SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Strong Advantage Fund, Inc. Strong International Equity Funds, Inc.
Strong Asia Pacific Fund, Inc. Strong Large Cap Growth Fund, Inc.
Strong Balanced Fund, Inc. Strong Life Stage Series, Inc.
Strong Balanced Stock Fund, Inc. Strong Money Market Fund, Inc.
Strong Common Stock Fund, Inc. Strong Municipal Bond Fund, Inc.
Strong Conservative Equity Funds, Inc. Strong Municipal Funds, Inc.
Strong Corporate Bond Fund, Inc. Strong Opportunity Fund II, Inc.
Strong Equity Funds, Inc. Strong Opportunity Fund, Inc.
Strong Government Securities Fund, Inc. Strong Short-Term Bond Fund, Inc.
Strong Heritage Reserve Series, Inc. Strong Short-Term Global Bond Fund, Inc.
Strong High-Yield Municipal Bond Fund, Inc. Strong Short-Term Municipal Bond Fund, Inc.
Strong Income Funds II, Inc. Strong Variable Insurance Funds, Inc.
Strong Income Funds, Inc.
(each a "Corporation" and collectively, the
"Corporations")
_______________________________________________________
(Name of Registrant as Specified in its Charter)
____________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: *
________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________
5) Total fee paid:
________________________________________________________________
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:____________________________________
2) Form, Schedule or Registration Statement No.: _____________
3) Filing Party: _____________________________________________
4) Date Filed: _______________________________________________
The Strong Funds
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
[May 24, 2001]
Dear Shareholder:
A joint Annual Meeting of Shareholders of the funds for which Strong Capital
Management, Inc. is the advisor and/or administrator ("Funds") will be held at
100 Heritage Reserve, Menomonee Falls, WI 53051 on Friday, July 20, 2001 at 8:00
a.m., Central Time. The enclosed Notice of Annual Meeting and Joint Proxy
Statement describes a number of important proposals affecting the Funds in which
you are invested. To save printing costs and administrative expenses, we have
created a single combined Joint Proxy Statement that encompasses all of the
proposed changes to the Funds on which shareholders will vote. Therefore, some
of the proposals may not apply to your Fund.
In general, the proposals relate to the election of the Board of Directors,
approval of a new advisory agreement, ratification of independent auditors, the
approval of a plan of reorganization, and approval of a subadvisory agreement.
To help identify the specific issues that affect your Fund, please refer to the
summary table on page __ of the Joint Proxy Statement. Please review and
consider each of the proposals carefully.
The Funds' Board of Directors has reviewed and [unanimously] approved these
proposals and believes them to be in the best interests of the Funds'
shareholders. Accordingly, the Board [unanimously] recommends that you vote in
favor of each proposal. Whether or not you plan to attend the Annual Meeting,
please sign and return the enclosed proxy card in the postage prepaid envelope
provided or vote by toll-free telephone or through the Internet according to the
enclosed Voting Instructions.
Please call our proxy solicitor, Georgeson Shareholder Communications Inc. at
1-888-705-1054 if you have any questions. Your vote is important to us, no
matter how many shares you own.
Thank you for your support.
Sincerely,
Richard S. Strong
Chairman
Strong Family of Funds
(each a "Fund" and collectively, the "Funds")
Strong Advantage Fund Strong Endeavor Fund Strong Multi Cap Value Fund II
Strong Advisor Aggressive High-Yield Strong Energy Fund Strong Municipal Advantage Fund
Bond Fund Strong Enterprise Fund Strong Municipal Bond Fund
Strong Advisor Bond Fund Strong Foreign MajorMarkets(SM) Fund Strong Municipal Money Market Fund
Strong Advisor Common Stock Fund Strong Government Securities Fund Strong Opportunity Fund
Strong Advisor Endeavor 20 Fund Strong Growth Fund Strong Opportunity Fund II
Strong Advisor Focus Fund Strong Growth 20 Fund Strong Overseas Fund
Strong Advisor Mid Cap Growth Fund Strong Growth and Income Fund Strong Short-Term Bond Fund
Strong Advisor Short Duration Bond Fund Strong Heritage Money Fund Strong Short-Term High Yield Bond Fund
Strong Advisor Small Cap Value Fund Strong High-Yield Bond Fund Strong Short-Term High Yield Municipal Fund
Strong Advisor Technology Fund Strong High-Yield Municipal Bond Fund Strong Short-Term Municipal Bond Fund
Strong Advisor U.S. Value Fund Strong Index 500 Fund Strong Tax-Free Money Fund
Strong Aggressive Portfolio Strong International Stock Fund Strong Technology 100 Fund
Strong American Utilities Fund Strong International Stock Fund II Strong U.S. Emerging Growth Fund
Strong Asia Pacific Fund Strong Internet Fund Strong Value Fund
Strong Balanced Fund Strong Investors Money Fund Strong Wisconsin Tax-Free Fund
Strong Balanced Stock Fund Strong Large Cap Core Fund
Strong Blue Chip Fund Strong Large Cap Growth Fund
Strong Conservative Portfolio Strong Mid Cap Disciplined Fund
Strong Corporate Bond Fund Strong Mid Cap Growth Fund II
Strong Discovery Fund II Strong Moderate Portfolio
Strong Dow 30 Value Fund Strong Money Market Fund
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
__________________________
Notice of Annual Meeting of Shareholders
to be held on July 20, 2001
An Annual Meeting of Shareholders of the Funds will be held at the offices
of Strong Capital Management, Inc., ("Strong") 100 Heritage Reserve, Menomonee
Falls, Wisconsin 53051, on July 20, 2001 at 8:00 a.m., Central Time (the "Annual
Meeting"). At the Annual Meeting, shareholders will be asked to consider and act
upon the proposals set forth below and to transact such other business as may be
properly brought before the Annual Meeting:
PROPOSAL 1: To elect members to the Board of Directors.
PROPOSAL 2: To approve a new advisory agreement between Strong Capital
Management, Inc. and the Corporation on behalf of each Fund.
Proposal 2A: To approve a new advisory agreement between Strong Capital
- -----------
Management, Inc. and the Corporation on behalf of each of:
Strong Advisor Aggressive High-Yield Bond Fund Strong Advisor Focus Fund
Strong Advisor Endeavor 20 Fund Strong Advisor Technology Fund
Proposal 2B: To approve a new advisory agreement between Strong Capital
- -----------
Management, Inc. and the Corporation on behalf of each of:
Strong Asia Pacific Fund Strong Money Market Fund
Strong Balanced Stock Fund Strong Multi Cap Value Fund II
Strong Dow 30 Value Fund Strong Municipal Money Market Fund
Strong Foreign MajorMarkets(SM) Fund Strong Overseas Fund
Strong International Stock Fund Strong Tax-Free Money Fund
Strong Investors Money Fund Strong Technology 100 Fund
Strong Mid Cap Growth Fund II Strong Value Fund
Proposal 2C: To approve a new advisory agreement between Strong Capital
- -----------
Management, Inc. and the Corporation on behalf of each of:
Strong Advantage Fund Strong Growth and Income Fund
Strong Advisor Bond Fund Strong Heritage Money Fund
Strong Advisor Common Stock Fund Strong High-Yield Bond Fund
Strong Advisor Mid Cap Growth Fund Strong High-Yield Municipal Bond Fund
Strong Advisor Short Duration Bond Fund Strong Large Cap Core Fund
Strong Advisor Small Cap Value Fund Strong Large Cap Growth Fund
Strong Advisor U.S. Value Fund Strong Mid Cap Disciplined Fund
Strong American Utilities Fund Strong Municipal Advantage Fund
Strong Balanced Fund Strong Municipal Bond Fund
Strong Blue Chip Fund Strong Opportunity Fund
Strong Corporate Bond Fund Strong Opportunity Fund II
Strong Energy Fund Strong Short-Term Bond Fund
Strong Enterprise Fund Strong Short-Term High Yield Bond Fund
Strong Government Securities Fund Strong Short-Term High Yield
Strong Growth 20 Fund Municipal Fund
Strong Growth Fund Strong Short-Term Municipal Bond Fund
Strong U.S. Emerging Growth Fund
PROPOSAL 3: To ratify the selection of each Fund's Independent Auditors.
Proposal 3A: To ratify the selection of PricewaterhouseCoopers LLP (all Funds
- -----------
except the Strong Index 500 Fund).
Proposal 3B: To ratify the selection of KPMG LLP (Strong Index 500 Fund only).
- -----------
PROPOSAL 4: To approve a plan of reorganization, including an amendment to
the Articles of Incorporation of Strong Equity Funds, Inc., to
reorganize the Strong Internet Fund into the Strong Technology
100 Fund (Strong Technology 100 Fund only).
PROPOSAL 5: To approve a subadvisory agreement between Sloate, Weisman,
Murray and Company, Inc. and the Strong Value Fund (Strong Value
Fund only).
Only shareholders of the Funds at the close of business on Friday, May 11,
2001 are entitled to notice of, and to vote at, the Annual Meeting or at any
adjournment thereof.
YOUR VOTE IS IMPORTANT.
PLEASE PROMPTLY RETURN YOUR PROXY CARD
OR VOTE BY TOLL-FREE TELEPHONE OR AT OUR WEB SITE
IN ACCORDANCE WITH THE ENCLOSED VOTING INSTRUCTIONS.
- --------------------------------------------------------------------------------
As a shareholder, you are asked to attend the Annual Meeting either in
person or by proxy. If you are unable to attend the Annual Meeting in person, we
urge you to vote by proxy. You can do this in one of three ways: by (1)
completing, dating, signing and promptly returning the enclosed proxy card using
the enclosed postage prepaid envelope, (2) calling our toll-free telephone
number, or (3) visiting our web site. Your prompt voting by proxy will help
assure a quorum at the Annual Meeting and avoid additional expenses associated
with further solicitation. Voting by proxy will not prevent you from voting your
shares in person at the Annual Meeting. You may revoke your proxy before it is
exercised at the Annual Meeting by submitting to the Secretary of the Fund a
written notice of revocation or a subsequently signed proxy card, or by
attending the Annual Meeting and voting in person. A prior proxy can also be
revoked by voting again through the web site or toll-free telephone number
listed on the enclosed Voting Instructions.
- --------------------------------------------------------------------------------
By Order of the Boards of Directors,
/s/ Elizabeth N. Cohernour
Elizabeth N. Cohernour
Vice President and Secretary
Menomonee Falls, Wisconsin
May ____, 2001
QUESTIONS AND ANSWERS
YOUR VOTE IS VERY IMPORTANT
Q. On what am I being asked to vote at the upcoming annual shareholder meeting
on July 20, 2001?
A. You are being asked to reelect the directors of the Funds. In addition,
shareholders of most Strong Funds are being asked to approve a new advisory
agreement between each Fund and Strong Capital Management, Inc. ("Strong"),
along with other proposals discussed below.
Q. Has the Board of Directors approved these proposals?
A. Each Fund's Board of Directors has [unanimously] approved each proposal and
recommends that you vote in favor of it.
Q. What is changing in the Advisory Agreement?
A. The main changes relate to fee structures, expense reimbursement policies
and administrative services. For some Funds, if approved by shareholders,
the new agreement will introduce breakpoints (asset levels) at which
management fees will go down as a percentage of the Fund's net assets. For
several Funds, under the new Agreement, the Advisor would not be
responsible for providing fund administrative services under the Advisory
Agreement. Instead, a new, separate, administration agreement would cover
fund administrative services provided by Strong. For most Funds, if
approved by shareholders, the new Agreement will also remove a 2% cap on
fund expenses that dates back to state laws that no longer apply to the
Funds.
Q. How will Fund expenses be affected?
A. For certain Funds, the management fee will be lowered to exclude the
portion currently being charged for administrative services and a separate
fee will be charged under the new administration agreement. However, for
these Funds, the new administration fee may be higher than the reduction in
the management fee. In addition, certain classes of some Funds that already
have a separate administration fee will be subject to an increase in
administration fees. In addition, for most Funds, the removal of the 2%
expense cap and the introduction of breakpoints will have no immediate
impact on Fund expenses.
Q. Why will administration fees increase?
A. In the past, Strong performed certain accounting and other services at no
additional cost to the Funds. Strong is no longer able to provide these
services at no cost to the Funds in order to remain competitive within the
marketplace.
Q. What other items are shareholders being asked to approve?
A. You are also being asked to ratify the selection of PricewaterhouseCoopers
LLP, or, in the case of the Strong Index 500 Fund, KPMG LLP, as independent
auditors for the Fund for its current fiscal year. Also, shareholders of
the Strong Technology 100 Fund are being asked to approve a plan of
reorganization, including an amendment to the Articles of Incorporation of
Strong Equity Funds, Inc., whereby the Strong Technology 100 Fund
would acquire the assets and liabilities of the Strong Internet Fund.
Shareholders of the Strong Value Fund are also being asked to approve the
subadvisory agreement with the current subadvisor, Sloate, Weisman, Murray
and Company, Inc.
Q. What is changing in the Strong Value Fund's subadvisory agreement with
Sloate, Weisman, Murray and Company, Inc.?
A. There are no changes that will effect you or the Fund. The only change is
in how the subadvisory fee is calculated. The subadvisory fee and overall
fund operating expenses will remain the same.
Q. I am a small investor. Why should I bother to vote?
A. Your vote makes a difference. If numerous shareholders just like you fail
to vote, your Fund may not receive enough votes to go forward with its
meeting. If this happens, we will need to solicit votes again.
Q. Who gets to vote?
A. Any person who owned shares of a Fund on the "record date," which was the
close of business on Friday, May 11, 2001 - even if you later sold your
shares. You may cast one vote for each share you owned and a fractional
vote for each fractional share you owned on the record date.
Q. How can I vote?
A. You can vote your shares in any one of four ways:
. Through the Internet.
. By toll-free telephone.
. By mail, using the enclosed proxy card.
. In person at the meeting.
We encourage you to vote through the Internet or by telephone, using the
number that appears on your proxy card. These voting methods will save a
good deal of money. Whichever voting method you choose, please take the
time to read the full text of the Proxy Statement before you vote.
Q. I plan to vote through the Internet. How does Internet voting work?
A. To vote through the Internet, please read the enclosed Voting Instructions.
Q. I plan to vote by telephone. How does telephone voting work?
A. To vote by telephone, please read the enclosed Voting Instructions.
Q. I plan to vote by mail. How should I sign my proxy card?
A. If you are an individual account owner, please sign exactly as your name
appears on the proxy card. Either owner of a joint account may sign the
proxy card, but the signer's name must exactly match one that appears on
the card. You should sign proxy cards for other types of accounts in a way
that indicates your authority (for instance, "John Brown, Custodian").
Q. Who should I call if I have any questions about voting?
A. You can call our proxy solicitor, Georgeson Shareholder Communications
Inc., at 1-888-705-1054.
STRONG FAMILY OF FUNDS
(Each a "Fund," and collectively, the "Funds")
Strong Advantage Fund Strong Discovery Fund II Strong Mid Cap Disciplined Fund
Strong Advisor Aggressive High-Yield Strong Dow 30 Value Fund Strong Mid Cap Growth Fund II
Bond Fund Strong Endeavor Fund Strong Moderate Portfolio
Strong Advisor Bond Fund Strong Energy Fund Strong Money Market Fund
Strong Advisor Common Stock Fund Strong Enterprise Fund Strong Multi Cap Value Fund II
Strong Advisor Endeavor 20 Fund Strong Foreign MajorMarkets(SM) Fund Strong Municipal Advantage Fund
Strong Advisor Focus Fund Strong Government Securities Fund Strong Municipal Bond Fund
Strong Advisor Mid Cap Growth Fund Strong Growth Fund Strong Municipal Money Market Fund
Strong Advisor Short Duration Bond Fund Strong Growth 20 Fund Strong Opportunity Fund
Strong Advisor Small Cap Value Fund Strong Growth and Income Fund Strong Opportunity Fund II
Strong Advisor Technology Fund Strong Heritage Money Fund Strong Overseas Fund
Strong Advisor U.S. Value Fund Strong High-Yield Bond Fund Strong Short-Term Bond Fund
Strong Aggressive Portfolio Strong High-Yield Municipal Bond Fund Strong Short-Term High Yield Bond Fund
Strong American Utilities Fund Strong Index 500 Fund Strong Short-Term High Yield Municipal Fund
Strong Asia Pacific Fund Strong International Bond Fund Strong Short-Term Municipal Bond Fund
Strong Balanced Fund Strong International Stock Fund II Strong Tax-Free Money Fund
Strong Balanced Stock Fund Strong Internet Fund Strong Technology 100 Fund
Strong Blue Chip Fund Strong Investors Money Fund Strong U.S. Emerging Growth Fund
Strong Conservative Portfolio Strong Large Cap Core Fund Strong Value Fund
Strong Corporate Bond Fund Strong Large Cap Growth Fund Strong Wisconsin Tax-Free Fund
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
__________________________
JOINT PROXY STATEMENT
__________________________
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
July 20, 2001
It is expected that the Notice of Annual Meeting, this Joint Proxy Statement and
a Proxy Card will be mailed to shareholders on or about [May 24], 2001.
This Joint Proxy Statement is furnished by the Board of Directors of Strong
Advantage Fund, Inc., Strong Asia Pacific Fund, Inc., Strong Balanced Fund,
Inc., Strong Balanced Stock Fund, Inc., Strong Common Stock Fund, Inc., Strong
Conservative Equity Funds, Inc., Strong Corporate Bond 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 Income Funds II, Inc., Strong International Equity Funds, Inc.,
Strong Large Cap Growth Fund, Inc., Strong Life Stage Series, Inc., Strong Money
Market Fund, Inc., Strong Municipal Bond Fund, Inc., Strong Municipal Funds,
Inc., Strong Opportunity Fund, Inc., Strong Opportunity Fund II, Inc., Strong
Short-Term Bond Fund, Inc., Strong Short-Term Global Bond Fund, Inc., Strong
Short-Term Municipal Bond Fund, Inc., and Strong Variable Insurance Funds, Inc.
(each a "Corporation" and collectively, the "Corporations") in connection with
the solicitation of proxies for use at the Annual Meeting of shareholders of
each Corporation to be held on Friday, July 20, 2001, at 8:00 a.m., Central
Time, or at any adjournment thereof (the
1
"Annual Meeting"), at the offices of Strong Capital Management, Inc., ("Strong")
100 Heritage Reserve, Menomonee Falls, Wisconsin 53051.
Summary
At the Annual Meeting, shareholders will be asked to vote on one proposal to
elect a slate of Directors to serve on the Board of Directors of each
Corporation ("Proposal #1"), one proposal to approve a revised advisory
agreement with Strong Capital Management, Inc. ("Strong") ("Proposal #2"), one
proposal to ratify the selection of each Fund's current independent auditors
("Proposal #3"), one proposal to approve a plan of reorganization, including an
amendment to the Articles of Incorporation of Strong Equity Funds, Inc., for the
Strong Technology 100 Fund ("Proposal # 4"), and one proposal to approve a new
subadvisory agreement for the Strong Value Fund with Sloate, Weisman, Murray &
Company, Inc. ("Proposal #5"). Proposals 1, 2, 3, 4 and 5 are referred to
collectively as the "Proposals."
Whether you expect to be personally present at the Annual Meeting or not, we
encourage you to vote by proxy. You can do this in one of three ways. You may
complete, date, sign and return the accompanying proxy card using the enclosed
postage prepaid envelope, you may vote by calling our toll-free telephone
number, or you may vote by visiting our web site in accordance with the enclosed
Voting Instructions. By voting by proxy, your shares will be voted as you
instruct. If no choice is indicated, your shares will be voted FOR the
Proposals, and in accordance with the best judgment of the persons named as
proxies on such other matters that properly may come before the Annual Meeting.
Any shareholder giving a proxy may revoke it before it is exercised at the
Annual Meeting by submitting to the Secretary of the Fund a written notice of
revocation or a subsequently signed proxy card, or by attending the Annual
Meeting and voting in person. A prior proxy can also be revoked by voting again
through the web site or toll-free telephone number listed on the enclosed Voting
Instructions. If not so revoked, the shares represented by the proxy will be
voted at the Annual Meeting and at any adjournments of the Annual Meeting.
Attendance by a shareholder at the Annual Meeting does not in itself revoke a
proxy.
The table below lists each Proposal described in this proxy statement and
identifies shareholders entitled to vote on each Proposal:
- ---------------------------------------------------------------------------------------------------------------------
Proposal Shareholders Entitled to Vote
- ---------------------------------------------------------------------------------------------------------------------
1. To elect members to the Board of Directors of Shareholders of each Corporation, voting separately by
each Fund. Corporation.
- ---------------------------------------------------------------------------------------------------------------------
2A. To approve a new advisory agreement Shareholders of the Funds listed, voting separately by
between Strong Capital Management, Inc. and the Fund.
Corporation on behalf of each of:
. Strong Advisor Aggressive High-Yield Bond Fund
. Strong Advisor Endeavor 20 Fund
. Strong Advisor Focus Fund
. Strong Advisor Technology Fund
- ---------------------------------------------------------------------------------------------------------------------
2B. To approve a new advisory agreement Shareholders of the Funds listed, voting separately by
between Strong Capital Management, Inc. and the Fund.
Corporation on behalf of each of:
. Strong Asia Pacific Fund
. Strong Balanced Stock Fund
. Strong Dow 30 Value Fund
. Strong Foreign MajorMarkets(SM) Fund
. Strong International Stock Fund
. Strong Investors Money Fund
- ---------------------------------------------------------------------------------------------------------------------
2
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. Strong Mid Cap Growth Fund II
. Strong Money Market Fund
. Strong Multi Cap Value Fund II
. Strong Municipal Money Market Fund
. Strong Overseas Fund
. Strong Tax-Free Money Fund
. Strong Technology 100 Fund
. Strong Value Fund
- ---------------------------------------------------------------------------------------------------------------------
2C. To approve a new advisory agreement Shareholders of the Funds listed, voting separately by
between Strong Capital Management, Inc. and the Fund.
Corporation on behalf of each of:
. Strong Advantage Fund
. Strong Advisor Bond Fund
. Strong Advisor Common Stock Fund
. Strong Advisor Mid Cap Growth Fund
. Strong Advisor Short Duration Bond Fund
. Strong Advisor Small Cap Value Fund
. Strong Advisor U.S. Value Fund
. Strong American Utilities Fund
. Strong Balanced Fund
. Strong Blue Chip Fund
. Strong Corporate Bond Fund
. Strong Energy Fund
. Strong Enterprise Fund
. Strong Government Securities Fund
. Strong Growth Fund
. Strong Growth 20 Fund
. Strong Growth and Income Fund
. Strong Heritage Money Fund
. Strong High-Yield Bond Fund
. Strong High-Yield Municipal Bond Fund
. Strong Large Cap Core Fund
. Strong Large Cap Growth Fund
. Strong Mid Cap Disciplined Fund
. Strong Municipal Advantage Fund
. Strong Municipal Bond Fund
. Strong Opportunity Fund
. Strong Opportunity Fund II
. Strong Short-Term Bond Fund
. Strong Short-Term High Yield Bond Fund
. Strong Short-Term High Yield Municipal Fund
. Strong Short-Term Municipal Bond Fund
. Strong U.S. Emerging Growth Fund
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3A. To ratify the selection of PricewaterhouseCoopers Shareholders of each Fund (except the Strong Index 500
LLP as Independent Auditors. Fund), voting separately by Fund.
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3B. To ratify the selection of KPMG LLP as Shareholders of the Strong Index 500 Fund.
Independent Auditors.
- ---------------------------------------------------------------------------------------------------------------------
4. To approve a plan of reorganization, including an Shareholders of the Strong Technology 100 Fund.
amendment to the Articles of Incorporation of (Shareholders of the Strong Internet Fund will vote
Strong Equity Funds, Inc., to reorganize the separately on the plan of reorganization, including the
Strong Internet Fund into the Strong Technology amendment to the Articles of Incorporation of Strong
100 Fund. Equity Funds, Inc., at a special meeting of shareholders
as described in a separate proxy statement/prospectus.)
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5. To approve the subadvisory agreement Shareholders of the Strong Value Fund.
between Sloate, Weisman, Murray and
Company, Inc. and the Strong Value Fund.
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6. To vote upon any other matters which may
properly come before the meeting.
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3
Record Date and Shares Outstanding
The close of business on May 11, 2001 has been fixed as the record date (the
"Record Date") for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting and at any adjournment thereof. Each full share
will be entitled to one vote at the Annual Meeting and each fraction of a share
will be entitled to the fraction of a vote equal to the proportion of a full
share represented by the fractional share. On May 11, 2001, each Fund had the
following shares outstanding:
Strong Funds
- -----------------------------------------------------------------------------------------------------------------------
Corporation/Fund Investor Advisor Institutional Total Shares
Class Class Class Outstanding
- -----------------------------------------------------------------------------------------------------------------------
STRONG ADVANTAGE FUND, INC.
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Strong Advantage Fund
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STRONG ASIA PACIFIC FUND, INC.
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Strong Asia Pacific Fund N/A N/A
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STRONG BALANCED FUND, INC.
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Strong Balanced Fund N/A N/A
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STRONG BALANCED STOCK FUND, INC.
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Strong Balanced Stock Fund N/A N/A
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STRONG CONSERVATIVE EQUITY FUNDS, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong American Utilities Fund N/A N/A
- -----------------------------------------------------------------------------------------------------------------------
Strong Blue Chip Fund N/A
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Strong Energy Fund N/A N/A
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Strong Growth and Income Fund
- -----------------------------------------------------------------------------------------------------------------------
STRONG CORPORATE BOND FUND, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Corporate Bond Fund
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STRONG EQUITY FUNDS, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Dow 30 Value Fund N/A N/A
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Strong Enterprise Fund N/A
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Strong Growth Fund
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Strong Growth 20 Fund N/A
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Strong Index 500 Fund N/A N/A
- -----------------------------------------------------------------------------------------------------------------------
Strong Internet Fund N/A N/A
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Strong Large Cap Core Fund N/A N/A
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Strong Mid Cap Disciplined Fund N/A N/A
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Strong Technology 100 Fund N/A N/A
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Strong U.S. Emerging Growth Fund N/A N/A
- -----------------------------------------------------------------------------------------------------------------------
Strong Value Fund N/A N/A
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STRONG GOVERNMENT SECURITIES FUND, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Government Securities Fund
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4
- -----------------------------------------------------------------------------------------------------------------------
Corporation/Fund Investor Advisor Institutional Total Shares
Class Class Class Outstanding
- -----------------------------------------------------------------------------------------------------------------------
STRONG HERITAGE RESERVE
SERIES, INC.
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Strong Heritage Money Fund
- -----------------------------------------------------------------------------------------------------------------------
Strong Investors Money Fund N/A N/A
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STRONG HIGH-YIELD MUNICIPAL BOND FUND, INC.
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Strong High-Yield Municipal Bond Fund N/A
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STRONG INCOME FUNDS, INC.
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Strong High-Yield Bond Fund N/A
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Strong Short-Term High Yield Bond Fund N/A
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STRONG INTERNATIONAL EQUITY FUNDS, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Foreign MajorMarkets(SM) Fund N/A N/A
- -----------------------------------------------------------------------------------------------------------------------
Strong International Stock Fund N/A N/A
- -----------------------------------------------------------------------------------------------------------------------
Strong Overseas Fund N/A N/A
- -----------------------------------------------------------------------------------------------------------------------
STRONG LARGE CAP GROWTH FUND, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Large Cap Growth Fund N/A N/A
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STRONG LIFE STAGE SERIES, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Aggressive Portfolio N/A N/A
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Strong Conservative Portfolio N/A N/A
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Strong Moderate Portfolio N/A N/A
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STRONG MONEY MARKET FUND, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Money Market Fund N/A N/A
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STRONG MUNICIPAL BOND FUND, INC.
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Strong Municipal Bond Fund
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STRONG MUNICIPAL FUNDS, INC.
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Strong Municipal Advantage Fund
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Strong Municipal Money Market Fund N/A N/A
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Strong Short-Term High-Yield Municipal Fund N/A
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Strong Tax-Free Money Fund N/A N/A
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Strong Wisconsin Tax-Free Fund N/A
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STRONG OPPORTUNITY FUND, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund N/A
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Strong Endeavor Fund N/A N/A
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STRONG OPPORTUNITY FUND II, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II N/A
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STRONG SHORT-TERM BOND FUND, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Short-Term Bond Fund
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STRONG SHORT-TERM MUNICIPAL BOND FUND, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Short-Term Municipal Bond Fund
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STRONG VARIABLE INSURANCE
FUNDS, INC.
