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:
[ ] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
[X] 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:
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5) Total fee paid:
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* 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 FAMILY OF FUNDS
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
May 30, 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, 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 beginning on page 3 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
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 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, Strong 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. Also, 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 affect 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. 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 Heritage Money Fund
Strong Advisor Aggressive High-Yield Strong High-Yield Bond Fund
Bond Fund Strong High-Yield Municipal Bond
Strong Advisor Bond Fund Fund
Strong Advisor Common Stock Fund Strong Index 500 Fund
Strong Advisor Endeavor 20 Fund Strong International Stock Fund
Strong Advisor Focus Fund Strong International Stock Fund II
Strong Advisor Mid Cap Growth Fund Strong Internet Fund
Strong Advisor Short Duration Bond Strong Investors Money Fund
Fund Strong Large Cap Core Fund
Strong Advisor Small Cap Value Fund Strong Large Cap Growth Fund
Strong Advisor Technology Fund Strong Mid Cap Disciplined Fund
Strong Advisor U.S. Value Fund Strong Mid Cap Growth Fund II
Strong Aggressive Portfolio Strong Moderate Portfolio
Strong American Utilities Fund Strong Money Market Fund
Strong Asia Pacific Fund Strong Multi Cap Value Fund II
Strong Balanced Fund Strong Municipal Advantage Fund
Strong Balanced Stock Fund Strong Municipal Bond Fund
Strong Blue Chip Fund Strong Municipal Money Market Fund
Strong Conservative Portfolio Strong Opportunity Fund
Strong Corporate Bond Fund Strong Opportunity Fund II
Strong Discovery Fund II Strong Overseas Fund
Strong Dow 30 Value Fund Strong Short-Term Bond Fund
Strong Endeavor Fund Strong Short-Term High Yield Bond
Strong Energy Fund Fund
Strong Enterprise Fund Strong Short-Term High Yield
Strong Foreign MajorMarkets/SM/ Fund Municipal Fund
Strong Government Securities Fund Strong Short-Term Municipal Bond
Strong Growth Fund Fund
Strong Growth 20 Fund Strong Tax-Free Money Fund
Strong Growth and Income Fund Strong Technology 100 Fund
Strong U.S. Emerging Growth Fund
Strong Value Fund
Strong Wisconsin Tax-Free 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 Strong Advisor Focus Fund
Bond Fund Strong Advisor Technology Fund
Strong Advisor Endeavor 20 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 Enterprise Fund
Strong Advisor Bond Fund Strong Government Securities Fund
Strong Advisor Common Stock Fund Strong Growth 20 Fund
Strong Advisor Mid Cap Growth Fund Strong Growth Fund
Strong Advisor Short Duration Bond Strong Growth and Income Fund
Fund Strong Heritage Money Fund
Strong Advisor Small Cap Value Fund Strong High-Yield Bond Fund
Strong Advisor U.S. Value Fund Strong High-Yield Municipal Bond
Strong American Utilities Fund Fund
Strong Balanced Fund Strong Large Cap Core Fund
Strong Blue Chip Fund Strong Large Cap Growth Fund
Strong Corporate Bond Fund Strong Mid Cap Disciplined Fund
Strong Energy Fund Strong Municipal Advantage Fund
Strong Municipal Bond Fund
Strong Opportunity Fund
Strong Opportunity Fund II Strong Short-Term High Yield
Strong Short-Term Bond Fund Municipal Fund
Strong Short-Term High Yield Bond Strong Short-Term Municipal Bond
Fund 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 Board of Directors,
Elizabeth N. Cohernour
Vice President and Secretary
Menomonee Falls, Wisconsin
May 30, 2001
STRONG FAMILY OF FUNDS
(Each a "Fund," and collectively, the "Funds")
Strong Advantage Fund Strong High-Yield Bond Fund
Strong Advisor Aggressive High-Yield Strong High-Yield Municipal Bond
Bond Fund Fund
Strong Advisor Bond Fund Strong Index 500 Fund
Strong Advisor Common Stock Fund Strong International Stock Fund
Strong Advisor Endeavor 20 Fund Strong International Stock Fund II
Strong Advisor Focus Fund Strong Internet Fund
Strong Advisor Mid Cap Growth Fund Strong Investors Money Fund
Strong Advisor Short Duration Bond Strong Large Cap Core Fund
Fund Strong Large Cap Growth Fund
Strong Advisor Small Cap Value Fund Strong Mid Cap Disciplined Fund
Strong Advisor Technology Fund Strong Mid Cap Growth Fund II
Strong Advisor U.S. Value Fund Strong Moderate Portfolio
Strong Aggressive Portfolio Strong Money Market Fund
Strong American Utilities Fund Strong Multi Cap Value Fund II
Strong Asia Pacific Fund Strong Municipal Advantage Fund
Strong Balanced Fund Strong Municipal Bond Fund
Strong Balanced Stock Fund Strong Municipal Money Market Fund
Strong Blue Chip Fund Strong Opportunity Fund
Strong Conservative Portfolio Strong Opportunity Fund II
Strong Corporate Bond Fund Strong Overseas Fund
Strong Discovery Fund II Strong Short-Term Bond Fund
Strong Dow 30 Value Fund Strong Short-Term High Yield Bond
Strong Endeavor Fund Fund
Strong Energy Fund Strong Short-Term High Yield
Strong Enterprise Fund Municipal Fund
Strong Foreign MajorMarkets/SM/ Fund Strong Short-Term Municipal Bond
Strong Government Securities Fund Fund
Strong Growth Fund Strong Tax-Free Money Fund
Strong Growth 20 Fund Strong Technology 100 Fund
Strong Growth and Income Fund Strong U.S. Emerging Growth Fund
Strong Heritage Money Fund Strong Value 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 30,
2001.
1
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
"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
2
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 Shareholders of each Corporation,
Directors of each Corporation. voting separately by Corporation.
2A. To approve a new advisory agreement Shareholders of the Funds listed,
between Strong Capital Management, voting separately
Inc. and the Corporation on behalf by Fund.
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,
between Strong Capital Management, voting separately
Inc. and the Corporation on behalf by Fund.
of each of:
. Strong Asia Pacific Fund
. Strong Balanced Stock Fund
. Strong Dow 30 Value Fund
. Strong Foreign MajorMarketsSM Fund
. Strong International Stock Fund
. Strong Investors Money Fund
. 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
3
Proposal Shareholders Entitled to
-------- Vote
------------------------
2C. To approve a new advisory agreement Shareholders of the Funds
between Strong Capital Management, Inc. listed, voting separately
and the Corporation on behalf of each of: by Fund.
. 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
4
Shareholders Entitled to
Proposal Vote
-------- ------------------------
3A. To ratify the selection of Shareholders of each Fund
PricewaterhouseCoopers LLP as Independent (except the Strong Index
Auditors. 500 Fund), voting
separately
by Fund.
3B. To ratify the selection of KPMG LLP as Shareholders of the Strong
Independent Auditors. Index 500 Fund.
4. To approve a plan of reorganization, Shareholders of the Strong
including an amendment to the Articles of Technology 100 Fund.
Incorporation of Strong Equity Funds, Inc., (Shareholders of the
to reorganize the Strong Internet Fund into Strong Internet Fund will
the Strong Technology 100 Fund. vote separately on the
plan of reorganization,
including the amendment to
the Articles of
Incorporation of Strong
Equity Funds, Inc., at a
special meeting of
shareholders as described
in a separate proxy
statement/prospectus.)
5. To approve the subadvisory agreement between Shareholders of the Strong
Sloate, Weisman, Murray and Value Fund.
Company, Inc. and the Strong Value Fund.
6. To vote upon any other matters which may
properly come before the meeting.
5
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
Investor Advisor Institutional Total Shares
Corporation/Fund Class Class Class Outstanding
- ---------------- ------------- --------- ------------- -------------
STRONG ADVANTAGE FUND,
INC.
Strong Advantage Fund 239,900,542 3,497,633 48,801,732 292,199,907
STRONG ASIA PACIFIC FUND,
INC.
Strong Asia Pacific Fund 6,532,714 N/A N/A 6,532,714
STRONG BALANCED FUND, INC.
Strong Balanced Fund 16,865,384 N/A N/A 16,865,384
STRONG BALANCED STOCK
FUND, INC.
Strong Balanced Stock Fund 462,968 N/A N/A 462,968
STRONG CONSERVATIVE EQUITY
FUNDS, INC.
Strong American Utilities
Fund 16,678,114 N/A N/A 16,678,114
Strong Blue Chip Fund 29,294,772 435,257 N/A 29,730,029
Strong Energy Fund 1,502,268 N/A N/A 1,502,268
Strong Growth and Income
Fund 44,535,992 512,796 1,024,136 46,072,924
STRONG CORPORATE BOND
FUND, INC.
Strong Corporate Bond Fund 104,102,189 1,316,460 1,427,143 106,845,792
STRONG EQUITY
FUNDS, INC.
Strong Dow 30 Value Fund 9,258,552 N/A N/A 9,258,552
Strong Enterprise Fund 18,441,994 32,177 N/A 18,474,171
Strong Growth Fund 123,602,378 510,570 821,930 124,934,878
Strong Growth 20 Fund 28,161,574 534,670 N/A 28,696,244
Strong Index 500 Fund 13,560,229 N/A N/A 13,560,229
Strong Internet Fund 9,261,618 N/A N/A 9,261,618
Strong Large Cap Core Fund 482,557 N/A N/A 482,557
Strong Mid Cap Disciplined
Fund 2,976,302 N/A N/A 2,976,302
Strong Technology 100 Fund 30,908,202 N/A N/A 30,908,202
Strong U.S. Emerging
Growth Fund 5,760,141 N/A N/A 5,760,141
Strong Value Fund 4,727,758 N/A N/A 4,727,758
STRONG GOVERNMENT
SECURITIES FUND, INC.
Strong Government
Securities Fund 133,562,536 286,846 4,467,642 138,317,024
STRONG HERITAGE RESERVE
SERIES, INC.
Strong Heritage Money Fund 1,414,826,339 8,862,957 588,170,352 2,011,859,648
6
Investor Advisor Institutional Total Shares
Corporation/Fund Class Class Class Outstanding
- ---------------- ------------- ------- ------------- -------------
Strong Investors Money Fund 748,934,425 N/A N/A 748,934,425
STRONG HIGH-YIELD
MUNICIPAL BOND
FUND, INC.
Strong High-Yield Municipal
Bond Fund 39,186,781 30,851 N/A 39,217,632
STRONG INCOME
FUNDS, INC.
Strong High-Yield Bond Fund 109,998,255 923,158 N/A 110,921,413
Strong Short-Term High Yield
Bond Fund 37,546,711 818,811 N/A 38,365,522
STRONG INTERNATIONAL EQUITY
FUNDS, INC.
Strong Foreign
MajorMarkets/SM/ Fund 389,263 N/A N/A 389,263
Strong International Stock
Fund 8,496,718 N/A N/A 8,496,718
Strong Overseas Fund 2,550,287 N/A N/A 2,550,287
STRONG LARGE CAP GROWTH
FUND, INC.
Strong Large Cap Growth Fund 45,138,443 N/A N/A 45,138,443
STRONG LIFE STAGE SERIES,
INC.
