<PAGE>
Salomon Brothers
Opportunity Fund Inc
April 14, 1997
Dear Shareholder:
THE NET ASSET VALUE of each of your shares at February 28, 1997 was $43.80,
equivalent to $46.04 assuming the distributions from income and capital gains
paid in December 1996 were reinvested in additional shares of the Fund.
This represented an increase of 21.5% from $37.89 on August 31, 1996,
compared with an increase of 22.5% for the Standard & Poor's Index of 500
Stocks.
AT FEBRUARY 28, 1997, the Fund was 89.5% invested in common stocks; 10.5% of the
Fund's net assets was held in cash or its equivalent.
ON THE FOLLOWING PAGES you will find unaudited financial statements of the Fund
at February 28, 1997 and an unaudited list of portfolio changes for the six
months ended on that date.
IF YOU WOULD LIKE to open an IRA or have any questions about the Fund, please
call 1-800-SALOMON (1-800-725-6666).
WE APPRECIATE THE CONFIDENCE you have demonstrated in the past and hope to
continue to serve you in future years.
Cordially,
/s/
Irving Brilliant
President and Portfolio Manager
Page 1
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Results of an Investment in Salomon Brothers Opportunity Fund Inc
The average annual total return over the periods indicated below shows
the average annual percentage change in value of an investment in the Fund
from the beginning of the measuring period to the end of the measuring
period. These figures represent past performance; they reflect changes in
the price of the Fund's shares and assume that any income dividends and/or
capital gain distributions made by the Fund during the period were reinvested
in additional shares of the Fund. Investment return and share price of the
Fund will fluctuate. Shares when redeemed may be worth more or less than
original cost. When considering "average" total return figures for periods
longer than one year, it is important to note that the Fund's annual total
return for any one year in the period might have been greater or less than
the average for the entire period.
The Fund's average annual total return for the periods indicated was as
follows:
+21.77% for the one-year period beginning March 1, 1996 and ended February 28,
1997;
+16.61% for the five-year period beginning March 1, 1992 and ended
February 28, 1997;
+12.61% for the ten-year period beginning March 1, 1987 and ended February
28, 1997.
Portfolio Changes six months ended February 28, 1997 (unaudited)
ADDITIONS+
- ------------------------------------------------
Shares
Increased
-----------
Amcast Industrial................. 2,500
AmerUs Life Holdings.............. 16,800(1)
CNA Financial..................... 3,000
Citation.......................... 17,000(1)
Cone Mills........................ 16,500(1)
El Chico Restaurants.............. 2,600
Guilford Mills.................... 2,500(1)
Heritage Media, Class A........... 3,000
Humana............................ 14,000
Inso.............................. 5,000(1)
MotivePower Industries............ 10,000(1)
Neiman-Marcus Group............... 6,000(1)
Overseas Shipholding Group........ 18,000
Reliance Group Holdings........... 8,000(1)
TRC Companies..................... 19,500
REDUCTIONS
- ------------------------------------------------
Shares
Decreased
-----------
APL............................... 16,000
Alexander & Baldwin............... 1,500
Archer-Daniels-Midland............ 6,000
Crown Crafts...................... 8,000
Federal Home Loan Mortgage........ 24,000
Intel............................. 3,000
International Business Machines... 5,000(2)
KeyCorp........................... 3,400(2)
Leucadia National................. 4,000
Loews............................. 7,000
McKesson.......................... 6,000(2)
Merck............................. 5,000(2)
New Germany Fund.................. 7,907
OMI............................... 6,000(2)
Trenwick Group.................... 300
Wellpoint Health Networks......... 4,801
- -------------
(1) New addition (2) Elimination
+This list excludes changes resulting entirely from stock dividends and stock
splits.
