<PAGE>
ANNUAL REPORT | September 30, 2000
The Strong
Schafer Value
--------------------------------------------------------------------------------
Fund
[PHOTO APPEARS HERE]
[LOGO APPEARS HERE]
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The Strong
Schafer Value
Fund
____________
ANNUAL REPORT . SEPTEMBER 30, 2000
Table of Contents
<TABLE>
<S> <C>
Investment Review
The Strong Schafer Value Fund............................... 2
Financial Information
Schedule of Investments in Securities....................... 5
Statement of Assets and Liabilities......................... 7
Statement of Operations..................................... 8
Statements of Changes in Net Assets......................... 9
Notes to Financial Statements............................... 10
Financial Highlights............................................ 12
Report of Independent Accountants............................... 12
</TABLE>
<PAGE>
THE STRONG SCHAFER VALUE FUND
-----------------------------
FUND
highlights
. For the year ended September 30, 2000, the Strong Schafer Value Fund returned
13.73%, compared with the 13.28% return of the Fund's benchmark, the S&P 500
Index.*
. Although the Fund's return was very close to that of the S&P 500, the two
groups of stocks behaved very differently from one another over the course of
the year. The Index performed strongly in the first half, while the Fund
outperformed in the second.
. Pharmaceutical, financial, telecommunications, and technology stocks were
among the Fund's best performers during the year.
_____________________________________________________________________________
AVERAGE ANNUAL
TOTAL RETURNS/1/
As of 9-30-00
1-year 13.73%
3-year -6.80%
5-year 6.17%
10-year 14.03%
Since Inception 12.07%
(10-22-85)
Equity funds are volatile investments and should only be considered
long-term goals.
_____________________________________________________________________________
FIVE LARGEST STOCK HOLDINGS
As of 9-30-00
Security % of Net Assets
ICN Pharmaceuticals, Inc. 3.6%
Omnicare, Inc. 3.5%
Franklin Resources, Inc. 3.5%
Federal National
Mortgage Association 3.5%
FedEx Corporation 3.4%
Please see the Schedule of Investments in Securities for a complete listing
of the Fund's portfolio.
Perspectives
from the Manager
/s/ David K Schafer
David K. Schafer
Portfolio Manager
________________________________________________________________________________
Health-care stocks, a sector in which we increased our investment during the
first half of the year, had the greatest positive impact on the Fund's
performance. Five of the Fund's 15 biggest gainers were from that sector.
Reflecting the broadening of the market, the remainder of the best-performing
stocks for the year came from a variety of industries. Financial stocks that
contributed to our performance included insurers Chubb and PartnerRe, investment
house Merrill Lynch, and bank holding company Mellon Financial.
In technology, global electronics distributors Arrow and Avnet benefited from
strong fundamentals and undervalued stock prices at the beginning of the year.
Furthermore, telecom equipment maker Veeco Instruments and BCE (formerly Bell
Canada) posted strong gains for the year.
The biggest negative impact on the portfolio came from defense stocks Raytheon
and Lockheed Martin, telecom stock Global Telesystems, cathode producer UCAR
International, and retailer May Department Stores. All of these companies
reported disappointing earnings during the year.
Although the Strong Schafer Value Fund and the S&P 500 Index had almost
identical investment results for the fiscal year ended September 30, 2000, these
numbers do not fully explain what went on over the course of that year. During
the initial six months of the fiscal year, the Fund fared poorly, trailing the
benchmark by nearly ten percentage
________________________
Health-care stocks,
a sector in which
we increased our
investment during the
first half of the year,
had the greatest
positive impact on the
Fund's performance.
________________________
________________________________________________________________________________
/1/ Average annual total return reflects annualized change in the value of an
investment, while total return reflects aggregate change and is not
annualized.
2
<PAGE>
points. During the second half of the year, however, the Fund benefited from the
general broadening of the U.S. stock market and posted a gain of 5.15%, while
the benchmark posted a loss of 3.60%. This represents the first time since 1997
that the Fund has beaten the benchmark for a six-month period and reflects the
first sustained period since that same year in which the market has broadened,
allowing stocks other than technology and large-cap growth issues to shine./1/
As we have commented in our past few shareholder letters, it has been our strong
conviction that it was a matter of when, and not if, value investing would
return to investors' favor. Although we are not ready to declare that value
investing is now the style of choice for the majority of investors going
forward, it is, nonetheless, comforting that this much-maligned group of stocks
has significantly outperformed the large-cap, growth-dominated S&P 500 Index in
recent months. A certain level of rationality has reappeared in the marketplace,
and it is our hope and expectation that this trend will continue.
