<PAGE> 1
THE STRONG GROWTH & INCOME Funds
ANNUAL REPORT - OCTOBER 31, 1995
THE STRONG ASSET ALLOCATION FUND
THE STRONG TOTAL RETURN FUND
THE STRONG AMERICAN UTILITIES FUND
[STRONG FUNDS LOGO]
STRONG FUNDS
<PAGE> 2
EIGHT BASIC PRINCIPLES FOR SUCCESSFUL MUTUAL FUND INVESTING
These common-sense rules are followed by many successful investors. They make
sense for beginners, too. If you have a question on these principles, or would
like to discuss them with us, please contact us at 1-800-368-3863. We're here
24 hours a day, seven days a week to take your call.
HAVE A PLAN.
Even a simple plan can help you take control of your financial
future. Review your plan once a year, or if your circumstances
change.
START INVESTING AS SOON AS POSSIBLE.
Make time a valuable ally. Let it put the power of compounding to
work for you, while helping to reduce your potential
investment risk.
DIVERSIFY YOUR PORTFOLIO.
By investing in different asset classes - stocks, bonds, and
cash - you help protect against poor performance in one type of
investment while including investments most likely to help you
achieve your important goals.
INVEST REGULARLY.
Investing is a process, not a one-time event. By investing
regularly over the long term, you reduce the impact of short-term
market gyrations, and you attend to your long-term plan before
you're tempted to spend those assets on short-term needs.
MAINTAIN A LONG-TERM PERSPECTIVE.
For most individuals, the best discipline is staying invested as
market conditions change. Reactive, emotional investment
decisions are all too often a source of regret - and of principal
loss.
CONSIDER STOCKS TO HELP ACHIEVE MAJOR LONG-TERM GOALS.
Over time, stocks have provided the more powerful returns needed
to help the value of your investments stay well ahead of
inflation.
KEEP A COMFORTABLE AMOUNT OF CASH IN YOUR PORTFOLIO.
To meet current needs, including emergencies, use a money market
fund or a bank account - not your long-term investment assets.
KNOW WHAT YOUR'RE BUYING.
Make sure you understand the potential risks and rewards
associated with each of your investments. Ask questions...
request information...make up your own mind. And choose a fund
company that helps you make informed investment decisions.
<PAGE> 3
THE STRONG GROWTH & INCOME Funds
ANNUAL REPORT - OCTOBER 31, 1995
Dear shareholder: As the Strong Family of Funds continues to grow, so too have
our reporting responsibilities to you. To help ensure that we can continue to
produce shareholder reports and other information on a timely basis, we have
changed the fiscal year-end of the Strong Growth and Income Funds from December
31 to October 31, beginning with this annual report. By staggering the Funds'
fiscal-year periods, and thereby their reporting schedules, we avoid a
potential "log-jam" at year-end. Please note that this change has no effect on
how the Funds are managed. It simply alters the reporting period of your
shareholder reports. If you have a question regarding the new schedule, please
don't hesitate to call us at 1-800-368-3863.
Table of Contents
<TABLE>
<S> <C>
INVESTMENT REVIEWS
The Strong Asset Allocation Fund . . . . . . . . . . . . 2
The Strong American Utilities Fund . . . . . . . . . . . 4
The Strong Total Return Fund . . . . . . . . . . . . . . 6
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong Asset Allocation Fund . . . . . . . . . 8
The Strong American Utilities Fund . . . . . . . . 12
The Strong Total Return Fund . . . . . . . . . . . 13
Statements of Operations . . . . . . . . . . . . . . . . 16
Statements of Assets and Liabilities . . . . . . . . . . 17
Statements of Changes in Net Assets . . . . . . . . . . . 18
Notes to Financial Statements . . . . . . . . . . . . . . 19
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . 22
REPORT OF INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . 24
</TABLE>
<PAGE> 4
The Strong ASSET ALLOCATION FUND
The Strong Asset Allocation Fund seeks high total return consistent with
reasonable risk over the long term. The Fund allocates its assets globally
among a diversified portfolio of equity securities, bonds, and short-term fixed
income securities.
PATIENT INVESTORS REWARDED WITH BIG RALLIES
After an arduous 1994, the stock and bond markets have roared back in 1995.
Fueled by strong corporate earnings, most notably in the technology, financial
services, and health-care sectors, the stock market posted a return of 29.30%
year-to-date through October 31, as measured by the S&P 500.* Also helping
fuel the stock market rally was a steep decline in interest rates, which
plummeted following a stream of weaker-than-expected economic numbers,
particularly in April and May.
Of course, the falling interest-rate environment was a positive for bond prices
as well. Many investors had been cautious of the bond market early in the year,
anticipating continued economic strength, higher inflation, and higher interest
rates. When that scenario failed to materialize, investors became more
confident that interest rates had reached a peak, and money poured from the
short end of the market into longer maturity bonds, driving prices higher and
forcing yields lower. The rally in bond prices took place across nearly all
maturities -- only 3-month yields held firm -- and continued nearly unabated
through the end of October.
RIDING THE RALLY
As the year began, we had positioned the portfolio somewhat cautiously in
anticipation of another tightening by the Federal Reserve. However, when that
tightening occurred in February, we concluded that short-term rates were
unlikely to move higher. Confident that an improvement in the markets was
around the corner, we reduced our cash position, boosted the duration of our
bond weighting, and increased our stock exposure to give the portfolio greater
total-return potential.
As a result of these moves and the markets' positive overall performance, the
Fund achieved a total return of 16.84% through October 31.
On average through most of 1995, the portfolio was about 50% weighted in stocks
when S&P 500 futures are taken into account. Helping moderate the portfolio's
risk profile was our multi-manager approach, which provided broad
diversification between growth stocks, value stocks, and international issues.
In October, we believed the stock market's rally made the portfolio
increasingly vulnerable to a possible correction. We therefore lightened up our
stock position and increased our bond weighting. This more conservative
allocation is reflected in the portfolio's composition as of October 31.
FORECAST: FAVORABLE, WITH OCCASIONAL SETBACKS
For the near term, we'll probably maintain our current positioning. After the
explosive rally we witnessed in the first ten months of 1995, we believe both
the stock and bond markets may be susceptible to some choppiness stemming from
upcoming budget negotiations, earnings concerns, and potential volatility in
Japanese markets.
These are short-term caveats, however. Longer-term, the overall investing
environment appears quite favorable. We expect inflation to remain subdued and
the economy to continue to grow at around a 3% annual rate. Against this
backdrop, we look for interest rates to stay in their current range with a
downward bias, and for corporate profits to remain fairly strong.
Asset Allocation
as of 10-31-95
<TABLE>
<S> <C>
Short-Term Instruments 28.4%
Stocks 35.8%
Bonds 35.8%
</TABLE>
This allocation does not include the effect of futures and is presented as a
percentage of net assets. Please see the Schedule of Investments in Securities
for a complete listing of the Fund's portfolio. The Bonds category maintains
no maturity limitation and generally has an average duration of 2.0 or higher.
The securities in the Short-Term category have effective maturities of three
years or less, and the category generally has an average duration of 2.0 or
lower. Duration is a measure of sensitivity to interest rates.
The Strong Growth & Income Funds Annual Report - October 31, 1995
<PAGE> 5
In such an environment, it's important for shareholders to be patient and
maintain a longer-term outlook. A slow-growth economy doesn't mean a smooth,
steady trend. On the contrary, because the markets currently lack any
overriding momentum, we can expect them to be buffeted occasionally by
contradictory economic data both here and internationally, and
politically-induced fluctuations as election campaigns kick into high gear.
But for investors who maintain a well-diversified portfolio and have the
discipline to look past short-term disturbances, we believe the markets
currently offer attractive opportunities for high total return. We appreciate
your confidence in the Strong Asset Allocation Fund, and we look forward to
serving your investment needs in the years to come.
[PHOTO OF BRADLEY C. TANK]
Sincerely,
/s/ Bradley C. Tank
Bradley C. Tank
Lead Portfolio Manager
Growth of an assumed $10,000
invested at the Fund's inception
<TABLE>
<CAPTION>
The
Strong S&P
Asset 40/20/20 Asset 500
Allocation Balanced Allocation Stock
Fund Index Index Index
<S> <C> <C> <C> <C>
12/81 10,000 10,000 10,000 10,000
12/82 13,320 12,166 12,374 12,155
12/83 19,344 13,899 14,119 14,897
12/84 21,234 15,331 15,605 15,832
12/85 25,346 18,625 19,226 20,854
12/86 29,819 21,260 22,123 24,747
12/87 29,734 22,601 23,442 26,046
12/88 32,467 25,002 26,058 30,372
12/89 36,104 29,820 31,267 39,996
12/90 37,107 31,088 32,579 38,754
12/91 44,394 37,005 38,498 50,561
12/92 45,824 39,479 41,628 54,412
12/93 52,469 42,695 45,208 59,897
12/94 51,679 42,955 45,314 60,688
6/95 57,081 48,279 51,281 72,954
10/95 60,379 50,465 53,703 78,470
</TABLE>
Average Annual
Total Returns
through 10-31-95
1-year
16.21%
5-year
10.72%
10-year
9.98%
Since inception
on 12-30-81
13.88%
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at the Fund's inception, with similar investments
in the Standard & Poor's 500 Stock Index ("S&P 500"), an unmanaged index
generally representative of the U.S. stock market, and the Asset Allocation
Index and the 40/40/20 Balanced Index, both of which are a combination of three
unmanaged indices. The Asset Allocation Index is composed of 40% S&P 500; 40%
Salomon Brothers Broad Investment-Grade Bond Index ("The Salomon BIG"), a
market-capitalization weighted index generally representative of government,
mortgage, and investment-grade corporate securities; and 20% Salomon Brothers
3-month Treasury Bill Index. The 40/40/20 Balanced Index is composed of 40% S&P
500; 40% Lehman Brothers Intermediate Government/Corporate Bond Index, a
market-capitalization weighted index generally representative of government
and investment-grade corporate securities with maturities of 1-10 years; and
20% Salomon Brothers 3-month Treasury Bill Index. The 40/40/20 Balanced Index
has been added because we believe it more accurately reflects the Fund's fixed
income security selection. Results include the reinvestment of all dividends
and capital gains distributions. Source for the index data is Micropal.
Performance is historical and does not represent future results. Investment
returns and principal value vary, and you may have a gain or loss when you sell
shares.
*Source of index information: Micropal.
The Strong Growth & Income Funds Annual Report - October 31, 1995
<PAGE> 6
The Strong AMERICAN UTILITIES Fund
The Strong American Utilities Fund seeks total return by investing for both
income and capital growth. The Fund invests primarily in the stocks of public
utility companies headquartered in the United States.
FUND SEES EXCELLENT PERFORMANCE TO DATE
Utility stocks continued to rebound through the third quarter and, overall,
performed very well throughout the first 10 months of the year. The Federal
Reserve reduced rates once during this period, contributing to the decline in
the 30-year U.S. Treasury Bond yield from 7.88% to 6.33% over the period. The
Fund posted a total return of 26.88% through October 31, as compared to 19.67%
for the Lipper Utility Fund Index and 30.80% for the Standard & Poor's
Utilities Index.(1)
The Fund ranked in the top 3% of the 82 utility funds tracked by Lipper
Analytical Services for the 10-month period ended 10-31-95(2), in part because
good earnings gains and a favorable interest-rate climate resulted in an
improved perception of the utility group as a whole. In response, we positioned
the portfolio to take advantage of these trends.
