DG INTERNATIONAL EQUITY FUND
(A Portfolio of DG Investor Series)
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Supplement to Prospectus dated June 30, 1997
1. The following is to be inserted as the second sentence under the section
entitled "Acceptable Investments," on page 11:
"In addition, the Fund may invest up to 40% of its total assets in
equity securities of established companies located in countries having
emerging markets."
2. The following is to be inserted after the section entitled "Short Sales,"
on page 13:
"Emerging Market Securities. The Fund may invest up to 40% of its total
assets in equity securities of established companies located in
countries having emerging markets. The Fund's sub-adviser considers
countries having emerging markets to be all countries that are generally
considered to have developing or emerging markets or economies.
Furthermore, the sub-adviser considers emerging market countries to be
all countries considered by the International Bank for Reconstruction
and Development (more commonly known as the World Bank) and the
International Finance Corporation, as well as countries that are
classified by the United Nations or otherwise regarded by their
authorities, as developing.
"Generally included in emerging markets are all countries in the world
except Australia, Canada, Japan, New Zealand, the United States, and
most western European countries. The Fund will focus on countries which
the sub-adviser believes to have strongly developing economies and
markets including, among others, the following countries: Argentina,
Bolivia, Botswana, Brazil, Chile, China, Colombia, Cyprus, Czech
Republic, Ecuador, Egypt, Ghana, Greece, Hong Kong, Hungary, India,
Indonesia, Jamaica, Jordan, Kenya, Korea, Malaysia, Mauritius, Mexico,
Morocco, Nigeria, Oman, Pakistan, Peru, Philippines, Poland, Russia,
Singapore, Slovakia, South Africa, Sri Lanka, Swaziland, Taiwan,
Thailand, Tunisia, Turkey, Uruguay, Venezuela, and Zimbabwe. The Fund
may invest in countries other than those defined above, if , in the
opinion of the sub-adviser, they are considered to be emerging markets.
While the sub-adviser considers the above-mentioned countries eligible
for investment, the Fund will not be invested in all such markets at all
times. Furthermore, the Fund may not pursue investment in such countries
due to lack of adequate custody of the Fund's assets, overly burdensome
restrictions and repatriation, lack of an organized and liquid market,
or unacceptable political or other risks.
"Emerging markets companies are defined as (i) those for which the
principal securities trading market is an emerging market country, as
described above; (ii) those which are organized under the laws of, or
with a principal office in, an emerging market country; or (iii) those,
wherever organized or traded, who derive (directly or indirectly through
subsidiaries) at least 50% of their total assets, capitalization, gross
revenue or profit from its most current year from goods produced,
services performed, or sales made in such emerging market countries."
3. The first paragraph under the section entitled "Risks Associated with
Investing in Foreign Companies," on page 7, is hereby amended to read in
its entirety as follows:
"Investing in non-U.S. securities carries substantial risks in addition to
those associated with domestic investments. In an attempt to reduce these risks,
the Fund diversifies its investments broadly among foreign countries. At least
three different countries will always be represented."
4. The second paragraph under the section entitled "Risks Associated With
Investing in Foreign Companies," on page 7, is hereby deleted.
5. The following is to be inserted after the section entitled "Risks
Associated With Investing in Foreign Companies," on page 8:
"Additional Risks Associated With Investing in Emerging Markets
"Investing in securities of issuers in emerging market countries
involves exposure to significantly higher risk than investing in
countries with developed markets. Emerging market countries may have
economic structures that are generally less diverse and mature and
political systems that can be expected to be less stable than those of
developed countries.
"Securities prices in emerging market countries can be significantly
more volatile than in developed countries, reflecting the greater
uncertainties of investing in lesser developed markets and economies. In
particular, emerging market countries may have relatively unstable
governments, and may present a greater risk of nationalization of
businesses, expropriation, confiscatory taxation or, in certain
instances, reversion to closed market, centrally planned economies. Such
countries may also have greater restrictions on foreign ownership or
prohibitions on the repatriation of assets, and may have less protection
of property rights, than developed countries.
