<PAGE>
THE STRONG
GROWTH
FUNDS
ANNUAL REPORT o DECEMBER 31, 1996
[PIE CHART]
[PHOTO OF FAMILY]
[BAR GRAPH]
THE STRONG VALUE FUND
THE STRONG OPPORTUNITY FUND
THE STRONG GROWTH FUND
THE STRONG COMMON STOCK FUND
THE STRONG SMALL CAP FUND
THE STRONG DISCOVERY FUND
[STONG LOGO]
STRONG FUNDS
<PAGE>
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----------------------------------------
Have a plan.
[PICTURE OF FOLDER LABELED INVESTMENTS]
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----------------------------------------
Start investing as soon as possible.
[PICTURE OF 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----------------------------------------
Diversify your portfolio.
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION]
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----------------------------------------
Invest regularly.
[PICTURE OF MEMO REMINDER TO INVEST]
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----------------------------------------
Maintain a long-term perspective.
[PICTURE OF GRAPH SLOPING UPWARD]
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----------------------------------------
Consider stocks to help achieve major long-term goals.
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION EMPHASIZING STOCKS]
Over time, stocks have provided the more powerful returns needed to help the
value of your investments stay well ahead of inflation.
- ---------------------------------------7----------------------------------------
Keep a comfortable amount of cash in your portfolio.
[PICTURE OF DOLLAR SIGN]
To meet current needs, including emergencies, use a money market fund or a bank
account - not your long-term investment assets.
- ---------------------------------------8----------------------------------------
Know what you're buying.
[PICTURE OF 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>
THE STRONG
GROWTH
FUNDS
ANNUAL REPORT o DECEMBER 31, 1996
Table of Contents
INVESTMENT REVIEWS
The Strong Value Fund ............................................. 2
The Strong Opportunity Fund ....................................... 4
The Strong Growth Fund ............................................ 6
The Strong Common Stock Fund ...................................... 8
The Strong Small Cap Fund ......................................... 10
The Strong Discovery Fund ......................................... 12
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong Value Fund ......................................... 14
The Strong Opportunity Fund ................................... 15
The Strong Growth Fund ........................................ 17
The Strong Common Stock Fund .................................. 19
The Strong Small Cap Fund ..................................... 22
The Strong Discovery Fund ..................................... 23
Statements of Operations .......................................... 26
Statements of Assets and Liabilities .............................. 27
Statements of Changes in Net Assets ............................... 28
Notes to Financial Statements ..................................... 29
FINANCIAL HIGHLIGHTS ................................................... 33
REPORT OF INDEPENDENT ACCOUNTANTS ...................................... 36
<PAGE>
THE STRONG VALUE FUND
TO IDENTIFY VALUE, OUR RESEARCH TEAM USES THOROUGH, FUNDAMENTAL ANALYSIS TO
IDENTIFY CATALYSTS THAT WE BELIEVE MAY SIGNAL A RESURGENCE IN THE STOCK'S PRICE
OR EARNINGS.
As the Fund completes its first year, we would like to take this opportunity to
welcome our new shareholders. In addition to providing you with a performance
review for the Fund's inaugural year, we would also like to reiterate our
strategy for pursuing the Fund's goal of capital growth.
ASSET ALLOCATION
Based on net assets as of 12-31-96
[PIE CHART]
Stocks 81.3%
Convertible Securities 2.3%
Short-Term Investments 16.4%
As its name implies, the Fund uses a "value" approach to investing. That means
it tends to emphasize companies whose value is not fully reflected in their
stock price, or companies that are selling at a discount relative to their
history or to other companies in the same industry.
To identify value, our research team uses thorough, fundamental analysis to
identify catalysts - such as management changes, corporate restructurings, or
underlying shifts in a particular industry - that we believe may signal a
resurgence in the stock's price or earnings.
While the Fund may invest in companies of any size, it currently emphasizes
medium- to large-size companies.
TOP FIVE INDUSTRIES
Based on net assets as of 12-31-96
INDUSTRY % OF NET ASSETS
- --------------------------------------------------------------------------------
Food 5.9%
- --------------------------------------------------------------------------------
Leisure Service 4.9%
- --------------------------------------------------------------------------------
Telecommunication Service 4.8%
- --------------------------------------------------------------------------------
Media-Radio/TV 4.2%
- --------------------------------------------------------------------------------
Oil-North American Exploration
and Production 3.9%
- --------------------------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
LARGE COMPANY GROWTH STOCKS LED THE WAY IN 1996
Overall, the stock market was up sharply in 1996. Added to the outstanding
returns of 1995, this has been one of the strongest two-year periods of
performance in history.
The market is taking its cue from the stability and growth of the U.S. economy,
a direct result of the vigilant interest rate policies of the Federal Reserve.
So far, the Federal Reserve has successfully used interest rate policy to react
to hints of higher inflation, overly strong economic expansion and extreme
valuations of the dollar. The market also has been aided by a benign political
climate.
In 1996, the main beneficiaries of this slow-growth, low-inflation, "no
surprises" environment were large growth companies. Primarily because they don't
need a fast-growing economy to increase earnings, large growth companies became
the focus of investors. Value stocks, while performing well overall, tended to
lag the gains of their growth-oriented counterparts.
WE ERRED SLIGHTLY ON THE SIDE OF CAUTION
For 1996, the Fund's total return was 16.82%...an attractive gain, but behind
the performance posted by our primary benchmark: the Russell 1000 Value Index*,
which returned 21.64% for the same period.(1)
Overall, our diversification and defensive positioning produced our lagging
results versus the benchmark. As is our discipline, we sold securities when they
reached our price objectives; however, a seemingly endless cash flow into the
market often drove prices still higher. Nevertheless, we managed more hits than
misses this year.
Our major miss was the technology sector. In order to reduce volatility in the
Fund, we typically underweight this sector because the companies tend to be
small and their management untested. Plus, technology stocks are often richly
priced relative to what they earn. Regardless, technology was one of the best
performing sectors of the market.
Hits included our holdings in financial and energy sectors, media companies, and
restructuring situations. Lower interest rates and a fundamental shift in the
financial services sector produced extraordinary performance for financial
stocks this year. Several of our holdings greatly benefited from this trend; in
fact, we added to our weighting late in the year and we plan to add selectively
to this group in 1997. While restructurings will continue as a theme, we expect
fewer opportunities in this area in the future.
FIVE LARGEST STOCK HOLDINGS
As of 12-31-96
% OF NET
SECURITY INDUSTRY ASSETS
- --------------------------------------------------------------------------------
Union Pacific Resources Oil-North American 2.9%
Group, Inc. Exploration & Production
- --------------------------------------------------------------------------------
Federated Department Retail-Department 2.5%
Stores, Inc. Store
- --------------------------------------------------------------------------------
Comsat Corporation Telecommunication Service 2.5%
- --------------------------------------------------------------------------------
General Mills, Inc. Food 2.0%
- --------------------------------------------------------------------------------
Ford Motor Company Automobile 2.0%
- --------------------------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
2
<PAGE>
Other moves included a consolidation of our gaming holdings, and additions to
natural gas, chemical, and cable stocks. We reduced our weighting in retailers.
We believe consumers will focus on saving in a slowing economy, leading to less
attractive prospects for retailers as a whole.
OUTLOOK
We expect the next three to six months will be a volatile period, as investors
react quickly to near-term earnings results. However, we would view such
volatility as an opportunity to identify situations where the stock prices of
high-quality companies have declined to an attractive level.
Longer term, several trends are evident in corporations and society as we move
toward the year 2000. In particular, America is moving to service and away from
production. This extends to export/import patterns as well, with the U.S.
exporting service and knowledge, while importing steel, cars, and electronics.
This evolution will likely produce more restructurings and reorganizations,
leading to more rapid change.
Stock-picking ability and adherence to discipline will be critical to success in
this environment. We believe that our patient, disciplined approach to investing
should help mitigate market volatility in uncertain times, helping to produce
consistent long-term results.
Thank you for your investment in the Strong Value Fund. We appreciate your
confidence, and look forward to helping you pursue your long-term growth goals.
Sincerely,
/s/ Laura J. Sloate
Laura J. Sloate
Portfolio Manager
/s/ Jeffrey B. Cohen
Jeffrey B. Cohen
Portfolio Manager
[PHOTO OF LAURA J. SLOATE & JEFFREY B. COHEN]
- --------------------------------------------------------------------------------
TOTAL RETURN
As of 12-31-96
1-YEAR 16.82%
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-29-95 to 12-31-96
[GRAPH]
Lipper
The Strong S & P 500 Growth and Income
Value Fund Stock Index* Funds Index*
12-95 10,000 10,000 10,000
3-96 10,869 10,536 10,574
6-96 11,073 11,009 10,845
9-96 11,187 11,349 11,195
12-96 11,681 12,296 12,068
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 Lipper Growth and Income
Funds Index. Results include the reinvestment of dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
- --------------------------------------------------------------------------------
* The Russell 1000 Value Index is an unmanaged index that contains securities
from the Russell 1000 Index with a less-than-average growth orientation.
The S&P 500 is an unmanaged index generally representative of the U.S.
stock market, without regard to company size. The Lipper Growth and Income
Funds Index is an equally-weighted performance index of the largest
qualifying funds in this Lipper category. Source of the S&P index data is
Micropal. Source of the Lipper index data is Lipper Analytical Services,
Inc.
3
<PAGE>
THE STRONG OPPORTUNITY FUND
FOR THE YEAR, THE MARKET PROVED TO BE STRONGER THAN WE EXPECTED.
In pursuit of capital growth, the Strong Opportunity Fund invests at least 70%
of its net assets in equity securities. It currently emphasizes medium-size
companies that the Fund's Advisor believes are under-researched and attractively
valued.
ASSET ALLOCATION
Based on net assets as of 12-31-96
[PIE CHART]
Stocks 90.6%
Short-Term Investments 9.4%
STOCKS CLIMBED, BUT NOT SMOOTHLY
For the year, the market proved to be stronger than we expected. The broad-based
S&P 500 Index returned 22.96% for the year. There were plenty of peaks and
valleys on the way to that number, though. Small- and mid-size stocks were
powerful in the first several months of the year, then suffered around the
middle of the year. They regained some of their footing, but ultimately
large-capitalization stocks beat them for the year. Thus, the S&P MidCap 400
Stock Index's 19.20% gain trailed the broader S&P 500 Stock Index.*
TOP FIVE SECTORS
Based on net assets as of 12-31-96
SECTOR % OF NET ASSETS
- --------------------------------------------------------------------------------
Technology 22.9%
- --------------------------------------------------------------------------------
Consumer Cyclical 13.4%
- --------------------------------------------------------------------------------
Financial 11.8%
- --------------------------------------------------------------------------------
Energy 11.6%
- --------------------------------------------------------------------------------
Basic Material 8.5%
- --------------------------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
Our return for the year was 18.14%. That's a robust figure, but it is a little
below the return of our benchmark, the S&P MidCap 400. This slight difference is
not entirely surprising. The market has been focused on earnings, with little
regard to valuation, to which we pay close attention. Therefore, high-priced
momentum-driven stocks continued to move up as long as they delivered a certain
level of earnings.
We positioned the Fund somewhat defensively around the beginning of the second
quarter. This kept the Fund from fully realizing the gains that many
higher-priced growth stocks posted early in that quarter. It also protected the
portfolio from the sharp declines that hit small- and medium-size stocks in the
summer.
The market rallied strongly in the second half of the year, but as time
progressed the focus increasingly fell on momentum stocks-stocks that, for
various reasons, attract intense investor interest.
MANY FACTORS CONTRIBUTED TO HEALTHY RETURNS
The Fund benefited from more than our defensive stance at mid-year. Late in the
summer we began to identify many solid opportunities, particularly in two
sectors. After an early summer downturn, technology began to recover, and rising
natural-resource prices helped to strengthen energy stocks.
We've also been able to take profits in some areas. For example, toward the end
of the year we slowly reduced our sizable position in retail. We had purchased
these stocks based on our perception that the market was unduly pessimistic
about their prospects. Our more optimistic view seems to have won out-and as the
stocks have gone up, we have selectively sold them off.
APPLYING OUR DISCIPLINE IN TODAY'S MARKET
Both market forces and our stock-selection criteria have made certain parts of
our portfolio especially attractive going into 1997. Our media stocks, for
example, appear to have bottomed out early in 1996's fourth quarter. They were a
drag on returns for most of the year, but now seem set for improved performance.
FIVE LARGEST STOCK HOLDINGS
As of 12-31-96
% OF NET
SECURITY INDUSTRY ASSETS
- --------------------------------------------------------------------------------
Comcast Corporation Media-Radio/TV 1.9%
Class A
- --------------------------------------------------------------------------------
Cox Communications, Inc. Media-Radio/TV 1.6%
Class A
- --------------------------------------------------------------------------------
Unilever NV Food 1.5%
- --------------------------------------------------------------------------------
Seagate Technology, Inc. Computer- 1.5%
Peripheral Equipment
- --------------------------------------------------------------------------------
Barnett Banks, Inc. Bank-Super Regional 1.5%
- --------------------------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
4
<PAGE>
Although we don't see quite as many opportunities now as we did at points in
1996, we are pleased with the prospects in some of the portfolio's main sectors.
Technology is a good example. We have identified companies in some less
traditional areas in this sector. We believe the performance of these companies
is therefore not entirely tied to the larger industry's. Should another
correction hit technology, these are the types of stocks that may be insulated
from the damage.
As we seek out the best opportunities in the year ahead, we will place renewed
emphasis on selecting high-quality companies for the portfolio-those companies
with superior management teams and a competitive advantage within their
industry. In a market full of lofty valuations, we feel it presents too much
risk not to go with the best-quality companies.
Looking for high-quality management is consistent with our private-value
approach to investing. We evaluate companies as if we were contemplating
purchasing the entire firm, and determining the price we would be willing to pay
(its private-market value). When a stock price does not reflect the strength of
this private value-usually because not many analysts are paying attention to the
stock-we will consider adding it to the portfolio.
OTHER POTENTIAL AREAS OF EMPHASIS
Over the next six months, we may add to our foreign holdings. One reason to
venture abroad is that prices in the U.S. market are somewhat high. At the same
time, we are finding more suitable companies overseas.
We will be working to lower the Fund's median market capitalization. This figure
has moved up a little recently, partly because of appreciation of the stocks in
the portfolio and partly because of the nature of the opportunities we have
found. By heightening our focus on smaller and mid-size firms, we plan to bring
the Fund's market cap down from its year-end level of $3.66 billion. We intend
to keep the Fund in line with its historic character.
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 & MARINA T. CARLSON]
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 12-31-96
1-YEAR 18.14%
5-YEAR 17.15%
10-YEAR 14.81%
SINCE INCEPTION 18.32%
(on 12-31-85)
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-85 to 12-31-96
[GRAPH]
The Strong S & P 500 Lipper Growth
Opportunity Fund Stock Index* Funds Index*
12-85 10,000 10,000 10,000
12-86 15,990 11,866 11,558
12-87 17,893 12,489 11,935
12-88 20,840 14,563 13,621
12-89 24,694 19,178 17,364
12-90 21,903 18,583 16,423
12-91 28,845 24,244 22,390
12-92 33,850 26,091 24,099
12-93 41,022 28,721 26,986
12-94 42,325 29,100 26,562
12-95 53,868 40,036 35,235
12-96 63,637 49,229 41,394
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 Lipper Growth Funds Index.
Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market, without regard to company size. The S&P MidCap 400 Stock
Index is an unmanaged index generally representative of the market for the
stocks of mid-sized U.S. companies. The Lipper Growth Funds Index is an
equally-weighted performance index of the largest qualifying funds in this
Lipper category. Source of the S&P index data is Micropal. Source of the
Lipper index data is Lipper Analytical Services, Inc.
5
<PAGE>
THE STRONG GROWTH FUND
UPTURNS IN SOME PARTS OF THE MARKET COINCIDED WITH DOWNDRAFTS IN OTHERS,
PRESENTING A CHALLENGE FOR EQUITY MANAGERS.
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.
AN IMPORTANT ANNIVERSARY
With the end of 1996, the Fund passes its third anniversary, a milestone that
makes us eligible for rating by Morningstar. Also, three-year returns and Lipper
rankings give investors a better indication of how the Fund has performed over
the longer term.
There's reason to be pleased with these results. For 1996, the Fund posted a
19.52% gain. That's a healthy figure, even though it is behind the S&P 500's
22.96% gain for the year. For the three years since inception, the Fund
delivered an average annual return of 25.49%.*
ASSET ALLOCATION
Based on net assets as of 12-31-96
[PIE CHART]
Stocks 93.1%
Convertible Securities 0.3%
Short-Term Investments 6.6%
NOT A STRAIGHT PATH UPWARD
It was far from a smooth market. Upturns in some parts of the market coincided
with downdrafts in others, presenting a challenge for equity managers.
In the first part of the year, investor enthusiasm drove sharp increases in
small-cap stock prices. Around the middle of the year, concern that the Federal
Reserve would raise interest rates brought a tentative note to the market. When
rates held firm, investors relaxed, sparking a second-half rally in bigger
companies.
The year finished with the Dow showing 44 record highs and plenty of precipitous
drops. Our portfolio similarly reflects this mix of optimism and caution. We
believe that overall there is much positive in the economy domestically and
abroad. Inflation appears subdued, government spending is at responsible levels,
and new technologies are helping companies and individuals in all sectors be
more efficient.
