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THE STRONG
CONSERVATIVE EQUITY
FUNDS
SEMI-ANNUAL REPORT 0 APRIL 30, 1996
[PHOTO OF MOTHER & DAUGHTER]
THE STRONG ASSET ALLOCATION FUND
THE STRONG EQUITY INCOME FUND
THE STRONG AMERICAN UTILITIES FUND
THE STRONG TOTAL RETURN FUND
THE STRONG GROWTH AND INCOME FUND
[STRONG FUNDS LOGO]
STRONG FUNDS
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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.
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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.
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Invest regularly.
Investing is a process, not a one-time event. By investing regularly over the
long term, you reduce the impact of short-term market gyrations, and you attend
to your long-term plan before you're tempted to spend those assets on short-term
needs.
- --------------------------------------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.
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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.
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THE STRONG
CONSERVATIVE EQUITY
FUNDS
SEMI-ANNUAL REPORT o APRIL 30, 1996
Table of Contents
INVESTMENT REVIEWS
The Strong Asset Allocation Fund........................2
The Strong Equity Income Fund...........................4
The Strong American Utilities Fund......................6
The Strong Total Return Fund............................8
The Strong Growth and Income Fund......................10
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong Asset Allocation Fund.....................12
The Strong Equity Income Fund........................16
The Strong American Utilities Fund...................18
The Strong Total Return Fund.........................19
The Strong Growth and Income Fund....................21
Statements of Operations................................24
Statements of Assets and Liabilities....................25
Statements of Changes in Net Assets.....................26
Notes to Financial Statements...........................27
FINANCIAL HIGHLIGHTS.........................................30
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The Strong ASSET ALLOCATION Fund
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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 stocks, bonds, and cash.
[PHOTO OF PENNIES]
The Fund's Benchmark Will Be Adjusted on July 1 to Increase Equity Holdings
To align the Fund more closely with other funds in its class, and to provide
shareholders with higher return potential, the Asset Allocation Fund's Board of
Directors authorized a modification of the Fund to take effect on July 1, 1996.
Overall, the Fund's normal benchmark allocations will be changed to allow for a
larger weighting in equities. Currently, the Fund's benchmark allocations to
stocks, bonds and cash are 40%, 40%, and 20%, respectively. The new benchmark
allocations will be 60%, 35%, and 5%. Specifically, the Fund's allowable
maximum and minimum ranges will be modified as follows:
Ranges
Current ranges after Modification
Stocks 10%-60% 30%-70%
Bonds 20%-60% 20%-70%
Cash 0%-70% 0%-50%
This expanded ability to invest in stocks will enhance the Fund's total return
potential versus its previous 40/40/20 benchmark allocation. Of course, this
change may increase the Fund's share price volatility compared to its previous,
more conservative benchmark. However, we expect our greater flexibility in
managing the Fund will enable us to provide shareholders with higher returns
over time while helping to keep risks within reasonable limits.
The Fund Has Performed Well So Far in 1996
The Fund posted a total return of 7.97% for the six-month period ended 4-30-96,
in line with its benchmark index. The Lipper Flexible Portfolio Fund Index
posted a total return of 8.95% over the same period.*
Bond Prices Fell as Stocks Continued their Upward Climb
The bond market experienced significant volatility over the last six months as
conflicting data sent mixed signals on the direction of the economy. Late last
year and into 1996, the consensus view was for weak economic growth in the U.S.,
with some economists even projecting a recession in the first half of the year.
The Federal Reserve Board continued the easing it began last year, and cut the
Fed Funds target rate to 5.25% on January 31. The market prepared itself for
further easing and priced additional rate cuts into Treasury yields.
But the release of stronger-than-expected employment numbers in February
shattered this pessimistic view of the economy. Bond yields staged an abrupt
reversal, which resulted in higher yields across all maturities. Long-term
interest rates rose significantly, as measured by the 30-year U.S. Treasury
bond, which added more than one-half percentage point to its yield over six
months, to finish April at 6.91%. Short-term rates were also higher, though less
significantly.
Asset Allocation
as of 4-30-96
Bonds (including convertibles) 41.1%
Stocks 58.9%
This allocation does not include the effect of futures. When-issued
securities are reflected in the Fund's allocation. The asset allocation depicts
market exposure and is not given as a percentage of net assets. Please see the
Schedule of Investments in Securities for a complete listing of the Fund's
portfolio.
2
<PAGE>
The stock market, however, continued its strong performance, although not at
1995's torrid pace. The Dow Jones Industrial Average posted a total return of
18.44% over the six months ended 4-30-96, and the broader-based S&P 500 gained
13.76%. Equities were supported during this period by heavy money flows into
mutual funds, and a net reduction in the supply of equities resulting from
mergers, acquisitions and company stock buybacks. The stock market paid little
attention to the sharp uptick in bond yields, which is usually a bearish signal
for stocks.
Our Outlook is Favorable
In our view, the underlying fundamentals for the U.S. stock and bond markets
remain positive. We expect economic growth of 2.5% or less this year, which
should pose no threat to the current subdued level of inflation. Moderate growth
and moderate inflation should also provide a favorable setting for stocks.
Going forward, we intend to maintain an asset allocation mix of approximately
60% stocks, 35% bonds, and 5% cash in the Fund. Overweighting or underweighting
of asset classes will occur in situations where we perceive large discrepancies
in relative values.
Sincerely,
/s/ Bradley C. Tank
Bradley C. Tank
Lead Portfolio Manager
[PHOTO OF BRADLEY C. TANK]
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Growth of an assumed $10,000 Investment
from 12-30-81 to 4-30-96
40/40/20
The Strong Asset Allocation Fund S & P 500 Index Balanced Index
12-81 10,000 10,000 10,000
12-82 13,320 12,154 12,166
12-83 19,344 14,895 13,898
12-84 21,233 15,830 15,330
12-85 25,345 20,852 18,624
12-86 29,818 24,745 21,259
12-87 29,733 26,044 22,600
12-88 32,466 30,369 25,001
12-89 36,103 39,992 29,819
12-90 37,107 38,751 31,087
12-91 44,393 50,557 37,003
12-92 45,823 54,408 39,478
12-93 52,468 59,892 42,694
12-94 51,678 60,683 42,954
12-95 63,028 83,487 52,319
4-96 65,190 89,265 53,688
This graph, prepared in accordance with SEC regulation, compares a $10,000
investment in the Fund, made at the Fund's Inception, with similar investments
in the Standard & Poor's 500 Stock Index ("S&P 500"),an unmanaged index
generally representative of the U.S. Stock market, and the 40/40/20 Balanced
Index, which is composed of 40% S&P 500; 40% Lehman Brothers Intermediate
Government/Corporate Bond Index, a market-capitalization weighted index gen-
erally representative of government and investment-grade corporate securities
with maturities of 1-10 years; and 20% Salomon Brothers 3-month Treasury Bill
Index. Results include the reinvestment of all dividends and capital gains
distributions. Source for the index data is Micropal. Performance is historical
and does not represent future results. Investment returns and principal value
vary, and you may have a gain or loss when you sell shares.
- --------------------------------------------------------------------------------
* Source of index data is Lipper Analytical Services, Inc. The Lipper Flexible
Portfolio Fund Index is based on the equally-weighted performance, adjusted for
capital gains distributions and income dividends, of the 30 largest flexible
portfolio funds in this Lipper category.
Average Annual Total Returns1
as of 4-30-96
1-year 19.52%
3-year 10.68%
5-year 10.73%
10-year 8.49%
Since inception 13.97%
(on 12-30-81)
1 Average annual total returns measure change in the value of an investment in
the Fund, assuming reinvestment of all dividends and capital gains. Average
annual total return reflects annualized change, while total return reflects
aggregate change.
3
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The Strong EQUITY INCOME Fund
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The Strong Equity Income Fund seeks total return by investing for both income
and capital growth. The Fund invests primarily in dividend-paying equity
securities.
Fund Provided Superior Returns to Date
Since its inception on 12/29/95, the Fund has provided shareholders with an
impressive gain. For the four-month period ended April 30, the Fund provided a
total return of 12.04%, which compared favorably with the 6.92% total return for
the S&P 500 over the same period.1 By the end of April, total assets under
management in the Fund had grown to $17.3 million.
"The Fund benefited in particular from its exposure to the healthcare,
financial, consumer non-durable, and aerospace sectors over these months."
[PHOTO OF AIRPLANE]
Large-Cap Stocks Outperform Market
The Fund's emphasis on the stocks of mid-
to large-sized companies played a significant role in the Fund's performance
during this period. Large-cap stocks, as measured by the Dow Jones Industrial
Average, an index of 30 large-company stocks, gained 9.49% over the four-month
period, a significantly larger gain than the broader-based S&P 500 Index. The
Fund benefited in particular from its exposure to the healthcare, financial,
consumer non-durable, and aerospace sectors over these months.
Because the Fund takes an income-oriented approach to growth investing, it
focuses on mid- and large-capitalization stocks from companies with stable and
predictable revenue and earnings growth, and those with steady or growing
dividend streams. These companies are typically medium- to large-sized companies
with market dominance in their industries.
Mixed Economic Signals
So far this year, the economy has sent mixed signals as to its pace of growth.
An East-coast blizzard and the government shutdown affected both economic
activity and the reporting of economic data, making it difficult to attain a
clear view of the economic environment.
Inflation, however, remained constrained, and at this time it does not appear
that the economy is re-accelerating to the point where we would expect it to
experience significant inflationary pressure.
Outlook
Stock market valuations appear to us to be fairly high at this time, as measured
by price-to-book ratios and dividend yields. In addition, interest rates so far
this year have been on the rise, and we believe any further significant increase
may cause stock valuations to compress in the near-term.
Asset Allocation
based on net assets as of 4-30-96
Short-Term Investments 26.0%
Stocks 70.2%
Bonds(including convertibles) 3.8%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
4
<PAGE>
Five Largest Equity Holdings
as of 4-30-96
- -------------------------------------------------------------
Standard & Poor's
Depositary Receipt Brokerage &
Trust Unit Series 1 Investment Management 3.3%
- -------------------------------------------------------------
Xerox Corporation Office Automation 1.4%
- -------------------------------------------------------------
Rockwell International Aerospace & Defense
Corporation 1.2%
- -------------------------------------------------------------
The Mead Corporation Paper & Forest
Products 1.2%
- -------------------------------------------------------------
Greenfield Capital Trust Metal Products
Convertible Preferred & Fabrication 1.2%
- -------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
The Fund therefore will continue to emphasize investments in companies that tend
to display superior financial performance, including above-average revenue and
earnings growth, moderate levels of financial leverage, above-average return on
equity, positive cash flow, and management teams that are focused on enhancing
shareholder value.
The Fund's holdings will continue to be diversified among sectors and industries
that we believe offer positive dynamics which can serve as a solid base for
future revenue and earnings growth.
Thank you for choosing the Strong Equity Income Fund to help meet your
investment needs.
Sincerely,
/s/ Rimas Milaitis
Rimas Milaitis
Portfolio Manager
[PHOTO OF RIMAS MILAITIS]
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Growth of an assumed $10,000 Investment
from 12-29-95 to 4-30-96
The Strong Equity Income Fund S & P 500 Index
12-95 10,000 10,000
1-96 10,430 10,340
2-96 10,900 10,436
3-96 11,053 10,536
4-96 11,204 10,692
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 may vary, and you may have a gain or loss when you sell shares.
- --------------------------------------------------------------------------------
1 Total return is not annualized. Source for the index information: Micropal
5
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The Strong AMERICAN UTILITIES Fund
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The Strong American Utilities Fund seeks total return by investing for both
income and capital growth. The Fund invests primarily in the stocks of public
utility companies headquartered in the United States.
The Fund Outperformed Broader Utility Indexes
The Fund posted a total return of 7.15% for the six-month period ended April 30,
which compared favorably to a gain of 4.28% in the Standard & Poor's Utilities
Index, and a 5.75% gain in the Lipper Utility Fund Index.1
The Fund ranked in the top 10% of all utility funds tracked by Lipper Analytical
Services, Inc. for the year ended April 30, and in the top 5% for the period
since its inception. For the 1-year and since-inception periods ended 4/30/96,
the Fund was ranked #8 of 85 and #2 of 43 funds, respectively. 2
Five Largest Equity Holdings
based on net assets as of 4-30-96
- -------------------------------------------------------------
Ameritech Corporation Telecommunications 10.3%
- -------------------------------------------------------------
SBC Communications, Inc. Telecommunications 7.3%
- -------------------------------------------------------------
SCANA Corporation Electric Utility 6.8%
- -------------------------------------------------------------
American Electric Power
Company, Inc. Electric Utility 6.8%
- -------------------------------------------------------------
CMS Energy Corporation Electric Utility 5.3%
- -------------------------------------------------------------
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
A Rising Interest Rate Environment
Interest rates rose substantially over the six-month period, as measured by the
yield on the 30-year Treasury bond, which rose more than one-half percentage
point to 6.91% by the end of April.
Beginning in February, rising interest rates contributed to a 10% to 20% decline
in the Fund's electric and telephone stocks from their recent highs. In our
view, however, these price declines provide the potential for better relative
price action for the balance of the year, particularly since the broad market
averages have not yet been significantly affected by higher interest rates.
Telephone and Energy Stocks Helped Boost the Fund's Performance
The Fund benefited over this six-month period from its holdings in the telephone
sector, as the telecommunications bill became law earlier this year and the
telephone sector experienced significant price appreciation. In response, we
took profits and reduced the Fund's exposure to the sector by approximately 7.5%
over the last six months to 29.9% at the end of April.
We are now in the process of rebuilding this position as we look for the Fund's
major telephone holdings to produce double-digit earnings growth this year and
in 1997. Three of the major telephone companies held in the Fund-Ameritech
Corporation, SBC Communications, Inc., and Bell Atlantic Corporation- recently
increased their dividends.
The Fund also benefited from higher earnings by gas utilities and energy-related
stocks during the period, as cold winter weather and continued economic growth
contributed to firm natural gas and oil prices. Restructuring and
technology-related reductions in production costs also led to higher profits and
positive market action.
Electric Utilities Off to a Strong Start in `96
We have continued a strategic shift begun late last year toward increased
exposure in the Fund to electric utilities. Three of the Fund's five largest
holdings were electric utility stocks as of April 30, and the sector accounted
for 38.2% of the Fund's total assets.
Most electrics experienced a strong start this year, and we expect them to
report good earnings growth in 1996. Well-positioned electric utility companies
have become more confident in their outlook, and in the opportunities available
in the increasingly competitive era that
Industry Allocation
based on net assets as of 4-30-96
Electric Utility 38.2%
Telecommunications 29.9%
Energy Related 14.7%
Gas Utility 9.8%
Other Utility 0.4%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
6
<PAGE>
lies ahead. Moreover, the market does not appear to fully appreciate the
earnings improvement that electric utilities are poised to deliver. Accordingly,
we have positioned the Fund to benefit from these opportunities.
Outlook on Interest Rates
Looking ahead, we believe the Fund will perform relatively well, barring a
substantial and sustained rise in interest rates. We would expect any further
substantive increase in rates to restrict economic growth, which might be
countered with action by the Federal Reserve.
We appreciate your investment with us, and look forward to earning your
continued confidence.
