<PAGE>
[LOGO OF STRONG]
[PHOTO]
semi-annual report
The Strong
O P P O R T U N I T Y
Fund II
<TABLE>
<S> <C>
Investment Review
The Strong Opportunity Fund II ................................................ 2
Financial Information
Schedule of Investments in Securities ......................................... 4
Statement of Assets and Liabilities............................................ 6
Statement of Operations........................................................ 7
Statements of Changes in Net Assets............................................ 8
Notes to Financial Statements.................................................. 9
Financial Highlights................................................................ 11
</TABLE>
Semi-Annual Report . June 30, 2000
<PAGE>
THE STRONG OPPORTUNITY FUND II
Fund
highlights
. For the six months ended June 30, 2000, the Fund returned 4.08%, while the
S&P MidCap 400 Stock Index returned 8.97%./1/, *
. The Fund's performance was driven primarily by its holdings in technology,
energy, and healthcare.
. As investors turned wary of technology stocks in April and May, more
defensive growth companies came to the fore. We were able to hold
securities in defensive growth during this period and reap the benefits.
--------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS/1/
As of 6-30-00
1-year 17.30%
3-year 21.73%
5-year 21.32%
Since Inception 20.20%
(on 5-8-92)
Equity funds are volatile investments and should only be considered for long-
term goals.
--------------------------------------------------------------------------------
FIVE LARGEST
STOCK HOLDINGS
As of 6-30-00
Security % of Net Assets
Corning, Inc. 2.7%
Micron Technology, Inc. 2.2%
American Power Conversion
Corporation 1.7%
American International
Group, Inc. 1.7%
Devon Energy Corporation 1.6%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
Perspectives from the Manager
/s/ Richard Trent Weiss
Richard Trent Weiss
Portfolio Manager
--------------------------------------------------------------------------------
From January through June of this year, holdings in the technology, energy, and
healthcare sectors drove the Fund's performance. The Nasdaq's precipitous drop
in April and May drove many investors to other areas of the market, allowing old
economy stocks to enjoy a period of healthier performance. Nonetheless, many
technology stocks continue to have high valuations--particularly after the
sector's partial recovery in June. As a result, we are still being very careful
about our selections in this area.
In the energy sector, supply constraints pushed crude oil and natural gas prices
to very high levels; the prices of energy-related stocks, such as fund holding
Weatherford International, followed suit. It's our assessment that many oil
stocks are at or near their peaks, so we have begun to trim our positions in
this area.
Healthcare generally performed well over the period, as investors looked for
more defensive alternatives in the face of technology stocks' high volatility.
In this environment, we chose to add some health stocks to the portfolio,
including Watson Pharmaceuticals. We still find the growth prospects of the
sector appealing, but the recovery in the sector during the spring pushed some
stocks toward their valuation targets.
Concerns about possible economic slowing that could result from the Federal
Reserve's interest-rate hikes have driven the prices of
___________________
From January through June of this year, holdings in the technology, energy,
and healthcare sectors drove the Fund's performance
___________________
--------------------------------------------------------------------------------
/1/ The Fund's returns include the effect of deducting the Fund's expenses, but
do not include charges and expenses attributable to any particular insurance
product. Including such insurance fees and expenses in the Fund's return
quotations has the effect of decreasing the performance quoted. Average
annual total return and total return measure change in the value of an
investment in the Fund, assuming reinvestment of all dividends and capital
gains. Average annual total return reflects annualized change, while total
return reflects aggregate change and is not annualized.
2
<PAGE>
many industrial and consumer cyclical stocks down, making them increasingly
attractive as buying opportunities. We have added high-quality names with strong
franchises, such as Masco Corporation and Raytheon, to the portfolio.
Reduced merger and acquisition activity along with economic concerns kept media
and telecom stocks under pressure. We remain optimistic, however, that
convergence and consolidation will continue in this sector and have, therefore,
chosen to take the current weakness in the sector as an opportunity to add to
positions.
The high valuations of large-cap growth stocks present the market with limited
opportunities to fuel continued strong performance. This creates an environment
that should be favorable to our investment approach, as it appears that smaller
stocks and stocks that focus on forgotten sectors now present the most
interesting investment opportunities. Areas in which we are adding to our
holdings include industrials and consumer cyclicals, as the impending end of the
Fed's interest-rate hikes could benefit these sectors.
