UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-2884
Salomon Brothers Opportunity Fund Inc
(Exact name of registrant as specified in charter)
125 Broad Street, New York, NY 10004
(Address of principal executive offices) (Zip code)
Christina T. Sydor, Esq.
Salomon Brothers Asset Management Inc
300 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 725-6666
Date of fiscal year end: August 31
Date of reporting period: August 31, 2003
ITEM 1. REPORT TO STOCKHOLDERS.
The Annual Report to Stockholders is filed herewith.
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
Letter from the Chairman
Dear Shareholder,
We encourage you to read this annual report for the Salomon Brothers Opportunity
Fund Inc in full. A detailed summary of the Fund's performance can be found in
the appropriate sections that follow. We hope you find this report to be useful
and informative.
Sincerely,
/s/ Irving G. Brilliant
Irving G. Brilliant
Chairman
September 22, 2003
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
Manager Overview
SPECIAL NOTICE TO SHAREHOLDERS
As of May 8, 2003, George J. Williamson is responsible for the day-to-day
management of the Fund's portfolio. Mr. Williamson is also an investment officer
of the Fund. Mr. Williamson has been a Director of the Manager since 1999. Prior
to 1999, he was a Vice President of the Manager. Irving G. Brilliant, who had
been portfolio manager of the Fund since 1979, remains Chairman of the Fund.
PERFORMANCE REVIEW
For the twelve months ended August 31, 2003, the Fund returned 2.57%,
underperforming its unmanaged benchmark, the S&P 500 Index, /1/ which returned
12.06% for the same period. It also underperformed the average of its Lipper
peer group of multi-cap value funds, which returned 12.61% for the same
period. /2/
FUND PERFORMANCE
One reason for the Fund's underperformance was its large cash position which was
held on expectations of a poor economy. Other detractors from performance
included being underweight in the consumer discretionary and resurgent
information technology sectors, which performed very well particularly towards
the end of the period. Contributors to performance included an underweight
position in the consumer staples industry and an overweight position in the
energy and basic materials sectors.
As always, thank you for entrusting your assets to us. We look forward to
helping you continue to meet your financial goals.
Sincerely,
/s/ George J. Williamson
George J. Williamson
Investment Officer
September 22, 2003
The information provided in this letter by the Manager is not intended to be a
forecast of future events, a guarantee of future results or investment advice.
Views expressed may differ from those of the firm as a whole.
Portfolio holdings and breakdowns are as of August 31, 2003 and are subject to
change. Please refer to pages 6 through 9 for a list and percentage breakdown of
the Fund's holdings.
1 The S&P 500 Index is a market capitalization-weighed index of 500 widely
held common stocks. Please note that an investor cannot invest directly in
an index.
2 Lipper is a major independent mutual-fund tracking organization. Average
annual returns are based on the 12-month period ended August 31, 2003,
calculated among 479 funds in the multi-cap value funds category with
reinvestment of dividends and capital gains excluding sales charges.
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, 1993. 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:
One-year period ended August 31, 2003 ........................... 2.57%
Five-year period ended August 31, 2003 .......................... 5.18%
Ten-year period ended August 31, 2003 ........................... 9.63%
PERFORMANCE COMPARISON -- VALUE OF $10,000*
AUGUST 1993 -- AUGUST 2003
(UNAUDITED)
Salomon Brothers
Opportunity Fund Inc S&P 500
----- -------
8/93 10000 10000
8/94 10640 10546
8/95 12881 12804
8/96 14346 15202
8/97 20154 21378
8/98 19481 23114
8/99 22704 32314
8/00 27339 37582
8/01 26474 28420
8/02 24448 23309
8/03 25075 26120
* Past performance is not predictive of future results.
