<PAGE>
Registration No. 33 - 49808
Investment Company Act File No. 811-6727
As filed with the Securities and Exchange Commission on September 8, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 9 [X]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 10
(Check Appropriate Box or Boxes)
DOMINION FUNDS, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
----------------------------------------
(Address of principal Executive Offices)
(972) 385-9595
----------------------------------------
(Registrant's Telephone Number, Including Area Code)
Douglas W. Powell
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
----------------------------------------
(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)
--
X on September 15, 1998 pursuant to paragraph (b)
--
60 days after filing pursuant to paragraph (a)(1)
--
on (date) pursuant to paragraph (a)(1)
--
75 days after filing pursuant to paragraph (a)(2)
--
on (date) pursuant to paragraph (a)(2) of Rule 485
--
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, 1998 for its fiscal year ending June 30, 1998
<PAGE>
THE DOMINION INSIGHT GROWTH FUND
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(a) OF REGULATION C
UNDER THE SECURITIES ACT OF 1933)
<TABLE>
<CAPTION>
ITEM NUMBER OF LOCATION OR CAPTION
FORM N-1A IN PROSPECTUS
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<S> <C>
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 Financial Highlights
Fund Performance
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITEM NUMBER OF LOCATION OR CAPTION IN STATEMENT
FORM N-1A OF ADDITIONAL INFORMATION
- -------------- --------------------------------
<S> <C>
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
</TABLE>
<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, 1998, 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.
- --------------------------------------------------------------------------------
NORTHSTAR SECURITIES, INC.
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
(972) 385-9595
- --------------------------------------------------------------------------------
This Prospectus is dated September 15, 1998.
<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, 1998, except as otherwise
noted below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
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
Administrative Fee (3,4,5) 1.25%
Total Fund Operating Expenses 2.25%
EXAMPLE:
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) $57 $102 $148 $263
</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, 1998, 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 for the fiscal periods ended June 30,
1998, 1997, 1996, 1995, and 1994 have been audited by Kinder & Wyman, P.C.,
independent auditors, whose unqualified report thereon and other financial
statements of the Fund are included in the Statement of Additional Information.
A copy of the Statement of Additional Information may be obtained by
shareholders as set forth on the front cover of this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA (1):
Net asset value, beginning of period $ 15.79 $ 19.04 $ 13.53 $ 10.24 $ 10.97
---------- ---------- ---------- ---------- ----------
Income From Investment Operations:
Net investment loss (0.37) (0.33) (0.34) (0.24) (0.24)
Net realized and unrealized gain (loss) on
investments 2.71 (1.16) 7.39 4.33 (0.49)
---------- ---------- ---------- ---------- ----------
Total income (loss) from investment operations 2.34 (1.49) 7.05 4.09 (0.73)
---------- ---------- ---------- ---------- ----------
Less Distributions:
Distributions from net realized gains (0.57) (1.76) (1.54) (0.80) -
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 17.56 $ 15.79 $ 19.04 $ 13.53 $ 10.24
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total return (2) 15.00% (8.21%) 54.32% 42.25% (6.65%)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 19,251 $ 22,944 $ 27,908 $ 8,089 $ 6,271
Ratio of expenses to average daily net assets 2.25% 2.30% 2.31% 2.38% 2.37%
Ratio of net investment loss to average net assets 2.08% 2.04% 2.03% 2.16% 2.01%
Portfolio turnover rate 273.25% 261.05% 172.87% 210.23% 140.87%
Average brokerage commission rate for the
underlying portfolio (3) $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10
</TABLE>
(1) Per share information has been calculated using the average number of
shares outstanding.
(2) Sales load is not reflected in total return.
(3) 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 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.")
5
<PAGE>
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 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
6
<PAGE>
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 Northstar
Securities, Inc. (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."
It is expected that the Advisor will place all orders for the Fund's
portfolio securities transactions 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.
Elliott Family Partnership, Ltd. and DW Powell Family Partnership, Ltd.
each owns 50% of the outstanding stock of the Administrator. James O. Collins
owns 100% of the outstanding stock of the Advisor. Anita Mills-Barry owns
100% of the outstanding stock of the Distributor.
