To our shareholders:
We are pleased to report that our prediction of an improved performance for
the Fund, as noted in our first quarter report, became a reality. Volumetric's
share value increased 7.4% in the second quarter reaching $19.42 on June 30,
up from $18.08 on March 31. We are now up 3.9% for the year, after a negative
first quarter. Volumetric is only 0.9% away from its all time record high of
$19.60, reached on May 13. (The high is adjusted for prior capital gain and
dividend distributions.) Our net assets reached a new record of $21.1 million.
The New York Stock Exchange Composite Index was up 7.7% in the second quarter
and 8.8% for the year.
Our average annual return in the past 20 1/2 years has been 14.3%. The
Volumetric Index, which measures the value of a $10,000 initial investment in
the Fund on January 1, 1979, has reached $140,124 on June 30, the highest ever
for a quarter end.
PORTFOLIO REVIEW
Our current cash position is 11.2%. We have 62 stocks in our portfolio.
There are 54 gainers and only 8 losers. Our average stock is up 26.1%. Not one
stock is down more than 9% from its purchase price. The best performing
stocks, as of June 30, are shown below:
Purchase
% Gain Date
1. Tyco International 344.4% 5/5/97
2. Ecolab 160.2 9/24/96
3. Toro 118.5 10/19/98
4. Vishay Intertech. 62.7 4/9/99
5. Frontier 55.2 2/4/99
We are pleased that our strategy to purchase seven turnaround stocks in the
first quarter has paid off. For example, Kerr McGee is up 53%, Boise Cascade
is up 30%, Polaroid is up 24%, Cyprus Amax is up 19% and Schlumberger is up
15%. We sold two of the seven: Inco with a 22% gain, and our only loser,
Bethlehem Steel, with a small, 3% loss.
Purchases. Our turnaround stocks bought in the first quarter were so
successful, that we have increased our positions in these types of stocks in
the second quarter. The results have confirmed our judgment, since some of our
best performing stocks were these brand new turnarounds. For example, Vishay
Intertech is up 63%, Polaris Industries is up 31% and Hollywood Park is up 28%
since we purchased them in April. Out of the 26 new stocks we consider about
half of them as turnarounds, the rest are large cap stocks or special
situations.
The following stocks were added to our portfolio in the second quarter: AGCO
Corp., Block H&R, Cablevision Systems, Data General, General Instrument,
Goodyear Tire, Hibernia Corp., Hollywood Park, IBP Inc., Hanna M.A.,
International Flavors & Fragrances, Key Corp., Kmart, Minnesota Mining &
Manufacturing, Neiman Marcus, Office Max, Pier 1 Imports, Pitney Bowes,
Polaris Industries, Raychem, Ryder System, St. Paul Companies, Thomas & Betts,
Tidewater, Vishay Intertechnology.
Sales. As you know from our prior reports, we sell a stock when it starts to
weaken as measured by our disciplined "Strength and Protection" formula. This
prevents a major drop not only in individual stocks, but also for the Fund's
overall portfolio.
Accordingly, the following stocks were sold in the second quarter: Abbott
Laboratories, Alaska Air Lines, Baxter International, Bethlehem Steel,
Citigroup, Claire's Stores, Dayton Hudson, Disney, General Motors, Hasbro,
Inco, McDonalds, Mellon Bank, Merck, Merrill Lynch, Papa John's International,
Pepsico, Procter & Gamble, Stride Rite. Our top gainers were: Merrill Lynch
with a 66% gain, Claire's Stores with a 40% profit and Dayton Hudson with a
37% net gain.
ANNUAL MEETING
We are pleased with the excellent turnout of our shareholders at our annual
meeting on May 26, 1999. All 11 nominated directors were reelected, and the
accounting firm of Feuer, Orlando & Pye, CPA, LP, was approved as independent
auditor of the Fund for the year ending 1999.
