<PAGE> 1
THE STRONG GROWTH FUNDS
ANNUAL REPORT - DECEMBER 31, 1995
[Photo of family]
THE STRONG OPPORTUNITY FUND
THE STRONG GROWTH FUND
THE STRONG COMMON STOCK FUND
THE STRONG DISCOVERY FUND
[STRONG FUNDS LOGO]
STRONG FUNDS
<PAGE> 2
EIGHT BASIC PRINCIPLES FOR SUCCESSFUL MUTUAL FUND INVESTING
These common-sense rules are followed by many successful investors. They make
sense for beginners, too. If you have a question on these principles or would
like to discuss them with us, please contact us at 1-800-368-3863. We're here
24 hours a day, seven days a week to take your call.
- -------------------------------------1-----------------------------------------
[Graphic of Have a plan.
File Folder]
Even a simple plan can help you take control of your financial
future. Review your plan once a year, or if your circumstances
change.
- -------------------------------------2-----------------------------------------
[Graphic of Start investing as soon as possible.
Clock]
Make time a valuable ally. Let it put the power of compounding
to work for you, while helping to reduce your potential
investment risk.
- -------------------------------------3-----------------------------------------
[Graphic of Diversify your portfolio.
Pie Chart]
By investing in different asset classes-stocks, bonds, and cash
-you help protect against poor performance in one type of
investment while including investments most likely to help you
achieve your important goals.
- -------------------------------------4-----------------------------------------
[Graphic of Invest regularly.
Notepad]
Investing is a process, not a one-time event. By investing
regularly over the long term, you reduce the impact of short-
term market gyrations, and you attend to your long-term plan
before you're tempted to spend those assets on short-term needs.
- -------------------------------------5-----------------------------------------
[Graphic of Maintain a long-term perspective.
Line Chart]
For most individuals, the best discipline is staying invested as
market conditions change. Reactive, emotional investment
decisions are all too often a source of regret-and of principal
loss.
- -------------------------------------6-----------------------------------------
[Graphic of Consider stocks to help achieve major long-term goals.
Pie Chart]
Over time, stocks have provided the more powerful returns needed
to help the value of your investments stay well ahead of
inflation.
- -------------------------------------7-----------------------------------------
[Graphic of Keep a comfortable amount of cash in your portfolio.
Dollar Sign]
To meet current needs, including emergencies, use a money market
fund or a bank account-not your long-term investment assets.
- -------------------------------------8-----------------------------------------
[Graphic of Know what you're buying.
Magnifying
Glass] Make sure you understand the potential risks and rewards
associated with each of your investments. Ask questions...
request information... make up your own mind. And choose a
fund company that helps you make informed investment decisions.
<PAGE> 3
THE STRONG GROWTH FUNDS
ANNUAL REPORT - DECEMBER 31, 1995
TABLE OF CONTENTS
INVESTMENT REVIEWS
The Strong Opportunity Fund............................ 2
The Strong Growth Fund................................. 4
The Strong Common Stock Fund........................... 6
The Strong Discovery Fund.............................. 8
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong Opportunity Fund......................10
The Strong Growth Fund...........................12
The Strong Common Stock Fund.....................14
The Strong Discovery Fund........................16
Statements of Operations...............................19
Statements of Assets and Liabilities...................20
Statements of Changes in Net Assets....................21
Notes to Financial Statements..........................22
FINANCIAL HIGHLIGHTS........................................25
REPORT OF INDEPENDENT ACCOUNTANTS...........................27
<PAGE> 4
THE STRONG OPPORTUNITY FUND
- ---------------------------
In pursuit of capital growth, the Strong Opportunity Fund invests at least 70%
of its total assets in equity securities. It currently emphasizes medium-sized
companies that the Fund's advisor believes are under-researched and
attractively valued.
NEAR-PERFECT ENVIRONMENT FOR STOCKS
Low interest rates, combined with moderate inflation and healthy corporate
earnings provided a near-perfect environment for U.S. common stocks in 1995,
and contributed to the stock market rally that ran practically unabated through
year end. Technology and financial stocks led this momentum-driven market,
aided by large inflows into equity mutual funds.
PUBLISHING BROADCASTING TECHNOLOGY
Large companies, up 37.58% through year end as measured by the S&P 500, saw the
biggest gains as investors favored traditional large-cap stocks through much of
the year. Though mid-cap stocks slightly lagged their larger counterparts, they
also posted significant gains, as reflected by the S&P MidCap 400's 30.94%
total return for the same period.*
The Fund had good exposure to some of the best performing sectors this
year-especially publishing, broadcasting, and technology-and had a total return
of 27.27% for the year.
A DISCIPLINED APPROACH TO INVESTING
Our investing style remained consistent through the year-we do not believe in
chasing market momentum. Rather, we continue to evaluate existing and
prospective holdings by analyzing their "private value." That simply means we
evaluate companies as if we were private buyers-determining how much we would
be willing to pay to own the entire company. In doing so, we have a
disciplined way to view the company's inherent value and impartially evaluate
potential winners and losers.
We look at underfollowed stocks-those with low institutional ownership and low
analyst coverage-because we believe they tend to be undervalued by the market.
We take a close look at unpopular, or "quiet," sectors because we think that,
in a market increasingly dominated by institutions, unpopular sectors can yield
superior returns for those willing to look beyond this year's favorites.
The Fund's top performers this year included Paging Network, Inc., a provider
of paging services in the U.S., and Sun Microsystems, Inc., a computer hardware
manufacturer.
Asset Allocation
as of 12-31-95
[Pie Chart]
<TABLE>
<S> <C>
SHORT-TERM INVESTMENTS 12.9%
COMMON STOCKS 86.7%
CONVERTIBLE CORPORATE BONDS 0.4%
</TABLE>
The Fund's asset allocation is presented as a percentage of net assets. Please
see the Schedule of Investments in Securities for a complete listing of the
Fund's portfolio.
This year, a number of companies in the Fund received takeover bids very close
to our private market value. In the publishing and broad-casting sector alone
we held shares in two companies that received takeover bids. Both companies,
Capital Cities/ABC, Inc. and CBS, Inc., obtained bids within several dollars of
our private market valuations. The Capital Cities/ABC takeover is awaiting a
vote by shareholders in January, and the CBS takeover is complete.
2
<PAGE> 5
Five Largest Holdings
as of 12-31-95
<TABLE>
- --------------------------------------------------------
<S> <C> <C>
PAGING NETWORK, INC. TELECOMMUNICATION 1.4%
SERVICE
- --------------------------------------------------------
WHITMAN CORPORATION DIVERSIFIED OPERATIONS 1.4%
- --------------------------------------------------------
VIGORO CORPORATION CHEMICAL 1.4%
- --------------------------------------------------------
ENRON OIL & GAS COMPANY OIL-NORTH AMERICAN 1.4%
EXPLORATION & PRODUCTION
- --------------------------------------------------------
TELEDYNE, INC. DIVERSIFIED OPERATIONS 1.3%
- --------------------------------------------------------
</TABLE>
CYCLE MAY REWARD MID-CAP STOCKS
We believe the stage now may be set for a longer-term cycle during which
mid-cap stocks have the potential to outperform large-cap issues. Given this
year's rally in large caps, we find mid-cap issues very attractive, based on
their relative value and expected earnings growth.
We are, however, somewhat cautious going into the new year, and are not totally
convinced that the much talked-about "soft landing" has occurred. Even with the
Fed's bias toward easing credit, the economy is sluggish, and it remains
unclear whether this slowdown will evolve into a recession. The market has
already basically discounted for slow growth but, if growth is slower than
anticipated, the stock market could react negatively.
Looking ahead, we will continue to place emphasis on underfollowed, growing
firms selling at significant discounts from their private market values. This
attention to discipline and value should help to protect the Fund from sharp
declines if the market turns down-while providing the potential for upside
appreciation in the meantime.
Thank you for your continued confidence,
/S/ Richard T. Weiss
Richard T. Weiss
Portfolio Manager
/S/ Marina T. Carlson
Marina T. Carlson
Portfolio Manager
[Photo of Richard T. Weiss and Marina T. Carlson]
Growth of an Assumed $10,000 Investment
from 12/31/85 to 12/31/95
[Line Chart]
<TABLE>
<CAPTION>
The Strong S&P MidCap S&P 500
Opportunity Fund 400 Stock Index Stock Index
<S> <C> <C> <C>
12/85 $10,000 $10,000 $10,000
12/86 $15,990 $11,621 $11,866
12/87 $17,894 $11,383 $12,490
12/88 $20,841 $13,761 $14,564
12/89 $24,694 $18,649 $19,179
12/90 $21,903 $17,693 $18,583
12/91 $28,845 $26,556 $24,245
12/92 $33,851 $29,720 $26,091
12/93 $41,022 $33,866 $28,721
12/94 $42,325 $32,652 $29,101
12/95 $53,868 $42,756 $40,036
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURNS
THROUGH 12-31-95
<S> <C>
1-YEAR 27.27%
3-YEAR 16.75%
5-YEAR 19.72%
10-YEAR 18.34%
</TABLE>
THIS GRAPH, PROVIDED IN ACCORDANCE WITH SEC REGULATIONS, COMPARES A
$10,000 INVESTMENT IN THE FUND, MADE AT ITS INCEPTION, WITH SIMILAR INVESTMENTS
IN THE STANDARD & POOR'S 500 STOCK INDEX ("S&P 500") AND THE STANDARD & POOR'S
MIDCAP 400 STOCK INDEX ("S&P 400"). RESULTS INCLUDE THE REINVESTMENT OF ALL
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. THE S&P 500 IS AN UNMANAGED INDEX
GENERALLY REPRESENTATIVE OF THE U.S. STOCK MARKET. THE S&P 400 IS AN UNMANAGED
INDEX GENERALLY REPRESENTATIVE OF THE MARKET FOR THE STOCKS OF MID-SIZED U.S.
COMPANIES. SOURCE FOR THE INDEX DATA IS MICROPAL. PERFORMANCE IS HISTORICAL AND
DOES NOT REPRESENT FUTURE RESULTS. INVESTMENT RETURNS AND PRINCIPAL VALUE VARY,
AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES.
*SOURCE OF INDEX DATA: MICROPAL.
3
<PAGE> 6
THE STRONG GROWTH FUND
- ----------------------
CUMULATIVE
TOTAL RETURNS(1)
SINCE INCEPTION (ON 12-31-93)
[Bar Graph]
<TABLE>
<S> <C>
STRONG GROWTH FUND 65.35%
S&P 500 INDEX(2) 39.40%
LIPPER GROWTH INDEX(3) 29.42%
</TABLE>
The Strong Growth Fund seeks capital growth. The Fund invests primarily in
equity securities that the Fund's advisor believes have above-average growth
prospects.
A GREAT YEAR FOR GROWTH STOCKS
1995 proved to be an exceptional year for U.S. common stocks, as declining
interest rates, moderate inflation, and a slow-growing economy provided a very
favorable environment. The Fund participated fully in the stock market rally
and provided investors with a total return of 41.00% for the year. These
results helped the Fund maintain its impressive lead over the market, as noted
in the chart on this page.
Through new money flows and price appreciation, the Fund grew from $106.0
million in assets as of December 31, 1994 to more than $642.8 million at year
end. A portion of this increase was due to the price appreciation of stocks in
the Fund; but, we also wish to thank financial planners and investors who
placed their confidence in us through new investments in the Fund this year.
FUND OVERVIEW
We search for the best growth stocks in the strongest industries, regardless of
their size. Our investors benefited in 1995 from the Fund's holdings in
multi-national growth stocks that have a proven ability to bring out new
products and find new markets. These larger-capitalization companies generally
outperformed smaller-cap stocks in 1995. However, many of the Fund's holdings
are in small- and medium-capitalization growth companies, which also performed
well--and the long-term outlook for these smaller stocks is very promising.
We continue to overweight the small and medium segments of the market because
their valuations relative to the prospective growth rates are generally more
attractive when compared to larger-capitalization stocks. We also expect small-
and medium-size stocks to outperform on a longer-term basis should there be a
reduction in the capital gains tax rate.
CAPITALIZING ON LONG-TERM TRENDS
Our emphasis on companies whose growth prospects were favorably enhanced by the
following secular trends contributed to the strong performance of the Fund. We
anticipate these themes will continue for at least the rest of the decade.
HEALTHCARE--THE GRAYING OF AMERICA AND COST CONTAINMENT. We view the aging of
America as a major catalyst for long-term trends in the U.S. economy. The
baby-boom generation--whose oldest members are now entering their fifties--will
require more healthcare-related products and services as they age. As
healthcare costs have escalated over the years, so has the demand for
medical products and service providers that can help contain this inflation
spiral.
SERVICES AND TECHNOLOGY TO ENHANCE PRODUCTIVITY. Corporate outsourcing of
various services is becoming more predominant in today's marketplace as
companies downsize and pare back their fixed costs in order to become more
efficient. We look for corporations around the world to continue improving
productivity through the use of new technology and specialized services. In
addition, the global boom in communications--from basic telephone service in
the emerging markets to the Internet in developed countries--should also provide
a catalyst for many companies engaged in these businesses.
CONSOLIDATING INDUSTRIES WITH MARKET-SHARE WINNERS. Many industries that are
highly fragmented are starting to become dominated by a few larger, more
efficient players. These industry consolidators typically have better
management, products, infrastructure, and financial resources that enable them
to make acquisitions and gain market share at the expense of weaker
competitors. Industries that meet these criteria include office equipment,
office supplies, temporary staffing, and financial services.
TRENDS FAVOR GROWTH
Looking forward to 1996, we anticipate moderate inflation, low interest rates,
and modest economic growth to continue. This should provide a favorable setting
for well-managed growth companies, since their earnings tend to be less
dependent on the strength of the
4
<PAGE> 7
ASSET ALLOCATION
AS OF 12-31-95
[Pie Chart]
<TABLE>
<S> <C>
SHORT-TERM INVESTMENTS 7.2%
COMMON & PREFERRED STOCK 92.6%
CONVERTIBLE CORPORATE BONDS 0.2%
</TABLE>
THE FUND'S ASSET ALLOCATION IS PRESENTED AS A PERCENTAGE OF NET ASSETS. PLEASE
SEE THE SCHEDULE OF INVESTMENTS IN SECURITIES FOR A COMPLETE LISTING OF THE
FUND'S PORTFOLIO.
overall economy. We believe most of the expansion in price-to-earnings ratios
is behind us and that companies will have to generate superior revenue and
earnings growth in order to generate superior price appreciation. Money
managers will need to do their homework to select the right stocks to get ahead
in this less dynamic market environment. We will continue to search for the new
growth leaders, and, as always, we will strictly adhere to our valuation
disciplines-buying stocks at significant discounts to their projected growth
rates, and selling when we believe valuations are excessive or we identify
better investment opportunities.