We thank you for investing in the Strong Opportunity Fund II and look forward to
continuing to help you pursue your financial goals.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 5-8-92 to 6-30-00
[GRAPH]
<TABLE>
<CAPTION>
The Strong Opportunity Fund II S&P MidCap 400 Stock Index* Lipper Multi-Cap Value Funds Index*
<S> <C> <C> <C>
Apr 92 $10,000 $10,000 $10,000
Dec 92 $11,617 $11,384 $10,900
Dec 93 $14,540 $12,972 $12,396
Dec 94 $15,064 $12,507 $12,410
Dec 95 $18,953 $16,378 $16,258
Dec 96 $22,393 $19,523 $19,671
Dec 97 $28,093 $25,820 $24,965
Dec 98 $31,897 $30,755 $26,594
Dec 99 $43,032 $35,284 $28,173
Jun 00 $44,787 $38,450 $27,957
</TABLE>
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the S&P
MidCap 400 Stock Index and the Lipper Multi-Cap Value Funds Index. Results
include the reinvestment of all dividends and capital gains distributions.
Performance is historical and does not represent future results. Investment
returns and principal value vary, and you may have a gain or loss when you sell
shares. To equalize time periods, the indexes' performances were prorated for
the month of May 1992.
--------------------------------------------------------------------------------
*The S&P MidCap 400 Stock Index is an unmanaged index generally representative
of the U.S. market for medium-capitalization stocks. The Lipper Multi-Cap Value
Funds Index is an equally weighted performance index of the largest qualifying
funds in this Lipper category. Source of the S&P index data is Standard &
Poor's Micropal. Source of the Lipper index data is Lipper Inc.
Your Fund's Approach
The Strong Opportunity Fund II seeks capital growth. It invests primarily in
stocks of medium-capitalization companies that the Fund's manager believes are
underpriced, yet have attractive growth prospects. He bases his analysis on a
company's "private market value"--the price an investor would be willing to
pay for the entire company given its management, financial health, and growth
potential. The manager determines a company's private market value based on a
fundamental analysis of a company's cash flows, asset valuations, competitive
situation, and franchise value.
Market Highlights
. Technology proved to be a precarious sector, with the Nasdaq Composite Index
dropping by more than 13% in the second quarter of the year.
. Cyclicals, along with media and telecommunications stocks, suffered in the
first half of the year. This was a result of worries about a possible
slowdown in the economy.
3
<PAGE>
SCHEDULE OF INVESTMENTS IN SECURITIES June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
STRONG OPPORTUNITY FUND II
Shares or
Principal Value
Amount (Note 2)
--------------------------------------------------------------------------------
Common Stocks 89.8%
Aerospace - Defense 0.9%
Raytheon Company Class B 522,000 $10,048,500
Banks - Foreign 0.1%
The Bank of Tokyo - Mitsubishi (b) 83,000 1,003,331
Banks - Money Center 1.1%
Bank of America Corporation 295,000 12,685,000
Banks - Super Regional 2.4%
Mellon Financial Corporation 375,000 13,664,063
Wells Fargo Company 351,300 13,612,875
-----------
27,276,938
Beverages - Alcoholic 0.9%
Diageo PLC 1,113,536 10,013,857
Beverages - Soft Drinks 2.4%
The Pepsi Bottling Group, Inc. 510,000 14,885,625
Whitman Corporation 1,065,000 13,179,375
-----------
28,065,000
Building - Construction Products/Miscellaneous 1.1%
Masco Corporation 735,000 13,275,937
Chemicals - Specialty 2.9%
Air Products & Chemicals, Inc. 415,000 12,787,188
Praxair, Inc. 270,000 10,108,125
Solutia, Inc. 755,000 10,381,250
-----------
33,276,563
Computer - Manufacturers 2.4%
Compaq Computer Corporation 545,000 13,931,563
NCR Corporation (b) 365,000 14,212,187
-----------
28,143,750
Computer - Memory Devices 1.1%
Seagate Technology, Inc. (b) 231,000 12,705,000
Computer - Peripheral Equipment 1.7%
