Salomon Brothers September 29, 1999
Opportunity Fund Inc
Dear Shareholder:
We are pleased to provide this annual report for the Salomon Brothers
Opportunity Fund Inc ("Fund") as of August 31, 1999. Included in this report are
performance results, a market commentary, a summary of portfolio highlights, and
a statement of the Fund's investments and financial statements for the year
ended August 31, 1999.
During the year ended August 31, 1999, the net asset value of the Fund
increased from $47.36 per share at August 31, 1998 to $49.69 per share at
August 31, 1999. Dividends of $0.47 per share from net investment income and
$4.94 in capital gains were paid during this period. Assuming reinvestment of
these dividends in additional shares of the Fund, the total rate of return
based on net asset value for the year ended August 31, 1999 was 16.5%. During
the same period, the Standard & Poor's 500 Index ("S&P 500"), a standard
measure of the U.S. stock market, returned 39.8%.
MARKET REVIEW
The past twelve months was a difficult time for many investors. Global markets
experienced an unprecedented financial crisis commencing with the Russian
default, and leading to the devaluation of the Brazilian real and a major hedge
fund debacle. The uncertainty that ensued among investors worldwide ignited a
"flight to quality," which left equities and credit-sensitive fixed income
products abandoned in favor of the safety of U.S. Treasuries. The Federal
Reserve Board ("Fed") responded to the crisis by decreasing short-term interest
rates on three occasions, September 29, October 15, and November 17, 1998.
Subsequently, the U.S. stock market responded and resumed its climb.
However, a disparity became apparent in equity markets as we observed an elite
group of stocks providing very narrow leadership to the market's growth. These
stocks were characterized by large capitalizations and rapid earnings growth.
Investors became unenamored with companies that could not sustain these
accelerated earnings; and consequently, investment flows became concentrated
into a select few companies that continued to exceed investors' and analysts'
expectations. As a result, share prices of these companies inflated rapidly
while the rest of the market remained rather lackluster.
More recently, inflationary pressures and fears that the economy might overheat
prompted the Fed to reverse its earlier actions by increasing short-term
interest rates twice, on June 30 and August 24, 1999. The actions of the Fed to
address the elevated risks of inflationary pressures provided the markets with
a certain degree of relief.
<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
PORTFOLIO HIGHLIGHTS
We believe this Fund is unique in the large capitalization value category, as we
tend to hold our equity selections, as long as their valuations do not become
too lofty, in an attempt to avoid the distribution of significant taxable
capital gains to shareholders.
The Fund's underperformance versus its benchmark can be partially contributed
to its underweight positions in the technology sector, which was a crucial
component of S&P 500 performance. Also, several of the leading large
capitalization growth companies are not held by the Fund because we believe
these stocks are vulnerable to a meaningful correction.
This year's performance, in particular, exhibited some of the less favorable
aspects of the Fund's strategy. The Fund is heavily concentrated with its top
ten holdings representing approximately 60% of assets, with a significant
overweighting in financials. Lackluster performance in companies in which we
have sizable stakes, such as Loews, Royal Dutch Petroleum, and Chubb, have
weakened the Fund's overall returns.
* * *
If you would like to open an IRA or have any questions about the Fund, please
call 1-888-777-0102 (toll free). Thank you for continuing to pursue your
long-term financial objectives with the Salomon Brothers Opportunity Fund Inc.
Cordially,
/s/ Irving Brilliant
Irving Brilliant
President and Portfolio Manager
<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
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, 1989. 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:
16.54% for the one-year period beginning September 1, 1998 and ended
August 31, 1999;
16.37% for the five-year period beginning September 1, 1994 and ended
August 31, 1999;
11.66% for the ten-year period beginning September 1, 1989 and ended
August 31, 1999.
