<PAGE>
THE STRONG
----------
DOW 30 VALUE
FUND
==================================
SEMI-ANNUAL REPORT o JUNE 30, 1998
==================================
[PHOTO OF STRONG FUNDS BUILDING]
[STRONG LOGO]
STRONG FUNDS
<PAGE>
8
EIGHT BASIC PRINCIPLES FOR SUCCESSFUL MUTUAL FUND INVESTING
These common-sense rules are followed by many successful investors. They make
sense for beginners, too. If you have a question on these principles, or would
like to discuss them with us, please contact us at 1-800-368-3863. We're here
24 hours a day, seven days a week to take your call.
- -------------------------------------------------------------------------------
[PICTURE OF FOLDER LABELED INVESTMENTS]
1. HAVE A PLAN. Even a simple plan can help you take control of your financial
future. Review your plan once a year, or if your circumstances change.
- -------------------------------------------------------------------------------
[PICTURE OF CLOCK]
2. START INVESTING AS SOON AS POSSIBLE. Make time a valuable ally. Let it put
the power of compounding to work for you, while helping to reduce your
potential investment risk.
- -------------------------------------------------------------------------------
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION]
3. DIVERSIFY YOUR PORTFOLIO. By investing in different asset classes - stocks,
bonds, and cash - you help protect against poor performance in one type of
investment while including investments most likely to help you achieve your
important goals.
- -------------------------------------------------------------------------------
[PICTURE OF MEMO REMINDER TO INVEST]
4. INVEST REGULARLY. Investing is a process, not a one-time event. By
investing regularly over the long term, you reduce the impact of short-term
market gyrations, and you attend to your long-term plan before you're tempted
to spend those assets on short-term needs.
- -------------------------------------------------------------------------------
[PICTURE OF GRAPH SLOPING UPWARD]
5. MAINTAIN A LONG-TERM PERSPECTIVE. For most individuals, the best discipline
is staying invested as market conditions change. Reactive, emotional investment
decisions are all too often a source of regret - and of principal loss.
- -------------------------------------------------------------------------------
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION EMPHASIZING STOCKS]
6. CONSIDER STOCKS TO HELP ACHIEVE MAJOR LONG-TERM GOALS. Over time, stocks
have provided the more powerful returns needed to help the value of your
investments stay well ahead of inflation.
- -------------------------------------------------------------------------------
[PICTURE OF DOLLAR SIGN]
7. KEEP A COMFORTABLE AMOUNT OF CASH IN YOUR PORTFOLIO. To meet current needs,
including emergencies, use a money market fund or a bank account - not your
long-term investment assets.
- -------------------------------------------------------------------------------
[PICTURE OF MAGNIFYING GLASS]
8. KNOW WHAT YOU'RE BUYING. Make sure you understand the potential risks and
rewards associated with each of your investments. Ask questions...request
information...make up your own mind. And choose a fund company that helps you
make informed investment decisions.
<PAGE>
THE STRONG
----------
DOW 30 VALUE
FUND
===============================================================================
SEMI-ANNUAL REPORT o JUNE 30, 1998
===============================================================================
TABLE OF CONTENTS
INVESTMENT REVIEW
The Strong Dow 30 Value Fund.............................................2
FINANCIAL INFORMATION
Schedule of Investments in Securities....................................4
Statement of Assets and Liabilities......................................5
Statement of Operations..................................................5
Statement of Changes in Net Assets.......................................6
Notes to Financial Statements............................................6
FINANCIAL HIGHLIGHTS..........................................................8
<PAGE>
============================
THE STRONG DOW 30 VALUE FUND
============================
THE FUND IS POSITIONED TO BENEFIT SHOULD THE PERFORMANCE GAP NARROW BETWEEN THE
DOW JONES INDUSTRIAL AVERAGE AND THE S&P 500.
The Strong Dow 30 Value Fund invests exclusively in the 30 stocks that comprise
the Dow Jones Industrial Average(SM) (Dow)*. The Fund strives to provide an
annual total return higher than the Dow Jones Industrial Average. Half of the
Fund's assets are proportionately invested in the 30 Dow stocks. The remaining
portion of the Fund's assets will be invested in the Dow using a value approach.
In choosing these stocks, we will consider a number of criteria, including
price/earnings ratio, price/cash flow ratio, current yield relative to the
stock's historical average, and dividend yield.