Five largest stock holdings
based on net assets as of 10-31-95
<TABLE>
<CAPTION>
COMPANY INDUSTRY % OF NET ASSETS
<S> <C> <C>
Ameritech Corporation Telecommunication 9.9%
American Electric Power Co., Inc. Electric Utilities 7.1%
CMS Energy Corporation Electric Utilities 6.6%
SBC Communications, Inc. Telecommunication 6.6%
Bell Atlantic Corporation Telecommunication 5.2%
</TABLE>
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
TELECOMMUNICATIONS PLAYED MAJOR ROLE
While all sectors in the Fund contributed to improved performance, price gains
in telecommunications stocks played a primary role. In particular, the timely
increase in our holdings in US WEST, Ameritech, and Bell Atlantic during the
third quarter, along with new positions in BellSouth and Pacific Telesis,
generated significant returns.
Telecommunications stocks continued to represent the Fund's largest sector
accounting for 37.4% of the Fund's assets at the end of October. We believe
the outlook for telecommunications stocks continues to be favorable because of
potential earnings growth, above-market dividend yields, and the prospect of
beneficial legislation. For example, the telecommunications bills that have
passed both houses of Congress may become law before year-end, allowing local
telephone companies to enter the long-distance market in due course.
ELECTRIC UTILITIES ADDED TO THE FUND'S GAINS
A strategic shift in July saw two electric utilities stocks join the Fund's
five largest holdings. We believe electric utility stocks are, relative to the
broad market, more attractive than they have been in several years.
Consequently, we increased the Fund's weighting in electric utility stocks
throughout the year. By the end of October, they represented 31.2% of the
portfolio.
Although the industry is faced with sweeping legislative and regulatory
changes, the exaggerated fear of increased competition appears to have eased.
As a result, it now appears that well-positioned companies are likely to
continue to increase earnings and dividends during the next few years. In
response to the possibility of industry changes, a number of mergers have been
proposed. Our view is that mergers can result in fewer-but better-companies,
and that good strategic combinations should enable the resultant firms to find
opportunities for additional profit as the industry evolves.
Industry Allocation
based on net assets as of 10-31-95
<TABLE>
<S> <C>
Telecommunication 37.4%
Electric Utilities 31.2%
Energy Related 10.2%
Gas Utilities 9.9%
Cash Equivalents 9.7%
Other Utilities 0.9%
Railroads 0.7%
</TABLE>
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
The Strong Growth & Income Funds Annual Report - October 31, 1995
<PAGE> 7
OUTLOOK REMAINS POSITIVE
Our outlook for utility stocks remains positive. In an economy experiencing
moderate economic growth and low inflation, financially strong, dividend-paying
stocks will, in our opinion, provide good investment returns. We continue to
believe that focused research-combined with solid experience managing utility
portfolios and our knowledge of the regulatory process-should enable us to
identify investment opportunities arising from the changes underway in the
utilities industry.
We appreciate your investment with us, and we look forward to earning your
continued confidence.
[PHOTO OF WILLIAM H. REAVES]
Sincerely,
/s/ William H. Reaves
William H. Reaves
Portfolio Manager
Average Annual Total Returns
as of 10-31-95
<TABLE>
<CAPTION>
Time Period Strong American Utilities Fund Lipper Utility Fund Index S&P Utilities Index
<S> <C> <C> <C>
Year-to-date 26.88 % 19.67 % 30.80 %
1-year 22.72 % 17.66 % 29.65 %
Since inception
(on 7-1-93) 11.56 % 4.40 % 8.69 %
</TABLE>
As of 10-31-95, the Fund's 30-day annualized yield was 3.27%.
Growth of an assumed $10,000 invested at the Fund's inception
<TABLE>
<CAPTION>
S&P 500 Stock Index The Strong American Utilities Fund S&P Utilities Index
<S> <C> <C> <C>
6/93 $ 10,000 $ 10,000 $ 10,000
9/93 10,258 10,801 10,700
12/93 10,496 10,450 10,090
3/94 10,098 9,894 9,257
6/94 10,141 10,020 9,255
9/94 10,637 10,278 9,299
12/94 10,635 10,178 9,289
3/95 11,670 10,799 9,930
6/95 12,784 11,557 10,667
9/95 13,800 12,638 11,897
10/95 $ 13,751 $ 12,913 $ 12,150
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with similar investments in the
Standard and Poor's 500 Stock Index, an unmanaged index generally
representative of the U.S. stock market, and the Standard and Poor's Utilities
Index, an unmanaged index generally representative of U.S. utility stocks.
Results include the reinvestment of all dividends and capital gains
distributions. Source for the index data is Micropal. Performance is
historical and does not represent future results. Investment returns and
principal value vary, and you may have a gain or loss when you sell shares.
(1) Source for the Standard and Poor's Utilities Index: Micropal.
(2) For the 1-year and since-inception periods ended 10-31-95, the Fund was
ranked #16 of 80 and #1 of 45 funds, respectively. From time to time, the
Fund's advisor has waived its management fee and absorbed its expenses,
which has resulted in higher returns. Rankings are historical and do not
represent future results.
The Strong Growth & Income Funds Annual Report - October 31, 1995
<PAGE> 8
The Strong TOTAL RETURN FUND
The Strong Total Return Fund seeks high total return by investing for capital
growth and income. While the Fund normally emphasizes equity investments, it
may also invest a portion of its assets in bonds and short-term fixed income
securities.
STOCKS ROAR BACK IN 1995
Fueled by strong corporate profits and spurred by tumbling long-term interest
rates, the stock market has surged through October 1995. Market leaders were
predominantly in the technology sector, particularly networking and
telecommunications companies. Other strong performers included
financial-services companies -- which benefited from declining interest rates
and merger activity in the banking and insurance areas -- and health-care
companies. The Fund's portfolio is well represented in these sectors and, as a
result, performed well overall. From the beginning of the year through the end
of October, the Fund's total return was 19.82%.
FOCUS ON "BLUE-CHIP" GROWERS
As part of the portfolio's growth-and-income orientation, we focused on
larger-capitalization, well-established, "blue chip" companies that we believe
can grow earnings at a steady pace and consistently raise their dividends. We
also sought to boost the Fund's yield potential by adding more convertible
bonds and higher-yielding equities. Generally, we limited our convertible bond
purchases to companies whose common stock we believed was attractively valued.
This approach is designed to provide a relatively low-volatility growth
vehicle, while increasing the Fund's ability to earn income.
Beyond this fundamental approach, we shifted the specific holdings of the Fund
through the year in an attempt to benefit from changing market expectations.
During the spring and into early summer, we increased the portfolio's weighting
in economically sensitive companies in anticipation of an interest-rate cut by
the Federal Reserve.
As autumn approached, we began to adopt a somewhat more conservative posture as
the economy once again showed signs of ebbing. In order to position the
portfolio toward stable growth and income companies, we de-emphasized
cyclicals, took some profits in the technology sector, purchased blue-chip
health-care stocks (which typically can continue to grow earnings even in a
slower growth environment), and built up a modest cash position.
Asset Allocation
as of 10-31-95
<TABLE>
<S> <C>
Stocks 82.1%
Bonds 9.4%
Short-Term Investments 8.5%
</TABLE>
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
A GOOD OUTLOOK FOR INVESTORS
While our positioning in October took a slightly more conservative turn, we
view it as a short-term move. Longer term, we see several positive factors for
stocks.
With inflation apparently contained, the next move by the Federal Reserve is
likely to entail lowering interest rates. At the same time, productivity in
American corporations should continue to improve due to new technology
investments, constrained labor costs, less regulation, and fiscal or
entitlement reforms coming out of Washington.
The Strong Growth & Income Funds Annual Report - October 31, 1995
<PAGE> 9
Overall, we expect a good environment for the high-quality, established
companies that this Fund will continue to emphasize. We thank you for your
confidence, and we look forward to serving your investment needs in the future.
[PHOTO OF RONALD C. OGNAR & IAN J. ROGERS]
Sincerely,
/s/ Ronald C. Ognar
Ronald C. Ognar,
Portfolio Manager
/s/ Ian J. Rogers
Ian J. Rogers,
Portfolio Manager
Growth of an assumed $10,000
invested at the Fund's inception
<TABLE>
<CAPTION>
THE STRONG TOTAL S&P 500
RETURN FUND STOCK INDEX
<S> <C> <C>
12/81 10,000 10,000
12/82 13,250 12,155
12/83 18,720 14,897
12/84 20,685 15,832
12/85 25,936 20,854
12/86 31,121 24,747
12/87 33,002 26,046
12/88 38,141 30,372
12/89 39,140 39,996
12/90 36,367 38,754
12/91 48,578 50,561
12/92 48,844 54,412
12/93 59,852 59,897
12/94 59,027 60,688
6/95 67,212 72,954
10/95 70,725 78,470
</TABLE>
Average Annual
Total Returns
through 10-31-95
1-year
17.48%
5-year
14.78%
10-year
11.73%
Since inception
on 12-30-81
15.19%
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Standard & Poor's 500 Stock Index, an unmanaged index generally representative
of the U.S. stock market. Results include the reinvestment of all dividends
and capital gains distributions. Source for the index data is Micropal.
Performance is historical and does not represent future results. Investment
returns and principal value vary, and you may have a gain or loss when you sell
shares.