Strong Aggressive Portfolio 2,302,477 N/A N/A 2,302,477
Strong Conservative
Portfolio 1,907,941 N/A N/A 1,907,941
Strong Moderate Portfolio 5,213,794 N/A N/A 5,213,794
STRONG MONEY MARKET
FUND, INC.
Strong Money Market Fund 2,086,667,066 N/A N/A 2,086,667,066
STRONG MUNICIPAL BOND
FUND, INC.
Strong Municipal Bond Fund 28,384,081 13,754 479,199 28,877,034
STRONG MUNICIPAL FUNDS, INC.
Strong Municipal Advantage
Fund 223,297,283 255,248 71,834,238 295,386,769
Strong Municipal Money
Market Fund 3,059,317,539 N/A N/A 3,059,317,539
Strong Short-Term High-Yield
Municipal Fund 14,096,589 1,558 N/A 14,098,147
Strong Tax-Free Money Fund 105,350,676 N/A N/A 105,350,676
Strong Wisconsin Tax-Free
Fund 413,496 N/A N/A 413,496
STRONG OPPORTUNITY
FUND, INC.
Strong Opportunity Fund 87,584,851 859,840 N/A 88,444,691
Strong Endeavor Fund 307,038 N/A N/A 307,038
STRONG OPPORTUNITY
FUND II, INC.
Strong Opportunity Fund II 52,074,960 N/A N/A 52,074,960
STRONG SHORT-TERM BOND
FUND, INC.
Strong Short-Term Bond Fund 131,272,475 244,874 5,933,363 137,450,712
STRONG SHORT-TERM MUNICIPAL
BOND FUND, INC.
Strong Short-Term Municipal
Bond Fund 36,097,138 41,681 426,241 36,565,060
7
Investor Advisor Institutional Total Shares
Corporation/Fund Class Class Class Outstanding
- ---------------- ---------- ------- ------------- ------------
STRONG VARIABLE INSURANCE
FUNDS, INC.
Strong Discovery Fund II 11,279,760 N/A N/A 11,279,760
Strong International Stock Fund
II 4,465,300 N/A N/A 4,465,300
Strong Mid Cap Growth Fund II 21,074,459 N/A N/A 21,074,459
Strong Multi Cap Value Fund II 2,938,753 N/A N/A 2,938,753
Strong Advisor Funds
Institu- Total
Class Class Class Class tional Shares
Fund A B Class C L Z Class Outstanding
- ---- --------- ------- ------- ------ ---------- ---------- -----------
STRONG COMMON STOCK
FUND, INC.
Strong Advisor Common
Stock Fund 403,570 179,333 222,819 12,195 86,440,491 N/A 87,258,408
Strong Advisor
Focus Fund 710,900 195,063 88,344 26,038 N/A N/A 1,020,345
Strong Advisor
Technology Fund 59,307 18,509 46,717 10,000 N/A N/A 134,533
STRONG CONSERVATIVE
EQUITY FUNDS, INC.
Strong Advisor
U.S. Value Fund 61,691 53,233 17,918 7,082 10,951,856 N/A 11,091,780
STRONG EQUITY FUNDS,
INC.
Strong Advisor Mid Cap
Growth Fund 262,917 100,023 45,599 8,079 9,125,688 N/A 9,542,306
Strong Advisor Small Cap
Value Fund 3,217,030 511,462 353,822 23,405 21,728,416 N/A 25,834,135
STRONG INCOME FUNDS II,
INC.
Strong Advisor Bond Fund 836,672 274,118 384,463 28,278 6,630,634 27,932,587 36,086,752
STRONG OPPORTUNITY FUND,
INC.
Strong Advisor Endeavor
20 Fund 60,082 29,706 21,550 10,000 N/A N/A 121,338
STRONG
SHORT-TERM GLOBAL BOND
FUND, INC.
Strong Advisor
Aggressive High-Yield
Bond Fund 326,979 98,545 81,933 31,234 N/A N/A 538,691
Strong Advisor
Short Duration
Bond Fund 257,953 138,427 60,803 16,553 4,905,341 N/A 5,379,077
8
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. The expenses of the Annual Meeting, including the cost of the proxy
solicitor, are estimated to be $4,900,000. The Funds will bear no more than
$900,000 of these expenses, allocated proportionately based on the assets of
each Fund as of the Record Date, with the remainder borne by Strong. Strong
may 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
9
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 on page 69, below, for the
amount of fund shares owned by the nominees and officers as a group.
Name and Principal Occupations or Employment Director of the
Date of Birth During the Past Five Years Funds Since
------------------ ----------------------------------------- ---------------
*Richard S. Strong Director and Chairman of the Board of the 9/81
5/12/42 Strong Funds; 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.
Marvin E. Nevins Director of the Strong Funds; 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.
10
Name and Principal Occupations or Employment Director of the
Date of Birth During the Past Five Years Funds Since
--------------- -------------------------------------------- ---------------
Willie D. Davis Director of the Strong Funds since 1994; a 7/94
7/24/34 Director of Alliance Bank since 1980; Sara
Lee Corporation (a food/consumer products
company) since 1983; KMart Corporation (a
discount consumer products company) since
1985; 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. (an entertainment company) 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 of the Strong Funds since 1995; 1/95
1/9/30 Chairman of the Audit Committee of the
Strong Funds since 2000; 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 of the Strong Funds since 1995; 1/95
7/19/47 Chairman of the Independent Directors
Committee of the Strong Funds since 1999;
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.
11
Name and
Date of Principal Occupations or Employment Director of the
Birth During the Past Five Years Funds Since
------------ ---------------------------------------------- ---------------
Neal Malicky Director of the Strong Funds since 1999; 12/99
9/14/34 President 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 and compensation and committee issues. The
Independent
12
Directors Committee usually meets 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 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 Total
Retirement Compensation
Benefits Estimated From the Fund
Aggregate Accrued as Annual Complex
Compensation Part Benefits Payable
Payable from of Fund Upon to
Name each Fund Expenses Retirement 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.
13
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 Assistant Executive Vice President, Senior Counsel
and Assistant Secretary of Strong since April 2001. From August 2000 to April
2001, Ms. Ebacher was Vice President, Senior Counsel, and Assistant Secretary
of Strong. From December 1997 to August 2000, Ms. Ebacher was Senior Counsel
of Strong. From November 1996 until December 1997, Ms. Ebacher was Associate
Counsel of Strong. From May 1992 until November 1996, Ms. Ebacher was
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.
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 Assistant Executive Vice President, Associate
Counsel and Assistant Secretary of Strong since April 2001. From August 2000
to April 2001, Ms. Hollister was Vice President, Associate Counsel, and
Assistant Secretary of Strong. From July 1999 to August 2000, Ms. Hollister
was Associate Counsel of Strong. From August 1996 until May 1999, Ms.
Hollister completed a Juris
14
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 Assistant Executive Vice President and Director of
Finance and Operations of Strong since April 2001. From November 1999 to April
2001, Mr. Wallestad was Senior Vice President and Director of Finance and
Operations of Strong. From February 1999 to October 1999, Mr. Wallestad was
Director of Finance and Operations of Strong. 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 and Manager of Financial Management of
Strong since April 1999. From October 1999 to April 1999, Mr. Widmer was the
Manager of Financial Management of Strong. From May 1997 to October 1999, Mr.
Widmer was the Manager of Financial Management and Sales Reporting Systems of
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.
None of the officers of the Strong Funds received salaries from the
Corporations during calendar year 2000.
15
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 UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" ALL NOMINEES.
16
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 Proposals
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 Proposal.
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 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
17
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 with the nature and quality of investment
advisory services provided by Strong to the Funds on an on-going
basis;
(v) current and projected profitability, including the financial viability
of Strong, 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.
18
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 Strong Advisor Focus Fund
Bond Fund Strong Advisor Technology Fund
Strong Advisor Endeavor 20 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.
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. Currently, each Fund with a proposed breakpoint schedule
(as shown in the tables below) has total net assets below $4 billion.
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
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
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%
19
Strong Advisor Endeavor 20 Fund
Strong Advisor Focus Fund
Strong Advisor Technology Fund
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
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:
Inception
Fund 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 advisory agreement (the advisory 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
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 advisory 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
20
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 advisory
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.
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
21
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 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 MajorMarketsSM 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. Currently, each Fund with a proposed breakpoint schedule (as shown in
the tables below) has total net assets below $4 billion.
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 fee, rather than being a
component of the investment management fee. As a result, investment management
fees will be lower. However,
22
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 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 MajorMarketsSM Fund Strong Technology 100 Fund
Strong International Stock Fund Strong Value Fund
Strong Mid Cap Growth Fund II
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
First $4 billion 0.25% -25.0%
Over $4 billion, but less than $6 billion 0.275% -27.5%
$6 billion and above 0.30% -30.0%
23
Strong Investors Money Fund Strong Municipal Money Market Fund
Strong Money Market Fund Strong Tax-Free Money Fund
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
All asset levels 0.35% -70.0%
Strong Dow 30 Value Fund
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
All asset levels 0.25% -31.25%
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:
Administration Administration
Fee if Fee if
Shareholders Shareholders
Approve the Do Not Approve
Proposed the Proposed
Advisory Advisory
Fund Agreement Agreement*
- ---- -------------- --------------
Strong Asia Pacific Fund 0.30% 0.25%
Strong Balanced Stock Fund 0.30% 0.25%
Strong Foreign MajorMarketsSM 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.
24
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:
Inception
Fund Date
- ---- ---------
Strong Asia Pacific Fund 12/31/93
Strong Balanced Stock Fund 12/31/97
Strong Foreign MajorMarketsSM 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 advisory agreement (the advisory 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 (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 advisory agreement cover both advisory and
administrative services to the Fund.
25
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 advisory 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 administration
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).
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.
26
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 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 within 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. The annual fund operating expense tables shown below are
based on actual expenses incurred during the Fund's most recent fiscal period.
Please keep in mind that, as a result of changing market conditions, total
asset levels and other factors, expenses at any time during the current fiscal
year may be significantly different than those shown.
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.
27
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%(/1/)
(/1/)If the 2% expense cap is removed, Strong will use its discretion when
setting reimbursement levels, taking into account such market factors as
the Fund's expense ratio relative to its peers and the Fund's ability to
offer shareholders competitive returns.
For the fiscal period 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
28
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%(/1/)
- -----------
(/1/)If the 2% expense cap is removed, Strong will use its discretion when
setting reimbursement levels, taking into account such market factors as
the Fund's expense ratio relative to its peers and the Fund's ability to
offer shareholders competitive returns.
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
29
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%
- -----------
* Strong has contractually agreed to waive 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 period 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
30
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 Strong's 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%. Strong 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 Strong's waiver of management
fees and/or absorptions. With waivers and absorptions, the current Annual
Fund Operating Expenses of the Fund would be 0.65%, and pro forma would be
0.65%. Strong can terminate waivers and absorptions for this fund at any
time.
For the fiscal period 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.
