<PAGE>
Registration No. 33 - 49808
Investment Company Act File No. 811-6727
As filed with the Securities and Exchange Commission on August 29, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
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Post-Effective Amendment No. 7 [X]
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and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 8
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(Check Appropriate Box or Boxes)
DOMINION FUNDS. INC.
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(Exact Name of Registrant as Specified in Charter)
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
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(Address of principal Executive Offices)
(972) 385-9595
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(Registrant's Telephone Number, Including Area Code)
Douglas W. Powell
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
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(Name and Address of Agent for Service)
Copies to:
Frederick C. Summers, III, Esq.
1400 St. Paul Place
750 North St. Paul Street
Dallas, Texas 75201
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
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X on September 15, 1997 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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on (date) pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of Rule 485
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If appropriate, check the following box: [ ] This post-effective amendment
designates a new effective date for a previously filed post-effective amendment.
Declaration Pursuant to Rule 24f-2
Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940, and will file a Rule 24f-2 Notice with the Commission on or prior to
December 31, 1997 for its fiscal year ending June 30, 1997
<PAGE>
THE DOMINION INSIGHT GROWTH FUND
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(a) OF REGULATION C
UNDER THE SECURITIES ACT OF 1933)
ITEM NUMBER OF LOCATION OR CAPTION
FORM N-1A IN PROSPECTUS
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PART A INFORMATION REQUIRED
IN A PROSPECTUS
Item I. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary; Fund Expenses
Item 3. Condensed Financial Financial Highlights
Information
Item 4. General Description The Fund; Investment Objective and
of Registrant Policies
Item 5. Management of the Fund Fund Expenses And
Example; Investment Advisory And
Other Services; Shareholder Services
and Reports
Item 5A. Management's Discussion of
Fund Performance Financial Highlights
Item 6. Capital Stock and Distributions and Taxes; Shareholder
Other Securities Services And Reports; Purchase of
Shares - Investments By Tax-Sheltered
Retirement Plans
Item 7. Purchase of Securities Purchase of Shares; Investment
Being Offered Advisory and Other Services
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Pending Legal Proceedings Not Applicable
<PAGE>
ITEM NUMBER OF LOCATION OR CAPTION IN STATEMENT
FORM N-1A OF ADDITIONAL INFORMATION
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PART B INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information The Fund and the Company
and History
Item 13. Investment Objectives Investment Policies and Restrictions
and Policies
Item 14. Management of the Fund Executive Officers and Directors
Item 15. Control Persons and Executive Officers and Directors
Principal Holders of
Securities
Item 16. Investment Advisory and Contained in Prospectus under
Other Services caption: "Investment Advisory and
Other Services"; Custodian; Legal
Counsel and Independent Auditors;
Management and Advisory Services;
Executive Officers and Directors; The
Distributor
Item 17. Brokerage Allocation Portfolio Transactions
and Other Practices and Brokerage
Item 18. Capital Stock and The Fund and the Company
Other Securities
Item 19. Purchase, Redemption Contained in Prospectus under
and Pricing of Securities captions: "Purchase of Shares"
Being Offered and "Redemption of Shares"
Item 20. Tax Status Contained in Prospectus under
captions: "Purchase of Shares -
Investments By Tax-Sheltered
Retirement Plans" and "Distributions
and Taxes - Tax Information"
Item 21. Underwriters The Distributor
Item 22. Calculations of Not Applicable
Performance Data
Item 23. Financial Statements Independent Auditors' Report;
Financial Statements
<PAGE>
PART C OTHER INFORMATION
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of this Registration Statement.
<PAGE>
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 September 15, 1997, 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.
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DOMINION CAPITAL CORPORATION
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
(972) 385-9595
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This Prospectus is dated September 15, 1997.
<PAGE>
THE DOMINION INSIGHT GROWTH FUND
PROSPECTUS SUMMARY
SHARES OFFERED Shares of Common Stock, $.00l par value per share.
OFFERING PRICE,
SALES CHARGE AND
MINIMUM PURCHASE The public offering price is equal to net asset value plus a
sales charge equal to 3.5% of the public offering price
(3.63% of the net amount invested), 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
AND POLICIES; RISK
FACTORS The Fund's only investment objective is growth of capital.
There is no assurance that such objective 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
AND ADVISORY FEE Insight Capital Management, Inc. (the "Advisor") is the
Fund's investment advisor. The annual 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
FROM THE FUND Distributions from net investment income and net capital
gains are declared and paid at least annually. See
"Distributions and Taxes."