7
<PAGE>
PERFORMANCE
During the fiscal year ended June 30, 1998, the shares of the Fund
experienced a total return of 15%, assuming reinvestment of the capital gains
distribution of $.57 per share that was paid during the fiscal year. The
Fund's return is attributable to appreciation in portfolio securities
overall, with weightier holdings in particular sectors such as technology,
causing the Fund's performance to trail the more broadly based market
indices, such as the NASDAQ Composite.
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 27, 1992 (the
date the Fund's registration statement became effective) and, in the case of
the investment in the Fund, net of the Fund's sales load.
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.
[GRAPHIC]
<TABLE>
<S> <C>
- -----------------------------------------
Average Annual Total Return:
- ---------------------------- Performance figures are based on historical results and are not
July 1, 1997 to June 30, 1998: 15.01% intended to be indicative of future results. The investment return
July 1, 1993 to June 30, 1998: 15.86% and principal value will fluctuate so that an investor's shares, when
October 27, 1992 to June 30, 1998: 16.18% redeemed, may be worth more or less than original cost.
- -----------------------------------------
</TABLE>
8
<PAGE>
PURCHASE OF SHARES
The Fund's shares are continuously offered through Northstar Securities,
Inc. (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>
Sales Charge as % Reallowance to Dealers Sales Charge as %
of Offering Price as a % of Offering Price of Amount Invested
----------------- ------------------------ ------------------
<S> <C> <C> <C>
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 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
9
<PAGE>
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 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
10
<PAGE>
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 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.
12
<PAGE>
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 20% on net long-term capital gains. The maximum rate
of 20% will apply to both capital gains distributions from mutual funds to
individual shareholders and to net long-term gains on the disposal of mutual
fund shares by individual shareholders.
To the extent that dividends paid by the Fund are attributable to
certain types of dividends it receives on its investment assets, dividends
paid by the Fund will qualify for the dividends received deduction for
corporations.
Redemption or resale of shares of the Fund is a taxable transaction for
federal income tax purposes. Redeeming shareholders recognize gain or loss in
an amount equal to the difference between their basis in such redeemed shares
of the Fund and the amount received. If such shares are held as a capital
asset, the gain or loss is a capital gain or loss and will generally be
long-term if such shareholders have held their shares for more than one year.
Any loss realized on shares held for six months or less is be treated as
long-term capital loss to the extent of any amounts received by the
shareholder as capital gains dividends with respect to such shares.
For most types of accounts, the transfer agent will report the proceeds
of any redemptions to shareholders and the Internal Revenue Service annually.
Shareholders should keep regular account statements to use in determining the
gain or loss on the sale of Fund shares.
The Fund's ability to dispose of portfolio securities may be limited by
the requirement for qualification as a regulated investment company that less
than 30% of the Fund's gross income be derived from the disposition of
securities held for less than three months.
In order to avoid a 4% excise tax the Fund is required to distribute by
December 31 of each year at least 98% of its net investment income for such
year and at least 98% of its capital gain net income (computed on the basis
of the one-year period ending on October 31 of such year), plus any required
distribution amounts that were not distributed in previous taxable years. For
purposes of the excise tax, any net investment income or capital gain net
income retained by, and taxed in the hands of, the Fund is treated as having
been distributed.
Although dividends generally are treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders
of record on a specified date in such months and paid in January of the
following year are treated as having been distributed by the Fund and
received by the shareholders on December 31 of the year in which the dividend
was declared. In addition, certain other distributions made after the close
of a taxable year of the Fund may be "spilled back" and treated as having
been paid by the Fund (except for purposes of the 4% excise tax) during such
15
<PAGE>
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 Robert H. Spiro, Jr.
5000 Quorum Drive, Suite 620 Peter R. Goldschmidt
Dallas, Texas 75240 Allen B. Clark, Jr.
DISTRIBUTOR
Northstar Securities, Inc.
5000 Quorum Drive, Suite 620
Dallas, Texas 75240
CUSTODIAN OFFICERS
May Financial Corporation Brian E. White
8333 Douglas Avenue, Suite 400 President
Dallas, Texas 75225
TRANSFER AGENT
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
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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 14
Distributions and Taxes 14
Shareholder Services and Reports 16
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THE DOMINION INSIGHT
GROWTH FUND
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PROSPECTUS
September 15, 1998
NORTHSTAR SECURITIES, INC.