31
Example:
Current Pro Forma
------- ---------
1 Year $ 85 $ 87
3 Years $ 265 $ 271
5 Years $ 460 $ 471
10 Years $1,025 $1,049
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 Strong's waiver of management
fees and/or absorptions. With waivers and absorptions, the current Annual
Fund Operating Expenses of the Fund would be 1.20%, and pro forma would be
1.20%. Strong 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 period 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.
32
Example:
Current Pro Forma
------- ---------
1 Year $ 59 $ 61
3 Years $186 $192
5 Years $324 $335
10 Years $726 $750
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 Strong's waiver of management
fees and/or absorptions. With waivers and absorptions, the current Annual
Fund Operating Expenses of the Fund would be 1.79%, and pro forma would be
1.84%. Strong 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 Strong's waiver of management
fees and/or absorptions. With waivers and absorptions, the current Annual
Fund Operating Expenses of the Fund would be 0.60%, and pro forma would be
0.60%. Strong can terminate waivers and absorptions for this fund at any
time.
33
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
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.
34
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.
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 ADVISORY AGREEMENT.
35
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 High-Yield Bond Fund
Strong Advisor Bond Fund Strong High-Yield Municipal
Strong Advisor Common Stock Fund 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
Strong Enterprise Fund Fund
Strong Government Securities Fund Strong Short-Term High Yield
Strong Growth Fund Municipal Fund
Strong Growth 20 Fund Strong Short-Term Municipal
Strong Growth and Income Fund Bond Fund
Strong Heritage Money Fund Strong U.S. Emerging Growth 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. Currently, each Fund with a proposed breakpoint
schedule (as shown in the tables below) has total net assets below $4 billion.
Strong also serves as administrator to the Funds pursuant to
administration agreements. For Investor Class and Z Class shares, the
administration fees payable
36
under such administration 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 Z Class
administration fees this year, absent a shareholder vote. 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 to each class. For Investor
Class and Z Class shares of each Fund, as applicable, 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. Therefore, the
administration fee for Advisor Class shares will increase even if shareholders
do not approve the proposed 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):
37
Strong Advisor Short Duration Bond Fund Strong Short-Term Bond Fund
Strong Corporate Bond Fund Strong Short-Term High Yield Bond
Strong High-Yield Bond Fund Fund
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
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
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
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
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
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%
Strong Advisor Bond Fund
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
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%
38
Strong Short-Term Municipal Bond Fund
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
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
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
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
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
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
Reduction From Percentage
Original Fee (%) Change
-------------- ----------
Assets:
All asset levels 0% 0%
39
The table below shows the fees (based on a percent of average daily net
assets) that Investor Class and 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 New
Fund/Class (if more than one) Administration Fee 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%
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%
40
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:
Inception
Fund Date
- ---- ---------
Strong Advantage Fund 11/25/88
Strong Advisor Bond Fund 12/31/96
Strong Advisor Common Stock Fund 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
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
advisory agreement on May 4, 2001. The current advisory agreement will
continue in effect until May 3, 2002 unless and until terminated by either
party as provided in the advisory agreement (the advisory agreement may be
terminated by the Board, or,
41
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, 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 advisory agreement. The
advisory 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 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 advisory
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 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
42
fee increase is not contingent upon approval by shareholders of the new
advisory agreement. Therefore, the administration fee for Advisor Class shares
will increase even if shareholders do not approve the proposed 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. The annual
fund operating expense tables shown below are based on actual expenses
incurred during the Fund's most recent fiscal period. Please keep in mind
that, as a result of changing market conditions, total asset levels and other
factors, expenses at any time during the current fiscal year may be
significantly different than those shown.
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
Annual Fund
Operating Expenses
---------------------
FYE: 10/31/00 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 period 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 period 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.
43
Example:
Current Pro Forma
------- ---------
1 Year $ 81 $ 84
3 Years $252 $ 262
5 Years $439 $ 455
10 Years $978 $1,014
Strong Advisor Bond Fund--Class Z
Annual Fund
Operating Expenses
---------------------
FYE: 10/31/00 Pro Forma
- ------------- Current ----------
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
Annual Fund
Operating
Expenses
-----------------
FYE: 12/31/00 Pro Forma
- ------------- Current ---------
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
44
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
Strong Advisor Mid Cap Growth Fund--Class Z
Annual Fund
Operating
Expenses
-----------------
FYE: 12/31/00 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
Annual Fund
Operating
Expenses
-----------------
FYE: 10/31/00 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
45
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
Strong Advisor Small Cap Value Fund--Class Z
Annual Fund
Operating
Expenses
-----------------
FYE: 12/31/00 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
46
Strong Advisor U.S. Value Fund--Class Z
Annual Fund
Operating
Expenses
-----------------
FYE: 10/31/00 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
Strong American Utilities Fund--Investor Class
Annual Fund
Operating
Expenses
-----------------
FYE: 10/31/00 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
47
Strong Balanced Fund--Investor Class
Annual Fund
Operating
Expenses
-----------------
FYE: 10/31/00 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
Strong Blue Chip Fund--Investor Class
Annual Fund
Operating Expenses
---------------------
FYE: 10/31/00 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
48
Strong Corporate Bond Fund--Investor Class
Annual Fund
Operating
Expenses
-----------------
FYE: 10/31/00 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
Strong Energy Fund
Annual Fund
Operating
Expenses
-----------------
FYE: 10/31/00 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 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
49
Strong Enterprise Fund--Investor Class
Annual Fund
Operating
Expenses
-----------------
FYE: 12/31/00 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
Strong Government Securities Fund--Investor Class
Annual Fund
Operating Expenses*
---------------------
FYE: 10/31/00 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 Strong's waiver of management
fees and/or absorptions. With waivers and absorptions, the current Annual
Fund Operating Expenses of the Fund would be 0.88%, and pro forma would be
0.91%. Strong 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.
50
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
Annual Fund
Operating Expenses
---------------------
FYE: 12/31/00 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
Strong Growth 20 Fund--Investor Class
Annual Fund
Operating Expenses
---------------------
FYE: 12/31/00 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.
51
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
Annual Fund
Operating Expenses
---------------------
FYE: 10/31/00 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
Strong Heritage Money Fund--Investor Class
Annual Fund
Operating Expenses*
---------------------
FYE: 10/31/00 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 Strong's waiver of management
fees and/or absorptions. With waivers and absorptions, the current Annual
Fund Operating Expenses of the Fund would be 0.40%, and pro forma would be
0.40%. Strong can terminate waivers and absorptions for this fund at any
time.
52
For the fiscal period 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 period 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
Annual Fund
Operating Expenses
---------------------
FYE: 10/31/00 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
53
Strong High-Yield Municipal Bond Fund--Investor Class
Annual Fund
Operating Expenses
---------------------
FYE: 10/31/00 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
Annual Fund
Operating Expenses
---------------------
FYE: 12/31/00 Current Pro Forma
- ------------- --------- ----------
Management Fees 0.75% 0.75%
Other Expenses 1.25% 1.67%
Total Operating Expenses 2.00% 2.42%(/1/)
- -----------
(/1/)If the 2% expense cap is removed, Strong will use its discretion when
setting reimbursement levels, taking into account such market factors as
the Fund's expense ratio relative to its peers and the Fund's ability to
offer shareholders competitive returns.
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.
54
Example:
Current Pro Forma
------- ---------
1 Year $ 203 $ 245
3 Years $ 627 $ 755
5 Years $1,078 $1,291
10 Years $2,327 $2,756
Strong Large Cap Growth Fund--Investor Class
Annual Fund
Operating Expenses
---------------------
FYE: 10/31/00 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.
55
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
Strong Municipal Advantage Fund--Investor Class
Annual Fund
Operating Expenses*
---------------------
FYE: 10/31/00 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 Strong's waiver of management
fees and/or absorptions. With waivers and absorptions, the current Annual
Fund Operating Expenses of the Fund would be 0.57%, and pro forma would be
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
56
Strong Municipal Bond Fund--Investor Class
Annual Fund
Operating Expenses
---------------------
FYE: 10/31/00 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
Strong Opportunity Fund--Investor Class
Annual Fund
Operating Expenses
---------------------
FYE: 12/31/00 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
57
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 Strong's waiver of management
fees and/or absorptions. With waivers and absorptions, the current Annual
Fund Operating Expenses of the Fund would be 1.10%, and pro forma would be
1.10%. Strong can terminate waivers and absorptions for this fund at any
time.
For the fiscal year ended 12/31/00, the Strong Opportunity Fund II--
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
Fund II--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
Strong Short-Term Bond Fund--Investor Class
Annual Fund
Operating Expenses
---------------------
FYE: 10/31/00 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.
58
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 Class
Annual Fund
Operating Expenses
---------------------
FYE: 10/31/00 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
Strong Short-Term High Yield Municipal Fund--Investor Class
Annual Fund
Operating Expenses*
---------------------
FYE: 10/31/00 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 Strong's waiver of management
fees and/or absorptions. With waivers and absorptions, the current Annual
Fund Operating Expenses of the Fund would be 0.67%, and pro forma would be
0.67%. Strong can terminate waivers and absorptions for this fund at any
time.
59
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
Annual Fund
Operating Expenses
---------------------
FYE: 10/31/00 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
Strong U.S. Emerging Growth Fund--Investor Class
Annual Fund
Operating Expenses
---------------------
FYE: 12/31/00 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.
60
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 ADVISORY AGREEMENT.
61
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,
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 audit 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 and paid by 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.
62
Tax-Related
Services
Corporation Audit Fees(/1/) 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.
THE BOARDS OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL OF THE INDEPENDENT AUDITORS.
63
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, Financial Information Systems Design and Implementation Fees
and All Other Fees. The aggregate fees billed for audit 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. 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. The aggregate fees billed by KPMG LLP to the
Strong Index 500 Fund during fiscal 2000 for tax-related services were $3,250.
No fees were billed by KPMG LLP to Strong during fiscal 2000 for tax-related
services. 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 UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL
OF THE INDEPENDENT AUDITORS.
64
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.
65
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.
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 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")
currently 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, a revised 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.
Approval of Agreement. At their 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
66
of the proposed 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 proposed 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 proposed Subadvisory Agreement and its submission to the Fund's
shareholders for approval and ratification. If the new proposed 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.
Subadvisory agreements are 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 unless it is terminated earlier or replaced by the
proposed Subadvisory Agreement. Both the current and proposed Subadvisory
Agreements may be terminated at any time, without payment of any penalty, by a
vote of a majority of the Directors of the Fund or by a vote of a majority of
the outstanding voting securities of the Fund on 60 days' written notice to
Sloate, Weisman, 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 and by Sloate, Weisman upon 180 days' written notice
for any reason. Both the current and proposed Subadvisory Agreements will
terminate automatically in the event of assignment.
Under the terms of both the current and proposed Subadvisory Agreements,
Sloate, Weisman furnishes investment advisory and portfolio management
services to the Fund, subject to supervision by Strong and the Fund's Board of
Directors. Sloate, Weisman is responsible for decisions to buy and sell the
Fund's investments and all other transactions related to investment 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, the current
management fee covers both advisory and administration services. It is
proposed that these services and fees be "unbundled," resulting in a reduction
in Strong's management fee by 0.25%, which represents the amount attributable
to administration services.
