STRONG COMMON STOCK FUND INC, 485APOS, 1996-11-01

STRONG COMMON STOCK FUND INC
485APOS, 1996-11-01

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<PAGE> 1
As filed with the Securities and Exchange Commission on or about
November 1, 1996
Securities Act Registration No. 33-25399
Investment Company Act Registration No. 811-5687
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]

Pre-Effective Amendment No. [ ]
----
Post-Effective Amendment No. 9 [X]
----

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]

Amendment No. 13 [X]
----

(Check appropriate box or boxes)

STRONG COMMON STOCK FUND, INC.
(Exact Name of Registrant as Specified in Charter)

100 HERITAGE RESERVE
MENOMONEE FALLS, WISCONSIN 53051
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (414) 359-3400

THOMAS P. LEMKE
STRONG CAPITAL MANAGEMENT, INC.
100 HERITAGE RESERVE
MENOMONEE FALLS, WISCONSIN 53051
(Name and Address of Agent for Service)

Copies to
SCOTT A. MOEHRKE
GODFREY & KAHN, S.C.
780 NORTH WATER STREET
MILWAUKEE, WISCONSIN 53202

Registrant has registered an indefinite amount of securities pursuant to
Rule 24f-2 under the Securities Act of 1933; the Registrant's Rule 24f-2 Notice
for the fiscal year ended December 31, 1995 was filed on or about February 21,
1996.

It is proposed that this filing will become effective (check appropriate
box).

[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[X] on December 31, 1996 pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.

================================================================================

<PAGE> 2

STRONG COMMON STOCK FUND, INC.

CROSS REFERENCE SHEET

(Pursuant to Rule 481 showing the location in the Prospectus and the
Statement of Additional Information of the responses to the Items of Parts A
and B of Form N-1A.)

<TABLE>
<CAPTION>
CAPTION OR SUBHEADING IN PROSPECTUS OR
ITEM NO. ON FORM N-1A STATEMENT OF ADDITIONAL INFORMATION
--------------------- ------------------------------------
<S> <C>
PART A - INFORMATION REQUIRED IN PROSPECTUS

1. Cover Page Cover Page

2. Synopsis Expenses; Highlights

3. Condensed Financial Information Financial Highlights

4. General Description of Registrant Strong Growth Funds; Investment
Objectives and Policies; Implementation
of Policies and Risks; About the Funds
- Organization

5. Management of the Fund About the Funds - Management; Financial
Highlights

5A. Management's Discussion of Fund Performance *

6. Capital Stock and Other Securities About the Funds - Organization, -
Distributions and Taxes; Shareholders
Manual - Shareholder Services

7. Purchase of Securities Being Offered Shareholder Manual - How to Buy Shares,
- Determining Your Share Price, -
Shareholder Services

8. Redemption or Repurchase Shareholder Manual - How to Sell Shares,
- Determining Your Share Price, -
Shareholder Services

9. Pending Legal Proceedings Inapplicable

PART B - INFORMATION REQUIRED IN STATEMENT OF
ADDITIONAL INFORMATION

10. Cover Page Cover page

11. Table of Contents Table of Contents

12. General Information and History **

13. Investment Objectives and Policies Investment Restrictions; Investment
Policies and Techniques

14. Management of the Fund Directors and Officers of the Fund
Principal Shareholders; Directors and

15. Control Persons and Principal Holders of Officers of the Fund; Investment
Securities Advisor and Distributor

16. Investment Advisory and Other Services Investment Advisor and Distributor;
About the Funds - Management (in
Prospectus); Custodian; Transfer Agent
and Dividend-Disbursing Agent;
Independent Accountants; Legal Counsel

</TABLE>

<PAGE> 3

18. Capital Stock and Other Securities Included in Prospectus under the
heading About the Funds - Organization
and in the Statement of Additional
Information under the heading
Shareholder Meetings

19. Purchase, Redemption and Pricing of Securities Included in Prospectus under the
Being Offered headings: Shareholder Manual - How to
Buy Shares, - Determining Your Share
Price, - How to Sell Shares, - Shareholder
Services; and in the Statement of Additional
Information under the headings: Additional
Shareholder Information; Investment Advisor
and Distributor; and Determination of Net
Asset Value

20. Tax Status Included in Prospectus under the
heading About the Funds - Distributions
and Taxes; and in the Statement of
Additional Information under the
heading Taxes

21. Underwriters Investment Advisor and Distributor

22. Calculation of Performance Data Performance Information

23. Financial Statements Financial Statements
</TABLE>

* Complete answer to Item is contained in Registrant's Annual Report.
** Complete answer to Item is contained in Registrant's Prospectus.

<PAGE> 4

Please file this Prospectus Supplement with your records.

STRONG VALUE FUND
STRONG OPPORTUNITY FUND
STRONG GROWTH FUND
STRONG COMMON STOCK FUND
STRONG SMALL CAP FUND
STRONG DISCOVERY FUND

Supplement to the Prospectus dated May 1, 1996

STRONG VALUE FUND

The following table sets forth the composite performance data of Sloate,
Weisman, Murray & Company, Inc., the subadvisor (the "Subadvisor") of the Strong
Value Fund (the "Value Fund") relating to the historical performance of equity
accounts and the designated equity portion (including designated cash reserves)
of balanced accounts with assets over $5 million (the "Equity Accounts") managed
by the Subadvisor, since the dates indicated, that have investment objectives,
policies, strategies, and risks substantially similar to those of the Value
Fund. The data is provided to illustrate the past performance of the Subadvisor
in managing substantially similar accounts as measured against the Standard &
Poor's 500 Stock Index ("S&P 500") and the Russell 100 Value Index ("Russell
1000 Value"), and does not represent the performance of the Value Fund.
Performance is historical and does not represent the future performance of the
Value Fund or of the Subadvisor.
The Subadvisor's composite performance data shown below was calculated in
accordance with the recommended standards of the Association for Investment
Management and Research (commonly referred to as AIMR)* retroactively applied
for all time periods. All returns presented were calculated on a total return
basis and include all dividends and interest, accrued income and realized and
unrealized gains and losses. All returns reflect the deduction of investment
management fees, brokerage commissions and execution costs paid by the Equity
Accounts, without provision for federal or state income

- ---------------

*AIMR is a non-profit membership and education organization with more than
60,000 members worldwide that, among other things, has formulated a set of
performance presentation standards for investment advisers. These AIMR
performance presentation standards are intended to (i) promote full and fair
presentations by investment advisers of their performance results, and (ii)
ensure uniformity in reporting so that performance results of investment
advisers are directly comparable.

---------------------
<PAGE> 5

taxes. Custodial fees, if any, were not included in the calculation. The
composite includes all actual, fee-paying, discretionary Equity Accounts managed
by the Subadvisor that have investment objectives, policies, strategies and
risks substantially similar to those of the Value Fund. Securities transactions
are accounted for on the trade date and accrual accounting is utilized. Cash and
equivalents are included in performance returns. The composite's returns are
calculated on a time-weighted basis.
The Equity Accounts that are included in the Subadvisor's composite are not
subject to the same type of expenses to which the Value Fund is subject nor to
the diversification requirements, specific tax restrictions, and investment
limitations imposed on the Value Fund by the Investment Company Act of 1940 or
Subchapter M of the Internal Revenue Code. Consequently, the performance results
for the Subadvisor's composite could have been adversely affected if the Equity
Accounts included in the composite had been regulated under the federal security
and tax laws.
The investment results of the Subadvisor's composite presented below are
unaudited and are not intended to predict or suggest the future returns of the
Value Fund. Investors should be aware that the use of a methodology different
than that used below to calculate performance could result in different
performance data.
----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Subadvisor's Value Russell
Time Period Equity Composite 1000 Value(1) S&P 500(2)
<S> <C> <C> <C>
Average Annual Returns
1 Year .% .% .%
3 Year .% .% .%
5 Year .% .% .%
4/1/88 - 9/30/96 .% .% .%
Cumulative Returns
4/1/88 - 9/30/96 .% .% .%
</TABLE>

- ----------------------------------------------------------------------------

(1) The Russell 1000 Value Index is an unmanaged index that contains securities
that value managers typically select from the Russell 1000 Index, which
generally represents the U.S. stock market. The index does not reflect
investment management fees, brokerage commissions, and other expenses
associated with investing in equity securities.

(2) The S&P 500 Stock Index is an unmanaged index generally representative of
the U.S. stock market. The index does not reflect investment management
fees, brokerage commissions, and other expenses associated with investing
in equity securities.

(3) The Value Equity Composite began on April 1, 1988.

---------------------

2
<PAGE> 6

STRONG GROWTH FUND

From March 1, 1989 through June 30, 1991, Mr. Ronald C. Ognar, the current
portfolio manager of the Strong Growth Fund, managed the Kemper Growth Fund. Mr.
Ognar assumed portfolio management responsibility from the Kemper Growth Fund's
previous manager. As portfolio manager, Mr. Ognar was primarily responsible for
the day-to-day management of the Kemper Growth Fund. During the time that Mr.
Ognar managed the Kemper Growth Fund, it had an investment objective, policies,
and strategies that were substantially similar to the Strong Growth Fund. The
cumulative total return for the Kemper Growth Fund from March 1, 1989 through
June 30, 1991 was 62.93% as compared to 39.32% for the S&P 500 Index over the
same period. The average annual total returns for the Kemper Growth Fund for the
one-year period ended June 30, 1991, and for the entire period that Mr. Ognar
managed the Kemper Growth Fund compared with the performance of the S&P 500
Index were:
----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Kemper
Growth S&P 500
Year Fund(1) Index(2)
<S> <C> <C>
1 Year 15.13% 7.39%
3/1/89 - 6/30/91(3) 23.27% 15.27%
</TABLE>

- ----------------------------------------------------------------------------

(1) Average annual total returns reflect changes in share prices and
reinvestment of dividends and distributions and are net of fund expenses.

(3) From July 1991 until he began managing the Strong Growth Fund in April of
1993, Mr. Ognar served RCM Capital Management as a portfolio manager of
certain separate accounts.

Historical performance does not indicate future performance. The Kemper
Growth Fund is a separate fund and its historical performance is not indicative
of the potential performance of the Strong Growth Fund. Share prices and
investment returns will fluctuate.

STRONG COMMON STOCK FUND

From November 1981 through March 1991, Mr. Richard T. Weiss, a current
co-portfolio manager of the Strong Common Stock Fund, managed and co-managed the
Stein Roe Special Fund. Mr. Weiss assumed portfolio management responsibility
from the Stein Roe Special Fund's previous manager. Although Mr. Weiss
co-managed the Stein Roe Special Fund from 1986 until March 1991, Mr. Weiss was
primarily responsible for the day-to-day

---------------------

3
<PAGE> 7

management of the Fund from November 1981 through March 1991. During
the time that Mr. Weiss managed the Stein Roe Special Fund, it had an investment
objective, policies and strategies that were substantially similar to the Strong
Common Stock Fund. The cumulative total return for the Stein Roe Special Fund
from December 1, 1981 through February 28, 1991 was 380.24% as compared to
163.68% for the Russell 2000 Stock Market Index ("Russell 2000 Index") and
322.20% for the S&P 500 Index over the same period. The average annual total
returns for the Stein Roe Special Fund the one-year, three-year, five-year
periods ended February 28, 1991, and for the entire period that Mr. Weiss
managed the Stein Roe Special Fund compared with the performance of the Russell
2000 and S&P 500 Indices were:
----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Stein Roe Russell
Special 2000 S&P 500
Year Fund(1) Index(2) Index(3)
<S> <C> <C> <C>
1 Year 12.07% 3.72% 14.67%
3 Year 18.14% 7.63% 15.12%
5 Year 14.18% 4.66% 13.97%
12/1/81 - 2/28/91 18.49% 11.05% 16.85%
</TABLE>

- ----------------------------------------------------------------------------

(1) Average annual total returns reflect changes in share prices and
reinvestment of dividends and distributions and are net of fund expenses.

(2) The Russell 2000 Index is an unmanaged index of common stocks generally
representative of the small capitalization U.S. stock market. The index
does not reflect investment management fees, brokerage commissions and
other expenses associated with investing in equity securities.

(3) The S&P 500 Stock Index is an unmanaged index generally representative of
the U.S. stock market. The index does not reflect investment management
fees, brokerage commissions and other expenses associated with investing in
equity securities.

Historical performance does not indicate future performance. The Stein Roe
Special Fund is a separate fund and its historical performance is not indicative
of the potential performance of the Strong Common Stock Fund. Share prices and
investment returns will fluctuate.

The Strong Common Stock Fund is currently closed to new investors, except
that the Fund may continue to offer its shares through certain 401(k) plans and
similar company-sponsored retirement plans.

STRONG SMALL CAP FUND

On August 31, 1996, Ms. Mary Lisanti began serving as the portfolio manager of
the Strong Small Cap Fund. Prior to joining Strong Capital Management, Inc., the
Fund's investment advisor (the "Advisor"), Ms. Lisanti acted as a managing
director at Bankers Trust in New York, where she headed the small/mid-cap equity
team, and served as a portfolio manager of the BT Investment Small Cap Fund
since its inception in March 1993. As portfolio

---------------------

4
<PAGE> 8

manager, Ms. Lisanti was primarily responsible for the day-to-day management of
BT Investment Small Cap Fund. During the time that Ms. Lisanti managed the BT
Investment Small Cap Fund, it had an investment objective, policies and
strategies that were substantially similar to the Strong Small Cap Fund. The
cumulative total return for the BT Investment Small Cap Fund from its inception
(10/21/93) through July 31, 1996 was 100.17% as compared to 29.15% for the
Russell 2000 Index and 47.88% for the S&P 500 Index over the same period. The
average annual returns of the BT Investment Small Cap Fund for the one-year
period ended July 31, 1996, and for the entire period that Ms. Lisanti managed
the Fund compared with the performance of the Russell 2000 and S&P 500 Indices
were:
----------------------------------------------------------------------------

<TABLE>
<CAPTION>
BT Investment Russell
Small Cap 2000 S&P 500
Year Fund(1,2) Index(3) Index(4)
<S> <C> <C> <C>
1 Year 11.57% 6.91% 16.57%
10/21/93 - 7/31/96 28.39% 9.64% 15.13%
</TABLE>

- ----------------------------------------------------------------------------
(1) Average annual total returns reflect changes in share prices and
reinvestment of dividends and distributions and are net of fund expenses.

(2) The expense ratio of the BT Investment Small Cap Fund was capped at 1.25%
for the period from October 21, 1993 (inception) to September 30, 1994
(reflecting annualized reimbursement of expenses of .86%), for the period
from October 1, 1994 to September 30, 1995 (reflecting reimbursement of
expenses of .34%), and for the period from October 1, 1995 to September 30,
1996 (reflecting reimbursement of expenses of %).

(3) The Russell 2000 Index is an unmanaged index of generally representative of
the U.S. market for small-cap domestic stocks. The index does not reflect
investment management fees, brokerage commissions and other expenses
associated with investing in equity securities.

(4) The S&P 500 Stock Index is an unmanaged index generally representative of
the U.S. stock market. The index does not reflect investment management
fees, brokerage commissions and other expenses associated with investing in
equity securities.
Historical performance does not indicate future performance. The BT
Investment Small Cap Fund is a separate fund and its historical performance is
not indicative of the potential performance of the Strong Small Cap Fund. Share
prices and investment returns will fluctuate.
Prior to joining Bankers Trust in February 1993, Ms. Lisanti was a vice
president and portfolio manager with Lieber & Company/The Evergreen Funds. A
native of Queens, New York, she graduated with honors from Princeton University
in 1978. Ms. Lisanti is a Chartered Financial Analyst and a member of the New
York Society of Security Analysts and the Financial Analyst Federation.

---------------------

5
<PAGE> 9

STRONG DISCOVERY FUND

On August 31, 1996, Mr. Charles A. Paquelet joined Mr. Richard S. Strong as a
co-portfolio manager of the Strong Discovery Fund. Mr. Strong has managed the
Fund since its inception in 1988.
Mr. Paquelet joined the Advisor as a securities analyst in 1988 from the B.F.
Goodrich Company, where he began his career as a financial analyst earlier in
1987. Since 1990, he has been a portfolio manager of separate accounts for
individual and institutional investors. Mr. Paquelet was awarded his M.B.A. in
1989 from Indiana University. He received his bachelor's degree in finance in
1987 from Case Western Reserve University. Mr. Paquelet is a Chartered Financial
Analyst. Mr. Paquelet served as the portfolio manager of the Strong Small Cap
Fund from the Fund's inception in December 1995 through August 31, 1996.

---------------------

6
<PAGE> 10

FINANCIAL HIGHLIGHTS
(For each share of the Funds' outstanding throughout the period.)
-----------------------------------------------------------------------

<TABLE>
<CAPTION>
Strong Strong Strong Strong Strong Strong
Value Opportunity Growth Common Stock Small Cap Discovery
Fund(a) Fund(c) Fund(c) Fund(c) Fund(a) Fund(c)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $ 33.35 $ 15.88 $ 19.77 $ 10.00 $ 18.96
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.06 0.12 (0.05) 0.03 0.02 0.02
Net Realized and Unrealized Gains (Losses) on
Investments 1.01 2.40 2.83 1.55 2.45 (0.41)
------- ---------- ---------- ---------- ------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.07 2.52 2.78 1.58 2.47 (0.39)
LESS DISTRIBUTIONS
From Net Investment Income (0.05) (0.17) -- (0.08) (0.01) (0.32)
In Excess of Net Investment Income -- -- -- -- -- (0.55)
From Net Realized Gains -- (0.32) -- (0.75) -- (0.59)
------- ---------- ---------- ---------- ------- --------
TOTAL DISTRIBUTIONS (0.05) (0.49) 0.00 (0.83) (0.01) (1.46)
------- ---------- ---------- ---------- ------- --------
NET ASSET VALUE, END OF PERIOD $ 11.02 $ 35.38 $ 18.66 $ 20.52 $ 12.46 $ 17.11
======= ========== ========== ========== ======= ========
Total Return +10.7% +7.6% +17.5% +8.0% +24.7% -1.9%
Net Assets, End of Period (In Thousands) $33,228 $1,641,855 $1,114,165 $1,150,120 $ 78,231 $581,910
Ratio of Expenses to Average Net Assets 1.6%* 1.3%* 1.3%* 1.2%* 1.6%* 1.4%*
Ratio of Net Investment Income to Average Net
Assets 1.7%* 0.7%* (0.8%)* 0.3%* -0.3% * -0.4%*
Portfolio Turnover Rate 29.9% 50.0% 119.2% 43.1% 69.5% 527.2%
Average Commission Rate Paid(b) $0.0507 $ 0.0495 $ 0.0669 $ 0.0439 $ 0.0555 $ 0.0318
</TABLE>

* Calculated on an annualized basis
(a) For the six months ended June 30, 1996 (Unaudited). Inception date is
December 29, 1995. Total return and portfolio turnover rate are not
annualized.
(b) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
(c) For the six months ended June 30, 1996 (Unaudited). Total return and
portfolio turnover rate are not annualized.

Prospectus Supplement Dated December 31, 1996.

---------------------

7
<PAGE> 11
PART A

PROSPECTUS

STRONG VALUE FUND
STRONG OPPORTUNITY FUND
STRONG GROWTH FUND
STRONG COMMON STOCK FUND
STRONG SMALL CAP FUND
STRONG DISCOVERY FUND

Incorporated by Reference to the Registrant's Post-Effective Amendment
No. 8 to the Registration Statement of Form N-1A (File No. 33-25399), which was
filed with the Securities and Exchange Commission on or about April 25, 1996
(Edgar Reference No. 0000950124-96-001774).

<PAGE> 12

STATEMENT OF ADDITIONAL INFORMATION

STRONG VALUE FUND
STRONG OPPORTUNITY FUND
STRONG GROWTH FUND
STRONG COMMON STOCK FUND
STRONG SMALL CAP FUND
STRONG DISCOVERY FUND
P.O. Box 2936
Milwaukee, Wisconsin 53201
Telephone: (414) 359-1400
Toll-Free: (800) 368-3863

This Statement of Additional Information is not a Prospectus and should be
read in conjunction with the Prospectus of Strong Opportunity Fund, Inc. (the
"Opportunity Fund"); Strong Common Stock Fund, Inc. (the "Common Stock Fund");
Strong Discovery Fund, Inc. (the "Discovery Fund"); and Strong Growth Fund (the
"Growth Fund"), Strong Small Cap Fund ("the Small Cap Fund"), and Strong Value
Fund (the "Value Fund"), all of which are series of Strong Equity Funds, Inc.
(hereinafter collectively referred to as the "Funds") dated May 1, 1996.
Requests for copies of the Prospectus should be made by calling one of the
numbers listed above. The financial statements appearing in the Opportunity,
Growth, Common Stock, and Discovery Funds' Annual Report, which accompanies
this Statement of Additional Information, are incorporated herein by reference.
The unaudited Financial Statements for the Small Cap and Value Funds for the
period from December 29, 1995 through June 30, 1996, accompany this Statement
of Additional Information.

This Statement of Additional Information is dated May 1, 1996,
as supplemented on December 31, 1996.

<PAGE> 13

STRONG GROWTH FUNDS

TABLE OF CONTENTS PAGE

INVESTMENT RESTRICTION.................................... 3
INVESTMENT POLICIES AND TECHNIQUES........................ 5
Borrowing................................................ 5
Convertible Securities................................... 5
Debt Obligations......................................... 6
Depositary Receipts...................................... 6
Derivative Instruments................................... 7
Foreign Investment Companies............................. 16
Foreign Securities....................................... 16
High-Yield (High-Risk) Securities........................ 17
Illiquid Securities...................................... 18
Lending of Portfolio Securities.......................... 19
Mortgage- and Asset-Backed Securities.................... 20
Mortgage Dollar Rolls and Reverse Repurchase Agreements.. 21
Repurchase Agreements.................................... 21
Short Sales Against the Box.............................. 21
Short-Term Cash Management............................... 22
Small Companies.......................................... 22
Temporary Defensive Position............................. 22
Warrants................................................. 22
When-Issued Securities................................... 22
Zero-Coupon, Step-Coupon and Pay-in-Kind Securities...... 23
DIRECTORS AND OFFICERS OF THE FUNDS....................... 23
PRINCIPAL SHAREHOLDERS.................................... 26
INVESTMENT ADVISOR, SUBADVISOR, AND DISTRIBUTOR........... 27
PORTFOLIO TRANSACTIONS AND BROKERAGE...................... 31
CUSTODIAN................................................. 34
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT.............. 34
TAXES..................................................... 35
DETERMINATION OF NET ASSET VALUE.......................... 37
ADDITIONAL SHAREHOLDER INFORMATION........................ 38
FUND ORGANIZATION......................................... 39
SHAREHOLDER MEETINGS...................................... 40
PERFORMANCE INFORMATION................................... 40
GENERAL INFORMATION....................................... 47
PORTFOLIO MANAGEMENT...................................... 49
INDEPENDENT ACCOUNTANTS................................... 52
LEGAL COUNSEL............................................. 52
FINANCIAL STATEMENTS...................................... 52
APPENDIX.................................................. A-1

______________________________________

No person has been authorized to give any information or to make any
representations other than those contained in this Statement of Additional
Information and the Prospectus dated May 1, 1996 and, if given or made, such
information or representations may not be relied upon as having been authorized
by the Funds.

This Statement of Additional Information does not constitute an offer to sell
securities.

<PAGE> 14

INVESTMENT RESTRICTIONS

The investment objective of each of the Funds is to seek capital growth.
The Funds' investment objectives and policies are described in detail in the
Prospectus under the caption "Investment Objectives and Policies." The
following are the Funds' fundamental investment limitations which cannot be
changed without shareholder approval.

Each Fund:

1. May not with respect to 75% of its total assets, purchase the securities
of any issuer (except securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities) if, as a result, (i) more
than 5% of the Fund's total assets would be invested in the securities of
that issuer, or (ii) the Fund would hold more than 10% of the outstanding
voting securities of that issuer.

2. May (i) borrow money from banks and (ii) make other investments or engage
in other transactions permissible under the Investment Company Act of 1940
(the "1940 Act") which may involve a borrowing, provided that the
combination of (i) and (ii) shall not exceed 33 1/3% of the value of the
Fund's total assets (including the amount borrowed), less the Fund's
liabilities (other than borrowings), except that the Fund may borrow up to
an additional 5% of its total assets (not including the amount borrowed)
from a bank for temporary or emergency purposes (but not for leverage or
the purchase of investments). The Fund may also borrow money from the
other Strong Funds or other persons to the extent permitted by applicable
law.

3. May not issue senior securities, except as permitted under the 1940 Act.

4. May not act as an underwriter of another issuer's securities, except to
the extent that the Fund may be deemed to be an underwriter within the
meaning of the Securities Act of 1933 in connection with the purchase and
sale of portfolio securities.

5. May not purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling options, futures contracts, or
other derivative instruments, or from investing in securities or other
instruments backed by physical commodities).

6. May not make loans if, as a result, more than 33 1/3% of the Fund's total
assets would be lent to other persons, except through (i) purchases of
debt securities or other debt instruments, or (ii) engaging in repurchase
agreements.

7. May not purchase the securities of any issuer if, as a result, more than
25% of the Fund's total assets would be invested in the securities of
issuers, the principal business activities of which are in the same
industry.

8. May not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prohibit
the Fund from purchasing or selling securities or other instruments backed
by real estate or of issuers engaged in real estate activities).

9. May, notwithstanding any other fundamental investment policy or
restriction, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and restrictions as the Fund.

<PAGE> 15

The following are the Funds' non-fundamental operating policies which may
be changed by the Board of Directors of each Fund without shareholder approval.

Each Fund may not:

1. Sell securities short, unless the Fund owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short, or
unless it covers such short sale as required by the current rules and
positions of the Securities and Exchange Commission or its staff, and
provided that transactions in options, futures contracts, options on
futures contracts, or other derivative instruments are not deemed to
constitute selling securities short.

2. Purchase securities on margin, except that the Fund may obtain such
short-term credits as are necessary for the clearance of transactions; and
provided that margin deposits in connection with futures contracts,
options on futures contracts, or other derivative instruments shall not
constitute purchasing securities on margin.

3. Invest in illiquid securities if, as a result of such investment, more
than 15% of its net assets would be invested in illiquid securities, or
such other amounts as may be permitted under the 1940 Act.

4. Purchase securities of other investment companies except in compliance
with the 1940 Act and applicable state law.

5. Invest all of its assets in the securities of a single open-end
investment management company with substantially the same fundamental
investment objective, restrictions and policies as the Fund.

6. Purchase the securities of any issuer (other than securities issued or
guaranteed by domestic or foreign governments or political subdivisions
thereof) if, as a result, more than 5% of its total assets would be
invested in the securities of issuers that, including predecessor or
unconditional guarantors, have a record of less than three years of
continuous operation. This policy does not apply to securities of pooled
investment vehicles or mortgage or asset-backed securities.

7. Invest in direct interests in oil, gas, or other mineral exploration
programs or leases; however, the Fund may invest in the securities of
issuers that engage in these activities.

8. Engage in futures or options on futures transactions which are
impermissible pursuant to Rule 4.5 under the Commodity Exchange Act and,
in accordance with Rule 4.5, will use futures or options on futures
transactions solely for bona fide hedging transactions (within the meaning
of the Commodity Exchange Act), provided, however, that the Fund may, in
addition to bona fide hedging transactions, use futures and options on
futures transactions if the aggregate initial margin and premiums required
to establish such positions, less the amount by which any such options
positions are in the money (within the meaning of the Commodity Exchange
Act), do not exceed 5% of the Fund's net assets.

In addition, (i) the aggregate value of securities underlying call options
on securities written by the Fund or obligations underlying put options on
securities written by the Fund determined as of the date the options are
written will not exceed 50% of the Fund's net assets; (ii) the aggregate
premiums paid on all options purchased by the Fund and which are being held
will not exceed 20% of the Fund's net assets; (iii) the Fund will not
purchase put or call options, other than hedging positions, if, as a result
thereof, more than 5% of its total assets would be so invested; and (iv)
the aggregate margin deposits required on all futures and options on
futures transactions being held will not exceed 5% of the Fund's total
assets.

9. Pledge, mortgage or hypothecate any assets owned by the Fund except as
may be necessary in connection with permissible borrowings or investments
and then such pledging, mortgaging, or hypothecating may not exceed 33
1/3% of the Fund's total assets at the time of the borrowing or
investment.

10. Purchase or retain the securities of any issuer if any officer or
director of the Fund or its investment advisor beneficially owns more
than 1/2 of 1% of the securities of such issuer and such officers and
directors together own beneficially more than 5% of the securities of such
issuer.

<PAGE> 16

11. Purchase warrants, valued at the lower of cost or market value, in excess
of 5% of the Fund's net assets. Included in that amount, but not to
exceed 2% of the Fund's net assets, may be warrants that are not listed on
any stock exchange. Warrants acquired by the Fund in units or attached to
securities are not subject to these restrictions.

12. Borrow money except (i) from banks or (ii) through reverse repurchase
agreements or mortgage dollar rolls, and will not purchase securities when
bank borrowings exceed 5% of its total assets.

13. Make any loans other than loans of portfolio securities, except through
(i) purchases of debt securities or other debt instruments, or (ii)
engaging in repurchase agreements.

Except for the fundamental investment limitations listed above and each
Fund's investment objective, the other investment policies described in the
Prospectus and this Statement of Additional Information are not fundamental and
may be changed with approval of a Fund's Board of Directors.

Unless noted otherwise, if a percentage restriction is adhered to at the
time of investment, a later increase or decrease in percentage resulting from a
change in a Fund's assets (i.e., due to cash inflows or redemptions) or in
market value of the investment or a Fund's assets will not constitute a
violation of that restriction.

INVESTMENT POLICIES AND TECHNIQUES

The following information supplements the discussion of the Funds'
investment objectives, policies, and techniques that are described in detail in
the Prospectus under the captions "Investment Objectives and Policies" and
"Implementation of Policies and Risks."

BORROWING

A Fund may borrow money from banks and make other investments or engage in
other transactions permissible under the 1940 Act which may be considered a
borrowing (such as mortgage dollar rolls and reverse repurchase agreements) as
discussed under "Investment Restrictions." However, a Fund may not purchase
securities when bank borrowings exceed 5% of a Fund's total assets. Presently,
the Funds only intend to borrow from banks for temporary or emergency purposes.

The Funds have established a line-of-credit (LOC) with certain banks by
which they may borrow funds for temporary or emergency purposes. A borrowing
is presumed to be for temporary or emergency purposes if it is repaid by a Fund
within sixty days and is not extended or renewed. The Funds intend to use the
LOC to meet large or unexpected redemptions that would otherwise force a Fund
to liquidate securities under circumstances which are unfavorable to a Fund's
remaining shareholders. The Funds pay a commitment fee to the banks for the
LOC.

CONVERTIBLE SECURITIES

A Fund may invest in convertible securities, which are bonds, debentures,
notes, preferred stocks, or other securities that may be converted into or
exchanged for a specified amount of common stock of the same or a different
issuer within a particular period of time at a specified price or formula. A
convertible security entitles the holder to receive interest normally paid or
accrued on debt or the dividend paid on preferred stock until the convertible
security matures or is redeemed, converted, or exchanged. Convertible
securities have unique investment characteristics in that they generally (i)
have higher yields than common stocks, but lower yields than comparable
non-convertible securities, (ii) are less subject to fluctuation in value than
the underlying stock since they have fixed income characteristics, and (iii)
provide the potential for capital appreciation if the market price of the
underlying common stock increases. Most convertible securities currently are
issued by U.S. companies, although a substantial Eurodollar convertible
securities market has developed, and the markets for convertible securities
denominated in local currencies are increasing.

The value of a convertible security is a function of its "investment
value" (determined by its yield in comparison with the yields of other
securities of comparable maturity and quality that do not have a conversion
privilege) and its "conversion value" (the security's worth, at market value,
if converted into the underlying common stock). The investment value of a

<PAGE> 17

convertible security is influenced by changes in interest rates, with
investment value declining as interest rates increase and increasing as
interest rates decline. The credit standing of the issuer and other factors
also may have an effect on the convertible security's investment value. The
conversion value of a convertible security is determined by the market price of
the underlying common stock. If the conversion value is low relative to the
investment value, the price of the convertible security is governed principally
by its investment value. Generally, the conversion value decreases as the
convertible security approaches maturity. To the extent the market price of
the underlying common stock approaches or exceeds the conversion price, the
price of the convertible security will be increasingly influenced by its
conversion value. A convertible security generally will sell at a premium over
its conversion value by the extent to which investors place value on the right
to acquire the underlying common stock while holding a fixed income security.

