Salomon Brothers October 11, 1997
Opportunity Fund Inc
Dear Shareholder:
THE NET ASSET VALUE of each of your shares at August 31, 1997 was $50.64,
equivalent to $53.23 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 40.5% from $37.89 on August 31, 1996, compared with
an increase of 40.6% for the Standard & Poor's Index of 500 Stocks.
THE FUND PERFORMED very well during the fiscal year ended August 31, 1997, with
returns virtually identical to the performance of the Standard & Poor's Index of
500 Stocks. This was the case despite the fact that we maintained throughout the
year a significant cash position.
WE HAVE ALSO CONTINUED to manage the Fund to avoid realizing significant
long-term capital gains and the tax impact of those gains on our shareholders.
This reflects our view that the Fund's current portfolio continues to have
long-term growth potential. However, now that the U.S. long-term capital gains
rate has been reduced from 28% to 20%, we may take advantage of selling
opportunities if we believe there are attractive reinvestment options.
OUR CASH POSITION HAS NOT changed significantly in absolute terms from last
year's. However, because of the rise in value of the other assets, the cash
percentage has declined from 15% to 10%. The cash position continues to provide
a measure of protection in case of a stock market decline.
OUR CURRENT INVESTMENT posture has not changed. We are of course leery about the
high stock market but we continue to have confidence in our significant
long-term holdings.
AT AUGUST 31, 1997, the Fund was 90.0% invested in common stocks; 10.0% of the
Fund's net assets was held in cash or its equivalent.
ON SEPTEMBER 24, 1997, Travelers Group ("Travelers") and Salomon Inc,
("Salomon"), the ultimate parent company of Salomon Brothers Asset Management
Inc ("SBAM"), announced their agreement (the "Transaction") to merge Salomon
with and into Smith Barney Holdings Inc., a subsidiary of Travelers, to form a
new company expected to be called Salomon Smith Barney Holdings Inc. Travelers
is a diversified financial services company engaged in investment services,
asset management, consumer finance and life and property casualty insurance
services.
Page 1
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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
THE TRANSACTION is expected to be completed by the end of November 1997, subject
to a number of conditions, including the receipt of U.S. and foreign regulatory
approvals and the approval of Salomon stockholders. Upon consummation of the
Transaction, Travelers will become the ultimate parent of SBAM, which will
continue to serve as investment adviser to the Fund.
ON THE FOLLOWING PAGES you will find audited financial statements of the Fund at
August 31, 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 1-888-777-0102, toll free.
WE APPRECIATE THE CONFIDENCE you have demonstrated in the past and hope to
continue to serve you in future years.
Cordially,
/s/ Irving Brilliant
Irving Brilliant
President and Portfolio Manager
Page 2
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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
Set forth below are average annual total return figures for the periods
indicated and a graph showing the value of a hypothetical $10,000 investment
made in Salomon Brothers Opportunity Fund Inc on August 31, 1987. The average
annual total return figures and the information in the graph 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.
AVERAGE ANNUAL TOTAL RETURN
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. When considering "average" total
return 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:
+40.49% for the one-year period beginning September 1, 1996 and ended
August 31, 1997;
+19.36% for the five-year period beginning September 1, 1992 and ended
August 31, 1997;
+12.80% for the ten-year period beginning September 1, 1987 and ended
August 31, 1997.