TOP FIVE SECTORS
Based on net assets as of 12-31-96
SECTOR % OF NET ASSETS
- --------------------------------------------------------------------------------
Technology 29.8%
- --------------------------------------------------------------------------------
Financial 16.4%
- --------------------------------------------------------------------------------
Healthcare 13.2%
- --------------------------------------------------------------------------------
Energy 10.9%
- --------------------------------------------------------------------------------
Retail 5.7%
- --------------------------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
STAYING SELECTIVE
Given the rich valuations in many areas of the market, though, it makes sense
for us to tighten our already high quality standards for the companies we own.
As usual, we're looking for companies with solid fundamentals-strong balance
sheets, good cash flows, and consistent earnings growth. In the current
environment, we generally won't tolerate companies that are showing any kind of
a slowdown.
We have also been working to lower the portfolio's overall price/earnings ratio.
This relationship between a company's share price and the earnings it reports is
the simplest, clearest measure of whether we are paying the right price for the
companies in the portfolio. Bringing this figure down reflects a reaffirmation
of the Fund's core theme-buying high-quality growing companies at reasonable
prices.
To enhance the portfolio's liquidity, we added more large companies to the
lineup. That doesn't mean we're abandoning our practice of buying attractively
priced growth in companies of all sizes. Mid-size companies are still at our
core, and the Fund's median market capitalization is a solidly mid-cap $3.3
billion. We are also still buying the best of the small-cap stocks we see,
though we are getting fussier on that front. By building our position in heavily
traded larger stocks, though, we shore up the portfolio should investors'
caution begin to play a heavier role in the market.
FIVE LARGEST HOLDINGS
Based on net assets as of 12-31-96
% OF NET
SECURITY INDUSTRY ASSETS
- --------------------------------------------------------------------------------
Intel Corporation Electronics- 2.4%
Semiconductor/Component
- --------------------------------------------------------------------------------
Danka Business Office Automation 2.3%
Systems PLC
- --------------------------------------------------------------------------------
Cisco Systems, Inc. Computer Software 2.1%
- --------------------------------------------------------------------------------
Starwood Lodging Trust Brokerage & Investment 1.8%
Management
- --------------------------------------------------------------------------------
Cooper Cameron Oil Well Equipment 1.8%
Corporation & Service
- --------------------------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
6
<PAGE>
Areas that we continue to overweight at this time are health care (to help the
portfolio benefit from an aging population spending more on medical care) and
financial services, where demand is increasing and the stocks still have
attractive valuations.
Another area we are paying attention to is semiconductors and semiconductor
equipment. We lowered our exposure to these stocks around the end of the first
quarter last year. We began building them back up about six months ago, after
they took a drubbing. Now, these stocks appear to be making the turn as orders
and pricing improve.
THIS YEAR'S OUTLOOK
The economy overall seems to be resilient, featuring slow but steady growth.
Nonetheless, after the past two explosive years, many investors worry about a
correction hitting the market, and wonder what steps are appropriate to take in
anticipation. No one can time corrections, but there is no denying that the
market has come a long way up.
In this environment it's good for the Fund (and individual investors as well) to
stay well-diversified across sectors and across market capitalizations. A
broader approach can help to cushion against a correction in a specific area of
the market. In any event, the Fund will continue to concentrate on growing
companies with the proper valuations. The prospect of a downturn, whether brief
or extended, is of course unpleasant. It's worth remembering, though, that in
the past corrections have served as buying opportunities for companies whose
fundamentals are strong. We will always be looking to take advantage of those
opportunities. Our goal in this Fund is to produce solid, consistent results for
the long term.
Thank you for your confidence in the Strong Growth Fund. We appreciate your
investing with us.
Sincerely,
/s/ Ronald C. Ognar
Ronald C. Ognar
Portfolio Manager
[PHOTO OF RONALD C. OGNAR]
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 12-31-96
1-YEAR 19.52%
2-YEAR 29.82%
SINCE INCEPTION 25.49%
(on 12-31-93)
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-93 to 12-31-96
[GRAPH]
The Strong S & P 500 Lipper Growth
Growth Fund Stock Index* Funds Index*
12-93 10,000 10,000 10,000
12-94 11,726 10,132 9,842
12-95 16,535 13,939 13,056
12-96 19,763 17,140 15,339
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") and the Lipper Growth Funds Index.
Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S. stock
market, without regard to company size. The Lipper Growth Funds Index is an
equally-weighted performance index of the largest qualifying funds in this
Lipper category. Source of the S&P index data is Micropal. Source of the Lipper
index data is Lipper Analytical Services, Inc.
7
<PAGE>
THE STRONG COMMON STOCK FUND
LATE IN THE SUMMER WE BEGAN TO IDENTIFY MANY SOLID OPPORTUNITIES, ESPECIALLY IN
TWO SECTORS, TECHNOLOGY AND ENERGY.
The Strong Common Stock Fund seeks capital growth. The Fund invests at least 80%
of its net assets in equity securities. It currently emphasizes small companies
that the Fund's Advisor believes are under-researched and attractively valued.
ASSET ALLOCATION
Based on net assets as of 12-31-96
[PIE CHART]
Stocks 91.1%
Short-Term Investments 8.9%
WE SUCCEEDED IN A TRICKY MARKET
The market in 1996 was stronger than we anticipated. The broad-based S&P 500
Index drove upward by 22.96% for the year, though that pleasing number conceals
quite a bit of market turbulence. Small-capitalization stocks posted outstanding
returns through May. They then suffered through a mid-year correction, and
finally regained some of their footing later in the year. The Russell 2000(R),
an index of small-cap stock performance, reflects some of this struggle. It came
in at 16.49%, still robust but much lower than the S&P.*
Our return for the year was 20.47%, nicely above that of the small-cap index. We
had positioned the Fund somewhat defensively around the beginning of the second
quarter. This had the net effect of protecting the portfolio from some of the
sharp declines that hit small-company stocks in June and July. Although we were
lagging the Russell index at mid-year, we ended up well ahead.
TOP FIVE SECTORS
Based on net assets as of 12-31-96
SECTOR % OF NET ASSETS
- --------------------------------------------------------------------------------
Technology 25.1%
- --------------------------------------------------------------------------------
Consumer Cyclical 12.7%
- --------------------------------------------------------------------------------
Financial 10.4%
- --------------------------------------------------------------------------------
Energy 9.7%
- --------------------------------------------------------------------------------
Healthcare 9.1%
- --------------------------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
MANY FACTORS CONTRIBUTED
More than our defensive stance at mid-year put us ahead of the index. Late in
the summer we began to identify many solid opportunities, especially in two
sectors, technology and energy. By the end of the third quarter, both sectors
had begun to recover from their early summer downturn, with rising
natural-resource prices especially aiding our oil-service and gas stocks.
We've also been able to take profits in some areas. For example, over the course
of the year we slowly reduced our sizable position in retail. We held these
stocks going into 1996, having purchased them on the belief that the market was
unduly pessimistic about their prospects. Our more optimistic view seems to have
won out-and as the stocks have gone up, we have selectively sold them off.
Through the year, the market's focus increasingly fell on momentum stocks-stocks
that, for various reasons, attract intense investor interest. These stocks got
even more attention as the year wore on, prompted by the heavy flow of
mutual-fund investments into momentum-driven portfolios. Despite this overall
trend, we have maintained our discipline of looking for well-managed companies
selling at a discount to private value.
APPLYING OUR DISCIPLINE IN TODAY'S MARKET
Both market forces and our stock-selection criteria have made certain parts of
our portfolio especially attractive going into 1997. Our media stocks, for
example, appear to have bottomed out early in 1996's fourth quarter. They were a
drag on returns for most of the year, but now seem set for improved performance.
As we seek out the best opportunities in the year ahead, we will place renewed
emphasis on selecting high-quality companies for the portfolio-those companies
with superior management teams and a competitive advantage within their
industry. In a market full of lofty valuations, we feel it presents too much
risk not to go with the best-quality companies.
FIVE LARGEST STOCK HOLDINGS
Based on net assets as of 12-31-96
% OF NET
SECURITY INDUSTRY ASSETS
- --------------------------------------------------------------------------------
Cox Communications, Inc. Media-Radio/TV 1.6%
Class A
- --------------------------------------------------------------------------------
ENSERCH Corporation Natural Gas Distribution 1.5%
- --------------------------------------------------------------------------------
Cypress Electronics- 1.5%
Semiconductor, Inc. Semiconductor/Component
- --------------------------------------------------------------------------------
Seagate Technology, Inc. Computer- 1.5%
Peripheral Equipment
- --------------------------------------------------------------------------------
SGS-Thomson Electronics- 1.4%
Microelectronics Semiconductor/Component
- --------------------------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
8
<PAGE>
It's also consistent with our private-value approach to investing. We evaluate
companies as if we were contemplating purchasing the entire firm, and
determining the price we would be willing to pay, also known as its
private-market value. When a stock price does not reflect the strength of this
private value-usually because not many analysts are paying attention to the
stock-we will consider adding it to the portfolio.
Although we don't see quite as many opportunities now as we did at points in
1996, we are pleased with the prospects in some of the portfolio's main sectors.
Technology is a good example. The companies we've identified, by and large, are
in out-of-the-way areas of that sector. Should technology face another downturn,
these are the types of stocks that may be insulated from the damage.
OTHER POTENTIAL AREAS OF EMPHASIS
Over the next six months, we may add to our foreign holdings. One reason for
venturing abroad is that the U.S. market overall is richly valued. At the same
time, we are more confident in taking greater positions overseas.
In choosing our investments for the Fund, we will be working to lower its median
market capitalization. Partly because of appreciation of the stocks in the
portfolio, and partly because of the nature of the opportunities we have found,
the size of the companies in the portfolio has gotten a bit bigger than we would
prefer. By heightening our focus on smaller firms, we intend to reduce the
Fund's market cap from its year-end level of $1.58 billion to better keep the
Fund in line with its historic character.
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]
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 12-31-96
1-YEAR 20.47%
3-YEAR 16.65%
5-YEAR 19.14%
SINCE INCEPTION 21.05%
(on 12-29-89)
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-29-89 to 12-31-96
[GRAPH]
The Strong
Common Stock S & P 500 Lipper Growth
Fund Stock Index* Fund Index*
12-89 10,000 10,000 10,000
12-90 10,100 9,689 9,458
12-91 15,864 12,641 12,894
12-92 19,160 13,604 13,879
12-93 23,987 14,975 15,541
12-94 23,871 15,173 15,297
12-95 31,609 20,875 20,292
12-96 38,077 25,669 23,839
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 Lipper Growth Funds Index.
Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value will vary, and you may have a gain or
loss when you sell shares.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market, without regard to company size. The Russell 2000(R) Index is
an unmanaged index generally representative of the U.S. market for small
cap stocks. The Lipper Growth Funds Index is an equally-weighted
performance index of the largest qualifying funds in this Lipper category.
Source of the S&P and the Russell index data is Micropal. Source of the
Lipper index data is Lipper Analytical Services, Inc.
9
<PAGE>
THE STRONG SMALL CAP FUND
WE BUILD OUR PORTFOLIO BASED ON OVERARCHING THEMES-WHICH HELP THE PORTFOLIO
REFLECT WHERE THE WORLD IS HEADED...
Dear Shareholder: Mary Lisanti joined Strong Funds in August of 1996, and began
managing the Strong Small Cap Fund at that time. The previous manager, Charles
Paquelet, became portfolio co-manager of the Strong Discovery Fund.
The Strong Small Cap Fund seeks capital growth. The Fund invests primarily in
stocks of companies that have small market capitalizations. While these stocks
can be extremely volatile over short-term time periods, they have amply rewarded
investors over time.
ASSET ALLOCATION
Based on net assets as of 12-31-96
[PIE CHART]
Stocks 92.4%
Short-Term Investments 7.6%
A FOCUS ON SMALL, FAST GROWING COMPANIES
In general, the Fund tends to invest in high-growth vehicles, rather than
low-priced, "value"-type stocks. Growth companies typically offer the benefits
of talented management, strong balance sheets, healthy sales and consistent
earnings growth.
TOP FIVE SECTORS
Based on net assets as of 12-31-96
SECTOR % OF NET ASSETS
- --------------------------------------------------------------------------------
Technology 47.5%
- --------------------------------------------------------------------------------
Retail 12.0%
- --------------------------------------------------------------------------------
Healthcare 10.7%
- --------------------------------------------------------------------------------
Capital Equipment 10.2%
- --------------------------------------------------------------------------------
Energy 4.6%
- --------------------------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
THE FUND PERFORMED WELL IN ITS FIRST YEAR
Though the second half of the year proved to be a difficult environment for
small cap stocks, the Strong Small Cap Fund outperformed its benchmark for 1996,
returning 22.70%, versus 16.49% for the Russell 2000 Stock Index.*
SMALL COMPANY STOCKS GAINED IN A TURBULENT YEAR
Small company stocks experienced a capricious year in 1996. In the second
quarter of 1996, they posted strong performance as their potent earnings growth
and reasonable valuations relative to larger cap stocks attracted investor
attention.
In fact, by June small cap stocks had performed so well that valuations appeared
to be at the high end of tolerable ranges; as investors became nervous that the
economy's apparent strength might generate a sustained rise in interest rates,
small cap stocks suffered a correction that focused primarily on higher-growth
issues. For the remainder of 1996, small growth stocks remained in this
correction.
OUR DISCIPLINED INVESTMENT PROCESS DROVE OUR DECISION-MAKING
During the last four months of 1996, we increased the Fund's weighting in the
technology and health care sectors. In choosing stocks, we concentrated on those
that fit our highly-defined investment criteria:
o We build our portfolio based on broad secular trends impacting the economic,
societal, and demographic landscape. These overarching themes - which help the
portfolio reflect where the world is headed - include the aging of America,
the move toward increased leisure time, and the technological revolution.
Having identified these themes, we emphasize companies that we believe are
best able to capitalize on them.
o Firms must pass our extensive database screening, which focuses on aspects
such as a company's price-to-earnings ratio relative to its growth rate. This
helps us identify a preliminary universe of companies with promising
characteristics. It also helps us capitalize on the market's volatility,
because we're able to add to or initiate positions in such companies during
periods of price weakness.
o Prospective purchases must measure up from a fundamental research standpoint.
This research includes on-site visits with senior management, and factors that
help us gauge a company's ability to provide consistently strong earnings and
revenue growth.
o We also employ a strict sell discipline to help manage risk.
OUR OUTLOOK FOR SMALL CAP STOCKS IS POSITIVE NEAR TERM...
Given the rally in larger company stocks that occurred in the fourth quarter of
1996, small cap stocks in general are priced slightly lower relative to their
earnings than the S&P 500 overall.* Smaller companies should also see their
earnings grow faster than large companies in 1997; thus, relative to their
projected rate of earnings growth, smaller companies appear to offer a
compelling alternative to larger-capitalization issues.
Barring a major negative macroeconomic event such as a recession, which we do
not foresee, we believe small cap stocks' faster earnings growth and reasonable
valuations give them the potential to provide investors with above-average
returns in 1997.
10
<PAGE>
...AND LONGER-TERM
As we approach the beginning of the next century, we are truly in the midst of a
structural transformation with tremendous worldwide cultural, political, social
and economic implications. We believe several of these structural changes play
to the strengths of smaller companies.
o Technology as "the great leveler." Technology is eliminating the size
advantage that many large companies have traditionally enjoyed relative to
smaller companies. Today, with technological solutions, a small company can
often go global as quickly and effectively as a large corporation.
o Rapid, global change. The global economic landscape of the future is one of
rapid change. Mature economies, led by the United States, are moving from the
Industrial Age to the Information Age - mimicking the dramatic shift which
propelled us out of the Agricultural Age and into the Industrial Age at the
end of the last century. With the rise of China, the collapse of the Soviet
Union, and the passage of GATT and NAFTA, the world is no longer composed of
three trading blocks that move in lockstep with each other. Rather, it is much
more a "patchwork quilt" of opportunities.
In a climate of rapid change, successful companies must be flexible, agile
and innovative to capitalize on what seems to be an ever more quickly
changing world. We believe these traits reside to a larger extent in smaller
companies, because their entrepreneurial cultures typically enable them to
react quickly and decisively.
As with any paradigm shift, new companies will emerge as economic and
technological leaders. Our strategy seeks to recognize such trends and identify
companies poised to benefit, and do so before the market fully uncovers these
opportunities.
Thank you for your investment in the Strong Small Cap Fund. We look forward to
serving your investment needs in the future.
Sincerely,
/s/ Mary Lisanti
Mary Lisanti
Portfolio Manager
[PHOTO OF MARY LISANTI]
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 12-31-96
SINCE INCEPTION 22.70%
(on 12-29-95)
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-29-95 to 12-31-96
[GRAPH]
Lipper Small
The Strong S & P 500 Company Growth
Small Cap Fund Stock Index* Funds Index*
12-95 10,000 10,000 10,000
3-96 11,728 10,536 10,563
6-96 12,468 11,009 11,407
9-96 12,398 11,349 11,552
12-96 12,269 12,296 11,451
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 Lipper Small Company
Growth Funds Index. Results include the reinvestment of all dividends and
capital gains distributions. Performance is historical and does not represent
future results. Investment returns and principal value vary, and you may have a
gain or loss when you sell shares.