PAGE 3
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 Year Ended August 31, 2003
ADDITIONS* REDUCTIONS*
- ----------------------------------------------------- -----------------------------------------------------
Stocks Shares Stocks Shares
- ----------------------------------------------------- -----------------------------------------------------
Aegon N.V................................ 10,000 Aegon N.V............................... 10,000(1)
Diamond Offshore Drilling, Inc........... 24,000 Amcast Industrial Corp.................. 20,700(1)
General Electric Co...................... 40,000 Amerada Hess Corp....................... 7,000(1)
International Business Machines Corp. ... 14,000 American International Group, Inc....... 11,591(1)
Johnson & Johnson........................ 20,000 AMR Corp................................ 20,000
Leucadia National Corp................... 300 ArvinMeritor, Inc....................... 15,000(1)
Loews Corp............................... 10,000 The Bank of New York Co., Inc........... 98,000
Monsanto Co.............................. 5,000 BJ's Wholesale Club, Inc................ 11,000(1)
Newscorp Overseas Ltd., ADR.............. 1,000 Canadian Pacific Ltd.................... 16,000(1)
Popular, Inc............................. 10,000 The Chubb Corp.......................... 111,700
Verizon Communications Inc............... 1,000 CNF Inc................................. 4,000(1)
Deltic Timber Corp...................... 6,000(1)
Encana Corp............................. 16,000
Everest Reinsurance Group Ltd........... 3,000(1)
Forest City Enterprises, Inc.,
Class A Shares........................ 4,800
Fremont General Corp.................... 5,980(1)
Intel Corp.............................. 5,000(1)
International Paper Co.................. 4,000(1)
International Shipholding Corp.......... 9,500(1)
Liberty Homes, Inc., Class A Shares .... 8,000
Loews Corp.............................. 15,000
National Processing Inc................. 8,000
Pharmacia Corp.......................... 45,260(1)
Pogo Producing Co....................... 6,800(1)
Rayonier Inc............................ 2,000
Sabre Holdings Corp..................... 14,000
Talisman Energy Inc..................... 10,000(1)
Trenwick Group Ltd...................... 13,000(1)
Tyco International Ltd.................. 15,000
Verizon Communications Inc.............. 20,000
- -------------------------
* Exclusive of changes resulting entirely from mergers, stock dividends and
stock splits.
(1) Elimination.
PAGE 4
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, 2003
SHARES SECURITY VALUE
- ---------------------------------------------------------------------------------------------------
COMMON STOCK -- 76.2%
AEROSPACE AND DEFENSE -- 4.5%
70,100 General Dynamics Corp.............................................. $ 6,036,311
12,000 Lockheed Martin Corp............................................... 614,760
------------
6,651,071
------------
AIR FREIGHT AND COURIERS -- 0.1%
73,000 ABX Air, Inc. (a).................................................. 171,550
------------
AIRLINES -- 0.4%
59,200 AMR Corp. (b)...................................................... 651,200
------------
BANKS -- 13.3%
487,976 The Bank of New York Co., Inc...................................... 14,356,254
135,000 Popular, Inc. ..................................................... 5,086,800
------------
19,443,054
------------
CHEMICALS -- 0.4%
12,721 Monsanto Co........................................................ 327,057
13,000 NL Industries, Inc. (b)............................................ 226,850
------------
553,907
------------
COMMERCIAL SERVICES AND SUPPLIES -- 1.8%
7,000 National Processing Inc. (a)(b).................................... 144,760
9,234 Sabre Holdings Corp. .............................................. 208,873
117,750 TRC Cos., Inc. (a)(b) ............................................. 2,287,882
------------
2,641,515
------------
COMPUTERS AND PERIPHERALS -- 0.8%
14,000 International Business Machines Corp............................... 1,148,140
------------
CONSTRUCTION AND ENGINEERING -- 1.0%
42,000 Lafarge North America Inc. (b)..................................... 1,438,080
------------
CONSTRUCTION MATERIALS -- 1.1%
49,600 Ameron International Corp.......................................... 1,673,008
------------
DIVERSIFIED FINANCIALS -- 3.2%
50,000 Freddie Mac ....................................................... 2,657,500
53,100 Leucadia National Corp............................................. 2,025,765
------------
4,683,265
------------
DIVERSIFIED TELECOMMUNICATIONS SERVICES -- 0.2%
6,000 Verizon Communications Inc. ....................................... 211,920
------------
ELECTRICAL EQUIPMENT -- 2.1%
Tecumseh Products Co.:
40,100 Class A Shares................................................... 1,572,722
40,900 Class BShares ................................................... 1,537,840
------------
3,110,562
------------
ENERGY EQUIPMENT AND SERVICES -- 0.3%
24,000 Diamond Offshore Drilling, Inc. (b) ............................... 484,800
------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 5
