THE STRONG
----------
GROWTH
FUNDS
=================================
ANNUAL REPORT o DECEMBER 31, 1998
=================================
The Strong Common Stock Fund
The Strong Discovery Fund
The Strong Enterprise Fund
The Strong Growth Fund
The Strong Growth 20 Fund
The Strong Mid Cap Fund
The Strong Opportunity Fund
The Strong Small Cap Value Fund
The Strong Strategic Growth Fund
[PHOTO OF STRONG FUNDS BUILDING]
[STRONG LOGO]
STRONG FUNDS
<PAGE>
LETTER FROM THE CHAIRMAN
Dear Strong Investor,
It was a rainy Friday night in Owings Mills, Md., in October 1996. I was
sitting on the set of "Wall Street Week," being interviewed by Louis Rukeyser.
We had been talking about the incredible bull market that was heading for
another year of double-digit returns. Lou asked--with tongue in cheek--if I
thought it could last forever.
My response was that I didn't know how long the bull would run, but that I
was pretty sure of one thing: We ought to enjoy it. We live in remarkable times,
the kind of times we only dreamt about when I was in school. I told Lou that
inflation was almost nonexistent, interest rates appeared to be heading lower,
and American technology had made a lot of companies unbelievably efficient and
productive.
"It's the best I've seen things in the 30 years since I got out of school,"
I said.
"Then you'd say the future probably lies ahead of us," observed Lou.
"Yes," I replied, "I'd say the future is ahead of us."
Here we are more than two years later, fast approaching the end of the
millennium, and the story line is pretty much unchanged. Inflation is low,
interest rates are still moving down--(and we believe they will move lower in
the months and years ahead)--and one technological miracle after another arrives
regularly.
Beyond that, we've just come off the fourth successive year in which the
S&P 500 returned more than 20%. Mind you, not every common stock finished 1998
so strong. Once again the investment gods smiled mainly on the bigger blue
chips. But generally speaking, after encountering some "air pockets" over Asia
last summer, the US and European markets rebounded when the Federal Reserve
reduced interest rates three times.
If there was one lesson that the markets taught us last year, it was the
importance of creating a balanced portfolio. That means splitting your
investments between stocks, bonds and cash. Common stocks today are the darling
of American investors, particularly the technology stocks. Bonds are not nearly
as romantic, and are also a little tougher to get your arms around. But there is
no disputing their importance in a sound, balanced investment portfolio. They
generate a consistent stream of income and provide protection when inflation is
low.
You ought to remember that in 1999. As long as interest rates fall, bonds
will continue to provide very attractive returns. If you find the world of bonds
a little tough to figure at times--as a number of our shareholders have reminded
us--call for a better explanation. We'll be happy to walk you through the math.
You should also make sure to spread out your stock investments among
small-, medium-, and large-cap stocks. While the blue chips, Internet and other
tech stocks received the spotlight in 1998, they are not the only game in town.
There are an awful lot of smart, solid, mid-sized and smaller companies out in
the common stock universe that have not shared in the run-up. You can find some
great bargains and, sooner or later, these companies are going to get their due.
/s/ Dick
<PAGE>
THE STRONG
----------
GROWTH
FUNDS
=================================
ANNUAL REPORT o DECEMBER 31, 1998
=================================
TABLE OF CONTENTS
INVESTMENT REVIEW
The Strong Common Stock Fund ................................2
The Strong Discovery Fund ...................................4
The Strong Enterprise Fund ..................................6
The Strong Growth Fund ......................................8
The Strong Growth 20 Fund ..................................10
The Strong Mid Cap Fund ....................................12
The Strong Opportunity Fund ................................14
The Strong Small Cap Value Fund ............................16
The Strong Strategic Growth Fund ...........................18
FINANCIAL INFORMATION
Schedules of Investments in Securities .....................20
Statements of Assets and Liabilities .......................32
Statements of Operations ...................................34
Statements of Changes in Net Assets ........................36
Notes to Financial Statements ..............................39
FINANCIAL HIGHLIGHTS ................................................44
REPORT OF INDEPENDENT ACCOUNTANTS ...................................48
<PAGE>
============
THE STRONG COMMON STOCK FUND
-----------============-----
FUND
HIGHLIGHTS
o For the year ending December 31, 1998, the Strong Common Stock Fund
returned 6.60% versus a -2.55% return for the Russell 2000(R) Index.*
o Media/cable stocks appreciated nicely as a number of acquisitions verified
our "private market value" methodology and new services highlighted the
market potential of the cable industry.
o Technology was very volatile, and a third quarter drop in values allowed us
to overweight the sector and earn strong gains in the fourth quarter of the
year.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 12-31-98
1-year 6.60%
3-year 16.78%
5-year 15.98%
Since Inception 19.67%
(on 12-29-89)
- --------------------------------------------------------------------------------
FIVE LARGEST
STOCK HOLDINGS
As of 12-31-98
SECURITY % OF NET ASSETS
Tele-Communications, Inc. 3.9%
MediaOne Group, Inc. 1.9%
Rollins Truck Leasing 1.8%
Corporation
Borders Group, Inc. 1.7%
Cox Communications, Inc. 1.7%
Please see the Schedule of Investments in Securities
for a complete listing of the Fund's portfolio.
PERSPECTIVES
FROM THE MANAGERS
/s/Richard Trent Weiss /s/Marina Carlson
Richard T. Weiss Marina Carlson
Portfolio Co-manager Portfolio Co-manager
- --------------------------------------------------------------------------------
By holding overweighted positions in the areas of cable/media and technology,
the Strong Common Stock Fund outperformed the Russell 2000 Index in 1998. Our
best stocks in 1998 included US West, Wellpoint, NTL, Inc. and
Tele-Communications, Inc. Despite continued confidence in these areas, the Fund
has taken profits in both groups as valuations have risen and the risk/reward
profile that led to the initial purchase of several stocks has shifted. We feel
that media/cable should continue to do well since demand for these services
tends to remain strong even in a weakening economic environment. We are more
cautious on technology stocks as valuations have risen substantially over a
short period and earnings expectations appear too aggressive over the shorter
term.
We were disappointed with performance of the energy sector in 1998. We were
initially optimistic at the beginning of the year due to favorable stock
valuations, what appeared to be a reasonable forecast for oil prices, and a
conservative estimate for demand from Asia. Unfortunately, unseasonably warm
weather internationally and the deflationary effects from the Asian crisis hurt
the supply/demand balance and caused the price of oil to fall greater than we
anticipated. We are cautiously optimistic on the short-term fundamentals for
natural gas and energy, and longer term we continue to believe this group
possesses great value.
------------------------
WHEN WE EVALUATE
HISTORICAL VALUATION
RANGES, SMALL-CAP
STOCKS ARE EXTREMELY
UNDERPRICED IN
RELATION TO THEIR LARGE-
CAP COUNTERPARTS.
------------------------
- --------------------------------------------------------------------------------
2
<PAGE>
Over the next six months, we expect the economy to slow, along with the earnings
prospects for most companies. If this does occur, the market's narrowness could
continue favoring large-cap stocks into 1999. However, when we evaluate
historical valuation ranges, small-cap stocks are extremely underpriced in
relation to their large-cap counterparts. While it's difficult to predict when
small-cap stocks will begin to outperform, similar situations in the past led to
a sustained rally in smaller stocks. Market conditions today are very comparable
to the 1968 to 1973 period which saw a preference for larger-cap stocks--what is
now known as the "Nifty Fifty" era. Following this era and the market top of
1973, small-cap stocks outperformed large-caps by 18% yearly for the next 10
years. We believe history could repeat itself, implying a prolonged period of
small-cap outperformance. Our conviction that the current valuation discrepancy
will be closed relatively soon is supported by the fact that the relative
valuation of small-cap to large-cap is near 25-30 year lows. We understand the
temptation of investors to forgo small-cap stocks but believe the risk is that
history repeats itself and investors will miss the period of small-cap
outperformance.
We thank you for investing in the Strong Common Stock Fund and hope to help you
achieve your financial goals.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-29-89 to 12-31-98
[GRAPH]
THE STRONG COMMON S & P 500 Lipper Growth
STOCK FUND Stock Index* Funds 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 23,850
12-97 47,223 34,233 30,536
12-98 50,340 44,015 38,380
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Standard & Poor's 500 Stock Index ("S&P 500") and the Lipper Growth Funds Index.
Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value will vary, and you may have a gain or
loss when you sell shares.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market. The Russell 2000(R) Index is an unmanaged index generally
representative of the U.S. market for small cap stocks. The Lipper Growth
Funds Index is an equally-weighted performance index of the largest
qualifying funds in this Lipper category. Source of the S&P and Russell
index data is Standard & Poor's Micropal. Source of the Lipper index data
is Lipper, Inc.
YOUR FUND'S
APPROACH
THE STRONG COMMON STOCK FUND INVESTS IN SMALL-CAP STOCKS THAT APPEAR UNDERVALUED
OR NEGLECTED BY WALL STREET ANALYSTS, BUT POSSESS SUPERIOR LONG-TERM GROWTH
POTENTIAL. AT THE CORE OF OUR INVESTMENT PHILOSOPHY IS THE "PRIVATE MARKET
METHODOLOGY." THIS APPROACH ALLOWS US TO DETERMINE WHAT WE BELIEVE TO BE THE
TRUE ECONOMIC VALUE OF A COMPANY--OR THE PRICE A BUYER WOULD PLACE ON THE WHOLE
COMPANY. BY ANALYZING THE COMPETITIVE ADVANTAGES OF A COMPANY AND BY JUDGING THE
ABILITY OF MANAGEMENT TO EFFECTIVELY CARRY OUT ITS CORPORATE VISION, WE ARE ABLE
TO DETERMINE THE TRUE ECONOMIC VALUE OF THE FIRM AND QUANTIFY THE RISK/REWARD
CHARACTERISTICS OF INDIVIDUAL STOCKS.
- --------------------------------------------------------------------------------
MARKET
HIGHLIGHTS
o The economy in 1998 remained relatively strong with U.S. companies
experiencing moderate gains in corporate earnings for the seventh year in a
row.
o The majority of U.S. companies saw a deceleration in the rate of profit
growth over the past few quarters, leading to a more narrow stock market
focused on large-cap stocks.
o The top 20 growth stocks in the S&P 500 Stock Index* accounted for over 50%
of the index's gains for the year as smaller stock again trailed the "ultra
large" cap stocks.
3
<PAGE>
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THE STRONG DISCOVERY FUND
-----------=========-----
FUND
HIGHLIGHTS
o The Strong Discovery Fund returned 7.04% in 1998.
o As of December 31, 1998, the Fund was invested in companies with an
expected earnings growth rate of 21.6%. On-site meetings with management
confirm that the vast majority of the Fund's holdings are on track to
achieve their profit targets.
o The Fund emphasizes dependable growth companies as a pre-cautionary measure
against a potential slowdown in the U.S. economy.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 12-31-98
1-year 7.04%
3-year 6.39%
5-year 8.90%
10-year 14.45%
Since Inception 15.32%
(on 12-31-87)
- --------------------------------------------------------------------------------
FIVE LARGEST
STOCK HOLDINGS
As of 12-31-98
SECURITY % OF NET ASSETS
Central Garden & Pet Co. 4.8%
Sybron International
Corporation 2.6%
Equity Corporation
International 2.2%
Corrections Corporation
America 2.1%
United Stationers, Inc. 2.0%
Please see the Schedule of Investments in
Securities for a complete listing of the
Fund's portfolio.
PERSPECTIVES
FROM THE MANAGERS
/s/Richard S. Strong /s/Chip Paquelet
Richard S. Strong Chip Paquelet
Portfolio Co-manager Portfolio Co-manager
- --------------------------------------------------------------------------------
Since June 1996, there have effectively been two stock markets--one consisting
of a handful of large blue-chip companies and the other containing all remaining
stocks. The few large-company stocks have performed extraordinarily well,
significantly exceeding historical averages. By contrast, the returns on most
stocks have trailed long-term averages. This divergent performance accelerated
in 1998, a year in which the stocks of the 50 largest companies rose an average
of 39.6% (propelling the S&P 500 Stock Index to a 28.58% gain) while the average
stock on the New York Stock Exchange actually declined 2.9%.*
Given that the Strong Discovery Fund invests primarily in smaller- and
medium-size companies, an important benchmark we use in evaluating our
performance is the Russell 2500(R) Index. This index tracks the performance of
stocks that are most similar to the types of companies in which the Fund
invests. We are pleased that the Fund's 1998 return exceeded that of this index
by 6.66%.
While exceeding the performance of relevant benchmarks is a goal of ours, we are
disappointed by the Fund's low absolute return in 1998--particularly in light of
the financial strength of most of the Fund's holdings. By our estimates, the
companies in the portfolio are growing their earnings by an average of 21.6% per
year. This significantly exceeds the prospects facing the S&P 500, where
long-term earnings growth is estimated at 5% and the earnings report for 1998 is
likely to show a decline. Additionally, the price we are paying for this
earnings growth, as a multiple of earnings, is below the average for the S&P
500. The Fund's attractive valuation and earnings-growth profile also compares
well with the Russell 2500.
------------------------------
DIVERGENT
PERFORMANCE
ACCELERATED IN 1998.
------------------------------
- --------------------------------------------------------------------------------
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, 1998. 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, 1998.
4
<PAGE>
FUND P/E RATIO ESTIMATED
(1998 EARNINGS) EARNINGS GROWTH(1)
- --------------------------------------------------------------------------------
Strong Discovery Fund 20.7x 21.6%
S&P 500 Index 26.2x 5.0%
Russell 2500 Index 24.2x 19.9%
Our investment approach is not based on chasing market euphoria or fads. Rather,
we look for well-managed companies that are in good businesses and offer
superior growth potential--and can be invested in at attractive prices. We also
focus on companies with products that are used and replaced every day, such as
razor blades and batteries. By investing in companies with consumable
characteristics, we attempt to insulate the portfolio from the impact of
economic slowdowns.
At the present time, we believe the portfolio is well-positioned relative to
these attributes. Over our respective careers, it has been our experience that
stock prices eventually track earnings growth. Although there is occasionally a
lapse in this relationship, it is our plan to stay the course with confidence in
our time-tested approach.
Successful investing requires confidence and patience. Yours is appreciated.
Thank you for your investment in the Strong Discovery Fund.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-87 to 12-31-98
[GRAPH]
Lipper Capital
THE STRONG S & P 500 Appreciation Russell
DISCOVERY FUND Stock Index* Funds Index* 2500 (R) Index*
12-87 10,000 10,000 10,000 10,000
12-89 15,428 15,356 14,479 14,555
12-91 25,151 19,412 18,366 19,810
12-93 31,333 22,996 22,865 23,500
12-95 39,885 32,056 29,350 30,982
12-97 44,825 52,566 40,477 40,911
12-98 47,981 67,588 48,566 42,178
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Standard & Poor's 500 Stock Index, ("S&P 500") the Lipper Capital Appreciation
Funds Index, and the Russell 2500(R) Index. Results include the reinvestment of
all dividends and capital gains distributions. Performance is historical and
does not represent future results. Investment returns and principal value will
vary, and you may have a gain or loss when you sell shares.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market. The Russell 2500(R) Index is an unmanaged index generally
representative of the U.S. market for small cap stocks. 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 and
Russell index data is Standard & Poor's Micropal. Source of the Lipper
index data is Lipper, Inc.
YOUR FUND'S
APPROACH
THE STRONG DISCOVERY FUND SEEKS TO PROVIDE INVESTORS WITH CAPITAL GROWTH, A GOAL
WE PURSUE BY INVESTING PRIMARILY IN SMALLER- AND MEDIUM-SIZE 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 ARE NOT REFLECTED IN A COMPUTER DATABASE OR HISTORICAL
FINANCIAL STATEMENTS.
- --------------------------------------------------------------------------------
MARKET
HIGHLIGHTS
o Large company stocks continue to perform well. The vast majority of stocks,
however, have not kept pace. In 1998, the average New York Stock Exchange
stock declined 2.9% and the average NASDAQ stock rose just 0.3%.
o By many measures, the U.S. stock market's third-quarter correction exceeded
both the 1990 bear market and the 1987 crash. Following the Fed's autumn
interest-rate cuts, the market rallied and finished the year with strong
momentum.
o The U.S. economy has proven resilient while many economies have experienced
recession and even depression. This global economic climate has driven many
international investors to the perceived safety of America's largest
companies.
5
<PAGE>
==========
THE STRONG ENTERPRISE FUND
-----------==========-----
FUND
HIGHLIGHTS
o The Fund was up 47.43% for the three months from its inception on September
30, 1998 through December 31, 1998.
o The Fund outperformed its benchmark, the Nasdaq Composite, which was up
29.52% during the same period. It also outperformed the S&P 500, which
returned 21.30%.*
o The manager's decision to enter the market slowly and deliberately in
October, when securities markets were very turbulent, helped the Fund's
performance.
o During November and December, the Fund focused on companies involved in
software, medical technology, semiconductors and the Internet. They offer
much opportunity today.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 12-31-98
Since Inception 47.43%
(on 9-30-98)
- --------------------------------------------------------------------------------
FIVE LARGEST
STOCK HOLDINGS
As of 12-31-98
SECURITY % OF NET ASSETS
Business Objects SA
Sponsored ADR 5.2%
BroadVision, Inc. 5.0%
FORE Systems, Inc. 4.3%
Cognos, Inc. 3.3%
Restoration Hardware, Inc. 2.8%
Please see the Schedule of Investments
in Securities for a complete listing of
the Fund's portfolio.
PERSPECTIVES
FROM THE MANAGER
/s/Drew Cupps
Drew Cupps
Portfolio Manager
- --------------------------------------------------------------------------------
The inception of the Strong Enterprise Fund corresponded with a tremendous
rebound in the stock market and created a very attractive environment for the
aggressive growth stocks we look for. We are excited to work on your behalf to
pursue some of the most innovative and exciting companies available. We believe
they are the engines of growth for the economy today and in the future.
Our research team constantly surveys the investment horizon for sectors and
industries that are changing significantly or growing rapidly. As we gather
information by visiting companies and analyzing the market, we develop
investment themes. These themes are sometimes very broad and encompass several
industries, and other times are more specific and apply to only a few companies.
By focusing on these themes, we believe we can invest in the most timely
industries and stocks in order to outperform the broader market.
Without a doubt, the most powerful investment theme of 1998 was the Internet.
Although we invested in several of the best-known Internet companies early in
the fourth quarter, most of our Internet-related investments have been less
direct. For example, Broadvision produces software that allows companies to
build profiles of the visitors to their web sites; it proved to be one of our
most successful investments. Intuit was another successful Internet-related
investment. Most of Intuit's earnings currently come from their traditional
financial software, including Quicken, but they are investing to position
themselves well to build a profitable Internet-based business.
-----------------------
WITHOUT A DOUBT,
THE MOST POWERFUL
INVESTMENT THEME
OF 1998 WAS
THE INTERNET.
-----------------------
- --------------------------------------------------------------------------------
6
<PAGE>
Medical technology is another sector we believe offers tremendous investment
opportunities. The pace at which scientists are learning about the human gene is
accelerating, a boon to biotechnology and pharmaceutical companies as they work
to discover new drugs. Millennium Pharmaceuticals, a leading investment for the
Fund, has developed one of the most advanced systems for new drug discovery.
Looking ahead, although the world economy is very fragile right now, we believe
Asia may indeed have stabilized. That would bode well for many U.S. growth
companies, especially in the current low interest rate environment. We are also
encouraged by the opportunities the Information Age provides for innovative
companies--not just in the technology sector, but also in health care,
retailing, media, and consumer products. As the pace of change increases, growth
opportunities expand.
We will endeavor to allow the Strong Enterprise Fund to capitalize on these and
other opportunities over the long term. High-growth stocks are susceptible to
changes in investor psychology, though, and to the volatility that accompanies
those changes. We encourage you to adopt a long-term investment perspective with
this Fund.
