<PAGE> 1
DOMINION INSIGHT GROWTH FUND
SEMI-ANNUAL REPORT
DECEMBER 31, 1996
DOMINION INSIGHT GROWTH FUND
A SERIES OF DOMINION FUNDS, INC.
To Our Shareholders:
Enclosed is the semi-annual report for the Fund.
Clearly, the small and mid-cap markets have experienced volatility and
excessive selling pressure since July, 1996 and the favor has been towards the
S&P 500. We believe it is a matter of time before smaller issues wrest market
leadership from larger ones. Fourth Quarter earnings releases for those
reporting were very strong. Current year earnings growth estimates for the
companies we follow have had to be revised significantly upward to 44%.
Meanwhile, the stocks combined are trading at a price-to-earnings (P/E) ratio
of about 30. This means for a fractionally higher multiple than the S&P 500,
you can pick up the basket of stocks we are holding and get seven times as much
potential growth. Combine this with a positive investment backdrop, and it is
not hard to see why we are bullish on 1997 and beyond.
In the short term, we may still see a drawdown in the NASDAQ Composite
Index of an additional 4-6% from today=s closing price. Yet, as we have
experienced in the past, when small and mid-cap stocks are recognized, the
result is almost always quick and dramatic. A couple of years of
underperformance can be made up in just one or two quarters. This gives an
investor very little time to react. The key is to be disciplined and willing
to wait for the next explosion in this segment of the market to take place.
Thank you for your continued confidence in the Fund. If ever there was
a time for patience and dollar cost averaging, we believe this is it.
/s/ DOUGLAS W. POWELL /s/ C. DEWEY ELLIOTT, III
December 31, 1996 Douglas W. Powell C. Dewey Elliott, III
Chairman of the Board President
CEO
<PAGE> 2
Dominion Insight Growth Fund
Investments in Securities
December 31, 1996
<TABLE>
<CAPTION>
Common Stocks - 98.7% Shares Value
- ------------------------ ------ -----
<S> <C> <C>
Aerospace/Defense Equipment - - 3.18%
SBS Technologies * 22,850 $ 845,450
Bldg - Constr Prod/Misc - - 1.91%
Apogee Entr * 12,750 506,813
Computer - Local Network - - 5.8%
3 Com * 10,600 777,775
Ascend Comm * 12,300 764,138
Computer - Memory Devices - - 3.85%
Western Digital * 18,000 1,023,750
Computer - Mini/Micro - - 5.02%
Compaq Computer * 6,500 482,625
Gateway 2000 Inc * 15,900 851,644
Computer - Peripheral Equipment - - 6.57%
Amer. Power Conv * 41,800 1,139,050
Encad * 14,750 608,438
Computer - Software - - 19.6%
Aspen Tech Inc. * 12,440 998,310
Clarify Inc * 11,450 549,600
Compuware Corp * 20,100 1,007,513
McAfee Associates * 12,950 569,800
Microsoft Corp * 12,000 991,500
PeopleSoft Inc * 22,800 1,092,975
Elec - Misc Components - - 1.8%
Act Mfg Inc * 18,100 477,388
Elec - Semiconductors - - 16.3%
Altera Corp * 11,300 821,369
Intel Corp * 9,450 1,237,359
Jabil Circuit Inc * 24,700 988,000
Uniphase Corp * 12,500 656,250
VLSI Technology * 26,450 631,494
</TABLE>
<PAGE> 3
Dominion Insight Growth Fund
Investments in Securities
December 31, 1996
<TABLE>
<CAPTION>
Common Stocks Shares Value
- --------------------- --------------- --------------
<S> <C> <C>
Energy - Alternate Source - - 2.78%
AES Corp * 15,900 $ 739,350
Medical - Ethical Drugs - - 1.95%
Medicis Pharm Cl A * 11,800 519,200
Oil & Gas Drilling - - 4.11%
Cliffs Drilling Co * 10,700 676,775
Marine Drilling * 60,900 414,881
Oil & Gas -- U.S. Exploration
and Production - - 4.23%
Forcenergy Gas Expltn * 31,000 1,123,750
Retail - Mail Order and Direct - - 4.57%
Black Box Corp * 29,450 1,214,813
Retail/Wholesale Computer - - 4.08
Dell Computer * 20,400 1,083,750
Telecommunications - Equipment - - 13.03%
ADC Telecom's * 27,200 846,600
Bright Point, Inc * 28,500 847,875
Davox Corp * 16,100 664,125
Tellabs Inc * 29,400 1,106,172
------------
Total Investments in Securities - - 98.7% $ 26,258,532
============
</TABLE>
Cost--($23,354,436)
Note: *Presently not paying dividend income.
