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Previous: CONNECTICUT MUTUAL FINANCIAL SERVICES SERIES FUND I INC, NSAR-A, 1995-08-28 |
Next: MERRILL LYNCH VARIABLE SERIES FUNDS INC, N-30D, 1995-08-28 |
<PAGE> 1
SEMIANNUAL REPORT
JUNE 30, 1995
THE STRONG
GROWTH AND INCOME FUNDS
[Photo of man and child]
THE STRONG ASSET ALLOCATION FUND
THE STRONG AMERICAN UTILITIES FUND
THE STRONG TOTAL RETURN FUND
[Strong logo]
<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.
1. Have a plan. Even a simple plan can help you take control of your
financial future. Review your plan once a year, or if your circumstances
change.
2. Start investing as soon as possible. Make time a valuable ally. Let it put
the power of compounding to work for you, while helping to reduce your
potential investment risk.
3. Diversify your portfolio. By investing in different asset classes--stocks,
bonds, and cash--you help protect against poor performance in one type
of investment while including investments most likely to help you achieve
your important goals.
4. Invest regularly. Investing is a process, not a one-time event. Make a
habit of investing. And make it easy for yourself with an "automatic
investment plan." This popular strategy not only helps you manage
investment risk, it also ensures you "pay yourself first" on a regular
basis.
5. Maintain a long-term perspective. For most individuals, the best discipline
is staying invested as market conditions change. Reactive, emotional
investment decisions are all too often a source of regret--and of principal
loss.
6. Consider stocks to help achieve major long-term goals. Over time, stocks
have provided the more powerful returns needed to help the value of
your investments stay well ahead of inflation.
7. Keep a comfortable amount of cash in your portfolio. To meet current needs,
including emergencies, use a money market fund or a bank account--not
your long-term investment assets.
8. Know what you're buying. Make sure you understand the potential risks and
rewards associated with each of your investments. Ask questions...request
information...make up your own mind. And choose a fund company that helps
you make informed investment decisions.
<PAGE> 3
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 ........................................... 17
Statements of Assets and Liabilities ............................... 18
Statements of Changes in Net Assets ................................ 19
Notes to Financial Statements ...................................... 20
FINANCIAL HIGHLIGHTS ................................................... 26
</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.
THE MARKETS BOUNCE BACK
The stock and bond markets staged powerful rallies during the first six months
of 1995, despite the dollar's slump against several major currencies and
Mexico's devaluation of the peso. Income investors, who in January were
anticipating a stronger economy and higher interest rates, were surprised by
unexpectedly weak economic numbers, particulary in April and May. With fears
of higher interest rates fading, longer-term bond prices rallied strongly.
The explosive rally in long bonds, coupled with continued healthy corporate
earnings, helped catapult stocks to record highs. Ironically, the dollar's
weakness -- and the turmoil in emerging markets that followed the peso's
devaluation -- led to a shift in global capital flows back to the U.S.
Investors in the U.S. market particularly favored traditional, large-cap growth
stocks, which gained 20.21% in the first half of 1995 as measured by the S&P
500.*
OUR STRATEGY: LESS CASH,
MORE RETURN POTENTIAL
At the start of the year, the portfolio was somewhat cautiously positioned in
anticipation of another tightening by the Federal Reserve. At that time, cash
composed 28.5% of net assets, stocks 37.5% and bonds 34%. However, following
the Fed's February rate hike, we concluded that short-term rates were unlikely
to move higher. Accordingly, 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. When adjusted for futures, cash had
dwindled to about 20% of the portfolio by the end of June with the balance
roughly 50% in stocks and 30% in bonds.
Our strategy for increasing the duration of the portfolio's bond position was
to seek out longer-maturity bonds offering an attractive level of income and
the potential for a relatively stable price. Secondarily, we sought to add
value through active management -- trading issues for similar ones that
provided an incrementally better yield or a better chance for price
appreciation through a credit upgrade.
While this increased duration heightened the portfolio's sensitivity to
interest rates, and therefore its potential volatility, we felt it was a
prudent move in light of the weakening economy and the greater probability of a
cut in interest rates by the Federal Reserve. Our strategy was vindicated on
July 6, when the Fed, concerned that the economy was slowing too rapidly,
reduced the federal funds rate by 0.25%.
On average for the first half of 1995, the portfolio was about 50% weighted in
stocks when S&P 500 futures are taken into account -- a fairly aggressive
position that reflected the favorable conditions for stocks. By virtue of our
multi-manager approach, the portfolio's stock holdings were well diversified
between growth stocks, value stocks, and international issues. Although this
diversification limited our exposure to individual "hot" sectors such as
technology, it also helped insulate the portfolio against a potential market
correction.
Overall, the Fund posted a total return of 10.45% for the first six months of
1995.
ASSET ALLOCATION
as of 6/30/95
[Pie Chart]
Short-term Investments 22.4%
Common and Preferred Stocks including Convertibles 38%
Bonds 39.6%
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.
<PAGE> 5
A FAVORABLE ENVIRONMENT GOING FORWARD
Overall, we expect a good environment for both stocks and bonds in the
foreseeable future. Economic growth appears to be moderating, lessening the
potential for a substantial, sustainable uptick in inflation. And while bond
prices have risen quite a bit in 1995, the market appears to be anticipating
lower rates, so there may be some remaining upside potential. Even if prices
don't move meaningfully from this point, we believe bonds still provide an
attractive level of income.
For these reasons, the Fund's current position is fairly aggressive -- about
50% weighted in stocks when adjusted for futures. Near-term, we may see some
nervousness in the markets about a possible downturn in the economy. However,
our belief is that, if such a downturn occurs, it will be relatively short and
shallow, and easily corrected by a modest cut in the federal funds rate by the
Federal Reserve. Generally, the American companies presently enjoy healthy
balance sheets compared to most past cycles, and the credit crunch that
hampered banks during the last downturn in 1990 has, for the most part, been
resolved. Therefore, we don't think a short downturn would prove problematic.
We appreciate your confidence in the Strong Asset Allocation Fund, and we look
forward to serving your investment needs.
Sincerely,
/s/ Bradley C. Tank
Bradley C. Tank
Lead Portfolio Manager
[Photo of Bradley C. Tank]
Growth of an assumed $10,000 investment
from 12/30/81 to 6/30/95
<TABLE>
<CAPTION>
Asset
The Strong Asset 40/40/20 Allocation S&P 500
Allocation Fund Balanced Index Index Stock Index
<S> <C> <C> <C> <C>
12/81 10000 10000 10000 10000
12/82 13320 12166 12374 12155
12/83 19344 13899 14119 14897
12/84 21234 15331 15605 15832
12/85 25346 18625 19226 20854
12/86 29819 21260 22123 24747
12/87 29734 22601 23442 26046
12/88 32467 25002 26058 30372
12/89 36104 29820 31267 39996
12/90 37107 31088 32579 38754
12/91 44394 37005 38498 50561
12/92 45824 39479 41628 54412
12/93 52469 42695 45208 59897
12/94 51679 42955 45314 60688
6/95 57081 48279 51281 72954
</TABLE>
<TABLE>
<CAPTION>
Average annual total return
through 6/30/95
<C> <C>
Since inception 13.77%
on 12/30/81
10-year 9.47%
5-year 9.47%
3-year 9.09%
1-year 13.26%
</TABLE>
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, 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
capitilization-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 Funds's fixed
income security selection. Results include the reinvestment of all dividends
and capital gains distributions. Sources 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.
4
<PAGE> 6
The Strong American Utilities Fund
As of 6/30/95
-------------
30-DAY
ANNUALIZED
CURRENT
YIELD
3.71%
The Strong American Utilities Fund seeks total return by investing for both
income and capital growth. The Fund invests primarily in the equity securities
of public utility companies headquartered in the United States.
THE FUND CONTINUED
TO PERFORM WELL
Utility stocks rebounded from a challenging 1994 to perform well in the first
half of 1995. For the 6-month period ended June 30, the S&P Utilities Index
achieved a total return of 14.84%.(1) The utility sector's strong showing helped
the Fund gain 13.55% on a total return basis for the same period. As a result
of this performance, the Fund was ranked in the top 7% of Utility funds
tracked by Lipper Analytical Services for the 6-month period ended 6/30/95,
based on total return. It ranked in the top 16% for the 1-year period.(2)
AN IMPROVED
ENVIRONMENT FOR UTILITIES
The price increase in utility stocks was generated largely by a decline in long
bond yields. After experiencing one of its most difficult years on record in
1994, the long bond market has rallied sharply so far in 1995, buoyed by a
stream of numbers indicating a slowing economy. With the threat of higher
interest rates fading, investors became more positive, and bond prices rose
dramatically at the long end of the market. As long bond yields fell, utility
stocks rallied, a contrast to last year, when rising bond yields put utility
stocks under pressure.
The decline in rates fueled utilities' prices for two major reasons. First,
the dividends paid by utility stocks became more attractive relative to bond
yields. Second, utilities could issue debt at more favorable rates, setting the
stage for improved profitability.
WE EMPHASIZED
TELECOMMUNICATIONS
We continue to look for the greatest earnings and dividend growth from the
telecommunications sector of the portfolio. On June 30, 1995,
telecommunication stocks comprised 35.1% of the Fund's assets.
Congress is currently considering major legislation that would lighten the
burden of traditional telephone regulation at both state and federal levels,
permitting more companies entry into new and growing markets, such as long
distance and video. This in turn should allow companies to pass more earnings
from cost savings through to shareholders. While competition among service
providers will increase near term, we believe any loss of traditional revenues
may be offset by revenues from new products. In addition, telephone usage --
and thereby revenues -- continues to grow via consumer services such as voice
mail, caller ID and on-line communication.
MORE POWER
Electric utilities have also regained a degree of favor with investors as
interest rates have declined. In addition, regulatory actions have raised hope
that the transition to increased competition in the electric industry will be
orderly. Electrics are still at a historically large discount versus the broad
market, and we believe selected stocks offer investors a compelling value.
These factors prompted us to increase the portfolio's weighting in electrics
from 25.2% at the beginning of the year to 34.3% on June 30. CMS Energy, an
electric utility, is now one of the five largest portfolio holdings, and
American Electric Power Company is a new holding for the portfolio.
As the total assets of the Fund have grown, we have maintained our combined
weighting in
FIVE LARGEST STOCK HOLDINGS
(as of 6/30/95)
<TABLE>
<CAPTION>
% of Net
Company Description Assets
------------------------------------------------------------------------------
<S> <C> <C>
Ameritech Telecommunication 9.0%
Corporation
------------------------------------------------------------------------------
SBC Communications, Inc. Telecommunication 7.9%
------------------------------------------------------------------------------
GTE Corporation Telecommunication 6.9%
------------------------------------------------------------------------------
CMS Energy Electric Utility 6.8%
Corporation
------------------------------------------------------------------------------
AT&T Corporation Telecommunication 4.7%
------------------------------------------------------------------------------
</TABLE>
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
<PAGE> 7
energy and gas utility stocks by selectively purchasing those that we believe
offer a positive dividend trend.
A POSITIVE OUTLOOK
FOR UTILITY STOCKS
Our outlook for utility stocks is favorable. The current investment climate
suggests slow economic growth, and the Federal Reserve seems increasingly more
biased toward lowering interest rates than raising them. In this climate of
modest economic growth and stable or declining interest rates, carefully
selected electric utilities appear particularly well-suited to providing
current income and the potential for capital gain.
We believe these factors, plus the continuing move to deregulate utilities,
bode well for conservative, long-term investors.
We appreciate your investment with us, and we look forward to earning your
continued confidence.
