1933 Act File No. 33-46431
1940 Act File No. 811-6607
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ...........
Post-Effective Amendment No. 12 .............. X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 15 ............................. X
DG INVESTOR SERIES
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
on pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i)
X 75 days after filing pursuant to paragraph (a)(ii)
on pursuant to paragraph (a)(ii) of Rule 485.
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If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
X filed the Notice required by that Rule on April 15, 1996; or
intends to file the Notice required by that Rule on or about
; or
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during the most recent fiscal year did not sell any securities pursuant
to Rule 24f-2 under the Investment Company Act of 1940, and, pursuant to
Rule 24f-2(b)(2), need not file the Notice.
Copies To:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
CROSS-REFERENCE SHEET
This Amendment to the Registration Statement of DG INVESTOR SERIES
which consists of seven portfolios: (1) DG U.S. Government Money Market
Fund, (2) DG Limited Term Government Income Fund, (3) DG Government Income
Fund, (4) DG Equity Fund, (5) DG Municipal Income Fund, (6) DG Opportunity
Fund, (7) DG Prime Money Market Fund and (8) DG International Equity Fund,
relates only to (8) DG International Equity Fund and is comprised of the
following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page...............(1-8) Cover Page.
Item 2. Synopsis.................(1-6) Synopsis; (7,8) General
Information; (1-8) Summary of Fund
Expenses; (1-6) Financial Highlights.
Item 3. Condensed Financial
Information..............(1-8) Performance Information.
Item 4. General Description of
Registrant...............(1-6) Objectives and Policies of Each
Fund;(7,8) Investment Information; (8)
Investment Objective; (8) Investment
Policies; (1-6) Portfolio Investments
and Strategies; (8) Risks Associated
With Financial Futures Contracts And
Options on Financial Futures Contracts;
(8) Non-Diversified; (1-8) Investment
Limitations.
Item 5. Management of the Fund...(1-6) DG Investor Series
Information;(7,8) Trust Information; (1-
8) Management of the Trust; (1-8)
Distribution of Fund Shares; (1-6)
Administration of the Funds;(7,8)
Administration of the Fund; (8)
Distribution Plan and Shareholder
Services; (8) Shareholder Serviceing
Arrangements; (6) Shareholder Services
Plan; (1-8) Brokerage Transactions.
Item 6. Capital Stock and Other
Securities...............(1-6) Dividends and Distributions; (7,
8) Dividends; (1,7,8) Capital Gains; (1-
6) Shareholder Information; (7,8)
Account & Shareholder Information; (1-8)
Voting Rights; (1-8) Tax Information;
(1-8) Federal Income Tax; (5) Additional
Tax Information for Municipal Income
Fund; (5) Other State and Local Taxes;
(1-8) Effect of Banking Laws.
Item 7. Purchase of Securities Being
Offered..................(1-8) Net Asset Value; (1-6) Investing
in the Funds; (7,8) Investing in the
Fund; (1-8) Share Purchases; (1-8)
Minimum Investment Required; (1-8) What
Shares Cost; (2-6) Reducing the Sales
Charge; (1-8) Systematic Investment
Program; (1-8) Certificates and
Confirmations; (1-8) Exchanging Shares;
(1-8) Exchange Privilege.
Item 8. Redemption or Repurchase.(1-8) Redeeming Shares; (1-8) Through
the Banks; (1-8) Systematic Withdrawal
Program; (1-8) Accounts With Low
Balances.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page...............(1-8) Cover Page.
Item 11. Table of Contents........(1-8) Table of Contents.
Item 12. General Information and
History .................(1-6) General Information About the
Funds; (8) General Information About the
Fund.
Item 13. Investment Objectives and
Policies.................(1-6,8) Investment Objective(s) and
Policies; (7) Investment Policies; (4,6)
Equity Fund and Opportunity Fund; (2,3)
Limited Term Fund and Government Income
Fund; (5) Municipal Income Fund; (1)
Money Market Fund; (1-6) Investment
Policies and Strategies; (1-8)
Investment Limitations;(1,7) Regulatory
Compliance.
Item 14. Management of the Fund...(1-8) DG Investor Series Management.
Item 15. Control Persons and Principal
Holders of Securities....(1-6) Trust Ownership; (7,8) Share
Ownership; (1-8) Trustees' Compensation;
(1-8) Trustee Liability.
Item 16. Investment Advisory and Other
Services.................(1-8) Investment Advisory Services; (1-
6) Adviser to the Funds; (7,8)
Investment Adviser; (8) Sub-Adviser;(1-
8) Advisory Fees; (8) Sub-Advisory
Fees;(2-6) Sub-Adviser to the Funds; (2-
6) Sub-Advisory Fees; (1-8) Other
Services; (1-6) Administration of the
Trust; (8) Fund Administration;(1-6)
Custodian; (7,8) Custodian & Portfolio
Accountant; (1-6) Transfer Agent,
Dividend Disbursing Agent and
Shareholder Servicing Agent; (7,8)
Transfer Agent; (1-8) Independent
Auditors.
Item 17. Brokerage Allocation.....(1-8) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities...............Not Applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered..................(1-8) Purchasing Shares; (1-8)
Conversion to Federal Funds; (1-8)
Exchange Privilege; (1-8) Requirements
for Exchange; (1-8) Making an Exchange;
(1-8) Determining Net Asset Value; (2-
4,6) Determining Market Value of
Securities; (5) Valuing Municipal
Securities; (1) Use of the Amortized
Cost Method; (1-8) Redeeming Shares; (1-
8) Redemption in Kind; (1-8)
Massachusetts Partnership Law.
Item 20. Tax Status...............(1-8) Tax Status (1-6) The Funds' Tax
Status; (7,8) The Fund's Tax Status; (1-
8) Shareholders' Tax Status;
Item 21. Underwriters.............(1-5,7) Distribution Plan; (6,8)
Distribution and Shareholder Services
Plans;
Item 22. Calculation of Performance
Data.....................(1-8) Performance Comparisons; (1-8)
Yield; (1,7) Effective Yield; (1-8)
Total Return; (5) Tax-Equivalent Yield;
(5) Tax-Equivalency Table.
Item 23. Financial Statements.....(7,8) To be filed by amendment.
DG International Equity Fund
(A Portfolio of DG Investor Series)
Prospectus
The shares of DG International Equity Fund (the `Fund'') offered by this
prospectus represent interests in a portfolio of DG Investor Series (the
`Trust''), an open-end management investment company (a mutual fund). The
Fund invests primarily in equity securities of non-U.S. issuers to seek
capital appreciation.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
DEPOSIT GUARANTY NATIONAL BANK, ARE NOT ENDORSED OR GUARANTEED BY DEPOSIT
GUARANTY NATIONAL 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 THESE SHARES INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before
you invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated March
, 1997, with the Securities and Exchange Commission (`SEC''). The
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information contained in the Statement of Additional Information is
incorporated by reference into this prospectus. You may request a copy of
the Statement of Additional Information or a paper copy of this prospectus,
if you have received your prospectus electronically, free of charge by
calling 1-800-530-7377. To obtain other information, or make inquiries
about the Fund, contact the Fund at the address listed in the back of this
prospectus. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Fund
is maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated March , 1997
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TABLE OF CONTENTS
Table of Contents will be generated by the typesetter.
SUMMARY OF FUND EXPENSES
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated February 7, 1992. The Declaration of Trust
permits the Trust to offer separate series of shares of beneficial interest
representing interests in separate portfolios of securities. The shares in
any one portfolio may be offered in separate classes. Shares of the Fund
are designed for retail and trust customers of Deposit Guaranty National
Bank and its affiliates as a convenient means of participating in a
professionally managed portfolio. A minimum initial investment of $1,000
is required, and subsequent investments must be in amounts of at least
$100.
Shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek capital appreciation.
While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies
described in this prospectus. This investment objective cannot be changed
without shareholder approval.
INVESTMENT POLICIES
Unless indicated otherwise, the investment policies described below may be
changed by the Board of Trustees (`Trustees'') without approval of
shareholders. Shareholders will be notified before any material change in
these policies becomes effective.
ACCEPTABLE INVESTMENTS. The Fund invests primarily in non-U.S. securities.
A substantial portion of these will be equity securities of established
companies in economically developed countries. The Fund will invest at
least 65%, and under normal market conditions substantially all of its
total assets, in equity securities denominated in foreign currencies,
including European Currency Units, of issuers located in at least three
countries outside of the United States and sponsored or unsponsored
American Depositary Receipts ("ADRs"), Global Depositary Receipts ("GDRs"),
and European Depositary Receipts ("EDRs"), collectively, "Depositary
Receipts." The Fund may also purchase corporate and government fixed income
securities denominated in currencies other than U.S. Dollars; enter into
forward commitments, repurchase agreements, and foreign currency
transactions; maintain reserves in foreign or U.S. money market
instruments; and purchase options and financial futures contracts.
EQUITY SECURITIES. The Fund will commit its assets primarily to equity
securities. In selecting investments for the Fund, Lazard Freres Asset
Management (the `sub-adviser'') attempts to identify inexpensive markets
worldwide through traditional measures of value, including low price to
earnings ratio, high yield, unrecognized assets, potential for management
change and/or the potential to improve profitability. In addition, the
sub-adviser seeks to identify companies that it believes are financially
productive and undervalued in those markets. The sub-adviser focuses on
individual stock selection (a `bottom-up'' approach) rather than on
forecasting stock market trends (a `top-down'' approach).
The sub-adviser recognizes that some of the best opportunities are in
securities not generally followed by investment professionals. Thus, the
sub-adviser relies on its research capabilities and also maintains a
dialogue with foreign brokers and with the management of foreign companies
in an effort to gather the type of `local knowledge'' that it believes is
critical to successful investment abroad. To this end, the sub-adviser
communicates with its affiliates, Lazard Freres & Cie. in Paris, Lazard
Brothers & Co. Ltd. in London and Lazard Japan Asset Management K.K. in
Tokyo, for information concerning current business trends, as well as for a
better understanding of the management of local businesses. The
information supplied by these affiliates of the sub-adviser will be limited
to statistical and factual information, advice regarding economic factors
and trends or advice as to occasional transactions in specific securities.
FIXED INCOME AND OTHER SECURITIES. As a temporary defensive position, the
Fund may shift its emphasis to fixed income securities, warrants, or other
obligations of foreign companies or governments, if they appear to offer
potential higher return. Fixed income securities include preferred stock,
convertible securities, bonds, notes, or other debt securities which are
investment grade or higher. However, in no event will the Fund invest more
than 25% of its total assets in the debt securities of any one foreign
country.
The high-quality debt securities in which the Fund will invest will possess
a minimum credit rating of A as assigned by Standard & Poor's Ratings Group
("S&P") or A by Moody's Investors Service, Inc. ("Moody's"), or, if
unrated, will be judged by ParkSouth Corporation, the Fund's investment
adviser, or the Fund's investment sub-adviser, to be of comparable quality.
Because the average quality of the Fund's portfolio investments should
remain constantly between A and AAA, the Fund will seek to avoid the
adverse consequences that may arise for some debt securities in difficult
economic circumstances. Downgraded securities will be evaluated on a case
by case basis by the sub-adviser. The sub-adviser will determine whether or
not the security continues to be an acceptable investment. If not, the
security will be sold.
The prices of fixed income securities generally fluctuate inversely to the
direction of interest rates.
DEPOSITARY RECEIPTS. The Fund may invest in foreign issuers by purchasing
sponsored or unsponsored ADRs, GDRs, and EDRs. ADRs are depositary receipts
typically issued by a United States bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs
and GDRs are typically issued by foreign banks or trust companies, although
they also may be issued by United States banks or trust companies, and
evidence ownership of underlying securities issued by either a foreign or a
United States corporation. Generally, depositary receipts in registered
form are designed for use in the United States securities market and
depositary receipts in bearer form are designed for use in securities
markets outside the United States. depositary receipts may not necessarily
be denominated in the same currency as the underlying securities into which
they may be converted. Ownership of unsponsored depositary receipts may not
entitle the Fund to financial or other reports from the issuer of the
underlying security, to which it would be entitled as the owner of
sponsored depositary receipts.
FORWARD COMMITMENTS. Forward commitments are contracts to purchase
securities for a fixed price at a date beyond customary settlement time.
The Fund may enter into these contracts if liquid securities in amounts
sufficient to meet the purchase price are segregated on the Fund's records
at the trade date and maintained until the transaction has been settled.
Risk is involved if the value of the security declines before settlement.
Although the Fund enters into forward commitments with the intention of
acquiring the security, it may dispose of the commitment prior to
settlement and realize short-term profit or loss.
