To our shareholders:
The stock market had its worst first half year performance since 1984,
according to the Dow Jones Industrial Average. The popular Dow declined
9.1% since December 31. The culprit was the Federal Reserve. It aggressively
raised interest rates six times since last June, culminating with a half point
raise in mid-May.
The first half of 2000, was also the most difficult in Volumetric's 21
years of history. Our net asset value per share declined 6.4% in the second
quarter and was down 8.3% for the year, as of June 30. Prior to 2000, our worse
first half was 1982 when we were down 6.3%. However, this was followed by a
huge gain of 23.2% in the second half of that year.
On the positive side, as you will see below, our protection system again
was quite successful. Our maximum percentage drop from the record high was
significantly less than those of other averages. The Fund's NAV at the
market close on June 30 was $16.95. This was 8.4% away from our all time
record high of $18.51, which was adjusted for capital gain and dividend
distributions.
Unlike the Dow and most other averages, the New York Stock Exchange
Composite Index has done comparatively well this year, down only 1.3%. Still,
in the past 21 1/2 years Volumetric had an average annual return of 13.3% as
compared to that of 12.6% of the NYSE Composite Index in the same period.
PROTECTION WORKS
Despite the disappointing first half, our protection system has prevented
us from an even larger decline. For example, the table below indicates the
maximum decline the various major indexes suffered at their low point from
their record high in the first half of 2000.
Maximum decline
from record high
NASDAQ Composite - 36.5%
Dow Jones Industrials - 20.0%
Standard & Poor 500 - 13.1%
New York Stock Index - 13.0%
Volumetric Fund - 9.3%
This was the third time since October of 1998, that the stock market had
suffered at least a 10% correction, but Volumetric did not.
We sold 28 stocks in the second quarter. A great majority of them dropped,
many of them sharply, after we sold them. Here are a few examples. After
selling Activision it declined from 11 to 6 1/8, Adaptec from 32 to 16 5/8,
Global Crossing from 41 to 25, Microsoft from 86 to 62, Motorola from 118 to
88 (prior to its split), Tiffany from 73 to 55, Silicon Graphics from 7 1/4
to 3 1/2, General Motors from 75 to 60, Ford from 53 to 42, US Steel from
24 1/2 to 19, International Paper from 37 to 31, EDS from 60 to 39 and Vishay
from 54 to 34. Without protection our semi-annual return would have been about
4% less.
PORTFOLIO REVIEW
After being nearly 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
24% in cash and equivalents at the end of June. According to our protection
system, by having occasionally a large cash position, we are willing to
sacrifice some potential gain, to insure against a potential major loss.
Our five best performing stocks, as of June 30th, are shown below:
Purchase
% Gain Date
1. Forest Laboratories 106.1% 11/5/99
2. Millipore 105.7 12/13/00
3. National Oilwell 78.1 1/20/00
4. Global Marine 70.6 12/27/99
5. Qwest 40.4 10/7/99
During the second quarter the following stocks were purchased and sold:
Purchases: Ashland, Avery Dennison, Baxter International, Cadence Design,
Delta Airlines, Dell Computer, Emerson Electric, Hormel, Host Marriott, IBM,
Interpublic Group, Johnson & Johnson, Kroger, Louisiana Pacific, Mohawk
Industries, Ryder System, Schering Plough, Seitel, Shopko, Snap-On Tools,
Universal Foods and Washington Mutual.
Sales: Activision, Adaptec, American General, Bank of America, Bear Stearns,
Caterpillar, Costco Wholesale, Edwards AG, Electronic Data Systems, Family
Dollar Stores, Ford, General Motors, Global Crossing, Intel, International
Paper, MA Hanna, Microsoft, Motorola, Pogo Producing, Sensormatic, Silicon
Graphics, Tiffany, Toro, USX Steel, Varco, Varian Semiconductor, Vishay
Intertechnology, and Weyerheauser.
Our most profitable stocks were: Vishay with a huge 384% gain, Varian Semi
with a 320% gain, Motorola, through the acquisition of our General
Instrument, with a 135% gain, Global Crossing, with a 125% gain and Toro
with a 67% gain.