REDEMPTIONS 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>
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, 1997, except as
otherwise noted below.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)(1) 3.5%
Maximum Deferred Sales Load None
Maximum Sales Load Imposed on Reinvested Dividends None
Redemption Fees(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) 1.30%
Administrative Fee(3,5) 1.25%
Amortization of Organization Costs .05%
Total Fund Operating Expenses 2.30%
EXAMPLE:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
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 $104 $154 $289
</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, 1997, 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>
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>
FISCAL PERIOD ENDED JUNE 30,
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993(1)
----------- ----------- ----------- ----------- ------------
PER SHARE INCOME AND CAPITAL CHANGES FOR A SHARE
OUTSTANDING DURING THE PERIOD (2):
Net asset value, beginning of period $ 19.04 $ 13.53 $ 10.24 $ 10.97 $ 9.79
----------- ----------- ----------- ----------- ------------
Income From Investment Operations:
Net investment loss (0.33) (0.34) (0.24) (0.24) (0.18)
Net realized and unrealized gain
(loss) on investments (1.16) 7.39 4.33 (0.49) 1.36
----------- ----------- ----------- ----------- ------------
Total income (loss) from investment
operations (1.49) 7.05 4.09 (0.73) 1.18
----------- ----------- ----------- ----------- ------------
Less Distributions:
Distributions from net realized gains (1.76) (1.54) (0.80) - -
----------- ----------- ----------- ----------- ------------
Net asset value, end of period $ 15.79 $ 19.04 $ 13.53 $ 10.24 $ 10.97
----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ------------
Total return (3)(4) (8.21%) 54.32% 42.25% (6.65%) 18.08%
----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 22,944 $ 27,908 $ 8,089 $ 6,271 $ 5,968
Ratio of expenses to average daily net assets 2.30% 2.31% 2.38% 2.37% 2.10%
Ratio of net investment loss to average net assets 2.04% 2.03% 2.16% 2.01% 1.83%
Portfolio turnover rate 261.05% 172.87% 210.23% 140.87% 135.40%
Average brokerage commission rate for the underlying
portfolio (5) $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10
</TABLE>
(1) 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.
(2) Per share information has been calculated using the average number of
shares outstanding.
(3) Sales load is not reflected in total return.
(4) Total return is annualized.
(5) Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold, and are not
separately reflected in the Fund's Statement of Operations. The rate is
calculated by dividing the total brokerage commissions paid on applicable
purchases and sales of portfolio securities for the period by the total
number of related shares purchased and sold.
4
<PAGE>
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 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
5
<PAGE>
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 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
6
<PAGE>
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, 1997, 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. 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.
7
<PAGE>
PERFORMANCE
During the fiscal year ended June 30, 1997, the shares of the Fund
experienced a total return of -8.21%, assuming reinvestment of the capital gains
distribution of $1.755 per share that was paid during the fiscal year. The
Fund's return is attributable to broad selling in the mid and small
capitalization market in the third quarter of 1996 and the first quarter of
1997. The Fund's portfolio was weighted towards technology companies with an
average rate of earnings growth of approximately 30%. Notwithstanding, the
selling pressure in this market segment exacerbated the effect of broader based
sector rotation.
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.
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]
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.
8
<PAGE>
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 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>
<S> <C> <C> <C>
Sales Charge as % Reallowance to Dealers Sales Charge as %
of Offering Price as a % of Offering Price of Amount Invested
------------------ ------------------------ ------------------
Less than $100,000 3.50% 3.00% 3.63%
$100,000 but less than $200,000 2.50% 2.00% 2.56%
$200,000 or more 1.50% 1.00% 1.52%
</TABLE>
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
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<PAGE>
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.
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
10
<PAGE>
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 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.
11
<PAGE>
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.
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
12
<PAGE>
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 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.
13
<PAGE>
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 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.
14
<PAGE>
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.
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
15
<PAGE>
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 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 quarterly
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.
16
<PAGE>
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
1400 St. Paul Place
750 North St. Paul Street
Dallas, Texas 75201
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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 OF CONTENTS PAGE
Prospectus Summary 2
Fund Expenses 3
Financial Highlights 4
The Fund 5
Investment Objective and Policies;
Risk Factors 5
Investment Advisory and
Other Services 6
Performance 8
Purchase of Shares 9
Redemption of Shares 12
Exchange Privilege 4
Distributions and Taxes 14
Shareholder Services and Reports 16
- --------------------------------------
THE DOMINION INSIGHT
GROWTH FUND
- --------------------------------------
- --------------------------------------
PROSPECTUS
September 15, 1997
DOMINION CAPITAL CORPORATION
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
<PAGE>
THE DOMINION FUNDS, INC. MAIL CHECK AND COMPLETED APPLICATION TO:
ACCOUNT APPLICATION
Dominion Funds, Inc.
IF YOU NEED ASSISTANCE IN P.O. Box 26305
COMPLETING THIS APPLICATION, Richmond, Virginia 23260
PLEASE CALL 1-800-628-4077 OR
YOUR BROKER.
1. YOUR ACCOUNT REGISTRATION (Please Print)
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<S> <C>
(Check only one box here to indicate type of registration. Circle the Social Security Number to be used for tax purposes. If no
number circled, the first number provided will be used.)