The Strong Growth & Income Funds Annual Report - October 31, 1995
<PAGE> 10
SCHEDULES OF INVESTMENTS IN SECURITIES October 31, 1995
STRONG ASSET ALLOCATION FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
--------- --------------
<S> <C> <C>
COMMON STOCKS 35.1%
AEROSPACE & DEFENSE 0.0%
Boeing Company 2,000 $ 131
AGRICULTURAL OPERATIONS 0.1%
Pioneer Hi-Bred International, Inc. 3,000 149
AIRLINE 0.5%
AMR Corporation (b) 6,600 435
Airborne Freight Corporation 20,000 525
Thai Airways International PCL (Fgn Reg)(b) 130,000 234
------------
1,194
AUTO & TRUCK PARTS 0.2%
Borg-Warner Automotive, Inc. 5,500 162
SensoNor AS (b) 31,100 265
------------
427
AUTOMOBILE 0.4%
Astra International PT (Fgn Reg) 220,000 441
Ek Chor China Motorcycle Company ADR 8,800 123
Pininfarina Spa 48,500 439
------------
1,003
BANK - MONEY CENTER 0.5%
Citicorp 3,000 194
The Development Bank of
Singapore, Ltd. (Fgn Reg) 78,000 894
Overseas Union Bank, Ltd. (Acquired 10/25/95;
Cost $254) (d) 43,000 268
------------
1,356
BEVERAGE - SOFT DRINK 0.2%
PepsiCo, Inc. 7,000 369
BROKERAGE & INVESTMENT MANAGEMENT 0.3%
Nomura Securities Company, Ltd. 28,000 514
Peregrine Investment Holdings, Ltd. 255,000 325
------------
839
CHEMICAL 0.2%
Monsanto Company 4,000 419
CLOSED-END FUND 0.1%
The Central European Growth Fund PLC 481,000 300
COMMERCIAL SERVICE 0.3%
Accustaff, Inc. (b) 14,000 623
Robert Half International, Inc. (b) 6,000 219
------------
842
COMPUTER - PERIPHERAL EQUIPMENT 0.1%
U.S. Robotics, Inc. 3,000 277
COMPUTER - PERSONAL & WORKSTATION 1.1%
Compaq Computer Corporation (b) 2,000 111
Digital Equipment Corporation (b) 7,000 379
Hewlett-Packard Company 9,700 898
Stratus Computer, Inc. (b) 50,500 1,572
------------
2,960
COMPUTER SERVICE 0.5%
America Online, Inc. (b) 1,000 80
First Data Corporation 7,929 524
National Data Corporation 18,000 477
Shared Medical Systems Corporation 8,500 328
------------
1,409
COMPUTER SOFTWARE 7.2%
Acclaim Entertainment, Inc. (b) 40,800 964
Ascend Communications, Inc. 7,000 455
Autodesk, Inc. 6,100 207
Baan Company N.V. (b) 4,000 170
Bay Networks, Inc. (b) 3,000 $ 199
CBT Group PLC ADR (b) 8,000 361
Cabletron Systems, Inc. (b) 4,000 314
Cheyenne Software, Inc. (b) 158,000 3,298
Cisco Systems, Inc. (b) 5,000 387
Computer Associates International, Inc. 80,100 4,405
Informix Corporation 12,000 349
Microsoft Corporation (b) 42,800 4,280
Network Equipment Technologies, Inc. (b) 89,700 2,926
SoftKey International, Inc. (b) 3,000 95
3Com Corporation 8,000 376
------------
18,786
CONGLOMERATES 1.1%
Brierley Investments, Ltd. 154,000 120
Guinness Peat Group PLC 872,000 442
Jardine Matheson Holdings, Ltd. 63,000 384
Keppel Corporation, Ltd. 74,000 607
Loxley PCL (Fgn Reg) 25,000 477
Mitsubishi Corporation 34,000 377
Tomkins PLC 140,000 552
------------
2,959
CONSUMER - MISCELLANEOUS 0.1%
Gucci Group NV (b) 7,800 234
COSMETIC & PERSONAL CARE 0.1%
The Gillette Company 6,000 290
DIVERSIFIED OPERATIONS 0.2%
Alco Standard Corporation 5,000 443
ELECTRICAL EQUIPMENT 0.1%
General Electric Company 4,800 304
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.4%
Hitachi, Ltd. 40,000 412
Johnson Electric Holdings, Ltd. 100,000 209
Olivetti Spa (b) 331,000 248
Sony Corporation 6,000 271
------------
1,140
ELECTRONICS - SEMICONDUCTOR/
COMPONENTS 1.2%
Altera Corporation 3,000 182
Atmel Corporation 5,000 156
Intel Corporation 3,300 231
LSI Logic Corporation 3,000 141
Motorola, Inc. 25,900 1,700
National Semiconductor Corporation (b) 7,000 171
Texas Instruments, Inc. 3,500 239
Uniphase Corporation (b) 6,000 175
Xilinx, Inc. 4,300 198
------------
3,193
ENGINEERING & CONSTRUCTION 0.2%
ACP Industries BHD 57,000 229
Road Builder Holdings BHD 63,000 195
Semen Cibinong PT (Fgn Reg) 40,000 105
------------
529
FINANCE - MISCELLANEOUS 0.4%
Lend Lease Corporation, Ltd. 40,000 555
SGS (Societe Generale de Surveillance) Holdings S.A. 285 539
------------
1,094
FOOD 0.5%
Burns, Philp & Company, Ltd. 111,000 248
CPC International, Inc. 8,400 558
Nestle' AG 495 519
------------
1,325
</TABLE>
See notes to financial statements.
8
<PAGE> 11
STRONG ASSET ALLOCATION FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
--------- --------------
<S> <C> <C>
HEALTHCARE - BIOMEDICAL/GENETIC 0.3%
Biogen, Inc. (b) 4,000 $ 245
Centocor, Inc. (b) 27,600 311
Cephalon, Inc. (b) 4,000 120
Gilead Sciences, Inc. (b) 12,000 234
------------
910
HEALTHCARE - DRUG/DIVERSIFIED 1.3%
American Home Products Corporation 7,000 620
Dura Pharmaceuticals, Inc. (b) 5,700 167
Johnson & Johnson 5,500 448
Merck & Company, Inc. 10,000 575
Pfizer, Inc. 8,000 459
Pharmacia Aktiebolag ADS 6,600 231
Rhone Poulenc Rorer, Inc. 5,100 240
Upjohn Company 12,000 609
------------
3,349
HEALTHCARE - INSTRUMENTATION 0.9%
Medtronic, Inc. 36,100 2,085
ThermoTrex Corporation (b) 5,400 194
United States Surgical Corporation 4,300 105
------------
2,384
HEALTHCARE - MEDICAL SUPPLY 0.3%
Arjo AB 20,900 325
Omnicare, Inc. 5,000 181
Scandinavian Mobility International
(Acquired 10/26/95; Cost $131) (b) (d) 6,000 143
------------
649
HEALTHCARE - PATIENT CARE 1.8%
Apria Healthcare Group, Inc. 15,700 340
Columbia/HCA Healthcare Corporation 10,900 535
Community Health Systems, Inc. (b) 8,600 273
Foundation Health Corporation (b) 8,600 364
Healthsouth Corporation 23,000 601
Humana, Inc. (b) 104,800 2,214
Oxford Health Plans, Inc. 3,000 235
United Healthcare Corporation 3,000 159
------------
4,721
HEALTHCARE - PRODUCT 0.5%
Allergan, Inc. 12,000 352
Boston Scientific Corporation (b) 15,000 632
Guidant Corporation 7,000 224
------------
1,208
HOUSEHOLD APPLIANCES & FURNISHINGS 0.1%
Philips Electronics N.V. ADR 9,000 348
INSURANCE - DIVERSIFIED 0.2%
Travelers Corporation 8,000 404
INSURANCE - MULTI-LINE 0.1%
MGIC Investment Corporation 5,000 284
INSURANCE - PROPERTY & CASUALTY 0.4%
American International Group, Inc. 11,050 932
Vesta Insurance Group, Inc. 5,000 202
------------
1,134
LEISURE PRODUCT 0.3%
Eastman Kodak Company 1,900 119
Salomon S.A. 1,000 579
------------
698
LEISURE SERVICE 1.0%
CDL Hotels International, Ltd. 690,000 313
CDL Hotels New Zealand, Ltd. (b) 850,000 358
HFS, Inc. 17,400 1,066
Helicopter Line, Ltd. 5,000 14
Regal Cinemas, Inc. 8,000 $ 314
Toho Company 4,090 578
------------
2,643
MACHINERY - AGRICULTURE 0.2%
Bukaka Teknik Utama PT (Fgn Reg) (b) 157,000 233
Deere & Company 2,000 179
------------
412
MEDIA - PUBLISHING 0.4%
De La Rue PLC 18,000 256
John Fairfax Holdings, Ltd. 275,000 565
News International PLC 47,000 212
------------
1,033
MEDIA - RADIO/TV 0.7%
CBS, Inc. 4,000 323
Capital Cities/ABC, Inc. 5,000 593
Tele-Communications, Inc. Class A 25,300 430
Viacom International, Inc. (b) 9,301 465
------------
1,811
METALS & MINING 0.7%
Aluminum Company of America 2,000 102
Ashanti Goldfields Company, Ltd. GDR 20,000 353
The Broken Hill Proprietary Company, Ltd. 33,500 453
Lonrho PLC 175,000 432
Normandy Mining, Ltd. 357,000 421
------------
1,761
MORTGAGE & RELATED SERVICE 0.2%
Federal National Mortgage Association 3,500 367
Green Tree Financial Corporation 10,000 266
------------
633
NATURAL GAS DISTRIBUTION 0.2%
The Williams Companies, Inc. 10,000 386
OFFICE AUTOMATION 0.2%
Danka Business Systems PLC ADR 15,000 503
OIL - INTERNATIONAL INTEGRATED 0.8%
Exxon Corporation 2,000 153
Mobil Corporation 3,000 302
Royal Dutch Petroleum Company 4,900 602
Woodside Petroleum, Ltd. 104,000 497
YPF Sociedad Anonima ADR 24,000 411
------------
1,965
OIL - NORTH AMERICAN EXPLORATION
& PRODUCTION 0.2%
Apache Corporation 7,100 181
Barrett Resources Corporation (b) 10,000 233
------------
414
PAPER & FOREST PRODUCTS 0.4%
Carter Holt Harvey, Ltd. 128,000 305
Fletcher Challenge, Ltd. Forestry Division 363,000 500
Fletcher Challenge, Ltd. Ordinary Division 23,000 61
Kimberly-Clark Corporation 3,000 218
------------
1,084
POLLUTION CONTROL 0.1%
Browning-Ferris Industries, Inc. 5,100 149
PRECIOUS METAL/GEM/STONE 0.2%
Anglo American Corporation of
South Africa, Ltd. ADR 8,000 454
REAL ESTATE 0.5%
Amoy Properties, Ltd. 502,000 484
Malayan Credit, Ltd. 54,000 99
TOC Company, Ltd. 70,000 654
------------
1,237
</TABLE>
See notes to financial statements.