American Power Conversion Corporation (b) 493,400 20,136,887
Computer Software - Enterprise 2.6%
Keane, Inc. (b) 600,000 12,975,000
Oracle Systems Corporation (b) 210,000 17,653,125
-----------
30,628,125
Containers 1.1%
Sonoco Products Company 625,000 12,851,562
Diversified Operations 0.4%
Invensys PLC 900,000 3,384,828
Itochu Corporation (b) 320,000 1,615,552
-----------
5,000,380
Electrical - Control Instruments 0.5%
Parker-Hannifin Corporation 157,800 5,404,650
Electrical - Equipment 1.1%
Hitachi, Ltd. 155,000 2,237,898
W.W. Grainger, Inc. 345,000 10,630,312
-----------
12,868,210
Electronics - Military Systems 1.2%
General Motors Corporation Class H (b) 152,000 13,338,000
Electronics - Parts Distributors 1.2%
Avnet, Inc. 235,000 13,923,750
Electronics - Semiconductor Manufacturing 3.5%
Micron Technology, Inc. (b) 285,000 25,097,812
National Semiconductor Corporation (b) 16,900 959,075
Texas Instruments, Inc. 208,000 14,287,000
-----------
40,343,887
Electronics Products - Miscellaneous 1.0%
AVX Corporation 521,800 11,968,788
Finance - Equity REIT 1.3%
Archstone Communities Trust 320,000 6,740,000
Equity Office Properties Trust 315,000 8,682,187
-----------
15,422,187
Financial Services - Miscellaneous 1.6%
John Hancock Financial Services, Inc. (b) 785,000 18,594,688
Household - Housewares 1.2%
Newell Rubbermaid, Inc. 560,000 14,420,000
Insurance - Property/Casualty/Title 4.2%
ACE, Ltd. 543,000 15,204,000
The Allstate Corporation 575,000 12,793,750
American International Group, Inc. 170,625 20,048,438
-----------
48,046,188
Internet- InternetService Provider/Content 1.9%
CNET Networks, Inc. (b) 315,000 7,737,187
go.com (b) 780,000 9,311,250
Lycos, Inc. (b) 100,000 5,400,000
-----------
22,448,437
Internet- Network Security/Solutions 1.1%
Network Associates, Inc. (b) 605,000 12,326,875
Internet- Software 0.9%
Genuity, Inc. (b) 1,140,000 10,438,125
Leisure - Services 0.7%
The Walt Disney Company 214,900 8,340,806
Media - Cable TV 4.5%
AT&T Corporation - Liberty Media Group
Class A (b) 720,000 17,460,000
Comcast Corporation Class A (b) 435,000 17,617,500
Cox Communications, Inc. Class A (b) 315,200 14,361,300
NTL, Inc. (b) 37,466 2,243,277
-----------
51,682,077
Media - Newspapers 1.3%
The E.W. Scripps Company Class A 314,000 15,464,500
Medical - Ethical Drugs 1.3%
Alza Corporation (b) 245,000 14,485,625
Medical - Generic Drugs 1.3%
Watson Pharmaceuticals, Inc. (b) 284,000 15,265,000
Medical - Health Maintenance Organizations 2.9%
CIGNA Corporation 201,500 18,840,250
UnitedHealth Group, Inc. 175,000 15,006,250
-----------
33,846,500
Medical - Outpatient/Home Care 1.0%
HEALTHSOUTH Corporation (b) 1,670,000 12,003,125
Medical/Dental - Supplies 1.0%
Sybron International Corporation (b) 595,800 11,804,288
Metal Products - Fasteners 1.4%
Illinois Tool Works, Inc. 280,000 15,960,000
4
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
STRONG OPPORTUNITY FUND II (continued)
Shares or
Principal Value
Amount (Note 2)
--------------------------------------------------------------------------------
<S> <C> <C>
Office - Equipment & Automation 0.2%
Canon, Inc. 47,000 $ 2,341,795
Oil & Gas - Field Services 3.1%
BJ Services Company (b) 289,200 18,075,000
Halliburton Company 370,000 17,459,375
--------------
35,534,375
Oil & Gas - Machinery/Equipment 3.0%
Cooper Cameron Corporation (b) 268,000 17,688,000
Weatherford International, Inc. (b) 422,000 16,800,875
--------------
34,488,875
Oil & Gas - Production/Pipeline 1.6%
Enron Corporation 280,000 18,060,000
Oil & Gas - United States Exploration
& Production 2.6%
Barrett Resources Corporation (b) 350,000 10,653,125
Devon Energy Corporation 338,000 18,991,375
--------------
29,644,500
Oil & Gas - United States Integrated 1.5%
Unocal Corporation 510,000 16,893,750
Paper & Paper Products 0.9%
The Mead Corporation 430,000 10,857,500
Retail - Apparel/Shoe 1.4%
Nordstrom, Inc. 692,000 16,694,500