Page 2
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Statement of Net Assets February 28, 1997 (unaudited)
COMMON STOCKS -- 89.5% of Net Assets
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Value
Shares Cost (Note 1a)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Banks - 15.6%
484,488 Bank of New York....................................... $ 2,721,411 $ 18,773,910
12,500 Bankers Trust NY....................................... 559,920 1,134,375
46,000 BanPonce............................................... 701,900 1,656,000
53,120 First Chicago NBD...................................... 570,621 3,107,520
20,000 First Hawaiian......................................... 517,800 665,000
5,500 Mercantile Bancorporation.............................. 45,630 318,313
---------- -----------
5,117,282 25,655,118
---------- -----------
Basic Industry - 7.1%
5,000 ASARCO................................................. 157,800 156,250
29,500 Amcast Industrial...................................... 538,624 682,188
5,000 Champion International................................. 200,300 220,625
17,000 Citation *............................................. 172,350 223,125
16,500 Cone Mills *........................................... 132,928 129,938
11,000 Crown Crafts........................................... 133,410 127,875
8,000 Deltic Timber.......................................... 85,962 198,000
2,500 Guilford Mills......................................... 59,213 71,563
9,500 International Shipholding.............................. 162,883 166,250
13,000 Mississippi Chemical................................... 271,014 318,500
85,500 Monsanto............................................... 1,050,826 3,110,063
10,000 MotivePower Industries *............................... 62,125 107,500
18,000 NL Industries.......................................... 199,350 204,750
11,077 Newmont Mining......................................... 289,765 526,158
14,000 Rayonier............................................... 404,730 532,000
4,000 Stone Container........................................ 70,240 52,000
87,500 TRC Companies *........................................ 565,847 360,938
40,100 Tecumseh Products, Class A............................. 1,106,775 2,295,725
41,000 Tecumseh Products, Class B............................. 1,721,035 2,265,250
---------- -----------
7,385,177 11,748,698
---------- -----------
Biotechnology & Drugs - 1.3%
20,000 Genzyme *.............................................. 277,571 515,000
30,800 Medeva-- ADR........................................... 301,498 631,400
25,375 Pharmacia & Upjohn..................................... 507,498 935,703
---------- -----------
1,086,567 2,082,103
---------- -----------
Construction - 1.2%
26,700 Ameron................................................. 526,254 1,298,288
34,250 Liberty Homes, Class A................................. 435,000 428,125
24,750 Liberty Homes, Class B................................. 325,688 326,391
---------- -----------
1,286,942 2,052,804
---------- -----------
</TABLE>
Page 3
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Statement of Net Assets February 28, 1997 (unaudited) (continued)
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Value
Shares Cost (Note 1a)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer Goods - 4.4%
43,000 Alexander & Baldwin.................................... $ 222,979 $ 1,150,250
4,729 Ames Dept Stores, Warrants, Series C *................. 4,729 38,423
21,300 Archer-Daniels-Midland................................. 305,527 394,050
19,000 El Chico Restaurants *................................. 69,419 131,813
100,000 Philips Electronics N.V................................ 1,281,995 4,500,000
6,000 Neiman-Marcus Group *.................................. 138,360 161,250
31,500 Waban *................................................ 332,240 901,688
---------- -----------
2,355,249 7,277,474
---------- -----------
Energy - 8.3%
14,000 Gilbert Associates, Class A............................ 157,790 239,750
31,000 Global Industrial Technologies *....................... 284,013 550,250
28,000 Murphy Oil............................................. 773,903 1,298,500
67,000 Royal Dutch Petroleum, 5 Guilder....................... 1,664,599 11,591,000
---------- -----------
2,880,305 13,679,500
---------- -----------
Finance - 11.5%
120,000 Federal Home Loan Mortgage............................. 318,200 3,570,000
57,800 Leucadia National...................................... 153,597 1,538,925
118,000 Loews.................................................. 2,610,514 12,050,750
5,481 NationsBank............................................ 18,168 328,175
22,093 New Germany Fund....................................... 210,214 298,256
48,000 Pioneer Group.......................................... 167,500 1,122,000
---------- -----------
3,478,193 18,908,106
---------- -----------
Health Care - 1.5%
5,250 Bergen Brunswig, Class A............................... 96,675 168,656
19,000 Foundation Health *.................................... 360,890 717,250
8,095 Horizon/CMS Healthcare *............................... 123,392 132,556
37,000 Humana................................................. 456,345 726,125
18,077 Wellpoint Health Networks *............................ 771,342 775,051
---------- -----------
1,808,644 2,519,638
---------- -----------
Insurance-Life, Accident & Health - 6.2%
7,500 American International Group........................... 440,675 907,500
16,800 AmerUs Life Holdings................................... 318,552 352,800
12,000 Aon.................................................... 293,390 760,500
8,400 Delphi Financial Group, Class A *...................... 136,500 285,600
37,125 Fremont General........................................ 571,663 1,071,984
5,900 Kansas City Life Insurance............................. 293,813 401,200
3,000 Protective Life........................................ 68,216 129,000
10,000 Provident Companies.................................... 180,500 545,000
46,000 UNUM................................................... 644,644 3,536,250
45,000 USLIFE................................................. 614,832 2,143,119
---------- -----------
3,562,785 10,132,953
