<PAGE>
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THE STRONG
CONSERVATIVE EQUITY FUNDS
ANNUAL REPORT o OCTOBER 31, 1997
[PHOTO OF FAMILY]
THE STRONG AMERICAN UTILITIES FUND
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THE STRONG ASSET ALLOCATION FUND
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THE STRONG BLUE CHIP 100 FUND
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THE STRONG EQUITY INCOME FUND
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THE STRONG GROWTH AND INCOME FUND
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THE STRONG LIMITED RESOURCES FUND
----------------------------------
THE STRONG TOTAL RETURN FUND
[STRONG FUNDS LOGO]
STRONG FUNDS
<PAGE>
8
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.
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[PICTURE OF FOLDER LABELED INVESTMENTS]
1. HAVE A PLAN. Even a simple plan can help you take control of your financial
future. Review your plan once a year, or if your circumstances change.
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[PICTURE OF CLOCK]
2. START INVESTING AS SOON AS POSSIBLE. Make time a valuable ally. Let it put
the power of compounding to work for you, while helping to reduce your potential
investment risk.
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[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION]
3. DIVERSIFY YOUR PORTFOLIO. By investing in different asset classes - stocks,
bonds, and cash - you help protect against poor performance in one type of
investment while including investments most likely to help you achieve your
important goals.
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[PICTURE OF MEMO REMINDER TO INVEST]
4. INVEST REGULARLY. Investing is a process, not a one-time event. By investing
regularly over the long term, you reduce the impact of short-term market
gyrations, and you attend to your long-term plan before you're tempted to spend
those assets on short-term needs.
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[PICTURE OF GRAPH SLOPING UPWARD]
5. MAINTAIN A LONG-TERM PERSPECTIVE. For most individuals, the best discipline
is staying invested as market conditions change. Reactive, emotional investment
decisions are all too often a source of regret - and of principal loss.
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[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION EMPHASIZING STOCKS]
6. CONSIDER STOCKS TO HELP ACHIEVE MAJOR LONG-TERM GOALS. Over time, stocks have
provided the more powerful returns needed to help the value of your investments
stay well ahead of inflation.
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[PICTURE OF DOLLAR SIGN]
7. KEEP A COMFORTABLE AMOUNT OF CASH IN YOUR PORTFOLIO. To meet current needs,
including emergencies, use a money market fund or a bank account - not your
long-term investment assets.
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[PICTURE OF MAGNIFYING GLASS]
8. KNOW WHAT YOU'RE BUYING. Make sure you understand the potential risks and
rewards associated with each of your investments. Ask questions...request
information...make up your own mind. And choose a fund company that helps you
make informed investment decisions.
<PAGE>
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THE STRONG
CONSERVATIVE EQUITY FUNDS
ANNUAL REPORT o OCTOBER 31, 1997
TABLE OF CONTENTS
INVESTMENT REVIEWS
The Strong American Utilities Fund ...................................2
The Strong Asset Allocation Fund .....................................4
The Strong Blue Chip 100 Fund ........................................6
The Strong Equity Income Fund ........................................8
The Strong Growth and Income Fund ...................................10
The Strong Limited Resources Fund ...................................12
The Strong Total Return Fund ........................................14
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong American Utilities Fund ..............................16
The Strong Asset Allocation Fund ................................16
The Strong Blue Chip 100 Fund ...................................20
The Strong Equity Income Fund ...................................21
The Strong Growth and Income Fund ...............................24
The Strong Limited Resources Fund ...............................26
The Strong Total Return Fund ....................................27
Statements of Assets and Liabilities ................................30
Statements of Operations ............................................31
Statements of Changes in Net Assets .................................32
Notes to Financial Statements .......................................34
FINANCIAL HIGHLIGHTS .....................................................37
REPORT OF INDEPENDENT ACCOUNTANTS ........................................39
<PAGE>
THE STRONG AMERICAN UTILITIES FUND
THE AMERICAN UTILITIES FUND DEMONSTRATED THE STABILITY THAT SELECTED UTILITIES
CAN OFFER DURING PERIODS OF OVERALL MARKET TURBULENCE.
