-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HLazsKRkaWq8X0ghzYdu5d65ttQ1Yj4j7l69YV0HMyi4oCrj+YJqAdpnngrIdY/E yRAzzSYevoBVu31SI4R3ew== 0000883843-98-000015.txt : 19981104 0000883843-98-000015.hdr.sgml : 19981104 ACCESSION NUMBER: 0000883843-98-000015 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980831 FILED AS OF DATE: 19981103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DG INVESTOR SERIES CENTRAL INDEX KEY: 0000883843 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 251676752 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06607 FILM NUMBER: 98736608 BUSINESS ADDRESS: STREET 1: FEDERATED INVESTORS TOWER CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122881900 FORMER COMPANY: FORMER CONFORMED NAME: DG CITADEL FUNDS DATE OF NAME CHANGE: 19600201 N-30D 1 DG INVESTOR SERIES STOCK AND BOND FUNDS o DG EQUITY FUND o DG OPPORTUNITY FUND o DG INTERNATIONAL EQUITY FUND o DG LIMITED TERM GOVERNMENT INCOME FUND o DG GOVERNMENT INCOME FUND o DG MUNICIPAL INCOME FUND ======================== COMBINED [DG INVESTOR SEMI-ANNUAL REPORT SERIES LOGO] Diversified Portfolios of DG Investor Series, an Open-End Management Investment Company ParkSouth Corporation Jackson, MS Investment Adviser Womack Asset Management, Inc. Jackson, MS Sub-Adviser to DG Opportunity Fund Lazard Asset Management New York, NY Sub-Adviser to FEDERATED SECURITIES CORP., DISTRIBUTOR DG International Equity Fund [RECYCLED Cusip 23321N301 Cusip 23321N509 PAPER Cusip 23321N400 Cusip 23321N202 LOGO] Cusip 23321N806 Cusip 23321N608 AUGUST 31, 1998 G00498-08 (10/98) =================== PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I'm pleased to present the Semi-Annual Report to Shareholders for the DG Investor Series--Stock and Bond Funds, which covers the six-month reporting period from March 1, 1998 through August 31, 1998. The Report begins with a discussion with each mutual fund's portfolio manager, followed by a complete list of holdings and financial statements. After an eight-year period of extremely positive gains, the U.S. stock market finally experienced a series of declines that have negatively impacted stock mutual fund returns. Bond funds, on the other hand, generally experienced positive returns as yields declined, causing bond prices to rise. The following highlights cover each fund's activity over the six-month period: - - Consistent with the significant declines in stock prices in August, the DG EQUITY FUND produced a negative total return of (5.67%).* While the fund's share price declined, the fund paid income distributions totaling $0.03 per share and capital gains totaling $0.17 per share. Net assets reached $664.4 million at the end of the reporting period. - - The total return of DG OPPORTUNITY FUND was a highly negative (34.33%)* for the six-month reporting period as the smaller-capitalization area of the market has experienced a longer and much steeper decline than large-capitalization stocks.*** The fund paid capital gains totaling $0.88 per share. Net assets totaled $82.0 million at the end of the reporting period.+ - - DG INTERNATIONAL EQUITY FUND, the newest member of the DG fund family, invests in international stocks.** During the reporting period, the international stock marketplace also experienced a series of downturns, primarily due to concerns over Asian and Russian economic difficulties. As a result, the fund's six-month return was a negative (10.33%).* The fund paid dividends totaling $0.01 per share. Net assets totaled $25.9 million. - - DG LIMITED TERM GOVERNMENT INCOME FUND paid dividends totaling $0.25 per share. Through the dividends and a share price increase of $0.03 per share, the fund's conservative, shorter-maturity government portfolio produced a total return of 2.90%.* Net assets totaled $29.7 million. - - DG GOVERNMENT INCOME FUND, a portfolio of U.S. government securities, paid dividends totaling $0.27 per share. Through dividends and a share price increase of $0.23, the fund produced a total return of 5.07%.* Net assets totaled $268.3 million. - - DG MUNICIPAL INCOME FUND rewarded tax-sensitive investors with federally tax-free dividends totaling $0.23 per share.++ The share price increased by $0.09 per share. The dividends and share price increase combined to produce a total return of 2.97%.* At the end of the reporting period, net assets reached $55.4 million. In this environment, it's important to keep focused on the long term, and remember that volatility--often highly uncomfortable--is part of stock investing. Thank you for keeping your money working in one or more key financial markets through DG Investor Series. You have our commitment to provide the highest level of service as we keep you informed about your progress. Sincerely, /s/ EDWARD C. GONZALES - ------------------------ Edward C. Gonzales President October 15, 1998 * Performance quoted represents past performance and is not indicative of future results. Investment return and principal value will fluctuate, so an investor's shares, when redeemed, may be worth more or less than their original cost. Total returns quoted above are based on net asset value and do not reflect the maximum sales charge. Total returns based on the maximum sales charge for the six-month period are as follows: DG Equity Fund, (8.96%); DG Opportunity Fund, (36.61%); DG Limited Term Government Income Fund, 0.84%; DG Government Income Fund, 2.92%; and DG Municipal Income Fund, 0.93%. ** Foreign investing involves special risks including currency risk, increased volatility of foreign securities, and differences in auditing and other financial standards. *** Small cap stocks have historically experienced greater volatility than average. + The quoted performance data includes the performance of the collective trust fund for the period before the date on which the Fund commenced operations (August 1, 1994), as adjusted to reflect the Fund's then anticipated expenses as set forth in the "Expenses of the Fund" section of the Fund's initial prospectus. The collective trust fund was not registered under the Investment Company Act of 1940 (the "1940 Act"), and therefore was not subject to certain investment restrictions that are imposed by the 1940 Act. If the collective trust fund had been registered under the 1940 Act, the performance may have been adversely affected. ++ Income may be subject to the federal alternative minimum tax and state and local taxes. INVESTMENT REVIEW - -------------------------------------------------------------------------------- DG EQUITY FUND After enjoying a remarkably long "run" of favorable Semi-Annual and Annual performance reviews, we must now reveal that there is still--as we had long feared--a dash of reality existent in our presumably "Goldilocks-comfortable" investment universe. Following our fund's most recent fiscal year's exceptional total return, as of February 28, 1998, experience of 39.74%*, our investment score for the first six months of this new fiscal year has proved to be quite a reversal. Actually, this fiscal year's first half's return was a kind-of "dis-return" as we suffered a decline of -5.67%.* Only when viewed on a relative comparison basis, does this short-term negative investment result seem even modestly attractive. For example, when contrasted with our long-term unmanaged benchmark S&P 500 Index's** decline of -8.10% and our widely quoted peer benchmark Lipper Growth Mutual Fund Index's*** "swoon" of -10.93%, our Fund compares exceptionally well. But for the many investors who have become accustomed to the almost routinely positive and historically out-sized returns which we have reported over most of the last half of this decade, the latest six-month period's investment experience has, no doubt, been unsettling. Few, if any, of our newest shareholders will recall our near incessant musings that short-term price volatility is an inherent and even expected characteristic of the equity market. Fewer still will recall our cautioning that it is, in fact, the absence of short-term negative or lackluster return experiences which should be considered unusual and perhaps even more unsettling. Now, if many of the last few lines seem somehow faintly familiar or even to have a "we told you so" ring to them, then we may have finally made our intended point. Empirical studies of market history remind us that period-to-period short-term investment returns are likely to prove very volatile--erratically positive and negative--for all equity investors. These seemingly random fluctuations are undeniably part and inseparable parcel of the "market" beast. Worse yet for the equity investor, these short-term ebbs and flows in returns are in no way predictive of the next short-term period's expectations either as to direction or magnitude of change. Clearly, we can show that investing in the stock market is not for the impatient nor for the faint of heart. But it can also be shown that for the true equity investor--coincident with the higher degree of short-term uncertainty (risk) comes the long-term prospect for much higher returns than those which might reasonably be expected from alternative investments in the two most commonly competing classes (i.e., bonds or risk-free cash equivalents) of traditional assets. Some six months ago, we guardedly sketched our near term concerns and expectations for the domestic equity and fixed income markets in light of the then deteriorating "off-shore" economic conditions. It now appears our fears were well founded as company after multi-national company either reports or "pre-announces" disappointing current earnings. As a result, the optimistic consensus "market" earnings per-share growth rate expectations previously touted by various prognosticators have been significantly pared back. For example, rather than the 1998 calendar 7% to 9% earnings growth earlier projected for the S&P 500, now a very much uncertain 5% growth in operating earnings is haltingly offered. Moreover, for the coming 1999 year's earnings, many believe another relatively lackluster performance of 5% or so growth is the best that can reasonably be expected. To be sure, these most recent downwardly revised earnings rates are a far cry from the earlier more sanguine projections. In fact, they fall to levels which are less than 65% of the previously held annual growth rate expectations. A diminution of one-third or more in the expected "market" earnings-per-share growth rate is most significant and would, therefore, ordinarily occasion--on an exceptional basis--a nearly concomitant price/earning multiple contraction and subsequent dramatic equity market decline. Currently, however, interest rates--particularly at the ten-year and longer maturity ranges--have continued their dramatic declines, thereby, at least to some degree, cushioning the expected rational P/E multiple contraction response. In spite of the current theoretical "push me/pull-me" phenomenon of diminishing earnings-per-share growth rate expectations and dramatically declining interest rates seeming to be nearly offsetting, much of the equity market has taken some major price "hits" over the past six weeks or so. As we had warned many times in the past, our fund would not be and was not, in fact, immune to the most recent economic and market shocks no matter our very high quality or rigidly disciplined investment focus. In the DG Equity Fund, a large-cap growth fund, we typically invest in very large and very high quality multi-national companies. These companies have, in the past, generated much of their superior earnings-per-share growth through aggressive expansion and successful penetration in foreign or "off-shore" economies. The developing weakness in many foreign economies is likely to be felt disproportionately greater by all multi-national companies with large foreign exposure. Heretofore consistent and above average per share earnings patterns are likely to be interrupted or imperiled. Individually, our well-chosen growth stocks are likely to experience an even greater degree of share-price fluctuation than has normally been the case. That aberrant behavior will persist, we believe, until investors become more confident of a favorable outcome emerging in the troubled foreign economies. As if to add even more uncertainty, our domestic economy's expansion cycle is very "long in the tooth" and could easily begin to falter. If that were to happen, even the best growth stocks will experience increased earnings-per-share related pressures. As we have seen, our portfolio did, most certainly, suffer during this recent short-term market storm...only not as much as the unmanaged venerable S&P 500. But, once again, to belabor our earlier and often-stressed point, we are quite sure that, while however soothing our fund's most recent relative success over the short-term, the results are in no way predictive of future short-term expectations...relative or otherwise...no matter what happens in the broad equity market. Long-term, however, we remain equally hopeful that our very high quality investment focus and disciplined large-cap growth investment approach will offer continued exceptional investment potential for our shareholders. In the final analysis, though, time and patience are likely to prove to be the most important determinants of the success of our individual stock selections, our fund and, consequently, that of our fund's investors. To wit, we believe it is worth noting that for investors time has often been said to be the legendary Archimedes' Lever. * Performance quoted reflects past performance and is not indicative of future results. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The fund's total return based on the maximum sales charge for the one-year, five-year, and since inception (8/3/92) periods ended August 31, 1998 was 8.84%, 17.81% and 15.82%, respectively. ** S&P 500 Index is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Investments cannot be made in an index. *** Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into respective categories indicated. These figures do not reflect sales charges. - -------------------------------------------------------------------------------- DG OPPORTUNITY FUND The DG Opportunity Fund was established in July 1994, to provide investors with a diversified portfolio of mostly smaller-capitalized companies with a minimum of 65% in companies with a market value capitalization of less than $1 billion. The objective of the fund is to provide capital appreciation. The majority of the small-cap universe is less widely followed by institutional investors, which creates the opportunity to add value to the fund's portfolio through research which includes both fundamental and technical analysis. Initially, companies are identified and a fundamental/technical analysis is performed to discern both potential growth and risk. Company activities are then closely monitored through analyst's research reports and discussions with company management. Lastly, technical analysis is incorporated to derive company specific patterns of price movement and to complete the evaluation process. The holdings of the fund are more speculative than stocks from more mature firms and lend characteristics which include below-market dividend yields, above-market betas, high residual risk relative to broad market indices, higher price/earnings ratios, and greater variability in the earnings number. These factors produce the potential for market appreciation which exceeds that of larger-capitalization stocks in return for greater volatility. For the six-month reporting period ended August 31, 1998, the fund's holdings were well represented in restaurants, apparel, retail stores, technology, healthcare, and domestic energy and oil field services. The portfolio fluctuated between 50 and 65 issues with an above average portfolio turnover rate. The fund's benchmark, the Russell 2000 Index*, is comprised of approximately 2000 small capitalization common stocks and was well represented in technology, healthcare, consumer durables, and domestic energy and oil field services. The DG Opportunity Fund net asset base decreased from $122.9 million as of February 28, 1998 to $82.0 million as of August 31, 1998. Total return based on net asset value for the six-month reporting period ended August 31, 1998 was - -34.33%.** The fund's performance fell during the three-month period of June, July, and August due to outflows of small capitalization stocks into large capitalization stocks and the uncertainty of the overseas markets. Technology stocks, representing 12.5% of the fund, were hurt by sluggish sales of computer and technology related equipment. Moreover, energy and oil field services stocks, representing 7.0% of the fund, were depressed by declines in energy prices. The above factors also negatively impacted the Russell 2000 Index causing it to fall -31.77% during the six-month reporting period ended August 31, 1998. * Indexes are unmanaged and investments cannot be made in an index. ** Performance quoted represents past performance and is not indicative of future results. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. - -------------------------------------------------------------------------------- DG INTERNATIONAL EQUITY FUND International equity markets declined during the month of August. Russian economic and political turmoil, compounded by Asia's continued weakness, shook investor confidence and sparked the largest monthly decline since October 1987. Despite a 36% year-to-date (ytd) fall in Hong Kong, a 15% ytd decline in Japan and currency devaluations in Asia, Russia, and, perhaps, Latin America, DG International Equity Fund's returns are only slightly negative for 1998. While this pales in comparison to the lofty portfolio returns in early summer, the portfolio has added value relative to the benchmark and competitors during a very difficult market environment. While Russia and the emerging markets pose obvious threats at the stock specific level, as well as at the overall economic environment level, it is necessary to separate fears from facts. German banks have been savagely berated due to concerns regarding their significant loan exposure to Russia. However, it has gone largely unnoticed that 80% of these loans are guaranteed by the German government, thus protecting the banks from the bulk of the losses. Companies with Latin American and Asian exposure have also been sold indiscriminately providing excellent investment opportunities. For example, we recently added to our portfolio a position in Electrolux (Sweden, Appliances). Electrolux reported first half earnings in August that far exceeded expectations because analyst forecasts were focusing more on the Brazilian and Asian exposure rather than on the massive restructuring program underway in the European operations. Europe represents over two-thirds of the company's profits and the sharp improvements there were more than able to compensate for the deterioration in the other operations. The stock rebounded sharply and ended flat on the month. Winnowing fear from fact is critical. Our investment decisions have been driven by valuation. Mannesmann, Honda, and HSBC stakes were reduced as stock prices fully reflected the return prospects. We added to our positions in ICI and Telecom Italia in addition to Electrolux following overdone stock price declines. We continue to be impressed by a fundamental change in corporate thinking, particularly in Europe. Historically, in Europe making a profit was a nice thing, but not a priority. Today a corporate renaissance is taking place as restructuring, shareholder focus, consolidation in the face of global competition, and the impending EMU have put profits on the front burner. After years of restructuring, Daimler-Benz (Germany) made a surprise acquisition of Chrysler (US) in April to create a global automotive powerhouse in the largest industrial takeover in history, at least until British Petroleum (UK) acquired Amoco (US) last month. Both mergers were driven by the desire to drive profits higher, but also each signaled the increasing importance of globalization. Country borders are giving way to industrial logic. ABB, a pioneer of region-based management, recently announced plans to organize management by business segment rather than by geography. In Japan, where the overall equity market has struggled, globally competitive companies like Honda and Sony have prospered, while domestic businesses have floundered. Throughout the world, companies are remaking themselves to become global industry leaders providing compelling investment opportunities despite current market volatility. In fact, it is the uncertainty and increased competition in the markets that continue to be the catalysts for corporate change. Emerging market positions (a modest 9% of portfolio) were hurt during the global market sell off. In many cases, investors indiscriminately sold stocks without regard to the underlying fundamentals. Valuations for many emerging, market stocks are now at long-time lows. At the end of the day, corporate returns drive stock performance. Market noise and the ensuing voices of financial pundits both rise with market turbulence. The discipline to filter this out and to maintain focus on business fundamentals, the returns companies generate, and the price one pays for them will ultimately be rewarded. With that stated, this short-term setback has provided fresh opportunities. Many quality companies that were too expensive to buy earlier this year are now approaching our valuation screens. In other cases, we are adding to existing positions where indiscriminate market selling has furnished buying opportunities. International investing involves special risks including currency risk, increased volatility of foreign securities, and differences in auditing and other financial standards. - -------------------------------------------------------------------------------- DG LIMITED TERM GOVERNMENT INCOME FUND The Federal Reserve Board maintained the federal funds rate at a 5 1/2% rate during the six-month period ended August 31, 1998. Investors, however, forecast a "fed easing" and acted on this prophecy by buying fixed income instruments, driving pricing higher and yields lower. For the reporting period, yields on 2, 5, 10, and 30-year Treasuries declined by 81, 87, 73, and 76 basis points, respectively. A "flight to quality" helped Treasury returns as investors feared political scandals would damage domestic investments and an international financial crisis would dominate investor psychology. Corporate bond yields widened significantly during the six-month reporting period with 3, 5, and 10-year corporate yields increasing by 11, 20 and 25 basis points over their prior levels. For the twelve-month period ended August 31, 1998, the fund's total return was 6.10%, based on net asset value*, compared to Merrill Lynch 1-3 Year Treasury Index's** total return of 7.37%. The fund's duration of 1.46 years and average maturity of 1.6 years were reduced during the reporting period. U.S. Treasury securities continued to hold a majority position in the fund. U.S. agency securities have been utilized more as spreads to Treasuries have widened, helping to provide a more adequate return for the additional risk. Corporate issues should also be utilized, as yields spreads should be sustained with good corporate earnings. * Performance quoted represents past performance and is not indicative of future results. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. The fund's total return, based on the maximum sales charge, for the one-year, five-year, and since inception (8/3/92) periods ended August 31, 1998, was 3.96%, 4.43% and 4.88%, respectively. ** Merrill Lynch 1-3 Year Treasury Index is an unmanaged index tracking short-term U.S. government securities between 1 and 2.99 years. The index is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc. Investments cannot be made in an index. - -------------------------------------------------------------------------------- DG GOVERNMENT INCOME FUND The Federal Reserve Board maintained the federal funds rate at a 5 1/2% rate during the six-month period ended August 31, 1998. Investors, however, forecast a fed easing and acted on this prophecy by buying fixed income instruments, driving pricing higher and yields lower. For the reporting period, yields on 2, 5, 10 and 30-year Treasuries declined by 81, 87, 73 and 76 basis points, respectively. A "flight to quality" helped Treasury returns as investors feared political scandals would damage domestic investments and an international financial crisis would dominate investor psychology. Corporate bond yields widened significantly during the six-month reporting period with 3, 5, and 10-year corporate yields increasing by 11, 20, and 25 basis points over their prior levels. For the twelve-month period ended August 31, 1998, the fund's total return was 11.15%, based on net asset value*, compared to the Lehman Brothers Government/Corporate Bond Index** total return of 11.43%. The fund's duration of 5.48 years and average maturity of 8.7 years was extended during this period. U.S. Agency securities have been utilized more, as spreads to Treasuries have widened helping to provide a more adequate return for the additional risk. Corporate issues should also be utilized, as yield spreads should be sustained with good corporate earnings. The fund's net assets remain steady at $268 million on August 31, 1998 compared to the $270 million on February 28, 1998. * Performance quoted represents past performance and is not indicative of future results. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. The fund's total return based on the maximum sales charge for the one-year, five-year, and since inception (8/3/92) periods ended August 31, 1998, was 8.92%, 5.55% and 6.52%, respectively. ** Lehman Brothers Government/Corporate Bond Index is composed of all bonds that are investment grade rated Baa or higher by Moody's or BBB or higher by S&P, if unrated by Moody's. Indexes are unmanaged and investments cannot be made in an index. - -------------------------------------------------------------------------------- DG MUNICIPAL INCOME FUND DG Municipal Income Fund was established in December 1992 to provide investors with the ability to invest in a diversified portfolio of quality municipal issues. The investment objective of the fund is to provide dividend income that is exempt from federal regular income tax. The flight to safety experienced throughout the summer months led to continued underperformance by virtually all fixed income asset classes relative to their treasury counterparts. This flight to safety, when combined with continued new issue supply and a lack of interest by retail investors, caused the municipal market to be no different. Municipal yields climbed to 93-100% of treasuries throughout the yield curve towards the latter part of the fund's semi-annual reporting period. The fund's total return (income plus capital appreciation) for the twelve-month period ended August 31, 1998, was 7.36%, based on net asset value. As of August 31, 1998, the 30-day SEC yield was 3.63%, based on net asset value (3.56% taking into account the sales charge).* The fund's net assets increased from $48.6 million on February 28, 1998, to $55.4 million on August 31, 1998. The fund's investment adviser continues to focus on higher quality municipal issues consisting primarily of general obligations of states, counties, and cities (63.5% weighting in general obligations and AA1 average quality rating as of August 31, 1998). * Performance quoted represents past performance and is not indicative of future results. Investment return and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. The fund's total return based on the maximum sales charge, for the one-year, five-year, and since inception (12/29/92) periods ended August 31, 1998, was 5.19%, 4.81% and 6.04%, respectively. DG EQUITY FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
SHARES VALUE - ----------- ------------------------------------------------------------ ------------ COMMON STOCKS--96.2% - ------------------------------------------------------------------------------- BUSINESS EQUIPMENT & SERVICES--7.3% ------------------------------------------------------------ 280,000 Automatic Data Processing, Inc. $ 17,850,000 ------------------------------------------------------------ 133,600 Donnelley (R.R.) & Sons Co. 4,843,000 ------------------------------------------------------------ 150,000 Electronic Data Systems Corp. 5,025,000 ------------------------------------------------------------ 415,400 Pitney Bowes, Inc. 20,614,225 ------------------------------------------------------------ ------------ Total 48,332,225 ------------------------------------------------------------ ------------ CAPITAL GOODS--8.6% ------------------------------------------------------------ 520,000 Dover Corp. 14,170,000 ------------------------------------------------------------ 311,000 General Electric Co. 24,880,000 ------------------------------------------------------------ 100,000 PPG Industries, Inc. 5,081,250 ------------------------------------------------------------ 240,000 Tyco International, Ltd. 13,320,000 ------------------------------------------------------------ ------------ Total 57,451,250 ------------------------------------------------------------ ------------ CONSUMER NON-DURABLES--17.9% ------------------------------------------------------------ 150,000 BestFoods 7,528,125 ------------------------------------------------------------ 280,000 Coca-Cola Co. 18,235,000 ------------------------------------------------------------ 60,000 Eastman Kodak Co. 4,687,500 ------------------------------------------------------------ 260,000 Gillette Co. 10,692,500 ------------------------------------------------------------ 129,450 Heinz (H.J.) Co. 6,901,303 ------------------------------------------------------------ 250,000 International Flavors & Fragrances, Inc. 9,687,500 ------------------------------------------------------------ 60,000 Nike, Inc., Class B 2,081,250 ------------------------------------------------------------ 411,200 PepsiCo, Inc. 11,385,100 ------------------------------------------------------------ 340,000 Philip Morris Cos., Inc. 14,131,250 ------------------------------------------------------------ 230,000 Procter & Gamble Co. 17,595,000 ------------------------------------------------------------ 209,800 Sara Lee Corp. 9,493,450 ------------------------------------------------------------ 320,000 Sysco Corp. 6,460,000 ------------------------------------------------------------ ------------ Total 118,877,978 ------------------------------------------------------------ ------------
(See Notes to Portfolios of Investments) DG EQUITY FUND - --------------------------------------------------------------------------------
SHARES VALUE - ----------- ------------------------------------------------------------ ------------ COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------- CONSUMER SERVICES--2.5% ------------------------------------------------------------ 613,500 Disney (Walt) Co. $ 16,832,906 ------------------------------------------------------------ ------------ HEALTHCARE--23.7% ------------------------------------------------------------ 374,600 Abbott Laboratories 14,422,100 ------------------------------------------------------------ 220,000 American Home Products Corp. 11,027,500 ------------------------------------------------------------ 90,000 (b) Amgen, Inc. 5,478,750 ------------------------------------------------------------ 100,000 Bristol-Myers Squibb Co. 9,787,500 ------------------------------------------------------------ 100,000 Hillenbrand Industries, Inc. 5,356,250 ------------------------------------------------------------ 100,000 IMS Health, Inc. 5,500,000 ------------------------------------------------------------ 250,000 Johnson & Johnson 17,250,000 ------------------------------------------------------------ 320,000 Medtronic, Inc. 16,440,000 ------------------------------------------------------------ 166,000 Merck & Co., Inc. 19,245,625 ------------------------------------------------------------ 250,000 Pfizer, Inc. 23,250,000 ------------------------------------------------------------ 300,000 Schering Plough Corp. 25,800,000 ------------------------------------------------------------ 100,000 United Healthcare Corp. 3,612,500 ------------------------------------------------------------ ------------ Total 157,170,225 ------------------------------------------------------------ ------------ RAW GOODS--1.5% ------------------------------------------------------------ 120,000 Avery Dennison Corp. 6,442,500 ------------------------------------------------------------ 150,000 Morton International, Inc. 3,337,500 ------------------------------------------------------------ ------------ Total 9,780,000 ------------------------------------------------------------ ------------ RETAIL--13.7% ------------------------------------------------------------ 200,000 Albertsons, Inc. 10,112,500 ------------------------------------------------------------ 130,000 Gap (The), Inc. 6,638,125 ------------------------------------------------------------ 450,000 Home Depot, Inc. 17,325,000 ------------------------------------------------------------ 320,000 McDonald's Corp. 17,940,000 ------------------------------------------------------------ 240,000 Wal-Mart Stores, Inc. 14,100,000 ------------------------------------------------------------ 650,000 Walgreen Co. 25,025,000 ------------------------------------------------------------ ------------ Total 91,140,625 ------------------------------------------------------------ ------------
(See Notes to Portfolios of Investments) DG EQUITY FUND - --------------------------------------------------------------------------------
SHARES OR PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ------------ COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------- TECHNOLOGY--19.8% ------------------------------------------------------------ 150,000 AMP, Inc. $ 5,353,125 ------------------------------------------------------------ 220,000 (b) Applied Materials, Inc. 5,403,750 ------------------------------------------------------------ 177,200 Boeing Co. 5,482,125 ------------------------------------------------------------ 822,850 Compaq Computer Corp. 22,988,372 ------------------------------------------------------------ 277,200 Hewlett-Packard Co. 13,461,525 ------------------------------------------------------------ 200,000 Intel Corp. 14,237,500 ------------------------------------------------------------ 200,000 International Business Machines Corp. 22,525,000 ------------------------------------------------------------ 120,000 Lucent Technologies, Inc. 8,505,000 ------------------------------------------------------------ 200,000 (b) Microsoft Corp. 19,187,500 ------------------------------------------------------------ 130,000 Motorola, Inc. 5,598,125 ------------------------------------------------------------ 180,000 (b) Oracle Corp. 3,588,750 ------------------------------------------------------------ 130,000 (b) Sun Microsystems, Inc. 5,151,250 ------------------------------------------------------------ ------------ Total 131,482,022 ------------------------------------------------------------ ------------ UTILITIES--1.2% ------------------------------------------------------------ 103,800 AT&T Corp. 5,202,975 ------------------------------------------------------------ 80,000 SBC Communications, Inc. 3,040,000 ------------------------------------------------------------ ------------ Total 8,242,975 ------------------------------------------------------------ ------------ TOTAL COMMON STOCKS (IDENTIFIED COST $324,665,291) 639,310,206 ------------------------------------------------------------ ------------ (a) REPURCHASE AGREEMENT--3.6% - ------------------------------------------------------------------------------- $23,971,800 Cantor Fitzgerald Securities, 5.82%, dated 8/31/1998, due 9/1/1998 (AT AMORTIZED COST) 23,971,800 ------------------------------------------------------------ ------------ TOTAL INVESTMENTS (IDENTIFIED COST $348,637,091) $663,282,006 ------------------------------------------------------------ ------------
(See Notes to Portfolios of Investments) DG OPPORTUNITY FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
SHARES VALUE - ----------- ------------------------------------------------------------ ----------- COMMON STOCKS--79.0% - ------------------------------------------------------------------------------- BUSINESS EQUIPMENT & SERVICES--5.8% ------------------------------------------------------------ 228,000 (b) Comforce Corp. $ 1,225,500 ------------------------------------------------------------ 122,000 (b) Dycom Industries, Inc. 3,370,250 ------------------------------------------------------------ 142,000 (b) Employee Solutions, Inc. 204,125 ------------------------------------------------------------ ----------- Total 4,799,875 ------------------------------------------------------------ ----------- CAPITAL GOODS--4.9% ------------------------------------------------------------ 180,000 (b) ITEQ, Inc. 793,125 ------------------------------------------------------------ 59,000 McDermott International, Inc. 1,183,688 ------------------------------------------------------------ 129,700 (b) Terex Corp. 2,042,775 ------------------------------------------------------------ ----------- Total 4,019,588 ------------------------------------------------------------ ----------- CAPITAL GOODS/ELECTRONICS--1.7% ------------------------------------------------------------ 60,000 Kuhlman Corp. 1,417,500 ------------------------------------------------------------ ----------- COLLECTIBLES--0.6% ------------------------------------------------------------ 20,000 (b) Action Performance Cos., Inc. 462,500 ------------------------------------------------------------ ----------- COMPUTERS-PERIPHERALS & SOFTWARE--5.5% ------------------------------------------------------------ 117,800 (b) AMX Corp. 589,000 ------------------------------------------------------------ 43,500 (b) Computer Network Technology 157,688 ------------------------------------------------------------ 204,000 (b) Datastream Systems, Inc. 2,065,500 ------------------------------------------------------------ 68,000 (b) Harbinger Corp. 467,500 ------------------------------------------------------------ 113,000 (b) Infinium Software, Inc. 1,257,125 ------------------------------------------------------------ ----------- Total 4,536,813 ------------------------------------------------------------ ----------- CONSUMER DURABLES--0.9% ------------------------------------------------------------ 45,000 (b) Speedway Motorsports, Inc. 731,250 ------------------------------------------------------------ ----------- CONSUMER NON-DURABLES--0.8% ------------------------------------------------------------ 67,000 (b) Hollywood Entertainment Corp. 690,938 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG OPPORTUNITY FUND - --------------------------------------------------------------------------------
SHARES VALUE - ----------- ------------------------------------------------------------ ----------- COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------- CONSUMER SERVICES--1.9% ------------------------------------------------------------ 159,000 (b) Master Graphics, Inc. $ 874,500 ------------------------------------------------------------ 72,000 Rainbow Rentals, Inc. 666,000 ------------------------------------------------------------ ----------- Total 1,540,500 ------------------------------------------------------------ ----------- DRUG STORES--1.5% ------------------------------------------------------------ 161,000 (b) HORIZON Pharmacies, Inc. 1,227,625 ------------------------------------------------------------ ----------- ENERGY/OIL FIELD SERVICES--2.7% ------------------------------------------------------------ 62,400 (b) Friede Goldman International, Inc. 651,300 ------------------------------------------------------------ 90,000 (b) Gulf Island Fabrication, Inc. 900,000 ------------------------------------------------------------ 26,000 (b) IRI International Corp. 130,000 ------------------------------------------------------------ 8,000 (b) J. Ray McDermott, S.A. 223,500 ------------------------------------------------------------ 102,500 (b) Superior Energy Services, Inc. 355,547 ------------------------------------------------------------ ----------- Total 2,260,347 ------------------------------------------------------------ ----------- ENERGY/OIL SERVICES--4.3% ------------------------------------------------------------ 40,000 (b) Basin Exploration, Inc. 365,000 ------------------------------------------------------------ 98,000 (b) Bellwether Exploration Co. 483,875 ------------------------------------------------------------ 200,000 (b) EEX Corp. 887,500 ------------------------------------------------------------ 88,000 Snyder Oil Corp. 1,309,000 ------------------------------------------------------------ 107,500 (b) TransCoastal Marine Services, Inc. 456,875 ------------------------------------------------------------ ----------- Total 3,502,250 ------------------------------------------------------------ ----------- FINANCIAL SERVICES--5.6% ------------------------------------------------------------ 107,200 (b) IMC Mortgage Co. 723,600 ------------------------------------------------------------ 126,000 T. Rowe Price Associates 3,835,125 ------------------------------------------------------------ ----------- Total 4,558,725 ------------------------------------------------------------ ----------- HEALTHCARE--8.5% ------------------------------------------------------------ 72,000 (b) Arterial Vascular Engineering, Inc. 2,520,000 ------------------------------------------------------------ 58,000 (b) Cyberonics, Inc. 337,125 ------------------------------------------------------------ 119,000 (b) Neotherapeutics, Inc. 714,000 ------------------------------------------------------------ 69,000 (b) OMEGA Health Systems, Inc. 280,312 ------------------------------------------------------------
(See Notes to Portfolios of Investments) DG OPPORTUNITY FUND - --------------------------------------------------------------------------------
SHARES VALUE - ----------- ------------------------------------------------------------ ----------- COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------- HEALTHCARE--CONTINUED ------------------------------------------------------------ 202,500 (b) ProMedCo Management Co. $ 1,025,156 ------------------------------------------------------------ 41,000 (b) Res-Care, Inc. 597,062 ------------------------------------------------------------ 90,000 (b) SangStat Medical Corp. 1,496,250 ------------------------------------------------------------ ----------- Total 6,969,905 ------------------------------------------------------------ ----------- LEISURE--1.9% ------------------------------------------------------------ 158,000 (b) Fairfield Communities, Inc. 1,540,500 ------------------------------------------------------------ ----------- RESTAURANTS--12.7% ------------------------------------------------------------ 160,000 Apple South, Inc. 1,840,000 ------------------------------------------------------------ 94,100 (b) Brinker International, Inc. 1,611,462 ------------------------------------------------------------ 15,300 (b) CEC Entertainment, Inc. 349,031 ------------------------------------------------------------ 66,000 Cracker Barrel Old Country Store 1,612,875 ------------------------------------------------------------ 75,000 (b) Foodmaker, Inc. 1,035,938 ------------------------------------------------------------ 60,000 (b) Outback Steakhouse, Inc. 1,803,750 ------------------------------------------------------------ 185,000 (b) Rare Hospitality International, Inc. 2,150,625 ------------------------------------------------------------ ----------- Total 10,403,681 ------------------------------------------------------------ ----------- RETAIL/CONSUMER--4.2% ------------------------------------------------------------ 66,000 (b) Elder-Beerman Stores Corp. 1,031,250 ------------------------------------------------------------ 104,400 (b) Pamida Holdings Corp. 561,150 ------------------------------------------------------------ 172,000 (b) PetSmart, Inc. 849,250 ------------------------------------------------------------ 9,000 (b) Restoration Hardware, Inc. 231,750 ------------------------------------------------------------ 165,000 (b) Ugly Duckling Corp. 763,125 ------------------------------------------------------------ ----------- Total 3,436,525 ------------------------------------------------------------ ----------- TECHNOLOGY/COMMUNICATION--3.6% ------------------------------------------------------------ 95,000 (b) Cerprobe Corp. 855,000 ------------------------------------------------------------ 137,000 (b) Cree Research, Inc. 1,472,750 ------------------------------------------------------------ 38,700 (b) Semtech Corp. 619,200 ------------------------------------------------------------ ----------- Total 2,946,950 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG OPPORTUNITY FUND - --------------------------------------------------------------------------------
SHARES OR PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ----------- COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------- TECHNOLOGY/COMPUTERS--5.1% ------------------------------------------------------------ 133,000 (b) Inso Corp. $ 2,061,500 ------------------------------------------------------------ 23,500 (b) MetaCreations Corp. 74,906 ------------------------------------------------------------ 103,000 (b) Microage, Inc. 1,248,875 ------------------------------------------------------------ 89,500 (b) Micrografx, Inc. 805,500 ------------------------------------------------------------ ----------- Total 4,190,781 ------------------------------------------------------------ ----------- TECHNOLOGY/TELECOMMUNICATIONS--3.8% ------------------------------------------------------------ 129,000 (b) SkyTel Communications, Inc. 1,693,125 ------------------------------------------------------------ 75,000 (b) World Access, Inc. 1,434,375 ------------------------------------------------------------ ----------- Total 3,127,500 ------------------------------------------------------------ ----------- TRANSPORTATION--3.0% ------------------------------------------------------------ 127,000 (b) Heartland Express, Inc. 2,032,000 ------------------------------------------------------------ 45,000 (b) Offshore Logistics, Inc. 405,000 ------------------------------------------------------------ ----------- Total 2,437,000 ------------------------------------------------------------ ----------- TOTAL COMMON STOCKS (IDENTIFIED COST $84,965,960) 64,800,753 ------------------------------------------------------------ ----------- (a) REPURCHASE AGREEMENT--20.1% - ------------------------------------------------------------------------------- $16,443,900 Cantor Fitzgerald Securities, 5.82%, dated 8/31/1998, due 9/1/1998 (AT AMORTIZED COST) 16,443,900 ------------------------------------------------------------ ----------- TOTAL INVESTMENTS (IDENTIFIED COST $101,409,860) $81,244,653 ---------------------------------------------------------- -----------
(See Notes to Portfolios of Investments) DG INTERNATIONAL EQUITY FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