We appreciate your confidence, and we look forward to serving your investment
needs in the years to come.
Sincerely,
/S/ Ronald C. Ognar
Ronald C. Ognar
Portfolio Manager
[Photo of Ronald C. Ognar]
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 12/31/93 TO 12/31/95
[Line Chart]
<TABLE>
<CAPTION>
The Strong S&P 500
Growth Fund Stock Index
<S> <C> <C>
12/93 $10,000 $10,000
3/94 $10,880 $ 9,621
6/94 $10,636 $ 9,661
9/94 $11,454 $10,134
12/94 $11,727 $10,132
3/95 $12,555 $11,119
6/95 $13,989 $12,180
12/95 $16,535 $13,940
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURNS(1)
AS OF 12-31-95
<S> <C>
1-YEAR 41.00%
SINCE INCEPTION
(ON 12-31-93) 28.59%
</TABLE>
THIS GRAPH, PREPARED IN ACCORDANCE WITH SEC REGULATIONS, COMPARES A $10,000
INVESTMENT IN THE FUND, MADE AT ITS INCEPTION, WITH A SIMILAR INVESTMENT IN THE
STANDARD & POOR'S 500 STOCK INDEX ("S&P 500"), AN UNMANAGED INDEX GENERALLY
REPRESENTATIVE OF THE U.S. STOCK MARKET. RESULTS INCLUDE THE REINVESTMENT OF
ALL DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. SOURCE FOR THE INDEX DATA IS
MICROPAL. PERFORMANCE IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE VARY, AND YOU MAY HAVE A GAIN OR LOSS
WHEN YOU SELL SHARES.
(1) AVERAGE ANNUAL TOTAL RETURN AND TOTAL RETURN MEASURE CHANGE IN THE VALUE OF
AN INVESTMENT IN THE FUND, ASSUMING REINVESTMENT OF ALL DIVIDENDS AND
CAPITAL GAINS. AVERAGE ANNUAL TOTAL RETURN REFLECTS ANNUALIZED CHANGE,
WHILE TOTAL RETURN REFLECTS AGGREGATE CHANGE.
(2) THE STANDARD & POOR'S 500 STOCK INDEX ("S&P 500") IS AN UNMANAGED INDEX
GENERALLY REPRESENTATIVE OF THE U.S. STOCK MARKET. RESULTS INCLUDE THE
REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. SOURCE OF
INDEX DATA: MICROPAL.
(3) THE LIPPER GROWTH INDEX IS AN EQUALLY-WEIGHTED PERFORMANCE INDEX, ADJUSTED
FOR CAPITAL GAINS DISTRIBUTIONS AND INCOME DIVIDENDS, OF THE LARGEST
QUALIFYING FUNDS IN THIS INVESTMENT OBJECTIVE. SOURCE OF INDEX DATA:
LIPPER ANALYTICAL SERVICES, INC.
5
<PAGE> 8
THE STRONG COMMON STOCK FUND
The Strong Common Stock Fund seeks capital growth. The Fund invests at least
80% of its total assets in equity securities. It currently emphasizes small
companies that the Fund's advisor believes are under-researched and
attractively valued. The Fund remains closed to new investors, an action taken
in March 1993 to limit its asset growth and allow it to continue focusing on
small company stocks.(1)
[Photo of printed circuit board]
STOCKS HIT NEW HIGHS
The bull market of 1995 continued unabated through year end, as moderate
inflation, low interest rates, and healthy corporate earnings provided a
near-perfect environment for stocks. This momentum-driven market was fueled by
falling interest rates, booms in technology and financial stocks, and large
inflows into equity mutual funds, particularly from 401(k) plans.
Investors favored large-cap stocks through much of the year and, as a result,
big companies gained 37.58% for the year, as measured by the S&P 500.
Small-cap stocks also showed significant gains, but lagged larger stocks, as
reflected in the Russell 2000's 28.44% total return for the same period.(2)
FIVE LARGEST HOLDINGS
AS OF 12-31-95
<TABLE>
- --------------------------------------------------
<S> <C> <C>
CENTOCOR, INC. HEALTHCARE- 2.0%
BIOMEDICAL/GENETIC
- --------------------------------------------------
PANAMSAT CORPORATION TELECOMMUNICATION 1.6%
SERVICE
- --------------------------------------------------
TENET HEALTHCARE CORP. HEALTHCARE- 1.4%
PATIENT CARE
- --------------------------------------------------
TEMPEST REINSURANCE INSURANCE- 1.4%
COMPANY, LTD. DIVERSIFIED
- --------------------------------------------------
PAGING NETWORK, INC. TELECOMMUNICATION 1.4%
SERVICE
- --------------------------------------------------
</TABLE>
PLEASE SEE THE SCHEDULE OF INVESTMENTS IN SECURITIES FOR A COMPLETE
LISTING OF THE FUND'S PORTFOLIO.
The Fund had good exposure to some of the best performing sectors this
year-especially publishing, broadcasting, and technology-and had a total return
of 32.41% for the year.
PRIVATE-VALUE THEORY PROVES VALID
Our investing style remained consistent through the year-we do not believe in
chasing market momentum. Rather, we continued to evaluate existing and
prospective holdings by analyzing their "private value." That simply means we
evaluate companies as if we were private buyers, determining how much we'd be
willing to pay to own the entire company. In doing so, we have a disciplined
way to view the company's value and impartially evaluate potential winners and
losers.
We look at underfollowed stocks-those with low institutional ownership and low
analyst coverage-because we believe they tend to be undervalued by the market.
We take a close look at unpopular, or "quiet," sectors because we think that,
in a market increasingly dominated by institutions, unpopular sectors can yield
superior returns for those willing to look beyond this year's favorites.
Some of the Fund's top performers this year included Old Kent Financial
Corporation, a regional bank holding company, and Centocor, Inc., a
biotechnology company. Among the stocks we sold because we believed they had
become fully valued was Texas Instruments, Inc., which benefited from the boom
in technology stocks this year.
During 1995, a number of companies in the Fund received takeover bids very
close to our private market valuations. In the publishing and broadcasting
sector alone we held shares in three companies that received takeover bids. All
three, Capital Cities/ABC, Lin Broadcasting, and Turner Broadcasting, obtained
bids within several dollars of our private market value. The Lin Broadcasting
deal has been completed; while the Capital Cities/ABC takeover is awaiting a
vote by shareholders, and the Turner deal is waiting for government approval.
6
<PAGE> 9
[PIE CHART]
ASSET ALLOCATION
AS OF 12-13-95
<TABLE>
<S> <C>
Common Stocks 88.3%
Short-Term Investments 11.7%
</TABLE>
THE FUND'S ASSET ALLOCATION IS PRESENTED AS A PERCENTAGE OF NET ASSETS.
PLEASE SEE THE SCHEDULE OF INVESTMENTS IN SECURITIES FOR A COMPLETE LISTING
OF THE FUND'S PORTFOLIO.
SMALL-CAP STOCKS MAY BENEFIT FROM CYCLE
We believe small stocks are now very attractive based on their relative value
and expected earnings growth-especially given this year's rally in large-cap
stocks. We think 1996 will be a bottom-up stock-picker's market, and that the
stage may be set for a longer-term cycle during which small-cap stocks have the
potential to outperform large-cap issues.
However, we are somewhat cautious going into the new year, and are not totally
convinced the much talked-about "soft landing" has occurred. Even with the
Fed's bias toward easing credit, the economy is sluggish, and it remains
unclear if the slowdown will evolve into a recession. The market has already
basically discounted for slow growth but, if growth is slower than anticipated,
the stock market could react negatively.
Looking ahead, we will continue to emphasize underfollowed, growing firms
selling at significant discounts from their private market values. This
attention to discipline and value should help to protect the Fund from sharp
declines if the market turns down while providing the potential for upside
appreciation in the meantime.
Thank you for your continued confidence,
/S/ Richard T. Weiss
Richard T. Weiss
Portfolio Manager
/S/ Marina T. Carlson
Marina T. Carlson
Portfolio Manager
[Photo of Richard T. Weiss and Marina T. Carlson]
Growth of an Assumed $10,000 Investment
from 12/29/89 to 12/31/95
[Line Graph]]
<TABLE>
<CAPTION>
The Strong Common Russell 2000 S&P 500
Stock Fund Stock Index Stock Index
<S> <C> <C> <C>
12/89 $10,000 $10,000 $10,000
12/90 $10,100 $ 8,048 $ 9,690
12/91 $15,864 $11,754 $12,642
12/92 $19,161 $13,920 $13,604
12/93 $23,988 $16,551 $14,976
12/94 $23,872 $16,249 $15,174
6/95 $27,972 $18,592 $18,241
12/95 $31,609 $20,871 $20,875
<CAPTION>
Average Annual
Total Returns
Through 12-31-95
<S> <C>
1-YEAR 32.41%
3-YEAR 18.16%
5-YEAR 25.63%
SINCE INCEPTION
(ON 12-29-89) 21.14%
</TABLE>
THIS GRAPH, PROVIDED IN ACCORDANCE WITH SEC REGULATIONS, COMPARES A $10,000
INVESTMENT IN THE FUND, MADE AT ITS INCEPTION, WITH SIMILAR INVESTMENTS IN THE
STANDARD & POOR'S 500 STOCK INDEX ("S&P 500"), AN UNMANAGED INDEX GENERALLY
REPRESENTATIVE OF THE U.S. STOCK MARKET WITHOUT REGARD TO COMPANY SIZE, AND THE
RUSSELL 2000 INDEX ("RUSSELL 2000"), AN UNMANAGED INDEX GENERALLY
REPRESENTATIVE OF THE MARKET FOR SMALL DOMESTIC STOCKS. RESULTS INCLUDE THE
REINVESTMENT OF ALL DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. SOURCE FOR THE
INDEX DATA IS MICROPAL. PERFORMANCE IS HISTORICAL AND DOES NOT REPRESENT FUTURE
RESULTS. INVESTMENT RETURNS AND PRINCIPAL VALUE VARY, AND YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL SHARES.
(1) THE COMMON STOCK FUND IS CLOSED TO NEW INVESTORS, EXCEPT THE FUND WILL
CONTINUE TO OFFER ITS SHARES TO CURRENT INVESTORS AND THROUGH QUALIFIED
RETIREMENT PLANS FOR WHICH STRONG RETIREMENT SERVICES PROVIDES RECORD
KEEPING AND ADMINISTRATIVE SERVICES TO THE PLAN.
(2) SOURCE OF INDEX DATA: MICROPAL.
7
<PAGE> 10
[Photo of electronic components]
TOP TEN SECTORS
BASED ON NET ASSETS AS OF 12-31-95
<TABLE>
<S> <C> <C>
1. TECHNOLOGY 23.6%
- -----------------------------
2. FINANCIAL 14.8%
- -----------------------------
3. CONSUMER CYCLICAL 10.0%
- -----------------------------
4. HEALTH CARE 9.9%
- -----------------------------
5. CAPITAL EQUIPMENT 6.3%
- -----------------------------
6. RETAIL 3.7%
- -----------------------------
7. TRANSPORTATION 1.3%
- -----------------------------
8. CONSUMER STAPLE 1.0%
- -----------------------------
9. ENERGY 0.7%
- -----------------------------
10. BASIC MATERIAL 0.5%
</TABLE>
PLEASE SEE THE SCHEDULE OF INVESTMENTS IN SECURITIES FOR A COMPLETE LISTING OF
THE FUND'S PORTFOLIO.
THE STRONG DISCOVERY FUND
- -------------------------
As I begin my thirtieth year in this business, I appreciate more than ever what
it takes to survive-and to thrive-as a money manager. My experience has taught
me to be like a fox...to work with the pack without blindly following the
herd...to bide my time, always ready to pounce and take advantage of the
extraordinary opportunity when it presents itself.
I believe there are extraordinary opportunities out there right now for
incisive, agile money managers. A number of great, young growth companies-in
America and abroad-are poised to break away from their competition.
It is our goal to break away with them, using their strength and momentum to
create rewards for our shareholders.
Since its inception on December 31, 1987 through December 31, 1995 the Strong
Discovery Fund has provided investors with a cumulative total return of
298.45%, significantly outpacing the S&P 500 Stock Index's return of 220.56%
for the same time period. (1) Over the years, the Discovery Fund has also
outperformed the majority of its peers. Based on its since-inception total
return, the Fund was ranked #9 out of 71 capital appreciation funds tracked by
Lipper Analytical Services, Inc.(2)
MARKET SUMMARY
STOCKS. In 1995, two of the most influential factors that drive stock
prices-earnings and interest rates-came together to create a nearly perfect
environment for U.S. common stocks. The rally was a fairly steady one, with the
S&P hitting 88 new highs during the twelve months. Most small stocks, though
they lagged their larger brethren a bit, produced solid gains as well.
LONG BONDS. Moderate inflation and slow economic growth also helped fuel a
robust rally in long-term bonds. The benchmark 30-year Treasury bond's yield
dropped to 5.95% by December 31 from 7.88% a year ago.
SHORT BONDS. Interest rates fell at the short end of the market, too. Although,
thanks primarily to the Federal Reserve's moderated monetary policy, they
dropped less than long rates did. After raising rates in February, the central
bank lowered its federal funds rate twice, in July and in December. The easing,
however, totaled just 50 basis points (0.50%) for the year, leaving the yield
curve-the spread between short- and long-term rates-fairly flat.
Overall, 1995 was an excellent year for most investments, and we're proud to be
able to include the Strong Discovery Fund among that group. By balancing the
Fund's holdings among a mix of resurgent, blue-chip companies and smaller,
rapidly growing companies, we were able to create a total return of 34.83% for
the year.