- -----------------------------------------------------------------------------------------------------------------------
Strong Discovery Fund II N/A N/A
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Strong International Stock Fund II N/A N/A
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Strong Mid Cap Growth Fund II N/A N/A
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Strong Multi Cap Value Fund II N/A N/A
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5
Strong Advisor Funds
- ---------------------------------------------------------------------------------------------------------------------------
Fund Class A Class B Class C Class L Class Z Institutional Total Shares
Class Outstanding
- ---------------------------------------------------------------------------------------------------------------------------
STRONG COMMON STOCK FUND, INC.
- ---------------------------------------------------------------------------------------------------------------------------
Strong Advisor Common Stock Fund N/A
- ---------------------------------------------------------------------------------------------------------------------------
Strong Advisor Focus Fund N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
Strong Advisor Technology Fund N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
STRONG CONSERVATIVE EQUITY FUNDS,
INC.
- ---------------------------------------------------------------------------------------------------------------------------
Strong Advisor U.S. Value Fund N/A
- ---------------------------------------------------------------------------------------------------------------------------
STRONG EQUITY
FUNDS, INC.
- ---------------------------------------------------------------------------------------------------------------------------
Strong Advisor Mid Cap N/A
Growth Fund
- ---------------------------------------------------------------------------------------------------------------------------
Strong Advisor Small Cap N/A
Value Fund
- ---------------------------------------------------------------------------------------------------------------------------
STRONG INCOME FUNDS II, INC.
- ---------------------------------------------------------------------------------------------------------------------------
Strong Advisor Bond Fund
- ---------------------------------------------------------------------------------------------------------------------------
STRONG OPPORTUNITY FUND, INC.
- ---------------------------------------------------------------------------------------------------------------------------
Strong Advisor Endeavor N/A N/A
20 Fund
- ---------------------------------------------------------------------------------------------------------------------------
STRONG SHORT-TERM GLOBAL BOND FUND,
INC.
- ---------------------------------------------------------------------------------------------------------------------------
Strong Advisor Aggressive N/A N/A
High-Yield Bond Fund
- ---------------------------------------------------------------------------------------------------------------------------
Strong Advisor Short Duration Bond N/A
Fund
- ---------------------------------------------------------------------------------------------------------------------------
Quorum Required to Hold Annual Meeting
A quorum for the Annual Meeting occurs if a majority of the outstanding shares
of common stock, of a Fund or a Corporation, entitled to vote at the Annual
Meeting are present in person or by proxy. Abstentions and broker non-votes
(i.e., proxies from brokers or nominees indicating that they have not received
instructions from the beneficial owners on an item for which the brokers or
nominees do not have discretionary power to vote) will be treated as present for
determining the quorum. Abstentions and broker non-votes will not, however, be
counted as voting on any matter at the Annual Meeting. In the event that a
quorum is not present at the Annual Meeting, or in the event that a quorum is
present but sufficient votes to approve the proposal are not received, the
persons named as proxies may propose one or more adjournments of the Annual
Meeting to permit further solicitation of votes. Any such adjournment will
require the affirmative vote of a majority of those shares voting on the
adjournment.
Method and Cost of Proxy Solicitations
The solicitation of proxies will be largely by mail, but may include telephone,
facsimile, telegraph, Internet or oral communication by certain officers and
employees of Strong, who will not be paid for these services, and/or by
Georgeson Shareholder Communications Inc., a professional proxy solicitor
retained by Strong.
6
Strong will also reimburse brokers and other nominees for their reasonable
expenses in communicating with the person(s) for whom they hold shares of the
Funds.
Upon request, each Fund will furnish to its shareholders, without charge, a copy
of its most recent Annual Report. The Annual Report and Semi-Annual Report of
any Fund may be obtained by written request to the Funds at P.O. Box 2936,
Milwaukee, Wisconsin 53201-2936 or by calling 1-800-368-3863.
The Funds are registered as open-end management investment companies, or series
thereof, under the Investment Company Act of 1940 (the "1940 Act") and their
shares are registered under the Securities Act of 1933.
PROPOSAL 1: TO ELECT MEMBERS TO THE BOARD OF DIRECTORS
Shareholders are being asked to elect six nominees to constitute the Board of
Directors of each Corporation.
All nominees are currently Directors of each Corporation. None of the nominees
are related to any other nominee. The term of office for a Director will be
until the next meeting of shareholders, if any, called for the purpose of
electing Directors and until the election and, if necessary, the qualification
of a successor, or until such Director sooner dies, resigns or is removed as
provided in the governing documents of each Corporation.
Each of the nominees has indicated that he is willing to continue to serve as a
Director if elected; however, should any nominee become unable or unwilling to
accept nomination or election, the persons named in the proxy will exercise
their voting power in favor of such other person or persons as the Board may
recommend.
Nominees for the Board. Nominees for Director of the Corporations are listed
- ----------------------
below, together with information regarding their age, address and business
experience during the past five years. Each director who is deemed an
"interested person" of a Corporation, as defined in the 1940 Act, is indicated
by an asterisk (*). See Additional Information, below, for the amount of fund
shares owned by each nominee and officer.
- ----------------------------------------------------------------------------------------------------------------
Name and Date of Birth Principal Occupations or Employment Director of the Funds
During the Past Five Years Since
- ----------------------------------------------------------------------------------------------------------------
*Richard S. Strong, Director and Chairman of the Board of the Strong 9/81
5/12/42 Funds since 1981; Director and Chief Investment
Officer of Strong; prior to August 1985, Chief
Executive Officer of Strong which he founded in
1974; since August 1985, Security Analyst and
Portfolio Manager of Strong; Chairman of Strong
since October 1991; controlling shareholder of
Strong and indirectly, of its subsidiary,
Strong Investments, Inc.
7
- ----------------------------------------------------------------------------------------------------------------
Name and Date of Birth Principal Occupations or Employment Director of the Funds
During the Past Five Years Since
- ----------------------------------------------------------------------------------------------------------------------
Marvin E. Nevins, Director of the Strong Funds since 1981; private 9/81
7/9/18 investor; from 1945 to 1980, Chairman of Wisconsin
Centrifugal, Inc., a foundry; from 1980 until 1981,
Chairman of the Wisconsin Association of Manufacturers
& Commerce; Director of A-Life Medical, Inc., San
Diego, CA since 1996 and Surface Systems, Inc. (a
weather information company), St. Louis, MO since 1992;
was also a regent of the Milwaukee School of Engineering
and member of the Board of Trustees of the Medical
College of Wisconsin and Carroll College.
Willie D. Davis, Director of the Strong Funds since 1994; a Director 7/94
7/24/34 of Alliance Bank since 1980; Sara Lee Corporation since
1983; KMart Corporation since 1985; Dow Chemical
Company since 1988; MGM Mirage (formerly MGM Grand,
Inc.) (an entertainment/hotel company) since 1990;
Wisconsin Energy Corporation (formerly WICOR, Inc.) (a
utility company) since 1990; Johnson Controls, Inc. (an
industrial company) since 1992; Checker's Drive In
Restaurants, Inc. (formerly Rally's Hamburgers, Inc.)
since 1994; Metro-Goldwyn-Mayer, Inc. since 1998 and
Bassett Furniture Industries, Inc. since 1997; President
and Chief Executive Officer of All Pro Broadcasting, Inc.;
Trustee of the University of Chicago since 1980 and Marquette
University since 1988; Director of the Fireman's Fund (an
insurance company) from 1975 until 1990.
Stanley Kritzik, Director and Chairman of the Audit Committee of the 1/95
1/9/30 Strong Funds since 1995; Partner of Metropolitan
Associates since 1962; Director of Aurora
Health Care since 1987; Director of Wisconsin
Health Information Network since November 1997;
member of the Board of Governors of the
Snowmass Village Resort Association since
October 1999; and Director of Health Network
Ventures, Inc. from 1992 until April 2000.
William F. Vogt, Director and Chairman of the Independent Directors 1/95
7/19/47 Committee of the Strong Funds since 1995; President
of Vogt Management Consulting, Inc. since 1990; Executive
Director of University Physicians of the University of
Colorado from 1982 until 1990; Past President of the
Medical Group Management Association and a Fellow of
the American College of Medical Practice Executives.
8
- ----------------------------------------------------------------------------------------------------------------
Name and Date of Birth Principal Occupations or Employment Director of the Funds
During the Past Five Years Since
- ----------------------------------------------------------------------------------------------------------------
Neal Malicky, Director of the Strong Funds since 1999; President 12/99
9/14/34 Emeritus of Baldwin-Wallace College since July 2000,
Chancellor from July 1999 to June 2000, President
from 1981 to June 1999; Director of Aspire Learning
Corporation since June 2000; Trustee of Southwest
Community Health Systems, Cleveland Scholarship
Program and The National Conference for Community
Justice; President of the Reserve Homeowners
Association; Past President of the National
Association of Schools and Colleges of the United
Methodist Church; Past Chairperson of the Association
of Independent Colleges and Universities of Ohio
and Past Secretary of the National Association
of Independent Colleges and Universities.
The address of each nominee is c/o Strong Funds, P.O. Box 2936, Milwaukee, WI
53201.
Responsibilities of the Board. The Board of Directors is responsible for the
- -----------------------------
management of the business and affairs of the Corporations. The Board also
elects the officers of the Corporations, who are responsible for supervising and
administering the Corporations' day to day operations. The Board of each
Corporation held five meetings during calendar year 2000. Each of the Directors
of the Corporations attended 100% of the Board meetings held during 2000.
Committees. Each Corporation's Board has an Audit Committee (the "Audit
- ----------
Committee") and an Independent Directors Committee. The Audit Committee,
established in July 2000, is comprised of each Director of the Funds who is not
a Director, officer or employee of Strong or any affiliated company (the
"Independent Directors"). The Audit Committee oversees and monitors each
Corporation's internal control structure, its auditing function and its
financial reporting process. The Audit Committee will meet privately with the
Fund's independent auditors and will receive annual representations from the
auditors as to their independence. The Audit Committee will also recommend the
appointment of the auditors for the Corporation. The Audit Committee will
normally meet four times a year, and held two meetings during 2000. Each member
of the Audit Committee attended 100% of these meetings. The Independent
Directors Committee is also comprised of all of the Independent Directors. The
Independent Directors Committee makes recommendations to the Board concerning
corporate and fund governance, compensation and committee issues and will
normally meet one time or less a year. The Independent Directors Committee did
not meet in 2000. The Board does not have a standing nominating or compensation
committee.
Compensation of Current Directors. The Corporations, in the aggregate, pay each
of the Independent Directors an annual fee of $101,000 plus $6,000 per Board
meeting attended, except for the Chairman of the Independent Directors
Committee, who receives an annual fee of $111,100 plus $6,600 per Board meeting
attended. The Independent Directors do not receive any additional compensation
for their services on the Independent Directors Committee. For their services on
the Audit Committee, each Independent Director receives an additional $2,500 per
meeting attended. The Chairman of the Audit Committee receives $2,750 per
meeting attended. In addition, each Independent Director is reimbursed by the
Corporation for travel and other expenses incurred in connection with attendance
at such meetings. Other officers and
9
Directors of the Strong Funds receive no compensation or expense reimbursement
from the Corporation related to these meetings.
The aggregate compensation paid by the Corporations to each of the Directors
serving during 2000 is set forth in the compensation table below.
COMPENSATION TABLE
(as of December 31, 2000)
Pension or
Retirement
Aggregate Benefits Total Compensation
Compensation Accrued as Part Estimated Annual From the Fund Complex
Payable from each of Fund Benefits Upon Payable
Name Fund Expenses Retirement to Director/(1)/
---- ---- -------- ---------- -----------
Marvin E. Nevins * N/A N/A $114,194
Willie D. Davis * N/A N/A $117,094
Stanley Kritzik * N/A N/A $117,360
William F. Vogt * N/A N/A $126,368
Neal Malicky * N/A N/A $ 98,490
---------------------------------------------------------------------------
/(1)/ The Strong Funds include 27 registered open-end management
investment companies consisting of 63 mutual funds, including both
the Strong Funds and the Strong Advisor Funds. Aggregate
compensation includes the amount paid to the Directors by the
Strong Funds during each of their most recently completed 12-month
fiscal period.
* The total annual fees payable to the Independent Directors are
allocated to each of the Strong Funds according to such Fund's
asset size.
Officers of the Strong Funds. The officers of the Strong Funds are elected by
- ----------------------------
the Strong Funds Directors. Each officer holds office until qualification of his
or her successor. Information concerning the officers of the Corporations is set
forth below.
Elizabeth N. Cohernour (DOB 4/26/50), Vice President and Secretary of the Strong
Funds since July 2000, Vice President of the Strong Funds since May 2000.
Ms. Cohernour has been Executive Vice President and General Counsel of Strong
since April 2001, Secretary and Chief Compliance Officer of Strong since August
2000, and was previously Senior Vice President and General Counsel of Strong
from February 2000 to April 2001. From February 1999 until January 2000, Ms.
Cohernour acted as Counsel to MFP Investors. From May 1988 to February 1999, Ms.
Cohernour acted as General Counsel and Vice President to Franklin Mutual
Advisors, Inc.
Cathleen A. Ebacher (DOB 11/9/62), Vice President and Assistant Secretary of the
Strong Funds since July 2000, and Vice President of the Strong Funds since May
2000.
Ms. Ebacher has been Vice President and Assistant Secretary of Strong since
August 2000 and Senior Counsel of Strong since December 1997. From November 1996
until December 1997, Ms. Ebacher acted as Associate Counsel to Strong. From May
1992 until November 1996, Ms. Ebacher acted as Corporate Counsel to Carson Pirie
Scott & Co., a department store retailer. From June 1989 until May 1992, Ms.
Ebacher was an attorney for Reinhart, Boerner, Van Deuren, Norris & Rieselbach,
s.c., a Milwaukee law firm.
10
Rhonda K. Haight (DOB 11/13/64), Assistant Treasurer of the Strong Funds since
December 1998.
Ms. Haight has been Manager of the Mutual Fund Accounting Department of Strong
since January 1994. From May 1990 to January 1994, Ms. Haight was a supervisor
in the Mutual Fund Accounting Department of Strong. From June 1987 to May 1990,
Ms. Haight was a Mutual Fund Accountant of Strong.
Susan A. Hollister (DOB 7/8/68), Vice President and Assistant Secretary of the
Strong Funds since July 2000.
Ms. Hollister has been Vice President, Associate Counsel, and Assistant
Secretary of Strong since August 2000 and Associate Counsel of Strong since July
1999. From August 1996 until May 1999, Ms. Hollister completed a Juris Doctor at
the University of Wisconsin Law School. From December 1993 until August 1996,
Ms. Hollister was Deposit Operations Supervisor for First Federal Savings Bank,
La Crosse - Madison.
Dennis A. Wallestad (DOB 11/3/62), Vice President of the Strong Funds since
October 1999.
Mr. Wallestad has been Director of Finance and Operations and Senior Vice
President of Strong since November 1999, and Director of Finance and Operations
of Strong since February 1999. From April 1997 to February 1999, Mr. Wallestad
was the Chief Financial Officer of The Ziegler Companies, Inc. From November
1996 to April 1997, Mr. Wallestad was the Chief Administrative Officer of
Calamos Asset Management, Inc. From July 1994 to November 1996, Mr. Wallestad
was Chief Financial Officer for Firstar Trust and Investments Group. From
September 1991 to June 1994 and from September 1985 to August 1989, Mr.
Wallestad was an Audit Manager for Arthur Andersen & Co., LLP in Milwaukee. Mr.
Wallestad completed a Masters of Accountancy from the University of Oklahoma
from September 1989 to August 1991.
John W. Widmer (DOB 1/19/65), Treasurer of the Strong Funds since April 1999.
Mr. Widmer has been Treasurer of Strong since April 1999. From January 1999 to
January 2000, Mr. Widmer served as both the Manager of Financial Management and
Sales Reporting Systems and Treasurer of Strong. From May 1997 to December 1998,
Mr. Widmer was the Manager of Financial Management and Sales Reporting Systems
at Strong. From May 1992 to May 1997, Mr. Widmer was an Accounting and Business
Advisory Manager in the Milwaukee office of Arthur Andersen LLP. From June 1987
to May 1992, Mr. Widmer was an accountant at Arthur Andersen LLP.
Thomas M. Zoeller (DOB 2/21/64), Vice President of the Strong Funds since
October 1999.
Mr. Zoeller has been Executive Vice President and Chief Financial Officer of
Strong since April 2001 and was Senior Vice President and Chief Financial
Officer of Strong from February 1998 to April 2001. Mr. Zoeller has been a
member of the Office of the Chief Executive since November 1998. From October
1991 to February 1998, Mr. Zoeller was the Treasurer and Controller of Strong,
and from August 1991 to October 1991 he was the Controller. From August 1989 to
August 1991, Mr. Zoeller was the Assistant Controller of Strong. From September
1986 to August 1989, Mr. Zoeller was a Senior Accountant at Arthur Andersen &
Co.
11
None of the officers of the Strong Funds received salaries from the Corporations
during calendar year 2000. [As of May 11, 2001, the officers and Directors of
the Strong Funds, as a group, owned less than 1% of each Fund's outstanding
shares.]
Required Vote. Election of directors requires a plurality vote of the shares of
- -------------
each Corporation voting in person or by proxy at the Annual Meeting, provided a
quorum is present. This means that the six nominees receiving the largest number
of votes will be elected. If the nominees are not elected, each Fund's current
Board of Directors, which currently consists of the six nominees, will remain in
place.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ALL NOMINEES.
---
PROPOSAL 2. TO APPROVE A NEW ADVISORY AGREEMENT BETWEEN STRONG CAPITAL
MANAGEMENT, INC. AND THE CORPORATION ON BEHALF OF THE FUND
The following is some general information that is relevant to each Subproposal
(2A - 2C). This information includes: (1) general information regarding Strong;
(2) limitations of liability under the current and proposed advisory agreements;
and (3) Board approval and considerations with respect to the proposed advisory
agreements. Please consider this information when voting on each Subproposal.
General Information about Strong
- --------------------------------
Strong Capital Management, Inc. ("Strong") is the investment advisor for the
Funds (except for the portfolios of Strong Life Stage Series, Inc. and the
Strong Index 500 Fund). Strong is controlled by Richard S. Strong because of his
stock ownership in Strong. Mr. Strong is Director and Chairman of the Board of
the Strong Funds and Chairman and Director of Strong. Strong is registered as an
investment adviser under the Investment Advisers Act of 1940. Strong is located
at 100 Heritage Reserve, Menomonee Falls, Wisconsin 53051.
Strong provides investment management services for mutual funds and other
investment portfolios representing assets, as of February 28, 2001, of over $43
billion. Strong began conducting business in 1974. Since then, its principal
business has been providing investment advice for individuals and institutional
accounts, such as pension and profit-sharing plans, as well as mutual funds,
several of which are available through variable insurance products. Strong
provides investment advisory services for multiple clients who may have similar
or different investment objectives and investment policies (e.g., some accounts
may have an active trading strategy while others follow a "buy and hold"
strategy). In managing these accounts, Strong seeks to maximize each account's
return, consistent with the account's investment objectives and investment
strategies. While Strong's policies are designed to ensure that over time
similarly situated clients receive similar treatment, to the maximum extent
possible, because of the range of Strong's clients, Strong may give advice and
take action with respect to one account that may differ from the advice given,
or the timing or nature of action taken, with respect to another account.
Limitations of Liability
- ------------------------
The proposed advisory agreements have the same provisions regarding the
circumstances under which Strong may be liable to a Fund as each Fund's current
advisory agreement. Under both agreements (current and proposed), Strong is not
liable to any Corporation, Fund or shareholder
12
for acts or omissions in connection with its services rendered under the
agreement, or any loss arising out of the purchase, holding or sale of any
security, except for liability resulting from Strong's willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations or duties under
the agreement, and except to the extent specified in Section 36(b) of the 1940
Act regarding a loss resulting from the breach of fiduciary duty with respect to
receipt of compensation for services.
Board Approval and Considerations
- ---------------------------------
At a joint meeting of the Board of Directors of the Funds held on May 4, 2001,
the Directors voted to recommend that shareholders of each Fund approve the
proposed investment advisory agreement. After due consideration, each Board of
Directors, including all of the Independent Directors, unanimously approved the
proposed investment advisory agreement, subject to shareholder approval. At the
meeting, the Board concluded that the terms of the proposed agreement are fair
and reasonable, and in the best interest of shareholders. In recommending that
shareholders approve the proposed advisory agreement, the Board considered all
factors that it deemed relevant, including:
(i) the management fees and other expenses that would be paid by the
Funds under the proposed advisory agreement and the fees and expenses
of similar funds managed by other investment advisors;
(ii) the impact of the proposed changes in management fee rates and
changes in other expenses of each Fund on each Fund's total expense
ratio;
(iii) the historical investment performance of each Fund, as well as
performance information regarding other funds within the current
marketplace not advised or managed by Strong, but having similar
investment focus and asset types;
(iv) its favorable experience in overseeing, on an on-going basis, the
nature and quality of investment advisory services provided by Strong
to the Funds;
(v) current and projected profitability and related other benefits to
Strong in providing investment advisory services to the Funds, both
under the current and proposed management fee schedules; and
(vi) possible economies of scale in managing the Funds, including in this
regard the proposed management fee breakpoints, as applicable, for
the Funds.
A copy of the form of proposed advisory agreement is found in Annex A.
-------
Proposal 2A: To approve a new advisory agreement between Strong Capital
- -----------
Management, Inc. and the Corporation on behalf of each of:
Strong Advisor Aggressive High-Yield Bond Fund Strong Advisor Focus Fund
Strong Advisor Endeavor 20 Fund Strong Advisor Technology Fund
Background: At the Annual Meeting, shareholders of each of the above listed
- ----------
Funds will be asked to vote separately regarding the approval of a new advisory
agreement with Strong. Strong serves as each Fund's investment advisor and, as
such, manages the investment and reinvestment of each Fund's assets.
13
The current and proposed advisory agreements do not differ with respect to
Strong's responsibilities and duties as each Fund's investment advisor. The
primary difference between the agreements relates to management fee structures.
Under each current advisory agreement, the investment management fee is a fixed
percentage of net assets, regardless of the size of the Fund. Under the proposed
advisory agreement, the management fee is calculated using breakpoints, which
provide for lower management fees as the Fund reaches certain asset levels.
Under the current advisory agreement, the management fee is accrued and payable
monthly to Strong. However, the proposed advisory agreement provides for the
management fee to be accrued and payable daily to Strong, although Strong
reserves the right to receive payment of the management fee on a less frequent
basis at its discretion.
The tables below show (i) the amount of the reduction in the management fee
after the addition of breakpoints and (ii) the percentage change in the fees
that Strong is entitled to receive from each Fund at certain asset levels under
the proposed advisory agreements compared to the current advisory agreements
(based on a percent of average daily net assets):
Strong Advisor Aggressive High-Yield Bond Fund
- -----------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- -----------------------------------------------------------------------------------------------------------
First $4 billion 0% 0%
- -----------------------------------------------------------------------------------------------------------
Over $4 billion, but less than $6 billion 0.025% -5.0%
- -----------------------------------------------------------------------------------------------------------
$6 billion and above 0.05% -10.0%
- -----------------------------------------------------------------------------------------------------------
Strong Advisor Endeavor 20 Fund
Strong Advisor Focus Fund
Strong Advisor Technology Fund
- -----------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- -----------------------------------------------------------------------------------------------------------
First $4 billion 0% 0%
- -----------------------------------------------------------------------------------------------------------
Over $4 billion, but less than $6 billion 0.025% -3.33%
- -----------------------------------------------------------------------------------------------------------
$6 billion and above 0.05% -6.67%
- -----------------------------------------------------------------------------------------------------------
Details About the Current Advisory Agreement
- --------------------------------------------
Strong has served as each Fund's investment advisor since its inception. The
current agreements were approved by each Fund's initial shareholder at the time
of the Fund's inception. Below are the inception dates of each Fund:
- --------------------------------------------------------------------------------
Fund: Inception Date:
- --------------------------------------------------------------------------------
Strong Advisor Aggressive High-Yield Bond Fund 11/30/00
- --------------------------------------------------------------------------------
Strong Advisor Endeavor 20 Fund 12/29/00
- --------------------------------------------------------------------------------
Strong Advisor Focus Fund 11/30/00
- --------------------------------------------------------------------------------
Strong Advisor Technology Fund 11/30/00
- --------------------------------------------------------------------------------
The Board of Directors, including a majority of the Independent Directors, most
recently approved each Fund's current advisory agreement on November 10, 2000.
The current advisory agreement will continue in effect for two years from the
inception dates listed above, unless and until terminated by either party as
provided in the agreement (the agreement may be terminated by the Board, or,
with respect to any Fund, by a vote of a majority of the outstanding voting
securities of that Fund, accompanied by appropriate notice). The agreement will
continue in
14
force from year to year after that two-year period, but only as long as such
continuance is specifically approved, at least annually, in the manner required
by the 1940 Act. Under the 1940 Act, the continuance of advisory agreements must
be approved annually by a majority of the Board members, including a majority of
directors who are not interested persons (as defined in the 1940 Act). The
current advisory agreement will continue only if the proposed advisory agreement
(described below) is not approved by shareholders.
Details and Duration of the Proposed Advisory Agreement
- -------------------------------------------------------
Under the proposed agreement, each Fund will pay Strong a fee based on the value
of the Fund's net assets which decreases on Fund net assets above specified
asset levels (i.e., at certain breakpoints). Therefore, management fees may
decrease. If approved by shareholders, the proposed advisory agreement will
commence on July 21, 2001 and continue in effect until July 20, 2003, unless and
until terminated by either party as provided in each agreement. The agreement
may be terminated by the Board, or, with respect to any Fund, by a vote of a
majority of the outstanding voting securities of that Fund, accompanied by
appropriate notice. The agreement will continue in force from year to year after
July 20, 2003, but only as long as such continuance is specifically approved, at
least annually, in the manner required by the 1940 Act.
Comparison of the Current and Proposed Advisory Agreements
- ----------------------------------------------------------
Investment Advisory Responsibilities. The proposed and current advisory
agreements are the same with respect to Strong's responsibilities and duties as
each Fund's investment advisor. Under both agreements, Strong is responsible for
managing the investment and reinvestment of each Fund's assets.
Investment Management Fees. The primary difference between the agreements
relates to fee structures as stated above. Under the current advisory agreement,
the investment management fee is calculated using a fixed percentage of net
assets of a Fund, regardless of the size of the Fund. Under the proposed
advisory agreement, the management fee is calculated using breakpoints, which
provides for lower fees on Fund net assets above specified asset levels (see
tables earlier in this section concerning breakpoints under the proposed
management fee schedules).
Also, as mentioned above, Strong is paid the management fee on a monthly basis
under the current advisory agreement. However, under the proposed advisory
agreement, the management fee would be payable to Strong on a daily basis,
although Strong reserves the right to receive payment of the management fees on
a less frequent basis at its discretion.
Comparative Fee and Cost Information. The Funds' management fees for the fiscal
year 2000 would not have changed had the proposed advisory agreement been in
effect during the same period. Fees are paid from Fund assets.
Required Vote
- -------------
For each Fund, approval of this proposal requires the affirmative vote of a
"majority of the outstanding voting securities" of the Fund. The term "majority
of the outstanding voting securities," as defined in the 1940 Act, means the
affirmative vote of the lesser of (1) 67% of the voting securities of the Fund
present at the Annual Meeting if more than 50% of the outstanding shares of the
Fund are present in person or by proxy or (2) more than 50% of the outstanding
shares of the Fund.
15
The persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies "FOR" the approval of the proposed
advisory agreement. Shareholders may vote "FOR" or "AGAINST" the approval of the
agreement, or may "ABSTAIN" from voting on this proposal. If you return your
proxy card and give no voting instructions, your shares will be voted "FOR" the
approval of the proposed advisory agreement.
THE BOARD OF DIRECTORS [UNANIMOUSLY] RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE NEW INVESTMENT
---
ADVISORY AGREEMENT.
