To our shareholders:
As you already know from your account statement, Volumetric Fund's
share value gained 10.3% in the first half of 1998. We ended the first half
at $19.20 per share, up from $17.41 since the beginning of the year. This
gain was achieved despite a 2.1% pullback in the second quarter. Overall,
Volumetric's net asset value posted a 18.4% advance in the past 12 months,
when adjusted for dividends and distributions.
After moving higher until the end of April, the stock market suffered its
first correction in the May-June period since October of 1997. The main cause
was the Asian and Japanese financial crisis which, after seemingly being
resolved, worsened again.
Since late April the stock market has exhibited a split personality. Large
stocks held up relatively well. However, mid-size and small stocks were
orphans and corrected sharply. For example, the New York Stock Exchange
Composite Index, which is weighted in favor of large stocks, was up 13.2% in
the first half. On the other hand, the unweighted Value Line Geometric Index,
which gives a truer picture of the performance of the average stock, was up
only 4.9%. We have not seen this degree of divergence between large and
small capitalization stocks since the era of the "nifty fifty" back in the
late 1960s.
PORTFOLIO REVIEW
After being fully invested in stocks until the end of April, we had increased
our cash position in May as the market started to correct. We had as much as
24% in cash and equivalents in June. After receiving a "buy signal" in late
June, we started to purchase stocks again and reduced our cash to 14.6%, by
June 30. As you know, according to our "Growth and Protection" approach,
by having occasionally a large cash position, we are willing to sacrifice a
minor amount of gain, to insure against a potential major loss.
Our five best performing stocks, as of June 30th, are shown below:
Purchase
% Gain Date
1. Warner Lambert 372.1% 6/11/95
2. Unisys 232.6 7/11/97
3. Tyco International 195.5 5/5/97
4. Home Depot 120.9 3/7/97
5. Wal-Mart 112.3 3/17/97
During the second quarter the following stocks were purchased and sold:
Purchases: ALLTEL Corp., Barnes & Noble, Bausch & Lomb, Cone
Mills, Dillard Department Stores, Dover, Eastman Kodak, Engelhard, General
Electric, Handelman, Huffy, Interpublic Group, Johnson & Johnson,
McGraw-Hill, Merck, Parametric Technology, Rubbermaid, St. Jude Medical,
Seagram, Stride Rite, Texas Utilites and Wellman.
Sales: Affiliated Computer Services, Alza, Ashland, Aztar, Ballard
Medical, Bandag, Ben and Jerry's, Burlington Industries, CBS, Cendant,
Champion Enterprises, Chris Craft, Cincinnati Bell, Clayton Homes, Cracker
Barrel Old Country Stores, Disney, Excel Realty Trust, Goodyear Tire, Harte
Hanks, Hertz, Hormel, Lancaster Colony, Leucadia National, Navistar,
Pharmacia Upjohn, Public Storage, Questar, Ryder System, Sonoco Products,
Southwest Airlines, Speedway Motorways, TCBY, Toll Brothers, Tower
Automotive and Wachovia Bancorp. Our most profitable stock was Navistar
with a 155% gain.
OUR TWENTY YEARS OF GROWTH
Volumetric Fund will celebrate its 20th birthday on September 1, 1998.
Since the end of 1978 our Fund's average annual return has been 15.0%, and
an initial investment of $10,000 has grown to $134,545. The NYSE Index had
a 13.7% annual return during the same period. The growth of the Volumetric
Index, which indicates the value of a $10,000 initial investment in the Fund
on January 1, 1979, is below:
Date Value of $10,000 % Change Over
Investment Prior Date
6/30/98 $134,545 + 10.3%*
12/31/97 121,987 + 18.2
12/31/96 103,189 + 15.5
12/31/95 89,336 + 17.3
12/31/94 76,104 - 2.2
12/31/93 77,839 + 2.0
12/31/92 76,311 + 10.8
12/31/91 68,902 + 35.2
12/31/90 50,963 - 5.2
12/31/89 53,743 + 16.0
12/31/88 46,349 + 20.0
12/31/87 38,637 - 1.5
12/31/86 39,225 + 7.4
12/31/85 36,524 + 31.9
12/31/84 27,696 + 6.7
12/31/83 26,321 + 18.7
12/31/82 21,876 + 16.9
12/31/81 18,712 + 17.0
12/31/80 15,991 + 37.5
12/31/79 11,630 + 16.3
1/1/79 10,000 -
*Annualized rate is 20.6%
ANNUAL MEETING
At the annual meeting of our shareholders, held on May 20, 1998, all 11
nominated directors were elected for their respected terms, and the CPA firm
of Feuer & Orlando, CPA, LP, was approved as independent auditor of the
Fund for the year ending 1998. We are pleased to welcome our two newest
directors: Mr. Wayne Moshier and Dr. Marcel Olbrecht.
