<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 21, 2000
REGISTRATION NO. 2-63023
811-2884
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM N-1A
<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 25 [x]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 [x]
Amendment No. 25 [x]
</TABLE>
-------------------
SALOMON BROTHERS OPPORTUNITY FUND INC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
-------------------
7 WORLD TRADE CENTER,
NEW YORK, NEW YORK, 10048
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (800) 725-6666
-------------------
IRVING G. BRILLIANT
SALOMON BROTHERS ASSET MANAGEMENT INC
7 WORLD TRADE CENTER
NEW YORK, NEW YORK, 10048
(NAME AND ADDRESS OF AGENT FOR SERVICE)
-------------------
COPY TO:
SARAH E. COGAN, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK, 10017
-------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
this Post-Effective Amendment becomes effective.
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[x] on December 29, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
--------------------------------------------------------------------------------
<PAGE>
SALOMON BROTHERS
OPPORTUNITY FUND INC
PROSPECTUS
December 29, 2000
The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
<PAGE>
CONTENTS
<TABLE>
<S> <C>
Investments, risks and performance.......................... 2
More on the Fund's investments.............................. 4
Management.................................................. 6
Buying shares............................................... 6
Redeeming shares............................................ 8
Other things to know about share transactions............... 10
Dividends, distributions and taxes.......................... 11
Financial highlights........................................ 12
</TABLE>
YOU SHOULD KNOW
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government agency.
Salomon Brothers Opportunity Fund Inc - 1
<PAGE>
--------------------------------------------------------------------------------
INVESTMENTS, RISKS AND PERFORMANCE
<TABLE>
<S> <C>
INVESTMENT The Fund seeks to achieve above average long-term capital
OBJECTIVE appreciation. Current income is a secondary objective.
-------------------------------------------------------------------------------------
KEY The Fund invests primarily in common stocks and securities
INVESTMENTS convertible into common stock such as convertible preferred
stock or convertible debt securities.
-------------------------------------------------------------------------------------
HOW THE The manager emphasizes individual security selection while
MANAGER varying the Fund's investments across industries, which may
SELECTS THE help to reduce risk. The manager evaluates companies of all
FUND'S sizes -- from established large capitalization companies to
INVESTMENTS young start-up companies. The manager seeks to identify
those companies whose securities are trading at prices which
are below the company's intrinsic value. This style of stock
selection is known as 'value' investing. The manager employs
fundamental analysis to analyze each company in detail,
ranking its management, strategy and competitive market
position.
The manager currently pursues a strategy of retaining
unrealized long-term capital gain and avoiding the tax
impact of realizing such gain. This strategy reflects the
belief of the manager that these securities continue to have
long-term growth potential.
In selecting individual companies for investment, the
manager considers how the following would affect a company's
earnings, the market price of its shares and the market's
evaluation of the company's future earnings:
Changes in management, policies, corporate control or
capitalization;
Changes in technology, marketing or production, the
development of new products or services or the demand
for existing products or services;
The effect of recent and anticipated capital
expenditures; and
The effect of social, economic, political, legal and
international developments.
-------------------------------------------------------------------------------------
PRINCIPAL RISKS While investing in equity securities historically has
OF INVESTING IN produced greater average returns than investments in fixed
THE FUND income securities, equity investments may also involve added
risks. Investors could lose money on their investment in the
Fund, or the Fund may not perform as well as other
investments, if any of the following occurs:
U.S. stock markets decline.
Value stocks fall out of favor with investors.
An adverse event, such as an unfavorable earnings
report, negatively affects the stock price of a
company in which the Fund invests.
The manager's judgment about the attractiveness,
value or potential appreciation of a particular
stock proves to be incorrect.
The Fund is not diversified, which means that it can invest
a higher percentage of its assets in any one issuer than a
diversified fund. Being non-diversified may magnify the
Fund's losses from events affecting a particular issuer.
As a result of the manager's strategy of retaining
unrealized capital gains, the Fund currently has a
substantial amount of net unrealized appreciation. On August
31, 2000, the amount of the net unrealized appreciation was
approximately $129,000,000, representing approximately 61%
of the Fund's net assets. If the manager chooses to sell
certain portfolio securities to take advantage of lower
long-term capital gains rates to invest in other attractive
investment opportunities the Fund may recognize sizeable
gains, which the Fund will distribute to stockholders who
will be taxed on those distributed gains. See 'Dividends,
Distributions and Income Taxes.'
</TABLE>
Salomon Brothers Opportunity Fund Inc - 2
<PAGE>
PERFORMANCE
<TABLE>
<S> <C> <C>
The bar chart indicates the risks of [BAR CHART]
investing in the Fund by showing
changes in the Fund's performance
from year to year. Past performance
does not necessarily indicate how
the Fund will perform in the future.
QUARTERLY RETURNS:
Highest: 17.53% in 1st quarter 1991
Lowest: - 18.19% in 3rd quarter
1990
YEAR TO DATE: 18.90%
through 9/30/00
TOTAL RETURN
The bar chart shows the
performance of the
Fund's shares for each
of the past 10 years.
------------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE TABLE
THIS TABLE ASSUMES REDEMPTION OF SHARES AT THE END OF THE PERIOD, AND THE
REINVESTMENT OF DISTRIBUTIONS AND DIVIDENDS.
AVERAGE ANNUAL TOTAL RETURNS (CALENDAR YEARS ENDED DECEMBER 31, 1999)
<TABLE>
<CAPTION>
1 5 10
YEAR YEARS YEARS
<S> <C> <C> <C>
Fund 0.87 17.85 12.44
COMPARATIVE
S&P 500 Index 21.03 28.54 18.19 PERFORMANCE
The table indicates the
risk of investing in
the Fund by comparing
the average annual
total return of the
Fund for the periods
shown to that of the
Standard & Poor's 500
Stock Index, a broad-
based unmanaged index
of widely held common
stocks.
</TABLE>
----------------------------------------------------------------------
FEE TABLE
----------------------------------------------------------------------
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<S> <C> <C>
Maximum sales charge on purchases (as a percentage of
offering price) None
Maximum deferred sales charge on redemptions (as a
percentage of amount redeemed) None
FEES AND EXPENSES
This table sets forth
the fees and expenses
you will pay if you
invest in shares of the
Fund.
----------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (PAID BY THE FUND AS A % OF NET
ASSETS)
Management fees 1.00%
Distribution and service (12b-1) fee None
Other expenses 0.11%
Total annual fund operating expenses 1.11%
-----------------------------------------------------------------------------------------------
</TABLE>
EXAMPLE
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF YEARS YOU OWN YOUR SHARES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C>
113 353 612 1,352
This example helps you
compare the cost of
investing in the Fund
with other mutual
funds. Your actual cost
may be higher or lower.
</TABLE>
The example assumes: You invest $10,000 for the period shown
You reinvest all distributions and dividends without
a sales charge
The Fund's operating expenses remain the same
Your investment has a 5% return each year
Redemption of your shares at the end of the period
Salomon Brothers Opportunity Fund Inc - 3
<PAGE>
--------------------------------------------------------------------------------
MORE ON THE FUND'S INVESTMENTS
<TABLE>
<S> <C>
ADDITIONAL The Fund's investment objective and its principal investment
INVESTMENTS AND strategies and risks are described under 'Investments, Risks
INVESTMENT and Performance.' This section provides additional
TECHNIQUES information about the Fund's investments and certain
portfolio management techniques the Fund may use. More
information about the Fund's investments and portfolio
management techniques, some of which entail risks, is
included in the statement of additional information (SAI).
Any policy or limitation for the Fund that is expressed as a
percentage of assets is considered only at the time of
purchase of portfolio securities. The policy will not be
violated if these limitations are exceeded because of
changes in the market value of the Fund's assets or for any
other reason.
----------------------------------------------------------------------------------
HIGH YIELD, LOWER The Fund may invest up to 5% of its net assets in fixed
QUALITY SECURITIES income securities that are high yield, lower quality
securities rated by a rating organization below its top four
long-term rating categories (i.e., below investment grade)
or unrated securities determined by the manager to be of
equivalent quality. These securities are commonly referred
to as 'junk bonds.' The issuers of lower quality bonds may
be highly leveraged and have difficulty servicing their
debt, especially during prolonged economic recessions or
periods of rising interest rates. The prices of lower
quality securities are volatile and may go down due to
market perceptions of deteriorating issuer creditworthiness
or economic conditions. Lower quality securities may become
illiquid and hard to value in down markets.
----------------------------------------------------------------------------------
FOREIGN AND The Fund may invest without limit in foreign securities and
EMERGING MARKET American Depository Receipts which are publicly traded in
INVESTMENTS the U.S. and up to 5% of its net assets in foreign
securities which are not publicly traded in the U.S. The
Fund's investments in securities of foreign issuers involve
greater risk than investments in securities of U.S. issuers.
Many foreign countries the Fund may invest in have markets
that are less liquid and more volatile than markets in the
U.S. In some foreign countries, less information is
available about foreign issuers and markets because of less
rigorous accounting and regulatory standards than in the
U.S. Currency fluctuations could erase investment gains or
add to investment losses. The risks of investing in foreign
securities are greater for securities of emerging market
issuers because political or economic instability, lack of
market liquidity, and negative government actions like
currency controls or seizure of private businesses or
property are more likely.
----------------------------------------------------------------------------------
BORROWING MONEY The Fund may borrow money from banks for either investment
or temporary purposes. Borrowings (excluding temporary
borrowings) may be secured by up to 33 1/3% of the value of
the Fund's total assets. The Fund may borrow an additional
amount of up to 5% of the Fund's total assets. While
borrowing creates an opportunity for increased return by
leveraging the Fund's portfolio, it creates special risks.
Borrowing may exaggerate changes in the net asset value of
the Fund's shares and in the return on the Fund's portfolio.
Although the principal amount of any borrowing will be
fixed, the Fund's assets may change in value during the time
the borrowing is outstanding. The Fund may be required to
liquidate portfolio securities at a time when it would be
disadvantageous to do so in order to make payments with
respect to any borrowing, which could affect the investment
manager's strategy. An increase in interest rates could
reduce the value of the Fund's shares by increasing the
Fund's interest expense. To date, the Fund has never
borrowed.
</TABLE>
Salomon Brothers Opportunity Fund Inc - 4
<PAGE>
<TABLE>
<S> <C>
----------------------------------------------------------------------------------
SECURITIES LENDING The Fund may lend portfolio securities representing up to
10% of total assets in order to increase its net investment
income. The loans are continuously secured by cash or liquid
securities equal to no less than the market value,
determined daily, of the securities loaned. The risks in
lending securities consist of possible delay in receiving
additional collateral, delay in recovery of securities when
the loan is called or possible loss of collateral should the
borrower fail financially.
----------------------------------------------------------------------------------
DERIVATIVES AND The Fund may, but need not, use derivative contracts, such
HEDGING TECHNIQUES as options on securities and securities indices for any of
the following purposes:
To hedge against the economic impact of adverse changes in
the market value of its securities due to changes in stock
market prices or fluctuations in exchange rates
As a substitute for buying or selling securities
To enhance the Fund's return
A derivative contract will obligate or entitle a fund to
deliver or receive an asset or cash payment that is based on
the change in value of one or more securities, currencies or
indices. Even a small investment in derivative contracts can
have a big impact on a fund's stock market exposure.
