Salomon Brothers
Opportunity Fund Inc
September 15, 2000
Dear Shareholder:
We are pleased to provide the annual report for the Salomon Brothers Opportunity
Fund Inc ("Fund") as of August 31, 2000. Included in this report are performance
results, a market commentary, a summary of portfolio highlights, and a statement
of the Fund's investments and financial statements for the year ended August 31,
2000.
During the year ended August 31, 2000, the net asset value ("NAV") of the Fund
increased from $49.69 per share at August 31, 1999 to $55.98 per share at August
31, 2000. Dividends of $0.80 per share from net investment income and $2.52 in
capital gains were paid during this period. During the period the Fund returned
20.42%. In comparison, the Standard & Poor's 500 Index ("S&P 500")1 returned
16.31% for the same period.
INVESTMENT STRATEGY
The Fund seeks to achieve above average long-term capital appreciation with
current income as a secondary objective by investing primarily in common stocks.
We emphasize individual security selection while varying the Fund's investments
across industries, which may help reduce risk. We evaluate companies of all
sizes. We seek to identify those companies whose securities are trading at
prices that we believe are below the company's intrinsic value. This style of
stock selection, known as value investing, focuses on using fundamental analysis
to analyze each company in detail, ranking its management, strategy and
competitive market position.
We currently pursue a strategy of retaining unrealized long-term capital gains
and avoiding the tax impact of realizing such gain. This strategy reflects our
belief that these securities continue to have solid long-term growth potential.
MARKET REVIEW
After posting historic returns in 1999, the shares of many companies declined
thus far in 2000, with most of the major market indexes down for the period.
Investors are concerned about the effects of higher interest rates raised by the
Federal Reserve Board ("Fed").
The Fed's change in monetary policy during the period was with the objective of
engineering a "soft landing" in the U.S. economy, where growth will continue to
expand, but at a slower, more sustainable pace. The Fed, in raising interest
rates, looked to address risks to an economy weighted toward higher inflation
produced by a disparity in the growth of demand and supply.
---------
1 The S&P 500 is a market capitalization-weighted measure of 500 widely held
common stocks. Please note that an investor cannot invest directly in an index.
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S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
PORTFOLIO HIGHLIGHTS 2
The Fund's outperformance versus its benchmark can be partly explained by its
underweight position in the technology sector, which was a crucial component of
the S&P 500 performance during the period. Over the past six months the
technology sector had a significantly negative impact of the overall market,
while the financial services, transportation, utilities and basic materials
sectors posted solid returns. The historic rise in the technology sector in 1999
gave way to a decline in the second quarter of 2000, as many investors began to
assess the valuations assigned to many companies with no demonstrated earnings
potential.
In our opinion, the Fund is comfortably positioned with its top ten holdings
representing approximately 58% of net assets, with a significant portion of the
portfolio invested in the insurance - property and casualty (15.3%), consumer
goods (10.0%) and energy (9.0%) sectors. We believe it may be difficult to find
alternative investments superior to the potential return anticipated on the
after tax proceeds of our major holdings.
* * *
Thank you for continuing to pursue your long-term financial objectives with the
Salomon Brothers Opportunity Fund Inc.
Cordially,
/s/ Irving Brilliant
Irving Brilliant
Chairman and Portfolio Manager
---------
2 Portfolio allocations are as of August 31, 2000 and are subject to change.
PAGE 2
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S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Results of an Investment in Salomon Brothers Opportunity Fund Inc
Set forth below are average annual total return figures for the periods
indicated and a graph showing the value of a hypothetical $10,000 investment
made in Salomon Brothers Opportunity Fund Inc on August 31, 1990. The average
annual total return figures and the information in the graph represent past
performance; they reflect changes in the price of the Fund's shares and assume
that any income dividends and/or capital gain distributions made by the Fund
during the period were reinvested in additional shares of the Fund. Investment
return and share price of the Fund will fluctuate. Shares when redeemed may be
worth more or less than original cost.