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
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THE DOMINION FUNDS, INC. MAIL CHECK AND COMPLETED APPLICATION TO:
ACCOUNT APPLICATION
Dominion Funds, Inc.
IF YOU NEED ASSISTANCE IN COMPLETING THIS APPLICATION, P.O. Box 26305
PLEASE CALL 1-800-628-4077 OR YOUR BROKER. Richmond, Virginia 23260
1. YOUR ACCOUNT REGISTRATION (PLEASE PRINT)
(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
6. ____________________________________________________________________________________________________
[ ] CORPORATIONS, Name of Corporation or Other Entity. If Trust, include date of trust instrument. Taxpayer Ident. No.
PARTNERSHIPS, 7. ____________________________________________________________________________________________________
Trusts & Others Name of Trustees to be in Registration Date of Trust Agreement
(USE LINES 6 & 7)
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 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. $_________.
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. (COMPLETE BANK INFORMATION IN SECTION 6A)
[ ] Income dividends will be paid in cash & capital gains distributions reinvested. Dividend Payment Authorization:
[ ] Capital gains distributions will be paid in cash & dividends reinvested. [ ] 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.
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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
whatsoever.
__________________________________________
Signature of Investor
__________________________________________
Signature of Investor (if joint account)
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 receipt, shares from by 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.)
___________________________________________________________________________________________________________________________________
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
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 not longer
subject to backup withholding.
X________________________________ X________________________________ ________________________________
Individual (or Custodian) Joint Registration, if any Date
X________________________________ X________________________________ ________________________________
Corporate Officer, Trustee, etc. Title Date
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STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 15, 1998
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, 1998 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.
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DOMINION INSIGHT GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
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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..............................................4
Purchase of Shares of the Fund................................................6
Net Asset Value Determination.................................................6
The Distributor...............................................................7
Redemption of Shares..........................................................7
Income Dividends, Capital Gains and Distributions.............................7
Custodian.....................................................................8
Legal Counsel and Independent Auditors........................................8
Registration Statement........................................................8
Independent Auditor's Report................................................F-1
Statement of Assets and Liabilities (June 30, 1998).........................F-2
Investments in Securities (June 30, 1998)...................................F-3
Statement of Operations (Year ended
June 30, 1998)............................................................F-5
Statement of Changes in Net Assets (Years ended
June 30, 1998 and 1997) ..................................................F-6
Notes to Financial Statements (June 30, 1998)...............................F-7
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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
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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 $138,387, $254,477, and $228,902, respectively, for the fiscal
years ended June 30, 1996, 1997, and 1998.
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 $172,983,
$318,097, and $286,128, respectively, for the fiscal years ended June 30,
1996, 1997, and 1998. Except as provided in this paragraph, the Administrator
pays all operating costs of the Fund, including office space, custodian and
transfer agent fees, administrative, clerical, record keeping, bookkeeping,
legal (non-litigation), auditing and accounting expenses, expenses of
preparing tax returns, expenses of shareholders' meetings and preparing,
printing and mailing proxy statements, expenses of preparing and typesetting
periodic reports to shareholders (except for those reports the Fund permits
to be used as sales literature), fees and expenses of directors of the
Company, and the costs, including filing fees, of renewing or maintaining
registration of Fund shares under federal and state law. The Fund pays the
investment advisory fee and the administration fee, interest, taxes, the cost
of brokerage incurred in connection with execution of securities
transactions, litigation expenses and indemnification paid to advisors of the
Fund and officers and directors of the Company. The costs and expenses,
including legal and accounting fees, filing fees and printing costs, in
connection with the formation of the Fund and the preparation and filing of
the Fund's initial registration statement under the Securities Act of 1933
and Investment Company Act of 1940 were paid by the Fund.
The Fund has entered into an accounting services agreement with
Commonwealth Fund Accounting, Inc. an affiliate of Fund Services, Inc., the
Fund's transfer agent. All costs associated with such services performed by
Commonwealth Fund Accounting, Inc. are borne by the Administrator.