Thank you for your investment and confidence in the Fund.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 9-30-98 to 12-31-98
[GRAPH]
THE STRONG NASDAQ Lipper Mid Cap
ENTERPRISE FUND Composite Index* Funds Index*
9-98 10,000 10,000 10,000
10-98 11,170 10,459 10,492
11-98 12,620 11,513 11,173
12-98 14,743 12,952 12,374
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Nasdaq Composite 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 will vary, and you may have a gain or loss when you sell shares.
- --------------------------------------------------------------------------------
* The Standard & Poors 500 Stock Index ("S&P 500") is an unmanaged index
generally representative of the U.S. stock market. The Nasdaq Composite
Index is an unmanaged index generally representative of the market for
small, domestic stocks. 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 and Russell index data is Standard &
Poor's Micropal. Source of the Lipper index data is Lipper, Inc.
YOUR FUND'S
APPROACH
THE PACE OF ADVANCEMENT AND CHANGE IN THE WORLD IS ACCELERATING. THE STRONG
ENTERPRISE FUND SEEKS TO CAPTURE THE GROWTH OF LEADING COMPANIES IN RAPIDLY
GROWING INDUSTRIES. WE WORK TO RESEARCH AND UNDERSTAND THE DIRECTIONS THAT THE
WORLD AND THE ECONOMY ARE MOVING IN, AND TO DEVELOP INVESTMENT THEMES TO
CAPITALIZE ON THE OPPORTUNITIES THOSE CHANGES CREATE. ALTHOUGH THIS FUND
EMPHASIZES SMALL- AND MID-CAP COMPANIES, WE SEARCH AMONG COMPANIES OF ALL SIZES
FOR THOSE THAT ARE POSITIONED FOR RAPID GROWTH OF REVENUE AND EARNINGS.
- --------------------------------------------------------------------------------
MARKET
HIGHLIGHTS
o The aggressive action by the Federal Reserve to cut interest rates and
support the U.S. and world economies boosted the performance of growth
stocks and of this Fund.
o Investor expectations shifted away from recession and toward a brighter
scenario in which Asian demand would return, adding to the steady demand
from Europe and the U.S.
o Large stocks continued to significantly outperform smaller ones, though
small stocks showed some signs of resurgence. Because this Fund has the
flexibility to invest in both large and small companies, we will seek to
emphasize the most timely segments of the market.
7
<PAGE>
======
THE STRONG GROWTH FUND
-----------======-----
FUND
HIGHLIGHTS
o The Strong Growth Fund returned 26.98% for the 12 months ended December 31,
1998, while the S&P 500 returned 28.58% for the same period.*
o Most of the Fund's performance came late in the year, with returns of
25.00% in the fourth quarter and 15.04% in December alone.
o Given the Fund's all-cap flexible growth approach and median market
capitalization of $5.63 billion, we are very pleased with these results. By
comparison, without its market-cap weighting, the S&P 500's average stock
was up only 10.8%.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 12-31-98
1-year 26.98%
3-year 21.80%
Since Inception 24.47%
(on 12-31-93)
- --------------------------------------------------------------------------------
FIVE LARGEST
STOCK HOLDINGS
As of 12-31-98
SECURITY % OF NET ASSETS
Kohl's Corporation 3.3%
Cisco Systems, Inc. 3.0%
MCI WorldCom, Inc. 2.9%
Lowe's Companies, Inc. 2.5%
America Online, Inc. 2.2%
Please see the Schedule of Investments
in Securities for a complete listing of
the Fund's portfolio.
PERSPECTIVES
FROM THE MANAGER
/s/Ronald C. Ognar
Ronald C. Ognar
Portfolio Manager
- --------------------------------------------------------------------------------
Let me first say thank you for your continuing investment in the Fund and for
your confidence in our approach. I share your belief that a managed portfolio of
dominant growth companies will prove to be a rewarding investment and deserves
to be a significant part of your long-term portfolio. Our team's investment aim
is to keep the ball in play, to try to have a good year every year, and to not
foul out of the game by taking too much risk. How have we done? (We are
shareholders too.) Over the period since its inception, the Fund has beaten the
average fund in the Lipper Growth category with a 198.77% cumulative return vs.
an average 146.96% cumulative return, and we've never had a down year.*
We were quite pleased with the performance of the Fund in 1998. While the Fund's
return of 26.98% is generally in line with the return of 28.58% posted by the
S&P 500, the comparison hides some important performance information. Without
its typical capitalization weighting, the S&P 500's average stock returned only
10.8%. In other words, the index's strong 1998 performance was posted on the
back of a few very large stocks that had a very good year.*
In 1998, we used the same investment themes we use every year and they worked
well. As always, we invested in the dominant companies in promising industries.
We believe companies that dominate their industries are simply in the best
position to become even stronger and more profitable. Our holdings in the
health-care and service sectors benefited as the aging U.S. population demanded
more of their products and services. The technology revolution which has been so
good for our country's economy continued in 1998, boosting the returns of the
Fund's technology holdings.
--------------------
IN 1998, WE USED THE
SAME INVESTMENT
THEMES WE USE
EVERY YEAR AND
THEY WORKED WELL.
--------------------
- --------------------------------------------------------------------------------
8
<PAGE>
The tried and true adage "Don't fight the Fed" held true again this year. Early
this fall, as the U.S. stock market was continuing its summer-long decline, the
Federal Reserve sparked a rally with a rapid series of interest rate cuts. We
were well-positioned for the late-year market festivities. The Fund advanced
25.00% in the fourth quarter and 15.04% in the month of December.
Looking forward, we think the Fed is still our friend and that the market will
continue to be volatile with its share of worries. Fortunately, volatility and
uncertain markets create opportunities. In 1998, growth stocks, especially those
with improving fundamentals, did well. In 1999, we are looking for more of the
same and will continue to search out these companies for you.
Again, thank you from the Strong Growth Fund team for the opportunity to serve
you and help you achieve your long-term investment goals.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-93 to 12-31-98
[GRAPH]
THE STRONG S & P 500 Lipper Growth
GROWTH FUND Stock Index* Funds Index*
12-93 10,000 10,000 10,000
12-94 11,727 10,132 9,843
12-95 16,535 13,940 13,057
12-96 19,763 17,140 15,346
12-97 23,528 22,859 19,648
12-98 29,877 29,391 24,696
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Standard & Poor's 500 Stock Index ("S&P 500") and the Lipper Growth Funds Index.
Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market. 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, Inc.
YOUR FUND'S
APPROACH
THE STRONG GROWTH FUND IS DESIGNED TO SERVE AS A CORE EQUITY HOLDING IN
INVESTORS' PORTFOLIOS BY INVESTING IN GROWTH STOCKS OF ALL SIZES. THE MANAGER
CHOOSES INVESTMENTS BY CAREFULLY RESEARCHING COMPANIES ONE AT A TIME, PAYING
CLOSE ATTENTION TO THEIR VALUATIONS AND THE LONG-TERM THEMES OF THEIR
BUSINESSES. THE FUND IS FLEXIBLE ENOUGH TO MOVE OUT OF WHAT THE MANAGER BELIEVES
ARE DANGEROUS SECTORS AND CAPITALIZATION AREAS IN AN EFFORT TO PROTECT
SHAREHOLDERS' INVESTMENTS. ONCE THESE STOCKS ARE SOLD, THE MANAGER MOVES THE
FUND TO POTENTIALLY MORE PROMISING INVESTMENT TERRITORY.
- --------------------------------------------------------------------------------
MARKET
HIGHLIGHTS
o This year's markets were volatile enough to remind many investors of 1987.
We endured the shocks and related fears of the Clinton situation, the
Southeast Asian meltdown, Russian and Brazilian economic problems, a
slowdown in corporate earnings, the hedge fund debacle, and fears of a
massive credit crunch.
o At the worst point of this summer's market correction, the average NASDAQ
and NYSE stocks had declined 38.5% and 27.8% from their respective highs.
o The Federal Reserve rode to the rescue in the fall, cutting interest rates
and sparking a terrific late-year stock market rally.
9
<PAGE>
=========
THE STRONG GROWTH 20 FUND
-----------=========-----
FUND
HIGHLIGHTS
o The Strong Growth 20 Fund returned 36.52% for the 12 months ended December
31, 1998, while the S&P 500 Stock Index returned 28.58% for the same
period.*
o Technology stocks, especially Internet stocks, had a very good year. While
we believe that the Internet sector will be one of the most dynamic growth
sectors of the next several years, we trimmed these holdings as their
prices reached levels we thought were simply too high.
o Outside of technology, the Fund's investments were focused in the growth
sectors of healthcare and category-killer retailers.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURN
As of 12-31-98
1-year 36.52%
Since Inception 34.19%
(on 6-30-97)
- --------------------------------------------------------------------------------
FIVE LARGEST
STOCK HOLDINGS
As of 12-31-98
SECURITY % OF NET ASSETS
Cisco Systems, Inc. 5.9%
MCI WorldCom, Inc. 5.5%
Kohl's Corporation 5.2%
Network Appliance, Inc. 5.1%
Office Depot, Inc. 4.9%
Please see the Schedule of Investments
in Securities for a complete listing of
the Fund's portfolio.
PERSPECTIVES
FROM THE MANAGER
/s/Ronald C. Ognar
Ronald C. Ognar
Portfolio Manager
- --------------------------------------------------------------------------------
The management team of the Strong Growth 20 Fund also manages the Strong Growth
Fund (all-cap growth stocks) and the Strong Total Return Fund (emphasis on
large-cap growth stocks). In Growth 20, we try to pick our best
intermediate-term ideas from the stocks we own. As always, we recommend this
Fund as a small portion of your long-term portfolio with the Strong Growth Fund
or the Strong Total Return Fund as the core growth investment. Although we had
great success in 1998, returning 36.52%, Growth 20 is designed to be our team's
most aggressive fund, and may be quite volatile.
In the record books, the S&P 500 Stock Index will show 1998 as a very strong
year. But the returns of major market indexes are often like the final score of
a sporting contest. While they summarize the final outcome of the game, they
sometimes fail to reflect a lot of what went on before the clock ran out. In
fact, a whole list of market-shaking events occurred this year. Most stocks
declined sharply this summer, pushing us into what we considered to be a bear
market. At the market's summer low, the average NASDAQ and NYSE stocks were down
38.5% and 27.8% from their respective highs, levels similar to the 1987 and 1990
bear markets. The Federal Reserve rode to the rescue in October with a rapid
series of interest rate cuts, sparking a terrific rally in stock prices.
-------------------
THIS YEAR,
WE CONCENTRATED
THE FUND'S
INVESTMENTS IN
TECHNOLOGY,
HEALTH CARE AND
DOMINANT RETAILERS.
-------------------
- --------------------------------------------------------------------------------
10
<PAGE>
This year, we concentrated the Fund's investments in technology, healthcare and
category-killer retailers. Our investments in Internet, communication, and
networking companies reflect our belief that the technology revolution will make
these some of the most dynamic growth areas for the next several years. Our
Internet stocks had big upward moves this year. While we still want to be
represented in this area, we've scaled back our holdings somewhat - there are
times when stocks prices simply get too high.
Looking ahead, we think the Fed will be market-friendly and money flowing into
stocks from 401(k) plans will help the market. Currently, increases in corporate
profits are hard to come by and the economy's growth is slow. Historically,
such conditions have made growth stocks the right hunting ground for investors.
We expect more volatility and think stock selection will be increasingly
important. Overall, we think the bull market is likely to continue and we should
see more breadth in the stock market as momentum builds.
Thank you for your support during Growth 20's first 18 months. So far we have
been very successful, but we emphasize the importance of holding this Fund as
part of a diversified equity portfolio and recommend investing through monthly
dollar-cost averaging as a way to ease the volatility of this concentrated fund.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 6-30-97 to 12-31-98
[GRAPH]
Lipper Capital
THE STRONG S & P 500 Appreciation
GROWTH 20 FUND Stock Index* Funds Index*
6-97 10,000 10,000 10,000
9-97 11,995 10,749 11,155
12-97 11,387 11,058 10,890
3-98 12,424 12,600 12,283
6-98 13,129 13,016 12,490
9-98 12,092 11,721 10,698
12-98 15,545 14,218 13,067
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of 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 vary, and you may have a
gain or loss when you sell shares.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market. 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, Inc.
YOUR FUND'S
APPROACH
THE STRONG GROWTH 20 FUND INVESTS IN A CONCENTRATED PORTFOLIO OF 20 TO 30 GROWTH
STOCKS OF ALL SIZES. THE MANAGER CHOOSES INVESTMENTS BY CAREFULLY RESEARCHING
COMPANIES ONE AT A TIME, PAYING CLOSE ATTENTION TO THEIR VALUATIONS AND THE
LONG-TERM THEMES OF THEIR BUSINESSES. THIS IS AN AGGRESSIVE GROWTH FUND THAT
HOLDS A LIMITED NUMBER OF STOCKS, EACH ONE NORMALLY ACCOUNTING FOR BETWEEN 3%
AND 7% OF THE FUND'S TOTAL ASSETS - SO IT IS LIKELY TO SHOW PRONOUNCED PRICE
FLUCTUATION. BECAUSE OF THIS POTENTIAL VOLATILITY AND THE FUND'S AGGRESSIVE
NATURE, IT SHOULD BE HELD AS A SMALL PORTION OF INVESTORS' LONG-TERM PORTFOLIOS.
- --------------------------------------------------------------------------------
MARKET
HIGHLIGHTS
o This year's markets were volatile enough to remind many investors of 1987.
We endured the shocks and related fears of the Clinton situation, the
Southeast Asian meltdown, Russian and Brazilian economic problems, a
slowdown in corporate earnings, the hedge fund debacle, and fears of a
massive credit crunch.
o At the worst point of this summer's market correction, the average NASDAQ
and NYSE stocks had declined 38.5% and 27.8% from their respective highs.
o The Federal Reserve rode to the rescue in the fall, cutting interest rates
and sparking a terrific late-year stock market rally.
11
<PAGE>
=======
THE STRONG MID CAP FUND
-----------=======-----
FUND
HIGHLIGHTS
o The Fund returned 14.50% for the year. This compared favorably with the
Lipper Mid Cap Funds Index return of 13.92%, but unfavorably with the
19.11% return of the S&P MidCap 400 Stock Index (MidCap Index).* Although
average, the results were somewhat disappointing.
o Technology holdings provided strong results for the Fund, while energy
holdings and the reduction in Internet holdings hurt performance.
o Despite a positive return, the Fund didn't pay a capital gain to
shareholders.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 12-31-98
1-year 14.50%
Since Inception 14.17%
(on 12-31-96)
- --------------------------------------------------------------------------------
TOP FIVE SECTORS
As of 12-31-98
SECTOR % OF NET ASSETS
Technology 40.01%
Financial 22.41%
Healthcare 12.52%
Retail 8.24%
Capital Equipment 8.20%
Please see the Schedule of Investments
in Securities for a complete listing of
the Fund's portfolio.
PERSPECTIVES
FROM THE MANAGER
/s/Scott Sindelar
Scott Sindelar
Portfolio Manager
- --------------------------------------------------------------------------------
In May 1998, upon assuming management of the Strong Mid Cap Fund, I modified the
investment philosophy by increasing emphasis on valuations, reducing the number
of holdings, and focusing on strong, long-term results. These changes both
helped and hurt the Fund during 1998.
The Fund's increased emphasis on stock valuations was demonstrated by the
reduction in Internet holdings in the portfolio. While the Internet should
exhibit tremendous growth well into the future, Internet stocks' prices already
reflect this anticipated growth. To see the prices paid for these stocks, look
at America Online (AOL). At the end of the year, AOL's total outstanding shares
were worth $68 billion, equal to the value of the top 25 holdings of this Fund.
While the market has assigned an equal value to AOL and our top 25, our 25
holdings have a combined operating income of $3.5 billion - more than 12 times
that of AOL! Having described our logic, we should note that our choice turned
out to be a poor one as Internet stocks performed exceedingly well at the end of
1998.
A reduction in the Fund's overall holdings resulted from our philosophy of
seeking mid-size companies that can grow swiftly into large companies. Since
there are few firms like this, the number of holdings in the Fund has been
reduced. By identifying well-managed companies and growing with them, it is
possible to generate attractive long-term results in a cost-efficient manner.
-----------------------
BECAUSE IT IS DIFFICULT
TO PREDICT MARKETS,
THE FUND STAYS
FOCUSED ON TRYING
TO IDENTIFY STRONG
LONG-TERM GROWTH
COMPANIES AND
PURCHASE THEM AT
ATTRACTIVE PRICES.
-----------------------
- --------------------------------------------------------------------------------
12
<PAGE>
Looking forward into 1999, there are several bright spots as well as concerns. A
strong domestic economy, relatively low interest rates, and low current
inflation bode well for the market. International troubles raise the likelihood
of disruptions to the U.S. economy. One unknown for 1999 is the introduction of
the Euro--the new consolidated currency for 11 European countries. Because it is
difficult to predict markets, the Fund stays focused on trying to identify
strong long-term growth companies and purchase them at attractive prices.
I appreciate your confidence in this Fund and hope to provide you with
attractive returns over time.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-96 to 12-31-98
[GRAPH]
THE STRONG MID S & P 500 Lipper Mid Cap
CAP FUND Stock Index* Funds Index*
12-96 10,000 10,000 10,000
6-97 10,104 12,061 10,808
12-97 11,385 13,336 11,746
6-98 13,196 15,698 13,180
12-98 13,035 17,147 13,381
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Standard & Poor's 500 Stock Index ("S&P 500") 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.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market. The S&P MidCap 400 Stock Index is an unmanaged index
generally representative of the U.S. stock market for medium cap stocks.
The Lipper Mid Cap Funds Index is an equally-weighted performance index of
the largest qualifying funds in this Lipper category. The Russell 2000(R)
Index is an unmanaged index generally representative of the U.S. stock
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, Inc.
YOUR FUND'S
APPROACH
THE STRONG MID CAP FUND SEEKS LONG-TERM RETURNS IN EXCESS OF THE S&P MID CAP 400
STOCK INDEX BY INVESTING IN WELL-MANAGED GROWTH COMPANIES. IDEAL INVESTMENTS ARE
COMPANIES THAT ARE GROWING FASTER BUT SELLING AT VALUATIONS LESS THAN THE
AVERAGE COMPANY IN THE INDEX. OVER TIME, THIS GENERALLY TRANSLATES INTO
ATTRACTIVE RETURNS FOR SHAREHOLDERS. THE MAJORITY OF THE FUND'S HOLDINGS WILL BE
MADE IN COMPANIES HAVING MARKET CAPITALIZATIONS BETWEEN $800 MILLION AND $5
BILLION AT THE TIME OF PURCHASE. THESE ARE COMPANIES THE SIZE OF HARLEY-DAVIDSON
OR STARBUCKS, RATHER THAN GENERAL MOTORS OR NAUTICA.
- --------------------------------------------------------------------------------
MARKET
HIGHLIGHTS
o Larger companies continued to outperform their smaller counterparts,
particularly during the second half of the year. The Mid Cap Index climbed
9.65%, while the small stocks of the Russell 2000(R) Stock Index declined
7.12% during this period.*
o Volatility was notable as the Mid Cap Index fell more than 27% from its
April high to the October low, when it rebounded with a 42% gain to end the
year at its high.
o The Mid Cap Index is changing some of its component companies as of January
1, 1999. Associated short-term trading may cause unusual volatility in the
Strong Mid Cap Fund for a short period surrounding this date.
13
<PAGE>
===========
THE STRONG OPPORTUNITY FUND
-----------===========-----
FUND
HIGHLIGHTS
o For the year ended December 31, 1998, the Strong Opportunity Fund returned
15.49% versus 19.11% for the S&P MidCap 400 Stock Index.*
o Two areas of Fund outperformance this year were cable/media and technology.
o The prices of cable/media stocks rose as investors recognized the area's
improved cash flow, and market potential for the services these companies
offer.
o During the fourth quarter, our investment methodology allowed us to find
areas of opportunity in the technology sector.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 12-31-98
1-year 15.49%
3-year 18.98%
5-year 17.20%
10-year 15.85%
Since Inception 18.49%
(on 12-31-85)
- --------------------------------------------------------------------------------
FIVE LARGEST
STOCK HOLDINGS
As of 12-31-98
SECURITY % OF NET ASSETS
Tele-Communications, Inc. 3.8%
Sun Microsystems, Inc. 2.0%
Corning, Inc. 1.9%
MediaOne Group, Inc. 1.7%
Whitman Corporation 1.7%
Please see the Schedule of Investments in
Securities for complete listing of the
Fund's portfolio.