Percentage of investments as shown is the ratio of the total market
value to total assets.
<PAGE> 4
DOMINION INSIGHT GROWTH FUND
Statement of Assets and Liabilities
December 31, 1996
(unaudited)
<TABLE>
<S> <C>
Assets
------
Investments in securities, at value $ 26,258,532
(identified cost of $23,354,436)
Cash 195,655
Receivables
Capital shares 181,346
Interest 2,013
Organization costs, net 4,738
--------------
TOTAL ASSETS 26,642,284
--------------
Liabilities
-----------
Payables
Administrative fee 28,215
Investment advisory fee 22,864
--------------
TOTAL 51,079
--------------
Net Assets $ 26,591,205
---------- ==============
Shares outstanding 1,669,500
Net asset value and offering price per share
Net asset value per share 15.93
Offering price per share 16.51
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
DOMINION INSIGHT GROWTH FUND
Statement of Operations
For The Six Months Ended December 31, 1996
(unaudited)
<TABLE>
<S> <C>
Investment income
-----------------
Income
Dividends $ 9,083
Interest 23,200
------------
Total Investment Income 32,283
------------
Expenses
Investment advisory fee 138,568
Administrative fee 173,210
Amortization 4,810
------------
Total Expenses 316,588
------------
Net Investment Loss (284,305)
------------
Realized and unrealized gain on investments
-------------------------------------------
Net realized gain on investments in securities (229,703)
Net change in unrealized appreciation of (1,511,184)
------------
investments in securities
Net loss on investments (1,740,887)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (2,025,192)
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
DOMINION INSIGHT GROWTH FUND
Statement of Changes in Net Assets
For The Six Months Ended December 31, 1996
(unaudited)
<TABLE>
<S> <C>
Change in net assets from operations
------------------------------------
Net investment loss $ (284,305)
Net realized loss on investments (229,703)
Change in unrealized appreciation (1,511,184)
------------
Net decrease in net assets from
operations (2,025,192)
Capital share transactions 3,349,357
--------------------------
Shareholder distributions (2,641,139)
------------------------- ------------
Total Increase (1,316,974)
Net assets
----------
Beginning of period 27,908,179
------------
END OF PERIOD (including undistributed $ 26,591,205
investment loss of $946,828) ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
DOMINION INSIGHT GROWTH FUND
Financial Highlights
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended Year Ended
12/31/96 06/30/96
(unaudited)
Per Share Income and Capital Changes (1)(2) (2)
for a Share Outstanding During the Period: ---------------- -----------
Net asset value, beginning of period $ 19.04 $ 13.53
----------- -----------
Income From Investment Operations:
Net investment loss (0.19) (0.34)
Net realized and unrealized gains
(losses) on securities (1.16) 7.39
----------- -----------
Total from investment operations (1.35) 7.05
----------- -----------
Less Distributions:
Dividends from net investment income 0 0
Distributions from net realized gains (1.76) (1.54)
Returns of capital 0.00 0
----------- -----------
Total distributions (1.76) (1.54)
----------- -----------
Net asset value, end of period $ 15.93 $ 19.04
=========== ===========
Total return (3) (4) (14.73%) 54.32%
=========== ===========
Ratios to Average Net Assets/Supplemental Data:
Net assets, end of period (in thousands) $ 26,591 $ 27,908
Ratio of expenses to average net assets 1.19% 2.31%
Ratio of net investment loss to average net assets 1.07% 2.03%
Portfolio turnover rate 154.00% 172.87%
</TABLE>
(1) Other than total return, financial highlights have not
been annualized.
(2) Per share information has been calculated using the average number
of shares outstanding.
(3) Total return 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.
(4) Total return is annualized, and net of capital gains distribution,
if any.
The accompanying notes are an integral part of these financial statements.
<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 (the "Fund") is a separate series of
shares of common stock of Dominion Funds, Inc. (the "Company"). The
Company was incorporated in the State of Texas on June 5, 1992. The
Company 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 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 Finacial 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.
Security Valuation
Investments in securities traded on a national securities exchange (or
reported on the NASDAQ national market) are stated at the last
reported sales price on the day of valuation; 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.
Other securities for which quotations are not readily available are
valued at fair value as determined by the Board of Directors.
Security Transactions and Related Investment Income
The Company follows industry practice and records security
transactions on the trade date. Dividend income is recognized on the
ex-dividend date, and interest income is recognized on an accrual
basis. Realized security gains and losses are reported 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 December 31, 1996, the interest rate
was 4.5%.
