<PAGE> 1
THE DOMINION INSIGHT GROWTH FUND
The Dominion Insight Growth Fund (the "Fund") is a mutual fund,
organized as a diversified, open-end management investment company whose only
investment objective is growth of capital. The Fund will invest primarily in
equity securities which management believes have a good potential for capital
growth. The Fund's portfolio is managed by Insight Capital Management, Inc.
The net assets and the return of the Fund will fluctuate depending on market
conditions and other factors. The Fund is a series of shares of Common Stock,
$.00l par value, of Dominion Funds, Inc., a Texas corporation (the "Company").
This Prospectus concisely sets forth the information about the Fund
and the Company that a prospective shareholder should know before investing in
the Fund. Shareholders should read and retain this Prospectus for future
reference.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
Additional information about the Fund and the Company is contained in a
Statement of Additional Information dated __________, 1996, which has been
filed with the Securities and Exchange Commission. A copy of the Statement of
Additional Information may be obtained upon request, without charge, by calling
or writing the Fund or the Distributor at the address or phone number indicated
below. Moreover, other supplementary information about the Fund and the Company
has been filed with the Securities and Exchange Commission and is available
from the Securities and Exchange Commission. This Prospectus incorporates by
reference the entire Statement of Additional Information.
- --------------------------------------------------------------------------------
DOMINION CAPITAL CORPORATION
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
(972) 385-9595
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This Prospectus is dated January 20, 1997.
<PAGE> 2
THE DOMINION INSIGHT GROWTH FUND
PROSPECTUS SUMMARY
Shares Offered Shares of Common Stock, $.00l par value per share.
Offering Price, The public offering price is equal to net asset value
Sales Charge and plus a sales charge equal to 3.5% of the public
Minimum offering price (3.63% of the net amount invested),
Purchase reduced on investments of $100,000 or more. The
minimum initial investment is $5,000 ($2,000 for
IRA's) with $100 minimum subsequent investments. In
its discretion, the Fund may allow investments
for less than the minimum amounts. See "Purchase
of Shares."
Type of Fund Open-end diversified management investment company
organized as a series of shares of Common Stock, $.001
par value, of Dominion Funds, Inc., a Texas
corporation.
Investment Objective The Fund's only investment objective is growth of
and Policies; capital. There is no assurance that such objective
Risk Factors will be achieved. The Fund will invest primarily
in equity securities which management believes have
a good potential for capital growth. These investments
are subject to inherent market risks and fluctuations
in value due to earnings, economic conditions and
other factors. See "Investment Objective and
Policies; Risk Factors."
Investment Advisor Insight Capital Management, Inc. (the "Advisor") is
and the Fund's investment advisor. The annual advisory fee
Advisory Fee is 1.0% of average daily net assets. This is a higher
fee than is paid by most mutual funds. See
"Investment Advisory and Other Services."
Administration Dominion Institutional Services Corporation (the
"Administrator") is responsible for the administration
of the Fund and overall management of the Fund's
business affairs. The annual administration fee is
1.25% of average daily net assets. See "Investment
Advisory and Other Services."
Distributions Distributions from net investment income and net
capital gains are declared and from the Fund paid at
least annually. See "Distributions and Taxes."
Redemption Shares may be redeemed at net asset value, without
charge. The Fund may require redemption of shares if
the value of an account falls below $500. See
"Redemption of Shares."
Transfer Agent Fund Services, Inc. See "Shareholder Services and Reports."
The above summary is qualified in its entirety by reference to the
more detailed information included elsewhere in this Prospectus.
2
<PAGE> 3
FUND EXPENSES
The following table illustrates the various expenses and fees a
shareholder of the Fund would bear directly or indirectly. These expenses and
fees set forth in the table are for the fiscal year ended June 30, 1996, except
as otherwise noted below.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)(1) 3.5%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds) None
Redemption Fees (as a percentage of amount redeemed)(2) None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Management Fees(3) 1.0%
12b-l Fees None
Other Expenses(4) 1.31%
Administrative Fee(3,5) 1.25%
Amortization of Organization Costs .06%
Total Fund Operating Expenses 2.31%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and
(2) redemption at the end of each
period. The Fund does not
charge a fee for redemptions.(2) $58 $105 $154 $290
</TABLE>
1 On sales of $100,000 or more, the sales load is reduced as set forth in
the section "Purchase of Shares."
2 Redemption proceeds will be sent regular first class mail, or can be
sent via overnight "express" mail (such as Federal Express), if
requested, for a $20.00 service charge, or can be sent by wire transfer
for a $15.00 fee. See "Redemptions of Shares."
3 The management and advisory fees paid by the Fund are higher than those
paid by most mutual funds.
4 Additional expenses which are incurred by the Fund include brokerage
commissions. During the fiscal year ended June 30, 1996, all orders
for the Fund's portfolio securities transactions were placed through
the Distributor, and it is expected that the Advisor will continue to
place such orders with the Distributor. The Distributor intends to
charge the Fund $.10 per share for all portfolio transactions effected
on behalf of the Fund, subject to restrictions described under
"Investment Advisory and Other Services" below.
5 Dominion Institutional Services Corporation is responsible for
supervising the overall management and administration of the Fund, and
receives for such services an annualized fee of 1.25% of the Fund's
average daily net assets.
The purpose of the above table is to assist investors in understanding
the various costs and expenses an investor in the Fund will bear directly or
indirectly. The expense information in the above table is described in greater
detail in the sections "Investment Advisory and Other Services" and "Purchase
of Shares." The Example assumes reinvestment of all dividends and
distributions, and reflects expenses based on the "Annual Fund Operating
Expenses" table as shown above carried out to future years.
THE EXPENSES SET FORTH IN THE PRECEDING TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESSER THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL AND
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS,
WHICH MAY BE GREATER OR LESSER THAN THE ASSUMED AMOUNT.
3
<PAGE> 4
FINANCIAL HIGHLIGHTS
The financial highlights for the Fund have been audited by Kinder &
Wyman, P.C., independent auditors, whose unqualified report thereon and other
financial statements of the Fund are included in the Statement of Additional
Information. A copy of the Statement of Additional Information may be obtained
by shareholders as set forth on the front cover of this Prospectus.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
June 30, 1996 June 30, 1995 June 30, 1994 June 30, 1993
(1) (1) (1) (1)(2)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
PER SHARE INCOME AND CAPITAL CHANGES
FOR A SHARE OUTSTANDING DURING THE PERIOD:
Net asset value, beginning of period $ 13.53 $ 10.24 $ 10.97 $ 9.79
------------ ----------- --------- ---------
Income From Investment Operations:
Net investment loss (0.34) (.24) (.24) (.18)
Net realized and unrealized gains and
(losses) on securities 7.39 4.33 (0.49) 1.36
------------ ----------- --------- ---------
Total income (loss) from investment
operations 7.05 4.09 (0.73) 1.18
------------ ----------- --------- ---------
Less Distributions:
Distributions from net realized gains (1.54) (0.80) 0.00 0.00
------------ ----------- --------- ---------
Net asset value, end of period $ 19.04 $ 13.53 $ 10.24 $ 10.97
------------ ----------- --------- ---------
Total return (3)(4) 54.32% 42.25% (6.65%) 18.08%
============ =========== ========= =========
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net Assets, end of period (in
thousands) $ 27,908 $ 8,089 $ 6,271 $ 5,968
Ratio of expenses to average net 2.31% 2.38% 2.37% 2.10%
assets
Ratio of net investment loss to 2.03% 2.16% 2.01% 1.83%
average net assets
Portfolio turnover rate 172.87% 210.23% 140.87% 135.40%
</TABLE>
1 Per share information has been calculated using the average number of
shares outstanding.
2 Financial highlights are for the period from October 27, 1992
(effective date of the Fund's Registration Statement under the
Securities Act of 1933) to June 30, 1993, and, other than total return,
have not been annualized.
3 Sales load is not reflected in total return.
4 Total return is annualized.
4
<PAGE> 5
THE FUND
The Fund is a diversified, open-end management investment company,
commonly known as a "mutual fund". The Fund is organized as a series of Common
Stock, $.001 par value, of Dominion Funds, Inc., a Texas corporation. See
"Shareholder Services and Reports." Mutual funds sell their shares to investors
and invest the proceeds in a portfolio of securities. A mutual fund allows
investors to pool their money with that of others in order to obtain
professional investment management. Mutual funds generally make it possible
for investors to obtain greater diversification of their investments and to
simplify their recordkeeping.
INVESTMENT OBJECTIVE AND POLICIES; RISK FACTORS
INVESTMENT OBJECTIVE. The Fund is an open-end diversified management
investment company registered under the Investment Company Act of 1940. The
only investment objective of the Fund is growth of capital. The Fund's
investment objective may not be changed without shareholder approval. Under
normal circumstances, the Fund may not, without shareholder approval, invest
less than 65% of the Fund's total assets in equity securities which management
believes have a good potential for capital growth.
RISK FACTORS. As all investments are subject to inherent market risks
and fluctuations in value due to earnings, economic conditions and other
factors, there can be no assurance that the Fund will, in fact, achieve its
objective.
The Fund may purchase foreign securities, as described below under
"Types of Securities." The Fund's investments in foreign securities can involve
risks not present in domestic securities such as: currency exchange rate
fluctuations; currency exchange control policies; expropriation or confiscatory
taxation; difficulty in obtaining and enforcing judgments against a foreign
issuer; political, economic or social instability; and less securities
regulation. Foreign securities can be less liquid or more volatile than U.S.
securities, and foreign accounting and disclosure standards may differ from
U.S. standards. The values of foreign investments can rise or fall because of
changes in currency exchange rates.
TYPES OF SECURITIES. The Fund will invest primarily in equity
securities which management believes have a good potential for capital growth.
Such securities will be listed on a national securities exchange or on the
NASDAQ National Market, and will be selected principally on the basis of
evaluation of factors such as asset value, cash flow, and earnings per share
that indicate fundamental investment value of the security. Fundamental
investment value also is determined by an analysis of a company's revenues,
earnings and dividend records, and its future growth prospects, although all
factors may not be positive on each investment.
