<PAGE> 1
DOMINION INSIGHT GROWTH FUND
ANNUAL REPORT
JUNE 30, 1996
DOMINION INSIGHT GROWTH FUND
A SERIES OF DOMINION FUNDS, INC.
- --------------------------------------------------------------------------------
To Our Shareholders:
We are pleased to report the excellent results of Dominion Insight Growth
Fund's (the "Fund") third full fiscal year. Your participation is particularly
gratifying as recognition of the Fund's performance through periods of growth
mixed with volatility.
For the year ended June 30, 1996, the Fund's annualized total return was
54.32%. For the same period, the S&P 500 Index and the Wilshire 5000 Index
increased 26% and 26.218%, respectively.
Further, in addition to increased and positive publicity by national financial
publications this past year, the Fund achieved Morningstar's 5 star ranking for
growth Funds.
New to the Dominion Funds for the near future will be the addition of our Cash
Account Trust (CAT). Zurich Kemper Investments (ZKI) will manage the CAT with
the investment objectives to provide competitive performance, ready access to
your funds, and preservation of capital. ZKI currently manages more than $11
billion in money fund assets, and we are confident of the synergy that will
develop with the Fund on your behalf.
While we recognize the dynamic factors influencing the markets, we remain
optimistic for the balance of 1996 and this next fiscal year as we anticipate
continued growth in the market sectors in which the Fund invests. This
translates to opportunity for our shareholders. Achieving it for you is our
goal.
/s/ DOUGLAS W. POWELL
June 30, 1996 Douglas W. Powell
Chairman of the Board and CEO
The performance data presented does not reflect the deduction of the sales load
and, if reflected, the load would reduce the performance quoted. The
performance data presented represents past performance, and the investment
return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
<PAGE> 2
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 1996
<TABLE>
<CAPTION>
Common Stocks (89.55%) Shares Value
- ----------------------- ------ ------------
<S> <C> <C>
Commercial Services (11.95%)
Accustaff, Inc. (a) 15,000 $ 408,750
Paychex, Inc. 18,800 904,750
PMT Services Inc. (a) 36,150 1,030,275
Quintiles Transnational Corp. (a) 8,000 526,000
Service Corporation International 11,900 684,250
Computers (8.24%)
Brooktrout Technology, Inc. (a) 20,400 571,200
HBO & Company 15,200 1,029,800
Sun Microsystems Inc. (a) 14,500 848,250
Computer Software (14.42%)
Cadence Design Systems Inc. (a) 23,400 789,750
Electronics for Imaging Com. (a) 10,000 693,750
Pairgain Technologies Inc. (a) 15,400 954,800
Peoplesoft Inc. (a) 11,400 812,250
Shiva Corporation (a) 13,000 1,036,750
Electronics (2.07%)
Fore Systems, Inc. (a) 17,000 614,125
Entertainment (2.85%)
Regal Cinemas, Inc. (a) 18,500 846,375
Hotels (3.37%)
HFS, Inc. (a) 14,300 1,001,000
Household Products (1.77%)
Blyth Industries (a) 11,600 526,350
Leisure Time (2.40%)
Callaway Golf Company 21,500 714,875
Machinery (2.50%)
JLG Industries 10,000 742,500
Medical Hospitality (2.17%)
Occusystems, Inc. (a) 17,300 646,588
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 3
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 1996
<TABLE>
<CAPTION>
Common Stocks (continued) Shares Value
- ------------------------- ------ ------------
<S> <C> <C>
Medical Supplies (2.21%)
Protocol Systems, Inc. (a) 28,600 $ 657,800
Office/Business Equipment (1.83%)
U.S. Office Products (a) 13,000 546,000
Oil and Gas Exploration (2.39%)
Chesapeake Energy Corp. (a) 7,900 710,012
Pharmaceuticals (5.47%)
Dura Pharmaceuticals (a) 16,300 912,800
Jones Medical Industry, Inc. 21,450 713,213
Publishing/Printing (2.00%)
Gartner Group Inc. (a) 16,300 596,987
Shoes (3.14%)
Nike Inc. Class B 9,100 935,025
Retail (3.64%)
Regis Corporation 15,600 487,500
TJX Companies, Inc. 17,600 594,000
Telecommunications (17.13%)
Ascend Communications Inc. (a) 14,100 793,125
Aspect Telecommunications Inc. (a) 11,000 544,500
Cascade Communication Corp. (a) 18,700 1,271,600
Davox (a) 21,400 631,300
U.S. Long Distance Corp. (a) 21,100 749,050
U.S. Robotics Corp. (a) 12,900 1,102,950
------------
Total Investments in Securities (89.55%)
(cost $22,212,971) $ 26,628,250
============
</TABLE>
Notes: (a) Presently non-income producing
(b) Percentage of investments as shown is the ratio of the total
market value to total assets.
