<PAGE>
DOMINION INSIGHT GROWTH FUND
ANNUAL REPORT
JUNE 30, 1999
Dominion Insight Growth Fund
A SERIES OF DOMINION FUNDS, INC.
- -------------------------------------------------------------------------------
To Our Shareholders:
The Fund's 1999 fiscal year with a total return of 25.47%, and included a
long-term capital gain distribution of $2.25 for the year.
In January 1999's semi-annual report we said we were "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." This has certainly
proved to be the case and is reflected in the Fund's performance.
Even with the summer's volatility, the stocks in the Fund's portfolio have
nearly all met or beat earnings expectations, and their business outlook
continues to look good. Current estimates for our stocks show that earnings
should grow nearly 50% this year and another 35% next year. Despite this
probable growth, the portfolio continues to trade at very reasonable valuations.
This means the possibility exists for stock price appreciation based on earnings
growth AND valuation.
As the market sells off with profit taking or expression of fear with Asia or
other crisis, we recommend it is a good time to make additional purchases. As in
the past 24 months, dollar cost averaging has proved its value.
August 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>
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and
Board of Directors of
Dominion Funds, Inc.
We have audited the accompanying statement of assets and liabilities of the
Dominion Insight Growth Fund portfolio of Dominion Funds, Inc., including the
schedule of investments in securities, as of June 30, 1999, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our 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 and financial highlights. Our procedures included confirmation of
securities owned as of June 30, 1999, by correspondence with the custodian and
broker. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 the
Dominion Insight Growth Fund portfolio of Dominion Funds, Inc. as of June 30,
1999, 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 each of the five years in the period then ended, in conformity
with generally accepted accounting principles.
KINDER & WYMAN, P.C.
Irving, Texas
July 14, 1999
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value $ 14,032,542
(identified cost $10,259,498)
Cash 480,440
Receivables
Investment securities sold 1,102,410
Capital shares sold 2,750
Dividends and interest 773
------------
TOTAL ASSETS 15,618,915
------------
LIABILITIES
Payables
Investment advisory fee 11,199
Administrative fee 13,865
Investment securities purchased 1,083,081
------------
TOTAL LIABILITIES 1,108,145
------------
NET ASSETS
Equivalent to $19.15 per share on
757,599 shares of capital stock outstanding $ 14,510,770
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 1999
<TABLE>
<CAPTION>
Percent of
Common Stocks Shares Value Total Assets
- ------------- ---------- --------- -------------
<S> <C> <C> <C>
Broadcast - Media
AT & T - Liberty Media Group 8,000 $ 294,000 1.88%
--------- ---------
Communication - Equipment
EchoStar Communications Corporation 2,600 398,938 2.55
Tellabs, Inc (a) 4,600 310,787 1.99
--------- ---------
709,725 4.54
--------- ---------
Computers - Hardware
Dell Computer (a) 8,800 325,600 2.09
RF Micro Devices, Incorporated (a) 7,200 537,300 3.44
Sun Microsystems, Incorporated (a) 5,000 344,375 2.20
--------- ---------
1,207,275 7.73
--------- ---------
Computers - Networking
Cisco Systems, Incorporated (a) 18,624 1,201,248 7.69
--------- ---------
Computers - Peripheral
EMC Corporation (Mass.) (a) 9,200 506,000 3.24
--------- ---------
Computers - Software/Services
Microsoft Corporation (a) 8,100 730,519 4.68
--------- ---------
Electrical Equipment
Solectron Corporation (a) 9,000 600,188 3.84
--------- ---------
Electronics - Semi-Conductors
Applied Materials, Incorporated (a) 3,900 288,113 1.84
JDS Uniphase Corporation (a) 2,800 464,800 2.98
TranSwitch Corp (a) 12,900 611,137 3.91
Vitesse Semiconductor Corporation (a) 7,400 499,037 3.20
Xilinx, Incorporated (a) 6,000 343,500 2.20
--------- ---------
2,206,587 14.13
--------- ---------
Footwear
K-Swiss Incorporated 6,300 292,950 1.88
--------- ---------
Healthcare - Biotechnology
Biogen, Incorporated (a) 5,400 347,288 2.22
--------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 1999
<TABLE>
<CAPTION>
Percent of
Common Stocks (continued) Shares Value Total Assets
- ------------------------ ------- ----------- ------------
<S> <C> <C> <C>
Healthcare - Drugs Major
MeddImune, Incorporated (a) 5,000 $ 338,750 2.17%
Priority Healthcare Corporation (a) 10,700 369,150 2.36
----------- ----------
707,900 4.53
----------- ----------
Healthcare - Specialized Service
Laser Vision Centers, Incorporated (a) 7,400 466,200 2.98
----------- ----------
Information Services
QRS Corporation 4,800 374,400 2.40
----------- ----------
Internet Service Providers
