<PAGE>
DOMINION INSIGHT GROWTH FUND
SEMI-ANNUAL REPORT
DECEMBER 31, 1998
Dominion Insight Growth Fund
A SERIES OF DOMINON FUNDS, INC.
- ------------------------------------------------------------------------
To Our Shareholders:
Enclosed is the semi-annual report for the Fund for the period ended December
31, 1998.
It was a great end to 1998 leading to a great start to 1999 with double-digit
gains for November and December and finishing the six months with a 27.07%
annualized total return, and 27.3% for the calendar year. This included a
long-term capital gain distribution of $2.23 for the year. For 1999, we are
looking for a continued strong economy, low inflation, and low
unemployment--all elements that central bankers at the Federal Reserve strive
for. This portends strong performance for the market in general and growth
stocks in particular.
Your Board of Directors took several actions at the quarterly meeting in
February, including the decision to eliminate the sales charge on new
purchases of shares of the Fund, making it a no load fund. The directors also
confirmed Peter R. Goldschmidt as Chairman of the Board of Directors and
re-elected Douglas W. Powell and C. Dewey Elliott, III as officers and
directors.
As before, dollar cost averaging has proved its value this past 24 months.
Thank you for your confidence in the Fund.
February 26, 1999 Douglas W. Powell C. Dewey Elliott, III
Chief Executive Officer President
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>
DOMINION INSIGHT GROWTH FUND
Investments in Securities
December 31, 1998
<TABLE>
<CAPTION>
Percent of
Common Stocks Shares Value Total Assets
- ------------- ------ ----- ------------
<S> <C> <C> <C>
Computer
Cisco* 8,800 $ 816,750 4.6%
Dell Computer* 15,400 1,127,087 6.3%
Intel Corporation* 7,000 829,937 4.6%
Network Appliance* 21,000 945,000 5.3%
------------ ------
3,718,776 20.8%
Computer Services
Henry Jack & Associates* 12,000 597,000 3.3%
Legato Systems Inc.* 15,000 989,062 5.5%
TSI International* 15,800 756,424 4.2%
------------ ------
2,342,488 13.0%
Computer Software
Advantage Learning* 4,400 289,300 1.6%
Compuware Corporation* 10,800 843,750 4.7%
Microsoft Corporation* 6,050 839,059 4.7%
New Era of Networks* 23,400 1,029,600 5.8%
Novell* 33,000 598,125 3.3%
Peregrine Systems* 6,300 292,163 1.6%
------------ ------
4,644,266 21.7%
Electronics
E M C Corp Mass* 9,600 816,000 4.5%
Solectron* 8,500 789,969 4.4%
Transwitch Corporation* 21,000 817,688 4.6%
Vitesse Semiconductor* 7,400 337,625 1.9%
------------ ------
2,761,282 15.4%
Medical Hospitality
Resmed Inc.* 16,500 748,688 4.2%
------------
Office Business Equipment
Lexmark International* 7,700 773,850 4.3%
------------
On-Line Services
America On Line* 2,450 392,000 2.2%
Mindspring Enter* 5,900 360,269 2.0%
------------ ------
752,269 4.2%
Pharmaceutical
Watson Pharmaceutical* 14,100 886,538 4.9%
------------
Shoes
American Eagle Out* 7,500 499,688 2.8%
------------
</TABLE>
<PAGE>
DOMINION INSIGHT GROWTH FUND
Investments in Securities
December 31, 1998
<TABLE>
<CAPTION>
Percent of
Common Stocks Shares Value Total Assets
- ------------- ------ ----- ------------
(continued)
<S> <C> <C> <C>
Telecommunications
Geotel Communications* 4,500 167,625 0.9%
World Com* 11,000 789,250 4.4%
------------ ------
956,875 5.3%
Total Investments in Securities $17,332,447 $96.6%
------------ ------
------------ ------
Cost - $11,799,026
- - Non-income producing security
Percentage of investments as shown is the ratio of the total value to
total assets.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities at value $ 17,332,447
(identified cost of $11,799,026)
Cash 587,208
Receivables
Capital shares sold 18,068
Dividends and interest 1,639
-------------
TOTAL ASSETS 17,939,362
LIABILITIES
Distributions payable 13,078
Accrued administrative fee 17,108
Accrued investment advisory fee 13,789
-------------
TOTAL LIABILITIES 43,975
-------------
NET ASSETS $ 17,895,387
-------------
-------------
Capital shares outstanding 1,031,815
-------------
-------------
Net asset value and offering price per share
Net asset value per share $ 17.34
-------------
-------------
Offering price per share $ 17.97
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