Retail - Department Stores 1.2%
Federated Department Stores, Inc. (b) 415,000 14,006,250
Retail - Major Discount Chains 2.9%
Costco Wholesale Corporation (b) 460,000 15,180,000
Kmart Corporation (b) 940,000 6,403,750
Toys 'R'Us, Inc. (b) 785,000 11,431,562
--------------
33,015,312
Retail - Super/Mini Markets 1.6%
Albertson's, Inc. 550,000 18,287,500
Retail/Wholesale - Building Products 1.1%
Lowe's Companies, Inc. 305,000 12,524,063
Telecommunications - Cellular 2.9%
NTT DoCoMo, Inc. 160 4,333,302
Vodafone AirTouch PLC Sponsored ADR 320,000 13,260,000
VoiceStream Wireless Corporation (b) 139,700 16,246,673
--------------
33,839,975
Telecommunications - Equipment 2.7%
Corning, Inc. 117,000 31,575,375
Telecommunications - Services 2.5%
AT&T Corporation 100,000 3,162,500
Cable & Wireless PLC Sponsored ADR 65,520 3,280,095
Global TeleSystems, Inc. (b) 680,000 8,202,500
Infonet Services Corporation (b) 28,800 343,800
MediaOne Group, Inc. (b) 215,000 14,257,510
--------------
29,246,405
Transportation - Airline 0.1%
Air New Zealand, Ltd. Class B 1,415,000 1,440,088
Transportation - Truck 1.0%
CNF Transportation, Inc. 505,000 11,488,750
Utility - Electric Power 1.2%
NiSource, Inc. 755,000 14,061,875
Utility - Telephone 1.1%
Telephone & Data Systems, Inc. 125,000 12,531,250
-------------------------------------------------------------------------------
Total Common Stocks (Cost $800,335,791) 1,040,038,674
-------------------------------------------------------------------------------
Short-Term Investments (a) 10.2%
Commercial Paper 0.3%
Interest Bearing, Due Upon Demand
Sara Lee Corporation, 6.27% $ 2,395,510 2,395,510
Wisconsin Electric Power Company, 6.31% 1,106,100 1,106,100
--------------
3,501,610
Repurchase Agreements 9.9%
Barclays Capital, Inc. (Dated 6/30/00), 6.50%,
Due 7/03/00 (Repurchase proceeds
$114,662,075); Collateralized by:
United States Treasury Bonds (c) 114,600,000 114,600,000
-------------------------------------------------------------------------------
Total Short-Term Investments (Cost $118,101,610) 118,101,610
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Investments in Securities (Cost $918,437,401) 100% 1,158,140,284
Other Assets and Liabilities,Net 0.0% 369,886
-------------------------------------------------------------------------------
Net Assets 100.0% $1,158,510,170
===============================================================================
<CAPTION>
WRITTEN OPTIONS ACTIVITY
-------------------------------------------------------------------------------
Contracts Premiums
-------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at beginning of period 160 $ 222,439
Options written during the period -- --
Options closed -- --
Options expired (160) (222,439)
Options exercised -- --
---- ---------
Options outstanding at end of period -- $ --
==== =========
Expired options resulted in a capital gain of $222,439.
</TABLE>
LEGEND
-------------------------------------------------------------------------------
(a) Short-term investments include any security which has a maturity of less
than one year.
(b) Non-income producing security.
(c) See Note 2(I) of Notes to Financial Statements.
Percentages are stated as a percent of net assets.
See Notes to Financial Statements. 5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Strong
Opportunity
Fund II
---------------
<S> <C>
Assets:
Investments in Securities,at Value (Cost $918,437,401) $1,158,140,284
Receivable for Securities Sold 7,967,096
Dividends and Interest Receivable 777,300
Other Assets 33,347
---------------
Total Assets 1,166,918,027
Liabilities:
Payable for Securities Purchased 6,915,732
Payable for Fund Shares Redeemed 1,461,077
Accrued Operating Expenses and Other Liabilities 31,048
---------------
Total Liabilities 8,407,857
---------------
Net Assets $1,158,510,170
===============
Net Assets Consist of:
