<PAGE>
Registration No. 33 - 49808
Investment Company Act File No. 811-6727
As filed with the Securities and Exchange Commission on September 14, 2000
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
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Post-Effective Amendment No. 12 [X]
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and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 13
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(Check Appropriate Box or Boxes)
DOMINION FUNDS. INC.
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(Exact Name of Registrant as Specified in Charter)
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
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(Address of principal Executive Offices)
(972) 385-9595
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(Registrant's Telephone Number, Including Area Code)
Douglas W. Powell
5000 Quorum Drive
Suite 620
Dallas, Texas 75240
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(Name and Address of Agent for Service)
Copies to:
Frederick C. Summers, III, Esq.
A Professional Corporation
5949 Sherry Lane, Suite 1025, LB109
Dallas, TX 75225
Approximate date of proposed
public offering: As soon as
practicable after the effective
date of the registration statement.
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
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X on September 20 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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on (date) pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of Rule 485
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If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
THE DOMINION INSIGHT GROWTH FUND
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(a) OF REGULATION C
UNDER THE SECURITIES ACT OF 1933)
PART A: INFORMATION REQUIRED IN A PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER OF FORM N-1A LOCATION OR CAPTION IN PROSPECTUS
<S> <C>
Item 1. Front and Back Cover Pages Cover Page
Item 2. Risk/Return Summary: Investments, Risks, Fund Summary
and Performance
Item 3. Risk/Return Summary: Fee Table Fund Expenses
Item 4. Investment Objectives, Principal Investment Objective and Strategy
Investment Strategies, and Related Risks
Item 5. Management's Discussion of Fund Management's Discussion of Fund Performance
Performance
Item 6. Management, Organization, and Capital Investment Advisory and Other Services; Shareholder
Structure Services and Reports
Item 7. Shareholder Information Purchase of Shares; Redemption of Shares; Distributions
and Taxes; Shareholder Services And Reports
Item 8. Distribution Arrangements Purchase of Shares; Investment Advisory and Other Services
Item 9. Financial Highlights Financial Highlights
<CAPTION>
PART B: INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
ITEM NUMBER OF FORM N-1A LOCATION OR CAPTION IN STATEMENT
OF ADDITIONAL INFORMATION
<S> <C>
Item 10. Cover Page and Table of Contents Cover Page; Table of Contents
Item 11. Fund History The Fund and the Company
Item 12. Description of the Fund and its Investment Policies and Restrictions; The Fund and the
Investment Risks Company
Item 13. Management of the Fund Executive Officers and Directors
Item 14. Control Persons and Principal Holders Executive Officers and Directors
of Securities
Item 15. Investment Advisory and Other Services Contained in Prospectus under caption: "Investment
Advisory and Other Services"; Custodian; Legal Counsel and
Independent Auditors; Management and Advisory Services;
Executive Officers and Directors; The Distributor
Item 16. Brokerage Allocation and Other Portfolio Transactions and Brokerage
<PAGE>
Practices
Item 17. Capital Stock and Other Securities The Fund and the Company
Item 18. Purchase, Redemption and Pricing of Contained in Prospectus under captions: "Purchase of
Securities Being Offered Shares" and "Redemption of Shares"
Item 19. Taxation of the Fund Contained in Prospectus under captions: "Purchase of
Shares - Investments By Tax-Sheltered Retirement Plans"
and "Distributions and Taxes - Tax Information"
Item 20. Underwriters The Distributor
Item 21. Calculations of Performance Data Not Applicable
Item 22. Financial Statements Independent Auditors' Report; Financial Statements
</TABLE>
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>
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THE DOMINION INSIGHT GROWTH FUND
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PROSPECTUS
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September 20, 2000
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The Dominion Insight Growth Fund is a mutual fund 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 Nye, Parnell & Everson Capital Management,
Inc. The net assets and the return of the Fund will fluctuate depending on
market conditions and other factors. Prospective investors should read and
retain this Prospectus for future reference.
--------------------------------------------------------------------------------
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
--------------------------------------------------------------------------------
Shares of the Fund are offered through
NORTHSTAR SECURITIES, INC.
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Fund Summary ..................................................................3
Fund Expenses .................................................................5
Financial Highlights ..........................................................6
Investment Objective and Strategy .............................................7
Risk Factors ..................................................................7
Management's Discussion of Fund Performance ...................................8
Investment Advisory and Other Services ........................................9
Purchase of Shares ...........................................................10
Redemption of Shares .........................................................11
Exchange Privilege ...........................................................13
Distributions and Taxes ......................................................13
Shareholder Services and Reports .............................................15
</TABLE>
2
<PAGE>
THE DOMINION INSIGHT GROWTH FUND
FUND SUMMARY
INVESTMENT OBJECTIVE
The Dominion Insight Growth Fund is a mutual fund whose only investment
objective is growth of capital.
PRINCIPAL INVESTMENT STRATEGY AND POLICIES
Nye, Parnell & Emerson Capital Management, Inc. ("Nye, Parnell &
Emerson") became the investment advisor of the Fund on November 1, 1999. Through
Nye, Parnell & Emerson, the Fund will invest primarily in common stocks of
larger more established companies, though it may invest in issuers of any size.
The investment advisor uses a bottom-up approach to choosing investments,
emphasizing a stock selection process favoring positions in leading U.S.
companies that are global leaders in their industry. These global U.S. companies
generally have high returns on equity, dominant competitive positions, pricing
power and predictable and consistent earnings growth. These stocks typically
demonstrate considerably higher growth in earnings, dividends, reinvestment
rates and high rates of free cash flow generation.
The Fund will invest at least 65% of its total assets in common stocks
and other equity type securities (including preferred stock, convertible debt
securities, and warrants) of companies which the Fund's investment advisor
believes have a good potential for capital growth. Generally, the Fund invests
for long-term growth consistent with preservation of capital.
The Fund has previously invested much of its assets in the technology
sector, including over 50% of such assets in computer manufacturing, servicing
and software companies. The Fund does not concentrate in any industry, however.
MAIN RISKS
Stock markets are volatile and can decline significantly in response to
adverse issuer, political, regulatory, market, interest rate fluctuations, or
economic developments. The Fund is subject to this risk of market volatility.
Loss of money is a risk of investing in the Fund.
The value of an individual security or particular type of security can
be more volatile than the market as a whole and can perform differently than the
market as a whole. Growth stocks are often more sensitive to economic and market
swings than other types of stocks because market prices tend to reflect future
expectations.
Other than company-specific problems, the factor most likely to hurt
Fund performance would be a sharp increase in interest rates, which generally
causes equity prices to fall.
The Fund may be suitable for the more aggressive section of an
investor's portfolio. It's designed for people who want to grow their capital
over the long term and who are comfortable with possible frequent short-term
changes in the value of their investment. An investment in the Fund should not
be considered a complete investment program.
3
<PAGE>
PERFORMANCE
The first chart below shows annual total returns for the Fund. The
second compares Fund performance with that of the NASDAQ Composite Index, a
broadly based index showing the performance of all NASDAQ traded stocks. These
charts will give you some idea of the risks involved in investing in the Fund by
showing changes in the Fund's performance from year to year and by comparing the
Fund's performance to the performance of a market index over time. As with all
mutual funds, how the Fund has performed in the past is not necessarily an
indication of how it will perform in the future.
[CHART]
Year-by-year total return as of 12/31 each year
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
18.24% -5.05% 64.63% 11.24% 1.66% 27.28% 75.40
</TABLE>
The year-to-date return as of June 30, 2000 was 6.57%.
<TABLE>
<S> <C> <C>
--------------------------------------------------
BEST
QUARTER Q4 `99 46.86%
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WORST QUARTER
Q4 `97 -23.82%
--------------------------------------------------
<CAPTION>
----------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/99
----------------------------------------------------
1 Year 5 Years Inception
(10/27/92)
----------------------------------------------------
<S> <C> <C> <C>
Fund 75.40% 32.97% 24.46%
----------------------------------------------------
NASDAQ
Composite 85.59% 40.17% 30.66%
Index
----------------------------------------------------
</TABLE>
4
<PAGE>
FUND EXPENSES
This table describes the fees and expenses that you may pay if you buy
and hold shares of the Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (Fees paid directly from your investment)
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other
Distributions) None
Redemption Fee(1) None
Exchange Fee None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)(2)
<S> <C>
Management Fees 1.0%
Distribution (12b-l) Fees None
Other Expenses(3) 1.25%
Total Annual Fund Operating Expenses 2.25%
</TABLE>
1 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."