Sincerely,
/s/ [William H. Reaves]
-------------------
William H. Reaves
Portfolio Manager
[Photo of William H. Reaves]
INDUSTRY ALLOCATION
(as of 6/30/95)
Telecommunication 35.1%
Electric Utility 34.3%
Energy Related 15.1%
Gas Utility 8.0%
Other Utility 1.3%
Railroad 0.9%
Please see the Schedule of Investments in Securities for a
complete listing of the Fund's portfolio.
Growth of an assumed $10,000 investment
from 7/1/93 to 6/30/95
<TABLE>
<CAPTION>
The Strong American S&P S&P 500
Utilities Fund Utilities Index Stock Index
<S> <C> <C> <C>
6/93 10000 10000 10000
9/93 10801 10700 10258
12/93 10450 10090 10496
3/94 9894 9257 10098
6/94 10020 9255 10141
9/94 10278 9299 10637
12/94 10178 9289 10635
3/95 10799 9930 11670
6/95 11557 10667 12784
</TABLE>
<TABLE>
<C> <C>
Average annual total returns
through 6/30/95
Since inception 7.49%
on 7/1/93
1-year 15.34%
</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. 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 6-month and 1-year periods ended 6/30/95, the Fund was ranked #6 of
87 and #12 of 77 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.
5
<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.
THE MARKETS BOUNCE BACK IN 1995
After battling through twelve months of cyclical corrections, the stock market
rallied strongly in the first half of 1995, posting a total return greater than
that of the previous two years combined. Large-capitalization stocks, as
measured by the S&P 500, led the rally with a 20.21% total return for the
period.*
The rally was fueled largely by strong corporate earnings--particularly in the
technology sector--and investors' anticipation of falling long-term interest
rates. This expectation was vindicated when weak economic numbers were reported
in April and May. Longer-term bond prices rallied in response, and falling
yields helped make stocks more attractive. At the same time, corporate earnings
remained strong, further boosting stock prices.
As a result of the markets' gains, the Fund's bond positions and most of its
stock holdings performed well. For the first six months of 1995, the Fund's
total return was 13.87%.
INCREASING OUR GROWTH AND
INCOME FOCUS
In recent months, we have been realigning the portfolio to more closely reflect
a more "traditional" growth plus income profile, versus its previous
positioning, which tended to be more growth oriented. These modifications
included:
- Increasing the market capitalization of the Fund by increasing the
portfolio's weighting in large-cap, well-established companies.
- Boosting the Fund's yield potential by adding more convertible bonds and
higher-yielding equities that possess attractive fundamentals and
valuations.
We believe these modifications will help the Fund better pursue its goal of
capital growth and income.
OUR SLOWER GROWTH
PREDICTION ON TARGET
In the Fund's 1994 annual report, we stated that, "financial markets appear to
be anticipating that interest rates will peak soon, with a possible decline
sometime in the coming year." We also stated that we were investing in
companies that were "less threatened by a possible slower economy in 1995."
Our expectations proved to be on the mark and helped us pick solid performers.
We increased the portfolio's weighting in financial companies, which typically
benefit when interest rates decline. Our purchases include Citicorp, "Fannie
Mae" (the Federal National Mortgage Association), and Wells Fargo. In addition,
we purchased Federated Department Stores and Sears to increase the Fund's
holdings in specialty retailers, which also tend to benefit from lower rates.
Other purchases reflected our emphasis on companies that are poised for
long-term earnings growth, particularly in the technology sector. Our additions
in this area included Hewlett-Packard, Motorola, Intel and Texas Instruments.
We also purchased Delta Air Lines in anticipation of an increase in
international air travel; we
ASSET ALLOCATION
(as of 6/30/95)
[Pie Chart]
U.S. Gov't & Agency Issues ...................... 0.9%
Corporate Bonds including Convertibles .......... 8.6%
Convertible Preferred Stock ..................... 3.0%
Short-Term Investments .......................... 4.1%
Common Stock .................................... 83.4%
The Fund's allocation 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.
6
<PAGE> 9
believe the weak dollar may boost the number of tourists visiting the United
States, and lower fuel prices should help airlines' profitability.
A GOOD OUTLOOK
FOR INVESTORS
On July 6, 1995, the Federal Reserve cut interest rates by 0.25% in order to
help stimulate the flagging economy. Usually, the Federal Reserve isn't content
to cut rates just once; therefore, we anticipate that the economy will begin to
pick up steam later in the year. Consequently, we have begun lightening up on
our defensive consumer-oriented stocks and increasing the portfolio's weighting
in more economically sensitive companies, such as selected industrials that
might be the first beneficiaries of strong economic growth.
Longer-term, we see several positive factors for stocks. First, Congress
appears to be serious about cutting the capital gains tax. Such a cut would
result in an excellent environment for growth stocks since it would prompt
investors to emphasize future earnings rather than taxable current income.
More importantly, the combination of increased global competition and the
Federal Reserve's bias for slow economic growth suggests a favorable
environment for growth stocks, which can typically provide earnings gains even
in a slower-growing economy. If the world's central bankers are successful in
engineering a climate of slow growth with modest inflation, we believe the U.S.
market currently represents an outstanding opportunity for long-term investors,
especially those with the discipline to demand solid earnings growth at a
reasonable price.
Thank you for your confidence. We look forward to serving your investment needs
in the future.
Sincerely,
[/s/ Ronald C. Ognar]
Ronald C. Ognar
Portfolio Manager
[/s/ Ian J. Rogers]
Ian J. Rogers
Portfolio Manager
[photo of Ronald C. Ognar & Ian J. Rogers]
Growth of an assumed $10,000 investment
from 12/30/81 to 6/30/95
<TABLE>
<CAPTION>
The Strong S&P 500
Total Return Fund Stock Index
<S> <C> <C>
12/81 10000 10000
12/82 13250 12155
12/83 18720 14897
12/84 20685 15832
12/85 25936 20854
12/86 31121 24747
12/87 33002 26046
12/88 38141 30372
12/89 39140 39996
12/90 36367 38754
12/91 48578 50561
12/92 48844 54412
12/93 59852 59897
12/94 59027 60688
6/95 67212 72954
</TABLE>
<TABLE>
<CAPTION>
Average annual total returns
through 6/30/95
<S> <C>
Since inception 15.16%
on 12/30/81
10-year 11.35%
5-year 11.66%
3-year 13.71%
1-year 18.23%
</TABLE>
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.
*Source: Micropal.
7
<PAGE> 10
SCHEDULE OF INVESTMENTS IN SECURITIES June 30, 1995 (Unaudited)
STRONG ASSET ALLOCATION FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 36.1%*
DOMESTIC STOCKS 24.7%*
AEROSPACE & DEFENSE 0.2%*
7,200 Boeing Company $ 450,900
AIRLINE 0.2%*
6,600 AMR Corporation + 492,525
AUTO & TRUCK PARTS 0.3%*
15,000 Exide Corporation 645,000
3,800 The Goodyear Tire & Rubber Company 156,750
-------
801,750
AUTOMOBILE 0.1%*
9,000 Ford Motor Company 267,750
BANK -- MONEY CENTER 0.2%*
10,000 Citicorp 578,750
BANK -- REGIONAL 0.2%*
15,000 First Bank System, Inc. 615,000
BANK -- SUPER REGIONAL 0.2%*
13,300 Norwest Corporation 382,375
BEVERAGE -- SOFT DRINK 0.2%*
10,000 PepsiCo, Inc. 456,250
BROKERAGE & INVESTMENT MANAGEMENT 0.1%*
3,800 The Charles Schwab Corporation 164,825
COMPUTER -- MAINFRAME 0.2%*
4,000 International Business Machines Corporation 384,000
COMPUTER -- PERSONAL & WORKSTATION 1.8%*
78,100 Compaq Computer Corporation + 3,543,787
5,000 Digital Equipment Corporation + 203,750
11,800 Hewlett-Packard Company 879,100
---------
4,626,637
COMPUTER SERVICE 0.6%*
8,000 First Financial Management Corporation 684,000
5,000 Fiserv, Inc. + 140,625
28,000 National Data Corporation 647,500
---------
1,472,125
COMPUTER SOFTWARE 2.5%*
43,300 Acclaim Entertainment, Inc. + 798,344
5,000 Ascend Communications, Inc. + 252,500
6,000 Cisco Systems, Inc. + 303,375
49,200 Computer Associates International, Inc. 3,333,300
16,000 Informix Corporation + 406,000
8,700 Microsoft Corporation + 786,262
6,100 3Com Corporation + 408,700
---------
6,288,481
COMPUTER SYSTEMS 0.2%*
19,000 System Software Associates, Inc. 380,000
CONSUMER -- MISCELLANEOUS 0.1%*
8,000 American Greetings Corporation 235,000
1,300 U.S. Industries, Inc. + 17,712
-------
252,712
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
COSMETIC & PERSONAL CARE 0.2%*
10,000 The Gillette Company $ 446,250
DIVERSIFIED OPERATIONS 0.2%*
7,000 Alco Standard Corporation 559,125
ELECTRICAL EQUIPMENT 0.2%*
7,300 General Electric Company 411,537
ELECTRONICS -- SEMICONDUCTOR/COMPONENT 2.0%*
5,000 Altera Corporation + 216,250
6,000 Atmel Corporation + 332,250
10,000 Intel Corporation 633,125
52,400 Motorola, Inc. 3,517,350
2,800 Texas Instruments, Inc. 374,850
---------
5,073,825
FINANCE -- MISCELLANEOUS 0.4%*
18,000 MBNA Corporation 607,500
17,000 Medaphis Corporation + 369,750
---------
977,250
FOOD 0.2%*
8,700 CPC International, Inc. 537,225
HEALTHCARE -- DRUG/DIVERSIFIED 0.2%*
12,500 Merck & Company, Inc. 612,500
HEALTHCARE -- INSTRUMENTATION 1.4%*
42,000 Medtronic, Inc. 3,239,250
7,000 ThermoTrex Corporation + 239,750
---------
3,479,000
HEALTHCARE -- MEDICAL SUPPLY 0.4%*
25,000 Sybron International Corporation + 996,875
HEALTHCARE -- PATIENT CARE 0.3%*
6,900 Integrated Health Services, Inc. 207,000
6,900 United Healthcare Corporation 285,487
10,000 Vencor, Inc. + 315,000
-------
807,487
HEALTHCARE -- PRODUCT 0.3%*
11,500 Allergan, Inc. 311,937
15,000 Boston Scientific Corporation + 478,125
-------
790,062
INSURANCE -- MULTI-LINE 0.3%*
16,000 MGIC Investment Corporation 750,000
INSURANCE -- PROPERTY & CASUALTY 0.6%*
7,900 American International Group, Inc. 900,600
20,000 Vesta Insurance Group, Inc. 687,500
---------
1,588,100
LEISURE SERVICE 0.5%*
18,000 Hospitality Franchise Systems, Inc. + 623,250
15,000 Marriott International, Inc. 538,125
---------
1,161,375
MACHINERY -- AGRICULTURE 0.1%*
6,000 Case Corporation 178,500
</TABLE>
8
<PAGE> 11
STRONG ASSET ALLOCATION FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA -- RADIO/TV 0.9%*