---------- -----------
</TABLE>
Page 4
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Statement of Net Assets February 28, 1997 (unaudited) (continued)
COMMON STOCKS (continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Value
Shares Cost (Note 1a)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Insurance-Property & Casualty - 20.4%
39,600 Allmerica Property & Casualty Companies................ $ 696,152 $ 1,242,450
36,000 CNA Financial *........................................ 1,354,958 4,005,000
328,000 Chubb.................................................. 2,802,937 19,229,000
40,000 Merchants Group........................................ 600,000 720,000
22,000 Old Republic International............................. 353,680 596,750
110,375 Orion Capital.......................................... 1,613,477 7,064,000
8,000 Reliance Group Holdings................................ 65,480 87,000
15,200 Trenwick Group......................................... 436,813 748,600
----------- -----------
7,923,497 33,692,800
----------- -----------
Real Estate - 2.7%
59,850 Forest City Enterprises, Class A....................... 845,723 2,902,725
31,050 Forest City Enterprises, Class B, Conv................. 364,301 1,548,619
----------- -----------
1,210,024 4,451,344
----------- -----------
Technology - 1.8%
8,500 Apple Computer......................................... 319,750 138,125
4,000 First Data............................................. 152,120 146,500
5,000 Inso *................................................. 192,750 173,125
12,000 Intel.................................................. 99,250 1,702,500
20,000 National Semiconductor *............................... 313,700 522,500
13,802 Silicon Graphics *..................................... 280,170 332,973
----------- -----------
1,357,740 3,015,723
----------- -----------
Telecommunications/Media - 0.2%
15,000 Heritage Media, Class A *.............................. 155,595 168,750
5,800 Time Warner............................................ 123,185 237,800
----------- -----------
278,780 406,550
----------- -----------
Transportation - 7.3%
39,600 AMR *.................................................. 1,828,141 3,113,550
114,000 APL.................................................... 1,009,244 2,622,000
52,000 Airborne Freight....................................... 515,758 1,423,500
33,000 Canadian Pacific....................................... 528,285 816,750
42,000 General Dynamics....................................... 928,543 2,824,500
9,000 Lockheed Martin........................................ 308,520 796,500
23,100 Overseas Shipholding Group............................. 369,929 401,363
----------- -----------
5,488,420 11,998,163
----------- -----------
TOTAL COMMON STOCKS.................................... $45,219,605 147,620,974
=========== ===========
</TABLE>
Page 5
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Statement of Net Assets February 28, 1997 (unaudited) (concluded)
CORPORATE SHORT-TERM NOTES -- 10.5%
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Principal Value
Amount (Note 1a)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$5,513,000 American Express Credit, 5.27%, due 03/05/97......................... $ 5,513,808
6,696,000 Chevron Oil Finance, 5.27%, due 03/03/97............................. 6,698,943
5,056,000 Ford Motor Credit, 5.28%, due 03/04/97............................... 5,057,484
------------
TOTAL CORPORATE SHORT-TERM NOTES..................................... 17,270,235
------------
CASH AND RECEIVABLES - 0.1%............................ $ 112,637
LIABILITIES - (0.1)%................................... (159,230) (46,593)
----------- ------------
NET ASSETS - 100% -- equivalent to $43.80, offering and
redemption price per share on 3,763,714 shares of $.01 par
value capital stock outstanding:
15,000,000 shares authorized....................................... $164,844,616
============
Net Assets Consist of:
Capital stock........................................................ $ 37,637
Additional paid-in capital........................................... 60,866,497
Undistributed net investment income.................................. 26,659
Undistributed net realized gain...................................... 1,512,454
Net unrealized appreciation.......................................... 102,401,369
------------
Net Assets - 100.0%.................................................. $164,844,616
============
<FN>
==============================
*Non-income producing security.
</TABLE>
See accompanying notes to financial statements.
Page 6
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Statement of Operations for the six months ended February 28, 1997 (unaudited)
Investment Income
<TABLE>
<S> <C> <C>
Income
Dividends (net of foreign withholding taxes of $27,183) ............................. $ 1,254,299
Interest............................................................................. 511,643
------------
1,765,942
Expenses
Management fee......................................................... $ 769,284
Shareholder services................................................... 33,485
Legal.................................................................. 28,960
Custodian.............................................................. 23,530
Audit and tax return preparation fees.................................. 19,005
Printing............................................................... 10,860
Registration and filing fees........................................... 10,860
Other.................................................................. 3,620 899,604
---------- ------------
Net investment income................................................................ 866,338
------------
Net Realized and Unrealized Gain on Investments
Net realized gain on investments..................................................... 2,073,818
Increase in net unrealized appreciation.............................................. 26,960,143
------------
Net realized gain and increase in net unrealized appreciation........................ 29,033,961
------------
Net increase in net assets resulting from operations................................. $29,900,299
============
</TABLE>
See accompanying notes to financial statements.