Capital Stock (par value and paid-in capital) $ 669,741,784
Undistributed Net Investment Income 3,304,929
Undistributed Net Realized Gain 245,759,836
Net Unrealized Appreciation 239,703,621
---------------
Net Assets $1,158,510,170
===============
Capital Shares Outstanding (Unlimited Number Authorized) 42,823,887
Net Asset Value Per Share $ 27.05
===============
</TABLE>
6 See Notes to Financial Statements.
<PAGE>
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Strong
Opportunity
Fund II
---------------
<S> <C>
Income:
Dividends (net of foreign withholding taxes of $8,978) $ 4,821,534
Interest 2,340,530
---------------
Total Income 7,162,064
Expenses:
Investment Advisory Fees 5,762,238
Custodian Fees 41,455
Shareholder Servicing Costs 900,585
Other 38,210
---------------
Total Expenses before Waivers, Absorptions and Fees Paid Indirectly by Advisor 6,742,488
Voluntary Expense Waivers and Absorptions by Advisor (119,318)
Fees Paid Indirectly by Advisor (Note 3) (112,446)
---------------
Expenses, Net 6,510,724
---------------
Net Investment Income 651,340
Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investments 91,860,824
Options 222,439
Foreign Currencies (2,690)
---------------
Net Realized Gain 92,080,573
Net Change in Unrealized Appreciation/Depreciation on:
Investments (47,374,662)
Options (120,439)
Foreign Currencies (233)
---------------
Net Change in Unrealized Appreciation/Depreciation (47,495,334)
---------------
Net Gain on Investments 44,585,239
---------------
Net Increase in Net Assets Resulting from Operations $ 45,236,579
===============
</TABLE>
See Notes Financial Statements.
7
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Strong Opportunity Fund II
-----------------------------------
Six Months Ended Year Ended
June 30, 2000 Dec 31, 1999
---------------- ------------
(Unaudited) <C>
<S> <C>
Operations:
Net Investment Income $ 651,340 $ 2,733,620
Net Realized Gain 92,080,573 158,598,711
Net Change in Unrealized Appreciation/Depreciation (47,495,334) 133,780,387
--------------- ---------------
Net Increase in Net Assets Resulting from Operations 45,236,579 295,112,718
Distributions from Net Realized Gains -- (99,944,225)
Capital Share Transactions:
Proceeds from Shares Sold 128,351,569 199,519,637
Proceeds from Reinvestment of Distributions -- 99,931,457
Payment for Shares Redeemed (134,313,111) (287,125,219)
--------------- ---------------
Net Increase (Decrease) in Net Assets from Capital Share Transactions (5,961,542) 12,325,875
--------------- ---------------
Total Increase in Net Assets 39,275,037 207,494,368
Net Assets:
Beginning of Period 1,119,235,133 911,740,765
--------------- ---------------
End of Period $ 1,158,510,170 $ 1,119,235,133
=============== ===============
Transactions in Shares of the Fund:
Sold 4,768,612 8,794,424
Issued in Reinvestment of Distributions -- 4,986,600
Redeemed (5,010,695) (12,695,396)
--------------- ---------------
Net Increase (Decrease) in Shares of the Fund (242,083) 1,085,628
=============== ===============
</TABLE>
8 See Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
June 30,2000 (Unaudited)
1. Organization
Strong Opportunity Fund II, Inc. is a diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Fund offers and sells its shares only to separate accounts of
insurance companies for the purpose of funding variable annuity and
variable life insurance contracts. At June 30, 2000, approximately 78% of
the Fund's shares were owned by the separate accounts of one insurance
company.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
(A) Security Valuation -- Securities of the Fund are valued at fair value
through valuations obtained by a commercial pricing service or the
mean of the bid and asked prices when no last sales price is
available. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith under
consistently applied procedures established by and under the general
supervision of the Board of Directors. Securities which are purchased
within 60 days of their stated maturity are valued at amortized
cost, which approximates fair value.
The Fund may own certain investment securities which are restricted as
to resale. These securities are valued after giving due consideration
to pertinent factors, including recent private sales, market
conditions and the issuer's financial performance. The Fund generally
bears the costs, if any, associated with the disposition of restricted
securities. The Fund held no restricted securities at June 30, 2000.
(B) Federal Income and Excise Taxes and Distributions to Shareholders --
The Fund intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders
in a manner which results in no tax cost to the Fund. Therefore, no
federal income or excise tax provision is required.
Net investment income or net realized gains for financial statement
purposes may differ from the characterization for federal income tax
purposes due to differences in the recognition of income and expense
items for financial statement and tax purposes. Where appropriate,
reclassifications between net asset accounts are made for such
differences that are permanent in nature.
