SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DOMINION FUNDS, INC.
(Name of Registrant as Specified In Its Charter)
---------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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DOMINION FUNDS, INC.
December 10, 1999
To Our Shareholders:
Enclosed is a notice of annual meeting of shareholders to be held on December
21, 1999. Your vote on several issues is very important, especially as your
Board of Directors continues to work on your behalf.
PROXY SOLICITATION
A PROXY IS ALSO ENCLOSED FOR YOUR SUBMISSION IN THE EVENT YOU ARE UNABLE TO
ATTEND. IT IS VERY IMPORTANT FOR YOU TO COMPLETE THIS AND RETURN IT IN THE
RETURN ENVELOPE AS SOON AS POSSIBLE. YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR ON EACH ISSUE.
MATTERS FOR CONSIDERATION
The Proxy statement discusses the matters scheduled for consideration at the
annual meeting. They include an election of five directors to serve on the board
of directors; approval or disapproval of a new investment manager, Nye, Parnell,
& Emerson; ratification or rejection of Wallace Sanders & Company as auditors of
the Fund; and any other business to come properly before the meeting.
NYE, PARNELL & EMERSON
For reasons described in our letter of December 3, 1999, the Board of your Fund
has selected Nye, Parnell, & Emerson (NP&E) to manage the Fund into the new
millennium beginning November 1, 1999. NP&E is one of the few U.S. investment
managers whose has consistently ranked in the top 25th percentile of all
investment managers in terms of long-term performance. Nelson Information's 1999
Trade Directory of the "World's Best Money Managers" annually ranks all of the
top international investment managers. NP&E has been awarded one of Nelson's top
rankings for each of the past one year, three years, and five years. Because of
NP&E's track record and presence, the Board believes NP&E will provide
consistent, stable and superior long-term investment performance for the Fund.
YEAR 2000
As we move into the New Year, we believe your Fund is positioned to again be one
of the best performing growth mutual funds in America. Your vote in favor of
these initiatives will support and continue this process. If you will be unable
to attend in person, be sure to send your proxy at your earliest convenience.
Then, be sure to send your e-mail address to us.
Very truly yours,
DOMINION FUNDS, INC.
/s/ C. Dewey Elliott
C. Dewey Elliott, III
President
5000 Quorum Drive, Dallas, Texas 75240
www.dominionfunds.com
e-mail: info@dominionfunds.com
DOMINION FUNDS, INC.
5000 QUORUM DRIVE
SUITE 620
DALLAS, TEXAS 75240
(972) 385-9595
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 21, 1999
To the Shareholders of DOMINION FUNDS, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of
Dominion Funds, Inc., a Texas corporation (the "Fund"), will be held at
10:00a.m., Central Time, on Tuesday, December 21, 1999, at 5000 Quorum Drive,
Suite 620, Dallas, Texas 75240, for the following purposes:
1. To elect five directors to serve until the next Annual Meeting, or
until their successors are duly elected and have qualified;
2. To approve or disapprove the Investment Advisory Agreement between the
Dominion Insight Growth Fund and Nye, Parnell & Emerson Capital
Management, Inc.;
3. To ratify or reject the selection of Wallace Sanders & Company as
auditors of the Fund for the fiscal year ending June 30, 2000; and
4. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only shareholders of record at the close of business on November 10,
1999, the record date for this meeting, will be entitled to notice of and to
vote at the meeting and any adjournments thereof.
IMPORTANT
Your vote is important and all shareholders are asked to be present at
the Annual Meeting in person or by proxy. If you will be unable to be present in
person, we urge you to complete, sign, date and return the enclosed proxy at
your earliest convenience using the enclosed stamped envelope. Sending in your
proxy will not prevent you from personally voting your shares at the meeting
since you may revoke your proxy by advising the Board of Directors of the Fund
in writing (by subsequent proxy or otherwise) of such revocation at any time
before it is voted.
By Order of the Board of Directors,
Douglas W. Powell, Secretary
Dallas, Texas
December 10, 1999
1
DOMINION FUNDS, INC.