PERSPECTIVES
FROM THE MANAGERS
/s/Richard Trent Weiss /s/Marina Carlson
Richard T. Weiss Marina Carlson
Portfolio Co-manager Portfolio Co-manager
- --------------------------------------------------------------------------------
The successful overweight positions of the Strong Opportunity Fund have been in
the areas of cable/media and technology. Some of our strongest stocks in 1998
included Cable & Wireless, US West, Sun Microsystems, and Texas Instruments. We
still have confidence in these areas, but have taken profits in both groups as
valuations have risen and the risk/reward profile that existed when we purchased
our positions has changed. Cable/media should continue to do well because demand
for these services tends to remain strong even in a weakening economic
environment. We have begun to moderately reduce our exposure to technology, as
the area's valuations--measured by comparing a stock's price versus its earnings
potential--have risen to relatively high levels and company earnings prospects
are somewhat optimistic.
One area where we were overly optimistic during 1998 was energy. We felt stock
valuations were favorable, given a reasonable forecast for oil prices after
factoring in marginally less demand from Asia. Unfortunately, the deflationary
effect from Asia, coupled with an exceptionally warm winter, led to a
deterioration of the supply/demand balance and falling oil prices. We are
cautiously optimistic about the fundamentals for natural gas and energy, and
believe this group possesses reasonable value over the long term.
--------------------
AT PRESENT, WE FIND
EXCEPTIONAL VALUE
IN SMALLER STOCKS
WHEN WE LOOK AT THE
COMBINATION OF PRICE
AND EARNINGS
POTENTIAL, AS
COMPARED WITH THOSE
OF LARGE-CAP STOCKS.
--------------------
- --------------------------------------------------------------------------------
14
<PAGE>
As we look out over the next six months, we expect the economy to continue to
slow, along with the earnings prospects for most companies. This scenario would
seem to dictate that the narrowness of the market would continue for the near
future. From a historical perspective, small- and mid-cap stocks are at
disproportionately low valuations compared with large-cap stocks. It is hard to
predict the point where small- and mid-cap stocks will begin to outperform, but
we have noted that under similar situations in the past, smaller stocks have
enjoyed a rally that resulted in solid outperformance. The present market
conditions are quite similar to the 1968 to 1973 market where we observed the
"Nifty Fifty" effect. It is our belief that the market will turn back to smaller
stocks, as it did during the 10-year period following the market top of 1973
when smaller stocks outperformed larger stocks by an average of 18% annually.
At present, we find exceptional value in smaller stocks when we look at the
combination of price and earnings potential, as compared with those of large-
cap stocks. As a result, from a fundamental valuation discipline we are very
optimistic. While investors may be tempted to sell mid-cap stocks because they
have been underperforming, in doing so they may miss the point of subsequent
outperformance.
We thank you for investing in the Strong Opportunity Fund, and look forward to
continuing to help you achieve your financial goals.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-85 to 12-31-98
[GRAPH]
THE STRONG S & P 500 Lipper Growth
OPPORTUNITY FUND Stock Index* Funds Index*
12-85 10,000 10,000 10,000
12-87 17,894 12,490 11,935
12-89 24,694 19,179 17,364
12-91 28,845 24,245 22,391
12-93 41,022 28,721 26,986
12-95 53,868 40,036 35,236
12-97 78,558 65,653 53,023
12-98 90,724 84,414 66,644
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Standard & Poor's 500 Stock Index ("S&P 500") and the Lipper Growth Funds Index.
Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market. The S&P MidCap 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. Source of the S&P index
data is Standard & Poor's Micropal. Source of the Lipper index data is
Lipper, Inc.
YOUR FUND'S
APPROACH
THE STRONG OPPORTUNITY FUND FOCUSES ON STOCKS OF MEDIUM-SIZE COMPANIES THAT
OFFER STRONG GROWTH POTENTIAL, BUT ARE UNDERPRICED. RATHER THAN RELY ON
TRADITIONAL WALL STREET RESEARCH, WE APPLY OUR PROPRIETARY PRIVATE MARKET VALUE
APPROACH TO FIND STOCKS FOR THE FUND. WE FIRST CONSIDER COMPANIES (AND
INDUSTRIES) THAT ARE OUT OF FAVOR. THEN WE DETERMINE THE PRICE WE BELIEVE AN
INVESTOR WOULD BE WILLING TO PAY FOR AN ENTIRE COMPANY--ITS PRIVATE MARKET
VALUE. A COMPANY WHOSE STOCK PRICE IS LOWER THAN ITS PRIVATE MARKET VALUE MAY BE
ADDED TO THE PORTFOLIO.
- --------------------------------------------------------------------------------
MARKET HIGHLIGHTS
o The economy in 1998 remained relatively healthy as we enjoyed a moderate
gain in corporate earnings.
o We are in the seventh year of rising profits, the longest run in history.
o A majority of companies in the stock market have begun to experience a
deceleration in the rate of profit growth over the past few quarters,
resulting in a very narrow market where the 20 top growth stocks (by
capitalization) in the S&P 500 Stock Index* are accounting for the bulk of
its gains. In fact, through mid-December, this group of 20 stocks accounted
for 56.0% of the total gain of the S&P 500--and 61% of the return of all
growth stocks.
15
<PAGE>
===============
THE STRONG SMALL CAP VALUE FUND
-----------===============-----
FUND
HIGHLIGHTS
o The Fund returned +6.10% for 1998 versus -2.55% for its benchmark, the
Russell 2000(R) Index*.
o The year 1998 was not a good one for small-cap value stocks. The Russell
2000(R) Value Index returned -6.45%. Small-cap growth stocks fared better,
with the Russell 2000(R) Growth Index returning +1.23%. Despite our style
being out of favor, we are pleased that the Fund outperformed all of the
Russell small-cap indexes.*
- --------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURN
As of 12-31-98
Since Inception 6.10%
(on 12-31-97)
- --------------------------------------------------------------------------------
TOP FIVE SECTORS
As of 12-31-98
SECTOR % OF NET ASSETS
Capital Equipment 15.45%
Technology 15.08%
Financial 13.83%
Energy 13.05%
Retail 12.70%
Please see the Schedule of Investments
in Securities for a complete listing of
the Fund's portfolio.
PERSPECTIVES
FROM THE MANAGER
/s/I. Charles Rinaldi
I. Charles Rinaldi
Portfolio Manager
- --------------------------------------------------------------------------------
The year 1998 will not be quickly forgotten by this manager. It was a very
difficult year for the small-cap value style. As expectations for corporate
earnings growth fell, investors sought returns in larger, established companies
and speculative, Internet-related companies. While some of these dramatic,
short-term returns may compel investors to chase them, history proves that
periods of speculative activity pass quickly and provide disappointment when the
bubble bursts. We are confident that our process of discovering out-of-vogue
small companies, with solid fundamental valuations, will generate the long-term
capital appreciation investors are seeking.
Many of the companies owned by the Fund were ignored by equity investors, but
their underlying value was recognized by corporations making acquisitions. In
fact, during 1998, several of the Fund's stocks were acquired or became
acquisition candidates. These include Nimbus CD, Galoob Toys, Award Software
International, Getchell Gold, STB Systems, Global Industrial Technologies, and
PharMerica. We should have seen higher takeover premiums for these holdings, but
the environment for our style was weak throughout the year. Nevertheless, we are
pleased that this activity confirmed that our investment process is working. Of
particular note is Getchell Gold (GGO), which was our single largest holding at
the end of the third quarter. GGO was offered a takeover bid by Placer Dome
during the fourth quarter. Despite gold being a depressed commodity and gold
stocks being among the worst stock performers, our return in GGO was over 100%.
-----------------------
THE SMALL-CAP VALUE
STYLE HAS PROVEN ITSELF
HISTORICALLY AS ONE
OF THE STRONGEST
PERFORMING AREAS
TO INVEST IN. WE
EXPECT THAT OUR STYLE
WILL SOON RETURN TO
THAT STATUS...
------------------------
- --------------------------------------------------------------------------------
16
<PAGE>
In addition, the Fund's high allocation to energy-related stocks performed well
during the first four months of the year, but as oil prices fell during 1998, so
did the value of our holdings. Despite current supply/demand imbalances, the
fact is that the world's energy needs are largely oil- and gas-based. Demand is
expected to improve and producers are expected to maintain better discipline in
their output levels. At these discounted levels, we also expect to see
heightened merger and consolidation activity in this area. So our position in
energy-related stocks is still overweighted, but substantially lower than at its
peak during 1998.
Although 1999 is likely to have its periods of volatility, our outlook for the
Fund's investment style is very bullish. The small-cap value style has proven
itself historically as one of the strongest performing areas to invest in. We
expect that our style will soon return to that status--especially since many of
the stocks we are finding with the Fund's selection process are very compelling.
Thank you for choosing the Strong Small Cap Value Fund to help you achieve your
financial goals.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-97 to 12-31-98
[GRAPH]
THE STRONG SMALL S & P 500 Lipper Small
CAP VALUE FUND Stock Index* Cap Funds Index*
12-97 10,000 10,000 10,000
3-98 12,430 11,395 11,072
6-98 11,730 11,771 10,645
9-98 8,850 10,600 8,367
12-98 10,610 12,858 9,915
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
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.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market. The Russell 2000(R) 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. The Russell 2000(R) Value Index
is an unmanaged index generally representative of the U.S. market for small
cap stocks. It contains securities that value managers typically select
from the Russell 2000(R) Index. The Russell 2000(R) Growth Index is an
unmanaged index generally representative of the U.S. market for small cap
stocks. It contains securities that growth managers typically select from
the Russell 2000(R) Index. Source of the S&P and Russell index data is
Standard & Poor's Micropal. Source of the Lipper index data is Lipper, Inc.
YOUR FUND'S
APPROACH
THE STRONG SMALL CAP VALUE FUND SEEKS TOTAL RETURN BY INVESTING IN STOCKS THAT
ARE NOT IN VOGUE AND SELL AT LOW PRICES BASED ON COMPANY EARNINGS, CASH FLOW, OR
ASSET VALUE. POSITIVE SURPRISES IN THIS GROUP TEND TO BE REWARDED WITH
ABOVE-AVERAGE RETURNS, COMPARED WITH ESTABLISHED MARKET FAVORITES THAT ALREADY
HAVE HIGH EXPECTATIONS BUILT INTO THEIR VALUATIONS. WE LOOK FOR A DYNAMIC CHANGE
IN A COMPANY OR AN INDUSTRY THAT MAY ENHANCE STOCK PRICE PERFORMANCE. GENERALLY,
WE PREFER COMPANIES THAT HAVE POSITIVE CASH FLOWS, WHERE MANAGEMENT HAS A
MEANINGFUL OWNERSHIP STAKE, AND THAT ARE NOT WIDELY OWNED INSTITUTIONALLY.
- --------------------------------------------------------------------------------
MARKET
HIGHLIGHTS
o Uncertainty in the overseas markets led to a stronger U.S. dollar, while
declining commodity prices encouraged lower interest rates. In this
environment, investors favored large growth stocks. Investors also
increasingly used the Internet to actively trade individual stocks. This
consequently heightened the level of speculation in Internet stocks.
o The U.S. economy was strong throughout most of 1998, but concerns regarding
a recession scenario for 1999 caused stocks to decline during the summer
and early fall. However, the market rallied strongly with a third and
unexpected cut in interest rates by the Federal Reserve in early October.
17
<PAGE>
================
THE STRONG STRATEGIC GROWTH FUND
-----------================-----
FUND HIGHLIGHTS
o Since its inception on June 30, 1998, the Strong Strategic Growth Fund has
returned 12.50%, comparing favorably with the 9.23% return of the S&P 500
Stock Index (S&P 500).*
o The Fund's smaller stocks suffered as they declined in price into October.
This led to long nights and a large telephone bill as many calls were made
to company managements to triple-check on their businesses. Reports were
generally favorable, so we kept the holdings; several stocks have rebounded
nicely.
o Despite a positive return, the Fund didn't pay a capital gain to
shareholders.
- --------------------------------------------------------------------------------
TOTAL RETURNS(1)
As of 12-31-98
Since Inception 12.50%
(on 6-30-98)
- --------------------------------------------------------------------------------
FIVE LARGEST
STOCK HOLDINGS
As of 12-31-98
SECURITY % OF NET ASSETS
Sykes Enterprises, Inc. 4.0%
Global Crossing, Ltd. 3.8%
Sterling Commerce, Inc. 3.8%
Global Imaging Systems, Inc. 3.5%
Transaction Systems 3.5%
Architects, Inc.
Please see the Schedule of Investments
in Securities for a complete listing of
the Fund's portfolio.
PERSPECTIVES
FROM THE MANAGER
/s/Scott Sindelar
Scott Sindelar
Portfolio Manager
- --------------------------------------------------------------------------------
The past six months are a good framework to emphasize certain characteristics of
the Strong Strategic Growth Fund, specifically its long-term nature, emphasis on
personnel, and concern for tax efficiency.
The philosophy of focusing on long-term returns more than monthly or quarterly
returns was tested during the October market decline. Several of the Fund's
stocks were down significantly in price, yet their operations were doing fine
and their strategic positions had not changed. The Fund held these stocks during
the decline and many of them have since rebounded in price. Although it may have
been possible to "sell at the high and buy at the low" during this period, the
likelihood of doing so was very low. Think of it this way: if the Fund were
investing in basketball teams rather than companies, we might choose the Chicago
Bulls as an investment. The Bulls might not win the championship, and there
would likely be a period where the team would lose five or six games in a row.
But by the end of the year the Bulls would probably have done better than many
competitors. This is the Fund's management style--to look at the whole season,
rather than focus on a few games. This analogy also applies to our emphasis on
personnel: if Michael Jordan were to leave the Chicago Bulls, we'd likely choose
a different team. Personnel is important!
--------------------
THE FUND AVOIDED
PAYING TAXABLE GAINS
BY TAKING ADVANTAGE
OF MARKET DECLINES
THAT OCCURRED FROM
EARLY JULY THROUGH
EARLY OCTOBER.
--------------------
- --------------------------------------------------------------------------------
1 Total Return is not annualized and measures aggregate change in the value
of an investment in the Fund, assuming reinvestment of dividends and
capital gains.
18
<PAGE>
The Fund's emphasis on minimizing taxes paid by its shareholders was evident
during the period, as shareholders did not receive any capital gains
distributions for 1998. The fund avoided paying taxable gains by taking
advantage of market declines that occurred from early July through early
October. This allowed the Fund to shelter taxes without changing the nature of
the portfolio. Although minimizing taxes is important, it will always be
secondary to the fundamental economics of the portfolio.
Looking forward into 1999, there are several bright spots as well as concerns. A
strong domestic economy, relatively low interest rates, and low current
inflation bode well for the market. International troubles raise the likelihood
of disruptions to the U.S. economy. One unknown for 1999 is the introduction of
the Euro--the new consolidated currency for 11 European countries. Because it is
difficult to predict markets, the Fund stays focused on trying to identify
strong long-term growth companies and purchase them at attractive prices.
I appreciate your confidence in this Fund and hope to continue to provide you
with attractive returns over time.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 6-30-98 to 12-31-98
[GRAPH]
THE STRONG STRATEGIC S & P 500 Lipper Growth
GROWTH FUND Stock Index* Funds Index*
6-98 10,000 10,000 10,000
7-98 10,210 9,894 9,894
8-98 8,310 8,463 8,305
9-98 9,020 9,005 8,859
10-98 9,540 9,738 9,472
11-98 10,120 10,328 10,037
12-98 11,250 10,923 10,876
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Standard & Poor's 500 Stock Index ("S&P 500"), and the Lipper Growth Funds
Index. Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market. The Russell 2000(R) Index is an unmanaged index generally
representative of the U.S. market for small cap stocks. The Lipper Growth
Funds Index is an equally-weighted performance index of the largest
qualifying funds in this Lipper category. Source of the S&P and Russell
index data is Standard & Poor's Micropal. Source of the Lipper index data
is Lipper, Inc.
YOUR FUND'S
APPROACH
THE STRONG STRATEGIC GROWTH FUND'S GOAL IS TO PROVIDE LONG-TERM RETURNS THAT
EXCEED THOSE OF THE S&P 500 BY INVESTING IN A MODEST NUMBER OF COMPANIES THAT
ARE STRATEGICALLY POSITIONED FOR LONG-TERM GROWTH. TWO TYPICAL CHARACTERISTICS
OF SUCH COMPANIES ARE SKILLED MANAGEMENT TEAMS AND SOLID FINANCIAL
CHARACTERISTICS. A FOCUS OF THE INVESTMENT PROCESS IS AN EFFORT TO BECOME
KNOWLEDGEABLE ABOUT EACH MANAGEMENT TEAM. THESE ARE THE PEOPLE WHO WILL
ULTIMATELY DETERMINE THE LONG-TERM SUCCESS OF THE STOCK. THE FUND INVESTS IN A
VARIETY OF COMPANIES OF ALL SIZES. TAX EFFICIENCY IS INTEGRAL TO THE INVESTMENT
PROCESS.
- --------------------------------------------------------------------------------
MARKET
HIGHLIGHTS
o Larger stocks, up 9.23% as measured by the S&P 500, notably outperformed
the smaller stocks represented by the Russell 2000(R) Index, which declined
7.12% during the second half of 1998.* This outperformance was driven by
investors seeking the safety and liquidity of big blue chip stocks.
Investor concerns generally surrounded international events in Asia, Japan,
Russia, and Latin America. Fears of domestic deflation and a spreading
economic slowdown were the two most common worries.
o Domestically, low energy prices, declining interest rates, and an abundance
of "help wanted" signs gave consumers confidence to continue spending,
helping the economy and pushing stock prices higher.