PERFORMANCE COMPARISON -- GROWTH OF $10,000
Salomon Brothers
Date S&P 500 Opportunity Fund Inc
8/87 10,000 10,000
8/88 9,382 8,218
8/89 12,471 11,435
8/90 9,898 10,861
8/91 12,194 13,787
8/92 13,768 14,906
8/93 16,549 17,168
8/94 17,608 18,110
8/95 21,316 21,984
8/96 23,739 26,102
8/97 33,351 36,708
Past performance is not predictive of future performance
Page 3
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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
Major Portfolio Changes six months ended August 31, 1997 (unaudited)
ADDITIONS+
- ------------------------------------------------
Shares
Increased
-------------
Angeion........................... 10,000(1)
BJ's Wholesale Club............... 31,500(1)
Deltic Timber..................... 3,000
Dravo............................. 19,400(1)
Forest City Enterprises, Class A.. 4,000
IBP............................... 7,200(1)
Inso.............................. 5,000
Intercargo........................ 5,000(1)
Leucadia National................. 2,500
Loews............................. 2,500
Mississippi Chemical.............. 8,000
National Processing............... 8,000(1)
Old Republic International........ 8,000
Popular........................... 9,000
Provident Companies............... 4,000
Rayonier.......................... 6,000
Tecumseh Products, Class B........ 6,000
Wellpoint Health Networks......... 4,000
REDUCTIONS
- -----------------------------------------------
Shares
Decreased
-----------
Alexander & Baldwin............... 7,500
Amcast Industrial................. 4,600
American General.................. 4,000
Aon............................... 4,000
Archer-Daniels-Midland............ 4,200
Bank of New York.................. 5,000
Bankers Trust NY.................. 2,500
Bergen Brunswig, Class A.......... 6,562(2)
Citation.......................... 10,000
Cone Mills........................ 6,800
Crown Crafts...................... 4,800
First Chicago NBD................. 3,000
First Hawaiian.................... 20,000(2)
Foundation Health................. 17,000
Liberty Homes, Class A............ 200
National Semiconductor............ 10,000
Neiman Marcus Group............... 6,000(2)
New Germany Fund.................. 5,000
Pharmacia & Upjohn................ 4,000
Protective Life................... 3,000(2)
Saliant 3 Communications, Class A. 10,000
Silicon Graphics.................. 3,000
Tecumseh Products, Class A........ 6,000
Trenwick Group.................... 4,300
UNUM.............................. 4,000
- ----------
(1) New addition (2) Elimination
+This list excludes changes resulting entirely from mergers, stock dividends
and stock splits.
Page 4
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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
<TABLE>
<CAPTION>
Statement of Net Assets August 31, 1997
COMMON STOCKS -- 90.0% OF NET ASSETS
- ----------------------------------------------------------------------------------------------------------------
VALUE
SHARES COST (NOTE 1A)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BANKS - 15.3%
479,488 Bank of New York....................................... $ 2,693,118 $ 21,397,152
10,000 Bankers Trust NY....................................... 426,645 1,037,500
50,120 First Chicago NBD...................................... 527,790 3,596,110
5,500 Mercantile Bancorporation.............................. 45,630 379,156
55,000 Popular................................................ 1,039,445 2,378,750
----------- ------------
4,732,628 28,788,668
----------- ------------
BASIC INDUSTRY - 7.0%
5,000 ASARCO................................................. 157,800 153,750
24,900 Amcast Industrial...................................... 452,423 603,825
5,000 Champion International................................. 200,300 295,938
7,000 Citation *............................................. 70,288 122,500
9,700 Cone Mills *........................................... 77,270 76,388
6,200 Crown Crafts........................................... 60,022 78,275
11,000 Deltic Timber.......................................... 167,179 325,188
19,400 Dravo *................................................ 206,527 224,313
3,750 Guilford Mills......................................... 59,213 81,563
5,000 Intercargo............................................. 46,500 66,875
9,500 International Shipholding.............................. 162,883 156,156
21,000 Mississippi Chemical................................... 445,494 455,438
85,500 Monsanto............................................... 1,050,826 3,756,656
10,000 MotivePower Industries *............................... 62,125 216,250
18,000 NL Industries *........................................ 199,350 238,500
8,000 National Processing.................................... 86,293 81,500
11,077 Newmont Mining......................................... 289,765 468,696
20,000 Rayonier............................................... 656,903 976,250
4,000 Stone Container........................................ 70,240 69,000
87,500 TRC Companies *........................................ 565,847 339,063
34,100 Tecumseh Products, Class A............................. 930,235 1,926,650
47,000 Tecumseh Products, Class B............................. 2,049,576 2,538,000
----------- ------------
8,067,059 13,250,774
----------- ------------
BIOTECHNOLOGY & DRUGS - 0.9%
20,000 Genzyme *.............................................. 274,285 562,500
30,800 Medeva-- ADR........................................... 301,498 440,825
21,375 Pharmacia & Upjohn..................................... 422,973 728,086
----------- ------------
998,756 1,731,411
----------- ------------
CONSTRUCTION - 1.1%
26,700 Ameron................................................. 526,254 1,560,281
34,050 Liberty Homes, Class A................................. 433,000 334,116
24,750 Liberty Homes, Class B................................. 325,688 252,141
----------- ------------
1,284,942 2,146,538
----------- ------------
Page 5