Proposal 2B: To approve a new advisory agreement between Strong Capital
- -----------
Management, Inc. and the Corporation on behalf of each of:
Strong Asia Pacific Fund Strong Money Market Fund
Strong Balanced Stock Fund Strong Multi Cap Value Fund II
Strong Dow 30 Value Fund Strong Municipal Money Market Fund
Strong Foreign MajorMarkets(SM) Fund Strong Overseas Fund
Strong International Stock Fund Strong Tax-Free Money Fund
Strong Investors Money Fund Strong Technology 100 Fund
Strong Mid Cap Growth Fund II Strong Value Fund
Background: At the Annual Meeting, shareholders of each of the above listed
- ----------
Funds will be asked to vote separately regarding the approval of a new advisory
agreement with Strong. Strong serves as each Fund's investment advisor and, as
such, manages the investment and reinvestment of each Fund's assets. Strong also
is responsible for providing certain administrative services.
The current and proposed advisory agreements do not differ with respect to
Strong's responsibilities and duties as each Fund's investment advisor. The
primary differences between the agreements relate to (i) management fee
structures, (ii) expense reimbursement policies, and (iii) administrative
services.
Under each current advisory agreement, the investment management fee is a fixed
percentage of net assets, regardless of the size of the Fund. Under the proposed
advisory agreement, for each Fund (except the Investors Money Fund, Money Market
Fund, Municipal Money Market Fund, Tax-Free Money Fund, and Dow 30 Value Fund),
the management fee is calculated using breakpoints, which provides for lower
management fees on Fund net assets above specified asset levels.
Strong also provides administrative services pursuant to the current advisory
agreement. As a result, each Fund's management fee contains a portion that
covers administrative services. In the future, administrative services will be
covered by a separate administration agreement, rather than being a component of
the investment management fee. As a result, investment management fees will be
lower. However, if the proposed advisory agreement is approved by the
shareholders, the new administration fee will be greater than the amount of the
reduction in the management fee. Therefore, for each Fund, this "unbundling" of
the administration fee from the management fee will result in an increase in
total Fund expenses if the proposed advisory agreement is approved.
Further, under the current advisory agreement for each Fund (except the Tax-Free
Money Fund), Strong is contractually obligated to reimburse certain expenses of
each Fund that exceed 2% of
16
its average daily net asset value. This type of reimbursement is called an
"expense cap." This expense cap dates back to state laws that no longer apply to
the Funds. Under the proposed advisory agreement, Strong would no longer be
required to reimburse expenses. Instead, Strong would be able to use its
discretion when setting reimbursement levels, taking into account such market
factors as a Fund's expense ratio relative to its peers and the Fund's ability
to offer shareholders competitive returns. Consequently, this change in fee
structure could, for some Funds, result in an immediate increase in management
fees resulting from the removal of the expense cap, but as Fund assets grow,
could lead to lower management fees under the breakpoints.
Under the current advisory agreement, the management fee is accrued and payable
monthly to Strong. However, the proposed advisory agreement provides for the
management fee to be accrued and payable daily to Strong, although Strong
reserves the right to receive payment of the management fee on a less frequent
basis at its discretion.
The tables below show (i) the amount of the reduction in the management fee
after the removal of the administration fee and, if applicable, the addition of
breakpoints and (ii) the percentage change in the fees that Strong is entitled
to receive from each Fund at certain asset levels under the proposed advisory
agreements compared to the current advisory agreements (based on a percent of
average daily net assets):
Strong Asia Pacific Fund Strong Multi Cap Value Fund II
Strong Balanced Stock Fund Strong Overseas Fund
Strong Foreign MajorMarkets(SM) Fund Strong Technology 100 Fund
Strong International Stock Fund Strong Value Fund
Strong Mid Cap Growth Fund II
- ------------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- ------------------------------------------------------------------------------------------------------------
First $4 billion 0.25 % -25 %
- ------------------------------------------------------------------------------------------------------------
Over $4 billion, but less than $6 billion 0.275% -27.5%
- ------------------------------------------------------------------------------------------------------------
$6 billion and above 0.30 % -30.0%
- ------------------------------------------------------------------------------------------------------------
Strong Investors Money Fund Strong Municipal Market Fund
Strong Money Market Fund Strong Tax-Free Money Fund
- ------------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- ------------------------------------------------------------------------------------------------------------
All asset levels 0.35% -70%
- ------------------------------------------------------------------------------------------------------------
Strong Dow 30 Value Fund
- ------------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage of Change
- ------------------------------------------------------------------------------------------------------------
All asset levels 0.25% -31.25%
- ------------------------------------------------------------------------------------------------------------
17
The table below shows the fees (based on a percent of average daily net assets)
that the Fund would be required to pay under the new separate administration
agreement:
- -----------------------------------------------------------------------------------------------------------------------
Fund: Administration Fee if Administration Fee if
Shareholders Approve the Shareholders Do Not Approve the
Proposed Advisory Agreement Proposed Advisory Agreement*
- -----------------------------------------------------------------------------------------------------------------------
Strong Asia Pacific Fund 0.30% 0.25%
- -----------------------------------------------------------------------------------------------------------------------
Strong Balanced Stock Fund 0.30% 0.25%
- -----------------------------------------------------------------------------------------------------------------------
Strong Foreign MajorMarkets(SM) Fund 0.30% 0.25%
- -----------------------------------------------------------------------------------------------------------------------
Strong International Stock Fund 0.30% 0.25%
- -----------------------------------------------------------------------------------------------------------------------
Strong Investors Money Fund 0.37% 0.35%
- -----------------------------------------------------------------------------------------------------------------------
Strong Dow 30 Value Fund 0.30% 0.25%
- -----------------------------------------------------------------------------------------------------------------------
Strong Mid Cap Growth Fund II 0.30% 0.25%
- -----------------------------------------------------------------------------------------------------------------------
Strong Money Market Fund 0.37% 0.35%
- -----------------------------------------------------------------------------------------------------------------------
Strong Multi Cap Value Fund II 0.30% 0.25%
- -----------------------------------------------------------------------------------------------------------------------
Strong Municipal Money Market Fund 0.37% 0.35%
- -----------------------------------------------------------------------------------------------------------------------
Strong Overseas Fund 0.30% 0.25%
- -----------------------------------------------------------------------------------------------------------------------
Strong Tax-Free Money Fund 0.37% 0.35%
- -----------------------------------------------------------------------------------------------------------------------
Strong Technology 100 Fund 0.30% 0.25%
- -----------------------------------------------------------------------------------------------------------------------
Strong Value Fund 0.30% 0.25%
- -----------------------------------------------------------------------------------------------------------------------
* The administration fee will be unbundled regardless of whether shareholders
approve the new advisory agreement. In the event that shareholders do not
approve the new advisory agreement, then administration fees would be equal to
the reduction in the current management fee.
Details About the Current Advisory Agreement
- --------------------------------------------
Strong has served as each Fund's investment advisor since its inception. The
current agreements were approved by each Fund's initial shareholder at the time
of the Fund's inception. Below are the inception dates of each Fund:
- -------------------------------------------------------------------------------
Fund: Inception date:
- -------------------------------------------------------------------------------
Strong Asia Pacific Fund 12/31/93
- -------------------------------------------------------------------------------
Strong Balanced Stock Fund 12/31/97
- -------------------------------------------------------------------------------
Strong Foreign MajorMarkets(SM) Fund 06/30/98
- -------------------------------------------------------------------------------
Strong International Stock Fund 03/04/92
- -------------------------------------------------------------------------------
Strong Investors Money Fund 01/31/98
- -------------------------------------------------------------------------------
Strong Dow 30 Value Fund 12/31/97
- -------------------------------------------------------------------------------
Strong Mid Cap Growth Fund II 01/02/97
- -------------------------------------------------------------------------------
Strong Money Market Fund 10/22/85
- -------------------------------------------------------------------------------
Strong Multi Cap Value Fund II 10/10/97
- -------------------------------------------------------------------------------
Strong Municipal Money Market Fund 10/23/86
- -------------------------------------------------------------------------------
Strong Overseas Fund 06/30/98
- -------------------------------------------------------------------------------
Strong Tax-Free Money Fund 12/15/00
- -------------------------------------------------------------------------------
Strong Technology 100 Fund 12/31/99
- -------------------------------------------------------------------------------
Strong Value Fund 12/29/95
- -------------------------------------------------------------------------------
The Board of Directors of each Fund, including a majority of the Independent
Directors, most recently approved the continuation of each Fund's current
advisory agreement on May 4, 2001 (except the Tax-Free Money Fund, which was
approved on November 10, 2000). The current advisory agreement will continue in
effect until May 3, 2002 (December 14, 2002 in the case of the Tax-Free Money
Fund), unless and until terminated by either party as provided in the agreement
(the agreement may be terminated by the Board, or, with respect to any Fund, by
a vote of a majority of the outstanding voting securities of that Fund,
accompanied by appropriate notice). The advisory agreement will continue in
force from year to year after May 3, 2002
18
(November 9, 2002 in the case of the Tax-Free Money Fund), but only as long as
such continuance is specifically approved, at least annually, in the manner
required by the 1940 Act. Under the 1940 Act, the continuance of advisory
agreements must be approved annually by a majority of Board members, including a
majority of directors who are not "interested persons" (as defined in the 1940
Act). The current advisory agreement will continue only if the proposed advisory
agreement (described below) is not approved by shareholders.
Under the current advisory agreement for each Fund (except the Tax-Free Money
Fund), Strong is contractually obligated to waive management fees or reimburse
certain Fund expenses so that each Fund's total expenses in any fiscal year do
not exceed 2% of its average daily net asset value. Further, the fees payable
under the current agreement cover both advisory and administrative services to
the Fund.
Details and Duration of the Proposed Advisory Agreement
- -------------------------------------------------------
Under the proposed advisory agreement, the management fee is calculated using
breakpoints for each Fund (except the Investors Money Fund, Money Market Fund,
Municipal Money Market Fund, Tax-Free Money Fund, and Dow 30 Value Fund). These
breakpoints provide for lower fees on Fund net assets above specified asset
levels. Also, administrative fees would be set according to services provided to
each Fund pursuant to a separate administration agreement. Further, under the
proposed advisory agreement, Strong would no longer be required to reimburse
expenses above the 2% expense cap. Instead, Strong would be able to use its
discretion when setting reimbursement levels, taking into account such market
factors as a Fund's expense ratio relative to its peers and the Fund's ability
to offer shareholders competitive returns. If approved by shareholders, the
proposed advisory agreement will commence on July 21, 2001 and continue in
effect until July 20, 2003, unless and until terminated by either party as
provided in the agreement. The agreement may be terminated by the Board, or,
with respect to any Fund, by a vote of a majority of the outstanding voting
securities of that Fund, accompanied by appropriate notice. The agreement will
continue in force from year to year after July 20, 2003, but only as long as
such continuance is specifically approved, at least annually, in the manner
required by the 1940 Act.
Comparison of the Current and Proposed Advisory Agreements
- ----------------------------------------------------------
Investment Advisory Responsibilities. The proposed and current advisory
agreements are the same with respect to Strong's responsibilities and duties as
each Fund's investment advisor. Under both agreements, Strong is responsible for
managing the investment and reinvestment of each Fund's assets. Under the
current advisory agreement, Strong also provides administrative services. If the
proposed advisory agreement is approved, these administrative services will be
provided pursuant to a separate agreement.
Investment Management Fees. The primary difference between the advisory
agreements relates to fee structures, expense reimbursement policies and
administrative services. Under the current advisory agreement, the investment
management fee is calculated using a fixed percentage of net assets of a Fund,
regardless of the size of the Fund. Under the proposed advisory agreement, the
management fee is calculated using breakpoints for each Fund (except the
Investors Money Fund, Money Market Fund, Municipal Money Market Fund, Tax-Free
Money Fund, and Dow 30 Value Fund). These breakpoints provide for lower fees as
Fund net assets reach specified asset levels (see tables earlier in this section
concerning breakpoints under the proposed management fee schedules).
19
Also, as mentioned above, Strong is paid the management fee on a monthly basis
under the current advisory agreement. However, under the proposed advisory
agreement, the management fee would be payable to Strong on a daily basis,
although Strong reserves the right to receive payment of the management fee on a
less frequent basis in its discretion.
Under the current advisory agreement, Strong is contractually obligated to cap
expenses by reimbursing certain expenses of each Fund so that the Fund's total
expenses in any fiscal year do not exceed 2% of its average daily net asset
value (except the Strong Tax-Free Money Fund). Under the proposed advisory
agreement, Strong will no longer be required to reimburse expenses above the 2%
expense cap. When determining reimbursement levels, Strong will evaluate, among
other considerations, each Fund's expense ratio relative to its peers and each
Fund's ability to offer competitive yields.
Administrative Services. Administrative services will no longer be provided
pursuant to the advisory agreement, but rather they will be provided pursuant to
a separate administration agreement and charged a separate fee under the
administration agreement. As a result, the management fee will be reduced.
However, the fee charged for services under the proposed administration
agreement would be higher than the reduction in the management fee. This
increase in total expenses is the result of the Funds now bearing the expense of
certain services currently being borne by Strong.
In the past, Strong performed accounting and other services, which were not
specifically covered by the advisory agreement, at no additional cost to the
Funds. Strong is no longer able to provide these services at no cost to the
Funds in order to remain competitive with the marketplace. Those services will
be covered under the new administration agreement and the additional costs
associated with these services will be borne directly by the Funds.
Comparative Fee and Cost Information. The annual fund operating expense tables
below are intended to help you compare the Funds' fees for the most recent
fiscal year ended with those that would have been paid had the proposed advisory
agreement been in effect during the same period (pro forma). Fees and expenses
are paid from Fund assets, and are shown as a percentage of average daily net
assets.
Following each operating expense table are hypothetical cost examples intended
to help you compare the current cost of investing in a Fund for the Fund's most
recently completed fiscal year end indicated below with the cost had the
proposed advisory agreement been in effect during the same period (pro forma).
The example assumes you invest $10,000 in a Fund and reinvest all dividends and
distributions for the time periods indicated, and then redeem all your shares at
the end of a period. The example also assumes that your investment has a 5%
return each year and that Fund operating expenses remain the same as those shown
above. Actual returns and costs may be higher or lower.
20
Strong Asia Pacific Fund
- ------------------------
Annual Fund Operating Expenses
FYE: 10/31/00
Current Pro Forma
Management Fees 1.00% 0.75%
Other Expenses/(1)/ 0.73% 1.03%
Total Operating Expenses 1.73% 1.78%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 10/31/00, the Strong Asia Pacific Fund paid $1,025,344
in management fees, and, on a pro forma basis under the proposed advisory
agreement and new administration agreement, would have paid $1,076,611, a change
of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 176 $ 181
3 Years $ 545 $ 560
5 Years $ 939 $ 964
10 Years $2,041 $2,095
Strong Balanced Stock Fund
- --------------------------
Annual Fund Operating Expenses
FYE: 12/31/00
Current Pro Forma
Management Fees 1.00% 0.75%
Other Expenses 1.00% 3.09%
Total Operating Expenses 2.00% 3.84%
For the fiscal year ended 12/31/00, the Strong Balanced Stock Fund paid $9,470
in management fees, and, on a pro forma basis under the proposed advisory
agreement and new administration agreement, would have paid $9,944, a change of
0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 203 $ 386
3 Years $ 627 $1,172
5 Years $1,078 $1,976
10 Years $2,327 $4,070
21
Strong Dow 30 Value Fund
- ------------------------
Annual Fund Operating Expenses
FYE: 12/31/00
Current Pro Forma
Management Fees 0.80% 0.55%
Other Expenses/(1)/ 0.46% 0.76%
Total Operating Expenses 1.26% 1.31%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 12/31/00, the Strong Dow 30 Value Fund paid $1,132,129
in management fees, and, on a pro forma basis under the proposed advisory
agreement and new administration agreement, would have paid $1,202,887, a change
of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 128 $ 133
3 Years $ 400 $ 415
5 Years $ 692 $ 718
10 Years $1,523 $1,579
Strong Foreign MajorMarkets(SM) Fund
- ------------------------------------
Annual Fund Operating Expenses
FYE: 10/31/00
Current Pro Forma
Management Fees 1.00% 0.75%
Other Expenses 1.00% 3.36%
Total Operating Expenses 2.00% 4.11%
For the fiscal year ended 10/31/00, the Strong Foreign MajorMarkets(SM) Fund
paid $33,007 in management fees, and, on a pro forma basis under the proposed
advisory agreement and new administration agreement, would have paid $34,657, a
change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 203 $ 413
3 Years $ 627 $ 1,250
5 Years $1,078 $ 2,101
10 Years $2,327 $ 4,298
22
Strong International Stock Fund
- -------------------------------
Annual Fund Operating Expenses
FYE: 10/31/00
Current Pro Forma
Management Fees 1.00% 0.75%
Other Expenses/(1)/ 0.70% 1.00%
Total Operating Expenses 1.70% 1.75%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 10/31/00, the Strong International Stock Fund paid
$1,654,536 in management fees, and, on a pro forma basis under the proposed
advisory agreement and new administration agreement, would have paid $1,737,263,
a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 173 $ 178
3 Years $ 536 $ 551
5 Years $ 923 $ 949
10 Years $2,009 $2,062
Strong Investors Money Fund
- ---------------------------
Annual Fund Operating Expenses*
FYE: 10/31/00
Current Pro Forma
Management Fees 0.50% 0.15%
Other Expenses 0.27% 0.64%
Total Operating Expenses 0.77% 0.79%
*We have contractually agreed to waive our management fees and absorb expenses
for the Investors Money Fund to keep total expenses until July 1, 2001, at no
more than 0.35%.
For the fiscal year ended 10/31/00, the Strong Investors Money Fund paid
$1,989,923 in management fees, and, on a pro forma basis under the proposed
advisory agreement and new administration agreement, would have paid $2,069,520,
a change of 0.02% in the expense ratio.
Example:
Current Pro Forma
1 Year $79 $81
3 Years $246 $252
5 Years $428 $439
10 Years $954 $978
23
Strong Mid Cap Growth Fund II
- -----------------------------
Annual Fund Operating Expenses*
FYE: 12/31/00
Current Pro Forma
Management Fees 1.00% 0.75%
Other Expenses 0.16% 0.46%
Total Operating Expenses 1.16% 1.21%
* Annual Fund Operating Expenses do not reflect our waiver of management fees
and/or absorptions. With waivers and absorptions, the pro forma Annual Fund
Operating Expenses of the Fund would be 1.20%. We can terminate waivers and
absorptions for this fund at any time.
For the fiscal year ended 12/31/00, the Strong Mid Cap Growth Fund II paid
$5,515,094 in management fees, and, on a pro forma basis under the proposed
advisory agreement and new administration agreement, would have paid $5,790,849,
a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 118 $ 123
3 Years $ 368 $ 384
5 Years $ 638 $ 665
10 Years $1,409 $1,466
Strong Money Market Fund
- ------------------------
Annual Fund Operating Expenses*
FYE: 10/31/00
Current Pro Forma
Management Fees 0.50% 0.15%
Other Expenses 0.33% 0.70%
Total Operating Expenses 0.83% 0.85%
* Annual Fund Operating Expenses do not reflect our waiver of management fees
and/or absorptions. With waivers and absorptions, the Annual Fund Operating
Expenses of the Fund were 0.65%, and pro forma would be 0.65%. We can terminate
waivers and absorptions for this fund at any time.
For the fiscal year ended 10/31/00, the Strong Money Market Fund paid $6,826,713
in management fees, and, on a pro forma basis under the proposed advisory
agreement and new administration agreement, would have paid $7,099,781, a change
of 0.02% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 85 $ 87
3 Years $ 265 $ 271
5 Years $ 460 $ 471
10 Years $1,025 $1,049
24
Strong Multi Cap Value Fund II
- ------------------------------
Annual Fund Operating Expenses*
FYE: 12/31/00
Current Pro Forma
Management Fees 1.00% 0.75%
Other Expenses 0.41% 0.71%
Total Operating Expenses 1.41% 1.46%
* Annual Fund Operating Expenses do not reflect our waiver of management fees
and/or absorptions. With waivers and absorptions, the Annual Fund Operating
Expenses of the Fund were 1.20%, and pro forma would be 1.20%. We can terminate
waivers and absorptions for this fund at any time.
For the fiscal year ended 12/31/00, the Strong Multi Cap Value Fund II paid
$158,313 in management fees, and, on a pro forma basis under the proposed
advisory agreement and new administration agreement, would have paid $166,228, a
change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 144 $ 149
3 Years $ 446 $ 462
5 Years $ 771 $ 797
10 Years $1,691 $1,746
Strong Municipal Money Market Fund
- ----------------------------------
Annual Fund Operating Expenses
FYE: 10/31/00
Current Pro Forma
Management Fees 0.50% 0.15%
Other Expenses 0.08% 0.45%
Total Operating Expenses 0.58% 0.60%
For the fiscal year ended 10/31/00, the Strong Municipal Money Market Fund paid
$9,199,417 in management fees, and, on a pro forma basis under the proposed
advisory agreement and new administration agreement, would have paid $9,567,394,
a change of 0.02% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 59 $ 61
3 Years $186 $192
5 Years $324 $335
10 Years $726 $750
25
Strong Overseas Fund
- --------------------
Annual Fund Operating Expenses*
FYE: 10/31/00
Current Pro Forma
Management Fees 1.00% 0.75%
Other Expenses/(1)/ 0.83% 1.13%
Total Operating Expenses 1.83% 1.88%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
* Annual Fund Operating Expenses do not reflect our waiver of management fees
and/or absorptions. With waivers and absorptions, the Annual Fund Operating
Expenses of the Fund were 1.79%, and pro forma would be 1.84%. We can terminate
waivers and absorptions for this fund at any time.
For the fiscal year ended 10/31/00, the Strong Overseas Fund paid $462,477 in
management fees, and, on a pro forma basis under the proposed advisory agreement
and new administration agreement, would have paid $485,601, a change of 0.05% in
the expense ratio.
Example:
Current Pro Forma
1 Year $ 186 $ 191
3 Years $ 576 $ 591
5 Years $ 990 $1,016
10 Years $2,148 $2,201
Strong Tax-Free Money Fund
- --------------------------
Annual Fund Operating Expenses*
FYE: 10/31/01 (estimated)
Current Pro Forma
Management Fees 0.50% 0.15%
Other Expenses 0.32% 0.69%
Total Operating Expenses 0.82% 0.84%
* Annual Fund Operating Expenses do not reflect our waiver of management fees
and/or absorptions. With waivers and absorptions, the Annual Fund Operating
Expenses of the Fund were 0.60%, and pro forma would be 0.60%. We can terminate
waivers and absorptions for this fund at any time.
The above fees are estimated as of the end of the Strong Tax-Free Money Fund's
first fiscal year end. As of 10/31/01, it is estimated that the Strong Tax-Free
Money Fund will pay $129,943 in management fees, and, on a pro forma basis under
the proposed advisory agreement and new administration agreement, would pay
$135,141, a change of 0.02% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 84 $ 86
3 Years $262 $268
26
Strong Technology 100 Fund
- --------------------------
Annual Fund Operating Expenses
FYE: 12/31/00
Current Pro Forma
Management Fees 1.00% 0.75%
Other Expenses/(1)/ 0.69% 0.99%
Total Operating Expenses 1.69% 1.74%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 12/31/00, the Strong Technology 100 Fund paid
$2,591,358 in management fees, and, on a pro forma basis under the proposed
advisory agreement and new administration agreement, would have paid $2,720,926,
a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 172 $ 177
3 Years $ 533 $ 548
5 Years $ 918 $ 944
10 Years $1,998 $2,052
Strong Value Fund
- -----------------
Annual Fund Operating Expenses
FYE: 12/31/00
Current Pro Forma
Management Fees 1.00% 0.75%
Other Expenses/(1)/ 0.46% 0.76%
Total Operating Expenses 1.46% 1.51%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 12/31/00, the Strong Value Fund paid $511,846 in
management fees, and, on a pro forma basis under the proposed advisory agreement
and new administration agreement, would have paid $537,438, a change of 0.05% in
the expense ratio.
Example:
Current Pro Forma
1 Year $ 149 $ 154
3 Years $ 462 $ 477
5 Years $ 797 $ 824
10 Years $1,746 $1,802
Required Vote
- -------------
For each Fund, approval of this proposal requires the affirmative vote of a
"majority of the outstanding voting securities" of the Fund. The term "majority
of the outstanding voting securities," as defined in the 1940 Act, means the
affirmative vote of the lesser of (1) 67% of the voting securities of the Fund
present at the Annual Meeting if more than 50% of the outstanding shares of the
Fund are present in person or by proxy or (2) more than 50% of the outstanding
shares of the Fund.
27
The persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies "FOR" the approval of the proposed
advisory agreement. Shareholders may vote "FOR" or "AGAINST" the approval of the
agreement, or may "ABSTAIN" from voting on this proposal. If you return your
proxy card and give no voting instructions, your shares will be voted "FOR" the
approval of the proposed advisory agreement.
THE BOARD OF DIRECTORS [UNANIMOUSLY] RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE NEW INVESTMENT
---
ADVISORY AGREEMENT.
Proposal 2C: To approve a new advisory agreement between Strong Capital
- -----------
Management, Inc. and the Corporation on behalf of each of:
Strong Advantage Fund Strong Heritage Money Fund
Strong Advisor Bond Fund Strong High-Yield Bond Fund
Strong Advisor Common Stock Fund Strong High-Yield Municipal Bond Fund
Strong Advisor Mid Cap Growth Fund Strong Large Cap Core Fund
Strong Advisor Short Duration Bond Fund Strong Large Cap Growth Fund
Strong Advisor Small Cap Value Fund Strong Mid Cap Disciplined Fund
Strong Advisor U.S. Value Fund Strong Municipal Advantage Fund
Strong American Utilities Fund Strong Municipal Bond Fund
Strong Balanced Fund Strong Opportunity Fund
Strong Blue Chip Fund Strong Opportunity Fund II
Strong Corporate Bond Fund Strong Short-Term Bond Fund
Strong Energy Fund Strong Short-Term High Yield Bond Fund
Strong Enterprise Fund Strong Short-Term High Yield Municipal Fund
Strong Government Securities Fund Strong Short-Term Municipal Bond Fund
Strong Growth Fund Strong U.S. Emerging Growth Fund
Strong Growth 20 Fund
Strong Growth and Income Fund
Background: At the Annual Meeting, shareholders of each Fund will be asked to
- ----------
vote separately regarding the approval of a new advisory agreement with Strong.
Strong serves as each Fund's investment advisor and, as such, manages the
investment of each Fund's assets. Strong also is responsible for administering
each Fund's business affairs, providing office facilities, equipment and certain
clerical, bookkeeping and administrative services.
The current and proposed advisory agreements do not differ with respect to
Strong's responsibilities and duties as each Fund's investment advisor. The
primary differences between the agreements relate to (i) management fee
structures and (ii) expense reimbursement policies.
Under each current advisory agreement, the investment management fee is a fixed
percentage of net assets, regardless of the size of the Fund. Under the proposed
advisory agreement, the management fee is calculated using breakpoints. These
breakpoints provide for lower fees on Fund net assets above specified asset
levels.
Strong also serves as administrator to the Funds pursuant to administration
agreements. For Investor Class and/or Z Class shares, the administration fees
payable under such agreements had previously been "bundled" together with
management fees under the current advisory agreement. Because of this, Strong
has determined that it will not raise Investor Class and/or Z Class
administration fees, absent a shareholder vote, so long as the current advisory
agreement is in place. If shareholders approve the proposed advisory agreement,
administration services would continue to be covered by a separate
administration agreement, but Strong would charge each class of shares an
increased administration fee, commensurate with the level of services provided
28
to each class. For Investor Class and/or Z Class shares of each Fund, the
approval of the proposed agreement would result in an increase in administration
fees and would result in an increase in total Fund expenses.
Strong is also raising administration fees for Advisor Class shares of each
applicable Fund. However, this fee increase is not contingent upon approval by
shareholders of the new advisory agreement.
Further, under the current advisory agreement, Strong is contractually obligated
to reimburse certain expenses of each Fund that exceed 2% of its average daily
net asset value. This type of reimbursement is called an "expense cap." This
expense cap dates back to state laws that no longer apply to the Funds. Under
the proposed advisory agreement, Strong would no longer be required to reimburse
expenses above the 2% expense cap. Instead, Strong would be able to use its
discretion when setting reimbursement levels, taking into account such market
factors as a Fund's expense ratio relative to its peers and the Fund's ability
to offer shareholders competitive returns. Consequently, this change in fee
structure could, for some Funds, result in an immediate increase in management
fees resulting from the removal of the expense cap, but, as Fund assets grow,
could lead to lower management fees under the breakpoints.
