFORNIA--2.2%
-----------------------------------------------------
1,000,000 California State, GO UT Public Improvement Bonds,
5.75%, 5/1/2007 A1 1,034,000
----------------------------------------------------- ------------
CONNECTICUT--2.2%
-----------------------------------------------------
1,000,000 Connecticut State, GO UT Public Improvement Bonds
(Series C), 5.80%, 8/15/2008 Aa 1,033,660
----------------------------------------------------- ------------
FLORIDA--8.5%
-----------------------------------------------------
1,000,000 Broward County, FL School District, GO UT Refunding
Bonds, 5.60% (Original Issue Yield: 5.80%), 2/15/2007 AA- 1,020,550
-----------------------------------------------------
1,000,000 Florida State Board of Education Administration, GO
UT Refunding Bonds (Series D), 5.00% (Original Issue
Yield: 5.15%), 6/1/2015 AA 911,850
-----------------------------------------------------
1,000,000 Jacksonville, FL Electric Authority, Refunding
Revenue Bonds (Issue 2-Series 8), 5.50% (St. John's
River)/ (Original Issue Yield: 5.582%), 10/1/2013 Aa1 970,330
-----------------------------------------------------
1,000,000 St. Petersburg, FL Public Utility, Water & Sewer
Revenue Bonds, 5.50%, 10/1/2009 Aa 997,640
----------------------------------------------------- ------------
Total 3,900,370
----------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING(C) VALUE
- ----------- ----------------------------------------------------- ---------- ------------
<C> <C> <S> <C> <C>
HAWAII--3.3%
-----------------------------------------------------
$ 500,000 Hawaii State, GO UT Bonds (Series CB), 5.75%
(Original Issue Yield: 5.95%), 1/1/2008 AA $ 515,295
-----------------------------------------------------
1,000,000 Honolulu, HI City & County, GO UT Improvement
Refunding Bonds (Series B), 5.50% (Original Issue
Yield: 5.70%), 10/1/2011 AA 997,410
----------------------------------------------------- ------------
Total 1,512,705
----------------------------------------------------- ------------
ILLINOIS--4.3%
-----------------------------------------------------
500,000 Du Page County, IL, (Jail Project) GO UT Revenue
Bonds, 5.40%, 1/1/2007 AAA 502,460
-----------------------------------------------------
1,000,000 Illinois State, GO UT Bonds, 5.60% (Original Issue
Yield: 5.65%), 4/1/2008 AA- 1,005,840
-----------------------------------------------------
500,000 Illinois State, GO UT Refunding Bonds, 5.875%
(Original Issue Yield: 6.05%), 6/1/2011 AA- 502,415
----------------------------------------------------- ------------
Total 2,010,715
----------------------------------------------------- ------------
INDIANA--1.1%
-----------------------------------------------------
500,000 Indianapolis, IN, Local Public Improvement Revenue
Bonds, 6.00% (Original Issue Yield: 6.40%), 7/1/2010 Aa 514,625
----------------------------------------------------- ------------
KENTUCKY--2.0%
-----------------------------------------------------
1,000,000 Kentucky State Property & Buildings Commission,
(Project No. 55) Refunding Revenue Bonds, 5.00%
(Original Issue Yield: 5.20%), 9/1/2009 A 947,310
----------------------------------------------------- ------------
LOUISIANA--1.1%
-----------------------------------------------------
500,000 Louisiana PFA, Hospital Refunding Revenue Bonds
(Series C), 6.05% (Our Lady of Lake Regional)/
MBIA INS)/(Original Issue Yield: 6.15%), 12/1/2008 AAA 514,770
----------------------------------------------------- ------------
MARYLAND--2.2%
-----------------------------------------------------
1,000,000 Maryland State, GO UT Bonds (Series BB), 5.50%,
6/1/2009 AAA 1,012,440
----------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING(C) VALUE
- ----------- ----------------------------------------------------- ---------- ------------
<C> <C> <S> <C> <C>
MASSACHUSETTS--3.3%
-----------------------------------------------------
$ 450,000 Commonwealth of Massachusetts, GO UT Bonds (Series
A), 6.00% (CGIC LOC)/(Original Issue Yield: 7.618%),
6/1/2011 AAA $ 458,969
-----------------------------------------------------
1,000,000 Commonwealth of Massachusetts, GO UT Refunding
Revenue Bonds (Series A), 6.25%, 7/1/2003 1,076,640
----------------------------------------------------- ------------
Total 1,535,609
----------------------------------------------------- ------------
MISSISSIPPI--13.3%
-----------------------------------------------------
1,000,000 Hinds County, MS, GO UT Refunding Bonds, 5.50% (MBIA
INS)/(Original Issue Yield: 5.75%), 3/1/2008 AAA 1,016,630
-----------------------------------------------------
1,125,000 Jackson, MS, GO UT Refunding Bonds (Series A), 5.85%
(MBIA INS), 5/1/2006 AAA 1,162,361
-----------------------------------------------------
1,000,000 Madison County, MS School District, GO UT Refunding
Bonds, 5.10% (AMBAC INS)/(Original Issue Yield:
5.10%), 6/1/2008 AAA 972,620
-----------------------------------------------------
1,000,000 Mississippi Hospital Equipment & Facilities
Authority, Refunding Revenue Bonds, 5.50% (North
Mississippi Health Services-1)/(AMBAC INS)/(Original
Issue Yield: 5.93%), 5/15/2009 AAA 989,110
-----------------------------------------------------
1,000,000 Mississippi State, GO UT Bonds, 5.90% (United States
Treasury PRF)/(Original Issue Yield: 5.95%),
12/15/2002 (@100) Aaa 1,060,990
-----------------------------------------------------
1,000,000 Tupelo, MS Public School District, GO UT Refunding
Bonds, 5.00% (AMBAC INS)/(Original Issue Yield:
5.10%), 12/1/2007 Aaa 974,320
----------------------------------------------------- ------------
Total 6,176,031
----------------------------------------------------- ------------
MISSOURI--3.2%
-----------------------------------------------------
500,000 Missouri State, GO UT Water PCR Bonds (Series B),
5.25% (Original Issue Yield: 5.55%), 8/1/2008 AAA 500,605
-----------------------------------------------------
1,000,000 Missouri State, Water Pollution Control Refunding
Bonds (Series B), 5.00% (Original Issue Yield:
5.60%), 8/1/2010 AAA 959,750
----------------------------------------------------- ------------
Total 1,460,355
----------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING(C) VALUE
- ----------- ----------------------------------------------------- ---------- ------------
<C> <C> <S> <C> <C>
MONTANA--2.1%
-----------------------------------------------------
$ 1,000,000 Montana State, GO UT Bonds (Series A), 4.875% (Long
Range Building Program)/(Original Issue Yield:
4.95%), 8/1/2009 Aa $ 961,020
----------------------------------------------------- ------------
NEVADA--3.2%
-----------------------------------------------------
500,000 Las Vegas Valley, NV Water District, GO LT Refunding
Revenue Bonds, 5.75% (MBIA INS)/(Original Issue
Yield: 5.90%), 9/1/2008 AAA 506,700
-----------------------------------------------------
1,000,000 Nevada State, (Project R-5) GO LT Bonds (Series A),
4.90% (Original Issue Yield: 5.00%), 11/1/2007 AA 964,980
----------------------------------------------------- ------------
Total 1,471,680
----------------------------------------------------- ------------
NEW JERSEY--1.1%
-----------------------------------------------------
500,000 New Jersey State, GO UT Refunding Bonds (Series D),