INVESTMENT LOSS
<S> <C>
INVESTMENT INCOME
Dividends $ 5,140
Interest 7,818
------------
Total investment income 12,958
EXPENSES
Investment advisory fee 82,443
Administrative fee 103,055
------------
Total expenses 185,498
Net investment loss (172,540)
REALIZED LOSS AND UNREALIZED APPRECIATION ON INVESTMENTS
Net realized loss on investments in securities (440,442)
Net change in unrealized appreciation of investments
in securities 2,576,040
------------
Net gain on investments 2,135,598
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 1,963,058
------------
------------
</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 SIX MONTHS ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
CHANGE IN NET ASSETS FROM OPERATIONS
<S> <C>
Net investment loss $ (172,540)
Net realized loss on investments (440,442)
Change in unrealized appreciation 2,576,040
-----------
Net increase in net assets
resulting from operations 1,963,058
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED
GAINS ON INVESTMENTS (2,151,402)
CAPITAL SHARE TRANSACTIONS - NET (1,166,769)
-----------
Total decrease in net assets (1,355,113)
NET ASSETS
Beginning of period 19,250,500
-----------
END OF PERIOD (including undistributed
investment loss of $1,828,714) $17,895.387
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
12/31/98 06/30/98
(unaudited)
(1)(2) (2)
---------------------- ------------------
<S> <C> <C>
PER SHARE DATA:
For a share outstanding during the period:
Net asset value, beginning of period $ 17.56 $ 15.79
---------------------- ------------------
Income from investment operations:
Net investment loss (0.17) (0.37)
Net realized and unrealized gains
on securities 2.18 2.71
---------------------- ------------------
Total income from investment operations 2.01 2.34
---------------------- ------------------
Less distributions:
Distributions from net realized gains (2.23) (0.57)
---------------------- ------------------
Net asset value, end of period $ 17.34 $ 17.56
---------------------- ------------------
---------------------- ------------------
Total return (3) 27.07% 15.00%
---------------------- ------------------
---------------------- ------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 17,895 $ 19,251
Ratio of expenses to average daily net assets 2.25% 2.25%
Ratio of net investment loss to average daily net assets 0.96% 2.08%
Portfolio turnover rate 125.00% 273.25%
Average brokerage commission rate for the underlying
Portfolio (4) $ 0.10 $ 0.10
</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
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) Brokerage commissions paid on portfolio transactions increase the
cost of securities purchased or reduce the proceeds of securities
sold, and are not separately reflected in the Fund's Statement of
Operations. The rate is calculated by dividing the total brokerage
commissions paid on applicable purchases and sales of portfolio
securities for the period by the total number of related shares
purchased and sold.
The accompanying notes are an integral part of these financial highlights.
<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 (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
amended) 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 net assets of the
Fund with each other share in such series and no interest in any other
series.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of the assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Valuation of Securities
Securities are valued at the close of each business day. Securities
traded on national securities exchanges or in national market systems
are valued at the last quoted sales price. Securities for which market
quotations are not readily available are valued at fair value according
to methods selected in good faith by the board of directors.
Security Transactions and Investment Income
Security transactions are accounted for on the date the securities are
purchased or sold, plus one day. Realized security gains and losses
from security transactions are reported on an identified cost basis.
Dividend income is recognized on the ex-dividend date, and interest
income is recognized on the accrual basis.