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, 2003
SHARES SECURITY VALUE
- ----------------------------------------------------------------------------------------------------
FOOD SERVICES -- 0.5%
96,000 Fine Host Corp. (a)(c)............................................. $ 672,000
------------
HEALTHCARE PROVIDERS AND SERVICES -- 2.9%
12,000 Health Net Inc. (a)................................................ 381,960
27,000 Humana Inc. (a).................................................... 474,930
44,154 WellPoint Health Networks Inc., Class A Shares (a)................. 3,444,012
------------
4,300,902
------------
HOTELS, RESTAURANTS AND LEISURE -- 0.2%
8,000 Fairmount Hotels & Resorts, Inc.................................... 212,400
------------
HOUSEHOLD DURABLES -- 6.0%
352,110 Koninklijke (Royal) Philips Electronics N.V., ADR.................. 8,591,484
Liberty Homes, Inc.:
16,550 Class A Shares (b)............................................... 78,199
24,750 Class B Shares .................................................. 118,800
------------
8,788,483
------------
INDUSTRIAL CONGLOMERATES -- 0.9%
40,000 General Electric Co................................................ 1,182,800
9,403 Tyco International Ltd............................................. 193,514
------------
1,376,314
------------
INSURANCE -- 12.6%
193,300 The Chubb Corp..................................................... 13,132,802
111,386 CNA Financial Corp. (a)(b)......................................... 2,422,645
10,000 Loews Corp......................................................... 411,600
40,000 Merchants Group, Inc............................................... 837,200
50,000 Old Republic International Corp.................................... 1,679,500
------------
18,483,747
------------
MARINE -- 1.2%
35,500 Alexander & Baldwin, Inc........................................... 1,039,440
8,000 CP Ships Ltd....................................................... 166,160
23,600 Overseas Shipholding Group, Inc.................................... 611,476
------------
1,817,076
------------
MEDIA -- 0.2%
11,000 Newscorp Overseas Ltd., ADR........................................ 318,120
------------
METALS AND MINING -- 0.2%
8,077 Newmont Mining Corp................................................ 317,103
------------
OIL AND GAS -- 10.7%
5,888 Encana Corp........................................................ 220,506
64,000 Murphy Oil Corp.................................................... 3,694,720
260,000 Royal Dutch Petroleum Co., ADR..................................... 11,666,200
------------
15,581,426
------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 6
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, 2003
SHARES SECURITY VALUE
- ---------------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS -- 1.3%
48,750 Rayonier Inc....................................................... $ 1,931,962
------------
PHARMACEUTICALS -- 2.0%
20,000 Johnson & Johnson.................................................. 991,600
63,364 Pfizer Inc......................................................... 1,895,851
------------
2,887,451
------------
REAL ESTATE -- 8.0%
Forest City Enterprises, Inc.:
172,950 Class A Shares................................................... 7,367,670
99,150 Class B Shares, Convertible (d).................................. 4,213,875
6,000 Harbor Global Co. Ltd.............................................. 52,200
------------
11,633,745
------------
SEMICONDUCTOR EQUIPMENT AND PRODUCTS -- 0.3%
12,000 National Semiconductor Corp. (a) .................................. 349,680
------------
TOTAL COMMON STOCK
(Cost -- $29,204,124).............................................. 111,532,481
------------
FACE
AMOUNT
- -----------
CORPORATE BONDS -- 0.2%
ELECTRIC/GAS -- 0.2%
$ 300,000 Pacific Gas & Electric Co., Series 93-G, 6.250% due 3/1/04
(Cost -- $292,263)............................................... 301,500
------------
TOTAL LONG-TERM INVESTMENTS
(Cost -- $29,496,387).............................................. 111,833,981
------------
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 7
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, 2003
FACE
AMOUNT SECURITY VALUE
- --------------------------------------------------------------------------------------------------
CORPORATE SHORT-TERM NOTES -- 23.6%
$3,745,000 AIG Funding Inc., 1.000% due 9/8/03................................ $ 3,744,272
4,388,000 Barclays US Fund, 1.015% due 9/2/03................................ 4,387,876
4,917,000 Gannett Co., Inc., 1.000% due 9/5/03............................... 4,916,454
5,000,000 ING America, 1.070% due 9/5/03..................................... 4,999,406
4,769,000 International Lease Finance Corp., 1.050% due 9/5/03............... 4,768,861
2,682,000 UBS Finance (Delaware) Inc., 1.030% due 9/5/03..................... 2,681,693
4,692,000 Wal-Mart Stores, Inc., 1.000% due 9/2/03........................... 4,691,870
4,345,000 Wells Fargo & Co., 1.010% due 9/5/03............................... 4,344,511
------------
TOTAL CORPORATE SHORT-TERM NOTES
