DOMINION INSIGHT GROWTH FUND
Semi-Annual Report
December 31, 1999
(unaudited)
Dominion Insight Growth Fund
A SERIES OF DOMINION FUNDS, INC.
- --------------------------------------------------------------------------------
To Our Shareholders:
Enclosed is the semi-annual report for the Fund for the period ended December
31, 1999. As you know from our previous correspondence, the total return for the
calendar year was 77.4%. It was an exceptional year.
In the annual report for June 30, 1999, we reminded you 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,
although Mr. Greenspan continues to ratchet interest rates in an effort to slow
the economy.
In September, the Board of Directors voted to replace the Investment Advisor
with Nye, Parnell & Emerson Capital Management of which Paul Dietrich is the
managing director. This change became effective November 1, 1999 and has since
been ratified by the shareholders. Mr. Dietrich's management style is clearly
aligned with the stated investment objectives of the Fund, and contributed to
the year-end performance. We anticipate continued superior long-term performance
with Paul's focus on dominant companies. For more information about this
thinking, please see the articles on the Fund's website at
www.dominionfunds.com.
The Fund held its annual meeting on December 21, 1999 for the purposes of
electing five directors, approving the Investment Advisory Agreement with
Nye, Parnell & Emerson Capital Management, and ratifying the selection of
Wallace Sanders & Company as auditors of the Fund for the fiscal year ending
June 30, 2000. Douglas W. Powell, C. Dewey Elliott, III, Peter R.
Goldschmidt, Robert H. Spiro, Jr., and Allen B. Clark, Jr. were all elected
to continue as directors following the meeting. At the adjourned meeting,
317,775 of the shares were present in person or represented by proxy, 317,775
of which were voted for the nominees, and 22,403, 23,957, 19,942, 20,161, and
19,942 of which were withheld with respect to each of the respective
nominees, 26,1466, 14,154, and 37,259 of which were voted for, against, and
to abstain, respectively, with respect to the approval of Nye, Parnell &
Emerson Capital Management as the investment advisor, and 28,4503, 9,860 and
18,515 of which were voted for, against, and to abstain, respectively, with
respect to the ratification of the selection of Wallace Sanders & Company.
Finally, please be sure to send your e-mail address to [email protected] at
your earliest convenience.
February 28, 2000 Douglas W. Powell C. Dewey Elliott, III
Chief Executive Officer President
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, 1999
Percent of
Common Stocks Shares Value Total Assets
- ------------- ------ ----- ------------
Beverages
Coca Cola* 6,500 $ 378,625 2.1%
--------- ------
Commercial Services
Comdisco Inc.* 3,000 111,750 .6
Federal Express 7,000 286,563 1.6
SEI Investment Co.* 1,000 119,016 .6
UPS 1,500 103,500 .6
--------- ------
620,829 3.4
--------- ------
Computers
Cisco 7,400 792,725 4.3
Dell Computer 8,800 448,800 2.4
Intel Corp.* 4,500 370,406 2.0
Sun Microsystems 10,000 774,375 4.2
Texas Instruments* 1,500 145,313 .8
--------- ------
2,531,619 13.8
--------- ------
Computer Services
BMC Software 3,000 559,563 1.1
Comverse Tech 2,000 289,500 1.6
--------- ------
849,063 4.6
--------- ------
Computer Software
Adobe Sys Inc.* 3,000 201,750 1.1
America On Line 4,000 301,750 1.6
Compuware Corporation 6,000 223,500 1.2
Mercury Interactive 1,000 107,938 .6
Microsoft Corporation 3,700 431,975 2.3
--------- ------
1,266,913 6.9
--------- ------
Electronics
Altera Corporation 4,000 198,250 1.1
Applied Materials 3,800 481,413 2.6
Applied Micro 3,000 381,750 2.1
CTS Corporation* 2,500 188,438 1.0
EMC Corporation Mass 7,000 764,750 4.2
JDS Uniphase Corporation 7,000 1,129,188 6.1
Optical Coating Lab* 3,000 888,000 4.8
RF Micro Devices SE 3,000 205,313 1.1
Solectron 4,000 380,500 2.1
Vitesse Semiconductor 4,000 209,750 1.1
Xilinx Incorporated 12,000 545,626 3.0
--------- ------
5,372,978 29.2
--------- ------
Financial
Capital One Financial* 6,200 298,763 1.6
--------- ------
Insurance
MBIA Incorporated* 4,500 237,656 1.3
--------- ------
The accompanying notes are an integral part of these financial statements.