PERFORMANCE COMPARISON -- GROWTH OF $10,000
(UNAUDITED)
$48,403
SALOMON BROTHERS
DATE S&P OPPORTUNITY FUND
- ---- --- ----------------
8/89 10000 10000
8/90 7936 9500
8/91 9778 12051
8/92 11040 13005
8/93 13269 14979
8/94 14119 15797
8/95 17092 19180
8/96 19035 22771
8/97 26742 32022
8/98 25849 34622
8/99 30126 48403
SALOMON BROTHERS OPPORTUNITY FUND INC
STANDARD & POOR'S 500 INDEX
$30,126
Past performance is not predictive of future performance
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
Major Portfolio Changes (unaudited)
For the Six Months Ended August 31, 1999
ADDITIONS+
- --------------------------------------------
Shares
--------
Ameron International Corp......... 2,600
The CIT Group, Inc., Class A Shares 13,000(1)
Everest Reinsurance Holdings, Inc. 5,000(1)
KLM ADR........................... 4,105(1)
Lafarge Corp...................... 4,000
Newcourt Credit Group Inc......... 10,000(1)
Overseas Shipholding Group, Inc... 9,000
Rayonier Inc...................... 8,700
Talisman Energy Inc............... 10,000(1)
Trenwick Group Inc................ 6,500
REDUCTIONS+
- --------------------------------------------
Shares
--------
The Bank of New York Co., Inc..... 13,000
BJ's Wholesale Club, Inc.......... 6,500
CNA Financial Corp................ 4,000
Delphi Financial Group, Inc.,
Class A Shares.................. 4,399(2)
Freddie Mac....................... 30,000
HomeBase, Inc..................... 10,500
IBP, Inc.......................... 14,800(2)
Intel Corp........................ 7,000
Loews Corp........................ 4,000
Mercantile Bancorporation Inc..... 3,550
Mississippi Chemical Corp......... 16,000
Orion Capital Corp................ 4,000
Philip Morris Cos., Inc........... 4,000(2)
Pogo Producing Co................. 3,000
Popular, Inc...................... 5,000
- --------
(1) New addition.
(2) Elimination.
+ Exclusive of changes resulting entirely from mergers, stock dividends, and
stock splits.
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
Schedule of Investments
August 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
- --------------------------------------------------------------------------------
- -----------------------------------
<S> <C>
<C>
COMMON STOCK -- 82.1%
BANKS -- 18.3%
862,976 The Bank of New York Co.,
Inc...................................... $ 30,851,392
6,000 Mellon Bank
Corp................................................... 200,250
700 Mercantile Bancorp.,
Inc........................................... 38,631
125,000 Popular,
Inc....................................................... 3,445,312
- ------------
34,535,585
- ------------
BASIC INDUSTRY -- 4.6%
35,600 Amcast Industrial
Corp............................................. 565,150
2,600 Citation Corp.
*................................................... 41,113
6,000 Deltic Timber
Corp................................................. 149,625
39,000 Mississippi Chemical
Corp.......................................... 294,938
15,000 MotivePower Industries, Inc.
*..................................... 185,625
18,000 NL Industries,
Inc................................................. 217,125
15,000 National Processing Inc.
*......................................... 129,375
11,077 Newmont Mining
Corp................................................ 226,386
36,700 Rayonier
Inc....................................................... 1,523,050
3,960 Smurfit-Stone Container Corp.
*.................................... 83,903
17,100 Solutia
Inc........................................................
342,000
2,200 Southern Peru Copper
Corp.......................................... 33,825
82,500 TRC Cos., Inc.
*................................................... 531,094
Tecumseh Products Co.:
34,100 Class A
Shares................................................... 1,943,700
47,000 Class B
Shares................................................... 2,491,000
- ------------
8,757,909
- ------------
BIOTECHNOLOGY & DRUGS -- 2.4%
15,300 Medeva PLC--
ADR................................................... 117,619
76,500 Monsanto
Co........................................................ 3,141,281
25,375 Pharmacia & Upjohn,
Inc............................................ 1,325,844
- ------------
4,584,744
- ------------
CONSTRUCTION -- 1.2%
28,400 Ameron International
Corp.......................................... 1,299,300
17,000 Lafarge
Corp.......................................................
467,500
Liberty Homes, Inc.:
29,050 Class A
Shares................................................... 241,478
24,750 Class B
Shares................................................... 224,297
- ------------
2,232,575
- ------------
CONSUMER GOODS -- 7.1%
35,500 Alexander & Baldwin,
Inc........................................... 858,656
2,000 Ames Department Stores, Inc.
*..................................... 58,750
33,500 BJ's Wholesale Club, Inc.