A convertible security may be subject to redemption at the option of the
issuer at a price established in the convertible security's governing
instrument. If a convertible security held by a Fund is called for redemption,
a Fund will be required to permit the issuer to redeem the security, convert it
into the underlying common stock, or sell it to a third party.

DEBT OBLIGATIONS

Each Fund may invest a portion of its assets in debt obligations. Issuers
of debt obligations have a contractual obligation to pay interest at a
specified rate on specified dates and to repay principal on a specified
maturity date. Certain debt obligations (usually intermediate- and long-term
bonds) have provisions that allow the issuer to redeem or "call" a bond before
its maturity. Issuers are most likely to call such securities during periods
of falling interest rates and a Fund may have to replace such securities with
lower yielding securities, which could result in a lower return for the Fund.

PRICE VOLATILITY. The market value of debt obligations is affected
primarily by changes in prevailing interest rates. The market value of a debt
obligation generally reacts inversely to interest-rate changes, meaning, when
prevailing interest rates decline, an obligation's price usually rises, and
when prevailing interest rates rise, an obligation's price usually declines.

MATURITY. In general, the longer the maturity of a debt obligation, the
higher its yield and the greater its sensitivity to changes in interest rates.
Conversely, the shorter the maturity, the lower the yield but the greater the
price stability. Commercial paper is generally considered the shortest form of
debt obligation.

CREDIT QUALITY. The values of debt obligations may also be affected by
changes in the credit rating or financial condition of their issuers.
Generally, the lower the quality rating of a security, the higher the degree of
risk as to the payment of interest and return of principal. To compensate
investors for taking on such increased risk, those issuers deemed to be less
creditworthy generally must offer their investors higher interest rates than do
issuers with better credit ratings.

In conducting its credit research and analysis, the Advisor considers both
qualitative and quantitative factors to evaluate the creditworthiness of
individual issuers. The Advisor also relies, in part, on credit ratings
compiled by a number of Nationally Recognized Statistical Rating Organizations
("NRSROs"). Refer to the Appendix for a discussion of securities ratings.

DEPOSITARY RECEIPTS

The Funds may invest in foreign securities by purchasing depositary
receipts, including American Depositary Receipts ("ADRs") and European
Depositary Receipts ("EDRs") or other securities convertible into securities of
foreign issuers. These securities may not necessarily be denominated in the
same currency as the securities into which they may be converted. Generally,
ADRs, in registered form, are denominated in U.S. dollars and are designed for
use in the U.S. securities markets, while EDRs, in bearer form, may be
denominated in other currencies and are designed for use in the European
securities markets. ADRs are receipts typically issued by a U.S. bank or
trust company evidencing ownership of the underlying securities. EDRs are
European receipts evidencing a similar arrangement. For purposes of a Fund's
investment policies, ADRs and EDRs are deemed to have the same classification
as the underlying securities they represent, except that ADRs and EDRs shall be
treated as indirect foreign investments. Thus, an ADR or EDR representing
ownership of common stock will be treated as common stock. ADR and EDR
depositary receipts do not eliminate all of the risks associated with directly
investing in the securities of foreign issuers.

<PAGE> 18

ADR facilities may be established as either "unsponsored" or "sponsored."
While ADRs issued under these two types of facilities are in some respects
similar, there are distinctions between them relating to the rights and
obligations of ADR holders and the practices of market participants.

A depositary may establish an unsponsored facility without participation
by (or even necessarily the acquiescence of) the issuer of the deposited
securities, although typically the depositary requests a letter of
non-objection from such issuer prior to the establishment of the facility.
Holders of unsponsored ADRs generally bear all the costs of such facilities.
The depositary usually charges fees upon the deposit and withdrawal of the
deposited securities, the conversion of dividends into U.S. dollars, the
disposition of non-cash distributions, and the performance of other services.
The depositary of an unsponsored facility frequently is under no obligation to
pass through voting rights to ADR holders in respect of the deposited
securities. In addition, an unsponsored facility is generally not obligated to
distribute communications received from the issuer of the deposited securities
or to disclose material information about such issuer in the U.S. and thus
there may not be a correlation between such information and the market value of
the depositary receipts.

Sponsored ADR facilities are created in generally the same manner as
unsponsored facilities, except that the issuer of the deposited securities
enters into a deposit agreement with the depositary. The deposit agreement
sets out the rights and responsibilities of the issuer, the depositary, and the
ADR holders. With sponsored facilities, the issuer of the deposited securities
generally will bear some of the costs relating to the facility (such as
dividend payment fees of the depositary), although ADR holders continue to bear
certain other costs (such as deposit and withdrawal fees). Under the terms of
most sponsored arrangements, depositories agree to distribute notices of
shareholder meetings and voting instructions, and to provide shareholder
communications and other information to the ADR holders at the request of the
issuer of the deposited securities.

DERIVATIVE INSTRUMENTS

IN GENERAL. A Fund may use derivative instruments for any lawful purpose
consistent with the Fund's investment objective such as hedging or managing
risk. Derivative instruments are commonly defined to include securities or
contracts whose values depend on (or "derive" from) the value of one or more
other assets, such as securities, currencies, or commodities. These "other
assets" are commonly referred to as "underlying assets."

A derivative instrument generally consists of, is based upon, or exhibits
characteristics similar to options or forward contracts. Options and forward
contracts are considered to be the basic "building blocks" of derivatives. For
example, forward-based derivatives include forward contracts, swap contracts,
as well as exchange-traded futures. Option-based derivatives include privately
negotiated, over-the-counter (OTC) options (including caps, floors, collars,
and options on forward and swap contracts) and exchange-traded options on
futures. Diverse types of derivatives may be created by combining options or
forward contracts in different ways, and by applying these structures to a wide
range of underlying assets.

An option is a contract in which the "holder" (the buyer) pays a certain
amount (the "premium") to the "writer" (the seller) to obtain the right, but
not the obligation, to buy from the writer (in a "call") or sell to the writer
(in a "put") a specific asset at an agreed upon price at or before a certain
time. The holder pays the premium at inception and has no further financial
obligation. The holder of an option-based derivative generally will benefit
from favorable movements in the price of the underlying asset but is not
exposed to corresponding losses due to adverse movements in the value of the
underlying asset. The writer of an option-based derivative generally will
receive fees or premiums but generally is exposed to losses due to changes in
the value of the underlying asset.

A forward is a sales contract between a buyer (holding the "long"
position) and a seller (holding the "short" position) for an asset with
delivery deferred until a future date. The buyer agrees to pay a fixed price
at the agreed future date and the seller agrees to deliver the asset. The
seller hopes that the market price on the delivery date is less than the agreed
upon price, while the buyer hopes for the contrary. The change in value of a
forward-based derivative generally is roughly proportional to the change in
value of the underlying asset.

HEDGING. A Fund may use derivative instruments to protect against
possible adverse changes in the market value of securities held in, or are
anticipated to be held in, the Fund's portfolio. Derivatives may also be used
by a Fund to "lock-in" the Fund's realized but unrecognized gains in the value
of its portfolio securities. Hedging strategies, if successful, can reduce the
risk of loss by wholly or partially offsetting the negative effect of
unfavorable price movements in the investments being

<PAGE> 19

hedged. However, hedging strategies can also reduce the opportunity for gain
by offsetting the positive effect of favorable price movements in the hedged
investments.

MANAGING RISK. A Fund may also use derivative instruments to manage the
risks of the Fund's portfolio. Risk management strategies include, but are not
limited to, facilitating the sale of portfolio securities, managing the
effective maturity or duration of debt obligations in a Fund's portfolio,
establishing a position in the derivatives markets as a substitute for buying
or selling certain securities, or creating or altering exposure to certain
asset classes, such as equity, debt, and foreign securities. The use of
derivative instruments may provide a less expensive, more expedient or more
specifically focused way for a Fund to invest than "traditional" securities
(i.e., stocks or bonds) would.

EXCHANGE OR OTC DERIVATIVES. Derivative instruments may be
exchange-traded or traded in OTC transactions between private parties.
Exchange-traded derivatives are standardized options and futures contracts
traded in an auction on the floor of a regulated exchange. Exchange contracts
are generally very liquid. The exchange clearinghouse is the counterparty of
every contract. Thus, each holder of an exchange contract bears the credit
risk of the clearinghouse (and has the benefit of its financial strength)
rather than that of a particular counterparty. Over-the-counter transactions
are subject to additional risks, such as the credit risk of the counterparty to
the instrument and are less liquid than exchange-traded derivatives since they
often can only be closed out with the other party to the transaction

RISKS AND SPECIAL CONSIDERATIONS. The use of derivative instruments
involves risks and special considerations as described below. Risks pertaining
to particular derivative instruments are described in the sections that follow.

(1) MARKET RISK. The primary risk of derivatives is the same as the risk
of the underlying assets, namely that the value of the underlying asset may go
up or down. Adverse movements in the value of an underlying asset can expose a
Fund to losses. Derivative instruments may include elements of leverage and,
accordingly, the fluctuation of the value of the derivative instrument in
relation to the underlying asset may be magnified. The successful use of
derivative instruments depends upon a variety of factors, particularly the
Advisor's ability to predict movements of the securities, currencies, and
commodity markets, which requires different skills than predicting changes in
the prices of individual securities. There can be no assurance that any
particular strategy adopted will succeed. The Advisor's decision to engage in
a derivative instrument will reflect the Advisor's judgment that the derivative
transaction will provide value to the Fund and its shareholders and is
consistent with the Fund's objectives, investment limitations, and operating
policies. In making such a judgment, the Advisor will analyze the benefits and
risks of the derivative transaction and weigh them in the context of the Fund's
entire portfolio and investment objective.

(2) CREDIT RISK. A Fund will be subject to the risk that a loss may be
sustained by the Fund as a result of the failure of a counterparty to comply
with the terms of a derivative instrument. The counterparty risk for
exchange-traded derivative instruments is generally less than for
privately-negotiated or OTC derivative instruments, since generally a clearing
agency, which is the issuer or counterparty to each exchange-traded instrument,
provides a guarantee of performance. For privately-negotiated instruments,
there is no similar clearing agency guarantee. In all transactions, a Fund
will bear the risk that the counterparty will default, and this could result in
a loss of the expected benefit of the derivative transaction and possibly other
losses to the Fund. A Fund will enter into transactions in derivative
instruments only with counterparties that the Advisor reasonably believes are
capable of performing under the contract.

(3) CORRELATION RISK. When a derivative transaction is used to
completely hedge another position, changes in the market value of the combined
position (the derivative instrument plus the position being hedged) result from
an imperfect correlation between the price movements of the two instruments.
With a perfect hedge, the value of the combined position remains unchanged for
any change in the price of the underlying asset. With an imperfect hedge, the
values of the derivative instrument and its hedge are not perfectly correlated.
Correlation risk is the risk that there might be imperfect correlation, or even
no correlation, between price movements of an instrument and price movements of
investments being hedged. For example, if the value of a derivative instruments
used in a short hedge (such as writing a call option, buying a put option, or
selling a futures contract) increased by less than the decline in value of the
hedged investments, the hedge would not be perfectly correlated. Such a lack of
correlation might occur due to factors unrelated to the value of the investments
being hedged, such as speculative or other pressures on the markets in which
these instruments are traded. The effectiveness of hedges using instruments on
indices will depend, in part, on the degree of correlation between price
movements in the index and price movements in the investments being hedged.

<PAGE> 20

(4) LIQUIDITY RISK. Derivatives are also subject to liquidity risk.
Liquidity risk is the risk that a derivative instrument cannot be sold, closed
out, or replaced quickly at or very close to its fundamental value. Generally,
exchange contracts are very liquid because the exchange clearinghouse is the
counterparty of every contract. OTC transactions are less liquid than
exchange-traded derivatives since they often can only be closed out with the
other party to the transaction. A Fund might be required by applicable
regulatory requirement to maintain assets as "cover," maintain segregated
accounts, and/or make margin payments when it takes positions in derivative
instruments involving obligations to third parties (i.e., instruments other
than purchased options). If a Fund was unable to close out its positions in
such instruments, it might be required to continue to maintain such assets or
accounts or make such payments until the position expired, matured, or was
closed out. The requirements might impair a Fund's ability to sell a portfolio
security or make an investment at a time when it would otherwise be favorable
to do so, or require that the Fund sell a portfolio security at a
disadvantageous time. A Fund's ability to sell or close out a position in an
instrument prior to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the counterparty to enter into a transaction closing out the
position. Therefore, there is no assurance that any derivatives position can
be sold or closed out at a time and price that is favorable to a Fund.

(5) LEGAL RISK. Legal risk is the risk of loss caused by the legal
unenforcibility of a party's obligations under the derivative. While a party
seeking price certainty agrees to surrender the potential upside in exchange
for downside protection, the party taking the risk is looking for a positive
payoff. Despite this voluntary assumption of risk, a counterparty that has
lost money in a derivative transaction may try to avoid payment by exploiting
various legal uncertainties about certain derivative products.

(6) SYSTEMIC OR "INTERCONNECTION" RISK. Interconnection risk is the risk
that a disruption in the financial markets will cause difficulties for all
market participants. In other words, a disruption in one market will spill
over into other markets, perhaps creating a chain reaction. Much of the OTC
derivatives market takes place among the OTC dealers themselves, thus creating
a large interconnected web of financial obligations. This interconnectedness
raises the possibility that a default by one large dealer could create losses
at other dealers and destabilize the entire market for OTC derivative
instruments.

GENERAL LIMITATIONS. The use of derivative instruments is subject to
applicable regulations of the Securities and Exchange Commission (the "SEC"),
the several options and futures exchanges upon which they may be traded, the
Commodity Futures Trading Commission ("CFTC"), and various state regulatory
authorities. In addition, a Fund's ability to use derivative instruments may
be limited by certain tax considerations. For a discussion of the federal
income tax treatment of a Fund's derivative instruments, see "Taxes -
Derivative Instruments."

Each Fund has filed a notice of eligibility for exclusion from the
definition of the term "commodity pool operator" with the CFTC and the National
Futures Association, which regulate trading in the futures markets. In
accordance with Rule 4.5 of the regulations under the Commodity Exchange Act
(the "CEA"), the notice of eligibility for a Fund includes representations that
the Fund will use futures contracts and related options solely for bona fide
hedging purposes within the meaning of CFTC regulations, provided that the Fund
may hold other positions in futures contracts and related options that do not
qualify as a bona fide hedging position if the aggregate initial margin
deposits and premiums required to establish these positions, less the amount by
which any such futures contracts and related options positions are "in the
money," do not exceed 5% of the Fund's net assets. Adherence to these
guidelines does not limit a Fund's risk to 5% of the Fund's assets.

In addition, certain state regulations presently require that (i) the
aggregate value of securities underlying call options on securities written by
a Fund or obligations underlying put options on securities written by a Fund
determined as of the date the options are written will not exceed 50% of the
Fund's net assets; (ii) the aggregate premiums paid on all options purchased by
a Fund and which are being held will not exceed 20% of the Fund's net assets;
(iii) a Fund will not purchase put or call options, other than hedging
positions, if, as a result thereof, more than 5% of its net assets would be so
invested; and (iv) the aggregate margin deposits required on all futures and
options on futures transactions being held will not exceed 5% of a Fund's net
assets.

The SEC has identified certain trading practices involving derivative
instruments that involve the potential for leveraging a Fund's assets in a
manner that raises issues under the 1940 Act. In order to limit the potential
for the leveraging of

<PAGE> 21

a Fund's assets, as defined under the 1940 Act, the SEC has stated that a Fund
may use coverage or the segregation of a Fund's assets. To the extent required
by SEC guidelines, a Fund will not enter into any such transactions unless it
owns either: (i) an offsetting ("covered") position in securities, options,
futures, or derivative instruments; or (ii) liquid securities with a value
sufficient at all times to cover its potential obligations to the extent that
the position is not "covered". The Funds will also set aside cash and/or
appropriate liquid assets in a segregated custodial account if required to do
so by the SEC and CFTC regulations. Assets used as cover or held in a
segregated account cannot be sold while the derivative position is open, unless
they are replaced with similar assets. As a result, the commitment of a large
portion of a Fund's assets to segregated accounts could impede portfolio
management or the Fund's ability to meet redemption requests or other current
obligations.

In some cases a Fund may be required to maintain or limit exposure to a
specified percentage of its assets to a particular asset class. In such cases,
when a Fund uses a derivative instrument to increase or decrease exposure to an
asset class and is required by applicable SEC guidelines to set aside liquid
assets in a segregated account to secure its obligations under the derivative
instruments, the Advisor may, where reasonable in light of the circumstances,
measure compliance with the applicable percentage by reference to the nature of
the economic exposure created through the use of the derivative instrument and
not by reference to the nature of the exposure arising from the liquid assets
set aside in the segregated account (unless another interpretation is specified
by applicable regulatory requirements).

OPTIONS. A Fund may use options for any lawful purpose consistent with
the Fund's investment objective such as hedging or managing risk. An option is
a contract in which the "holder" (the buyer) pays a certain amount (the
"premium") to the "writer" (the seller) to obtain the right, but not the
obligation, to buy from the writer (in a "call") or sell to the writer (in a
"put") a specific asset at an agreed upon price (the "strike price" or
"exercise price") at or before a certain time (the "expiration date"). The
holder pays the premium at inception and has no further financial obligation.
The holder of an option will benefit from favorable movements in the price of
the underlying asset but is not exposed to corresponding losses due to adverse
movements in the value of the underlying asset. The writer of an option will
receive fees or premiums but is exposed to losses due to changes in the value
of the underlying asset. A Fund may buy or write (sell) put and call options
on assets, such as securities, currencies, commodities, and indices of debt and
equity securities ("underlying assets") and enter into closing transactions
with respect to such options to terminate an existing position. Options used
by the Funds may include European, American, and Bermuda style options. If an
option is exercisable only at maturity, it is a "European" option; if it is
also exercisable prior to maturity, it is an "American" option. If it is
exercisable only at certain times, it is a "Bermuda" option.

Each Fund may purchase (buy) and write (sell) put and call options
underlying assets and enter into closing transactions with respect to such
options to terminate an existing position. The purchase of call options serves
as a long hedge, and the purchase of put options serves as a short hedge.
Writing put or call options can enable a Fund to enhance income by reason of
the premiums paid by the purchaser of such options. Writing call options
serves as a limited short hedge because declines in the value of the hedged
investment would be offset to the extent of the premium received for writing
the option. However, if the security appreciates to a price higher than the
exercise price of the call option, it can be expected that the option will be
exercised and the Fund will be obligated to sell the security at less than its
market value or will be obligated to purchase the security at a price greater
than that at which the security must be sold under the option. All or a
portion of any assets used as cover for OTC options written by a Fund would be
considered illiquid to the extent described under "Investment Policies and
Techniques -- Illiquid Securities." Writing put options serves as a limited
long hedge because increases in the value of the hedged investment would be
offset to the extent of the premium received for writing the option. However,
if the security depreciates to a price lower than the exercise price of the put
option, it can be expected that the put option will be exercised and the Fund
will be obligated to purchase the security at more than its market value.

The value of an option position will reflect, among other things, the
historical price volatility of the underlying investment, the current market
value of the underlying investment, the time remaining until expiration, the
relationship of the exercise price to the market price of the underlying
investment, and general market conditions.

A Fund may effectively terminate its right or obligation under an option
by entering into a closing transaction. For example, a Fund may terminate its
obligation under a call or put option that it had written by purchasing an
identical call or put option; this is known as a closing purchase transaction.
Conversely, a Fund may terminate a position in a put or call option it had
purchased by writing an identical put or call option; this is known as a
closing sale transaction. Closing transactions permit a Fund to realize the
profit or limit the loss on an option position prior to its exercise or
expiration.

<PAGE> 22

The Funds may purchase or write both exchange-traded and OTC options.
Exchange-traded options are issued by a clearing organization affiliated with
the exchange on which the option is listed that, in effect, guarantees
completion of every exchange-traded option transaction. In contrast, OTC
options are contracts between a Fund and the other party to the transaction
("counter party") (usually a securities dealer or a bank) with no clearing
organization guarantee. Thus, when a Fund purchases or writes an OTC option,
it relies on the counter party to make or take delivery of the underlying
investment upon exercise of the option. Failure by the counter party to do so
would result in the loss of any premium paid by the Fund as well as the loss of
any expected benefit of the transaction.

A Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. Each Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the counter party, or by a
transaction in the secondary market if any such market exists. Although each
Fund will enter into OTC options only with counter parties that are expected to
be capable of entering into closing transactions with the Funds, there is no
assurance that the Funds will in fact be able to close out an OTC option at a
favorable price prior to expiration. In the event of insolvency of the counter
party, a Fund might be unable to close out an OTC option position at any time
prior to its expiration. If a Fund were unable to effect a closing transaction
for an option it had purchased, it would have to exercise the option to realize
any profit.

The Funds may engage in options transactions on indices in much the same
manner as the options on securities discussed above, except the index options
may serve as a hedge against overall fluctuations in the securities market in
general.

The writing and purchasing of options is a highly specialized activity
that involves investment techniques and risks different from those associated
with ordinary portfolio securities transactions. Imperfect correlation between
the options and securities markets may detract from the effectiveness of
attempted hedging.

SPREAD TRANSACTIONS. A Fund may use spread transactions for any lawful
purpose consistent with the Fund's investment objective such as hedging or
managing risk. A Fund may purchase covered spread options from securities
dealers. Such covered spread options are not presently exchange-listed or
exchange-traded. The purchase of a spread option gives a Fund the right to
put, or sell, a security that it owns at a fixed dollar spread or fixed yield
spread in relationship to another security that the Fund does not own, but
which is used as a benchmark. The risk to a Fund in purchasing covered spread
options is the cost of the premium paid for the spread option and any
transaction costs. In addition, there is no assurance that closing
transactions will be available. The purchase of spread options will be used to
protect a Fund against adverse changes in prevailing credit quality spreads,
i.e., the yield spread between high quality and lower quality securities. Such
protection is only provided during the life of the spread option.

FUTURES CONTRACTS. A Fund may use futures contracts for any lawful
purpose consistent with the Fund's investment objective such as hedging or
managing risk. A Fund may enter into futures contracts, including interest
rate, index, and currency futures. Each Fund may also purchase put and call
options, and write covered put and call options, on futures in which it is
allowed to invest. The purchase of futures or call options thereon can serve
as a long hedge, and the sale of futures or the purchase of put options thereon
can serve as a short hedge. Writing covered call options on futures contracts
can serve as a limited short hedge, and writing covered put options on futures
contracts can serve as a limited long hedge, using a strategy similar to that
used for writing covered options in securities. The Funds' hedging may include
purchases of futures as an offset against the effect of expected increases in
currency exchange rates and securities prices and sales of futures as an offset
against the effect of expected declines in currency exchange rates and
securities prices. The Funds may also write put options on futures contracts
while at the same time purchasing call options on the same futures contracts in
order to create synthetically a long futures contract position. Such options
would have the same strike prices and expiration dates. The Funds will engage
in this strategy only when the Advisor believes it is more advantageous to the
Funds than is purchasing the futures contract.

To the extent required by regulatory authorities, the Funds only enter
into futures contracts that are traded on national futures exchanges and are
standardized as to maturity date and underlying financial instrument. Futures
exchanges and trading are regulated under the CEA by the CFTC. Although
techniques other than sales and purchases of futures contracts could be used to
reduce a Fund's exposure to market, currency, or interest rate fluctuations, a
Fund may be able to hedge its exposure more effectively and perhaps at a lower
cost through using futures contracts.

<PAGE> 23

An interest rate futures contract provides for the future sale by one
party and purchase by another party of a specified amount of a specific
financial instrument (e.g., debt security) or currency for a specified price at
a designated date, time, and place. An index futures contract is an agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to the difference between the value of the index at the close of the
last trading day of the contract and the price at which the index futures
contract was originally written. Transaction costs are incurred when a futures
contract is bought or sold and margin deposits must be maintained. A futures
contract may be satisfied by delivery or purchase, as the case may be, of the
instrument, the currency or by payment of the change in the cash value of the
index. More commonly, futures contracts are closed out prior to delivery by
entering into an offsetting transaction in a matching futures contract.
Although the value of an index might be a function of the value of certain
specified securities, no physical delivery of those securities is made. If the
offsetting purchase price is less than the original sale price, a Fund realizes
a gain; if it is more, a Fund realizes a loss. Conversely, if the offsetting
sale price is more than the original purchase price, a Fund realizes a gain; if
it is less, a Fund realizes a loss. The transaction costs must also be
included in these calculations. There can be no assurance, however, that a
Fund will be able to enter into an offsetting transaction with respect to a
particular futures contract at a particular time. If a Fund is not able to
enter into an offsetting transaction, the Fund will continue to be required to
maintain the margin deposits on the futures contract.

No price is paid by a Fund upon entering into a futures contract.
Instead, at the inception of a futures contract, a Fund is required to deposit
in a segregated account with its custodian, in the name of the futures broker
through whom the transaction was effected, "initial margin" consisting of cash,
U.S. government securities or other liquid, high grade debt obligations, in an
amount generally equal to 10% or less of the contract value. High grade
securities include securities rated "A" or better by an NRSRO. Margin must
also be deposited when writing a call or put option on a futures contract, in
accordance with applicable exchange rules. Unlike margin in securities
transactions, initial margin on futures contracts does not represent a
borrowing, but rather is in the nature of a performance bond or good-faith
deposit that is returned to a Fund at the termination of the transaction if all
contractual obligations have been satisfied. Under certain circumstances, such
as periods of high volatility, a Fund may be required by an exchange to
increase the level of its initial margin payment, and initial margin
requirements might be increased generally in the future by regulatory action.

Subsequent "variation margin" payments are made to and from the futures
broker daily as the value of the futures position varies, a process known as
"marking to market." Variation margin does not involve borrowing, but rather
represents a daily settlement of a Fund's obligations to or from a futures
broker. When a Fund purchases an option on a future, the premium paid plus
transaction costs is all that is at risk. In contrast, when a Fund purchases
or sells a futures contract or writes a call or put option thereon, it is
subject to daily variation margin calls that could be substantial in the event
of adverse price movements. If a Fund has insufficient cash to meet daily
variation margin requirements, it might need to sell securities at a time when
such sales are disadvantageous. Purchasers and sellers of futures positions
and options on futures can enter into offsetting closing transactions by
selling or purchasing, respectively, an instrument identical to the instrument
held or written. Positions in futures and options on futures may be closed
only on an exchange or board of trade that provides a secondary market. The
Funds intend to enter into futures transactions only on exchanges or boards of
trade where there appears to be a liquid secondary market. However, there can
be no assurance that such a market will exist for a particular contract at a
particular time.

Under certain circumstances, futures exchanges may establish daily limits
on the amount that the price of a future or option on a futures contract can
vary from the previous day's settlement price; once that limit is reached, no
trades may be made that day at a price beyond the limit. Daily price limits do
not limit potential losses because prices could move to the daily limit for
several consecutive days with little or no trading, thereby preventing
liquidation of unfavorable positions.

If a Fund were unable to liquidate a futures or option on a futures
contract position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The Fund would
continue to be subject to market risk with respect to the position. In
addition, except in the case of purchased options, the Fund would continue to
be required to make daily variation margin payments and might be required to
maintain the position being hedged by the future or option or to maintain cash
or securities in a segregated account.

Certain characteristics of the futures market might increase the risk that
movements in the prices of futures contracts or options on futures contracts
might not correlate perfectly with movements in the prices of the investments
being hedged. For example, all participants in the futures and options on
futures contracts markets are subject to daily variation margin calls and

<PAGE> 24

might be compelled to liquidate futures or options on futures contracts
positions whose prices are moving unfavorably to avoid being subject to further
calls. These liquidations could increase price volatility of the instruments
and distort the normal price relationship between the futures or options and
the investments being hedged. Also, because initial margin deposit
requirements in the futures markets are less onerous than margin requirements
in the securities markets, there might be increased participation by
speculators in the future markets. This participation also might cause
temporary price distortions. In addition, activities of large traders in both
the futures and securities markets involving arbitrage, "program trading" and
other investment strategies might result in temporary price distortions.

FOREIGN CURRENCIES. The Funds may purchase and sell foreign currency on a
spot basis, and may use currency-related derivatives instruments such as
options on foreign currencies, futures on foreign currencies, options on
futures on foreign currencies and forward currency contracts (i.e., an
obligation to purchase or sell a specific currency at a specified future date,
which may be any fixed number of days from the contract date agreed upon by the
parties, at a price set at the time the contract is entered into). The Funds
may use these instruments for hedging or any other lawful purpose consistent
with its investment objective, including transaction hedging, anticipatory
hedging, cross hedging, proxy hedging, and position hedging. The Funds' use of
currency-related derivative instruments will be directly related to a Fund's
current or anticipated portfolio securities, and the Funds may engage in
transactions in currency-related derivative instruments as a means to protect
against some or all of the effects of adverse changes in foreign currency
exchange rates on its portfolio investments. In general, if the currency in
which a portfolio investment is denominated appreciates against the U.S.
dollar, the dollar value of the security will increase. Conversely, a decline
in the exchange rate of the currency would adversely affect the value of the
portfolio investment expressed in U.S. dollars.

For example, a Fund might use currency-related derivative instruments to
"lock in" a U.S. dollar price for a portfolio investment, thereby enabling the
Fund to protect itself against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and the subject foreign currency
during the period between the date the security is purchased or sold and the
date on which payment is made or received. A Fund also might use
currency-related derivative instruments when the Advisor believes that one
currency may experience a substantial movement against another currency,
including the U.S. dollar, and it may use currency-related derivative
instruments to sell or buy the amount of the former foreign currency,
approximating the value of some or all of the Fund's portfolio securities
denominated in such foreign currency. Alternatively, where appropriate, a Fund
may use currency-related derivative instruments to hedge all or part of its
foreign currency exposure through the use of a basket of currencies or a proxy
currency where such currency or currencies act as an effective proxy for other
currencies. The use of this basket hedging technique may be more efficient and
economical than using separate currency-related derivative instruments for each
currency exposure held by the Fund. Furthermore, currency-related derivative
instruments may be used for short hedges - for example, a Fund may sell a
forward currency contract to lock in the U.S. dollar equivalent of the
proceeds from the anticipated sale of a security denominated in a foreign
currency.

In addition, a Fund may use a currency-related derivative instrument to
shift exposure to foreign currency fluctuations from one foreign country to
another foreign country where the Advisor believes that the foreign currency
exposure purchased will appreciate relative to the U.S. dollar and thus better
protect the Fund against the expected decline in the foreign currency exposure
sold. For example, if a Fund owns securities denominated in a foreign currency
and the Advisor believes that currency will decline, it might enter into a
forward contract to sell an appropriate amount of the first foreign currency,
with payment to be made in a second foreign currency that the Advisor believes
would better protect the Fund against the decline in the first security than
would a U.S. dollar exposure. Hedging transactions that use two foreign
currencies are sometimes referred to as "cross hedges." The effective use of
currency-related derivative instruments by a Fund in a cross hedge is dependent
upon a correlation between price movements of the two currency instruments and
the underlying security involved, and the use of two currencies magnifies the
risk that movements in the price of one instrument may not correlate or may
correlate unfavorably with the foreign currency being hedged. Such a lack of
correlation might occur due to factors unrelated to the value of the currency
instruments used or investments being hedged, such as speculative or other
pressures on the markets in which these instruments are traded.

A Fund also might seek to hedge against changes in the value of a
particular currency when no hedging instruments on that currency are available
or such hedging instruments are more expensive than certain other hedging
instruments. In such cases, the Fund may hedge against price movements in that
currency by entering into transactions using currency-related derivative
instruments on another foreign currency or a basket of currencies, the values
of which the Advisor believes will have a high degree of positive correlation
to the value of the currency being hedged. The risk that movements in the
price of the

<PAGE> 25
hedging instrument will not correlate perfectly with movements in the price of
the currency being hedged is magnified when this strategy is used.

The use of currency-related derivative instruments by a Fund involves a
number of risks. The value of currency-related derivative instruments depends
on the value of the underlying currency relative to the U.S. dollar. Because
foreign currency transactions occurring in the interbank market might involve
substantially larger amounts than those involved in the use of such derivative
instruments, a Fund could be disadvantaged by having to deal in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots (generally consisting of transactions of greater than $1 million).

There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis.
Quotation information generally is representative of very large transactions in
the interbank market and thus might not reflect odd-lot transactions where
rates might be less favorable. The interbank market in foreign currencies is a
global, round-the-clock market. To the extent the U.S. options or futures
markets are closed while the markets for the underlying currencies remain open,
significant price and rate movements might take place in the underlying markets
that cannot be reflected in the markets for the derivative instruments until
they re-open.