DOMINION INSIGHT GROWTH FUND
Investments in Securities
December 31, 1999
Percent of
Common Stocks Shares Value Total Assets
- ------------- ------ ----- ------------
(continued)
Machinery
American Power Conversion 4,000 105,500 .6%
--------- ------
Manufacturing
General Electric* 2,000 309,500 1.7
--------- ------
Pharmaceutical
Medimune Incorporated 3,000 497,625 2.7
Merck* 5,000 335,313 1.8
Pfizer Incorporated* 8,000 259,500 1.4
--------- ------
1,092,438 5.9
--------- ------
Publishing/Printing
Time Warner* 6,000 434,625 2.4
--------- ------
Retail
Walmart* 4,000 276,500 1.5
--------- ------
Telecommunications
Batm Adv-Comm UK 800 65,699 .4
Cox Communications Inc. CL A 2,500 128,750 .7
Echostar Comm 2,000 195,000 1.1
Harmonic Lightwaves 2,000 142,406 .8
Lucent Technologies* 5,000 374,063 2.0
Nokia Adr.* 500 95,000 .5
Nextel Comm Inc-A 5,000 515,625 2.8
Powerwave Techs 2,000 116,750 .6
Qualcomm Inc. 9,200 1,620,350 8.8
Tellabs Incorporated 3,000 192,563 1.0
Vodafone Airtouch* 8,000 396,000 2.2
Voice Stream* 1,500 213,469 1.2
MCI Worldcom Incorporated 8,250 437,760 2.4
--------- ------
4,493,441 24.4
--------- ------
Utilities
Bell Atlantic* 3,500 215,469 1.2
--------- ------
Total Investments in Securities $18,483,913 100%
Cost - $11,207,778 =========== ======
* Presently non-income producing security
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
Statement of Assets and Liabilities
December 31, 1999
(unaudited)
Assets
- ------
Investments in securities at value $18,483,912
(identified cost of $11,207,778)
Receivables
Dividends and interest 6,864
--------------
TOTAL ASSETS 18,490,776
--------------
Liabilities
- -----------
Payable to broker 77,401
Accrued administrative fee 17,257
Accrued investment advisory fee 13,895
--------------
TOTAL LIABILITIES 108,553
--------------
Net Assets
- ----------
Equivalent to $23.90 per share on 769,102 shares
of capital stock outstanding. $18,382,223
==============
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, 1999
(unaudited)
Investment Loss
- ----------------
Investment Income
Dividends $ 7,980
Interest 11,710
-----------
Total investment income 19,690
-----------
Expenses
Investment advisory fee 73,360
Administrative fee 91,715
-----------
Total expenses 165,075
-----------
Net investment loss (145,385)
-----------
Realized gain and unrealized appreciation on investments
- --------------------------------------------------------
Net realized gain on investments in securities 4,532,187
Net change in unrealized appreciation of investments
in securities 2,957,264
-----------
Net gain on investments 7,489,451
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $7,344,066
===========
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, 1999
(unaudited)
Change in net assets from operations
- ------------------------------------
Net investment loss $ (145,385)
Net realized gain on investments 4,532,187
Change in unrealized appreciation 2,957,264
-------------
Net increase in net assets
resulting from operations 7,344,066
Distributions to shareholders from net realized
- -----------------------------------------------
gains on investments in securities (3,649,884)
- ----------------------------------
Capital share transactions - net 177,271
- -------------------------------- -------------
Total increase in net assets 3,871,453
Net Assets
- ----------
Beginning of period 14,510,770
------------
END OF PERIOD $ 18,382,223
(including undistributed investment ============
loss of $1,801,559)
The accompanying notes are an integral part of these financial statements.