- --------------------------------------------------------------------------------
* The Russell 2000(R) Index is an unmanaged index generally representative of
the U.S. market for small cap stocks. The S&P 500 is an unmanaged index
generally representative of the U.S. stock market, without regard to
company size. The Lipper Small Company Growth Funds Index is an
equally-weighted performance index of the largest qualifying funds in this
Lipper category. Source of the S&P and the Russell index data is Micropal.
Source of the Lipper index data is Lipper Analytical Services, Inc.
11
<PAGE>
THE STRONG DISCOVERY FUND
THROUGH FREQUENT DISCUSSIONS WITH MANAGEMENT, SUPPLIERS, CUSTOMERS AND
COMPETITORS, WE BELIEVE WE CAN IDENTIFY VITAL ASPECTS OF COMPANIES THAT AREN'T
REFLECTED ON HISTORICAL FINANCIAL STATEMENTS.
The Strong Discovery Fund seeks to provide investors with capital growth, a goal
we pursue by investing in a diversified portfolio of small-, mid-, and
larger-cap stocks.
Our investment approach combines number-crunching research with on-site visits
to the companies in which we invest. Through frequent discussions with
management, suppliers, customers and competitors, we believe we can identify
vital aspects of companies that aren't reflected on historical financial
statements.
As our long-term track record indicates, over time we've been successful at
adding value for shareholders, compared with the overall market and our specific
peer group.
CUMULATIVE TOTAL RETURNS(1)
Since the Fund's inception on 12-31-87 through 12-31-96
[BAR GRAPH]
Strong Discovery Fund 304.39%
S&P 500* 294.16%
Lipper Capital Appreciation Funds Index* 237.38%
A DIFFICULT FIRST HALF OF 1996 FOR THE FUND...
The Discovery Fund's charter gives us the flexibility to allocate assets away
from stocks when we believe it is appropriate. Historically, when it appears the
market has gotten ahead of itself, we've taken defensive positions to help
protect capital. Early 1996 was one of those times.
The year began with investors having enjoyed one of the better markets on
record. However, signs of economic weakness led us to anticipate a downturn in
economic activity that would put corporate profits and the stock market at risk.
Therefore, we decided to reduce the portfolio's commitment to stocks and invest
the proceeds in U.S. Treasury bonds.
But as the first half of the year unfolded, a sharp rebound in economic growth
fueled higher stock prices. Our decision to conservatively position the Fund
prevented it from fully participating in the market's strong advances early in
the year. In addition, interest rates rose as the economy recovered, which
negatively impacted the Fund's bond holdings.
By March, we realized that our cautious stance was incorrect, and we began to
reallocate the bond investments back into stocks. While the decision to return
the portfolio to a normal position emphasizing stocks was sound, the timing was
poor. In June and July, the market corrected sharply, impacting small- and
mid-cap growth stocks most significantly. This sequence of events caused the
Fund to under perform the stock market and its peer group during the first half
of 1996.
ASSET ALLOCATION
Based on net assets as of 12-31-96
[PIE CHART]
Stocks 92.3%
Convertible Securities 0.5%
Short-Term Investments 7.2%
...A RETURN TO FORM IN LATTER PART OF THE YEAR
During the last five months of the year, the major stock indexes moved higher as
corporate profits continued growing and inflation remained low, enabling the
stock market to anticipate lower interest rates. However, the market's advance
later in the year tended to be concentrated mainly in the stocks of large
companies.
Despite the market's bias toward larger firms, the portfolio performed well from
August through the end of the year, gaining 13.42% - topping our Lipper peer
group's 12.59% return and enabling us to end the year in positive territory.(1)
FOCUSING ON WHAT WE DO BEST
To a large extent, the Fund's improved performance during the latter stages of
the year was due to our focusing on what we do best. Our strength has always
been identifying companies that are just starting to blossom, and it's typically
been our adeptness at identifying good growers that has generated our greatest
success over the years. To that end, we re-evaluated the portfolio from top to
bottom to emphasize these strengths.
o Brick-by-brick recovery program. We avoided the temptation to make big bets in
an effort to quickly catch up with the market. Rather, we chose to rely on our
time-tested stock picking abilities to gradually close the gap.
o Face-to-face evaluation. We spent 2-3 days a week visiting companies,
appraising management and generally "kicking the tires." Just since August, we
have met with the management of over 150 companies.
o Diversify, but stay focused on small- and mid-size growth companies. Small
companies are where we usually find the attributes we prize. To help ensure
that we invest in these companies in a disciplined way, we generally divide
the portfolio into three tiers: one third in companies with a market
capitalization less than $1 billion, one third committed to companies between
$1-3 billion, and the final third invested in larger firms. (By comparison,
the average market cap of companies in the S&P 500 is over $20 billion.)
12
<PAGE>
o Welcomed Charles "Chip" Paquelet. In August, Chip Paquelet was named portfolio
co-manager of the Fund. Chip, whom I've worked with for more than eight years,
managed the Strong Small Cap Fund from its inception on December 29, 1995
through August of 1996. His proven ability to identify attractive growth
companies should be a great asset.
Having thoroughly reviewed the Fund's holdings, we believe it is well-positioned
to pursue its long-term growth goal.
WE SEE MANY OPPORTUNITIES AHEAD
Currently, we like the environment for U.S. stocks. The economy appears strong
enough to support attractive growth in corporate profits, but not so strong as
to trigger inflation and higher interest rates. In addition, valuations should
benefit as baby boomers ratchet up their savings for retirement.
Large-cap stock prices largely reflect this positive environment. But we believe
the stocks of small and mid-size companies still have room for strong gains. In
fact, we've not had a problem finding attractively priced stocks with exciting
growth prospects.
For instance, we estimate the average annual growth rate of the companies in the
portfolio at 24% - more than twice that of the companies in the S&P 500 Index.
By concentrating on companies with superior growth potential, our goal over time
is to return the Fund's performance to the strong relative and absolute level
that existed prior to 1996. Your continued confidence is appreciated as we work
to accomplish this.
Sincerely,
/s/ Richard S. Strong
Richard S. Strong
Portfolio Manager
/s/ Charles A. Paquelet
Charles A. Paquelet
Portfolio Manager
[PHOTO OF RICHARD S. STRONG AND CHARLES A. PAQUELET]
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS(1)
As of 12-31-96
1-YEAR 1.49%
3-YEAR 8.88%
5-YEAR 9.96%
SINCE INCEPTION 16.79%
(on 12-31-87)
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-87 to 12-31-96
[GRAPH]
Lipper Capital
The Strong S & P 500 Appreciation
Discovery Fund Stock Index* Funds Index*
12-87 10,000 10,000 10,000
12-88 12,445 11,660 11,284
12-89 15,427 15,355 14,478
12-90 15,005 14,878 13,351
12-91 25,150 19,411 18,366
12-92 25,638 20,890 19,754
12-93 31,332 22,996 22,865
12-94 29,552 23,300 22,303
12-95 39,884 32,055 29,350
12-96 40,439 39,416 33,738
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") and the Lipper Capital
Appreciation Funds Index. Results include the reinvestment of all dividends and
capital gains distributions. Performance is historical and does not represent
future results. Investment returns and principal value will vary, and you may
have a gain or loss when you sell shares.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market, without regard to company size. The Lipper Capital
Appreciation Funds Index is an equally-weighted performance index of the
largest qualifying funds in this Lipper category. Source of the S&P index
data is Micropal. Source of the Lipper index data is Lipper Analytical
Services, Inc.
1 Average annual total return and total return measure change in the value of
an investment, assuming reinvestment of all dividends and capital gains.
Average annual total return reflects annualized change, while total return
reflects aggregate change.
13
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES December 31, 1996
- --------------------------------------------------------------------------------
STRONG VALUE FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 81.3%
AEROSPACE & DEFENSE 1.0%
Northrop Grumman Corporation 1,000 $ 83
Thiokol Corporation 10,000 447
------
530
AIRLINE 1.2%
AMR Corporation (b) 1,500 132
Delta Air Lines, Inc. 7,800 553
------
685
AUTOMOBILE 2.0%
Ford Motor Company 34,800 1,109
BANK - MONEY CENTER 1.0%
Chase Manhattan Corporation 6,000 535
BROKERAGE & INVESTMENT MANAGEMENT 2.1%
National Golf Properties, Inc. 15,000 475
Vornado Realty Trust 12,900 677
------
1,152
CHEMICAL 1.9%
IMC Global, Inc. 22,200 868
Monsanto Company 4,700 183
------
1,051
CHEMICAL - SPECIALTY 0.9%
Engelhard Corporation 27,400 524
COMMERCIAL SERVICE 2.4%
ACNielsen Corporation (b) 35,966 544
Dun & Bradstreet Corporation 11,300 268
Manpower, Inc. 15,900 517
------
1,329
DIVERSIFIED OPERATIONS 2.4%
Allied Signal, Inc. 3,200 215
Corning, Inc. 10,100 467
E.I. du Pont de Nemours & Company 6,700 632
------
1,314
ELECTRIC POWER 1.4%
Illinova Corporation 13,400 369
Public Service Company of Colorado 2,500 97
Sierra Pacific Resources 10,400 299
------
765
ELECTRICAL EQUIPMENT 2.5%
AMP, Inc. 2,000 77
Amphenol Corporation (b) 3,600 80
General Electric Company 4,700 464
Honeywell, Inc. 11,800 776
------
1,397
ELECTRONIC INSTRUMENTATION 0.2%
Input/Output, Inc. (b) 6,000 111
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.7%
General Motors Corporation Class H 7,100 399
ENGINEERING & CONSTRUCTION 2.0%
Fluor Corporation 17,300 1,086
FINANCE - MISCELLANEOUS 1.0%
American Express Company 9,500 537
FOOD 5.9%
CPC International, Inc. 6,800 527
ConAgra, Inc. 6,000 298
General Mills, Inc. 17,900 1,134
IBP, Inc. 44,600 1,082
Quaker Oats Company 6,000 229
------
3,270
HEALTHCARE - DRUG/DIVERSIFIED 1.0%
Eli Lilly & Company 7,700 562
HEALTHCARE - PATIENT CARE 1.3%
Vencor, Inc. (b) 23,200 734
HOUSEHOLD APPLIANCES & FURNISHINGS 2.3%
Sunbeam Corporation 29,400 757
Tupperware Corporation 10,200 547
------
1,304
INSURANCE - ACCIDENT & HEALTH 1.1%
Provident Companies, Inc. 12,800 619
INSURANCE - DIVERSIFIED 0.7%
American General Corporation 9,100 372
INSURANCE - PROPERTY & CASUALTY 2.4%
Berkshire Hathaway, Inc. Class B (b) 534 594
TIG Holdings, Inc. 21,400 725
------
1,319
LEISURE PRODUCT 2.2%
Eastman Kodak Company 8,900 714
Hasbro, Inc. 13,300 517
------
1,231
LEISURE SERVICE 4.9%
Circus Circus Enterprises, Inc. (b) 4,700 162
The Walt Disney Company 4,600 320
Gaylord Entertainment Company 24,150 553
Hilton Hotels Corporation 24,200 632
International Game Technology 56,900 1,038
------
2,705
MEDIA - PUBLISHING 3.9%
Cognizant Corporation 15,400 508
Readers Digest Association, Inc. Class A 20,800 837
Time Warner, Inc. 21,800 818
------
2,163
MEDIA - RADIO/TV 4.2%
Comcast Corporation Class A 46,900 835
Cox Communications, Inc. Class A (b) 26,500 613
HSN, Inc. (b) 37,905 900
------
2,348
NATURAL GAS DISTRIBUTION 1.9%
El Paso Natural Gas Company 3,700 187
Enron Corporation 13,700 591
PanEnergy Corporation 6,300 283
------
1,061
OFFICE AUTOMATION 1.1%
Xerox Corporation 11,300 595
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 3.9%
Enron Oil & Gas Company 21,900 553
Union Pacific Resources Group, Inc. 55,458 1,622
------
2,175
OIL - NORTH AMERICAN INTEGRATED 1.0%
Unocal Corporation 13,700 557
PAPER & FOREST PRODUCTS 1.7%
Kimberly-Clark Corporation 4,500 428
Union Camp Corporation 10,800 516
------
944
PERSONAL & COMMERCIAL LENDING 1.8%
Associates First Capital Corporation 22,700 1,002
RAILROAD 0.6%
Union Pacific Corporation 5,500 331
14
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STRONG VALUE FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
RETAIL - DEPARTMENT STORE 2.5%
Federated Department Stores, Inc. (b) 41,300 $ 1,409
RETAIL - DRUG STORE 1.9%
Rite Aid Corporation 26,400 1,049
RETAIL - MAJOR CHAIN 2.2%
Sears, Roebuck & Company 11,900 549
Toys `R' Us, Inc. (b) 21,600 648
-------
1,197
RETAIL - RESTAURANT 0.9%
McDonald's Corporation 11,600 525
RETAIL - SPECIALTY 2.0%
Handleman Company (b) 14,500 123
The Limited, Inc. 29,800 548
OfficeMax, Inc. (b) 41,500 441
-------
1,112
TELECOMMUNICATION EQUIPMENT 0.5%
Lucent Technologies, Inc. 5,828 270
TELECOMMUNICATION SERVICE 4.8%
AT&T Corporation 14,000 609
AirTouch Communications, Inc. (b) 15,000 379
Comsat Corporation 55,300 1,362
WorldCom, Inc. (b) 13,100 341
-------
2,691
TRUCKING 1.9%
CNF Transportation, Inc. 47,800 1,064
-------
TOTAL COMMON STOCKS (COST $42,038) 45,133
CONVERTIBLE PREFERRED STOCKS 2.3%
AirTouch Communications, Inc.
6.00% Class B 22,000 599
Kmart Financing I Trust 7.75%
Convertible Preferred Securities 13,800 673
-------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $1,346) 1,272
PREFERRED STOCKS 0.0%
Fresenius National Medical Care, Inc.
Class D (b) (COST $0) 8,500 1
SHORT-TERM INVESTMENTS (a) 22.3%
COMMERCIAL PAPER 1.8%
INTEREST BEARING, DUE UPON DEMAND
Johnson Controls, Inc., 5.53% $ 968 968
Wisconsin Electric Power Company, 5.55% 9 9
-------
977
REPURCHASE AGREEMENT 20.5%
Cantor Fitzgerald & Company, Inc.
(Collateralized by: $5,999 United
States Treasury Notes, 6.875%, Due 8/31/99;
$2,233 United States Treasury Notes, 6.125%,
Due 3/31/98; and $3,167 United States Treasury
Notes, 7.875%, Due 11/15/04) 6.30%,
Due 1/02/97 (d) 11,400 11,400
-------
TOTAL SHORT-TERM INVESTMENTS (COST $12,377) 12,377
-------
TOTAL INVESTMENTS IN SECURITIES
(COST $55,761) 105.9% 58,783
Other Assets and Liabilities, Net ( 5.9%) (3,288)
-------
NET ASSETS 100.0% $55,495
=======
- --------------------------------------------------------------------------------
STRONG OPPORTUNITY FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 90.6%
AEROSPACE & DEFENSE 1.2%
Litton Industries, Inc. (b) 440,000 $20,955
AIRLINE 0.2%
Air New Zealand, Ltd. Class B 1,193,545 3,235
BANK - MONEY CENTER 2.4%
Bayerische Hypotheken-
und Wechsel-Bank AG 315,000 9,515
Deutsche Bank AG 112,000 5,233
Hong Leong Finance, Ltd. (Fgn Reg) 368,000 1,278
Toronto - Dominion Bank Ontario 930,000 24,054
United Overseas Bank, Ltd. 176,000 1,963
-------
42,043
BANK - REGIONAL 2.2%
Mercantile Bancorporation, Inc. 407,500 20,935
Old Kent Financial Corporation 387,975 18,526
-------
39,461
BANK - SUPER REGIONAL 2.7%
Barnett Banks, Inc. 630,000 25,909
First Union Corporation 297,000 21,978
-------
47,887
BEVERAGE - SOFT DRINK 0.1%
Coca-Cola Amatil, Ltd. 105,498 1,127
BROKERAGE & INVESTMENT MANAGEMENT 1.9%
Equity Residential Properties Trust 225,000 9,281
First Industrial Realty Trust, Inc. 265,000 8,049
New Germany Fund, Inc. 145,000 1,939
Security Capital Industrial Trust 354,000 7,567
Spieker Properties, Inc. 200,000 7,200
-------
34,036
CHEMICAL 1.2%
IMC Global, Inc. 530,800 20,768
CHEMICAL - SPECIALTY 1.2%
Cabot Corporation 858,900 21,580
CLOSED-END FUND 0.1%
The Central European Growth Fund PLC 1,134,000 1,204
Jardine Fleming Fund 1,249,000 509
-------
1,713
COMMERCIAL SERVICE 1.1%
Reuters Holdings PLC ADR 250,000 19,125
COMPUTER - PERIPHERAL EQUIPMENT 1.5%
Seagate Technology, Inc. (b) 658,000 25,991
COMPUTER SOFTWARE 3.7%
Cabletron Systems, Inc. (b) 600,000 19,950
Silicon Graphics, Inc. (b) 970,000 24,735
Sybase, Inc. (b) 1,252,500 20,901
-------
65,586
COMPUTER SYSTEMS 0.7%
Policy Management Systems
Corporation (b) 285,000 13,146
CONGLOMERATE 0.3%
Guinness Peat Group PLC 1,331,000 770
Hutchison Whampoa, Ltd. ADR 50,000 1,950
Lonrho PLC 800,000 1,705
-------
4,425
DIVERSIFIED OPERATIONS 1.2%
Whitman Corporation 959,100 21,939
ELECTRIC POWER 1.4%
NIPSCO Industries, Inc. 608,400 24,108
15
See notes to financial statements.
