To our shareholders:
We are pleased to report that our prediction of an
'attractive buying opportunity' for the Fund in our first
quarter report became a reality. Volumetric's share value
increased sharply in the second quarter. Net asset value
advanced 11.0% reaching $18.92 on June 30, up from $17.05 on
March 31. As a matter of fact, this was our best second quarter
since 1983. We are up 10.2% so far in 1997. Volumetric also
posted a 21.7% gain for the 12 months ended June 30. Net assets
surged to a record of $16.1 million. We reduced our cash
position to a bullish 5% from 28% as of March 31.
The Volumetric Index, which measures the value of a $10,000
initial investment in the Fund on January 1, 1979, has reached
$113,688 on June 30, the highest ever for a quarter end.
Although the NYSE Composite Index appreciated 17.9% in the first
half, its equivalent value of an initial investment on 1/1/79
has reached only $76,233.
PORTFOLIO REVIEW
The composition of our current portfolio is one of the
strongest in recent years. Our average stock is up 23.9%. Out
of our 67 securities there are 63 winners and only 4 minor
losers. None of our stocks are down more than 6%. Even more
impressively, our stocks have the upside momentum, as they keep
on hitting new record highs. For example, all but one of our
securities were within 10% of their 52-week highs, as of June
30.
Our five best performing investments were:
Number of
% Gain Days Held
1. Warner Lambert 181.9% 602
2. Allied Signal 134.0 905
3. Procter & Gamble 87.9 651
4. Keystone International 67.0 56
5. Textron 66.9 245
Many of our new stock positions purchased in the second
quarter have moved substantially higher. Keystone International
is the most impressive. It has advanced 67% since we purchased
it in May. It is being taken over by Tyco International. Below
are the 5 new stocks with the highest percentage gain.
% Gain Days Held Reason
Keystone Intern'l 67.0% 56 Takeover
Navistar 59.0 60 Turnaround
Shopko 39.1 70 Restructuring
Scientfic Atlanta 26.1 55 Turnaround
Deere 21.3 84 Higher earnings
We purchased the following 38 stocks in the second quarter:
Purchases: Alcoa, Alza, AMR, Aviall, Bergen Brunswig,
Carmike Cinema, Chris Craft, Cooper Tire & Rubber, Deere, Duty
Free International, Fiserv, Ford, GATX, General Dynamics,
Goodrich, Haemonetics, Harsco, Hewlett-Packard, International
Paper, John Alden Financial, Johnson & Johnson, Keystone
International, Morrison Knudson, National Service Industries,
Navistar, Newell, Owens Minor, Phelps Dodge, Ply-Gem
Industries, Savannah Foods, Scientific Atlanta, S&P Midcap
Index, Shopko, Southwest Airlines, TCBY, Union Carbide,
Westinghouse, Zale.
Sales: Our most profitable sales were Avery Dennison with a
198% gain and North Fork Bancorp with a 99% gain. The following
twenty-two stocks were sold in the second quarter: American
Express, Alaska Air Lines, Alcan Aluminum, Asarco, Avery
Dennison, Ballard Medical, Beneficial Corp., Browning Ferris,
Centex, Chevron, Colgate Palmolive, Cypress Semiconductor,
Dallas Semiconductor, Data General, Delta Airlines, First
Republic Bank, Glendale Federal, Halliburton, Reliance Group,
Rockwell International, Russell, Wallace Computer.
GROWTH AND PROTECTION
Our protection system worked again! Although we had good
growth in the first half, our most impressive results were
accomplished in the down market protection mode. During the
sharp March/April correction the major market indices dropped
10% or more. However, Volumetric's pullback was only 7.5%. This
was now the second successful test of our 'Strength and
Protection' system in a down market. Since July of 1996, the
market had two downward corrections of between 9-12%. In both
cases our maximum decline was less than 8%.
OTHER NEWS
We are pleased to announce the introduction of the semi-
annual account statement. Instead of one you will receive two
statements annually. By now, you must have received your June
30 statement.
Our volume analysis is now done more quickly due to
additional computerization. We now scan and analyze stocks more
than 5 times faster as before. The credit is due to Jeffrey
Gibs, who joined Volumetric Advisers, in January.
During the first half of 1997, we improved efficiency by
combining several multiple shareholder accounts and eliminated
many small fractional accounts. This combining along with new
share sales and market appreciation increased the size of the
average shareholder account by 37%.