=================================
ASSET ALLOCATION
=================================
Based on net assets as of 6-30-98
[PIE CHART]
Stocks 99.8%
Short-Term Investments 0.2%
=================================
================================================
TOP FIVE INDUSTRIES
================================================
As of 6-30-98
INDUSTRY % OF NET ASSETS
- ------------------------------------------------
Diversified Operations 9.9%
................................................
Healthcare - Drug/Diversified 9.3%
................................................
Oil - International Integrated 7.1%
................................................
Aerospace and Defense 5.6%
................................................
Bank - Money Center 5.6%
................................................
Please see the Schedule of Investments in
Securities for a complete listing of the Fund's
portfolio.
================================================
PERFORMANCE
In the first half of 1998, the Fund posted a gain of 12.73%, versus 14.11% for
the Dow.(1) The first-half performance of the major market indexes was
impressive, especially considering the strong performances posted in 1995, 1996,
and 1997. Low inflation and favorable interest rates have remained important
engines for the market.
The bulk of the Dow's return came in the first quarter. The second quarter was
much less generous, as the Dow Industrials rose less than 2% in the three months
ended June 30. Growing concerns regarding the profit impact of problems
overseas, particularly in Asia, hindered the Dow's performance. Many of the 30
Dow components have large exposures to overseas economies, and investors were
quick to sell certain Dow stocks and shift into companies perceived as reliable
profit gainers. This shift to such popular - and richly valued - Dow stocks as
Coca-Cola and Procter & Gamble hurt the Fund's relative performance. Because of
our value orientation, such stocks are underweighted in the Fund relative to
their weightings in the Dow. Conversely, stocks that score well in our value
model, such as General Motors, Hewlett-Packard, and Caterpillar, were not in
favor in the second quarter. Fortunately, the Fund was overweighted in enough
top-performing Dow stocks - including Sears, Merck, and DuPont - to keep our
performance relatively close to the index.
STAY THE COURSE
Going forward, we remain confident that our value approach will be rewarded.
Investors are bidding up many stocks to levels that appear unsustainable. Even
if these market favorites meet consensus profit estimates, their stock prices
may come under pressure as valuations move closer to historical norms. On the
other hand, many of our favored stocks in the Dow are cheap relative to
historical levels. Even with modest profit improvement, such stocks are likely
to attract renewed interest on Wall Street.
Despite the tendency of many funds to chase the latest "hot" investment style,
the Strong Dow 30 Value Fund has remained true to its value approach. At the end
of the quarter, the Fund's price/earnings ratio, based on forward 12-month
earnings per share, was 18.6 - versus 23.0 for the Standard & Poors 500 Stock
===============================================================================
FIVE LARGEST STOCK HOLDINGS
===============================================================================
As of 6-30-98
% OF NET
SECURITY INDUSTRY ASSETS
---------------------------------------------------------------------------
Merck & Company, Inc. Healthcare - Drug/Diversified 6.8%
...........................................................................
J.P. Morgan Bank - Money Center 5.6%
& Company, Inc.
...........................................................................
International Business Computer - Mainframe 4.9%
Machines Corporation
...........................................................................
American Express Company Finance - Miscellaneous 4.5%
...........................................................................
Hewlett-Packard Company Computer - Personal and 4.2%
Workstations
...........................................................................
Please see the Schedule of Investments in Securities for a complete listing
of the Fund's portfolio.
===============================================================================
2
<PAGE>
Index (S&P 500). The yield on the Fund was nearly 1.8%, versus a yield of 1.6%
on the Dow Jones Industrial Average and 1.4% for the S&P 500.*
OUTLOOK
For a period in which value stocks took a back seat to glamour stocks and
momentum plays, the Fund's first-half performance was encouraging. While we
expect further gains in the Dow, it will be difficult for the market to
duplicate the strong results of the first half of the year. In a more difficult
market environment, we believe investors will once again focus on value and
yield when choosing their investments. The Fund is positioned to benefit from
this refocus.
The Fund is also positioned to benefit should the performance gap narrow between
the Dow Jones Industrial Average and the S&P 500. Although the Fund is just six
months old, a look at the 12-month period ended June 30 shows that the S&P 500
has outperformed the Dow Jones Industrial Average by more than 11 percentage
points. For the first half of 1998, the S&P 500 has outperformed the Dow by
nearly four percentage points. Given the historically high correlation of
returns between the Dow and S&P 500 (and given that the Dow trades at a lower
price/earnings ratio and higher yield than the S&P 500), we don't expect this
performance gap to persist indefinitely.