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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 August 31, 1997 (continued)
<TABLE>
<CAPTION>
COMMON STOCKS (continued)
- ----------------------------------------------------------------------------------------------------------------
VALUE
SHARES COST (NOTE 1A)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CONSUMER GOODS - 5.4%
35,500 Alexander & Baldwin.................................... $ 169,490 $ 958,500
4,729 Ames Dept Stores, Warrants, Series C, expires 01/31/99 * 4,729 75,664
10,000 Angeion................................................ 44,150 51,875
18,165 Archer-Daniels-Midland................................. 248,084 392,818
31,500 BJ's Wholesale Club *.................................. 257,773 909,563
19,000 El Chico Restaurants *................................. 69,419 191,188
31,500 Homebase............................................... 74,468 248,063
7,200 IBP.................................................... 170,582 165,150
100,000 Philips Electronics N.V................................ 1,281,995 7,162,500
----------- ------------
2,320,690 10,155,321
----------- ------------
ENERGY - 8.0%
28,000 Murphy Oil............................................. 773,903 1,503,250
268,000 Royal Dutch Petroleum, 5 Guilder....................... 1,664,599 13,601,000
----------- ------------
2,438,502 15,104,250
----------- ------------
FINANCE - 11.9%
45,810 American General....................................... 558,501 2,207,461
120,000 Federal Home Loan Mortgage............................. 318,200 3,907,500
60,300 Leucadia National...................................... 234,997 1,922,063
120,500 Loews.................................................. 2,843,477 12,283,469
5,481 NationsBank............................................ 18,168 325,434
17,093 New Germany Fund....................................... 155,734 243,575
48,000 Pioneer Group.......................................... 167,500 1,560,000
----------- ------------
4,296,577 22,449,502
----------- ------------
HEALTH CARE - 1.3%
7,700 Foundation Health Systems, Class A *................... 110,903 244,956
8,095 Horizon/CMS Healthcare *............................... 123,392 166,453
37,000 Humana *............................................... 456,345 871,813
22,077 Wellpoint Health Networks *............................ 872,533 1,200,437
----------- ------------
1,563,173 2,483,659
----------- ------------
INSURANCE-LIFE, ACCIDENT & HEALTH - 4.9%
11,250 American International Group........................... 440,675 1,061,719
16,800 AmerUs Life Holdings................................... 318,552 483,000
14,000 Aon.................................................... 225,692 713,125
8,568 Delphi Financial Group, Class A........................ 136,500 375,386
37,125 Fremont General........................................ 571,663 1,480,359
5,900 Kansas City Life Insurance............................. 293,813 480,850
14,000 Provident Companies.................................... 395,740 911,750
88,000 UNUM................................................... 540,274 3,630,000
----------- ------------
2,922,909 9,136,189
----------- ------------
Page 6
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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 August 31, 1997 (continued)
<TABLE>
<CAPTION>
COMMON STOCKS (continued)
- ----------------------------------------------------------------------------------------------------------------
VALUE
SHARES COST (NOTE 1A)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INSURANCE-PROPERTY & CASUALTY - 20.5%
15,840 Allmerica Financial.................................... $ 691,020 $ 655,380
36,000 CNA Financial *........................................ 1,354,958 4,083,750
328,000 Chubb.................................................. 2,802,937 21,935,000
40,000 Merchants Group........................................ 600,000 705,000
30,000 Old Republic International............................. 604,723 1,078,125
220,750 Orion Capital.......................................... 1,613,477 9,381,875
8,000 Reliance Group Holdings................................ 65,480 98,000
18,500 Trenwick Group......................................... 304,863 672,938
----------- ------------
8,037,458 38,610,068
----------- ------------
REAL ESTATE - 2.7%
63,850 Forest City Enterprises, Class A....................... 1,007,463 3,435,928
31,050 Forest City Enterprises, Class B, Conv................. 364,301 1,666,997
----------- ------------
1,371,764 5,102,925
----------- ------------
TECHNOLOGY - 2.1%
8,500 Apple Computer*........................................ 319,750 184,875
4,000 First Data............................................. 152,120 164,250
31,000 Global Industrial Technologies......................... 284,013 587,063
10,000 Inso *................................................. 314,250 138,750
24,000 Intel.................................................. 99,250 2,211,000
10,000 National Semiconductor *............................... 166,850 342,500
10,802 Silicon Graphics *..................................... 259,836 296,380
----------- ------------
1,596,069 3,924,818
----------- ------------
TELECOMMUNICATIONS/MEDIA - 0.4%
20,738 News Corporation-- ADR................................. 155,595 313,655
4,000 Salient 3 Communications, Class A...................... 44,800 60,250
5,800 Time Warner............................................ 123,185 298,700
----------- ------------
323,580 672,605
----------- ------------
TRANSPORTATION - 8.5%
39,600 AMR *.................................................. 1,828,141 3,989,700
114,000 APL.................................................... 1,009,244 3,648,000
52,000 Airborne Freight....................................... 515,758 2,561,000
33,000 Canadian Pacific....................................... 528,285 963,188
42,000 General Dynamics....................................... 928,543 3,344,250
9,000 Lockheed Martin........................................ 308,520 933,188