SHARES VALUE - ---------- ------------------------------------------------------------ ----------- COMMON STOCKS--94.5% - ------------------------------------------------------------------------------ ARGENTINA--1.3% - ------------------------------------------------------------------------------ ENERGY SOURCES--1.3% ------------------------------------------------------------ 15,000 YPF Sociedad Anonima, ADR $ 331,875 ------------------------------------------------------------ ----------- AUSTRALIA--1.7% - ------------------------------------------------------------------------------ BANKING--0.8% ------------------------------------------------------------ 37,700 Westpac Banking Corp. Ltd., Sydney 200,356 ------------------------------------------------------------ ----------- ENERGY SOURCES--0.9% ------------------------------------------------------------ 35,017 Broken Hill Proprietary Co. Ltd. 241,326 ------------------------------------------------------------ ----------- TOTAL AUSTRALIA 441,682 ------------------------------------------------------------ ----------- BRAZIL--0.9% - ------------------------------------------------------------------------------ TELECOMMUNICATIONS--0.9% ------------------------------------------------------------ 3,300 (b) Telecomunicacoes Brasileiras SA, ADR 236,981 ------------------------------------------------------------ ----------- DENMARK--1.2% - ------------------------------------------------------------------------------ BANKING--1.2% ------------------------------------------------------------ 3,850 Unidanmark, Class A 316,191 ------------------------------------------------------------ ----------- FINLAND--0.7% - ------------------------------------------------------------------------------ BANKING--0.4% ------------------------------------------------------------ 18,100 Merita Ltd, Class A 91,645 ------------------------------------------------------------ ----------- FOREST PRODUCTS & PAPER--0.3% ------------------------------------------------------------ 3,900 UPM--Kymmene OY 79,424 ------------------------------------------------------------ ----------- TOTAL FINLAND 171,069 ------------------------------------------------------------ ----------- FRANCE--16.3% - ------------------------------------------------------------------------------ AUTOMOBILE--0.8% ------------------------------------------------------------ 4,900 Michelin, Class B 208,599 ------------------------------------------------------------ ----------- BANKING--1.7% ------------------------------------------------------------ 6,500 Banque Nationale de Paris 430,504 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG INTERNATIONAL EQUITY FUND - --------------------------------------------------------------------------------
SHARES VALUE - ---------- ------------------------------------------------------------ ----------- COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------ FRANCE--CONTINUED - ------------------------------------------------------------------------------ CHEMICALS--2.1% ------------------------------------------------------------ 11,100 Rhone-Poulenc, Class A $ 534,856 ------------------------------------------------------------ ----------- COMMERCIAL SERVICES--2.2% ------------------------------------------------------------ 2,870 Compagnie Generale des Eaux 573,416 ------------------------------------------------------------ ----------- ELECTRICAL & ELECTRONICS--2.0% ------------------------------------------------------------ 3,140 Alcatel Alsthom 508,599 ------------------------------------------------------------ ----------- ENERGY SOURCES--2.3% ------------------------------------------------------------ 6,080 Elf Aquitaine SA 603,256 ------------------------------------------------------------ ----------- INSURANCE--2.3% ------------------------------------------------------------ 5,300 AXA 611,262 ------------------------------------------------------------ ----------- MISCELLANEOUS MATERIALS & COMMODITIES--1.7% ------------------------------------------------------------ 3,100 Compagnie de St. Gobain 445,862 ------------------------------------------------------------ ----------- MULTI-INDUSTRY--1.2% ------------------------------------------------------------ 1,840 Lyonnaise des Eaux SA 303,338 ------------------------------------------------------------ ----------- TOTAL FRANCE 4,219,692 ------------------------------------------------------------ ----------- GERMANY--10.5% - ------------------------------------------------------------------------------ AUTOMOBILE--1.3% ------------------------------------------------------------ 3,700 Daimler Benz AG 334,623 ------------------------------------------------------------ ----------- BANKING--1.1% ------------------------------------------------------------ 6,200 Dresdner Bank AG, Frankfurt 279,654 ------------------------------------------------------------ ----------- CHEMICALS--1.7% ------------------------------------------------------------ 10,500 Hoechst AG 431,204 ------------------------------------------------------------ ----------- ELECTRICAL & ELECTRONICS--1.4% ------------------------------------------------------------ 5,800 Siemens AG 377,737 ------------------------------------------------------------ ----------- FOOD & HOUSEHOLD PRODUCTS--1.3% ------------------------------------------------------------ 5,870 Metro AG 332,214 ------------------------------------------------------------ ----------- INSURANCE--0.9% ------------------------------------------------------------ 810 Allianz AG Holding 233,127 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG INTERNATIONAL EQUITY FUND - --------------------------------------------------------------------------------
SHARES VALUE - ---------- ------------------------------------------------------------ ----------- COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------ GERMANY--CONTINUED - ------------------------------------------------------------------------------ MACHINERY & ENGINEERING--0.7% ------------------------------------------------------------ 1,000 Thyssen AG $ 188,271 ------------------------------------------------------------ ----------- UTILITIES--ELECTRICAL & GAS--2.1% ------------------------------------------------------------ 850 Viag AG 534,242 ------------------------------------------------------------ ----------- TOTAL GERMANY 2,711,072 ------------------------------------------------------------ ----------- HONG KONG--1.1% - ------------------------------------------------------------------------------ BANKING--0.6% ------------------------------------------------------------ 7,200 HSBC Holdings PLC 152,842 ------------------------------------------------------------ ----------- DIVERSIFIED OPERATIONS--0.3% ------------------------------------------------------------ 93,000 Wharf Holdings Ltd. 88,809 ------------------------------------------------------------ ----------- MULTI-INDUSTRY--0.2% ------------------------------------------------------------ 20,500 Swire Pacific Ltd., Class A 59,125 ------------------------------------------------------------ ----------- TOTAL HONG KONG 300,776 ------------------------------------------------------------ ----------- ITALY--5.6% - ------------------------------------------------------------------------------ AUTOMOBILE--0.5% ------------------------------------------------------------ 43,900 Fiat SPA 137,101 ------------------------------------------------------------ ----------- BANKING--2.1% ------------------------------------------------------------ 35,900 Istituto Bancario San Paolo di Torino 529,611 ------------------------------------------------------------ ----------- ENERGY SOURCES--1.2% ------------------------------------------------------------ 58,900 Eni SPA 311,658 ------------------------------------------------------------ ----------- TELECOMMUNICATIONS--1.8% ------------------------------------------------------------ 93,600 Telecom Italia SPA 467,004 ------------------------------------------------------------ ----------- TOTAL ITALY 1,445,374 ------------------------------------------------------------ ----------- JAPAN--11.8% - ------------------------------------------------------------------------------ APPLIANCES & HOUSEHOLD DURABLES--1.0% ------------------------------------------------------------ 18,000 Matsushita Electric Industrial Co. 259,370 ------------------------------------------------------------ ----------- AUTOMOBILE--0.4% ------------------------------------------------------------ 43,000 Nissan Motor Co., Ltd. 114,764 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG INTERNATIONAL EQUITY FUND - --------------------------------------------------------------------------------
SHARES VALUE - ---------- ------------------------------------------------------------ ----------- COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------ JAPAN--CONTINUED - ------------------------------------------------------------------------------ BANKING--0.6% ------------------------------------------------------------ 66,000 Sumitomo Trust & Banking $ 158,816 ------------------------------------------------------------ ----------- BEVERAGE & TOBACCO--1.1% ------------------------------------------------------------ 23,000 Asahi Breweries 272,154 ------------------------------------------------------------ ----------- ELECTRICAL & ELECTRONICS--1.6% ------------------------------------------------------------ 9,000 Omron Corp. 98,382 ------------------------------------------------------------ 4,400 Sony Corp. 322,005 ------------------------------------------------------------ ----------- Total 420,387 ------------------------------------------------------------ ----------- FINANCIAL SERVICES--2.4% ------------------------------------------------------------ 5,700 Orix Corp 386,393 ------------------------------------------------------------ 5,740 Promise Co. Ltd. 240,389 ------------------------------------------------------------ ----------- Total 626,782 ------------------------------------------------------------ ----------- OFFICE EQUIPMENT--0.8% ------------------------------------------------------------ 21,000 Ricoh Co. Ltd. 201,533 ------------------------------------------------------------ ----------- RECREATION, OTHER CONSUMER GOODS--1.2% ------------------------------------------------------------ 3,300 Nintendo Corp. Ltd. 306,623 ------------------------------------------------------------ ----------- TELECOMMUNICATIONS--1.5% ------------------------------------------------------------ 50 Nippon Telegraph & Telephone Corp. 379,756 ------------------------------------------------------------ ----------- TOBACCO--1.2% ------------------------------------------------------------ 45 (d) Japan Tobacco, Inc. 304,408 ------------------------------------------------------------ ----------- TOTAL JAPAN 3,044,593 ------------------------------------------------------------ ----------- KOREA--1.2% - ------------------------------------------------------------------------------ APPLIANCES & HOUSEHOLD DURABLES--1.2% ------------------------------------------------------------ 18,434 (b) (d)Samsung Electronics Co., GDR 316,604 ------------------------------------------------------------ ----------- MALAYSIA--0.3% - ------------------------------------------------------------------------------ LEISURE & TOURISM--0.3% ------------------------------------------------------------ 41,300 Genting Berhad 75,983 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG INTERNATIONAL EQUITY FUND - --------------------------------------------------------------------------------
SHARES VALUE - ---------- ------------------------------------------------------------ ----------- COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------ MEXICO--1.1% - ------------------------------------------------------------------------------ BANKING--0.6% ------------------------------------------------------------ 194,000 Grupo Financiero Banamex Accivel, Class B $ 163,491 ------------------------------------------------------------ ----------- BEVERAGE & TOBACCO--0.5% ------------------------------------------------------------ 8,500 Pan American Beverage, Class A 135,469 ------------------------------------------------------------ ----------- TOTAL MEXICO 298,960 ------------------------------------------------------------ ----------- NETHERLANDS--3.8% - ------------------------------------------------------------------------------ APPLIANCES & HOUSEHOLD DURABLES--1.2% ------------------------------------------------------------ 4,700 Philips Electronics N.V. 307,374 ------------------------------------------------------------ ----------- BEVERAGE & TOBACCO--1.2% ------------------------------------------------------------ 7,325 Heineken NV 322,562 ------------------------------------------------------------ ----------- TELECOMMUNICATIONS--1.4% ------------------------------------------------------------ 8,000 KPN NV 362,363 ------------------------------------------------------------ ----------- TOTAL NETHERLANDS 992,299 ------------------------------------------------------------ ----------- PHILIPPINES--0.5% - ------------------------------------------------------------------------------ BANKING--0.5% ------------------------------------------------------------ 210,000 (b) Philippine National Bank 122,121 ------------------------------------------------------------ ----------- RUSSIA--0.4% - ------------------------------------------------------------------------------ ENERGY--OIL & GAS--0.4% ------------------------------------------------------------ 39,000 AO Tatneft, ADR 97,500 ------------------------------------------------------------ ----------- SINGAPORE--0.3% - ------------------------------------------------------------------------------ BANKING--0.3% ------------------------------------------------------------ 34,000 United Overseas Bank Ltd. 80,541 ------------------------------------------------------------ ----------- SOUTH AFRICA--0.6% - ------------------------------------------------------------------------------ BUILDING MATERIALS & COMPONENTS--0.6% ------------------------------------------------------------ 44,458 Barlow Ltd. 160,635 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG INTERNATIONAL EQUITY FUND - --------------------------------------------------------------------------------
SHARES VALUE - ---------- ------------------------------------------------------------ ----------- COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------ SPAIN--3.4% - ------------------------------------------------------------------------------ BANKING--1.4% ------------------------------------------------------------ 18,800 Argentaria SA $ 361,417 ------------------------------------------------------------ ----------- TELECOMMUNICATIONS--2.0% ------------------------------------------------------------ 13,418 Telefonica SA 515,005 ------------------------------------------------------------ ----------- TOTAL SPAIN 876,422 ------------------------------------------------------------ ----------- SWEDEN--6.8% - ------------------------------------------------------------------------------ APPLIANCES & HOUSEHOLD DURABLES--1.3% ------------------------------------------------------------ 21,800 Electrolux AB, Class B 348,636 ------------------------------------------------------------ ----------- AUTOMOBILE--1.1% ------------------------------------------------------------ 10,500 Volvo AB, Class B 290,282 ------------------------------------------------------------ ----------- BANKING--1.9% ------------------------------------------------------------ 22,200 Nordbanken Holding Ab 132,656 ------------------------------------------------------------ 9,300 Svenska Handelsbanken, Stockholm 362,025 ------------------------------------------------------------ ----------- Total 494,681 ------------------------------------------------------------ ----------- ELECTRICAL & ELECTRONICS--1.2% ------------------------------------------------------------ 27,500 ABB AB, Class A 306,832 ------------------------------------------------------------ ----------- HEALTH & PERSONAL CARE--1.3% ------------------------------------------------------------ 20,300 Astra AB, Class B 329,680 ------------------------------------------------------------ ----------- TOTAL SWEDEN 1,770,111 ------------------------------------------------------------ ----------- SWITZERLAND--5.2% - ------------------------------------------------------------------------------ BANKING--0.8% ------------------------------------------------------------ 1,140 Credit Suisse Group 200,409 ------------------------------------------------------------ ----------- BUSINESS & PUBLIC SERVICES--0.6% ------------------------------------------------------------ 143 SGS Societe Generale de Surveillance Holding SA 159,660 ------------------------------------------------------------ ----------- FOOD & HOUSEHOLD PRODUCTS--1.0% ------------------------------------------------------------ 132 Nestle SA 245,509 ------------------------------------------------------------ ----------- INSURANCE--2.2% ------------------------------------------------------------ 950 (b) Zurich Versicherungsgesellschaft 570,527 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG INTERNATIONAL EQUITY FUND - --------------------------------------------------------------------------------
SHARES VALUE - ---------- ------------------------------------------------------------ ----------- COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------ SWITZERLAND--CONTINUED - ------------------------------------------------------------------------------ RETAIL--0.6% ------------------------------------------------------------ 291 Societe Suisse pour la Microelectronique et l'Horlogerie $ 164,469 ------------------------------------------------------------ ----------- TOTAL SWITZERLAND 1,340,574 ------------------------------------------------------------ ----------- UNITED KINGDOM--19.2% - ------------------------------------------------------------------------------ AEROSPACE & MILITARY TECHNOLOGY--2.3% ------------------------------------------------------------ 90,800 British Aerospace PLC 595,133 ------------------------------------------------------------ ----------- AUTOMOBILE--1.2% ------------------------------------------------------------ 84,700 LucasVarity PLC 301,003 ------------------------------------------------------------ ----------- BANKING--1.8% ------------------------------------------------------------ 26,600 National Westminster Bank, PLC, London 469,528 ------------------------------------------------------------ ----------- BEVERAGES--1.4% ------------------------------------------------------------ 35,868 Diageo PLC 363,759 ------------------------------------------------------------ ----------- BROADCASTING & PUBLISHING--0.4% ------------------------------------------------------------ 36,800 Mirror Group PLC 108,879 ------------------------------------------------------------ ----------- CHEMICALS--0.9% ------------------------------------------------------------ 22,200 Imperial Chemical Industries, PLC 243,006 ------------------------------------------------------------ ----------- ENERGY SOURCES--1.7% ------------------------------------------------------------ 34,200 British Petroleum Co. PLC 431,977 ------------------------------------------------------------ ----------- FOOD & HOUSEHOLD PRODUCTS--3.7% ------------------------------------------------------------ 17,300 Cadbury Schweppes PLC 253,750 ------------------------------------------------------------ 34,000 Prudential Corp. PLC 482,171 ------------------------------------------------------------ 23,400 Unilever PLC 218,486 ------------------------------------------------------------ ----------- Total 954,407 ------------------------------------------------------------ ----------- INSURANCE--1.0% ------------------------------------------------------------ 32,200 Royal & Sun Alliance Insurance Group PLC 270,964 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG INTERNATIONAL EQUITY FUND - --------------------------------------------------------------------------------
SHARES VALUE - ---------- ------------------------------------------------------------ ----------- COMMON STOCKS--CONTINUED - ------------------------------------------------------------------------------ UNITED KINGDOM--CONTINUED - ------------------------------------------------------------------------------ LEISURE & TOURISM--1.3% ------------------------------------------------------------ 25,500 Granada Group PLC $ 338,973 ------------------------------------------------------------ ----------- MACHINERY & ENGINEERING--0.7% ------------------------------------------------------------ 49,500 Siebe PLC 174,251 ------------------------------------------------------------ ----------- RECREATION, OTHER CONSUMER GOODS--0.6% ------------------------------------------------------------ 21,400 EMI Group PLC 149,769 ------------------------------------------------------------ ----------- TOBACCO--1.4% ------------------------------------------------------------ 36,600 B.A.T. Industries PLC 360,140 ------------------------------------------------------------ ----------- UTILITIES--ELECTRICAL & GAS--0.8% ------------------------------------------------------------ 26,100 National Power Co. PLC 217,007 ------------------------------------------------------------ ----------- TOTAL UNITED KINGDOM 4,978,796 ------------------------------------------------------------ ----------- UNITED STATES--0.0% - ------------------------------------------------------------------------------ APPLIANCES & HOUSEHOLD DURABLES--0.0% ------------------------------------------------------------ 1,776 Samsung Electronics Co., Rights 9,189 ------------------------------------------------------------ ----------- VENEZUELA--0.6% - ------------------------------------------------------------------------------ TELECOMMUNICATIONS--0.6% ------------------------------------------------------------ 14,200 Compania Anonima Nacional Telefonos de Venezuela, Class D, ADR 149,100 ------------------------------------------------------------ ----------- TOTAL COMMON STOCKS (IDENTIFIED COST $26,866,354) 24,488,140 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG INTERNATIONAL EQUITY FUND - --------------------------------------------------------------------------------
