<PAGE>
- -------------------------------------------------------------------------------
THE STRONG
GROWTH FUNDS
ANNUAL REPORT * DECEMBER 31, 1997
[PHOTO OF MAN AND CHILD]
THE STRONG COMMON STOCK FUND
----------------------------
THE STRONG DISCOVERY FUND
----------------------------
THE STRONG GROWTH FUND
----------------------------
THE STRONG GROWTH 20 FUND
----------------------------
THE STRONG MID CAP FUND
----------------------------
THE STRONG OPPORTUNITY FUND
----------------------------
THE STRONG SMALL CAP FUND
----------------------------
THE STRONG VALUE FUND
[STRONG FUNDS LOGO]
STRONG FUNDS
<PAGE>
8
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.
- --------------------------------------------------------------------------------
[PICTURE OF FOLDER LABELED INVESTMENTS]
1. HAVE A PLAN. Even a simple plan can help you take control of your financial
future. Review your plan once a year, or if your circumstances change.
- --------------------------------------------------------------------------------
[PICTURE OF CLOCK]
2. START INVESTING AS SOON AS POSSIBLE. Make time a valuable ally. Let it put
the power of compounding to work for you, while helping to reduce your potential
investment risk.
- --------------------------------------------------------------------------------
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION]
3. DIVERSIFY YOUR PORTFOLIO. 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.
- --------------------------------------------------------------------------------
[PICTURE OF MEMO REMINDER TO INVEST]
4. INVEST REGULARLY. 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.
- --------------------------------------------------------------------------------
[PICTURE OF GRAPH SLOPING UPWARD]
5. MAINTAIN A LONG-TERM PERSPECTIVE. 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.
- --------------------------------------------------------------------------------
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION EMPHASIZING STOCKS]
6. CONSIDER STOCKS TO HELP ACHIEVE MAJOR LONG-TERM GOALS. Over time, stocks have
provided the more powerful returns needed to help the value of your investments
stay well ahead of inflation.
- --------------------------------------------------------------------------------
[PICTURE OF DOLLAR SIGN]
7. KEEP A COMFORTABLE AMOUNT OF CASH IN YOUR PORTFOLIO. To meet current needs,
including emergencies, use a money market fund or a bank account - not your
long-term investment assets.
- --------------------------------------------------------------------------------
[PICTURE OF MAGNIFYING GLASS]
8. KNOW WHAT YOU'RE BUYING. 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 * DECEMBER 31, 1997
TABLE OF CONTENTS
INVESTMENT REVIEWS
The Strong Common Stock Fund.............................................2
The Strong Discovery Fund................................................4
The Strong Growth Fund...................................................6
The Strong Growth 20 Fund................................................8
The Strong Mid Cap Fund.................................................10
The Strong Opportunity Fund.............................................12
The Strong Small Cap Fund...............................................14
The Strong Value Fund...................................................16
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong Common Stock Fund........................................18
The Strong Discovery Fund...........................................20
The Strong Growth Fund..............................................22
The Strong Growth 20 Fund...........................................24
The Strong Mid Cap Fund.............................................24
The Strong Opportunity Fund.........................................26
The Strong Small Cap Fund...........................................28
The Strong Value Fund...............................................30
Statements of Assets and Liabilities....................................32
Statements of Operations................................................33
Statements of Changes in Net Assets.....................................35
Notes to Financial Statements...........................................37
FINANCIAL HIGHLIGHTS.........................................................41
REPORT OF INDEPENDENT ACCOUNTANTS............................................44
<PAGE>
THE STRONG COMMON STOCK FUND
DESPITE A MARKET-WIDE FOCUS ON LARGE-CAP STOCKS, THE FUND FOUND AREAS OF
OPPORTUNITY.
The Strong Common Stock Fund seeks capital growth by investing at least 80% of
its assets in equity securities. The Fund emphasizes small companies that the
Fund's advisor believes are under-researched and attractively valued.
==================================
ASSET ALLOCATION
==================================
Based on net assets as of 12-31-97
[PIE CHART]
Stocks 92.0%
Short-Term Investments 7.9%
Corporate Bonds 0.1%
==================================
For the fiscal year ended December 31, 1997, the U.S. stock market was stronger
than expected, largely driven by the 22 largest multinationals in the S&P 500
Index; stocks such as General Electric and Coca-Cola became "safe havens" for
investors concerned about the economic turmoil in Asia. While this narrow
market hindered small- and mid-cap stocks relative to large ones, the Fund
still delivered a 24.02% return for the year vs. a 22.36% return for its
benchmark, the Russell 2000(reg.tm) Index.*
============================================
TOP FIVE SECTORS
============================================
As of 12-31-97
SECTOR % OF NET ASSETS
- --------------------------------------------
Technology 21.9%
- --------------------------------------------
Consumer Cyclical 16.1%
- --------------------------------------------
Energy 14.0%
- --------------------------------------------
Financial 11.1%
- --------------------------------------------
Capital Equipment 8.3%
- --------------------------------------------
Please see the Schedule of Investments in
Securities for a complete listing of the
Fund's portfolio.
============================================
STRONG RESULTS IN A MIXED MARKET
In the first quarter of 1997, small- and mid-sized companies lagged the
large-cap dominated market indices as the combination of earnings growth and
ready liquidity that large-caps offered proved attractive to investors. During
this period, earnings momentum played a larger role in the performance of many
stocks than did their underlying long-term fundamentals and valuation.
Eventually, the valuation gap between large and small stocks grew too large to
sustain, resulting in a substantial third-quarter rally for small- and mid-cap
stocks. A strong dollar also contributed to this rally, as large multinational
companies are susceptible to reduced earnings expectations when the dollar
rises in value against foreign currencies. However, the rally in small- and
mid-cap stocks was cut short in the fourth quarter as the Asia crisis drove
many investors to seek "safe-haven" stocks that could provide stability in
times of volatility. As a result, the S&P 500 outperformed the Russell
2000(reg.tm) for the year.
A momentum-driven and narrow market is not consistent with our disciplined
investment style. We believe our strength lies in a commitment to our private
value approach to stock selection. We evaluate a company as though we were
considering buying the entire firm, and compare the price we'd be willing to
pay with the current stock price. If the cost of the stock doesn't reflect this
private value--often because the stock is being ignored by analysts-- we will
consider adding it to the portfolio.
RESEARCH UNCOVERED OPPORTUNITIES
During the year, the Fund discovered a number of areas of opportunity. Our
investment universe tends to focus on undiscovered, largely ignored companies
that are selling at substantial discounts to their private value. To be
successful within this universe, an investor needs to adopt a very intensive
research process, of which direct company visits are important. In 1997, we
were able to add several promising holdings to the portfolio, such as
Pittston-Brinks and Falcon Drilling.
In particular, the Fund benefited from an outperformance by many of its media
holdings, which were overweighted in the portfolio. Increased merger and
acquisition activity led to attractive returns in cable and cellular stocks.
The Fund's overweighted energy sector--particularly the oil service group--also
performed well, as oil and gas prices have grown sharply in response to a
greater demand for resources.
============================================================================
FIVE LARGEST STOCK HOLDINGS
============================================================================
As of 12-31-97
% OF NET
SECURITY INDUSTRY ASSETS
- ----------------------------------------------------------------------------
Cox Communications, Media-Radio/TV 1.9%
Inc. Class A
- ----------------------------------------------------------------------------
Tele-Communications, Inc. Media-Radio/TV 1.7%
- ----------------------------------------------------------------------------
Sterling Software, Inc. Computer Software 1.5%
- ----------------------------------------------------------------------------
Xilinx, Inc. Electronics- 1.5%
Semiconductor/Component
- ----------------------------------------------------------------------------
Global Industries, Ltd. Oil Well Equipment 1.5%
and Service
- ----------------------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing
of the Fund's portfolio.
============================================================================
2
<PAGE>
LOOKING AHEAD TO 1998
We believe that as Asian economies struggle to recover, the turmoil will
continue to have an impact on the U.S. market. To mitigate the potential for
higher earnings growth risk in the U.S., we intend to carefully scrutinize
earnings estimates, paying close attention to good management.
The media sector continues to look positive, although much of its valuation
discount has disappeared. While a slowing of Asian demand has recently reduced
oil prices, we expect that suppliers of oil and gas will encounter an
increasingly positive environment. With stock prices lower, we plan to
overweight these sectors.
We're also taking advantage of selected opportunities in the technology
sector--an area whose stocks were the first to reflect the impact of the Asian
crisis. While this sector floundered during the fourth quarter of 1997, we're
cautiously reinvesting there now. As always, we're looking for well-managed,
securely positioned companies selling at values we'd be comfortable owning,
even during downturns.
Thank you for your investment in the Strong Common Stock Fund. We appreciate
your confidence in our investment approach.
Sincerely,
/s/ Richard Trent Weiss
Richard T. Weiss
/s/ Marina Carlson
Marina Carlson
Portfolio Co-managers
[PHOTO OF RICHARD T. WEISS AND MARINA CARLSON]
===================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
===================================================================
From 12-29-89 to 12-31-97
[GRAPH]
THE STRONG COMMON Lipper Growth
STOCK FUND S & P 500 Index* Fund Index*
12-89 10,000 10,000 10,000
12-90 10,100 9,690 9,459
12-91 15,864 12,642 12,895
12-92 19,161 13,605 13,879
12-93 23,988 14,976 15,541
12-94 23,872 15,174 15,297
12-95 31,609 20,876 20,292
12-96 38,078 25,669 23,839
12-97 47,223 34,232 30,532
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.
===================================================================
=================================
AVERAGE ANNUAL
TOTAL RETURNS
=================================
As of 12-31-97
1-YEAR 24.02%
3-YEAR 25.53%
5-YEAR 19.77%
SINCE INCEPTION 21.41%
(on 12-29-89)
=================================
- ------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S. stock
market, without regard to company size. The Russell 2000(reg.tm) 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 Standard & Poor's Micropal. Source of the
Lipper index data is Lipper Analytical Services, Inc.
3
<PAGE>
THE STRONG DISCOVERY FUND
WE MAINTAINED THE FUND'S HISTORIC FOCUS ON SMALL- AND MEDIUM-SIZED GROWTH
COMPANIES. WE BELIEVE THESE STOCKS OFFER THE GREATEST OPPORTUNITIES GOING
FORWARD.
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 companies. Our investment approach combines number-crunching
analysis with direct research, including on-site visits. Through frequent
discussions with management, suppliers, customers, and competitors, we believe
we can identify vital aspects of companies that aren't reflected in their
historical financial statements--or their stock prices.
====================================
ASSET ALLOCATION
====================================
Based on net assets as of 12-31-97
[PIE CHART]
Common Stocks 89.3%
Short-Term Investments 10.6%
Convertible Securities 0.1%
The Fund's asset allocation does not
reflect any futures positions held
by the Fund.
====================================
As your investment managers, we are not accustomed to producing disappointing
investment results. Over our respective careers, we have experienced success
in various market environments. We are acutely aware that our recent results
have not been up to par, and remain dedicated to improving the Fund's
performance going forward.
Although the Strong Discovery Fund's recent investment returns have not kept
pace with the S&P 500's, its portfolio measures up well under the key criteria
we use when selecting stocks--good businesses, good managements, and attractive
valuations. In general, we are pleased with the quality and performance of the
companies in the portfolio. With few exceptions, they have been meeting or
exceeding their profit targets.
We are also pleased with the valuation of the portfolio, especially compared
with the valuations being accorded the companies that comprise the S&P 500
Index. As the following table illustrates, the Fund's average valuation--as
measured by its price/earnings ratio--is the same as the S&P 500's.
However, we estimate the portfolio's earnings growth potential to be more than
three times that of the S&P 500. We seek to produce superior investment results
over time by concentrating on companies with superior growth potential.
P/E RATIO ESTIMATED
FUND (1998 EARNINGS) EARNINGS GROWTH(1)
- -------------------------------------------------------------------------------
Strong Discovery Fund 20.1x 22%
S&P 500 Index 20.1x 7%
In our investment process, we make forward-looking decisions. Our job is to
position the portfolio for what we expect to happen, not to chase after the
market sectors or stocks that have recently performed best.
To that end, we maintained the Fund's historic focus on small- and medium-size
growth companies. We believe that these stocks offer the greatest opportunities
going forward. In recent months, however, the market has heavily favored the
largest, most established firms, as uncertainty in Asian markets has driven a
flight to quality.
As a result, our 10.85% total return for 1997 trailed the 33.36% return of the
S&P 500 and the 19.86% return of our peer group, the Lipper Capital
Appreciation Funds Index. Including 1997's return, the Discovery Fund's average
annual total return since its December 31, 1987 inception is 16.19%, which
keeps us ahead of our peer group's average annual return of 15.00%. But it puts
us below the S&P 500's average annual gain since our inception--a figure we
have historically surpassed--of 18.05%.*(1)
4
<PAGE>
Despite recent setbacks, we continue to find reason for optimism in the current
market environment. The prevailing conditions remind us of 1990 and 1991. Then
as now, investors moved toward indexation--trying to replicate the S&P 500
without regard for the merits of the individual companies or their prices.
Eventually this cycle came to an end, creating an opportunity for investors
willing to consider stocks outside the S&P 500's largest. The Fund capitalized
on the situation then, and posted a 67.61% gain for 1991, versus a 30.47%
return for the S&P 500. Drawing on our combined 40 years of investment
experience, we have currently positioned the Fund to benefit from what may be a
similar scenario.
Thank you for your investment in the Strong Discovery Fund.
Sincerely,
/s/ Richard S. Strong
Richard S. Strong
/s/ Chip Paquelet
Charles A. Paquelet
Portfolio Co-managers
[PHOTO OF RICHARD S. STRONG AND CHARLES A. PAQUELET]
===========================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
===========================================================================
From 12-31-87 to 12-31-97
[GRAPH]
THE STRONG Lipper Capital
DISCOVERY FUND S & P 500 Index* Appreciation Fund Index*
12-87 10,000 10,000 10,000
12-88 12,445 11,661 11,285
12-89 15,428 15,356 14,479
12-90 15,005 14,879 13,352
12-91 25,151 19,412 18,366
12-92 25,639 20,891 19,754
12-93 31,333 22,996 22,865
12-94 29,553 23,300 22,304
12-95 39,885 32,056 29,350
12-96 40,439 39,416 33,738
12-97 44,825 52,566 40,438
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.
===========================================================================
===================================
AVERAGE ANNUAL
TOTAL RETURNS
===================================
As of 12-31-97
1-YEAR 10.85%
3-YEAR 14.90%
5-YEAR 11.82%
10-YEAR 16.19%
SINCE INCEPTION 16.19%
(on 12-31-87)
===================================
------------------------------------------------------------------------------
* 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 Standard &
Poor's Micropal. Source of the Lipper index data is Lipper Analytical
Services, Inc.
1 Earnings growth has been estimated on an annual basis for a projected
five-year period. The Discovery Fund's earnings growth estimate has been
generated from our own analysis of the portfolio's individual securities as
of December 31, 1997. The earnings growth projection for the S&P 500 has
been based on a consensus of earnings estimates from six Wall Street
investment firms as shown by Bloomberg dated December 31, 1997.
5
<PAGE>
THE STRONG GROWTH FUND
WHILE WE ARE CAUTIOUS OVER THE NEAR TERM, WE REMAIN BULLISH FOR THE LONG RUN.
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. The Fund is able to invest in any company regardless of size.
For the year ended December 31, 1997, the Strong Growth Fund generated a
positive total return of 19.05% by maintaining a primarily mid-to-small-cap
portfolio of promising growth stocks.
==================================
ASSET ALLOCATION
==================================
Based on net assets as of 12-31-97
[PIE CHART]
Stocks 89.8%
Short-Term Investments 10.2%
==================================
The S&P 500 Index,* a broad stock market index and benchmark, finished the year
with a 33.36% total return. We believe this difference in performance can be
primarily attributed to an investor preference for very large companies which
were not heavily represented in our portfolio. Illustrating the strength of
large caps is the fact that the average performance of the top 50 companies in
terms of market capitalization size in the S&P 500 was 35.29% for 1997 vs. the
average for the remaining 450 stocks which was only 19.7% for the year.
======================================
TOP FIVE SECTORS
======================================
As of 12-31-97
Sector % of Net Assets
- --------------------------------------
Technology 20.2%
......................................
Financial 14.9%
......................................
Healthcare 13.4%
......................................
Retail 12.6%
......................................
Consumer Cyclical 10.1%
......................................
Please see the Schedule of Investments
in Securities for a complete listing
of the Fund's portfolio.
======================================
SEEKING GROWTH OPPORTUNITIES IN A CHALLENGING MARKET
The strong performance of large-cap equities early in the year was followed by
a brief correction in March and early April, and then followed by a market
rebound to new highs in the second quarter. Even though large-cap stocks led
this rebound, there was a gradual broadening out to small- and mid-cap issues
later in the quarter which favored this Fund's portfolio.
Also, in the second quarter, when it appeared that the Fed would not raise
interest rates any further, we used our modest cash reserves and boosted the
Fund's weightings in higher-growth technology and health care stocks. We also
added to our current positions in retail and media stocks, which typically
benefit from high levels of employment and consumer confidence. At the same
time, we pared back our positions in financial stocks to their market
weightings after their big run-up in the first quarter.
The Strong Growth Fund narrowly outperformed the S&P 500 Index during the
second quarter with a quarterly return of 17.70% vs. 17.46%. And, as the
broadening of the market increased in the third quarter, the Fund's small- to
mid-cap focus continued to generate strong results. The specific sectors which
did well--and where the Fund was overweighted--were those of energy,
technology, and consumer cyclicals.
In October, the world's major markets were forced to deal with concerns over
the economies in Southeast Asia. Those concerns eventually halted the summer
rally in small- and mid-cap stocks, and money flowed into the perceived safety
of U.S. bonds and larger-cap stocks, such as utilities, telephones, drugs and
consumer staples. As a result, the S&P 500 Index had an up quarter, while
small- and mid-cap stocks, the Fund's primary focus, came under heavy selling
pressure. This led to the Fund's underperformance in the fourth quarter.
====================================================================
FIVE LARGEST HOLDINGS
====================================================================
As of 12-31-97
% OF NET
SECURITY INDUSTRY ASSETS
- --------------------------------------------------------------------
Kohl's Corporation Retail-Department Store 2.3%
....................................................................
Cendant Corporation Retail-Specialty 2.3%
....................................................................
Chancellor Media Media-Radio/TV 2.0%
Corporation
....................................................................
Travelers Group, Inc. Insurance-Diversified 1.9%
....................................................................
Schlumberger, Ltd. Oil Well Equipment 1.8%
and Service
....................................................................
Please see the Schedule of Investments in Securities for a complete
listing of the Fund's portfolio.
====================================================================
6
<PAGE>
Specifically, while the Fund had previously sold its holdings in companies with
any significant Southeast Asian exposure early in the third quarter, the
portfolio was negatively impacted in the fourth quarter by the sell-off in most
of the technology and energy stocks. Overall, domestic-oriented groups, such as
media, regional banks, and retailers, were the top performers in the fourth
quarter.
A FOCUS ON FUNDAMENTALS GOING FORWARD
In our opinion, the market could remain in a set trading range over the next
six months until the full effects of the Asian crisis are understood, and we
are likely to see continued volatility in the meantime. Inflation and interest
rates should remain low as the economy and earnings show signs of slowing, and
should produce a better climate for investing in companies with solid assured
earnings growth.
Therefore, we will continue to pay strict attention to the fundamentals and
valuations of the companies in which we invest. While we are cautious over the
near term, we remain bullish for the long run. As always, it is our belief that
outstanding companies with superior earnings and revenue growth will outperform
the market over time.
Thank you for your investment in the Strong Growth Fund. We appreciate the
opportunity to serve you, and look forward to helping you pursue your important
financial goals in the years ahead.
Sincerely,
/s/ Ronald C. Ognar
Ronald C. Ognar
Portfolio Manager
[PHOTO OF RONALD C. OGNAR]
=========================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
=========================================================
From 12-31-93 to 12-31-97
[GRAPH]
THE STRONG Lipper Growth
GROWTH FUND S & P 500 Index* Funds Index*
12-93 10,000 10,000 10,000
12-94 11,727 10,132 9,843
12-95 16,535 13,940 13,057
12-96 19,763 17,140 15,339
12-97 23,528 22,859 19,645
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.
=========================================================
=====================================
AVERAGE ANNUAL
TOTAL RETURNS
=====================================
As of 12-31-97
1-YEAR 19.05%
3-YEAR 26.13%
SINCE INCEPTION 23.85%
(on 12-31-93)
=====================================
- -------------------------------------------------------------------------------
* 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 Standard & Poor's
Micropal. Source of the Lipper index data is Lipper Analytical Services, Inc.