Under the current advisory agreement, the management fee is accrued and payable
monthly to Strong. However, the proposed advisory agreement provides for the
management fee to be accrued and payable daily to Strong, although Strong
reserves the right to receive payment of the management fee on a less frequent
basis at its discretion.
The tables below show (i) the amount of the reduction in the management fee
after the addition of breakpoints and (ii) the percentage change in the fees
that Strong is entitled to receive from each Fund at certain asset levels under
the proposed advisory agreements compared to the current advisory agreements
(based on a percent of average daily net assets):
Strong Advisor Short Duration Bond Fund Strong Short-Term Bond Fund
Strong Corporate Bond Fund Strong Short-Term High Yield Bond Fund
Strong High-Yield Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- ----------------------------------------------------------------------------------------------------------------------------
First $4 billion 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
Over $4 billion, but less than $6 billion 0.025% -6.67%
- ----------------------------------------------------------------------------------------------------------------------------
$6 billion and above 0.05% -13.33%
- ----------------------------------------------------------------------------------------------------------------------------
Strong Government Securities Fund Strong Municipal Bond Fund
Strong High-Yield Municipal Bond Fund Strong Short-Term High Yield Municipal Fund
- ----------------------------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- ----------------------------------------------------------------------------------------------------------------------------
First $4 billion 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
Over $4 billion, but less than $6 billion 0.025% -7.14%
- ----------------------------------------------------------------------------------------------------------------------------
$6 billion and above 0.05% -14.28%
- ----------------------------------------------------------------------------------------------------------------------------
Strong Advantage Fund Strong Municipal Advantage Fund
- ----------------------------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- ----------------------------------------------------------------------------------------------------------------------------
First $4 billion 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
Over $4 billion, but less than $6 billion 0.025% -8.33%
- ----------------------------------------------------------------------------------------------------------------------------
$6 billion and above 0.05% -16.67%
- ----------------------------------------------------------------------------------------------------------------------------
29
Strong Advisor Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- ----------------------------------------------------------------------------------------------------------------------------
First $4 billion 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
Over $4 billion, but less than $6 billion 0.025% -10.87%
- ----------------------------------------------------------------------------------------------------------------------------
$6 billion and above 0.05% -21.75%
- ----------------------------------------------------------------------------------------------------------------------------
Strong Short-Term Municipal Bond Fund
- ----------------------------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- ----------------------------------------------------------------------------------------------------------------------------
First $4 billion 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
Over $4 billion, but less than $6 billion 0.025% -10.0%
- ----------------------------------------------------------------------------------------------------------------------------
$6 billion and above 0.05% -20.0%
- ----------------------------------------------------------------------------------------------------------------------------
Strong Growth Fund Strong Growth 20 Fund
- ----------------------------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- ----------------------------------------------------------------------------------------------------------------------------
First $4 billion 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
Over $4 billion, but under $6 billion 0.025% -2.5%
- ----------------------------------------------------------------------------------------------------------------------------
$6 billion and above 0.05% -5.0%
- ----------------------------------------------------------------------------------------------------------------------------
Strong Advisor Common Stock Strong Large Cap Core Fund
Strong Advisor Mid Cap Growth Fund Strong Mid Cap Disciplined Fund
Strong Advisor Small Cap Value Fund Strong Opportunity Fund
Strong American Utilities Fund Strong Opportunity Fund II
Strong Energy Fund Strong U.S. Emerging Growth Fund
Strong Enterprise Fund
- ----------------------------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- ----------------------------------------------------------------------------------------------------------------------------
First $4 billion 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
Over $4 billion, but less than $6 billion 0.025% -3.33%
- ----------------------------------------------------------------------------------------------------------------------------
$6 billion and above 0.05% -6.67%
- ----------------------------------------------------------------------------------------------------------------------------
Strong Advisor U.S. Value Fund Strong Growth and Income Fund
Strong Balanced Fund Strong Heritage Money Fund
Strong Blue Chip Fund Strong Large Cap Growth Fund
- ----------------------------------------------------------------------------------------------------------------------------
Assets: Reduction From Original Fee Percentage (%) Change
- ----------------------------------------------------------------------------------------------------------------------------
All asset levels 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
The table below shows the fees (based on a percent of average daily net assets)
that Investor Class and/or Z Class shares of each Fund are required to pay under
the current administration agreement and would be required to pay under the
proposed administration agreement if shareholders approve the proposed advisory
agreement:
- ----------------------------------------------------------------------------------------------------------------------------
Current
Fund/Class (if more than one): Administration Fee: New Administration Fee:
- ----------------------------------------------------------------------------------------------------------------------------
Strong Advantage Fund - Investor 0.30% 0.33%
- ----------------------------------------------------------------------------------------------------------------------------
Strong Advisor Bond Fund - Z 0.25% 0.28%
- ----------------------------------------------------------------------------------------------------------------------------
Strong Advisor Common Stock Fund - Z 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------------------------
Strong Advisor Mid Cap Growth Fund - Z 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------------------------
Strong Advisor Short Duration Bond Fund - Z 0.25% 0.28%
- ----------------------------------------------------------------------------------------------------------------------------
Strong Advisor Small Cap Value Fund - Z 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------------------------
30
- ----------------------------------------------------------------------------------------------------------
New
Current Administration
Fund/Class (if more than one): Administration Fee: Fee:
- ----------------------------------------------------------------------------------------------------------
Strong Advisor U.S. Value Fund - Z 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong American Utilities Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Balanced Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Blue Chip Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Corporate Bond Fund - Investor 0.25% 0.28%
- ----------------------------------------------------------------------------------------------------------
Strong Energy Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Enterprise Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Government Securities Fund - Investor 0.25% 0.28%
- ----------------------------------------------------------------------------------------------------------
Strong Growth Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Growth 20 Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Growth and Income Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Heritage Money Fund - Investor 0.35% 0.37%
- ----------------------------------------------------------------------------------------------------------
Strong High-Yield Bond Fund - Investor 0.25% 0.28%
- ----------------------------------------------------------------------------------------------------------
Strong High-Yield Municipal Bond Fund - Investor 0.25% 0.28%
- ----------------------------------------------------------------------------------------------------------
Strong Large Cap Core Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Large Cap Growth Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Mid Cap Disciplined Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Municipal Advantage Fund - Investor 0.30% 0.33%
- ----------------------------------------------------------------------------------------------------------
Strong Municipal Bond Fund - Investor 0.25% 0.28%
- ----------------------------------------------------------------------------------------------------------
Strong Opportunity Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Strong Short-Term Bond Fund - Investor 0.25% 0.28%
- ----------------------------------------------------------------------------------------------------------
Strong Short-Term High Yield Bond Fund - Investor 0.25% 0.28%
- ----------------------------------------------------------------------------------------------------------
Strong Short-Term High Yield Municipal Fund - Investor 0.25% 0.28%
- ----------------------------------------------------------------------------------------------------------
Strong Short-Term Municipal Bond Fund - Investor 0.25% 0.28%
- ----------------------------------------------------------------------------------------------------------
Strong U.S. Emerging Growth Fund - Investor 0.25% 0.30%
- ----------------------------------------------------------------------------------------------------------
Details About the Current Advisory Agreement
- --------------------------------------------
Strong has served as each Fund's investment advisor since its inception. The
current agreements were approved by each Fund's initial shareholder at the time
of the Fund's inception. Below are the inception dates of each Fund:
- ---------------------------------------------------------------------------------------
Fund: Inception date:
- ---------------------------------------------------------------------------------------
Strong Advantage Fund 11/25/88
- ---------------------------------------------------------------------------------------
Strong Advisor Bond Fund 12/31/96
- ---------------------------------------------------------------------------------------
Strong Advisor Common Stock 12/29/89
- ---------------------------------------------------------------------------------------
Strong Advisor Mid Cap Growth Fund 12/31/96
- ---------------------------------------------------------------------------------------
Strong Advisor Short Duration Bond Fund 03/31/94
- ---------------------------------------------------------------------------------------
Strong Advisor Small Cap Value Fund 12/31/97
- ---------------------------------------------------------------------------------------
Strong Advisor U.S. Value Fund 12/29/95
- ---------------------------------------------------------------------------------------
Strong American Utilities Fund 07/01/93
- ---------------------------------------------------------------------------------------
Strong Balanced Fund 12/30/81
- ---------------------------------------------------------------------------------------
Strong Blue Chip Fund 06/30/97
- ---------------------------------------------------------------------------------------
Strong Corporate Bond Fund 12/12/85
- ---------------------------------------------------------------------------------------
Strong Energy Fund 09/30/97
- ---------------------------------------------------------------------------------------
Strong Enterprise Fund 09/30/98
- ---------------------------------------------------------------------------------------
Strong Government Securities Fund 10/29/86
- ---------------------------------------------------------------------------------------
Strong Growth and Income Fund 12/29/95
- ---------------------------------------------------------------------------------------
Strong Growth Fund 12/31/93
- ---------------------------------------------------------------------------------------
Strong Growth 20 Fund 06/04/97
- ---------------------------------------------------------------------------------------
Strong Heritage Money Fund 06/29/95
- ---------------------------------------------------------------------------------------
Strong High-Yield Bond Fund 12/28/95
- ---------------------------------------------------------------------------------------
Strong High-Yield Municipal Bond Fund 10/01/93
- ---------------------------------------------------------------------------------------
31
- -------------------------------------------------------------------------------------------
Fund: Inception date:
- -------------------------------------------------------------------------------------------
Strong Large Cap Core Fund 06/30/98
- -------------------------------------------------------------------------------------------
Strong Large Cap Growth Fund 12/30/81
- -------------------------------------------------------------------------------------------
Strong Mid Cap Disciplined Fund 12/31/98
- -------------------------------------------------------------------------------------------
Strong Municipal Advantage Fund 11/30/95
- -------------------------------------------------------------------------------------------
Strong Municipal Bond Fund 10/23/86
- -------------------------------------------------------------------------------------------
Strong Opportunity Fund 12/31/85
- -------------------------------------------------------------------------------------------
Strong Opportunity Fund II 12/31/85
- -------------------------------------------------------------------------------------------
Strong Short-Term Bond Fund 08/31/87
- -------------------------------------------------------------------------------------------
Strong Short-Term High Yield Bond Fund 06/30/97
- -------------------------------------------------------------------------------------------
Strong Short-Term High Yield Municipal Fund 11/30/97
- -------------------------------------------------------------------------------------------
Strong Short-Term Municipal Bond Fund 12/31/91
- -------------------------------------------------------------------------------------------
Strong U.S. Emerging Growth Fund 12/31/98
- -------------------------------------------------------------------------------------------
Each Fund's Board of Directors, including a majority of the Independent
Directors, most recently approved the continuation of each Fund's current
agreement on May 4, 2001. The current agreement will continue in effect until
May 3, 2002 unless and until terminated by either party as provided in the
agreement (the agreement may be terminated by the Board, or, with respect to any
Fund, by a vote of a majority of the outstanding voting securities of that Fund,
accompanied by appropriate notice). The agreement will continue in force from
year to year after May 3, 2002, but only as long as such continuance is
specifically approved, at least annually, in the manner required by the 1940
Act. Under the 1940 Act, the continuance of advisory agreements must be approved
annually by a majority of the Board members, including a majority of directors
who are not "interested persons" (as defined in the 1940 Act). The current
advisory agreement will continue only if the proposed advisory agreement
(described below) is not approved by shareholders.
Details and Duration of the Proposed Advisory Agreement
- -------------------------------------------------------
Under the proposed agreement, each Fund will pay Strong a fee based on the value
of the Fund's net assets which decreases as the Fund reaches certain asset
levels. Also, under the proposed advisory agreement, Strong would no longer be
required to reimburse expenses above the 2% expense cap. Instead, Strong would
be able to use its discretion when setting reimbursement levels, taking into
account such market factors as a Fund's expense ratio relative to its peers and
the Fund's ability to offer shareholders competitive returns. If approved by
shareholders, the proposed advisory agreement will commence on July 21, 2001 and
continue in effect until July 20, 2003, unless and until terminated by either
party as provided in each agreement. The agreement may be terminated by the
Board, or, with respect to any Fund, by a vote of a majority of the outstanding
voting securities of that Fund, accompanied by appropriate notice. The agreement
will continue in force from year to year after July 20, 2003, but only as long
as such continuance is specifically approved, at least annually, in the manner
required by the 1940 Act.
Comparison of the Current and Proposed Advisory Agreements
- ----------------------------------------------------------
Investment Advisory Responsibilities. The proposed and current advisory
agreements are the same with respect to Strong's responsibilities and duties as
each Fund's investment advisor. Under both agreements, Strong is responsible for
managing the investment and reinvestment of each Fund's assets.
Investment Management Fees. The primary differences between the agreements
relate to fee structures and expense reimbursement policies as stated above.
Under the proposed advisory agreement, the management fee is calculated using
breakpoints for each Fund which provides for
32
lower fees as Fund net assets reach specified asset levels (see tables earlier
in this section concerning breakpoints under the proposed management fee
schedules).
If the proposed advisory agreement is approved, a new administration agreement
would also be implemented for Investor Class and Z Class shares that would
result in an overall increase in Fund expenses. Strong is also raising
administration fees for Advisor Class shares of each applicable Fund. However,
this fee increase is not contingent upon approval by shareholders of the new
advisory agreement.
Also, as mentioned above, Strong is paid the management fee on a monthly basis
under the current advisory agreement. However, under the proposed advisory
agreement, the management fee would be payable to Strong on a daily basis,
although Strong reserves the right to receive payment of the management fee on a
less frequent basis at its discretion.
Comparative Fee and Cost Information. The operating expense tables below are
intended to help you compare the Funds' fees for the fiscal year 2000 with those
that would have been paid had the proposed advisory agreement been in effect
during the same period (pro forma). Fees and expenses are paid from Fund assets,
and are shown as a percentage of average net assets.
Following each operating expense table are hypothetical cost examples intended
to help you compare the current cost of investing in a Fund over the time
periods indicated below with the cost had the proposed advisory agreement been
in effect during the same periods (pro forma). The example assumes you invest
$10,000 in a Fund and reinvest all dividends and distributions for the time
periods indicated, and then redeem all your shares at the end of a period. The
example also assumes that your investment has a 5% return each year and that
Fund operating expenses remain the same as those shown above. Actual returns and
costs may be higher or lower.
Strong Advantage Fund - Investor Class
- --------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.30% 0.30%
Other Expenses 0.49% 0.52%
Total Operating Expenses 0.79% 0.82%
For the fiscal year ended 10/31/00, the Strong Advantage Fund paid $5,456,678 in
management fees, and, on a pro forma basis under the proposed advisory
agreement, would have paid $5,456,678, a change of 0.0%. For the fiscal year
ended 10/31/00, the Strong Advantage Fund-Investor Class paid $3,839,586 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $4,300,337, a change of 0.03% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 81 $ 84
3 Years $252 $ 262
5 Years $439 $ 455
10 Years $978 $1,014
33
Strong Advisor Bond Fund - Class Z
- ----------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.23% 0.23%
Other Expenses 0.48% 0.51%
Total Operating Expenses 0.71% 0.74%
For the fiscal year ended 10/31/00, the Strong Advisor Bond Fund paid $481,749
in management fees, and, on a pro forma basis under the proposed advisory
agreement, would have paid $481,749, a change of 0.0%. For the fiscal year ended
10/31/00, the Strong Advisor Bond Fund-Class Z paid $17,640 in administration
fees, and, on a pro forma basis under the new administration agreement, would
have paid $19,757, a change of 0.03% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 73 $ 76
3 Years $227 $237
5 Years $395 $411
10 Years $883 $918
Strong Advisor Common Stock Fund - Class Z
- ------------------------------------------
FYE: 12/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.75% 0.75%
Other Expenses 0.43% 0.48%
Total Operating Expenses 1.18% 1.23%
For the fiscal year ended 12/31/00, the Strong Advisor Common Stock Fund paid
$13,663,581 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $13,663,581, a change of 0.0%. For the
fiscal year ended 12/31/00, the Strong Advisor Common Stock Fund-Class Z paid
$3,734,670 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $4,481,604, a change of 0.05% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 120 $ 125
3 Years $ 375 $ 390
5 Years $ 649 $ 676
10 Years $1,432 $1,489
34
Strong Advisor Mid Cap Growth Fund - Class Z
- --------------------------------------------
FYE: 12/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.75% 0.75%
Other Expenses 0.60% 0.65%
Total Operating Expenses 1.35% 1.40%
For the fiscal year ended 12/31/00, the Strong Advisor Mid Cap Growth Fund paid
$1,182,298 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $1,182,298, a change of 0.0%. For the fiscal
year ended 12/31/00, the Strong Advisor Mid Cap Growth Fund-Class Z paid
$354,265 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $425,118, a change of 0.05% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 137 $ 143
3 Years $ 428 $ 443
5 Years $ 739 $ 766
10 Years $1,624 $1,680
Strong Advisor Short Duration Bond Fund - Class Z
- -------------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.375% 0.375%
Other Expenses 0.78% 0.81%
Total Operating Expenses 1.15% 1.18%
For the fiscal year ended 10/31/00, the Strong Advisor Short Duration Bond Fund
paid $299,895 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $299,895, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong Advisor Short Duration Bond Fund-Class Z paid
$118,365 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $132,569, a change of 0.03% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 117 $ 120
3 Years $ 365 $ 375
5 Years $ 633 $ 649
10 Years $1,398 $1,432
35
Strong Advisor Small Cap Value Fund - Class Z
- ---------------------------------------------
FYE: 12/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.75% 0.75%
Other Expenses(1) 0.65% 0.70%
Total Operating Expenses 1.40% 1.45%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 12/31/00, the Strong Advisor Small Cap Value Fund paid
$1,108,905 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $1,108,905, a change of 0.0%. For the fiscal
year ended 12/31/00, the Strong Advisor Small Cap Value Fund-Class Z paid
$333,566 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $400,280, a change of 0.05% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 143 $ 148
3 Years $ 443 $ 459
5 Years $ 766 $ 792
10 Years $1,680 $1,735
Strong Advisor U.S. Value Fund - Class Z
- ----------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.55% 0.55%
Other Expenses 0.49% 0.54%
Total Operating Expenses 1.04% 1.09%
For the fiscal year ended 10/31/00, the Strong Advisor U.S. Value Fund paid
$1,369,699 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $1,369,699, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong Advisor U.S. Value Fund-Class Z paid $398,256 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $477,907, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 106 $ 111
3 Years $ 331 $ 347
5 Years $ 574 $ 601
10 Years $1,271 $1,329
36
Strong American Utilities Fund - Investor Class
- -----------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.50% 0.50%
Other Expenses 0.52% 0.57%
Total Operating Expenses 1.02% 1.07%
For the fiscal year ended 10/31/00, the Strong American Utilities Fund paid
$1,282,430 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $1,282,430, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong American Utilities Fund paid $367,868 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $441,442, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 104 $ 109
3 Years $ 325 $ 340
5 Years $ 563 $ 590
10 Years $1,248 $1,306
Strong Balanced Fund - Investor Class
- -------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.55% 0.55%
Other Expenses 0.51% 0.56%
Total Operating Expenses 1.06% 1.11%
For the fiscal year ended 10/31/00, the Strong Balanced Fund paid $2,314,030 in
management fees, and, on a pro forma basis under the proposed advisory
agreement, would have paid $2,314,030, a change of 0.0%. For the fiscal year
ended 10/31/00, the Strong Balanced Fund paid $614,824 in administration fees,
and, on a pro forma basis under the new administration agreement, would have
paid $737,789, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 108 $ 113
3 Years $ 337 $ 353
5 Years $ 585 $ 612
10 Years $1,294 $1,352
37
Strong Blue Chip Fund - Investor Class
- --------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.50% 0.50%
Other Expenses/(1)/ 0.65% 0.70%
Total Operating Expenses 1.15% 1.20%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 10/31/00, the Strong Blue Chip Fund paid $3,429,671 in
management fees, and, on a pro forma basis under the proposed advisory
agreement, would have paid $3,429,671, a change of 0.0%. For the fiscal year
ended 10/31/00, the Strong Blue Chip Fund-Investor Class paid $1,038,895 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $1,246,674, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 117 $ 122
3 Years $ 365 $ 381
5 Years $ 633 $ 660
10 Years $1,398 $1,455
Strong Corporate Bond Fund - Investor Class
- -------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.375% 0.375%
Other Expenses 0.55% 0.58%
Total Operating Expenses 0.92% 0.95%
For the fiscal year ended 10/31/00, the Strong Corporate Bond Fund paid
$3,283,128 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $3,283,128, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong Corporate Bond Fund-Investor Class paid
$2,167,790 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $2,427,924, a change of 0.03% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 94 $ 97
3 Years $ 293 $ 303
5 Years $ 509 $ 525
10 Years $1,131 $1,166
38
Strong Energy Fund
- ------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.75% 0.75%
Other Expenses/(1)/ 1.17% 1.22%
Total Operating Expenses 1.92% 1.97%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 10/31/00, the Strong Energy Fund paid $62,886 in
management fees, and, on a pro forma basis under the proposed advisory
agreement, would have paid $62,886, a change of 0.0%. For the fiscal year ended
10/31/00, the Strong Energy Fund paid $14,589 in administration fees, and, on a
pro forma basis under the new administration agreement, would have paid $17,507,
a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 195 $ 200
3 Years $ 603 $ 618
5 Years $1,037 $1,062
10 Years $2,243 $2,296
Strong Enterprise Fund - Investor Class
- ---------------------------------------
FYE: 12/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.75% 0.75%
Other Expenses/(1)/ 0.68% 0.73%
Total Operating Expenses 1.43% 1.48%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 12/31/00, the Strong Enterprise Fund paid $6,594, 199
in management fees, and, on a pro forma basis under the proposed advisory
agreement, would have paid $6,594,199, a change of 0.0%. For the fiscal year
ended 12/31/00, the Strong Enterprise Fund-Investor Class paid $1,830,006 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $2,196,007, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 146 $ 151
3 Years $ 452 $ 468
5 Years $ 782 $ 808
10 Years $1,713 $1,768
39
Strong Government Securities Fund - Investor Class
- --------------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses*
Current Pro Forma
Management Fees 0.35% 0.35%
Other Expenses 0.54% 0.57%
Total Operating Expenses 0.89% 0.92%
* Annual Fund Operating Expenses do not reflect our waiver of management fees
and/or absorptions. With waivers and absorptions, the Annual Fund Operating
Expenses of the Fund were 0.88%, and pro forma would be 0.91%. We can terminate
waivers and absorptions for this fund at any time.
For the fiscal year ended 10/31/00, the Strong Government Securities Fund paid
$4,432,845 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $4,432,845, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong Government Securities Fund-Investor Class paid
$3,135,994 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $3,512,313, a change of 0.03% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 91 $ 94
3 Years $ 284 $ 293
5 Years $ 493 $ 509
10 Years $1,096 $1,131
Strong Growth Fund - Investor Class
- -----------------------------------
FYE: 12/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.75% 0.75%
Other Expenses 0.45% 0.50%
Total Operating Expenses 1.20% 1.25%
For the fiscal year ended 12/31/00, the Strong Growth Fund paid $29,531,542 in
management fees, and, on a pro forma basis under the proposed advisory
agreement, would have paid $29,531,542, a change of 0.0%. For the fiscal year
ended 12/31/00, the Strong Growth Fund-Investor Class paid $8,188,200 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $9,825,839, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 122 $ 127
3 Years $ 381 $ 397
5 Years $ 660 $ 686
10 Years $1,455 $1,511
40
Strong Growth 20 Fund - Investor Class
- --------------------------------------
FYE: 12/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.75% 0.75%
Other Expenses 0.52% 0.57%
Total Operating Expenses 1.27% 1.32%
For the fiscal year ended 12/31/00, the Strong Growth 20 Fund paid $5,660,960 in
management fees, and, on a pro forma basis under the proposed advisory
agreement, would have paid $5,660,960, a change of 0.0%. For the fiscal year
ended 12/31/00, the Strong Growth 20 Fund-Investor Class paid $1,622,913 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $1,947,496, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 129 $ 134
3 Years $ 403 $ 418
5 Years $ 697 $ 723
10 Years $1,534 $1,590
Strong Growth & Income Fund - Investor Class
- --------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.55% 0.55%
Other Expenses/(1)/ 0.59% 0.64%
Total Operating Expenses 1.14% 1.19%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 10/31/00, the Strong Growth & Income Fund paid
$6,929,319 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $6,929,319, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong Growth & Income Fund-Investor Class paid
$1,979,847 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $2,375,816, a change of 0.05% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 116 $ 121
3 Years $ 362 $ 378
5 Years $ 628 $ 654
10 Years $1,386 $1,443
41
Strong Heritage Money Fund - Investor Class
- -------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses*
Current Pro Forma
Management Fees 0.15% 0.15%
Other Expenses 0.42% 0.44%
Total Operating Expenses 0.57% 0.59%
* Annual Fund Operating Expenses do not reflect our waiver of management fees
and/or absorptions. With waivers and absorptions, the Annual Fund Operating
Expenses of the Fund were 0.40%, and pro forma would be 0.40%. We can terminate
waivers and absorptions for this fund at any time.
For the fiscal year ended 10/31/00, the Strong Heritage Money Fund paid
$2,029,349 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $2,029,349, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong Heritage Money Fund-Investor Class paid
$2,896,681 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $3,062,206, a change of 0.02% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 58 $ 60
3 Years $183 $ 189
5 Years $318 $ 329
10 Years $714 $ 738
Strong High-Yield Bond Fund - Investor Class
- --------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.375% 0.375%
Other Expenses 0.485% 0.515%
Total Operating Expenses 0.86% 0.89%
For the fiscal year ended 10/31/00, the Strong High-Yield Bond Fund paid
$2,628,270 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $2,628,270, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong High-Yield Bond Fund-Investor Class paid
$1,752,093 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $1,962,345, a change of 0.03% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 88 $ 91
3 Years $ 274 $ 284
5 Years $ 477 $ 493
10 Years $1,061 $1,096
42
Strong High-Yield Municipal Bond Fund - Investor Class
- ------------------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.35% 0.35%
Other Expenses 0.38% 0.41%
Total Operating Expenses 0.73% 0.76%
For the fiscal year ended 10/31/00, the Strong High-Yield Municipal Bond Fund
paid $247,624 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $247,624, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong High-Yield Municipal Bond Fund-Investor Class
paid $180,790 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $202,485, a change of 0.03% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 75 $ 78
3 Years $ 233 $ 243
5 Years $ 406 $ 422
10 Years $ 906 $ 942
Strong Large Cap Core Fund - Investor Class
- -------------------------------------------
FYE: 12/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.75% 0.75%
Other Expenses 1.25% 1.67%
Total Operating Expenses 2.00% 2.42%
For the fiscal year ended 12/31/00, the Strong Large Cap Core Fund paid $42,595
in management fees, and, on a pro forma basis under the proposed advisory
agreement, would have paid $42,595, a change of 0.0%. For the fiscal year ended
12/31/00, the Strong Large Cap Core Fund paid $11,875 in administration fees,
and, on a pro forma basis under the new administration agreement, would have
paid $14,249, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 203 $ 245
3 Years $ 627 $ 755
5 Years $1,078 $1,291
10 Years $2,327 $2,756
43
Strong Large Cap Growth Fund - Investor Class
- ---------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.55% 0.55%
Other Expenses 0.41% 0.46%
Total Operating Expenses 0.96% 1.01%
For the fiscal year ended 10/31/00, the Strong Large Cap Growth Fund paid
$10,936,795 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $10,936,795, a change of 0.0%. For the
fiscal year ended 10/31/00, the Strong Large Cap Growth Fund paid $3,095,811 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $3,714,973, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 98 $ 103
3 Years $ 306 $ 322
5 Years $ 531 $ 558
10 Years $1,178 $1,236
Strong Mid Cap Disciplined Fund
- -------------------------------
Annual Fund Operating Expenses
FYE: 12/31/00
Current Pro Forma
Management Fees 0.75% 0.75%
Other Expenses/(1)/ 1.17% 1.22%
Total Operating Expenses 1.92% 1.97%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 12/31/00, the Strong Mid Cap Disciplined Fund paid
$68,858 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $68,858, a change of 0.0%. For the fiscal
year ended 12/31/00, the Strong Mid Cap Disciplined Fund paid $20,119 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $24,143, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 195 $ 200
3 Years $ 603 $ 618
5 Years $1,037 $1,062
10 Years $2,243 $2,296
44
Strong Municipal Advantage Fund - Investor Class
- ------------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses*
Current Pro Forma
Management Fees 0.30% 0.30%
Other Expenses 0.32% 0.35%
Total Operating Expenses 0.62% 0.65%
* Annual Fund Operating Expenses do not reflect our waiver of management fees
and/or absorptions. With waivers and absorptions, the Annual Fund Operating
Expenses of the Fund were 0.57%. We can terminate waivers and absorptions for
this fund at any time.