(Cost -- $34,534,943)............................................. 34,534,943
------------
TOTAL INVESTMENTS -- 100.0%
(Cost -- $64,031,330*)............................................. $146,368,924
============
- ------------
(a)Non-income producing security.
(b)All or a portion of this security is on loan (See Note 4).
(c)Security is valued in accordance with fair valuation procedures.
(d)Convertible into Forest City Enterprises Inc., Class A Shares.
* Aggregate cost for Federal income tax purposes is $64,146,388.
Abbreviation used in this schedule:
-----------------------------------
ADR -- American Depositary Receipt
Loaned Securities Collateral
August 31, 2003
FACE
AMOUNT SECURITY VALUE
- --------------------------------------------------------------------------------------------------
$7,454,052 State Street Navigator Securities Lending Trust Prime Portfolio
(Cost -- $7,454,052) ............................................ $ 7,454,052
============
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 8
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, 2003
ASSETS:
Investments, at value (Cost -- $29,496,387)........................................ $ 111,833,981
Corporate short-term notes, at amortized cost...................................... 34,534,943
Loaned securities collateral, at value (Cost -- $7,454,052) (Note 4)............... 7,454,052
Cash............................................................................... 66,372
Dividends and interest receivable.................................................. 268,087
Receivable for Fund shares sold.................................................... 29,450
-------------
TOTAL ASSETS....................................................................... 154,186,885
-------------
LIABILITIES:
Payable for securities on loan (Note 4)............................................ 7,454,052
Payable for securities purchased................................................... 694,141
Payable for Fund shares reacquired................................................. 206,885
Management fee payable............................................................. 122,073
Accrued expenses................................................................... 55,656
-------------
TOTAL LIABILITIES.................................................................. 8,532,807
-------------
TOTAL NET ASSETS..................................................................... $145,654,078
=============
NET ASSETS:
Common stock ($0.01 par value, 15,000,000 shares authorized;
3,523,156 shares outstanding).................................................... $ 35,232
Capital paid in excess of par value................................................ 54,295,473
Undistributed net investment income................................................ 848,100
Accumulated net realized gain from investment transactions......................... 8,137,679
Net unrealized appreciation of investments......................................... 82,337,594
-------------
TOTAL NET ASSETS..................................................................... $145,654,078
=============
NET ASSET VALUE, PER SHARE ($145,654,078 / 3,523,156 shares)......................... $41.34
=======
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 9
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, 2003
INVESTMENT INCOME:
Dividends ......................................................................... $ 2,275,431
Interest (Note 4).................................................................. 571,262
Less: Foreign withholding tax...................................................... (89,165)
-------------
TOTAL INVESTMENT INCOME............................................................ 2,757,528
-------------
EXPENSES:
Management fee (Note 2)............................................................ 1,415,057
Legal.............................................................................. 49,621
Audit and tax services............................................................. 40,474
Shareholder servicing fees......................................................... 28,699
Registration fees.................................................................. 17,985
Custody............................................................................ 12,370
Shareholder communications......................................................... 10,904
Directors' fees.................................................................... 6,214
Other.............................................................................. 9,515
-------------
TOTAL EXPENSES..................................................................... 1,590,839
-------------
NET INVESTMENT INCOME................................................................ 1,166,689
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES (NOTE 3):
Realized Gain From:
Investment transactions ......................................................... 9,180,817
Foreign currency transactions.................................................... 672
-------------
NET REALIZED GAIN.................................................................. 9,181,489
