Salomon Brothers
Opportunity Fund Inc
Annual Report
AUGUST 31, 1998
- --------------------------------------------------
Salomon Brothers Asset Management
-------------------------------------------------
<PAGE>
Salomon Brothers
Opportunity Fund Inc
October 21, 1998
Dear Shareholder:
The net asset value of each of your shares at August 31, 1998 was $47.36,
equivalent to $48.95 assuming the distributions from income and capital gains
paid in December 1997 were reinvested in additional shares of the Fund. This
represented a decrease of 3.3% from $50.64 on August 31, 1997, compared with an
increase of 8.1% for the Standard & Poor's Index of 500 Stocks.
There were few major transactions in the Fund during the fiscal period that
ended on August 31, 1998, except for the tender of the substantial position
in APL to a Far Eastern shipping line. Cash was increased through several other
sales from 10% to over 15% of assets. At present the cash is approximately 20%
which we intend to reduce as new investment opportunities arise.
Although the stock market reached peak levels last year, it was a peak with
gambling undertones. In our view, rationalizations were stretched to justify the
consequent high price earnings multiples.
We found it difficult to locate attractive new investments. And since we manage
the Fund to avoid realizing long-term capital gains and the tax impact of those
gains to shareholders, we limited our purchases to minor thrusts - offsetting
most of them with equivalent valued sales. We continue to believe in the
long-term potential of the portfolio.
How do we envision the future? It appears that some effort is being made at
present to contain the recent problems related to excessive loans and non-self
liquidating investments - though there is no certainty of success.
Interest rates have been lowered in order to avert a credit crunch and to
increase the liquidity of the lending institutions.
The U.S. is, moreover, experiencing greater trade deficits - which we believe to
be a positive development. These deficits should help stabilize foreign
economies.
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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 U.S. has the wherewithal to absorb these deficits: the deficits are one
way of sharing the benefits of the low inflation that resulted from the
over-investments that have produced the overcapacity so beneficial to the U.S.
We are not, however, convinced that the measures taken to-date are sufficient.
Consequently, we continue to retain a sizable cash position, but we are starting
to nibble.
On the following pages you will find audited financial statements of the Fund at
August 31, 1998 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, 1988. 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:
- 3.34% for the one-year period beginning September 1, 1997 and
ended August 31, 1998;
+14.27% for the five-year period beginning September 1, 1993 and ended
August 31, 1998;
+13.14% for the ten-year
period beginning September 1, 1988 and ended August 31, 1998.
PERFORMANCE COMPARISON -- GROWTH OF $10,000
Salomon
Brothers
Opportunity
DATE Fund Inc S&P 500
8/88 10000 10000
8/89 13292 13918
8/90 10549 13223
8/91 12997 16774
8/92 14674 18101
8/93 17637 20849
8/94 18767 21987
8/95 22719 26696
8/96 25302 31694
8/97 35546 44568
8/98 34359 48187
Past performance is not predictive of future performance
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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 for the six months ended August 31, 1998 (unaudited)
Additions+
- ----------------------------------------------------
Shares/
Principal
Amount
-----------------
Amcast Industrial................. 4,000
Dravo............................. 8,000
FDX............................... 4,000(1)
Fine Host, 5.00%, due 11/1/04.....$1,750,000(1)
Forest City Enterprises, Class B,
Conv. .......................... 4,000
Foster Wheeler.................... 5,000(1)
IBP............................... 7,600
Mellon Bank....................... 3,000(1)
Mississippi Chemical.............. 20,000
Rayonier.......................... 4,000
Silicon Graphics.................. 11,000
Sunbeam, Zero Coupon, due 3/25/18.$2,500,000(1)
Reductions+
- ----------------------------------------------------
Shares
------------------
Airborne Freight.................. 25,000
American General.................. 8,500
Ameron............................ 900
Apple Computer ................... 5,000(2)
ASARCO............................ 10,000(2)
Bank of New York.................. 8,000
BJ's Wholesale Club............... 5,000
Canadian Pacific.................. 5,000
CNA Financial..................... 2,700
Crown Crafts...................... 4,200(2)
Deltic Timber..................... 5,000
Federal Home Loan Mortgage........ 21,000
First Chicago NBD................. 27,900
Fremont General................... 18,100
Genzyme........................... 11,000(2)
Harcourt General.................. 4,100
Humana............................ 4,000
Loews............................. 6,000
Medeva--ADR........................ 2,800
Monsanto.......................... 9,000
New Germany Fund.................. 20,067(2)
Reliance Group Holdings........... 4,000
UNUM.............................. 10,600
- ------------
(1) New addition. (2) Elimination.