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
DOMINION INSIGHT GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value
(identified cost $22,212,971) $ 26,628,250
Cash 1,300,060
Receivables
Investment securities sold 814,634
Capital shares sold 970,168
Dividends and interest 12,292
Organization costs, net 9,547
--------------
TOTAL ASSETS 29,734,951
--------------
LIABILITIES
Payables
Investment advisory fee 22,432
Administrative fee 28,025
Investment securities purchased 1,776,315
--------------
TOTAL LIABILITIES 1,826,772
--------------
NET ASSETS $ 27,908,179
==============
Capital shares outstanding 1,465,521
Net asset value and offering price per share
Net asset value per share $ 19.04
==============
Offering price per share $ 19.73
==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
DOMINION INSIGHT GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<S> <C>
INVESTMENT LOSS
Investment Income
Dividends $ 3,551
Interest 35,862
------------
Total Investment Income 39,413
------------
Expenses
Investment advisory fee 138,387
Administrative fee 172,983
Amortization 9,567
------------
Total Expenses 320,937
------------
NET INVESTMENT LOSS (281,524)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments in securities 3,556,449
Net change in unrealized appreciation
of investments in securities 1,978,534
------------
NET GAIN ON INVESTMENTS 5,534,983
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 5,253,459
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
DOMINION INSIGHT GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
CHANGE IN NET ASSETS FROM OPERATIONS
Net investment loss $ (281,524) $ (152,738)
Net realized gain on investments 3,556,449 322,450
Change in unrealized appreciation 1,978,534 2,385,666
------------ -----------
Net increase (decrease)
in net assets resulting
from operations 5,253,459 2,555,378
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gains on investments (1,003,817) (507,653)
CAPITAL SHARE TRANSACTIONS 15,569,399 (229,566)
------------ -----------
Total Increase in Net Assets 19,819,041 1,818,159
NET ASSETS
Beginning of year 8,089,138 6,270,979
------------ -----------
END OF YEAR (including undistributed investment $ 27,908,179 $ 8,089,138
loss of $662,523 and $380,999, respectively) ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
DOMINION INSIGHT GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Period Ended
June 30, 1996 June 30, 1995 June 30, 1994 June 30, 1993
(1) (1) (1) (1)(2)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
PER SHARE INCOME AND CAPITAL
CHANGES FOR A SHARE OUTSTANDING
DURING THE PERIOD:
Net asset value, beginning of period $ 13.53 $ 10.24 $ 10.97 $ 9.79
------- ------- ------- -------
Income From Investment Operations:
Net investment loss (0.34) (0.24) (0.24) (0.18)
Net realized and unrealized gains 7.39 4.33 (0.49) 1.36
(losses) on investments ------- ------- ------- -------
Total income (loss) from investment 7.05 4.09 (0.73) 1.18
operations ------- ------- ------- -------
Less Distributions:
Distributions from net realized gains (1.54) (0.80) -- --
------- ------- ------- -------
Net asset value, end of period $ 19.04 $ 13.53 $ 10.24 $ 10.97
======= ======= ======= =======
Total return(3)(4) 54.32% 42.25% (6.65%) 18.08%
======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in $27,908 $ 8,089 $ 6,271 $ 5,968
thousands)
Ratio of expenses to average net 2.31% 2.38% 2.37% 2.10%
assets
Ratio of net investment loss to 2.03% 2.16% 2.01% 1.83%
average net assets
Portfolio turnover rate 172.87% 210.23% 140.87% 135.40%
</TABLE>
(1) Per share information has been calculated using the average number of
shares outstanding.