MONEY MARKET INSTRUMENTS. The Fund may invest in U.S. and foreign short-
term money market instruments, including interest-bearing call deposits
with banks, government obligations, certificates of deposit, bankers'
acceptances, commercial paper, short-term corporate debt securities, and
repurchase agreements. The commercial paper in which the Fund invests will
be rated A-1 by S&P or P-1 by Moody's. These investments may be used to
temporarily invest cash received from the sale of Fund shares, to establish
and maintain reserves for temporary defensive purposes, or to take
advantage of market opportunities. Investments in the World Bank, Asian
Development Bank, or Inter-American Development Bank are not anticipated.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/ dealers, and other recognized financial institutions sell
securities to the Fund and agree at the time of sale to repurchase them at
a mutually agreed upon time and price. To the extent that the original
seller does not repurchase the securities from the Fund, the Fund could
receive less than the repurchase price on any sale of such securities.
OPTIONS AND FINANCIAL FUTURES CONTRACTS. The Fund may purchase put and call
options, financial futures contracts, and options on financial futures
contracts. In addition, the Fund may write (sell) put and call options with
respect to securities in the Fund's portfolio.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued or delayed delivery basis. These transactions
are arrangements in which the Fund purchases securities with payment and
delivery scheduled for a future time. The seller's failure to complete the
transaction may cause the Fund to miss a price or yield considered to be
advantageous. Settlement dates may be a month or more after entering into
these transactions, and the market values of the securities purchased may
vary from the purchase prices.
The Fund may dispose of a commitment prior to settlement if the adviser
deems it appropriate to do so. In addition, the Fund may enter into
transactions to sell its purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits
or losses upon the sale of such commitments.
FOREIGN CURRENCY TRANSACTIONS. The Fund will enter into foreign currency
transactions to obtain the necessary currencies to settle securities
transactions. Currency transactions may be conducted either on a spot or
cash basis at prevailing rates or through forward foreign currency exchange
contracts.
The Fund may also enter into foreign currency transactions to protect Fund
assets against adverse changes in foreign currency exchange rates or
exchange control regulations. Such changes could unfavorably affect the
value of Fund assets which are denominated in foreign currencies, such as
foreign securities or funds deposited in foreign banks, as measured in U.S.
Dollars. Although foreign currency exchanges may be used by the Fund to
protect against a decline in the value of one or more currencies, such
efforts may also limit any potential gain that might result from a relative
increase in the value of such currencies and might, in certain cases,
result in losses to the Fund.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward foreign currency
exchange contract ("forward contract") is an obligation to purchase or sell
an amount of a particular currency at a specific price and on a future date
agreed upon by the parties.
Generally, no commission charges or deposits are involved. At the time the
Fund enters into a forward contract, Fund assets with a value equal to the
Fund's obligation under the forward contract are segregated on the Fund's
records and are maintained until the contract has been settled. The Fund
will not enter into a forward contract with a term of more than one year.
The Fund will generally enter into a forward contract to provide the proper
currency to settle a securities transaction at the time the transaction
occurs ("trade date"). The period between the trade date and settlement
date will vary between 24 hours and 30 days, depending upon local custom.
The Fund may also protect against the decline of a particular foreign
currency by entering into a forward contract to sell an amount of that
currency approximating the value of all or a portion of the Fund's assets
denominated in that currency ("hedging"). The success of this type of
short-term hedging strategy is highly uncertain due to the difficulties of
predicting short-term currency market movements and of precisely matching
forward contract amounts and the constantly changing value of the
securities involved. Although the adviser will consider the likelihood of
changes in currency values when making investment decisions, the adviser
believes that it is important to be able to enter into forward contracts
when it believes the interests of the Fund will be served. The Fund will
not enter into forward contracts for hedging purposes in a particular
currency in an amount in excess of the Fund's assets denominated in that
currency.
PUT AND CALL OPTIONS ON EQUITY SECURITIES. The Fund may purchase put and
call options on its portfolio of securities. Put and call options will be
used as a hedge to attempt to protect securities which the Fund holds, or
will be purchasing, against decreases or increases in value. The Fund is
also authorized to write (sell) put and call options on all or any portion
of its portfolio of securities to generate income. The Fund may write call
options on securities either held in its portfolio or which it has the
right to obtain without payment of further consideration or for which it
has segregated cash in the amount of any additional consideration. In the
case of put options written by the Fund, the Trust's custodian will
segregate cash, U.S. Treasury obligations, or highly liquid debt securities
with a value equal to or greater than the exercise price of the underlying
securities.
The Fund is authorized to invest in put and call options that are traded on
securities exchanges. The Fund may also purchase and write over-the-counter
options ("OTC options") on portfolio securities in negotiated transactions
with the buyers or writers of the options since options on some of the
portfolio securities held by the Fund are not traded on an exchange. The
Fund will purchase and write OTC options only with investment dealers and
other financial institutions (such as commercial banks or savings and loan
associations) deemed creditworthy by the sub-adviser.
OTC options are two-party contracts with price and terms negotiated between
buyer and seller. In contrast, exchange-traded options are third-party
contracts with standardized strike prices and expiration dates and are
purchased from a clearing corporation. Exchange-traded options have a
continuous liquid market while OTC options may not. Prior to exercise or
expiration, an option position can only be terminated by entering into a
closing purchase or sale transaction. This requires a secondary market on
an exchange which may or may not exist for any particular call or put
option at any specific time. The absence of a liquid secondary market also
may limit the Fund's ability to dispose of the securities underlying an
option. The inability to close options also could have an adverse impact on
the Fund's ability to effectively hedge its portfolio.
FINANCIAL FUTURES AND OPTIONS ON FINANCIAL FUTURES. The Fund may purchase
and sell financial futures contracts to hedge all or a portion of its
portfolio securities against changes in interest rates or securities
prices. Financial futures contracts on securities call for the delivery of
particular securities at a certain time in the future. The seller of the
contract agrees to make delivery of the type of instrument called for in
the contract, and the buyer agrees to take delivery of the instrument at
the specified future time. A financial futures contract on a securities
index does not involve the actual delivery of securities, but merely
requires the payment of a cash settlement based on changes in the
securities index.
The Fund may also write call options and purchase put options on financial
futures contracts as a hedge to attempt to protect securities in its
portfolio against decreases in value resulting from anticipated increases
in market interest rates or broad declines in securities prices. When the
Fund writes a call option on a financial futures contract, it is
undertaking the obligation of selling the financial futures contract at a
fixed price at any time during a specified period if the option is
exercised. Conversely, as a purchaser of a put option on a financial
futures contract, the Fund is entitled (but not obligated) to sell a
financial futures contract at the fixed price during the life of the
option.
The Fund may also write put options and purchase call options on financial
futures contracts as a hedge against rising purchase prices of securities
eligible for purchase by the Fund. The Fund will use these transactions to
attempt to protect its ability to purchase securities in the future at
price levels existing at the time it enters into the transactions. When the
Fund writes a put option on a futures contract, it is undertaking to buy a
particular futures contract at a fixed price at any time during a specified
period if the option is exercised. As a purchaser of a call option on a
futures contract, the Fund is entitled (but not obligated) to purchase a
futures contract at a fixed price at any time during the life of the
option.
The Fund may not purchase or sell financial futures contracts or options on
financial futures contracts if, immediately thereafter, the sum of the
amount of initial margin deposits on the Fund's existing financial futures
positions and premiums paid for related options would exceed 5% of the fair
market value of the Fund's total assets, after taking into account the
unrealized profits and losses on those contracts it has entered into. When
the Fund purchases financial futures contracts, an amount of cash and cash
equivalents, equal to the underlying commodity value of the financial
futures contracts (less any related margin deposits), will be deposited in
a segregated account with the Fund's custodian to collateralize the
position and, thereby, insure that the use of such financial futures
contracts is unleveraged.
RISK CONSIDERATIONS. Investing in non-U.S. securities carries substantial
risks in addition to those associated with domestic investments. In an
attempt to reduce some of these risks, the Fund diversifies its investments
broadly among foreign countries, including both developed and developing
countries. At least three different countries will always be represented.
The Fund occasionally takes advantage of the unusual opportunities for
higher returns available from investing in developing countries. As
discussed in the Statement of Additional Information, however, these
investments carry considerably more volatility and risk because they are
associated with less mature economies and less stable political systems.
The economies of foreign countries may differ from the U.S. economy in such
respects as growth of gross domestic product, rate of inflation, currency
depreciation, capital reinvestment, resource self-sufficiency, and balance
of payments position. Further, the economies of developing countries
generally are heavily dependent on international trade and, accordingly,
have been, and may continue to be, adversely affected by trade barriers,
exchange controls, managed adjustments in relative currency values, and
other protectionist measures imposed or negotiated by the countries with
which they trade. These economies also have been, and may continue to be,
adversely affected by economic conditions in the countries with which they
trade.
Prior governmental approval for foreign investments may be required under
certain circumstances in some countries, and the extent of foreign
investment in certain debt securities and domestic companies may be subject
to limitation. Foreign ownership limitations also may be imposed by the
charters of individual companies to prevent, among other concerns,
violation of foreign investment limitations.
Repatriation of investment income, capital, and the proceeds of sales by
foreign investors may require governmental registration and/or approval in
some countries. The Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental registration or approval for
such repatriation. Any investment subject to such repatriation controls
will be considered illiquid if it appears reasonably likely that this
process will take more than seven days.
With respect to any foreign country, there is the possibility of
nationalization, expropriation or confiscatory taxation, political changes,
governmental regulation, social instability or diplomatic developments
(including war) which could affect adversely the economies of such
countries or the value of the Fund's investments in those countries. In
addition, it may be difficult to obtain and enforce a judgment in a court
outside of the United States.
Brokerage commissions, custodial services, and other costs relating to
investment may be more expensive than in the United States. Foreign markets
may have different clearance and settlement procedures and in certain
markets there have been times when settlements have been unable to keep
pace with the volume of securities transactions, making it difficult to
conduct such transactions. The inability of the Fund to make intended
security purchases due to settlement problems could cause the Fund to miss
attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems could result either in losses to the
Fund due to subsequent declines in value of the portfolio security or, if
the Fund has entered into a contract to sell the security, could result in
possible liability to the purchaser.
CURRENCY RISKS. Because the majority of the securities purchased by the
Fund are denominated in currencies other than the U.S. Dollar, changes in
foreign currency exchange rates will affect the Fund's net asset value; the
value of interest earned; gains and losses realized on the sales of
securities; and net investment income and capital gain, if any, to be
distributed to shareholders by the Fund. If the value of a foreign currency
rises against the U.S. Dollar, the value of the Fund assets denominated in
that currency will increase; correspondingly, if the value of a foreign
currency declines against the U.S. Dollar, the value of Fund assets
denominated in that currency will decrease.
The exchange rates between the U.S. Dollar and foreign currencies are a
function of such factors as supply and demand in the currency exchange
markets, international balances of payments, governmental interpretation,
speculation and other economic and political conditions. Although the Fund
values its assets daily in U.S. Dollars, the Fund will not convert its
holdings of foreign currencies to U.S. Dollars daily. When the Fund
converts its holdings to another currency, it may incur conversion costs.
Foreign exchange dealers may realize a profit on the difference between the
price at which they buy and sell currencies.
FOREIGN COMPANIES. Other differences between investing in foreign and U.S.
companies include:
oless publicly available information about foreign companies;
othe lack of uniform accounting, auditing, and financial reporting
standards and practices or regulatory requirements comparable to
those applicable to U.S. companies;
oless readily available market quotations on foreign companies;
odifferences in government regulation and supervision of foreign
stock exchanges, brokers, listed companies, and banks;
odifferences in legal systems which may affect the ability to enforce
contractual obligations or obtain court judgments;
othe limited size of many foreign securities markets and limited
trading volume in issuers compared to the volume of trading in U.S.
securities could cause prices to be erratic for reasons apart from
factors that affect the quality of securities;
othe likelihood that foreign securities may be less liquid or more
volatile;
oforeign brokerage commissions may be higher;
ounreliable mail service between countries;
opolitical or financial changes which adversely affect investments in
some countries;
oincreased risk of delayed settlements of portfolio transactions or
loss of certificates for portfolio securities;
ocertain markets may require payment for securities before delivery;
oreligious and ethnic instability; and
ocertain national policies which may restrict the Fund's investment
opportunities, including restrictions on investment in issuers or
industries deemed sensitive to national interests.
U.S. GOVERNMENT POLICIES. In the past, U.S. government policies have
discouraged or restricted certain investments abroad by investors such as
the Fund. Investors are advised that when such policies are instituted, the
Fund will abide by them.