-------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year................................................................ 90,047,817
End of year...................................................................... 82,337,594
-------------
DECREASE IN NET UNREALIZED APPRECIATION............................................ (7,710,223)
-------------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCIES....................................... 1,471,266
-------------
INCREASE IN NET ASSETS FROM OPERATIONS............................................... $ 2,637,955
=============
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 10
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,
2003 2002
- ---------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income.................................... $ 1,166,689 $ 1,125,315
Net realized gain........................................ 9,181,489 4,289,766
Decrease in net unrealized appreciation.................. (7,710,223) (18,801,577)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS........ 2,637,955 (13,386,496)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.................................... (701,596) (2,501,139)
Net realized gains....................................... (4,812,573) (10,395,070)
------------- -------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS.......................... (5,514,169) (12,896,209)
------------- -------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares......................... 1,310,952 1,960,116
Net asset value of shares issued for
reinvestment of dividends.............................. 3,492,308 9,207,194
Cost of shares reacquired................................ (16,547,404) (9,776,266)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM
FUND SHARE TRANSACTIONS................................ (11,744,144) 1,391,044
------------- -------------
DECREASE IN NET ASSETS..................................... (14,620,358) (24,891,661)
NET ASSETS:
Beginning of year........................................ 160,274,436 185,166,097
------------- -------------
END OF YEAR*............................................. $145,654,078 $160,274,436
============= =============
* Includes undistributed net investment income of:......... $848,100 $382,335
============= =============
SEE NOTES TO FINANCIAL STATEMENTS.
PAGE 11
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
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 accounting principles generally
accepted in the United States of America ("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 prices which represent the current value
of the security. Over-the-counter securities are valued at the mean between the
current bid and asked prices. 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.
(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.
PAGE 12
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)
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"), an indirect
wholly-owned subsidiary of Citigroup Inc. ("Citigroup"), to act as investment
manager of the Fund, subject to the supervision by the Board of Directors of the
Fund. The management fee is payable monthly at an annual rate of 1.00% of the
Fund's average daily net assets.
Citigroup Global Markets Inc., formerly known as Salomon Smith Barney Inc.,
another indirect wholly-owned subsidiary of Citigroup and an affiliate of SBAM,
acts as the Fund's distributor.
Certain officers and/or directors of the Fund are also officers and/or directors
of SBAM.
The Fund has a concentration of several shareholders who may be a related party,
holding a significant percentage of shares outstanding. Investment activities of
these shareholders could have a material impact on the Fund.
3. PORTFOLIO ACTIVITY
During the year ended August 31, 2003, the aggregate cost of purchases and
proceeds from sales of investments (excluding short-term investments) were as
follows:
Purchases ..................................................... $ 5,057,969
===========
Sales ......................................................... $15,639,647
===========
At August 31, 2003, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were as follows:
Gross unrealized appreciation ................................. $83,341,979
Gross unrealized depreciation ................................. (1,119,443)
-----------
Net unrealized appreciation ................................... $82,222,536
===========
4. LENDING OF PORTFOLIO SECURITIES
The Fund has an agreement with its custodian whereby the custodian may lend
securities owned by the Fund to brokers, dealers and other financial
organizations, and receives a lenders fee. Fees earned by the Fund on securities
lending are recorded as interest income. Loans of securities by the Fund are
collateralized by cash, U.S. government securities or high quality money market
instruments that are maintained at all times in an amount at least equal to the
current market value of the loaned securities, plus a margin which may vary
depending on the type of securities loaned. The Fund maintains exposure for the
risk of any losses in the investment of amounts received as collateral.