3
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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.
Elliott Family Partnership, Ltd. and DW Powell Family Partnership, Ltd.
each own 50% of the outstanding stock of the Administrator. James O. Collins
owns 100% of the outstanding stock of the Advisor.
PORTFOLIO TRANSACTIONS AND BROKERAGE
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 Fund paid $153,876, $371,206, and $394,547, respectively, in
brokerage commissions in connection with its portfolio business during the
fiscal years ended June 30, 1996, 1997, and 1998, all of which were paid to
Dominion Capital Corporation, which was then an affiliate of the Fund. The
increase in brokerage commissions from 1996 was primarily due to the
increasing size of the Fund and the increasing portfolio turnover rate. On
July 10, 1998, Northstar Securities, Inc. replaced Dominion Capital
Corporation as the Fund's Distributor. The Fund anticipates the Advisor will
place all orders for the Fund's portfolio securities transactions through its
Distributor.
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 Northstar Securities, Inc. or affiliates of the Fund with respect to
securities transactions effected on a securities exchange must be reasonable
and fair compared to the commissions, fees or other remuneration received or
to be received by other brokers in connection with comparable transactions
involving similar securities during a comparable period of time. The rule and
procedures also contain review requirements and require the Advisor to
furnish reports to the Board of Directors and to maintain records in
connection with such reviews. After consideration of all factors deemed
relevant, the Board of Directors will consider from time to time whether the
advisory fee will be reduced by all or a portion of the brokerage commission
given to affiliated brokers.
EXECUTIVE OFFICERS AND DIRECTORS
The directors and officers of Dominion Funds, Inc. (the "Company"), a
Texas corporation (of which the Fund is a series of shares of common stock),
their principal occupations for the last five years and their affiliations,
if any, with Dominion Institutional Services Corporation (the
"Administrator"), the Fund's administrator, Insight Capital Management, Inc.
(the "Advisor"), the Fund's investment advisor, or with Northstar Securities,
Inc. (the "Distributor"), the Fund's principal underwriter, are as follows:
Brian E. White
5000 Quorum Drive, Suite 620
Dallas, Texas 75240
Mr. White, age 34, became President of Dominion Funds, Inc. in July, 1998.
Mr. White served as Fund Administrator for Dominion Capital Corporation from
June 1992 until the present, and Vice President of Operations from March 1994
until the present. Since July, 1998, Mr. White has served as Operations
Officer for Northstar Securities, Inc., the Distributor for the Fund. Mr.
White is a registered representative of that firm. Mr. White is also Vice
President of Operations of Dominion Institutional Services Corporation, the
Administrator of the Fund, and Mr. White's father-in-law is the chief
executive officer and a major shareholder of that firm. Mr. White is an
interested person (as defined in the Investment Company Act of 1940) of the
Fund.
4
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Robert H. Spiro, Jr.
5821 Colfax Avenue
Alexandria, Virginia 22311
Mr. Spiro, age 77, 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, age 68, 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.
5
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Allen B. Clark, Jr.
10602 Stone Canyon Road #164
Dallas, Texas 75230
The Honorable Allen B. Clark, Jr., age 56, 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,
Northstar Securities, Inc.. Shares of the Fund are sold at the net asset
value per share as determined at the close of business of the New York Stock
Exchange next occurring after the purchase order is received and accepted by
the Fund plus the applicable sales charge. The Prospectus contains detailed
information about the purchase of shares.
As indicated in the Prospectus under "Purchase of Shares - Certain
Purchases," certain directors, officers, full-time employees, and sales
representatives of the Company, the Advisor, the Administrator, the
Distributor, or any broker-dealer having a sales agreement with the
Distributor and certain affiliates of the foregoing and members of their
immediate families (i.e., spouse, children, siblings, parents and
parents-in-law) may purchase shares of the Fund at net asset value without
the sales charge. This privilege is offered to compensate these persons for
their efforts on behalf of the Fund, and to encourage them to continue their
employment with the Fund and its affiliates and to use their best efforts to
promote the Fund's growth and profitability.
