UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-CSR
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.
- --------------------
(Exact name of registrant as specified in charter)
35955 Huntland Farm Road, Middleburg, VA 20117
- ----------------------------------------------
(Address of principal executive offices)(Zip code)
Paul Dietrich, 35955 Huntland Farm Road, Middleburg, VA 20117
- -------------------------------------------------------------
(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: 07/01/06 --- 12/31/06
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Item 1. Reports to Stockholders.
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SHEPHERD FUNDS
SEMI-ANNUAL REPORT
DECEMBER 31, 2006
SHEPHERD LARGE CAP GROWTH FUND
A SERIES OF DOMINION FUNDS, INC.
================================================================================
MARCH 1, 2007
SHEPHERD LARGE CAP GROWTH FUND
Dear Fund Shareholders,
For the calendar year 2006, the SHEPHERD LARGE CAP GROWTH FUND had increased by
+7.6%.
2006 IN REVIEW
2006 was a year of investment contrasts. During the first five months of the
year global stocks and especially emerging market funds in Asia were outstanding
performers and oil and energy stocks dominated US stock markets.
But from May to July stock markets experienced one of the most severe
corrections in 20 years. The S&P 500 Index declined 7.7%, but that was
overshadowed by mid-and small-cap declines of 10%-15% and drops in international
indexes of 20% to 25%. Many oil and energy stocks lost 20%.
Since August, the largest stocks in the Dow Jones Index and S&P 500 Index have
started to outperform small and mid-cap stocks for the first time in years.
IN AN UNCERTAIN WORLD--
RISK MANAGEMENT IS ALL IMPORTANT!
FOXHALL CAPITAL manages risk in your Fund's portfolio in several ways:
o we diversify globally so that a market downturn in the US may be
offset by international holdings.
o we actively monitor your portfolio's holdings, replacing those that
no longer meet our criteria.
o we aggressively move to bonds or money market funds if there is a
recession or sustained US and global market decline.
We feel this strategy is the best way to protect your investment principal in a
BEAR MARKET or recession while providing appreciation when the market is rising.
CONCLUSION
Absent significant deterioration in the economic or international situation, we
believe there is reason to anticipate that the stock market will remain positive
through the first part of 2007.
Until then....
Patience!
Paul Dietrich
President & Chief Investment Officer
Opinions expressed are those of Foxhall Capital Management, Inc. and are subject
to change, are not guaranteed and should not be considered a recommendation to
buy or sell any security.
Mutual fund investing involves risk; loss of principal is possible. This report
is intended for shareholder use only and must be preceded or accompanied by a
prospectus. Read it carefully before investing or sending money.
Automatic investment plans do not assure a profit and do not protect against a
loss in declining markets.
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SHEPHERD FUNDS
TABLE OF CONTENTS
Page
----
TOP TEN HOLDINGS AND ASSET ALLOCATION .................................. 3
EXPENSE EXAMPLE ........................................................ 4
SCHEDULE OF INVESTMENTS IN SECURITIES .................................. 5
FINANCIAL STATEMENTS ................................................... 6
NOTES TO FINANCIAL STATEMENTS .......................................... 10
ADDITIONAL INFORMATION ................................................. 13
2
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SHEPHERD FUNDS
TOP TEN HOLDINGS AND ASSET ALLOCATION
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December 31, 2006
- --------------------------------------------------------------------------------
(% of Net (% of Net
Top Ten Holdings Assets) Asset Allocation by Sector Assets)
- --------------------------------------------------------------------------------
EMPIRE FINANCIAL HLD 7.66% FINANCIAL 16.17%
CHINA LIFE INSURANCE 3.95% SERVICES 12.43%
NORTHERN DYNASTY 3.68% BASIC MATERIALS 6.56%
COPA HOLDINGS SA C A 3.07% UTILITIES 4.29%
INTERCONTINENTAL XCH 2.89% TELECOMMUNICATION 2.84%
CBOT HOLDINGS, INC 2.88% CONSUMER STAPLES 2.65%
POTASHCORP 2.87% TECHNOLOGY 0.02%
ALBEMARLE 2.35%
BRITISH AIRWAYS PLC 2.27%
SL GREEN REALTY CORP 2.02%
--------- ---------
33.66% 44.96%
========= =========
3
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SHEPHERD FUNDS
EXPENSE EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; and (2) ongoing
costs, including advisory fees and other Fund expenses. This Example is intended
to help you understand your ongoing costs (in dollars) of investing in the Fund
and to compare these costs with the ongoing costs of investing in other mutual
funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period (July 1, 2006 through December 31, 2006).