(2) Financial highlights are for the period from October 27, 1992 (effective
date of the Fund's Registration Statement under the Securities Act of 1933)
to June 30, 1993, and, other than total return, have not been annualized.
(3) Sales load is not reflected in total return.
(4) Total return is annualized.
The accompanying notes are an integral part of these financial highlights
<PAGE> 8
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations
Dominion Insight Growth Fund (Fund) is a separate series of shares of
common stock of Dominion Funds, Inc. (Company). The Company was
incorporated in the State of Texas in June of 1992. The Company is
registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. In addition, the
Fund is subject to various investment restrictions as set forth in the
Statement of Additional Information. The effective date of the Fund's
Registration Statement under the Securities Act of 1933 was October
27, 1992. The primary investment objective of the Fund is capital
appreciation. The Company may designate one or more series of common
stock. The only series currently designated is the Fund. Each share
represents an equal proportionate interest in the assets of the Fund
with each other share in such series and no interest in any other
series.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of the assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Valuation of Securities
Securities are valued at the close of each business day. Securities
traded on national securities exchanges or included in national market
systems are valued at the last quoted sales price; other securities
traded in the over-the-counter market and listed securities for which
no sale was reported on that date are stated at the last quoted bid
price. Securities for which market quotations are not readily
available are valued at fair value according to methods selected in
good faith by the board of directors.
Investment Transactions and Investment Income
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend
date and interest income is accrued daily. Realized security gains and
losses are determined on an identified cost basis.
<PAGE> 9
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, 1996, the interest rate was
4.50%
Organization Costs
Organization costs have been capitalized and are being amortized on a
straight-line basis over a period of five years. If any of the initial
shares are redeemed before all the organization costs have been
amortized, the proceeds will be reduced by the redeemed share's
prorata share of the then-unamortized organization costs, in the same
proportion as the number of shares redeemed bears to the total number
of initial shares outstanding.
Income Taxes
The Fund's policy is to comply with all sections of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders; therefore, no
provision for income or excise taxes is required.
Net investment income (loss), net realized gains (losses) and the cost
of investments in securities may differ for financial statement and
tax purposes. The character of distributions from net investment
income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. At June 30, 1996,
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 to shareholders are recorded on the ex-dividend date.
<PAGE> 10
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - DISTRIBUTION TO SHAREHOLDERS
On November 30, 1995, a distribution of $1.54 aggregating $1,003,817
was declared from net realized gains from investment transactions. The
dividend was payable on December 1, 1995 to shareholders of record on
November 29, 1995.
NOTE 3 - CAPITAL SHARE TRANSACTIONS
As of June 30, 1996, there were 1,000,000,000 shares of $.001 par
value capital stock authorized of which 200,000,000 shares are
classified as the Fund's series and the balance is unclassified. As of
June 30, 1996, capital paid-in aggregated $21,514,222.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Shares Amount
-------------------- ---------------------------
1996 1995 1996 1995
------- ------- ----------- ----------
<S> <C> <C> <C> <C>
Shares sold 912,218 108,396 $16,297,454 $1,198,065
Shares issued in
reinvestment of
dividends 61,981 47,958 987,344 501,158
------- ------- ----------- ----------
974,199 156,354 17,284,798 1,699,223
Shares redeemed 106,734 170,914 1,715,399 1,928,789
------- ------- ----------- ----------
Net increase/(decrease) 867,465 (14,560) $15,569,399 $ (229,566)
======= ======= =========== ==========
</TABLE>
NOTE 4 - INVESTMENT TRANSACTIONS
Cost of purchases and sales of securities (excluding short-term
obligations) aggregated $36,122,813 and $22,921,858, respectively, for
the year ended June 30, 1996. The cost of securities for federal
income taxes is the same as that shown in the accompanying schedule of
investments in securities. Net gain on investments for the year ended
June 30, 1996 was $5,534,983. All security transactions were in long
transactions. As of June 30, 1996, the aggregate gross unrealized
appreciation and depreciation of securities was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 4,937,741
Unrealized depreciation (522,462)
------------
Net unrealized appreciation $ 4,415,279
============
</TABLE>
Accumulated undistributed net realized gains on investment
transactions totalled $2,641,202.