For the fiscal year ended 10/31/00, the Strong Municipal Advantage Fund paid
$5,043,516 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $5,043,516, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong Municipal Advantage Fund-Investor Class paid
$942,624 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $1,036,886, a change of 0.03% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 63 $ 66
3 Years $ 199 $ 208
5 Years $ 346 $ 362
10 Years $ 774 $ 810
Strong Municipal Bond Fund - Investor Class
- -------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.35% 0.35%
Other Expenses 0.41% 0.44%
Total Operating Expenses 0.76% 0.79%
For the fiscal year ended 10/31/00, the Strong Municipal Bond Fund paid $147,556
in management fees, and, on a pro forma basis under the proposed advisory
agreement, would have paid $147,556, a change of 0.0%. For the fiscal year ended
10/31/00, the Strong Municipal Bond Fund-Investor Class paid $111,665 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $125,065, a change of 0.03% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 78 $ 81
3 Years $ 243 $ 252
5 Years $ 422 $ 439
10 Years $ 942 $ 978
45
Strong Opportunity Fund - Investor Class
- ----------------------------------------
FYE: 12/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.75% 0.75%
Other Expenses 0.45% 0.50%
Total Operating Expenses 1.20% 1.25%
For the fiscal year ended 12/31/00, the Strong Opportunity Fund paid $22,947,728
in management fees, and, on a pro forma basis under the proposed advisory
agreement, would have paid $22,947,728, a change of 0.0%. For the fiscal year
ended 12/31/00, the Strong Opportunity Fund-Investor Class paid $6,445,208 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $7,734,249, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 122 $ 127
3 Years $ 381 $ 397
5 Years $ 660 $ 686
10 Years $1,455 $1,511
Strong Opportunity Fund II - Investor Class
- -------------------------------------------
Annual Fund Operating Expenses*
FYE: 12/31/00
Current Pro Forma
Management Fees/(1)/ 0.75% 0.75%
Other Expenses/(1)/ 0.41% 0.46%
Total Operating Expenses 1.16% 1.21%
/(1)/ Management Fees and Other Expenses are based on estimated amounts for the
current fiscal year.
* Annual Fund Operating Expenses do not reflect our waiver of management fees
and/or absorptions. With waivers and absorptions, the Annual Fund Operating
Expenses of the Fund were 1.10%, and pro forma would be 1.10%. We can terminate
waivers and absorptions for this fund at any time.
For the fiscal year ended 12/31/00, the Strong Opportunity II Fund - Investor
Class paid $8,667,561 in estimated management fees, and, on a pro forma basis
under the proposed advisory agreement, would have paid $8,667,561, a change of
0.0%. For the fiscal year ended 12/31/00, the Strong Opportunity II Fund -
Investor Class would have paid $2,889,187 in estimated administration fees, and,
on a pro forma basis under the new administration agreement, would have paid
$3,467,024, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $ 118 $ 123
3 Years $ 368 $ 384
5 Years $ 638 $ 665
10 Years $1,409 $1,466
46
Strong Short-Term Bond Fund - Investor Class
- --------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.375% 0.375%
Other Expenses 0.49% 0.52%
Total Operating Expenses 0.86% 0.89%
For the fiscal year ended 10/31/00, the Strong Short-Term Bond Fund paid
$4,458,692 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $4,458,692, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong Short-Term Bond Fund-Investor Class paid
$2,923,500 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $3,274,320, a change of 0.03% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 88 $ 91
3 Years $ 274 $ 284
5 Years $ 477 $ 493
10 Years $1,061 $1,096
Strong Short-Term High Yield Bond Fund - Investor
- -------------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.375% 0.375%
Other Expenses 0.45% 0.48%
Total Operating Expenses 0.82% 0.85%
For the fiscal year ended 10/31/00, the Strong Short-Term High Yield Bond Fund
paid $986,307 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $986,307, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong Short-Term High Yield Bond Fund-Investor Class
paid $657,497 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $736,396, a change of 0.03% in the
expense ratio.
Example:
Current Pro Forma
1 Year $ 84 $ 87
3 Years $ 262 $ 271
5 Years $ 455 $ 471
10 Years $1,014 $1,049
47
Strong Short-Term High Yield Municipal Fund - Investor Class
- ------------------------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses*
Current Pro Forma
Management Fees 0.35% 0.35%
Other Expenses 0.37% 0.40%
Total Operating Expenses 0.72% 0.75%
* Annual Fund Operating Expenses do not reflect our waiver of management fees
and/or absorptions. With waivers and absorptions, the Annual Fund Operating
Expenses of the Fund were 0.67%. We can terminate waivers and absorptions for
this fund at any time.
For the fiscal year ended 10/31/00, the Strong Short-Term High Yield Municipal
Fund paid $78,041 in management fees, and, on a pro forma basis under the
proposed advisory agreement, would have paid $78,041, a change of 0.0%. For the
fiscal year ended 10/31/00, the Strong Short-Term High Yield Municipal
Fund-Investor Class paid $57,494 in administration fees, and, on a pro forma
basis under the new administration agreement, would have paid $64,393, a change
of 0.03% in the expense ratio.
Example:
Current Pro Forma
1 Year $74 $77
3 Years $230 $240
5 Years $401 $417
10 Years $894 $930
Strong Short-Term Municipal Bond Fund - Investor Class
- ------------------------------------------------------
FYE: 10/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.25% 0.25%
Other Expenses 0.35% 0.38%
Total Operating Expenses 0.60% 0.63%
For the fiscal year ended 10/31/00, the Strong Short-Term Municipal Bond Fund
paid $126,791 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $126,791, a change of 0.0%. For the fiscal
year ended 10/31/00, the Strong Short-Term Municipal Bond Fund-Investor Class
paid $130,272 in administration fees, and, on a pro forma basis under the new
administration agreement, would have paid $145,904, a change of 0.03% in the
expense ratio.
Example:
Current Pro Forma
1 Year $61 $64
3 Years $192 $202
5 Years $335 $351
10 Years $750 $786
48
Strong U.S. Emerging Growth Fund - Investor Class
- -------------------------------------------------
FYE: 12/31/00 Annual Fund Operating Expenses
Current Pro Forma
Management Fees 0.75% 0.75%
Other Expenses/(1)/ 0.73% 0.78%
Total Operating Expenses 1.48% 1.53%
/(1)/ Other Expenses are based on estimated amounts for the current fiscal year.
For the fiscal year ended 12/31/00, the Strong U.S. Emerging Growth Fund paid
$693,600 in management fees, and, on a pro forma basis under the proposed
advisory agreement, would have paid $693,600, a change of 0.0%. For the fiscal
year ended 12/31/00, the Strong U.S. Emerging Growth Fund paid $210,098 in
administration fees, and, on a pro forma basis under the new administration
agreement, would have paid $252,117, a change of 0.05% in the expense ratio.
Example:
Current Pro Forma
1 Year $151 $156
3 Years $468 $483
5 Years $808 $834
10 Years $1,768 $1,824
Required Vote
- -------------
For each Fund, approval of this proposal requires the affirmative vote of a
"majority of the outstanding voting securities" of the Fund. The term "majority
of the outstanding voting securities," as defined in the 1940 Act, means the
affirmative vote of the lesser of (1) 67% of the voting securities of the Fund
present at the Annual Meeting if more than 50% of the outstanding shares of the
Fund are present in person or by proxy or (2) more than 50% of the outstanding
shares of the Fund.
The persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies "FOR" the approval of the proposed
advisory agreement. Shareholders may vote "FOR" or "AGAINST" the approval of the
agreement, or may "ABSTAIN" from voting on this proposal. If you return your
proxy card and give no voting instructions, your shares will be voted "FOR" the
approval of the proposed advisory agreement.
THE BOARD OF DIRECTORS [UNANIMOUSLY] RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE NEW INVESTMENT
---
ADVISORY AGREEMENT.
PROPOSAL 3: TO RATIFY THE SELECTION OF EACH FUND'S INDEPENDENT AUDITORS
PROPOSAL 3A: To Ratify the Selection of PricewaterhouseCoopers LLP (all Funds
except the Strong Index 500 Fund)
The selection by the Board of Directors of PricewaterhouseCoopers LLP as the
independent auditors for each Fund, except the Strong Index 500 Fund, for the
current fiscal year is being submitted for ratification by the shareholders at
the Annual Meeting. In its capacity as independent auditors,
PricewaterhouseCoopers LLP currently performs a variety of functions,
49
including auditing each Fund's financial statements and reviewing each Fund's
federal and state annual income tax returns. PricewaterhouseCoopers LLP are
independent auditors and have advised the Funds that they have no direct or
material indirect financial interest in the Funds. A representative of
PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting and
will have an opportunity to make a statement if he so desires and to respond to
shareholder questions.
Audit Fees; Financial Information Systems Design and Implementation Fees; and
- -----------------------------------------------------------------------------
All Other Fees. The aggregate fees for professional services rendered by
- --------------
PricewaterhouseCoopers LLP for the audit of the Funds' (except the Strong Index
500 Fund) financial statements for each Fund's fiscal year are set forth in the
table below by Corporation. In addition, the aggregate fees by
PricewaterhouseCoopers LLP for professional services during fiscal 2000 for
financial information systems design and implementation were $181,873 (billed
entirely to Strong). The aggregate fees by PricewaterhouseCoopers LLP to each
Fund (except the Strong Index 500 Fund) during fiscal 2000 for tax-related
services are set forth in the table below by Corporation. The aggregate fees by
the independent auditors to Strong and its affiliated entities during the fiscal
year 2000 for audit, attestation, tax and other non-audit services were
$405,228.
- ------------------------------------------------------------------------------------------------------------
Corporation Audit Fees/(1)/ Tax-Related Services Fees
- ------------------------------------------------------------------------------------------------------------
Strong Advantage Fund, Inc. $42,527 $1,600
- ------------------------------------------------------------------------------------------------------------
Strong Asia Pacific Fund, Inc. $15,775 $1,950
- ------------------------------------------------------------------------------------------------------------
Strong Balanced Fund, Inc. $27,163 $1,650
- ------------------------------------------------------------------------------------------------------------
Strong Balanced Stock Fund, Inc. $1,650 $9,565
- ------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund, Inc. $51,274 $1,950
- ------------------------------------------------------------------------------------------------------------
Strong Conservative Equity Funds, Inc. $85,197 $8,250
- ------------------------------------------------------------------------------------------------------------
Strong Corporate Bond Fund, Inc. $21,922 $1,650
- ------------------------------------------------------------------------------------------------------------
Strong Equity Funds, Inc. $132,898 $19,600
- ------------------------------------------------------------------------------------------------------------
Strong Government Securities Fund, Inc. $31,682 $1,650
- ------------------------------------------------------------------------------------------------------------
Strong Heritage Reserve Series, Inc. $27,887 $1,850
- ------------------------------------------------------------------------------------------------------------
Strong High-Yield Municipal Bond Fund, Inc. $21,428 $1,650
- ------------------------------------------------------------------------------------------------------------
Strong Income Funds, Inc. $41,674 $3,300
- ------------------------------------------------------------------------------------------------------------
Strong Income Funds II, Inc. $14,330 $1,650
- ------------------------------------------------------------------------------------------------------------
Strong International Equity Funds, Inc. $42,987 $5,850
- ------------------------------------------------------------------------------------------------------------
Strong Large Cap Growth Fund, Inc. $42,346 $1,650
- ------------------------------------------------------------------------------------------------------------
Strong Life Stage Series, Inc. $14,641 $4,950
- ------------------------------------------------------------------------------------------------------------
Strong Money Market Fund, Inc. $15,183 $1,100
- ------------------------------------------------------------------------------------------------------------
Strong Municipal Bond Fund, Inc. $19,801 $1,650
- ------------------------------------------------------------------------------------------------------------
Strong Municipal Funds, Inc. $68,294 $3,500
- ------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund, Inc. $42,527 $1,950
- ------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II, Inc. $15,183 $750
- ------------------------------------------------------------------------------------------------------------
Strong Short-Term Bond Fund, Inc. $53,373 $1,650
- ------------------------------------------------------------------------------------------------------------
Strong Short-Term Global Bond Fund, Inc. $13,556 $1,950
- ------------------------------------------------------------------------------------------------------------
Strong Short-Term Municipal Bond Fund, Inc. $19,259 $1,650
- ------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc. $35,789 $3,000
- ------------------------------------------------------------------------------------------------------------
/(1)/For some Funds, these amounts include additional audit services required as
a result of a change in the Fund's fiscal year end.
The Board of Directors has considered whether the provision of financial
information implementation services and other non-audit services is compatible
with the independent auditors' independence.
Required Vote. Approval of Proposal 3A requires, for each Fund, that the votes
- -------------
cast in favor of the Proposal exceed the votes cast against the Proposal.
50
THE BOARDS OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
---
APPROVAL OF THE INDEPENDENT AUDITORS.
PROPOSAL 3B: To Ratify the Selection of KPMG LLP (Strong Index 500 Fund only)
The selection by the Board of Directors of KPMG LLP as the independent auditors
for the Strong Index 500 Fund for the current fiscal year is being submitted for
ratification by the shareholders at the Annual Meeting. In its capacity as
independent auditors, KPMG LLP currently performs a variety of functions,
including auditing the Fund's financial statements and reviewing the Fund's
federal and state annual income tax returns. KPMG LLP are independent auditors
and have advised the Fund that they have no direct or material indirect
financial interest in the Fund. Representatives of KPMG LLP are expected to be
available by telephone at the Annual Meeting and will have an opportunity to
make a statement if they so desire and to respond to shareholder questions.
Audit Fees. The aggregate fees billed for professional services rendered by KPMG
- ----------
LLP for the audit of the Strong Index 500 Fund's financial statements for the
fiscal year ended December 31, 2000 were $12,500.
Financial Information Systems Design and Implementation Fees. No fees were
- ------------------------------------------------------------
billed for professional services rendered by KPMG LLP during fiscal 2000 for (1)
operating, or supervising the operation of, the Fund's information systems or
managing its local area networks or (2) designing or implementing a hardware or
software system that aggregates source data underlying the Fund's financial
statements or generates information that is significant to its financial
statements taken as a whole.
All Other Fees. The aggregate fees billed by KPMG LLP to Strong and the Strong
- --------------
Index 500 Fund during fiscal 2000 for tax-related services were $0 and $3,250,
respectively. The aggregate fees billed by KPMG LLP to Strong and affiliated
entities during fiscal 2000 for audit, attestation, tax and other non-audit
services were $89,458.
The Board of Directors has considered whether the provision of financial
information implementation services and other non-audit services is compatible
with the independent auditors' independence.
Required Vote. Approval of Proposal 3B requires, for the Strong Index 500 Fund,
- -------------
that the votes cast in favor of the Proposal exceed the votes cast against the
Proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
---
APPROVAL OF THE INDEPENDENT AUDITORS.
51
PROPOSAL 4: TO APPROVE A PLAN OF REORGANIZATION, INCLUDING AN AMENDMENT TO THE
ARTICLES OF INCORPORATION OF STRONG EQUITY FUNDS, INC.,
REORGANIZING THE STRONG INTERNET FUND INTO THE STRONG TECHNOLOGY
100 FUND (Strong Technology 100 Fund only)
Background. Shareholders of the Strong Technology 100 Fund (the "Technology 100
- ----------
Fund"), a series of Strong Equity Funds, Inc. ("SEF"), will be asked to consider
and approve a proposed reorganization between the Technology 100 Fund and the
Strong Internet Fund (the "Internet Fund"), another series of SEF. A copy of the
form of Plan of Reorganization (the "Reorganization Plan") is included as Annex
-----
B. The Proposal, if approved, will result in the transfer of the assets and
- -
liabilities of the Internet Fund to the Technology 100 Fund in return for shares
of the Technology 100 Fund.
The Reorganization Plan provides for (i) the transfer of the Internet Fund's
assets and liabilities to the Technology 100 Fund; (ii) the issuance of shares
of the Technology 100 Fund to shareholders of the Internet Fund; and (iii) the
amendment of SEF's Articles of Incorporation to reflect that shares of the
Internet Fund have been exchanged for shares of the Technology 100 Fund.
(collectively, "Reorganization"). The transfer is expected to occur on or about
5:00 p.m., Central Time ("Effective Time") on Friday, August 31, 2001.
Immediately after the transfer of the Internet Fund's assets and liabilities,
each holder of shares in the Internet Fund at the Effective Time of the
Reorganization will receive a number of shares of the Technology 100 Fund with
the same aggregate value as the shareholder had in the Internet Fund immediately
before the Effective Time. At the Effective Time, shareholders of the Internet
Fund will become shareholders of the Technology 100 Fund.
The Internet Fund and the Technology 100 Fund offer one class of shares -
Investor Class shares. Holders of Investor Class shares of the Internet Fund
will receive an amount of Investor Class shares of the Technology 100 Fund equal
in value to their Internet Fund shares.
Additional information about the Internet Fund is included as Annex C. For a
-------
more detailed discussion of the investment objectives, policies, risks and
restrictions of the Internet Fund, see the Internet Fund's Investor Class
prospectus and statement of additional information dated May 1, 2001, as they
may be amended and/or supplemented, which have been filed with the SEC. Copies
of the prospectus and statement of additional information for the Internet Fund
are available upon request and without charge by writing to the Strong Funds at
P.O. Box 2936, Milwaukee, Wisconsin 53201, or by calling toll-free at
1-800-368-3863.
In a separate proxy statement, the Internet Fund's shareholders are also being
asked to vote on the proposed Reorganization. The proposed Reorganization will
only occur if shareholders of both Funds approve the Reorganization Plan.
Based on their evaluation of all relevant information at a meeting held on May
4, 2001, the Board of Directors of SEF has determined that the Reorganization is
(i) in the best interests of the shareholders of the Internet Fund and the
Technology 100 Fund and (ii) that the interests of the existing shareholders of
the Internet Fund and the Technology 100 Fund would not be diluted as a result
of the Reorganization.
52
Required Vote. Approval of Proposal 4 requires, for the Strong Technology 100
- -------------
Fund, that the votes cast in favor of the Proposal exceed the votes cast against
the Proposal.
THE BOARD OF DIRECTORS [UNANIMOUSLY] RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL
---
OF THE REORGANIZATION PLAN, INCLUDING THE AMENDMENT TO THE ARTICLES OF
INCORPORATION OF SEF
PROPOSAL 5: TO APPROVE THE INVESTMENT SUBADVISORY AGREEMENT BETWEEN SLOATE,
WEISMAN, MURRAY AND COMPANY, INC. AND THE STRONG VALUE FUND (Strong
Value Fund only)
Background. Sloate, Weisman, Murray and Company, Inc. ("Sloate, Weisman") serves
- ----------
as the subadvisor to the Strong Value Fund pursuant to a subadvisory agreement
dated December 28, 1995 with Strong (the "Subadvisory Agreement"). The Directors
have approved, and recommend that shareholders of the Strong Value Fund approve
and ratify the proposed Subadvisory Agreement between Strong and Sloate,
Weisman. A copy of the form of proposed Subadvisory agreement is found in Annex
-----
D.
- -
Sloate, Weisman began conducting business in 1974. Since then, its principal
business has been providing continuous investment advice to institutional
investors and high net worth clients. Sloate, Weisman is a Delaware corporation.
As of February 28, 2001, Sloate, Weisman had over $363 million under management.
Sloate, Weisman's address is 230 Park Avenue, 7th Floor, New York, New York
10169.
Reapproval of Agreement. At its Annual Meeting on May 4, 2001, the Directors,
- -----------------------
including each of the Independent Directors, considered (i) Sloate, Weisman's
cost in providing such services and (ii) the investment performance, expense
ratios, and management fees for comparable investment companies. The Directors
received all information they deemed necessary to their evaluation of the terms
and conditions of the Subadvisory Agreement. Based upon the Directors' review
and evaluations of these materials and their consideration of all factors deemed
relevant, the Directors determined that the Subadvisory Agreement is reasonable,
fair, and in the best interests of the Fund and its shareholders. Accordingly,
the Directors, including all of the Independent Directors, approved the
Subadvisory Agreement and its submission to the Fund's shareholders for approval
and ratification. If the new Subadvisory Agreement is not approved and ratified
by the Fund's shareholders, the current Subadvisory Agreement may be terminated
with 60 days written notice. In the event that the current Subadvisory Agreement
is terminated, the Board of Directors will have to consider other alternative
arrangements for the management of the Fund including having Strong manage the
Fund directly.
The Subadvisory Agreement is required to be approved annually by the Fund's
Directors or by a vote of a majority of a Fund's outstanding voting securities
(as defined in the 1940 Act). In either case, such annual renewal must be
approved by the vote of a majority of the Fund's Directors, including a majority
of directors who are not "interested persons" (as defined in the 1940 Act), cast
in person at a meeting called for the purpose of voting on such approval. On May
4, 2001, the Directors of the Fund, including all directors who are not
"interested persons," voted [unanimously] to extend the current Subadvisory
Agreement for the Fund for an additional period of one year, commencing May 4,
2001. The Subadvisory Agreement may be terminated at any time, without payment
of any penalty, by a vote of a majority of the Directors of the Fund
53
or by a vote of a majority of the outstanding voting securities of the Fund on
60 days' written notice to Sloate, Weisman. The Subadvisory Agreement may also
be terminated by Strong for breach upon 20 days' written notice and immediately
in the event that Sloate, Weisman becomes unable to discharge its duties and
obligations. The Subadvisory Agreement may be terminated by Sloate, Weisman upon
180 days' written notice for any reason. The Subadvisory Agreement will
terminate automatically in the event of assignment.
Under the terms of both the current and new Subadvisory Agreements, Sloate,
Weisman furnishes investment advisory and portfolio management services to the
Fund, subject to supervision by Strong and the Board of Directors. Sloate,
Weisman is responsible for decisions to buy and sell the Fund's investments and
all other transactions related to investment thereto, subject to the investment
policies and restrictions of the Fund, and the negotiation of brokerage
commissions.
Asset Based Compensation. Under the current Subadvisory Agreement, subadvisory
- ------------------------
fees are paid by Strong to Sloate, Weisman based on a percentage of Strong's
management fee. As described in Proposal 2B herein, the current management fee
covers both advisory and administration services. It is proposed that these
services and the attenuating fees be "unbundled," resulting in a reduction in
Strong's management fee by 0.25%, which represents the amount attributable to
administration services. Such a reduction in the management fee might make it
seem as though Sloate, Weisman's fee was lowered. Under the proposed agreement,
subadvisory fees would be based on a percentage of the Fund's net assets to
avoid the potential appearance of an unintended reduction in Sloate, Weisman's
fees. Under the current Subadvisory Agreement, Strong, not the Fund, pays the
subadvisor a fee, computed and paid monthly as follows: 60% of the management
fees collected by Strong from the Fund on the first $74.2 million (this amount
being "base" net assets), 50% of the management fees collected by Strong from
the Fund on net assets from base net assets to $300 million in the Fund, and 40%
of management fees collected by Strong from the Fund on net assets in excess of
$300 million.
Under the proposed agreement, Strong would pay the subadvisor a fee, computed
and paid monthly as follows:
0.60% of the Fund's average daily net asset value on the first $74.2
million (this amount being "base" net assets), 0.50% of the Fund's
average daily net asset value on net assets from base net assets to
$300 million in the Fund and 0.40% of the Fund's average daily net
asset value on net assets in excess of $300 million.
Approval of the proposed agreement will not result in an increase in subadvisory
fees.
Required Vote. Approval of this proposal requires the affirmative vote of a
- -------------
"majority of the outstanding voting securities" of the Fund. The term "majority
of the outstanding voting securities," as defined in the 1940 Act, means the
affirmative vote of the lesser of (1) 67% of the voting securities of the Fund
present at the Annual Meeting if more than 50% of the outstanding shares of the
Fund are present in person or by proxy or (2) more than 50% of the outstanding
shares of the Fund.
The persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies "FOR" the approval of the proposed
Subadvisory Agreement. Shareholders may vote "FOR" or "AGAINST" the approval of
the agreement, or may "ABSTAIN" from voting
54
on this proposal. If you return your proxy card and give no voting instructions,
your shares will be voted "FOR" the approval of the proposed Subadvisory
Agreement.
THE BOARD OF DIRECTORS [UNANIMOUSLY] RECOMMENDS THAT YOU VOTE
"FOR" THE APPROVAL OF THE SUBADVISORY AGREEMENT
---
OTHER MATTERS
The Board of Directors knows of no other matters that may come before the Annual
Meeting, other than the Proposals as set forth above. If any other matters
properly come before the Annual Meeting, it is the intention of the persons
acting pursuant to the enclosed Proxy Card to vote the shares represented by
such proxies in accordance with their best judgment with respect to such
matters.
ADDITIONAL INFORMATION
Investment Advisor
Strong Capital Management, Inc. ("Strong"), 100 Heritage Reserve, Menomonee
Falls, Wisconsin 53051 acts as the Funds' Investment Advisor. Richard S. Strong
controls Strong due to his stock ownership of Strong, which he holds both
individually and through family trusts. Mr. Strong is the Chairman, Chief
Investment Officer and a Director of Strong; Richard T. Weiss is a Director of
Strong; David A. Braaten, Anthony J. D'Amato, Bradley C. Tank and Thomas M.
Zoeller serve in the Office of the Chief Executive; Mr. Zoeller is also an
Executive Vice President and the Chief Financial Officer of Strong; Mr. D'Amato
is also an Executive Vice President; Elizabeth N. Cohernour is an Executive Vice
President of Strong and Strong's General Counsel, Secretary and Chief Compliance
Officer; Cathleen A. Ebacher is Vice President, Senior Counsel and Assistant
Secretary of Strong; Susan A. Hollister and Constance R. Wick are each a Vice
President, Associate Counsel and Assistant Secretary of Strong; Joseph J. Rhiel
is a Senior Vice President and the Chief Information Officer; Wallace L. Head
and Dennis A. Wallestad are each a Senior Vice President; Peter D. Schwab is a
Vice President and John W. Widmer is the Treasurer of Strong. The mailing
address of all of the above persons is P.O. Box 2936, Milwaukee, Wisconsin
53201.
Administrator
Strong also serves as each Fund's administrator, either pursuant to a separate
administration agreement, shareholder servicing (personal services) agreement,
or the Advisory Agreement.
Distributor and Principal Underwriter
Strong Investments, Inc. (the "Distributor"), located at 100 Heritage Reserve,
Menomonee Falls, Wisconsin 53051, serves as each Fund's distributor. The
Distributor is a direct subsidiary of Strong and is controlled by Strong and Mr.
Strong.
55
Affiliated Brokers
The Board of Directors has authorized W.H. Reaves & Co., Inc. ("Reaves"), the
subadvisor for the Strong American Utilities Fund, and a member of the New York
Stock Exchange, to act as an affiliated broker to the Funds subject to
procedures set forth in Rule 17e-1 under the 1940 Act. As such, in order for
Reaves to effect any portfolio transactions for a Fund on an exchange, the
commissions, fees or other remuneration received by Reaves must be reasonable
and fair compared to the commissions, fees or other remuneration paid to other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on an exchange during a comparable period of time. This
standard would allow Reaves to receive no more than the remuneration which would
be expected to be received by an unaffiliated broker in a commensurate
arm's-length transaction. For the fiscal year ended October 31, 2000, the Strong
American Utilities Fund paid Reaves $673,402 in commissions, which represented
99.97% of the Fund's aggregate brokerage commissions. In 2000, the American
Utilities Fund changed its fiscal year end to December 31. For the two-month
fiscal period ended December 31, 2000, the Strong American Utilities Fund paid
Reaves $77,334 in commissions, which represented 100% of the Fund's aggregate
brokerage commissions.
