STRONG ASSET ALLOCATION FUND INC, 497, 1998-11-02

STRONG ASSET ALLOCATION FUND INC
497, 1998-11-02

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STRONG CONSERVATIVE EQUITY FUNDS
STRONG AMERICAN UTILITIES FUND STRONG FUNDS
STRONG ASSET ALLOCATION FUND P.O. Box 2936
STRONG BLUE CHIP 100 FUND Milwaukee, Wisconsin 53201
STRONG EQUITY INCOME FUND TELEPHONE: (414) 359-1400
STRONG GROWTH AND INCOME FUND TOLL-FREE: (800) 368-3863
STRONG LIMITED RESOURCES FUND DEVICE FOR THE HEARING-IMPAIRED:
STRONG TOTAL RETURN FUND (800) 999-2780
www.strong-funds.com
The Strong Family of Funds ("Strong Funds") is a family of more than
thirty-five diversified and non-diversified mutual funds. All of the Strong
Funds are no-load funds, meaning that you may purchase, redeem, or exchange
shares without paying a sales charge. Strong Funds include growth funds,
conservative equity funds, income funds, municipal income funds, international
funds, and cash management funds. The Strong Conservative Equity Funds are
described in this Prospectus.
This Prospectus contains information you should consider before you invest.
Please read it carefully and keep it for future reference. A Statement of
Additional Information for the Funds, dated March 1, 1998 ("SAI"), which
contains further information, is incorporated by reference into this
Prospectus, and has been filed with the Securities and Exchange Commission
("SEC"). The SAI, which may be revised from time to time, is available without
charge upon request to the above-noted address or telephone number. If you
would like to electronically access additional information about the Funds
after reading this Prospectus, you may do so by accessing the SEC's World Wide
Web site (http://www.sec.gov) that contains the SAI regarding the Funds and
other related materials.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

March 1, 1998, as supplemented
November 2, 1998

1
<PAGE>

STRONG CONSERVATIVE EQUITY FUNDS
The Strong Asset Allocation Fund, Inc. and Strong Total Return Fund, Inc. are
separately incorporated, diversified, open-end management investment companies.
Strong American Utilities Fund is a non-diversified series, and Strong Equity
Income, Strong Growth and Income, Strong Blue Chip 100, and Strong Limited
Resources Funds are diversified series of Strong Conservative Equity Funds,
Inc., which is an open-end management investment company.
STRONG AMERICAN UTILITIES FUND ("American Utilities Fund") seeks total return
by investing for both income and capital growth. The Fund invests primarily in
the equity securities of public utility companies headquartered in the United
States.
STRONG ASSET ALLOCATION FUND ("Asset Allocation Fund") seeks high total return
consistent with reasonable risk over the long term. The Fund allocates its
assets globally among a diversified portfolio of equity securities, bonds, and
cash.
STRONG BLUE CHIP 100 FUND ("Blue Chip 100 Fund") seeks total return by
investing for capital growth and income. Under normal market conditions, the
Fund intends on being fully invested in common stocks issued by blue-chip
companies.
STRONG EQUITY INCOME FUND ("Equity Income Fund") seeks total return by
investing for both income and capital growth. The Fund invests primarily in
dividend-paying equity securities.
STRONG GROWTH AND INCOME FUND ("Growth and Income Fund") seeks high total
return by investing for capital growth and income. The Fund invests primarily
in companies that pay current dividends and offer potential growth of earnings.
STRONG LIMITED RESOURCES FUND ("Limited Resources Fund") seeks total return by
investing for capital growth and income. Under normal market conditions, the
Fund invests primarily in the equity securities of issuers principally engaged
in the energy and other natural resources industries with a focus on mid- and
large-cap stocks that pay current dividends and offer potential growth of
earnings.
STRONG TOTAL RETURN FUND ("Total Return Fund") seeks high total return by
investing for capital growth and income. Using a conservative approach to
equity management, the Fund emphasizes investments in large- to medium-sized
growth companies with steady or growing dividends.

2
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
EXPENSES I-4
FINANCIAL HIGHLIGHTS I-5
HIGHLIGHTS I-11
INVESTMENT OBJECTIVES AND POLICIES I-12
Comparing the Funds I-13
Strong American Utilities Fund I-14
Strong Asset Allocation Fund I-14
Strong Blue Chip 100 Fund I-15
Strong Equity Income Fund I-16
Strong Growth and Income Fund I-16
Strong Limited Resources Fund I-17
Strong Total Return Fund I-18

IMPLEMENTATION OF POLICIES AND RISKS I-18
ABOUT THE FUNDS I-30
SHAREHOLDER MANUAL II-1
APPENDIX A-1
</TABLE>

No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and the SAI, and
if given or made, such information or representations may not be relied upon as
having been authorized by the Funds. This Prospectus does not constitute an
offer to sell securities in any state or jurisdiction in which such offering
may not lawfully be made.

3
<PAGE>

EXPENSES
The following information is provided in order to help you understand the
various costs and expenses that you, as an investor in the Funds, will bear
directly or indirectly.
SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
<S> <C>
Sales Load Imposed on Purchases NONE
Sales Load Imposed on Reinvested Dividends NONE
Deferred Sales Load NONE
Redemption Fees NONE
Exchange Fees NONE
</TABLE>

There are certain charges associated with retirement accounts (such as a $10
charge for closing an IRA account) and with certain other special shareholder
services offered by the Funds. Additionally, purchases and redemptions may also
be made through broker-dealers or other financial intermediaries who may charge
fees for their services. (See "Shareholder Manual - How to Buy Shares" and "-
How to Sell Shares.")
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MANAGEMENT OTHER 12B-1 TOTAL OPERATING
FUND FEES EXPENSES FEES EXPENSES
- ------------------ ----------- ----------- ----------- ---------------
American Utilities 0.75% 0.38% NONE 1.13%
- ------------------ ----------- ----------- ----------- ---------------
Asset Allocation 0.80 0.31 NONE 1.11
- ------------------ ----------- ----------- ----------- ---------------
Blue Chip 100 0.75 1.23 NONE 1.98
- ------------------ ----------- ----------- ----------- ---------------
Equity Income 0.80 0.34 NONE 1.14
- ------------------ ----------- ----------- ----------- ---------------
Growth and Income 0.80 0.40 NONE 1.20
- ------------------ ----------- ----------- ----------- ---------------
Limited Resources 1.00 0.91 NONE 1.91
- ------------------ ----------- ----------- ----------- ---------------
Total Return 0.80 0.26 NONE 1.06
- ------------------ ----------- ----------- ----------- ---------------
</TABLE>

From time to time, the Funds' investment advisor, Strong Capital Management,
Inc. ("Advisor"), may voluntarily waive its management fee and/or absorb
certain expenses for a Fund. Except for the Blue Chip 100 and Limited Resources
Funds, the expenses specified in the table above are based on actual expenses
incurred for the fiscal year ended October 31, 1997. Since the Blue Chip 100
and Limited Resources Funds did not begin operations until June 30, 1997 and
September 30, 1997, respectively, the Other Expenses have been estimated.
During the fiscal year ended October 31, 1997, the Advisor absorbed certain
expenses for the Blue Chip 100 Fund. The actual total operating expenses
incurred for such fiscal year by the Blue Chip 100 Fund after absorptions was
0.98%. Therefore the expenses specified in the table above for the Blue Chip
100 Fund have been restated to include such absorptions. For additional
information concerning fees and expenses, see "About the Funds - Management."

4
<PAGE>

EXAMPLE. You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PERIOD (IN YEARS)
<S> <C> <C> <C> <C>
FUND 1 3 5 10

American Utilities $12 $36 $62 $137
Asset Allocation 11 35 61 135
Blue Chip 100 20 62 107 231
Equity Income 12 36 63 139
Growth and Income 12 38 66 145
Limited Resources 19 60 103 223
Total Return 11 34 58 129

</TABLE>
The Example is based on each Fund's "Total Operating Expenses" before any
absorptions, as described above. PLEASE REMEMBER THAT THE EXAMPLE SHOULD NOT
BE CONSIDERED AS REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND THAT ACTUAL
EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN. The assumption in the
Example of a 5% annual return is required by regulations of the SEC applicable
to all mutual funds. The assumed 5% annual return is not a prediction of, and
does not represent, the projected or actual performance of a Fund's shares.
FINANCIAL HIGHLIGHTS
The following annual Financial Highlights for each of the Funds has been
audited by Coopers & Lybrand L.L.P., independent certified public accountants.
Their report for the Funds for the fiscal year ended October 31, 1997 is
included in the Annual Report of the Conservative Equity Funds that is
contained in the Funds' SAI. The Financial Highlights for the Funds should be
read in conjunction with the Financial Statements and related notes included in
the Funds' Annual Report. In addition, unaudited interim Financial Highlights
for the Limited Resources Fund for the two-month period ended December 31, 1997
are provided in accordance with SEC requirements pertaining to new mutual
funds. Additional information about each Fund's performance is contained in the
Funds' Annual Report, which may be obtained without charge by calling or
writing Strong Funds. The following presents information relating to a share of
common stock of each of the Funds, outstanding for the entire period ended as
indicated.

5
<PAGE>
STRONG AMERICAN UTILITIES FUND

SELECTED PER-SHARE DATA (a)

Income From Investment Operations Less Distributions

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Realized
Net Asset and Unrealized Total In Excess Net Asset
Value, Net Gains from From Net From Net of Net Total Value,
Beginning Investment (Losses) on Investment Investment Realized Realized Distrib- End of
of Period Income Investments Operations Income Gains Gains utions Period
Oct. 31, 1997 $12.64 $0.40 $1.98 $2.38 ($0.38) ($0.67) -- ($1.05) $13.97
Oct. 31, 1996 11.73 0.40 0.90 1.30 (0.39) -- -- (0.39) 12.64
Oct. 31, 1995(c) 9.46 0.27 2.25 2.52 (0.25) -- -- (0.25) 11.73
Dec. 31, 1994 10.19 0.46 (0.73) (0.27) (0.46) -- -- (0.46) 9.46
Dec. 31, 1993(d) 10.00 0.18 0.27 0.45 (0.18) (0.05) ($0.03) (0.26) 10.19
</TABLE>

Ratios and Supplemental Data

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net Ratio of Expenses Ratio of Net
Assets, Ratio of to Average Net Investment Average
End of Expenses Assets Without Income Portfolio Commission
Total Period (In to Average Waivers and to Average Turnover Rate
Return Millions) Net Assets Absorptions Net Assets Rate Paid(b)
+19.7% $135 1.1% 1.1% 3.0% 61.9% $0.0598
+11.2% 122 1.2% 1.2% 3.2% 84.0% 0.0599
+26.9% 92 1.2%* 1.2%* 3.4%* 56.4%
- -2.6% 38 0.5% 1.6% 4.8% 105.4%
+4.5% 32 0.0%* 1.4%* 5.6%* 89.3%
</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) Disclosure required, effective for reporting periods beginning
after September 1, 1995.
(c) Total return and portfolio turnover rate are not annualized. In
1995, the Fund changed its fiscal year end from December to October.
(d) Inception date is July 1, 1993. Total return and portfolio
turnover rate are not annualized.

STRONG ASSET ALLOCATION FUND

SELECTED PER-SHARE DATA (a)

Income From Investment Operations Less Distributions

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Real-
ized and
Unreal- Total In Excess
Net Asset Net lized from From Net of Net In Excess Net Asset
Value, Invest- Gains Invest- Invest- Invest- From Net of Net Return Total Value,
Beginning ment (Losses) on ment Op- ment ment Realized Realized of Distrib- End of
of Period Income Investments erations Income Income Gains Gains Capital utions Period
Oct. 31, 1997 $20.12 $0.67 $2.96 $3.63 ($0.67) ($0.10) ($1.54) -- -- ($2.31) $21.44
Oct. 31, 1996 20.31 0.78 1.05 1.83 (0.84) -- (1.18) -- -- (2.02) 20.12
Oct. 31, 1995(c) 17.91 0.66 2.32 2.98 (0.58) -- -- -- -- (0.58) 20.31
Dec. 31, 1994 19.06 0.70 (0.99) (0.29) (0.70) -- -- ($0.16) -- (0.86) 17.91
Dec. 31, 1993 18.49 0.82 1.81 2.63 (0.82) -- (1.24) -- -- (2.06) 19.06
Dec. 31, 1992 19.68 0.87 (0.25) 0.62 (0.87) -- (0.94) -- -- (1.81) 18.49
Dec. 31, 1991 17.50 0.94 2.41 3.35 (0.97) -- (0.20) -- -- (1.17) 19.68
Dec. 31, 1990 18.41 1.12 (0.65) 0.47 (1.38) -- -- -- -- (1.38) 17.50
Dec. 31, 1989 17.57 1.22 0.73 1.95 (0.97) -- (0.14) -- -- (1.11) 18.41
Dec. 31, 1988 17.60 1.39 0.19 1.58 (1.38) -- -- -- ($0.23) (1.61) 17.57
Dec. 31, 1987 22.18 0.85 (0.70) 0.15 (1.78) -- (2.95) -- -- (4.73) 17.60
</TABLE>

Ratios and Supplemental Data

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Return Millions) Net Assets Net Assets Rate Paid(b)
+19.3% $277 1.1% 3.2% 276.5% $0.0443
+9.5% 263 1.1% 3.9% 446.7% 0.0469
+16.8% 261 1.2%* 4.1%* 326.8%
- -1.5% 249 1.2% 3.8% 359.7%
+14.5% 254 1.2% 4.2% 348.3%
+3.2% 208 1.2% 4.4% 320.4%
+19.6% 215 1.3% 5.1% 418.4%
+2.8% 204 1.3% 6.1% 319.6%
+11.2% 241 1.3% 6.6% 206.5%
+9.2% 256 1.2% 7.5% 426.2%
- -0.3% 273 1.1% 4.2% 336.5%
</TABLE>

STRONG BLUE CHIP 100 FUND

SELECTED PER-SHARE DATA (a)

Income From Investment Operations Less Distributions

Ratios and Supplemental Data
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Ratio of Expenses Ratio of Net
Net Assets, Ratio of to Average Net Investment Average
End of Expenses Assets Without Income Portfolio Commission
Total Period (In to Average Waivers and to Average Turnover Rate
Return Millions) Net Assets Absorptions Net Assets Rate Paid
+3.9% $5 1.0%* 2.0%* 0.6%* 21.5% $0.0209
</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) Inception date is June 30, 1997. Total return and portfolio
turnover rate are not annualized.

