<PAGE>
THE STRONG
CONSERVATIVE [PIE CHART OF ASSET DIVERSIFICATION
EQUITY FUNDS EMPHASIZING STOCKS]
SEMI-ANNUAL REPORT o APRIL 30, 1997
THE STRONG ASSET ALLOCATION FUND
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THE STRONG EQUITY INCOME FUND
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THE STRONG AMERICAN UTILITIES FUND
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THE STRONG TOTAL RETURN FUND
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THE STRONG GROWTH AND INCOME FUND
[STRONG LOGO]
STRONG FUNDS
<PAGE>
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.
[PICTURE OF FOLDER LABELED INVESTMENTS]
Even a simple plan can help you take control of your financial future. Review
your plan once a year, or if your circumstances change.
- ---------------------------------------2----------------------------------------
START INVESTING AS SOON AS POSSIBLE.
[PICTURE OF CLOCK]
Make time a valuable ally. Let it put the power of compounding to work for you,
while helping to reduce your potential investment risk.
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DIVERSIFY YOUR PORTFOLIO.
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION]
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.
[PICTURE OF MEMO REMINDER TO INVEST]
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.
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MAINTAIN A LONG-TERM PERSPECTIVE.
[PICTURE OF GRAPH SLOPING UPWARD]
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.
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CONSIDER STOCKS TO HELP ACHIEVE MAJOR LONG-TERM GOALS.
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION EMPHASIZING STOCKS]
Over time, stocks have provided the more powerful returns needed to help the
value of your investments stay well ahead of inflation.
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KEEP A COMFORTABLE AMOUNT OF CASH IN YOUR PORTFOLIO.
[PICTURE OF DOLLAR SIGN]
To meet current needs, including emergencies, use a money market fund or a bank
account - not your long-term investment assets.
- ---------------------------------------8----------------------------------------
KNOW WHAT YOU'RE BUYING.
[PICTURE OF MAGNIFYING GLASS]
Make sure you understand the potential risks and rewards associated with each of
your investments. Ask questions...request information...make up your own mind.
And choose a fund company that helps you make informed investment decisions.
<PAGE>
THE STRONG
CONSERVATIVE EQUITY FUNDS
SEMI-ANNUAL REPORT o APRIL 30, 1997
AN IMPORTANT NOTE FOR SHAREHOLDERS OF THE ASSET ALLOCATION FUND
EFFECTIVE MAY 23, 1997, RIMAS M. MILAITIS SERVES AS THE SOLE PORTFOLIO MANAGER
OF THE EQUITY PORTION OF THE STRONG ASSET ALLOCATION FUND. As of that same date,
Bradley C. Tank and Jeffrey A. Koch serve as the only portfolio managers of the
bond and cash portions of the Fund.
Mr. Milaitis joined Strong Capital Management in December 1995. Prior to joining
Strong, he managed several conservative equity portfolios at Aon Advisers, Inc.
for four years, as well as serving as an equity trader for two years. Mr.
Milaitis also served as an equity portfolio assistant to the Illinois State
Board of Investment for three years.
Please see pages I-30 and I-31 of the Fund's prospectus for information on the
professional backgrounds of Mr. Tank and Mr. Koch.
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 Assets and Liabilities ...............................23
Statements of Operations ...........................................24
Statements of Changes in Net Assets ................................25
Notes to Financial Statements ......................................27
FINANCIAL HIGHLIGHTS ....................................................31
<PAGE>
THE STRONG ASSET ALLOCATION FUND
WE EXPECT TO FIND GOOD OPPORTUNITIES FOR OUTPERFORMANCE IN BOTH THE BOND
AND STOCK MARKETS GOING FORWARD.
The Strong Asset Allocation Fund seeks high total return consistent with
reasonable risk over the long term. The Fund allocates its assets among a
diversified portfolio of equity securities, bonds, and short-term fixed-income
securities.
For the six months ended April 30, 1997, the Fund posted a total return of
6.30%. Although that's below the returns of the all-stock S&P 500, which
returned 14.72% for the same period, it compares favorably with the Lipper
Flexible Portfolio Funds Index, which posted returns of 5.94% for the six
months.*(1)
===========================================
ASSET ALLOCATION
Based on net assets as of 4-30-97
===========================================
[PIE CHART]
Stocks 62.6%
Convertible Securities 2.1%
Bonds 23.9%
Short-Term Investments 11.4%
This asset allocation does not reflect any
futures positions held by the Fund.
===========================================
A NEW MANAGER FOR STOCKS
Rimas Milaitis has joined the Fund's management team. As equity manager for the
Fund, Rimas will focus more on larger-capitalization stocks. He will follow
much the same style he has applied in the two Strong Funds he manages, the
Strong Equity Income Fund and the Strong Growth and Income Fund. (Discussion of
those two Funds also appears in this report.)
With Rimas' arrival, we have decided to consolidate the entire equity portion of
this Fund into a single, largely domestic, portfolio under his sole management.
Over time, as we identify new opportunities in domestic stocks, we intend to
move assets into them and out of the international portion of our stock
portfolio.
LOOKING BACK
The first six months of the Fund's fiscal year can really be divided into two
periods. First, in November and December 1996, the markets generally rallied as
investors expected growth in the economy to slow to sustainable levels in the
first quarter of 1997. However, by early 1997, the market recognized that the
economy was stronger than previously forecasted. Furthermore, it became apparent
that the Federal Reserve would need to raise short-term interest rates to slow
economic growth and head off potential increases in inflation.
Rates rose significantly after Federal Reserve Chairman Alan Greenspan gave his
Humphrey-Hawkins testimony to Congress in February. In his remarks, Greenspan
gave a strong signal that the Fed would raise the fed funds rate in March--as it
in fact did. The result was significant volatility in both the stock and bond
markets.
Although interest rates at the end of April remained higher than in November,
the markets had stabilized within a month of the Fed's hike. Most investors
appeared to believe that the increase in short-term interest rates needed to
slow economic growth would be relatively small and short-lived.
POSITIONING RELATIVE TO OUR NEW BENCHMARK ALLOCATION
Over the last six months, we held the Fund's stock position near the new
benchmark allocation we adopted on July 1 of last year, which calls for
approximately 60% of assets to be placed in stocks, 35% in bonds, and 5% in
cash. Although we made that change in the benchmark allocation to allow the Fund
to put more assets into equities than before, at times a slight equity
underweighting made sense given the uncertainty in the market.
SLIGHTLY DEFENSIVE ON THE BOND SIDE
In this environment, we have maintained our careful approach to fixed-income
investing. We believe that successful fixed-income management begins with a
top-down analysis of the economy, interest rates, and the supply of and demand
for credit--and ends with extensive security analysis. As with our stock
portfolio, we have also consolidated the management of our bond allocation. Brad
Tank and Jeff Koch will serve as the Fund's fixed-income managers.
2
<PAGE>
Given the current interest rate environment, we are keeping the interest-rate
sensitivity of the bond portion of the portfolio somewhat lower than neutral.
This is not a large-scale shift, but rather one intended to serve as a slight
defensive measure. We remain confident that bonds represent a good value to
investors.
OUTLOOK
Our outlook for the markets generally hinges on the direction of interest rates,
which will be influenced by the pace of economic activity over the near term. As
of the end of April, market sentiment appeared to hold that the Federal Reserve
will only need to make modest adjustments to interest rates in order to achieve
a slowdown in economic growth. We believe there is still some risk of higher
interest rates, though.
The small increase in interest rates in March is unlikely to be enough to slow
this economy in a meaningful way. Therefore, we intend to keep our bond
portfolio's interest-rate positioning somewhat shorter than usual, making it
less sensitive to any future increases in interest rates. However, with
continued strong economic fundamentals and corporate earnings, we expect to find
good opportunities for outperformance in both the bond and stock markets going
forward.
We appreciate your confidence in the Strong Asset Allocation Fund. We look
forward to serving your investment needs in the years to come.
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 4-30-97
================================================================================
[GRAPH]
THE STRONG ASSET S & P 500 Lipper Flexible
ALLOCATION FUND Index * Portfolio Average *
12-81 10,000 10,000 10,000
12-82 13,320 12,154 12,762
12-83 19,344 14,895 15,136
12-84 21,233 15,830 15,783
12-85 25,345 20,852 19,758
12-86 29,818 24,745 22,702
12-87 29,733 26,044 24,312
12-88 32,466 30,369 26,621
12-89 36,103 39,992 31,224
12-90 37,107 38,751 31,047
12-91 44,393 50,557 38,898
12-92 45,823 54,408 41,984
12-93 52,468 59,892 46,553
12-94 51,678 60,683 45,626
12-95 63,028 83,487 57,007
12-96 69,616 102,655 64,691
4-97 70,252 111,701 66,282
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at the Fund's inception, with a similar investment
in the Standard & Poor's 500 Stock Index ("S&P 500") and the Lipper Flexible
Portfolio Average. Results include the reinvestment of all dividends and capital
gains distributions. Performance is historical and does not represent future
results. Investment returns and principal value vary, and you may have a gain or
loss when you sell shares.
================================================================================
===============================
AVERAGE ANNUAL
TOTAL RETURNS(1)
As of 4-30-97
===============================
1-YEAR 7.77%
3-YEAR 11.28%
5-YEAR 9.85%
10-YEAR 8.37%
SINCE INCEPTION 13.56%
(on 12-30-81)
===============================
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market, without regard to company size. The Lipper Flexible Portfolio
Average represents funds which allocate their investments across various
asset classes, including domestic common stocks, bonds, and money market
instruments, with a focus on total return. Source of the S&P index data is
Micropal. Source of the Lipper index data is Lipper Analytical Services,
Inc.
1 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 return reflects annualized change,
while total return reflects aggregate change.
3
<PAGE>
THE STRONG EQUITY INCOME FUND
OUR INTENT IS TO LOWER VOLATILITY AND AIM THIS FUND TOWARD A CONSERVATIVE
POSTURE.
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.
===========================================
ASSET ALLOCATION
Based on net assets as of 4-30-97
===========================================
[PIE CHART]
Common Stocks 93.4%
Convertible Securities 5.0%
Short-Term Investments 1.6%
===========================================
STRONG PERFORMANCE CONTINUED
For the six months ended April 30, the Fund posted a total return of 13.18%.
That's slightly below the 14.72% return of the S&P 500. We come out ahead of our
peer group of funds that share our investment style, the Lipper Equity Income
Funds Index, which returned 10.43% for the same period. As of April 30, assets
under management stood at $79.1 million.*(1)
We achieved this performance while continuing our preference for large,
well-established, dividend-paying companies. We believe these firms offer
investors greater potential stability. These companies' financial strength (and
the resulting flexibility), solid yield support from a steady stream of
dividends, and ready liquidity make them attractive holdings for the core of
this Fund. Our intent is to lower volatility and aim this Fund toward a
conservative posture.
========================================================
FIVE LARGEST HOLDINGS
Based on net assets as of 4-30-97
========================================================
% OF NET
SECURITY INDUSTRY ASSETS
- ---------------------------------------------------------
Pitney Bowes, Inc. Office Automation 1.7%
.........................................................
The Bank of New York Bank-Super Regional 1.5%
Company, Inc.
.........................................................
BankAmerica Corporation Bank-Money Center 1.5%
.........................................................
Philips Electronics Household Appliances
NV ADR and Furnishings 1.5%
.........................................................
Banc One Corporation Bank-Super Regional 1.4%
.........................................................
Please see the Schedule of Investments in Securities for
a complete listing of the Fund's portfolio.
========================================================
AT TIMES A CONTRADICTORY MARKET
Continuing a trend from the preceding year, economic indicators sent somewhat
contradictory signals. In 1997's early months, the stock market disregarded
Federal Reserve Chairman Alan Greenspan's statements regarding its "irrational
exuberance," and appreciated by approximately 10%.
Meanwhile, economic data continued to point to an economy that was in near
perfect balance, with moderate growth, full employment, and modest inflation.
Because investors were uncertain about how long such conditions could persist
and about the future direction of interest rates, the market's ups and downs
were fast and steep.
As 1997 progressed, the market came to the consensus that the Federal Reserve
would have to raise interest rates at least slightly in order to cool growth
down to a sustainable level. The first strong signal that the Fed would raise
rates came when Chairman Greenspan testified before Congress in February.
His statements led to considerable market volatility, followed to an even
greater degree by the market's reaction to the actual increase, which came in
late March. Stock prices moved sharply lower in the aftermath of this hike, but
within a month the Dow Jones Industrial Average had regained virtually all of
the losses it had suffered.
A FOCUS ON LARGE-CAP STOCKS
Our focus on larger companies was helpful during the recent market turbulence.
These companies generally have established, mature businesses, which allows them
to weather times of uncertainty better than newer, smaller firms. Also, because
the stocks of larger companies trade more frequently, their stocks tend to be
less prone to abrupt, sharp changes in price than are smaller, less commonly
traded issues. Finally, the dividend income that these stocks tend to pay also
can support stock prices during market downturns.
The Fund uses the S&P 500 as a benchmark for its weightings in sectors and
industries, varying from those as our own top-down research indicates. We
consistently underweight the technology sector, as that sector offers few or no
dividend-producing securities, and is among the most volatile. As we anticipated
the Fed's rate increase, we lowered the Fund's exposure to the financials sector
from an overweighting to a slight underweighting.
We added somewhat to our holdings in cyclical stocks, in reaction to attractive
prices and an economic environment that seems to have allowed certain
more-cyclical industries to prosper.
4
<PAGE>
OUTLOOK
For the next six months, we anticipate that moderate growth and low inflation
will continue to be the dominant themes. In keeping with that, and with our
overall investment style, we will likely maintain our focus on larger-company
stocks from companies with these attributes: above-average growth in revenues
and earnings, modest debt levels, superior return on equity, positive cash flow,
and shareholder-oriented management.
Much of the direction of the stock market over the balance of the year will
depend on the direction of interest rates and on the rate of growth in the
economy. The gauges of economic growth that I look at point toward an economy
that is in very good shape. Unemployment is low; average hourly earnings are up
modestly from a year ago; consumer demand and confidence are high as well. When,
for the first time in nearly two years, the Federal Reserve increased interest
rates on March 25 by 0.25%, the move was argued by Chairman Greenspan to be
pre-emptive in nature. We can hope that the Federal Reserve's foresight has
indeed subdued any near to intermediate inflationary pressures and thus extended
the life of the current business cycle.
With the market's near historical highs, a degree of caution is warranted even
in a generally positive environment. We will continue to diversify the Fund's
holdings among sectors and industries that we believe can enjoy future revenue
and earnings growth.
Thank you for your investment in the Strong Equity Income Fund. We appreciate
your confidence, and look forward to helping you pursue your financial goals.
Sincerely,
/s/ Rimas Milaitis
Rimas Milaitis
Portfolio Manager
[PHOTO OF RIMAS MILAITIS]
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-29-95 to 4-30-97
================================================================================
[GRAPH]
Lipper
THE STRONG EQUITY S & P 500 Equity Income
INCOME FUND Index * Funds Index *
12-95 10,000 10,000 10,000
3-96 11,053 10,536 10,432
6-96 11,296 11,009 10,700
9-96 11,817 11,349 10,965
12-96 12,810 12,295 11,788
3-97 13,091 12,625 12,038
4-97 13,752 13,379 12,396
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 ("S&P 500") and the Lipper Equity Income Funds
Index. Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
================================================================================
===============================
AVERAGE ANNUAL
TOTAL RETURNS(1)
As of 4-30-97
===============================
1-YEAR 22.74%
SINCE INCEPTION 26.99%
(on 12-29-95)
===============================
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market, without regard to company size. The Lipper Equity Income
Funds Index is an equally-weighted performance index of the largest
qualifying funds in this Lipper category. Source of the S&P 500 index data
is Micropal. Source of the Lipper index data is Lipper Analytical Services,
Inc.