23,100 Overseas Shipholding Group............................. 369,929 567,394
----------- ------------
5,488,420 16,006,720
----------- ------------
TOTAL COMMON STOCKS.................................... $45,442,527 169,563,448
=========== ------------
Page 7
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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 August 31, 1997 (concluded)
<TABLE>
<CAPTION>
CORPORATE SHORT-TERM NOTES -- 10.1%
- -------------------------------------------------------------------------------------------------------------------
VALUE
SHARES (NOTE 1A)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$6,285,000 American Express Credit, 5.50%, due 09/02/97......................... $ 6,289,805
6,343,000 Chevron Oil Finance, 5.52%, due 09/03/97............................. 6,346,894
6,419,000 Ford Motor Credit, 5.57%, due 09/04/97............................... 6,421,983
------------
TOTAL CORPORATE SHORT-TERM NOTES..................................... 19,058,682
------------
CASH, RECEIVABLES AND OTHER ASSETS - 0.1%.............. $ 139,559
LIABILITIES - (0.2%)................................... (265,887) (126,328)
----------- ------------
NET ASSETS - 100.0% -- equivalent to $50.64, offering and
redemption price per share on 3,722,380 shares of $.01 par
value capital stock outstanding;
15,000,000 shares authorized....................................... $188,495,802
============
NET ASSETS CONSIST OF:
Capital stock........................................................ $ 37,224
Additional paid-in capital........................................... 59,086,552
Undistributed net investment income.................................. 729,573
Undistributed net realized gain...................................... 4,521,532
Net unrealized appreciation on investments........................... 124,120,921
------------
NET ASSETS........................................................... $188,495,802
============
<FN>
- ---------------
*Non-income producing security.
See accompanying notes to financial statements.
Page 8
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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 year ended August 31, 1997
<TABLE>
INVESTMENT INCOME
<S> <C> <C>
INCOME
Dividends (net of foreign withholding taxes of $61,091) ............................. $ 2,526,225
Interest............................................................................. 967,639
-----------
3,493,864
EXPENSES
Management fee......................................................... $ 1,654,512
Custodian.............................................................. 57,950
Shareholder services................................................... 52,525
Legal.................................................................. 44,400
Audit and tax return preparation fees.................................. 44,325
Printing............................................................... 34,500
Registration and filing fees........................................... 13,400
Directors' fees and expenses........................................... 5,000
Other.................................................................. 18,000 1,924,612
----------- -----------
Net investment income................................................................ 1,569,252
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments..................................................... 5,082,896
Increase in net unrealized appreciation on investments............................... 48,679,695
-----------
Net realized gain and increase in net unrealized appreciation on investments......... 53,762,591
-----------
Net increase in net assets resulting from operations................................. $55,331,843
===========
See accompanying notes to financial statements.
Page 9
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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
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income...................................... $ 1,569,252 $ 2,226,491
Net realized gain on investments........................... 5,082,896 5,924,655
Increase in net unrealized appreciation on investments..... 48,679,695 6,598,349
------------ ------------
Net increase in net assets resulting from operations....... 55,331,843 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 187,581 and 541,164 shares,
respectively............................................. 8,167,100 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.............................. 6,282,472 5,716,069
Payment for redemption of 362,924 and 621,760 shares,
respectively............................................. (15,425,967) (23,116,339)
------------ ------------
Change in net assets resulting from capital share transactions,
representing net decrease of 25,363 and net increase of
77,132 shares, respectively.............................. (976,395) 2,704,660
------------ ------------
Total increase in net assets............................... 46,511,637 10,747,462
NET ASSETS
Beginning of year.......................................... 141,984,165 131,236,703
------------ ------------
End of year (includes undistributed net investment income of
$729,573 and $1,432,827, respectively)................... $188,495,802 $141,984,165
============ ============
See accompanying notes to financial statements.
Page 10
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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
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 11
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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 (concluded)
2. CAPITAL STOCK
Payable for Fund shares redeemed at August 31, 1997 amounted to $37,239.
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
August 31, 1997 was $162,261.
4. PORTFOLIO ACTIVITY
The cost of securities purchased and proceeds from securities sold
(excluding corporate short-term notes) during the year ended August 31, 1997
aggregated $5,917,882 and $10,724,423, respectively.