STRONG EQUITY INCOME FUND

SELECTED PER-SHARE DATA (a)

Income From Investment Operations Less Distributions

<S> <C> <C> <C> <C> <C> <C> <C>
Net Real-
Net Asset Net lized and Total Net Asset
Value, Invest- Unrealized from From Net Total Value,
Beginning ment Gains on Investment Investment Distrib- End of
of Period Income Investments Operations Income utions period
Oct. 31, 1997 $12.03 $0.13 $3.81 $3.94 ($0.13) ($0.13) $15.84
Oct. 31, 1996(b) 10.00 0.12 2.02 2.14 (0.11) (0.11) 12.03

</TABLE>

Ratios and Supplemental Data

* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the
Fund outstanding for the entire period.
(b) Inception date is December 29, 1995. Total return and portfolio
turnover rate are not annualized.

STRONG GROWTH AND INCOME FUND

SELECTED PER-SHARE DATA (a)

Income From Investment Operations Less Distributions

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Net Realized Total Net Asset
Value, Net and Unrealized from From Net From Net Value,
Beginning Investment Gains on Investment Investment Realized Total End of
of Period Income Investments Operations Income Gains Distributions Period
Oct. 31, 1997 $12.38 $0.07 $3.99 $4.06 ($0.07) ($0.02) ($0.09) $16.35
Oct. 31, 1996 (b) 10.00 0.04 2.38 2.42 (0.04) -- (0.04) 12.38
</TABLE>

Ratios and Supplemental Data
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Return Millions) Net Assets Net Assets Rate Paid
+32.9% $227 1.2% 0.5% 237.8% $0.0687
+24.2% 18 1.9%* 0.6%* 174.1% 0.0667
</TABLE>

STRONG LIMITED RESOURCES FUND

SELECTED PER-SHARE DATA (a)

Income From Investment Operations Less Distributions

<S> <C> <C> <C> <C> <C> <C> <C>
Net Real-
Net Asset Net lized and Total Net Asset
Value, Invest- Unrealized from From Net Total Value,
Beginning ment Losses on Investment Investment Distrib- End of
of Period Income Investments Operations Income utions Period
Oct. 31, 1997(c) $10.00 -- ($0.49) ($0.49) -- -- $9.51
</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) Inception date is September 30, 1997. Total return and portfolio
turnover rate are not annualized.

STRONG TOTAL RETURN FUND

SELECTED PER-SHARE DATA (a)

Income From Investment Operations Less Distributions

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Realized Total Net
Net Asset Net and Unrealized from In- In Excess In Excess Asset
Value, Invest- Gains vestment From Net of Net From Net of Net Return Total Value,
Beginning ment (Losses) on Opera- Investment Investment Realized Realized of Distrib- End of
of Period Income Investments ations Income Income Gains Gains Capital utions Period
Oct. 31, 1997 $31.36 $0.19 $6.21 $6.40 ($0.19) ($0.17) ($4.74) -- -- ($5.10) $32.66
Oct. 31, 1996 28.02 0.24 4.65 4.89 (0.24) (0.06) (1.25) -- -- (1.55) 31.36
Oct. 31, 1995(c) 23.62 0.26 4.41 4.67 (0.26) (0.01) -- -- -- (0.27) 28.02
Dec. 31, 1994 24.30 0.25 (0.59) (0.34) (0.26) (0.08) -- -- -- (0.34) 23.62
Dec. 31, 1993 20.17 0.33 4.18 4.51 (0.33) -- -- ($0.05) -- (0.38) 24.30
Dec. 31, 1992 20.24 0.18 (0.08) 0.10 (0.17) -- -- -- -- (0.17) 20.17
Dec. 31, 1991 15.34 0.22 4.90 5.12 (0.22) -- -- -- -- (0.22) 20.24
Dec. 31, 1990 17.72 0.95 (2.19) (1.24) (1.14) -- -- -- -- (1.14) 15.34
Dec. 31, 1989 18.96 1.55 (0.97) 0.58 (1.31) -- (0.51) -- -- (1.82) 17.72
Dec. 31, 1988 18.37 1.95 0.85 2.80 (1.96) -- -- -- ($0.25) (2.21) 18.96
Dec. 31, 1987 21.61 0.97 0.61 1.58 (1.65) -- (3.17) -- -- (4.82) 18.37
</TABLE>
Ratios and Supplemental Data

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Return Millions) Net Assets Net Assets Rate Paid(b)
+23.4% $832 1.1% 0.6% 404.6% $0.0696
+18.0% 760 1.1% 0.8% 502.4% 0.0584
+19.8% 671 1.1%* 1.2%* 298.8%
- -1.4% 607 1.2% 1.1% 290.4%
+22.5% 630 1.2% 1.4% 271.3%
+0.6% 588 1.3% 0.9% 371.8%
+33.6% 691 1.4% 1.3% 426.4%
- -7.1% 647 1.4% 5.4% 312.3%
+2.6% 1,065 1.2% 7.7% 305.3%
+15.6% 1,005 1.2% 10.1% 281.1%
+6.0% 802 1.1% 5.2% 224.4%
</TABLE>

HIGHLIGHTS
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has distinct investment objectives and policies. Each Fund seeks
total return consistent with its investment objective and policies. The
investment objective of each Fund is set forth under "Investment Objectives and
Policies."
IMPLEMENTATION OF POLICIES AND RISKS
Subject to certain limitations, each Fund may invest in derivative
transactions, including options, futures, and options on futures transactions.
Each Fund (except the Blue Chip 100 Fund), may invest in foreign securities and
engage in foreign currency transactions. Each Fund may invest in illiquid
securities. The Asset Allocation Fund may engage in substantial short-term
trading, which may result in high portfolio turnover rates. The American
Utilities Fund is a "non-diversified" fund, which means that it may invest a
larger proportion of its assets in the securities of a single issuer than a
diversified fund. The Funds (except the Blue Chip 100 Fund) may invest in
non-investment-grade debt obligations (commonly called "junk bonds") within
specified limits. (See "Implementation of Policies and Risks.")
MANAGEMENT
The Advisor, Strong Capital Management, Inc., serves as investment advisor to
the Funds. The Advisor provides investment management services for mutual funds
and other investment portfolios representing assets of over $28.6 billion. W.H.
Reaves & Co., Inc. ("Reaves") is the subadvisor for the American Utilities
Fund. Scarborough Investment Advisers, LLC ("Scarborough") is the subadvisor
for the Limited Resources Fund. (See "About the Funds - Management.")
PURCHASE AND REDEMPTION OF SHARES
You may purchase or redeem shares of a Fund at net asset value. There are no
redemption or 12b-1 charges. The net asset values change daily with the value
of each Fund's portfolio. You can locate the net asset value for a Fund in
newspaper listings of mutual fund prices under the "Strong Funds" heading or at
our site on the World Wide Web at http://www.strong-funds.com. (See
"Shareholder Manual - How to Buy Shares" and "- How to Sell Shares.")
SHAREHOLDER SERVICES
Strong shareholder benefits include: telephone purchase, exchange, and
redemption privileges; professional representatives available 24 hours a day;
automatic investment, automatic dividend reinvestment, payroll direct deposit,
automatic exchange, and systematic withdrawal plans; and a no-minimum
investment program. (See "Shareholder Manual - Shareholder Services.")
DIVIDENDS AND OTHER DISTRIBUTIONS
The policy of each Fund is to pay dividends from net investment income
quarterly and to distribute substantially all net realized capital gains
annually. (See "About the Funds - Distributions and Taxes.")
INVESTMENT OBJECTIVES AND POLICIES
The descriptions that follow are designed to help you choose the Fund that best
fits your investment objective. You may want to pursue more than one objective
by investing in more than one of the Funds or by investing in one of the other
Strong Funds, which are described in separate prospectuses. Each Fund's
investment objective is discussed below in connection with the Fund's
investment policies. Because of the risks inherent in all investments, there
can be no assurance that the Funds will meet their objectives.
The Funds are each required or permitted to invest a substantial portion of
their assets in equity securities. Each Fund's net asset value will fluctuate
based upon changes in the value of the securities in its portfolio. Although
they are considered conservative equity funds - meaning that each Fund's net
asset value is likely to be less volatile than that of a Fund invested solely
for growth of capital - each Fund's net asset value is likely to fluctuate more
than that of a fund invested solely for income. The Funds, therefore, are not
appropriate for investors' short-term financial needs.

9
<PAGE>

COMPARING THE FUNDS
The following summary is intended to distinguish the Funds and help you
determine their suitability for your investments.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
EQUITY BOND
FUND RANGE RANGE DIVERSIFIED FOCUS
- ------------------------------------------------------------------------------
American Utilities 65-100% 0-35% No Utility and
Energy Stocks
- ------------------------------------------------------------------------------
Asset Allocation 30-70% 20-70% Yes Allocated Across Asset
Classes
- ------------------------------------------------------------------------------
Blue Chip 100 100% -- Yes 100 Largest Blue Chip
Companies
- ------------------------------------------------------------------------------
Equity Income 65-100% 0-35% Yes Dividend-Paying Stocks
- ------------------------------------------------------------------------------
Growth and Income 65-100% 0-35% Yes Dividend-Paying and
Growth Stocks
- ------------------------------------------------------------------------------
Limited Resources 80-100% 0-20% Yes Energy and Natural
Resources Stocks
- ------------------------------------------------------------------------------
Total Return 60-100% 0-40% Yes Large- and Mid-Cap,
Dividend- Paying
Growth Stocks
- ------------------------------------------------------------------------------
</TABLE>

Each Fund has adopted certain fundamental investment restrictions that are set
forth in the SAI. Those restrictions, a Fund's investment objective, and any
other investment policies identified as "fundamental" cannot be changed without
shareholder approval. To further guide investment activities, each Fund has
also instituted a number of non-fundamental operating policies, which are
described throughout this Prospectus and in the SAI. Although operating
policies may be changed by a Fund's Board of Directors without shareholder
approval, a Fund will promptly notify shareholders of any material change in
operating policies.
Except as limited below, each Fund may invest in a diversified portfolio of
securities without regard to objective investment criteria, such as company
size, exchange listing, earnings history, or other factors. When selecting
securities, the Advisor will, except as otherwise limited below, be limited
only by its best judgment as to what will help achieve each Fund's investment
objective.
When the Advisor determines market conditions warrant a temporary defensive
position, the Total Return Fund may invest up to 40% of its net assets, and the
Asset Allocation, American Utilities, Blue Chip 100, Equity Income, Growth and
Income, and Limited Resources Funds may invest without limitation in cash and
short-term fixed income securities.
STRONG AMERICAN UTILITIES FUND
The American Utilities Fund seeks total return by investing for both income and
capital growth.
The Fund normally will invest at least 65% of its total assets in the equity
securities of public utility companies headquartered in the United States.
Equity securities in which the Fund may invest include common stocks, preferred
stocks, and securities that are convertible into common stocks, such as
warrants and convertible bonds. Public utility companies include those engaged
in the manufacture, production, generation, transmission, sale and/or
distribution of water, gas, and electric energy, as well as those engaged in
the communications industry, including providers of telephone, telegraph,
satellite, cable

10
<PAGE>

television, microwave, and other communication facilities for the public,
excluding public broadcasting companies. (See "Implementation of Policies and
Risks - Public Utility Companies.")
The balance of the Fund, up to 35% of its total assets, may be invested in any
type of security, including debt obligations and equity securities of companies
in other industries. The Fund intends to use this allowance primarily to invest
in the equity securities of energy companies, which may compose up to 25% of
the Fund's total assets. (See "Implementation of Policies and Risks - Energy
Companies.") The Fund may invest up to 5% of its net assets in
non-investment-grade debt securities. (See "Implementation of Policies and
Risks - - Debt Obligations.")
The Fund may invest up to 25% of its net assets in foreign securities,
including both direct investments and investments made through depositary
receipts. (See "Implementation of Policies and Risks - Foreign Securities and
Currencies" for the special risks associated with foreign investments.)
Under normal market conditions, the Fund expects to be fully invested in the
equity securities of companies in the public utility and energy industries.
STRONG ASSET ALLOCATION FUND
The Asset Allocation Fund seeks high total return consistent with reasonable
risk over the long term. The Fund allocates its assets among a diversified
portfolio of equity securities, bonds, and cash.
Under normal market conditions, the Fund's net assets will be allocated
according to a benchmark of 60% equities, 35% bonds, and 5% cash. The Advisor
intends to actively manage the Fund's assets, maintaining a balance over time
between investment opportunities and their associated potential risks. In
response to changing market and economic conditions, the Advisor may reallocate
the Fund's net assets among these asset categories. Those allocations normally
will be within the ranges indicated below. However, in pursuit of total return,
the Advisor may under-allocate or over-allocate the Fund's net assets in a
particular category.
ASSET-ALLOCATION CATEGORIES
<TABLE>
<CAPTION>
PERCENTAGE OF FUND NET ASSETS
-----------------------------
<S> <C> <C>
CATEGORY OF INVESTMENT BENCHMARK RANGE
- ---------------------- ----------------------------- ------
Equities 60% 30-70%
Bonds 35% 20-70%
Cash 5% 0-50%

- ---------------------- ----------------------------- ------
</TABLE>

Equity securities in which the Fund may invest include common stocks, preferred
stocks, and securities that are convertible into common stocks, such as
warrants and convertible bonds. The Fund may invest up to 35% of its net assets
in non-investment-grade debt obligations. (See "Implementation of Policies and
Risks - Debt Obligations.") The cash portion of the Fund may include, but is
not limited to, debt securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities, commercial paper, banker's acceptances,
certificates of deposit, and time deposits. The Fund may invest in obligations
of domestic and foreign banks and their subsidiaries and branches.
The Fund also has the flexibility to take advantage of investment opportunities
around the world by investing in foreign securities. The Fund may invest up to
25% of its net assets in foreign securities, including both direct investments
and investments made through depositary receipts. Foreign investments involve
risks not normally found when investing in securities of U.S. issuers. (See
"Implementation of Policies and Risks - Foreign Securities and Currencies.")
Within the asset-allocation categories described above, the Advisor will
allocate the Fund's investments among countries (including developing
countries), geographic regions, and currencies in response to changing market
and economic trends. In making geographic based allocations of investments, the
Advisor will consider such factors as the historical and prospective
relationships among currencies and governmental policies that influence
currency-exchange rates, current and anticipated interest rates,