AVERAGE ANNUAL TOTAL RETURN
The average annual total return over the periods indicated below shows the
average annual percentage change in value of an investment in the Fund from the
beginning of the measuring period to the end of the measuring period. When
considering "average" total-return for periods longer than one year, it is
important to note that the Fund's annual total return for any one year in the
period might have been greater or less than the average for the entire period.
The Fund's average annual total return for the periods indicated was as follows:
20.42% for the one-year period beginning September 1, 1999 and
ended August 31, 2000;
16.24% for the five-year period beginning September 1, 1995 and
ended August 31, 2000;
16.41% for the ten-year period beginning September 1, 1990 and
ended August 31, 2000.
PERFORMANCE COMPARISON -- GROWTH OF $10,000*
(UNAUDITED)
DATE S&P SALOMON
8/90 10000 10000
8/91 12320 12685
8/92 13910 13689
8/93 16719 15767
8/94 17790 16628
8/95 21537 20189
8/96 23985 23968
8/97 33696 33706
8/98 32571 36443
8/99 37959 50949
8/00 45709 59255
$59,255
SALOMON BROTHERS OPPORTUNITY FUND INC
STANDARD & POOR'S 500 INDEX
$45,709
*Past performance is not predictive of future performance.
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S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Major Portfolio Changes (unaudited)
For the Six Months Ended August 31, 2000
ADDITIONS+
------------------------------------------------
Shares
------------
Amcast Industrial Corp............ 8,000
Genuity Inc....................... 5,000(1)
International Paper Co............ 4,000(1)
Lafarge Corp...................... 25,500
Overseas Shipholding Group, Inc... 3,400
Tecumseh Products Co.,
Class A Shares.................. 16,500
Trenwick Group Inc................ 9,000
Verizon Communications............ 15,000(1)
REDUCTIONS+
------------------------------------------------
Shares
------------
Aon Corp.......................... 3,000
BJ's Wholesale Club, Inc.......... 6,000
The Bank of New York Co., Inc..... 51,000
Celltech Group PLC - ADR.......... 10,404(2)
Fremont General Corp.............. 13,000
General Dynamics Corp............. 5,000
HEALTHSOUTH Corp.................. 3,000
Humana Inc........................ 4,000
Intel Corp........................ 13,000
Liberty Homes, Inc., Class A Shares 4,500
Loews Corp........................ 6,000
Monsanto Co....................... 15,000(2)
National Semiconductor Corp....... 3,000
New Germany Fund.................. 5,000
Pioneer Group, Inc................ 5,000
The Pogo Producing Co............. 15,000(2)
Silicon Graphics, Inc............. 21,302(2)
Tecumseh Products Co.,
Class B Shares.................. 16,500
-----------
(1) New addition.
(2) Elimination.
+ Exclusive of changes resulting entirely from mergers, stock dividends, and
stock splits.
PAGE 4
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S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Schedule of Investments
August 31, 2000
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
-------------------------------------------------------------------------------------------------
COMMON STOCK -- 78.7%
BANKS -- 20.4%
<S> <C> <C>
770,976 The Bank of New York Co., Inc.................................... $ 40,428,054
6,000 Mellon Financial Corp............................................ 271,500
125,000 Popular, Inc..................................................... 2,578,125
------------
43,277,679
------------
BASIC INDUSTRY -- 3.8%
42,600 Amcast Industrial Corp........................................... 511,200
12,000 ArvinMeritor, Inc................................................ 198,000
6,000 Deltic Timber Corp............................................... 120,000
4,000 International Paper Co........................................... 127,500
39,000 Mississippi Chemical Corp........................................ 160,875
18,000 NL Industries, Inc............................................... 419,625
15,000 National Processing Inc.*........................................ 177,188
8,077 Newmont Mining Corp.............................................. 149,929
34,500 Rayonier Inc..................................................... 1,433,906
3,960 Smurfit-Stone Container Corp.*................................... 51,975
17,100 Solutia Inc...................................................... 257,569
2,200 Southern Peru Copper Corp........................................ 30,663
78,500 TRC Cos., Inc.*.................................................. 1,148,063