*........................................ 946,375
9,700 Cone Mills Corp.
*................................................. 56,988
96,000 Fine Host Corp.
*+................................................. 897,458
10,900 Harcourt General,
Inc.............................................. 477,556
18,000 Homebase, Inc.
*................................................... 78,750
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 5
</TABLE>
<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
Schedule of Investments (continued)
August 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
- --------------------------------------------------------------------------------
- -----------------------------------
<S> <C>
<C>
CONSUMER GOODS -- 7.1% (CONTINUED)
92,000 Koninklijke (Royal) Philips Electronics N.V.--
ADR................. $ 9,458,750
20,737 The News Corp. Ltd.--
ADR.......................................... 548,234
- ------------
13,381,517
- ------------
ENERGY -- 9.7%
32,000 Murphy Oil
Corp.................................................... 1,624,000
15,000 Pogo Producing
Co.................................................. 313,125
260,000 Royal Dutch Petroleum Co.--
ADR.................................... 16,087,500
10,000 Talisman Energy Inc.
*............................................. 293,125
- ------------
18,317,750
- ------------
FINANCE -- 6.8%
15,010 American General
Corp.............................................. 1,065,710
13,000 The CITGroup, Inc., Class
AShares.................................. 309,563
8,000 Chile
Fund.........................................................
87,500
50,000 Freddie
Mac........................................................
2,575,000
60,300 Leucadia National
Corp............................................. 1,277,606
84,000 Loews
Corp.........................................................
6,594,000
10,000 Newcourt Credit Group
Inc.......................................... 143,125
48,000 The Pioneer Group, Inc.
*.......................................... 723,000
- ------------
12,775,504
- ------------
HEALTH CARE -- 1.1%
12,000 Foundation Health Systems, Inc., Class A Shares
*.................. 153,000
6,827 HEALTHSOUTH Corp.
*................................................ 55,896
36,000 Humana Inc.
*...................................................... 326,250
22,077 Wellpoint Health Networks Inc.
*................................... 1,608,861
- ------------
2,144,007
- ------------
INSURANCE - LIFE, ACCIDENT & HEALTH -- 1.0%
1,714 Delphi International Ltd.
*........................................ 9,159
27,950 Fremont General
Corp............................................... 277,753
11,800 Kansas City Life Insurance
Co...................................... 481,588
30,040 UnumProvident
Corp................................................. 1,083,317
- ------------
1,851,817
- ------------
INSURANCE - PROPERTY & CASUALTY -- 18.8%
5,040 Allmerica Financial
Corp........................................... 284,760
101,300 CNA Financial Corp.
*.............................................. 3,684,787
5,000 Chartwell Re
Corp.................................................. 80,000
328,000 The Chubb
Corp..................................................... 18,757,500
5,000 Everest Reinsurance Holdings,
Inc.................................. 138,750
40,000 Merchants Group,
Inc............................................... 935,000
42,000 Old Republic International
Corp.................................... 651,000
216,750 Orion Capital
Corp................................................. 10,458,187
4,000 Reliance Group Holdings,
Inc....................................... 19,000
25,000 Trenwick Group
Inc................................................. 548,438
- ------------
35,557,422
- ------------
</TABLE>
SEE 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
Schedule of Investments (continued)
August 31, 1999
<TABLE>
<CAPTION>
SHARES SECURITY
VALUE
- --------------------------------------------------------------------------------
- -----------------------------------
<S> <C>
<C>
REAL ESTATE -- 2.5%
Forest City Enterprises, Inc.:
118,500 Class A
Shares................................................... $ 2,888,437
66,100 Class B Shares,
Convertible...................................... 1,751,650
- ------------
4,640,087
- ------------
TECHNOLOGY -- 1.5%
5,000 Inso Corp.
*....................................................... 35,156
25,000 Intel
Corp.........................................................
2,054,688
15,000 National Semiconductor Corp.
*..................................... 422,813
21,302 Silicon Graphics, Inc.
*........................................... 243,642
- ------------
2,756,299
- ------------
TRANSPORTATION -- 7.1%
79,200 AMR Corp.