5.90% (Original Issue Yield: 6.05%), 2/15/2008 AA+ 521,505
----------------------------------------------------- ------------
NEW YORK--2.1%
-----------------------------------------------------
1,000,000 New York State, GO UT Bonds, 5.50% (Original Issue
Yield: 5.55%), 7/15/2011 A- 982,510
----------------------------------------------------- ------------
NORTH CAROLINA--3.2%
-----------------------------------------------------
1,000,000 North Carolina Eastern Municipal Power Agency,
Power System Refunding Revenue Bonds (Series C),
5.50% (Original Issue Yield: 5.70%), 1/1/2007 A 957,360
-----------------------------------------------------
500,000 North Carolina Eastern Municipal Power Agency,
Power System Revenue Bonds (Series B), 6.125%
(Original Issue Yield: 6.30%), 1/1/2009 A 510,150
----------------------------------------------------- ------------
Total 1,467,510
----------------------------------------------------- ------------
NORTH DAKOTA--1.1%
-----------------------------------------------------
500,000 North Dakota State Building Authority, Lease Revenue
Bonds (Series A), 6.00% (Original Issue Yield:
6.05%), 6/1/2010 AAA 516,255
----------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING(C) VALUE
- ----------- ----------------------------------------------------- ---------- ------------
<C> <C> <S> <C> <C>
OREGON--2.1%
-----------------------------------------------------
$ 1,000,000 Portland, OR, GO UT Refunding Revenue Bonds, 4.90%
(Original Issue Yield: 5.00%), 10/1/2007 Aaa $ 978,960
----------------------------------------------------- ------------
RHODE ISLAND--1.1%
-----------------------------------------------------
500,000 Providence, RI, GO UT Bonds, 5.90% (MBIA INS)/
(Original Issue Yield: 6.05%), 1/15/2009 AAA 515,680
----------------------------------------------------- ------------
TENNESSEE--2.1%
-----------------------------------------------------
1,000,000 Memphis, TN, GO UT Refunding Bonds, 4.90% (Original
Issue Yield: 5.05%), 8/1/2006 AA 982,170
----------------------------------------------------- ------------
TEXAS--8.7%
-----------------------------------------------------
500,000 Corpus Christi, TX, GO UT Refunding Bonds, 6.00%
(FGIC INS)/(Original Issue Yield: 6.15%), 3/1/2010 AAA 514,750
-----------------------------------------------------
500,000 El Paso, TX Independent School District, GO UT
Refunding Bonds (Series A), 5.75% (PSFG INS)/
(Original Issue Yield: 6.15%), 7/1/2007 AAA 512,010
-----------------------------------------------------
500,000 Harris County, TX Flood Control District, GO LT Bonds
(Series B), 6.20% (Original Issue Yield: 6.25%),
10/1/2002 (@100) AA+ 536,840
-----------------------------------------------------
1,000,000 Houston, TX Independent School District, GO UT
Refunding Bonds, 5.50% (PSFG INS)/(Original Issue
Yield: 5.55%), 8/15/2008 AAA 1,004,270
-----------------------------------------------------
500,000 Texas State Public Finance Authority, GO UT Refunding
Bonds (Series A), 5.90% (Original Issue Yield:
6.00%), 10/1/2011 AA 512,240
-----------------------------------------------------
1,000,000 Texas State, GO UT Water Development Bonds, 5.20%
(Original Issue Yield: 5.25%), 8/1/2010 AA 969,810
----------------------------------------------------- ------------
Total 4,049,920
----------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING(C) VALUE
- ----------- ----------------------------------------------------- ---------- ------------
<C> <C> <S> <C> <C>
VIRGINIA--3.3%
-----------------------------------------------------
$ 1,000,000 Fairfax County, VA, GO UT Bonds (Series A), 5.50%
(Original Issue Yield: 5.70%), 6/1/2008 AAA $ 1,014,710
-----------------------------------------------------
500,000 Virginia State Transportation Board, Refunding
Revenue Bonds, 6.00% (Original Issue Yield: 6.45%),
4/1/2010 AA 510,800
----------------------------------------------------- ------------
Total 1,525,510
----------------------------------------------------- ------------
WASHINGTON--10.2%
-----------------------------------------------------
1,500,000 King County, WA Library System, UT GO Bonds, 6.15%,
12/1/2010 AA- 1,565,325
-----------------------------------------------------
500,000 King County, WA, GO UT Refunding Bonds (Series A),
6.00%, 12/1/2010 AA+ 514,285
-----------------------------------------------------
500,000 Port of Seattle, WA, Revenue Bonds, 6.25% (Original
Issue Yield: 6.566%), 11/1/2010 AA- 515,905
-----------------------------------------------------
650,000 Tacoma, WA Electric System, Refunding Revenue Bonds,
6.25% (AMBAC INS)/(Original Issue Yield: 6.60%),
1/1/2011 AAA 676,065
-----------------------------------------------------
500,000 Washington State, GO LT Refunding Revenue Bonds
(Series R92-B), 6.25% (Original Issue Yield: 6.80%),
9/1/2009 AA 520,300
-----------------------------------------------------
1,000,000 Washington State, GO UT Refunding Bonds (Series
R-96B), 5.00% (Original Issue Yield: 5.45%), 7/1/2010 AA 941,300
----------------------------------------------------- ------------
Total 4,733,180
----------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL CREDIT
AMOUNT RATING(C) VALUE
- ----------- ----------------------------------------------------- ---------- ------------
<C> <C> <S> <C> <C>
WISCONSIN--4.3%
-----------------------------------------------------
$ 500,000 Green Bay, WI Area Public School District, GO UT
Bonds (Series F), 6.00% (Original Issue Yield:
6.10%), 4/1/2010 Aa $ 509,480
-----------------------------------------------------
500,000 Wisconsin State, GO UT Bonds (Series A), 6.30%
(Original Issue Yield: 6.60%), 5/1/2012 AA 538,265
-----------------------------------------------------
1,000,000 Wisconsin State, GO UT Bonds (Series C), 5.25%
(Original Issue Yield: 5.45%), 5/1/2011 AA 969,590
----------------------------------------------------- ------------
Total 2,017,335
----------------------------------------------------- ------------
TOTAL LONG-TERM MUNICIPAL SECURITIES
(IDENTIFIED COST $44,588,168) $ 44,864,350
----------------------------------------------------- ------------
MUTUAL FUND SHARES--2.0%
- ------------------------------------------------------------------------
925,670 Lehman Municipal Money Money Market Fund
(AT NET ASSET VALUE) 925,670
----------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $45,513,838) $ 45,790,020
----------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG U.S. GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. TREASURY OBLIGATIONS--73.7%
- -----------------------------------------------------------------------------------
U.S. TREASURY BILLS--56.2%
----------------------------------------------------------------
$10,000,000 9/5/1996 $ 9,994,394
----------------------------------------------------------------
10,000,000 9/12/1996 9,984,417
----------------------------------------------------------------
10,000,000 9/19/1996 9,976,725
----------------------------------------------------------------
10,000,000 9/26/1996 9,964,688
----------------------------------------------------------------
10,000,000 10/3/1996 9,955,289
----------------------------------------------------------------
10,000,000 10/17/1996 9,934,769