"The economies of emerging market countries may be predominantly based
on only a few industries or dependent on revenues from particular
commodities or on international aid or development assistance, may be
highly vulnerable to changes in local or global trade conditions, and
may suffer from extreme and volatile debt burdens or inflation rates. In
addition, securities markets in emerging market countries may trade a
small number of securities and may be unable to respond effectively to
increases in trading volume, potentially resulting in a lack of
liquidity and in volatility in the price of securities traded on those
markets. Also, securities markets in emerging market countries typically
offer less regulatory protection for investors."
June 30, 1997
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Cusip 23321N806
G01258-12 (6/97)
[GRAPHIC OMITTED]
DG INTERNATIONAL EQUITY FUND
(A Portfolio of DG Investor Series)
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Supplement to Statement of Additional Information dated June 30, 1997
The following is to be inserted after the section entitled "Warrants," on page
3:
"Special Considerations Affecting Emerging Markets
"Investing in equity securities of companies in emerging
markets may entail greater risks than investing in equity
securities in developed countries. These risks include (i)
less social, political and economic stability; (ii) the small
current size of the markets for such securities and the
currently low or nonexistent volume of trading, which result
in a lack of liquidity and in greater price volatility; (iii)
certain national policies which may restrict the Fund's
investment opportunities, including restrictions on investment
in issuers or industries deemed sensitive to national
interest; (iv) foreign taxation; and (v) the absence of
developed structures governing private or foreign investment
or allowing for judicial redress for injury to private
property. Investing in the securities of companies in emerging
markets, may entail special risks relating to the potential
political and economic instability and the risks of
expropriation, nationalization, confiscation or the imposition
of restrictions on foreign investment, convertibility of
currencies into U.S. dollars and on repatriation of capital
invested. In the event of such expropriation, nationalization
or other confiscation by any country, the Fund could lose its
entire investment in any such country.
"Settlement mechanisms in emerging markets may be less
efficient and reliable than in more developed markets. In such
emerging securities markets there may be share registration
and delivery delays or failures.
"Most Latin American countries have experienced substantial,
and in some periods extremely high, rates of inflation for
many years. Inflation and rapid fluctuations in inflation
rates and corresponding currency devaluations have had and may
continue to have negative effects on the economies and
securities markets of certain Latin American countries.
"Political, Social and Economic Risks. Even though
opportunities for investment may exist in emerging markets,
any change in the leadership or policies of the governments of
those countries or in the leadership or policies of any other
government which exercises a significant influence over these
countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring
and thereby eliminate any investment opportunities which may
currently exist.
"Investors should note that upon the accession to power of
authoritarian regimes, the governments of a number of Latin
American countries previously expropriated large quantities of
real and personal property similar to the property which will
be represented by the securities purchased by the Fund. The
claims of property owners against those governments were never
finally settled. There can be no assurance that any property
represented by securities purchased by the Fund will not also
be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose its
entire investment in such countries. The Fund's investment
would similarly be adversely affected by exchange control
regulation in any of those countries.
"Certain countries in which the Fund may invest may have
groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance
on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by
individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries.
Instability may also result from, among other things: (i)
authoritarian governments or military involvement in political
and economic decision-making, including changes in government
though extraconstitutional means; (ii) popular unrest
associated with demands for improved political, economic and
social conditions; and (iii) hostile relations with
neighboring or other countries. Such political, social and
economic instability could disrupt the principal financial
markets in which the Fund invests and adversely affect the
value of the Fund's assets."
June 30, 1997
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Cusip 23321N806
G01258-13 (6/97)
DG INVESTOR SERIES
Federated Investors
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(412) 288-1900
June 30, 1997
Edgar Operations Branch
Securities and Exchange Commission
Division of Investment Management
450 Fifth Street, Northwest
Washington, DC 20549
RE: DG INVESTOR SERIES
DG International Equity Fund
1933 Act File No. 33-46431
1940 Act File No. 811-6607
Dear Sir or Madam:
Pursuant to Rule 497(e) of the Securities Act of 1933, the Supplements
to the Prospectus and Statement of Additional Information dated June 30, 1997 as
amended on June 30, 1997 are hereby electronically transmitted.
Very truly yours,
/s/Amy B. Gotz
Amy B. Gotz
Compliance Analyst
Enclosures