Tecumseh Products Co.:
50,600 Class A Shares................................................. 2,011,350
30,500 Class B Shares................................................. 1,181,875
------------
7,979,718
------------
BIOTECHNOLOGY AND DRUGS -- 1.8%
66,260 Pharmacia & Upjohn, Inc.......................................... 3,880,351
------------
CONSTRUCTION -- 1.1%
28,400 Ameron International Corp........................................ 958,500
42,500 Lafarge Corp..................................................... 1,035,937
Liberty Homes, Inc.:
24,550 Class A Shares................................................. 151,903
24,750 Class B Shares................................................. 151,594
------------
2,297,934
------------
CONSUMER GOODS -- 10.0%
35,500 Alexander & Baldwin, Inc......................................... 934,094
17,000 BJ's Wholesale Club, Inc.*....................................... 575,875
9,700 Cone Mills Corp.*................................................ 42,437
96,000 Fine Host Corp.*+................................................ 900,338
10,900 Harcourt General, Inc............................................ 646,506
18,000 Homebase, Inc.*.................................................. 41,625
352,110 Koninklijke (Royal) Philips Electronics N.V.-- ADR............... 17,363,424
3,284 The Neiman Marcus Group, Inc., Class B Shares*................... 103,446
15,737 The News Corp. Ltd.-- ADR........................................ 696,362
------------
21,304,107
------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 5
</TABLE>
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S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Schedule of Investments (continued)
August 31, 2000
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
-------------------------------------------------------------------------------------------------
ENERGY -- 9.0%
<S> <C> <C>
10,000 Amerada Hess Corp................................................ $ 684,375
32,000 Murphy Oil Corp.................................................. 2,136,000
260,000 Royal Dutch Petroleum Co.-- ADR.................................. 15,908,750
10,000 Talisman Energy Inc.*............................................ 336,875
------------
19,066,000
------------
FINANCE -- 6.0%
10,010 American General Corp............................................ 728,853
8,000 Chile Fund....................................................... 76,000
30,250 The CIT Group, Inc., Class A Shares.............................. 529,375
50,000 Freddie Mac...................................................... 2,106,250
60,300 Leucadia National Corp........................................... 1,575,338
71,500 Loews Corp....................................................... 5,787,031
5,000 New Germany Fund................................................. 66,875
43,000 The Pioneer Group, Inc.*......................................... 1,875,875
------------
12,745,597
------------
HEALTHCARE -- 1.1%
12,000 Foundation Health Systems, Inc., Class A Shares *................ 210,750
3,827 HEALTHSOUTH Corp.*............................................... 23,440
32,000 Humana Inc.*..................................................... 274,000
22,077 Wellpoint Health Networks Inc.*.................................. 1,905,521
------------
2,413,711
------------
INSURANCE - LIFE, ACCIDENT AND HEALTH -- 0.5%
1,714 Delphi International Ltd.*....................................... 7,231
17,950 Fremont General Corp............................................. 57,216
8,800 Kansas City Life Insurance Co.................................... 293,700
32,440 UnumProvident Corp............................................... 703,543
------------
1,061,690
------------
INSURANCE - PROPERTY AND CASUALTY -- 15.3%
5,040 Allmerica Financial Corp......................................... 306,810
3,000 Aon Corp......................................................... 111,937
101,300 CNA Financial Corp.*............................................. 4,020,344
328,000 The Chubb Corp................................................... 25,112,500
5,000 Everest Re Group Ltd............................................. 201,250
40,000 Merchants Group, Inc............................................. 695,000
50,000 Old Republic International Corp.................................. 1,196,875
4,000 Reliance Group Holdings, Inc..................................... 875
38,445 Trenwick Group Ltd............................................... 728,052