UPDATE AND OUTLOOK
In July, Volumetric and the stock market opened sharply
higher. Our NAV reached a new record high of $19.58 on July
10th, up $0.66, or 3.5%, in just 7 business days. Duty Free
International, a stock we bought on June 30th at $18.375,
received a $24 tender offer on July 2nd. We sold it on July
9th at $23.875 with a quick 30% profit.
We expect the market to continue advancing but at a more
moderate pace in the third quarter. This should enhance the
relative performance of Volumetric. Our 'relative strength'
is best under moderately growing, flat and down market
conditions.
July 11, 1997
Sincerely,
Gabriel Gibs
President
Irene J. Zawitkowski
Executive Vice President
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
Six Months Ended June 30, 1997
(Unaudited)
Per share data:
Net Asset Value, December 31, 1996 $18.38
Income from investment operations:
Net investment income 0.00
Net realized and unrealized gain on investments 1.75
-----
Total from investment operations 1.75
-----
Less distributions from:
Net investment income (0.35)
Realized gains (0.86)
------
Total distributions (1.21)
------
Net Asset Value, June 30, 1997 $18.92
=======
Total Return 10.19%
=======
Ratios/Supplemental Data:
Net assets, 6/30/97 (in thousands) $16,113
Ratio of expenses to average net assets 1.96%*
Ratio of net income to average net assets 0.00%*
Portfolio turnover rate 129%
*Annualized
VOLUMETRIC FUND, INC.
STATEMENT OF OPERATIONS
For Six Months Ended June 30, 1997
(Unaudited)
INVESTMENT INCOME
Dividends................................... $ 114,430
Interest.................................... 29,482
-------
TOTAL INVESTMENT INCOME....................... 143,912
-------
EXPENSES
Management fee.............................. 146,534
--------
INVESTMENT INCOME - NET....................... (2,622)
--------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on investment............... 1,390,527
Unrealized appreciation of investments
Beginning of period.......... $2,670,124
End of period................ 2,804,646
Increase in unrealized appreciation......... 134,522
-----------
NET GAIN ON INVESTMENTS........................ 1,525,049
INCREASE IN NET ASSETS ------------
RESULTING FROM OPERATIONS............... $ 1,522,427
============
VOLUMETRIC FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For Six Months Ended June 30, 1997
(Unaudited)
CHANGES RESULTING FROM OPERATIONS
Investment income - Net....................... $ (2,622)
Net realized gain on investments.............. 1,390,527
Increase in unrealized appreciation............ 134,522
INCREASE IN NET ASSETS RESULTING ----------
FROM OPERATIONS............................... 1,522,427
DISTRIBUTIONS TO SHAREHOLDERS
From 1996 net investment income
($0.35/share)................................. (272,106)
From 1996 net realized gain on
investment ($0.86/share) (668,604)
---------
TOTAL DISTRIBUTIONS............................ (940,710)
CAPITAL SHARE TRANSACTIONS ---------
Shares sold.................................. 822,128
Shares reinvested............................ 920,153
Shares redeemed.............................. (497,999)
NET INCREASE FROM CAPITAL ---------
SHARE TRANSACTIONS........................... 1,244,282
----------
NET INCREASE IN NET ASSETS..................... 1,825,999
NET ASSETS:
Beginning of year............................. 14,286,584
-----------
End of period.................................. $16,112,583
===========
VOLUMETRIC FUND, INC.