STRATEGY REVIEW
STEADFAST COMMITMENT TO STOCKS. Throughout the year, we maintained a bullish
exposure to U.S. common stocks. Three key factors led us to hold our course:
1. two years of robust corporate-earnings growth,
2. the poor performance of the market in 1994, and
3. our view that interest rates would decline.
Our willingness to stick with a market that many believed was topping out
helped the Fund participate fully in the market's year-long rally.
SELECTED THEMES. As ever, our approach to managing the portfolio included
healthy measures of both bottom-up stock selection and theme-oriented research.
For example, with the help of our energetic staff of analysts, we were able to
take advantage of the year's strong surge in technology stocks.
In fact, a number of our holdings in this sector were among the portfolio's top
performers. Examples include McAfee Associates, a California firm that
specializes in computer-virus software, and CBT Group PLC ADR, which develops,
publishes, and markets software for networked and stand-alone personal
computers.
By year end, however, we had begun taking profits, reducing our technology
exposure significantly. As of December 31, technology issues accounted for
23.6% of the portfolio, down from a high of 50.8% in September.
8
<PAGE> 11
In addition to identifying sectors we believe show greater-than-average
opportunity, we also seek to identify areas of the market that may be headed
for trouble. The aging baby-boom generation, if it follows historical patterns,
should soon begin to consume less and save more. This is not good news for most
U.S. retailers. As a result, we have significantly under-weighted this sector
in the portfolio.
[PIE CHART]
ASSET ALLOCATION
<TABLE>
<S> <C>
Short-Term Investments 5.0%
Common & Preferred Stocks 73.6%
U.S. Government Bonds 21.4%
</TABLE>
THE FUND'S ASSET ALLOCATION IS PRESENTED AS A PERCENTAGE OF NET ASSETS AND DOES
NOT REFLECT ANY OPTIONS OR FUTURES POSITIONS HELD BY THE FUND. PLEASE SEE THE
SCHEDULE OF INVESTMENTS IN SECURITIES FOR A COMPLETE LISTING OF THE FUND'S
PORTFOLIO.
OPPORTUNISTIC USE OF BONDS. Late in the year, with the economy slowing and
interest rates heading down further, we moved a portion of the portfolio into
long-term bonds. As a result, we were able to lock in some attractive long-term
yields.
OUR OUTLOOK
Overall, our outlook for U.S. stocks remains favorable. All of the key
variables are pointed in the right direction: growth is moderate, inflation is
low, and we expect interest rates to ease further.
We all must keep in mind, however, that the market's huge run up in 1995 is a
lot for the system to digest. Unless the Fed is willing to take more aggressive
action to fuel the economy, the prospects for corporate earnings are, if not
dim, certainly diminished, especially when compared to last year.
Still, we wholeheartedly believe that there are terrific investment
opportunities out there for those investors who know where to look.
Thank you for choosing the Strong Discovery Fund to help meet your investment
needs.
Sincerely,
/S/ Richard S. Strong
Richard S. Strong
Portfolio Manager
[Photo of Richard S. Strong]
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 12/31/87 TO 12/31/95
[Line Chart]
<TABLE>
<CAPTION>
The Strong S&P 500
Discovery Fund Stock Index
<S> <C> <C>
12/87 $10,000 $10,000
12/88 $12,445 $11,661
12/89 $15,428 $15,356
12/90 $15,005 $14,879
12/91 $25,151 $19,412
12/92 $25,639 $20,891
12/93 $31,333 $22,996
12/94 $29,553 $23,300
6/95 $34,475 $28,010
12/95 $39,845 $32,056
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
THROUGH 12-31-95
<S> <C>
1-YEAR 34.83%
3-YEAR 15.83%
5-YEAR 21.57%
SINCE INCEPTION
(ON 12-31-87) 18.86%
</TABLE>
THIS GRAPH, PREPARED IN ACCORDANCE WITH SEC REGULATIONS, COMPARES A $10,000
INVESTMENT IN THE FUND, MADE AT ITS INCEPTION, WITH A SIMILAR INVESTMENT IN THE
STANDARD & POOR'S 500 STOCK INDEX ("S&P 500"), AN UNMANAGED INDEX GENERALLY
REPRESENTATIVE OF THE U.S. STOCK MARKET. RESULTS INCLUDE THE REINVESTMENT OF
ALL DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. SOURCE FOR THE INDEX DATA IS
MICROPAL. PERFORMANCE IS HISTORICAL AND DOES NOT REPRESENT FUTURE RESULTS.
INVESTMENT RETURNS AND PRINCIPAL VALUE VARY, AND YOU MAY HAVE A GAIN OR LOSS
WHEN YOU SELL SHARES.
(1) SOURCE OF INDEX DATA: MICROPAL.
(2) RANKINGS ARE HISTORICAL AND DO NOT REPRESENT FUTURE RESULTS. FOR THE 1-YEAR
AND 5-YEAR PERIODS, THE FUND WAS RANKED #60 OF 158 (TOP 38%) AND #13 OF 84
(TOP 16%), RESPECTIVELY, OF ALL CAPITAL APPRECIATION FUNDS TRACKED BY LIPPER
ANALYTICAL SERVICES, INC.
9
<PAGE> 12
SCHEDULES OF INVESTMENTS IN SECURITIES December 31, 1995
- -------------------------------------------------------------------------------
STRONG OPPORTUNITY FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (IN THOUSANDS)
- -----------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 86.7%
AIRLINE 2.1%
AMR Corporation (b) 209,300 $15,541
Air New Zealand, Ltd. Class B 1,830,000 6,214
Federal Express Corporation (b) 77,000 5,688
-------
27,443
AUTOMOBILE 0.0%
Mitsubishi Motors Corporation 67,000 545
BANK - MONEY CENTER 1.0%
HSBC Holdings PLC ADR 62,000 9,382
Mitsubishi Bank, Ltd. Japan 49,000 1,152
Mitsubishi Trust & Banking Corporation 63,000 1,048
Mitsui Trust & Banking Company, Ltd. 37,000 405
Sakura Bank, Ltd. 80,000 1,014
-------
13,001
BANK - REGIONAL 2.3%
Old Kent Financial Corporation 353,000 14,517
U.S. Bancorp 464,520 15,619
-------
30,136
BANK - SUPER REGIONAL 1.1%
Barnett Banks, Inc. 251,200 14,821
BEVERAGE - SOFT DRINK 0.2%
Coca-Cola Amatil, Ltd. 364,000 2,900
BROKERAGE & INVESTMENT MANAGEMENT 0.2%
Nomura Securities Company, Ltd. 145,000 3,157
CHEMICAL 2.4%
Rohm & Haas Company 202,500 13,036
Vigoro Corporation 295,400 18,241
-------
31,277
CLOSED-END FUND 0.2%
The Central European Growth Fund PLC 750,000 456
Five Arrows Chile Investment Trust, Ltd. (b) 170,000 457
Jardine Fleming Mutual Fund 1,469,000 479
NITC Fu Yuan Fund 1,347,000 506
Yuan Ta Duo Yuan Fund 1,430,000 529
-------
2,427
COMMERCIAL SERVICE 1.7%
Reuters Holdings PLC ADR 260,000 14,333
Rollins Truck Leasing Corporation 700,000 7,787
-------
22,120
COMPUTER PERIPHERAL EQUIPMENT 1.3%
Seagate Technology, Inc. (b) 355,000 16,863
COMPUTER - PERSONAL & WORKSTATION 1.1%
Sun Microsystems, Inc. (b) 330,000 15,056
COMPUTER SOFTWARE 1.3%
Adobe Systems, Inc. 174,800 10,838
Microsoft Corporation (b) 70,000 6,143
-------
16,981
COMPUTER SYSTEMS 1.1%
Policy Management Systems Corporation (b) 314,700 14,988
CONGLOMERATE 0.6%
Guinness Peat Group PLC 1,100,000 575
Keppel Corporation, Ltd. 235,000 2,094
Lonrho PLC 1,940,000 5,292
-------
7,961
DIVERSIFIED OPERATIONS 5.0%
Corning, Inc. 513,000 16,416
Teledyne, Inc. 697,200 17,866
Tyco International, Ltd. 392,200 13,972
Whitman Corporation 805,800 18,735
-------
66,989
ELECTRIC POWER 1.3%
NIPSCO Industries, Inc. 460,500 17,614
ELECTRONIC PARTS DISTRIBUTION 2.4%
Arrow Electronics, Inc. (b) 400,000 $17,250
Marshall Industries (b) 440,000 14,135
-------
31,385
ELECTRONIC PRODUCTS - MISCELLANEOUS 1.8%
AVX Corporation 194,000 5,141
Hubbell, Inc. Class B 210,000 13,808
Sony Corporation 70,000 4,193
-------
23,142
ELECTRONICS - SEMICONDUCTOR/
COMPONENT 2.9%
Dallas Semiconductor Corporation 580,000 12,035
LSI Logic Corporation (b) 255,000 8,351
National Semiconductor Corporation (b) 790,100 17,580
-------
37,966
ENGINEERING & CONSTRUCTION 0.1%
Ishikawajima Harima Heavy Industries
Company, Ltd. 126,000 530
Ohmoto Gumi Company, Ltd. 40,000 987
Walker Corporation 1,000,000 334
-------
1,851
FOOD 3.9%
CPC International, Inc. 222,500 15,269
Hershey Foods Corporation 249,800 16,237
Lion Nathan, Ltd. 2,000,000 4,767
Nestle SA Sponsored ADR 288,800 16,013
-------
52,286
HEALTHCARE - DRUG/DIVERSIFIED 3.9%
Mallinckrodt Group, Inc. 480,000 17,460
Pharmacia & Upjohn, Inc. (b) 445,100 17,248
Rhone Poulenc Rorer, Inc. 330,900 17,620
-------
52,328
HEALTHCARE - INSTRUMENTATION 1.2%
United States Surgical Corporation 710,000 15,176
HEALTHCARE - MEDICAL SUPPLY 2.4%
McKesson Corporation 297,000 15,036
Sybron International Corporation (b) 707,000 16,791
-------
31,827
HEALTHCARE - PATIENT CARE 1.7%
Apria Healthcare Group, Inc. (b) 521,700 14,738
Columbia/HCA Healthcare Corporation 143,000 7,257
-------
21,995
HOUSING RELATED 0.0%
Nichiha 28,000 634
INSURANCE - PROPERTY & CASUALTY 2.4%
ACE, Ltd. ADR 367,400 14,604
American International Group, Inc. 184,200 17,039
-------
31,643
LEISURE PRODUCT 1.2%
Eastman Kodak Company 238,300 15,966
LEISURE SERVICE 1.0%
Gaylord Entertainment Company 475,000 13,181
Sydney Aquarium, Ltd. 314,000 606
-------
13,787
MEDIA - PUBLISHING 2.6%
Matichon Public Company, Ltd. 45,000 266
The E.W. Scripps Company 430,000 16,931
U.S. West, Inc. Media Group (b) 933,500 17,737
-------
34,934
MEDIA - RADIO/TV 5.8%
Bell Cablemedia PLC ADR (b) 925,000 14,800
Capital Cities/ABC, Inc. 118,300 14,595
Comcast Corporation Class A 773,000 14,059
Cox Communications, Inc. Class A (b) 840,100 16,382
Tele-Communications, Inc. Class A (b) 894,800 17,784
-------
77,620
</TABLE>
See notes to financial statements.
10
<PAGE> 13
STRONG OPPORTUNITY FUND (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (IN THOUSANDS)
- -----------------------------------------------------------------------------------
<S> <C> <C>
METALS & MINING 1.4%
Freeport-McMoRan Copper & Gold, Inc. Class A 570,000 $15,960
Posgold, Ltd. 720,000 1,433
Tambang Timah PT GDR (b) 17,000 201
Tambang Timah PT GDR (Acquired 10/06/95;
Cost $306) (b) (d) 24,000 284
----------
17,878
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 4.5%
Apache Corporation 582,000 17,169
Barrett Resources Corporation (b) 286,000 8,401
Devon Energy Corporation 639,700 16,312
Enron Oil & Gas Company 747,000 17,928
----------
59,810
OIL - NORTH AMERICAN INTEGRATED 1.2%
Phillips Petroleum Company 460,000 15,697
OIL WELL EQUIPMENT & SERVICE 3.0%
Camco International, Inc. 542,500 15,190
Offshore Logistics, Inc. (b) 513,700 6,485
Petroleum Geo-Services A/S ADR (b) 704,000 17,600
----------
39,275
PAPER & FOREST PRODUCTS 0.4%
Fletcher Challenge, Ltd. Forestry Division 3,104,996 4,420
Fletcher Challenge, Ltd. Ordinary Division 577,000 1,330
----------
5,750
PRECIOUS METAL/GEM/STONE 2.7%
De Beers Consolidated Mines, Ltd. ADR 529,000 16,002
Newmont Mining Company 353,000 15,973
Western Deep Levels, Ltd. ADR 94,500 3,095
----------
35,070
REAL ESTATE 0.4%
Amoy Properties, Ltd. 3,800,000 3,784
Diamond City Company 8,000 62
Shortland Properties, Ltd. 724,500 407
TOC Company, Ltd. 92,000 917
----------
5,170
RETAIL - DEPARTMENT STORE 1.0%
May Department Stores Company 316,500 13,372
RETAIL - DISCOUNT & VARIETY 1.2%
Toys 'R' Us, Inc. (b) 753,500 16,389
RETAIL - FOOD CHAIN 3.6%
Albertson's, Inc. 450,000 14,794
FamilyMart 20,000 902
The Kroger Company (b) 465,000 17,438
The Stop & Shop Companies, Inc. (b) 654,900 15,145
----------
48,279
RETAIL - MAJOR CHAIN 1.0%
Dayton Hudson Corporation 184,000 13,800
RETAIL - SPECIALTY 2.6%
The Limited, Inc. 1,004,600 17,455
Ross Stores, Inc. 863,100 16,507
----------
33,962
SAVINGS & LOAN 0.5%
Washington Federal Savings & Loan Association 230,900 5,917
SHIPPING 0.0%
Cosco Investments, Ltd. 350,000 488
SHOE & APPAREL MANUFACTURING 1.0%
Simint SPA (b) 170,000 185
Warnaco Group, Inc. Class A 532,000 13,300
----------
13,485
STEEL 0.0%
Chubu Steel Plate Company, Ltd. (b) 48,000 $ 276
TELECOMMUNICATION SERVICE 5.2%
AirTouch Communications (b) 600,000 16,950
Hong Kong Telecommunications, Ltd. 115,000 2,041
MCI Communications Corporation 567,800 14,834
Paging Network, Inc. (b) 782,800 19,081
United States Cellular Corporation (b) 470,900 15,893
----------
68,799
TELEPHONE 0.8%
Telefonos de Mexico S.A. ADR Series L 340,000 10,837
----------
TOTAL COMMON STOCKS (COST $919,130) 1,151,073
CONVERTIBLE BONDS 0.4%
LSI Logic Corporation Convertible Subordinated
Notes, 5.50%, Due 3/15/01 (Acquired
3/16/94-7/06/94; Original Cost $2,194, Amortized
Cost $2,189) (d) $2,185 6,025
CASH EQUIVALENTS (A) 12.4%
COMMERCIAL PAPER 12.2%
DISCOUNTED 12.1%
CNA Financial Corporation
Due 1/04/96 39,500 39,487
Cole Taylor Finance Company
Due 1/05/96 2,300 2,299
Conagra, Inc.:
Due 1/04/96 20,100 20,093
Due 1/17/96 11,000 10,972
Fleet Mortgage Group, Inc.