Investments may be made in both domestic and foreign companies. While
the Fund has no present intention to invest any significant portion of its
assets in foreign securities, it reserves the right to invest not more than 10%
of the value of its net assets at the time of purchase in the securities of
foreign issuers and obligors. Such securities will be purchased solely through
United States Dollar denominated American Depository Receipts (ADRs), which are
publicly traded in the United States. ADRs are traded in the United States on
exchanges or over-the-counter and are sponsored and issued by domestic banks.
ADRs represent the right to receive securities of foreign issuers deposited in
the domestic bank or a correspondent bank. ADRs do not eliminate all risk
inherent in investing in the securities of foreign issuers. However, by
investing in ADRs rather than directly in foreign issuers' stock, the Fund will
avoid
5
<PAGE> 6
currency risks during the settlement period for either purchases or sales. In
general, there is a large, liquid market in the United States for most ADRs.
The information available for ADRs is subject to the accounting, auditing and
financial reporting standards of the domestic market or exchange on which they
are traded, which standards are more uniform and more exacting than those to
which many foreign issuers may be subject.
Although the Fund's assets are and will be invested primarily in
equity securities at most times, U.S. Government securities, high grade
commercial paper, corporate bonds and debentures, preferred stocks or
certificates of deposit of commercial banks may be held when, in the Advisor's
judgment, a temporary defensive position is warranted, or so that the Fund may
receive a return on its idle cash. While the Fund maintains a temporary
defensive position, investment income will increase and may constitute a larger
portion of the return on the Fund. (See "Distributions and Taxes.")
PORTFOLIO TURNOVER POLICY. The Fund intends to continue its policy of
purchasing securities for capital growth. However, the Fund will seek, on a
limited basis, to realize profits by anticipating short-term market movements,
and the rate of portfolio turnover will not be a limiting factor when
management deems changes appropriate. If the Advisor is satisfied with the
performance of a security and anticipates continued appreciation, the Fund
generally will retain such security. The annual portfolio turnover of the Fund
may exceed 100%, and it may be substantially higher in some years when the
Advisor views changes in the portfolio as advantageous to the Fund. An annual
portfolio turnover rate of 100% would occur, for example, if all of the Fund's
portfolio securities were replaced once in a period of one year. Increased
portfolio turnover necessarily results in correspondingly higher brokerage
costs which the Fund must pay, and may result in accelerated realization of
capital gains for federal income tax purposes.
INVESTMENT RESTRICTIONS. The Fund is subject to certain investment
restrictions and policies which are fundamental policies of the Fund, and which
may not be changed without approval of the shareholders of the Fund. These
investment restrictions and policies are described in the Statement of
Additional Information. In particular, the Fund may not purchase the
securities of any issuer (except U.S. Government securities) if immediately
after and as a result of such purchase the value of the Fund's holding in the
securities of that issuer exceeds 5% of the value of the Fund's total assets.
In addition, the Fund is restricted from concentrating its investments in any
particular industry and from purchasing or selling real estate, oil and gas, or
interests therein, and is limited with respect to its ability to purchase
securities of any company with less than three years of continuous operations
or investments which are not readily marketable.
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund has an Investment Advisory Agreement (the "Advisory
Agreement") with Insight Capital Management, Inc. (the "Advisor"), whose
address is 1656 North California Blvd., Suite 300, Walnut Creek, California
94596, to act as its investment advisor. The Advisor provides the Fund with
investment advice and recommendations for the Fund consistent with its
investment objective, policies and restrictions, and supervises the purchase
and sale of security transactions on behalf of the Fund. For such services,
the Advisor receives an annual fee of 1.0% of the Fund's average daily net
assets, computed daily and paid on a monthly basis. This fee is higher than
that paid by most mutual funds.
The Advisor also serves as investment adviser to certain private
accounts. The Advisor has no previous experience in advising a mutual fund,
other than to advise the Fund since the inception of the
6
<PAGE> 7
Fund. James O. Collins, Chairman, CEO, Portfolio Manager and sole owner of the
Advisor, is primarily responsible for the day-to-day management of the Fund's
portfolio and has been since the inception of the Fund. Mr. Collins has served
in such capacity with regard to the Advisor since founding the Company in 1983.
Mr. Collins has served as Chairman, CEO and Portfolio Manager of Insight
Capital Research and Management, Inc. since founding the Company in 1988.
The business and affairs of the Fund are managed under the direction
of the Board of Directors of the Company. Subject to their authority, the
Advisor is responsible for supervising the Fund's investments and for
conducting its investment program, and in connection therewith performing or
causing to be performed by others the following services: (i) furnishing to the
Fund investment advice and recommendations, and (ii) supervising the purchase
and sale of securities as directed by appropriate Fund officers.
The Fund has an Administration Agreement with Dominion Institutional
Services Corporation (the "Administrator"), whose address is 5000 Quorum Drive,
Suite 620, Dallas, Texas 75240. Pursuant to the Administration Agreement, and
subject to the authority of the Board of Directors of the Company, the
Administrator is responsible for the administration of the Fund and overall
management of the Fund's business affairs. The Administrator provides all
services required to carry on the Fund's general administrative and corporate
affairs. These services include furnishing all executive and managerial
personnel, office space and equipment, and federal and state regulatory
compliance. For its services, the Administrator receives an annual fee of
1.25% of the Fund's average daily net assets, computed daily and paid on a
monthly basis.
Fund Services, Inc. serves as transfer agent for the purpose of
recording the transfer, issuance and redemption of shares of the Fund,
transferring shares of the Fund, disbursing dividends and other distributions
to shareholders, mailing shareholder information and receiving and responding
to various shareholder inquiries. Commonwealth Fund Accounting, Inc., an
affiliate of Fund Services, Inc., provides accounting services to the Fund.
All costs associated with such services performed by Fund Service, Inc. and
Commonwealth Fund Accounting, Inc., are borne by the Administrator.
In addition to the fees to be paid to the Advisor and the
Administrator, the Fund pays all broker commissions in connection with its
portfolio transactions, together with all other expenses incurred by the Fund
except to the extent such other expenses are required to be paid by the
Administrator. In this connection, the Administrator has agreed, pursuant to
the Administration Agreement, to assume all expenses (hereafter defined) of the
Fund. Expenses as defined are normal operating expenses, but exclude fees paid
to the Advisor and the Administrator, broker commissions in connection with the
Fund's portfolio transactions, interest, taxes, litigation and indemnification
costs, and annual distribution plan expenses, if any. The Administrator
reserves the right to terminate or revise this policy.
The Fund has entered into a Distribution Agreement with Dominion
Capital Corporation (the "Distributor"), 5000 Quorum Drive, Suite 620, Dallas,
Texas 75240, pursuant to which the Distributor performs services and bears the
expenses relating to the offering of Fund shares for sale to the public. As
compensation for the services provided and expenses borne by the Distributor,
the Fund pays the Distributor the sales charges described in the section
"Purchase of Shares."
During the fiscal year ended June 30, 1996, all orders for the Fund's
portfolio securities transactions were placed through the Distributor, and it
is expected that the Advisor will continue to place such orders with the
Distributor. The Distributor intends to charge the Fund $.10 per share for all
7
<PAGE> 8
portfolio transactions effected on behalf of the Fund. With respect to
securities traded on a stock exchange, such commissions are subject to the
requirement that they be reasonable and fair compared to commissions received
or to be received by other brokers in connection with comparable transactions
involving similar securities during a comparable period of time. With regard
to securities traded over-the-counter, such commissions are subject to a
maximum amount of 1% of the purchase or sale price of the securities. It is
expected that most of the Fund's securities trades will be placed in the
over-the-counter market. Although the Advisor is generally required to effect
execution of the Fund's securities transactions at the most favorable price,
the Advisor may take various additional factors into consideration, including,
with respect to the Distributor, the fact that the Distributor has sold or is
selling shares of the Fund. Accordingly, the prices to the Fund for its
portfolio trades effected through the Distributor may be less favorable than
those available from unaffiliated broker-dealers, or than prices that could be
obtained by placing the trades directly with the market maker. The Board of
Directors of the Company has allowed portfolio transactions to be directed to
the Distributor based on its determination that the Fund is receiving "best
price and execution" with respect to such transactions, taking into account
such factors as the Board deems appropriate.
C. Dewey Elliott and Douglas W. Powell each owns approximately 42.5%
of the outstanding stock of the Distributor and 50% of the outstanding stock of
the Administrator. James O. Collins owns 100% of the outstanding stock of the
Advisor.
8
<PAGE> 9
PERFORMANCE
During the fiscal year ended June 30, 1996, the Fund experienced a
total return of 54.32%. In addition, a capital gains distribution of $1.54 per
share was paid during the fiscal year, which is not taken into account in the
foregoing return calculation. Such return is attributable largely to the
performance of high-technology stocks in which the Fund invested.
From time to time in advertisements, the Fund may discuss its
performance ratings as published by recognized mutual fund statistical
services, such as Lipper Analytical Services, Inc., or by publications of
general interest such as Forbes, Money, The Wall Street Journal, Business Week,
Barron's, Changing Times, Fortune, or Institutional Investor. In addition, the
Fund may compare its performance to that of recognized stock market indicators,
including the NASDAQ Composite Index, the Standard & Poor's 500 Stock Index and
the Dow Jones Industrial Average. The Fund may also advertise total return
information which does not reflect deduction of the sales charge.
The line graph below compares the initial account value and subsequent
account values for the Fund at the end of each of the periods indicated to the
same investment over the same periods in the NASDAQ Composite Index. The graph
assumes an initial $10,000 investment beginning October 30, 1992 and, in the
case of the investment in the Fund, net of the Fund's sales load. The Fund's
registration statement became effective on October 27, 1992.
9
<PAGE> 10
The average annual total return table below shows average annual total
return for the Fund for the periods indicated. The table assumes an intitial
investment, net of sales load, beginning October 27, 1992.
[CHART]
Average Annual Total Return
- ---------------------------
July 1, 1995 to June 30, 1996: 54.32%
October 27, 1992 to June 30, 1996: 35.35%
Performance figures are based on historical results and are not
intended to be indicative of future results. The investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than original cost.