SHORT SALES. The Fund intends to sell securities short from time to time,
subject to certain restrictions. A short sale occurs when a borrowed
security is sold in anticipation of a decline in its price. If the decline
occurs, shares equal in number to those sold short can be purchased at the
lower price. If the price increases, the higher price must be paid. The
purchased shares are then returned to the original lender. Risk arises
because no loss limit can be placed on the transaction. When the Fund
enters into a short sale, assets, equal to the market price of the
securities sold short or any lesser price at which the Fund can obtain such
securities, are segregated on the Fund's records and maintained until the
Fund meets its obligations under the short sale.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund will not
own securities of open-end investment companies, own more than 3% of the
total outstanding voting stock of any closed-end investment company, invest
more than 5% of its total assets in any closed-end investment company, or
invest more than 10% of its total assets in closed-end investment companies
in general. The Fund will purchase securities of closed-end investment
companies only in open-market transactions involving only customary
broker's commissions. However, these limitations are not applicable if the
securities are acquired in a merger, consolidation, reorganization, or
acquisition of assets. The Fund will indirectly bear its proportionate
share of any fees and expenses paid by other investment companies, in
addition to the fees and expenses payable directly by the Fund.
RISKS ASSOCIATED WITH FINANCIAL FUTURES CONTRACTS AND OPTIONS ON FINANCIAL
FUTURES CONTRACTS
Financial futures contracts and options on financial futures contracts can
be highly volatile and could result in a reduction of the Fund's total
return. The Fund's attempt to use such investment devices for hedging
purposes may not be successful. Successful futures strategies require the
ability to predict future movements in securities prices, interest rates
and other economic factors. When the Fund uses financial futures contracts
and options on financial futures contracts as hedging devices, there is a
risk that the prices of the securities subject to the financial futures
contracts and options on financial futures contracts may not correlate
perfectly with the prices of the securities in the Fund. This may cause the
financial futures contract and any related options to react to market
changes differently than the portfolio securities. In addition, the adviser
could be incorrect in its expectations about the direction or extent of
market factors, such as interest rate, securities price movements, and
other economic factors. In these events, the Fund may lose money on the
financial futures contract or the options on financial futures contracts.
It is not certain that a secondary market for positions in financial
futures contracts or for options on financial futures contracts will exist
at all times. Although the adviser will consider liquidity before entering
into financial futures contracts or options on financial futures contracts
transactions, there is no assurance that a liquid secondary market on an
exchange will exist for any particular financial futures contract or option
on a financial futures contract at any particular time. The Fund's ability
to establish and close out financial futures contracts and options on
financial futures contract positions depends on this secondary market. If
the Fund is unable to close out its position due to disruptions in the
market or lack of liquidity, the losses to the Fund could be significant.
NON-DIVERSIFICATION
The Fund is a non-diversified investment portfolio. As such, there is no
limit on the percentage of assets which can be invested in any single
issuer. An investment in the Fund, therefore, will entail greater risk
than would exist in a diversified portfolio of securities because the
higher percentage of investments among fewer issuers may result in greater
fluctuation in the total market value of the Fund's portfolio. Any
economic, political, or regulatory developments affecting the value of the
securities in the Fund's portfolio will have a greater impact on the total
value of the portfolio than would be the case if the portfolio was
diversified among more issuers.
The Fund intends to comply with Subchapter M of the Internal Revenue Code,
as amended. This undertaking requires that at the end of each quarter of
the taxable year, with regard to at least 50% of the Fund's total assets,
no more than 5% of its total assets are invested in the securities of a
single issuer; beyond that no more than 25% of its total assets are
invested in the securities of a single issuer.
INVESTMENT LIMITATIONS
The Fund will not:
osell securities short except under strict limitations;
oborrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of
its total assets and pledge up to 15% of the value of those assets
to secure such borrowings; or
opermit margin deposits for financial futures contracts held by the
Fund, plus premiums paid by it for open options on financial futures
contracts, to exceed 5% of the fair market value of the Fund's total
assets, after taking into account the unrealized profits and losses
on those contracts.
The above investment limitations cannot be changed without shareholder
approval. The following limitation, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any
material change in this limitation becomes effective.
The Fund will not:
oinvest more than 15% of the value of its net assets in illiquid
securities, including securities not determined by the Trustees to
be liquid, and repurchase agreements with maturities longer than
seven days after notice and certain OTC options.
TRUST INFORMATION
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The
Trustees are responsible for managing the Fund's business affairs and for
exercising all the Trust's powers except those reserved for the
shareholders. An Executive Committee of the Board of Trustees handles the
Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER. Pursuant to an investment advisory contract with the
Trust, investment decisions for the Fund are made by ParkSouth Corporation,
the Fund's investment adviser, subject to direction by the Trustees. The
adviser, in consultation with Lazard Freres Asset Management (the `Sub-
Adviser'), continually conducts investment research and supervision for
the Fund and is responsible for the purchase and sale of portfolio
instruments.
ADVISORY FEES. The Fund's adviser receives an annual investment advisory
fee equal to 1.00% of the Fund's average daily net assets. The adviser may
voluntarily choose to waive a portion of its fee or reimburse the Fund for
certain operating expenses. The adviser can terminate this voluntary
waiver of its advisory fees at any time at its sole discretion.
ADVISER'S BACKGROUND. ParkSouth Corporation (`ParkSouth'') is a
registered investment adviser providing investment management services to
individuals and institutional clients. ParkSouth is a subsidiary of
Deposit Guaranty National Bank (the `Bank''), a national banking
association founded in 1925 which, in turn, is a subsidiary of Deposit
Guaranty Corp. (`DGC''). Through its subsidiaries and affiliates, DGC
offers a full range of financial services to the public, including
commercial lending, depository services, cash management, brokerage
services, retail banking, mortgage banking, investment advisory services
and trust services. DGC is listed on the New York Stock Exchange under the
symbol `DEP.''
ParkSouth manages, in addition to the Funds in the DG Investor Series,
$ billion in common trust fund assets. ParkSouth (which succeeded to
------
the investment advisory business of the Bank in 1997), or the Bank, have
served as the adviser to the Trust since May 5, 1992.
As part of its regular banking operations, the Bank may make loans to
public companies. Thus, it may be possible, from time to time, for the Fund
to hold or acquire the securities of issuers which are also lending clients
of the Bank. The lending relationships will not be a factor in the
selection of securities.
SUB-ADVISER. Under the terms of a sub-advisory agreement between ParkSouth
Corporation and Lazard Freres Asset Management, the Sub-Adviser will
furnish to the Bank such investment advice, statistical and other factual
information as may be requested by the Bank.
SUB-ADVISORY FEES. For its services under the sub-advisory agreement, the
Sub-Adviser receives an annual fee from the Bank equal to 0.50% of the
average daily net assets of the Fund. The sub-advisory fee is accrued daily
and paid monthly. Notwithstanding any other provision in the sub-advisory
agreement, the Sub-Adviser may, from time to time and for such periods as
it deems appropriate, reduce its compensation (and, if appropriate, assume
expenses of the Fund or class of the Fund) to the extent that the Fund's
expenses exceed such lower expense limitation as the Sub-Adviser may, by
notice to the Trust on behalf of the Fund, voluntarily declare to be
effective.
SUB-ADVISER'S BACKGROUND. Lazard Freres Asset Management is a division of
Lazard Freres & Co. LLC, a New York limited liability company, which is
registered as an investment adviser with the SEC and is a member of the New
York, American and Midwest Stock Exchanges. Lazard Freres Asset Management
provides investment management services to client discretionary accounts
with assets totalling approximately $ billion as of December 31, 1996.
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Its clients are both individuals and institutions.
Herbert W. Gullquist is a Managing Director of Lazard Freres Asset
Management and has been with the Lazard Freres Asset Management since 1982.
Mr. Gullquist has managed the Fund since March , 1997 (the Fund's
--
inception date).
John R. Reinsberg is a Managing Director of Lazard Freres Asset Management
and has been with the Lazard Freres Asset Management since 1992. Prior
thereto, Mr. Reinsberg was Executive Vice President of General Electric
Investment Company. Mr. Reinsberg has managed the Fund since March ,
--
1997 (the Fund's inception date).
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for the Fund. It is
a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated
Securities Corp. is a subsidiary of Federated Investors.
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES. Under a distribution plan
adopted in accordance with Rule 12b-1 under the Investment Company Act of
1940 (the "Plan"), the distributor may be paid a fee by the Fund in an
amount computed at an annual rate of .25% of the average daily net asset
value of shares of the Fund. The distributor may select financial
institutions such as banks, fiduciaries, custodians for public funds,
investment advisers, and broker/dealers to provide sales services or
distribution-related support services as agents for their clients or
customers.
The Plan is a compensation-type plan. As such, the Fund makes no payments
to the distributor except as described above. Therefore, the Fund does not
pay for unreimbursed expenses of the distributor, including amounts
expended by the distributor in excess of amounts received by it from the
Fund, interest, carrying or other financing charges in connection with
excess amounts expended, or the distributor's overhead expenses. However,
the distributor may be able to recover such amounts or may earn a profit
from future payments made by the Fund under the Plan.
In addition, the Fund has entered into a Shareholder Services Agreement
with Federated Shareholder Services, a subsidiary of Federated Investors,
under which the Fund may make payments up to .15% of the average daily net
asset value of shares of the Fund to obtain certain personal services for
shareholders and to maintain shareholder accounts. From time to time and
for such periods as deemed appropriate, the amount stated above may be
reduced voluntarily. Under the Shareholder Services Agreement, Federated
Shareholder Services will either perform shareholder services directly or
will select financial institutions to perform shareholder services.
Financial institutions will receive fees based upon shares of the Fund
owned by their clients or customers. The schedules of such fees and the
basis upon which such fees will be paid will be determined from time to
time by the Fund and Federated Shareholder Services.
The Glass-Steagall Act prohibits a depository institution (such as a
commercial bank or a savings association) from being an underwriter or
distributor of most securities. In the event the Glass-Steagall Act is
deemed to prohibit depository institutions from acting in the
administrative capacities described above or should Congress relax current
restrictions on depository institutions, the Trustees will consider
appropriate changes in the services.
SHAREHOLDER SERVICING ARRANGEMENTS. The distributor may pay financial
institutions a fee with respect to the average net asset value of shares
held by their customers for providing administrative services. This fee, if
paid, will be reimbursed by the adviser and not the Fund.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides administrative personnel and services
(including certain legal and financial reporting services) necessary to
operate the Fund. Such services include shareholder servicing and certain
legal and accounting services. Federated Administrative Services provides
these at an annual rate as specified below:
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE FEE DAILY NET ASSETS OF THE TRUST
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$100,000 per portfolio. Federated Administrative Services may choose
voluntarily to waive a portion of its fee at any time.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Sub-Adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the Sub-Adviser will
generally utilize those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can be
obtained elsewhere. In selecting among firms believed to meet these
criteria, the Sub-Adviser may give consideration to those firms which have
sold or are selling shares of the Funds and other funds distributed by
Federated Securities Corp. The Sub-Adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to review by the
Trustees.
EXPENSES OF THE FUND
The Fund pays all of its own expenses and its allocable share of Trust
expenses.
These expenses include, but are not limited to the cost of: organizing the
Trust and continuing its existence; registering the Fund and its shares;
Trustees fees; meetings of Trustees and shareholders and proxy
solicitations therefor; auditing, accounting, and legal services;
investment advisory and administrative services; custodians, transfer
agents, dividend disbursing agents, shareholder servicing agents, and
registrars; issuing, purchasing, repurchasing, and redeeming shares;
reports to government agencies; preparing, printing and mailing documents
to shareholders such as financial statements, prospectuses and proxies;
taxes and commissions; insurance premiums; association membership dues; and
such non-recurring and extraordinary items as may arise.
NET ASSET VALUE
The Fund's net asset value per share fluctuates. The net asset value per
share is determined by dividing the sum of the market value of all
securities and all other assets, less liabilities, by the number of shares
outstanding.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value
of the Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; or (iii) the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
INVESTING IN THE FUND
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Fund shares may be
ordered by telephone through procedures established with Commercial
National Bank, a subsidiary of Deposit Guaranty Corp., and Deposit Guaranty
National Bank (collectively, the "Banks") in connection with qualified
account relationships. Such procedures may include arrangements under which
certain accounts are swept periodically and amounts exceeding an agreed
upon minimum are invested automatically in Fund shares. The Fund reserves
the right to reject any purchase request.
THROUGH THE BANKS. To place an order to purchase shares of the Fund, open
an account by calling Deposit Guaranty National Bank at (800) 748-8500 or
Commercial National Bank at (800) 274-1907. Information needed to establish
the account will be taken over the telephone.
Payment may be made by either check, federal funds or by debiting a
customer's account at the Banks.
