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[LOGO]
[PHOTO OF WOMAN WITH 3 KIDS]
THE STRONG
DOW 30 VALUE
FUND
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ANNUAL REPORT - DECEMBER 31,1999
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LETTER FROM THE CHAIRMAN
Dear Strong Investor,
As an apprentice investment analyst in the 1960s, I observed and experienced
powerful economic and stock market growth. The explosive stock market was very
profitable for investors, and I always planned for the time when I'd be able to
position our investors to take advantage of that kind of growth again. The
dramatic market move of the late 1990s reminded me of those days in the 1960s
and provided an excellent opportunity.
In our strategic planning effort, what Strong saw coming in the 1990s was a
powerful wave of innovation and technological change that was going to affect
the way we all lived our daily lives. We knew the successful companies of the
future would be those that moved quickly to embrace this new way of thinking. It
was Strong's responsibility to ensure that our shareholders benefited from this
change and capitalized on the opportunity.
How did Strong position our investors to take advantage of the coming growth?
First, we expanded our fund lineup to offer quality choices in every asset
class. We then put technology to work in a number of ways--all intended to
provide our customers and portfolio managers with state-of-the-art tools for
better decision making, and to enhance the customer experience in every
interaction with Strong. And as we made these improvements, we always stayed
true to our commitment to developing a one-on-one relationship with each of our
investors.
When it comes right down to it, it's our job to make you money. And many of you
benefited in 1999, the most exceptional performance year in Strong's history.
Many major financial publications have also recently recognized Strong.
What can you expect from Strong in the future? We'll continue working to improve
our investment management expertise to try to deliver market-beating results
year after year. And we'll continue to innovate and develop practical technology
solutions aimed at helping you make better investment decisions. And you can be
assured that we will continue to work to deliver the "across-the-kitchen-table"
customer experience you've come to expect from STRONG.
/s/ Dick
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THE STRONG DOW 30 VALUE FUND
---------------------------
ANNUAL REPORT - DECEMBER 31, 1999
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 ............................................. 6
Statements of Changes in Net Assets ................................. 7
Notes to Financial Statements ....................................... 8
FINANCIAL HIGHLIGHTS .....................................................10
REPORT OF INDEPENDENT ACCOUNTANTS ........................................11
<PAGE>
PERSPECTIVES
FROM THE MANAGERS
/s/ Charles B. Carlson /s/ Richard T. Moroney
Charles B. Carlson Richard T. Moroney
Portfolio Co-manager Portfolio Co-manager
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In late 1997, your portfolio managers thought it would be a good idea to start a
fund that focused exclusively on the Dow Industrials and emphasized the best
value stocks in the average. We believed these stocks were well-positioned to
capitalize on an increasingly global economy. We also believed they were poised
for improvement as investors questioned the historically rich premiums at which
growth stocks were trading.
So far, we've been half right. As a group, the 30 Dow Industrials have handily
outperformed the broad stock market. Value stocks, however, have continued to
lag both inside and outside The Dow.
While many investors seem to have concluded that price/earnings ratios and other
valuation measures are outdated tools, we do not intend to change our
value-oriented style. Not only do we think such a shift would be unduly risky,
but several factors suggest the tide will turn in value investors' favor. First,
the outlook for global economic growth and overall corporate earnings is bright.
Historically, value stocks have done best when the global economy and corporate
earnings growth are accelerating.
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...THE OUTLOOK FOR GLOBAL ECONOMIC GROWTH AND OVERALL CORPORATE EARNINGS IS
BRIGHT.
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Second, the premiums investors are paying for growth stocks have seldom been
richer. Measured by price/earnings ratios, the discount offered by value stocks
relative to growth stocks has rarely been wider. Third, many attractive growth
stocks are still trading at reasonable valuations. Several consistent
double-digit growers now trade at discount valuations.
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[SIDENOTE]
FUND
HIGHLIGHTS
- For the year ended December 31, 1999, the Strong Dow 30 Value Fund
achieved a total return of 24.87% while the Dow Jones Industrial
Average-SM- (DJIA) returned 27.18%.*
- The Fund's performance benefited from investors' continuing interest in
large-capitalization stocks. Also, improving economies around the globe
helped the performance of several Fund holdings that have substantial
overseas operations.