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. In addition to the sales load, you will be assessed
fees for outgoing wire transfers, returned checks and stop payment orders at
prevailing rates charged by Fund Services, Inc., the Funds' transfer agent.
Redemption proceeds can be sent via overnight "express" mail (such as Federal
Express), if requested, for a $20.00 service charge, or can be sent by wire
transfer for a $15.00 fee. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads). Therefore, the second line of the table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if this transactional cost were included,
your costs would have been higher.
- --------------------------------------------------------------------------------
Expenses Paid
Beginning During Period*
Account Value Ending Account Value July 1, 2006 to
July 1, 2006 December 31, 2006 December 31, 2006
- --------------------------------------------------------------------------------
Actual $1,000.00 $ 993.18 $11.30
- --------------------------------------------------------------------------------
Hypothetical (5% return
before expenses) $1,000.00 $1,013.86 $11.42
- --------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 2.25%, multiplied
by the average account value over the period, multiplied by 184/365 (to reflect
the one-half year period).
4
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SHEPHERD FUNDS
SCHEDULE OF INVESTMENTS IN SECURITIES
December 31, 2006
(unaudited)
(Showing Percentage of Net Assets)
COMMON STOCKS--(44.96%)
Shares Value
-------- ---------------------
Basic Materials--(6.56%)
POTASHCORP 1,650 236,742
* NORTHERN DYNASTY 37,500 303,750
---------------------
540,492
Consumer Staples--(2.65%)
* RALCORP HOLDINGS, INC 1,746 88,854
WIMM-BILL-DANN-FOODS 1,954 130,039
---------------------
218,893
Financial--(16.17%)
BOSTON PROPERTIES 854 95,546
CASCADE BANCORP 2,955 91,694
CHINA LIFE INSURANCE 6,453 325,950
SL GREEN REALTY CORP 1,254 166,506
* EMPIRE FINANCIAL HLD 200,000 632,000
* WATERSIDE CAPITAL CO 5,300 21,730
---------------------
1,333,425
Technology--(.02%)
* SANDISK, CORP. 30 1,291
Telecommunication--(2.84%)
BT GROUP ADR 1,736 103,969
ROSTELECOM 2,868 130,494
---------------------
234,463
Services--(12.43%)
* BRITISH AIRWAYS PLC 1,816 187,538
* CBOT HOLDINGS, INC. 1,570 237,808
COPA HOLDINGS SA C A 5,430 252,821
* INTERCONTINENTAL XCH 2,210 238,459
SHIP FINANCE INTL 4,556 108,251
---------------------
1,024,877
Utilities--(4.29%)
ALBEMARLE 2,704 194,147
ONEOK, INC. 3,698 159,458
---------------------
353,605
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TOTAL COMMON STOCKS--(44.96%) 3,707,045
-----------
OTHER ASSETS LESS LIABILITIES - NET--(55.04%) 4,538,344
-----------
NET ASSETS--(100.%) $ 8,245,389
===========
Notes:
* Presently non-income producing.
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SHEPHERD FUNDS
FINANCIAL STATEMENTS
DOMINION FUNDS, INC.
SHEPHERD LARGE CAP GROWTH FUND
Statement of Assets and Liabilities
December 31, 2006
(unaudited)
ASSETS
Investments in securities, at value
(cost of $2,865,649) $ 3,707,045
Cash 270,828
Receivables:
Investment sold 4,287,580
Dividends 8,401
Interest 1,446
----------------
Total Assets 8,275,301
----------------
LIABILITIES
Payables
Investment advisory fee 13,374
Administration fee 16,538
----------------
Total Liabilities 29,912
----------------
NET ASSETS $ 8,245,389
================
NET ASSETS CONSIST OF:
Net capital paid in on shares of capital stock $ 12,095,986
Accumulated Undistributed Net Investment Income --
Accumulated net realized loss (4,691,993)
Net unrealized appreciation 841,396
----------------
NET ASSETS $ 8,245,389
================
CAPITAL SHARES OUTSTANDING
(200,000,000 authorized shares; $.001 par value) 1,887,313
================
NET ASSET VALUE PER SHARE $ 4.37
================
OFFERING PRICE PER SHARE $ 4.59
================
The accompanying notes are an integral part of these financial statements.