67
Such a reduction in the management fee might make it seem as though Sloate,
Weisman's fee was lowered. Under the proposed Subadvisory 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 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.
68
OTHER MATTERS
The Board of Directors knows of no other matters that may come before the
Annual Meeting, other than the Proposals as described 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 and are
Executive Vice Presidents of Strong; Mr. Zoeller is also the Chief Financial
Officer of Strong; Elizabeth N. Cohernour is an Executive Vice President of
Strong and Strong's General Counsel, Secretary and Chief Compliance Officer;
Cathleen A. Ebacher is an Assistant Executive Vice President, Senior Counsel
and Assistant Secretary of Strong; Susan A. Hollister, Robert G. Uecker, Jr.,
and Constance R. Wick are each an Assistant Executive Vice President,
Associate Counsel and Assistant Secretary of Strong; Joseph J. Rhiel is the
Chief Information Officer; Wallace L. Head and Dennis A. Wallestad is an
Assistant Executive Vice President; 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.
Investment Subadvisor
Sloate, Weisman, 230 Park Avenue, 7th Floor, New York, NY 10169, acts as
the Strong Value Fund's subadvisor. Laura J. Sloate controls Sloate, Weisman
due to her stock ownership of Sloate, Weisman. Ms. Sloate is Director,
Chairman of the Board, Chief Executive Officer, President and Treasurer of
Sloate, Weisman. Donna M. Leone is Director, Chief Operating Officer and
Secretary of Sloate, Weisman. The mailing address of both of the above persons
is 230 Park Avenue, 7th Floor, New York, NY 10169.
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.
69
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.
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.
The Board of Directors has authorized SWM Securities, Inc. ("SWM"), which
is an affiliated company of Sloate, Weisman, Murray & Company, Inc., the
subadvisor for the Strong Value 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 SWM to
effect any portfolio transactions for a Fund on an exchange, the commissions,
fees or other remuneration received by SWM 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 SWM to receive no more than the remuneration that would
be expected to be received by an unaffiliated broker in a commensurate arm's-
length transaction. For the fiscal year ended December 31, 2000, the Strong
Value Fund paid SWM $7,893 in commissions, which represented 3.81% of the
Fund's aggregate brokerage commissions.
70
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 the directors and officers of each Fund as a group.
Number of
Fund Class Shares(/1/) Percentage
- ---- ------------- ----------- ----------
Strong Advantage Fund Investor 412,121 0.17%
Strong Advantage Fund Institutional 206,026 0.42%
Strong Advisor Aggressive High-Yield Bond
Fund A 104,945 32.10%
Strong Advisor Aggressive High-Yield Bond
Fund B 25,978 26.36%
Strong Advisor Aggressive High-Yield Bond
Fund C 25,979 31.71%
Strong Advisor Aggressive High-Yield Bond
Fund L 26,012 83.28%
Strong Advisor Bond Fund B 9,721 3.55%
Strong Advisor Bond Fund L 9,735 34.43%
Strong Advisor Bond Fund Z 977 0.02%
Strong Advisor Common Stock Fund B 5,296 2.95%
Strong Advisor Common Stock Fund C 5,296 2.38%
Strong Advisor Common Stock Fund L 5,297 43.44%
Strong Advisor Common Stock Fund Z 4,420,999 5.10%
Strong Advisor Endeavor 20 Fund A 10,554 17.57%
Strong Advisor Endeavor 20 Fund B 10,000 33.66%
Strong Advisor Endeavor 20 Fund C 10,000 46.40%
Strong Advisor Endeavor 20 Fund L 10,000 100%
Strong Advisor Focus Fund A 38,409 5.40%
Strong Advisor Focus Fund B 10,000 5.13%
Strong Advisor Focus Fund C 10,000 11.32%
Strong Advisor Focus Fund L 10,000 38.41%
Strong Advisor Mid Cap Growth Fund B 5,647 5.65%
71
Number of
Fund Class Shares(/1/) Percentage
- ---- ------------- ----------- ----------
Strong Advisor Mid Cap Growth Fund C 5,647 12.38%
Strong Advisor Mid Cap Growth Fund L 5,647 69.89%
Strong Advisor Mid Cap Growth Fund Z 12,183 0.13%
Strong Advisor Short Duration Bond Fund A 10,152 3.94%
Strong Advisor Short Duration Bond Fund B 10,113 7.31%
Strong Advisor Short Duration Bond Fund C 10,116 16.64%
Strong Advisor Short Duration Bond Fund L 10,118 61.12%
Strong Advisor Short Duration Bond Fund Z 596 0.01%
Strong Advisor Small Cap Value Fund L 6,510 27.82%
Strong Advisor Small Cap Value Fund Z 2,581,949 11.88%
Strong Advisor Technology Fund A 10,000 16.86%
Strong Advisor Technology Fund B 10,000 54.03%
Strong Advisor Technology Fund C 10,000 21.41%
Strong Advisor Technology Fund L 10,000 100%
Strong Advisor U.S. Value Fund A 5,008 8.12%
Strong Advisor U.S. Value Fund B 5,005 9.40%
Strong Advisor U.S. Value Fund C 5,005 27.93%
Strong Advisor U.S. Value Fund L 5,005 70.68%
Strong Advisor U.S. Value Fund Z 5,738,339 52.40%
Strong Aggressive Portfolio Investor 4,838 0.21%
Strong American Utilities Fund Investor 9,774 0.06%
Strong Asia Pacific Fund Investor 3,925 0.06%
Strong Balanced Fund Investor 11,083 0.07%
Strong Balanced Stock Fund Investor 10,263 2.22%
Strong Blue Chip Fund Investor 3,134,695 10.70%
Strong Conservative Portfolio Investor 20,068 1.05%
Strong Corporate Bond Fund Investor 3,210,064 3.08%
Strong Dow 30 Value Fund Investor 1,657 0.02%
Strong Endeavor Fund Investor 50,871 16.57%
Strong Energy Fund Investor 3,144 0.21%
Strong Enterprise Fund Investor 102,973 0.56%
Strong Foreign MajorMarkets SM Fund Investor 108,785 27.95%
Strong Government Securities Fund Investor 6,508 0.01%
Strong Growth Fund Investor 50,168 0.04%
Strong Growth 20 Fund Investor 856,815 3.04%
Strong Growth and Income Fund Investor 2,409,214 5.41%
Strong Heritage Money Fund Investor 8,703,290 0.62%
Strong Heritage Money Fund Institutional 653,979 0.11%
Strong High-Yield Bond Fund Investor 4,332,236 3.94%
Strong High-Yield Municipal Bond Fund Investor 367,665 0.94%
Strong High-Yield Municipal Bond Fund Advisor 1,682 5.45%
Strong Index 500 Fund Investor 1,574 0.01%
Strong International Stock Fund Investor 5,681 0.07%
Strong Internet Fund Investor 71,778 0.78%
72
Number of
Fund Class Shares(/1/) Percentage
- ---- -------- ----------- ----------
Strong Investors Money Fund Investor 186,989 0.03%
Strong Large Cap Core Fund Investor 54,394 11.27%
Strong Large Cap Growth Fund Investor 15,317 0.03%
Strong Mid Cap Disciplined Fund Investor 1,132,375 38.05%
Strong Moderate Portfolio Investor 3,300 0.06%
Strong Money Market Fund Investor 1,143,156 0.05%
Strong Municipal Advantage Fund Investor 32,795 0.02%
Strong Municipal Bond Fund Investor 447,059 1.58%
Strong Municipal Bond Fund Advisor 1,736 12.62%
Strong Municipal Money Market Fund Investor 1,566,190 0.05%
Strong Opportunity Fund Investor 67,461 0.08%
Strong Overseas Fund Investor 23,628 0.93%
Strong Short-Term Bond Fund Investor 6,164,047 4.70%
Strong Short-Term High Yield Bond Fund Investor 2,435,719 6.49%
Strong Short-Term High Yield
Municipal Fund Advisor 1,558 100%
Strong Short-Term High Yield
Municipal Fund Investor 180,517 1.28%
Strong Short-Term Municipal Bond Fund Investor 839,957 2.33%
Strong Technology 100 Fund Investor 140,817 0.46%
Strong U.S. Emerging Growth Fund Investor 20,676 0.36%
Strong Wisconsin Tax-Free Fund Investor 38,338 9.27%
- -----------
(/1/)Full shares of the Fund owned beneficially as of May 11, 2001.
The following table sets forth information regarding the beneficial
ownership of each Fund's outstanding shares as of the Record Date by persons
who are known by the Funds to beneficially own more than 5% of a Fund's
outstanding shares.
Fund--Class of Number of Percentage
Name and Address of Owner Share Shares(/1/) Ownership
- ------------------------- -------------- ----------- ----------
Charles Schwab & Co. Inc. Strong Advantage 59,591,864 24.84%
101 Montgomery St. Fund--
San Francisco, CA 94104-4122 Investor Class
("Schwab")
Schwab Strong Advantage 3,262,101 93.27%
Fund--
Advisor Class
Dean V. White Strong Advantage 13,779,768 28.24%
1000 E 80th Pl., Ste. 700N Fund--
Merrillville, IN 46410-5608 Institutional Class
("Dean V. White")
Schwab Strong Advantage 5,395,274 11.06%
Fund--
Institutional Class
73
Fund--Class of Number of Percentage
Name and Address of Owner Share Shares(/1/) Ownership
- ------------------------- -------------- ----------- ----------
McData Corp Strong Advantage 3,124,162 6.40%
310 Interlocken Pkwy Fund--
Broomfield, CO 80021-3424 Institutional Class
Bankers Trust Co. Strong Advantage 2,881,942 5.91%
FBO 2434472424 Fund--
Church Street Station Institutional Class
P.O. Box 9005
New York, NY 10008
David C. Bohnett Trust Strong Advantage 2,515,091 5.15%
David C. Bohnett Living Trust Fund--
2049 Century Park E. Ste 2151 Institutional Class
Los Angeles, CA 90067-3101
Strong Investments Inc. Strong Advisor 104,493 31.96%
100 Heritage Reserve Aggressive High-
Menomonee Falls, WI 53051-4400 Yield Bond Fund--
("Strong Investments") Class A
Schwab Strong Advisor 46,915 14.35%
Aggressive High-
Yield Bond Fund--
Class A
U.S. Clearing Corp. Strong Advisor 21,920 6.70%
FBO 717-42921-15 Aggressive High-
26 Broadway Yield Bond Fund--
New York, NY 10004-1799 Class A
("U.S. Clearing")
U.S. Clearing Strong Advisor 20,300 6.21%
FBO 718-00406-15 Aggressive High-
Yield Bond Fund--
Class A
Strong Investments Strong Advisor 25,978 26.36%
Aggressive High-
Yield Bond Fund--
Class B
American Enterprise Investment Strong Advisor 8,388 8.51%
FBO 177130581 Aggressive High-
P.O. Box 9446 Yield Bond Fund--
Minneapolis, MN 55440 Class B
("American Enterprise")
Merrill Lynch Pierce Fenner & Strong Advisor 5,320 5.40%
Smith Inc. Aggressive High-
Merrill Lynch Financial Data Yield Bond Fund--
Services Class B
4800 Deer Lake Dr. E FL 3
Jacksonville, FL 32246-6484
("Merrill Lynch")