Sincerely,
/s/ William H. Reaves
William H. Reaves
Portfolio Manager
[PHOTO WILLIAM H. REAVES]
Average Annual Total Returns1
as of 4-30-96
STRONG AMERICAN LIPPER UTILITY S&P UTILITIES
TIME PERIOD UTILITIES FUND2 FUND INDEX INDEX
1-year 24.13% 18.84% 23.00%
2-year 16.14% 10.32% 15.55%
Since inception 12.12% 5.69% 8.70%
(on 7-1-93)
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Growth of an assumed $10,000 Investment
from 7-1-93 to 4-30-96
The Strong American
Utilities Fund S&P 500 Index S&P Utilities Index
6-93 10,000 10,000 10,000
12-93 10,450 10,496 10,090
12-94 10,177 10,634 9,288
12-95 13,939 14,631 13,146
4-96 13,836 15,644 12,670
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with similar investments in the
Standard and Poor's 500 Stock Index, an unmanaged index generally representative
of the U.S. stock market, and the Standard and Poor's Utilities Index, an
unmanaged index generally representative of U.S. utility stocks. Results include
the reinvestment of all dividends and capital gains distributions. Source for
the index data is Micropal. Performance is historical and does not represent
future results. Investment returns and principal value vary, and you may have a
gain or loss when you sell shares.
- --------------------------------------------------------------------------------
1 Source for the Standard and Poor's Utilities Index: Micropal. Source for
the Lipper Utility Fund Index: Lipper Analytical Services, Inc. The Lipper
Utility Fund Index is based on equally weighted performance, adjusted for
capital gains distributions and income dividends of the 30 largest utility
funds in this Lipper category. Average annual total return and total
return measure change in the value of an investment in the Fund,
assuming reinvestment of all dividends and capital gains. Average
annual total returns reflects annualized change, while total return
reflects aggregate change.
2 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.
As of 4-30-96
30-DAY ANNUALIZED
CURRENT YIELD
3.21%
7
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The Strong TOTAL RETURN Fund
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The Strong Total Return Fund seeks high total return by investing for capital
growth and income. The Fund emphasizes investments in large- and medium-sized
companies. The Fund's managers seek well-managed companies with accelerating
sales and earnings, expanding market share, and a sustainable competitive
advantage.
"The Fund emphasizes large- and medium-size companies with superior earnings or
dividend growth potential."
[PHOTO OF FIBEROPTICS]
Stock Market Continued its Climb
The stock market continued its upward climb over the last six months as a
healthy U.S. economy paved the way for higher corporate earnings and stock
prices. The Fund participated well in this rally and provided investors with a
total return of 12.46% for the six-month period ended April 30, compared to a
13.76% gain for the S&P 500.1
Emphasis on Growth
The Fund emphasizes large- and medium-size companies with superior earnings or
dividend growth potential. These companies often benefit from favorable secular
trends, which currently include:
SERVICES AND TECHNOLOGIES THAT ENHANCE PRODUCTIVITY AND PROVIDE SOLUTIONS
Corporations are striving to improve productivity and earnings through the use
of new information technologies and outsourcing specific services. Companies
that provide these types of products and services tend to be in industries like
distribution, computer networking software, telecommunications, technology
consulting and contract staffing services.
GRAYING OF AMERICA
As the baby-boomer generation ages they will demand more health care, financial
services, and leisure products and services. Industries that will benefit from
these increased demands include: drug, biotechnology, medical devices, lodging,
restaurants, entertainment, banks, securities brokerages, and insurance.
CONSOLIDATING INDUSTRIES
Industry consolidators typically have better management, products,
infrastructure, and financial resources that enable them to make acquisitions
and gain market share at the expense of weaker competitors. Industries that meet
these criteria include office equipment, office supplies, temporary staffing,
and financial services.
Asset Allocation
based on net assets as of 4-30-96
Short-Term Investments 5.5%
Bonds(including convertibles) 8.0%
Other 0.4%
Stocks 86.1%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
8
<PAGE>
Economy Favorable for Growth Companies
The biggest concern for the stock market going forward would be a "too hot or
too cold" economic scenario that could either send inflation and interest rates
significantly higher, or corporate profits sharply lower. The Federal Reserve
Board appears to be in a wait-and-see mode, and we believe the Fed is more
inclined not to lower interest rates further at this time.
That said, we expect moderate inflation and modest economic growth to
continue. This scenario should provide a favorable setting for well-managed
companies with strong earnings-companies that tend to be less dependent on the
strength of the overall economy. We believe that most of the expansion on the
"price" side of price-to-earnings ratios is behind us; from here, companies will
have to generate superior revenue and earnings growth in order to generate
superior price appreciation.
Overall, we expect a good environment for the high-quality, established
companies that the Fund will continue to emphasize. We thank you for your
confidence, and 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]
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Growth of an assumed $10,000 Investment
from 12-30-81 to 4-30-96
The Strong Total Return Fund S & P 500 Index
12-81 10,000 10,000
12-82 13,250 12,154
12-83 18,719 14,895
12-84 20,685 15,830
12-85 25,936 20,852
12-86 31,120 24,745
12-87 33,001 26,044
12-88 38,140 30,369
12-89 39,139 39,992
12-90 36,366 38,751
12-91 48,578 50,557
12-92 48,843 54,408
12-93 59,851 59,892
12-94 59,026 60,683
12-95 74,962 83,487
4-96 79,541 89,265
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.
- --------------------------------------------------------------------------------
Average Annual Total Returns2
as of 4-30-96
1-year 23.38%
3-year 15.26%
5-year 14.51%
10-year 10.08%
Since inception 15.57%
(on 12-30-81)
1 Source of index data: Micropal
2 Average annual total return and total return measure change in the value of
an investment in the Fund, assuming reinvestment of all dividends and
capital gains. Average annual total returns reflects annualized change,
while total return reflects aggregate change.
9
<PAGE>
The Strong GROWTH & INCOME Fund
- --------------------------------------------------------------------------------
The Strong Growth and Income Fund seeks high total return by investing for
capital growth and income.
Impressive Returns to Date
In the four-month period since its inception on 12-29-95 through 4-30-96, the
Fund provided shareholders with an impressive total return of 14.26%, which
compared favorably to a gain of 6.92% in the S&P 500 over the same period.1
Total assets under management in the Fund had grown to $4.9 million by the end
of April.
"Exposure to the healthcare, financial, consumer non-durable, and aerospace
sectors also added value to the fund, as these stocks also performed well during
the period."
[PHOTO OF STETHOSCOPE]
Focus on Larger-Cap Stocks Rewarded
The Fund benefited during this period from a significant exposure to
large-capitalization stocks. Large-cap stocks, as measured by the Dow Jones
Industrial Average, outperformed the broader market for the four months ended
4-30-96, gaining 9.49% compared to the broader-based S&P 500's gain of 6.92%.
Exposure to the healthcare, financial, consumer non-durable, and aerospace
sectors also added value to the Fund, as these stocks also performed well during
the period. Going forward, we will be balancing the Fund primarily between
large- and mid-capitalization stocks, and adding a slight exposure to small-cap
issues.
The Economy Sends Mixed Signals
The economy sent mixed signals earlier this year, making it difficult to get a
clear view of the economic environment. A severe winter snowstorm on the East
coast affected economic activity and a government shutdown delayed the release
of key economic reports, resulting in a number of contradictory indications
regarding the pace of economic growth.
Inflation remained under control during the period, despite conflicting economic
data, and the economy now appears to be shaking off the effects of the severe
weather and the government shutdown. It does not appear to us that the economy
is accelerating to such a degree that significant inflationary pressure will be
generated.
Five Largest Holdings*
based on net assets as of 4-30-96
.......................................................
Standard & Poor's
Depositary Receipt Brokerage &
Trust Unit Series 1 Management 1.5%
.......................................................
Greenfield Capital Trust Metal Products
Preferred Convertible & Fabrication 1.2%
.......................................................
Quintiles Transnational
Convertible
Subordinated Notes Healthcare-Product 1.1%
.......................................................
Wang Labs, Inc. Computer-Personal
Depositary Shares & Workstation 1.1%
.......................................................
General Motors
Corp. Class E Computer Service 1.0%
.......................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
*Does not include Short-Term securities
10
<PAGE>
Asset Allocation
based on net assets as of 4-30-96
Short-Term Investments 18.8%
Convertible Bonds 6.6%
Stocks 74.6%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
Emphasis on Companies with Superior Financial Performance
We will continue to emphasize investments in companies that display the
potential for superior financial performance, particularly in light of stock
valuations that appear to us to be fairly high at this time. In addition,
interest rates have been on the rise, and we believe any further significant
increase in rates may cause stock valuations to compress in the near future.
In choosing holdings for the Fund, we will continue to look for above-average
revenue and earnings growth, a moderate level of financial leverage,
above-average return on equity, positive cash flow, and management teams that
focus on enhancing shareholder value. The holdings also will be diversified
among sectors and industries with positive dynamics that we believe are likely
to serve as a solid base for future revenue and earnings growth.
Sincerely,
/s/ Rimas Milaitis
Rimas Milaitis
Portfolio Manager
[PHOTO OF RIMAS MILAITIS]
- --------------------------------------------------------------------------------
Growth of an assumed $10,000 Investment
from 12-29-95 to 4-30-96
The Strong Growth and Income Fund S & P 500 Index
12-95 10,000 10,000
1-96 10,360 10,340
2-96 10,930 10,436
3-96 11,145 10,536
4-96 11,426 10,692
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.
- --------------------------------------------------------------------------------
1 Total return is not annualized. Source for the index information: Micropal
11
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 56.9%
AEROSPACE & DEFENSE 0.2%
Boeing Company 1,900 $ 156
Litton Industries, Inc. (b) 3,800 172
Rockwell International Corporation 2,800 164
------
492
AIRLINE 1.7%
AMR Corporation (b) 19,500 1,740
America West Airlines, Inc. Class B (b) 7,400 155
Federal Express Corporation (b) 27,500 2,221
Korea Airline Company, Ltd. 6,800 220
Thai Airways International PCL (Fgn Reg) 130,000 232
UAL Corporation (b) 800 172
------
4,740
AUTO & TRUCK PARTS 1.1%
Borg-Warner Automotive, Inc. 71,200 2,714
Magna International, Inc. Class A 3,700 172
------
2,886
AUTOMOBILE 1.0%
Daimler-Benz AG 460 252
Ford Motor Company 68,000 2,440
Pininfarina Spa 13,000 141
------
2,833
BANK - MONEY CENTER 0.5%
The Bank of Tokyo - Mitsubishi 8,000 184
BankAmerica Corporation 2,200 167
The Development Bank of Singapore, Ltd.
(Fgn Reg) 27,000 342
Hong Leong Finance, Ltd. (Fgn Reg) 89,000 364
Overseas Union Bank (Acquired 10/25/95;
Cost $254) (d) 43,000 333
------
1,390
BANK - SUPER REGIONAL 1.5%
Bank of Boston Corporation 3,500 169
Fleet Financial Group, Inc. 45,000 1,935
Mellon Bank Corporation 3,100 167
U.S. Bancorp 59,800 1,936
------
4,207
BEVERAGE - SOFT DRINK 0.1%
The Coca-Cola Company 2,000 163
PepsiCo, Inc. 2,600 165
------
328
BROKERAGE & INVESTMENT MANAGEMENT 4.3%
Amway, Japan, Ltd. Premium Exchangeable
Participating Shares Trust 6,500 145
Apartment Investment and Management Company 7,500 158
Beacon Properties Corporation 60,000 1,538
Commercial Net Lease Realty, Inc. 125,000 1,625
Equity Residential Properties Trust 85,500 2,757
Manufactured Home Communities, Inc. 126,700 2,391
Nomura Securities Company, Ltd. 28,000 607
Peregrine Investment Holdings, Ltd. 255,000 394
Reckson Associates Realty Corporation 60,000 1,785
------
11,400
CHEMICAL 0.1%
FMC Corporation (b) 2,000 139
CLOSED-END FUND 0.5%
The Baring Taiwan Fund, Ltd. (b) 9,600 104
The Central European Growth Fund PLC 481,000 470
The Fleming Poland Fund, Ltd. Redeemable
Participating Preference A Shares (b) (Cost $250) 25,510 252
The Fleming Poland Fund, Ltd. Warrants,
Expire 1/31/99 (b) 5,102 10
Mexico Fund 18,000 279
The Taipei Fund IDR 3 249
------
1,364
COMMERCIAL SERVICE 0.8%
ABR Information Services, Inc. (b) 3,000 187
ADT, Ltd. (b) 10,100 172
Deluxe Corporation 50,000 1,750
Iron Mountain, Inc. (b) 11,100 186
------
2,295
COMPUTER - MAINFRAME 0.0%
International Business Machines Corporation 400 43
COMPUTER - PERIPHERAL EQUIPMENT 0.2%
Quantum Corporation (b) 8,600 183
Seagate Technology, Inc. (b) 2,700 156
U.S. Robotics, Inc. (b) 1,400 219
------
558
COMPUTER - PERSONAL & WORKSTATION 0.9%
Hewlett-Packard Company 22,000 2,329
COMPUTER - SERVICE 0.2%
Bell & Howell Company (b) 3,500 110
Fiserv, Inc. (b) 5,700 174
HBO & Company 1,500 178
------
462
COMPUTER - SOFTWARE 2.7%
Adobe Systems, Inc. 70,000 3,010
Autodesk, Inc. 55,000 2,242
Baan Company NV (b) 2,900 174
Cisco Systems, Inc. (b) 3,700 192
Silicon Graphics, Inc. (b) 50,000 1,481
Wang Labs, Inc. (b) 6,800 161
------
7,260
COMPUTER SYSTEMS 0.1%
Verifone, Inc. (b) 4,300 181
CONGLOMERATE 1.0%
Guinness Peat Group PLC 872,000 539
Guinness Peat Group PLC Rights, Expire 5/03/96 (b) 87,200 13
Jardine Matheson Holdings, Ltd. 63,000 503
Keppel Corporation, Ltd. 74,000 669
Lonrho PLC 60,000 175
Loxley PCL (Fgn Reg) 25,000 354
Mitsubishi Corporation 34,000 482
------
2,735
DIVERSIFIED OPERATIONS 1.1%
Allied Signal, Inc. 3,000 174
ITT Industries, Inc. 95,000 2,613
National Service Industries, Inc. 4,400 163
------
2,950
ELECTRIC POWER 0.1%
NIPSCO Industries, Inc. 4,500 161
ELECTRICAL EQUIPMENT 0.8%
General Electric Company 27,000 2,093