Independent Public Accountants
PricewaterhouseCoopers LLP serves as independent public accountants for each
Fund, except the Strong Index 500 Fund. PricewaterhouseCoopers LLP has informed
the Funds that it has no material direct or indirect financial interest in the
Funds. A representative of PricewaterhouseCoopers LLP is expected to be
available at the Annual Meeting, should questions arise.
KPMG LLP serves as independent public accountants for the Strong Index 500 Fund.
KPMG LLP has informed the Funds that it has no material direct or indirect
financial interest in the Funds. Representatives of KPMG LLP are expected to be
available by telephone at the Annual Meeting, should questions arise.
Share Ownership. The following table sets forth information regarding the
- ---------------
beneficial ownership of each Fund's outstanding shares as of the Record Date by
(i) the directors and executive officers of the Funds, (ii) the directors and
executive officers of the Funds as a group and (iii) persons who are known by
the Funds to beneficially own more than 5% of a Fund's outstanding shares.
Directors deemed to be "interested persons" of the Funds for purposes of the
1940 Act are indicated by an asterisk (*).
Position(s)
Held Principal Occupation Number
Name, Age and Address with Fund and Other Affiliations of Shares/(1)/ Percentage
- --------------------- --------- ---------------------- -------------- ----------
* Less than 1%.
/(1)/ Full shares of the Fund owned beneficially as of May 11, 2001.
56
FUTURE MEETINGS; SHAREHOLDER PROPOSALS
Each Fund is generally not required to hold annual meetings of shareholders and
each Fund generally does not hold a meeting of shareholders in any year unless
certain specified shareholder actions such as election of directors or approval
of a new advisory agreement are required to be taken under the 1940 Act. By
observing this policy, each Fund seeks to avoid the expenses customarily
incurred in the preparation of proxy material and the holding of shareholder
meetings, as well as the related expenditure of staff time.
A shareholder desiring to submit a proposal intended to be presented at any
meeting of shareholders of the Fund hereafter called should send the proposal to
the Secretary of the Fund at the Fund's principal offices. The mere submission
of a proposal by a shareholder does not guarantee that such proposal will be
included in the proxy statement because certain rules under the Federal
securities laws must be complied with before inclusion of the proposal is
required.
By Order of the Board of Directors,
/s/Elizabeth N. Cohernour
Elizabeth N. Cohernour
Vice President and Secretary
Menomonee Falls, Wisconsin
[May 24, 2001]
57
Annex A
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Form of Proposed Advisory Agreement
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on __________, 20 __, and as
amended and restated on this ____ day of _________, ____, between STRONG [ ],
INC., a Wisconsin corporation (the "Corporation"), and STRONG CAPITAL
MANAGEMENT, INC., a Wisconsin corporation (the "Adviser");
WITNESSETH
WHEREAS, the Corporation is an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Corporation is authorized to create separate series, each with
its own separate investment portfolio; and
WHEREAS, the Corporation desires to retain the Adviser, which is a
registered investment adviser under the Investment Advisers Act of 1940, as
amended, to act as investment adviser for each series of the Corporation listed
in Schedule A attached hereto, and to manage each of their assets;
NOW, THEREFORE, the Corporation and the Adviser do mutually agree and
promise as follows:
1. Employment. The Corporation hereby appoints Adviser as investment
----------
adviser for each series of the Corporation listed on Schedule A attached hereto
(a "Portfolio" or collectively, the "Portfolios"), and Adviser accepts such
appointment. Subject to the supervision of the Board of Directors of the
Corporation and the terms of this Agreement, the Adviser shall act as investment
adviser for and manage the investment and reinvestment of the assets of any
Portfolio. The Adviser is hereby authorized to delegate some or all of its
services subject to necessary approval, which includes without limitation, the
delegation of its investment adviser duties hereunder to a subadvisor pursuant
to a written agreement (a "Subadvisory Agreement") under which the subadvisor
shall furnish the services specified therein to the Adviser. The Adviser will
continue to have responsibility for all investment advisory services furnished
pursuant to a Subadvisory Agreement. The Adviser shall discharge the foregoing
responsibilities subject to the control of the Board of Directors of the
Corporation and in compliance with such policies as the Board of Directors may
from time to time establish, and in compliance with the objectives, policies,
and limitations for each Portfolio set forth in such Portfolio's prospectus(es)
and statement of additional information, as amended from time to time, and
applicable laws and regulations. The Adviser shall (i) provide for use by the
Corporation, at the Adviser's expense, office space and all necessary office
facilities, equipment and personnel for servicing the investments of each
Portfolio, (ii) pay the salaries and fees of all officers and directors of the
Corporation who are "interested persons" of the Adviser as such term is defined
under the 1940 Act, and (iii) pay for all clerical services relating to
research, statistical and investment work.
A-1
2. Allocation of Portfolio Brokerage. The Adviser is authorized, subject
---------------------------------
to the supervision of the Board of Directors of the Corporation, to place orders
for the purchase and sale of securities and to negotiate commissions to be paid
on such transactions. The Adviser is authorized to select the brokers or dealers
that will execute the purchases and sales of securities for the Portfolios and
is directed to use its best efforts to obtain the best net results as described
in the Portfolios' statements of additional information. The Adviser may, on
behalf of each Portfolio, pay brokerage commissions to a broker which provides
brokerage and research services to the Adviser in excess of the amount another
broker would have charged for effecting the transaction, provided (i) the
Adviser determines in good faith that the amount is reasonable in relation to
the value of the brokerage and research services provided by the executing
broker in terms of the particular transaction or in terms of the Adviser's
overall responsibilities with respect to a Portfolio and the accounts as to
which the Adviser exercises investment discretion, (ii) such payment is made in
compliance with Section 28(e) of the Securities Exchange Act of 1934, as
amended, and other applicable state and federal laws, and (iii) in the opinion
of the Adviser, the total commissions paid by a Portfolio will be reasonable in
relation to the benefits to such Portfolio over the long term.
3. Expenses. Each Portfolio will pay all its expenses and the Portfolio's
--------
allocable share of the Corporation's expenses, other than those expressly stated
to be payable by the Adviser hereunder, which expenses payable by a Portfolio
shall include, without limitation, interest charges, taxes, brokerage
commissions and similar expenses, distribution and shareholder servicing
expenses, expenses of issue, sale, repurchase or redemption of shares, expenses
of registering or qualifying shares for sale, expenses of printing and
distributing prospectuses to existing shareholders, charges of custodians
(including sums as custodian and for keeping books and similar services of the
Portfolios), 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, printing of share
certificates, fees for directors who are not "interested persons" of the
Adviser, and other expenses not expressly assumed by the Adviser under Paragraph
1 above. Notwithstanding the foregoing, the Adviser will not bear expenses of
the Corporation or any Portfolio which would result in the Corporation's
inability to qualify as a regulated investment company under the provisions of
the Internal Revenue Code.
4. Authority of Adviser. The Adviser shall for all purposes herein be
--------------------
considered an independent contractor and shall not, unless expressly authorized
and empowered by the Corporation or any Portfolio, have authority to act for or
represent the Corporation or any Portfolio in any way, form or manner. Any
authority granted by the Corporation on behalf of itself or any Portfolio to the
Adviser shall be in the form of a resolution or resolutions adopted by the Board
of Directors of the Corporation.
5. Compensation of Adviser. For the services to be furnished by the
-----------------------
Adviser hereunder, each Portfolio listed in Schedule A shall pay the Adviser,
and the Adviser agrees to accept as full compensation for all services rendered
hereunder, an Advisory Fee. The Advisory Fee shall be calculated by applying a
daily rate, based on the annual percentage rates as set forth in Schedule B of
the net asset value of the Portfolio determined and payable as of the close of
business on each business day.
6. Rights and Powers of Adviser. The Adviser's rights and powers with
----------------------------
respect to acting for and on behalf of the Corporation or any Portfolio,
including the rights and powers of the Adviser's officers and directors, shall
be as follows:
A-2
(a) Directors, officers, agents and shareholders of the Corporation
are or may at any time or times be interested in the Adviser as officers,
directors, agents, shareholders or otherwise. Correspondingly, directors,
officers, agents and shareholders of the Adviser are or may at any time or
times be interested in the Corporation as directors, officers, agents and
as shareholders or otherwise, but nothing herein shall be deemed to require
the Corporation to take any action contrary to its Articles of
Incorporation or any applicable statute or regulation. The Adviser shall,
if it so elects, also have the right to be a shareholder in any Portfolio.
(b) Except for initial investments in a Portfolio, not in excess of
$100,000 in the aggregate for the Corporation, the Adviser shall not take
any long or short positions in the shares of the Portfolios and that
insofar as it can control the situation it shall prevent any and all of its
officers, directors, agents or shareholders from taking any long or short
position in the shares of the Portfolios. This prohibition shall not in any
way be considered to prevent the Adviser or an officer, director, agent or
shareholder of the Adviser from purchasing and owning shares of any of the
Portfolios for investment purposes. The Adviser shall notify the
Corporation of any sales of shares of any Portfolio made by the Adviser
within two months after purchase by the Adviser of shares of any Portfolio.
(c) The services of the Adviser to each Portfolio and the Corporation
are not to be deemed exclusive and Adviser shall be free to render similar
services to others as long as its services for others does not in any way
hinder, preclude or prevent the Adviser from performing its duties and
obligations under this Agreement. In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Corporation or to any of the Portfolios or to any
shareholder for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security.
7. Duration and Termination. The following shall apply with respect to
------------------------
the duration and termination of this Agreement:
(a) This Agreement shall begin for each Portfolio as of the date this
Agreement is first executed and shall continue in effect for two years.
With respect to each Portfolio added by execution of an Addendum to
Schedule A, the term of this Agreement shall begin on the date of such
execution and, unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect to the date two years after such
execution. Thereafter, in each case, this Agreement shall remain in effect,
for successive periods of one year, subject to the provisions for
termination and all of the other terms and conditions hereof if: (a) such
continuation shall be specifically approved at least annually by (i) either
the Board of Directors of the Corporation or a majority of a Portfolio's
outstanding voting securities, and in either case (ii) a majority of the
Directors who are not parties to this Agreement or interested persons of
any such party (other than as Directors of the Corporation), cast in person
at a meeting called for that purpose; and (b) Adviser shall not have
notified a Portfolio in writing at least sixty (60) days prior to the
anniversary date of this Agreement in any year thereafter that it does not
desire such continuation with respect to that Portfolio. Prior to voting on
the renewal of this Agreement, the Board of Directors of the Corporation
may request and evaluate, and the
A-3
Adviser shall furnish, such information as may reasonably be necessary to
enable the Corporation's Board of Directors to evaluate the terms of this
Agreement.
(b) Notwithstanding whatever may be provided herein to the contrary,
this Agreement may be terminated at any time with respect to any Portfolio,
without payment of any penalty, by affirmative vote of a majority of the
Board of Directors of the Corporation, or by vote of a majority of the
outstanding voting securities of that Portfolio, as defined in Section
2(a)(42) of the 1940 Act, or by the Adviser, in each case, upon sixty (60)
days' written notice to the other party and shall terminate automatically
in the event of its assignment.
8. Amendment. This Agreement may be amended by mutual consent of the
---------
parties, provided that the terms of each such amendment shall be approved by the
vote of a majority of the Board of Directors of the Corporation, including a
majority of the Directors who are not parties to this Agreement or interested
persons of any such party to this Agreement (other than as Directors of the
Corporation) cast in person at a meeting called for that purpose, and, where
required by Section 15(a)(2) of the 1940 Act, on behalf of a Portfolio by a
majority of the outstanding voting securities (as defined in Section 2(a)(42) of
the 1940 Act) of such Portfolio. If such amendment is proposed in order to
comply with the recommendations or requirements of the Securities and Exchange
Commission or state regulatory bodies or other governmental authority, or to
obtain any advantage under state or federal laws, the Corporation shall notify
the Adviser of the form of amendment which it deems necessary or advisable and
the reasons therefor, and if the Adviser declines to assent to such amendment,
the Corporation may terminate this Agreement forthwith.
9. Notice. Any notice that is required to be given by the parties to each
------
other under the terms of this Agreement shall be in writing, addressed and
delivered, or mailed postpaid to the other party at the principal place of
business of such party.
10. Assignment. This Agreement shall neither be assignable nor subject to
----------
pledge or hypothecation and in the event of assignment, pledge or hypothecation
shall automatically terminate. For purposes of determining whether an
"assignment" has occurred, the definition of "assignment" in Section 2(a)(4) of
the 1940 Act, or any rules or regulations promulgated thereunder, shall control.
11. Reports. The Corporation and the Adviser agree to furnish to each
-------
other, if applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such other
information with regard to their affairs as each may reasonably request.
12. Use of the Adviser's Name. The Corporation shall not use the name of
-------------------------
the Adviser in any prospectus, sales literature or other material relating to
the Portfolios in a manner not approved by the Adviser prior thereto; provided,
--------
however, that the approval of the Adviser shall not be required for any use of
- -------
its name which merely refers in accurate and factual terms to its appointment
hereunder or which is required by the SEC or any state securities authority or
any other appropriate regulatory, governmental or judicial authority; provided,
--------
further, that in no event shall such approval be unreasonably withheld or
- -------
delayed.
13. Certain Records. Any records required to be maintained and preserved
---------------
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the
1940 Act which are
A-4
prepared or maintained by the Adviser on behalf of the Corporation are the
property of the Corporation and will be surrendered promptly to the Corporation
on request.
14. Severability. If any provision of this Agreement shall be held or made
------------
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Wisconsin and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of
Wisconsin, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the day and year first stated above.
Attest: Strong Capital Management, Inc.
- ------------------------------------- ------------------------------------
Attest: Strong [ ], Inc.
- ------------------------------------- ------------------------------------
A-5
SCHEDULE A
The Portfolio(s) of the Corporation currently subject to this Agreement are
as follows:
Date of Addition
Portfolio(s) to this Agreement
- ------------ -----------------
Strong [ ] Fund
Attest: Strong Capital Management, Inc.
- ------------------------------------- -----------------------------------
Attest: Strong [ ], Inc.
- ------------------------------------- -----------------------------------
A-6
SCHEDULE B
Compensation pursuant to Paragraph 5 of this Agreement shall be calculated
in accordance with the following schedules:
Portfolio(s) Annual Fee
- ------------ ----------
Strong [ ] Fund _________%
Attest: Strong Capital Management, Inc.
- ------------------------------------- -----------------------------------
Attest: Strong [ ], Inc.
- ------------------------------------ -----------------------------------
A-7
Annex B
-------
Form of Plan of Reorganization
PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION is dated as of May 7, 2001 ("Plan"), and has
been adopted by the Board of Directors of Strong Equity Funds, Inc., a Wisconsin
corporation ("Corporation") to provide for the reorganization of its Strong
Internet Fund ("Selling Fund") into its Strong Technology 100 Fund ("Acquiring
Fund"). The Selling Fund and the Acquiring Fund are sometimes referred to
collectively, as the "Funds" and individually, as a "Fund."
PRELIMINARY STATEMENTS
1. The Selling Fund and the Acquiring Fund are each series of the
Corporation, which is an open-end management investment company registered under
the Investment Company Act of 1940 ("1940 Act").
2. The Board of Directors of the Corporation has determined that the
Reorganization (as defined below) is in the best interests of each Fund and that
the interests of the existing shareholders of each Fund would not be diluted as
a result of the Reorganization.
3. This Plan is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended ("Code").
PROVISIONS
1. Plan of Reorganization. At the Effective Time (as that term is defined
in Section 5 herein), the Selling Fund will assign, deliver and otherwise
transfer all of its assets and good and marketable title to the assets, free and
clear of all liens, encumbrances and adverse claims except as provided in this
Plan, and assign all liabilities to the Acquiring Fund. The Acquiring Fund shall
acquire all these assets, and shall assume all these liabilities of the Selling
Fund, in exchange for the issuance of shares (both full and fractional) of the
Acquiring Fund to the shareholders of the Selling Fund, equivalent in value to
the shares of the Selling Fund outstanding immediately prior to the Effective
Time. These transactions are collectively referred to as the "Reorganization."
The shares of the Acquiring Fund that are issued in exchange for the assets of
the Selling Fund are referred to as the "Acquiring Fund Shares," and the shares
of the Selling Fund that are held by the holders of such shares at the Effective
Time are referred to as the "Selling Fund Shares." The assets and stated
liabilities of the Selling Fund shall be exclusively assigned to and assumed by
the Acquiring Fund. All debts, liabilities, obligations and duties of the
Selling Fund, to the extent that they exist at or after the Effective Time,
shall after the Effective Time, attach to the Acquiring Fund and may be enforced
against the Acquiring Fund to the same extent as if the same had been incurred
by the Acquiring Fund. If the Selling Fund is unable to make delivery of any of
its portfolio securities pursuant to this Section to the Acquiring Fund because
any of such securities purchased by the Selling Fund have not yet been delivered
to it by the Selling Fund's broker or brokers, then, in lieu of such delivery,
the Selling Fund shall deliver to the Acquiring Fund, with respect to these
securities, executed copies of an agreement of assignment and due bills executed
on behalf of the broker or brokers,
B-1
together with any other documents as may be required by the Acquiring Fund,
including brokers' confirmation slips.
2. Transfer of Assets. The assets of the Selling Fund to be acquired by
the Acquiring Fund shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), goodwill and intangible property, and deferred or prepaid expenses,
as well as any claims or rights of action or rights to register shares under
applicable securities laws, any books or records of the Selling Fund and other
property owned by the Selling Fund at the Effective Time.
3. Liquidation of the Selling Fund. At the Effective Time, the Selling
Fund will liquidate. Contemporaneous with the liquidation of the Selling Fund,
each shareholder of the Selling Fund will be issued a number of Acquiring Fund
Shares equal in value to the Selling Fund Shares held by that shareholder. This
liquidation will be accompanied by the establishment of an open account on the
share records of the Acquiring Fund in the name of each shareholder of record of
the Selling Fund and representing the respective number of Acquiring Fund Shares
due that shareholder. Each Selling Fund shareholder shall also have the right to
receive any dividends or other distributions that were declared prior to the
Effective Time, but unpaid at that time, with respect to the Selling Fund Shares
that are held by such Selling Fund shareholders at the Effective Time. An
amendment to the Articles of Incorporation of the Corporation in a form not
materially different from that attached as Annex 1 to this Plan ("Articles
Amendment") shall be filed to reflect that shares of the Acquired Fund have been
exchanged for shares of the Acquiring Fund.
4. Conditions of the Reorganization. Consummation of this Plan is subject
to the following conditions:
(a) Shares to be Issued upon Reorganization. The Acquiring Fund Shares to
be issued in connection with the Reorganization (i) have been duly authorized
and upon consummation of the Reorganization will be validly issued, fully paid
and non-assessable, except to the extent provided in Section 180.0622(2)(b) of
the Wisconsin Statutes and (ii) will be duly registered in conformity with
applicable federal and state securities laws, and no shareholder of the
Acquiring Fund shall have any option, warrant, or preemptive right of
subscription or purchase with respect to the Acquiring Fund's Shares.
(b) Marketable Title to Assets. The Selling Fund will have, at the
Effective Time, good and marketable title to, and full right, power and
authority to sell, assign, transfer and deliver, the assets to be transferred to
the Acquiring Fund. Upon delivery and payment for these assets, the Acquiring
Fund will have good and marketable title to the assets without restriction on
the transfer of the assets free and clear of all liens, encumbrances and adverse
claims.
(c) Taxes. As of the Effective Time, all federal and other tax returns and
reports of each Fund required by law to have been filed shall have been filed,
and all other taxes shall have been paid so far as due, or provision shall have
been made for the payment of them, and to the best of the Corporation's
knowledge, no such return is currently under audit and no assessment has been
asserted with respect to any of those returns.
B-2
(d) The Corporation shall have received an opinion of Godfrey & Kahn, S.C.
based upon customary representations and assumptions, in form reasonably
satisfactory to the Corporation and dated as of the Effective Time, to the
effect that:
(1) the shares of the Acquiring Fund issued and outstanding at the
Effective Time are duly authorized and validly issued, fully paid and
non-assessable by the Corporation, except to the extent provided in
Section 180.0622(2)(b) of the Wisconsin Statutes;
(2) the Acquiring Fund Shares to be issued to the Selling Fund, as
provided for by this Plan, are duly authorized and upon delivery
pursuant to the terms of this Plan, will be validly issued, fully
paid, and non-assessable by the Corporation, except to the extent
provided in Section 180.0622(2)(b) of the Wisconsin Statutes or any
successor statute, and no shareholder of the Acquiring Fund has any
option, warrant or preemptive right to subscription or purchase in
respect thereof based on a review of the Corporation's Amended and
Restated Articles of Incorporation and By-laws and otherwise to such
counsel's knowledge;
(3) the Selling Fund Shares issued and outstanding, at the Effective Time
are duly authorized and validly issued, fully paid and non-assessable
by the Selling Fund, except to the extent provided in Section
180.0622(2)(b) of the Wisconsin Statutes;
(4) the Board of Directors of the Corporation has duly authorized the
Acquiring Fund and Selling Fund, each as a class of common stock of
the Corporation, pursuant to the terms of the Amended and Restated
Articles of Incorporation of the Corporation;
(5) the consummation of the transactions contemplated by this Plan will
not, violate the Amended and Restated Articles of Incorporation or
Bylaws of the Corporation or any material agreement known to such
counsel to which the Corporation, on behalf of either the Acquiring
Fund or Selling Fund, is a party or by which it is bound;
(6) to the knowledge of such counsel no consent, approval, authorization,
or order of any court or governmental authority is required for the
consummation by the Corporation of the transactions contemplated by
this Plan, except such as have been obtained under the Securities Act
of 1933 ("1933 Act"), state securities laws, the 1940 Act, the rules
and regulations under those statutes and such as may be required under
state securities laws, rules and regulations; and
(7) the Acquiring Fund and the Selling Fund are each registered as a
series of an investment company under the 1940 Act and such
registration with the Securities and Exchange Commission ("SEC") as an
investment company or series thereof under the 1940 Act is in full
force and effect.
Such opinion: (a) shall state that while such counsel have not verified,
and are not passing upon and do not assume responsibility for, the accuracy,
completeness, or fairness of any portion of the Form N-14 Registration Statement
relating to the Reorganization or any amendment thereof or supplement thereto,
they have generally reviewed and discussed certain information included therein
with respect to the Selling Fund with certain officers of the
B-3
Corporation and that in the course of such review and discussion no facts came
to the attention of such counsel which caused them to believe that, on the
respective effective or clearance dates of the Form N-14 Registration Statement,
and any amendment thereof or supplement thereto, the Form N-14 Registration
Statement or any amendment thereof or supplement thereto, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading;
(b) shall state that such counsel does not express any opinion or belief as to
the financial statements, other financial data, statistical data, or any
information relating to the Selling Fund contained or incorporated by reference
in the Form N-14 Registration Statement; and (c) shall state that such opinion
is solely for the benefit of the Corporation and its Board of Directors and
officers.
In giving such opinion, Godfrey & Kahn, S.C. may rely upon officers'
certificates and certificates of public officials.
(e) The Corporation shall have received on or before the Effective Time an
opinion of Morgan, Lewis & Bockius LLP satisfactory to the Corporation, based
upon customary representations and assumptions, substantially to the effect that
the Reorganization, as a tax-free reorganization within the meaning of Section
368(a)(1) of the Code, will have the following federal income tax consequences
for Selling Fund shareholders, the Selling Fund, and the Acquiring Fund:
(1) No gain or loss will be recognized by the Selling Fund upon the
transfer of its assets in exchange solely for Acquiring Fund Shares
and the assumption by the Acquiring Fund of the Selling Fund's stated
liabilities;
(2) No gain or loss will be recognized by the Acquiring Fund on its
receipt of the Selling Fund's assets in exchange for Acquiring Fund
Shares and the assumption by the Acquiring Fund of the Selling Fund's
liabilities;
(3) The basis of the Selling Fund's assets in the Acquiring Fund's hands
will be the same as the basis of those assets in the Selling Fund's
hands immediately before the Reorganization;
(4) The Acquiring Fund's holding period for the assets transferred to the
Acquiring Fund by the Selling Fund will include the holding period of
those assets in the Selling Fund's hands immediately before the
Reorganization;
(5) No gain or loss will be recognized by the Selling Fund on the issuance
of Acquiring Fund Shares to the Selling Fund's shareholders in
exchange for Selling Fund Shares;
(6) No gain or loss will be recognized by the Selling Fund's shareholders
as a result of the Selling Fund's distribution of Acquiring Fund
Shares to the Selling Fund's shareholders in exchange for the Selling
Fund's shareholders' Selling Fund Shares;
B-4
(7) The basis of the Acquiring Fund Shares received by the Selling Fund's
shareholders will be the same as the basis of that Selling Fund's
shareholders' Selling Fund Shares surrendered in exchange therefor;
and
(8) The holding period of the Acquiring Fund Shares received by the
Selling Fund's shareholders will include the Selling Fund's
shareholders' holding period for the Selling Fund's shareholders'
Selling Fund Shares surrendered in exchange for the Acquiring Fund
Shares, provided that the Selling Fund Shares were held as capital
assets on the date of the Reorganization.
(f) This Plan, including the Articles Amendment, and the Reorganization
contemplated by this Plan shall have been approved, at an annual or special
meeting, by the shareholders of the Acquiring Fund and Selling Fund in a manner
consistent with the requirements under the Wisconsin Statutes.
(g) The Board of Directors of the Corporation, at a meeting duly called
for such purpose, shall have authorized the issuance by the Acquiring Fund of
Acquiring Fund Shares at the Effective Time in exchange for the assets of the
Selling Fund pursuant to the terms and provisions of this Plan.
(h) The Corporation will not take any action or cause any action to be
taken that is inconsistent with the treatment of the Reorganization as a
reorganization within the meaning of Section 368(a) of the Code or results in
the failure of the transaction to qualify as a reorganization with the meaning
of Section 368(a) of the Code. At or prior to the Effective Time, the
Corporation will take such action, or cause such action to be taken, as is
reasonably necessary to enable Morgan, Lewis & Bockius LLP to deliver the tax
opinion contemplated in this Plan.
5. Effective Time of the Reorganization. The exchange of the Selling Fund's
assets for the corresponding issuance Acquiring Fund Shares shall be effective
at 5:00 p.m., Central Time on August 31, 2001, or at such other time and date as
fixed by the Board of Directors or any duly authorized officer of the
Corporation ("Effective Time").
6. Termination. This Plan and the transactions contemplated by this Plan
may be terminated and abandoned by resolution of the Board of Directors of the
Corporation, or at the discretion of any duly authorized officer of the
Corporation, at any time prior to the Effective Time, if circumstances should
develop that, in the opinion of such Board or officer, make proceeding with the
Plan inadvisable. In the event of any such termination, there shall be no
liability for damages on the part of the Acquiring Fund, the Selling Fund or the
Corporation, or the Corporation's Board of Directors or officers.
7. Amendment and Waiver. This Plan may be amended, modified or supplemented
at any time (to the fullest extent permitted by law) upon authorization by the
Board of Directors, with or without shareholder approval; provided, that no
amendment may have the effect of changing the provisions for determining the
number or value of Acquiring Fund Shares to be paid to the Selling Fund's
shareholders under this Plan to the detriment of the Selling Fund's shareholders
or otherwise materially change the amendment to the Articles of Incorporation of
the Corporation without further shareholder approval. The Board of Directors or
any duly
B-5
authorized officer of the Corporation, may waive any condition to the
consummation of this Plan if, in its or such officer's judgment, such waiver
will not have a material adverse effect on the interests of the shareholders of
the Acquiring Fund or the shareholders of the Selling Fund.
8. Fees and Expenses. Each Fund shall be solely liable for its own expenses
incurred in connection with entering into and carrying out the transactions
contemplated by this Plan, whether or not the transactions contemplated hereby
are consummated.
9. Governing Law. This Plan shall be governed and construed in accordance
with the laws of the State of Wisconsin.
B-6
Annex 1
-------
To Be Effective Upon Filing With The Department Of Financial Institutions
AMENDMENT TO ARTICLES OF INCORPORATION
OF
STRONG EQUITY FUNDS, INC.