/ / INDIVIDUAL 1. ____________________________________________________________________________________________________
(USE LINE 1) First Name Initial Last Name Social Security Number
AND, IF ANY: 2. ____________________________________________________________________________________________________
Right of survivorship presumed, unless tenancy in common indicated. Social Security Number
/ / JOINT REGISTRANT 3. _________________________________________________________________________________ as Custodian for
(USE LINE 2) Custodian's Name
OR 4. ________________________________________________________________________________________under the
Minor's Name
/ / GIFT TO A MINOR 5. _________________Uniform Gifts to Minors Act. _____________________________________________________
(USE LINES 3, 4 & 5) State Minor's Social Security Number
/ / CORPORATIONS, 6. ____________________________________________________________________________________________________
PARTNERSHIPS, Name of Corporation or Other Entity. If Trust, include date of trust instrument. Taxpayer Ident. No.
Trusts & Others
(USE LINES 6 & 7) 7. ___________________________________________________________________________________________________
Name of Trustees to be in Registration Date of Trust Agreement
2. YOUR ADDRESS (Please Print)
________________________________ _____________________________________
Street Address Citizenship if not U.S
________________________________ (____)________________________________
City Area Code Home Phone No.
________________________________ (____)________________________________
State Zip Area Code Business Phone No.
3. DUPLICATE ADDRESS (Please Print)
________________________________________________________
Street Address
________________________________________________________
City State Zip
4. YOUR INVESTMENT Minimum $5,000 ($2,000 for IRA's)
(You may elect to utilize both options to save time at a later date.)
/ / BY MAIL: Enclosed is a check payable to Dominion Insight Growth Fund in the amount of $________.
/ / BY MAIL: Enclosed is a check payable to Cash Account Trust in the amount of $________.
/ / BY WIRE: Call 1-800-628-4077 to obtain account number and wiring instructions. $________.
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5. DISTRIBUTION OPTION PLAN - If no box is checked, all distributions will be reinvested.
/ / All distributions to be paid in cash. EXPEDITED DISTRIBUTION SERVICE*
/ / All distributions to be reinvested.
/ / Income dividends will be paid in cash & capital gains distributions
reinvested. (COMPLETE BANK INFORMATION IN SECTION 6A)
/ / Capital gains distributions will be paid in cash & dividends reinvested. Dividend Payment Authorization
/ / I authorize the Fund to mail any cash
distributions to my bank account.
* ATTACH COPY OF VOIDED UNSIGNED CHECK OR
DEPOSIT SLIP FROM YOUR BANKING INSTITUTION.
6. SHAREHOLDER PRIVILEGES - Please Print or Type
A AUTOMATIC INVESTMENT PLAN (Please check box if you wish to establish)
/ / I(We) authorize the Fund to deduct $____________ from my (our) bank account* on or about the
/ / 5th day of each month / / 20th day of each month
(20th will be selected if no box is checked)
Set up charge: / / Please debit my account $5.00 / / I enclose a check for $5.00
BANK ACCOUNT INFORMATION*
______________________________________________________________________________________________________________
Depositor's Bank Name of Depositor Joint Depositor Account Number
______________________________________________________________________________________________________________
Bank Address City State Zip Code Bank Number
______________________________________________________________________________________________________________
Depositor's Signature Date Joint Depositor Signature (if any) Date
/ / Checking / / Savings / / Other * ATTACH YOUR VOIDED UNSIGNED CHECK OR PREPRINTED DEPOSIT SLIP.
As a convenience to me, you are hereby requested and authorized to pay and charge to my account debits drawn on my account as
indicated above. This authority is to remain in effect until revoked by me in writing or by telephone instructions. Until you
actually receive such notice, I agree you shall be fully protected in honoring any such debit. I further agree that if any such
debit be dishonored, whether with or without cause and whether intentionally or inadvertently, you shall be under no liability
whatsover.
________________________________________
Signature of Investor
________________________________________
Signature of Investor (if joint account)
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<PAGE>
B TELEPHONE TRANSACTION PRIVILEGES
/ / Telephone Redemption Privilege: I(We) authorize the Fund, upon
receipt of instructions received by telephone from any person, to
redeem shares from my (our) account; to make checks payable as account
is registered and mail to address of record or wire the proceeds of
redemption to my (our) commercial bank account as indicated in the
Bank Account Information following Subsection A above.
/ / Telephone Exchange Privilege: I hereby authorize the Fund to redeem,
upon my request, shares from my account and transmit the proceeds
directly to the Cash Account Trust. Call 1-800-628-4077 to switch
from the Dominion Insight Growth Fund into the Cash Account Trust.
/ / Telephone Purchase Privilege (New shares will carry the same
registration as original shares.)
I(We) understand and agree to hold harmless the Fund, its respective investment
advisors, distributors and transfer agents, and the officers, directors,
employees and agents thereof against any liability, damage, expense, claim or
loss, including reasonable costs and attorney's fees, resulting from acceptance
of, or acting or failure to act upon, this Authorization.
7. DEALERS AND ADVISORS ONLY
(If certification below is executed duplicate transaction advices will be sent
to the address indicated below.)