6
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SHEPHERD FUNDS
DOMINION FUNDS, INC.
SHEPHERD LARGE CAP GROWTH FUND
Statement of Operations
For the Six Months Ended December 31, 2006
(unaudited)
Investment Income
Dividends $ 40,386
Interest 79,277
---------
Total investment income 119,663
---------
Expenses
Investment advisory fee 37,684
Administration fee 47,105
---------
Total expenses 84,788
---------
Net Investment Income 34,875
---------
Realized and Unrealized Gain
on Investments (Note 4)
Net realized gain on investments 175,465
Net change in unrealized appreciation on investments (172,394)
---------
Net realized and unrealized gain on investments 3,071
---------
Net Increase in Net Assets Resulting from Operations $ 37,946
=========
The accompanying notes are an integral part of these financial statements.
7
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SHEPHERD FUNDS
DOMINION FUNDS, INC.
SHEPHERD LARGE CAP GROWTH FUND
Statement of Changes in Net Assets
Six months ended
December 31, 2006 Year Ended June
(unaudited) 30, 2006
------------------- -----------------
Increase in Net Assets from Operations
Net investment gain/(loss) $ 34,875 $ (93,270)
Net realized gain on investments 175,465 573,436
Net change in unrealized
appreciation/(depreciation)
on investments (172,394) 842,842
------------------- -----------------
Net increase in net assets resulting from
operations 37,946 1,323,008
Distributions to shareholders - -
Capital Share Transactions-Net 1,028,452 524,204
------------------- -----------------
Total Increase 1,066,398 798,804
Net Assets
Beginning of period 7,178,991 6,380,187
------------------- -----------------
End of period $ 8,245,389 $ 7,178,991
=================== =================
The accompanying notes are an integral part ofthese financial statements.
8
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SHEPHERD FUNDS
DOMINION FUNDS, INC.
SHEPERD LARGE CAP GROWTH FUND.
Financial Highlights
For a share of capital stock outstanding throughout the period
Six months
ended
December 31, For the years ended June 30,
2006 ---------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
----------- ----------- ----------- ----------- ----------- ----------
PER SHARE DATA
Net asset value, beginning of period $ 4.40 3.61 3.52 3.31 3.42 5.59
Income from investment operations:
Net investment income (loss) 0.02 (0.06) (0.04) (0.05) (0.04) (0.08)
Net realized and unrealized gain (loss)
on investments (0.05) 0.85 0.13 0.26 (0.07) (2.09)
----------- ----------- ----------- ----------- ----------- ----------
Total from investment operations (0.03) 0.79 0.09 0.21 (0.11) (2.17)
Less distributions -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period $ 4.37 $ 4.40 $ 3.61 $ 3.52 $ 3.31 $ 3.42
=========== =========== =========== =========== =========== ==========
Total Return (a) (0.61)% 21.88% 2.56% 6.34% (3.22)% (38.82)%
----------- ----------- ----------- ----------- ----------- ----------
Ratios and Supplemental Data:
Net assets, end of period (000's)
$ 8,245 7,179 6,380 4,990 3,739 3,615
Ratio of expenses to average net assets 1.13% 2.25% 2.25% 2.25% 2.25% 2.25%
Ratio of net investment income (loss)
to average net assets 0.47% (1.33)% (1.28)% (1.37)% (1.33)% (1.94)%
Portfolio turnover rate 246.36% 190.31% 487.33% 258.84% 235.79% 99.77%
(a) Sales load is not reflected in total return
The accompanying notes are an integral part of these financial statements.
9
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SHEPHERD FUNDS
NOTES TO FINANCIAL STATEMENTS
DOMINION FUNDS, INC.