Therefore, using derivatives can disproportionately increase
losses and reduce opportunities for gains when stock prices
are changing. A fund may not fully benefit from or may lose
money on derivatives if changes in their value do not
correspond accurately to changes in the value of the Fund's
holdings. The other parties to certain derivative contracts
present the same types of credit risk as issuers of fixed
income securities. Derivatives can also make a fund less
liquid and harder to value, especially in declining markets.
----------------------------------------------------------------------------------
TEMPORARY DEFENSIVE The Fund may depart from its principal investment strategies
INVESTING in response to adverse market, economic or political
conditions by taking temporary defensive positions in all
types of money market and short-term debt securities. If the
Fund takes a temporary defensive position, it may be unable
to achieve its investment goal.
----------------------------------------------------------------------------------
PORTFOLIO TURNOVER While the Fund has traditionally had very low portfolio
turnover, the Fund may engage in active and frequent trading
to achieve its principal investment strategies. Frequent
trading also increases transaction costs, which could
detract from a fund's performance.
</TABLE>
Salomon Brothers Opportunity Fund Inc - 5
<PAGE>
--------------------------------------------------------------------------------
MANAGEMENT
Salomon Brothers Asset Management Inc is the investment manager for the Fund.
Together with its affiliates, the manager provides a broad range of fixed
income and investment advisory services to various individuals located
throughout the world. The manager's principal address is 7 World Trade Center,
New York, New York 10048. It is a wholly-owned subsidiary of Citigroup, Inc.
Citigroup businesses produce a broad range of financial services -- asset
management, banking and consumer finance, credit and charge cards, insurance,
investments, investment banking and trading -- and use diverse channels to make
them available to consumer and corporate customers around the world. As of
September 30, 2000, the manager and its affiliates managed approximately $28.7
billion of assets.
Irving G. Brilliant is primarily responsible for day-to-day management of the
Funds's portfolio. Mr. Brilliant has been the Fund's Chairman and portfolio
manager since 1979. Since 1990, he has been a Director of the manager.
George Williamson serves as co-portfolio manager, along with Mr. Brilliant.
Mr. Williamson has been a Director of the manager since 1999. Prior to 1999,
he was a Vice President of the manager.
As compensation for its services, the Fund pays the manager a monthly fee
at the annual rate of 1% of the Fund's average daily net assets. Except for the
expenses paid by the manager that are described herein, the Fund bears all
costs of its operations.
<TABLE>
<S> <C>
----------------------------------------------------------------------------------
DISTRIBUTOR CFBDS, Inc. a registered broker-dealer, serves as the Fund's
distributor.
----------------------------------------------------------------------------------
ADMINISTRATOR SSB Citi Fund Management LLC ('SSB Citi'), an affiliate of
the manager, serves as administrator for the Fund. As
compensation for its services and at no additional cost to
the Fund, the manager pays SSB Citi a fee each month at an
annual rate of .05% of the average daily value of the Fund's
net assets.
</TABLE>
--------------------------------------------------------------------------------
BUYING SHARES
<TABLE>
<S> <C>
BUYING SHARES Shares may be purchased at net asset value without a sales
BY MAIL charge.
You may make The minimum initial investment is $1,000 and subsequent
subsequent investments require a minimum of $100. For Individual
purchases by mail Retirement Accounts and Self- Employed Retirement Plans
or, if you elect, (formerly, Keogh Plans), the minimum initial investment is
by telephone $250. In addition, an account can be established with a
minimum of $50 if such account will be receiving regular
periodic investments through the Automatic Investment
Plan. See 'Automatic Investment Plan.'
Shares of the Fund may be initially purchased through PFPC
Global Fund Services, Inc. ('PFPC' or the 'transfer agent')
by completing a Purchase Application and forwarding it to
the transfer agent. Shares may also be purchased from
selected dealers in accordance with procedures established
by the dealer. The dealer may charge a fee for executing
your order. The Fund reserves the right to reject any
purchase order in whole or in part.
Subsequent investments may be made by mailing a check to the
transfer agent, along with the detachable stub from your
Statement of Account (or a letter providing the account
number) or through a selected dealer. Your check should be
made payable to Salomon Brothers Funds. If an investor's
purchase check is not collected, the purchase will be
cancelled and the transfer agent will charge a $10 fee to
the shareholder's account. There is a ten day hold on all
checks and no redemptions are allowed until the proceeds
from the check clears.
</TABLE>
Salomon Brothers Opportunity Fund Inc - 6
<PAGE>
<TABLE>
<S> <C>
Write the transfer agent at the following address:
Salomon Brothers Opportunity Fund
Inc
c/o PFPC
P.O. Box 9764
Providence, RI 02940-9764
----------------------------------------------------------------------------------
BUYING SHARES Subsequent investments may also be made by wiring funds to
BY WIRE the transfer agent. Prior notification by telephone is not
required. You should instruct the wiring bank to transmit
the specified amount in federal funds to:
Boston Safe Deposit and Trust
Company
Boston, MA
ABA No. 011-001-234
Account #142743
Attn: Salomon Brothers Opportunity
Fund Inc
Name of Account:
Account # (as assigned):
To ensure prompt credit to their accounts, investors or
their dealers should call (800) 446-1013 with a reference
number for the wire. Shareholders should note that their
bank may charge a fee in connection with transferring money
by bank wire.
Orders for the purchase of Fund shares received by selected
dealers by the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m. Eastern time) on any day
that the Fund calculates its net asset value and either
transmitted to PFPC through the facilities of the National
Securities Clearing Corporation ('NSCC') by 7:00 p.m., New
York time, on that day will be priced according to the net
asset value determined on that day. Otherwise, the orders
will be priced as of the time the net asset value is next
determined. It is the dealers' responsibility to ensure that
orders are transmitted so as to be received by PFPC through
the facilities of NSCC prior to the close of its business
day. Any loss resulting from a dealer's failure to submit an
order within the prescribed time frame will be borne by that
dealer.
Funds transmitted by a wire system other than the Federal
Reserve Wire System generally take one business day to be
converted into federal funds. In those cases in which an
investor pays for shares by a check drawn on a member bank
of the Federal Reserve System, federal funds generally will
become available on the business day after the check is
deposited. Checks drawn on banks which are not members of
the Federal Reserve System or foreign banks may take
substantially longer to be converted into federal funds.
AUTOMATIC You may authorize the transfer agent to automatically
INVESTMENT transfer funds on a periodic basis (monthly, alternative
PLAN months, quarterly) from a regular bank account or other
financial institution to buy shares of the Fund. On or about
the 10th of the month, the Fund will debit the bank account
in the specified amount (minimum of $25 per draft) and the
proceeds will be invested at the applicable offering price
determined on the date of the debit. In order to set up a
plan, your bank must be a member of the Automated Clearing
House.
Amounts transferred should be at least $25 monthly.
If you do not have sufficient funds in your bank account on
a transfer date, the transfer agent may charge you a fee.
For more information, consult the SAI.
</TABLE>
Salomon Brothers Opportunity Fund Inc - 7
<PAGE>
--------------------------------------------------------------------------------
REDEEMING SHARES
<TABLE>
<S> <C>
REDEMPTIONS BY MAIL You may redeem some or all of your shares by sending your
redemption request in proper form to:
PFPC Global Fund Services, Inc.
c/o Salomon Brothers Opportunity Fund
P.O. Box 9764
Providence, RI 02940-9764
Generally, a properly The written request for redemption must be in good order.
completed Redemption This means that you have provided the following information.
Form with any required Your request will not be processed without this information.
signature guarantee is Account number
all that is required Dollar amount or number of shares to redeem
for a redemption. In Signature of each owner exactly as the account is registered
some cases, however, Other documentation required by the transfer agent
other documents may be To be in good order, your request must include a signature
necessary. guarantee if:
The proceeds of the redemption exceed $50,000
The proceeds are not paid to the record owner(s) at the
record address
The shareholder(s) has had an address change in the past 45
days
The shareholder(s) is a corporation, sole proprietor,
partnership, trust or fiduciary
You can obtain a signature guarantee from most banks,
dealers, brokers, credit unions and federal savings and
loans, but not from a notary public.
-------------------------------------------------------------------------------------
REDEMPTIONS BY FAX You may redeem shares by fax only if a signature guarantee
or other documentary evidence is not required. Redemption
requests should be properly signed by all owners of the
account and faxed to the transfer agent at (508) 871-9503.
If fax redemptions are not available for any reason, you may
use the Fund's redemption by mail procedure described above.
-------------------------------------------------------------------------------------
REDEMPTION In all cases, your redemption price is the net asset value
PAYMENTS next determined after your request is received in good
Any request that your order. The Fund does not charge a redemption fee. Redemption
redemption proceeds be proceeds normally will be sent within seven days. However,
sent to a destination if you recently purchased your shares by check, your
other than your bank redemption proceeds will not be sent to you until your
account or address of original check clears. Your redemption proceeds can be sent
record must be in by check to your address of record or by wire transfer to a
writing and must bank account designated on your application.
include signature The Fund may suspend the right of redemption during any
guarantees. period when: (a) trading on the NYSE is restricted or the
NYSE is closed, other than customary weekend and holiday
closings; (b) the SEC has by order permitted such
suspension; or (c) an emergency exists, as defined by rules
of the SEC, making disposal of portfolio securities or
determination of the value of net assets of the Fund not
reasonably practicable.
-------------------------------------------------------------------------------------
REDEMPTIONS THROUGH You may transmit your redemption request to selected dealers
SELECTED DEALERS with which the distributor has entered into sales agreements
for the purchase of shares of the funds. Redemption orders
received by these dealers before the New York Stock Exchange
closes and which are transmitted to the transfer agent prior
to the close of its business day (normally 5:00 p.m. Eastern
time) are effective that day. It is the responsibility of
the dealer to transmit orders on a timely basis to the
transfer agent. The dealer may charge you a fee for
executing your order.
</TABLE>
Salomon Brothers Opportunity Fund Inc - 8
<PAGE>
<TABLE>
<S> <C>
-------------------------------------------------------------------------------------
REDEMPTIONS BY WIRE You may redeem shares by wire in amounts of $500 to $50,000
if redemption by wire has been elected on your Purchase
Application. A signature guarantee is not required on this
type of redemption request. To elect this service after
opening your account, call the transfer agent at (800)
446-1013 for more information. To redeem by wire, you may
either:
Telephone the redemption request to the transfer agent at
(800) 446-1013
Mail the request to the transfer agent at the address listed
above
Proceeds of wire redemptions of $500 or more will be wired
to the bank which is indicated on your Purchase Application
or by letter which has been properly guaranteed. Checks for
redemption proceeds of less than $500 will be mailed to your
address of record. You should note that your bank may charge
you a fee in connection with money by wire.
-------------------------------------------------------------------------------------
REDEMPTIONS BY You may redeem shares by telephone if you elect the
TELEPHONE telephone redemption option on your Purchase Application and
you have a direct account with the transfer agent. The
proceeds must be mailed to your address of record. In
addition, you must be able to provide proper identification
information. You may not redeem by telephone if your address
has changed within the past 45 days or if your shares are in
certificate form. Telephone redemption requests may be made
by calling the transfer agent at (800) 446-1013 between 9:00
a.m. and 4:00 p.m. Eastern time on any day the New York
Stock Exchange is open. If telephone redemptions are not
available for any reason, you may use the Fund's regular
redemption procedure described above.