UPDATE AND OUTLOOK
Volumetric and the stock market opened higher in July. As of July 8th, our
NAV moved up to $19.50 or 1.6% from the end of the first half and 12.0% in
1998. July is usually a good month for stocks, as new money starts to flow
into equities from pension funds and 401k plans. With the current low
interest rates, there are few alternate places this money can go.
We expect the U.S. economy and the stock market to remain on an
upward path, barring some unexpected events or a large number of negative
earnings surprises. We will focus our new purchases among large-cap stocks
until the market rally broadens out to smaller stocks. If our second half
return matches the first, we will reach our goal of 20% return in 1998 to
celebrate our 20th anniversary.
July 9, 1998
Sincerely,
/s/Gabriel Gibs /s/Irene Zawitkowski
Gabriel Gibs Irene Zawitkowski
President Executive Vice President
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
Six Months Ended June 30, 1998
(Unaudited)
Per share data:
Net Asset Value, December 31, 1997 $ 20.30
Income from investment operations:
Net investment income (0.01)
Net realized and unrealized gain on
investments 1.80
------
Total from investment operations 1.79
------
Less distributions from:
Net investment income (0.87)
Realized gains (2.02)
------
Total distributions (2.89)
-------
Net Asset Value, June 30, 1998 $ 19.20
=======
Total Return 10.28%
=======
Ratios/Supplemental Data:
Net assets, 6/30/98 (in thousands) $20,435
Ratio of expenses to average net assets 1.95%*
Ratio of net income to average net assets (.05%)*
Portfolio turnover rate 198%*
*Annualized
VOLUMETRIC FUND, INC.
STATEMENT OF OPERATION
For Six Months Ended June 30, 1998
(Unaudited)
INVESTMENT INCOME
Dividends............................................. $ 137,939
Interest.............................................. 43,530
---------
TOTAL INVESTMENT INCOME................................. 181,469
---------
EXPENSES
Management fee........................................ 191,236
--------
INVESTMENT INCOME - NET................................. (9,767)
---------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on investments ......................... 1,122,916
Unrealized appreciation of investments
Beginning of year................ $2,772,169
End of period..................... 3,442,638
----------
Increase in unrealized appreciation................... 670,469
----------
NET GAIN ON INVESTMENTS................................. 1,793,385
----------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................ $1,783,618
==========
VOLUMETRIC FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For Six Months Ended June 30, 1998
(Unaudited)
INCREASE IN NET ASSETS FROM
FROM OPERATIONS
Investment income - Net................................ $(9,767)
Net realized gain on investments........................ 1,122,916
Increase in unrealized appreciation..................... 670,469
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................. 1,783,618
-----------
DISTRIBUTIONS TO SHAREHOLDERS
From 1997 net investment income
($0.87/share).............. .....................(764,285)
From 1997 net realized gain on
investments($2.02/share) (1,774,548)
-----------
TOTAL DISTRIBUTIONS................................. (2,538,833)
-----------
CAPITAL SHARE TRANSACTIONS
Shares purchased..................................... 2,290,906
Shares reinvested.................................... 2,498,529
Shares redeemed......................................(1,430,979)
----------
NET INCREASE FROM CAPITAL SHARE TRANSACTIONS........... 3,358,456
----------
NET INCREASE IN NET ASSETS............................. 2,603,241
NET ASSETS:
Beginning of year.................................... 17,832,270
-----------
