UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-6727
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Dominion Funds, Inc.
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(Exact name of registrant as specified in charter)
1141 Custis Street, Alexandria, Virginia 22308
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(Address of principal executive offices)(Zip code)
Paul Dietrich, 1141 Custis Street, Alexandria, Virginia 22308
- -------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 416-2053
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Date of fiscal year end: June 30
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Date of reporting period: 07/01/03--12/31/03
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ITEM 1. REPORTS TO STOCKHOLDERS.
THE SHEPHERD LARGE CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2003
(UNAUDITED)
ASSETS
- ------
Investments in securities, at value
(identified cost $3,629,455) $4,226,233
Cash and cash equivalents 1,277,594
Receivables
Dividends and interest 1,982
Fund shares sold 21,003
----------
TOTAL ASSETS 5,526,812
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LIABILITIES
- -----------
Payables
Investment advisory fee 3,595
Administration fee 6,633
----------
TOTAL LIABILITIES 10,228
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NET ASSETS $5,516,584
==========
Capital shares outstanding 1,500,878
Net asset value and offering price per share
Net asset value per share $ 3.68
==========
Offering price per share $ 3.86
==========
See notes to financial statements.
THE SHEPHERD LARGE CAP GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2003
(UNAUDITED)
INVESTMENT LOSS
- ---------------
Investment income
Dividends $ 14,522
Interest 4,252
---------
Total investment income 18,774
---------
Expenses
Investment advisory fee 24,031
Administration fee 30,039
---------
Total expenses 54,070
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NET INVESTMENT LOSS (35,296)
---------
REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS
- --------------------------------------------------------
Net realized gain on investments in securities 306,618
Net change in unrealized appreciation
of investments in securities 228,256
---------
NET GAIN ON INVESTMENTS 534,875
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 499,579
=========
See notes to financial statements.
THE SHEPHERD LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS IN SECURITIES
DECEMBER 31, 2003
(UNAUDITED)
Shares Value
----------- ------------
BONDS 0.73%
Dominican SMME 40,000 $ 40,000
------------
COMMON STOCKS 76.6%
BASIC MATERIALS 1.97%
Gold & Silver
Northern Dynasty (a) 25,000 $ 108,750
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CAPITAL GOODS 2.35%
Misc. Capital Goods
SPX Corp (a) 2,200 $ 129,382
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CONSUMER NON-CYCLICAL 2.38%
Crops
Fresh Del Monte (a) 5,500 $ 131,065
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ENERGY 4.72%
Oil & Gas Operations 3.19%
Anadarko Petroleum (a) 3,450 $ 175,985
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Oil Well Services & Equipment 1.53%
Superior Energy Serv (a) 9,000 $ 84,600
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$ 260,585
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FINANCIAL 25.44%
Misc. Financial Services 4.17%
Allied Capital Corp (a) 8,250 $ 230,010
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Savings & Loan 4.10%
GreenPoint Financial (a) 6,400 $ 226,048
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Consumer Financial Services 1.89%
World Acceptance (a) 5,250 $ 104,528
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Insurance (Property & Casualty) 5.22%
IPC Holdings Ltd (a) 3,000 $ 116,820
Zenith Nat'l Ins Cor (a) 5,250 $ 170,888
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$ 287,708
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Misc. Financial Services 0.35%
Waterside Capital Co (a) 5,300 $ 19,186
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Regional Banks 2.82%
MBNA Corp (a) 6,250 $ 155,313
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Savings & Loan 6.90%
Indymac Bancorp (a) 5,000 $ 148,950
Sovereign Bancorp (a) 9,750 $ 231,563
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$ 380,513
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$ 1,403,306
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HEALTH CARE 5.54%
Biotechnology & Drugs 3.46%
Ivax Corp (a) 8,000 $ 191,040
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See notes to financial statements.
THE SHEPHERD LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS IN SECURITIES
DECEMBER 31, 2003
(UNAUDITED)
Shares Value
----------- ------------
Medical Equipment & Supplies 2.08%
Biomet Inc (a) 3,150 $ 114,692
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$ 305,732
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SERVICES 15.58%
Communication Services 3.94%
Nextel Comm Inc-A (a) 7,750 $ 217,465
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Personal Services 2.26%
H&R Block Inc. (a) 2,250 $ 124,583
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Retail (Drugs) 1.46%
Omnicare Inc (a) 2,000 $ 80,780
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Restaurants 2.40%
Ruby Tuesday Inc (a) 4,650 $ 132,479
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Retail (Home Improvement) 1.76%
Lowes Companies (a) 1,750 $ 96,933
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Retail (Specialty Non-Apparel) 3.76%
Family Dollar Stores (a) 2,000 $ 71,760
1800 Flowers (a) 12,250 $ 135,485
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$ 207,245
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$ 859,485
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TECHNOLOGY 17.91%
Communication Equipment 2.05%
Sonicwall Inc Com (a) 14,500 $ 113,100
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Computer Services 5.20%
Affiliated Computer (a) 3,000 $ 163,380
First Data Corp (a) 3,000 $ 123,270
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$ 286,650
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Computer Storage Devices 2.34%
EMC Corp Mass (a) 10,000 $ 129,200
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Semiconductors 6.10%
Flextronics (a) 12,500 $ 185,500
Taiwan Semiconductor (a) 14,750 $ 151,040
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$ 336,540
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Software & Programming 2.22%
Take-2 Interactive S (a) 4,250 $ 122,438
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$ 987,928
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TOTAL COMMON STOCKS 75.88% $ 4,186,233
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TOTAL INVESTMENTS
IN SECURITIES 76.61%
(cost $3,629,455) $ 4,226,233
============
NOTES:
(a) Presently non-income producing.