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.2%
AVX Corporation 6,700 159
Hitachi, Ltd. 40,000 430
589
ELECTRONICS - SEMICONDUCTOR/COMPONENT 0.2%
Atmel Corporation (b) 5,600 224
KLA Instruments Corporation (b) 6,500 188
National Semiconductor Corporation (b) 11,500 181
------
593
ENGINEERING & CONSTRUCTION 0.6%
ACP Industries BHD 57,000 279
Boral, Ltd. 104,000 272
Koninklijke Boskalis Westminster NV 10,400 154
Ohmoto Gumi Company, Ltd. 11,000 248
Road Builder Holdings BHD 63,000 278
Semen Cibinong PT (Fgn Reg) 94,000 278
------
1,509
FINANCE - MISCELLANEOUS 1.1%
Capital One Financial Corporation 70,000 2,065
First USA, Inc. 2,900 163
See notes to financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
First USA Paymentech, Inc. (b) 4,200 $ 183
SGS (Societe Generale de Surveillance) Holdings SA 285 641
------
3,052
FOOD 2.3%
CPC International, Inc. 22,300 1,541
Hershey Foods Corporation 2,300 175
Hormel Foods Corporation 5,900 157
IBP, Inc. 6,800 182
Interstate Bakeries Corporation 62,000 1,473
Lancaster Colony Corporation 1,500 51
Nabisco Holdings Corporation 3,700 113
Nestle AG 495 549
Quaker Oats Company 60,200 2,069
------
6,310
HEALTHCARE - BIOMEDICAL/GENETIC 1.4%
Centocor, Inc. (b) 50,000 2,000
Collagen Corporation 81,000 1,661
------
3,661
HEALTHCARE - DRUG/DIVERSIFIED 3.8%
Astra AB 46,000 2,040
Bristol Myers Squibb Company 1,900 156
Elan Corporation, Ltd. ADR (b) 2,700 179
Glaxo Wellcome PLC Sponsored ADR 105,000 2,533
Eli Lilly and Company 2,500 148
Pfizer, Inc. 2,400 165
Pharmacia & Upjohn, Inc. 45,000 1,721
Rhone Poulenc Rorer, Inc. 30,000 1,860
U.S. Bioscience, Inc. (b) 75,000 1,406
------
10,208
HEALTHCARE - INSTRUMENTATION 1.8%
Acuson Corporation (b) 53,000 1,007
Datascope Corporation (b) 6,700 118
Femrx, Inc. (b) 18,100 211
Intelligent Medical Imaging, Inc. (b) 16,900 169
Physio-Control International Corporation (b) 7,300 142
St. Jude Medical, Inc. (b) 4,400 161
ThermoTrex Corporation (b) 14,000 733
United States Surgical Corporation 65,200 2,412
------
4,953
HEALTHCARE - MEDICAL SUPPLY 0.1%
Orthodontic Centers of America, Inc. (b) 4,600 181
Sola International, Inc. (b) 5,000 164
------
345
HEALTHCARE - PATIENT CARE 3.2%
Apria Healthcare Group, Inc. (b) 57,500 1,955
Caremark International, Inc. 67,000 1,851
Columbia/HCA Healthcare Corporation 61,500 3,267
NovaCare, Inc. (b) 178,000 1,291
Ornda Healthcorp (b) 5,900 162
Tenet Healthcare Corporation (b) 8,000 164
------
8,690
HEALTHCARE - PRODUCT 0.9%
R.P. Scherer Corporation (b) 60,000 2,370
HOUSEHOLD APPLIANCE & FURNISHINGS 0.1%
Philips Electronics NV ADR 7,500 269
HOUSING RELATED 0.8%
Nichiha 8,800 161
Sherwin Williams Company 40,000 1,870
------
2,031
INSURANCE - MULTI-LINE 1.1%
Horace Mann Educators Corporation 82,500 2,712
MGIC Investment Corporation 3,000 163
Pohjola Insurance Company `B' 20,000 316
------
3,191
LEISURE PRODUCT 0.2%
Ek Chor China Motorcycle Company, Ltd. 8,800 130
Harley-Davidson, Inc. 4,000 177
Toy Biz, Inc. Class A (b) 3,900 79
West Marine, Inc. (b) 3,400 188
------
574
LEISURE SERVICE 1.3%
CDL Hotels International, Ltd. 690,000 393
CDL Hotels New Zealand, Ltd. 638,000 245
Gaylord Entertainment Company 6,300 167
HFS, Inc. (b) 3,600 185
Helicopter Line, Ltd. 5,000 11
Marriott International, Inc. 3,400 166
Sydney Aquarium, Ltd. 75,000 171
Toho Company 4,090 708
The Walt Disney Company 25,000 1,550
------
3,596
MACHINE TOOL 1.0%
Kennametal, Inc. 70,000 2,651
MACHINERY - AGRICULTURE 0.9%
AGCO Corporation 95,000 2,399
MACHINERY - MISCELLANEOUS 0.1%
Bukaka Teknik Utama PT IDR (b) 157,000 270
MEDIA - PUBLISHING 1.0%
Arnoldo Mondadori Editor 32,000 267
Cordiant PLC (b) 158,000 321
De La Rue PLC 10,000 112
John Fairfax Holdings, Ltd. 275,000 654
Matichon Newspaper PCL (Fgn Reg) 92,000 712
News International PLC 60,000 302
Outdoor Systems, Inc. (b) 14,000 322
------
2,690
MEDIA - RADIO/TV 2.5%
American Radio Systems Corporation Class A (b) 5,300 179
American Telecasting, Inc. Warrants,
Expire 8/10/00 (b) 350 9
Children's Broadcasting Corporation (b) 14,100 118
Comcast UK Cable Partners ADR (b) 149,500 1,981
Infinity Broadcasting Corporation Class A (b) 3,200 93
Tele-Communications, Inc. Class A (b) 130,000 2,486
Viacom International, Inc. (b) 47,501 1,947
------
6,813
METAL PRODUCTS & FABRICATION 0.1%
Email, Ltd. 112,000 315
METALS & MINING 0.6%
Ashanti Goldfields Company, Ltd. GDR 20,000 443
Normandy Mining, Ltd. 357,000 629
Normandy Mining, Ltd. Warrants, Expire 4/30/01 142,800 51
Tambang Timah PT GDR (b) 35,200 607
------
1,730
MORTGAGE & RELATED SERVICE 0.1%
Aames Financial Corporation 4,000 176
The Money Store, Inc. 3,400 86
------
262
NATURAL GAS DISTRIBUTION 0.1%
WICOR, Inc. 5,000 172
OIL - INTERNATIONAL INTEGRATED 1.7%
Enterprise Oil PLC 35,000 237
Mobil Corporation 1,400 161
Royal Dutch Petroleum Company 25,800 3,696
YPF Sociedad Anonima ADR 24,000 525
------
4,619
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 1.1%
Apache Corporation 72,300 2,097
Chesapeake Energy Corporation (b) 1,300 92
Devon Energy Corporation 7,500 191
Flores & Rucks, Inc. (b) 8,300 173
See notes to financial statements.
13
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES(continued) April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND(continued)
SHARES OR VALUE
PRINCIPAL NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
Parker & Parsley Petroleum Company 6,700 $ 165
Triton Energy, Ltd. (b) 3,200 176
Union Pacific Resources Group, Inc. 6,200 171
------
3,065
OIL - NORTH AMERICAN INTEGRATED 0.1%
Ashland, Inc. 4,100 169
OIL WELL EQUIPMENT & SERVICE 0.1%
Dresser Industries, Inc. 5,300 169
Sonat Offshore Drilling, Inc. 3,300 181
------
350
PAPER & FOREST PRODUCTS 0.9%
Carter Holt Harvey, Ltd. 115,000 272
Consolidated Papers, Inc. 600 33
Fletcher Challenge, Ltd. Forestry Division 366,263 472
Thermo Fibertek, Inc. (b) 67,100 1,535
------
2,312
POLLUTION CONTROL 0.1%
Allied Waste Industries, Inc. (b) 3,600 35
Browning-Ferris Industries, Inc. 5,000 161
------
196
PRECIOUS METAL/GEM/STONE 0.7%
Placer Dome, Inc. 65,500 1,818
REAL ESTATE 0.9%
Amoy Properties, Ltd. 376,000 423
Diamond City Company 36,000 321
Shortland Properties, Ltd. (e) 1,124,500 686
Singapore Land, Ltd. 40,000 285
TOC Company, Ltd. 70,000 806
------
2,521
RETAIL - DEPARTMENT STORE 0.1%
Dillard Department Stores, Inc. Class A 4,500 181
RETAIL - FOOD CHAIN 0.2%
Familymart, Inc. 6,600 322
The Kroger Company (b) 3,800 156
The Stop & Shop Companies, Inc. (b) 5,000 164
------
642
RETAIL - MAJOR CHAIN 0.9%
Toys `R' Us, Inc. (b) 90,900 2,534
RETAIL - RESTAURANT 0.1%
Sbarro, Inc. 6,700 176
RETAIL - SPECIALTY 0.3%
Boise Cascade Office Products Corporation (b) 1,700 133
Cortefiel, SA 13,000 281
MSC Industrial Direct Company Class A (b) 6,000 218
Movie Gallery, Inc. (b) 6,200 189
------
821
SHOE & APPAREL MANUFACTURING 0.4%
Saha Union PCL (Fgn Reg) 250,000 336
Simint Spa (b) 325,000 527
Unifi, Inc. 6,800 183
------
1,046
SOAP & CLEANING PREPARATION 0.1%
USA Detergents, Inc. (b) 4,900 201
STEEL 0.3%
AK Steel Holding Corporation 4,100 157
Chubu Steel Plate Company, Ltd. 47,000 319
J & L Specialty Steel, Inc. 9,400 170
Nucor Corporation 2,800 158
------
804
TELECOMMUNICATION 0.4%
Nippon Telegraph & Telephone Corporation 47 362
Telefonica de Espana SA 35,000 623
------
985
TELECOMMUNICATION EQUIPMENT 0.1%
Andrew Corporation (b) 4,000 192
Loral Space & Communications (b) 3,500 50
------
242
TELECOMMUNICATION SERVICE 2.9%
AT&T Corporation 2,600 159
AirTouch Communications (b) 70,000 2,188
American Communications Services, Inc. Warrants,
Expire 11/01/05 (b) 1,750 100
Comsat Corporation 6,100 186
Nextel Communications, Inc. Class A (b) 9,300 169
SPT Telecom AS 18,000 2,205
Telecommunicacoes Brasileiras SA-Sponsored ADR 2,000 108
360 Communications Company (b) 117,500 2,761
------
7,876
TELEPHONE 1.1%
Ameritech Corporation 2,700 158
Cincinnati Bell, Inc. 3,400 167
GTE Corporation 2,700 117
Philippine Long Distance Telephone Company ADR 2,200 111
Telephone & Data Systems, Inc. 50,000 2,325
------
2,878
-------
TOTAL COMMON STOCKS (COST $139,531) 153,525
CONVERTIBLE PREFERRED STOCKS 3.7%
Lehman Brothers Holdings, Inc. Series A 5.00% 127,000 2,983
Sun, Inc. Depositary Shares Representing
1/2 Series A $1.80 135,000 4,185
Wang Labs, Inc. Depositary Shares Representing
1/20 Series B 6.50% (Acquired 2/21/96-4/29/96;
Cost $2,587) (d) 50,000 2,700
TOTAL CONVERTIBLE PREFERRED STOCKS ------
(COST $9,274) 9,868
CONVERTIBLE BONDS 0.3%
MBL International Finance Bermuda Trust
Guaranteed Notes, 3.00%, Due 11/30/02 $ 210 243
Quintiles Transnational Subordinated Notes, 4.25%,
Due 5/31/00 (Acquired 4/23/96; Cost $500)(d) (e) 500 525
------
TOTAL CONVERTIBLE BONDS (COST $710) 768
CORPORATE BONDS 27.7%
American Communications Services, Inc. Senior
Discount Notes, Zero%, Due 11/01/05 (Rate Reset
Effective 11/01/00) 1,750 963
Banc One Corporation Subordinated Notes,
9.875%, Due 3/01/09 2,445 2,926
Boyd Gaming Corporation Senior Subordinated
Notes, Series B, 10.75%, Due 9/01/03 198 209
Cablevision Industries Corporation Senior Notes,
10.75%, Due 1/30/02 7,150 7,704
Canandaigua Wine, Inc. Senior Subordinated Notes,
8.75%, Due 12/15/03 375 375
Chrysler Financial Corporation Medium Term
Notes, 6.21%, Due 7/21/97 200 200
Continental Cablevision, Inc. Senior Notes, 8.30%,
Due 5/15/06 (Acquired 12/08/95; Cost $2,143) (d) 2,150 2,215
Continental Homes Holding Corporation Senior
Notes, 10.00%, Due 4/15/06 2,000 1,975
Export Import Bank Korea Bonds, 6.375%,
Due 2/15/06 400 373
First Nationwide Holdings, Inc. Senior Subordinated
Notes, 9.125%, Due 1/15/03 (Acquired 3/01/96;
Cost $1,015) (d) 1,000 973
First Nationwide Parent Holdings, Ltd. Senior Notes,
12.50 %, Due 4/15/03 (Acquired 4/12/96;
Cost $1,483) (d) 1,500 1,530
General Electric Capital Corporation Remarketed
Reset Notes, 8.65%, Due 5/01/18 (e) 8,000 8,009
See notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
Helicon Group L.P./Helicon Capital Corporation
Senior Secured Notes, Series B, 9.00%,
Due 11/01/03 (Rate Reset Effective 11/01/96) $ 1,250 $ 1,253
International Cabletel, Inc. Senior Deferred Notes,
Series A, Zero%, Due 2/01/06 (Rate Reset Effective
2/01/01) (Acquired 1/25/96; Cost $1,429) (d) 2,500 1,456
Korea Electric Power Company Notes, 6.375%,
Due 12/01/03 4,900 4,650
Newsquest Capital PLC Senior Subordinated Notes,
11.00%, Due 5/01/06 (Acquired 4/03/96;
Cost $500) (d) 500 500
Nextlink Communications LLC Senior Notes,
12.50%, Due 4/15/06 (Acquired 4/18/96;
Cost $2,000) (d) 2,000 2,020
Owens-Illinois, Inc. Senior Debentures, 11.00%,
Due 12/01/03 1,547 1,694
Paging Network, Inc. Senior Subordinated Notes,
11.75%, Due 5/15/02 110 120
Panamsat L.P./ Panamsat Capital Corporation
Senior Secured Notes, 9.75%, Due 8/01/00 1,105 1,160
Republic of Argentina Bonds, 9.25%, Due 2/23/01 8,000 7,730
Republic of Poland Yankee Bearer PDI Bonds
3.75%, Due 10/27/14 5,000 3,819
Revlon Worldwide Corporation Senior Secured
Discount Notes, Series B, Zero %, Due 3/15/98 300 242
Salomon, Inc. Senior Notes, 6.75%, Due 2/15/03 5,300 5,025
Santa Fe Pacific Gold Corporation Senior
Debentures, 8.375%, Due 7/01/05 2,770 2,770
Stone Consolidated Corporation Senior Secured
Notes, 10.25%, Due 12/15/00 2,500 2,619
Stratospere Corporation Guaranteed First Mortgage
Notes, 14.25%, Due 5/15/02 2,120 2,661
Teekay Shipping Corporation Guaranteed First
Preferred Mortgage Notes, 8.32%, Due 2/01/08 2,000 1,912
Travelers/Aetna Property & Casualty Corporation
Notes, 6.75%, Due 4/15/01 4,000 4,005
USAir 1993-A Pass-Thru Trust Certificates, Series
1993-A2, 9.625%, Due 9/01/03 1,675 1,608
Union Pacific Railroad Company 1995 Pass-Thru
Trust Certificates, Series 1995-A, 6.54%,
Due 7/01/15 2,200 2,079
-------
TOTAL CORPORATE BONDS (COST $75,939) 74,775
NON-AGENCY MORTGAGE & ASSET-BACKED
SECURITIES 8.0%
Chase Mortgage Finance Corporation Mortgage
Pass-Thru Certificates, Series 1990-G, Class A-Z1,
9.50%, Due 12/25/21 1,279 1,282
Citicorp Mortgage Securities, Inc. Real Estate
Mortgage Investment Conduit Pass-Thru
Certificates, Series 1992-5, Class M, 8.00%,
Due 3/25/22 2,996 3,021
First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates:
Series 1993-2, Class A-3, 7.50%, Due 3/25/33 3,029 2,989
Series 1994-MHC1, Class A-1X, Interest Only,
1.8621%, Due 4/25/11 17,359 906
Lennar U.S. Partners, Ltd. Partnership Structured
Variable Rate Notes, Series 1995-1, Class E, 9.75%,
Due 5/15/05 (Acquired 9/27/95; Cost $5,509) (d) 5,500 5,519
MDC Asset Investors Trust V Collateralized
Mortgage Obligation, Class V-2, 9.325%,
Due 12/01/17 153 156
Merrill Lynch Mortgage Investors, Inc. Manufactured
Housing Contract Pass-Thru Certificates:
Series 1987-C, 10.10%, Due 11/15/07 2,204 2,347
Series 1992-E, Class B, 5.85%, Due 8/15/12 504 503
Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage Bonds,
Series 1992-C, Class 3-A, 11.8194%, Due 11/25/30 725 757
Westam Mortgage Financial Corporation
Collateralized Mortgage Bonds, Series 10,
Class 10-D, Principal Only, Due 7/26/18 7,704 4,025
TOTAL NON-AGENCY MORTGAGE & ASSET-BACKED -------
SECURITIES (COST $22,511) 21,505
UNITED STATES GOVERNMENT AND AGENCY
ISSUES 4.2%
FHLMC Guaranteed Pass-Thru Certificates:
9.50%, Due 1/01/06 200 211
10.25%, Due 3/01/15 182 199
10.50%, Due 1/01/16 40 44
FHLMC Guaranteed Multiclass Mortgage
Participation Certificates:
Series 1181, Class 1181-G, 7.50%, Due 8/15/05 582 589
Series 1257, Class 1257-J, 7.00%, Due 4/15/07 658 634
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
11.00%, Due 10/01/00 thru 11/01/00 227 241
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
Series 1992-137, Class BA, 3.50%, Due 1/25/17 606 570
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate Pass-Thru
Certificates:
Series G92-61, ClassFJ, 6.075%, Due 10/25/22 594 592
Series 1992-187, Class SA, 8.40%, Due 10/25/07 2,290 2,061
GNMA Guaranteed Pass-Thru Certificates, 10.25%,
Due 10/15/98 41 42
Small Business Administration Guaranteed Loan
Pool #440019, Interest Only Custodial Receipts,
Series 1993-1A, 2.531%, Due 2/15/18 22,031 2,554
United States Treasury Notes:
5.50%, Due 11/15/98 2,000 1,969
5.625%, Due 2/15/06 1,610 1,493
6.25%, Due 2/15/03 195 192
TOTAL UNITED STATES GOVERNMENT AND AGENCY -------
ISSUES (COST $11,219) 11,391
OPTIONS 0.1%
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.) 9,500 452
Merrill Lynch Deuschemark Forward Swap Put 10,250 (114)
------
TOTAL OPTIONS (COST $440) 338
CASH EQUIVALENTS (a) 1.4%
COMMERCIAL PAPER 0.2%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.03% 20 20
Sara Lee Corporation, 5.01% 567 567
------
587
UNITED STATES GOVERNMENT ISSUES 1.2%
United States Treasury Bills:
Due 5/09/96 (c) 135 135
Due 6/06/96 (c) 1,060 1,055
Due 6/13/96 70 70
Due 7/11/96 (c) 350 346
Due 8/08/96 (c) 1,700 1,677
------
3,283
------
TOTAL CASH EQUIVALENTS (COST $3,871) 3,870
------
TOTAL INVESTMENTS IN SECURITIES
(COST $263,495) 102.3% 276,040
Other Assets and Liabilities, Net (2.3%) (6,150)
--------
NET ASSETS 100.0% $269,890
========
See notes to financial statements.