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 OUTPERFORMED THE MARKET
The American Utilities Fund posted solid gains for the fiscal year ended October
31, 1997. Its return of 19.70% compared favorably with the 9.90% return of the
Standard and Poor's Utility Index, and the 17.64% gain of the Lipper Utility
Funds Index.*
=========================================
ASSET ALLOCATION
Based on net assets as of 10-31-97
=========================================
[PIE CHART]
Common Stocks 93.0%
Short-Term Investments 7.0%
=========================================
A YEAR OF CHALLENGE AND OPPORTUNITY
The utilities market encountered periods of both challenge and opportunity over
the last twelve months as a result of fluctuations in interest rates. As
measured by the yield on the 30-year Treasury Bond, rates rose from 6.64% at the
beginning of the fiscal year to 6.95% at the year's mid-point. A more favorable
climate ensued during the second half of the year, as rates dropped to 6.15%.
================================================================================
FIVE LARGEST HOLDINGS
================================================================================
Based on net assets as of 10-31-97
% OF NET
SECURITY INDUSTRY ASSETS
- --------------------------------------------------------------------------------
SBC Communications, Inc. Telecommunication 10.7%
................................................................................
Ameritech Corporation Telecommunication 10.0%
................................................................................
Bell Atlantic Corporation Telecommunication 7.4%
................................................................................
TECO Energy Electric Utility 6.4%
................................................................................
The Southern Company Electric Utility 5.5%
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
================================================================================
The American Utilities Fund demonstrated the stability that selected utilities
can offer during periods of overall market turbulence. In the last three months
of the Fund's fiscal year, overall market volatility increased. During this
time, the benefit of using carefully chosen utilities as defensive investment
vehicles was clear as the Fund exhibited only moderate fluctuation. After being
out of favor in recent years, early indications are that selected utility stocks
are beginning to attract attention.
===================================
YIELD SUMMARY(2)
===================================
As of 10-31-97
30-day annualized yield 2.62%
===================================
During the period of volatility at the end of the fiscal year--which was
triggered by economic instability in Asian markets--the Fund also benefited from
its limited exposure to foreign utility stocks. While these stocks offer
increased growth potential, they also tend to increase risk.
A GOOD YEAR FOR TELEPHONE AND ELECTRIC STOCKS
As we anticipated, telephone companies continued to demonstrate solid
performance in the American Utilities Fund, turning in double-digit earnings for
the year. Our holdings in this area continue to encompass just over 35% of the
Fund. The three largest telephone stocks we hold-- SBC Communications, Ameritech
and Bell Atlantic -- all delivered significant dividend increases.
We continue to expect strong earnings growth for the telephone industry. These
large-capitalization phone stocks are currently priced at a substantial discount
in relation to the S&P Industrial Index, and are underweighted in institutional
portfolios. When the spotlight comes on the value this industry offers, we
believe that institutional investors will seek to add these securities to their
holdings. We're positioning the Fund to take advantage of this.
Careful selection among the stocks of electric companies also contributed to the
Fund's success--despite mild weather that was generally unfavorable for
utilities. These stocks continue to sell at a substantial discount, while
weather-adjusted dividend and earnings numbers have increased.
2
<PAGE>
OUR OUTLOOK
The accelerating trend of mergers and acquisitions will contribute to a higher
level of short-term profit opportunities. We believe that most mergers will
result in fewer but better companies with more attractive investment appeal.
Looking ahead, another factor that we expect to have a positive influence on
electric utilities is the potential for substantial stock buybacks. In addition,
for certain companies, the portion of business not subject to the limitations of
rate base/rate of return regulation can be expected to expand over the next few
years, leading to the potential for higher company earnings. Several holdings in
the Fund's portfolio are particularly well positioned to take advantage of
opportunities in a more deregulated industry.
Overall, it is becoming easier to identify those electric companies that can be
expected to establish themselves as superior investment vehicles. We remain
enthusiastic about the prospects for the utility sector. For investors looking
for a more conservative stock investment, we believe the Fund is an attractive
choice to balance more growth-oriented portfolios.
[PHOTO OF WILLIAM H. REAVES]
Thank you for your investment in the Strong American Utilities Fund. We look
forward to earning your continued confidence.
Sincerely,
/s/ William H. Reaves
William H. Reaves
Portfolio Manager
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 7-1-93 to 10-31-97
[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 10,178 9,289 9,223
12-95 13,939 13,193 11,724
12-96 15,106 13,605 12,809
10-97 17,185 14,713 14,391
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
==================================
As of 10-31-97
1-year 19.70%
2-year 15.36%
3-year 17.76%
Since Inception 13.31%
(on 7-1-93)
==================================
- --------------------------------------------------------------------------------
* The S&P Utilities Index is an unmanaged index generally representative of
the U.S. market for 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 Standard & Poor's
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 Yields are historical and do not represent future yields, which will
fluctuate.