We thank you for your continued patience and investment in the Strong Schafer
Value Fund.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 9-30-90 to 9-30-00
<TABLE>
<CAPTION>
The Strong Lipper
Schafer S&P Multi-Cap
Value Fund 500 Index Value Funds
Index*
<S> <C> <C> <C>
Sep 90 $10,000 $10,000 $10,000
Sep 91 $13,727 $13,116 $12,670
Sep 92 $16,307 $14,565 $14,126
Sep 93 $20,940 $16,459 $16,754
Sep 94 $21,866 $17,066 $17,470
Sep 95 $27,555 $22,142 $21,576
Sep 96 $31,135 $26,644 $25,056
Sep 97 $45,913 $37,421 $34,462
Sep 98 $35,116 $40,806 $31,985
Sep 99 $32,680 $52,153 $36,899
Sep 00 $37,168 $59,081 $40,815
</TABLE>
/1/ Average annual total return reflects annualized change in the value of an
investment, while total return reflects aggregate change and is not
annualized. This graph, provided in accordance with SEC regulations,
compares a $10,000 investment in the Fund with the performance of the
Standard & Poor's 500 Index ("S&P 500") and the Lipper Multi-Cap Value Funds
Index during the last ten fiscal years. 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 Index is an unmanaged index generally representative of the U.S.
stock market. The Lipper Multi-Cap Value 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 Schafer Value Fund seeks long-term capital growth. Current income is
a secondary objective. The Fund invests primarily in common stocks of medium-
and large- capitalization companies. The portfolio manager generally selects
stocks of companies that have a below-average price/earnings ratio as compared
to that of the S&P 500 Index and above-average projected earnings growth. The
Fund generally invests substantially all of its assets in stocks. The Fund
invests roughly similar amounts of its assets in each stock in the portfolio.
________________________________________________________________________________
MARKET
highlights
. Steady economic growth during the first six months of the Fund's fiscal year
gave way to increasing concerns of an economic slowdown, as increasing
numbers of companies issued earnings warnings during the second half of the
year.
. The U.S. stock market broadened in October 1999, only to revert to its focus
on large-cap and technology stocks a month later. In late February 2000,
however, the stock market again broadened and generally remained that way
through September.
. Over the past six months, the broader market outpaced the S&P 500 Index,
which is dominated by large-cap growth stocks. This marks the first time in
years this index has fallen behind.
3
<PAGE>
PORTFOLIO HOLDINGS, EARNINGS PER SHARE ESTIMATES, AND PRICE/EARNINGS RATIOS
AS OF 9-30-00 (UNAUDITED)
<TABLE>
<CAPTION>
Earnings Per Share Price/Earnings Ratio
Security Unit Price 2000E 2001E 2000E 2001E
<S> <C> <C> <C> <C> <C>
Alltel Corporation $ 52.19 2.70 3.09 19.3 16.9
---------------------------------------------------------------------------------------------------------------
Arrow Electronics, Inc. 34.06 3.57 4.60 9.5 7.4
---------------------------------------------------------------------------------------------------------------
BorgWarner Inc. 33.13 5.24 5.39 6.3 6.1
---------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Company 57.13 2.34 2.59 24.4 22.1
---------------------------------------------------------------------------------------------------------------
Cadence Design Systems, Inc. 25.69 0.84* 1.15 30.6 22.3
---------------------------------------------------------------------------------------------------------------
Canadian National Railway Company 29.31 2.98 3.35 9.9 8.8
---------------------------------------------------------------------------------------------------------------
Chase Manhattan Corporation 46.19 3.64 4.15 12.7 11.1
---------------------------------------------------------------------------------------------------------------
Chubb Corporation 79.13 3.98 4.71 19.9 16.8
---------------------------------------------------------------------------------------------------------------
Dana Corporation 21.50 2.84 2.55 7.6 8.4
---------------------------------------------------------------------------------------------------------------
ECI Telecom Ltd. 30.63 1.80 2.16 17.0 14.2