The undersigned Vice President and Assistant Secretary of Strong Equity
Funds, Inc. ("Corporation"), hereby certifies that, in accordance with Section
180.1003 of the Wisconsin Statutes, the following Amendment was duly adopted by
the Board of Directors of the Corporation on May 4, 2001 and subsequently
approved by the shareholders of the classes designated as the Strong Internet
Fund and the Strong Technology 100 Fund, each voting as a separate group, at a
meeting held on July 20, 2001 in order to exchange all of the shares designated
as the Strong Internet Fund as shares of the class designated as the Strong
Technology 100 Fund in connection with a reorganization effected pursuant to a
Plan of Reorganization ("Plan").
1. Paragraph A of Article IV is hereby amended by deleting Paragraph A
thereof and inserting the following as a new paragraph:
"A. The Corporation shall have the authority to issue an indefinite
number of shares of Common Stock with a par value of $.00001 per share. Subject
to the following paragraph the authorized shares are classified as follows:
Class Series Authorized Number of Shares
----- ------ ---------------------------
Strong Advisor Mid Cap Growth Fund Class A Indefinite
Class B Indefinite
Class C Indefinite
Class L Indefinite
Class Z Indefinite
Strong Advisor Small Cap Value Fund Class A Indefinite
Class B Indefinite
Class C Indefinite
Class L Indefinite
Class Z Indefinite
Strong Dow 30 Value Fund Investor Indefinite
Strong Enterprise Fund Investor Indefinite
Advisor Indefinite
Strong Growth Fund Investor Indefinite
Advisor Indefinite
Institutional Indefinite
Strong Growth 20 Fund Investor Indefinite
Advisor Indefinite
Strong Index 500 Fund Investor Indefinite
Strong Large Cap Core Fund Investor Indefinite
Strong Mid Cap Disciplined Fund Investor Indefinite
Strong Technology 100 Fund Investor Indefinite
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Strong U.S. Emerging Growth Fund Investor Indefinite
Strong Value Fund Investor Indefinite"
2. Article IV is hereby amended by adding a new paragraph, labeled
Paragraph J, and inserting the following language:
"J. At the Effective Time (as defined in the Plan), each
outstanding share of Common Stock of the Strong Internet Fund shall be exchanged
for Acquiring Fund Shares (as defined in the Plan) in accordance with the terms
of the Plan. Certificates representing shares of the Strong Internet Fund shall
be surrendered at the time and in the manner set forth in the Plan. Any such
certificates that remain outstanding after the Effective Time shall be deemed to
be automatically canceled, and shares represented by such certificates shall be
restored to the status of authorized but unissued shares and shall be
automatically exchanged as noted above."
Executed in duplicate this ____ day of July, 2001.
STRONG EQUITY FUNDS, INC.
By:_________________________________
Cathleen A. Ebacher
Vice President and Assistant Secretary
This instrument was drafted by
Kerry A. Jung
Strong Capital Management, Inc.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
B-8
Annex C
-------
Additional Information About the Strong Internet Fund
INVESTMENT OBJECTIVES, POLICIES, RESTRICTIONS
- ---------------------------------------------
The investment objective of the Strong Internet Fund is to provide investors
with capital growth. The Fund pursues its objective by investing, under normal
conditions, primarily in companies engaged in Internet- and Intranet-related
businesses. The Internet is a world-wide network of computers designed to permit
users to share information and transfer data quickly and easily. An Intranet is
the application of World Wide Web (WWW) tools and concepts to a company's
internal documents and databases. The World Wide Web, which is a means of
graphically interfacing with the Internet, is a hyper-text based publishing
medium containing text, graphics, interactive feedback mechanisms, and links
within WWW documents and to other WWW documents. The Fund usually invests at
least 65% of its assets in equity securities (including common stocks, preferred
stocks, and securities convertible into these stocks, such as warrants and
convertible bonds) of companies of any size that derive at least 50% of their
revenues, expenses, or profits from the research, design, development,
manufacturing, or distribution of products, processes, or services for use with
Internet- or Intranet-related businesses. Some examples of these companies
include providers of broad-band Internet access, web site content, Internet
software, and electronic commerce. The portfolio manager identifies these
companies by looking for several characteristics including strong revenue
growth, overall financial strength, competitive advantages (for example,
dominant market share), and effective management (for example, high return on
invested capital). The portfolio manager can invest in futures and options
transactions for hedging and risk management purposes. Also, the Fund writes put
and call options. This means that the Fund sells an option to another party to
either sell a stock to (put) or buy a stock from (call) the Fund at a
predetermined price in the future. The portfolio manager's decision to engage in
this hedging strategy will reflect the manager's judgment that writing an option
on a stock will provide value to the Fund and its shareholders. The Fund may
also invest up to 35% of its net assets in debt obligations, including
intermediate- to long-term corporate or U.S. government debt securities. To a
limited extent, the Fund may also invest in foreign securities. The portfolio
manager may also invest without limitation in cash or cash-type securities
(high-quality, short-term debt securities issued by corporations, financial
institutions, the U.S. government, or foreign governments) as a temporary
defensive position during adverse market, economic, or political conditions if
the Fund's manager determines that a temporary defensive position is advisable.
INVESTMENT RISKS
- ----------------
The Strong Internet Fund invests primarily in equity securities (including
common stocks, preferred stocks, and securities convertible into these stocks,
such as warrants and convertible bonds) of companies of any size that derive at
least 50% of their revenues, expenses, or profits from the research, design,
development, manufacturing, or distribution of products, processes, or services
for use with Internet- or Intranet-related businesses. The principal risks of
investing in the Fund are those associated with investing in the stock market
("Stock Risks"). Stock Risks refers to the fact that stock values experience
periods of rising prices and periods of declining prices therefore, a
shareholder may receive more or less money than originally invested. The Fund is
also subject to "Foreign Securities Risks," because the Fund may invest up to
25% of its assets in foreign securities. Foreign investments involve additional
risks from domestic
C-1
investments including less liquidity, currency-rate fluctuations, political and
economic instability, differences in financial reporting standards, and less-
strict regulation of securities markets. The Fund is subject to "Futures and
Options Risks," because the Fund uses the futures and options to manage risk or
hedge against market volatility. Futures and options may not always be
successful hedges and may not successfully manage risk. Futures and options
prices can be highly volatile and using them could lower the Fund's total
return, and the potential loss from the use of futures can exceed the Fund's
initial investment in such contracts.
The Fund is also subject to "Internet Risks" because the Fund concentrates its
assets in companies engaged in Internet- and Intranet-related businesses. The
value of these companies is vulnerable to rapidly changing technology, extensive
government regulation, and relatively high risks of obsolescence caused by
scientific and technological advances. These companies face greater risk of
business failure. Also, the securities of these companies generally have higher
price/earning (P/E) ratios than the P/E ratios of the general stock market. A
P/E ratio describes the relationship between the price of a stock and its
earnings per share during the last 12 months. The higher the P/E, the more
earnings growth investors are expecting. However, stocks with a higher P/E are
considered riskier than stocks with a lower P/E, lower growth, and proven
earnings. As a result of all of these factors, the Fund's shares are subject to
abrupt or erratic price movements and are likely to fluctuate in value more than
those of a fund investing in a broader range of securities. As a nondiversified
fund, the Fund may take larger positions in individual stocks and is therefore
also subject to "Nondiversified Portfolio Risk." As a result, the shares of the
Fund are likely to fluctuate in value more than those of a fund investing in a
broader range of securities. The Fund is also subject to "Not Insured Risk,"
meaning that an investment in the Fund is not a bank deposit and it is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.
In addition, the Fund is subject to "Small and Medium Companies Risk." Small-
and medium-capitalization companies may experience more volatility than larger,
more established companies because they often have narrower markets, more
limited managerial and financial resources, and face a greater risk of business
failure. The Fund is also subject to "Writing Options Risk" because the Fund
writes put and call options. In doing so, the Fund receives fees for writing the
options but is exposed to losses due to adverse changes in the value of the
underlying asset against which the option was written. Although writing options
can serve as a limited or partial hedge against adverse market movements,
whether or not a hedging strategy is successful depends on a variety of factors,
particularly the ability of the Fund's managers to predict movements of the
price of the hedged stock. Transactions involving written options may also
include elements of leverage and could magnify the Fund's losses. In addition,
using options in this manner may reduce the Fund's opportunity for investment
gain. To the extent required, the Fund will cover the financial exposure created
by writing put and call options either by the use of offsetting options or
futures or by designating liquid assets on its books and records. Finally, due
to its investment strategy, the Fund may buy and sell securities frequently,
thereby resulting in higher transaction costs and additional capital gains tax
liabilities.
FUND PERFORMANCE
- ----------------
The following return information illustrates the performance of the Internet
Fund's Investor Class shares, which is one indication of the risks of investing
in the Fund. Please keep in mind that the past performance does not represent
how the Fund will perform in the future. The information assumes that you
reinvested all dividends and distributions.
C-2
Calendar Year Total Returns
- -------------------------------------
Year Internet Fund
- -------------------------------------
2000 -44.5%
- -------------------------------------
Best and Worst Quarterly Performance
(During the periods shown above)
Best quarter return Worst quarter return
- -----------------------------------------------------------------
14.6% (1st Q 2000) -45.9% (4th Q 2000)
Average Annual Total Returns
As of 12-31-00
Fund/Index 1-year Since Fund Inception/(1)/
Internet -44.50% -44.50%
S&P 500 Index/(2)/ -9.11% -9.11%
Lipper Science & Technology
Funds Index/(3)/ -30.27% -30.27%
/(1)/ The Internet Fund commenced operations on December 31, 1999.
/(2)/ The S&P 500 Composite Stock Price Index (S&P 500 Index) is an unmanaged
index generally representative of the U.S. stock market.
/(3)/ The Lipper Science & Technology Funds Index is an equally weighted
performance index of the largest qualifying funds in this Lipper category.
FEES AND EXPENSES
- -----------------
Shareholder Fees
There are no sales charges on purchases, exchanges, or redemptions. Shares of
the Internet Fund held for less than six months are subject to a redemption fee
of 1.00%. Effective June 15, 2001, shares held for less than one month will be
subject to a redemption fee of 1.00%. Redemption fees are paid directly to the
Fund.
Annual Operating Expenses
(as a percentage of average net assets)
This table describes the Fund expenses that you may pay indirectly if you hold
Fund shares.
- --------------------------------------------------------------------------------
Total Annual Fund
Fund Management Fees Other Expenses Operating Expenses
- --------------------------------------------------------------------------------
Strong Internet Fund 1.20% 0.80% 2.00%
- --------------------------------------------------------------------------------
Example
The example below is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the Fund and reinvest all dividends and distributions for
the time periods indicated. The example also assumes that your investment has a
5% return each year and that the Fund's Total Annual
C-3
Operating Expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions, you would pay the following expenses if you
redeem all of your shares at the end of the time periods indicated:
- --------------------------------------------------------------------------------
Fund 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
Strong Internet Fund $203 $627 $1,078 $2,327
- --------------------------------------------------------------------------------
The example above should not be considered a representation of future expenses.
Actual expenses may be greater or less than those shown.
PORTFOLIO MANAGER
- -----------------
The following individual is the manager of the Internet Fund:
James W.M. Houlton manages the Internet Fund. He has over ten years of
investment experience. Mr. Houlton joined Strong in July 1994 as an equity
research analyst and has managed the Internet Fund since its inception in
December 1999. He has been an equity Portfolio Manager since December 1999. From
January 1999 to December 1999, he was a senior equity research analyst. From
July 1994 to December 1998, he was an equity research analyst. From June 1990 to
July 1994, Mr. Houlton was a quantitative research analyst at Kemper Financial
Services. From June 1988 to June 1990, he worked at Zacks Investment Research
where he began his investment career. Mr. Houlton received his bachelor's degree
in economics from University of Cincinnati in 1983 and his master's of business
administration in finance and management from University of Cincinnati in 1988.
PURCHASE, EXCHANGE, AND REDEMPTION PROCEDURES
- ---------------------------------------------
Purchase Procedures
Investor Class shares of the Fund may be purchased directly from Strong by mail
or wire, and if elected, by phone or through the Internet. Investor Class shares
may also be purchased through broker-dealers or other intermediaries. The
minimum initial purchase requirement is $2,500 for regular accounts, $500 for
Education IRA accounts, $250 for individual retirement accounts, $250 for
custodial accounts for minors, and the lesser of $250 or $25 per month for
certain retirement plan accounts (e.g., SIMPLE-IRA, SEP-IRA, 403(b)(7) plans,
Keogh, Pension Plans, and Profit Sharing accounts). Shares may also be purchased
through regular deductions from a bank account (e.g., Automatic Investment
Plan), however the minimum initial purchase requirements must still be met for
the Funds. Whether purchases are made by mail, phone, wire, Internet, or
Automatic Investment Plan, subsequent purchases must be for a minimum of $50.
Fund shares may be purchased on any business day at a price per share equal to
the net asset value ("NAV") next determined after SCM receives a purchase order
and payment. The NAV of each Fund or class is generally calculated as of the
close of regular trading on the New York Stock Exchange ("NYSE") (normally, 3:00
p.m. Central Time). The NAV per share of a Fund or class is calculated by
dividing the total market value of the investments and other assets attributable
to that Fund or class, less any liabilities attributable to that Fund or class,
by the total outstanding shares of that Fund or class. SCM reserves the right to
refuse, change, discontinue, or temporarily suspend the purchase privilege for
any reason.
C-4
Exchange Privileges
Shareholders may exchange shares of one Strong Fund for shares of another Strong
Fund either in writing or, if elected, by telephone or through the Internet on
any business day, if the accounts are identically registered (with the same
name, address, and taxpayer identification number). Shareholders may submit
exchange requests directly to SCM or through its intermediaries. The exchange
price is the next NAV determined after SCM receives the exchange request.
Purchases by exchange are subject to the investment requirements and other
criteria of the fund or class purchased. SCM may require that written exchange
requests for more than $100,000 include a signature guarantee from an eligible
guarantor (a notarized signature is not sufficient). An exchange of shares of
one Strong Fund for those of another Strong Fund is considered a sale
(redemption) and a purchase of shares for several purposes, including tax
purposes. The Internet Fund charges an early redemption fee of 1.00%. SCM
reserves the right to refuse, change, discontinue, or temporarily suspend the
exchange privilege for any reason.
Redemption Procedures
Shareholders may redeem shares on any business day by mail or, if elected, by
telephone or through the Internet. The redemption price will be the next NAV
determined after SCM receives the redemption request. Shareholders may submit
redemption requests directly to SCM or through their intermediaries. Redemptions
may also be made through a Systematic Withdrawal Plan from the Fund. If a
written redemption request exceeds $100,000, SCM may require a signature
guarantee from an eligible guarantor (a notarized signature is not sufficient).
If a shareholder's account balance drops below the investment minimum, SCM
reserves the right to close the account. However, the shareholder will be given
at least 60-days' notice to give him/her time to add to his/her account and
avoid an involuntary redemption. The Internet Fund also charges a 1.00% fee on
redemptions (including exchanges) of fund shares held for less than six months.
Effective June 15, 2001, the 1.00% fee will be charged on redemptions held for
less than one month. SCM reserves the right to refuse, change, discontinue, or
temporarily suspend the telephone or Internet redemption privilege for any
reason.
Redemptions In Kind
SCM reserves the right to pay redemption proceeds in kind (i.e., a payment in
portfolio securities rather than cash) for redemption requests that are in
excess of the lesser of (1) $250,000 or (2) 1% of the Fund's assets. Generally,
SCM uses redemption in kind when large redemption requests may cause harm to the
Fund and its shareholders.
DIVIDENDS AND DISTRIBUTIONS
- ---------------------------
To the extent they are available, the Internet Fund pays dividends from net
investment income and distributes capital gains annually. Shareholders will
receive dividends and distributions in the form of additional shares of the Fund
or class that paid them unless they have elected to receive payment in cash or
have them invested in another Strong Fund.
C-5
TAX CONSEQUENCES
- ----------------
Taxable Distributions
Any net investment income and net short-term capital gains distributions you
receive are generally taxable as ordinary dividend income at your income tax
rate. Distributions of net capital gains are generally taxable as long-term
capital gains. This is generally true no matter how long you have owned your
shares and whether you reinvest your distributions or take them in cash. You may
also have to pay taxes when you exchange or sell shares if your shares have
increased in value since you bought them.
Return of Capital
If the Fund's distributions exceed its earnings and profits, all or a portion of
those distributions may be treated as a return of capital to you. A return of
capital may be treated as a sale of your shares. It may also reduce the cost
basis of your shares.
FINANCIAL HIGHLIGHTS
- --------------------
This information describes investment performance of the Investor Class shares
of the Internet Fund for the period shown. Certain information reflects
financial results for a single Investor Class share outstanding for the entire
period. "Total Return" shows how much an investment in the Investor Class shares
of the Fund would have increased (or decreased) during the period, assuming you
had reinvested all dividends and distributions. These figures have been audited
by PricewaterhouseCoopers LLP, whose report, along with the Fund's financial
statements, is included in the Fund's annual report.
STRONG INTERNET FUND
- --------------------------------------------
Selected Per-Share Data(a) Dec. 31, 2000
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 10.00
Income From Investment Operations:
Net Investment Loss (0.16)
Net Realized and Unrealized Losses on Investments (4.29)
- ------------------------------------------------------------- ------------
Total from Investment Operations (4.45)
Less Distributions:
From Net Investment Income --
- ------------------------------------------------------------- ------------
Total Distributions --
- -------------------------------------------- ------------
Net Asset Value, End of Period $ 5.55
============================================================= ============
Ratios and Supplemental Data
- ------------------------------------------------------------- ------------
Total Return - 44.5%
C-6
Net Assets, End of Period (In Millions) $ 50
Ratio of Expenses to Average Net Assets 2.0%
Ratio of Net Investment Loss to Average Net Assets (1.8%)
Portfolio Turnover Rate 437.5%
/(a)/ Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- -------------------------------------------
(The following is an excerpt from the Fund's Annual Report for the year ended
December 31, 2000.)
Strong Internet Fund
- --------------------------------------------------------------------------------
Your Fund's Approach
The Strong Internet Fund seeks capital growth. It invests primarily in companies
engaged in Internet- and Intranet-related businesses. Under normal market
conditions, the Fund will invest at least 65% of its assets in equity securities
of companies of any size that derive at least 50% of their revenues, expenses,
or profits from the research, design, development, manufacturing, or
distribution of products, processes, or services for use with Internet- or
Intranet-related businesses. Some examples of these companies include providers
of broadband Internet access, web-site content, Internet software, and
electronic commerce. To identify these companies, the Funds manager generally
looks for several characteristics, including strong revenue growth, overall
financial strength, competitive advantages, and effective management.
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-99 to 12-31-00
The Strong Internet Fund S&P 500 Index* Lipper Science & Technology
Funds Index*
Dec 99 $10,000 $10,000 $10,000
Jan 00 $ 9,480 $ 9,317 $ 9,895
Feb 00 $11,980 $ 9,317 $12,560
Mar 00 $11,460 $10,229 $12,178
Apr 00 $ 9,390 $ 9,921 $10,756
May 00 $ 8,020 $ 9,717 $ 9,458
Jun 00 $ 9,710 $ 9,957 $10,892
Jul 00 $ 9,450 $ 9,801 $10,316
Aug 00 $10,950 $10,410 $11,881
Sep 00 $10,260 $ 9,861 $10,663
Oct 00 $ 8,940 $ 9,819 $ 9,493
Nov 00 $ 6,120 $ 9,045 $ 7,046
Dec 00 $ 5,550 $ 9,089 $ 6,973
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 S&P
500 Index (S&P 500) and the Lipper Science & Technology Funds Index. Results
include the reinvestment of all dividends and capital gains distributions.
Performance is historical and does not represent future results. Investment
returns and principal value vary, and you may have a gain or loss when you sell
shares.
- --------------------------------------------------------------------------------
C-7
AVERAGE ANNUAL
TOTAL RETURN/1/
As of 12-31-00
1-year -44.50%
Since Inception -44.50%
(12-31-99)
Equity funds are volatile investments and should only be considered for long-
term goals.
- --------------------------------------------------------------------------------
Q: How did your Fund perform?
A: The Strong Internet Fund's annual performance on an absolute basis was
disappointing, when being compared to our broad-based benchmark, the S&P
500 Index,* which returned -9.11%. However, the Fund was able to outperform
its performance benchmark, the Inter@tive Week Internet Index,* which
returned -51.23%. This above-average performance was achieved through a
disciplined approach to valuation, avoidance of the dot-com mania, and
stock blow-ups. The Fund's NAV peaked on March 9, in the midst of the
dot-com mania. After the ensuing correction in technology and
Internet-related stocks, the Fund bounced back toward its prior highs in
the middle of April, led by Internet infrastructure stocks. The cumulative
effect of interest-rate hikes by the Federal Reserve, however, led to
further correction.
The Fund found its footing in mid-May, as valuations in
business-to-business e-commerce stocks appeared to be bottoming. The Fund
experienced a third-quarter rally based on strength in these stocks,
recovering more than half of the correction. However, with no interest-rate
relief in sight, fears of a weakening economy, and concerns about corporate
earnings, the Fund then began a downward trend that bottomed on December
21.
Q: What market conditions, market events, and other factors impacted your
Fund's performance?
A: The performance of the Fund went through four seasons, but not in the
typical order. The first quarter was summer, as the valuations of
new-economy Internet stocks set new record-high temperatures and
overheated. The second quarter was the fall. Fears of accelerating wage and
price inflation put a chill in the air and in the hearts of technology and
Internet investors as the new economy corrected and gave way to the more
defensive old-economy stocks.
The third quarter represented spring. From more reasonable valuation
levels, the Internet infrastructure and business-to-business e-commerce
stocks staged a recovery as the prospects for these companies warmed up.
The fourth quarter felt like winter. Concerns ranging from higher energy
prices, an obviously weakening economy, apparent apathy from the Federal
Reserve, and uncertainty over who would be our next President, resulted in
investor sentiment readings dropping below freezing. The straw that broke
the back of the Nasdaq and Internet stocks was Indecision 2000, the
Presidential election. Because the contest was drawn out into December, the
Federal Reserve couldn't move even if it
C-8
had wanted to, as any move would have been interpreted as politically
motivated. So as we all watched the political drama unfold, the economy was
getting progressively worse. The uncertainty resulted in a massive
correction in Nasdaq and Internet stocks, bringing the valuations back
toward more normal historical levels.
Q: What investment strategies and techniques impacted your Fund's performance?
A: We look to own the highest-quality Internet-related companies available. We
use a combination of quantitative and qualitative factors to narrow down a
list of attractive investment candidates, and then dig deeper into the
fundamentals of the business with an emphasis on valuation relative to
other companies in its peer group. We complement our bottom-up approach
with a big-picture, thematic trend analysis looking for large market
opportunities where demand for innovative products or services vastly
outstrips the supply. Using this approach, we work hard to discover the
leading companies or first movers among Internet-related companies. In this
way, we hope to own the future blue-chips of the Internet. This emphasis on
quality helped us throughout the year.
For example, one group of stocks that reflects an appealing macro trend is
in Internet security, which has been a top-performing group for us
throughout the year. The key leader in this group is Check Point Software
Technologies.
At the beginning of 2000, we carefully examined the valuations of the
business-to-consumer (B2C) portal companies such as America Online and
Yahoo. We determined they were overvalued, and underweighted this group
until after they and many others had gone through the valuation correction
of the second quarter. We also benefited by underweighting the business-to
business (B2B) e-commerce stocks during the second quarter. We started
accumulating B2B e-commerce companies in the May-June time frame once the
valuations became more reasonable. Leaders in this group included Ariba, i2
Technologies, and Commerce One. As these stocks rebounded strongly during
the third quarter, we were able to increase our lead relative to our
performance benchmark, the Inter@tive Week Internet Index,* while enabling
us to make up some ground compared to our broad-based benchmark the, S&P
500 Index.*
Q: What is your future outlook?
A: We expect further interest-rate cuts through mid-year as the Fed tries to
engineer a soft landing for the U.S. economy. Also, there are renewed
prospects of tax cuts with the coming of the Bush administration. Stocks
typically do well with these two macroeconomic tailwinds.
James W.M. Houlton
Portfolio Manager
/1/ The Fund's performance, especially for very short time periods, should not
be the sole factor in making your investment decision. The fund has a
redemption fee of 1.00% against shares held for fewer than six months.
The Fund concentrates its assets in companies engaged in Internet- and
Intranet-related activities. As a result, the Fund shares are likely to
fluctuate in value more than those of a fund investing in a broader range
of securities.
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market. The Lipper Science & Technology Funds Index is an equally
weighted performance index of the largest qualifying funds in this Lipper
category. The Inter@ctive Week Internet Index is an unmanaged index
generally representative of companies involved with providing digital
interactive services, developing and marketing digital interactive
software, and manufacturing digital interactive hardware. Source of the S&P
index data is Standard & Poors Micropal. Source of the Lipper index data is
Lipper Inc. Source of Inter@ctive index is Bloomberg.
C-9
Annex D
-------
Proposed Subadvisory Agreement with Sloate, Weisman, Murray and Company, Inc.
AMENDED AND RESTATED
--------------------
SUBADVISORY AGREEMENT
---------------------
THIS AGREEMENT is made and entered into as of December 28, 1995, and as
amended and restated as of July __, 2001, between STRONG CAPITAL MANAGEMENT,
INC. (the "Adviser"), a Wisconsin corporation registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and SLOATE, WEISMAN,
MURRAY & COMPANY, INC. (the "Subadviser"), a Delaware corporation registered
under the Advisers Act.
W I T N E S S E T H:
WHEREAS, Strong Value Fund (the "Fund"), a series of the Strong Equity
Funds, Inc., a Wisconsin corporation, is registered with the U.S. Securities and
Exchange Commission (the "Commission") as a series fund of an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act");
WHEREAS, the Fund has, pursuant to an Advisory Agreement with the Adviser
dated as of October 20, 1995 (the "Advisory Agreement"), retained the Adviser to
act as investment adviser for and to manage its assets;
WHEREAS, the Advisory Agreement permits the Adviser to delegate certain of
its duties under the Advisory Agreement to other investment advisers, subject to
the requirements of the Investment Company Act; and
WHEREAS, the Adviser desires to retain the Subadviser as subadviser for the
Fund to act as investment adviser for and to manage the Fund's Investments (as
defined below) and the Subadviser desires to render such services.
NOW, THEREFORE, the Adviser and Subadviser do mutually agree and promise as
follows:
1. Appointment as Subadviser. The Adviser hereby retains the Subadviser
-------------------------
to act as investment adviser for and to manage certain assets of the Fund
subject to the supervision of the Adviser and the Board of Directors of the Fund
and subject to the terms of this Agreement; and the Subadviser hereby accepts
such employment. In such capacity, the Subadviser shall be responsible for the
Fund's investments.
D-1
2. Duties of Subadviser.
--------------------
(a) Investments. The Subadviser is hereby authorized and directed and
-----------
hereby agrees, subject to the stated investment policies and restrictions of the
Fund as set forth in the Fund's current prospectus and statement of additional
information as currently in effect and as supplemented or amended from time to
time (collectively referred to hereinafter as the "Prospectus") and subject to
the directions of the Adviser and the Fund's Board of Directors, to purchase,
hold and sell investments for the account of the Fund (hereinafter
"Investments") and to monitor on a continuous basis the performance of such
Investments.
(b) Allocation of Brokerage. The Subadviser is authorized, subject to
-----------------------
the supervision of the Adviser and the Board of Directors of the Fund, to place
orders for the purchase and sale of the Fund's Investments with or through such
persons, brokers or dealers, and to negotiate commissions to be paid on such
transactions in accordance with the Fund's policy with respect to brokerage as
set forth in the Prospectus. The Subadviser may, on behalf of the Fund, pay
brokerage commissions to a broker which provides brokerage and research services
to the Subadviser in excess of the amount another broker would have charged for
effecting the transaction, provided (i) the Subadviser determines in good faith
that the amount is reasonable in relation to the value of the brokerage and
research services provided by the executing broker in terms of the particular
transaction or in terms of the Subadviser's overall responsibilities with
respect to the Fund and the accounts as to which the Subadviser exercises
investment discretion, (ii) such payment is made in compliance with Section
28(e) of the Securities Exchange Act of 1934, as amended, and any other
applicable laws and regulations, and (iii) in the opinion of the Subadviser, the
total commissions paid by the Fund will be reasonable in relation to the
benefits to the Fund over the long term. It is recognized that the services
provided by such brokers may be useful to the Subadviser in connection with the
Subadviser's services to other clients. On occasions when the Subadviser deems
the purchase or sale of a security to be in the best interests of the Fund as
well as other clients of the Subadviser, the Subadviser, to the extent permitted
by applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be sold or purchased in order to obtain the most
favorable price or lower brokerage commissions and efficient execution. In such
event, allocation of securities so sold or purchased, as well as the expenses
incurred in the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
(c) Securities Transactions. The Subadviser and any affiliated person
-----------------------
of the Subadviser will not purchase securities or other instruments from or sell
securities or other instruments to the Fund; provided, however, the Subadviser
-------- -------
may purchase securities or other instruments from or sell securities or other
instruments to the Fund if such transaction is permissible under applicable laws
and regulations, including, without limitation, the Investment Company Act and
the Advisers Act and the rules and regulations promulgated thereunder.