Stockholders cannot apply the telephone redemption privilege
to shares held in certificate form or for accounts requiring
additional supporting documentation for redemptions such as
trust, corporate, estate and guardian accounts.
-------------------------------------------------------------------------------------
AUTOMATIC CASH You can arrange for the automatic redemption of a portion of
WITHDRAWAL PLAN your shares on a monthly or quarterly basis. To qualify, you
must own shares of the Fund with a value of at least $7,500
and each automatic redemption must be at least $50.
</TABLE>
Salomon Brothers Opportunity Fund Inc - 9
<PAGE>
--------------------------------------------------------------------------------
OTHER THINGS TO KNOW ABOUT SHARE TRANSACTIONS
<TABLE>
<S> <C>
Small account balances If your account falls below $1,000 due to redemption of Fund
shares, the Fund may ask you to bring your account up to the
minimum requirement. If your account is still below $1,000
after 30 days, the Fund may close your account and send you
the redemption proceeds.
-------------------------------------------------------------------------------------
Share price You may buy, exchange or redeem Fund shares at the net asset
value next determined after receipt of your request in good
order. The Fund's net asset value is the value of its assets
minus its liabilities and is calculated every day as of the
close of regular trading on the NYSE (normally 4:00 p.m.
Eastern time) each day the NYSE is open.
The Fund generally values its securities based on market
prices or quotations. The Fund's currency conversions are
done when the London stock exchange closes, which is 12 noon
Eastern time. When market prices are not available, or when
the manager believes they are unreliable or that the value
of a security has been materially affected by events
occurring after a foreign exchange closes, the Fund may
price its securities at fair value. Fair value is determined
in accordance with procedures approved by the Fund's board.
A fund that uses fair value to price securities may value
its securities higher or lower than another fund that uses
market quotations to price the same securities.
International markets may be open on days when U.S. markets
are closed and the value of foreign securities owned by the
Fund could change on days when you cannot buy or redeem
shares.
In order to buy, redeem or exchange shares at that day's
price, you must place your order with the transfer agent or
selected dealers before the New York Stock Exchange closes.
If the New York Stock Exchange closes early, you must place
your order prior to the actual closing time. Otherwise, you
will receive the next business day's price.
Members of the Fund's selling group must transmit all orders
to buy, exchange or redeem shares to the Fund's transfer
agent before the agent's close of business.
-------------------------------------------------------------------------------------
The Fund has the right to:
Suspend the offering of shares
Waive or change minimum and additional investment amounts
Reject any purchase or exchange order
Change, revoke or suspend the exchange privilege
Suspend telephone transactions
Suspend or postpone redemptions of shares on any day when
trading on the NYSE is restricted, or as otherwise permitted
by the SEC
-------------------------------------------------------------------------------------
Redemptions in kind The Fund may make payment for Fund shares wholly or in part
by distributing portfolio securities to the shareholders.
The redeeming shareholder must pay transaction costs to sell
these securities.
</TABLE>
Salomon Brothers Opportunity Fund Inc - 10
<PAGE>
--------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS The Fund generally makes capital gain distributions and pays
dividends from its net investment income, if any, once a year,
typically in December. The Fund may pay additional
distributions and dividends at other times if necessary for
the Fund to avoid a federal income tax. Capital gain
distributions and dividends are reinvested in additional Fund
shares of the same class you hold. The Fund expects
distributions to be primarily from capital gains. You do not
pay a sales charge on reinvested distributions or dividends.
Alternatively, you can instruct the transfer agent to have
your distributions and/or dividends paid in cash. You can
change your choice at any time to be effective as of the next
distribution or dividend, except that any change given to the
transfer agent less than five days before the payment date
will not be effective until the next distribution or dividend
is paid.
--------------------------------------------------------------------------------
TAXES In general, redeeming shares, exchanging shares and receiving
distributions (whether in cash or additional shares) are all
taxable events.
<TABLE>
<CAPTION>
TRANSACTION FEDERAL INCOME TAX STATUS
<S> <C>
Redemption or exchange of shares Usually capital gain or loss; long-term only if
shares owned more than one year
Long-term capital gain distributions Long-term capital gain
Short-term capital gain distributions Ordinary income
Dividends Ordinary income
</TABLE>
Long-term capital gain distributions are taxable to you as
long-term capital gain regardless of how long you have
owned your shares. You may want to avoid buying shares when
the Fund is about to declare a capital gain distribution or
a taxable dividend, because it will be taxable to you even
though it may actually be a return of a portion of your
investment. In particular, as discussed earlier in this
Prospectus, the Fund currently has a substantial amount of
unrealized long-term capital gain which could result in
large capital gain distributions.
After the end of each year, the Fund will provide you with
information about the distributions and dividends that you
received and any redemptions of shares during the previous
year. If you do not provide the Fund with your correct
taxpayer identification number and any required
certifications, you may be subject to back-up withholding
of 31% of your distributions, dividends (other than
exempt-interest dividends), and, except for a money market
fund, redemption proceeds. Because each shareholder's
circumstances are different and special tax rules may
apply, you should consult your tax adviser about your
investment in a fund.
Salomon Brothers Opportunity Fund Inc - 11
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
performance of the Fund for the past 5 years. Total return represents the rate
that a shareholder would have earned (or lost) on a Fund share assuming
reinvestment of all dividends and distributions. The information in the
following table was audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's financial statements, are
included in the annual report (available upon request).
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year............. $ 49.69 $ 47.36 $ 50.64 $ 37.89 $ 35.75
-------- -------- -------- -------- --------
Net investment income.......................... 0.82 0.76 0.46 0.43 0.60
Net gains (or losses) on securities (both
realized and unrealized)...................... 8.79 6.98 (1.95) 14.46 3.38
-------- -------- -------- -------- --------
Total from investment operations............... 9.61 7.74 (1.49) 14.89 3.98
-------- -------- -------- -------- --------
Less dividends and distributions:
Dividends from net investment income........... (0.80) (0.47) (0.39) (0.62) (0.48)
Distributions from net realized gain on
investments................................... (2.52) (4.94) (1.40) (1.52) (1.36)
-------- -------- -------- -------- --------
Total dividends and distributions.............. (3.32) (5.41) (1.79) (2.14) (1.84)
-------- -------- -------- -------- --------
Net asset value, end of year................... $ 55.98 $ 49.69 $ 47.36 $ 50.64 $ 37.89
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return based on net asset
value per share............................... +20.4% +16.5% - 3.3% +40.5% +11.4%
Ratios/Supplemental Data:
Net assets, end of year (thousands)............ $212,155 $188,744 $177,269 $188,496 $141,984
Ratio of expenses to average net assets........ 1.11% 1.14% 1.12% 1.16% 1.18%
Ratio of net investment income to average net
assets........................................ 1.65% 1.55% 0.83% 0.95% 1.59%
Portfolio turnover rate........................ 3% 3% 3% 4% 5%
</TABLE>
Salomon Brothers Opportunity Fund Inc - 12
<PAGE>
SALOMON BROTHERS
OPPORTUNITY FUND INC
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE FUND
SHAREHOLDER REPORTS. Annual and semiannual reports to shareholders provide
additional information about the Fund's investments. These reports discuss the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION. The statement of additional information
provides more detailed information about the Fund. It is incorporated by
reference into (is legally a part of) this combined prospectus.
The Fund sends only one report to a household if more than one account has the
same address. Contact the transfer agent if you do not want this policy to apply
to you.
HOW TO OBTAIN ADDITIONAL INFORMATION.
You can make inquiries about the Fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting the
transfer agent, by calling 1-800-446-1013 or writing the Fund at Seven World
Trade Center, New York, NY, 10048 or calling your financial consultant.
Information about the Fund (including the statement of additional information)
can be reviewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. Information about the public reference room
may be obtained by calling 1-202-942-8090. Reports and other information about
the Fund are available on the EDGAR Database on the Commission's Internet site
at http://www.sec.gov and copies of this information may be obtained, after
paying a duplication fee, by electronic request at the following E-mail
address: [email protected] or by writing to the Public Reference Section of
the Commission, Washington, D.C. 20549-0102.
If someone makes a statement about the Fund that is not in this prospectus, you
should not rely upon that information. Neither the Fund nor the distributor is
offering to sell shares of the Fund to any person to whom the Fund may not
lawfully sell their shares.
(Investment Company Act
file no. 811-02884)
OPPRO 12/00
<PAGE>
SALOMON BROTHERS OPPORTUNITY FUND INC
A NO-LOAD MUTUAL FUND
7 WORLD TRADE CENTER, NEW YORK, NEW YORK 10048
(800) SALOMON
TELEPHONES: (800) 725-6666
OR (212) 783-1301 (NEW YORK STATE)
-------------------
STATEMENT OF ADDITIONAL INFORMATION
-------------------
Salomon Brothers Opportunity Fund Inc (the 'Fund') is an open-end, no-load,
non-diversified investment company. The Fund seeks to achieve above-average
long-term capital appreciation through investments principally in common stocks,
or securities convertible into or exchangeable for common stocks, which are
believed to be undervalued. Current income is a secondary objective. The Fund
may employ the speculative investment techniques of leveraging and investing in
restricted securities and other securities of limited marketability. There can
be no assurance that the Fund will achieve its investment objectives.
This Statement of Additional Information (the 'SAI') is not a prospectus and
is only authorized for distribution when preceded or accompanied by the Fund's
current prospectus dated December 29, 2000 (the 'prospectus'). This SAI
supplements and should be read in conjunction with the prospectus, a copy of
which may be obtained without charge by writing the Fund at the address, or by
calling the telephone numbers, listed above.
December 29, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Policies.................... 3
Investment Restrictions and
Limitations.......................... 6
Management............................. 8
Portfolio Transactions................. 11
Determination of Net Asset Value....... 12
Additional Redemption Information...... 12
Performance Data....................... 12
Federal Income Taxes................... 14
<CAPTION>
PAGE
----
Shareholder Services................... 16
Account Services....................... 17
Capital Stock.......................... 17
Administrator.......................... 17
Custodian and Transfer Agent........... 17
Independent Accountants................ 17
Counsel................................ 18
Financial Statements................... 18
</TABLE>
2
<PAGE>
INVESTMENT POLICIES
The following information supplements the discussion of the investment
policies of the Fund found under 'Investments, risks and performance' and 'More
on the Fund's investments' in the prospectus.
The Fund intends to invest primarily in common stocks, or securities
convertible into or exchangeable for common stocks, such as convertible
preferred stocks or convertible debentures. When management deems it appropriate
however, for temporary defensive purposes due to economic or market conditions,
the Fund may also invest without limitation in fixed-income securities or hold
assets in cash or cash equivalents, such as U.S. Government obligations,
investment grade debt securities and other money market instruments. Investment
grade debt securities are debt securities rated BBB or better by Standard &
Poor's Corporation ('S&P') or Baa or better by Moody's Investors Service, Inc.