+Exclusive of changes resulting entirely from mergers, stock dividends, stock
splits, and reverse 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
Statement of Net Assets August 31, 1998
<TABLE>
<CAPTION>
Common Stocks -- 80.9% of Net Assets
- ------------------------------------------------------------------------------------------------------------
Shares Cost Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Banks - 15.5%
930,976 Bank of New York....................................... $ 2,613,899 $ 22,517,982
14,020 First Chicago NBD...................................... 105,618 888,518
3,000 Mellon Bank............................................ 231,368 156,000
8,250 Mercantile Bancorporation.............................. 45,630 362,484
130,000 Popular................................................ 1,526,008 3,640,000
----------- ------------
4,522,523 27,564,984
----------- ------------
Basic Industry - 7.2%
28,900 Amcast Industrial...................................... 524,600 442,531
5,000 Champion International................................. 200,300 165,000
7,000 Citation *............................................. 70,288 74,375
9,700 Cone Mills *........................................... 77,270 68,506
6,000 Deltic Timber.......................................... 61,588 135,750
35,400 Dravo *................................................ 370,237 238,950
5,000 Intercargo............................................. 46,500 50,000
9,500 International Shipholding.............................. 162,883 145,469
45,000 Mississippi Chemical................................... 866,559 565,313
76,500 Monsanto............................................... 856,225 4,183,594
10,000 MotivePower Industries *............................... 62,125 200,000
18,000 NL Industries *........................................ 199,350 357,750
8,000 National Processing.................................... 86,293 66,500
11,077 Newmont Mining......................................... 289,765 151,616
28,000 Rayonier............................................... 1,023,383 1,092,000
17,100 Solutia................................................ 87,639 383,681
5,500 Southern Peru Copper................................... 70,455 48,469
4,000 Stone Container *...................................... 70,240 41,750
87,500 TRC Companies *........................................ 565,847 355,469
34,100 Tecumseh Products, Class A............................. 930,235 1,621,881
47,000 Tecumseh Products, Class B............................. 2,049,576 2,397,000
----------- ------------
8,671,358 12,785,604
----------- ------------
Biotechnology & Drugs - 0.7%
28,000 Medeva-- ADR........................................... 272,680 203,000
25,375 Pharmacia & Upjohn..................................... 567,213 1,054,648
----------- ------------
839,893 1,257,648
----------- ------------
Construction - 1.0%
26,700 Ameron................................................. 526,254 1,016,269
5,000 Foster Wheeler......................................... 128,475 61,563
29,050 Liberty Homes, Class A................................. 341,813 360,403
24,750 Liberty Homes, Class B................................. 325,688 297,000
----------- ------------
1,322,230 1,735,235
----------- ------------
</TABLE>
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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, 1998 (continued)
<TABLE>
<CAPTION>
Common Stocks (continued)
- ------------------------------------------------------------------------------------------------------------
Shares Cost Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Consumer Goods - 5.2%
35,500 Alexander & Baldwin.................................... $ 169,490 $ 834,250
4,729 Ames Dept Stores, Warrants, Series C, expires 1/31/99 * 4,729 65,024
15,000 Angeion *.............................................. 59,150 34,688
26,500 BJ's Wholesale Club *.................................. 194,396 894,375
4,000 Converse *............................................. 41,240 11,750
10,900 Harcourt General....................................... 536,486 529,331
31,500 Homebase............................................... 74,468 192,938
14,800 IBP.................................................... 318,738 245,125
20,737 News Corporation-- ADR................................. 155,591 435,477
100,000 Philips Electronics N.V.-- ADR......................... 1,281,995 5,993,750
----------- ------------
2,836,283 9,236,708
----------- ------------
Energy - 6.4%
28,000 Murphy Oil............................................. 773,903 988,750
260,000 Royal Dutch Petroleum, 5 Guilder....................... 1,602,394 10,335,000
----------- ------------
2,376,297 11,323,750
----------- ------------
Finance - 9.6%
20,310 American General....................................... 238,185 1,304,918
90,000 Federal Home Loan Mortgage............................. 238,650 3,555,000
60,300 Leucadia National...................................... 234,997 1,669,556