------------
32,373,643
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 6
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S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Schedule of Investments (continued)
August 31, 2000
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
-------------------------------------------------------------------------------------------------
REAL ESTATE -- 3.1%
<S> <C> <C>
Forest City Enterprises, Inc.:
118,500 Class A Shares................................................. $ 4,147,500
66,100 Class B Shares, Convertible++.................................. 2,472,140
47,776 HomeFed Corp.*................................................... 33,921
------------
6,653,561
------------
TECHNOLOGY -- 1.7%
5,000 Genuity Inc.*.................................................... 43,125
14,000 Intel Corp....................................................... 1,048,250
12,000 National Semiconductor Corp.*.................................... 534,000
28,234 Sabre Holdings Corp.*............................................ 787,023
25,000 Verizon Communications........................................... 1,090,625
------------
3,503,023
------------
TRANSPORTATION -- 4.9%
79,200 AMR Corp......................................................... 2,598,750
76,000 Airborne Freight Corp............................................ 1,135,250
32,000 Canadian Pacific Ltd............................................. 874,000
70,100 General Dynamics Corp............................................ 4,411,919
9,500 International Shipholding Corp................................... 68,281
3,078 KLM Royal Dutch Airlines-- ADR................................... 78,104
18,000 Lockheed Martin Corp............................................. 510,750
27,000 Overseas Shipholding Group, Inc.................................. 794,813
------------
10,471,867
------------
TOTAL COMMON STOCK (Cost--$37,223,215)........................... 167,028,881
------------
FACE
AMOUNT SECURITY VALUE
-------------------------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS -- 0.1%
CONSUMER GOODS -- 0.1%
-------------------------------------------------------------------------------------------------
$ 2,500,000 Sunbeam Corp., zero coupon due 3/25/18++ (Cost--$640,645)........ 287,500
------------
TOTAL LONG-TERM INVESTMENTS (Cost--$37,863,860).................. 167,316,381
------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 7
</TABLE>
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S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Schedule of Investments (continued)
August 31, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT SECURITY VALUE
--------------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES -- 21.2%
<S> <C> <C>
$ 4,553,000 AI Credit Corp., 6.500% due 9/14/00.............................. $ 4,542,313
3,906,000 Abbott Laboratories, 6.450% due 9/8/00........................... 3,901,101
3,500,000 Associates Corp., 6.440% due 9/1/00.............................. 3,500,000
1,500,000 Bell Atlantic Financial Services, 6.480% due 9/5/00.............. 1,498,920
1,254,000 Commercial Metals Co., 6.750% due 9/12/00........................ 1,251,414
5,000,000 Conagra Inc., 6.660% due 9/8/00.................................. 4,993,525
2,220,000 McCormick & Co. Inc., 6.650% due 9/8/00.......................... 2,217,129
5,000,000 NICOR Inc., 6.520% due 9/5/00.................................... 4,996,378
Nordstrom, Inc.:
1,083,000 6.510% due 9/12/00............................................. 1,080,846
3,917,000 6.520% due 9/12/00............................................. 3,909,197
1,887,000 Parker-Hannifin, 6.500% due 9/6/00............................... 1,885,296
5,000,000 Sara Lee Corp., 6.470% due 9/13/00............................... 4,989,217
5,000,000 United Parcel Service Inc., 6.400% due 9/5/00.................... 4,996,444
1,140,000 Volkswagen of America, 6.500% due 9/11/00........................ 1,137,942
------------
TOTAL CORPORATE SHORT-TERM NOTES (Cost--$44,899,722)............. 44,899,722
------------
TOTALINVESTMENTS--100% (Cost--$82,763,582**)..................... $212,216,103
============
</TABLE>
* Non-income producing security.
+ Security valued at fair value.
++ Convertible into Forest City Enterprises Inc., Class A shares.
++ Security is exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold in transactions that are exempt from
registration, normally to qualified institutional buyers.