('Moody's'), or if unrated, securities deemed by Salomon Brothers Asset
Management Inc ('SBAM' or the 'Manager'), the Fund's investment adviser, to be
of comparable quality. Debt securities rated BBB by S&P are regarded by S&P as
having an adequate capacity to pay interest and repay principal, while debt
securities rated Baa by Moody's are regarded by Moody's as medium grade
obligations and as having speculative characteristics. Investments in such
fixed-income securities may also be made for the purpose of capital
appreciation, as in the case of purchases of bonds trading at a substantial
discount.
LOANS OF PORTFOLIO SECURITIES
The Fund's Board of Directors may authorize the lending of portfolio
securities to selected member firms of the New York Stock Exchange ('NYSE'). The
procedure for the lending of securities will include the following features and
conditions. The borrower of the securities will deposit cash with the Fund in an
amount equal to a minimum of 100% of the market value of the securities lent.
The Fund will invest the collateral in short-term debt securities or cash
equivalents and earn the interest thereon. A negotiated portion of the income so
earned may be paid as a fee to the broker or other person who arranged the loan.
If the deposit drops below the required minimum at any time, the borrower will
be called upon to post additional cash, so as to mark to market on a daily
basis. If the additional cash is not provided, the loan will be immediately due
and the Fund may use the collateral or its own cash to replace the securities by
purchase in the open market, charging any loss to the borrower. These will be
'demand' loans and may be terminated by the Fund at any time. The Fund will
receive any dividends and interest paid on the loaned securities, and the loans
will be structured to assure that the Fund will be able to exercise its voting
rights on the securities. Such loans will be authorized only to the extent that
such activity would not cause any adverse tax consequences to the Fund or its
shareholders and only in accordance with applicable rules and regulations.
Neither the brokers nor the borrowers may be affiliated, directly or indirectly,
with the Fund. Lending of portfolio securities is subject to the restrictions
set forth in paragraph (5) under 'Investment Restrictions and Limitations'
below. The Fund did not lend any of its portfolio securities during the fiscal
year ended August 31, 2000.
PUT AND CALL OPTIONS
The Fund may purchase and write put and call options on securities and
securities indices provided such options are traded on a national securities
exchange and provided further that the value of options held and the value of
positions underlying options written do not exceed 10% of the Fund's total
assets. A put option gives the holder the right to sell to the writer, and a
call option gives the holder the right to buy from the writer, the number of
shares of the underlying security covered by the option at a stated exercise
price on or before a stated expiration date. Puts and calls, with respect to a
limited number of securities, currently may be purchased or written through the
facilities of certain national securities exchanges. In addition, each of such
exchanges provides a secondary market for 'closing' options positions. It will
be the policy of the Fund to write call options only if the Fund either: (i)
owns and will hold over the term of the option the underlying securities against
which the option is written (or securities convertible into the underlying
securities without additional consideration); or (ii) owns or will hold a call
on the same underlying security or securities. When a put option is written by
the Fund, the Fund will create and maintain a segregated account consisting of
liquid assets equal to the option price.
3
<PAGE>
The primary risk to the Fund as the writer of a covered call option is that,
unless a closing transaction is executed, the Fund must retain its underlying
cover position even if price movement would otherwise have caused the Fund to
dispose of that position, and must forgo opportunities for gain in excess of the
option premium which may result from favorable changes in the value of the
underlying cover position.
The primary risk to the Fund as the writer of a put option is that, unless a
closing transaction is executed, the Fund may be required to purchase the
underlying security or securities at a price above the market price at the time
of such purchase. When a put option is collateralized through the maintenance of
a segregated account, the contents of such account are not available to the Fund
for the general pursuit of the Fund's investment objectives. The Fund will write
put options only when it is believed that the acquisition of the underlying
security or securities would be in accordance with the Fund's investment
objectives.
The Fund may enter into closing purchase transactions in the secondary
markets in options maintained by the various exchanges. In such a transaction,
the Fund would buy an option similar to the one it had previously written. The
resulting transaction would have the effect of canceling the Fund's preexisting
obligation on the option written by it. The Fund has no assurance, however, that
a liquid secondary market will exist on any given day with respect to options on
a particular security. Therefore, there is no assurance that the Fund will be
able to enter into a closing transaction at any particular time.
In executing any closing purchase transaction, the Fund will incur the
expense of the premium (plus transaction costs) in order to effect the
transaction.
The Fund may purchase put or call options for speculative purposes in
pursuit of its objective of capital appreciation or, in the case of a put, to
hedge against an adverse price change in a portfolio position.
The primary risk in purchasing (as opposed to writing) an option is the
potential loss of investment (i.e., the premium for the option) in a relatively
short period of time if the underlying securities increase, in the case of a
put, or decrease, in the case of a call, in value. In such instances, the option
would not be exercised by the Fund and would become worthless at its expiration
date. If a secondary market for the option exists, the Fund may utilize closing
sale transactions analogous to the closing purchase transactions described above
with respect to the writing of options.
INVESTMENTS IN FOREIGN SECURITIES
Investments in securities of foreign issuers may involve risks not typically
associated with investments in securities of U.S. issuers. The value of any
foreign securities held, and of any related income received, will be affected by
fluctuations in currency rates, exchange control regulations and, as with
domestic multinational corporations, fluctuating interest rates. Most foreign
securities markets have substantially less trading volume and are generally not
as highly regulated and supervised as U.S. securities markets. Securities of
some foreign companies are less liquid and more volatile than securities of
comparable U.S. companies and are subject to different accounting, auditing and
financial reporting standards. In addition, there may be less publicly-available
information about a foreign issuer than about a U.S. issuer. Political and
economic conditions such as seizure or nationalization of assets, establishment
of exchange controls, expropriation or confiscatory taxation, political changes,
government regulation, social instability or diplomatic developments could
adversely affect the economy of a particular country and, thus, the Fund's
investments in that country. In the event of default on a foreign security, it
may be more difficult for the Fund to obtain or enforce a judgment against the
issuer of such obligation. Additionally, certain amounts of the Fund's income
may be subject to withholding taxes in the country in which it invests. The Fund
may not invest more than 5% of its net assets in securities of foreign issuers
which are not publicly traded in the United States.
LOW-RATED SECURITIES
The Fund may invest up to 5% of its net assets in debt securities rated
below investment grade by Moody's or S&P, with no minimum rating required, and
comparable unrated securities. Such securities are generally referred to as
'high-yield' or 'junk' bonds, and involve a high degree of risk. An
4
<PAGE>
economic recession could disrupt the market for such securities and adversely
affect their value and the ability of issuers to repay principal and pay
interest thereon.
While the market values of high-yield securities may tend to react less to
fluctuations in interest rate levels than the market values of higher-rated
securities, the market values of certain of these securities also tend to be
more sensitive to individual corporation developments and changes in economic
conditions, and thus will fluctuate over time. In addition, high-yield
securities generally present a higher degree of credit risk. Issuers of these
securities are often highly leveraged and may not have more traditional methods
of financing available to them so that their ability to service their debt
obligations during an economic downturn or during sustained periods of rising
interest rates may be impaired. The risk of loss due to default by such issuers
is significantly greater because high-yield securities generally are unsecured
and frequently are subordinated to the prior payment of senior indebtedness. The
Fund may also incur additional expenses to the extent that it is required to
seek recovery upon a default in the payment of principal or interest on its
portfolio holdings. The existence of limited markets for these securities may
diminish the Fund's ability to obtain accurate market quotations for purposes of
valuing such securities and calculating its net asset value as well as impair
the Fund's ability to dispose of such securities.
The ratings of Moody's and S&P generally represent the opinions of those
organizations as to the quality of the securities that they rate. Such ratings,
however, are relative and subjective, are not absolute standards of quality, are
subject to change and do not evaluate the market risk of the securities.
Although SBAM uses these ratings as a criterion for the selection of securities
for the Fund, SBAM also relies on its independent analysis to evaluate potential
investments for the Fund.
RESTRICTED SECURITIES
The Fund may purchase securities for which there is a limited trading market
or which are subject to restrictions on resale to the public. To the extent that
the Fund's portfolio may include securities of limited marketability, the price
obtainable for such securities could be affected adversely if the Fund were
forced to sell under inexpedient circumstances, e.g., to satisfy sizable
redemptions. Furthermore, where the Fund has a substantial position in
securities with limited trading markets, the activities of the Fund itself, as
well as those of other investors, could have an adverse effect upon the
liquidity and marketability of such securities and the Fund might not be able to
dispose of its holdings at then current market prices. 'Limited marketability'
may exist if the Fund has a substantial position in securities that trade in a
limited market, or if the securities are 'restricted,' and are therefore not
readily marketable without registration under the Securities Act of 1933, as
amended (the '1933 Act'). Investments in securities which are 'restricted' may
involve added expenses to the Fund should the Fund be required to bear
registration costs with respect to such securities and could involve delays in
disposing of such securities, which might have an adverse effect upon the price
and timing of sales of such securities and the ability of the Fund to meet
redemption requests. Restricted securities and securities for which there is a
limited trading market may be significantly more difficult to value due to the
unavailability of reliable market quotations for such securities, and investment
in such securities may have an adverse impact on net asset value. The Fund will
not invest more than 10% of the value of its total assets in illiquid
securities, such as 'restricted securities' and securities that are not readily
marketable.
PORTFOLIO TURNOVER
Flexibility of investment and emphasis on capital appreciation may involve a
greater portfolio turnover rate than that of investment companies whose
objective, for example, is production of income or maintenance of a balanced
investment position. The rate of portfolio turnover cannot be predicted with
assurance and may vary from year to year. See the table under 'Financial
Highlights' in the prospectus for the Fund's portfolio turnover rates.
5
<PAGE>
INVESTMENT RESTRICTIONS AND LIMITATIONS
Unless otherwise indicated, the investment restrictions described below are
fundamental investment policies which may be changed only when permitted by law,
if applicable and approved by the holders of a majority of the Fund's
outstanding voting securities which, as defined by the Investment Company Act of
1940, as amended (the '1940 Act'), means the lesser of: (i) 67% of the voting
securities represented at a meeting at which more than 50% of the outstanding
voting securities are represented; or (ii) more than 50% of the outstanding
voting securities of the Fund.
The percentage limitations contained in the investment restrictions
described above and the description of the Fund's investment policies are all
applied solely at the time of any proposed transaction on the basis of values or
amounts determined at that time. If a percentage restriction on investment or
utilization of assets in a policy or restriction is adhered to at the time an
investment is made, a later change in percentage ownership of a security or kind
of security resulting from changing market values or a similar type of event
will not be considered a violation of such policy or restriction.
(1) Invest: (i) more than 25% of the value of its total assets in the
securities of any single issuer (other than the United States Government or
its agencies or instrumentalities) or in the securities of issuers in any
one industry; or (ii) as to 50% of the value of its total assets, invest
more than 5% of the value of its total assets in the securities of any one
issuer (other than the United States Government or its agencies or
instrumentalities) or acquire more than 10% of the outstanding voting
securities of any one issuer;
(2) Borrow money or pledge its assets, except as described under 'More
on the Fund's investments' in the prospectus above.
