|
|
|
|
|
|
|
|
|
<PAGE>
[GRAPHIC OMITTED]
[LETTERHEAD]
Annual Report
June 30, 2000
Dominion Insight Growth Fund
A Series of Dominion Funds, Inc.
To Our Shareholders:
Even with the market's volatility and investment in a large number of
technology stocks, the Fund outperformed all of the major indexes over the
past six months, and finished the fiscal year with a total return of 69.10%.
This included an annual distribution of $5.82.
During the year, a change of investment advisor to Nye, Parnell, & Emerson
Capital Management brought the Fund an increased interest in companies that
dominate their industries and which have a competitive advantage over their
nearest competition. This has served our shareholders well.
The economy continues to be very healthy, even with the recent interest rate
increases by the Federal Reserve. Overall, we think the economy will soon be
showing a more visible slowing, that inflation is not a severe threat, and
that the political outlook does not present a controlling danger. Some
studies show that roughly 75% of American stocks have fallen about 30% in
price. However, earnings have continued to make large progress, and the
price/earnings ratio of the Dow Jones is currently only about 16 times the
present estimate of $640 for 2001. Corporate earnings continue to remain very
strong with healthy demand, technological advances, and rising productivity.
This should partially offset less-favorable interest-rate developments. The
market's current price level is particularly attractive for a number of our
favorite companies--dominant companies with competitive advantage.
Our Fund's portfolio will be in these dominant stocks within dynamically
growing industries. This is still the best investment strategy for investors
with patience and understanding. We're pleased you have chosen to be a
shareholder with us.
August 22, 2000 Douglas W. Powell C. Dewey Elliott, III
Chief Executive Officer President
5000 QUORUM DRIVE, SUITE 620, DALLAS, TEXAS 75240
<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, 2000, and the related
statements of operations and changes in net assets and the financial
highlights for the year 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 audit. The statement of changes in net
assets for the year ended June 30, 1999 and financial highlights for the four
years then ended were audited by other auditors whose report dated July 14,
1999, expressed an unqualified opinion on the statement of changes in net
assets and financial highlights.
We conducted our audit 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, 2000, 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
audit provides 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,
2000, the results of its operations, the changes in its net assets, and the
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
WALLACE SANDERS & COMPANY
Irving, Texas
July 18, 2000
<PAGE>
DOMINION INSIGHT GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value $ 17,692,679
(identified cost $12,328,982)
Cash 56,242
Receivables
Investment securities sold 207,981
Dividends and interest 2,845
------------
TOTAL ASSETS 17,959,747
------------
LIABILITIES
Payables
Investment advisory fee 14,585
Administrative fee 18,186
Investment securities purchased 23,936
------------
TOTAL LIABILITIES 56,707
------------
NET ASSETS
Equivalent to $25.47 per share on
702,901 shares of capital stock outstanding $ 17,903,040
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
PERCENT OF
COMMON STOCKS SHARES VALUE TOTAL ASSETS
------------- ------------ ------------ --------------
<S> <C> <C> <C>
Air Courier
FedEx Corporation (a) 3,500 $ 133,000 0.74%
------------ --------------
Audio & Video Equipment
Gemstar International Group Limited (a) 3,300 202,795 1.13
------------ --------------
Biotechnology & Drugs
Immunex Corporation (a) 3,600 177,975 0.99
MedImmune, Inc. (a) 4,500 333,000 1.85
------------ --------------
510,975 2.85
------------ --------------
Broadcasting & Cable TV
UnitedGlobalCom, Inc. Class A (a) 1,800 84,150 0.47
------------ --------------
Communications Equipment
Advanced Fibre Communications, Inc. (a) 3,000 135,938 0.76
CIENA Corporation (a) 650 108,347 0.60
Comverse Technology, Inc. (a) 2,000 186,000 1.04
Harmonic Inc. (a) 2,042 50,540 0.28
JDS Uniphase Corporation (a) 9,000 1,078,875 6.01
Juniper Networks, Inc. (a) 1,200 174,675 0.97
Lucent Technologies Inc. 6,000 355,500 1.98
Motorola, Inc. 6,000 174,375 0.97