3
<PAGE>
THE STRONG ASSET ALLOCATION FUND
CAREFUL ISSUE SELECTION LED TO OPPORTUNITIES IN BOTH THE STOCK AND BOND MARKETS.
The Strong Asset Allocation Fund seeks high total return consistent with
reasonable risk over the term. The Fund allocates its assets among a diversified
portfolio of equity securities, bonds, and short-term fixed-income securities.
For the year ended October 31, 1997, the Fund posted a total return of 19.34%.
That's slightly below the 21.94% return from the 60/35/5 Balanced Index-- the
benchmark for our Fund, and comparable to the 19.28% return of our peer group of
funds, the Lipper Flexible Portfolio Average, for the same period.*
A NEW MEMBER OF THE MANAGEMENT TEAM
As announced in our semi-annual letter, Rimas Milaitis joined the Strong Asset
Allocation Fund's management team as equity manager in April, 1997. Rimas
focuses primarily on larger capitalization stocks, following the same
disciplined style he uses in the two Strong Funds he manages, the Strong Equity
Income Fund and the Strong Growth and Income Fund. You'll find a discussion of
each of these Funds elsewhere in this report.
============================================
ASSET ALLOCATION
============================================
Based on net assets as of 10-31-97
[PIE CHART]
Stocks 66.7%
Bonds 22.7%
Short-Term Investments 6.0%
Convertible Securities 4.6%
The Fund's asset allocation does not reflect
any futures positions held by the Fund.
============================================
A LOOK AT THE PAST YEAR
The Fund's fiscal year was marked by diverse environments for stocks and bonds.
Careful issue selection led to opportunities in both areas.
The bond market was influenced by a relatively tranquil domestic interest rate
environment over the past 12 months. The combination of a strong economy and low
inflation has kept the Federal Reserve inactive, except when interest rates
increased in March. There's been a gradual flattening of the yield curve,
resulting in a smaller difference between short-term and long-term rates. This
overall low-volatility environment has been advantageous for fixed-income
investors. Bonds offer attractive income levels, and are attractively priced as
well--especially when compared with prevailing high stock market valuations.
The past fiscal year was a turbulent--yet positive--one for stocks. The
volatility stemmed from stronger than expected economic activity, historically
low unemployment levels, and continued concerns about the potential for rising
inflation. Accelerating economic activity in the first quarter of 1997 was
followed by a brief downturn after the March interest rate hike. Stock price
appreciation climbed, as the market broadened out to favor small- and
medium-capitalization issues.
THE FUND'S FOCUS ON LARGE-CAP STOCKS SERVED US WELL
We held the Fund's stock position relatively close to our benchmark allocations,
weighting sectors based on the forecast of the economic environment. We continue
to focus on large companies with visible earnings and revenue growth--firms we
believe offer investors greater potential stability.
Despite the market's concerns, the Strong Asset Allocation Fund's focus on
larger companies served us well during the market's ups and downs. These firms
tend to have a solid, stable business presence that allows them to endure
periods of market uncertainty. Their tendency to pay dividend income also helps
to support stock prices during market declines.
POSITIVE OPPORTUNITIES FOR BONDS
The duration of the Fund's bond position stands at 3.9. We believe this
positions the bond portion of the Fund well in a relatively stable interest rate
environment. We'll continue to rely on a careful mix of treasury, mortgage and
corporate bonds in the bond side of the portfolio. In particular, we've found
good bond opportunities in banks and airlines over the past fiscal year.
As with our stock portfolio, we've consolidated the fixed-income management of
our Fund. Brad Tank and Jeff Koch will manage the bond portion of the Fund's
allocation.
4
<PAGE>
OUR OUTLOOK
Given the current crisis in Southeast Asian financial markets, we believe that
Federal Reserve policy will remain passive as this situation plays out. It's
unclear at this point what the short- or long-term effects of this instability
will be on global economic activity.
Despite these uncertainties, it appears that the U.S. economy will continue on
its path of moderate growth and low inflation. Therefore, our outlook for the
general market continues to be cautiously optimistic. In light of this, we plan
to continue our focus on larger-company stocks with visible earnings and revenue
growth.
On the bond side, we believe the convergence of short- and long-term interest
rates will continue, but at a diminished rate. We expect to find opportunities
in the corporate bond market--particularly in the banking, finance and
industrial sectors.
Thank you for your investment in the Strong Asset Allocation Fund. We look
forward to earning your continued confidence.