2 Calculated as a percentage of average daily net assets.
3 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.
EXAMPLE:
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all of
your shares at the end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$236 $728 $1,245 $2,664
</TABLE>
5
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all distributions). The financial
highlights for the year ended June 30, 2000 were audited by Wallace Sanders &
Company, independent auditors, whose report, along with the Fund's financial
statements, are included in the Annual Report, which is available on request.
The financial highlights for the four years ended June 30, 1999 were audited
by Kinder & Wyman, P.C., independent auditors.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
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PER SHARE DATA (1):
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $19.15 $17.56 $15.79 $19.04 $13.53
------ ------ ------ ------ ------
----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Investment Operations:
----------------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.48) (0.36) (0.37) (0.33) (0.34)
----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 12.62 4.20 2.71 (1.16) 7.39
----- ---- ---- ---- ----
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Total income (loss) from investment operations 12.14 3.84 2.34 (1.49) 7.05
----- ---- ---- ---- ----
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Less Distributions:
----------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (5.82) (2.25) (0.57) (1.76) (1.54)
------ ------ ------ ------ ------
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Net asset value, end of year $25.47 $19.15 $17.56 $15.79 $19.04
------ ------ ------ ------ ------
------ ------ ------ ------ ------
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Total return 69.10% 25.47% 15.00% (8.21%) 54.32%
------ ------ ------ ------- ------
------ ------ ------ ------- ------
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RATIOS/SUPPLEMENTAL DATA:
----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (in thousands) $17,903 $14,511 $19,251 $22,944 $27,908
----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 2.24% 2.25% 2.25% 2.30% 2.31%
----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss to average net assets 2.02% 2.14% 2.08% 2.04% 2.03%
----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 120.65% 185.62% 273.25% 261.05% 172.87%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share information has been calculated using the average number of shares
outstanding.
6
<PAGE>
INVESTMENT OBJECTIVE AND STRATEGY
INVESTMENT OBJECTIVE. The only investment objective of the Fund is
growth of capital. The Fund's investment objective may not be changed without
shareholder approval.
INVESTMENT STRATEGY. Nye, Parnell & Emerson Capital Management, Inc.
("Nye, Parnell & Emerson") became the investment advisor of the Fund on
November 1, 1999. Through Nye, Parnell & Emerson, the Fund will invest
primarily in common stocks of larger more established companies, though it
may invest in issuers of any size. The investment advisor uses a bottom-up
approach to choosing investments, emphasizing a stock selection process
favoring positions in leading U.S. companies that are global leaders in their
industry. These global U.S. companies generally have high returns on equity,
dominant competitive positions, pricing power and predictable and consistent
earnings growth. These stocks typically demonstrate considerably higher
growth in earnings, dividends, reinvestment rates and high rates of free cash
flow generation.
The Fund will invest at least 65% of its total assets in common
stocks and other equity type securities (including preferred stock,
convertible debt securities, and warrants) of companies which the Fund's
investment advisor believes have a good potential for capital growth.
Generally, the Fund invests for long-term growth consistent with preservation
of capital.
The Fund has previously invested much of its assets in the
technology sector, including over 50% of such assets in computer
manufacturing, servicing and software companies. The Fund does not
concentrate in any industry, however.
As the investment advisor, Nye, Parnell & Emerson makes the investment
decisions for the Fund. Nye, Parnell & Emerson will seek to invest in leading US
companies that are global leaders in their industries and which have
consistently high returns on equity and earnings per share growth. Nye, Parnell
& Emerson will then attempt to purchase a stock at an attractive price/earnings
ratio relative to its earnings growth rate. In short, Nye, Parnell & Emerson
will apply a "value" screen to a "growth" equity style.
In times of adverse equity markets in the investment advisor's
judgment, the Fund may take temporary defensive positions in U.S. Treasury
bills and commercial paper of major U.S. corporations. This could reduce the
benefit from an upswing in the market.
RISK FACTORS
STOCK MARKET VOLATILITY. Stock values fluctuate in response to issuer,
political, market and economic developments. Stock prices can fluctuate
dramatically in response to these developments.
SECTOR RISK. Different parts of the market can react differently to
these developments. Issuer, political or economic developments can affect a
single issuer, issuers within an industry or economic sector or geographic
region, or the market as a whole.
COMPANY RISK. Changes in the financial condition of an issuer, changes
in specific economic or political conditions that affect a particular type of
issuer, and changes in general economic or political conditions can affect the
credit quality or value of an issuer's securities.
INTEREST RATE CHANGES. The stock market is dependent on general
economic conditions. Changes in interest rates can affect the performance of
the stock market.
PORTFOLIO TURNOVER POLICY. The annual portfolio turnover of the Fund
may exceed 200%, and it may be substantially higher in some years when the
Fund's investment advisor views changes in the portfolio as advantageous to the
Fund. The annual portfolio turnover rate is the number of times the Fund's
portfolio securities are replaced 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.
7
<PAGE>
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
During the fiscal year ended June 30, 2000, the shares of the Fund
experienced a total return of 69.10%, assuming reinvestment of the capital
gains distribution of $5.82 per share that was paid during the fiscal year.
The Fund's return is attributable to continued domestic economic growth and
cyclical preference to growth stocks. In addition, the Fund has followed a
new investment strategy under its new investment advisor, Nye, Parnell, &
Emerson, as described under "Fund Summary--Principal Investment Strategy and
Policies." As a result, there has been some reallocation of the Fund's
portfolio to include equities of companies generally identified as large-cap.
Net redemptions by shareholders during the year resulted in some portfolio
liquidation, which may have adversely affected the Fund's performance.
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).
[GRAPH]
<TABLE>
<CAPTION>
10/27/92 6/30/93 6/30/94 6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
6/4
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dominion Insight Growth Fund $10,000 $11,144 $10,460 $14,825 $22,895 $21,004 $24,157 $30,310 $51,251
NASDAQ Composite Index $10,000 $11,792 $11,826 $15,637 $19,851 $24,157 $31,740 $44,997 $66,440
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------
AVERAGE ANNUAL TOTAL RETURN OF
THE FUND AS OF 6/30/00
---------------------------------------
1 Year 5 Years Inception
(10/27/92)
---------------------------------------
<S> <C> <C>
69.10% 28.16% 23.73%
---------------------------------------
</TABLE>
Past performance does not predict future performance. The investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than original cost.
8
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund has an Investment Advisory Agreement (the "Advisory
Agreement") with Nye, Parnell & Emerson Capital Management, Inc. (the
"Advisor"), whose address is 526 King Street, Suite 201, Alexandria, Virginia
22314, to act as its investment advisor. The Advisory Agreement was effective
November 1, 1999. 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. Prior to November 1, 1999, and since inception
of the Fund, Insight Capital Management, Inc. served as investment advisor
for the Fund for the same annual fee as the Advisor.
The Advisor also serves as investment adviser to certain private
accounts, managing approximately $300 million of investments for private
investors and institutions throughout the United States. The Advisor has no
previous experience in advising a mutual fund, other than to advise the Fund
since November 1, 1999. The Advisor's Portfolio Management Group is jointly
and primarily responsible for the day-to-day management of the Fund's
portfolio.
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 Northstar
Institutional Services Corporation, formerly known as Dominion Institutional
Services Corporation (the "Administrator"), whose address is 5000 Quorum
Drive, Suite 620, Dallas, Texas 75240, phone number (800) 687-9494. Pursuant
to the Administration Agreement, and subject to the authority of the Board of
Directors of the Company, the Administrator is responsible for the
administration of the Fund and overall management of the Fund's business
affairs. The Administrator provides all services required to carry on the
Fund's general administrative and corporate affairs. These services include
furnishing all executive and managerial personnel, office space and
equipment, and federal and state regulatory compliance. For its services, the
Administrator receives an annual fee of 1.25% of the Fund's average daily net
assets, computed daily and paid on a monthly basis.
Fund Services, Inc. serves as transfer agent for the purpose of
recording the transfer, issuance and redemption of shares of the Fund,
transferring shares of the Fund, disbursing dividends and other distributions to
shareholders, mailing shareholder information and receiving and responding to
various shareholder inquiries. Commonwealth Fund Accounting, Inc., an affiliate
of Fund Services, Inc., provides accounting services to the Fund. All costs
associated with such services performed by Fund Service, Inc. and Commonwealth
Fund Accounting, Inc., are borne by the Administrator.