Settlement of transactions in currency-related derivative instruments
might be required to take place within the country issuing the underlying
currency. Thus, a Fund might be required to accept or make delivery of the
underlying foreign currency in accordance with any U.S. or foreign regulations
regarding the maintenance of foreign banking arrangements by U.S. residents
and might be required to pay any fees, taxes and charges associated with such
delivery assessed in the issuing country.

When a Fund engages in a transaction in a currency-related derivative
instrument, it relies on the counterparty to make or take delivery of the
underlying currency at the maturity of the contract or otherwise complete the
contract. In other words, the Fund will be subject to the risk that a loss may
be sustained by the Fund as a result of the failure of the counterparty to
comply with the terms of the transaction. The counterparty risk for
exchange-traded instruments is generally less than for privately-negotiated or
OTC currency instruments, since generally a clearing agency, which is the
issuer or counterparty to each instrument, provides a guarantee of performance.
For privately-negotiated instruments, there is no similar clearing agency
guarantee. In all transactions, the Fund will bear the risk that the
counterparty will default, and this could result in a loss of the expected
benefit of the transaction and possibly other losses to the Fund. The Funds
will enter into transactions in currency-related derivative instruments only
with counterparties that the Advisor reasonably believes are capable of
performing under the contract.

Purchasers and sellers of currency-related derivative instruments may
enter into offsetting closing transactions by selling or purchasing,
respectively, an instrument identical to the instrument purchased or sold.
Secondary markets generally do not exist for forward currency contracts, with
the result that closing transactions generally can be made for forward currency
contracts only by negotiating directly with the counterparty. Thus, there can
be no assurance that a Fund will in fact be able to close out a forward
currency contract (or any other currency-related derivative instrument) at a
time and price favorable to a Fund. In addition, in the event of insolvency of
the counterparty, a Fund might be unable to close out a forward currency
contract at any time prior to maturity. In the case of an exchange-traded
instrument, a Fund will be able to close the position out only on an exchange
which provides a market for the instruments. The ability to establish and
close out positions on an exchange is subject to the maintenance of a liquid
market, and there can be no assurance that a liquid market will exist for any
instrument at any specific time. In the case of a privately-negotiated
instrument, a Fund will be able to realize the value of the instrument only by
entering into a closing transaction with the issuer or finding a third party
buyer for the instrument. While a Fund will enter into privately-negotiated
transactions only with entities who are expected to be capable of entering into
a closing transaction, there can be no assurance that a Fund will in fact be
able to enter into such closing transactions.

The precise matching of currency-related derivative instrument amounts and
the value of the portfolio securities involved generally will not be possible
because the value of such securities, measured in the foreign currency, will
change after the currency-related derivative instrument position has been
established. Thus, a Fund might need to purchase or sell foreign currencies in
the spot (cash) market. The projection of short-term currency market movements
is extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain.

<PAGE> 26
Permissible foreign currency options will include options traded primarily
in the OTC market. Although options on foreign currencies are traded primarily
in the OTC market, the Funds will normally purchase or sell OTC options on
foreign currency only when the Advisor reasonably believes a liquid secondary
market will exist for a particular option at any specific time.

There will be a cost to a Fund of engaging in transactions in
currency-related derivative instruments that will vary with factors such as the
contract or currency involved, the length of the contract period and the market
conditions then prevailing. A Fund using these instruments may have to pay a
fee or commission or, in cases where the instruments are entered into on a
principal basis, foreign exchange dealers or other counterparties will realize
a profit based on the difference ("spread") between the prices at which they
are buying and selling various currencies. Thus, for example, a dealer may
offer to sell a foreign currency to a Fund at one rate, while offering a lesser
rate of exchange should the Fund desire to resell that currency to the dealer.

When required by the SEC guidelines, the Funds will set aside permissible
liquid assets in segregated accounts or otherwise cover their respective
potential obligations under currency-related derivatives instruments. To the
extent a Fund's assets are so set aside, they cannot be sold while the
corresponding currency position is open, unless they are replaced with similar
assets. As a result, if a large portion of a Fund's assets are so set aside,
this could impede portfolio management or the Fund's ability to meet redemption
requests or other current obligations.

The Advisor's decision to engage in a transaction in a particular
currency-related derivative instrument will reflect the Advisor's judgment that
the transaction will provide value to the Fund and its shareholders and is
consistent with the Fund's objectives and policies. In making such a judgment,
the Advisor will analyze the benefits and risks of the transaction and weigh
them in the context of the Fund's entire portfolio and objectives. The
effectiveness of any transaction in a currency-related derivative instrument is
dependent on a variety of factors, including the Advisor's skill in analyzing
and predicting currency values and upon a correlation between price movements
of the currency instrument and the underlying security. There might be
imperfect correlation, or even no correlation, between price movements of an
instrument and price movements of investments being hedged. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the markets
in which these instruments are traded. In addition, a Fund's use of
currency-related derivative instruments is always subject to the risk that the
currency in question could be devalued by the foreign government. In such a
case, any long currency positions would decline in value and could adversely
affect any hedging position maintained by the Fund.

The Funds' dealing in currency-related derivative instruments will
generally be limited to the transactions described above. However, the Funds
reserve the right to use currency-related derivatives instruments for different
purposes and under different circumstances. Of course, the Funds are not
required to use currency-related derivatives instruments and will not do so
unless deemed appropriate by the Advisor. It also should be realized that use
of these instruments does not eliminate, or protect against, price movements in
the Funds' securities that are attributable to other (i.e., non-currency
related) causes. Moreover, while the use of currency-related derivatives
instruments may reduce the risk of loss due to a decline in the value of a
hedged currency, at the same time the use of these instruments tends to limit
any potential gain which may result from an increase in the value of that
currency.

SWAP AGREEMENTS. The Funds may enter into interest rate, securities
index, commodity, or security and currency exchange rate swap agreements for
any lawful purpose consistent with each Fund's investment objective, such as
for the purpose of attempting to obtain or preserve a particular desired return
or spread at a lower cost to the Fund than if the Fund had invested directly in
an instrument that yielded that desired return or spread. A Fund also may
enter into swaps in order to protect against an increase in the price of, or
the currency exchange rate applicable to, securities that the Fund anticipates
purchasing at a later date. Swap agreements are two-party contracts entered
into primarily by institutional investors for periods ranging from a few weeks
to several years. In a standard "swap" transaction, two parties agree to
exchange the returns (or differentials in rates of return) earned or realized
on particular predetermined investments or instruments. The gross returns to
be exchanged or "swapped" between the parties are calculated with respect to a
"notional amount," i.e., the return on or increase in value of a particular
dollar amount invested at a particular interest rate, in a particular foreign
currency, or in a "basket" of securities representing a particular index. Swap
agreements may include interest rate caps, under which, in return for a
premium, one party agrees to make payments to the other to the extent that
interest rates exceed a specified rate, or "cap;"

<PAGE> 27

interest rate floors, under which, in return for a premium, one party agrees to
make payments to the other to the extent that interest rates fall below a
specified level, or "floor;" and interest rate collars, under which a party
sells a cap and purchases a floor, or vice versa, in an attempt to protect
itself against interest rate movements exceeding given minimum or maximum
levels.

The "notional amount" of the swap agreement is the agreed upon basis for
calculating the obligations that the parties to a swap agreement have agreed to
exchange. Under most swap agreements entered into by a Fund, the obligations
of the parties would be exchanged on a "net basis." Consequently, a Fund's
obligation (or rights) under a swap agreement will generally be equal only to
the net amount to be paid or received under the agreement based on the relative
values of the positions held by each party to the agreement (the "net amount").
A Fund's obligation under a swap agreement will be accrued daily (offset
against amounts owed to the Fund) and any accrued but unpaid net amounts owed
to a swap counterparty will be covered by the maintenance of a segregated
account consisting of cash, or liquid high grade debt obligations.

Whether a Fund's use of swap agreements will be successful in furthering
its investment objective will depend, in part, on the Advisor's ability to
predict correctly whether certain types of investments are likely to produce
greater returns than other investments. Swap agreements may be considered to
be illiquid. Moreover, a Fund bears the risk of loss of the amount expected to
be received under a swap agreement in the event of the default or bankruptcy of
a swap agreement counterparty. Certain restrictions imposed on the Funds by
the Internal Revenue Code may limit the Funds' ability to use swap agreements.
The swaps market is largely unregulated.

The Funds will enter swap agreements only with counterparties that the
Advisor reasonably believes are capable of performing under the swap
agreements. If there is a default by the other party to such a transaction, a
Fund will have to rely on its contractual remedies (which may be limited by
bankruptcy, insolvency or similar laws) pursuant to the agreements related to
the transaction.

ADDITIONAL DERIVATIVE INSTRUMENTS AND STRATEGIES. In addition to the
derivative instruments and strategies described above and in the Funds'
Prospectus, the Advisor expects to discover additional derivative instruments
and other hedging or risk management techniques. The Advisor may utilize these
new derivative instruments and techniques to the extent that they are
consistent with a Fund's investment objective and permitted by the Fund's
investment limitations, operating policies, and applicable regulatory
authorities.

FOREIGN INVESTMENT COMPANIES

The Funds may invest, to a limited extent, in foreign investment
companies. Some of the countries in which the Funds invest may not permit
direct investment by outside investors. Investments in such countries may
only be permitted through foreign government-approved or -authorized
investment vehicles, which may include other investment companies. In
addition, it may be less expensive and more expedient for a Fund to invest in
a foreign investment company in a country which permits direct foreign
investment. Investing through such vehicles may involve frequent or layered
fees or expenses and may also be subject to limitation under the 1940 Act.
Under the 1940 Act, a Fund may invest up to 10% of its assets in shares of
other investment companies and up to 5% of its assets in any one investment
company as long as the investment does not represent more than 3% of the
voting stock of the acquired investment company. Each Fund does not intend to
invest in such investment companies unless, in the judgment of the Advisor,
the potential benefits of such investments justify the payment of any
associated fees and expenses.

FOREIGN SECURITIES

Investing in foreign securities involves a series of risks not present in
investing in U.S. securities. Many of the foreign securities held by the Fund
will not be registered with the Securities and Exchange Commission (the "SEC"),
nor will the foreign issuers be subject to SEC reporting requirements.
Accordingly, there may be less publicly available information concerning foreign
issuers of securities held by the Funds than is available concerning U.S.
companies. Disclosure and regulatory standards in many respects are less
stringent in emerging market countries than in the U.S. and other major
markets. There also may be a lower level of monitoring and regulation of
emerging markets and the activities of investors in such markets, and
enforcement of existing regulations may be extremely limited. Foreign
companies, and in particular, companies in smaller and emerging capital markets
are not generally subject to uniform accounting, auditing and financial
reporting

<PAGE> 28

standards, or to other regulatory requirements comparable to those applicable
to U.S. companies. The Fund's net investment income and capital gains from
its foreign investment activities may be subject to non-U.S. withholding
taxes.

The costs attributable to foreign investing that the Funds must bear
frequently are higher than those attributable to domestic investing; this is
particularly true with respect to emerging capital markets. For example, the
cost of maintaining custody of foreign securities exceeds custodian costs for
domestic securities, and transaction and settlement costs of foreign investing
also frequently are higher than those attributable to domestic investing.
Costs associated with the exchange of currencies also make foreign investing
more expensive than domestic investing. Investment income on certain foreign
securities in which the Funds may invest may be subject to foreign withholding
or other government taxes that could reduce the return of these securities.
Tax treaties between the United States and foreign countries, however, may
reduce or eliminate the amount of foreign tax to which the Funds would be
subject.

Foreign markets also have different clearance and settlement procedures,
and in certain markets there have been times when settlements have failed to
keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Delays in settlement could result in temporary
periods when assets of a Fund are uninvested and no return is earned thereon.
The inability of a Fund to make intended security purchases due to settlement
problems could cause the Fund to miss investment opportunities. Inability to
dispose of a portfolio security due to settlement problems could result either
in losses to a Fund due to subsequent declines in the value of such portfolio
security or, if the Fund has entered into a contract to sell the security,
could result in possible liability to the purchaser.

HIGH-YIELD (HIGH-RISK) SECURITIES

IN GENERAL. The Funds may invest up to 5% of its net assets in
non-investment grade debt obligations. Non-investment grade debt obligations
(hereinafter referred to as "lower-quality securities") include (i) bonds rated
as low as C by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), or Fitch Investors Service, Inc. ("Fitch"), or CCC by
Duff & Phelps, Inc. ("D&P"); (ii) commercial paper rated as low as C by S&P,
Not Prime by Moody's, or Fitch 4 by Fitch; and (iii) unrated debt obligations
of comparable quality. Lower-quality securities, while generally offering
higher yields than investment grade securities with similar maturities, involve
greater risks, including the possibility of default or bankruptcy. They are
regarded as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal. The special risk considerations in
connection with investments in these securities are discussed below. Refer to
the Appendix for a discussion of securities ratings.

EFFECT OF INTEREST RATES AND ECONOMIC CHANGES. The lower-quality and
comparable unrated security market is relatively new and its growth has
paralleled a long economic expansion. As a result, it is not clear how this
market may withstand a prolonged recession or economic downturn. Such
conditions could severely disrupt the market for and adversely affect the value
of such securities.

All interest-bearing securities typically experience appreciation when
interest rates decline and depreciation when interest rates rise. The market
values of lower-quality and comparable unrated securities tend to reflect
individual corporate developments to a greater extent than do higher rated
securities, which react primarily to fluctuations in the general level of
interest rates. Lower-quality and comparable unrated securities also tend to
be more sensitive to economic conditions than are higher-rated securities. As
a result, they generally involve more credit risks than securities in the
higher-rated categories. During an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower-quality and comparable
unrated securities may experience financial stress and may not have sufficient
revenues to meet their payment obligations. The issuer's ability to service
its debt obligations may also be adversely affected by specific corporate
developments, the issuer's inability to meet specific projected business
forecasts or the unavailability of additional financing. The risk of loss due
to default by an issuer of these securities is significantly greater than
issuers of higher-rated securities because such securities are generally
unsecured and are often subordinated to other creditors. Further, if the
issuer of a lower-quality or comparable unrated security defaulted, a Fund
might incur additional expenses to seek recovery. Periods of economic
uncertainty and changes would also generally result in increased volatility in
the market prices of these securities and thus in a Fund's net asset value.

As previously stated, the value of a lower-quality or comparable unrated
security will decrease in a rising interest rate market and accordingly so will
a Fund's net asset value. If a Fund experiences unexpected net redemptions in
such a market

<PAGE> 29

it may be forced to liquidate a portion of its portfolio securities without
regard to their investment merits. Due to the limited liquidity of
lower-quality and comparable unrated securities (discussed below), a Fund may
be forced to liquidate these securities at a substantial discount. Any such
liquidation would force the Fund to sell the more liquid portion of its
portfolio.

PAYMENT EXPECTATIONS. Lower-quality and comparable unrated securities
typically contain redemption, call or prepayment provisions which permit the
issuer of such securities containing such provisions to, at its discretion,
redeem the securities. During periods of falling interest rates, issuers of
these securities are likely to redeem or prepay the securities and refinance
them with debt securities with a lower interest rate. To the extent an issuer
is able to refinance the securities, or otherwise redeem them, a Fund may have
to replace the securities with a lower yielding security, which would result in
a lower return for the Fund.

CREDIT RATINGS. Credit ratings issued by credit rating agencies are
designed to evaluate the safety of principal and interest payments of rated
securities. They do not, however, evaluate the market value risk of
lower-quality securities and, therefore, may not fully reflect the true risks
of an investment. In addition, credit rating agencies may or may not make
timely changes in a rating to reflect changes in the economy or in the
condition of the issuer that affect the market value of the security.
Consequently, credit ratings are used only as a preliminary indicator of
investment quality. Investments in lower-quality and comparable unrated
obligations will be more dependent on the Advisor's credit analysis than would
be the case with investments in investment-grade debt obligations. The Advisor
employs its own credit research and analysis, which includes a study of
existing debt, capital structure, ability to service debt and to pay dividends,
the issuer's sensitivity to economic conditions, its operating history and the
current trend of earnings. The Advisor continually monitors the investments in
each Fund's portfolio and carefully evaluates whether to dispose of or to
retain lower-quality and comparable unrated securities whose credit ratings or
credit quality may have changed.

LIQUIDITY AND VALUATION. A Fund may have difficulty disposing of certain
lower-quality and comparable unrated securities because there may be a thin
trading market for such securities. Because not all dealers maintain markets
in all lower-quality and comparable unrated securities, there is no established
retail secondary market for many of these securities. The Funds anticipate
that such securities could be sold only to a limited number of dealers or
institutional investors. To the extent a secondary trading market does exist,
it is generally not as liquid as the secondary market for higher-rated
securities. The lack of a liquid secondary market may have an adverse impact
on the market price of the security. As a result, a Fund's asset value and
ability to dispose of particular securities, when necessary to meet the Fund's
liquidity needs or in response to a specific economic event, may be impacted.
The lack of a liquid secondary market for certain securities may also make it
more difficult for a Fund to obtain accurate market quotations for purposes of
valuing the Fund's portfolio. Market quotations are generally available on
many lower-quality and comparable unrated issues only from a limited number of
dealers and may not necessarily represent firm bids of such dealers or prices
for actual sales. During periods of thin trading, the spread between bid and
asked prices is likely to increase significantly. In addition, adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of lower-quality and comparable
unrated securities, especially in a thinly traded market.

LEGISLATION. Legislation may be adopted, and from time to time designed
to limit the use of certain lower-quality and comparable unrated securities by
certain issuers. It is anticipated that if additional legislation is enacted
or proposed, it could have a material affect on the value of these securities
and the existence of a secondary trading market for the securities.

ILLIQUID SECURITIES

The Funds may invest in illiquid securities (i.e., securities that are not
readily marketable). However, a Fund will not acquire illiquid securities if,
as a result, they would comprise more than 15% of the value of the Fund's net
assets (or such other amounts as may be permitted under the 1940 Act).
However, as a matter of internal policy, the Advisor intends to limit each
Fund's investments in illiquid securities to 10% of its net assets.

The Board of Directors of each Fund, or its delegate, has the ultimate
authority to determine, to the extent permissible under the federal securities
laws, which securities are illiquid for purposes of this limitation. Certain
securities exempt from registration or issued in transactions exempt from
registration under the Securities Act of 1933, as amended (the "Securities
Act"), such as securities that may be resold to institutional investors under
Rule 144A under the Securities Act and Section 4(2) commercial paper, may be
considered liquid under guidelines adopted by the Funds' Board of Directors.

<PAGE> 30
The Board of Directors of each Fund has delegated to Strong Capital
Management, Inc. (the "Advisor") the day-to-day determination of the liquidity
of a security, although it has retained oversight and ultimate responsibility
for such determinations. The Board of Directors has directed the Advisor to
look to such factors as (i) the frequency of trades or quotes for a security,
(ii) the number of dealers willing to purchase or sell the security and number
of potential buyers, (iii) the willingness of dealers to undertake to make a
market in the security, (iv) the nature of the security and nature of the
marketplace trades, such as the time needed to dispose of the security, the
method of soliciting offers, and the mechanics of transfer, (v) the likelihood
that the security's marketability will be maintained throughout the anticipated
holding period, and (vi) any other relevant factors. The Advisor may determine
4(2) commercial paper to be liquid if (i) the 4(2) commercial paper is not
traded flat or in default as to principal and interest, (ii) the 4(2)
commercial paper is rated in one of the two highest rating categories by at
least two nationally rated statistical rating organizations ("NRSRO"), or if
only one NRSRO rates the security, by that NRSRO, or is determined by the
Advisor to be of equivalent quality, and (iii) the Advisor considers the
trading market for the specific security taking into account all relevant
factors. With respect to a Fund's foreign holdings, a foreign security may be
considered liquid by the Advisor (despite its restricted nature under the
Securities Act) if the security can be freely traded in a foreign securities
market and all the facts and circumstances support a finding of liquidity.

Restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which a registration
statement is in effect under the Securities Act. Where registration is
required, a Fund may be obligated to pay all or part of the registration
expenses and a considerable period may elapse between the time of the decision
to sell and the time the Fund may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, a Fund might obtain a less favorable price than
prevailed when it decided to sell. Restricted securities will be priced at
fair value as determined in good faith by the Board of Directors of the Funds.
If through the appreciation of restricted securities or the depreciation of
unrestricted securities, a Fund should be in a position where more than 15% of
the value of its net assets are invested in illiquid securities, including
restricted securities which are not readily marketable (except for 144A
Securities and 4(2) commercial paper deemed to be liquid by the Advisor), the
Fund will take such steps as is deemed advisable, if any, to protect liquidity.

Each Fund may sell over-the-counter ("OTC") options and, in connection
therewith, segregate assets or cover its obligations with respect to OTC
options written by the Fund. The assets used as cover for OTC options written
by the Fund will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.

LENDING OF PORTFOLIO SECURITIES

Each Fund is authorized to lend up to 33 1/3% of the total value of its
portfolio securities to broker-dealers or institutional investors that the
Advisor deems qualified, but only when the borrower maintains with the Fund's
custodian bank collateral either in cash or money market instruments in an
amount at least equal to the market value of the securities loaned, plus
accrued interest and dividends, determined on a daily basis and adjusted
accordingly. Although the Funds are authorized to lend, the Funds do not
presently intend to engage in lending. In determining whether to lend
securities to a particular broker-dealer or institutional investor, the Advisor
will consider, and during the period of the loan will monitor, all relevant
facts and circumstances, including the creditworthiness of the borrower. The
Funds will retain authority to terminate any loans at any time. The Funds may
pay reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or money market
instruments held as collateral to the borrower or placing broker. The Funds
will receive reasonable interest on the loan or a flat fee from the borrower
and amounts equivalent to any dividends, interest or other distributions on the
securities loaned. The Funds will retain record ownership of loaned securities
to exercise beneficial rights, such as voting and subscription rights and
rights to dividends, interest or other distributions, when retaining such
rights is considered to be in a Fund's interest.

<PAGE> 31

MORTGAGE- AND ASSET-BACKED SECURITIES

Mortgage-backed securities represent direct or indirect participations in,
or are secured by and payable from, mortgage loans secured by real property,
and include single- and multi-class pass-through securities and collateralized
mortgage obligations. Such securities may be issued or guaranteed by U.S.
government agencies or instrumentalities, such as the Government National
Mortgage Association and the Federal National Mortgage Association, or by
private issuers, generally originators and investors in mortgage loans,
including savings associations, mortgage bankers, commercial banks, investment
bankers, and special purpose entities (collectively, "private lenders").
Mortgage-backed securities issued by private lenders may be supported by pools
of mortgage loans or other mortgage-backed securities that are guaranteed,
directly or indirectly, by the U.S. government or one of its agencies or
instrumentalities, or they may be issued without any governmental guarantee of
the underlying mortgage assets but with some form of non-governmental credit
enhancement.

Asset-backed securities have structural characteristics similar to
mortgage-backed securities. Asset-backed debt obligations represent direct or
indirect participation in, or secured by and payable from, assets such as motor
vehicle installment sales contracts, other installment loan contracts, home
equity loans, leases of various types of property, and receivables from credit
card or other revolving credit arrangements. The credit quality of most
asset-backed securities depends primarily on the credit quality of the assets
underlying such securities, how well the entity issuing the security is
insulated from the credit risk of the originator or any other affiliated
entities, and the amount and quality of any credit enhancement of the
securities. Payments or distributions of principal and interest on
asset-backed debt obligations may be supported by non-governmental credit
enhancements including letters of credit, reserve funds, overcollateralization,
and guarantees by third parties. The market for privately issued asset-backed
debt obligations is smaller and less liquid than the market for government
sponsored mortgage-backed securities.

The rate of principal payment on mortgage- and asset-backed securities
generally depends on the rate of principal payments received on the underlying
assets which in turn may be affected by a variety of economic and other
factors. As a result, the yield on any mortgage- and asset-backed security is
difficult to predict with precision and actual yield to maturity may be more or
less than the anticipated yield to maturity. The yield characteristics of
mortgage- and asset-backed securities differ from those of traditional debt
securities. Among the principal differences are that interest and principal
payments are made more frequently on mortgage-and asset-backed securities,
usually monthly, and that principal may be prepaid at any time because the
underlying mortgage loans or other assets generally may be prepaid at any time.
As a result, if a Fund purchases these securities at a premium, a prepayment
rate that is faster than expected will reduce yield to maturity, while a
prepayment rate that is slower than expected will have the opposite effect of
increasing the yield to maturity. Conversely, if a Fund purchases these
securities at a discount, a prepayment rate that is faster than expected will
increase yield to maturity, while a prepayment rate that is slower than
expected will reduce yield to maturity. Amounts available for reinvestment by
a Fund are likely to be greater during a period of declining interest rates
and, as a result, are likely to be reinvested at lower interest rates than
during a period of rising interest rates. Accelerated prepayments on
securities purchased by a Fund at a premium also impose a risk of loss of
principal because the premium may not have been fully amortized at the time the
principal is prepaid in full. The market for privately issued mortgage- and
asset-backed securities is smaller and less liquid than the market for
government-sponsored mortgage-backed securities.

While many mortgage- and asset-backed securities are issued with only one
class of security, many are issued in more than one class, each with different
payment terms. Multiple class mortgage- and asset-backed securities are issued
for two main reasons. First, multiple classes may be used as a method of
providing credit support. This is accomplished typically through creation of
one or more classes whose right to payments on the security is made subordinate
to the right to such payments of the remaining class or classes. Second,
multiple classes may permit the issuance of securities with payment terms,
interest rates, or other characteristics differing both from those of each
other and from those of the underlying assets. Examples include so-called
"strips" (mortgage - and asset-backed securities entitling the holder to
disproportionate interests with respect to the allocation of interest and
principal of the assets backing the security), and securities with class or
classes having characteristics which mimic the characteristics of non-mortgage-
or asset-backed securities, such as floating interest rates (i.e., interest
rates which adjust as a specified benchmark changes) or scheduled amortization
of principal.

The Funds may invest in stripped mortgage- or asset-backed securities,
which receive differing proportions of the interest and principal payments from
the underlying assets. The market value of such securities generally is more
sensitive to changes in prepayment and interest rates than is the case with
traditional mortgage- and asset-backed securities, and in some

<PAGE> 32

cases such market value may be extremely volatile. With respect to certain
stripped securities, such as interest only and principal only classes, a rate
of prepayment that is faster or slower than anticipated may result in a Fund
failing to recover all or a portion of its investment, even though the
securities are rated investment grade.

Mortgage- and asset-backed securities backed by assets, other than as
described above, or in which the payment streams on the underlying assets are
allocated in a manner different than those described above may be issued in the
future. A Fund may invest in such securities if such investment is otherwise
consistent with its investment objectives and policies and with the investment
restrictions of a Fund.

MORTGAGE DOLLAR ROLLS AND REVERSE REPURCHASE AGREEMENTS

The Funds may engage in reverse repurchase agreements to facilitate
portfolio liquidity, a practice common in the mutual fund industry, or for
arbitrage transactions discussed below. In a reverse repurchase agreement, a
Fund would sell a security and enter into an agreement to repurchase the
security at a specified future date and price. The Fund generally retains the
right to interest and principal payments on the security. Since the Fund
receives cash upon entering into a reverse repurchase agreement, it may be
considered a borrowing. (See "Borrowing".) When required by guidelines of the
SEC, a Fund will set aside permissible liquid assets in a segregated account to
secure its obligations to repurchase the security.

Each Fund may also enter into mortgage dollar rolls, in which the Fund
would sell mortgage-backed securities for delivery in the current month and
simultaneously contract to purchase substantially similar securities on a
specified future date. While a Fund would forego principal and interest paid
on the mortgage-backed securities during the roll period, the Fund would be
compensated by the difference between the current sales price and the lower
price for the future purchase as well as by any interest earned on the proceeds
of the initial sale. The Fund also could be compensated through the receipt of
fee income equivalent to a lower forward price. At the time the Fund would
enter into a mortgage dollar roll, it would set aside permissible liquid assets
in a segregated account to secure its obligation for the forward commitment to
buy mortgage-backed securities. Mortgage dollar roll transactions may be
considered a borrowing by the Funds. (See "Borrowing".)

The mortgage dollar rolls and reverse repurchase agreements entered into
by the Funds may be used as arbitrage transactions in which a Fund will
maintain an offsetting position in investment grade debt obligations or
repurchase agreements that mature on or before the settlement date on the
related mortgage dollar roll or reverse repurchase agreements. Since a Fund
will receive interest on the securities or repurchase agreements in which it
invests the transaction proceeds, such transactions may involve leverage.
However, since such securities or repurchase agreements will be high quality
and will mature on or before the settlement date of the mortgage dollar roll or
reverse repurchase agreement, the Advisor believes that such arbitrage
transactions do not present the risks to the Funds that are associated with
other types of leverage.

REPURCHASE AGREEMENTS

Each Fund may enter into repurchase agreements with certain banks or
non-bank dealers. In a repurchase agreement, a Fund buys a security at one
price, and at the time of sale, the seller agrees to repurchase the obligation
at a mutually agreed upon time and price (usually within seven days). The
repurchase agreement, thereby, determines the yield during the purchaser's
holding period, while the seller's obligation to repurchase is secured by the
value of the underlying security. The Advisor will monitor, on an ongoing
basis, the value of the underlying securities to ensure that the value always
equals or exceeds the repurchase price plus accrued interest. Repurchase
agreements could involve certain risks in the event of a default or insolvency
of the other party to the agreement, including possible delays or restrictions
upon a Fund's ability to dispose of the underlying securities. Although no
definitive creditworthiness criteria are used, the Advisor reviews the
creditworthiness of the banks and non-bank dealers with which the Funds enter
into repurchase agreements to evaluate those risks. A Fund may, under certain
circumstances, deem repurchase agreements collateralized by U.S. government
securities to be investments in U.S. government securities.

SHORT SALES AGAINST THE BOX

Each Fund may sell securities short against the box to hedge unrealized
gains on portfolio securities. Selling securities short against the box
involves selling a security that a Fund owns or has the right to acquire, for
delivery at a specified

<PAGE> 33

date in the future. If a Fund sells securities short against the box, it may
protect unrealized gains, but will lose the opportunity to profit on such
securities if the price rises.

SHORT-TERM CASH MANAGEMENT

From time to time the Advisor may determine to use a non-affiliated money
market fund to manage some or all of the Fund's short-term cash positions. The
Advisor will do this only when the Advisor reasonably believes that this action
will result in a return to the Fund that is equal to, or better than, the
return that could be achieved by direct investments in money market
instruments. In such cases, to ensure no double charging of fees, the Advisor
will credit any management or other fees of the non-affiliated money market
fund against the Advisor's management fee.

SMALL COMPANIES

The Funds may invest a substantial portion of their assets in small
companies. While smaller companies generally have the potential for rapid
growth, investments in smaller companies often involve greater risks than
investments in larger, more established companies because smaller companies
may lack the management experience, financial resources, product
diversification, and competitive strengths of larger companies. In addition,
in many instances the securities of smaller companies are traded only
over-the-counter or on a regional securities exchange, and the frequency and
volume of their trading is substantially less than is typical of larger
companies. Therefore, the securities of smaller companies may be subject to
greater and more abrupt price fluctuations. When making large sales, the Fund
may have to sell portfolio holdings at discounts from quoted prices or may
have to make a series of small sales over an extended period of time due to
the trading volume of smaller company securities. Investors should be aware
that, based on the foregoing factors, an investment in the Fund may be subject
to greater price fluctuations than an investment in a fund that invests
primarily in larger, more established companies. The Advisor's research
efforts may also play a greater role in selecting securities for the Fund than
in a fund that invests in larger, more established companies.

TEMPORARY DEFENSIVE POSITION

When the Advisor determines that market conditions warrant a temporary
defensive position, the Opportunity and Value Funds may invest up to 30% of
their net assets, the Common Stock Fund may invest up to 20% of its net assets,
and the Growth, Discovery, and Small Cap Funds may invest without limitation in
cash and short-term fixed income securities, including U.S. government
securities, commercial paper, banker's acceptances, certificates of deposit,
and time deposits.

WARRANTS

Each Fund may acquire warrants. Warrants are securities giving the holder
the right, but not the obligation, to buy the stock of an issuer at a given
price (generally higher than the value of the stock at the time of issuance)
during a specified period or perpetually. Warrants may be acquired separately
or in connection with the acquisition of securities. A Fund will not purchase
warrants, valued at the lower of cost or market value, in excess of 5% of the
Fund's net assets. Included in that amount, but not to exceed 2% of the Fund's
net assets, may be warrants that are not listed on any stock exchange.
Warrants acquired by a Fund in units or attached to securities are not subject
to these restrictions. Warrants do not carry with them the right to dividends
or voting rights with respect to the securities that they entitle their holder
to purchase, and they do not represent any rights in the assets of the issuer.
As a result, warrants may be considered to have more speculative
characteristics than certain other types of investments. In addition, the
value of a warrant does not necessarily change with the value of the underlying
securities, and a warrant ceases to have value if it is not exercised prior to
its expiration date.