Page 7
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended Year Ended
February 28, 1997 August 31,
(unaudited) 1996
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income...................................... $ 866,338 $ 2,226,491
Net realized gain on investments........................... 2,073,818 5,924,655
Increase in net unrealized appreciation.................... 26,960,143 6,598,349
------------ -------------
Net increase in net assets resulting from operations....... 29,900,299 14,749,495
------------ -------------
Distributions to Shareholders from
Net investment income...................................... (2,272,506) (1,749,572)
Net realized gain on investments........................... (5,571,305) (4,957,121)
------------ ------------
(7,843,811) (6,706,693)
------------ ------------
Capital Share Transactions
Proceeds from sales of 119,753 and 541,164 shares,
respectively............................................. 4,998,310 20,104,930
Net asset value of 149,980 and 157,728 shares, respectively,
issued in reinvestment of net investment income and net
realized gain distributions.............................. 6,273,115 5,716,069
Payment for redemption of 253,762 and 621,760 shares,
respectively............................................. (10,467,462) (23,116,339)
------------ ------------
Change in net assets resulting from capital share transactions,
representing net increase of 15,971 and 77,132 shares,
respectively............................................. 803,963 2,704,660
------------ ------------
Total increase in net assets............................... 22,860,451 10,747,462
Net Assets
Beginning of period........................................ 141,984,165 131,236,703
------------ ------------
End of period (includes undistributed net investment income of
$26,659 and $1,432,827, respectively).................... $164,844,616 $141,984,165
============ ============
</TABLE>
See accompanying notes to financial statements.
Page 8
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Notes to Financial Statements (unaudited)
1. Significant Accounting Policies
The Fund is registered as a non-diversified, open-end management
investment company under the Investment Company Act of 1940, as amended. The
Fund's primary objective is to achieve above-average long-term capital
appreciation. Current income is a secondary objective. The following is a
summary of significant accounting policies consistently followed by the Fund
in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements in accordance with GAAP requires
management to make estimates of certain reported amounts in the financial
statements. Actual amounts could differ from those estimates.
(a) Securities Valuation. Portfolio securities listed or traded
on national securities exchanges, or reported on the NASDAQ national market
system, are valued at the last sale price, or if there have been no sales on
that day, at the mean of the current bid and ask price which represents the
current value of the security. Over-the-counter securities are valued at the
mean of the current bid and ask price. If no quotations are readily available
(as may be the case for securities of limited marketability), such
portfolio securities are valued at a fair value determined pursuant to
procedures established by the Board of Directors. Corporate short-term
notes with maturities of 60 days or less at date of purchase are valued at
cost plus interest earned, which approximates market value.
(b) Federal Income Taxes. The Fund has complied and intends
to continue to comply with the requirements of the Internal Revenue Code of
1986, as amended, applicable to regulated investment companies, and to
distribute all of its taxable income to its shareholders. Therefore, no
Federal income tax or excise tax provision is required.
(c) Dividends and Distributions. The Fund declares and pays
dividends from net investment income and distributions from net realized
gains, if any, annually. Dividends and distributions to shareholders are
recorded on the ex-dividend date. The amount of dividends and distributions
from net investment income and net realized gains are determined in
accordance with federal income tax regulations, which may differ from GAAP.
These differences are due primarily to deferral of wash sale and
post-October losses. Permanent book/tax differences are reclassified within
the capital accounts based on their federal income tax basis treatment;
temporary differences do not require reclassifications. Dividends and
distributions which exceed net investment income and net realized gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income and distributions in
excess of net realized capital gains.
(d) Other. Securities transactions are recorded as of the trade
date. Dividend income and dividends payable are recorded on the
ex-dividend date. Interest income is recognized when earned. Noncash
dividend income is recorded based on market or fair value of property
received. Gains or losses on sales of securities are calculated for
financial accounting and Federal income tax purposes on the identified
cost basis.
Page 9
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Notes to Financial Statements (unaudited) (concluded)
2. Capital Stock
There was no payable for Fund shares redeemed at February 28, 1997.
3. Management Fee and Other Transactions
The Fund retains Salomon Brothers Asset Management Inc ("SBAM"),
an indirect wholly-owned subsidiary of Salomon Inc ("Salomon"), to act
as investment manager of the Fund subject to supervision by the Board of
Directors of the Fund. SBAM furnishes the Fund with office space and pays the
compensation of its officers. The management fee for these services is payable
monthly at an annual rate of 1% of average daily net assets. The management
fee payable at February 28, 1997 was $126,326.