NET ASSET VALUE DETERMINATION
As stated in the Prospectus, the net asset value of Fund shares is
determined once daily as of the close of business on the New York Stock
Exchange (currently 4:00 pm. New York City time), Monday through Friday,
except on (i) days on which changes in value of the Fund's portfolio
securities will not materially affect the net asset value of shares of the
Fund; (ii) days during which no shares of the Fund are tendered for
redemption and no order to purchase shares of the Fund are received; or (iii)
customary national holidays on which the New York Stock Exchange is closed.
The per share net asset value of the Fund is determined by dividing the total
value of the securities and other assets, less liabilities, by the total
number of shares outstanding. In determining asset value, securities listed
on the national securities exchanges and the NASDAQ National Market are
valued at the closing prices on such markets, or if such a price is lacking
for the trading period immediately preceding the time of determination, such
securities are valued at their current bid price. Other securities which are
traded on the over-the-counter market are valued at bid price. Other
securities for which quotations are not readily available, and other assets,
are valued at fair value determined in good faith by the Advisor under the
supervision of the Company's Board of Directors.
6
<PAGE>
THE DISTRIBUTOR
On July 10, 1998, the Fund entered into a Distribution Agreement with
Northstar Securities, Inc. (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.
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.
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.
7
<PAGE>
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.
8
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and
Board of Directors of
Dominion Insight Growth Fund
We have audited the accompanying statement of assets and liabilities of
Dominion Insight Growth Fund, including the schedule of investments in
securities, as of June 30, 1998, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's 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 and financial highlights. Our procedures included
confirmation of securities owned as of June 30, 1998, 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, 1998, 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 each
of the five years in the period then ended, in conformity with generally
accepted accounting principles.
/s/ KINDER & WYMAN, P.C.
KINDER & WYMAN, P.C.
Irving, Texas
July 15, 1998
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value $19,119,400
(identified cost $15,574,814)
Cash 414,110
Receivables
Investment securities sold 220,870
Capital shares sold 12,397
Dividends and interest 2,525
-----------
TOTAL ASSETS 19,769,302
-----------
LIABILITIES
Accrued investment advisory fee 15,393
Accrued administrative fee 19,084
Payable for investment securities purchased 484,325
-----------
TOTAL LIABILITIES 518,802
-----------
NET ASSETS $19,250,500
-----------
-----------
Capital shares outstanding 1,096,264
-----------
-----------
Net asset value and offering price per share
Net asset value per share $ 17.56
-----------
-----------
Offering price per share $ 18.20
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 1998
<TABLE>
<CAPTION>
Market Percent of
COMMON STOCKS Shares Value Total Assets
- ------------- ------ ----------- ------------
<S> <C> <C> <C>
Banks - Major Regional
National Comm Bancorp 8,700 $ 364,312 1.84%
----------- -----
Broadcast-Media
Clear Channel Comm (a) 6,700 731,137 3.70
Tele-Comm A (a) 14,200 545,813 2.76
----------- -----
1,276,950 6.46
----------- -----
Commercial Services - Telephone
Century Tel Enterprises 16,500 756,938 3.83
----------- -----
Communication - Equipment
QWEST Comm (a) 9,800 341,775 1.73
Tellabs, Inc (a) 8,500 608,812 3.08
----------- -----
950,587 4.81
----------- -----
Computers - Hardware
Dell Computer (a) 9,700 900,281 4.55
Network Appliance Inc (a) 10,500 408,844 2.07
----------- -----
1,309,125 6.62
----------- -----
Computers - Software/Services
Aspect Development (a) 9,300 703,312 3.56
Compuware Corp (a) 16,800 858,900 4.34
Datastream International (a) 27,000 514,688 2.60
Documentum Inc (a) 8,800 422,400 2.14
HBO & Co 26,000 916,500 4.64
Legato Systems Inc (a) 15,000 585,000 2.96
Timberline Software 15,000 353,438 1.79
----------- -----
4,354,238 22.03
----------- -----
Computers - Peripheral
FileNet Corp (a) 21,800 629,475 3.18
----------- -----
Entertainment