Nokia Corporation ADR (a) 3,200 159,800 0.89
Nortel Networks Corporation 5,100 348,075 1.94
Powerwave Technologies, Inc. (a) 2,800 123,200 0.69
QUALCOMM Incorporated (a) 9,200 552,000 3.07
Tellabs, Inc. (a) 5,000 342,188 1.91
------------ --------------
3,789,511 21.10
------------ --------------
Communication Services
Global Crossing Ltd. (a) 4,000 105,250 0.59
Nextel Communications, Inc. (a) 5,000 305,938 1.70
Qwest Communications International Inc. (a) 1,800 89,438 0.50
Verizon Communications 1,700 86,381 0.48
Vodafone AirTouch PLC ADR 7,000 290,063 1.62
WorldCom, Inc. (a) 8,250 378,469 2.11
------------ --------------
1,255,538 6.99
------------ --------------
Computer Hardware
Dell Computer Corporation (a) 6,500 320,531 1.78
International Business Machines Corporation 1,500 164,344 0.92
Sun Microsystems, Inc. (a) 7,500 682,031 3.80
------------ --------------
1,166,906 6.50
------------ --------------
Computer Networks
Cisco Systems, Inc. (a) 14,800 940,725 5.24
Network Appliance, Inc. (a) 2,100 169,050 0.94
------------ --------------
1,109,775 6.18
------------ --------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
PERCENT OF
COMMON STOCKS (CONTINUED) SHARES VALUE TOTAL ASSETS
------------------------- ------------ ------------ --------------
<S> <C> <C> <C>
Computer Services
America Online, Inc. (a) 4,000 $ 211,000 1.17%
------------ --------------
Computer Storage Devices
EMC Corporation (a) 12,000 923,250 5.14
------------ --------------
Conglomerates
General Electric Company 5,100 270,300 1.51
------------ --------------
Consumer Financial Services
Concord EFS, Inc. (a) 4,900 127,400 0.71
------------ --------------
Electronic Instruments & Controls
Agilent Technologies, Inc. (a) 125 9,219 0.05
CTS Corporation 2,200 99,000 0.55
Sanmina Corporation (a) 1,400 119,700 0.67
SCI Systems, Inc. (a) 2,000 78,375 0.44
Solectron Corporation (a) 7,000 293,125 1.63
------------ --------------
599,419 3.34
------------ --------------
Major Drugs
Pfizer, Inc. 7,200 345,600 1.92
------------ --------------
Media
Time Warner Inc. 4,300 326,800 1.82
------------ --------------
Medical Equipment & Supplies
Medtronic, Inc. 1,500 74,719 0.42
------------ --------------
Office Equipment
MICROS Systems, Inc. (a) 4,000 74,250 0.41
------------ --------------
Rental & Leasing
Comdisco, Inc. 3,000 66,938 0.37
------------ --------------
Retail (Department & Discount)
Wal-Mart Stores, Inc. 5,800 334,225 1.86
------------ --------------
S&Ls/Savings Banks
Capital One Financial Corporation 2,400 107,100 0.60
------------ --------------
Scientific & Technical Instruments
Cytyc Corporation (a) 2,600 138,775 0.77
------------ --------------
Security Systems & Services
Symbol Technologies, Inc. 1,700 91,800 0.51
------------ --------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
INVESTMENTS IN SECURITIES
JUNE 30, 2000
<TABLE>
<CAPTION>
PERCENT OF
COMMON STOCKS (CONTINUED) SHARES VALUE TOTAL ASSETS
------------------------- ------------ ------------ --------------
<S> <C> <C> <C>
Semiconductors
Altera Corporation (a) 1,500 $ 152,906 0.85%
Applied Materials, Inc. (a) 3,900 353,438 1.97
Applied Micro Circuits Corporation (a) 3,500 345,625 1.92
Broadcom Corporation Class A (a) 1,700 372,194 2.07
Conexant Systems, Inc. (a) 3,300 160,463 0.89
Cree, Inc. (a) 1,000 133,500 0.74
Intel Corporation 4,000 534,750 2.98
International Rectifier Corporation (a) 1,800 100,800 0.56
PMC-Sierra, Inc. (a) 900 159,919 0.89
Rambus Inc. (a) 6,000 618,000 3.44
RF Micro Devices, Inc. (a) 2,000 175,250 0.98
SDL, Inc. (a) 600 171,113 0.95
Texas Instruments Incorporated 4,200 288,488 1.61
Vitesse Semiconductor Corporation (a) 3,000 220,688 1.23
Xilinx, Inc. (a) 3,500 288,969 1.61
------------ --------------
4,076,100 22.70
------------ --------------
Software & Programming
BroadVision, Inc. (a) 5,500 279,469 1.56
Citrix Systems, Inc. (a) 1,600 30,300 0.17
Compuware Corporation (a) 11,000 114,125 0.64
Inktomi Corporation (a) 1,050 124,163 0.69
Mercury Interactive Corporation (a) 2,000 193,500 1.08
Microsoft Corporation (a) 3,700 296,000 1.65
Oracle Corporation (a) 3,000 252,188 1.40
RealNetworks, Inc. (a) 1,700 85,956 0.48
Siebel Systems, Inc. (a) 950 155,384 0.87
VERITAS Software Corporation (a) 1,250 141,270 0.79
------------ --------------
1,672,354 9.31
------------ --------------
Total Investments in Securities
(cost $12,328,982) $17,692,679 98.51%
============ ==============
</TABLE>
NOTE:
(a) Presently non-income producing.