In addition to the fees to be paid to the Advisor and the
Administrator, the Fund pays all broker commissions in connection with its
portfolio transactions, together with all other expenses incurred by the Fund
except to the extent such other expenses are required to be paid by the
Administrator. In this connection, the Administrator has agreed, pursuant to the
Administration Agreement, to assume all expenses (hereafter defined) of the
Fund. Expenses as defined are normal operating expenses, but exclude fees paid
to the Advisor and the Administrator, broker commissions in connection with the
Fund's portfolio transactions, interest, taxes, litigation and indemnification
costs, and annual distribution plan expenses, if any.
9
<PAGE>
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.
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.
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, phone number
(800) 687-9494. 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 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 $1,000 and $100,
respectively. 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. 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, after
ordering shares by telephone. Please call (800) 687-9494 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").
10
<PAGE>
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 are valued at fair value determined in
good faith by the Advisor under the supervision of the Board of Directors.
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 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.
REDEMPTION OF SHARES
REDEMPTIONS BY MAIL. Shareholders of the Fund may require the Fund to
redeem their shares at any time
11
<PAGE>
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 the Fund at 5000 Quorum Drive, Suite 620, Dallas,
Texas 75240, 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 at 5000 Quorum Drive, Suite 620, Dallas, Texas 75240.
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 at (800) 687-9494. 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.
SMALL ACCOUNTS. Because of the high cost of maintaining small accounts,
the Fund reserves the right to redeem shares in any account and pay the proceeds
to the shareholder if, due to redemptions, the account balance falls below $500,
and the account reflects no purchases of shares, other than through
reinvestments of dividends or capital gains, during the 60 days prior to the
mailing of the notice of intent to redeem. The Fund will give written notice of
intent to redeem 60 days prior to any such redemption. During the 60-day period
following mailing of such notice, such notified shareholder may increase the
value of his account through additional purchases and avoid involuntary
redemption. A notice of intent to redeem will not be sent to shareholders
earlier than 24 months after establishment of an account.
EXCHANGE PRIVILEGE
By telephoning the Fund at (800) 687-9494, or writing the Fund at
5000 Quorum Drive, Suite 620, Dallas, Texas 75240, 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
13
<PAGE>
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 Fund'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 the Fund, 5000 Quorum Drive, Suite 620, Dallas, Texas 75240.
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. The Fund expects that its distributions will consist primarily
of capital gains.
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 at the net asset value per share determined as of the next business day
following the record date for each investor who does not elect on his account
application to receive dividends and capital gains in cash. Checks for cash
dividends and distributions and reinvestment confirmations are usually mailed to
shareholders within ten days of the record date. Shareholders may change their
option any time before the record date of any distribution by writing to
Dominion Insight Growth Fund, 5000 Quorum Drive, Suite 620, Dallas, Texas 75240.
TAX INFORMATION. The Fund has qualified and intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). To qualify as a regulated
investment company, the Fund must comply with certain requirements of the Code
relating to, among other things, the source of its income and diversification of
its assets. If the Fund so qualifies and if it distributes to its shareholders
at least 90% of its net investment income (which includes net short term capital
gains, but not net capital gains, which are the excess of net long-term capital
gains over net short-term capital losses), it will not be required to pay
federal income taxes on the income distributed to shareholders. The Fund intends
to distribute at least the minimum amount of net investment income to satisfy
the 90% distribution requirement. The Fund will not be subject to federal income
tax on any net capital gains distributed to its shareholders provided that the
Fund meets the requirements under the Code for a corresponding capital gains
dividend paid deduction. As a Texas corporation, the Fund will not be
14
<PAGE>
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.
In order to avoid a 4% excise tax the Fund is required to distribute by
December 31 of each year at least 98% of its net investment income for such year
and at least 98% of its capital gain net income (computed on the basis of the
one-year period ending on October 31 of such year), plus any required
distribution amounts that were not distributed in previous taxable years. For
purposes of the excise tax, any net investment income or capital gain net income
retained by, and taxed in the hands of, the Fund is treated as having been
distributed.
Although dividends generally are treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in such months and paid in January of the following
year are treated as having been distributed by the Fund and received by the
shareholders on December 31 of the year in which the dividend was declared. In
addition, certain other distributions made after the close of a taxable year of
the Fund may be "spilled back" and treated as having been paid by the Fund
(except for purposes of the 4% excise tax) during such taxable year. In such
case, shareholders are treated as having received such dividends in the taxable
year in which the distribution is actually made.
Statements as to the tax status of each shareholder's dividends and
distributions are mailed annually. Each shareholder will also receive, as
applicable, various written notices after the close of the Fund's taxable year
(i.e., after each June 30th) with respect to certain dividends or distributions
that were paid by the Fund to its shareholders during the Fund's prior taxable
year.
To avoid being subject to a 31% federal withholding tax on dividends,
capital gains and proceeds of redemption, shareholders must furnish the Fund
with their taxpayer identification number and certify in writing that the
15
<PAGE>
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 the Fund at 5000 Quorum Drive, Suite 620, Dallas, Texas
75240 or at (800) 687-9494.
16
<PAGE>
<TABLE>
<CAPTION>
Investment Advisor Transfer Agent Distributor
------------------ -------------- -----------
<S> <C> <C>
Nye, Parnell & Emerson Fund Services, Inc. Northstar Securities, Inc.
Capital Management, Inc. 1500 Forest Avenue, Suite 111 5000 Quorum Drive, Suite 620
526 King Street, Suite 201 Richmond, Virginia 23229 Dallas, Texas 75240
Alexandria, Virginia, 22314
<CAPTION>
Administrator Independent Auditors Legal Counsel
------------- -------------------- -------------
<S> <C> <C>
Northstar Institutional Services Wallace Sanders & Company Frederick C. Summers, III
Corporation Certified Public Accountants A Professional Corporation
5000 Quorum Drive, Suite 620 511 E. John Carpenter Freeway Attorney at Law
Dallas, Texas 75240 Suite 200 5949 Sherry Lane
Irving, Texas 75062-3920 Suite 1025, LB109
Dallas, Texas 75225
<CAPTION>
Officers Directors Custodian
-------- --------- ---------
<S> <C> <C>
Douglas W. Powell Peter R. Goldschmidt, May Financial Corporation
Chief Executive Officer Chairman Robert H. Spiro, Jr. 8333 Douglas Avenue, Suite 400
Allen B. Clark, Jr. Dallas, Texas 75225
C. Dewey Elliott, III Douglas W. Powell
President C. Dewey Elliott, III
</TABLE>
STATEMENT OF ADDITIONAL INFORMATION ("SAI"). The SAI contains more details on
other aspects of the Fund. The SAI is incorporated by reference into this
Prospectus, making it legally part of this Prospectus.
SHAREHOLDER REPORTS. The Fund publishes Annual and Semi-Annual Reports. These
reports describe the Fund's performance, list its holdings, and discuss market
conditions, economic trends and Fund strategies that significantly affected the
Fund's performance during its last fiscal year.
To obtain free copies of the Fund's Annual Report, Semi-Annual Report, and SAI,
or to request other information about the Fund or make shareholder inquiries,
contact the Fund:
The Dominion Insight Growth Fund
5000 Quorum Drive, Suite 620
Dallas, Texas 75240
800-687-9494
972-385-9595
The SAI, the Fund's Annual and Semi-Annual reports and other related materials
are available on the SEC's Internet Web site (http://www.sec.gov). You can
obtain copies of this information upon paying a duplicating fee, by writing the
Public Reference Section of the SEC, Washington, D.C. 20549-6009. You can also
review and copy information about the Fund, including the Fund's SAI, at the
SEC's Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for
information on the operation of the SEC's Public Reference Room.
SEC file number 811-6727
17
<PAGE>
<TABLE>
<S><C>
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 1-800-687-9494 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
[ ] CORPORATIONS, 6. _____________________________________________________________________________________________
PARTNERSHIPS, Name of Corporation or Other Entity. If Trust, include date of trust instrument. Taxpayer
Trusts & Others
(USE LINES 6 & 7) 7. _____________________________________________________________________________________________
Name of Trustees to be in Registration Date of Trust Agreement
2. YOUR ADDRESS (PLEASE PRINT)
_______________________________________ _________________________________________________
Street Address Citizenship if not U.S.