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1996
- --------------------------------------------------------------------------------
STRONG OPPORTUNITY FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
ELECTRONIC PARTS DISTRIBUTION 2.1%
Arrow Electronics, Inc. (b) 435,000 $ 23,273
Marshall Industries (b) 465,000 14,241
--------
37,514
ELECTRONIC PRODUCTS - MISCELLANEOUS 2.5%
AVX Corporation 1,047,400 22,519
Hubbell, Inc. Class B 480,000 20,760
--------
43,279
ELECTRONICS - SEMICONDUCTOR/COMPONENT 6.9%
Analog Devices, Inc. (b) 650,000 22,019
Dallas Semiconductor Corporation 550,500 12,661
Intel Corporation 175,000 22,914
KLA Instruments Corporation (b) 635,000 22,543
Lattice Semiconductor Corporation (b) 480,000 22,080
Texas Instruments, Inc. 325,000 20,719
--------
122,936
ENGINEERING & CONSTRUCTION 0.1%
Italian-Thai Development PCL (Fgn Reg) 123,000 787
Siam Cement PCL (Fgn Reg) 24,000 752
Walker Corporation 1,000,000 691
--------
2,230
FINANCE - MISCELLANEOUS 0.0%
Finance One PCL (Fgn Reg) 291,000 590
FOOD 4.4%
CPC International, Inc. 331,900 25,722
Lion Nathan, Ltd. 1,090,000 2,608
Nestle SA Sponsored ADR 437,000 23,325
Unilever NV 153,000 26,813
--------
78,468
HEALTHCARE - DRUG/DIVERSIFIED 1.1%
Zeneca Group PLC 705,000 19,885
HEALTHCARE - MEDICAL SUPPLY 2.7%
McKesson Corporation 409,000 22,904
Sybron International Corporation (b) 730,000 24,090
--------
46,994
HEALTHCARE - PATIENT CARE 1.2%
Apria Healthcare Group, Inc. (b) 1,100,000 20,625
HOUSEHOLD APPLIANCES & FURNISHINGS 0.3%
Philips Electronics NV ADR 151,000 6,040
HOUSING RELATED 1.4%
Owens Corning 577,700 24,624
INSURANCE - PROPERTY & CASUALTY 2.5%
ACE, Ltd. 368,500 22,156
American International Group, Inc. 200,000 21,650
--------
43,806
LEISURE PRODUCT 1.2%
Eastman Kodak Company 255,000 20,464
LEISURE SERVICE 1.1%
Gaylord Entertainment Company 840,000 19,215
MEDIA - PUBLISHING 1.0%
The E.W. Scripps Company Ohio Class A 503,200 17,612
MEDIA - RADIO/TV 7.1%
Bell Cablemedia PLC ADR (b) 1,032,700 16,007
Comcast Corporation Class A 1,845,030 32,865
Cox Communications, Inc. Class A (b) 1,220,000 28,212
TCI Satellite Entertainment, Inc. (b) 155,500 1,536
Tele Communications, Inc. Class A (b) 1,650,000 21,553
Tele Communications, Inc. Liberty
Media Group Series A (b) 880,000 25,135
--------
125,308
METALS & MINING 1.2%
Freeport-McMoRan Copper & Gold, Inc.
Class A 736,200 20,706
Minsur SA 311,843 1,082
--------
21,788
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 8.1%
Apache Corporation 492,100 17,408
Barrett Resources Corporation (b) 509,300 21,709
Burlington Resources, Inc. 402,000 20,251
Devon Energy Corporation 723,100 25,128
Enron Oil & Gas Company 825,000 20,831
Union Pacific Resources Group, Inc. 827,000 24,190
United Meridian Corporation (b) 282,000 14,593
--------
144,110
OIL WELL EQUIPMENT & SERVICE 3.5%
Baker Hughes, Inc. 555,000 19,147
Camco International, Inc. 500,000 23,062
Transocean Offshore, Inc. 310,000 19,414
--------
61,623
PAPER & FOREST PRODUCTS 2.8%
Fletcher Challenge, Ltd.
Forestry Division 1,686,000 2,820
The Mead Corporation 387,600 22,529
Willamette Industries, Inc. 352,000 24,508
--------
49,857
PRECIOUS METAL/GEM/STONE 2.0%
De Beers Consolidated Mines, Ltd. ADR 675,000 19,069
Newmont Mining Company 352,800 15,788
--------
34,857
RAILROAD 0.9%
Canadian National Railway Company 401,800 15,268
REAL ESTATE 0.1%
Land & House PCL (Fgn Reg) 82,900 604
Shortland Properties, Ltd. 724,500 501
--------
1,105
RETAIL - DEPARTMENT STORE 0.9%
May Department Stores Company 358,000 16,737
RETAIL - FOOD CHAIN 2.0%
Albertson's, Inc. 449,900 16,028
The Kroger Company (b) 430,000 19,995
--------
36,023
RETAIL - MAJOR CHAIN 1.2%
Sears Canada, Inc. 594,800 4,426
Toys `R' Us, Inc. (b) 582,000 17,460
--------
21,886
RETAIL - RESTAURANT 0.7%
Brinker International, Inc. (b) 825,000 13,200
RETAIL - SPECIALTY 1.7%
The Limited, Inc. 850,000 15,619
OfficeMax, Inc. (b) 1,278,100 13,580
--------
29,199
SHOE & APPAREL MANUFACTURING 1.3%
Warnaco Group, Inc. Class A 800,000 23,700
STEEL 0.1%
Companhia Vale do Rio Doce Sponsored ADR 80,000 1,551
TELECOMMUNICATION SERVICE 5.4%
AirTouch Communications, Inc. (b) 850,000 21,462
MCI Communications Corporation 470,000 15,363
Mobilemedia Corporation (b) 719,300 315
Paging Network, Inc. (b) 1,260,000 19,215
16
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STRONG OPPORTUNITY FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
U.S. West, Inc. Media Group (b) 1,280,000 $ 23,680
United States Cellular Corporation (b) 577,400 16,095
----------
96,130
----------
TOTAL COMMON STOCKS (COST $1,305,541) 1,603,749
SHORT-TERM INVESTMENTS (a) 9.5%
COMMERCIAL PAPER 9.5%
DISCOUNTED 9.5%
Cole Taylor Finance Company:
Due 1/02/97 $ 5,094 5,094
Due 1/03/97 25,000 24,996
Due 1/07/97 25,000 24,980
ENSERCH Corporation, Due 1/07/97 4,800 4,796
Financial Federal Corporation:
Due 1/06/97 14,300 14,291
Due 1/15/97 9,500 9,480
Hilton Hotels Corporation, Due 1/06/97 20,000 19,988
Mercury Finance Corporation, Due 2/11/97 17,000 16,894
U.S. West Capital Funding, Inc.:
Due 1/07/97 (Acquired 12/03/96;
Cost $29,837) (c) 30,000 29,977
Due 1/08/97 (Acquired 12/05/96;
Cost $4,874) (c) 4,900 4,895
Due 1/09/97 (Acquired 12/13/96;
Cost $3,983) (c) 4,000 3,996
Due 1/10/97 (Acquired 12/12/96;
Cost $8,461) (c) 8,500 8,489
----------
167,876
INTEREST BEARING, DUE UPON DEMAND 0.0%
Wisconsin Electric Power Company, 5.55% 1 1
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $167,877) 167,877
----------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,473,418) 100.1% 1,771,626
Other Assets and Liabilities, Net (0.1%) (2,056)
----------
NET ASSETS 100.0% $1,769,570
==========
WRITTEN OPTIONS ACTIVITY
- ------------------------
PREMIUMS
NUMBER (In Thousands)
- --------------------------------------------------------------------------------
Options outstanding at beginning of period -- $ --
Options written during the period 3,085 604
Options expired (2,485) (343)
Options exercised (600) (261)
------- ------
Options outstanding at end of period -- $ --
======= ======
Exercised and expired options resulted in a capital gain (in thousands) of $343.
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------
United States ....................................... 86.7%
United Kingdom ...................................... 3.3
Canada .............................................. 2.5
Netherlands ......................................... 1.8
Switzerland ......................................... 1.3
Bermuda ............................................. 1.2
South Africa ........................................ 1.1
Germany ............................................. 0.9
New Zealand ......................................... 0.6
Singapore ........................................... 0.2
Australia ........................................... 0.1
Brazil .............................................. 0.1
Hong Kong ........................................... 0.1
Peru ................................................ 0.1
Thailand ............................................ 0.1
Other Assets and Liabilities, Net ................... (0.1)
------
Total 100.0%
======
- --------------------------------------------------------------------------------
STRONG GROWTH FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 93.1%
AIRLINE 0.6%
Midwest Express Holdings, Inc. (b) 200,000 $ 7,200
BANK - MONEY CENTER 1.8%
Chase Manhattan Corporation 125,000 11,156
Citicorp 125,000 12,875
-------
24,031
BANK - REGIONAL 1.4%
First Bank System, Inc. 175,000 11,944
Northern Trust Company 175,000 6,344
-------
18,288
BANK - SUPER REGIONAL 2.0%
Mellon Bank Corporation 190,000 13,490
Norwest Corporation 300,000 13,050
-------
26,540
BEVERAGE - SOFT DRINK 0.6%
The Coca-Cola Company 140,000 7,367
BROKERAGE & INVESTMENT MANAGEMENT 3.1%
Patriot American Hospitality, Inc. 200,000 8,625
The Charles Schwab Corporation 250,000 8,000
Starwood Lodging Trust 425,000 23,428
-------
40,053
CHEMICAL 0.9%
Monsanto Company 300,000 11,662
COMMERCIAL SERVICE 2.0%
Accustaff, Inc. (b) 475,000 10,034
Corestaff, Inc. (b) 400,000 9,475
Robert Half International, Inc. (b) 200,000 6,875
-------
26,384
COMPUTER - MAINFRAME 0.9%
International Business Machines
Corporation 75,000 11,325
COMPUTER - PERIPHERAL EQUIPMENT 1.2%
Microchip Technology, Inc. (b) 150,000 7,631
U.S. Robotics, Inc. (b) 110,000 7,920
-------
15,551
COMPUTER - PERSONAL & WORKSTATION 0.7%
Dell Computer Corporation (b) 175,000 9,298
COMPUTER SERVICE 2.0%
National Techteam, Inc. (b) 300,000 6,000
Sykes Enterprises, Inc. (b) 540,900 20,284
-------
26,284
COMPUTER SOFTWARE 11.1%
BMC Software, Inc. (b) 150,000 6,206
CBT Group PLC ADR (b) 300,000 16,275
Cadence Design Systems, Inc. (b) 200,000 7,950
Cisco Systems, Inc. (b) 425,000 27,040
McAfee Associates, Inc. (b) 325,000 14,300
Microsoft Corporation (b) 200,000 16,525
Netscape Communications Corporation (b) 125,000 7,109
Parametric Technology Corporation (b) 175,000 8,991
PeopleSoft, Inc. (b) 200,000 9,588
Puma Technology, Inc. (b) 100,000 1,725
Select Software Tools, Ltd.
Sponsored ADR (b) 40,000 730
3Com Corporation (b) 240,000 17,610
Visio Corporation (b) 225,000 11,137
-------
145,186
CONSUMER - MISCELLANEOUS 0.8%
Service Corporation International 400,000 11,200
COSMETIC & PERSONAL CARE 0.7%
Avon Products, Inc. 125,000 7,141
Carson, Inc. Class A (b) 100,000 1,387
-------
8,528
17
See notes to financial statements.
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1996
- --------------------------------------------------------------------------------
STRONG GROWTH FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS 0.4%
Alco Standard Corporation 100,000 $ 5,162
ELECTRICAL EQUIPMENT 0.6%
General Electric Company 75,000 7,416
ELECTRONIC INSTRUMENTATION 1.0%
ASM Lithography Holding NV (b) 139,900 6,969
Perkin Elmer Corporation 100,000 5,887
-------
12,856
ELECTRONICS - SEMICONDUCTOR/COMPONENT 9.1%
Altera Corporation (b) 125,000 9,086
Applied Materials, Inc. (b) 100,000 3,594
Intel Corporation 240,000 31,425
KLA Instruments Corporation (b) 200,000 7,100
Maxim Integrated Products, Inc. (b) 200,000 8,650
National Semiconductor Corporation (b) 400,000 9,750
Sierra Semiconductor Corporation (b) 400,000 6,000
Sipex Corporation (b) 400,000 12,900
Teradyne, Inc. (b) 150,000 3,656
Uniphase Corporation (b) 350,000 18,375
Vitesse Semiconductor Corporation (b) 200,000 9,100
-------
119,636
FINANCE - MISCELLANEOUS 2.9%
American Express Company 200,000 11,300
First USA, Inc. 225,000 7,791
SunAmerica, Inc. 425,000 18,859
-------
37,950
FOOD 0.7%
Interstate Bakeries Corporation 183,000 8,990
HEALTHCARE - DRUG/DIVERSIFIED 5.3%
Abbott Laboratories 225,000 11,419
Dura Pharmaceuticals, Inc. (b) 420,000 20,055
Eli Lilly & Company 260,000 18,980
Pfizer, Inc. 200,000 16,575
Warner-Lambert Company 25,000 1,875
-------
68,904
HEALTHCARE - INSTRUMENTATION 0.9%
Medtronic, Inc. 175,000 11,901
HEALTHCARE - MEDICAL SUPPLY 4.1%
Amerisource Distribution
Corporation Class A (b) 350,000 16,887
Cardinal Health, Inc. 355,000 20,679
Parexel International Corporation (b) 269,400 13,908
Quest Medical, Inc. (b) 275,000 2,131
-------
53,605
HEALTHCARE - PATIENT CARE 1.9%
Healthsouth Corporation (b) 350,000 13,519
Oxford Health Plans, Inc. (b) 200,000 11,712
-------
25,231
HEALTHCARE - PRODUCT 1.0%
Boston Scientific Corporation (b) 225,000 13,500
INSURANCE - DIVERSIFIED 1.1%
Travelers Corporation 333,333 15,125
INSURANCE - LIFE 1.3%
Conseco, Inc. 275,000 17,530
INSURANCE - MULTI-LINE 0.9%
MGIC Investment Corporation 150,000 11,400
INSURANCE - PROPERTY & CASUALTY 0.5%
The Progressive Corporation 88,000 5,929
LEISURE SERVICE 2.9%
Carnival Corporation Class A 200,000 6,600
Circus Circus Enterprises, Inc. (b) 250,000 8,594
HFS, Inc. (b) 75,000 4,481
Regal Cinemas, Inc. (b) 347,700 10,692
Wyndham Hotel Corporation (b) 325,000 8,003
-------
38,370
MACHINERY - TRANSPORTATION EQUIPMENT &
PARTS 1.4%
Miller Industries, Inc. (b) 900,000 18,000
MEDIA - PUBLISHING 0.4%
Cognizant Corporation 150,000 4,950
MEDIA - RADIO/TV 0.3%
Univision Communications, Inc. (b) 97,800 3,618
MORTGAGE & RELATED SERVICE 0.7%
Federal National Mortgage Association 250,000 9,312
OFFICE AUTOMATION 2.1%
Danka Business Systems PLC Sponsored ADR 780,000 27,593
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 2.0%
Apache Corporation 250,000 8,844
Burlington Resources, Inc. 100,000 5,038
Gulf Canada Resources, Ltd. ADR (b) 700,000 5,162
Noble Affiliates, Inc. 150,000 7,181
-------
26,225
OIL WELL EQUIPMENT & SERVICE 8.9%
BJ Services Company (b) 175,000 8,925
Camco International, Inc. 225,000 10,378
Cooper Cameron Corporation (b) 300,000 22,950
Diamond Offshore Drilling, Inc. (b) 200,000 11,400
ENSCO International, Inc. (b) 150,000 7,275
Global Marine, Inc. (b) 350,000 7,219
Pride Petroleum Services, Inc. (b) 500,000 11,625
Production Operators Corporation 53,800 2,502
Schlumberger, Ltd. 100,000 9,987
Seitel, Inc. (b) 210,000 8,400
Smith International, Inc. (b) 350,000 15,706
-------
116,367
PAPER & FOREST PRODUCTS 0.6%
Kimberly-Clark Corporation 85,000 8,096
RETAIL - DEPARTMENT STORE 0.8%
Kohl's Corporation (b) 250,000 9,813
RETAIL - DISCOUNT & VARIETY 1.2%
Consolidated Stores Corporation (b) 212,500 6,827
Dollar Tree Stores, Inc. (b) 250,000 9,562
-------
16,389
RETAIL - RESTAURANT 1.4%
Boston Chicken, Inc. (b) 200,000 7,175
PJ America, Inc. (b) 256,500 4,617
Starbucks Corporation (b) 225,000 6,441
-------
18,233
RETAIL - SPECIALTY 2.3%
Black Box Corporation (b) 200,000 8,250
CUC International, Inc. (b) 350,000 8,312
Just For Feet, Inc. (b) 275,000 7,219
Staples, Inc. (b) 354,100 6,396
-------
30,177
SAVINGS & LOAN 0.7%
TCF Financial Corporation 200,000 8,700
18
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STRONG GROWTH FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
SHOE & APPAREL MANUFACTURING 1.2%
Jones Apparel Group, Inc. (b) 140,000 $ 5,233
Nautica Enterprises, Inc. (b) 400,000 10,100
----------
15,333
SOAP & CLEANING PREPARATION 1.1%
The Procter & Gamble Company 50,000 5,375
USA Detergents, Inc. (b) 225,000 9,366
----------
14,741
TELECOMMUNICATION EQUIPMENT 1.6%
Advanced Fibre Communications, Inc. (b) 100,000 5,563
Tellabs, Inc. (b) 400,000 15,050
----------
20,613
TELECOMMUNICATION SERVICE 0.1%
TESSCO Technologies, Inc. (b) 50,000 1,838
TELEPHONE 1.3%
Cincinnati Bell, Inc. 270,900 16,694
TOBACCO 0.6%
Philip Morris Companies, Inc. 75,000 8,447
----------
TOTAL COMMON STOCKS (COST $1,001,394) 1,217,541
CONVERTIBLE PREFERRED STOCKS 0.1%
Crystal Dynamics, Inc. Series D
(Acquired 7/07/95; COST $1,000)(b)(c) 133,334 1,000
CONVERTIBLE BONDS 0.2%
Danka Business Systems PLC
Subordinated Notes, 6.75%,
Due 4/01/02 (COST $2,417) $ 2,000 2,708
SHORT-TERM INVESTMENTS (a) 6.7%
COMMERCIAL PAPER 1.5%
DISCOUNTED 1.5%
Enron Corporation, Due 1/02/97 6,610 6,610
RJR Nabisco, Inc., Due 1/02/97 13,389 13,389
----------
19,999
INTEREST BEARING, DUE UPON DEMAND 0.0%
Johnson Controls, Inc., 5.53% 564 564
MONEY MARKET 5.2%
Strong Institutional Money Fund 68,000 68,000
----------
TOTAL SHORT-TERM INVESTMENTS (COST $88,563) 88,563
----------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,093,374) 100.1% 1,309,812
Other Assets and Liabilities, Net (0.1%) (1,655)
----------
NET ASSETS 100.0% $1,308,157
==========
WRITTEN OPTIONS ACTIVITY
- ------------------------
PREMIUMS
NUMBER (In Thousands)
- --------------------------------------------------------------------------------
Options outstanding at beginning of period -- $ --
Options written during the period 1,200 249
Options closed (1,200) (249)
------- ------
Options outstanding at end of period -- $ --
======= ======
Closed options resulted in a capital gain (in thousands) of $110.