WHEN-ISSUED SECURITIES

Each Fund may from time to time purchase securities on a "when-issued"
basis. The price of debt obligations purchased on a when-issued basis, which
may be expressed in yield terms, generally is fixed at the time the commitment
to purchase is made, but delivery and payment for the securities take place at
a later date. Normally, the settlement date occurs within 45 days of the
purchase although is some cases settlement may take longer. During the period
between the purchase and settlement, no payment is made by a Fund to the issuer
and no interest on the debt obligations accrues to the Fund. Forward
commitments involve a risk of loss if the value of the security to be purchased
declines prior to the settlement date, which risk is

<PAGE> 34

in addition to the risk of decline in value of the Fund's other assets. While
when-issued securities may be sold prior to the settlement date, the Funds
intend to purchase such securities with the purpose of actually acquiring them
unless a sale appears desirable for investment reasons. At the time a Fund
makes the commitment to purchase a security on a when-issued basis, it will
record the transaction and reflect the value of the security in determining its
net asset value. The Funds do not believe that their net asset values will be
adversely affected by purchases of securities on a when-issued basis.

To the extent required by the SEC, the Funds will maintain cash and
marketable securities equal in value to commitments for when-issued securities.
Such segregated securities either will mature or, if necessary, be sold on or
before the settlement date. When the time comes to pay for when-issued
securities, a Fund will meet its obligations from then-available cash flow,
sale of the securities held in the separate account, described above, sale of
other securities or, although it would not normally expect to do so, from the
sale of the when-issued securities themselves (which may have a market value
greater or less than the Fund's payment obligation).

ZERO-COUPON, STEP-COUPON AND PAY-IN-KIND SECURITIES

The Funds may invest in zero-coupon, step-coupon, and pay-in-kind
securities. These securities are debt securities that do not make regular cash
interest payments. Zero-coupon and step-coupon securities are sold at a deep
discount to their face value. Pay-in-kind securities pay interest through the
issuance of additional securities. Because such securities do not pay current
cash income, the price of these securities can be volatile when interest rates
fluctuate. While these securities do not pay current cash income, federal
income tax law requires the holders of zero-coupon, step-coupon, and
pay-in-kind securities to include in income each year the portion of the
original issue discount (or deemed discount) and other non-cash income on such
securities accruing that year. In order to continue to qualify as a "regulated
investment company" under the Internal Revenue Code and avoid a certain excise
tax, each Fund may be required to distribute a portion of such discount and
income and may be required to dispose of other portfolio securities, which may
occur in periods of adverse market prices, in order to generate cash to meet
these distribution requirements.

DIRECTORS AND OFFICERS OF THE FUNDS

Directors and officers of the Funds, together with information as to their
principal business occupations during the last five years, and other
information are shown below. Each director who is deemed an "interested
person," as defined in the 1940 Act, is indicated by an asterisk (*). Each
officer and director holds the same position with the 25 registered open-end
management investment companies consisting of 36 mutual funds, which are
managed by the Advisor (the "Strong Funds"). The Strong Funds, in the
aggregate, pays each Director who is not a director, officer, or employee of
the Advisor, or any affiliated company (a "disinterested director") an annual
fee of $50,000, plus $100 per Board meeting for each Strong Fund. In addition,
each disinterested director is reimbursed by the Strong Funds for travel and
other expenses incurred in connection with attendance at such meetings. Other
officers and directors of the Strong Funds receive no compensation or expense
reimbursement from the Strong Funds.

*RICHARD S. STRONG (DOB 5/12/42), Chairman of the Board and Director of the
Funds.

Prior to August 1985, Mr. Strong was Chief Executive Officer of the
Advisor, which he founded in 1974. Since August 1985, Mr. Strong has been a
Security Analyst and Portfolio Manager of the Advisor. In October 1991, Mr.
Strong also became the Chairman of the Advisor. Mr. Strong is a director of
the Advisor. Mr. Strong has been in the investment management business since
1967. Mr. Strong has served the Funds as follows:

DIRECTOR - Opportunity Fund (since December 1985); Growth Fund (since
October 1993); Common Stock Fund (since December 1989); Discovery Fund
(since December 1987); Small Cap Fund (since November 1995); and Value
Fund (since November 1995).

CHAIRMAN - Opportunity Fund (since December 1985); Growth Fund (since
October 1993); Common Stock Fund (since December 1989); Discovery Fund
(since December 1987); Small Cap Fund (since November 1995); and Value
Fund (since November 1995).

<PAGE> 35

MARVIN E. NEVINS (DOB 7/9/18), Director of the Funds.

Private Investor. From 1945 to 1980, Mr. Nevins was Chairman of Wisconsin
Centrifugal Inc., a foundry. From July 1983 to December 1986, he was Chairman
of General Casting Corp., Waukesha, Wisconsin, a foundry. Mr. Nevins is a
former Chairman of the Wisconsin Association of Manufacturers & Commerce. He
was also a regent of the Milwaukee School of Engineering and a member of the
Board of Trustees of the Medical College of Wisconsin. Mr. Nevins has served
the Funds as follows:

WILLIE D. DAVIS (DOB 7/24/34), Director of the Funds.

Mr. Davis has been director of Alliance Bank since 1980, Sara Lee
Corporation (a food/consumer products company) since 1983, KMart Corporation (a
discount consumer products company) since 1985, YMCA Metropolitan - Los Angeles
since 1985, Dow Chemical Company since 1988, MGM Grand, Inc. (an
entertainment/hotel company) since 1990, WICOR, Inc. (a utility company) since
1990, Johnson Controls, Inc. (an industrial company) since 1992, L.A. Gear (a
footwear/sportswear company) since 1992, and Rally's Hamburger, Inc. since
1994. Mr. Davis has been a trustee of the University of Chicago since 1980,
Marquette University since 1988, and Occidental College since 1990. Since
1977, Mr. Davis has been President and Chief Executive Officer of All Pro
Broadcasting, Inc. Mr. Davis was a director of the Fireman's Fund (an
insurance company) from 1975 until 1990. Mr. Davis has served the Funds as
follows:

DIRECTOR - Opportunity Fund (since July 1994); Growth Fund (since July
1994); Common Stock Fund (since July 1994); Discovery Fund (since July
1994) ; Small Cap Fund (since November 1995); and Value Fund (since
November 1995).

*JOHN DRAGISIC (DOB 11/26/40), President and Director of the Funds.

Mr. Dragisic has been President of the Advisor since October 1995 and a
director of the Advisor, Holdings, and Distributor since July 1994. Mr.
Dragisic previously served as a director of Opportunity, Growth, Common Stock,
and Discovery Funds between 1991 and 1994, and as Vice Chairman of the Funds
from July 1994 until October 1995. Mr. Dragisic was the President and Chief
Executive Officer of Grunau Company, Inc. (a mechanical contracting and
engineering firm), Milwaukee, Wisconsin from 1987 until July 1994. From 1981
to 1987, he was an Executive Vice President with Grunau Company, Inc. From
1969 until 1973, Mr. Dragisic worked for the InterAmerican Development Bank.
Mr. Dragisic received his Ph.D. in Economics in 1971 from the University of
Wisconsin - Madison and his B.A. degree in Economics in 1962 from Lake Forest
College. Mr. Dragisic has served the Funds as follows:

DIRECTOR - Opportunity Fund(since April 1995); Growth Fund (since April
1995); Common Stock Fund (since April 1995); Discovery Fund (since April
1995); Small Cap Fund (since November 1995); and Value Fund (since
November 1995).

VICE CHAIRMAN - Opportunity Fund (July 1994 through October 1995); Growth
Fund (July 1994 through October 1995); Common Stock Fund (July 1994
through October 1995); Discovery Fund (July 1994 through October 1995).

PRESIDENT - Opportunity Fund (since November 1995); Growth Fund (since
November 1995); Common Stock Fund (since November 1995); Discovery Fund
(since November 1995); Small Cap Fund (since November 1995); and Value
Fund (since November 1995).

<PAGE> 36

STANLEY KRITZIK (DOB 1/9/30), Director of the Funds.

Mr. Kritzik has been a Partner of Metropolitan Associates since 1962, a
Director of Aurora Health Care since 1987, and Health Network Ventures, Inc.
since 1992. Mr. Kritzik has served the Funds as follows:

DIRECTOR - Opportunity Fund (since April 1995); Growth Fund (since April
1995); Common Stock Fund (since April 1995); Discovery Fund (since April
1995); Small Cap Fund (since November 1995); and Value Fund (since
November 1995).

WILLIAM F. VOGT (DOB 7/19/47), Director of the Funds.

Mr. Vogt has been the President of Vogt Management Consulting, Inc. since
1990. From 1982 until 1990, he served as Executive Director of University
Physicians of the University of Colorado. Mr. Vogt is the Past President of
the Medical Group Management Association and a Fellow of the American College
of Medical Practice Executives. He has served the Funds as follows:

DIRECTOR - Opportunity Fund (since April 1995); Growth Fund (since April
1995); Common Stock Fund (since April 1995); Discovery Fund (since April
1995); Small Cap Fund (since November 1995); and Value Fund (since
November 1995).

LAWRENCE A. TOTSKY (DOB 5/6/59), C.P.A., Vice President of the Funds.

Mr. Totsky has been Senior Vice President of the Advisor since September
1994. Mr. Totsky served as Vice President of the Advisor from December 1992 to
September 1994. Mr. Totsky acted as the Advisor's Manager of Shareholder
Accounting and Compliance from June 1987 to June 1991 when he was named
Director of Mutual Fund Administration. Mr. Totsky has served the Funds as
follows:

VICE PRESIDENT - Opportunity Fund (since May 1993); Common Stock Fund
(since May 1993); Growth Fund (since October 1993); Discovery Fund
(since April 1993); Small Cap Fund (since November 1995); and Value Fund
(since November 1995).

THOMAS P. LEMKE (DOB 7/30/54), Vice President of the Funds.

Mr. Lemke has been Senior Vice President, Secretary, and General Counsel
of the Advisor since September 1994. For two years prior to joining the
Advisor, Mr. Lemke acted as Resident Counsel for Funds Management at J.P.
Morgan & Co., Inc. From February 1989 until April 1992, Mr. Lemke acted as
Associate General Counsel to Sanford C. Bernstein Co., Inc. For two years
prior to that, Mr. Lemke was Of Counsel at the Washington, D.C. law firm of Tew
Jorden & Schulte, a successor of Finley, Kumble Wagner. From August 1979 until
December 1986, Mr. Lemke worked at the Securities and Exchange Commission, most
notably as the Chief Counsel to the Division of Investment Management (November
1984 - December 1986), and as Special Counsel to the Office of Insurance
Products, Division of Investment Management (April 1982 - October 1984). Mr.
Lemke has served the Funds as follows:

VICE PRESIDENT - Opportunity Fund (since October 1994); Growth Fund
(since October 1994); Common Stock Fund (since October 1994); Discovery
Fund (since October 1994)
; Small Cap Fund (since November 1995); and Value Fund (since November
1995).

STEPHEN J. SHENKENBERG (DOB 6/14/58), Vice President of the Funds.

Mr. Shenkenberg has been an Associate Counsel to the Advisor since
December 1992. From June 1987 until December 1992, Mr. Shenkenberg was an
attorney for Godfrey & Kahn, S.C., a Milwaukee law firm. Mr. Shenkenberg has
served the Funds as follows:

<PAGE> 37

VICE PRESIDENT - Opportunity Fund (since April 1996); Growth Fund (since
April 1996); Common Stock Fund (since April 1996); Discovery Fund (since
April 1996); Small Cap Fund (since April 1996); and Value Fund (since
April 1996).

JOHN S. WEITZER (DOB 10/31/67), Vice President of the Funds.

Mr. Weitzer has been an Associate Counsel to the Advisor since July 1993.
Mr. Weitzer has served the Funds as follows:

VICE PRESIDENT - Opportunity Fund (since January 1996); Growth Fund
(since January 1996); Common Stock Fund (since January 1996); Discovery
Fund (since January 1996); Small Cap Fund (since January 1996), and Value
Fund (since 1996).

Except for Messrs. Nevins, Davis, Kritzik and Vogt, the address of all of
the above persons is P.O. Box 2936, Milwaukee, Wisconsin 53201. Mr. Nevins'
address is 6075 Pelican Bay Boulevard, Naples, Florida 33963. Mr. Davis'
address is 161 North La Brea, Inglewood, California 90301, Mr. Kritzik's
address is 1123 North Astor Street, P.O. Box 92547, Milwaukee, Wisconsin
53202-0547. Mr. Vogt's address is 2830 East Third Avenue, Denver, Colorado
80206.

In addition to the positions listed above, Mr. Strong has been Chairman
and a director of Strong Holdings, Inc., a Wisconsin corporation and subsidiary
of the Advisor ("Holdings") since October 1993; Chairman and a director of the
Funds' underwriter, Strong Funds Distributors, Inc., a Wisconsin Corporation
and subsidiary of Holdings ("Distributor") since October 1993; Chairman and a
director of Heritage Reserve Development Corporation, a Wisconsin corporation
and subsidiary of Holdings ("Heritage") since January 1994; Chairman and a
director of Strong Service Corporation, a Wisconsin corporation and subsidiary
of Holdings ("SSC") since November 1995; Chairman and a member of the Managing
Board of Fussville Real Estate Holdings L.L.C., a Wisconsin Limited Liability
Company and subsidiary of the Advisor ("Real Estate Holdings") since February
1994; Chairman and a member of the Managing Board of Fussville Development
L.L.C., a Wisconsin Limited Liability Company and subsidiary of the Advisor and
Real Estate Holdings ("Fussville Development") since February 1994; and
Chairman and a member of the Managing Board of Sherwood Development L.L.C., a
Wisconsin Limited Liability Company and subsidiary of the Advisor ("Sherwood")
since December 1995 and April 1995, respectively. In addition to the positions
listed above, Mr. Dragisic has been a director of Distributors since July 1994;
President and a director of Holdings since December 1995 and July 1994,
respectively; President and a director of SSC since November 1995; Vice
Chairman and a director of Heritage since August 1994; Vice Chairman and a
member of the Managing Board of Fussville Development since December 1995 and
August 1994, respectively; Vice Chairman and a member of the Managing Board of
Real Estate Holdings since December 1995 and August 1994, respectively; and
Vice Chairman and a member of the Managing Board of Sherwood since December
1995 and April 1995, respectively. In addition to the positions listed above,
Mr. Lemke has been President of Distributors since December 1995; Vice
President of Holdings since December 1995; Vice President of SSC since November
1995; Vice President of Heritage since December 1995; Vice President of
Fussville Development since December 1995; Vice President of Real Estate
Holdings since December 1995; and Vice President of Sherwood since December
1995. In addition to the positions listed above, Mr. Shenkenberg has been Vice
President and Secretary of Distributors since December 1995; Secretary of SSC
since November 1995; and Secretary of Holdings, Heritage, Fussville
Development, Real Estate Holdings, and Sherwood since December 1995.

As of October 7, 1996, the officers and directors of the Funds in the
aggregate beneficially owned less than 1% of each Fund's then outstanding
shares.

PRINCIPAL SHAREHOLDERS

As of September 30, 1996 the following persons owned of record or are
known by the Funds to own of record or beneficially, more than 5% of the listed
Fund's outstanding shares:

<PAGE> 38

NAME AND ADDRESS FUND/SHARES PERCENT OF CLASS
---------------- ------------ ----------------
<S> <C> <C>
OPPORTUNITY FUND
----------------

Charles Schwab & Co., Inc. 11,373,065.105 24.45%
For Exclusive Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104

GROWTH FUND
-----------

Charles Schwab & Co., Inc. 14,847,160.594 22.45%

National Financial Service Corp. 3,404,120.811 5.15%
FBO Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908

COMMON FUND
-----------

Charles Schwab & Co., Inc. 5,496,126.327 9.94%

DISCOVERY FUND
---------------

Charles Schwab & Co., Inc. 4,659,246.521 14.46%

Lincoln National Life Insurance 1,680,983.093 5.22%
P.O. Box 1110
Fort Wayne, IN 46801

VALUE FUND
----------

Charles Schwab & Co., Inc. 858,923.479 20.30%

SMALL CAP FUND
--------------

Charles Schwab & Co., Inc. 1,625,954.382 17.35%
</TABLE>

INVESTMENT ADVISOR, SUBADVISOR, AND DISTRIBUTOR

The Advisor to the Funds is Strong Capital Management, Inc. Mr. Richard
S. Strong controls the Advisor. Mr. Strong is the Chairman and a director of
the Advisor, Mr. Dragisic is the President and a director of the Advisor, Mr.
Totsky is a Senior Vice President of the Advisor, Mr. Lemke is a Senior Vice
President, Secretary, and General Counsel of the Advisor, Mr. Shenkenberg is
Vice President, Assistant Secretary, and Associate Counsel of the Advisor, and
Mr. Weitzer is Associate Counsel of the Advisor. A brief description of each
Fund's investment advisory agreement ("Advisory Agreement") is set forth in the
Prospectus under "About the Funds - Management."

The Advisory Agreements for the Opportunity, Growth, Common Stock, and
Discovery Funds, dated May 1, 1995, were last approved by shareholders at the
annual meeting of shareholders held on April 13, 1995. The Small Cap and Value
Funds' Advisory Agreements dated December 28, 1995 was last approved by each
Fund's sole shareholder on December 28, 1995, and will remain in effect as to
each Fund for a period of two years. The Advisory Agreement is required to be
approved

<PAGE> 39
annually by either the Board of Directors of the Fund or by vote of a majority
of the Fund's outstanding voting securities (as defined in the 1940 Act). In
either case, each annual renewal must be approved by the vote of a majority of
the Fund's directors who are not parties to the Advisory Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval. Each Advisory Agreement is terminable,
without penalty, on 60 days' written notice by the Board of Directors of the
Fund, by vote of a majority of the Fund's outstanding voting securities, or by
the Advisor, and will terminate automatically in the event of its assignment.

Under the terms of each Advisory Agreement, the Advisor manages the Fund's
investments subject to the supervision of the Fund's Board of Directors. The
Advisor is responsible for investment decisions and supplies investment
research and portfolio management. In addition, the Advisory Agreement between
the Advisor and the Value Fund authorizes the Advisor to delegate its duties
under that agreement to another Advisor. As discussed below, the Advisor has
retained Sloate, Weisman, Murray & Company, Inc. as Subadvisor with respect to
the Value Fund's investments. At its expense, the Advisor provides office
space and all necessary office facilities, equipment and personnel for
servicing the investments of the Fund. The Advisor places all orders for the
purchase and sale of the Fund's portfolio securities at the Fund's expense.

As compensation for its services, each Fund pays to the Advisor a monthly
management fee at the annual rate of 1.00% of the average daily net asset value
of the Fund. (See "Shareholder Manual - Determining Your Share Price" in the
Prospectus.) From time to time, the Advisor may voluntarily waive all or a
portion of its management fee for a Fund. The organizational expenses of the
Growth Fund was approximately $31,418, was advanced by the Advisor, and will be
reimbursed by the Fund over a period of not more than 60 months from the Fund's
date of inception.

The following table sets forth certain information concerning management
fees for each Fund that has completed a fiscal year:

<TABLE>
<CAPTION>
Management Fee
Incurred Management Fee Management Fee
by Fund Waiver Paid by Fund
-------------- ------- --------------
<S> <C> <C> <C>
Opportunity Fund
1993 $ 3,265,375 $ 0 $ 3,265,375
1994 6,335,605 0 6,335,605
1995 10,843,733 0 10,843,733
Growth Fund(1)
1994 $ 484,396 $ 0 $ 484,396
1995 3,861,111 0 3,861,111

Common Stock Fund
1993 $ 5,801,331 $ 0 $ 5,801,331
1994 7,989,263 0 7,979,263
1995 9,152,976 0 9,152,976

Discovery Fund
1993 $ 2,236,540 $ 0 $ 2,236,540
1994 3,647,967 0 3,647,967
1995 4,713,024 0 4,713,024
</TABLE>

(1) Commenced operations on December 31, 1993.

Each Advisory Agreement requires the Advisor to reimburse a Fund in the
event that the expenses and charges payable by the Fund in any fiscal year,
including the management fee but excluding taxes, interest, brokerage
commissions, and similar fees and to the extent permitted extraordinary
expenses, exceed that percentage of the average net asset value of the Fund for
such year, as determined by valuations made as of the close of each business
day of the year, which is the most restrictive percentage expense limitation
provided by the laws of the various states in which the Fund's common stock is

<PAGE> 40
qualified for sale; or if the states in which the Fund's common stock is
qualified for sale impose no restrictions, then 2%. The most restrictive
percentage limitation currently applicable to a Fund is 2.5% of its average
daily net assets up to $30,000,000, 2% on the next $70,000,000 of its average
daily net assets and 1.5% of its average daily net assets in excess of
$100,000,000. Reimbursement of expenses in excess of the applicable limitation
will be made on a monthly basis and will be paid to the Fund by reduction of
the Advisor's fee, subject to later adjustment, month by month, for the
remainder of the Fund's fiscal year. The Advisor may from time to time
voluntarily absorb expenses for a Fund in addition to the reimbursement of
expenses in excess of application limitations.

On July 12, 1994, the Securities and Exchange Commission (the "SEC") filed
an administrative action (Order) against the Advisor, Mr. Strong, and another
employee of the Advisor in connection with conduct that occurred between 1987
and early 1990. In re Strong/Corneliuson Capital Management, Inc., et al.
Admin. Proc. File No. 3-8411. The proceeding was settled by consent without
admitting or denying the allegations in the Order. The Order found that the
Advisor and Mr. Strong aided and abetted violations of Section 17(a) of the
1940 Act by effecting trades between mutual funds, and between mutual funds and
Harbour Investments Ltd. ("Harbour"), without complying with the exemptive
provisions of SEC Rule 17a-7 or otherwise obtaining an exemption. It further
found that the Advisor violated, and Mr. Strong aided and abetted violations
of, the disclosure provisions of the 1940 Act and the Investment Advisers Act
of 1940 by misrepresenting the Advisor's policy on personal trading and by
failing to disclose trading by Harbour, an entity in which principals of the
Advisor owned between 18 and 25 percent of the voting stock. As part of the
settlement, the respondents agreed to a censure and a cease and desist order
and the Advisor agreed to various undertakings, including adoption of certain
procedures and a limitation for six months on accepting certain types of new
advisory clients.

On June 6, 1996, the Department of Labor (the "DOL") filed an action
against the Advisor for equitable relief alleging violations of the Employee
Retirement Security Act of 1974 ("ERISA") in connection with cross trades that
occurred between 1987 and late 1989 involving certain pension accounts managed
by the Advisor. Contemporaneous with this filing, the Advisor, without
admitting or denying the DOL's allegations, agreed to the entry of a consent
judgment resolving all matters relating to the allegations. Reich v. Strong
Capital Management, Inc., (U.S.D.C. E.D. WI)(the "Consent Judgment"). Under
the terms of the Consent Judgment, the Advisor agreed to reimburse the affected
accounts a total of $5.9 million. The settlement did not have any material
impact on the Advisor's financial position or operations.

As indicated above, the Subadvisor to the Value Fund is Sloate, Weisman,
Murray & Company, Inc. (the "Subadvisor") The Value Fund's subadvisory
agreement, dated December 28, 1995 (the "Subadvisory Agreement"), was last
approved by the Fund's sole shareholder on December 28, 1995. Under the terms
of the Subadvisory Agreement, the Subadvisor furnishes investment advisory and
portfolio management services to the Fund with respect to its investments. The
Subadvisor is responsible for decisions to buy and sell the Fund's investments
and all other transactions related to investment therein and the negotiation of
brokerage commissions, if any, except that the Advisor is responsible for
managing the cash equivalent investments maintained by the Fund in the ordinary
course of its business and which, on average, are expected to equal
approximately five to seven percent of the Fund's total assets. Purchases and
sales of securities on a securities exchange are effected through brokers who
charge a negotiated commission for their services. During the term of the
Subadvisory Agreement, the Subadvisor will bear all expenses incurred by it in
connection with its services under such agreement.

The Subadvisory Agreement requires the Advisor, not the Value Fund, to pay
the Subadvisor a monthly fee based on the following annual rates. For the
first eighteen (18) months, the Advisor will pay the Subadvisor 60% of
management fees collected by the Advisor from the Fund on the first $150
million of net assets in the Fund, 50% of management fees collected by the
Advisor from the Fund on net assets from $150 to $300 million in the Fund, and
40% of management fees collected by the Advisor from the Fund on assets in
excess of $300 million in the Fund. After the first eighteen (18) months, the
Advisor will pay the Subadvisor 60% of management fees collected by the Advisor
from the Fund on the lower of $150 million or the level of net assets in the
Fund at the end of eighteen months (this amount being "base" net assets), 50%
of management fees collected by the Advisor from the Fund on net assets from
base net assets to $300 million in the Fund, and 40% of management fees
collected by the Advisor from the Fund on assets in excess of $300 million in
the Fund.

The Subadvisory Agreement may be terminated at any time, without payment
of any penalty, by vote of the Board of Directors of the Value Fund or by a
vote of a majority of the outstanding voting securities of the Fund on 60 days'
written notice to the Subadvisor. The Subadvisory Agreement may also be
terminated by the Advisor for breach upon 20 days' notice, immediately in the
event that the Subadvisor becomes unable to discharge its duties and
obligations, and upon 60 days' notice

<PAGE> 41

for any reason. The Subadvisory Agreement may be terminated by the Subadvisor
upon 180 days' notice for any reason. The Subadvisory Agreement will terminate
automatically in the event of its unauthorized assignment.

The Advisor has two relationships with the Subadvisor that are not related
to the subadvisory arrangement for the Fund. First, for more than 10 years,
the Advisor has obtained third party investment research from the Subadvisor
through soft dollar brokerage arrangements with various broker-dealers. The
Advisor expects to continue this relationship in the future. Second, since
early 1995, Matthew D. Strong, the son of Richard S. Strong, CEO and
controlling shareholder of the Advisor, has been employed by the Subadvisor as
a research analyst. Matthew D. Strong has a beneficial interest in certain
trusts which hold shares of the Advisor.

Except for expenses assumed by the Advisor, and the Subadvisor if
applicable, as set forth above, or by the Distributor, as described below with
respect to the distribution of a Fund's shares, each Fund is responsible for
all its other expenses, including, without limitation, interest charges, taxes,
brokerage commissions and similar expenses; organizational expenses; expenses
of issue, sale, repurchase or redemption of shares; expenses of registering or
qualifying shares for sale with the states and the SEC; expenses for printing
and distributing Prospectuses and quarterly financial statements to existing
shareholders; charges of custodians, transfer agents (including the printing
and mailing of reports and notices to shareholders), registrars, auditing and
legal services, clerical services related to recordkeeping and shareholder
relations, and printing of stock certificates; and fees for directors who are
not "interested persons" of the Advisor.

The Advisor and Subadvisor have each adopted a Code of Ethics (the "Code")
which governs the personal trading activities of all "Access Persons" of the
Advisor. Access Persons include every director and officer of the Advisor or
Subadvisor and the investment companies managed by the Advisor or Subadvisor,
including the Funds, as well as certain employees of the Advisor or Subadvisor
who have access to information relating to the purchase or sale of securities
by the Advisor or Subadvisor on behalf of accounts managed by it. The Code is
based upon the principal that such Access Persons have a fiduciary duty to
place the interests of the Advisor or Subadvisor's clients ahead of their own.

The Code requires Access Persons (other than Access Persons who are
independent directors of the investment companies managed by the Advisor or
Subadvisor, including the Funds) to, among other things, preclear their
securities transactions (with limited exceptions, such as transactions in
shares of mutual funds, direct obligations of the U.S. government, and certain
options on broad-based securities market indexes) and to execute such
transactions through the Advisor or Subadvisor's trading department. The Code,
which applies to all Access Persons (other than Access Persons who are
independent directors of the investment companies managed by the Advisor or
Subadvisor, including the Funds), includes a ban on acquiring any securities in
an initial public offering, other than a new offering of a registered open-end
investment company, and a prohibition from profiting on short-term trading in
securities. In addition, no Access Person may purchase or sell any security
which, at the time, is being purchased or sold, or to the knowledge of the
Access Person, is being considered for purchase or sale, by the Advisor or
Subadvisor on behalf of any mutual fund or other account managed by it.
Finally, the Code provides for trading "black out" periods which prohibit
trading by Access Persons who are portfolio managers within seven calendar days
of trading in the same securities by any mutual fund or other account managed
by the portfolio manager.

From time to time the Advisor votes the shares owned by the Funds
according to its Statement of General Proxy Voting Policy ("Proxy Voting
Policy"). The general principal of the Proxy Voting Policy is to vote any
beneficial interest in an equity security prudently and solely in the best
long-term economic interest of the Fund and its beneficiaries considering all
relevant factors and without undue influence from individuals or groups who may
have an economic interest in the outcome of a proxy vote. Shareholders may
obtain a copy of the Proxy Voting Policy upon request from the Advisor.

Under a Distribution Agreement dated December 1, 1993 with the
Opportunity, Common Stock, and Discovery Funds, a Distribution Agreement dated
December 20, 1993 with the Growth Fund, and a Distribution Agreement dated
December 28, 1995 for the Small Cap and Value Funds (collectively, the
"Distribution Agreements"), Strong Funds Distributors, Inc. ("Distributor"), a
subsidiary of the Advisor, acts as underwriter of each Fund's shares. Each
Distribution Agreement provides that the Distributor will use its best efforts
to distribute the Fund's shares. Since the Funds are "no-load" funds, no sales
commissions are charged on the purchase of Fund shares. Each Distribution
Agreement further provides that the Distributor will bear the additional costs
of printing Prospectuses and shareholder reports which are used for selling
purposes, as well as advertising and any other costs attributable to the
distribution of a Fund's shares. The Distributor is an indirect subsidiary of
the Advisor and controlled by the Advisor and Richard S. Strong. Prior to
December 1, 1993, the

<PAGE> 42

Advisor acted as underwriter for the Opportunity, Common Stock, and Discovery
Funds. On December 1, 1993, the Distributor succeeded to the broker-dealer
registration of the Advisor and, in connection therewith, Distribution
Agreements for the Opportunity, Common Stock, and Discovery Funds were executed
on substantially identical terms as the former distribution agreement with the
Advisor as distributor. The Distribution Agreement is subject to the same
termination and renewal provisions as are described above with respect to the
Advisory Agreements.

From time to time, the Distributor may hold in-house sales incentive
programs for its associated persons under which these persons may receive
non-cash compensation awards in connection with the sale and distribution of a
Fund's shares. These awards may include items such as, but not limited to,
gifts, merchandise, gift certificates, and payment of travel expenses, meals
and lodging. As required by the National Association of Securities Dealers,
Inc. or NASD's proposed rule amendments in this area, any in-house sales
incentive program will be multi-product oriented, i.e., any incentive will be
based on an associated person's gross production of all securities within a
product type and will not be based on the sales of shares of any specifically
designated mutual fund.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Advisor and the Subadvisor, with respect to the Value Fund only, are
responsible for decisions to buy and sell securities for the Funds and for the
placement of the Funds' investment business and the negotiation of the
commissions to be paid on such transactions. It is the policy of the Advisor,
and the Subadvisor, to seek the best execution at the best security price
available with respect to each transaction, in light of the overall quality of
brokerage and research services provided to the Advisor, and the Subadvisor, or
the Funds. In over-the-counter transactions, orders are placed directly with a
principal market maker unless it is believed that a better price and execution
can be obtained using a broker. The best price to the Funds means the best net
price without regard to the mix between purchase or sale price and commissions,
if any. In selecting broker-dealers and in negotiating commissions, the
Advisor, and the Subadvisor, consider a variety of factors, including best
price and execution, the full range of brokerage services provided by the
broker, as well as its capital strength and stability, and the quality of the
research and research services provided by the broker. Brokerage will not be
allocated based on the sale of any shares of the Strong Funds.

The Advisor has adopted procedures that provide generally for the Advisor
to seek to bunch orders for the purchase or sale of the same security for the
Fund, other mutual funds managed by the Advisor, and other advisory clients
(collectively, the "client accounts"). The Advisor will bunch orders when it
deems it to be appropriate and in the best interest of the client accounts.
When a bunched order is filled in its entirety, each participating client
account will participate at the average share price for the bunched order on
the same business day, and transaction costs shall be shared pro rata based on
each client's participation in the bunched order. When a bunched order is only
partially filled, the securities purchased will be allocated on a pro rata
basis to each client account participating in the bunched order based upon the
initial amount requested for the account, subject to certain exceptions, and
each participating account will participate at the average share price for the
bunched order on the same business day.

Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment advisor, under certain circumstances, to cause an account
to pay a broker or dealer a commission for effecting a transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting the transaction in recognition of the value of the brokerage and
research services provided by the broker or dealer. Brokerage and research
services include (a) furnishing advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; (b)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and performing functions
incidental thereto (such as clearance, settlement, and custody).

In carrying out the provisions of the Advisory Agreements, and Subadvisory
Agreement, if applicable, the Advisor, and the Subadvisor, may cause the Funds
to pay a broker, which provides brokerage and research services to the Advisor,
a commission for effecting a securities transaction in excess of the amount
another broker would have charged for effecting the transaction. The Advisor,
and the Subadvisor, believe it is important to its investment decision-making
process to have access to independent research. The Advisory Agreements
provide that such higher commissions will not be paid by a Fund unless (a) the
Advisor determines in good faith that the amount is reasonable in relation to
the services in terms of the particular transaction or in terms of the
Advisor's overall responsibilities with respect to the accounts as to which it
exercises investment

<PAGE> 43
discretion; (b) such payment is made in compliance with the provisions of
Section 28(e), other applicable state and federal laws, and the Advisory
Agreement; and (c) in the opinion of the Advisor, the total commissions paid by
a Fund will be reasonable in relation to the benefits to the Fund over the long
term. The investment management fees paid by the Funds under the Advisory
Agreements are not reduced as a result of the Advisor's receipt of research
services.

Generally, research services provided by brokers may include information
on the economy, industries, groups of securities, individual companies,
statistical information, accounting and tax law interpretations, political
developments, legal developments affecting portfolio securities, technical
market action, pricing and appraisal services, credit analysis, risk
measurement analysis, performance analysis, and analysis of corporate
responsibility issues. Such research services are received primarily in the
form of written reports, telephone contacts, and personal meetings with
security analysts. In addition, such research services may be provided in the
form of access to various computer-generated data, computer hardware and
software, and meetings arranged with corporate and industry spokespersons,
economists, academicians, and government representatives. In some cases,
research services are generated by third parties but are provided to the
Advisor by or through brokers. Such brokers may pay for all or a portion of
computer hardware and software costs relating to the pricing of securities.

Where the Advisor itself receives both administrative benefits and
research and brokerage services from the services provided by brokers, it makes
a good faith allocation between the administrative benefits and the research
and brokerage services, and will pay for any administrative benefits with cash.
In making good faith allocations of costs between administrative benefits and
research and brokerage services, a conflict of interest may exist by reason of
the Advisor's allocation of the costs of such benefits and services between
those that primarily benefit the Advisor and those that primarily benefit the
Funds and other advisory clients.

From time to time, the Advisor may purchase new issues of securities for a
Fund in a fixed price offering. In these situations, the seller may be a member
of the selling group that will, in addition to selling the securities to the
Funds and other advisory clients, provide the Advisor with research. The
National Association of Securities Dealers has adopted rules expressly
permitting these types of arrangements under certain circumstances. Generally,
the seller will provide research "credits" in these situations at a rate that
is higher than that which is available for typical secondary market
transactions. These arrangements may not fall within the safe harbor of Section
28(e).

Each year, the Advisor considers the amount and nature of research and
research services provided by brokers, as well as the extent to which such
services are relied upon, and attempts to allocate a portion of the brokerage
business of the Funds and other advisory clients on the basis of that
consideration. In addition, brokers may suggest a level of business they would
like to receive in order to continue to provide such services. The actual
brokerage business received by a broker may be more or less than the suggested
allocations, depending upon the Advisor's evaluation of all applicable
considerations.

The Advisor has informal arrangements with various brokers whereby, in
consideration for providing research services and subject to Section 28(e), the
Advisor allocates brokerage to those firms, provided that their brokerage and
research services were satisfactory to the Advisor and their execution
capabilities were compatible with the Advisor's policy of seeking best
execution at the best security price available, as discussed above. In no case
will the Advisor make binding commitments as to the level of brokerage
commissions it will allocate to a broker, nor will it commit to pay cash if any
informal targets are not met. The Advisor anticipates it will continue to
enter into such brokerage arrangements.

The Advisor may direct the purchase of securities on behalf of the Funds
and other advisory clients in secondary market transactions, in public
offerings directly from an underwriter, or in privately negotiated transactions
with an issuer. When the Advisor believes the circumstances so warrant,
securities purchased in public offerings may be resold shortly after
acquisition in the immediate aftermarket for the security in order to take
advantage of price appreciation from the public offering price or for other
reasons. Short-term trading of securities acquired in public offerings, or
otherwise, may result in higher portfolio turnover and associated brokerage
expenses.

The Advisor, and Subadvisor, place portfolio transactions for other
advisory accounts, including other mutual funds managed by the Advisor.
Research services furnished by firms through which the Funds effect their
securities transactions may be used by the Advisor in servicing all of its
accounts; not all of such services may be used by the Advisor, and Subadvisor,
in connection with the Funds. In the opinion of the Advisor, it is not
possible to measure separately the benefits from research services to each of
the accounts (including the Funds) managed by the Advisor. Because the volume
and nature of the trading

<PAGE> 44
activities of the accounts are not uniform, the amount of commissions in excess
of those charged by another broker paid by each account for brokerage and
research services will vary. However, in the opinion of the Advisor, such
costs to the Funds will not be disproportionate to the benefits received by the
Funds on a continuing basis.

The Advisor seeks to allocate portfolio transactions equitably whenever
concurrent decisions are made to purchase or sell securities by the Funds and
another advisory account. In some cases, this procedure could have an adverse
effect on the price or the amount of securities available to the Funds. In
making such allocations between a Fund and other advisory accounts, the main
factors considered by the Advisor are the respective investment objectives, the
relative size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held, and the opinions of the persons responsible for recommending
the investment.

Where consistent with a client's investment objectives, investment
restrictions, and risk tolerance, the Advisor may purchase securities sold in
underwritten public offerings for client accounts, commonly referred to as
"deal" securities. The Advisor has adopted deal allocation procedures (the
"procedures"), summarized below, that reflect the Advisor's overriding policy
that deal securities must be allocated among participating client accounts in a
fair and equitable manner and that deal securities may not be allocated in a
manner that unfairly discriminates in favor of certain clients or types of
clients.

The procedures provide that, in determining which client accounts a
portfolio manager team will seek to have purchase deal securities, the team
will consider all relevant factors including, but not limited to, the nature,
size, and expected allocation to the Advisor of deal securities; the size of
the account(s); the accounts' investment objectives and restrictions; the risk
tolerance of the client; the client's tolerance for possibly higher portfolio
turnover; the amount of commissions generated by the account during the past
year; and the number of other deals the client has participated in during the
past year.

Where more than one of the Advisor's portfolio manager team seeks to have
client accounts participate in a deal and the amount of deal securities
allocated to the Advisor by the underwriting syndicate is less than the
aggregate amount ordered by the Advisor (a "reduced allocation"), the deal
securities will be allocated among the portfolio manager teams based on all
relevant factors. The primary factor shall be assets under management,
although other factors that may be considered in the allocation decision
include, but are not limited to, the nature, size, and expected allocation of
the deal; the amount of brokerage commissions or other amounts generated by the
respective participating portfolio manager teams; and which portfolio manager
team is primarily responsible for the Advisor receiving securities in the deal.
Based on the relevant factors, the Advisor has established general allocation
percentages for its portfolio manager teams, and these percentages are reviewed
on a regular basis to determine whether asset growth or other factors make it
appropriate to use different general allocation percentages for reduced
allocations.

When a portfolio manager team receives a reduced allocation of deal
securities, the portfolio manager team will allocate the reduced allocation
among client accounts in accordance with the allocation percentages set forth
in the team's initial allocation instructions for the deal securities, except
where this would result in a de minimis allocation to any client account. On a
regular basis, the Advisor reviews the allocation of deal securities to ensure
that they have been allocated in a fair and equitable manner that does not
unfairly discriminate in favor of certain clients or types of clients.

As of December 31, 1995, the Discovery Fund had acquired securities of its
regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) or
their parents in the following amounts:

<TABLE>
<CAPTION>
Regular Broker or Dealer or Parent Issuer Value of Securities Owned as of December 31, 1995
- ----------------------------------------- -------------------------------------------------
<S> <C>
Chase Manhattan 28,870,000
</TABLE>

<PAGE> 45

The following table sets forth certain information concerning brokerage
commissions paid by each Fund that has completed a fiscal year.

<TABLE>
<CAPTION>
Opportunity Fund Brokerage Commissions
- ---------------- ---------------------
<S> <C>
1993 $1,347,000
1994 2,114,000
1995 3,873,000
Growth Fund
1994 $ 549,000
1995 2,125,360
Common Stock Fund
1993 $2,120,000
1994 2,905,000
1995 3,060,000
Discovery Fund
1993 $3,901,000
1994 5,548,000
1995 6,380,000
</TABLE>
CUSTODIAN

Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201, serves as
custodian of the assets of the Opportunity, Growth, Common Stock, and Discovery
Funds. As a result, Firstar Trust Company has custody of all securities and
cash of the Funds, delivers and receives payment for securities sold, receives
and pays for securities purchased, collects income from investments, and
performs other duties, all as directed by the officers of the Funds. The
custodian is in no way responsible for any of the investment policies or
decisions of the Funds.

TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT

The Advisor acts as transfer agent and dividend-disbursing agent for the
Funds. The Advisor is compensated based on an annual fee per open account of
$21.75 for the Funds, plus out-of-pocket expenses, such as postage and printing
expenses in connection with shareholder communications. The Advisor also
receives an annual fee per closed account of $4.20 from each Fund. The fees
received and the services provided as transfer agent and dividend disbursing
agent are in addition to those received and provided by the Advisor under the
Advisory Agreements. In addition, the Advisor provides certain printing and
mailing services for the Funds, such as printing and mailing of shareholder
account statements, checks, and tax forms.

The following table sets forth certain information concerning amounts paid
by each Fund that has completed a fiscal year for transfer agency and dividend
disbursing and printing and mailing services:

Transfer Agency and Dividend Disbursement
Services Charges Incurred
-----------------------------------------------------------------
Per Printing and Amounts Net Amount
Account Out-of-Pocket Mailing Waived By Paid By
Fund Charges Expenses Services Advisor Fund
- ---------------- --------- ------------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Opportunity Fund
1993 $ 818,157 $177,231 $ 20,947 $ 0 $1,016,335
1994 1,512,509 305,446 34,044 0 1,851,999
1995 2,291,454 216,920 40,488 0 2,548,862

</TABLE>
34

<PAGE> 46
<TABLE>
<S> <C> <C> <C> <C> <C>
Growth Fund
1994 $ 142,921 $ 34,501 $ 3,818 $ 0 $ 181,240
1995 1,029,731 99,888 17,794 0 1,147,413
Common Stock Fund
1993 $1,304,233 $ 392,470 $ 43,107 $ 0 $1,739,810
1994 1,449,445 398,828 41,781 0 1,890,054
1995 1,424,965 186,368 33,018 0 1,644,351
Discovery Fund
1993 $ 591,796 $139,185 $16,937 $ 0 $ 747,918
1994 1,021,993 215,173 24,127 0 1,261,293
1995 1,172,370 126,755 23,139 0 1,322,264
</TABLE>

______________________________________________________________________

From time to time, the Funds, directly or indirectly through arrangements
with the Advisor, and/or the Advisor may pay amounts to third parties that
provide transfer agent and other administrative services relating to the Funds
to persons who beneficially own interests in the Funds, such as participants in
401(k) plans. These services may include, among other things, sub-accounting
services, transfer agent type activities, answering inquiries relating to the
Funds, transmitting, on behalf of the Funds, proxy statements, annual reports,
updated Prospectuses, other communications regarding the Funds, and related
services as the Funds or beneficial owners may reasonably request. In such
cases, the Funds will not pay fees based on the number of beneficial owners at
a rate that is greater than the rate the Funds are currently paying the Advisor
for providing these services to Fund shareholders.

TAXES

GENERAL

As indicated under "About the Funds - Distributions and Taxes" in the
Prospectus, each Fund intends to continue to qualify annually for treatment as
a regulated investment company ("RIC") under the Code. This qualification does
not involve government supervision of the Funds' management practices or
policies.

In order to qualify for treatment as a RIC under the Code, each Fund must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain, and net gains from certain foreign
currency transactions) ("Distribution Requirement") and must meet several
additional requirements. For each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of securities or foreign
currencies or other income (including gains from options, futures, or forward
contracts) derived with respect to its business of investing in securities of
those currencies ("Income Requirement"); (2) the Fund must derive less than 30%
of its gross income each taxable year from the sale or other disposition of
securities, or any of the following that were held for less than three months
- -- options or futures (other than those on foreign currencies), or foreign
currencies (or options, futures, or forward contracts thereon) that are not
directly related to the Fund's principal business of investing in securities
(or options and futures with respect to securities) ("30% Limitation"); (3) at
the close of each quarter of the Fund's taxable year, at least 50% of the value
of its total assets must be represented by cash and cash items, U.S. government
securities, securities of other RICs, and other securities, with these other
securities limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of the Fund's total assets and that does not represent
more than 10% of the issuer's outstanding voting securities; and (4) at the
close of each quarter of the Fund's taxable year, not more than 25% of the
value of its total assets may be invested in securities (other than U.S.
government securities or the securities of other RICs) of any one issuer. From
time to time the Advisor may find it necessary to make certain types of
investments for the purpose of ensuring that the Fund continues to qualify for
treatment as a RIC under the Code.

If Fund shares are sold at a loss after being held for six months or less,
the loss will be treated as long-term, instead of short-term, capital loss to
the extent of any capital gain distributions received on those shares.

<PAGE> 47

Each Fund will be subject to a nondeductible 4% excise tax ("Excise Tax")
to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ending on October 31 of that year, plus certain
other amounts.

FOREIGN TRANSACTIONS

Dividends and interest received by a Fund may be subject to income,
withholding, or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
a Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, it will be eligible to, and may, file an election with
the Internal Revenue Service that would enable its shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign and
U.S. possessions income taxes paid by it. Pursuant to the election, a Fund
would treat those taxes as dividends paid to its shareholders and each
shareholder would be required to (1) include in gross income, and treat as paid
by him, his proportionate share of those taxes, (2) treat his share of those
taxes and of any dividend paid by the Fund that represents income from foreign
or U.S. possessions sources as his own income from those sources, and (3)
either deduct the taxes deemed paid by him in computing his taxable income or,
alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. Each Fund will report to its
shareholders shortly after each taxable year their respective shares of its
income from sources within, and taxes paid to, foreign countries and U.S.
possessions if it makes this election.

Each Fund maintains its accounts and calculates its income in U.S.
dollars. In general, gain or loss (1) from the disposition of foreign
currencies and forward currency contracts, (2) from the disposition of
foreign-currency-denominated debt securities that are attributable to
fluctuations in exchange rates between the date the securities are acquired and
their disposition date, and (3) attributable to fluctuations in exchange rates
between the time a Fund accrues interest or other receivables or expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects those receivables or pays those liabilities, will be treated
as ordinary income or loss. A foreign-currency-denominated debt security
acquired by a Fund may bear interest at a high normal rate that takes into
account expected decreases in the value of the principal amount of the security
due to anticipated currency devaluations; in that case, the Fund would be
required to include the interest in income as it accrues but generally would
realize a currency loss with respect to the principal only when the principal
was received (through disposition or upon maturity).

The Funds may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation that, in general, meets
either of the following tests: (1) at least 75% of its gross income is passive
or (2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, a Fund will be
subject to federal income tax on a portion of any "excess distribution"
received on the stock or of any gain on disposition of the stock (collectively,
"PFIC income"), plus interest thereon, even if the Fund distributes the PFIC
income as a taxable dividend to its shareholders. The balance of the PFIC
income will be included in the Fund's investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is distributed
to its shareholders. If a Fund invests in a PFIC and elects to treat the PFIC
as a "qualified electing fund," then in lieu of the foregoing tax and interest
obligation, the Fund will be required to include in income each year its pro
rata share of the qualified electing fund's annual ordinary earnings and net
capital gain (the excess of net long-term capital gain over net short-term
capital loss) -- which probably would have to be distributed to its
shareholders to satisfy the Distribution Requirement and avoid imposition of
the Excise Tax -- even if those earnings and gain were not received by the
Fund. In most instances it will be very difficult, if not impossible, to make
this election because of certain requirements thereof.

DERIVATIVE INSTRUMENTS

The use of derivatives strategies, such as purchasing and selling
(writing) options and futures and entering into forward currency contracts,
involves complex rules that will determine for income tax purposes the
character and timing of recognition of the gains and losses the Funds realize
in connection therewith. Gains from the disposition of foreign currencies
(except certain gains therefrom that may be excluded by future regulations),
and income from transactions in options, futures, and forward currency
contracts derived by a Fund with respect to its business of investing in
securities or foreign currencies, will qualify as permissible income under the
Income Requirement. However, income from the disposition of options and
futures (other than those on foreign currencies) will be subject to the 30%
Limitation if they are held for less than three months.

<PAGE> 48

Income from the disposition of foreign currencies, and options, futures, and
forward contracts on foreign currencies, that are not directly related to a
Fund's principal business of investing in securities (or options and futures
with respect to securities) also will be subject to the 30% Limitation if they
are held for less than three months.

If a Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Fund satisfies the
30% Limitation. Thus, only the net gain (if any) from the designated hedge
will be included in gross income for purposes of that limitation. The Funds
intend that, when they engage in hedging strategies, the hedging transactions
will qualify for this treatment, but at the present time it is not clear
whether this treatment will be available for all of the Funds' hedging
transactions. To the extent this treatment is not available or is not elected
by a Fund, it may be forced to defer the closing out of certain options,
futures, or forward currency contracts beyond the time when it otherwise would
be advantageous to do so, in order for the Fund to continue to qualify as a
RIC.

For federal income tax purposes, each Fund is required to recognize as
income for each taxable year its net unrealized gains and losses on options,
futures, or forward currency contracts that are subject to section 1256 of the
Code ("Section 1256 Contracts") and are held by the Fund as of the end of the
year, as well as gains and losses on Section 1256 Contracts actually realized
during the year. Except for Section 1256 Contracts that are part of a "mixed
straddle" and with respect to which a Fund makes a certain election, any gain
or loss recognized with respect to Section 1256 Contracts is considered to be
60% long-term capital gain or loss and 40% short-term capital gain or loss,
without regard to the holding period of the Section 1256 Contract. Unrealized
gains on Section 1256 Contracts that have been held by a Fund for less than
three months as of the end of its taxable year, and that are recognized for
federal income tax purposes as described above, will not be considered gains on
investments held for less than three months for purposes of the 30% Limitation.

ZERO-COUPON, STEP-COUPON, AND PAY-IN-KIND SECURITIES

Certain Funds may acquire zero-coupon, step-coupon, or other securities
issued with original issue discount. As a holder of those securities, a Fund
must include in its income the original issue discount that accrues on the
securities during the taxable year, even if the Fund receives no corresponding
payment on the securities during the year. Similarly, a Fund must include in
its income securities it receives as "interest" on pay-in-kind securities.
Because a Fund annually must distribute substantially all of its investment
company taxable income, including any original issue discount and other
non-cash income, to satisfy the Distribution Requirement and avoid imposition
of the Excise Tax, it may be required in a particular year to distribute as a
dividend an amount that is greater than the total amount of cash it actually
receives. Those distributions may be made from the proceeds on sales of
portfolio securities, if necessary. A Fund may realize capital gains or losses
from those sales, which would increase or decrease its investment company
taxable income or net capital gain, or both. In addition, any such gains may
be realized on the disposition of securities held for less than three months.
Because of the 30% Limitation, any such gains would reduce the Fund's ability
to sell other securities, or certain options, futures or forward contracts,
held for less that three months that it might wish to sell in the ordinary
course of its portfolio management.

The foregoing federal tax discussion as well as the tax discussion
contained within the Prospectus under "About the Funds - Distributions and
Taxes" is intended to provide you with an overview of the impact of federal
income tax provisions on each Fund or its shareholders. These tax provisions
are subject to change by legislative or administrative action at the federal,
state or local level, and any changes may be applied retroactively. Any such
action that limits or restricts each Fund's current ability to pass-through
earnings without taxation at the Fund level, or otherwise materially changes a
Fund's tax treatment, could adversely affect the value of a shareholder's
investment in a Fund. Because each Fund's taxes are a complex matter, you
should consult your tax adviser for more detailed information concerning the
taxation of a Fund and the federal, state, and local tax consequences to
shareholders of an investment in a Fund.

DETERMINATION OF NET ASSET VALUE

As set forth in the Prospectus under the caption "Shareholder Manual -
Determining Your Share Price," the net asset value of each Fund will be
determined as of the close of trading on each day the New York Stock Exchange
(the "NYSE") is open for trading. The NYSE is open for trading Monday through
Friday except, New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Additionally, if any of the

<PAGE> 49

aforementioned holidays falls on a Saturday, the NYSE will not be open for
trading on the preceding Friday, and when any such holiday falls on a Sunday,
the NYSE will not be open for trading on the succeeding Monday, unless unusual
business conditions exist, such as the ending of a monthly or yearly accounting
period.

Debt securities are valued by a pricing service that utilizes electronic
data processing techniques to determine values for normal institutional-sized
trading units of debt securities without regard to sale or bid prices when
such values are believed to more accurately reflect the fair market value for
such securities. Otherwise, sale or bid prices are used. Any securities or
other assets for which market quotations are not readily available are valued
at fair value as determined in good faith by the Board of Directors of each
Fund. Debt securities having remaining maturities of 60 days or less are
valued by the amortized cost method when the respective Fund's Board of
Directors determines that the fair value of such securities is their amortized
cost. Under this method of valuation, a security is initially valued at its
acquisition cost, and thereafter, amortization of any discount or premium is
assumed each day, regardless of the impact of the fluctuating rates on the
market value of the instrument.

ADDITIONAL SHAREHOLDER INFORMATION

TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGES AND AUTOMATIC EXCHANGE PLAN

Shares of the Fund and any other funds sponsored by the Advisor may be
exchanged for each other at relative net asset values. Exchanges will be
effected by redemption of shares of the Fund held and purchase of shares of the
fund for which Fund shares are being exchanged (the "New Fund"). For federal
income tax purposes, any such exchange constitutes a sale upon which a capital
gain or loss will be realized, depending upon whether the value of the shares
being exchanged is more or less than the shareholder's adjusted cost basis. If
you are interested in exercising any of these exchange privileges, you should
obtain Prospectuses of other funds sponsored by the Advisor from the Advisor.
Upon a telephone exchange, the transfer agent establishes a new account in the
New Fund with the same registration and dividend and capital gains options as
the redeemed account, unless otherwise specified, and confirms the purchase to
you.

The Funds employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. The Funds may not be liable for losses
due to unauthorized or fraudulent instructions. Such procedures include but are
not limited to requiring a form of personal identification prior to acting on
instructions received by telephone, providing written confirmations of such
transactions to the address of record, and tape recording telephone
instructions.

The Telephone Exchange and Redemption Privileges and Automatic Exchange
Plan are available only in states where shares of the New Fund may be sold, and
may be modified or discontinued at any time. Additional information regarding
the Telephone Exchange and Redemption Privileges and Automatic Exchange Plan is
contained in the Funds' Prospectus.

RETIREMENT PLANS

Individual Retirement Account (IRA): Everyone under age 70 1/2 with earned
income may contribute to a tax-deferred IRA. The Strong Funds offer a prototype
plan for you to establish your own IRA. You are allowed to contribute up to the
lesser of $2,000 or 100% of your earned income each year to your IRA. Under
certain circumstances, your contribution will be deductible.

Direct Rollover IRA: To avoid the mandatory 20% federal withholding tax on
distributions, you must transfer the qualified retirement or Code section
403(b) plan distribution directly into an IRA. This tax cannot be avoided if
you receive a distribution and then roll it over into an IRA. The amount of
your Direct Rollover IRA contribution will not be included in your taxable
income for the year.

Simplified Employee Pension Plan (SEP-IRA): A SEP-IRA allows an employer to
make deductible contributions to separate IRA accounts established for each
eligible employee.

<PAGE> 50

Salary Reduction Simplified Employee Pension Plan (SAR SEP-IRA): A SAR SEP-IRA
is a type of SEP-IRA in which an employer may allow employees to defer part of
their salaries and contribute to an IRA account. These deferrals help lower the
employees' taxable income.

Defined Contribution Plan: A defined contribution plan allows self-employed
individuals, partners, or a corporation to provide retirement benefits for
themselves and their employees. There are three plan types: a profit-sharing
plan, a money purchase pension plan, and a paired plan (a combination of a
profit-sharing plan and a money purchase plan).

401(k) Plan: A 401(k) plan is a type of profit-sharing plan that allows
employees to have part of their salary contributed to a retirement plan which
will earn tax-deferred income. A 401(k) plan is funded by employee
contributions, employer contributions, or a combination of both.

403(b)(7) Plan: A tax-sheltered custodial account designed to qualify under
section 403(b)(7) of the Code is available for use by employees of certain
educational, non-profit, hospital, and charitable organizations.

FUND ORGANIZATION

The Opportunity, Common Stock, and Discovery Funds are Wisconsin
corporations (each a "Corporation") that are authorized to offer separate
series of shares representing interests in separate portfolios of securities,
each with differing investment objectives. The Growth, Small Cap, and Value
Funds are series of common stock of Strong Equity Funds, Inc., a Wisconsin
corporation (a "Corporation") that is authorized to offer separate series of
shares representing interests in separate portfolios of securities, each with
differing objectives. The shares in any one portfolio may, in turn, be offered
in separate classes, each with differing preferences, limitations or relative
rights. However, the Articles of Incorporation for each of the Corporations
provides that if additional classes of shares are issued by a Corporation, such
new classes of shares may not affect the preferences, limitations or relative
rights of the Corporation's outstanding shares. In addition, the Board of
Directors of each Corporation is authorized to allocate assets, liabilities,
income and expenses to each series and class. Classes within a series may have
different expense arrangements than other classes of the same series and,
accordingly, the net asset value of shares within a series may differ.
Finally, all holders of shares of a Corporation may vote on each matter
presented to shareholders for action except with respect to any matter which
affects only one or more series or class, in which case only the shares of the
affected series or class are entitled to vote. Fractional shares have the same
rights proportionately as do full shares. Shares of the Corporation have no
preemptive, conversion, or subscription rights. If a Corporation issues
additional series, the assets belonging to each series of shares will be held
separately by the custodian, and in effect each series will be a separate fund.

Each Corporation was organized on the following dates and currently has
the following authorized shares of capital stock:

<TABLE>
<CAPTION>
Incorporation Date Series Authorized Par
Corporation Date Created Shares Value ($)
- ------------------------------ ------------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Strong Opportunity Fund, Inc. 07/05/83 Indefinite .01
Strong Equity Funds, Inc. (1) 12/28/90 Indefinite .00001
- - Strong Growth Fund 12/28/90 Indefinite .00001
- - Strong Value Fund 11/1/95 Indefinite .00001
- - Strong Small Cap Fund 11/1/95 Indefinite .00001
Strong Common Stock Fund, Inc. 11/11/88 Indefinite .001
Strong Discovery Fund, Inc. 09/24/87 Indefinite .001
</TABLE>

(1) Prior to November 1, 1995, the Fund's name was Strong Growth Fund, Inc.

<PAGE> 51

SHAREHOLDER MEETINGS

The Wisconsin Business Corporation Law permits registered investment
companies, such as the Corporations, to operate without an annual meeting of
shareholders under specified circumstances if an annual meeting is not required
by the 1940 Act. Each Corporation has adopted the appropriate provisions in
their Bylaws and may, at their discretion, not hold an annual meeting in any
year in which the election of directors is not required to be acted on by
shareholders under the 1940 Act.

Each Corporation's Bylaws allow for a director to be removed by its
shareholders with or without cause, only at a meeting called for the purpose
of removing the director. Upon the written request of the holders of shares
entitled to not less than ten percent (10%) of all the votes entitled to be
cast at such meeting, the Secretary of the Corporation shall promptly call a
special meeting of shareholders for the purpose of voting upon the question of
removal of any director. The Secretary of the Corporation shall inform such
shareholders of the reasonable estimated costs of preparing and mailing the
notice of the meeting, and upon payment to the Corporation of such costs, the
Corporation shall give not less than ten nor more than sixty days notice of the
special meeting.

PERFORMANCE INFORMATION

As described under "About the Funds - Performance Information" in the
Prospectus, each Fund's historical performance or return may be shown in the
form of "average annual total return," "total return," and "cumulative total
return." From time to time, the Advisor may voluntarily waive all or a portion
of its management fee and/or absorb certain expenses for a Fund. Without
these waivers and absorption of expenses, the performance results for the Funds
noted herein would have been lower. All performance and returns noted herein
are historical and do not represent the future performance of a Fund.

AVERAGE ANNUAL TOTAL RETURN

The average annual total return of a Fund is computed by finding the
average annual compounded rates of return over these periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
n
P (1 + T) = ERV

P = a hypothetical initial payment of $10,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $10,000 payment
made at the beginning of the stated periods at the end of the
stated periods.

TOTAL RETURN

Calculation of a Fund's total return is not subject to a standardized
formula. Total return performance for a specific period is calculated by first
taking an investment (assumed below to be $10,000) ("initial investment") in a
Fund's shares on the first day of the period and computing the "ending value"
of that investment at the end of the period. The total return percentage is
then determined by subtracting the initial investment from the ending value and
dividing the remainder by the initial investment and expressing the result as a
percentage. The calculation assumes that all income and capital gains
dividends paid by a Fund have been reinvested at net asset value on the
reinvestment dates during the period. Total return may also be shown as the
increased dollar value of the hypothetical investment over the period.

CUMULATIVE TOTAL RETURN

Cumulative total return represents the simple change in value of an
investment over a stated period and may be quoted as a percentage or as a
dollar amount. Total returns and cumulative total returns my be broken down
into their components of income and capital (including capital gains and
changes in share price) in order to illustrate the relationship between these
factors and their contributions to total return.

<PAGE> 52
Each of the Fund's performance figures are based upon historical results
and do not represent future performance. Each Fund's shares are sold at net
asset value per share. Each Fund's returns and net asset value will fluctuate
and shares are redeemable at the then current net asset value of the Fund,
which may be more or less than original cost. Factors affecting a Fund's
performance include general market conditions, operating expenses, and
investment management. Any additional fees charged by a dealer or other
financial services firm would reduce the returns described in this section.

The table below shows performance information for various periods ended
June 30, 1996. No adjustment has been made for taxes, if any, payable on
dividends. Securities prices fluctuated during these periods.

OPPORTUNITY FUND
- ----------------
Total Average Annual
Return Total Return
------ --------------
Initial Ending Value
$10,000 June 30, Percentage Percentage
Investment 1996 Increase Increase
---------- ------- -------- --------
<S> <C> <C> <C> <C>
Life of Fund(1) $10,000 $57,958 479.58% 18.22%
Ten Years 10,000 32,288 222.88 12.44
Five Years 10,000 23,364 133.64 18.50
One Year 10,000 11,970 19.70 19.70
</TABLE>

_______________________
(1) Commenced operations on December 31, 1985.

GROWTH FUND
- -----------
Total Average Annual
Return Total Return
------ --------------
Initial Ending Value
$10,000 June 30, Percentage Percentage
Investment 1996 Increase Increase
---------- ------- -------- --------
<S> <C> <C> <C> <C>

Life of Fund(1) $10,000 $19,433 94.33% 30.44%
One Year 10,000 13,891 38.91 38.91
</TABLE>

____________________
(1) Commenced operations on December 31, 1993.

COMMON STOCK FUND
- -----------------
Total Average Annual
Return Total Return
------ --------------
Initial Ending Value
$10,000 June 30, Percentage Percentage
Investment 1996 Increase Increase
---------- -------- -------- --------
<S> <C> <C> <C> <C>
Life of Fund(1) $10,000 $34,142 241.42% 20.79%
Five Year 10,000 26,494 164.94 21.51
One Year 10,000 12,206 22.06 22.06
</TABLE>

________________________
(1) Commenced operations on December 29, 1989.

<PAGE> 53

DISCOVERY FUND
- --------------
Total Average Annual
Return Total Return
------ --------------
Initial Ending Value
$10,000 June 30, Percentage Percentage
Investment 1996 Increase Increase
---------- ------- -------- --------
<S> <C> <C> <C> <C>
Life of Fund(1) $10,000 $39,082 290.82% 17.39%
Five Years 10,000 21,054 110.54 16.06
One Year 10,000 11,336 13.36 13.36
</TABLE>

________________________
(1) Commenced operations on December 31, 1987.

VALUE FUND
- ----------
Total Average Annual
Return Total Return
------ --------------
Initial Ending Value
$10,000 June 30, Percentage Percentage
Investment 1996 Increase Increase
---------- ------- ---------- ---------
<S> <C> <C> <C> <C>
Life of Fund(1) $10,000 $11,073 10.73% N/A
</TABLE>

________________________
(1) Commenced operations on December 31, 1995.

SMALL CAP FUND
- --------------
Total Average Annual
Return Total Return
------ --------------
Initial Ending Value
$10,000 June 30, Percentage Percentage
Investment 1996 Increase Increase
---------- ------- --------- --------
<S> <C> <C> <C> <C>

Life of Fund(1) $10,000 $12,469 24.69% N/A
</TABLE>

________________________
(1) Commenced operations on December 31, 1995.

The Opportunity, Growth, Common Stock, Discovery, Small Cap and Value
Funds' total returns for the three months ending June 30, 1996, were 2.33%,
10.28%, .86%, 1.09%, 6.31% and 1.87%, respectively.