----------------------------------------------------------------
10,000,000 10/24/1996 9,924,033
----------------------------------------------------------------
10,000,000 10/31/1996 9,914,083
----------------------------------------------------------------
10,000,000 11/7/1996 9,902,571
----------------------------------------------------------------
10,000,000 11/21/1996 9,886,600
----------------------------------------------------------------
10,000,000 12/5/1996 9,867,000
----------------------------------------------------------------
10,000,000 12/12/1996 9,851,392
----------------------------------------------------------------
10,000,000 1/9/1997 9,815,833
---------------------------------------------------------------- ------------
Total 128,971,794
---------------------------------------------------------------- ------------
U.S. TREASURY NOTES--17.5%
----------------------------------------------------------------
10,000,000 4.375%, 11/15/1996 9,977,539
----------------------------------------------------------------
10,000,000 7.250%, 11/15/1996 10,036,496
----------------------------------------------------------------
10,000,000 7.500%, 12/31/1996 10,061,384
----------------------------------------------------------------
10,000,000 8.000%, 1/15/1997 10,092,873
---------------------------------------------------------------- ------------
Total 40,168,292
---------------------------------------------------------------- ------------
TOTAL U.S. TREASURY OBLIGATIONS 169,140,086
---------------------------------------------------------------- ------------
(See Notes to Portfolio of Investments)
</TABLE>
DG U.S. GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)REPURCHASE AGREEMENTS--26.4%
- -----------------------------------------------------------------------------------
$31,000,000 Eastbridge Capital, Inc., 5.250%, dated 8/30/1996, due 9/3/1996 $ 31,000,000
----------------------------------------------------------------
29,663,300 HSBC Securities, Inc., 5.210%, dated 8/30/1996, due 9/3/1996 29,663,300
---------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 60,663,300
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS AT AMORTIZED COST $229,803,386
---------------------------------------------------------------- ------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Non-income producing security.
(c) Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
CGIC -- Capital Guaranty Insurance Corporation
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
INS -- Insured
LOC -- Letter of Credit
LT -- Limited Tax
MBIA -- Municipal Bond Investors Assurance
PCR -- Pollution Control Revenue
PFA -- Public Facility Authority
PRF -- Prerefunded
PSFG -- Permanent School Fund Guarantee
UT -- Unlimited Tax
</TABLE>
<TABLE>
<CAPTION>
Cost of
Investments for Net Unrealized Gross Gross
Federal Tax Appreciation Unrealized Unrealized Total Net
DG Investor Series Purposes (Depreciation) Appreciation Depreciation Assets
- ---------------------------- ---------------- --------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Equity Fund................. $309,577,986 $98,091,432 $104,627,393 $ 6,535,961 $408,342,355
Opportunity Fund............ 62,477,612 9,944,361 13,513,320 3,568,959 72,087,524
Limited Term Fund........... 89,354,597 (1,317,448) 312,155 1,629,603 89,369,188
Government Income Fund...... 227,570,204 (5,803,341) 1,265,560 7,068,901 224,599,353
Municipal Income Fund....... 45,513,838 276,182 743,349 467,167 46,436,170
Money Market Fund........... 229,803,386 -- -- -- 229,516,222
</TABLE>
(See Notes which are an integral part of the Financial Statements)
DG INVESTOR SERIES
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DG LIMITED
DG TERM
DG EQUITY OPPORTUNITY GOVERNMENT
FUND FUND INCOME FUND
------------ ----------- -------------
<S> <C> <C> <C>
ASSETS:
- -------------------------------------------------------------
Investments in repurchase agreements $23,476,209 $10,141,900 $ 3,201,000
- -------------------------------------------------------------
Investments in other securities 384,193,209 62,280,073 84,836,149
- ------------------------------------------------------------- ------------ ----------- -------------
Total investments in securities, at value $407,669,418 $72,421,973 $88,037,149
- -------------------------------------------------------------
Cash 6,323 1,305 2,358
- -------------------------------------------------------------
Income receivable 633,722 21,091 1,344,474
- -------------------------------------------------------------
Receivable for investments sold -- 355,967 --
- -------------------------------------------------------------
Receivable for shares sold 50,386 1,250 --
- -------------------------------------------------------------
Deferred expenses 11,011 1,525 4,308
- ------------------------------------------------------------- ------------ ----------- -------------
Total assets 408,370,860 72,803,111 89,388,289
- ------------------------------------------------------------- ------------ ----------- -------------
LIABILITIES:
- -------------------------------------------------------------
Payable for investments purchased -- 699,588 --
- -------------------------------------------------------------
Income distribution payable -- -- --
- -------------------------------------------------------------
Accrued expenses 28,505 15,999 19,101
- ------------------------------------------------------------- ------------ ----------- -------------
Total liabilities 28,505 715,587 19,101
- ------------------------------------------------------------- ------------ ----------- -------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------
Paid in capital 306,664,949 57,759,847 93,154,450
- -------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 98,091,432 9,972,956 (1,317,448 )
- -------------------------------------------------------------
Accumulated net realized gain (loss) on investments 3,138,432 4,354,721 (2,552,836 )
- -------------------------------------------------------------
Undistributed net investment income 447,542 -- 85,022
- ------------------------------------------------------------- ------------ ----------- -------------
Total Net Assets $408,342,355 $72,087,524 $89,369,188
- ------------------------------------------------------------- ------------ ----------- -------------
NET ASSET VALUE PER SHARE, and Redemption Proceeds Per Share:
(net assets / shares outstanding) $14.28 $14.32 $9.68
- ------------------------------------------------------------- ------------ ----------- -------------
Offering Price Per Share*** $14.80 * $14.84 * $9.88 **
- ------------------------------------------------------------- ------------ ----------- -------------
Shares Outstanding 28,605,091 5,034,332 9,234,455
- ------------------------------------------------------------- ------------ ----------- -------------
Investments, at identified cost $309,577,986 $62,449,017 $89,354,597
- ------------------------------------------------------------- ------------ ----------- -------------
Investments, at tax cost $309,577,986 $62,477,612 $89,354,597
- ------------------------------------------------------------- ------------ ----------- -------------
</TABLE>
* Computation of offering price: 100/96.5 of net asset value.