3,600 CBS, Inc. $ 241,200
5,600 Capital Cities/ABC, Inc. 604,800
21,600 Tele-Communications, Inc. + 506,250
19,301 Viacom International, Inc. + 895,084
---------
2,247,334
MORTGAGE & RELATED SERVICE 0.6%*
8,300 Federal Home Loan Mortgage Corporation 570,625
20,200 Green Tree Financial Corporation 896,375
---------
1,467,000
NATURAL GAS DISTRIBUTION 0.2%*
18,000 The Williams Companies, Inc. 627,750
OFFICE AUTOMATION 1.3%*
148,050 Corporate Express, Inc. + 3,164,569
OIL -- INTERNATIONAL INTEGRATED 0.2%*
4,900 Royal Dutch Petroleum Company 597,188
OIL -- NORTH AMERICAN EXPLORATION &
PRODUCTION 0.1%*
10,000 Barrett Resources Corporation + 232,500
OIL -- NORTH AMERICAN INTEGRATED 0.2%*
11,700 Ashland, Inc. 410,963
PAPER & FOREST PRODUCTS 0.4%*
18,000 James River Corporation of Virginia 497,250
10,000 Scott Paper Company 495,000
---------
992,250
PERSONAL & COMMERCIAL LENDING 0.3%*
10,000 First USA, Inc. 443,750
8,100 Student Loan Marketing Association 379,688
---------
823,438
POLLUTION CONTROL 0.8%*
43,000 Browning-Ferris Industries, Inc. 1,553,375
16,500 WMX Technologies, Inc. 468,188
---------
2,021,563
RETAIL -- DEPARTMENT STORE 0.8%*
41,300 Federated Department Stores, Inc. + 1,063,475
10,000 Kohl's Corporation + 456,250
9,000 May Department Stores Company 374,625
---------
1,894,350
RETAIL -- DISCOUNT & VARIETY 0.1%*
12,500 Toys 'R' Us + 365,625
RETAIL -- FOOD CHAIN 0.0%*
2,900 Albertson's, Inc. 86,275
RETAIL -- RESTAURANT 0.3%*
12,000 Lone Star Steakhouse & Saloon, Inc. + 363,750
13,500 Starbucks Corporation + 480,938
---------
844,688
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
RETAIL -- SPECIALTY 2.5%*
87,300 CUC International, Inc. + $ 3,666,600
25,000 Circuit City Stores, Inc. + 790,625
25,000 Just For Feet, Inc. + 996,875
14,500 The Limited, Inc. 319,000
15,000 Staples, Inc. + 433,125
4,600 Viking Office Prooducts, Inc. + 168,475
---------
6,374,700
TELECOMMUNICATION EQUIPMENT 0.8%*
20,000 ADC Telecommunications, Inc. + 715,000
10,000 StrataCom, Inc. + 487,500
15,000 Tellabs, Inc. + 721,875
---------
1,924,375
TELECOMMUNICATION SERVICE 0.5%*
16,100 AirTouch Communications + 458,850
3,400 LIN Broadcasting Corporation + 430,100
22,200 MCI Communications Corporation 488,400
---------
1,377,350
TELEPHONE 0.3%*
25,000 Cincinnati Bell, Inc. 631,250
---------
Total Domestic Stocks 62,066,359
FOREIGN STOCKS 11.4%*
Argentina 0.2%*
OIL -- INTERNATIONAL INTEGRATED
22,000 YPF Sociedad Anonima ADR (USD) 415,250
Australia 1.0%*
FINANCE -- MISCELLANEOUS 0.2%*
40,000 Lend Lease Corporation 510,056
FOOD 0.1%*
161,000 Burns, Philp & Company, Ltd. 335,693
METALS & MINING 0.4%*
38,500 The Broken Hill Proprietary Company, Ltd. 472,909
357,000 Normandy Mining, Ltd. 440,541
---------
913,450
OIL -- INTERNATIONAL INTEGRATED 0.3%*
194,000 Woodside Petroleum, Ltd. 759,468
---------
2,518,667
Brazil 0.1%*
TELECOMMUNICATION SERVICE
9,000 Telecommunicacoes Brasileiras S.A. ADR (USD) 297,000
Finland 1.8%*
TELECOMMUNICATION EQUIPMENT
74,800 Nokia Corporation ADR (USD) 4,459,950
France 0.3%*
LEISURE PRODUCT
1,600 Salomon S.A. 725,770
Germany 0.1%*
COMPUTER SOFTWARE
8,200 SAP AG ADS (USD) (Acquired 5/23/95;
Cost $299,464) (r) + 344,400
</TABLE>
9
<PAGE> 12
SCHEDULE OF INVESTMENTS IN SECURITIES (CONTINUED) June 30, 1995 (Unaudited)
STRONG ASSET ALLOCATION FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
Hong Kong 0.3%*
ELECTRONIC PRODUCTS -- MISCELLANEOUS 0.1%*
164,000 Johnson Electric Holdings, Ltd. $ 330,662
LEISURE SERVICE 0.2%*
1,030,000 CDL Hotels International, Ltd. 502,540
----------
833,202
Indonesia 0.2%*
AUTOMOBILE
270,000 Astra International PT (Fgn Reg) 479,111
Ireland 0.1%*
COMPUTER SOFTWARE
3,000 CBT Group PLC ADR (USD) + 127,125
Israel 0.1%*
HEALTHCARE -- DRUG/DIVERSIFIED
10,000 Teva Pharmaceutical Industries, Ltd. ADR (USD) 375,000
Italy 0.4%*
AUTOMOBILE 0.2%*
48,500 Pininfarina Spa 451,021
ELECTRONIC PRODUCTS -- MISCELLANEOUS 0.2%*
510,000 Olivetti Spa + 499,758
----------
950,779
Japan 1.8%*
BROKERAGE & INVESTMENT MANAGEMENT 0.1%*
11,000 Nomura Securities Company, Ltd. 192,435
CONGLOMERATE 0.2%*
40,000 Mitsubishi Corporation 456,265
ELECTRONIC PRODUCTS -- MISCELLANEOUS 0.7%*
52,000 Hitachi, Ltd. 519,385
2,000 Rohm Company Warrants, Expire 11/20/97 (CHF) + 784,314
10,000 Sony Corporation 481,087
----------
1,784,786
LEISURE SERVICE 0.3%*
4,900 Toho Company 816,667
REAL ESTATE 0.3%*
100,000 TOC Company, Ltd. 910,165
TELECOMMUNICATION 0.2%*
57 Nippon Telegraph & Telephone Corporation 478,369
----------
4,638,687
Netherlands 0.4%*
COMPUTER SOFTWARE 0.1%*
7,800 Baan Company N.V. (USD) + 240,825
HOUSEHOLD APPLIANCE & FURNISHINGS 0.2%*
15,000 Philips Electronics N.V. ADR (USD) 641,250
LEISURE PRODUCT 0.1%*
3,000 Polygram 177,417
----------
1,059,492
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
New Zealand 0.8%*
CONGLOMERATE 0.2%*
578,000 Brierley Investments, Ltd. $ 436,820
LEISURE SERVICE 0.2%*
1,150,000 CDL Hotels New Zealand, Ltd. + 553,766
5,000 Helicopter Line, Ltd. 15,048
----------
568,814
PAPER & FOREST PRODUCTS 0.4%*
178,000 Carter Holt Harvey, Ltd. 435,710
363,000 Fletcher Challenge, Ltd. Forestry Division 478,265
23,000 Fletcher Challenge, Ltd. Ordinary Division 64,606
----------
978,581
----------
1,984,215
Norway 0.1%*
AUTO & TRUCK PARTS
36,100 SenosoNor AS 258,192
Singapore 1.1%*
BANK -- MONEY CENTER 0.5%*
108,000 The Development Bank of Singapore, Ltd. (Fgn Reg) 1,229,646
CONGLOMERATE 0.5%*
84,000 Jardine Matheson Holdings, Ltd. (USD) 617,400
74,000 Keppel Corporation, Ltd. 604,082
----------
1,221,482
REAL ESTATE 0.1%*
196,000 Malayan Credit, Ltd. 409,825
----------
2,860,953
South Africa 0.4%*
PRECIOUS METAL/GEM/STONE
17,000 Anglo American Corporation of South Africa,
Ltd. ADR (USD) 911,625
Spain 0.2%*
ELECTRIC UTILITY
86,000 Iberdrola S.A. 649,809
Sweden 0.4%*
HEALTH CARE -- MEDICAL SUPPLY 0.2%*
64,900 Arjo AB 572,169
TELECOMMUNICATION EQUIPMENT 0.2%*
20,000 Ericsson (LM) Telephone Company ADR (USD) 400,000
----------
972,169
Thailand 0.7%*
AIRLINE 0.2%*
250,000 Thai Airways International PCL (Fgn Reg) 557,244
CONGLOMERATE 0.3%*
33,000 Loxley PCL (Fgn Reg) 708,815
SHOE & APPAREL MANUFACTURING 0.2%*
250,000 Saha Union PCL (Fgn Reg) 402,735
----------
1,668,794
United Kingdom 0.9%*
CONGLOMERATE 0.4%*
130,000 Hanson Trust PLC 455,741
140,000 Tomkins PLC 501,952
----------
957,693
</TABLE>
10
<PAGE> 13
STRONG ASSET ALLOCATION FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
METALS & MINING 0.4%*
20,000 Ashanti Goldfields Company, Ltd. GDR (USD) $ 465,000
200,000 Lonrho PLC 471,676
-----------
936,676
OFFICE AUTOMATION 0.1%*
15,000 Danka Business Systems PLC ADR (USD) 362,812
-----------
2,257,181
-----------
Total Foreign Stocks 28,787,371
-----------
TOTAL COMMON STOCKS (COST $81,210,044) 90,853,730
CONVERTIBLE PREFERRED STOCKS 0.3%*
7,800 Battle Mountain Gold Company $3.25 430,950
25,000 Westinghouse Electric Corporation $1.30
(Acquired 5/02/95; Cost $368,750) (r) 378,125
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $820,984) 809,075
FOREIGN PREFERRED STOCK 1.5%*
Germany
3,000 SAP AG (Cost $2,528,419) 3,808,110
DOMESTIC BONDS 52.2%*
CORPORATE BONDS 25.0%*
$5,045,000 Bankers Life Holding Corporation Senior
Subordinated Notes, Series B, 13.00%,
Due 11/01/02 5,890,037
2,840,000 CNA Financial Corporation Debentures,
7.25%, Due 11/15/23 2,567,672
3,000,000 Centex Corporation Subordinated Notes,
7.375%, Due 6/01/05 2,955,495
13,100,000 Coca-Cola Enterprises, Inc. Notes,
Zero %, Due 6/20/20 2,225,926
1,190,000 Dr Pepper/Seven-Up Companies, Inc. Senior
Subordinated Notes, Zero %, Due 11/01/02
(Rate Reset Effective 11/01/97) 1,059,100
5,300,000 Federated Department Stores, Inc. Senior
Notes, 10.00%, Due 2/15/01 5,717,375
2,500,000 GNS Finance Corporation Senior Subordinated
Notes, Series B, 9.25%, Due 3/15/03 2,662,500
2,000,000 W.R. Grace & Company Notes, 8.00%, Due 8/15/04 2,122,912
1,000,000 Kaufman & Broad Home Corporation Senior
Notes, 10.375%, Due 9/01/99 1,015,000
5,000,000 Magma Copper Company Senior Subordinated
Notes, 8.70%, Due 5/15/05 4,962,500
1,000,000 News America Holdings, Inc. Debentures,
8.45%, Due 8/01/34 1,101,611
2,000,000 News America Holdings, Inc. Senior Debentures,
7.75%, Due 2/01/24 1,940,494
2,000,000 Owens-Illinois, Inc. Senior Debentures,
11.00%, Due 12/01/03 2,215,000
2,500,000 SCI Television, Inc. Senior Secured Notes,
11.00%, Due 6/30/05 2,606,250
2,770,000 Santa Fe Pacific Gold Corporation Senior
Debentures, 8.375%, Due 7/01/05 2,759,613
2,400,000 Station Casinos, Inc. Senior Subordinated Notes,
9.625%, Due 6/01/03 2,244,000
600,000 Tele-Communications, Inc. Non-Redeemable
Senior Debentures, 10.125%, Due 4/15/22 680,633
3,550,000 Time Warner, Inc. Debentures, 9.125%, Due 1/15/13 3,721,795
2,500,000 Union Planters Corporation Subordinated Notes,
6.25%, Due 11/01/03 2,346,363
11,905,000 Viacom, Inc. Senior Notes, 7.75%, Due 6/01/05 12,024,050
-----------
TOTAL CORPORATE BONDS (COST $60,676,364) 62,818,326
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS 2.2%*
$1,500,000 Regents of the University of California Revenue
Refunding -- Multiple Purpose Projects,
4.90%, Due 9/01/08 $ 1,368,750
1,295,000 Southern California Public Power Authority
Power Project Revenue, Zero %, Due 7/01/09 1,152,550
1,000,000 Valdez, Alaska Marine Terminal Revenue --
BP Pipeline, Inc. Project, 5.50%, Due 10/01/28 893,750
2,225,000 Washington Public Power Supply System
Nuclear Project No. 1 Refunding Revenue,
5.70%, Due 7/01/17 2,110,969
-----------
TOTAL MUNICPAL BONDS (COST $5,545,795) 5,526,019
NON-AGENCY MORTGAGE-BACKED SECURITIES 9.1%*
1,563,135 Chase Mortgage Finance Corporation Mortgage
Pass-Thru Certificates, Series 1990-G,
Class A-Z1, 9.50%, Due 12/25/21 1,600,259
3,028,947 First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates, Series 1993-2,
Class A-3, 7.50%, Due 3/25/33 3,002,444
20,243,723 First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates, Series
1994-MHC1, Class A-1X, Interest Only,
1.8621%, Due 4/25/11 1,837,725
895,323 Green Tree Financial Corporation
Manufactured Housing Senior Subordinated
Pass-Thru Certificates, Series 1993-3,
Class A-1, 4.60%, Due 10/15/18 888,563
248,469 MDC Asset Investors Trust V Collateralized
Mortgage Obligation, Class V-2,
9.325%, Due 12/01/17 254,772
Merrill Lynch Mortgage Investors, Inc.