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_________________________________________________________________________________________________________________
Print Name Telephone Number Dealer Number if known
_________________________________________________________________________________________________________________
Company Name
_________________________________________________________________________________________________________________
Address
_________________________________________________________________________________________________________________
City State Zip Code
I would like to receive duplicate transaction statements: _______________________________________
Registered Representative's Signature
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8. YOUR SIGNATURE
The undersigned warrants that he/she/it has full authority and is of legal age
to purchase shares of the Fund. The Undersigned has received and read a current
Prospectus of the Fund and agrees to its terms. The Fund's Transfer Agent will
not be liable for acting upon instructions it believes are genuine. Under
penalties of perjury, the undersigned whose Social Security (Tax I.D.) Number is
shown above certifies that (i) the number is his/her/its correct taxpayer
identification number, and (ii) the undersigned is not subject to backup
withholding because: (a) the undersigned is exempt from backup withholding, or
(b) the undersigned has not been notified by the Internal Revenue Service (IRS)
that he/she/it is subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified he/she/it that
he/she/it is no longer subject to backup withholding.
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<S> <C> <C>
X ____________________________ X_____________________________ _______________________
Individual(or Custodian) Joint Registration, if any Date
X ____________________________ X_____________________________ _______________________
Corporate Officer, Trustee, etc. Title Date
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 15, 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 September 15, 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>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
The Fund and the Company. . . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Policies and Restrictions. . . . . . . . . . . . . . . . . . . 1
Management and Advisory Services. . . . . . . . . . . . . . . . . . . . . 3
Portfolio Transactions and Brokerage. . . . . . . . . . . . . . . . . . . 4
Executive Officers and Directors. . . . . . . . . . . . . . . . . . . . . 5
Purchase of Shares of the Fund. . . . . . . . . . . . . . . . . . . . . . 7
Net Asset Value Determination . . . . . . . . . . . . . . . . . . . . . . 7
The Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Redemption of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Income Dividends, Capital Gains and Distributions . . . . . . . . . . . . 8
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Legal Counsel and Independent Auditors. . . . . . . . . . . . . . . . . . 9
Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Independent Auditor's Report. . . . . . . . . . . . . . . . . . . . . . . F-1
Statement of Assets and Liabilities (June 30, 1997) . . . . . . . . . . . F-2
Investments in Securities (June 30, 1997) . . . . . . . . . . . . . . . . F-3
Statement of Operations (Year ended
June 30, 1997). . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Statement of Changes in Net Assets (Years ended
June 30, 1997 and 1996) . . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements (June 30, 1997) . . . . . . . . . . . . . . F-7
<PAGE>
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 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.
1
<PAGE>
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.
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.
2
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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 $70,672, $138,387, and $254,477, respectively, for the fiscal years ended
June 30, 1995, 1996 and 1997.
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 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 $88,339, $172,983, and $318,097,
respectively, for the fiscal years ended June 30, 1995, 1996 and 1997. 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.
3
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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 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, 1997, 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 approximately 42.5%
each by C. Dewey Elliott, III and Douglas W. Powell, officers and directors of
the Fund. The Fund paid $96,531, $153,876, and $371,206, respectively, in
brokerage commissions in connection with its portfolio business during the
fiscal years ended June 30, 1995, 1996 and 1997, 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.
4
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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, Inc., 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.
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.
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, Inc. 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.
* Interested person (as defined in the Investment Company Act of 1940) of the
Fund.
5
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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.
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. From September 1996 to
the present, he has been an Account Executive with Cartridge Technology Network.
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 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 for 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.
6
<PAGE>
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 and 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.
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.
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
7
<PAGE>
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, 1995, 1996 and 1997 was approximately $39,036, $375,308, and $115,746,
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 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.
8
<PAGE>
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, 1400 St. Paul Place, 750 North St. Paul Street,
Dallas, Texas 75201.
The independent auditor for the Fund is Kinder & Wyman, P.C., 511 E. John
Carpenter Freeway, Suite 200, Irving, Texas 75062-3920.
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, as it may
be amended from time to time, and the exhibits filed as a part thereof.
9
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders
Dominion Insight Growth Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of Dominion Insight Growth Fund as of
June 30, 1997, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the years in the four-year
period ended June 30, 1997 and the period October 27, 1992 (effective date of
the fund Registration Statement under the Securities Act of 1933) to June 30,
1993. These financial statements and the financial highlights are the
responsibility of fund management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1997, by correspondence with the custodian and broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dominion Insight Growth Fund as of June 30, 1997, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for the periods stated in
the first paragraph above, in conformity with generally accepted accounting
principles.
/s/ Kinder & Wyman
KINDER & WYMAN, P.C.