- One factor adversely affecting the Fund's performance relative to its
DJIA benchmark was the rise in interest rates during the year, as the
Fund had overweightings in a number of interest-sensitive DJIA stocks.
Another factor was the Fund's underweightings in such extremely pricey
DJIA stocks as retailers Wal-Mart Stores and Home Depot, as well as
General Electric.
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[SIDENOTE]
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 12-31-99
1-year 24.87%
Since Inception 20.41%
(on 12-31-97)
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[SIDENOTE]
FIVE LARGEST STOCK
HOLDINGS
AS OF 12-31-99
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SECURITY % OF NET ASSETS
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American Express Company 7.0%
General Electric Company 5.9%
J.P. Morgan & Company, Inc. 5.8%
Hewlitt-Packard Company 5.8%
Microsoft Corporation 5.3%
Please see the Schedule of Investments in Securities for a complete listing of
the Funds portfolio.
2
<PAGE>
Fourth, some deep-discount value stocks are being ignored on Wall Street. For
example, we remain bullish on the prospects of General Motors and therefore
overweighted this stock during 1999. The stock traded at less than nine times
expected 2000 earnings. We expect automotive earnings to hold up relatively well
in 2000 because of cost cutting. Also, GM has the potential to benefit from the
spin-off or sale of its Hughes unit, which in our opinion would spark an upward
reappraisal of the company. And while investors have not been focusing on
dividend yield, GM's yield of nearly 3% offers a potential cushion during rocky
market periods. Likewise, we overweighted our holdings in Boeing. The company is
finally improving its productivity, which has translated into rising profit
margins. We also favor Boeing because we believe plane orders will surprise to
the upside as foreign economies improve.
While it's probably too much to ask for the market to show yet another big gain
in 2000 on top of the huge gains posted in the last five years, the strong
corporate profits we expect in the new year should fuel decent returns in the
DJIA.
We appreciate your confidence in the Fund and will do our best to reward that
confidence in 2000.
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[SIDENOTE]
YOUR FUND'S
APPROACH
THE STRONG DOW 30 VALUE FUND INVESTS SOLELY IN THE 30 STOCKS THAT COMPRISE THE
DOW JONES INDUSTRIAL AVERAGE (DJIA). WITH ONE HALF OF THE FUND'S ASSETS, THE
MANAGERS ATTEMPT TO REPLICATE THE DJIA AND EQUAL ITS RETURN. IN THE OTHER HALF
OF THE PORTFOLIO, THE MANAGERS ATTEMPT TO BETTER THE DJIA'S RETURN BY
EMPHASIZING DJIA STOCKS SELLING AT ATTRACTIVE VALUATIONS. IN ASSESSING VALUE,
THE MANAGERS CONSIDER DIVIDEND YIELD, PRICE/EARNINGS RATIOS, PRICE/CASH FLOW
RATIOS, AND COMPANY GROWTH RATES.
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[SIDENOTE]
MARKET
HIGHLIGHTS
- - The major market averages extended their winning streak, posting a fifth
straight year of double-digit growth. Strong corporate profit growth and
moderate inflation fueled investor bullishness.
- - Momentum investing was a primary market theme. Indeed, investors were willing
to pay exorbitant prices for companies showing earnings and price momentum,
especially in the technology sector. This climate presents challenges for
value-oriented funds, which includes the Strong Dow 30 Value Fund.
- - Given investors' willingness to overpay for stocks with momentum, we were
reluctant to place big bets against richly valued Dow stocks with price and
earnings momentum. This partly explains why the Fund held up well relative to
its benchmark and outdistanced most large-cap value funds.