Due 1/05/96 46,000 45,978
Potomac Capital Investment Corporation:
Due 1/05/96 15,750 15,742
Due 1/16/96 12,600 12,570
RJR Nabisco, Inc.:
Due 1/16/96 1,590 1,586
Due 1/18/96 12,500 12,466
----------
161,193
INTEREST BEARING, DUE UPON DEMAND 0.1%
American Family Financial, 5.49% 78 78
General Mills, Inc., 5.58% 120 120
Sara Lee Corporation, 5.47% 474 474
Wisconsin Electric Power Company, 5.53% 202 202
----------
874
----------
Total Commercial Paper 162,067
UNITED STATES GOVERNMENT ISSUES 0.2%
United States Treasury Bills:
Due 2/29/96 275 273
Due 3/07/96 1,500 1,487
Due 3/14/96 200 198
Due 5/02/96 450 442
Due 5/23/96 20 19
----------
2,419
----------
Total Cash Equivalents (Cost $164,484) 164,486
----------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,085,803) 99.5% 1,321,584
Other Assets and Liabilities, Net 0.5% 6,076
----------
NET ASSETS 100.0% $1,327,660
==========
</TABLE>
See notes to financial statements.
11
<PAGE> 14
SCHEDULES OF INVESTMENTS IN SECURITIES (CONTINUED) December 31, 1995
- -------------------------------------------------------------------------------
STRONG OPPORTUNITY FUND (Continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
VALUE IN UNREALIZED
SETTLEMENT USD APPRECIATION
DATE (IN THOUSANDS) (IN THOUSANDS)
- --------------------------------------------------------------------------------------
Sold:
<S> <C> <C> <C> <C>
1,672,427 Japanese Yen 5/07/96 $16,185 $600
<CAPTION>
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- -----------------------------------------------------------------------------
United States...................................................... 86.6%
United Kingdom..................................................... 2.7
Hong Kong.......................................................... 1.4
New Zealand........................................................ 1.3
Norway............................................................. 1.3
Japan.............................................................. 1.2
South Africa....................................................... 1.2
Switzerland........................................................ 1.2
Bermuda............................................................ 1.1
Mexico............................................................. 0.8
Australia.......................................................... 0.4
Singapore.......................................................... 0.2
Taiwan............................................................. 0.1
Other Assets.and.Liabilities,.Net.................................. 0.5
--------
Total..............................................................100.0%
========
<CAPTION>
- -------------------------------------------------------------------------------------
STRONG GROWTH FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (IN THOUSANDS)
- -------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 92.4%
AUTO & TRUCK PARTS 0.7%
Exide Corporation 100,000 $4,587
BANK - REGIONAL 1.9%
Fifth Third Bancorp 100,000 7,325
First Bank System, Inc. 100,000 4,962
------
12,287
COMMERCIAL SERVICE 5.1%
Accustaff, Inc. (b) 400,000 17,600
Checkpoint Systems, Inc. (b) 100,000 3,738
Corestaff, Inc.(b) 150,000 5,475
Data Broadcasting Corporation (b) 100,000 1,237
Robert Half International, Inc. (b) 75,000 3,141
TechForce Corporation (b) 150,000 1,312
------
32,503
COMPUTER PERIPHERAL EQUIPMENT 1.6%
C-Cube Microsystems, Inc. (b) 70,000 4,375
U.S. Robotics, Inc. (b) 70,000 6,143
------
10,518
COMPUTER - PERSONAL & WORKSTATION 2.7%
Compaq Computer Corporation (b) 50,000 2,400
Hewlett-Packard Company 65,000 5,444
Sun Microsystems, Inc. (b) 200,000 9,125
------
16,969
COMPUTER SERVICE 0.5%
National Data Corporation 125,000 3,094
COMPUTER SOFTWARE 10.1%
Ascend Communications, Inc. (b) 120,000 9,735
CBT Group PLC ADR (b) 170,000 9,010
Cabletron Systems, Inc. (b) 40,000 3,240
Cisco Systems, Inc. (b) 75,000 5,597
Diamond Multimedia Systems, Inc. (b) 75,000 2,690
Epic Design Technology, Inc. (b) 75,000 1,575
HNC Software, Inc. 80,000 $3,820
Informix Corporation (b) 60,000 1,800
Madge Networks N.V. (b) 120,000 5,370
McAfee Associates, Inc. (b) 165,000 7,239
Microsoft Corporation (b) 40,000 3,510
SAP AG ADS (Acquired 5/23/95; Cost $1,461) (d) 40,000 2,025
3Com Corporation (b) 150,000 6,994
Transaction Systems Architects, Inc. (b) 65,000 2,194
------
64,799
COMPUTER SYSTEMS 0.7%
Oracle Systems Corporation (b) 100,000 4,238
COSMETIC & PERSONAL CARE 0.8%
General Nutrition Companies, Inc. (b) 100,000 2,300
The Gillette Company 50,000 2,606
------
4,906
DIVERSIFIED OPERATION 1.4%
Alco Standard Corporation 195,000 8,897
ELECTRONIC - SEMICONDUCTOR/
COMPONENT 1.0%
Uniphase Corporation (b) 180,000 6,435
FINANCE - MISCELLANEOUS 1.2%
First Data Corporation 115,000 7,691
HEALTHCARE - BIOMEDICAL/GENETIC 3.4%
Biogen, Inc. (b) 80,000 4,920
Cephalon, Inc. (b) 125,000 5,094
Gilead Sciences, Inc. (b) 255,000 8,160
Molecular Devices Corporation (b) 125,000 1,312
Neuromedical Systems, Inc. (b) 100,000 2,013
------
21,499
HEALTHCARE - DRUG/DIVERSIFIED 7.6%
Biovail Corporation International (b) 99,999 7,725
Eli Lilly and Company 80,000 4,500
Johnson & Johnson (b) 110,000 9,419
Merck & Company, Inc. 130,000 8,548
Pfizer, Inc. 145,000 9,135
Pharmacia & Upjohn, Inc. (b) 150,000 5,812
Teva Pharmaceutical Industries, Ltd. ADR 75,000 3,478
------
48,617
HEALTHCARE - INSTRUMENTATION 3.8%
IDEXX Laboratories, Inc. (b) 110,000 5,170
Medtronic, Inc. 125,000 6,984
Norland Medical Systems, Inc. (b) 200,000 4,650
Stryker Corporation 150,000 7,875
------
24,679
HEALTHCARE - MEDICAL SUPPLY 1.2%
Physician Sales & Service, Inc. (b) 132,200 3,768
Quest Medical, Inc. (b) 400,000 4,150
------
7,918
HEALTHCARE - PATIENT CARE 3.5%
Healthsource, Inc. (b) 100,000 3,600
Healthsouth Corporation (b) 300,000 8,738
PhyCor, Inc. (b) 75,000 3,792
United Healthcare Corporation 100,000 6,550
------
22,680
HEALTHCARE - PRODUCT 4.2%
Boston Scientific Corporation (b) 200,000 9,800
Corvita Corporation (b) 250,000 2,594
Guidant Corporation 200,000 8,450
Parexel International Corporation (b) 185,000 6,151
------
26,995
INSURANCE - MULTI-LINE 1.3%
MGIC Investment Corporation 150,000 8,137
</TABLE>
See notes to financial statements.
12
<PAGE> 15
STRONG GROWTH FUND (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (IN THOUSANDS)
- -----------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE - PROPERTY & CASUALTY 1.4%
American International Group, Inc. 60,000 $5,550
Vesta Insurance Group, Inc. 60,000 3,270
------
8,820
LEISURE SERVICE 3.3%
The Walt Disney Company 50,000 2,950
HFS, Inc. (b) 140,000 11,445
Regal Cinemas, Inc. (b) 150,000 4,462
Studio Plus Hotels, Inc. (b) 100,000 2,575
------
21,432
MACHINERY - MISCELLANEOUS 0.4%
PRI Automation, Inc. (b) 80,000 2,810
MORTGAGE & RELATED SERVICE 0.6%
Green Tree Financial Corporation 150,000 3,956
OFFICE AUTOMATION 2.3%
Danka Business Systems PLC ADR 400,000 14,800
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 2.2%
Barrett Resources Corporation (b) 200,000 5,875
Chesapeake Energy Corporation (b) 75,000 2,494
Gulf Canada Resources, Ltd. (b) 950,000 3,917
Gulf Canada Resources, Ltd. ADR (b) 495,000 2,042
------
14,328
OIL WELL EQUIPMENT & SERVICE 2.8%
Camco International, Inc. 120,000 3,360
Nabors Industries, Inc. (b) 150,000 1,669
Pride Petroleum Services, Inc. (b) 125,000 1,328
Schlumberger, Ltd. 50,000 3,462
Smith International, Inc. (b) 200,000 4,700
Sonat Offshore Drilling, Inc. 75,000 3,356
------
17,875
PAPER & FOREST PRODUCTS 1.0%
Kimberly-Clark Corporation 80,000 6,620
RAILROAD 0.4%
Wisconsin Central Transportation Corporation (b) 40,000 2,630
RETAIL - DEPARTMENT STORE 0.4%
Kohl's Corporation (b) 50,000 2,625
RETAIL - DISCOUNT & VARIETY 0.3%
Dollar Tree Stores, Inc. (b) 75,000 1,856
RETAIL - RESTAURANT 2.2%
Boston Chicken, Inc. (b) 125,000 4,015
Papa John's International, Inc. (b) 100,000 4,119
Starbucks Corporation (b) 300,000 6,300
------
14,434
RETAIL - SPECIALTY 12.1%
AutoZone, Inc. (b) 75,000 2,166
BT Office Products International, Inc. (b) 350,000 5,600
CUC International, Inc. 175,000 5,971
The Circle K Corporation (b) 275,000 6,978
Corporate Express, Inc. (b) 365,000 10,996
Discount Auto Parts, Inc. (b) 190,000 5,914
Fastenal Company 100,000 4,225
The Home Depot, Inc. 140,000 6,703
Just For Feet, Inc. 235,000 8,401
The Mens Wearhouse, Inc. (b) 170,000 4,378
Staples, Inc. (b) 225,000 5,484
Viking Office Products, Inc. (b) 200,000 9,300
Zale Corporation (b) 100,000 1,612
------
77,728
SAVINGS & LOAN 0.6%
TCF Financial Corporation 110,000 3,644
SHOE & APPAREL MANUFACTURING 4.6%
Donnkenny, Inc. (b) 335,000 $6,072
Tommy Hilfiger Corporation (b) 75,000 3,178
Nautica Enterprises, Inc. (b) 230,000 10,063
NIKE, Inc. Class B 90,000 6,266
St. John Knits, Inc. 80,000 4,250
------
29,829
TELECOMMUNICATION EQUIPMENT 3.4%
ADC Telecommunications, Inc. (b) 110,000 4,015
Picturetel Corporation (b) 75,000 3,234
StrataCom, Inc. (b) 135,000 9,923
Tellabs, Inc. (b) 100,000 3,700
VTEL Corporation (b) 60,500 1,119
------
21,991
TELEPHONE 0.8%
Cincinnati Bell, Inc. 150,000 5,213
TOBACCO 0.9%
Philip Morris Companies, Inc. 65,000 5,883
--------
TOTAL COMMON STOCKS (COST $465,418) 593,923
CONVERTIBLE PREFERRED STOCK 0.2%
Crystal Dynamics, Inc. Series D
(Acquired 7/07/95; Cost $1,000) (d) 133,334 1,000
CONVERTIBLE BONDS 0.2%
Danka Business Systems PLC Convertible
Subordinated Notes, 6.75%, Due 4/01/02 $ 500 701
First Financial Management Corporation
Convertible Bonds 5.00%, Due 12/15/99 500 781
--------
TOTAL CONVERTIBLE BONDS (COST $1,016) 1,482
CASH EQUIVALENTS (A) 6.8%
COMMERCIAL PAPER
DISCOUNTED 6.7%
Conagra, Inc.
Due 1/03/96 30,000 29,995
RJR Nabisco, Inc.:
Due 1/04/96 10,000 9,997
Due 1/18/96 3,000 2,992
--------
42,984
INTEREST BEARING, DUE UPON DEMAND 0.1%
Sara Lee Corporation, 5.47% 336 336
Southwestern Bell Telephone Company, 5.72% 33 33
Warner Lambert Company, 5.46% 400 400
--------
769
--------
Total Cash Equivalents (Cost $43,753) 43,753
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $511,187) 99.6% 640,158
Other Assets and Liabilities, Net 0.4% 2,664
--------
NET ASSETS 100.0% $642,822
========
</TABLE>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE IN UNREALIZED
SETTLEMENT USD APPRECIATION
DATE (IN THOUSANDS) (IN THOUSANDS)
- ------------------------------------------------------------------------------------------
SOLD:
<S> <C> <C> <C> <C>
3,013,333 German Mark 5/09/96 $2,112 $2
</TABLE>
See notes to financial statements.