*........................................................ 4,643,100
73,000 Airborne Freight
Corp.............................................. 1,838,687
32,000 Canadian Pacific
Ltd............................................... 750,000
80,100 General Dynamics
Corp.............................................. 5,046,300
9,500 International Shipholding
Corp..................................... 111,031
4,105 KLM--
ADR...........................................................
111,605
18,000 Lockheed Martin
Corp............................................... 666,000
20,600 Overseas Shipholding Group,
Inc.................................... 287,113
- ------------
13,453,836
- ------------
TOTAL COMMON STOCK (Cost-- $39,689,395)
........................... 154,989,052
- ------------
FACE
AMOUNT SECURITY
VALUE
- --------------------------------------------------------------------------------
- -----------------------------------
CONVERTIBLE CORPORATE BONDS -- 0.3%
CONSUMER GOODS -- 0.3%
$ 2,500,000 Sunbeam Corp., zero coupon due 3/25/18++ (Cost--
$592,868)......... 453,125
- ------------
TOTAL LONG-TERM INVESTMENTS (Cost--
$40,282,263)................... 155,442,177
- ------------
CORPORATE SHORT-TERM NOTES -- 17.6%
7,080,000 American Express Credit Corp., 5.235% due
9/2/99................... 7,080,000
6,507,000 Chevron Oil Finance Corp., 5.035% due
9/1/99....................... 6,507,000
4,323,000 Exxon Asset Management Corp., 5.305% due
9/7/99.................... 4,323,000
5,341,000 Ford Motor Credit Corp., 5.255% due
9/3/99......................... 5,341,000
10,020,000 General Electric Capital Corp., 5.286% due
9/7/99.................. 10,020,000
- ------------
TOTAL CORPORATE SHORT-TERM NOTES (Cost--
$33,271,000).............. 33,271,000
- ------------
TOTAL INVESTMENTS -- 100% (Cost --
$73,553,263**).................. $188,713,177
============
<FN>
- ------------
* Non-income producing security.
+ Security valued at fair value.
++ Security is exempt from registration under Rule 144A of the Securities Act of
1933. This security may be
resold in transactions that are exempt from registration, normally to
qualified institutional buyers.
** Aggregate cost for Federal income tax purposes is substantially the same.
</FN>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 7
</TABLE>
<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 Assets and Liabilities
August 31, 1999
<TABLE>
<S>
<C>
ASSETS:
Investments, at value (cost--
$40,282,263)......................................... $155,442,177
Corporate short-term notes, at value (Cost--
$33,271,000).......................... 33,271,000
Cash............................................................................
... 585
Dividends and interest
receivable.................................................. 277,216
Receivable for Fund shares
sold.................................................... 1,056
Other...........................................................................
... 1,635
- ------------
TOTAL
ASSETS.......................................................................
188,993,669
- ------------
LIABILITIES:
Management fees
payable............................................................
163,380
Payable for Fund shares
reacquired................................................. 4,926
Accrued
expenses...................................................................
81,843
- ------------
TOTAL
LIABILITIES..................................................................
250,149
- ------------
TOTAL NET
ASSETS.....................................................................
$188,743,520
============
NET ASSETS:
Common stock ($0.01 par value, authorized 15,000,000 shares;
3,798,376 shares
outstanding).................................................... $ 37,984
Capital paid in excess of par
value................................................ 62,598,475
Undistributed net investment
income................................................ 2,152,450
Accumulated net realized gain on
investments....................................... 8,794,697
Net unrealized appreciation on
investments......................................... 115,159,914
- ------------
TOTAL NET
ASSETS.....................................................................
$188,743,520
============
Net Asset Value, Per Share ($188,743,520 / 3,798,376
shares)......................... $49.69
======
</TABLE>
SEE 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, 1999
<TABLE>
<S>
<C>
INVESTMENT INCOME:
Dividends.......................................................................
... $ 3,382,675
Interest........................................................................
... 1,876,328
Less: Foreign withholding
tax...................................................... (88,528)
- ------------
TOTAL INVESTMENT
INCOME............................................................
5,170,475
- ------------
EXPENSES:
Management fees (Note
2)........................................................... 1,921,430
Legal...........................................................................
... 35,153
Audit and tax
services.............................................................
43,800
Shareholder
services...............................................................