1 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 return reflects annualized change,
while total return reflects aggregate change.
5
<PAGE>
THE STRONG AMERICAN UTILITIES FUND
ENERGY STOCKS CONTINUED TO CONTRIBUTE TO PORTFOLIO PERFORMANCE IN SPITE OF MILD
WINTER WEATHER AND DECLINING OIL AND GAS PRICES.
The Strong American Utilities Fund seeks total return by investing for both
income and capital growth. The Fund invests primarily in the equity securities
of public utility companies headquartered in the United States.(1)
The Fund achieved a total return of 5.71% for the six-month period ended April
30. That figure compared favorably with a loss of 3.45% in the Standard and
Poor's Utility Index and a gain of 4.63% by the Lipper Utility Funds Index.*(2)
===========================================
ASSET ALLOCATION
Based on net assets as of 4-30-97
===========================================
[PIE CHART]
Common Stocks 94.6%
Short-Term Investments 5.4%
===========================================
RISING INTEREST RATES
The interest-rate climate remained challenging during the six-month period as
interest rates, measured by the yield on the 30-year Treasury Bond, rose by the
end of April to 6.96% from 6.64%. The Federal Reserve increased the fed funds
rate by 0.25% on March 25, reinforcing expectations of rising interest rates.
Subsequent to the rate hike, electric utilities experienced a broad-based price
decline while the broad market averages have continued to rise. The resulting
valuation of electric utilities relative to the broad market should provide
downside protection in a falling market, and the opportunity for meaningful
price appreciation in the event of an improving interest-rate climate.
========================================================
FIVE LARGEST HOLDINGS
Based on net assets as of 4-30-97
========================================================
% OF NET
SECURITY INDUSTRY ASSETS
- ---------------------------------------------------------
Ameritech Corporation Telecommunication 10.8%
.........................................................
SBC Communications, Inc. Telecommunication 10.6%
.........................................................
TECO Energy Electric Utility 6.2%
.........................................................
SCANA Corporation Electric Utility 5.5%
.........................................................
The Southern Company Electric Utility 5.4%
.........................................................
Please see the Schedule of Investments in Securities for
a complete listing of the Fund's portfolio.
========================================================
===================================
YIELD SUMMARY(2)
As of 4-30-97
===================================
30-DAY ANNUALIZED YIELD 3.25%
===================================
POSITIVE DEVELOPMENTS IN TELEPHONE AND ENERGY
Over the six months, the Fund's holdings in telephone stocks were increased to
35.3% of net assets from 28.4%. Significantly, SBC Communications completed the
acquisition of Pacific Telesis on April 1, and on April 24 the Justice
Department said it would not challenge Bell Atlantic's proposed acquisition of
NYNEX Corporation. SBC Communications, Bell Atlantic, NYNEX Corporation and
Ameritech all experienced price appreciation in excess of 11%.
For the year ended December 31, 1996 and the quarter ended March 31, 1997, the
telephone companies met our expectations of double-digit earnings growth, and we
continue to expect good earnings growth for all of 1997. Dividends were
increased by Ameritech, Alltel, Bell Atlantic and SBC Communications.
Energy stocks continued to contribute to portfolio performance in spite of mild
winter weather and declining oil and gas prices. Good earnings growth, dividend
increases, and stock buy-backs contributed to the price appreciation in the
energy sector.
OPPORTUNITIES AMONG ELECTRIC UTILITIES
In contrast to the winter of 1995-1996, mild weather this past winter reduced
earnings for the electric utilities. Nevertheless, we look for good investment
returns from the utilities in the portfolio. Electric utility stocks continue to
sell at prices that reflect substantial discounts to the average price/earnings
ratio of the broad markets while earnings, factoring out weather, are growing
and selected electrics are increasing their dividends. Three states have passed
legislation that implements electric utility restructuring and is otherwise
favorable to the utilities industry.
REGULATORY AND INTEREST-RATE UNCERTAINTY
Investor concerns over the impact of regulation on electric utilities and
telephone companies, when combined with fear of repeated interest-rate
increases, have adversely affected the market prices for the stocks of some
electric utilities and telephone companies. Regarding telephones, we are looking
for resolution of major regulatory issues beginning in mid-1997. Similar
uncertainty for electrics will diminish as more states pass favorable
legislation. In our view, resolution of regulatory matters will lead to greater
investor interest in telephone and electric stocks. As to interest rates, we
believe the Fund can perform well in the absence of substantial and sustained
increases in rates.
6
<PAGE>
OUTLOOK
Our outlook remains positive. The accelerating trend of mergers and acquisitions
should contribute to a higher level of excitement and interest in this sector,
as well as short-term profit opportunities. Over time, this activity will result
in fewer, bigger, and better companies in the industry. In addition, we
anticipate a direct and strong positive impact on share prices over the next few
years from company stock buy-backs, especially in the electric utility industry.
Both electric and telephone stocks have been generally out of favor for more
than a year. We believe the investment prospects for certain companies are
grossly underrated in the current market and present a long-term opportunity for
investors.
As always, we appreciate your investment in the Strong American Utilities Fund,
and we look forward to earning your continued confidence.
Sincerely,
/s/ William H. Reaves
William H. Reaves
Portfolio Manager
[PHOTO OF WILLIAM H. REAVES]
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 7-1-93 to 4-30-97
================================================================================
[GRAPH]
THE STRONG
AMERICAN S&P Utilities Lipper Utility
UTILITIES FUND Index * Funds Index *
6-93 10,000 10,000 10,000
12-93 10,450 10,090 10,167
12-94 10,177 9,288 9,223
12-95 13,939 13,192 11,723
12-96 15,106 13,604 12,808
4-97 15,176 12,925 12,800
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 and Poor's Utilities Index and the Lipper Utility Funds Index. Results
include the reinvestment of all dividends and capital gains distributions.
Performance is historical and does not represent future results. Investment
returns and principal value vary, and you may have a gain or loss when you sell
shares.
================================================================================
===============================
AVERAGE ANNUAL
TOTAL RETURNS(2)
As of 4-30-97
===============================
1-YEAR 9.68%
2-YEAR 16.68%
3-YEAR 13.95%
SINCE INCEPTION 11.50%
(on 7-1-93)
===============================
- --------------------------------------------------------------------------------
* The S&P Utilities Index is an unmanaged index generally representative of
U.S. utility stocks. The Lipper Utility Funds Index is an equally-weighted
performance index of the largest qualifying funds in this Lipper category.
Source of the S&P index data is Micropal. Source of the Lipper index data
is Lipper Analytical Services, Inc.
1 The American Utilities Fund is a non-diversified sector fund. As such, it
may concentrate its assets in fewer individual holdings than a diversified
fund may, and it may concentrate its investments in the utilities sector.
Therefore, the Fund is more exposed to individual stock volatility and
negative market pressures in the utilities sector.
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 return reflects annualized change,
while total return reflects aggregate change. Yields are historical and do
not represent future yields, which will fluctuate.
7
<PAGE>
THE STRONG TOTAL RETURN FUND
WE BELIEVE THAT OUTSTANDING COMPANIES WITH SUPERIOR EARNINGS, DIVIDEND, AND
REVENUE GROWTH WILL OUTPERFORM THE MARKET OVER THE LONG TERM.
The Strong Total Return Fund seeks high total return by investing for capital
growth and income. Using a conservative approach to equity management, the Fund
emphasizes investments in large- to medium-size companies.
===========================================
ASSET ALLOCATION
Based on net assets as of 4-30-97
===========================================
[PIE CHART]
Common Stocks 84.7%
Convertible Securities 5.5%
Short-Term Investments 9.8%
===========================================
LOOKING BACK
The first six months of the Fund's fiscal year can really be divided into two
periods. First, in November and December 1996, the markets generally rallied as
investors expected growth in the economy to slow to sustainable levels in the
first quarter of 1997. However, by early 1997, the market recognized that the
economy was stronger than previously forecasted. Furthermore, it became apparent
that the Federal Reserve would need to raise short-term interest rates to slow
economic growth and head off potential increases in inflation.
Rates rose significantly when Federal Reserve Chairman Alan Greenspan gave a
strong signal that there would be a hike in the federal funds rate in March--as
in fact there was. After the actual interest-rate increase hit, the stock market
experienced weeks of significant volatility.
Although interest rates at the end of April remained higher than in November,
the markets had stabilized within a month of the Fed's hike. Most investors
appeared to believe that the increase in short-term interest rates needed to
slow economic growth would be relatively small and short-lived. Although the
period after the Fed's interest-rate hike was very volatile, overall this has
been a positive environment for most larger-capitalization stocks.
For the six months, the S&P 500 registered accelerated growth, returning 14.72%
for the period.* The bulk of that return, however, came from the very largest
companies in the index--and because the index is weighted by its companies'
market capitalizations, the largest firms have the greatest impact on the
index's performance. We had smaller weightings in these firms, given our
valuation targets. As a result, we experienced a slower-paced growth in the
Fund. For the six months ended April 30, 1997, the Fund posted a total return of
5.05%.(1)
OUR FOCUS REMAINS THE SAME
Because stock valuations are quite high, our focus on finding solid companies at
reasonable prices is particularly important now. We look for firms that exhibit
accelerating sales and earnings; offer some unique, sustainable competitive
advantage; are expanding market share; have good balance sheets; and are led by
effective management teams.
We believe that outstanding companies with superior earnings, dividend, and
revenue growth will outperform the market over the long term. Nonetheless, to
help keep volatility within reasonable bounds we only intend to buy these stocks
when their prices leave room for some appreciation over time.
============================================================
FIVE LARGEST HOLDINGS
Based on net assets as of 4-30-97
============================================================
% OF NET
SECURITY INDUSTRY ASSETS
- ------------------------------------------------------------
Monsanto Company Chemical 2.5%
............................................................
Warner-Lambert Company Healthcare-Drug/Diversified 2.1%
............................................................
Danka Business Office Automation 2.0%
Systems PLC
............................................................
E. I. du Pont de Nemours Diversified Operations 1.9%
& Company
............................................................
Pfizer, Inc. Healthcare-Drug/Diversified 1.7%
............................................................
Please see the Schedule of Investments in Securities for a
complete listing of the Fund's portfolio.
============================================================
8
<PAGE>
OUTLOOK
Much of the S&P 500's rally has been quite narrow, dominated by 25 or so stocks
that account for much of the runup. We expect that rally to broaden out
somewhat, particularly if interest rates come down or remain stable.
A decline in interest rates may not come immediately, as the Federal Reserve is
being vigilant about keeping inflation under control. Should the growth in the
economy remain strong, the Fed may choose to raise rates again. Another hike may
lead to a bout of volatility similar to the one that followed the March rate
increase. We expect the economy to slow, but not to go into recession.
We have been reducing our exposure to interest rate sensitive stocks while
increasing our exposure to large-capitalization technology stocks. This is the
time to stay with high-quality, predictable companies, while paying attention to
valuations.
Thank you for your investment in the Strong Total Return Fund. We look forward
to helping you pursue your investment goals in the future.
Sincerely,
/s/ Ronald C. Ognar
Ronald C. Ognar
/s/ Ian J. Rogers
Ian J. Rogers
Portfolio Comanagers
[PHOTO OF RONALD C. OGNAR & IAN J. ROGERS]
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-30-81 to 4-30-97
================================================================================
[GRAPH]
THE STRONG Lipper Growth
TOTAL RETURN S & P 500 and Income
FUND Index * Funds Index *
12-81 10,000 10,000 10,000
12-82 13,250 12,154 12,417
12-83 18,719 14,895 15,242
12-84 20,685 15,830 15,896
12-85 25,936 20,852 20,436
12-86 31,120 24,745 24,039
12-87 33,001 26,044 24,673
12-88 38,140 30,369 29,201
12-89 39,139 39,992 36,131
12-90 36,366 38,751 33,966
12-91 48,578 50,557 43,393
12-92 48,843 54,408 47,572
12-93 59,851 59,892 54,527
12-94 59,026 60,683 54,302
12-95 74,962 83,487 71,211
12-96 85,511 102,655 85,944
4-97 87,698 111,701 90,606
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 ("S&P 500") and the Lipper Growth and Income
Funds Index. Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
================================================================================
===============================
AVERAGE ANNUAL
TOTAL RETURNS(1)
As of 4-30-97
===============================
1-YEAR 10.25%
3-YEAR 14.80%
5-YEAR 13.20%
10-YEAR 9.45%
SINCE INCEPTION 15.21%
(on 12-30-81)
===============================
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market, without regard to company size. The Lipper Growth and Income
Funds Index is an equally-weighted performance index of the largest
qualifying funds in this Lipper category. Source of the S&P index data is
Micropal. Source of the Lipper index data is Lipper Analytical Services,
Inc.
1 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 return reflects annualized change,
while total return reflects aggregate change.
9
<PAGE>
THE STRONG GROWTH & INCOME FUND
OUR FOCUS ON LARGER COMPANIES WAS HELPFUL DURING THE RECENT MARKET TURBULENCE.
The Strong Growth and Income Fund seeks total return by investing for capital
growth and income. The Fund invests primarily in companies that pay current
dividends and offer earnings-growth potential.
===========================================
ASSET ALLOCATION
Based on net assets as of 4-30-97
===========================================
[PIE CHART]
Common Stocks 96.3%
Convertible Securities 3.2%
Short-Term Investments 0.5%
===========================================
STRONG PERFORMANCE CONTINUED
For the six months ended April 30, the Fund posted a total return of 12.90%.
That's slightly below the 14.72% return of the S&P 500. We come out ahead of our
peer group of funds that share our investment style, the Lipper Growth and
Income Funds Index, which returned 11.13% for the same period.*(1) As of April
30, assets under management stood at $128.9 million.
We achieved this performance while continuing our preference for large,
well-established, dividend-paying companies. We believe these firms offer
investors greater potential stability. These companies' financial strength (and
the resulting flexibility), solid yield support from a steady stream of
dividends, and ready liquidity make them attractive holdings for the core of
this Fund.
============================================================
FIVE LARGEST HOLDINGS
Based on net assets as of 4-30-97
============================================================
% OF NET
SECURITY INDUSTRY ASSETS
- ------------------------------------------------------------
The Bank of New York Bank-Super Regional 1.5%
Company, Inc.
............................................................
BankAmerica Corporation Bank-Money Center 1.5%
............................................................
Intel Corporation Electronics- 1.5%
Semiconductor/Component
............................................................
Texas Instruments, Inc. Electronics- 1.4%
Semiconductor/Component
............................................................
Philips Electronics Household Appliances 1.4%
NV ADR and Furnishings
............................................................
Please see the Schedule of Investments in Securities for a
complete listing of the Fund's portfolio.
============================================================
AT TIMES A CONTRADICTORY MARKET
Continuing a trend from the preceding year, economic indicators sent somewhat
contradictory signals. In 1997's early months, the stock market disregarded
Federal Reserve Chairman Alan Greenspan's statements regarding its "irrational
exuberance," and appreciated by approximately 10%.
Meanwhile, economic data continued to point to an economy that was in near
perfect balance, with moderate growth, full employment, and modest inflation.
Because investors were uncertain about how long such conditions could persist
and about the future direction of interest rates, the market's ups and downs
were fast and steep.