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 21, 1999
-------------------
The Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Dominion Funds, Inc. (the "Fund"), to be
used at the Annual Meeting of Shareholders of the Fund to be held at 10:00 a.m.,
Central Time, on Tuesday, December 21, 1999, at 5000 Quorum Drive, Suite 620,
Dallas, Texas 75240, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders.
The Fund is the issuer of the Dominion Insight Growth Fund series of
common stock. The Dominion Insight Growth Fund is the only series of shares of
the Fund outstanding.
Execution of a proxy given in response to this solicitation will not
affect a shareholder's right to attend the meeting and to vote in person.
Presence at the meeting of a shareholder who has signed a proxy does not in
itself revoke the proxy. Any shareholder giving a proxy may revoke it at any
time before it is exercised by giving notice thereof to the Board of Directors
in writing. Unless so revoked, the shares represented by proxies received by the
Board of Directors will be voted at the meeting or any adjournments thereof.
Where a shareholder specifies a choice by means of a ballot provided in the
proxy, the shares will be voted in accordance with such specification. If no
choice is indicated, proxies will be voted for the election of the nominees for
directors and the proposal set forth in the Notice of Annual Meeting of
Shareholders.
The Notice of Annual Meeting of Shareholders, this Proxy Statement, and
the accompanying form of proxy were first mailed to shareholders of the Fund on
or about December 10, 1999.
Only holders of Dominion Insight Growth Fund series of common stock
shares as of the close of business on November 10, 1999, are entitled to notice
of and to vote at the Annual Meeting. On that date, the Fund had outstanding and
entitled to vote 631,019.533 shares of Common Stock. The record holder of each
outstanding share is entitled to one vote on all matters submitted to
shareholders.
The Fund will furnish, without charge, a copy of the Fund's Annual
Report, and the most recent Semi-Annual Report succeeding the Annual Report, if
any, to a shareholder upon request. To obtain free copies of these reports, a
request should be directed to: The Dominion Insight Growth Fund, 5000 Quorum
Drive, Suite 620, Dallas, Texas 75240, 800-687-9494, 972-385-9595. These
reports may also be obtained at www.dominionfunds.com.
2
ELECTION OF DIRECTORS
The Board of Directors of the Fund consists of five members, each of
whom is to hold office until the next annual meeting of shareholders or until
his successor is elected and qualified. Each nominee has consented to be named
in this Proxy Statement and to serve if elected. Management has no reason to
believe that any of the named nominees will be unable to serve as a director.
However, in such event, the person named as proxy reserves full discretion, in
accordance with his best judgment, to vote or refrain from voting for such other
person or persons as may be nominated. All nominees are members of the present
Board of Directors. The proxies cannot vote for a greater number of persons than
named below.
The name, age, principal occupations during the past five years and
other information with respect to each of the nominees for election as a
director of the Fund are set forth below:
Position(s)
Name, Address, and Age Held with Fund Occupation(s) During Past 5 Years
---------------------- ---------------- ---------------------------------
*
-
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 Dominion Financial Services, an SEC registered
Suite 620 investment advisor, since 1981, and Dominion Institutional Services
Dallas, Texas 75240 Corporation since June 1987. See "SEC Order" below.
Age 59
C. Dewey Elliott, III** President, Mr. Elliott has been an officer, director of Dominion Financial
5000 Quorum Drive Director Services since 1986, and Dominion Institutional Services
Suite 620 Corporation since June 1987. See "SEC Order" below.
Dallas, Texas 75240
Age 52
Peter R. Goldschmidt Chairman of the Mr. Goldschmidt has a broad background in business and legislative
2706 N. Randolph Street Board, Director affairs and has recently resumed his marketing consulting practice.
Arlington, Virginia 22207 From September 1996 to September 1997, he was an Account
Age 70 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 1978.
105 Follin Lane, S.E. He is currently Chairman of RHS Imprinted Products, Inc., and
Vienna, Virginia 22180 provides consulting on matters of marketing and management. He is
Age 78 also Vice President of the American Security Council and President
of the American Security Caucus Foundation.
Allen B. Clark, Jr. Director Mr. Clark is a Charter Financial Analyst. From April 1996 to the
10718 Sandpiper Lane present, he has been employed with the Department of Veterans
Dallas, Texas 75230 Affairs as an Administrative Officer of two medical services. From
Age 57 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.