15
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES(continued) April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND(continued)
- --------------------------------------------------------------------------------
FUTURES
-------
UNDERLYING UNREALIZED
FACE AMOUNT APPRECIATION
EXPIRATION AT VALUE DEPRECIATION
DATE (IN THOUSANDS) (IN THOUSANDS)
- --------------------------------------------------------------------------------
Purchased:
176 Five-Year U.S. Treasury Notes 6/96 $18,642 ($207)
Sold:
40 Five-Year U.S. Treasury Notes 6/96 4,237 16
44 Ten-Year U.S. Treasury Notes 6/96 4,730 154
59 U.S. Treasury Bonds 6/96 6,440 344
50 S&P 500 Futures 6/96 16,371 (3)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
-------------------------------------------
UNREALIZED
VALUE APPRECIATION
SETTLEMENT IN USD DEPRECIATION
DATE (IN THOUSANDS) (IN THOUSANDS)
- --------------------------------------------------------------------------------
Sold:
20,380,000 FRF 10/25/96 $3,976 $24
120,373,156 JPY 8/13/96 1,162 (6)
PERCENTAGE OF
COUNTRY DIVERISIFICATION NET ASSETS
----------------------------------------------------
United States......................... 81.7%
Argentina............................. 3.1%
United Kingdom........................ 2.4%
Japan................................. 2.0%
South Korea........................... 1.9%
Netherlands........................... 1.6%
Poland................................ 1.5%
Singapore............................. 0.9%
Australia............................. 0.8%
Czech Republic........................ 0.8%
New Zealand........................... 0.8%
Sweden................................ 0.8%
Canada................................ 0.7%
Thailand.............................. 0.6%
Hong Kong............................. 0.4%
Indonesia............................. 0.4%
Switzerland........................... 0.4%
Italy................................. 0.3%
Spain................................. 0.3%
Malaysia.............................. 0.2%
Russia................................ 0.2%
Finland............................... 0.1%
Germany............................... 0.1%
Ireland............................... 0.1%
Mexico................................ 0.1%
Taiwan................................ 0.1%
Other Assets and Liabilities, Net..... (2.3%)
-------
Total 100.0%
======
- --------------------------------------------------------------------------------
STRONG EQUITY INCOME FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 64.9%
AEROSPACE & DEFENSE 5.3%
Boeing Company 2,200 $ 181
B.F. Goodrich & Company 4,420 176
Rockwell International Corporation 3,625 212
Sundstrand Corporation 4,000 147
United Technologies Corporation 1,760 194
------
910
AUTOMOBILE 1.0%
Ford Motor Company 2,400 86
General Motors Corporation 1,540 84
------
170
BANK - MONEY CENTER 0.9%
Chase Manhattan Corporation 2,390 165
BANK - REGIONAL 1.4%
First Tennessee National Corporation 5,000 165
Signet Banking Corporation 3,300 81
------
246
BANK - SUPER REGIONAL 1.8%
Bank of New York, Inc. 3,100 150
PNC Bank Corporation 5,580 169
------
319
BEVERAGE - SOFT DRINK 1.0%
PepsiCo, Inc. 2,740 174
BROKERAGE & INVESTMENT MANAGEMENT 6.7%
Avalon Properties, Inc. 4,000 84
Equity Residential Properties Trust 3,000 97
Felcor Suite Hotels, Inc. 6,600 192
First Industrial Realty Trust, Inc. 3,850 92
Oasis Residential, Inc. 5,950 134
Standard & Poors Depositary Receipt Trust Unit
Series 1 8,700 569
------
1,168
CHEMICAL 1.1%
Monsanto Company 1,210 183
CHEMICAL - SPECIALTY 1.5%
W.R. Grace & Company 2,000 155
Wellman, Inc. 4,300 103
------
258
COMMERCIAL SERVICES 2.3%
Avery Dennison Corporation 2,750 157
Data Processing Resources Corporation (b) 500 13
Equifax, Inc. 5,400 132
FlightSafety International 1,900 105
------
407
COMPUTER SERVICE 0.9%
General Motors Corporation Class E 2,800 158
Sykes Enterprises (b) 100 4
------
162
COMPUTER SOFTWARE 1.2%
Computer Associates International, Inc. 2,090 153
Cylink Corporation (b) 500 9
Documentum, Inc. (b) 400 18
I2 Technologies, Inc. (b) 100 4
Raptor Systems, Inc. (b) 600 20
------
204
COSMETIC & PERSONAL CARE 0.7%
Avon Products, Inc. 1,300 116
DIVERSIFIED OPERATIONS 5.9%
Alco Standard Corporation 1,540 89
Allied Signal, Inc. 3,000 174
ITT Industries, Inc. 2,500 69
Lockheed Martin Corporation 2,200 177
Olin Corporation 1,000 89
Tenneco, Inc. 2,750 151
See notes to financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
STRONG EQUITY INCOME FUND(continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
Textron, Inc. 1,760 $ 151
Whitman Corporation 4,700 119
------
1,019
ELECTRIC POWER 0.7%
Allegheny Power Systems, Inc. 4,000 117
ELECTRICAL EQUIPMENT 0.9%
General Electric Company 1,980 153
ELECTRONIC INSTRUMENTATION 1.0%
Millipore Corporation 4,300 180
ELECTRONICS PARTS DISTRIBUTION 1.0%
Avnet, Inc. 3,410 180
ENGINEERING & CONSTRUCTION 0.6%
Fluor Corporation 1,500 99
FINANCE - MISCELLANEOUS 2.4%
Capital One Financial Corporation 4,000 118
First Data Corporation 2,200 167
First USA Paymentech, Inc. (b) 400 17
MBNA Corporation 4,100 116
------
418
FOOD 1.0%
Dole Food Company, Inc. 4,210 168
HEALTHCARE - DRUG/DIVERSIFIED 3.6%
American Home Products Corporation 1,560 165
Johnson & Johnson 2,090 193
Eli Lilly and Company 2,400 142
Pfizer, Inc. 1,800 124
------
624
HEALTHCARE - INSTRUMENTATION 0.1%
Arthrocare Corporation (b) 500 13
Heartport, Inc. (b) 100 3
------
16
HEALTHCARE - MEDICAL SUPPLY 0.9%
Becton, Dickinson & Company 1,500 121
NCS Healthcare, Inc. Class A (b) 800 27
------
148
HEALTHCARE - PRODUCT 0.6%
Baxter International, Inc. 2,200 97
HOUSEHOLD - APPLIANCE & FURNISHINGS 0.8%
Harman International Industries, Inc. 3,000 142
HOUSING RELATED 0.5%
Danaher Corporation 2,200 87
INSURANCE - PROPERTY & CASUALTY 0.6%
Partners RE Holdings, Ltd. ADR 3,970 112
LEISURE SERVICE 0.7%
ITT Corporation Nevada (b) 1,900 116
Penske Motorsports, Inc. (b) 100 3
------
119
MACHINERY - AGRICULTURE 0.4%
Deere & Company 1,960 76
MEDIA - RADIO/TV 0.6%
United States Satellite Broadcasing, Inc. Class A (b) 400 14
Viacom, Inc. (b) 2,210 88
------
102
METAL PRODUCTS & FABRICATION 0.9%
Illinois Tool Works, Inc. 2,200 148
MORTGAGE & RELATED SERVICE 0.7%
Green Tree Financial Corporation 3,500 118
NATURAL GAS DISTRIBUTION 1.8%
Columbia Gas Systems, Inc. 1,800 88
Enron Corporation 4,000 161
Enron Global Power & Pipelines LLC 2,750 68
------
317
OFFICE AUTOMATION 1.4%
Xerox Corporation 1,655 242
OIL - INTERNATIONAL INTEGRATED 0.7%
Royal Dutch Petroleum Company 905 130
OIL - NORTH AMERICAN EXPLORATION &
PRODUCT 0.0%
Belco Oil & Gas Corporation (b) 200 6
OIL - NORTH AMERICAN INTEGRATED 1.3%
Ashland, Inc. 4,200 173
USX-Marathon Group 2,000 44
------
217
OIL WELL EQUIPMENT & SERVICES 2.7%
Baker Hughes, Inc. 4,000 127
Halliburton Company 2,800 161
Schlumberger, Ltd. 2,000 176
------
464
PAPER & FOREST PRODUCTS 1.2%
The Mead Corporation 3,600 200
PERSONAL & COMMERCIAL LENDING 0.3%
Household International, Inc. 830 57
RETAIL - SPECIALTY 1.2%
Barnett, Inc. (b) 300 7
Hughes Supply, Inc. 1,400 48
Melville Corporation 3,900 152
------
207
TELECOMMUNICATION EQUIPMENT 0.7%
Harris Corporation 2,100 130
TELECOMMUNICATION SERVICE 2.5%
AT&T Corporation 60 4
Comsat Corporation 2,000 61
MCI Communications Corporation 6,000 176
Orange PLC ADR (b) 400 7
Sprint Corporation 4,200 177
------
425
TELEPHONE 0.9%
Frontier Corporation 5,000 158
TOBACCO 0.5%
Philip Morris Companies, Inc. 1,000 90
------
TOTAL COMMON STOCKS (COST $10,932) 11,248
CONVERTIBLE PREFERRED STOCKS 5.3%
Alco Standard Corporation Depositary Shares
Representing 1/100 Series BB 6.50% 800 79
Bally Entertainment Corporation 8.00% 4,000 81
Evergreen Media Corporation $3.00 100 8
Greenfield Capital Trust 6.00% (Acquired 4/18/96;
Cost $175) (d) 3,500 199
SCI Financial LLC Terminal Convertible Shares
Series A $3.125 1,910 169
Sun, Inc. Depositary Shares Representing
1/2 Series A $1.80 3,900 121
Trans World Airlines, Inc. 8.00%
(Acquired 3/18/96, 4/18/96; Cost $138) (d) 2,500 136
Wang Labs, Inc. Depositary Shares Representing
1/20 Series B 6.50% (Acquired 2/21/96, 2/28/96;
Cost $131) (d) 2,400 130
TOTAL CONVERTIBLE PREFERRED STOCKS ------
(COST $884) 923
See notes to financial statements.
17
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES(continued) April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
STRONG EQUITY INCOME FUND(continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS 3.7%
Career Horizons, Inc. Senior Notes, 7.00%,
Due 11/01/02 $ 50 $ 106
Delta Airlines Subordinated Notes, 3.23%,
Due 6/15/03 93 95
Federated Department Stores, Inc. Subordinated
Notes, 5.00%, Due 10/01/03 10 11
Magna International, Inc. Yankee Subordinated
Debentures, 5.00%, Due 10/15/02 57 59
Sanifill, Inc. Subordinated Debentures, 5.00%,
Due 3/01/06 110 119
Tele-Communications International, Inc.