4. Portfolio Activity
The cost of securities purchased and proceeds from securities
sold (excluding corporate short-term notes) during the six months ended
February 28, 1997 aggregated $2,771,320 and $4,800,797, respectively.
Cost of securities held (excluding corporate short-term notes) on
February 28, 1997 for Federal income tax purposes was substantially the same
as for book purposes. As of February 28, 1997, gross unrealized
appreciation and depreciation, based on cost for Federal income tax purposes,
was approximately $102,666,713 and $265,344, respectively, resulting
in net unrealized appreciation of approximately $102,401,369.
Page 10
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Financial Highlights
Selected data per share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
Six Months Ended
February 28, Year Ended August 31,
------------------------------------------------------
1997* 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $37.89 $35.75 $31.47 $31.91 $27.64 $25.16
------ ------ ------ ------ ------ ------
Net investment income............ .24 .60 .45 .42 .57 .36
Net gains (or losses) on securities
(both realized and unrealized). 7.81 3.38 5.68 1.48 4.85 2.79
------ ------ ------ ------ ------ ------
Total from investment operations 8.05 3.98 6.13 1.90 5.42 3.15
------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income (.62) (.48) (.37) (.64) (.345) (.50)
Distributions from net realized gain
on investments................. (1.52) (1.36) (1.48) (1.70) (.805) (.17)
------ ------ ------ ------ ------ ------
Total dividends and distributions (2.14) (1.84) (1.85) (2.34) (1.15) (.67)
------ ------ ------ ------ ------ ------
Net asset value, end of period.... $43.80 $37.89 $35.75 $31.47 $31.91 $27.64
====== ====== ====== ====== ====== ======
Total investment return based on net
asset value per share.......... +21.5% +11.4% +21.1% +6.4% +20.2% +12.9%
Ratios/Supplemental Data:
Net assets, end of period (thousands) $164,845 $141,984 $131,237 $118,755 $116,607 $101,679
Ratio of expenses to average net assets 1.17%** 1.18% 1.18% 1.22% 1.23% 1.25%
Ratio of net investment income to
average net assets............. 1.13%** 1.59% 1.39% 1.29% 1.86% 1.28%
Portfolio turnover rate.......... 2% 5% 8% 13% 10% 11%
Average broker commission rate... $0.5763 $0.0591 -- -- -- --
<FN>
- ------------------------
* Unaudited.
** Annualized.
</TABLE>
See accompanying notes to financial statements.
Page 11
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Directors
IRVING BRILLIANT
President
BENITO GAGUINE
Attorney at Law
ROSALIND A. KOCHMAN
Administrator and counsel,
Kochman Eye Surgical Facility
IRVING SONNENSCHEIN
Partner of law firm of Sonnenschein,
Sherman &Deutsch
Officers
IRVING BRILLIANT
President and Portfolio Manager
LAWRENCE H. KAPLAN
Executive Vice President and General Counsel
ALAN M. MANDEL
Treasurer
JENNIFER G. MUZZEY
Secretary
JANET S. TOLCHIN
Assistant Treasurer
NOEL B. DAUGHERTY
Assistant Secretary
Salomon Brothers Opportunity Fund Inc
7 World Trade Center
New York, New York 10048
1-800-SALOMON (1-800-725-6666)
INVESTMENT MANAGER
Salomon Brothers Asset Management Inc
7 World Trade Center
New York, New York 10048
DISTRIBUTOR
Salomon Brothers Inc
7 World Trade Center
New York, New York 10048
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
DIVIDEND DISBURSING AND TRANSFER AGENT
First Data Investor Services Group, Inc.
53 State Street
Boston, Massachusetts 02109-2873
LEGAL COUNSEL
Simpson Thacher & Bartlett
New York, New York 10017-3909
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of
Salomon Brothers Opportunity Fund Inc. It is not authorized for distribution to
prospective investors unless accompanied or preceded by an effective Prospectus
for the Fund, which contains information concerning the Fund's investment
policies and expenses as well as other pertinent information.
- --------------------------------------------------------------------------------
Page 12
<PAGE>
Salomon Brothers Asset Management
P.O. Box 9109
Boston, MA 02205-9109
Salomon Brothers
Opportunity Fund Inc
Semi-Annual Report
FEBRUARY 28, 1997
- --------------------------------------------------------------------------------
Salomon Brothers Asset Management
- --------------------------------------------------------------------------------
FIRST-CLASS
U.S. POSTAGE
PAID
BOSTON, MA
PERMIT No. 54201