11
<PAGE>

inflation levels, and business conditions within various countries, as well as
other macroeconomic, social, and political factors.
STRONG BLUE CHIP 100 FUND
The Blue Chip 100 Fund seeks total return by investing for capital growth and
income.
Under normal market conditions, the Fund intends to be fully invested in a
diversified portfolio of common stocks of the 100 largest market capitalization
companies traded in the U.S., as determined by the Advisor (collectively, "Blue
Chip Companies"). With approximately 50% of the Fund's net assets, the Fund
will maintain capitalization-weighted positions in each of the Blue Chip
Companies' securities. In this way, this portion of the Fund's portfolio will
seek to approximate the capitalization-weighted total return of these
companies. The remainder of the Fund's net assets will be invested in some or
all of these Blue Chip Companies, as selected by the Advisor. Generally, the
Fund will not have a position in any company greater than 5% of the Fund's net
assets. The Fund typically maintains representation in as many market sectors
as possible, but may concentrate in any sectors represented by the Blue Chip
Companies.
The Advisor will regularly readjust the capitalization-weighted portion of the
Fund's portfolio to reflect the current capitalization weightings of the Blue
Chip Companies. The Advisor intends to frequently review the list of the Blue
Chip Companies in which the Fund invests and update the list when necessary.
When the Advisor determines market conditions warrant a temporary defensive
position, the Fund may invest without limitation in cash and short-term
fixed-income securities. The Fund may invest in dollar-denominated foreign
securities to the extent that they are issued by Blue Chip Companies.
STRONG EQUITY INCOME FUND
The Equity Income Fund seeks total return by investing for both income and
capital growth.
The Fund invests primarily in dividend-paying equity securities. Under normal
market conditions, the Fund will invest at least 65% of its total assets in
dividend-paying equity securities, including common stocks, preferred stocks,
and securities that are convertible into common stocks, such as warrants and
convertible bonds. The Fund may invest up to 35% of its total assets in
non-dividend paying equity securities and intermediate- to long-term corporate
or U.S. government bonds. The Fund may invest up to 10% of its net assets in
non-investment-grade bonds. The Fund may invest up to 5% of its net assets in
foreign securities, including both direct investment and investments made
through depositary receipts. (See "Implementation of Policies and Risks -
Foreign Securities and Currencies" for the special risks associated with
foreign investments.)
STRONG GROWTH AND INCOME FUND
The Growth and Income Fund seeks high total return by investing for capital
growth and income.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in equity securities, with a focus on those that pay current dividends
and offer potential growth of earnings. At times, however, the Fund may invest
in equity securities that are not currently paying dividends, but offer
prospects for either capital growth or future income. Equity securities include
common stocks, preferred stocks, and securities that are convertible into
common stocks, such as warrants and convertible bonds. The Fund may invest up
to 35% of its total assets in intermediate- to long-term corporate or U.S.
government bonds. The Fund may invest up to 5% of its net assets in
non-investment-grade bonds. The Fund may invest up to 25% of net assets in
foreign securities, including both direct investments and investments made
through depositary receipts. (See "Implementation of Policies and Risks -
Foreign Securities and Currencies" for the special risks associated with
foreign investments.)
STRONG LIMITED RESOURCES FUND
The Limited Resources Fund seeks total return by investing for capital growth
and income.
Under normal market conditions, the Fund will invest at least 80% of its total
assets in the equity securities of issuers principally engaged in the energy
and other natural resources industries with a focus on mid- and large-cap
stocks that pay current dividends and offer potential growth of earnings. Equity

12
<PAGE>

securities in which the Fund may invest include common stocks, preferred
stocks, and securities that are convertible into common stocks, such as
warrants and convertible bonds. Energy and natural resource companies include
companies principally engaged in the discovery, development, production,
generation, transmission, or distribution of energy or other natural resources,
the development of technologies for the production or efficient use of energy
and other natural resources, or the furnishing of related supplies or services.
Such companies may:
- - participate in the discovery and development of natural resources.
- - own or produce natural resources.
- - provide natural resources transportation, distribution, or processing
services.
- - contribute new technologies for the production or efficient use of natural
resources.
- - own or control oil, gas, or other mineral leases (which may or may not
produce recoverable energy or resources), rights, or royalty interests.
- - provide services or supplies related to natural resources such as drilling,
well servicing, chemicals, parts, and equipment.
A company is deemed to be "principally engaged" in these industries if at the
time of investment Scarborough believes that at least 50% of the company's (i)
assets relate to, or (ii) revenues or profits are derived from, these
industries. Energy sources include, but are not limited to, oil, natural gas,
coal, nuclear power, and renewable energy sources, such as wind, solar, and
geothermal. As new sources of energy are developed and current methods of
exploiting and developing energy are advanced, then companies in these new
areas will also be considered for investment by the Fund. Natural resources
other than energy sources include, but are not limited to, basic materials such
as chemicals, forest products, steel, copper, and aluminum.
The balance of the Fund, up to 20% of total assets, may be invested in any type
of security, including debt obligations and equity securities of companies in
industries other than the energy and other natural resource industries. The
Fund may invest up to 5% of its net assets in non-investment-grade debt
securities. When Scarborough determines that market conditions warrant a
temporary defensive position, the Fund may invest without limitation in cash
and short-term fixed-income securities.
The Fund may invest up to 25% of its net assets in foreign securities,
including both direct investments and investments made through depositary
receipts. (See "Implementation of Policies and Risks - Foreign Securities and
Currencies" for the special risks associated with foreign investments.)
The Fund's investments will be concentrated in the energy and natural resources
industries. This means that more than 25% of the Fund's total assets will
normally be invested in these industries. Because the Fund's investments are
concentrated, the value of its shares is especially affected by factors
relating to these industries, and may fluctuate more widely than the value of
shares of a fund which invests in a broader range of industries. For example,
changes in crude oil prices may affect both those industries which produce,
refine, and distribute petroleum products and industries which supply
alternative sources of energy. In addition, certain of these industries are
generally subject to greater government regulation than many other industries,
and changes in regulatory policies may have a material effect on the business
of companies in these industries.
STRONG TOTAL RETURN FUND
The Total Return Fund seeks high total return by investing for capital growth
and income. Using a conservative approach to equity management, the Fund
emphasizes investments in large- to medium-sized growth companies with steady
or growing dividends. (See "Implementation of Policies and Risks - Debt
Obligations.")
Under normal market conditions, the Fund will invest at least 60% of its net
assets in equity securities, including common stocks, preferred stocks, and
securities that are convertible into common stocks, such as warrants and
convertible bonds. The Fund expects to invest at least 80% of its net assets in
equity securities. At times, however, it may invest up to 40% of its net assets
in intermediate- to long-term corporate or U.S. government bonds. The Fund may
invest up to 5% of its net assets in non-investment-grade bonds. The Fund may
invest up to 25% of its net assets in foreign securities, including both direct

13
<PAGE>

investments and investments made through depositary receipts. (See
"Implementation of Policies and Risks - Foreign Securities and Currencies" for
the special risks associated with foreign investments.)
IMPLEMENTATION OF POLICIES AND RISKS
In addition to the investment policies described above (and subject to certain
restrictions described below), the Funds may invest in some or all of the
following securities and may employ some or all of the following investment
techniques, some of which may present special risks as described below. Each
Fund may also engage in reverse repurchase agreements and mortgage dollar roll
transactions. A more complete discussion of certain of these securities and
investment techniques and the associated risks is contained in the Funds' SAI.
DEBT OBLIGATIONS
IN GENERAL. The market value of all debt obligations is affected by changes in
the prevailing interest rates. The market value of such instruments generally
reacts inversely to interest rate changes. If the prevailing interest rates
decline, the market value of debt obligations generally increases. If the
prevailing interest rates increase, the market value of debt obligations
generally decreases. In general, the longer the maturity of a debt obligation,
the greater its sensitivity to changes in interest rates.
TYPES OF OBLIGATIONS. Debt obligations include (i) corporate debt securities,
including bonds, debentures, and notes; (ii) bank obligations, such as
certificates of deposit, banker's acceptances, and time deposits of domestic
and foreign banks and their subsidiaries and branches, and domestic savings and
loan associations; (iii) commercial paper (including variable-amount master
demand notes); (iv) repurchase agreements; (v) loan interests; (vi) foreign
debt obligations issued by foreign issuers traded either in foreign markets or
in domestic markets through depositary receipts; (vii) convertible securities -
debt obligations of corporations convertible into or exchangeable for equity
securities or debt obligations that carry with them the right to acquire equity
securities, as evidenced by warrants attached to such securities, or acquired
as part of units of the securities; (viii) preferred stocks - securities that
represent an ownership interest in a corporation and that give the owner a
prior claim over common stock on the company's earnings or assets; (ix) trust
preferred securities - certain obligations which have characteristics of both
debt and preferred stock; (x) U.S. government securities; (xi) mortgage-backed
securities, collateralized mortgage obligations, and similar securities; and
(xii) municipal obligations.
CREDIT QUALITY. The values of debt obligations may also be affected by changes
in the credit rating or financial condition of their issuers. Generally, the
lower the quality rating of an obligation, the higher the degree of risk as to
the payment of interest and return of principal. To compensate investors for
taking on such increased risk, those issuers deemed to be less creditworthy
generally must offer their investors higher interest rates than do issuers with
better credit ratings.
In conducting its credit research and analysis, the Advisor considers both
qualitative and quantitative factors to evaluate the creditworthiness of
individual issuers. The Advisor also relies, in part, on credit ratings,
compiled by a number of nationally recognized statistical rating organizations,
which include Standard & Poor's Ratings Group ("S&P"), Moody's Investors
Service, Duff & Phelps Rating Co., Thomson Bankwatch, Inc., and Fitch IBCA,
Inc. (collectively, "NRSROs"). Please refer to the Appendix in the Funds' SAI
for a more detailed description of the ratings of the NRSROs.
INVESTMENT-GRADE DEBT OBLIGATIONS. Debt obligations rated in the
highest-through the medium-quality categories are commonly referred to as
"investment-grade" debt obligations and include the following:
- - U.S. government securities;
- - bonds or bank obligations rated in one of the four highest rating categories
(E.G., BBB or higher by S&P);
- - short-term notes rated in one of the two highest rating categories (E.G.,
SP-2 or higher by S&P);
- - short-term bank obligations rated in one of the three highest rating
categories (E.G., A-3 or higher by S&P), with respect to obligations maturing
in one year or less;
- - commercial paper rated in one of the three highest rating categories (E.G.,
A-3 or higher by S&P);

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<PAGE>

- - unrated debt obligations determined by the Advisor to be of comparable
quality; and
- - repurchase agreements involving investment-grade debt obligations.
Investment-grade debt obligations are generally believed to have relatively low
degrees of credit risk. All ratings are determined at the time of investment.
Any subsequent rating downgrade of a debt obligation will be monitored by the
Advisor to consider what action, if any, a Fund should take consistent with its
investment objective. For purposes of determining whether a security is
investment grade, the Advisor may use the highest rating assigned to that
security by any NRSRO.
HIGH-YIELD (HIGH-RISK) SECURITIES. High-yield (high-risk) securities, also
referred to as "junk bonds," are those securities that are rated lower than
investment grade and unrated securities of comparable quality. Although these
securities generally offer higher yields than investment-grade securities with
similar maturities, lower-quality securities involve greater risks, including
the possibility of default or bankruptcy. In general, they are regarded to be
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal. Other potential risks associated with investing in
high-yield securities include:
- - substantial market-price volatility resulting from changes in interest rates,
changes in or uncertainty about economic conditions, and changes in the
actual or perceived ability of the issuer to meet its obligations;
- - greater sensitivity of highly leveraged issuers to adverse economic changes
and individual-issuer developments;
- - subordination to the prior claims of other creditors;
- - additional Congressional attempts to restrict the use or limit the tax and
other advantages of these securities; and
- - adverse publicity and changing investor perceptions about these securities.
As with any other asset in a Fund's portfolio, any reduction in the value of
such securities as a result of the factors listed above would be reflected in
the net asset value of the Fund. In addition, a Fund that invests in
lower-quality securities may incur additional expenses to the extent it is
required to seek recovery upon a default in the payment of principal and/or
interest on its holdings. As a result of the associated risks, successful
investments in high-yield (high-risk) securities will be more dependent on the
Advisor's credit analysis than generally would be the case with investments in
investment-grade securities.
It is uncertain how the high-yield market will perform during a prolonged
period of rising interest rates. A prolonged economic downturn or a prolonged
period of rising interest rates could adversely affect the market for these
securities, increase their volatility, and reduce their value and liquidity. In
addition, lower-quality securities tend to be less liquid than higher-quality
debt securities because the market for them is not as broad or active. If
market quotations are not available, these securities will be valued in
accordance with procedures established by the Fund's Board of Directors.
Judgment may, therefore, play a greater role in valuing these securities. The
lack of a liquid secondary market may have an adverse effect on market price
and a Fund's ability to sell particular securities.
See the Appendix for information concerning the credit quality of the Asset
Allocation Fund's investments in debt obligations for the fiscal period ended
October 31, 1997.
U.S. GOVERNMENT SECURITIES
U.S. government securities are issued or guaranteed by the U.S. government or
its agencies or instrumentalities. Securities issued by the government include
U.S. Treasury obligations, such as Treasury bills, notes, and bonds. Securities
issued by government agencies or instrumentalities include obligations of the
following:
- - the Federal Housing Administration, Farmers Home Administration,
Export-Import Bank of the United States, Small Business Administration, and
the Government National Mortgage Association, including GNMA pass-through
certificates, whose securities are supported by the full faith and credit of
the United States;
- - the Federal Home Loan Banks, Federal Intermediate Credit Banks, and the
Tennessee Valley Authority, whose securities are supported by the right of
the agency to borrow from the U.S. Treasury;