7
<PAGE>
THE STRONG GROWTH 20 FUND
WHILE WE ARE CAUTIOUS OVER THE NEAR TERM, WE REMAIN BULLISH FOR THE LONG RUN.
The Strong Growth 20 Fund seeks capital growth. The Fund invests primarily in
equity securities that the Fund's Advisor believes have above-average growth
prospects. The Fund is able to invest in any company regardless of size. The
Fund is non-diversified and normally concentrates its investments in a core
position of 20 to 30 common stocks.
==================================
ASSET ALLOCATION
==================================
Based on net assets as of 12-31-97
[PIE CHART]
Stocks 87.7%
Short-Term Investments 12.3%
==================================
For the six months ended December 31, 1997, the Strong Growth 20 Fund generated
a total return of 13.87%. That figure is ahead of the Fund's benchmark, the S&P
500 Index*, which generated a 10.58% total return for the same period.
SEEKING GROWTH OPPORTUNITIES IN A CHALLENGING MARKET
The Strong Growth 20 Fund began on June 30, 1997. The Fund benefited from a
summer rally in small- and mid-cap issues throughout the third quarter of 1997,
and posted a 19.95% three-month return in the period ended September 30, 1997
vs. a return of 7.49% for the S&P 500 during the same period. We closed the
quarter with 28 stocks included in the portfolio. Overall, the Fund benefited
during the third quarter from a market in which small- and mid-cap valuations
were brought into line with larger-cap issues.
======================================
TOP FIVE SECTORS
======================================
As of 12-31-97
SECTOR % OF NET ASSETS
- --------------------------------------
Technology 26.6%
......................................
Financial 22.0%
......................................
Capital Equipment 13.4%
......................................
Healthcare 10.6%
......................................
Retail 8.3%
......................................
Please see the Schedule of Investments
in Securities for a complete listing
of the Fund's portfolio.
======================================
In October, all of the world's major markets were forced to deal with concerns
over the economies of Southeast Asia. Those concerns eventually halted the
summer rally in small- and mid-cap stocks, and money flowed into the perceived
safety of U.S. bonds and larger-cap stocks, such as utilities, telephones,
drugs and consumer staples.
The Fund's top performing stocks for the fourth quarter of 1997 included HBO,
Peoplesoft, TCF Financial, and Eli Lilly. During the quarter, the Fund took a
more cautious buying position in light of the volatile market conditions. But
as nervous sellers pushed stock prices down, we were able to find some good
values in core growth stocks.
A FOCUS ON FUNDAMENTALS GOING FORWARD
In our opinion, the market could remain within a set trading range over the
next six months until the full effects of the Asian crisis are understood, and
we are likely to see continued volatility in the meantime. Inflation and
interest rates should remain low as the economy and earnings show signs of
slowing.
===========================================================
FIVE LARGEST HOLDINGS
===========================================================
As of 12-31-97
% OF NET
SECURITY INDUSTRY ASSETS
- -----------------------------------------------------------
TCF Financial Savings and Loan 5.1%
Corporation
...........................................................
Pfizer, Inc. Healthcare- 5.0%
Drug/Diversified
...........................................................
Romac International, Inc. Commercial Service 4.9%
...........................................................
Starwood Lodging Trust Real Estate 4.8%
...........................................................
HBO & Company Computer Service 4.8%
...........................................................
Please see the Schedule of Investments in Securities for a
complete listing of the Fund's portfolio.
===========================================================
8
<PAGE>
Therefore, we will continue to pay strict attention to the fundamentals and
valuations of companies that we own. It is our goal to be invested in the most
promising growth stocks, regardless of market cap or market sector.
While we are cautious over the near term, we remain bullish for the long run.
As always, it is our belief that outstanding companies with superior earnings
and revenue growth will outperform the market over time. We expect that market
volatility will present attractive buying opportunities for stocks with
long-term growth potential.
Thank you for your investment in the Strong Growth 20 Fund. We appreciate the
opportunity to serve you, and look forward to helping you pursue your important
financial goals in the years ahead.
Sincerely,
/s/ Ronald C. Ognar
Ronald C. Ognar
Portfolio Manager
[PHOTO OF RONALD C. OGNAR]
==========================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
==========================================================================
From 6-30-97 to 12-31-97
[GRAPH]
THE STRONG GROWTH Lipper Capital
20 FUND S & P 500 Index* Appreciation Funds Index*
6-97 10,000 10,000 10,000
7-97 11,280 10,796 10,725
8-97 11,280 10,191 10,524
9-97 11,995 10,749 11,149
10-97 11,453 10,390 10,705
11-97 11,122 10,871 10,723
12-97 11,387 11,058 10,881
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.
==========================================================================
====================================
TOTAL RETURNS(1)
====================================
As of 12-31-97
SINCE INCEPTION 13.87%
(on 6-30-97)
====================================
- -------------------------------------------------------------------------------
* 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 Standard &
Poor's Micropal. Source of the Lipper index data is Lipper Analytical
Services, Inc.
1 Total return is not annualized and measures aggregate change in the value
of an investment in the Fund, assuming reinvestment of dividends.
9
<PAGE>
THE STRONG MID CAP FUND
WE REMAIN FOCUSED ON THE HIGHEST QUALITY COMPANIES--THOSE THAT CAN GENERATE
CONSISTENT EARNINGS GROWTH BETTER THAN THE OVERALL MARKET AND WHICH HAVE GOOD
VISIBILITY IN THEIR BUSINESSES.
The Strong Mid Cap Fund seeks capital growth. The Fund invests primarily in
stocks of companies that have midsize market capitalizations. While these
stocks can be very volatile over short time periods, they have the potential to
amply reward investors over time.
==================================
ASSET ALLOCATION
==================================
Based on net assets as of 12-31-97
[PIE CHART]
Stocks 96.6%
Short-Term Investments 3.4%
==================================
In general, the Fund tends to invest in high-growth companies rather than
low-priced value stocks. Growth companies typically offer the benefits of
talented management, strong balance sheets, healthy sales, and accelerating
earnings growth.
===========================================
TOP FIVE SECTORS
===========================================
As of 12-31-97
SECTOR % OF NET ASSETS
- -------------------------------------------
Technology 37.8%
..........................................
Healthcare 16.8%
..........................................
Retail 12.8%
..........................................
Financial 10.0%
..........................................
Consumer Staple 6.4%
..........................................
Please see the Schedule of Investments
in Securities for a complete listing
of the Fund's portfolio.
===========================================
A DIFFICULT YEAR FOR HIGH-GROWTH MID-CAP STOCKS
Despite a relatively benign market backdrop, mid-sized capitalization
higher-growth issues struggled all year. After the sharp sell off in the first
four months of 1997, mid-capitalization issues rebounded. That rebound was cut
short in late October as concern about the Asian countries began to filter into
the U.S. market. During this correction, higher-growth, higher-multiple issues
were hit the hardest. For 1997, the Fund trailed its benchmark, the S&P Midcap
400 Index, returning 13.85% vs. a 32.25% return for the index. This was due to
the Fund's long-term focus on the higher-growth issues within the
mid-capitalization range of the market, while the index includes both growth
and value stocks.*
AN UNUSUAL MARKET FOR MID-CAP STOCKS
The performance of the mid-sized, higher-growth issues in which the Fund
invests was unusual, given both the macroeconomic environment and the financial
results demonstrated by those companies in 1997. During 1997, long rates as
measured by the yield on Treasury bonds dropped from 6.6% to 5.9%; GDP growth
slowed; and inflation remained a non-issue. Historically, against this kind of
economic backdrop we have seen price/earnings ratios expand for those companies
which can deliver earnings growth at a rate consistently above the market
average; instead, they contracted as investors' fears about the future
outweighed the reality of the present. This contraction is even more unusual
when viewed in the context of relative earnings growth: since the first quarter
of 1997, earnings growth for mid-capitalization issues as measured by the S&P
Midcap 400 Index have grown at a pace increasingly faster than that of the S&P
500.
TAKING ADVANTAGE OF MARKET OPPORTUNITIES
We have used the weakness in this sector to further improve the quality of the
portfolio. We remain focused on the highest quality companies--those that can
generate consistent earnings growth better than the overall market and which
have good visibility in their businesses. We remain overweighted in technology
and healthcare, with our holdings diversified across a broad number of
subsectors. The Fund continues to be underweighted in utilities. These
weightings reflect our bias toward companies that have strong and consistent
earnings growth.
Among the more significant themes around which we have structured the portfolio
are: Telecommunications--technological changes within this industry have
provided exciting new opportunities for a variety of companies, while major
deregulation and restructuring of the telecommunications industry is
challenging providers of these services to adapt their business models to a
constantly changing environment. Our focus in this area is on companies well
positioned to benefit from the deregulation/restructuring of this industry and
the convergence of several different mediums of delivery.
New Financial Structures--as the global financial environment becomes
increasingly competitive and traditional financial companies such as banks and
insurance companies bring more discipline to their businesses, opportunities
arise for mid-sized companies to capitalize on pockets of opportunity, through
a lower cost structure or a new method of delivery.
10
<PAGE>
OUR OUTLOOK FOR THE NEAR TERM
The multiple contraction we saw in this end of the market in 1997 has, we
believe, discounted a lot of the macroeconomic risks that exist currently,
while not rewarding these companies for their positives. In our experience,
such negative sentiment does not continue for long periods of time, because
investors inevitably focus on the fundamentals of the individual companies and
the market has over time rewarded companies that demonstrate that they can grow
earnings at a rate significantly faster than the overall market with premium
valuations. While mid-sized, high growth companies always carry more risk than
larger, more established companies, at this point we believe most of those
risks are already reflected in the price of these stocks.
We are concerned about the outlook for the broader market in 1998. We believe
we will see earnings growth slow for the larger multinational companies, due to
a variety of factors. There also appears to be more uncertainty in the
macroeconomic environment than there has been in several years, and it is
possible that uncertainty may persist through most of 1998. We believe the
companies in which we have invested are extremely well positioned to grow their
businesses in the future. Currently they are selling at approximately a 40%
discount to their growth rates, based on 1997 and 1998 earnings. While these
companies are selling at a slight premium to the overall market, they offer
earnings growth almost four times as fast.
Thank you for your investment in the Strong Mid Cap Fund. We appreciate your
confidence in our investment approach.
Sincerely,
/s/ Mary Lisanti
Mary Lisanti
/s/ Jeffrey M.K. Bernstein
Jeffrey M.K. Bernstein
Portfolio Co-managers
[PHOTO OF MARY LISANTI AND JEFFREY M.K. BERNSTEIN]
=======================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
=======================================================================
From 12-31-96 to 12-31-97
[GRAPH]
STRONG MID S & P MidCap 400 S & P 500 Lipper Mid Cap
CAP FUND Stock Index* Stock Index* Funds Index*
12-96 10,000 10,000 10,000 10,000
1-97 10,500 10,375 10,625 10,328
2-97 9,890 10,290 10,708 9,936
3-97 8,964 9,851 10,268 9,338
4-97 8,824 10,107 10,881 9,511
5-97 9,814 10,991 11,544 10,467
6-97 10,104 11,299 12,061 10,820
7-97 11,125 12,418 13,020 11,676
8-97 11,025 12,403 12,291 11,605
9-97 12,115 13,116 12,964 12,347
10-97 11,425 12,545 12,531 11,698
11-97 11,205 12,731 13,111 11,663
12-97 11,385 13,225 13,336 11,757
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 S&P 500 Stock Index and the Lipper Mid Cap 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.
=======================================================================
======================================
AVERAGE ANNUAL
TOTAL RETURN
======================================
As of 12-31-97
SINCE INCEPTION 13.85%
(on 12-31-96)
======================================
- -------------------------------------------------------------------------------
* The S& P 500 Stock Index is an unmanaged index generally representative of
the U.S. stock market, without regard to company size. Previous performance
comparisons have shown the Fund compared to an equivalent investment in the
S&P Midcap 400 Stock Index. We have replaced this index with the S&P 500
Stock Index because it is a broad-based index. The Lipper Mid Cap Funds Index
is an equally-weighted performance index of the largest qualifying funds in
this Lipper category. Source of the S&P index data is Standard & Poor's
Micropal. Source of the Lipper index data is Lipper Analytical Services, Inc.
11
<PAGE>
THE STRONG OPPORTUNITY FUND
THE FUND BENEFITED FROM AN OUTPERFORMANCE BY MANY OF ITS MEDIA HOLDINGS, WHICH
WERE OVERWEIGHTED IN THE PORTFOLIO.
The Strong Opportunity Fund seeks capital growth by investing at least 70% of
its assets in equity securities. The Fund emphasizes medium companies that the
Fund's advisor believes are under-researched and attractively valued.
==================================
ASSET ALLOCATION
==================================
Based on net assets as of 12-31-97
[PIE CHART]
Stocks 89.6%
Short-Term Investments 10.4%
==================================
For the fiscal year ended December 31, 1997, the U.S. stock market was stronger
than expected, largely driven by the 22 largest multinationals of the S&P 500
Index; stocks such as General Electric and Coca-Cola became "safe havens" for
investors concerned about the economic turmoil in Asia. While this narrow
market hindered small- and mid-cap stocks relative to large ones, the Fund
still delivered a 23.45% return for the year vs. a 32.25% return for its
benchmark, S&P Midcap 400 Stock Index, and 28.08% for the Lipper Growth Funds
Index.*
======================================
TOP FIVE SECTORS
As of 12-31-97
======================================
SECTOR % OF NET ASSETS
- --------------------------------------
Technology 20.7%
.......................................
Energy 13.1%
.......................................
Financial 11.9%
.......................................
Consumer Cyclical 10.8%
.......................................
Retail 8.1%
.......................................
Please see the Schedule of Investments
in Securities for a complete listing
of the Fund's portfolio.
======================================
STRONG RESULTS IN A MIXED MARKET
In the first quarter of 1997, small- and mid-sized companies lagged the
large-cap dominated market indices as the combination of earnings growth and
ready liquidity that large-caps offered proved attractive to investors. During
this period, earnings momentum played a larger role in the performance of many
stocks than did their underlying long-term fundamentals and valuation.
Eventually, the valuation gap between large and small stocks grew too large to
sustain, resulting in a substantial third-quarter rally for small- and mid-cap
stocks. A strong dollar also contributed to this rally, as large multinational
companies are susceptible to reduced earnings expectations when the dollar
rises in value against foreign currencies. However, the rally in small- and
mid-cap stocks was cut short in the fourth quarter as the Asia crisis drove
many investors to seek "safe-haven" stocks that could provide stability in
times of volatility. As a result, the S&P 500 outperformed the Russell
2000(reg.tm) for the year.*
A momentum-driven and narrow market is not consistent with our disciplined
investment style. We believe our strength lies in a commitment to our private
value approach to stock selection. We evaluate a company as though we were
considering buying the entire firm, and compare the price we'd be willing to
pay with the current stock price. If the cost of the stock doesn't reflect this
private value--often because the stock is being ignored by analysts--we will
consider adding it to the portfolio.
RESEARCH UNCOVERED OPPORTUNITIES
During the year, the Fund discovered a number of areas of opportunity. Our
investment universe tends to focus on undiscovered, largely ignored companies
that are selling at substantial discounts to their private value. To be
successful within this universe, an investor needs to adopt a very intensive
research process, of which direct company visits are important. In 1997, we
were able to add several promising holdings to the portfolio, such as Cadence
Design and American Power Conversion.
In particular, the Fund benefited from an outperformance by many of its media
holdings, which were overweighted in the portfolio. Increased merger and
acquisition
==============================================================
FIVE LARGEST STOCK HOLDINGS
==============================================================
As of 12-31-97
% OF NET
SECURITY INDUSTRY ASSETS
--------------------------------------------------------------
Tele-Communications, Inc. Media-Radio/TV 3.1%
...............................................................
Comcast Corporation Media-Radio/TV 2.1%
Class A
...............................................................
Cox Communications, Media-Radio/TV 1.9%
Inc. Class A
...............................................................
NIPSCO Industries, Inc. Electric Power 1.6%
...............................................................
Whitman Corporation Diversified Operations 1.6%
...............................................................
Please see the Schedule of Investments in Securities for a
complete listing of the Fund's portfolio.
==============================================================
12
<PAGE>
activity led to attractive returns in cable and cellular stocks. The Fund's
overweighted energy sector--particularly the oil service group--also performed
well, as oil and gas prices have grown sharply in response to a greater demand
for resources.
We plan to avoid companies with products that may be in oversupply in
Asia--particularly products with high labor content. Going into 1998, we also
intend to focus on lowering the median market cap for the Fund.
LOOKING AHEAD TO 1998
We believe that as Asian economies struggle to recover, the turmoil will
continue to have an impact on the U.S. market. To mitigate the potential for
higher earnings growth risk in the U.S., we intend to carefully scrutinize
earnings estimates, paying close attention to good management.
The media sector continues to look positive, although much of its valuation
discount has disappeared. While a slowing of Asian demand has recently reduced
oil prices, we expect that suppliers of oil and gas will encounter an
increasingly positive environment. With stock prices lower, we plan to
overweight these sectors.
We're also taking advantage of selected opportunities in the technology
sector--an area whose stocks were the first to reflect the impact of the Asian
crisis. While this sector floundered during the fourth quarter of 1997, we're
cautiously reinvesting there now. As always, we're looking for well-managed,
securely positioned companies selling at values we'd be comfortable owning,
even during downturns.
Thank you for your investment in the Strong Opportunity Fund. We appreciate
your confidence in our investment approach.
Sincerely,
/s/ Richard Trent Weiss
Richard T. Weiss
/s/ Marina Carlson
Marina Carlson
Portfolio Co-managers
[PHOTO OF RICHARD T. WEISS AND MARINA CARLSON]
========================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
========================================================
From 12-31-85 to 12-31-97
[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 11,559
12-87 17,894 12,490 11,935
12-88 20,841 14,564 13,622
12-89 24,694 19,179 17,364
12-90 21,903 18,583 16,424
12-91 28,845 24,245 22,391
12-92 33,851 26,092 24,100
12-93 41,022 28,721 26,986
12-94 42,325 29,101 26,562
12-95 53,868 40,036 35,236
12-96 63,637 49,229 41,394
12-97 78,558 65,653 53,016
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.
========================================================
==============================
AVERAGE ANNUAL
TOTAL RETURNS
==============================
As of 12-31-97
1-YEAR 23.45%
5-YEAR 18.34%
10-YEAR 15.94%
SINCE INCEPTION 18.74%
(on 12-31-85)
==============================
- -------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S. stock
market, without regard to company size. The S&P Mid Cap 400 Stock Index is an
unmanaged index generally representative of the U.S. market for medium cap
stocks. The Lipper Growth Funds Index is an equally-weighted performance
index of the largest qualifying funds in this Lipper category. The Russell
2000(reg.tm) Index is an unmanaged index generally representative of the U.S.
market for small cap stocks. Source of the S&P and Russell index data is
Standard & Poor's Micropal. Source of the Lipper index data is Lipper
Analytical Services, Inc.
13
<PAGE>
THE STRONG SMALL CAP FUND
WE BELIEVE THE COMPANIES IN WHICH WE HAVE INVESTED ARE EXTREMELY WELL
POSITIONED TO GROW THEIR BUSINESSES IN THE FUTURE.
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 very volatile over short time periods, they have the potential to amply
reward investors over time.
==================================
ASSET ALLOCATION
==================================
Based on net assets as of 12-31-97
[PIE CHART]
Stocks 94.3%
Short-Term Investments 5.7%
==================================
In general, the Fund tends to invest in high-growth companies rather than
low-priced value stocks. Growth companies typically offer the benefits of
talented management, strong balance sheets, healthy sales, and accelerating
earnings growth.
======================================
TOP FIVE SECTORS
======================================
As of 12-31-97
SECTOR % OF NET ASSETS
- --------------------------------------
Technology 36.5%
......................................
Healthcare 23.6%
......................................
Capital Equipment 15.2%
......................................
Retail 8.2%
......................................
Financial 3.4%
......................................
Please see the Schedule of Investments
in Securities for a complete listing
of the Fund's portfolio.