* 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
3
1996.
** Interested person (as defined in the Investment Company Act of 1940) of
the Fund.
4
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
Information with respect to compensation paid to each of the directors
of the Fund during the fiscal year ended June 30, 1999 is set forth below.
All compensation shown was paid by Dominion Institutional Services
Corporation, the administrator of the Fund. The Fund does not pay, nor is it
obligated to pay, such compensation shown.
Aggregate Pension or Retirement Estimated Total Compensation
Name of Person, Position Compensation Benefits Accrued As Annual Benefits From Fund and
------------------------ From Fund Part of Fund Expenses Upon Fund Complex
--------- --------------------- ---- ------------
Retirement
----------
Douglas W. Powell, Director $3,600 $3,600
C. Dewey Elliott, III, Director $3,600 $3,600
Peter R. Goldschmidt, Director $3,900 $3,900
Robert H. Spiro, Jr., Director $3,600 $3,600
Allen B. Clark, Jr., Director $3,600 $3,600
MEETINGS
There were five meetings of the Board of Directors held during the
fiscal year ended June 30, 1999. Each of the nominees attended such meetings.
The Board of Directors has no standing audit, nominating or compensation
committees or committees performing similar functions.
ELECTION
The election of a director requires the affirmative vote of a
plurality of the shares present in person or represented by proxy at the
meeting and entitled to vote. Consequently, votes withheld and broker
non-votes with respect to the election of directors will have no impact on
the election of directors. Proxies submitted pursuant to this solicitation
will be voted for the election of each of the nominees, unless specified
otherwise. The Board of Directors recommends that shareholders vote for all
of the proposed nominees.
5
APPROVAL OR DISAPPROVAL OF THE INVESTMENT ADVISORY AGREEMENT BETWEEN THE
FUND AND NYE, PARNELL & EMERSON CAPITAL MANAGEMENT, INC.
On September 10, 1999, the Board of Directors of the Company
terminated Insight Capital Management, Inc. ("Insight Capital") as the Fund's
investment advisor, and at the same time approved Nye, Parnell & Emerson
Capital Management, Inc. ("NP&E") as the Fund's new investment advisor.
Insight Capital had served as investment advisor for the Fund since its
inception. Both the termination of Insight Capital as the Fund's investment
advisor and the approval of NP&E as the new investment advisor were effective
November 1, 1999. Under the Investment Company Act of 1940, to which the Fund
is subject, the new Investment Advisory Agreement ("Advisory Agreement") with
NP&E may only be for an initial term of 120 days, and thereafter will
terminate unless approved by the vote of the 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. Accordingly,
the Advisory Agreement is being submitted at the Annual Meeting for the
requisite shareholder approval.
If approved at the Annual Meeting by the requisite majority, the
Advisory Agreement will continue in effect for a period of two years, and from
year to year thereafter so long as such continuance is approved annually by a
majority of the Fund's directors who are not parties to the Advisory Agreement
or interested persons of such parties, and by either the shareholders of the
Fund or the Board of Directors of the Fund. If the Advisory Agreement is not
approved at the Annual Meeting by the requisite shareholder vote, the Advisory
Agreement may be resubmitted for shareholder approval prior to the expiration of
its initial term. The description of the Advisory Agreement set forth herein is
qualified in its entirety by reference to the entire Advisory Agreement, which
is attached to this Proxy Statement as Exhibit A.
As the investment advisor, NP&E 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, NP&E receives
an annual fee of 1.0% of the Fund's average daily net assets, computed daily
and paid on a monthly basis. This is the same annual fee which the Fund paid
to Insight Capital for serving as investment advisor.
NP&E also serves as investment adviser to certain private accounts,
managing approximately $400 million of investments for private investors and
institutions throughout the United States. Although the overall investment
objective of the Fund may differ from the objectives of the private accounts
served by NP&E, 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 NP&E to be
equitable to each.
NP&E has no previous experience in advising a mutual fund, other
than to advise the Fund since November 1, 1999. NP&E's Portfolio Management
Group is jointly and primarily responsible for the day-to-day management of
the Fund's portfolio.