9
<PAGE> 12
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1995
STRONG ASSET ALLOCATION FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
--------- --------------
<S> <C> <C>
RETAIL - DEPARTMENT STORE 0.2%
Dollar Tree Stores, Inc. (b) 7,000 $ 189
May Department Stores Company 9,600 377
------------
566
RETAIL - DISCOUNT & VARIETY 0.1%
Toys 'R' Us, Inc. (b) 15,300 335
RETAIL - FOOD CHAIN 0.3%
Albertson's, Inc. 21,400 712
RETAIL - RESTAURANT 0.2%
Lone Star Steakhouse & Saloon, Inc. (b) 4,500 174
Papa John's International, Inc. (b) 3,000 116
Starbucks Corporation (b) 6,000 235
------------
525
RETAIL - SPECIALTY 2.5%
BT Office Products International, Inc. (b) 30,000 386
CUC International, Inc. 15,000 519
Casey's General Stores, Inc. 10,000 230
CompUSA, Inc. (b) 10,000 383
Corporate Express, Inc. 121,750 3,181
Discount Auto Parts, Inc. (b) 14,000 374
Insight Enterprises, Inc. (b) 3,000 53
Just For Feet, Inc. (b) 15,000 354
The Limited, Inc. 18,100 333
Staples, Inc. 15,000 399
Viking Office Products, Inc. (b) 9,200 409
------------
6,621
SAVINGS & LOAN 0.2%
H.F. Ahmanson & Company 24,000 600
SHIPPING 0.1%
Teekay Shipping Corporation 15,000 349
SHOE & APPAREL MANUFACTURING 0.3%
Nautica Enterprises, Inc. (b) 6,000 206
NIKE, Inc. Class B 7,000 398
Saha Union PCL (Fgn Reg) 250,000 298
------------
902
TELECOMMUNICATION 0.5%
Nippon Telegraph & Telephone Corporation 47 387
Telecommunicacoes Brasileiras S.A. ADR 9,000 363
Telefonica de Espana S.A. 35,000 442
------------
1,192
TELECOMMUNICATION EQUIPMENT 1.9%
ADC Telecommunications, Inc. 6,000 240
Nokia Corporation ADR A 21,900 1,221
Octel Communications Corporation (b) 93,200 3,180
StrataCom, Inc. 4,000 246
Tellabs, Inc. 5,000 170
------------
5,057
TELECOMMUNICATION SERVICE 0.6%
AirTouch Communications (b) 15,000 427
DDI Corporation 55 447
MCI Communications Corporation 23,500 586
WorldCom, Inc. (b) 4,800 157
------------
1,617
TELEPHONE 0.2%
Cincinnati Bell, Inc. 10,000 294
Telefonos de Mexico S.A. ADR Series L 6,500 179
------------
473
------------
TOTAL COMMON STOCKS (COST $83,646) 91,495
CONVERTIBLE PREFERRED STOCKS 0.1%
Westinghouse Electric Corporation $1.30
(Acquired 5/02/95; Cost $369) (d) 25,000 $ 359
NON-CONVERTIBLE PREFERRED STOCKS 0.6%
SAP AG (Cost $861) 10,400 1,593
CORPORATE BONDS 26.3%
Asarco, Inc. Debentures, 8.50%, Due 5/01/25 $ 1,090 1,204
Bankers Life Holding Corporation Senior
Subordinated Notes, Series B, 13.00%,
Due 11/01/02 5,045 5,676
Bell Cablemedia PLC Senior Discount Notes,
Zero %, Due 9/15/05
(Acquired 9/22/95; Cost $1,148) (d) 2,000 1,200
Centex Corporation Subordinated Notes,
7.375%, Due 6/01/05 3,000 2,967
Dr. Pepper/Seven-Up Companies, Inc. Senior
Subordinated Notes, Zero %, Due 11/01/02
(Rate Reset Effective 11/01/97) 2,690 2,488
Federated Department Stores, Inc. Senior Notes,
10.00%, Due 2/15/01 5,300 5,711
Kaufman & Broad Home Corporation Senior Notes,
10.375%, Due 9/01/99 1,000 1,020
Lehman Brothers Holdings, Inc. Senior Notes,
8.80%, Due 3/01/15 3,750 4,183
MBL International Finance Bermuda Trust
Convertible Notes, 3.00%, Due 11/20/02 310 322
Magma Copper Company Senior
Subordinated Notes, 8.70%, Due 5/15/05 5,000 5,025
News America Holdings, Inc. Senior Debentures,
7.75%, Due 2/01/24 2,000 2,008
Owens-Illinois, Inc. Senior Debentures,
11.00%, Due 12/01/03 2,000 2,223
Ralston Purina Company Debentures,
7.875%, Due 6/15/25 2,000 2,098
Riggs National Corporation Subordinated Notes,
8.50%, Due 2/01/06 1,000 1,025
SCI Television, Inc. Senior Secured Notes,
11.00%, Due 6/30/05 2,500 2,656
Santa Fe Pacific Gold Corporation Senior
Debentures, 8.375%, Due 7/01/05 2,770 2,798
Tele-Communications, Inc. Non-Redeemable
Senior Debentures, 10.125%, Due 4/15/22 600 731
Time Warner, Inc. Debentures,
9.125%, Due 1/15/13 3,550 3,897
Time Warner, Inc. Floating Rate Notes,
6.835%, Due 8/15/00 9,025 9,071
Viacom, Inc. Senior Notes, 7.75%, Due 6/01/05 11,905 12,247
------------
TOTAL CORPORATE BONDS (COST $66,352) 68,550
NON-AGENCY MORTGAGE &
ASSET-BACKED SECURITIES 12.3%
Chase Mortgage Finance Corporation Mortgage
Pass-Thru Certificates, Series 1990-G,
Class A-Z1, 9.50%, Due 12/25/21 1,356 1,383
First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates, Series 1993-2,
Class A-3, 7.50%, Due 3/25/33 3,029 3,068
First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates,
Series 1994-MHC1, Class A-1X, Interest Only,
1.8621%, Due 4/25/11 20,189 1,776
</TABLE>
See notes to financial statements.
10
<PAGE> 13
STRONG ASSET ALLOCATION FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
--------- --------------
<S> <C> <C>
Green Tree Financial Corporation Manufactured
Housing Senior Subordinated Pass-Thru
Certificates, Series 1993-3, Class A-1,
4.60%, Due 10/15/18 $ 376 $ 374
Green Tree Securitized Net Interest Margin
Trust Certificates, Series 1995-A,
7.25%, Due 7/15/05 1,854 1,865
Lennar U.S. Partners, Ltd. Partnership Structured
Variable Rate Notes, Series 1995-1, Class E, 9.75%,
Due 5/15/05 (Acquired 9/27/95; Cost $5,509) (d) 5,500 5,524
MDC Asset Investors Trust V Collateralized
Mortgage Obligation, Class V-2, 9.325%,
Due 12/01/17 205 210
Merrill Lynch Mortgage Investors, Inc.
Manufactured Housing Contract
Pass-Thru Certificates:
Series 1987-C, 10.10%, Due 11/15/07 2,484 2,688
Series 1992-E, Class B, 5.85%, Due 8/15/12 781 777
Merrill Lynch Mortgage Investors, Inc.
Senior Subordinated Variable Rate
Pass-Thru Certificates:
Series 1994-F, Class M, 6.875%, Due 3/15/24 3,000 2,761
Series 1994-H, Class M, 6.875%, Due 6/15/19 1,000 920
RTC Variable Rate Mortgage Pass-Thru
Securities, Inc., Series 1995-2, Class A-1B,
7.15%, Due 5/25/29 3,000 3,000
Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage Bonds,
Series 1992-C, Class 3-A, 11.8055%, Due 11/25/30 828 862
U.S. Home Equity Loan Asset Backed Certificates,
Series 1991-2, Class B, 9.125%, Due 4/15/21 2,200 2,307
Westam Mortgage Financial Corporation
Collateralized Mortgage Bonds, Series 10,
Class 10-D, Principal Only, Due 7/26/18 7,811 4,457
------------
TOTAL NON-AGENCY MORTGAGE &
ASSET-BACKED SECURITIES (COST $31,080) 31,972
UNITED STATES GOVERNMENT AND
AGENCY ISSUES 15.2%
FHLMC Guaranteed Pass-Thru Certificates:
9.50%, Due 1/01/06 212 224
10.25%, Due 3/01/15 213 231
10.50%, Due 1/01/16 48 53
FHLMC Guaranteed Multiclass Mortgage
Participation Certificates:
Series 1181, Class 1181-G, 7.50%, Due 8/15/05 744 755
Series 1257, Class 1257-J, 7.00%, Due 4/15/07 674 667
FHLMC Guaranteed Multiclass Variable Rate
Mortgage Participation Certificates, Series 1544,
Class 1544-TA, 5.733%, Due 7/15/08 1,481 1,471
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
6.50%, Due 9/01/08 2,255 2,249
11.00%, Due 10/01/00 thru 11/01/00 261 274
13.00%, Due 10/01/15 12,079 13,977
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
Series 1989-1, Class 1-D, 10.30%, Due 1/25/19 2,105 2,409
Series 1992-137, Class BA, 3.50%, Due 1/25/17 673 642
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate
Pass-Thru Certificates:
Series G92-61, Class FJ, 6.233%, Due 10/25/22 605 604
Series 1992-187, Class SA, 8.40%, Due 10/25/07 2,290 2,115
FNMA Stripped Mortgage-Backed Securities
Trust 25, Class 1, 6.00%, Due 2/25/13 906 868
Federal Home Loan Bank Consolidated Bonds,
Series IK, 5.750%, Due 4/21/97 $ 2,620 $ 2,604
GNMA Guaranteed Pass-Thru Certificates,
10.25%, Due 10/15/98 54 56
Small Business Administration Guaranteed
Loan Pool #440019, Interest Only Custodial
Receipts, Series 1993-1A, 2.531%, Due 2/15/18 23,421 2,921
United States Treasury Notes:
5.875%, Due 7/31/97 710 713
6.50%, Due 8/15/05 6,500 6,734
------------
TOTAL UNITED STATES GOVERNMENT AND
AGENCY ISSUES (COST $39,061) 39,567
OPTION 0.3%
Merrill Lynch Swaption (The option to receive a
fixed rate of interest of 7.75%; exercisable at a
strike price of 100 beginning 4/09/04 and expiring
4/09/25. Putable on 11/16/95.) (Cost $440) 9,500 660
CASH EQUIVALENTS (a) 9.7%
COMMERCIAL PAPER 7.8%
DISCOUNTED 7.7%
Baxter International, Inc.
Due 11/01/95 7,600 7,600
ITT Corporation (Acquired 10/26/95; Cost $12,478)
Due 11/06/95 (d) 12,500 12,490
------------
20,090
INTEREST BEARING, DUE UPON DEMAND 0.1%
Southwestern Bell Telephone Company, 5.45% 262 262
Warner Lambert Company, 5.44% 23 23
------------
285
------------
Total Commercial Paper 20,375
TAXABLE MUNICIPAL DAILY VARIABLE
RATE PUT BONDS 0.9%
Maine Regional Waste System, Inc. Solid Waste
Recovery Revenue, 6.05% 280 280
State Industrial Development Authority of Alabama
Industrial Development Revenue - Tee Jays
Manufacturing Company, Inc. Project, 6.00% 2,025 2,025
------------
2,305
UNITED STATES GOVERNMENT ISSUES 1.0%
United States Treasury Bills:
Due 11/09/95 (c) 25 25
Due 11/16/95 570 569
Due 12/07/95 (c) 1,000 995
Due 12/14/95 225 223
Due 1/11/96 (c) 875 866
Due 1/18/96 (c) 25 25
------------
2,703
------------
Total Cash Equivalents (Cost $25,383) 25,383
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $247,192) 99.6% 259,579
Other Assets and Liabilities, Net 0.4% 1,143
------------
NET ASSETS 100.0% $260,722
============
FUTURES
- -------
UNDERLYING UNREALIZED
FACE AMOUNT APPRECIATION
EXPIRATION AT VALUE (DEPRECIATION)
DATE (In Thousands) (In Thousands)
Purchased:
50 S&P 500 Futures 12/95 $14,596 ($148)
Sold:
115 Five-Year U.S. Treasury Notes 12/95 12,458 (127)
66 Ten-Year U.S. Treasury Notes 12/95 7,361 (120)
</TABLE>
See notes to financial statements.