Irving, Texas
July 18, 1997
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
ASSETS
Investments in securities, at value $ 21,994,912
(identified cost $16,822,485)
Cash 504,688
Receivables
Investment securities sold 481,332
Capital shares sold 483
Dividends and interest 5,349
Organization costs, net 6
-------------
TOTAL ASSETS $ 22,986,770
-------------
-------------
LIABILITIES
Accrued investment advisory fee $ 18,999
Accrued administrative fee 23,741
-------------
TOTAL LIABILITIES 42,740
-------------
NET ASSETS $ 22,944,030
-------------
-------------
Capital shares outstanding 1,453,179
Net asset value and offering price per share
Net asset value per share $ 15.79
-------------
-------------
Offering price per share $ 16.36
-------------
-------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 1997
Market Percent of
Common Stocks Shares Value Total Assets
- ------------- ---------- ---------- ------------
Commercial Services - Printing
Consolidated Graphic (a) 13,100 $ 546,925 2.38%
---------- ------------
Computer - Memory Devices
Smart Modular Tech (a) 17,150 578,813 2.52
---------- ------------
Computer - Mini/Micro
Compaq (a) 6,500 645,125 2.81
---------- ------------
Computer - Services
Data Dimensions, Inc. (a) 19,500 429,000 1.87
---------- ------------
Computer - Software
Compuware Corp. (a) 31,200 1,489,800 6.48
McAfee Association (a) 11,650 735,406 3.20
Microsoft Corp. (a) 12,000 1,516,500 6.60
Peoplesoft Inc. (a) 22,800 1,202,700 5.23
---------- ------------
4,944,406 21.51
---------- ------------
Electronics - Measuring Instrument
Teradyne (a) 13,400 525,950 2.29
---------- ------------
Electronics - Semiconductors
Altera Corp. (a) 18,000 909,000 3.95
Applied Materials (a) 13,300 941,806 4.10
Microlinear (a) 30,000 315,000 1.37
Orbotech Ltd. (a) 22,300 710,813 3.09
Sanmine Corp. (a) 12,400 787,400 3.43
Semtech Corp. (a) 20,200 737,300 3.21
Texas Instruments 4,800 403,500 1.76
Vecco Instruments (a) 12,600 488,250 2.12
---------- ------------
5,293,069 23.03
---------- ------------
Food - Meat Products
Smithfields Foods (a) 12,200 750,300 3.26
---------- ------------
Insurance - Life
Conseco Inc. 11,900 440,300 1.91
---------- ------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 1997
Market Percent of
Common Stocks (continued) Shares Value Total Assets
- ------------------------- -------- ------------- ------------
Medical - Ethical Drugs
Medicis Pharmaceutical (a) 14,550 $ 725,681 3.16%
Teva Pharmaceutical ADR 7,800 505,050 2.20
---------- ------------
1,230,731 5.36
---------- ------------
Medical - Outpatient/Home Care
Rehabcare Group (a) 13,300 492,100 2.14
---------- ------------
Oil & Gas - Machinery/Equipment
Energy Ventures (a) 15,000 630,000 2.74
---------- ------------
Retail - Discount & Variety
Ninety-Nine Cents (a) 16,200 488,025 2.12
Tuesday Morning Corp (a) 27,000 543,375 2.36
---------- ------------
1,031,400 4.48
---------- ------------
Retail/Wholesale Computer
Dell Computer (a) 13,500 1,585,406 6.90
---------- ------------
Telecommunications - Equipment
Bright Point (a) 23,800 774,988 3.37
Teledata Comm (a) 20,100 690,938 3.01
Tellabs Inc. (a) 14,700 821,363 3.57
---------- ------------
2,287,289 9.95
---------- ------------
Transportation - Truck
Swift Transportation (a) 19,800 584,100 2.54
---------- ------------
Total Investments in Securities
(cost $16,822,485) $ 21,994,912 95.69%
---------- ------------
---------- ------------
NOTES:
(a) Presently non-income producing.
(b) Percentage of investments as shown is the ratio of the total
market value to total assets.
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
INVESTMENT LOSS
Investment income
Dividends $ 24,139
Interest 40,612
-------------
Total investment income 64,751
-------------
Expenses
Investment advisory fee 254,477
Administration fee 318,097
Amortization 9,541
-------------
Total expenses 582,115
-------------
NET INVESTMENT LOSS (517,364)
-------------
REALIZED LOSS AND UNREALIZED APPRECIATION ON INVESTMENTS
Net realized loss on investments in securities (2,607,737)
Net change in unrealized appreciation
of investments in securities 757,148
-------------
NET LOSS ON INVESTMENTS (1,850,589)
-------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ (2,367,953)
-------------
-------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996
CHANGE IN NET ASSETS FROM OPERATIONS 1997 1996
------------ ------------
Net investment loss $ (517,364) $ (281,524)
Net realized gain (loss) on investments (2,607,737) 3,556,449
Net change in unrealized appreciation 757,148 1,978,534
------------ ------------
Net increase (decrease) in net
assets resulting from operations (2,367,953) 5,253,459
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gains on investments (2,641,139) (1,003,817)
CAPITAL SHARE TRANSACTIONS 44,943 15,569,399
------------ ------------
Total increase (decrease) in net assets (4,964,149) 19,819,041
NET ASSETS
Beginning of year 27,908,179 8,089,138
------------ ------------
END OF YEAR (including undistributed
investment loss of $1,179,887
and $662,523, respectively) $22,944,030 $27,908,179
------------ ------------
------------ ------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS
Dominion Insight Growth Fund (Fund) is a separate series of shares of
common stock of Dominion Funds, Inc. (Company). The Company was
incorporated in the State of Texas in June of 1992. The Company is
registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. In addition, the
Fund is subject to various investment restrictions as set forth in the
Statement of Additional Information. The effective date of the Fund's
Registration Statement under the Securities Act of 1933 was October
27, 1992. The primary investment objective of the Fund is capital
appreciation. The Company may designate one or more series of common
stock. The only series currently designated is the Fund. 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.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of the assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
VALUATION OF SECURITIES
All securities are valued at the close of each business day.