<PAGE> 11
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement (Advisory Agreement)
with Insight Capital Management, Inc. (Advisor) to act as its
investment advisor. The Advisor also serves as investment advisor to
certain private accounts. The Advisor's only previous experience in
advising a mutual fund is advising the Fund. The Advisor provides the
Fund with investment advice and recommendations consistent with the
Fund's investment objective, policies and restrictions, and
supervises the purchase and sale of investment transactions on behalf
of the Fund. For such services, the Advisor receives an annual fee of
1.0% of the Fund's average daily net assets, computed daily and paid
on a monthly basis.
The Fund has an Administration Agreement with Dominion Institutional
Services Corporation (Administrator). Pursuant to the Administration
Agreement, and subject to the authority of the board of directors of
the Fund, the Administrator is responsible for the administration of
the Fund and overall management of the Fund's business affairs. The
Administrator provides all services required to carry on the Fund's
general administrative and corporate affairs. These services include
furnishing all executive and managerial personnel, office space and
equipment, and providing federal and state regulatory compliance. For
its services, the Administrator receives an annual fee of 1.25% of
the Fund's average daily net assets, computed daily and paid on a
monthly basis.
The Fund has a Distribution Agreement with Dominion Capital
Corporation (Distributor). Pursuant to the Distribution Agreement,
the Distributor performs services and bears the expenses relating to
the offering of Fund shares for sale to the public. As compensation
for the services provided and expenses borne by the Distributor, the
Fund pays the Distributor the sales charges. Sales charges for
distributing fund shares were $375,308 for the year ended June 30,
1996.
During the year ended June 30, 1996, all orders for the Fund's
investment transactions were placed through the Distributor, and it
is expected that the Advisor will continue to place such orders with
the Distributor. Commissions charged by Distributor for executing
investment transactions were $153,876 for the year ended June 30,
1996.
Certain directors and officers of the Company are also directors,
officers and/or employees of the Administrator and the Distributor.
<PAGE> 12
[KINDER & WYMAN, P.C. LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors
Dominion Insight Growth Fund
We have audited the accompanying statement of assets and liabilities of
Dominion Insight Growth Fund, including the schedule of investments in
securities, as of June 30, 1996, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the three years in the period then ended, and the period October 27, 1992
(effective date of the fund Registration Statement under the Securities Act of
1933) to June 30, 1993. These financial statements and the financial
highlights are the responsibility of the fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Dominion Insight Growth Fund as of June 30, 1996, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for the periods
stated in the first paragraph above, in conformity with generally accepted
accounting principles.
/s/ KINDER & WYMAN
KINDER & WYMAN, P.C.
Irving, Texas
July 12, 1996
<PAGE> 13
NOTES
<PAGE> 14
DOMINION INSIGHT GROWTH FUND
ANNUAL REPORT
JUNE 30, 1996
Officers Independent Auditors
- -------- --------------------
Douglas W. Powell Kinder & Wyman, P.C.
Chairman and Chief Executive Officer Certified Public Accountants
C. Dewey Elliott, III 511 E. John Carpenter Freeway,
President Suite 200
Irving, TX 75062-3920
Directors Legal Counsel
- --------- -------------
Douglas W. Powell Frederick C. Summers, III
C. Dewey Elliott, III A Professional Corporation
Robert H. Spiro, Jr. 3700 Bank One Center
Peter R. Goldschmidt 1717 Main Street
Allen B. Clark Dallas, TX 75201
Investment Advisor
- ------------------
Insight Capital Management, Inc.
1656 North California Blvd., Suite 300
Walnut Creek, CA 94696
Administrator
- -------------
Dominion Institutional Services
Corporation
5000 Quorum Dr., Suite 620
Dallas, TX 75240
Distributor
- -----------
Dominion Capital Corporation
5000 Quorum Dr., Suite 620
Dallas, TX 75240
Custodian
- ---------
May Financial Corporation
8333 Douglas Ave., Suite 400
Dallas, TX 75225
Transfer Agent
- --------------
Fund Services, Inc.
1500 Forest Avenue, Suite 111
Richmond, VA 23229
<PAGE> 15
(THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.)
<PAGE> 16
DOMINION CAPITAL CORPORATION
5000 Quorum Drive, Suite 620
Dallas, Texas 75240