SHEPHERD LARGE CAP GROWTH FUND
Notes to Financial Statements
December 31, 2006
(unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: Dominion Funds, Inc. (the "Company") is a diversified
regulated investment company and was incorporated in the State of Texas on
June 5, 1992. The Company may designate one or more series of common
stock; however, at this time the Shepherd Large Cap Growth Fund (the
"Fund") is the only series of the Company. The primary investment
objective of the Fund is growth of capital. The Fund will invest in a
diversified portfolio of common stock of companies that meet the Fund's
investment and social criteria. The following is a summary of the Fund's
significant accounting policies.
Security Valuations: Equity securities generally are valued by using
market quotations, but may be valued on the basis of prices furnished by a
pricing service when the Advisor believes such prices accurately reflect
the fair market value of such securities. Securities that are traded on
any stock exchange or on the NASDAQ over-the- counter market are generally
valued by the pricing service at the last quoted sale price. Lacking a
last sale price, an equity security is generally valued by the pricing
service at its last bid price. When market quotations are not readily
available, when the Advisor determines that the market quotation or the
price provided by the pricing service does not accurately reflect the
current market value, or when restricted or illiquid securities are being
valued, such securities are valued as determined in good faith by the
Board of Directors. The Board has adopted guidelines for good faith
pricing, and has delegated to the Advisor the responsibility for
determining fair value prices, subject to review by the Board of
Directors.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service
when the Advisor believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data
processing techniques based on yield spreads relating to securities with
similar characteristics to determine prices for normal institutional-size
trading units of debt securities without regard to sale or bid prices. If
the Advisor decides that a price provided by the pricing service does not
accurately reflect the fair market value of the securities, when prices
are not readily available from a pricing service, or when restricted or
illiquid securities are being valued, securities are valued at fair value
as determined in good faith by the Advisor, subject to review by the Board
of Directors. Short term investments in fixed income securities with
maturities of less than 60 days when acquired, or which subsequently are
within 60 days of maturity, are valued by using the amortized cost method
of valuation, which the Board has determined will represent fair value.
Federal 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 its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
Distributions to Shareholders: The Fund intends to distribute to its
shareholders substantially all of its net realized capital gains and net
investment income, if any, at year-end. Distributions will be recorded on
ex- dividend date.
10
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SHEPHERD FUNDS
DOMINION FUNDS, INC.
SHEPHERD LARGE CAP GROWTH FUND
Notes to Financial Statements (continued)
December 31, 2006
(unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Other: The Fund follows industry practice and records security
transactions on the trade date. The specific identification method is used
for determining gains or losses for financial statements and income tax
purposes. Dividend income is recorded on the ex-dividend date and interest
income is recorded on an accrual basis. Discounts and premiums are
amortized over the useful lives of the respective securities. Withholding
taxes on foreign dividends will be provided for in accordance with the
Fund's understanding of the applicable country's tax rules and rates.
Reclassifications: In accordance with SOP-93-2, the Fund has recorded a
reclassification in the capital accounts. As of June 30, 2006 the Fund has
recorded a permanent book/tax differences of $2,607,093, from net
investment loss to paid-in-capital. This reclassification has no impact on
the net asset value of the Fund and is designed generally to present
undistributed income and net realized gains on a tax basis, which is
considered to be more informative to shareholders.
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 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 year. Actual results
could differ from these estimates
2. INVESTMENT ADVISORY AGREEMENT AND ADMINISTRATION AGREEMENT
The Fund has an investment advisory agreement (the "agreement") with
Foxhall Capital Management (the "Advisor"), formerly Nye, Parnell &
Emerson Capital Management, Inc. The Advisor provides the Fund with
investment advice and recommendations for investments. Under the terms of
the agreement, the Fund will pay the Advisor a monthly fee based on the
Fund's average daily net assets at the annual rate of 1.00%. For the six
month period ended December 31, 2006 the Advisor earned advisory fees of
$37,684. At December 31, 2006 the Fund owed the Advisor $13,374 in
advisory fees.
The Fund has an administration agreement with Foundation Management, Inc.,
an affiliate of the Advisor, (the "Administrator"). The Administrator is
responsible for the administration of the Fund and overall management of
the Fund's business affairs. Under the terms of the administrative
agreement, the Fund will pay the Administrator a monthly fee based on the
Fund's average daily net assets at the annual rate of 1.25%. For the six
month period ended December 31, 2006 the Administrator earned fees of
$47,105. At December 31, 2006 the Fund owed the Administrator $16,538 in
administrative fees.