Thank you for your investment in the Strong Dow 30 Value Fund. We appreciate
your confidence in our investment approach.
[PHOTO OF CHARLES B. CARLSON AND RICHARD J. MORONEY]
Sincerely,
/s/ Charles B. Carlson
Charles B. Carlson, CFA
/s/ Richard J. Moroney
Richard J. Moroney, CFA
Portfolio Co-managers
===============================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
===============================================================================
From 12-31-97 to 6-30-98
[GRAPH]
THE STRONG Dow Jones
DOW 30 VALUE Industrial Lipper Growth
FUND Average(SM)* & Income Fund*
12-97 10,000 10,000 10,000
1-98 9,980 10,001 10,019
2-98 10,820 10,836 10,647
3-98 11,127 11,172 11,140
4-98 11,498 11,511 11,200
5-98 11,287 11,331 11,029
6-98 11,273 11,411 11,162
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with similar investments in the
Dow Jones Industrial Average(SM) (DJIA) and the Lipper Growth & Income Funds
Index. Results include the reinvestment of dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
================================
TOTAL RETURN(1)
================================
As of 6-30-98
SINCE INCEPTION 12.73%
(on 12-31-97)
================================
- -------------------------------------------------------------------------------
* The DJIA is an unmanaged index generally representative of the U.S. market.
The Lipper Growth and Income Funds Index is an equally-weighted performance
index of the largest qualifying funds in this Lipper category. Source of the
DJIA index data is Standard & Poor's Micropal. Source of the Lipper index data
is Lipper Analytical Services, Inc.
1 Total return is not annualized and measures aggregate change in the value
of an investment in the Fund, assuming reinvestment of all dividends.
3
<PAGE>
SCHEDULE OF INVESTMENTS IN SECURITIES JUNE 30, 1998 (UNAUDITED)
- -------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
COMMON STOCKS 99.8%
AEROSPACE & DEFENSE 5.6%
The Boeing Company 7,680 $ 342,240
United Technologies Corporation 9,100 841,750
-----------
1,183,990
AUTO & TRUCK PARTS 2.8%
The Goodyear Tire & Rubber Company 9,180 591,536
AUTOMOBILE 4.2%
General Motors Corporation 13,210 882,593
BANK - MONEY CENTER 5.6%
J.P. Morgan & Company, Inc. 10,070 1,179,449
BEVERAGE - SOFT DRINK 1.9%
The Coca-Cola Company 4,700 401,850
CHEMICAL 2.7%
Union Carbide Corporation 10,740 573,247
COMPUTER - MAINFRAME 4.9%
International Business Machines Corporation 8,960 1,028,720
COMPUTER - PERSONAL & WORKSTATION 4.2%
Hewlett-Packard Company 14,840 888,545
DIVERSIFIED OPERATIONS 9.8%
Allied Signal, Inc. 11,780 522,737
E.I. Du Pont de Nemours & Company 10,150 757,444
Minnesota Mining & Manufacturing Company 9,780 803,794
-----------
2,083,975
ELECTRICAL EQUIPMENT 2.7%
General Electric Company 6,190 563,290
FINANCE - MISCELLANEOUS 4.5%
American Express Company 8,360 953,040
HEALTHCARE - DRUG/DIVERSIFIED 9.3%
Johnson & Johnson 7,240 533,950
Merck & Company, Inc. 10,670 1,427,112
-----------
1,961,062
INSURANCE - DIVERSIFIED 3.3%
Travelers Group, Inc. 11,410 691,731
LEISURE PRODUCT 3.6%
Eastman Kodak Company 10,370 757,658
LEISURE SERVICE 3.8%
The Walt Disney Company 7,690 807,931
MACHINERY - CONSTRUCTION & MINING 3.7%
Caterpillar, Inc. 14,770 780,964
METALS & MINING 3.4%
Aluminum Company of America 10,900 718,719
OIL - INTERNATIONAL INTEGRATED 7.1%
Chevron Corporation 9,700 805,706
Exxon Corporation 9,630 686,740
-----------
1,492,446
PAPER & FOREST PRODUCTS 1.9%
International Paper Company 9,620 413,660
RETAIL - DEPARTMENT STORE 3.5%
Sears, Roebuck & Company 12,170 743,131
RETAIL - MAJOR CHAIN 2.2%
Wal-Mart Stores, Inc. 7,750 470,812
RETAIL - RESTAURANT 1.5%
McDonald's Corporation 4,700 324,300
SOAP & CLEANING PREPARATION 2.0%
The Procter & Gamble Company 4,700 427,994
TELECOMMUNICATION SERVICE 3.6%
AT&T Corporation 13,350 762,619
TOBACCO 2.0%
Philip Morris Companies, Inc. 10,810 425,644
- ------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $20,143,637) 21,108,906
- ------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 0.8%
COMMERCIAL PAPER 0.3%
INTEREST BEARING, DUE UPON DEMAND
General Mills, Inc., 5.26% $ 46,028 46,028
Johnson Controls, Inc., 5.26% 13,600 13,600
Pitney Bowes Credit Corporation, 5.26% 3,172 3,172
Warner Lambert Company, 5.25% 100 100
-----------
62,900
REPURCHASE AGREEMENT 0.5%
BZW Securities, Inc. (Dated 6/30/98),
5.50%, Due 7/01/98 (Repurchase proceeds
$100,015); Collateralized by: $100,000
United States Treasury Notes, 8.875%,
Due 11/15/98 (Market Value $102,384) (b) 100,000 100,000