19
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES December 31, 1998
- --------------------------------------------------------------------------------
================================================================================
STRONG COMMON STOCK FUND
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 88.6%
Airline 0.2%
Air New Zealand, Ltd. Class B 2,017,300 $ 3,160,274
Bank - Money Center 0.3%
ING Groep NV 49,000 2,985,102
UBS AG - Registered Shares (b) 2,400 737,386
-----------
3,722,488
Bank - Regional 2.7%
City National Corporation 378,700 15,763,388
Old Kent Financial Corporation 485,000 22,552,500
-----------
38,315,888
Bank - Super Regional 2.6%
BankBoston Corporation 425,000 16,548,438
Wells Fargo Company 510,000 20,368,125
----------
36,916,563
Chemical 2.7%
Crompton & Knowles Corporation 955,000 19,756,563
Morton International, Inc. 800,000 19,600,000
----------
39,356,563
Closed-End Fund 0.0%
Morgan Stanley Emerging Markets Fund, Inc. (b) 84,000 682,500
Commercial Service 3.5%
DoubleClick, Inc. (b) 140,000 6,378,750
Pittston Company Brinks Group 550,000 17,531,250
Rollins Truck Leasing Corporation 1,800,000 26,550,000
----------
50,460,000
Computer - Peripheral Equipment 1.3%
Microchip Technology, Inc. (b) 521,800 19,306,600
Computer - Personal & Workstation 0.4%
Data General Corporation (b) 380,000 6,246,250
Computer Service 1.5%
Sterling Commerce, Inc. (b) 485,000 21,825,000
Computer Software 6.0%
Autodesk, Inc. 340,000 14,513,750
Silicon Graphics, Inc. (b) 1,360,000 17,510,000
Sterling Software, Inc. (b) 900,000 24,356,250
Sybase, Inc. (b) 1,550,000 11,479,688
Synopsys, Inc. (b) 340,000 18,445,000
----------
86,304,688
Diversified Operations 1.4%
Johnson Controls, Inc. 290,000 17,110,000
Siebe PLC 677,000 2,653,666
----------
19,763,666
Electrical Equipment 1.4%
Molex, Inc. Class A 610,000 19,443,750
Electronic Parts Distribution 0.7%
Marshall Industries (b) 436,100 10,684,450
Electronic Products - Miscellaneous 2.8%
General Motors Corporation Class H (b) 540,000 21,431,250
Raychem Corporation 600,000 19,387,500
----------
40,818,750
Electronics - Semiconductor/Component 2.8%
Dallas Semiconductor Corporation 458,100 18,667,575
Xilinx, Inc. (b) 335,000 21,816,875
----------
40,484,450
Energy - Alternate Source 1.1%
The AES Corporation (b) 335,000 15,870,625
Engineering & Construction 1.4%
Jacobs Engineering Group, Inc. (b) 505,000 20,578,750
Food 1.4%
Nabisco Holdings Corporation 470,000 19,505,000
Healthcare - Biomedical/Genetic 1.6%
Centocor, Inc. (b) 520,000 23,465,000
Healthcare - Medical Supply 0.7%
Bausch & Lomb, Inc. 164,000 9,840,000
Healthcare - Patient Care 3.4%
PhyCor, Inc. (b) 1,690,000 11,513,125
Tenet Healthcare Corporation (b) 685,000 17,981,250
WellPoint Health Networks, Inc. (b) 220,000 19,140,000
----------
48,634,375
Insurance - Multi-line 0.0%
Skandia Forsakrings AB 24,000 367,203
Insurance - Property & Casualty 1.3%
EXEL, Ltd. Class A 250,000 18,750,000
Machinery - Miscellaneous 1.7%
Hussmann International, Inc. 1,275,000 24,703,125
Media - Publishing 1.9%
Arnoldo Mondadori Editore Spa 115,000 1,525,696
News Corporation, Ltd. Sponsored ADR 820,000 21,678,750
Torstar Corporation Class B 302,400 3,568,696
----------
26,773,142
Media - Radio/TV 6.3%
Cox Communications, Inc. Class A (b) 360,000 24,885,000
Flextech PLC (b) 900,000 9,035,256
Tele-Communications, Inc. Liberty Media
Group Series A (b) 610,000 28,098,125
Tele-Communications, Inc. TCI Group Series A (b) 520,000 28,762,500
----------
90,780,881
Oil - International Integrated 0.0%
Fortum Corporation (b) 68,000 420,288
Oil - North American Exploration & Production 5.7%
Anadarko Petroleum Corporation 590,000 18,216,250
Apache Corporation 710,000 17,971,875
Devon Energy Corporation 595,000 18,259,063
EEX Corporation (b) 966,666 6,766,662
Harken Energy Corporation (b) 2,500,000 4,843,750
Noble Affiliates, Inc. 665,000 16,375,625
----------
82,433,225
Oil Well Equipment & Service 2.8%
Nabors Industries, Inc. (b) 1,060,000 14,376,250
Offshore Logistics, Inc. (b) 995,000 11,815,625
Smith International, Inc. (b) 560,000 14,105,000
----------
40,296,875
Paper & Forest Products 1.3%
Bowater, Inc. 450,000 18,646,875
Precious Metal/Gem/Stone 0.9%
Barrick Gold Corporation 635,000 12,382,500
Real Estate 2.8%
Apartment Investment & Management
Company Class A 480,000 17,850,000
CarrAmerica Realty Corporation 345,000 8,280,000
Security Capital Group, Inc. Class B (b) 1,040,000 14,105,000
Shortland Properties, Ltd. 851,000 299,738
----------
40,534,738
20
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG COMMON STOCK FUND (continued)
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
Retail - Restaurant 2.5%
IHOP Corporation (b) (f) 470,000 $ 18,770,625
Outback Steakhouse, Inc. (b) 420,000 16,747,500
----------
35,518,125
Retail - Specialty 7.0%
AutoZone, Inc. (b) 575,000 18,939,062
Borders Group, Inc. (b) 1,010,000 25,186,875
The Gymboree Corporation (b) 950,000 6,056,250
Intimate Brands, Inc. 755,000 22,555,625
Ross Stores, Inc. 335,000 13,190,625
TJX Companies, Inc. 510,000 14,790,000
-----------
100,718,437
Steel 1.2%
USX-US Steel Group 775,000 17,825,000
Telecommunication Equipment 2.3%
Alcatel SA ADR 90,000 2,199,375
Belden, Inc. 525,000 11,123,437
Newbridge Networks Corporation (b) 630,000 19,136,250
----------
32,459,062
Telecommunication Service 11.0%
Aerial Communications, Inc. (b) 1,850,000 10,868,750
AirTouch Communications, Inc. (b) 290,000 20,916,250
Cable & Wireless Communications PLC (b) 323,000 2,932,811
Cable & Wireless Communications PLC
Sponsored ADR (b) 435,000 19,738,125
Intermedia Communications, Inc. (b) 1,085,000 18,716,250
MediaOne Group, Inc. 575,000 27,025,000
NTL, Inc. (b) 390,000 22,010,625
Nippon Telegraph & Telephone Corporation 330 2,542,049
Paging Network, Inc. (b) 2,520,000 11,812,500
United States Cellular Corporation (b) 570,000 21,660,000
-----------
158,222,360
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $1,045,761,094) 1,276,217,466
- --------------------------------------------------------------------------------
CORPORATE BONDS 0.5%
Omnipoint Corporation Senior Notes,
11.625%, Due 8/15/06 $ 8,500,000 5,950,000
Omnipoint Corporation Senior Notes,
Series A, 11.625%, Due 8/15/06 1,500,000 1,050,000
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (COST $6,081,570) 7,000,000
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS 0.8%
Conxus Communications, Inc. Senior Subordinated
Notes, 9.00%, Due 5/15/01 (Rate Reset Effective
5/15/99) (Acquired 5/22/98; Cost
$13,000,000) (d) 13,000,000 11,570,000
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS (COST $13,000,000) 11,570,000
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 9.6%
COMMERCIAL PAPER 0.1%
INTEREST BEARING, DUE UPON DEMAND
General Mills, Inc., 5.23% 396,100 396,100
Pitney Bowes Credit Corporation, 5.23% 197,200 197,200
Wisconsin Corporate Central Credit Union, 5.30% 881,400 881,400
---------
1,474,700
REPURCHASE AGREEEMENTS 9.4%
ABN-AMRO Chicago Corporation (Dated 12/31/98),
4.90%, Due 1/04/99 (Repurchase proceeds
$134,673,282); Collateralized by: $63,415,000
FNMA Notes, Zero % - 7.55%, Due 7/09/99 -
5/15/08 (Market Value $65,603,993);
$15,000,000 FHLMC Debentures, 6.77%, Due 3/05/08
(Market Value $15,333,809); $55,970,000 Federal
Home Loan Bank Notes, Zero % - 5.50%, Due
1/18/99 - 10/15/03 (Market Value
$56,354,600) (e) 134,600,000 134,600,000
-----------
134,600,000
UNITED STATES GOVERNMENT ISSUES 0.1%
United States Treasury Bills:
Due 1/07/99 (c) 300,000 299,919
Due 2/11/99 (c) 1,300,000 1,294,114
Due 4/01/99 (c) 60,000 59,374
---------
1,653,407
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $137,727,937) 137,728,107
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST
$1,202,570,601) 99.5% 1,432,515,573
Other Assets and Liabilities, Net 0.5% 7,385,871
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $1,439,901,444
================================================================================
FUTURES
- --------------------------------------------------------------------------------
Underlying
Expiration Face Amount Unrealized
Date at Value Depreciation
- --------------------------------------------------------------------------------
Sold:
15 S&P 500 3/99 $4,670,625 $185,813
WRITTEN OPTIONS ACTIVITY
- --------------------------------------------------------------------------------
Contracts Premiums
- --------------------------------------------------------------------------------
Options outstanding at beginning of period -- $ --
Options written during the period 12,100 6,076,562
Options closed (7,625) (4,921,115)
Options expired (3,275) (879,681)
Options exercised (1,200) (275,766)
------ ----------
Options outstanding at end of period -- $ --
====== ==========
Closed, exercised and expired options resulted in a capital loss of $958,569.
================================================================================
STRONG DISCOVERY FUND
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 89.4%
Bank - Money Center 1.2%
Citigroup, Inc. 76,200 $ 3,771,900
Brokerage & Investment Management 2.0%
Kansas City Southern Industries, Inc. 75,600 3,718,575
Waddell & Reed Financial, Inc. Class A 109,700 2,598,519
---------
6,317,094
Commercial Service 12.7%
H & R Block, Inc. 38,900 1,750,500
Coinmach Laundry Corporation (b) 500,000 6,500,000
Consolidated Graphics, Inc. (b) 66,500 4,492,906
Corrections Corporation America (b) 384,700 6,780,337
ITT Educational Services, Inc. (b) 137,000 4,658,000
Lamar Advertising Company (b) 27,500 1,024,375
Modis Professional Services, Inc. (b) 299,700 4,345,650
Outdoor Systems, Inc. (b) 147,900 4,437,000
Pittston Company Brinks Group 76,800 2,448,000
The ServiceMaster Company 102,400 2,259,200
Sykes Enterprises, Inc. (b) 38,100 1,162,050
Valassis Communications, Inc. (b) 18,000 929,250
----------
40,787,268
21
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1998
- --------------------------------------------------------------------------------
================================================================================
STRONG DISCOVERY FUND (continued)
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
Computer - Mainframe 1.4%
International Business Machines Corporation 25,100 $4,637,225
Computer - Peripheral Equipment 2.2%
Lexmark International Group, Inc. Class A (b) 43,100 4,331,550
Security Dynamics Technologies, Inc. (b) 37,200 855,600
Storage Technology Corporation (b) 53,400 1,899,037
---------
7,086,187
Computer Service 1.4%
Pierce Leahy Corporation (b) 181,300 4,623,150
Computer Software 0.6%
HBO & Company 62,200 1,784,362
Consumer - Miscellaneous 2.2%
Equity Corporation International (b) 271,825 7,220,352
Electric Power 0.2%
Montana Power Company 12,000 678,750
Electronic Products - Miscellaneous 1.7%
Rayovac Corporation (b) 210,975 5,630,395
Electronics - Semiconductor/Component 0.9%
Micron Technology, Inc. (b) 59,700 3,018,581
Food 0.7%
Lancaster Colony Corporation 27,700 889,862
Merkert American Corporation (b) 99,300 1,501,913
---------
2,391,775
Healthcare - Drug/Diversified 1.1%
Halsey Drug Company, Inc. (b) (f) 398,055 547,326
Halsey Drug Company, Inc. (Acquired
5/20/98 - 10/02/98; Cost $44,996) (b) (d) (f) 13,845 17,140
Jones Medical Industries, Inc. 50,000 1,825,000
Warner-Lambert Company 15,000 1,127,812
---------
3,517,278
Healthcare - Instrumentation 1.0%
Datascope Corporation (b) 49,800 1,145,400
Medtronic, Inc. 26,300 1,952,775
---------
3,098,175
Healthcare - Medical Supply 6.6%
McKesson Corporation 37,800 2,988,563
PSS World Medical, Inc. (b) 79,500 1,828,500
Henry Schein, Inc. (b) 142,200 6,363,450
Steris Corporation (b) 70,000 1,990,625
Sybron International Corporation (b) 302,500 8,224,219
----------
21,395,357
Healthcare - Patient Care 0.6%
Compdent Corporation (b) 191,900 1,990,963
Healthcare - Product 0.7%
Cytyc Corporation (b) 88,400 2,276,300
Household Appliances & Furnishings 0.8%
Newell Companies, Inc. 65,200 2,689,500
Insurance - Life 0.4%
The MONY Group, Inc. (b) 24,100 754,631
Protective Life Corporation 16,061 639,429
---------
1,394,060
Insurance - Property & Casualty 1.7%
American Bankers Insurance Group, Inc. 113,100 5,471,212
Leisure Product 2.7%
Action Performance Companies, Inc. (b) 105,700 3,739,138
Harley-Davidson, Inc. 36,900 1,748,137
SCP Pool Corporation (b) 212,100 3,208,012
---------
8,695,287
Leisure Service 2.0%
Bally Total Fitness Holding Corporation (b) 142,900 3,554,638
International Game Technology 113,100 2,749,744
---------
6,304,382
Machine Tool 1.1%
Applied Power, Inc. 91,100 3,439,025
Media - Publishing 0.6%
School Specialty, Inc. (b) 85,500 1,827,563
Media - Radio/TV 6.3%
Chancellor Media Corporation (b) 132,700 6,353,013
Clear Channel Communications, Inc. (b) 73,414 4,001,063
Infinity Broadcasting Corporation (b) 53,275 1,458,403
Tele-Communications, Inc. TCI Group Series A (b) 66,000 3,650,625
Viacom International, Inc. (b) 65,500 4,847,000
----------
20,310,104
Office Automation 1.2%
Xerox Corporation 31,700 3,740,600
Oil Well Equipment & Service 0.4%
Noble Drilling Corporation (b) 110,000 1,423,125
Personal & Commercial Lending 3.5%
Associates First Capital Corporation 121,200 5,135,850
Household International, Inc. 152,100 6,026,962
----------
11,162,812
Pollution Control 3.7%
Republic Services, Inc. Class A (b) 106,800 1,969,125
Superior Services, Inc. (b) 252,750 5,070,797
Waste Management, Inc. 105,900 4,937,587
----------
11,977,509
Railroad 1.0%
Burlington Northern Santa Fe Corporation 100,000 3,375,000
Real Estate 1.5%
CCA Prison Realty Trust 48,050 985,025
Sunstone Hotel Investors, Inc. 411,550 3,884,003
---------
4,869,028
Retail - Drug Store 0.3%
Rite Aid Corporation 16,700 827,694
Retail - Food Chain 0.4%
US Foodservice (b) 24,900 1,220,100
Retail - Restaurant 2.2%
PJ America, Inc. (b) 105,000 1,903,125
Papa John's International, Inc. (b) 67,000 2,956,375
Rainforest Cafe, Inc. (b) 360,800 2,187,350
---------
7,046,850
Retail - Specialty 16.4%
Black Box Corporation (b) 96,100 3,639,787
Central Garden & Pet Company (b) 1,071,625 15,404,609
Global Imaging Systems, Inc. (b) 167,000 4,049,750
Lowe's Companies, Inc. 25,300 1,295,044
MSC Industrial Direct Company, Inc. Class A (b) 118,800 2,687,850
Movie Gallery, Inc. (b) 453,125 3,228,516
Office Depot, Inc. (b) 139,300 5,145,394
22
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG DISCOVERY FUND (continued)
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
Pier 1 Imports, Inc. 142,000 $ 1,375,625
Regis Corporation 67,300 2,692,000
Renters Choice, Inc. (b) 134,200 4,260,850
United Stationers, Inc. (b) 252,700 6,570,200
Wilmar Industries, Inc. (b) 113,200 2,299,375
----------
52,649,000
Savings & Loan 1.0%
Dime Bancorp, Inc. 28,900 764,044
TCF Financial Corporation 107,175 2,592,295
---------
3,356,339
Telecommunication Equipment 1.1%
American Tower Corporation Class A (b) 94,300 2,787,744
Aware, Inc. (b) 30,200 821,062
---------
3,608,806
Telecommunication Service 2.1%
Davel Communications, Inc. (b) 240,900 4,396,425
MCI WorldCom, Inc. (b) 32,700 2,346,226
---------
6,742,651
Tobacco 1.1%
Philip Morris Companies, Inc. 65,400 3,498,900
Transportation Service 0.7%
Hub Group, Inc. Class A (b) 109,500 2,121,562
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $257,855,311) 287,976,221
- --------------------------------------------------------------------------------
PREFERRED STOCKS 0.7%
News Corporation, Ltd. Sponsored ADR 83,400 2,058,937
- --------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (COST $2,045,682) 2,058,937
- --------------------------------------------------------------------------------
WARRANTS 0.0%
Halsey Drug Company, Inc. Warrants,
Expire 12/26/01 (Acquired 7/21/97;
Cost $0) (b) (d) (f) 21,429 7,072
- --------------------------------------------------------------------------------
TOTAL WARRANTS (COST $0) 7,072
- --------------------------------------------------------------------------------
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) $ 600,000 228,462
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS (AMORTIZED COST $592,762) 228,462
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 3.9%
COMMERCIAL PAPER 0.2%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.17% 100 100
Pitney Bowes Credit Corporation, 5.23% 270,000 270,000
Wisconsin Corporate Central Credit Union, 5.30% 356,200 356,200
-------
626,300
REPURCHASE AGREEMENTS 3.3%
Goldman Sachs Group LP (Dated 12/31/98),
4.55%, Due 1/04/99 (Repurchase proceeds
$10,505,308); Collateralized by: $8,340,000
United States Treasury Bonds, 10.00%,
Due 5/15/10 (Market Value $10,721,070) (e) 10,500,000 10,500,000
UNITED STATES GOVERNMENT ISSUES 0.4%
United States Treasury Bills,
Due 1/14/99 thru 4/01/99 (c) 1,480,000 1,466,285
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $12,592,412) 12,592,585
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST
$273,086,167) 94.1% 302,863,277
Other Assets and Liabilities, Net 5.9% 19,132,139
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $321,995,416
================================================================================
FUTURES
- --------------------------------------------------------------------------------
Underlying
Expiration Face Amount Unrealized
Date at Value Appreciation
- --------------------------------------------------------------------------------
Purchased:
35 Russell 2000 3/99 $ 7,441,875 $175,370
90 S&P 500 3/99 28,023,750 262,430
WRITTEN OPTIONS ACTIVITY
- --------------------------------------------------------------------------------
Contracts Premiums
- --------------------------------------------------------------------------------
Options outstanding at beginning of period -- $ --
Options written during the period 333 848,073
Options closed (333) (848,073)
Options expired -- --
Options exercised -- --
---- --------
Options outstanding at end of period -- $ --
==== ========
Closed options resulted in a capital gain of $239,349.