Purchase orders must be received by 4:00 p.m. (Eastern time). Payment is
required before 4:00 p.m. (Eastern time) on the next business day in order
to earn dividends for that day.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $1,000. Subsequent
investments may be in amounts of $100 or more. The Fund may waive the
initial minimum investment for employees of Deposit Guaranty Corp. and its
affiliates from time to time.
SYSTEMATIC INVESTMENT PROGRAM
Once an account has been opened, shareholders may add to their investment
on a regular basis in a minimum amount of $100. Under this program, funds
may be automatically withdrawn periodically from the shareholder's checking
account and invested in Fund shares. A shareholder may apply for
participation in this program through the Banks.
EXCHANGE PRIVILEGE
All shareholders of the Fund are shareholders of DG Investor Series, which,
in addition to the Fund, is composed of the following seven portfolios: DG
Equity Fund, DG Opportunity Fund, DG Limited Term Government Income Fund,
DG Government Income Fund, DG Municipal Income Fund, DG U.S. Government
Money Market Fund and DG Prime Money Market Fund.
Shareholders in any of the Funds have easy access to all of the other
Funds.
EXCHANGING SHARES
Shareholders of any Fund in DG Investor Series may exchange shares for the
shares of any other Fund in DG Investor Series. Prior to any exchange, the
shareholder must receive a copy of the current prospectus of the fund into
which an exchange is to be effected. Shares may be exchanged at net asset
value, plus the difference between the sales charge (if any) already paid
and any sales charge of the Fund into which shares are to be exchanged, if
higher.
When an exchange is made from a Fund with a sales charge to a Fund with no
sales charge, the shares exchanged and additional shares which have been
purchased by reinvesting dividends on such shares retain the character of
the exchanged shares for purposes of exercising further exchange
privileges; thus, an exchange of such shares for shares of a Fund with a
sales charge would be at net asset value.
Upon receipt of proper instructions and all necessary supporting documents,
shares submitted for exchange will be redeemed at the next-determined net
asset value. Written exchange instructions may require a signature
guarantee. Exercise of this privilege is treated as a sale for federal
income tax purposes and, depending on the circumstances, a short or long-
term capital gain or loss may be realized. The exchange privilege may be
terminated at any time. Shareholders will be notified of the termination of
the exchange privilege. A shareholder may obtain further information on the
exchange privilege by calling the Banks. Telephone exchange instructions
may be recorded. If reasonable procedures are not followed by the Fund, it
may be liable for losses due to unauthorized or fraudulent telephone
instructions.
REDEEMING SHARES
Shares are redeemed at their net asset value next determined after the
Banks receive the redemption request. Redemptions will be made on days on
which the Fund computes its net asset value. Redemption requests cannot be
executed on days on which the New York Stock Exchange is closed or on
Federal holidays when wire transfers are restricted. Requests for
redemption can be made by telephone or by mail.
THROUGH THE BANKS
BY TELEPHONE. A shareholder who is a customer of one of the Banks may
redeem shares of the Fund by calling Deposit Guaranty National Bank at
(800) 748-8500 or Commercial National Bank at (800) 274-1907.
For orders received before 4:00 p.m. (Eastern time), proceeds will normally
be wired the next day to the shareholder's account at the Banks or a check
will be sent to the address of record.
Proceeds from redemption requests received on holidays when wire transfers
are restricted will be wired the following business day. In no event will
proceeds be sent more than seven days after a proper request for redemption
has been received. An authorization form permitting the Fund to accept
telephone requests must first be completed. Authorization forms and
information on this service are available from the Banks. Telephone
redemption instructions may be recorded. If reasonable procedures are not
followed by the Fund, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should
occur, another method of redemption should be utilized, such as a written
request to Federated Shareholder Services Company or the Banks.
If at any time the Fund determines it necessary to terminate or modify this
method of redemption, shareholders would be promptly notified.
BY MAIL. Any shareholder may redeem Fund shares by sending a written
request to the Banks. The written request should include the shareholder's
name, the Fund name, the account number, and the share or dollar amount
requested, and should be signed exactly as the shares are registered. If
share certificates have been issued, they should be sent unendorsed with
the written request by registered or certified mail. Shareholders should
call the Banks for assistance in redeeming by mail.
SIGNATURES. Shareholders requesting a redemption of any amount to be sent
to an address other than on record with the Fund, or a redemption payable
other than to the shareholder of record must have signatures on written
redemption requests guaranteed by:
oa trust company or commercial bank whose deposits are insured by the
Bank Insurance Fund, which is administered by the Federal Deposit
Insurance Corporation ("FDIC");
oa member of the New York, American, Boston, Midwest, or Pacific
Stock Exchange;
oa savings bank or savings association whose deposits are insured by
the Savings Association Insurance Fund, which is administered by the
FDIC; or
oany other "eligible guarantor institution," as defined in the
Securities Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and Federated Shareholder Services Company have adopted standards
for accepting signature guarantees from the above institutions. The Fund
may elect in the future to limit eligible signature guarantors to
institutions that are members of a signature guarantee program. The Fund
and Federated Shareholder Services Company reserve the right to amend these
standards at any time without notice.
Normally, a check for the proceeds is mailed within one business day, but
in no event more than seven days, after receipt of a proper written
redemption request.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
Fund shares are redeemed to provide for periodic withdrawal payments in an
amount directed by the shareholder. Depending upon the amount of the
withdrawal payments and the amount of dividends paid with respect to Fund
shares, redemptions may reduce, and eventually deplete, the shareholder's
investment in the Fund. For this reason, payments under this program should
not be considered as yield or income on the shareholder's investment in the
Fund. To be eligible to participate in this program, a shareholder must
have an account value of at least $10,000, other than retirement accounts
subject to required minimum distributions. A shareholder may apply for
participation in this program through the Banks.
ACCOUNT AND SHARE INFORMATION
DIVIDENDS. Dividends are declared and paid annually to all shareholders
invested in the Fund on the record date. Dividends are automatically
reinvested in additional shares of the Fund on payment dates at the ex-
dividend date's net asset value without a sales charge, unless cash
payments are requested by writing to the Fund or the Banks, as appropriate.
All shareholders on the record date are entitled to the dividend. If
shares are redeemed or exchanged prior to the record date, or purchased
after the record date, those shares are not entitled to that year's
dividend.
CAPITAL GAINS. Net long-term capital gains realized by the Fund, if any,
will be distributed at least once every 12 months.
CERTIFICATES AND CONFIRMATIONS. As transfer agent for the Fund, Federated
Shareholder Services Company maintains a share account for each
shareholder. Share certificates are not issued unless requested by
contacting the Fund or Federated Shareholder Services Company in writing.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Annual confirmations are sent to report dividends paid during
the year.
ACCOUNTS WITH LOW BALANCES. Due to the high cost of maintaining accounts
with low balances, the Fund may redeem shares in any account, and pay the
proceeds to the shareholder if the account balance falls below a required
minimum value of $1,000 due to shareholder redemptions. Before shares are
redeemed to close an account, the shareholder is notified in writing and
allowed 30 days to purchase additional shares to meet the minimum
requirement.
VOTING RIGHTS. Each share of the Trust owned by a shareholder gives that
shareholder one vote in Trustee elections and other matters submitted to
shareholders for vote. All shares of each portfolio in the Trust have equal
voting rights, except that in matters affecting only a particular
portfolio, only shareholders of that portfolio are entitled to vote. The
Trust is not required to hold annual shareholder meetings. Shareholder
approval will be sought only for certain changes in the Trust's or the
Fund's operation and for election of Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting shall be called by the Trustees upon the written
request of shareholders owning at least 10% of the outstanding shares of
the Trust entitled to vote.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit a bank holding company registered under the Bank Holding Company
Act of 1956 or any bank or non-bank affiliate thereof from sponsoring,
organizing or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, and from issuing,
underwriting, selling or distributing securities in general. Such laws and
regulations do not prohibit such a holding company or bank or non-bank
affiliate from acting as investment adviser, transfer agent or custodian to
such an investment company or from purchasing shares of such a company as
agent for and upon the order of their customer.
Some entities providing services to the Fund are subject to such banking
laws and regulations. They believe, based on the advice of counsel, that
they may perform those services for the Fund contemplated by any agreement
entered into with the Trust without violating the Glass-Steagall Act or
other applicable banking laws or regulations. Changes in either federal or
state statutes and regulations relating to the permissible activities of
banks and their subsidiaries or affiliates, as well as further judicial or
administrative decisions or interpretations of present or future statutes
and regulations, could prevent these entities from continuing to perform
all or a part of the above services. If this happens, the Trustees would
consider alternative means of continuing available investment services. It
is not expected that Fund shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded to
such companies.
The Fund will be treated as single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by
the Trust's other portfolios will not be combined for tax purposes with
those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal income
tax on any dividends and other distributions received. This applies whether
dividends and distributions are received in cash or as additional shares.
The Fund will provide detailed tax information for reporting purposes.
STATE AND LOCAL TAXES
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its yield, effective yield and total
return.
Yield represents the annualized rate of income earned on an investment over
a seven-day period. It is the annualized dividends earned during the period
on an investment shown as a percentage of the investment. The effective
yield is calculated similarly to the yield, but when annualized, the income
earned by an investment is assumed to be reinvested daily. The effective
yield will be slightly higher than the yield because of the compounding
effect of this assumed reinvestment.
Advertisements and sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the value
of an investment in the shares after reinvesting all income distributions.
It is calculated by dividing that change by the initial investment and is
expressed as a percentage.
From time to time, advertisements for the Fund may refer to ratings,
rankings, and other information in certain financial publications and/or
compare the Fund's performance to certain indices.
ADDRESSES
DG Investor Series
DG International Equity Fund Federated Investors Tower
Pittsburgh, PA 15222-3779
Distributor
Federated Securities Corp. Federated Investors Tower
Pittsburgh, PA 15222-3779
Investment Adviser
ParkSouth Corporation P.O. Box 1200
Jackson, MS 39215-1200
Sub- Adviser
Lazard Freres Asset Management 30 Rockefeller Plaza
New York, NY 10020
Custodian
State Street Bank and P.O. Box 1713
Trust Company Boston, MA 02266-8600
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder Services Company Federated Investors Tower
Pittsburgh, PA 15222-3779
Independent Auditors
KPMG Peat Marwick LLP One Mellon Bank Center
Pittsburgh, PA 15219
DG INTERNATIONAL EQUITY FUND
(A PORTFOLIO OF DG INVESTOR SERIES)
PROSPECTUS
A Portfolio of
DG Investor Series
Investment Company
Prospectus dated March , 1997
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Cusip
G00499-06 (3/97)
DG INTERNATIONAL EQUITY FUND
(A PORTFOLIO OF DG INVESTOR SERIES)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of DG International Equity Fund (the ``Fund'), a portfolio
of DG Investor Series (the ``Trust'), dated March , 1997. This
----
Statement is not a prospectus. You may request a copy of a prospectus
or a paper copy of this Statement, if you have received it
electronically, free of charge by calling 1-800-530-7377.
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
Statement dated March , 1997
-----
FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
Cusip
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G00499- (3/97)
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TABLE OF CONTENTS
GENERAL INFORMATION ABOUT THE FUND 1
INVESTMENT OBJECTIVE AND POLICIES 1
Types of Investments 1
When-Issued and Delayed Delivery Transactions 1
Repurchase Agreements 1
Lending Portfolio Securities 1
Restricted and Illiquid Securities 2
Futures and Options Transactions 2
Futures Contracts 2
Put Options on Futures Contracts 2
Call Options on Futures Contracts 3
``Margin''in Futures Transactions 3
Regulatory Restrictions 4
Purchasing Put Options on Portfolio Securities4
Writing Covered Call Options on Portfolio
Securities 4
Over-the-Counter Options 4
Warrants 4
Additional Risk Considerations 4
Portfolio Turnover 5
INVESTMENT LIMITATIONS 5
DG INVESTOR SERIES MANAGEMENT 7
Share Ownership 11
Trustees Compensation 11
Trustee Liability 11
INVESTMENT ADVISORY SERVICES 11
Investment Adviser 11
Advisory Fees 12
Sub-Adviser 12
Sub-Advisory Fees 12
BROKERAGE TRANSACTIONS 12
OTHER SERVICES 12
Fund Administration 12
Custodian and Portfolio Accountant 12
Transfer Agent 12
Independent Auditors 13
PURCHASING SHARES 13
Distribution Plan and Shareholder Services 13
Conversion to Federal Funds 13
DETERMINING NET ASSET VALUE 13
Determining Market Value of Securities 13
Trading in Foreign Securities 14
EXCHANGE PRIVILEGE 14
Requirements for Exchange 14
Making an Exchange 14
REDEEMING SHARES 14
Redemption in Kind 14
MASSACHUSETTS PARTNERSHIP LAW 14
TAX STATUS 15
The Fund's Tax Status 15
Foerign Taxes 15
Shareholders' Tax Status 15
TOTAL RETURN 15
YIELD 15
PERFORMANCE COMPARISONS 15
Economic and Market Information 16
APPENDIX 17
GENERAL INFORMATION ABOUT THE FUND
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated February 7, 1992. The Fund is advised by
ParkSouth Corporation (the `Adviser'') and is sub-advised by Lazard Freres
Asset Management (the `Sub-Adviser'').