15
<PAGE>

- - the Federal National Mortgage Association, whose securities are supported by
the discretionary authority of the U.S. government to purchase certain
obligations of the agency or instrumentality; and
- - the Student Loan Marketing Association, the Interamerican Development Bank,
and International Bank for Reconstruction and Development, whose securities
are supported only by the credit of such agencies.
Although the U.S. government provides financial support to such U.S.
government-sponsored agencies or instrumentalities, no assurance can be given
that it will always do so. The U.S. government and its agencies and
instrumentalities do not guarantee the market value of their securities;
consequently, the value of such securities will fluctuate.
ZERO-COUPON, STEP-COUPON, AND PAY-IN-KIND SECURITIES
Each Fund may invest in zero-coupon, step-coupon, and pay-in-kind securities.
These securities are debt securities that do not make regular cash interest
payments. Zero-coupon and step-coupon securities are sold at a deep discount to
their face value. Pay-in-kind securities pay interest through the issuance of
additional securities. Because such securities do not pay current cash income,
the price of these securities can be volatile when interest rates fluctuate.
While these securities do not pay current cash income, federal income tax law
requires the holders of zero-coupon, step-coupon, and pay-in-kind securities to
include in income each year the portion of the original issue discount (or
deemed discount) and other non-cash income on such securities accrued during
that year. In order to continue to qualify for treatment as a "regulated
investment company" under the Internal Revenue Code of 1986 ("IRC") and avoid a
certain excise tax, a Fund may be required to distribute a portion of such
discount and income and may be required to dispose of other portfolio
securities, which may occur in periods of adverse market prices, in order to
generate cash to meet these distribution requirements.
PUBLIC UTILITY COMPANIES (AMERICAN UTILITIES FUND)
Under normal market conditions, at least 65% of the American Utilities Fund's
total assets will be invested in the equity securities of public utility
companies headquartered in the United States. Accordingly, the Fund's
performance will depend in part on conditions in the public utility industry.
Stocks of public utility companies have traditionally been attractive to
conservative stock market investors because they have generally paid consistent
and above-average dividends. The Fund's investments in public utility
securities may or may not pay consistent and above-average dividends. Moreover,
the securities of public utility companies can still be affected by the risks
of the stock market, as well as factors specific to public utility companies.
Government regulation of public utility companies can limit their ability to
expand their businesses or to pass cost increases on to customers.
Additionally, companies providing power or energy-related services may also be
affected by the following factors: increases in fuel and other operating costs;
high costs of borrowing to finance capital construction during inflationary
periods; operational restrictions, increased costs, and delays associated with
compliance with environmental and nuclear safety regulations; difficulties
involved in obtaining natural gas for resale or fuel for generating electricity
at reasonable prices; risks associated with constructing and operating nuclear
power plants; effects of energy conservation; and effects of regulatory
changes. Some public utility companies are facing increased competition, which
may reduce their profits. All of these factors are subject to rapid change,
which may affect utility companies independently from the stock market as a
whole. Equity securities issued by public utility companies tend to be more
affected by changes in interest rates than are the equity securities of other
issuers and, therefore, may react to such changes somewhat like debt
instruments. (See "Debt Obligations" above.)
In accordance with its investment objective and fundamental investment
restrictions, the Fund will normally concentrate its investments in the public
utility industry. This means that more than 25% of the value of the Fund's
total assets will normally be invested in the public utility industry. The Fund
does not have set policies to concentrate within any particular segment of the
public utilities industry; however, the Subadvisor generally emphasizes
investments in established electric utility, telephone, natural gas, and energy
stocks with sound financial structures.

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<PAGE>

Due to the Fund's concentration of investments in the public utility industry,
an investment in the Fund may be subject to greater fluctuations in value than
a Fund that does not concentrate its investments in a similar manner. For
example, as discussed above, certain economic factors or specific events may
exert a disproportionate impact upon the prices of equity securities of
companies within the public utilities industry relative to their impact on the
prices of securities of companies engaged in other industries. Additionally,
changes in the market price of the equity securities of a particular company
that occupies a dominant position in an industry may tend to influence the
market prices of other companies within the same industry. As a result of the
foregoing factors, the net asset value of the Fund may be more susceptible to
change than those of investment companies that diversify their investments over
many different industries.
ENERGY COMPANIES (AMERICAN UTILITIES FUND)
Under normal market conditions, the American Utilities Fund anticipates it may
invest a substantial portion, but not more than 25% of its total assets, in the
equity securities of energy companies. Energy companies are generally defined
as companies in the conventional areas of oil, gas, electricity, and coal, as
well as those involved in alternative sources of energy, such as nuclear,
geothermal, shale, and solar power. The business activities of energy companies
may include production, generation, refining, transmission, transportation,
marketing, control, or measurement of energy or energy fuels; providing
component parts or services to companies engaged in these energy activities;
energy research or experimentation; and environmental activities related to the
solution of energy problems, such as energy conservation and pollution control.
For purposes of this 25% investment limitation, energy companies shall exclude
companies that are also public utility companies.
To the extent the Fund makes significant investments in energy companies, the
Fund's performance will depend in part on conditions in the energy industry.
The securities of companies in the energy industry are subject to changes in
value and dividend yield that depend to a large extent on the price and supply
of energy fuels. Swift price and supply fluctuations of energy fuels may be
caused by events relating to international politics, energy conservation, the
success of exploration projects, currency exchange rate fluctuations, and tax
and other regulatory policies of various governments.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES
Each Fund may invest in securities purchased on a when-issued or
delayed-delivery basis. 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.
Purchasing when-issued or delayed-delivery securities allows a Fund to lock in
a fixed price or yield on a security it intends to purchase. However, when a
Fund purchases these types of securities, it immediately assumes the risk of
ownership, including the risk of price fluctuation.
The greater a Fund's outstanding commitments for these securities, the greater
the exposure to potential fluctuations in the Fund's net asset value.
Purchasing when-issued or delayed-delivery securities may involve the
additional risk that the yield available in the market when the delivery occurs
may be higher or the market price lower than that obtained at the time of
commitment. Although a Fund may be able to sell these securities prior to the
delivery date, it will purchase them for the purpose of actually acquiring the
securities, unless, after entering into the commitment, a sale appears
desirable for investment reasons. When required by SEC guidelines, a Fund will
set aside permissible liquid assets in a segregated account to secure its
outstanding commitments for these types of securities.
FOREIGN SECURITIES AND CURRENCIES
Each Fund (except the Blue Chip 100 Fund) may invest in foreign securities
either directly or through the use of depositary receipts. The Blue Chip 100
Fund may only invest in dollar denominated foreign securities to the extent
that they are issued by Blue Chip Companies. Depositary receipts are generally
issued by banks or trust companies and evidence ownership of underlying foreign
securities. Foreign investments involve special risks, including:
- - expropriation, confiscatory taxation, and withholding taxes on dividends and
interest;

17
<PAGE>

- - less extensive regulation of foreign brokers, securities markets, and
issuers;
- - less publicly available information and different accounting standards;
- - costs incurred in conversions between currencies, possible delays in
settlement in foreign securities markets, limitations on the use or transfer
of assets (including suspension of the ability to transfer currency from a
given country), and difficulty of enforcing obligations in other countries;
and
- - diplomatic developments and political or social instability.
Foreign economies may differ favorably or unfavorably from the U.S. economy in
various respects, including growth of gross domestic product, rates of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency, and balance-of-payments positions. Many foreign securities
may be less liquid and their prices more volatile than comparable U.S.
securities. Although the Funds generally invest only in securities that are
regularly traded on recognized exchanges or in over-the-counter markets, from
time to time foreign securities may be difficult to liquidate rapidly without
adverse price effects. Certain costs attributable to foreign investing, such as
custody charges and brokerage costs, may be higher than those attributable to
domestic investing.
The Asset Allocation Fund may invest in the foreign securities of issuers in
developing countries. The risks of foreign investments are generally
intensified for investments in developing countries. Risks of investing in such
markets include:
- - less social, political, and economic stability;
- - smaller securities markets and the lower trading volume, which may result in
a lack of liquidity and greater price volatility;
- - certain national policies that may restrict a Fund's investment
opportunities, including restrictions on investments in issuers or industries
deemed sensitive to national interests, or expropriation or confiscation of
assets or property, which could result in the Fund's loss of its entire
investment in that market; and
- - less developed legal structures governing private or foreign investment or
allowing for judicial redress for injury to private property.
In addition, brokerage commissions, custodial services, withholding taxes, and
other costs relating to investments in emerging markets generally are more
expensive than in the U.S. and certain more established foreign markets.
Economies in emerging markets generally are heavily dependent upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values, and other protectionist measures negotiated or imposed by the
countries with which they trade.
The Asset Allocation Fund may also invest in debt obligations issued or
guaranteed by foreign governments or their agencies, instrumentalities or
political subdivisions, or by supranational issuers (collectively, sovereign
debt). Investment in sovereign debt involves special risks. Certain foreign
countries, particularly developing countries, have experienced, and may
continue to experience, high rates of inflation, high interest rates,
exchange-rate fluctuations, large amounts of external debt, balance of payments
and trade difficulties, and extreme poverty and unemployment. The issuer of the
debt or the governmental authorities that control the repayment of the debt may
be unable or unwilling to repay principal or interest when due in accordance
with the terms of such debt, and the Fund may have limited legal recourse in
the event of default.
Because most foreign securities are denominated in non-U.S. currencies, the
investment performance of the Funds could be affected by changes in foreign
currency exchange rates to some extent. The value of a Fund's assets
denominated in foreign currencies will increase or decrease in response to
fluctuations in the value of those foreign currencies relative to the U.S.
dollar. Currency exchange rates can be volatile at times in response to supply
and demand in the currency exchange markets, international balances of
payments, governmental intervention, speculation, and other political and
economic conditions.
The Funds (except for the Blue Chip 100 Fund) may purchase and sell foreign
currency on a spot basis and may engage in forward currency contracts, currency
options, and futures transactions for hedging or any other lawful purpose
consistent with their investment objectives. (See "Derivative Instruments.")

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<PAGE>

FOREIGN INVESTMENT COMPANIES
The Funds (except for the Blue Chip 100 Fund) may invest, to a limited extent,
in foreign investment companies. Some of the countries in which the Funds
invest may not permit direct investment by outside investors. Investments in
such countries may only be permitted through foreign government-approved or
- -authorized investment vehicles, which may include other investment companies.
In addition, it may be less expensive and more expedient for a Fund to invest
in a foreign investment company in a country which permits direct foreign
investment. Investing through such vehicles may involve frequent or layered
fees or expenses and may also be subject to limitation under the Investment
Company Act of 1940 ("1940 Act"). The Funds do not intend to invest in such
investment companies unless, in the judgment of the Advisor, the potential
benefits of such investments justify the payment of any associated fees and
expenses.
DERIVATIVE INSTRUMENTS
A Fund may use derivative instruments for any lawful purpose consistent with
the Fund's investment objective such as hedging or managing risk. Derivative
instruments are commonly defined to include securities or contracts whose
values depend on (or "derive" from) the value of one or more other assets, such
as securities, currencies, or commodities. These "other assets" are commonly
referred to as "underlying assets."
A derivative instrument generally consists of, is based upon, or exhibits
characteristics similar to OPTIONS or FORWARD CONTRACTS. Options and forward
contracts are considered to be the basic "building blocks" of derivatives. For
example, forward-based derivatives include forward contracts, swap contracts,
as well as exchange-traded futures. Option-based derivatives include privately
negotiated, over-the-counter ("OTC") options (including caps, floors, collars,
and options on forward and swap contracts) and exchange-traded options on
futures. Diverse types of derivatives may be created by combining options or
forward contracts in different ways, and by applying these structures to a wide
range of underlying assets.
An option is a contract in which the "holder" (the buyer) pays a certain amount
("premium") to the "writer" (the seller) to obtain the right, but not the
obligation, to buy from the writer (in a "call") or sell to the writer (in a
"put") a specific asset at an agreed upon price at or before a certain time.
The holder pays the premium at inception and has no further financial
obligation. The holder of an option-based derivative generally will benefit
from favorable movements in the price of the underlying asset but is not
exposed to corresponding losses due to adverse movements in the value of the
underlying asset. The writer of an option-based derivative generally will
receive fees or premiums but generally is exposed to losses due to changes in
the value of the underlying asset.
A forward is a sales contract between a buyer (holding the "long" position) and
a seller (holding the "short" position) for an asset with delivery deferred
until a future date. The buyer agrees to pay a fixed price at the agreed future
date and the seller agrees to deliver the asset. The seller hopes that the
market price on the delivery date is less than the agreed upon price, while the
buyer hopes for the contrary. The change in value of a forward-based derivative
generally is roughly proportional to the change in value of the underlying
asset.
Derivative instruments may include (i) options; (ii) futures; (iii) options on
futures; (iv) short sales, in which a Fund sells a security for delivery at a
future date; (v) swaps, in which two parties agree to exchange a series of cash
flows in the future, such as interest-rate payments; (vi) interest-rate caps,
under which, in return for a premium, one party agrees to make payments to the
other to the extent that interest rates exceed a specified rate, or "cap";
(vii) interest-rate floors, under which, in return for a premium, one party
agrees to make payments to the other to the extent that interest rates fall
below a specified level, or "floor"; (viii) forward currency contracts and
foreign currency exchange-related securities; and (ix) structured instruments
which combine the foregoing in different ways.
Derivatives may be exchange-traded or traded in OTC transactions between
private parties. OTC transactions are subject to additional risks, such as the
credit risk of the counterparty to the instrument and are less liquid than
exchange-traded derivatives since they often can only be closed out with the
other party to the transaction. Derivative instruments may include elements of
leverage and, accordingly, the fluctuation of the value of the derivative
instrument in relation to the underlying asset may be magnified.