ANNUAL MEETING
At the annual meeting of our shareholders, held on June 7, 2000, all 11
nominated directors were elected for their respective terms, and the CPA
firm of Feuer, Orlando & Pye, CPA, LLP, was approved as independent auditors
of the Fund for the year ending 2000. We are pleased to welcome our newest
director George Curtis, president of CCP Printing, Inc.
UPDATE AND OUTLOOK
Volumetric and the stock market opened higher in July. As of July 11, our
NAV moved up to $17.32 or 2.2% since June 30.
Based on statistical considerations, the second half of 2000, should be
much better than the first. In the past fifty years the market had declined only
once in the second half of an election year, in 1960. Also, It now appears
that the Federal Reserve has completed its tightening. Historically, they
have never raised interest rates in the second half of an election year.
Consequently, we remain optimistic for the rest of 2000, barring some
negative earnings surprises. We expect to reduce our cash substantially and
turn to a more aggressive position in the near future. Will this be a
replay of 1982? Only time will tell.
July 12, 2000
Sincerely,
Gabriel Gibs Irene Zawitkowski
President Executive Vice President
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
Six Months Ended June 30, 2000
(Unaudited)
Per share data:
Net Asset Value, December 31, 1999 $19.66
Income from investment operations:
Net investment income (0.01)
Net realized and unrealized loss on investments (1.54)
--------
Total from investment operations ( 1.55)
--------
Less distributions from capital gains: (1.16)
--------
Net Asset Value, June 30, 2000 $16.95
========
Total Return (8.33%)
========
Ratios/Supplemental Data:
Net assets, 6/30/00 (in thousands) $17,596
Ratio of expenses to average net assets 1.92%*
Ratio of net income to average net assets (.04%)*
Portfolio turnover rate 144%
*Annualized
VOLUMETRIC FUND, INC.
STATEMENT OF OPERATIONS
For Six Months Ended, June 30, 2000
(Unaudited)
INVESTMENT INCOME
Dividends.....................................$ 99,191
Interest...................................... 77,772
-----------
TOTAL INVESTMENT INCOME................. 175,963
-----------
EXPENSES
Management Fee................................ 182,927
-----------
INVESTMENT INCOME - NET.......................... (6,964)
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on investments............. 1,289,654
Unrealized appreciations of investments
Beginning of year.........$3,993,713
End of period............. 1,026,953
Decrease in unrealized appreciation............(2,966,760)
-----------
NET LOSS ON INVESTMENTS...........................(1,677,106)
-----------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................... $(1,684,070)
============
VOLUMETRIC FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For Six Months Ended, June 30, 2000
(Unaudited)
CHANGES RESULTING FROM OPERATIONS
Investment income-net.......................$ (6,964)
Net realized gain on invesments............. 1,289,654
Decrease in unrealized appreciation......... (2,966,760)
-------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS................... (1,684,070)
-------------
DISTRIBUIONS TO SHAREHOLDERS:
From 1999 net realized gain on investments
($1.16/share)............................. (1,241,838)
-------------
CAPITAL SHARE TRANSACTIONS
Shares purchased........................... 304,579
Shares reinvested.......................... 1,226,088
Shares redeemed............................ (2,052,332)
------------
Net decrease from capital share transactions.. (521,665)
------------
NET DECREASE IN NET ASSETS.................... (3,447,573)
NET ASSETS
Beginning of year.......................... 21,043,876
End of period.............................. $ 17,596,303
=============
VOLUMETRIC FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
COMMON STOCKS: 76.3%
<TABLE>