_______________________________________ (______)_________________________________________
City Area Code Home Phone No.
_______________________________________ (______)_________________________________________
State Zip Area Code Business Phone No.
3. DUPLICATE
_________________________________________________________________________________________
Street Address
_________________________________________________________________________________________
City State Zip
4. YOUR INVESTMENT
(You may elect to utilize both options to save time at a later date.)
[ ] BY MAIL: Enclosed is a check payable to Dominion Insight Growth Fund in the amount of $________.
[ ] BY MAIL: Enclosed is a check payable to Cash Account Trust in the amount of $________.
[ ] BY WIRE: Call 1-800-628-4077 to obtain account number and wiring instructions. $________.
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.
<PAGE>
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 request, shares from my account and transmit
the proceeds directly to the Cash Account Trust. Call 1-800-687-9494 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
(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 no longer subject to backup withholding.
X ____________________________ X_____________________________ ____________________________
Individual(or Custodian) Joint Registration, if any Date
X ____________________________ X_____________________________ ____________________________
Corporate Officer, Trustee, etc. Title Date
</TABLE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
September 20, 2000
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 20, 2000 which
may be obtained free of charge from the Fund at the above address or by calling
the above telephone number. This Statement of Additional Information contains
additional and more detailed information about the Fund's operations and
activities than that set forth in the Prospectus.
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Fund and the Company ......................................................1
Investment Policies and Restrictions ..........................................1
Management and Advisory Services ..............................................3
Portfolio Transactions and Brokerage ..........................................4
Executive Officers and Directors ..............................................5
Purchase of Shares of the Fund ................................................7
Net Asset Value Determination .................................................7
The Distributor ...............................................................7
Redemption of Shares ..........................................................7
Income Dividends, Capital Gains and Distributions .............................8
Custodian .....................................................................8
Legal Counsel and Independent Auditors ........................................8
Registration Statement ........................................................8
Independent Auditor's Report ................................................F-1
Investments in Securities (June 30, 2000) ...................................F-2
Statement of Assets and Liabilities (June 30, 2000) .........................F-5
Statement of Operations (Year ended
June 30, 2000) .............................................................F-6
Statement of Changes in Net Assets (Years ended
June 30, 2000 and 1999) ....................................................F-7
Notes to Financial Statements (June 30, 2000) ...............................F-8
</TABLE>
<PAGE>
THE FUND AND THE COMPANY
The Fund is an open-end diversified management investment company.
The Fund is a series of shares of common stock, $.00l par value, of Dominion
Funds, Inc. (the "Company"), which was formed as a Texas corporation on June
5, 1992. The Articles of Incorporation of the Company permit the Board of
Directors of the Company to designate one or more series of common stock,
each series to have such relative rights and privileges as the Board of
Directors shall determine. The only series currently designated is the Fund.
The directors are also empowered by the Articles of Incorporation to
designate additional series and issue shares with respect thereto. Each share
represents an equal proportionate interest in the assets of the Fund with
each other share in such series and no interest in any other series.
Shares of the Fund entitle their holders to one vote per share;
however, separate votes are taken by each series on matters affecting an
individual series. For example, a change in investment policy for a series would
be voted upon by shareholders of only the series involved. Shares do not have
cumulative voting rights, preemptive rights or any conversion or exchange
rights. Shares of the Fund are fully paid and nonassessable when issued and
share equally in dividend and other distributions of the Fund, and in the event
of liquidation are entitled to receive equal shares of the net assets of the
Fund. The Fund does not contemplate holding regular meetings of shareholders to
elect directors or otherwise. However, the holders of 10% or more of the
outstanding shares may by written request require a meeting to consider the
removal of directors by a vote of a majority of the shares present and voting at
such meeting.
Statements contained in this Statement of Additional Information as to
the contents of any contract or other document referred to are not necessarily
complete, and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement of which
this Statement of Additional Information forms a part, each such statement being
qualified in all respects by such reference.
INVESTMENT POLICIES AND RESTRICTIONS
As stated in the Prospectus, the Fund's only investment objective is
capital appreciation. There can be no assurance that the Fund will, in fact,
achieve its objective. The Fund's investment objective may not be changed by
the Board of Directors without shareholder approval. The Prospectus discusses
the types of securities in which the Fund invests. The following discussion
of investment restrictions supplements that set forth in the Prospectus.
As indicated in the Prospectus, the Fund is subject to certain policies
and restrictions which may not be changed without shareholder approval.
Shareholder approval would be the approval by the lesser of (i) more than 50% of
the outstanding voting securities of the Fund, or (ii) 67% or more of the voting
securities present at a meeting if the holders of more than 50% of the
outstanding voting securities of the Fund are present or represented by proxy.
Without such shareholder approval, the Fund may not:
1. Purchase the securities of any one issuer (except securities issued
or guaranteed by the U.S. Government) if immediately after and as a result of
such purchase (a) the value of the holdings of the Fund in the securities of
such issuer exceeds 5% of the value of the Fund's total assets, or (b) the Fund
owns more than 10% of the outstanding voting securities of any one class of
securities of such issuer.
2. Concentrate its investments, that is, invest more than 25% of the
value of its assets, in any particular industry.
3. Change the Fund's investment objective, or invest, under normal
circumstances, less than 65% of the value of the Fund's total assets in equity
securities which management believes have a good potential for capital growth.
1
<PAGE>
4. Purchase or sell real estate or other interests (including limited
partnership interests) in real estate, except that the Fund may purchase or
sellsecurities 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
<PAGE>
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.
The portfolio turnover rate decreased from 185.62% for the fiscal
year ended June 30, 1999 to 120.65% for the fiscal year ended June 30, 2000
primarily as a result of decreased net redemptions. In addition, the Fund has
followed a new investment strategy under its new investment advisor, Nye,
Parnell, & Emerson Capital Management, Inc., as described under "Fund
Summary--Principal Investment Strategy and Policies" in the Prospectus, which
should result in longer holding periods, and thus reduce turnover.
MANAGEMENT AND ADVISORY SERVICES
As stated in the Prospectus, the Fund has an Investment Advisory
Agreement (the "Advisory Agreement") with Nye, Parnell & Emerson Capital
Management, Inc. (the "Advisor"). The Advisory Agreement was effective
November 1, 1999, and continues for an initial term of 120 days, and
thereafter only if approved by the vote of a lesser of (A) at least 67% of
the shares of the Fund present at a shareholder meeting, if the holders of
more than 50% of the outstanding shares are present or represented by proxy
at such meeting, or (B) at least 50% of the outstanding shares. 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 Fund incurred fees payable to the Advisor in the amount of
$164,986 for the fiscal year ended June 30, 2000.
The Advisor was formed in 1986. Paul Dietrich owns 75% of the
equity in Eton Court Asset Management, Ltd. ("Eton Court"), which owns 100%
of the Advisor. Mr. Dietrich is President/Managing Director of Eton Court.
Eton Court was formed in 1999. Besides the Advisor, Eton Court also owns a
majority interest in Peress Investment Advisors, Ltd. and is the process of
negotiating investments in three other investment advisory firms with assets
under management of over $1 billion. Mr. Dietrich was the Founder of the
Meridian Emerging Markets, Ltd., one of the leading providers of global
emerging markets company financial information. With offices in New York,
Boston, London and Princeton, Meridian collects, compiles, and distributes
fundamental financial data on all of the largest publicly traded companies in
over 56 emerging markets. Mr. Dietrich has also been an investment adviser
to a Bermuda-based, offshore investment fund. He is an international corporate
attorney and was formerly associated with two Washington, DC law firms, Squire,
Sanders & Dempsey, and Jones, Day, Reavis & Pogue.
The Advisor also performs investment advisory services for
individual and institutional 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.
Both the Fund and the Advisor have adopted Codes of Ethics. The Code
of Ethics of the Advisor does not prohibit personnel subject to its Code from
investing in securities including securities that may be purchased or held by
the Fund, but does not restrict such personnel from trading in any security if
he or she knows that, within the last week, the security was either
recommended for purchase or sale or actually purchased or sold by the Advisor
for the Fund, subject to certain limited exceptions. The Code of Ethics of the
Fund does not prohibit personnel subject to its Code from investing in
securities including securities that may be purchased or held by the Fund, but
does not restrict such personnel from purchasing any security within 15 days
before or after the sale by the Fund of such security, or selling any security
within 15 days before or after the purchase by the Fund of such security, if
he or she is aware of the purchase or sale by the Fund. The Distributor has
not adopted a Code of Ethics because it is not an affiliate of the Fund or the
Advisor, and because none of its directors or officers is a director or
officer of the Fund or the Advisor.