TRANSACTIONS WITH AFFILIATED COMPANIES
- --------------------------------------
REALIZED DIVIDEND
GAIN/LOSS INCOME MARKET VALUE
AFFILIATE (In Thousands) (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Norland Medical Systems, Inc. $3,305 -- $ --
PJAmerica, Inc. -- -- 4,617
Quest Medical, Inc. (349) -- 2,131
Sipex Corporation 3,323 -- 12,900
Strong Institutional Money Fund -- 125 68,000
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------
United States ...................................... 95.6%
United Kingdom ..................................... 2.4
Ireland ............................................ 1.2
Netherlands ........................................ 0.5
Canada ............................................. 0.4
Other Assets and Liabilities, Net .................. (0.1)
------
Total 100.0%
======
- --------------------------------------------------------------------------------
STRONG COMMON STOCK FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 91.1%
AIRLINE 0.2%
KLM Royal Dutch Airlines 50,000 $ 1,394
Singapore Airlines, Ltd. (Fgn Reg) 100,000 908
-------
2,302
BANK - MONEY CENTER 0.4%
Deutsche Bank AG 85,000 3,971
Hong Leong Finance, Ltd. (Fgn Reg) 250,000 868
-------
4,839
BANK - REGIONAL 2.5%
City National Corporation 724,000 15,657
Old Kent Financial Corporation 325,000 15,519
-------
31,176
BANK - SUPER REGIONAL 1.3%
Bank of Boston Corporation 250,000 16,063
BEVERAGE - SOFT DRINK 0.1%
Coca-Cola Amatil, Ltd. 65,400 699
BROKERAGE & INVESTMENT MANAGEMENT 1.6%
Apartment Investment & Management Company
Class A 585,000 16,526
Midland Walwyn, Inc. 393,000 3,398
-------
19,924
CHEMICAL 0.0%
Yizheng Chemical Fibre Company, Ltd. 1,370,000 333
CLOSED-END FUND 0.3%
Morgan Stanley Emerging
Markets Fund, Inc. 150,000 2,081
The R.O.C. Taiwan Fund (b) 147,800 1,515
-------
3,596
COMMERCIAL SERVICE 2.3%
ADT, Ltd. (b) 570,000 13,039
Rollins Truck Leasing Corporation 1,216,200 15,354
-------
28,393
COMPUTER - PERIPHERAL EQUIPMENT 1.5%
Mustek Systems, Inc. (b) 203,000 705
Seagate Technology, Inc. (b) 466,000 18,407
-------
19,112
COMPUTER - PERSONAL & WORKSTATION 2.4%
Apple Computer, Inc. (b) 600,000 12,525
Data General Corporation (b) 1,175,000 17,038
-------
29,563
19
See notes to financial statements.
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1996
- --------------------------------------------------------------------------------
STRONG COMMON STOCK FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE 3.7%
Autodesk, Inc. 611,000 $17,108
Sybase, Inc. (b) 830,000 13,850
Wang Labs, Inc. (b) 715,000 14,479
-------
45,437
CONGLOMERATE 0.2%
Benpres Holdings Corporation
Sponsored GDR (b) 110,000 825
Hutchison Whampoa, Ltd. ADR 35,000 1,365
-------
2,190
DIVERSIFIED OPERATIONS 0.9%
Canadian Pacific, Ltd. 167,800 4,447
Laidlaw, Inc. Class B (b) 550,000 6,325
-------
10,772
ELECTRICAL EQUIPMENT 2.3%
Amphenol Corporation (b) 630,000 14,017
Molex, Inc. Class A 425,000 15,141
-------
29,158
ELECTRONIC INSTRUMENTATION 1.3%
ASM Lithography Holding NV (b) 293,000 14,635
ASM Lithography Holding NV (USD) (b) 37,000 1,843
-------
16,478
ELECTRONIC PARTS DISTRIBUTION 1.0%
Marshall Industries (b) 405,000 12,403
ELECTRONICS - SEMICONDUCTOR/COMPONENT 5.4%
Cypress Semiconductor, Inc. (b) 1,325,000 18,716
Ibiden Company, Ltd. 112,000 1,082
Intel Corporation 120,000 15,712
Kemet Corporation (b) 455,000 10,579
Littelfuse, Inc. (b) 76,500 3,710
SGS-Thomson Microelectronics (b) 255,000 17,850
-------
67,649
ENGINEERING & CONSTRUCTION 0.1%
Italian-Thai Development PCL (Fgn Reg) 90,000 575
Siam Cement PCL (Fgn Reg) 17,000 533
-------
1,108
FOOD 3.1%
Allied Domecq PLC 127,000 994
Chiquita Brands International, Inc. 575,000 7,331
Dole Food Company, Inc. 410,000 13,889
Lion Nathan, Ltd. 767,000 1,835
Nabisco Holdings Corporation 360,000 13,995
-------
38,044
HEALTHCARE - BIOMEDICAL/GENETIC 1.3%
Centocor, Inc. (b) 460,000 16,445
HEALTHCARE - DRUG/DIVERSIFIED 1.1%
Novartis AG Sponsored ADR (b) 235,000 13,454
HEALTHCARE - INSTRUMENTATION 1.3%
Beckman Instruments, Inc. 435,000 16,693
HEALTHCARE - MEDICAL SUPPLY 1.4%
Sybron International Corporation (b) 515,000 16,995
HEALTHCARE - PATIENT CARE 2.6%
Living Centers of America, Inc. (b) 160,000 4,440
Tenet Healthcare Corporation 630,000 13,781
WellPoint Health Networks, Inc. (b) 420,000 14,438
-------
32,659
HEALTHCARE - PRODUCT 1.3%
Nellcor Puritan Bennett, Inc. (b) 750,000 16,406
HOUSEHOLD APPLIANCES & FURNISHINGS 2.8%
Libbey, Inc. 525,000 14,634
Philips Electronics NV ADR 157,000 6,280
Premark International, Inc. 630,000 14,018
-------
34,932
HOUSING RELATED 1.2%
RPM, Inc. 860,000 14,620
INSURANCE - DIVERSIFIED 0.1%
Zurich Versicherungsgesellschaft 5,000 1,387
INSURANCE - MULTI-LINE 1.3%
Horace Mann Educators Corporation 400,000 16,150
INSURANCE - PROPERTY & CASUALTY 1.4%
ACE, Ltd. 280,000 16,835
LEISURE SERVICE 0.1%
AAPC, Ltd. 2,900,000 1,751
MACHINERY - MISCELLANEOUS 0.1%
Briggs & Stratton Corporation 19,900 876
MEDIA - PUBLISHING 0.3%
Torstar Corporation Class B 149,500 3,600
MEDIA - RADIO/TV 7.0%
Bell Cablemedia PLC ADR (b) 780,000 12,090
Cox Communications, Inc. Class A (b) 845,000 19,541
International Family
Entertainment, Inc. Class B (b) 550,000 8,525
LIN Television Corporation (b) 400,000 16,900
TCI Satellite Entertainment, Inc. (b) 109,500 1,081
Tele Communications, Inc. Class A (b) 1,200,000 15,675
Tele-Communications International,
Inc. Class A (b) 1,025,000 13,581
-------
87,393
METALS & MINING 0.1%
Minsur SA 184,159 639
Orogen Minerals, Ltd. GDR
(Acquired 10/31/96; Cost $499)(b)(c) 31,500 733
-------
1,372
NATURAL GAS DISTRIBUTION 1.5%
ENSERCH Corporation 825,000 18,975
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 5.1%
Devon Energy Corporation 495,600 17,222
Enron Oil & Gas Company 600,000 15,150
Enserch Exploration, Inc. (b) 344,200 4,044
H S Resources, Inc. (b) 490,000 8,085
Harken Energy Corporation (b) 1,800,000 5,400
Noble Affiliates, Inc. 291,000 13,932
-------
63,833
OIL - NORTH AMERICAN INTEGRATED 1.3%
Unocal Corporation 388,000 15,763
OIL WELL EQUIPMENT & SERVICE 3.3%
Offshore Logistics, Inc. (b) 825,000 15,984
Tidewater, Inc. 280,000 12,670
Weatherford Enterra, Inc. (b) 425,000 12,750
-------
41,404
PAPER & FOREST PRODUCTS 1.2%
Consolidated Papers, Inc. 309,000 15,180
PRECIOUS METAL/GEM/STONE 2.8%
Battle Mountain Gold Company 1,100,000 7,563
Bre-X Minerals, Ltd. (b) 50,000 781
De Beers Consolidated Mines, Ltd. ADR 485,000 13,701
Newmont Mining Company 275,000 12,306
-------
34,351
REAL ESTATE 0.6%
Castle & Cooke, Inc. (b) 474,001 7,525
Land & House PCL (Fgn Reg) 60,300 439
-------
7,964
RETAIL - DEPARTMENT STORE 1.2%
Federated Department Stores, Inc. (b) 435,000 14,844
RETAIL - FOOD CHAIN 1.1%
American Stores Company 340,000 13,898
20
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STRONG COMMON STOCK FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
RETAIL - MAJOR CHAIN 0.1%
Magazine Zum Globus Registered Shares 1,800 $ 933
RETAIL - RESTAURANT 3.4%
IHOP Corporation (b) 535,000 12,639
Outback Steakhouse, Inc. (b) 590,000 15,783
Sbarro, Inc. 540,000 13,770
----------
42,192
RETAIL - SPECIALTY 2.1%
Cambridge Shopping Centers, Ltd. 475,000 4,280
Musicland Stores Corporation (b) 1,446,600 2,170
Nordstrom, Inc. 320,000 11,340
Software Spectrum, Inc. (b) 274,000 8,014
----------
25,804
SAVINGS & LOAN 1.2%
H.F. Ahmanson & Company 455,000 14,788
SHOE & APPAREL MANUFACTURING 1.2%
Unifi, Inc. 480,000 15,420
SOAP & CLEANING PREPARATION 1.1%
Ecolab, Inc. 370,000 13,921
STEEL 0.1%
Companhia Vale do Rio Doce Sponsored ADR 60,000 1,163
TELECOMMUNICATION EQUIPMENT 1.3%
Belden, Inc. 445,000 16,465
TELECOMMUNICATION SERVICE 8.5%
Aerial Communications, Inc. (b) 1,350,000 10,969
AirTouch Communications, Inc. (b) 580,000 14,645
International CableTel, Inc. (b) 592,600 14,963
Nextel Communications, Inc. Class A(b) 1,030,000 13,454
Paging Network, Inc. (b) 895,000 13,649
Telefonica del Peru SA Sponsored ADR
Representing Class B Shares 54,000 1,019
Teleport Communications Group, Inc.
Class A (b) 233,800 7,131
U.S. West, Inc. Media Group (b) 890,000 16,465
United States Cellular Corporation (b) 470,000 13,101
----------
105,396
----------
TOTAL COMMON STOCKS (COST $936,915) 1,133,101
CORPORATE BONDS 0.0%
Musicland Group, Inc. Senior
Subordinated Notes, 9.00%,
Due 6/15/03 (COST $686) $ 1,000 445
SHORT-TERM INVESTMENTS (a) 9.2%
COMMERCIAL PAPER 7.6%
DISCOUNTED 7.5%
CSX Corporation, Due 1/06/97 9,800 9,794
Cole Taylor Finance Company, Due 1/15/97 20,000 19,958
Enron Corporation, Due 1/02/97 13,000 13,000
Financial Federal Corporation,Due 1/06/97 11,700 11,693
Louisiana Land & Exploration Company,
Due 1/06/97 3,900 3,898
RJR Nabisco, Inc., Due 1/02/97 10,700 10,700
U.S. West Capital Funding, Inc.:
Due 1/08/97 (Acquired 12/05/96;
Cost $14,025)(c) 14,100 14,087
Due 1/09/97 (Acquired 12/13/96;
Cost $9,459)(c) 9,500 9,489
----------
92,619
INTEREST BEARING, DUE UPON DEMAND 0.1%
American Family Financial
Services, Inc., 5.51% 174 174
Johnson Controls, Inc., 5.53% 886 886
Sara Lee Corporation, 5.49% 167 167
Wisconsin Electric Power Company, 5.55% 87 87
----------
1,314
MONEY MARKET 1.6%
Strong Institutional Money Fund 20,000 20,000
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $113,933) 113,933
----------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,051,534) 100.3% 1,247,479
Other Assets and Liabilities, Net (0.3%) (3,833)
----------
NET ASSETS 100.0% $1,243,646
==========
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------
United States ...................................... 88.5%
Netherlands ........................................ 1.9
Canada ............................................. 1.8
Bermuda ............................................ 1.4
France ............................................. 1.4
Switzerland ........................................ 1.3
South Africa ....................................... 1.1
United Kingdom ..................................... 1.1
Australia .......................................... 0.3
Germany ............................................ 0.3
Taiwan ............................................. 0.2
Brazil ............................................. 0.1
Hong Kong .......................................... 0.1
Japan .............................................. 0.1
New Zealand ........................................ 0.1
Peru ............................................... 0.1
Philippines ........................................ 0.1
Singapore .......................................... 0.1
Thailand ........................................... 0.1
Other .............................................. 0.2
Other Assets and Liabilities, Net .................. (0.3)
------
Total 100.0%
======
WRITTEN OPTION ACTIVITY
- -----------------------
PREMIUMS
NUMBER (In Thousands)
- --------------------------------------------------------------------------------
Options outstanding at beginning of period -- $ --
Options written during the period 70 8
Options closed (70) (8)
----- -----
Options outstanding at end of period -- $ --
===== =====
Closed options resulted in a capital loss (in thousands) of $3.
TRANSACTIONS WITH AFFILIATED COMPANIES
- --------------------------------------
REALIZED DIVIDEND
GAIN/LOSS INCOME MARKET VALUE
AFFILIATE (In Thousands) (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Apartment Investment &
Management Company
Class A $ 198 $1,081 $16,526
H S Resources, Inc. (1,530) -- 8,085
IHOP Corporation (15) -- 12,639
Software Spectrum, Inc. (2) -- 8,014
Strong Institutional Money Fund -- 37 20,000
21
See notes to financial statements.
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1996
- --------------------------------------------------------------------------------
STRONG SMALL CAP FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 92.4%
AEROSPACE & DEFENSE 1.3%
SBS Technologies, Inc. (b) 53,400 $ 1,976
COMMERCIAL SERVICE 7.5%
Abacus Direct Corporation (b) 28,000 525
CRA Managed Care, Inc. (b) 19,400 873
Catalina Marketing Corporation (b) 23,500 1,295
Checkpoint Systems, Inc. (b) 57,200 1,416
Forrester Research, Inc. (b) 85,900 2,212
Investment Technology Group, Inc. (b) 2,600 50
Metromail Corporation (b) 59,400 1,084
NCO Group, Inc. (b) 70,200 1,185
Outdoor Systems, Inc. (b) 9,200 259
Registry, Inc. (b) 29,500 1,361
Universal Outdoor Holdings, Inc. (b) 65,600 1,542
-------
11,802
COMPUTER - PERIPHERAL EQUIPMENT 4.0%
Microchip Technology, Inc. (b) 51,800 2,635
Network Appliance, Inc. (b) 15,000 763
Security Dynamics Technologies, Inc. (b) 41,400 1,304
Splash Technology Holdings, Inc. (b) 74,000 1,591
-------
6,293
COMPUTER SERVICE 2.3%
Affiliated Computer Services, Inc.