** Computation of offering price: 100/98.0 of net asset value.
*** See 'What Shares Cost' in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
DG INVESTOR SERIES
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DG U.S.
DG DG GOVERNMENT
GOVERNMENT MUNICIPAL MONEY MARKET
INCOME FUND INCOME FUND FUND
------------ ----------- -------------
<S> <C> <C> <C>
ASSETS:
- -----------------------------------------------------------
Investments in repurchase agreements $10,051,900 $ -- $ 60,663,300
- -----------------------------------------------------------
Investments in other securities 211,714,963 45,790,020 169,140,086
- ----------------------------------------------------------- ------------ --------- ------------
Total investments in securities, at value $221,766,863 $45,790,020 $229,803,386
- -----------------------------------------------------------
Cash 723 192 4,099
- -----------------------------------------------------------
Income receivable 2,825,925 659,898 594,700
- -----------------------------------------------------------
Receivable for investments sold -- -- --
- -----------------------------------------------------------
Receivable for shares sold -- -- --
- -----------------------------------------------------------
Deferred expenses 7,443 1,088 9,983
- ----------------------------------------------------------- ------------ --------- ------------
Total assets 224,600,954 46,451,198 230,412,168
- -----------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------
Payable for investments purchased -- -- --
- -----------------------------------------------------------
Income distribution payable -- -- 874,739
- -----------------------------------------------------------
Accrued expenses 1,601 15,028 21,207
- ----------------------------------------------------------- ------------ --------- ------------
Total liabilities 1,601 15,028 895,946
- ----------------------------------------------------------- ------------ --------- ------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------
Paid in capital 231,439,195 46,052,883 229,516,222
- -----------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (5,803,341 ) 276,182 --
- -----------------------------------------------------------
Accumulated net realized gain (loss) on investments (1,113,644 ) 11,168 --
- -----------------------------------------------------------
Undistributed net investment income 77,143 95,937 --
- ----------------------------------------------------------- ------------ --------- ------------
Total Net Assets $224,599,353 $46,436,170 $229,516,222
- ----------------------------------------------------------- ------------ --------- ------------
NET ASSET VALUE PER SHARE, and Redemption Proceeds Per
Share: (net assets / shares outstanding) $9.54 $10.36 $1.00
- ----------------------------------------------------------- ------------ --------- ------------
Offering Price Per Share*** $9.73 ** $10.57 ** $1.00
- ----------------------------------------------------------- ------------ --------- ------------
Shares Outstanding 23,545,529 4,482,603 229,516,222
- ----------------------------------------------------------- ------------ --------- ------------
Investments, at identified cost $227,570,204 $45,513,838 $229,803,386
- ----------------------------------------------------------- ------------ --------- ------------
Investments, at tax cost $227,570,204 $45,513,838 $229,803,386
- ----------------------------------------------------------- ------------ --------- ------------
</TABLE>
* Computation of offering price: 100/96.5 of net asset value.
** Computation of offering price: 100/98.0 of net asset value.
*** See 'What Shares Cost' in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
DG INVESTOR SERIES
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DG LIMITED
DG TERM
DG EQUITY OPPORTUNITY GOVERNMENT
FUND FUND INCOME FUND
----------- ---------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------
Dividends $3,085,382 $ 115,299 $ --
- -------------------------------------------------------
Interest 889,751 218,275 2,749,808
- ------------------------------------------------------- ---------- --------- ------------
Total income 3,975,133 333,574 2,749,808
- ------------------------------------------------------- ---------- --------- ------------
EXPENSES:
- -------------------------------------------------------
Investment advisory fee 1,507,483 305,134 270,239
- -------------------------------------------------------
Administrative personnel and services fee 223,381 50,411 50,063
- -------------------------------------------------------
Custodian fees 27,086 12,416 8,793
- -------------------------------------------------------
Transfer and dividend disbursing agent fees and
expenses 29,169 16,997 15,096
- -------------------------------------------------------
Directors'/Trustees' fees 2,727 696 1,732
- -------------------------------------------------------
Auditing fees 6,046 6,143 6,286
- -------------------------------------------------------
Legal fees 2,807 846 1,263
- -------------------------------------------------------
Portfolio accounting fees 45,935 22,874 24,079
- -------------------------------------------------------
Share registration costs 11,319 6,602 9,884
- -------------------------------------------------------
Printing and postage 3,724 2,962 3,778
- -------------------------------------------------------
Insurance premiums 2,179 1,493 1,914
- -------------------------------------------------------
Miscellaneous 4,480 964 4,446
- ------------------------------------------------------- ---------- --------- ------------
Total expenses 1,866,336 427,538 397,573
- -------------------------------------------------------
WAIVER--
- -------------------------------------------------------
Waiver of investment advisory fee -- (55,737 ) (90,080)
- ------------------------------------------------------- ---------- --------- ------------
Net expenses 1,866,336 371,801 307,493
- ------------------------------------------------------- ---------- --------- ------------
Net investment income (loss) 2,108,797 (38,227 ) 2,442,315
- ------------------------------------------------------- ---------- --------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------
Net realized gain (loss) on investments 3,137,248 5,451,054 (31,296)
- -------------------------------------------------------
Change in unrealized appreciation (depreciation) of
investments (9,426,509 ) 1,266,230 (1,094,342)
- ------------------------------------------------------- ---------- --------- ------------
Net realized and unrealized gain (loss) on
investments (6,289,261 ) 6,717,284 (1,125,638)
- ------------------------------------------------------- ---------- --------- ------------
Change in net assets resulting from operations $(4,180,464) $6,679,057 $ 1,316,677
- ------------------------------------------------------- ---------- --------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
DG INVESTOR SERIES
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED AUGUST 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DG U.S.