NP&E was formed in 1986. Paul Dietrich owns 75% of the equity in
Eton Court Asset Management, Ltd. ("Eton Court"), a corporation which owns
100% of NP&E. Robert LoPinto owns 25% of the remaining equity in Eton Court.
Mr. Dietrich is President/Managing Director of Eton Court. Robert LoPinto is
a director of Eton Court. Eton Court was formed in 1999. The address of Eton
Court is 526 King Street, Suite 201, Alexandria, Virginia 22314. Besides the
Advisor, Eton Court also owns a majority interest in Peress Investment
Advisors, Ltd. and may from time-to-time acquire other investment advisory
firms.
Financial analysts employed by NP&E are subject to the Code of
Ethics and Standards of Professional Conduct adopted by the Association of
Investment Management and Research. Under the Standards of Professional
6
Conduct, the financial analyst is required to act in a manner consistent with
his obligation to deal fairly with all customers and clients when (i)
disseminating investment recommendations, (ii) disseminating material changes in
prior investment advice, and (iii) taking investment action.
The Board of Directors of the Fund is recommendinig the new Advisory
Agreement with NP&E to create a more stable, tax-efficient investment
strategy with a lower risk profile, while continuing to invest in companies in
the high growth industries of software, semiconductors, computer services,
network and Internet technology; cable, Internet infrastructure and wireless
telecommunications; and the health care and biotech sectors, that have been
the primary focus of the Fund since its inception.
NP&E will focus on primarily investing in the dominant company in a
particular industry or industry niche within all the high-growth industry
sectors. These companies generally have high returns on equity and dominant
competitive market positions which leads to pricing power and predictable and
consistent earnings growth. These stocks typically demonstrate considerably
higher growth in earnings, dividends, reinvestment rates and rates of free
cash flow. These companies do not rely on market fashions or technical market
circumstances to prosper. Instead, their prosperity derives from global
leadership or franchise within their industries.
NP&E will manage a diversified portfolio of between 55 and 75
dominant, high-quality companies in the above-mentioned industries or
industry niches. With a more diversified portfolio, the risk is cushioned
because the decline of any single stock will have less significance to the
portfolio as a whole.
NP&E also intends to manage the Fund in the future to minimize
investor's end-of-the-year capital gains tax distrubutions. The key to tax
efficiency is for a fund to have a low turnover without sacrificing
performance. This means the Fund will be buying and holding stocks for
long-term investments, rather than trading in and out of the market, which
increases turnover and potential capital gains taxes. NP&E seeks to
accomplish both of these objectives, strong performance and tax efficiency,
while lowering the overall risk of the portfolio during market downturns.
7
The following information is provided with respect to each director or
officer of NP&E:
Name and Address Position(s) Principal Occupation(s)
---------------- ----------- -----------------------
Paul Dietrich Chairman & Mr. Dietrich was the Founder of Meridian Emerging Markets, Ltd., one
526 King Street, Managing of the leading providers of global emerging markets company financial
Suite 201 Alexandria, Director information. With offices in New York, Boston, London and Princeton,
VA 22314 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, D.C. law firms, Squire,
Sanders & Dempsey, and Jones, Day, Reavis & Pogue.
Robert LoPinto Director Mr. LoPinto is the President and Founder of TriCapital Corporation, an
11140 Rockville investment banking firm focused on middle market transactions, including
Pike, Suite 600 buyouts, growth financings, and M&A.
N. Bethesda, MD
20852
Edward R. Venit Executive Vice Mr. Venit is a senior securities attorney who has advised domestic and
526 King Street, President, Chief international brokerage and asset management firms on legal and
Suite 201 Operating compliance issues and operating procedures. From 1992 to 1996, Mr.
Alexandria, VA Officer Venit was General Counsel and Chief Operating Officer for Baring
22314 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.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE FOR THE
APPROVAL OF THE ADVISORY AGREEMENT. APPROVAL BY THE SHAREHOLDERS OF THE ADVISORY
AGREEMENT WILL REQUIRE THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING
VOTING SECURITIES OF THE FUND AS DEFINED BELOW.