Securities traded on national securities exchanges or in national
market systems are valued at the last quoted sales price. Securities
for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board of
directors.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the date the securities are
purchased or sold. Realized security gains and losses from security
transactions are reported on an identified cost basis. Dividend and
interest income is reported on the accrual basis.
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH
Cash is held in a credit interest account at May Financial
Corporation, a member of the Chicago Stock Exchange, Inc., bearing
interest at a variable rate. At June 30, 1997, the interest rate was
4.75%
ORGANIZATION COSTSCOSTS
Organization costs have been capitalized and are being amortized on a
straight-line basis over a period of five years. If any of the
initial shares are redeemed before all the organization costs have
been amortized, the proceeds will be reduced by the redeemed share's
prorata share of the then-unamortized organization costs, in the same
proportion as the number of shares redeemed bears to the total number
of initial shares outstanding.
INCOME TAXES
The Fund's policy is to continue to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its net taxable income, including any net
realized gain on investments, to its shareholders. Therefore, no
provision for income or excise taxes is required.
Net investment income (loss), net realized gains (losses) and the cost
of investments in securities may differ for financial statement and
income tax purposes. The character of distributions from net
investment income or net realized gains may differ from their ultimate
characterization for income tax purposes. At June 30, 1997, there
were no material differences. Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains were recorded
by the Fund.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends declared and paid from net investment income or net realized
gains are recorded on the ex-dividend date, distributed on the record
date and are reinvested in additional shares of the Fund at net asset
value or are payable in cash without any charge to the shareholder.
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - DISTRIBUTION TO SHAREHOLDERS
On November 30, 1996, a distribution of $1.76 aggregating $2,641,139
was declared from net realized gains from securities transactions.
The dividend was payable on December 2, 1996 to shareholders of record
as of November 29, 1996.
NOTE 3 - CAPITAL SHARE TRANSACTIONS
As of June 30, 1997, there were 1,000,000,000 shares of $.001 par
value capital stock authorized of which 200,000,000 shares are
classified as the Fund's series and the balance is unclassified. As
of June 30, 1997, capital paid-in aggregated $21,559,165.
Transactions in shares of capital stock for the years ended June 30,
1997 and June 30, 1996 are as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
------------------------ --------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- --------- ----------- ------------
Shares sold 376,369 912,218 $ 6,333,645 $ 16,297,454
Shares issued in
reinvestment of
dividends 152,678 61,981 2,508,498 987,344
--------- --------- ----------- ------------
529,047 974,199 8,842,143 17,284,798
Shares redeemed 541,389 106,734 8,797,200 1,715,399
--------- --------- ----------- ------------
Net increase/(decrease) (12,342) 867,465 $ 44,943 $ 15,569,399
--------- --------- ----------- ------------
--------- --------- ----------- ------------
</TABLE>
NOTE 4 - SECURITIES TRANSACTIONS
Cost of purchases and sales of securities (excluding short-term
obligations) aggregated $63,693,444 and $66,455,371, respectively, for
the year ended June 30, 1997. The cost of securities for financial
statement and income tax purposes was $16,822,485 at June 30, 1997.
Net loss on investments in securities for the year ended June 30, 1997
was $1,850,589 for financial statement and income tax purposes. All
security transactions were in long transactions. As of June 30, 1997,
the aggregate unrealized appreciation and depreciation of securities
was as follows:
Unrealized appreciation $ 5,666,370
Unrealized depreciation (493,943)
-------------
Net unrealized appreciation $ 5,172,427
-------------
-------------
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (Advisory Agreement)
with Insight Capital Management, Inc. (Advisor) to act as its
investment advisor. The Advisor also serves as investment advisor to
certain private accounts. The Advisor's only previous experience in
advising a mutual fund is advising the Fund. The Advisor provides the
Fund with investment advice and recommendations consistent with the
Fund's investment objective, policies and restrictions, and supervises
the purchase and sale of investment 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.
The Fund has an Administration Agreement with Dominion Institutional
Services Corporation (Administrator). Pursuant to the Administration
Agreement, and subject to the authority of the board of directors of
the Fund, 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 providing 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.