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 organizational costs have
been amortized, the proceeds will be reduced by the redeemed share's
pro rata 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 intends to qualify, under the Internal Revenue Code, as a
regulated investment company and if so qualified, will not have to pay
federal income taxes to the extent its taxable net income is
distributed. On a calendar year basis, the Fund is subject to a 4%
federal excise tax to the extent it does not distribute substantially
all of its net investment income and realized gains, if any.
Net investment income, net realized gains and the cost of investments
in securities may differ for financial statement and tax purposes
because of book-to-tax differences. The character of distributions
from net investment income or net realized gains may therefore differ
from their ultimate characterization for federal income tax purposes.
At December 31, 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.
Income and Capital Gains Distributions
It is the policy of the Fund to generally pay annual distributions
from net investment income and make distributions of any realized
capital gains as required by law. These dividends are recorded on the
ex-dividend date, and are reinvested in additional shares of the Fund
at net asset value or are payable in cash without any charge to the
shareholder.
<PAGE> 10
DOMINION INSIGHT GROWTH FUND
Notes to Financial Statements
Note 2-Capital Share Transactions
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 December 31, 1996,
capital paid-in aggregated $24,861,911.
Transactions in capital stock for the six months ended December 31,
1996 were as follows:
<TABLE>
<CAPTION>
Shares Amount
-------- -------------
<S> <C> <C>
Shares sold 286,020 $ 4,962,406
Shares issued in reinvestment
of dividends 152,678 2,508,498
------- ---------
438,698 $ 7,470,904
Shares redeemed 234,719 4,121,547
------- -------------
Net increase 203,979 $ 3,349,357
======== =============
</TABLE>
Note 3-Distribution To Shareholders
On November 29, 1996, a distribution of $1.76 aggregating $2,641,139
was declared from net realized gains from investment transactions.
The dividend was paid on December 2, 1996, to all shareholders of
record on November 29, 1996.
Note 4-Investment Transactions
Purchases of investment securities and sales of investment securities
(excluding short-term securities) for the six months ended December
31, 1996 were $41,971,132 and $40,599,964, respectively, for common
stocks. The cost of securities for federal income taxes is the same
as that shown in the schedule of investments. Net loss on investments
for the six months ended December 31, 1996, was $229,703. All
security transactions were in long transactions. As of December 31,
1996, the aggregate gross unrealized appreciation and depreciation of
securities was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 3,838,301
Unrealized depreciation (934,205)
------------
Net unrealized appreciation $ 2,904,096
============
</TABLE>
<PAGE> 11
DOMINION INSIGHT GROWTH FUND
Notes to Financial Statements
Note 5-Investment Advisory Fees and Other Agreements and Transactions with
Affiliates
The Fund has an Investment Advisory Agreement (the "Advisory
Agreement") with Insight Capital Management, Inc. (the "Advisor") to
act as its investment advisor. The Advisor also serves as investment
advisor to certain private accounts. 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, 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 (the "Administrator"). 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 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 entered into a Distribution Agreement with Dominion
Capital Corporation (the "Distributor") pursuant to which the
Distributor performs services and bears the expenses relating to the
offering of Fund shares for sale to the public. As compensation for
the services provided and expenses borne by the Distributor, the Fund
pays the Distributor the sales charges. Sales charges received by the
Distributor for Fund shares sold for the six months ended December 31,
1996 were approximately $128,000.
During the six months ended December 31, 1996, all orders for the
Fund's portfolio securities transactions were placed through the
Distributor, and it is expected that the Advisor will continue to
place such orders with the Distributor. Commissions received by the
Distributor for executing portfolio transactions for the six months
ended December 31, 1996 were approximately $229,700.
Certain directors and officers of the Company are also directors,
officers, and/or employees of the Administrator and the Distributor.
<PAGE> 12
DOMINION INSIGHT GROWTH FUND
SEMI-ANNUAL REPORT
DECEMBER 31, 1996
Officers
--------
Douglas W. Powell
Chairman and Chief Executive Officer
C. Dewey Elliott, III
President
Directors
---------
Douglas W. Powell
C. Dewey Elliott, III
Robert H. Spiro, Jr.
Peter R. Goldschmidt
Allen B. Clark, Jr.
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
Independent Auditors
--------------------
Kinder & Wyman, P.C.
Certified Public Accountants
511 E. John Carpenter Freeway
Suite 200
Irving, TX 75062
Legal Counsel
-------------
Frederick C. Summers, III
A Professional Corporation
Attorney at Law
1400 St. Paul Place
750 N. St. Paul Street
Dallas, TX 75201