Subordinated Debentures, 4.50%, Due 2/15/06 80 76
Tenet Healthcare Corporation Subordinated
Notes, 6.00%, Due 12/01/05 160 173
------
TOTAL CONVERTIBLE BONDS (COST $610) 639
UNITED STATES GOVERNMENT ISSUES 0.1%
United States Treasury Bonds, 6.875%, Due 8/15/25
(COST $11) 10 10
CASH EQUIVALENTS (a) 27.0%
COMMERCIAL PAPER 0.4%
INTEREST BEARING, DUE UPON DEMAND
Pitney Bowes Credit Corporation, 5.03% 5 5
Sara Lee Corporation, 5.01% 50 50
Wisconsin Electric Power Company, 5.07% 16 16
------
71
REPURCHASE AGREEMENT 26.0%
Cantor Fitzgerald & Company, Inc. (Collateralized
by: $627 United States Treasury Notes, 5.75%,
Due 9/30/97; $2,923 United States Treasury Notes,
6.125%, Due 9/30/00; and $1,085 United States
Treasury Note Strips, Due 6/20/96) 5.34%,
Due 5/01/96 (f) 4,500 4,500
UNITED STATES GOVERNMENT ISSUES 0.6%
United States Treasury Bills, Due 5/02/96 100 100
------
TOTAL CASH EQUIVALENTS (COST $4,671) 4,671
-------
TOTAL INVESTMENTS IN SECURITIES
(COST $17,108) 101.0% 17,491
Other Assets and Liabilities, Net (1.0%) (179)
--------
NET ASSETS 100.0% $17,312
========
PERCENTAGE OF
COUNTRY DIVERISIFICATION NET ASSETS
- ------------------------------------------------------
United States......................... 99.3%
Bermuda............................... 0.7%
Netherlands........................... 0.7%
Canada................................ 0.3%
Other Assets and Liabilities, Net..... (1.0%)
-------
Total 100.0%
=======
- --------------------------------------------------------------------------------
STRONG AMERICAN UTILITIES FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 93.0%
ELECTRIC UTILITY 38.2%
American Electric Power Company, Inc. 229,700 $ 9,332
Baltimore Gas & Electric Company 60,000 1,582
Boston Edison Company 126,000 3,071
CMS Energy Corporation 250,000 7,281
Duke Power Company 10,000 470
Entergy Corporation 5,000 133
General Public Utilities Corporation 99,000 3,143
NIPSCO Industries, Inc. 115,000 4,126
PECO Energy Company 150,500 3,744
SCANA Corporation 367,800 9,425
The Southern Company 240,000 5,280
TECO Energy 214,500 4,987
-------
52,574
ENERGY RELATED 14.7%
Amoco Corporation 47,100 3,438
Ashland, Inc. 15,000 617
British Petroleum PLC ADR 2,500 273
Camco International, Inc. 7,500 267
Chevron Corporation 29,800 1,728
Exxon Corporation 29,800 2,533
Helmerich & Payne, Inc. 12,500 461
Imperial Oil, Ltd. 71,000 2,875
Kerr McGee Corporation 9,600 613
Lyondell Petrochemical Company 8,400 247
Mapco, Inc. 7,500 437
McDermott International, Inc. 11,500 242
Mobil Corporation 1,500 173
Pennzoil Company 4,000 177
Petroleum Geo-Services A/S ADR (b) 13,000 411
Schlumberger, Ltd. 6,900 609
Shell Transport & Trading ADR 49,820 3,986
Texaco, Inc. 3,000 257
Union Texas Petroleum Holdings, Inc. 1,000 19
USX-Marathon Group 20,000 440
Vastar Resources, Inc. 11,000 400
-------
20,203
GAS UTILITY 9.8%
Coastal Corporation 4,000 159
Consolidated Natural Gas Company 19,500 912
ENSERCH Corporation 27,500 591
MCN Corporation 189,000 4,654
Questar Corporation 14,800 518
Southwestern Energy Corporation 62,900 873
Valero Energy Corporation 1,500 43
The Williams Companies, Inc. 113,000 5,777
-------
13,527
OTHER UTILITY 0.4%
American Water Works Company, Inc. 16,000 608
TELECOMMUNICATIONS 29.9%
AT&T Corporation 57,000 3,491
Alltel Corporation 8,000 263
Ameritech Corporation 244,000 14,243
Bell Atlantic Corporation 86,000 5,590
BellSouth Corporation 85,000 3,400
GTE Corporation 98,000 4,251
SBC Communications, Inc. 200,000 10,000
-------
41,238
-------
TOTAL COMMON STOCK (COST $119,016) 128,150
CASH EQUIVALENTS (a) 6.9%
COMMERCIAL PAPER 4.7%
DISCOUNTED 3.6%
Praxair, Inc., Due 5/03/96 5,000 4,998
See notes to financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
STRONG AMERICAN UTILITIES FUND(continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
INTEREST BEARING, DUE UPON DEMAND 1.1%
American Family Financial Services, Inc., 5.03% $ 86 $ 86
General Mills, Inc., 5.02% 597 597
Sara Lee Corporation, 5.01% 597 597
Southwestern Bell Telephone Company, 5.01% 185 185
Wisconsin Electric Power Company, 5.07% 62 62
------
1,527
------
Total Commercial Paper 6,525
REPURCHASE AGREEMENT 2.2%
Cantor Fitzgerald & Company, Inc., 5.34%,
Due 5/01/96 3,000 3,000
------
TOTAL CASH EQUIVALENTS (COST $9,525) 9,525
------
TOTAL INVESTMENTS IN SECURITIES
(COST $128,541) 99.9% 137,675
Other Assets & Liabilities, Net 0.1% 163
--------
NET ASSETS 100.0% $137,838
========
- --------------------------------------------------------------------------------
STRONG TOTAL RETURN FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 84.4%
AEROSPACE & DEFENSE 2.0%
Boeing Company 70,000 $ 5,749
B.F. Goodrich & Company 220,000 8,745
-------
14,494
AUTOMOBILE 0.9%
Chrysler Corporation 100,000 6,275
BANK - MONEY CENTER 1.0%
BankAmerica Corporation 50,000 3,787
Citicorp 50,000 3,937
-------
7,724
BANK - REGIONAL 1.3%
First Bank System, Inc. 60,000 3,615
Firstar Corporation 125,000 5,812
-------
9,427
BANK - SUPER REGIONAL 0.5%
Norwest Corporation 100,000 3,612
BROKERAGE & INVESTMENT MANAGEMENT 1.0%
United Asset Management Corporation 150,000 7,012
CHEMICAL 3.5%
Monsanto Company 170,000 25,755
CHEMICAL - SPECIALTY 1.1%
W.R. Grace & Company 100,000 7,750
COMMERCIAL SERVICE 3.6%
Accustaff, Inc. (b) 400,000 11,900
Corestaff, Inc. (b) 35,900 1,391
Corrections Corporation America (b) 30,000 1,913
Equifax, Inc. 200,000 4,900
Omnicom Group, Inc. 110,000 4,771
Robert Half International, Inc. (b) 30,000 1,725
-------
26,600
COMPUTER - PERIPHERAL EQUIPMENT 2.6%
U.S. Robotics, Inc. (b) 125,000 19,562
COMPUTER - PERSONAL & WORKSTATION 3.9%
Digital Equipment Corporation (b) 150,000 8,962
Hewlett-Packard Company 100,000 10,588
Sun Microsystems, Inc. (b) 175,000 9,494
-------
29,044
COMPUTER SERVICE 1.9%
General Motors Corporation Class E 100,000 5,637
HBO & Company 70,000 8,313
-------
13,950
COMPUTER SOFTWARE 4.8%
Ascend Communications, Inc. (b) 160,000 9,840
BMC Software, Inc. (b) 75,000 4,566
Cisco Systems, Inc. (b) 150,000 7,781
Computer Associates International, Inc. 40,000 2,935
Microsoft Corporation (b) 70,000 7,936
3Com Corporation (b) 50,000 2,306
-------
35,364
COMPUTER SYSTEMS 0.9%
Oracle Systems Corporation (b) 187,500 6,328
CONSUMER - MISCELLANEOUS 1.8%
Service Corporation International 250,000 13,281
COSMETIC & PERSONAL CARE 0.7%
Avon Products, Inc. 25,000 2,222
The Gillette Company 50,000 2,700
-------
4,922
DIVERSIFIED OPERATIONS 5.2%
Alco Standard Corporation 150,000 8,681
Allied Signal, Inc. 225,000 13,078
Olin Corporation 130,000 11,505
Tenneco, Inc. 100,000 5,488
-------
38,752
ELECTRICAL EQUIPMENT 0.5%
General Electric Company 50,000 3,875
ELECTRONICS - SEMICONDUCTOR/COMPONENT 1.5%
Altera Corporation (b) 50,000 2,637
Intel Corporation 120,000 8,130
-------
10,767
FINANCE - MISCELLANEOUS 2.3%
Capital One Financial Corporation 233,000 6,873
First USA, Inc. 110,000 6,188
Medaphis Corporation (b) 90,000 4,151
-------
17,212
HEALTHCARE - BIOMEDICAL/GENETIC 1.2%
Amgen, Inc. (b) 50,000 2,875
Biogen, Inc. (b) 50,000 3,294
Centocor, Inc. (b) 75,000 3,000
-------
9,169
HEALTHCARE - DRUG/DIVERSIFIED 3.7%
American Home Products Corporation 50,000 5,275
Elan Corporation PLC ADR (b) 30,000 1,984
Johnson & Johnson 75,000 6,937
Eli Lilly and Company 50,000 2,950
Pfizer, Inc. 50,000 3,444
Warner-Lambert Company 60,000 6,705
-------
27,295
HEALTHCARE - PATIENT CARE 1.5%
Healthsouth Corporation (b) 300,000 11,138
INSURANCE - DIVERSIFIED 0.8%
Travelers/Aetna Property Casualty
Corporation Class A (b) 125,000 3,453
Travelers Corporation 40,000 2,460
-------
5,913
LEISURE PRODUCT 0.3%
Eastman Kodak Company 30,000 2,293
LEISURE SERVICE 3.0%
HFS, Inc. (b) 250,000 12,844
Hilton Hotels Corporation 40,000 4,220
Marriott International, Inc. 80,000 3,900
Mirage Resorts, Inc. (b) 30,000 1,571
-------
22,535
MACHINERY - MISCELLANEOUS 0.6%
Cooper Industries, Inc. 100,000 4,250
See notes to financial statements.
19
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES(continued) April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
STRONG TOTAL RETURN FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
MORTGAGE & RELATED SERVICE 0.7%
Green Tree Financial Corporation 25,000 $ 844
The Money Store, Inc. 185,000 4,671
-------
5,515
NATURAL GAS DISTRIBUTION 2.2%
El Paso Natural Gas Company 130,000 4,810
The Williams Companies, Inc. 225,000 11,503
-------
16,313
OFFICE AUTOMATION 2.0%
Danka Business Systems PLC Sponsored ADR 130,000 6,240
Xerox Corporation 60,000 8,790
-------
15,030
OIL - INTERNATIONAL INTEGRATED 1.6%
Mobil Corporation 50,000 5,750
Texaco, Inc. 75,000 6,413
-------
12,163
OIL - NORTH AMERICAN INTEGRATED 1.3%
Ashland, Inc. 150,000 6,169
Occidental Petroleum Corporation 125,000 3,219
-------
9,388
OIL WELL EQUIPMENT & SERVICE 6.5%
Baker Hughes, Inc. 150,000 4,763
Dresser Industries, Inc. 300,000 9,563
Halliburton Company 160,000 9,180
Reading & Bates Corporation (b) 200,000 4,900
Schlumberger, Ltd. 110,000 9,708
Smith International, Inc. (b) 200,000 5,950
Sonat Offshore Drilling, Inc. 75,000 4,116
-------
48,180
PAPER & FOREST PRODUCTS 0.3%
Weyerhaeuser Company 50,000 2,475
RAILROAD 1.1%
Canadian National Railway Company
First Installment Receipt 440,000 8,360
RETAIL - DEPARTMENT STORE 0.6%
Kohl's Corporation (b) 140,000 4,812
RETAIL - DRUG STORE 0.5%
Thrifty Payless Holdings, Inc. (b) 293,900 3,968
RETAIL - FOOD CHAIN 0.6%
Safeway, Inc. (b) 120,000 4,050
RETAIL - RESTAURANT 0.2%
Brinker International, Inc. (b) 100,000 1,750
RETAIL - SPECIALTY 3.9%
CUC International, Inc. (b) 150,000 4,931
Corporate Express, Inc. (b) 280,000 10,465
Gucci Group NV (b) 30,000 1,631
OfficeMax, Inc. (b) 150,000 3,938
Staples, Inc. (b) 50,000 950
Viking Office Products, Inc. (b) 115,000 6,828
-------
28,743
SHOE & APPAREL MANUFACTURING 0.5%
NIKE, Inc. Class B 40,000 3,500
STEEL 1.5%
Nucor Corporation 200,000 11,250
TELECOMMUNICATION EQUIPMENT 4.9%
Andrew Corporation (b) 67,500 3,240
Cascade Communications Corporation (b) 57,000 5,714
Glenayre Technologies, Inc. (b) 109,400 5,087
Newbridge Networks Corporation (b) 125,000 8,047
StrataCom, Inc. (b) 65,000 3,380
Tellabs, Inc. (b) 200,000 11,050
-------
36,518
TELECOMMUNICATION SERVICE 0.9%
Sprint Corporation 160,000 6,740
TELEPHONE 3.0%
Bell Atlantic Corporation 150,000 9,750
Cincinnati Bell, Inc. 250,000 12,313
-------
22,063
-------
TOTAL COMMON STOCKS (COST $562,077) 625,117
CONVERTIBLE PREFERRED STOCKS 1.7%
Alco Standard Corporation Depositary Shares
Representing 1/100 Series BB 6.50% 85,000 8,415
MCN Corporation Preferred Redeemable
Increased Dividend Equity Securities 8.75% 20,000 525
Merrill Lynch Company, Inc. Strypes, 6.50%,
Due 8/15/98 (Exchangeable for MGIC
Investment Corporation Common Stock) 41,000 2,137
SCI Financial LLC Terminal Convertible Shares
Series A $3.125 20,000 1,770
TOTAL CONVERTIBLE PREFERRED STOCKS -------
(COST $11,451) 12,847
CONVERTIBLE BONDS 6.1%
Altera Corporation Subordinated Notes, 5.75%,
Due 6/15/02 (Acquired 4/24/96; Cost $2,515) (d) 2,000 2,450
Career Horizons, Inc. Senior Notes, 7.00%,
Due 11/01/02 1,000 2,111
Danka Business Systems PLC Subordinated Notes,
6.75%, Due 4/01/02 11,000 18,879
First Financial Management Corporation Senior
Debentures, 5.00%, Due 12/15/99 3,500 6,339
LSI Logic Corporation Subordinated Notes, 5.50%,
Due 3/15/01 (Acquired 4/24/96; Cost $1,532) (d) 500 1,495
Marriott International, Inc. Liquid Yield Option
Notes, Zero %, Due 3/25/11 (Acquired 3/19/96;
Cost $4,523) (d) 8,500 4,473
Quintiles Transnational Subordinated Notes, 4.25%,
Due 5/31/00 (Acquired 4/23/96; Cost $1,950) (d) (e) 1,950 2,116
Staples, Inc. Subordinated Debentures, 4.50%,
Due 10/01/00 (Acquired 9/12/95 - 4/23/96;
Cost $4,225) (d) 4,000 4,255
3Com Corporation Subordinated Notes, 10.25%,
Due 11/01/01 (Acquired 4/23/96; Cost $2,990) (d) 2,000 3,090
------
TOTAL CONVERTIBLE BONDS (COST $36,093) 45,208
CORPORATE BONDS 1.1%
American Home Products Corporation Notes,
7.90%, Due 2/15/05 $ 3,000 3,145
First Data Corporation Notes, 6.75 %, Due 7/15/05 3,000 2,903
Kansas City Southern Industries, Inc. Debentures,
7.00%, Due 12/15/25 2,250 2,011
------
TOTAL CORPORATE BONDS (COST $8,248) 8,059
UNITED STATES GOVERNMENT ISSUES 0.8%
United States Treasury Bonds, 7.625%,
Due 2/15/25 (COST $6,033) 5,555 5,961
CASH EQUIVALENTS (a) 5.5%
COMMERCIAL PAPER 5.5%
DISCOUNTED 5.4%
Cole Taylor Finance Company, Due 5/03/96 3,848 3,847
Lockheed Martin Corporation, Due 5/06/96 15,000 14,989
Mapco, Inc.:
Due 5/02/96 5,700 5,699
Due 5/06/96 15,000 14,988
------
39,523
See notes to financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
STRONG TOTAL RETURN FUND (continued)
SHARES OR VALUE
PRINCIPAL NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
INTEREST BEARING, DUE UPON DEMAND 0.1%
General Mills, Inc., 5.02% $ 90 $ 90
Sara Lee Corporation, 5.01% 668 668
------
758
------
Total Commercial Paper 40,281
UNITED STATES GOVERNMENT ISSUES 0.0%
United States Treasury Bills, Due 5/30/96 500 498
------
TOTAL CASH EQUIVALENTS (COST $40,779) 40,779
TOTAL INVESTMENTS IN SECURITIES ------
(COST $664,681) 99.6% 737,971
Other Assets and Liabilities, Net 0.4% 2,897
--------
NET ASSETS 100.0% $740,868
========
OPTIONS
- -------
PREMIUMS
NUMBER (In Thousands)
- --------------------------------------------------------------------------------
Options outstanding at Beginning of Period 1,000 $119
Options written during the period 2,200 543
Options expired (1,000) (119)
Options closed (2,200) (543)
------- -----
Options outstanding at End of Period -- --
======= =====
Closed and expired options resulted in a capital gain (in thousands) of $345.