Royal Caribbean Cruises 6,600 524,700 2.65
----------- -----
Financial - Consumer Finance
Doral Financial Corp (a) 36,000 630,000 3.19
Providian Corp 5,600 439,950 2.23
----------- -----
1,069,950 5.42
----------- -----
Financial - Diverse
Capital One Financial 6,100 757,544 3.83
Healthcare Financial Partners (a) 16,800 1,030,050 5.21
----------- -----
1,787,594 9.04
----------- -----
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 1998
<TABLE>
<CAPTION>
Market Percent of
COMMON STOCKS (CONTINUED) Shares Value Total Assets
- ------------------------- ------ ----------- ------------
<S> <C> <C> <C>
Healthcare - Drugs Major
Watson Pharmaceuticals (a) 14,100 $ 658,294 3.33%
----------- -----
Healthcare - Medical Products &
Supply Akron Inc (a) 42,800 321,000 1.62
----------- -----
Healthcare - Specialized Services
Lincare Holdings (a) 15,400 647,762 3.28
Medquist Inc (a) 26,800 773,850 3.91
----------- -----
1,421,612 7.19
----------- -----
Oil & Gas - Drill & Equipment
Core Laboratories (a) 11,000 237,875 1.20
----------- -----
Retail - Apparel
Tarrant Apparel Group (a) 25,000 471,875 2.39
----------- -----
Retail - General Merchandise
Linens 'N Things (a) 20,000 611,250 3.09
----------- -----
Retail - Specialty
Office Depot (a) 13,500 426,094 2.16
----------- -----
Services - Advertising/Marketing
Abacus Direct Corp (a) 7,300 379,144 1.92
----------- -----
Textiles - Apparel
DM Management (a) 13,800 495,075 2.50
----------- -----
Transportation - Airlines
Atlantic Coast Airlines (a) 21,000 630,000 3.19
----------- -----
Waste Management
KTI Inc (a) 20,500 443,312 2.24
----------- -----
Total Investments in Securities
(cost $15,574,814) $19,119,400 96.71%
----------- -----
----------- -----
</TABLE>
NOTE:
(a) Presently non-income producing.
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, 1998
<TABLE>
<S> <C>
INVESTMENT LOSS
Investment income
Dividends $ 13,825
Interest 24,924
-----------
Total investment income 38,749
-----------
Expenses
Investment advisory fee 228,902
Administrative fee 286,128
Amortization 6
-----------
Total expenses 515,036
-----------
Net investment loss (476,287)
-----------
REALIZED GAIN AND UNREALIZED DEPRECIATION ON INVESTMENTS
Net realized gain on investments in securities 5,494,226
Net change in unrealized appreciation
of investments in securities (1,627,841)
-----------
NET GAIN ON INVESTMENTS 3,866,385
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 3,390,098
-----------
-----------
</TABLE>
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, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
CHANGE IN NET ASSETS FROM OPERATIONS
Net investment loss $ (476,287) $ (517,364)
Net realized gain (loss) on investments 5,494,226 (2,607,737)
Net change in unrealized appreciation (1,627,841) 757,148
------------ ------------
Net increase (decrease) in net
assets resulting from operations 3,390,098 (2,367,953)
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gains on investments (735,148) (2,641,139)
CAPITAL SHARE TRANSACTIONS - NET (6,348,480) 44,943
------------ ------------
Total decrease in net assets (3,693,530) (4,964,149)
NET ASSETS
Beginning of year 22,944,030 27,908,179
------------ ------------
End of year (including undistributed
investment loss of $1,656,174
and $1,179,887, respectively) $ 19,250,500 $ 22,944,030
------------ ------------
------------ ------------
</TABLE>
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 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
net 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
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, plus one day. Realized security gains and losses
from security transactions are reported on an identified cost basis.
Dividend income is recognized on the ex-dividend date, and interest
income is recognized 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, 1998, the interest rate was
4.75%
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 gains on investments, to its shareholders. Therefore, there
is no provision for income or excise taxes.
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, 1998, 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.
NOTE 2 - DISTRIBUTION TO SHAREHOLDERS
On December 2, 1997, a distribution of $.57 aggregating $735,148 was
declared from net realized gains from securities transactions. The
dividend was payable on December 2, 1997 to shareholders of record as
of December 1, 1997.
At June 30, 1998, the Fund had undistributed net realized gains of
$2,151,402.