Cost of securities held (excluding corporate short-term notes) on August
31, 1997 for Federal income tax purposes was $45,464,824. As of August 31, 1997,
gross unrealized appreciation and depreciation, based on cost for Federal income
tax purposes, amounted to $124,866,978 and $768,354, respectively, resulting in
net unrealized appreciation of $124,098,624.
5. EVENTS SUBSEQUENT TO AUGUST 31, 1997
On September 24, 1997, Travelers Group ("Travelers") and Salomon Inc,
("Salomon"), the ultimate parent company of SBAM, announced their agreement (the
"Transaction") to merge Salomon with and into Smith Barney Holdings Inc., a
subsidiary of Travelers, to form a new company expected to be called Salomon
Smith Barney Holdings Inc. Travelers is a diversified financial services company
engaged in investment services, asset management, consumer finance and life and
property casualty insurance services.
The Transaction is expected to be completed by the end of November 1997,
subject to a number of conditions, including the receipt of U.S. and foreign
regulatory approvals and the approval of Salomon stockholders. Upon consummation
of the Transaction, Travelers will become the ultimate parent of SBAM, which
will continue to serve as investment adviser to the Fund.
Page 12
<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 year:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------------------------------
1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year....... $37.89 $35.75 $31.47 $31.91 $27.64
------ ------ ------ ------ ------
Net investment income.................... 0.43 0.60 0.45 0.42 0.57
Net gains (or losses) on securities
(both realized and unrealized)......... 14.46 3.38 5.68 1.48 4.85
------ ------ ------ ------ ------
Total from investment operations....... 14.89 3.98 6.13 1.90 5.42
------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income..... (0.62) (0.48) (0.37) (0.64) (0.345)
Distributions from net realized gain
on investments......................... (1.52) (1.36) (1.48) (1.70) (0.805)
------ ------ ------ ------ ------
Total dividends and distributions...... (2.14) (1.84) (1.85) (2.34) (1.15)
------ ------ ------ ------ ------
Net asset value, end of year............. $50.64 $37.89 $35.75 $31.47 $31.91
====== ====== ====== ====== ======
Total investment return based on net
asset value per share.................. +40.5% +11.4% +21.1% +6.4% +20.2%
Ratios/Supplemental Data:
Net assets, end of year (thousands)...... $188,496 $141,984 $131,237 $118,755 $116,607
Ratio of expenses to average net assets.. 1.16% 1.18% 1.18% 1.22% 1.23%
Ratio of net investment income to
average net assets..................... .95% 1.59% 1.39% 1.29% 1.86%
Portfolio turnover rate.................. 4% 5% 8% 13% 10%
Average broker commission rate........... $0.0571 $0.0591 N/A N/A N/A
See accompanying notes to financial statements.
Page 13
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<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
Report of Independent Accountants
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
SALOMON BROTHERS OPPORTUNITY FUND INC
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Salomon Brothers Opportunity Fund Inc (the "Fund") at August 31, 1997, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and the financial highlights
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1997 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
New York, New York
October 10, 1997
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TAX INFORMATION (UNAUDITED)
We are required by the Internal Revenue Code to advise you within 60
days of the Fund's fiscal year end as to the federal tax status of
distributions paid by the Fund during such fiscal year. Accordingly, during
its fiscal year ended August 31, 1997, the Fund paid distributions from
realized long-term capital gains of $1.51 per share which are taxable as such.
We wish to advise you that the corporate dividends received deduction
for the Fund is 85%.
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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
ALAN M. MANDEL
Treasurer
NOEL B. DAUGHERTY
Secretary
JANET S. TOLCHIN
Assistant Treasurer
JENNIFER G. MUZZEY
Assistant Secretary
Salomon Brothers Opportunity Fund Inc
7 World Trade Center
New York, New York 10048
1-888-777-0102, toll free
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
200 Clarendon Street
Boston, Massachusetts 02116
DIVIDEND DISBURSING AND TRANSFER AGENT
First Data Investor Services Group, Inc.
53 State Street
Boston, Massachusetts 02109-2873
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3909
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
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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 15
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Salomon Brothers Asset Management
P.O. Box 9109
Boston, MA 02205-9109
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FIRST-CLASS
U.S. POSTAGE
PAID
BOSTON, MA
PERMIT No. 54201
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Salomon Brothers
Opportunity Fund Inc
Annual Report
AUGUST 31, 1997
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Salomon Brothers Asset Management
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