Manufactured Housing Contract
Pass-Thru Certificates:
2,685,845 Series 1987-C, 10.10%, Due 11/15/07 2,903,774
964,455 Series 1992-E, Class B, 5.85%, Due 8/15/12 957,511
Merrill Lynch Mortgage Investors, Inc.
Senior Subordinated Variable Rate
Pass-Thru Certificates:
3,000,000 Series 1994-F, Class M, 7.0625%, Due 4/15/19 2,725,500
1,000,000 Series 1994-H, Class M, 7.0625%, Due 6/15/19 908,500
76,358 RTC Variable Rate Mortgage Pass-Thru
Certificates, Series 1992-6, Class A-2,
8.40%, Due 7/25/24 75,022
919,431 Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage Bonds,
Series 1992-C, Class 3-A, 11.8179%, Due 11/25/30 963,389
2,200,000 U.S. Home Equity Loan Asset Backed Certificates,
Series 1991-2, Class B, 9.125%, Due 4/15/21 2,310,726
7,971,239 Westam Mortgage Financial Corporation
Collateralized Mortgage Bonds, Series 10,
Class 10-D, Principal Only, Due 7/26/18 4,491,315
-----------
TOTAL NON-AGENCY MORTGAGE-BACKED
SECURITIES (COST $22,247,345) 22,919,500
UNITED STATES GOVERNMENT AND AGENCY
ISSUES 15.9%*
FHLMC Guaranteed Multiclass Mortgage
Participation Certificates:
845,303 Series 1181, Class 1181-G, 7.50%, Due 8/15/05 858,837
673,603 Series 1257, Class 1257-J, 7.00%, Due 4/15/07 657,416
FHLMC Guaranteed Multiclass Variable Rate
Mortgage Participation Certificates:
500,000 Series 1492, Class 1492-FB, 6.675%, Due 1/15/20 502,625
1,559,672 Series 1544, Class 1544-TA, 5.741%, Due 7/15/08 1,550,220
</TABLE>
11
<PAGE> 14
SCHEDULE OF INVESTMENTS IN SECURITIES (CONTINUED) June 30, 1995 (Unaudited)
STRONG ASSET ALLOCATION FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
FHLMC Guaranteed Pass-Thru Certificates:
$ 230,014 9.50%, Due 1/01/06 $ 240,455
226,698 10.25%, Due 3/01/15 244,667
50,187 10.50%, Due 1/01/16 54,764
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
2,428,166 6.50%, Due 9/01/08 2,408,109
280,428 11.00%, Due 10/01/00 thru 11/01/00 297,657
12,970,000 13.00%, Due 1/24/15 (w) 15,073,604
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
2,747,726 Series 1991-125, Class Z, 8.50%, Due 9/25/21 2,905,033
712,354 Series 1992-137, Class BA, 3.50%, Due 1/25/17 673,025
FNMA Guaranteed Real Estate Mortgage Investment
Conduit Variable Rate Pass-Thru Certificates:
3,385,617 Series 1992-187, Class SA, 8.40%, Due 10/25/07 3,087,277
610,564 Series G92-61, Class FJ, 6.241%, Due 10/25/22 616,749
957,700 FNMA Stripped Mortgage-Backed Securities
Trust 25, Class 1, 6.00%, Due 2/25/13 911,586
2,620,000 Federal Home Loan Bank Floating Rate Notes,
Series IK97, 5.50%, Due 4/21/97 2,592,163
63,985 GNMA Guaranteed Pass-Thru Certificates,
10.25%, Due 10/15/98 65,803
23,694,022 Small Business Administration Guaranteed Loan
Pool #440019, Interest Only Custodial Receipts,
Series 1993-1A, 2.531%, Due 2/15/18 2,950,617
4,200,000 United States Treasury Notes, 6.125%, Due 5/15/98 4,228,875
-----------
TOTAL UNITED STATES GOVERNMENT AND
AGENCY ISSUES (COST $39,305,103) 39,919,482
-----------
TOTAL DOMESTIC BONDS (COST $127,774,607) 131,183,327
FOREIGN BONDS 2.3%*
Canada
10,000,000 News America Holdings, Inc. Debentures,
USD 8.625%, Due 2/07/14 (Cost $6,015,932) 5,693,316
OPTION 0.2%*
9,500,000 Merrill Lynch Swaption (The option to receive
a fixed interest rate 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 $439,881) 551,000
DOMESTIC CASH EQUIVALENTS 12.7%*
COMMERCIAL PAPER 10.0%*
DISCOUNTED 9.9%*
$10,000,000 Burlington Northern Railroad Company
Due 7/03/95 10,000,000
4,900,000 Conagra, Inc.
Due 7/07/95 4,896,641
3,000,000 El Paso Natural Gas Company
Due 7/11/95 2,995,800
7,000,000 Ryder System, Inc.
Due 7/12/95 6,988,975
-----------
24,881,416
INTEREST BEARING, DUE UPON DEMAND 0.1%*
106,400 General Mills, Inc., 5.72% 106,400
108,300 Pitney Bowes Credit Corporation, 5.73% 108,300
2,800 Wisconsin Electric Power Company, 5.77% 2,800
-----------
217,500
-----------
Total Commercial Paper 25,098,916
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
TAXABLE MUNICIPAL DAILY VARIABLE RATE
PUT BONDS 0.9%*
$2,250,000 State Industrial Development Authority of Alabama
Industrial Development Revenue -- Tee Jays
Manufacturing Company, Inc. Project, 6.20% $ 2,250,000
TIME DEPOSITS 0.8%*
2,000,000 Citibank Nassau, 6.8625%, Due 7/25/95 2,000,000
UNITED STATES GOVERNMENT ISSUES 1.0%*
United States Treasury Bills:
550,000 Due 7/06/95 549,744
45,000 Due 7/20/95 44,894
390,000 Due 7/27/95 388,527
950,000 Due 9/21/95 938,685
570,000 Due 11/16/95 558,243
-----------
2,480,093
-----------
Total Domestic Cash Equivalents 31,829,009
FOREIGN CASH EQUIVALENTS 1.1%*
DISCOUNTED CERTIFICATE OF DEPOSIT
Poland
2,803,426 Morgan Guaranty (with Polish Zloty indexation
USD based on the Polish-denominated deposit),
Due 7/21/95 2,765,832
-----------
Total Cash Equivalents (Cost $34,596,348) 34,594,841
-----------
TOTAL INVESTMENTS IN SECURITIES
(COST $253,386,215) 106.4%* 267,493,399
-----------
OTHER ASSETS AND LIABILITIES, NET (6.4%)* (15,976,268)
NET ASSETS 100.0%* $251,517,131
===========
</TABLE>
STRONG AMERICAN UTILITIES FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 94.7%*
DOMESTIC STOCKS 90.7%*
ELECTRIC UTILITY 34.3%*
75,000 American Electric Power Company, Inc. $ 2,634,375
115,000 Boston Edison Company 3,004,375
185,000 CMS Energy Corporation 4,555,625
9,800 DPL, Inc. 216,825
17,500 Duke Power Company 726,250
3,000 FPL Group, Inc. 115,875
27,500 General Public Utilities Corporation 818,125
6,000 IPALCO Enterprises, Inc. 191,250
18,800 NIPSCO Industries, Inc. 639,200
100,000 PECO Energy Company 2,762,500
29,000 Public Service Enterprise Group, Inc. 804,750
108,000 SCANA Corporation 2,416,500
79,000 The Southern Company 1,767,625
92,000 TECO Energy 2,012,500
12,000 TNP Enterprises, Inc. 193,500
-----------
22,859,275
ENERGY RELATED 11.1%*
14,600 Amoco Corporation 972,725
4,500 Camco International, Inc. 105,187
6,000 Dresser Industries, Inc. 133,500
16,000 ENSERCH Corporation 274,000
20,500 Exxon Corporation 1,447,812
12,600 Kerr McGee Corporation 675,675
4,000 Mobil Corporation 384,000
</TABLE>
12
<PAGE> 15
STRONG AMERICAN UTILITIES FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
------------------------------------------------------------------------------------------
<S> <C> <C>
13,500 Pennzoil Company $ 636,187
7,000 Phillips Petroleum Company 233,625
33,500 Questar Corporation 963,125
11,500 Schlumberger, Ltd. 714,438
41,300 Southwestern Energy Corporation 573,038
14,500 USX-Marathon Group 286,375
500 Union Texas Petroleum Holdings, Inc. 10,563
-----------
7,410,250
GAS UTILITY 8.0%*
103,000 MCN Corporation 2,034,250
57,000 National Fuel Gas Company 1,631,625
48,000 The Williams Companies, Inc. 1,674,000
-----------
5,339,875
OTHER UTILITY 1.3%*
27,000 American Water Works Company, Inc. 857,250
RAILROAD 0.9%*
11,300 Union Pacific Corporation 625,737
TELECOMMUNICATION 35.1%*
59,000 AT&T Corporation 3,134,375
13,000 AirTouch Communications + 370,500
136,000 Ameritech Corporation 5,984,000
47,000 Bell Atlantic Corporation 2,632,000
135,000 GTE Corporation 4,606,875
10,000 MCI Communications Corporation 220,000
110,000 SBC Communications, Inc. 5,238,750
30,000 US WEST Communications, Inc. 1,248,750
23,435,250
-----------
Total Domestic Stocks 60,527,637
FOREIGN STOCKS 4.0%*
Canada 2.3%*
ENERGY RELATED
40,000 Imperial Oil, Ltd. (USD) 1,485,000
United Kingdom 1.7%*
ENERGY RELATED
6,900 British Petroleum PLC ADR (USD) 590,813
7,720 Shell Transport & Trading ADR (USD) 558,735
1,149,548
-----------
Total Foreign Stocks 2,634,548
-----------
TOTAL COMMON STOCKS (COST $59,527,305) 63,162,185
CASH EQUIVALENTS 5.8%*
COMMERCIAL PAPER 5.8%*
DISCOUNTED 4.9%*
$2,000,000 Barnett Banks, Inc.