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GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 12-31-97 TO 12-31-99
[GRAPH]
<TABLE>
THE STRONG DOW 30 VALUE FUND Dow Jones Industrial Average-SM-* Lipper Large-Cap Value Funds Index*
<S> <C> <C> <C>
12-97 $ 10,000 $ 10,000 $ 10,000
4-98 $ 11,127 $ 11,172 $ 11,148
6-98 $ 11,273 $ 11,411 $ 11,276
9-98 $ 10,065 $ 10,048 $ 10,028
12-98 $ 11,611 $ 11,813 $ 11,824
4-99 $ 12,444 $ 12,644 $ 12,102
06-99 $ 13,978 $ 14,228 $ 13,152
9-99 $ 13,084 $ 13,461 $ 12,081
12-99 $ 14,499 $ 15,023 $ 13,099
</TABLE>
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the Dow
Jones Industrial Average-SM- (DJIA) and the Lipper Large-Cap Value 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.
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* The DJIA is an unmanaged index generally representative of the U.S. stock
market. The Lipper Large-Cap Value 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 Inc.
3
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SCHEDULE OF INVESTMENTS IN SECURITIES December 31, 1999
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STRONG DOW 30 VALUE FUND
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<TABLE>
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
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<S> <C> <C>
COMMON STOCKS 99.6%
AEROSPACE & DEFENSE 6.1%
The Boeing Company 73,100 $ 3,038,219
United Technologies Corporation 59,900 3,893,500
----------
6,931,719
AUTOMOBILE 5.1%
General Motors Corporation 79,800 5,800,462
BANK - MONEY CENTER 9.5%
Citigroup, Inc. 75,550 4,197,747
J.P. Morgan & Company, Inc. 52,000 6,584,500
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10,782,247
BEVERAGE - SOFT DRINK 1.2%
The Coca-Cola Company 24,500 1,427,125
COMPUTER - MAINFRAME 10.3%
Hewlett-Packard Company 57,600 6,562,800
International Business Machines Corporation 47,800 5,162,400
---------
11,725,200
COMPUTER SOFTWARE 5.3%
Microsoft Corporation (b) 51,500 6,012,625
DIVERSIFIED OPERATIONS 8.6%
E.I. Du Pont de Nemours & Company 30,700 2,022,362
Honeywell International, Inc. 60,200 3,472,788
Minnesota Mining & Manufacturing Company 43,600 4,267,350
---------
9,762,500
ELECTRICAL EQUIPMENT 5.9%
General Electric Company 43,800 6,778,050
ELECTRONICS - SEMICONDUCTOR MANUFACTURING 4.6%
Intel Corporation 64,600 5,317,388
FINANCE - MISCELLANEOUS 7.0%
American Express Company 47,800 7,946,750
HEALTHCARE - DRUG/DIVERSIFIED 8.5%
Johnson & Johnson 59,300 5,522,312
Merck & Company, Inc. 62,700 4,204,819
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9,727,131
LEISURE PRODUCT 2.5%
Eastman Kodak Company 42,500 2,815,625
LEISURE SERVICE 0.9%
The Walt Disney Company 34,200 1,000,350
MACHINERY - CONSTRUCTION & MINING 1.1%
Caterpillar, Inc. 26,900 1,265,981
METALS & MINING 3.2%
Alcoa, Inc. 44,700 3,710,100
OIL - INTERNATIONAL INTEGRATED 1.7%
Exxon Mobil Corporation 24,500 1,973,781
PAPER & FOREST PRODUCTS 1.8%
International Paper Company 37,300 2,105,119
RETAIL - MAJOR CHAIN 2.4%
Wal-Mart Stores, Inc. 40,100 2,771,913
RETAIL - RESTAURANT 0.9%
McDonald's Corporation 24,500 987,656
RETAIL - SPECIALTY 3.1%
The Home Depot, Inc. 52,350 $ 3,589,247
SOAP & CLEANING PREPARATION 2.4%
The Procter & Gamble Company 24,500 2,684,281
TELECOMMUNICATIONS - SERVICES 3.1%
AT&T Corporation 68,700 3,486,525
TELEPHONE 3.0%
SBC Communications, Inc. 69,100 3,368,625
TOBACCO 1.4%
Philip Morris Companies, Inc. 68,100 1,579,069
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Total Common Stocks (Cost $97,869,306) 113,549,469
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SHORT-TERM INVESTMENTS (a) 0.3%
COMMERCIAL PAPER
INTEREST BEARING, DUE UPON DEMAND
Pitney Bowes Credit Corporation, 6.10% $286,600 286,600
Warner Lambert Company, 6.08% 100 100
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Total Short-Term Investments (Cost $286,700) 286,700
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Total Investments in Securities (Cost $98,156,006) 99.9% 113,836,169
Other Assets and Liabilities, Net 0.1% 139,693
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TOTAL NET ASSETS 100.0% $113,975,862
============================================================================================
</TABLE>
LEGEND
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(a) Short-term investments include any security which has a maturity of less
than one year.