The Fund generally pays dividends from net investment income and
distributes any net capital gains that it realizes annually.
(C) Realized Gains and Losses on Investment Transactions -- Investment
security transactions are recorded as of the trade date. Gains or
losses realized on investment transactions are determined on a first-
in, first-out basis.
(D) Certain Investment Risks -- The Fund may utilize derivative
instruments including options, futures and other instruments with
similar characteristics to the extent that they are consistent with
the Fund's investment objectives and limitations. The Fund intends to
use such derivative instruments primarily to hedge or protect from
adverse movements in securities prices or interest rates. The use of
these instruments may involve risks such as the possibility of
illiquid markets or imperfect correlation between the value of the
instruments and the underlying securities, or that the counterparty
will fail to perform its obligations.
Investments in foreign denominated assets or forward currency
contracts may involve greater risks than domestic investments due to
currency, political, economic, regulatory and market risks.
(E) Futures -- Upon entering into a futures contract, the Fund pledges to
the broker cash or other investments equal to the minimum "initial
margin" requirements of the exchange. Additional securities held by
the Fund may be designated as collateral on open futures contracts.
The Fund also receives from or pays to the broker an amount of cash
equal to the daily fluctuation in the value of the contract. Such
receipts or payments are known as "variation margin" and are recorded
as unrealized gains or losses. When the futures contract is closed, a
realized gain or loss is recorded equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed.
(F) Options -- The Fund may write put or call options. Premiums received
by the Fund upon writing put or call options are recorded as an asset
with a corresponding liability which is subsequently adjusted to the
current market value of the option. Changes between the initial
premiums received and the current market value of the options are
recorded as unrealized gains or losses. When an option expires, is
exercised, or is closed, the Fund realizes a gain or loss, and the
liability is eliminated. The Fund continues to bear the risk of
adverse movements in the price of the underlying asset during the
period of the option, although any potential loss during the period
would be reduced by the amount of the option premium received.
Securities held by the Fund may be designated as collateral on written
options.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
June 30, 2000 (Unaudited)
(G) Foreign Currency Translation -- Investment securities and other assets
and liabilities initially expressed in foreign currencies are
converted daily to U.S. dollars based upon current exchange rates.
Purchases and sales of foreign investment securities and income are
converted to U.S. dollars based upon currency exchange rates
prevailing on the respective dates of such transactions. The effect of
changes in foreign exchange rates on realized and unrealized security
gains or losses is reflected as a component of such gains or losses.
(H) Forward Foreign Currency Exchange Contracts -- Forward foreign
currency exchange contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the Fund records
an exchange gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
(I) Repurchase Agreements -- The Fund may enter into repurchase agreements
with institutions that the Fund's investment advisor, Strong Capital
Management, Inc. ("the Advisor"), has determined are creditworthy
pursuant to criteria adopted by the Board of Directors. Each
repurchase agreement is recorded at cost. The Fund requires that the
collateral, represented by securities (primarily U.S. Government
securities), in a repurchase transaction be maintained in a segregated
account with a custodian bank in a manner sufficient to enable the
Fund to obtain those securities in the event of a default of the
repurchase agreement. On a daily basis, the Advisor monitors the value
of the collateral, including accrued interest, to ensure it is at
least equal to the amount owed to the Fund under each repurchase
agreement.
(J) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts in these financial statements. Actual results could differ
from those estimates.
(K) Other -- Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on the
accrual basis and includes amortization of premium and discounts.
3. Related Party Transactions
The Advisor, with whom certain officers and directors of the Fund are
affiliated, provides investment advisory services and shareholder
recordkeeping and related services to the Fund. Investment advisory fees,
which are established by terms of the Advisory Agreement, are based on an
annualized rate of 1.00% of the average daily net assets of the Fund. Based
on the terms of the Advisory Agreement, advisory fees and other expenses
will be waived or absorbed by the Advisor if the Fund's operating expenses
exceed 2% of the average daily net assets of the Fund. In addition,the
Fund's Advisor may voluntarily waive or absorb certain expenses at its
discretion. Shareholder recordkeeping and related service fees are based on
the lesser of various agreed-upon contractual percentages of the average
daily net assets of the Fund or a contractually established rate for each
participant account. The Advisor also allocates to the Fund certain charges
or credits resulting from transfer agency banking activities based on the
Fund's level of subscription and redemption activity. Charges allocated to
the Fund by the Advisor are included in Other Expenses in the Fund's
Statement of Operations. Credits allocated by the Advisor serve to reduce
the shareholder servicing expenses incurred by the Fund and are reported as
Fees Paid Indirectly by Advisor in the Fund's Statement of Operations. The
Advisor is also compensated for certain other services related to costs
incurred for reports to shareholders.