End of period...................................... $20,435,511
===========
VOLUMETRIC FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1998
(Unaudited)
COMMON STOCKS 85.4%
MARKET
SHARES VALUE
Aerospace/Defense: 2.7%
5,800 General Dynamics $ 269,700
4,800 Litton Industries 283,200
-------
552,900
-------
Air Transportation: 3.8%
4,400 AMR 366,300
14,000 America West Holdings 399,875
-------
766,175
-------
Autos/Auto Parts: 1.7%
6,000 Ford 354,000
-------
Banking: 1.3%
3,300 Fleet Financial 275,550
-------
Business Services: 1.5%
5,000 Interpublic Group 303,432
-------
Chemicals: 2.6%
7,800 Ecolab 241,800
14,000 Engelhard 283,500
-------
525,300
-------
Communications: 1.5%
6,600 Alltel 306,900
-------
Computers: 4.5%
8,700 Parametric Technology* 235,988
24,000 Unisys* 678,000
-------
913,988
-------
Consumer Products: 1.6%
9,700 Rubbermaid 320,100
-------
Drugs: 5.1%
3,900 Johnson & Johnson 288,600
2,500 Merck 334,375
6,000 Warner-Lambert 416,250
---------
1,039,225
---------
Electrical/Electronics: 7.4%
12,400 Baldor Electric 302,250
10,000 EG & G 300,000
4,100 Emerson Electric 247,538
3,300 General Electric 299,888
9,750 Symbol Technology 368,063
---------
1,517,739
---------
Engineering/Construction: 1.5%
9,400 Jacobs Engineering* 301,975
-------
Financial Services: 1.1%
5,250 Fiserv* 222,961
-------
Forest Products: 1.4%
7,300 Chesapeake Corp. 284,240
-------
Home Furnishings: 2.6%
4,400 La-Z-Boy 248,600
11,600 Leggett & Platt* 290,000
-------
538,600
-------
Indices: 9.8%
17,600 S&P 500 Depository Receipts 1,994,300
---------
Machinery: 4.1%
7,500 Dover 256,875
5,400 GATX 236,925
19,000 Huffy 344,375
-------
838,175
-------
Medical: 6.6%
13,333 Bindley-Western 440,000
3,200 Cardinal Health 300,000
8,100 Omnicare 307,800
8,000 St. Jude Medical* 295,500
---------
1,343,300
---------
Misc./Diversified: 7.6%
10,000 Ogden 276,875
7,200 Seagram 294,750
3,800 Textron 272,413
7,406 Tyco International 466,578
11,000 Wellman 249,563
---------
1,560,179
---------
Precision Instruments: 3.0%
6,100 Bausch & Lomb 305,763
4,300 Eastman Kodak 314,169
-------
619,932
-------
Publishing: 1.4%
3,600 McGraw-Hill 293,400
-------
Retail: 8.7%
7,800 Barnes & Noble* 293,475
7,400 Dillard's 306,638
20,000 Handleman* 230,000
6,000 Home Depot* 498,375
7,500 Wal-Mart 455,625
---------
1,784,113
---------
Shoes/Textiles: 2.4%
21,700 Cone Mills* 187,163
20,000 Stride Rite 301,250
-------
488,413
-------
Utilites: 1.5%
7,500 Texas Utilities 312,188
-------
TOTAL COMMON STOCKS
(COST:14,014,447 ) 17,457,085
----------
CASH EQUIVALENTS/RECEIVABLES
LESS LIABILITIES: 14.6%
Cash 84,329
Chase Manhattan Premium Market Rate Acct. 3,032,653
Receivable from brokers, others 431,691
Dividends and interest receivable 39,828
---------
TOTAL CASH EQUIVALENTS/RECEIVABLES 3,588,501
---------
TOTAL ASSETS 21,045,586
Liabilities: payable to brokers (610,076)
----------
NET ASSETS $ 20,435,510
==========
VOLUMETRIC SHARES OUTSTANDING 1,064,555
NET ASSET VALUE PER SHARE $ 19.20
==========
NUMBER OF SHAREHOLDER ACCOUNTS 1,199
*Security is non-income producing.
**Will split two for one on 7/6/98
Volumetric Fund, Inc.
87 Violet Drive
Pearl River
New York 10965
Tel: 914-623-7637
800-541-FUND
www.volumetric.com
Investment Advisor Board of Directors
and
Transfer Agent William P. Behrens
Jeffrey J. Castaldo
Volumetric Advisers, Inc. Richard C. Friedenberg
Pearl River, New York Gabriel J. Gibs, Chairman
Anna Karpati
Custodian Wayne W. Moshier
Marcel A. Olbrecht
The Chase Manhattan Stephen J. Samitt
Bank, N.A. David Seidenberg
New York, New York Raymond W. Sheriden
Irene J. Zawitkowski
Officers
Gabriel J. Gibs
President, Portfolio Manager
Irene J. Zawitkowski
Executive Vice President
Jeffrey M. Gibs
Senior Vice President
Raymond W. Sheriden
Vice President
David L. Seidenberg
Treasurer