(b) Non-income producing security.
Percentages are stated as a percent of net assets.
4
See Notes to Financial Statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
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December 31, 1999
<TABLE>
<CAPTION>
STRONG DOW 30
VALUE FUND
-------------
<S> <C>
ASSETS:
Investments in Securities, at Value (Cost of $98,156,006) $113,836,169
Receivable for Securities Sold 768,896
Receivable for Fund Shares Sold 24,841
Dividends and Interest Receivable 168,872
Other Assets 13,722
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Total Assets 114,812,500
LIABILITIES:
Payable for Securities Purchased 730,497
Payable for Fund Shares Redeemed 62,181
Accrued Operating Expenses and Other Liabilities 43,960
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Total Liabilities 836,638
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NET ASSETS $113,975,862
=============
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $100,964,489
Accumulated Net Realized Loss (2,668,790)
Net Unrealized Appreciation 15,680,163
-------------
Net Assets $113,975,862
=============
Capital Shares Outstanding (Unlimited Number Authorized) 8,016,824
NET ASSET VALUE PER SHARE $14.22
======
</TABLE>
5
See Notes to Financial Statements.
<PAGE>
STATEMENT OF OPERATIONS
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For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
STRONG DOW 30
VALUE FUND
-------------
<S> <C>
INCOME:
Dividends $ 1,164,571
Interest 53,870
----------
Total Income 1,218,441
EXPENSES:
Investment Advisory Fees 582,923
Custodian Fees 43,367
Shareholder Servicing Costs 77,310
Reports to Shareholders 51,911
Other 70,461
----------
Total Expenses before Waivers and Absorptions 825,972
Voluntary Expense Waivers and Absorptions by Advisor (26,670)
----------
Expenses, Net 799,302
----------
NET INVESTMENT INCOME 419,139
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Loss on Investments (1,913,272)
Net Change in Unrealized Appreciation/Depreciation on Investments 13,283,450
NET GAIN ON INVESTMENTS 11,370,178
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 11,789,317
==========
</TABLE>
6
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
STRONG DOW 30 VALUE FUND
---------------------------------
Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998
----------- -----------
(Note 1)
<S> <C> <C>
OPERATIONS:
Net Investment Income $ 419,139 $ 381,766
Net Realized Loss (1,913,272) (755,518)
Net Change in Unrealized Appreciation/Depreciation 13,283,450 2,396,712
---------- ----------
Net Increase in Net Assets Resulting from Operations 11,789,317 2,022,960
DISTRIBUTIONS FROM NET INVESTMENT INCOME (421,108) (381,735)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 125,783,891 36,153,107
Proceeds from Reinvestment of Distributions 391,152 370,392
Payment for Shares Redeemed (51,814,938) (9,917,176)
----------- ----------
Net Increase in Net Assets from Capital Share Transactions 74,360,105 26,606,323
----------- ----------
TOTAL INCREASE IN NET ASSETS 85,728,314 28,247,548
NET ASSETS:
Beginning of Year 28,247,548 --
---------- ---------
End of Year $ 113,975,862 $ 28,247,548
============ ===========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 9,423,493 3,359,816
Issued in Reinvestment of Distributions 27,546 32,316
Redeemed (3,905,128) (921,219)
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Net Increase in Shares of the Fund 5,545,911 2,470,913
========= =========
</TABLE>
7
See Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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DECEMBER 31, 1999
1. ORGANIZATION
Strong Dow 30 Value Fund is a non-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 -- Securities of the Fund are valued at fair value
through valuations obtained by a commercial pricing service or the
mean of the bid and asked prices when no last sales price is
available. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith under
consistently applied procedures established by and under the general
supervision of the Board of Directors. Securities which are purchased
within 60 days of their stated maturity are valued at amortized cost,
which approximates fair value.