American Enterprise Strong Advisor 5,083 5.16%
FBO 180358731 Aggressive High-
Yield Bond Fund--
Class B
74
Number of Percentage
Name and Address of Owner Fund--Class of Share Shares(/1/) Ownership
- ------------------------- -------------------- ----------- ----------
Strong Investments Inc. Strong Advisor Aggressive 25,979 31.71%
High-Yield Bond Fund--Class
C
Merrill Lynch Strong Advisor Aggressive 13,959 17.04%
High-Yield Bond Fund--
Class C
Legg Mason Wood Walker Inc. Strong Advisor Aggressive 5,177 6.32%
328-73296-13 High-Yield Bond Fund--Class
P.O. Box 1476 C
Baltimore, VA 21202
American Enterprise Strong Advisor Aggressive 4,805 5.87%
FBO 181165581 High-Yield Bond Fund--Class
C
Raymond James & Associates Strong Advisor Aggressive 4,732 5.76%
Inc. High-Yield Bond Fund--Class
FBO Duke G Burnett & C
Barbara
Sue Burnett Community
Property
201 N. Panama St.
Madisonville, TX 77864
Strong Investments Strong Advisor Aggressive 26,012 83.28%
High-Yield Bond Fund--Class
L
American Enterprise Strong Advisor Aggressive 4,746 15.20%
FBO 170706321 High-Yield Bond Fund--Class
L
Schwab Strong Advisor Bond Fund-- 421,413 50.37%
Class A
First Clearing Corporation Strong Advisor Bond Fund-- 92,316 11.03%
A/C 2513-9485 Class A
Desert Schools Self
Insurance Program
2355 Crenshaw Blvd., Ste.
200
Glen Allen, VA 23060
First Clearing Corporation Strong Advisor Bond Fund-- 72,820 8.70%
A/C 8099-6401 Class A
Self Insurance Risk Mgn.
Auth.
21515 Redview Drive
Santa Clarita, CA 91350-
2947
Merrill Lynch Strong Advisor Bond Fund -- 60,916 7.28%
Class A
First Clearing Corporation Strong Advisor Bond Fund-- 52,086 6.23%
A/C 6968-5598 Class A
Riverside Schools Ins.
Auth.
2355 Crenshaw Blvd #200
Torrance, CA 90501-3329
Merrill Lynch Strong Advisor Bond Fund-- 47,201 17.22%
Class B
75
Number of Percentage
Name and Address of Owner Fund--Class of Share Shares(/1/) Ownership
- ------------------------- -------------------- ----------- ----------
Merrill Lynch Strong Advisor Bond Fund-- 123,475 32.12%
Class C
LPL Financial Services Strong Advisor Bond Fund-- 21,151 5.50%
A/C 4021-0449 Class C
9785 Towne Centre Dr.
San Diego, CA 92121-1968
("LPL")
Strong Investments Strong Advisor Bond Fund-- 9,735 34.43%
Class L
U.S. Clearing Corp. Strong Advisor Bond Fund-- 8,072 28.54%
FBO 155-03261-13 Class L
American Enterprise Strong Advisor Bond Fund-- 4,208 14.88%
FBO 161969251 Class L
American Enterprise Strong Advisor Bond Fund-- 3,551 12.56%
FBO 179258921 Class L
First Clearing Corporation Strong Advisor Bond Fund-- 2,712 9.59%
A/C 8783-3964 Class L
William E. Wilson IRA
FCC as Custodian
731 Fox Hollow Way
Vacaville, CA 95687-7424
Schwab Strong Advisor Bond Fund-- 2,477,683 37.37%
Class Z
Emre & Co. Strong Advisor Bond Fund-- 1,556,234 23.47%
FBO Strong Retirement Class Z
Omnibus
c/o Strong Capital
Management
P.O. Box 1408
Milwaukee, WI 53201-1408
("Emre")
New York Life Trust Co. Strong Advisor Bond Fund-- 1,092,000 16.47%
260 Cherry Hill Rd., FL. 4 Class Z
Parsippany, NJ 07054-1108
Schwab Strong Advisor Bond Fund-- 11,275,258 40.37%
Institutional Class
Skywest, Inc. Strong Advisor Bond Fund-- 5,397,530 19.32%
444 S. River Rd. Institutional Class
Saint George, UT 84790-2085
INEW Local 117 Strong Advisor Bond Fund-- 3,135,207 11.22%
6525 Centurion Dr. Institutional Class
Lansing, MI 48917-9295
National Financial Services Strong Advisor Bond Fund-- 1,582,277 5.67%
Corp. Institutional Class
One World Financial Center
200 Liberty Dr.
New York, NY 10281-1003
76
Fund--Class of Number of Percentage
Name and Address of Owner Share Shares(/1/) Ownership
- ------------------------- -------------- ----------- ----------
Schwab Strong Advisor 112,779 27.95%
Common Stock Fund--
Class A
Donaldson Lufkin Jenrette Strong Advisor 76,664 19.00%
Securities Corporation Inc. Common Stock Fund--
P.O. Box 2052 Class A
Jersey City, NJ 07303-9998
("Donaldson Lufkin")
Nationwide Insurance Company Strong Advisor 63,959 15.85%
FBO QPVA Common Stock Fund--
P.O. Box 182029 Class A
Columbus, OH 43218-2029
("Nationwide")
Merrill Lynch Strong Advisor 24,312 6.02%
Common Stock Fund--
Class A
Merrill Lynch Strong Advisor 29,621 16.52%
Common Stock Fund--
Class B
Merrill Lynch Strong Advisor 114,967 51.60%
Common Stock--Class
C
Strong Investments Strong Advisor 5,297 43.44%
Common Stock Fund--
Class L
LPL Strong Advisor 2,550 20.91%
A/C 1000-0002 Common Stock Fund--
Class L
Donaldson Lufkin Strong Advisor 1,001 8.21%
Common Stock Fund--
Class L
Donaldson Lufkin Strong Advisor 781 6.40%
Common Stock Fund--
Class L
Emre Strong Advisor 7,452,743 8.62%
Common Stock Fund--
Class Z
Mitra & Co. Strong Advisor 5,195,195 6.01%
Attn: Exp Mutual Funds TR14 Common Stock Fund--
1000 N. Water Street Class Z
Milwaukee, WI 53202-6648
Schwab Strong Advisor 4,902,041 5.67%
Common Stock Fund--
Class Z
Strong Investments Strong Advisor 4,355,499 5.04%
Common Stock Fund--
Class Z
Merrill Lynch Strong Advisor 27,467 45.72%
Endeavor 20 Fund--
Class A
Strong Investments Strong Advisor 10,000 16.64%
Endeavor 20 Fund--
Class A
NFSC FEBO #0MF--653063 Strong Advisor 4,270 7.11%
Iris J. Anderson Endeavor 20 Fund--
312 Sheridan Drive Class A
West Bend, WI 53095
77
Fund--Class of Number of Percentage
Name and Address of Owner Share Shares(/1/) Ownership
- ------------------------- -------------- ----------- ----------
Merrill Lynch Strong Advisor 15,169 51.06%
Endeavor 20 Fund--
Class B
Strong Investments Strong Advisor 10,000 33.66%
Endeavor 20 Fund--
Class B
First Clearing Corporation Strong Advisor 2,670 9.09%
A/C 6671-8787 Endeavor 20 Fund--
FUNB Collateral Account FBO Class B
Joseph Pure Revocable Trust
145-80 Seventh Avenue
Whitestone, NY 11357-1619
Strong Investments Strong Advisor 10,000 46.40%
Endeavor 20--Class
C
Merrill Lynch Strong Advisor 5,731 26.59%
Endeavor 20--Class
C
A.G. Edwards & Sons Inc. C/F Strong Advisor 4,396 20.40%
Margaret Joyce Endeavor 20--Class
Farrell IRA Account C
352 Pine Run Drive
Osprey, FL 34229-
9539
Strong Investments Strong Advisor 10,000 100.00%
Endeavor 20 Fund--
Class L
Schwab Strong Advisor 556,038 78.22%
Focus
Fund--Class A
Strong Investments Strong Advisor 38,409 5.40%
Focus
Fund--Class A
Merrill Lynch Strong Advisor 37,946 19.45%
Focus
Fund--Class B
American Enterprise Strong Advisor 12,674 6.50%
FBO 178729611 Focus
Fund--Class B
Strong Investments Strong Advisor 10,000 5.13%
Focus
Fund--Class B
Strong Investments Strong Advisor 10,000 11.32%
Focus
Fund--Class C
Merrill Lynch Strong Advisor 8,823 9.99%
Focus
Fund--Class C
American Enterprise Strong Advisor 4,895 5.54%
FBO 175863971 Focus Fund--Class C
American Enterprise Strong Advisor 4,461 5.05%
FBO 1782499621 Focus Fund--Class C
Strong Investments Inc. Strong Advisor 10,000 38.41%
Focus Fund--Class L
78
Fund--Class of Number of Percentage
Name and Address of Owner Share Shares(/1/) Ownership
- ------------------------- -------------- ----------- ----------
American Enterprise Strong Advisor 4,999 19.20%
FBO 564643241 Focus Fund--Class L
American Enterprise Strong Advisor 3,903 14.99%
FBO 137024361 Focus Fund--Class L
American Enterprise Strong Advisor 2,811 10.80%
FBO 138007921 Focus Fund--Class L
Schwab Strong Advisor Mid 181,271 68.95%
Cap Growth Fund--
Class A
Nationwide Strong Advisor Mid 18,957 7.21%
FBO QPVA Cap Growth Fund--
Class A
Strong Investments Strong Advisor Mid 5,647 5.65%
Cap Growth Fund--
Class B
Merrill Lynch Strong Advisor Mid 8,146 17.87%
Cap Growth Fund--
Class C
Strong Investments Strong Advisor Mid 5,647 12.38%
Cap Growth Fund--
Class C
Association Of Operating Room Strong Advisor Mid 3,452 7.57%
Nurses Inc. Cap Growth Fund--
Main Account Class C
2170 S. Parker Rd., Ste. 300
Denver, Co. 80231-5732
U.S. Clearing Strong Advisor Mid 3,163 6.94%
FBO 717-90997-13 Cap Growth Fund--
Class C
Strong Investments Strong Advisor Mid 5,647 69.89%
Cap Growth Fund--
Class L
Donaldson Lufkin Strong Advisor Mid 966 11.96%
Cap Growth Fund--
Class L
American Enterprise Strong Advisor Mid 637 7.89%
FBO 728247091 Cap Growth Fund--
Class L
Donaldson Lufkin Strong Advisor Mid 596 7.38%
Cap Growth Fund--
Class L
Schwab Strong Advisor Mid 1,898,551 20.80%
Cap Growth Fund--
Class Z
Emre Strong Advisor Mid 694,290 7.61%
Cap Growth Fund--
Class Z
U.S. Clearing Strong Advisor Mid 457,618 5.02%
FBO Customer Accounts Cap Growth Fund--
Class Z
79
Fund--Class of Number of Percentage
Name and Address of Owner Share Shares(/1/) Ownership
- ------------------------- -------------- ----------- ----------
Schwab Strong Advisor 206,523 80.06%
Short Duration Bond
Fund--Class A
American Enterprise Strong Advisor 14,509 5.63%
FBO 176937221 Short Duration Bond
Fund--Class A
Merrill Lynch Strong Advisor 16,149 11.67%
Short Duration Bond
Fund--Class B
American Enterprise Strong Advisor 16,093 11.63%
FBO 174549921 Short Duration Bond
Fund--Class B
American Enterprise Strong Advisor 10,940 7.90%
FBO 176364651 Short Duration Bond
Fund--Class B
American Enterprise Strong Advisor 10,187 7.36%
FBO 175680981 Short Duration Bond
Fund--Class B
Strong Investments Strong Advisor 10,113 7.31%
Short Duration Bond
Fund--Class B
American Enterprise Strong Advisor 10,081 7.28%
FBO 178094191 Short Duration Bond
Fund--Class B
American Enterprise Strong Advisor 9,945 7.18%
FBO 174898321 Short Duration Bond
Fund--Class B
Raymond James & Associates Inc. Strong Advisor 28,012 46.07%
FBO Sherry Wingfield Short Duration Bond
34500 Jackson Rd. Fund--Class C
Moreland Hills, OH 44022
Strong Investments Strong Advisor 10,116 16.64%
Short Duration Bond
Fund--Class C
Donaldson Lufkin Strong Advisor 4,888 8.04%
Short Duration Bond
Fund--Class C
Strong Investments Strong Advisor 10,118 6.12%
Short Duration Bond
Fund--Class L
Dain Rauscher Inc. FBO Strong Advisor 2,415 14.59%
Helen R. Erickson Short Duration Bond
24295 Highway 87 Fund--Class L
Custer, SD 57730
80
Fund--Class of Number of Percentage
Name and Address of Owner Share Shares(/1/) Ownership
- ------------------------- -------------- ----------- ----------
American Enterprise Strong Advisor 1,598 9.65%
FBO 178829111 Short Duration Bond
Fund--Class L
Salomon Smith Barney, Inc. Strong Advisor 969 5.85%
135402478 Short Duration Bond
333 West 34th St.--3rd Floor Fund--Class L
New York, NY 10001
Donaldson Lufkin Strong Advisor 968 5.85%
Short Duration Bond
Fund--Class L
Schwab Strong Advisor 2,969,999 60.55%
Short Duration Bond
Fund--Class Z
Schwab Strong Advisor 2,135,513 66.38%
Small Cap Value
Fund--Class A
National Investor Services Strong Advisor 189,496 5.89%
FBO 820-01055-11 Small Cap Value
55 Water St., FL 32 Fund--Class A
New York, NY 10041
("National Investor")