---------------------------------------------------------------------------------------------------------------
Family Dollar Stores, Inc. 19.25 1.22 1.45 15.8 13.3
---------------------------------------------------------------------------------------------------------------
FedEx Corporation 44.34 2.90 3.06 15.3 14.5
---------------------------------------------------------------------------------------------------------------
Fannie Mae 71.50 4.28 4.86 16.7 14.7
---------------------------------------------------------------------------------------------------------------
Franklin Resources, Inc. 44.43 2.47 2.75 18.0 16.2
---------------------------------------------------------------------------------------------------------------
General Motors Corporation 65.00 9.29 9.34 7.0 7.0
---------------------------------------------------------------------------------------------------------------
Harrah's Entertainment, Inc. 27.50 1.65 2.04 16.7 13.5
---------------------------------------------------------------------------------------------------------------
ICN Pharmaceuticals, Inc. 33.25 1.72 2.06 19.3 16.1
---------------------------------------------------------------------------------------------------------------
Lafarge Corporation 21.75 3.81 4.08 5.7 5.3
---------------------------------------------------------------------------------------------------------------
May Department Stores Company 20.50 2.52 2.83 8.1 7.2
---------------------------------------------------------------------------------------------------------------
Maytag Corporation 31.06 3.31 3.56 9.4 8.7
---------------------------------------------------------------------------------------------------------------
Mellon Financial Corporation 46.38 2.03 2.28 22.8 20.4
---------------------------------------------------------------------------------------------------------------
Montana Power Company 33.38 1.28 1.29 26.1 25.9
---------------------------------------------------------------------------------------------------------------
Office Depot, Inc. 7.81 1.00 1.25 7.8 6.3
---------------------------------------------------------------------------------------------------------------
Omnicare, Inc. 16.13 0.75 1.05 21.5 15.4
---------------------------------------------------------------------------------------------------------------
PartnerRe Ltd. 47.44 4.34 4.88 10.9 9.7
---------------------------------------------------------------------------------------------------------------
PETROLEO BRASILEIRO S.A. - PETROBRAS 30.06 5.04 5.23 6.0 5.7
---------------------------------------------------------------------------------------------------------------
Power Integrations, Inc. 13.94 1.13 1.40 12.3 10.0
---------------------------------------------------------------------------------------------------------------
Royal Group Technologies Limited 20.00 1.46 1.72 13.7 11.6
---------------------------------------------------------------------------------------------------------------
Schering-Plough Corporation 46.50 1.64 1.90 28.3 24.5
---------------------------------------------------------------------------------------------------------------
Station Casinos, Inc. 14.25 1.24 1.22 11.5 11.6
---------------------------------------------------------------------------------------------------------------
Superior Industries International, Inc. 30.00 3.02 3.32 9.9 9.0
---------------------------------------------------------------------------------------------------------------
UCAR International Inc. 12.69 1.00 2.05 12.7 6.2
---------------------------------------------------------------------------------------------------------------
Veeco Instruments Inc. 106.27 0.90 3.10 118.1 34.3
---------------------------------------------------------------------------------------------------------------
Wells Fargo & Company 45.94 2.53 2.90 18.1 15.8
---------------------------------------------------------------------------------------------------------------
Strong Schafer Value Fund Portfolio Averages 14.8 12.7
S&P 500 Index 500 Stocks 1,436.50 57.89 62.69 24.8 22.9
</TABLE>
E = Estimate
*Represents 4th Quarter 2000 annualized Earnings Per Share.