================================================================================
STRONG ENTERPRISE FUND
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.7%
Commercial Service 1.6%
DoubleClick, Inc. (b) 4,000 $ 182,250
Computer - Peripheral Equipment 9.3%
FORE Systems, Inc. (b) 26,000 476,125
Microchip Technology, Inc. (b) 3,400 125,800
SanDisk Corporation (b) 9,400 132,775
Seagate Technology, Inc. (b) 4,600 139,150
Security Dynamics Technologies, Inc. (b) 6,900 158,700
---------
1,032,550
Computer - Personal & Workstation 2.4%
Compaq Computer Corporation 6,400 268,400
Computer Service 9.6%
BroadVision, Inc. (b) 17,400 556,800
Concentric Network Corporation (b) 5,900 196,175
Excite, Inc. (b) 2,000 84,125
USWeb Corporation (b) 9,000 237,375
---------
1,074,475
Computer Software 26.5%
Actuate Software Corporation (b) 7,700 152,075
Brio Technology, Inc. (b) 9,000 159,187
Business Objects SA Sponsored ADR (b) 17,700 575,250
Check Point Software Technologies, Ltd. (b) 5,700 261,131
Cognos, Inc. (b) 14,800 370,000
Concur Technologies, Inc. (b) 5,300 161,650
Documentum, Inc. (b) 4,400 235,125
Exchange Applications, Inc. (b) 12,700 249,238
23
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1998
- --------------------------------------------------------------------------------
================================================================================
STRONG ENTERPRISE FUND (continued)
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
Intuit, Inc. (b) 3,450 $ 250,125
I2 Technologies, Inc. (b) 7,400 224,775
NetGravity, Inc. (b) 5,300 88,775
New Era of Networks, Inc. (b) 2,000 88,000
Siebel Systems, Inc. (b) 4,000 135,750
---------
2,951,081
Electronic Instrumentation 2.3%
Perkin Elmer Corporation 2,625 256,102
Electronic Products - Miscellaneous 1.0%
Proxim, Inc. (b) 4,200 112,088
Electronics - Semiconductor/Component 9.3%
Altera Corporation (b) 1,400 85,225
Applied Materials, Inc. (b) 5,200 221,975
LSI Logic Corporation (b) 13,600 219,300
Motorola, Inc. 4,200 256,462
SDL, Inc. (b) 2,100 83,213
Texas Instruments, Inc. 2,000 171,125
---------
1,037,300
Healthcare - Biomedical/Genetic 7.2%
Chiron Corporation (b) 5,800 151,887
Gilead Sciences, Inc. (b) 5,100 209,419
Incyte Pharmaceuticals, Inc. (b) 4,150 155,106
Millennium Pharmaceuticals, Inc. (b) 7,800 201,825
SangStat Medical Corporation (b) 3,900 82,875
-------
801,112
Healthcare - Patient Care 3.5%
Columbia/HCA Healthcare Corporation 6,200 153,450
United Healthcare Corporation 3,400 146,413
WellPoint Health Networks, Inc. (b) 1,000 87,000
-------
386,863
Retail - Food Chain 2.2%
Whole Foods Marketing, Inc. (b) 5,100 246,713
Retail - Specialty 6.9%
Intimate Brands, Inc. 8,600 256,925
The Limited, Inc. 7,000 203,875
Restoration Hardware, Inc. (b) 11,500 309,062
-------
769,862
Shoe & Apparel Manufacturing 2.5%
The Timberland Company Class A (b) 6,100 277,931
Telecommunication Equipment 10.4%
American Tower Corporation Class A (b) 10,400 307,450
Aware, Inc. (b) 6,400 174,000
Comverse Technology, Inc. (b) 3,200 227,200
General Instrument Corporation (b) 4,300 145,931
Polycom, Inc. (b) 13,500 300,375
---------
1,154,956
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $8,908,384) 10,551,683
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 11.7%
COMMERCIAL PAPER
INTEREST BEARING, DUE UPON DEMAND
General Mills, Inc., 5.23% $137,800 137,800
Pitney Bowes Credit Corporation, 5.23% 483,400 483,400
Sara Lee Corporation, 5.23% 156,100 156,100
Warner Lambert Company, 5.18% 142,900 142,900
Wisconsin Corporate Central Credit Union, 5.30% 383,700 383,700
---------
1,303,900
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $1,303,900) 1,303,900
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $10,212,284)106.4% 11,855,583
Other Assets and Liabilities, Net (6.4%) (711,891)
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $11,143,692
================================================================================
- --------------------------------------------------------------------------------
WRITTEN OPTIONS ACTIVITY
- --------------------------------------------------------------------------------
Contracts Premiums
- --------------------------------------------------------------------------------
Options outstanding at beginning of period -- $ --
Options written during the period 31 75,854
Options closed (31) (75,854)
Options expired -- --
Options exercised -- --
--- --------
Options outstanding at end of period -- $ --
=== ========
Closed options resulted in a capital loss of $81,827.
================================================================================
STRONG GROWTH FUND
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 92.3%
Airline 0.5%
Midwest Express Holdings, Inc. (b) 350,000 $ 9,209,375
Bank - Regional 0.8%
Fifth Third Bancorp 200,000 14,262,500
Bank - Super Regional 1.0%
Northern Trust Company 200,000 17,462,500
Brokerage & Investment Management 0.9%
The Charles Schwab Corporation 300,000 16,856,250
Commercial Service 5.5%
Cintas Corporation 100,000 7,043,750
Lason Holdings, Inc. (b) 100,000 5,818,750
The Metzler Group, Inc. (b) 225,000 10,954,687
Outdoor Systems, Inc. (b) 900,000 27,000,000
Paychex, Inc. 225,000 11,573,438
Robert Half International, Inc. (b) 200,000 8,937,500
Romac International, Inc. (b) 700,000 15,575,000
Sykes Enterprises, Inc. (b) 485,000 14,792,500
-----------
101,695,625
Computer - Peripheral Equipment 3.6%
American Power Conversion Corporation (b) 250,000 12,109,375
EMC Communications Corporation (b) 365,000 31,025,000
Network Appliance, Inc. (b) 525,000 23,625,000
----------
66,759,375
Computer - Personal & Workstation 1.3%
Dell Computer Corporation (b) 325,000 23,785,938
Computer Service 1.2%
CSG Systems International, Inc. (b) 93,000 7,347,000
Fiserv, Inc. (b) 300,000 15,431,250
----------
22,778,250
Computer Software 15.7%
Advantage Learning Systems, Inc. (b) 115,000 7,561,250
America Online, Inc. (b) 250,000 40,000,000
Ascend Communications, Inc. (b) 250,000 16,437,500
At Home Corporation Series A (b) 200,000 14,850,000
Cisco Systems, Inc. (b) 600,000 55,687,500
Compuware Corporation (b) 200,000 15,625,000
Gemstar International Group, Ltd. (b) 100,000 5,725,000
Inktomi Corporation (b) 100,000 12,937,500
Legato Systems, Inc. (b) 400,000 26,375,000
Microsoft Corporation (b) 235,000 32,591,562
Siebel Systems, Inc. (b) 150,000 5,090,625
Synopsys, Inc. (b) 200,000 10,850,000
3Com Corporation (b) 250,000 11,203,125
24
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG GROWTH FUND (continued)
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
Veritas Software Corporation (b) 100,000 $ 5,993,750
Visio Corporation (b) 350,000 12,796,875
Yahoo, Inc. (b) 60,000 14,103,750
-----------
287,828,437
Diversified Operations 0.5%
Tyco International, Ltd. 125,000 9,429,687
Electric Power 0.8%
Montana Power Company 250,000 14,140,625
Electronic Instrumentation 1.8%
Perkin Elmer Corporation 175,000 17,073,438
Waters Corporation (b) 175,000 15,268,750
----------
32,342,188
Electronics - Semiconductor/Component 8.0%
Altera Corporation (b) 175,000 10,653,125
Broadcom Corporation (b) 210,000 25,357,500
Intel Corporation 225,000 26,676,562
Jabil Circuit, Inc. (b) 149,700 11,171,362
Rambus, Inc. (b) 150,000 14,437,500
Solectron Corporation (b) 300,000 27,881,250
Teradyne, Inc. (b) 200,000 8,475,000
Transwitch Corporation (b) 150,000 5,840,625
Xilinx, Inc. (b) 250,000 16,281,250
-----------
146,774,174
Finance - Miscellaneous 1.0%
Concord EFS, Inc. (b) 240,000 10,170,000
SunAmerica, Inc. 100,000 8,112,500
----------
18,282,500
Healthcare - Biomedical/Genetic 0.9%
Biogen, Inc. (b) 100,000 8,300,000
Genzyme Corporation (b) 150,000 7,462,500
----------
15,762,500
Healthcare - Drug/Diversified 4.8%
Alza Corporation (b) 150,000 7,837,500
Forest Laboratories, Inc. (b) 500,000 26,593,750
Pfizer, Inc. 100,000 12,543,750
Schering-Plough Corporation 350,000 19,337,500
Watson Pharmaceuticals, Inc. (b) 350,000 22,006,250
----------
88,318,750
Healthcare - Instrumentation 1.7%
IDEXX Laboratories, Inc. (b) 300,000 8,071,875
Medtronic, Inc. 300,000 22,275,000
----------
30,346,875
Healthcare - Medical Supply 2.2%
McKesson Corporation 250,000 19,765,625
PSS World Medical, Inc. (b) 300,000 6,900,000
Sybron International Corporation (b) 525,000 14,273,438
----------
40,939,063
Healthcare - Product 2.0%
Allergan, Inc. 350,000 22,662,500
Sepracor, Inc. (b) 150,000 13,134,375
----------
35,796,875
Leisure Service 0.4%
Carnival Corporation 150,000 7,200,000
Media - Radio/TV 5.1%
Chancellor Media Corporation (b) 60,000 2,872,500
Clear Channel Communications, Inc. (b) 250,000 13,625,000
Comcast Corporation Class A 150,000 8,803,125
Infinity Broadcasting Corporation (b) 600,000 16,425,000
Jacor Communications, Inc. (b) 200,000 12,875,000
Tele-Communications, Inc. Liberty
Media Group Series A (b) 325,000 14,970,312
Time Warner, Inc. 400,000 24,825,000
----------
94,395,937
Mortgage & Related Service 1.2%
Federal Home Loan Mortgage Corporation 350,000 22,553,125
Retail - Department Store 3.3%
Kohl's Corporation (b) 1,000,000 61,437,500
Retail - Discount & Variety 2.6%
Dollar Tree Stores, Inc. (b) 600,000 26,212,500
99 Cents Only Stores (b) 434,000 21,320,250
----------
47,532,750
Retail - Drug Store 3.1%
CVS Corporation 625,000 34,375,000
Walgreen Company 375,000 21,960,938
----------
56,335,938
Retail - Food Chain 3.1%
Fred Meyer, Inc. (b) 275,000 16,568,750
Safeway, Inc. (b) 650,000 39,609,375
----------
56,178,125
Retail - Major Chain 1.3%
Wal-Mart Stores, Inc. 300,000 24,431,250
Retail - Restaurant 0.8%
Starbucks Corporation (b) 250,000 14,031,250
Retail - Specialty 10.5%
American Eagle Outfitters, Inc. (b) 340,000 22,652,500
Bed Bath & Beyond, Inc. (b) 500,000 17,062,500
Best Buy Company, Inc. (b) 225,000 13,809,375
CDW Computer Centers, Inc. (b) 80,000 7,675,000
Gap, Inc. 100,000 5,625,000
Global Imaging Systems, Inc. (b) 250,000 6,062,500
The Home Depot, Inc. 525,000 32,123,438
Linens `N Things, Inc. (b) 29,800 1,180,825
Lowe's Companies, Inc. 900,000 46,068,750
Office Depot, Inc. (b) 350,000 12,928,125
Staples, Inc. (b) 625,000 27,304,688
-----------
192,492,701
Telecommunication Equipment 2.9%
Comverse Technology, Inc. (b) 200,000 14,200,000
Lucent Technologies, Inc. 75,000 8,250,000
Tellabs, Inc. (b) 200,000 13,712,500
Uniphase Corporation (b) 250,000 17,343,750
----------
53,506,250
Telecommunication Service 3.8%
Equant NV - New York Registered Shares (b) 110,000 7,459,375
MCI WorldCom, Inc. (b) 750,000 53,812,500
Qwest Communications International, Inc. (b) 170,000 8,500,000
----------
69,771,875
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $1,097,432,035) 1,692,638,188
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 5.5%
COMMERCIAL PAPER 0.1%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.17% $ 59,300 59,300
General Mills, Inc., 5.23% 577,600 577,600
Pitney Bowes Credit Corporation, 5.23% 918,200 918,200
Sara Lee Corporation, 5.23% 310,000 310,000
Warner Lambert Company, 5.18% 436,400 436,400
Wisconsin Corporate Central Credit Union, 5.30% 628,200 628,200
---------
2,929,700
25
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES December 31, 1998
- --------------------------------------------------------------------------------
================================================================================
STRONG GROWTH FUND (continued)
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS 5.4%
ABN-AMRO Chicago Corporation (Dated 12/31/98),
4.90%, Due 1/04/99 (Repurchase proceeds
$99,053,900); Collateralized by: $53,646,000
FNMA Notes, Zero % - 6.55%, Due 7/09/99 -
8/27/12 (Market Value $50,160,570);
$20,000,000 FHLMC Debentures, 6.00% - 6.25%,
Due 11/18/03 - 11/19/08 (Market Value $20,093,315);
$30,253,000 Federal Home Loan Bank Bonds, Zero % -
6.60%, Due 2/03/99 - 3/19/18 (Market Value
$30,726,139) (e) $99,000,000 $ 99,000,000
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $101,929,700) 101,929,700
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST
$1,199,361,735) 97.8% 1,794,567,888
Other Assets and Liabilities, Net 2.2% 40,106,994
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $1,834,674,882
================================================================================
WRITTEN OPTIONS ACTIVITY
- --------------------------------------------------------------------------------
Contracts Premiums
- --------------------------------------------------------------------------------
Options outstanding at beginning of period -- $ --
Options written during the period 13,250 9,416,623
Options closed (13,250) (9,416,623)
Options expired -- --
Options exercised -- --
------ ----------
Options outstanding at end of period -- $ --
====== ==========
Closed options resulted in a capital loss of $1,383,472.
================================================================================
STRONG GROWTH 20 FUND
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 87.9%
Commercial Service 4.6%
Outdoor Systems, Inc. (b) 110,000 $ 3,300,000
Computer - Peripheral Equipment 9.8%
EMC Communications Corporation (b) 40,000 3,400,000
Network Appliance, Inc. (b) 80,000 3,600,000
---------
7,000,000
Computer Software 17.9%
America Online, Inc. (b) 15,000 2,400,000
Ascend Communications, Inc. (b) 30,000 1,972,500
At Home Corporation Series A (b) 15,000 1,113,750
Cisco Systems, Inc. (b) 45,000 4,176,562
Microsoft Corporation (b) 17,000 2,357,688
Yahoo, Inc. (b) 3,000 705,187
----------
12,725,687
Electronic Products - Miscellaneous 2.8%
Power Integrations, Inc. (b) 80,000 2,005,000
Electronics - Semiconductor/Components 1.7%
Broadcom Corporation (b) 10,000 1,207,500
Healthcare - Drug Diversified 4.7%
Forest Laboratories, Inc. (b) 35,000 1,861,562
Pfizer, Inc. 12,000 1,505,250
---------
3,366,812
Healthcare - Instrumentation 1.5%
Medtronic, Inc. 14,000 1,039,500
Healthcare - Product 3.1%
Sepracor, Inc. (b) 25,000 2,189,063
Media - Radio/TV 4.2%
Infinity Broadcasting Corporation (b) 110,000 3,011,250
Retail - Department Store 5.2%
Kohl's Corporation (b) 60,000 3,686,250
Retail - Discount & Variety 5.2%
Dollar Tree Stores, Inc. (b) 45,000 1,965,937
99 Cents Only Stores (b) 35,000 1,719,375
---------
3,685,312
Retail - Drug Store 3.7%
CVS Corporation 30,000 1,650,000
Walgreen Company 17,000 995,563
---------
2,645,563
Retail - Food Chain 4.3%
Safeway, Inc. (b) 50,000 3,046,875
Retail - Specialty 13.6%
Bed Bath & Beyond, Inc. (b) 50,000 1,706,250
Lowe's Companies, Inc. 45,000 2,303,437
Office Depot, Inc. (b) 95,000 3,509,063
Staples, Inc. (b) 50,000 2,184,375
---------
9,703,125
Telecommunication Service 5.6%
MCI WorldCom, Inc. (b) 55,000 3,946,250
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $45,770,497) 62,558,187
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 6.3%
COMMERCIAL PAPER 6.3%
INTEREST BEARING, DUE UPON DEMAND
General Mills, Inc., 5.23% $ 517,200 517,200
Pitney Bowes Credit Corporation, 5.23% 1,458,500 1,458,500
Sara Lee Corporation, 5.23% 509,700 509,700
Warner-Lambert Company, 5.18% 613,900 613,900
Wisconsin Corporate Central Credit Union, 5.30% 1,108,800 1,108,800
Wisconsin Electric Power Company, 5.17% 261,300 261,300
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $4,469,400) 4,469,400
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $50,239,897)
94.2% 67,027,587
Other Assets and Liabilities, Net 5.8% 4,177,098
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $71,204,685
================================================================================
WRITTEN OPTIONS ACTIVITY
- --------------------------------------------------------------------------------
Contracts Premiums
- --------------------------------------------------------------------------------
Options outstanding at beginning of period -- $ --
Options written during the period 3,599 2,338,828
Options closed (3,599) (2,338,828)
Options expired -- --
Options exercised -- --
----- ---------
Options outstanding at end of period -- $ --
===== =========
Closed options resulted in a capital gain of $14,552.