35,550
Shareholder communication
fees..................................................... 32,062
Custody.........................................................................
... 38,609
Registration
fees..................................................................
16,847
Directors'
fees....................................................................
9,050
Other...........................................................................
... 53,658
- ------------
TOTAL
EXPENSES.....................................................................
2,186,159
- ------------
NET INVESTMENT
INCOME................................................................
2,984,316
- ------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from
sales..............................................................
19,158,129
Cost of securities
sold.......................................................... 6,920,235
- ------------
NET REALIZED
GAIN..................................................................
12,237,894
- ------------
Change in Net Unrealized Appreciation on Investments:
Beginning of
year................................................................
101,396,990
End of
year......................................................................
115,159,914
- ------------
INCREASE IN NET UNREALIZED
APPRECIATION............................................ 13,762,924
- ------------
NET GAIN ON
INVESTMENTS..............................................................
26,000,818
- ------------
INCREASE IN NET ASSETS FROM
OPERATIONS............................................... $ 28,985,134
============
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 9
</TABLE>
<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
Statements of Changes in Net Assets
For the Years Ended August 31,
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
- -----------------------------------
<S>
<C> <C>
OPERATIONS:
Net investment income....................................
$ 2,984,316 $ 1,720,273
Net realized gain........................................
12,237,894 15,568,652
Increase (decrease) in net unrealized appreciation.......
13,762,924 (22,723,931)
- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS........
28,985,134 (5,435,006)
- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income....................................
(1,859,719) (1,444,133)
Net realized gains.......................................
(18,345,689) (5,165,552)
- ------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS..........................
(20,205,408) (6,609,685)
- ------------ ------------
FUND SHARE TRANSACTIONS (NOTE 4):
Net proceeds from sale of shares.........................
2,519,335 5,372,304
Net asset value of shares issued for
reinvestment of dividends..............................
16,435,063 5,244,472
Cost of shares reacquired................................
(16,259,750) (9,798,741)
- ------------ ------------
INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS......
2,694,648 818,035
- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS..........................
11,474,374 (11,226,656)
NET ASSETS:
Beginning of year........................................
177,269,146 188,495,802
- ------------ ------------
END OF YEAR*.............................................
$188,743,520 $177,269,146
============ ============
*Includes undistributed net investment income of:........
$ 2,152,450 $ 1,027,853
============ ============
</TABLE>
SEE 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 Salomon Brothers Opportunity Fund Inc ("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), or if "restricted" securities are
being valued, such portfolio securities and other assets are valued at fair
value determined pursuant to procedures established by the Board of Directors.
Short-term securities with less than 60 days remaining to maturity when acquired
by the Fund are valued at amortized cost 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 substantially
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 sales 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
<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 (continued)
(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. 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. 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.
3. PORTFOLIO ACTIVITY
During the year ended August 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (excluding short-term securities) were as
follows:
Purchases................................... $ 4,068,843
===========
Sales....................................... $19,158,129
===========
At August 31, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
Gross unrealized appreciation............... $116,685,790
Gross unrealized depreciation............... (1,525,876)
------------
Net unrealized appreciation................. $115,159,914
============
4. SHARES OF CAPITAL STOCK
At August 31, 1999, the Fund had 15,000,000 shares of capital stock
authorized with a par value of $0.01 per share. Transactions in shares for the
portfolio were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED
AUGUST 31, 1999
AUGUST 31, 1998
------------------------- ----