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - CAPITAL SHARE TRANSACTIONS
As of June 30, 1998, 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; the balance is unclassified. As of
June 30, 1998, capital paid-in aggregated $15,210,686.
Transactions in shares of capital stock for the years ended June 30,
1998 and June 30, 1997 are as follows:
<TABLE>
<CAPTION>
Shares Amount
------------------------------ ---------------------------------
1998 1997 1998 1997
-------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold 84,898 376,369 $ 1,516,177 $ 6,333,645
Shares issued in
reinvestment of
dividends 41,935 152,678 699,897 2,508,498
-------- ------- ----------- -----------
126,833 529,047 2,216,074 8,842,143
Shares redeemed 483,748 541,389 8,564,554 8,797,200
-------- ------- ----------- -----------
Net increase/(decrease) (356,915) (12,342) $(6,348,480) $ 44,943
-------- ------- ----------- -----------
-------- ------- ----------- -----------
</TABLE>
NOTE 4 - SECURITIES TRANSACTIONS
Cost of purchases and sales of securities (excluding short-term
obligations) aggregated $60,371,151 and $61,618,818, respectively, for
the year ended June 30, 1998. The cost of securities for financial
statement and income tax purposes was $15,574,814 at June 30, 1998.
Net gain on investments in securities for the year ended June 30, 1998
was $3,866,385 for financial statement and income tax purposes. All
security transactions were in long transactions. As of June 30, 1998,
the aggregate unrealized appreciation and depreciation of securities
was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 3,991,083
Unrealized depreciation (446,497)
-------------
Net unrealized appreciation $ 3,544,586
-------------
-------------
</TABLE>
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - INVESTMENT ADVISORY FEES AND TRANSACTIONS WITH AFFILIATES
The Fund has an Investment 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 for distributing fund shares.
Sales charges were $23,718 for the year ended June 30, 1998.
During the year ended June 30, 1998, all orders for the Fund's
securities transactions were placed through the Distributor.
Commissions charged by the Distributor for executing security
transactions were $394,547 for the year ended June 30, 1998.
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
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - SUBSEQUENT EVENTS
The Fund terminated its distribution agreement with Dominion Capital
Corporation (DCC) in July 1998. The Fund then entered into a
distribution agreement with Northstar Securities, Inc. with
substantially the same conditions and terms as the distribution
agreement with DCC.
<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 included:
Statement of Assets and Liabilities (June 30, 1998)
Investments in Securities (June 30, 1998)
Statement of Operations (Year ended June 30, 1998)
Statement of Change in Net Assets (Years ended June 30, 1998 and 1997)
Notes to Financial Statements (June 30, 1998)
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
Item 25 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
i
<PAGE>
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, 1998 was as follows:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Common Stock, Dominion
Insight Growth Fund series 933
</TABLE>
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 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
Northstar Securities, Inc. (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:
<TABLE>
<CAPTION>
Name and Principal Positions and Office Position and Office
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Anita Mills-Barry President None
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
</TABLE>
Northstar Securities, Inc. received no commissions or other compensation
from the Registrant during the
ii
<PAGE>
Registrant's last fiscal year.
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 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.
iii
<PAGE>
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
3rd day of September 1998.
DOMINION FUNDS, INC.
By: /s/ Brian E. White
------------------------------------
Brian E. White, President
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>
<S> <C> <C>
/s/ Brian E. White President (Principal Executive Officer and September 3, 1998
- -------------------------- Principal Financial Accounting Officer)
Brian E. White
Director September , 1998
- --------------------------
Robert H. Spiro, Jr.
/s/ Peter R. Goldschmidt Director September 3, 1998
- --------------------------
Peter R. Goldschmidt
/s/ Allen B. Clark, Jr. Director September 2, 1998
- --------------------------
Allen B. Clark, Jr.
</TABLE>
iv
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
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
</TABLE>
<PAGE>
EXHIBIT 11
<PAGE>
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 15, 1998, on our audit of the financial
statements of Dominion Insight Growth Fund. We also consent to the reference
to our firm in the prospectus.
KINDER & WYMAN, P.C.
Irving, Texas
September 3, 1998