Class A (b) 35,600 1,059
National Data Corporation (b) 13,200 574
Whittman-Hart, Inc. (b) 76,600 1,963
-------
3,596
COMPUTER SOFTWARE 19.7%
Applix, Inc. (b) 49,700 1,087
Aurum Software, Inc. (b) 17,900 414
CBT Group PLC ADR (b) 24,600 1,335
Citrix Systems, Inc. (b) 24,700 965
Clarify, Inc. (b) 53,600 2,573
Cognos, Inc. (b) 19,700 554
Industri-Matematik International
Corporation (b) 165,300 2,170
JDA Software Group, Inc. (b) 71,900 2,049
Legato Systems, Inc. (b) 33,300 1,086
McAfee Associates, Inc. (b) 28,250 1,243
Memco Software, Ltd. (b) 66,900 1,179
Network General Corporation (b) 44,600 1,349
Patient Infosystems, Inc. (b) 181,500 1,679
Rational Software Corporation (b) 30,500 1,207
Remedy Corporation (b) 17,200 924
Saville Systems PLC Sponsored ADR (b) 38,700 1,572
SeaChange International, Inc. (b) 48,900 1,247
Select Software Tools, Ltd.
Sponsored ADR (b) 69,900 1,276
Siebel Systems, Inc. (b) 31,400 848
Dr. Solomon's Group PLC Sponsored ADR (b) 2,000 34
Symantec Corporation (b) 63,100 915
Technology Modeling Associates, Inc. (b) 55,100 730
Versant Object Technology Corporation (b) 26,800 499
Visio Corporation (b) 36,100 1,787
XcelleNet, Inc. (b) 72,000 1,161
XLConnect Solutions, Inc. (b) 34,400 989
-------
30,872
COMPUTER SYSTEMS 0.2%
Viisage Technology, Inc. (b) 17,900 259
COSMETIC & PERSONAL CARE 0.9%
Rexall Sundown, Inc. (b) 49,600 1,348
ELECTRICAL EQUIPMENT 1.5%
Level One Communications, Inc. (b) 64,200 2,295
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.6%
Cymer, Inc. (b) 20,000 962
ELECTRONICS - SEMICONDUCTOR/COMPONENT 12.5%
DSP Communications, Inc. (b) 74,800 1,449
DuPont Photomasks, Inc. (b) 16,200 735
ESS Technology, Inc. (b) 81,800 2,301
Lam Research Corporation (b) 21,200 596
Micrel, Inc. (b) 23,800 753
Novellus Systems, Inc. (b) 34,900 1,891
PRI Automation, Inc. (b) 36,500 1,661
Peerless Systems Corporation (b) 128,100 2,178
Sawtek, Inc. (b) 37,400 1,482
Sipex Corporation (b) 37,900 1,222
Uniphase Corporation (b) 11,800 620
VLSI Technology, Inc. (b) 101,600 2,426
Veeco Instruments, Inc. (b) 78,300 1,723
Vitesse Semiconductor Corporation (b) 14,400 655
-------
19,692
FINANCE - MISCELLANEOUS 0.8%
PMT Services, Inc. (b) 69,800 1,221
HEALTHCARE - BIOMEDICAL/GENETIC 4.8%
Agouron Pharmaceuticals, Inc. (b) 34,400 2,331
ArQule, Inc. (b) 3,500 55
BioChem Pharma, Inc. (b) 30,400 1,528
Genetics Institute, Inc. Depositary Shares
Representing One Share (b) 7,300 619
Human Genome Sciences, Inc. (b) 14,200 579
Protein Design Labs, Inc. (b) 43,400 1,584
Vertex Pharmaceuticals, Inc. (b) 22,400 902
-------
7,598
HEALTHCARE - INSTRUMENTATION 0.5%
United States Surgical Corporation 19,600 772
HEALTHCARE - MEDICAL SUPPLY 2.7%
Amerisource Distribution Corporation
Class A (b) 34,000 1,640
Henry Schein, Inc. (b) 29,600 1,017
Steris Corporation (b) 37,000 1,609
-------
4,266
HEALTHCARE - PATIENT CARE 1.2%
National Surgery Centers, Inc. (b) 51,200 1,946
HEALTHCARE - PRODUCT 1.4%
Hemocleanse, Inc. (Acquired 5/14/96;
Cost $465) (b) (c) 155,000 465
Uroquest Medical Corporation (b) 258,700 1,746
-------
2,211
LEISURE SERVICE 1.2%
Steiner Leisure, Ltd. (b) 95,700 1,926
MEDIA - RADIO/TV 0.8%
Univision Communications, Inc. (b) 35,100 1,299
MORTGAGE & RELATED SERVICE 0.8%
Triad Guaranty, Inc. (b) 44,200 1,271
OIL WELL EQUIPMENT & SERVICE 4.6%
Energy Ventures, Inc. (b) 27,100 1,379
Falcon Drilling Company, Inc. (b) 35,800 1,405
Pride Petroleum Services, Inc. (b) 70,900 1,648
Seitel, Inc. (b) 33,000 1,320
Smith International, Inc. (b) 34,000 1,526
-------
7,278
RETAIL - DISCOUNT & VARIETY 2.0%
Dollar Tree Stores, Inc. (b) 39,700 1,518
Mazel Stores, Inc. (b) 70,000 1,575
-------
3,093
RETAIL - RESTAURANT 1.8%
PJ America, Inc. (b) 79,900 1,438
22
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STRONG SMALL CAP FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
Papa John's International, Inc. (b) 42,600 $ 1,438
--------
2,876
RETAIL - SPECIALTY 8.2%
Abercrombie & Fitch Company Class A (b) 22,900 378
Ethan Allen Corporation 38,400 1,478
dELiA*s, Inc. (b) 36,300 721
Eagle Hardware & Garden, Inc. (b) 45,100 936
K & G Men's Centers, Inc. (b) 62,100 1,615
Loehmann's Holdings, Inc. (b) 46,100 1,060
MSC Industrial Direct Company, Inc.
Class A (b) 32,900 1,217
Piercing Pagoda, Inc. (b) 29,800 723
Stage Stores, Inc. (b) 71,000 1,296
West Marine, Inc. (b) 23,900 675
Williams-Sonoma, Inc. (b) 54,700 1,990
Wilmar Industries, Inc. (b) 27,200 755
--------
12,844
SHOE & APPAREL MANUFACTURING 1.4%
Cutter & Buck, Inc. (b) 88,200 1,025
Nautica Enterprises, Inc. (b) 47,200 1,192
--------
2,217
SOAP & CLEANING PREPARATION 1.0%
USA Detergents, Inc. (b) 39,800 1,657
STEEL 0.5%
Steel Dynamics, Inc. (b) 37,700 721
TELECOMMUNICATION EQUIPMENT 5.8%
Advanced Fibre Communications, Inc. (b) 16,600 923
Aspect Telecommunications Corporation (b) 18,400 1,168
Digital Microwave Corporation (b) 71,000 1,979
P-COM, Inc. (b) 60,600 1,795
Powerwave Technologies, Inc. (b) 100,400 1,468
Premisys Communications, Inc. (b) 12,300 415
Verilink Corporation (b) 40,600 1,350
--------
9,098
TELECOMMUNICATION SERVICE 2.4%
Pacific Gateway Exchange, Inc. (b) 68,400 2,497
West TeleServices Corporation (b) 55,200 1,256
--------
3,753
--------
TOTAL COMMON STOCKS (COST $133,013) 145,142
SHORT-TERM INVESTMENTS (a) 7.5%
COMMERCIAL PAPER 0.6%
INTEREST BEARING, DUE UPON DEMAND
Johnson Controls, Inc., 5.53% $ 597 597
Southwestern Bell Telephone Company, 5.49% 342 342
Wisconsin Electric Power Company, 5.55% 17 17
--------
956
REPURCHASE AGREEMENT 6.9%
Cantor Fitzgerald & Company, Inc., 6.30%,
Due 1/02/97 (d) 10,900 10,900
--------
TOTAL SHORT-TERM INVESTMENTS (COST $11,856) 11,856
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $144,869) 99.9% 156,998
Other Assets and Liabilities, Net 0.1% 61
--------
NET ASSETS 100.0% $157,059
========
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------
United States ....................................... 95.5%
Ireland ............................................. 1.9
Canada .............................................. 1.0
United Kingdom ...................................... 0.8
Israel .............................................. 0.7
Other Assets and Liabilities, Net ................... 0.1
------
Total 100.0%
======
- --------------------------------------------------------------------------------
STRONG DISCOVERY FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 92.3%
AEROSPACE & DEFENSE 0.7%
Boeing Company 11,500 $ 1,223
Hexcel Corporation (b) 138,300 2,248
-------
3,471
AIRLINE 0.2%
Atlas Air, Inc. (b) 20,000 955
AUTOMOBILE 0.3%
General Motors Corporation 30,000 1,673
BANK - MONEY CENTER 2.3%
BankAmerica Corporation 28,150 2,808
Chase Manhattan Corporation 50,453 4,503
Citicorp 43,400 4,470
-------
11,781
BANK - REGIONAL 0.2%
First Bank System, Inc. 13,800 942
BROKERAGE & INVESTMENT MANAGEMENT 0.1%
The Quick & Reilly Group, Inc. 21,300 636
COMMERCIAL SERVICE 7.4%
Accustaff, Inc. (b) 559,100 11,811
Bacou U.S.A., Inc. (b) 174,300 2,898
Consolidated Graphics, Inc. (b) 180,000 10,080
Getty Communications PLC
Sponsored ADR (b) 186,400 2,796
Interim Services, Inc. (b) 90,000 3,195
Manpower, Inc. 29,600 962
PIA Merchandising Services, Inc. (b) 280,000 2,940
Pittston Company Brinks Group 50,000 1,350
Sensormatic Electronics Corporation 20,000 335
Universal Outdoor Holdings, Inc. (b) 55,000 1,292
Vallen Corporation (b) 33,800 562
-------
38,221
COMPUTER - MAINFRAME 1.7%
International Business Machines
Corporation 57,800 8,728
COMPUTER - PERIPHERAL EQUIPMENT 0.7%
Creative Technology, Ltd. (b) 214,000 2,515
Micros Systems, Inc. (b) 6,200 191
U.S. Robotics, Inc. (b) 15,000 1,080
-------
3,786
COMPUTER SERVICE 1.3%
National Techteam, Inc. (b) 96,800 1,936
Sykes Enterprises, Inc. (b) 120,000 4,500
-------
6,436
COMPUTER SOFTWARE 2.6%
Ascend Communications, Inc. (b) 2,100 130
BroadVision, Inc. (b) 69,500 547
Cisco Systems, Inc. (b) 31,000 1,972
Computer Associates International, Inc. 49,600 2,468
FileNet Corporation (b) 28,100 899
IA Corporation (b) 68,300 401
McAfee Associates, Inc. (b) 77,000 3,388
OneWave, Inc. (b) 63,100 493
Phoenix International, Inc. (b) 17,150 296
Select Software Tools, Ltd.
Sponsored ADR (b) 27,700 506
Sterling Commerce, Inc. (b) 37,100 1,308
TriTeal Corporation (b) 35,200 748
-------
13,156
DIVERSIFIED OPERATIONS 0.1%
Minnesota Mining & Manufacturing Company 5,000 414
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.2%
Harmonic Lightwaves, Inc. (b) 23,300 358
23
See notes to financial statements.
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1996
- --------------------------------------------------------------------------------
STRONG DISCOVERY FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
Universal Electronics, Inc. (b) 107,000 $ 589
-------
947
ELECTRONICS - SEMICONDUCTOR/COMPONENT 2.7%
Cypress Semiconductor, Inc. (b) 20,000 283
Intel Corporation 69,700 9,126
Motorola, Inc. 25,000 1,534
SDL, Inc. (b) 10,000 262
Texas Instruments, Inc. 19,900 1,269
Uniphase Corporation (b) 24,700 1,297
-------
13,771
FINANCE - MISCELLANEOUS 1.0%
American Express Company 69,400 3,921
Checkfree Corporation (b) 27,000 462
MoneyGram Payment Systems, Inc. (b) 48,500 643
-------
5,026
HEALTHCARE - BIOMEDICAL/GENETIC 0.1%
Ortec International, Inc.
(Acquired 10/21/96; Cost $525)(b)(c) 80,000 664
HEALTHCARE - DRUG/DIVERSIFIED 2.8%
Halsey Drug Company, Inc. (b) 812,660 4,978
Halsey Drug Company, Inc.
(Acquired 10/01/96; Cost $9)(b)(c) 2,820 15
Eli Lilly & Company 15,000 1,095
Pharmacia & Upjohn, Inc. 213,000 8,440
-------
14,528
HEALTHCARE - INSTRUMENTATION 0.2%
FemRx, Inc. (b) 241,400 1,086
HEALTHCARE - MEDICAL SUPPLY 9.4%
Bergen Brunswig Corporation Class A 80,000 2,280
Cohr, Inc. (b) 111,100 2,999
Dentsply International, Inc. 93,000 4,417
Foxmeyer Health Corporation (b) 1,404,600 2,282
Laboratory Corporation of America
Holdings Warrants, Expire 4/28/00(b) 30,414 3
McKesson Corporation 330,000 18,480
NCS Healthcare, Inc. Class A (b) 96,100 2,799
Omnicare, Inc. 40,000 1,285
Steris Corporation (b) 20,000 870
Suburban Ostomy Supply Company, Inc.(b) 430,400 5,917
Sybron International Corporation (b) 213,900 7,058
-------
48,390
HEALTHCARE - PATIENT CARE 3.0%
American Healthcorp, Inc. (b) 16,600 193
Humana, Inc. (b) 89,500 1,711
Renal Treatment Centers, Inc. (b) 30,000 765
United Dental Care, Inc. (b) 415,200 12,612
-------
15,281
HEALTHCARE - PRODUCT 0.3%
Sabratek Corporation (b) 90,000 1,429
HOUSEHOLD - APPLIANCES & FURNISHINGS 1.2%
Fedders Corporation Class A 440,000 2,200
Harman International Industries, Inc. 62,000 3,449
Newell Companies, Inc. 15,000 472
-------
6,121
HOUSING RELATED 0.9%
Diamond Home Services, Inc. (b) 150,000 4,125
Royal Plastics Group, Ltd. (b) 28,200 525
-------
4,650
INSURANCE - LIFE 0.2%
Conseco, Inc. 15,000 956
INSURANCE - MULTI-LINE 0.4%
MGIC Investment Corporation 30,000 2,280
LEISURE PRODUCT 1.3%
Custom Chrome, Inc. (b) 150,000 3,019
Harley-Davidson, Inc. 32,100 1,509
Mattel, Inc. 35,000 971
SCP Pool Corporation (b) 58,400 1,212
-------
6,711
LEISURE SERVICE 3.3%
Candlewood Hotel Company, Inc. (b) 148,800 1,432
Circus Circus Enterprises, Inc. (b) 189,925 6,529
The Walt Disney Company 24,050 1,674
Hilton Hotels Corporation 25,000 653
La Quinta Inns, Inc. 100,000 1,913
Red Roof Inns, Inc. (b) 259,600 4,024
Sholodge, Inc. (b) 68,900 930
-------
17,155
MACHINE TOOL 0.5%
Applied Power, Inc. 64,700 2,564
MACHINERY - MISCELLANEOUS 1.0%
Greenwich Air Services, Inc. (b) 235,000 5,229
MEDIA - RADIO/TV 1.1%
American Radio Systems Corporation
Class A (b) 30,000 817
Clear Channel Communications, Inc. (b) 32,800 1,185
Comcast Corporation Class A 26,200 467
Tele Communications, Inc. Class A (b) 60,000 784
Young Broadcasting, Inc. Class A (b) 81,600 2,387
-------
5,640
NATURAL GAS DISTRIBUTION 0.3%
Enron Corporation 9,900 427
WICOR, Inc. 29,700 1,065
-------
1,492
OFFICE AUTOMATION 4.0%
Danka Business Systems PLC Sponsored ADR 570,000 20,164
Xerox Corporation 6,800 358
-------
20,522
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 10.9%
Barrett Resources Corporation (b) 14,200 605
Chesapeake Energy Corporation (b) 60,000 3,338
Flores & Rucks, Inc. (b) 488,100 25,991
Nuevo Energy Company (b) 20,000 1,040
Triton Energy, Ltd. (b) 77,000 3,735
Union Pacific Resources Group, Inc. 730,600 21,370
-------
56,079
OIL WELL EQUIPMENT & SERVICE 4.7%
Cooper Cameron Corporation (b) 69,100 5,286
Global Marine, Inc. (b) 90,000 1,856
Marine Drilling Companies, Inc. (b) 23,700 467
Nabors Industries, Inc. (b) 184,100 3,544
National-Oilwell, Inc. (b) 26,025 800
Noble Drilling Corporation (b) 350,000 6,956
Oceaneering International, Inc. (b) 89,950 1,428
Rowan Companies, Inc. (b) 55,700 1,260
Schlumberger, Ltd. 15,000 1,498
3DX Technologies, Inc. (b) 81,700 899
-------
23,994
PAPER & FOREST PRODUCTS 0.0%
Buckeye Cellulose Corporation (b) 9,500 253
PERSONAL & COMMERCIAL LENDING 2.1%
Associates First Capital Corporation 115,000 5,074
Household International, Inc. 50,000 4,613
Mercury Finance Company 100,000 1,225
-------
10,912
RAILROAD 0.8%
Burlington Northern Santa Fe Corporation 50,001 4,319
24
See notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STRONG DISCOVERY FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
REAL ESTATE 0.1%
Signature Resorts, Inc. (b) 11,600 $ 409
RETAIL - DEPARTMENT STORE 0.8%
Federated Department Stores, Inc. (b) 120,000 4,095
RETAIL - DISCOUNT & VARIETY 1.5%
Consolidated Stores Corporation (b) 156,250 5,020
Stein Mart, Inc. (b) 125,000 2,531
--------
7,551
RETAIL - DRUG STORE 1.4%
Revco D.S., Inc. (b) 90,000 3,330
Rite Aid Corporation 95,000 3,776
--------
7,106
RETAIL - RESTAURANT 4.3%
Casa Ole Restaurants, Inc. (b) 117,900 1,091
Longhorn Steaks, Inc. (b) 135,000 2,548
McDonald's Corporation 83,000 3,756
Quality Dining, Inc. (b) 575,725 10,291
Rainforest Cafe, Inc. (b) 197,200 4,634
--------
22,320
RETAIL - SPECIALTY 9.5%
CUC International, Inc. (b) 567,400 13,476
Central Garden & Pet Company (b) 345,000 7,267
Corporate Express, Inc. (b) 157,400 4,633
The Home Depot, Inc. 85,900 4,306
MSC Industrial Direct Company, Inc.