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<PAGE>

When required by SEC guidelines, a Fund will set aside permissible liquid
assets in a segregated account to secure its obligations under the derivative.
The successful use of derivatives by a Fund is dependent upon a variety of
factors, particularly the Advisor's ability to correctly anticipate trends in
the underlying asset. In a hedging transaction, if the Advisor incorrectly
anticipates trends in the underlying asset, a Fund may be in a worse position
than if no hedging had occurred. In addition, there may be imperfect
correlation between a Fund's derivative transactions and the instruments being
hedged. To the extent that the Fund is engaging in derivative transactions for
risk management, the Fund's successful use of such transactions is more
dependent upon the Advisor's ability to correctly anticipate such trends, since
losses in these transactions may not be offset by gains in the Fund's portfolio
or in lower purchase prices for assets it intends to acquire. The Advisor's
prediction of trends in underlying assets may prove to be inaccurate, which
could result in substantial losses to a Fund.
A Fund may also use derivative instruments to make investments that are
consistent with a Fund's investment objective but that are impracticable or not
feasible in the cash market (E.G. using derivative instruments to create a
synthetic security or to derive exposure to a region or asset class when cash
markets are inefficient and/or illiquid). A Fund will only engage in this
strategy when the Advisor reasonably believes it to be more advantageous to the
Fund.
In addition to the derivative instruments and strategies described above, the
Advisor expects to discover additional derivative instruments and other trading
techniques. The Advisor may utilize these new derivative instruments and
techniques to the extent that they are consistent with a Fund's investment
objective and permitted by the Fund's investment limitations, operating
policies, and applicable regulatory authorities.
MORTGAGE- AND ASSET-BACKED SECURITIES
Mortgage-backed securities represent direct or indirect participation in, or
are secured by and payable from, mortgage loans secured by real property, and
include single- and multi-class pass-through securities and collateralized
mortgage obligations. Such securities may be issued or guaranteed by U.S.
government agencies or instrumentalities or by private issuers, generally
originators and investors in mortgage loans, including savings associations,
mortgage bankers, commercial banks, investment bankers, and special purpose
entities (collectively, "private lenders"). Mortgage-backed securities issued
by private lenders may be supported by pools of mortgage loans or other
mortgage-backed securities that are guaranteed, directly or indirectly, by the
U.S. government or one of its agencies or instrumentalities, or they may be
issued without any governmental guarantee of the underlying mortgage assets but
with some form of non-governmental credit enhancement.
Asset-backed securities have structural characteristics similar to mortgage-
backed securities. However, the underlying assets are not first-lien mortgage
loans or interests therein; rather, they include assets such as motor vehicle
installment sales contracts, other installment loan contracts, home equity
loans, leases of various types of property, and receivables from credit card or
other revolving credit arrangements. Payments or distributions of principal and
interest on asset-backed securities may be supported by non-governmental credit
enhancements similar to those utilized in connection with mortgage-backed
securities.
The yield characteristics of mortgage- and asset-backed securities differ from
those of traditional debt securities. Among the principal differences are that
interest and principal payments are made more frequently on mortgage-and
asset-backed securities, usually monthly, and that principal may be prepaid at
any time because the underlying mortgage loans or other assets generally may be
prepaid at any time. As a result, if a Fund purchases these securities at a
premium, a prepayment rate that is faster than expected will reduce yield to
maturity, while a prepayment rate that is slower than expected will have the
opposite effect of increasing the yield to maturity. Conversely, if a Fund
purchases these securities at a discount, a prepayment rate that is faster than
expected will increase yield to maturity, while a prepayment rate that is
slower than expected will reduce yield to maturity. Accelerated prepayments on
securities purchased by a Fund at a premium also impose a risk of loss of
principal because the premium may not have been fully

20
<PAGE>

amortized at the time the principal is prepaid in full. The market for
privately issued mortgage- and asset-backed securities is smaller and less
liquid than the market for government-sponsored mortgage-backed securities.
The Funds may invest in stripped mortgage- or asset-backed securities, which
receive differing proportions of the interest and principal payments from the
underlying assets. The market value of such securities generally is more
sensitive to changes in prepayment and interest rates than is the case with
traditional mortgage- and asset-backed securities, and in some cases such
market value may be extremely volatile. With respect to certain stripped
securities, such as interest-only ("IO") and principal-only ("PO") classes, a
rate of prepayment that is faster or slower than anticipated may result in a
Fund failing to recover all or a portion of its investment, even though the
securities are rated investment grade.
SMALL AND MEDIUM COMPANIES
The Funds may invest a portion of their assets in the securities of small and
medium companies. While small and medium companies generally have potential for
rapid growth, investments in small and medium companies often involve greater
risks than investments in larger, more established companies because small and
medium companies may lack the management experience, financial resources,
product diversification, and competitive strengths of larger companies. In
addition, in many instances the securities of small and medium companies are
traded only OTC or on a regional securities exchange, and the frequency and
volume of their trading is substantially less than is typical of larger
companies. Therefore, the securities of small and medium companies may be
subject to greater and more abrupt price fluctuations. When making large sales,
the Fund may have to sell portfolio holdings at discounts from quoted prices or
may have to make a series of small sales over an extended period of time due to
the trading volume of small and medium company securities. Investors should be
aware that, based on the foregoing factors, an investment in the Fund may be
subject to greater price fluctuations than an investment in a fund that invests
primarily in larger, more established companies. The Advisor's research efforts
may also play a greater role in selecting securities for the Fund than in a
fund that invests in larger, more established companies.
DIVERSIFICATION
The American Utilities Fund is non-diversified. Because the Fund may invest a
larger portion of its assets in the securities of a single issuer than
diversified funds, an investment in the Fund may be subject to greater
fluctuations in value than an investment in a diversified fund.
ILLIQUID SECURITIES
Each Fund may invest up to 15% of its net assets in illiquid securities.
Illiquid securities are those securities that are not readily marketable,
including restricted securities and repurchase obligations maturing in more
than seven days. Certain restricted securities that may be resold to
institutional investors under Rule 144A under the Securities Act of 1933 and
Section 4(2) commercial paper may be determined to be liquid under guidelines
adopted by each Fund's Board of Directors.
CASH MANAGEMENT
Each Fund may invest directly in cash and short-term fixed-income securities,
including, for this purpose, shares of one or more money market funds managed
by the Advisor (collectively, "Strong Money Funds"). The Strong Money Funds
seek current income, a stable share price of $1.00, and daily liquidity. All
money market instruments can change in value when interest rates or an issuer's
creditworthiness change dramatically. The Strong Money Funds cannot guarantee
that they will always be able to maintain a stable net asset value of $1.00 per
share. Each Fund may also participate in pooled transactions involving cash and
short-term fixed income securities with other Strong Funds.
PORTFOLIO TURNOVER
Historical portfolio turnover rates for the Funds are listed under "Financial
Highlights." The annual portfolio turnover rate indicates changes in a Fund's
portfolio. The turnover rate may vary from year to year, as well as within a
year. It may also be affected by sales of portfolio securities necessary to
meet cash

21
<PAGE>

requirements for redemption of shares. High portfolio turnover in any year will
result in the payment by a Fund of above-average amounts of transaction costs
and could result in the payment by shareholders of above-average amounts of
taxes on realized investment gains. Under normal market circumstances, the rate
of portfolio turnover of the Blue Chip 100 and Limited Resources Funds
generally will not exceed 150%. However, during periods in which the Advisor
deems it advisable to engage in substantial short-term trading, the rate of
portfolio turnover may exceed 150%. The Asset Allocation and Total Return Funds
each have a wide investment scope and an active management investment policy,
which may result in higher portfolio turnover. The Asset Allocation Fund may
engage in substantial short-term trading that involves significant risk and may
be deemed speculative. Such trading will result in a higher portfolio turnover
rate and correspondingly higher brokerage costs.
ABOUT THE FUNDS
MANAGEMENT
The Board of Directors of each Fund is responsible for managing its business
and affairs. Each of the Funds has entered into an investment advisory
agreement (collectively, "Advisory Agreements") with Strong Capital Management,
Inc. ("Advisor"). Except for the management fee arrangements, the Advisory
Agreements are substantially identical. Under the terms of these agreements,
the Advisor manages each Fund's investments and business affairs subject to the
supervision of each Fund's Board of Directors.
ADVISOR. The Advisor began conducting business in 1974. Since then, its
principal business has been providing continuous investment supervision for
individuals and institutional accounts, such as pension funds and
profit-sharing plans, as well as mutual funds, several of which are funding
vehicles for variable insurance products. As of January 31, 1998, the Advisor
had over $28.6 billion under management. The Advisor's principal mailing
address is P.O. Box 2936, Milwaukee, Wisconsin 53201. Mr. Richard S. Strong,
the Chairman of the Board of each Fund, is the controlling shareholder of the
Advisor.
As compensation for its services, each Fund pays the Advisor a monthly
management fee based on a percentage of each Fund's average daily net asset
value. The annual rates are as follows: Limited Resources Fund, 1.00%; Asset
Allocation and Total Return Funds, .85% of the Fund's average daily net assets
up to $35,000,000 and .80% of each Fund's average daily net assets in excess of
$35,000,000; Equity Income and Growth and Income Funds, .80%; and American
Utilities and Blue Chip 100 Funds, .75%. From time to time, the Advisor may
voluntarily waive all or a portion of its management fee and/or absorb certain
Fund expenses without further notification of the commencement or termination
of such waiver or absorption. Any such waiver or absorption will temporarily
lower a Fund's overall expense ratio and increase a Fund's overall return to
investors.
The Advisor, Reaves, and Scarborough each permit portfolio managers and other
persons who may have access to information about the purchase or sale of
securities in a Fund's portfolio ("access persons") to purchase and sell
securities for their own accounts, subject to their respective policies
governing personal investing. These policies require access persons to conduct
their personal investment activities in a manner that the Advisor, Reaves or
Scarborough, respectively, each reasonably believes is not detrimental to the
Fund which it advises or to its other advisory clients. Among other things,
these policies require access persons to obtain preclearance before executing
personal trades and prohibits access persons from keeping profits derived from
the purchase or sale of the same security within 60 calendar days. See the SAI
for more information.
SUBADVISOR FOR AMERICAN UTILITIES FUND. Under a subadvisory agreement ("Reaves
Subadvisory Agreement") between the Advisor and W.H. Reaves & Co., Inc.
("Reaves"), Reaves, subject to the oversight and supervision of the American
Utilities Fund's Board of Directors and the Advisor, provides a continuous
investment program for the American Utilities Fund. Under the Reaves
Subadvisory Agreement, Reaves is responsible for determining the securities to
be purchased and sold by the Fund and for executing those transactions.
However, the Advisor is responsible for managing the cash-equivalent investment
maintained by the Fund in the ordinary course of its business, which is
expected to equal approximately 5% - 7% of the Fund's total assets. As
compensation for its services, the Advisor (not the Fund) pays Reaves a monthly
fee at an annual rate of .50% on the first $200 million of the Fund's average

22
<PAGE>

daily net assets plus 40% of the Advisor's net management fee (after any
waivers thereof) on that portion of the Fund's average daily net assets in
excess of $200 million except that the foregoing percentage will be 50% on
those average daily net assets between $1.0 billion and $1.5 billion. Reaves
bears all of its own expenses in providing subadvisory services to the Fund.
Reaves began conducting business in 1961. Since then, its principal business
has been providing continuous investment supervision to institutional investors
such as corporations, corporate pension funds, employee savings plans,
foundations, and endowments. Reaves is a Delaware corporation. Mr. William H.
Reaves is the controlling shareholder of Reaves. As of January 31, 1998, Reaves
had over $1.5 billion under management. Its address is 10 Exchange Place,
Jersey City, New Jersey 07302.
Reaves may also act as a broker for the American Utilities Fund. In order for
Reaves to effect any portfolio transactions for the Fund on an exchange, the
commissions, fees, or other remuneration received by Reaves must be reasonable
and fair compared to the commissions, fees, or other remuneration paid to other
brokers in connection with transactions involving similar securities being
purchased or sold on any exchange during a comparable period of time. This
standard allows Reaves to receive no more than the remuneration that would be
expected to be received by an unaffiliated broker in a commensurate
arm's-length transaction.
HISTORICAL PERFORMANCE DATA OF REAVES
The following table sets forth the composite performance data of Reaves
relating to the historical performance of actual, fee-paying, discretionary
equity accounts and the designated equity portion (including designated cash
reserves) of balanced accounts with assets over $1 million ("Equity Accounts")
managed by Reaves, since the dates indicated, that have investment objectives,
policies, strategies, and risks substantially similar to those of the American
Utilities Fund. The data is provided to illustrate the past performance of
Reaves in managing substantially similar accounts as measured against the
Standard & Poor's 500 Stock Index ("S&P 500"), and does not represent the
performance of the American Utilities Fund. PERFORMANCE IS HISTORICAL AND DOES
NOT REPRESENT THE FUTURE PERFORMANCE OF THE AMERICAN UTILITIES FUND OR OF
REAVES.
Reaves' composite performance data shown below was calculated in accordance
with the recommended standards of the Association for Investment Management and
Research (commonly referred to as AIMR)* retroactively applied for all time
periods. All returns presented were calculated on a total return basis and
include all dividends and interest, accrued income, and realized and unrealized
gains and losses. All returns reflect the deduction of investment management
fees, brokerage commissions, and execution costs paid by the Equity Accounts,
without provision for federal or state income taxes. Custodial fees, if any,
were not included in the calculation. Securities transactions are accounted for
on the trade date and accrual accounting is utilized. Cash and equivalents are
included in performance returns. The composite's returns are calculated on a
time-weighted basis.
The Equity Accounts that are included in Reaves' composite are not subject to
the same type of expenses to which the American Utilities Fund is subject nor
to the diversification requirements, specific tax restrictions, and investment
limitations imposed on the American Utilities Fund by the Investment Company
Act of 1940 or Subchapter M of the IRC. Consequently, the performance results
for Reaves' composite could have been adversely affected if the Equity Accounts
included in the composite had been regulated under the federal securities laws
and Subchapter M of the IRC.

* AIMR is a non-profit membership and education organization with more than
60,000 members worldwide that, among other things, has formulated a set of
performance presentation standards for investment advisers. These AIMR
performance presentation standards are intended to (i) promote full and fair
presentations by investment advisers of their performance results, and (ii)
ensure uniformity in reporting so that performance results of investment
advisers are directly comparable.

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<PAGE>

The investment results of Reaves' composite presented below have been audited
for all periods presented up to June 30, 1997. Reaves has its composite
performance audited every three years. The investment results presented are not
intended to predict or suggest the future returns of the Fund. Investors should
be aware that the use of a methodology different than that used below to
calculate performance could result in different performance data.