OUTLOOK
On June 30, the Federal Reserve raised interest rates by a quarter point. This
move was widely expected. More importantly, the Fed has also taken a neutral
stance for future interest rates. This indicates that interest rates are
unlikely to rise further in the near term. It is good news and bullish for the
market. Meanwhile, our volume indicator has also improved to +2 from neutral,
as of June 30th. Consequently, we expect a good rally to develop this summer.
We will reduce our cash from 11% to a more fully invested position in the next
few days. We expect Volumetric's performance to accelerate in the third
quarter, as our investments in the new stocks will increasingly pay off.
Based on our past results, and on the assumption that the market indeed will
remain positive, we have set our goal for a 10% additional return for the
second half of 1999.
The greatest benefit of the Volumetric System is that it combines growth with
low risk. If you wish to add to your Volumetric account, please use the form
on the bottom of your account statement. Do not hesitate to call us, if you
have any questions.
July 3, 1999
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, 1999
(Unaudited)
Per Share Data
- --------------
Net asset value, December 31, 1998...................$19.25
Income from investment operations:
Net investment income...............................(0.02)
Net realized and unrealized gain on investments..... 0.75
------
Total from investment operations...................... 0.73
------
Less distributions from capital gains.................(0.56)
------
Net asset value, June 30, 1999........................$19.42
======
Total return......................................... 3.91%
======
Ratios and Supplemental Data:
- -----------------------------
Net assets, 6/30/99 (in thousands)....................$21,072
Ratio of expenses to average net assets*................1.91%
Ratio of net investment income to average net assets*..(0.12%)
Portfolio turnover rate..................................123%
*Annualized
VOLUMETRIC FUND, INC.
STATEMENT OF OPERATIONS
For Six Months Ended, June 30, 1999
(Unaudited)
INVESTMENT INCOME
Dividends.......................................... $ 118,393
Interest........................................... 52,531
---------
TOTAL INVESTMENT INCOME.......................... 170,924
---------
EXPENSES
Management fee...................................... 195,841
----------
INVESTMENT INCOME - NET ............................. (24,917)
----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Net realized gain on investments................... 1,569,544
Unrealized appreciation of investments
Beginning of year .......... $ 4,125,066
End of period ............. 3,375,845
-------------
Decrease in unrealized appreciation ............... (749,221)
----------
NET GAIN ON INVESTMENTS ............................... 820,323
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .......................... $ 795,406
===========
VOLUMETRIC FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For Six Months Ended, June 30, 1999
(Unaudited)
INCREASE IN NET ASSETS FROM OPERATIONS
Investment income - net ....................... $ (24,917)
Net realized gain on investments .............. 1,569,544
Decrease in unrealized appreciation ........... (749,221)
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................... 795,406
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
From 1998 net realized gain on investments
($0.56/share).............................. (597,638)
----------
CAPITAL SHARE TRANSACTIONS
Shares purchased ............................ 678,330
Shares reinvested ............................ 589,733
Shares redeemed .............................. (933,579)
----------
Net increase from capital share transactions..... 334,484
----------