11
<PAGE> 14
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1995
STRONG ASSET ALLOCATION FUND (continued)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
UNREALIZED
VALUE APPRECIATION
SETTLEMENT IN USD (DEPRECIATION)
DATE (In Thousands) (In Thousands)
---------- -------------- --------------
<S> <C> <C> <C> <C>
Sold:
4,344,925 DEM 11/13/95 $3,088 ($130)
760,000 DEM 11/15/95 540 (30)
1,338,000 DEM 12/21/95 954 (25)
24,625,000 FRF 4/25/96 5,036 (36)
397,315,000 JPY 11/13/95 3,899 82
</TABLE>
<TABLE>
<CAPTION>
Percentage of
Net Assets
COUNTRY DIVERSIFICATION -------------
<S> <C>
United States . . . . . . . . . . . . . . . . . . . . . 89.2%
United Kingdom . . . . . . . . . . . . . . . . . . . . 1.6%
Japan . . . . . . . . . . . . . . . . . . . . . . . . . 1.4%
Australia . . . . . . . . . . . . . . . . . . . . . . . 1.0%
Singapore . . . . . . . . . . . . . . . . . . . . . . . 0.9%
Germany . . . . . . . . . . . . . . . . . . . . . . . . 0.6%
Hong Kong . . . . . . . . . . . . . . . . . . . . . . . 0.6%
New Zealand . . . . . . . . . . . . . . . . . . . . . . 0.5%
Finland . . . . . . . . . . . . . . . . . . . . . . . . 0.5%
Switzerland . . . . . . . . . . . . . . . . . . . . . . 0.4%
Thailand . . . . . . . . . . . . . . . . . . . . . . . 0.4%
Italy . . . . . . . . . . . . . . . . . . . . . . . . . 0.3%
Indonesia . . . . . . . . . . . . . . . . . . . . . . . 0.3%
France . . . . . . . . . . . . . . . . . . . . . . . . 0.2%
Sweden . . . . . . . . . . . . . . . . . . . . . . . . 0.2%
Netherlands . . . . . . . . . . . . . . . . . . . . . . 0.2%
South Africa . . . . . . . . . . . . . . . . . . . . . 0.2%
Spain . . . . . . . . . . . . . . . . . . . . . . . . . 0.2%
Malaysia . . . . . . . . . . . . . . . . . . . . . . . 0.2%
Argentina . . . . . . . . . . . . . . . . . . . . . . . 0.2%
Brazil . . . . . . . . . . . . . . . . . . . . . . . . 0.1%
Ireland . . . . . . . . . . . . . . . . . . . . . . . . 0.1%
Norway . . . . . . . . . . . . . . . . . . . . . . . . 0.1%
Mexico . . . . . . . . . . . . . . . . . . . . . . . . 0.1%
Denmark . . . . . . . . . . . . . . . . . . . . . . . . 0.1%
Other Assets and Liabilities . . . . . . . . . . . . . 0.4%
------
Total . . . . . . . . . . . . . . . . . . . . . . . . 100.0%
======
</TABLE>
STRONG AMERICAN UTILITIES FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
----------- --------------
<S> <C> <C>
COMMON STOCKS 90.3%
ELECTRIC UTILITIES 31.2%
American Electric Power Company, Inc. 170,000 $ 6,481
Boston Edison Company 97,000 2,655
CMS Energy Corporation 219,500 6,064
DPL, Inc. 2,000 47
Duke Power Company 15,000 671
Eastern Utilities Associates 6,000 141
General Public Utilities Corporation 12,000 375
NIPSCO Industries, Inc. 9,500 347
P P & L Resources, Inc. 55,000 1,237
PECO Energy Company 102,000 2,983
Pinnacle West Capital Corporation 6,000 165
SCANA Corporation 109,000 2,766
The Southern Company 77,000 1,838
TECO Energy 120,000 2,835
------------
28,605
ENERGY RELATED 10.2%
Amoco Corporation 16,100 $ 1,028
Anadarko Petroleum Corporation 500 22
British Petroleum PLC ADR 5,600 494
Camco International, Inc. 10,000 229
Chevron Corporation 1,500 70
Exxon Corporation 19,000 1,451
Imperial Oil, Ltd. 46,000 1,679
Kerr McGee Corporation 17,500 965
Mobil Corporation 2,700 272
Pennzoil Company 12,500 472
Schlumberger, Ltd. 12,000 747
Shell Transport & Trading ADR 9,120 650
Texaco, Inc. 14,600 995
USX-Marathon Group 16,500 293
------------
9,367
GAS UTILITIES 9.9%
ENSERCH Corporation 21,600 313
MCN Corporation 138,000 3,001
Questar Corporation 35,000 1,054
Southwestern Energy Corporation 43,000 538
The Williams Companies, Inc. 107,000 4,133
------------
9,039
OTHER UTILITIES 0.9%
American Water Works Company, Inc. 27,000 861
RAILROAD 0.7%
Union Pacific Corporation 9,500 621
TELECOMMUNICATION 37.4%
AT&T Corporation 61,000 3,904
AirTouch Communications 16,500 470
Ameritech Corporation 168,000 9,072
Bell Atlantic Corporation 75,000 4,772
BellSouth Corporation 10,000 765
GTE Corporation 95,000 3,919
Pacific Telesis Group 63,000 1,914
SBC Communications, Inc. 108,000 6,035
US WEST Communications, Inc. 73,000 3,477
------------
34,328
------------
TOTAL COMMON STOCKS (COST $72,221) 82,821
CASH EQUIVALENTS (a) 9.6%
COMMERCIAL PAPER
DISCOUNTED 6.2%
Baxter International, Inc.
Due 11/01/95 $ 3,000 3,000
Cooper Industries, Inc.
Due 11/01/95 2,700 2,700
------------
5,700
INTEREST BEARING, DUE UPON DEMAND 3.4%
General Mills, Inc., 5.46% 60 60
Eli Lilly & Company, 5.30% 200 200
Pitney Bowes Credit Corporation, 5.47% 199 199
Sara Lee Corporation, 5.45% 2,136 2,136
Southwestern Bell Telephone Company, 5.45% 403 403
Warner Lambert Company, 5.44% 79 79
Wisconsin Electric Power Company, 5.51% 34 34
------------
3,111
------------
Total Cash Equivalents (Cost $8,811) 8,811
TOTAL INVESTMENTS IN SECURITIES
(COST $81,032) 99.9% 91,632
Other Assets and Liabilities, Net 0.1% 64
------------
NET ASSETS 100.0% $ 91,696
============
</TABLE>
See notes to financial statements.
12
<PAGE> 15
STRONG TOTAL RETURN FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
--------- --------------
<S> <C> <C>
COMMON STOCKS 79.5%
AEROSPACE & DEFENSE 1.7%
Boeing Company 60,000 $ 3,937
The B.F. Goodrich Company 110,000 7,246
------------
11,183
AGRICULTURAL OPERATIONS 0.7%
Pioneer Hi-Bred International, Inc. 100,000 4,963
AUTO & TRUCK PARTS 0.3%
Exide Corporation 50,000 2,194
BANK - MONEY CENTER 1.6%
BankAmerica Corporation 75,000 4,312
Citicorp 100,000 6,487
------------
10,799
BANK - REGIONAL 1.5%
First Bank System, Inc. 135,000 6,716
Firstar Corporation 100,000 3,538
------------
10,254
BANK - SUPER REGIONAL 1.7%
First Interstate Bancorp 60,000 7,740
Mellon Bank Corporation 75,000 3,759
------------
11,499
BEVERAGE - SOFT DRINK 1.8%
The Coca-Cola Company 80,000 5,750
PepsiCo, Inc. 125,000 6,594
------------
12,344
BROKERAGE & INVESTMENT MANAGEMENT 0.2%
Omega Healthcare Investors, Inc. 54,400 1,380
CHEMICAL 1.6%
Monsanto Company 100,000 10,475
CHEMICAL - SPECIALTY 0.9%
Hercules, Inc. 110,000 5,871
COMMERCIAL SERVICE 0.3%
Paychex, Inc. 40,000 1,735
COMPUTER - MAINFRAME 0.7%
International Business Machines Corporation 50,000 4,862
COMPUTER - PERSONAL & WORKSTATION 3.5%
Compaq Computer Corporation (b) 75,000 4,181
Digital Equipment Corporation (b) 100,000 5,412
Hewlett-Packard Company 125,000 11,578
Sun Microsystems, Inc. (b) 30,000 2,340
------------
23,511
COMPUTER SERVICE 1.4%
Bell & Howell Holdings Company (b) 50,000 1,250
General Motors Corporation Class E 50,000 2,356
National Data Corporation 220,000 5,830
------------
9,436
COMPUTER SOFTWARE 5.4%
Bay Networks, Inc. (b) 75,000 4,969
Cisco Systems, Inc. (b) 135,000 10,463
Informix Corporation 275,000 8,009
Microsoft Corporation (b) 60,000 6,000
3Com Corporation 150,000 7,050
------------
36,491
CONSUMER - MISCELLANEOUS 0.9%
Service Corporation International 150,000 6,019
COSMETIC & PERSONAL CARE 0.8%
The Gillette Company 110,000 5,321
DIVERSIFIED OPERATIONS 1.1%
Alco Standard Corporation 85,000 $ 7,523
ELECTRIC POWER 0.7%
SCANA Corporation 100,000 2,538
The Southern Company 100,000 2,388
------------
4,926
ELECTRONICS - SEMICONDUCTOR/
COMPONENT 1.8%
Altera Corporation 50,000 3,025
Intel Corporation 75,000 5,241
Micron Technology, Inc. 50,000 3,531
------------
11,797
FOOD 0.9%
General Mills, Inc. 100,000 5,737
HEALTHCARE - BIOMEDICAL/GENETIC 0.4%
Gilead Sciences, Inc. (b) 130,000 2,535
HEALTHCARE - DRUG/DIVERSIFIED 10.2%
Abbott Laboratories 125,000 4,969
American Home Products Corporation 120,000 10,635
Biovail Corporation International (b) 90,000 3,487
Johnson & Johnson 130,000 10,595
Merck & Company, Inc. 200,000 11,500
Pfizer, Inc. 190,000 10,901
Schering-Plough Corporation 110,000 5,899
Upjohn Company 200,000 10,150
------------
68,136
HEALTHCARE - INSTRUMENTATION 1.9%
Medtronic, Inc. 220,000 12,705
HEALTHCARE - PATIENT CARE 1.5%
Columbia/HCA Healthcare Corporation 110,000 5,404
United Healthcare Corporation 85,000 4,516
------------
9,920
HOUSING RELATED 0.4%
Danaher Corporation 80,000 2,480
INSURANCE - DIVERSIFIED 2.2%
CIGNA Corporation 70,000 6,939
Travelers Corporation 150,000 7,575
------------
14,514
INSURANCE - MULTI-LINE 1.7%
MGIC Investment Corporation 200,000 11,375
INSURANCE - PROPERTY & CASUALTY 1.1%
American International Group, Inc. 90,000 7,594
MACHINERY - AGRICULTURE 1.1%
Deere & Company 85,000 7,597
MACHINERY - CONSTRUCTION & MINING 0.8%
Caterpillar, Inc. 100,000 5,613
METALS & MINING 1.3%
Aluminum Company of America 100,000 5,100
Phelps Dodge Corporation 60,000 3,803
------------
8,903
MORTGAGE & RELATED SERVICE 2.3%
Countrywide Credit Industries, Inc. 75,000 1,659
Federal National Mortgage Association 60,000 6,292
Green Tree Financial Corporation 270,000 7,189
------------
15,140
</TABLE>
See notes to financial statements.