The vote of a majority of the outstanding voting securities of the
Fund, as defined in Section 2(a)(42) of the Investment Company Act of 1940,
means the lesser of the vote of 67% or more of the outstanding voting securities
of the Fund present at any meeting, if the holders of more than 50% of the
outstanding voting securities of the Fund are present or represented by proxy
thereat, or more than 50% of the outstanding voting securities of the Fund.
Abstentions and broker non-votes with respect to the Fund's shares entitled to
vote shall be counted for the above purposes. The only voting security of the
Fund is its common stock.
8
RATIFICATION OR REJECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, by unanimous vote, has selected Kinder & Wyman,
P.C., Certified Public Accountants, 511 E. John Carpenter Freeway, Suite 200,
Irving, Texas 75062-3920, to act as independent public accountants for the Fund
for the fiscal year ending June 30, 2000. Kinder & Wyman, P.C. has served in
such capacity on behalf of the Fund since the Fund's organization. Wallace
Sanders & Company is the successor to Kinder & Wyman, P.C., and will perform the
functions authorized to be performed by Kinder & Wyman, P.C. It is not expected
that a representative of Wallace Sanders & Company will be present at the Annual
Meeting.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE FOR THE
SELECTION OF WALLACE SANDERS & COMPANY FOR THE FUND FOR THE FISCAL YEAR ENDING
JUNE 30, 2000.
INVESTMENT ADVISOR, ADMINISTRATOR AND PRINCIPAL UNDERWRITER
Nye, Parnell & Emerson Capital Management, Inc. serves as the Fund's
investment advisor. The address of the investment advisor is 526 King Street,
Suite 201 Alexandria, Virginia 22314.
Dominion Institutional Services Corporation serves as the Fund's
administrator. The address of the administrator is 5000 Quorum Drive, Suite 620,
Dallas, Texas 75240. The Fund incurred fees payable to the administrator in the
amount of $199,717 for the fiscal year ended June 30, 1999. C. Dewey Elliott,
III and Douglas W. Powell, officers and directors of the Fund and of the
administrator, are beneficial owners in Elliott Family Partnership, Ltd. and DW
Powell Family Partnership, Ltd., respectively., each of which owns 50% of the
outstanding stock of the administrator.
Northstar Securities, Inc. serves as the Fund's principal underwriter.
The address of the principal underwriter is 5000 Quorum Drive, Suite 620,
Dallas, Texas 75240. The Fund paid $455 in sales charges (in connection with
distributing Fund shares) during the fiscal year ended June 30, 1999 to Dominion
Capital Corporation, which was then the principal underwriter of the Fund. C.
Dewey Elliott, III and Douglas W. Powell, officers and directors of the Fund and
of the administrator, were officers, directors and principal owners of Dominion
Capital Corporation at the time. On July 10, 1998, Northstar Securities, Inc.
replaced Dominion Capital Corporation as the Fund's principal underwriter. While
Northstar Securities, Inc. is not an affiliate of the Fund, it shares offices,
personnel and expenses with the administrator. The Fund paid $18,156 in sales
charges during the fiscal year ended June 30, 1999 to Northstar Securities, Inc.
There are no sales charge on sales of the Fund's shares that occur on or after
April 1, 1999.
The Fund anticipates the investment advisor will place all orders for
the Fund's portfolio securities transactions through its principal underwriter.
During the fiscal year ended June 30, 1999, the Fund's investment advisor placed
all orders for the Fund's portfolio securities transactions through the Fund's
principal underwriter, including $62,160 in brokerage commissions to Dominion
Capital Corporation and $115,595 in brokerage commissions to Northstar
Securities, Inc.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below are the names and addresses of all holders of the
Fund's Common Stock who, as of December 10, 1999, beneficially owned more than
5% of the outstanding shares of the Fund's Common Stock, as well as the number
of shares of the Fund's Common Stock beneficially owned by each director and by
all officers and directors of the Fund as a group. In each case, the person
named has sole power to vote or dispose of such shares.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- ------------------- -------------------- --------
Officers and Directors
As a Group (5 persons) -0- 0%
9
OTHER MATTERS
The Board of Directors of the Fund knows of no other matters that may
come before the Annual Meeting. If any other matters properly come before the
meeting, it is the intention of the persons acting pursuant to the enclosed form
of proxy to vote the shares represented by such proxies in accordance with the
best judgment with respect to such matters.