Northstar Institutional Services Corporation, formerly known as
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 $286,128,
$199,717, and $206,254, respectively, for the fiscal years ended June 30,
1998, 1999 and 2000. Except as provided in this paragraph, the Administrator
pays all operating costs of the Fund, including office space, custodian and
transfer agent fees, administrative, clerical, record keeping, bookkeeping,
legal (non-litigation), auditing and accounting expenses, expenses of
preparing tax returns, expenses of shareholders' meetings and preparing,
printing and mailing proxy statements, expenses of preparing and typesetting
periodic reports to shareholders (except for those reports the Fund permits
to be used as sales literature), fees and expenses of directors of the
Company, and the costs, including filing fees, of renewing or maintaining
registration of Fund shares under federal and state law. The Fund pays the
investment advisory fee and the administration fee, interest, taxes, the cost
of brokerage incurred in connection with execution of securities
transactions, litigation expenses and indemnification paid to advisors of the
Fund and officers and directors of the Company. The costs and expenses,
including legal and accounting fees, filing fees and printing costs, in
connection with the formation of the Fund and the preparation and filing of
the Fund's initial registration statement under the Securities Act of 1933
and Investment Company Act of 1940 were paid by the Fund.
3
<PAGE>
The Fund has entered into an accounting services agreement with
Commonwealth Fund Accounting, Inc. an affiliate of Fund Services, Inc., the
Fund's transfer agent. All costs associated with such services performed by
Commonwealth Fund Accounting, Inc. are borne by the Administrator.
Fund Services, Inc. serves as transfer agent for the purpose of
recording the transfer, issuance and redemption of shares of the Fund,
transferring shares of the Fund, disbursing dividends and other distributions to
shareholders, mailing shareholder information and receiving and responding to
various shareholder inquiries. All costs associated with such services performed
by Fund Service, Inc. are borne by the Administrator.
Elliott Family Partnership, Ltd. and Talon Partners, Ltd. each own
50% of the outstanding stock of the Administrator. C. Dewey Elliott, III and
Douglas W. Powell, officers and directors of the Fund, are beneficial owners
in Elliott Family Partnership, Ltd. and Talon Partners, Ltd., respectively.
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.
Since inception of the Fund, all brokerage commissions in connection
with its portfolio business have been paid to the Distributor. The Fund paid
$394,547 and $62,160, respectively, in brokerage commissions during the
fiscal years ended June 30, 1998, and 1999 to Dominion Capital Corporation,
which was then the Distributor and an affiliate of the Fund. On July 10,
1998, Northstar Securities, Inc. replaced Dominion Capital Corporation as the
Fund's Distributor. The Fund paid $115,595 and $72,203, respectively, in
brokerage commissions during the fiscal year ended June 30, 1999 and 2000 to
Northstar Securities, Inc. While Northstar Securities, Inc. is not an
affiliate of the Fund, it shares offices, personnel and expenses with the
Administrator. C. Dewey Elliott, III and Douglas W. Powell, officers and
directors of the Fund, are beneficial owners, officers, and directors of the
Administrator. 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.
4
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
The Board of Directors of Dominion Funds, Inc. (the "Company"), a
Texas corporation (of which the Fund is a series of shares of common stock),
oversee and review the Fund's management, administrator and other companies
who provide services to the Fund to ensure compliance with investment
policies. The directors and officers of the Company as a group held less
than 1% of the Fund's outstanding shares on the date on this Statement of
Additional Information. The directors and officers of the Company, their
principal occupations for the last five years and their affiliations, if any,
with Northstar Institutional Services Corporation (the "Administrator"), the
Fund's administrator, Nye, Parnell & Emerson 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:
<TABLE>
<CAPTION>
Position(s) Held
Name, Address, and Age with Fund * Occupation(s) During Past 5 Years
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Douglas W. Powell** Chief Executive Mr. Powell has been Chairman of the Board of Directors and Chief
5000 Quorum Drive Officer, Director Executive Officer of Northstar Financial Services, an SEC
Suite 620 registered investment advisor, since 1981, and Northstar
Dallas, Texas 75240 Institutional Services Corporation since June 1987. See "SEC
Age 60 Order" below.
C. Dewey Elliott, III** President, Mr. Elliott has been an officer, director of Northstar Financial
5000 Quorum Drive Director Services since 1986, and Northstar Institutional Services
Suite 620 Corporation since June 1987. See "SEC Order" below.
Dallas, Texas 75240
Age 53
Peter R. Goldschmidt Chairman of the Mr. Goldschmidt has a broad background in business and
2706 N. Randolph Street Board, Director legislative affairs and has recently resumed his marketing
Arlington, Virginia 22207 consulting practice. From September 1996 to September 1997, he
Age 71 was 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 1993 and 1994, he also worked with PIC, a fund-raising company.
Robert H. Spiro, Jr. Director Dr. Spiro retired from the Naval Reserve as a Rear Admiral in
105 Follin Lane, S.E. 1978. He is currently Chairman of RHS Imprinted Products, Inc.,
Vienna, Virginia 22180 and provides consulting on matters of marketing and management.
Age 79 He is also Vice President of the American Security Council and
President of the National Security Caucus Foundation.
Allen B. Clark, Jr. Director Mr. Clark is a Charter Financial Analyst. From April 1996 to
10718 Sandpiper Lane the present, he has been employed with the Department of
Dallas, Texas 75230 Veterans Affairs as an Administrative Officer of two medical
Age 58 services. 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.
</TABLE>
* Messrs. Powell and Elliott served as officers and directors of the Fund
from inception until their resignations in July, 1998, and thereafter
following their reelection to those positions in February, 1999. Mr.
Goldschmidt has been a director of the Fund since inception, and was
elected as Chairman of the Board in October, 1998. Mr. Spiro has been a
director of the Fund since inception. Mr. Clark has been a director of the
Fund since 1996.
** Interested person (as defined in the Investment Company Act of 1940) of the
Fund.
5
<PAGE>
SEC ORDER
Messrs. Powell and Elliott are the subject of an Order Making Findings and
Imposing Remedial Sanctions, and Order to Cease and Desist (collectively, the
"Order") issued by the SEC on May 13, 1999 in connection with an
administrative proceeding involving Dominion Capital Corporation ("Dominion")
(IN THE MATTER OF DOMINION CAPITAL CORPORATION, DOUGLAS WOODROW POWELL,
CHARLES DEWEY ELLIOTT, AND WILLIAM CARL BERRY, RESPONDENTS). Dominion was
previously the Fund's Distributor, and Messrs. Powell and Elliott were
officers, directors, principal owners, and registered principals of Dominion.
The Order was issued after the Commission accepted an Offer of Settlement by
Dominion and Messrs. Powell and Elliott in which they neither admitted nor
denied the findings contained in the Order. The Order made the following
findings: that five registered representatives of Dominion engaged in
activities that constituted willful violations of the anti-fraud provisions
of Section 17(a) of the Securities Act of 1933 (the "1933 Act") and Section
10(b) of the Securities Exchange Act of 1934 (the "1934 Act") and Rule 10b-5
promulgated thereunder; that Dominion and Messrs. Powell and Elliott failed
reasonably to supervise these registered representatives, all of which were
subject to their supervision, in their conduct of these activities; and that
Dominion willfully violated Section 17(a) of the 1934 Act and Rule
17a-3(a)(6) thereunder by failing to make and keep current books and records
in connection with these activities. The Order imposed the following
sanctions: Dominion's registration as a broker and dealer in securities was
revoked; Dominion was also ordered to pay a civil money penalty of $75,000;
Messrs. Powell and Elliott were each suspended from association with any
broker or dealer in any capacity for a period of three months, and,
thereafter, in any supervisory or proprietary capacity for a period of an
additional six months; and Messrs. Powell and Elliott were each also ordered
to pay a civil money penalty of $35,000.