110,000 Loews.................................................. 2,347,752 9,281,250
5,481 NationsBank............................................ 18,168 312,417
48,000 Pioneer Group.......................................... 167,500 861,000
----------- ------------
3,245,252 16,984,141
----------- ------------
Health Care - 1.1%
7,700 Foundation Health Systems, Class A *................... 110,903 86,144
6,827 HEALTHSOUTH *.......................................... 123,389 129,286
36,000 Humana *............................................... 436,285 468,000
22,077 Wellpoint Health Networks *............................ 872,533 1,178,360
----------- ------------
1,543,110 1,861,790
----------- ------------
Insurance-Life, Accident & Health - 3.6%
16,875 American International Group........................... 440,675 1,304,648
14,000 Aon.................................................... 225,692 875,875
8,739 Delphi Financial Group, Class A........................ 136,494 364,853
1,714 Delphi International *................................. 8,784 25,710
19,025 Fremont General........................................ 275,449 813,319
5,900 Kansas City Life Insurance............................. 293,813 388,663
28,000 Provident Companies.................................... 395,740 1,008,000
38,400 UNUM................................................... 164,292 1,689,600
----------- ------------
1,940,939 6,470,668
----------- ------------
</TABLE>
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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, 1998 (continued)
<TABLE>
<CAPTION>
Common Stocks (continued)
- ------------------------------------------------------------------------------------------------------------
Shares Cost Value
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Insurance-Property & Casualty - 20.3%
15,840 Allmerica Financial.................................... $ 691,020 $ 944,460
105,300 CNA Financial *........................................ 1,263,885 3,856,608
328,000 Chubb.................................................. 2,802,937 20,500,000
40,000 Merchants Group........................................ 600,000 810,000
45,000 Old Republic International............................. 604,723 1,004,063
220,750 Orion Capital.......................................... 1,613,477 8,222,938
4,000 Reliance Group Holdings................................ 32,740 50,500
18,500 Trenwick Group......................................... 304,863 638,250
----------- ------------
7,913,645 36,026,819
----------- ------------
Real Estate - 2.6%
127,700 Forest City Enterprises, Class A....................... 1,007,463 2,897,194
66,100 Forest City Enterprises, Class B, Conv................. 482,889 1,652,500
----------- ------------
1,490,352 4,549,694
----------- ------------
Technology - 1.3%
10,000 Inso *................................................. 171,500 155,000
24,000 Intel.................................................. 99,250 1,708,500
15,000 National Semiconductor *............................... 287,525 136,875
5,000 Seagate Technology *................................... 124,050 87,500
25,802 Silicon Graphics *..................................... 479,786 233,831
----------- ------------
1,162,111 2,321,706
----------- ------------
Transportation - 6.4%
79,200 AMR *.................................................. 1,828,141 4,316,400
69,000 Airborne Freight....................................... 216,341 1,345,500
28,000 Canadian Pacific....................................... 433,810 530,250
4,000 FDX *.................................................. 275,990 200,250
84,000 General Dynamics....................................... 928,543 3,995,250
9,000 Lockheed Martin........................................ 308,520 786,938
11,600 Overseas Shipholding Group............................. 178,239 165,300
----------- ------------
4,169,584 11,339,888
----------- ------------
TOTAL COMMON STOCKS.................................... 42,033,577 143,458,635
----------- ------------
Principal
Amount
- -------------
CONVERTIBLE CORPORATE BONDS - 1.0%
Consumer Goods - 1.0%
$1,750,000 Fine Host, 5.00%, due 11/1/04.......................... 1,204,483 1,268,750
2,500,000 Sunbeam, Zero Coupon, due 3/25/18...................... 548,585 456,250
----------- ------------
1,753,068 1,725,000
----------- ------------
TOTAL INVESTMENTS-- 81.9%.............................. $43,786,645 145,183,635
=========== ------------
</TABLE>
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, 1998 (concluded)
<TABLE>
<CAPTION>
Corporate Short-Term Notes -- 17.8%
- ----------------------------------------------------------------------------------------------------------------
Principal
Amount Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$9,017,000 American Express Credit, 5.565%, due 9/1/98.......................... $ 9,025,364
5,281,000 Chevron Oil Finance, 5.535%, due 9/2/98.............................. 5,285,060