The Fund does not expect to hold an Annual Meeting of Shareholders in
2000. All shareholder proposals intended for presentation at any future Annual
Meeting of Shareholders must be received by the Fund at its principal office
within a reasonable time period prior to such meeting in order to qualify for
inclusion in the form of proxy and the proxy statement relating to such meeting.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by Dominion Institutional
Services Corporation, the administrator of the Fund. The Fund expects to solicit
proxies primarily by mail. Proxies may also be solicited personally and by
telephone by certain officers of the Fund. It is not anticipated that anyone
will be specially engaged to solicit proxies or that special compensation will
be paid for that purpose.
By Order of the Board of Directors,
Douglas W. Powell, Secretary
Dallas, Texas
December 10, 1999
10
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
DOMINION FUNDS, INC.
(Dominion Insight Growth Fund Series)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of the 1st day of November, 1999, by and
between Dominion Funds, Inc., a Texas corporation (the "Company"), and Nye,
Parnell & Emerson Capital Management, Inc., a Delaware corporation (the
"Advisor").
RECITALS
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end diversified management investment
company; and
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor; and
WHEREAS, the Company's Articles of Incorporation authorize the Board of
Directors of the Company to classify or reclassify authorized but unissued
shares of the Company and, as of the date of this Agreement, the Company's Board
of Directors has authorized the issuance of a series of shares representing
interests in a single investment portfolio: Dominion Insight Growth Fund (such
portfolio and any other portfolios hereafter added to the Company being referred
to collectively herein as the "Portfolios"); and
WHEREAS, the Company and the Advisor desire to enter into an agreement to
provide for investment advisory services to the Company's Dominion Insight
Growth Fund series (the "Fund") upon the terms and conditions hereinafter set
forth; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. ADVISORY SERVICES. The Advisor shall act as investment advisor for
the Fund and shall, in such capacity, supervise all aspects of the Fund's
investments, including the investment and reinvestment of the cash, securities
or other properties comprising the Fund's assets, subject at all times to the
policies and control of the Company's Board of Directors. The Advisor shall give
the Company and the Fund the benefit of its best judgment, efforts and
facilities in rendering its services as investment advisor hereunder.
2. INVESTMENT ANALYSIS AND IMPLEMENTATION. In carrying out its duties
under paragraph 1 hereof, the Advisor shall:
(a) obtain and evaluate pertinent information about significant
developments and
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economic, statistical and financial data, domestic, foreign, or
otherwise, whether affecting the economy generally or the Fund, and
whether concerning the individual issuers whose securities are
included in the assets of the Fund or the activities in which such
issuers engage, or with respect to securities which the Advisor
considers desirable for inclusion in the Fund;
(b) determine which issuers and securities shall be represented in the
Fund's investment portfolio and regularly report thereon to the
Company's Board of Directors;
(c) formulate and implement continuing programs for the purchases and
sales of the securities of such issuers, and regularly report thereon
to the Company's Board of Directors; and
(d) order or direct the execution of securities transactions on behalf of
the Fund, select broker-dealers and negotiate brokerage commission
rates.
and take, on behalf of the Company and the Fund, all actions which appear to the
Company and the Fund necessary to carry into effect such purchase and sale
programs as aforesaid.
3. CONTROL BY BOARD OF DIRECTORS. Any investment program undertaken by
the Advisor pursuant to this Agreement, as well as any other activities
undertaken by the Advisor on behalf of the Fund, including, but not limited to,
decisions to buy and sell securities for the Fund, broker-dealer selection, and
negotiation of brokerage commission rates, shall at all times be subject to any
directives of the Board of Directors of the Company.
4. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In performing its duties
hereunder, the Advisor shall at all times conform to:
(a) all applicable provisions of the Act and the Advisers Act, and any
rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the Company relating
to the Fund, as the same may be amended from time to time, under the
Securities Act of 1933 and the Act;
(c) the provisions of the Articles of Incorporation of the Company, as the
same may be amended from time to time;
(d) the provisions of the By-laws of the Company, as the same may be
amended from time to time; and
(e) any other applicable provisions of state, federal or foreign law.