- ------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $162,900) 162,900
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $20,306,537) 100.6% 21,271,806
Other Assets and Liabilities, Net (0.6%) (136,313)
- ------------------------------------------------------------------------------
NET ASSETS 100.0% $21,135,493
==============================================================================
LEGEND
- ------------------------------------------------------------------------------
(a) Short-term investments include any security which has a maturity of
less than one year.
(b) See note 2(F) of notes to financial statements.
Percentages are stated as a percent of net assets.
See notes to financial statements.
4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
June 30, 1998 (Unaudited)
ASSETS:
Investments in Securities, at Value (Cost of $20,306,537) $21,271,806
Receivable for Fund Shares Sold 14,506
Dividends and Interest Receivable 35,257
Other Assets 41,138
-----------
Total Assets 21,362,707
LIABILITIES:
Payable for Securities Purchased 192,271
Accrued Operating Expenses and Other Liabilities 34,943
-----------
Total Liabilities 227,214
-----------
NET ASSETS $21,135,493
===========
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $20,303,030
Undistributed Net Investment Income 6,440
Accumulated Net Realized Loss (139,246)
Net Unrealized Appreciation 965,269
-----------
Net Assets $21,135,493
===========
Capital Shares Outstanding (Unlimited Number Authorized) 1,887,802
NET ASSET VALUE PER SHARE $11.20
======
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
For the Six Months Ended June 30, 1998 (Unaudited)
INCOME:
Dividends $120,205
Interest 13,464
--------
Total Income 133,669
EXPENSES:
Investment Advisory Fees 50,818
Custodian Fees 6,594
Shareholder Servicing Costs 14,894
Federal and State Registration Fees 38,829
Other 13,650
--------
Total Expenses before Waivers and Absorptions by Advisor 124,785
Voluntary and Involuntary Expense Waivers and Absorptions by
Advisor (114,796)
--------
Expenses, Net 9,989
--------
NET INVESTMENT INCOME 123,680
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Loss on Investments (139,246)
Change in Unrealized Appreciation/Depreciation on Investments 965,269
--------
NET GAIN 826,023
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $949,703
========
5
See notes to financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1998
(UNAUDITED)
----------------
(NOTE 1)
OPERATIONS:
Net Investment Income $ 123,680
Net Realized Loss (139,246)
Change in Unrealized Appreciation/Depreciation 965,269
-----------
Increase in Net Assets Resulting from Operations 949,703
DISTRIBUTIONS:
From Net Investment Income (117,240)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 24,916,100
Proceeds from Reinvestment of Distributions 113,529
Payments for Shares Redeemed (4,726,599)
-----------
Increase in Net Assets from Capital Share Transactions 20,303,030
-----------
TOTAL INCREASE IN NET ASSETS 21,135,493
NET ASSETS:
Beginning of Period --
-----------
End of Period $21,135,493
===========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 2,316,582
Issued in Reinvestment of Distributions 10,172
Redeemed (438,952)
---------
Net Increase in Shares of the Fund 1,887,802
=========
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
June 30, 1998 (Unaudited)
1. ORGANIZATION
The Strong Dow 30 Value Fund is a diversified series of Strong Equity Funds,
Inc., an open-end management investment company registered under the
Investment Company Act of 1940. The Fund commenced operations on January 2,
1998.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
(A) Security Valuation -- Portfolio securities traded primarily on a
principal securities exchange are valued at the last reported sales price
or the mean of the latest bid and asked prices where no last sales price
is available. Securities traded over-the-counter are valued at the mean
of the latest bid and asked prices or the last reported sales price. Debt
securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service, otherwise
last sale or bid prices are used. Securities for which market quotations
are not readily available are valued at fair value as determined in good
faith under consistently applied procedures established by and under the
general supervision of the Board of Directors. Securities which are
purchased within 60 days of their stated maturity are valued at amortized
cost, which approximates current value.