As 1997 progressed, the market came to the consensus that the Federal Reserve
would have to raise interest rates at least slightly in order to cool growth
down to a sustainable level. The first strong signal that the Fed would raise
rates came when Chairman Greenspan testified before Congress in February.
His statements led to considerable market volatility, followed to an even
greater degree by the market's reaction to the actual increase, which came in
late March. Stock prices moved sharply lower in the aftermath of this hike, but
within a month the Dow Jones Industrial Average had regained virtually all of
the losses it had suffered.
THE FUND'S FOCUS WAS SUITED TO THIS ENVIRONMENT
Our focus on larger companies was helpful during the recent market turbulence.
These companies generally have established, mature businesses, which allows them
to weather times of uncertainty better than newer, smaller firms. Also, because
the stocks of larger companies trade more frequently, their stocks tend to be
less prone to abrupt, sharp changes in price than are smaller, less commonly
traded issues. Finally, the dividend income that these stocks tend to pay also
can support stock prices during market downturns.
The Fund uses the S&P 500 as a benchmark for its weightings in sectors and
industries, varying from those as our own top-down research indicates. As we
anticipated the Fed's rate increase, we lowered the Fund's exposure to the
financials sector from an overweighting to a slight underweighting. We also sold
off shares in the technology sector, as that industry came under intense
pressure when earnings expectations and investor psychology turned negative.
We added somewhat to our holdings in cyclical stocks, in reaction to attractive
prices and an economic environment that seems to have allowed certain
more-cyclical industries to prosper.
10
<PAGE>
OUTLOOK
For the next six months, we anticipate that moderate growth and low inflation
will continue to be the dominant themes. In keeping with that, and with our
overall investment style, we will likely maintain our focus on larger-company
stocks from companies with these attributes: above-average growth in revenues
and earnings, modest debt levels, superior return on equity, positive cash flow,
and shareholder-oriented management. We will, however, also selectively consider
some smaller companies for their growth potential.
Much of the direction of the stock market over the balance of the year will
depend on the direction of interest rates and on the rate of growth in the
economy. The gauges of economic growth that I look at point toward an economy
that is in very good shape. Unemployment is low; average hourly earnings are up
modestly from a year ago; consumer demand and confidence are high as well. When,
for the first time in nearly two years, the Federal Reserve increased interest
rates on March 25 by 0.25%, the move was argued by Chairman Greenspan to be
pre-emptive in nature. We can hope that the Federal Reserve's foresight has
indeed subdued any near to intermediate inflationary pressures and thus extended
the life of the current business cycle.
With the market near historical highs, a degree of caution is warranted even in
a generally positive environment. We will continue to diversify the Fund's
holdings among sectors and industries that we believe can enjoy future revenue
and earnings growth.
Thank you for your investment in the Strong Growth and Income Fund. We
appreciate your confidence, and look forward to helping you pursue your
financial goals.
Sincerely,
/s/ Rimas Milaitis
Rimas Milaitis
Portfolio Manager
[PHOTO OF RIMAS MILAITIS]
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-30-81 to 4-30-97
================================================================================
[GRAPH]
THE STRONG Lipper Growth
GROWTH AND S & P 500 and Income
INCOME FUND Index * Funds Index *
12-95 10,000 10,000 10,000
3-96 11,145 10,536 10,574
6-96 11,556 11,009 10,845
9-96 12,078 11,349 11,195
12-96 13,191 12,295 12,068
3-97 13,306 12,625 12,271
4-97 14,021 13,379 12,724
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 ("S&P 500") and the Lipper Growth and Income
Funds Index. Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
================================================================================
===============================
AVERAGE ANNUAL
TOTAL RETURNS(1)
As of 4-30-97
===============================
1-YEAR 22.72%
SINCE INCEPTION 28.85%
(on 12-29-95)
===============================
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market, without regard to company size. The Lipper Growth and Income
Funds Index is an equally-weighted performance index of the largest
qualifying funds in this Lipper category. Source of the S&P index data is
Micropal. Source of the Lipper index data is Lipper Analytical Services,
Inc.
1 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 return reflects annualized change,
while total return reflects aggregate change.
11
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 57.5%
AEROSPACE & DEFENSE 1.4%
B.F. Goodrich & Company 39,100 $ 1,559
Thiokol Corporation 31,600 2,062
--------
3,621
AIRLINE 0.3%
Air New Zealand, Ltd. Class B 87,000 251
Delta Air Lines, Inc. 1,500 138
Korean Airline Company, Ltd. (b) 12,100 219
Thai Airways International PCL (Fgn Reg) 130,000 189
--------
797
AUTO & TRUCK PARTS 0.5%
Lear Corporation (b) 40,000 1,430
AUTOMOBILE 0.4%
Ford Motor Company 17,500 608
Vickers PLC 111,000 382
--------
990
BANK - MONEY CENTER 0.5%
Citicorp 7,900 890
Commerzbank AG 9,000 241
The Development Bank of Singapore, Ltd. (Fgn Reg) 13,000 155
--------
1,286
BANK - REGIONAL 1.1%
First American Corporation 22,000 1,441
First Security Corporation 40,000 1,425
--------
2,866
BANK - SUPER REGIONAL 0.4%
Barnett Banks, Inc. 3,500 171
U.S. Bancorp 16,000 914
--------
1,085
BEVERAGE - ALCOHOLIC 0.7%
Anheuser-Busch Companies, Inc. 3,600 154
The Seagram Company, Ltd. 45,000 1,721
--------
1,875
BEVERAGE - SOFT DRINK 0.1%
The Coca-Cola Company 2,800 178
BROKERAGE & INVESTMENT MANAGEMENT 1.6%
Apartment Investment & Management Company
Class A 5,600 155
Bradley Real Estate, Inc. 8,400 161
Equity Residential Properties Trust 39,900 1,746
Franklin Resources, Inc. 2,800 165
Kay Hian James Capel Holdings, Ltd. 250,000 242
Manufactured Home Communities, Inc. 60,000 1,260
Merry Land & Investment Company, Inc. 1,500 31
Nomura Securities Company, Ltd. 9,000 100
Peregrine Investment Holdings, Ltd. 67,000 103
Peregrine Investment Holdings, Ltd. Warrants,
Expire 5/15/98 (b) 25,500 4
Santa Anita Realty Enterprises, Inc. 5,100 150
Ssangyong Investment & Securities
Company, Ltd. (b) 25,000 160
Weeks Corporation 900 28
--------
4,305
CHEMICAL 0.1%
The Dow Chemical Company 2,000 170
CHEMICAL - SPECIALTY 0.6%
Air Products & Chemicals, Inc. 2,300 165
Cabot Corporation 6,500 143
Morton International, Inc. 3,800 159
Praxair, Inc. 21,000 1,084
--------
1,551
CLOSED-END FUND 0.4%
The Central European Growth Fund PLC (b) 481,000 548
The Fleming Poland Fund, Ltd. Redeemable
Participating Preference `A' Shares (b) 20,510 218
The Fleming Poland Fund, Ltd. Warrants,
Expire 1/31/99 (b) 5,102 13
The R.O.C. Taiwan Fund (b) 9,600 124
Vietnam Frontier Fund (b) 25,000 231
--------
1,134
COMMERCIAL SERVICE 1.7%
ADT, Ltd. (b) 68,200 1,867
Billing Information Concepts Corporation (b) 6,700 160
Comdisco, Inc. 70,000 2,222
DeVry, Inc. (b) 6,300 139
Universal Outdoor Holdings, Inc. (b) 5,400 147
--------
4,535
COMPUTER - MAINFRAME 0.2%
International Business Machines Corporation 4,300 691
COMPUTER - PERIPHERAL EQUIPMENT 0.8%
EMC Communications Corporation (b) 3,900 142
Seagate Technology, Inc. (b) 42,500 1,950
--------
2,092
COMPUTER SERVICE 0.1%
America Online, Inc. (b) 3,300 149
Fiserv, Inc. (b) 3,900 147
--------
296
COMPUTER SOFTWARE 0.8%
Cabletron Systems, Inc. (b) 4,800 166
Computer Associates International, Inc. 3,500 182
Imagineer Company, Ltd. (b) 7,200 229
INSO Corporation (b) 3,900 82
Sterling Commerce, Inc. (b) 5,100 132
Wang Labs, Inc. (b) 70,000 1,216
--------
2,007
CONGLOMERATE 1.0%
Gemina Spa (b) 18,300 7
Guinness Peat Group PLC 1,071,291 661
Guoco Group, Ltd. 75,000 356
Jardine Matheson Holdings, Ltd. 64,371 354
Keppel Corporation, Ltd. 92,500 403
Lonrho PLC 29,208 65
Loxley PCL (Fgn Reg) 25,000 83
Mitsubishi Corporation 34,000 319
Oerlikon - Buehrle Holding AG `R' (b) 3,000 297
Technology Resources Industries BHD (b) 119,000 218
--------
2,763
CONSUMER - MISCELLANEOUS 1.1%
Amway Asia Pacific, Ltd. 32,500 1,365
Jostens, Inc. 50,000 1,194
Leica Camera AG (b) 7,500 230
SMH (Suisse Microelectronique et d'Horlogerie) 400 227
--------
3,016
CONTAINER 0.8%
Crown Cork & Seal, Inc. 40,000 2,190
COSMETIC & PERSONAL CARE 1.5%
Avon Products, Inc. 20,000 1,232
Dial Corporation 105,000 1,628
The Gillette Company 9,600 816
Shiseido Company, Ltd. 22,000 315
--------
3,991
DIVERSIFIED OPERATIONS 1.1%
American Standard Companies, Inc. (b) 3,600 151
Loews Corporation 15,000 1,378
Olin Corporation 3,800 156
Textron, Inc. 12,000 1,337
--------
3,022
ELECTRIC POWER 0.8%
NIPSCO Industries, Inc. 3,800 150
Public Service Company of Colorado 54,000 2,093
--------
2,243
ELECTRICAL EQUIPMENT 0.7%
Emerson Electric Company 1,300 66
General Electric Company 15,000 1,663
Teleflex, Inc. 2,900 167
--------
1,896
See notes to financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
ELECTRONIC INSTRUMENTATION 2.6%
Fisher Scientific International, Inc. 78,000 $ 3,305
Thermo Electron Corporation (b) 60,000 2,070
Thermo Instrument Systems, Inc. (b) 47,500 1,490
--------
6,865
ELECTRONICS - SEMICONDUCTOR/COMPONENT 2.6%
Altera Corporation (b) 36,000 1,784
Anadigics, Inc. (b) 4,600 130
Cypress Semiconductor, Inc. (b) 52,600 730
Kemet Corporation (b) 7,200 140
KLA Instruments Corporation (b) 40,000 1,780
Teradyne, Inc. (b) 70,000 2,293
Xilinx, Inc. (b) 2,200 108
--------
6,965
ENGINEERING & CONSTRUCTION 0.1%
Ohmoto Gumi Company, Ltd. 10,000 80
Semen Cibinong PT (Fgn Reg) 54,000 147
--------
227
FINANCE - MISCELLANEOUS 0.5%
Hong Leong Finance, Ltd. (Fgn Reg) 89,000 276
Keppel Bank 166,000 434
Liechtenstein Global Trust AG 530 291
PMT Services, Inc. (b) 12,500 148
SGS (Societe Generale de Surveillance)
Holdings SA 140 290
--------
1,439
FOOD 2.5%
Campbell Soup Company 700 36
H.J. Heinz Company 3,800 158
Hershey Foods Corporation 3,200 174
Interstate Bakeries Corporation 30,000 1,556
Louis Dreyfus Citrus (b) 7,300 262
McCormick & Company, Inc. 67,500 1,595
Nestle AG 495 601
Ralston Purina Company - Ralston Purina Group 25,000 2,059
Sara Lee Corporation 3,900 164
--------
6,605
HEALTHCARE - DRUG/DIVERSIFIED 0.8%
Abbott Laboratories 2,700 165
Ivax Corporation 17,300 131
Johnson & Johnson 22,000 1,347
Novartis AG 200 263
Pfizer, Inc. 1,800 173
Zeneca Group PLC (b) 5,200 157
--------
2,236
HEALTHCARE - INSTRUMENTATION 0.4%
Medtronic, Inc. 15,000 1,039
HEALTHCARE - MEDICAL SUPPLY 0.1%
Amerisource Distribution Corporation Class A (b) 3,100 138
Becton, Dickinson & Company 3,400 157
--------
295
HEALTHCARE - PATIENT CARE 2.7%
Columbia/HCA Healthcare Corporation 4,400 154
Compdent Corporation (b) 5,400 87
Medpartners, Inc. (b) 117,700 2,148
PacifiCare Health Systems, Inc. Class A (b) 2,000 154
Quorum Health Group, Inc. (b) 77,500 2,412
United Dental Care, Inc. (b) 5,500 121
Vencor, Inc. (b) 45,000 1,873
WellPoint Health Networks, Inc. (b) 3,600 152
--------
7,101
HEALTHCARE - PRODUCT 0.2%
R.P. Scherer Corporation (b) 12,500 575
HOUSEHOLD APPLIANCES & FURNISHINGS 0.7%
Philips Electronics NV ADR 7,500 401
Sunbeam Corporation 43,000 1,365
Tupperware Corporation 4,400 146
--------
1,912
HOUSING RELATED 0.5%
RPM, Inc. 75,000 1,256
INSURANCE - LIFE 0.7%
Equitable of Iowa Companies 35,000 1,711
Reliastar Financial Corporation 2,500 151
--------
1,862
INSURANCE - MULTI-LINE 0.7%
Horace Mann Educators Corporation 37,000 1,734
INSURANCE - PROPERTY & CASUALTY 1.8%
Hartford Financial Services Group 37,200 2,771
Mid Ocean, Ltd. 25,000 1,147
Partners RE, Ltd. ADR 22,000 740
--------
4,658
LEISURE PRODUCT 0.1%
Harley-Davidson, Inc. 3,900 154
LEISURE SERVICE 1.7%
CDL Hotels International, Ltd. 588,075 256
CDL Hotels New Zealand, Ltd. (b) 638,000 234
Choice Hotels Holdings, Inc. (b) 90,000 1,260
Club Mediterranee SA 3,500 271
CNET, Inc. (b) 6,300 128
HFS, Inc. (b) 22,000 1,304
International Game Technology 9,000 143
Sydney Aquarium, Ltd. 137,000 406
Toho Company 4,090 547
Tourism Holdings, Ltd. 5,000 8
--------
4,557
MACHINE TOOL 0.1%
Applied Power, Inc. 3,200 136
MACHINERY - AGRICULTURE 0.3%
AGCO Corporation 35,000 906
MACHINERY - MISCELLANEOUS 0.7%
Briggs & Stratton Corporation 3,600 177
Bukaka Teknik Utama PT (Fgn Reg) 89,000 56
Greenwich Air Services, Inc. 5,600 155
Ingersoll Rand Company 32,100 1,577
--------
1,965
MACHINERY - TRANSPORTATION EQUIPMENT
& PARTS 0.5%
Cummins Engine Company, Inc. 16,900 949
Zucchini Spa (b) 65,000 431
--------
1,380
MEDIA - PUBLISHING 0.1%
Matichon PCL (Fgn Reg) 92,000 254
McGraw-Hill, Inc. 3,000 153
--------
407
MEDIA - RADIO/TV 1.7%
American Telecasting, Inc. Warrants,
Expire 8/10/00 (b) 350 0
Comcast UK Cable Partners, Ltd. Class A ADR (b) 25,000 284
Cox Communications, Inc. Class A (b) 68,800 1,342
News Corporation Exchange Trust Warrants
(Acquired 11/04/96; Cost $1,831)(b)(d) 50,000 1,825
Tele-Communications, Inc. Class A (b) 80,000 1,105
--------
4,556
METAL PRODUCTS & FABRICATION 0.1%
Illinois Tool Works, Inc. 1,800 164
METALS & MINING 1.0%
Ashanti Goldfields Company, Ltd. GDR 20,000 237
Normandy Mining, Ltd. 515,514 632
Reynolds Metals Company 25,500 1,731
--------
2,600
NATURAL GAS DISTRIBUTION 0.9%
Columbia Gas Systems, Inc. 2,600 161
ENSERCH Corporation 7,700 151
Questar Corporation 4,300 163
See notes to financial statements.