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5. BROKER-DEALER RELATIONSHIPS. The Advisor's primary consideration in
effecting a security transaction shall be to obtain execution at the most
favorable price. In selecting a broker-dealer to execute each particular
transaction, the Advisor shall take the following into consideration: the best
net price available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies as the Board of Directors
may from time to time determine, the Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Advisor an amount of commission
for effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Advisor with
respect to the Fund, and other clients of the Advisor as to which the Advisor
exercises investment discretion. The Advisor is further authorized to allocate
the orders placed by it on behalf of the Fund to brokers and dealers who also
provide research or statistical material, or other services to the Fund or the
Advisor. Such allocation shall be in such amounts and proportions as the Advisor
shall determine and the Advisor shall report on said allocations regularly to
the Board of Directors of the Company, indicating the brokers to whom such
allocations have been made and the basis therefor.
6. COMPENSATION. The Company shall pay the Advisor, as compensation for
services rendered hereunder, an annual investment advisory fee, payable monthly,
equal to 1.0% of the average daily net assets of the Fund. The average daily net
assets of the Fund shall be determined in the manner set forth in the Company's
Articles of Incorporation and registration statement relating to the Fund, as
amended from time to time.
7. ADVISOR'S EXPENSES. The Advisor shall furnish at its own expense all
administrative services, office space, equipment and facilities, investment
advisory, statistical and research services, and executive, supervisory and
clerical personnel necessary to perform its duties and obligations hereunder.
8. RECORDS. The Advisor shall comply with the record keeping provisions
of Section 204 of the Advisers Act and Rule 204-2 thereunder, and shall provide
to the Company, upon the Company's request, copies of such records.
9. NON-EXCLUSIVITY. The services of the Advisor to the Company and the
Fund are not to be deemed exclusive, and the Advisor shall be free to render
investment advisory and administrative or other services to others (including
other investment companies) and to engage in other activities. It is understood
and agreed that officers and directors of the Advisor may serve as officers and
directors of the Company, and that officers and directors of the Company may
serve as officers and directors of the Advisor, to the extent permitted by law;
and that officers and directors
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of the Advisor are not prohibited from engaging in any other business activity
or from rendering services to any other person, or from serving as partners,
officers, directors or trustees of any other firm or trust, including other
investment advisory companies.
10. TERM AND APPROVAL. This Agreement shall be effective on the date
hereof, and shall thereafter continue for an initial term of 120 days. If this
Agreement is, on or before the end of such initial term, approved by the vote of
"a majority of the outstanding voting securities" of the Fund (as defined under
Section 2(a)(42) of the Act), this Agreement shall thereafter continue in force
and effect for two years, and may be continued from year to year thereafter,
provided that the continuation of the Agreement is specifically approved at
least annually:
(a)(i) by the Company's Board of Directors or (ii) by the vote of "a
majority of the outstanding voting securities" of the Fund (as defined
under Section 2(a)(42) of the Act); and
(b) by the affirmative vote of a majority of the directors of the Company
who are not parties to this Agreement or "interested persons" (as defined
under the Act) of a party to this Agreement (other than as Company
directors), by votes cast in person at a meeting specifically called for
such purpose.
11. TERMINATION. This Agreement may be terminated as to the Fund at any
time, without payment of any penalty, by vote of the Company's Board of
Directors or by vote of a majority of the Fund's outstanding voting securities,
or by the Advisor, on sixty (60) days' written notice to the other party. The
notice herein provided for may be waived by the party entitled to receipt
thereof. This Agreement shall automatically terminate in the event of its
"assignment" (as defined under Section 2(a)(4), of the Act).