DG DG GOVERNMENT
GOVERNMENT MUNICIPAL MONEY MARKET
INCOME FUND INCOME FUND FUND
------------ ----------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------
Dividends $ -- $ -- $ --
- -----------------------------------------------------
Interest 7,227,999 1,258,545 5,608,583
- ----------------------------------------------------- ------------ --------- -----------
Total income 7,227,999 1,258,545 5,608,583
- ----------------------------------------------------- ------------ --------- -----------
EXPENSES:
- -----------------------------------------------------
Investment advisory fee 659,081 139,381 537,817
- -----------------------------------------------------
Administrative personnel and services fee 122,079 25,820 119,527
- -----------------------------------------------------
Custodian fees 11,196 11,722 21,024
- -----------------------------------------------------
Transfer and dividend disbursing agent fees and
expenses 20,078 13,494 21,129
- -----------------------------------------------------
Directors'/Trustees' fees 1,811 1,696 907
- -----------------------------------------------------
Auditing fees 6,056 6,063 6,049
- -----------------------------------------------------
Legal fees 2,788 2,631 2,102
- -----------------------------------------------------
Portfolio accounting fees 31,606 27,050 31,341
- -----------------------------------------------------
Share registration costs 11,567 6,944 15,735
- -----------------------------------------------------
Printing and postage 4,078 3,519 4,001
- -----------------------------------------------------
Insurance premiums 2,825 1,993 1,972
- -----------------------------------------------------
Miscellaneous 3,923 3,263 5,039
- ----------------------------------------------------- ------------ --------- -----------
Total expenses 877,088 243,576 766,643
- -----------------------------------------------------
WAIVER--
- -----------------------------------------------------
Waiver of investment advisory fee (109,847 ) (81,306 ) (215,127)
- ----------------------------------------------------- ------------ --------- -----------
Net expenses 767,241 162,270 551,516
- ----------------------------------------------------- ------------ --------- -----------
Net investment income (loss) 6,460,758 1,096,275 5,057,067
- ----------------------------------------------------- ------------ --------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------
Net realized gain (loss) on investments (463,963 ) 11,245 --
- -----------------------------------------------------
Change in unrealized appreciation (depreciation) of
investments (7,261,787 ) (1,341,193 ) --
- ----------------------------------------------------- ------------ --------- -----------
Net realized and unrealized gain (loss) on
investments (7,725,750 ) (1,329,948 ) --
- ----------------------------------------------------- ------------ --------- -----------
Change in net assets resulting from
operations $(1,264,992 ) $(233,673 ) $ 5,057,067
- ----------------------------------------------------- ------------ --------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
DG INVESTOR SERIES
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DG EQUITY FUND DG OPPORTUNITY FUND
---------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR ENDED
(UNAUDITED) YEAR ENDED (UNAUDITED) FEBRUARY 29,
AUGUST 31, FEBRUARY 29, AUGUST 31, 1996
1996 1996 1996 -
------------ ------------ -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------
OPERATIONS--
- -------------------------------------------------
Net investment income $ 2,108,797 $ 4,256,188 $ (38,227 ) $ 141
- -------------------------------------------------
Net realized gain (loss) on investments
transactions 3,137,248 13,664,210 5,451,054 4,440,660
- -------------------------------------------------
Net change in unrealized appreciation
(depreciation) of investments (9,426,509) 81,182,937 1,266,230 7,971,651
- ------------------------------------------------- ----------- ------------ ----------- ------------
Change in net assets resulting from
operations (4,180,464) 99,103,335 6,679,057 12,412,452
- ------------------------------------------------- ----------- ------------ ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------
Distributions from net investment income (2,096,837) (4,438,344 ) -- --
- -------------------------------------------------
Distributions from net realized gain -- (13,575,996 ) -- (5,952,830 )
- ------------------------------------------------- ----------- ------------ ----------- ------------
Change in net assets resulting from
distributions to shareholders (2,096,837) (18,014,340 ) -- (5,952,830 )
- ------------------------------------------------- ----------- ------------ ----------- ------------
CAPITAL STOCK TRANSACTIONS--
- -------------------------------------------------
Proceeds from sale of shares 60,325,266 129,890,889 18,954,948 19,841,733
- -------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 1,247,981 10,503,917 -- 4,248,370
- -------------------------------------------------
Cost of shares redeemed (32,098,628) (96,336,688 ) (7,023,806 ) (13,735,953 )
- ------------------------------------------------- ----------- ------------ ----------- ------------
Change in net assets from share transactions 29,474,619 44,058,118 11,931,142 10,354,150
- ------------------------------------------------- ----------- ------------ ----------- ------------
Change in net assets 23,197,318 125,147,113 18,610,199 16,813,772
- -------------------------------------------------
NET ASSETS:
- -------------------------------------------------
Beginning of period 385,145,037 259,997,924 53,477,325 36,663,553
- ------------------------------------------------- ----------- ------------ ----------- ------------
End of period 408,342,355 385,145,037 72,087,524 53,477,325
- ------------------------------------------------- ----------- ------------ ----------- ------------
Undistributed net investment income included in
net assets at end of period $ 447,542 $ 435,582 $ -- $ 239
- ------------------------------------------------- ----------- ------------ ----------- ------------
Net gain (loss) as computed for federal tax
purposes $ 3,137,248 $13,575,513 $5,417,571 $ 5,471,469
- ------------------------------------------------- ----------- ------------ ----------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
DG INVESTOR SERIES
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DG LIMITED
TERM GOVERNMENT DG GOVERNMENT
INCOME FUND INCOME FUND
---------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
(UNAUDITED) YEAR ENDED (UNAUDITED) YEAR ENDED
AUGUST 31, FEBRUARY 29, AUGUST 31, FEBRUARY 29,
1996 1996 1996 1996
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------
OPERATIONS--
- ------------------------------------------------
Net investment income $ 2,442,315 $ 5,278,987 $ 6,460,758 $ 8,933,122
- ------------------------------------------------
Net realized gain (loss) on investments
transactions (31,296) (677,996 ) (463,963) 1,713,476
- ------------------------------------------------
Net change in unrealized appreciation
(depreciation) of investments (1,094,342) 2,272,579 (7,261,787) 4,322,771
- ------------------------------------------------ ----------- ------------ ----------- ------------
Change in net assets resulting from
operations 1,316,677 6,873,570 (1,264,992) 14,969,369
- ------------------------------------------------ ----------- ------------ ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------