PURCHASE OF SHARES
The Fund's shares are continuously offered through Dominion Capital
Corporation (the "Distributor"), the Fund's distributor, which is located at
5000 Quorum Drive, Suite 620, Dallas, Texas
10
<PAGE> 11
75240. Shares are also offered through members of the National Association of
Securities Dealers, Inc. ("NASD") who are acting as securities dealers
("dealers") and through NASD members or eligible non-NASD members who are
acting as brokers or agents for investors ("brokers"). Purchases are effective
at the next determined net asset value after the purchase order and
accompanying payment of the public offering price for shares are received and
accepted by the Fund. Brokers and dealers are responsible for promptly
transmitting orders to the Distributor. The Fund reserves the right to suspend
or terminate the continuous public offering at any time and without prior
notice. The minimum initial and subsequent investment are $5,000 ($2,000 for
IRA's) and $100, respectively (inclusive of the applicable sales charge). In
its discretion, the Fund may allow investments for less than the minimum
amounts. In the case of purchases through the Automatic Investment Plan (see
"Automatic Investment Plan"), the minimum initial investment will be
automatically waived, subject to initial and subsequent monthly investment
minimums of $100.
All orders to purchase shares are subject to acceptance by the Fund,
are not binding until so accepted, and are subject to ultimate collectibility
of funds. The Fund ordinarily will not open an account unless the tax
identification or social security number of the beneficial owner has been
provided on the application to the Fund or is otherwise certified by the
authorized dealer through which an account may be opened. The Fund may decline
to accept a purchase order when in the judgment of management the acceptance of
an order is not in the best interest of existing Fund shareholders.
PUBLIC OFFERING PRICE. The public offering price is the net asset
value per share determined at the close of business of the New York Stock
Exchange next occurring after the purchase order and accompanying payment for
the shares are received and accepted by the Fund, plus the applicable sales
charge. All orders must be mailed to the Distributor by dealers or investors.
Alternatively, payment for shares purchased may be made by wire transfer from
the investor's bank to Fund Services, Inc., after ordering shares by telephone.
Please call (800) 628-4077 for current wire transfer instructions. Shares may
also be purchased by bank account debit pursuant to the Automatic Investment
Plan (see "Automatic Investment Plan"). The net asset value per share is
determined in the manner described below (see "Net Asset Value").
NET ASSET VALUE. The net asset value of Fund shares is determined once
daily as of the close of business of the New York Stock Exchange (the
"Exchange") each day the Exchange is open, and at such other times as the Fund
may determine. The per share net asset value of the Fund is determined by
dividing the total value of the securities and other assets, less liabilities,
by the total number of shares outstanding. In determining net asset value,
securities are valued at market value. Securities for which quotations are not
readily available, and other assets, are valued at fair value determined in
good faith by the Advisor under the supervision of the Board of Directors.
SALES CHARGE. Sales charges on purchases of less than $100,000 amount
to 3.50% of the public offering price (3.63% of the net amount invested).
Sales charges are reduced on transactions greater than $100,000 as follows:
<TABLE>
<CAPTION>
Sales Charge Reallowance Sales Charge
as % of to Dealers as % of
Offering as a % of Amount
Price Offering Price Invested
----- -------------- --------
<S> <C> <C> <C>
Less than $100,000 3.50% 3.00% 3.63%
$100,000 but less than 2.50% 2.00% 2.56%
$200,000
$200,000 or more 1.50% 1.00% 1.52%
</TABLE>
11
<PAGE> 12
From time to time, the Distributor may reallow up to the entire amount
of the applicable sales charge, as shown in the above table, to selected
dealers and brokers who sell Fund shares. During periods when substantially the
entire sales charge is reallowed, such dealers may be deemed to be underwriters
as that term is defined in the Securities Act of 1933. The Fund receives the
entire net asset value of all shares sold. The Distributor retains the sales
charge from which it allows discounts from the applicable public offering price
to dealers and brokers which are uniform for all dealers and brokers in the
United States and its territories. The maximum reallowance on single sales of
less than $100,000 will normally be 3.0%. The Distributor may also pay amounts
equal to the applicable reallowance, as shown in the above table, to selected
institutions to compensate such institutions for their services in connection
with the purchase of Fund shares and servicing of shareholder accounts.
The above scale is applicable to purchases of shares of the Fund made
at one time by any "purchaser", which includes: (i) an individual, his spouse
and children under the age of 21, and (ii) a trustee or other fiduciary of a
single trust estate or single fiduciary account (including pension,
profit-sharing and other employee benefit trusts qualified under Section 401 of
the Internal Revenue Code of 1986) although more than one beneficiary is
involved. The above scale is also applicable to purchases of shares of the Fund
made at one time by clients of the same registered investment advisor, provided
each purchaser seeking to aggregate purchases for purposes of the above scale
sets forth the name of such registered investment advisor where provided in the
Account Application.
LETTER OF INTENT. The above scale also is applicable to aggregate
purchases of $100,000 or over (excluding any reinvestment of dividends and
capital gains distributions) made by a purchaser, as defined above, within a
13-month period pursuant to a Letter of Intent. For example, a person who
signs a Letter of Intent providing for a total investment in Fund shares of
$100,000 over a 13-month period would be charged at the 2.50% sales charge rate
with respect to all purchases during that period. Should the amount actually
purchased during the 13-month period be more or less than that indicated in the
Letter, an adjustment in the sales charge will be made. A purchase not made
pursuant to a Letter of Intent may be included thereunder if the Letter is
signed within 90 days of such purchase. Any shareholder may also obtain the
reduced sales charge by including the value (at the current offering price) of
all his shares in the Fund held of record as of the date of his Letter of
Intent as a credit toward determining the applicable scale of sales charge for
the shares to be purchased under the Letter of Intent.
By signing a Letter of Intent, an investor authorizes the transfer
agent to restrict shares having a purchase price of 3.50% of the minimum dollar
amount specified in the Letter of Intent; that is, these shares cannot be
redeemed by the shareholder until the Letter of Intent is satisfied or the
additional sales charges have been paid. These shares can be redeemed by the
Fund to adjust the sales charge which might result from a difference in the
amount intended to be invested from the amount actually invested. In any
retroactive reduction in sale charge, the amount of the reduction either will
be delivered to the shareholder or invested in additional shares at the lower
charge, as directed by the shareholder. A Letter of Intent is not a binding
obligation upon the investor to purchase, nor the Fund to sell, the full amount
indicated.
The letter of intent privilege is also available to clients of the same
registered investment advisor, provided each purchaser seeking to aggregate
purchases for purposes of the above scale sets forth the name of such
registered investment advisor where provided in the Account Application.
RIGHT OF ACCUMULATION. The above scale also applies to current
purchases of shares of the Fund by a purchaser, as defined above, where the
aggregate quantity of shares of the Fund previously purchased or acquired and
then owned, determined at the current net asset value at the time of the
subsequent purchase, plus the shares being purchased, amount to more than
$100,000, provided the Distributor is notified by such person or his dealer
each time a purchase is made which would so qualify.
12
<PAGE> 13
The right of accumulation privilege is also available to clients of the
same registered investment advisor, provided each purchaser seeking to
aggregate purchases for purposes of the above scale sets forth the name of such
registered investment advisor where provided in the Account Application.
CERTAIN PURCHASES. Shares of the Fund may be sold at net asset value
per share without a sales charge, if such shares are purchased for investment
purposes and may not be resold except to the Fund, to: (a) directors, officers,
full-time employees or sales representatives of the Company, the Administrator,
the Advisor, the Distributor or any of their affiliates; (b) directors,
officers, full-time employees and sales representatives of any broker-dealer
having a sales agreement with the Distributor; (c) any trust, pension,
profit-sharing or other benefit plan for any of the foregoing persons; or (d)
any members of the immediate family (i.e., spouse, children, siblings, parents
and parents-in-law) of any of the foregoing persons. Any person who on or
after October 1, 1992, was eligible to purchase shares of the Fund at net asset
value pursuant to (a) through (d) above, who subsequently became ineligible,
may continue to purchase shares at net asset value for accounts opened prior to
such ineligibility. The Fund reserves the right to modify or eliminate this
privilege at any time.
CONFIRMATIONS AND CERTIFICATES. After every account transaction, a
shareholder receives a statement showing the details of the transaction, the
number of shares held, and a record of transactions since the beginning of the
year. Shares purchased are ordinarily in non-certificated form. Certificates
representing shares owned are not delivered to the shareholder unless requested
in writing from the transfer agent. No certificate is issued for fractional
shares and no certificate is issued to a shareholder who would thereafter hold
a certificate or certificates representing in the aggregate less than 30 shares
(except in connection with sales or transfers of shares represented by
certificates already outstanding). Certificates are issued only in like
registration to that of the account. Certificates may be returned to the
transfer agent at any time and the shares represented by the certificate will
be credited to the shareholder's account. No charge is made for this
safekeeping service.
INVESTMENTS BY TAX-SHELTERED RETIREMENT PLANS. Shares of the Fund are
available for purchase in connection with certain types of tax-sheltered
retirement plans, including:
* Individual Retirement Accounts (IRAs) for individuals.
* Simplified Employee Pension Plans (SEPs) for employees.
* Qualified plans for self-employed individuals.
* Qualified corporate pension and profit-sharing plans
for employees.
The purchase of shares of the Fund may be limited by the plans'
provisions and does not itself establish such plans.
Shareholders considering purchasing any Fund shares in connection with
a retirement plan should consult with their attorney or tax advisor with
respect to plan requirements and tax aspects pertaining to the shareholder.
AUTOMATIC INVESTMENT PLAN. By completing the Automatic Investment Plan
section of the application, you may authorize the Fund to debit your bank
account for the periodic purchase of Fund shares on or about the 5th or 20th
day of each month. Automatic investments are subject to the minimum investment
of $100 per month and are unrestricted as to the permitted maximum. You will
receive confirmation of automatic investments after the end of each calendar
quarter.