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek capital appreciation.
TYPES OF INVESTMENTS
The Fund invests in a diversified portfolio composed primarily of non-U.S.
securities. A substantial portion of these instruments will be equity
securities of established companies in economically developed countries.
The Fund will invest at least 65%, and under normal market conditions,
substantially all of its total assets, in equity securities denominated in
foreign currencies, including European Currency Units, of issuers located
in at least three countries outside of the United States and sponsored or
unsponsored American Depositary Receipts (`ADRs''), Global Depositary
Receipts (`GDRs''), and European Depositary Receipts (``EDRs''),
collectively, `Depositary Receipts.'' The Fund may also purchase
investment grade fixed income securities and foreign government securities;
enter into forward commitments, repurchase agreements, and foreign currency
transactions; and maintain reserves in foreign or U.S. money market
instruments.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Fund sufficient to make payment for the securities to be purchased are
segregated on the Fund's records at the trade date. These assets are marked
to market daily and are maintained until the transaction has been settled.
The Fund does not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20%
of the total value of its assets.
REPURCHASE AGREEMENTS
The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily.
In the event that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject
to repurchase agreements, a court of competent jurisdiction would rule in
favor of the Fund and allow retention or disposition of such securities.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's Sub-Adviser to be creditworthy.
LENDING PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend its portfolio
securities to broker/dealers, banks, or other institutional borrowers of
securities. The Fund will only enter into loan arrangements with
broker/dealers, banks, or other institutions which the Adviser has
determined are creditworthy under guidelines established by the Trust's
Board of Trustees (the `Trustees'') and will receive collateral equal to
at least 100% of the value of the securities loaned. The Fund did not lend
portfolio securities during the last fiscal year and has no present intent
to do so in the current fiscal year.
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays the
Fund any dividends or interest paid on such securities. Loans are subject
to termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker. The Fund does not
have the right to vote securities on loan, but would terminate the loan and
regain the right to vote if that were considered important with respect to
the investment.
RESTRICTED AND ILLIQUID SECURITIES
The Fund expects that any restricted securities would be acquired either
from institutional investors who orginally acquired the securities in
private placements or directly from the issuers of the securities in
private placements. Restricted securities and securities that are not
readily marketable may sell at a discount from the price they would bring
if freely marketable.
The Trustees consider the following criteria in determining the liquidity
of certain restricted securities:
othe frequency of trades and quotes for the security;
othe number of dealers willing to purchase or sell the security and
the number of other potential buyers;
odealer undertakings to make a market in the security; and
othe nature of the security and the nature of the marketplace trades.
When the Fund invests in certain restricted securities determined by the
Trustees to be liquid, such investments could have the effect of increasing
the level of Fund illiquidity to the extent that the buyers in the
secondary market for such securities (whether in Rule 144A resales or other
exempt transactions) become, for a time, uninterested in purchasing these
securities.
FUTURES AND OPTIONS TRANSACTIONS
The Fund may engage in futures and options hedging transactions. In an
effort to reduce fluctuations in the net asset value of shares, the Fund
may attempt to hedge all or a portion of its portfolio by buying and
selling financial futures contracts, buying put options on portfolio
securities and listed put options on futures contracts, and writing call
options on futures contracts. The Fund may also write covered call options
on portfolio securities to attempt to increase its current income. The Fund
will maintain its positions in securities, option rights, and segregated
cash subject to puts and calls until the options are exercised, closed, or
have expired. An option position on financial futures contracts may be
closed out only on the exchange on which the position was established.
FUTURES CONTRACTS
The Fund may engage in transactions in futures contracts. A futures
contract is a firm commitment by two parties: the seller who agrees to make
delivery of the specific type of security called for in the contract
(`going short'') and the buyer who agrees to take delivery of the security
(`going long'') at a certain time in the future. However, a stock index
futures contract is an agreement pursuant to which two parties agree to
take or make delivery of an amount of cash equal to the difference between
the value of the index at the close of the last trading day of the contract
and the price at which the index contract was originally written. No
physical delivery of the underlying securities in the index is made.
The purpose of the acquisition or sale of a futures contract by the Fund is
to protect the Fund from fluctuations in the value of its securities caused
by anticipated changes in interest rates or market conditions without
necessarily buying or selling the securities. For example, in the fixed
income securities market, price generally moves inversely to interest
rates. A rise in rates generally means a drop in price. Conversely, a drop
in rates generally means a rise in price. In order to hedge its holdings of
fixed income securities against a rise in market interest rates, the Fund
could enter into contracts to deliver securities at a predetermined price
(i.e., `go short'') to protect itself against the possibility that the
prices of its fixed income securities may decline during the anticipated
holding period. The Fund would `go long'' (i.e., agree to purchase
securities in the future at a predetermined price) to hedge against a
decline in market interest rates.
PUT OPTIONS ON FUTURES CONTRACTS
The Fund may engage in transactions in put options on futures contracts.
The Fund may purchase listed put options on futures contracts. Unlike
entering directly into a futures contract, which requires the purchaser to
buy a financial instrument on a set date at a specified price, the purchase
of a put option on a futures contract entitles (but does not obligate) its
purchaser to decide on or before a future date whether to assume a short
position at the specified price. The Fund would purchase put options on
futures contracts to protect portfolio securities against decreases in
value resulting from market factors, such as an anticipated increase in
interest rates.
Generally, if the hedged portfolio securities decrease in value during the
term of an option, the related futures contracts will also decrease in
value and the option will increase in value. In such an event, the Fund
will normally close out its option by selling an identical option. If the
hedge is successful, the proceeds received by the Fund upon the sale of the
second option may be large enough to offset both the premium paid by the
Fund for the original option plus the decrease in value of the hedged
securities. Alternatively, the Fund may exercise its put option to close
out the position. To do so, it would simultaneously enter into a futures
contract of the type underlying the option (for a price less than the
strike price of the option) and exercise the option. The Fund would then
deliver the futures contract in return for payment of the strike price. If
the Fund neither closes out nor exercises an option, the option will expire
on the date provided in the option contract, and only the premium paid for
the contract will be lost.
When the Fund sells a put on a futures contract, it receives a cash premium
which can be used in whatever way is deemed most advantageous to the Fund.
In exchange for such premium, the Fund grants to the purchaser of the put
the right to receive from the Fund, at the strike price, a short position
in such futures contract, even though the strike price upon exercise of the
option is greater than the value of the futures position received by such
holder. If the value of the underlying futures position is not such that
exercise of the option would be profitable to the option holder, the option
will generally expire without being exercised. The Fund has no obligation
to return premiums paid to it whether or not the option is exercised. It
will generally be the policy of the Fund, in order to avoid the exercise of
an option sold by it, to cancel its obligation under the option by entering
into a closing purchase transaction, if available, unless it is determined
to be in the Fund's interest to deliver the underlying futures position. A
closing purchase transaction consists of the purchase by the Fund of an
option having the same term as the option sold by the Fund, and has the
effect of canceling the Fund's position as a seller. The premium which the
Fund will pay in executing a closing purchase transaction may be higher
than the premium received when the option was sold, depending in large part
upon the relative price of the underlying futures position at the time of
each transaction.
CALL OPTIONS ON FUTURES CONTRACTS
The Fund may engage in transactions in call options on futures contracts.
In addition to purchasing put options on futures, the Fund may write listed
call options on futures contracts to hedge its portfolio against, for
example, an increase in market interest rates. When the Fund writes a call
option on a futures contract, it is undertaking the obligation of assuming
a short futures position (selling a futures contract) at the fixed strike
price at any time during the life of the option if the option is exercised.
As market interest rates rise or as stock prices fall, causing the prices
of futures to go down, the Fund's obligation under a call option on a
future (to sell a futures contract) costs less to fulfill, causing the
value of the Fund's call option position to increase. In other words, as
the underlying future's price goes down below the strike price, the buyer
of the option has no reason to exercise the call, so that the Fund keeps
the premium received for the option. This premium can help substantially to
offset the drop in value of the Fund's portfolio securities. Prior to the
expiration of a call written by the Fund, or exercise of it by the buyer,
the Fund may close out the option by buying an identical option. If the
hedge is successful, the cost of the second option will be less than the
premium received by the Fund for the initial option. The net premium income
of the Fund will then help offset the decrease in value of the hedged
securities.
When the Fund purchases a call on a financial futures contract, it receives
in exchange for the payment of a cash premium the right, but not the
obligation, to enter into the underlying futures contract at a strike price
determined at the time the call was purchased, regardless of the
comparative market value of such futures position at the time the option is
exercised. The holder of a call option has the right to receive a long (or
buyer's) position in the underlying futures contract.
The Fund will not maintain open positions in futures contracts it has sold
or call options it has written on futures contracts if, in the aggregate,
the value of the open positions (marked to market) exceeds the current
market value of its securities portfolio (including cash or cash
equivalents) plus or minus the unrealized gain or loss on those open
positions, adjusted for the correlation of volatility between the hedged
securities and the futures contracts. If this limitation is exceeded at any
time, the Fund will take prompt action to close out a sufficient number of
open contracts to bring its open futures and options positions within this
limitation.
`MARGIN'' IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, the Fund is
required to deposit an amount of `initial margin'' in cash or U.S.
Treasury bills with the custodian (or the broker, if legally permitted).
The nature of initial margin in futures transactions is different from that
of margin in securities transactions in that futures contracts initial
margin does not involve a borrowing by the Fund to finance the
transactions. Initial margin is in the nature of a performance bond or good
faith deposit on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual obligations
have been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the Fund
pays or receives cash, called `variation margin,'' equal to the daily
change in value of the futures contract. This process is known as `marking
to market.''Variation margin does not represent a borrowing or loan by the
Fund but is instead settlement between the Fund and the broker of the
amount one would owe the other if the futures contract expired. In
computing its daily net asset value, the Fund will mark to market its open
futures positions. The Fund is also required to deposit and maintain margin
when it writes call options on futures contracts.
REGULATORY RESTRICTIONS
To the extent required to comply with Commodity Futures Trading Commission
Regulation 4.5 and thereby avoid status as a `commodity pool operator,''
the Fund will not enter into a futures contract, or purchase an option
thereon, if immediately thereafter the initial margin deposits for futures
contracts held by it, plus premiums paid by it for open options on futures,
would exceed 5% of the total assets of the Fund. The Fund will not engage
in transactions in futures contracts or options thereon for speculation,
but only to attempt to hedge against changes in market conditions affecting
the value of assets which the Fund holds or intends to purchase. When
futures contracts or options thereon are purchased in order to protect
against a price increase on securities or other assets intended to be
purchased later, it is anticipated that at least 75% of such intended
purchases will be completed. When other futures contracts or options
thereon are purchased, the underlying value of such contracts will at all
times not exceed the sum of (1) accrued profit on such contracts held by
the broker; (2) cash or high-quality money market instruments set aside in
an identifiable manner; and (3) cash proceeds from investments due in 30
days or less.
PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES
The Fund may purchase put options on portfolio securities to protect
against price movements in particular securities in its portfolio. A put
option gives the Fund, in return for a premium, the right to sell the
underlying security to the writer (seller) at a specified price during the
term of the option.
WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may write covered call options to generate income. As a writer of
a call option, the Fund has the obligation upon exercise of the option
during the option period to deliver the underlying security upon payment of
the exercise price. The Fund may only sell call options either on
securities held in its portfolio or on securities which it has the right to
obtain without payment of further consideration (or has segregated cash in
the amount of any additional consideration).
OVER-THE-COUNTER OPTIONS
The Fund may purchase and write over-the-counter options (`OTC options'')
on portfolio securities in negotiated transactions with the buyers or
writers of the options for those options on portfolio securities held by
the Fund and not traded on an exchange.
OTC options are two-party contracts with price and terms negotiated between
buyer and seller. In contrast, exchange-traded options are third-party
contracts with standardized strike prices and expiration dates and are
purchased from a clearing corporation. Exchange-traded options have a
continuous liquid market while over-the-counter options may not.