Distributions from net investment income (2,469,110) (5,261,106 ) (6,507,114) (8,982,698)
- ------------------------------------------------
Distributions from net realized gain -- -- -- --
- ------------------------------------------------ ----------- ------------ ----------- ------------
Change in net assets resulting from
distributions to shareholders (2,469,110) (5,261,106 ) (6,507,114) (8,982,698)
- ------------------------------------------------ ----------- ------------ ----------- ------------
CAPITAL STOCK TRANSACTION--
- ------------------------------------------------
Proceeds from sale of shares 15,734,113 26,209,467 75,428,827 153,671,801
- ------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 1,052,947 2,236,332 2,487,049 2,976,364
- ------------------------------------------------
Cost of shares redeemed (19,541,050) (32,999,086 ) (29,770,523) (146,722,215)
- ------------------------------------------------ ----------- ------------ ----------- ------------
Change in net assets from share transactions (2,753,990) (4,553,287 ) 48,145,353 9,925,950
- ------------------------------------------------ ----------- ------------ ----------- ------------
Change in net assets (3,906,423) (2,940,823 ) 40,373,247 15,912,621
- ------------------------------------------------
NET ASSETS:
- ------------------------------------------------
Beginning of period 93,275,611 96,216,434 184,226,106 168,313,485
- ------------------------------------------------ ----------- ------------ ----------- ------------
End of period 89,369,188 93,275,611 224,599,353 184,226,106
- ------------------------------------------------ ----------- ------------ ----------- ------------
Undistributed net investment income included in
net assets at end of period $ 29,730 $ 56,525 $ 77,143 $ 62,896
- ------------------------------------------------ ----------- ------------ ----------- ------------
Net gain (loss) as computed for federal tax
purposes $ (31,296) $(1,040,337 ) $ (463,963) $ (467,764)
- ------------------------------------------------ ----------- ------------ ----------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
DG INVESTOR SERIES
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DG MUNICIPAL DG U.S. GOVERNMENT MONEY
INCOME FUND MARKET FUND
--------------------------- ------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
(UNAUDITED) YEAR ENDED (UNAUDITED) YEAR ENDED
AUGUST 31, FEBRUARY 29, AUGUST 31, FEBRUARY 29,
1996 1996 1996 1996
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------
OPERATIONS--
- -----------------------------------------------
Net investment income $1,096,275 $ 2,033,071 $ 5,057,067 $ 11,132,692
- -----------------------------------------------
Net realized gain (loss) on investments
transactions 11,245 36,102 -- --
- -----------------------------------------------
Net change in unrealized appreciation
(depreciation) of investments (1,341,193 ) 2,105,078 -- --
- ----------------------------------------------- ----------- ------------ ------------ ------------
Change in net assets resulting from
operations (233,673 ) 4,174,251 5,057,067 11,132,692
- ----------------------------------------------- ----------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------
Distributions from net investment income (1,068,756 ) (1,990,513 ) (5,057,067) (11,132,692)
- -----------------------------------------------
Distributions from net realized gain (36,056 ) (11,600 ) -- --
- ----------------------------------------------- ----------- ------------ ------------ ------------
Change in net assets resulting from
distributions to shareholders (1,104,812 ) (2,002,113 ) (5,057,067) (11,132,692)
- ----------------------------------------------- ----------- ------------ ------------ ------------
CAPITAL STOCK TRANSACTIONS--
- -----------------------------------------------
Proceeds from sale of shares 9,740,554 17,982,143 244,852,343 505,711,379
- -----------------------------------------------
Net asset value of shares issued to
shareholders in payment of distributions
declared 17,726 25,625 77,346 114,789
- -----------------------------------------------
Cost of shares redeemed (6,561,949 ) (17,143,725 ) (261,060,697) (422,693,644)
- ----------------------------------------------- ----------- ------------ ------------ ------------
Change in net assets from share
transactions 3,196,331 864,043 (16,131,008) 83,132,524
- ----------------------------------------------- ----------- ------------ ------------ ------------
Change in net assets 1,857,846 3,036,181 (16,131,008) 83,132,524
- -----------------------------------------------
NET ASSETS:
- -----------------------------------------------
Beginning of period 44,578,324 41,542,143 245,647,230 162,514,706
- ----------------------------------------------- ----------- ------------ ------------ ------------
End of period 46,436,170 44,578,324 $ 229,516,222 $ 245,647,230
- ----------------------------------------------- ----------- ------------ ------------ ------------
Undistributed net investment income included in
net assets at end of period $ 95,937 $ 68,418 -- --
- ----------------------------------------------- ----------- ------------ ------------ ------------
Net gain (loss) as computed for federal tax
purposes $ 11,245 $ 36,102 -- --
- ----------------------------------------------- ----------- ------------ ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
DG INVESTOR SERIES
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET TO DISTRIBUTIONS
REALIZED DISTRIBUTIONS SHAREHOLDERS TO
AND TO FROM NET SHAREHOLDERS
NET ASSET UNREALIZED TOTAL SHAREHOLDERS REALIZED IN EXCESS
VALUE, NET GAIN/(LOSS) FROM FROM NET GAIN ON OF NET
YEAR ENDED BEGINNING INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT INVESTMENT
FEBRUARY 28 OR 29, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS INCOME (I)
- -------------------------- --------- ---------- ------------ ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY FUND
1993(a) $ 10.00 0.12 0.52 0.64 (0.10) -- --
1994 $ 10.54 0.14 0.38 0.52 (0.14) (0.05) --
1995 $ 10.87 0.16 0.71 0.87 (0.16) (0.17) --
1996 $ 11.41 0.16 3.63 3.79 (0.17) (0.54) --
1997(h) $ 14.49 0.08 (0.21) (0.13) (0.08) -- --
OPPORTUNITY FUND
1995(b) $ 10.00 0.02 1.17 1.19 (0.02) (0.02) --
1996 $ 11.15 -- 3.30 3.30 -- (1.66) --
1997(h) $ 12.79 (0.01) 1.54 1.53 -- -- --
LIMITED TERM GOVERNMENT
INCOME FUND
1993(a) $ 10.00 0.36 0.07 0.43 (0.36) -- --
1994 $ 10.07 0.52 (0.17) 0.35 (0.52) (0.03) --
1995 $ 9.87 0.49 (0.23) 0.26 (0.48) -- --
1996 $ 9.65 0.54 0.15 0.69 (0.54) -- --
1997(h) $ 9.80 0.27 (0.12) 0.15 (0.27) -- --
GOVERNMENT INCOME FUND
1993(a) $ 10.00 0.37 0.25 0.62 (0.37) -- --
1994 $ 10.25 0.55 (0.09) 0.46 (0.55) (0.25) (0.01)
1995 $ 9.90 0.54 (0.44) 0.10 (0.53) -- --
1996 $ 9.47 0.58 0.41 0.99 (0.59) -- --
1997(h) $ 9.87 0.29 (0.33) (0.04) (0.29) -- --
MUNICIPAL INCOME FUND
1993(c) $ 10.00 0.07 0.49 0.56 (0.05) -- --
1994 $ 10.51 0.48 0.08 0.56 (0.49) (0.01) --
1995 $ 10.57 0.49 (0.43) 0.06 (0.48) -- --
1996 $ 10.15 0.49 0.50 0.99 (0.48) -- --
1997(h) $ 10.66 0.25 (0.30) (0.05) (0.24) (0.01) --
MONEY MARKET FUND
1993(d) $ 1.00 0.02 -- 0.02 (0.02) -- --
1994 $ 1.00 0.03 -- 0.03 (0.03) -- --
1995 $ 1.00 0.04 -- 0.04 (0.04) -- --
1996 $ 1.00 0.05 -- 0.05 (0.05) -- --
1997(h) $ 1.00 0.02 -- 0.02 (0.02) -- --
</TABLE>
(a) Reflects operations for the period from August 3, 1992 (date of initial
public investment) to February 28, 1993.