COMPENSATION
The following information is provided for all directors of the Fund and
for all members of any advisory board who receive compensation from the Fund,
and for each of the highest paid executive officers or any affiliated person
of the Fund who received aggregate compensation from the Fund for the most
recently completed fiscal year exceeding $60,000:
<TABLE>
<CAPTION>
Pension or Estimated Total Compensation
Aggregate Retirement Benefits Annual From Fund and Fund
Compensation Accrued As Part of benefits Upon Complex Paid to
Name of Person, Position From Fund(1) Fund Expenses Retirement Directors
------------------------ ------------ ------------------- ------------- -------------------
<S> <C> <C> <C> <C>
Douglas W. Powell, Director $3,600 $3,600
C. Dewey Elliott, III, Director $3,600 $3,600
Peter R. Goldschmidt, Director $4,800 $4,800
Robert H. Spiro, Jr., Director $3,600 $3,600
Allen B. Clark, Jr., Director $3,600 $3,600
</TABLE>
(1)All compensation shown was paid by Northstar Institutional Services
Corporation, the Administrator, during the last fiscal year. The Fund does
not pay, nor is it obligated to pay, such compensation shown.
7
<PAGE>
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.
The Prospectus contains detailed information about the purchase of shares.
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 are
valued at fair value determined in good faith by the Advisor under the
supervision of the Company's Board of Directors.
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.
The Fund paid $23,718 and $455, respectively, in sales charges (in
connection with distributing Fund shares) during the fiscal years ended June
30, 1998 and 1999 to Dominion Capital Corporation, which was then the
Distributor and an affiliate of the Fund. On July 10, 1998, Northstar
Securities, Inc. replaced Dominion Capital Corporation as the Fund's
Distributor. The Fund paid $18,156 in sales charges during the fiscal year
ended June 30, 1999 to Northstar Securities, Inc. While Northstar Securities,
Inc. is not an affiliate of the Fund, it shares offices, personnel and
expenses with the Administrator. C. Dewey Elliott, III and Douglas W. Powell,
officers and directors of the Fund, are beneficial owners, officers, and
directors of the Administrator. Northstar Securities, Inc. waived the sales
charge on all sales of the Fund's shares that occurred on or after April 1,
1999.
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
8
<PAGE>
selected from its assets at its discretion. The Fund has, however, elected to be
governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant to
which the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net asset value of the Fund during any 90-day period for
any one shareholder. Should redemptions by any shareholder exceed such
limitation, the Fund will have the option of redeeming the excess in cash or in
kind. If shares are redeemed in kind, the redeeming shareholder might incur
brokerage costs in converting the assets to cash. The method of valuing
securities used to make redemptions in kind will be the same as the method of
valuing portfolio securities described under the Section "Net Asset Value
Determination," and such valuation will be made as of the same time the
redemption price is determined.
The right to require the Fund to redeem its shares may be suspended, or
the date of payment may be postponed, whenever (1) trading on the New York Stock
Exchange is restricted, as determined by the Securities and Exchange Commission,
or the New York Stock Exchange is closed except for holidays and weekends, (2)
the Securities and Exchange Commission permits such suspension and so orders, or
(3) an emergency exists as determined by the Securities and Exchange Commission
so that disposal of securities and determination of net asset value is not
reasonably practicable.
INCOME DIVIDENDS, CAPITAL GAINS AND
DISTRIBUTIONS
It is the policy of the Fund to make at least annual distributions of
substantially all of its investment income and at least annual distributions of
any net realized capital gains. Distributions reflecting capital gains realized
during each fiscal year ended June 30 normally are declared and payable to
shareholders in the subsequent fiscal year. Distributions reflecting investment
income received during the fiscal year ended June 30 normally are made during
the current and subsequent fiscal year.
All investors who do not elect otherwise will have all of their income
dividends and capital gains distributions reinvested in additional Fund shares,
at net asset value as described under "Distributions and Taxes-Reinvestment of
Distributions" in the Prospectus. Shareholders who desire to receive their
dividends and distributions in cash may so elect on their account applications
or by written notice to the Fund.
CUSTODIAN
May Financial Corporation, 8333 Douglas Avenue, Dallas, Texas 75240, is
the custodian of the Fund. May Financial Corporation deposits securities of the
Fund with a trust company which acts as a securities depository. The custodian,
among other things, attends to the collection of dividends and payment for and
collection of proceeds of securities bought and sold by Fund.
LEGAL COUNSEL AND INDEPENDENT AUDITORS
Counsel to the Fund is Frederick C. Summers, III, a Professional
Corporation, Attorney at Law, 5949 Sherry Lane, Suite 1025, LB109, Dallas,
Texas 75225.
The independent auditor for the Fund is Wallace Sanders & Company,
511 E. John Carpenter Freeway, Suite 200, Irving, Texas 75062-3920.
REGISTRATION STATEMENT
There has been filed with the Securities and Exchange Commission,
Washington, D.C. a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities to which this Statement of Additional
Information relates. If further information is desired with respect to the Fund
or such securities, reference is made to the Registration Statement, as it may
be amended from time to time, and the exhibits filed as a part thereof.
9
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and
Board of Directors of
Dominion Funds, Inc.
We have audited the accompanying statement of assets and liabilities of the
Dominion Insight Growth Fund portfolio of Dominion Funds, Inc., including the
schedule of investments in securities, as of June 30, 2000, and the related
statements of operations and changes in net assets and the financial
highlights for the year 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 audit. The statement of changes in net
assets for the year ended June 30, 1999 and financial highlights for the four
years then ended were audited by other auditors whose report dated July 14,
1999, expressed an unqualified opinion on the statement of changes in net
assets and financial highlights.
We conducted our audit 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, 2000, 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
audit provides 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 the
Dominion Insight Growth Fund portfolio of Dominion Funds, Inc. as of June 30,
2000, the results of its operations, the changes in its net assets, and the
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
WALLACE SANDERS & COMPANY
Irving, Texas
July 18, 2000
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value $ 17,692,679
(identified cost $12,328,982)
Cash 56,242
Receivables
Investment securities sold 207,981
Dividends and interest 2,845
------------
TOTAL ASSETS 17,959,747
------------
LIABILITIES
Payables
Investment advisory fee 14,585
Administrative fee 18,186
Investment securities purchased 23,936
------------
TOTAL LIABILITIES 56,707
------------
NET ASSETS
Equivalent to $25.47 per share on
702,901 shares of capital stock outstanding $ 17,903,040
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
PERCENT OF
COMMON STOCKS SHARES VALUE TOTAL ASSETS
------------- ------------ ------------ --------------
<S> <C> <C> <C>
Air Courier
FedEx Corporation (a) 3,500 $ 133,000 0.74%
------------ --------------
Audio & Video Equipment
Gemstar International Group Limited (a) 3,300 202,795 1.13
------------ --------------
Biotechnology & Drugs
Immunex Corporation (a) 3,600 177,975 0.99
MedImmune, Inc. (a) 4,500 333,000 1.85
------------ --------------
510,975 2.85
------------ --------------
Broadcasting & Cable TV
UnitedGlobalCom, Inc. Class A (a) 1,800 84,150 0.47
------------ --------------
Communications Equipment
Advanced Fibre Communications, Inc. (a) 3,000 135,938 0.76
CIENA Corporation (a) 650 108,347 0.60
Comverse Technology, Inc. (a) 2,000 186,000 1.04
Harmonic Inc. (a) 2,042 50,540 0.28
JDS Uniphase Corporation (a) 9,000 1,078,875 6.01
Juniper Networks, Inc. (a) 1,200 174,675 0.97
Lucent Technologies Inc. 6,000 355,500 1.98
Motorola, Inc. 6,000 174,375 0.97
Nokia Corporation ADR (a) 3,200 159,800 0.89
Nortel Networks Corporation 5,100 348,075 1.94
Powerwave Technologies, Inc. (a) 2,800 123,200 0.69
QUALCOMM Incorporated (a) 9,200 552,000 3.07
Tellabs, Inc. (a) 5,000 342,188 1.91
------------ --------------
3,789,511 21.10
------------ --------------
Communication Services
Global Crossing Ltd. (a) 4,000 105,250 0.59
Nextel Communications, Inc. (a) 5,000 305,938 1.70
Qwest Communications International Inc. (a) 1,800 89,438 0.50
Verizon Communications 1,700 86,381 0.48
Vodafone AirTouch PLC ADR 7,000 290,063 1.62
WorldCom, Inc. (a) 8,250 378,469 2.11
------------ --------------