The Subadviser agrees to observe and comply with Rule 17j-1 under the
Investment Company Act and the Fund's Code of Ethics, as the same may be amended
from time to time (or, in the case of the Fund's Code of Ethics, to adopt or
have adopted a Code of Ethics that complies in all material respects with the
requirements of the
D-2
Fund's Code of Ethics). The Subadviser will make available to the Adviser or the
Fund at any time upon request, including facsimile without delay, during any
business day any reports required to be made by the Subadviser pursuant to Rule
17j-1 under the Investment Company Act.
(d) Books and Records. The Subadviser will maintain all books and
-----------------
records required to be maintained pursuant to the Investment Company Act and the
rules and regulations promulgated thereunder with respect to transactions made
by it on behalf of the Fund including, without limitation, the books and records
required by Subsections (b)(1), (5), (6), (7), (9), (10) and (11) and Subsection
(f) of Rule 31a-1 under the Investment Company Act and shall timely furnish to
the Adviser all information relating to the Subadviser's services hereunder
needed by the Adviser to keep such other books and records of the Fund required
by Rule 31a-1 under the Investment Company Act. The Subadviser will also
preserve all such books and records for the periods prescribed in Rule 31a-2
under the Investment Company Act, and agrees that such books and records shall
remain the sole property of the Fund and shall be immediately surrendered to the
Fund upon request. The Subadviser further agrees that all books and records
maintained hereunder shall be made available to the Fund or the Adviser at any
time upon request, including facsimile without delay, during any business day.
(e) Information Concerning Investments and Subadviser. From time to
-------------------------------------------------
time as the Adviser or the Fund may request, the Subadviser will furnish the
requesting party reports on portfolio transactions and reports on Investments
held in the portfolio, all in such detail as the Adviser or the Fund may
request. The Subadviser will also provide the Fund and the Adviser on a regular
basis with economic and investment analyses and reports or other investment
services normally available to institutional or other clients of the Subadviser.
The Subadviser will make available its officers and employees to meet
with the Fund's Board of Directors at the Fund's principal place of business on
due notice to review the Investments of the Fund (through quarterly telephone
presentations and, if necessary, in-person presentation once per year). The
Subadviser further agrees to inform the Fund and the Adviser on a current basis
of changes in investment strategy, tactics or key personnel.
The Subadviser will also provide such information or perform such
additional acts as are customarily performed by a subadviser and may be required
for the Fund or the Adviser to comply with their respective obligations under
applicable laws, including, without limitation, the Internal Revenue Code of
1986, as amended (the "Code"), the Investment Company Act, the Advisers Act, the
Securities Act of 1933, as amended (the "Securities Act") and any state
securities laws, and any rule or regulation thereunder.
(f) Custody Arrangements. The Subadviser acknowledges receipt of the
--------------------
Custody Agreement for the Fund, dated November 1, 1995, and amended on December
28, 1995 to include the Fund, and agrees to comply at all times with all
requirements relating to such arrangements. The Subadviser shall provide the
Adviser, and the Adviser shall provide the Fund's custodian, on each business
day with information relating to all transactions concerning the Fund's assets.
D-3
(g) Adviser Representatives. The Subadviser shall include at least
-----------------------
two (2) representatives of the Adviser, as specified by the Adviser, in the list
of individuals authorized to give directions (without restrictions of any kind)
to brokers and dealers utilized by the Subadviser to execute portfolio
transactions for the Fund and custodians or depositories that hold securities or
other assets of the Fund at any time. Subadviser shall have no liability or
responsibility for the actions of such representatives of the Adviser. For so
long as this Agreement is in effect, the Adviser will not issue any instructions
under this provision without prior notice to the Subadviser.
(h) Compliance with Applicable Laws and Governing Documents. The
-------------------------------------------------------
Subadviser agrees that in all matters relating to its performance under this
Agreement, the Subadviser and its directors, officers, partners, employees and
interested persons, will act in accordance with all applicable laws, including,
without limitation, the Investment Company Act, the Advisers Act, the Code, the
Public Utility Holding Company Act of 1935, the Commodity Exchange Act, as
amended (the "CEA"), if applicable, and state securities laws, and any rules and
regulations promulgated thereunder. The Subadviser further agrees to act in
accordance with the Fund's Articles of Incorporation, By-Laws, currently
effective registration statement under the Investment Company Act, including any
amendments or supplements thereto, and Notice of Eligibility under Rule 4.5 of
the CEA, if applicable, (collectively, "Governing Instruments and Regulatory
Filings") and any instructions or directions of the Fund, its Board of Directors
or the Adviser.
The Subadviser acknowledges receipt of the Fund's Governing
Instruments and Regulatory Filings. The Adviser hereby agrees to provide to the
Subadviser any amendments, supplements or other changes to the Governing
Instruments and Regulatory Filings as soon as practicable after such materials
become available and, upon receipt by the Subadviser, the Subadviser will act in
accordance with such amended, supplemented or otherwise changed Governing
Instruments and Regulatory Filings.
(i) Fund's Name; Adviser's Name. The Subadviser agrees that it shall
have no rights of any kind relating to the Fund's name, "Strong Value Fund" or
in the name "Strong" as it is used in connection with investment products,
services or otherwise, and that it shall make no use of such names without the
express written consent of the Fund or the Adviser, as the case may be.
(j) Voting of Proxies. The Subadviser shall direct the custodian as
to how to vote such proxies as may be necessary or advisable in connection with
any matters submitted to a vote of shareholders of securities held by the Fund.
3. Services Exclusive.
------------------
(a) Exclusive Investment Advise. Except as provided in Subsection (b)
---------------------------
of this Section 3 or as otherwise agreed to in writing by the Adviser, during
the term of this Agreement, as provided in Section 14 hereof, and for a period
of two (2) years after the date the Subadviser gives notice to the Adviser of
its intention to terminate this Agreement or six (6) months after the date the
Adviser gives notice to the Subadviser of its intention to terminate this
Agreement, the Subadviser (which for purposes of this Section 3 shall also
include any successors to the Subadviser), and any person or entity
D-4
controlled by, or under common control with, the Subadviser, shall not act
as investment adviser or subadviser, or otherwise render investment advice
to, or sponsor, promote or distribute, any investment company or comparable
entity registered under the Investment Company Act or other investment fund
consisting of more than 100 investors that is offered publicly but is not
subject to the registration requirements of the Investment Company Act that
is substantially similar to the Fund (including the Fund). This provision
shall not apply to the Subadviser's existing relationship with Smith Barney
to provide investment advisory services to participants in the Smith Barney
Fiduciary Services and other Smith Barney related programs, or any similar
relationships the Subadviser may in the future enter into.
(b) Exceptions. The Subadviser may, except as provided in
Subsection (a) of this Section 3, act as investment adviser for non-
investment company clients; provided, however, that such services for
others shall not in any way hinder, impair, preclude or prevent the
Subadviser from performing its duties and obligations under this Agreement
and that whenever the Fund and one or more other accounts advised by the
Subadviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with procedures that
are equitable for each account. Similarly, opportunities to sell securities
will be allocated in an equitable manner.
4. Non-Competition. The Subadviser and any person or entity
---------------
controlled by the Subadviser will not in any manner sponsor, promote or
distribute any new investment product or service substantially similar to the
Fund, as such phrase is used in Section 3 hereof, for the period that the
Subadviser is required to provide exclusive services to the Fund pursuant to
Section 3 hereof, without the prior written consent of the Adviser. In addition,
the Subadviser and any person or entity controlled by the Subadviser will not in
any manner sponsor, promote or distribute any other mutual funds that compete
with other Funds in the Strong Family of Funds for the period of this Agreement,
without the prior written consent of the Adviser.
5. Independent Contractor. In the performance of its duties
----------------------
hereunder, the Subadviser is and shall be an independent contractor and unless
otherwise expressly provided herein or otherwise authorized in writing, shall
have no authority to act for or represent the Fund or the Adviser in any way or
otherwise be deemed an agent of the Fund or the Adviser.
6. Compensation. The Adviser shall pay to the Subadviser a fee for
------------
its services hereunder(the "Subadvisory Fee") computed as follows, based on the
net asset value of the Fund:
(a) Fee Rate. The Subadvisory Fee shall be 0.60% of the Fund's
--------
average daily net asset value on the first $74.2 million (this amount being
"base" net assets), 0.50% of the Fund's average daily net asset value on
net assets from base net assets to $300 million in the Fund, and 0.40% of
the Fund's average daily net asset value on net assets in excess of $300
million.
In connection with subsections (a)(i) and (ii) hereof, Subadviser
acknowledges and agrees that the Adviser may waive all or any portion of
its management fee at such times and for such periods of time as it
determines in its sole and absolute discretion. In the event of a partial
waiver, the Subadviser's fee shall be reduced pro rata.
D-5
The Adviser and the Subadviser shall share, in proportion to the fees they
receive from the Fund, in the amount of payments the Adviser is obligated
to make to third party intermediaries who provide various administrative
services for Fund shareholders who invest through them.
(b) Most Favored Client Compensation Disclosure. In the event
-------------------------------------------
the Subadviser charges any of its similarly situated mutual fund advisory
or subadvisory clients on a more favorable compensation basis, the
Subadviser shall immediately notify and fully disclose to the Adviser the
nature and exact terms of such arrangement.
(c) Method of Computation; Payment. The Subadvisory Fee shall be
------------------------------
accrued for each calendar day the Subadviser renders subadvisory services
hereunder and the sum of the daily fee accruals shall be paid monthly to
the Subadviser as soon as practicable following the last day of each month,
by wire transfer if so requested by the Subadviser, but no later than eight
(8) calendar days thereafter. The daily fee accruals will be computed by
multiplying the fraction of one (1) over the number of calendar days in the
year by the annual rate as described in Subsection (a) of this Section 6
and multiplying the product by the net asset value of the Fund as
determined in accordance with the Prospectus as of the close of business on
the previous business day on which the Fund was open for business. The
Subadvisory Fee will reflect any waivers by the Adviser as described in
Subsection (a) of this Section 6.
7. Expenses. The Subadviser shall bear all expenses incurred by it
--------
in connection with its services under this Agreement and will, from time to
time, at its sole expense employ or associate itself with such persons as it
believes to be particularly fitted to assist it in the execution of its duties
hereunder.
8. Representations and Warranties of Subadviser. The Subadviser
--------------------------------------------
represents and warrants to the Adviser and the Fund as follows:
(a) The Subadviser is registered as an investment adviser under
the Advisers Act;
(b) The Subadviser has filed a notice of exemption pursuant to
Rule 4.14 under the CEA with the Commodity Futures Trading Commission (the
"CFTC") and the National Futures Association (the "NFA"), if applicable;
(c) The Subadviser is a corporation duly organized and validly
existing under the laws of the State of Delaware with the power to own and
possess its assets and carry on its business as it is now being conducted;
(d) The execution, delivery and performance by the Subadviser of
this Agreement are within the Subadviser's powers and have been duly
authorized by all necessary action on the part of its shareholders, and no
action by or in respect of, or filing with, any governmental body, agency
or official is required on the part of the Subadviser for the execution,
delivery and performance by the Subadviser of this Agreement, and the
execution, delivery and performance by the Subadviser of this Agreement do
not contravene or constitute a default under (i) any provision of
applicable law, rule or regulation, (ii) the Subadviser's governing
instruments, or (iii) any agreement, judgment, injunction, order, decree or
other instrument binding upon the Subadviser;
D-6
(e) This Agreement is a valid and binding agreement of the
Subadviser;
(f) The Subadviser and any affiliated person of the Subadviser
have not:
(i) within 10 years from the date hereof been convicted
of any felony or misdemeanor involving the purchase or sale of any
securities or arising out of the conduct as an underwriter, broker,
dealer, investment adviser, municipal securities dealer, government
securities broker, government securities dealer, transfer agent, or
entity or person required to be registered under the CEA, or as an
affiliated person, salesman, or employee of any investment company,
bank, insurance company, or entity or person required to be registered
under the CEA; or
(ii) by reason of any misconduct, been permanently or
temporarily enjoined by an order, judgment or decree of any court of
competent jurisdiction or other governmental authority from acting as
an underwriter, broker, dealer, investment adviser, municipal
securities dealer, government securities broker, government securities
dealer, transfer agent, or entity or person required to be registered
under the CEA, or an affiliated person, salesman, or employee of any
investment company, bank, insurance company, or entity or person
required to be registered under the CEA or from engaging in or
continuing any conduct or practice in connection with any such
activity or in connection with the purchase or sale of any security;
or
(iii) been a party to litigation or other adversarial
proceedings involving any former or current client that is material to
the Subadviser's business;
(g) The Form ADV of the Subadviser attached hereto as Exhibit A
is a true and complete copy of the form filed with the Commission and the
information contained therein is accurate and complete in all material
respects and does not omit to state any material fact necessary in order to
make the statements made, in light of the circumstances under which they
were made, not misleading;
(h) The Subadviser's audited financial statements attached
hereto as Exhibit B for the fiscal years ended December, 1992, 1993, and
1994 are true and complete copies of the Subadviser's financial statements,
are accurate and complete in all material respects and does not omit to
state any material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading;
(i) The Subadviser's performance figures for certain client
accounts attached hereto as Exhibit C are accurate and complete in all
material respects and do not omit to state any material fact necessary in
order to make the statements made, in light of the circumstances under
which they were made, not misleading; and
D-7
(j) The Subadviser's Code of Ethics attached hereto as Exhibit D
has been duly adopted by the Subadviser, meets the requirements of Rule
17j-1 under the Investment Company Act and such code has been complied with
and no violation has occurred.
9. Representations and Warranties of Adviser. The Adviser represents
-----------------------------------------
and warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under the
Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant to Rule
4.14 under the CEA with the CFTC and the NFA;
(c) The Adviser is a corporation duly organized and validly
existing under the laws of the State of Wisconsin with the power to own and
possess its assets and carry on its business as it is now being conducted;
(d) The execution, delivery and performance by the Adviser of
this Agreement are within the Adviser's powers and have been duly
authorized by all necessary action on the part of its shareholders, and no
action by or in respect of, or filing with, any governmental body, agency
or official is required on the part of the Adviser for the execution,
delivery and performance by the Adviser of this Agreement, and the
execution, delivery and performance by the Adviser of this Agreement do not
contravene or constitute a default under (i) any provision of applicable
law, rule or regulation, (ii) the Adviser's governing instruments, or (iii)
any agreement, judgment, injunction, order, decree or other instrument
binding upon the Adviser;
(e) This Agreement is a valid and binding agreement of the
Adviser;
(f) The Adviser and any affiliated person of the Adviser have
not:
(i) within 10 years from the date hereof been convicted
of any felony or misdemeanor involving the purchase or sale of any
securities or arising out of the conduct as an underwriter, broker,
dealer, investment adviser, municipal securities dealer, government
securities broker, government securities dealer, transfer agent, or
entity or person required to be registered under the CEA, or as an
affiliated person, salesman, or employee of any investment company,
bank, insurance company, or entity or person required to be registered
under the CEA; or
(ii) by reason of any misconduct, been permanently or
temporarily enjoined by an order, judgment or decree of any court of
competent jurisdiction or other governmental authority from acting as
an underwriter, broker, dealer, investment adviser, municipal
securities dealer, government securities broker, government securities
dealer, transfer agent, or entity or person required to be registered
under the CEA, or an affiliated person, salesman, or employee of any
investment company, bank, insurance company, or entity or person
required to be registered under the CEA or from engaging in or
continuing any conduct or
D-8
practice in connection with any such activity or in connection with
the purchase or sale of any security; or
(iii) been a party to litigation or other adversarial
proceedings involving any former or current client that is material to
the Adviser's business;
(g) The Form ADV of the Adviser attached hereto as Exhibit E is
a true and complete copy of the form filed with the Commission and the
information contained therein is accurate and complete in all material
respects and does not omit to state any material fact necessary in order to
make the statements made, in light of the circumstances under which they
were made, not misleading;
(h) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV at least 48 hours prior to the execution of this
Agreement.
10. Survival of Representations and Warranties; Duty to Update
------------------------------------------
Information. All representations and warranties made by the Subadviser and the
Adviser pursuant to Sections 8 and 9 hereof shall survive for the duration of
this Agreement and the parties hereto shall immediately notify, but in no event
later than five (5) business days, each other in writing upon becoming aware
that any of the foregoing representations and warranties are no longer true. In
addition, the Subadviser will deliver to the Adviser and the Fund copies of any
amendments, supplements or updates to any of the information provided to the
Adviser and attached as exhibits hereto within fifteen (15) days after becoming
available. Within forty-five (45) days after the end of each calendar year
during the term hereof, the Subadviser shall certify to the Adviser that it has
complied with the requirements of Rule 17j-1 under the Investment Company Act
with regard to its duties hereunder during the prior year and that there has
been no violation of the Subadviser's Code of Ethics with respect to the Fund or
in respect of any matter or circumstance that is material to the performance of
the Subadviser's duties hereunder or, if such violation has occurred, that
appropriate action was taken in response to such violation.
11. Liability and Indemnification.
-----------------------------
(a) Liability. In the absence of willful misfeasance, bad faith
---------
or negligence on the part of the Subadviser or a breach of its duties
hereunder, the Subadviser shall not be subject to any liability to the
Adviser or the Fund or any of the Fund's shareholders, and, in the absence
of willful misfeasance, bad faith or negligence on the part of the Adviser
or a breach of its duties hereunder, the Adviser shall not be subject to
any liability to the Subadviser, for any act or omission in the case of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of Investments; provided,
--------
however, that nothing herein shall relieve the Adviser and the Subadviser
-------
from any of their obligations under applicable law, including, without
limitation, the federal and state securities laws and the CEA.
(b) Indemnification. The Subadviser shall indemnify the Adviser
and the Fund, and their respective officers and directors, for any
liability and expenses, including attorneys' fees, which may be sustained
as a result of the Subadviser's willful misfeasance, bad faith, negligence,
breach of its duties hereunder or violation of applicable law, including,
without limitation, the federal and state securities laws or the CEA. The
Adviser shall indemnify the Subadviser and its officers and directors, for
any liability and expenses, including attorneys' fees, which may be
sustained as a result of the
D-9
Adviser's willful misfeasance, bad faith, negligence, breach of its duties
hereunder or violation of applicable law, including, without limitation,
the federal and state securities laws or the CEA.
12. Duration and Termination.
------------------------
(a) Duration. This Agreement shall be submitted for approval by
--------
shareholders of the Fund at the first meeting of shareholders of the Fund
following the effective date of its Registration Statement on Form N-1A
covering the initial offering of shares of the Fund. This Agreement shall
continue in effect for a period of two years from the date hereof, subject
thereafter to being continued in force and effect from year to year if
specifically approved each year by either (i) the Board of Directors of the
Fund, or (ii) by the affirmative vote of a majority of the Fund's
outstanding voting securities. In addition to the foregoing, each renewal
of this Agreement must be approved by the vote of a majority of the Fund's
directors who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of
voting on such approval. Prior to voting on the renewal of this Agreement,
the Board of Directors of the Fund may request and evaluate, and the
Subadviser shall furnish, such information as may reasonably be necessary
to enable the Fund's Board of Directors to evaluate the terms of this
Agreement.
(b) Termination. Notwithstanding whatever may be provided herein
-----------
to the contrary, this Agreement may be terminated at any time, without
payment of any penalty:
(i) By vote of a majority of the Board of Directors of
the Fund, or by vote of a majority of the outstanding voting
securities of the Fund, or by the Adviser, in each case, upon sixty
(60) days' written notice to the Subadviser;
(ii) By the Adviser upon breach by the Subadviser of any
representation or warranty contained in Section 8 hereof, which shall
not have been cured during the notice period, upon twenty (20) days
written notice;
(iii) By the Adviser immediately upon written notice to the
Subadviser if the Subadviser becomes unable to discharge its duties
and obligations under this Agreement; or
(iv) By the Subadviser upon 180 days written notice to the
Adviser and the Fund.
This Agreement shall terminate automatically in the event of its assignment
(as such term is defined in the Investment Company Act).
13. Duties of the Adviser. The Adviser shall continue to have
---------------------
responsibility for all services to be provided to the Fund pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement. Nothing contained in this Agreement shall
obligate the Adviser to provide any funding or other support for the purpose of
directly or indirectly promoting investments in the Fund.
D-10
14. Amendment. This Agreement may be amended by mutual consent of the
---------
parties, provided that the terms of each such amendment shall be approved by the
Board of Directors of the Fund or by a vote of a majority of the outstanding
voting securities of the Fund. If such amendment is proposed in order to comply
with the recommendations or requirements of the Commission or state regulatory
bodies or other governmental authority, or to expressly obtain any advantage
under federal or state or non-U.S. laws, the Adviser shall notify the Subadviser
of the form of amendment which it deems necessary or advisable and the reasons
therefor, and if the Subadviser declines to assent to such amendment, the
Adviser may terminate this Agreement forthwith.
15. Confidentiality. Subject to the duties of the Adviser, the Fund
---------------
and the Subadviser to comply with applicable law, including any demand of any
regulatory or taxing authority having jurisdiction, the parties hereto shall
treat as confidential all information pertaining to the Fund and the actions of
the Subadviser, the Adviser and the Fund in respect thereof.
16. Notice. Any notice that is required to be given by the parties to
------
each other under the terms of this Agreement shall be in writing, delivered, or
mailed postpaid to the other party, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Adviser:
Strong Capital Management, Inc.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
Attention: General Counsel
Facsimile: (414) 359-3948
(b) If to the Subadviser:
Sloate, Weisman, Murray & Company, Inc.
540 Madison Avenue
New York, New York 10022
Attention: Ms. Laura Sloate
Facsimile: (212) 593-3279
(c) If to the Fund:
Strong Value Fund
c/o Strong Capital Management, Inc.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
Attention: General Counsel
Facsimile: (414) 359-3948
D-11
17. Governing Law; Jurisdiction. This Agreement shall be governed by
---------------------------
and construed in accordance with the internal laws of the State of Wisconsin and
the Subadviser consents to the exclusive jurisdiction of courts, both federal
and state, and venue in Wisconsin, with respect to any dispute arising under or
in connection with this Agreement.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall together constitute one and the same
instrument.
19. Captions. The captions herein are included for convenience of
--------
reference only and shall be ignored in the construction or interpretation
hereof.
20. Severability. If any provision of this Agreement remainder of the
------------
Agreement shall not be affected adversely and shall remain in full shall be held
or made invalid by a court decision or applicable law, the force and effect.
21. Certain Definitions.
-------------------
(a) "business day." As used herein, business day means any
customary business day in the United States on which the New York Stock
Exchange is open.
(b) Miscellaneous. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the Investment Company Act shall be resolved by
reference to such term or provision of the Investment Company Act and to
interpretations thereof, if any, by the U.S. courts or, in the absence of
any controlling decisions of any such court, by rules, regulation or order
of the Commission validly issued pursuant to the Investment Company Act.
Specifically, as used herein, "investment company," "affiliated person,"
"interested person," "assignment," "broker," "dealer" and "affirmative vote
of the majority of the Fund's outstanding voting securities" shall all have
such meaning as such terms have in the Investment Company Act. The term
"investment adviser" shall have such meaning as such term has in the
Advisers Act and the Investment Company Act, and in the event of a conflict
between such Acts, the most expansive definition shall control. In
addition, where the effect of a requirement of the Investment Company Act
reflected in any provision of this Agreement is relaxed by a rule,
regulation or order of the Commission, whether of special or general
application, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
D-12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
STRONG CAPITAL MANAGEMENT, INC.
By: ___________________________________
Name:
Title:
Attest: ___________________________________
Name:
Title:
SLOATE, WEISMAN, MURRAY & COMPANY, INC.
By: ___________________________________
Name:
Title:
Attest: ___________________________________
Name:
Title:
D-13
VOTE BY TOUCH-TONE PHONE OR THROUGH THE INTERNET
CALL TOLL-FREE: 1-888-221-0697 OR VISIT WWW.PROXY.STRONG.COM
[FUND NAME]
PROXY CARD FOR ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby revokes all previous proxies and constitutes and appoints
Elizabeth N. Cohernour, Cathleen A. Ebacher and Susan A. Hollister as proxies,
each with power to act without the other, and with power to appoint her
substitute, and hereby authorizes them to represent and to vote, as designated
on the reverse side, all shares of stock of the above-referenced fund (the
"Fund") which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Fund ("Annual Meeting") to be held at 100 Heritage Reserve,
Menomonee Falls, WI 53051 on July 20, 2001, at 8:00 a.m., Central Time, and at
any adjournments thereof, with respect to the matters set forth on the reverse
side and described in the Notice of Annual Meeting of Shareholders and Proxy
Statement dated [May 24, 2001], receipt of which is hereby acknowledged.
DATE: _________________________, 2001
NOTE: Please sign exactly as your name appears on this Proxy Card. If joint
owners, EITHER may sign this proxy. When signing as attorney, executor,
administrator, trustee, guardian, or corporate officer, please give your full
title. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
__________________________________________________
Signature(s) (Title(s), if applicable)
================================================================================
WE NEED YOUR VOTE BEFORE JULY 20, 2001
================================================================================
PLEASE, your vote is important and as a shareholder, you are asked to be at the
Annual Meeting either in person or by proxy. If you are unable to attend the
Annual Meeting in person, we urge you to vote by proxy. You can do this in one
of three ways: by (1) completing, signing, dating, and promptly returning this
Proxy Card using the enclosed postage prepaid envelope, (2) calling our
toll-free telephone number at 1-888-221-0697, or (3) voting on the Strong web
site at www. proxy.strong.com. Your prompt voting by proxy will help assure a
quorum at the Annual Meeting and avoid additional expenses to the Fund
associated with further solicitation. Voting by proxy will not prevent you from
personally voting your shares at the Annual Meeting and you may revoke your
proxy by advising the Secretary of the Fund in writing (by subsequent proxy or
through the web site), or by telephone at 1-888-221-0697, of such revocation at
any time before the Meeting.
================================================================================
THANK YOU FOR YOUR TIME
PROXY CARD FOR ANNUAL MEETING OF SHAREHOLDERS
================================================================================
This proxy will be voted as specified. If no specification is made, this Proxy
Card will be voted in favor of the nominees and the Proposals and in the
discretion of the proxies as to any other matters that may properly come before
the Annual Meeting. Please indicate by filling in the appropriate box below.
1. To elect members to the FOR all nominees WITHHOLD
Board of Directors (except as marked to the contrary) AUTHORIZATION to vote for all
[ ] nominees [ ]
TO WITHOLD AUTHORITY FOR AN INDIVIDUAL NOMINEE STRIKE A LINE THROUGH
THE NOMINEE'S NAME IN THE LIST BELOW
Richard S. Strong Willie D. Davis William F. Vogt
Marvin E. Nevins Stanley Kritzik Neal Malicky
2. To approve the new advisory FOR [ ] AGAINST [ ] ABSTAIN [ ]
agreement as described in the
Proxy Statement.
3. To ratify the selection of FOR [ ] AGAINST [ ] ABSTAIN [ ]
Independent Auditors as
described in the Proxy
Statement.
4. Strong Technology 100 Fund FOR [ ] AGAINST [ ] ABSTAIN [ ]
Shareholders Only - To
approve a plan of
reorganization, including
an amendment to the Articles
of Incorporation of Strong
Equity Funds, Inc., as
described in the Proxy
Statement
5. Strong Value Fund FOR [ ] AGAINST [ ] ABSTAIN [ ]
Shareholders Only - To
approve a subadvisory
agreement as described in the
Proxy Statement
6. To vote upon any other
matters which may properly
come before the meeting.
================================================================================
TO BE COMPLETED AND SIGNED ON REVERSE SIDE OF CARD