4
<PAGE>
SCHEDULE OF INVESTMENTS IN SECURITIES September 30, 2000
--------------------------------------------------------------------------------
STRONG SCHAFER VALUE FUND
Shares or Average Unit
Principal Unit Market Market
Security Amount Cost Value % Change Value
--------------------------------------------------------------------------------
Common Stocks 99.1%
Auto & Auto Parts 9.6%
Borg-Warner Automotive, Inc. 340,000 $37.24 $ 33.13 -11.04% $ 11,262,500
Dana Corporation 552,000 39.90 21.50 -46.12% 11,868,000
General Motors Corporation 174,000 69.27 65.00 -6.16% 11,310,000
Superior Industries
International, Inc. 132,900 29.71 30.00 0.98% 3,987,000
-----------
38,427,500
Banks 9.3%
The Chase Manhattan
Corporation 253,000 26.73 46.19 72.80% 11,685,438
Mellon Financial
Corporation 281,000 10.48 46.38 342.56% 13,031,375
Wells Fargo Company 274,000 36.79 45.94 24.87% 12,586,875
-----------
37,303,688
Building Materials 5.5%
Lafarge Corporation 500,000 20.22 21.75 7.57% 10,875,000
Royal Group Technologies,
Ltd. (b) 569,000 23.65 20.00 -15.43% 11,380,000
-----------
22,255,000
Computer Software 3.2%
Cadence Design Systems,
Inc. (b) 499,000 21.66 25.69 18.61% 12,818,063
Electronics 7.9%
Arrow Electronics, Inc. (b) 336,000 25.83 34.06 31.86% 11,445,000
Power Integrations, Inc.(b) 788,000 17.85 13.94 -21.90% 10,982,750
Veeco Instruments, Inc. (b) 89,000 51.38 106.27 106.83% 9,457,641
-----------
31,885,391
Energy 3.0%
Petroleo Brasileiro SA
Petrobras Sponsored ADR (b) 402,000 29.70 30.06 1.21% 12,085,125
Finance 7.0%
Federal National Mortgage
Association 195,000 71.83 71.50 -0.46% 13,942,500
Franklin Resources, Inc. 315,000 37.81 44.43 17.51% 13,995,450
-----------
27,937,950
Healthcare 13.6%
Bristol-Myers Squibb
Company 225,000 53.34 57.13 7.11% 12,853,125
ICN Pharmaceuticals, Inc. 431,000 33.43 33.25 -0.54% 14,330,750
Omnicare, Inc. 879,400 25.78 16.13 -37.43% 14,180,325
Schering-Plough Corporation 291,000 37.67 46.50 23.44% 13,531,500
-----------
54,895,700
Household Appliances 2.9%
Maytag Corporation 375,000 54.18 31.06 -42.67% 11,648,437
Insurance 6.4%
Chubb Corporation 167,000 62.41 79.13 26.79% 13,213,875
PartnerRe, Ltd. 262,000 42.92 47.44 10.53% 12,428,625
-----------
25,642,500
Leisure 4.7%
Harrahs Entertainment,
Inc. (b) 362,000 22.86 27.50 20.30% 9,955,000
Station Casinos, Inc. (b) 615,000 3.10 14.25 8.78% 8,763,750
-----------
18,718,750
Office Supplies 8.4%
Office Depot, Inc. (b) 1,512,000 11.09 7.81 -29.58% 11,812,500
Family Dollar Stores, Inc. 655,000 17.44 19.25 10.38% 12,608,750
May Department Stores
Company 458,000 27.11 20.50 -24.38% 9,389,000
-----------
33,810,250
Steel 3.1%
UCAR International, Inc. (b) 986,000 22.41 12.69 -43.37% 12,509,874
Telecommunications 8.3%
ALLTEL Corporation 195,000 67.44 52.19 -22.61% 10,176,563
ECI Telecom, Ltd. 359,000 36.92 30.63 -17.04% 10,994,375
Montana Power Company 368,000 36.80 33.38 -9.29% 12,282,000
-----------
33,452,938
Transportation 6.2%
Canadian National Railway
Company 384,000 27.78 29.31 5.51% 11,256,000
FedEx Corporation (b) 311,000 16.57 44.34 167.59% 13,789,740
-----------
25,045,740
--------------------------------------------------------------------------------
Total Common Stocks (Cost $406,864,524) $398,436,906
--------------------------------------------------------------------------------
<PAGE>
SCHEDULE OF INVESTMENTS IN SECURITIES (continued) September 30, 2000
--------------------------------------------------------------------------------
STRONG SCHAFER VALUE FUND (continued)
Shares or Average Unit
Principal Unit Market Market
Security Amount Cost Value % Change Value
--------------------------------------------------------------------------------
Short-Term Investments
(a) 3.1%
Commercial Paper 2.9%
Galaxy Funding, Inc.,
6.56%, Due 10/02/00 (c) $ 11,600,000 $100.00 $100.00 0.00% $ 11,600,000
Interest Bearing, Due Upon
Demand 0.2%
Firstar Bank, N.A., 6.29% 661,749 100.00 100.00 0.00% 661,749
Sara Lee Corporation, 6.22% 100 100.00 100.00 0.00% 100
Wisconsin Electric Power
Company, 6.24% 615 100.00 100.00 0.00% 615
----------
662,464
-------------------------------------------------------------------------------
Total Short-Term Investments (Cost $12,262,464) 12,262,464
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Investments in Securities (Cost $419,126,988) 102.2% 410,699,370
Other Assets and Liabilities, Net (2.2%) (8,752,597)
-------------------------------------------------------------------------------
Net Assets 100.0% $401,946,773
===============================================================================
LEGEND
--------------------------------------------------------------------------------
(a) Short-term investments include any security which has a remaining maturity
of less than one year.