The Fund has a Distribution Agreement with Dominion Capital
Corporation (Distributor). Pursuant to the Distribution Agreement,
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. Sales charges for
distributing fund shares were $115,746 for the year ended June 30,
1997.
During the year ended June 30, 1997, all orders for the Fund's
securities transactions were placed through the Distributor, and it is
expected that the Advisor will continue to place such orders with the
Distributor. Commissions charged by Distributor for executing
security transactions were $371,206 for the year ended June 30, 1997.
Certain directors and officers of the Company are also directors,
officers and/or employees of the Administrator and the Distributor.
<PAGE>
DOMINION INSIGHT GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FISCAL PERIOD ENDED JUNE 30,
1997 1996 1995 1994 1993 (1)
-------- -------- -------- -------- --------
PER SHARE INCOME AND CAPITAL CHANGES
FOR A SHARE OUTSTANDING DURING THE
PERIOD (2):
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.04 $ 13.53 $ 10.24 $ 10.97 $ 9.79
-------- -------- -------- -------- --------
Income (loss) from investment operations:
Net investment loss (0.33) (0.34) (0.24) (0.24) (0.18)
Net realized and unrealized gain
(loss) on investments (1.16) 7.39 4.33 (0.49) 1.36
-------- -------- -------- -------- --------
Total income (loss) from investment
operations (1.49) 7.05 4.09 (0.73) 1.18
-------- -------- -------- -------- --------
Less distributions:
Distributions from net realized gains (1.76) (1.54) (0.80) - -
-------- -------- -------- -------- --------
Net asset value, end of period $ 15.79 $ 19.04 $ 13.53 $ 10.24 $ 10.97
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total return (3)(4) (8.94%) 54.32% 42.25% (6.65%) 18.08%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $ 22,944 $ 27,908 $ 8,089 $ 6,271 $ 5,968
Ratio of expenses to average
daily net assets 2.30% 2.31% 2.38% 2.37% 2.10%
Ratio of net investment loss to
average net assets 2.04% 2.03% 2.16% 2.01% 1.83%
Portfolio turnover rate 261.05% 172.87% 210.23% 140.87% 135.40%
Average brokerage commission rate for
the underlying portfolio (5) $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10
</TABLE>
(1) 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.
(2) Per share information has been calculated using the average number of
shares outstanding.
(3) Sales load is not reflected in total return.
(4) Total return is annualized.
(5) Brokerage commissions paid on portfolio transactions increase the cost of
securities purchased or reduce the proceeds of securities sold, and are not
separately reflected in the Fund's Statement of Operations. The rate is
calculated by dividing the total brokerage commissions paid on applicable
purchases and sales of portfolio securities for the period by the total
number of related shares purchased and sold.
The accompanying notes are an integral part of these financial highlights.
<PAGE>
DOMINION INSIGHT GROWTH FUND
OTHER INFORMATION
PART C
Item 24 FINANCIAL STATEMENTS AND EXHIBITS
List all financial statements and exhibits filed as part of the Registration
Statement.
(a) Financial Statements:
Statement of Assets and Liabilities (June 30, 1997)
Investments in Securities (June 30, 1997)
Statement of Operations (Year ended June 30, 1997)
Statement of Change in Net Assets (Years ended June 30, 1997
and 1996)
Notes to Financial Statements (June 30, 1997)
The foregoing financial statements are included in the Statement of
Additional Information.
(b) Exhibits:
Exhibit 1 Articles of Incorporation*
Exhibit 2 Bylaws*
Exhibit 3 Not Applicable
Exhibit 4 Specimen Share Certificate*
Exhibit 5 Investment Advisory Agreement*
Exhibit 6(a) Distribution Agreement*
(b) Selected Dealer Agreement*
Exhibit 7 Not Applicable
Exhibit 8(a) Custody Agreement With May Financial Corporation*
(b) Participant's Agreement with The Depository Trust Company*
Exhibit 9(a) Administration Agreement*
(b) Transfer Agent Agreement*
(c) Omnibus Account Services Agreement*
Exhibit 10 Opinion and Consent of Brady & Summers, P.C.*
Exhibit 11 Consent of Kinder & Wyman, P.C.
Exhibit 12 Not Applicable
Exhibit 13 Subscription Agreement*
Exhibit 14 Not Applicable
Exhibit 15(a) Distribution Plan*
(b) Dealer Assistance Agreement*
(c) Bank Shareholder Service Agreement*
Exhibit 16 Not Applicable
*Previously provided
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Item 25 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
C. Dewey Elliott, III and Douglas W. Powell each own approximately 42.5%
of the outstanding stock of the Distributor and 50% of the outstanding stock
of the Administrator, and are executive officers and directors of such
companies. Both the Distributor and the Administrator are Texas
corporations. Such persons are also executive officers and directors of the
Registrant, although such persons do not purport to "control" the Registrant
except to the extent such positions as executive officers and directors could
otherwise be deemed to be in "control" of the Registrant.