(b) Percentages are of net assets.
See notes to financial statements.
THE SHEPHERD LARGE CAP GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
Six months
ended
December 31, Year Ended
2003 June 30,
(Unaudited) 2003
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CHANGE IN NET ASSETS FROM OPERATIONS
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Net investment loss $ (35,296) $ (42,917)
Net realized gain (loss)
on investments in securities 306,618 (879,557)
Net change in unrealized appreciation on
investments in securities 228,256 845,960
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Net increase (decrease) in net assets
resulting from operations 499,579 (76,514)
DISTRIBUTIONS TO SHAREHOLDERS FROM
- ----------------------------------
Net realized gains on
investments in securities -- --
CAPITAL SHARE TRANSACTIONS - NET 1,278,158 200,529
- ------------------------------- ----------- -----------
Total increase in net assets 1,777,736 124,015
NET ASSETS
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Beginning of period 3,738,848 3,614,833
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End of period (including undistributed
investment loss of $2,417,855
and $2,382,559, respectively) $ 5,516,584 $ 3,738,848
=========== ===========
See notes to financial statements.
THE SHEPHERD LARGE CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
Six
months
ended
December 31,
2003 Year ended June 30,
(unaudited) 2003 2002 2001 2000 1999
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PER SHARE DATA (1):
Net asset value, beginning of year $ 3.31 $ 3.42 $ 5.59 $ 25.47 $ 19.15 $ 17.56
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment operations:
Net investment loss (0.03) (0.04) (.08) (.24) (.48) (.36)
Net realized and unrealized gain
(loss) on investments in securities 0.39 (0.07) (2.09) (9.93) 12.62 4.20
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Total income (loss) from investment
operations 0.37 (0.11) (2.17) (10.17) 12.14 3.84
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Less distributions:
Distributions from net realized gains -- -- -- (9.71) (5.82) (2.25)
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Net asset value, end of year $ 3.68 $ 3.31 $ 3.42 $ 5.59 $ 25.47 $ 19.15
========== ========== ========== ========== ========== ==========
Total return 10.96% -3.22% -38.82% -53.85% 69.10% 25.47%
========== ========== ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in
thousands) $ 5,517 $ 3,739 $ 3,615 $ 6,994 $ 17,903 $ 14,511
Ratio of expenses to average
net assets 1.13% 2.25% 2.25% 2.25% 2.24% 2.25%
Ratio of net investment loss to
average net assets -0.74% 1.33% 1.94% 2.03% 2.02% 2.14%
Portfolio turnover rate 80.41% 235.79% 99.77% 19.96% 120.65% 185.62%
(1) Per share information has been calculated using the average number of
shares outstanding.
(2) Sales load is not reflected in total return. Total return is not
annualized.
See notes to financial statements.
THE SHEPHERD LARGE CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business:
The Shepherd Large Cap 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.
Significant Accounting Policies:
Use of Estimates
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 increases and decreases
in net assets from operations 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.
THE SHEPHERD LARGE CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Cash
Cash is held in a credit interest account at First Southwest Company,
bearing interest at a variable rate.
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 December 31, 2003, 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
There were no distributions to shareholders for the six months ended
December 31, 2003.
At December 31, 2003, the Fund had undistributed net realized losses of
$5,653,530.
THE SHEPHERD LARGE CAP GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - CAPITAL SHARE TRANSACTIONS
As of December 31, 2003, 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 December 31,
2003, capital paid-in aggregated $12,991,193.
Transactions in shares of capital stock for the six months ended December
31, 2003 are as follows:
Shares Amount
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Shares sold 500,717 $1,739,858
Shares issued in reinvestment
of dividends -- --
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Shares redeemed 128,560 461,700
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Net increase 372,157 $1,278,158
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NOTE 4 - SECURITIES TRANSACTIONS
Cost of purchases and sales of securities (excluding short-term
obligations) aggregated $3,378,880 and $2,283,812 respectively, for the
six months ended December 31, 2003. As of December 31, 2003, the aggregate
unrealized appreciation and depreciation of securities was as follows:
Unrealized appreciation $ 657,222
Unrealized depreciation (60,444)
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Net unrealized appreciation $ 596,778
================
THE SHEPHERD LARGE CAP 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, and supervises the purchase
and sale of securities 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 investment
advisory fee equal to 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 Foundation Management, Inc.