[PHOTO OF BRADLEY C. TANK, RIMAS MILAITIS AND JEFF KOCH]
Sincerely,
/s/Rimas Milaitis
Rimas Milaitis
/s/Bradley C. Tank
Bradley C. Tank
/s/Jeff Koch
Jeff Koch
Portfolio Co-managers
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 12-30-81 to 10-31-97
[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 12,155 12,763
12-83 19,344 14,896 15,136
12-84 21,234 15,830 15,783
12-85 25,346 20,853 19,759
12-86 29,819 24,745 22,703
12-87 29,734 26,044 24,412
12-88 32,467 30,370 26,640
12-89 36,104 39,993 31,231
12-90 37,107 38,751 31,002
12-91 44,393 50,557 38,888
12-92 45,824 54,408 42,029
12-93 52,469 59,892 46,608
12-94 51,679 60,684 45,736
12-95 63,028 83,487 57,206
12-96 69,617 102,656 64,891
10-97 78,872 128,628 74,813
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
=======================================
As of 10-31-97
1-year 19.34%
3-year 14.93%
5-year 11.87%
10-year 10.35%
Since Inception 13.93%
(on 12-30-81)
=======================================
- --------------------------------------------------------------------------------
* The 60/35/5 Balanced Index is comprised of 60% S&P Stock Index, 35% Lehman
Brothers Intermediate Government/Corporate Bond Index, and 5% Salomon
Brothers 3-Month Treasury Bill Index. The S&P 500 Stock Index is an
unmanaged index generally representative of the U.S. stock market, without
regard to company size. The Lehman Brothers Intermediate
Government/Corporate Bond Index is an unmanaged index generally
representative of government and investment-grade corporate securities with
maturities of 1-10 years. The Salomon Brothers 3-Month Treasury Bill Index
is an unmanaged index generally representative of the average yield of
Three-Month Treasury Bills. The Lipper Flexible Portfolio Average
represents funds that 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 60/35/5 Balanced
Index and the S&P index data is Standard & Poor's Micropal. Source of the
Lipper index data is Lipper Analytical Services, Inc.
5
<PAGE>
THE STRONG BLUE CHIP 100 FUND
WE SEEK TO KEEP THE ACTIVE PORTION OF OUR PORTFOLIO TO ABOUT 25 COMPANIES,
ALLOWING THESE POSITIONS TO HAVE A SIGNIFICANT IMPACT ON PERFORMANCE.
The Strong Blue Chip 100 Fund seeks total return by investing for capital growth
and income. The Fund invests in a diversified portfolio of the stocks of the 100
largest companies (by market capitalization) traded in the United States.
Approximately 50% of the Fund's assets are passively invested in these 100
companies in proportion to their market capitalizations. The Fund's manager uses
the remainder of the Fund's assets to selectively add to these positions, to
emphasize those stocks believed to have the greatest growth potential.
Generally, no more than 5% of assets will be invested in any of the 100
companies.
This Fund is designed to combine the diversification of large-cap index
investing with the added growth potential that active management can provide.
A POSITIVE BEGINNING
For the four months from the Fund's inception on June 30, 1997 through the end
of its fiscal year on October 31, 1997, the Fund posted a return of 3.90%. That
put us even with the S&P 500's return for the same period.(1)
======================================
ASSET ALLOCATION
======================================
Based on net assets as of 10-31-97
[PIE CHART]
Common Stocks 98.1%
Short-Term Investments 1.9%
======================================
When the markets made their steep correction in late October, in the wake of
crises in Southeast Asia, the largest U.S. stocks suffered the most. That might
have positioned us to underperform the S&P 500, which is broader-based than our
own investment universe. However, with the 50% of the Fund that we actively
manage, we chose to focus on companies whose businesses are more focused on the
U.S. We believe this helped protect the value of the Fund by offsetting the
passive half of the portfolio, which has a higher level of exposure to companies
that do more business outside the U.S.
To give you some insight into how we invested the active portion of the Fund,
here are some of our favored sectors and companies:
o Top holding Schlumberger, an oil services company, is poised to benefit from
increased exploration and drilling activity by the major oil companies. In
all, energy accounts for about 12% of the Fund's assets.
o Health-care holdings account for the largest concentration of the Fund's
actively managed half. These companies benefit from, among other things,
demographic shifts in the U.S.
o Financials make up the Fund's second-largest sector overall, represented by
top-10 holding Bank of New York.
o We also favor technology holdings, including several industry stalwarts.
We seek to keep the active portion of our portfolio to about 25 companies,
allowing these positions to have a significant impact on performance.