(b) Non-income producing security.
(c) Restricted security.
Percentages are stated as a percent of net assets.
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------------------------------------------------------------------------------------
September 30, 2000
Strong Schafer
Value Fund
----------
<S> <C>
Assets:
Investments in Securities, at Market Value (Cost of $419,126,988) $410,699,370
Receivable for Securities Sold 1,950,931
Dividends and Interest Receivable 283,279
Receivable from Fund Shares Sold 23,487
Other Assets 24,370
------------
Total Assets 412,981,437
Liabilities:
Payable for Securities Purchased 10,643,974
Payable for Fund Shares Redeemed 171,138
Accrued Operating Expenses and Other Liabilities 219,552
------------
Total Liabilities 11,034,664
------------
Net Assets $401,946,773
============
Net Assets Consist of:
Capital Stock (250,000,000 shares authorized, $.10 par value) $ 774,602
Paid-in Capital 505,811,884
Accumulated Net Realized Loss (96,212,095)
Net Unrealized Depreciation (8,427,618)
------------
Net Assets $401,946,773
============
Capital Shares Outstanding 7,746,017
Net Asset Value Per Share $ 51.89
============
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
-----------------------------------------------------------------------------------------------------------------------------------
For The Year Ended September 30, 2000
Strong Schafer
Value Fund
----------
<S> <C>
Income:
Dividends (net of foreign withholding taxes of $215,844) $ 6,896,990
Interest 427,350
-----------
Total Income 7,324,340
Expenses:
Investment Advisory Fees 4,860,234
Custodian Fees 11,786
Shareholder Servicing Costs 1,887,303
Other 604,737
-----------
Total Expenses before Fees Paid Indirectly by Strong 7,364,060
Fees Paid Indirectly by Strong (39,561)
-----------
Expenses, Net 7,324,499
-----------
Net Investment Loss (159)
Realized and Unrealized Gain (Loss):
Net Realized Gain on Investments 8,251,693
Net Change in Unrealized Appreciation/Depreciation on Investments 53,881,436
-----------
Net Gain on Investments 62,133,129
-----------
Net Increase in Net Assets Resulting from Operations $62,132,970
===========
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------------------------------
Strong Schafer Value Fund
-------------------------------
Year Ended Year Ended
Sept. 30, 2000 Sept. 30, 1999
-------------- --------------
<S> <C> <C>
Operations:
Net Investment Income (Loss) ($ 159) $ 6,749,105
Net Realized Gain (Loss) on Investments 8,251,693 (101,955,383)
Net Change in Unrealized Appreciation/Depreciation on Investments 53,881,436 111,839,764
------------- ---------------
Net Increase in Net Assets Resulting from Operations 62,132,970 16,633,486
Distributions from Net Investment Income (5,737,017) (9,533,194)
Capital Share Transactions:
Proceeds from Shares Sold 97,012,305 233,245,091
Proceeds from Reinvestment of Distributions 5,560,120 9,181,919
Payment for Shares Redeemed (416,327,703) (1,017,952,730)
------------- ---------------
Net Decrease in Net Assets from Capital Share Transactions (313,755,278) (775,525,720)
------------- ---------------
Total Decrease in Net Assets (257,359,325) (768,425,428)
Net Assets
Beginning of Year 659,306,098 1,427,731,526
------------- ---------------
End of Year $ 401,946,773 $ 659,306,098
============= ===============
Transactions in Shares of the Fund:
Sold 1,972,567 4,260,881
Issued in Reinvestment of Distributions 115,713 159,187
Redeemed (8,645,385) (18,755,755)
------------- ---------------
Net Decrease in Shares of the Fund (6,557,105) (14,335,687)
============= ===============
</TABLE>
9
See Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
September 30, 2000
1. Organization
Strong Schafer Value Fund, Inc. (the "Fund") was incorporated under the
laws of the State of Maryland on August 12, 1985, and is registered under
the Investment Company Act of 1940, as amended, as an open-end, diversified
management investment company.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
(A) Security Valuation -- Securities of the Fund are valued at fair value
through valuations obtained by a commercial pricing service or the
mean of the bid and asked prices when no last sales price is
available. 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 Fund 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 Fund generally
bears the costs, if any, associated with the disposition of restricted
securities. Aggregate cost and fair value of the restricted security
held at September 30, 2000 was $11,600,000 and $11,600,000,
respectively. The restricted security is Section 4(2) commercial paper
under the Securities Act of 1933 and has been determined to be liquid
by the Advisor based upon guidelines established by the Fund's Board
of Directors.