INVESTMENT BY TELEPHONE. The Fund will, at its discretion, accept
purchase orders from existing shareholders by telephone, although not
accompanied by payment of the shares being purchased. To receive the net asset
value for a specific day, a telephone purchase request must be received before
the
13
<PAGE> 14
close of the New York Stock Exchange on that day. Payment for shares ordered
in this way must be received by the Fund's transfer agent within three business
days after acceptance of the order. In order to make sure that payment is
received on time, shareholders are encouraged to remit payment by wire or
electronic funds transfer, or by overnight delivery. If payment is not
received on time, the Fund may cancel the order and redeem shares held in the
shareholder's account to compensate the Fund for any decline in the value of
the purchased shares. Telephone purchase orders may not exceed four times the
value of an account on the date the order is placed (shares previously
purchased by telephone are included in computing such value only if payment has
been received). See "Redemption of Shares - Redemptions by Telephone" for
procedures for telephone transactions.
REDEMPTION OF SHARES
REDEMPTIONS BY MAIL. Shareholders of the Fund may require the Fund to
redeem their shares at any time at a price equal to the net asset value per
share next determined following receipt of a valid redemption request by the
Fund. To redeem shares, the shareholder must send to Fund Services, Inc. at
1500 Forest Avenue, Suite 111, Richmond, Virginia 23229, a written redemption
request, together with any outstanding certificates representing the shares to
be redeemed, endorsed by the registered owner or owners, with signatures
guaranteed, if required. If no certificates have been issued for the shares to
be redeemed, a written request for redemption signed by the registered owner or
owners of such shares must be sent to the Fund. Signature guarantees are not
required for redemptions of $10,000 or less, so long as payment is to be sent
to the shareholder of record at the address of record. A signature guarantee
will be required if the redemption proceeds (regardless of amount) are being
made payable other than exactly as registered; are being mailed to an address
other than the address of record; or are being mailed to an address which has
been changed within 30 days of the redemption request. All required guarantees
of signatures must be made by a national or state bank or by a member firm of a
national stock exchange. If shares are held of record in the name of a
corporation, partnership, trust or fiduciary, evidence of the authority of the
person seeking redemption will be required before the request for redemption is
accepted, including redemptions under $10,000. For additional information,
shareholders may call the Fund at (800) 687-9494.
REDEMPTIONS BY TELEPHONE. All shareholders have telephone transaction
privileges to authorize purchases, exchanges or redemptions unless they
specifically decline this service on the account application or by writing to
the Fund Services, Inc. at 1500 Forest Avenue, Suite 111, Richmond, Virginia
23229. The telephone redemption option is not available for shares held in
retirement accounts sponsored by the Fund. Redemption requests may be made by
telephoning the Fund Services, Inc. at (800) 628-4077. To receive the net asset
value for a specific day, a telephone redemption request must be received
before the close of the New York Stock Exchange on that day. As discussed
above, the signature of a redeeming shareholder must be signature guaranteed,
and therefore shares may not be redeemed by telephone, if the redemption
proceeds: exceed $10,000; are being made payable other than exactly as
registered; are being mailed to an address other than the address of record; or
are being mailed to an address which has been changed within 30 days of the
redemption request.
All telephone transactions are recorded and written confirmations
indicating the details of all telephone transactions will promptly be sent to
the shareholder of record. Prior to accepting a telephone transaction, the
Fund and its transfer agent may require the shareholder placing the order to
provide certain identifying information. A shareholder electing to communicate
instructions by telephone may be giving up some level of security that would
otherwise be present were the shareholder to request a transaction in writing.
Neither the Fund nor its transfer agent assumes responsibility for the
authenticity of instructions communicated by telephone which are reasonably
believed to be genuine and which comply with the foregoing procedures. The
transfer agent may be liable for losses resulting from unauthorized or
fraudulent telephone instructions in the event these procedures are not
followed.
14
<PAGE> 15
In times of extreme economic or market conditions, redeeming shares by
telephone may be difficult. The Fund may terminate or modify the procedures
concerning the telephone redemption at any time, although shareholders of the
Fund will be given at least 60 days' prior notice of any termination or
material modification. The Fund may, at its own risk, waive certain of the
redemption requirements described in the preceding paragraphs.
PAYMENT FOR REDEEMED SHARES. Payment for shares redeemed upon written
request will be made by check and generally will be mailed within seven days
after receipt by the Fund of a properly executed redemption request and any
outstanding certificates for the shares to be redeemed. Payment for shares
redeemed by telephone will be made by check payable to the account name(s) and
address exactly as registered, and generally will be mailed within seven days
following the request for redemption.
The value of Fund shares on redemption may be more or less than the
shareholder's cost, depending upon the market value of the Fund's net assets at
the time of redemption. Shares are normally redeemed for cash, except under
unusual circumstances as described in the Statement of Additional Information
under the heading "Redemption of Shares". Redemption proceeds are sent regular
first class mail, or can be sent via overnight "express" mail (such as Federal
Express), if requested, for a $20 service charge. A shareholder can pay the
$20 by check or simply request that the charge be deducted from his account or
the proceeds of such redemption. The transfer agent can only provide this
service when mailing to street addresses.
A shareholder may request that payment for redeemed shares of the Fund
be made by wire transfer. Shareholders may elect to use this service on the
account application or by providing the Fund with a signature guaranteed letter
requesting this service and designating the bank to receive all wire
transfers. A shareholder may change the predesignated bank of record by
providing the Fund with written signature guaranteed instructions. Wire
transfers are subject to a $1,000 minimum and a $100,000 maximum limitation.
Redemption proceeds paid by wire transfer will be transmitted to the
shareholder's predesignated bank account on the next business day after receipt
of the shareholder's redemption request. There is a $15 fee for each wire
payment for shares redeemed by the Fund.
A shareholder may also request that payment for redeemed shares of a
Cash Account Trust portfolio be made by wire transfer and should review the
Cash Account Trust portfolio prospectus for procedures and charges applicable
to redemptions by wire transfer. See below under "Exchange Privilege" for more
information concerning the Cash Account Trust portfolios.
If shares have been purchased by check or other means that are subject
to final collection, the Fund does not make redemption proceeds available until
such purchase has cleared the shareholder's bank, which could take up to 15
days or more. In addition to the foregoing restrictions, no redemption payment
can be made for shares which have been purchased by telephone order until full
payment for the shares has been received. In any event, valid redemption
requests concerning shares for which full payment has been made will be priced
at the net asset value next determined after receipt of the request.
Redemption may be suspended or payment postponed during any period in
which the Exchange is closed (except on weekends or customary holidays) or
trading on the Exchange is restricted, or during periods of an emergency or
other periods during which the Securities and Exchange Commission permits such
suspension.
REINVESTMENT PRIVILEGE. An investor who has redeemed all or part of his
shares of the Fund may reinvest all or part of the redemption proceeds, without
a sales charge, if he sends a written request to the Fund or its transfer agent
not more than 30 days after his shares were redeemed. The redemption proceeds
will be so reinvested on the basis of the net asset value of the shares in
effect immediately after receipt of the written request. This reinvestment
privilege may be exercised only once
15
<PAGE> 16
by an investor upon redemption of his shares of the Fund. Any gain recognized
as a result of such redemption will be taxable; if redemption resulted in a
loss and reinvestment is made in shares of the Fund, the loss will not be
recognized.
In addition, an investor who has exchanged all or part of his shares of
the Fund for shares of the CAT Portfolio as provided below under "Exchange
Privilege" may reinvest all or part of the redemption proceeds of such CAT
Portfolio shares, without a sales charge.
SMALL ACCOUNTS. Because of the high cost of maintaining small
accounts, the Fund reserves the right to redeem shares in any account and pay
the proceeds to the shareholder if, due to redemptions, the account balance
falls below $500, and the account reflects no purchases of shares, other than
through reinvestments of dividends or capital gains, during the 60 days prior
to the mailing of the notice of intent to redeem. The Fund will give written
notice of intent to redeem 60 days prior to any such redemption. During the
60-day period following mailing of such notice, such notified shareholder may
increase the value of his account through additional purchases and avoid
involuntary redemption. A notice of intent to redeem will not be sent to
shareholders earlier than 24 months after establishment of an account.
EXCHANGE PRIVILEGE
By telephoning Fund Services, Inc. at (800) 628-4077., or writing Fund
Services, Inc. at 1500 Forest Avenue, Suite 111, Richmond, Virginia 23229 ,
any shareholder may exchange, without charge, any or all of his shares in the
Fund for shares of the Money Market Portfolio, the Government Securities
Portfolio or the Tax-Exempt Portfolio of the Cash Account Trust (the "CAT
Portfolio"), separately managed, unaffiliated money market funds. Exchanges may
be made only if the CAT Portfolio is registered in your state of residence. The
exchange privilege with the CAT Portfolio does not constitute an offering or
recommendation of the shares of the CAT Portfolio by the Fund or its transfer
agent. The Administrator is compensated for services it performs with respect
to the CAT Portfolios.
It is your responsibility to obtain and read a prospectus of the CAT
Portfolio into which you are exchanging. By giving exchange instructions, a
shareholder will be deemed to have acknowledged receipt of the prospectus for
the CAT Portfolio. You may make up to one exchange out of the Fund during the
calendar month and four exchanges out of the Fund during the calendar year.
This limit helps keep the Fund's net asset base stable and reduces the Fend's
administrative expenses. There currently is no limit on exchanges out of the
CAT Portfolio. In times of extreme economic or market conditions, exchanging
Fund or CAT Portfolio shares by telephone may be difficult. See "Redemption of
Shares - Redemptions by Telephone" for procedures for telephone transactions.
Redemptions of shares in connection with exchanges into or out of the
Fund are made at the net asset value per share next determined after the
exchange request is received. To receive a specific day's price, your letter or
call must be received before that day's close of the New York Stock Exchange. A
day or more delay may be experienced prior to the investment of the redemption
process into the CAT Portfolio. Each exchange represents the sale of shares
from one fund and the purchase of shares in another, which may produce a gain
or loss for Federal income tax purposes.
All exchanges out of the Fund into the CAT Portfolio are subject to the
minimum and subsequent investment requirements of the CAT Portfolio into which
shares are being exchanged. Exchanges will be accepted only if the registration
of the two accounts is identical. Neither the Fund nor the CAT Portfolio, or
their transfer agents or advisors, assume responsibility for the authenticity
of exchange instructions communicated by telephone or in writing which are
believed to be genuine. See "Redemption of Shares - Redemptions by Telephone"
for procedures for telephone transactions. All shareholders have telephone
transaction privileges to authorize exchanges unless they specifically decline
this service on the account
16
<PAGE> 17
application or by writing to Fund Services, Inc. at 1500 Forest Avenue, Suite
111, Richmond, Virginia 23229.