======================================
A DIFFICULT YEAR FOR HIGH-GROWTH SMALL CAP STOCKS
Despite a relatively benign market backdrop, smaller capitalization
higher-growth issues struggled all year. After the sharp sell off in the first
four months of 1997, smaller capitalization issues rebounded. That rebound was
cut short in late October as concern about the Asian countries began to filter
into the U.S. market. During this correction, smaller capitalization,
higher-growth, higher-multiple issues were hit the hardest. For 1997, the Fund
trailed its benchmark, the Russell 2000(reg.tm) Index, returning a negative
4.47% vs. a 22.36% return for the index. This was due to the Fund's long-term
focus on the higher-growth issues within the smaller capitalization range of
the market, while the Russell 2000(reg.tm) Index includes both growth and value
stocks.*
AN UNUSUAL MARKET FOR SMALL-CAP STOCKS
The performance of the smaller, higher-growth issues in which the Fund invests
was unusual, given both the macroeconomic environment and the financial results
demonstrated by those companies in 1997. During 1997, long rates as measured by
the yield on Treasury bonds dropped from 6.6% to 5.9%; GDP growth slowed; and
inflation remained a non-issue. Historically, against this kind of economic
backdrop we have seen price/earnings ratios expand for those companies which
can deliver earnings growth at a rate consistently above the market average;
instead, they contracted as investors' fears about the future outweighed the
reality of the present. This contraction is even more unusual when viewed in
the context of relative earnings growth: since the first quarter of 1997,
earnings growth for smaller capitalization issues as measured by the Russell
2000(reg.tm) Index have grown at a pace increasingly faster than that of the
S&P 500.
TAKING ADVANTAGE OF MARKET OPPORTUNITIES
We have used the weakness in this sector to further improve the quality of the
portfolio. We remain focused on the highest quality companies--those that can
generate consistent earnings growth better than the overall market and which
have good visibility in their businesses. We remain overweighted in technology
and healthcare, with our holdings diversified across a broad number of
subsectors. The Fund continues to be underweighted in financials and utilities.
These weightings reflect our bias toward companies that have strong and
consistent earnings growth.
Among the more significant themes around which we have structured the portfolio
are: Productivity Enhancement--global competition may force management to focus
on technology as a productivity lever in order to control costs and remain
competitive. Our focus in this sector is on companies which provide products
and services to improve productivity by streamlining production and
distribution processes or facilitating information to shorten "time to market."
Flourishing in the Managed Care Environment--though the drive for Healthcare
Reform has slowed in Washington, the marketplace continues to rationalize
healthcare and reduce costs in the system. In this new environment, we have
focused investments on companies that are helping to reduce health care costs
while maintaining or improving the quality of healthcare and those that are
technological innovators who provide quality care at competitive prices.
14
<PAGE>
OUR OUTLOOK FOR THE NEAR TERM
The multiple contraction we saw in this end of the market in 1997 has, we
believe, discounted a lot of the macroeconomic risks that exist currently,
while not rewarding these companies for their positives. In our experience,
such negative sentiment does not continue for long periods of time, because
investors inevitably focus on the fundamentals of the individual companies and
the market has over time rewarded companies that demonstrate that they can grow
earnings at a rate significantly faster than the overall market with premium
valuations. While smaller, high growth companies always carry more risk than
larger, more established companies, at this point we believe most of those
risks are already reflected in the price of these stocks.
We are concerned about the outlook for the broader market in 1998. We believe
we will see earnings growth slow for the larger multinational companies, due to
a variety of factors. There also appears to be more uncertainty in the
macroeconomic environment than there has been in several years, and it is
possible that uncertainty may persist through most of 1998.
We believe the companies in which we have invested are extremely well
positioned to grow their businesses in the future. Currently they are selling
at approximately a 40% discount to their growth rates, based on 1997 and 1998
earnings. While these companies are selling at a slight premium to the overall
market, they offer earnings growth almost four times as fast.
Thank you for your investment in the Strong Small Cap Fund. We appreciate your
confidence in our investment approach.
Sincerely,
/s/ Mary Lisanti
Mary Lisanti
Portfolio Manager
[PHOTO OF MARY LISANTI]
==========================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
==========================================================
From 12-29-95 to 12-31-97
[GRAPH]
THE STRONG S & P 500 Lipper Small Cap
SMALL CAP FUND Stock Index Funds Index
12-95 10,000 10,000 10,000
3-96 11,728 10,537 10,564
6-96 12,469 11,010 11,403
9-96 12,399 11,350 11,547
12-96 12,270 12,296 11,437
3-97 10,056 12,626 10,359
6-97 11,183 14,830 12,127
9-97 13,164 15,941 13,976
12-97 11,721 16,398 13,158
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
Cap 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.
==========================================================
=================================
AVERAGE ANNUAL
TOTAL RETURNS
=================================
As of 12-31-97
1-YEAR -4.47%
SINCE INCEPTION 8.26%
(on 12-29-95)
=================================
- -------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S. stock
market, without regard to company size. The Russell 2000(reg.tm) Index is an
unmanaged index generally representative of the U.S. market for small cap
stocks. The Lipper Small Cap 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 Standard & Poor's Micropal. Source of the
Lipper index data is Lipper Analytical Services, Inc.
15
<PAGE>
THE STRONG VALUE FUND
WE STRIVE TO PERFORM WELL IN ALL MARKETS, BUT PARTICULARLY IN CHOPPY AND
DIFFICULT TIMES.
Thank you for your investment in the Strong Value Fund. We appreciate your
trust and confidence in managing your assets.
==================================
ASSET ALLOCATION
==================================
Based on net assets as of 12-31-97
[PIE CHART]
Stocks 93.8%
Short-Term Investments 6.2%
==================================
A LOOK AT PERFORMANCE
By any measure, 1997 was another great year for the equity markets, marked by
returns substantially above historical averages, though with higher volatility
than in the last several years. Performance in 1997 was driven once again by
mega-cap (the very largest) stocks. The first half of the year was
characterized by a benign political climate and a positive economic atmosphere
marked by stable interest rates. In this environment, the stocks of the
largest companies had the strongest price performance and led the market to
all-time highs. The 27 largest stocks accounted for approximately half of the
gain in the market in the first half of the year.
====================================================
TOP FIVE INDUSTRIES
====================================================
As of 12-31-97
INDUSTRY % OF NET ASSETS
- ----------------------------------------------------
Oil-North American Exploration 6.8%
and Production
....................................................
Real Estate 4.5%
....................................................
Leisure Product 4.3%
....................................................
Healthcare-Patient Care 4.0%
....................................................
Aerospace and Defense 4.0%
....................................................
Please see the Schedule of Investments in Securities
for a complete listing of the Fund's portfolio.
====================================================
In the third quarter, the market broadened to include small- and medium-sized
companies. During this quarter, the Strong Value Fund had its best quarterly
performance relative to its benchmark. In the fourth quarter, the mega-caps
were market leaders again, along with utility companies as interest rates
declined to multi-year lows. We strive to perform well in all markets, but
particularly in choppy and difficult times. During March, August and
October--the three months in 1997 that the equity market declined--the Fund was
down less than the market's drop.
For the one-year period ended December 31, 1997, the Strong Value Fund returned
a healthy 25.93%. This compared with the Lipper Growth and Income Funds Index
up 26.96%, the Russell 1000(reg.tm) Value Index (the Fund's benchmark during
the reporting period) up 35.18%, and the Russell 3000(reg.tm) Index up 31.78%.
Investors should note that the Value Fund's bench-mark going forward will be
the Russell 3000(reg.tm) Index, which we believe is a more appropriate index
for comparison to the Fund.*
THE VALUE FUND APPROACH
In all market environments, the Strong Value Fund seeks capital appreciation by
investing primarily in equity securities using a value approach in stock
selection. On a stock-by-stock basis, the Fund seeks companies that are selling
at a discount--to their historical range, peer group or unrecognized firm
value. Our experienced research team relies on fundamental analysis of each
individual stock to help us identify catalysts such as management changes,
corporate restructuring, or underlying shifts in a particular industry that may
drive a company's valuation significantly higher.
Currently, we are finding investment opportunities in the energy sector and in
companies that had
============================================================================
FIVE LARGEST STOCK HOLDINGS
============================================================================
As of 12-31-97
% OF NET
SECURITY INDUSTRY ASSETS
- ----------------------------------------------------------------------------
Eastman Kodak Company Leisure Product 4.3%
............................................................................
Pioneer Natural Oil-North American 3.1%
Resources Company Exploration and Production
............................................................................
Harcourt General, Inc. Media-Publishing 3.0%
............................................................................
Union Pacific Resources Oil-North American 3.0%
Group, Inc. Exploration and Production
............................................................................
Waste Management, Inc. Pollution Control 3.0%
............................................................................
Please see the Schedule of Investments in Securities for a complete listing
of the Fund's portfolio.
============================================================================
16
<PAGE>
significant problems in 1997 resulting in stock prices near 52 week lows.
OUTLOOK
We expect 1998 to be a difficult year, marked by extreme volatility in the
markets. Results will depend on the degree to which Asian financial crises are
resolved. Our expectation is for a slowing economy with a decline in the growth
rate of corporate profits. We also believe that layoffs will accelerate,
increasing the unemployment rate by the end of the first quarter, and that wage
inflation will not be a major concern.
Regardless of market levels, we will seek companies that represent value in
relation to companies' assets, earnings power or cash-generating ability. We
search for catalysts that will bring out value not currently recognized by the
market. We do not buy technology or foreign securities. Our discipline of
avoiding foreign securities should help us navigate the turmoil in Asian
markets. Our discipline is also to sell stocks that reach the upper end of
their valuation and purchase stocks at the low end of their valuation.
Thank you again. We look forward to another exciting year.
Sincerely,
/s/ Laura J. Sloate
Laura J. Sloate
/s/ Jeffrey B. Cohen
Jeffrey B. Cohen
Portfolio Co-managers
[PHOTO OF LAURA J. SLOATE AND JEFFREY B. COHEN]
============================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
============================================================
From 12-29-95 to 12-31-97
[GRAPH]
THE STRONG S & P 500 Lipper Growth and
VALUE FUND Stock Index* Income Funds Index*
12-95 10,000 10,000 10,000
3-96 10,869 10,537 10,574
6-96 11,073 11,010 10,846
9-96 11,188 11,350 11,196
12-96 11,682 12,296 12,069
3-97 11,754 12,626 12,272
6-97 13,140 14,830 13,992
9-97 14,506 15,941 15,163
12-97 14,710 16,398 15,323
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.
============================================================
==================================
AVERAGE ANNUAL
TOTAL RETURNS
==================================
As of 12-31-97
1-YEAR 25.93%
SINCE INCEPTION 21.29%
(on 12-29-95)
==================================
- -------------------------------------------------------------------------------
* The Russell 1000(reg.tm) Value Index is an unmanaged index generally
representative of the U.S. market for large cap stocks. It contains
securities that value managers typically select from the Russell 1000(reg.tm)
Index. 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. The Russell 3000(reg.tm) Index is
an unmanaged index generally representative of the U.S. stock market. Source
of the S&P and the Russell index data is Standard & Poor's Micropal. Source
of the Lipper index data is Lipper Analytical Services, Inc.
17
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES DECEMBER 31, 1997
- -------------------------------------------------------------------------------
===============================================================================
STRONG COMMON STOCK FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
COMMON STOCKS 91.6%
AIRLINE 0.1%
Air New Zealand, Ltd. Class B 742,000 $ 1,486,534
BANK - MONEY CENTER 0.4%
Canadian Imperial Bank of Commerce 83,000 2,610,264
Grupo Financiero Banamex Accival SA de CV (b) 546,000 1,631,568
Standard Chartered PLC 239,000 2,607,819
------------
6,849,651
BANK - REGIONAL 2.7%
City National Corporation 600,000 22,162,500
Old Kent Financial Corporation 517,000 20,486,125
------------
42,648,625
BANK - SUPER REGIONAL 2.6%
BankBoston Corporation 230,000 21,605,625
Norwest Corporation 495,000 19,119,375
------------
40,725,000
CHEMICAL - SPECIALTY 1.1%
M.A. Hanna Company 700,000 17,675,000
CLOSED-END FUND 0.1%
Morgan Stanley Emerging Markets Fund, Inc. 84,000 1,097,250
COMMERCIAL SERVICE 3.9%
Pittston Company Brinks Group 585,000 23,546,250
Rollins Truck Leasing Corporation 1,255,000 22,433,125
Sensormatic Electronics Corporation 890,000 14,629,375
------------
60,608,750
COMPUTER - PERIPHERAL EQUIPMENT 2.0%
Microchip Technology, Inc. (b) 600,000 18,000,000
Read-Rite Corporation (b) 800,000 12,600,000
------------
30,600,000
COMPUTER - PERSONAL & WORKSTATION 1.2%
Data General Corporation (b) 1,100,000 19,181,250
COMPUTER SOFTWARE 2.9%
Sterling Software, Inc. (b) 588,000 24,108,000
Sybase, Inc. (b) 1,550,000 20,634,375
------------
44,742,375
CONGLOMERATE 0.2%
General Electric Company PLC 530,000 3,443,630
DIVERSIFIED OPERATIONS 1.9%
Canadian Pacific, Ltd. 167,000 4,550,750
Johnson Controls, Inc. 400,000 19,100,000
Laidlaw, Inc. 425,000 5,790,625
------------
29,441,375
ELECTRICAL EQUIPMENT 1.3%
Molex, Inc. Class A 720,000 20,700,000
ELECTRONIC PARTS DISTRIBUTION 1.0%
Marshall Industries (b) 500,000 15,000,000
ELECTRONICS - SEMICONDUCTOR/COMPONENT 4.4%
Cypress Semiconductor, Inc. (b) 1,800,000 15,300,000
Ibiden Company, Ltd. 107,000 1,294,983
Kemet Corporation (b) 805,000 15,596,875
Novellus Systems, Inc. (b) 385,000 12,440,312
Xilinx, Inc. (b) 675,000 23,667,188
------------
68,299,358
FOOD 1.2%
Lion Nathan, Ltd. 633,000 1,418,871
Quaker Oats Company 340,000 17,935,000
------------
19,353,871
HEALTHCARE - BIOMEDICAL/GENETIC 2.6%
Centocor, Inc. (b) 586,000 19,484,500
Vertex Pharmaceuticals, Inc. (b) 660,000 21,780,000
------------
41,264,500
HEALTHCARE - MEDICAL SUPPLY 1.4%
Sybron International Corporation (b) 482,000 22,623,875
HEALTHCARE - PATIENT CARE 2.7%
Tenet Healthcare Corporation (b) 700,000 23,187,500
WellPoint Health Networks, Inc. (b) 445,000 18,801,250
------------
41,988,750
HOUSING RELATED 2.5%
Ferro Corporation 780,000 18,963,750
RPM, Inc. 1,326,000 20,221,500
------------
39,185,250
INSURANCE - LIFE 1.3%
Reliastar Financial Corporation 475,000 19,564,062
INSURANCE - MULTI-LINE 1.3%
Horace Mann Educators Corporation 715,000 20,332,812
LEISURE PRODUCT 0.7%
Callaway Golf Company 400,000 11,425,000
MACHINERY - MISCELLANEOUS 1.3%
Flowserve Corporation 700,000 19,556,250
MEDIA - PUBLISHING 3.0%
New York Times Company Class A 335,000 22,151,875
News Corporation, Ltd. Sponsored ADR 900,000 20,081,250
Torstar Corporation - Class B 151,200 5,236,409
------------
47,469,534
MEDIA - RADIO/TV 6.1%
Cox Communications, Inc. Class A (b) 740,000 29,646,250
Flextech PLC (b) 956,000 8,219,057
LIN Television Corporation (b) 170,000 9,265,000
Tele-Communications, Inc. TCI Group Series A (b) 950,000 26,540,633
Tele-Communications International, Inc. Class A (b) 1,229,000 22,122,000
------------
95,792,940
OIL - INTERNATIONAL INTEGRATED 0.2%
Elf Aquitaine SA Sponsored ADR 55,000 3,224,375
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 7.2%
Devon Energy Corporation 487,000 18,749,500
EEX Corporation (b) 2,370,000 21,478,125
Forcenergy, Inc. (b) 730,000 19,116,875
Harken Energy Corporation (b) 1,955,000 13,685,000
Noble Affiliates, Inc. 580,000 20,445,000
Pioneer Natural Resources Company 685,000 19,822,188
------------
113,296,688
OIL - NORTH AMERICAN INTEGRATED 1.3%
Valero Energy Corporation 630,000 19,805,625
OIL WELL EQUIPMENT & SERVICE 5.3%
Falcon Drilling Company, Inc. (b) 627,000 21,984,188
Global Industries, Ltd. (b) 1,390,000 23,630,000
Nabors Industries, Inc. (b) 615,000 19,334,062
Offshore Logistics, Inc. (b) 815,000 17,420,625
------------
82,368,875
18
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
STRONG COMMON STOCK FUND (CONTINUED)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS 1.1%
Consolidated Papers, Inc. 335,000 $ 17,880,625
PRECIOUS METAL/GEM/STONE 0.5%
Newmont Mining Company 280,000 8,225,003
REAL ESTATE 2.8%
Apartment Investment & Management Company
Class A 560,000 20,580,000
Castle & Cooke, Inc. (b) 350,000 5,906,250
Security Capital Group, Inc. Class B (b) 507,000 16,477,500
Shortland Properties, Ltd. 900,000 457,301
--------------
43,421,051
RETAIL - DEPARTMENT STORE 0.2%
Hudson's Bay Company 175,000 3,899,636
RETAIL - FOOD CHAIN 1.3%
American Stores Company 860,000 17,683,750
Distribucion y Servicio SA ADR (b) 30,000 556,875
Santa Isabel SA Sponsored ADR 90,000 1,575,000
--------------
19,815,625
RETAIL - RESTAURANT 2.8%
IHOP Corporation (b) (f) 492,000 15,990,000
Outback Steakhouse, Inc. (b) 703,000 20,211,250
Sbarro, Inc. 305,000 8,025,313
--------------
44,226,563
RETAIL - SPECIALTY 3.4%
CompUSA, Inc. (b) 472,000 14,632,000
The Gymboree Corporation (b) 110,000 3,011,250
Intimate Brands, Inc. 900,000 21,656,250
Musicland Stores Corporation (b) (f) 1,900,000 13,893,750
--------------
53,193,250
SHOE & APPAREL MANUFACTURING 3.7%
Nine West Group, Inc. (b) 615,000 15,951,563
Unifi, Inc. 540,000 21,971,250
Warnaco Group, Inc. Class A 640,000 20,080,000
--------------
58,002,813
SOAP & CLEANING PREPARATION 1.3%
Ecolab, Inc. 357,000 19,791,187
TELECOMMUNICATION EQUIPMENT 1.2%
Belden, Inc. 530,000 18,682,500
TELECOMMUNICATION SERVICE 9.4%
Aerial Communications, Inc. (b) 1,720,000 12,255,000
AirTouch Communications, Inc. (b) 550,000 22,859,375
Cable & Wireless Communications PLC (b) 803,000 3,491,508
Cable & Wireless Communications PLC
Sponsored ADR (b) 630,000 15,356,250
Cable & Wireless PLC 290,000 2,574,426
Cellular Communications International, Inc. (b) 55,000 2,571,250
NTL, Inc. (b) 740,000 20,627,500
Paging Network, Inc. (b) 1,570,000 16,877,500
PanAmSat Corporation (b) 171,000 7,374,375
U.S. West, Inc. Media Group (b) 817,000 23,590,875