26
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG MID CAP FUND
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 95.2%
Aerospace & Defense 3.0%
Kellstrom Industries, Inc. (b) 20,000 $ 575,000
Commercial Service 2.7%
Sykes Enterprises, Inc. (b) 17,000 518,500
Computer Service 10.1%
American Management Systems, Inc. (b) 7,500 300,000
Fiserv, Inc. (b) 5,250 270,047
National Data Corporation 5,300 258,044
Shared Medical Systems Corporation 10,000 498,750
Sterling Commerce, Inc. (b) 14,000 630,000
---------
1,956,841
Computer Software 16.2%
Citrix Systems, Inc. (b) 2,300 223,244
Compuware Corporation (b) 6,000 468,750
Keane, Inc. (b) 10,000 399,375
Network Associates, Inc. (b) 9,000 596,250
QuadraMed Corporation (b) 20,000 410,000
Sterling Software, Inc. (b) 18,000 487,125
Transaction Systems Architects, Inc. (b) 10,700 535,000
---------
3,119,744
Computer Systems 1.8%
Policy Management Systems Corporation (b) 7,000 353,500
Electronics - Semiconductor/Component 3.2%
PMC-Sierra, Inc. (b) 4,600 290,375
Vitesse Semiconductor Corporation (b) 7,000 319,375
-------
609,750
Healthcare - Biomedical/Genetic 3.5%
Alkermes, Inc. (b) 12,000 266,250
Biogen, Inc. (b) 5,000 415,000
-------
681,250
Healthcare - Drug/Diversified 2.2%
Elan Corporation PLC ADR (b) 6,000 417,375
Healthcare - Instrumentation 2.4%
Arterial Vascular Engineering, Inc. (b) 9,000 472,500
Healthcare - Patient Care 4.4%
Covance, Inc. (b) 18,000 524,250
Quintiles Transnational Corporation (b) 6,000 320,250
-------
844,500
Insurance - Life 2.1%
Protective Life Corporation 10,000 398,125
Insurance - Property & Casualty 4.5%
Ambac Financial Group, Inc. 7,000 421,312
LandAmerica Financial Group, Inc. 8,000 446,500
-------
867,812
Oil - North American Exploration & Production 1.4%
Devon Energy Corporation 9,000 276,188
Personal & Commercial Lending 2.6%
The CIT Group, Inc. 16,000 509,000
Pollution Control 2.5%
Eastern Environmental Services, Inc. (b) 16,500 488,813
Real Estate 8.7%
Apartment Investment & Management
Company Class A 13,000 483,437
Camden Property Trust 16,000 416,000
Duke Realty Investments, Inc. 18,000 418,500
Mack-Cali Realty Corporation 12,000 370,500
---------
1,688,437
Retail - Department Store 1.6%
Family Dollar Stores, Inc. 13,500 297,000
Retail - Discount & Variety 1.5%
Dollar Tree Stores, Inc. (b) 6,500 283,969
Retail - Specialty 5.2%
AutoZone, Inc. (b) 10,000 329,375
Global Imaging Systems, Inc. (b) 28,000 679,000
---------
1,008,375
Savings & Loan 4.5%
Sovereign Bancorp, Inc. 27,000 384,750
TeleBanc Financial Corporation (b) 14,000 476,000
-------
860,750
Telecommunication Equipment 4.2%
Uniphase Corporation (b) 4,500 312,187
World Access, Inc. (b) 23,000 491,625
-------
803,812
Telecommunication Service 4.5%
Global Crossing, Ltd. (b) 6,500 293,312
IDT Corporation (b) 19,000 292,125
STAR Telecommunications, Inc. (b) 24,000 292,500
-------
877,937
Transportation Service 2.4%
C.H. Robinson Worldwide, Inc. 18,000 466,875
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $14,239,216) 18,376,053
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 4.5%
COMMERCIAL PAPER 4.5%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.17% $ 100 100
Pitney Bowes Credit Corporation, 5.23% 384,000 384,000
Sara Lee Corporation, 5.23% 265,100 265,100
Warner Lambert Company, 5.18% 44,700 44,700
Wisconsin Corporate Central Credit Union, 5.30% 172,200 172,200
-------
866,100
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $866,100) 866,100
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST
$15,105,316) 99.7% 19,242,153
Other Assets and Liabilities, Net 0.3% 54,867
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $19,297,020
================================================================================
================================================================================
STRONG OPPORTUNITY FUND
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 83.8%
Airline 0.3%
Air New Zealand, Ltd. Class B 2,607,000 $ 4,084,090
Delta Air Lines, Inc. 37,800 1,965,600
---------
6,049,690
Auto & Truck Parts 1.2%
Magna International, Inc. Class A 384,000 23,808,000
Bank - Money Center 2.8%
BankAmerica Corporation 400,000 24,050,000
Chase Manhattan Corporation 424,000 28,858,500
ING Groep NV 72,000 4,386,273
----------
57,294,773
Bank - Super Regional 2.1%
Mellon Bank Corporation 205,000 14,093,750
Wells Fargo Company 740,000 29,553,750
----------
43,647,500
27
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1998
- --------------------------------------------------------------------------------
================================================================================
STRONG OPPORTUNITY FUND (continued)
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
Beverage - Soft Drink 1.7%
Whitman Corporation 1,390,900 $35,294,088
Chemical - Specialty 3.5%
Morton International, Inc. 1,002,000 24,549,000
Praxair, Inc. 648,000 22,842,000
Solutia, Inc. 1,065,000 23,829,375
----------
71,220,375
Computer - Peripheral Equipment 3.2%
American Power Conversion Corporation (b) 545,000 26,398,437
Quantum Corporation (b) 1,170,000 24,862,500
Seagate Technology, Inc. (b) 428,600 12,965,150
----------
64,226,087
Computer - Personal & Workstation 2.0%
Sun Microsystems, Inc. (b) 475,000 40,671,875
Computer Software 1.8%
Cadence Design Systems, Inc. (b) 1,130,000 33,617,500
Sybase, Inc. (b) 407,500 3,018,047
----------
36,635,547
Diversified Operations 2.2%
Corning, Inc. 880,000 39,600,000
Siebe PLC 1,236,000 4,844,802
----------
44,444,802
Electric Power 1.4%
NIPSCO Industries, Inc. 963,600 29,329,575
Electronic Parts Distribution 1.6%
Avnet, Inc. 425,000 25,712,500
Marshall Industries (b) 250,000 6,125,000
----------
31,837,500
Electronic Products - Miscellaneous 2.9%
AVX Corporation 1,510,500 25,584,094
General Motors Corporation Class H (b) 833,400 33,075,562
----------
58,659,656
Electronics - Semiconductor/Component 1.9%
Micron Technology, Inc. (b) 200,000 10,112,500
Texas Instruments, Inc. 330,000 28,235,625
----------
38,348,125
Food 2.8%
ConAgra, Inc. 890,000 28,035,000
Unilever NV 350,000 29,028,125
----------
57,063,125
Healthcare - Medical Supply 1.4%
Sybron International Corporation (b) 1,088,600 29,596,312
Healthcare - Patient Care 3.8%
Columbia/HCA Healthcare Corporation 1,171,900 29,004,525
Healthsouth Corporation (b) 1,699,600 26,237,575
United Healthcare Corporation 536,500 23,103,031
----------
78,345,131
Household Appliances & Furnishings 1.4%
Premark International, Inc. 802,100 27,772,712
Insurance - Diversified 1.4%
CIGNA Corporation 375,000 28,992,188
Insurance - Multi-line 0.0%
Skandia Forsakrings AB 34,000 520,205
Insurance - Property & Casualty 4.2%
ACE, Ltd. 870,000 29,960,625
American International Group, Inc. 312,500 30,195,312
Hartford Financial Services Group, Inc. 479,200 26,296,100
----------
86,452,037
Leisure Service 0.7%
Gaylord Entertainment Company 504,300 15,192,037
Media - Publishing 2.8%
The E.W. Scripps Company Class A 588,500 29,277,875
Tribune Company 408,500 26,961,000
----------
56,238,875
Media - Radio/TV 7.0%
Comcast Corporation Class A 530,000 31,104,375
Cox Communications, Inc. Class A (b) 475,000 32,834,375
Tele-Communications, Inc. Liberty
Media Group Series A (b) 825,000 38,001,562
Tele-Communications, Inc. TCI Group Series A (b) 720,000 39,825,000
-----------
141,765,312
Natural Gas Distribution 4.0%
Columbia Energy Group 474,000 27,373,500
Enron Corporation 520,900 29,723,856
The Williams Companies, Inc. 813,000 25,355,438
----------
82,452,794
Oil - International Integrated 1.2%
Chevron Corporation 277,000 22,973,688
Fortum Corporation (b) 100,000 618,071
----------
23,591,759
Oil - North American Exploration & Production 3.5%
Apache Corporation 974,000 24,654,375
Barrett Resources Corporation (b) 881,800 21,163,200
Devon Energy Corporation 851,000 26,115,063
----------
71,932,638
Oil - North American Integrated 1.0%
USX-Marathon Group 666,700 20,084,338
Oil Well Equipment & Service 3.3%
Cooper Cameron Corporation (b) 822,900 20,161,050
Schlumberger, Ltd. 458,300 21,139,087
Weatherford International, Inc. (b) 1,354,500 26,243,438
----------
67,543,575
Precious Metal/Gem/Stone 0.9%
Barrick Gold Corporation 989,600 19,297,200
Real Estate 1.8%
Ayala Land, Inc. 2,456,400 697,301
CarrAmerica Realty Corporation 375,000 9,000,000
ProLogis Trust 1,224,000 25,398,000
Shortland Properties, Ltd. 2,513,625 885,346
----------
35,980,647
Retail - Department Store 1.3%
May Department Stores Company 426,100 25,725,788
Retail - Food Chain 1.2%
The Kroger Company (b) 395,800 23,945,900
Retail - Major Chain 1.4%
Kmart Corporation (b) 1,729,200 26,478,375
Sears Canada, Inc. 141,900 1,623,570
----------
28,101,945
Retail - Specialty 1.6%
Office Depot, Inc. (b) 865,000 31,950,937
Steel 1.3%
Nucor Corporation 596,000 25,777,000
Telecommunication Equipment 0.1%
Alcatel SA ADR 125,000 3,054,687
Telecommunication Service 7.1%
AirTouch Communications, Inc. (b) 383,000 27,623,875
Cable & Wireless Communications PLC (b) 453,000 4,113,200
Cable & Wireless Communications
PLC Sponsored ADR (b) 530,000 24,048,750
MediaOne Group, Inc. 755,200 35,494,400
Omnipoint Corporation (b) 1,354,200 12,610,988
28
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG OPPORTUNITY FUND (continued)
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
Paging Network, Inc. (b) 2,380,300 $ 11,157,656
United States Cellular Corporation (b) 762,100 28,959,800
-----------
144,008,669
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $1,264,087,318) 1,706,853,404
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 15.6%
COMMERCIAL PAPER 0.1%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.17% $ 136,000 136,000
General Mills, Inc., 5.23% 396,100 396,100
Pitney Bowes Credit Corporation, 5.23% 113,000 113,000
Sara Lee Corporation, 5.23% 53,000 53,000
Warner Lambert Company, 5.18% 156,000 156,000
Wisconsin Corporate Central Credit Union, 5.30% 70,000 70,000
Wisconsin Electric Power Company, 5.17% 1,044,600 1,044,600
---------
1,968,700
REPURCHASE AGREEMENTS 15.4%
ABN-AMRO Chicago Corporation (Dated 12/31/98),
4.90%, Due 1/04/99 (Repurchase proceeds
$314,471,119); Collateralized by: $1,036,549
Resolution Funding Corporation
Principal Strips, Zero%, Due
7/15/20 - 10/15/19 (Market
Value $309,161,226); $11,150,000
FHLMC Notes, 6.85%, Due 3/04/08
(Market Value $11,428,056) (e) 314,300,000 314,300,000
UNITED STATES GOVERNMENT ISSUES 0.1%
United States Treasury Bills, Due 4/01/99 (c) 1,210,000 1,197,368
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $317,465,866) 317,466,068
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST
$1,581,553,184) 99.4% 2,024,319,472
Other Assets and Liabilities, Net 0.6% 13,607,075
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $2,037,926,547
================================================================================
FUTURES
- --------------------------------------------------------------------------------
Underlying Unrealized
Expiration Face Amount Appreciation
Contracts Date at Value (Depreciation)
- --------------------------------------------------------------------------------
Purchased:
30 Russell 2000 3/99 $ 6,378,750 $140,375
20 S&P 500 3/99 6,227,500 (24,250)
60 S&P Midcap 3/99 11,752,500 431,375
WRITTEN OPTIONS ACTIVITY
- --------------------------------------------------------------------------------
Contracts Premiums
- --------------------------------------------------------------------------------
Options outstanding at beginning of period -- $ --
Options written during the period 9,110 4,031,055
Options closed (3,858) (1,995,195)
Options expired (5,238) (2,028,377)
Options exercised (14) (7,483)
----- ---------
Options outstanding at end of period -- $ --
===== =========
Closed, exercised and expired options resulted in a capital gain of $3,344,267.
================================================================================
STRONG SMALL CAP VALUE FUND
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 99.4%
Aerospace & Defense 1.3%
Hexcel Corporation 38,000 $ 318,250
Airline 1.0%
Lan Chile SA 50,000 237,500
Auto & Truck Parts 4.3%
Jason, Inc. (b) 91,000 762,125
Mark IV Industries, Inc. 20,000 260,000
---------
1,022,125
Chemical - Specialty 1.7%
Lawter International, Inc. (g) 35,000 406,875
Commercial Service 9.4%
R.H. Donnelley Corporation 35,000 509,687
Romac International, Inc. (b) (g) 25,000 556,250
SCB Computer Technology, Inc. (b) 75,000 740,625
Vallen Corporation (b) 23,000 460,000
---------
2,266,562
Computer Software 9.4%
Optika, Inc. (b) 273,000 1,057,875
Phoenix Technologies, Ltd. (b) 120,000 1,035,000
STB Systems, Inc. (b) 25,000 167,187
---------
2,260,062
Electronic Instrumentation 0.5%
IFR Systems, Inc. (b) 25,000 115,625
Electronics - Semiconductor/Component 1.8%
Silicon Valley Group, Inc. (b) 35,000 446,250
Engineering & Construction 2.8%
Chicago Bridge & Iron Company NV 55,000 677,187
Finance - Miscellaneous 5.9%
Creditrust Corporation (b) 55,500 1,415,250
Healthcare - Instrumentation 0.9%
Acuson Corporation (b) 15,000 223,125
Healthcare - Product 5.8%
Maxxim Medical, Inc. (b) 38,000 1,130,500
PharMerica, Inc. (b) (g) 45,000 270,000
---------
1,400,500
Housing 2.6%
Newmark Homes Corporation (b) 88,000 616,000
Housing Related 0.9%
Watsco, Inc. 12,800 214,400
Insurance - Property & Casualty 2.9%
Chicago Title Corporation 15,000 704,062
Machinery - Miscellaneous 1.8%
Global Industrial Technologies, Inc. (b) 40,000 427,500
Metal Products & Fabrication 0.2%
Olympic Steel, Inc. (b) 8,000 40,000
Oil - North American Exploration & Production 5.3%
The Meridian Resource Corporation (b) 115,000 366,563
Patina Oil & Gas Corporation 203,100 596,606
Range Resources Corporation 95,000 326,562
---------
1,289,731
Oil Well Equipment & Service 7.7%
Lufkin Industries, Inc. 15,000 277,500
Matrix Service Company (b) 110,000 522,500
29
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1998
- --------------------------------------------------------------------------------
================================================================================
STRONG SMALL CAP VALUE FUND (continued)
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
Oceaneering International, Inc. (b) 40,000 $ 600,000
Pride International, Inc. (b) 65,000 459,063
---------
1,859,063
Paper & Forest Products 2.7%
Chesapeake Corporation 6,000 221,250
Wausau-Mosinee Paper Corporation 25,000 442,188
-------
663,438
Personal & Commercial Lending 5.0%
World Acceptance Corporation (b) 187,500 1,218,750
Precious Metal/Gem/Stone 5.9%
Apex Silver Mines, Ltd. (b) 45,000 371,250
Getchell Gold Corporation (b) 25,000 681,250
Glamis Gold, Ltd. (b) 202,700 380,063
---------
1,432,563
Retail - Food Chain 2.1%
Richfood Holdings, Inc. (g) 25,000 518,750
Retail - Specialty 10.6%
Barbeques Galore, Ltd. (b) 193,000 1,001,188
Boise Cascade Office Products Corporation (b)(g) 30,000 405,000
Friedman's, Inc. Class A (b) 17,500 179,375
Heilig-Meyers Company 35,000 234,063
TBC Corporation (b) 75,000 534,375
Trend-Lines, Inc. Class A (b) 50,000 193,750
---------
2,547,751
Steel 1.4%
Bethlehem Steel Corporation (b) 40,000 335,000
Telecommunication Equipment 3.4%
Andrew Corporation (b) 10,000 165,000
Anicom, Inc. (b) 50,000 459,375
Tollgrade Communications, Inc. (b) 10,000 192,500
-------
816,875
Trucking 2.1%
Boyd Brothers Transportation, Inc. (b) 10,000 62,500
Covenant Transport, Inc. Class A (b) 25,000 446,875
-------
509,375
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $25,228,760) 23,982,569
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 1.1%
COMMERCIAL PAPER 1.1%
INTEREST BEARING, DUE UPON DEMAND
Pitney Bowes Credit Corporation, 5.23% $193,200 193,200
Warner Lambert Company, 5.18% 100 100
Wisconsin Corporate Central Credit Union, 5.30% 76,100 76,100
-------
269,400
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $269,400) 269,400
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST
$25,498,160) 100.5% 24,251,969
Other Assets and Liabilities, Net (0.5%) (114,313)
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $24,137,656
================================================================================
WRITTEN OPTIONS ACTIVITY
- --------------------------------------------------------------------------------
Contracts Premiums
- --------------------------------------------------------------------------------
Options outstanding at beginning of period -- $ --
Options written during the period 13,437 2,107,421
Options closed (9,535) (1,605,433)
Options expired (2,434) (315,412)
Options exercised (113) (17,754)
----- ----------
Options outstanding at end of period 1,355 $ 168,822
===== ==========
Closed, exercised and expired options resulted in a capital gain of $613,876.
- --------------------------------------------------------------------------------
WRITTEN OPTIONS DETAIL
- --------------------------------------------------------------------------------
Contracts
(100 shares Value
per contract) (Note 2)
- --------------------------------------------------------------------------------
Boise Cascade Office Products Corporation
Calls: (Strike Price is $10.00. Expiration date
is 2/19/99. Premium Received $12,743.) 75 ($26,719)
Hexcel Corporation Puts: (Strike Price is $10.00.
Expiration date is 4/16/99. Premium Received $11,412.) 50 (12,188)
Lawter International, Inc. Calls: (Strike Price is
$10.00. Expiration date is 6/18/99. Premium Received
$10,950.) 100 (18,125)
PharMerica, Inc.
Calls: (Strike Price is $5.00. Expiration date is
3/19/99. Premium Received $12,036.) 150 (29,063)
Calls: (Strike Price is $7.50. Expiration date is
3/19/99. Premium Received $22,199.) 300 (26,250)
Puts: (Strike Price is $5.00. Expiration date is
3/19/99. Premium Received $22,986.) 150 (9,845)
Phoenix Technologies, Ltd.
Puts: (Strike Price is $7.50. Expiration date is
1/15/99. Premium Received $8,025.) 100 (1,563)
Puts: (Strike Price is $7.50. Expiration date is
2/19/99. Premium Received $13,125.) 150 (6,095)
Pride International, Inc.
Puts: (Strike Price is $7.50. Expiration date is
1/15/99. Premium Received $8,760.) 80 (5,500)
Richfood Holdings, Inc.
Calls: (Strike Price is $20.00. Expiration date is
5/21/99. Premium Received $7,350.) 50 (13,438)
Romac International, Inc.
Calls: (Strike Price is $17.50. Expiration date is
1/15/99. Premium Received $7,037.) 50 (25,313)
Calls: (Strike Price is $20.00. Expiration date is
6/18/99. Premium Received $32,199.) 100 (45,625)
30
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG STRATEGIC GROWTH FUND
================================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 91.4%
Aerospace & Defense 2.7%
Kellstrom Industries, Inc. (b) 3,300 $ 94,875
Commercial Service 6.5%
Strayer Education, Inc. 2,500 88,125
Sykes Enterprises, Inc. (b) 4,500 137,250
-------
225,375
Computer Service 8.6%
Shared Medical Systems Corporation 1,600 79,800
Sterling Commerce, Inc. (b) 2,900 130,500
Tier Technologies, Inc. Class B (b) 5,000 86,250
-------
296,550
Computer Software 15.7%
Network Associates, Inc. (b) 1,500 99,375
Platinum Technology, Inc. (b) 3,000 57,375
QuadraMed Corporation (b) 5,200 106,600
Sterling Software, Inc. (b) 3,300 89,306
Transaction Systems Architects, Inc. (b) 2,400 120,000
Zebra Technologies Corporation (b) 2,500 71,875
-------
544,531
Finance - Miscellaneous 2.2%
BA Merchant Services, Inc. Class A (b) 3,800 76,475
Healthcare - Biomedical/Genetic 4.3%
Alkermes, Inc. (b) 3,000 66,562
Biogen, Inc. (b) 1,000 83,000
-------
149,562
Healthcare - Drug/Diversified 5.6%
Elan Corporation PLC ADR (b) 1,500 104,344
Merck & Company, Inc. 600 88,612
-------
192,956
Healthcare - Medical Supply 3.0%
Wesley Jessen VisionCare, Inc. (b) 3,700 102,675
Healthcare - Patient Care 2.5%
Covance, Inc. (b) 3,000 87,375
Insurance - Property & Casualty 2.6%
LandAmerica Financial Group, Inc. 1,600 89,300
Oil - North American Exploration & Production 0.9%
Devon Energy Corporation 1,000 30,688
Personal & Commercial Lending 7.9%
Associates First Capital Corporation 2,600 110,175
The CIT Group, Inc. 3,100 98,619
Household International, Inc. 1,600 63,400
-------
272,194
Pollution Control 2.8%
Eastern Environmental Services, Inc. (b) 3,300 97,762
Real Estate 5.8%
Apartment Investment & Management
Company Class A 2,000 74,375
Camden Property Trust 2,500 65,000
Duke Realty Investments, Inc. 2,700 62,775
-------
202,150
Retail - Drug Store 3.2%
CVS Corporation 2,000 110,000
Retail - Specialty 3.5%
Global Imaging Systems, Inc. (b) 5,000 121,250
Savings & Loan 2.9%
TeleBanc Financial Corporation (b) 3,000 102,000
Telecommunication Equipment 2.3%
World Access, Inc. (b) 3,800 81,225
Telecommunication Service 5.9%
Global Crossing, Ltd. (b) 2,900 130,863
STAR Telecommunications, Inc. (b) 6,000 73,125
-------
203,988
Transportation Service 2.5%
C.H. Robinson Worldwide, Inc. 3,400 88,188
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $2,788,253) 3,169,119
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS 2.8%
Monsanto Company 6.50% Adjustable Conversion
Rate Equity Security Units, Due 11/30/03 (b) 2,000 98,000
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $80,000) 98,000
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 5.5%
COMMERCIAL PAPER 5.5%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.17% $ 100 100
Pitney Bowes Credit Corporation, 5.23% 17,100 17,100
Sara Lee Corporation, 5.23% 14,500 14,500
Wisconsin Corporate Central Credit Union, 5.30% 156,200 156,200
-------
187,900
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $187,900) 187,900
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $3,056,153)
99.7% 3,455,019
Other Assets and Liabilities, Net 0.3% 11,509
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $3,466,528
================================================================================
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(I) of Notes to Financial Statements.
(f) Affiliated Issuer. (See note 7 of Notes to Financial Statements.)
(g) All or a portion of these securities are held in conjunction with open
written call option contracts.
Percentages are stated as a percent of net assets.
See Notes to Financial Statements.