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------
United States............................... 94.6%
United Kingdom.............................. 3.4%
Canada...................................... 1.1%
Ireland..................................... 0.3%
Italy....................................... 0.2%
Other Assets and Liabilities, Net........... 0.4%
------
Total 100.0%
======
- --------------------------------------------------------------------------------
STRONG GROWTH & INCOME FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 68.8%
AEROSPACE & DEFENSE 4.1%
Boeing Company 500 $ 41
B.F. Goodrich & Company 1,020 40
Rockwell International Corporation 800 47
Sundstrand Corporation 1,000 37
United Technologies Corporation 300 33
------
198
AUTOMOBILE 0.6%
Ford Motor Company 600 22
General Motors Corporation 190 10
------
32
BANK - MONEY CENTER 1.0%
Chase Manhattan Corporation 700 48
BANK - REGIONAL 1.1%
First Tennessee National Corporation 1,000 33
Signet Banking Corporation 900 22
------
55
BANK - SUPER REGIONAL 1.7%
Bank of New York, Inc. 800 39
PNC Bank Corporation 1,530 46
------
85
BEVERAGE - SOFT DRINK 0.5%
PepsiCo, Inc. 400 26
BROKERAGE & INVESTMENT MANAGEMENT 3.5%
Equity Residential Properties Trust 1,000 32
Felcor Suite Hotels, Inc. 1,450 42
First Industrial Realty Trust, Inc. 350 9
Oasis Residential, Inc. 800 18
Standard & Poors Depositary Receipt Trust Unit
Series 1 1,100 72
------
173
CHEMICAL 0.9%
Monsanto Company 300 45
CHEMICAL - SPECIALTY 0.8%
W.R. Grace & Company 400 31
Wellman, Inc. 300 7
------
38
COMMERCIAL SERVICE 2.7%
Avery Dennison Corporation 700 40
Data Processing Resources Corporation (b) 100 3
Equifax, Inc. 1,500 37
FlightSafety International, Inc. 500 28
Pittston Company Brinks Group 900 25
------
133
COMPUTER - PERSONAL & WORKSTATION 0.4%
Sun Microsystems, Inc. (b) 400 22
COMPUTER SERVICE 2.4%
American Management Systems, Inc. (b) 1,500 40
Ceridian Corporation (b) 500 24
General Motors Corporation Class E 900 51
Sykes Enterprises, Inc. (b) 100 3
------
118
COMPUTER SOFTWARE 5.3%
BMC Software, Inc. (b) 300 18
Computer Associates International, Inc. 600 44
Cylink Corporation (b) 500 9
Documentum, Inc. (b) 500 23
I2 Technologies, Inc. (b) 100 4
Microsoft Corporation (b) 200 23
Raptor Systems, Inc. (b) 800 26
Segue Software, Inc. (b) 100 3
Sterling Commerce, Inc. (b) 700 24
Sterling Software, Inc. (b) 500 39
Vanstar Corporation (b) 3,000 41
Workgroup Technology Corporation (b) 100 3
------
257
See notes to financial statements.
21
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES(continued) April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
STRONG GROWTH & INCOME FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
COSMETIC & PERSONAL CARE 0.6%
Avon Products, Inc. 350 $ 31
DIVERSIFIED OPERATIONS 5.2%
Alco Standard Corporation 400 23
Allied Signal, Inc. 700 41
ITT Industries, Inc. 700 19
Lockheed Martin Corporation 600 49
Olin Corporation 150 13
Tenneco, Inc. 800 44
Textron, Inc. 400 34
Whitman Corporation 1,300 33
------
256
ELECTRIC POWER 0.2%
Allegheny Power Systems, Inc. 350 10
ELECTRICAL EQUIPMENT 0.8%
General Electric Company 500 39
ELECTRONIC INSTRUMENTATION 1.0%
Millipore Corporation 1,200 50
ELECTRONIC PARTS DISTRIBUTION 0.6%
Avnet, Inc. 600 32
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.5%
Raychem Corporation 300 23
ENGINEERING & CONSTRUCTION 0.7%
Fluor Corporation 550 36
FINANCE - MISCELLANEOUS 2.6%
Capital One Financial Corporation 1,100 33
First Data Corporation 500 38
First USA Paymentech, Inc. (b) 100 4
MBNA Corporation 1,200 34
Medaphis Corporation (b) 400 18
------
127
FOOD 1.0%
Dole Food Company, Inc. 1,200 48
HEALTHCARE - DRUG/DIVERSIFIED 4.0%
American Home Products Corporation 350 37
Elan Corporation PLC ADR (b) 600 40
Ivax Corporation 800 23
Johnson & Johnson 300 28
Eli Lilly and Company 600 35
Pfizer, Inc. 500 35
------
198
HEALTHCARE - INSTRUMENTATION 1.0%
Arthrocare Corporation (b) 800 20
Heartport, Inc. (b) 100 4
Medtronic, Inc. 500 26
------
50
HEALTHCARE - MEDICAL SUPPLY 1.6%
Becton, Dickinson & Company 450 37
NCS Healthcare, Inc. Class A (b) 1,200 40
------
77
HEALTHCARE - PATIENT CARE 1.8%
Community Health Systems, Inc. (b) 500 22
Foundation Health Corporation (b) 1,000 39
Healthsouth Corporation (b) 700 26
------
87
HEALTHCARE - PRODUCT 1.1%
Baxter International, Inc. 750 33
Boston Scientific Corporation (b) 250 11
Guidant Corporation 150 8
------
52
HOUSEHOLD APPLIANCE & FURNISHINGS 0.8%
Harman International Industries, Inc. 800 38
HOUSING RELATED 0.2%
Danaher Corporation 300 12
INSURANCE - PROPERTY & CASUALTY 0.3%
Partners RE Holdings, Ltd. ADR 440 13
LEISURE PRODUCT 0.3%
Harley-Davidson, Inc. 300 13
LEISURE SERVICE 0.8%
ITT Corporation Nevada (b) 600 37
MACHINERY - AGRICULTURE 0.4%
Deere & Company 500 20
MEDIA - RADIO/TV 0.8%
United States Satellite Broadcasting, Inc. Class A (b) 500 17
Viacom, Inc. (b) 600 24
------
41
METAL PRODUCTS & FABRICATION 0.4%
Illinois Tool Works, Inc. 300 20
MORTGAGE & RELATED SERVICE 0.8%
Green Tree Financial Corporation 1,100 37
NATURAL GAS DISTRIBUTION 1.9%
Columbia Gas Systems, Inc. 500 24
Enron Corporation 800 32
Enron Global Power & Pipelines LLC 500 12
NGC Corporation 1,500 23
------
91
OFFICE AUTOMATION 0.9%
Danka Business Systems PLC Sponsored ADR 150 7
Xerox Corporation 255 38
------
45
OIL - INTERNATIONAL INTEGRATED 0.5%
Royal Dutch Petroleum Company 155 22
OIL - NORTH AMERICAN INTEGRATED 1.2%
Ashland, Inc. 1,200 49
USX-Marathon Group 500 11
------
60
OIL WELL EQUIPMENT & SERVICE 2.5%
Baker Hughes, Inc. 1,200 38
Halliburton Company 700 40
Schlumberger, Ltd. 500 44
------
122
PAPER & FOREST PRODUCTS 1.0%
The Mead Corporation 900 50
PERSONAL & COMMERCIAL LENDING 0.3%
Household International, Inc. 230 16
RETAIL - SPECIALTY 2.6%
Barnett, Inc. (b) 100 2
CUC International, Inc. (b) 1,000 33
Corporate Express, Inc. (b) 900 33
Hughes Supply, Inc. 400 14
Melville Corporation 1,100 43
------
125
TELECOMMUNICATION EQUIPMENT 1.2%
Harris Corporation 550 34
Newbridge Networks Corporation (b) 400 26
------
60
TELECOMMUNICATION SERVICE 2.9%
Comsat Corporation 400 12
MCI Communications Corporation 1,700 50
Orange PLC ADR (b) 100 2
PanAmSat Corporation (b) 800 27
Sprint Corporation 1,200 50
------
141
See notes to financial statements.
22
<PAGE>
- --------------------------------------------------------------------------------
STRONG GROWTH & INCOME FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)(In
AMOUNT Thousands)
- --------------------------------------------------------------------------------
TELEPHONE 0.9%
Frontier Corporation 1,400 $ 44
TOBACCO 0.4%
Philip Morris Companies, Inc. 200 18
------
TOTAL COMMON STOCKS (COST $3,165) 3,371
CONVERTIBLE PREFERRED STOCKS 5.8%
Alco Standard Corporation Depositary Shares
Representing 1/100 Series BB 6.50% 200 20
Bally Entertainment Corporation 8.00% 1,200 24
Evergreen Media Corporation $3.00 100 8
Greenfield Capital Trust 6.00% (Acquired 4/18/96;
Cost $50) (d) 1,000 57
SCI Financial LLC Terminal Convertible Shares
Series A $3.125 500 44
Sun, Inc. Depositary Shares Representing 1/2
Series A $1.80 1,100 34
Trans World Airlines, Inc. (Acquired 3/18/96,
4/18/96; Cost $47)(d) 800 44
Wang Labs, Inc. Depositary Shares Representing
1/20 Series B 6.50%(Acquired 2/21/96 - 4/22/96;
Cost $54) (d) 1,000 54
------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $275) 285
CONVERTIBLE BONDS 6.0%
Career Horizons, Inc. Senior Notes, 7.00%,
Due 11/01/02 $ 10 21
Delta Airlines Subordinated Notes, 3.23%,
Due 6/15/03 25 26
Federated Department Stores, Inc. Subordinated
Notes, 5.00%, Due 10/01/03 10 11
Magna International, Inc. Yankee Subordinated
Debentures, 5.00%, Due 10/15/02 10 10
Quintiles Transnational Subordinated Notes, 4.25%,
Due 5/31/00 (Acquired 4/23/96; Cost $50) (d) (e) 50 54
Sanifill, Inc. Subordinated Debentures, 5.00%,
Due 3/01/06 30 33
Staples, Inc. Subordinated Debentures, 4.50%,
Due 10/01/00 (Acquired 4/22/96; Cost $33) (d) 30 32
Tele-Communications International, Inc.
Subordinated Debentures, 4.50%, Due 2/15/06 20 19
Tenet Healthcare Corporation Subordinated
Notes, 6.00%, Due 12/01/05 45 49
United States Filter Corporation Subordinated Notes,
6.00%, Due 9/15/05 (Acquired 2/01/96-4/02/96;
Cost $38) (d) 31 39
------
TOTAL CONVERTIBLE BONDS (COST $283) 294
UNITED STATES GOVERNMENT ISSUES 0.6%
United States Treasury Bonds, 6.875%, Due 8/15/25
(COST $35) 31 31
CASH EQUIVALENTS (a) 19.6%
COMMERCIAL PAPER 1.2%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.03% 8 8
Pitney Bowes Credit Corporation, 5.03% 9 9
Wisconsin Electric Power Company, 5.07% 43 43
------
60
REPURCHASE AGREEMENTS 12.3%
Cantor Fitzgerald & Company, Inc. (Collateralized
by: $90 United States Treasury Notes, 5.75%,
Due 9/30/97; $418 United States Treasury Notes,
6.125%, Due 9/30/00; and $155 United States
Treasury Note Strips, Due 6/20/96) 5.34%,
Due 5/01/96 (f) 600 600
UNITED STATES GOVERNMENT ISSUES 6.1%
United States Treasury Bills, Due 5/02/96 300 300
------
TOTAL CASH EQUIVALENTS (COST $960) 960
TOTAL INVESTMENTS IN SECURITIES ------
(COST $4,718) 100.8% 4,941
Other Assets and Liabilities, Net (0.8%) (39)
------
NET ASSETS 100.0% $4,902
======
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------
United States......................... 98.9%
Ireland............................... 0.8%
Netherlands........................... 0.4%
Bermuda............................... 0.3%
Canada................................ 0.2%
United Kingdom........................ 0.2%
Other Assets and Liabilities, Net..... (0.8%)
------
Total 100.0%
======
LEGEND
------
(a) Cash equivalents includes any security which has a maturity of less than
one year.
(b) Non-income producing security.
(c) All or a portion of security pledged to cover margin requirements for
futures contracts.
(d) Restricted security.
(e) All or a portion of security is When-Issued
(f) The Funds may engage in repurchase agreements where the
underlying collateral consists of U.S. Government securities which are
maintained in a segregated account with a custodian. The market value of
the collateral must exceed the principal amount by at least two percent
on a daily basis.
All principal amounts and costs are stated in thousands. Percentages are stated
as a percent of net assets.
CURRENCY ABBREVIATIONS
----------------------
FRF French Franc
JPY Japanese Yen
See notes to financial statements.
