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Please file this prospectus supplement with your records.
STRONG DISCOVERY FUND II, INC.
Prospectus Supplement Dated February 17, 1995, to Prospectus Dated May 1, 1994.
ANNUAL MEETING OF SHAREHOLDERS. The Board of Directors of the Fund has
approved submitting for shareholder vote the following items at an Annual
Meeting of Shareholders to be held on April 13, 1995, or any adjournment
thereof: (i) the election of an expanded Board of Directors for the Fund; (ii)
adoption and ratification of the Fund's revised advisory agreement with Strong
Capital Management, Inc. (SCM); (iii) the ratification of independent public
accountants for the Fund; (iv) adoption of the Fund's revised Articles of
Incorporation; and (v) the approval of a revised investment objective for the
Fund.
The Board of Directors of the Fund also has proposed for shareholder approval
certain changes to the Fund's investment limitations that are designed (i) to
simplify and modernize the Fund's fundamental investment limitations, (ii) to
replace certain fundamental investment limitations with non-fundamental
operating policies, and (iii) to eliminate certain limitations. These changes,
if adopted, are intended to conform the Fund's policies to those expected to
become standard for all Funds managed by SCM and, in certain cases, are
designed to increase the Fund's flexibility to make investments.
The proposed investment objective is "to seek capital growth." The Fund will
continue to emphasize equity investments, and in pursuit of its objective, it
may invest in any combination of equity securities, bonds, and short-term fixed
income securities. The amended investment objective is designed to describe
the Fund's goal more clearly and is not intended to change the manner in which
the Fund is managed.
A copy of the Fund's Proxy Statement dated February 16, 1995, will be provided
without charge by calling 1-800-359-3369 and is incorporated herein by
reference. This information supplements the section entitled "Investment
Objectives and Policies" contained on pages 4 and 5 of the Prospectus.
WHEN-ISSUED SECURITIES. Effective immediately, the Fund may invest without
limitation in when-issued or delayed delivery securities ("when-issued
securities"). Previously, the Fund did not have an operating policy concerning
investments in when-issued securities. Although the payment and interest terms
of these securities are established at the time the purchaser enters into the
commitment, these securities may be delivered and paid for at a future date,
generally within 45 days. Purchasing when-issued securities allows the Fund to
lock in a fixed price or yield on a security it intends to purchase. However,
when the Fund purchases a when-issued security, it immediately assumes the risk
of ownership, including the risk of price fluctuation until the settlement
date. In addition, failure of the issuer to deliver the security purchased on
a when-issued basis may result in a loss or missed opportunity to make an
alternative investment.
When-issued securities and the securities held in the Fund's portfolio are
subject to changes in value based on the market perception of the
creditworthiness of the issuer and changes, real or anticipated, in the level
of interest rates. When-issued securities may expose the Fund to this risk
because they may experience such fluctuations prior to actual delivery. At the
time the Fund purchases a when-issued security, it records the transaction and
reflects the value of the security in determining its net asset value (although
the Fund will not accrue interest income prior to actual delivery). The
greater the Fund's outstanding commitments for these securities, the greater
the exposure to potential fluctuations in the Fund's net asset value.
Purchasing when-issued securities may involve the additional risk that the
yield available in the market when the delivery occurs may be higher than that
obtained at the time of commitment. Although the Fund may be able to sell
these securities prior to the delivery date, the Fund will purchase when-issued
securities for the purpose of actually acquiring the securities, unless after
entering into the commitment a sale appears desirable for investment reasons.
The Fund will segregate and maintain cash, cash equivalents, or other high
quality, liquid debt securities in an amount at least equal to the amount of
outstanding commitments for when-issued securities at all times. Such
segregated securities either will mature or, if necessary, be sold on or before
the settlement date. When the time comes to pay for when-issued securities,
the Fund will meet its obligations from then available cash flow, sale of the
securities held in the separate account described above, sale of other
securities or, although it would not normally expect to do so, from the sale of
the when-issued securities themselves (which may have a market value greater or
less than the Fund's payment obligation). This information supplements the
section entitled "Implementation of Policies and Certain Risks" beginning on
page 5 of the Prospectus.
DIRECTORS AND OFFICERS OF THE FUND. Mr. John Dragisic began serving as Vice
Chairman of the Fund upon his resignation from the Fund's Board of Directors.
Mr. Dragisic has also assumed day-to-day responsibilities of the office of
President, which is currently vacant, until such time as a President is
appointed by the Board of Directors of the Fund. The Board of Directors
appointed Mr. Willie D. Davis as a Director, Mr. Thomas P. Lemke as a Vice
President, and Ms. Ann E. Oglanian as Secretary of the Fund. This information
supersedes the information relating to the Directors and Officers of the Fund
contained on page 18 of the Prospectus.
