N-Q 1 first06.txt 1Q REPORT 2006 March 31, 2006 Volumetric Fund, Inc. A No-Load Mutual Fund ---------------------- 1 First Quarter Report 2006 (Logo) Volumetric Fund, Inc. To our shareholders: We are pleased to report that Volumetric Fund's net asset value (NAV) advanced 5.7% in the past three months, our best first quarter performance since 1998. Our NAV closed out the quarter at $18.98, up $1.02 from $17.96, the Fund's ex-distribution opening NAV on January 2, 2006. Thanks to our 'Volume and Range' system introduced in 2000, we have again outperformed the Standard & Poor 500 Index. This occurred six out of the past seven years. Please see the table below to compare the Fund's performance to those of other market indices. First Quarter Since 2006 9/1/2000* Volumetric Fund + 5.7 + 38.7% Dow-Jones Ind + 3.7 - 1.2 S&P 500 Index + 3.7 - 14.9 NYSE Index + 6.2 + 15.1 NASDAQ + 6.1 - 44.7 *Introduction of 'Volume and Range' system The Volumetric Index, which measures the value of a hypothetical investment of $10,000 in Volumetric Fund since its inception on January 1, 1979, closed out the quarter at a record breaking $186,139. This value is equivalent to an 11.33% compounded growth rate since inception. PORTFOLIO REVIEW Due to our strong performance, our net assets for the first time have surpassed $25 million, reaching a record $25.3 million at the end of the first quarter. Since the beginning of year, we have reduced our cash position from 6.3% to a nearly fully invested 3.7%. Following the methodology of our disciplined 'Volume and Range' system, we have made several changes in our portfolio, as summarized in the following: Purchases: AmSouth Bancorp, Avery Dennison, Avnet, Inc., Beazer Homes, Beckman Coulter, Church & Dwight, Corinthian Colleges, Diebold, Inc., Disney (Walt), Edwards (A.G.), Electronic Arts, Florida Rock Industries, International Paper, L-3 Communications, Modine Manufacturing Comp., NiSource Inc., Omnicom, Pall Corp., Potash Corp., Ryan's Restaurant, Stewart & Stevenson, Sensient Technologies, Verizon Communications, and Zale. Sales: Albertson's, Alaska Air Group, Bowater, Carmike Cinemas, Cox Radio, DuPont, First American Corp., General Electric, Genzyme, HCA, Health Net, Micron Technology, Nike, North Fork Bancorp, Northern Trust, Omnicare, Paxar, Pride International, Siebel Systems, Steris, Time Warner and Torchmark. Among our stocks sold the three most profitable were: Omnicare with an 87% net realized gain, Health Net with an 85% gain and First American Corp. with a 62% gain. We have 85 stocks in the Fund's portfolio. Our average stock is up 20.6%. Our ten largest holdings and their gains are shown below: TOP TEN COMMON STOCK HOLDINGS (as of 3/31/2006) % of Total % Gain Office Depot 2.07% 116.4% Jacobs Engineering 1.78 102.9 National Semiconductor 1.65 88.7 Wabtec 1.65 76.4 Tellabs 1.57 67.2 Anixter 1.47 96.2 Archer Daniels Midland 1.46 50.8 Crane 1.43 52.4 Stewart Stevenson 1.41 45.6 Tektronics 1.41 51.4 In addition, we have four other stocks with at least a 40% gain: ITT Industries, up 70%, Allergan, up 50%, Genuine Parts, up 48% and Tommy Hilfiger up 47%. Our worst performing stock is Superior Industries with a 17% loss. MERGERS AND ACQUISITIONS The quantitative and computer driven methodology of our 'Volume and Range' system paid off handsomely in the first quarter. We have several stocks which ended up as merger or acquisition candidates. Here are six examples. Tommy Hilfiger Corp., the apparel company, is being acquired by Apax Partners resulting currently in a 47% gain for Volumetric. Stewart & Stevenson, a leading manufacturer of military tactical wheeled vehicles is in the process of being purchased by Armor Holdings, Inc. At the end of the quarter, we had a 46% unrealized gain in Stevenson. Whirlpool is acquiring Maytag. This merger has excellent synergistic effects. Consequently, Whirlpool, which we own, is up 35%. One of our stocks, Computer Sciences, is a potential takeover candidate. As a consequence, it is currently up 19%. Lincoln National, a large insurer, is buying and will merge with our Jefferson Pilot, also an insurance company, resulting in a 15% gain. During the first quarter, our software firm Siebel Systems was acquired by Oracle. It resulted in a 14% capital gain for the Fund. ANNUAL MEETING