** Aggregate cost for Federal income tax purposes is substantially the same.
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 8
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S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Statement of Assets and Liabilities
August 31, 2000
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (cost--$37,863,860).......................................... $167,316,381
Corporate short-term notes, at value (Cost--$44,899,722)........................... 44,899,722
Cash............................................................................... 1,650
Dividends and interest receivable.................................................. 209,967
Receivable for Fund shares sold.................................................... 4,050
Other.............................................................................. 235
------------
TOTAL ASSETS....................................................................... 212,432,005
------------
LIABILITIES:
Management fees payable............................................................ 174,936
Payable for Fund shares reacquired................................................. 19,458
Accrued expenses................................................................... 82,862
------------
TOTAL LIABILITIES.................................................................. 277,256
------------
TOTAL NET ASSETS..................................................................... $212,154,749
============
NET ASSETS:
Common stock ($0.01 par value, authorized 15,000,000 shares;
3,790,137 shares outstanding).................................................... $ 37,901
Capital paid in excess of par value................................................ 63,375,618
Undistributed net investment income................................................ 2,129,699
Accumulated net realized gain from security transactions........................... 17,159,010
Net unrealized appreciation of investments......................................... 129,452,521
------------
TOTAL NET ASSETS..................................................................... $212,154,749
============
Net Asset Value, Per Share ($212,154,749 / 3,790,137 shares)......................... $55.98
======
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 9
</TABLE>
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Statement of Operations
For the Year Ended August 31, 2000
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Dividends.......................................................................... $ 2,879,525
Interest........................................................................... 2,351,442
Less: Foreign withholding tax...................................................... (84,010)
------------
TOTAL INVESTMENT INCOME............................................................ 5,146,957
------------
EXPENSES:
Management fees (Note 2)........................................................... 1,865,336
Shareholder communication fees..................................................... 53,430
Audit and tax services............................................................. 43,920
Legal.............................................................................. 34,770
Shareholder services............................................................... 24,618
Registration fees.................................................................. 16,470
Custody............................................................................ 11,031
Directors' fees.................................................................... 7,320
Other.............................................................................. 6,054
------------
TOTAL EXPENSES..................................................................... 2,062,949
------------
NET INVESTMENT INCOME................................................................ 3,084,008
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 3):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales.............................................................. 25,485,072
Cost of securities sold.......................................................... 7,651,852
------------
NET REALIZED GAIN.................................................................. 17,833,220
------------
Change in Net Unrealized Appreciation on Investments:
Beginning of year................................................................ 115,159,914
End of year...................................................................... 129,452,521
------------
INCREASE IN NET UNREALIZED APPRECIATION............................................ 14,292,607
------------
NET GAIN ON INVESTMENTS.............................................................. 32,125,827
------------
INCREASE IN NET ASSETS FROM OPERATIONS............................................... $ 35,209,835
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 10
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S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Statements of Changes in Net Assets
For the Years Ended August 31,
<TABLE>
<CAPTION>
2000 1999
---------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................. $ 3,084,008 $ 2,984,316
Net realized gain...................................... 17,833,220 12,237,894
Increase in net unrealized appreciation................ 14,292,607 13,762,924
------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS................. 35,209,835 28,985,134
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................. (3,100,369) (1,859,719)
Net realized gains..................................... (9,475,297) (18,345,689)
------------ ------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS........................ (12,575,666) (20,205,408)
------------ ------------
FUND SHARE TRANSACTIONS (NOTE 4):
Net proceeds from sale of shares....................... 19,877,386 2,519,335
Net asset value of shares issued for
reinvestment of dividends............................ 9,758,565 16,435,063
Cost of shares reacquired.............................. (28,858,891) (16,259,750)
------------ ------------
INCREASE IN NET ASSETS FROM FUND SHARE TRANSACTIONS.... 777,060 2,694,648
------------ ------------
INCREASE IN NET ASSETS................................... 23,411,229 11,474,374
NET ASSETS:
Beginning of year...................................... 188,743,520 177,269,146
------------ ------------
END OF YEAR*........................................... $212,154,749 $188,743,520
============ ============
*Includes undistributed net investment income of:........ $ 2,129,699 $ 2,152,450
============ ============
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 11
</TABLE>
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
The Salomon Brothers Opportunity Fund Inc ("Fund") is registered as a
non-diversified, open-end management investment company under the Investment
Company Act of 1940, as amended. The Fund's primary objective is to achieve
above average long-term capital appreciation. Current income is a secondary
objective. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles ("GAAP"). The preparation of financial statements in accordance with
GAAP requires management to make estimates of certain reported amounts in the
financial statements. Actual amounts could differ from those estimates.