United States Cellular Corporation (b) 607,000 18,817,000
--------------
146,395,059
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $1,164,018,413) 1,433,284,517
- ------------------------------------------------------------------------------
PREFERRED STOCKS 0.4%
Henkel KGaA-Vorzug 63,000 3,976,919
Telecom Italia Spa 440,000 1,933,855
- ------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (COST $5,178,722) 5,910,774
- ------------------------------------------------------------------------------
CORPORATE BONDS 0.1%
Musicland Group, Inc. Senior Subordinated Notes,
9.00%, Due 6/15/03 (f) $ 1,000,000 925,000
- ------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (COST $715,579) 925,000
- ------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 8.0%
COMMERCIAL PAPER 0.1%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.49% 440,000 440,000
General Mills, Inc., 5.33% 100 100
Johnson Controls, Inc., 5.33% 463,000 463,000
Warner Lambert Company, 5.49% 224,200 224,200
--------------
1,127,300
MONEY MARKET 2.3%
Strong Institutional Money Fund (f) 36,000,000 36,000,000
REPURCHASE AGREEMENT 5.6%
ABN-AMRO Chicago Corporation (Dated 12/31/97),
6.82%, Due 1/02/98 (Repurchase proceeds
$87,933,304); Collateralized by: $140,999,000
United States Treasury Strips, Zero %, Due
2/15/99 - 8/15/10 (Market Value $89,791,835) (e) 87,900,000 87,900,000
UNITED STATES GOVERNMENT ISSUES 0.0%
United States Treasury Bills, Due 2/12/98 550,000 546,843
- ------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $125,574,099) 125,574,143
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $1,295,486,813) 100.1% 1,565,694,434
Other Assets and Liabilities, Net (0.1%) (867,507)
- ------------------------------------------------------------------------------
NET ASSETS 100.0% $1,564,826,927
==============================================================================
COUNTRY DIVERSIFICATION
- ------------------------------------------------------------------------------
Percentage of Net Assets
- ------------------------------------------------------------------------------
United States........................................................ 94.0%
United Kingdom....................................................... 2.3
Canada............................................................... 1.4
Australia............................................................ 1.3
Germany.............................................................. 0.3
France............................................................... 0.2
New Zealand.......................................................... 0.2
Chile................................................................ 0.1
Italy................................................................ 0.1
Mexico............................................................... 0.1
Japan................................................................ 0.1
Other Assets and Liabilities, Net.................................... (0.1)
- ------------------------------------------------------------------------------
Total 100.0%
- ------------------------------------------------------------------------------
19
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) DECEMBER 31, 1997
- -------------------------------------------------------------------------------
===============================================================================
STRONG DISCOVERY FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
COMMON STOCK 89.3%
AEROSPACE & DEFENSE 0.8%
The Boeing Company 13,000 $ 636,187
Hexcel Corporation (b) 96,550 2,407,716
-----------
3,043,903
BANK - MONEY CENTER 1.7%
BankAmerica Corporation 17,100 1,248,300
Chase Manhattan Corporation 20,700 2,266,650
Citicorp 24,700 3,123,006
-----------
6,637,956
COMMERCIAL SERVICE 13.9%
Accustaff, Inc. (b) 109,100 2,509,300
Avis Rent A Car, Inc. (b) 178,600 5,704,038
H & R Block, Inc. 50,600 2,267,513
Budget Group, Inc. Class A (b) 364,400 12,594,575
Coinmach Laundry Corporation (b) 152,900 3,746,050
Consolidated Graphics, Inc. (b) 85,600 3,991,100
Getty Communications PLC Sponsored ADR (b) 81,400 1,210,825
Lamalie Associates, Inc. (b) 37,900 758,000
Lason Holdings, Inc. (b) 175,800 4,680,675
Mac-Gray Corporation (b) 36,500 570,312
Outdoor Systems, Inc. (b) 78,600 3,016,275
Pittston Company Brinks Group 81,800 3,292,450
Rollins Truck Leasing Corporation 58,800 1,051,050
Universal Outdoor Holdings, Inc. (b) 151,900 7,898,800
-----------
53,290,963
COMPUTER - MAINFRAME 1.6%
International Business Machines Corporation 58,500 6,116,906
COMPUTER - PERIPHERAL EQUIPMENT 1.1%
Storage Technology Corporation (b) 65,700 4,069,294
COMPUTER SERVICE 2.0%
America Online, Inc. (b) 18,000 1,605,375
Ceridian Corporation (b) 15,200 696,350
Fiserv, Inc. (b) 18,000 884,250
Pierce Leahy Corporation (b) 193,800 3,972,900
USWeb Corporation (b) 34,300 321,563
-----------
7,480,438
COMPUTER SOFTWARE 1.9%
Computer Associates International, Inc. 30,050 1,588,894
Hummingbird Communications, Ltd. (b) 82,150 2,592,859
Phoenix International, Inc. (b) 88,500 1,305,375
Sterling Commerce, Inc. (b) 27,000 1,037,813
Tecnomatix Technologies, Ltd. (b) 10,400 351,000
Versant Object Technology Corporation (b) 22,800 314,925
-----------
7,190,866
CONSUMER - MISCELLANEOUS 1.5%
Equity Corporation International (b) 81,600 1,887,000
Service Corporation International 103,500 3,823,031
-----------
5,710,031
ELECTRICAL EQUIPMENT 1.4%
Berg Electronics Corporation (b) 233,500 5,312,125
ELECTRONIC INSTRUMENTATION 0.3%
Molecular Dynamics, Inc. (b) 9,700 157,625
VWR Scientific Products Corporation (b) 41,500 1,172,375
-----------
1,330,000
ELECTRONIC PARTS DISTRIBUTION 0.8%
Kent Electronics Corporation (b) 117,000 2,939,625
ELECTRONICS - SEMICONDUCTOR/COMPONENT 0.5%
General Cable Corporation 57,800 2,091,637
FINANCE - MISCELLANEOUS 1.0%
American Express Company 30,400 2,713,200
CheckFree Corporation (b) 33,000 891,000
-----------
3,604,200
FOOD 0.3%
Lancaster Colony Corporation 17,100 964,013
HEALTHCARE - BIOMEDICAL/GENETIC 0.1%
Pharmacopeia, Inc. (b) 14,100 225,600
HEALTHCARE - DRUG/DIVERSIFIED 0.3%
Halsey Drug Company, Inc. (b) (f) 694,220 1,084,719
Halsey Drug Company, Inc. (Acquired 10/01/96;
Cost $9,165) (b) (d) (f) 2,820 3,965
-----------
1,088,684
HEALTHCARE - INSTRUMENTATION 0.5%
Arterial Vascular Engineering, Inc. (b) 18,900 1,228,500
Datascope Corporation (b) 28,700 742,612
-----------
1,971,112
HEALTHCARE - MEDICAL SUPPLY 7.9%
Cohr, Inc. (b) 183,100 2,334,525
Covance, Inc. (b) 54,000 1,073,250
Dentsply International, Inc. 45,000 1,372,500
Gulf South Medical Supply, Inc. (b) 59,400 2,212,650
McKesson Corporation 27,000 2,921,062
Henry Schein, Inc. (b) 167,820 5,873,700
Steris Corporation (b) 54,000 2,605,500
Suburban Ostomy Supply Company, Inc. (b) 251,700 2,926,013
Sybron International Corporation (b) 187,300 8,791,394
-----------
30,110,594
HEALTHCARE - PATIENT CARE 0.2%
Coram Healthcare Corporation (b) 852 2,875
United Dental Care, Inc. (b) 85,500 919,125
-----------
922,000
HEALTHCARE - PRODUCT 1.0%
Boston Scientific Corporation (b) 77,700 3,564,488
Sabratek Corporation (b) 12,500 359,375
-----------
3,923,863
HOUSEHOLD APPLIANCES & FURNISHINGS 0.8%
Harman International Industries, Inc. 68,000 2,885,750
INSURANCE - LIFE 0.5%
Conseco, Inc. 41,400 1,881,112
INSURANCE - MULTI-LINE 1.1%
MGIC Investment Corporation 65,900 4,382,350
LEISURE PRODUCT 2.0%
Action Performance Companies, Inc. 56,300 2,132,363
Harley-Davidson, Inc. 108,500 2,970,187
SCP Pool Corporation (b) 135,500 2,608,375
-----------
7,710,925
LEISURE SERVICE 4.1%
American Skiing Company (b) 327,600 4,873,050
Bally Total Fitness Holding Corporation (b) 158,300 3,462,813
Candlewood Hotel Company, Inc. (b) 91,800 803,250
Host Marriott Corporation (b) 64,700 1,269,737
International Game Technology 108,000 2,727,000
Metro-Goldwyn-Mayer, Inc. (b) 45,000 900,000
Promus Hotel Corporation (b) 42,383 1,780,065
-----------
15,815,915
MACHINE TOOL 1.1%
Applied Power, Inc. 59,900 4,133,100
20
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
STRONG DISCOVERY FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
MACHINERY - TRANSPORTATION EQUIPMENT & PARTS 0.6%
Miller Industries, Inc. (b) 211,900 $ 2,277,925
MEDIA - RADIO/TV 1.8%
CBS Corporation 52,500 1,545,469
Clear Channel Communications, Inc. (b) 38,400 3,050,400
Sinclair Broadcast Group, Inc. Class A (b) 45,700 2,130,762
------------
6,726,631
NATURAL GAS DISTRIBUTION 0.1%
WICOR, Inc. 12,125 563,055
OFFICE AUTOMATION 2.2%
Danka Business Systems PLC Sponsored ADR 471,900 7,520,906
Xerox Corporation 12,100 893,131
------------
8,414,037
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 5.0%
Ocean Energy, Inc. (b) 201,600 9,941,400
Union Pacific Resources Group, Inc. 378,300 9,173,775
------------
19,115,175
OIL WELL EQUIPMENT & SERVICE 5.5%
Cooper Cameron Corporation (b) 14,400 878,400
ENSCO International, Inc. 76,500 2,562,750
Global Marine, Inc. (b) 50,300 1,232,350
Helmerich & Payne, Inc. 7,200 488,700
Marine Drilling Companies, Inc. (b) 166,500 3,454,875
Nabors Industries, Inc. (b) 79,500 2,499,281
Noble Drilling Corporation (b) 202,100 6,189,313
Rowan Companies, Inc. (b) 4,500 137,250
Santa Fe International Corporation 12,000 488,250
Schlumberger, Ltd. 38,500 3,099,250
------------
21,030,419
PERSONAL & COMMERCIAL LENDING 1.9%
Associates First Capital Corporation 60,000 4,267,500
Household International, Inc. 22,500 2,870,156
------------
7,137,656
POLLUTION CONTROL 0.3%
Waste Management, Inc. 39,200 1,078,000
RAILROAD 1.2%
Burlington Northern Santa Fe Corporation 35,500 3,299,281
Wisconsin Central Transportation Corporation (b) 63,200 1,477,300
------------
4,776,581
REAL ESTATE 0.6%
Security Capital Group, Inc. Class B (b) 14,700 477,750
Sunstone Hotel Investors, Inc. 110,100 1,899,225
------------
2,376,975
RETAIL - DISCOUNT & VARIETY 0.9%
Consolidated Stores Corporation (b) 76,500 3,361,219
RETAIL - DRUG STORE 0.7%
Rite Aid Corporation 44,900 2,635,069
RETAIL - FOOD CHAIN 0.1%
JP Foodservice, Inc. (b) 15,300 565,144
RETAIL - RESTAURANT 1.5%
Casa Ole Restaurants, Inc. (b) 41,300 144,550
Logan's Roadhouse, Inc. (b) 46,300 717,650
PJ America, Inc. (b) 96,400 1,446,000
Rainforest Cafe, Inc. (b) 107,900 3,560,700
------------
5,868,900
RETAIL - SPECIALTY 13.3%
Black Box Corporation (b) 190,700 6,746,013
Cendant Corporation (b) 121,500 4,176,562
Central Garden & Pet Company (b) 380,600 9,990,750
Cole National Corporation Class A (b) 94,025 2,814,873
Eagle Hardware & Garden, Inc. (b) 198,000 3,836,250
Fingerhut Companies, Inc. 52,100 1,113,637
Goody's Family Clothing, Inc. (b) 56,100 1,525,219
The Hertz Corporation 91,750 3,692,937
Just For Feet, Inc. (b) 59,700 783,563
MSC Industrial Direct Company, Inc. Class A (b) 40,700 1,724,663
Movie Gallery, Inc. (b) (f) 498,725 1,465,005
Regis Corporation 82,600 2,075,325
Renters Choice, Inc. (b) 159,100 3,261,550
Staples, Inc. (b) 91,500 2,539,125
Wilmar Industries, Inc. (b) 117,100 2,795,762
Zale Corporation (b) 106,700 2,454,100
------------
50,995,334
SAVINGS & LOAN 2.2%
TCF Financial Corporation 244,600 8,301,112
SHOE & APPAREL MANUFACTURING 0.3%
Rocky Shoes & Boots, Inc. (b) 81,300 1,239,825
TELECOMMUNICATION EQUIPMENT 0.2%
Aware, Inc. (b) 33,300 341,325
Communications Central, Inc. (b) 47,500 477,969
------------
819,294
TELECOMMUNICATION SERVICE 0.1%
Mobile Telecommunication Technologies
Corporation (b) 19,700 433,400
TOBACCO 1.3%
800-JR CIGAR, Inc. (b) 115,800 2,895,000
Philip Morris Companies, Inc. 49,740 2,253,844
------------
5,148,844
TRANSPORTATION SERVICE 1.1%
Hub Group, Inc. Class A (b) 141,100 4,197,725
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $307,616,263) 341,895,282
- ------------------------------------------------------------------------------
WARRANTS 0.0%
Halsey Drug Company, Inc. Warrants, Expire
12/26/01 (Acquired 7/21/97) (b) (d) (f) 21,429 8,036
- ------------------------------------------------------------------------------
TOTAL WARRANTS (COST $0) 8,036
- ------------------------------------------------------------------------------
CONVERTIBLE BONDS 0.1%
Halsey Drug Company, Inc. Subordinated
Debentures, 10.00%, Due 8/06/01
(Acquired 8/05/96; Cost $587,550) (d) (f) $600,000 259,614
- ------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS (AMORTIZED COST $590,431) 259,614
- ------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 3.8%
COMMERCIAL PAPER 0.2%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.49% 440,000 440,000
Warner Lambert Company, 5.49% 395,000 395,000
Wisconsin Electric Power Company, 5.49% 100 100
------------
835,100
21
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) DECEMBER 31, 1997
- -------------------------------------------------------------------------------
===============================================================================
STRONG DISCOVERY FUND (CONTINUED)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT 3.5%
Goldman, Sachs & Company (Dated 12/31/97),
6.35%, Due 1/02/98 (Repurchase proceeds
$13,304,692); Collateralized by: $10,145,000
United States Treasury Bonds, 11.625%,
Due 11/15/04 (Market Value $13,574,010) (e) $13,300,000 $ 13,300,000
UNITED STATES GOVERNMENT ISSUES 0.1%
United States Treasury Bills, Due 4/02/98 (c) 550,000 542,877
- ------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $14,677,888) 14,677,977
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $322,884,582) 93.2% 356,840,909
Other Assets and Liabilities, Net 6.8% 26,170,312
- ------------------------------------------------------------------------------
NET ASSETS 100.0% $383,011,221
==============================================================================
FUTURES
- ------------------------------------------------------------------------------
Underlying
Expiration Face Amount Unrealized
Date at Value Appreciation
- ------------------------------------------------------------------------------
Purchased:
49 S&P 500 3/98 $11,993,975 $194,383
COUNTRY DIVERSIFICATION
- ------------------------------------------------------------------------------
Percentage of Net Assets
- ------------------------------------------------------------------------------
United States.......................................................... 90.1%
United Kingdom......................................................... 2.3
Canada................................................................. 0.7
Israel................................................................. 0.1
Other Assets and Liabilities, Net...................................... 6.8
- ------------------------------------------------------------------------------
Total 100.0%
- ------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
STRONG GROWTH FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
COMMON STOCKS 89.8%
AIRLINE 1.0%
Midwest Express Holdings, Inc. (b) 350,000 $ 13,584,375
Southwest Airlines Company 100,000 2,462,500
------------
16,046,875
BANK - REGIONAL 2.3%
Northern Trust Company 275,000 19,181,250
US Bancorp 150,000 16,790,625
------------
35,971,875
BANK - SUPER REGIONAL 0.5%
Norwest Corporation 200,000 7,725,000
BEVERAGE - SOFT DRINK 1.2%
The Coca-Cola Company 175,000 11,659,375
Coca-Cola Enterprises, Inc. 225,000 8,001,563
------------
19,660,938
BROKERAGE & INVESTMENT MANAGEMENT 1.2%
Franklin Resources, Inc. 125,000 10,867,188
The Charles Schwab Corporation 200,000 8,387,500
------------
19,254,688
COMMERCIAL SERVICE 8.0%
Accustaff, Inc. (b) 300,000 6,900,000
Apollo Group, Inc. Class A (b) 250,000 11,812,500
Corestaff, Inc. (b) 178,000 4,717,000
Lamar Advertising Company (b) 125,000 4,968,750
Outdoor Systems, Inc. (b) 525,000 20,146,875
Paychex, Inc. 275,000 13,921,875
Rental Service Corporation (b) 300,000 7,368,750
Robert Half International, Inc. (b) 550,000 22,000,000
Romac International, Inc. (b) 675,000 16,495,313
Snyder Communications, Inc. (b) 175,000 6,387,500
Universal Outdoor Holdings, Inc. (b) 250,000 13,000,000
------------
127,718,563
COMPUTER SERVICE 4.4%
America Online, Inc. (b) 100,000 8,918,750
Ciber, Inc. (b) 95,000 5,510,000
Fiserv, Inc. (b) 200,000 9,825,000
HBO & Company 525,000 25,200,000
Shared Medical Systems Corporation 125,000 8,250,000
Sykes Enterprises, Inc. (b) 610,000 11,895,000
------------
69,598,750
COMPUTER SOFTWARE 11.4%
CBT Group PLC ADR (b) 250,000 20,531,250
Cisco Systems, Inc. (b) 475,000 26,481,250
Computer Associates International, Inc. 250,000 13,218,750
Compuware Corporation (b) 450,000 14,400,000
Intuit, Inc. (b) 175,000 7,218,750
Keane, Inc. (b) 100,000 4,062,500
Microsoft Corporation (b) 150,000 19,387,500
Networks Associates, Inc. (b) 50,000 2,643,750
PeopleSoft, Inc. (b) 650,000 25,350,000
Saville Systems PLC Sponsored ADR (b) 300,000 12,450,000
Veritas Software Corporation (b) 310,000 15,810,000
Visio Corporation (b) 525,000 20,146,875
------------
181,700,625
COSMETIC & PERSONAL CARE 0.6%
The Gillette Company 100,000 10,043,750
DIVERSIFIED OPERATIONS 0.5%
Tyco International, Ltd. 170,000 7,660,625
ELECTRICAL EQUIPMENT 1.0%
General Electric Company 225,000 16,509,375
ELECTRONICS - SEMICONDUCTOR/COMPONENT 1.3%
Uniphase Corporation (b) 510,000 21,101,250
FOOD 1.1%
Campbell Soup Company 50,000 2,906,250
Dean Foods Company 175,000 10,412,500
Nabisco Holdings Corporation 100,000 4,843,750
------------
18,162,500
HEALTHCARE - DRUG/DIVERSIFIED 4.1%
Dura Pharmaceuticals, Inc. (b) 100,000 4,587,500
Eli Lilly & Company 400,000 27,850,000
Pfizer, Inc. 325,000 24,232,812
Warner-Lambert Company 65,000 8,060,000
------------
64,730,312
HEALTHCARE - INSTRUMENTATION 1.8%
Arterial Vascular Engineering, Inc. (b) 75,000 4,875,000
Medtronic, Inc. 450,000 23,540,625
------------
28,415,625
22
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
STRONG GROWTH FUND (CONTINUED)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
HEALTHCARE - MEDICAL SUPPLY 4.7%
Amerisource Health Corporation Class A (b) 150,000 $ 8,737,500
Cardinal Health, Inc. 275,000 20,659,375
McKesson Corporation 200,000 21,637,500
Parexel International Corporation (b) 275,000 10,175,000
Sybron International Corporation (b) 300,000 14,081,250
--------------
75,290,625
HEALTHCARE - PATIENT CARE 1.8%
Atria Communities, Inc. (b) 225,000 3,853,125
Health Systems International, Inc. Class A (b) 300,000 7,575,000
HEALTHSOUTH Corporation (b) 600,000 16,650,000
--------------
28,078,125
HEALTHCARE - PRODUCT 1.1%
Guidant Corporation 275,000 17,118,750
HOUSEHOLD APPLIANCES & FURNISHINGS 1.3%
Sunbeam Corporation 500,000 21,062,500
INSURANCE - DIVERSIFIED 1.9%
Travelers Group, Inc. 550,000 29,631,250
INSURANCE - LIFE 0.8%
Conseco, Inc. 150,000 6,815,625
Nationwide Financial Services, Inc. Class A 150,000 5,418,750
--------------
12,234,375
INSURANCE - MULTI-LINE 2.1%
MGIC Investment Corporation 380,000 25,270,000
UNUM Corporation 150,000 8,156,250
--------------
33,426,250
LEISURE SERVICE 3.0%
CapStar Hotel Company (b) 325,000 11,151,562
Carnival Corporation Class A 125,000 6,921,875
The Walt Disney Company 50,000 4,953,125
Wyndham Hotel Corporation (b) 600,000 24,225,000
--------------
47,251,562
MEDIA - PUBLISHING 0.4%
Time Warner, Inc. 100,000 6,200,000
MEDIA - RADIO/TV 5.4%
Chancellor Media Corporation (b) 425,000 31,715,625
Clear Channel Communications, Inc. (b) 325,000 25,817,188
Heftel Broadcasting Corporation Class A (b) 300,000 14,025,000
Jacor Communications, Inc. (b) 150,000 7,968,750
Tele-Communications, Inc. Liberty Media Group
Series A (b) 200,000 7,250,000
--------------
86,776,563
MORTGAGE & RELATED SERVICE 1.0%
Federal Home Loan Mortgage Corporation 175,000 7,339,062
Federal National Mortgage Association 150,000 8,559,375
--------------
15,898,437
OFFICE AUTOMATION 0.4%
Danka Business Systems PLC Sponsored ADR 420,000 6,693,750
OIL WELL EQUIPMENT & SERVICE 4.7%
Cooper Cameron Corporation (b) 325,000 19,825,000
EVI, Inc. (b) 250,000 12,937,500
Falcon Drilling Company, Inc. (b) 227,300 7,969,706
Key Energy Group, Inc. (b) 245,000 5,313,438
Schlumberger, Ltd. 350,000 28,175,000
--------------
74,220,644
POLLUTION CONTROL 0.4%
Newpark Resources, Inc. (b) 350,000 6,125,000
REAL ESTATE 2.5%
Patriot American Hospitality, Inc. 500,000 14,406,250
Starwood Lodging Trust 450,000 26,043,750
--------------
40,450,000
RETAIL - DEPARTMENT STORE 2.3%
Kohl's Corporation (b) 550,000 37,468,750
RETAIL - DISCOUNT & VARIETY 2.1%
Consolidated Stores Corporation (b) 200,000 8,787,500