<PAGE>
DOMINION INSIGHT GROWTH FUND
Financial Highlights (unaudited)
Six Months Year Ended
Ended 06/30/99
12/31/99
(unaudited)
Per Share Data: (1) (1)
-------------- --------------
Net asset value, beginning of period $ 19.15 $ 17.56
-------------- --------------
Income from investment operations:
Net investment loss (0.19) (0.36)
Net realized and unrealized
gains on securities 10.76 4.20
-------------- --------------
Total income from investment operations 10.57 3.84
-------------- --------------
Less distributions:
Distributions from net realized gains (5.82) (2.25)
-------------- --------------
Net asset value, end of period $ 23.90 $ 19.15
============== ==============
Total return 60.26% 25.47%
============== ==============
Ratios/Supplemental Data:
Net assets, end of period
in thousands) $ 18,382 $ 14,511
Ratio of expenses to average net assets 2.25% 2.25%
Ratio of net investment loss to
average net assets .50% 2.14%
Portfolio turnover rate 91.78% 185.62%
(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
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 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 on the day of valuation. 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.
DOMINION INSIGHT GROWTH FUND
Notes to Financial Statements
Note 1-Summary of Significant Accounting Policies, continued
-----------------------------------------------------
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,
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
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.
Note 2-Capital Share Transactions
--------------------------
As of December 31, 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 and the balance is unclassified. As of December 31,
1999, capital paid in aggregated was $9,315,061.
Transactions in capital stock for the six months ended December 31, 1999
were as follows:
Shares Amount
------ ------
Shares sold 8,763 $ 176,522
Shares issued in reinvestment
of dividends 166,094 3,371,705
-------- ----------
174,857 3,548,227
Shares redeemed 163,354 3,370,956
-------- --------------
Net increase 11,503 $ 177,271
========= ===============
DOMINION INSIGHT GROWTH FUND
Notes to Financial Statements
Note 3-Distribution To Shareholders
----------------------------
On December 1, 1999, a distribution of $5.82 aggregating $3,649,884 was
declared from net realized gains from investment transactions. The
dividend was paid on December 3, 1999, to all shareholders of record on
November 30, 1999.
As of December 31, 1999, the fund had undistributed net realized gains of
$4,532,187.
Note 4-Investment Transactions
-----------------------
Cost of purchases and sales of investment securities (excluding short-term
securities) for the six months ended December 31, 1999 were $13,303,821
and $16,355,724, respectively. The cost of securities for federal income
taxes is the same as that shown in the schedule of investments. Net gain
on investments for the six months ended December 31, 1999, was $7,489,451.
All security transactions were in long transactions. As of December 31,
1999, the aggregate gross unrealized appreciation and depreciation of
securities was as follows:
Unrealized appreciation $ 7,464,078
Unrealized depreciation (187,944)
-----------
Net unrealized appreciation $ 7,276,134
===========
DOMINION INSIGHT GROWTH FUND
Notes to Financial Statements
Note 5-Investment Advisory Fees and Other Agreements and Transactions with
----------------------------------------------------------------------
Affiliates
----------
The Fund had an Investment Advisory Agreement (the "Advisory Agreement")
with Insight Capital Management, Inc. (the "Advisor") to act as its
investment advisor through October 31, 1999 and with Nye, Parnell, &
Emerson (Advisor), effective November 1, 1999. 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. There is no sales charge to the investor
for purchase of shares.
During the six months ended December 31, 1999, 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, 1999 were
approximately $52,844.
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, 1999
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 St.
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
5949 Sherry Lane, Suite 1025
Dallas, TX 75225