13
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
Sonat, Inc. 30,000 $ 1,714
The Williams Companies, Inc. 3,300 145
--------
2,334
OFFICE AUTOMATION 0.1%
Pitney Bowes, Inc. 2,900 186
OIL - INTERNATIONAL INTEGRATED 0.7%
Mobil Corporation 400 52
Royal Dutch Petroleum Company 900 162
Texaco, Inc. 10,700 1,129
YPF Sociedad Anonima ADR 18,000 497
--------
1,840
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 0.2%
Forcenergy, Inc. (b) 5,600 174
Gulf Canada Resources, Ltd. ADR (b) 17,600 143
Noble Affiliates, Inc. 4,100 147
--------
464
OIL - NORTH AMERICAN INTEGRATED 0.9%
Amoco Corporation 16,800 1,405
Ashland, Inc. 3,500 156
Ultramar Diamond Shamrock Corporation 30,000 964
--------
2,525
OIL WELL EQUIPMENT & SERVICE 2.5%
ENSCO International, Inc. (b) 25,500 1,211
Global Industries, Ltd. (b) 7,500 157
Marine Drilling Companies, Inc. (b) 9,500 150
Noble Drilling Corporation (b) 120,000 2,085
Rowan Companies, Inc. (b) 7,700 139
Schlumberger, Ltd. 13,000 1,440
Tidewater, Inc. 3,500 140
Transocean Offshore, Inc. 2,500 152
Weatherford Enterra, Inc. (b) 35,000 1,111
--------
6,585
PAPER & FOREST PRODUCTS 1.5%
Bowater, Inc. 34,600 1,496
Consolidated Papers, Inc. 16,000 860
Fletcher Challenge, Ltd. Forestry Division 182,263 251
Georgia-Pacific Corporation 16,100 1,256
--------
3,863
POLLUTION CONTROL 0.1%
Allied Waste Industries, Inc. (b) 15,000 167
WMX Technologies, Inc. 5,200 153
--------
320
PRECIOUS METAL/GEM/STONE 0.1%
De Beers Consolidated Mines, Ltd. ADR 4,100 148
REAL ESTATE 0.6%
Ciputra Development PT (Fgn Reg) 287,000 254
Diamond City Company 36,000 198
Hong Kong Land Holdings, Ltd. 84,000 175
Kiwi Income Property Trust 340,000 261
Shortland Properties, Ltd. 761,500 485
Signature Resorts, Inc. (b) 6,100 135
Singapore Land, Ltd. 40,000 187
--------
1,695
RETAIL - DISCOUNT & VARIETY 0.1%
Dollar General Corporation 4,900 155
RETAIL - DRUG STORE 1.1%
Rite Aid Corporation 32,500 1,495
Walgreen Company 28,600 1,316
--------
2,811
RETAIL - FOOD CHAIN 0.0%
Familymart, Inc. 660 24
RETAIL - MAJOR CHAIN 0.2%
Dayton Hudson Corporation 3,800 171
Magazine Zum Globus Registered Shares 500 256
Wal-Mart Stores, Inc. 5,300 150
--------
577
RETAIL - RESTAURANT 0.1%
Rainforest Cafe, Inc. (b) 7,400 177
RETAIL - SPECIALTY 1.1%
AutoZone, Inc. (b) 60,000 1,470
Central Garden & Pet Company (b) 8,000 160
The Home Depot, Inc. 17,200 998
MSC Industrial Direct Company, Inc. Class A (b) 4,600 141
PETsMART, Inc. (b) 8,500 143
--------
2,912
SAVINGS & LOAN 0.1%
Washington Mutual, Inc. 3,100 153
SHOE & APPAREL MANUFACTURING 0.2%
Holding di Partecipazioni Industriali Spa (b) 260,300 142
NIKE, Inc. Class B 2,100 118
Saha Union PCL (Fgn Reg) 250,000 201
Wolverine World Wide, Inc. 4,000 161
--------
622
SOAP & CLEANING PREPARATION 0.1%
Colgate Palmolive Company 1,400 155
STEEL 0.6%
Chubu Steel Plate Company, Ltd. 47,000 222
UCAR International, Inc. 30,000 1,260
--------
1,482
TELECOMMUNICATION EQUIPMENT 0.7%
Nokia Corporation Sponsored ADR 29,700 1,919
TELECOMMUNICATION SERVICE 1.3%
American Communications Services, Inc. Warrants,
Expire 11/01/05
(Acquired 3/22/96; Cost $107)(b)(d) 1,750 61
International Wireless Holding Company Warrants,
Expire 8/15/01
(Acquired 8/09/96; Cost $0)(b)(d) 4,000 0
Nextel Communications, Inc. Class A (b) 10,400 137
Nippon Telegraph & Telephone Corporation (b) 48 338
NTL, Inc. (b) 7,600 148
Telecommunicacoes Brasileiras SA Sponsored ADR 3,000 345
U.S. West, Inc. Media Group (b) 140,000 2,415
--------
3,444
TELEPHONE 1.3%
BellSouth Corporation 22,500 1,001
Cincinnati Bell, Inc. 2,600 146
SBC Communications, Inc. 40,000 2,220
Telephone & Data Systems, Inc. 4,100 152
--------
3,519
TOBACCO 0.9%
American Brands, Inc. 43,200 2,322
TRANSPORTATION SERVICE 0.2%
Flughafen Wien AG 10,000 414
--------
TOTAL COMMON STOCKS (COST $145,941) 152,270
PREFERRED STOCKS 5.1%
California Federal Bank, A Federal Savings Bank,
Los Angeles, Series B, 10.625% 18,300 1,975
IFI Istituto Finanziario (Acquired 1/23/97;
Cost $520)(d) 42,000 507
The News Corporation, Ltd. 141,897 542
Nextlink Communications 14.00%
(Acquired 4/04/97; Cost $2,101)(d) 50,000 2,375
Panamsat International Systems, Inc. 12.75%
Senior 2,197 2,629
Time Warner, Inc. 10.25% Exchangeable Series K 5,128 5,551
--------
TOTAL PREFERRED STOCKS (COST $13,491) 13,579
CONVERTIBLE PREFERRED STOCKS 0.4%
Tosco Financing Trust 5.75%
(Acquired 12/10/96 - 2/28/97; COST $859)(d) 17,000 948
See notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS 1.7%
Apache Corporation Subordinated Debentures,
6.00%, Due 1/15/02 (Acquired 8/09/96;
Cost $1,392) (d) $1,200 $ 1,446
Hexcel Corporation Subordinated Notes, 7.00%,
Due 8/01/03 1,500 1,965
North American Vaccine, Inc. Subordinated Notes,
6.50%, Due 5/01/03 (Acquired 5/01/96 - 11/05/96;
Cost $1,184) (d) 1,200 1,149
--------
TOTAL CONVERTIBLE BONDS (COST $4,109) 4,560
CORPORATE BONDS 11.0%
CalEnergy, Inc. Senior Notes, 9.50%, Due 9/15/06 1,500 1,560
Coast Savings Financial, Inc. Senior Notes, 10.00%,
Due 3/01/00 250 262
First Nationwide Parent Holdings, Ltd. Senior
Exchange Notes, 12.50%, Due 4/15/03 1,500 1,650
Food 4 Less Holdings, Inc. Senior Subordinated
Debentures, 13.625%, Due 6/15/07 1,500 1,640
International Wireless Communications Holdings,
Inc. Senior Discount Notes, Zero %, Due 8/15/01 3,000 1,635
Kelley Oil & Gas Corporation Senior Subordinated
Notes, 10.375%, Due 10/15/06 2,000 1,990
Motors & Gears, Inc. Senior Notes, Series A, 10.75%,
Due 11/15/06 (Acquired 11/01/96; Cost $1,008)(d) 1,000 1,000
News America Holdings, Inc. Senior Debentures,
7.75%, Due 1/20/24 3,800 3,547
Nextlink Communications LLC Senior Notes,
12.50%, Due 4/15/06 1,500 1,560
Noble Drilling Corporation Senior Notes, 9.125%,
Due 7/01/06 2,500 2,663
North Fork Bancorp Capital Trust Pass-Thru
Securities, 8.70%, Due 12/15/26 (Acquired
12/23/96; Cost $3,985) (d) 4,000 3,900
Pagemart, Inc. Senior Discount Notes, Zero %,
Due 11/01/03 1,000 795
Paging Network, Inc. Senior Subordinated Notes,
11.75%, Due 5/15/02 110 117
Panamsat LP/ Panamsat Capital Corporation Senior
Secured Notes, 9.75%, Due 8/01/00 1,105 1,160
Teekay Shipping Corporation Guaranteed First
Preferred Mortgage Notes, 8.32%, Due 2/01/08 2,000 1,965
U.S. Air, Inc. Guaranteed Senior Notes, 10.00%,
Due 7/01/03 500 514
USAir 1993-A Pass-Thru Trust Certificates, Series
1993-A2, 9.625%, Due 9/01/03 1,675 1,688
Western Wireless Corporation Senior Subordinated
Notes, 10.50%, Due 2/01/07 1,500 1,483
--------
TOTAL CORPORATE BONDS (COST $29,087) 29,129
NON-AGENCY MORTGAGE & ASSET-BACKED
SECURITIES 5.0%
Aircraft Lease Portfolio Securitization Pass-Thru
Trust Certificates, Series 1996-1, Class D, 12.75%,
Due 6/15/06 (Acquired 6/18/96; Cost $2,498)(d) 2,498 2,673
CS First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates:
Series 1993-2, Class A-3, 7.50%, Due 3/25/33 1 1
Series 1994-MHC1, Class A-1X, Interest Only,
5.5227%, Due 4/25/11 4,385 32
Chase Mortgage Finance Corporation Mortgage
Pass-Thru Certificates, Series 1990-G, Class A-Z1,
9.50%, Due 12/25/21 944 959
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 2,953
MDC Asset Investors Trust V Collateralized
Mortgage Obligation, Class V-2, 9.325%,
Due 12/01/17 71 71
RTC Variable Rate Mortgage Pass-Thru Securities,
Inc., Series 1992-7, Class A-3, 7.3901%,
Due 3/25/22 2,071 2,081
Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage Bonds,
Series 1992-C, Class 3-A, 11.7531%, Due 11/25/30 427 451
Westam Mortgage Financial Corporation
Collateralized Mortgage Bonds, Series 10,
Class 10-D, Principal Only, Due 7/26/18 6,446 3,964
--------
TOTAL NON-AGENCY MORTGAGE & ASSET-BACKED
SECURITIES (COST $13,239) 13,185
UNITED STATES GOVERNMENT & AGENCY
ISSUES 7.7%
FHLMC Guaranteed Multiclass Mortgage
Participation Certificates:
Series 1181, Class 1181-G, 7.50%, Due 8/15/05 313 316
Series 1257, Class 1257-J, 7.00%, Due 4/15/07 184 179
FHLMC Guaranteed Pass-Thru Certificates:
9.50%, Due 1/01/06 144 150
10.25%, Due 3/01/15 169 183
10.50%, Due 1/01/16 30 33
FNMA Guaranteed Real Estate Mortgage Investment
Conduit Pass-Thru Certificates, 11.00%,
Due 10/01/00 thru 11/01/00 150 159
FNMA Guaranteed Real Estate Mortgage Investment
Conduit Pass-Thru Certificates, Series 1992-137,
Class BA, 3.50%, Due 1/25/17 452 430
FNMA Guaranteed Real Estate Mortgage Investment
Conduit Variable Rate Pass-Thru Certificates,
Series G92-61, Class FJ, 5.86%, Due 10/25/22 579 564
GNMA Guaranteed Pass-Thru Certificates:
7.50%, Due 12/15/07 2,193 2,220
10.25%, Due 10/15/98 7 8
Small Business Administration Guaranteed Loan
Pool #440019, Interest Only Custodial Receipts,
Series 1993-1A, 2.531%, Due 2/15/18 17,857 1,741
United States Treasury Bonds, 6.50%, Due 11/15/26 2,830 2,656
United States Treasury Notes:
6.25%, Due 3/31/99 (e) 2,650 2,649
6.50%, Due 10/15/06 2,320 2,281
6.75%, Due 4/30/00 2,100 2,118
7.25%, Due 8/15/04 3,000 3,095
7.75%, Due 12/31/99 1,520 1,569
--------
TOTAL UNITED STATES GOVERNMENT & AGENCY
ISSUES (COST $20,863) 20,351
OPTIONS 0.2%
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.) (COST $440) 9,500 497
SHORT-TERM INVESTMENTS (a) 12.6%
COMMERCIAL PAPER 0.6%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.26% $ 86 86
Johnson Controls, Inc., 5.28% 1,148 1,148
Sara Lee Corporation, 5.23% 404 404
Warner Lambert Company, 5.23% 67 67
--------
1,705
CORPORATE BONDS 0.6%
Chrysler Financial Corporation Medium Term
Notes, 6.21%, Due 7/21/97 200 200
Russia Sovereign Risk Notes, Zero %, Due 6/18/97 1,500 1,470
--------
1,670
REPURCHASE AGREEMENT 11.3%
Goldman, Sachs & Company, Inc. (Collateralized
by: $29,800 United States Treasury Bonds,
9.125%, Due 5/15/18), 5.27%, Due 5/01/97 (f) 29,800 29,800
See notes to financial statements.