The Fund may invest cash in money market funds sponsored and managed by the
Advisor, subject to certain limitations. The terms of such transactions are
identical to those of non-related entities except that, to avoid duplicate
investment advisory fees, advisory fees of the Fund are reduced by an
amount equal to advisory fees paid to the Advisor under its investment
advisory agreement with the money market funds.
The amount payable to the Advisor at June 30, 2000, shareholder servicing
and other expenses paid to the Advisor, transfer agency banking credits and
unaffiliated directors' fees for the six months then ended, were $16,621,
$900,585, $112,446 and $18,092, respectively.
4. Line of Credit
The Strong Funds have established a line of credit agreement ("LOC") with
certain financial institutions to be used for temporary or emergency
purposes, primarily for financing redemption payments. Combined borrowings
among all participating Strong Funds are subject to a $350 million cap on
the total LOC. For an individual Fund, borrowings under the LOC are limited
to either the lesser of 15% of the market value of the Fund's total assets
or any explicit borrowing limits in the Fund's prospectus. Principal and
interest on each borrowing under the LOC are due not more than 60 days
after the date of the borrowing. Borrowings under the LOC bear interest
based on prevailing market rates as defined in the LOC. A commitment fee of
0.08% per annum is incurred on the unused portion of the LOC and is
allocated to all participating Strong Funds. At June 30, 2000, there were
no borrowings by the Fund outstanding under the LOC.
10
<PAGE>
--------------------------------------------------------------------------------
5. Investment Transactions
The aggregate purchases and sales of long-term securities, other than
government securities, for the six months ended June 30, 2000 were
$411,236,279 and $428,725,875, respectively. There were no purchases or
sales of long-term government securities during the six months ended June
30, 2000.
6. Income Tax Information
At June 30, 2000, the cost of investments in securities for federal income
tax purposes was $924,797,398. Net unrealized appreciation of securities
was $233,342,886, consisting of gross unrealized appreciation and
depreciation of $326,357,440 and $93,014,554, respectively.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------------------------------------------------------------------
STRONG OPPORTUNITY FUND II
-----------------------------------------------------------------------------------------------------------------------------------
Period Ended
----------------------------------------------------------------------
June 30, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
Selected Per-Share Data(a) 2000/(b)/ 1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 25.99 $21.72 $21.70 $19.24 $17.04 $14.23
Income From Investment Operations:
Net Investment Income 0.02 0.06 0.05 0.07 0.13 0.12
Net Realized and Unrealized Gains on Investments 1.04 6.76 2.90 4.35 2.87 3.42
-----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.06 6.82 2.95 4.42 3.00 3.54
Less Distributions:
From Net Investment Income -- -- (0.05) (0.07) (0.13) (0.12)
In Excess of Net Investment Income -- -- -- (0.01) -- (0.03)
From Net Realized Gains -- (2.55) (2.88) (1.88) (0.67) (0.58)
-----------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- (2.55) (2.93) (1.96) (0.80) (0.73)
-----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 27.05 $25.99 $21.72 $21.70 19.24 $17.04
===================================================================================================================================
Ratios and Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Total Return +4.1% +34.9% +13.5% +25.5% +18.2% +25.8%
Net Assets,End of Period (In Millions) $ 1,159 $1,119 $912 $835 $632 $452
Ratio of Expenses to Average Net Assets without Waivers,
Absorptions and Fees Paid Indirectly by Advisor 1.2%* 1.2% 1.2% 1.1% 1.2% 1.2%
Ratio of Expenses to Average Net Assets 1.1%* 1.1% 1.2% 1.1% 1.2% 1.2%
Ratio of Net Investment Income to Average Net Assets 0.1%* 0.3% 0.2% 0.4% 0.7% 0.8%
Portfolio Turnover Rate 38.6% 85.4% 88.5% 101.1% 89.8% 91.1%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the six months ended June 30, 2000 (unaudited).
See Notes to Financial Statements 11
<PAGE>
RT5544-0700