Dollar Tree Stores, Inc. (b) 600,000 24,825,000
--------------
33,612,500
RETAIL - DRUG STORE 1.0%
CVS Corporation 180,000 11,531,250
Walgreen Company 140,000 4,392,500
--------------
15,923,750
RETAIL - RESTAURANT 0.9%
Landry's Seafood Restaurants, Inc. (b) 270,000 6,480,000
Outback Steakhouse, Inc. (b) 300,000 8,625,000
--------------
15,105,000
RETAIL - SPECIALTY 6.2%
Cendant Corporation (b) 1,060,000 36,437,500
Lowe's Companies, Inc. 450,000 21,459,375
Michaels Stores, Inc.(b) 225,000 6,581,250
Office Depot, Inc. (b) 500,000 11,968,750
Stage Stores, Inc. (b) 150,000 5,606,250
Staples, Inc. (b) 400,000 11,100,000
Viking Office Products, Inc. (b) 250,000 5,453,125
--------------
98,606,250
SAVINGS & LOAN 2.7%
TCF Financial Corporation 725,000 24,604,687
Washington Mutual, Inc. 300,000 19,143,750
--------------
43,748,437
TELECOMMUNICATION EQUIPMENT 2.7%
ADC Telecommunications, Inc. (b) 275,000 11,481,250
CIENA Corporation (b) 375,000 22,921,875
Tellabs, Inc. (b) 180,000 9,517,500
--------------
43,920,625
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $1,135,570,918) 1,433,143,894
- ------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS 0.0%
Crystal Dynamics, Inc. Series D (Acquired
7/07/95) (b) (d) 133,334 400,002
- ------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $1,000,005) 400,002
- ------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 11.1%
COMMERCIAL PAPER 0.1%
INTEREST BEARING, DUE UPON DEMAND
General Mills, Inc., 5.33% $ 100 100
Johnson Controls, Inc., 5.33% 999,000 999,000
Warner Lambert Company, 5.49% 107,900 107,900
Wisconsin Electric Power Company, 5.49% 54,100 54,100
--------------
1,161,100
REPURCHASE AGREEMENT 11.0%
Goldman Sachs & Company (Dated 12/31/97),
6.35%, Due 1/02/98 (Repurchase proceeds
$176,562,265); Collateralized by: $118,980,000
United States Treasury Bonds, 12.00%,
Due 8/15/13 (Market Value $180,135,720) (e) 176,500,000 176,500,000
- ------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $177,661,100) 177,661,100
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $1,314,232,023) 100.9% 1,611,204,996
Other Assets and Liabilities, Net (0.9%) (14,081,461)
- ------------------------------------------------------------------------------
NET ASSETS 100.0% $1,597,123,535
==============================================================================
23
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) DECEMBER 31, 1997
- -------------------------------------------------------------------------------
===============================================================================
STRONG GROWTH FUND (CONTINUED)
===============================================================================
- -------------------------------------------------------------------------------
COUNTRY DIVERSIFICATION
- ------------------------------------------------------------------------------
Percentage of Net Assets
- ------------------------------------------------------------------------------
United States......................................................... 98.4%
Ireland............................................................... 2.1
United Kingdom........................................................ 0.4
Other Assets and Liabilities, Net..................................... (0.9)
- -----------------------------------------------------------------------------
Total 100.0%
- -----------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
STRONG GROWTH 20 FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
COMMON STOCKS 87.7%
COMMERCIAL SERVICE 13.4%
Avis Rent A Car, Inc. (b) 70,000 $ 2,235,625
Hall, Kinion & Associates, Inc. (b) 100,000 2,187,500
Lamalie Associates, Inc. (b) 30,700 614,000
Romac International, Inc. (b) 120,000 2,932,500
-----------
7,969,625
COMPUTER SERVICE 4.8%
HBO & Company 60,000 2,880,000
COMPUTER SOFTWARE 19.5%
CBT Group PLC ADR (b) 25,000 2,053,125
Cisco Systems, Inc. (b) 30,000 1,672,500
Intuit, Inc. (b) 40,000 1,650,000
PeopleSoft, Inc. (b) 65,000 2,535,000
Saville Systems PLC Sponsored ADR (b) 55,000 2,282,500
Visio Corporation (b) 38,000 1,458,250
-----------
11,651,375
HEALTHCARE - DRUG/DIVERSIFIED 7.9%
Eli Lilly & Company 25,000 1,740,625
Pfizer, Inc. 40,000 2,982,500
-----------
4,723,125
HEALTHCARE - MEDICAL SUPPLY 2.7%
McKesson Corporation 15,000 1,622,812
INSURANCE - DIVERSIFIED 4.1%
Travelers Group, Inc. 45,000 2,424,375
INSURANCE - LIFE 1.8%
Nationwide Financial Services, Inc. Class A 30,000 1,083,750
INSURANCE - MULTI-LINE 6.2%
MGIC Investment Corporation 35,000 2,327,500
UNUM Corporation 25,000 1,359,375
-----------
3,686,875
MEDIA - RADIO/TV 3.1%
Chancellor Media Corporation (b) 25,000 1,865,625
OIL WELL EQUIPMENT & SERVICE 3.7%
Cooper Cameron Corporation (b) 36,000 2,196,000
REAL ESTATE 4.8%
Starwood Lodging Trust 50,000 2,893,750
RETAIL - DEPARTMENT STORE 4.6%
Kohl's Corporation (b) 40,000 2,725,000
RETAIL - FOOD CHAIN 3.7%
Safeway, Inc. (b) 35,000 2,213,750
SAVINGS & LOAN 5.1%
TCF Financial Corporation 90,000 3,054,375
TELECOMMUNICATION EQUIPMENT 2.3%
CIENA Corporation (b) 22,000 1,344,750
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $48,758,222) 52,335,187
- ------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 16.0%
COMMERCIAL PAPER 1.9%
INTEREST BEARING, DUE UPON DEMAND
General Mills, Inc., 5.33% $ 179,000 179,000
Johnson Controls, Inc., 5.33% 590,300 590,300
Pitney Bowes Credit Corporation, 5.33% 233,900 233,900
Warner Lambert Company, 5.49% 157,000 157,000
-----------
1,160,200
REPURCHASE AGREEMENTS 14.1%
Goldman Sachs & Company (Dated 12/31/97),
6.35%, Due 1/02/98 (Repurchase proceeds
$8,402,963); Collateralized by: $6,860,000
United States Treasury Bonds, 10.00%,
Due 5/15/10 (Market Value $8,575,000) (e) 8,400,000 8,400,000
- ------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $9,560,200) 9,560,200
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $58,318,422) 103.7% 61,895,387
Other Assets and Liabilities, Net (3.7%) (2,217,146)
- ------------------------------------------------------------------------------
NET ASSETS 100.0% $59,678,241
==============================================================================
COUNTRY DIVERSIFICATION
- -----------------------------------------------------------------------------
Percentage of Net Assets
- -----------------------------------------------------------------------------
United States.......................................................... 96.4%
Ireland................................................................ 7.3
Other Assets and Liabilities, Net...................................... (3.7)
- -----------------------------------------------------------------------------
Total 100.0%
- -----------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
STRONG MID CAP FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
COMMON STOCKS 96.6%
BANK - MONEY CENTER 1.1%
Bankers Trust New York Corporation 1,600 $179,900
COMMERCIAL SERVICE 2.0%
Outdoor Systems, Inc. (b) 3,100 118,962
Paychex, Inc. 2,900 146,812
Registry, Inc. (b) 900 41,287
--------
307,061
COMPUTER - PERIPHERAL EQUIPMENT 2.3%
EMC Communications Corporation (b) 7,400 203,037
Microchip Technology, Inc. (b) 5,300 159,000
--------
362,037
24
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
STRONG MID CAP FUND (CONTINUED)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
COMPUTER SERVICE 7.9%
America Online, Inc. (b) 2,900 $ 258,644
American Management Systems, Inc. (b) 4,700 91,650
Computer Horizons Corporation (b) 3,100 139,500
Fiserv, Inc. (b) 1,900 93,337
HBO & Company 4,800 230,400
National Data Corporation 4,500 162,562
Yahoo, Inc. (b) 3,750 259,687
----------
1,235,780
COMPUTER SOFTWARE 14.3%
Baan Company NV (b) 3,200 105,600
Bay Networks, Inc. (b) 6,600 168,712
CBT Group PLC ADR (b) 2,800 229,950
Cadence Design Systems, Inc. (b) 3,100 75,950
Check Point Software Technologies, Ltd. (b) 1,900 77,425
Computer Associates International, Inc. 3,700 195,637
Compuware Corporation (b) 8,400 268,800
Industri-Matematik International Corporation (b) 5,800 171,100
Lernout & Hauspie Speech Products NV (b) 4,200 195,300
Manugistics Group, Inc. (b) 3,100 138,337
PeopleSoft, Inc. (b) 5,600 218,400
Platinum Technology, Inc. (b) 6,200 175,150
Veritas Software Corporation (b) 2,700 137,700
Xylan Corporation (b) 5,700 86,213
----------
2,244,274
COMPUTER SYSTEMS 2.0%
Hypercom Corporation (b) 11,100 156,788
Policy Management Systems Corporation (b) 1,100 76,519
Wind River Systems, Inc. (b) 1,900 75,406
----------
308,713
COSMETIC & PERSONAL CARE 3.2%
General Nutrition Companies, Inc. (b) 6,200 210,800
Rexall Sundown, Inc. (b) 9,600 289,800
----------
500,600
ELECTRONIC INSTRUMENTATION 0.5%
Input/Output, Inc. (b) 2,400 71,250
ELECTRONICS - SEMICONDUCTOR/COMPONENT 3.7%
Maxim Integrated Products, Inc. (b) 5,800 200,100
Solectron Corporation (b) 2,200 91,438
Uniphase Corporation (b) 4,300 177,913
Vitesse Semiconductor Corporation (b) 3,100 117,025
----------
586,476
FOOD 3.2%
International Home Foods, Inc. (b) 6,500 182,000
Interstate Bakeries Corporation 8,400 313,950
----------
495,950
HEALTHCARE - BIOMEDICAL/GENETIC 4.7%
BioChem Pharma, Inc. (b) 8,500 177,438
Human Genome Sciences, Inc. (b) 3,800 151,050
Incyte Pharmaceuticals, Inc. (b) 4,000 180,000
Medimmune, Inc. (b) 2,000 85,750
Protein Design Labs, Inc. (b) 3,500 140,000
----------
734,238
HEALTHCARE - DRUG/DIVERSIFIED 2.2%
Elan Corporation PLC ADR (b) 3,800 194,512
Mylan Laboratories, Inc. 6,500 136,094
----------
330,606
HEALTHCARE - INSTRUMENTATION 3.8%
Arterial Vascular Engineering, Inc. (b) 3,700 240,500
ESC Medical Systems, Ltd. (b) 4,300 166,625
Spine-Tech, Inc. (b) 3,600 185,175
----------
592,300
HEALTHCARE - MEDICAL SUPPLY 1.0%
Steris Corporation (b) 3,300 159,225
HEALTHCARE - PATIENT CARE 3.8%
Concentra Managed Care, Inc. (b) 5,400 182,250
Humana, Inc. (b) 6,200 128,650
Renal Treatment Centers, Inc. (b) 5,200 187,850
Universal Health Services, Inc. Class B (b) 1,900 95,713
----------
594,463
HEALTHCARE - PRODUCT 1.4%
Guidant Corporation 3,600 224,100
HOUSEHOLD APPLIANCES & FURNISHINGS 1.4%
Pillowtex Corporation 6,200 216,225
LEISURE SERVICE 1.1%
Royal Caribbean Cruises, Ltd. 3,200 170,600
MEDIA - RADIO/TV 2.4%
Big City Radio, Inc. Class A (b) 13,000 105,625
Heftel Broadcasting Corporation Class A (b) 2,400 112,200
Sinclair Broadcast Group, Inc. Class A (b) 3,400 158,525
----------
376,350
MORTGAGE & RELATED SERVICE 1.3%
Franchise Mortgage Acceptance Company (b) 11,300 207,638
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 0.7%
Patina Oil & Gas Corporation 10,500 80,719
United Meridian Corporation (b) 1,200 33,750
----------
114,469
OIL - NORTH AMERICAN INTEGRATED 0.5%
Sun Company, Inc. 1,800 75,713
OIL WELL EQUIPMENT & SERVICE 1.7%
Falcon Drilling Company, Inc. (b) 1,000 35,062
IRI International Corporation (b) 8,300 116,200
National-Oilwell, Inc. (b) 2,500 85,469
Santa Fe International Corporation 800 32,550
----------
269,281
POLLUTION CONTROL 1.8%
Allied Waste Industries, Inc. (b) 12,100 282,081
REAL ESTATE 6.1%
Crescent Real Estate Equities, Inc. 2,700 106,312
Equity Office Properties Trust 7,000 220,938
Mack Cali Realty Corporation 5,500 225,500
Security Capital Group, Inc. Class B (b) 3,100 100,750
Sunstone Hotel Investors, Inc. 8,200 141,450
Trammell Crow Company (b) 6,300 162,225
----------
957,175
RETAIL - DISCOUNT & VARIETY 4.3%
Consolidated Stores Corporation (b) 4,225 185,636
Dollar Tree Stores, Inc. (b) 5,950 246,181
Family Dollar Stores, Inc. 8,250 241,828
----------
673,645
RETAIL - RESTAURANT 2.1%
CKE Restaurants, Inc. 4,200 176,925
Outback Steakhouse, Inc. (b) 5,100 146,625
----------
323,550
RETAIL - SPECIALTY 6.4%
Barnes & Noble, Inc. (b) 6,200 206,925
Brylane, Inc. (b) 3,800 187,150
Ethan Allen Corporation 3,900 150,394
Fingerhut Companies, Inc. 8,100 173,137
The Hertz Corporation 3,700 148,925
MSC Industrial Direct Company, Inc. Class A (b) 3,100 131,363
----------
997,894
25
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) DECEMBER 31, 1997
- -------------------------------------------------------------------------------
===============================================================================
STRONG MID CAP FUND (CONTINUED)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
SAVINGS & LOAN 1.4%
Ocwen Financial Corporation (b) 8,800 $ 223,850
SHOE & APPAREL MANUFACTURING 0.8%
Polo Ralph Lauren Corporation (b) 5,400 131,288
TELECOMMUNICATION EQUIPMENT 3.2%
Cable Design Technologies Corporation (b) 4,400 171,050
CIENA Corporation (b) 2,100 128,363
Digital Microwave Corporation (b) 8,100 117,450
Newbridge Networks Corporation (b) 2,600 90,675
-----------
507,538
TELECOMMUNICATION SERVICE 3.9%
Mobile Telecommunication Technologies
Corporation (b) 4,300 94,600
NEXTLINK Communications, Inc. (b) 5,800 123,613
Teleport Communications Group, Inc. Class A (b) 4,100 224,987
WorldCom, Inc. (b) 5,300 160,325
-----------
603,525
TRUCKING 0.4%
Yellow Corporation (b) 2,700 67,838
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $12,976,146) 15,125,633
- ------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 3.8%
COMMERCIAL PAPER 3.8%
INTEREST BEARING, DUE UPON DEMAND
Johnson Controls, Inc., 5.33% $461,900 461,900
Pitney Bowes Credit Corporation, 5.33% 120,700 120,700
Warner Lambert Company, 5.49% 11,700 11,700
Wisconsin Electric Power Company, 5.49% 100 100
-----------
594,400
- ------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $594,400) 594,400
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $13,570,546) 100.4% 15,720,033
Other Assets and Liabilities, Net (0.4%) (55,393
- ------------------------------------------------------------------------------
NET ASSETS 100.0% $15,664,640
==============================================================================
COUNTRY DIVERSIFICATION
- ------------------------------------------------------------------------------
Percentage of Net Assets
- ------------------------------------------------------------------------------
United States......................................................... 93.0%
Ireland............................................................... 2.7
Israel................................................................ 1.6
Belgium............................................................... 1.3
Canada................................................................ 1.1
Netherlands........................................................... 0.7
Other Assets and Liabilities, Net..................................... (0.4)
- ------------------------------------------------------------------------------
Total 100.0%
- ------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
STRONG OPPORTUNITY FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
COMMON STOCKS 89.3%
AIRLINE 0.1%
Air New Zealand, Ltd. Class B 1,313,010 $ 2,630,504
AUTO & TRUCK PARTS 1.3%
Magna International, Inc. Class A 370,000 23,240,625
Pirelli Spa 350,000 927,964
-----------
24,168,589
BANK - MONEY CENTER 3.0%
BankAmerica Corporation 346,000 25,258,000
Grupo Financiero Banamex Accival SA de CV (b) 682,000 2,037,967
Standard Chartered PLC 323,000 3,524,374
Toronto-Dominion Bank 720,000 27,403,624
-----------
58,223,965
BANK - SUPER REGIONAL 2.7%
First Union Corporation 475,000 24,343,750
Mellon Bank Corporation 440,000 26,675,000
-----------
51,018,750
CHEMICAL - SPECIALTY 2.5%
Cabot Corporation 796,000 21,989,500
Solutia, Inc. 950,000 25,353,125
-----------
47,342,625
COMPUTER - PERIPHERAL EQUIPMENT 2.5%
American Power Conversion Corporation (b) 1,050,000 24,806,250
Quantum Corporation (b) 610,000 12,238,125
Seagate Technology, Inc. (b) 540,000 10,395,000
-----------
47,439,375
COMPUTER - PERSONAL & WORKSTATION 1.2%
Sun Microsystems, Inc. (b) 609,000 24,283,875
COMPUTER SERVICE 1.4%
Computer Sciences Corporation (b) 320,000 26,720,000
COMPUTER SOFTWARE 1.9%
Cadence Design Systems, Inc. (b) 500,000 12,250,000
Sybase, Inc. (b) 1,850,000 24,628,125
-----------
36,878,125
CONGLOMERATE 0.3%
General Electric Company PLC 1,070,000 6,952,234
DIVERSIFIED OPERATIONS 1.6%
Whitman Corporation 1,160,000 30,232,500
ELECTRIC POWER 1.6%
NIPSCO Industries, Inc. 630,000 31,145,625
ELECTRONIC PARTS DISTRIBUTION 1.9%
Arrow Electronics, Inc. (b) 700,000 22,706,250
Marshall Industries (b) 470,000 14,100,000
-----------
36,806,250
ELECTRONIC PRODUCTS - MISCELLANEOUS 2.5%
AVX Corporation 1,140,000 21,018,750
Hubbell, Inc. Class B 550,000 27,121,875
-----------
48,140,625
ELECTRONICS - SEMICONDUCTOR/COMPONENT 2.6%
KLA-Tencor Corporation (b) 600,000 23,175,000
Texas Instruments, Inc. 585,000 26,325,000
-----------
49,500,000
FOOD 3.0%
Lion Nathan, Ltd. 780,000 1,748,371
Nestle SA Sponsored ADR 365,000 27,306,562
Unilever NV 455,000 28,409,063
-----------
57,463,996
26
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
STRONG OPPORTUNITY FUND (CONTINUED)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
HEALTHCARE - DRUG/DIVERSIFIED 1.2%
Pharmacia & Upjohn, Inc. 615,000 $ 22,524,375
HEALTHCARE - INSTRUMENTATION 1.4%
United States Surgical Corporation 908,000 26,615,750
HEALTHCARE - MEDICAL SUPPLY 2.0%
McKesson Corporation 98,000 10,602,375
Sybron International Corporation (b) 610,000 28,631,875
--------------
39,234,250
HEALTHCARE - PATIENT CARE 1.3%
United Healthcare Corporation 490,000 24,346,875
HOUSEHOLD APPLIANCES & FURNISHINGS 0.6%
Philips Electronics NV ADR 32,000 1,936,000
Premark International, Inc. 308,000 8,932,000
--------------
10,868,000
INSURANCE - PROPERTY & CASUALTY 4.1%
ACE, Ltd. 295,000 28,467,500
American International Group, Inc. 240,000 26,100,000
Hartford Financial Services Group, Inc. 270,000 25,261,875
--------------
79,829,375
LEISURE SERVICE 0.6%
Gaylord Entertainment Company 349,000 11,146,188
MACHINERY - MISCELLANEOUS 1.1%
Ingersoll-Rand Company 540,000 21,870,000
MEDIA - PUBLISHING 1.3%
The E.W. Scripps Company Class A 528,000 25,575,000
MEDIA - RADIO/TV 7.1%
Comcast Corporation Class A 1,280,000 40,400,000
Cox Communications, Inc. Class A (b) 910,000 36,456,875
Tele-Communications, Inc. Liberty Media Group
Series A (b) 730,000 26,462,500
Tele-Communications, Inc. TCI Group Series A (b) 1,210,000 33,804,365
--------------
137,123,740
METALS & MINING 0.8%
Freeport-McMoRan Copper & Gold, Inc. Class A 970,000 14,853,125
NATURAL GAS DISTRIBUTION 2.9%
Columbia Gas Systems, Inc. 340,000 26,711,250
Enron Corporation 720,000 29,925,000
--------------
56,636,250
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 7.5%
Apache Corporation 710,000 24,894,375
Barrett Resources Corporation (b) 760,000 22,990,000
Devon Energy Corporation 610,000 23,485,000
Oryx Energy Company (b) 980,000 24,990,000
Union Pacific Resources Group, Inc. 1,080,000 26,190,000
United Meridian Corporation (b) 800,000 22,500,000
--------------
145,049,375
OIL - NORTH AMERICAN INTEGRATED 1.3%
USX-Marathon Group 780,000 26,325,000
OIL WELL EQUIPMENT & SERVICE 4.2%
Baker Hughes, Inc. 612,000 26,698,500
Camco International, Inc. 430,000 27,385,625
Falcon Drilling Company, Inc. (b) 770,000 26,998,125
--------------
81,082,250
PAPER & FOREST PRODUCTS 2.3%
The Mead Corporation 780,000 21,840,000
Willamette Industries, Inc. 670,000 21,565,625
--------------
43,405,625
PRECIOUS METAL/GEM/STONE 0.6%
De Beers Consolidated Mines, Ltd. ADR 145,000 2,963,438
Newmont Mining Company 315,000 9,253,126
--------------
12,216,564
RAILROAD 1.9%
Burlington Northern Santa Fe Corporation 240,000 22,305,000
Canadian National Railway Company 300,000 14,175,000
--------------
36,480,000
REAL ESTATE 1.4%
Ayala Land, Inc. B Shares 1,924,000 769,600
Equity Residential Properties Trust 250,000 12,640,625
First Industrial Realty Trust, Inc. 325,000 11,740,625
Shortland Properties, Ltd. 2,655,625 1,349,355
--------------
26,500,205
RETAIL - DEPARTMENT STORE 2.3%
Federated Department Stores, Inc. (b) 505,000 21,746,563
May Department Stores Company 420,000 22,128,750
--------------
43,875,313
RETAIL - FOOD CHAIN 1.3%
The Kroger Company (b) 680,000 25,117,500
RETAIL - MAJOR CHAIN 1.7%
Kmart Corporation (b) 2,200,000 25,437,500
Sears Canada, Inc. 536,000 7,406,423
--------------
32,843,923
RETAIL - RESTAURANT 1.2%
Brinker International, Inc. (b) 1,400,000 22,400,000
RETAIL - SPECIALTY 1.7%
The Hertz Corporation 100,000 4,025,000
Office Depot, Inc. (b) 1,165,000 27,887,188
--------------
31,912,188
SAVINGS & LOAN 0.7%
Charter One Financial, Inc. 215,000 13,571,875
TELECOMMUNICATION SERVICE 6.7%