Due 7/06/95 1,998,988
1,300,000 Burlington Northern Railroad Company
Due 7/03/95 1,300,000
-----------
3,298,988
INTEREST BEARING, DUE UPON DEMAND 0.9%*
140,900 Eli Lilly & Company, 5.55% 140,900
297,800 General Mills, Inc., 5.72% 297,800
21,300 Pitney Bowes Credit Corporation, 5.73% 21,300
24,600 Southwestern Bell Telephone Company, 5.71% 24,600
82,400 Wisconsin Electric Power Company, 5.77% 82,400
-----------
567,000
-----------
Total Cash Equivalents (Cost $3,865,988) 3,865,988
-----------
TOTAL INVESTMENTS IN SECURITIES
(COST $63,393,293) 100.5%* 67,028,173
Other Assets & Liabilities, Net (0.5%)* (307,637)
-----------
NET ASSETS 100.0%* $66,720,536
===========
</TABLE>
STRONG TOTAL RETURN FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 83.4%*
DOMESTIC STOCKS 80.7%*
AEROSPACE & DEFENSE 2.4%*
135,000 Boeing Company $ 8,454,375
87,000 McDonnell Douglas Corporation 6,677,250
-----------
15,131,625
AIRLINE 1.8%*
50,000 AMR Corporation + 3,731,250
110,000 Delta Air Lines, Inc. 8,112,500
-----------
11,843,750
AUTO & TRUCK PARTS 1.8%*
170,000 Exide Corporation 7,310,000
100,000 The Goodyear Tire & Rubber Company 4,125,000
-----------
11,435,000
AUTOMOBILE 0.8%*
22,400 Chrysler Corporation 1,072,400
50,000 Ford Motor Company 1,487,500
50,000 General Motors Corporation 2,343,750
-----------
4,903,650
BANK -- MONEY CENTER 0.5%*
60,000 Citicorp 3,472,500
BANK -- REGIONAL 0.8%*
125,000 First Bank System, Inc. 5,125,000
BANK -- SUPER REGIONAL 1.2%*
100,000 Mellon Bank Corporation 4,162,500
20,000 Wells Fargo & Company 3,605,000
-----------
7,767,500
BEVERAGE -- SOFT DRINK 2.3%*
100,000 The Coca-Cola Company 6,375,000
190,000 PepsiCo, Inc. 8,668,750
-----------
15,043,750
BROKERAGE & INVESTMENT MANAGEMENT 1.0%*
70,000 Duke Realty Investments, Inc. 1,977,500
175,000 Omega Healthcare Investors, Inc. 4,440,625
-----------
6,418,125
CHEMICAL 1.0%*
200,000 Witco Corporation 6,450,000
CHEMICAL -- SPECIALTY 2.0%*
50,000 Air Products & Chemicals, Inc. 2,787,500
89,100 Great Lakes Chemical Corporation 5,368,275
90,000 Hercules, Inc. 4,387,500
-----------
12,543,275
COMMERCIAL SERVICE 0.5%*
80,000 The Interpublic Group of Companies, Inc. 3,000,000
COMPUTER -- MAINFRAME 0.7%*
50,000 International Business Machines Corporation 4,800,000
COMPUTER -- PERSONAL & WORKSTATION 2.3%*
75,000 Compaq Computer Corporation + 3,403,125
50,000 Digital Equipment Corporation + 2,037,500
125,000 Hewlett-Packard Company 9,312,500
-----------
14,753,125
</TABLE>
13
<PAGE> 16
SCHEDULE OF INVESTMENTS IN SECURITIES (CONTINUED) June 30, 1995 (Unaudited)
STRONG TOTAL RETURN FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SERVICE 0.7%*
204,200 National Data Corporation $ 4,722,125
COMPUTER SOFTWARE 3.1%*
120,000 Cisco Systems, Inc. + 6,067,500
150,000 Informix Corporation + 3,806,250
60,000 Microsoft Corporation + 5,422,500
65,000 3Com Corporation + 4,355,000
-----------
19,651,250
COMPUTER SYSTEMS 0.8%*
125,000 Oracle Systems Corporation + 4,828,125
COSMETIC & PERSONAL CARE 0.8%*
110,000 The Gillette Company 4,908,750
DIVERSIFIED OPERATIONS 2.0%*
115,000 Alco Standard Corporation 9,185,625
55,000 E.I. du Pont de Nemours & Company 3,781,250
-----------
12,966,875
ELECTRIC POWER 0.5%*
100,000 Texas Utilities Electric Company 3,437,500
ELECTRICAL EQUIPMENT 0.8%*
50,000 AMP, Inc. 2,112,500
50,000 General Electric Company 2,818,750
-----------
4,931,250
ELECTRONICS -- SEMICONDUCTOR/COMPONENT 4.8%*
50,000 Applied Materials, Inc. + 4,331,250
160,000 Intel Corporation 10,130,000
60,000 Micron Technology, Inc. 3,292,500
100,000 Motorola, Inc. 6,712,500
50,000 Texas Instruments, Inc. 6,693,750
-----------
31,160,000
FINANCE -- MISCELLANEOUS 1.5%*
225,000 MBNA Corporation 7,593,750
100,000 Medaphis Corporation + 2,175,000
-----------
9,768,750
FOOD 0.6%*
90,000 H.J. Heinz Company 3,993,750
HEALTHCARE -- DRUG/DIVERSIFIED 5.0%*
135,000 Abbott Laboratories 5,467,500
225,000 Biovail Corporation International + 4,190,625
105,000 Johnson & Johnson 7,100,625
145,000 Merck & Company, Inc. 7,105,000
90,000 Pfizer, Inc. 8,313,750
-----------
32,177,500
HEALTHCARE -- INSTRUMENTATION 1.3%*
105,000 Medtronic, Inc. 8,098,125
HEALTHCARE -- PATIENT CARE 1.3%*
175,000 Humana, Inc. + 3,084,375
50,000 United Healthcare Corporation 2,068,750
100,000 Vencor, Inc. + 3,150,000
-----------
8,303,125
HOUSEHOLD APPLIANCE & FURNISHINGS 1.1%*
435,000 SHAW Industries, Inc. $ 7,395,000
HOUSING RELATED 1.9%*
100,000 Armstrong World Industries, Inc. 5,012,500
140,000 Danaher Corporation 4,235,000
100,000 Masco Corporation 2,700,000
-----------
11,947,500
INSURANCE -- DIVERSIFIED 2.1%*
100,000 Aetna Life & Casualty Company 6,287,500
40,000 CIGNA Corporation 3,105,000
100,000 Travelers Corporation 4,375,000
-----------
13,767,500
INSURANCE -- MULTI-LINE 1.3%*
175,000 MGIC Investment Corporation 8,203,125
INSURANCE -- PROPERTY & CASUALTY 1.0%*
75,000 The PMI Group, Inc. 3,253,125
100,000 Vesta Insurance Group, Inc. 3,437,500
-----------
6,690,625
LEISURE PRODUCT 0.7%*
75,000 Eastman Kodak Company 4,546,875
LEISURE SERVICE 0.8%*
135,000 Marriott International, Inc. 4,843,125
MEDIA -- RADIO/TV 0.3%*
40,000 Viacom International, Inc. + 1,855,000
MORTGAGE & RELATED SERVICE 3.1%*
87,000 Federal Home Loan Mortgage Corporation 5,981,250
50,000 Federal National Mortgage Association 4,718,750
125,000 Green Tree Financial Corporation 5,546,875
127,000 Pulte Corporation 3,556,000
-----------
19,802,875
NATURAL GAS DISTRIBUTION 1.1%*
200,000 The Williams Companies, Inc. 6,975,000
OFFICE AUTOMATION 1.0%*
112,500 Corporate Express, Inc. + 2,404,687
35,000 Xerox Corporation 4,103,750
-----------
6,508,437
OIL -- INTERNATIONAL INTEGRATED 3.0%*
60,000 Chevron Corporation 2,797,500
75,000 Exxon Corporation 5,296,875
80,000 Mobil Corporation 7,680,000
50,000 Texaco, Inc. 3,281,250
-----------
19,055,625
OIL -- NORTH AMERICAN INTEGRATED 1.0%*
60,000 Amoco Corporation 3,997,500
25,000 Atlantic Richfield Company 2,743,750
-----------
6,741,250
OIL WELL EQUIPMENT & SERVICE 0.4%*
120,000 Baker Hughes, Inc. 2,460,000
</TABLE>
14
<PAGE> 17
STRONG TOTAL RETURN FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
------------------------------------------------------------------------------------------
<S> <C>
PAPER & FOREST PRODUCTS 3.5%*
125,000 James River Corporation of Virginia $ 3,453,125
50,000 Kimberly-Clark Corporation 2,993,750
47,000 The Mead Corporation 2,790,625
200,000 Scott Paper Company 9,900,000
75,000 Weyerhaeuser Company 3,534,375
------------
22,671,875
PERSONAL & COMMERCIAL LENDING 0.9%*
73,000 First USA, Inc. 3,239,375
50,000 Household International, Inc. 2,475,000
------------
5,714,375
POLLUTION CONTROL 0.6%*
100,000 Browning-Ferris Industries, Inc. 3,612,500
RAILROAD 0.9%*
120,000 Wisconsin Central Transportation Corporation + 5,880,000
RETAIL -- DEPARTMENT STORE 1.3%*
250,000 Federated Department Stores, Inc. + 6,437,500
40,100 Kohl's Corporation + 1,829,563
------------
8,267,063
RETAIL -- FOOD CHAIN 0.7%*
125,000 Safeway, Inc. + 4,671,875
RETAIL -- MAJOR CHAIN 1.2%*
75,000 Sears, Roebuck & Company 4,490,625
130,000 Wal-Mart Stores, Inc. 3,477,500
------------
7,968,125
RETAIL -- RESTAURANT 0.7%*
110,000 McDonald's Corporation 4,303,750
RETAIL -- SPECIALTY 1.5%*
90,000 CUC International, Inc. + 3,780,000
1,181 Jan Bell Marketing, Inc. Warrants,
Expire 12/16/98 + 0
210,000 Staples, Inc. + 6,063,750
------------
9,843,750
SAVINGS & LOAN 0.5%*
160,000 Great Western Financial Corporation 3,300,000
SOAP & CLEANING PREPARATION 1.5%*
75,000 Colgate Palmolive Company 5,484,375
60,000 The Procter & Gamble Company 4,312,500
------------
9,796,875
TELECOMMUNICATION EQUIPMENT 2.6%*
150,000 ADC Telecommunications, Inc. + 5,362,500
40,000 StrataCom, Inc. + 1,950,000
200,000 Tellabs, Inc. + 9,625,000
------------
16,937,500
TELEPHONE 2.3%*
150,000 Ameritech Corporation 6,600,000
325,000 Cincinnati Bell, Inc. 8,206,250
------------
14,806,250
TOBACCO 1.4%*
100,000 Philip Morris Companies, Inc. 7,437,500
50,000 UST, Inc. 1,487,500
------------
8,925,000
------------
Total Domestic Stocks 519,125,300
FOREIGN STOCKS 2.7%*
Finland 1.3%*
TELECOMMUNICATION EQUIPMENT
140,000 Nokia Corporation ADR (USD) $ 8,347,500
Germany 0.8%*
COMPUTER SOFTWARE
115,000 SAP AG ADS (USD) (Acquired 5/23/95;
Cost $4,199,800) (r) + 4,830,000
Israel 0.6%*
HEALTHCARE -- DRUG/DIVERSIFIED
110,000 Teva Pharmaceutical Industries, Ltd. ADR (USD) 4,125,000
------------
Total Foreign Stocks 17,302,500
------------
TOTAL COMMON STOCKS (COST $460,939,913) 536,427,800
CONVERTIBLE PREFERRED STOCKS 3.0%*
25,000 Alco Standard Corporation 2,237,500
145,000 The Allstate Corporation 6.7647% 5,908,750
80,000 AmeriData Delaware, L.L.C.
