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THE THERMO OPPORTUNITY FUND, INC.
THERMO OPPORTUNITY FUND
SEMI-ANNUAL REPORT
May 31, 2000
(Unaudited)
INVESTMENT ADVISER ADMINISTRATOR
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BRUNDAGE, STORY AND ROSE, LLC INTEGRATED FUND SERVICES, INC.
One Broadway P.O. Box 5354
New York, New York 10004 Cincinnati, Ohio 45201-5354
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<PAGE>
THE THERMO OPPORTUNITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2000
(Unaudited)
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ASSETS
Investment securities, at market value (Cost $20,884,843) $ 20,948,085
Interest receivable 2,393
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TOTAL ASSETS 20,950,478
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LIABILITIES
Bank overdraft 6
Payable for securities purchased 323,053
Payable to affiliates (Note 3) 19,029
Other accrued expenses and liabilities 69,325
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TOTAL LIABILITIES 411,413
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NET ASSETS $ 20,539,065
============
NET ASSETS CONSIST OF:
Common stock - par value $0.001 per share
Authorized 16,000,000 shares, Outstanding 1,588,217 shares $ 1,588
Additional paid-in capital 21,712,868
Undistributed net investment loss (138,212)
Accumulated net realized losses from security transactions (1,100,421)
Net unrealized appreciation on investments 63,242
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NET ASSETS $ 20,539,065
============
Net asset value per share (Note 1) $ 12.93
============
See accompanying notes to financial statements.
<PAGE>
THE THERMO OPPPRTUNITY FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2000
(Unaudited)
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INVESTMENT INCOME
Interest $ 192,670
Dividends 6
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TOTAL INVESTMENT INCOME 192,676
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EXPENSES
Investment advisory fees (Note 3) 78,635
Amoritization of organization expenses (Note 1) 62,744
Insurance expense 43,076
Directors' fees and expenses 35,519
Administrative service fees (Note 3) 30,000
Transfer agent fees 19,446
Exchange listing fees 14,655
Legal fees 9,952
Reports to shareholders 9,784
Audit fees 8,619
Custodian fees 4,457
Postage and supplies 1,196
Other expenses 12,805
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TOTAL EXPENSES 330,888
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NET INVESTMENT LOSS (138,212)
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REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 1,357,747
Net change in unrealized appreciation/depreciation
on investments 5,672,316
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NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 7,030,063
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NET INCREASE IN NET ASSETS FROM OPERATIONS $ 6,891,851
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See accompanying notes to financial statements.
<PAGE>
THE THERMO OPPORTUNITY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
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Six-Months Year
Ended Ended
May 31, 2000 November 30,
(Unaudited) 1999
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<S> <C> <C>
FROM OPERATIONS:
Net investment loss $ (138,212) $ (202,779)
Net realized gains from security transactions 1,357,747 (273,246)
Net change in unrealized appreciation/depreciation on investments 5,672,316 522,148
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Net increase in net assets from operations 6,891,851 46,123
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FROM COMMON STOCK TRANSACTIONS:
Payments for the repurchase of common stock (Note 4) (2,098,721) (35,544)
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NET INCREASE IN NET ASSETS 4,793,130 10,579
NET ASSETS:
Beginning of period 15,745,934 15,735,355
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End of period $ 20,539,065 $ 15,745,934
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE THERMO OPPORTUNITY FUND, INC.
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
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Six Months
Ended Year Year Year Period
May 31, Ended Ended Ended Ended
2000 November 30, November 30, November 30, November 30,
(Unaudited) 1999 1998 1997 1996 (A)
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<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period $ 8.97 $ 8.94 $ 12.02 $ 13.66 $ 14.10
Income (loss) from investment operations:
Net investment income (loss) (0.09) (0.12) (0.19) (0.17) 0.07
Net realized and unrealized gains (losses) on investments 4.05 0.15 (2.89) (1.41) (0.42)
-------- -------- -------- -------- --------
Total from investment operations 3.96 0.03 (3.08) (1.58) (0.35)
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income -- -- -- (0.06) --
-------- -------- -------- -------- --------
Effect of initial public offering costs -- -- -- -- (0.09)
-------- -------- -------- -------- --------
Net asset value at end of period $ 12.93 $ 8.97 $ 8.94 $ 12.02 $ 13.66
======== ======== ======== ======== ========
Market value at end of period $ 12.56 $ 7.44 $ 7.25 $ 9.50 $ 13.75
======== ======== ======== ======== ========
Total investment return based on net asset value 44.15% 0.34% (25.62%) (11.59%) (3.12%)
======== ======== ======== ======== ========
Total investment return based on market value 68.82% 2.59% (23.68%) (30.56%) (2.48%)
======== ======== ======== ======== ========
Net assets at end of the period (000's) $ 20,539 $ 15,746 $ 15,735 $ 21,158 $ 24,048
======== ======== ======== ======== ========
Ratio of net expenses to average net assets (B) 3.33%(C) 2.00% 1.78% 1.66% 1.53%(C)
Ratio of net investment income (loss) to average net assets (1.39%)(C) (1.27%) (1.66%) (1.33%) 1.62%(C)
Portfolio turnover rate 111%(C) 56% 37% 47% 12%(C)
</TABLE>
(A) Represents the period from the initial public offering of shares (August 6,
1996) through November 30, 1996. No income was earned or expenses incurred
from the commencement of operations through the date of initial public
offering.