13
<PAGE> 16
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1995
STRONG TOTAL RETURN FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
--------- --------------
<S> <C> <C>
NATURAL GAS DISTRIBUTION 1.9%
Panhandle Eastern Corporation 150,000 $ 3,787
The Williams Companies, Inc. 225,000 8,691
------------
12,478
OFFICE AUTOMATION 0.6%
Xerox Corporation 30,000 3,893
OIL - INTERNATIONAL INTEGRATED 2.6%
Exxon Corporation 100,000 7,638
Mobil Corporation 100,000 10,075
------------
17,713
OIL WELL EQUIPMENT & SERVICE 0.5%
Halliburton Company 75,000 3,113
PAPER & FOREST PRODUCTS 1.1%
Kimberly-Clark Corporation 100,000 7,263
RAILROAD 0.9%
Consolidated Rail Corporation 50,000 3,437
Wisconsin Central Transportation Corporation (b) 47,500 2,862
------------
6,299
RETAIL - DRUG STORE 0.8%
Walgreen Company 200,000 5,700
RETAIL - FOOD CHAIN 1.6%
Albertson's, Inc. 175,000 5,819
Safeway, Inc. (b) 110,000 5,197
------------
11,016
RETAIL - MAJOR CHAIN 1.0%
Dayton Hudson Corporation 50,000 3,438
Sears, Roebuck & Company 100,000 3,400
------------
6,838
RETAIL - SPECIALTY 3.0%
CUC International, Inc. 175,000 6,059
Corporate Express, Inc. 175,000 4,572
Jan Bell Marketing, Inc. Warrants (b) 1,181 --
Just For Feet, Inc. (b) 175,000 4,134
Staples, Inc. 200,000 5,325
------------
20,090
SAVINGS & LOAN 1.3%
H.F. Ahmanson & Company 200,000 5,000
Great Western Financial Corporation 150,000 3,394
------------
8,394
SHOE & APPAREL MANUFACTURING 1.3%
NIKE, Inc. Class B 150,000 8,512
SOAP & CLEANING PREPARATION 1.1%
The Procter & Gamble Company 90,000 7,290
TELECOMMUNICATION EQUIPMENT 2.2%
ADC Telecommunications, Inc. 50,000 2,000
Nokia Corporation ADR A 50,000 2,788
StrataCom, Inc. 100,000 6,150
Tellabs, Inc. 120,000 4,080
------------
15,018
TELEPHONE 3.9%
Ameritech Corporation 130,000 7,020
BellSouth Corporation 110,000 8,415
Cincinnati Bell, Inc. 250,000 7,344
US WEST Communications, Inc. 75,000 3,572
------------
26,351
TOBACCO 1.3%
Philip Morris Companies, Inc. 100,000 8,450
------------
TOTAL COMMON STOCKS (COST $466,420) 533,250
CONVERTIBLE PREFERRED STOCKS 2.6%
Alco Standard Corporation Series AA $2.375 12,500 $ 1,244
Alco Standard Corporation Series BB $5.04 22,800 2,024
Ceridian Corporation 5.50% 50,000 4,875
Citicorp Series 13 $5.375 15,000 2,685
Delta Airlines, Series C $3.50 75,000 4,162
Merrill Lynch Company, Inc. Strypes, 6.50%,
Due 8/15/98 (Exchangeable for MGIC
Investment Corporation Common Stock) 41,000 2,209
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $14,285) 17,199
CORPORATE BONDS 3.3%
American Home Products Corporation Notes,
7.90%, Due 2/15/05 $ 3,000 3,275
First Data Corporation Notes, 6.75%,
Due 7/15/05 3,000 3,033
News America Holdings, Inc. Senior Notes,
7.50%, Due 3/01/00 2,000 2,073
Ralston Purina Company Debentures,
7.875%, Due 6/15/25 2,000 2,098
Time Warner, Inc. Floating Rate Notes,
6.835%, Due 8/15/00 9,000 9,046
USX-Marathon Group Debentures,
9.125%, Due 1/15/13 2,000 2,239
------------
TOTAL CORPORATE BONDS (COST $21,190) 21,764
CONVERTIBLE BONDS 4.7%
Danka Business Systems PLC Convertible
Subordinated Notes, 6.75%, Due 4/01/02
(Acquired 3/06/95 - 6/13/95; Cost $8,209) (d) 8,000 10,580
First Financial Management Corporation Senior
Convertible Debentures, 5.00%, Due 12/15/99 6,000 9,240
LSI Logic Corporation Convertible Subordinated
Notes, 5.50%, Due 3/15/01 (Acquired
12/15/94 - 9/05/95; Cost $3,692) (d) 1,400 5,475
Staples, Inc. Convertible Subordinated Debentures,
4.50%, Due 10/01/00 (Acquired 9/12/95;
Cost $2,000) (d) 2,000 2,045
3Com Corporation Convertible Subordinated Notes,
10.25%, 11/01/01 (Acquired 3/14/95 - 10/05/95;
Cost $2,516) (d) 2,000 3,250
United States Filter Corporation Convertible
Subordinated Notes, 6.00%, Due 9/15/05
(Aquired 9/13/95; Cost $1,000) (d) 1,000 1,056
------------
TOTAL CONVERTIBLE BONDS (COST $23,071) 31,646
UNITED STATES GOVERNMENT ISSUES 1.4%
United States Treasury Bonds,
7.625%, Due 2/15/25 4,000 4,648
United States Treasury Notes,
5.625%, Due 10/31/97 5,000 5,003
------------
TOTAL UNITED STATES GOVERNMENT ISSUES
(COST $9,494) 9,651
OPTIONS 0%
MGIC Investment Corporation Call
Options (Strike Price is $64.718. Expiration
date is 12/20/95.) 1,000 (50)
MGIC Investment Corporation Put
Options (Strike Price is $54.727. Expiration
Date is 12/20/95.) 1,000 134
------------
TOTAL OPTIONS (COST $0) 84
</TABLE>
See notes to financial statements.
14
<PAGE> 17
STRONG TOTAL RETURN FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
--------- --------------
<S> <C> <C>
CASH EQUIVALENTS (a) 11.1%
COMMERCIAL PAPER
DISCOUNTED 10.8%
Baxter International, Inc.
Due 11/01/95 $12,900 $ 12,900
Burlington Northern Railroad Company
Due 11/14/95 6,000 5,987
Cole Taylor Finance Company
Due 11/08/95 8,500 8,490
Due 11/10/95 8,064 8,052
Cooper Industries, Inc.
Due 11/01/95 15,100 15,100
Darden Restaurants, Inc.
Due 11/03/95 10,000 9,997
ITT Corporation (Acquired 10/26/95;
Cost $7,986) Due 11/06/95 (d) 8,000 7,993
Salomon, Inc.
Due 11/06/95 4,000 3,997
------------
72,516
INTEREST BEARING, DUE UPON DEMAND 0.3%
General Mills, Inc., 5.46% 137 137
Pitney Bowes Credit Corporation, 5.47% 158 158
Sara Lee Corporation, 5.45% 980 980
Southwestern Bell Telephone Company, 5.45% 793 793
Warner Lambert Company, 5.44% 206 206
Wisconsin Electric Power Company, 5.51% 10 10
------------
2,284
------------
Total Cash Equivalents (Cost $74,800) 74,800
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $609,260) 102.6% 688,394
Other Assets and Liabilities, Net (2.6%) (17,436)
------------
NET ASSETS 100.0% $670,958
============
</TABLE>
OPTIONS
<TABLE>
<CAPTION>
PREMIUMS
NUMBER (In Thousands)
--------- --------------
<S> <C> <C>
Options outstanding at Beginning of Period 0 $ --
Options written during the period 1,000 119
Options cancelled in closing purchase transactions 0 --
------------ ------------
Options outstanding at End of Period 1,000 $ 119
============ ============
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
-------------
<S> <C>
United States . . . . . . . . . . . . . . . . . . . . . . 82.6%
United Kingdom . . . . . . . . . . . . . . . . . . . . . 16.0%
Finland . . . . . . . . . . . . . . . . . . . . . . . . . 4.0%
Other Assets and Liabilities . . . . . . . . . . . . . . (2.6%)
------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0%
======
</TABLE>
LEGEND
(a) Cash equivalents include any security which has a maturity of less than
one year.
(b) Non-income producing security.
(c) Security pledged to cover margin requirements for futures contracts.
(d) Restricted security.
All principal amounts and costs are stated in thousands.
Percentages are stated as a percent of net assets.
CURRENCY ABBREVIATIONS
DEM German Mark
FRF French Franc
JPY Japanese Yen
See notes to financial statements.
15
<PAGE> 18
STATEMENTS OF OPERATIONS
For the Period Ended October 31, 1995 (Note 1)
(In Thousands)
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG TOTAL
ALLOCATION FUND UTILITIES FUND RETURN FUND
--------------- --------------- ------------
<S> <C> <C> <C>
INCOME:
Dividends $ 797 $ 2,146 $ 8,013
Interest 10,276 213 4,169
------- ------- --------
Total Income 11,073 2,359 12,182
EXPENSES:
Investment Advisory Fees 1,679 382 4,221
Custodian Fees 103 20 84
Shareholder Servicing Costs 462 162 1,236
Reports to Shareholders 108 41 361
Federal and State Registration Fees 38 7 40
Other 72 23 78
------- ------- --------
Total Expenses 2,462 635 6,020
------- ------- --------
NET INVESTMENT INCOME 8,611 1,724 6,162
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 14,434 222 73,040
Futures Contracts, Options and
Forward Foreign Currency Contracts 3,241 -- (530)
Foreign Currencies (46) -- --
Change in Unrealized Appreciation/
Depreciation on:
Investments 13,063 12,628 33,752
Futures Contracts, Options and
Forward Foreign Currency Contracts (314) -- 85
------- ------- --------
NET GAIN 30,378 12,850 106,347
------- ------- --------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $38,989 $14,574 $112,509
======= ======= ========
</TABLE>
See notes to financial statements.
16
<PAGE> 19
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Amounts)
STRONG ASSET STRONG AMERICAN STRONG TOTAL
ALLOCATION FUND UTILITIES FUND RETURN FUND
--------------- --------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments in Securities, at Value (Cost
of $247,192, $81,032, and $609,260, respectively) $259,579 $ 91,632 $688,394
Receivable from Brokers for Securities and
Forward Foreign Currency Contracts Sold 994 545 13,664
Dividends and Interest Receivable 2,623 376 1,557
Other Assets -- 47 24
-------- ----------- --------
Total Assets 263,196 92,600 703,639
LIABILITIES:
Payable to Brokers for Securities and
Forward Foreign Currency Contracts Purchased 2,148 780 32,053
Accrued Operating Expenses and Other Liabilities 326 124 628
-------- ----------- --------
Total Liabilities 2,474 904 32,681
-------- ----------- --------
NET ASSETS $260,722 $ 91,696 $670,958
======== =========== ========
Capital Shares
Authorized 300,000 10,000,000 300,000
Outstanding 12,834 7,814 23,947
NET ASSET VALUE PER SHARE $ 20.31 $ 11.73 $ 28.02
======== =========== ========
</TABLE>
See notes to financial statements.