6
<PAGE>
OUR OUTLOOK
We believe the fundamentals of the U.S. economy remain strong, and our current
economic outlook is one of moderate economic growth, with no significant change
in the rate of inflation or in interest rates. These conditions should provide a
favorable backdrop for equity investments.
In that environment, we don't foresee any major changes to our industry
allocations. Despite recent challenges in the market, we see no recession on the
U.S. horizon. We believe the industries that are our current focus should be
able to perform well in the months ahead. Naturally, we will continue to closely
monitor market conditions, making adjustments to the managed half of the Fund's
assets as conditions warrant.
We would like to welcome all shareholders to the Strong Blue Chip 100 Fund. We
thank you for your investment and look forward to earning your further
confidence.
[PHOTO OF KAREN E. MCGRATH]
Sincerely,
/s/Karen E. McGrath
Karen E. McGrath
Portfolio Manager
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 6-30-97 to 10-31-97
[GRAPH]
THE STRONG BLUE S & P 500
CHIP 100 FUND Index*
6-97 10,000 10,000
7-97 10,830 10,795
8-97 10,120 10,191
9-97 10,750 10,749
10-97 10,390 10,390
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"). 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.
+ The S&P 500 Index figure tracks the Strong Blue Chip 100 Fund figure so
closely that its results are not discernible on the graph.
================================================================================
====================================
TOTAL RETURN(1)
As of 10-31-97
Since Inception 3.90%
(on 6-30-97)
====================================
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market, without regard to company size. Source of the S&P index data
is Standard & Poor's Micropal.
1 Total return is not annualized and measures aggregate change in the value
of an investment in the Fund, assuming reinvestment of dividends.
7
<PAGE>
THE STRONG EQUITY INCOME FUND
TO MANAGE THE FUND'S VOLATILITY, WE HAVE CONSISTENTLY UNDERWEIGHTED THE
TECHNOLOGY SECTOR.
The Strong Equity Income Fund seeks total return by investing for both income
and capital growth. The Fund invests primarily in companies that pay current
dividends and offer potential growth of earnings.
FUND OUTPERFORMS THE MARKET
For the fiscal year ended October 31, 1997, the Fund posted a total return of
32.88%, slightly higher than the 32.10% return of the S&P 500 Stock Index. Our
return compares quite favorably to the 26.65% gain posted by our peer group of
funds, the Lipper Equity Income Funds Index.* As of October 31, assets under
management totaled $134.5 million.
=======================================
ASSET ALLOCATION
=======================================
Based on net assets as of 10-31-97
[PIE CHART]
Common Stocks 88.6%
Convertible Securities 6.1%
Short-Term Investments 5.3%
=======================================
We continue to adhere to our discipline of picking the stocks of large,
well-established, dividend paying companies. We believe these companies--with
their financial strength, solid yield support from a steady stream of dividends,
and ready liquidity--offer investors the potential for greater stability and
capital growth.
================================================================================
FIVE LARGEST HOLDINGS
================================================================================
Based on net assets as of 10-31-97
% OF NET
SECURITY INDUSTRY ASSETS
- --------------------------------------------------------------------------------
General Electric Company Electrical Equipment 2.0%
................................................................................
Schlumberger, Ltd. Oil Well Equipment and Service 1.6%
................................................................................
Bristol-Myers Squibb Healthcare-
Company Drug/Diversified 1.4%
................................................................................
Rite Aid Corporation Retail-Drug Store 1.4%
................................................................................
AT & T Corporation Telecommunication Service 1.3%
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
================================================================================
A POSITIVE MARKET FOR STOCKS
The past fiscal year was a turbulent--but positive--one for stocks, with the
market experiencing so many shifts that wide fluctuations seemed almost
commonplace. The volatility stemmed from reports of stronger than expected
economic activity, historically low unemployment levels, and continued concerns
about the potential for rising inflation. The year was marked by frequent
hawkish commentary from the Federal Reserve, as it kept a rigorous eye on the
economy.
The year began strongly with market confidence at high levels. Accelerating
economic activity in the first quarter of 1997 led the Federal Reserve to raise
interest rates in late March, causing a sharp market decline. Buoyed by the
belief that the pace of the calendar year's first quarter was unsustainable, the
downturn proved to be short lived. The market embraced a scenario of moderate
growth, low inflation, and strong corporate profits that led to a quarter
exhibiting one of the strongest periods of price appreciation in stock market
history.
The market broadened out to favor small- and medium-capitalization issues as the
year progressed. Concerns mounted about the negative effects of a strong dollar
on corporate earnings growth, highlighted by companies such as Coca Cola and
Gillette attributing poor earnings performance in part to this phenomenon.