(Acquired 5/26/95; Cost $2,000,000)(r) 2,360,400
50,000 Ceridian Corporation 5.50% 4,175,000
30,000 Citicorp Series 13 $5.375 4,781,250
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $16,151,737) 19,462,900
DOMESTIC BONDS 8.1%*
CORPORATE BONDS 3.0%*
$3,000,000 American Home Products Corporation Notes,
7.90%, Due 2/15/05 3,207,513
3,750,000 Auburn Hills Guaranteed Exchangeable Adjustable
Rate Certificates, 12.375%, Due 5/01/20 5,567,460
3,000,000 Browning-Ferris Industries, Inc. Notes,
7.875%, Due 3/15/05 3,225,033
News America Holdings, Inc. Senior Notes:
2,000,000 7.50%, Due 3/01/00 2,042,660
5,000,000 12.00%, Due 12/15/01 5,680,875
------------
TOTAL CORPORATE BONDS (COST $19,115,520) 19,723,541
CONVERTIBLE BONDS 4.2%*
1,500,000 ADT Operations, Inc. Convertible Liquid Yield
Option Notes, Zero %, Due 7/06/10 587,760
3,500,000 Altera Corporation Convertible Subordinated
Notes, 5.75%, Due 12/15/02 (Acquired 6/16/95;
Cost $3,500,000) (r) 3,696,875
6,000,000 First Financial Management Corporation Senior
Convertible Debentures, 5.00%, Due 12/15/99 8,010,000
2,750,000 Integrated Device Technology, Inc. Convertible
Subordinated Notes, 5.50%, Due 6/01/02 2,921,875
1,500,000 LSI Logic Corporation Convertible Subordinated
Notes, 5.50%, Due 3/15/01 (Acquired 12/15/94,
2/15/95; Cost $2,977,110) (r) 4,995,000
2,694,000 Medaphis Corporation Convertible Subordinated
Debentures, 6.50%, Due 1/01/00 (Acquired
1/14/94 -- 6/16/95; Cost $4,305,595) (r) 4,206,007
2,000,000 3Com Corporation Convertible Subordinated
Notes, 10.25%, 11/01/01 (Acquired 3/14/95,
3/24/95; Cost $2,335,000) (r) 2,555,000
------------
TOTAL CONVERTIBLE BONDS
(COST $22,099,343) 26,972,517
</TABLE>
15
<PAGE> 18
SCHEDULE OF INVESTMENTS IN SECURITIES June 30, 1995 (Unaudited)
STRONG TOTAL RETURN FUND (CONTINUED)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES GOVERNMENT ISSUES 0.9%*
$ 5,000,000 United States Treasury Bonds, 7.50%,
Due 11/15/24 (Cost $5,046,775) $ 5,539,065
------------
TOTAL DOMESTIC BONDS (COST $46,261,638) 52,235,123
FOREIGN BONDS 1.4%*
United Kingdom
8,500,000 Danka Business Systems PLC Convertible
Subordinated Notes, 6.75%, Due 4/01/02
(Acquired 3/06/95 -- 6/13/95; Cost $8,708,170)
(r) (Amortized Cost $8,706,540) 8,925,000
CASH EQUIVALENTS 4.0%*
COMMERCIAL PAPER 3.9%*
DISCOUNTED 3.9%*
16,800,000 Burlington Northern Railroad Company
Due 7/03/95 16,800,000
2,000,000 ENSERCH Corporation
Due 7/06/95 1,998,972
2,000,000 Louisiana Land & Exploration Company
Due 7/07/95 1,998,629
4,000,000 Olin Corporation
Due 7/07/95 3,997,311
------------
24,794,912
INTEREST BEARING, DUE UPON DEMAND 0.0%*
$128,400 General Mills, Inc., 5.72% $ 128,400
70,600 Southwestern Bell Telephone Company, 5.71% 70,600
------------
199,000
------------
Total Commercial Paper 24,993,912
UNITED STATES GOVERNMENT ISSUES 0.1%*
United States Treasury Bills:
335,000 Due 7/06/95 334,842
215,000 Due 7/27/95 214,219
------------
549,061
------------
Total Cash Equivalents (Cost $25,542,973) 25,542,973
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $557,602,801) 99.9%* 642,593,796
Other Assets and Liabilities, Net 0.1%* 605,538
------------
NET ASSETS 100.0%* $643,199,334
============
</TABLE>
* Percentages are calculated as a percentage of net assets.
(CHF) Swiss Franc-denominated.
(USD) U.S. Dollar-denominated.
(r) Restricted security.
(w) When-issued security.
+ Non-income producing.
16
<PAGE> 19
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
(IN THOUSANDS)
STRONG STRONG AMERICAN STRONG
ASSET ALLOCATION FUND UTILITIES FUND TOTAL RETURN FUND
--------------------- --------------- -----------------
<S> <C> <C> <C>
INCOME:
Dividends $ 574 $1,195 $ 4,637
Interest 6,268 125 3,103
------- ------ -------
Total Income 6,842 1,320 7,740
EXPENSES:
Investment Advisory Fees 994 201 2,432
Custodian Fees 60 12 55
Shareholder Servicing Costs 287 90 763
Professional Fees 38 12 26
Reports to Shareholders 121 23 322
Federal and State Registration Fees 29 -- 26
Other 10 1 21
------- ------ -------
Total Expenses 1,539 339 3,645
------- ------ -------
NET INVESTMENT INCOME 5,303 981 4,095
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 3,587 (208) 36,280
Futures Contracts, Options and Forward Foreign
Currency Contracts 244 -- (752)
Foreign Currencies (221) -- --
Change in Unrealized Appreciation/Depreciation on:
Investments 14,893 5,662 39,694
Futures Contracts, Options and Forward Foreign
Currency Contracts 694 -- (43)
Assets and Liabilities Denominated in Foreign
Currencies (5) -- --
------ ------ -------
NET GAIN 19,192 5,454 75,179
------ ------ -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $24,495 $6,435 $79,274
======= ====== =======
</TABLE>
17
<PAGE> 20
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1995 (Unaudited) (In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
STRONG STRONG AMERICAN STRONG
ASSET ALLOCATION FUND UTILITIES FUND TOTAL RETURN FUND
--------------------- --------------- -----------------
ASSETS:
<S> <C> <C> <C>
Investments in Securities, at Value (Cost of $253,386,
$63,393 and $557,603, respectively) $267,493 $ 67,028 $642,594
Receivable from Brokers for Securities and
Forward Foreign Currency Contracts Sold 190 167 --
Dividends and Interest Receivable 2,366 253 2,210
Other Assets 95 56 55
-------- ----------- --------
Total Assets 270,144 67,504 644,859
LIABILITIES:
Payable to Brokers for Securities and
Forward Foreign Currency Contracts Purchased 18,291 688 971
Accrued Operating Expenses and Other Liabilities 336 95 689
-------- ----------- --------
Total Liabilities 18,627 783 1,660
-------- ----------- --------
NET ASSETS $251,517 $ 66,721 $643,199
======== =========== ========
Capital Shares
Authorized 300,000 10,000,000 300,000
Outstanding 12,969 6,310 24,089
NET ASSET VALUE PER SHARE $ 19.39 $ 10.57 $ 26.70
======== =========== ========
</TABLE>
18
<PAGE> 21
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1995 (Unaudited) and the Year Ended
December 31, 1994
<TABLE>
<CAPTION>
(In Thousands)
STRONG STRONG AMERICAN
ASSET ALLOCATION FUND UTILITIES FUND
------------------------------ -----------------------------
JUNE 30, 1995 DEC. 31, 1994 JUNE 30, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 5,303 $ 9,681 $ 981 $ 1,664
Net Realized Gain (Loss) 3,610 (1,157) (208) (2,007)
Change in Unrealized Appreciation/Depreciation 15,582 (12,535) 5,662 (664)
-------- -------- ------- -------
Increase (Decrease) in Net Assets Resulting from Operations 24,495 (4,011) 6,435 (1,007)
CAPITAL SHARE TRANSACTIONS (16,662) 10,200 23,329 8,157
DISTRIBUTIONS:
From Net Investment Income (4,963) (9,681) (987) (1,663)
In Excess of Net Investment Income -- (33) -- --
In Excess of Net Realized Gains -- (2,267) -- --
-------- -------- ------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,870 (5,792) 28,777 5,487
NET ASSETS:
Beginning of Period 248,647 254,439 37,944 32,457
-------- -------- ------- -------
End of Period $251,517 $248,647 $66,721 $37,944
======== ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
STRONG
TOTAL RETURN FUND
-----------------------------------
JUNE 30, 1995 DEC. 31, 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Net Investment Income $ 4,095 $ 6,622
Net Realized Gain 35,528 3,915
Change in Unrealized Appreciation/Depreciation 39,651 (20,243)
-------- --------
Increase (Decrease) in Net Assets Resulting from Operations 79,274 (9,706)
CAPITAL SHARE TRANSACTIONS (38,286) (4,929)
DISTRIBUTIONS:
From Net Investment Income (4,051) (6,696)
In Excess of Net Investment Income (552) (2,204)
-------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 36,385 (23,535)
NET ASSETS:
Beginning of Period 606,814 630,349
-------- --------
End of Period $643,199 $606,814
======== ========
</TABLE>
19
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
June 30, 1995 (Unaudited)
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 with the Securities and
Exchange Commission under the Investment Company Act of 1940.
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 -- Investments in securities for which market
quotations are readily available are valued at fair value as
determined by a pricing service on the basis of the average of the
most recent bid and asked prices in the principal market (closing
sales prices if the principal market is an exchange) in which such
securities are normally traded. Securities for which 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 Directors of the Funds. Debt
securities which are purchased within 60 days of their stated
maturity are valued at amortized cost, which approximates current
value.
Strong Asset Allocation Fund and Strong Total Return Fund own certain
investment securities which are restricted as to resale. These
securities are valued by the Funds after giving due consideration to
pertinent factors, including recent private sales, market conditions
and the issuer's financial performance. The Funds bear the costs, if
any, associated with the disposition of restricted securities. Where
such disposition depends on a security's registration under the
Securities Act of 1933, the Funds will bear such registration costs
unless the Funds have registration rights, in which case the issuer
will bear such costs. Aggregate cost and fair value of these
restricted securities held at June 30, 1995 were as follows:
<TABLE>
<CAPTION>
STRONG ASSET ALLOCATION FUND STRONG TOTAL RETURN FUND
---------------------------- ------------------------
<S> <C> <C>
Aggregate Cost $668,214 $28,025,675
Aggregate Fair Value 722,525 31,568,282
Percent of Net Assets 0.3% 4.9%
</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.
(C) Realized Gains and Losses on Investment Transactions -- The Funds
determine the gain or loss realized on investment transactions by
comparing the identified cost of the security lot sold with the net
sales proceeds.
(D) Futures -- The Funds may enter into futures contracts for any lawful
purpose, including hedging, risk management, or enhancing returns,
but not for speculation. Upon entering into a futures contract, the
Funds deposit cash, U.S. government securities or other liquid,
high-grade debt obligations in a segregated account with their
custodians, in the name of the futures broker through whom the
transaction was effected, equal to the minimum "initial margin"
requirements of the applicable futures exchange. Additionally, the
Funds 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 by the
Funds as unrealized gains or losses. When the contract is closed, the
Funds record a realized 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.