PAGE 13
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)
At August 31, 2003, the Fund loaned securities having a market value of
$7,279,974. The Fund received cash collateral amounting to $7,454,052 which was
invested in the State Street Navigator Securities Lending Trust Prime Portfolio.
Income earned by the Fund from securities lending for the year ended August 31,
2003 was $13,227.
5. SHARES OF CAPITAL STOCK
At August 31, 2003, the Fund had 15,000,000 shares of capital stock authorized
with a par value of $0.01 per share. Transactions in shares of the Fund were as
follows:
YEAR ENDED YEAR ENDED
AUGUST 31, 2003 AUGUST 31, 2002
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
------- ------ -------- -------
Shares sold................................ 34,685 $ 1,310,952 43,495 $ 1,960,116
Shares issued on reinvestment.............. 92,610 3,492,308 200,253 9,207,194
Shares reacquired.......................... (432,592) (16,547,404) (216,277) (9,776,266)
-------- ------------ -------- ----------
Net Increase (Decrease).................... (305,297) $(11,744,144) 27,471 $ 1,391,044
======== ============ ======== ===========
6. INCOME TAX INFORMATION AND DISTRIBUTIONS TO SHAREHOLDERS
At August 31, 2003, the tax basis components of distributable earnings were:
Undistributed ordinary income............................. $ 815,226
===========
Accumulated capital gains................................. $ 8,285,611
===========
Unrealized appreciation................................... $82,222,536
===========
The tax character of distributions paid during the year ended August 31, 2003
was:
Ordinary income........................................... $ 701,596
Long-term capital gains................................... 4,812,573
----------
Total..................................................... $5,514,169
==========
7. SUBSEQUENT EVENT
On September 19, 2003, the Board of Directors approved a reduction of the
management fee paid to SBAM. Effective October 1, 2003, the management fee was
reduced from 1.00% to 0.75%.
PAGE 14
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,
unless otherwise noted:
2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR....... $41.86 $48.72 $55.98 $49.69 $47.36
------ ------ ------ ------ ------
INCOME (LOSS) FROM OPERATIONS:
Net investment income.................. 0.33 0.28 0.69 0.82 0.76
Net realized and unrealized gain (loss) 0.61 (3.74) (2.23) 8.79 6.98
------ ------ ------ ------ ------
Total Income (Loss) From Operations...... 0.94 (3.46) (1.54) 9.61 7.74
------ ------ ------ ------ ------
LESS DISTRIBUTIONS FROM:
Net investment income.................. (0.19) (0.64) (0.76) (0.80) (0.47)
Net realized gains..................... (1.27) (2.76) (4.96) (2.52) (4.94)
------ ------ ------ ------ ------
Total Distributions...................... (1.46) (3.40) (5.72) (3.32) (5.41)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR............. $41.34 $41.86 $48.72 $55.98 $49.69
====== ====== ====== ====== ======
TOTAL RETURN............................. 2.6% (7.7)% (3.2)% 20.4% 16.5%
NET ASSETS, END OF YEAR (MILLIONS)....... $146 $160 $185 $212 $189
RATIOS TO AVERAGE NET ASSETS:
Expenses............................... 1.12% 1.11% 1.10% 1.11% 1.14%
Net investment income.................. 0.82 0.64 1.30 1.65 1.55
PORTFOLIO TURNOVER RATE.................. 5% 1% 1% 3% 3%
PAGE 15
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 Auditors
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 ("Fund") at August 31, 2003, 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, 2003 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
New York, New York
October 13, 2003
PAGE 16
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
Additional Information (unaudited)
INFORMATION ABOUT DIRECTORS AND OFFICERS
The business and affairs of Salomon Brothers Opportunity Fund Inc ("Fund") are
managed under the direction of its Board of Directors. Information pertaining to
the Directors and Officers of the Fund is set forth below. The Statement of
Additional Information includes additional information about Fund's Directors
and is available, without charge, upon request, by calling the Fund's Transfer
Agent (Citicorp Trust Bank, fsb. at 1-800-451-2010).