COMPARISONS

(1) U.S. TREASURY BILLS, NOTES, OR BONDS
Investors may want to compare the performance of a Fund to that of U.S.
Treasury bills, notes or bonds, which are issued by the U.S. government.
Treasury obligations are issued in selected denominations. Rates of Treasury
obligations are fixed at the time of issuance and payment of principal and
interest is backed by the full faith and credit of the United States Treasury.
The market value of such instruments will generally fluctuate inversely with
interest rates prior to maturity and will equal par value at maturity.
Generally, the values of obligations with shorter maturities will fluctuate
less than those with longer maturities.

<PAGE> 54

(2) CERTIFICATES OF DEPOSIT
Investors may want to compare a Fund's performance to that of certificates
of deposit offered by banks and other depositary institutions. Certificates of
deposit may offer fixed or variable interest rates and principal is guaranteed
and may be insured. Withdrawal of the deposits prior to maturity normally will
be subject to a penalty. Rates offered by banks and other depositary
institutions are subject to change at any time specified by the issuing
institution.

(3) MONEY MARKET FUNDS
Investors may also want to compare performance of a Fund to that of money
market funds. Money market fund yields will fluctuate and shares are not
insured, but share values usually remain stable.

(4) LIPPER ANALYTICAL SERVICES, INC. ("LIPPER") AND OTHER INDEPENDENT RANKING
ORGANIZATIONS
From time to time, in marketing and other fund literature, a Fund's
performance may be compared to the performance of other mutual funds in general
or to the performance of particular types of mutual funds, with similar
investment goals, as tracked by independent organizations. Among these
organizations, Lipper, a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives, and assets, may be
cited. Lipper performance figures are based on changes in net asset value,
with all income and capital gain dividends reinvested. Such calculations do
not include the effect of any sales charges imposed by other funds. A Fund
will be compared to Lipper's appropriate fund category, that is, by fund
objective and portfolio holdings. A Fund's performance may also be compared to
the average performance of its Lipper category.

(5) MORNINGSTAR, INC.
A Fund's performance may also be compared to the performance of other
mutual funds by Morningstar, Inc. which rates funds on the basis of historical
risk and total return. Morningstar's ratings range from five stars (highest)
to one star (lowest) and represent Morningstar's assessment of the historical
risk level and total return of a fund as a weighted average for 3, 5, and 10
year periods. Ratings are not absolute and do not represent future results.

(6) INDEPENDENT SOURCES
Evaluations of Fund performance made by independent sources may also be
used in advertisements concerning a Fund, including reprints of, or selections
from, editorials or articles about a Fund, especially those with similar
objectives. Sources for Fund performance information and articles about a Fund
may include publications such as Money, Forbes, Kiplinger's, Smart Money,
Morningstar, Inc., Financial World, Business Week, U.S. News and World Report,
The Wall Street Journal, Barron's, and a variety of investment newsletters.

(7) INDICES
A Fund may compare its performance to a wide variety of indices including
the following:

(a) Consumer Price Index
(b) Dow Jones Average of 30 Industrials
(c) NASDAQ Over-the-Counter Composite Index
(d) Standard & Poor's 500 Stock Index
(e) Standard & Poor's 400 Mid-Cap Stock Index
(f) Standard & Poor's 600 Small-Cap Index
(g) Standard & Poor's Barra Value Index
(h) Wilshire 4500 Index
(i) Wilshire 5000 Index
(j) Wilshire Small Cap Index
(k) Wilshire Small Cap Growth Index
(l) Wilshire Small Cap Value Index
(m) Wilshire Midcap 750 Index
(n) Wilshire Midcap Growth Index
(o) Wilshire Midcap Value Index
(p) Wilshire Large Cap Growth Index
(q) Russell 1000 Index
(r) Russell 1000 Growth Index

<PAGE> 55

(s) Russell 1000 Value Index
(t) Russell 2000 Index
(u) Russell 2000 Small Stock Index
(v) Russell 2000 Growth Index
(w) Russell 2000 Value Index
(x) Russell 2500 Index
(y) Russell 3000 Stock Index
(z) Russell MidCap Index
(aa) Russell Midcap Growth Index
(bb) Russell MidCap Value Index
(cc) Value Line Index
(dd) Morgan Stanley Capital International EAFE(R) Index (Net
Dividend, Gross Dividend, and Price-Only). In addition, a Fund may
compare its performance to certain other indices that measure stock
market performance in geographic areas in which the Fund may invest.
The market prices and yields of the stocks in these indexes will
fluctuate. A Fund may also compare its portfolio weighting to the
EAFE Index weighting, which represents the relative capitalization
of the major overseas markets on a dollar-adjusted basis
(ee) Morgan Stanley Capital International World Index

There are differences and similarities between the investments that a Fund
may purchase for its portfolio and the investments measured by these indices.

(8) HISTORICAL ASSET CLASS RETURNS
From time to time, marketing materials may portray the historical returns
of various asset classes. Such presentations will typically compare the
average annual rates of return of inflation, U.S. Treasury bills, bonds, common
stocks, and small stocks. There are important differences between each of these
investments that should be considered in viewing any such comparison. The
market value of stocks will fluctuate with market conditions, and small-stock
prices generally will fluctuate more than large-stock prices. Stocks are
generally more volatile than bonds. In return for this volatility, stocks have
generally performed better than bonds or cash over time. Bond prices generally
will fluctuate inversely with interest rates and other market conditions, and
the prices of bonds with longer maturities generally will fluctuate more than
those of shorter-maturity bonds. Interest rates for bonds may be fixed at the
time of issuance, and payment of principal and interest may be guaranteed by
the issuer and, in the case of U.S. Treasury obligations, backed by the full
faith and credit of the U.S. Treasury.

(9) STRONG FAMILY OF FUNDS
The Strong Family of Funds offers a comprehensive range of conservative to
aggressive investment options. Members of the Strong Family and their
investment objectives are listed below.

<TABLE>
<CAPTION>
FUND NAME INVESTMENT OBJECTIVE
<S> <C>
Strong Money Market Fund Current income, a stable share price, and daily liquidity.
Strong Heritage Money Fund Current income, a stable share price, and daily liquidity.
Strong Municipal Money Market Federally tax-exempt current income, a stable share-price, and daily
Fund liquidity.
Federally tax-exempt current income with a very low degree of
Strong Municipal Advantage Fund share-price fluctuation.
Strong Advantage Fund Current income with a very low degree of share-price fluctuation.
Strong Short-Term Municipal Total return by investing for a high level of federally tax-exempt
Bond Fund current income with a low degree of share-price fluctuation.
Total return by investing for a high level of current income with a low
Strong Short-Term Bond Fund degree of share-price fluctuation.
Strong Short-Term Global Bond Total return by investing for a high level of income with a low degree
Fund of share-price fluctuation.
Strong Government Securities Total return by investing for a high level of current income with a
Fund moderate degree of share-price fluctuation.
</TABLE>

<S> <C>
Strong Municipal Bond Fund Total return by investing for a high level of federally tax-exempt
current income with a moderate degree of share-price fluctuation.
Strong Corporate Bond Fund Total return by investing for a high level of current income with a
Strong High-Yield Municipal moderate degree of share-price fluctuation.
Bond Fund Total return by investing for a high level of federally tax-exempt
current income.
Strong High-Yield Bond Fund Total return by investing for a high level of current income and
Strong International Bond Fund capital growth.
Strong Asset Allocation Fund High total return by investing for both income and capital appreciation.
Strong Equity Income Fund High total return consistent with reasonable risk over the long term.
Strong American Utilities Fund Total return by investing for both income and capital growth.
Strong Total Return Fund Total return by investing for both income and capital growth.
Strong Growth and Income Fund High total return by investing for capital growth and income.
High total return by investing for capital growth and income.
Strong Schafer Value Fund Long-term capital appreciation principally through investment in common
stocks and other equity securities. Current income is a secondary
objective.
Strong Value Fund Capital growth.
Strong Opportunity Fund Capital growth.
Strong Growth Fund Capital growth.
Strong Common Stock Fund* Capital growth.
Strong Mid Cap Fund Capital growth.
Strong Small Cap Fund Capital growth.
Strong Discovery Fund Capital growth.
Strong International Stock Fund Capital growth.
Strong Asia Pacific Fund Capital growth.
</TABLE>

*The Fund is currently closed to new investors.

The Advisor also serves as Advisor or Subadvisor to several management
investment companies, some of which fund variable annuity separate accounts of
certain insurance companies.

Each Fund may from time to time be compared to the other funds in the
Strong Family of Funds based on a risk/reward spectrum. In general, the amount
of risk associated with any investment product is commensurate with that
product's potential level of reward. The Strong Funds risk/reward continuum or
any Fund's position on the continuum may be described or diagrammed in
marketing materials. The Strong Funds risk/reward continuum positions the risk
and reward potential of each Strong Fund relative to the other Strong Funds,
but is not intended to position any Strong Fund relative to other mutual funds
or investment products. Marketing materials may also discuss the relationship
between risk and reward as it relates to an individual investor's portfolio.

Financial goals vary from person to person. You may choose one or more of
the Strong Funds to help you reach your financial goals. To help you better
understand the Strong Growth Funds and determine which Fund or combination of
Funds best meets your personal investment objectives, they are described in the
same Prospectus.

(10) TYING TIME FRAMES TO YOUR GOALS

There are many issues to consider as you make your investment decisions,
including analyzing your risk tolerance, investing experience, and asset
allocations. You should start to organize your investments by learning to link
your many financial goals to specific time frames. Then you can begin to
identify the appropriate types of investments to help meet your goals. As a
general rule of thumb, the longer your time horizon, the more price fluctuation
you will be able to tolerate in pursuit of higher returns. For that reason,
many people with longer-term goals select stocks or long-term bonds, and many
people with nearer-term goals match those up with for instance, short-term
bonds. The Advisor developed the following suggested holding periods to help
our investors set realistic expectations for both the risk and reward potential
of our funds. (See table below.) Of course, time is just one element to
consider when making your investment decision.

<PAGE> 57

STRONG FUNDS SUGGESTED MINIMUM HOLDING PERIODS

<TABLE>
<CAPTION>
UNDER 1 YEAR 1 TO 2 YEARS 4 TO 7 YEARS 5 OR MORE YEARS
- -------------------- --------------------------- -------------------------- --------------------
<S> <C> <C> <C>
Money Market Fund Advantage Fund Government Securities Fund Total Return Fund
Heritage Money Fund Municipal Advantage Fund Municipal Bond Fund Opportunity Fund
Municipal Money Corporate Bond Fund Growth Fund
Market Fund 2 TO 4 YEARS International Bond Fund Common Stock Fund*
--------------------------- High-Yield Municipal Bond Discovery Fund
Short-Term Bond Fund Fund International Stock
Short-Term Municipal Bond Asset Allocation Fund Fund
Fund American Utilities Fund Asia Pacific Fund
Short-Term Global Bond Fund High-Yield Bond Fund Value Fund
Equity Income Fund Small Cap Fund
Growth and Income
Fund
Mid Cap Fund
Schafer Value Fund

</TABLE>

*This fund is currently closed to new investors.

ADDITIONAL FUND INFORMATION

(1) PORTFOLIO CHARACTERISTICS

In order to present a more complete picture of a Fund's portfolio,
marketing materials may include various actual or estimated portfolio
characteristics, including but not limited to median market capitalizations,
earnings per share, alphas, betas, price/earnings ratios, returns on equity,
dividend yields, capitalization ranges, growth rates, price/book ratios, top
holdings, sector breakdowns, asset allocations, quality breakdowns, and
breakdowns by geographic region.

(2) MEASURES OF VOLATILITY AND RELATIVE PERFORMANCE

Occasionally statistics may be used to specify Fund volatility or risk.
The general premise is that greater volatility connotes greater risk undertaken
in achieving performance. Measures of volatility or risk are generally used to
compare the Fund's net asset value or performance relative to a market index.
One measure of volatility is beta. Beta is the volatility of a fund relative
to the total market as represented by the Standard & Poor's 500 Stock Index. A
beta of more than 1.00 indicates volatility greater than the market, and a beta
of less than 1.00 indicates volatility less than the market. Another measure
of volatility or risk is standard deviation. Standard deviation is a
statistical tool that measures the degree to which a fund's performance has
varied from its average performance during a particular time period.

Standard deviation is calculated using the following formula:

<TABLE>
<S><C> 2
Standard deviation = the square root of E(x - x )
i m
---------
n-1

where E = "the sum of",
x = each individual return during the time period,
i
x = the average return over the time period, and
m
n = the number of individual returns during the time period.
</TABLE>

Statistics may also be used to discuss a Fund's relative performance. One
such measure is alpha. Alpha measures the actual return of a fund compared to
the expected return of a fund given its risk (as measured by beta). The
expected return is based on how the market as a whole performed, and how the
particular fund has historically performed against the market. Specifically,
alpha is the actual return less the expected return. The expected return is
computed by multiplying the advance or decline in a market representation by
the fund's beta. A positive alpha quantifies the value that the fund manager
has added, and a negative alpha quantifies the value that the fund manager has
lost.

Other measures of volatility and relative performance may be used as
appropriate. However, all such measures will fluctuate and do not represent
future results.

<PAGE> 58

GENERAL INFORMATION

BUSINESS PHILOSOPHY

The Advisor is an independent, Midwestern-based investment advisor, owned
by professionals active in its management. Recognizing that investors are the
focus of its business, the Advisor strives for excellence both in investment
management and in the service provided to investors. This commitment affects
many aspects of the business, including professional staffing, product
development, investment management, and service delivery.

The increasing complexity of the capital markets requires specialized
skills and processes for each asset class and style. Therefore, the Advisor
believes that active management should produce greater returns than a passively
managed index. The Advisor has brought together a group of top-flight
investment professionals with diverse product expertise, and each concentrates
on their investment specialty. The Advisor believes that people are the firm's
most important asset. For this reason, continuity of professionals is critical
to the firm's long-term success.

INVESTMENT ENVIRONMENT

Discussions of economic, social, and political conditions and their impact
on the Funds may be used in advertisements and sales materials. Such factors
that may impact the Funds include, but are not limited to, changes in interest
rates, political developments, the competitive environment, consumer behavior,
industry trends, technological advances, macroeconomic trends, and the supply
and demand of various financial instruments. In addition, marketing materials
may cite the portfolio management's views or interpretations of such factors.

EIGHT BASIC PRINCIPLES FOR SUCCESSFUL MUTUAL FUND INVESTING

These common sense rules are followed by many successful investors. They
make sense for beginners, too. If you have a question on these principles, or
would like to discuss them with us, please contact us at 1-800-368-3863.

1. Have a plan - even a simple plan can help you take control of your
financial future. Review your plan once a year, or if your circumstances
change.

2. Start investing as soon as possible. Make time a valuable ally. Let it
put the power of compounding to work for you, while helping to reduce your
potential investment risk.

3. Diversify your portfolio. By investing in different asset classes -
stocks, bonds, and cash - you help protect against poor performance in one
type of investment while including investments most likely to help you
achieve your important goals.

4. Invest regularly. Investing is a process, not a one-time event. By
investing regularly over the long term, you reduce the impact of
short-term market gyrations, and you attend to your long-term plan before
you're tempted to spend those assets on short-term needs.

5. Maintain a long-term perspective. For most individuals, the best
discipline is staying invested as market conditions change. Reactive,
emotional investment decisions are all too often a source of regret - and
principal loss.

6. Consider stocks to help achieve major long-term goals. Over time, stocks
have provided the more powerful returns needed to help the value of your
investments stay well ahead of inflation.

7. Keep a comfortable amount of cash in your portfolio. To meet current
needs, including emergencies, use a money market fund or a bank account -
not your long-term investment assets.

8. Know what you're buying. Make sure you understand the potential risks and
rewards associated with each of your investments. Ask questions... request
information...make up your own mind. And choose a fund company that helps
you make informed investment decisions.

<PAGE> 59

STRONG RETIREMENT PLAN SERVICES

Strong Retirement Plan Services offers a full menu of high quality,
affordable retirement plan options, including traditional money purchase
pension and profit sharing plans, 401(k) plans, simplified employee pension
plans, salary reduction plans, Keoghs, and 403(b) plans. Retirement plan
specialists are available to help companies determine which type of retirement
plan may be appropriate for their particular situation.

Markets:

The retirement plan services provided by the Advisor focus on four
distinct markets, based on the belief that a retirement plan should fit the
customer's needs, not the other way around.

1. Small company plans. Small company plans are designed for companies with
1-50 plan participants. The objective is to incorporate the features and
benefits typically reserved for large companies, such as sophisticated
recordkeeping systems, outstanding service, and investment expertise, into
a small company plan without administrative hassles or undue expense.
Small company plan sponsors receive a comprehensive plan administration
manual as well as toll-free telephone support.

2. Large company plans. Large company plans are designed for companies with
between 51 and 1,000 plan participants. Each large company plan is
assigned a team of professionals consisting of an account manager, who is
typically an attorney, CPA, or holds a graduate degree in business, a
conversion specialist (if applicable), an accounting manager, a
legal/technical manager, and an education/communications educator.

3. Women-owned businesses.

4. Non-profit and educational organizations (the 403(b) market).

Turnkey approach:

The retirement plans offered by the Advisor are designed to be streamlined
and simple to administer. To this end, the Advisor has invested heavily in the
equipment, systems, and people necessary to adopt or convert a plan, and to
keep it running smoothly. The Advisor provides all aspects of the plan,
including plan design, administration, recordkeeping, and investment
management. To streamline plan design, the Advisor provides customizable
IRS-approved prototype documents. The Advisor's services also include annual
government reporting and testing as well as daily valuation of each
participant's account. This structure is intended to eliminate the confusion
and complication often associated with dealing with multiple vendors. It is
also designed to save plan sponsors time and expense.

The Advisor strives to provide one-stop retirement savings programs that
combine the advantages of proven investment management, flexible plan design,
and a wide range of investment options. The open architecture design of the
plans allow for the use of the family of mutual funds managed by the Advisor as
well as a stable asset value option. Large company plans may supplement these
options with their company stock (if publicly traded) or funds from other
well-known mutual fund families.

Education:

Participant education and communication is key to the success of any
retirement program, and therefore is one of the most important services that
the Advisor provides. The Advisor's goal is twofold: to make sure that plan
participants fully understand their options and to educate them about the
lifelong investment process. To this end, the Advisor provides attractive,
readable print materials that are supplemented with audio and video tapes, and
retirement education programs.

48
<PAGE> 60

Service:

The Advisor's goal is to provide a world class level of service. One
aspect of that service is an experienced, knowledgeable team that provides
ongoing support for plan sponsors, both at adoption or conversion and
throughout the life of a plan. The Advisor is committed to delivering accurate
and timely information, evidenced by straightforward, complete, and
understandable reports, participant account statements, and plan summaries.

The Advisor has designed both "high-tech" and "high-touch" systems,
providing an automated telephone system as well as personal contact.
Participants can access daily account information, conduct transactions, or
have questions answered in the way that is most comfortable for them.

STRONG FINANCIAL ADVISORS GROUP

The Strong Financial Advisors Group is dedicated to helping financial
advisors better serve their clients. Financial advisors receive regular
updates on the mutual funds managed by the Advisor, access to portfolio
managers through special conference calls, consolidated mailings of duplicate
confirmation statements, access to the Advisor's network of regional
representatives, and other specialized services. For more information on the
Strong Financial Advisors Group, call 1-800-368-1683.

PORTFOLIO MANAGEMENT

Each portfolio manager works with a team of analysts, traders, and
administrative personnel. From time to time, marketing materials may discuss
various members of the team, including their education, investment experience,
and other credentials.

OPPORTUNITY AND COMMON STOCK FUNDS

The Advisor uses a research-intensive, "bottom up" securities selection
discipline to identify well-run, profitable companies whose prospects for
growth and other financial characteristics, when compared to the price of their
securities, indicate fundamental value and the potential for significant
capital appreciation. The Advisor's goal is to find well-managed companies
that have sustainable growth prospects but that are selling at prices below
their private market values. While not limited to smaller-capitalization
stocks, this investment approach often leads to smaller, newer companies that
have not yet captured the attention of investment professionals.

It should be noted, however, that investments in securities of under
researched companies with smaller market capitalizations, while generally
offering a greater opportunity for appreciation, also involve a greater risk of
depreciation than securities of companies with larger market capitalization.
In addition, since companies with smaller market capitalizations are not as
broadly traded as those of companies with larger market capitalizations. these
securities are often subject to wider and more abrupt fluctuations in market
price.

The Advisor's investment philosophy is that (i) underfollowed stocks with
low institutional ownership and low analyst coverage tend to be undervalued;
(ii) unpopular or "quiet" sectors of the market tend to be undervalued; (iii)
stock prices are more volatile than underlying intrinsic business values; and
(iv) smaller capitalization stocks historically have had higher growth rates
and have outperformed larger cap stocks, but may also entail significantly
greater price variability than those of larger companies.

The Advisor's investment process includes (i) independent, fundamental
analysis; (ii) screening for stocks covered by fewer than 10 analysts; (iii)
identifying unpopular or "quiet" sectors of the market; (iv) identifying
companies with consistent earnings per share growth greater than 10% and
price/earnings ratios below the S&P 500; (v) visiting companies and meeting
management; (vi) establishing intrinsic business value and buy/sell targets,
and (vii) diversifying the portfolio.

The Advisor considers selling a stock when it reaches 80 to 100% of
private market value, it becomes widely followed, or there is a change in
company fundamentals.

<PAGE> 61

GROWTH FUND

Conventional wisdom often divides fund managers into two schools -- growth
and value. Growth-style managers look for companies that exhibit
faster-than-average gains in earnings and profits. Value-style managers
generally concentrate more on the price side of the equation, looking for
companies that are undervalued and selling at a discount to what they believe
is their intrinsic value.

The style of the portfolio manager for the Fund, Mr. Ronald C. Ognar,
leans more toward growth, although he keeps an eye on valuations. The Fund's
core investments tend to be growth stocks at reasonable prices. These core
holdings are supplemented by stocks that have strong growth prospects. The
Advisor looks for growth of both sales and earnings. The Advisor believes
that, in general, good growth companies exhibit accelerating sales and
earnings, high return on equity, and, typically, low debt. They offer products
or services that should show strong future growth, and their market share is
expanding. Other characteristics that the Advisor looks for in companies
include low cost production, innovative products, and strong fundamentals
versus an index. In short, they offer some unique, sustainable competitive
advantage. These advantages can be found in companies of all market
capitalizations. However, the Advisor believes that the key is the management.
Mr. Ognar meets face-to-face with the management of many companies, which
helps him get to know and trust a company and the people in charge of it.

Currently, the Advisor is focusing on some companies that are undergoing
positive change. Oftentimes, a new product, a new technology, or a change in
management can positively affect a company's earnings growth prospects. Themes
also play a part in the investment strategy. Some examples would be the aging
population, telecommunications, and the rapid development of foreign economies
where U.S. companies have strong revenue growth.

The Advisor believes that investors need to have both large and small
companies because core holdings with growing dividends are usually found in
larger companies, but faster growth should continue in medium and small
companies. Therefore, the Advisor utilizes a broad range of equity market
capitalizations.

The Advisor seeks to manage risk by adhering to price disciplines,
diversifying holdings across sectors, and, when appropriate, building cash
reserves.

VALUE FUND

The Subadvisor uses a research intensive, "bottom up" securities selection
discipline to identify companies whose share price does not fully reflect the
value of the company's assets, earnings power, or cash generating ability.
While the approach focuses on medium-to-large capitalization companies,
investments may be made in companies with small market capitalizations as well.

The Subadivsor's investment approach is to search for a catalyst event -
whether company specific or affecting an industry or sector - that will bring
out the value in companies currently not recognized by the market. These
events include:

- corporate restructuring or reorganization - including acquisition or
divestiture of assets
- significant management change
- cyclical turnaround of a depressed business or industry
- secular trend (e.g. demographic, regulatory, environmental change,
etc.)

The Subadvisor's fundamental research process focuses on identifying
value, as measured by qualitative factors, such as management and business
position, and quantitative valuation measures. Key quantitative indicators
include cash flow and earnings multiples at the low end of historical levels or
a discount to asset value, growth rate or industry peer group levels.

The Subadvisor considers selling a stock when it reaches price objectives
or if there is a change in fundamentals or management that will negatively
affect the company. A drop of 15% in price from cost under normal market
conditions will prompt an immediate sale review, resulting in the sale of the
security or purchase of additional shares.

<PAGE> 62

SMALL CAP FUND

The Advisor believes that small companies offer excellent opportunities
for capital growth. Although they may have higher risks,
smaller-capitalization stocks have historically outperformed
larger-capitalization stocks. The investment process includes:

- Macro analysis to identify attractive sectors or industries;
- Bottom-up investment analysis on the companies in the identified sectors
or industries to select individual stocks;
- Individual stock selection based on a variety of factors, including:
- Revenue and earning growth prospects
- Management track record commitment
- Valuation relative to the market and the company's peer group; and
- Regular review of investments for changes in valuation levels and
earnings/growth prospects.

The goal of the Advisor is to find well-managed, growing companies that
trade at attractive valuations in the marketplace.

DISCOVERY FUND

While the Fund has the ability to take advantage of favorable trends in
stock prices, it also retains the flexibility to invest up to 100% of its
assets in conservative, short-term, money market securities. The need for this
flexibility is based on a fundamental belief by the Advisor that economic and
financial conditions create favorable and unfavorable investment periods (or
seasons) and that these different seasons require different investment
approaches. Through its understanding and willingness to change with these
investment cycles, the Advisor seeks to achieve the Fund's objectives
throughout the seasons of investment. The Fund is managed to capitalize on
change, which can include technological, regulatory, political, social,
economic, market, management and demographic change.

The Advisor's investment philosophy is that (i) maximum capital growth
should be aggressively pursued in a favorable market environment; (ii) capital
preservation is critical under unfavorable market conditions; and (iii) broad
use of asset classes and investment vehicles provides flexibility in achieving
capital growth and risk control. The Advisor also believes that (i) the
purpose of investment capital is to finance corporate growth, (ii) companies
that are growing rapidly often provide excellent opportunities for capital
appreciation, (iii) assessing the management behind a company is as important
as "crunching the numbers", and (iv) American and foreign economies are
increasingly intertwined, creating growth opportunities for both American and
foreign companies.

The Advisor's investment process includes (i) independent, fundamental
analysis; (ii) top-down economic and secular research to determine the current
position of the economic cycle, identify unique secular trends and themes, and
allocate asset classes; (iii) bottom-up security analysis and selection process
with particular emphasis on the following: free cash flow, revenue and earnings
growth, balance sheet strength, share repurchase programs, competitive
position, discounted cash flow value, private market value, relative price
earnings ratio, and assessment of management, including on-site visits; (iv)
reducing equity exposure in bear markets; and (v) aggressively pursuing unique
investment opportunities.

The Advisor considers selling a stock when there is a change in market
conditions, a change in company fundamentals, or when the stock is excessively
overvalued. The Advisor attempts to reduce risk by diversifying broadly across
industries and by generally limiting position sizes to 5% or less.

<PAGE> 63

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P., 411 East Wisconsin Avenue, Milwaukee, Wisconsin
53202, are the independent accountants for the Funds, providing audit services
and assistance and consultation with respect to the preparation of filings with
the SEC.

LEGAL COUNSEL

Godfrey & Kahn, S.C., 780 North Water Street, Milwaukee, Wisconsin 53202,
acts as outside legal counsel for the Funds.

FINANCIAL STATEMENTS

The Annual Report for the Opportunity, Growth, Common Stock, and Discovery
Funds that is attached hereto contains the following audited financial
information for the Funds:

(a) Schedules of Investments in Securities.
(b) Statements of Operations.
(c) Statements of Assets and Liabilities.
(d) Statements of Changes in Net Assets.
(e) Notes to Financial Statements.
(f) Financial Highlights.
(g) Report of Independent Accountants.

The unaudited financial statements for the Small Cap and Value Funds for
the period December 29, 1995 through June 30, 1996 that are attached hereto
contain the following financial information for the Funds:

<PAGE> 64

APPENDIX

BOND RATINGS

STANDARD & POOR'S DEBT RATINGS

A Standard & Poor's corporate or municipal debt rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.

The debt rating is not a recommendation to purchase, sell, or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.

The ratings are based on current information furnished by the issuer or
obtained by S&P from other sources it considers reliable. S&P does not perform
an audit in connection with any rating and may, on occasion, rely on unaudited
financial information. The ratings may be changed, suspended, or withdrawn as
a result of changes in, or unavailability of, such information, or based on
other circumstances.

The ratings are based, in varying degrees, on the following
considerations:

1. Likelihood of default capacity and willingness of
the obligor as to the timely payment of interest and repayment
of principal in accordance with the terms of the obligation.

2. Nature of and provisions of the obligation.

3. Protection afforded by, and relative position of,
the obligation in the event of bankruptcy, reorganization, or
other arrangement under the laws of bankruptcy and other laws
affecting creditors' rights.

INVESTMENT GRADE
AAA Debt rated 'AAA' has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

A Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

SPECULATIVE GRADE
Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. 'BB' indicates the least degree of speculation
and 'C' the highest. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major exposures to adverse conditions.

BB Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'BBB-' rating.

A-1

<PAGE> 65

B Debt rated 'B' has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The 'B' rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'BB' or 'BB-' rating.

CCC Debt rated 'CCC' has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial, or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'B' or 'B-' rating.

CC Debt rated 'CC' typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.

C Debt rated 'C' typically is applied to debt subordinated to senior debt
which is assigned an actual or implied 'CCC-' rating. The 'C' rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

CI The rating 'CI' is reserved for income bonds on which no interest is
being paid.

D Debt rated 'D' is in payment default. The 'D' rating category is used
when interest payments or principal payments are not made on the date due, even
if the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grade period. The 'D' rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

MOODY'S LONG-TERM DEBT RATINGS

Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than in Aaa
securities.

A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.

Baa - Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable over
any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or
maintenance of other terms of the contract over any long period of time may be
small.

A-2

<PAGE> 66

Caa - Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.

Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C - Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

FITCH INVESTORS SERVICE, INC. BOND RATINGS

Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
represent Fitch's assessment of the issuer's ability to meet the obligations of
a specific debt issue or class of debt in a timely manner.

The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength and credit quality.

Fitch ratings do not reflect any credit enhancement that may be provided
by insurance policies or financial guaranties unless otherwise indicated.

Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.

Fitch ratings are not recommendations to buy, sell, or hold any security.
Ratings do not comment on the adequacy of market price, the suitability of any
security for a particular investor, or the tax-exempt nature or taxability of
payments made in respect of any security.

Fitch ratings are based on information obtained from issuers, other
obligors, underwriters, their experts, and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.

AAA Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected
by reasonably foreseeable events.

AA Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds
rated 'AAA'. Because bonds rated in the 'AAA' and 'AA' categories
are not significantly vulnerable to foreseeable future
developments, short-term debt of the issuers is generally rated
'F-1+'.

A Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.

BBB Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have
adverse impact on these bonds and, therefore, impair timely payment.
The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

A-3

<PAGE> 67

Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
('BB' to 'C') represent Fitch's assessment of the likelihood of timely payment
of principal and interest in accordance with the terms of obligation for bond
issues not in default. For defaulted bonds, the rating ('DDD' to 'D') is an
assessment of the ultimate recovery value through reorganization or
liquidation.

Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories cannot fully reflect the
differences in the degrees of credit risk.

BB Bonds are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by
adverse economic changes. However, business and financial
alternatives can be identified, which could assist the obligor in
satisfying its debt service requirements.