WARRANTS
The Fund may invest in warrants. Warrants are basically options to purchase
common stock at a specific price (usually at a premium above the market
value of the optioned common stock at issuance) valid for a specific period
of time. Warrants may have a life ranging from less than a year to twenty
years or may be perpetual. However, most warrants have expiration dates
after which they are worthless. In addition, if the market price of the
common stock does not exceed the warrant's exercise price during the life
of the warrant, the warrant will expire as worthless. Warrants have no
voting rights, pay no dividends, and have no rights with respect to the
assets of the corporation issuing them. The percentage increase or decrease
in the market price of the warrant may tend to be greater than the
percentage increase or decrease in the market price of the optioned common
stock.
ADDITIONAL RISK CONSIDERATIONS
The Trustees consider at least annually the likelihood of the imposition by
any foreign government of exchange control restrictions which would affect
the liquidity of the Fund's assets maintained with custodians in foreign
countries, as well as the degree of risk from political acts of foreign
governments to which such assets may be exposed. The Trustees also consider
the degree of risk involved through the holding of portfolio securities in
domestic and foreign securities depositories. However, in the absence of
willful misfeasance, bad faith or gross negligence on the part of the
Adviser, any losses resulting from the holding of the Fund's portfolio
securities in foreign countries and/or with securities depositories will be
at the risk of shareholders. No assurance can be given that the Trustees'
appraisal of the risks will always be correct or that such exchange control
restrictions or political acts of foreign governments might not occur.
PORTFOLIO TURNOVER
The Fund will not attempt to set or meet a portfolio turnover rate since
any turnover would be incidental to transactions undertaken in an attempt
to achieve the Fund's investment objective. Portfolio securities will be
sold when the Adviser believes it is appropriate, regardless of how long
those securities have been held. The Adviser does not anticipate that the
Fund's portfolio turnover rate will exceed 50%.
INVESTMENT LIMITATIONS
ACQUIRING SECURITIES
The Fund will not acquire more than 10% of the outstanding voting
securities of any one issuer, or acquire any securities of Deposit
Guaranty Corp. or its affiliates.
CONCENTRATION OF INVESTMENTS
The Fund will not invest more than 25% of its total assets in
securities of issuers having their principal business activities in the
same industry.
BORROWING
The Fund will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then only in amounts up to one-
third of the value of its total assets, including the amount borrowed.
The Fund will not purchase securities while outstanding borrowings
exceed 5% of the value of its total assets. (This borrowing provision
is not for investment leverage but solely to facilitate management of
the portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities would be inconvenient or
disadvantageous. )
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate assets, except when
necessary for permissible borrowings. In those cases, it may pledge
assets having a value of 15% of its assets taken at cost. Neither the
deposit of underlying securities or other assets in escrow in
connection with the writing of put or call options or the purchase of
securities on a when-issued basis, nor margin deposits for the purchase
and sale of financial futures contracts and related options are deemed
to be a pledge.
BUYING ON MARGIN
The Fund will not purchase any securities on margin, but may obtain
such short-term credits as are necessary for clearance of transactions,
except that the Fund may make margin payments in connection with its
use of financial futures contracts or related options and transactions.
ISSUING SENIOR SECURITIES
The Fund will not issue senior securities except in connection with
transactions described in other investment limitations or as required
by forward commitments to purchase securities or currencies.
UNDERWRITING
The Fund will not underwrite or participate in the marketing of
securities of other issuers, except as it may be deemed to be an
underwriter under federal securities law in connection with the
disposition of its portfolio securities.
INVESTING IN REAL ESTATE
The Fund will not invest in real estate, although it may invest in
securities secured by real estate or interests in real estate or issued
by companies, including real estate investment trusts, which invest in
real estate or interests therein.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities or commodity contracts,
except that the Fund may purchase and sell financial futures contracts
and options on financial futures contracts, provided that the sum of
its initial margin deposits for financial futures contracts held by the
Fund, plus premiums paid by it for open options on financial futures
contracts may not exceed 5% of the fair market value of the Fund's
total assets, after taking into account the unrealized profits and
losses on those contracts. Further, the Fund may engage in foreign
currency transactions and purchase or sell forward contracts with
respect to foreign currencies and related options.
LENDING CASH OR SECURITIES
The Fund will not lend any assets except portfolio securities. This
shall not prevent the purchase or holding of bonds, debentures, notes,
certificates of indebtedness, or other debt securities of an issuer,
repurchase agreements or other transactions which are permitted by the
Fund's investment objective and policies or its Declaration of Trust.
INVESTING IN MINERALS
The Fund will not invest in interests in oil, gas, or other mineral
exploration or development programs, other than debentures or equity
stock interests.
SELLING SHORT
The Fund will not sell securities short unless (1) it owns, or has a
right to acquire, an equal amount of such securities, or (2) it has
segregated an amount of its other assets equal to the lesser of the
market value of the securities sold short or the amount required to
acquire such securities. The segregated amount will not exceed 10% of
the Fund's net assets. While in a short position, the Fund will retain
the securities, rights, or segregated assets.
Except as noted, the above investment limitations cannot be changed without
shareholder approval. The following limitations, however, may be changed by
the Trustees without shareholder approval. Shareholders will be notified
before any material change in these limitations becomes effective.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for the purpose of
exercising control or management.
INVESTING IN WARRANTS
The Fund will not invest more than 5% of its net assets in warrants. No
more than 2% of the Fund's net assets, to be included within the
overall 5% limit on investments in warrants, may be invested in
warrants which are not listed on the New York Stock Exchange or the
American Stock Exchange.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will not own securities of open-end investment companies, own
more than 3% of the total outstanding voting stock of any closed-end
investment company, invest more than 5% of its total assets in any
closed-end investment company, or invest more than 10% of its total
assets in closed-end investment companies in general. The Fund will
purchase securities of closed-end investment companies only in open-
market transactions involving only customary broker's commissions.
However, these limitations are not applicable if the securities are
acquired in a merger, consolidation, reorganization, or acquisition of
assets. The Fund will indirectly bear its proportionate share of any
fees and expenses paid by other investment companies, in addition to
the fees and expenses payable directly by the Fund.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets
in illiquid securities, including securities not determined by the
Trustees to be liquid, repurchase agreements with maturities longer
than seven days after notice, and certain over-the-counter options.
DEALING IN PUTS AND CALLS
The Fund will not write call options or put options on securities,
except hat the Fund may write covered call options and secured put
options on all or any portion of its portfolio, provided the securities
are held in the Fund's portfolio or the Fund is entitled to them in
deliverable form without further payment or the Fund has segregated
cash in the amount of any further payments. The Fund will not purchase
put options on securities unless the securities or an offsetting call
option is held in the Fund's portfolio. The Fund may also purchase,
hold or sell (i) contracts for future delivery of securities or
currencies and (ii) warrants granted by the issuer of the underlying
securities.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such restriction.
The Fund has no present intent to borrow money or pledge securities in
excess of 5% of the value of its total assets during the coming fiscal
year.
DG INVESTOR SERIES MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with DG Investor Series, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; formerly, President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director of the
Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center - Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly, Hematologist,
Oncologist, and Internist, Presbyterian and Montefiore Hospitals; Director
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Edward C. Gonzales*
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President, Treasurer and Trustee
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee of the
Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing/Conference Planning, Manchester Craftsmen's
Guild; Restaurant Consultant, Frick Art & History Center; Conference
Coordinator, University of Pittsburgh Art History Department; Director or
Trustee of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company, and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Company.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President , Secretary and Treasurer
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds; Treasurer of some of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some
of the Funds; Director or Trustee of some of the Funds.
Charles L. Davis, Jr.
Federated Investors Tower
Pittsburgh, PA
Birthdate: March 23, 1960
Vice President and Assistant Treasurer
Vice President and Assistant Treasurer of some of the Funds.
*This Trustee is deemed to be an ``interested person'' as defined in
the Investment Company Act of 1940.
@Member of the Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board between
meetings of the Board.
As referred to in the list of Trustees and Officers, `Funds'' includes the
following investment companies:
111 Corcoran Funds; Annuity Management Series; Arrow Funds; Automated
Government Money Trust; Blanchard Funds; Blanchard Precious Metals Fund,
Inc.; Cash Trust Series II; Cash Trust Series, Inc. ; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable Rate
U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Equity Funds; Federated Equity Income Fund,
Inc.; Federated Fund for U.S. Government Securities, Inc.; Federated GNMA
Trust; Federated Government Income Securities, Inc.; Federated Government
Trust; Federated High Income Bond Fund, Inc.; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Insurance Series; Federated
Investment Portfolios; Federated Investment Trust; Federated Master Trust;
Federated Municipal Opportunities Fund, Inc.; Federated Municipal
Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated
Stock and Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust;
Federated Total Return Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years; Federated U.S.
Government Securities Fund: 2-5 Years; Federated U.S. Government Securities
Fund: 5-10 Years; Federated Utility Fund, Inc.; First Priority Funds; Fixed
Income Securities, Inc.; High Yield Cash Trust; Intermediate Municipal
Trust; International Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Term Trust, Inc. - 1999; Liberty U.S.
Government Money Market Trust; Liquid Cash Trust; Managed Series Trust;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; Newpoint Funds; Peachtree Funds;
RIMCO Monument Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
The Planters Funds; The Starburst Funds; The Starburst Funds II; The Virtus
Funds; Trust for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities; Trust for U.S.
Treasury Obligations; and World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Fund`s outstanding
shares.
TRUSTEES COMPENSATION
Name , Aggregate
Position With Compensation From
Trust Trust+
John F. Donahue, $0
Chairman and Trustee
Thomas G. Bigley, $1,781
Trustee
John T. Conroy, Jr., $1,914
Trustee
William J. Copeland, $1,914
Trustee
James E. Dowd, $1,914
Trustee
Lawrence D. Ellis, M.D., $1,781
Trustee
Edward L. Flaherty, Jr., $1,781
Trustee
Edward C. Gonzales, $0
President, Treasurer and Trustee
Peter E. Madden, $1,781
Trustee
Gregor F. Meyer, $1,781
Trustee
John E. Murray, Jr., $ 1,781
Trustee
Wesley W. Posvar, $1,781
Trustee
Marjorie P. Smuts, $1,781
Trustee
+The aggregate compensation is provided for the Trust which is comprised
of six portfolios. Information is furnished for the fiscal year ended
February 29, 1996.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
INVESTMENT ADVISER
The Fund's investment adviser is ParkSouth Corporation (the "Adviser"), a
subsidiary of Deposit Guaranty National Bank, a national banking
association founded in 1925 which, in turn, is a subsidiary of Deposit
Guaranty Corp. The Adviser shall not be liable to the Trust, the Fund or
any shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security, or for anything done or omitted
by it, except acts or omissions involving willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties imposed upon it by
its contract with the Trust.
Because of the internal controls maintained by Deposit Guaranty National
Bank to restrict the flow of non-public information, Fund investments are
typically made without any knowledge of Deposit Guaranty National Bank's or
its affiliates' lending relationships with an issuer.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment
advisory fee as described in the prospectus.
SUB-ADVISER
The Fund's sub-adviser is Lazard Freres Asset Management (the `Sub-
Adviser'), a division of Lazard Freres & Co. LLC, a New York limited
liability company.
SUB-ADVISORY FEES
For its sub-advisory services, the Sub-Adviser receives an annual sub-
advisory fee as described in the prospectus.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Sub-Adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the Sub-Adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can be
obtained elsewhere. The Sub-Adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Trustees. The Sub-Adviser may select brokers and dealers
who offer brokerage and research services. These services may be furnished
directly to the Fund or to the Sub-Adviser and may include: advice as to
the advisability of investing in securities; security analysis and reports;
economic studies; industry studies; receipt of quotations for portfolio
evaluations; and similar services. Research services provided by brokers
and dealers may be used by the Sub-Adviser or its affiliates in advising
the Fund and other accounts. To the extent that receipt of these services
may supplant services for which the Sub-Adviser or its affiliates might
otherwise have paid, it would tend to reduce their expenses. The Sub-
Adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions
charged by such persons are reasonable in relationship to the value of the
brokerage and research services provided.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the Sub-Adviser, investments of the
type the Fund may make may also be made by those other accounts. When the
Fund and one or more other accounts managed by the Sub-Adviser are prepared
to invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the Sub-Adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund. In other
cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
OTHER SERVICES
FUND ADMINISTRATION
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for a fee as
described in the prospectus.
CUSTODIAN AND PORTFOLIO ACCOUNTANT
State Street Bank and Trust Company, Boston, MA, is custodian for the
securities and cash of the Fund. Federated Services Company, Pittsburgh,
PA, provides certain accounting and recordkeeping services with respect to
the Fund's portfolio investments. The fee paid for this service is based
upon the level of the Fund's average net assets for the period plus out-of-
pocket expenses.
TRANSFER AGENT
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, maintains all necessary shareholder
records. For its services, the transfer agent receives a fee based on the
size, type and number of accounts and transactions made by shareholders.