The Fund has adopted a distribution plan (the "Plan"). Under the Plan, if
the payment of administration fees by the Fund to the Administrator is
deemed to be indirect financing by the Fund of the distribution of its
shares, such payment is authorized by the Plan. The Plan specifically
recognizes that the Administrator may use its administration fee, to pay
for expenses incurred in connection with providing services intended to
result in the sale of Fund shares and/or shareholder support services. For
the six-month period ended December 31, 2006 no such payments were made.
Certain directors and officers of the Fund are also directors and officers
of the Advisor and Administrator.
11
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SHEPHERD FUNDS
DOMINION FUNDS, INC.
SHEPHERD LARGE CAP GROWTH FUND
Notes to Financial Statements (continued)
December 31, 2006
(unaudited)
3. INVESTMENT TRANSACTIONS
Investment transactions, excluding short-term investments, for the six
month period ended December 31, 2006 were as follows:
Purchases $ 12,747,531
Proceeds from sales $ 15,132,328
4. FEDERAL INCOME TAXES
Income and long-term capital gain distributions are determined in
accordance with Federal income tax regulations, which may differ from
accounting principles generally accepted in the United States.
Federal tax cost of investments, including short
term investments $ 2,865,649
===========
Gross tax appreciation of investments $ 860,023
Gross tax depreciation of investments (18,627)
-----------
Net tax appreciation $ 841,396
===========
Undistributed ordinary income $ --
Undistributed capital gain income $ --
Accumulated capital losses $ 4,691,993
The accumulated capital loss carryovers listed above expire as follows:
Amount
-----------
2008 $ 31,975
2009 $ 3,990,801
2010 $ 879,557
5. CAPITAL SHARE TRANSACTIONS
As of December 31, 2006 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. The total par value and
paid-in totaled $12,095,986. Transactions in capital stock were as
follows:
December 31, 2006 June 30, 2006
Shares Amount Shares Amount
----------------------------------------------------
Shares sold 801,805 $ 3,409,770 316,611 $ 1,357,131
Shares issued in
Reinvestment of dividends -- -- -- --
Shares redeemed (547,624) (2,381,318) (451,064) (1,881,335)
----------- ----------- ----------- -----------
Net increase (decrease) 254,181 $ 1,028,452 348,771 $ 1,211,544
=========== =========== =========== ===========
12
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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 Statement of Additional Information includes additional
information about the Fund's directors and is available, without charge, upon
request by calling (800) 416 2053.
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
- -----------------------------------------------------------------------------------------------------------------------------
Interested Directors
Paul Dietrich * Chairman, Indefinite President and Managing Director None
35955 Huntland Farm Road President, term; of Eton Court Asset
Middleburg, VA 20117 Director Director Management, Ltd. ("Eton
Age: 57 since 2001; Court") (parent of Foxhall
Chairman Capital Management, Inc., the
since 2002; Fund's investment advisor) and
President President of Foundation
since 2003 Management, Inc., the Fund's
administrator (1999 - present).
Non-Interested Directors
Douglas W. Powell Director Indefinite Registered representative of New None
4101 McEwen term; Investor World Incorporated
Suite 110 Director (2000 - present); COO/CFO
Dallas, TX 75244 since 1999 NIW Holdings, Inc. (2002 -
Age: 66 Present); CEO Rushmore
Investment Management Corp.
(2001 -2002); Chairman and
Chief Executive Officer of
Northstar Financial Group (1995
- 2001).
* This director is considered an "interested person" as defined in the
Investment Company Act of 1940 because of his affiliations with Foxhall
Capital Management, Inc., the Fund's investment advisor, and Foundation
Management, Inc., the Fund's administrator.