The annual meeting of shareholders will be held at 8 p.m., Wednesday, June 14, 2006, at Comfort Inn & Suites, 425 E. Route 59, Nanuet, New York. Invitations and proxy statements will be sent to shareholders around middle of May. Shareholders of record at the close of business on April 26, 2006, are entitled to receive proxy material and an invitation to attend the meeting. At the meeting, as described in the Proxy Statement, you will be asked to elect nine directors and ratify the appointment of BKD, LLP as independent auditors of the Fund for 2006. Also, we will report on Volumetric Fund's year-to-date performance. We are pleased to announce that Raymond T. Mundy will be a new nominee for the Board. Mr. Mundy is an attorney and an Adjunct Professor of Philosophy at Rockland Community College, Suffern, NY. Mr. Jeffrey Castaldo will retire from the Board in June. We are grateful for his numerous contributions during his 12 years of tenure as a director. PRIVACY POLICY According to federal law and regulations, financial institutions, including mutual funds, are required to disclose their privacy policy to their clients and shareholders annually. To meet this requirement, our fund's privacy policy is described in the following paragraphs. Volumetric Fund and its affiliate Volumetric Advisers, Inc. work hard to maintain the highest standard of confidentiality and to respect the privacy of its shareholders and clients. The non-public personal information collected about you comes primarily from the account applications or other forms you submit to Volumetric Fund, Inc. We do not market or disclose information about you to anyone, except as permitted by law. For example, this may include disclosing information according to your express consent to fulfill your instructions, such as in a mortgage application, or to comply with applicable laws and regulations. We limit information about you to those of our employees who are involved in servicing your account. We maintain physical, electronic, and procedural safeguards that are designed to comply with federal standards to guard the information. If our relationship ends, we will continue to treat the information as described in this Privacy Policy notice. UPDATE AND OUTLOOK Volumetric and the market have continued to advance in the first few weeks of April. As of April 20, our NAV reached a record $19.25, up 7.2% since the beginning of the year. We also have an additional takeover stock in our portfolio. Russell, a leading sports clothing maker, is being purchased by Warren Buffets' Berkshire Hathaway. As the news was announced on April 18, Russell stock jumped a huge 37%. We think the market will rise still further, but with occasional pauses and pullbacks along the way. The major unknown at this time is interest rates. Recently, the Fed raised rates for the 15th time in less than two years. Our feeling is that the Fed will boost rates once more before it will halt its tightening process. We hope to see many of you at our annual meeting. Thank you for your trust. Please do not hesitate to call us, if you have any questions. April 21, 2006 Sincerely, /s/ Gabriel Gibs /s/ Irene Zawitkowski Gabriel Gibs Irene Zawitkowski Chairman & CEO President VOLUMETRIC FUND, INC. STATEMENT OF NET ASSETS March 31, 2006 (Unaudited) COMMON STOCKS: 96.2% MARKET SHARES COMPANY VALUE Aerospace/Defense: 4.9% 4,000 Lockheed Martin $300,520 4,300 Rockwell Automation 309,213 9,800 Stewart Stevenson Services 357,504 4,800 United Technologies 278,256 ----------- 1,245,493 Air Transport: 1.2% 16,500 Southwest Airlines 296,835 ----------- Apparel: 1.8% 9,900 Russell 136,620 19,600 Tommy Hilfiger* 322,812 ----------- 459,432 ----------- Appliances: 1.2% 3,400 Whirlpool 310,998 ----------- Auto/Auto Parts: 2.8% 12,000 Autonation* 258,600 5,900 Genuine Parts 258,597 10,300 Superior Industries 199,408 ----------- 716,605 ----------- Banking: 4.2% 9,100 AmSouth 246,155 5,400 Marshall & Ilsley 235,332 5,000 Wachovia Corp. 280,250 3,500 Zions Bancorp 289,555 ----------- 1,051,292 ----------- Building/Construction: 1.0% 3,800 Beazer Homes 249,660 ----------- Business/Consumer Services: 6.3% 5,800 Choicepoint Systems* 259,550 18,500 Corinthian Colleges* 266,400 6,100 Diebold 250,710 7,000 Equifax 260,680 22,000 Gartner* 306,900 