13
<PAGE> 16
SCHEDULES OF INVESTMENTS IN SECURITIES (CONTINUED) December 31, 1995
- -------------------------------------------------------------------------------
STRONG GROWTH FUND (CONTINUED)
- -------------------------------------------------------------------------------
OPTIONS
<TABLE>
<CAPTION>
PREMIUMS
NUMBER (IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at Beginning of Period -- $--
Options written during the period 1,000 132
Options closed and expired (1,000) ($132)
-------- --------
Options outstanding at End of Period -- --
======== ========
</TABLE>
Closed and expired options resulted in a capital gain (in thousands) of $7.
TRANSACTIONS WITH AFFILIATED COMPANIES
<TABLE>
<CAPTION>
REALIZED DIVIDEND MARKET
AFFILIATE LOSS INCOME VALUE
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Norland Medical Systems, Inc. $- $-- $4,650
ON Technology Corporation 514 -- --
Quest Medical, Inc. 16 -- 4,150
<CAPTION>
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- ---------------------------------------------------------------------
<S> <C>
United States........................................... 93.2%
United Kingdom.......................................... 2.4
Ireland................................................. 1.4
Canada.................................................. 0.9
Netherlands............................................. 0.8
Israel.................................................. 0.6
Germany................................................. 0.3
Other Assets and Liabilities, Net....................... 0.4
-----
Total 100.0%
=====
</TABLE>
- --------------------------------------------------------------------------------
STRONG COMMON STOCK FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (IN THOUSANDS)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 88.3%
AIRLINE 0.1%
Cathay Pacific Airways, Ltd. 767,000 $1,171
AUTO & TRUCK PARTS 1.3%
Borg-Warner Automotive, Inc. 425,000 13,600
BANK - MONEY CENTER 1.0%
HSBC Holdings PLC ADR 49,800 7,536
Mitsubishi Bank, Ltd. Japan 46,000 1,081
Mitsui Trust & Banking Company, Ltd. 131,000 1,432
Sakura Bank, Ltd. 62,000 786
-------
10,835
BANK - REGIONAL 1.1%
Old Kent Financial Corporation 285,000 11,720
BANK - SUPER REGIONAL 2.2%
Bank of Boston Corporation 255,000 11,794
Boatmen's Bancshares, Inc. 280,000 11,445
-------
23,239
BEVERAGE - ALCOHOLIC 1.2%
Canandaigua Wine Company, Inc. (b) 390,000 12,724
BROKERAGE & INVESTMENT MANAGEMENT 1.3%
Apartment Investment and Management Company 650,000 12,675
Nomura Securities Company, Ltd. 75,000 1,633
-------
14,308
CHEMICAL - SPECIALTY 0.1%
Yizheng Chemical Fibre Company, Ltd. 6,400,000 1,440
CLOSED-END FUND 0.4%
Jardine Fleming Fund 1,224,000 $ 399
NITC Fu Yuan Fund 1,121,000 421
ROC Taiwan Fund (b) 280,000 2,940
Yuan Ta Duo Yuan Fund 1,193,000 442
-------
4,202
COMMERCIAL SERVICE 3.4%
ADT, Ltd. (b) 784,200 11,763
Ecolab, Inc. 388,000 11,640
Rollins Truck Leasing Corporation 1,100,000 12,237
-------
35,640
COMPUTER - PERIPHERAL EQUIPMENT 2.5%
Alliance Semiconductor Corporation 380,000 4,417
Quantum Corporation (b) 680,000 10,965
Seagate Technology, Inc. (b) 235,000 11,163
-------
26,545
COMPUTER PERSONAL & WORKSTATION 1.0%
Data General Corporation (b) 810,000 11,138
COMPUTER SOFTWARE 1.2%
Autodesk, Inc. 385,000 13,186
ELECTRONIC PARTS DISTRIBUTION 1.1%
Marshall Industries (b) 370,000 11,886
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.8%
Nichols Research Corporation (b) 240,000 6,180
Sony Corporation 42,000 2,515
-------
8,695
ELECTRONICS - SEMICONDUCTOR/
COMPONENTS 3.3%
Cirrus Logic, Inc. (b) 400,000 7,900
Ibiden Company, Ltd. 124,000 1,000
Intel Corporation 215,000 12,201
Littelfuse, Inc. (b) 78,200 2,874
VLSI Technology, Inc. (b) 620,000 11,238
-------
35,213
ENGINEERING & CONSTRUCTION 0.1%
Ishikawajima Harima Heavy Industries
Company, Ltd. 151,000 635
Ohmoto Gumi Company, Ltd. 35,000 864
-------
1,499
FINANCE - MISCELLANEOUS 0.2%
Lend Lease Corporation, Ltd. 153,000 2,215
FOOD 2.7%
Dole Food Company, Inc. 310,000 10,850
Lion Nathan, Ltd. 1,850,000 4,409
Nabisco Holdings Corporation 413,000 13,474
-------
28,733
HEALTHCARE - BIOMEDICAL/GENETIC 2.0%
Centocor, Inc. (b) 700,000 21,613
HEALTHCARE - DRUG/DIVERSIFIED 1.3%
Astra AB A Shares 345,000 13,779
HEALTHCARE - INSTRUMENTATION 1.4%
Beckman Instruments, Inc. 410,000 14,504
HEALTHCARE - MEDICAL SUPPLY 2.1%
Invacare Corporation 350,000 8,837
Sybron International Corporation (b) 562,600 13,362
-------
22,199
HEALTHCARE - PATIENT CARE 1.4%
Tenet Healthcare Corporation (b) 730,000 15,148
HEALTHCARE - PRODUCT 1.2%
Allergan, Inc. 408,000 13,260
HOUSEHOLD APPLIANCES & FURNISHINGS 0.9%
Libbey, Inc. 441,400 9,932
</TABLE>
See notes to financial statements.
14
<PAGE> 17
- --------------------------------------------------------------------------------
STRONG COMMON STOCK FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (IN THOUSANDS)
- -----------------------------------------------------------------------------------
<S> <C> <C>
HOUSING RELATED 0.1%
Nichiha 34,000 $770
INSURANCE - DIVERSIFIED 1.4%
Tempest Reinsurance Company, Ltd.
(Acquired 9/15/93; Cost $11,500) (b) (d) 115,000 14,667
INSURANCE - MULTI-LINE 1.2%
Horace Mann Educators Corporation 410,000 12,813
INSURANCE - PROPERTY & CASUALTY 0.1%
Partners RE Holdings, Ltd. ADR 30,400 836
LEISURE PRODUCT 1.2%
Hasbro, Inc. 400,000 12,400
LEISURE SERVICE 0.2%
AAPC, Ltd. 3,200,000 1,734
MEDIA - RADIO/TV 9.6%
Bell Cablemedia PLC ADR (b) 750,000 12,000
A.H. Belo Corporation Series A 350,000 12,162
Capital Cities/ABC, Inc. 94,000 11,597
Cox Communications, Inc. Class A (b) 650,000 12,675
International Family Entertainment, Inc. Class B (b) 400,000 6,550
LIN Television Corporation (b) 377,500 11,231
Tele-Communications, Inc. Class A (b) 675,000 13,416
Tele-Communications International, Inc. Class A (b) 580,000 13,195
Turner Broadcasting System, Inc. Class B 352,201 9,157
-------
101,983
NATURAL GAS DISTRIBUTION 0.8%
Enron Global Power & Pipelines L.L.C. 322,400 8,020
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 6.7%
Apache Corporation 446,500 13,172
Devon Energy Corporation 536,300 13,675
Enron Oil & Gas Company 485,000 11,640
H S Resources, Inc. (b) 698,400 8,992
Noble Affiliates, Inc. 421,000 12,577
Union Texas Petroleum Holdings, Inc. 570,000 11,044
-------
71,100
OIL - NORTH AMERICAN INTEGRATED 1.1%
Phillips Petroleum Company 336,000 11,466
OIL WELL EQUIPMENT & SERVICE 2.0%
ENSCO International, Inc. (b) 534,000 12,282
Offshore Logistics, Inc. (b) 684,800 8,646
-------
20,928
PAPER & FOREST PRODUCT 0.3%
Carter Holt Harvey, Ltd. 1,400,000 3,017
PRECIOUS METAL/GEM/STONE 3.4%
Battle Mountain Gold Company 1,265,000 10,594
De Beers Consolidated Mines, Ltd. ADR 420,000 12,705
Newmont Mining Company 275,000 12,444
-------
35,743
RAILROAD 1.1%
Wisconsin Central Transportation Corporation (b) 180,000 11,835
REAL ESTATE 0.5%
Castle & Cooke, Inc. (b) 103,333 1,731
Hysan Development Company, Ltd. 1,011,000 2,674
TOC Company, Ltd. 116,000 1,156
-------
5,561
RETAIL - DEPARTMENT STORE 1.2%
Dillard Department Stores, Inc. Class A 445,000 12,683
RETAIL - FOOD CHAIN 3.5%
American Stores Company 385,000 10,299
FamilyMart 6,000 270
The Kroger Company (b) 365,000 13,688
The Vons Companies, Inc. (b) 438,000 12,373
-------
36,630
RETAIL - RESTAURANT 2.2%
IHOP Corporation (b) 454,500 $11,817
Sbarro, Inc. 525,000 11,288
-------
23,105
RETAIL - SPECIALTY 3.7%
AnnTaylor Stores Corporation (b) 635,000 6,509
Best Denki Company, Ltd. 43,000 636
The Gap, Inc. 248,000 10,416
Musicland Stores Corporation (b) 1,096,400 4,660
Nordstrom, Inc. 273,700 11,085
Software Spectrum, Inc. (b) 281,000 6,041
-------
39,347
SAVINGS & LOAN 2.2%
H.F. Ahmanson & Company 431,000 11,421
Washington Federal Savings & Loan Association 475,000 12,172
-------
23,593
SHIPPING 0.2%
Jurong Shipyards, Ltd. 243,000 1,873
SHOE & APPAREL MANUFACTURING 1.1%
Unifi, Inc. 511,000 11,306
STEEL 0.1%
Chubu Steel Plate Company, Ltd. (b) 117,000 674
TELECOMMUNICATION EQUIPMENT 1.2%
Belden, Inc. 476,000 12,257
TELECOMMUNICATION SERVICE 7.9%
AirTouch Communications (b) 460,000 12,995
Hong Kong Telecommunications, Ltd. 90,000 1,598
International CableTel, Inc. (b) 520,000 12,740
Nextel Communications, Inc. Class A (b) 717,900 10,589
Paging Network, Inc. (b) 600,000 14,625
PanAmSat Corporation (b) 770,000 16,988
Telecom Corporation of New Zealand, Ltd. 600,000 2,586
United States Cellular Corporation (b) 360,000 12,150
-------
84,271
-------
TOTAL COMMON STOCKS (COST $784,578) 937,036
CASH EQUIVALENTS(A) 10.7%
COMMERCIAL PAPER 10.6%
DISCOUNTED 10.5%
CNA Financial Corporation
Due 1/04/96 $4,370 4,369
Cole Taylor Finance Company:
Due 1/05/96 3,000 2,999
Due 1/17/96 7,750 7,730
Conagra, Inc.:
Due 1/03/96 11,800 11,798
Due 1/17/96 6,400 6,384
FMC Corporation:
Due 1/02/96 7,530 7,530
Due 1/03/96 15,000 14,998
General Signal Corporation (Acquired 12/04/95;
Cost $10,613) (d)
Due 1/23/96 10,700 10,664
Potomac Capital Investment Corporation
Due 1/23/96 4,100 4,085
RJR Nabisco, Inc.:
Due 1/05/96 21,000 20,989
Due 1/16/96 7,330 7,313
Salomon, Inc.
Due 1/05/96 12,600 12,593
-------
111,452
INTEREST BEARING, DUE UPON DEMAND 0.1%
General Mills, Inc., 5.58% 21 21
Pitney Bowes Credit Corporation, 5.49% 12 12
Sara Lee Corporation, 5.47% 712 712
Southwestern Bell Telephone Company, 5.72% 166 166
</TABLE>
See notes to financial statements.
15
<PAGE> 18
SCHEDULES OF INVESTMENTS IN SECURITIES (CONTINUED) December 31, 1995
- -------------------------------------------------------------------------------
STRONG COMMON STOCK FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (IN THOUSANDS)
- -----------------------------------------------------------------------------------
<S> <C> <C>
Warner Lambert Company, 5.46% $285 $ 285
Wisconsin Electric Power Company, 5.53% 227 227
----------
1,423
----------
Total Commercial Paper 112,875
UNITED STATES GOVERNMENT ISSUES 0.1%
United States Treasury Bills:
Due 2/29/96 585 580
Due 3/07/96 530 525
----------
1,105
----------
Total Cash Equivalents (Cost $113,979) 113,980
TOTAL INVESTMENTS IN SECURITIES
(COST $898,557) 99.0% 1,051,016
Other Assets and Liabilities, Net 1.0% 9,994
----------
Net Assets 100.0% $1,061,010
==========
</TABLE>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
VALUE IN UNREALIZED
SETTLEMENT USD APPRECIATION
DATE (IN THOUSANDS) (IN THOUSANDS)
- -----------------------------------------------------------------------------------------------------
Sold:
<S> <C> <C> <C> <C> <C>
1,337,223 Japanese Yen 5/07/96 $12,941 $548
</TABLE>
OPTIONS
<TABLE>
<CAPTION>
PREMIUMS
NUMBER (IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at Beginning of Period -- $ --
Options written during the period 2,800 2,579
Options closed (2,800) (2,579)
--------- ----------
Options outstanding at End of Period -- $ --
========= =========
</TABLE>
Closed options resulted in a capital loss (in thousands) of $420.