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, 2000
<TABLE>
INVESTMENT LOSS
<S> <C>
Investment income
Dividends $ 20,198
Interest 14,885
------------
Total investment income 35,083
------------
Expenses
Investment advisory fee 164,986
Administrative fee 206,254
------------
Total expenses 371,240
------------
NET INVESTMENT LOSS (336,157)
------------
REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS
Net realized gain on investments in securities 7,297,542
Net change in unrealized appreciation
of investments in securities 1,590,653
------------
NET GAIN ON INVESTMENTS 8,888,195
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 8,552,038
============
</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, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
CHANGE IN NET ASSETS FROM OPERATIONS
Net investment loss $ (336,157) $ (341,979)
Net realized gain on investments in securities 7,297,542 3,598,098
Net change in unrealized appreciation on
investments in securities 1,590,653 228,458
------------ ------------
Net increase in net assets
resulting from operations 8,552,038 3,484,577
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net realized gains on investments in securities (3,649,885) (2,151,402)
Capital share transactions- net (1,509,883) (6,072,905)
------------ ------------
Total increase (decrease) in net assets 3,392,270 (4,739,730)
NET ASSETS
Beginning of year 14,510,770 19,250,500
------------ ------------
End of year (including undistributed
investment loss of $1,992,331
and $1,656,174, respectively) $ 17,903,040 $ 14,510,770
============ ============
</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, 2000, the
interest rate was 5.30%.
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, 2000, 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.
NOTE 2 - DISTRIBUTION TO SHAREHOLDERS
Distributions of $5.82 aggregating $3,649,885 were declared from
net realized gains from security transactions. The dividends were
payable on December 3, 1999, to shareholders of record on
November 30, 1999.
At June 30, 2000, the Fund had undistributed net realized gains
of $6,567,618, of which $4,164,929 are short-term.
<PAGE>
DOMINION INSIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - CAPITAL SHARE TRANSACTIONS
As of June 30, 2000, 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, 2000, capital paid-in aggregated $7,627,898.
Transactions in shares of capital stock for the years ended June
30, 2000 and June 30, 1999 are as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
--------------------------------- ---------------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Shares sold 23,115 41,539 $ 520,531 $ 705,427
Shares issued in
reinvestment of
dividends 166,094 136,971 3,371,705 2,045,849
---------- ---------- ----------- -----------
189,209 178,510 3,892,236 2,751,276
Shares redeemed 243,907 517,175 5,402,119 8,824,181
---------- ---------- ----------- -----------
Net decrease (54,698) (338,665) $(1,509,883) $(6,072,905)
========== ========== =========== ===========
</TABLE>
NOTE 4 - SECURITIES TRANSACTIONS
Cost of purchases and sales of securities (excluding short-term
obligations) aggregated $19,680,800 and $17,610,916 respectively,
for the year ended June 30, 2000. As of June 30, 2000, the
aggregate unrealized appreciation and depreciation of securities
was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 6,450,348
Unrealized depreciation (1,086,651)
------------
Net unrealized appreciation $ 5,363,697
============
</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 Nye, Parnell &
Emerson Capital Management, Inc. (Advisor) to act as its
investment advisor. The Advisor also serves as investment advisor
to certain private accounts. The Advisor has no previous
experience in advising a mutual fund, other than to advise the
Fund since November 1, 1999. 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, 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 (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. There is no
sales charge to the investor for the purchase of shares.
During the year ended June 30, 2000, a majority of the orders for
the Fund's securities transactions were placed through the
Distributor. Commissions charged by the Distributor for executing
security transactions were $72,203 for the year ended June 30,
2000.
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,
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA (1):
Net asset value, beginning of year $ 19.15 $ 17.56 $ 15.79 $ 19.04 $ 13.53
---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment loss (.48) (.36) (.37) (.33) (.34)
Net realized and unrealized gain
(loss) on investments in securities 12.62 4.20 2.71 (1.16) 7.39
---------- ---------- ---------- ---------- ----------
Total income (loss) from investment
operations 12.14 3.84 2.34 (1.49) 7.05
---------- ---------- ---------- ---------- ----------
Less distributions:
Distributions from net realized gains (5.82) (2.25) (.57) (1.76) (1.54)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 25.47 $ 19.15 $ 17.56 $ 15.79 $ 19.04
========== ========== ========== ========== ==========
Total return 69.10% 25.47% 15.00% (8.21)% 54.32%
========== ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
thousands) $ 17,903 $ 14,511 $ 19,251 $ 22,944 $ 27,908
Ratio of expenses to average
net assets 2.24% 2.25% 2.25% 2.30% 2.31%
Ratio of net investment loss to
average net assets 2.02% 2.14% 2.08% 2.04% 2.03%
Portfolio turnover rate 120.65% 185.62% 273.25% 261.05% 172.87%
</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.
<PAGE>
DOMINION INSIGHT GROWTH FUND
ANNUAL REPORT
JUNE 30, 2000
OFFICERS
Douglas W. Powell
Chief Executive Officer
C. Dewey Elliott, III
President
DIRECTORS
Peter R. Goldschmidt, Chairman
Robert H. Spiro, Jr.
Allen B. Clark, Jr.
Douglas W. Powell
C. Dewey Elliott, III
INVESTMENT ADVISOR
Nye, Parnell, & Emerson Capital Management
526 King Street, Suite 201
Alexandria, VA 22314
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
Wallace Sanders & Company
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
|
|