15
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
UNITED STATES GOVERNMENT ISSUES 0.1%
United States Treasury Bills:
Due 7/10/97 (c) $ 40 $ 40
Due 7/17/97 (c) 110 109
--------
149
--------
TOTAL SHORT-TERM INVESTMENTS (COST $33,329) 33,324
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $261,358) 101.2% 267,843
Other Assets and Liabilities, Net (1.2%) (3,084)
--------
NET ASSETS 100.0% $264,759
========
FUTURES
- -------
UNDERLYING UNREALIZED
FACE AMOUNT APPRECIATION
EXPIRATION AT VALUE (DEPRECIATION)
DATE (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Purchased:
20 Two-Year U.S.Treasury Notes 6/97 $5,580 ($10)
53 Five-Year U.S.Treasury Notes 6/97 4,110 (24)
28 Ten-Year U.S.Treasury Notes 6/97 2,995 (9)
Sold:
20 Ten-Year U.S.Treasury Notes 6/97 (2,139) 8
70 U.S. Treasury Bonds 6/97 (7,650) 85
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- ---------------------------------------------------------------
United States ........................................ 90.7%
Hong Kong ............................................ 1.0
Japan ................................................ 0.9
New Zealand .......................................... 0.8
Russia ............................................... 0.8
Switzerland .......................................... 0.8
Bermuda .............................................. 0.7
Canada ............................................... 0.7
Finland .............................................. 0.7
Australia ............................................ 0.6
Singapore ............................................ 0.6
Italy ................................................ 0.4
Thailand ............................................. 0.3
United Kingdom ....................................... 0.3
Argentina ............................................ 0.2
France ............................................... 0.2
Germany .............................................. 0.2
Indonesia ............................................ 0.2
Netherlands .......................................... 0.2
Austria .............................................. 0.1
Brazil ............................................... 0.1
Ghana ................................................ 0.1
Malaysia ............................................. 0.1
Poland ............................................... 0.1
South Africa ......................................... 0.1
South Korea .......................................... 0.1
Taiwan ............................................... 0.1
Vietnam .............................................. 0.1
Other Assets and Liabilities, Net .................... (1.2)
------
Total 100.0%
======
- --------------------------------------------------------------------------------
STRONG EQUITY INCOME FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 93.4%
AEROSPACE & DEFENSE 3.5%
B.F. Goodrich & Company 23,200 $ 925
Thiokol Corporation 10,600 692
United Technologies Corporation 14,900 1,127
-------
2,744
AIRLINE 0.4%
Delta Air Lines, Inc. 3,400 313
AUTOMOBILE 0.5%
Ford Motor Company 10,500 365
BANK - MONEY CENTER 2.2%
BankAmerica Corporation 10,200 1,192
Citicorp 4,900 552
-------
1,744
BANK - SUPER REGIONAL 4.0%
Banc One Corporation 26,700 1,131
The Bank of New York Company, Inc. 30,400 1,201
PNC Bank Corporation 19,280 793
-------
3,125
BEVERAGE - ALCOHOLIC 0.8%
Anheuser-Busch Companies, Inc. 14,100 605
BEVERAGE - SOFT DRINK 1.2%
PepsiCo, Inc. 26,400 921
BROKERAGE & INVESTMENT MANAGEMENT 3.3%
Apartment Investment & Management Company
Class A 12,000 333
Bradley Real Estate, Inc. 28,100 537
First Union Real Estate Equity & Mortgage
Investments Share Beneficial Interest 30,100 410
Patriot American Hospitality, Inc. 30,500 656
Starwood Lodging Trust 18,250 703
-------
2,639
CHEMICAL 1.7%
The Dow Chemical Company 8,600 730
Monsanto Company 9,700 415
Union Carbide Corporation 3,800 190
-------
1,335
CHEMICAL - SPECIALTY 3.1%
Betzdearborn, Inc. 15,100 966
Morton International, Inc. 20,000 838
Praxair, Inc. 13,000 671
-------
2,475
COMMERCIAL SERVICE 1.9%
Avery Dennison Corporation 16,800 617
The Interpublic Group of Companies, Inc. 16,000 906
-------
1,523
COMPUTER - MAINFRAME 0.5%
International Business Machines Corporation 2,700 434
CONSUMER - MISCELLANEOUS 0.6%
Service Corporation International 14,200 486
COSMETIC & PERSONAL CARE 1.6%
Avon Products, Inc. 11,600 715
The Gillette Company 6,300 535
-------
1,250
DIVERSIFIED OPERATIONS 6.0%
Allied Signal, Inc. 11,300 816
American Standard Companies, Inc. (b) 15,300 641
Corning, Inc. 5,500 265
E.I. du Pont de Nemours & Company 7,300 775
Harsco Corporation 20,600 760
Olin Corporation 10,600 436
Textron, Inc. 9,700 1,080
-------
4,773
ELECTRICAL EQUIPMENT 4.2%
Emerson Electric Company 17,000 863
General Electric Company 10,100 1,120
Honeywell, Inc. 13,900 982
Westinghouse Electric Corporation 21,000 357
-------
3,322
See notes to financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
STRONG EQUITY INCOME FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
ELECTRONIC INSTRUMENTATION 1.3%
Fisher Scientific International, Inc. 14,600 $ 619
Perkin Elmer Corporation 5,300 385
-------
1,004
FINANCE - MISCELLANEOUS 1.7%
American Express Company 11,800 777
Dean Witter, Discover & Company 14,500 555
-------
1,332
FOOD 5.8%
CPC International, Inc. 6,800 562
Dean Foods Company 21,400 789
Dole Food Company, Inc. 5,910 241
Hershey Foods Corporation 15,100 819
Interstate Bakeries Corporation 2,500 130
Ralston Purina Company - Ralston Purina Group 7,600 626
Sara Lee Corporation 18,400 773
Unilever NV 3,200 628
-------
4,568
HEALTHCARE - DRUG/DIVERSIFIED 5.3%
Bristol-Myers Squibb Company 9,500 622
Johnson & Johnson 13,200 808
Eli Lilly & Company 9,600 844
Merck & Company, Inc. 10,900 986
Warner-Lambert Company 9,500 931
-------
4,191
HEALTHCARE - MEDICAL SUPPLY 0.9%
Becton, Dickinson & Company 15,000 690
HOUSEHOLD APPLIANCES & FURNISHINGS 1.5%
Philips Electronics NV ADR 21,600 1,156
HOUSING RELATED 1.3%
Snap-On, Inc. 17,500 674
Sherwin Williams Company 11,600 351
-------
1,025
INSURANCE - DIVERSIFIED 1.0%
Travelers Group, Inc. 13,566 751
INSURANCE - LIFE 2.5%
Conseco, Inc. 19,300 799
Reliastar Financial Corporation 12,400 750
Western National Corporation 16,600 427
-------
1,976
INSURANCE - PROPERTY & CASUALTY 1.0%
The Allstate Corporation 12,300 806
LEISURE PRODUCT 0.8%
Eastman Kodak Company 8,000 668
MACHINERY - AGRICULTURE 0.8%
Deere & Company 13,300 612
MACHINERY - CONSTRUCTION & MINING 1.0%
Caterpillar, Inc. 8,800 783
MACHINERY - MISCELLANEOUS 1.0%
Ingersoll Rand Company 16,800 825
MACHINERY - TRANSPORTATION EQUIPMENT
& PARTS 0.7%
Cummins Engine Company, Inc. 10,500 589
MEDIA - PUBLISHING 2.6%
Gannett Company, Inc. 9,900 864
Houghton Mifflin Company 6,900 387
McGraw-Hill, Inc. 15,400 783
-------
2,034
METAL PRODUCTS & FABRICATION 0.7%
Illinois Tool Works, Inc. 6,300 576
METALS & MINING 1.3%
Reynolds Metals Company 15,300 1,038
NATURAL GAS DISTRIBUTION 0.9%
El Paso Natural Gas Company 10,300 599
Sonat, Inc. 2,200 126
-------
725
OFFICE AUTOMATION 3.1%
Pitney Bowes, Inc. 20,600 1,318
Xerox Corporation 18,300 1,125
-------
2,443
OIL - INTERNATIONAL INTEGRATED 1.8%
Royal Dutch Petroleum Company 4,200 757
Texaco, Inc. 6,300 665
-------
1,422
OIL - NORTH AMERICAN INTEGRATED 3.0%
Amoco Corporation 10,000 836
Ashland, Inc. 16,700 745
USX-Marathon Group 28,900 798
-------
2,379
OIL WELL EQUIPMENT & SERVICE 1.3%
Schlumberger, Ltd. 9,600 1,063
PAPER & FOREST PRODUCTS 3.3%
Bowater, Inc. 18,600 804
Georgia-Pacific Corporation 10,100 788
Kimberly-Clark Corporation 15,100 774
The Mead Corporation 4,600 258
-------
2,624
PERSONAL & COMMERCIAL LENDING 0.7%
Household International, Inc. 6,000 528
POLLUTION CONTROL 0.8%
Browning-Ferris Industries, Inc. 21,500 610
RAILROAD 0.2%
Burlington Northern Santa Fe Corporation 1,800 142
RETAIL - DRUG STORE 2.4%
Rite Aid Corporation 23,600 1,086
Walgreen Company 18,000 828
-------
1,914
RETAIL - SPECIALTY 0.8%
The Home Depot, Inc. 10,700 621
SOAP & CLEANING PREPARATION 2.2%
Colgate Palmolive Company 8,850 982
The Procter & Gamble Company 6,100 767
-------
1,749
TELECOMMUNICATION EQUIPMENT 1.7%
Harris Corporation 6,100 522
Nokia Corporation Sponsored ADR 12,200 788
-------
1,310
TELEPHONE 1.8%
BellSouth Corporation 14,000 623
SBC Communications, Inc. 14,800 821
-------
1,444
TOBACCO 2.2%
American Brands, Inc. 18,600 1,000
Philip Morris Companies, Inc. 18,600 732
-------
1,732
TRUCKING 0.5%
CNF Transportation, Inc. 14,300 425
-------
TOTAL COMMON STOCKS (COST $69,136) 73,809
CONVERTIBLE PREFERRED STOCKS 2.7%
Corning LP Monthly Income 6.00% Preferred
Securities 9,300 707
Crown Cork & Seal, Inc., 4.50% 8,700 445
See notes to financial statements.
17
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
STRONG EQUITY INCOME FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
Merrill Lynch & Company, Inc. Structured Yield
Product, 6.50%, Due 8/15/98 (Exchangeable for
MGIC Investment Corporation Common Stock) 5,800 $ 405
SunAmerica, Inc. 8.50% Preferred Equity
Cumulative Redeemable Securities 13,400 566
-------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $1,847) 2,123
CONVERTIBLE BONDS 2.3%
Altera Corporation Subordinated Notes, 5.75%,
Due 6/15/02 (Acquired 12/03/96 - 3/05/97;
Cost $270) (d) $ 155 316
Diamond Offshore Drilling, Inc. Subordinated
Notes, 3.75%, Due 2/15/07 750 769
Federated Department Stores, Inc. Subordinated
Notes, 5.00%, Due 10/01/03 200 233
Hexcel Corporation Subordinated Notes, 7.00%,
Due 8/01/03 410 537
-------
TOTAL CONVERTIBLE BONDS (COST $1,736) 1,855
UNITED STATES GOVERNMENT ISSUES 0.0%
United States Treasury Bonds, 6.875%, Due 8/15/25
(COST $11) 10 10
SHORT-TERM INVESTMENTS (a) 6.0%
COMMERCIAL PAPER
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.26% 270 270
Johnson Controls, Inc., 5.28% 2,659 2,659
Sara Lee Corporation, 5.23% 1,330 1,330
Warner Lambert Company, 5.23% 41 41
Wisconsin Electric Power Company, 5.30% 467 467
-------
TOTAL SHORT-TERM INVESTMENTS (COST $4,767) 4,767
-------
TOTAL INVESTMENTS IN SECURITIES
(COST $77,497) 104.4% 82,564
Other Assets and Liabilities, Net (4.4%) (3,511)
-------
NET ASSETS 100.0% $79,053
=======
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- ---------------------------------------------------------------
United States ..................................... 100.2%
Netherlands ....................................... 3.2
Finland ........................................... 1.0
Other Assets and Liabilities, Net ................. (4.4)
------
Total 100.0%
======
- --------------------------------------------------------------------------------
STRONG AMERICAN UTILITIES FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.6%
ELECTRIC UTILITY 34.4%
Allegheny Power Systems, Inc. 3,000 $ 79
American Electric Power Company, Inc. 160,000 6,480
CMS Energy Corporation 151,000 4,794
Duke Power Company 10,000 439
Entergy Corporation 120,000 2,805
NIPSCO Industries, Inc. 38,000 1,501
PECO Energy Company 200,000 3,950
Rochester Gas & Electric Corporation 10,000 186
SCANA Corporation 276,000 6,658
The Southern Company 321,000 6,540
TECO Energy 312,000 7,449
TNP Enterprises, Inc. 20,000 420
--------
41,301
ENERGY RELATED 17.2%
Amoco Corporation 46,400 3,880
Anadarko Petroleum Corporation 2,200 121
Camco International, Inc. 8,500 377
Chevron Corporation 22,500 1,541
Dresser Industries, Inc. 3,000 90
Exxon Corporation 77,200 4,371
Imperial Oil, Ltd. 41,000 1,871
Mobil Corporation 6,800 884
Petroleum Geo-Services A/S ADR (b) 2,000 77
Phillips Petroleum Company 500 20
Royal Dutch Petroleum Company 6,500 1,172
Schlumberger, Ltd. 9,300 1,030
Shell Transport & Trading ADR 36,300 3,861
Transocean Offshore, Inc. 3,500 212
Triton Energy, Ltd. (b) 1,500 55
Ultramar Diamond Shamrock Corporation 5,500 177
Union Pacific Resources Group, Inc. 34,400 933
--------
20,672
GAS UTILITY 7.2%
Brooklyn Union Gas Company 7,000 192
MCN Energy Group, Inc. 149,000 4,265
National Fuel Gas Company 39,000 1,623
Questar Corporation 15,000 570
Southwestern Energy Corporation 54,800 692
Valero Energy Corporation 2,000 70
The Williams Companies, Inc. 29,000 1,272
--------
8,684
OTHER UTILITY 0.5%
American Water Works Company, Inc. (b) 28,000 595
Noble Drilling Corporation (b) 2,000 35
--------
630
TELECOMMUNICATION 35.3%
Alltel Corporation 105,000 3,308
Ameritech Corporation 212,000 12,959
Bell Atlantic Corporation 92,000 6,233
BellSouth Corporation 70,000 3,115
GTE Corporation 18,000 826
Nynex Corporation 51,000 2,639
SBC Communications, Inc. 229,777 12,753
US WEST Communications, Inc. 16,000 562
--------
42,395
--------
TOTAL COMMON STOCKS (COST $103,548) 113,682
SHORT-TERM INVESTMENTS (a) 4.4%
COMMERCIAL PAPER 4.4%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.26% $ 760 760
Johnson Controls, Inc., 5.28% 1,500 1,500
Sara Lee Corporation, 5.23% 3,004 3,004
Wisconsin Electric Power Company, 5.30% 10 10
--------
TOTAL SHORT-TERM INVESTMENTS (COST $5,274) 5,274
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $108,822) 99.0% 118,956
Other Assets and Liabilities, Net 1.0% 1,159
--------
NET ASSETS 100.0% $120,115
========
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- ---------------------------------------------------------------
United States ...................................... 93.2%
United Kingdom ..................................... 3.2
Canada ............................................. 1.5
Netherlands ........................................ 1.0
Norway ............................................. 0.1
Other Assets and Liabilities, Net .................. 1.0
------
Total 100.0%
======
See notes to financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
STRONG TOTAL RETURN FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 84.7%
AEROSPACE & DEFENSE 1.8%
Boeing Company 75,000 $ 7,397
United Technologies Corporation 80,000 6,050
--------
13,447
AIRLINE 3.0%
AMR Corporation (b) 95,000 8,847
Delta Air Lines, Inc. 90,000 8,291
UAL Corporation (b) 35,000 2,603
USAir Group, Inc. (b) 70,000 2,266
--------
22,007
BANK - MONEY CENTER 1.5%
Chase Manhattan Corporation 40,000 3,705
Citicorp 65,000 7,321
--------
11,026
BANK - REGIONAL 2.0%
First Bank System, Inc. 70,000 5,372
Firstar Corporation 100,000 2,937
Northern Trust Company 140,700 6,261
--------
14,570
BANK - SUPER REGIONAL 1.8%
NationsBank Corporation 75,000 4,528
Norwest Corporation 175,000 8,728
--------
13,256
BEVERAGE - SOFT DRINK 1.4%
The Coca-Cola Company 88,000 5,599
PepsiCo, Inc. 140,000 4,883
--------
10,482
BROKERAGE & INVESTMENT MANAGEMENT 2.3%
Patriot American Hospitality, Inc. 405,000 8,708
Starwood Lodging Trust 220,000 8,470
--------
17,178
CHEMICAL 2.5%
Monsanto Company 435,000 18,596
COMPUTER - MAINFRAME 0.3%
International Business Machines Corporation 15,000 2,411
COMPUTER SOFTWARE 1.5%
Microsoft Corporation 90,000 10,935
CONSUMER - MISCELLANEOUS 0.3%
Service Corporation International 60,000 2,055
CONTAINER 0.6%
Crown Cork & Seal Company, Inc. 85,000 4,654
COSMETIC & PERSONAL CARE 1.1%
The Gillette Company 100,000 8,500
DIVERSIFIED OPERATIONS 5.4%
Allied Signal, Inc. 80,000 5,780
Corning, Inc. 158,000 7,624
E.I. du Pont de Nemours & Company 135,000 14,327
Textron, Inc. 70,000 7,796
Tyco International, Ltd. 80,000 4,880
--------
40,407
ELECTRICAL EQUIPMENT 3.1%
Emerson Electric Company 90,000 4,568
General Electric Company 85,000 9,424
Honeywell, Inc. 35,000 2,472
Westinghouse Electric Corporation 400,000 6,800
--------
23,264
ELECTRONICS - SEMICONDUCTOR/COMPONENT 2.8%
Applied Materials, Inc. (b) 80,000 4,390
Intel Corporation 55,000 8,422
Texas Instruments, Inc. 90,000 8,032
--------
20,844
FINANCE - MISCELLANEOUS 1.5%
American Express Company 80,000 5,270
SunAmerica, Inc. 130,000 5,980
--------
11,250
FOOD 3.4%
Campbell Soup Company 75,000 3,834
Hershey Foods Corporation 130,000 7,053
Nabisco Holdings Corporation 85,000 3,262
Ralston Purina Company - Ralston Purina Group 45,000 3,707
Sara Lee Corporation 50,000 2,100
Unilever NV 25,000 4,906
--------
24,862
HEALTHCARE - DRUG/DIVERSIFIED 8.8%
Abbott Laboratories 160,000 9,760
American Home Products Corporation 75,000 4,969
Johnson & Johnson 130,000 7,962
Eli Lilly & Company 63,000 5,536
Merck & Company, Inc. 95,000 8,598
Pfizer, Inc. 130,000 12,480
Warner-Lambert Company 161,000 15,778
--------
65,083
HEALTHCARE - INSTRUMENTATION 0.7%
Medtronic, Inc. 70,000 4,847
HEALTHCARE - MEDICAL SUPPLY 1.7%
Cardinal Health, Inc. 80,000 4,260
McKesson Corporation 120,000 8,685
--------
12,945
HEALTHCARE - PATIENT CARE 0.8%
HEALTHSOUTH Corporation (b) 300,000 5,925
HOUSEHOLD APPLIANCES & FURNISHINGS 0.4%
Sunbeam Corporation 85,000 2,699
INSURANCE - DIVERSIFIED 1.1%
Travelers Group, Inc. 141,000 7,808
INSURANCE - LIFE 1.5%
Conseco, Inc. 175,000 7,241
Western National Corporation 160,000 4,120
--------
11,361
INSURANCE - MULTI-LINE 0.7%
MGIC Investment Corporation 61,600 5,005
INSURANCE - PROPERTY & CASUALTY 0.9%
The Allstate Corporation 90,000 5,895
Hartford Financial Services Group 7,900 589
--------
6,484
LEISURE PRODUCT 0.3%
Eastman Kodak Company 25,000 2,087
LEISURE SERVICE 1.5%
The Walt Disney Company 35,000 2,870
HFS, Inc. (b) 145,000 8,591
--------
11,461
MACHINERY - AGRICULTURE 0.2%
Deere & Company 40,000 1,840
MACHINERY - CONSTRUCTION & MINING 0.2%
Caterpillar, Inc. 20,000 1,780
MEDIA - PUBLISHING 2.2%
Gannett Company, Inc. 70,000 6,108
McGraw-Hill, Inc. 75,000 3,816
New York Times Company Class A 90,000 3,892
The Times Mirror Company Class A 50,000 2,762
--------
16,578
METAL PRODUCTS & FABRICATION 0.7%
Illinois Tool Works, Inc. 60,000 5,483
See notes to financial statements.