B Bonds are considered highly speculative. While bonds in
this class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity throughout the life of
the issue.

CCC Bonds have certain identifiable characteristics that, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.

CC Bonds are minimally protected. Default in payment of
interest and/or principal seems probable over time.

C Bonds are in imminent default in payment of interest or
principal.

DDD, DD,
and D Bonds are in default on interest and/or principal payments.
Such bonds are extremely speculative and should be valued on the
basis of their ultimate recovery value in liquidation or
reorganization of the obligor. 'DDD' represents the highest
potential for recovery of these bonds, and 'D' represents the lowest
potential for recovery.

DUFF & PHELPS, INC. LONG-TERM DEBT RATINGS

These ratings represent a summary opinion of the issuer's long-term
fundamental quality. Rating determination is based on qualitative and
quantitative factors which may vary according to the basic economic and
financial characteristics of each industry and each issuer. Important
considerations are vulnerability to economic cycles as well as risks related to
such factors as competition, government action, regulation, technological
obsolescence, demand shifts, cost structure, and management depth and
expertise. The projected viability of the obligor at the trough of the cycle
is a critical determination.

Each rating also takes into account the legal form of the security, (e.g.,
first mortgage bonds, subordinated debt, preferred stock, etc.). The extent of
rating dispersion among the various classes of securities is determined by
several factors including relative weightings of the different security classes
in the capital structure, the overall credit strength of the issuer, and the
nature of covenant protection. Review of indenture restrictions is important
to the analysis of a company's operating and financial constraints.

A-4

<PAGE> 68

The Credit Rating Committee formally reviews all ratings once per quarter (more
frequently, if necessary). Ratings of 'BBB-' and higher fall within the
definition of investment grade securities, as defined by bank and insurance
supervisory authorities.

<TABLE>
<CAPTION>
RATING SCALE DEFINITION
<S> <C>
AAA Highest credit quality. The risk factors are negligible, being only slightly more
than for risk-free U.S. Treasury debt.

AA+ High credit quality. Protection factors are strong. Risk is modest, but may
AA vary slightly from time to time because of economic conditions.
AA-

A+ Protection factors are average but adequate. However, risk factors are more
A variable and greater in periods of economic stress.
A-

BBB+ Below-average protection factors but still considered sufficient for prudent
BBB investment. Considerable variability in risk during economic cycles.
BBB-

BB+ Below investment grade but deemed likely to meet obligations when due.
BB Present or prospective financial protection factors fluctuate according to
BB- industry conditions or company fortunes. Overall quality may move up or
down frequently within this category.

B+ Below investment grade and possessing risk that obligations will not be met
B when due. Financial protection factors will fluctuate widely according to
B- economic cycles, industry conditions and/or company fortunes. Potential
exists for frequent changes in the rating within this category or into a higher
or lower rating grade.

CCC Well below investment grade securities. Considerable uncertainty exists as to
timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company developments.

DD Defaulted debt obligations. Issuer failed to meet scheduled principal and/or
interest payments.
DP Preferred stock with dividend arrearages.
</TABLE>

A-5

<PAGE> 69

SHORT-TERM RATINGS

STANDARD & POOR'S COMMERCIAL PAPER RATINGS

A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the relevant
market.

Ratings are graded into several categories, ranging from 'A-1' for the
highest quality obligations to 'D' for the lowest. These categories are as
follows:

A-1 This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.

A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated 'A-1'.

A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes
in circumstances than obligations carrying the higher designations.

B Issues rated 'B' are regarded as having only speculative capacity for
timely payment.

C This rating is assigned to short-term debt obligations with doubtful
capacity for payment.

STANDARD & POOR'S NOTE RATINGS

An S&P note rating reflects the liquidity factors and market-access risks
unique to notes. Notes maturing in three years or less will likely receive a
note rating. Notes maturing beyond three years will most likely receive a
long-term debt rating.

The following criteria will be used in making the assessment:

- Amortization schedule - the larger the final maturity
relative to other maturities, the more likely the issue is to be
treated as a note.

- Source of payment - the more the issue depends on the market
for its refinancing, the more likely it is to be considered a note.

Note rating symbols and definitions are as follows:

SP-1 Strong capacity to pay principal and interest. Issues determined to
possess very strong characteristics are given a plus (+) designation.

SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.

SP-3 Speculative capacity to pay principal and interest.

A-6

<PAGE> 70

MOODY'S SHORT-TERM RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations. These obligations have an original
maturity not exceeding one year, unless explicitly noted.

Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment ability of rated issuers:

Issuers rated PRIME-1 (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. Prime-1 repayment will
often be evidenced by many of the following characteristics: (i) leading
market positions in well-established industries, (ii) high rates of return on
funds employed, (iii) conservative capitalization structure with moderate
reliance on debt and ample asset protection, (iv) broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and (v)
well established access to a range of financial markets and assured sources of
alternate liquidity.

Issuers rated PRIME-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

Issuers rated PRIME-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt
protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.

Issuers rated NOT PRIME do not fall within any of the Prime rating
categories.

MOODY'S NOTE RATINGS

MIG 1/VMIG 1 This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad based access to the market for refinancing.

MIG 2/VMIG 2 This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

MIG 3/VMIG 3 This designation denotes favorable quality. All security
elements are accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.

MIG 4/VMIG 4 This designation denotes adequate quality. Protection
commonly regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.

SG This designation denotes speculative quality. Debt instruments in
this category lack margins of protection.

A-7

<PAGE> 71

FITCH INVESTORS SERVICE, INC. SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.

The short-term rating places greater emphasis than a long-term rating on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.

F-1+ Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for
timely payment.

F-1 Very Strong Credit Quality. Issues assigned this rating
reflect an assurance of timely payment only slightly less in degree
than issues rated 'F-1+'.

F-2 Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment but the margin
of safety is not as great as for issues assigned 'F-1+' and 'F-1'
ratings.

F-3 Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate; however, near-term adverse changes could cause
these securities to be rated below investment grade.

F-S Weak Credit Quality. Issues assigned this rating have
characteristics suggesting a minimal degree of assurance for timely
payment and are vulnerable to near-term adverse changes in financial
and economic conditions.

D Default. Issues assigned this rating are in actual or
imminent payment default.

LOC The symbol LOC indicates that the rating is based on a letter
of credit issued by a commercial bank.

d DUFF & PHELPS, INC. SHORT-TERM DEBT RATINGS

Duff & Phelps' short-term ratings are consistent with the rating criteria
used by money market participants. The ratings apply to all obligations with
maturities of under one year, including commercial paper, the uninsured portion
of certificates of deposit, unsecured bank loans, master notes, bankers
acceptances, irrevocable letters of credit, and current maturities of long-term
debt. Asset-backed commercial paper is also rated according to this scale.

Emphasis is placed on liquidity which is defined as not only cash from
operations, but also access to alternative sources of funds including trade
credit, bank lines, and the capital markets. An important consideration is the
level of an obligor's reliance on short-term funds on an ongoing basis.

Rating Scale: Definition
- ------------- ----------

High Grade

D-1+ Highest certainty of timely payment. Short-Term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.

D-1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors.
Risk factors are minor.

A-8

<PAGE> 72

D-1- High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk
factors are very small.

Good Grade

D-2 Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is
good. Risk factors are small.

Satisfactory Grade

D-3 Satisfactory liquidity and other protection factors qualify
issues as to investment grade. Risk factors are larger and subject
to more variation. Nevertheless, timely payment is expected.

Non-Investment Grade

D-4 Speculative investment characteristics. Liquidity is not
sufficient to insure against disruption in debt service. Operating
factors and market access may be subject to a high degree of
variation.

Default

D-5 Issuer failed to meet scheduled principal and/or interest payments.

THOMSON BANKWATCH (TBW) SHORT-TERM RATINGS

The TBW Short-Term Ratings apply, unless otherwise noted, to specific debt
instruments of the rated entities with a maturity of one year or less. TBW
Short-Term Ratings are intended to assess the likelihood of an untimely or
incomplete payments of principal or interest.

TBW-1 The highest category; indicates a very high likelihood that
principal and interest will be paid on a timely basis.

TBW-2 The second highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1".

TBW-3 The lowest investment-grade category; indicates that while the
obligation is more susceptible to adverse developments (both internal and
external) than those with higher ratings, the capacity to service principal and
interest in a timely fashion is considered adequate.

TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.

A-9
<PAGE> 73

IBCA SHORT-TERM RATINGS

IBCA Short-Term Ratings assess the borrowing characteristics of banks and
corporations, and the capacity for timely repayment of debt obligations. The
Short-Term Ratings relate to debt which has a maturity of less than one year.

A1+ Obligations supported by the highest capacity for timely
repayment and possess a particularly strong credit feature.

A1 Obligations supported by the highest capacity for timely repayment.

A2 Obligations supported by a good capacity for timely repayment.

A3 Obligations supported by a satisfactory capacity for timely repayment.

B Obligations for which there is an uncertainty as to the capacity
to ensure timely repayment.

C Obligations for which there is a high risk of default or which are
currently in default.

A-10
<PAGE> 74

STRONG COMMON STOCK FUND, INC.

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements (all included or incorporated by reference in
Parts A & B)

Schedules of Investments in Securities
Statements of Operations
Statements of Assets and Liabilities
Statements of Changes in Net Assets
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants

(b) Exhibits

(1) Articles of Incorporation
(2) Bylaws
(3) Inapplicable
(4) Specimen Stock Certificate
(5) Investment Advisory Agreement
(6) Distribution Agreement
(7) Inapplicable
(8) Custody Agreement
(8.1) Global Custody Agreement
(9) Shareholder Servicing Agent Agreement
(10) Inapplicable
(11) Consent of Auditor
(12) Inapplicable
(13) Inapplicable
(14.1) Prototype Defined Contribution Retirement Plan with
Standardized Adoption Agreements - No. 1
(14.1.1) Prototype Defined Contribution Retirement Plan with
Standardized Adoption Agreements - No. 2
(14.2) Individual Retirement Custodial Account
(14.3) Section 403(b)(7) Retirement Plan
(14.4) Simplified Employee Pension Plan Brochure
(15) Inapplicable
(16) Computation of Performance Figures
(17) Financial Data Schedule
(18) Power of Attorney

Item 25. Persons Controlled by or under Common Control with Registrant

Registrant neither controls any person nor is under common control
with any other person.

Item 26. Number of Holders of Securities

<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of September 30, 1996
-------------- ------------------------
<S> <C>
Common Stock, $.001 par value 58,150
</TABLE>

C-1

<PAGE> 75

Item 27. Indemnification

Officers and directors are insured under a joint errors and omissions
insurance policy underwritten by American International Group, First State
Insurance Company, Chubb Group, and Gulf Insurance Companies in the aggregate
amount of $40,000,000, subject to certain deductions. Pursuant to the
authority of the Wisconsin Business Corporation Law, Article VII of
Registrant's Bylaws provides as follows:

ARTICLE VII. INDEMNIFICATION OF OFFICERS AND DIRECTORS

SECTION 7.01. Mandatory Indemnification. The corporation shall
indemnify, to the full extent permitted by the WBCL, as in effect from
time to time, the persons described in Sections 180.0850 through
180.0859 (or any successor provisions) of the WBCL or other provisions
of the law of the State of Wisconsin relating to indemnification of
directors and officers, as in effect from time to time. The
indemnification afforded such persons by this section shall not be
exclusive of other rights to which they may be entitled as a matter of
law.

SECTION 7.02. Permissive Supplementary Benefits. The
corporation may, but shall not be required to, supplement the right of
indemnification under Section 7.01 by (a) the purchase of insurance on
behalf of any one or more of such persons, whether or not the
corporation would be obligated to indemnify such person under Section
7.01; (b) individual or group indemnification agreements with any one
or more of such persons; and (c) advances for related expenses of such
a person.

SECTION 7.03. Amendment. This Article VII may be amended or
repealed only by a vote of the shareholders and not by a vote of the
Board of Directors.

SECTION 7.04. Investment Company Act. In no event shall the
corporation indemnify any person hereunder in contravention of any
provision of the Investment Company Act.

Item 28. Business and Other Connections of Investment Advisor

The information contained under "About the Funds - Management" in the
Prospectus and under "Directors and Officers of the Fund" and "Investment
Advisor and Distributor" in the Statement of Additional Information is hereby
incorporated by reference pursuant to Rule 411 under the Securities Act of
1933.

Item 29. Principal Underwriters

(a) Strong Funds Distributors, Inc., principal underwriter for
Registrant, also serves as principal underwriter for Strong Advantage Fund,
Inc.; Strong Asia Pacific Fund, Inc.; Strong Asset Allocation Fund, Inc.; Strong
Conservative Equity Funds, Inc.; Strong Corporate Bond Fund, Inc.; Strong
Discovery Fund, Inc.; Strong Equity Funds, Inc.; Strong Government Securities
Fund, Inc.; Strong Heritage Reserve Series, Inc.; Strong High-Yield Municipal
Bond Fund, Inc.; Strong Income Funds, Inc.; Strong Institutional Funds, Inc.;
Strong International Bond Fund, Inc.; Strong International Stock Fund, Inc.;
Strong Money Market Fund, Inc.; Strong Municipal Funds, Inc.; Strong Municipal
Bond Fund, Inc.; Strong Opportunity Fund, Inc.; Strong Schafer Value Fund, Inc.;
Strong Short-Term Bond Fund, Inc.; Strong Short-Term Global Bond Fund, Inc.;
Strong Short-Term Municipal Bond Fund, Inc.; Strong Special Fund II, Inc.;
Strong Total Return Fund, Inc.; and Strong Variable Insurance Funds, Inc.

(b) The information contained under "About the Funds - Management" in
the Prospectus and under "Directors and Officers of the Fund" and "Investment
Advisor and Distributor" in the Statement of Additional Information is hereby
incorporated by reference pursuant to Rule 411 under the Securities Act of 1933.

C-2

<PAGE> 76

Item 30. Location of Accounts and Records

All accounts, books, or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are in the physical possession of Registrant's Vice President,
Thomas P. Lemke, at Registrant's corporate offices, 100 Heritage Reserve,
Menomonee Falls, Wisconsin 53051.

Item 31. Management Services

All management-related service contracts entered into by Registrant
are discussed in Parts A and B of this Registration Statement.

Item 32. Undertakings

The Registrant undertakes to furnish to each person to whom a
prospectus is delivered, upon request and without charge, a copy of the
Registrant's latest annual report to shareholders.

C-3

<PAGE> 77

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant hereby certifies that it has
duly caused this Post-Effective Amendment No. 9 to the Registration Statement
on Form N-1A to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Menomonee Falls, and State of Wisconsin on the
31st day of October, 1996.

STRONG COMMON STOCK FUND, INC.
(Registrant)

BY: /s/ John Dragisic
-------------------------------
John Dragisic, President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 9 to the Registration Statement on Form N-1A has
been signed below by the following persons in the capacities and on the date
indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ John Dragisic President (Principal Executive Officer October 31, 1996
- --------------------- and acting Principal Financial and
John Dragisic Accounting Officer) and a Director

/s/ Richard S. Strong Chairman of the Board and a Director October 31, 1996
- ---------------------
Richard S. Strong

Director October 31, 1996
- ---------------------
Marvin E. Nevins*

Director October 31, 1996
- ---------------------
Willie D. Davis*

Director October 31, 1996
- ---------------------
William F. Vogt*

Director October 31, 1996
- ---------------------
Stanley Kritzik*
</TABLE>

* Thomas P. Lemke signs this document pursuant to powers of attorney filed with
Post-Effective Amendment No. 7 to the Registration Statement of Registrant
filed with the SEC on or about April 18, 1995.

BY: /s/ Thomas P. Lemke
-----------------------------
Thomas P. Lemke

<PAGE> 78

EXHIBIT INDEX

<TABLE>
<CAPTION>
EDGAR
Exhibit No. Exhibit Exhibit No.
- ----------- ------- -----------
<S> <C> <C>
(1) Articles of Incorporation EX-99.B1

(2) Bylaws EX-99.B2(2)

(3) Inapplicable

(4) Specimen Stock Certificate EX-99.B4(2)

(5) Investment Advisory Agreement EX-99.B5(1)

(6) Distribution Agreement EX-99.B6(2)

(7) Inapplicable

(8) Custody Agreement EX-99.B8(2)

(8.1) Global Custody Agreement EX-99.B8.1(2)

(9) Shareholder Servicing Agent Agreement EX-99.B9(2)

(10) Inapplicable

(11) Consent of Auditor EX-99.B11

(12) Inapplicable

(13) Inapplicable

(14.1) Prototype Defined Contribution Retirement Plan EX-99.B14.1(2)
with Standardized Adoption Agreements - No. 1

(14.1.1) Prototype Defined Contribution Retirement Plan EX-99.B14.1.1(2)
with Standardized Adoption Agreements - No. 2

(14.2) Individual Retirement Custodial Account EX-99.B14.2(2)

(14.3) Section 403(b)(7) Retirement Plan EX-99.B14.3(2)

(14.4) Simplified Employee Pension Plan Brochure EX-99.B14.4

(15) Inapplicable

(16) Computation of Performance Figures EX-99.B16

(17) Financial Data Schedule EX-27.CLASS A

(18) Inapplicable

(19) Power of Attorney(1)

</TABLE>

- -------------------------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 7 to the
Registration Statement on Form N-1A of Registrant filed on or about April
18, 1995.

<PAGE> 79

(2) Incorporated herein by reference to Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A of Registrant filed on or about April
25, 1996.

<PAGE> 1

AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF STRONG COMMON STOCK FUND, INC.

These Amended and Restated Articles of Incorporation shall supersede and
replace the heretofore existing Articles of Incorporation of Strong Common
Stock Fund, Inc., as amended to date, a corporation organized under Chapter 180
of the Wisconsin Statutes:

ARTICLE I

The name of the corporation (hereinafter, the "Corporation") is:

Strong Common Stock Fund, Inc.

ARTICLE II

The period of existence of the Corporation shall be perpetual.

ARTICLE III

The purpose for which the Corporation is organized is, without limitation,
to act as a registered management investment company under 15 USC 80a-1 to
80a-64, as amended from time to time (the "Investment Company Act"), and for
any other purposes for which corporations may be organized under Chapter 180 of
the Wisconsin Statutes, as amended from time to time (the "WBCL").

ARTICLE IV

A. The Corporation shall have the authority to issue an indefinite number
of shares with a par value of $.001 per share, initially consisting of a single
class designated as Common Stock. Prior to the reclassification of any unissued
shares of the Corporation's Common Stock, such Common Stock shall have
unlimited voting rights as provided by the WBCL, shall be entitled to receive
the net assets of the Corporation upon liquidation and shall be entitled to
such dividends or distributions, in shares or in cash or in both, as may be
declared from time to time by the Board of Directors. The Board of Directors
shall have the authority to redesignate the outstanding Common Stock upon the
reclassification of any unissued shares of Common Stock into different classes
and series of classes, provided the redesignation does not affect the
preferences, limitations, and relative rights of outstanding shares of Common
Stock (or such other designation for such Common Stock as is determined by the
Board of Directors pursuant to this sentence) and upon such redesignation and
reclassification, outstanding shares shall be subject to subparagraphs 1-7 of
paragraph B of this Article IV. Thereafter, the Corporation's Common Stock
shall consist of such classes and series as is designated by the Board of
Directors in accordance with paragraph B of this Article IV.

B. The Board of Directors is authorized to classify or to reclassify (i.e.
into classes and series of classes), from time to time, any unissued shares of
the Corporation by setting, changing, or eliminating the distinguishing
designation and the preferences, limitations, and relative rights, in whole or
in part, to the fullest extent permissible under the WBCL.

Unless otherwise provided by the Board of Directors prior to the issuance
of shares, the shares of any and all classes and series shall be subject to the
following:

1. The Board of Directors may redesignate a class or series whether or not
shares of such class or series are issued and outstanding, provided that such
redesignation does not affect the preferences, limitations, and relative
rights, in whole or in part, of such class or series.

<PAGE> 2

2. The assets and liabilities and the income and expenses for each class
shall be attributable to that class. The assets and liabilities and the income
and expenses of each series within a class shall be determined separately and,
accordingly, the net asset value of shares may vary from series to series
within a class. The income or gain and the expense or liabilities of the
Corporation shall be allocated to each class or series as determined by or
under the direction of the Board of Directors.

3. Shares of each class or series shall be entitled to such dividends or
distributions, in shares or in cash or both, as may be declared from time to
time by the Board of Directors with respect to such class or series. Dividends
or distributions shall be paid on shares of a class or series only out of the
assets belonging to that class or series.

4. Any shares redeemed by the Corporation shall be deemed to be canceled
and restored to the status of authorized but unissued shares of the particular
class or series.

5. In the event of the liquidation or dissolution of the Corporation, the
holders of a class or series shall be entitled to receive, as a class or
series, out of the assets of the Corporation available for distribution to
shareholders, the assets belonging to that class or series less the liabilities
allocated to that class or series. The assets so distributable to the holders
of a class or series shall be distributed among such holders in proportion to
the number of shares of that class or series held by them and recorded on the
books of the Corporation. In the event that there are any assets available for
distribution that are not attributable to any particular class or series, such
assets shall be allocated to all classes or series in proportion to the net
asset value of the respective class or series.

6. All holders of shares shall vote as a single class and series except
with respect to any matter which affects only one or more series or class of
shares, in which case only the holders of shares of the class or series
affected shall be entitled to vote.

7. For purposes of the Corporation's Registration Statement filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the
Investment Company Act of 1940, including all prospectuses and Statements of
Additional Information, and other reports filed under the Investment Company
Act of 1940, references therein to "classes" of the Corporation's common stock
shall mean "series", as used in these Articles of Incorporation and the WBCL,
and references therein to "series" shall mean "classes", as used in these
Articles of Incorporation and the WBCL.

C. The Corporation may issue fractional shares. Any fractional shares
shall carry proportionately all the rights of whole shares, including, without
limitation, the right to vote and the right to receive dividends and
distributions.

D. The Board of Directors of the Corporation may authorize the issuance
and sale of any class or series of shares from time to time in such amount and
on such terms and conditions, for such purposes and for such amounts or kind of
consideration as the Board of Directors shall determine, subject to any limits
required by then applicable law. Nothing in this paragraph shall be construed
in any way as limiting the Board of Directors authority to issue the
Corporation's shares in connection with a share dividend under the WBCL.

E. Subject to the suspension of the right of redemption or postponement of
the date of payment or satisfaction upon redemption in accordance with the
Investment Company Act, each holder of any class or series of the Common Stock
of the Corporation, upon request and after complying with the redemption
procedures established by or under the supervision of the Board of Directors,
shall be entitled to require the Corporation to redeem out of legally available
funds all or any part of the Common Stock standing in the name of such holder
on the books of the Corporation at the net asset value (as determined in
accordance with the Investment Company Act) of such shares (less any applicable
redemption fee). Any such redeemed shares shall be canceled and restored to the
status of authorized but unissued shares.

<PAGE> 3

F. The Board of Directors may authorize the Corporation, at its option and
to the extent permitted by and in accordance with the Investment Company Act,
to redeem any shares of Common Stock of any class or series of the Corporation
owned by any shareholder under circumstances deemed appropriate by the Board of
Directors in its sole discretion from time to time, including without
limitation the failure to maintain ownership of a specified minimum number or
value of shares of Common Stock of any class or series of the Corporation, at
the net asset value (as determined in accordance with the Investment Company
Act) of such shares (less any applicable redemption fee).

G. The Board of Directors of the Corporation may, upon reasonable notice
to the holders of Common Stock of any class or series of the Corporation,
impose a fee for the redemption of shares, such fee to be not in excess of the
amount set forth in the Corporation's then existing Bylaws and to apply in the
case of such redemptions and under such terms and conditions as the Board of
Directors shall determine. The Board of Directors shall have the authority to
rescind imposition of any such fee in its discretion and to reimpose the
redemption fee from time to time upon reasonable notice.

H. No holder of the Common Stock of any class or series of the Corporation
shall, as such holder, have any right to purchase or subscribe for any shares
of the Common Stock of any class or series of the Corporation which it may
issue or sell other than such right, if any, as the Board of Directors, in its
sole discretion, may determine.

I. With respect to any class or series, the Board of Directors may adopt
provisions to seek to maintain a stable net asset value per share. Without
limiting the foregoing, the Board of Directors may determine that the net asset
value per share of any class or series should be maintained at a designated
constant value and may establish procedures, not inconsistent with applicable
law, to accomplish that result. Such procedures may include a requirement, in
the event of a net loss with respect to the particular class or series from
time to time, for automatic pro rata capital contributions from each
shareholder of that class or series in amounts sufficient to maintain the
designated constant share value.

ARTICLE V

The number of directors shall be fixed by the Bylaws of the Corporation.

ARTICLE VI

The Corporation reserves the right to enter into, from time to time,
investment advisory agreements providing for the management and supervision of
the investments of the Corporation, the furnishing of advice to the Corporation
with respect to the desirability of investing in, purchasing or selling
securities or other assets and the furnishing of clerical and administrative
services to the Corporation. Such agreements shall contain such other terms,
provisions and conditions as the Board of Directors of the Corporation may deem
advisable and as are permitted by the Investment Company Act.

The Corporation may, without limitation, designate distributors,
custodians, transfer agents, registrars and/or disbursing agents for the stock
and assets of the Corporation and employ and fix the powers, rights, duties,
responsibilities and compensation of each such distributor, custodian, transfer
agent, registrar and/or disbursing agent.

ARTICLE VII

If the Board of Directors redesignate the outstanding Common Stock in
accordance with paragraph A of Article IV, the Board of Directors shall
designate the corporation with a generic name that is consistent with the name
of the first series and any subsequent series.

<PAGE> 4

ARTICLE VIII

The registered office of the Corporation is located at 100 Heritage
Reserve, in the Village of Menomonee Falls, Waukesha County, Wisconsin 53051
and the name of the registered agent at such address is Thomas P. Lemke.

This instrument was drafted by:

John S. Weitzer
Strong Capital Management, Inc.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051

<PAGE> 1

CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 99.B11

To the Board of Directors of
Strong Common Stock Fund, Inc.

We consent to the incorporation by reference in Post-Effective Amendment No. 9
to the Registration Statement of Strong Common Stock Fund, Inc. on Form N-1A of
our reports dated February 5, 1996 on our audits of the financial statements
and financial highlights of Strong Growth Fund (a series of Strong Equity
Funds, Inc.), Strong Discovery Fund, Inc., Strong Opportunity Fund, Inc. and
Strong Common Stock Fund, Inc., which reports are included in the Annual Report
to Shareholders for the year ended December 31, 1995, which is also
incorporated by reference in the Registration Statement. We also consent to
the reference to our Firm under the caption "Independent Accountants" in the
Statement of Additional Information.

/s/ Coopers & Lybrand L.L.P.

COOPERS & LYBRAND L.L.P.

Milwaukee, Wisconsin
October 28, 1996

<PAGE> 1
BASIC PLAN DOCUMENT

UNIVERSAL SIMPLIFIED EMPLOYEE PENSION PLAN
EXHIBIT 14.4
[STRONG FUNDS LOGO]
STRONG FUNDS

1 ESTABLISHMENT AND PURPOSE OF PLAN

1.01 PURPOSE The purpose of this Plan is to provide, in accordance with
its provisions, a Simplified Employee Pension Plan providing benefits
upon retirement for the individuals who are eligible to participate
hereunder.

1.02 INTENT TO QUALIFY It is the intent of the Employer that this Plan shall
be for the exclusive benefit of its Employees and shall qualify for
approval under Section 408(k) of the Internal Revenue Code, as
amended from time to time (for corresponding provisions of any
subsequent Federal law at that time in effect). In case of any
ambiguity, it shall be interpreted to accomplish such result. It is
further intended, that it comply with the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA) as amended from time to
time.

1.03 WHO MAY ADOPT An employer who has ever maintained a defined benefit
plan which is now terminated may not participate in this prototype
Simplified Employee Pension Plan. If, subsequent to adopting this
Plan, any defined benefit plan of the Employer terminates, the
employer will no longer participate in this prototype plan and will
be considered to have an individually designed plan.

1.04 USE WITH IRA This prototype Simplified Employee Pension Plan must be
used with an Internal Revenue Service model IRA (Form 5305 or Form
5305-A) or an Internal Revenue Service approved master or prototype
IRA.

1.05 FOR MORE INFORMATION To obtain more information concerning the rules
governing this Plan, contact the Prototype Sponsor listed in Section
5 of the Adoption Agreement.
<PAGE> 2
2 DEFINITIONS

2.01 ADOPTION AGREEMENT Means the document executed by the Employer
through which it adopts the Plan and thereby agrees to be bound by
all terms and conditions of the Plan.

2.02 CODE Means the Internal Revenue Code of 1986 as amended.

2.03 COMPENSATION Compensation for the purposes of the $300 limit of
Section 408(k)(2)(C) of the Code shall be defined as Section 414(q)(7)
Compensation.

For all other purposes, Compensation shall mean all of a Participant's
wages as defined in Section 3401(a) of the Code for the purposes of
income tax withholding at the source (that is, W-2 wages) but
determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment or
the services performed (such as the exception for agricultural labor
in Section 3401(a)(2) of the Code).

For any Self-Employed Individual covered under the Plan, Compensation
will mean Earned Income.

Compensation shall include only that Compensation which is actually
paid to the Participant during the Plan Year.

Compensation shall include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is not
includible in the gross income of the Employee under Sections
125,402(a)(8), 402(h) or 403(b) of the Code.

The annual Compensation of each Participant taken into account under
the Plan for any year shall not exceed $200,000. This limitation
shall be adjusted by the Secretary at the same time and in the same
manner as under Section 415(d) of the Code, except the dollar
increase in effect on January 1 of any calendar year is effective for
years beginning in such calendar year and the first adjustment to the
$200,000 limitation is effected on January 1, 1990. If a Plan
determines Compensation on a period of time that contains fewer than
12 calendar months, then the annual Compensation limit is an amount
equal to the annual Compensation limit for the calendar year in which
the compensation period begins multiplied by the ratio obtained by
dividing the number of full months in the period by 12.

In determining the Compensation of a Participant the rules of Section
414(q)(6) of the Code shall apply, except in applying such rules, the
term "family" shall include only the spouse of the Participant and
any lineal descendants of the Participant who have not attained age
19 before the close of the year. If, as a result of the application
of such rules the adjusted $200,000 limitation is exceeded, then
(except for purposes of determining the portion of Compensation up to
the integration level if this Plan provides for permitted disparity),
the limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as determined under
this section prior to the application of this limitation.

In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the contrary,
for Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Employee taken into account under the Plan shall
not exceed the OBRA '93 annual Compensation limit. The OBRA '93
annual Compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance with
Section 401(a)(17)(B) of the Internal Revenue Code. The
cost-of-living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Compensation is determined
(determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93
annual Compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination
period, and the denominator of which is 12.

For Plan Years beginning on or after January 1, 1994, any reference
in this Plan to the limitation under Section 401(a)(17) of the Code
shall mean the OBRA '93 annual Compensation limit set forth in this
provision.

<PAGE> 3
2.04 EARNED INCOME Means the net earnings from self-employment in
the trade or business with respect to which the Plan is
established, for which personal services of the individual
are a material income-producing factor. Net earnings will be
determined without regard to items not included in gross
income and the deductions allocable to such items. Net
earnings are reduced by contributions by the Employer to
a qualified plan or to a Simplified Employee Pension Plan
to the extent deductible under Section 404 of the Code.

Net earnings shall be determined with regard to the
deduction allowed to the Employer by Section 164(f)
of the Code for taxable years beginning after
December 31, 1989.

2.05 EFFECTIVE DATE Means the date the Plan becomes
effective as indicated in the Adoption Agreement.

2.06 EMPLOYEE Means any person who is a natural person
employed by the Employer as a common law employee
and if the Employer is a sole proprietorship or
partnership, any Self-Employed Individual who performs
services with respect to the trade or business of the
Employer. Further, any employee of any other employer
required to be aggregated under Section 414(b), (c), (m),
or (o) of the Code and any leased employee required to be
treated as an employee of the Employer under Section 414(n)
of the Code shall also be considered an Employee.

2.07 EMPLOYER Means any corporation, partnership or sole
proprietorship named in the Adoption Agreement and any
successor who by merger, consolidation, purchase or
otherwise assumes the obligations of the Plan. A partnership
is considered to be the Employer of each of the partners and
a sole proprietorship is considered to be the Employer of
the sole proprietor.

2.08 EMPLOYER CONTRIBUTION Means the amount contributed
by the Employer to this Plan.

2.09 IRA Means the designated Individual Retirement
Account or Individual Retirement Annuity, which satisfies
the requirements of Section 408 of the Code, and which is
maintained by a Participant with the Prototype Sponsor
(unless the Prototype Sponsor allows Participants to
maintain their IRAs with other organizations).