Quarterly Portfolio Schedule
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available without charge, upon request, by calling 1-800-416-2053. The Forms
N-Q are also available on the SEC's website at http://www.sec.gov and may be
reviewed and copied at the SEC's Public Reference Room in Washington, DC, and
information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
13
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SHEPHERD FUNDS
Proxy Voting Policies and Procedures
The Fund has adopted proxy voting policies and procedures that delegate to
Foxhall Capital Management, Inc., the Fund's investment advisor (the "Advisor"),
the authority to vote proxies. A description of the Fund's proxy voting policies
and procedures is available without charge, upon request, by calling the Fund
toll free at 1-800-416-2053. A description of these policies and procedures is
also included in the Fund's Statement of Additional Information, which is
available on the SEC's website at http://www.sec.gov.
Proxy Voting Record
The actual voting records relating to portfolio securities during the most
recent twelve month period ended June 30 are available without charge by calling
1-800-416-2053 or by accessing the SEC's website at http://www.sec.gov.
Advisory Contract Renewal
On September 27, 2006, the Board of the Directors of the Fund approved the
continuance for one additional year of the Fund's investment advisory agreement
dated November 1, 1999 (the "Advisory Agreement") with the Advisor.
The Directors discussed and considered and evaluated, among other things, (a)
the terms and conditions of the Advisory Agreement, including the nature,
quality and scope of the investment management services and the fees charged for
their services; (b) the Directors' legal duties in approving the Advisory
Agreement; (c) the advisor's investment performance; (d) the advisor's personnel
and method of analysis; possible conflicts of interest; (e) overall Fund
expenses; and (f) brokerage and portfolio transactions.
On the basis of its review and the foregoing information, the Directors
determined that the terms of the Advisory Agreement are fair and reasonable and
in the best interests of the Fund's shareholders.
A Note on Forward Looking Statements
Except for historical information contained in the annual report for the Fund,
the matters discussed in this report may constitute forward-looking statements
made pursuant to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. These include any advisor or portfolio manager predictions,
assessments, analyses or outlooks for individual securities, industries, market
sectors and/or markets. These statements involve risks and uncertainties. In
addition to the general risks described for the Fund in the current Prospectus,
other factors bearing on this report include the accuracy of the advisor's or
portfolio manager's forecasts and predictions, and the appropriateness of the
investment programs designed by the advisor or portfolio manager to implement
their strategies efficiently and effectively. Any one or more of these factors,
as well as other risks affecting the securities markets and investment
instruments generally, could cause the actual results of the Fund to differ
materially as compared to benchmarks associated with the Fund.
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SHEPHERD FUNDS
SEMI-ANNUAL REPORT
DECEMBER 31, 2006
Investment Advisor Transfer Agent Distributor
------------------ -------------- -----------
Foxhall Capital Management, Inc. Fund Services, Inc. Cullum & Burks Securities, Inc.
1613 Duke Street 8730 Stony Point Pkwy 13355 Noel Road, Suite 1300,
Alexandria, VA 22314 Suite 205 One Galleria Tower
(800)416 2053 Richmond, VA 23235 Dallas, TX 75240
(800)628 4077 (972) 755 0270
Administrator Independent Registered Public Legal Counsel
------------- ----------------------------- -------------
Accounting Firm
---------------
Foundation Management, Inc. Frederick C. Summers, III, P.C.
35955 Huntland Farm Road Sanville & Company Attorney at Law
Middleburg, VA 20117 Certified Public Accountants 8235 Douglas Ave., Suite 1111
(800)416 2053 1514 Old York Road Dallas, TX 75225
Abington, PA 19001
Officers Directors Custodian
-------- --------- ---------
Paul Dietrich Paul Dietrich RBC Dain Rauscher, Inc.
Chairman, President City Place Center East
Douglas W. Powell 2711 North Haskell Avenue, Suite 2400
Dallas, TX 75204
15
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. Schedule of Investments
The schedule is included as part of the report to shareholders filed under Item
1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
The registrant does not currently have procedures by which shareholders may
recommend nominees to the registrant's board of directors.
Item 11. Controls and Procedures.
(a) Based on their evaluation of registrant's disclosure controls and procedures
(as defined in rule 30a-3(c) under the Investment Company Act of 1940) as of the
filing date of this report, registrant's principal executive officer and
principal financial officer found such disclosure controls and procedures to be
effective.
(b) There were no significant changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment Company
Act of 1940) that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
Item 12. Exhibits.
(a) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
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: March 7, 2007
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: March 7, 2007