NUMBER OF
PORTFOLIOS
IN
FUND
TERM OF PRINCIPAL COMPLEX
POSITION(S) OFFICE* AND OCCUPATION(S) OVERSEEN OTHER
HELD WITH LENGTH OF DURING PAST BY DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND TIME SERVED 5 YEARS DIRECTOR HELD BY DIRECTOR
- --------------------------------------------------------------------------------------------------------
NON-INTERESTED
DIRECTORS:
B. Alexander Gaguine Director Since Chief Operating 1 None
516 Bethany Avenue 1997 Officer and President,
Santa Cruz, CA 95060 Appleton Foundation
Age 52
Rosalind A. Kochman Director Since Chief Executive 1 None
1301 Avenue J 1990 Officer, Brooklyn
Brooklyn, NY 11230 Eye Surgery Center;
Age 65 and Administrator,
Kochman Lebowitz
& Mobil, MDs
Irving Sonnenschein Director Since Partner in the law 1 None
888 7th Avenue 1994 firm of Sonnenschein,
New York, NY 10016 Sherman & Deutsch
Age 82
INTERESTED DIRECTOR:
Irving G. Brilliant** Chairman Since Prior to April 1 None
399 Park Avenue and Director 1978 2003, he was a
New York, NY 10022 Director of Salomon
Age 84 President 2002- Brothers Asset
2003 Management Inc
("SBAM") and
Citigroup Global
Markets Inc. ("CGM")
PAGE 17
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
Additional Information (unaudited) (continued)
NUMBER OF
PORTFOLIOS
IN
FUND
TERM OF PRINCIPAL COMPLEX
POSITION(S) OFFICE*** AND OCCUPATION(S) OVERSEEN OTHER
HELD WITH LENGTH OF DURING PAST BY DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND TIME SERVED 5 YEARS DIRECTOR HELD BY DIRECTOR
- --------------------------------------------------------------------------------------------------------
OFFICERS:
R. Jay Gerken, CFA Executive Vice Since Managing Director N/A N/A
Citigroup Asset Management President 2002 of CGM; Chairman,
("CAM") President, Chief
399 Park Avenue Executive Officer
4th Floor and Director of
New York, NY 10022 Smith Barney Fund
Age 52 Management LLC
("SBFM"); Travelers
Investment Adviser,
Inc. ("TIA") and Citi
Fund Management
Inc. ("CFM");
Formerly, Portfolio
Manager of Smith
Barney Allocation
Series Inc. (from
1996-2001) and Smith
Barney Growth and
Income Fund (from
1996-2001)
Lewis E. Daidone Senior Vice Since Managing Director N/A N/A
CAM President and 2002 of CGM; Director
125 Broad Street Chief and Senior Vice
11th Floor Administrative President of
New York, NY 10004 Officer SBFM, TIA and
Age 46 Director of CFM;
Treasurer 1998- Chief Financial
2002 Officer of certain
mutual funds
affiliated with
Citigroup Inc.
("Citigroup") and
formerly Treasurer
of the mutual funds
affiliated with
Citigroup
George J. Williamson Investment Since Director of SBAM N/A N/A
CAM Officer 2002 and CGM since
399 Park Avenue January 1999; Prior
4th Floor President 2000- to January 1999, he
New York, NY 10022 2002 was a Vice President
Age 68 of SBAM and CGM
PAGE 18
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
Additional Information (unaudited) (continued)
NUMBER OF
PORTFOLIOS
IN
FUND
TERM OF PRINCIPAL COMPLEX
POSITION(S) OFFICE*** AND OCCUPATION(S) OVERSEEN OTHER
HELD WITH LENGTH OF DURING PAST BY DIRECTORSHIPS
NAME, ADDRESS AND AGE FUND TIME SERVED 5 YEARS DIRECTOR HELD BY DIRECTOR
- --------------------------------------------------------------------------------------------------------
Frances M. Guggino Controller Since Vice President of N/A N/A
CAM 2002 CGM
125 Broad Street
10th Floor
New York, NY 10004
Age 45
Christina T. Sydor Secretary Since Managing Director N/A N/A
CAM 1998 of CGM; General
300 First Stamford Place Counsel and
4th Floor Secretary of SBFM
Stamford, CT 06902 and TIA
Age 52
- --------------------------------------------------------------------------------------------------------
* Directors are elected until the Fund's next annual meeting and until their
sucessors are elected and qualified.