Class A (b) 49,050 1,815
Movie Gallery, Inc. (b) 710,000 9,230
OfficeMax, Inc. (b) 400,200 4,252
Wilmar Industries, Inc. (b) 60,000 1,665
Zale Corporation (b) 109,600 2,096
--------
48,740
SAVINGS & LOAN 1.0%
TCF Financial Corporation 118,550 5,157
TELECOMMUNICATION EQUIPMENT 1.3%
Aware, Inc. (b) 29,700 301
Belden, Inc. 78,250 2,895
Cascade Communications Corporation (b) 25,000 1,378
Loral Space & Communications (b) 110,200 2,025
Scientific-Atlanta, Inc. 15,100 227
--------
6,826
TELECOMMUNICATION SERVICE 0.2%
U.S. West, Inc. Media Group (b) 51,500 953
TELEPHONE 0.5%
Cincinnati Bell, Inc. 37,900 2,336
TOBACCO 0.5%
Philip Morris Companies, Inc. 24,700 2,782
TRANSPORTATION SERVICE 1.2%
Coach USA, Inc. (b) 120,000 3,480
Hub Group, Inc. Class A (b) 94,100 2,517
--------
5,997
--------
TOTAL COMMON STOCKS (COST $447,870) 474,470
CONVERTIBLE PREFERRED STOCKS 0.3%
Nuevo Financing 5.75% (COST $1,250) 25,000 1,341
CONVERTIBLE BONDS 0.2%
Halsey Drug Company, Inc. Subordinated
Debentures, 10.00%, Due 8/06/01
(Acquired 8/05/96; COST $588) (c) $600 1,018
SHORT-TERM INVESTMENTS (a) 0.1%
COMMERCIAL PAPER 0.1%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial
Services, Inc., 5.51% 12 12
Johnson Controls, Inc., 5.53% 355 355
--------
TOTAL SHORT-TERM INVESTMENTS (COST $367) 367
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $450,075) 92.9% 477,196
Other Assets and Liabilities, Net 7.1% 36,597
--------
NET ASSETS 100.0% $513,793
========
TRANSACTIONS WITH AFFILIATED COMPANIES
- --------------------------------------
REALIZED DIVIDEND
GAIN/LOSS INCOME MARKET VALUE
AFFILIATE (In Thousands) (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Foxmeyer Health Corporation ($ 58) $-- $2,282
Halsey Drug Company, Inc. (5) -- 6,011
Movie Gallery, Inc. (158) -- 9,230
PIA Merchandising Services, Inc. 173 -- 2,940
Parlux Fragrances, Inc. (7,461) -- --
Sheridan Healthcare, Inc. (2,242) -- --
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------
United States ...................................... 87.7%
United Kingdom ..................................... 4.6
Singapore .......................................... 0.5
Canada ............................................. 0.1
Other Assets and Liabilities, Net .................. 7.1
------
Total 100.0%
======
LEGEND
- ------
(a) Short-term investments include any security which has a maturity of less
than one year.
(b) Non-income producing security.
(c) Restricted security.
(d) The Funds may engage in repurchase agreements where the underlying
collateral consists of U.S. Government securities which are maintained in a
segregated account with a custodian. The market value of the collateral
must exceed the principal amount by at least two percent on a daily basis.
All principal amounts and costs are stated in thousands.
Percentages are stated as a percent of net assets.
25
See notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
For the Year Ended December 31, 1996 (In Thousands)
<CAPTION>
STRONG STRONG STRONG
VALUE FUND OPPORTUNITY FUND GROWTH FUND
---------- ---------------- -----------
INCOME:
<S> <C> <C> <C>
Dividends $ 419 $ 17,944 $ 7,582
Interest 496 11,042 3,947
-------- -------- --------
Total Income 915 28,986 11,529
EXPENSES:
Investment Advisory Fees 303 15,841 10,356
Custodian Fees 9 267 113
Shareholder Servicing Costs 78 3,114 2,426
Reports to Shareholders 27 599 651
Federal and State Registration Fees 29 252 369
Other 12 152 46
-------- -------- --------
Total Expenses 458 20,225 13,961
-------- -------- --------
NET INVESTMENT INCOME (LOSS) 457 8,761 (2,432)
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 69 198,339 68,160
Futures Contracts, Options and Forward Foreign Currency Contracts -- (5,822) (756)
Foreign Currencies -- (1) --
Change in Unrealized Appreciation/Depreciation on:
Investments 3,022 62,427 87,467
Forward Foreign Currency Contracts -- (600) (2)
Foreign Currencies -- (9) --
-------- -------- --------
NET GAIN 3,091 254,334 154,869
-------- -------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,548 $263,095 $152,437
======== ======== ========
STRONG COMMON STRONG SMALL STRONG
STOCK FUND CAP FUND DISCOVERY FUND
---------- -------- --------------
INCOME:
Dividends $ 9,694 $ 130 $ 2,318
Interest 7,097 473 3,467
-------- -------- --------
Total Income 16,791 603 5,785
EXPENSES:
Investment Advisory Fees 11,499 721 5,503
Custodian Fees 211 37 166
Shareholder Servicing Costs 1,391 185 1,402
Reports to Shareholders 239 55 297
Federal and State Registration Fees 101 64 102
Other 116 17 71
-------- -------- --------
Total Expenses 13,557 1,079 7,541
-------- -------- --------
NET INVESTMENT INCOME (LOSS) 3,234 (476) (1,756)
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 174,446 (9,983) 27,383
Futures Contracts, Options and Forward Foreign Currency Contracts (4,808) -- (12,867)
Foreign Currencies -- -- (2)
Change in Unrealized Appreciation/Depreciation on:
Investments 43,486 12,129 (4,067)
Futures Contracts and Forward Foreign Currency Contracts (548) -- (3,448)
Foreign Currencies (4) -- (4)
-------- -------- --------
NET GAIN 212,572 2,146 6,995
-------- -------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $215,806 $ 1,670 $ 5,239
======== ======== ========
26
See notes to financial statements.
</TABLE>
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
December 31, 1996 (In Thousands, Except Per Share Amounts)
<CAPTION>
STRONG STRONG STRONG
VALUE FUND OPPORTUNITY FUND GROWTH FUND
---------- ---------------- -----------
ASSETS:
Investments in Securities, at Value (Cost of $55,761,
<S> <C> <C> <C>
$1,473,418 and $1,093,374, respectively) $ 58,783 $1,771,626 $1,309,812
Receivable from Brokers for Securities Sold 112 1,609 18,924
Receivable for Fund Shares Sold 7 250 178
Dividends and Interest Receivable 56 2,003 865
Other Assets 26 1,606 57
---------- ---------- ----------
Total Assets 58,984 1,777,094 1,329,836
LIABILITIES:
Payable to Brokers for Securities Purchased 3,390 4,970 20,027
Payable for Fund Shares Redeemed 16 713 192
Accrued Operating Expenses and Other Liabilities 83 1,841 1,460
---------- ---------- ----------
Total Liabilities 3,489 7,524 21,679
---------- ---------- ----------
NET ASSETS $ 55,495 $1,769,570 $1,308,157
========== ========== ==========
Capital Shares Outstanding (Unlimited Number Authorized) 4,806 50,180 70,704
NET ASSET VALUE PER SHARE $11.55 $35.26 $18.50
====== ====== ======
STRONG COMMON STRONG SMALL STRONG
STOCK FUND CAP FUND DISCOVERY FUND
---------- -------- --------------
ASSETS:
Investments in Securities, at Value (Cost of $1,051,534,
$144,869 and $450,075, respectively) $1,247,479 $ 156,998 $ 477,196
Receivable from Brokers for Securities Sold 5,088 -- 37,169
Receivable for Fund Shares Sold -- 349 4
Dividends and Interest Receivable 611 171 4,168
Other Assets -- 31 49
---------- ---------- ----------
Total Assets 1,253,178 157,549 518,586
LIABILITIES:
Payable to Brokers for Securities Purchased 5,652 113 4,141
Payable for Fund Shares Redeemed 33 167 74
Accrued Operating Expenses and Other Liabilities 3,847 210 578
---------- ---------- ----------
Total Liabilities 9,532 490 4,793
---------- ---------- ----------
NET ASSETS $1,243,646 $ 157,059 $ 513,793
========== ========== ==========
Capital Shares Outstanding (Unlimited Number Authorized) 61,449 13,002 29,439
NET ASSET VALUE PER SHARE $20.24 $12.08 $17.45
====== ====== ======
27
See notes to financial statements.
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
STRONG
VALUE FUND STRONG OPPORTUNITY FUND STRONG GROWTH FUND
------------- ------------------------------ ------------------------------
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1996 DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1996 DEC. 31, 1995
------------- ------------- ------------- ------------- -------------
(NOTE 1)
OPERATIONS:
<S> <C> <C> <C> <C> <C>
Net Investment Income (Loss) $ 457 $ 8,761 $ 7,106 ($ 2,432) ($ 1,860)
Net Realized Gain 69 192,516 67,590 67,404 8,083
Change in Unrealized
Appreciation/Depreciation 3,022 61,818 186,713 87,465 122,479
---------- ---------- ---------- ---------- --------
Increase in Net Assets
Resulting from Operations 3,548 263,095 261,409 152,437 128,702
CAPITAL SHARE TRANSACTIONS 52,403 363,928 329,001 546,016 426,979
DISTRIBUTIONS:
From Net Investment Income (456) (8,761) (7,106) -- --
In Excess of Net Investment Income -- (2,559) (420) (1,456) (1,160)
From Net Realized Gains -- (173,793) (60,924) (31,662) (6,171)
In Excess of Net Realized Gains -- -- -- -- (11,537)
---------- ---------- ---------- ---------- --------
TOTAL INCREASE IN NET ASSETS 55,495 441,910 521,960 665,335 536,813
NET ASSETS:
Beginning of Year -- 1,327,660 805,700 642,822 106,009
---------- ---------- ---------- ---------- --------
End of Year $ 55,495 $1,769,570 $1,327,660 $1,308,157 $642,822
========== ========== ========== ========== ========
STRONG SMALL
STRONG COMMON STOCK FUND CAP FUND STRONG DISCOVERY FUND
------------------------------- ------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1996 DEC. 31, 1995 DEC. 31, 1996 DEC. 31, 1996 DEC. 31, 1995
------------- ------------- ------------- ------------- -------------
(NOTE 1)
OPERATIONS:
Net Investment Income (Loss) $ 3,234 $ 4,919 ($ 476) ($ 1,756) ($ 1,909)
Net Realized Gain (Loss) 169,638 142,556 (9,983) 14,514 96,222
Change in Unrealized
Appreciation/Depreciation 42,934 106,914 12,129 (7,519) 44,159
---------- ---------- ---------- ---------- --------
Increase in Net Assets
Resulting from Operations 215,806 254,389 1,670 5,239 138,472
CAPITAL SHARE TRANSACTIONS 155,515 129,341 157,492 (36,233) 133,177
DISTRIBUTIONS:
From Net Investment Income (3,234) (4,919) -- -- --
In Excess of Net Investment Income (3,023) (729) (2,103) (35,615) (2,868)
From Net Realized Gains (182,428) (107,197) -- (18,658) (58,131)
---------- ---------- ---------- ---------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 182,636 270,885 157,059 (85,267) 210,650
NET ASSETS:
Beginning of Year 1,061,010 790,125 -- 599,060 388,410
---------- ---------- ---------- ---------- --------
End of Year $1,243,646 $1,061,010 $ 157,059 $ 513,793 $599,060
========== ========== ========== ========== ========
28
See notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1996
1. ORGANIZATION
The accompanying financial statements represent the Strong Growth Funds,
which include the following diversified, open-end management investment
companies registered under the Investment Company Act of 1940:
_ Strong Value Fund (a series of Strong Equity Funds, Inc.)
_ Strong Opportunity Fund, Inc.
_ Strong Growth Fund (a series of Strong Equity Funds, Inc.)
_ Strong Common Stock Fund, Inc.
_ Strong Small Cap Fund (a series of Strong Equity Funds, Inc.)
_ Strong Discovery Fund, Inc.
The Strong Value Fund and Strong Small Cap Fund commenced investment
operations on January 2, 1996.
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, when
held by the Funds, 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, 1996 were as follows (in
thousands):
<TABLE>
<CAPTION>
STRONG STRONG STRONG COMMON STRONG SMALL STRONG
OPPORTUNITY FUND GROWTH FUND STOCK FUND CAP FUND DISCOVERY FUND
---------------- ----------- ---------- -------- --------------
<S> <C> <C> <C> <C> <C>
Aggregate Cost $47,155 $1,000 $23,983 $465 $1,122
Aggregate Fair Value 47,357 1,000 24,309 465 1,697
Percent of Net Assets 2.7% 0.1% 2.0% 0.3% 0.3%
</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 or other investments 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.
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
December 31, 1996
(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, forward foreign currency exchange
contracts and other similar investments 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) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the
reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ
from those estimates.
(J) 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, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG STRONG STRONG
VALUE FUND OPPORTUNITY FUND GROWTH FUND
---------- ---------------- -----------
<S> <C> <C> <C>
Capital Stock $ 52,403 $1,442,315 $1,074,422
Undistributed Net Investment Income (Loss) 1 (294) 91
Undistributed Net Realized Gain 69 29,350 17,206
Net Unrealized Appreciation 3,022 298,199 216,438
---------- ---------- ----------
$ 55,495 $1,769,570 $1,308,157
========== ========== ==========
STRONG COMMON STRONG SMALL STRONG
STOCK FUND CAP FUND DISCOVERY FUND
---------- -------- --------------
Capital Stock $1,021,673 $ 157,492 $ 505,838
Undistributed Net Investment Income (Loss) (720) 6 __
Undistributed Net Realized Gain (Loss) 26,752 (12,568) (19,162)
Net Unrealized Appreciation 195,941 12,129 27,117
---------- ---------- ----------
$1,243,646 $ 157,059 $ 513,793
========== ========== ==========
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the years ended December 31, 1996
and 1995 were as follows (in thousands):
1996 1995
---- ----
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
STRONG VALUE FUND
Shares Sold 5,736 $ 62,709
Dividends Reinvested 39 443
Shares Redeemed (969) (10,749)
------- --------
4,806 $ 52,403
======= ========
STRONG OPPORTUNITY FUND
Shares Sold 20,032 $705,579 18,368 $563,647
Dividends Reinvested 5,146 181,281 2,037 66,138
Shares Redeemed (14,803) (522,932) (9,679) (300,784)
------- -------- ------ --------
10,375 $363,928 10,726 $329,001
======= ======== ====== ========
STRONG GROWTH FUND
Shares Sold 52,717 $942,711 41,849 $575,998
Dividends Reinvested 1,753 32,540 1,180 18,423
Shares Redeemed (24,245) (429,235) (11,681) (167,442)
------- -------- ------- --------
30,225 $546,016 31,348 $426,979
======= ======== ======= ========
STRONG COMMON STOCK FUND
Shares Sold 9,957 $206,140 9,453 $182,025
Dividends Reinvested 9,121 184,686 5,653 110,159
Shares Redeemed (11,308) (235,311) (8,613) (162,843)
------- -------- ------ --------
7,770 $155,515 6,493 $129,341
======= ======== ====== ========
30
<PAGE>
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
1996 1995
---- ----
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
STRONG SMALL CAP FUND
Shares Sold 19,415 $234,309
Dividends Reinvested 170 2,045
Shares Redeemed (6,583) (78,862)
------ --------
13,002 $157,492
====== ========
STRONG DISCOVERY FUND
Shares Sold 23,944 $418,430 21,180 $394,018
Dividends Reinvested 3,134 53,029 3,156 59,230
Shares Redeemed (29,235) (507,692) (17,524) (320,071)
------- -------- ------ --------
(2,157) ($ 36,233) 6,812 $133,177
======= ======== ====== ========
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.