<TABLE>
<CAPTION>
<S> <C> <C>
SUBADVISOR'S
EQUITY
TIME PERIOD COMPOSITE S&P 500(1)
Average Annual Returns (as of 12/31/97)
1 Year 28.3% 33.4%
3 Year 23.9% 31.2%
5 Year 16.3% 20.3%
10 Year 15.3% 18.0%
15 Year 17.9% 17.4%
1/1/78 - 12/31/97(2) 17.7% 16.6%
Cumulative Returns
1/1/78 - 12/31/97(2) 2492.0% 2054.2%
</TABLE>

(1) The S&P 500 Stock Index is an unmanaged index generally representative
of the U.S. stock market. The index does not reflect investment management
fees, brokerage commissions, and other expenses associated with investing in
equity securities.
(2) Reaves' Equity Composite began on January 1, 1978.
SUBADVISOR FOR LIMITED RESOURCES FUND. Under a subadvisory agreement
("Scarborough Subadvisory Agreement") between the Advisor and Scarborough
Investment Advisers LLC ("Scarborough"), Scarborough, subject to the oversight
and supervision of the Fund's Board of Directors and the Advisor, provides a
continuous investment program for the Fund. Under the Scarborough Subadvisory
Agreement, Scarborough is responsible for determining the securities to be
purchased or sold by the Fund and for executing those transactions. However,
the Advisor is responsible for managing the cash-equivalent investment
maintained by the Fund in the ordinary course of business, which on average is
expected to equal approximately 5% of the Fund's total assets. As compensation
for its services, the Advisor (not the Fund) pays Scarborough a monthly fee at
an annual rate of (i) .50% of the Fund's average daily net asset value on the
first $250 million of the Fund's net assets, (ii) .40% of the Fund's average
daily net asset value on the Fund's net assets over $250 million and up to
$1.25 billion, and (iii) .35% of the Fund's average daily net asset value on
the Fund's net assets over $1.25 billion. Scarborough bears all of its own
expenses in providing subadvisory services to the Fund.
Scarborough began conducting business in 1996. Since then, its principal
business has been providing continuous investment supervision to institutional
investors and high net worth clients. Scarborough is a Delaware corporation.
Mr. J. Richard Walton, Scarborough's President and Chief Investment Officer, is
the controlling shareholder of Scarborough. As of January 31, 1998, Scarborough
had over $11.6 million under management. Its address is 399 Park Avenue, 20th
Floor, New York, New York 10022.
PORTFOLIO MANAGERS. The following individuals serve as portfolio managers for
the Funds.
STRONG ASSET ALLOCATION FUND
EQUITY COMPONENT

RIMAS M. MILAITIS. Mr. Milaitis serves as the portfolio manager of the equity
portion of the Fund. Mr. Milaitis joined the Advisor in December of 1995. For
the previous four years, he managed several conservative equity portfolios at
Aon Advisors, Inc. ("AAI") in Chicago, Illinois. For two years prior to that,
he served as an equity trader to AAI. Prior to working at AAI, Mr. Milaitis
served for three years as an equity portfolio assistant to the Illinois State
Board of Investment. Mr. Milaitis received his B.S. in
24
<PAGE>

Economics in 1984 from Illinois State University and his M.B.A. in Finance in
1991 from DePaul University.
BOND AND CASH COMPONENTS
BRADLEY C. TANK. Mr. Tank co-manages the bond and cash portions of the Fund.
Before joining the Advisor in June 1990, he spent eight years at Salomon
Brothers Inc., where he was a fixed-income specialist and, for the last six
years, a vice president. Mr. Tank received his B.A. in English in 1980 from the
University of Wisconsin-Eau Claire and his M.B.A. in Finance in 1982 from the
University of Wisconsin-Madison, where he also completed the Applied Securities
Analysis Program. Mr. Tank currently chairs the Advisor's Fixed Income
Investment Committee.
JEFFREY A. KOCH. Mr. Koch co-manages the bond and cash portions of the Fund.
Mr. Koch joined the Advisor as a portfolio manager and securities analyst in
June 1989. For a brief period prior to that, he was a market-maker clerk at
Fossett Corporation, a clearing firm. Mr. Koch received his B.A. in Economics
in 1987 from the University of Minnesota-Morris and his M.B.A. in Finance in
1989 from Washington University in St. Louis. Mr. Koch is also a Chartered
Financial Analyst. Mr. Koch has co-managed the Fund since December 1994.
STRONG AMERICAN UTILITIES FUND
WILLIAM H. REAVES. Mr. Reaves, the Fund's senior co-manager, has been the
President and Chief Investment Officer, Portfolio Manager, and Utilities
Analyst of Reaves since 1961. He has worked as a utilities analyst since 1946.
WILLIAM A. FERER. Mr. Ferer, a co-manager of the Fund, has been a Vice
President, Portfolio Manager, and Energy Analyst of Reaves since 1987. He has
worked as a securities analyst since 1971.
RONALD J. SORENSON. Mr. Sorenson, a co-manager of the Fund, has been a Vice
President and Portfolio Manager of Reaves since 1991. For three years prior to
that, he was a partner and portfolio manager of PVF Inc., an investment
advisory firm. For a two-year period prior to that, Mr. Sorenson was the
Chairman of the Board and Chairman of the Investment Committee of The American
Life Insurance Company of New York. Mr. Sorenson has acted as President of RWS
Energy Services, Chief Financial Officer of Emerging Market Services A.G.,
Controller of Triad Holding Corporation S.A., and was a C.P.A. for Arthur Young
& Co.
MARK D. LUFTIG. Mr. Luftig, a co-manager of the Fund, has been a Vice President
and Utilities Analyst of Reaves since January 1995. Prior to joining Reaves, he
was the Executive Vice President and Director of Equity Research at Kemper
Securities, Inc., where he worked since 1992. For approximately three years
prior to that, Mr. Luftig served as the Vice President of the National Economic
Research Association, Inc. From 1975 until 1989, he worked at Salomon Brothers
Inc. as the Director of Research.
STRONG BLUE CHIP 100 FUND
KAREN E. MCGRATH. Ms. McGrath serves as the portfolio manager of the Fund. Ms.
McGrath, a Chartered Financial Analyst with more than 25 years of investment
experience, joined the Advisor in October 1995. For two years prior to joining
the Advisor, she served as a portfolio manager of equity accounts and President
of National Investment Services, Inc. ("NIS"). From January 1990 until December
1993, she served as a portfolio manager of equity accounts and Vice President
and Senior Vice President of National Investment Services of America, Inc., a
predecessor organization to NIS. Ms. McGrath began her career at Loomis Sayles
& Company, Inc., where she worked as a portfolio manager of equity accounts for
over 15 years. Ms. McGrath received her B.S. in Accounting in 1959 from
Marquette University. Ms. McGrath has managed the Fund since its inception in
June 1997.

STRONG TOTAL RETURN FUND
RONALD C. OGNAR. Mr. Ognar co-manages the Fund. Mr. Ognar, a Chartered
Financial Analyst with more than 25 years of investment experience, joined the
Advisor in April 1993 after two years as a principal and portfolio manager with
RCM Capital Management. For approximately three years prior to that, he was a
portfolio manager at Kemper Financial Services in Chicago. Mr. Ognar began his
investment
25
<PAGE>

career in 1968 at LaSalle National Bank in Chicago after serving two
years in the U.S. Army. Mr. Ognar received his B.S. in Accounting in 1968 from
the University of Illinois. Mr. Ognar has co-managed the Fund since December
1994.
IAN J. ROGERS. In October 1994, Mr. Rogers joined Mr. Ognar as co-portfolio
manager of the Fund. Mr. Rogers has worked with Mr. Ognar as an equity analyst
since joining the Advisor in August 1993. Prior to joining the Advisor, Mr.
Rogers worked for seven years as an equity analyst with Kemper Financial
Services in Chicago. For approximately two years prior to that, he was an
equity analyst for Allstate Insurance. Mr. Rogers began his investment career
in 1983 as an equity analyst for Comerica Bank in Detroit. Mr. Rogers received
his B.S. in Business Administration in 1966 from Ferris State College and his
M.B.A. in Finance in 1983 from Central Michigan University.
STRONG EQUITY INCOME FUND
STRONG GROWTH AND INCOME FUND
RIMAS M. MILAITIS. Information concerning Mr. Milaitis is set forth above under
"Strong Asset Allocation Fund".
STRONG LIMITED RESOURCES FUND
MARK A. BASKIR. Mr. Baskir manages the Fund. Mr. Baskir, a Chartered Financial
Analyst with more than 30 years of investment experience, joined Scarborough in
February 1997. Prior to joining Scarborough, he was an investment adviser at
Peckland Associates. Prior to that, Mr. Baskir worked at Neuberger & Berman
LLC, which he joined in 1970. While at Neuberger & Berman, he specialized in
energy stocks as a research analyst (1970-96) and as the portfolio manager
(1983-96) for separate accounts. From 1987-92, he managed or co-managed the
Energy Fund (now called the Focus Fund). Mr. Baskir received his B.A. in
Political Science from Princeton University in 1964 and an M.B.A. from the
Columbia University Graduate School of Business Administration in 1967.
TRANSFER AND DIVIDEND-DISBURSING AGENT
The Advisor, P.O. Box 2936, Milwaukee, Wisconsin 53201, also acts as
dividend-disbursing agent and transfer agent for the Funds. The Advisor is
compensated for its services based on an annual fee per account plus certain
out-of-pocket expenses. The fees received and the services provided as transfer
agent and dividend-disbursing agent are in addition to those received and
provided under the Advisory Agreements between the Advisor and the Funds.
DISTRIBUTOR
Strong Funds Distributors, Inc., P.O. Box 2936, Milwaukee, Wisconsin 53201, an
indirect subsidiary of the Advisor, acts as distributor of the shares of the
Funds.
ORGANIZATION
SHAREHOLDER RIGHTS. The Asset Allocation and Total Return Funds are Wisconsin
corporations that are authorized to issue an indefinite number of shares of
common stock and series and classes of series of shares of common stock. The
American Utilities Fund, Equity Income, Growth and Income, Blue Chip 100, and
Limited Resources Funds are series of common stock of Strong Conservative
Equity Funds, Inc., a Wisconsin corporation that is authorized to issue an
indefinite number of shares of common stock and series and classes of series of
shares of common stock. Each share of the Funds has one vote, and all shares
participate equally in dividends and other capital gains distributions by the
respective Fund and in the residual assets of the respective Fund in the event
of liquidation. Certificates will be issued for shares held in your account
only upon your written request. You will, however, have full shareholder rights
whether or not you request certificates. Generally, the Funds will not hold an
annual meeting of shareholders unless required by the 1940 Act.
Shareholders have certain rights, including the right to call an annual meeting
upon a vote of 10% of the Fund's outstanding shares for the purpose of voting to
remove one or more directors or to transact any other business. The 1940 Act
requires the Fund to assist the shareholders in calling such a meeting.
26
<PAGE>

SHAREHOLDER PRIVILEGES. The shareholders of each Fund may benefit from the
privileges described in the "Shareholder Manual" (see Page II-1). However, each
Fund reserves the right, at any time and without prior notice, to suspend,
limit, modify, or terminate any of these privileges or their use in any manner
by any person or class.
DISTRIBUTIONS AND TAXES
PAYMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. Unless you choose otherwise, all
your dividends and capital gains distributions will be automatically reinvested
in additional Fund shares. Or, you may elect to have all your dividends and
capital gain distributions from a Fund automatically invested in additional
shares of another Strong Fund. Shares are purchased at the net asset value
determined on the payment date. If you request in writing that your dividends
and other distributions be paid in cash, a Fund will credit your bank account
by Electronic Funds Transfer ("EFT") or issue a check to you within five
business days of the payment date. You may change your election at any time by
calling or writing the Fund. The Fund must receive any such change 7 days (15
days for EFT) prior to a dividend or capital gain distribution payment date in
order for the change to be effective for that payment. The policy of each Fund
is to pay dividends from net investment income quarterly and to distribute
substantially all net realized capital gains and gains from foreign currency
transactions annually. Each Fund may make additional distributions if necessary
to avoid imposition of a 4% excise tax on undistributed income and gains.
If you have chosen to receive dividends and/or capital gain distributions in
cash and the postal or other delivery service is unable to deliver checks to
your address of record, your distribution option will automatically be
converted to having all dividend and other distributions reinvested in
additional Fund shares. No interest will accrue on amounts represented by
uncashed distribution or redemption checks.
TAX STATUS OF DIVIDENDS AND OTHER DISTRIBUTIONS. You will be subject to federal
income tax at ordinary income tax rates on any dividends you receive that are
derived from investment company taxable income (consisting generally of net
investment income, net short-term capital gain, and net gains from certain
foreign currency transactions, if any). Distributions of net capital gain (the
excess of net long-term capital gain over net short-term capital loss), when
designated as such by a Fund, are taxable to you as long-term capital gains,
regardless of how long you have held your Fund shares. The Funds' distributions
are taxable in the year they are paid, whether they are taken in cash or
reinvested in additional shares, except that certain distributions declared in
the last three months of the year and paid in January are taxable as if paid on
December 31.
If a Fund's distributions exceed its investment company taxable income and net
capital gain in any year, as a result of currency-related losses or otherwise,
all or a portion of those distributions may be treated as a return of capital
to shareholders for tax purposes.
YEAR-END TAX REPORTING. After the end of each calendar year, you will receive a
statement (Form 1099) of the federal income tax status of all dividends and
other distributions paid (or deemed paid) during the year.
SHARES SOLD OR EXCHANGED. Your redemption of shares of the Fund may result in
taxable gain or loss to you, depending upon whether the redemption proceeds
payable to you are more or less than your adjusted cost basis for the redeemed
shares. Similar tax consequences generally will result from an exchange of
shares of the Fund for shares of another Strong Fund. If you purchase shares of
a Fund within 30 days before or after redeeming shares of the same Fund at a
loss, a portion or all of that loss will not be deductible and will increase
the cost basis of the newly purchased shares. If you redeem shares out of a
non-IRA retirement account, you will be subject to withholding for federal
income tax purposes unless you transfer the distribution directly to an
"eligible retirement plan."

BUYING A DISTRIBUTION. A distribution paid shortly after you have purchased
shares in a Fund will reduce the net asset value of the shares by the amount of
the distribution, which nevertheless will be taxable to you even though it
represents a return of a portion of your investment.
BACKUP WITHHOLDING. If you are an individual or certain other noncorporate
shareholder and do not furnish a Fund with a correct taxpayer identification
number, the Fund is required to withhold federal
27
<PAGE>
income tax at a rate of 31% (backup withholding) from all dividends, capital
gain distributions, and redemption proceeds payable to you. Withholding at that
rate from dividends and capital gain distributions payable to you also is
required if you otherwise are subject to backup withholding. To avoid backup
withholding, you must provide a taxpayer identification number and state that
you are not subject to backup withholding due to the underreporting of your
income. This certification is included as part of your application. Please
complete it when you open your account.
TAX STATUS OF THE FUNDS. Each Fund intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the IRC and, if so
qualified, will not be liable for federal income tax on earnings and gains
distributed to its shareholders in a timely manner.
This section is not intended to be a full discussion of present or proposed
federal income tax law and its effects on the Funds and investors therein. See
the SAI for a further discussion. There may be other federal, state, or local
tax considerations applicable to a particular investor. You are therefore urged
to consult your own tax adviser.
PERFORMANCE INFORMATION
Each Fund may advertise a variety of types of performance information,
including "average annual total return," "total return," "cumulative total
return," and "yield." Each of these figures is based upon historical results
and does not represent the future performance of a Fund. Average annual total
return and total return figures measure both the net investment income
generated by, and the effect of any realized and unrealized appreciation or
depreciation of, the underlying investments in a Fund assuming the reinvestment
of all dividends and distributions. Total return figures are not annualized and
simply represent the aggregate change of a Fund's investments over a specified
period of time.
Yield is an annualized figure, which means that it is assumed that a Fund
generates the same level of net investment income over a one-year period. A
Fund's yield is a measure of the net investment income per share earned by the
Fund over a specific one-month period and is shown as a percentage of the net
asset value of the Fund's shares at the end of the period.