The Fund may own certain investment securities which are restricted
as to resale. These securities are valued after giving due
consideration to pertinent factors, including recent private sales,
market conditions and the issuer's financial performance. The Fund
generally bears the costs, if any, associated with the disposition
of restricted securities. The Fund held no restricted securities at
December 31, 1999.
(B) FEDERAL INCOME AND EXCISE TAXES AND DISTRIBUTIONS TO SHAREHOLDERS --
The Fund intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders
in a manner which results in no tax cost to the Fund. Therefore, no
federal income or excise tax provision is required.
Net investment income or net realized gains for financial statement
purposes may differ from the characterization for federal income
tax purposes due to differences in the recognition of income and
expense items for financial statement and tax purposes. Where
appropriate, reclassifications between net asset accounts are made
for such differences that are permanent in nature.
The Fund generally pays dividends from net investment income and
distributes any net capital gains that it realizes annually.
(C) REALIZED GAINS AND LOSSES ON INVESTMENT TRANSACTIONS -- Investment
security transactions are recorded as of the trade date. Gains or
losses realized on investment transactions are determined by comparing
the identified cost of the security lot sold with the net sales
proceeds.
(D) CERTAIN 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.
(E) 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. Additional securities held by
the Fund may be designated as collateral on open futures contracts.
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.
(F) 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. Changes between the initial premiums received and the current
market value of the options are recorded as unrealized gains or
losses. 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. Securities held by the Fund may be designated
as collateral on written options.
(G) 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), in a repurchase transaction be maintained in a segregated
account with a custodian bank in a manner sufficient to enable the
Fund to obtain those securities in the event of a default of the
8
<PAGE>
repurchase agreement. On a daily basis, the Advisor monitors the value
of the collateral, including accrued interest, to ensure it is at
least equal to the amount owed to the Fund under each repurchase
agreement.
(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 in these financial statements. Actual results could differ
from those estimates.
(I) OTHER -- Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on the
accrual basis and includes amortization of premium and discounts.
3. RELATED PARTY TRANSACTIONS
The Advisor, with whom certain officers and directors of the Fund are
affiliated, provides investment advisory services 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. Based
on the terms of the Advisory Agreement, advisory fees and other expenses
will be waived or absorbed by the Advisor if the Fund's operating expenses
exceed 2% of the average daily net assets of the Fund. In addition, the
Fund's Advisor may voluntarily waive or absorb certain expenses at its
discretion. Shareholder recordkeeping and related service fees are based on
contractually established rates for each open and closed shareholder
account. The Advisor also allocates to the Fund certain charges or credits
resulting from transfer agency banking activities based on the Fund's level
of subscription and redemption activity. Charges allocated to the Fund by
the Advisor for the year ended December 31, 1999 of $3,722 are included in
Other Expenses in the Fund's Statement of Operations. The Advisor is also
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 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 December 31, 1999, shareholder
servicing and other expenses paid to the Advisor, and unaffiliated
directors' fees, excluding the effects of waivers and absorptions, for the
year then ended, were $22,030, $187,823 and $1,500, respectively.
4. LINE OF CREDIT
The Strong Funds have established a line of credit agreement ("LOC") with
certain financial institutions to be used for temporary or emergency
purposes, primarily for financing redemption payments. Combined borrowings
among all participating Strong Funds are subject to a $350 million cap on
the total LOC. For an individual Fund, borrowings under the LOC are limited
to either the lesser of 15% of the market value of the Fund's total assets
or any explicit borrowing limits in the Fund's prospectus. Principal and
interest of each borrowing on the LOC are due not more than 60 days after
the date of the borrowing. Borrowings under the LOC bear interest based on
prevailing market rates as defined in the LOC. A commitment fee of .08% per
annum is incurred on the unused portion of the LOC and is allocated to all
participating Strong Funds. At December 31, 1999, there were no borrowings
by the Fund outstanding under the LOC.