(3) Purchase securities on margin (except for such short-term credits as
are necessary for the clearance of transactions) or make short sales of
securities (except for sales 'against the box,' i.e., when a security
identical to the one owned by the Fund or which the Fund has the right to
acquire without payment of additional consideration, is borrowed and sold
short in order to defer a gain or loss for federal income tax purposes);
(4) Underwrite securities, except in instances where the Fund has
acquired portfolio securities which it may not be free to sell publicly
without registration under the 1933 Act ('restricted securities'); in such
registrations, the Fund may technically be deemed an 'underwriter' for
purposes of that Act. It is the Fund's present intention not to acquire
restricted securities unless the Fund also receives contractual registration
rights. In any event, no more than 10% of the value of the Fund's total
assets may be invested in illquid securities;
(5) Make loans of cash or other assets provided that: (i) this
restriction shall not prevent the Fund from buying a portion of an issue of
bonds, debentures or other obligations which are publicly distributed, or
from investing up to an aggregate of 10% (including investments in other
types of restricted securities) of the value of its total assets in portions
of issues of bonds, debentures or other obligations of a type privately
placed with financial institutions; and (ii) this restriction shall not
prohibit the Board of Directors of the Fund from authorizing the lending of
portfolio securities to selected members of the NYSE on a demand basis and
fully collateralized by cash so long as such loans do not exceed 10% of the
Fund's total assets;
(6) Purchase more than 3% of the stock of another investment company, or
purchase stock of other investment companies equal to more than 5% of the
Fund's net assets in the case of any one other investment company and 10% of
such net assets in the case of all other investments companies in the
aggregate. Any such purpose will be made only in the open market where no
profit to a sponsor or dealer results from the purchase, except for the
customary broker's commission. This restriction shall not apply to
investment company securities received or acquired by the Fund pursuant to a
merger or plan or reorganization. (The return on such investments will be
reduced by the operating expenses, including management fees, of such
investment company, and will be further reduced by the Fund's expenses; that
is, there will be a layering of certain fees and expenses);
(7) Invest more than 10% of the value of the Fund's total assets in
securities of unseasoned issuers, including their predecessor, which have
been in operation for less than three years.
6
<PAGE>
(8) Invest in companies for the purpose of exercising control of
management;
(9) Purchase or sell real estate, interests in real estate, interests in
real estate investment trusts or commodities or commodity contracts;
however, the Fund may purchase interests in real estate investment trusts or
other companies which invest in or own real estate if the securities of such
trusts or companies are registered under the Securities Act of 1933, as
amended, and are readily marketable and may purchase the securities of
companies engaged in businesses which may involve commodities or commodities
futures contracts; or
(10) Write or purchase puts or calls on securities or securities indices
except as described under 'Investment Policies -- Put and Call Options.'
7
<PAGE>
MANAGEMENT
DIRECTORS AND OFFICERS
The principal occupations of the directors and executive officers of the
Fund for the past five years are listed below. The address of each, unless
otherwise indicated, is 7 World Trade Center, New York, New York 10048. With the
exception of Mr. Brilliant and Mr. Williamson, each of the Fund's officers are
also officers of each of the other investment companies for which SBAM, the
Fund's investment manager, acts as investment adviser. 'Interested directors' of
the Fund (as defined in the 1940 Act) are indicated by asterisk.
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION(S) HELD PRINCIPAL OCCUPATION(S) PAST 5 YEARS
--------------------- ---------------- ------------------------------------
<S> <C> <C>
*Irving Brilliant ........... Chairman and Director Director of SBAM and Salomon Smith
Age: 82 Barney Inc. ('SSB') since May 1990.
B. Alexander Gaguine ........ Director Fund-raising and electoral campaign
516 Bethany Avenue consultant.
Santa Cruz, California 95060
Age: 50
Rosalind A. Kochman ......... Director Administrator and Counsel, Brooklyn Eye
1301 Avenue J Surgery Center.
Brooklyn, New York 11230
Age: 63
Irving Sonnenschein ......... Director Partner in the law firm of Sonnenschein,
888 7th Avenue Sherman & Deutsch.
New York, New York 10016
Age: 80
George Williamson ........... President Director of SBAM and SSB since January
Age: 66 1999. Prior to January 1999, he was a
Vice President of SBAM and SSB.
Lewis E. Daidone ............ Executive Vice Managing Director of SSB; Director and
125 Broad Street President and Senior Vice President of SSB Citi Fund
New York, New York 10004 Treasurer Management LLC ('SSB Citi') and
Age: 43 Travelers Investment Adviser, Inc.
Anthony Pace ................ Controller Vice President of SSB since 1995.
125 Broad Street
New York, New York 10004
Age: 35
Christina T. Sydor .......... Secretary Managing Director of SSB and General
Age: 49 Counsel of SSB Citi.
</TABLE>
Directors of the Fund not affiliated with SBAM receive from the Fund a $500
fee for each meeting of the Board of Directors attended and are reimbursed for
out-of-pocket expenses relating to attendance at such meetings. The Directors
receive no per annum fee for their services as Directors. Directors who are
affiliated with SBAM do not receive compensation from the Fund but are
reimbursed for out-of-pocket expenses relating to attendance at such meetings.
As of November 24, 2000, directors and officers of the Fund as a group owned
beneficially approximately 1,622,146 shares or approximately 40% of the Fund's
outstanding shares.
As of November 24, 2000 to the knowledge of management, the following
persons owned of record or beneficially 5% or more of the Fund's outstanding
shares. Irving Brilliant, a director of the Fund and the Fund's Chairman,
directly and as a trustee of trusts for the benefit of his family and trusts for
the benefit of the Gaguine family (see below), was the record and beneficial
owner of approximately 615,886 shares of approximately 15% of the Fund's
outstanding shares. Mr. Brilliant's wife Benice also serves as a trustee of the
foregoing trusts for the benefit of the Brilliant family and in that capacity,
was the record and beneficial owner of approximately 403,238 shares or
approximately 10% of the Fund's outstanding shares. Mrs. Brilliant disclaims
beneficial ownership of shares owned of record directly by Mr. Brilliant. Mrs.
Brilliant shares the same address as Mr. Brilliant. B. Alexander Gaguine, also a
director of the Fund, directly and as a trustee of trusts for the benefit of the
Gaguine family (the 'Gaguine Trusts'), was the record and beneficial owner of
approximately 504,259 shares or approximately 13% of the Fund's oustanding
shares. In addition, Benito Gaguine, father of B.
8
<PAGE>
Alexander and a former director of the Fund, directly and as a trustee of the
Gaguine Trusts, was the record and beneficial owner of approximately 418,852
shares or approximately 10% of the Fund's outstanding shares. Frances Gaguine,
the mother of B. Alexander and wife of Benito, as a trustee of the Gaguine
Trusts, owned of record and beneficially approximately 414,402 shares or
approximately 10% of the Fund's outstanding shares. Frances Gaguine disclaims
beneficial ownership of shares owned of record directly by Benito Gaguine. The
address for Benito and Frances Gaguine is 8100 Connecticut Avenue, Chevy Chase,
Maryland. John Gaguine, a brother of B. Alexander whose address is 10117 Silver
Street, Juneau, Alaska, directly and as a trustee of the Gaguine Trusts, owned
beneficially approximately 534,371 shares or approximately 13% of the Fund's
outstanding shares. Of such shares, John Gaguine owned of record approximately
534,371 shares or approximately 13% of the Fund's outstanding shares. In
addition, John Gaguine's spouse owned of record and beneficially approximately
1,934 shares of which he disclaims beneficial ownership. Rosalind Kochman, a
director of the Fund, owned of record and beneficially approximately 319,618
shares or approximately 8% of the Fund's outstanding shares. Of such shares,
Mrs. Kochman owned of record approximately 57,089 shares or approximately 1% of
the Fund's outstanding shares. Dr. Marvin Kochman, husband of Rosalind Kochman,
owned of record and beneficially approximately 319,618 or approximately 8% of
the Fund's outstanding shares. Mr. and Mrs. Kochman each disclaim beneficial
ownership of the shares owned of record directly by the other.
As of November 24, 2000, to the knowledge of management, the following
persons owned of record or beneficially 5% or more of the Fund's outstanding
shares:
<TABLE>
<CAPTION>
SHARES %
NAME OWNED OWNERSHIP
---- ----- ---------
<S> <C> <C>
Charles Schwab & Co. Inc. ................................. 393,864 9.87%
Reinvest Account
101 Montgomery Street
San Francisco, CA 94104
Benito Gaguine, Frances C. Gaguine, John B. Gaguine
and Bruce Alexander Gaguine, TTEE Benito Gaguine............ 295,696 7.41%
Management Trust dated 12/05/94
8100 Connecticut Ave., NW Apt. 809
Chevy Chase, MD 20815
Marvin Kochman ............................................. 222,802 5.58%
35 Prospect Park West
Apt. 15B
Brooklyn, NY 11215
</TABLE>
The following table provides information concerning the compensation paid
during the fiscal year ended August 31, 2000 to each of the Fund's directors.
The Fund does not provide any pension or retirement benefits to directors. In
addition, the Fund paid no remuneration during the fiscal year ended August 31,
2000 to officers of the Fund, including Mr. Brilliant, who, as employees of
SBAM, are 'interested person,' as defined in the 1940 Act. None of the directors
serve on the Board of Directors of any other investment company advised by SBAM
or its affiliates.
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION
FROM THE FUND
FOR THE FISCAL
YEAR ENDED
NAME OF PERSON, POSITION AUGUST 31, 2000
------------------------ ---------------
<S> <C>
B. Alexander Gaguine ................................. $1,500
Director
Rosalind A. Kochman .................................. $1,500
Director
Irving Sonnenschein .................................. $1,500
Director
</TABLE>
9
<PAGE>
INVESTMENT MANAGER
The Fund retains SBAM, an indirect wholly-owned subsidiary of Citigroup
Inc., as its investment manager. SBAM serves as the investment manager to
various individuals, institutions and other investment companies.
The management contract ('Management Contract') between SBAM and the Fund
provides that SBAM shall manage the operations of the Fund, subject to the
policies established by the Board of Directors of the Fund. Pursuant to the
Management Contract, SBAM manages the Fund's investment portfolio, directs
purchases and sales of the Fund's portfolio securities and reports thereon to
the Fund's officers and directors regularly. SBAM also furnishes office space
and certain facilities required for conducting the business of the Fund and pays
the compensation of the Fund's officers, employees and directors affiliated with
SBAM. The Fund bears all other costs of its operations, including the
compensation of its directors not affiliated with SBAM.
As compensation for services performed under the Management Contract, the
Fund pays SBAM a management fee each month, at an annual rate of 1% ( 1/12 of 1%
per month) of the Fund's average daily net assets, which fee does not decrease
as the Fund's assets increase. The fee is at a higher rate than the management
fees charged by SBAM to some other investment companies it manages. Management
fees paid by the Fund to SBAM for the fiscal years ended August 31, 2000,
August 31, 1999 and 1998 amounted to $1,865,336, $1,921,430 and $2,080,479,
respectively.