28
<PAGE>

SHAREHOLDER MANUAL

<TABLE>
<CAPTION>
<S> <C>
HOW TO BUY SHARES II-1
DETERMINING YOUR SHARE PRICE II-5
HOW TO SELL SHARES II-6
SHAREHOLDER SERVICES II-9
REGULAR INVESTMENT PLANS II-10
RETIREMENT PLAN SERVICES II-12
SPECIAL SITUATIONS II-12
</TABLE>

HOW TO BUY SHARES
All the Strong Funds are 100% NO-LOAD, meaning you may purchase, redeem or
exchange shares directly at net asset value without paying a sales charge.
Because each Fund's net asset value changes daily, your purchase price will be
the next net asset value determined after the Fund receives and accepts your
purchase order.
Whether you are opening a new account or adding to an existing one, the Fund
provides you with several methods to buy its shares.

29
<PAGE>

TO OPEN A NEW ACCOUNT

<TABLE>
<CAPTION>
<S> <C>
MAIL BY CHECK
Complete and sign the application. Make your check or money order payable
to "Strong Funds."
Mail to Strong Funds, P.O. Box 2936, Milwaukee, Wisconsin 53201. If
you're using an express delivery service, send to Strong Funds, 900 Heritage
Reserve, Menomonee Falls, Wisconsin 53051.
BY EXCHANGE
Call 1-800-368-3863 for instructions on establishing an account with an
exchange by mail.
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
TELEPHONE BY EXCHANGE
Call 1-800-368-3863 to establish a new account by exchanging funds from
1-800-368-3863 an existing Strong Funds account.
24 HOURS A DAY, Sign up for telephone exchange services when you open your account. To
7 DAYS A WEEK add the telephone exchange option to your account, call 1-800-368-3863 for
a Shareholder Account Options Form.
Please note that your accounts must be identically registered and that you
must exchange enough into the new account to meet the minimum initial
investment.
Or use STRONG DIRECTSM, Strong Funds' automated telephone response system.
Call 1-800-368-7550.
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
IN PERSON Stop by our Investor Center in Menomonee Falls, Wisconsin. Call 1-800
368-3863 for hours and directions.
The Investor Center can only accept checks or money orders.
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
WIRE Call 1-800-368-3863 for instructions on opening an account by wire.
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
AUTOMATICALLY USE STRONG'S "NO-MINIMUM INVESTMENT PROGRAM."
If you sign up for Strong's Automatic Investment Plan when you open your
account and contribute monthly, Strong Funds will waive the Fund's
minimum initial investment (see chart on page II-4).
Complete the Automatic Investment Plan section on the account application.
Mail to the address indicated on the application.
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
BROKER-DEALER You may purchase shares in the Fund through a broker-dealer or other
institution that may charge a transaction fee.
Strong Funds may only accept requests to purchase shares into a broker
dealer street name account from the broker-dealer.
</TABLE>

30
<PAGE>

TO ADD TO AN EXISTING ACCOUNT

BY CHECK
- - Complete an Additional Investment Form provided at the bottom of your account
statement, or write a note indicating your fund account number and
registration. Make your check or money order payable to "Strong Funds."
- - Mail to Strong Funds, P.O. Box 2936, Milwaukee, Wisconsin 53201. If you're
using an express delivery service, send to Strong Funds, 900 Heritage
Reserve, Menomonee Falls, Wisconsin 53051.
BY EXCHANGE
- - Call 1-800-368-3863 for instructions on exchanging by mail.

BY EXCHANGE
- - Add to an account by exchanging funds from another Strong Funds account.
- - Sign up for telephone exchange services when you open your account. To add
the telephone exchange option to your account, call 1-800-368-3863 for a
Shareholder Account Options Form.
- - Please note that the accounts must be identically registered and that the
minimum exchange is $50 or the balance of your account, whichever is less.
BY TELEPHONE PURCHASE
- - Sign up for telephone purchase when you open your account to make additional
investments from $50 to $25,000 into your Strong Funds account by telephone.
To add this option to your account, call 1-800-368-3863 for a Shareholder
Account Options Form.
Or use STRONG DIRECT SM, Strong Funds' automated telephone response system.
Call 1-800-368-7550.

- - Stop by our Investor Center in Menomonee Falls, Wisconsin. Call
1-800-368-3863 for hours and directions.
- - The Investor Center can only accept checks or money orders.

Call 1-800-368-3863 for instructions on adding to an account by wire.

USE ONE OF STRONG'S AUTOMATIC INVESTMENT PROGRAMS. Sign up for these services
when you open your account, or call 1-800-368-3863 for instructions on how to
add them to your existing account.
- - AUTOMATIC INVESTMENT PLAN. Make regular, systematic investments (minimum $50)
into your Strong Funds account from your bank checking or NOW account.
Complete the Automatic Investment Plan section on the account application.
- - AUTOMATIC EXCHANGE PLAN. Make regular, systematic exchanges (minimum $50)
from one eligible Strong Funds account to another. Call 1-800-368-3863 for an
application.
- - PAYROLL DIRECT DEPOSIT. Have a specified amount (minimum $50) regularly
deducted from your paycheck, social security check, military allotment, or
annuity payment invested directly into your Strong Funds account. Call
1-800-368-3863 for an application.
- - AUTOMATIC DIVIDEND REINVESTMENT. Unless you choose otherwise, all your
dividends and capital gain distributions will be automatically reinvested in
additional Fund shares. Or, you may elect to have your dividends and capital
gain distributions automatically invested in shares of another Strong Fund.

- - You may purchase additional shares in a Fund through a broker-dealer or other
institution that may charge a transaction fee.
- - Strong Funds may only accept requests to purchase shares into a broker-dealer
street name account from the broker-dealer.

31
<PAGE>

WHAT YOU SHOULD KNOW ABOUT BUYING SHARES
- - Please make all checks or money orders payable to "Strong Funds."
- - We cannot accept third-party checks or checks drawn on banks outside the U.S.
- - You will be charged a $20 service fee for each check, wire, or Electronic
Funds Transfer ("EFT") purchase that is returned unpaid, and you will be
responsible for any resulting losses suffered by a Fund.
- - Further documentation may be requested from corporations, executors,
administrators, trustees, guardians, agents, or attorneys-in-fact.
- - A Fund reserves the right to decline to accept your purchase order upon
receipt for any reason.
- - Minimum Investment Requirements:

<TABLE>
<CAPTION>
<S> <C>
To open a regular account
Asset Allocation Fund $250
American Utilities, Equity Income, Growth and Income,
Blue Chip 100, Limited Resources, and Total Return Funds $2,500

To open a regular IRA, Roth IRA, or one-person SEP account $250

To open an Education IRA account $500*

To open an UGMA/UTMA account $250

To open a SIMPLE, SEP-IRA, Keogh, Profit Sharing the lesser of $250
or Money Purchase Pension Plan, or 403(b) account or $25 per month

To open a qualified retirement plan account where the Advisor
or a financial intermediary provides administrative services No Minimum

To add to an existing account $50

</TABLE>

* Not eligible for the Automatic Investment Plan and No-Minimum Investment
Program.
The Funds offer a No-Minimum Investment Program that waives the minimum initial
investment requirements for investors who participate in the Strong Automatic
Investment Plan and invest monthly (described on page II-11). Unless you
participate in the Strong No-Minimum Investment Program, please ensure that
your purchases meet the minimum investment requirements.
Under certain circumstances (for example, if you discontinue a No-Minimum
Investment Program before you reach a Fund's minimum initial investment), each
Fund reserves the right to close your account. Before taking such action, a
Fund will provide you with written notice and at least 60 days in which to
reinstate an investment program or otherwise reach the minimum initial
investment required.
DETERMINING YOUR SHARE PRICE
Generally, when you make any purchases, sales, or exchanges, the price of your
shares will be the net asset value ("NAV") next determined after Strong Funds
receives your request in proper form. If Strong Funds receives such request
prior to the close of the New York Stock Exchange (the "Exchange") on a day on
which the Exchange is open, your share price will be the NAV determined that
day. The NAV for each Fund is normally determined as of 3:00 p.m. Central Time
("CT") each day the Exchange is open. The Funds reserve the right to change the
time at which purchases, redemptions, and exchanges are priced if the Exchange
closes at a time other than 3:00 p.m. CT or if an emergency exists. Each
Fund's NAV is calculated by taking the fair value of a Fund's total assets,
subtracting all its liabilities, and dividing by the total number of shares
outstanding. Expenses are accrued and applied daily when determining the NAV.
32
<PAGE>

A Fund's portfolio securities are valued based on market quotations or at fair
value as determined by the method selected by each Fund's Board of Directors.
Equity securities traded on a national securities exchange or NASDAQ are valued
at the last sales price on the national securities exchange or NASDAQ on which
such securities are primarily traded. Securities traded on NASDAQ for which
there were no transactions on a given day or securities not listed on an
exchange or NASDAQ are valued at the average of the most recent bid and asked
prices. Other exchange traded securities (generally foreign securities) will be
valued based on market quotations. Debt securities are valued by a pricing
service that utilizes electronic data processing techniques to determine values
for normal institutional-sized trading units of debt securities without regard
to sale or bid prices when such techniques are believed to more accurately
reflect the fair market value for such securities. Otherwise, sale or bid
prices are used. Any securities or other assets for which market quotations are
not readily available are valued at fair value as determined in good faith by
the Board of Directors. Debt securities having remaining maturities of 60 days
or less are valued by the amortized cost method when the Board of Directors
determines that the fair value of such securities is their amortized cost.
Under this method of valuation, a security is initially valued at its
acquisition cost, and thereafter, amortization of any discount or premium is
assumed each day, regardless of the impact of the fluctuating rates on the
market value of the instrument.
Securities quoted in foreign currency are valued daily in U.S. dollars at the
foreign currency exchange rates that are prevailing at the time the daily NAV
per share is determined. Although the Funds value their foreign assets in U.S.
dollars on a daily basis, they do not intend to convert their holdings of
foreign currencies into U.S. dollars on a daily basis. Foreign currency
exchange rates are generally determined prior to the close of trading on the
Exchange. Occasionally, events affecting the value of foreign investments and
such exchange rates occur between the time at which they are determined and the
close of trading on the Exchange. Such events would not normally be reflected
in a calculation of a Fund's NAV on that day. If events that materially affect
the value of a Fund's foreign investments or the foreign currency exchange
rates occur during such period, the investments will be valued at their fair
value as determined in good faith by or under the direction of the Board of
Directors.
HOW TO SELL SHARES
You can access the money in your account at any time by selling (redeeming)
some or all of your shares back to the Fund. Once your redemption request is
received in proper form, Strong will normally mail you the proceeds the next
business day and, in any event, no later than seven days thereafter.
To redeem shares, you may use any of the methods described in the following
chart. However, if you are selling shares in a retirement account, please call
1-800-368-3863 for instructions. Please note that there is a $10.00 fee for
closing an IRA or other retirement account or for transferring assets to
another custodian. For your protection, certain requests may require a
signature guarantee. (See "Special Situations - Signature Guarantees.")

33
<PAGE>

TO SELL SHARES

- ---------------------------

MAIL
FOR INDIVIDUAL, JOINT TENANT, AND UGMA/UTMA ACCOUNTS
FOR YOUR PROTECTION CERTAIN Write a "letter of instruction" that includes the following information:
REDEMPTION REQUESTS MAY your account number, the dollar amount or number of shares you wish
REQUIRE A SIGNATURE to redeem, each owner's name, your street address, and the signature of
GUARANTEE. SEE "SPECIAL each owner as it appears on the account.
SITUATIONS - SIGNATURE Mail to Strong Funds, P.O. Box 2936, Milwaukee, Wisconsin 53201. If
GUARANTEES." you're using an express delivery service, send to 900 Heritage Reserve,
Menomonee Falls, Wisconsin 53051.
FOR TRUST ACCOUNTS
Same as above. Please ensure that all trustees sign the letter of
instruction.
FOR OTHER REGISTRATIONS
Call 1-800-368-3863 for instructions.
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
TELEPHONE Sign up for telephone redemption services when you open your account.
1-800-368-3863 To add the telephone redemption option to your account, call 1-800-368
24 HOURS A DAY, 3863 for a Shareholder Account Options Form.
7 DAYS A WEEK Once the telephone redemption option is in place, you may sell shares by
phone and arrange to receive the proceeds in one of three ways:
TO RECEIVE A CHECK BY MAIL
At no charge, we will mail a check to the address to which your account
is registered.
TO DEPOSIT BY EFT
At no charge, we will transmit the proceeds by Electronic Funds
Transfer (EFT) to a pre-authorized bank account. Usually, the funds will
arrive at your bank two banking days after we process your redemption.
TO DEPOSIT BY WIRE
For a $10 fee, we will transmit the proceeds by wire to a pre-authorized
bank account. Usually, the funds will arrive at your bank the next
banking day after we process your redemption.
You may also use STRONG DIRECTSM, Strong Funds' automated telephone
response system. Call 1-800-368-7550.
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
AUTOMATICALLY You can set up automatic withdrawals from your account at regular
intervals. To establish the Systematic Withdrawal Plan, request a form by
calling 1-800-368-3863.
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
BROKER-DEALER You may also redeem shares through broker-dealers or financial
intermediaries who may charge a transaction fee.
</TABLE>