DISTRIBUTIONS AND TAXES
DISTRIBUTION PAYMENT POLICY. The Fund intends to pay dividends at
least annually out of substantially all of its investment income (minus certain
required adjustments) and to make distributions at least annually of any "net
capital gains". Distributions reflecting capital gains realized during each
fiscal year ended June 30 normally will be declared and paid in the subsequent
fiscal year.
Checks will be made payable and sent by first class mail to each
shareholder's address of record unless otherwise requested on the application
or by a separate written request. Any checks which are unable to be delivered
and are returned to the Fund will be reinvested for such shareholder's account
in full or fractional shares at the net asset value next computed after the
check has been received by the transfer agent. To reduce costs to the Fund,
checks outstanding and uncashed ("stale") for over 180 days may be "stop-paid"
and reinvested back into the account from which they were paid at the
discretion of the Fund.
REINVESTMENT OF DISTRIBUTIONS. All income dividends and capital gains
distributions, if any, will be reinvested automatically in additional shares of
the Fund, without a sales charge, at the net asset value per share determined
as of the next business day following the record date for each investor who
does not elect on his account application to receive dividends and capital
gains in cash. Checks for cash dividends and distributions and reinvestment
confirmations are usually mailed to shareholders within ten days of the record
date. Shareholders may change their option any time before the record date of
any distribution by writing to Dominion Insight Growth Fund, 5000 Quorum Drive,
Suite 620, Dallas, Texas 75240.
TAX INFORMATION. The Fund has qualified and intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). To qualify as a regulated
investment company, the Fund must comply with certain requirements of the Code
relating to, among other things, the source of its income and diversification
of its assets. If the Fund so qualifies and if it distributes to its
shareholders at least 90% of its net investment income (which includes net
short term capital gains, but not net capital gains, which are the excess of
net long-term capital gains over net short-term capital losses), it will not be
required to pay federal income taxes on the income distributed to shareholders.
The Fund intends to distribute at least the minimum amount of net investment
income to satisfy the 90% distribution requirement. The Fund will not be
subject to federal income tax on any net capital gains distributed to its
shareholders provided that the Fund meets the requirements under the Code for a
corresponding capital gains dividend paid deduction. As a Texas corporation,
the Fund will not be subject to any corporate franchise taxes in Texas as long
as it qualifies as an open-end investment company as defined in the Investment
Company Act of 1940.
Distributions of the Fund's net investment income are taxable to
shareholders (other than those exempt from income tax) as ordinary income
whether received in shares or in cash. Shareholders who receive distributions
in the form of additional shares will have a basis for federal income tax
purposes in each such share equal to the fair market value thereof on the
reinvestment date. Distributions of the Fund's net capital gains ("capital
gains dividends") are taxable to shareholders (other than those exempt from
income tax) as long-term capital gains regardless of the length of time the
shares of the Fund have been held by such shareholders. Distributions in excess
of the Fund's earnings and profits, such as distributions of principal, first
will reduce the adjusted tax basis of shareholders and, after such adjusted tax
basis is reduced to zero, will constitute capital gains to such holder
(assuming such shares are held as a capital asset). The Fund will inform
shareholders of the source and tax status of such distributions promptly after
the close of each calendar year.
17
<PAGE> 18
Presently under the Code, individuals are subject to a maximum rate for
income tax purposes of 28% on net long- term capital gains. The maximum rate
of 28% will apply to both capital gains distributions from mutual funds to
individual shareholders and to net long-term gains on the disposal of mutual
fund shares by individual shareholders.
To the extent that dividends paid by the Fund are attributable to
certain types of dividends it receives on its investment assets, dividends paid
by the Fund will qualify for the dividends received deduction for corporations.
Redemption or resale of shares of the Fund is a taxable transaction for
federal income tax purposes. Redeeming shareholders recognize gain or loss in
an amount equal to the difference between their basis in such redeemed shares
of the Fund and the amount received. If such shares are held as a capital
asset, the gain or loss is a capital gain or loss and will generally be
long-term if such shareholders have held their shares for more than one year.
Any loss realized on shares held for six months or less is be treated as
long-term capital loss to the extent of any amounts received by the shareholder
as capital gains dividends with respect to such shares.
For most types of accounts, the transfer agent will report the proceeds
of any redemptions to shareholders and the Internal Revenue Service annually.
Shareholders should keep regular account statements to use in determining the
gain or loss on the sale of Fund shares.
The Fund's ability to dispose of portfolio securities may be limited by
the requirement for qualification as a regulated investment company that less
than 30% of the Fund's gross income be derived from the disposition of
securities held for less than three months.
In order to avoid a 4% excise tax the Fund is required to distribute by
December 31 of each year at least 98% of its net investment income for such
year and at least 98% of its capital gain net income (computed on the basis of
the one-year period ending on October 31 of such year), plus any required
distribution amounts that were not distributed in previous taxable years. For
purposes of the excise tax, any net investment income or capital gain net
income retained by, and taxed in the hands of, the Fund is treated as having
been distributed.
Although dividends generally are treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in such months and paid in January of the following
year are treated as having been distributed by the Fund and received by the
shareholders on December 31 of the year in which the dividend was declared. In
addition, certain other distributions made after the close of a taxable year of
the Fund may be "spilled back" and treated as having been paid by the Fund
(except for purposes of the 4% excise tax) during such taxable year. In such
case, shareholders are treated as having received such dividends in the taxable
year in which the distribution is actually made.
Statements as to the tax status of each shareholder's dividends and
distributions are mailed annually. Each shareholder will also receive, as
applicable, various written notices after the close of the Fund's taxable year
(i.e., after each June 30th) with respect to certain dividends or distributions
that were paid by the Fund to its shareholders during the Fund's prior taxable
year.
To avoid being subject to a 31% federal withholding tax on dividends,
capital gains and proceeds of redemption, shareholders must furnish the Fund
with their taxpayer identification number and certify in writing that the
number furnished is correct and that they are not subject to backup
withholding. The appropriate number may be furnished and certified on the
application to purchase Fund shares or on IRS Form W-9. To avoid the
additional expense and burden of withholding taxes on dividends, the Fund may
involuntarily redeem any accounts for which certified taxpayer identification
numbers have not been
18
<PAGE> 19
furnished within 60 days of the initial purchase of shares in those accounts.
Foreign shareholders, including shareholders who are nonresident aliens, may be
subject to U.S. withholding tax on certain distributions (whether received in
cash or in shares) at a rate of 30% or such lower rate as prescribed by any
applicable treaty.
The federal income tax discussion set forth above is for general
information only. Prospective investors should consult their own advisors
regarding the specific federal tax consequences to them of holding and
disposing of shares, as well as the effects of state, local and foreign tax
laws.
SHAREHOLDER SERVICES AND REPORTS
Fund Services, Inc., 1500 Forest Avenue, Suite 111, Richmond, Virginia
23229, transfer agent for the Fund, performs bookkeeping, data processing and
administrative services related to the maintenance of shareholder accounts.
When an initial investment is made in the Fund, an account will be opened for
each shareholder on the Fund's books and shareholders will receive a
confirmation of the opening of the account. Shareholders receive monthly
statements giving details of all activity in their account and also receive a
statement whenever an investment or withdrawal is made in or from their
account. Information for federal income tax purposes will be provided at the
end of the year.
Shareholders receive annual and semiannual reports with financial
statements, as well as proxy statements for shareholders' meetings, if any.
The Fund is a series of Common Stock, $.00l par value per share, of Dominion
Funds, Inc., a Texas corporation formed on June 5, 1992. The Fund's operations
are governed by Articles of Incorporation, a copy of which is on file with the
Secretary of State of Texas. The Fund is managed by its Board of Directors
pursuant to the Articles of Incorporation. The Articles of Incorporation permit
the Board of Directors to issue an unlimited number of shares of Common Stock
with respect to the Fund. To date, the Fund is the only series of capital stock
of the Company, although the Board of Directors is empowered to designate other
series. Shares of the Company entitle their holders to one vote per share;
however, separate votes are taken by each series on matters affecting an
individual series. The Fund does not intend to hold annual meetings of
shareholders, unless required to do so by the 1940 Act or Texas corporate law.
A meeting will be called for the election of directors upon the written request
of holders of 10% of the Fund's outstanding shares. Shareholders have neither
preemptive rights nor cumulative voting rights. The Company will assist such
holders in communicating with other shareholders of the Fund to the extent
required by the Investment Company Act of 1940. More detailed information
concerning the Fund and the Company is set forth in the Statement of Additional
Information.
Any inquiries by shareholders relating to the Fund may be made by
calling or writing Fund Services, Inc. at 1500 Forest Avenue, Suite 111,
Richmond, Virginia 23229 or at (800) 628-4077.
19
<PAGE> 20
Investment Advisor
- ------------------
Insight Capital Management, Inc.
1656 North California Boulevard, Suite 300
Walnut Creek, California 94596
Administrator Directors
- ------------- ---------
Dominion Institutional Services Corporation Douglas W. Powell
5000 Quorum Drive, Suite 620 C. Dewey Elliott, III
Dallas, Texas 75240 Robert H. Spiro, Jr.
Peter R. Goldschmidt
Distributor Allen B. Clark, Jr.
- -----------
Dominion Capital Corporation
5000 Quorum Drive, Suite 620
Dallas, Texas 75240
Custodian Officers
- --------- --------
May Financial Corporation Douglas W. Powell,
8333 Douglas Avenue, Suite 400 Chairman and Chief
Dallas, Texas 75225 Executive Officer
Transfer Agent C. Dewey Elliott, III,
- -------------- President
Fund Services, Inc.
1500 Forest Avenue, Suite 111
Richmond, Virginia 23229
Independent Auditors
- --------------------
Kinder & Wyman, P.C.