Yahoo! Incorporated (a) 1,000 172,250 1.10
----------- ----------
Investment Banking/Brokerage
Schwab (Charles) Corporation 1,800 197,775 1.27
----------- ----------
Manufacture - Special
Optical Coating Laboratory, Incorporated 5,500 459,937 2.94
----------- ----------
Photographic Equipment
Pinnacle Systems, Incorporated (a) 6,400 215,200 1.38
----------- ----------
Retail - Apparel
American Eagle Outfitters, Incorporated 11,400 518,700 3.32
Children's Place Retail Stores, Incorporated (a) 9,000 364,500 2.33
Quicksilver Resources Incorporated (a) 11,300 294,506 1.89
----------- ----------
1,177,706 7.54
----------- ----------
Telecom - Long Distance
MCI WORLDCOM, Incorporated 11,000 948,750 6.07
Viatel, Incorporated (a) 7,100 398,487 2.55
----------- ----------
1,347,237 8.63
----------- ----------
Toys and Games
JAKKS Pacific, Incorporated (a) 14,300 426,319 2.73
----------- ----------
Transportation - Airlines
Frontier Airlines, Incorporated (a) 24,300 391,838 2.51
----------- ----------
Total Investments in Securities
(cost $10,259,498) $14,032,542 89.84%
----------- ----------
----------- ----------
Note:
(a) Presently non-income producing.
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999
<TABLE>
<S> <C>
INVESTMENT LOSS
Investment income
Dividends $ 6,015
Interest 11,497
-----------
Total investment income 17,512
-----------
Expenses
Investment advisory fee 159,774
Administrative fee 199,717
-----------
Total expenses 359,491
-----------
NET INVESTMENT LOSS (341,979)
-----------
REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS
Net realized gain on investments in securities 3,598,098
Net change in unrealized appreciation
of investments in securities 228,458
-----------
NET GAIN ON INVESTMENTS 3,826,556
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 3,484,577
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
<TABLE>
1999 1998
----------- -----------
<S> <C> <C>
CHANGE IN NET ASSETS FROM OPERATIONS
Net investment loss $ (341,979) $ (476,287)
Net realized gain on investments in securites 3,598,098 5,494,226
Net change in unrealized appreciation on
investments in securities 228,458 (1,627,841)
----------- -----------
Net increase in net assets
resulting from operations 3,484,577 3,390,098
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gains on investments in securities (2,151,402) (735,148)
CAPITAL SHARE TRANSACTIONS - NET (6,072,905) (6,348,480)
----------- -----------
Total decrease in net assets (4,739,730) (3,693,530)
NET ASSETS
Beginning of year 19,250,500 22,944,030
----------- -----------
End of year (including undistributed
investment loss of $1,656,174
and $1,656,174, respectively) $14,510,770 $19,250,500
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS
Dominion Insight Growth Fund (Fund) is a separate series of shares
of common stock of Dominion Funds, Inc. (Company). The Company was
incorporated in the state of Texas in June of 1992, and is
registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The Fund is
subject to various investment restrictions as set forth in the
Statement of Additional Information. The investment objective of
the Fund is capital appreciation. The Company may designate one or
more series of common stock. The only series currently designated
is the Fund. Each capital share in the Fund represents an equal
proportionate interest in the net assets of the Fund with each
other capital share in such series and no interest in any other
series.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of the assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
income and expenses during the reporting period. Actual results
could differ from those estimates.
VALUATION OF SECURITIES
Securities are valued at the close of each business day. Securities
traded on national securities exchanges or on the national market
systems are valued at the last quoted sales price on the day of
valuation. Securities for which representative market quotations are
not readily available are valued at fair value as determined in good
faith by the Board of Directors.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the date the securities
are purchased or sold. Realized security gains and losses from
security transactions are reported on an identified cost basis.
Dividend income is recognized on the ex-dividend date, and interest
income is recognized on the accrual basis.
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH
Cash is held in a credit interest account at May Financial
Corporation, a member of the Chicago Stock Exchange, Inc., bearing
interest at a variable rate. At June 30, 1999, the interest rate
was 4.00%.
INCOME TAXES
The Fund's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies
and to distribute all of its net taxable income, including any net
realized gains on investments, to its shareholders. Therefore, no
federal income or excise tax provision is required.