TRANSACTIONS WITH AFFILIATED COMPANIES
<TABLE>
<CAPTION>
REALIZED DIVIDEND MARKET
AFFILIATE LOSS INCOME VALUE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Apartment Investment
and Management
Company $ - $971 $12,675
H S Resources, Inc. 145 - 8,992
Software Spectrum 230 - 6,041
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- -------------------------------------------------------------------------------
<S> <C>
United States.................................................... 89.4%
Bermuda.......................................................... 1.5
Japan............................................................ 1.3
Sweden........................................................... 1.3
Hong Kong........................................................ 1.2
South Africa..................................................... 1.2
United Kingdom................................................... 1.1
New Zealand...................................................... 0.9
Australia........................................................ 0.4
Taiwan........................................................... 0.4
Singapore........................................................ 0.2
China............................................................ 0.1
Other Assets and Liabilities, Net................................ 1.0
-----
Total 100.0%
=====
</TABLE>
STRONG DISCOVERY FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 72.3%
AUTO & TRUCK PARTS 1.3%
Bandag, Inc. Class A 8,000 $ 424
Exide Corporation 75,400 3,459
Thompson PBE, Inc. (b) 267,250 3,742
Transpro, Inc. 10,000 106
-------
7,731
AUTOMOBILE 1.0%
Chrysler Corporation 111,011 6,147
BANK - MONEY CENTER 7.7%
Bank of Tokyo, Ltd. 144,000 2,522
Bank of Tokyo, Ltd. ADR 3,600 632
Citicorp 57,300 3,853
Dai-Ichi Kangyo Bank, Ltd. Japan 142,000 2,789
Dai-Ichi Kangyo Bank, Ltd. Japan ADR 7,900 1,555
Fuji Bank, Ltd. 115,000 2,537
Fuji Bank, Ltd. ADR 2,900 641
HSBC Holdings PLC ADR 18,000 2,724
Long-Term Credit Bank of Japan 233,000 1,984
Mitsubishi Bank, Ltd. Japan 333,000 7,830
Mitsubishi Bank, Ltd. Japan ADR 65,200 1,589
Mitsubishi Trust & Banking Corporation 133,000 2,213
Mitsubishi Trust & Banking Corporation ADR 3,800 634
Mitsui Trust & Banking Company, Ltd. 356,000 3,892
Sakura Bank, Ltd. 294,000 3,727
Sakura Bank, Ltd. ADR 13,000 1,651
Sumitomo Trust & Banking, Ltd. 205,000 2,896
Yasuda Trust & Banking, Ltd. 336,000 1,986
Yasuda Trust & Banking, Ltd. ADR 13,000 770
-------
46,425
BEVERAGE - ALCOHOLIC 1.0%
Canandaigua Wine Company, Inc. (b) 130,100 4,245
MSC Industrial Direct Company Class A (b) 64,200 1,765
-------
6,010
BROKERAGE & INVESTMENT MANAGEMENT 4.3%
CWM Mortgage Holdings, Inc. 195,600 3,325
Daiwa Securities Company, Ltd. 230,000 3,516
Daiwa Securities Company, Ltd. ADR 4,200 643
Kankaku Securities Company (b) 232,000 988
New Japan Securities, Ltd. (b) 52,000 335
New Japan Securities, Ltd. ADR (b) 11,000 710
Nikko Securities Company, Ltd. Japan 68,000 875
Nikko Securities Company, Ltd. Japan ADR (b) 13,200 1,702
Nomura Securities Company, Ltd. 326,000 7,097
Nomura Securities Company, Ltd. ADR 8,700 1,898
The Quick & Reilly Group, Inc. 122,400 2,509
Sanyo Securities, Ltd. (b) 81,000 339
Yamaichi Securities, Ltd. 106,000 824
Yamaichi Securities, Ltd. ADR 10,000 779
-------
25,540
CHEMICAL 0.1%
Monsanto Company 3,000 368
COMMERCIAL SERVICE 5.1%
Accustaff, Inc. (b) 295,500 13,002
Career Horizons Corporation (b) 53,100 1,792
Consolidated Graphics, Inc. (b) 94,000 2,444
Corestaff, Inc. (b) 15,700 573
Education Alternatives, Inc. (b) 113,400 510
HA-LO Industries, Inc. (b) 80,700 2,482
Paychex, Inc. 36,900 1,840
Sensormatic Electronics Corporation 442,700 7,692
-------
30,335
COMPUTER PERIPHERAL EQUIPMENT 0.7%
Dialogic Corporation (b) 27,600 1,063
Digi International, Inc. 5,000 95
</TABLE>
See notes to financial statements.
16
<PAGE> 19
- --------------------------------------------------------------------------------
STRONG DISCOVERY FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Seagate Technology, Inc. (b) 11,600 $ 551
VideoServer, Inc. (b) 81,000 2,551
-------
4,260
COMPUTER - PERSONAL & WORKSTATION 0.3%
Sun Microsystems, Inc. 34,100 1,556
COMPUTER SERVICE 0.4%
America Online, Inc. (b) 59,150 2,218
COMPUTER SOFTWARE 10.2%
Access Health, Inc. (b) 57,900 2,562
Adobe Systems, Inc. 6,200 384
Avant! Corporation (b) 95,000 1,829
CBT Group PLC ADR (b) 116,800 6,190
Cheyenne Software, Inc. (b) 79,875 2,087
Cisco Systems, Inc. (b) 1,800 134
Computer Associates International, Inc. 175,000 9,953
Diamond Multimedia Systems, Inc. (b) 40,000 1,435
Enterprise Systems, Inc. (b) 29,800 909
FORE Systems, Inc. (b) 128,000 7,616
Informix Corporation (b) 40,000 1,200
McAfee Associates, Inc. (b) 102,150 4,482
NTT Data Communications Systems Company 280 9,401
NETCOM On-Line Communication Services, Inc. (b) 140,000 5,040
Netscape Communications Corporation 4,600 639
Network Equipment Technologies, Inc. (b) 60,350 1,652
Network General Corporation (b) 37,300 1,245
SQA, Inc. (b) 18,600 358
Spyglass, Inc. (b) 45,000 2,565
Sybase, Inc. (b) 21,300 767
3Com Corporation (b) 13,000 606
-------
61,054
COMPUTER SYSTEM 3.4%
System Software Associates, Inc. 942,563 20,501
CONGLOMERATE 0.6%
Marubeni Corporation 531,000 2,872
Marubeni Corporation ADR 11,100 602
-------
3,474
CONSUMER - MISCELLANEOUS 2.2%
The Loewen Group, Inc. 515,400 13,046
DIVERSIFIED OPERATION 0.1%
Jason, Inc. (Acquired 1/21/94; Cost $770) (b) (d) 87,500 501
ELECTRICAL EQUIPMENT 0.1%
Toshiba Corporation 111,000 869
ELECTRONIC PARTS DISTRIBUTION 1.3%
Kent Electronics Corporation 26,200 1,529
Marshall Industries 191,575 6,154
-------
7,683
ELECTRONIC PRODUCT - MISCELLANEOUS 0.4%
Mitsumi Electric Company, Ltd. 36,000 867
Rohm Company, Ltd. 26,000 1,467
-------
2,334
ELECTRONIC - SEMICONDUCTOR/
COMPONENT 0.4%
Dallas Semiconductor Corporation 9,200 191
Uniphase Corporation (b) 18,500 661
Xilinx, Inc. (b) 42,200 1,287
-------
2,139
FINANCE - MISCELLANEOUS 1.1%
American Express Company 20,000 828
Capital One Financial Corporation 6,000 143
Medaphis Corporation (b) 71,800 2,657
Mercury Finance Company 172,150 2,281
Sunamerica, Inc. 13,050 620
-------
6,529
HEALTHCARE - DRUG/DIVERSIFIED 1.9%
Halsey Drug Company, Inc. (b) 5,500 $ 20
Pharmacia & Upjohn, Inc. (b) 287,970 11,159
-------
11,179
HEALTHCARE - MEDICAL SUPPLY 2.6%
Amerisource Distribution Corporation Class A (b) 15,000 495
Dentsply International, Inc. 89,900 3,596
Gulf South Medical Supply, Inc. (b) 50,900 1,540
Laboratory Corporation of America Holdings
Warrants, Expire 4/28/00 (b) 30,414 21
Omnicare, Inc. 58,250 2,607
Physician Sales & Service, Inc. (b) 213,700 6,090
Sybron International Corporation (b) 56,600 1,344
-------
15,693
HEALTHCARE - PATIENT CARE 5.4%
American Oncology Resources, Inc. (b) 50,800 2,470
Community Care of America, Inc. (b) 32,900 345
Compdent Corporation (b) 21,000 872
Coram Healthcare Corporation (b) 41,500 182
Home Health Corporation of America (b) 147,600 1,624
Humana, Inc. (b) 96,800 2,650
Oxford Health Plans, Inc. (b) 107,175 7,918
PhyCor, Inc. (b) 8,700 440
Physicians Health Services, Inc. Class A (b) 25,500 944
Sheridan Healthcare, Inc. (b) 415,700 5,040
United Dental Care, Inc. (b) 145,000 5,981
U.S. Healthcare, Inc. (b) 25,300 1,176
Vencor, Inc. (b) 54,400 1,768
WellPoint Health Networks, Inc. Class A (b) 23,000 739
-------
32,149
HOUSEHOLD APPLIANCE & FURNISHINGS 0.6%
Fedders Corporation Class A 641,400 2,726
Matsushita-Kotobuki Electronics Industries, Ltd. 39,000 989
-------
3,715
INSURANCE - PROPERTY & CASUALTY 0.8%
Risk Capital Holdings, Inc. (b) 196,150 4,585
LEISURE PRODUCT 2.9%
Custom Chrome, Inc. (b) 88,000 2,035
Harley-Davidson, Inc. 497,900 14,315
Oakley, Inc. (b) 35,400 1,203
-------
17,553
LEISURE SERVICE 1.3%
The Walt Disney Company 25,000 1,475
Harrahs Entertainment, Inc. (b) 210,200 5,097
Promus Hotel Corporation (b) 19,350 431
Sholodge, Inc. (b) 54,200 515
-------
7,518
MACHINE TOOL 0.6%
Applied Power, Inc. 110,900 3,327
MACHINERY - AGRICULTURE 0.1%
Deere & Company 20,000 705
MEDIA - RADIO/TV 0.5%
CAI Wireless Systems, Inc. 19,100 184
Evergreen Media Corporation Class A (b) 44,200 1,414
Heartland Wireless Communications, Inc. (b) 42,000 1,250
Infinity Broadcasting Corporation (b) 5,100 190
Peoples Choice TV Corporation 12,900 245
-------
3,283
METAL PRODUCT & FABRICATION 0.3%
Sync Research, Inc. (b) 45,900 2,077
MORTGAGE & RELATED SERVICE 0.0%
North American Mortgage Company 13,250 282
</TABLE>
See notes to financial statements.
17
<PAGE> 20
SCHEDULES OF INVESTMENTS IN SECURITIES (CONTINUED) December 31, 1995
- --------------------------------------------------------------------------------
STRONG DISCOVERY FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
OFFICE AUTOMATION 4.7%
Canon, Inc. 170,000 $3,076
Canon, Inc. ADR 7,000 640
Danka Business Systems PLC ADR 500,200 18,507
Nu-Kote Holding, Inc. Class A (b) 190,900 3,245
Xerox Corporation 21,100 2,891
-------
28,359
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 0.7%
Flores & Rucks, Inc. (b) 271,000 3,930
PAPER & FOREST PRODUCTS 0.4%
Buckeye Cellulose Corporation (b) 121,200 2,666
PERSONAL & COMMERCIAL LENDING 0.4%
National Auto Credit, Inc. (b) 144,800 2,353
RAILROAD 1.3%
Burlington Northern Santa Fe Corporation 23,717 1,850
East Japan Railway Company 236 1,146
Kansas City Southern Industries, Inc. 107,200 4,904
-------
7,900
REAL ESTATE 0.4%
Mitsui Fudosan 215,000 2,642
RETAIL - DEPARTMENT STORE 0.2%
Federated Department Stores, Inc. (b) 50,700 1,394
RETAIL - RESTAURANT 0.1%
Rainforest Cafe, Inc. (b) 27,200 819
RETAIL - SPECIALTY 3.3%
CUC International, Inc. (b) 81,500 2,781
Central Garden and Pet Company (b) 455,300 4,325
Corporate Express, Inc. (b) 115,200 3,470
Hollywood Entertainment Corporation (b) 224,900 1,884
Movie Gallery, Inc. (b) 116,250 3,546
Office Depot, Inc. (b) 202,200 3,993
-------
19,999
SHOE & APPAREL MANUFACTURING 0.2%
Sankyo Seiki Manufacturing (b) 113,000 1,050
TELECOMMUNICATION EQUIPMENT 1.0%
Andrew Corporation (b) 20,900 799
Cascade Communications Corporation (b) 5,000 426
Newbridge Networks Corporation (b) 40,600 1,680
VTEL Corporation (b) 151,850 2,809
-------
5,714
TELECOMMUNICATION SERVICE 0.9%
DDI Corporation 635 4,915
EqualNet Holding Corporation (b) 55,200 400
-------
5,315
TOTAL COMMON STOCKS (COST $404,276) 432,927
PREFERRED STOCK 1.3%
SAP AG (Cost $7,451) 50,500 7,659
UNITED STATES GOVERNMENT ISSUES 21.4%
United States Treasury Bonds, 6.875%,
Due 8/15/25 (c) (Cost $125,986) $113,710 128,315
CASH EQUIVALENTS 3.4%
COMMERCIAL PAPER 3.3%
DISCOUNTED 3.1%
Lehman Brothers Holdings, Inc., Due 1/02/96 18,600 18,600
INTEREST BEARING, DUE UPON DEMAND 0.2%
Sara Lee Corporation, 5.46% 1,170 1,170
Southwestern Bell Telephone Company, 5.72% 156 156
-------
1,326
-------
Total Commercial Paper 19,926
UNITED STATES GOVERNMENT ISSUES 0.1%
United States Treasury Bills, Due 2/29/96 (c) $460 $ 456
--------
Total Cash Equivalents (Cost $20,382) 20,382
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $558,095) 98.4% 589,283
Other Assets and Liabilities, Net 1.6% 9,777
--------
NET ASSETS 100.0% $599,060
========
</TABLE>
<TABLE>
<CAPTION>
FUTURES UNDERLYING UNREALIZED
FACE AMOUNT APPRECIATION
EXPIRATION AT VALUE (DEPRECIATION)
DATE (IN THOUSANDS) (IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------
Purchased:
<S> <C> <C> <C>
60 NIKKEI 225 Futures 3/96 $ 6,018 $ 15
Sold:
335 S&P 500 Futures 3/96 (103,590) (143)
</TABLE>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
VALUE IN UNREALIZED
SETTLEMENT USD APPRECIATION
DATE (IN THOUSANDS) (IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------
Sold:
<S> <C> <C> <C>
2,012 German Marks 5/09/96 $1,410 $ 30
9,023 German Marks 5/17/96 6,326 76
9,154,381 Japanese Yen 5/13/96 88,593 3,470
</TABLE>
OPTIONS
<TABLE>
<CAPTION>
PREMIUMS
NUMBER (IN THOUSANDS)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at Beginning of Period -- $ --
Options written during the period 2,849 $1,123
Options closed (2,849) (1,123)
------ ------
Options outstanding at End of Period -- $ --
====== ======
</TABLE>
Closed options resulted in a capital loss (in thousands) of $233.