FUND WEIGHTINGS WERE KEYED TO MARKET SHIFTS
Despite the market's concerns, the Strong Equity Income Fund's focus on larger
companies served us well during the market's ups and downs. These firms tend to
have a solid, stable business presence that allows them to endure periods of
market uncertainty. Their tendency to pay dividend income also helps to support
stock prices during market declines.
Because of the delicate balance between growth and inflation, the Fund's
exposure to the financial sector was generally market weighted to its benchmark.
In our continuous attempt to lower the Fund's volatility, we consistently
underweighted the technology sector. This benefited the Fund by not exposing it
to the volatility that comes with these types of investments.
As the market broadened throughout the year, cyclically oriented stocks became
more attractive. Retail stocks in particular showed strong potential for growth,
with consumer strength evidenced by low unemployment and high levels of consumer
confidence and income.
8
<PAGE>
LOOKING AHEAD
Due to the delicate balance in the economy, we expect the Federal Reserve to
retain its vigilant stance. Given the current crisis in the Southeast Asian
financial markets, we believe that Fed policy will remain passive while the
instability plays out. It's unclear at this point what the short- or long-term
effects of this crisis will be on global economic activity.
Despite these uncertainties, it appears the U.S. economy will continue on its
path of moderate growth and low inflation. Therefore, our outlook for the
general market continues to be cautiously optimistic. In light of this, we plan
to continue our focus on larger-company stocks with visible earnings and revenue
growth. We'll choose issues based on a top-down analysis--where we evaluate
trends in the general economy--and weight sectors of the S&P 500 based on the
forecast of the economic environment. Our aim is to maximize total return, while
maintaining a conservative stance and keeping relative volatility low.
Thank you for your investment in the Strong Equity Income Fund. We look forward
to earning your continued confidence.
[PHOTO OF RIMAS MILAITIS]
Sincerely,
/s/Rimas Milaitis
Rimas Milaitis
Portfolio Manager
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 12-29-95 to 10-31-97
[GRAPH]
THE STRONG EQUITY S & P 500 Lipper Equity
INCOME FUND Index* Income Funds Index*
12-95 10,000 10,000 10,000
3-96 11,054 10,537 10,433
6-96 11,296 11,010 10,700
9-96 11,817 11,350 10,966
12-96 12,810 12,296 11,789
3-97 13,092 12,626 12,038
10-97 16,146 15,407 14,217
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
========================================
As of 10-31-97
1-year 32.88%
Since Inception 29.87%
(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 Standard & Poor's Micropal. Source of the Lipper index data is Lipper
Analytical Services, Inc.
9
<PAGE>
THE STRONG GROWTH & INCOME FUND
THE FUND'S FOCUS ON LARGER COMPANIES SERVED US WELL DURING THE MARKET'S UPS AND
DOWNS.
The Strong Growth and Income Fund seeks high total return by investing for
capital growth and income. The Fund invests primarily in companies that pay
current dividends and offer potential growth of earnings.
==========================================
ASSET ALLOCATION
==========================================
Based on net assets as of 10-31-97
[PIE CHART]
Common Stocks 96.2%
Short-Term Investments 2.1%
Convertible Securities 1.7%
==========================================
FUND OUTPERFORMS THE MARKET
For the fiscal year ended October 31, 1997, the Fund posted a total return of
32.90%, slightly higher than the 32.10% return of the S&P 500 Stock Index. Our
return compares favorably to the 28.03% gain posted by our peer group of funds,
the Lipper Growth and Income Funds Index.* As of October 31, assets under
management totaled $227 million.
================================================================================
FIVE LARGEST HOLDINGS
================================================================================
Based on net assets as of 10-31-97
% OF NET
SECURITY INDUSTRY ASSETS
- --------------------------------------------------------------------------------
Schlumberger, Ltd. Oil Well Equipment 2.5%
and Service
................................................................................
General Electric Company Electrical Equipment 2.0%
................................................................................
Microsoft Corporation Computer Software 1.7%
................................................................................
Rite Aid Corporation Retail-Drug Store 1.4%
................................................................................
Warner-Lambert Healthcare- 1.4%
Company Drug/Diversified
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
================================================================================
We continue to adhere to our discipline of picking the stocks of large,
well-established, dividend paying companies. We believe these companies--with
their financial strength, solid yield support from a steady stream of dividends,
and ready liquidity--offer investors the potential for greater stability and
capital growth.