The Management Contract provides that it will continue automatically for
periods of one year provided that such continuance is specifically approved
annually: (a) by the vote of a majority of the Fund's outstanding voting
securities or by the Fund's Board of Directors; and (b) by the vote of a
majority of the Fund's directors who are not parties to the Management Contract
or 'interested persons,' as defined in the 1940 Act, of any such party. The
Management Contract may be terminated on 30 days' written notice by the Fund to
SBAM or on 60 days' written notice by SBAM to the Fund. The Management Contract
will terminate automatically in the event of its 'assignment,' as defined in the
1940 Act.
Investment decisions for the Fund are made independently from those of other
funds or accounts managed by SBAM. Such other funds or accounts may also invest
in the same securities as the Fund. If those funds or accounts are prepared to
invest in, or desire to dispose of, the same security at the same time as the
Fund, however, transactions in such securities will be made insofar as feasible,
for the respective funds and accounts in a manner deemed equitable to all. In
some cases, this procedure may adversely affect the size of the position
obtained for or disposed of by the Fund or the price paid or received by the
Fund. In addition, because of different investment objectives, a particular
security may be purchased for one or more funds or accounts when one or more
funds or accounts are selling the same security.
Rule 17j-1 under the 1940 Act requires all registered investment companies
and their investment advisers and principal underwriters to adopt written codes
of ethics and institute procedures designed to prevent 'access persons' (as
defined in Rule 17j-1) from engaging in any fraudulent, deceptive or
manipulative trading practices. The Fund's Board of Directors has adopted a Code
of Ethics (the 'Fund Code') that incorporates personal trading polices and
procedures applicable to access persons of the Fund, which includes officers,
directors and other specified persons who may make, participate in or otherwise
obtain information concerning the purchase or sale of securities by the Fund. In
addition, the Fund Code attaches and incorporates personal trading policies and
procedures applicable to access persons of SBAM, as the investment adviser to
the Fund, which policies serve as SBAM's Code of Ethics (the 'Adviser Code').
The Fund Code and the Adviser Code have been designed to address potential
conflicts of interest that can arise in connection with the personal trading
activities of investment company and investment advisory personnel.
Pursuant to the Fund Code and the Adviser Code, access persons are generally
permitted to engage in personal securities transactions, provided that a
transaction does not involve securities that are being purchased or sold, are
being considered for purchase or sale, or are being recommended for purchase or
sale by or for the Fund. In addition, the Adviser Code contains specified
prohibitions and blackout periods for certain categories of securities and
transactions, including a prohibition on short-term trading and purchasing
securities during an initial public offering. The Adviser Code, with certain
exceptions, also requires that access persons obtain preclearance to engage in
personal securities
10
<PAGE>
transactions. Finally, the Fund Code and the Adviser Code require access persons
to report all personal securities transactions periodically.
DISTRIBUTOR
Shares of the Fund are offered on a continuous basis and without a sales
charge through CFBDS as distributor pursuant to a distribution agreement between
CFBDS and the Fund which became effective on September 1, 1998. CFBDS is not
obligated to sell any specific amount of Fund shares.
During the fiscal year ended August 31, 1998, Salomon Brothers Inc served as
the Fund's distributor. SBI received no compensation for its services as
distributor. For the fiscal years ended August 31, 2000 and August 31, 1999
CFBDS did not receive any compensation.
PORTFOLIO TRANSACTIONS
The Fund's general policy in selecting brokers and dealers is to obtain the
best results taking into account factors such as the general execution and
operational facilities of the broker or dealer, the type and size of the
transaction involved, the creditworthiness of the broker or dealer, the
stability of the broker or dealer, execution and settlement capabilities, time
required to negotiate and execute the trade, research services and SBAM's
arrangements related thereto (as described below) overall performance, the
dealer's risk in positioning the securities involved, and the broker's
commissions and dealer's spread or mark-up. While SBAM generally seeks the best
price in placing its orders, the Fund may not necessarily be paying the lowest
price available.
Notwithstanding the above, in compliance with Section 28(e) of the
Securities Exchange Act of 1934, SBAM may select brokers who charge a commission
in excess of that charged by other brokers, if SBAM determines in good faith
that the commission to be charged is reasonable in relation to the brokerage and
research services provided to SBAM by such brokers. Research services generally
consist of research or oral advice from brokers and dealers regarding particular
companies, industries or general economic conditions. SBAM may also have
arrangements with brokers pursuant to which such brokers provide research
services to SBAM in exchange for a certain volume of brokerage transactions to
be executed by such broker. While the payment of higher commissions increases
the Fund's costs, SBAM does not believe that the research significantly reduces
its expenses as the Fund's investment manager.
Research services furnished to SBAM by brokers who effect securities
transactions for the Fund may be used by SBAM in providing investment advice to
the other investment companies and accounts which it manages. Similarly,
research services furnished to SBAM by brokers who effect securities
transactions for other investment companies and accounts which SBAM manages may
be used by SBAM in servicing the Fund. Not all of these research services are
used by SBAM in managing any particular account, including the Fund.
Over-the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and executions may be
obtained elsewhere.
Under the 1940 Act, 'affiliated persons' with a fund are prohibited from
dealing with it as a principal in the purchase and sale of securities unless an
exemptive order allowing such transactions is obtained from the Securities and
Exchange Commission (the 'SEC'). However, a fund may purchase securities from
underwriting syndicates of which the investment manager or any of its
broker/dealer affiliates is a member under certain conditions, in accordance
with Rule 10f-3 under the 1940 Act. Affiliated persons of a fund, or affiliated
persons of such persons, may from time to time be selected to execute portfolio
transactions for such fund. Subject to the considerations discussed above and in
accordance with procedures adopted by the Board of Directors, in order for such
an affiliated person to be permitted to effect any portfolio transactions for a
fund, the commissions, fees or other remuneration received by such affiliated
person must be reasonable and fair compared to the commissions, fees or other
remuneration received by other brokers in connection with comparable
transactions. This standard would allow such an affiliated person to receive no
more than the remuneration which would be expected to be received by an
unaffiliated broker in a commensurate arm's-length transaction.
Aggregate brokerage commissions paid by the Fund for the fiscal years ended
August 31, 2000, 1999 and 1998 were $32,281, $35,206 and $32,170, respectively.
During the fiscal year ended August 31,
11
<PAGE>
2000, the Fund paid no commission to Salomon Smith Barney, an affiliated
broker-dealer. During the fiscal years ended August 31, 1999 and 1998, the Fund
paid no commissions to SBI, an affiliated broker-dealer.
Irving G. Brilliant, the Fund's Chairman and portfolio manager, is primarily
responsible for the allocation of brokerage transactions.
DETERMINATION OF NET ASSET VALUE
The Fund's net asset value per share for the purpose of pricing purchase and
redemption orders is determined at the close of regular trading of the New York
Stock Exchange (the 'NYSE') on each day the NYSE is open for business. The Fund
is open for business on each day the NYSE is open for trading, i.e., Monday
through Friday with the exception of New Year's Day, Martin Luther King Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day, and the preceding Friday or subsequent
Monday when one of those holidays falls on a Saturday or Sunday, respectively.
The net asset value per share is computed by dividing the value of the net
assets of the Fund (i.e., the value of the assets less the liabilities) by the
total number of Fund shares outstanding. In calculating net asset value,
portfolio securities listed or traded on national securities exchanges, or
reported by the NASDAQ reporting 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. Other 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 as the Board of Directors in good faith
deems appropriate to reflect the fair value thereof.
Securities that are primarily traded on foreign exchanges generally are
valued at the preceding closing values of such securities on their respective
exchanges, except that when an occurrence subsequent to the time a value was so
established is likely to have changed such value, then the fair value of those
securities may be determined by consideration of other factors by or under the
direction of the Board of Directors or its delegates. In valuing assets, prices
denominated in foreign countries are converted to U.S. dollar equivalents at the
current exchange rate. Securities may be valued by independent pricing services
which use prices provided by market-makers or estimates of market values
obtained from yield data relating to instruments or securities with similar
characteristics. Short-term obligations with maturities of 60 days or less are
valued at amortized cost, which approximates market value as determined by the
Board of Directors.
ADDITIONAL REDEMPTION INFORMATION
The Fund has established different redemption procedures. No redemption
requests will be processed until the Fund has received a completed Purchase
Application, and no redemption of shares purchased by check will be permitted
until all checks in payment for the purchase of the shares to be redeemed have
been collected, which may take up to 15 days or more.
REDEMPTIONS IN KIND
If the Board of Directors shall determine that it is in the best interests
of the shareholders of the Fund, the Fund may pay the redemption price, in whole
or in part, by a distribution in kind from the portfolio of the Fund, in lieu of
cash, taking such securities at their values employed for determining such
redemption price, and selecting the securities in such manner as the Board of
Directors may deem fair and equitable. However, the Fund has made an election
pursuant to Rule 18f-1 under the 1940 Act requiring that all redemptions be
effected in cash to each redeeming shareholder, during any period of 90 days, up
to the lesser of $250,000 or 1% of the net assets of the Fund. A shareholder who
receives a distribution in kind may incur a brokerage commission upon a later
disposition of such securities. The Fund does not intend to make a practice of
redeeming shares in kind.
PERFORMANCE DATA
From time to time, the Fund may advertise its 'average annual total return'
over various periods of time. Such total return figures show the average annual
percentage change in value of an investment
12
<PAGE>
in the Fund from the beginning date of the measuring period to the end of the
measuring period. These figures reflect changes in the price of the Fund's
shares and assume that any income dividends and/or capital gains distributions
made by the Fund during the period were reinvested in shares of the Fund.
Figures will be given for the most current one, five and ten-year periods and
may be given for other periods as well, such as on a year-by-year basis. When
considering average total return figures for periods longer than one year, it is
important to note that the Fund's annual total return for any one year in the
period might have been greater or less than the average for the entire period.
Aggregate total return figures may also be used for various periods,
representing the cumulative change in value of any investment in the Fund for
the specified period (again reflecting changes in Fund share prices and assuming
reinvestment of dividends and distributions). Aggregate total return may be
shown by means of schedules, charts, or graphs and may indicate subtotals of the
various components of total return (i.e., change in value of initial investment,
income dividends, and capital gains distributions).
Furthermore, in reports or other communications to shareholders or in
advertising material, the Fund may compare its performance with that of other
mutual funds as listed in the rankings prepared by Lipper Analytical Services,
Inc. or similar independent services which monitor the performance of mutual
funds, financial indices such as the Standard & Poor's 500 Index or other
industry or financial publications, including, but not limited, Barron's,
Business Week, CDA Investment Technologies, Inc., Changing Times, Forbes,
Fortune, Institutional Investor, Investors Daily, Money, Morningstar Mutual
funds Values, The New York Times, USA Today and The Wall Street Journal. It is
important to note that the total return figures set forth above and in the table
below are based on historical earnings and are not intended to indicate future
performance. The Fund's Annual Report for the fiscal year ended August 31, 2000
can be obtained by writing the Fund at the address, or by calling the Fund at
the toll-free telephone number, printed on the front cover.
AVERAGE ANNUAL TOTAL RETURN
The Fund's 'average annual total return' figures described and shown in the
prospectus are computed according to a formula prescribed by the SEC. The
formula can be expressed as follows:
P(I+T) to the power of n = ERV
<TABLE>
<S> <C> <C>
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000
investment made at the beginning of the 1-, 5-, or 10-year
periods at the end of the 1, 5, or 10 year periods (or
fractional portion thereof), assuming reinvestment of all
dividends and distributions.