TRANSACTIONS WITH AFFILIATED COMPANIES
<TABLE>
<CAPTION>
REALIZED DIVIDEND MARKET
AFFILIATE GAIN/LOSS INCOME VALUE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Saber Software
Corporation* $17,886 $-- $4,482
Sheridan Healthcare, Inc. -- $-- $5,040
</TABLE>
* Merged into McAfee Associates effective 8/31/95.
<TABLE>
<CAPTION>
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------------------------------
<S> <C>
United States 75.3%
Japan 15.0
United Kingdom 3.1
Canada 2.2
Germany 1.3
Ireland 1.0
Hong Kong 0.5
Other Assets and Liabilities, Net 1.6
------
Total 100.0%
======
</TABLE>
LEGEND
(a) Cash equivalents include any security which has a maturity of less than one
year.
(b) Non-income producing security.
(c) Security pledged to cover margin requirements for futures contracts.
(d) Restricted security.
All principal amounts and costs are stated in thousands.
Percentages are stated as a percent of net assets.
See notes to financial statements.
18
<PAGE> 21
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
(In Thousands)
STRONG STRONG
OPPORTUNITY FUND GROWTH FUND
---------------- -----------
<S> <C> <C>
INCOME:
Dividends $ 13,447 $ 1,671
Interest 7,869 1,795
-------- --------
Total Income 21,316 3,466
EXPENSES:
Investment Advisory Fees 10,843 3,861
Custodian Fees 236 94
Shareholder Servicing Costs 2,291 1,030
Reports to Shareholders 522 196
Federal and State Registration Fees 212 88
Other 106 57
-------- --------
Total Expenses 14,210 5,326
-------- --------
NET INVESTMENT INCOME (LOSS) 7,106 (1,860)
REALIZED AND UNREALIZED GAIN:
Net Realized Gain on:
Investments 66,426 8,060
Futures Contracts, Options and Forward Currency Contracts 1,164 23
Change in Unrealized Appreciation/Depreciation on:
Investments 186,060 122,472
Futures Contracts, Options and Forward Currency Contracts 653 7
-------- --------
NET GAIN 254,303 130,562
-------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $261,409 $128,702
======== ========
<CAPTION>
STRONG COMMON STRONG
STOCK FUND DISCOVERY FUND
-------------- --------------
<S> <C> <C>
INCOME:
Dividends $ 10,504 $ 3,717
Interest 5,859 944
-------- --------
Total Income 16,363 4,661
EXPENSES:
Investment Advisory Fees 9,153 4,713
Custodian Fees 197 213
Shareholder Servicing Costs 1,425 1,172
Reports to Shareholders 468 295
Federal and State Registration Fees 86 105
Other 115 72
-------- --------
Total Expenses 11,444 6,570
-------- --------
NET INVESTMENT INCOME (LOSS) 4,919 (1,909)
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 142,735 95,869
Futures Contracts, Options and Forward Currency Contracts (171) 353
Foreign Currencies (8) --
Change in Unrealized Appreciation/Depreciation on:
Investments 106,366 40,711
Futures Contracts, Options and Forward Currency Contracts 548 3,448
-------- --------
NET GAIN 249,470 140,381
-------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $254,389 $138,472
======== ========
</TABLE>
See notes to financial statements.
19
<PAGE> 22
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1995
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Amounts)
STRONG STRONG
OPPORTUNITY FUND GROWTH FUND
---------------- -----------
<S> <C> <C>
ASSETS:
Investments in Securities, at Value
(Cost of $1,085,803 and $511,187, respectively) $1,321,584 $ 640,158
Receivable from Brokers for Securities and
Forward Foreign Currency Contracts Sold 9,049 9,990
Dividends and Interest Receivable 1,019 279
Other 914 51
---------- --------
Total Assets 1,332,566 650,478
LIABILITIES:
Payable to Brokers for Securities and
Forward Foreign Currency Contracts Purchased 3,482 7,007
Accrued Operating Expenses and Other Liabilities 1,424 649
---------- --------
Total Liabilities 4,906 7,656
---------- --------
NET ASSETS $1,327,660 $ 642,822
========== ========
Capital Shares
Authorized 100,000 300,000
Outstanding 39,805 40,479
NET ASSET VALUE PER SHARE $ 33.35 $ 15.88
========== ========
<CAPTION>
STRONG COMMON STRONG
STOCK FUND DISCOVERY FUND
------------- --------------
<S> <C> <C>
ASSETS:
Investments in Securities, at Value (Cost of $898,557 and
$558,095, respectively) $1,051,016 $ 589,283
Receivable from Brokers for Securities and
Forward Foreign Currency Contracts Sold 14,127 27,440
Dividends and Interest Receivable 640 4,678
Other 795 --
---------- --------
Total Assets 1,066,578 621,401
LIABILITIES:
Payable to Brokers for Securities and
Forward Foreign Currency Contracts Purchased 4,424 21,609
Accrued Operating Expenses and Other Liabilities 1,144 732
---------- --------
Total Liabilities 5,568 22,341
---------- --------
NET ASSETS $1,061,010 $ 599,060
=========- ========
Capital Shares
Authorized 300,000 1,000,000
Outstanding 53,679 31,596
NET ASSET VALUE PER SHARE $ 19.77 $ 18.96
========== ========
</TABLE>
See notes to financial statements.
20
<PAGE> 23
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
(In Thousands)
STRONG STRONG
OPPORTUNITY FUND GROWTH FUND
---------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) $ 7,106 $ 3,346 ($ 1,860) ($ 28)
Net Realized Gain (Loss) 67,590 29,481 8,083 (1,487)
Change in Unrealized Appreciation/Depreciation 186,713 (19,889) 122,479 6,495
---------- -------- -------- --------
Increase in Net Assets Resulting from Operations 261,409 12,938 128,702 4,980
CAPITAL SHARE TRANSACTIONS 329,001 383,946 426,979 101,393
DIVIDENDS PAID FROM:
From Net Investment Income (7,106) (3,314) -- --
In Excess of Net Investment Income (420) (18) (1,160) (464)
From Net Realized Gains (60,924) (31,355) (6,171) --
In Excess of Net Realized Gains -- -- (11,537) --
---------- -------- -------- --------
TOTAL INCREASE IN NET ASSETS 521,960 362,197 536,813 105,909
NET ASSETS:
Beginning of Year 805,700 443,503 106,009 100
---------- -------- -------- --------
End of Year $1,327,660 $805,700 $642,822 $106,009
========== ======== ======== ========
<CAPTION>
Strong Common Strong
Stock Fund Discovery Fund
-------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operations:
Net Investment Income (Loss) $ 4,919 $ 2,037 ($ 1,909) $ 2,543
Net Realized Gain 142,556 47,778 96,222 9,276
Change in Unrealized Appreciation/Depreciation 106,914 (54,576) 44,159 (34,031)
---------- -------- -------- --------
Increase (Decrease) in Net Assets Resulting
from Operations 254,389 (4,761) 138,472 (22,212)
Capital Share Transactions 129,341 82,644 133,177 139,429
Dividends Paid From:
From Net Investment Income (4,919) (1,963) -- (2,544)
In Excess of Net Investment Income (729) (46) (2,868) (13,712)
From Net Realized Gains (107,197) (47,835) (58,131) (14,340)
---------- -------- -------- --------
Total Increase in Net Assets 270,885 28,039 210,650 86,621
Net Assets:
Beginning of Year 790,125 762,086 388,410 301,789
---------- -------- -------- --------
End of Year $1,061,010 $790,125 $599,060 $388,410
========== ======== ======== ========
</TABLE>
See notes to financial statements.
21
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1995
1. ORGANIZATION
The Strong Growth Funds consist of Strong Opportunity Fund, Inc., Strong
Growth Fund, Strong Common Stock Fund, Inc. and Strong Discovery Fund,
Inc. The Strong Opportunity Fund, Inc., Strong Common Stock Fund, Inc.,
and the Strong Discovery Fund, Inc. are separately incorporated,
diversified, open-end management investment companies registered under
the Investment Company Act of 1940. The Strong Growth Fund is a
diversified series of the Strong Equity Funds, Inc., an open-end
management investment company registered under the Investment Company Act
of 1940.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Funds in the preparation of their financial statements.
(A) Security Valuation -- Portfolio securities traded primarily on a
principal securities exchange are valued at the last reported sales
price or the mean between the latest bid and asked prices where no
last sales price is available. Securities traded over-the-counter
are valued at the mean of the latest bid and asked prices or the
last reported sales price. Debt securities not traded on a principal
securities exchange are valued through valuations obtained from a
commercial pricing service, otherwise sale or bid prices are used.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith under consistently
applied procedures established by and under the general supervision of
the Board of Directors. Securities which are purchased within 60 days
of their stated maturity are valued at amortized cost, which
approximates current value.
The Funds may own certain investment securities which are restricted
as to resale. These securities are valued after giving due
consideration to pertinent factors including recent private sales,
market conditions and the issuer's financial performance. The
Funds generally bear the costs, if any, associated with the
disposition of restricted securities. Aggregate cost and fair value
of these restricted securities held at December 31, 1995 were as
follows (in thousands):
<TABLE>
<CAPTION>
STRONG STRONG STRONG COMMON STRONG
OPPORTUNITY FUND GROWTH FUND STOCK FUND DISCOVERY FUND
---------------- ----------- ------------- --------------
<S> <C> <C> <C> <C>
Aggregate Cost $2,500 $2,461 $22,113 $770
Aggregate Fair Value 6,309 3,025 25,331 501
Percent of Net Assets 0.5% 0.5% 2.4% 0.1%
</TABLE>
(B) Federal Income and Excise Taxes and Distributions to
Shareholders -- It is the Funds' policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of their
taxable income to their shareholders in a manner which results in no
tax cost to the Funds. Therefore, no Federal income or excise tax
provision is required.
The character of distributions made during the year from net
investment income or net realized gains may differ from the
characterization for Federal income tax purposes due to differences
in the recognition of income and expense items for financial
statement and tax purposes. Where appropriate, reclassifications
between net asset accounts are made for such differences that are
permanent in nature.
(C) Realized Gains and Losses on Investment Transactions -- Gains
or losses realized on investment transactions are determined by
comparing the identified cost of the security lot sold with the net
sales proceeds.
(D) Futures -- Upon entering into a futures contract, the Funds
pledge to the broker cash, U.S. government securities or other
liquid, high-grade debt obligations equal to the minimum "initial
margin" requirements of the exchange. The Funds also receive from or
pay to the broker an amount of cash equal to the daily fluctuation in
the value of the contract. Such receipts or payments are known as
"variation margin," and are recorded as unrealized gains or losses.
When the futures contract is closed, a realized gain or loss is
recorded equal to the difference between the value of the contract at
the time it was opened and the value at the time it was closed.
(E) Options -- Premiums received by the Funds upon writing put or
call options are recorded as an asset with a corresponding liability
which is subsequently adjusted to the current market value of the
option. When an option expires, is exercised, or is closed, the
Funds realize a gain or loss, and the liability is eliminated. The
Funds continue to bear the risk of adverse movements in the price of
the underlying asset during the period of the option, although any
potential loss during the period would be reduced by the amount of
the option premium received.
(F) Foreign Currency Translation -- Investment securities and other
assets and liabilities initially expressed in foreign currencies are
converted to U.S. dollars based upon current exchange rates.
Purchases and sales of foreign investment securities and income are
converted to U.S. dollars based upon currency exchange rates
prevailing on the respective dates of such transactions. The effect
of changes in foreign exchange rates on realized and unrealized
security gains or losses is reflected as a component of such gains or
losses.
22
<PAGE> 25
- --------------------------------------------------------------------------------
(G) Forward Foreign Currency Exchange Contracts -- Forward foreign
currency exchange contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the Funds
record an exchange gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed.
(H) Additional Investment Risk -- The use of futures contracts,
options, foreign denominated assets and forward foreign currency
exchange contracts for purposes of hedging the Funds' investment
portfolios involves, to varying degrees, elements of market risk in
excess of the amount recognized in the statement of assets and
liabilities. The predominant risk with futures contracts is an
imperfect correlation between the value of the contracts and the
underlying securities. Foreign denominated assets and forward
foreign currency exchange contracts may involve greater risks than
domestic transactions, including currency, political and economic,
regulatory and market risks.
(I) Other -- Investment security transactions are recorded as of
the trade date. Dividend income and distributions to shareholders
are recorded on the ex-dividend date. Interest income is recorded on
the accrual basis and includes amortization of premium and discounts.