1,255,538 6.99
------------ --------------
Computer Hardware
Dell Computer Corporation (a) 6,500 320,531 1.78
International Business Machines Corporation 1,500 164,344 0.92
Sun Microsystems, Inc. (a) 7,500 682,031 3.80
------------ --------------
1,166,906 6.50
------------ --------------
Computer Networks
Cisco Systems, Inc. (a) 14,800 940,725 5.24
Network Appliance, Inc. (a) 2,100 169,050 0.94
------------ --------------
1,109,775 6.18
------------ --------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
PERCENT OF
COMMON STOCKS (CONTINUED) SHARES VALUE TOTAL ASSETS
------------------------- ------------ ------------ --------------
<S> <C> <C> <C>
Computer Services
America Online, Inc. (a) 4,000 $ 211,000 1.17%
------------ --------------
Computer Storage Devices
EMC Corporation (a) 12,000 923,250 5.14
------------ --------------
Conglomerates
General Electric Company 5,100 270,300 1.51
------------ --------------
Consumer Financial Services
Concord EFS, Inc. (a) 4,900 127,400 0.71
------------ --------------
Electronic Instruments & Controls
Agilent Technologies, Inc. (a) 125 9,219 0.05
CTS Corporation 2,200 99,000 0.55
Sanmina Corporation (a) 1,400 119,700 0.67
SCI Systems, Inc. (a) 2,000 78,375 0.44
Solectron Corporation (a) 7,000 293,125 1.63
------------ --------------
599,419 3.34
------------ --------------
Major Drugs
Pfizer, Inc. 7,200 345,600 1.92
------------ --------------
Media
Time Warner Inc. 4,300 326,800 1.82
------------ --------------
Medical Equipment & Supplies
Medtronic, Inc. 1,500 74,719 0.42
------------ --------------
Office Equipment
MICROS Systems, Inc. (a) 4,000 74,250 0.41
------------ --------------
Rental & Leasing
Comdisco, Inc. 3,000 66,938 0.37
------------ --------------
Retail (Department & Discount)
Wal-Mart Stores, Inc. 5,800 334,225 1.86
------------ --------------
S&Ls/Savings Banks
Capital One Financial Corporation 2,400 107,100 0.60
------------ --------------
Scientific & Technical Instruments
Cytyc Corporation (a) 2,600 138,775 0.77
------------ --------------
Security Systems & Services
Symbol Technologies, Inc. 1,700 91,800 0.51
------------ --------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
PERCENT OF
COMMON STOCKS (CONTINUED) SHARES VALUE TOTAL ASSETS
------------------------- ------------ ------------ --------------
<S> <C> <C> <C>
Semiconductors
Altera Corporation (a) 1,500 $ 152,906 0.85%
Applied Materials, Inc. (a) 3,900 353,438 1.97
Applied Micro Circuits Corporation (a) 3,500 345,625 1.92
Broadcom Corporation Class A (a) 1,700 372,194 2.07
Conexant Systems, Inc. (a) 3,300 160,463 0.89
Cree, Inc. (a) 1,000 133,500 0.74
Intel Corporation 4,000 534,750 2.98
International Rectifier Corporation (a) 1,800 100,800 0.56
PMC-Sierra, Inc. (a) 900 159,919 0.89
Rambus Inc. (a) 6,000 618,000 3.44
RF Micro Devices, Inc. (a) 2,000 175,250 0.98
SDL, Inc. (a) 600 171,113 0.95
Texas Instruments Incorporated 4,200 288,488 1.61
Vitesse Semiconductor Corporation (a) 3,000 220,688 1.23
Xilinx, Inc. (a) 3,500 288,969 1.61
------------ --------------
4,076,100 22.70
------------ --------------
Software & Programming
BroadVision, Inc. (a) 5,500 279,469 1.56
Citrix Systems, Inc. (a) 1,600 30,300 0.17
Compuware Corporation (a) 11,000 114,125 0.64
Inktomi Corporation (a) 1,050 124,163 0.69
Mercury Interactive Corporation (a) 2,000 193,500 1.08
Microsoft Corporation (a) 3,700 296,000 1.65
Oracle Corporation (a) 3,000 252,188 1.40
RealNetworks, Inc. (a) 1,700 85,956 0.48
Siebel Systems, Inc. (a) 950 155,384 0.87
VERITAS Software Corporation (a) 1,250 141,270 0.79
------------ --------------
1,672,354 9.31
------------ --------------
Total Investments in Securities
(cost $12,328,982) $17,692,679 98.51%
============ ==============
</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, 2000
<TABLE>
INVESTMENT LOSS
<S> <C>
Investment income
Dividends $ 20,198
Interest 14,885
------------
Total investment income 35,083
------------
Expenses
Investment advisory fee 164,986
Administrative fee 206,254
------------
Total expenses 371,240
------------
NET INVESTMENT LOSS (336,157)
------------
REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS
Net realized gain on investments in securities 7,297,542
Net change in unrealized appreciation
of investments in securities 1,590,653
------------
NET GAIN ON INVESTMENTS 8,888,195
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 8,552,038
============
</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, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
CHANGE IN NET ASSETS FROM OPERATIONS
Net investment loss $ (336,157) $ (341,979)
Net realized gain on investments in securities 7,297,542 3,598,098
Net change in unrealized appreciation on
investments in securities 1,590,653 228,458
------------ ------------
Net increase in net assets
resulting from operations 8,552,038 3,484,577
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gains on investments in securities (3,649,885) (2,151,402)
Capital share transactions- net (1,509,883) (6,072,905)
------------ ------------
Total increase (decrease) in net assets 3,392,270 (4,739,730)
NET ASSETS
Beginning of year 14,510,770 19,250,500
------------ ------------
End of year (including undistributed
investment loss of $1,992,331
and $1,656,174, respectively) $ 17,903,040 $ 14,510,770
============ ============
</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,
and is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The Fund is
subject to various investment restrictions as set forth in the
Statement of Additional Information. The 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 capital share in the Fund represents
an equal proportionate interest in the net assets of the Fund
with each other capital 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 income 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 on the
national market systems are valued at the last quoted sales price
on the day of valuation. Securities for which representative
market quotations are not readily available are valued at fair
value as determined in good faith by the Board of Directors.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the date the
securities are purchased or sold. Realized security gains and
losses from security transactions are reported on an identified
cost basis. Dividend 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, 2000, the
interest rate was 5.30%.
INCOME TAXES
The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are 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, no federal income or excise tax
provision is required.
Net investment income (loss), net realized gains (losses) and the
cost of investments in securities may differ for financial
statement and income tax purposes. The character of distributions
from net investment income or net realized gains may differ from
their ultimate characterization for income tax purposes. At June
30, 2000, 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.
NOTE 2 - DISTRIBUTION TO SHAREHOLDERS
Distributions of $5.82 aggregating $3,649,885 were declared from
net realized gains from security transactions. The dividends were
payable on December 3, 1999, to shareholders of record on
November 30, 1999.
At June 30, 2000, the Fund had undistributed net realized gains
of $6,567,618, of which $4,164,929 are short-term.
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - CAPITAL SHARE TRANSACTIONS
As of June 30, 2000, 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, 2000, capital paid-in aggregated $7,627,898.
Transactions in shares of capital stock for the years ended June
30, 2000 and June 30, 1999 are as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
--------------------------------- ---------------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Shares sold 23,115 41,539 $ 520,531 $ 705,427
Shares issued in
reinvestment of
dividends 166,094 136,971 3,371,705 2,045,849
---------- ---------- ----------- -----------
189,209 178,510 3,892,236 2,751,276
Shares redeemed 243,907 517,175 5,402,119 8,824,181
---------- ---------- ----------- -----------
Net decrease (54,698) (338,665) $(1,509,883) $(6,072,905)
========== ========== =========== ===========
</TABLE>
NOTE 4 - SECURITIES TRANSACTIONS
Cost of purchases and sales of securities (excluding short-term
obligations) aggregated $19,680,800 and $17,610,916 respectively,
for the year ended June 30, 2000. As of June 30, 2000, the
aggregate unrealized appreciation and depreciation of securities
was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 6,450,348
Unrealized depreciation (1,086,651)
------------
Net unrealized appreciation $ 5,363,697
============
</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 Nye, Parnell &
Emerson Capital Management, Inc. (Advisor) to act as its
investment advisor. The Advisor also serves as investment advisor
to certain private accounts. The Advisor has no previous
experience in advising a mutual fund, other than to advise the
Fund since November 1, 1999. 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, including the negotiation of commissions and the allocation
of principal business and portfolio brokerage. 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 Northstar Securities,
Inc. (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. There is no
sales charge to the investor for the purchase of shares.