PORTFOLIO OF INVESTMENTS
June 30, 1997
(Unaudited)
COMMON STOCKS: 94.8% MARKET
SHARES COMPANY VALUE
Aerospace/Defense: 3.9%
12,000 Aviall* $168,000
2,900 General Dynamics 217,500
4,000 Precision Castways 238,500
-------
624,000
-------
Air Transportation: 4.0%
2,200 AMR 203,500
4,400 Federal Express 254,650
7,000 Southwest Airlines 181,125
-------
639,275
-------
Autos: 2.5%
6,000 Ford 228,000
10,000 Navistar* 172,500
-------
400,500
-------
Banking: 1.6%
4,400 Mercantile Bancorp 267,300
-------
Beverage: 1.6%
6,200 Anheuser-Busch 260,013
-------
Building/Construction: 2.6%
12,000 Ply-Gem Industries 217,500
19,100 Standard Pacific 195,775
--------
413,275
-------
Chemical: 5.4%
3,900 Betz Dearborn 257,400
3,900 Ecolab 186,225
5,200 Goodrich 225,225
4,200 Union Carbide 197,663
-------
866,513
-------
Communications: 3.6%
4,400 Chris Craft* 212,300
5,200 Harte Hanks 153,400
9,000 Westinghouse 208,125
-------
573,825
-------
Computers: 1.2%
3,600 Hewlett-Packard 201,600
-------
Consumer Products: 3.3%
5,000 Newell 198,750
2,400 Procter & Gamble 339,000
-------
537,750
-------
Drugs: 5.7%
7,000 Alza* 203,000
3,400 Johnson & Johnson 218,875
4,000 Warner Lambert 497,000
-------
918,875
-------
Electrical/Electronics: 4.9%
9,300 Baldor Electric 274,931
3,300 Honeywell 250,388
12,000 Scientific Atlanta 262,500
-------
787,819
-------
Engineering: 0.8%
9,300 Morrison Knudson* 126,713
-------
Entertainment: 2.5%
6,400 Carmike Cinema* 209,600
2,500 Disney, Walt 200,625
-------
410,225
-------
Financial Services: 1.0%
3,500 Fiserv 156,188
-------
Foods: 3.0%
20,000 Chock Full 'O Nuts* 146,250
5,500 Sara Lee 228,938
6,400 Savannah Foods 113,600
-------
488,788
-------
Forest Products: 1.4%
4,800 International Paper 233,100
-------
Home Furnishings: 1.0%
4,400 La-Z-Boy $158,400
--------
Indices: 5.7%
3,700 S&P Midcap 206,911
8,000 S&P 500 Depository Receipts 706,500
-------
913,411
-------
Insurance: 1.0%
7,700 John Alden Financial 161,219
-------
Machinery: 5.4%
4,000 Cooper Industries 199,000
4,500 Deere 246,938
2,700 GATX 155,925
7,600 Keystone International 263,625
-------
865,488
-------
Medical: 5.1%
8,250 Bergen Brunswig 232,031
10,000 Haemonetics* 191,250
15,000 Owens-Minor 224,063
5,700 Tenet Healthcare* 168,150
-------
815,494
-------
Metals: 4.2%
3,000 Alcoa 226,125
2,800 Phelps Dodge 238,525
3,100 Reynolds Metals 220,875
-------
685,525
-------
Misc./Diversified: 8.5%
4,700 Allied Signal 394,800
5,500 Harsco 222,750
4,800 National Service Industries 233,700
4,000 Textron 265,500
9,000 Trimas 253,125
---------
1,369,875
---------
Oil/Oil Services: 1.7%
2,600 Texaco 282,750
-------
Real Estate: 1.2%
7,300 Excel Realty Trust 192,538
-------
Restaurants: 0.8%
20,400 TCBY 128,775
-------
Retail: 8.5%
12,000 Burlington Coat Factory* 234,000
10,500 Duty Free International 196,875
4,000 Home Depot 276,000
8,100 Shopko 206,550
7,500 Wal-Mart 253,594
10,000 Zale* 198,125
---------
1,365,144
---------
Tire/Rubber: 1.3%
9,700 Cooper Tire & Rubber 213,400
-------
Trucking: 1.4%
6,700 Ryder System 221,100
-------
TOTAL COMMON STOCKS
(COST: $12,474,227) 15,278,873
----------
CASH EQUIVALENTS/RECEIVABLES:5.2%
Cash 140,844
Chase Manhattan Premium
Market Rate Acct. 506,028
Receivable from brokers 163,627
Dividends receivable 23,211
--------
TOTAL CASH EQUIVALENTS/RECEIVABLES 833,710
---------
TOTAL ASSETS 16,112,583
Less liabilities -
-----------
NET ASSETS $16,112,583
===========
VOLUMETRIC SHARES OUTSTANDING 851,482
NET ASSET VALUE PER SHARE $18.92
=======
NUMBER OF SHAREHOLDER ACCOUNTS 1,138
-------
*Non-income producing security
SECOND QUARTER REPORT 1997
Volumetric Fund, Inc.
87 Violet Drive
Pearl River, New York 10965
(914)623-7637
(800)541-FUND
INVESTMENT ADVISER AND
TRANSFER AGENT
Volumetric Advisers, Inc.
Pearl River, New York
CUSTODIAN
The Chase Manhattan Bank, N.A.
New York, New York
BOARD OF DIRECTORS
William P. Behrens
Jeffrey Castaldo
Richard C. Friedenberg
Gabriel Gibs, Chairman
Anna Karpati
Robert McKenna
Stephen Samitt
David Seidenberg
Raymond W. Sheridan
Frank Wuertz
Irene Zawitkowski
OFFICERS
Gabriel Gibs,
President, Portfolio Manager
Irene J. Zawitkowski,
Executive Vice President, Secretary
Raymond W. Sheridan, Vice President
David L. Seidenberg, Treasurer