31
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------------------------------------------------------
December 31, 1998
(In Thousands, Except Per Share Amounts)
<CAPTION>
STRONG STRONG STRONG STRONG STRONG
COMMON DISCOVERY ENTERPRISE GROWTH GROWTH 20
STOCK FUND FUND FUND FUND FUND
---------- --------- ---------- ------ ---------
ASSETS:
Investments in Securities, at Value
Unaffiliated Issuers (Cost of $1,192,390, $270,722,
<S> <C> <C> <C> <C> <C>
$10,212, $1,199,362 and $50,240, respectively) $1,413,745 $302,063 $11,855 $1,794,568 $67,028
Affiliated Issuers (Cost of $10,181, $2,364, $0, $0
and $0, respectively) 18,771 800 -- -- --
Receivable for Securities Sold 9,082 20,503 197 75,451 8,862
Receivable for Fund Shares Sold 15 3 29 31 24
Dividends and Interest Receivable 1,232 126 5 266 18
Other Assets 109 166 24 143 15
--------- ------- ------ --------- ------
Total Assets 1,442,954 323,661 12,110 1,870,459 75,947
LIABILITIES:
Payable for Securities Purchased 2,878 1,557 934 35,649 4,728
Payable for Fund Shares Redeemed 50 75 -- 78 --
Accrued Operating Expenses and Other Liabilities 125 34 32 57 14
--------- -------- ------- ---------- -------
Total Liabilities 3,053 1,666 966 35,784 4,742
--------- -------- ------- ---------- -------
NET ASSETS $1,439,901 $321,995 $11,144 $1,834,675 $71,205
========== ======== ======= ========== =======
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $1,167,401 $299,644 $ 9,177 $1,215,495 $51,797
Accumulated Net Investment Income (Loss) -- (208) -- -- --
Accumulated Net Realized Gain (Loss) 42,738 (7,656) 324 23,974 2,620
Net Unrealized Appreciation 229,762 30,215 1,643 595,206 16,788
---------- -------- ------- ---------- -------
Net Assets $1,439,901 $321,995 $11,144 $1,834,675 $71,205
========== ======== ======= ========== =======
Capital Shares Outstanding (Unlimited Number Authorized) 68,366 17,941 756 78,926 4,613
NET ASSET VALUE PER SHARE $21.06 $17.95 $14.74 $23.25 $15.44
====== ====== ====== ====== ======
See Notes to Financial Statements.
32
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES (continued)
- ----------------------------------------------------------------------------------------------------------------
December 31, 1998
(In Thousands, Except Per Share Amounts)
<CAPTION>
STRONG STRONG STRONG STRONG
MID CAP OPPORTUNITY SMALL CAP STRATEGIC
FUND FUND VALUE FUND GROWTH FUND
------- ----------- ---------- -----------
ASSETS:
Investments in Securities, at Value
(Cost of $15,105, $1,581,553, $25,498
<S> <C> <C> <C> <C>
and $3,056, respectively) $19,242 $2,024,319 $24,252 $3,455
Receivable for Securities Sold 106 27,442 207 13
Receivable for Fund Shares Sold 20 83 3 --
Dividends and Interest Receivable 16 1,244 2 3
Other Assets 46 600 17 16
------ --------- ------ -----
Total Assets 19,430 2,053,688 24,481 3,487
LIABILITIES:
Payable for Securities Purchased 87 15,312 98 --
Written Options, at Value (Premiums Received
of $0, $0, $169 and $0, respectively) -- -- 220 --
Payable for Fund Shares Redeemed -- 267 -- --
Accrued Operating Expenses and Other Liabilities 46 182 25 21
------ --------- ------ -----
Total Liabilities 133 15,761 343 21
------ --------- ------ -----
NET ASSETS $19,297 $2,037,927 $24,138 $3,466
======= ========== ======= ======
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $15,633 $1,544,995 $25,623 $3,158
Accumulated Net Investment Income -- 44 -- --
Accumulated Net Realized Gain (Loss) (473) 49,570 (188) (91)
Net Unrealized Appreciation (Depreciation) 4,137 443,318 (1,297) 399
------- ---------- ------- ------
Net Assets $19,297 $2,037,927 $24,138 $3,466
======= ========== ======= ======
Capital Shares Outstanding (Unlimited Number Authorized) 1,481 52,772 2,276 308
NET ASSET VALUE PER SHARE $13.03 $38.62 $10.61 $11.25
====== ====== ====== ======
See Notes to Financial Statements.
33
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------
For the Year Ended December 31, 1998 (Note 1)
(In Thousands)
<CAPTION>
STRONG STRONG STRONG STRONG STRONG
COMMON DISCOVERY ENTERPRISE GROWTH GROWTH 20
STOCK FUND FUND FUND FUND FUND
---------- --------- ---------- ------ ---------
INCOME:
Dividends--Unaffiliated (net of withholding
taxes of $151, $11, $0, $11 and $0,
<S> <C> <C> <C> <C> <C>
respectively) $ 10,271 $ 1,459 $ 2 $ 5,278 $ 115
Dividends--Affiliated 558 -- -- -- --
Interest--Unaffiliated 7,361 1,703 13 4,802 376
Interest--Affiliated 65 60 -- -- --
------ ----- ---- ------- ------
Total Income 18,255 3,222 15 10,080 491
EXPENSES:
Investment Advisory Fees 15,453 3,426 13 16,040 572
Custodian Fees 119 56 3 82 10
Shareholder Servicing Costs 1,939 821 3 3,403 165
Professional Fees 67 24 6 45 10
Reports to Shareholders 312 150 5 731 32
Federal and State Registration Fees 106 39 10 104 54
Other 79 23 1 91 3
------ ----- --- ------ -----
Total Expenses Before Waivers and Absorptions 18,075 4,539 41 20,496 846
Expense Waivers and Absorptions by Advisor -- -- (16) -- --
------ ----- --- ------ -----
Expenses, Net 18,075 4,539 25 20,496 846
------ ----- --- ------ -----
NET INVESTMENT INCOME (LOSS) 180 (1,317) (10) (10,416) (355)
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 130,590 32,641 372 107,392 6,232
Futures Contracts, Options and Forward
Foreign Currency Contracts (2,285) (4,866) (36) (2,485) 8
Foreign Currencies (2) -- -- -- --
------- ------ --- ------- -----
Net Realized Gain 128,303 27,775 336 104,907 6,240
Change in Unrealized Appreciation/Depreciation on:
Investments (40,263) (4,179) 1,643 304,272 13,211
Futures Contracts (186) 243 -- -- --
Foreign Currencies 400 -- -- -- --
------- ------ ----- ------- ------
Net Change in Unrealized Appreciation
/Depreciation (40,049) (3,936) 1,643 304,272 13,211
------- ------ ----- ------- ------
NET GAIN ON INVESTMENTS 88,254 23,839 1,979 409,179 19,451
------- ------ ----- ------- ------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 88,434 $22,522 $1,969 $398,763 $19,096
======== ======= ====== ======== =======
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS (continued)
- --------------------------------------------------------------------------------------------------------------
For the Year Ended December 31, 1998 (Note 1)
(In Thousands)
<CAPTION>
STRONG STRONG STRONG STRONG
MID CAP OPPORTUNITY SMALL CAP STRATEGIC
FUND FUND VALUE FUND GROWTH FUND
------- ----------- ---------- -----------
INCOME:
Dividends - Unaffiliated (net of withholding
<S> <C> <C> <C> <C>
taxes of $0, $440, $8, and $0, respectively) $ 84 $ 16,036 $ 89 $ 12
Dividends - Affiliated -- 504 -- --
Interest 74 11,123 75 11
-- ------ -- --
Total Income 158 27,663 164 23
EXPENSES:
Investment Advisory Fees 197 20,313 178 16
Custodian Fees 8 147 19 3
Shareholder Servicing Costs 65 3,305 67 6
Professional Fees 12 82 8 6
Federal and State Registration Fees 28 69 46 22
Other 20 658 15 2
-- --- -- -
Total Expenses Before Waivers and Absorptions 330 24,574 333 55
Expense Waivers and Absorptions by Advisor -- -- -- (23)
--- ------ --- ---
Expenses, Net 330 24,574 333 32
--- ------ --- --
NET INVESTMENT INCOME (LOSS) (172) 3,089 (169) (9)
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 22 210,645 (802) (91)
Options -- 3,336 614 --
Foreign Currencies -- (10) -- --
-- ------- --- --
Net Realized Gain (Loss) 22 213,971 (188) (91)
Change in Unrealized Appreciation/Depreciation on:
Investments 1,987 60,298 (1,246) 399
Futures Contracts and Options -- 548 (51) --
Foreign Currencies -- 429 -- --
----- ------ ----- ---
Net Change in Unrealized Appreciation/Depreciation 1,987 61,275 (1,297) 399
----- ------ ------ ---
NET GAIN (LOSS) ON INVESTMENTS 2,009 275,246 (1,485) 308
----- ------- ------ ---
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,837 $278,335 ($1,654) $299
====== ======== ======= ====
See Notes to Financial Statements.
35
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
<CAPTION>
STRONG COMMON STOCK FUND STRONG DISCOVERY FUND
------------------------------ ----------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1998 Dec. 31, 1997
------------- ------------- ------------- -------------
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ 180 $ 556 ($ 1,317) ($ 3,494)
Net Realized Gain 128,303 222,693 27,775 36,232
Net Change in Unrealized Appreciation/Depreciation (40,049) 73,870 (3,936) 7,034
------- ------ ------ -----
Net Increase in Net Assets Resulting from Operations 88,434 297,119 22,522 39,772
DISTRIBUTIONS:
From Net Investment Income -- (556) -- --
In Excess of Net Investment Income -- (1,918) -- --
From Net Realized Gains (86,285) (246,268) (4,244) (36,232)
In Excess of Net Realized Gains -- -- -- (7,422)
------ ------- ----- ------
Total Distributions (86,285) (248,742) (4,244) (43,654)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 254,809 294,151 247,185 300,976
Proceeds from Reinvestment of Distributions 83,552 242,397 4,134 42,767
Payment for Shares Redeemed (465,436) (263,744) (330,613) (470,643)
-------- -------- -------- --------
Net Increase (Decrease) in Net Assets from Capital
Share Transactions (127,075) 272,804 (79,294) (126,900)
-------- ------- ------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS (124,926) 321,181 (61,016) (130,782)
NET ASSETS:
Beginning of Year 1,564,827 1,243,646 383,011 513,793
--------- --------- ------- -------
End of Year $ 1,439,901 $ 1,564,827 $ 321,995 $ 383,011
=========== =========== ========= =========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 11,860 13,002 14,251 16,361
Issued in Reinvestment of Distributions 4,039 11,819 235 2,569
Redeemed (21,988) (11,814) (19,075) (25,839)
------- ------- ------- -------
Net Increase (Decrease) in Shares of the Fund (6,089) 13,007 (4,589) (6,909)
====== ====== ====== ======
36
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------------------------------
(In Thousands)
<CAPTION>
STRONG ENTERPRISE FUND STRONG GROWTH FUND
---------------------- -------------------------------
Year Ended Year Ended Year Ended
Dec. 31, 1998 Dec. 31, 1998 Dec. 31, 1997
------------- ------------- -------------
(Note 1)
OPERATIONS:
<S> <C> <C> <C>
Net Investment Loss ($ 10) ($ 10,416) ($ 7,215)
Net Realized Gain 336 104,907 184,678
Net Change in Unrealized Appreciation/Depreciation 1,643 304,272 80,535
----- ------- ------
Net Increase in Net Assets Resulting from Operations 1,969 398,763 257,998
DISTRIBUTIONS:
In Excess of Net Investment Income -- -- (92)
From Net Realized Gains (2) (37) (201,884)
In Excess of Net Realized Gains -- -- (60,918)
--- --- -------
Total Distributions (2) (37) (262,894)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 10,984 379,839 568,912
Proceeds from Reinvestment of Distributions 2 36 257,296
Payment for Shares Redeemed (1,809) (602,747) (532,345)
Net Proceeds from Acquisition (Note 8) -- 61,697 --
----- ------- -------
Net Increase (Decrease) in Net Assets
from Capital Share Transactions 9,177 (161,175) 293,863
----- -------- -------
TOTAL INCREASE IN NET ASSETS 11,144 237,551 288,967
NET ASSETS:
Beginning of Year -- 1,597,124 1,308,157
-------- --------- ---------
End of Year $ 11,144 $ 1,834,675 $ 1,597,124
======== =========== ===========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 897 19,329 29,336
Issued to Effect Acquisition (Note 8) -- 3,292 --
Issued in Reinvestment of Distributions -- 2 14,529
Redeemed (141) (30,918) (27,349)
---- ------- -------
Net Increase (Decrease) in Shares of the Fund 756 (8,295) 16,516
=== ====== ======
</TABLE>
<TABLE>
<CAPTION>
STRONG GROWTH 20 FUND STRONG MID CAP FUND
---------------------------- ----------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1998 Dec. 31, 1997
------------- ------------- ------------- -------------
(Note 1)
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Loss ($ 355) ($ 68) ($ 172) ($ 125)
Net Realized Gain (Loss) 6,240 (2,826) 22 (466)
Net Change in Unrealized Appreciation/Depreciation 13,211 3,577 1,987 2,149
------ ----- ----- -----
Net Increase in Net Assets Resulting from Operations 19,096 683 1,837 1,558
DISTRIBUTIONS:
In Excess of Net Investment Income (1) (370) -- (6)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 39,531 77,081 23,567 32,746
Proceeds from Reinvestment of Distributions 1 364 -- 6
Payment for Shares Redeemed (47,100) (18,080) (21,772) (18,639)
------- ------- ------- -------
Net Increase (Decrease) in Net Assets
from Capital Share Transactions (7,568) 59,365 1,795 14,113
------ ------ ----- ------
TOTAL INCREASE IN NET ASSETS 11,527 59,678 3,632 15,665
NET ASSETS:
Beginning of Year 59,678 -- 15,665 --
------ ------ ------- -------
End of Year $71,205 $59,678 $ 19,297 $ 15,665
======= ======= ======== ========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 3,204 6,862 1,888 3,136
Issued in Reinvestment of Distributions -- 33 -- 1
Redeemed (3,869) (1,618) (1,760) (1,760)
------ ------ ------ ------
Net Increase (Decrease) in Shares of the Fund (665) 5,277 104 1,377
==== ===== === =====
37
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- ------------------------------------------------------------------------------------------------------------------
(In Thousands)
<CAPTION>
STRONG SMALL CAP
STRONG OPPORTUNITY FUND VALUE FUND
------------------------------ ----------------
Year Ended Year Ended Year Ended
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1998
------------- ------------- -------------
(Note 1)
OPERATIONS:
<S> <C> <C> <C>
Net Investment Income (Loss) $ 3,089 $ 4,721 ($ 169)
Net Realized Gain (Loss) 213,971 288,375 (188)
Net Change in Unrealized Appreciation/Depreciation 61,275 83,844 (1,297)
------ ------ ------
Net Increase (Decrease) in Net Assets Resulting from Operations 278,335 376,940 (1,654)
DISTRIBUTIONS:
From Net Investment Income (2,486) (4,721) --
In Excess of Net Investment Income -- (93) --
From Net Realized Gains (220,319) (261,981) --
-------- -------- ----
Total Distributions (222,805) (266,795) --
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 348,997 337,611 60,317
Proceeds from Reinvestment of Distributions 217,297 260,936 --
Payment for Shares Redeemed (508,783) (553,376) (34,525)
-------- -------- -------
Net Increase in Net Assets from Capital Share Transactions 57,511 45,171 25,792
------ ------ ------
TOTAL INCREASE IN NET ASSETS 113,041 155,316 24,138
NET ASSETS:
Beginning of Year 1,924,886 1,769,570 --
--------- --------- -------
End of Year $ 2,037,927 $ 1,924,886 $ 24,138
=========== =========== ========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 8,778 8,874 5,453
Issued in Reinvestment of Distributions 5,578 7,155 --
Redeemed (13,034) (14,759) (3,177)
------- ------- ------
Net Increase in Shares of the Fund 1,322 1,270 2,276
===== ===== =====
</TABLE>
STRONG STRATEGIC GROWTH FUND
----------------------------
Year Ended
Dec. 31, 1998
-------------
(Note 1)
OPERATIONS:
Net Investment Loss ($ 9)
Net Realized Loss (91)
Net Change in Unrealized Appreciation/Depreciation 399
---
Net Increase in Net Assets Resulting from Operations 299
DISTRIBUTIONS FROM NET INVESTMENT INCOME --
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 5,323
Payment for Shares Redeemed (2,156)
------
Net Increase in Net Assets from Capital Share Transactions 3,167
-----
TOTAL INCREASE IN NET ASSETS 3,466
NET ASSETS:
Beginning of Year --
-------
End of Year $ 3,466
=======
TRANSACTIONS IN SHARES OF THE FUND:
Sold 528
Redeemed (220)
----
Net Increase in Shares of the Fund 308
===
See Notes to Financial Statements.
38
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1998
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 Enterprise Fund (a series of Strong Equity Funds, 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 Value Fund (a series of Strong Equity Funds, Inc.)
-Strong Strategic Growth Fund (a series of Strong Equity Funds, Inc.)
Strong Growth 20 Fund commenced operations on July 1, 1997. Strong Small
Cap Value Fund commenced operations on January 2, 1998. Strong Strategic
Growth Fund commenced operations on July 1, 1998. Strong Enterprise Fund
commmenced operations on October 1, 1998.
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 of the latest bid and asked prices where no last
sales price is available. Securities traded over-the-counter are
valued at the mean of the latest bid and asked prices or the last
reported sales price. Debt securities not traded on a principal
securities exchange are valued through valuations obtained from a
commercial pricing service, otherwise sale or bid prices are used.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith under consistently
applied procedures established by and under the general supervision of
the Board of Directors. Securities which are purchased within 60 days
of their stated maturity are valued at amortized cost, which
approximates fair 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, 1998 were as follows:
Aggregate Aggregate Percent of
Cost Fair Value Net Assets
--------- ---------- ----------
Strong Common Stock Fund $13,000,000 $11,570,000 0.8%
Strong Discovery Fund 632,546 252,674 0.1%
(B) Federal Income and Excise Taxes and Distributions to Shareholders --
The Funds intend 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) Certain 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.
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
December 31, 1998
(E) 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. Additional securities held by
the Fund may be designated as collateral on open futures contracts.
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.
(F) Options -- The Funds may write put or call options. Premiums received
by the Funds upon writing put or call options are recorded as an asset
with a corresponding liability which is subsequently adjusted to the
current market value of the option. When an option expires, is
exercised, or is closed, the Funds realize a gain or loss, and the
liability is eliminated. The Funds continue to bear the risk of
adverse movements in the price of the underlying asset during the
period of the option, although any potential loss during the period
would be reduced by the amount of the option premium received.
(G) 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.
(H) Forward Foreign Currency Exchange Contracts -- Forward foreign
currency exchange contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the 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.
(I) Repurchase Agreements -- The Funds may enter into repurchase
agreements with institutions that the Funds' investment advisor,
Strong Capital Management, Inc. ("the Advisor"), has determined are
creditworthy pursuant to criteria adopted by the Board of Directors.
Each repurchase agreement is recorded at cost. The 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 bank 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
each repurchase agreement to ensure the value of the collateral,
including accrued interest, is at least equal to the amounts owed to
the Funds under each repurchase agreement.
(J) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts in these financial statements. Actual results could differ
from those estimates.
(K) Other -- 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 premiums and discounts.
3. RELATED PARTY TRANSACTIONS
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.
Based on the terms of the Advisory Agreements, advisory fees and other
expenses will be waived by the Advisor if the Fund's operating expenses
exceed 2% of the average daily net assets of the Fund. In addition, the
Fund's Advisor may voluntarily waive or absorb certain expenses at their
discretion. During 1998, the Advisor involuntarily waived expenses of
$15,769 and $22,674 for the Strong Enterprise Fund and Strong Strategic
Growth Fund, respectively. Shareholder recordkeeping and related service
fees are based on contractually established rates for each open and closed
shareholder account. The Advisor is compensated for certain other services
related to costs incurred for reports to shareholders.
The Funds may invest cash reserves in money market funds sponsored and
managed by 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.