17
<PAGE> 20
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(In Thousands)
STRONG ASSET STRONG AMERICAN
ALLOCATION FUND UTILITIES FUND
----------------------------- ----------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
OCT. 31, 1995 DEC. 31, 1994 OCT. 31, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
(NOTE 1) (NOTE 1)
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 8,611 $ 9,681 $ 1,724 $ 1,664
Net Realized Gain (Loss) 17,629 (1,157) 222 (2,007)
Change in Unrealized Appreciation/Depreciation 12,749 (12,535) 12,628 (664)
-------- ------- -------- -------
Increase (Decrease) in Net Assets Resulting from Operations 38,989 (4,011) 14,574 (1,007)
CAPITAL SHARE TRANSACTIONS (19,395) 10,200 40,693 8,157
DISTRIBUTIONS:
From Net Investment Income (7,519) (9,681) (1,515) (1,663)
In Excess of Net Investment Income -- (33) -- --
In Excess of Net Realized Gains -- (2,267) -- --
-------- ------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 12,075 (5,792) 53,752 5,487
NET ASSETS:
Beginning of Period 248,647 254,439 37,944 32,457
------- -------- -------- --------
End of Period $260,722 $248,647 $91,696 $37,944
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
STRONG TOTAL
RETURN FUND
--------------------------------
PERIOD ENDED YEAR ENDED
OCT. 31, 1995 DEC. 31, 1994
------------- -------------
(NOTE 1)
<S> <C> <C>
OPERATIONS:
Net Investment Income $ 6,162 $ 6,622
Net Realized Gain 72,510 3,915
Change in Unrealized Appreciation/Depreciation 33,837 (20,243)
Increase (Decrease) in Net Assets Resulting from -------- --------
Operations 112,509 (9,706)
CAPITAL SHARE TRANSACTIONS (41,908) (4,929)
DISTRIBUTIONS:
From Net Investment Income (6,162) (6,696)
In Excess of Net Investment Income (295) (2,204)
-------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 64,144 (23,535)
NET ASSETS:
Beginning of Period 606,814 630,349
-------- --------
End of Period $670,958 $606,814
======== ========
</TABLE>
See notes to financial statements.
18
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
1. ORGANIZATION
The Strong Growth and Income Funds consist of Strong Asset Allocation Fund,
Inc. (formerly Strong Investment Fund, Inc.), Strong American Utilities
Fund, Inc. and Strong Total Return Fund, Inc. The Funds are separately
incorporated, diversified and non-diversified, open-end management
investment companies registered under the Investment Company Act of 1940.
The Board of Directors of the Funds approved changing the Funds' fiscal
year-ends from December 31 to October 31; therefore, this report
encompasses financial information for the ten months ended October 31,
1995.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.
(A) Security Valuation -- Portfolio securities traded primarily on a
principal securities exchange are valued at the last reported sales
price or the mean between the latest bid and asked prices where no
last sales price is available. Securities traded over-the-counter
are valued at the mean of the latest bid and asked prices or the
last reported sales price. Debt securities not traded on a principal
securities exchange are valued through valuation obtained from a
commercial pricing service, otherwise sale or bid prices are used.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith under consistently
applied procedures established by and under the general supervision
of the Board of Directors. Securities which are purchased within 60
days of their stated maturity are valued at amortized cost, which
approximates current value.
The Funds may own certain investment securities which are restricted
as to resale. These securities are valued after giving due
consideration to pertinent factors, including recent private sales,
market conditions and the issuer's financial performance. The Funds
generally bear the costs, if any, associated with the disposition of
restricted securities. Aggregate cost and fair value of these
restricted securities held at October 31, 1995 were as follows
(in thousands):
<TABLE>
<CAPTION>
STRONG ASSET ALLOCATION FUND STRONG TOTAL RETURN FUND
---------------------------- ------------------------
<S> <C> <C>
Aggregate Cost $19,889 $25,403
Aggregate Fair Value 19,984 30,399
Percent of Net Assets 7.7% 4.5%
</TABLE>
(B) Federal Income and Excise Taxes and Distributions to
Shareholders -- It is the Funds' policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of their
taxable income to their shareholders in a manner which results in no
tax cost to the Funds. Therefore, no Federal income or excise tax
provision is required.
The character of distributions made during the year from net
investment income or net realized gains may differ from the
characterization for Federal income tax purposes due to differences
in the recognition of income and expense items for financial statement
and tax purposes. Where appropriate, reclassifications between net
asset accounts are made for such differences that are permanent in
nature.
(C) Realized Gains and Losses on Investment Transactions -- Gain or loss
realized on investment transactions is determined by comparing the
identified cost of the security lot sold with the net sales proceeds.
(D) Futures -- Upon entering into a futures contract, the Funds
pledge to the broker cash, U.S. government securities or other liquid,
high-grade debt obligations equal to the minimum "initial margin"
requirements of the exchange. The Funds also receive from or pay to
the broker an amount of cash equal to the daily fluctuation in the
value of the contract. Such receipts or payments are known as
"variation margin," and are recorded as unrealized gains or losses.
When the futures contract is closed, a realized gain or loss is
recorded equal to the difference between the value of the contract at
the time it was opened and the value at the time it was closed.
(E) Options -- Premiums received by the Funds upon writing put
or call options are recorded as an asset with a corresponding
liability which is subsequently adjusted to the current market value
of the option. When an option expires, is exercised, or is closed,
the Funds realize a gain or loss, and the liability is eliminated.
The Funds continue to bear the risk of adverse movements in the
price of the underlying asset during the period of the option,
although any potential loss during the period would be reduced by the
amount of the option premium received.
(F) Foreign Currency Translation -- Investment securities and
other assets and liabilities initially expressed in foreign currencies
are converted to U.S. dollars based upon current exchange rates.
Purchases and sales of foreign investment securities and income are
converted to U.S. dollars based upon currency exchange rates
prevailing on the respective dates of such transactions. The effect
of changes in foreign exchange rates on realized and unrealized
security gains or losses is reflected as a component of such gains or
losses.
19
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1995
(G) Forward Foreign Currency Exchange Contracts -- Forward
foreign currency exchange contracts are valued at the forward rate and
are marked-to-market daily. The change in market value is recorded as
an unrealized gain or loss. When the contract is closed, the Funds
record an exchange gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed.
(H) Additional Investment Risk -- The use of futures contracts,
options, foreign denominated assets and forward currency contracts for
purposes of hedging the Funds' investment portfolios involves, to
varying degrees, elements of market risk in excess of the amount
recognized in the statement of assets and liabilities. The
predominant risk with futures contracts is an imperfect correlation
between the value of the contracts and the underlying securities.
Foreign denominated assets and forward currency contracts may involve
greater risks than domestic transactions, including currency,
political and economic, regulatory and market risks.
(I) Other -- Investment security transactions are recorded as
of the trade date. Dividend income and distributions to shareholders
are recorded on the ex-dividend date. Interest income is recorded on
the accrual basis and includes amortization of premium and discounts.
3. NET ASSETS
Net assets as of October 31, 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG TOTAL
ALLOCATION FUND UTILITIES FUND RETURN FUND
--------------- --------------- ------------
<S> <C> <C> <C>
Capital Stock $232,893 $82,790 $565,303
Undistributed Net Investment Income 1,189 209 296
Undistributed Net Realized Gain (Loss) 14,789 (1,903) 26,225
Net Unrealized Appreciation 11,851 10,600 79,134
-------- ------- --------
$260,722 $91,696 $670,958
======== ======= ========
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the period ended October 31, 1995
and the year ended December 31, 1994 were as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
------------------- --------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
STRONG ASSET ALLOCATION FUND
Shares Sold 1,503 $ 28,706 2,972 $ 55,431
Dividends Reinvested 374 7,226 634 11,547
Shares Redeemed (2,922) (55,327) (3,077) (56,778)
------ -------- ----- --------
(1,045) ($ 19,395) 529 $ 10,200
====== ======== ===== ========
STRONG AMERICAN UTILITIES FUND
Shares Sold 7,396 $ 78,125 3,551 $ 34,838
Dividends Reinvested 130 1,385 148 1,414
Shares Redeemed (3,722) (38,817) (2,874) (28,095)
------ -------- ----- --------
3,804 $ 40,693 825 $ 8,157
====== ======== ===== ========
STRONG TOTAL RETURN FUND
Shares Sold 4,004 $105,937 6,259 $150,873
Dividends Reinvested 234 6,277 365 8,656
Shares Redeemed (5,976) (154,122) (6,880) (164,458)
------ -------- ----- --------
(1,738) ($ 41,908) (256) ($ 4,929)
====== ======== ===== ========
</TABLE>
<PAGE> 23
REPORT OF INDEPENDENT ACCOUNTANTS
October 31, 1995
5. RELATED PARTY TRANSACTIONS
Strong Capital Management, Inc. (the "Advisor"), with whom certain
officers and directors of the Funds are affiliated, provides investment
advisory services and shareholder recordkeeping and related services to the
Funds. Investment advisory fees, which are established by terms of the
Advisory Agreements, are based on the following annualized rates of the
average daily net assets: Strong American Utilities Fund .75%, Strong
Asset Allocation Fund and Strong Total Return Fund .85% of the first $35
million and .80% thereafter. Advisory fees are subject to reimbursement by
the Advisor if the Funds' operating expenses exceed certain levels.
Shareholder recordkeeping and related service fees are based on
contractually established rates for each open and closed shareholder
account. In addition, the Advisor is compensated for certain other
services related to costs incurred for reports to shareholders.
W. H. Reaves & Co., Inc. (the "Subadvisor") manages the investments of the
Strong American Utilities Fund under an agreement with Strong Capital
Management, Inc. The Subadvisor is compensated by the Advisor (not the
Fund) and bears all of its own expenses in providing subadvisory services.
In addition, the Subadvisor directly effects purchases and sales of
securities for the Fund. In conjunction therewith, brokerage commissions
paid by the Fund for the period ended October 31, 1995 totaled $176,704.
