<PAGE>
DG PRIME MONEY MARKET FUND
DG TREASURY MONEY MARKET FUND
(FORMERLY, DG U.S. GOVERNMENT MONEY MARKET FUND)
(Portfolios of DG Investor Series)
- --------------------------------------------------------------------------------
SUPPLEMENT TO COMBINED PROSPECTUS DATED JUNE 30, 1998
1. Notice of Board Action
At a Special Meeting held on September 18, 1998, the Board of Trustees of the DG
Investor Series (the "Funds") approved an Agreement and Plan of Reorganization
between the Funds and the AmeriStar Portfolios of The Infinity Mutual Funds,
Inc. (which are to be renamed the ISG Funds, the "ISG Funds") whereby certain
existing or newly created portfolios of the ISG Funds would acquire all of the
assets (subject to liabilities) of corresponding portfolios of the Funds (as
indicated below) in exchange for Class A and Trust Shares (collectively, the
"ISG Shares") of such portfolios of ISG Funds. Shareholders of the Funds would
then receive ISG Shares of the corresponding portfolios of ISG Funds that would
be equal in value to the Fund shares they owned, and the Funds would be
liquidated and terminated (the "Reorganizations"). The Reorganizations would be
tax-free to Fund Shareholders and would be effected without the imposition of a
sales charge.
<TABLE>
<CAPTION>
FUNDS ISG FUNDS
----- ---------
<S> <C>
DG Equity Fund ISG Large Cap Equity Portfolio
DG Opportunity Fund ISG Small Cap Opportunity Portfolio
DG International Equity Fund ISG International Equity Portfolio
ISG Limited Duration U.S. Government
DG Limited Term Government Income Fund Portfolio
DG Government Income Fund ISG Government Income Portfolio
DG Municipal Income Fund ISG Municipal Income Portfolio
DG Prime Money Market Fund ISG Prime Money Market Portfolio
DG Treasury Money Market Fund ISG U.S. Treasury Money Market Portfolio
</TABLE>
The Reorganizations will be presented for the approval of Shareholders of the
Funds at a Special Meeting of Shareholders to be held on or about December 11,
1998. Shareholders of the Funds will receive a proxy statement discussing the
terms of and the reasons for the Reorganizations in detail, and will be entitled
to vote at the Special Meeting. Assuming satisfaction of the conditions to the
Reorganizations, including approvals by Fund Shareholders, the completion of the
Reorganizations is contemplated to take place in December, 1998.
<PAGE>
2. Please delete the "Summary of Fund Expenses" table on page 2 and replace it
with the following:
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
DG TREASURY MONEY
MARKET FUND
DG PRIME (FORMERLY, DG U.S.
MONEY GOVERNMENT MONEY
MARKET FUND MARKET FUND)
-------------- --------------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)....................... None None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)....................... None None
Contingent Deferred Sales Charge (as a percentage of
original
purchase price or redemption proceeds, if applicable)..... None None
Redemption Fee (as a percentage of amount redeemed, if
applicable)............................................... None None
Exchange Fee................................................ None None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)............................ 0.30% 0.30%
12b-1 Fees(2)............................................... 0.25% 0.00%
Total Other Expenses(3)..................................... 0.11% 0.30%
Shareholder Servicing Fee(4)...................... 0.00% 0.15%
Total Annual Fund Operating Expenses(5)................. 0.66% 0.60%
</TABLE>
(1) The management fees of DG Prime Money Market Fund and DG Treasury Money
Market Fund have been reduced to reflect the voluntary waivers by the adviser.
The adviser can terminate these voluntary waivers at any time at its sole
discretion. The maximum management fees for these Funds is 0.50%.
(2) As of the date of this prospectus DG Treasury Money Market Fund is not
paying or accruing 12b-1 fees. The Fund will not accrue 12b-1 fees until a
separate class of shares has been created for certain institutional investors.