A POSITIVE MARKET FOR STOCKS
The past fiscal year was a turbulent--but positive--one for stocks, with the
market experiencing so many shifts that wide fluctuations seemed almost
commonplace. The volatility stemmed from reports of stronger than expected
economic activity, historically low unemployment levels, and continued concerns
about the potential for rising inflation. The year was marked by frequent
hawkish commentary from the Federal Reserve, as it kept a rigorous eye on the
economy.
The year began strongly with market confidence at high levels. Accelerating
economic activity in the first quarter of 1997 led the Federal Reserve to raise
interest rates in late March, causing a sharp market decline. Buoyed by the
belief that the pace of the calendar year's first quarter was unsustainable, the
downturn proved to be short lived. The market embraced a scenario of moderate
growth, low inflation, and strong corporate profits that led to a quarter
exhibiting one of the strongest periods of price appreciation in stock market
history.
The market broadened out to favor small- and medium-capitalization issues as the
year progressed. Concerns mounted about the negative effects of a strong dollar
on corporate earnings growth, highlighted by com-panies such as Coca Cola and
Gillette blaming poor earnings performance on this phenomenon.
FUND WEIGHTINGS WERE KEYED TO MARKET SHIFTS
Despite the market's concerns, the Strong Growth and Income Fund's focus on
larger companies served us well during the market's ups and downs. These firms
tend to have a solid, stable business presence that allows them to endure
periods of market uncertainty. Their tendency to pay dividend income also helps
to support stock prices during market declines.
Because of the delicate balance between growth and inflation, the Fund's
exposure to the financial sector was generally market weighted to its benchmark.
We kept our eye on the technology sector for the majority of the year,
particularly as ambiguity in that industry's growth rate peaked towards the end
of the fiscal year.
As the market broadened throughout the year, cyclically oriented stocks became
more attractive. Retail stocks in particular showed strong potential for growth,
with consumer strength evidenced by low unemployment and high levels of consumer
confidence and income.
10
<PAGE>
LOOKING AHEAD
Due to the delicate balance in the economy, we expect the Federal Reserve to
retain its vigilant stance. Given the current crisis in Southeast Asian
financial markets and its influence on other markets, we believe that Fed policy
will remain passive while the instability plays out. It's unclear at this point
what the short- or long-term effects of this crisis will be on global economic
activity.
Despite these uncertainties, it appears the U.S. economy will continue on its
path of moderate growth and low inflation. Therefore, our outlook for the
general market continues to be cautiously optimistic. In light of this, we plan
to continue our focus on larger-company stocks with visible earnings and revenue
growth. We'll choose issues based on a top-down analysis--where we evaluate
trends in the general economy--and weight sectors of the S&P 500 based on the
forecast of the economic environment. When the market allows, we'll seek
smaller-cap issues to enhance shareholder returns.
Thank you for your investment in the Strong Growth and Income Fund. We look
forward to earning your continued confidence.
[PHOTO OF RIMAS MILAITIS]
Sincerely,
/s/Rimas Milaitis
Rimas Milaitis
Portfolio Manager
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 12-29-95 to 10-31-97
[GRAPH]
THE STRONG GROWTH S & P 500 Lipper Growth and
AND INCOME FUND Index* Income Funds Index*
12-95 10,000 10,000 10,000
3-96 11,145 10,537 10,574
6-96 11,556 11,010 10,846
9-96 12,078 11,350 11,196
12-96 13,191 12,296 12,069
3-97 13,306 12,626 12,272
6-97 14,021 14,829 13,992
9-97 17,090 15,939 15,163
10-97 16,505 15,407 14,659
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
=======================================
As of 10-31-97
1-year 32.90%
Since Inception 31.43%
(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
Standard & Poor's Micropal. Source of the Lipper index data is Lipper
Analytical Services, Inc.
11
<PAGE>
THE STRONG LIMITED RESOURCES FUND
WE BELIEVE THE MOST COMPELLING VALUATIONS AND HIGHEST POTENTIAL FOR RETURNS
PRESENTLY EXIST IN THE VARIOUS ENERGY INDUSTRIES.
The Strong Limited Resources Fund seeks total return by investing for capital
growth and income in the energy and natural resources industries. To pursue this
objective, the Fund invests primarily in the stocks of companies engaged in the
discovery, development, production, generation, transmission, or distribution of
energy or other natural resources; companies involved in the development of
technologies for production or efficient use of energy or other natural
resources; and companies furnishing related supplies or services.