Certified Public Accountants
511 E. John Carpenter Freeway
Suite 200
Irving, Texas 75062-3920
Legal Counsel
- -------------
Frederick C. Summers, III
A Professional Corporation
Attorney at Law
3700 Bank One Center
1717 Main Street
Dallas, Texas 75201
<PAGE> 21
No dealer, salesman or any other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, in connection with the offer contained in this Prospectus and, if
given or made, such other information or representations must not be relied
upon as having been authorized by the Fund, the Advisor, or the Distributor.
This Prospectus does not constitute an offer by the Fund to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful for the Fund to make such an
offer in such jurisdiction.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
Prospectus Summary 2
Fund Expenses 3
Financial Highlights 4
The Fund 5
Investment Objective and Policies;
Risk Factors 5
Investment Advisory And
Other Services 7
Performance 9
Purchase Of Shares 11
Redemption of Shares 13
Distributions And Taxes 14
Shareholder Services and Reports 16
</TABLE>
- --------------------------------------------------------------------------------
THE DOMINION INSIGHT
GROWTH FUND
- --------------------------------------------------------------------------------
PROSPECTUS
January 20, 1997
DOMINION CAPITAL CORPORATION
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
<PAGE> 22
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 20, 1997
DOMINION INSIGHT GROWTH FUND
5000 Quorum Drive, Suite 620
Dallas, Texas 75240
Telephone (972) 385-9595 or (800) 687-9494
for Shareholder Account Information
Dominion Insight Growth Fund (the "Fund") is a diversified open-end
mutual fund that seeks only capital appreciation. The Fund will invest
primarily in equity securities which the investment advisor believes have a
good potential for capital growth. When the investment advisor believes that
prevailing market conditions dictate a temporary defensive position, however,
the Fund may invest its assets in U.S. Government securities and other senior
securities or in short-term interest bearing securities.
This Statement of Additional Information is not a Prospectus, and
should be read in conjunction with the Prospectus dated January 20, 1997, which
may be obtained free of charge from the Fund at the above address or by calling
the above telephone number. This Statement of Additional Information contains
additional and more detailed information about the Fund's operations and
activities than that set forth in the Prospectus.
<PAGE> 23
DOMINION INSIGHT GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Fund and the Company..........................................................................................1
Investment Policies and Restrictions..............................................................................1
Management and Advisory Services..................................................................................4
Portfolio Transactions and Brokerage..............................................................................6
Executive Officers and Directors..................................................................................7
Purchase of Shares of the Fund...................................................................................10
Net Asset Value Determination....................................................................................10
The Distributor..................................................................................................11
Redemption of Shares.............................................................................................11
Income Dividends, Capital Gains and Distributions................................................................12
Custodian........................................................................................................12
Legal Counsel and Independent Auditors...........................................................................12
Registration Statement...........................................................................................13
Independent Auditor's Report....................................................................................F-1
Statement of Assets and Liabilities (June 30, 1996).............................................................F-2
Investments in Securities (June 30, 1996).......................................................................F-3
Statement of Operations (Year ended
June 30, 1996)................................................................................................F-5
Statement of Changes in Net Assets (Years ended
June 30, 1996 and 1995) ......................................................................................F-6
Notes to Financial Statements (June 30, 1996)...................................................................F-7
</TABLE>
<PAGE> 24
THE FUND AND THE COMPANY
The Fund is an open-end diversified management investment company. The
Fund is a series of shares of common stock, $.00l par value, of Dominion Funds,
Inc. (the "Company"), which was formed as a Texas corporation on June 5, 1992.
The Articles of Incorporation of the Company permit the Board of Directors of
the Company to designate one or more series of common stock, each series to
have such relative rights and privileges as the Board of Directors shall
determine. The only series currently designated is the Fund. The directors are
also empowered by the Articles of Incorporation to designate additional series
and issue shares with respect thereto.
Each share represents an equal proportionate interest in the assets of
the Fund with each other share in such series and no interest in any other
series.
Shares of the Fund entitle their holders to one vote per share;
however, separate votes are taken by each series on matters affecting an
individual series. For example, a change in investment policy for a series
would be voted upon by shareholders of only the series involved. Shares do not
have cumulative voting rights, preemptive rights or any conversion or exchange
rights. Shares of the Fund are fully paid and nonassessable when issued and
share equally in dividend and other distributions of the Fund, and in the event
of liquidation are entitled to receive equal shares of the net assets of the
Fund. The Fund does not contemplate holding regular meetings of shareholders to
elect directors or otherwise. However, the holders of 10% or more of the
outstanding shares may by written request require a meeting to consider the
removal of directors by a vote of a majority of the shares present and voting
at such meeting.
Statements contained in this Statement of Additional Information as to
the contents of any contract or other document referred to are not necessarily
complete, and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement of which
this Statement of Additional Information forms a part, each such statement
being qualified in all respects by such reference.
INVESTMENT POLICIES AND RESTRICTIONS
As stated in the Prospectus, the Fund's only investment objective is
capital appreciation. There can be no assurance that the Fund will, in fact,
achieve its objective. The Fund's investment objective may not be changed by
the Board of Directors without shareholder approval.
The Prospectus discusses the types of securities in which the Fund
invests. The following discussion of investment restrictions supplements that
set forth in the Prospectus.
As indicated in the Prospectus, the Fund is subject to certain
policies and restrictions which may not be changed without shareholder
approval. Shareholder approval would be the approval by the lesser of (i) more
than 50% of the outstanding voting securities of the Fund, or (ii) 67% or more
of the voting securities present at a meeting if the holders of more than 50%
of the outstanding voting securities of the Fund are present or represented by
proxy. Without such shareholder approval, the Fund may not:
1. Purchase the securities of any one issuer (except securities issued
or guaranteed by the U.S. Government) if immediately after and as a result of
such purchase (a) the value of the holdings of the
STATEMENT OF ADDITIONAL INFORMATION -- PAGE 1
<PAGE> 25
Fund in the securities of such issuer exceeds 5% of the value of the Fund's
total assets, or (b) the Fund owns more than 10% of the outstanding voting
securities of any one class of securities of such issuer.
2. Concentrate its investments, that is, invest more than 25% of the
value of its assets, in any particular industry.
3. Change the Fund's investment objective, or invest, under normal
circumstances, less than 65% of the value of the Fund's total assets in equity
securities which management believes have a good potential for capital growth.
4. Purchase or sell real estate or other interests (including limited
partnership interests) in real estate, except that the Fund may purchase or
sell securities of issuers that invest or deal in real estate provided such
securities are readily marketable.
5. Write, purchase or sell put options, straddles, spreads or
combinations thereof or deal in commodities, or write, purchase or sell call
options unless the conditions imposed by Rule 260.140.85(b)(1) of the
California Blue Sky Regulations are met.
6. Make loans (the purchase of a portion of an issue of publicly
distributed bonds, debentures or other debt securities is not considered to be
a loan).
7. Purchase securities on margin or sell short.
8. Purchase securities of other investment companies, except in
connection with a merger, consolidation or acquisition of assets.
9. Borrow money, except that, as a temporary measure for extraordinary
or emergency purposes, and not for investment purposes, the Fund may borrow up
to 5% of the value of its total assets.
10. Mortgage or pledge any security owned or held by the Fund, except
in connection with item number 8 above.
11. Participate on a joint or a joint and several basis in any trading
account in securities.
12. Invest in companies for the purpose of exercising control of
management.
13. Act as an underwriter of securities of other issuers or invest in
portfolio securities which the Fund might not be free to sell to the public
without registration of such securities under the Securities Act of 1933.
14. Purchase securities of any company with a record of less than
three years' continuous operation (including that of predecessors), or
securities of any company which are restricted as to disposition, if such
purchase would cause the cost of the Fund's investments in all such companies
to exceed 5% of the Fund's total assets taken at market value.
STATEMENT OF ADDITIONAL INFORMATION -- PAGE 2
<PAGE> 26
15. Purchase or retain the securities of any issuer if those officers
and directors of the Fund, its investment adviser or affiliates owning
individually more than 1/2 of 1% of the securities of such issuer together own
more than 5% of the securities of such issuer.
16. Purchase any interests in oil, gas or other mineral leases or
development or exploration programs, except that the Fund may purchase or sell
securities of issuers that invest in or deal in oil, gas or minerals.
17. Purchase investments which are not readily marketable, including
securities and other assets for which an active and substantial market does not
exist at the time of purchase or subsequent valuation, if such investments
exceed 15% of net assets at the time of purchase.
18. Issue senior securities.
19. Purchase or sell commodities or commodity contracts including
futures contracts.
20. Invest more than 5% of the value of the Fund's net assets in
warrants. Included within such limitation, but not to exceed 2% of the value of
the Fund's net assets, may be warrants which are not listed on the New York or
American Stock Exchange.
21. Invest more than 10% of the value of the Fund's net assets at the
time of purchase in foreign securities (i. e., the securities of foreign
issuers or obligors), which investment must be made solely through the purchase
of United States Dollar denominated American Depository Receipts sponsored by
domestic banks or their correspondent banks.
MANAGEMENT AND ADVISORY SERVICES
As stated in the Prospectus, the Fund has an Investment
Advisory Agreement (the "Advisory Agreement") with Insight Capital Management,
Inc. (the "Advisor"), 1656 North California Boulevard, Suite 300, Walnut Creek,
California 94596. The Advisor supervises the Fund's investments and conducts
its investment program. The Advisory Agreement provides that the Advisor will
perform the following services or cause them to be performed by others: (i)
furnish to the Fund investment advice and recommendations, and (ii) supervise
the purchase and sale of securities as directed by appropriate Fund officers.
For such services the Advisor receives an annual investment advisory fee equal
to 1.0% of the Fund's average daily net assets, computed daily and paid on a
monthly basis. The advisory fee paid by the Fund is higher than that paid by
most mutual funds. The Fund incurred fees payable to the Advisor in the amounts
of $70,407, $70,672, and $138,387, respectively, for the fiscal years ended
June 30, 1994, 1995 and 1996.