DG Treasury Money Market Fund could pay 0.25% as a 12b-1 fee to the distributor.
(3) Other expenses for DG Prime Money Market Fund have been reduced to reflect
the voluntary waiver of a portion of the administration fee. The administrator
can terminate this voluntary waiver at any time at its sole discretion.
(4) As of the date of this prospectus, DG Prime Money Market Fund is not paying
or accruing a shareholder services fee. If the Fund were paying or accruing the
shareholder services fee, the Fund would be able to pay up to 0.15% of its
average daily net assets for the shareholder services fee.
(5) Total Fund Operating Expenses would have been 0.92% for the DG Prime Money
Market Fund and 0.80% for the DG Treasury Money Market Fund absent the voluntary
waivers described above in Note (1) and Note (3) above. Total Fund Operating
Expenses as of February 28, 1998 for the DG Prime Money Market Fund would have
been 0.94% and 0.77% for the DG Treasury Money Market Fund absent the voluntary
waiver by the adviser. <PAGE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUNDS WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "TRUST INFORMATION" AND "INVESTING IN THE FUNDS." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
------- -------- --------- --------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment assuming (1) 5% annual return and (2)
redemption at the end of each time period, and (3)
payment of the maximum sales charge. The Funds charge
no contingent deferred sales charges...................
DG Prime Money Market Fund............................. $7 $21 $37 $82
DG Treasury Money Market Fund.......................... $6 $19 $33 $75
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
September 23, 1998
Federated Securities Corp. is the distributor of the Funds.
Cusip 23321N707
Cusip 23321N608
G01258-30 (9/98) LOGO
<PAGE>
DG EQUITY FUND
DG OPPORTUNITY FUND
DG INTERNATIONAL EQUITY FUND
DG LIMITED TERM GOVERNMENT INCOME FUND
DG GOVERNMENT INCOME FUND
DG MUNICIPAL INCOME FUND
(Portfolios of DG Investor Series)
- --------------------------------------------------------------------------------
SUPPLEMENT TO COMBINED PROSPECTUS DATED JUNE 30, 1998
1. Notice of Board Action
At a Special Meeting held on September 18, 1998, the Board of Trustees of the DG
Investor Series (the "Funds") approved an Agreement and Plan of Reorganization
between the Funds and the AmeriStar Portfolios of The Infinity Mutual Funds,
Inc. (which are to be renamed the ISG Funds, the "ISG Funds") whereby certain
existing or newly created portfolios of the ISG Funds would acquire all of the
assets (subject to liabilities) of corresponding portfolios of the Funds (as
indicated below) in exchange for Class A and Trust Shares (collectively, the
"ISG Shares") of such portfolios of ISG Funds. Shareholders of the Funds would
then receive ISG Shares of the corresponding portfolios of ISG Funds that would
be equal in value to the Fund shares they owned, and the Funds would be
liquidated and terminated (the "Reorganizations"). The Reorganizations would be
tax-free to Fund Shareholders and would be effected without the imposition of a
sales charge.
<TABLE>
<CAPTION>
FUNDS ISG FUNDS
----- ---------
<S> <C>
DG Equity Fund ISG Large Cap Equity Portfolio
DG Opportunity Fund ISG Small Cap Opportunity Portfolio
DG International Equity Fund ISG International Equity Portfolio
ISG Limited Duration U.S. Government
DG Limited Term Government Income Fund Portfolio
DG Government Income Fund ISG Government Income Portfolio
DG Municipal Income Fund ISG Municipal Income Portfolio
DG Prime Money Market Fund ISG Prime Money Market Portfolio
DG Treasury Money Market Fund ISG U.S. Treasury Money Market Portfolio
</TABLE>
The Reorganizations will be presented for the approval of Shareholders of the
Funds at a Special Meeting of Shareholders to be held on or about December 11,
1998. Shareholders of the Funds will receive a proxy statement discussing the
terms of and the reasons for the Reorganizations in detail, and will be entitled
to vote at the Special Meeting. Assuming satisfaction of the conditions to the
Reorganizations, including approvals by Fund Shareholders, the completion of the
Reorganizations is contemplated to take place in December, 1998.