3. NET ASSETS
Net assets as of December 31, 1995 were as follows (in thousands):
<TABLE>
STRONG STRONG STRONG COMMON STRONG
OPPORTUNITY FUND GROWTH FUND STOCK FUND DISCOVERY FUND
---------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
Capital Stock $1,078,387 $528,406 $ 866,158 $542,492
Undistributed Net Investment
Income 1,063 72 670 2,648
Undistributed Net Realized Gain (Loss) 11,829 (14,629) 41,175 19,284
Net Unrealized Appreciation 236,381 128,973 153,007 34,636
---------- -------- ---------- --------
$1,327,660 $642,822 $1,061,010 $599,060
========== ======== ========== ========
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the years ended December 31, 1995
and 1994 were as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
----------------------- -----------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
STRONG OPPORTUNITY FUND
Shares Sold 18,368 $563,647 19,268 $552,372
Dividends Reinvested 2,037 66,138 1,202 33,506
Shares Redeemed (9,679) (300,784) (7,100) (201,932)
------ -------- ------ --------
10,726 $329,001 13,370 $383,946
====== ======== ====== ========
STRONG GROWTH FUND
Shares Sold 41,849 $575,998 12,148 $135,056
Dividends Reinvested 1,180 18,423 44 455
Shares Redeemed (11,681) (167,442) (3,071) (34,118)
------ -------- ------ --------
31,348 $426,979 9,121 $101,393
====== ======== ====== ========
STRONG COMMON STOCK FUND
Shares Sold 9,453 $182,025 12,780 $228,135
Dividends Reinvested 5,653 110,159 2,874 48,507
Shares Redeemed (8,613) (162,843) (10,938) (193,998)
------ -------- ------ --------
6,493 $129,341 4,716 $ 82,644
====== ======== ====== ========
STRONG DISCOVERY FUND
Shares Sold 21,180 $394,018 24,287 $415,186
Dividends Reinvested 3,156 59,230 1,843 29,781
Shares Redeemed (17,524) (320,071) (18,065) (305,538)
------ -------- ------ --------
6,812 $133,177 8,065 $139,429
====== ======== ====== ========
</TABLE>
23
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
December 31, 1995
5. RELATED PARTY TRANSACTIONS
Strong Capital Management, Inc. (the "Advisor"), with whom certain
officers and directors of the Funds are affiliated, provides investment
advisory services and shareholder recordkeeping and related services to
the Funds. Investment advisory fees, which are established by terms of
the Advisory Agreements, are based on annualized rates of 1.00% of the
average daily net assets of the Funds. Advisory fees are subject to
reimbursement by the Advisor if the Funds' operating expenses exceed
certain levels. Shareholder recordkeeping and related service fees are
based on contractually established rates for each open and closed
shareholder account. In addition, the Advisor is compensated for certain
other services related to costs incurred for reports to shareholders.
Certain information regarding related party transactions for the year
ended December 31, 1995 is as follows (in thousands):
<TABLE>
<CAPTION>
STRONG STRONG STRONG COMMON STRONG
OPPORTUNITY FUND GROWTH FUND STOCK FUND DISCOVERY FUND
---------------- ----------- ------------- --------------
<S> <C> <C> <C> <C>
Payable to Advisor at December 31, 1995 $1,284 $613 $910 $560
Other Shareholder Servicing
Expenses Paid to Advisor 40 18 33 23
Unaffiliated Directors' Fees 18 4 18 9
</TABLE>
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities during the year
ended December 31, 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG STRONG STRONG COMMON STRONG
OPPORTUNITY FUND GROWTH FUND STOCK FUND DISCOVERY FUND
---------------- ----------- ------------- --------------
<S> <C> <C> <C> <C>
Purchases:
U.S. Government and Agency $ 10,000 $ -- $ -- $ 125,990
Other 1,061,909 1,504,501 751,081 2,335,531
Sales:
U.S. Government and Agency 10,005 -- -- --
Other 871,578 1,128,785 769,783 2,370,610
</TABLE>
7. INCOME TAX INFORMATION
At December 31, 1995, the investment cost and gross unrealized
appreciation and depreciation on investments for Federal income tax
purposes were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG STRONG STRONG COMMON STRONG
OPPORTUNITY FUND GROWTH FUND STOCK FUND DISCOVERY FUND
---------------- ----------- ------------- --------------
<S> <C> <C> <C> <C>
Aggregate Investment Cost $1,087,208 $516,776 $900,356 $561,168
========== ======== ======== ========
Aggregate Unrealized:
Appreciation $ 253,650 $127,522 $184,613 $ 52,776
Depreciation (19,274) (4,140) (33,953) (24,661)
---------- -------- -------- --------
$ 234,376 $123,382 $150,660 $ 28,115
========== ======== ======== ========
</TABLE>
For corporate shareholders in the Funds, the percentages of dividend
income distributed for the year ended December 31, 1995, which are
designated as qualifying for the dividends-received deduction are Strong
Opportunity Fund 100.0%, Strong Growth Fund 100.0%, Strong Common Stock
Fund 100.0%, and Strong Discovery Fund 73.4%.
24
<PAGE> 27
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
STRONG GROWTH FUND
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net Asset Value, Beginning of Period $ 11.61 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss (0.04) --
Net Realized and Unrealized Gains on Investments 4.79 1.72
--------- -------
Total from Investment Operations 4.75 1.72
LESS DISTRIBUTIONS
In Excess of Net Investment Income (0.03) (0.11)
From Net Realized Gains (0.16) --
In Excess of Net Realized Gains (0.29) --
--------- -------
TOTAL DISTRIBUTIONS (0.48) (0.11)
--------- -------
NET ASSET VALUE, END OF PERIOD $ 15.88 $ 11.61
========= =======
Total Return +41.0% +17.3%
Net Assets, End of Period (In Thousands) $ 642,822 $106,009
Ratio of Expenses to Average Net Assets 1.4% 1.6%
Ratio of Net Investment Income to Average Net Assets (0.5%) (0.1%)
Portfolio Turnover Rate 321.2% 385.8%
<CAPTION>
STRONG COMMON STOCK FUND
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 16.74 $ 17.94 $ 15.07 $ 12.84 $ 10.02 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.11 0.04 0.04 0.03 (0.02) 0.07
Net Realized and Unrealized Gains on Investments 5.25 (0.13) 3.74 2.59 5.42 0.03
---------- -------- -------- -------- -------- --------
Total from Investment Operations 5.36 (0.09) 3.78 2.62 5.40 0.10
LESS DISTRIBUTIONS
From Net Investment Income (0.10) (0.04) (0.04) (0.01) -- (0.08)
In Excess of Net Investment Income (0.02) -- -- -- -- --
From Net Realized Gains (2.21) (1.07) (0.87) (0.38)(1) (2.58)(2) --
---------- -------- -------- -------- -------- --------
Total Distributions (2.33) (1.11) (0.91) (0.39) (2.58) (0.08)
---------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 19.77 $ 16.74 $ 17.94 $ 15.07 $ 12.84 $ 10.02
========== ======== ======== ======== ======== ========
Total Return +32.4% _ 0.5% +25.2% +20.8% +57.1% +1.0%
Net Assets, End of Period (In Thousands) $1,061,010 $790,125 $762,086 $179,113 $ 48,549 $ 2,432
Ratio of Expenses to Average Net Assets 1.2% 1.3% 1.4% 1.4% 2.0% 2.0%
Ratio of Net Investment Income to Average Net Assets 0.5% 0.3% 0.2% 0.1% (0.5%) 0.9%
Portfolio Turnover Rate 91.5% 83.0% 80.9% 291.7% 2,460.7% 291.2%
</TABLE>
(1) Includes $0.22 ordinary income distribution for tax purposes.
(2) Ordinary income distribution for tax purposes.
25
<PAGE> 28
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
STRONG OPPORTUNITY FUND
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 27.71 $ 28.23 $ 24.70 $ 21.24 $ 16.29 $ 19.21 $ 16.90 $ 15.87
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.20 0.13 0.06 0.06 0.21 0.63 0.84 1.35
Net Realized and Unrealized Gains
(Losses) on Investments 7.28 0.76 5.10 3.62 4.93 (2.77) 2.31 1.23
---------- -------- -------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 7.48 0.89 5.16 3.68 5.14 (2.14) 3.15 2.58
LESS DISTRIBUTIONS
From Net Investment Income (0.20) (0.13) (0.06) (0.06) (0.19) (0.74) (0.68) (1.37)
In Excess of Net Investment Income (0.01) -- -- -- -- -- -- --
From Net Realized Gains (1.63) (1.28) (1.57) (0.16) -- (0.04) (0.16) --
Returns of Capital -- -- -- -- -- -- -- (0.18)
---------- -------- -------- -------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (1.84) (1.41) (1.63) (0.22) (0.19) (0.78) (0.84) (1.55)
---------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 33.35 $ 27.71 $ 28.23 $ 24.70 $ 21.24 $ 16.29 $ 19.21 $ 16.90
========== ======== ======== ======== ======== ======== ======== ========
Total Return +27.3% +3.2% +21.2% +17.4% +31.7% -11.3% +18.5% +16.5%
Net Assets, End of Period
(In Thousands) $1,327,660 $805,700 $443,503 $193,208 $159,667 $131,919 $205,043 $157,353
Ratio of Expenses to Average
Net Assets 1.3% 1.4% 1.4% 1.5% 1.7% 1.7% 1.6% 1.6%
Ratio of Net Investment Income
to Average Net Assets 0.7% 0.5% 0.2% 0.3% 1.1% 3.3% 4.3% 7.4%
Portfolio Turnover Rate 92.5% 59.2% 109.1% 138.5% 270.5% 275.0% 305.6% 352.4%
<CAPTION>
1987 1986
---- ----
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 15.99 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.27 0.05
Net Realized and Unrealized Gains
(Losses) on Investments 1.65 5.94
-------- -------
TOTAL FROM INVESTMENT OPERATIONS 1.92 5.99
LESS DISTRIBUTIONS
From Net Investment Income (0.24) --
In Excess of Net Investment Income -- --
From Net Realized Gains (1.80) --
Returns of Capital -- --
-------- -------
TOTAL DISTRIBUTIONS (2.04) --
-------- -------
NET ASSET VALUE, END OF PERIOD $ 15.87 $ 15.99
======== =======
Total Return +11.9% +59.9%
Net Assets, End of Period
(In Thousands) $153,573 $43,632
Ratio of Expenses to Average
Net Assets 1.5% 1.7%
Ratio of Net Investment Income
to Average Net Assets 1.7% 0.7%
Portfolio Turnover Rate 371.2% 170.2%
<CAPTION>
STRONG DISCOVERY FUND
1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.67 $ 18.05 $ 16.01 $ 17.49 $ 12.51 $ 13.18 $ 11.44 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.05) 0.16 (0.01) (0.06) -- 0.27 0.30 0.95
Net Realized and Unrealized Gains
(Losses) on Investments 5.48 (1.17) 3.48 0.23 8.41 (0.63) 2.43 1.49
-------- -------- -------- -------- -------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 5.43 (1.01) 3.47 0.17 8.41 (0.36) 2.73 2.44
LESS DISTRIBUTIONS
From Net Investment Income -- (0.11) -- -- -- (0.31) (0.28) (0.97)
In Excess of Net Investment Income (0.10) (0.58) (0.45) -- -- -- -- --
From Net Realized Gains (2.04) (0.68) (0.98) (1.65)(1) (3.43)(2) -- (0.71) (0.03)
-------- -------- -------- -------- -------- ------- ------- -------
TOTAL DISTRIBUTIONS (2.14) (1.37) (1.43) (1.65) (3.43) (0.31) (0.99) (1.00)
-------- -------- -------- -------- -------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 18.96 $ 15.67 $ 18.05 $ 16.01 $ 17.49 $ 12.51 $ 13.18 $ 11.44
======== ======== ======== ======== ======== ======= ======= =======
Total Return +34.8% - 5.7% +22.2% +1.9% +67.6% -2.7% +24.0% +24.5%
Net Assets, End of Period (In Thousands) $599,060 $388,410 $301,789 $193,276 $162,499 $56,260 $57,914 $13,648
Ratio of Expenses to Average Net Assets 1.4% 1.5% 1.5% 1.5% 1.6% 1.9% 1.9% 2.0%
Ratio of Net Investment Income to Average
Net Assets (0.4%) 0.7% (0.2%) (0.4%) 0.0% 2.1% 2.4% 11.9%
Portfolio Turnover Rate 516.0% 606.1% 668.2% 1,258.6% 1,059.9% 493.9% 549.6% 441.6%
</TABLE>
(1) Includes $1.50 ordinary income distribution for tax purposes.
(2) Includes $0.83 ordinary income distribution for tax purposes.
26
<PAGE> 29
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of the
Strong Growth Funds
We have audited the accompanying statements of assets and liabilities of Strong
Opportunity Fund, Inc., Strong Growth Fund (one of the portfolios constituting
the Strong Equity Funds, Inc.), Strong Common Stock Fund, Inc. and Strong
Discovery Fund, Inc. (collectively referred to herein as the "Strong Growth
Funds"), including the schedules of investments in securities, as of December
31, 1995, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the periods indicated.
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995 by correspondence with the custodians and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Strong Growth Funds as of December 31, 1995, the results of their
operations for the year then ended, the changes in their net assets for each of
the two years in the period then ended, and the financial highlights for each
of the periods indicated, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
February 5, 1996
<PAGE> 30
SHAREHOLDER PRIVILEGES*
[STRONG FUNDS 24-HOUR SERVICE LOGO]
TELEPHONE PURCHASE
Make additional investments into any Strong Fund by calling us toll-free at
1-800-368-3863.
TELEPHONE EXCHANGE
If your financial goals change, you can exchange your investments between any of
the Strong Funds.
TELEPHONE REDEMPTION
You can call toll-free to redeem your mutual fund shares at any time. Your
shares will be redeemed no later than the close of the next business day.
[STRONG FUNDS AUTOMATIC EXCHANGE LOGO]
AUTOMATIC INVESTMENT PLAN
This plan allows you to set up regular transfers from your bank checking or NOW
account to your Strong Funds account.
PAYROLL DIRECT DEPOSIT PLAN
You can automatically transfer all or a portion of your net pay at each pay
period. This eliminates the delay of depositing paychecks to your bank and then
sending a check through the mail to Strong Funds.
AUTOMATIC EXCHANGE PLAN
This plan allows you to exchange money from one Strong Fund to another. For
example, you may want to set up automatic exchanges from a money market fund to
an equity fund.
FOR MORE INFORMATION ABOUT THESE PRIVILEGES, CALL US AT 1-800-368-3863.
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.
Please call 1-800-368-3863 if you wish to receive additional copies, free of
charge.
*Each Fund reserves the right to terminate or modify any of these privileges.
<PAGE> 31
Bulk Rate
U.S. Postage
PAID
Mailed from
Zip Code 94545
Permit No. 23
For Literature and Information Requests,
Call 1-800-368-1030.
To Discuss an Existing Account or Conduct a Transaction,
Call 1-800-368-3863.
For a prospectus containing more complete information,
including management fees and expenses, please call
1-800-368-1030. Please read it carefully before
investing or sending money. This annual report does
not constitute an offer for the sale of securities.
Strong Funds are offered for sale by prospectus only.
[STRONG FUNDS LOGO]
STRONG FUNDS DISTRIBUTORS, INC.
P.O. Box 2936
Milwaukee, Wisconsin 53201