</TABLE>
The Fund's average annual total return was as follows for the fiscal periods
ending August 31:
<TABLE>
<S> <C>
1 year.................................... 20.42%
5 years................................... 16.24%
10 years.................................. 16.41%
</TABLE>
AGGREGATE TOTAL RETURN
The Fund's 'aggregate total return' figures, as described in the prospectus,
represent the cumulative change in the value of an investment in Fund shares for
the specified period and are computed by the following formula:
<TABLE>
<S> <C>
AGGREGATE TOTAL RETURN = ERV-P
-----
P
</TABLE>
<TABLE>
<S> <C> <C>
Where: P = a hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a hypothetical $10,000
investment made at the beginning of a 1-, 5-, or 10-year
period at the end of such period (or fractional portion
thereof), assuming reinvestment of all dividends and
distributions.
</TABLE>
13
<PAGE>
The Fund's aggregate total return was as follows for the fiscal periods
ending August 31:
<TABLE>
<S> <C>
1 year.................................... 20.42%
5 years................................... 112.24%
10 years.................................. 357.09%
</TABLE>
FEDERAL INCOME TAXES
The following is a summary of selected federal income tax considerations
that may affect the Fund and its shareholders. This summary is not intended as a
substitute for individual tax advice and investors are urged to consult their
own tax advisors as to the federal, state and local tax consequences to them of
an investment in the Fund.
TAXATION OF THE FUND
The Fund has qualified for the fiscal year ended August 31, 2000 and intends
to continue to qualify as a regulated investment company ('RIC') under
subchapter M of the Internal Revenue Code of 1986, as amended (the 'Code'). As a
regulated investment company, the Fund will not be subject to federal income tax
on its net investment income (i.e., its investment company taxable income, as
that term is defined in the Code, determined without regard to the deduction for
dividends paid) and net capital gain (the excess of net realized long-term
capital gain over net realized short-term capital loss), if any, that it
distributes to its shareholders, provided that it distributes at least 90% of
its net investment income for the taxable year. All net investment income and
net capital gain distributed by the Fund will be reinvested automatically in
additional shares of the Fund at net asset value, unless the shareholder elects
to receive dividends and distributions in cash.
Qualification as a regulated investment company requires, among other
things, that the Fund: (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock or securities, foreign currencies or
other income (including gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at the end of each fiscal
quarter: (i) at least 50% of the market value of the Fund's assets is
represented by cash, cash items, U.S. Government securities, securities of other
regulated investment companies and other securities with such other securities
limited, in respect of any one issuer, to an amount not greater than 5% of the
value of the Fund's assets and 10% of the outstanding voting securities of such
issuer; and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than U.S. Government securities or the
securities of other regulated investment companies).
TAX STATUS OF THE FUND'S INVESTMENTS
Gain or loss on the sale or other disposition of Fund investments will
generally be long-term capital gain or loss if the Fund has held the security
for more than one year. Gain or loss on the sale of a security held for one year
or less will generally be short-term capital gain or loss. If the Fund acquires
a debt security at a discount, any gain upon the sale or redemption of the
security, to the extent it reflects accrued market discount, will be taxed as
ordinary income, rather than capital gain.
Foreign countries may impose withholding and other taxes on dividends and
interest paid to the Fund with respect to investments in foreign securities.
However, certain foreign countries have entered into tax treaties with the U.S.
to reduce or eliminate such taxes.
TAXATION OF SHAREHOLDERS
Dividends of net investment income ('ordinary income dividends') will be
taxable to shareholders as ordinary income for federal income tax purposes.
Ordinary income dividends received by corporate shareholders will be eligible
for the dividends received deduction to the extent of qualifying dividends
received by the Fund from domestic corporations for the taxable year. A dividend
received by the Fund will not be treated as a qualifying dividend (1) if it has
been received with respect to any share of stock that has been held by the Fund
for less than 46 days during the 90 day period beginning on the date which is
45 days before the date on which such share becomes ex-dividend with respect to
such dividend; (2) to the extent that the Fund is under an obligation to make
related payments with respect
14
<PAGE>
to positions in substantially similar or related property; or (3) to the extent
the stock on which the dividend is paid is treated as debt-financed. Moreover,
the dividends received deduction may be disallowed or reduced if the corporate
shareholder fails to satisfy the foregoing requirements with respect to its
shares of the Fund. The amount of any dividends eligible for the corporate
dividends received deduction, if any, will be designated by the Fund in a
written notice within 60 days of the close of the Fund's taxable year.
Distributions of net capital gain that are property designated by the Fund
('capital gain dividends') will be taxable to shareholders as long-term capital
gain regardless of the length of time the investor has held shares in the Fund.
In the case of individual shareholders, long-term capital gain attributable to
securities held by the Fund longer than 12 months is taxed at a maximum rate of
20%. Not later than 60 days after the close of its taxable year, the Fund will
provide its shareholders with a written notice designating the amounts of any
ordinary income dividends or capital gain dividends. If a shareholder redeems or
otherwise disposes of shares of the Fund before holding them for more than six
months, any loss on such redemption or disposition will be treated as long-term
capital loss to the extent of any capital gain dividends received by the
shareholder as designated in a written notice from the Fund.
The Fund is subject to a nondeductible 4% excise tax, on a calendar basis
calculated as a percentage of certain undistributed amounts of ordinary income
and capital gain net income. To the extent possible, the Fund intends to make
sufficient distributions as are necessary to avoid the imposition of this excise
tax.
DIVIDENDS AND DISTRIBUTIONS
If a shareholder elects to receive dividends and/or distributions in cash
and the check cannot be delivered to a shareholder due to an invalid address or
otherwise remains uncashed by the shareholder for a period of six months, the
Fund reserves the right to reinvest the dividends and/or distribution in a
shareholder's account at the then-current net asset value and to convert the
shareholder's election to automatic reinvestment in shares of the Fund from
which the distributions were made. Dividends and capital gain distributions are
reinvested automatically in additional shares of the Fund at the net asset value
next determined after the record date and such shares are automatically credited
to a shareholder's account, unless PFPC Global Fund Services, Inc. ('PFPC') or
an SBAM representative is informed by notice that a shareholder wishes to
receive such dividends or distributions in cash. The shareholder may change such
distribution option at any time by notification to PFPC prior to the record date
of any such dividend or distribution. See 'Buying Shares' in the prospectus.
Shareholders receiving distributions in the form of shares will be treated as
receiving a distribution in an amount equal to the fair market value, determined
as of the payment date, of the shares received. For federal income tax purposes,
distributions of net investment income (which term includes net short-term
capital gain) will be taxable to shareholders at ordinary income rates
('ordinary income dividends'). It is expected that all or a portion of the
Fund's distributions from net investment income will be eligible for the 70%
dividends received deduction available to corporations. Distributions of net
capital gain designated by the Fund as 'capital gain dividends' will be taxable
as long-term capital gain regardless of the length of time the shareholder has
owned his shares. However, such capital gain dividends will not qualify for the
dividends received deduction.
Generally, shareholders will be taxed on dividends or distributions in the
year of receipt. However, if the Fund declares a dividend or distribution in
October, November or December to shareholders of record on a specified date in
such a month which is paid during the following January, it will be taxable to
shareholders in the year the dividend or distribution is declared.
The redemption of shares of the Fund is a taxable event and may result in a
gain or loss. Gain or loss, if any, recognized on the redemption or other
disposition of Fund shares will be taxed as capital gain or loss if the shares
are capital assets in the shareholder's hand. If a shareholder redeems or
otherwise disposes of shares of a fund before holding them for more than six
months, any loss on the redemption or other disposition of such shares shall be
treated as a long-term capital loss to the extent of any capital gain dividends
received by the shareholder with respect to such shares. A loss realized on a
redemption of shares may be disallowed if other shares are acquired within a
61-day period beginning 30 days before and ending 30 days after the date that
the shares are disposed of.
15
<PAGE>
The Fund may be required to withhold federal income tax at a rate of 31%
('backup withholding') from dividends and redemption proceeds paid to
non-corporate shareholders. This tax may be withheld from dividends if: (i) the
payee fails to furnish the Fund with the payee's correct taxpayer identification
number (e.g., an individual's social security number); (ii) the Internal Revenue
Service ('IRS') notifies the Fund that the payee has failed to report properly
certain interest and dividend income to the IRS and to respond to notices to
that effect; or (iii) when required to do so, the payee fails to certify that he
or she is not subject to backup withholding. Redemption proceeds may be subject
to withholding under the circumstances described in (i) above.
Backup withholding is not an additional tax and any amount withheld may be
credited against the shareholder's federal income tax liability. The foregoing
is intended to be general information to shareholders and potential investors in
the Fund and does not constitute tax advice.
Shareholders and potential investors are urged to consult their own tax
advisers regarding federal, state, local and, if applicable, foreign tax
consequences of an investment in the Fund.
SHAREHOLDER SERVICES
Automatic Withdrawal Plan. An Automatic Withdrawal Plan ('Withdrawal Plan')
may be opened with shares having a total value of at least $7,500. All dividends
and distributions on the shares held under the Withdrawal Plan are automatically
reinvested at net asset value in full and fractional shares. Withdrawal payments
are made by PFPC, as agent, from the proceeds of the redemption of such number
of shares as may be necessary to make each periodic payment. As such redemptions
involve the use of capital, over a period of time they may exhaust the share
balance of an account held under a Withdrawal Plan. Use of a Withdrawal Plan
cannot assure realization of investment objectives, including capital growth or
protection against loss in declining markets. A Withdrawal Plan can be
terminated at any time by the investor, the Fund or PFPC upon written notice.
A new Withdrawal Plan application is required to establish the Withdrawal
Plan in the new fund. Shareholders should call (800) 446-1013 for more
information.
Self-Employed Retirement Plans. The Fund offers a prototype retirement plan
for self-employed individuals ('SERP'). Under the SERP, self-employed
individuals may contribute out of earned income to purchase Fund shares and/or
shares of certain other mutual funds managed by SBAM.
Boston Safe Deposit and Trust ('BSDT') has agreed to serve as custodian and
furnish the services provided for in the SERP and the related Custody Agreement.
Individuals adopting a SERP will be charged an application fee as well as
certain additional annual fees which are separate from those paid by the Fund
for custodian services.
For information required for adopting a SERP, including information on fees,
the form of SERP and Custody Agreement is available from the Fund. Because
application of particular tax provisions will vary depending on each
individual's situation, consultation with a financial adviser regarding a SERP
is recommended.
Individual Retirement Accounts. A prototype individual retirement account
('IRA'), which has been approved as to form by the Internal Revenue Service
('IRS'), is available for all working individuals who receive compensation in
the tax year for services rendered and who have not attained age 70 1/2 before
the close of the tax year. In addition, individuals who have received certain
distributions from qualified plans or other IRAs may be eligible to make
rollover contributions to an IRA. Also, individuals covered by an
employer-sponsored simplified employee pension are eligible to establish art
IRA. Finally, divorced or legally separated spouses may make IRA contributions
out of taxable alimony payments. Contributions to an IRA made available by the
Fund may be invested in fund shares and/or in shares of certain other mutual
funds managed by SBAM.