19
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
STRONG TOTAL RETURN FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
METALS & MINING 0.6%
Aluminum Company of America 60,000 $ 4,192
MORTGAGE & RELATED SERVICE 0.5%
Federal National Mortgage Association 90,000 3,701
NATURAL GAS DISTRIBUTION 1.1%
El Paso Natural Gas Company 30,000 1,744
The Williams Companies, Inc. 147,200 6,458
--------
8,202
OFFICE AUTOMATION 1.4%
Xerox Corporation 165,000 10,148
OIL - INTERNATIONAL INTEGRATED 3.7%
Exxon Corporation 200,000 11,325
Mobil Corporation 40,000 5,200
Texaco, Inc. 100,000 10,550
--------
27,075
OIL - NORTH AMERICAN INTEGRATED 1.4%
Sun Company, Inc. 75,000 2,053
Tosco Corporation 250,000 7,406
USX-Marathon Group 40,000 1,105
--------
10,564
OIL WELL EQUIPMENT & SERVICE 4.7%
Diamond Offshore Drilling, Inc. (b) 50,000 3,219
ENSCO International, Inc. (b) 70,000 3,325
Halliburton Company 145,000 10,241
Reading & Bates Corporation (b) 100,000 2,237
Schlumberger, Ltd. 74,000 8,196
Smith International, Inc. (b) 100,000 4,737
Transocean Offshore, Inc. 50,000 3,031
--------
34,986
PAPER & FOREST PRODUCTS 2.0%
Georgia-Pacific Corporation 45,000 3,510
Kimberly-Clark Corporation 190,000 9,737
The Mead Corporation 30,000 1,684
--------
14,931
PERSONAL & COMMERCIAL LENDING 0.2%
Household International, Inc. 15,700 1,382
RETAIL - DRUG STORE 2.2%
CVS Corporation 80,000 3,970
Rite Aid Corporation 135,000 6,210
Walgreen Company 140,000 6,440
--------
16,620
RETAIL - FOOD CHAIN 0.4%
Safeway, Inc. (b) 70,000 3,124
RETAIL - MAJOR CHAIN 0.9%
Dayton Hudson Corporation 65,000 2,925
Wal-Mart Stores, Inc. 130,000 3,672
--------
6,597
RETAIL - RESTAURANT 0.4%
McDonald's Corporation 60,000 3,217
RETAIL - SPECIALTY 0.7%
The Home Depot, Inc. 85,000 4,930
SAVINGS & LOAN 0.3%
Washington Mutual, Inc. 40,000 1,975
SHOE & APPAREL MANUFACTURING 0.2%
NIKE, Inc. Class B 20,000 1,125
SOAP & CLEANING PREPARATION 1.4%
Clorox Company 20,000 2,547
The Procter & Gamble Company 65,000 8,174
--------
10,721
TELECOMMUNICATION EQUIPMENT 2.1%
Lucent Technologies, Inc. 140,000 8,278
Nokia Corporation Sponsored ADR 60,000 3,877
Tellabs, Inc. (b) 90,000 3,589
--------
15,744
TELEPHONE 2.1%
BellSouth Corporation 55,000 2,447
Cincinnati Bell, Inc. 90,000 5,040
GTE Corporation 50,000 2,294
SBC Communications, Inc. 100,000 5,550
--------
15,331
TOBACCO 0.4%
Phillip Morris Companies, Inc. 70,000 2,756
--------
TOTAL COMMON STOCKS (COST $564,330) 628,451
CONVERTIBLE PREFERRED STOCKS 1.8%
McKesson Financing Trust 2.50%
(Acquired 2/13/97; Cost $2,500)(d) 50,000 2,894
Qualcomm Financial Trust I 5.75%
(Acquired 2/19/97; Cost $2,000)(b)(d) 40,000 1,775
SCI Financial LLC Terminal Convertible Shares
Series A $3.125 40,000 4,585
Tosco Financing Trust 5.75% (Acquired 12/10/96 -
2/13/97; Cost $4,233)(b)(d) 80,000 4,460
--------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $12,347) 13,714
CONVERTIBLE BONDS 3.7%
Altera Corporation Subordinated Notes, 5.75%,
Due 6/15/02 (Acquired 9/16/96 - 4/04/97;
Cost $3,105)(d) $ 2,000 4,073
Danka Business Systems PLC Subordinated Notes,
6.75%, Due 4/01/02 12,000 14,490
Staples, Inc. Subordinated Debentures, 4.50%,
Due 10/01/00 (Acquired 9/12/95 - 3/06/97;
Cost $3,726)(d) 3,500 3,640
United States Filter Corporation Subordinated
Notes, 4.50%, Due 12/15/01 5,150 5,144
--------
TOTAL CONVERTIBLE BONDS (COST $25,015) 27,347
SHORT-TERM INVESTMENTS (a) 4.8%
COMMERCIAL PAPER 0.4%
INTEREST BEARING, DUE UPON DEMAND
Johnson Controls, Inc., 5.28% 2,763 2,763
Sara Lee Corporation, 5.23% 441 441
Wisconsin Electric Power Company, 5.30% 90 90
--------
3,294
REPURCHASE AGREEMENT 4.4%
Cantor Fitzgerald & Company, Inc. (Collateralized
by: $8,411 United States Treasury Notes, 6.25%,
Due 1/31/02), 5.34%, Due 5/01/97 (f) 8,400 8,400
Firstar Corporation (Collateralized by: $20,000
United States Treasury Notes, 6.50%, Due 4/30/99
and $4,300 United States Treasury Notes, 5.50%,
Due 9/30/97), 4.00%, Due 5/01/97 (f) 24,300 24,300
--------
32,700
--------
TOTAL SHORT-TERM INVESTMENTS (COST $35,994) 35,994
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $637,686) 95.0% 705,506
Other Assets and Liabilities, Net 5.0% 36,965
--------
NET ASSETS 100.0% $742,471
========
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- ---------------------------------------------------------------
United States ....................................... 91.8%
United Kingdom ...................................... 2.0
Netherlands ......................................... 0.7
Finland ............................................. 0.5
Other Assets and Liabilities, Net ................... 5.0
------
Total 100.0%
======
See notes to financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
STRONG GROWTH & INCOME FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 96.3%
AEROSPACE & DEFENSE 3.1%
B.F. Goodrich & Company 34,900 $ 1,392
Thiokol Corporation 14,300 933
United Technologies Corporation 22,800 1,724
--------
4,049
AIRLINE 0.4%
Delta Air Lines, Inc. 6,100 562
AUTOMOBILE 0.5%
Ford Motor Company 16,700 580
BANK - MONEY CENTER 2.2%
BankAmerica Corporation 16,600 1,940
Citicorp 8,100 912
--------
2,852
BANK - SUPER REGIONAL 3.9%
Banc One Corporation 40,300 1,708
The Bank of New York Company, Inc. 49,700 1,963
PNC Bank Corporation 31,500 1,295
--------
4,966
BEVERAGE - ALCOHOLIC 0.8%
Anheuser-Busch Companies, Inc. 22,500 965
BEVERAGE - SOFT DRINK 0.6%
PepsiCo, Inc. 22,700 792
BROKERAGE & INVESTMENT MANAGEMENT 3.1%
Apartment Investment & Management Company
Class A 17,000 472
Bradley Real Estate, Inc. 40,500 775
First Union Real Estate Equity & Mortgage
Investments Share Beneficial Interest 42,100 574
Patriot American Hospitality, Inc. 47,500 1,021
Starwood Lodging Trust 28,400 1,093
--------
3,935
CHEMICAL 1.8%
The Dow Chemical Company 12,800 1,086
Monsanto Company 29,400 1,257
--------
2,343
CHEMICAL - SPECIALTY 1.7%
Morton International, Inc. 25,700 1,076
Praxair, Inc. 20,500 1,058
--------
2,134
COMMERCIAL SERVICE 2.7%
ADT, Ltd. (b) 57,500 1,574
Avery Dennison Corporation 25,600 941
The Interpublic Group of Companies, Inc. 17,900 1,014
--------
3,529
COMPUTER - MAINFRAME 0.5%
International Business Machines Corporation 4,400 707
COMPUTER SOFTWARE 1.1%
Microsoft Corporation 11,600 1,409
COSMETIC & PERSONAL CARE 1.9%
Avon Products, Inc. 18,500 1,140
The Gillette Company 15,000 1,275
--------
2,415
DIVERSIFIED OPERATIONS 6.2%
Allied Signal, Inc. 17,600 1,272
American Standard Companies, Inc. (b) 23,300 976
Corning, Inc. 34,000 1,641
E.I. du Pont de Nemours & Company 11,700 1,242
Harsco Corporation 32,800 1,209
Textron, Inc. 14,800 1,648
--------
7,988
ELECTRICAL EQUIPMENT 3.5%
Emerson Electric Company 24,500 1,243
General Electric Company 15,900 1,763
Honeywell, Inc. 20,900 1,476
--------
4,482
ELECTRONIC INSTRUMENTATION 0.8%
Fisher Scientific International, Inc. 7,400 314
Perkin Elmer Corporation 9,300 675
--------
989
ELECTRONICS - SEMICONDUCTOR/COMPONENT 3.4%
Intel Corporation 12,600 1,929
Motorola, Inc. 11,500 658
Texas Instruments, Inc. 20,300 1,812
--------
4,399
FINANCE - MISCELLANEOUS 1.5%
American Express Company 19,300 1,271
Dean Witter, Discover & Company 18,500 708
--------
1,979
FOOD 4.8%
CPC International, Inc. 10,100 835
Dean Foods Company 31,600 1,165
Hershey Foods Corporation 23,900 1,297
Interstate Bakeries Corporation 19,500 1,012
Ralston Purina Company - Ralston Purina Group 11,600 956
Unilever NV 4,700 922
--------
6,187
HEALTHCARE - DRUG/DIVERSIFIED 4.8%
Bristol-Myers Squibb Company 12,800 838
Johnson & Johnson 21,000 1,286
Eli Lilly & Company 14,650 1,287
Merck & Company, Inc. 16,500 1,493
Warner-Lambert Company 12,700 1,245
--------
6,149
HEALTHCARE - INSTRUMENTATION 0.8%
Medtronic, Inc. 14,000 969
HEALTHCARE - MEDICAL SUPPLY 0.8%
Becton, Dickinson & Company 23,400 1,076
HEALTHCARE - PATIENT CARE 0.5%
HEALTHSOUTH Corporation (b) 32,400 640
HOUSEHOLD APPLIANCES & FURNISHINGS 2.3%
Philips Electronics NV ADR 33,400 1,787
Sunbeam Corporation 38,500 1,222
--------
3,009
HOUSING RELATED 0.7%
Snap-On, Inc. 23,400 901
INSURANCE - DIVERSIFIED 1.0%
Travelers Group, Inc. 22,100 1,224
INSURANCE - LIFE 2.3%
Conseco, Inc. 29,500 1,221
Reliastar Financial Corporation 18,900 1,143
Western National Corporation 23,200 597
--------
2,961
INSURANCE - PROPERTY & CASUALTY 1.0%
The Allstate Corporation 18,900 1,238
LEISURE PRODUCT 0.8%
Eastman Kodak Company 12,100 1,010
LEISURE SERVICE 1.0%
HFS, Inc. (b) 22,000 1,304
MACHINERY - AGRICULTURE 0.8%
Deere & Company 21,100 971
MACHINERY - CONSTRUCTION & MINING 0.7%
Caterpillar, Inc. 9,800 872
MACHINERY - MISCELLANEOUS 1.0%
Ingersoll Rand Company 26,600 1,307
See notes to financial statements.