** Mr. Brilliant is an "Interested Director" by virtue of his position with
affiliates of SBAM as described in the table above.
*** Officers are elected annually by the Board of Directors.
PAGE 19
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, 2003:
o A corporate dividends received deduction of 100.00%.
o Total long-term capital gain distributions paid of $4,812,573.
o For individual shareholders, the maximum amount allowable of
qualifying dividends for the reduced tax rate and The Jobs and Growth
Tax Relief Reconciliation Act of 2003.
PAGE 20
Directors Salomon Brothers Opportunity Fund Inc
IRVING G. BRILLIANT 125 Broad Street
10th Floor, MF-2
B. ALEXANDER GAGUINE New York, New York 10004
1-888-777-0102, toll free
ROSALIND A. KOCHMAN
IRVING SONNENSCHEIN
INVESTMENT MANAGER
Salomon Brothers Asset Management Inc
399 Park Avenue
New York, New York 10022
Officers
DISTRIBUTOR
IRVING G. BRILLIANT Citigroup Global Markets Inc.
Chairman 388 Greenwich Street
New York, New York 10013
R. JAY GERKEN, CFA
Executive Vice President
CUSTODIAN
LEWIS E. DAIDONE State Street Bank and Trust Company
Senior Vice President and 225 Franklin Street
Chief Administrative Officer Boston, Massachusetts 02110
GEORGE J. WILLIAMSON DIVIDEND DISBURSING AND TRANSFER AGENT
Investment Officer Citicorp Trust Bank, fsb.
125 Broad Street
FRANCES M. GUGGINO 11th Floor
Controller New York, New York 10004
CHRISTINA T. SYDOR LEGAL COUNSEL
Secretary Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017-3909
INDEPENDENT AUDITORS
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 21
(This page intentionally left blank.)
PFPC Global Fund Services
P.O. Box 9764
Providence, Rhode Island 02940-9764
Salomon Brothers
Opportunity Fund Inc
Annual Report
AUGUST 31, 2003
FIRST-CLASS
U.S. POSTAGE
PAID
NORTH READING, MA
PERMIT No. 105
SALOMON
-------
BROTHERS
--------
Asset Management
OPANN 8/03
03-5500
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Fund's Board of Directors has determined that the Fund does not
have an audit committee financial expert serving on its audit
committee. Although no single Director possesses the attributes
necessary for qualification as an audit committee financial expert,
several Directors have significant experience in the management of
their personal assets and the assets of the businesses with which they
are or have been associated. The Board is considering various options
for obtaining access to other sources of financial expertise, such as
seeking an additional board member who would qualify as a financial
expert or engaging an outside consultant to provide advice with respect
to complicated financial or accounting issues.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's disclosure
controls and procedures (as defined in Rule 30a- 3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act")) are
effective as of a date within 90 days of the filing date of this
report that includes the disclosure required by this paragraph,
based on their evaluation of the disclosure controls and
procedures required by Rule 30a-3(b) under the 1940 Act and
15d-15(b) under the Securities Exchange Act of 1934
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940
Act) that occurred during the registrant's last fiscal half-year
(the registrant's second fiscal half-year in the case of an
annual report) that have materially affected, or are likely to
materially affect the registrant's internal control over
financial reporting.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b) Attached hereto.
Exhibit 99.CERT Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 99.906CERT Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this Report to be
signed on its behalf by the undersigned, there unto duly authorized.
Salomon Brothers Opportunity Fund Inc
By: /s/ Irving G. Brilliant
(Irving G. Brilliant)
Chairman
Salomon Brothers Opportunity Fund Inc
Date: November 5, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Irving G. Brilliant
(Irving G. Brilliant)
Chairman
Salomon Brothers Opportunity Fund Inc
Date: November 5, 2003
By: /s/ Lewis E. Daidone
Chief Administrative Officer
Salomon Brothers Opportunity Fund Inc
Date: November 5, 2003