The use of futures contracts may involve, to varying degrees,
elements of market risk in excess of the amount recognized in the
statement of assets and liabilities. The successful use of futures
contracts by the Funds is dependent upon the ability of Strong
Capital Management, Inc. (the "Advisor") to correctly anticipate
trends in the underlying assets of the futures contracts. To the
extent that the Funds are engaging in futures contracts other than
for hedging purposes, the Funds' successful use of such transactions
is more dependent upon the Advisor's ability to correctly anticipate
such trends, since losses in these transactions may not be offset in
gains in the Funds' portfolios or in lower purchase prices for assets
they intend to acquire. The Advisor's prediction of trends in
underlying assets may prove to be inaccurate, which could result in
substantial losses to the Funds. Hedging transactions are also
subject to risks. If the Advisor incorrectly anticipates trends in
the underlying asset, the Funds may be in a worse position than if no
hedging had occurred. In addition, there may be imperfect correlation
between the Funds' use of futures contracts and the assets being
hedged.
20
<PAGE> 23
<TABLE>
<CAPTION>
COLLATERAL
FUND (PAR VALUE) CONTRACTS
---- ----------------------------- -----------------------------------------
<S> <C> <C>
Strong Asset Allocation Fund United States Treasury Bills: 115 Five-Year U.S. Treasury Notes (Short)
$550,000 Due 7/06/95 32 Ten-Year U.S. Treasury Notes (Short)
45,000 Due 7/20/95 18 U.S. Treasury Bonds (Long)
390,000 Due 7/27/95 120 S&P 500 (Long)
950,000 Due 9/21/95 94 Australian 10-Year (Short)
<CAPTION>
UNREALIZED
APPRECIATION
CONTRACT VALUE (DEPRECIATION)
(IN THOUSANDS) EXPIRATION (IN THOUSANDS)
-------------- ---------- --------------
<S> <C> <C>
($12,345) Sept. 1995 $ 19)
(3,523) Sept. 1995 (5)
2,044 Sept. 1995 (3)
32,829 Sept. 1995 464
(7,852) Sept. 1995 128
</TABLE>
(E) Options -- The Funds may engage in options transactions for any
lawful purpose, including hedging, risk management, or enhancing
returns, but not for speculation. The Funds may purchase or write put
and call options on securities, futures contracts, indices, and
foreign currency, and enter into closing transactions with respect to
such options to terminate an existing position.
Premiums received by the Funds upon writing put or call options are
recorded in the Funds' statements of assets and liabilities as an
asset with a corresponding liability which is subsequently adjusted
to the current market value of the option. When an option that is
written by the Funds 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. The use of written option contracts may
involve elements of market risk in excess of the amount recognized in
the statements of assets and liabilities. The contract value
represents the Funds' involvement in these financial instruments.
When required by SEC guidelines, the Funds will set aside permissible
liquid assets in a segregated account to secure their potential
obligations under their written options positions.
The successful use of option contracts by the Funds is dependent upon
the ability of the Advisor to correctly anticipate trends in the
underlying assets of the option contracts. To the extent that the
Funds are engaging in option contracts other than for hedging
purposes, the Funds' successful use of such transactions is more
dependent upon the Advisor's ability to correctly anticipate such
trends, since losses in these transactions may not be offset in gains
in the Funds' portfolio or in lower purchase prices for assets they
intend to acquire. The Advisor's prediction of trends in the
underlying assets may prove to be inaccurate, which could result in
substantial losses to the Funds. Hedging transactions are also
subject to risks. If the Advisor incorrectly anticipates trends in
the underlying asset, the Funds may be in a worse position than if no
hedging had occurred. In addition, there may be imperfect correlation
between the Funds' use of option contracts and the assets being
hedged.
(F) Foreign Currency Translation -- Investment securities and other
assets and liabilities denominated 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.
(G) When-Issued Securities -- The Funds may purchase securities on a
when-issued or delayed delivery basis. Although the payment and
interest terms of these securities are established at the time the
purchaser enters into the agreement, these securities may be
delivered and paid for at a future date, generally within 45 days.
The Funds record purchases of when-issued securities and reflect the
values of such securities in determining net asset value in the same
manner as other portfolio securities. The Funds segregate and
maintain at all times permissible liquid assets in an amount at least
equal to the amount of outstanding commitments for when-issued
securities.
(H) Other -- Portfolio transactions are recorded on the trade date.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
3. NET ASSETS
Net assets as of June 30, 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 $235,648 $65,427 $568,925
Undistributed Net Investment Income (Loss) 317 (7) 45
Undistributed Net Realized Gain (Loss) 867 (2,334) (10,719)
Net Unrealized Appreciation 14,685 3,635 84,948
-------- ------- --------
Net Assets $251,517 $66,721 $643,199
======== ======= ========
</TABLE>
21
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1995 (Unaudited)
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the six months ended June 30, 1995
and the year ended December 31, 1994 were as follows (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1995 DECEMBER 31, 1994
------------------------- ------------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
STRONG ASSET ALLOCATION FUND
Shares Sold 1,005 $ 18,647 2,972 $ 55,431
Shares Issued in Reinvestment of Dividends 253 4,765 634 11,547
Shares Redeemed (2,168) (40,074) (3,077) (56,778)
----- -------- ----- --------
Net Increase (Decrease) (910) ($ 16,662) 529 $ 10,200
===== ======== ===== ========
STRONG AMERICAN UTILITIES FUND
Shares Sold 4,512 $ 45,688 3,551 $ 34,838
Shares Issued in Reinvestment of Dividends 87 895 148 1,414
Shares Redeemed (2,299) (23,254) (2,874) (28,095)
----- -------- ----- --------
Net Increase 2,300 $ 23,329 825 $ 8,157
===== ======== ===== ========
STRONG TOTAL RETURN FUND
Shares Sold 2,331 $ 58,827 6,259 $150,873
Shares Issued in Reinvestment of Dividends 171 4,474 365 8,656
Shares Redeemed (4,099) (101,587) (6,880) (164,458)
----- -------- ----- --------
Net Decrease (1,597) ($ 38,286) (256) ($ 4,929)
===== ======== ===== ========
</TABLE>
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 annualized rates of .75% of the average
daily net assets of Strong American Utilities Fund, and .85% of the first
$35,000,000 and .80% of the average daily net assets in excess of that
amount for Strong Asset Allocation Fund and Strong Total Return Fund.
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.
Under a subadvisory agreement between the Advisor and W.H. Reaves & Co.,
Inc. (the "Subadvisor"), the Subadvisor, pursuant to the oversight and
supervision of the Fund's Board of Directors and the Advisor, provides a
continuous investment program for Strong American Utilities Fund. Under
the subadvisory agreement, the Subadvisor is responsible for determining
the securities to be purchased and sold by the Fund and for executing
those transactions, except that the Advisor is responsible for managing
the cash equivalents maintained by the Fund. The Subadvisor is compensated
by the Advisor (not the Fund) under the terms provided in the subadvisory
agreement. The Subadvisor bears all of its own expenses in providing
subadvisory services to the Fund. 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 six months ended
June 30, 1995 were $109,090.
Certain information regarding these transactions, excluding the effects of
waivers and reimbursements, for the six months ended June 30, 1995 is as
follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG
ALLOCATION FUND UTILITIES FUND TOTAL RETURN FUND
--------------- --------------- -----------------
<S> <C> <C> <C>
Payable to Advisor at June 30, 1995 $189 $70 $433
Other Shareholder Servicing Expenses Paid to Advisor 7 1 17
Unaffiliated Directors' Fees 3 1 6
</TABLE>
22
<PAGE> 25
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the six
months ended June 30, 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG
ALLOCATION FUND UTILITIES FUND TOTAL RETURN FUND
--------------- --------------- -----------------
<S> <C> <C> <C>
Purchases:
U.S. Government and Agency $140,391 $ 0 $ 46,744
Other 401,146 40,439 755,239
Sales:
U.S. Government and Agency 142,696 0 80,405
Other 417,863 19,174 729,390
</TABLE>
7. INCOME TAX INFORMATION
At June 30, 1995, the investment cost and gross unrealized appreciation
and depreciation on investments for Federal income tax purposes were as
follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG
ALLOCATION FUND UTILITIES FUND TOTAL RETURN FUND
--------------- --------------- -----------------
<S> <C> <C> <C>
Aggregate Investment Cost $254,252 $63,644 $559,481
Aggregate Unrealized:
Appreciation $ 16,395 $ 4,066 $ 87,459
Depreciation (3,135) (682) (4,388)
-------- ------- --------
$ 13,260 $ 3,384 $ 83,071
======== ======= ========
</TABLE>
8. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Funds may enter into forward foreign currency exchange contracts for
any lawful purpose, including hedging, risk managment, or enhancing
returns, but not for speculation.
Forward foreign currency exchange contracts are typically used by the
Funds to hedge currency exposure related to receivables from securities
sold and payables for securities purchased. Forward foreign currency
exchange contracts are valued at the forward rate and are marked-to-market
daily. The change in market value is recorded by the Funds 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.
The use of forward foreign currency exchange contracts does not eliminate
fluctuations in the underlying prices of the Funds' portfolio securities,
but it does establish a rate of exchange that can be achieved in the
future. Although forward foreign currency exchange contracts limit the
risk of loss due to a decline in the value of the hedged currency, they
also limit any potential gain that might result should the value of the
currency increase. In addition, the Funds could be exposed to risks if the
counterparties to the contracts are unable to meet the terms of their
contracts.
At June 30, 1995, the Funds had entered into forward foreign currency
contracts as follows:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
CURRENCY SETTLEMENT CURRENCY VALUE IN USD (DEPRECIATION)
FUND SOLD DATE (IN THOUSANDS) (IN THOUSANDS)
---- ---------------------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Strong Asset Allocation Fund 8,504,583 Australian Dollars 7/19/95 $6,045 $122
4,344,925 German Marks 7/13/95 3,151 (54)
4,770,000 German Marks 7/19/95 3,459 (45)
372,000 German Marks 7/26/95 270 (1)
47,013 German Marks 7/26/95 34 0
421,480 German Marks 8/03/95 306 (3)
Strong Total Return Fund 659,333 German Marks 7/26/95 476 (2)
5,911,000 German Marks 8/03/95 4,246 (41)
</TABLE>
9. FOREIGN INVESTMENTS
Investments in foreign markets can pose more risks than U.S. investments,
and to the extent that each Fund invests in foreign securities, each
Fund's share price is expected to be more volatile than that of a
U.S.-only fund. The value of each Fund's foreign securities will fluctuate
with changes in stock market conditions, currency values, interest rates,
foreign government regulations, and economic and political conditions in
countries in which each Fund invests. These risks are generally
intensified for investments in emerging markets.
23
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1995 (Unaudited)
10. ANNUAL MEETING
A shareholder meeting was held on April 13, 1995 in Milwaukee, Wisconsin.