(B) Federal Income and Excise Taxes and Distributions to Shareholders --
The Fund intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders
in a manner which results in no tax cost to the Fund. Therefore, no
federal income or excise tax provision is required.
Net investment income or net realized gains for financial statement
purposes 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.
The Fund generally pays dividends from net investment income and
distributes any net capital gains that it realizes annually.
(C) Realized Gains and Losses on Investment Transactions -- Investment
security transactions are recorded as of the trade date. 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) Additional Investment Risk -- The Fund has short-term investments
which are unsecured nonnegotiable instruments. These instruments are
rated at least A1 by Standard & Poor's. However, the Fund may be
susceptible to credit risk with respect to these securities to the
extent the issuer defaults on its payment obligation. The Fund's
policy is to monitor the creditworthiness of the issuer and the Fund
does not anticipate nonperformance by these counterparties.
Investments in foreign denominated assets may involve greater risks
than domestic investments due to currency, political, economic,
regulatory and market risks.
(E) Foreign Currency Translation -- Investment securities and other assets
and liabilities initially expressed in foreign currencies are
converted daily 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.
(F) Use of Estimates -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and
assumptions that affect the reported amounts in these financial
statements. Actual results could differ from those estimates.
(G) Other -- 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
Strong Schafer Capital Management LLC (the "LLC") provides management and
investment advisory services to the Fund. The Investment Advisory Agreement
(the "Advisory Agreement") provides that, subject to the direction of the
Fund's Board of Directors, the LLC is responsible for the management of the
Fund's portfolio. The LLC is obligated to perform certain
10
<PAGE>
________________________________________________________________________________
administrative and management services for the Fund, except to the extent
these services are provided by any custodian, transfer agent, registrar or
administrator hired by the Fund, and is obligated to provide all of the
office space, facilities, equipment and personnel necessary to perform its
duties under the Advisory Agreement. The Advisory Agreement provides for a
monthly fee computed at an annual rate of 1.0% of the Fund's average daily
net assets. Unaffiliated directors' fees paid for the year ended September
30, 2000 were $44,000.
In September, 1997, Schafer Capital Management, Inc. ("Schafer") and Strong
Capital Management, Inc. ("Strong") entered into a Limited Liability
Company Agreement (the "LLC Agreement") forming the LLC. The LLC Agreement
provides that Schafer and Strong shall be members of the LLC, with Schafer
as the managing member, and grants to Strong an option to purchase
Schafer's interest in the LLC. This option is first exercisable on January
10, 2001, or earlier in the event of certain other circumstances, subject
to obtaining necessary regulatory approvals, including approval of the
Fund's shareholders. As managing member of the LLC, Schafer will provide
ongoing management and investment advisory services to the Fund and will
perform all obligations of the LLC under the investment advisory agreement
between the Fund and the LLC.
Strong provides fund accounting services and shareholder recordkeeping and
related services to the Fund. Fund accounting service fees are
contractually established based upon the net assets of the Fund. Fund
accounting service fees paid to Strong for the year ended September 30,
2000 were $53,579. Shareholder recordkeeping and related service fees are
based upon contractually established rates for each open and closed
shareholder account. Shareholder recordkeeping and related service fees
payable to Strong at September 30, 2000 were $145,014. Also allocated to
the Fund are certain charges or credits resulting from transfer agency
banking activities based on the Fund's level of subscription and redemption
activity. Charges allocated to the Fund are included in Other Expenses in
the Fund's Statement of Operations. Credits serve to reduce the shareholder
servicing expenses incurred by the Fund and are reported as Fees Paid
Indirectly by Strong in the Fund's Statement of Operations. In addition,
Strong is compensated for certain other services related to costs incurred
for reports to shareholders. Shareholder servicing and other expenses paid
to Strong for the year ended September 30, 2000 were $1,891,150.