BSDT has agreed to serve as custodian of the IRA and furnish the services
provided for in the Custodial Agreement. Each IRA will not be charged an
application fee but is subject to certain additional annual fees, which are
separate from those paid to PNC Bank, N.A. ('PNC') for its services as Fund
custodian. In accordance with IRS regulations, an individual may revoke an IRA
within seven calendar days after it is established.
16
<PAGE>
Information required for adopting an IRA, including information on fees, the
form of Custodial Agreement and related materials, including disclosure
materials, is available from the Fund. Consultation with a financial adviser
regarding an IRA is recommended.
ACCOUNT SERVICES
Shareholders receive annual and semi-annual reports which outline the Fund's
current investments and other financial data. Annual reports include audited
financial statements. Shareholders will receive a Statement of Account following
each share transaction. Shareholders can write or call the Fund at the address
and telephone numbers on the first page of the prospectus with any question
relating to their investment in Fund shares.
CAPITAL STOCK
The authorized capital stock of the Fund consists of 15,000,000 shares
having a par value of $0.01 per share. All shares are of the same class, with
like rights and privileges. Each share is entitled to one vote and participates
equally in Fund dividends and distributions and in its net assets on
liquidation. Each shareholder is entitled to cast, at all meetings of
shareholders, such number of votes as is equal to the number of full and
fractional shares held by such shareholder. Except as required under the 1940
Act, there will not be a regularly scheduled Annual Meeting of Shareholders. The
shares are fully paid and non-assessable when issued and have no preference,
pre-emptive, conversion or exchange rights. There are no options or other
special rights outstanding relating to any such shares.
ADMINISTRATOR
SSB Citi Fund Management LLC, an affiliate of SBAM (the 'Administrator')
provides certain administrative services to the Fund. The services provided by
the Administrator under the applicable administration agreement include certain
accounting, clerical and bookkeeping services, Blue Sky compliance, corporate
secretarial services and assistance in the preparation and filing of tax returns
and reports to shareholders and the Commission. SBAM pays the Administrator a
fee, calculated daily and payable monthly, at an annual rate of 0.05% of the
Fund's average daily net assets.
CUSTODIAN AND TRANSFER AGENT
PNC serves as the Fund's custodian. PNC, among other things, maintains a
custody account or accounts in the name of the Fund, receives and delivers all
assets for the Fund upon purchase and upon sale or maturity, collects and
receives all income and other payments and distributions on account of the
assets of the Fund, and makes disbursements on behalf of the Fund. The custodian
does not determine the investment policies of the Fund, nor decide which
securities the Fund will buy or sell. PNC's address is Airport Business Center,
International Court, 200 Stevens Drive, Lester, PA 19113.
PFPC serves as the Fund's transfer agent. PFPC registers and processes
transfers of the Fund's stock, processes purchase and redemption orders, acts as
the Fund's dividend disbursing agent and maintains records and handles
correspondence with respect to shareholder accounts pursuant to a Transfer
Agency Agreement. PFPC's address is P.O. Box 9764, Providence, RI 02940-9764.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP ('PricewaterhouseCoopers') serves as the Fund's
independent accountants. PricewaterhouseCoopers provides audit services, tax
return preparation and assistance and consultation in connection with the review
of filings with the SEC. The financial highlights included in the prospectus and
the financial statements and financial highlights incorporated by reference in
this Statement of Additional Information have been included and incorporated by
reference in reliance on the report of PricewaterhouseCoopers, independent
accountants, given on the authority of that firm as experts in auditing and
accounting. PricewaterhouseCoopers address is 1177 Avenue of the Americas, New
York, New York 10036.
17
<PAGE>
COUNSEL
Simpson Thacher & Bartlett serves as Fund counsel and is located at 425
Lexington Avenue, New York, New York 10017.
Piper, Marbury, Rudnick & Wolfe, L.L.P. of Baltimore, Maryland has issued an
opinion regarding the valid issuance of shares being offered for sale pursuant
to the Fund's prospectus.
FINANCIAL STATEMENTS
The audited financial statements of the Fund for the fiscal year ended
August 31, 2000, contained in the 2000 Annual Report of the Fund, are
incorporated by reference into this SAI. Copies of such Annual Report may be
obtained by calling the telephone number on the first page of this SAI.
18
<PAGE>
ITEM 22. FINANCIAL STATEMENTS
Financial Statements:
Financial Statements included in Part A:
Financial Highlights for the ten years ended August 31, 2000
Financial Statements incorporated by reference in Part B:
Registrants Annual Report to shareholders for the fiscal year
ended August 31, 2000 is incorporated herein by reference to
Registrant's definitive Rule 30b2-1 filed on November 8, 2000 as
Accession No. 890163-00-000505
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
<TABLE>
<S> <C>
a (1) -- Articles of Incorporation of Registrant (filed as Exhibit
1 of the Registration Statement on Form N-8B-1 (File Nos.
2-63023 and 811-2884) and incorporated herein by
reference).
(2) -- Amendment to Articles of Incorporation of Registrant
(filed as Exhibit 1(a) to Amendment No. 1 to the
Registration Statement on Form N-8B-1 (File Nos. 2-63023
and 811-2884) and incorporated herein by reference).
(3) -- Amendment to Articles of Incorporation of Registrant
(filed as Exhibit 1(b) to Registration Statement on Form
N-8B-1 (File Nos. 2-63023 and 811-2884) and incorporated
herein by reference).
(4) -- Amendment to Articles of Incorporation of Registrant
(filed as Exhibit 1(d) to Post-Effective Amendment No. 11
to the Registration Statement on Form N-1A (File Nos.
2-63023 and 811-2884) and incorporated herein by
reference).
(5) -- Amendment to Articles of Incorporation of Registrant
(filed as Exhibit 1(e) to Post-Effective Amendment No. 13
to the Registration Statement on Form N-1A (File Nos.
2-63023 and 811-2884) and incorporated herein by
reference).
b -- By-Laws of Registrant, as amended, December 16, 1988
(filed as Exhibit (2) to Post-Effective Amendment No. 10
to the Registration Statement on Form N-1A (File Nos.
2-63023 and 811-2884) and incorporated herein by
reference).
c -- None.
d -- Management Contract between Registrant and Salomon
Brothers Asset Management Inc dated November 28, 1997
(filed as Exhibit 5 to Post-Effective Amendment No. 21 to
the Registration Statement on Form N-1A (File Nos. 2-63023
and 811-2884) and incorporated herein by reference).
e (1) -- Distribution agreement between Registrant and CFBDS, Inc.
dated September 1, 1998, is incorporated herein by
reference.
(2) -- Form of Dealer Contract is incorporated herein by
reference.
f -- None.
g -- Custodian Agreement between Registrant and PNC Bank, N.A.
is incorporated herein by reference.
h -- Transfer Agency Agreement between Registrant and First
Data Investors Services Group, Inc. is incorporated herein
by reference.
i -- Opinion and consent of Counsel (filed as Exhibit 10 to
Post-Effective Amendment No. 21 to the Registration
Statement on Form N-1A (File Nos. 2-63023 and 811-2884)
and incorporated herein by reference).
j -- Consent of PricewaterhouseCoopers LLP, independent
accountants is filed herewith.
k -- None.
l (1) -- Subscription Agreement between Registrant and Irving
Brilliant (filed as Exhibit 13(a) to Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A
(File Nos. 2-63023 and 811-2884) and incorporated herein
by reference).
(2) -- Subscription Agreement between Registrant and William H.
David, dated February 8, 1979 (filed as Exhibit 13(b) to
Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A (File Nos. 2063023 and 811-2884)
and incorporated herein by reference).
m -- None.
n -- None.
p -- Code of Ethics is filed herewith.
</TABLE>
C-1
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 25. INDEMNIFICATION
Reference is made to Article VIII of Registrant's Articles of Incorporation,
Article V of Registrant's By-Laws and paragraph 4 of the Distribution Agreement.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the 'Securities Act') may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant understands that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The Registrant is named on a Mutual Fund Professional Liability Insurance
Policy which covers all present and future directors and officers of Registrant
against loss arising from any civil claim or claims by reason of any actual or
alleged error, misstatement, misleading statement, negligent act or omission, or
neglect or breach of duty committed while acting as directors or officers of the
Registrant.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Investment Adviser -- Salomon Brothers Asset Management Inc
The list required by this Item 27 of officers and directors of SBAM,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
FORM ADV filed by SBAM pursuant to the Advisers Act (SEC File No. 801-32046).
ITEM 27. PRINCIPAL UNDERWRITER
CFBDS, Inc., ('CFBDS') the Registrant's Distributor, is the distributor for
CitiFunds Multi-State Tax Free Trust, CitiFunds Premium Trust, CitiFunds
Institutional Trust, CitiFunds Tax Free Reserves, CitiFunds Trust III. CFBDS is
also the placement agent for Tax Free Reserves Portfolio, Cash Reserves
Portfolio and U.S. Treasury Reserves Portfolio.
In addition, CFBDS is also the distributor for the following Salomon
Brothers Funds: Salomon Brothers Investors Value Fund Inc, Salomon Brothers
Capital Fund Inc, Salomon Brothers Series Funds Inc, Salomon Brothers
Institutional Series Funds Inc, Salomon Brothers Variable Series Funds Inc. and
SSBCiti Funds Inc.
(b) The information required by this Item 27 with respect to each director
and officer of CFBDS is incorporated by reference to Schedule A of Form BD filed
by CFBDS pursuant to the Securities and Exchange Act of 1934 (File
No. 8-32417).
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
(1) Salomon Brothers Asset Management Inc
7 World Trade Center
New York, New York 10048
C-2
<PAGE>
(2) PNC Bank, N.A.
Airport Business Center
International Court 2
200 Stevens Drive
Lester, PA 19113
(3) PFPC Global Fund Services, Inc.
P.O. Box 9764
Providence, Rhode Island 02940-9633
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
The Registrant hereby undertakes to furnish each person to whom a Prospectus
is delivered with a copy of the Registrant's latest Annual Report to
shareholders upon request and without charge.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
and State of New York, on the 21st day of December, 2000.
SALOMON BROTHERS OPPORTUNITY FUND INC
(Registrant)
By: /s/ IRVING BRILLIANT
..................................
IRVING BRILLIANT
CHAIRMAN
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ IRVING BRILLIANT Chairman and Director (Principal December 21, 2000
......................................... Executive Officer)
IRVING BRILLIANT
* Executive Vice President and December 21, 2000
......................................... Treasurer (Principal Accounting
LEWIS E. DAIDONE and Financial Officer)
* Director December 21, 2000
.........................................
B. ALEXANDER GAGUINE
* Director December 21, 2000
.........................................
ROSALIND A. KOCHMAN
* Director December 21, 2000
.........................................
IRVING SONNENSCHEIN
*By: /S/ ROBERT VEGLIANTE
.........................................
ROBERT VEGLIANTE AS
ATTORNEY-IN-FACT
DECEMBER 21, 2000
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------ ----------- ------
<S> <C> <C>
j Consent of PricewaterhouseCoopers LLP,
independent
accountants
p Code of Ethics
</TABLE>