(Administrator). Pursuant to the Administration Agreement, the
Administrator is responsible for the administration and overall management
of the Fund. The Administrator pays all operating costs of the Fund,
except the investment advisory fee and the administration fee, interest,
taxes, the cost of brokerage incurred in connection with execution of
securities transactions, litigation expenses and indemnification paid to
advisors of the Fund and officers and directors of the Company. For such
services, the Administrator receives an annual administration fee equal to
1.25% of the Fund's average daily net assets, computed daily and paid on a
monthly basis.
Certain directors and officers of the Company are also directors and
officers of the Advisor and of the Administrator.
[LOGO]
SHEPHERD
SHEPHERD FUNDS
ADDITIONAL INFORMATION
INFORMATION ABOUT DIRECTORS
The business and affairs of the Fund are managed under the direction of
the Fund's Board of Directors. Information pertaining to the directors of
the Fund is set forth below. The SAI includes additional information about
the Fund's directors and is available, without charge, upon request by
calling (800) 416 2053.
INTERESTED DIRECTORS
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TERM OF OTHER
POSITION OFFICE AND DIRECTORSHIPS
NAME, HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) HELD BY
ADDRESS AND AGE FUND TIME SERVED DURING PAST 5 YEARS DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------------------
Paul Dietrich Chairman, Indefinite term; President and Managing Director of Eton Court None
1613 Duke Street President, Director since Asset Management, Ltd. ("Eton Court") (parent of
Alexandria, VA 22314 Director 2001; Chairman Nye, Parnell & Emerson Capital Management, Inc.,
Age: 55 since 2002; the Fund's investment adviser) and President of
President since Foundation Management, Inc., the Fund's
2003 administrator (1999 - present); Chairman of
Peress Investment Advisors, Ltd. (1999 to
present).
- ------------------------------------------------------------------------------------------------------------------------------------
NON-INTERESTED DIRECTORS
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TERM OF OTHER
POSITION OFFICE AND DIRECTORSHIPS
NAME, HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) HELD BY
ADDRESS AND AGE FUND TIME SERVED DURING PAST 5 YEARS DIRECTOR
- ------------------------------------------------------------------------------------------------------------------------------------
Douglas W. Powell Director Indefinite term; Registered representative of New Investor World None
4101 McEwen Director since Incorporated (2000 - present); COO/CFO NIW
Suite 110 1999 Holdings, Inc. (2002 - Present); CEO Rushmore
Dallas, TX 75244 Investment Management Corp. (2001 -2002);
Age: 64 Chairman and Chief Executive Officer of
Northstar Financial Group (1995 - 2001).
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[LOGO]
SHEPHERD
SHEPHERD FUNDS
SEMI-ANNUAL REPORT
DECEMBER 31, 2003
Investment Advisor Transfer Agent Distributor
------------------ -------------- -----------
Nye, Parnell & Emerson Capital Fund Services, Inc. Cullum & Burks Securities, Inc.
Management, Inc. 1500 Forest Ave., Suite 111 13355 Noel Road, Suite 1300,
1613 Duke Street Richmond, VA 23229 One Galleria Tower
Alexandria, VA 22314 (800) 628 4077 Dallas, TX 75240
(800) 416 2053 (972) 755 0270
Administrator Independent Auditors Legal Counsel
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Foundation Management, Inc. Brad A. Kinder, CPA Frederick C. Summers, III, P.C.
1141 Custis Street 400 Parker Square Attorney at Law
Alexandria, VA 22308 Suite 250-K 8235 Douglas Ave., Suite 1111
(800) 416 2053 Flower Mound, TX 75028 Dallas, TX 75225
Officers Directors Custodian
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Paul Dietrich Paul Dietrich First Southwest Company
Chairman, President 1700 Pacific, Suite 500
Douglas W. Powell Dallas, TX 75201
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 10. CONTROLS AND PROCEDURES.
Based on their evaluation of registrant's disclosure controls and procedures (as
defined in rule 30a-2(c) under the Investment Company Act of 1940 as of
September 8, 2004, registrant's principal executive officer and principal
financial officer found registrant's disclosure controls and procedures to be
appropriately designed to ensure that information required to be disclosed by
registrant in the reports that it files under the Securities Exchange Act of
1934 (a) is accumulated and communicated to registrant's management, including
its principal executive officer and principal financial officer, to allow timely
decisions regarding required disclosure, and (b) is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms adopted by the U.S. Securities and Exchange Commission.
There have been no significant changes in registrant's internal controls or in
other factors that could significantly affect registrant's internal controls
subsequent to the date of the most recent evaluation as indicated, including no
significant deficiencies or material weaknesses that required corrective action.
ITEM 11. EXHIBITS.
(a) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are
attached hereto as EX-99.CERT. Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 are attached hereto as EX-906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dominion Funds, Inc.
By: /S/ Paul Dietrich
-----------------
Paul Dietrich, President
Date: September 9, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /S/ Paul Dietrich
------------------
Paul Dietrich,
Principal executive and
Principal financial officer
Date: September 9, 2004