SHARES OR PRINCIPAL AMOUNT VALUE - ---------- ------------------------------------------------------------ ----------- PREFERRED STOCKS--1.1% - ------------------------------------------------------------------------------ BRAZIL--1.1% - ------------------------------------------------------------------------------ BEVERAGE & TOBACCO--1.1% ------------------------------------------------------------ 637,000 Cia Cervejaria Brahma, Preference (IDENTIFIED COST $419,644) $ 299,841 ------------------------------------------------------------ ----------- (a) REPURCHASE AGREEMENT--7.2% - ------------------------------------------------------------------------------ $1,854,000 State Street Corp., 5.72%, dated 8/31/1998, due 9/1/1998 (AT AMORTIZED COST) 1,854,000 ------------------------------------------------------------ ----------- TOTAL INVESTMENTS (IDENTIFIED COST $29,139,998) $26,641,981 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG LIMITED TERM GOVERNMENT INCOME FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ----------- CORPORATE BONDS--27.2% - ------------------------------------------------------------------------------- CHEMICALS--3.4% ------------------------------------------------------------ $ 1,000,000 Du Pont (E.I.) de Nemours & Co., 6.500%, 9/1/2002 $ 1,027,790 ------------------------------------------------------------ ----------- FINANCE--7.7% ------------------------------------------------------------ 1,000,000 General Electric Capital Corp., 5.920%, 4/3/2001 1,013,900 ------------------------------------------------------------ 750,000 IBM Credit Corp., 5.760%, 5/15/2001 755,535 ------------------------------------------------------------ 500,000 International Lease Finance Corp., 6.000%, 6/15/2003 508,510 ------------------------------------------------------------ ----------- Total 2,277,945 ------------------------------------------------------------ ----------- HEALTHCARE--4.2% ------------------------------------------------------------ 1,250,000 Upjohn Co., 5.875%, 4/15/2000 1,258,188 ------------------------------------------------------------ ----------- PHARMACEUTICALS--3.5% ------------------------------------------------------------ 1,000,000 American Home Products Corp., 7.700%, 2/15/2000 1,028,540 ------------------------------------------------------------ ----------- UTILITIES--8.4% ------------------------------------------------------------ 1,500,000 Northern States Power Co., 5.500%, 2/1/1999 1,502,235 ------------------------------------------------------------ 1,000,000 Southern California Edison Co., 5.600%, 12/15/1998 1,001,430 ------------------------------------------------------------ ----------- Total 2,503,665 ------------------------------------------------------------ ----------- TOTAL CORPORATE BONDS (IDENTIFIED COST $7,952,242) 8,096,128 ------------------------------------------------------------ ----------- GOVERNMENT AGENCIES--13.6% - ------------------------------------------------------------------------------- FEDERAL FARM CREDIT BANK--3.4% ------------------------------------------------------------ 1,000,000 5.48%, 3/1/1999 999,690 ------------------------------------------------------------ ----------- FEDERAL HOME LOAN BANK--3.4% ------------------------------------------------------------ 1,000,000 6.275%, 8/13/2001 1,009,420 ------------------------------------------------------------ ----------- FEDERAL HOME LOAN MORTGAGE CORPORATION--3.4% ------------------------------------------------------------ 1,000,000 6.790%, 5/24/2001 1,010,840 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG LIMITED TERM GOVERNMENT INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ----------- FEDERAL NATIONAL MORTGAGE ASSOCIATION--3.4% ------------------------------------------------------------ $ 1,000,000 6.050%, 10/20/2000 $ 1,007,815 ------------------------------------------------------------ ----------- TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $3,994,063) 4,027,765 ------------------------------------------------------------ ----------- U.S. TREASURY NOTES--48.9% - ------------------------------------------------------------------------------- 4,000,000 6.625%, 7/31/2001 4,175,440 ------------------------------------------------------------ 4,000,000 7.125%, 10/15/1998 4,011,000 ------------------------------------------------------------ 2,000,000 7.500%, 10/31/1999 2,052,680 ------------------------------------------------------------ 4,000,000 7.500%, 11/15/2001 4,292,800 ------------------------------------------------------------ ----------- TOTAL U.S. TREASURY NOTES (IDENTIFIED COST $14,202,968) 14,531,920 ------------------------------------------------------------ ----------- (a)REPURCHASE AGREEMENT--12.3% - ------------------------------------------------------------------------------- 3,656,200 Cantor Fitzgerald Securities, 5.820%, dated 8/31/1998, due 9/1/1998 (AT AMORTIZED COST) 3,656,200 ------------------------------------------------------------ ----------- TOTAL INVESTMENTS (IDENTIFIED COST $29,805,473) $30,312,013 ------------------------------------------------------------ -----------
(See Notes to Portfolios of Investments) DG GOVERNMENT INCOME FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ------------ CORPORATE BONDS--11.0% - ------------------------------------------------------------------------------- AUTOMOBILE--0.8% ------------------------------------------------------------ $ 2,000,000 General Motors Corp., 6.250%, 5/1/2005 $ 2,024,700 ------------------------------------------------------------ ------------ BANKING--0.4% ------------------------------------------------------------ 1,000,000 NationsBank Corp., 5.375%, 4/15/2000 996,320 ------------------------------------------------------------ ------------ BROKERAGE--0.9% ------------------------------------------------------------ 2,500,000 Merrill Lynch & Co., Inc., 6.000%, 7/15/2005 2,486,975 ------------------------------------------------------------ ------------ CONSUMER NON-DURABLES--0.7% ------------------------------------------------------------ 889,000 Anheuser-Busch Cos., Inc., 6.900%, 10/1/2002 903,073 ------------------------------------------------------------ 1,000,000 Heinz (H.J.) Co., 6.750%, 10/15/1999 1,013,660 ------------------------------------------------------------ ------------ Total 1,916,733 ------------------------------------------------------------ ------------ FINANCIAL SERVICES--3.3% ------------------------------------------------------------ 2,000,000 General Electric Capital Corp., 5.920%, 4/3/2001 2,027,800 ------------------------------------------------------------ 2,500,000 International Lease Finance Corp., 6.000%, 6/15/2003 2,542,550 ------------------------------------------------------------ 2,000,000 Private Export Funding Corp., 6.310%, 9/30/2004 2,093,964 ------------------------------------------------------------ 2,000,000 Private Export Funding Corp., 6.490%, 7/15/2007 2,126,638 ------------------------------------------------------------ ------------ Total 8,790,952 ------------------------------------------------------------ ------------ HEALTHCARE--0.4% ------------------------------------------------------------ 1,000,000 Upjohn Co., 5.875%, 4/15/2000 1,006,550 ------------------------------------------------------------ ------------ INSURANCE--0.9% ------------------------------------------------------------ 2,250,000 Chubb Corp., 6.150%, 8/15/2005 2,281,905 ------------------------------------------------------------ ------------ PHARMACEUTICALS--0.5% ------------------------------------------------------------ 1,400,000 American Home Products Corp., 7.700%, 2/15/2000 1,439,956 ------------------------------------------------------------ ------------ RAW MATERIALS--0.5% ------------------------------------------------------------ 889,000 Du Pont (E.I.) de Nemours & Co., 6.750%, 10/15/2002 922,266 ------------------------------------------------------------ 437,000 Du Pont (E.I.) de Nemours & Co., 9.150%, 4/15/2000 459,973 ------------------------------------------------------------ ------------ Total 1,382,239 ------------------------------------------------------------ ------------
(See Notes to Portfolios of Investments) DG GOVERNMENT INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ------------ CORPORATE BONDS--CONTINUED - ------------------------------------------------------------------------------- TECHNOLOGY SERVICES--0.2% ------------------------------------------------------------ $ 437,000 Texas Instruments, Inc., 9.250%, 6/15/2003 $ 498,774 ------------------------------------------------------------ ------------ UTILITIES--2.4% ------------------------------------------------------------ 1,000,000 Alabama Power Co., 6.750%, 2/1/2003 1,031,350 ------------------------------------------------------------ 2,000,000 GTE South, Inc., 6.125%, 6/15/2007 2,006,980 ------------------------------------------------------------ 1,500,000 Northern States Power Co., 5.500%, 2/1/1999 1,502,235 ------------------------------------------------------------ 1,000,000 Pacific Gas & Electric Co., 6.250%, 3/1/2004 1,028,980 ------------------------------------------------------------ 1,000,000 Southern California Edison Co., 5.625%, 10/1/2002 1,004,690 ------------------------------------------------------------ ------------ Total 6,574,235 ------------------------------------------------------------ ------------ TOTAL CORPORATE BONDS (IDENTIFIED COST $28,731,447) 29,399,339 ------------------------------------------------------------ ------------ GOVERNMENT AGENCIES--19.6% - ------------------------------------------------------------------------------- FEDERAL FARM CREDIT BANK--7.1% ------------------------------------------------------------ 4,000,000 5.430%, 9/1/1998 4,001,240 ------------------------------------------------------------ 4,000,000 5.48%, 3/1/1999 3,998,760 ------------------------------------------------------------ 4,000,000 5.540%, 1/4/1999 4,000,360 ------------------------------------------------------------ 7,000,000 5.700%, 9/3/2008 6,995,590 ------------------------------------------------------------ ------------ Total 18,995,950 ------------------------------------------------------------ ------------ FEDERAL HOME LOAN BANK--5.6% ------------------------------------------------------------ 3,000,000 5.790%, 2/18/2000 3,004,770 ------------------------------------------------------------ 10,000,000 5.800%, 9/2/2008 10,080,900 ------------------------------------------------------------ 2,000,000 6.275%, 8/13/2001 2,018,840 ------------------------------------------------------------ ------------ Total 15,104,510 ------------------------------------------------------------ ------------
(See Notes to Portfolios of Investments) DG GOVERNMENT INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ------------ GOVERNMENT AGENCIES--CONTINUED - ------------------------------------------------------------------------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION--5.8% ------------------------------------------------------------ $ 7,000,000 6.000%, 5/15/2008 $ 7,215,250 ------------------------------------------------------------ 5,000,000 6.460%, 5/9/2005 5,148,400 ------------------------------------------------------------ 1,000,000 6.820%, 12/13/2006 1,018,240 ------------------------------------------------------------ 2,000,000 6.940%, 9/5/2007 2,105,680 ------------------------------------------------------------ ------------ Total 15,487,570 ------------------------------------------------------------ ------------ STUDENT LOAN MARKETING ASSOCIATION--1.1% ------------------------------------------------------------ 3,000,000 5.810%, 1/27/2000 3,004,410 ------------------------------------------------------------ ------------ TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $52,289,089) 52,592,440 ------------------------------------------------------------ ------------ U.S. TREASURY OBLIGATIONS--68.5% - ------------------------------------------------------------------------------- U.S. TREASURY BONDS--26.9% ------------------------------------------------------------ 10,000,000 6.750%, 8/15/2026 11,879,900 ------------------------------------------------------------ 10,000,000 6.875%, 8/15/2025 12,008,600 ------------------------------------------------------------ 9,000,000 7.125%, 2/15/2023 11,010,240 ------------------------------------------------------------ 7,000,000 7.250%, 8/15/2022 8,666,350 ------------------------------------------------------------ 7,000,000 7.500%, 11/15/2016 8,661,030 ------------------------------------------------------------ 10,000,000 7.500%, 5/15/2002 10,821,900 ------------------------------------------------------------ 7,000,000 7.625%, 11/15/2022 9,019,150 ------------------------------------------------------------ ------------ Total 72,067,170 ------------------------------------------------------------ ------------ U.S. TREASURY NOTES--41.6% ------------------------------------------------------------ 8,000,000 5.750%, 10/31/2000 8,127,120 ------------------------------------------------------------ 10,000,000 5.750%, 8/15/2003 10,306,200 ------------------------------------------------------------ 10,000,000 6.125%, 7/31/2000 10,211,700 ------------------------------------------------------------ 9,000,000 6.500%, 8/15/2005 9,776,250 ------------------------------------------------------------ 15,000,000 7.000%, 7/15/2006 16,802,100 ------------------------------------------------------------ 9,000,000 7.125%, 10/15/1998 9,024,750 ------------------------------------------------------------ 10,000,000 7.500%, 10/31/1999 10,263,400 ------------------------------------------------------------ 10,000,000 7.750%, 1/31/2000 10,360,100 ------------------------------------------------------------
(See Notes to Portfolios of Investments) DG GOVERNMENT INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ------------ U.S. TREASURY OBLIGATIONS--CONTINUED - ------------------------------------------------------------------------------- U.S. TREASURY NOTES--CONTINUED ------------------------------------------------------------ $ 9,000,000 7.750%, 2/15/2001 $ 9,562,500 ------------------------------------------------------------ 7,000,000 7.875%, 8/15/2001 7,543,970 ------------------------------------------------------------ 9,000,000 8.000%, 5/15/2001 9,684,720 ------------------------------------------------------------ ------------ Total 111,662,810 ------------------------------------------------------------ ------------ TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $170,126,558) 183,729,980 ------------------------------------------------------------ ------------ (a)REPURCHASE AGREEMENT--10.5% - ------------------------------------------------------------------------------- 28,248,700 Cantor Fitzgerald Securities, 5.820%, dated 8/31/1998, due 9/1/1998 (AT AMORTIZED COST) 28,248,700 ------------------------------------------------------------ ------------ TOTAL INVESTMENTS (IDENTIFIED COST $279,395,794) $293,970,459 ------------------------------------------------------------ ------------
(See Notes to Portfolios of Investments) DG MUNICIPAL INCOME FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING(C) VALUE - ---------- --------------------------------------------------------- --------- ----------- LONG-TERM MUNICIPAL SECURITIES--97.5% - ---------------------------------------------------------------------- ALABAMA--3.0% --------------------------------------------------------- $ 500,000 Huntsville, AL, GO LT Warrants (Series A), 6.00% (Original Issue Yield: 6.325%), 11/1/2012 AA $ 541,750 --------------------------------------------------------- 1,000,000 Jefferson County, AL, Sewer Revenue Bonds, 6.00% (Original Issue Yield: 6.30%), 9/1/2013 NR 1,100,510 --------------------------------------------------------- ----------- Total 1,642,260 --------------------------------------------------------- ----------- ARIZONA--1.9% --------------------------------------------------------- 1,000,000 Phoenix, AZ, GO UT Refunding Bonds (Series C), 4.90% (Original Issue Yield: 5.00%), 7/1/2008 AA+ 1,043,270 --------------------------------------------------------- ----------- CALIFORNIA--2.0% --------------------------------------------------------- 1,000,000 California State, GO UT Public Improvement Bonds, 5.75%, 5/1/2007 A+ 1,091,590 --------------------------------------------------------- ----------- CONNECTICUT--2.0% --------------------------------------------------------- 1,000,000 Connecticut State, GO UT Public Improvement Bonds (Series C), 5.80%, 8/15/2008 NR 1,091,600 --------------------------------------------------------- ----------- FLORIDA--7.6% --------------------------------------------------------- 1,000,000 Broward County, FL School District, GO UT Refunding Bonds, 5.60% (Original Issue Yield: 5.80%), 2/15/2007 AA- 1,074,430 --------------------------------------------------------- 1,000,000 Florida State Board of Education Administration, GO UT Refunding Bonds (Series D), 5.00% (Original Issue Yield: 5.15%), 6/1/2015 AA+ 1,004,710 --------------------------------------------------------- 1,000,000 Jacksonville, FL Electric Authority, Refunding Revenue Bonds (Issue 2-Series 8), 5.50% (St. John's River)/(Original Issue Yield: 5.582%), 10/1/2013 AA 1,040,110 --------------------------------------------------------- 1,000,000 St. Petersburg, FL Public Utility, Water & Sewer Revenue Bonds, 5.50%, 10/1/2009 AA- 1,069,630 --------------------------------------------------------- ----------- Total 4,188,880 --------------------------------------------------------- -----------
(See Notes to Portfolios of Investments) DG MUNICIPAL INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING(C) VALUE - ---------- --------------------------------------------------------- --------- ----------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ---------------------------------------------------------------------- GEORGIA--1.8% --------------------------------------------------------- $1,000,000 Fulton County, GA, GO UT Refunding Bonds, 4.60%, 1/1/2001 AA $ 1,020,590 --------------------------------------------------------- ----------- HAWAII--3.0% --------------------------------------------------------- 500,000 Hawaii State, GO UT Bonds (Series CB), 5.75% (Original Issue Yield: 5.95%), 1/1/2008 A+ 551,580 --------------------------------------------------------- 1,000,000 Honolulu, HI City & County, GO UT Improvement Refunding Bonds (Series B), 5.50% (Original Issue Yield: 5.70%), 10/1/2011 AA 1,090,270 --------------------------------------------------------- ----------- Total 1,641,850 --------------------------------------------------------- ----------- ILLINOIS--2.9% --------------------------------------------------------- 1,000,000 Illinois State, GO UT Bonds, 5.60% (Original Issue Yield: 5.65%), 4/1/2008 AA 1,078,360 --------------------------------------------------------- 500,000 Illinois State, GO UT Refunding Bonds, 5.875% (Original Issue Yield: 6.05%), 6/1/2011 AA 539,200 --------------------------------------------------------- ----------- Total 1,617,560 --------------------------------------------------------- ----------- INDIANA--1.0% --------------------------------------------------------- 500,000 Indianapolis, IN, Local Public Improvement Revenue Bonds, 6.00% (Original Issue Yield: 6.40%), 7/1/2010 AA- 542,445 --------------------------------------------------------- ----------- LOUISIANA--1.0% --------------------------------------------------------- 500,000 Louisiana PFA, Hospital Refunding Revenue Bonds (Series C), 6.05% (Our Lady of Lake Regional)/(MBIA INS)/(Original Issue Yield: 6.15%), 12/1/2008 AAA 543,305 --------------------------------------------------------- ----------- MARYLAND--1.9% --------------------------------------------------------- 1,000,000 Maryland State, GO UT Bonds (Series BB), 5.50%, 6/1/2009 AAA 1,079,070 --------------------------------------------------------- ----------- MASSACHUSETTS--4.6% --------------------------------------------------------- 450,000 Commonwealth of Massachusetts, GO UT Bonds (Series A), 6.00% (FSA INS)/(Original Issue Yield: 7.618%), 6/1/2011 AAA 476,496 --------------------------------------------------------- 1,000,000 Commonwealth of Massachusetts, GO UT Refunding Revenue Bonds (Series A), 6.25%, 7/1/2003 NR 1,101,850 ---------------------------------------------------------
(See Notes to Portfolios of Investments) DG MUNICIPAL INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING(C) VALUE - ---------- --------------------------------------------------------- --------- ----------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ---------------------------------------------------------------------- MASSACHUSETTS--CONTINUED --------------------------------------------------------- $1,000,000 Massachusetts Bay Transit Authority, Refunding Revenue Bonds, 4.75% (General Transportation Systems)/ (MBIA INS)/(Original Issue Yield: 5.05%), 3/1/2017 AAA $ 978,910 --------------------------------------------------------- ----------- Total 2,557,256 --------------------------------------------------------- ----------- MINNESOTA--1.9% --------------------------------------------------------- 1,000,000 Minnesota State, GO UT, 5.00% (Original Issue Yield: 5.15%), 11/1/2008 AAA 1,056,540 --------------------------------------------------------- ----------- MISSISSIPPI--16.2% --------------------------------------------------------- 1,000,000 Harrison County, MS School District, Revenue Bonds, 4.90% (FSA INS), 8/1/2013 AAA 1,011,630 --------------------------------------------------------- 1,000,000 Hinds County, MS, GO UT Refunding Bonds, 5.50% (MBIA INS)/(Original Issue Yield: 5.75%), 3/1/2008 AAA 1,092,780 --------------------------------------------------------- 1,125,000 Jackson, MS, GO UT Refunding Bonds (Series A), 5.85% (MBIA INS), 5/1/2006 AAA 1,187,989 --------------------------------------------------------- 500,000 Lincoln County, MS Hospital Revenue, Health, Hospital, Nursinghome Improvements (Series B), 5.50% (King's Daughters Hospital)/(Asset Guaranty LOC)/(Original Issue Yield: 5.60%), 4/1/2018 AAA 518,415 --------------------------------------------------------- 1,000,000 Madison County, MS School District, GO UT Refunding Bonds, 5.10% (AMBAC INS)/(Original Issue Yield: 5.10%), 6/1/2008 AAA 1,039,530 --------------------------------------------------------- 955,000 Medical Center EDL Building Corp., MS, Refunding Revenue Bonds, 4.60% (University of Mississippi Medical Center)/ (AMBAC INS), 8/1/2010 AAA 959,727 --------------------------------------------------------- 1,000,000 Mississippi Hospital Equipment & Facilities Authority, Refunding Revenue Bonds, 5.50% (North Mississippi Health Services-1)/(AMBAC INS)/(Original Issue Yield: 5.93%), 5/15/2009 AAA 1,060,530 ---------------------------------------------------------
(See Notes to Portfolios of Investments) DG MUNICIPAL INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING(C) VALUE - ---------- --------------------------------------------------------- --------- ----------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ---------------------------------------------------------------------- MISSISSIPPI--CONTINUED --------------------------------------------------------- $1,000,000 Mississippi State, GO UT Bonds, 5.125% (Original Issue Yield: 5.30%), 12/1/2011 AA $ 1,041,630 --------------------------------------------------------- 1,000,000 Tupelo, MS Public School District, GO UT Refunding Bonds, 5.00% (AMBAC INS)/(Original Issue Yield: 5.10%), 12/1/2007 AAA 1,037,070 --------------------------------------------------------- ----------- Total 8,949,301 --------------------------------------------------------- ----------- MISSOURI--1.8% --------------------------------------------------------- 1,000,000 Missouri State, Water Pollution Control Refunding Bonds (Series B), 5.00% (Original Issue Yield: 5.60%), 8/1/2010 AAA 1,024,770 --------------------------------------------------------- ----------- MONTANA--1.8% --------------------------------------------------------- 1,000,000 Montana State, GO UT Bonds (Series A), 4.875% (Long Range Building Program)/(Original Issue Yield: 4.95%), 8/1/2009 AA- 1,028,700 --------------------------------------------------------- ----------- NEVADA--2.8% --------------------------------------------------------- 500,000 Las Vegas Valley, NV Water District, GO LT Refunding Revenue Bonds, 5.75% (MBIA INS)/(Original Issue Yield: 5.90%), 9/1/2008 AAA 535,195 --------------------------------------------------------- 1,000,000 Nevada State, (Project R-5) GO LT Bonds (Series A), 4.90% (Original Issue Yield: 5.00%), 11/1/2007 AA 1,038,090 --------------------------------------------------------- ----------- Total 1,573,285 --------------------------------------------------------- ----------- NEW JERSEY--1.0% --------------------------------------------------------- 500,000 New Jersey State, GO UT Refunding Bonds (Series D), 5.90% (Original Issue Yield: 6.05%), 2/15/2008 AA+ 543,215 --------------------------------------------------------- ----------- NORTH CAROLINA--2.8% --------------------------------------------------------- 1,000,000 North Carolina State, GO UT Bonds, 5.10%, 3/1/2003 AAA 1,054,370 --------------------------------------------------------- 500,000 Wake County, NC, General Obligation Unlimited, 4.90%, 3/1/2005 AAA 527,145 --------------------------------------------------------- ----------- Total 1,581,515 --------------------------------------------------------- -----------