8,003,000 Exxon Asset Management, 5.513%, due 9/4/98........................... 8,004,226
9,275,000 General Electric Capital, 5.355%, due 9/3/98......................... 9,280,518
------------
TOTAL CORPORATE SHORT-TERM NOTES..................................... 31,595,168
------------
CASH, RECEIVABLES AND OTHER ASSETS - 0.4%........................... $ 779,976
LIABILITIES - (0.1%)................................................ (289,633) 490,343
---------- ------------
NET ASSETS - 100.0% -- equivalent to $47.36, offering and
redemption price per share on 3,742,735 shares of $.01 par
value capital stock outstanding;
15,000,000 shares authorized....................................... $177,269,146
============
Net Assets consist of:
Capital stock........................................................ $ 37,427
Additional paid-in capital........................................... 59,904,384
Undistributed net investment income.................................. 1,027,853
Undistributed net realized gain...................................... 14,902,492
Net unrealized appreciation on investments........................... 101,396,990
------------
Net Assets........................................................... $177,269,146
============
Net Asset Value Per Share............................................ $47.36
======
</TABLE>
- ---------
*Non-income producing security.
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
Statement of Operations for the year ended August 31, 1998
<TABLE>
<CAPTION>
Investment Income
<S> <C>
Income:
Dividends (net of foreign withholding taxes of $83,978) ........................... $ 2,511,339
Interest........................................................................... 1,536,313
------------
4,047,652
Expenses:
Management fee (Note 3).............................................. $ 2,080,479
Custodian............................................................ 58,460
Shareholder services................................................. 47,420
Audit and tax return preparation fees................................ 43,830
Printing............................................................. 37,030
Legal................................................................ 25,920
Registration and filing fees......................................... 16,950
Directors' fees and expenses......................................... 7,730
Other................................................................ 9,560 2,327,379
---------- ------------
Net investment income................................................................ 1,720,273
------------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments................................................... 15,568,652
Decrease in net unrealized appreciation on investments............................. (22,723,931)
------------
Net realized gain and decrease in net unrealized appreciation on investments......... (7,155,279)
------------
Net decrease in net assets from operations........................................... $ (5,435,006)
============
</TABLE>
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
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
For the Years Ended August 31, 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income.................................... $ 1,720,273 $ 1,569,252
Net realized gain on investments......................... 15,568,652 5,082,896
Increase (Decrease) in net unrealized appreciation
on investments......................................... (22,723,931) 48,679,695
------------ ------------
Net increase (decrease) in net assets from operations.... (5,435,006) 55,331,843
------------ ------------
Distributions to Shareholders from:
Net investment income.................................... (1,444,133) (2,272,506)
Net realized gain on investments......................... (5,165,552) (5,571,305)
------------ ------------
(6,609,685) (7,843,811)
------------ ------------
Capital Share Transactions:
Net proceeds from sales of 97,900 and 187,581 shares,
respectively........................................... 5,372,304 8,167,100
Net asset value of 98,645 and 149,980 shares, respectively,
issued in reinvestment of net investment income and net
realized gain distributions............................ 5,244,472 6,282,472
Payment for redemption of 176,190 and 362,924 shares,
respectively........................................... (9,798,741) (15,425,967)
------------ ------------
Change in net assets resulting from capital share
transactions, representing net increase of 20,355
and net decrease of 25,363 shares, respectively....... 818,035 (976,395)
------------ ------------
Total increase (decrease) in net assets.................... (11,226,656) 46,511,637
Net Assets:
Beginning of year........................................ 188,495,802 141,984,165
------------ ------------
End of year (includes undistributed net investment income
of $1,027,853 and $729,573, respectively)............. $177,269,146 $188,495,802
============ ============
</TABLE>
See accompanying notes to financial statements.