(b) Reflects operations for the period from August 1, 1994 (date of initial
public investment) to February 28, 1995.
(c) Reflects operations for the period from December 29, 1992 (date of initial
public investment) to February 28, 1993.
(d) Reflects operations for the period from July 1, 1992 (date of initial public
investment) to February 28, 1993. For the period from March 31, 1992 (start
of business) to June 30, 1992, all income was distributed to the
administrator.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
-------------------------------------
NET
ASSETS,
NET ASSET END OF
VALUE, NET PERIOD PORTFOLIO AVERAGE
TOTAL END OF TOTAL INVESTMENT EXPENSE (000 TURNOVER COMMISSION
DISTRIBUTIONS PERIOD RETURN(E) EXPENSES INCOME WAIVER(G) OMITTED) RATE PAID
- ---------- --------- --------- -------- --------- -------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(0.10) $ 10.54 6.40% 0.51%(f) 2.15%(f) 0.53%(f) $181,239 28% --
(0.19) $ 10.87 4.99% 0.96% 1.38% 0.01% $284,203 7% --
(0.33) $ 11.41 8.23% 0.95% 1.54% -- $259,998 1% --
(0.71) $ 14.49 33.73% 0.94% 1.24% -- $385,145 15% $0.0653
(0.08) $ 14.28 (0.93)% 0.93%(f) 1.05%(f) -- $408,342 4% $0.0753
(0.04) $ 11.15 11.84% 0.79%(f) 0.06%(f) 1.34%(f) $ 36,664 45% --
(1.66) $ 12.79 31.42% 1.17% -- 0.35% $ 53,477 154% $0.0098
-- $ 14.32 11.96% 1.16%(f) (0.12)%(f) 0.17%(f) $ 72,088 60% $0.0553
(0.36) $ 10.07 4.43% 0.50%(f) 6.25%(f) 0.42%(f) $ 99,921 18% --
(0.55) $ 9.87 3.52% 0.59% 5.21% 0.29% $116,600 76% --
(0.48) $ 9.65 2.72% 0.63% 5.00% 0.25% $ 92,216 14% --
(0.54) $ 9.80 7.34% 0.69% 5.49% 0.20% $ 93,276 56% --
(0.27) $ 9.68 1.55% 0.68%(f) 5.42%(f) 0.20%(f) $ 89,369 10% --
(0.37) $ 10.25 6.40% 0.50%(f) 6.45%(f) 0.41%(f) $111,435 78% --
(0.81) $ 9.90 4.55% 0.70% 5.34% 0.19% $118,695 49% --
(0.53) $ 9.47 1.20% 0.68% 5.79% 0.15% $168,313 31% --
(0.59) $ 9.87 10.70% 0.72% 5.96% 0.10% $184,226 87% --
(0.29) $ 9.54 (0.43)% 0.70%(f) 5.88%(f) 0.10%(f) $224,599 3% --
(0.05) $ 10.51 5.65% 0.48%(f) 4.11%(f) 1.02%(f) $ 15,644 93% --
(0.05) $ 10.57 5.34% 0.74% 4.60% 0.67% $ 34,435 9% --
(0.48) $ 10.15 0.81% 0.75% 4.93% 0.41% $ 41,542 9% --
(0.48) $ 10.66 9.96% 0.70% 4.65% 0.47% $ 44,578 20% --
(0.25) $ 10.36 (0.46)% 0.70%(f) 4.72%(f) 0.35%(f) $ 46,436 1% --
(0.02) $ 1.00 1.97% 0.41%(f) 2.88%(f) 0.38%(f) $189,024 -- --
(0.03) $ 1.00 2.74% 0.54% 2.70% 0.20% $189,315 -- --
(0.04) $ 1.00 4.06% 0.53% 3.96% 0.20% $162,515 -- --
(0.05) $ 1.00 5.48% 0.51% 5.33% 0.20% $245,647 -- --
(0.02) $ 1.00 2.39% 0.51%(f) 4.70%(f) 0.20%(f) $229,516 -- --
</TABLE>
(e) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(f) Computed on an annualized basis.
(g) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(h) Reflects operations for the six months ended August 31, 1996 (unaudited).
(i) This distribution does not represent a return of capital for federal tax
purposes.
DG INVESTORS SERIES
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
DG Investors 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 portfolios (individually referred to as the "Fund", or
collectively as the "Funds") which are presented herein:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
PORTFOLIO NAME DIVERSIFICATION INVESTMENT OBJECTIVE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
DG Equity Fund ("Equity") diversified Long term capital appreciation with
current income as a secondary objective.
- ----------------------------------------------------------------------------------------------------------
DG Opportunity Fund ("Opportunity") diversified Provide capital appreciation.
- ----------------------------------------------------------------------------------------------------------
DG Limited Term Government Income Fund diversified Provide current income.