(B) Absent fee waivers, the ratio of expenses to average net assets would have
been 2.24%, 1.81%, and 1.56% (C) for the periods ended November 30, 1999,
1998, 1997, and 1996, respectively (Note 3).
(C) Annualized.
See accompanying notes to financial statements.
<PAGE>
THE THERMO OPPORTUNITY FUND, INC.
PORTFOLIO OF INVESTMENTS
MAY 31, 2000 (Unaudited)
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MARKET
SHARES COMMON STOCKS - 30.9% VALUE
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BIO-MEDICAL PRODUCTS - 21.8%
325,400 Thermedics, Inc.* $ 2,745,563
163,200 Thermo Cardiosystems, Inc.* 1,601,400
68,400 Trex Medical Corp.* 128,250
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4,475,213
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ADVANCED TECHNOLOGIES - 7.6%
156,100 ThermoTrex Corp.* 1,551,244
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PRIVATE PLACEMENTS(A) - 0.8%
50,000 Thermo Trilogy Corp.* (Environmental Services) 165,000
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ALTERNATIVE ENERGY SYSTEMS - 0.7%
87,700 KFX, Inc.* 153,475
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TOTAL COMMON STOCKS (Cost $6,281,689) $ 6,344,932
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FACE MARKET
AMOUNT REPURCHASE AGREEMENTS(B) - 71.1% VALUE
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$ 14,603,154 Fifth Third Bank, 5.90%, dated 5/31/00,
due 6/01/00, repurchase proceeds $14,605,547
(Cost $14,603,154) $ 14,603,154
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TOTAL INVESTMENT SECURITIES - 102.0%
(Cost $20,884,843) $ 20,948,086
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.0%) (409,021)
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NET ASSETS - 100.0% $ 20,539,065
============
* Non-income producing security.
(A) Valued at fair value as determined in good faith by the Adviser consistent
with procedures approved by the Board of Directors.
(B) Repurchase agreements are fully collateralized by U.S. Government
obligations.
See accompanying notes to financial statements.
<PAGE>
THE THERMO OPPORTUNITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The Thermo Opportunity Fund, Inc. (the Fund) was organized under Maryland law on
May 16, 1996 as a non-diversified, closed-end investment company. The Fund
commenced operations on June 19, 1996, when Brundage, Story and Rose, LLC (the
Adviser), purchased 6,667 shares at $15 per share to provide the Fund with its
initial $100,000 of capital. The Fund commenced the public offering of shares on
August 6, 1996. The Fund is listed on the American Stock Exchange with a symbol
of "TMF."
The Fund's investment objective is to seek long-term capital appreciation. The
Fund seeks to achieve its investment objective by investing primarily in
securities issued by direct and indirect subsidiaries of Thermo Electron
Corporation (Thermo Electron). The Fund may also invest in securities issued by
companies not affiliated with Thermo Electron which either (i) engage in the
same or related industries as Thermo Electron or one or more of its subsidiaries
or (ii) practice a spin-out strategy similar to that practiced by Thermo
Electron.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued weekly (each
Friday) and on the last business day of each month as of the close of the
regular session of trading on the New York Stock Exchange (normally 4:00 p.m.,
Eastern time). Portfolio securities listed on stock exchanges and securities
traded in the over-the-counter market are valued at the last sale price as of
the close of business on the day the securities are being valued. Securities not
traded on a particular day, or for which the last sale price is not readily
available, are valued at the closing bid price quoted by brokers that make
markets in the securities. Corporate bonds are valued at their most recent bid
price as obtained from one or more of the major market makers for such
securities or are valued at an estimated fair value obtained from an independent
pricing service based upon such factors as maturity, coupon, issuer and type of
security. If market quotations are not readily available, securities will be
valued at fair value as determined in good faith by the Adviser consistent with
procedures approved by the Board of Directors.