The Advisor also performs investment advisory services for individual
and pension and profit sharing accounts (the "private accounts"). Although the
overall investment objective of the Fund may differ from the objectives of the
private accounts served by the Advisor, in certain instances there may be
securities which are suitable for the portfolio of the Fund as well as for one
or more of the private accounts. At times, therefore, purchases and sales of
the same investment securities may be recommended for the Fund and for one or
more of the other private accounts. To the extent that the Fund and one or more
of the private accounts seek to acquire or sell the same security at the same
time, either the price obtained by the Fund or the amount of securities that
may be purchased or sold by the Fund at one time
STATEMENT OF ADDITIONAL INFORMATION -- PAGE 3
<PAGE> 27
may be adversely affected. In such cases the purchase and sale transactions are
allocated among the Fund and the private accounts in a manner believed by the
management of the Advisor to be equitable to each.
Financial analysts employed by the Advisor are subject to the Code of
Ethics and Standards of Professional Conduct adopted by the Association of
Investment Management and Research. Under the Standards of Professional
Conduct, the financial analyst is required to act in a manner consistent with
his obligation to deal fairly with all customers and clients when (i)
disseminating investment recommendations, (ii) disseminating material changes
in prior investment advice, and (iii) taking investment action.
Dominion Institutional Services Corporation (the "Administrator") has
entered into an Administration Agreement (the "Administration Agreement") with
the Fund pursuant to which the Administrator is responsible for the overall
management and administration of the Fund. The Fund pays the Administrator an
annual administration fee equal to 1.25% of the Funds average daily net assets,
computed daily and paid on a monthly basis. The Fund incurred fees payable to
the Administrator in the amounts of $87,020, $88,339, and $172,983,
respectively, for the fiscal years ended June 30, 1994, 1995 and 1996. Except
as provided in this paragraph, the Administrator pays all operating costs of
the Fund, including office space, custodian and transfer agent fees,
administrative, clerical, record keeping, bookkeeping, legal (non-litigation),
auditing and accounting expenses, expenses of preparing tax returns, expenses
of shareholders' meetings and preparing, printing and mailing proxy statements,
expenses of preparing and typesetting periodic reports to shareholders (except
for those reports the Fund permits to be used as sales literature), fees and
expenses of directors of the Company, and the costs, including filing fees, of
renewing or maintaining registration of Fund shares under federal and state
law. The Fund pays the investment advisory fee and the administration fee,
interest, taxes, the cost of brokerage incurred in connection with execution of
securities transactions, litigation expenses and indemnification paid to
advisors of the Fund and officers and directors of the Company. The costs and
expenses, including legal and accounting fees, filing fees and printing costs,
in connection with the formation of the Fund and the preparation and filing of
the Fund's initial registration statement under the Securities Act of 1933 and
Investment Company Act of 1940 were paid by the Fund.
The Fund has entered into an accounting services agreement with
Commonwealth Fund Accounting, Inc. an affiliate of Fund Services, Inc., the
Fund's transfer agent. All costs associated with such services performed by
Commonwealth Fund Accounting, Inc. are borne by the Administrator.
Fund Services, Inc. serves as transfer agent for the purpose of
recording the transfer, issuance and redemption of shares of the Fund,
transferring shares of the Fund, disbursing dividends and other distributions
to shareholders, mailing shareholder information and receiving and responding
to various shareholder inquiries. All costs associated with such services
performed by Fund Service, Inc. are borne by the Administrator.
C. Dewey Elliott III and Douglas W. Powell each own approximately 50%
of the outstanding stock of the Administrator. James O. Collins owns 100% of
the outstanding stock of the Advisor. Messrs. Elliott and Powell are both
executive officers and directors of the Company.
PORTFOLIO TRANSACTIONS AND BROKERAGE
During the fiscal year ended June 30, 1996, all orders for the Fund's
portfolio securities transactions were placed through Dominion Capital
Corporation, an affiliate of the Fund, and it is expected that the Advisor will
continue to place such orders through Dominion Capital Corporation. Dominion
Capital Corporation is the Fund's Distributor, and is owned 42.5% each by C.
Dewey Elliott, III and Douglas W. Powell, officers and directors of the Fund.
The Fund paid approximately $62,067, $96,531,
STATEMENT OF ADDITIONAL INFORMATION -- PAGE 4
<PAGE> 28
and $153,876, respectively, in brokerage commissions in connection with its
portfolio business during the fiscal years ended June 30, 1994, 1995 and 1996,
all of which were paid to Dominion Capital Corporation. The increase in
brokerage commissions each year was primarily due to the increasing size of the
Fund and the increasing portfolio turnover rate.
Decisions as to the assignment of portfolio business for the Fund and
negotiation of its commission rates are made by the Advisor. In selecting
brokers and in negotiating commissions, the Advisor considers the broker's
reliability, the quality of its execution services on a continuing basis, the
financial condition of the firm, and research services provided, if any. The
Advisory Agreement specifically provides that in placing portfolio transactions
for the Fund, the Advisor may agree to pay brokerage commissions in an amount
higher than the lowest available rate for brokerage and research services as
authorized, under certain circumstances, by the Advisory Agreement.
The Board of Directors has adopted certain policies incorporating the
standards of Rule 17e-1 issued by the Securities and Exchange Commission under
the Investment Company Act of 1940 which requires that the commissions paid to
Dominion Capital Corporation and other affiliates of the Fund with respect to
securities transactions effected on a securities exchange must be reasonable
and fair compared to the commissions, fees or other remuneration received or to
be received by other brokers in connection with comparable transactions
involving similar securities during a comparable period of time. The rule and
procedures also contain review requirements and require the Advisor to furnish
reports to the Board of Directors and to maintain records in connection with
such reviews. After consideration of all factors deemed relevant, the Board of
Directors will consider from time to time whether the advisory fee will be
reduced by all or a portion of the brokerage commission given to affiliated
brokers.
EXECUTIVE OFFICERS AND DIRECTORS
The directors and officers of Dominion Funds, Inc. (the "Company"), a
Texas corporation (of which the Fund is a series of shares of common stock),
their principal occupations for the last five years and their affiliations, if
any, with Dominion Institutional Services Corporation (the "Administrator"),
the Fund's administrator, Insight Capital Management, Inc. (the "Advisor"), the
Fund's investment advisor, or with Dominion Capital Corporation (the
"Distributor"), the Fund's principal underwriter, are as follows:
Douglas W. Powell*
5000 Quorum Drive, Suite 620
Dallas, Texas 75240
Mr. Powell is Chairman of the Board and Chief Executive Officer of Dominion
Funds, Inc. He is a founder of The Dominion Companies, a Dallas, Texas, based
financial services group providing investment products and services to
individuals, businesses and institutions. Mr. Powell serves as Chairman of the
Board of Directors and Chief Executive Officer of Dominion Capital Corporation,
an NASD Broker/Dealer; Dominion Financial Services, an SEC Registered
Investment Advisor; Dominion Agency, Inc.; Dominion Institutional Services
Corporation; and Dominion Mortgage Company.
Mr. Powell is a 1962 graduate of the United States Naval Academy. Upon
graduation he was commissioned in the U.S. Air Force, where he served with
distinction for eight years as a pilot and Deputy Missile Combat Crew
Commander. Upon leaving military service in 1970, Mr. Powell accepted a
position as a Systems Engineer with Electronic Data Systems, participating in
the analysis, design and development of automated systems for the New York
Stock Exchange, American Airlines and numerous insurance carriers. He
subsequently served as assistant to the President of Systems Resources, Inc., a
subsidiary of Control Data Corporation providing consulting and data processing
services to the insurance industry.
STATEMENT OF ADDITIONAL INFORMATION -- PAGE 5
<PAGE> 29
From 1976 to 1980 Mr. Powell was President of Direction One, Inc., providing
products and services to most major U.S. department stores. After a period as
Assistant to the President of the North Texas Financial Group, an integrated
financial planning and investment firm, Mr. Powell was co-founder and President
of Chiattello & Powell, Inc., an SEC Registered Investment Advisor, from which
The Dominion Companies emerged. Mr. Powell has been Chairman and Chief
Executive Officer of Dominion Capital Corporation since October 1986, Dominion
Financial Services, Inc. since 1981, and Dominion Institutional Services
Corporation since June 1987.
* Interested person (as defined in the Investment Company Act of 1940) of the
Fund.
STATEMENT OF ADDITIONAL INFORMATION -- PAGE 6
<PAGE> 30
C. Dewey Elliott, III*
5000 Quorum Drive, Suite 620
Dallas, Texas 75240
Mr. Elliott graduated in 1970 from the United States Naval Academy with a B.S.
in aeronautical engineering and earned an MBA in 1975. He serves as President
of Dominion Funds, Inc. and affiliated Dominion firms, and has been a principal
in the firms since 1986, including Dominion Capital Corporation since October
1986, Dominion Financial Services since January 1986, Dominion Institutional
Services Corporation since June 1987 and Dominion Mortgage Company since 1991.
Mr. Elliott has been an adjunct professor in the business graduate school at the
University of Dallas since 1987. Previously, Mr. Elliott was a retail broker
with Merrill Lynch from 1984 to 1985. From 1976-1985, he was a senior
consultant with Harbridge House, Inc. and other firms, consulting to national
and international companies and the Department of Defense. Mr. Elliott served
on active duty with the Navy from 1970 to 1976.
Robert H. Spiro, Jr.
5821 Colfax Avenue
Alexandria, Virginia 22311
Mr. Spiro has a distinguished career in business, academia, and public service.
He is currently Vice President and member of the board of directors of Crescent
Financial Corporation, Inc., Chairman of RHS Imprinted Products, Inc., and
provides consulting on matters of marketing and management. He is also Vice
President of the American Security Council Foundation. He served as Under
Secretary of the Army.
Mr. Spiro graduated from Wheaton College, attended six universities, and earned
his Ph.D in Modern European History from the University of Edinburgh. Since
1986, he has served as a consultant to various businesses. He was National
Executive Director of the Reserve Officers Association of the U.S. from 1984 to
1986, President of Jacksonville University from 1964 to 1979 and Dean of the
College of Liberal Arts at Mercer University from 1960 to 1964. He has an
honorary Doctor of Science degree from Florida Institute of Technology and was
awarded Palmes Academicues by the President of France.