NET INCREASE IN NET ASSETS ...................... 532,252
NET ASSETS
Beginning of year .............................. 20,539,273
============
End of period ................................. $ 21,071,525
============
VOLUMETRIC FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
COMMON STOCKS: 88.8%
SHARES COMPANY MARKET VALUE
Air Transportation: 1.4%
9,600 Southwest Airlines $298,800
---------
Auto/Auto Parts: 2.8%
14,000 Cooper Tire & Rubber 330,750
4,400 Goodyear Tire 258,775
---------
589,525
---------
Banking: 5.1%
15,500 Hibernia Corp. 243,156
7,300 Key Corp. 234,513
2,200 Morgan, J.P. 309,100
6,700 Wells Fargo 286,425
---------
1,073,194
---------
Beverage: 2.1%
6,100 Anheuser-Busch 432,719
---------
Business Services: 4.1%
8,800 Automatic Data Processing 387,200
2,600 Interpublic Group 225,225
4,000 Pitney Bowes 257,000
---------
869,425
---------
Chemicals: 5.5%
7,800 Ecolab 340,275
16,600 M.A. Hanna 272,863
6,100 International Flavors & Fragrances 268,400
5,600 Union Carbide 273,000
---------
1,154,538
---------
Communications: 3.2%
4,000 Cablevision* 280,000
6,600 Frontier Corp. 386,925
---------
666,925
---------
Computers: 3.0%
17,500 Data General* 254,844
3,000 Microsoft* 270,563
6,600 Varian Semiconductor** 112,200
--------
637,607
--------
Consumer Products: 1.3%
2,800 Colgate Palmolive 275,800
--------
Drugs: 1.8%
3,900 Johnson & Johnson 382,200
--------
Electrical/Electronics: 6.1%
7,700 General Instrument* 327,250
8,500 Raychem 314,500
5,500 Thomas & Betts 259,875
18,750 Vishay Intertechnology* 393,750
---------
1,295,375
---------
Entertainment: 2.9%
13,400 Harrah's Entertainment* 295,638
18,600 Hollywood Park* 316,200
--------
611,838
--------
Financial Services: 1.2%
5,000 H.R. Block 250,000
--------
Foods:1.1%
10,000 IBP 237,500
--------
Forest Products: 4.7%
7,500 Boise Cascade 321,563
5,600 International Paper 281,400
5,700 Temple-Inland 391,163
--------
994,126
--------
Indices: 2.9%
4,500 S&P 500 Depository Receipts 616,500
--------
Insurance: 3.8%
2,500 American International Group 293,125
4,500 Hartford Financial 262,406
7,700 St. Paul Companies 244,956
--------
800,487
--------
Machinery: 6.7%
25,000 AGCO 282,813
4,800 Briggs & Stratton 277,200
5,800 Polaris Industries 252,300
15,000 Toro 590,625
---------
1,402,938
---------
Metals: 1.4%
20,000 Cyprus Amax 305,000
---------
Misc./Diversified: 7.7%
5,600 Allied Signal 352,800
2,900 Minnesota Mining & Manuf. 252,119
8,500 Premark International 318,750
7,406 Tyco International 701,714
---------
1,625,383
---------
Oil/Oil Services: 6.9%
2,900 Chevron 275,681
3,300 Exxon 254,513
7,600 Kerr-McGee 381,425
4,400 Schlumberger 280,225
8,900 Tidewater 271,450
---------
1,463,294
---------
Precision Instruments: 2.5%
10,000 Polaroid* 275,000
6,600 Varian, Inc.** 89,100
6,600 Varian Medical** 166,650
---------
530,750
---------
Publishing: 3.4%
7,200 McGraw-Hill 388,350
8,400 Reader's Digest 333,900
---------
722,250
---------
Retail: 5.9%
14,500 Kmart* 239,250
9,000 Neiman Marcus* 231,188
22,000 Office Max* 264,000
24,000 Pier 1 Imports 270,000
5,500 Sears 245,094
---------
1,249,532
---------
Trucking: 1.1%
9,000 Ryder System 231,750
----------
TOTAL COMMON STOCKS
(COST: $15,341,611) 18,717,456
-----------
CASH EQUIVALENTS/RECEIVABLES: 11.2%
Cash 91,133
Chase Manhattan Premium Market Rate Acct. 3,083,938
Receivable from brokers, others 6,654
Dividends and interest receivable 30,728
-----------
TOTAL CASH EQUIVALENTS/RECEIVABLES 3,212,453
-----------
TOTAL ASSETS 21,929,909
LIABILITIES: Payable to brokers (858,384)
------------
NET ASSETS $21,071,525
===========
VOLUMETRIC SHARES OUTSTANDING 1,085,205
-----------
NET ASSET VALUE PER SHARE $19.42
===========
NUMBER OF SHAREHOLDER ACCOUNTS 1,192
-----------
*Security is non-income producing.
**Spin-off from Varian Associates
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