2.10 PARTICIPANT Means any Employee who has met the
participation requirements of Section 3.01 and who is or
may become eligible to receive an Employer Contribution.

2.11 PLAN Means this plan document plus the corresponding
Adoption Agreement as completed and signed by the Employer.

2.12 PLAN YEAR Means the calendar year or the 12 consecutive month
period which coincides with the Employer's taxable year.

2.13 PRIOR PLAN Means a plan which was amended or replaced by
adoption of this plan document, as indicated in the Adoption
Agreement.

2.14 PROTOTYPE SPONSOR Means the entity specified in the
Adoption Agreement which sponsors this prototype Plan.

2.15 SELF-EMPLOYED INDIVIDUAL Means an individual who
has Earned Income for a Plan Year from the trade or business
for which the Plan is established; also, an individual who
would have had Earned Income but for the fact that the trade
or business had no net profits for the Plan Year.

2.16 SERVICE Means the performance of duties by an Employee for
the Employer, for any period of time, however
short, for which the Employee is paid or entitled to payment.
When the Employer maintains the Plan of a predecessor
employer, an Employee's Service will include his or her
service for such predecessor employer.

2.17 TAXABLE WAGE BASE Means the maximum amount of earnings which
may be considered wages for a year under Section 312(a)(1) of
the Code in effect as of the beginning of the Plan Year.

<PAGE> 4
3. ELIGIBILITY AND PARTICIPATION

3.01 ELIGIBILITY REQUIREMENTS Except for those Employees excluded
pursuant to Section 3.02, each Employee of the Employer who fulfills the
eligibility requirements specified in the Adoption Agreement shall, as
a condition for further employment, become a participant. Each
Participant must establish an IRA with the Prototype Sponsor to which
Employer Contributions under this Plan will be made.

3.03 ADMITTANCE AS A PARTICIPANT

A. Prior Plan If this Plan is an amendment or continuation of a Prior
Plan, each Employee of the Employer who immediately before the
Effective Date was a participant in said Prior Plan shall be a
Participant in this Plan as of said date.

B. Notification of Eligibility The Employer shall notify each
Employee who becomes a Participant of his or her status as a
Participant in the Plan and of his or her duty to establish an IRA
with the Prototype Sponsor to which Employer Contributions may be
made.

C. Establishment of an IRA If a Participant fails to establish an
IRA for whatever reason, the Employer may execute any necessary
documents to establish an IRA on behalf of the Participant.

3.02 EXCLUSION OF CERTAIN EMPLOYEES If the Employer has so indicated in the
Adoption Agreement, the following Employees shall not be eligible to
become a participant in the Plan: (a) Those Employees included in a unit
of Employees covered by the terms of a collective bargaining agreement,
provided retirement benefits were the subject of good faith bargaining;
and (b) those Employees who are nonresident aliens, who have received no
earned income from the Employer which constitutes earned income from
sources within the United States.

3.04 DETERMINATIONS UNDER THIS SECTION The Employer shall determine the
eligibility of each Employee to be a Participant. This determination
shall be conclusive and binding upon all persons except as otherwise
provided herein or by law.

3.05 LIMITATION RESPECTING EMPLOYMENT Neither the fact of the establishment
of the Plan nor the fact that a common-law employee has become a
Participant shall give to that common-law employee any right to
continued employment; nor shall either fact limit the right of the
Employer to discharge or to deal otherwise with a common-law employee
without regard to the effect such treatment may have upon the Employee's
rights under the Plan.
<PAGE> 5

4. CONTRIBUTIONS AND ALLOCATIONS

4.01 EMPLOYER CONTRIBUTIONS

A. Allocation Formula Employer Contributions shall be allocated in
accordance with the allocation formula selected in the Adoption
Agreement. Each Employee who has satisfied the eligibility
requirements pursuant to Section 3.01 (thereby becoming a
Participant) will share in such allocation.

If the Employer has selected the pro rata allocation formula in
the Adoption Agreement, then Employer Contributions for each
Plan Year shall be allocated to the IRA of each Participant in the
same proportion as such Participant's Compensation (not in excess
of $200,000, indexed for cost of living increases in accordance
with Section 408(k)(8) of the Code) for the Plan Year bears to the
total Compensation of all Participants for such year.

Employer Contributions made for a Plan Year on behalf of any
Participant shall not exceed the lesser of 15% of Compensation or
the limitation in effect under Code Section 415(c)(1)(A)(indexed
for cost of living increases in accordance with Code Section
415(d)).

B. Integrated Allocation Formula If the Employer has selected the
integrated allocation formula in the Adoption Agreement, then
Employer Contributions for the Plan Year will be allocated to
Participants' IRA as follows:

Step 1 Employer Contributions will be allocated to each
Participant's IRA in the ratio that each Participant's
total Compensation bears to all Participants' total
Compensation, but not in excess of 3% of each
Participant's Compensation.

Step 2 Any Employer Contributions remaining after the allocation
in Step 1 will be allocated to each Participant's IRA
in the ratio that each Participant's Compensation for the
Plan Year in excess of the integration level bears to the
Compensation of all Participants' in excess of the
integration level, but not in excess of 3%.

Step 3 Any Employer Contributions remaining after the allocation
in Step 2 will be allocated to each Participant's IRA
in the ratio that the sum of each Participant's total
Compensation and Compensation in excess of the integration
level bears to the sum of all Participants' total
Compensation and Compensation in excess of the integration
level, but not in excess of the maximum disparity rate
described in the following table.

Step 4 Any Employer Contributions remaining after the allocation
in Step 3 will be allocated to each Participant's IRA
in the ratio that each Participant's total Compensation
for the Plan Year bears to all Participants' total
Compensation for that Plan Year.

The integration level shall be equal to the Taxable Wage
Base or such lesser amount elected by the Employer in the
Adoption Agreement.

<TABLE>
<CAPTION>
Integration Level Maximum Disparity Rate
- --------------------------------------------------------------------------------
<S> <C>
Taxable Wage Base (TWB) 2.7%
More than $0 but not more than X* 2.7%
More than X* of TWB but not more than 80% of TWB 1.3%
More than 80% of TWB but not more than TWB 2.4%
</TABLE>

*X means the greater of $10,000 or 20% of TWB.

C. Timing of Employer Contribution Employer Contributions, if any,
made on behalf of Participants for a Plan Year shall be
allocated and deposited to the IRA of each Participant no later
than the due date for filing the Employer's tax return (including
extensions).

4.02 DEDUCTIBILITY OF CONTRIBUTIONS Contributions to the Plan are
deductible by the Employer for the taxable year with or within
which the Plan Year of the Plan ends. Contributions made for a
particular taxable year and contributed by the due date of the
Employer's income tax return, including extensions, are deemed made in
that taxable year.

4.03 VESTING, WITHDRAWAL RIGHTS TO CONTRIBUTIONS All Employer Contributions
made under the Plan on behalf of Employees shall be fully
vested and nonforfeitable at all times. Each Employee shall have an
unrestricted right to withdraw at any time all or a portion of the
Employer Contributions made on his or her behalf. However,
withdrawals taken are subject to the same taxation and penalty
provisions of the Code which are applicable to IRA distributions.

4.04 SIMPLIFIED EMPLOYER REPORTS The Employer shall furnish reports,
relating to contributions made under the Plan, in the time and
manner and containing the information prescribed by the Secretary of
the Treasury, to Participants. Such reports shall be furnished at
least annually and shall disclose the amount of the contribution made
under the Plan to the Participant's IRA.

<PAGE> 6
5 AMENDMENT OR TERMINATION OF PLAN

5.01 AMENDMENT BY EMPLOYER The Employer reserves the right to amend
the elections made or not made on the Adoption Agreement by
executing a new Adoption Agreement and delivering a copy of the
same to the Prototype Sponsor. The Employer shall not have the
right to amend any nonelective provision of the Adoption Agreement
nor the right to amend provisions of this plan document. If the
Employer adopts an amendment to the Adoption Agreement or plan
document in violation of the preceding sentence, the Plan will be
deemed to be an individually designed plan and may no longer
participate in this prototype Plan.

5.02 AMENDMENT BY PROTOTYPE SPONSOR By adopting this Plan, the
Employer delegates to the Prototype Sponsor the power to amend or
replace the Adoption Agreement of the Plan to conform them to the
provisions of any law, regulations or administrative rulings
pertaining to Simplified Employee Pensions and to make such other
changes to the Plan, which, in the judgement of the Prototype
Sponsor, are necessary or appropriate. The Employer shall be
deemed to have consented to all such amendments, provided however,
that no changes may be made without the consent of the Employer if
the effect would be to substantially change the costs or benefits
under the Plan. The Prototype Sponsor shall not have the
obligation to exercise or not to exercise the power delegated to
it nor shall the Prototype Sponsor incur liability of any nature
for any act done or failed to be done by the Prototype Sponsor in
good faith in the exercise or nonexercise of the power delegated
hereunder. The Prototype Sponsor shall notify the Employer should
it discontinue sponsorship of the Plan.

5.03 LIMITATIONS ON POWER TO AMEND No amendment by either the Employer
or the Prototype Sponsor shall reduce or otherwise adversely
affect any benefits of a Participant or Beneficiary acquired
prior to such amendment unless it is required to maintain
compliance with any law, regulation or administrative ruling
pertaining to Simplified Employee Pensions.

5.04 TERMINATION While the Employer expects to continue the Plan
indefinitely, the Employer shall not be under any obligation or
liability to continue contributions or to maintain the Plan for
any given length of time. The Employer may terminate this Plan at
any time by appropriate action of its managing body. This Plan
shall terminate on the occurrence of any of the following events:

A. Delivery to the Prototype Sponsor of a notice of termination
executed by the Employer specifying the effective date of the
Plan's termination.

B. Adjudication of the Employer as bankrupt or the liquidation or
dissolution of the Employer.

5.05 NOTICE OF AMENDMENT, TERMINATION Any amendment or termination
shall be communicated by the Employer to all appropriate parties
as required by law. Amendments made by the Prototype Sponsor shall
be furnished to the Employer and communicated by the Employer to
all appropriate parties as required by law. Any filings required
by the Internal Revenue Service or any other regulatory body
relating to the amendment or termination of the Plan shall be
made by the Employer.

5.06 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER A successor of the
Employer may continue the Plan and be substituted in the place of
the present Employer. The successor and present Employer (or if
deceased, the executor of the estate of a deceased Self-Employed
Individual who was the Employer) must execute a written instrument
authorizing such substitution and the successor must complete and
sign a new Adoption Agreement.

<PAGE> 7
6 SALARY DEFERRAL SEP PROVISIONS

In addition to Sections 1 through 5, the provisions of this
Section 6 shall apply if the Employer is an Eligible Employer and
has adopted a salary deferral Simplified Employee Pension Plan by
indicating in the Adoption Agreement that Retirement Savings
Contributions are permitted.

If the Employer has so indicated in the Adoption Agreement, the
Employer agrees to permit Retirement Savings Contributions to be
made which will be contributed by the Employer to the IRA
established by or on behalf of each Contributing Participant. This
arrangement is intended to qualify as a salary reduction
simplified employee pension ("SARSEP") under Section 480(k)(6) of
the Code and the regulations thereunder.

The SARSEP portion of this Plan shall be effective upon adoption.
No Retirement Savings Contributions may be based on Compensation
an Employee could have received before adoption of the SARSEP and
execution by the Employee of a Retirement Savings Agreement.

6.100 DEFINITIONS

6.101 COMPENSATION Means Compensation as defined in Section 2.03 of
the Plan and shall include any amount which is contributed by the
Employer as a Retirement Savings Contribution pursuant to a
Retirement Savings Agreement which is not includible in the gross
income of the Employee under Section 402(h) of the Code.

6.102 CONTRIBUTING PARTICIPANT Means a person who has met the
participation requirements and who has enrolled as a Contributing
Participant pursuant to Section 6.201 and on whose behalf the
Employer is contributing Retirement Savings Contributions.

6.103 ELIGIBLE EMPLOYER Means an Employer which: (a) has no more than
25 Employees who are eligible to participate in the Plan (or would
have been eligible to participate if this Plan had been
maintained) at any time during the preceding Plan Year; (b) has no
leased employees within the meaning of Section 414(n)(2) of the
Code; (c) is not a state or local government or political
subdivision thereof, or any agency or instrumentality thereof, or
an organization exempt from tax under Subtitle A of the Code; and
(d) does not currently maintain or has not maintained a defined
benefit plan, even if now terminated.

6.104 ENROLLMENT DATE Means the first day of any Plan Year, the first
day of the seventh month of any Plan Year and any more frequent
dates as the Employer may designate in a uniform and
nondiscriminatory manner.

6.105 EXCESS CONTRIBUTION Means the amount of each Highly Compensated
Employee's Retirement Savings Contributions that exceeds the
actual deferral percentage test limits described in Section
6.303(B) of the Plan for a Plan Year.

6.106 HIGHLY COMPENSATED EMPLOYEE Means a Participant described in
Section 414(q) of the Code who during the current or preceding
year; (a) was a 5% owner of the Employer as defined in Section
416(i)(1)(B)(i) of the Code; (b) received Compensation in excess
of $50,000, as adjusted pursuant to Section 415(d), and was in the
top-paid group (the top 20% of Employees, by Compensation); (c)
received Compensation in excess of $75,000, as adjusted pursuant
to section 415(d); or (d) was an officer and received Compensation
in excess of 50% of the dollar limit under Section 415 of the Code
for defined benefit plans.

6.107 KEY EMPLOYEE Means any Employee or former Employee or
beneficiaries of these Employees who at any time during the Plan
Year or the four preceding Plan Years is or was: (a) an officer of
the Employer (if the Employee's annual Compensation exceeds 50% of
the dollar limitation under Section 415(b)(1)(A) of the Code); (b)
an owner of one of the 10 largest interests in the Employer (if
the Employee's annual Compensation exceeds 100% of the dollar
limitation under Section 415(c)(1)(A) of the Code); (c) a 5% owner
of the Employer as defined in Section 416(i)(1)(B)(i) of the Code;
or (d) a 1% owner of Employer (if the Employee has annual
Compensation in excess of $150,000).

6.108 RETIREMENT SAVINGS AGREEMENT Means an agreement, on a form
provided by the Employer pursuant to which a Contributing
Participant may elect to have his or her Compensation reduced and
paid as a Retirement Savings Contribution to his or her IRA by the
Employer.

6.109 RETIREMENT SAVINGS CONTRIBUTIONS Means contributions made by the
Employer on behalf of the Contributing Participant pursuant to
Section 6.301. Retirement Savings Contributions shall be deemed to
be Employer Contributions for purposes of (a) the contribution
limits described in Section 4.01(A) of the Plan; (b) the vesting
and withdrawal rights described in Section 4.03 of the Plan; and
(c) determining whether this Plan is a Top-Heavy Plan.

6.110 TOP-HEAVY PLAN This Plan is a Top-Heavy Plan for any Plan Year
if, as of the last day of the previous Plan Year (or current Plan
Year if this is the first year of the Plan) the total of the
Employer Contributions made on behalf of Key Employees for all the
years this Plan has been in existence exceeds 60% of such
contributions for all Employees. If the Employer maintains (or
maintained within the prior five years) any other SEP or defined
contribution plan in which a Key Employee participates (or
participated), the contributions or account balances, whichever is
applicable, must be aggregated with the contributions made to the
Plan. The contributions (and account balances, if applicable) of
an Employee who ceases to be a Key Employee or of an individual
who has not been in the employ of the Employer for the previous
five years shall be disregarded. The identification of Key
Employees and the top-heavy calculation shall be determined in
accordance with Section 416 of the Code and the regulations
thereunder.

<PAGE> 8
6.200 CONTRIBUTING PARTICIPANT

6.201 REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT

A. Enrollment Each Employee who becomes a Participant may enroll
as a Contributing Participant. A Participant shall be eligible
to enroll as a Contributing Participant on any Enrollment
Date.

B. Initial Enrollment Notwithstanding the time set forth in
Section 6.201(A) as of which a Participant may enroll as a
Contributing Participant, the Employer shall have the
authority to designate, in a uniform and nondiscriminatory
manner, additional Enrollment Dates during the twelve month
period beginning on the Effective Date in order that an
orderly first enrollment might be completed.

6.202 MODIFICATION OF RETIREMENT SAVINGS AGREEMENT A Contributing
Participant may modify his or her Retirement Savings Agreement to
increase or decrease (within the limits placed on Retirement
Savings Contributions in the Adoption Agreement) the amount of his
or her Compensation deferred into his or her IRA under the Plan.
Such modification may only be prospectively made effective as of
an Enrollment Date, or as of any other more frequent date(s) if
the Employer so permits in a uniform and nondiscriminatory manner.
A Contributing Participant who desires to make such a modification
shall complete, sign and file a new Retirement Savings Agreement
with the Employer at least 30 days (or such lesser period of days
as the Employer shall permit in a uniform and nondiscriminatory
manner) before the modification is to become effective.

6.203 WITHDRAWAL AS A CONTRIBUTING PARTICIPANT A Participant may
withdraw as a Contributing Participant as of the last date
preceding any Enrollment Date (or as of any other date if the
Employer so permits in a uniform and nondiscriminatory manner) by
revoking his or her authorization to the Employer to make
Retirement Savings Contributions on his or her behalf. A
Participant who desires to withdraw as a Contributing Participant
shall give written notice of withdrawal to the Employer at least
30 days (or such lesser period of days as the Employer shall
permit in a uniform and nondiscriminatory manner) before the
effective date of withdrawal. A Participant shall cease to be a
Contributing Participant upon his or her termination of
employment, or on account of termination of the Plan.

6.204 RETURN AS CONTRIBUTING PARTICIPANT AFTER WITHDRAWAL A Participant
who has withdrawn as a Contributing Participant under Section
6.203 may not again become a Contributing Participant until the
first day of the first Plan Year following the effective date of
his or her withdrawal as Contributing Participant.

6.300 RETIREMENT SAVINGS CONTRIBUTIONS

6.301 SALARY DEFERRAL ARRANGEMENT The Employer shall contribute
Retirement Savings Contributions on behalf of all Contributing
Participants for each Plan Year that the following requirements
are satisfied:

A. The Employer is an Eligible Employer; and

B. Not less than 50% of the Employees eligible to participate
elect to have Retirement Savings Contributions contributed to
the Plan on their behalf.

Subject to the limits described in Section 6.303, the amount of
Retirement Savings Contributions so contributed shall be the
amount required by the Retirement Savings Agreements of
Contributing Participants.

No Retirement Savings Contribution may be based on Compensation a
Participant received, or had a right to receive, before execution
of a Retirement Savings Agreement by the Participant.

6.302 FAILURE TO SATISFY 50% PARTICIPATION REQUIREMENT If the 50%
participation requirement described in Section 6.301(B) is not
satisfied as of the end of any Plan Year, all the Retirement
Savings Contributions made by Employees for the Plan Year shall be
considered "Disallowed Deferrals," i.e., IRA contributions that
are not SEP-IRA contributions. The Employer shall notify each
affected Employee, within 2-1/2 months after the end of the Plan
Year to which the Disallowed Deferrals relate, that the deferrals
are no longer considered SEP-IRA contributions. Such notification
shall specify the amount of the Disallowed Deferrals and the
calendar year of the Employee in which they are includible in
income and must provide an explanation of applicable penalties if
the Disallowed Deferrals are not withdrawn in a timely fashion.

The notice to each affected Employee must state specifically; (a)
the amount of the Disallowed Deferrals; (b) that the Disallowed
Deferrals are includible in the Employee's gross income for the
calendar year or years in which the amounts deferred would have
been received by the Employee in cash had he or she not made an
election to defer and that the income allocable to such Disallowed
Deferrals is includible in the year withdrawn from the IRA; and
(c) that the Employee must withdraw the Disallowed Deferrals (and
allocable income) from the SEP-IRA by April 15 following the
calendar year of notification by the Employer. Those Disallowed
Deferrals not withdrawn by April 15 following the year of
notification will be subject to the IRA contribution limitations
of Sections 219 and 408 of the Code and thus may be considered an
excess contribution to the Employee's IRA. Disallowed Deferrals
may be subject to the 6% tax on excess contributions under Section
4973 of the Code. If income allocable to a Disallowed Deferral is
not withdrawn by April 15 following the year of notification by
the Employer, the income may be subject to the 10% tax on early
distributions under Section 72(t) of the Code when withdrawn.

Disallowed Deferrals are reported in the same manner as are Excess
Contributions.
<PAGE> 9
6.303 LIMITS ON RETIREMENT SAVINGS CONTRIBUTIONS

A. Maximum Amount No Contributing Participant shall be permitted
to have Retirement Savings Contributions made under this Plan
during any calendar year in excess of $7,000 (as indexed
pursuant to Code Section 402(g)(5)). The $7,000 (indexed)
limit applies to the total elective deferrals the Contributing
Participant makes for the calendar year under this Plan and
under any cash or deferred arrangement described in Section
401(k) of the Code and any salary reduction arrangement
described in Section 403(b) of the Code. The limit may be
increased to $9,500 if the Contributing Participant makes
elective deferrals to a salary reduction arrangement under
Section 403(b) of the Code.

Under no circumstances may an Employee's Retirement Savings
Contributions in any calendar year exceed the lesser of: (1)
the limitation under Section 402(g) of the Code based on all
of the plans of the Employer; or (2) 15% of his or her
Compensation (less any amount contributed by the Employer as a
Retirement Savings Contribution). Compute the amount of this
15% limit by using the following formula:

Compensation (before subtracting Retirement Savings
Contributions) X 13.0435%.

If an Employer maintains any other SEP plan to which
non-elective SEP Employer Contributions are made for a Plan
Year, or any qualified plan to which contributions are made
for such Plan Year, then an Employee's Retirement Savings
Contribution may be limited to the extent necessary to satisfy
the maximum contribution limitation under Section 415(c)(1)(A)
of the Code.

In addition to the dollar limitation of Section 415(c)(1)(A),
which is $30,000 in 1991, Employer Contributions to this Plan,
when aggregated with contributions to all other SEP plans and
qualified plans of the Employer, generally may not exceed 15%
of Compensation (less any amount contributed by the Employer
as a Retirement Savings Contribution) for any Employee. If
these limits are exceeded on behalf of any Employee for a
particular Plan Year, that Employee's Retirement Savings
Contributions for that year must be reduced to the extent of
the excess.

B. Actual Deferred Percentage (ADP) Test Limits Retirement
Savings Contributions by a Highly Compensated Employee must
satisfy the actual deferral percentage (hereinafter "ADP")
limitation under Section 408(k)(6) of the Code. Amounts in
excess of the ADP limitation will be deemed Excess
Contributions on behalf of the affected Highly Compensated
Employee or Employees. The ADP of any Highly Compensated
Employee who is eligible to be a Contributing Participant
shall not be more than the product obtained by multiplying the
average of the ADPs of all non-Highly Compensated Employees
who are eligible to be Contributing Participants by 1.25. For
purposes of this Section 6.303, an Employee's ADP is the ratio
(expressed as a percentage) of his or her Retirement Savings
Contributions for the Plan Year to his or her Compensation for
the Plan Year. The ADP of an Employee who is eligible to be a
Contributing Participant, but who does not make Retirement
Savings Contributions during the Plan Year is zero. The
determination of the ADP for any Employee is to be made in
accordance with Section 408(k)(6) of the Code and should
satisfy such other requirements as may be provided by the
Secretary of the Treasury.

C. Special Rule for Family Members For purposes of determining
the ADP of a Highly Compensated Employee, the Retirement
Savings Contributions and Compensation of the Employee will
also include the Retirement Savings Contribution and
Compensation of any family member. This special rule applies
only if the Highly Compensated Employee is in one of the
following groups: (a) a more than 5% owner of the Employer; or
(b) one of a group of the 10 most Highly Compensated
Employees.

The Retirement Savings Contributions and Compensation of
family members used in this special rule do not count in
computing the average of the ADPs of non-Highly Compensated
Employees.

For purposes of this special rule, a family member is an
individual who is related to a Highly Compensated Employee as
a spouse, or as a lineal ascendent or descendent or the
spouses of such lineal ascendents or descendents in accordance
with Section 414(q) of the Code and the regulations
thereunder.

6.304 DISTRIBUTION OF EXCESS RETIREMENT SAVINGS CONTRIBUTIONS To the
extent that a Contributing Participant's Retirement Savings
Contributions for a calendar year exceed the limit described in
Section 6.303(A) (i.e., the $7,000 (indexed) limit), the
Contributing Participant must withdraw the excess Retirement
Savings Contributions (and any income allocable to such amount) by
April 15 following the year of the deferral.

6.305 DISTRIBUTION OF EXCESS CONTRIBUTIONS The Employer shall notify
each Employee, no later than 2-1/2 months following the close of
the Plan Year of the amount, if any, of any Excess Contribution to
that Employee's IRA for such Plan Year. If the Employer does not
so notify Employees by such date, the Employer must pay a tax
equal to 10% of the Excess Contributions for the Plan Year
pursuant to Section 4979 of the Code. If the Employer fails to
notify Employees by the end of the Plan Year following the Plan
Year of the Excess Contributions, the SEP no longer will be
considered to meet the requirements of Section 408(k)(6) of the
Code. This means that the earnings on the SEP are subject to tax
immediately, that no more Retirement Savings Contributions may be
made under the SEP, and
<PAGE> 10
that Retirement Savings Contributions of all Employees with
uncorrected Excess Contributions must be included in their income
in that year. If the SEP no longer meets the requirements of
Section 408(k)(6), then any contribution to an Employee's IRA will
be subject to the IRA contribution limitations of Section 219 and
408 of the Code and thus may be considered an excess contribution
to the Employee's IRA.

The Employer's notification to each affected Employee of the
Excess Contributions must specifically state in a manner
calculated to be understood by the average Plan Participant: (a)
the amount of the Excess Contributions attributable to that
Employee's Retirement Savings Contributions; (b) the Plan Year for
which the Excess Contributions were made; (c) that the Excess
Contributions are includible in the affected Employee's gross
income for the calendar year in which such Excess Contributions
were made; and (d) that the Employee must withdraw the Excess
Contributions (and allocable income) from the IRA by April 15
following the year of notification by the Employer. Those Excess
Contributions not withdrawn by April 15 following the year of
notification will be subject to the IRA contribution limitations
of Sections 219 and 408 of the Code for the preceding calendar
year and thus may be considered an excess contribution to the
Employee's IRA. Such excess contributions may be subject to the 6%
tax on excess contributions under Section 4973 of the Code. If
income allocable to an Excess Contribution is not withdrawn by
April 15 following the year of notification by the Employer, the
income may be subject to the 10% tax on early distributions under
Section 72(t) of the Code when withdrawn. However, if the Excess
Contributions (not including allocable income) total less than
$100, then the Excess Contributions are includible in the
Employee's gross income in the year of notification. Income
allocable to the Excess Contributions is includible in the year of
withdrawal from the IRA.

6.306 DETERMINATION OF INCOME For purposes of Sections 6.302, 6.304 and
6.305, the income allocable to Disallowed Deferrals, excess
Retirement Savings Contributions or Excess Contributions for a
year shall be determined by multiplying the income earned on the
IRA for the period which begins on the first day of such year and
ends on the date of distribution from the IRA by a fraction, the
numerator of which is the Disallowed Deferral, excess Retirement
Savings Contribution or Excess Contribution for such year and the
denominator of which is the sum of the account balance of the IRA
as of the beginning of such year and the total contributions made
to the IRA for such year.

6.307 RESTRICTION ON TRANSFERS AND WITHDRAWALS The Employer shall
notify each Contributing Participant that, until the earlier of
2-1/2 months after the end of a particular Plan Year or the date
the Employer notifies its employees that the actual deferral
percentage limitations have been calculated, any transfer or
distribution from the Contributing Participant's IRA of Retirement
Savings Contributions (or income on these contributions)
attributable to Retirement Savings Contributions made during that
Plan Year will be includible in income for purposes of Sections
72(t) and 408(d)(1) of the Code.

6.308 ALLOCATION OF RETIREMENT SAVINGS CONTRIBUTIONS Retirement Savings
Contributions made on behalf of Contributing Participants for a
Plan Year shall be allocated and deposited to the IRA of each
Contributing Participant by the Employer as soon as is
administratively feasible.

6.400 SPECIAL RULES FOR TOP-HEAVY PLANS

6.401 MINIMUM ALLOCATION The following mandatory minimum allocation
applies when this Plan is a Top-Heavy Plan:

Unless another plan of the Employer is designated in the space
below to satisfy the top-heavy requirements of Section 416 of the
Code, each year this Plan is a Top-Heavy Plan, the Employer will
make a minimum contribution to the IRA of each Participant who is
not a Key Employee, which, in combination with other non-elective
contributions, if any, is equal to the lesser of 3% of such
Participant's Compensation or a percentage of Compensation equal
to the percentage of Compensation at which elective and non-
elective contributions are made under the Plan for the Plan Year
for the Key Employee for whom such percentage is the largest.

The top-heavy minimum will be met in the following plan:
________________________________________________________________
_________________________________________________________________
_________________________________________________________________

(If applicable, name the plan other than this Plan in which the
minimum top-heavy contribution will be made).

6.402 RETIREMENT SAVINGS CONTRIBUTIONS CANNOT BE USED FOR MINIMUM
ALLOCATION For purposes of satisfying the minimum allocation
requirement of Section 416 of the Code, Retirement Savings
Contributions contributed for the benefit of Employees who are not
Key Employees may not be used to satisfy the minimum allocation
requirement.

<PAGE> 1
Strong Common Stock Fund, Inc.

EXHIBIT 16

SCHEDULE OF COMPUTATION OF
PERFORMANCE QUOTATIONS

I. AVERAGE ANNUAL TOTAL RETURN

A. Formula

n n ____
P(1+T) =ERV or T= \ /ERV/P-1

Where: P= a hypothetical initial payment of $10,000

T= average annual total return

n= number of years

ERV= ending redeemable value of a hypothetical $10,000
payment made at the beginning of the stated periods at
the end of the stated periods.

B. Calculation

n ____
T=\ /ERV/P-1

1. One-year period 6-30-95 through 6-30-96

1 _____________
22.06%=\ /12,206/10,000-1

2. Five-year period 6-30-91 through 6-30-96

5 _____________
21.51%=\ /26,494/10,000-1

3. Since inception 12-29-89 through 6-30-96

6.5 _____________
20.79%=\ /34,142/10,000-1
<PAGE> 2
III. TOTAL RETURN

A. Formula

EV-IV
----- = TR
IV

Where: EV= Value at the end of the period, including reinvestment
of all dividends and capital gains distributions.

IV= Initial value of a hypothetical investment at the net
asset value

TR= Total Return

B. Calculation

EV-IV
----- = TR
IV

One-year period ended June 30, 1996

12,206 - 10,000
--------------- = 22.06%
10,000

<ARTICLE> 6
<CIK> 0000842791
<NAME> STRONG COMMON STOCK FUND, INC.
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 990,651
<INVESTMENTS-AT-VALUE> 1,157,856
<RECEIVABLES> 8,564
<ASSETS-OTHER> 487
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,166,907
<PAYABLE-FOR-SECURITIES> 15,521
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,266
<TOTAL-LIABILITIES> 16,787
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 914,125
<SHARES-COMMON-STOCK> 56,060
<SHARES-COMMON-PRIOR> 53,679
<ACCUMULATED-NII-CURRENT> (1,821)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 70,180
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 167,636
<NET-ASSETS> 1,150,120
<DIVIDEND-INCOME> 5,156
<INTEREST-INCOME> 3,405
<OTHER-INCOME> 0
<EXPENSES-NET> (6,830)
<NET-INVESTMENT-INCOME> 1,731
<REALIZED-GAINS-CURRENT> 69,260
<APPREC-INCREASE-CURRENT> 14,630
<NET-CHANGE-FROM-OPS> 85,621
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,223)
<DISTRIBUTIONS-OF-GAINS> (40,255)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,638
<NUMBER-OF-SHARES-REDEEMED> (5,401)
<SHARES-REINVESTED> 2,144
<NET-CHANGE-IN-ASSETS> 89,110
<ACCUMULATED-NII-PRIOR> 670
<ACCUMULATED-GAINS-PRIOR> 41,175
<OVERDISTRIB-NII-PRIOR> 729
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,595
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,830
<AVERAGE-NET-ASSETS> 1,131,939
<PER-SHARE-NAV-BEGIN> 19.77
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 1.55
<PER-SHARE-DIVIDEND> (0.08)
<PER-SHARE-DISTRIBUTIONS> (0.75)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.52
<EXPENSE-RATIO> 1.2
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>