INDEPENDENT AUDITORS
The independent auditors for the Fund are KPMG Peat Marwick LLP,
Pittsburgh, PA.
PURCHASING SHARES
Shares of the Fund are sold at their net asset value next determined after
an order is received on days the New York Stock Exchange and Federal
Reserve Wire System are open for business. The procedure for purchasing
shares is explained in the prospectus under "Investing in the Fund."
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES
These arrangements permit the payment of fees to financial institutions,
the distributor, and Federated Shareholder Services, to stimulate
distribution activities and to cause services to be provided to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include, but are not limited to: marketing efforts; providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries; and assisting clients in
changing dividend options, account designations and addresses.
By adopting the Plan, the Trustees expect that the Fund will be able to
achieve a more predictable flow of cash for investment purposes and to meet
redemptions. This will facilitate more efficient portfolio management and
assist the Fund in pursuing its investment objectives. By identifying
potential investors whose needs are served by the Fund's objectives, and
properly servicing these accounts, it may be possible to curb sharp
fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail; (3)
enhancing shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be
in federal funds or be converted into federal funds. Deposit Guaranty
National Bank and Commercial National Bank (the `Banks''), as well as
Federated Services Company, act as the shareholder's agent in depositing
checks and converting them to federal funds.
DETERMINING NET ASSET VALUE
Net asset value generally changes each day. The days on which net asset
value is calculated by the Fund are described in the prospectus.
Dividend income is recorded on the ex-dividend date, except certain
dividends from foreign securities where the ex-dividend date may have
passed, are recorded as soon as the Fund is informed of the ex-dividend
date.
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's securities, other than options, are determined
as follows:
o according to the prices provided by an independent pricing service if
available, or at fairmarket value as determined in good faith by the
Trustees; or
o for short-term obligations with remaining maturities of 60 days or
less at the time of purchase, at amortized cost, unless the Trustees
determine that particular circumstances of the security indicate
otherwise.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, trading characteristics, and other market data.
The Fund will value futures contracts and options at their market values
established by the exchanges on which they are traded at the close of
trading on such exchanges unless the Trustees determine in good faith that
another method of valuing such investments is necessary.
TRADING IN FOREIGN SECURITIES
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange. In computing the net asset value,
the Fund values foreign securities at the latest closing price on the
exchange on which they are traded immediately prior to the closing of the
New York Stock Exchange. Certain foreign currency exchange rates may also
be determined at the latest rate prior to the closing of the New York Stock
Exchange. Foreign securities quoted in foreign currencies are translated
into U.S. dollars at current rates. Occasionally, events that affect these
values and exchange rates may occur between the times at which they are
determined and the closing of the New York Stock Exchange. If such events
materially affect the value of portfolio securities, these securities may
be valued at their fair value as determined in good faith by the Trustees,
although the actual calculation may be done by others.
EXCHANGE PRIVILEGE
REQUIREMENTS FOR EXCHANGE
Before the exchange, the shareholder must receive a prospectus of the fund
for which the exchange is being made. This privilege is available to
shareholders resident in any state in which the fund shares being acquired
may be sold. Upon receipt of proper instructions and required supporting
documents, shares submitted for exchange are redeemed and the proceeds
invested in shares of the other fund.
Further information on the exchange privilege may be obtained by calling
the Fund.
MAKING AN EXCHANGE
Instructions for exchanges may be given in writing. Written instructions
may require a signature guarantee.
REDEEMING SHARES
Shares of the Fund are redeemed at the next computed net asset value after
the Banks receive the redemption request. Redemption procedures are
explained in the prospectus under "Redeeming Shares." Redemption requests
cannot be executed on days on which the New York Stock Exchange is closed
or on federal holidays when wire transfers are restricted.
Although State Street Bank does not charge for telephone redemptions, it
reserves the right to charge a fee for the cost of wire-transferred
redemptions of less than $5,000.
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part
by a distribution of securities from the Fund's portfolio.
Redemption in kind will be made in conformity with applicable Securities
and Exchange Commission rules, taking such securities at the same value
employed in determining net asset value and selecting the securities in a
manner the Trustees determine to be fair and equitable.
The Fund has elected to be governed by Rule 18f-1 of the Investment Company
Act of 1940 under which the Fund is obligated to redeem shares for any one
shareholder in cash only up to the lesser of $250,000 or 1% of the Fund's
net asset value during any 90-day period.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect
its shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of its shareholders for acts or
obligations of the Trust. These documents require notice of this disclaimer
to be given in each agreement, obligation, or instrument the Trust or its
Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to
use its property to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder
for any act or obligation of the Trust. Therefore, financial loss resulting
from liability as a shareholder will occur only if the Trust itself cannot
meet its obligations to indemnify shareholders and pay judgments against
them.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Fund must,
among other requirements:
o derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
o derive less than 30% of its gross income from the sale of securities
held less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned
during the year.
FOREIGN TAXES
Investment income on certain foreign securities in which the Fund may
invest may be subject to foreign withholding or other taxes that could
reduce the return on these securities. Tax treaties between the United
States and foreign countries, however, may reduce or eliminate the amount
of foreign taxes to which the Fund would be subject.
SHAREHOLDERS' TAX STATUS
Shareholders of the Fund are subject to federal income tax on dividends
received as cash or additional shares. These dividends, and any short-term
capital gains, are taxable as ordinary income. No portion of any income
dividend paid by the Fund is eligible for the dividends received deduction
available to corporations.
TOTAL RETURN
Average annual total return is the average compounded rate of return for a
given period that would equate a $1,000 initial investment to the ending
redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period
by the net asset value per share at the end of the period. The number of
shares owned at the end of the period is based on the number of shares
purchased at the beginning of the period with $1,000, adjusted over the
period by any additional shares, assuming the monthly reinvestment of all
dividends and distributions.
YIELD
The yield for the shares of the Fund is determined by dividing the net
investment income per share (as defined by the Securities and Exchange
Commission) earned by shares of the Fund over a thirty-day period by the
maximum offering price per share of the respective class on the last day of
the period. This value is annualized using semi-annual compounding. This
means that the amount of income generated during the thirty-day period is
assumed to be generated each month over a 12-month period and is reinvested
every six months. The yield does not necessarily reflect income actually
earned by the Fund because of certain adjustments required by the
Securities and Exchange Commission and, therefore, may not correlate to the
dividends or other distributions paid to the shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in
shares of the Fund, the performance will be reduced for those shareholders
paying those fees.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
OLIPPER ANALYTICAL SERVICES, INC., for example, makes comparative
calculations for one-month, three-month, one-year, and five-year
periods which assume the reinvestment of all capital gains
distributions and income dividends.
oEUROPE, AUSTRALIA, AND FAR EAST (EAFE) INDEX is a market
capitalization weighted foreign securities index, which is widely
used to measure the performance of European, Australian, New Zealand
and Far Eastern stock markets. The index covers approximately 1,020
companies drawn from 18 countries in the above regions. The index
values its securities daily in both U.S. dollars and local currency
and calculates total returns monthly. EAFE U.S. dollar total return
is a net dividend figure less Luxembourg withholding tax. The EAFE
is monitored by Capital International, S.A., Geneva, Switzerland.
oSTANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industry, transportation, and
financial and public utility companies, can be used to compare to
the total returns of funds whose portfolios are invested primarily
in common stocks. In addition, the Standard & Poor's index assumes
reinvestments of all dividends paid by stocks listed on its index.
Taxes due on any of these distributions are not included, nor are
brokerage or other fees calculated in Standard & Poor's figures.
oMORNINGSTAR, INC., an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates more
than 1,000 NASDAQ-listed mutual funds of all types, according to
their risk-adjusted returns. The maximum rating is five stars, and
ratings are effective for two weeks.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on non-standardized base periods. These total
returns represent the historic change in the value of an investment in the
Fund based on monthly reinvestment of dividends over a specified period of
time.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns in general, that demonstrate
basic investment concepts such as tax-deferred compounding, dollar-cost
averaging and systematic investment. In addition, the Fund can compare its
performance, or performance for the types of securities in which it
invests, to a variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Funds. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute (`ICI''). For example,
according to the ICI, twenty-seven percent of American households are
pursuing their financial goals through mutual funds. These investors, as
well as businesses and institutions, have entrusted over $3 trillion to the
more than 5,500 funds available.
APPENDIX
MOODY'S INVESTORS SERVICE, INC., COMMERCIAL PAPER RATING DEFINITIONS
P-1-Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by the following
characteristics:
oLeading market positions in well established industries;
oHigh rates of return on funds employed;
oConservative capitalization structures with moderate reliance on
debt and ample asset protection;
oBroad margins in earning coverage of fixed financial charges and
high internal cash generation; and
oWell-established access to a range of financial markets and assured
sources of alternate liquidity.
STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATING DEFINITIONS
A-1-This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus (+) sign designation.
MOODY'S INVESTORS SERVICE, INC., LONG-TERM BOND RATING DEFINITIONS
AAA-Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as ``gilt edge.'' Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA-Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A-Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
STANDARD AND POOR'S RATINGS GROUP LONG-TERM DEBT RATING DEFINITIONS
AAA-Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA-Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A-Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements: (7,8) To be filed by amendment.
(b) Exhibits:
(1) Conformed copy of Declaration of Trust of the
Registrant (1.);
(i)Conformed copy of Amendment No. 1 of Declaration
of Trust of the Registrant (2.);
(ii)Conformed copy of Amendment No. 3 of Declaration
of Trust of the Registrant (4.);
(iii)Conformed copy of Amendment to the Declaration of
Trust of the Registrant dated May 17, 1994 (8.);
(2) Copy of By-Laws of the Registrant (1.);
(3) Not applicable;
(4) (i)Copy of Specimen Certificate for Shares of
Beneficial Interest of DG U.S. Government Money
Market Fund (3.);
(ii)Copy of Specimen Certificate for Shares of
Beneficial Interest of DG Limited Term Government
Income Fund (3.);
(iii)Copy of Specimen Certificate for Shares of
Beneficial Interest of DG Government Income Fund
(3.);
(iv)Copy of Specimen Certificate for Shares of
Beneficial Interest of DG Equity Fund (3.);
(v)Copy of Specimen Certificate for Shares of
Beneficial Interest of DG Municipal Income (6.);
(vi)Copy of Specimen Certificate for Shares of
Beneficial Interest of DG Opportunity Fund (8.);
(vii)Copy of Specimen Certificate for Shares of
Beneficial Interest of DG Prime Money Market
Fund; (12)
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed March 18, 1992. (File Nos.
33-46431 and 811-6607)
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed April 29, 1992. (File Nos. 33-
46431 and 811-6607)
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed May 22, 1992. (File Nos. 33-46431
and 811-6607)
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No.2 on Form N-1A filed October 14, 1992. (File Nos. 33-
46431 and 811-6607)
6. Response is incorporated by Reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed April 23, 1993. (File Nos. 33-
46431 and 811-6607)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed April 27, 1994. (File Nos. 33-
46431 and 811-6607)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed May 26, 1994. (File Nos. 33-46431
and 811-6607)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed November 15, 1996. (File Nos. 33-
46431 and 811-6607)
(5) (i)Conformed copy of Investment Advisory Contract of
Registrant (7.);
(a) Conformed copy of Exhibit A for DG U.S.
Government Money Market Fund (8.);
(b) Conformed copy of Exhibit B for DG
Limited Term Government Income Fund
(8.);
(c) Conformed copy of Exhibit C for DG Government
Income Fund (8.);
(d) Conformed copy of Exhibit D for DG Equity
Fund (8.);
(e) Conformed copy of Exhibit E for DG Municipal
Income Fund (8.);
(f) Conformed copy of Exhibit F for DG
Opportunity Funds; (9.)
(g) Form of Exhibit G for DG Prime Money Market
Fund; (12)
(ii)Conformed copy of Sub-Advisory Agreement between
Deposit Guaranty National Bank and Commercial
National Bank (6.);
(a) Conformed copy of Exhibit A for DG Equity
Fund (8.);
(b) Conformed copy of Exhibit B for DG Government
Income Fund (8.);
(c) Conformed copy of Exhibit C for DG Limited
Term Government Income Fund (8.);
(d) Conformed copy of Exhibit D for DG Municipal
Income Fund (8.);
(e) Conformed copy of Exhibit E for DG
Opportunity Fund; (9.)
(6) Conformed copy of Distributor's Contract of the
Registrant (3.);
(i)Conformed copy of Exhibit A for DG vs Government
Money Market Fund (8.);
(ii) Copy of Exhibit B for DG Limited Term Government
Income Fund (8.);
+ All exhibits have been filed electronically.