AirTouch Communications, Inc. (b) 700,000 29,093,750
Cable & Wireless Communications PLC (b) 900,000 3,913,272
Cable & Wireless Communications PLC
Sponsored ADR (b) 763,000 18,598,125
Cable & Wireless PLC 375,000 3,328,998
Cellular Communications International, Inc. (b) 64,000 2,992,000
Paging Network, Inc. (b) 1,980,000 21,285,000
U.S. West, Inc. Media Group (b) 1,045,000 30,174,375
United States Cellular Corporation (b) 612,000 18,972,000
--------------
128,357,520
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $1,336,990,551) 1,718,707,304
- ------------------------------------------------------------------------------
PREFERRED STOCKS 0.3%
Henkel KGaA-Vorzug 63,000 3,976,919
Telecom Italia Spa 530,000 2,329,417
- ------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (COST $5,554,990) 6,306,336
- ------------------------------------------------------------------------------
27
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) DECEMBER 31, 1997
- -------------------------------------------------------------------------------
===============================================================================
STRONG OPPORTUNITY FUND (CONTINUED)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 9.8%
COMMERCIAL PAPER 0.1%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.49% $ 848,700 $ 848,700
General Mills, Inc., 5.33% 100 100
Johnson Controls, Inc., 5.33% 435,400 435,400
Sara Lee Corporation, 5.32% 59,500 59,500
--------------
1,343,700
REPURCHASE AGREEMENT 8.1%
ABN-AMRO Chicago Corporation (Dated 12/31/97),
6.82%, Due 1/02/98 (Repurchase proceeds
$157,559,675); Collateralized by: $261,960,000
United States Treasury Strips, Zero %, Due
2/15/99 - 2/15/17 (Market Value
$160,889,320) (e) 157,500,000 157,500,000
MONEY MARKET 1.6%
Strong Institutional Money Fund (f) 30,600,000 30,600,000
- ------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $189,443,700) 189,443,700
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $1,531,989,241) 99.4% 1,914,457,340
Other Assets and Liabilities, Net 0.6% 10,428,709
- ------------------------------------------------------------------------------
NET ASSETS 100.0% $1,924,886,049
==============================================================================
COUNTRY DIVERSIFICATION
- ------------------------------------------------------------------------------
Percentage of Net Assets
- ------------------------------------------------------------------------------
United States.......................................................... 88.4%
Canada................................................................. 3.7
United Kingdom......................................................... 1.9
Netherlands............................................................ 1.6
Bermuda................................................................ 1.5
Switzerland............................................................ 1.4
New Zealand............................................................ 0.3
Germany................................................................ 0.2
Italy.................................................................. 0.2
Mexico................................................................. 0.1
South Africa........................................................... 0.1
Other Assets and Liabilities, Net...................................... 0.6
- ------------------------------------------------------------------------------
Total 100.0%
- ------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
STRONG SMALL CAP FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
COMMON STOCKS 94.3%
AEROSPACE & DEFENSE 0.7%
SBS Technologies, Inc. (b) 45,900 $ 1,245,038
AIRLINE 0.4%
Midway Airlines Corporation (b) 53,100 803,138
CHEMICAL - SPECIALTY 0.7%
ChiRex, Inc. (b) 73,800 1,300,725
COMMERCIAL SERVICE 9.4%
ABR Information Services, Inc. (b) 33,300 795,037
Abacus Direct Corporation (b) 27,100 1,111,100
Advance Paradigm, Inc. (b) 15,700 498,475
American Oncology Resources, Inc. (b) 75,400 1,206,400
Avis Rent A Car, Inc. (b) 47,400 1,513,837
Billing Information Concepts Corporation (b) 9,700 465,600
Boron, LePore & Associates, Inc. (b) 20,600 566,500
Bright Horizons, Inc. (b) 59,500 1,115,625
Lamar Advertising Company (b) 36,900 1,466,775
Medical Manager Corporation (b) 104,700 1,884,600
The Metzler Group, Inc. (b) 49,100 1,970,137
NCO Group, Inc. (b) 35,100 903,825
Pediatrix Medical Group (b) 23,900 1,021,725
Personnel Group of America, Inc. (b) 38,500 1,270,500
Registry, Inc. (b) 10,700 490,863
Transcrypt International, Inc. (b) 29,200 726,350
-----------
17,007,349
COMPUTER - PERIPHERAL EQUIPMENT 1.0%
SCM Microsystems, Inc. (b) 72,800 1,747,200
COMPUTER SERVICE 3.0%
CSG Systems International, Inc. (b) 19,500 780,000
Lycos, Inc. (b) 43,500 1,799,813
Systems & Computer Technology Corporation (b) 44,300 2,198,387
Tier Technologies, Inc. Class B (b) 64,300 691,225
-----------
5,469,425
COMPUTER SOFTWARE 18.5%
ACE*COMM Corporation (b) 51,500 608,343
Advantage Learning Systems, Inc. (b) 45,900 981,113
Applied Graphics Technologies, Inc. (b) 20,700 1,102,275
Arbor Software Corporation (b) 20,700 838,350
Aspect Development, Inc. (b) 33,300 1,731,600
BEA Systems, Inc. (b) 56,400 976,425
Crosskeys Systems Corporation (b) 57,600 734,400
DAOU Systems, Inc. (b) 51,100 1,596,875
Datastream Systems, Inc. (b) 48,900 1,515,900
Dendrite International, Inc. (b) 102,600 1,987,875
Engineering Animation, Inc. (b) 20,700 952,200
FlexiInternational Software, Inc. (b) 22,000 341,000
Hyperion Software Corporation (b) 47,700 1,705,275
Industri-Matematik International Corporation (b) 105,300 3,106,350
JDA Software Group, Inc. (b) 29,800 1,043,000
Legato Systems, Inc. (b) 50,500 2,222,000
Lernout & Hauspie Speech Products NV (b) 48,900 2,273,850
Lightbridge, Inc. (b) 83,400 1,584,600
MMC Networks, Inc. (b) 25,900 440,300
Manugistics Group, Inc. (b) 41,500 1,851,937
Mercury Inactive Corporation (b) 36,300 971,025
QuadraMed Corporation (b) 60,900 1,674,750
Saville Systems PLC Sponsored ADR (b) 71,600 2,971,400
Telxon Corporation 15,200 362,900
-----------
33,573,743
COMPUTER SYSTEMS 1.6%
Apex PC Solutions, Inc. (b) 45,400 1,004,475
Hypercom Corporation (b) 129,600 1,830,600
-----------
2,835,075
COSMETIC & PERSONAL CARE 0.3%
NBTY, Inc. (b) 17,600 587,400
ELECTRICAL EQUIPMENT 0.9%
Level One Communications, Inc. (b) 55,500 1,567,875
28
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
STRONG SMALL CAP FUND (CONTINUED)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
ELECTRONIC INSTRUMENTATION 1.0%
FARO Technologies, Inc. (b) 125,300 $ 1,456,613
Mettler-Toledo International, Inc. (b) 26,200 451,950
------------
1,908,563
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.4%
International Manufacturing Services, Inc.
Class A (b) 88,500 641,625
ELECTRONICS - SEMICONDUCTOR/COMPONENT 3.3%
Sanmina Corporation (b) 26,600 1,802,150
Sipex Corporation (b) 56,200 1,700,050
Uniphase Corporation (b) 61,000 2,523,875
------------
6,026,075
FINANCE - MISCELLANEOUS 0.8%
Metris Companies, Inc. 40,900 1,400,825
FOOD 0.5%
American Italian Pasta Company (b) 39,300 982,500
HEALTHCARE - BIOMEDICAL/GENETIC 6.4%
ArQule, Inc. (b) 64,700 1,484,056
BioReliance Corporation (b) 79,900 1,837,700
COR Therapeutics, Inc. (b) 67,200 1,512,000
Coulter Pharmaceutical, Inc. (b) 51,300 1,038,825
Incyte Pharmaceuticals, Inc. (b) 61,400 2,763,000
Medimmune, Inc. (b) 23,100 990,412
Protein Design Labs, Inc. (b) 47,400 1,896,000
------------
11,521,993
HEALTHCARE - DRUG/DIVERSIFIED 1.7%
Geltex Pharmaceuticals, Inc. (b) 63,200 1,674,800
Inhale Therapeutic Systems (b) 57,000 1,482,000
------------
3,156,800
HEALTHCARE - INSTRUMENTATION 5.2%
Arterial Vascular Engineering, Inc. (b) 57,000 3,705,000
Healthdyne Technologies, Inc. (b) 47,800 973,925
Schick Technologies, Inc. (b) 99,500 1,934,031
Spine-Tech, Inc. (b) 55,600 2,859,925
------------
9,472,881
HEALTHCARE - MEDICAL SUPPLY 5.1%
Gulf South Medical Supply, Inc. (b) 80,100 2,983,725
Ocular Sciences, Inc. (b) 85,400 2,241,750
Parexel International Corporation (b) 15,700 580,900
Safeskin Corporation (b) 62,500 3,546,875
------------
9,353,250
HEALTHCARE - PATIENT CARE 3.4%
Capital Senior Living Corporation (b) 106,600 1,112,638
Concentra Managed Care, Inc. (b) 27,179 917,291
Coventry Corporation (b) 120,000 1,830,000
National Surgery Centers, Inc. (b) 38,500 1,010,625
Renal Care Group, Inc. (b) 43,300 1,385,600
------------
6,256,154
HEALTHCARE - PRODUCT 1.7%
Hemocleanse, Inc. (Acquired 5/14/96;
Cost $465,000) (b) (d) 155,000 155,000
Sepracor, Inc. (b) 74,000 2,964,625
------------
3,119,625
INSURANCE - DIVERSIFIED 0.5%
Stirling Cooke Brown Holdings, Ltd. (b) 39,600 970,200
LEISURE PRODUCT 1.2%
Action Performance Companies, Inc. 29,200 1,105,950
Play By Play Toys & Novelties, Inc. (b) 59,200 1,076,700
------------
2,182,650
LEISURE SERVICE 1.1%
Suburban Lodges of America, Inc. (b) 78,100 1,039,706
Travel Services International, Inc. (b) 39,900 947,625
------------
1,987,331
MACHINE TOOL 0.9%
Innovative Valve Technologies, Inc. (b) 83,100 1,682,775
MACHINERY - TRANSPORTATION EQUIPMENT & PARTS 1.0%
Halter Marine Group, Inc. (b) 64,850 1,872,544
MEDIA - RADIO/TV 0.7%
Big City Radio, Inc. Class A (b) 151,100 1,227,688
MORTGAGE & RELATED SERVICE 0.6%
Franchise Mortgage Acceptance Company (b) 55,400 1,017,975
OIL WELL EQUIPMENT & SERVICE 2.4%
Gulf Island Fabrication, Inc. (b) 82,100 1,642,000
IRI International Corporation (b) 102,500 1,435,000
Patterson Energy, Inc. (b) 32,600 1,261,213
------------
4,338,213
POLLUTION CONTROL 2.3%
American Disposal Services, Inc. (b) 59,100 2,157,150
Casella Waste Systems, Inc. (b) 67,800 1,788,225
Waste Industries, Inc. (b) 16,100 299,863
------------
4,245,238
REAL ESTATE 1.6%
Boston Properties, Inc. 56,200 1,858,113
SL Green Realty Corporation 37,200 964,875
------------
2,822,988
RETAIL - FOOD CHAIN 0.8%
Whole Foods Marketing, Inc. (b) 28,200 1,441,725
RETAIL - RESTAURANT 0.5%
Sonic Corporation (b) 33,700 947,813
RETAIL - SPECIALTY 6.9%
American Eagle Outfitters, Inc. (b) 80,600 2,810,925
Coldwater Creek, Inc. (b) 55,400 1,869,750
Goody's Family Clothing, Inc. (b) 46,300 1,258,781
Linens 'N Things, Inc. (b) 60,600 2,643,675
Michaels Stores, Inc. (b) 74,400 2,176,200
Pacific Sunwear of California (b) 57,050 1,686,540
------------
12,445,871
TELECOMMUNICATION EQUIPMENT 1.7%
Digital Microwave Corporation (b) 111,800 1,621,100
World Access, Inc. (b) 21,600 515,700
Yurie Systems, Inc. (b) 49,600 1,001,300
------------
3,138,100
TELECOMMUNICATION SERVICE 6.1%
Intermedia Communications, Inc. (b) 50,600 3,073,950
Mobile Telecommunication Technologies
Corporation (b) 58,300 1,282,600
Premiere Technologies, Inc. (b) 71,000 1,961,375
RSL Communications, Ltd. Class A (b) 77,600 1,707,200
STAR Telecommunications, Inc. (b) 96,100 3,087,212
------------
11,112,337
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $158,216,254) 171,410,707
- ------------------------------------------------------------------------------
29
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) DECEMBER 31, 1997
- -------------------------------------------------------------------------------
===============================================================================
STRONG SMALL CAP FUND (CONTINUED)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 5.3%
COMMERCIAL PAPER 0.4%
INTEREST BEARING, DUE UPON DEMAND
Johnson Controls, Inc., 5.33% $ 629,800 $ 629,800
Pitney Bowes Credit Corporation, 5.33% 19,300 19,300
Warner Lambert Company, 5.49% 57,400 57,400
Wisconsin Electric Power Company, 5.49% 24,800 24,800
------------
731,300
REPURCHASE AGREEMENT 4.9%
Goldman, Sachs & Company (Dated 12/31/97),
6.35%, Due 1/02/98 (Repurchase proceeds
$8,903,140); Collateralized by: $5,645,000
United States Treasury Bonds, 13.25%, Due
5/15/14, (Market Value $9,088,450) (e) 8,900,000 8,900,000
- ------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $9,631,300) 9,631,300
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $167,847,554) 99.6% 181,042,007
Other Assets and Liabilities, Net 0.4% 816,386
- ------------------------------------------------------------------------------
NET ASSETS 100.0% $181,858,393
==============================================================================
COUNTRY DIVERSIFICATION
- ------------------------------------------------------------------------------
Percentage of Net Assets
- ------------------------------------------------------------------------------
United States.......................................................... 96.1%
Ireland................................................................ 1.6
Belgium................................................................ 1.3
Canada................................................................. 0.4
Switzerland............................................................ 0.2
Other Assets and Liabilities, Net...................................... 0.4
- -----------------------------------------------------------------------------
Total 100.0%
- -----------------------------------------------------------------------------
- -------------------------------------------------------------------------------
===============================================================================
STRONG VALUE FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
COMMON STOCKS 92.0%
AEROSPACE & DEFENSE 4.0%
The Boeing Company 36,350 $1,778,878
Raytheon Company Class A (b) 37,500 1,849,219
Raytheon Company Class B 2,500 126,250
----------
3,754,347
AUTO & TRUCK PARTS 1.4%
Echlin, Inc. 35,100 1,270,181
AUTOMOBILE 2.3%
Ford Motor Company 44,700 2,176,331
BANK - MONEY CENTER 1.6%
Chase Manhattan Corporation 13,500 1,478,250
BANK - SUPER REGIONAL 1.3%
Banc One Corporation 22,600 1,227,463
BEVERAGE - ALCOHOLIC 2.2%
Anheuser-Busch Companies, Inc. 47,700 2,098,800
CHEMICAL 2.7%
IMC Global, Inc. 57,400 1,879,850
Monsanto Company 15,000 630,000
----------
2,509,850
COMMERCIAL SERVICE 0.2%
Reynolds & Reynolds Company Class A 10,000 184,375
CONTAINER 1.0%
W.R. Grace & Company 11,600 933,075
DIVERSIFIED OPERATIONS 3.8%
E.I. Du Pont de Nemours & Company 25,100 1,507,569
Tyco International, Ltd. 44,666 2,012,762
----------
3,520,331
ELECTRIC POWER 3.1%
Duke Energy Company 35,835 1,984,363
New Century Energies, Inc. 2,500 119,844
Sierra Pacific Resources 22,400 840,000
----------
2,944,207
ELECTRICAL EQUIPMENT 0.8%
AMP, Inc. 2,000 84,000
General Electric Company 9,400 689,725
----------
773,725
FINANCE - MISCELLANEOUS 2.9%
American Express Company 9,500 847,875
First Data Corporation 10,000 292,500
Morgan Stanley, Dean Witter, Discover & Company 13,000 768,625
Providian Financial Corporation 17,000 768,187
----------
2,677,187
FOOD 1.6%
CPC International, Inc. 7,700 829,675
General Mills, Inc. 8,900 637,462
----------
1,467,137
HEALTHCARE - DRUG/DIVERSIFIED 3.4%
Eli Lilly & Company 17,400 1,211,475
Pharmacia & Upjohn, Inc. 39,900 1,461,337
Warner-Lambert Company 4,000 496,000
----------
3,168,812
HEALTHCARE - PATIENT CARE 4.0%
Columbia/HCA Healthcare Corporation 62,700 1,857,487
Pacificare Health Systems, Inc. Class B (b) 17,000 890,375
Tenet Healthcare Corporation (b) 31,400 1,040,125
----------
3,787,987
HOUSEHOLD APPLIANCES & FURNISHINGS 2.3%
Rubbermaid, Inc. 36,700 917,500
Sunbeam Corporation 28,300 1,192,137
----------
2,109,637
INSURANCE - ACCIDENT & HEALTH 1.1%
Provident Companies, Inc. 25,600 988,800
INSURANCE - DIVERSIFIED 2.3%
American General Corporation 23,800 1,286,688
CIGNA Corporation 5,000 865,313
----------
2,152,001
LEISURE PRODUCT 4.3%
Eastman Kodak Company 66,500 4,044,031
LEISURE SERVICE 3.3%
Hilton Hotels Corporation 22,700 675,325
International Game Technology 77,200 1,949,300
Mirage Resorts, Inc. (b) 9,900 225,225
Ticketmaster Group, Inc. (b) 10,000 230,000
----------
3,079,850
MEDIA - PUBLISHING 3.5%
Dow Jones & Company, Inc. 5,000 268,437
Harcourt General, Inc. 51,500 2,819,625
Scholastic Corporation (b) 5,000 187,500
John Wiley & Sons, Inc. 500 27,125
----------
3,302,687
30
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
STRONG VALUE FUND (CONTINUED)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
MEDIA - RADIO/TV 1.6%
Cox Communications, Inc. Class A (b) 37,300 $ 1,494,331
NATURAL GAS DISTRIBUTION 1.8%
Enron Corporation 28,300 1,176,219
Keyspan Energy Corporation 14,000 515,375
-----------
1,691,594
OFFICE AUTOMATION 1.5%
Xerox Corporation 19,300 1,424,581
OIL - INTERNATIONAL INTEGRATED 0.2%
Texaco, Inc. 4,000 217,500
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 6.8%
Pioneer Natural Resources Company 98,600 2,853,238
Seagull Energy Corporation (b) 35,500 732,188
Union Pacific Resources Group, Inc. 114,558 2,778,032
-----------
6,363,458
OIL WELL EQUIPMENT & SERVICE 2.3%
Reading & Bates Corporation (b) 11,400 477,375
Santa Fe International Corporation 41,200 1,676,325
-----------
2,153,700
PERSONAL & COMMERCIAL LENDING 1.7%
Associates First Capital Corporation 22,700 1,614,537
POLLUTION CONTROL 3.0%
Waste Management, Inc. 101,000 2,777,500
RAILROAD 1.9%
Union Pacific Corporation 28,300 1,766,981
REAL ESTATE 4.5%
Boston Properties, Inc. 10,000 330,625
Mack Cali Realty Corporation 5,000 205,000
The Mills Corporation 37,000 906,500
National Golf Properties, Inc. 15,000 492,188
Charles E. Smith Residential Realty, Inc. 22,600 802,300
Vornado Realty Trust 32,200 1,511,388
-----------
4,248,001
RETAIL - DEPARTMENT STORE 2.3%
Federated Department Stores, Inc. (b) 49,700 2,140,206
RETAIL - DRUG STORE 2.8%
Rite Aid Corporation 44,200 2,593,987
RETAIL - RESTAURANT 1.5%
McDonald's Corporation 29,900 1,427,725
RETAIL - SPECIALTY 2.1%
Cendant Corporation (b) 44,600 1,533,125
Tandy Corporation 10,000 385,625
-----------
1,918,750
SHOE & APPAREL MANUFACTURING 0.7%
NIKE, Inc. Class B 16,100 631,925
STEEL 0.9%
Allegheny Teledyne, Inc. 3,500 90,562
Oregon Metallurgical Corporation (b) 23,000 767,625
-----------
858,187
TELECOMMUNICATION SERVICE 2.3%
AT&T Corporation 2,000 122,500
AirTouch Communications, Inc. (b) 21,900 910,219
WorldCom, Inc. (b) 36,600 1,107,150
-----------
2,139,869
TRUCKING 1.0%
CNF Transportation, Inc. 23,700 909,488
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $72,697,724) 86,021,384
- ------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS 1.8%
Equity Residential Properties Trust (Depositary Shares
Representing 1/10th Preferred Series G Convertible) 23,300 597,063
Vornado Realty Trust $3.25 Series A 17,200 1,135,200
- ------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $1,444,252) 1,732,263
- ------------------------------------------------------------------------------
PREFERRED STOCKS 0.0%
Fresenius National Medical Care, Inc. Class D (b) 8,500 595
- ------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (COST $0) 595
- ------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 8.2%
COMMERCIAL PAPER 0.8%
INTEREST BEARING, DUE UPON DEMAND
General Mills, Inc., 5.33% $ 27,100 27,100
Johnson Controls, Inc., 5.33% 657,400 657,400
Pitney Bowes Credit Corporation, 5.33% 46,400 46,400
Warner Lambert Company, 5.49% 15,200 15,200
Wisconsin Electric Power Company, 5.49% 39,800 39,800
-----------
785,900
REPURCHASE AGREEMENT 7.4%
Goldman Sachs & Company (Dated 12/31/97), 6.35%,
Due 1/02/98 (Repurchase proceeds $6,902,434);
Collateralized by: $5,435,000 United States
Treasury Bonds, 13.375%, Due 8/15/01
(Market Value $7,043,760) (e) 6,900,000 6,900,000
- ------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $7,685,900) 7,685,900
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $81,827,876) 102.0% 95,440,142
Other Assets and Liabilities, Net (2.0%) (1,903,905)
- ------------------------------------------------------------------------------
NET ASSETS 100.0% $93,536,237
==============================================================================
COUNTRY DIVERSIFICATION
- ------------------------------------------------------------------------------
Percentage of Net Assets
- ------------------------------------------------------------------------------
United States..........................................................102.0%
Other Assets and Liabilities, Net...................................... (2.0)
- -----------------------------------------------------------------------------
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) All or a portion of security pledged to cover margin requirements for
futures contracts.