Throughout his career, he has served on numerous professional and civic
commissions and boards; published articles, editorials, essays and
contributions to Encyclopedia Americana; and edited a scholarly journal. His
naval career included service in destroyers in operations in the Pacific during
World War II, command of various Reserve units and retirement as a Rear Admiral
in 1978.
* Interested person (as defined in the Investment Company Act of 1940) of the
Fund.
STATEMENT OF ADDITIONAL INFORMATION -- PAGE 7
<PAGE> 31
Peter R. Goldschmidt
2706 N. Randolph Street
Arlington, Virginia 22207
Mr. Goldschmidt has a broad background in business and legislative affairs and
has recently resumed his marketing consulting practice. Since August 1996, he
has served as a marketing consultant to D'Brit Corporation, an internet
provider. From May 1994 through July 1996 he was Sales Manager of GAMER Corp.,
a wholly owned subsidiary of Iverson Technology. In 1992 and 1993 he worked
with LDS Enterprises, a medical emergency communications company, and as a
consultant to corporate clients on matters of Federal Relations and domestic
and international marketing. In 1993 and 1994, he also worked with PIC, a
fund-raising company. From March 1990 to December 1991, he served as senior
advisor to Recovery America, a provider of natural solutions for addictions.
From August 1987 to December 1989, he served as a marketing consultant for
Advanced Tool Technologies, a company holding patents on a chemical die cutting
process. In 1986, he was Washington liaison for Campus Network. Previously, he
served the University of California as special assistant to the president for
federal relations and director of the University's Washington, D.C. office from
1968 until 1985.
From 1966 to 1968 he was a supervisory attorney in the Civil Rights Unit of the
Office of General Counsel for the U.S. Department of Health, Education and
Welfare. Prior to HEW, he was Assistant United States Attorney with the Justice
Department in the Northern District of California from 1961 to 1966, and from
1964 to 1966 was Chairman of the Civil Service Commission for Contra Costa
County, California. He was in private practice from 1959 until 1960 with a firm
in Frankfurt/Main, Germany.
Mr. Goldschmidt earned a B.S. Degree from the University of California,
Berkeley, and his J.D. from the University of California Hastings College of the
Law.
Allen B. Clark, Jr.
10602 Stone Canyon Road #164
Dallas, Texas 75230
The Honorable Allen B. Clark, Jr. is a Charter Financial Analyst and has served
as a fixed income and personal trust portfolio manager in the Trust Department
of a major Texas bank. His private business endeavors included presiding over
his own real estate investment company. His public service included being a
Special Assistant to Texas Governor Bill Clements.
From April 1996 to the present, he has been employed with the Department of
Veterans Affairs as a Veterans Liaison. From June 1994 to April 1996, he was
self employed in marketing and consulting. From June 1993 to June 1994, he was
employed in the mortgage lending department of First Fidelity Mortgage
Corporation. From January 1993 to June 1993, he was self employed as a
consultant. From August 1991 to January 1993, he served as an Assistant
Secretary and Director, National Cemetery System, of the Department of Veterans
Affairs in the Presidency of George Bush.
Upon graduation from West Point he was an officer with service in Vietnam in
Special Forces. He received an M.B.A. from Southern Methodist University.
The directors and officers of the Company as a group held less than 1%
of the Fund's outstanding shares on the date of this Statement of Additional
Information.
STATEMENT OF ADDITIONAL INFORMATION -- PAGE 8
<PAGE> 32
PURCHASE OF SHARES OF THE FUND
As stated in the Prospectus, shares of the Fund can be purchased
through broker-dealers who have sales agreements with the Fund's Distributor,
Dominion Capital Corporation. Shares of the Fund are sold at the net asset
value per share as determined at the close of business of the New York Stock
Exchange next occurring after the purchase order is received and accepted by
the Fund plus the applicable sales charge. The Prospectus contains detailed
information about the purchase of shares.
As indicated in the Prospectus under "Purchase of Shares - Certain
Purchases," certain directors, officers, full-time employees, and sales
representatives of the Company, the Advisor, the Administrator, the
Distributor, or any broker-dealer having a sales agreement with the Distributor
and certain affiliates of the foregoing and members of their immediate families
(i.e., spouse, children, siblings, parents and parents-in-law) may purchase
shares of the Fund at net asset value without the sales charge. This privilege
is offered to compensate these persons for their efforts on behalf of the Fund,
and to encourage them to continue their employment with the Fund and its
affiliates and to use their best efforts to promote the Fund's growth and
profitability.
NET ASSET VALUE DETERMINATION
As stated in the Prospectus, the net asset value of Fund shares is
determined once daily as of the close of business on the New York Stock
Exchange (currently 4:00 pm. New York City time), Monday through Friday, except
on (i) days on which changes in value of the Fund's portfolio securities will
not materially affect the net asset value of shares of the Fund; (ii) days
during which no shares of the Fund are tendered for redemption and no order to
purchase shares of the Fund are received; or (iii) customary national holidays
on which the New York Stock Exchange is closed. The per share net asset value
of the Fund is determined by dividing the total value of the securities and
other assets, less liabilities, by the total number of shares outstanding. In
determining asset value, securities listed on the national securities exchanges
and the NASDAQ National Market are valued at the closing prices on such
markets, or if such a price is lacking for the trading period immediately
preceding the time of determination, such securities are valued at their
current bid price. Other securities which are traded on the over-the-counter
market are valued at bid price. Other securities for which quotations are not
readily available, and other assets, are valued at fair value determined in
good faith by the Advisor under the supervision of the Company's Board of
Directors.
THE DISTRIBUTOR
The Fund has entered into a Distribution Agreement with Dominion
Capital Corporation (the "Distributor"), 5000 Quorum Drive, Suite 620, Dallas,
Texas 75240, pursuant to which the Distributor performs services and bears the
expenses relating to the offering of Fund shares for sale to the public. As
compensation for the services provided and expenses borne by the Distributor,
the Fund pays the Distributor a sales load as described in the Prospectus. The
sales load received by the Distributor for Fund shares sold for the years ended
June 30, 1994, 1995 and 1996 was approximately $85,168, $39,036, and $375,308,
respectively.
Shares of the Fund are offered on a continuous basis through the
Distributor. Pursuant to the Distribution Agreement, the Distributor serves as
exclusive agent for the sale of the shares of the Fund and has agreed to use
its best efforts to sell such shares, either directly or through securities
dealers.
REDEMPTION OF SHARES
Shareholders of the Fund may require the Fund to redeem their shares
at any time at a price equal to the net asset value per share next determined
following receipt of a valid redemption request by the Fund. Subject to certain
exceptions set forth in the Prospectus, payment will be made within seven days
STATEMENT OF ADDITIONAL INFORMATION -- PAGE 9
<PAGE> 33
of the Fund's receipt of a valid redemption request. The value of the Fund
shares on redemption may be more or less than the shareholder's cost, depending
upon the market value of the portfolio securities at the time of redemption.
The Prospectus describes the requirements and procedures for the redemption of
shares.
Shares are normally redeemed for cash, although the Fund retains the
right to redeem its shares in kind under unusual circumstances, in order to
protect the interests of the remaining shareholders, by the delivery of
securities selected from its assets at its discretion. The Fund has, however,
elected to be governed by Rule 18f-1 under the Investment Company Act of 1940
pursuant to which the Fund is obligated to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the net asset value of the Fund during any
90-day period for any one shareholder. Should redemptions by any shareholder
exceed such limitation, the Fund will have the option of redeeming the excess
in cash or in kind. If shares are redeemed in kind, the redeeming shareholder
might incur brokerage costs in converting the assets to cash. The method of
valuing securities used to make redemptions in kind will be the same as the
method of valuing portfolio securities described under the Section "Net Asset
Value Determination," and such valuation will be made as of the same time the
redemption price is determined.
The right to require the Fund to redeem its shares may be suspended,
or the date of payment may be postponed, whenever (1) trading on the New York
Stock Exchange is restricted, as determined by the Securities and Exchange
Commission, or the New York Stock Exchange is closed except for holidays and
weekends, (2) the Securities and Exchange Commission permits such suspension
and so orders, or (3) an emergency exists as determined by the Securities and
Exchange Commission so that disposal of securities and determination of net
asset value is not reasonably practicable.
INCOME DIVIDENDS, CAPITAL GAINS AND
DISTRIBUTIONS
It is the policy of the Fund to make at least annual distributions of
substantially all of its investment income and at least annual distributions of
any net realized capital gains. Distributions reflecting capital gains realized
during each fiscal year ended June 30 normally are declared and payable to
shareholders in the subsequent fiscal year. Distributions reflecting investment
income received during the fiscal year ended June 30 normally are made during
the current and subsequent fiscal year.
All investors who do not elect otherwise will have all of their income
dividends and capital gains distributions reinvested in additional Fund shares,
at net asset value as described under "Distributions and Taxes-Reinvestment of
Distributions" in the Prospectus. Shareholders who desire to receive their
dividends and distributions in cash may so elect on their account applications
or by written notice to the Fund.
CUSTODIAN
May Financial Corporation, 8333 Douglas Avenue, Dallas, Texas 75240,
is the custodian of the Fund. May Financial Corporation deposits securities of
the Fund with a trust company which acts as a securities depository. The
custodian, among other things, attends to the collection of dividends and
payment for and collection of proceeds of securities bought and sold by Fund.
LEGAL COUNSEL AND INDEPENDENT AUDITORS
Counsel to the Fund is Frederick C. Summers, III, a Professional
Corporation, Attorney at Law, 3700 Bank One Center, 1717 Main Street, Dallas,
Texas 75201-4639.
The independent auditor for the Fund is Kinder & Wyman, P.C., 511 E.
John Carpenter Freeway, Suite 200, Irving, Texas 75062-3920.
STATEMENT OF ADDITIONAL INFORMATION -- PAGE 10
<PAGE> 34
REGISTRATION STATEMENT
There has been filed with the Securities and Exchange Commission,
Washington, D.C. a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this Statement of Additional
Information relates. If further information is desired with respect to the Fund
or such securities, reference is made to the Registration Statement and the
exhibits filed as a part thereof.
STATEMENT OF ADDITIONAL INFORMATION -- PAGE 11