3,000 Omnicom 249,750 ----------- 1,593,990 ----------- Chemicals: 3.8% 4,200 Avery Dennison 245,616 5,200 Dow Chemical 211,120 6,000 Lubrizol 257,100 4,000 PPG Industries 253,400 ----------- 967,236 ----------- Communications: 3.6% 3,200 L-3 Communications 274,528 25,000 Tellabs* 397,500 7,300 Verizon Communications 248,638 ----------- 920,666 ----------- Computers, Software: 3.3% 5,000 Computer Science* 277,750 25,000 LSI Logic* 289,000 12,000 Synopsis* 268,200 ----------- 834,950 ----------- Consumer Products: 2.0% 5,500 Alberto Culver 243,265 7,200 Church & Dwight 265,824 ----------- 509,089 ----------- Drugs: 0.9% 9,000 Bristol-Myers 221,490 ----------- Electrical/Electronics: 6.9% 10,000 Agilysys 150,600 7,800 Anixter* 372,684 10,000 Avnet* 253,800 17,000 EMC Corp.* 231,710 15,000 National Semiconductor 417,600 8,300 Thermo Electron* 307,847 ----------- 1,734,241 ----------- Engineering, Construction: 1.8% 5,200 Jacobs Engineering* 451,048 ----------- Entertainment: 2.0% 9,500 Disney (Walt) 264,955 4,600 Electronic Arts* 251,712 ----------- 516,667 ----------- Financial Services: 4.3% 4,300 American Express 225,965 5,500 Edwards, AG 274,230 8,000 Federated Investors 312,400 5,800 First Data 271,556 ----------- 1,084,151 ----------- MARKET SHARES COMPANY VALUE Foods/Beverage: 3.5% 11,000 Archer-Daniels-Midland $370,150 5,000 General Mills 253,400 14,800 Sensient Technology 267,140 ----------- 890,690 ----------- Forest Products: 3.1% 7,600 International Paper 262,732 9,100 Lousiana-Pacific 247,520 12,300 Packaging Corp. of America 276,012 ----------- 786,264 ----------- Indices: 2.8% 6,300 Diamond Trust Series 1 701,127 ----------- Insurance: 1.6% 4,600 Jefferson-Pilot 257,324 2,500 Lincoln National 136,475 ----------- 393,799 ----------- Machinery: 7.1% 8,800 Crane 360,888 6,400 Ingersoll-Rand 267,456 7,500 Modine Manufacturing 221,250 8,800 Pall Corp. 274,472 7,000 Snap-on Tools 266,840 12,800 Wabtec 417,280 ----------- 1,808,186 ----------- Medical/Healthcare: 1.4% 3,200 Allergan 347,200 ----------- Metals/Minerals: 3.1% 9,000 Florida Rock 258,612 7,600 Inco 334,263 9,500 Potash 202,607 ----------- 795,482 ----------- Misc./Diversified: 5.0% 6,700 Dover Corp. 315,640 6,500 ITT Industries 337,320 7,000 Oakley 331,890 3,000 Steelcase 291,600 ----------- 1,276,450 ----------- Oil/Energy: 0.9% 7,000 National Fuel Gas 229,040 ----------- Precision Instruments: 3.4% 4,100 Beckman Coulter 223,737 12,000 PerkinElmer 281,640 10,000 Tektronix 357,100 ----------- 862,477 ----------- Restaurants: 0.8% 13,495 Ryan's Restaurants* 195,678 ----------- Retail: 8.9% 7,500 Ethan Allen 315,150 11,000 Family Dollar Stores 292,600 13,300 Furniture Brands 325,983 6,000 Home Depot 253,800 4,100 Lowe's Companies 264,204 14,100 Office Depot* 525,084 10,000 Zale* 280,300 ----------- 2,257,121 ----------- Toys: 0.9% 11,000 Hasbro 232,100 ----------- Transportation: 1.0% 3,200 United Parcel Services 254,016 ----------- Utilities: 0.6% 8,000 Nisource 161,760 ----------- TOTAL COMMON STOCKS: (COST $20,391,456) 24,355,233 CASH EQUIVALENTS & RECEIVABLES: 3.8% Cash 71,887 JP Morgan Prime Money Market Fund 752,438 Dividends and interest receivable 19,134 Receivables from broker 109,711 ----------- TOTAL CASH EQUIVALENTS/ RECEIVABLES 953,170 ----------- TOTAL ASSETS 25,308,403 Less Liabilities - ----------- NET ASSETS: 100.0% $25,308,403 =========== VOLUMETRIC SHARES OUTSTANDING 1,333,658 ----------- NET ASSET VALUE PER SHARE $18.98 =========== * Non-income producing security Volumetric Fund, Inc. ------------------------ 87 Violet Drive Pearl River, New York 10965 Tel: 845-623-7637 800-541-FUND www.volumetric.com Investment Adviser and ------------------------ Transfer Agent -------------- Volumetric Advisers, Inc. ------------------------- Pearl River, New York Custodian --------- J.P. Morgan Chase New York, New York Independent Auditors ------------------------ BKD, LLP Kansas City, Missouri Board of Directors ------------------------ William P. Behrens Louis Bollag Jeffrey J. Castaldo Gabriel J. Gibs, Chairman Joseph Heaupl Stephen Samitt David L. Seidenberg Raymond W. Sheridan Irene J. Zawitkowski Officers -------- Gabriel J. Gibs Chief Executive Officer, Portfolio Co-Manager Irene J. Zawitkowski President, Portfolio Co-Manager Jeffrey M. Gibs Vice President