During the year ended June 30, 2000, a majority of the orders for
the Fund's securities transactions were placed through the
Distributor. Commissions charged by the Distributor for executing
security transactions were $72,203 for the year ended June 30,
2000.
Certain directors and officers of the Company are also directors,
officers and/or employees of the Administrator.
<PAGE>
DOMINION INSIGHT GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA (1):
Net asset value, beginning of year $ 19.15 $ 17.56 $ 15.79 $ 19.04 $ 13.53
---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment loss (.48) (.36) (.37) (.33) (.34)
Net realized and unrealized gain
(loss) on investments in securities 12.62 4.20 2.71 (1.16) 7.39
---------- ---------- ---------- ---------- ----------
Total income (loss) from investment
operations 12.14 3.84 2.34 (1.49) 7.05
---------- ---------- ---------- ---------- ----------
Less distributions:
Distributions from net realized gains (5.82) (2.25) (.57) (1.76) (1.54)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 25.47 $ 19.15 $ 17.56 $ 15.79 $ 19.04
========== ========== ========== ========== ==========
Total return 69.10% 25.47% 15.00% (8.21)% 54.32%
========== ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
thousands) $ 17,903 $ 14,511 $ 19,251 $ 22,944 $ 27,908
Ratio of expenses to average
net assets 2.24% 2.25% 2.25% 2.30% 2.31%
Ratio of net investment loss to
average net assets 2.02% 2.14% 2.08% 2.04% 2.03%
Portfolio turnover rate 120.65% 185.62% 273.25% 261.05% 172.87%
</TABLE>
(1) Per share information has been calculated using the average number of shares
outstanding.
The accompanying notes are an integral part of these financial highlights.
<PAGE>
DOMINION INSIGHT GROWTH FUND
PART C: OTHER INFORMATION
Item 23 EXHIBITS
Exhibit a Articles of Incorporation*
Exhibit b Bylaws*
Exhibit c Specimen Share Certificate*
Exhibit d Investment Advisory Agreement**
Exhibit 23e1 Distribution Agreement***
23e2 Selected Dealer Agreement***
Exhibit f Not Applicable
Exhibit g(1) Custody Agreement With May Financial Corporation*
(2) Participant's Agreement with The Depository Trust
Company*
Exhibit h(1) Administration Agreement****
(2) Transfer Agent Agreement****
(3) Omnibus Account Services Agreement*****
Exhibit i Opinion and Consent of Consent of Frederick C.
Summers, III, a Professional Corporation**
Exhibit 23j(1) Consent of Kinder & Wyman, P.C.
j(2) Consent of Frederick C. Summers, III, A
Professional Corporation
j(3) Consent of Wallace Sanders & Company
Exhibit k Not Applicable
Exhibit l Subscription Agreement*
Exhibit m Not Applicable
Exhibit n Not Applicable
Exhibit o(1) Code of Ethics of the Fund
Exhibit o(2) Code of Ethics of the Advisor
* Previously provided--filed with original registration statement on July 21,
1992.
** Previously provided--filed with post-effective amendment 11 to the
registration statement on November 1, 1999.
*** Previously provided--filed with post-effective amendment 10 to the
registration statement on September 2, 1999.
**** Previously provided--filed with pre-effective amendment 1 to the
registration statement on September 30, 1992.
*****Previously provided--filed with post-effective amendment 6 to the
registration statement on November 19, 1996.
Item 24 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 25 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 a and b 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 26 BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
(a) Nye, Parnell & Emerson Capital Management, Inc. (the "Advisor") serves as
the investment advisor of the Registrant. The Advisor also performs investment
advisory services for individual and institutional accounts.
(b) The following information is provided with respect to each director or
officer of the Advisor:
PAUL DIETRICH, CHAIRMAN & MANAGING DIRECTOR
Mr. Dietrich was the Founder of Meridian Emerging Markets, Ltd., one of the
leading providers of global emerging markets company financial information. With
offices in New York, Boston, London and Princeton, Meridian collects, compiles,
and distributes fundamental financial data on all of the largest publicly traded
companies in over 56 emerging markets. Mr. Dietrich has also been an investment
adviser to a Bermuda-based, offshore investment fund. He is an international
corporate attorney and was formerly associated with two Washington, DC law
firms, Squire, Sanders & Dempsey, and Jones, Day, Reavis & Pogue.
ROBERT LOPINTO, DIRECTOR
Mr. LoPinto is the President and Founder of TriCapital Corporation, an
investment banking firm focused on middle market transactions, including
buyouts, growth financings, and M&A.
EDWARD R. VENIT, EXECUTIVE VICE PRESIDENT, CHIEF OPERATING OFFICER
Edward R. Venit is a senior securities attorney who has advised domestic and
international brokerage and asset management firms on legal and compliance
issues and operating procedures.
From 1992 to 1996, Mr. Venit was General Counsel and Chief Operating Officer for
Baring Securities Inc. (NY). He was a member of the senior management team
responsible for developing the U.S. and Latin American operations of this
NYSE/NASD member firm engaged in both U.S. and global securities activities,
including corporate finance, asset management and institutional brokerage. He
also oversaw strategic planning, budgeting, customer relations and human
resources. During his tenure at Baring Securities Inc., the U.S. operations grew
by 400% and had over 300 employees. Mr. Venit started his career in the Office
of the General Counsel of the National Association of Securities Dealers and has
been of-counsel to the law firms of Kelley Drye & Warren and Kutak Rock.
(c) The principal business addresses of both the Advisor and the Advisor's
Portfolio Management Group is 526 King Street, Suite 201 Alexandria, Virginia
22314.
i
<PAGE>
Item 27 PRINCIPAL UNDERWRITERS
(a) 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.
(b) 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>
Russell Tarbett President, CEO None
5000 Quorum Drive, Suite 620 and Director
Dallas, Texas 75240
</TABLE>
(c) The Fund paid $72,203 in brokerage commissions during the fiscal
year ended June 30, 2000 to Northstar Securities, Inc.
Item 28 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 29 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 29.
Item 30 UNDERTAKINGS
Not applicable.
ii
<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 pusuant 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
13th day of September, 2000.
DOMINION FUNDS, INC.
By: /s/ Douglas W. Powell
---------------------
Douglas W. Powell,
Chief Executive Officer
Pursuant to the Requirements of the Securities Act of 1933, this
Amended Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Douglas W. Powell Chief Executive Officer September 13, 2000
---------------------- (Principal Executive Officer
Douglas W. Powell and Principal Financial
Accounting Officer)
/s/ C. Dewey Elliott, III President and Director September 13, 2000
--------------------------
C. Dewey Elliott, III
/s/ Robert H. Spiro, Jr. Director September 13, 2000
------------------------
Robert H. Spiro, Jr.
/s/ Peter R. Goldschmidt Director September 13, 2000
------------------------
Peter R. Goldschmidt
/s/ Allen B. Clark, Jr. Director September 13, 2000
-----------------------
Allen B. Clark, Jr.
</TABLE>
iii
<PAGE>
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------ -------
<S> <C>
Exhibit a Articles of Incorporation*
Exhibit b Bylaws*
Exhibit c Specimen Share Certificate*
Exhibit d Investment Advisory Agreement*
Exhibit e(1) Distribution Agreement*
e(2) Selected Dealer Agreement*
Exhibit f Not Applicable
Exhibit g(1) Custody Agreement With May Financial Corporation*
(2) Participant's Agreement with The Depository Trust
Company*
Exhibit h(1) Administration Agreement*
(2) Transfer Agent Agreement*
(3) Omnibus Account Services Agreement*
Exhibit i Opinion and Consent of Frederick C. Summers, III,
A Professional Corporation*
Exhibit j(1) Consent of Kinder & Wyman, P.C.
j(2) Consent of Frederick C. Summers, III,
A Professional Corporation*
j(3) Consent of Wallace Sanders & Company
Exhibit k Not Applicable
Exhibit l Subscription Agreement*
Exhibit m Not Applicable
Exhibit n Not Applicable
Exhibit o(1) Code of Ethics of the Fund.
Exhibit o(2) Code of Ethics of the Advisor.
</TABLE>
*Previously provided