("Limited Term")
- ----------------------------------------------------------------------------------------------------------
DG Government Income Fund ("Government diversified Provide current income.
Income")
- ----------------------------------------------------------------------------------------------------------
DG Municipal Income Fund diversified Provide dividend income that is exempt
("Municipal Income") from federal regular income tax.
- ----------------------------------------------------------------------------------------------------------
DG U.S. Government Money Market Fund diversified Current income consistent with stability
("U.S. Government Money Market") of principal and liquidity.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
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 Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--U.S. government securities, listed corporate bonds,
other fixed income and asset-backed securities, are generally valued at the
mean of the latest bid and asked price as furnished by an independent
pricing service. Listed equity securities are valued at the last sale price
reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
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.
DG INVESTORS SERIES
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--It is the policy of the Trust 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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Trust to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Trust 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 the guidelines and/or
standards reviewed or 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 Trust
could receive less than the repurchase price on the sale of collateral
securities.
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 Trust'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.
At February 29, 1996, the Government Income, and Limited Term, for federal
tax purposes, had a capital loss carryforward, as noted below, which will
reduce the Trust's taxable income arising from future net realized gain on
investments, if any, to the extent permitted by the Code, and thus will
reduce the amount of the distributions to shareholders which would
otherwise be necessary to relieve the Trust of any liability for federal
tax. Pursuant to the Code, such capital loss carryforward will expire as
follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR
------------------------ TOTAL TAX LOSS
FUND 2003 2004 CARRYFORWARD
------------------------- ---------- ---------- ---------------
<S> <C> <C> <C>
Limited Term $1,406,691 $1,040,337 $ 2,447,028
Government Income $ 181,520 $ 467,764 $ 649,284
</TABLE>
DG INVESTORS SERIES
- --------------------------------------------------------------------------------
Additionally, net capital losses, as noted below, attributable to security
transactions incurred after October 31, 1995 are treated as arising on the
first day of the Funds' next taxable year.
<TABLE>
<CAPTION>
TOTAL TAX LOSS
FUND PUSHFORWARD
------------------------- ---------------
<S> <C>
Opportunity $ 996,231
Limited Term $ 74,936
</TABLE>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The Trust 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 Trust 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 over a period of five years from
the Trust's commencement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(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) for each
class of shares. At August 31, 1996, U.S. Government Money Market capital
paid-in aggregated $229,516,222.
DG INVESTORS SERIES
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
EQUITY FUND OPPORTUNITY FUND
---------------------------------------- ----------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, 1996 YEAR ENDED AUGUST 31, 1996 YEAR ENDED
(UNAUDITED) FEBRUARY 29, 1996 (UNAUDITED) FEBRUARY 29, 1996
- ---------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Shares sold 4,175,342 10,299,860 1,338,672 1,579,949
- ---------------------------
Shares issued to
shareholders in payment of
distributions declared 86,038 782,712 0 368,888
- ---------------------------
Shares redeemed (2,239,380) (7,276,853) (486,314) (1,054,805)
- --------------------------- ------------- ------------- ----------- ------------
Net change resulting from
share transactions 2,022,000 3,805,719 852,358 894,032
- --------------------------- ------------- ------------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
LIMITED TERM GOVERNMENT INCOME
---------------------------------------- ----------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, 1996 YEAR ENDED AUGUST 31, 1996 YEAR ENDED
(UNAUDITED) FEBRUARY 29, 1996 (UNAUDITED) FEBRUARY 29, 1996
- ---------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Shares sold 1,616,413 2,675,393 7,706,124 15,482,495
- ---------------------------
Shares issued to
shareholders in payment of
distributions declared 108,534 228,722 258,047 302,148
- ---------------------------
Shares redeemed (2,003,839) (3,365,918) (3,078,336) (14,897,666)
- --------------------------- ------------- ------------- ------------- -------------
Net change resulting from
share transactions (278,892) (461,803) 4,885,835 886,977
- --------------------------- ------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND U.S. GOVERNMENT MONEY MARKET
---------------------------------------- ----------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, 1996 YEAR ENDED AUGUST 31, 1996 YEAR ENDED
(UNAUDITED) FEBRUARY 29, 1996 (UNAUDITED) FEBRUARY 29, 1996
- ---------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Shares sold 929,447 1,716,250 244,852,343 505,711,379
- ---------------------------
Shares issued to
shareholders in payment of
distributions declared 1,713 2,449 77,346 114,789
- ---------------------------
Shares redeemed (630,946) (1,627,203) (261,060,697) (422,693,644)
- --------------------------- ------------ ------------- -------------- --------------
Net change resulting from
share transactions 300,214 91,496 (16,131,008) 83,132,524
- --------------------------- ------------ ------------- -------------- --------------
</TABLE>
DG INVESTORS SERIES
- --------------------------------------------------------------------------------
(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 based on a percentage of each Fund's average daily net assets (see below).
<TABLE>
<CAPTION>
ANNUAL
FUND RATE
- --------------------------------------------------------------------------------- ------
<S> <C>
Equity 0.75%
- ---------------------------------------------------------------------------------
Opportunity 0.95%
- ---------------------------------------------------------------------------------
Limited Term 0.60%
- ---------------------------------------------------------------------------------
Government Income 0.60%
- ---------------------------------------------------------------------------------
Municipal Income 0.60%
- ---------------------------------------------------------------------------------
U.S. Government Money Market 0.50%
- ---------------------------------------------------------------------------------
</TABLE>
The Adviser may voluntarily choose to waive any 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 0.25% of the Fund's average daily net
assets (excluding U.S. Government Money Market). In addition, Trust Division of
Commercial National Bank may voluntarily choose to reduce its compensation.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
with certain administrative personnel and services. The fee paid to FAS 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 FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the Trust.
The fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Trust's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
DG INVESTORS SERIES
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended August 31, 1996, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ---------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Equity Fund $49,003,618 $13,996,774
- ----------------------------------------------------------------
Opportunity $42,314,588 $33,216,473
- ----------------------------------------------------------------
Limited Term $ 8,173,750 $10,209,297
- ----------------------------------------------------------------
Government Income $49,610,234 $ 5,674,000
- ----------------------------------------------------------------
Municipal Income $ 3,617,165 $ 508,750
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- -----------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and
Peter E. Madden Secretary
Gregor F. Meyer Richard B. Fisher
John E. Murray, Jr. Vice President
Wesley W. Posvar Charles L. Davis, Jr.
Marjorie P. Smuts Vice President and Assistant
Treasurer
C. Grant Anderson
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, 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. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts concerning
their objectives and policies, management fees, expenses and other information.