Results of the shareholder vote, calculated as a percentage of total
shares voted, are as follows:
<TABLE>
<CAPTION>
STRONG ASSET ALLOCATION FUND STRONG AMERICAN UTILITIES FUND
SHARES VOTED 9,870,168.694 SHARES VOTED 3,126,783.798
------------------------------------ ---------------------------------
PROPOSALS AFFIRMATIVE WITHHOLD AFFIRMATIVE WITHHOLD
--------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
1 Election of Directors
Richard S. Strong 98.10% 1.90% 97.86% 2.14%
John Dragisic 97.95 2.05 97.63 2.37
Marvin E. Nevins 98.02 1.98 97.99 2.01
Willie D. Davis 97.82 2.18 97.31 2.69
William F. Vogt 98.12 1.88 97.75 2.25
Stanley Kritzik 97.78 2.22 97.48 2.52
<CAPTION>
AFFIRMATIVE AGAINST ABSTAIN AFFIRMATIVE AGAINST ABSTAIN
----------- ------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
2 Ratify Selection of Auditors 97.29% 0.82% 1.89% 96.09% 1.40% 2.51%
3A Adopt Advisory Agreement 94.36 2.48 3.16 93.52 2.80 3.68
3B Adopt Subadvisory Agreement N/A N/A N/A 92.46 3.41 4.13
4 Adopt Revised Articles 94.00 2.75 3.25 91.20 4.89 3.91
5 Amend Investment Objective N/A N/A N/A 91.47 4.63 3.90
6 Amend or Adopt a Fundamental
Investment Limitation Concerning:
6A Diversification N/A N/A N/A N/A N/A N/A
6B Concentration N/A N/A N/A 92.30 2.66 5.04
6C Lending N/A N/A N/A 90.40 4.41 5.19
6D Purchasing or Selling Real Estate N/A N/A N/A 90.23 4.65 5.12
6E Borrowing N/A N/A N/A 89.09 5.76 5.15
6F Underwriting Securities N/A N/A N/A 91.15 3.53 5.32
6G Purchasing or Selling Financial
Commodities N/A N/A N/A 88.36 6.36 5.28
6H Issuing Senior Securities N/A N/A N/A 90.80 3.90 5.30
6I Pooled Fund Structures N/A N/A N/A 90.43 4.15 5.42
7 Eliminate a Fundamental Investment
Limitation Concerning: N/A N/A N/A N/A N/A N/A
7A Short Sales of Securities N/A N/A N/A N/A N/A N/A
7B Use of Margin N/A N/A N/A 86.75 6.72 6.53
7C Illiquid and Restricted Securities N/A N/A N/A N/A N/A N/A
7D Purchase of Investment
Company Securities N/A N/A N/A 88.66 4.85 6.49
7E Purchasing Securities of
Newly-Formed Issuers N/A N/A N/A N/A N/A N/A
7F Investing in Oil and Gas Interests N/A N/A N/A N/A N/A N/A
7G Futures and Options N/A N/A N/A 86.30 7.07 6.63
7H Pledging Assets N/A N/A N/A 86.94 6.41 6.65
7I Securities Investments of
Directors and Officers N/A N/A N/A N/A N/A N/A
7J Fund Portfolio Transactions with
Directors and Officers N/A N/A N/A N/A N/A N/A
7K Investing in Securities for the
Purpose of Management or Control N/A N/A N/A N/A N/A N/A
7L Participating on a Joint basis in
any Trading Account N/A N/A N/A N/A N/A N/A
</TABLE>
24
<PAGE> 27
10. ANNUAL MEETING (CONTINUED)
<TABLE>
<CAPTION>
STRONG TOTAL RETURN FUND
SHARES VOTED 16,930,018.840
------------------------------------
PROPOSALS AFFIRMATIVE WITHHOLD
--------- ---------- --------
<S> <C> <C> <C> <C>
1 Election of Directors
Richard S. Strong 98.02% 1.98%
John Dragisic 98.04 1.96
Marvin E. Nevins 98.01 1.99
Willie D. Davis 97.79 2.21
William F. Vogt 98.23 1.77
Stanley Kritzik 97.65 2.35
<CAPTION>
AFFIRMATIVE AGAINST ABSTAIN
---------- ------- -------
<S> <C> <C> <C> <C>
2 Ratify Selection of Auditors 97.63% 0.70% 1.67%
3A Adopt Advisory Agreement 94.96 2.39 2.65
3B Adopt Subadvisory Agreement N/A N/A N/A
4 Adopt Revised Articles 93.94 3.58 2.48
5 Amend Investment Objective 93.62 3.72 2.66
6 Amend or Adopt a Fundamental
Investment Limitation Concerning:
6A Diversification 92.97 3.26 3.77
6B Concentration 93.68 2.55 3.77
6C Lending 92.62 3.61 3.77
6D Purchasing or Selling Real Estate 92.28 3.95 3.77
6E Borrowing 91.57 4.65 3.78
6F Underwriting Securities 93.05 3.14 3.81
6G Purchasing or Selling Financial
Commodities 90.54 5.73 3.73
6H Issuing Senior Securities 93.24 3.03 3.73
6I Pooled Fund Structures 92.84 3.40 3.76
7 Eliminate a Fundamental Investment
Limitation Concerning:
7A Short Sales of Securities 91.01 4.11 4.88
7B Use of Margin 90.32 4.81 4.87
7C Illiquid and Restricted Securities 90.10 5.02 4.88
7D Purchase of Investment
Company Securities 92.28 2.83 4.89
7E Purchasing Securities of
Newly-Formed Issuers 92.20 2.90 4.90
7F Investing in Oil and Gas Interests 91.85 3.27 4.88
7G Futures and Options 89.79 5.35 4.86
7H Pledging Assets 90.10 5.03 4.87
7I Securities Investments of
Directors and Officers 90.96 4.17 4.87
7J Fund Portfolio Transactions with
Directors and Officers 90.69 4.45 4.86
7K Investing in Securities for the
Purpose of Management or Control 91.20 3.92 4.88
7L Participating on a Joint basis in
any Trading Account 91.87 3.24 4.89
</TABLE>
25
<PAGE> 28
FINANCIAL HIGHLIGHTS
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
STRONG ASSET ALLOCATION FUND
<TABLE>
<CAPTION>
1995** 1994 1993 1992 1991 1990 1989 1988 1987 1986
------ ---- ---- ---- ---- ---- ---- ---- ---- ----
<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 0.41 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 1.45 (0.99) 1.81 (0.25) 2.41 (0.65) 0.73 0.19 (0.70) 2.54
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------
TOTAL FROM INVESTMENT OPERATIONS 1.86 (0.29) 2.63 0.62 3.35 0.47 1.95 1.58 0.15 3.43
LESS DISTRIBUTIONS
From Net Investment Income (0.38) (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 (0.38) (0.86) (2.06) (1.81) (1.17) (1.38) (1.11) (1.61) (4.73) (1.37)
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $ 19.39 $ 17.91 $ 19.06 $ 18.49 $ 19.68 $ 17.50 $ 18.41 $ 17.57 $ 17.60 $ 22.18
======== ======== ======== ======== ======== ======== ======== ======== ======== =======
Total Return +10.5% - 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) $251,517 $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 1.3%* 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 4.3%* 3.8% 4.2% 4.4% 5.1% 6.1% 6.6% 7.5% 4.2% 4.7%
Portfolio Turnover Rate 235.6% 359.7% 348.3% 320.4% 418.4% 319.6% 206.5% 426.2% 336.5% 80.4%
</TABLE>
STRONG AMERICAN UTILITIES FUND
<TABLE>
<CAPTION>
1995** 1994 1993***
------ ---- -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 9.46 $ 10.19 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.16 0.46 0.18
Net Realized and Unrealized Gains
(Losses) on Investments 1.11 (0.73) 0.27
------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.27 (0.27) 0.45
LESS DISTRIBUTIONS
From Net Investment Income (0.16) (0.46) (0.18)
From Net Realized Gains -- -- (0.05)
In Excess of Net Realized Gains -- -- (0.03)
------- -------- --------
TOTAL DISTRIBUTIONS (0.16) (0.46) (0.26)
------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.57 $ 9.46 $ 10.19
======= ======== ========
Total Return +13.6% -2.6% + 4.5%
Net Assets, End of Period (In Thousands) $66,721 $ 37,944 $ 32,457
Ratio of Expenses to Average Net Assets 1.3%* 0.5% 0.0%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 1.3%* 1.6% 1.4%*
Ratio of Net Investment Income to
Average Net Assets 3.7%* 4.8% 5.6%*
Portfolio Turnover Rate 38.3% 105.4% 178.6%*
</TABLE>
* Calculated on an annualized basis.
** For the six months ended June 30, 1995 (Unaudited). Total return and
portfolio turnover rate are not annualized.
*** Inception date is July 1, 1993. Total return is not annualized.
26
<PAGE> 29
FINANCIAL HIGHLIGHTS (CONTINUED)
STRONG TOTAL RETURN FUND
<TABLE>
<CAPTION>
1995** 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 23.62 $ 24.30 $ 20.17 $ 20.24 $ 15.34 $ 17.72
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.17 0.25 0.33 0.18 0.22 0.95
Net Realized and Unrealized Gains
(Losses) on Investments 3.10 (0.59) 4.18 (0.08) 4.90 (2.19)
-------- -------- ------- -------- -------- -------
TOTAL FROM INVESTMENT OPERATIONS 3.27 (0.34) 4.51 0.10 5.12 (1.24)
LESS DISTRIBUTIONS
From Net Investment Income (0.17) (0.26) (0.33) (0.17) (0.22) (1.14)
In Excess of Net Investment Income (0.02) (0.08) -- -- -- --
From Net Realized Gains -- -- -- -- -- --
In Excess of Net Realized Gains -- -- (0.05) -- -- --
Returns of Capital -- -- -- -- -- --
-------- -------- ------- -------- -------- -------
TOTAL DISTRIBUTIONS (0.19) (0.34) (0.38) (0.17) (0.22) (1.14)
-------- -------- ------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $ 26.70 $ 23.62 $ 24.30 $ 20.17 $ 20.24 $ 15.34
======== ======== ======== ======== ======== ========
Total Return +13.9% - 1.4% +22.5% +0.6% +33.6% - 7.1%
Net Assets, End of Period (In Thousands) $643,199 $606,814 $630,349 $587,873 $691,327 $646,579
Ratio of Expenses to Average Net Assets 1.2%* 1.2% 1.2% 1.3% 1.4% 1.4%
Ratio of Net Investment Income to Average
Net Assets 1.4%* 1.1% 1.4% 0.9% 1.3% 5.4%
Portfolio Turnover Rate 141.4% 290.4% 271.3% 371.8% 426.4% 312.3%
<CAPTION>
1989 1988 1987 1986
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
$ 18.96 $ 18.37 $ 21.61 $ 19.56
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 1.55 1.95 0.97 0.66
Net Realized and Unrealized Gains
(Losses) on Investments (0.97) 0.85 0.61 3.13
---------- ---------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 0.58 2.80 1.58 3.79
LESS DISTRIBUTIONS
From Net Investment Income (1.31) (1.96) (1.65) (0.70)
In Excess of Net Investment Income -- -- -- --
From Net Realized Gains (0.51) -- (3.17) (1.04)
In Excess of Net Realized Gains -- -- -- --
Returns of Capital -- (0.25) -- --
---------- ---------- -------- --------
TOTAL DISTRIBUTIONS (1.82) (2.21) (4.82) (1.74)
---------- ---------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 17.72 $ 18.96 $ 18.37 $ 21.61
========== ========== ======== ========
Total Return +2.6% +15.6% +6.0% +20.0%
Net Assets, End of Period (In Thousands) $1,065,278 $1,005,192 $802,442 $518,760
Ratio of Expenses to Average Net Assets 1.2% 1.2% 1.1% 1.1%
Ratio of Net Investment Income to Average
Net Assets 7.7% 10.1% 5.2% 4.3%
Portfolio Turnover Rate 305.3% 281.1% 224.4% 153.5%
</TABLE>
*Calculated on an annualized basis.
**For the six months ended June 30, 1995 (Unaudited). Total return and
portfolio turnover rate are not annualized.
<PAGE> 30
NOTES
28
<PAGE> 31
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> 32
Bulk Rate
U.S. Postage
P A I D
Milw, WI.
Permit #4134
FOR LITERATURE AND INFORMATION REQUESTS,
CALL 1-800-368-1030.
TO DISCUSS AN EXISTING ACCOUNT OR
CONDUCT A TRANSACTION,
CALL 1-800-368-3863.
This report must be preceded or accompanied by the prospectus for
the Strong Growth and Income Funds.
(LOGO)
STRONG FUNDS DISTRIBUTORS, INC.
P.O. Box 2936
Milwaukee, Wisconsin 53201
1316F95
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