Net investment income (loss), net realized gains (losses) and the
cost of investments in securities may differ for financial statement
and income tax purposes. The character of distributions from net
investment income or net realized gains may differ from their
ultimate characterization for income tax purposes. At June 30, 1999,
there were no material differences. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized
gains were recorded by the Fund.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends declared and paid from net investment income or net
realized gains are recorded on the ex-dividend date. Short-term
realized gains are reduced by current year net investment loss. The
current year net investment loss was fully utilized to reduce
undistributed short-term realized gains.
NOTE 2 - DISTRIBUTION TO SHAREHOLDERS
Distributions of $2.23 aggregating $2,138,324 and $.02 aggregating
$13,078 were declared from net realized gains from security
transactions. The dividends were payable on December 3, 1998 and
June 25, 1999, respectively, to shareholders of record on
November 30, 1998 and June 21, 1999, respectively.
At June 30, 1999, the Fund had undistributed net realized gains of
$3,256,119, of which $1,170,198 are short-term.
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - CAPITAL SHARE TRANSACTIONS
As of June 30, 1999, there were 1,000,000,000 shares of $.001 par
value capital stock authorized of which 200,000,000 shares are
classified as the Fund's series; the balance is unclassified. As of
June 30, 1999, capital paid-in aggregated $9,137,781.
Transactions in shares of capital stock for the years ended
June 30, 1999 and June 30, 1998 are as follows:
<TABLE>
<CAPTION>
Shares Amount
----------------------------------- ---------------------------------
1999 1998 1999 1998
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares sold 41,539 84,898 $ 705,427 $ 1,516,177
Shares issued in
reinvestment of
dividends 136,971 41,935 2,045,849 699,897
------------- ------------- ------------- --------------
178,510 126,833 2,751,276 2,216,074
Shares redeemed 517,175 483,748 8,824,181 8,564,554
------------- ------------- ------------- --------------
Net decrease (338,665) (356,915) $ (6,072,905) $ (6,348,480)
------------- ------------- ------------- --------------
------------- ------------- ------------- --------------
</TABLE>
NOTE 4 - SECURITIES TRANSACTIONS
Cost of purchases and sales of securities (excluding short-term
obligations) aggregated $29,773,160 and $35,088,479, respectively,
for the year ended June 30, 1999. Net gain on investments in
securities for the year ended June 30, 1999 was $3,826,556. That
amount represents the net increase in the value of investment
securities held during the year. All security transactions were in
long transactions. As of June 30, 1999, the aggregate unrealized
appreciation and depreciation of securities was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 3,870,098
Unrealized depreciation (97,054)
----------------
Net unrealized appreciation $ 3,773,044
----------------
----------------
</TABLE>
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - INVESTMENT ADVISORY FEES AND TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory Agreement with 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 Northstar Securities,
Inc. (Distributor). Pursuant to the Distribution Agreement, the
Distributor performs services and bears the expenses relating to the
offering of Fund shares for sale to the public. 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 were $18,156 for the year ended June 30, 1999.
The Distributor waived the sales charges on all sales of the Fund's
shares that occur on or after April 1, 1999.
During the year ended June 30, 1999, all orders for the Fund's
securities transactions were placed through the Distributor.
Commissions charged by the Distributor for executing security
transactions were $172,855 for the year ended June 30, 1999.
Certain directors and officers of the Company are also directors,
officers and/or employees of the Administrator.
<PAGE>
DOMINION INSIGHT GROWTH FUND
Financial Highlights
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE DATA (1):
Net asset value, beginning of year $17.56 $15.79 $19.04 $13.53 $10.24
------ ------ ------ ------ ------
Income (Loss) From Investment Operations:
Net investment loss (0.36) (0.37) (0.33) (0.34) (0.24)
Net realized and unrealized gain (loss) on investments 4.20 2.71 (1.16) 7.39 4.33
---- ---- ---- ---- ----
Total income (loss) from investment operations 3.84 2.34 (1.49) 7.05 4.09
---- ---- ---- ---- ----
Less Distributions:
Distributions from net realized gains (2.25) (0.57) (1.76) (1.54) (0.8)
---- ---- ---- ---- ----
Net asset value, end of year $19.15 $17.56 $15.79 $19.04 $13.53
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total return 25.47% 15.00% (8.21%) 54.32% 42.25%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) $14,511 $19,251 $22,944 $22,908 $8,089
Ratio of expenses to average daily net assets 2.25% 2.25% 2.30% 2.31% 2.38%
Ratio of net investment loss to average net assets 2.14% 2.08% 2.04% 2.03% 2.16%
Portfolio turnover rate 185.62% 273.25% 261.05% 172.87% 210.23%
</TABLE>
(1) Per share information has been calculated using the average number of
shares outstanding.
The accompanying notes are an integral part of these financial highlights.