Certain information regarding related party transactions for the period
ended October 31, 1995 is as follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG TOTAL
ALLOCATION FUND UTILITIES FUND RETURN FUND
--------------- --------------- ------------
<S> <C> <C> <C>
Payable to Advisor at October 31, 1995 $179 $96 $452
Other Shareholder Servicing Expenses Paid to Advisor 10 2 24
Unaffiliated Directors' Fees 7 1 14
</TABLE>
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the period
ended October 31, 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG TOTAL
ALLOCATION FUND UTILITIES FUND RETURN FUND
--------------- --------------- ------------
<S> <C> <C> <C>
Purchases:
U.S. Government and Agency $202,116 $ 0 $ 106,464
Other 559,013 66,075 1,646,502
Sales:
U.S. Government and Agency 198,143 0 134,849
Other 578,306 32,547 1,657,368
</TABLE>
7. INCOME TAX INFORMATION
At October 31, 1995, the investment cost, gross unrealized appreciation and
depreciation on investments and capital loss carryovers (expiring in
varying amounts through 2003) for Federal income tax purposes were as
follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG TOTAL
ALLOCATION FUND UTILITIES FUND RETURN FUND
--------------- --------------- ------------
<S> <C> <C> <C>
Aggregate Investment Cost $248,012 $81,192 $612,942
======== ======= ========
Aggregate Unrealized:
Appreciation $ 14,942 $10,942 $ 83,071
Depreciation (3,375) (502) (7,619)
-------- ------- --------
$ 11,567 $10,440 $ 75,452
======== ======= ========
Capital Loss Carryovers - $ 1,794 -
======== ======= ========
</TABLE>
For corporate shareholders in the Funds, the percentages of dividend income
distributed for the period ended October 31, 1995, which are designated as
qualifying for the dividends-received deduction are: Strong Asset
Allocation Fund 4.9%, Strong American Utilities Fund 100.0%, and Strong
Total Return Fund 91.3%.
21
<PAGE> 24
FINANCIAL HIGHLIGHTS
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
<TABLE>
<CAPTION>
STRONG ASSET ALLOCATION FUND
1995(A) 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(NOTE 1)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 17.91 $ 19.06 $ 18.49 $ 19.68 $ 17.50 $ 18.41 $ 17.57 $ 17.60 $ 22.18 $ 20.12
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.66 0.70 0.82 0.87 0.94 1.12 1.22 1.39 0.85 0.89
Net Realized and
Unrealized Gains
(Losses) on Investments 2.32 (0.99) 1.81 (0.25) 2.41 (0.65) 0.73 0.19 (0.70) 2.54
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS 2.98 (0.29) 2.63 0.62 3.35 0.47 1.95 1.58 0.15 3.43
LESS DISTRIBUTIONS
From Net Investment Income (0.58) (0.70) (0.82) (0.87) (0.97) (1.38) (0.97) (1.38) (1.78) (0.95)
From Net Realized Gains -- -- (1.24) (0.94) (0.20) -- (0.14) -- (2.95) (0.42)
In Excess of Net Realized
Gains -- (0.16) -- -- -- -- -- -- -- --
Returns of Capital -- -- -- -- -- -- -- (0.23) -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.58) (0.86) (2.06) (1.81) (1.17) (1.38) (1.11) (1.61) (4.73) (1.37)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 20.31 $ 17.91 $ 19.06 $ 18.49 $ 19.68 $ 17.50 $ 18.41 $ 17.57 $ 17.60 $ 22.18
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return +16.8% - 1.5% +14.5% +3.2% +19.6% +2.8% +11.2% +9.2% - 0.3% +17.6%
Net Assets, End of Period
(In Thousands) $260,722 $248,647 $254,439 $208,368 $214,951 $203,562 $240,549 $256,089 $272,899 $339,405
Ratio of Expenses to Average
Net Assets 1.2%* 1.2% 1.2% 1.2% 1.3% 1.3% 1.3% 1.2% 1.1% 1.1%
Ratio of Net Investment Income
to Average Net Assets 4.1%* 3.8% 4.2% 4.4% 5.1% 6.1% 6.6% 7.5% 4.2% 4.7%
Portfolio Turnover Rate 326.8% 359.7% 348.3% 320.4% 418.4% 319.6% 206.5% 426.2% 336.5% 80.4%
</TABLE>
<TABLE>
<CAPTION>
STRONG AMERICAN UTILITIES FUND
1995(a) 1994 1993(b)
---- ---- ----
(NOTE 1)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 9.46 $ 10.19 $ 10.00
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.27 0.46 0.18
Net Realized and
Unrealized Gains
(Losses) on Investments 2.25 (0.73) 0.27
-------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 2.52 (0.27) 0.45
LESS DISTRIBUTIONS
From Net Investment Income (0.25) (0.46) (0.18)
From Net Realized Gains -- -- (0.05)
In Excess of Net Realized
Gains -- -- (0.03)
-------- -------- --------
TOTAL DISTRIBUTIONS (0.25) (0.46) (0.26)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 11.73 $ 9.46 $ 10.19
======== ======== ========
Total Return +26.9% - 2.6% + 4.5%
Net Assets, End of Period
(In Thousands) $ 91,696 $ 37,944 $ 32,457
Ratio of Expenses to Average
Net Assets 1.2%* 0.5% 0.0%*
Ratio of Expenses to Average
Net Assets Without Waivers
and Absorptions 1.2%* 1.6% 1.4%*
Ratio of Net Investment Income
to Average Net Assets 3.4%* 4.8% 5.6%*
Portfolio Turnover Rate 56.4% 105.4% 89.3%
</TABLE>
* Calculated on an annualized basis.
(a) For the period ended October 31, 1995. Total return and portfolio turnover
rate are not annualized.
(b) Inception date is July 1, 1993. Total return and portfolio turnover rate
are not annualized.
22
<PAGE> 25
FINANCIAL HIGHLIGHTS (continued)
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
STRONG TOTAL RETURN FUND
<TABLE>
<CAPTION>
1995(a) 1994 1993 1992 1991 1990 1989 1988 1987 1986
-------- ------ ------ ------ ------ ------ ------ ------ ------ ------
(NOTE 1)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 23.62 $ 24.30 $ 20.17 $ 20.24 $ 15.34 $ 17.72 $ 18.96 $ 18.37 $ 21.61 $ 19.56
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.26 0.25 0.33 0.18 0.22 0.95 1.55 1.95 0.97 0.66
Net Realized and Unrealized
Gains (Losses) on
Investments 4.41 (0.59) 4.18 (0.08) 4.90 (2.19) (0.97) 0.85 0.61 3.13
-------- -------- -------- -------- -------- -------- ---------- ---------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 4.67 (0.34) 4.51 0.10 5.12 (1.24) 0.58 2.80 1.58 3.79
LESS DISTRIBUTIONS
From Net Investment Income (0.26) (0.26) (0.33) (0.17) (0.22) (1.14) (1.31) (1.96) (1.65) (0.70)
In Excess of Net Investment
Income (0.01) (0.08) -- -- -- -- -- -- -- --
From Net Realized Gains -- -- -- -- -- -- (0.51) -- (3.17) (1.04)
In Excess of Net Realized
Gains -- -- (0.05) -- -- -- -- -- -- --
Returns of Capital -- -- -- -- -- -- -- (0.25) -- --
-------- -------- -------- -------- -------- -------- ---------- ---------- -------- --------
TOTAL DISTRIBUTIONS (0.27) (0.34) (0.38) (0.17) (0.22) (1.14) (1.82) (2.21) (4.82) (1.74)
-------- -------- -------- -------- -------- -------- ---------- ---------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 28.02 $ 23.62 $ 24.30 $ 20.17 $ 20.24 $ 15.34 $ 17.72 $ 18.96 $ 18.37 $ 21.61
======== ======== ======== ======== ======== ======== ========== ========== ======== ========
Total Return +19.8% - 1.4% +22.5% +0.6% +33.6% - 7.1% +2.6% +15.6% +6.0% +20.0%
Net Assets, End of Period
(In Thousands) $670,958 $606,814 $630,349 $587,873 $691,327 $646,579 $1,065,278 $1,005,192 $802,442 $518,760
Ratio of Expenses to Average
Net Assets 1.1%* 1.2% 1.2% 1.3% 1.4% 1.4% 1.2% 1.2% 1.1% 1.1%
Ratio of Net Investment Income
to Average Net Assets 1.2%* 1.1% 1.4% 0.9% 1.3% 5.4% 7.7% 10.1% 5.2% 4.3%
Portfolio Turnover Rate 298.8% 290.4% 271.3% 371.8% 426.4% 312.3% 305.3% 281.1% 224.4% 153.5%
</TABLE>
* Calculated on an annualized basis.
(a) For the period ended October 31, 1995. Total return and portfolio turnover
rate are not annualized.
23
<PAGE> 26
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of the
Strong Growth and Income Funds
We have audited the accompanying statements of assets and liabilities of Strong
Asset Allocation Fund, Inc., Strong American Utilities Fund, Inc., and Strong
Total Return Fund, Inc., (collectively referred to herein as the "Strong Growth
and Income Funds"), including the schedules of investments in securities, as of
October 31, 1995, and the related statements of operations for the period from
January 1, 1995 to October 31, 1995, the statements of changes in net assets
for the period January 1, 1995 to October 31, 1995 and for the year ended
December 31, 1994, and the financial highlights for each of the periods
indicated. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of October 31, 1995 by correspondence with the custodians and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Strong Growth and Income Funds as of October 31, 1995, the results of
their operations for the period from January 1, 1995 to October 31, 1995, the
changes in their net assets for the period from January 1, 1995 to October 31,
1995 and for the year ended December 31, 1994, and the financial highlights for
each of the periods indicated, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
December 8, 1995
<PAGE> 27
SHAREHOLDER PRIVILEGES*
TELEPHONE PURCHASE
Make additional investments into any Strong Fund by calling us toll-free at
1-800-368-3863.
TELEPHONE EXCHANGE
If your financial goals change, you can exchange your investments between any
of the Strong Funds.
TELEPHONE REDEMPTION
You can call toll-free to redeem your mutual fund shares at any time. Your
shares will be redeemed no later than the close of the next business day.
AUTOMATIC INVESTMENT PLAN
This plan allows you to set up regular transfers from your bank checking or
NOW account to your Strong Funds account.
PAYROLL DIRECT DEPOSIT PLAN
You can automatically transfer all or a portion of your net pay at each pay
period. This eliminates the delay of depositing paychecks to your bank and then
sending a check through the mail to Strong Funds.
AUTOMATIC EXCHANGE PLAN
This plan allows you to exchange money from one Strong Fund to another. For
example, you may want to set up automatic exchanges from a money market fund to
an equity fund.
FOR MORE INFORMATION ABOUT THESE PRIVILEGES, CALL US AT 1-800-368-3863.
To reduce the volume of mail you receive, only one copy of certain materials,
such as prospectuses and shareholder reports, is mailed to your household.
Please call 1-800-368-3863 if you wish to receive additional copies, free of
charge.
*EACH FUND RESERVES THE RIGHT TO TERMINATE OR MODIFY ANY OF THESE PRIVILEGES.
<PAGE> 28
FOR LITERATURE AND INFORMATION REQUESTS,
CALL 1-800-368-1030
TO DISCUSS AN EXISTING ACCOUNT OR
CONDUCT A TRANSACTION,
CALL 1-800-368-3863
For a prospectus containing more complete information, including management
fees and expenses, please call 1-800-368-1030. Please read it carefully before
investing or sending money. This annual report does not constitute an offer for
the sale of securities. Strong Funds are offered for sale by prospectus only.
[STRONG FUNDS LOGO]
STRONG FUNDS DISTRIBUTORS, INC.
P.O. Box 2936
Milwaukee, Wisconsin 53201