(d) Restricted security.
(e) See Note 2(h) of Notes to Financial Statements.
(f) Affiliated issuer. (See Note 6 of Notes to Financial Statements.)
Percentages are stated as a percent of net assets.
See notes to financial statements.
31
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------
December 31, 1997 (In Thousands, Except Per Share Amounts)
<CAPTION>
STRONG COMMON STRONG STRONG STRONG GROWTH
STOCK FUND DISCOVERY FUND GROWTH FUND 20 FUND
------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in Securities, at Value
Unaffiliated Issuers (Including Repurchase Agreements
of $87,900, $13,300, $176,500, and $8,400, respectively)
(Cost of $1,196,792, $312,966, $1,314,232 and $58,318,
respectively) $1,498,885 $354,020 $1,611,205 $61,895
Affiliated Issuers (Cost of $98,695, $9,919, $0
and $0, respectively) 66,809 2,821 -- --
Receivable for Securities Sold 10,283 26,127 22,145 2,999
Receivable for Fund Shares Sold 9 12 55 85
Dividends and Interest Receivable 803 212 873 42
Other Assets 2,215 20 38 1
---------- -------- ---------- -------
Total Assets 1,579,004 383,212 1,634,316 65,022
LIABILITIES:
Payable for Securities Purchased 13,914 -- 36,789 5,313
Payable for Fund Shares Redeemed 128 115 236 --
Accrued Operating Expenses and Other Liabilities 135 86 167 31
---------- -------- ---------- -------
Total Liabilities 14,177 201 37,192 5,344
---------- -------- ---------- -------
NET ASSETS $1,564,827 $383,011 $1,597,124 $59,678
========== ======== ========== =======
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $1,294,476 $378,937 $1,368,284 $59,365
Undistributed Net Investment Income (Loss) -- (158) (124) 1
Undistributed Net Realized Gain (Loss) 540 (29,919) (68,009) (3,265)
Net Unrealized Appreciation 269,811 34,151 296,973 3,577
---------- -------- ---------- -------
Net Assets $1,564,827 $383,011 $1,597,124 $59,678
========== ======== ========== =======
Capital Shares Outstanding (Unlimited Number Authorized) 74,455 22,529 87,220 5,277
NET ASSET VALUE PER SHARE $21.02 $17.00 $18.31 $11.31
====== ====== ====== ======
STRONG MID STRONG STRONG SMALL STRONG
CAP FUND OPPORTUNITY FUND CAP FUND VALUE FUND
---------- ---------------- ------------ ----------
ASSETS:
Investments in Securities, at Value
Unaffiliated Issuers (Cost of $13,571, $1,501,389, $167,848
and $81,828, respectively) $15,720 $1,883,857 $181,042 $95,440
Affiliated Issuers (Cost of $0, $30,600, $0 and $0, respectively) -- 30,600 -- --
Receivable for Securities Sold 52 17,220 1,526 --
Receivable for Fund Shares Sold -- 127 73 54
Dividends and Interest Receivable 9 1,301 42 132
Other Assets 42 2,329 26 23
------- ---------- -------- -------
Total Assets 15,823 1,935,434 182,709 95,649
LIABILITIES:
Payable for Securities Purchased 108 10,255 763 1,887
Payable for Fund Shares Redeemed -- 68 39 188
Accrued Operating Expenses and Other Liabilities 50 225 49 38
------- ---------- -------- -------
Total Liabilities 158 10,548 851 2,113
------- ---------- -------- -------
NET ASSETS $15,665 $1,924,886 $181,858 $93,536
======= ========== ======== =======
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $14,016 $1,487,485 $189,550 $78,099
Undistributed Net Investment Income -- 53 14 --
Undistributed Net Realized Gain (Loss) (500) 55,305 (20,900) 1,825
Net Unrealized Appreciation 2,149 382,043 13,194 13,612
------- ---------- -------- -------
Net Assets $15,665 $1,924,886 $181,858 $93,536
======= ========== ======== =======
Capital Shares Outstanding (Unlimited Number Authorized) 1,377 51,449 15,884 6,794
NET ASSET VALUE PER SHARE $11.38 $37.41 $11.45 $13.77
====== ====== ====== ======
See notes to financial statements.
32
</TABLE>
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
For the Period Ended December 31, 1997
(In Thousands)
<CAPTION>
STRONG COMMON STRONG STRONG STRONG GROWTH
STOCK FUND DISCOVERY FUND GROWTH FUND 20 FUND
------------- -------------- ----------- -------------
(NOTE 1)
<S> <C> <C> <C> <C>
INCOME:
Dividends $ 10,960 $ 1,501 $ 6,981 $ 84
Interest - Unaffiliated Issuers 4,154 366 4,895 160
Interest - Affiliated Issuers 2,114 60 538 --
-------- ------- -------- ------
Total Income 17,228 1,927 12,414 244
EXPENSES:
Investment Advisory Fees 14,265 3,954 15,115 218
Custodian Fees 112 68 79 8
Shareholder Servicing Costs 1,802 1,130 3,623 49
Federal and State Registration Fees 100 46 123 19
Other 393 223 689 18
-------- ------- -------- ------
Total Expenses 16,672 5,421 19,629 312
-------- ------- -------- ------
NET INVESTMENT INCOME (LOSS) 556 (3,494) (7,215) (68)
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments in Unaffiliated Issuers 225,560 46,291 176,895 (2,826)
Investments in Affiliated Issuers (2,362) (6,906) 8,277 --
Futures Contracts, Options and Forward Foreign
Currency Contracts (497) (3,153) (494) --
Foreign Currencies (8) -- -- --
-------- ------- -------- ------
Net Realized Gain (Loss) 222,693 36,232 184,678 (2,826)
Change in Unrealized Appreciation/Depreciation on:
Investments 74,263 6,835 80,535 3,577
Futures Contracts, Options and Forward Foreign
Currency Contracts -- 195 -- --
Foreign Currencies (393) 4 -- --
-------- ------- -------- ------
Net Change in Unrealized Appreciation/Depreciation 73,870 7,034 80,535 3,577
-------- ------- -------- ------
NET GAIN 296,563 43,266 265,213 751
-------- ------- -------- ------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $297,119 $39,772 $257,998 $ 683
======== ======= ======== ======
See notes to financial statements.
33
</TABLE>
<PAGE>
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------
For the Period Ended December 31, 1997
(In Thousands)
<CAPTION>
STRONG MID STRONG STRONG SMALL STRONG
CAP FUND OPPORTUNITY FUND CAP FUND VALUE FUND
---------- ---------------- ------------ ----------
(NOTE 1)
<S> <C> <C> <C> <C>
INCOME:
Dividends $ 49 $ 19,119 $ 151 $ 1,100
Interest - Unaffiliated Issuers 60 6,455 377 522
Interest - Affiliated Issuers -- 1,499 25 --
------ -------- ------ -------
Total Income 109 27,073 553 1,622
EXPENSES:
Investment Advisory Fees 145 18,115 1,796 750
Custodian Fees 14 162 38 7
Shareholder Servicing Costs 40 3,396 546 160
Other 35 679 163 90
------ -------- ------ -------
Total Expenses 234 22,352 2,543 1,007
------ -------- ------ -------
NET INVESTMENT INCOME (LOSS) (125) 4,721 (1,990) 615
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments (466) 288,390 (4,603) 5,878
Futures Contracts, Options and Forward Foreign
Currency Contracts -- -- (11) --
Foreign Currencies -- (15) -- --
------ -------- ------ -------
Net Realized Gain (Loss) (466) 288,375 (4,614) 5,878
Change in Unrealized Appreciation/Depreciation on:
Investments 2,149 84,260 1,065 10,590
Foreign Currencies -- (416) -- --
------ -------- ------ -------
Net Change in Unrealized Appreciation/Depreciation 2,149 83,844 1,065 10,590
------ -------- ------ -------
NET GAIN (LOSS) 1,683 372,219 (3,549) 16,468
------ -------- ------ -------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $1,558 $376,940 ($5,539) $17,083
====== ======== ====== =======
See notes to financial statements.
</TABLE>
34
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
<CAPTION>
STRONG COMMON STOCK FUND STRONG DISCOVERY FUND
------------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1997 DEC. 31, 1996 DEC. 31, 1997 DEC. 31, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) $ 556 $ 3,234 ($ 3,494) ($ 1,756)
Net Realized Gain 222,693 169,638 36,232 14,514
Change in Unrealized Appreciation/Depreciation 73,870 42,934 7,034 (7,519)
---------- ---------- -------- --------
Increase in Net Assets Resulting from Operations 297,119 215,806 39,772 5,239
DISTRIBUTIONS:
From Net Investment Income (556) (3,234) -- --
In Excess of Net Investment Income (1,918) (3,023) -- (35,615)
From Net Realized Gains (246,268) (182,428) (36,232) (18,658)
In Excess of Net Realized Gains -- -- (7,422) --
---------- ---------- -------- --------
Total Distributions (248,742) (188,685) (43,654) (54,273)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 294,151 206,140 300,976 418,430
Proceeds from Reinvestment of Dividends 242,397 184,686 42,767 53,029
Payment for Shares Redeemed (263,744) (235,311) (470,643) (507,692)
---------- ---------- -------- --------
Increase (Decrease) in Net Assets from Capital
Share Transactions 272,804 155,515 (126,900) (36,233)
---------- ---------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 321,181 182,636 (130,782) (85,267)
NET ASSETS:
Beginning of Year 1,243,646 1,061,010 513,793 599,060
---------- ---------- -------- --------
End of Year $1,564,827 $1,243,646 $383,011 $513,793
========== ========== ======== ========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 13,002 9,957 16,361 23,944
Issued in Reinvestment of Distributions 11,819 9,121 2,569 3,134
Redeemed (11,814) (11,308) (25,839) (29,235)
------ ------ ------ ------
Net Increase (Decrease) in Shares of the Fund 13,007 7,770 (6,909) (2,157)
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
STRONG GROWTH FUND STRONG GROWTH 20 FUND
------------------------------- ---------------------
YEAR ENDED YEAR ENDED PERIOD ENDED
DEC. 31, 1997 DEC. 31, 1996 DEC. 31, 1997
------------- ------------- -------------
(NOTE 1)
<S> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) ($ 7,215) ($ 2,432) ($ 68)
Net Realized Gain (Loss) 184,678 67,404 (2,826)
Change in Unrealized Appreciation/Depreciation 80,535 87,465 3,577
---------- ---------- -------
Increase in Net Assets Resulting from Operations 257,998 152,437 683
DISTRIBUTIONS:
In Excess of Net Investment Income (92) (1,456) (370)
From Net Realized Gains (201,884) (31,662) --
In Excess of Net Realized Gains (60,918) -- --
---------- ---------- -------
Total Distributions (262,894) (33,118) (370)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 568,912 942,711 77,081
Proceeds from Reinvestment of Dividends 257,296 32,540 364
Payment for Shares Redeemed (532,345) (429,235) (18,080)
---------- ---------- -------
Increase in Net Assets from Capital Share Transactions 293,863 546,016 59,365
---------- ---------- -------
TOTAL INCREASE IN NET ASSETS 288,967 665,335 59,678
NET ASSETS:
Beginning of Period 1,308,157 642,822 --
---------- ---------- -------
End of Period $1,597,124 $1,308,157 $59,678
========== ========== =======
TRANSACTIONS IN SHARES OF THE FUND:
Sold 29,336 52,717 6,862
Issued in Reinvestment of Distributions 14,529 1,753 33
Redeemed (27,349) (24,245) (1,618)
------ ------ -----
Net Increase in Shares of the Fund 16,516 30,225 5,277
====== ====== =====
See notes to financial statements.
35
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
(In Thousands)
<CAPTION>
STRONG MID CAP FUND STRONG OPPORTUNITY FUND
------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1997 DEC. 31, 1997 DEC. 31, 1996
------------- ------------- -------------
(NOTE 1)
<S> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) ($ 125) $ 4,721 $ 8,761
Net Realized Gain (Loss) (466) 288,375 192,516
Change in Unrealized Appreciation/Depreciation 2,149 83,844 61,818
------- ---------- ----------
Increase in Net Assets Resulting from Operations 1,558 376,940 263,095
DISTRIBUTIONS:
From Net Investment Income -- (4,721) (8,761)
In Excess of Net Investment Income (6) (93) (2,559)
From Net Realized Gains -- (261,981) (173,793)
------- ---------- ----------
Total Distributions (6) (266,795) (185,113)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 32,746 337,611 705,579
Proceeds from Reinvestment of Dividends 6 260,936 181,281
Payment for Shares Redeemed (18,639) (553,376) (522,932)
------- ---------- ----------
Increase in Net Assets from Capital Share Transactions 14,113 45,171 363,928
------- ---------- ----------
TOTAL INCREASE IN NET ASSETS 15,665 155,316 441,910
NET ASSETS:
Beginning of Year -- 1,769,570 1,327,660
------- ---------- ----------
End of Year $15,665 $1,924,886 $1,769,570
======= ========== ==========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 3,136 8,874 20,032
Issued in Reinvestment of Dividends 1 7,155 5,146
Redeemed (1,760) (14,759) (14,803)
----- ------ ------
Net Increase in Shares of the Fund 1,377 1,270 10,375
===== ====== ======
</TABLE>
<TABLE>
<CAPTION>
STRONG SMALL CAP FUND STRONG VALUE FUND
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1997 DEC. 31, 1996 DEC. 31, 1997 DEC. 31, 1996
------------- ------------- ------------- -------------
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) ($ 1,990) ($ 476) $ 615 $ 457
Net Realized Gain (Loss) (4,614) (9,983) 5,878 69
Change in Unrealized Appreciation/Depreciation 1,065 12,129 10,590 3,022
-------- -------- ------- -------
Increase (Decrease) in Net Assets Resulting from Operations (5,539) 1,670 17,083 3,548
DISTRIBUTIONS:
From Net Investment Income -- -- (616) (456)
In Excess of Net Investment Income (1,721) (2,103) -- --
From Net Realized Gains -- -- (4,122) --
-------- -------- ------- -------
Total Distributions (1,721) (2,103) (4,738) (456)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 211,720 234,309 56,387 62,709
Proceeds from Reinvestment of Dividends 1,646 2,045 4,653 443
Payment for Shares Redeemed (181,307) (78,862) (35,344) (10,749)
-------- -------- ------- -------
Increase in Net Assets from Capital Share Transactions 32,059 157,492 25,696 52,403
-------- -------- ------- -------
TOTAL INCREASE IN NET ASSETS 24,799 157,059 38,041 55,495
NET ASSETS:
Beginning of Year 157,059 -- 55,495 --
-------- -------- ------- -------
End of Year $181,858 $157,059 $93,536 $55,495
======== ======== ======= =======
TRANSACTIONS IN SHARES OF THE FUND:
Sold 18,622 19,415 4,408 5,736
Issued in Reinvestment of Dividends 128 170 348 39
Redeemed (15,868) (6,583) (2,769) (969)
------ ------ ----- -----
Net Increase in Shares of the Fund 2,882 13,002 1,987 4,806
====== ====== ===== =====
See notes to financial statements.