23
<PAGE>
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
For the Period Ended April 30, 1996 (Unaudited) (Note 1)
<TABLE>
<CAPTION>
(In Thousands)
STRONG ASSET STRONG EQUITY STRONG AMERICAN
ALLOCATION FUND INCOME FUND UTILITIES FUND
--------------- ------------- ---------------
<S> <C> <C> <C>
INCOME:
Dividends $ 824 $ 39 $ 2,497
Interest 6,044 49 363
----- -- -----
Total Income 6,868 88 2,860
===== == =====
EXPENSES:
Investment Advisory Fees 1,061 22 488
Custodian Fees 83 6 23
Shareholder Servicing Costs 275 5 158
Reports to Shareholders 93 6 26
Other 55 4 53
----- -- -----
Total Expenses 1,567 43 748
----- -- -----
NET INVESTMENT INCOME 5,301 45 2,112
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 14,042 (8) 5,373
Futures Contracts, Options and Forward
Foreign Currency Contracts (90) (22) --
Foreign Currencies (1) -- --
Change in Unrealized Appreciation/Depreciation on:
Investments 484 383 (1,466)
Futures Contracts, Options and Forward
Foreign Currency Contracts 534 -- --
Foreign Currencies 1 -- --
------ ---- ------
NET GAIN 14,970 353 3,907
------ ---- ------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $20,271 $398 $6,019
======= ==== ======
</TABLE>
<TABLE>
<CAPTION>
STRONG TOTAL STRONG GROWTH
RETURN FUND & INCOME FUND
------------ -------------
<S> <C> <C>
INCOME:
Dividends $ 5,841 $ 8
Interest 2,126 16
----- --
Total Income 7,967 24
EXPENSES:
Investment Advisory Fees 2,825 7
Custodian Fees 52 4
Shareholder Servicing Costs 771 3
Reports to Shareholders 239 1
Other 69 1
----- --
Total Expenses 3,956 16
----- --
NET INVESTMENT INCOME 4,011 8
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 84,376 52
Futures Contracts, Options and Forward Foreign Currency Contracts (62) --
Change in Unrealized Appreciation/Depreciation on:
Investments (5,760) 223
Futures Contracts, Options and Forward Foreign Currency Contracts (85) --
------- ----
NET GAIN 78,469 275
------- ----
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $82,480 $283
======= ====
</TABLE>
See notes to financial statements.
24
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
April 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Amounts)
STRONG ASSET STRONG EQUITY STRONG AMERICAN
ALLOCATION FUND INCOME FUND UTILITIES FUND
--------------- ----------- --------------
<S> <C> <C> <C>
ASSETS:
Investments in Securities, at Value
(Cost of $263,495, $17,108 and $128,541, respectively) $276,040 $ 17,491 $137,675
Receivable from Brokers for Securities Sold 3,764 16 90
Dividends and Interest Receivable 1,976 16 708
Other Assets -- 29 --
-------- ------ -------
Total Assets 281,780 17,552 138,473
LIABILITIES:
Payable to Brokers for Securities Purchased 11,345 196 434
Accrued Operating Expenses and Other Liabilities 545 44 201
-------- -------- --------
Total Liabilities 11,890 240 635
-------- -------- --------
NET ASSETS $269,890 $ 17,312 $137,838
======== ======== ========
Capital Shares
Authorized 300,000 300,000 300,000
Outstanding 13,350 1,548 11,123
NET ASSET VALUE PER SHARE $ 20.22 $ 11.18 $ 12.39
======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
STRONG TOTAL STRONG GROWTH
RETURN FUND & INCOME FUND
----------- -------------
<S> <C> <C>
ASSETS:
Investments in Securities, at Value (Cost of $664,681
and $4,718, respectively) $737,971 $ 4,941
Receivable from Brokers for Securities Sold 50,655 58
Dividends and Interest Receivable 984 5
Other Assets 46 34
------- -----
Total Assets 789,656 5,038
LIABILITIES:
Payable to Brokers for Securities Purchased 48,059 105
Accrued Operating Expenses and Other Liabilities 729 31
------ -------
Total Liabilities 48,788 136
-------- -------
NET ASSETS $740,868 $ 4,902
======== =======
Capital Shares
Authorized 300,000 300,000
Outstanding 24,699 430
NET ASSET VALUE PER SHARE $30.00 $11.40
====== ======
</TABLE>
See notes to financial statements.
25
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Periods Ended April 30, 1996 (Unaudited) and October 31, 1995 (Note 1)
<TABLE>
<CAPTION>
(In Thousands)
STRONG ASSET STRONG EQUITY STRONG AMERICAN
ALLOCATION FUND INCOME FUND UTILITIES FUND
--------------- ----------- --------------
APRIL 30, 1996 OCT. 31, 1995 APRIL 30, 1996 APRIL 30, 1996 OCT.31,1995
-------------- ------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 5,301 $ 8,611 $ 45 $ 2,112 $ 1,724
Net Realized Gain (Loss) 13,951 17,629 (30) 5,373 222
Change in Unrealized Appreciation/Depreciation 1,019 12,749 383 (1,466) 12,628
----- ------ --- ------ ------
Increase in Net Assets Resulting from Operations 20,271 38,989 398 6,019 14,574
CAPITAL SHARE TRANSACTIONS 10,039 (19,395) 16,947 42,002 40,693
DISTRIBUTIONS:
From Net Investment Income (6,097) (7,519) (33) (1,879) (1,515)
From Net Realized Gains (15,045) -- -- -- --
------- ------ ------ ------ ------
TOTAL INCREASE IN NET ASSETS 9,168 12,075 17,312 46,142 53,752
NET ASSETS:
Beginning of Period 260,722 248,647 -- 91,696 37,944
------- ------- ------- -------- -------
End of Period $269,890 $260,722 $17,312 $137,838 $91,696
======== ======== ======= ======== =======
</TABLE>
<TABLE>
<CAPTION>
STRONG TOTAL STRONG GROWTH
RETURN FUND & INCOME FUND
----------- -------------
APRIL 30, 1996 OCT. 31, 1995 APRIL 30, 1996
-------------- ------------- --------------
<S> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 4,011 $ 6,162 $ 8
Net Realized Gain 84,314 72,510 52
Change in Unrealized Appreciation/Depreciation (5,845) 33,837 223
------ ------ ---
Increase in Net Assets Resulting from Operations 82,480 112,509 283
CAPITAL SHARE TRANSACTIONS 21,555 (41,908) 4,628
DISTRIBUTIONS:
From Net Investment Income (4,312) (6,162) (9)
In Excess of Net Investment Income (14) (295) --
From Net Realized Gains (29,799) -- --
------- ------ ------
TOTAL INCREASE IN NET ASSETS 69,910 64,144 4,902
NET ASSETS:
Beginning of Period 670,958 606,814 --
------- ------- ------
End of Period $740,868 $670,958 $4,902
======== ======== ======
</TABLE>
See notes to financial statements.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
April 30, 1996 (Unaudited)
1. ORGANIZATION
The accompanying financial statements represent the Strong Conservative
Equity Funds, which include the following diversified and non-diversified,
open-end management investment companies registered under the Investment
Company Act of 1940:
- Strong Asset Allocation Fund, Inc.
- Strong Equity Income Fund (a series of Strong Conservative Equity Funds,
Inc.)
- Strong American Utilities Fund (a series of Strong Conservative Equity
Funds, Inc.)
- Strong Total Return Fund, Inc.
- Strong Growth & Income Fund(a series of Strong Conservative Equity Funds,
Inc.)
The Board of Directors of the Funds approved changing the Strong Asset
Allocation Fund, Inc., Strong American Utilities Fund, and the Strong Total
Return Fund, Inc. fiscal year-ends from December 31 to October 31 in 1995.
The inception date for the Strong Equity Income Fund and the Strong Growth &
Income Fund was December 29, 1995.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.
(A) Security Valuation -- Portfolio securities traded primarily on a
principal securities exchange are valued at the last reported sales
price or the mean between the latest bid and asked prices where no last
sales price is available. Securities traded over-the-counter are valued
at the mean of the latest bid and asked prices or the last reported
sales price. Debt securities not traded on a principal securities
exchange are valued through valuation obtained from a commercial
pricing service, otherwise sale or bid prices are used. Securities for
which market quotations are not readily available are valued at fair
value as determined in good faith under consistently applied procedures
established by and under the general supervision of the Board of
Directors. Securities which are purchased within 60 days of their
stated maturity are valued at amortized cost, which approximates
current value.
The Funds may own certain investment securities which are restricted as
to resale. These securities are valued after giving due consideration
to pertinent factors, including recent private sales, market conditions
and the issuer's financial performance. The Funds generally bear the
costs, if any, associated with the disposition of restricted
securities. Aggregate cost and fair value of these restricted
securities held at April 30, 1996 were as follows (in thousands):
STRONG ASSET STRONG EQUITY STRONG TOTAL
ALLOCATION FUND INCOME FUND RETURN FUND
--------------- ----------- ------------
Aggregate Cost $17,420 $444 $17,735
Aggregate Fair Value 17,771 465 17,879
Percent of Net Assets 6.6% 2.7% 2.4%
STRONG GROWTH
& INCOME FUND
-------------
Aggregate Cost $272
Aggregate Fair Value 280
Percent of Net Assets 5.7%
(B) Federal Income and Excise Taxes and Distributions to Shareholders -- It
is the Funds' policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of their taxable income to their
shareholders in a manner which results in no tax cost to the Funds.
Therefore, no Federal income or excise tax provision is required.
The character of distributions made during the year from net investment
income or net realized gains may differ from the characterization for
Federal income tax purposes due to differences in the recognition of
income and expense items for financial statement and tax purposes.
Where appropriate, reclassifications between net asset accounts are
made for such differences that are permanent in nature.
(C) Realized Gains and Losses on Investment Transactions -- Gain or loss
realized on investment transactions is determined by comparing the
identified cost of the security lot sold with the net sales proceeds.
(D) Futures -- Upon entering into a futures contract, the Funds pledge to
the broker cash, U.S. government securities or other liquid, high-grade
debt obligations equal to the minimum "initial margin" requirements of
the exchange. The Funds also receive from or pay to the broker an
amount of cash equal to the daily fluctuation in the value of the
contract. Such receipts or payments are known as "variation margin,"
and are recorded as unrealized gains or losses. When the futures
contract is closed, a realized gain or loss is recorded equal to the
difference between the value of the contract at the time it was opened
and the value at the time it was closed.
(E) Options -- Premiums received by the Funds upon writing put or call
options are recorded as an asset with a corresponding liability which
is subsequently adjusted to the current market value of the option.
When an option expires, is exercised, or is closed, the Funds realize a
gain or loss, and the liability is eliminated. The Funds continue to
bear the risk of adverse movements in the price of the underlying asset
during the period of the option, although any potential loss during the
period would be reduced by the amount of the option premium received.
(F) Foreign Currency Translation -- Investment securities and other assets
and liabilities initially expressed in foreign currencies are converted
to U.S. dollars based upon current exchange rates. Purchases and sales
of foreign investment securities and income are converted to U.S.
dollars based upon currency exchange rates prevailing on the respective
dates of such transactions. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected
as a component of such gains or losses.
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS(continued)
- --------------------------------------------------------------------------------
April 30, 1996 (Unaudited)
(G) Forward Foreign Currency Exchange Contracts -- Forward foreign currency
exchange contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the Funds record
an exchange gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it was
closed.
(H) Additional Investment Risk -- The use of futures contracts, options,
foreign denominated assets and forward currency contracts for purposes
of hedging the Funds' investment portfolios involves, to varying
degrees, elements of market risk in excess of the amount recognized in
the statement of assets and liabilities. The predominant risk with
futures contracts is an imperfect correlation between the value of the
contracts and the underlying securities. Foreign denominated assets and
forward currency contracts may involve greater risks than domestic
transactions, including currency, political and economic, regulatory
and market risks.
(I) Other -- Investment security transactions are recorded as of the trade
date. Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Interest income is recorded on the accrual basis
and includes amortization of premium and discounts.
3. NET ASSETS
Net assets as of April 30, 1996 were as follows (in thousands):
STRONG ASSET STRONG EQUITY
ALLOCATION FUND INCOME FUND
--------------- -----------
Capital Stock $242,931 $16,947
Undistributed Net Investment Income (Loss) 396 12
Undistributed Net Realized Gain (Loss) 13,696 (30)
Net Unrealized Appreciation 12,867 383
-------- -------
$269,890 $17,312
======== =======
STRONG AMERICAN STRONG TOTAL
UTILITIES FUND RETURN FUND
--------------- ------------
Capital Stock $124,792 $586,857
Undistributed Net Investment Income (Loss) 443 (4)
Undistributed Net Realized Gain (Loss) 3,469 80,725
Net Unrealized Appreciation 9,134 73,290
-------- --------
$137,838 $740,868
======== ========
STRONG GROWTH
& INCOME FUND
-------------
Capital Stock $4,628
Undistributed Net Investment Income (Loss) (1)
Undistributed Net Realized Gain (Loss) 52
Net Unrealized Appreciation 223
------
$4,902
======
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the periods ended April 30, 1996
and October 31, 1995 were as follows (in thousands):
1996 1995
---- ----
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
STRONG ASSET ALLOCATION FUND
Shares Sold 1,065 $ 21,391 1,503 $ 28,706
Dividends Reinvested 1,034 20,350 374 7,226
Shares Redeemed (1,584) (31,702) (2,922) (55,327)
------ ------- ------ -------
515 $ 10,039 (1,045) ($19,395)
====== ======== ====== =========
STRONG EQUITY INCOME FUND
Shares Sold 1,650 $ 18,078
Dividends Reinvested 3 33
Shares Redeemed (105) (1,164)
----- ------
1,548 $ 16,947
===== ========
STRONG AMERICAN UTILITIES FUND
Shares Sold 9,235 $115,742 7,396 $ 78,125
Dividends Reinvested 141 1,755 130 1,385
Shares Redeemed (6,067) (75,495) (3,722) (38,817)
------ ------- ------ -------
3,309 $ 42,002 3,804 $ 40,693
===== ======== ===== ========
STRONG TOTAL RETURN FUND
Shares Sold 2,988 $ 87,265 4,004 $105,937
Dividends Reinvested 1,178 33,387 234 6,277
Shares Redeemed (3,414) (99,097) (5,976) (154,122)
------ ------- ------ --------
752 $ 21,555 (1,738)($ 41,908)
===== ======== ====== =========
STRONG GROWTH & INCOME FUND
Shares Sold 531 $ 5,744
Dividends Reinvested 1 7
Shares Redeemed (102) (1,123)
---- ------
430 $ 4,628
=== ========
28
<PAGE>
- --------------------------------------------------------------------------------
April 30, 1996 (Unaudited)
5. RELATED PARTY TRANSACTIONS
Strong Capital Management, Inc. (the "Advisor"), with whom certain officers
and directors of the Funds are affiliated, provides investment advisory
services and shareholder recordkeeping and related services to the Funds.