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
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 asked price which
represents the current value of the security. Over-the-counter securities
are valued at the mean of the current bid and asked 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. To the extent they exceed net investment income
and net realized capital gains for tax purposes, they are reported as tax
return of capital.
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)
(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.
2. Capital Stock
Payable for Fund shares redeemed at August 31, 1998 amounted to $71,538.
3. Management Fee and Other Transactions
The Fund retains Salomon Brothers Asset Management Inc ("SBAM"), a
wholly-owned subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), to act
as investment manager of the Fund, subject to the supervision by the Board of
Directors of the Fund. The management agreement with SBAM was most recently
approved by shareholders at a special meeting held on January 14, 1998. Approval
of the agreement was necessary due to the merger of Salomon Inc, which had been
the ultimate parent company of the investment manager, with and into SSBH, which
occurred on November 28, 1997. 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, 1998 was $168,149.
The Fund pays each Director not affiliated with the SBAM a fee of $500 for
attendance at each board meeting and reimbursement for travel and out-of-pocket
expenses for each board meeting attended.
4. Portfolio Activity
The cost of securities purchased and proceeds from securities sold
(excluding corporate short-term notes) during the year ended August 31, 1998
aggregated $5,955,220 and $23,179,813, respectively.
Cost of securities held (excluding corporate short-term notes) on August
31, 1998 for Federal income tax purposes was $43,786,645. As of August 31, 1998,
gross unrealized appreciation and depreciation, based on cost for Federal income
tax purposes, amounted to $103,422,662 and $2,025,672, respectively, resulting
in net unrealized appreciation of $101,396,990.
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,
- ------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year....... $50.64 $37.89 $35.75 $31.47 $31.91
------ ------ ------ ------ ------
Net investment income.................... 0.46 0.43 0.60 0.45 0.42
Net gains (or losses) on securities
(both realized and unrealized)......... (1.95) 14.46 3.38 5.68 1.48
------ ------ ------ ------ ------
Total from investment operations....... (1.49) 14.89 3.98 6.13 1.90
------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income..... (0.39) (0.62) (0.48) (0.37) (0.64)
Distributions from net realized gain
on investments......................... (1.40) (1.52) (1.36) (1.48) (1.70)
------ ------ ------ ------ ------
Total dividends and distributions...... (1.79) (2.14) (1.84) (1.85) (2.34)
------ ------ ------ ------ ------
Net asset value, end of year............. $47.36 $50.64 $37.89 $35.75 $31.47
====== ====== ====== ====== ======
Total investment return based on net
asset value per share.................. -3.3% +40.5% +11.4% +21.1% +6.4%
Ratios/Supplemental Data:
Net assets, end of year (thousands)...... $177,269 $188,496 $141,984 $131,237 $118,755
Ratio of expenses to average net assets.. 1.12% 1.16% 1.18% 1.18% 1.22%
Ratio of net investment income to
average net assets..................... 0.83% 0.95% 1.59% 1.39% 1.29%
Portfolio turnover rate.................. 3% 4% 5% 8% 13%
</TABLE>
See accompanying notes to financial statements.
Page 13
<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, 1998, 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, 1998 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
New York, New York
October 21, 1998
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, 1998, the Fund paid
distributions from realized long-term capital gains (20% tax rate)
of $0.90 and from mid-term capital gains (28% tax rate) of $0.46 per
share, which are taxable as such.
We wish to advise you that the corporate dividends received deduction
for the Fund is 92%.
Page 14
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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
B. Alexander Gaguine
Consultant
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
Lewis E. Daidone
Executive Vice President and Treasurer
Anthony Pace
Assistant Controller
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
CFBDS, Inc.
21 Milk Street
Boston, Massachusetts 02109-5408
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
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
- ----------------------------------------------------------------------------
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 5127
Westborough, MA 01581-5127
FIRST-CLASS
U.S. POSTAGE
PAID
NORTH READING, MA
PERMIT No. 105