(See Notes to Portfolios of Investments) DG MUNICIPAL INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING(C) VALUE - ---------- --------------------------------------------------------- --------- ----------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ---------------------------------------------------------------------- NORTH DAKOTA--1.0% --------------------------------------------------------- $ 500,000 North Dakota State Building Authority, Lease Revenue Bonds (Series A), 6.00% (AMBAC INS)/(Original Issue Yield: 6.05%), 6/1/2010 AAA $ 542,685 --------------------------------------------------------- ----------- OKLAHOMA--0.9% --------------------------------------------------------- 500,000 Oklahoma State Industrial Authority, Refunding Revenue Bonds, 5.00% (Original Issue Yield: 5.73%), 6/1/2013 AA+ 504,095 --------------------------------------------------------- ----------- OREGON--1.9% --------------------------------------------------------- 1,000,000 Portland, OR, GO UT Refunding Revenue Bonds, 4.90% (Original Issue Yield: 5.00%), 10/1/2007 NR 1,032,450 --------------------------------------------------------- ----------- RHODE ISLAND--1.0% --------------------------------------------------------- 500,000 Providence, RI, GO UT Bonds, 5.90% (MBIA INS)/(Original Issue Yield: 6.05%), 1/15/2009 AAA 537,100 --------------------------------------------------------- ----------- TENNESSEE--5.5% --------------------------------------------------------- 1,000,000 Chattanooga, TN, GO UT, 5.00% (FGIC INS)/(Original Issue Yield: 5.15%), 9/1/2015 AAA 1,011,380 --------------------------------------------------------- 1,000,000 Memphis, TN, GO UT Refunding Bonds, 4.90% (Original Issue Yield: 5.05%), 8/1/2006 AA 1,035,150 --------------------------------------------------------- 1,000,000 Shelby County, TN, GO UT, 5.00% (Original Issue Yield: 5.05%), 3/1/2018 AA+ 1,001,870 --------------------------------------------------------- ----------- Total 3,048,400 --------------------------------------------------------- ----------- TEXAS--8.6% --------------------------------------------------------- 500,000 Corpus Christi, TX, GO UT Refunding Bonds, 6.00% (FGIC INS)/(Original Issue Yield: 6.15%), 3/1/2010 AAA 536,765 --------------------------------------------------------- 500,000 El Paso, TX Independent School District, GO UT Refunding Bonds (Series A), 5.75% (PSFG INS)/(Original Issue Yield: 6.15%), 7/1/2007 AAA 527,055 --------------------------------------------------------- 500,000 Harris County, TX Flood Control District, GO LT Bonds (Series B), 6.20% (Original Issue Yield: 6.25%), 10/1/2002 (@100) AA 543,690 ---------------------------------------------------------
(See Notes to Portfolios of Investments) DG MUNICIPAL INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING(C) VALUE - ---------- --------------------------------------------------------- --------- ----------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ---------------------------------------------------------------------- TEXAS--CONTINUED --------------------------------------------------------- $1,000,000 Houston, TX Independent School District, GO UT Refunding Bonds, 5.50% (PSFG INS)/(Original Issue Yield: 5.55%), 8/15/2008 AAA $ 1,052,800 --------------------------------------------------------- 500,000 Texas State Public Finance Authority, GO UT Refunding Bonds (Series A), 5.90% (Original Issue Yield: 6.00%), 10/1/2011 AA 551,905 --------------------------------------------------------- 1,000,000 Texas State, GO UT Water Development Bonds, 5.20% (Original Issue Yield: 5.25%), 8/1/2010 AA 1,049,340 --------------------------------------------------------- 500,000 Travis County, TX Health Facilities, Revenue Bonds, 5.00% (Daughters of Charity)/(Original Issue Yield: 5.25%), 11/1/2012 AA+ 509,335 --------------------------------------------------------- ----------- Total 4,770,890 --------------------------------------------------------- ----------- UTAH--1.0% --------------------------------------------------------- 500,000 Utah State Building Ownership Authority Lease Revenue, (Series C) Refunding Revenue Bonds, 5.50% (FSA LOC), 5/15/2013 AAA 545,150 --------------------------------------------------------- ----------- VIRGINIA--4.7% --------------------------------------------------------- 1,000,000 Fairfax County, VA, GO UT Bonds (Series A), 5.50% (Original Issue Yield: 5.70%), 6/1/2008 AAA 1,062,970 --------------------------------------------------------- 500,000 Newport News, VA, GO UT Refunding Bonds, 5.00% (Original Issue Yield: 5.05%), 3/1/2013 AA 514,330 --------------------------------------------------------- 500,000 Virginia Commonwealth Transportation Board, Refunding Revenue Bonds, 5.125% (Northern Virginia Transportation District)/(Original Issue Yield: 5.25%), 5/15/2017 AA 507,915 --------------------------------------------------------- 500,000 Virginia State Transportation Board, Refunding Revenue Bonds, 6.00% (Original Issue Yield: 6.45%), 4/1/2010 AA 539,815 --------------------------------------------------------- ----------- Total 2,625,030 --------------------------------------------------------- -----------
(See Notes to Portfolios of Investments) DG MUNICIPAL INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT CREDIT OR SHARES RATING(C) VALUE - ---------- --------- ----------- LONG-TERM MUNICIPAL SECURITIES--CONTINUED - ---------------------------------------------------------------------- WASHINGTON--8.1% --------------------------------------------------------- $1,000,000 King County, WA Library System, UT GO Bonds, 6.15%, 12/1/2010 AA- $ 1,115,500 --------------------------------------------------------- 145,000 King County, WA, GO LT Refunding Bonds (Series A), 6.00% (Original Issue Yield: 6.10%), 12/1/2010 AA+ 159,298 --------------------------------------------------------- 355,000 King County, WA, GO LT Refunding Bonds (Series A), 6.00% (Original Issue Yield: 6.10%), 12/1/2010 AA+ 386,719 --------------------------------------------------------- 500,000 Port of Seattle, WA, Revenue Bonds, 6.25% (Original Issue Yield: 6.566%), 11/1/2010 AA- 553,980 --------------------------------------------------------- 650,000 Tacoma, WA Electric System, Refunding Revenue Bonds, 6.25% (AMBAC INS)/(Original Issue Yield: 6.60%), 1/1/2011 AAA 704,542 --------------------------------------------------------- 500,000 Washington State, GO LT Refunding Revenue Bonds (Series R92-B), 6.25% (Original Issue Yield: 6.80%), 9/1/2009 AA+ 532,380 --------------------------------------------------------- 1,000,000 Washington State, GO UT Refunding Bonds (Series R-96B), 5.00% (Original Issue Yield: 5.45%), 7/1/2010 AA+ 1,033,310 --------------------------------------------------------- ----------- Total 4,485,729 --------------------------------------------------------- ----------- WISCONSIN--3.8% --------------------------------------------------------- 500,000 Green Bay, WI Area Public School District, GO UT Bonds (Series F), 6.00% (Original Issue Yield: 6.10%), 4/1/2010 NR 527,120 --------------------------------------------------------- 500,000 Wisconsin State, GO UT Bonds (Series A), 6.30% (Original Issue Yield: 6.60%), 5/1/2012 AA 541,755 --------------------------------------------------------- 1,000,000 Wisconsin State, GO UT Bonds (Series C), 5.25% (Original Issue Yield: 5.45%), 5/1/2011 AA 1,047,121 --------------------------------------------------------- ----------- Total 2,115,996 --------------------------------------------------------- ----------- TOTAL LONG-TERM MUNICIPAL SECURITIES (IDENTIFIED COST $50,912,954) 54,024,527 --------------------------------------------------------- ----------- MUTUAL FUND SHARES--2.1% - ---------------------------------------------------------------------- 1,161,209 Dreyfus Tax Exempt Cash Management (AT NET ASSET VALUE) 1,161,209 --------------------------------------------------------- ----------- TOTAL INVESTMENTS (IDENTIFIED COST $52,074,163) $55,185,736 --------------------------------------------------------- -----------
(See Notes to Portfolios of Investments) NOTES TO PORTFOLIOS OF INVESTMENTS - -------------------------------------------------------------------------------- (a) The repurchase agreements are fully collateralized by U.S. Treasury obligations based on market prices at the date of the portfolio. (b) Non-income producing security. (c) Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current ratings are unaudited. (d) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At August 31, 1998, these securities amounted to $621,012 which represents 2.4% of net assets. The following acronyms are used throughout this portfolio: ADR -- American Depository Receipt AMBAC -- American Municipal Bond Assurance Corporation CGIC -- Capital Guaranty Insurance Corporation FGIC -- Financial Guaranty Insurance Company FSA -- Financial Security Assurance GDR -- Global Depository Receipt GO -- General Obligation INS -- Insured LOC -- Letter of Credit LT -- Limited Tax LTD -- Limited MBIA -- Municipal Bond Investors Assurance PCR -- Pollution Control Revenue PFA -- Public Facility Authority PLC - -- Public Limited Company PRF -- Prerefunded PSFG -- Permanent School Fund Guarantee UT -- Unlimited Tax
COST OF NET INVESTMENTS FOR UNREALIZED GROSS GROSS FEDERAL TAX APPRECIATION UNREALIZED UNREALIZED TOTAL NET DG INVESTOR SERIES PURPOSES (DEPRECIATION) APPRECIATION DEPRECIATION ASSETS* - ------------------------- --------------- -------------- ------------ ------------ ------------ Equity Fund $348,637,091 $314,644,915 $323,272,501 $ 8,627,586 $664,464,016 International Equity Fund $ 29,139,998 $ (2,498,017) $ 2,163,037 $ 4,661,054 $ 25,905,045 Opportunity Fund $101,409,860 $(20,165,207) $ 7,448,475 $27,613,682 $ 81,975,573 Limited Term Fund $ 29,805,473 $ 506,540 $ 547,256 $ 40,716 $ 29,722,562 Government Income Fund $279,395,794 $ 14,574,665 $15,796,177 $ 1,221,512 $268,273,898 Municipal Income Fund $ 52,074,163 $ 3,111,573 $ 3,111,573 $ -- $ 55,412,782
* The categories of investments are shown as a percentage of net assets at August 31, 1998. (See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--STOCK AND BOND FUNDS STATEMENTS OF ASSETS AND LIABILITIES AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
DG DG DG EQUITY INTERNATIONAL OPPORTUNITY FUND EQUITY FUND FUND ---- ----------- ---- ASSETS: - ------------------------------------------------------------ Investments in repurchase agreements $23,971,800 $ 1,854,000 $ 16,443,900 - ------------------------------------------------------------ Investments in securities 639,310,206 24,787,981 64,800,753 - ------------------------------------------------------------ ------------ ----------- ------------ Total investments in securities at value 663,282,006 26,641,981 81,244,653 - ------------------------------------------------------------ Cash 837,440 65,930 -- - ------------------------------------------------------------ Income receivable 758,308 98,567 2,658 - ------------------------------------------------------------ Receivable for investments sold -- 34,795 798,773 - ------------------------------------------------------------ Receivable for shares sold 159,408 -- 3,643 - ------------------------------------------------------------ Deferred organizational costs -- -- 2,941 - ------------------------------------------------------------ Deferred expenses -- -- 1,102 - ------------------------------------------------------------ ------------ ----------- ------------ Total assets 665,037,162 26,841,273 82,053,770 - ------------------------------------------------------------ ------------ ----------- ------------ LIABILITIES: - ------------------------------------------------------------ Payable for investments purchased -- 871,107 -- - ------------------------------------------------------------ Payable for shares redeemed 141,784 -- 3,348 - ------------------------------------------------------------ Payable to bank -- -- 397 - ------------------------------------------------------------ Net payable for foreign exchange contracts purchased -- 1,135 -- - ------------------------------------------------------------ Payable for taxes withheld -- 3,929 -- - ------------------------------------------------------------ Accrued expenses 431,362 60,057 74,452 - ------------------------------------------------------------ ------------ ----------- ------------ Total liabilities 573,146 936,228 78,197 - ------------------------------------------------------------ ------------ ----------- ------------ NET ASSETS CONSIST OF: - ------------------------------------------------------------ Paid in capital 337,892,564 27,952,394 107,006,854 - ------------------------------------------------------------ Net unrealized appreciation (depreciation) of investments and foreign currency translation 314,644,915 (2,499,481) (20,165,207) - ------------------------------------------------------------ Accumulated net realized gain (loss) on investments and foreign currency transactions 11,663,863 243,497 (4,631,997) - ------------------------------------------------------------ Undistributed net investment income (distributions in excess of net investment loss) 262,674 208,635 (234,077) - ------------------------------------------------------------ ------------ ----------- ------------ Total Net Assets $664,464,016 $25,905,045 $ 81,975,573 - ------------------------------------------------------------ ------------ ----------- ------------ NET ASSET VALUE PER SHARE, and Redemption Proceeds Per Share: (net assets / shares outstanding) $21.52 $9.38 $9.76 - ------------------------------------------------------------ ------------ ----------- ------------ Offering Price Per Share** $22.30* $9.38 $10.11* - ------------------------------------------------------------ ------------ ----------- ------------ Shares Outstanding 30,881,768 2,762,888 8,395,401 - ------------------------------------------------------------ ------------ ----------- ------------ Investments, at identified cost $348,637,091 $29,139,998 $101,409,860 - ------------------------------------------------------------ ------------ ----------- ------------ Investments, at tax cost $348,637,091 $29,139,998 $101,409,860 - ------------------------------------------------------------ ------------ ----------- ------------
* Computation of offering price: 100/96.5 of net asset value. ** See "What Shares Cost" in the Prospectus. (See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--STOCK AND BOND FUNDS STATEMENTS OF ASSETS AND LIABILITIES AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
DG LIMITED TERM DG DG GOVERNMENT GOVERNMENT MUNICIPAL INCOME FUND INCOME FUND INCOME FUND ----------- ----------- ----------- ASSETS: - ------------------------------------------------------------ Investments in repurchase agreements $3,656,200 $28,248,700 $ -- - ------------------------------------------------------------ Investments in securities 26,655,813 265,721,759 55,185,736 - ------------------------------------------------------------ ----------- ------------ ----------- Total investments in securities at value 30,312,013 293,970,459 55,185,736 - ------------------------------------------------------------ Cash 2,515 -- -- - ------------------------------------------------------------ Income receivable 431,306 2,821,041 803,658 - ------------------------------------------------------------ Receivable for shares sold 31 7,780 -- - ------------------------------------------------------------ ----------- ------------ ----------- Total assets 30,745,865 296,799,280 55,989,394 - ------------------------------------------------------------ ----------- ------------ ----------- LIABILITIES: - ------------------------------------------------------------ Payable for investments purchased 1,000,000 28,355,547 538,129 - ------------------------------------------------------------ Payable to bank -- 11,109 -- - ------------------------------------------------------------ Accrued expenses 23,303 158,726 38,483 - ------------------------------------------------------------ ----------- ------------ ----------- Total liabilities 1,023,303 28,525,382 576,612 - ------------------------------------------------------------ ----------- ------------ ----------- NET ASSETS CONSIST OF: - ------------------------------------------------------------ Paid in capital 32,466,770 255,206,509 52,129,175 - ------------------------------------------------------------ Net unrealized appreciation (depreciation) of investments and foreign currency translation 506,540 14,574,665 3,111,573 - ------------------------------------------------------------ Accumulated net realized gain (loss) on investments and foreign currency transactions (3,322,307) (1,740,510) 71,481 - ------------------------------------------------------------ Undistributed net investment income 71,559 233,234 100,553 - ------------------------------------------------------------ ----------- ------------ ----------- Total Net Assets $29,722,562 $268,273,898 $55,412,782 - ------------------------------------------------------------ ----------- ------------ ----------- NET ASSET VALUE PER SHARE, and Redemption Proceeds Per Share: (net assets / shares outstanding) $9.81 $10.30 $10.98 - ------------------------------------------------------------ ----------- ------------ ----------- Offering Price Per Share** $10.01* $10.51* $11.20* - ------------------------------------------------------------ ----------- ------------ ----------- Shares Outstanding 3,028,296 26,041,256 5,047,340 - ------------------------------------------------------------ ----------- ------------ ----------- Investments, at identified cost $29,805,473 $279,395,794 $52,074,163 - ------------------------------------------------------------ ----------- ------------ ----------- Investments, at tax cost $29,805,473 $279,395,794 $52,074,163 - ------------------------------------------------------------ ----------- ------------ -----------
* Computation of offering price: 100/98 of net asset value. ** See "What Shares Cost" in the Prospectus. (See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--STOCK AND BOND FUNDS STATEMENTS OF OPERATIONS SIX MONTHS ENDED AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
DG INTERNATIONAL DG DG EQUITY EQUITY OPPORTUNITY FUND FUND FUND ---- ---- ---- INVESTMENT INCOME: - ------------------------------------------------------------ Dividends $ 3,779,673 $ 463,493(a) $ 50,545 - ------------------------------------------------------------ Interest 1,021,301 43,109 522,305 - ------------------------------------------------------------ ----------- ----------- ----------- Total income 4,800,974 506,602 572,850 - ------------------------------------------------------------ ----------- ----------- ----------- EXPENSES: - ------------------------------------------------------------ Investment advisory fee 2,865,342 153,132 570,329 - ------------------------------------------------------------ Administrative personnel and services fee 365,876 38,327 57,483 - ------------------------------------------------------------ Custodian fees 14,260 35,567 5,663 - ------------------------------------------------------------ Transfer and dividend disbursing agent fees and expenses 48,260 14,327 25,791 - ------------------------------------------------------------ Directors'/Trustees' fees 3,097 927 1,660 - ------------------------------------------------------------ Auditing fees 6,364 6,519 6,297 - ------------------------------------------------------------ Legal fees 1,471 1,147 1,713 - ------------------------------------------------------------ Portfolio accounting fees 56,235 33,927 25,909 - ------------------------------------------------------------ Shareholder services fee 573,068 22,970 90,052 - ------------------------------------------------------------ Share registration costs 15,840 13,248 6,674 - ------------------------------------------------------------ Printing and postage 3,191 3,915 4,323 - ------------------------------------------------------------ Insurance premiums 3,149 1,736 1,390 - ------------------------------------------------------------ Miscellaneous 4,385 2,576 9,643 - ------------------------------------------------------------ ----------- ---------- ------------ Total expenses 3,960,538 328,318 806,927 - ------------------------------------------------------------ WAIVER-- - ------------------------------------------------------------ Waiver of investment advisory fees -- (53,520) -- - ------------------------------------------------------------ ----------- ----------- ------------ Net expenses 3,960,538 274,798 806,927 - ------------------------------------------------------------ ----------- ----------- ------------ Net investment income (operating loss) 840,436 231,804 (234,077) - ------------------------------------------------------------ ----------- ----------- ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: - ------------------------------------------------------------ Net realized gain (loss) on investments and foreign currency transactions 11,638,026 480,770 (4,545,939) - ------------------------------------------------------------ Change in unrealized appreciation (depreciation) of investments, and foreign currency translation (50,610,335) (3,921,333) (38,231,696) - ------------------------------------------------------------ ----------- ----------- ------------ Net realized and unrealized gain (loss) on investments and foreign currency (38,972,309) (3,440,563) (42,777,635) - ------------------------------------------------------------ ----------- ----------- ------------ Change in net assets resulting from operations $(38,131,873) $(3,208,759) $(43,011,712) - ------------------------------------------------------------ ----------- ----------- ------------
(a) Net of foreign taxes withheld of $55,402. (See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--STOCK AND BOND FUNDS STATEMENTS OF OPERATIONS SIX MONTHS ENDED AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
DG LIMITED TERM DG DG GOVERNMENT GOVERNMENT MUNICIPAL INCOME FUND INCOME FUND INCOME FUND ----------- ----------- ----------- INVESTMENT INCOME: - ---------------------------------------------------------- Dividends $ -- $ -- $ -- - ---------------------------------------------------------- Interest 1,343,945 8,660,743 1,347,741 - ---------------------------------------------------------- ----------- ----------- ----------- Total income 1,343,945 8,660,743 1,347,741 - ---------------------------------------------------------- ----------- ---------- ----------- EXPENSES: - ---------------------------------------------------------- Investment advisory fee 126,128 819,497 160,717 - ---------------------------------------------------------- Administrative personnel and services fee 50,000 130,779 50,410 - ---------------------------------------------------------- Custodian fees 2,337 5,938 1,135 - ---------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 15,855 21,425 15,510 - ---------------------------------------------------------- Directors'/Trustees' fees 1,329 1,949 1,401 - ---------------------------------------------------------- Auditing fees 6,340 6,408 6,542 - ---------------------------------------------------------- Legal fees 1,579 1,629 1,287 - ---------------------------------------------------------- Portfolio accounting fees 23,513 36,978 27,578 - ---------------------------------------------------------- Shareholder services fee 31,532 204,874 40,179 - ---------------------------------------------------------- Share registration costs 6,833 9,051 7,548 - ---------------------------------------------------------- Printing and postage 3,417 2,923 2,797 - ---------------------------------------------------------- Insurance premiums 1,464 1,913 1,331 - ---------------------------------------------------------- Miscellaneous 1,047 2,383 1,243 - ---------------------------------------------------------- ----------- ---------- ------------ Total expenses 271,374 1,245,747 317,678 - ---------------------------------------------------------- WAIVER-- - ---------------------------------------------------------- Waiver of investment advisory fees (31,532) -- (80,358) - ---------------------------------------------------------- ----------- ----------- ----------- Net expenses 239,842 1,245,747 237,320 - ---------------------------------------------------------- ----------- ----------- ----------- Net investment income 1,104,103 7,414,996 1,110,421 - ---------------------------------------------------------- ----------- ----------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: - ---------------------------------------------------------- Net realized gain (loss) on investments and foreign currency transactions 228,788 170,859 (1,043) - ---------------------------------------------------------- Change in unrealized appreciation (depreciation) of investments and foreign currency translation (183,339) 5,993,559 512,274 - ---------------------------------------------------------- ----------- ---------- ----------- Net realized and unrealized gain (loss) on investments and foreign currency 45,449 6,164,418 511,231 - ---------------------------------------------------------- ----------- ----------- ----------- Change in net assets resulting from operations $1,149,552 $13,579,414 $1,621,652 - ---------------------------------------------------------- ----------- ----------- -----------