(A) SECURITIES VALUATION. Portfolio securities listed or traded on national
securities exchanges, or reported on the NASDAQ national market system, are
valued at the last sale price, or if there have been no sales on that day, at
the mean of the current bid and asked price which represents the current value
of the security. Over-the-counter securities are valued at the mean of the
current bid and asked price. If no quotations are readily available (as may be
the case for securities of limited marketability), or if "restricted" securities
are being valued, such portfolio securities and other assets are valued at fair
value determined pursuant to procedures established by the Board of Directors.
Short-term securities with less than 60 days remaining to maturity when acquired
by the Fund are valued at amortized cost which approximates market value.
(B) FEDERAL INCOME TAXES. The Fund has complied and intends to continue to
comply with the requirements of the Internal Revenue Code of 1986, as amended,
applicable to regulated investment companies, and to distribute substantially
all of its taxable income to its shareholders. Therefore, no Federal income tax
or excise tax provision is required.
(C) DIVIDENDS AND DISTRIBUTIONS. The Fund declares and pays dividends from
net investment income and distributions from net realized gains, if any,
annually. Dividends and distributions to shareholders are recorded on the
ex-dividend date. The amount of dividends and distributions from net investment
income and net realized gains are determined in accordance with Federal income
tax regulations, which may differ from GAAP. Permanent book/tax differences are
reclassified within the capital accounts based on their Federal income tax basis
treatment; temporary differences do not require reclassifications. Dividends and
distributions which exceed net investment income and net realized gains for
financial reporting purposes but not for tax purposes are reported as dividends
in excess of net investment income and distributions in excess of net realized
capital gains. To the extent they exceed net investment income and net realized
capital gains for tax purposes, they are reported as tax return of capital.
(D) YEAR END TAX RECLASSIFICATIONS. The character of income and gains to be
distributed are determined in accordance with income tax regulations which may
differ from GAAP. At August 31, 2000, reclassifications were made to the capital
accounts of the Fund to reflect permanent book/tax differences and income and
gains available for distributions under income tax regulations. Net investment
income, net realized gains and net assets were not affected by this change.
PAGE 12
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S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Notes to Financial Statements (continued)
(E) OTHER. Securities transactions are recorded as of the trade date.
Dividend income and dividends payable are recorded on the ex-dividend date.
Interest income is recognized when earned. Noncash dividend income is recorded
based on market or fair value of property received. Gains or losses on sales of
securities are calculated for financial accounting and Federal income tax
purposes on the identified cost basis.
2. MANAGEMENT FEE AND OTHER TRANSACTIONS
The Fund retains Salomon Brothers Asset Management Inc ("SBAM"), a
wholly-owned subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), which,
in turn, is a subsidiary of Citigroup, Inc., to act as investment manager of the
Fund, subject to the supervision by the Board of Directors of the Fund. SBAM
furnishes the Fund with office space and pays the compensation of its officers.
The management fee for these services is payable monthly at an annual rate of 1%
of average daily net assets.