Merrill Lynch Strong Advisor 50,087 9.79%
Small Cap Value
Fund--Class B
Merrill Lynch Strong Advisor 154,333 43.62%
Small Cap Value
Fund--Class C
Strong Investments Strong Advisor 6,510 27.82%
Small Cap Value
Fund--Class L
American Enterprise Strong Advisor 1,558 6.66%
FBO 169698181 Small Cap Value
Fund--Class L
American Enterprise Strong Advisor 1,197 5.12%
FBO 152808861 Small Cap Value
Fund--Class L
Schwab Strong Advisor 6,720,450 30.93%
Small Cap Value
Fund--Class Z
Strong Investments Strong Advisor 2,474,126 11.39%
Small Cap Value
Fund--Class Z
Emre Strong Advisor 1,679,150 7.73%
Small Cap Value
Fund--Class Z
Northern Trust Company Strong Advisor 1,324,288 6.10%
FBO Ericsson Savings Plan--DV Small Cap Value
P.O. Box 92956 Fund--Class Z
Chicago, IL 60675-2956
Merrill Lynch Strong Advisor 12,313 20.76%
Technology Fund--
Class A
81
Fund--Class of Number of Percentage
Name and Address of Owner Share Shares(/1/) Ownership
- ------------------------- -------------- ----------- ----------
Strong Investments Strong Advisor 10,000 16.86%
Technology Fund--
Class A
Bear Stearns Securities Corp. Strong Advisor 8,772 14.79%
FBO 493-92750-14 Technology Fund--
1 Metrotech Center North Class A
Brooklyn, NY 11201-3859
American Enterprise Strong Advisor 3,347 5.64%
FBO 551988401 Technology Fund--
Class A
Schwab Strong Advisor 3,062 5.16%
Technology Fund--
Class A
Strong Investments Strong Advisor 10,000 54.03%
Technology Fund--
Class B
American Enterprise Strong Advisor 2,602 14.06%
FBO 179127421 Technology Fund--
Class B
American Enterprise Strong Advisor 1,691 9.14%
FBO 176017581 Technology Fund--
Class B
American Enterprise Strong Advisor 1,496 8.08%
FBO 181500601 Technology Fund--
Class B
Strong Investments Strong Advisor 10,000 21.41%
Technology Fund--
Class C
Merrill Lynch Strong Advisor 7,866 16.84%
Technology Fund--
Class C
American Enterprise Strong Advisor 3,506 7.51%
FBO 174471451 Technology Fund--
Class C
Dain Rauscher Custodian Strong Advisor 3,133 6.71%
David C. Peterson Technology Fund--
Segregated Rollover/IRA Class C
15405 Highland Lawns Ct.
Minnetonka, MN 55345
American Enterprise Strong Advisor 3,041 6.51%
FBO 569626241 Technology Fund--
Class C
American Enterprise Strong Advisor 2,891 6.19%
FBO 180585601 Technology Fund--
Class C
American Enterprise Strong Advisor 2,878 6.16%
FBO 152057501 Technology Fund--
Class C
American Enterprise Strong Advisor 2,574 5.51%
FBO 136006221 Technology Fund--
Class C
Strong Investments Strong Advisor 10,000 100.00%
Technology Fund--
Class L
Schwab Strong Advisor U.S. 34,726 56.29%
Value Fund--Class A
82
Name and Address Number of Percentage
of Owner Fund--Class of Share Shares(/1/) Ownership
- ---------------- -------------------- ----------- ----------
Strong Investments Strong Advisor U.S. 5,008 8.12%
Value Fund--Class A
American Enterprise Strong Advisor U.S. 3,521 5.71%
FBO 168910611 Value Fund--Class A
Strong Investments Strong Advisor U.S. 5,005 9.40%
Value--Class B
Strong Investments Strong Advisor U.S. 5,005 27.93%
Value Fund--Class C
Strong Investments Strong Advisor U.S. 5,005 70.68%
Value Fund--Class L
Donaldson Lufkin Strong Advisor U.S. 826 11.66%
Value Fund--Class L
American Enterprise Strong Advisor U.S. 742 10.47%
FBO 175004481 Value Fund--Class L
Donaldson Lufkin Strong Advisor U.S. 509 10.17%
Value Fund--Class L
Strong Investments Strong Advisor U.S. 5,733,201 52.35%
Value Fund--Class Z
Schwab Strong Advisor U.S. 681,675 6.22%
Value Fund--Class Z
Strong Aggressive 1,033,237 44.88%
Emre Portfolio
Strong American 7,037,109 42.19%
Schwab Utilities Fund
Schwab Strong Asia Pacific Fund 1,268,563 19.42%
Union Bank of California Strong Asia Pacific Fund 382,395 5.85%
FBO Sheinberg Trust
A/C 20013071001
P.O Box 85484
San Diego, CA 92186-5484
Emre Strong Balanced Fund 3,669,098 21.76%
Strong Balanced Stock 36,306 7.84%
U.S. Clearing Fund
Strong Balanced Stock 32,545 7.03%
Schwab Fund
Schwab Strong Blue Chip Fund-- 4,083,608 13.94%
Investor Class
Strong Investments Strong Blue Chip Fund-- 3,114,591 10.63%
Investor Class
Schwab Strong Blue Chip Fund-- 434,331 99.79%
Advisor Class
83
Number of Percentage
Name and Address of Owner Fund--Class of Share Shares(/1/) Ownership
- ------------------------- -------------------- ----------- ----------
Emre Strong Conservative Portfolio 1,192,541 62.50%
Schwab Strong Corporate Bond 22,997,331 22.09%
Fund--Investor Class
Merrill Lynch Strong Corporate Bond 16,779,929 16.12%
Fund--Investor Class
Schwab Strong Corporate Bond 836,594 63.55%
Fund--Advisor Class
Security Trust Company Strong Corporate Bond 423,751 32.19%
Trustee Fund--Advisor Class
FBO Paracelsus Healthcare
Retirement Savings Plan
2390 E. Camelback Rd,
Ste. 240
Phoenix, AZ 85016-3434
Schwab Strong Corporate Bond 891,203 62.45%
Fund--Institutional Class
Susan J. Kalush and Strong Corporate Bond 146,445 10.26%
Samuel L. Kalush TR Fund--Institutional Class
Susan J Kalush Revocable
Trust
U/A DTD 02/19/86
7426 Weeping Willow Blvd.
Sarasota, FL 34241-6417
National Investor Strong Corporate Bond 124,684 8.74%
Special Custody Account Fund--Institutional Class
for
Exclusive Benefit of
Customers
CLS Advisor One Funds Strong Corporate Bond 78,290 5.49%
Clermont Fund Fund--Institutional Class
14747 California St.
Omaha, NE 68154-1952
Nationwide Strong Discovery Fund II 9,752,704 86.46%
Variable Account II
Nationwide Strong Discovery Fund II 594,862 5.27%
VLI Separate Account II
Schwab Strong Dow 30 Value Fund 3,979,824 42.99%
U.S. Clearing Strong Endeavor Fund 74,930 24.40%
Strong Investments Strong Endeavor Fund 50,000 16.29%
U.S. Clearing Strong Energy Fund 130,658 8.70%
Schwab Strong Energy Fund 114,318 7.61%
84
Fund--Class of Number of Percentage
Name and Address of Owner Share Shares(/1/) Ownership
- ------------------------- -------------- ---------- ----------
Emre Strong Energy Fund 91,559 6.10%
Charles B. Levinson & Sara M. Strong Energy Fund 80,206 5.34%
Levinson Community Property
14044 W. Rico Dr.
Sun City West, AZ 85375-2801
Schwab Strong Enterprise 2,694,122 14.61%
Fund--Investor
Class
U.S. Clearing Strong Enterprise 1,087,761 5.90%
Fund--Investor
Class
Schwab Strong Enterprise 30,216 93.91%
Fund--Advisor Class
Strong Investments Strong Foreign 108,149 27.78%
MajorMarkets/SM/ Fund
Strong Aggressive Portfolio Strong Foreign 81,653 20.98%
Oregon College Savings Program MajorMarkets/SM/ Fund
100 Heritage Reserve
Menomonee Falls, WI 53051-4400