(See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--STOCK AND BOND FUNDS STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
DG INTERNATIONAL DG EQUITY FUND EQUITY FUND ---------------------------- --------------------------- SIX-MONTHS SIX-MONTHS ENDED ENDED PERIOD AUGUST 31, YEAR ENDED AUGUST 31, ENDED 1998 FEBRUARY 28, 1998 FEBRUARY 28, (UNAUDITED) 1998 (UNAUDITED) 1998(A) ----------- ------------ ----------- ------------ INCREASE (DECREASE) IN NET ASSETS - ------------------------------------------------ OPERATIONS-- - ------------------------------------------------ Net investment income/(operating loss) $ 840,436 $ 3,179,613 $ 231,804 $ (45,719) - ------------------------------------------------ Net realized gain (loss) on investments and foreign currency transactions 11,638,026 9,991,335 480,770 (240,297) - ------------------------------------------------ Net change in unrealized appreciation (depreciation) of investments and foreign currency translation (50,610,335) 193,990,094 (3,921,333) 1,421,852 - ------------------------------------------------ ----------- ------------ ---------- ----------- Change in net assets resulting from operations (38,131,873) 207,161,042 (3,208,759) 1,135,836 - ------------------------------------------------ ----------- ------------ ---------- ----------- DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------ Distributions from net investment income (1,015,876) (3,295,484) -- (20,145) - ------------------------------------------------ Distributions in excess of net investment income -- -- -- - ------------------------------------------------ Distributions from net realized gain on investments (5,517,413) (4,463,969) -- -- - ------------------------------------------------ ----------- ------------ ---------- ----------- Change in net assets resulting from distributions to shareholders (6,533,289) (7,759,453) -- (20,145) - ------------------------------------------------ ----------- ------------ ---------- ----------- CAPITAL STOCK TRANSACTIONS-- - ------------------------------------------------ Proceeds from sale of shares 87,258,210 146,010,215 7,192,412 26,266,042 - ------------------------------------------------ Net asset value of shares issued to shareholders in payment of distributions declared 3,840,905 4,620,893 -- 17,816 - ------------------------------------------------ Cost of shares redeemed (97,600,604) (124,793,931) (4,611,819) (866,338) - ------------------------------------------------ ----------- ------------ ---------- ----------- Change in net assets from share transactions (6,501,489) 25,837,177 2,580,593 25,417,520 - ------------------------------------------------ ----------- ------------ ---------- ----------- Change in net assets (51,166,651) 225,238,766 (628,166) 26,533,211 - ------------------------------------------------ NET ASSETS: - ------------------------------------------------ Beginning of period 715,630,667 490,391,901 26,533,211 -- - ------------------------------------------------ ----------- ------------ ---------- ----------- End of period $664,464,016 $ 715,630,667 $ 25,905,045 $ 26,533,211 - ------------------------------------------------ ----------- ----------- ----------- ------------ Undistributed net investment income (distribution in excess of net investment loss) included in net assets at end of period $ 262,674 $ 438,114 $ 208,635 $ -- - ------------------------------------------------ ----------- ----------- ----------- ------------ Net realized gain (loss) as computed for federal tax purposes $ 11,638,026 $ 9,991,335 $ 501,732 $ 364 - ------------------------------------------------ ----------- ----------- ----------- ------------
(a) Reflects operations from the period from August 15, 1997 (date of initial public investment) to February 28, 1998. (See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--STOCK AND BOND FUNDS STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
DG LIMITED TERM GOVERNMENT DG OPPORTUNITY FUND INCOME FUND --------------------------- --------------------------- SIX-MONTHS SIX-MONTHS ENDED ENDED AUGUST 31, YEAR ENDED AUGUST 31, YEAR ENDED 1998 FEBRUARY 28, 1998 FEBRUARY 28, (UNAUDITED) 1998 (UNAUDITED) 1998 ----------- ------------ ----------- ------------ INCREASE (DECREASE) IN NET ASSETS - ------------------------------------------------- OPERATIONS-- - ------------------------------------------------- Net investment income/(operating loss) $ (234,077) $ (398,934) $ 1,104,103 $ 4,192,239 - ------------------------------------------------- Net realized gain (loss) on investments and foreign currency transactions (4,545,939) 24,232,586 228,788 (21,405) - ------------------------------------------------- Net change in unrealized appreciation (depreciation) of investments and foreign currency translation (38,231,696) 8,351,884 (183,339) 619,533 - ------------------------------------------------- ----------- ------------ ----------- ------------ Change in net assets resulting from operations (43,011,712) 32,185,536 1,149,552 4,790,367 - ------------------------------------------------- ----------- ------------ ----------- ------------ DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------- Distributions from net investment income -- -- (1,044,019) (4,216,317) - ------------------------------------------------- Distributions in excess of net investment income -- - ------------------------------------------------- Distributions from net realized gain on investments (7,315,965) (16,352,806) -- -- - ------------------------------------------------- ----------- ------------ ----------- ------------ Change in net assets resulting from distributions to shareholders (7,315,965) (16,352,806) (1,044,019) (4,216,317) - ------------------------------------------------- ----------- ------------ ----------- ------------ CAPITAL STOCK TRANSACTIONS-- - ------------------------------------------------- Proceeds from sale of shares 44,700,011 47,226,667 4,943,871 9,959,722 - ------------------------------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 4,840,922 10,900,651 637,946 1,715,788 - ------------------------------------------------- Cost of shares redeemed (40,109,193) (31,615,686) (35,101,714) (37,498,061) - ------------------------------------------------- ----------- ------------ ----------- ------------ Change in net assets from share transactions 9,431,740 26,511,632 (29,519,897) (25,822,551) - ------------------------------------------------- ----------- ------------ ----------- ------------ Change in net assets (40,895,937) 42,344,362 (29,414,364) (25,248,501) - ------------------------------------------------- NET ASSETS: - ------------------------------------------------- Beginning of period 122,871,510 80,527,148 59,136,926 84,385,427 - ------------------------------------------------- ----------- ------------ ----------- ------------ End of period $ 81,975,573 $122,871,510 $ 29,722,562 $ 59,136,926 - ------------------------------------------------- ----------- ------------ ----------- ------------ Undistributed net investment income (distribution in excess of net investment loss) included in net assets at end of period $ (234,077) $ -- $ 71,559 $ 11,475 - ------------------------------------------------- ----------- ------------ ----------- ------------ Net realized gain (loss) as computed for federal tax purposes $ (4,545,939) $24,041,342 $ 228,788 $ (378,938) - ------------------------------------------------- ----------- ------------ ----------- ------------
(See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--STOCK AND BOND FUNDS STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
DG GOVERNMENT DG MUNICIPAL INCOME FUND INCOME FUND --------------------------- -------------------------- SIX-MONTHS SIX-MONTHS ENDED ENDED AUGUST 31, YEAR ENDED AUGUST 31, YEAR ENDED 1998 FEBRUARY 28, 1998 FEBRUARY 28, (UNAUDITED) 1998 (UNAUDITED) 1998 ----------- ------------ ----------- ------------ INCREASE (DECREASE) IN NET ASSETS - ------------------------------------------------- OPERATIONS-- - ------------------------------------------------- Net investment income/(operating loss) $ 7,414,996 $14,791,115 $1,110,421 $ 2,124,116 - ------------------------------------------------- Net realized gain (loss) on investments and foreign currency transactions 170,859 151,276 (1,043) 72,332 - ------------------------------------------------- Net change in unrealized appreciation (depreciation) of investments and foreign currency translation 5,993,559 9,924,175 512,274 1,412,573 - ------------------------------------------------- ---------- ------------ ----------- ------------ Change in net assets resulting from operations 13,579,414 24,866,566 1,621,652 3,609,021 - ------------------------------------------------- ----------- ------------ ----------- ------------ DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------------------------------- Distributions from net investment income (7,276,093) (14,742,578) (1,122,683) (2,122,421) - ------------------------------------------------- Distributions in excess of net investment income - ------------------------------------------------- Distributions from net realized gain on investments -- -- -- (104,785) - ------------------------------------------------- ----------- ------------ ----------- ------------ Change in net assets resulting from distributions to shareholders (7,276,093) (14,742,578) (1,122,683) (2,227,206) - ------------------------------------------------- ----------- ------------ ----------- ------------ CAPITAL STOCK TRANSACTIONS-- - ------------------------------------------------- Proceeds from sale of shares 59,256,576 97,746,058 13,136,762 12,400,013 - ------------------------------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 2,745,810 5,515,899 10,070 26,535 - ------------------------------------------------- Cost of shares redeemed (70,435,373) (92,600,823) (6,811,626) (12,157,682) - ------------------------------------------------- ----------- ------------ ----------- ------------ Change in net assets from share transactions (8,432,987) 10,661,134 6,335,206 268,866 - ------------------------------------------------- ----------- ------------ ----------- ------------ Change in net assets (2,129,666) 20,785,122 6,834,175 1,650,681 - ------------------------------------------------- NET ASSETS: - ------------------------------------------------- Beginning of period 270,403,564 249,618,442 48,578,607 46,927,926 - ------------------------------------------------- ----------- ------------ ----------- ------------ End of period $268,273,898 $270,403,564 $55,412,782 $ 48,578,607 - ------------------------------------------------- ----------- ------------ ----------- ------------ Undistributed net investment income (distribution in excess of net investment loss) included in net assets at end of period $ 233,234 $ 94,331 $ 100,553 $ 112,815 - ------------------------------------------------- ----------- ------------ ----------- ------------ Net realized gain (loss) as computed for federal tax purposes $ 170,859 $ (763,279) $ (1,043) $ 72,332 - ------------------------------------------------- ----------- ------------ ----------- ------------
(See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--STOCK AND BOND FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
NET DISTRIBUTIONS REALIZED TO AND DISTRIBUTIONS SHAREHOLDERS UNREALIZED DISTRIBUTIONS TO FROM NET GAIN/(LOSS) TO SHAREHOLDERS REALIZED GAIN NET ASSET NET ON TOTAL SHAREHOLDERS IN EXCESS OF ON INVESTMENT VALUE, INVESTMENT INVESTMENTS FROM FROM NET NET TRANSACTIONS YEAR ENDED BEGINNING INCOME AND FOREIGN INVESTMENT INVESTMENT INVESTMENT AND FOREIGN FEBRUARY 28 OR 29, OF PERIOD (LOSS) CURRENCIES OPERATIONS INCOME LOSS CURRENCIES ------------------ --------- ------ ---------- ---------- ------ ---- ---------- DG EQUITY FUND 1993(a) $10.00 0.12 0.52 0.64 (0.10) -- -- 1994 $10.54 0.14 0.38 0.52 (0.14) -- (0.05) 1995 $10.87 0.16 0.71 0.87 (0.16) -- (0.17) 1996 $11.41 0.16 3.63 3.79 (0.17) -- (0.54) 1997 $14.49 0.14 2.54 2.68 (0.14) -- (0.35) 1998 $16.68 0.11 6.48 6.59 (0.11) -- (0.15) 1998(i) $23.01 0.02 (1.31) (1.29) (0.03) -- (0.17) DG INTERNATIONAL EQUITY FUND 1998(c) $10.00 (0.02)* 0.49 0.47 -- (0.01)(h) -- 1998(i) $10.46 0.09 (1.16) (1.07) (0.01) -- -- DG OPPORTUNITY FUND 1995(b) $10.00 0.02 1.17 1.19 (0.02) -- (0.02) 1996 $11.15 -- 3.30 3.30 -- -- (1.66) 1997 $12.79 (0.03) 1.60 1.57 -- -- (0.83) 1998 $13.53 (0.05) 4.90 4.85 -- -- (2.54) 1998(i) $15.84 (0.03) (5.17) (5.20) -- -- (0.88) DG LIMITED TERM GOVERNMENT INCOME FUND 1993(a) $10.00 0.36 0.07 0.43 (0.36) -- -- 1994 $10.07 0.52 (0.17) 0.35 (0.52) -- (0.03) 1995 $ 9.87 0.49 (0.23) 0.26 (0.48) -- -- 1996 $ 9.65 0.54 0.15 0.69 (0.54) -- -- 1997 $ 9.80 0.52 (0.08) 0.44 (0.53) -- -- 1998 $ 9.71 0.51 0.07 0.58 (0.51) -- -- 1998(i) $ 9.78 0.27 0.01 0.28 (0.25) -- -- DG GOVERNMENT INCOME FUND 1993(a) $10.00 0.37 0.25 0.62 (0.37) -- -- 1994 $10.25 0.55 (0.09) 0.46 (0.55) -- (0.25) 1995 $ 9.90 0.54 (0.44) 0.10 (0.53) -- -- 1996 $ 9.47 0.58 0.41 0.99 (0.59) -- -- 1997 $ 9.87 0.57 (0.18) 0.39 (0.57) -- -- 1998 $ 9.69 0.55 0.38 0.93 (0.55) -- -- 1998(i) $10.07 0.28 0.22 0.50 (0.27) -- -- DG MUNICIPAL INCOME FUND 1993(d) $10.00 0.07 0.49 0.56 (0.05) -- -- 1994 $10.51 0.48 0.08 0.56 (0.49) -- (0.01) 1995 $10.57 0.49 (0.43) 0.06 (0.48) -- -- 1996 $10.15 0.49 0.50 0.99 (0.48) -- -- 1997 $10.66 0.49 (0.07) 0.42 (0.48) -- (0.01) 1998 $10.59 0.47 0.32 0.79 (0.47) -- (0.02) 1998(i) $10.89 0.22 0.10 0.32 (0.23) -- --
* Per share information presented is based upon the average number of shares outstanding. (a) Reflects operations for the period from August 3, 1992 (date of initial public investment) to February 28, 1993. (b) Reflects operations for the period from August 1, 1994 (date of initial public investment) to February 28, 1995. (c) Reflects operations for the period from August 15, 1997 (date of initial public investment) to February 28, 1998. (d) Reflects operations for the period from December 29, 1992 (date of initial public investment) to February 28, 1993. (e) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (See Notes which are an integral part of the Financial Statements) - --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS RATIOS TO AVERAGE NET ASSETS IN EXCESS ---------------------------------------- NET ASSETS, OF NET NET ASSET NET INVESTMENT END OF PORTFOLIO REALIZED GAIN TOTAL VALUE, END TOTAL INCOME EXPENSE PERIOD TURNOVER ON INVESTMENTS DISTRIBUTIONS OF PERIOD RETURN(E) EXPENSES (OPERATING LOSS) WAIVER(G) (000 OMITTED) RATE -------------- ------------- --------- --------- -------- ---------------- --------- ------------- ---- -- (0.10) $10.54 6.40% 0.51%(f) 2.15%(f) 0.53%(f) $181,239 28% -- (0.19) $10.87 4.99% 0.96% 1.38% 0.01% $284,203 7% -- (0.33) $11.41 8.23% 0.95% 1.54% -- $259,998 1% -- (0.71) $14.49 33.73% 0.94% 1.24% -- $385,145 15% -- (0.49) $16.68 18.79% 0.92% 0.95% -- $490,392 7% -- (0.26) $23.01 39.74% 0.99% 0.54% -- $715,631 6% -- (0.20) $21.52 (5.67)% 1.04%(f) 0.22%(f) -- $664,464 3% -- (0.01) $10.46 4.71% 1.77%(f) (0.48)%(f) 0.50%(f) $ 26,533 21% -- (0.01) $ 9.38 (10.33)% 1.79%(f) 1.51%(f) 0.35%(f) $ 25,905 39% -- (0.04) $11.15 11.84% 0.79%(f) 0.06%(f) 1.34%(f) $ 36,664 45% -- (1.66) $12.79 31.42% 1.17% -- 0.35% $ 53,477 154% -- (0.83) $13.53 12.08% 1.14% (0.24)% 0.16% $ 80,527 116% -- (2.54) $15.84 37.81% 1.20% (0.39)% 0.11% $122,872 180% -- (0.88) $ 9.76 (34.33)% 1.34%(f) (0.39)%(f) -- $ 81,976 60% -- (0.36) $10.07 4.43% 0.50%(f) 6.25%(f) 0.42%(f) $ 99,921 18% -- (0.55) $ 9.87 3.52% 0.59% 5.21% 0.29% $116,600 76% -- (0.48) $ 9.65 2.72% 0.63% 5.00% 0.25% $ 96,216 14% -- (0.54) $ 9.80 7.34% 0.69% 5.49% 0.20% $ 93,276 56% -- (0.53) $ 9.71 4.66% 0.68% 5.39% 0.20% $ 84,385 28% -- (0.51) $ 9.78 6.16% 0.80% 5.21% 0.16% $ 59,137 42% -- (0.25) $ 9.81 2.90% 1.14%(f) 5.25%(f) 0.15%(f) $ 29,723 9% -- (0.37) $10.25 6.40% 0.50%(f) 6.45%(f) 0.41%(f) $111,435 78% (0.01)(h) (0.81) $ 9.90 4.55% 0.70% 5.34% 0.19% $118,695 49% -- (0.53) $ 9.47 1.20% 0.68% 5.79% 0.15% $168,313 31% -- (0.59) $ 9.87 10.70% 0.72% 5.96% 0.10% $184,226 87% (0.57) $ 9.69 4.07% 0.70% 5.82% 0.10% $249,618 7% -- (0.55) $10.07 9.90% 0.80% 5.62% 0.06% $270,404 25% -- (0.27) $10.30 5.07% 0.91%(f) 5.43%(f) -- $268,274 14% -- (0.05) $10.51 5.65% 0.48%(f) 4.11%(f) 1.02%(f) $ 15,644 93% -- (0.50) $10.57 5.34% 0.74% 4.60% 0.67% $ 34,435 9% -- (0.48) $10.15 0.81% 0.75% 4.93% 0.41% $ 41,542 9% -- (0.48) $10.66 9.96% 0.70% 4.65% 0.47% $ 44,578 20% -- (0.49) $10.59 4.12% 0.70% 4.69% 0.46% $ 46,928 9% -- (0.49) $10.89 7.70% 0.76% 4.40% 0.38% $ 48,579 6% -- (0.23) $10.98 2.97% 0.89%(f) 4.15%(f) 0.30%(f) $ 55,413 1%
(f) Computed on an annualized basis. (g) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (h) This distribution does not represent a return of capital for federal tax purposes. (i) For the six-months ended August 31, 1998 (unaudited). (See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--STOCK AND BOND FUNDS NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1998 (UNAUDITED) - -------------------------------------------------------------------------------- (1) ORGANIZATION DG Investor Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The following diversified portfolios (individually referred to as the "Fund", or collectively as the "Funds") are presented herein: - ----------------------------------------------------------------------------------------------------- PORTFOLIO NAME INVESTMENT OBJECTIVE - ----------------------------------------------------------------------------------------------------- DG Equity Fund Provide long term capital appreciation with ("Equity Fund") current income as a secondary objective. - ----------------------------------------------------------------------------------------------------- DG International Equity Fund Seek capital appreciation. ("International Equity Fund") - ----------------------------------------------------------------------------------------------------- DG Opportunity Fund Provide capital appreciation. ("Opportunity Fund") - ----------------------------------------------------------------------------------------------------- DG Limited Term Government Income Fund Provide current income. ("Limited Term Fund") - ----------------------------------------------------------------------------------------------------- DG Government Income Fund Provide current income. ("Government Income Fund") - ----------------------------------------------------------------------------------------------------- DG Municipal Income Fund Provide dividend income that is exempt from ("Municipal Income Fund") federal regular income tax. - -----------------------------------------------------------------------------------------------------
DG Mid Cap Fund, one of the Trust's nine portfolios, was effective but had no public shareholders as of August 31, 1998. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing service, taking into consideration yield, liquidity, risk, credit quality, coupon, maturity, type of issue, and any other factors or market data the pricing service deems relevant. U.S. government securities, listed corporate bonds, and other fixed income and asset-backed securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Listed equity securities are valued at the last sale price reported on a national securities exchange. Short-term securities are valued at the prices provided by an independent pricing service. However, DG INVESTOR SERIES--STOCK AND BOND FUNDS - -------------------------------------------------------------------------------- short-term securities with remaining maturities of sixty days or less at the time of purchase may be valued at amortized cost, which approximates fair market value. Investments in other open-end regulated investment companies are valued at net asset value. With respect to valuation of foreign securities, trading in foreign cities may be completed at times which vary from the closing of the New York Stock Exchange. Therefore, foreign securities are valued at the latest closing price on the exchange on which they are traded prior to the closing of the New York Stock Exchange. Foreign securities quoted in foreign currencies are translated into U.S. dollars at the foreign exchange rate in effect at noon, eastern time, on the day the value of the foreign security is determined. REPURCHASE AGREEMENTS--It is the policy of the Funds to require the custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian bank's vault, all securities held as collateral under repurchase agreement transactions. Additionally, procedures have been established by the Funds to monitor, on a daily basis, the market value of each repurchase agreement's collateral to ensure that the value of collateral at least equals the repurchase price to be paid under the repurchase agreement transaction. The Funds will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Funds' adviser to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Board of Trustees (the "Trustees"). Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Funds could receive less than the repurchase price on the sale of collateral securities. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and paid discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Dividend income and distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of their income. Accordingly, no provisions for federal tax are necessary. At February 28, 1998, the Funds, for federal tax purposes, had capital loss carryforwards, as noted below, which will reduce each Fund's taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Funds of any liability for federal tax. DG INVESTOR SERIES--STOCK AND BOND FUNDS - -------------------------------------------------------------------------------- Pursuant to the Code, such capital loss carryforwards will expire as follows:
EXPIRATION YEAR TOTAL --------------------------------------------- CAPITAL LOSS FUND 2003 2004 2005 2006 CARRYFORWARD ---- ---- ---- ---- ---- ------------ Limited Term Fund $1,406,691 $1,040,337 $758,580 $378,938 $3,584,546 Government Income Fund $ 181,520 $ 467,764 $498,409 $763,279 $1,910,972
Net realized losses on International Equity Fund of $204,664, attributable to security, forward contracts and foreign currency transactions incurred after October 31, 1997, were treated as arising on the first day of International Equity Fund's next taxable year (March 1, 1998). Net realized losses on Limited Term Fund of $6,643, attributable to security transactions incurred after October 31, 1997, were treated as arising on the first day of the Fund's next taxable year (March 1, 1998). WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in when-issued or delayed delivery transactions. The Funds record when-issued securities on the trade date and maintain security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. DEFERRED EXPENSES--The costs incurred by each Fund with respect to registration of their shares in their first fiscal year, excluding the initial expense of registering their shares, have been deferred and are being amortized over a period not to exceed five years from each Fund's commencement date. Organizational expenses of $22,108 for Opportunity Fund were borne initially by the Adviser. The Fund has reimbursed the Adviser for these expenses. These expenses have been deferred and are being amortized over the five year period following the Fund's effective date. For the period ended August 31, 1998, the Fund expensed $3,479 of organizational expenses. FOREIGN EXCHANGE CONTRACTS--International Equity Fund may enter into foreign currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may enter into these contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date as a hedge or cross-hedge against either specific transactions or portfolio positions. The objective of the Fund's foreign currency hedging transactions is to reduce the risk that the U.S. dollar value of the Fund's foreign-currency-denominated securities will decline in value due to changes in foreign currency exchange rates. All foreign currency exchange contracts are "marked-to-market" daily at the applicable translation rates resulting in unrealized gains or losses. Realized gains or losses are recorded at the time the foreign currency exchange contract is offset by entering into a closing transaction or by delivery or receipt of the currency. Risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their DG INVESTOR SERIES--STOCK AND BOND FUNDS - -------------------------------------------------------------------------------- contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. At August 31, 1998, International Equity Fund had outstanding foreign exchange contracts as set forth below:
IN UNREALIZED CURRENCY UNITS TO EXCHANGE CONTRACTS APPRECIATION SETTLEMENT DATE DELIVER/RECEIVE FOR AT VALUE (DEPRECIATION) --------------- --------------- --- -------- -------------- Contracts Purchased: 9/1/98-9/4/98 119,918 Pound Sterling $201,466 $201,018 $ (448) Contracts Sold: 9/1/98 4,939,120 Japanese Yen $ 34,371 $ 35,058 $ (687) ------------ Net Unrealized Depreciation on Foreign Exchange Contracts $(1,135) ------------
FOREIGN CURRENCY TRANSLATION--The accounting records of International Equity Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies ("FC") are translated into U.S. dollars based on the rate of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income, and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded. Differences between income and expense amounts recorded and collected or paid are adjusted when reported by the custodian bank. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of portfolio securities, sales and maturities of short-term securities, sales of FCs, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer's expense either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees. The Fund will not incur any registration costs upon such DG INVESTOR SERIES--STOCK AND BOND FUNDS - -------------------------------------------------------------------------------- resales. The Fund's restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined by the Fund's pricing committee. Additional information on each restricted security held by International Equity Fund at August 31, 1998 is as follows:
ACQUISITION ACQUISITION SECURITY DATE COST -------- ---- ---- Japan Tobacco, Inc. 8/18/97--2/12/98 $297,751 Samsung Electronics Co 11/11/97--12/1/97 $228,600
USE OF ESTIMATES--The preparation of financial statements in conformity generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on the trade date. (3) SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Transactions in shares were as follows:
EQUITY FUND INTERNATIONAL EQUITY FUND --------------------------------------- ----------------------------------------- SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED PERIOD ENDED AUGUST 31, 1998 FEBRUARY 28, 1998 AUGUST 31, 1998 FEBRUARY 28, 1998(A) - ----------------------- ------------------ ------------------ ------------------ -------------------- Shares sold 3,661,666 7,924,532 645,715 2,623,705 - ---------------------- Shares issued to shareholders in payment of distributions declared 161,577 234,089 -- 1,867 - ---------------------- Shares redeemed (4,045,865) (6,448,544) (420,275) (88,124) - ---------------------- ------------- ------------- ----------- -------------- Net change resulting from share transactions (222,622) 1,710,077 225,440 2,537,448 - ---------------------- ------------- ------------- ----------- --------------
(a) For the period from August 15, 1997 (date of public investment) to February 28, 1998. DG INVESTOR SERIES--STOCK AND BOND FUNDS - --------------------------------------------------------------------------------
OPPORTUNITY FUND LIMITED TERM FUND --------------------------------------- --------------------------------------- SIX-MONTHS ENDED YEAR ENDED SIX-MONTHS ENDED YEAR ENDED AUGUST 31, 1998 FEBRUARY 28, 1998 AUGUST 31, 1998 FEBRUARY 28, 1998 - ---------------------------- ------------------ ------------------ ------------------ ------------------ Shares sold 3,079,688 3,050,510 505,922 1,021,729 - --------------------------- Shares issued to shareholders in payment of distributions declared 360,455 759,627 65,379 176,304 - --------------------------- Shares redeemed (2,802,875) (2,003,613) (3,591,054) (3,839,432) - --------------------------- ------------- ------------- ------------- -------------- Net change resulting from share transactions 637,268 1,806,524 (3,019,753) (2,641,399) - --------------------------- ------------- ------------- ------------- --------------
GOVERNMENT INCOME FUND MUNICIPAL INCOME FUND --------------------------------------- --------------------------------------- SIX-MONTHS ENDED YEAR ENDED SIX-MONTHS ENDED YEAR ENDED AUGUST 31, 1998 FEBRUARY 28, 1998 AUGUST 31, 1998 FEBRUARY 28, 1998 - ---------------------------- ------------------ ------------------ ------------------ ------------------ Shares sold 5,876,934 9,911,035 1,211,379 1,162,205 - --------------------------- Shares issued to shareholders in payment of distributions declared 272,542 561,104 927 2,485 - --------------------------- Shares redeemed (6,973,626) (9,367,967) (626,900) (1,136,101) - --------------------------- ------------- ------------- ------------- -------------- Net change resulting from share transactions 824,150 1,104,172 585,406 28,589 - --------------------------- ------------- ------------- ------------- --------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--ParkSouth Corporation, a subsidiary of Deposit Guaranty National Bank, the Funds' investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to the percentage of each Fund's average daily net assets as follows:
INVESTMENT ADVISORY FEE FUND NAME PERCENTAGE - ------------------------------------------------------------ ---------- Equity Fund 0.75% - ------------------------------------------------------------ International Equity Fund 1.00% - ------------------------------------------------------------ Opportunity Fund 0.95% - ------------------------------------------------------------ Limited Term Fund 0.60% - ------------------------------------------------------------ Government Income Fund 0.60% - ------------------------------------------------------------ Municipal Income Fund 0.60% - ------------------------------------------------------------
SUB-ADVISORY FEE--Lazard Asset Management is a sub-adviser for International Equity Fund. Under the terms of a Sub-Advisery Agreement between ParkSouth Corporation and Lazard Asset Manage- DG INVESTOR SERIES--STOCK AND BOND FUNDS - -------------------------------------------------------------------------------- ment, the sub-adviser receives an annual fee from the adviser equal to 0.50% of the average daily net assets of the Fund. Womack Asset Management, Inc. (the "WAMI") is a sub-adviser for Opportunity Fund. WAMI receives a monthly fee based on the average daily net assets of Opportunity Fund under management by WAMI during the preceding month, as described below. The sub-advisery fee shall be the sum of: 0.32% of the average daily net assets up to $50 million; 0.075% of the average daily net assets in excess of $50 million and up to $70 million; and 0.25% of the average daily net assets in excess of $70 million. ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds with certain administrative personnel and services. The fee paid to FAS is based on the level of average aggregate net assets of the Trust for the period. FAS may voluntarily choose to waive a portion of its fee. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with FAS, the Funds will pay FAS up to 0.15% of average daily net assets of each Fund for the period. The fee paid to FAS is used to finance certain services for shareholders and to maintain shareholder accounts. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ"), through its subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer and dividend disbursing agent for the Funds. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for which it receives a fee. The fee is based on the level of each Fund's average daily net assets for the period, plus out-of-pocket expenses. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. (5) INVESTMENT TRANSACTIONS Purchases and sales of investments, excluding short-term and converted securities, for the period ended August 31, 1998, were as follows:
FUND PURCHASES SALES - ------------------------------------------------------------ ----------- ----------- Equity Fund $20,942,781 $25,310,355 - ------------------------------------------------------------ International Equity Fund $14,735,069 $10,872,771 - ------------------------------------------------------------ Opportunity Fund $59,101,650 $62,675,035 - ------------------------------------------------------------ Limited Term Fund $ 3,247,400 $35,174,394 - ------------------------------------------------------------ Government Income Fund $60,487,812 $34,809,010 - ------------------------------------------------------------ Municipal Income Fund $ 7,820,216 $ 494,560 - ------------------------------------------------------------
DG INVESTOR SERIES--STOCK AND BOND FUNDS - -------------------------------------------------------------------------------- (6) CONCENTRATION OF CREDIT RISK International Equity Fund invests in equity and fixed income securities of non-U.S. issuers. Although the Fund maintains a diversified investment portfolio, the political or economic developments within a particular country or region may have an adverse effect on the ability of domiciled issuers to meet their obligations. Additionally, political or economic developments may have an effect on the liquidity and volatility of portfolio securities and currency holdings. (7) YEAR 2000 Similar to other financial organizations, the Funds could be adversely affected if the computer systems used by the Funds' service providers do not properly process and calculate date-related information and data from and after January 1, 2000. The Funds' Adviser and FAS are taking measures that they believe are reasonably designed to address the Year 2000 issue with respect to computer systems that they use and to obtain reasonable assurances that comparable steps are being taken by each of the Funds' other service providers. At this time, however, there can be no assurance that these steps will be sufficient to avoid any adverse impact to the Funds. TRUSTEES OFFICERS - ---------------------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Nicholas P. Constantakis Edward C. Gonzales William J. Copeland President and Treasurer James E. Dowd, Esq. Lawrence D. Ellis, M.D. J. Christopher Donahue Edward L. Flaherty, Jr., Esq. Executive Vice President Edward C. Gonzales Peter E. Madden John W. McGonigle John E. Murray, Jr., J.D., S.J.D. Executive Vice President and Wesley W. Posvar Secretary Marjorie P. Smuts Richard B. Fisher Vice President C. Christine Thomson Vice President and Assistant Treasurer Timothy S. Johnson Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including possible loss of principal. This report is authorized for distribution to prospective investors only when preceded or accompanied by the Funds' prospectus which contains facts concerning their objectives and policies, management fees, expenses and other information. DG INVESTOR SERIES MONEY MARKET FUNDS o DG PRIME MONEY MARKET FUND o DG TREASURY MONEY MARKET FUND [DG INVESTOR SERIES LOGO] =================== COMBINED SEMI-ANNUAL REPORT Portfolios of DG Investor Series, an Open-End Management Investment Company ParkSouth Corporation Jackson, MS Investment Adviser FEDERATED SECURITIES CORP., DISTRIBUTOR Cusip 23321N707 Cusip 23321N103 [RECYCLED G00498-10 (10/98) PAPER LOGO] AUGUST 31, 1998 =================== PRESIDENT'S MESSAGE - -------------------------------------------------------------------------------- Dear Shareholder: I am pleased to present the Semi-Annual Report of the DG Investor Series--Money Market Funds for the six-month period from March 1, 1998 through August 31, 1998. It provides you with complete financial information for the funds, including a complete list of investments and the financial statements. Each fund puts your cash to work pursuing daily income through a diversified portfolio of high-quality money market securities. Of course, the funds are also managed to give you easy access to your money, and maintain a stable price of $1.00.* DG PRIME MONEY MARKET FUND, a portfolio of high-quality money market securities, paid dividends totaling $0.02 per share, for a six-month total return of 2.51%. As of August 31, 1998, the fund's 7-day net yield was 4.97%.** By the end of the reporting period, the fund had attracted $212 million in assets. DG TREASURY MONEY MARKET FUND, a portfolio of all-government securities, paid dividends totaling $0.02 per share, for a six-month total return of 2.44%. As of August 31, 1998, the fund's 7-day net yield was 4.82%.** Net assets had decreased to $319 million at the end of the reporting period. Thank you for keeping your ready cash working every day through the convenience and professional management of the DG Investor Series Money Market Funds. As always, we welcome your questions or comments. Sincerely, /s/ EDWARD C. GONZALES - ---------------------- Edward C. Gonzales President October 15, 1998 * Money market funds seek to maintain a stable net asset value of $1.00 per share. There is no assurance that they will be able to do so. Investments in mutual funds are not insured or guaranteed by the U.S. government. ** Performance quoted represents past performance and is not indicative of future results. Yield will vary. Yields quoted for money market funds most closely reflect the funds' current earnings. DG PRIME MONEY MARKET FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ------------ (a)COMMERCIAL PAPER--84.5% - ------------------------------------------------------------------------------- BROKERAGE--6.5% ------------------------------------------------------------ $ 7,000,000 Goldman Sachs & Co., 5.548%, 10/5/1998 $ 6,963,771 ------------------------------------------------------------ 7,000,000 Merrill Lynch & Co., Inc., 5.572%, 11/13/1998 6,921,931 ------------------------------------------------------------ ------------ Total 13,885,702 ------------------------------------------------------------ ------------ DIVERSIFIED--3.3% ------------------------------------------------------------ 7,000,000 Minnesota Mining & Manufacturing Co., 5.530%, 11/17/1998 6,918,401 ------------------------------------------------------------ ------------ FINANCE--AUTOMOTIVE--6.1% ------------------------------------------------------------ 7,000,000 Ford Motor Credit Corp., 5.566%, 10/14/1998 6,954,097 ------------------------------------------------------------ 6,000,000 General Motors Acceptance Corp., 5.589%, 10/19/1998 5,955,840 ------------------------------------------------------------ ------------ Total 12,909,937 ------------------------------------------------------------ ------------ FINANCE--COMMERCIAL--6.6% ------------------------------------------------------------ 7,000,000 CIT Group Holdings, Inc., 5.570%, 10/1/1998 6,967,800 ------------------------------------------------------------ 7,000,000 General Electric Capital Corp., 5.575%, 10/7/1998 6,961,430 ------------------------------------------------------------ ------------ Total 13,929,230 ------------------------------------------------------------ ------------ FINANCE--RETAIL--16.2% ------------------------------------------------------------ 7,000,000 American Express Co., 5.552%, 9/4/1998 6,996,786 ------------------------------------------------------------ 7,000,000 American General Finance Corp., 5.603%, 9/18/1998 6,981,720 ------------------------------------------------------------ 7,000,000 Associates Corp. of North America, 5.565%, 10/9/1998 6,959,435 ------------------------------------------------------------ 7,000,000 Commercial Credit Co., 5.568%, 9/16/1998 6,983,900 ------------------------------------------------------------ 6,500,000 Household Finance Corp., 5.563%, 9/14/1998 6,487,090 ------------------------------------------------------------ ------------ Total 34,408,931 ------------------------------------------------------------ ------------ FINANCIAL SERVICES--3.0% ------------------------------------------------------------ 6,500,000 National Rural Utilities Cooperative Finance Corp., 5.566%, 10/16/1998 6,455,475 ------------------------------------------------------------ ------------ (See Notes to Portfolios of Investments)
DG PRIME MONEY MARKET FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ------------ (a)COMMERCIAL PAPER--CONTINUED - ------------------------------------------------------------------------------- FOOD & BEVERAGE--9.6% ------------------------------------------------------------ $ 7,000,000 Coca-Cola Co., 5.550%, 9/22/1998 $ 6,977,664 ------------------------------------------------------------ 6,500,000 Hershey Foods Corp., 5.529%, 10/21/1998 6,450,528 ------------------------------------------------------------ 7,000,000 PepsiCo, Inc., 5.627%, 12/11/1998 6,892,772 ------------------------------------------------------------ ------------ Total 20,320,964 ------------------------------------------------------------ ------------ FOREST PRODUCTS--1.6% ------------------------------------------------------------ 3,500,000 Kimberly-Clark Corp., 5.545%, 9/29/1998 3,485,109 ------------------------------------------------------------ ------------ INDUSTRIAL PRODUCTS--9.8% ------------------------------------------------------------ 7,000,000 Archer-Daniels-Midland Co., 5.525%, 12/8/1998 6,896,338 ------------------------------------------------------------ 7,000,000 Cargill, Inc., 5.542%, 11/4/1998 6,931,929 ------------------------------------------------------------ 7,000,000 Deere & Co., 5.550%, 9/2/1998 6,998,929 ------------------------------------------------------------ ------------ Total 20,827,196 ------------------------------------------------------------ ------------ INSURANCE--8.4% ------------------------------------------------------------ 6,000,000 General RE Corp., 5.566%, 9/10/1998 5,991,765 ------------------------------------------------------------ 5,000,000 Great Western Life, 5.656%, 9/8/1998 4,994,585 ------------------------------------------------------------ 7,000,000 USAA Capital Corp., 5.560%, 10/13/1998 6,955,165 ------------------------------------------------------------ ------------ Total 17,941,515 ------------------------------------------------------------ ------------ LEASING--3.3% ------------------------------------------------------------ 7,000,000 International Lease Finance Corp., 5.557%, 10/9/1998 6,959,361 ------------------------------------------------------------ ------------ MISCELLANEOUS--3.3% ------------------------------------------------------------ 7,000,000 Procter & Gamble Co., 5.560%, 9/25/1998 6,974,473 ------------------------------------------------------------ ------------ OIL & OIL FINANCE--6.8% ------------------------------------------------------------ 7,500,000 Amoco Corp., 5.539%, 10/28/1998 7,435,044 ------------------------------------------------------------ 7,000,000 Texaco, Inc., 5.559%, 10/2/1998 6,966,787 ------------------------------------------------------------ ------------ Total 14,401,831 ------------------------------------------------------------ ------------ TOTAL COMMERCIAL PAPER 179,418,125 ------------------------------------------------------------ ------------ (See Notes to Portfolios of Investments)
DG PRIME MONEY MARKET FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ------------ GOVERNMENT AGENCIES--6.0% - ------------------------------------------------------------------------------- $ 7,000,000 (a) Federal Home Loan Bank, 5.541%, 11/23/1998 $ 6,913,334 ------------------------------------------------------------ 6,000,000 (a) Federal Home Loan Mortgage Corp., 5.526%, 10/22/1998 5,954,100 ------------------------------------------------------------ ------------ TOTAL GOVERNMENT AGENCIES 12,867,434 ------------------------------------------------------------ ------------ (b) REPURCHASE AGREEMENT--9.9% - ------------------------------------------------------------------------------- 20,974,400 Cantor Fitzgerald Securities, 5.820%, dated 8/31/1998, due 9/1/1998 20,974,400 ------------------------------------------------------------ ------------ TOTAL INVESTMENTS (AT AMORTIZED COST)(c) $213,259,959 ------------------------------------------------------------ ------------
(See Notes to Portfolios of Investments) DG TREASURY MONEY MARKET FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE - ----------- ------------------------------------------------------------ ------------ U.S. TREASURY OBLIGATIONS--57.8% - ------------------------------------------------------------------------------- U.S. TREASURY BILLS--23.3% ------------------------------------------------------------ $20,000,000 9/17/1998 $ 19,954,847 ------------------------------------------------------------ 20,000,000 11/12/1998 19,796,800 ------------------------------------------------------------ 15,000,000 11/19/1998 14,836,733 ------------------------------------------------------------ 20,000,000 12/10/1998 19,720,833 ------------------------------------------------------------ ------------ Total 74,309,213 ------------------------------------------------------------ ------------ U.S. TREASURY NOTES--34.5% ------------------------------------------------------------ 20,000,000 4.750%, 9/30/1998 19,988,726 ------------------------------------------------------------ 15,000,000 5.000%, 2/15/1999 14,986,523 ------------------------------------------------------------ 20,000,000 5.125%, 11/30/1998 19,986,607 ------------------------------------------------------------ 20,000,000 5.750%, 12/31/1998 20,028,183 ------------------------------------------------------------ 15,000,000 6.375%, 1/15/1999 15,052,880 ------------------------------------------------------------ 20,000,000 7.125%, 10/15/1998 20,041,536 ------------------------------------------------------------ ------------ Total 110,084,455 ------------------------------------------------------------ ------------ TOTAL U.S. TREASURY OBLIGATIONS 184,393,668 ------------------------------------------------------------ ------------ (b) REPURCHASE AGREEMENTS--46.9% - ------------------------------------------------------------------------------- 75,000,000 Cantor Fitzgerald Securities, 5.820%, dated 8/31/1998, due 9/1/1998 75,000,000 ------------------------------------------------------------ 74,488,300 State Street Corp., 5.800%, dated 8/31/1998, due 9/1/1998 74,488,300 ------------------------------------------------------------ ------------ TOTAL REPURCHASE AGREEMENTS 149,488,300 ------------------------------------------------------------ ------------ TOTAL INVESTMENTS (AT AMORTIZED COST)(c) $333,881,968 ------------------------------------------------------------ ------------
(See Notes to Portfolios of Investments) NOTES TO PORTFOLIOS OF INVESTMENTS - -------------------------------------------------------------------------------- (a) Each issue shows the rate of discount at the time of purchase for discount issues, or the coupon for interest bearing issues. (b) The repurchase agreements are fully collateralized by U.S. government and/or agency obligations based on market prices at the date of the portfolio. (c) Also represents cost for federal tax purposes.