The Funds may invest cash reserves in money market funds sponsored and
managed by Strong Capital Management, Inc., subject to certain limitations.
The terms of such transactions are identical to those of non-related
entitites except that, to aviod duplicate investment advisory fees, the
Advisor remits to each Fund an amount equal to all fees otherwise due to
them under their investment advisory agreement for the assets invested in
such money market funds.
Certain information regarding related party transactions for the year ended
December 31, 1996 is as follows (in thousands):
<TABLE>
<CAPTION>
STRONG STRONG STRONG
VALUE FUND OPPORTUNITY FUND GROWTH FUND
---------- ---------------- -----------
<S> <C> <C> <C>
Payable to Advisor at December 31, 1996 $47 $1,612 $1,183
Other Shareholder Servicing Expenses Paid to Advisor 1 46 45
Unaffiliated Directors' Fees 1 22 12
STRONG COMMON STRONG SMALL STRONG
STOCK FUND CAP FUND DISCOVERY FUND
---------- -------- --------------
Payable to Advisor at December 31, 1996 $1,063 $131 $462
Other Shareholder Servicing Expenses Paid to Advisor 28 4 26
Unaffiliated Directors' Fees 18 1 11
</TABLE>
6. INVESTMENT TRANSACTIONS
<TABLE>
The aggregate purchases and sales of long-term securities during the year ended December 31, 1996 were as follows (in
thousands):
<CAPTION>
STRONG STRONG STRONG
VALUE FUND OPPORTUNITY FUND GROWTH FUND
---------- ---------------- -----------
Purchases:
<S> <C> <C> <C>
U.S. Government and Agency $ -- $ -- $ --
Other 64,606 1,618,452 3,293,445
Sales:
U.S. Government and Agency -- -- --
Other 21,291 1,432,236 2,820,082
STRONG COMMON STRONG SMALL STRONG
STOCK FUND CAP FUND DISCOVERY FUND
---------- -------- --------------
Purchases:
U.S. Government and Agency $ -- $ 3,514 $ 684,659
Other 931,274 434,342 3,367,354
Sales:
U.S. Government and Agency -- 3,243 787,438
Other 949,390 289,047 3,352,884
31
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
December 31, 1996
7. INCOME TAX INFORMATION
At December 31, 1996, the investment cost and gross unrealized appreciation
and depreciation on investments and capital loss carryovers (expiring in
varying amounts through 2004) for Federal income tax purposes were as
follows (in thousands):
<TABLE>
<CAPTION>
STRONG STRONG STRONG
VALUE FUND OPPORTUNITY FUND GROWTH FUND
---------- ---------------- -----------
<S> <C> <C> <C>
Aggregate Investment Cost $ 55,771 $1,475,787 $1,108,018
========== ========== ==========
Aggregate Unrealized:
Appreciation $ 3,762 $ 332,360 $ 215,256
Depreciation (750) (36,521) (13,462)
---------- ---------- ----------
$ 3,012 $ 295,839 $ 201,794
========== ========== ==========
Capital Loss Carryovers __ __ __
========== ========== ==========
STRONG COMMON STRONG SMALL STRONG
STOCK FUND CAP FUND DISCOVERY FUND
---------- -------- --------------
<S> <C> <C> <C>
Aggregate Investment Cost $1,054,693 $ 144,895 $ 451,528
========== ========== ==========
Aggregate Unrealized:
Appreciation $ 242,973 $ 18,783 $ 54,626
Depreciation (50,187) (6,680) (28,958)
---------- ---------- ----------
$ 192,786 $ 12,103 $ 25,668
========== ========== ==========
Capital Loss Carryovers __ $ 6,669 $ 17,680
========== ========== ==========
</TABLE>
For corporate shareholders in the Funds, the percentages of dividend income
distributed for the year ended December 31, 1996, which are designated as
qualifying for the dividends-received deduction are Strong Value Fund
83.5%, Strong Opportunity Fund 57.0%, Strong Growth Fund 100.0%, Strong
Common Stock Fund 16.5%, Strong Small Cap Fund 5.6%, and Strong Discovery
Fund 3.4%.
32
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STRONG VALUE FUND 12-31-96
--------
SELECTED PER-SHARE DATA(a)
- --------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.13
Net Realized and Unrealized Gains
on Investments 1.55
---------
Total from Investment Operations 1.68
LESS DISTRIBUTIONS:
From Net Investment Income (0.13)
---------
Total Distributions (0.13)
---------
NET ASSET VALUE, END OF PERIOD $ 11.55
=========
TOTAL RETURN +16.8%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $ 55,495
Ratio of Expenses to Average Net Assets 1.5%
Ratio of Net Investment Income to
Average Net Assets 1.5%
Portfolio Turnover Rate 89.5%
Average Commission Rate Paid(b) $ 0.0513
<TABLE>
<CAPTION>
STRONG OPPORTUNITY FUND 12-31-96 12-31-95 12-31-94 12-31-93 12-31-92 12-31-91
-------- -------- -------- -------- -------- --------
SELECTED PER-SHARE DATA(a)
- --------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 33.35 $ 27.71 $ 28.23 $ 24.70 $ 21.24 $ 16.29
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.20 0.20 0.13 0.06 0.06 0.21
Net Realized and Unrealized Gains
(Losses) on Investments 5.78 7.28 0.76 5.10 3.62 4.93
---------- ---------- --------- --------- --------- ---------
Total from Investment Operations 5.98 7.48 0.89 5.16 3.68 5.14
LESS DISTRIBUTIONS:
From Net Investment Income (0.20) (0.20) (0.13) (0.06) (0.06) (0.19)
In Excess of Net Investment Income (0.05) (0.01) -- -- -- --
From Net Realized Gains (3.82) (1.63) (1.28) (1.57) (0.16) --
Return of Capital -- -- -- -- -- --
---------- ---------- --------- --------- --------- ---------
Total Distributions (4.07) (1.84) (1.41) (1.63) (0.22) (0.19)
---------- ---------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 35.26 $ 33.35 $ 27.71 $ 28.23 $ 24.70 $ 21.24
========== ========== ========= ========= ========= =========
TOTAL RETURN +18.1% +27.3% +3.2% +21.2% +17.4% +31.7%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $1,769,570 $1,327,660 $ 805,700 $ 443,503 $ 193,208 $ 159,667
Ratio of Expenses to Average Net Assets 1.3% 1.3% 1.4% 1.4% 1.5% 1.7%
Ratio of Net Investment Income to
Average Net Assets 0.6% 0.7% 0.5% 0.2% 0.3% 1.1%
Portfolio Turnover Rate 103.3% 92.5% 59.2% 109.1% 138.5% 270.5%
Average Commission Rate Paid(b) $ 0.0503
STRONG OPPORTUNITY FUND (continued) 12-31-90 12-31-89 12-31-88 12-31-87
-------- -------- -------- --------
SELECTED PER-SHARE DATA(a)
- --------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 19.21 $ 16.90 $ 15.87 $ 15.99
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.63 0.84 1.35 0.27
Net Realized and Unrealized Gains
(Losses) on Investments (2.77) 2.31 1.23 1.65
--------- --------- --------- ---------
Total from Investment Operations (2.14) 3.15 2.58 1.92
LESS DISTRIBUTIONS:
From Net Investment Income (0.74) (0.68) (1.37) (0.24)
In Excess of Net Investment Income -- -- -- --
From Net Realized Gains (0.04) (0.16) -- (1.80)
Return of Capital -- -- (0.18) --
--------- --------- --------- ---------
Total Distributions (0.78) (0.84) (1.55) (2.04)
--------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 16.29 $ 19.21 $ 16.90 $ 15.87
======== ========= ========= =========
TOTAL RETURN - 11.3% +18.5% +16.5% +11.9%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $131,919 $ 205,043 $ 157,353 $ 153,573
Ratio of Expenses to Average Net Assets 1.7% 1.6% 1.6% 1.5%
Ratio of Net Investment Income to
Average Net Assets 3.3% 4.3% 7.4% 1.7%
Portfolio Turnover Rate 275.0% 305.6% 352.4% 371.2%
Average Commission Rate Paid(b)
</TABLE>
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
33
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
STRONG GROWTH FUND 12-31-96 12-31-95 12-31-94
-------- -------- --------
SELECTED PER-SHARE DATA(a)
- --------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.88 $ 11.61 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss (0.03) (0.04) --
Net Realized and Unrealized Gains
on Investments 3.13 4.79 1.72
---------- --------- --------
Total from Investment Operations 3.10 4.75 1.72
LESS DISTRIBUTIONS:
From Net Investment Income -- -- --
In Excess of Net Investment Income (0.02) (0.03) (0.11)
From Net Realized Gains (0.46) (0.16) --
In Excess of Net Realized Gains -- (0.29) --
---------- --------- --------
Total Distributions (0.48) (0.48) (0.11)
---------- --------- --------
NET ASSET VALUE, END OF PERIOD $ 18.50 $ 15.88 $ 11.61
========== ========= ========
TOTAL RETURN +19.5% +41.0% +17.3%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $1,308,157 $ 642,822 $106,009
Ratio of Expenses to Average Net Assets 1.3% 1.4% 1.6%
Ratio of Net Investment Income to
Average Net Assets (0.2%) (0.5%) (0.1%)
Portfolio Turnover Rate 294.9% 321.2% 385.8%
Average Commission Rate Paid(b) $ 0.0478
<TABLE>
<CAPTION>
STRONG COMMON STOCK FUND 12-31-96 12-31-95 12-31-94 12-31-93 12-31-92 12-31-91 12-31-90
-------- -------- -------- -------- -------- -------- --------
SELECTED PER-SHARE DATA(a)
- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 19.77 $ 16.74 $ 17.94 $ 15.07 $ 12.84 $ 10.02 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.06 0.11 0.04 0.04 0.03 (0.02) 0.07
Net Realized and Unrealized Gains
(Losses) on Investments 3.87 5.25 (0.13) 3.74 2.59 5.42 0.03
---------- ----------- ---------- --------- ---------- --------- --------
Total from Investment Operations 3.93 5.36 (0.09) 3.78 2.62 5.40 0.10
LESS DISTRIBUTIONS:
From Net Investment Income (0.06) (0.10) (0.04) (0.04) (0.01) -- (0.08)
In Excess of Net Investment Income (0.05) (0.02) -- -- -- -- --
From Net Realized Gains (3.35) (2.21) (1.07) (0.87) (0.38)(c) (2.58)(d) --
---------- ----------- ---------- --------- ---------- --------- --------
Total Distributions (3.46) (2.33) (1.11) (0.91) (0.39) (2.58) (0.08)
---------- ----------- ---------- --------- ---------- --------- --------
NET ASSET VALUE, END OF PERIOD $ 20.24 $ 19.77 $ 16.74 $ 17.94 $ 15.07 $ 12.84 $ 10.02
========== =========== ========= ========= ========== ======== ========
TOTAL RETURN +20.5% +32.4% -0.5% +25.2% +20.8% +57.1% +1.0%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $1,243,646 $1,061,010 $ 790,125 $ 762,086 $ 179,113 $ 48,549 $ 2,432
Ratio of Expenses to Average Net Assets 1.2% 1.2% 1.3% 1.4% 1.4% 2.0% 2.0%
Ratio of Net Investment Income to
Average Net Assets 0.3% 0.5% 0.3% 0.2% 0.1% (0.5%) 0.9%
Portfolio Turnover Rate 90.9% 91.5% 83.0% 80.9% 291.7% 2,460.7% 291.2%
Average Commission Rate Paid(b) $ 0.0456
</TABLE>
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
(c) Includes $0.22 ordinary income distribution for tax purposes.
(d) Ordinary income distribution for tax purposes.
34
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
STRONG SMALL CAP FUND 12-31-96
--------
SELECTED PER-SHARE DATA(a)
- --------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Loss (0.01)
Net Realized and Unrealized Gains
on Investments 2.28
--------
Total from Investment Operations 2.27
LESS DISTRIBUTIONS:
In Excess of Net Investment Income (0.19)
--------
Total Distributions (0.19)
--------
NET ASSET VALUE, END OF PERIOD $ 12.08
========
TOTAL RETURN +22.7%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $157,059
Ratio of Expenses to Average Net Assets 1.5%
Ratio of Net Investment Income to
Average Net Assets (0.7%)
Portfolio Turnover Rate 419.8%
Average Commission Rate Paid(b) $ 0.0372
<TABLE>
<CAPTION>
STRONG DISCOVERY FUND 12-31-96 12-31-95 12-31-94 12-31-93 12-31-92 12-31-91
-------- -------- -------- -------- -------- --------
SELECTED PER-SHARE DATA(a)
- --------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.96 $ 15.67 $ 18.05 $ 16.01 $ 17.49 $ 12.51
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) (0.15) (0.05) 0.16 (0.01) (0.06) --
Net Realized and Unrealized Gains
(Losses) on Investments 0.35 5.48 (1.17) 3.48 0.23 8.41
-------- -------- -------- -------- -------- --------
Total from Investment Operations 0.20 5.43 (1.01) 3.47 0.17 8.41
LESS DISTRIBUTIONS:
From Net Investment Income -- -- (0.11) -- -- --
In Excess of Net Investment Income (1.12) (0.10) (0.58) (0.45) -- --
From Net Realized Gains (0.59) (2.04) (0.68) (0.98) (1.65)(c) (3.43)(d)
-------- -------- -------- -------- -------- --------
Total Distributions (1.71) (2.14) (1.37) (1.43) (1.65) (3.43)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 17.45 $ 18.96 $ 15.67 $ 18.05 $ 16.01 $ 17.49
======== ======== ======== ======== ======== ========
TOTAL RETURN +1.5% +34.8% -5.7% +22.2% +1.9% +67.6%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $513,793 $599,060 $388,410 $301,789 $193,276 $162,499
Ratio of Expenses to Average Net Assets 1.4% 1.4% 1.5% 1.5% 1.5% 1.6%
Ratio of Net Investment Income to
Average Net Assets (0.3%) (0.4%) 0.7% (0.2%) (0.4%) 0.0%
Portfolio Turnover Rate 792.8% 516.0% 606.1% 668.2% 1,258.6% 1,059.9%
Average Commission Rate Paid(b) $ 0.0339
</TABLE>
STRONG DISCOVERY FUND (continued) 12-31-90 12-31-89 12-31-88
-------- -------- --------
SELECTED PER-SHARE DATA(a)
- --------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.18 $ 11.44 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) 0.27 0.30 0.95
Net Realized and Unrealized Gains
(Losses) on Investments (0.63) 2.43 1.49
-------- -------- --------
Total from Investment Operations (0.36) 2.73 2.44
LESS DISTRIBUTIONS:
From Net Investment Income (0.31) (0.28) (0.97)
In Excess of Net Investment Income -- -- --
From Net Realized Gains -- (0.71) (0.03)
-------- -------- --------
Total Distributions (0.31) (0.99) (1.00)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 12.51 $ 13.18 $ 11.44
======== ======== ========
TOTAL RETURN -2.7% +24.0% +24.5%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $ 56,260 $ 57,914 $13,648
Ratio of Expenses to Average Net Assets 1.9% 1.9% 2.0%
Ratio of Net Investment Income to
Average Net Assets 2.1% 2.4% 11.9%
Portfolio Turnover Rate 493.9% 549.6% 441.6%
Average Commission Rate Paid(b)
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
(c) Includes $1.50 ordinary income distribution for tax purposes.
(d) Includes $0.83 ordinary income distribution for tax purposes.
35
<PAGE>
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., including the schedules of investments in securities, as
of December 31, 1996, 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. We have also audited the accompanying statements of assets and
liabilities of Strong Value Fund and Strong Small Cap Fund (two of the
portfolios constituting the Strong Equity Funds, Inc.), including the schedules
of investments in securities, as of December 31, 1996, and the related
statements of operations, statements of changes in net assets and the financial
highlights for the year then ended. These Funds are collectively referred to
herein as the "Strong Growth Funds." 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, 1996 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, 1996, the results of their
operations, the changes in their net assets, 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 3, 1997
36
<PAGE>
SHAREHOLDER PRIVILEGES*
STRONG FUNDS
[PICTURE OF TELEPHONE]
24-HOUR SERVICE
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
[PICTURE OF DOLLAR SIGN]
AUTOMATIC EXCHANGE
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>
Bulk Rate
U.S. Postage
PAID
Milwaukee, WI
Permit No. 2652
[PICTURE OF TELEPHONE]
To order a free prospectus kit,
CALL 1-800-368-1030.
To learn more about our funds,
discuss an existing account,
or conduct a transaction,
CALL 1-800-368-3863.
If you are a
Financial Professional,
CALL 1-800-368-1683
[PICTURE OF COMPUTER]
Strong Funds On-Line
http://www.strong-funds.com
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 LOGO]
STRONG FUNDS DISTRIBUTORS, INC.
P.O. Box 2936
Milwaukee, Wisconsin 53201
4617A97