Schwab Strong Government 32,434,709 24.28%
Securities Fund--
Investor Class
Schwab Strong Government 11,863,370 8.88%
Securities Fund--
Investor Class
Prudential Securities Inc. Strong Government 7,856,657 5.88%
PC 222347336 Securities Fund--
1 New York Plaza Investor Class
New York, NY 10004-1901
Schwab Strong Government 274,702 95.77%
Securities Fund--
Advisor Class
Schwab Strong Government 1,110,709 24.86%
Securities Fund--
Institutional Class
First American Trust Co. Strong Government 1,043,181 23.35%
TR FBO Omnibus Securities Fund--
421 N. Main St. Institutional Class
Santa Ana, CA 92701-4617
Exeter Trust Co. Strong Government 554,944 12.42%
P.O Box 41178 Securities Fund--
Rochester, NY 14604-4278 Institutional Class
85
Number of Percentage
Name and Address of Owner Fund--Class of Share Shares(/1/) Ownership
- ------------------------- -------------------- ----------- ----------
Ripon College Strong Government 408,994 9.16%
300 Seward Street Securities Fund--
P.O. Box 248 Institutional Class
Ripon, WI 54971-0248
PFF Bank & Trust Strong Government 341,319 7.64%
Trust & Investment Services Securities Fund--
393 W. Foothill Blvd., FL 2 Institutional Class
Claremont, CA 91711-2758
Saxon & Co. Strong Government 233,012 5.22%
FBO Rehab Institute Securities Fund--
A/C 10-01-002-1043360 Institutional Class
P.O. Box 7780-1888
Philadelphia, PA 19182-0001
Schwab Strong Growth Fund-- 19,195,405 15.53%
Investor Class
Emre Strong Growth Fund-- 7,304,719 5.91%
Investor Class
Schwab Strong Growth Fund-- 381,440 74.71%
Advisor Class
Safeco Services Corp. Strong Growth Fund-- 73,694 14.43%
P.O. Box 34443 Advisor Class
Seattle, WA 98124-1443
Carn & Co. 940519010 Strong Growth Fund-- 43,734 8.57%
Slant/Fin Corp Employees Advisor Class
Savings Plan
Attn: Star Group
P.O. Box 96211
Washington, DC 20090-6211
Trust Company of Illinois Strong Growth Fund-- 398,137 48.44%
45 S. Park Blvd., Ste 300 Institutional Class
Glen Ellyn, IL 60137-6282
Schwab Strong Growth Fund-- 210,787 25.65%
Institutional Class
Mead Witter Foundation Inc. Strong Growth Fund-- 138,352 16.83%
P.O. Box 39 Institutional Class
Wisconsin Rapids, WI
54495-0039
Schwab Strong Growth 20 Fund-- 7,726,356 27.44%
Investor Class
Schwab Strong Growth 20 Fund-- 488,846 91.43%
Advisor Class
Schwab Strong Growth and Income 8,175,778 18.36%
Fund-- Investor Class
Emre Strong Growth and Income 4,899,835 11.00%
Fund-- Investor Class
86
Number of Percentage
Name and Address of Owner Fund--Class of Share Shares(/1/) Ownership
- ------------------------- -------------------- ----------- ----------
Strong Investments Strong Growth and 2,401,165 5.39%
Income Fund--
Investor Class
Schwab Strong Growth and 315,029 61.43%
Income Fund--
Advisor Class
Master Account Strong Growth and 187,840 36.63%
FBO Participation Income Fund--
Kemflex Plans Advisor Class
c/o Kemper Service Company
811 Main St. # Dept.
Kansas City, MO 64105-20005
Chase Manhattan Bank Strong Growth and 952,924 93.05%
Trustee for Milbank, Tweed, Income Fund--
Hadley & McCloy Institutional Class
Master Trust
3 Chase Metro Tech Center
Brooklyn, NY 11245
U.S. Clearing Strong Heritage Money 106,197,926 7.51%
Fund--Investor Class
Wexford Clearing Services Strong Heritage Money 1,500,000 16.92%
FAO Baptist Genera Fund--Advisor Class
1 Conference Cornerstone Fund
Attn: Paul Kruit
1 New York Plaza
New York, NY 10004-1901
Bear Stearns Securities Corp. Strong Heritage Money 80,352,439 13.66%
FBO 103-21050-15 Fund--Institutional
1 Metrotech Center North Class
Brooklyn, NY 11201-385
("Bear Stearns")
Monroe & Co. Strong Heritage Money 60,000,000 10.20%
FAO Chiuni A-1 Construction Fund--Institutional
P.O. Box 160 Class
Westerville, OH 43086-0160
GATX Rail Corporation Strong Heritage Money 51,700,000 8.79%
500 W. Monroe St. Fund--Institutional
Chicago, IL 60661-3630 Class
Bear Stearns Strong Heritage Money 50,506,418 8.59%
FBO 103-21051-22 Fund--Institutional
Class
Kent Electronics Corporation Strong Heritage Money 50,335,838 8.56%
7433 Harwin Dr. Fund--Institutional
Class
Houston, TX 77036-2007
87
Number of Percentage
Name and Address of Owner Fund--Class of Share Shares(/1/) Ownership
- ------------------------- -------------------- ----------- ----------
Jeffrey Skoll TR Strong Heritage Money 35,032,359 5.96%
Jeffrey S. Skoll Revocable Fund--Institutional Class
Trust U/A DTD 8/20/99
27040 Old Trace Ln.
Los Altos Hills, CA 94022-
1977
Strong Opportunity Fund Inc. Strong Heritage Money 30,000,000 5.10%
Institutional Cash Management Fund--Institutional Class
Group
P.O. Box 782
Milwaukee, WI 53201-0782
Schwab Strong High-Yield Bond 30,364,478 27.61%
Fund--Investor Class
Merrill Lynch Strong High-Yield Bond 10,393,854 9.45%
Fund--Investor Class
Schwab Strong High-Yield Bond 849,878 92.06%
Fund--Advisor Class
Schwab Strong High-Yield 6,939,107 17.71%
Municipal
Bond Fund--Investor Class
Schwab Strong High-Yield 29,169 94.55%
Municipal Bond Fund--
Advisor Class
Strong Capital Management, Strong High-Yield 1,682 5.45%
Inc. Municipal Bond Fund--
100 Heritage Reserve Advisor Class
Menomonee Falls, WI 53051-
4400
("Strong Capital")
Emre Strong Index 500 Fund 4,790,356 35.33%
Emre Strong International 1,296,471 15.26%
Stock Fund
Schwab Strong International 804,299 9.47%
Stock Fund
Nationwide Strong International Stock 3,737,203 83.69%
Variable Account II Fund II
Nationwide Strong International Stock 313,476 7.02%
VLI Separate Account II Fund II
U.S. Clearing Strong Internet Fund 663,488 7.16%
Schwab Strong Internet Fund 591,924 6.39%
Strong Investments Strong Large Cap Core Fund 53,288 11.04%
U.S. Clearing Strong Large Cap Core Fund 27,272 5.65%
Schwab Strong Large Cap Core Fund 27,272 5.65%
Charles F. Streich Strong Large Cap Core Fund 25,054 5.19%
1423 W. Westport Circle
Mequon, WI 53092-5753
88
Fund--Class of Number of Percentage
Name and Address of Owner Share Shares(/1/) Ownership
- ------------------------- -------------- ----------- ----------
Emre Strong Large Cap 3,416,023 7.57%
Growth Fund
Schwab Strong Large Cap 3,114,494 6.90%
Growth Fund
Strong Investments Strong Mid Cap 1,074,220 36.09%
Disciplined Fund
Schwab Strong Mid Cap 596,309 20.04%
Disciplined Fund
Fidelity Investments Life Strong Mid Cap 11,649,875 55.28%
Insurance Co. Growth Fund II
82 Devonshire St #R27A
Boston, MA 02109-3605
("Fidelity")
The Ohio National Life Strong Mid Cap 2,452,878 11.64%
Insurance Co. Growth Fund II
1 Financial Way
Cincinnati, OH 45242-5851
("Ohio National")