TOTAL NET DG INVESTOR SERIES ASSETS* - -------------------------- ------------ Prime Money Market Fund $212,331,407 Treasury Money Market Fund $319,026,768
* The categories of investments are shown as a percentage of net assets at August 31, 1998. (See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--MONEY MARKET FUNDS STATEMENTS OF ASSETS AND LIABILITIES AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
DG PRIME DG TREASURY MONEY MARKET MONEY MARKET FUND FUND ---- ---- ASSETS: - ---------------------------------------------------------- Investments in repurchase agreements $ 20,974,400 $149,488,300 - ---------------------------------------------------------- Investments in other securities 192,285,559 184,393,668 - ---------------------------------------------------------- ------------ ------------ Total investments in securities, at amortized cost and value 213,259,959 333,881,968 - ---------------------------------------------------------- Cash 78,863 5,477 - ---------------------------------------------------------- Income receivable 3,391 1,581,742 - ---------------------------------------------------------- Deferred organizational costs 13,818 -- - ---------------------------------------------------------- ------------ ------------ Total assets 213,356,031 335,469,187 - ---------------------------------------------------------- ------------ ------------ LIABILITIES: - ---------------------------------------------------------- Payable for shares redeemed 34,696 15,021,170 - ---------------------------------------------------------- Income distribution payable 895,385 1,243,882 - ---------------------------------------------------------- Accrued expenses 94,543 177,367 - ---------------------------------------------------------- ------------ ------------ Total liabilities 1,024,624 16,442,419 - ---------------------------------------------------------- ------------ ------------ Total Net Assets $212,331,407 $319,026,768 - ---------------------------------------------------------- ------------ ------------ NET ASSET VALUE, OFFERING PRICE and Redemption Proceeds Per Share: (net assets / shares outstanding) $1.00 $1.00 - ---------------------------------------------------------- ------------ ------------ Shares Outstanding 212,331,407 319,026,768 - ---------------------------------------------------------- ------------ ------------
(See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--MONEY MARKET FUNDS STATEMENTS OF OPERATIONS SIX MONTHS ENDED AUGUST 31, 1998 (UNAUDITED) - --------------------------------------------------------------------------------
DG PRIME DG TREASURY MONEY MARKET MONEY MARKET FUND FUND ---- ---- INVESTMENT INCOME: - ---------------------------------------------------------- Interest $5,898,243 $8,779,475 - ---------------------------------------------------------- ------------- ------------- EXPENSES: - ---------------------------------------------------------- Investment advisory fee 526,064 812,557 - ---------------------------------------------------------- Administrative personnel and services fee 100,721 155,660 - ---------------------------------------------------------- Custodian fees 5,369 8,368 - ---------------------------------------------------------- Transfer and dividend disbursing agent fees and expenses 14,734 20,116 - ---------------------------------------------------------- Directors'/Trustees' fees 1,751 2,119 - ---------------------------------------------------------- Auditing fees 5,986 6,239 - ---------------------------------------------------------- Legal fees 1,307 1,570 - ---------------------------------------------------------- Portfolio accounting fees 26,131 39,220 - ---------------------------------------------------------- Distribution services fee 263,032 -- - ---------------------------------------------------------- Shareholder services fee -- 243,767 - ---------------------------------------------------------- Share registration costs 21,996 18,837 - ---------------------------------------------------------- Printing and postage 3,910 3,611 - ---------------------------------------------------------- Insurance premiums 1,661 2,440 - ---------------------------------------------------------- Miscellaneous 3,218 1,419 - ---------------------------------------------------------- ------------- ------------- Total expenses 975,880 1,315,923 - ---------------------------------------------------------- WAIVERS-- - ---------------------------------------------------------- Waiver of investment advisory fee (210,425) (325,023) - ---------------------------------------------------------- Waiver of administrative personnel and services fee (63,125) -- - ---------------------------------------------------------- ------------- ------------- Total waivers (273,550) (325,023) - ---------------------------------------------------------- ------------- ------------- Net expenses 702,330 990,900 - ---------------------------------------------------------- ------------- ------------- Net investment income $5,195,913 $7,788,575 - ---------------------------------------------------------- ------------- -------------
(See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--MONEY MARKET FUNDS STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
DG PRIME DG TREASURY MONEY MARKET FUND MONEY MARKET FUND --------------------------------- ----------------------------- SIX MONTHS SIX MONTHS ENDED PERIOD ENDED YEAR (UNAUDITED) ENDED (UNAUDITED) ENDED AUGUST 31, FEBRUARY 28, AUGUST 31, FEBRUARY 28, 1998 1998(A) 1998 1998 ----------- ------------ ----------- ------------ INCREASE (DECREASE) IN NET ASSETS: - ----------------------------- OPERATIONS-- - ----------------------------- Net investment income $ 5,195,913 $ 8,077,537 $ 7,788,575 $ 13,490,756 - ----------------------------- ------------- ------------- ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS-- - ----------------------------- Distributions from net investment income (5,195,913) (8,077,537) (7,788,575) (13,490,756) - ----------------------------- ------------- ------------- ------------- ------------- SHARE TRANSACTIONS-- - ----------------------------- Proceeds from sale of shares 133,406,081 528,390,173 464,754,905 789,333,839 - ----------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 4,251,969 8,066,557 303,615 457,722 - ----------------------------- Cost of shares redeemed (120,367,577) (341,415,796) (495,082,461) (714,193,778) - ----------------------------- ------------- ------------- ------------- ------------- Change in net assets from share transactions 17,290,473 195,040,934 (30,023,941) 75,597,783 - ----------------------------- ------------- ------------- ------------- ------------- Change in net assets 17,290,473 195,040,934 (30,023,941) 75,597,783 - ----------------------------- NET ASSETS: - ----------------------------- Beginning of period 195,040,934 -- 349,050,709 273,452,926 - ----------------------------- ------------- ------------- ------------- ------------- End of period $ 212,331,407 $ 195,040,934 $ 319,026,768 $ 349,050,709 - ----------------------------- ------------- ------------- ------------- -------------
(a) For the period from March 10, 1997 (date of initial public investment) to February 28, 1998. (See Notes which are an integral part of the Financial Statements) DG INVESTOR SERIES--MONEY MARKET FUNDS FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
NET ASSET DISTRIBUTIONS VALUE, NET FROM NET BEGINNING INVESTMENT INVESTMENT YEAR ENDED FEBRUARY 28 OR 29, OF PERIOD INCOME INCOME ----------------------------- --------- ------ ------ DG PRIME MONEY MARKET FUND 1998(a) $1.00 0.05 (0.05) 1998(f) $1.00 0.02 (0.02) DG TREASURY MONEY MARKET FUND 1993(b) $1.00 0.02 (0.02) 1994 $1.00 0.03 (0.03) 1995 $1.00 0.04 (0.04) 1996 $1.00 0.05 (0.05) 1997 $1.00 0.05 (0.05) 1998 $1.00 0.05 (0.05) 1998(f) $1.00 0.02 (0.02)
(a) For the period from March 10, 1997 (date of initial public investment), to February 28, 1998. (b) Reflects operations for the period from July 1, 1992 (date of initial public investment) to February 28, 1993. For the period from March 31, 1992 (start of business) to June 30, 1992, all income was distributed to the administrator. (c) Based on net asset value, which does not reflect the sales charge or contingent deferred sales charge, if applicable. (d) Computed on an annualized basis. (e) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (f) For six-months ended August 31, 1998 (unaudited).
RATIOS TO AVERAGE NET ASSETS --------------------------------------------------------- NET ASSETS, NET ASSET NET END OF VALUE, END OF TOTAL INVESTMENT EXPENSE PERIOD PERIOD RETURN(c) EXPENSES INCOME WAIVER(e) (000 OMITTED) ------ --------- -------- ------ --------- ------------- $1.00 4.93% 0.68%(d) 4.98%(d) 0.26%(d) $195,041 $1.00 2.51% 0.67%(d) 4.94%(d) 0.26%(d) $212,331 $1.00 1.97% 0.41%(d) 2.88%(d) 0.38%(d) $189,024 $1.00 2.74% 0.54% 2.70% 0.20% $189,315 $1.00 4.06% 0.53% 3.96% 0.20% $162,515 $1.00 5.48% 0.51% 5.33% 0.20% $245,647 $1.00 4.83% 0.50% 4.74% 0.20% $273,453 $1.00 4.90% 0.57% 4.81% 0.20% $349,051 $1.00 2.44% 0.61%(d) 4.79%(d) 0.20%(d) $319,027
DG INVESTORS SERIES--MONEY MARKET FUNDS NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1998 (UNAUDITED) - -------------------------------------------------------------------------------- (1) ORGANIZATION DG Investor Series (the "Trust") is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management investment company. The Trust consists of nine portfolios. The following portfolios (individually referred to as the "Fund", or collectively as the "Funds") are presented herein: - ----------------------------------------------------------------------------------------------------- PORTFOLIO NAME INVESTMENT OBJECTIVE - ----------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------- DG Prime Money Market Fund ("Prime Money Market Current income consistent with stability of Fund") principal. - ----------------------------------------------------------------------------------------------------- DG Treasury Money Market Fund ("Treasury Money Current income consistent with stability of Market Fund") principal and liquidity. - -----------------------------------------------------------------------------------------------------
The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. (2) SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. These policies are in conformity with generally accepted accounting principles. INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value portfolio securities is in accordance with Rule 2a-7 under the Act. REPURCHASE AGREEMENTS--It is the policy of the Funds to require the custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian bank's vault, all securities held as collateral under repurchase agreement transactions. Additionally, procedures have been established by the Funds to monitor, on a daily basis, the market value of each repurchase agreement's collateral to ensure that the value of collateral at least equals the repurchase price to be paid under the repurchase agreement transaction. The Funds will only enter into repurchase agreements with banks and other recognized financial institutions, such as broker/dealers, which are deemed by the Funds' adviser to be creditworthy pursuant to the guidelines and/or standards reviewed or established by the Board of Trustees (the "Trustees"). Risks may arise from the potential inability of counterparties to honor the terms of the repurchase agreement. Accordingly, the Funds could receive less than the repurchase price on the sale of collateral securities. DG INVESTORS SERIES--MONEY MARKET FUNDS - -------------------------------------------------------------------------------- INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses are accrued daily. Bond premium and paid discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Dividend income and distributions to shareholders are recorded on the ex-dividend date. FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the Code applicable to regulated investment companies and to distribute to shareholders each year substantially all of their income. Accordingly, no provisions for federal tax are necessary. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in when-issued or delayed delivery transactions. The Funds record when-issued securities on the trade date and maintain security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. DEFERRED EXPENSES--The costs incurred by each Fund with respect to registration of their shares in their first fiscal year, excluding the initial expense of registering their shares, have been deferred and are being amortized over a period not to exceed five years from each Fund's commencement date. Organizational expenses of $20,300 for Prime Money Market Fund were borne initially by the Adviser. The Fund has reimbursed the Adviser for these expenses. These expenses have been deferred and are being amortized over the five year period following the Fund's effective date. For the six-months ended August 31, 1998, the Fund expensed $1,243 of organizational expenses. USE OF ESTIMATES--The preparation of financial statements in conformity generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on the trade date. (3) SHARES OF BENEFICIAL INTEREST The Declaration of Trust permits the Trustees to issue an unlimited number of full and fractional shares of beneficial interest (without par value). At August 31, 1998, Prime Money Market Fund's and DG INVESTORS SERIES--MONEY MARKET FUNDS - -------------------------------------------------------------------------------- Treasury Money Market Fund's capital paid-in aggregated $212,331,407, and $319,026,768, respectively. Transactions in shares were as follows:
PRIME MONEY MARKET FUND TREASURY MONEY MARKET FUND ----------------------------------------- -------------------------------------- SIX-MONTHS ENDED PERIOD ENDED SIX-MONTHS ENDED YEAR ENDED AUGUST 31, 1998 FEBRUARY 28, 1998(a) AUGUST 31, 1998 FEBRUARY 28, 1998 - --------------------------- ------------------ -------------------- ------------------ ----------------- Shares sold 133,406,081 528,390,173 464,754,905 789,333,839 - -------------------------- Shares issued to shareholders in payment of distributions declared 4,251,969 8,066,557 303,615 457,722 - -------------------------- Shares redeemed (120,367,577) (341,415,796) (495,082,461) (714,193,778) - -------------------------- -------------- --------------- -------------- -------------- Net change resulting from share transactions 17,290,473 195,040,934 (30,023,941) 75,597,783 - -------------------------- ============== =============== ============== ==============
(a) For the period from March 10, 1997 (date of initial public investment), to February 28, 1998. (4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY FEE--ParkSouth Corporation, a subsidiary of Deposit Guaranty National Bank, the Funds' investment adviser (the "Adviser"), receives for its services an annual investment advisory fee equal to 0.50% of each Fund's average daily net assets. The Adviser may voluntarily choose to waive any portion of its fee. The Adviser can modify or terminate this voluntary waiver at any time at its sole discretion. ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds with certain administrative personnel and services. The fee paid to FAS is based on the level of average aggregate net assets of the Trust for the period. FAS may voluntarily choose to waive a portion of its fee. SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement with FAS, the Funds will pay FAS up to 0.15% of average daily net assets of the Fund for the period. The fee paid to FAS is used to finance certain services for shareholders and to maintain shareholder accounts. As of August 31, 1998, Prime Money Market Fund did not pay or accrue shareholder services fee. DISTRIBUTION SERVICES FEE--The Funds have adopted a Distribution Plan ("the Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Funds will compensate Federated Securities Corporation ("FSC"), the principal distributor, from the net assets of the Funds to finance activities intended to result in the sale of the Funds' shares. The Plan provides that the Funds may incur distribution expenses up to 0.25% of the average daily net assets of the Funds, annually, to compensate FSC. As of August 31, 1998, Treasury Money Market Fund did not pay or accrue 12b-1 fees. TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ"), through its subsidiary, Federated Shareholder Services Company ("FSSC") serves as DG INVESTORS SERIES--MONEY MARKET FUNDS - -------------------------------------------------------------------------------- transfer and dividend disbursing agent for the Funds. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for which it receives a fee. The fee is based on the level of each Fund's average daily net assets for the period, plus out-of-pocket expenses. GENERAL--Certain of the Officers and Trustees of the Trust are Officers and Directors or Trustees of the above companies. (5) YEAR 2000 Similar to other financial organizations, the Funds could be adversely affected if the computer systems used by the Funds' service providers do not properly process and calculate date-related information and data from and after January 1, 2000. The Funds' Adviser and FAS are taking measures that they believe are reasonably designed to address the Year 2000 issue with respect to computer systems that they use and to obtain reasonable assurances that comparable steps are being taken by each of the Funds' other service providers. At this time, however, there can be no assurance that these steps will be sufficient to avoid any adverse impact to the Funds. TRUSTEES OFFICERS - ---------------------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Nicholas P. Constantakis Edward C. Gonzales William J. Copeland President and Treasurer James E. Dowd, Esq. Lawrence D. Ellis, M.D. J. Christopher Donahue Edward L. Flaherty, Jr., Esq. Executive Vice President Edward C. Gonzales Peter E. Madden John W. McGonigle John E. Murray, Jr., J.D., S.J.D. Executive Vice President and Wesley W. Posvar Secretary Marjorie P. Smuts Richard B. Fisher Vice President C. Christine Thomson Vice President and Assistant Treasurer Timothy S. Johnson Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any bank, and are not insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other government agency. Investment in mutual funds involves investment risk, including possible loss of principal. Although money market funds seek to maintain a stable net asset value of $1.00 per share, there is no assurance that they will be able to do so. This report is authorized for distribution to prospective investors only when preceded or accompanied by the Funds' prospectus which contains facts concerning their objectives and policies, management fees, expenses and other information. -----END PRIVACY-ENHANCED MESSAGE-----