<PAGE>
2. Please delete the "Summary of Fund Expenses" table on page 3 and replace it
with the following:
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
DG
DG LIMITED TERM DG DG
DG INTERNATIONAL DG GOVERNMENT GOVERNMENT MUNICIPAL
EQUITY EQUITY OPPORTUNITY INCOME INCOME INCOME
FUND FUND FUND FUND FUND FUND
------ ------------- ----------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price).... 3.50% None 3.50% 2.00% 2.00% 2.00%
Maximum Sales Charge Imposed on
Reinvested Dividends (as a percentage
of offering price)..................... None None None None None None
Contingent Deferred Sales Charge (as a
percentage of original purchase price
or redemption proceeds, if
applicable)............................ None None None None None None
Redemption Fee (as a percentage of amount
redeemed, if applicable)............... None None None None None None
Exchange Fee............................. None None None None None None
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver)(1)......... 0.75% 0.50% 0.95% 0.45% 0.60% 0.30%
12b-1 Fees(2)............................ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Other Expenses..................... 0.29% 1.27% 0.38% 0.77% 0.31% 0.60%
Shareholder Servicing Fee........ 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%
Total Annual Fund Operating
Expenses(3)........................ 1.04% 1.77% 1.33% 1.22% 0.91% 0.90%
</TABLE>
(1)The management fee of DG International Equity Fund, DG Limited Term
Government Income Fund, and DG Municipal Income Fund have been reduced to
reflect the voluntary waivers by the Adviser. The Adviser can terminate these
voluntary waivers at any time at its sole discretion. The maximum management
fees for these Funds are 1.00%, 0.60%, and 0.60%.
(2) As of the date of this prospectus, the Funds are not paying or accruing
12b-1 fees. The Funds will not accrue 12b-1 fees until a separate class of
shares has been created for certain institutional investors. DG Equity Fund, DG
Opportunity Fund, DG Limited Term Government Income Fund, DG Government Income
Fund, and DG Municipal Income Fund could each pay 0.35% as a 12b-1 fee to the
distributor. DG International Equity Fund could pay 0.25% as a 12b-1 fee to the
distributor.
(3) Total Fund Operating Expenses are expected to be 1.37% for the DG Limited
Term Government Income Fund and 1.20% for the DG Municipal Income Fund absent
the waiver described in Note (1) above. Total Fund Operating Expenses as of
February 28, 1998 for the DG Equity Fund, DG International Equity Fund, DG
Opportunity Fund, DG Limited Term Government Income Fund, DG Government Fund and
DG Municipal Income Fund were 0.99%, 2.27%, 1.31%, 0.96%, 0.86% and 1.07%,
respectively absent the voluntary waiver by the Adviser.
<PAGE>
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUNDS WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "DG INVESTOR SERIES INFORMATION" AND "INVESTING IN THE FUNDS."
Wire-transferred redemptions of less than $5,000 may be subject to additional
fees.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end
of each time period, and (3) payment of the maximum sales
charge. The Funds charge no contingent deferred sales
charges.
DG Equity Fund.............................................. $45 $67 $ 90 $158
DG International Equity Fund................................ $18 $56 $ 96 $208
DG Opportunity Fund......................................... $48 $76 $105 $190
DG Limited Term Government Income Fund...................... $32 $58 $ 86 $165
DG Government Income Fund................................... $29 $48 $ 69 $130
DG Municipal Income Fund.................................... $29 $48 $ 69 $129
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
September 23, 1998
Federated Securities Corp. is the distributor of the Funds.
Cusip 23321N301 Cusip 23321N202 Cusip 23321N400 Cusip 23321N806 Cusip 23321N103
Cusip 23321N509 G01258-31 (9/98) LOGO