3. PORTFOLIO ACTIVITY
During the year ended August 31, 2000, the aggregate cost of purchases and
proceeds from sales of investments (excluding short-term securities) were as
follows:
Purchases.......................................... $ 5,185,673
============
Sales.............................................. $ 25,485,072
============
At August 31, 2000, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
Gross unrealized appreciation...................... $131,434,057
Gross unrealized depreciation...................... (1,981,536)
------------
Net unrealized appreciation........................ $129,452,521
============
4. SHARES OF CAPITAL STOCK
At August 31, 2000, the Fund had 15,000,000 shares of capital stock
authorized with a par value of $0.01 per share. Transactions in shares for the
portfolio were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
AUGUST 31, 2000 AUGUST 31, 1999
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Shares sold................................ 375,908 $ 19,877,386 50,822 $ 2,519,335
Shares issued on reinvestment.............. 199,416 9,758,565 333,965 16,435,063
Shares reacquired.......................... (583,563) (28,858,891) (329,146) (16,259,750)
-------- ------------ -------- ------------
Net Increase (Decrease).................... (8,239) $ 777,060 55,641 $ 2,694,648
======== ============ ======== ============
</TABLE>
PAGE 13
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Financial Highlights
For a share of capital stock outstanding throughout each year ended August 31,
except where noted:
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR.......... $49.69 $47.36 $50.64 $37.89 $35.75
------ ------ ------ ------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income..................... 0.82 0.76 0.46 0.43 0.60
Net realized and unrealized gain (loss)... 8.79 6.98 (1.95) 14.46 3.38
------ ------ ------ ------ ------
Total Income (Loss) From Operations......... 9.61 7.74 (1.49) 14.89 3.98
------ ------ ------ ------ ------
LESS DISTRIBUTIONS FROM:
Net investment income..................... (0.80) (0.47) (0.39) (0.62) (0.48)
Net realized gains........................ (2.52) (4.94) (1.40) (1.52) (1.36)
------ ------ ------ ------ ------
Total 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 RETURN................................ 20.4% 16.5% (3.3)% 40.5% 11.4%
NET ASSETS, END OF YEAR (000S).............. $212,155 $188,744 $177,269 $188,496 $141,984
RATIOS TO AVERAGE NET ASSETS:
Expenses.................................. 1.11% 1.14% 1.12% 1.16% 1.18%
Net investment income..................... 1.65 1.55 0.83 0.95 1.59
PORTFOLIO TURNOVER RATE..................... 3% 3% 3% 4% 5%
</TABLE>
PAGE 14
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Report of Independent Accountants
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
SALOMON BROTHERS OPPORTUNITY FUND INC
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Salomon Brothers Opportunity Fund
Inc (the "Fund") at August 31, 2000, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at August
31, 2000 by correspondence with the custodian, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
October 17, 2000
PAGE 15
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Tax Information (unaudited)
For Federal tax purposes the Fund hereby designates for the fiscal year ended
August 31, 2000:
* A corporate dividends received deduction of 84.26%.
* Total long-term capital gain distributions paid of $9,381,448.
PAGE 16
<PAGE>
S A L O M O N B R O T H E R S O P P O R T U N I T Y F U N D I N C
Directors
IRVING BRILLIANT
Chairman
B. ALEXANDER GAGUINE
Consultant
ROSALIND A. KOCHMAN
Administrator and counsel,
Kochman Eye Surgical Facility
IRVING SONNENSCHEIN
Partner of law firm of Sonnenschein,
Sherman & Deutsch
Officers
IRVING BRILLIANT
Chairman and Portfolio Manager
GEORGE J. WILLIAMSON
President and Co-Portfolio Manager
LEWIS E. DAIDONE
Executive Vice President and Treasurer
ANTHONY PACE
Controller
CHRISTINA T. SYDOR
Secretary
Salomon Brothers Opportunity Fund Inc
7 World Trade Center
New York, New York 10048
1-888-777-0102, toll free
INVESTMENT MANAGER
Salomon Brothers Asset Management Inc
7 World Trade Center
New York, New York 10048
DISTRIBUTOR
CFBDS, Inc.
CUSTODIAN
PFPC Trust Company
8800 Tinicom Blvd.
Suite 200
Philadelphia, Pennsylvania 19153
DIVIDEND DISBURSING AND TRANSFER AGENT
PFPC Global Fund Services
P.O. Box 9764
Providence, Rhode Island 02940-9764
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3909
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
--------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of
Salomon Brothers Opportunity Fund Inc. It is not authorized for distribution to
prospective investors unless accompanied or preceded by an effective Prospectus
for the Fund, which contains information concerning the Fund's investment
policies and expenses as well as other pertinent information.
<PAGE>
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<PAGE>
PFPC Global Fund Services
P.O. Box 9764
Providence, Rhode Island 02940-9764
Salomon Brothers
Opportunity Fund Inc
Annual Report
AUGUST 31, 2000
--------------------------------------
Salomon Brothers Asset Management
-----------------------------------------
NOT FDIC INSURED * NOT BANK GUARANTEED * MAY LOSE VALUE
FIRST-CLASS
U.S. POSTAGE
PAID
NORTHREADING, MA
PERMIT No. 105
OPANN 8/00