</TABLE>
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
December 31, 1997
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 Common Stock Fund, Inc.
- Strong Discovery Fund, Inc.
- Strong Growth Fund (a series of Strong Equity Funds, Inc.)
- Strong Growth 20 Fund (a series of Strong Equity Funds, Inc.)
- Strong Mid Cap Fund (a series of Strong Equity Funds, Inc.)
- Strong Opportunity Fund, Inc.
- Strong Small Cap Fund (a series of Strong Equity Funds, Inc.)
- Strong Value Fund (a series of Strong Equity Funds, Inc.)
The Strong Mid Cap Fund commenced operations on January 2, 1997. The
inception date for Strong Growth 20 Fund is June 30, 1997.
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, 1997 were as follows:
AGGREGATE AGGREGATE PERCENT OF
COST FAIR VALUE NET ASSETS
---------- ---------- ----------
Strong Discovery Fund $1,596,715 $271,615 0.07%
Strong Growth Fund 1,000,005 400,002 0.03%
Strong Small Cap Fund 465,000 155,000 0.09%
(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.
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
December 31, 1997
(E) Options -- The Funds may write put or call options (none were written
during 1997). 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.
(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) Repurchase Agreements -- The Funds may enter into repurchase agreements
with institutions that the Funds' investment advisor, Strong Capital
Management, Inc. ('the Advisor") have determined are creditworthy
pursuant to criteria adopted by the Board of Directors. Each repurchase
agreement is recorded at cost. The Funds require that the collateral,
represented by securities (primarily U.S. Government securities),
purchased in a repurchase transaction be maintained in a segregated
account with a custodian in a manner sufficient to enable the Funds to
obtain those securities in the event of a default of the repurchase
agreement. On a daily basis, the Advisor monitors the value of the
collateral transferred under each repurchase agreement to ensure the
value of the collateral exceeds the amounts owed to the Funds under each
repurchase agreement by at least 2%.
(I) Additional Investment Risks -- The Funds may utilize derivative
instruments including options, futures and other instruments with
similar characteristics to the extent that they are consistent with the
Funds' investment objectives and limitations. The Funds intend to use
such derivative instruments primarily to hedge or protect from adverse
movements in securities prices or interest rates. The use of these
instruments may involve risks such as the possibility of illiquid
markets or imperfect correlation between the value of the instruments
and the underlying securities, or that the counterparty will fail to
perform its obligations.
Foreign denominated assets and forward currency contracts may involve
greater risks than domestic transactions, including currency, political
and economic, regulatory and market risks.
(J) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts 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.
(K) 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. 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 a Fund's 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.
Sloate, Weisman, Murray & Company, Inc. ("Sloate") manages the investments
of Strong Value Fund under an agreement with the Advisor. Sloate is
compensated by the Advisor (not the Fund) and bears all of its own expenses
in providing subadvisory services.
38
<PAGE>
- -------------------------------------------------------------------------------
The Funds may invest cash reserves in money market funds sponsored and
managed by the Advisor, subject to certain limitations. The terms of such
transactions are identical to those of non-related entities except that, to
avoid duplicate investment advisory fees, advisory fees of each Fund
invested in such money market funds are reduced by an amount equal to
advisory fees paid to the Advisor under its investment advisory agreement
with the money market funds.
Certain information regarding related party transactions for the period
ended December 31, 1997, is as follows:
PAYABLE TO OTHER SHAREHOLDER UNAFFILIATED
ADVISOR AT SERVICING EXPENSES DIRECTORS'
DECEMBER 31, 1997 PAID TO ADVISOR FEES
----------------- ------------------ ------------
Strong Common Stock Fund $ 13,109 $18,792 $15,562
Strong Discovery Fund 25,277 13,482 7,308
Strong Growth Fund 62,105 40,770 16,276
Strong Growth 20 Fund 2,287 663 400
Strong Mid Cap Fund 36,568 534 1,500
Strong Opportunity Fund 109,376 30,271 21,493
Strong Small Cap Fund 31,098 7,114 3,273
Strong Value Fund 21,463 2,319 1,500
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities during the period
ended December 31, 1997, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------------ ------------------------------
U.S. GOVERNMENT U.S. GOVERNMENT
AND AGENCY OTHER AND AGENCY OTHER
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Strong Common Stock Fund $ -- $1,543,822,498 $ -- $1,534,740,030
Strong Discovery Fund 1,341,700 653,805,490 1,347,950 833,964,532
Strong Growth Fund -- 4,105,807,233 -- 4,159,022,251
Strong Growth 20 Fund -- 156,880,533 -- 104,857,501
Strong Mid Cap Fund -- 56,838,922 -- 43,362,508
Strong Opportunity Fund -- 1,553,766,110 -- 1,809,126,874
Strong Small Cap Fund -- 1,034,652,137 -- 1,001,116,756
Strong Value Fund -- 92,193,029 -- 67,313,072
</TABLE>
5. INCOME TAX INFORMATION
At December 31, 1997, the investment cost, gross unrealized appreciation and
depreciation on investments and capital loss carryovers (expiring in varying
amounts through 2005) for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
FEDERAL TAX UNREALIZED UNREALIZED NET NET CAPITAL LOSS
COST APPRECIATION DEPRECIATION APPRECIATION CARRYOVERS
-------------- ------------ ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Strong Common Stock Fund $1,301,262,520 $334,015,440 ($69,583,526) $264,431,914 $ --
Strong Discovery Fund 327,069,931 63,801,453 (34,030,475) 29,770,978 --
Strong Growth Fund 1,336,307,266 297,356,996 (22,459,266) 274,897,730 --
Strong Growth 20 Fund 59,094,656 3,433,928 (633,197) 2,800,731 2,519,430
Strong Mid Cap Fund 13,600,021 2,592,623 (472,611) 2,120,012 470,793
Strong Opportunity Fund 1,534,527,605 438,347,845 (58,418,110) 379,929,735 --
Strong Small Cap Fund 168,620,374 22,862,705 (10,441,072) 12,421,633 20,126,715
Strong Value Fund 81,869,959 15,043,844 (1,473,661) 13,570,183 --
</TABLE>
Under current tax law, the Strong Growth Fund had capital losses of
$38,879,433 which were realized during November and December 1997 are being
deferred and treated as occurring on the first day of the following fiscal
year.
For corporate shareholders in the Funds, the percentages of dividend income
distributed for the period ended December 31, 1997 which are designated as
qualifying for the dividends-received deduction are as follows: Strong
Common Stock Fund 43.2%, Strong Discovery Fund 0.0%, Strong Growth Fund
100.0%, Strong Growth 20 Fund 19.7%, Strong Mid Cap Fund 100.0%, Strong
Opportunity Fund 99.3%, Strong Small Cap Fund 3.5%, and Strong Value Fund
100.0% (unaudited).
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
December 31, 1997
6. INVESTMENTS IN AFFILIATES
Affiliated issuers, as defined under the Investment Company Act of 1940,
include those in which the Fund's holdings of an issuer represent 5% or more
of the outstanding voting securities of the issuer, and any other Strong
Fund. A summary of transactions in the securities of these issuers during
the period ended December 31, 1997 is as follows:
<TABLE>
<CAPTION>
BALANCE OF BALANCE OF DIVIDEND/INTEREST
SHARES OR PAR GROSS GROSS SALES SHARES OR PAR VALUE INCOME
VALUE HELD PURCHASES AND VALUE HELD DEC. 31, JAN. 1 - DEC. 31,
JAN. 1, 1997 AND ADDITIONS REDUCTIONS DEC. 31, 1997 1997 1997
------------- ------------- ----------- ------------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Strong Common Stock Fund
- ------------------------
IHOP Corporation 535,000 7,300 (50,300) 492,000 $15,990,000 $ --
Musicland Group, Inc. - Senior
Subordinated Notes $1,000,000 -- -- $1,000,000 925,000 119,576
Musicland Stores Corporation 1,446,600 496,600 (43,200) 1,900,000 13,893,750 --
Software Spectrum, Inc. 274,000 11,000 (285,000) -- -- --
Strong Institutional Money Fund 20,000,000 18,000,000 (2,000,000) 36,000,000 36,000,000 1,993,940
Strong Discovery Fund
- ---------------------
Avatex Corporation (formerly
Foxmeyer Health Corporation) 1,404,600 -- (1,404,600) -- -- --
Halsey Drug Company, Inc. - Common Stock 812,660 74,060 (192,500) 694,220 1,084,719 --
Halsey Drug Company, Inc. - Convertible
Bonds $600,000 -- -- $600,000 259,614 60,000
Halsey Drug Company, Inc. - Restricted
Common Stock 2,820 -- -- 2,820 3,965 --
Halsey Drug Company, Inc. - Warrants -- 21,429 -- 21,429 8,036 --
Movie Gallery, Inc. 710,000 60,000 (271,275) 498,725 1,465,005 --
Strong Growth Fund
- ------------------
PJ America, Inc. 256,500 -- (256,500) -- -- --
Sipex Corporation 400,000 315,500 (715,500) -- -- --
Strong Institutional Money Fund 68,000,000 -- (68,000,000) -- -- 537,544
Strong Opportunity Fund
- -----------------------
Strong Institutional Money Fund -- 43,000,000 (12,400,000) 30,600,000 30,600,000 1,499,214
Strong Small Cap Fund
- ---------------------
Strong Institutional Money Fund -- 2,000,000 (2,000,000) -- -- 25,323
</TABLE>
40
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
STRONG COMMON STOCK FUND
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SELECTED PER-SHARE DATA(a)
--------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------- -----------------------------------------------
Net Realized
Net Asset and Unrealized Total In Excess Net Asset
Value, Net Gains from From Net of Net From Net Value,
Beginning Investment (Losses) on Investment Investment Investment Realized Total End of
Year Ended of Period Income Investments Operations Income Income Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 $20.24 $0.01 $4.67 $4.68 ($0.01) ($0.03) ($3.86) ($3.90) $21.02
Dec. 31, 1996 19.77 0.06 3.87 3.93 (0.06) (0.05) (3.35) (3.46) 20.24
Dec. 31, 1995 16.74 0.11 5.25 5.36 (0.10) (0.02) (2.21) (2.33) 19.77
Dec. 31, 1994 17.94 0.04 (0.13) (0.09) (0.04) -- (1.07) (1.11) 16.74
Dec. 31, 1993 15.07 0.04 3.74 3.78 (0.04) -- (0.87) (0.91) 17.94
</TABLE>
<TABLE>
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Year Ended Return Millions) Net Assets Net Assets Rate Paid(b)
<S> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 +24.0% $1,565 1.2% 0.0% 117.3% $0.0560
Dec. 31, 1996 +20.5% 1,244 1.2% 0.3% 90.9% 0.0456
Dec. 31, 1995 +32.4% 1,061 1.2% 0.5% 91.5%
Dec. 31, 1994 -0.5% 790 1.3% 0.3% 83.0%
Dec. 31, 1993 +25.2% 762 1.4% 0.2% 80.9%
(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.
</TABLE>
<TABLE>
STRONG DISCOVERY FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SELECTED PER-SHARE DATA (a)
---------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ----------------------------------------------------------
Net Realized
Net Asset Net and Unrealized Total In Excess In Excess Net Asset
Value, Investment Gains from From Net of Net From Net of Net Value,
Beginning Income (Losses) on Investment Investment Investment Realized Realized Total End of
Year Ended of Period (Loss) Investments Operations Income Income Gains Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 $17.45 ($0.16) $2.00 $1.84 -- -- ($1.90) ($0.39) ($2.29) $17.00
Dec. 31, 1996 18.96 (0.15) 0.35 0.20 -- ($1.12) (0.59) -- (1.71) 17.45
Dec. 31, 1995 15.67 (0.05) 5.48 5.43 -- (0.10) (2.04) -- (2.14) 18.96
Dec. 31, 1994 18.05 0.16 (1.17) (1.01) ($0.11) (0.58) (0.68) -- (1.37) 15.67
Dec. 31, 1993 16.01 (0.01) 3.48 3.47 -- (0.45) (0.98) -- (1.43) 18.05
</TABLE>
<TABLE>
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Year Ended Return Millions) Net Assets Net Assets Rate Paid (b)
<S> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 +10.9% $383 1.4% (0.9%) 169.9% $0.0600
Dec. 31, 1996 +1.5% 514 1.4% (0.3%) 792.8% 0.0339
Dec. 31, 1995 +34.8% 599 1.4% (0.4%) 516.0%
Dec. 31, 1994 -5.7% 388 1.5% 0.7% 606.1%
Dec. 31, 1993 +22.2% 302 1.5% (0.2%) 668.2%
(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.
</TABLE>
<TABLE>
STRONG GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SELECTED PER-SHARE DATA (a)
------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------- ----------------------------------------------
Net Realized
Net Asset and Unrealized Total In Excess In Excess Net Asset
Value, Net Gains from of Net From Net of Net Value,
Beginning Investment on Investment Investment Realized Realized Total End of
Year Ended of Period Loss Investments Operations Income Gains Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 $18.50 ($0.08) $3.41 $3.33 -- ($2.70) ($0.82) ($3.52) $18.31
Dec. 31, 1996 15.88 (0.03) 3.13 3.10 ($0.02) (0.46) -- (0.48) 18.50
Dec. 31, 1995 11.61 (0.04) 4.79 4.75 (0.03) (0.16) (0.29) (0.48) 15.88
Dec. 31, 1994 10.00 -- 1.72 1.72 (0.11) -- -- (0.11) 11.61
</TABLE>
<TABLE>
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
---------------------------------------------------------------------
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Year Ended Return Millions) Net Assets Net Assets Rate Paid (b)
<S> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 +19.1% $1,597 1.3% (0.5%) 295.7% $0.0680
Dec. 31, 1996 +19.5% 1,308 1.3% (0.2%) 294.9% 0.0478
Dec. 31, 1995 +41.0% 643 1.4% (0.5%) 321.2%
Dec. 31, 1994 +17.3% 106 1.6% (0.1%) 385.8%
(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.
</TABLE>
41
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
STRONG GROWTH 20 FUND
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
SELECTED PER-SHARE DATA(a)
---------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------- -------------------------
Net Asset Net Realized Total In Excess Net Asset
Value, Net and Unrealized from of Net Value,
Beginning Investment Gain on Investment Investment Total End of
Period Ended of Period Loss Investments Operations Income Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 (b) $10.00 ($0.01) $1.40 $1.39 ($0.08) ($0.08) $11.31
</TABLE>
<TABLE>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Period Ended Return Millions) Net Assets Net Assets Rate Paid
<S> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 (b) +13.9% $60 1.4%* 1.7%* 250.1% $0.0474
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund outstanding for the entire period.
(b) For the period from June 30, 1997 (inception) to December 31, 1997. Total return and portfolio turnover rate
are not annualized.
</TABLE>
<TABLE>
STRONG MID CAP FUND
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
SELECTED PER-SHARE DATA(a)
---------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------- -------------------------
Net Asset Net Realized Total In Excess Net Asset
Value, Net and Unrealized from of Net Value,
Beginning Investment Gain on Investment Investment Total End of
Period Ended of Period Loss Investments Operations Income Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 $10.00 ($0.09) $1.47 $1.38 ($0.00) ($0.00) $11.38
</TABLE>
<TABLE>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Period Ended Return Millions) Net Assets Net Assets Rate Paid
<S> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 +13.9% $16 1.6% (0.9%) 305.2% $0.0597
(a) Information presented relates to a share of capital stock of the Fund outstanding for the entire period.
</TABLE>
<TABLE>
STRONG OPPORTUNITY FUND
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SELECTED PER-SHARE DATA(a)
--------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------- -----------------------------------------------
Net Asset Net Realized Total In Excess Net Asset
Value, Net and Unrealized from From Net of Net From Net Value,
Beginning Investment Gains on Investment Investment Investment Realized Total End of
Year Ended of Period Income Investments Operations Income Income Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 $35.26 $0.10 $7.90 $8.00 ($0.10) -- ($5.75) ($5.85) $37.41
Dec. 31, 1996 33.35 0.20 5.78 5.98 (0.20) ($0.05) (3.82) (4.07) 35.26
Dec. 31, 1995 27.71 0.20 7.28 7.48 (0.20) (0.01) (1.63) (1.84) 33.35
Dec. 31, 1994 28.23 0.13 0.76 0.89 (0.13) -- (1.28) (1.41) 27.71
Dec. 31, 1993 24.70 0.06 5.10 5.16 (0.06) -- (1.57) (1.63) 28.23
</TABLE>
<TABLE>
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Year Ended Return Millions) Net Assets Net Assets Rate Paid
<S> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 +23.5% $1,925 1.2% 0.3% 93.7% $0.0519
Dec. 31, 1996 +18.1% 1,770 1.3% 0.6% 103.3% 0.0503
Dec. 31, 1995 +27.3% 1,328 1.3% 0.7% 92.5%
Dec. 31, 1994 +3.2% 806 1.4% 0.5% 59.2%
Dec. 31, 1993 +21.2% 444 1.4% 0.2% 109.1%
(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.
</TABLE>
42
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
STRONG SMALL CAP FUND
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
SELECTED PER-SHARE DATA(a)
---------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------- -------------------------
Net Realized
Net Asset and Unrealized Total In Excess Net Asset
Value, Net Gains from of Net Value,
Beginning Investment (Losses) on Investment Investment Total End of
Year Ended of Period Loss Investments Operations Income Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 $12.08 ($0.13) ($0.40) ($0.53) ($0.10) ($0.10) $11.45
Dec. 31, 1996 10.00 (0.01) 2.28 2.27 (0.19) (0.19) 12.08
</TABLE>
<TABLE>
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Year Ended Return Millions) Net Assets Net Assets Rate Paid
<S> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 -4.5% $182 1.4% (1.1%) 592.9% $0.0375
Dec. 31, 1996 +22.7% 157 1.5% (0.7%) 419.8% 0.0372
(a) Information presented relates to a share of capital stock of the Fund outstanding for the entire period.
</TABLE>
<TABLE>
STRONG VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SELECTED PER-SHARE DATA(a)
---------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
--------------------------------------- ------------------------------------
Net Asset Net Realized Total Net Asset
Value, Net and Unrealized from From Net From Net Value,
Beginning Investment Gains on Investment Investment Realized Total End of
Year Ended of Period Income Investments Operations Income Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 $11.55 $0.10 $2.86 $2.96 ($0.10) ($0.64) ($0.74) $13.77
Dec. 31, 1996 10.00 0.13 1.55 1.68 (0.13) -- (0.13) 11.55
</TABLE>
<TABLE>
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Year Ended Return Millions) Net Assets Net Assets Rate Paid
<S> <C> <C> <C> <C> <C> <C>
Dec. 31, 1997 +25.9% $94 1.3% 0.8% 103.0% $0.0509
Dec. 31, 1996 +16.8% 55 1.5% 1.5% 89.5% 0.0513
(a) Information presented relates to a share of capital stock of the Fund outstanding for the entire period.
</TABLE>
43
<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
Growth Fund, Strong Growth 20 Fund, Strong Mid Cap Fund, Strong Small Cap Fund,
Strong Value Fund (all five of the portfolios constituting the Strong Equity
Funds, Inc.), Strong Opportunity Fund, Inc., Strong Common Stock Fund, Inc. and
Strong Discovery Fund, Inc. (collectively referred to herein as the "Strong
Growth Funds"), including the schedules of investments in securities, as of
December 31, 1997, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1997 by correspondence with the custodians. 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, 1997, 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 4, 1998
44
<PAGE>
DIRECTORS
Richard S. Strong
Willie D. Davis
Stanley Kritzik
Marvin E. Nevins
William F. Vogt
OFFICERS
Richard S. Strong, Chairman of the Board
Mary F. Hoppa, Vice President
Thomas P. Lemke, Vice President
John S. Weitzer, Vice President
Stephen J. Shenkenberg, Vice President and Secretary
John A. Flanagan, Treasurer
INVESTMENT ADVISOR
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
CUSTODIAN
Firstar Trust Company
P.O. Box 701, Milwaukee, Wisconsin 53201
AUDITOR
Coopers & Lybrand L.L.P.
411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street, Milwaukee, Wisconsin 53202
<PAGE>
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 report does
not constitute an offer for the sale of securities.
Strong Funds are offered for sale by prospectus only.
[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 On-line
www.strong-funds.com
[STRONG FUNDS LOGO]
STRONG FUNDS
P.O. Box 2936 * Milwaukee, Wisconsin 53201
Strong Funds Distributors, Inc. 7026B98 98AGRO