34
<PAGE>

WHAT YOU SHOULD KNOW ABOUT SELLING SHARES
- - If you have recently purchased shares, please be aware that your redemption
request may not be honored until the purchase check or electronic transaction
has cleared your bank, which generally occurs within ten calendar days.
- - You will be charged a $10 service fee for a stop-payment and replacement of a
redemption or dividend check.
- - The right of redemption may be suspended during any period in which (i)
trading on the Exchange is restricted, as determined by the SEC, or the
Exchange is closed for other than weekends and holidays; (ii) the SEC has
permitted such suspension by order; or (iii) an emergency as determined by
the SEC exists, making disposal of portfolio securities or valuation of net
assets of a Fund not reasonably practicable.
- - If you are selling shares you hold in certificate form, you must submit the
certificates with your redemption request. Each registered owner must endorse
the certificates and all signatures must be guaranteed.
- - Further documentation may be requested from corporations, executors,
administrators, trustees, guardians, agents, or attorneys-in-fact.
REDEMPTIONS IN KIND
If the Advisor determines that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in securities
or other financial assets, valued for this purpose as they are valued in
computing the NAV for a Fund's shares. Shareholders receiving securities or
other financial assets on redemption may realize a gain or loss for tax
purposes, and will incur any costs of sale, as well as the associated
inconveniences.
WHAT YOU SHOULD KNOW ABOUT TELEPHONE REDEMPTIONS
- - The Funds reserve the right to refuse a telephone redemption if they believe
it advisable to do so.
- - Once you place your telephone redemption request, it cannot be canceled or
modified.
- - Investors will bear the risk of loss from fraudulent or unauthorized
instructions received over the telephone provided that the Funds reasonably
believe that such instructions are genuine. The Funds and their transfer
agent employ reasonable procedures to confirm that instructions communicated
by telephone are genuine. The Funds may incur liability if they do not follow
these procedures.
- - Because of increased telephone volume, you may experience difficulty in
implementing a telephone redemption during periods of dramatic economic or
market changes. In these situations, investors may want to consider using
STRONGDIRECTSM, our automated telephone system, to effect such a transaction
by calling 1-800-368-7550.
SHAREHOLDER SERVICES
INFORMATION SERVICES
24-HOUR ASSISTANCE. Strong Funds has registered representatives available to
help you 24 hours a day, 7 days a week. Call 1-414-359-1400 or toll-free
1-800-368-3863. You may also write to Strong Funds at the address on the cover
of this Prospectus, or e-mail us at [email protected].
STRONG DIRECTSM AUTOMATED TELEPHONE SYSTEM. Also available 24 hours a day, the
STRONG DIRECTSM automated response system enables you to use a touch-tone phone
to hear fund quotes and returns on any Strong Fund. You may also confirm
account balances, hear records of recent transactions and dividend activity
(1-800-368-5550), and perform purchases, exchanges or redemptions among your
existing Strong accounts (1-800-368-7550). You may also perform an exchange to
open a new Strong account provided that your account has the telephone exchange
option. Please note that your accounts must be identically registered and you
must exchange enough into the new account to meet the minimum initial
investment. Your account information is protected by a personal code.
STRONG NETDIRECTSM. Available 24 hours a day from your personal computer,
STRONG NETDIRECTSM allows you to use the Internet to access your Strong Funds
account information. You may access specific

35
<PAGE>

account history, view current account balances, obtain recent dividend
activity, and perform purchases, exchanges, or redemptions among your existing
Strong accounts.
To register for netDirect, please visit our web site at
http://www.strong-funds.com. Your account information is protected by a
personal password and Internet encryption technology. For more information on
this service, please call 1-800-359-3379 or e-mail us at
[email protected].
STATEMENTS AND REPORTS. At a minimum, each Fund will confirm all transactions
for your account on a quarterly basis. We recommend that you file each
quarterly statement - and, especially, each calendar year-end statement - with
your other important financial papers, since you may need to refer to them at a
later date for tax purposes. Should you need additional copies of previous
statements, you may order confirmation statements for the current and preceding
year at no charge. Statements for earlier years are available for $10 each.
Call 1-800-368-3863 to order past statements.
Each year, you will also receive a statement confirming the tax status of any
distributions paid to you, as well as an annual report containing audited
financial statements and a semi-annual report.
To reduce the volume of mail you receive, only one copy of certain materials,
such as prospectuses and shareholder reports, is mailed to your household. Call
1-800-368-3863 if you wish to receive additional copies, free of charge.
More complete information regarding each Fund's investment policies and
services is contained in its SAI, which you may request by calling or writing
Strong Funds at the phone number and address on the cover of this Prospectus.
CHANGING YOUR ACCOUNT INFORMATION. So that you continue receiving your Strong
correspondence, including any dividend checks and statements, please notify us
in writing as soon as possible or call us at 1-800-368-3863 if your address
changes. You may use the Additional Investment Form at the bottom of your
confirmation statement, or simply write us a letter of instruction that
contains the following information:
1. a written request to change the address,
2. the account number(s) for which the address is to be changed,
3. the new address, and
4. the signatures of all owners of the accounts.
Please send your request to the address on the cover of this Prospectus.
Changes to an account's registration - such as adding or removing a joint
owner, changing an owner's name, or changing the type of your account - must
also be submitted in writing. Please call 1-800-368-3863 for instructions. For
your protection, some requests may require a signature guarantee.
TRANSACTION SERVICES
EXCHANGE PRIVILEGE. You may exchange shares between identically registered
Strong Funds accounts, either in writing, by telephone, or through your
personal computer. By establishing exchange services, you authorize the Fund
and its agents to act upon your instruction through the telephone or personal
computer to exchange shares from any account you specify. For tax purposes, an
exchange is considered a sale and a purchase of Fund shares. Please obtain and
read the appropriate prospectus before investing in any of the Strong Funds.
Since an excessive number of exchanges may be detrimental to the Funds, each
Fund reserves the right to discontinue the exchange privilege of any
shareholder at any time.
REGULAR INVESTMENT PLANS
Strong Funds' Automatic Investment Plan, Payroll Direct Deposit Plan, and
Automatic Exchange Plan, all discussed below, are methods of implementing
DOLLAR COST AVERAGING. Dollar cost averaging is an investment strategy that
involves investing a fixed amount of money at regular time intervals. By always
investing the same set amount, you will be purchasing more shares when the
price is low and fewer shares when the price is high. Ultimately, by using this
principle in conjunction with fluctuations in share price, your average cost
per share may be less than your average transaction price. A program of regular
investment cannot ensure a profit or protect against a loss during declining
markets. Since such a program

36
<PAGE>

involves continuous investment regardless of fluctuating share values, you
should consider your ability to continue the program through periods of both
low and high share-price levels.
AUTOMATIC INVESTMENT PLAN. The Automatic Investment Plan allows you to make
regular, systematic investments in a Fund from your bank checking, savings, or
NOW account. You may choose to make investments on any day of the month in
amounts of $50 or more. You can set up the Automatic Investment Plan with any
financial institution that is a member of the Automated Clearing House. Because
each Fund has the right to close an investor's account for failure to reach the
minimum initial investment, please consider your ability to continue this Plan
until you reach the minimum initial investment. To establish the Plan, complete
the Automatic Investment Plan section on the account application, or call
1-800-368-3863 for an application.
PAYROLL DIRECT DEPOSIT PLAN. Once you meet a Fund's minimum initial investment
requirement, you may purchase additional Fund shares through the Payroll Direct
Deposit Plan. Through this Plan, periodic investments (minimum $50) are made
automatically from your payroll check into your existing Fund account. By
enrolling in the Plan, you authorize your employer or its agents to deposit a
specified amount from your payroll check into the Fund's bank account. In most
cases, your Fund account will be credited the day after the amount is received
by the Fund's bank. In order to participate in the Plan, your employer must
have direct deposit capabilities through the Automated Clearing House available
to its employees. The Plan may be used for other direct deposits, such as
social security checks, military allotments, and annuity payments.
To establish Direct Deposit for your account, call 1-800-368-3863 to request a
form. Once the Plan is established, you may alter the amount of the deposit,
alter the frequency of the deposit, or terminate your participation in the
program by notifying your employer.
AUTOMATIC EXCHANGE PLAN. The Automatic Exchange Plan allows you to make
regular, systematic exchanges (minimum $50) from one Strong Funds account into
another Strong Funds account. By setting up the Plan, you authorize the Fund
and its agents to redeem a set dollar amount or number of shares from the first
account and purchase shares of a second Strong Fund. In addition, you authorize
a Fund and its agents to accept telephone instructions to change the dollar
amount and frequency of the exchange. An exchange transaction is a sale and
purchase of shares for federal income tax purposes and may result in a capital
gain or loss. To establish the Plan, request a form by calling 1-800-368-3863.
To participate in the Automatic Exchange Plan, you must have an initial account
balance of $2,500 in the first account and at least the minimum initial
investment in the second account. Exchanges may be made on any day or days of
your choice. If the amount remaining in the first account is less than the
exchange amount you requested, then the remaining amount will be exchanged. At
such time as the first account has a zero balance, your participation in the
Plan will be terminated. You may also terminate the Plan at any time by calling
or writing to the Fund. Once participation in the Plan has been terminated for
any reason, to reinstate the Plan you must do so in writing; simply investing
additional funds will not reinstate the Plan.
SYSTEMATIC WITHDRAWAL PLAN. You can set up automatic withdrawals from your
account at regular intervals. To begin distributions, you must have an initial
balance of $5,000 in your account and withdraw at least $50 per payment. To
establish the Systematic Withdrawal Plan, request a form by calling
1-800-368-3863. Depending upon the size of the account and the withdrawals
requested (and fluctuations in net asset value of the shares redeemed),
redemptions for the purpose of satisfying such withdrawals may reduce or even
exhaust the account. If the amount remaining in the account is not sufficient
to meet a Plan payment, the remaining amount will be redeemed and the Plan will
be terminated.
RETIREMENT PLAN SERVICES
We offer a wide variety of retirement plans for individuals and institutions,
including large and small businesses. For information on IRAs, including Roth
IRAs, or SEP-IRAs for a one-person business, call 1-800-368-3863. If you are
interested in opening a 401(k) or other company-sponsored retirement plan
(SIMPLE, SEP, Keogh, 403(b)(7), pension or profit sharing), call 1-800-368-2882
and a Strong Retirement Plan Specialist will help you determine which
retirement plan would be best for your company. Complete

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instructions about how to establish and maintain your plan and how to open
accounts for you and your employees will be included in the retirement plan kit
you receive in the mail.
SPECIAL SITUATIONS
POWER OF ATTORNEY. If you are investing as attorney-in-fact for another person,
please complete the account application in the name of such person and sign the
back of the application in the following form: "[applicant's name] by [your
name], attorney-in-fact." To avoid having to file an affidavit prior to each
transaction, please complete the Power of Attorney form available from Strong
Funds at 1-800-368-3863. However, if you would like to use your own power of
attorney form, please call the same number for instructions.
CORPORATIONS AND TRUSTS. If you are investing for a corporation, please include
with your account application a certified copy of your corporate resolution
indicating which officers are authorized to act on behalf of the corporation.
As an alternative, you may complete a Certification of Authorized Individuals,
which can be obtained from the Funds. Until a valid corporate resolution or
Certification of Authorized Individuals is received by the Fund, services such
as telephone and wire redemption will not be established.
If you are investing as a trustee (including trustees of a retirement plan),
please include the date of the trust. All trustees must sign the application.
If they do not, services such as telephone and wire redemption will not be
established. All trustees must sign redemption requests unless proper
documentation to the contrary is provided to the Fund. Failure to provide these
documents or signatures as required when you invest may result in delays in
processing redemption requests.
FINANCIAL INTERMEDIARIES. If you purchase or redeem shares of a Fund through a
financial intermediary, certain features of the Fund relating to such
transactions may not be available or may be modified. In addition, certain
operational policies of a Fund, including those related to settlement and
dividend accrual, may vary from those applicable to direct shareholders of the
Fund and may vary among intermediaries. We urge you to consult your financial
intermediary for more information regarding these matters. In addition, a Fund
may pay, directly or indirectly through arrangements with the Advisor, amounts
to financial intermediaries that provide transfer agent type and/or other
administrative services to their customers provided, however, that the Fund
will not pay more for these services through intermediary relationships than it
would if the intermediaries' customers were direct shareholders in the Fund.
Certain financial intermediaries may charge an advisory, transaction, or other
fee for their services. You will not be charged for such fees if your purchase
or redeem your Fund shares directly from a Fund without the intervention of a
financial intermediary.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect you and the
Fund against fraudulent transactions by unauthorized persons. In the following
instances, the Fund will require a signature guarantee for all authorized
owners of an account:
- - when you add the telephone redemption option to your existing account;
- - if you transfer the ownership of your account to another individual or
organization;
- - when you submit a written redemption request for more than $50,000;
- - when you request to redeem or redeposit shares that have been issued in
certificate form;
- - if you open an account and later decide that you want certificates;
- - when you request that redemption proceeds be sent to a different name or
address than is registered on your account;
- - if you add/change your name or add/remove an owner on your account; and
- - if you add/change the beneficiary on your transfer on death account.
A signature guarantee may be obtained from any eligible guarantor
institution, as defined by the SEC. These institutions include banks, savings
associations, credit unions, brokerage firms, and others. PLEASE NOTE THAT A
NOTARY PUBLIC STAMP OR SEAL IS NOT ACCEPTABLE.

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APPENDIX
RATINGS OF DEBT OBLIGATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
STANDARD & POOR'S MOODY'S INVESTOR DUFF & PHELPS THOMSON
DEFINITION RATINGS GROUP SERVICES FITCH IBCA, INC. RATING CO. BANKWATCH, INC.
- ------------------- ----------------- ---------------- ---------------- ------------- ---------------
Highest quality AAA Aaa AAA AAA AAA
High quality AA Aa AA AA AA
Upper medium grade A A A A A
Medium grade BBB Baa BBB BBB BBB
Low grade BB Ba BB BB BB
Speculative B B B B B
Submarginal CCC, CC, C Caa, Ca CCC, CC, C CCC CCC, CC
Probably in default D C DDD, DD, D DD D
</TABLE>

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APPENDIX
ASSET COMPOSITION
For the fiscal year ended October 31, 1997, the Asset Allocation Fund's assets
were invested in the credit categories shown below. Percentages are computed on
a dollar-weighted basis and are an average of twelve monthly calculations.
<TABLE>
<CAPTION>
Asset Allocation Fund
<S> <C><C> <C>

RATED ADVISOR'S ASSESSMENT OF
RATING SECURITIES* UNRATED SECURITIES
- ------------------- --------------------- -----------------------
AAA 14.5% 0%
AA 0.8 0
A 0.9 0
BBB 3.6 0
BB 3.9 0.3
B 8.1 1.0
CCC 0.1 1.2
CC 0 0
C 0 0
D 0 0
Total Debt Assets 31.9+ 2.5 = 34.4%
Total Equity Assets +65.6
100%
</TABLE>

* The indicated percentages are based on the highest rating received from
any one NRSRO. Each of the NRSROs utilizes rating categories that are
substantially similar to those used in this chart (see the preceding table for
the rating categories of the five NRSROs)

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