- ---------------------
SHARES AMOUNT
SHARES AMOUNT
-------- ---------- ----
- ---- ----------
<S> <C> <C> <C>
<C>
Shares sold................................ 50,822 $ 2,519,335
97,900 $ 5,372,304
Shares issued on reinvestment.............. 333,965 16,435,063
98,645 5,244,472
Shares reacquired.......................... (329,146) (16,259,750)
(176,190) (9,798,741)
------- ----------- ---
- ---- -----------
Net Increase............................... 55,641 $ 2,694,648
20,355 $ 818,035
======= ===========
======= ===========
</TABLE>
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 ended
August 31:
<TABLE>
<CAPTION>
1999 1998
1997 1996 1995
- --------------------------------------------------------------------------------
- ----------------------------
<S> <C> <C>
<C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR.......... $47.36 $50.64
$37.89 $35.75 $31.47
------ ------ -
- ----- ------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income..................... 0.76 0.46
0.43 0.60 0.45
Net realized and unrealized gain (loss)... 6.98 (1.95)
14.46 3.38 5.68
------ ------ -
- ----- ------ ------
TOTAL INCOME (LOSS) FROM OPERATIONS......... 7.74 (1.49)
14.89 3.98 6.13
------ ------ -
- ----- ------ ------
LESS DISTRIBUTIONS FROM:
Net investment income..................... (0.47) (0.39)
(0.62) (0.48) (0.37)
Net realized gains........................ (4.94) (1.40)
(1.52) (1.36) (1.48)
------ ------ -
- ----- ------ ------
Total Distributions......................... (5.41) (1.79)
(2.14) (1.84) (1.85)
------ ------ -
- ----- ------ ------
NET ASSET VALUE, END OF YEAR................ $49.69 $47.36
$50.64 $37.89 $35.75
====== ======
====== ====== ======
TOTAL RETURN................................ 16.5% (3.3)%
40.5% 11.4% 21.1%
NET ASSETS, END OF YEAR (000S).............. $188,744 $177,269
$188,496 $141,984 $131,237
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................. 1.14% 1.12%
1.16% 1.18% 1.18%
Net investment income..................... 1.55 0.83
0.95 1.59 1.39
PORTFOLIO TURNOVER RATE..................... 3% 3%
4% 5% 8%
PAGE 13
</TABLE>
<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 assets and liabilities, including
the schedule of investments, 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, 1999, 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, 1999 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
October 15, 1999
PAGE 14
<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
Tax Information (unaudited)
For Federal tax purposes the Fund hereby designates for the fiscal year ended
August 31, 1999:
* A corporate dividends received deduction of 38.54%.
* Total long-term capital gain distributions paid of $18,177,907.
PAGE 15
<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
Other Information (unaudited)
Year 2000. The investment management services provided to the Fund by Salomon
Brothers Asset Management Inc. ("SBAM") depend in large part on the smooth
functioning of its computer systems. Many computer software systems in use today
cannot recognize the year 2000, but revert to 1900 or some other date, due to
the manner in which the dates were encoded or calculated. The capability of
these systems to recognize the year 2000 could have a negative impact on the
SBAM's provision of investment advisory services, including handling of
securities trades, pricing and account services. SBAM has advised the Fund that
it has been reviewing all of their computer systems and actively working on
necessary changes to its systems to prepare for the year 2000 and expects that
given the extensive testing which it is undertaking, its systems will be year
2000 compliant before such date. In addition, SBAM has been advised by certain
of the Fund's service providers that they are also in the process of modifying
their systems with the same goal. There can, however, be no assurance that SBAM
or any other service provider will be successful in achieving year 2000
compliance, or that interaction with other non-complying computer systems will
not impair services to the Fund at that time.
PAGE 16
<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
HEATH B. MCLENDON
Chairman, Managing Director,
Salomon Smith Barney, Inc.; President and
Director, SSBC Fund Management Inc. and
Travelers Investment Adviser, Inc.
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
HEATH B. MCLENDON
Chairman
IRVING BRILLIANT
President and Portfolio Manager
LEWIS E. DAIDONE
Executive Vice President and Treasurer
ANTHONY PACE
Controller
CHRISTINA T. SYDOR
Secretary
ROBERT A. VEGLIANTE
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
CFBDS, Inc.
21 Milk Street
Boston, Massachusetts 02109-5408
CUSTODIAN
PNC Bank N.A.
17th & Chestnut Streets
Philadelphia, Pennsylvania 19103
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>
First Data Investor Services Group, Inc.
53 State Street
Boston, Massachusetts 02109-2873
Salomon Brothers
Opportunity Fund Inc
Annual Report
AUGUST 31, 1999
----------------------------------------
Salomon Brothers Asset Management
----------------------------------------
Not FDIC Insured * No Bank Guarantee * May Lose Value
FIRST-CLASS
U.S. POSTAGE
PAID
NORTH READING, MA
PERMIT No. 105
OPANN 8/99