40
<PAGE>
- --------------------------------------------------------------------------------
Certain information regarding related party transactions, excluding the effects
of waivers and reimbursements, for the year ended December 31, 1998, is as
follows:
Shareholder
Payable to Servicing and Other Unaffiliated
Advisor at Expenses Directors'
December 31, 1998 Paid to Advisor Fees
----------------- ------------------- ------------
STRONG COMMON STOCK FUND $ 80,055 $2,082,624 $16,686
STRONG DISCOVERY FUND 20,141 917,041 5,217
STRONG ENTERPRISE FUND 113 2,144 --
STRONG GROWTH FUND 25,292 3,615,965 17,000
STRONG GROWTH 20 FUND 4,901 161,172 1,500
STRONG MID CAP FUND 33,858 64,378 1,500
STRONG OPPORTUNITY FUND 130,837 3,475,911 20,181
STRONG SMALL CAP VALUE FUND 15,036 64,337 1,500
STRONG STRATEGIC GROWTH FUND 147 5,125 400
4. LINE OF CREDIT
The Strong Funds have established a line of credit agreement ("LOC") with
certain financial institutions to be used for temporary or emergency
purposes, primarily for financing redemption payments. Combined borrowings
among all participating Strong Funds are subject to a $350 million cap on
the total line of credit. For individual Funds, borrowings under the LOC
are limited to either the lesser of 15% of the market value of total assets
or any explicit borrowing limits in the Funds' prospectus. Borrowings under
the LOC bear interest based on prevailing market rates as defined in the
LOC. A commitment fee of .07% per annum is incurred on the unused portion
of the line of credit and is allocated to all participating Strong Funds.
At December 31, 1998, there were no borrowings by the Funds outstanding
under the LOC.
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities during the year
ended December 31, 1998, were as follows:
Purchases Sales
-------------- --------------
STRONG COMMON STOCK FUND $1,438,727,856 $1,674,467,768
STRONG DISCOVERY FUND 572,398,858 652,490,956
STRONG ENTERPRISE FUND 14,130,074 5,594,274
STRONG GROWTH FUND 3,729,966,751 3,929,651,478
STRONG GROWTH 20 FUND 270,578,063 279,797,865
STRONG MID CAP FUND 38,192,348 36,951,621
STRONG OPPORTUNITY FUND 1,534,101,593 1,823,580,126
STRONG SMALL CAP VALUE FUND 47,269,590 21,226,046
STRONG STRATEGIC GROWTH FUND 4,698,010 1,738,388
6. INCOME TAX INFORMATION
At December 31, 1998, the investment cost, gross unrealized appreciation
and depreciation on investments and capital loss carryovers (expiring in
varying amounts through 2007) for federal income tax purposes were as
follows:
<TABLE>
<CAPTION>
Net
Federal Tax Unrealized Unrealized Appreciation/ Net Capital Loss
Cost Appreciation Depreciation (Depreciation) Carryovers
-------------- ------------ ------------ -------------- ----------------
<S> <C> <C> <C> <C> <C>
STRONG COMMON STOCK FUND $1,208,546,847 $358,264,595 $134,295,869 $223,968,726 $ --
STRONG DISCOVERY FUND 276,517,391 51,969,030 25,623,144 26,345,886 --
STRONG ENTERPRISE FUND 10,256,990 1,723,318 124,725 1,598,593 --
STRONG GROWTH FUND 1,227,316,604 567,924,368 673,084 567,251,284 15,174,979
STRONG GROWTH 20 FUND 50,645,787 16,446,719 64,919 16,381,800 --
STRONG MID CAP FUND 15,060,383 4,659,075 477,305 4,181,770 517,673
STRONG OPPORTUNITY FUND 1,591,433,116 532,789,858 99,903,502 432,886,356 --
STRONG SMALL CAP VALUE FUND 25,612,290 3,017,389 4,377,710 (1,360,321) 131,504
STRONG STRATEGIC GROWTH FUND 3,079,144 576,951 201,076 375,875 68,378
</TABLE>
41
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
December 31, 1998
During the year ended December 31, 1998, the Funds paid capital gains
distributions (taxable as long term gains at 20%) to shareholders as
follows (unaudited): Strong Common Stock Fund $0, Strong Discovery Fund
$4,244,403, Strong Enterprise Fund $0, Strong Growth Fund $0, Strong Growth
20 Fund $0, Strong Mid Cap Fund $0, Strong Opportunity Fund $211,220,874,
Strong Small Cap Value Fund $0, and Strong Strategic Growth Fund $0.
For corporate shareholders in the Funds, the percentages of dividend income
distributed for the year ended December 31, 1998 which is designated as
qualifying for the dividends-received deduction are as follows (unaudited):
Strong Common Stock Fund 0.0%, Strong Discovery Fund 0.0%, Strong
Enterprise Fund 0.0%, Strong Growth Fund 0.0%, Strong Growth 20 Fund
100.0%, Strong Mid Cap Fund 0.0%, Strong Opportunity Fund 100.0%, Strong
Small Cap Value Fund 0.0%, and Strong Strategic Growth Fund 0.0%.
7. 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 year ended December 31, 1998 is as follows:
<TABLE>
<CAPTION>
Balance of Balance of Dividend/Interest
Shares or Par Gross Gross Sales Shares or Par Value Income Realized
Value Held Purchases and Value Held Dec. 31, Jan. 1 - Dec. 31, Gain/(Loss)
Jan. 1, 1998 and Additions Reductions Dec. 31, 1998 1998 1998 on Sale
------------- ------------- ----------- ------------- -------- ----------------- -----------
STRONG COMMON STOCK FUND
- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IHOP Corporation 492,000 -- (22,000) 470,000 $18,770,625 -- $ 367,694
Musicland Group, Inc. Senior
Subordinated Notes 1,000,000 -- (1,000,000) -- -- $ 64,723 213,077
Musicland Stores Corporation 1,900,000 -- (1,900,000) -- -- -- 9,756,342
Strong Institutional
Money Fund 36,000,000 -- (36,000,000) -- -- 549,783 --
Strong Investors Money Fund -- 1,000,000 (1,000,000) -- -- 7,931 --
STRONG DISCOVERY FUND
- ---------------------
Cohr, Inc. 183,100 329,600 (512,700) -- -- -- (4,909,301)
Halsey Drug Company, Inc.
Common Stock 694,220 7,435 (303,600) 398,055 547,326 -- (1,206,261)
Halsey Drug Company, Inc.
Restricted Common Stock 2,820 13,845 (2,820) 13,845 17,140 -- --
Halsey Drug Company, Inc.
Convertible Bonds 600,000 -- -- 600,000 228,462 60,000 --
Halsey Drug Company, Inc.
Warrants 21,429 -- -- 21,429 7,072 -- --
STRONG OPPORTUNITY FUND
- -----------------------
Strong Institutional
Money Fund 30,600,000 -- (30,600,000) -- -- 497,917 --
Strong Investors Money Fund -- 1,000,000 (1,000,000) -- -- 5,721 --
</TABLE>
8. ACQUISITION INFORMATION
Effective October 30, 1998, the Strong Growth Fund acquired, through a
non-taxable exchange, substantially all the net assets of Strong Small Cap
Fund. Strong Growth Fund issued 3,292,272 shares (valued at $61,697,184)
for the 6,353,984 shares of Strong Small Cap Fund outstanding at October
30, 1998. The net assets of $61,697,184 of Strong Small Cap Fund included
net unrealized depreciation on investments of $6,038,997, undistributed net
investment losses of $1,076,450, accumulated realized net losses of
$12,771,247 and capital loss carryovers of $15,711,933 which were combined
with those of Strong Growth Fund. The Strong Growth Fund utilized $536,954
of these capital loss carryforwards in 1998. The Strong Growth Fund
Statement of Operations for the year ended December 31, 1998 does not
include the preacquisition activity of Strong Small Cap Fund.
42
<PAGE>
- --------------------------------------------------------------------------------
9. SPECIAL MEETING OF SHAREHOLDERS
A special meeting of the shareholders of Strong Small Cap Fund was held on
October 29, 1998 in Menomonee Falls, Wisconsin. Shareholders elected to (1)
approve an Agreement and Plan of Reorganization on behalf of Strong Small
Cap Fund and Strong Growth Fund, and (2) approve an amendment to the
Articles of Incorporation of Strong Equity Funds, Inc. to reflect the
reorganization. Results of the shareholder vote, calculated as a percentage
of total shares voted (5,825,835), are as follows:
PROPOSALS AFFIRMATIVE WITHHOLD ABSTAIN
- --------- ----------- -------- -------
1 Approve Agreement and
Plan of Reorganization 92.16% 3.11% 4.73%
2A Approve cancellation and
conversion of Small Cap
Fund shares 92.47% 2.77% 4.76%
2B Approve elimination of fund
within series 92.47% 2.77% 4.76%
43
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------------------------------------
STRONG COMMON STOCK FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------------
SELECTED PER-SHARE DATA(a) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $21.02 $20.24 $19.77 $16.74 $17.94
Income From Investment Operations
Net Investment Income 0.00(b) 0.01 0.06 0.11 0.04
Net Realized and Unrealized Gains (Losses) on Investments 1.36 4.67 3.87 5.25 (0.13)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.36 4.68 3.93 5.36 (0.09)
Less Distributions
From Net Investment Income -- (0.01) (0.06) (0.10) (0.04)
In Excess of Net Investment Income -- (0.03) (0.05) (0.02) --
From Net Realized Gains (1.32) (3.86) (3.35) (2.21) (1.07)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.32) (3.90) (3.46) (2.33) (1.11)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $21.06 $21.02 $20.24 $19.77 $16.74
====================================================================================================================================
RATIOS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return +6.6% +24.0% +20.5% +32.4% -0.5%
Net Assets, End of Period (In Millions) $1,440 $1,565 $1,244 $1,061 $790
Ratio of Expenses to Average Net Assets 1.2% 1.2% 1.2% 1.2% 1.3%
Ratio of Net Investment Income to Average Net Assets 0.0%(b) 0.0%(b) 0.3% 0.5% 0.3%
Portfolio Turnover Rate 102.6% 117.3% 90.9% 91.5% 83.0%
</TABLE>
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Amount calculated is less than $0.01 or 0.1%.
<TABLE>
<CAPTION>
STRONG DISCOVERY FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended
------------------------------------------------------------------
SELECTED PER-SHARE DATA(a) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.00 $17.45 $18.96 $15.67 $18.05
Income From Investment Operations
Net Investment Income (Loss) (0.07) (0.16) (0.15) (0.05) 0.16
Net Realized and Unrealized Gains (Losses) on Investments 1.26 2.00 0.35 5.48 (1.17)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.19 1.84 0.20 5.43 (1.01)
Less Distributions
From Net Investment Income -- -- -- -- (0.11)
In Excess of Net Investment Income -- -- (1.12) (0.10) (0.58)
From Net Realized Gains (0.24) (1.90) (0.59) (2.04) (0.68)
In Excess of Net Realized Gains -- (0.39) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.24) (2.29) (1.71) (2.14) (1.37)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.95 $17.00 $17.45 $18.96 $15.67
====================================================================================================================================
RATIOS AND SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return +7.0% +10.9% +1.5% +34.8% -5.7%
Net Assets, End of Period (In Millions) $322 $383 $514 $599 $388
Ratio of Expenses to Average Net Assets 1.3% 1.4% 1.4% 1.4% 1.5%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.4%) (0.9%) (0.3%) (0.4%) 0.7%
Portfolio Turnover Rate 185.9% 169.9% 792.8% 516.0% 606.1%
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
See Notes to Financial Statements.
</TABLE>
44
<PAGE>
- --------------------------------------------------------------------------------
STRONG ENTERPRISE FUND
- --------------------------------------------------------------------------------
Year Ended
----------
SELECTED PER-SHARE DATA(a) 1998(b)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00
Income From Investment Operations
Net Investment Loss (0.01)
Net Realized and Unrealized Gains on Investments 4.75
- --------------------------------------------------------------------------------
Total from Investment Operations 4.74
Less Distributions
From Net Investment Income --
From Net Realized Gains (0.00)(c)
- --------------------------------------------------------------------------------
Total Distributions (0.00)(c)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $14.74
================================================================================
RATIOS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Total Return +47.4%
Net Assets, End of Period (In Millions) $11
Ratio of Expenses to Average Net Assets 2.0%*
Ratio of Net Investment Loss to Average Net Assets (0.9%)*
Portfolio Turnover Rate 95.7%
* 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 October 1, 1998 (commencement of operations) to
December 31, 1998.
(c) Amount calculated is less than $0.01.
<TABLE>
<CAPTION>
STRONG GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended
--------------------------------------------------------------------------
SELECTED PER-SHARE DATA(a) 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $18.31 $18.50 $15.88 $11.61 $10.00
Income From Investment Operations
Net Investment Loss (0.13) (0.08) (0.03) (0.04) (0.00)(b)
Net Realized and Unrealized Gains on Investments 5.07 3.41 3.13 4.79 1.72
- --------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 4.94 3.33 3.10 4.75 1.72
Less Distributions
In Excess of Net Investment Income -- -- (0.02) (0.03) (0.11)
From Net Realized Gains (0.00)(b) (2.70) (0.46) (0.16) --
In Excess of Net Realized Gains -- (0.82) -- (0.29) --
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.00)(b) (3.52) (0.48) (0.48) (0.11)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $23.25 $18.31 $18.50 $15.88 $11.61
================================================================================================================================
RATIOS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Total Return +27.0% +19.1% +19.5% +41.0% +17.3%
Net Assets, End of Period (In Millions) $1,835 $1,597 $1,308 $643 $106
Ratio of Expenses to Average Net Assets 1.3% 1.3% 1.3% 1.4% 1.6%
Ratio of Net Investment Loss to Average Net Assets (0.7%) (0.5%) (0.2%) (0.5%) (0.1%)
Portfolio Turnover Rate 248.6% 295.7% 294.9% 321.2% 385.8%
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Amount calculated is less than $0.01.
See Notes to Financial Statements.
45
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
STRONG GROWTH 20 FUND
- --------------------------------------------------------------------------------
Year Ended
---------------------------
SELECTED PER-SHARE DATA(a) 1998 1997(b)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $11.31 $10.00
Income From Investment Operations
Net Investment Loss (0.08) (0.01)
Net Realized and Unrealized Gains on Investments 4.21 1.40
- --------------------------------------------------------------------------------
Total from Investment Operations 4.13 1.39
Less Distributions
In Excess of Net Investment Income (0.00)(c) (0.08)
- --------------------------------------------------------------------------------
Total Distributions (0.00)(c) (0.08)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $15.44 $11.31
================================================================================
RATIOS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Total Return +36.5% +13.9%
Net Assets, End of Period (In Millions) $71 $60
Ratio of Expenses to Average Net Assets 1.5% 1.4%*
Ratio of Net Investment Loss to Average Net Assets (0.6%) (0.3%)*
Portfolio Turnover Rate 541.2% 250.1%
* 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 July 1, 1997 (commencement of operations) to December
31, 1997.
(c) Amount calculated is less than $0.01.
STRONG MID CAP FUND
- --------------------------------------------------------------------------------
Year Ended
----------------------------
SELECTED PER-SHARE DATA(a) 1998 1997
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $11.38 $10.00
Income From Investment Operations
Net Investment Loss (0.12) (0.09)
Net Realized and Unrealized Gains on Investment 1.77 1.47
- --------------------------------------------------------------------------------
Total from Investment Operations 1.65 1.38
Less Distributions
From Net Investment Income -- --
- --------------------------------------------------------------------------------
Total Distributions -- --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $13.03 $11.38
================================================================================
RATIOS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Total Return +14.5% +13.9%
Net Assets, End of Period (In Millions) $19 $16
Ratio of Expenses to Average Net Assets 1.7% 1.6%
Ratio of Net Investment Loss to Average Net Assets (0.9%) (0.9%)
Portfolio Turnover Rate 206.9% 305.2%
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
See Notes to Financial Statements.
46
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
STRONG OPPORTUNITY FUND
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended
----------------------------------------------------------------------
SELECTED PER-SHARE DATA(a) 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $37.41 $35.26 $33.35 $27.71 $28.23
Income From Investment Operations
Net Investment Income 0.05 0.10 0.20 0.20 0.13
Net Realized and Unrealized Gains on Investments 5.68 7.90 5.78 7.28 0.76
- -------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 5.73 8.00 5.98 7.48 0.89
Less Distributions
From Net Investment Income (0.05) (0.10) (0.20) (0.20) (0.13)
In Excess of Net Investment Income -- -- (0.05) (0.01) --
From Net Realized Gains (4.47) (5.75) (3.82) (1.63) (1.28)
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions (4.52) (5.85) (4.07) (1.84) (1.41)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $38.62 $37.41 $35.26 $33.35 $27.71
===============================================================================================================================
RATIOS AND SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------------------------------
Total Return +15.5% +23.5% +18.1% +27.3% +3.2%
Net Assets, End of Period (In Millions) $2,038 $1,925 $1,770 $1,328 $806
Ratio of Expenses to Average Net Assets 1.2% 1.2% 1.3% 1.3% 1.4%
Ratio of Net Investment Income to Average Net Assets 0.2% 0.3% 0.6% 0.7% 0.5%
Portfolio Turnover Rate 86.0% 93.7% 103.3% 92.5% 59.2%
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
</TABLE>
STRONG SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
Year Ended
----------
SELECTED PER-SHARE DATA(a) 1998
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00
Income From Investment Operations
Net Investment Loss (0.07)
Net Realized and Unrealized Gains on Investments 0.68
- --------------------------------------------------------------------------------
Total from Investment Operations 0.61
Less Distributions
From Net Investment Income --
- --------------------------------------------------------------------------------
Total Distributions --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.61
================================================================================
RATIOS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Total Return +6.1%
Net Assets, End of Period (In Millions) $24
Ratio of Expenses to Average Net Assets 1.9%
Ratio of Net Investment Loss to Average Net Assets (1.0%)
Portfolio Turnover Rate 121.5%
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
See Notes to Financial Statements.
47
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
STRONG STRATEGIC GROWTH FUND
- --------------------------------------------------------------------------------
Year Ended
----------
SELECTED PER-SHARE DATA(a) 1998(b)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00
Income From Investment Operations
Net Investment Loss (0.03)
Net Realized and Unrealized Gains on Investments 1.28
- --------------------------------------------------------------------------------
Total from Investment Operations 1.25
Less Distributions
From Net Investment Income --
- --------------------------------------------------------------------------------
Total Distributions --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $11.25
================================================================================
RATIOS AND SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Total Return +12.5%
Net Assets, End of Period (In Millions) $3
Ratio of Expenses to Average Net Assets 2.0%*
Ratio of Net Investment Loss to Average Net Assets (0.5%)*
Portfolio Turnover Rate 59.7%
* 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 July 1, 1998 (commencement of operations) to December
31, 1998.
See Notes to Financial Statements.
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of the
Strong Growth Funds
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Strong Growth Fund, Strong Growth
20 Fund, Strong Enterprise Fund, Strong Mid Cap Fund, Strong Small Cap Value
Fund, Strong Strategic Growth Fund (six of the portfolios constituting the
Strong Equity Funds, Inc.), Strong Opportunity Fund, Inc., Strong Common Stock
Fund, Inc., and Strong Discovery Fund, Inc. (herein referred to as the "Strong
Growth Funds") at December 31, 1998, the results of each of their operations,
the changes in each of their net assets and the financial highlights for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Strong Growth Funds'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at December 31, 1998 by correspondence with
custodians, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
February 8, 1999
<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
Dana J. Russart, Treasurer
INVESTMENT ADVISOR
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
DISTRIBUTOR
Strong Investments, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
CUSTODIAN
Firstar Bank Milwaukee, N.A.
P.O. Box 701, Milwaukee, Wisconsin 53201
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
100 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 STRONG WEB SITE ON COMPUTER]
Strong On-line
www.strongfunds.com
[STRONG LOGO]
STRONG FUNDS
P.O. Box 2936 o Milwaukee, Wisconsin 53201
Strong Investments, Inc. 10379A99Y AGRTH