The Fund may own certain investment securities which are restricted as to
resale. These securities are valued after giving due consideration to
pertinent factors, including recent private sales, market conditions and
the issuer's financial performance. The Fund generally bears the costs,
if any, associated with the disposition of restricted securities. The
Fund held no restricted securities at June 30, 1998.
6
<PAGE>
- -------------------------------------------------------------------------------
(B) Federal Income and Excise Taxes and Distributions to Shareholders -- It
is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders in
a manner which results in no tax cost to the Fund. Therefore, no federal
income or excise tax provision is required.
The character of distributions made during the year from net investment
income or net realized gains may differ from the characterization for
federal income tax purposes due to differences in the recognition of
income and expense items for financial statement and tax purposes. Where
appropriate, reclassifications between net asset accounts are made for
such differences that are permanent in nature.
(C) Realized Gains and Losses on Investment Transactions -- Gains or losses
realized on investment transactions are determined by comparing the
identified cost of the security lot sold with the net sales proceeds.
(D) Futures -- Upon entering into a futures contract, the Fund pledges to the
broker cash or other investments equal to the minimum "initial margin"
requirements of the exchange. The Fund also receives from or pays to the
broker an amount of cash equal to the daily fluctuation in the value of
the contract. Such receipts or payments are known as "variation margin"
and are recorded as unrealized gains or losses. When the futures contract
is closed, a realized gain or loss is recorded equal to the difference
between the value of the contract at the time it was opened and the value
at the time it was closed.
(E) Options -- The Fund may write put or call options (none were written
during the period). Premiums received by the Fund upon writing put or
call options are recorded as an asset with a corresponding liability
which is subsequently adjusted to the current market value of the option.
When an option expires, is exercised, or is closed, the Fund realizes a
gain or loss, and the liability is eliminated. The Fund continues to bear
the risk of adverse movements in the price of the underlying asset during
the period of the option, although any potential loss during the period
would be reduced by the amount of the option premium received.
(F) Repurchase Agreements -- The Fund may enter into repurchase agreements
with institutions that the Fund's investment advisor, Strong Capital
Management, Inc. ("the Advisor"), has determined are creditworthy
pursuant to criteria adopted by the Board of Directors. Each repurchase
agreement is recorded at cost. The Fund requires that the collateral,
represented by securities (primarily U.S. Government securities),
purchased in a repurchase transaction be maintained in a segregated
account with a custodian in a manner sufficient to enable the Fund to
obtain those securities in the event of a default of the issuer of the
repurchase agreement. On a daily basis, the Advisor monitors the value
of the collateral transferred under each repurchase agreement to ensure
the value of the collateral exceeds the amount owed to the Fund under
each repurchase agreement by at least 2%.
(G) Additional Investment Risks -- The Fund may utilize derivative
instruments including options, futures and other instruments with similar
characteristics to the extent that they are consistent with the Fund's
investment objectives and limitations. The Fund intends to use such
derivative instruments primarily to hedge or protect from adverse
movements in securities prices or interest rates. The use of these
instruments may involve risks such as the possibility of illiquid markets
or imperfect correlation between the value of the instruments and the
underlying securities, or that the counterparty will fail to perform its
obligations.
(H) Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of increases
and decreases in net assets from operations during the reporting period.
Actual results could differ from those estimates.
(I) Other -- Investment security transactions are recorded as of the trade
date. Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Interest income is recorded on the accrual basis
and includes amortization of premium and discounts.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
June 30, 1998 (Unaudited)
3. RELATED PARTY TRANSACTIONS
The Advisor, with whom certain officers and directors of the Fund are
affiliated, provides investment advisory and shareholder recordkeeping and
related services to the Fund. Investment advisory fees, which are
established by terms of the Advisory Agreement, are based on an annualized
rate of 0.80% of the average daily net assets of the Fund. Advisory fees are
subject to reimbursement by the Advisor if the Fund's operating expenses
exceed certain levels. Shareholder recordkeeping and related service fees
are based on contractually established rates for each open and closed
shareholder account. In addition, the Advisor is compensated for certain
other services related to costs incurred for reports to shareholders.