Conseco Variable Insurance Co. Strong Mid Cap 2,095,366 9.94%
11825 N. Pennsylvania St. Growth Fund II
Carmel, IN 46032-4555
Empire Fidelity Investments Strong Mid Cap 1,101,691 5.23%
Life Insurance Company Growth Fund II
Devonshire St #R27A
Boston, MA 02109-3605
Emre Strong Moderate 3,821,782 73.30%
Portfolio
U.S. Clearing Strong Money Market 196,168,908 9.40%
Fund
Emre Strong Money Market 147,650,177 7.08%
Fund
The Travelers Separate Account TM2 Strong Multi Cap 1,083,818 36.88%
For Variable Annuities Value Fund II
Attn: Bob Iagrossi
1 Tower Sq. #5MS
Hartford, CT 06183-0001
Great West Life & Annuity Strong Multi Cap 1,077,616 36.67%
Insurance Company Value Fund II
Unit Valuations 2T2
8515 E. Orchard Rd.
Englewood, CO 80111-5037
Ohio National Strong Multi Cap 428,475 14.58%
Value Fund II
Schwab Strong Municipal 40,488,694 18.13%
Advantage
Fund--Investor
Class
Schwab Strong Municipal 255,248 100.00%
Advantage Fund--
Advisor Class
89
Number of Percentage
Name and Address of Owner Fund--Class of Share Shares(/1/) Ownership
- ------------------------- -------------------- ----------- ----------
Tellabs Operations Inc. Strong Municipal 20,879,168 29.07%
1000 Reminton Blvd. Advantage Fund--
Bolingbrook, IL 60440-4955 Institutional Class
Bankers Trust Co. Escrow Agent Strong Municipal 10,609,581 14.77%
for Dow Corning U/A DTD 10/99 Advantage Fund--
4th Floor MS 50401 Institutional Class
4 Albany St.
New York, NY 10006-1502
Schwab Strong Municipal 6,021,336 8.38%
Advantage
Fund--Institutional
Class
Dean V. White Strong Municipal 3,945,877 5.49%
Advantage
Fund--Institutional
Class
BTCO as Escrow Agent Strong Municipal 3,812,820 5.31%
for Dow Corning Advantage Fund--
U/A/ DTD 10/01/99 Institutional Class
4 Albany St.
New York, NY 10006-1502
Schwab Strong Municipal 2,781,892 9.80%
Bond
Fund--Investor Class
Schwab Strong Municipal 12,018 87.38%
Bond
Fund--Advisor Class
Strong Capital Strong Municipal 1,736 12.62%
Attn: Kevin Scott Bond
100 Heritage Reserve Fund--Advisor Class
Menomonee Falls, WI 53051-4400
Ernest C. Styberg Strong Municipal 203,619 42.49%
6725 Brook Rd. Bond
Franksville, WI 53126-9305 Fund--
Institutional Class
Bernice M Styberg Strong Municipal 158,063 32.98%
6725 Brook Rd. Bond
Franksville, WI 53126-9305 Fund--
Institutional Class
Firstar Bank NA CUST Strong Municipal 84,202 17.57%
FBO Gerald O'Rourke Bond
P.O. Box 1787 Fund--
Milwaukee, WI 53201-1787 Institutional Class
("Firstar")
Firstar FBO James Strong Municipal 33,315 6.95%
Curtes & Nancy Curtes JT WROS Bond Fund--
Institutional Class
Schwab Strong Opportunity 17,232,233 19.68%
Fund--Investor Class
Schwab Strong Opportunity 554,096 64.44%
Fund--Advisor Class
90
Number of Percentage
Name and Address of Owner Fund--Class of Share Shares(/1/) Ownership
- ------------------------- -------------------- ----------- ----------
State Street Bank & Trust Co. Strong Opportunity Fund-- 155,723 18.11%
FBO ADP Daily Valuation 401K Advisor Class
200 Newport Ave. Ext. #JQ7
North Quincy, MA 02171-2102
Muggs & Co. Strong Opportunity Fund-- 55,613 6.47%
c/o Firstar Trust Company Advisor Class
P.O. Box 1787
Milwaukee, WI 53201-1787
Nationwide Strong Opportunity Fund II 34,136,814 65.55%
Variable Account II
Fidelity Strong Opportunity Fund II 4,740,573 9.10%
Nationwide Strong Opportunity Fund II 3,625,368 6.96%
FBO NWVA-9
Schwab Strong Overseas Fund 335,888 13.17%
U.S. Clearing Strong Overseas Fund 164,435 6.45%
Schwab Strong Short-Term Bond 25,105,158 19.12%
Fund--Investor Class
Schwab Strong Short-Term Bond 236,666 96.65%
Fund--Advisor Class
First Union National Bank Strong Short-Term Bond 1,502,586 25.32%
FBO FINOVA Executive Officers Fund--Institutional Class
Acct. # 1090105781
1525 W. Wt. Harris Blvd.,
#1151
Charlotte, NC 28261-8522
Gene A. Salmon Strong Short-Term Bond 780,771 13.16%
DBA G-S Service Co. Fund--Institutional Class
P.O. Box 308
Urbana, IL 61803-0308
Schwab Strong Short-Term Bond 734,164 12.37%
Fund--Institutional Class
Richard C. Sears & Strong Short-Term Bond 624,097 10.52%
Deborah Marx Fund--Institutional Class
Sears JT TEN
P.O. Box 574
Palisades, NY 10964-0574
Muhlenberg College Strong Short-Term Bond 388,906 6.55%
2400 W. Chew St. Fund--Institutional Class
Allentown, PA 18104-5564
Schwab Strong Short-Term High Yield 15,695,638 41.80%
Bond Fund--Investor Class
91
Number of Percentage
Name and Address of Owner Fund--Class of Share Shares(/1/) Ownership
- ------------------------- -------------------- ----------- ----------
Strong Investments Strong Short-Term High 2,435,089 6.49%
Yield Bond Fund--Investor
Class
Schwab Strong Short-Term High 804,393 98.24%
Yield Bond Fund--Advisor
Class
Dean V. White Strong Short-Term High 3,767,086 26.72%
Yield Municipal Fund--
Investor Class
Schwab Strong Short-Term High 1,640,136 11.64%
Yield Municipal Fund--
Investor Class
Strong Capital Strong Short-Term High 1,578 100.00%
Yield Municipal Fund--
Advisor Class
Schwab Strong Short-Term 5,829,557 16.15%
Municipal Bond Fund--
Investor Class
Strong Capital Strong Short-Term High 1,578 100.00%
Yield Municipal Fund
--Advisor Class
Skywest Inc. Strong Short-Term 4,333,914 12.01%
Attn: Mike Kraupp--VP of Municipal
Finance/Controller Bond Fund--Investor Class
444 S River Rd.
St. George, UT 84790-2085
Schwab Strong Short-Term 41,681 100.00%
Municipal
Bond Fund--Advisor Class
Schwab Strong Short-Term 192,314 45.12%
Municipal
Bond Fund--
Institutional Class
Kevin P. Scullion, Annette M. Strong Short-Term 126,565 29.69%
Scullion & Margaret A. Murphy Municipal
TR. Bond Fund--
Kevin P. Scullion Declaration Institutional Class
of Trust
U/A DTD 10/29/86
386 Muskegon Ave.
Calumet City, IL 60409-2347
Raymond J. Murphy, Annette M. Strong Short-Term 107,362 25.19%
Scullion & Kevin P. Scullion Municipal
JT TEN Bond Fund--
386 Muskegon Ave. Institutional Class
Calumet City, IL 60409-2347
U.S. Clearing Strong Tax-Free Money Fund 11,753,043 11.16%
Daryl A. Ferguson Strong Tax-Free Money Fund 6,236,859 5.92%
1305 Barnwell Blf
Beaufort, SC 29902-4126
92
Number of Percentage
Name and Address of Owner Fund--Class of Share Shares(/1/) Ownership
- ------------------------- -------------------- ----------- ----------
Schwab Strong Technology 100 Fund 2,442,527 7.90%
U.S. Clearing Strong Technology 100 Fund 2,357,173 7.63%
Schwab Strong U.S. Emerging Growth Fund 798,488 13.86%
U.S. Clearing Strong U.S. Emerging Growth Fund 432,701 7.51%
Emre Strong U.S. Emerging Growth Fund 430,577 7.48%
Schwab Strong Value Fund 542,133 11.47%
Joseph M. Jauquet TR Strong Wisconsin Tax-Free Fund 62,082 15.01%
Joseph M. Jauquet
Revocable Living Trust
P.O. Box 1787
Milwaukee, WI 53201-1787
Daniel J. Czarnecki & Strong Wisconsin Tax-Free Fund 49,988 12.09%
Mary C Czarnecki JT TEN
7220 Overlook Dr.
Greendale, WI 53129-2141
Strong Investments Strong Wisconsin Tax-Free Fund 38,338 9.27%
John P. Hermann Strong Wisconsin Tax-Free Fund 36,866 8.92%
& Katherine C. Hermann
TR
John P. Hermann
& Katherine C. Hermann
Living Trust of 1998
U/A DTD 12/01/98
1709 Plainwood Cir.
Sheboygan, WI 53081-7745
(/1/) Full shares of the Fund owned beneficially as of May 11, 2001.
93
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,
Elizabeth N. Cohernour
Vice President and Secretary
Menomonee Falls, Wisconsin
May 30, 2001
94
ANNEX A
FORM OF PROPOSED 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.
A-1
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.
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.
A-2
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) 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
A-3
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 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
A-4
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 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.
A-5
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-6
SCHEDULE A
TO AMENDED AND RESTATED ADVISORY AGREEMENT
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.
- ------------------------------------- -------------------------------------
SCHEDULE B
TO AMENDED AND RESTATED ADVISORY AGREEMENT
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
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
B-1
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, 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-2
(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.
(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;
B-3
(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 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
B-4
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;
(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
B-5
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 of 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 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 PLAN OF REORGANIZATION
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:
Authorized
Number of
Class Series 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
B-7
Authorized
Number of
Class Series Shares
----- ------ ----------
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
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.
---------------------------------------
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, AND 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.
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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 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
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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.
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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.
CALENDAR YEAR TOTAL RETURNS
- ----------------------------------
Year Internet Fund
- ----------------------------------
2000 -44.5%
- ----------------------------------
BEST AND WORST QUARTERLY PERFORMANCE
(During the periods shown above)
Fund name Best quarter return Worst quarter return
Internet Fund 14.6% (1st Q 2000) -45.9% (4th Q 2000)
AVERAGE ANNUAL TOTAL RETURNS
As of 12-31-00
Since Fund
Fund/Index 1-year 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.
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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 Fund 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.
Management Other Total Annual Fund
Fund Fees 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
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.
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PORTFOLIO MANAGER
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 Strong 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. Strong reserves the right to refuse, change, discontinue, or
temporarily suspend the purchase privilege for any reason.
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
C-6
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 Strong or through its intermediaries. The
exchange price is the next NAV determined after Strong receives the exchange
request. Purchases by exchange are subject to the investment requirements and
other criteria of the fund or class purchased. Strong 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%. Strong
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 Strong receives the redemption request. Shareholders may
submit redemption requests directly to Strong 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, Strong 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, Strong 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. Strong reserves the right
to refuse, change, discontinue, or temporarily suspend the telephone or
Internet redemption privilege for any reason.
Redemptions In Kind
Strong 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, Strong uses redemption in kind when large redemption requests may
cause harm to the Fund and its shareholders.
C-7
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.
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.
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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
- ------------------------------------------------------------
Dec. 31,
Selected Per-Share Data(a) 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%
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.
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MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The following is an excerpt from the Fund's Annual Report for the fiscal
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
all shares.
C-10
AVERAGE ANNUAL TOTAL RETURN/1/
As of 12-31-00
1-year -44.50%
Since Inception (12-31-99) -44.50%
Equity funds are volatile investments and should only be considered for long-
term goals.
/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.
Effective June 15, 2001, shares held for less than one month will be subject
to a redemption fee of 1.00%.
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.
Q: How did your Fund perform?
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 Iner@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
C-11
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 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.*
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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
*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-13
ANNEX D
PROPOSED SUBADVISORY AGREEMENT WITH
SLOATE, WEISMAN, MURRAY AND COMPANY, INC.
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.
WITNESSETH:
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.
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
D-1
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.
D-2
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 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
D-3
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.
(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.
D-4
(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 Advice. 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 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.
D-5
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.
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
D-6
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;
(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
D-7
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
(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
D-8
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 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; and
(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
D-9
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 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
D-10
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.
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
D-11
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.
230 Park Avenue, 7th Floor
New York, New York 10022
Attention: Ms. Laura Sloate
Facsimile: (212) 449-2481
(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
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.
D-12
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 shall be held or made
invalid by a court decision or applicable law, the remainder of the Agreement
shall not be affected adversely and shall remain in full force and effect.
21. Certain Definitions.
3(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.
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
[STRONG LOGO]
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 30, 2001, receipt of which is hereby acknowledged.
DATE: _________________________, 2001
NOTE: Please sign exactly as your name(s) appear(s) on this Proxy Card. If joint
owners, EITHER may sign this Proxy Card. 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 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
Annual Meeting.
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PROXY CARD FOR ANNUAL THANK YOU FOR YOUR TIME
MEETING OF SHAREHOLDERS Please fill in box(es)
as shown using black
or blue ink or number
2 pencil [X]
PLEASE DO NOT USE FINE
POINT PENS
THANK YOU FOR YOUR TIME
PROXY CARD FOR ANNUAL MEETING OF SHAREHOLDERS
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This proxy will be voted as specified. If no specification is made, this Proxy
Card will be voted for 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.
1. To elect members to the FOR all nominees WITHHOLD
Board of Directors. (except as witheld) AUTHORIZATION to vote for all
[ ] nominee(s) [ ]
(01) Richard S. Strong (02) Willie D. Davis (03) William F. Vogt
(04) Marvin E. Nevins (05) Stanley Kritzik (06) Neal Malicky
TO WITHOLD AUTHORITY FOR AN INDIVIDUAL NOMINEE(S), WRITE THE NOMINEE(S) NAME(S) OR
NUMBERS(S) ON THE LINE BELOW.
2. To approve the new advisory FOR AGAINST ABSTAIN
agreement as described in the [ ] [ ] [ ]
Proxy Statement.
3. To ratify the selection of [ ] [ ] [ ]
Independent Auditors as
described in the Proxy
Statement.
4. Strong Technology 100 Fund [ ] [ ] [ ]
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 [ ] [ ] [ ]
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 Annual Meeting.
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TO BE COMPLETED AND SIGNED ON REVERSE SIDE OF CARD