Item 26 NUMBER OF HOLDERS OF SECURITIES
The number of record holders of shares of each class of securities of
Registrant as of June 30, 1997 was as follows:
Title of Class Number of Record Holders
-------------- ------------------------
Common Stock, Dominion
Insight Growth Fund series 1222
Item 27 INDEMNIFICATION
Provisions of the Registrant's Articles of Incorporation and Bylaws
relating to indemnification of the Registrant's directors and employees are
included as Exhibits 1 and 2 to the Registration Statement. Insofar as
indemnification for liability arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 28 BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
Insight Capital Management, Inc. (the "Advisor") serves as the investment
advisor of the Registrant. The Advisor also performs investment advisory
services for individual and pension and profit sharing accounts.
James O. Collins has served as Chairman, Chief Executive Officer and
Portfolio Manager of Insight Capital Research and Management, Inc. since he
founded the company in 1988. He is also
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Chairman, CEO and Portfolio Manager of Insight Capital Management, Inc., the
publisher of the OTC Insight newsletter, and has served in that capacity
since founding the company in 1983.
The principal business addresses of both the Advisor and Insight Capital
Research and Management, Inc. is 1656 North California Blvd., Suite 300, Walnut
Creek, California 94596.
Item 29 PRINCIPAL UNDERWRITERS
Dominion Capital Corporation (the "Distributor") serves as the principal
underwriter of the Registrant, and does not serve as principal underwriter,
depositor or investment advisor for any other investment company.
The following information is provided with respect to each director or
officer of the Distributor:
Name and Principal Positions and Office Position and Office
Business Address with Underwriter with Registrant
---------------- -------------------- ---------------
Douglas W. Powell Chairman, Chief Chairman, Chief
5000 Quorum Drive Executive Officer Executive Officer
Suite 620
Dallas, Texas 75240
C. Dewey Elliott, III President, Director President, Director
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
Item 30 LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained as follows:
(a) Shareholder records are maintained by the Registrant's transfer
agent, Fund Services, Inc., 1500 Forest Avenue, Suite 111, Richmond, Virginia
23229.
(b) All other accounting records of the Registrant are maintained at the
offices of Commonwealth Fund Accounting, 1500 Forest Avenue, Suite 111,
Richmond, Virginia 23229.
Item 31 MANAGEMENT SERVICES
The Registrant has entered into a custody agreement with May Financial
Corporation, pursuant to which it acts as custodian and clearing agent for
the Fund. May Financial Corporation has in turn entered into a Participant's
Agreement with The Depository Trust Company, pursuant to
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which it acts as depository for the Fund's securities.
The Registrant has no other management-related service contract which is
not discussed in Part A or Part B of this form and which is required to be
disclosed in this Item 31.
Item 32 UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes, if requested to do so by the holders of at
least 10% of the Registrant's outstanding shares, to call a meeting for the
purpose of voting upon the question of removal of a director or directors and
to assist in communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this amended
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Dallas and State of Texas, on the
27th day of August, 1997.
DOMINION FUNDS, INC.
By: /s/ Douglas W. Powell
---------------------
Douglas W. Powell, Chairman of the Board
Pursuant to the Requirements of the Securities Act of 1933, this Amended
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Douglas W. Powell Chairman of the Board and Chief August 27, 1997
- --------------------------- Executive Officer (Principal Executive
Douglas W. Powell Officer and Principal Financial
Accounting Officer)
/s/ C. Dewey Elliott, III President and Director August 27, 1997
- ---------------------------
C. Dewey Elliott, III
Director _________, 1997
- ---------------------------
Robert H. Spiro, Jr.
/s/ Peter R. Goldschmidt Director August 27, 1997
- ---------------------------
Peter R. Goldschmidt
Director _________, 1997
- ---------------------------
Allen B. Clark, Jr.
</TABLE>
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INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------ -------
1 Articles of Incorporation*
2 Bylaws*
4 Specimen Share Certificate*
5 Investment Advisory Agreement*
6(a) Distribution Agreement*
6(b) Selected Dealer Agreement*
8(a) Custody Agreement with May Financial Corporation*
8(b) Participant's Agreement with The Depository Trust Company*
9(a) Administration Agreement*
9(b) Transfer Agent Agreement*
9(c) Omnibus Account Services Agreement*
10 Opinion and Consent of Brady & Summers, P.C.*
11 Consent of Kinder & Wyman, P.C.
13 Subscription Agreement*
15(a) Distribution Plan*
15(b) Dealer Assistance Agreement*
15(c) Bank Shareholder Service Agreement*
*Previously filed
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the inclusion in this amended registration statement on Form N-1A
of our report dated July 18, 1997, on our audit of the financial statements of
Dominion Insight Growth Fund. We also consent to the reference to our firm in
the prospectus.
/s/ KINDER & WYMAN, P.C.
KINDER & WYMAN, P.C.
Irving, Texas
August 28, 1997