Horizon Investment Services, LLC ("Horizon") manages the investments of
Strong Dow 30 Value Fund under an agreement with the Advisor. Horizon is
compensated by the Advisor (not the Fund) and bears all of its own expenses
in providing subadvisory services.
The Fund may invest cash reserves in money market funds sponsored and managed
by the Advisor, subject to certain limitations. The terms of such
transactions are identical to those of non-related entities except that, to
avoid duplicate investment advisory fees, advisory fees of the Fund are
reduced by an amount equal to advisory fees paid to the Advisor under its
investment advisory agreement with the money market funds.
The amount payable to the Advisor at June 30, 1998, other shareholder
servicing expenses paid to the Advisor, and unaffiliated directors' fees for
the six months then ended, were $19,669, $547 and $750, respectively.
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the six months
ended June 30, 1998 were $23,650,417 and $3,367,534, respectively.
5. INCOME TAX INFORMATION
At June 30, 1998, the cost of investments in securities for federal income
tax purposes was $20,425,047. Net unrealized appreciation of securities was
$846,759, consisting of gross unrealized appreciation and depreciation of
$1,457,428 and $610,669, respectively.
<TABLE>
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA (a)
---------------------------------------------------------------------------------------
Income From Investment Operations Less Distributions
-------------------------------------- -------------------------
<CAPTION>
Net Realized
Net Asset and Unrealized Total Net Asset
Value, Net Gains from From Net Value,
Beginning Investment on Investment Investment Total End of
Period Ended of Period Income Investments Operations Income Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C>
June 30, 1998 (b) $10.00 $0.08 $1.19 $1.27 ($0.07) ($0.07) $11.20
</TABLE>
<TABLE>
Ratios and Supplemental Data
-----------------------------------------------------------------------------------
<CAPTION>
Ratio of
Net Expenses to Ratio of Net
Assets, Ratio of Average Net Investment Average
End of Expenses Assests Without Income Portfolio Commission
Total Period (In to Average Waivers and to Average Turnover Rate
Period Ended Return Millions) Net Assets Absorptions Net Assets Rate Paid
<S> <C> <C> <C> <C> <C> <C> <C>
June 30, 1998 (b) +12.7% $21 0.2%* 1.9%* 1.9%* 23.4% $0.0155
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund outstanding for the entire period.
(b) For the six months ended June 30, 1998 (Unaudited). Total return and portfolio turnover rate are not annualized.
</TABLE>
8
<PAGE>
DIRECTORS
Richard S. Strong
Willie D. Davis
Stanley Kritzik
Marvin E. Nevins
William F. Vogt
OFFICERS
Richard S. Strong, Chairman of the Board
Mary F. Hoppa, Vice President
Thomas P. Lemke, Vice President
John S. Weitzer, Vice President
Stephen J. Shenkenberg, Vice President and Secretary
John A. Flanagan, Treasurer
INVESTMENT ADVISOR
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
DISTRIBUTOR
Strong Funds Distributors, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
CUSTODIAN
Firstar Trust Company
P.O. Box 701, Milwaukee, Wisconsin 53201
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
AUDITOR
PricewaterhouseCoopers
411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street, Milwaukee, Wisconsin 53202
<PAGE>
For a prospectus containing more complete information, including management
fees and expenses, please call 1-800-368-1030. Please read it carefully before
investing or sending money. This report does not constitute an offer for the
sale of securities. Strong Funds are offered for sale by prospectus only.
[PICTURE OF TELEPHONE]
To order a free prospectus kit,
CALL 1-800-368-1030
To learn more about our funds,
discuss an existing account,
or conduct a transaction,
CALL 1-800-368-3863
-------------------
If you are a
Financial Professional,
CALL 1-800-368-1683
[PICTURE OF STRONG WEB SITE ON COMPUTER]
Strong On-line
www.strong-funds.com
[STRONG LOGO]
STRONG FUNDS
P.O. Box 2936 o Milwaukee, Wisconsin 53201
Strong Funds Distributors, Inc. 8501H98 98SDOW