Pursuant to a distribution agreement, Strong Investments, Inc., an indirect
subsidiary of Strong, has agreed to act at the request of the Fund and the
LLC as the Fund's agent to effect the distribution of the Fund's shares. No
expenses are incurred by the Fund with respect to this agreement.
4. Investment Transactions
The aggregate purchases and sales of long-term securities, other than
government securities, for the year ended September 30, 2000 were
$250,232,352 and $564,055,572, respectively. There were no purchases or
sales of long-term government securities for the year ended September 30,
2000.
5. Income Tax Information
At September 30, 2000, the cost of investments in securities for federal
income tax purposes was $419,636,274. Net unrealized depreciation of
securities was $8,936,904, consisting of gross unrealized appreciation and
depreciation of $50,350,069 and $59,286,973, respectively.
The Fund utilized $7,978,237 of its capital loss carryover during the year
ended September 30, 2000, and at September 30, 2000 had a capital loss
carryover of $95,815,010 which expires in 2007.
For corporate shareholders in the Fund, the percentage of dividend income
distributed for the year ended September 30, 2000 which is designated as
qualifying for the dividends-received deduction is 100% (unaudited).
11
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------------------------------------
STRONG SCHAFER VALUE FUND
------------------------------------------------------------------------------------------------------------------------------------
Year Ended
-----------------------------------------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30,
Selected Per-Share Data/(a)/ 2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $46.10 $49.85 $ 67.29 $ 47.28 $43.46
Income From Investment Operations:
Net Investment Income (Loss) (0.00)/(b)(c)/ 0.44 0.40 0.39 0.47
Net Realized and Unrealized Gains (Losses) on Investments 6.29 (3.83) (15.81) 21.48 5.00
-----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 6.29 (3.39) (15.41) 21.87 5.47
Less Distributions:
From Net Investment Income (0.50) (0.36) (0.59) (0.43) (0.38)
From Net Realized Gains -- -- (1.44) (1.43) (1.27)
-----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.50) (0.36) (2.03) (1.86) (1.65)
-----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $51.89 $46.10 $ 49.85 $ 67.29 $47.28
===================================================================================================================================
Ratios and Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Total Return +13.7% -6.9% -23.5% +47.5% +13.0%
Net Assets, End of Period (In Millions) $ 402 $ 659 $ 1,428 $ 1,318 $ 389
Ratio of Expenses to Average Net Assets Without Fees
Paid Indirectly by Strong 1.5% 1.4% 1.2% 1.2% 1.3%
Ratio of Expenses to Average Net Assets 1.5% 1.4% 1.2% 1.2% 1.3%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.0%)/(b)/ 0.6% 0.7% 0.8% 1.2%
Portfolio Turnover Rate 52.2% 67.1% 39.0% 22.5% 17.8%
</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%.
(c) Net investment loss per share represents net investment loss divided by the
average shares outstanding throughout the period.
See Notes to Financial Statements.
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and Board of Directors of the
Strong Schafer Value Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments in securities, 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 Schafer Value
Fund, Inc. (the "Fund") at September 30, 2000, the results of its operations,
the changes in its net assets and the financial highlights for the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, 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 audit, which included confirmation of securities at September
30, 2000 by correspondence with the custodian and brokers, provides a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
October 25, 2000
12
<PAGE>
Directors
David K. Schafer
Timothy C. Collins
Mary P. English
Phillip P. Young
Officers
David K. Schafer, President
James P. Cullen, Vice President
Brendan J. Spillane, Secretary and Treasurer
Susan A. Hollister, Assistant Secretary
Investment Advisor
Strong Schafer Capital Management, LLC
P.O. Box 2936, Milwaukee, Wisconsin 53201
Distributor
Strong Investments, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
Custodian
Firstar Bank, 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
Sidley & Austin
1 First National Plaza, Chicago, Illinois 60603
<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. Strong Investments, Inc. RT8433-1100
Strong Investments
P.O. Box 2936 | Milwaukee, WI 53201
www.eStrong.com
________________________________________________________________________________
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
Visit our web site at
www.eStrong.com
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