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities, other than
government securities, for the year ended December 31, 1999 were
$119,978,040 and $45,989,686, respectively. There were no purchases or
sales of long-term government securities during the year ended December 31,
1999.
6. INCOME TAX INFORMATION
At December 31, 1999, the cost of investments in securities for federal
income tax purposes was $100,143,721. Net unrealized appreciation of
securities was $13,692,448, consisting of gross unrealized appreciation and
depreciation of $16,400,331 and $2,707,883, respectively. The Fund had a
capital loss carryover of $681,075 which expires in varying amounts through
2007.
For corporate shareholders in the fund, the percentage of dividend
income distributed for the year ended December 31, 1999 which is
designated as qualifying for the dividends-received deduction was 100.0%
(unaudited).
9
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------------
STRONG DOW 30 VALUE FUND
- -------------------------------------------------------------------------------------------------------------------
Year Ended
--------------------
Dec. 31, Dec. 31,
Selected Per-Share Data(a) 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $ 11.43 $ 10.00
Income From Investment Operations:
Net Investment Income 0.05 0.18
Net Realized and Unrealized Gains on Investments 2.79 1.43
- -------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 2.84 1.61
Less Distributions:
From Net Investment Income (0.05) (0.18)
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (0.05) (0.18)
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 14.22 $ 11.43
===================================================================================================================
Ratios and Supplemental Data
- -------------------------------------------------------------------------------------------------------------------
Total Return +24.9% +16.1%
Net Assets, End of Period (In Thousands) $ 113,976 $ 28,248
Ratio of Expenses to Average Net Assets without Waivers and Absorptions 1.1% 2.0%
Ratio of Expenses to Average Net Assets 1.1% 0.1%
Ratio of Net Investment Income to Average Net Assets 0.6% 2.1%
Portfolio Turnover Rate 64.8% 45.7%
</TABLE>
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
10
See Notes to Financial Statements.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of Strong Equity Funds, Inc.
and the Shareholders of Strong Dow 30 Value Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments in securities, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Strong Dow 30 Value
Fund (the "Fund") (one of the portfolios constituting the Strong Equity Funds,
Inc.) at December 31, 1999, the results of its operations for the year then
ended, the changes in its net assets and the financial highlights for each of
the two years in the period then ended, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at December
31, 1999 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where broker confirmations were not received,
provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
February 2, 2000
11
<PAGE>
DIRECTORS
Richard S. Strong
Marvin E. Nevins
William F. Vogt
Willie D. Davis
Stanley Kritzik
Neal Malicky
OFFICERS
Richard S. Strong, CHAIRMAN OF THE BOARD
Thomas M. Zoeller, VICE PRESIDENT
Dennis A. Wallestad, VICE PRESIDENT
Stephen J. Shenkenberg, VICE PRESIDENT AND SECRETARY
John S. Weitzer, VICE PRESIDENT
John W. Widmer, TREASURER
Rhonda K. Haight, ASSISTANT TREASURER
INVESTMENT ADVISOR
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
DISTRIBUTOR
Strong Investments, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
CUSTODIAN
Firstar Bank Milwaukee, N.A.
P.O. Box 701, Milwaukee, Wisconsin 53201
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
100 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street, Milwaukee, Wisconsin 53202
<PAGE>
For a prospectus containing more complete information, including management
fees and expenses, please call 1-800-368-1030. Please read it carefully before
investing or sending money. This report does not constitute an offer for the
sale of securities. Strong Funds are offered for sale by prospectus only. To
reduce the volume of mail you receive, only one copy of financial reports,
prospectuses, and other regulatory materials is mailed to your household. You
can call us at 1-800-368-1030, or write to us at the address listed below, to
request (1) additional copies free of charge, or (2) that we discontinue our
practice of householding regulatory materials.
Strong Investments, Inc. RT0954-0200
To order a free prospectus kit, call
1-800-368-1030
To learn more about our funds,
discuss an existing account,
or conduct a transaction, call
1-800-368-3863
If you are a Financial Professional, call
1-800-368-1683
Visit our web site at
www.eStrong.com
[LOGO] STRONG FUNDS-Registered Trademark-
P.O. Box 2936
Milwaukee, Wisconsin 53201