Repurchase agreements -- Repurchase agreements, which are collateralized by U.S.
Government obligations, are valued at cost which, together with accrued
interest, approximates market. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Fund's custodian at the Federal
Reserve Bank. At the time the Fund enters into a repurchase agreement, the
seller agrees that the value of the underlying securities, including accrued
interest, will be equal to or exceed the face amount of the repurchase
agreement. The Fund enters into repurchase agreements only with institutions
deemed to be creditworthy by the Adviser, including banks having assets in
excess of $10 billion and primary U.S. Government securities dealers.
Share valuation -- The net asset value of the Fund is calculated weekly (each
Friday) and on the last business day of each month by dividing the total value
of the Fund's assets,
<PAGE>
less liabilities, by the number of shares outstanding.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Discounts and premiums on securities purchased
are accreted/amortized in accordance with income tax regulations.
Distributions to shareholders -- Dividends arising from net investment income,
if any, are declared and paid annually. Net realized short-term capital gains,
if any, may be distributed throughout the year and net realized long-term
capital gains, if any, are distributed at least once each year. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are accounted for on a specific identification basis.
Organization expenses -- Expenses of organization, net of certain expenses paid
by the Adviser, have been capitalized and are being amortized on a straight-line
basis over five years.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities at the
date of the financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code available to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
fiscal year ended November 30) plus undistributed amounts from prior years.
As of May 31, 2000, net unrealized appreciation on investments was $63,242,
based on a federal income tax cost basis of $20,884,843, of which $1,103,877,
related to appreciated securities and $1,040,635, related to depreciated
securities.
As of May 31, 2000, the Fund had capital loss carryforwards for federal income
tax purposes of $2,188,029, none of which expire prior to November 30, 2007.
These capital loss carryforwards may be utilized in the current and future years
to offset net realized capital gains prior to distributing such gains to
shareholders.
2. INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales and maturities of investment
securities, other than short-term investments, amounted to $7,381,157 and
$23,398,134, respectively, during the six-months ended May 31, 2000.
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
Certain Directors and officers of the Fund are principals of the Adviser.
Certain officers of the Fund are officers of Integrated Fund Services, Inc.
(IFS), the administrative services agent for the Fund.
ADVISORY AGREEMENT
The Fund's investments are managed by the Adviser pursuant to the terms of an
Advisory Agreement. Under the Advisory Agreement, the Fund pays the Adviser a
fee, computed and accrued daily and paid monthly, at an annual rate of 0.80% of
its average daily net assets.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of the Administrative Services Agreement between the Fund and
IFS, IFS supplies non-investment related statistical and research data, internal
regulatory compliance services and executive and administrative services for the
Fund. IFS calculates the weekly and month end net asset value per share and
maintains the financial books and records of the Fund, supervises the
preparation of tax returns, reports to shareholders of the Fund, reports to and
filings with the Securities and Exchange Commission, and materials for meetings
of the Board of Directors. For the performance of these administrative services,
IFS receives a monthly fee based on the Fund's average daily net assets, subject
to a $5,000 monthly minimum.
4. STOCK REPURCHASE PROGRAM
On April 20, 1999, the Board of Directors authorized the Fund to purchase, from
time to time, up to 25% of its common stock in the open market. As of May 31,
2000, 172,200 shares had been repurchased under the stock repurchase program.
5. FUND LIQUIDATION
On November 4, 1999, the Board of Directors approved a Plan of Liquidation and
Dissolution of the Fund (the Plan), to become effective as soon as practicable
as deemed by the Adviser. The Plan was ratified and confirmed on January 31,
2000 and subsequently approved by shareholders on April 11, 2000. The Plan
called for the Fund's assets to be liquidated and distributed in a timely and
efficient manner in order to realize maximum shareholder value. The Board of
Directors authorized the Adviser to use its best judgment, with due regard to
maximizing shareholder value, as to the exact timing of the liquidation.
On July 17, 2000, the Fund distributed substantially all of its net assets to
shareholders of record as of that date. Accordingly, the Fund's common stock
traded "ex-dividend" on July 18, 2000, and the American Stock Exchange suspended
trading of the Fund's common stock immediately prior to the opening of the
Exchange on that date.