12. LIABILITY OF ADVISOR AND INDEMNIFICATION. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Advisor or any of its officers, directors or
employees, the Advisor shall not be subject to liability to the Company, the
Fund or any shareholder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses than may be
sustained in the purchase, holding or sale of any security. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Advisor or any officer,
director or employee of the Advisor, the Company hereby agrees to indemnify and
hold the Advisor harmless from and against all claims, actions, suits, and
proceedings at law or in equity, whether brought or asserted by a private party
or a governmental agency, instrumentality or entity of any kind, relating to the
sale, purchase, pledge of, advertisement of, or solicitation of sales or
purchases of any security (whether of the Fund or otherwise) by the Company, its
officers, directors, employees or agents in alleged violation of applicable
federal, state or foreign laws, rules or regulations. The Company's obligations
under this paragraph 12 shall be payable only from, and limited to, the assets
of the Fund, and not from the assets of any other series of shares of the
Company.
13. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered by hand, telecopied or mailed, postage prepaid, to the
other party at such address as such
A-4
other party may designate for the receipt of such notice. Until further notice,
it is agreed that the addresses of the Company and the Fund shall be 5000 Quorum
Drive #620, Dallas, Texas 75240, and that of the Advisor shall be 526 King
Street, Suite 201, Alexandria, Virginia 22314.
14. QUESTIONS OF INTERPRETATION. Questions of interpretation of any term
or provision of this Agreement having a counterpart in or otherwise derived from
a term or provision of the Act shall be resolved by reference to such term or
provision of the Act and to interpretations thereof, if any, by the Courts of
the United States, or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and Exchange Commission
issued pursuant to the Act. In addition, where the effect of a requirement of
the Act reflected in any provision of the Agreement is revised by rule,
regulation or order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
Subject to the foregoing, this Agreement shall be governed by and construed in
accordance with the laws (without reference to conflicts of law provisions) of
the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective duly authorized officers on the day
and year first written above.
DOMINION FUNDS, INC.
on behalf of its Dominion Insight Growth Fund Series
By:/s/ C. Dewey Elliott, III
--------------------------------
President
NYE, PARNELL & EMERSON CAPITAL MANAGEMENT, INC.
By:/s/ Paul Dietrich
--------------------------------
President
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PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
DOMINION FUNDS, INC.
DECEMBER 21, 1999
The undersigned hereby constitutes and appoints Douglas W. Powell and C.
Dewey Elliott, III, or either of them, with power of substitution, attorney and
proxy for and in the name and place of the undersigned to appear and vote with
the same force and effect as the undersigned at the Annual Meeting of
Shareholders of DOMINION FUNDS, INC. (the "Fund"), to be held at 10:00 a.m.,
Central time, on Tuesday, December 21, 1999, at 5000 Quorum Drive, Suite 620,
Dallas, Texas 75240, and any adjournments thereof, all shares of stock of the
Fund which the undersigned is entitled to vote as follows:
1. In the election of directors:
FOR all nominees listed below (except as marked to the contrary below) [ ]
WITHHOLD AUTHORITY to vote for all nominees listed below: [ ]
Douglas W. Powell, C. Dewey Elliott, III, Robert H. Spiro, Jr.,
Peter R. Goldschmidt and Allen B. Clark, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.)
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2. To approve the Investment Advisory Agreement between the Fund and Nye,
Parnell & Emerson Capital Management, Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To ratify the selection of Wallace Sanders & Company as auditors of the
Fund for the fiscal year ending June 30, 2000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To transact such other business as may properly come before the meeting or
any adjournments thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED IN THE ELECTION OF DIRECTORS FOR THE ELECTION OF THE
NOMINEES LISTED IN THE PROXY STATEMENT, IN FAVOR OF ALL PROPOSALS AND IN THE
DISCRETION OF THE PROXY UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
THE SIGNATURE ON THIS PROXY SHOULD CORRESPOND EXACTLY WITH THE NAME OF
THE STOCKHOLDER AS IT APPEARS ON THE PROXY. IF STOCK IS ISSUED IN THE NAME OF
TWO OR MORE PERSONS, EACH SHOULD SIGN THE PROXY. IF A PROXY IS SIGNED BY AN
ADMINISTRATOR, TRUSTEE, GUARDIAN, ATTORNEY OR OTHER FIDUCIARY, PLEASE INDICATE
FULL TITLE AS SUCH.
Dated , 1999
------------------------
Signed:
----------------------------
Signed:
----------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DOMINION FUNDS,
INC.
[ ] Please check here if you WILL be attending the meeting.