<PAGE>
DOMINION INSIGHT GROWTH FUND
Notes to Financial Statements
Note 1-Summary of Significant Accounting Policies, continued
Cash
Cash is held in a credit interest account at May Financial Corporation,
a member of the Chicago Stock Exchange, Inc., bearing interest at a
variable rate. At December 31, 1998, the interest rate was 4.00%.
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 form
their ultimate characterization for federal income tax purposes. At
December 31, 1998, there were no material differences. Also, due to the
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains
were recorded by the Fund.
Distributions to Shareholders
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>
DOMINION INSIGHT GROWTH FUND
Notes to Financial Statements
Note 2-Capital Share Transactions
As of December 31, 1998, there were 1,000,000,000 shares of $.001 par
value capital stock authorized of which 200,000,000 shares are
classified as the Fund's series and the balance is unclassified. As of
December 31, 1998, capital paid in aggregated $14,043,915.
Transactions in capital stock for the six months ended December 31,
1998 were as follows:
<TABLE>
<CAPTION>
Shares Amount
-------- ----------
<S> <C> <C>
Shares sold 30,519 $ 509,114
Shares issued in reinvestment
of dividends 136,301 2,033,620
-------- -----------
166,820 2,542,734
Shares redeemed 231,268 3,709,503
-------- -----------
Net decrease (64,448) $(1,166,769)
-------- -----------
-------- -----------
</TABLE>
Note 3-Distribution To Shareholders
On November 29, 1998, a distribution of $2.23 aggregating $2,151,402
was declared from net realized gains from investment transactions. The
dividend was paid on December 3, 1998, to all shareholders of record on
December 2, 1998.
As of December 31, 1998, the fund had undistributed net realized losses
of $440,442.
Note 4-Investment Transactions
Cost of purchases and sales of investment securities (excluding
short-term securities) for the six months ended December 31, 1998 were
$19,811,079 and $23,733,630, respectively. The cost of securities for
federal income taxes is the same as that shown in the schedule of
investments. Net income on investments for the six months ended
December 31, 1998, was $2,135,598. All security transactions were in
long transactions. As of December 31, 1998, the aggregate gross
unrealized appreciation and depreciation of securities was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 5,601,409
Unrealized depreciation (67,988)
-----------
Net unrealized appreciation $ 5,533,421
-----------
-----------
</TABLE>
<PAGE>
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 consistent with the Fund's
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 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 entered into a Distribution Agreement with Northstar
Securities, Inc. (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 for distributing fund shares. Sales
charges received by the Distributor for Fund shares sold for the six
months ended December 31, 1998 were approximately $6,830.
During the six months ended December 31, 1998, all orders for the
Fund's portfolio securities transactions were placed through either the
Distributor or the prior distributor, Dominion Capital Corporation, and
it is expected that the Advisor will continue to place such orders with
the Distributor. Commissions received by the Distributor and Dominion
Capital Corporation for executing portfolio transactions for the six
months ended December 31, 1998 were approximately $44,000 and $80,000,
respectively.
Certain directors and officers of the Company are also directors,
officers, and/or employees of the Administrator.
<PAGE>
DOMINION INSIGHT GROWTH FUND
SEMI-ANNUAL REPORT
DECEMBER 31, 1998
OFFICERS
Douglas W. Powell
Chief Executive Officer
C. Dewey Elliott, III
President
DIRECTORS
Robert H. Spiro, Jr.
Peter R. Goldschmidt
Allen B. Clark, Jr.
Douglas W. Powell
C. Dewey Elliott, III
INVESTMENT ADVISOR
Insight Capital Management, Inc.
2121 North California Blvd., Suite 560
Walnut Creek, CA 94696
ADMINISTRATOR
Dominion Institutional Services Corporation
5000 Quorum Dr., Suite 620
Dallas, TX 75240
DISTRIBUTOR
Northstar Securities, Inc.
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
750 N. St. Paul Street, Suite 1400
Dallas, TX 75201