Investment advisory fees, which are established by terms of the Advisory
Agreements, are based on the following annualized rates of the average daily
net assets: Strong American Utilities Fund .75%, Strong Equity Income and
Strong Growth & Income .80%, Strong Asset Allocation Fund and Strong Total
Return Fund .85% of the first $35 million and .80% thereafter. Advisory fees
are subject to reimbursement by the Advisor if the Funds' operating expenses
exceed certain levels. Shareholder recordkeeping and related service fees
are based on contractually established rates for each open and closed
shareholder account. In addition, the Advisor is compensated for certain
other services related to costs incurred for reports to shareholders.
W.H. Reaves & Co., Inc.(the "Subadvisor") manages the investments of the
Strong American Utilities Fund under an agreement with Strong Capital
Management, Inc. The Subadvisor is compensated by the Advisor (not the
Fund) and bears all of its own expenses in providing subadvisory services.
In addition, the Subadvisor directly effects purchases and sales of
securities for the Fund. In conjunction therewith, brokerage commissions
paid by the Fund for the period ended April 30, 1996 totaled (in thousands)
$235.
Certain information regarding related party transactions for the period
ended April 30, 1996 is as follows (in thousands):
STRONG ASSET STRONG EQUITY
ALLOCATION FUND INCOME FUND
--------------- -----------
Payable to Advisor at April 30, 1996 $168 $11
Other Shareholder Servicing Expenses
Paid to Advisor 6 --
Unaffiliated Directors' Fees 1 --
STRONG AMERICAN STRONG TOTAL
UTILITIES FUND RETURN FUND
-------------- -----------
Payable to Advisor at April 30, 1996 $122 $486
Other Shareholder Servicing Expenses
Paid to Advisor 2 16
Unaffiliated Directors' Fees 1 3
STRONG GROWTH
& INCOME FUND
-------------
Payable to Advisor at April 30, 1996 $3
Other Shareholder Servicing Expenses
Paid to Advisor -
Unaffiliated Directors' Fees -
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the period
ended April 30, 1996 were as follows (in thousands):
STRONG ASSET STRONG EQUITY STRONG AMERICAN
ALLOCATION FUND INCOME FUND UTILITIES FUND
--------------- ----------- --------------
Purchases:
U.S. Government and Agency $184,739 $ 67 $ --
Other 510,438 18,097 92,390
Sales:
U.S. Government and Agency 212,604 56 --
Other 462,429 5,664 50,969
STRONG TOTAL STRONG GROWTH
RETURN FUND & INCOME FUND
------------ --------------
Purchases:
U.S. Government and Agency $ 27,311 $ 147
Other 1,347,465 5,245
Sales:
U.S. Government and Agency 31,071 112
Other 1,338,343 1,576
7. INCOME TAX INFORMATION
At April 30, 1996, the investment cost and gross unrealized appreciation and
depreciation on investments for Federal income tax purposes were as follows
(in thousands):
STRONG ASSET STRONG EQUITY STRONG AMERICAN
ALLOCATION FUND INCOME FUND UTILITIES FUND
--------------- ----------- --------------
Aggregate Investment Cost $263,898 $17,107 $128,581
======== ======= ========
Aggregate Unrealized:
Appreciation $ 16,714 $ 550 $ 12,229
Depreciation (4,572) (167) (3,135)
------ ---- ------
$ 12,142 $ 383 $ 9,094
======== ======= ========
STRONG TOTAL STRONG GROWTH
RETURN FUND &INCOME FUND
----------- ------------
Aggregate Investment Cost $664,929 $4,718
======== ======
Aggregate Unrealized:
Appreciation $ 77,202 $ 273
Depreciation (4,728) (49)
------ ---
$ 72,474 $ 224
======== ======
29
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
<TABLE>
<CAPTION>
SIX MONTHS PERIOD ENDED
ENDED APRIL 30 OCT. 31 YEAR ENDED
STRONG ASSET ALLOCATION FUND 1996(a) 1995(a) 1994 1993 1992 1991
-------------- ----------- ---- ---- ---- ----
(UNAUDITED) (NOTE 1)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 20.31 $ 17.91 $ 19.06 $ 18.49 $ 19.68 $ 17.50
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income 0.40 0.66 0.70 0.82 0.87 0.94
Net Realized and Unrealized Gains
(Losses) on Investments 1.16 2.32 (0.99) 1.81 (0.25) 2.41
---- ---- ----- ---- ----- ----
TOTAL FROM INVESTMENT OPERATIONS 1.56 2.98 (0.29) 2.63 0.62 3.35
LESS DISTRIBUTIONS
- ------------------
From Net Investment Income (0.47) (0.58) (0.70) (0.82) (0.87) (0.97)
From Net Realized Gains (1.18) -- -- (1.24) (0.94) (0.20)
In Excess of Net Realized Gains -- -- (0.16) -- -- --
Return of Capital -- -- -- -- -- --
---- ---- ----- ---- ----- ----
TOTAL DISTRIBUTIONS (1.65) (0.58) (0.86) (2.06) (1.81) (1.17)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 20.22 $ 20.31 $ 17.91 $ 19.06 $ 18.49 $ 19.68
======== ======== ======== ======== ======== ========
Total Return +8.0% +16.8% - 1.5% +14.5% +3.2% +19.6%
Net Assets, End of Period (In Thousands) $269,890 $260,722 $248,647 $254,439 $208,368 $214,951
Ratio of Expenses to Average Net Assets 1.2%* 1.2%* 1.2% 1.2% 1.2% 1.3%
Ratio of Net Investment Income to Average Net Assets 4.0%* 4.1%* 3.8% 4.2% 4.4% 5.1%
Portfolio Turnover Rate 260.5% 326.8% 359.7% 348.3% 320.4% 418.4%
Average Commission Rate Paid (c) $ 0.0587
<CAPTION>
YEAR ENDED
STRONG ASSET ALLOCATION FUND 1990 1989 1988 1987
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.41 $ 17.57 $ 17.60 $ 22.18
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income 1.12 1.22 1.39 0.85
Net Realized and Unrealized Gains
(Losses) on Investments (0.65) 0.73 0.19 (0.70)
----- ---- ---- -----
TOTAL FROM INVESTMENT OPERATIONS 0.47 1.95 1.58 0.15
LESS DISTRIBUTIONS
- ------------------
From Net Investment Income (1.38) (0.97) (1.38) (1.78)
From Net Realized Gains -- (0.14) -- (2.95)
In Excess of Net Realized Gains -- -- -- --
Return of Capital -- -- (0.23) --
----- ---- ---- -----
TOTAL DISTRIBUTIONS (1.38) (1.11) (1.61) (4.73)
NET ASSET VALUE, END OF PERIOD $ 17.50 $ 18.41 $ 17.57 $ 17.60
======== ======== ======== ========
Total Return +2.8% +11.2% +9.2% - 0.3%
Net Assets, End of Period (In Thousands) $203,562 $240,549 $256,089 $272,899
Ratio of Expenses to Average Net Assets 1.3% 1.3% 1.2% 1.1%
Ratio of Net Investment Income to Average Net Assets 6.1% 6.6% 7.5% 4.2%
Portfolio Turnover Rate 319.6% 206.5% 426.2% 336.5%
</TABLE>
PERIOD
ENDED APRIL 30
STRONG EQUITY INCOME FUND 1996(b)
--------------
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income 0.03
Net Realized and Unrealized Gains
on Investments 1.17
----
TOTAL FROM INVESTMENT OPERATIONS 1.20
LESS DISTRIBUTIONS
- ------------------
From Net Investment Income (0.02)
-----
TOTAL DISTRIBUTIONS (0.02)
-----
NET ASSET VALUE, END OF PERIOD $ 11.18
========
Total Return +12.0%
Net Assets, End of Period (In Thousands) $ 17,312
Ratio of Expenses to Average Net Assets 1.5%*
Ratio of Net Investment Income to Average Net Assets 1.6%*
Portfolio Turnover Rate 68.6%
Average Commission Rate Paid (c) $ 0.0644
* Calculated on an annualized basis.
(a) Total return and portfolio turnover rate are not annualized.
(b) For the period from December 29, 1995 (inception) to April 30, 1996.
Total return and portfolio turnover rate are not annualized.
(c) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
30
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
<TABLE>
<CAPTION>
SIX MONTHS PERIOD ENDED
ENDED APRIL 30 OCT. 31 YEAR ENDED
STRONG AMERICAN UTILITIES FUND 1996 (a) 1995(a) 1994 1993(b)
-------------- ------- ---- -------
(UNAUDITED) (NOTE 1)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.73 $ 9.46 $ 10.19 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income 0.19 0.27 0.46 0.18
Net Realized and Unrealized Gains
(Losses) on Investments 0.65 2.25 (0.73) 0.27
---- ---- ----- ----
TOTAL FROM INVESTMENT OPERATIONS 0.84 2.52 (0.27) 0.45
LESS DISTRIBUTIONS
- ------------------
From Net Investment Income (0.18) (0.25) (0.46) (0.18)
From Net Realized Gains -- -- -- (0.05)
In Excess of Net Realized Gains -- -- -- (0.03)
---- ---- ----- ----
TOTAL DISTRIBUTIONS (0.18) (0.25) (0.46) (0.26)
----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 12.39 $ 11.73 $ 9.46 $ 10.19
======== ======= ======= =======
Total Return 7.2% +26.9% - 2.6% + 4.5%
Net Assets, End of Period (In Thousands) $137,838 $91,696 $37,944 $32,457
Ratio of Expenses to Average Net Assets 1.1%* 1.2%* 0.5% 0.0%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 1.1%* 1.2%* 1.6% 1.4%*
Ratio of Net Investment Income to Average Net Assets 3.2%* 3.4%* 4.8% 5.6%*
Portfolio Turnover Rate 44.0% 56.4% 105.4% 89.3%
Average Commission Rate Paid (c) $ 0.0600
</TABLE>
* Calculated on an annualized basis.
(a) Total return and portfolio turnover rate are not annualized
(b) Inception date is July 1, 1993. Total return and portfolio turnover rate
are not annualized.
(c) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
31
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
<TABLE>
<CAPTION>
SIX MONTHS PERIOD ENDED
ENDED APRIL 30 OCT. 31 YEAR ENDED
STRONG TOTAL RETURN FUND 1996(a) 1995(a) 1994 1993 1992 1991
------- ------- ---- ---- ---- ----
(UNAUDITED) (NOTE 1)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 28.02 $ 23.62 $ 24.30 $ 20.17 $ 20.24 $ 15.34
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income 0.17 0.26 0.25 0.33 0.18 0.22
Net Realized and Unrealized Gains
(Losses) on Investments 3.24 4.41 (0.59) 4.18 (0.08) 4.90
---- ---- ----- ---- ----- ----
TOTAL FROM INVESTMENT OPERATIONS 3.41 4.67 (0.34) 4.51 0.10 5.12
LESS DISTRIBUTIONS
- ------------------
From Net Investment Income (0.18) (0.26) (0.26) (0.33) (0.17) (0.22)
In Excess of Net Investment Income -- (0.01) (0.08) -- -- --
From Net Realized Gains (1.25) -- -- -- -- --
In Excess of Net Realized Gains -- -- -- (.05) -- --
Returns of Capital -- -- -- -- -- --
---- ---- ----- ---- ----- ----
TOTAL DISTRIBUTIONS (1.43) (0.27) (0.34) (0.38) (0.17) (0.22)
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $ 30.00 $ 28.02 $ 23.62 $ 24.30 $ 20.17 $ 20.24
======== ======== ======== ======== ======== ========
Total Return +12.5% +19.8% - 1.4% +22.5% +0.6% +33.6%
Net Assets, End of Period (In Thousands) $740,868 $670,958 $606,814 $630,349 $587,873 $691,327
Ratio of Expenses to Average Net Assets 1.1%* 1.1%* 1.2% 1.2% 1.3% 1.4%
Ratio of Net Investment Income to Average Net Assets 1.1%* 1.2%* 1.1% 1.4% 0.9% 1.3%
Portfolio Turnover Rate 205.6% 298.8% 290.4% 271.3% 371.8% 426.4%
Average Commission Rate Paid (c) $ 0.0692
<CAPTION>
YEAR ENDED
STRONG TOTAL RETURN FUND 1990 1989 1988 1987
------- ------- ---- ----
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.72 $ 18.96 $ 18.37 $ 21.61
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income 0.95 1.55 1.95 0.97
Net Realized and Unrealized Gains
(Losses) on Investments (2.19) (0.97) 0.85 0.61
----- ----- ---- ----
TOTAL FROM INVESTMENT OPERATIONS (1.24) 0.58 2.80 1.58
LESS DISTRIBUTIONS
- ------------------
From Net Investment Income (1.14) (1.31) (1.96) (1.65)
In Excess of Net Investment Income -- -- -- --
From Net Realized Gains -- (0.51) -- (3.17)
In Excess of Net Realized Gains -- -- -- --
Returns of Capital -- -- (0.25) --
----- ----- ---- ----
Total Distributions (1.14) (1.82) (2.21) (4.82)
----- ----- ----- -----
Net Asset Value, End of Period $ 15.34 $ 17.72 $ 18.96 $ 18.37
======== ========== ========= ========
Total Return -7.1% +2.6% +15.6% + 6.0%
Net Assets, End of Period (In Thousands) $646,579 $1,065,278 $1,005,192 $802,442
Ratio of Expenses to Average Net Assets 1.4% 1.2% 1.2% 1.1%
Ratio of Net Investment Income to Average Net Assets 5.4% 7.7% 10.1% 5.2%
Portfolio Turnover Rate 312.3% 305.3% 281.1% 224.4%
</TABLE>
PERIOD
ENDED APRIL 30
STRONG GROWTH & INCOME FUND 1996(b)
-------
(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net Investment Income 0.02
Net Realized and Unrealized Gains on Investments 1.41
----
TOTAL FROM INVESTMENT OPERATIONS 1.43
LESS DISTRIBUTIONS
------------------
From Net Investment Income (0.03)
-----
TOTAL DISTRIBUTIONS (0.03)
-----
NET ASSET VALUE, END OF PERIOD $ 11.40
=======
Total Return +14.3%
Net Assets, End of Period (In Thousands) $ 4,902
Ratio of Expenses to Average Net Assets 1.9%*
Ratio of Net Investment Income to Average Net Assets 0.9%*
Portfolio Turnover Rate 76.5%
Average Commission Rate Paid (c) $0.0654
* Calculated on an annualized basis.
(a) Total return and portfolio turnover rate are not annualized.
(b) For the period from December 29, 1995 (inception) to April 30, 1996.
Total return and portfolio turnover rate are not annualized.
(c) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
32
<PAGE>
SHAREHOLDER PRIVILIGES*
STRONG FUNDS
[PICTURE OF TELEPHONE]
24-HOUR SERVICE
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.
STRONG FUNDS
[PICTURE OF DOLLAR SIGN]
AUTOMATIC EXCHANGE
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.
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>
Bulk Rate
U.S. Postage
PAID
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.
For a prospectus containing more complete information, including management fees
and expenses, please call 1-800-368-1030. Please read it carefully before
investing or sending money. This annual report does not constitute an offer for
the sale of securities. Strong Funds are offered for sale by prospectus only.
[Strong Funds Logo]
STRONG FUNDS DISTRIBUTORS, INC.
P.O. Box 2936
Milwaukee, Wisconsin 53201
http://www.strong-funds.com