<C> <C> <C>
SHARES COMPANY MARKET VALUE
Airlines: 1.3%
4,400 Delta Air Lines $ 229,625
---------
Banking: 2.7%
4,500 Citigroup 271,688
7,000 Washington Mutual 205,188
---------
476,876
Beverage: 1.3%
4,100 Coca Cola 235,494
---------
Building/Construction: 2.1%
10,000 Kaufmann & Broad Homes 196,875
8,500 Toll Brothers* 174,250
---------
371,125
Business Services: 1.0%
4,200 Interpublic Group 180,600
---------
Chemicals: 3.4%
10,000 Ferro 210,000
13,500 Olin 222,750
4,200 Praxair 157,238
---------
589,988
Communications: 2.0%
7,000 Qwest Communications* 347,813
---------
Computers, Hardware: 3.4%
8,000 Compaq Computer 204,000
4,300 Dell Computer* 212,044
1,700 IBM 185,725
--------
601,769
Computers, Software: 3.8%
3,600 America Online* 189,900
11,000 Cadence Design* 224,813
5,000 National Computer Systems 246,250
--------
660,963
Drugs: 7.1%
5,100 Forest Laboratories* 518,925
2,100 Johnson & Johnson 211,050
6,200 Pfizer 297,600
4,400 Schering-Plough 222,750
---------
1,250,325
Electrical/Electronics: 6.6%
20,000 Checkpoint Systems* 150,000
3,400 Emerson Electric 209,100
3,200 Lucent Technology 187,200
5,400 Millipore 407,025
9,500 Thermo Electron* 200,089
---------
1,153,414
Entertainment: 1.5%
7,000 Disney, Walt 270,375
---------
Financial Services: 1.3%
10,000 Raymond James Financial 225,000
---------
Foods: 2.2%
12,000 Hormel 206,250
10,000 Universal Foods 185,000
--------
391,250
Forest Products: 2.3%
3,500 Avery Dennison 234,938
15,000 Louisiana Pacific 163,125
--------
398,063
Indexes: 5.0%
6,000 S&P 500 Depository Receipts 873,000
--------
Machinery: 2.6%
6,600 Harley-Davidson 254,100
7,000 Snap-on Tools, Inc. 197,750
--------
451,850
Medical/Healthcare: 3.8%
3,000 Baxter International 210,938
6,400 Becton Dickinson 183,600
10,000 Tenet Healthcare 275,000
--------
669,538
Misc./Diversified: 4.1%
6,300 Cooper Inudustries 205,538
5,400 General Electric 282,150
4,900 Tyco International 230,300
--------
717,988
Oil/Oil Services: 7.9%
5,500 Ashland Oil 193,531
13,000 Global Marine* 373,750
4,400 Murphy Oil 261,525
12,000 National Oilwell* 394,500
20,000 Seitel* 162,500
---------
1,385,806
Publishing: 1.2%
11,000 American Greetings 215,188
---------
Real Estate: 1.1%
20,000 Host Marriott 187,500
---------
Retail: 4.6%
4,300 Home Depot 214,731
10,000 Kroger* 219,375
12,000 Shopko* 184,500
3,400 Wal-Mart Stores 192,738
--------
811,344
Shoes: 0.9%
17,000 Wolverine World Wide 167,875
--------
Textile/Apparel: 1.1%
8,600 Mohawk Industries* 192,425
--------
Trucking: 0.9%
8,300 Ryder System 159,256
--------
Utilities: 1.2%
8,600 Kansas City Power & Light 209,625
--------
TOTAL COMMON STOCKS
(COST:$12,397,122) 13,424,075
-----------
CASH EQUIVALENTS/RECEIVABLES: 23.7%
Cash 78,829
Chase Vista Instit. Money Market acct. 4,100,874
Receivable from brokers, others 586,331
Dividends and interest receivable 18,446
-----------
TOTAL CASH EQUIVS / RECEIVABLES 4,784,480
-----------
TOTAL ASSETS 18,208,555
LIABILITIES: Payable to brokers (612,252)
------------
NET ASSETS $17,596,303
===========
VOLUMETRIC SHARES OUTSTANDING 1,038,095
-----------
NET ASSET VALUE PER SHARE $16.95
===========
NUMBER OF SHAREHOLDER ACCOUNTS 1,116
-----------
*Security is non-income producing.
</TABLE>
Volumetric Fund, Inc.
87 Violet Drive
Pearl River
New York 10965
Tel: 845-623-7637
800-541-FUND
www.volumetric.com
Investment Advisor Board of Directors
and
Transfer Agent William P. Behrens
Jeffrey J. Castaldo
Volumetric Advisers, Inc. George Curtis
Pearl River, New York Richard C. Freidenberg
Gabriel J. Gibs, Chairman
Custodian Wayne W. Moshier
Marcel A. Olbrecht
The Chase Manhattan Stephen J. Samitt
Bank, N.A. David L. Seidenberg
New York, New York Raymond W. Sheridan
Officers
Gabriel J. Gibs
President, Portfolio Manager
Irene Zawitkowski
Executive Vice President
Jeffrey M. Gibs
Senior Vice President
Raymond W. Sheridan
Vice President
David L. Seidenberg
Treasurer