21
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
STRONG GROWTH & INCOME FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
MACHINERY - TRANSPORTATION EQUIPMENT &
PARTS 0.7%
Cummins Engine Company, Inc. 17,100 $ 960
MEDIA - PUBLISHING 2.3%
Gannett Company, Inc. 13,600 1,187
Houghton Mifflin Company 12,900 724
McGraw-Hill, Inc. 21,800 1,109
--------
3,020
METAL PRODUCTS & FABRICATION 0.9%
Illinois Tool Works, Inc. 12,800 1,170
METALS & MINING 1.3%
Reynolds Metals Company 24,500 1,663
NATURAL GAS DISTRIBUTION 0.7%
El Paso Natural Gas Company 16,500 959
OFFICE AUTOMATION 2.7%
Pitney Bowes, Inc. 26,400 1,690
Xerox Corporation 28,200 1,734
--------
3,424
OIL - INTERNATIONAL INTEGRATED 1.7%
Royal Dutch Petroleum Company 6,605 1,190
Texaco, Inc. 10,000 1,055
--------
2,245
OIL - NORTH AMERICAN INTEGRATED 2.6%
Amoco Corporation 15,000 1,255
Ashland, Inc. 26,000 1,160
Tosco Corporation 29,400 871
--------
3,286
OIL WELL EQUIPMENT & SERVICE 5.0%
Cooper Cameron Corporation (b) 15,000 1,069
Diamond Offshore Drilling, Inc. (b) 22,100 1,423
ENSCO International, Inc. (b) 23,500 1,116
Energy Ventures, Inc. (b) 18,900 1,264
Schlumberger, Ltd. 14,700 1,628
--------
6,500
PAPER & FOREST PRODUCTS 2.9%
Bowater, Inc. 29,500 1,276
Georgia-Pacific Corporation 16,300 1,271
Kimberly-Clark Corporation 24,000 1,230
--------
3,777
PERSONAL & COMMERCIAL LENDING 0.6%
Household International, Inc. 8,900 783
POLLUTION CONTROL 0.7%
WMX Technologies, Inc. 32,600 958
RETAIL - DRUG STORE 2.0%
Rite Aid Corporation 28,500 1,311
Walgreen Company 28,100 1,293
--------
2,604
RETAIL - FOOD CHAIN 0.9%
American Stores Company 24,700 1,124
RETAIL - SPECIALTY 0.8%
The Home Depot, Inc. 17,400 1,009
SOAP & CLEANING PREPARATION 1.9%
Colgate Palmolive Company 12,000 1,332
The Procter & Gamble Company 9,200 1,157
--------
2,489
TELECOMMUNICATION EQUIPMENT 2.8%
Harris Corporation 9,400 804
Lucent Technologies, Inc. 22,000 1,301
Nokia Corporation Sponsored ADR 23,700 1,532
--------
3,637
TELEPHONE 1.8%
BellSouth Corporation 22,800 1,015
SBC Communications, Inc. 23,700 1,315
--------
2,330
TOBACCO 1.0%
American Brands, Inc. 24,500 1,317
--------
TOTAL COMMON STOCKS (COST $116,981) 124,148
CONVERTIBLE PREFERRED STOCKS 2.2%
Corning LP Monthly Income Securties 6.00% 3,700 281
Crown Cork & Seal, Inc. 4.50% 15,200 777
Merrill Lynch & Company, Inc. Structured Yield
Product, 6.50%, Due 8/15/98 8,800 615
SunAmerica, Inc. Preferred Equity Cumulative
Redeemable Securities 19,000 803
Tosco Financing Trust 5.75% (Acquired 12/10/96;
Cost $280)(b)(d) 5,600 312
--------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $2,632) 2,788
CONVERTIBLE BONDS 1.0%
Altera Corporation Subordinated Notes, 5.75%,
Due 6/15/02 (Acquired 1/16/97 - 3/05/97;
Cost $451)(d) $ 250 509
Hexcel Corporation Subordinated Notes, 7.00%,
Due 8/01/03 600 786
--------
TOTAL CONVERTIBLE BONDS (COST $1,212) 1,295
UNITED STATES GOVERNMENT ISSUES 0.0%
United States Treasury Bonds, 6.875%,
Due 8/15/25 (COST $35) 31 30
SHORT-TERM INVESTMENTS (a) 3.1%
COMMERCIAL PAPER 2.3%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.26% 100 100
Johnson Controls, Inc., 5.28% 983 983
Sara Lee Corporation, 5.23% 977 977
Warner Lambert Company, 5.23% 396 396
Wisconsin Electric Power Company, 5.30% 510 510
--------
2,966
MONEY MARKET 0.8%
Strong Institutional Money Fund 1,000 1,000
--------
TOTAL SHORT-TERM INVESTMENTS (COST $3,966) 3,966
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $124,826) 102.6% 132,227
Other Assets and Liabilities, Net (2.6%) (3,288)
--------
NET ASSETS 100.0% $128,939
========
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- ---------------------------------------------------------------
United States ......................................... 98.4%
Netherlands ........................................... 3.0
Finland ............................................... 1.2
Other Assets and Liabilities, Net ..................... (2.6)
------
Total 100.0%
======
LEGEND
- ------
(a) Short-term investments include 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) When-issued security.
(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.
See notes to financial statements.
22
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
April 30, 1997 (Unaudited) (In Thousands, Except Per Share Amounts)
<CAPTION>
STRONG ASSET STRONG EQUITY STRONG AMERICAN
ALLOCATION FUND INCOME FUND UTILITIES FUND
--------------- ------------- ---------------
ASSETS:
Investments in Securities, at Value
(Including Repurchase Agreements of $29,800,
$0 and $0, respectively)
<S> <C> <C> <C>
(Cost of $261,358, $77,497 and $108,822, respectively) $267,843 $ 82,564 $118,956
Receivable from Brokers for Securities Sold 3,006 1,307 561
Receivable for Fund Shares Sold -- 127 16
Dividends and Interest Receivable 1,273 92 608
Other Assets 36 35 40
-------- -------- --------
Total Assets 272,158 84,125 120,181
LIABILITIES:
Payable to Brokers for Securities Purchased 7,320 5,031 29
Payable for Fund Shares Redeemed -- 2 --
Accrued Operating Expenses and Other Liabilities 79 39 37
-------- -------- --------
Total Liabilities 7,399 5,072 66
-------- -------- --------
NET ASSETS $264,759 $ 79,053 $120,115
======== ======== ========
Capital Shares Outstanding (Unlimited Number Authorized) 13,650 5,836 9,591
NET ASSET VALUE PER SHARE $19.40 $13.55 $12.52
====== ====== ======
STRONG TOTAL STRONG GROWTH
RETURN FUND & INCOME FUND
----------- -------------
ASSETS:
Investments in Securities, at Value (Cost of $637,686
and $124,826, respectively) $705,506 $132,227
Cash 51,300 --
Receivable from Brokers for Securities Sold 27,330 5,491
Receivable for Fund Shares Sold 6 86
Dividends and Interest Receivable 648 119
Other Assets 64 28
-------- --------
Total Assets 784,854 137,951
LIABILITIES:
Payable to Brokers for Securities Purchased 42,271 8,941
Payable for Fund Shares Redeemed -- 10
Accrued Operating Expenses and Other Liabilities 112 61
-------- --------
Total Liabilities 42,383 9,012
-------- --------
NET ASSETS $742,471 $128,939
======== ========
Capital Shares Outstanding (Unlimited Number Authorized) 26,641 9,266
NET ASSET VALUE PER SHARE $27.87 $13.92
====== ======
See notes to financial statements.
23
</TABLE>
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
For the Six Months Ended April 30, 1997 (Unaudited)
(In Thousands)
<CAPTION>
STRONG ASSET STRONG EQUITY STRONG AMERICAN
ALLOCATION FUND INCOME FUND UTILITIES FUND
--------------- ----------- --------------
INCOME:
<S> <C> <C> <C>
Dividends $ 1,649 $ 501 $2,487
Interest 4,653 89 170
------- ------ ------
Total Income 6,302 590 2,657
EXPENSES:
Investment Advisory Fees 1,078 202 483
Custodian Fees 41 10 11
Shareholder Servicing Costs 303 53 166
Federal and State Registration Fees 17 28 23
Other 59 15 42
------- ------ ------
Total Expenses 1,498 308 725
------- ------ ------
NET INVESTMENT INCOME 4,804 282 1,932
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 11,267 1,923 3,584
Futures Contracts, Options and Forward Foreign Currency Contracts 170 -- --
Foreign Currencies (1) -- --
Change in Unrealized Appreciation/Depreciation on:
Investments 271 2,703 1,516
Futures Contracts, Options and Forward Foreign Currency Contracts (50) -- --
Foreign Currencies (1) -- --
------- ------ ------
NET GAIN 11,656 4,626 5,100
------- ------ ------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $16,460 $4,908 $7,032
======= ====== ======
STRONG TOTAL STRONG GROWTH
RETURN FUND & INCOME FUND
----------- -------------
INCOME:
Dividends $ 5,457 $ 640
Interest 1,713 92
------- -------
Total Income 7,170 732
EXPENSES:
Investment Advisory Fees 3,045 285
Custodian Fees 36 15
Shareholder Servicing Costs 792 91
Federal and State Registration Fees 17 51
Other 177 30
------- -------
Total Expenses 4,067 472
------- -------
NET INVESTMENT INCOME 3,103 260
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 41,107 (313)
Futures Contracts (182) --
Change in Unrealized Appreciation/Depreciation on Investments (6,736) 6,253
------- -------
NET GAIN 34,189 5,940
------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $37,292 $ 6,200
======= =======
See notes to financial statements.
</TABLE>
24
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
STRONG ASSET STRONG EQUITY
ALLOCATION FUND INCOME FUND
------------------------------- ---------------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED PERIOD ENDED
APRIL 30, 1997 OCT. 31, 1996 APRIL 30, 1997 OCT. 31, 1996
---------------- ------------- ---------------- -------------
(UNAUDITED) (UNAUDITED) (NOTE 1)
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income $ 4,804 $ 10,344 $ 282 $ 220
Net Realized Gain (Loss) 11,436 18,985 1,923 (226)
Change in Unrealized Appreciation/Depreciation 220 (5,538) 2,703 2,365
-------- -------- -------- --------
Increase in Net Assets Resulting from Operations 16,460 23,791 4,908 2,359
CAPITAL SHARE TRANSACTIONS 10,602 4,776 45,653 26,576
DISTRIBUTIONS:
From Net Investment Income (5,679) (11,071) (231) (212)
From Net Realized Gains (19,794) (15,048) -- --
-------- -------- -------- --------
TOTAL INCREASE IN NET ASSETS 1,589 2,448 50,330 28,723
NET ASSETS:
Beginning of Period 263,170 260,722 28,723 --
-------- -------- -------- --------
End of Period $264,759 $263,170 $ 79,053 $ 28,723
======== ======== ======== ========
</TABLE>
<TABLE>
STRONG AMERICAN
UTILITIES FUND
<CAPTION>
--------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCT. 31, 1996
---------------- -------------
(UNAUDITED)
OPERATIONS:
<S> <C> <C>
Net Investment Income $ 1,932 $ 4,070
Net Realized Gain 3,584 8,401
Change in Unrealized Appreciation/Depreciation 1,516 (1,982)
-------- --------
Increase in Net Assets Resulting from Operations 7,032 10,489
CAPITAL SHARE TRANSACTIONS (764) 24,205
DISTRIBUTIONS:
From Net Investment Income (1,823) (3,904)
From Net Realized Gains (6,816) --
-------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS (2,371) 30,790
NET ASSETS:
Beginning of Period 122,486 91,696
-------- --------
End of Period $120,115 $122,486
======== ========
See notes to financial statements.
25
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<TABLE>
- ---------------------------------------------------------------------------------------------------------
(In Thousands)
STRONG TOTAL
RETURN FUND
-------------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCT. 31, 1996
---------------- -------------
(UNAUDITED)
OPERATIONS:
<S> <C> <C>
Net Investment Income $ 3,103 $ 5,816
Net Realized Gain 40,925 116,429
Change in Unrealized Appreciation/Depreciation (6,736) (4,578)
-------- --------
Increase in Net Assets Resulting from Operations 37,292 117,667
CAPITAL SHARE TRANSACTIONS 63,054 8,676
DISTRIBUTIONS:
From Net Investment Income (6,949) (5,816)
In Excess of Net Investment Income -- (1,467)
From Net Realized Gains (111,146) (29,798)
-------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS (17,749) 89,262
NET ASSETS:
Beginning of Period 760,220 670,958
-------- --------
End of Period $742,471 $760,220
======== ========
STRONG GROWTH
& INCOME FUND
-------------------------------
SIX MONTHS ENDED PERIOD ENDED
APRIL 30, 1997 OCT. 31, 1996
---------------- -------------
(UNAUDITED) (NOTE 1)
OPERATIONS:
Net Investment Income $ 260 $ 30
Net Realized Gain (Loss) (313) 27
Change in Unrealized Appreciation/Depreciation 6,253 1,147
-------- --------
Increase in Net Assets Resulting from Operations 6,200 1,204
CAPITAL SHARE TRANSACTIONS 105,010 16,807
DISTRIBUTIONS:
From Net Investment Income (205) (21)
From Net Realized Gains (56) --
-------- --------
TOTAL INCREASE IN NET ASSETS 110,949 17,990
NET ASSETS:
Beginning of Period 17,990 --
-------- --------
End of Period $128,939 $ 17,990
======== ========
See notes to financial statements.
</TABLE>
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
April 30, 1997 (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 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 valuations 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, 1997 were as follows (in
thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG EQUITY STRONG TOTAL STRONG GROWTH
ALLOCATION FUND INCOME FUND RETURN FUND & INCOME FUND
--------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Aggregate Cost $15,485 $270 $15,564 $731
Aggregate Fair Value 15,884 316 16,842 821
Percent of Net Assets 6.0%* 0.4% 2.3% 0.6%
</TABLE>
*Of these securities, which are restricted from resale, 66% are
eligible for resale pursuant to Rule 144A under the Securities Act
of 1933 and also have been determined to be liquid by the Advisor
based upon guidelines established by the Fund's Board of Directors.
(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 -- Gains or
losses realized on investment transactions are 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 or other investments 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.
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
April 30, 1997 (Unaudited)
(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.
(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 foreign currency exchange
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 foreign currency exchange
contracts may involve greater risks than domestic transactions,
including currency, political and economic, regulatory and market
risks.
(I) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the
reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ
from those estimates.
(J) 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 premiums and discounts.