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed May 22, 1992. (File Nos. 33-46431
and 811-6607)
6. Response is incorporated by Reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed April 23, 1993. (File Nos. 33-
46431 and 811-6607)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed April 27, 1994. (File Nos. 33-
46431 and 811-6607)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed May 26, 1994. (File Nos. 33-46431
and 811-6607)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed February 10, 1995. (File Nos. 33-
46431 and 811-6607)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed November 15, 1996. (File Nos. 33-
46431 and 811-6607)
(iii) Conformed copy of Exhibit C for DG Government
Income Fund (8.);
(iv)Conformed copy of Exhibit D for DG Equity Income
Fund (8.);
(v)Conformed copy of Exhibit E for DG Municipal
Income Fund (8.);
(vi)Conformed copy of Exhibit F for DG Opportunity
Fund;(9.)
(vii)Form of Exhibit G for DG Prime Money Market Fund;
(12)
(7) Not applicable
(8) Conformed copy of Custodian Agreement of the Registrant
(6.);
(9) (i)Conformed copy of Transfer Agency and Service
Agreement of Registrant (6.);
(ii) Conformed copy of Administrative Services
Agreement (7.);
(iii)Conformed copy of Shareholder Services Agreement
(8.);
(iv)Conformed copy of Shareholder Services Plan; (9.)
(v)Conformed copy of Exhibit A to Shareholder
Services Plan; (9.)
(10) Conformed copy of Opinion and Consent of Counsel as to
legality of shares being registered;(11)
(11) Not applicable;
(12) Not applicable;
(13) Conformed copy of Initial Capital Understanding (2.);.
(14) Not applicable;
(15) (i)Copy of Distribution Plan of the Registrant (2.);
(a) Conformed copy of Exhibit A for D.G. U.S.
Government Money Market Fund (8.);
(b) Conformed copy of Exhibit B for DG Limited
Term Government Income Fund (8.);
(c) Conformed copy of Exhibit C for DG Government
Income Fund (8.);
+ All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed April 29, 1992. (File Nos. 33-
46431 and 811-6607)
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No.3 on Form N-1A filed October 28, 1992. (File Nos. 33-
46431 and 811-6607)
6. Response is incorporated by Reference to Registrant's Post-Effective
Amendment No. 4 on Form N-1A filed April 23, 1993. (File Nos. 33-
46431 and 811-6607)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed May 26, 1994. (File Nos. 33-46431
and 811-6607)
9. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 8 on Form N-1A filed February 10, 1995. (File Nos. 33-
46431 and 811-6607);
11. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed June 24, 1996. (File Nos. 33-46431
and 811-6607)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 11 on Form N-1A filed November 15, 1996. (File Nos. 33-
46431 and 811-6607)
(d) Conformed copy of Exhibit D for DG Equity
Fund (8.);
(e) Conformed copy of Exhibit E for DG Municipal
Income Fund (8.);
(f) Conformed copy of Exhibit F for DG
Opportunity Fund; (9.)
(g) Form of Exhibit G for DG Prime Money Market
Fund; (12)
(ii)Copy of Rule 12b-1 Agreement of the Registrant
(8.);
(16) Schedule for Computation of Fund Performance Data;
(i)DG Equity Fund(5.);
(ii)DG Government Income Fund(5.);
(iii)DG Limited Term Government Income Fund(5.);
(iv)DG U.S. Government Money Market Fund(5.);
(v)DG Municipal Income Fund (6.);
(vi)DG Opportunity Fund; (9.)
(17) Not applicable;
(18) Conformed copy of Power of Attorney; (10.)
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of December 16, 1996
Shares of beneficial interest
(no par value)
DG U.S. Government Money
Market Fund 73
DG Limited Term Government
Income Fund 151
DG Government Income Fund 145
DG Equity Fund 840
DG Municipal Income Fund 79
DG Opportunity Fund 630
DG Prime Money Market Fund Not currently effective
DG International Equity Fund Not currently effective
Item 27. Indemnification: (4)
+ All exhibits have been filed electronically.
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No.2 on Form N-1A filed October 14, 1992. (File Nos. 33-
46431 and 811-6607)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed April 25, 1995. (File Nos. 33-46431
and 811-6607)
Item 28.Business and Other Connections of Investment Adviser:
(a)Deposit Guaranty National Bank, a national banking
association formed in 1925, is a subsidiary of Deposit
Guaranty Corp ("DGC"). Through its subsidiaries and
affiliates, DGC offers a full range of financial services to
the public, including commercial lending, depository
services, cash management, brokerage services, retail
banking, mortgage banking, investment advisory services and
trust services.
As of December 31, 1995, the Trust Division of Deposit
Guaranty National Bank had approximately $2.2 billion under
administration, of which it had investment discretion over
$1.7 billion. Deposit Guaranty National Bank has served as
the Trust's investment adviser since May 5, 1992.
The principal executive officers of the Fund's Investment
Adviser, and the Directors of the Fund's Adviser, are set
forth in the following tables. Unless otherwise noted, the
position listed under Other Substantial Business, Profession,
Vocation or Employment is with Deposit Guaranty National
Bank.
Other Substantial
Position With Business,Profession,
Name the Adviser Vocation or Employment
E.B. Robinson, Jr. Chairman of the Board
and Chief Executive
Howard L. McMillan, Jr. President and Chief
Operating Officer
William R. Boone Executive Vice President
Thomas M. Hontzas Executive Vice President
W. Parks Johnson Executive Vice President
James S. Lenoir Executive Vice President
W. Stanley Pratt Executive Vice President
Arlen L. McDonald Executive Vice President
and Chief Financial Officer
DIRECTORS
Haley R. Barbour Warren A. Hood, Jr. W.R. Newman, III
Michael B. Bemis Charles L. Irby John N. Palmer
W. Randolph James E.B. Robinson, Jr. Sharon S. Greener
Booker T. Jones Robert D. Robinson Robert L.T. Smith, Jr.
Howard L. McMillan, Jr. Douglas A. Herring Richard
McRae,Jr.
J. Kelley Williams
(b)Commercial National Bank, a national banking association
which received its charter in 1886, is a subsidiary of DGC
and serves as Investment Sub-Adviser to DG Limited Term
Government Income Fund, DG Government Income Fund, DG Equity
Fund, DG Municipal Income Fund and DG Opportunity Fund. As
of December 31, 1995, the Trust Division at Commercial
National Bank had approximately $1.5 billion in trust assets
under administration, of which it had investment discretion
over $1.1 billion. Commercial National Bank has served as
sub-adviser to DG Limited Term Government Income Fund, DG
Government Income Fund, DG Equity Fund and DG Municipal
Income Fund since July 20, 1992 and for DG Opportunity Fund
since May 25, 1994.
The principal executive officers of the Investment Sub-
Adviser, and the Directors of the Investment Sub-Adviser, are
set forth in the following tables. Unless otherwise noted,
the position listed under Other Substantial Business,
Profession, Vocation or Employment is with Commercial
National Bank.
Other Substantial
Position With Business, Profession,
Name the Sub-Adviser Vocation or Employment
Steven C. Walker President and Chief
Executive Officer
P. Michael Adkins Executive Vice President
C. David Barrentine, Jr. Executive Vice President
David H. Nordyke Executive Vice President
Robert H. Boehmler, Jr. Executive Vice President
Richard H. Sale Senior Vice President
Ronald E. Yrjanson Vice President
DIRECTORS
Willis L. Meadows Dewey W. Corley C. W. Holtsclaw, Jr.
William C. Peatross E. B. Robinson, Jr. Steven C. Walker
N. H. Wheless, Jr. Richard H. Bremer L. Michael Ashbrook
Darrell Finney Peggy R. Newell Chris Gabriel
Dr. Kenneth L. Schwab Robert B. Hamm Ivan I. Smith, Jr.
(c) Lazard Freres Asset Management, a division of Lazard Freres &
Co. LLC, a New York limited liability company, which is
registered as an investment adviser with the Securities and
Exchange Commission and is a member of the New York, American
and Midwest Stock Exchanges. Lazard Freres Asset Management
provides investment management services to client
discretionary accounts with assets totalling approximately
$30.7 billion as of December 31, 1995. Lazard Freres Asset
Management serves as Sub-Adviser to DG International Equity
Fund.
Lazard Freres Asset Management is managed by members who are
referred to as Managing Directors and are as follows: Norman
Eig; Herbert W. Gullquist; Thomas F. Dunn; Robert P.
Morgenthau; John R. Reese; John R. Reinsberg; Michael S. Rome;
Alexander E. Zagoreos; Larry Kohn; and Eileen Alexanderson.
Item 29. Principal Underwriters:
(a) 111 Corcoran Funds; Annuity Management Series; Arrow Funds;
Automated Government Money Trust; BayFunds; Blanchard Funds;
Blanchard Precious Metals Fund, Inc.; Cash Trust Series II; Cash
Trust Series, Inc.; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated Adjustable Rate U.S. Government Fund, Inc.;
Federated American Leaders Fund, Inc.; Federated ARMs Fund;
Federated Equity Funds; Federated Equity Income Fund, Inc.;
Federated Fund for U.S. Government Securities, Inc.; Federated
GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund,
Inc.; Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Insurance Series; Federated
Investment Portfolios; Federated Investment Trust; Federated
Master Trust; Federated Municipal Opportunities Fund, Inc.;
Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term
U.S. Government Trust; Federated Stock and Bond Fund, Inc.;
Federated Stock Trust; Federated Tax-Free Trust; Federated Total
Return Series, Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3 Years; Federated
U.S. Government Securities Fund: 2-5 Years; Federated U.S.
Government Securities Fund: 5-10 Years; Federated Utility Fund,
Inc.; First Priority Funds; Fixed Income Securities, Inc.; High
Yield Cash Trust; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series
Funds, Inc.; Investment Series Trust; Liberty U.S. Government
Money Market Trust; Liquid Cash Trust; Managed Series Trust;
Marshall Funds, Inc.; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities
Income Trust; Newpoint Funds; Peachtree Funds; RIMCO Monument
Funds; SouthTrust Vulcan Funds; Star Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Biltmore Funds; The
Biltmore Municipal Funds; The Monitor Funds; The Planters Funds;
The Starburst Funds; The Starburst Funds II; The Virtus Funds;
Tower Mutual Funds; Trust for Financial Institutions; Trust for
Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; Vision Group of
Funds, Inc.; and World Investment Series, Inc.
Federated Securities Corp. also acts as principal underwriter for
the following closed-end investment company: Liberty Term Trust,
Inc.- 1999.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, Asst.
Secretary, and Asst.
Treasurer, Federated
Securities Corp.
Edward C. Gonzales Director, Executive Vice President, Treasurer
Federated Investors Tower President, Federated, and Trustee
Pittsburgh, PA 15222-3779 Securities Corp.
Thomas R. Donahue Director, Assistant Secretary,
Federated Investors Tower Assistant Treasurer
Pittsburgh, PA 15222-3779 Federated Securities Corp
John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust, Federated
Pittsburgh, PA 15222-3779 Securities Corp.
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Byron F. Bowman Vice President, Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Dale R. Browne Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securites Corp.
Pittsburgh, PA 15222-3779
Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Steven A. La Versa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard Suder Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
J. Timothy Radcliff Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Leslie K. Platt Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(c) Not applicable.
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of the
following locations:
DG Investor Series Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Services Company P.O. Box 8600
Transfer Agent, Dividend Boston, MA 02266-8600
Disbursing Agent and
Shareholder Servicing Agent
Federated Administrative Services Federated Investors Tower
Administrator Pittsburgh, PA 15222-3779
Deposit Guaranty National Bank P.O. Box 1200
Adviser Jackson,MS 39215-1200
Commercial National Bank P.O. Box 21119
Sub-Adviser Shreveport, LA 71152
(except DG U.S. Government Money
Market Fund, DG Prime Money
Market Fund and DG International Equity
Fund)
Lazard Freres Asset Management 30 Rockefeller Plaza
Sub-Adviser to DG International New York, NY 10020
Equity Fund only
State Street Bank and Trust Company P.O. Box 8600
Custodian Boston, MA 02266-8600
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to file a post-effective amendment
on behalf of DG International Equity Fund, using financial
statments for DG International Equity Fund, which need not be
certified, within four to six months from the effective date of
this Post-Effective Amendment No. 12.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, DG INVESTOR SERIES, has
duly caused this Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 15th day of
January 15, 1997.
DG INVESTOR SERIES
BY: /s/C. Grant Anderson
C. Grant Anderson, Assistant Secretary
Attorney in Fact for John F. Donahue
January 15, 1997
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:
NAME TITLE DATE
By:/s/C. Grant Anderson
C. Grant Anderson Attorney In Fact January 15, 1997
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Edward C. Gonzales* President, Treasurer and Trustee
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