3. NET ASSETS
Net assets as of April 30, 1997 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG EQUITY STRONG AMERICAN STRONG TOTAL STRONG GROWTH
ALLOCATION FUND INCOME FUND UTILITIES FUND RETURN FUND & INCOME FUND
--------------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Capital Stock $248,271 $72,229 $106,232 $637,033 $121,816
Undistributed Net Investment Income 817 80 484 494 64
Undistributed Net Realized Gain (Loss) 9,138 1,677 3,265 37,124 (342)
Net Unrealized Appreciation 6,533 5,067 10,134 67,820 7,401
-------- ------- -------- -------- --------
$264,759 $79,053 $120,115 $742,471 $128,939
======== ======= ======== ======== ========
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the six months ended April 30, 1997
and the year ended October 31, 1996, respectively, were as follows (in
thousands):
<TABLE>
1997 1996
----------------- -----------------
<CAPTION>
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
STRONG ASSET ALLOCATION FUND
<S> <C> <C> <C> <C>
Shares Sold 936 $18,530 2,141 $ 42,832
Dividends Reinvested 1,271 24,663 1,274 25,146
Shares Redeemed (1,637) (32,591) (3,168) (63,202)
------ ------- ------ --------
570 $10,602 247 $ 4,776
====== ======= ====== ========
STRONG EQUITY INCOME FUND
Shares Sold 4,822 $63,663 2,756 $ 30,697
Dividends Reinvested 17 223 18 207
Shares Redeemed (1,392) (18,233) (386) (4,328)
------ ------- ------ --------
3,447 $45,653 2,388 $ 26,576
====== ======= ====== ========
STRONG AMERICAN UTILITIES FUND
Shares Sold 2,660 $34,055 12,627 $158,043
Dividends Reinvested 644 8,179 293 3,644
Shares Redeemed (3,404) (42,998) (11,043) (137,482)
------ ------- ------ --------
(100) ($ 764) 1,877 $ 24,205
====== ======= ====== ========
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
1997 1996
----------------- -----------------
<CAPTION>
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
STRONG TOTAL RETURN FUND
<S> <C> <C> <C> <C>
Shares Sold 3,778 $109,330 6,135 $181,834
Dividends Reinvested 4,169 115,272 1,272 36,262
Shares Redeemed (5,546) (161,548) (7,115) (209,420)
------ -------- ------ --------
2,401 $ 63,054 292 $ 8,676
====== ======== ====== ========
STRONG GROWTH & INCOME FUND
Shares Sold 9,666 $129,689 1,816 $ 20,948
Dividends Reinvested 19 255 2 19
Shares Redeemed (1,872) (24,934) (365) (4,160)
------ -------- ------ --------
7,813 $105,010 1,453 $ 16,807
====== ======== ====== ========
</TABLE>
5. RELATED PARTY TRANSACTIONS
Strong Capital Management, Inc. (the "Advisor"), with whom certain officers
and directors of the Funds are affiliated, provides investment advisory
services and shareholder recordkeeping and related services to the Funds.
Investment advisory fees, which are established by terms of the Advisory
Agreements, are based on the following annualized rates of the average
daily net assets: Strong American Utilities Fund .75%, Strong Equity Income
Fund and Strong Growth &Income Fund .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 the Advisor. 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
six months ended April 30, 1997 totaled (in thousands) $111.
The Funds may invest cash reserves in money market funds sponsored and
managed by Strong Capital Management, Inc., subject to certain limitations.
The terms of such transactions are identical to those of non-related
entities except that, to avoid duplicate investment advisory fees, the
Advisor remits to each Fund an amount equal to all fees otherwise due to
them under their investment advisory agreement for the assets invested in
such money market funds.
Certain information regarding related party transactions for the six months
ended April 30, 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG EQUITY STRONG AMERICAN STRONG TOTAL STRONG GROWTH
ALLOCATION FUND INCOME FUND UTILITIES FUND RETURN FUND & INCOME FUND
--------------- ----------- -------------- ----------- -------------
Payable to (Receivable from)
<S> <C> <C> <C> <C> <C>
Advisor at April 30, 1997 ($4) $30 $23 $-- $30
Other Shareholder Servicing
Expenses Paid to Advisor 5 1 3 14 2
Unaffiliated Directors' Fees 3 1 2 6 1
</TABLE>
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the six
months ended April 30, 1997 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG EQUITY STRONG AMERICAN STRONG TOTAL STRONG GROWTH
ALLOCATION FUND INCOME FUND UTILITIES FUND RETURN FUND & INCOME FUND
--------------- ----------- -------------- ----------- -------------
Purchases:
<S> <C> <C> <C> <C> <C>
U.S. Government and Agency $ 44,457 $ -- $ -- $ -- $ --
Other 302,406 98,111 31,891 1,299,415 203,342
Sales:
U.S. Government and Agency 42,461 -- -- -- --
Other 333,333 52,021 38,881 1,392,009 97,821
</TABLE>
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
April 30, 1997 (Unaudited)
7. INCOME TAX INFORMATION
At April 30, 1997, the investment cost, gross unrealized appreciation and
depreciation on investments for federal income tax purposes were as follows
(in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG EQUITY STRONG AMERICAN STRONG TOTAL STRONG GROWTH
ALLOCATION FUND INCOME FUND UTILITIES FUND RETURN FUND & INCOME FUND
--------------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Aggregate Investment Cost $261,783 $77,777 $109,282 $644,356 $125,450
======== ======= ======== ======== ========
Aggregate Unrealized:
Appreciation $ 14,601 $ 5,806 $ 13,168 $ 67,642 $ 8,376
Depreciation (8,497) (1,018) (3,494) (6,491) (1,599)
-------- ------- -------- -------- --------
$ 6,104 $ 4,788 $ 9,674 $ 61,151 $ 6,777
======== ======= ======== ======== ========
Capital Loss Carryovers
(at October 31, 1996) $ -- $ 211 $ -- $ -- $ --
======== ======= ======== ======== ========
</TABLE>
Capital loss carryovers expire in varying amounts through 2004.
30
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND
- ----------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA(a)
-----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
---------------------------------- -----------------------------------------
<CAPTION>
Net Realized
Net Asset and Unrealized Total In Excess Net Asset
Value, Net Gains from From Net From Net of Net Value,
Beginning Investment (Losses) on Investment Investment Realized Realized Total End of
of Period Income Investments Operations Income Gains Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
April 30, 1997(c) $20.12 $0.36 $0.89 $1.25 ($0.43) ($1.54) __ ($1.97) $19.40
Oct. 31, 1996 20.31 0.78 1.05 1.83 (0.84) (1.18) __ (2.02) 20.12
Oct. 31, 1995(d) 17.91 0.66 2.32 2.98 (0.58) __ __ (0.58) 20.31
Dec. 31, 1994 19.06 0.70 (0.99) (0.29) (0.70) __ ($0.16) (0.86) 17.91
Dec. 31, 1993 18.49 0.82 1.81 2.63 (0.82) (1.24) __ (2.06) 19.06
Dec. 31, 1992 19.68 0.87 (0.25) 0.62 (0.87) (0.94) __ (1.81) 18.49
</TABLE>
STRONG ASSET ALLOCATION FUND (continued)
<TABLE>
- -----------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
----------------------------------------------------------------
<CAPTION>
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Return Millions) Net Assets Net Assets Rate Paid(b)
<S> <C> <C> <C> <C> <C> <C>
April 30, 1997(c) +6.3% $265 1.1%* 3.6%* 137.2% $0.0523
Oct. 31, 1996 +9.5% 263 1.1% 3.9% 446.7% 0.0469
Oct. 31, 1995(d) +16.8% 261 1.2%* 4.1%* 326.8%
Dec. 31, 1994 -1.5% 249 1.2% 3.8% 359.7%
Dec. 31, 1993 +14.5% 254 1.2% 4.2% 348.3%
Dec. 31, 1992 +3.2% 208 1.2% 4.4% 320.4%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
(c) For the six months ended April 30, 1997 (Unaudited). Total return and
portfolio turnover rate are not annualized.
(d) Total return and portfolio turnover rate are not annualized.
STRONG EQUITY INCOME FUND
<TABLE>
- -----------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA(a)
------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
---------------------------------- ------------------------
<CAPTION>
Net Realized
Net Asset and Unrealized Total Net Asset
Value, Net Gains from From Net Value,
Beginning Investment (Losses) on Investment Investment Total End of
of Period Income Investments Operations Income Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1997(c) $12.03 $0.06 $1.52 $1.58 ($0.06) ($0.06) $13.55
Oct. 31, 1996(d) 10.00 0.12 2.02 2.14 (0.11) (0.11) 12.03
</TABLE>
STRONG EQUITY INCOME FUND (continued)
<TABLE>
- ------------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
----------------------------------------------------------------
<CAPTION>
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Return Millions) Net Assets Net Assets Rate Paid(b)
<S> <C> <C> <C> <C> <C> <C>
April 30, 1997(c) +13.2% $79 1.2%* 1.1%* 108.6% $0.0680
Oct. 31, 1996(d) +21.5% 29 1.3%* 1.6%* 158.3% 0.0633
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
(c) For the six months ended April 30, 1997 (Unaudited). Total return and
portfolio turnover rate are not annualized.
(d) Inception date is December 29, 1995. Total return and portfolio
turnover rate are not annualized.
STRONG AMERICAN UTILITIES FUND
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA(a)
----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
---------------------------------- -----------------------------------------
<CAPTION>
Net Realized
Net Asset and Unrealized Total In Excess Net Asset
Value, Net Gains from From Net From Net Of Net Value,
Beginning Investment (Losses) on Investment Investment Realized Realized Total End of
of Period Income Investments Operations Income Gains Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
April 30, 1997(c) $12.64 $0.19 $0.54 $0.73 ($0.18) ($0.67) __ ($0.85) $12.52
Oct. 31, 1996 11.73 0.40 0.90 1.30 (0.39) __ __ (0.39) 12.64
Oct. 31, 1995(d) 9.46 0.27 2.25 2.52 (0.25) __ __ (0.25) 11.73
Dec. 31, 1994 10.19 0.46 (0.73) (0.27) (0.46) __ __ (0.46) 9.46
Dec. 31, 1993(e) 10.00 0.18 0.27 0.45 (0.18) (0.05) ($0.03) (0.26) 10.19
</TABLE>
STRONG AMERICAN UTILITIES FUND (continued)
<TABLE>
- ---------------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
<CAPTION>
Net Ratio of Expense Ratio of Net
Assets, Ratio of to Average Net Investment Average
End of Expenses Assets Without Income Portfolio Commission
Total Period (In to Average Waivers and to Average Turnover Rate
Return Millions) Net Assets Absorptions Net Assets Rate Paid(b)
<S> <C> <C> <C> <C> <C> <C> <C>
April 30, 1997(c) +5.7% $120 1.1%* 1.1%* 3.0%* 25.9% $0.0599
Oct. 31, 1996 +11.2% 122 1.2% 1.2% 3.2% 84.0% 0.0599
Oct. 31, 1995(d) +26.9% 92 1.2%* 1.2%* 3.4%* 56.4%
Dec. 31, 1994 -2.6% 38 0.5% 1.6% 4.8% 105.4%
Dec. 31, 1993(e) +4.5% 32 0.0% 1.4%* 5.6%* 89.3%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
(c) For the six months ended April 30, 1997 (Unaudited). Total return and
portfolio turnover rate are not annualized.
(d) Total return and portfolio turnover rate are not annualized.
(e) Inception date is July 1, 1993. Total return and portfolio turnover
rate are not annualized.
31
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
STRONG TOTAL RETURN FUND
- -----------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA(a)
------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
---------------------------------- -----------------------------------------
<CAPTION>
Net Realized
Net Asset and Unrealized Total In Excess Net Asset
Value, Net Gains from From Net From Net Of Net Value,
Beginning Investment (Losses) on Investment Investment Realized Realized Total End of
of Period Income Investments Operations Income Gains Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
April 30, 1997(c) $31.36 $0.13 $1.41 $1.54 ($0.29) __ ($4.74) __ ($5.03)
Oct. 31, 1996 28.02 0.24 4.65 4.89 (0.24) ($0.06) (1.25) __ (1.55)
Oct. 31, 1995(d) 23.62 0.26 4.41 4.67 (0.26) (0.01) __ __ (0.27)
Dec. 31, 1994 24.30 0.25 (0.59) (0.34) (0.26) (0.08) __ __ (0.34)
Dec. 31, 1993 20.17 0.33 4.18 4.51 (0.33) __ __ ($0.05) (0.38)
Dec. 31, 1992 20.24 0.18 (0.08) 0.10 (0.17) __ __ __ (0.17)
</TABLE>
STRONG TOTAL RETURN FUND (continued)
<TABLE>
- -------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
<CAPTION>
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Return Millions) Net Assets Net Assets Rate Paid(b)
<S> <C> <C> <C> <C> <C> <C>
April 30, 1997(c) +5.1% $742 1.1%* 0.8%* 183.7% $0.0697
Oct. 31, 1996 +18.0% 760 1.1% 0.8% 502.4% 0.0584
Oct. 31, 1995(d) +19.8% 671 1.1%* 1.2%* 298.8%
Dec. 31, 1994 -1.4% 607 1.2% 1.1% 290.4%
Dec. 31, 1993 +22.5% 630 1.2% 1.4% 271.3%
Dec. 31, 1992 +0.6% 588 1.3% 0.9% 371.8%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
(c) For the six months ended April 30, 1997 (Unaudited). Total return and
portfolio turnover rate are not annualized.
(d) Total return and portfolio turnover rate are not annualized.
STRONG GROWTH & INCOME FUND
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA(a)
-----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
---------------------------------- ---------------------------------
<CAPTION>
Net Realized
Net Asset and Unrealized Total Net Asset
Value, Net Gains from From Net From Net Value,
Beginning Investment (Losses) on Investment Investment Realized Total End of
of Period Income Investments Operations Income Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C>
April 30, 1997(c) $12.38 $0.04 $1.56 $1.60 ($0.04) ($0.02) ($0.06) $13.92
Oct. 31, 1996(d) 10.00 0.04 2.38 2.42 (0.04) __ (0.04) 12.38
</TABLE>
STRONG GROWTH & INCOME FUND (contined)
<TABLE>
- -------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
<CAPTION>
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Return Millions) Net Assets Net Assets Rate Paid(b)
<S> <C> <C> <C> <C> <C> <C>
April 30, 1997(c) +12.9% $129 1.3%* 0.7%* 140.2% $0.0680
Oct. 31, 1996(d) +24.2% 18 1.9%* 0.6%* 174.1% 0.0667
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
(c) For the six months ended April 30, 1997 (Unaudited). Total return and
portfolio turnover rate are not annualized.
(d) Inception date is December 29, 1995. Total return and portfolio turnover
rate are not annualized.
32
<PAGE>
DIRECTORS
Richard S. Strong
John Dragisic
Willie D. Davis
Stanley Kritzik
Marvin E. Nevins
William F. Vogt
OFFICERS
Richard S. Strong, Chairman of the Board
John Dragisic, President
Lawrence A. Totsky, Vice President
Thomas P. Lemke, Vice President
John S. Weitzer, Vice President
Stephen J. Shenkenberg, Vice President and Secretary
John A. Flanagan, Treasurer
INVESTMENT ADVISOR
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
DISTRIBUTOR
Strong Funds Distributors, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
CUSTODIAN
Firstar Trust Company
P.O. Box 701, Milwaukee, Wisconsin 53201
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
AUDITOR
Coopers & Lybrand L.L.P.
411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street, Milwaukee, Wisconsin 53202
<PAGE>
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 report does not constitute an offer for the
sale of securities. Strong Funds are offered for sale by prospectus only.
[PICTURE OF TELEPHONE]
To order a free prospectus kit,
CALL 1-800-368-1030.
To learn more about our funds,
discuss an existing account,
or conduct a transaction,
CALL 1-800-368-3863.
--------------------
If you are a
Financial Professional,
CALL 1-800-368-1683
[PICTURE OF STRONG WEB SITE ON COMPUTER]
Strong On-line
www.strong-funds.com
[STRONG LOGO]
STRONG FUNDS
P.O. Box 2936 o Milwaukee, Wisconsin 53201
Strong Funds Distributors, Inc. 5208E97 97SCEQ