==============================================
ASSET ALLOCATION
==============================================
Based on net assets as of 10-31-97
[PIE CHART]
Common Stocks 90.4%
Short-Term Investments 9.6%
==============================================
================================================================================
FIVE LARGEST HOLDINGS
================================================================================
Based on net assets as of 10-31-97
% OF NET
SECURITY INDUSTRY ASSETS
- --------------------------------------------------------------------------------
Ocean Energy, Inc. Oil-North American 4.3%
Exploration and Production
................................................................................
Enron Oil & Gas Company Oil-North American 4.1%
Exploration and Production
................................................................................
Tidewater, Inc. Oil Well Equipment 4.1%
and Service
................................................................................
Amerada Hess Corporation Oil-North American 4.0%
Integrated
................................................................................
Kimberly-Clark Corporation Paper and Forest Products 4.0%
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
================================================================================
LAYING THE GROUNDWORK IN 1997
Our initial management task was to identify companies offering the best
long-term values in the energy and natural resources areas. This would provide
the groundwork for our long-term goal of capital growth and income. Our
management philosophy and investment strategy are based on a long-term horizon
which corresponds with the long-term nature of the resource groups' cycles.
Within weeks of the Fund's inception date (September 30, 1997), and led
primarily by a weakness in Asian markets, stock markets worldwide underwent a
correction which led to the Fund's underperformance vs. its benchmark, the S&P
500 Index. For the one month ended October 31, 1997 (the Fund's initial fiscal
year), we saw a -4.90% total return for the Fund vs. a -3.34% return for the S&P
500 Index.
We view this volatility as short term and have every confidence that the Fund's
portfolio is well positioned to take advantage of the longer-term opportunities
we see in the energy and natural resources areas, particularly in the natural
gas and oil industries. Here is a more detailed look at the long-term portfolio
acquisitions we made for the Strong Limited Resources Fund during that initial
30-day period.
A FOCUS ON NATURAL GAS
At the beginning of October and after careful analysis of the resources areas,
we believed that the stocks of natural gas and related companies were the most
undervalued industries relative to the stock market. For that reason, we
invested a substantial proportion of the Fund's assets in companies involved in
the exploration and production of natural gas, as well as in gas utility areas.
Our optimism for this area stemmed from the tight supply and demand situation
that we saw for natural gas in North America. For example, in the U.S. and
Canada, the gap between growing demand for natural gas and available supply has
continued to shrink-- despite increased drilling for new reserves. When making
our initial portfolio allocations, we expected that the long-term continuation
of this trend would lead to above-average cash flow and market performance for
independent oil and gas companies.
OIL SECTOR ALSO OFFERS GOOD VALUES
In our opinion, the same supply/demand dynamics also applied to the world oil
picture. That is the reason we also favored larger-capitalization oil and oil
service companies when making our initial acquisitions.
Until recently, there had been significant slack in the world crude oil
supply/demand equation. Throughout the 1980's, oil production ran comfortably
within capacity constraints, with capacity utilization averaging 85%. But as
world demand for oil has continued to grow and supply growth has slowed, the gap
has narrowed significantly, so that demand in the coming years is expected to
push production near its capacity limits.
12
<PAGE>
A POSITIVE LONG-TERM OUTLOOK
We continue to believe that the most compelling valuations and highest potential
for returns presently exist in the various energy sectors, especially natural
gas and oil. The tight supply and demand scenario we see for natural gas and oil
can also be seen in other natural resources sectors, such as aluminum and paper
and forest products. For that reason, we made sure these two areas were also
actively represented in the Fund.
Despite recent events in Asia, the shift to capitalism throughout the world's
economies should result in world GDP growth that's above the current trend and a
corresponding demand on the natural resource base. With natural resource
capacity already tight, this can provide natural resources suppliers with
expanded price flexibility and earnings growth in the years ahead.
We believe the Strong Limited Resources Fund is strategically positioned to take
advantage of future trends in the energy and natural resources sectors.
We would like to thank you for your investment and welcome you as a new
shareholder.
[PHOTO OF MARK A. BASKIR]
Sincerely,
/s/Mark A. Baskir
Mark A. Baskir
Portfolio Manager
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 9-30-97 to 10-31-97
[GRAPH]
THE STRONG LIMITED S & P 500
RESOURCES FUND Index*
9-97 10,000 10,000
10-97 9,510 9,666
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"). 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.
================================================================================
===================================
TOTAL RETURN
===================================
As of 10-31-97
Since Inception -4.90%
(on 9-30-97)
===================================
- --------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market, without regard to company size. Source of the S&P index data
is Standard & Poor's Micropal.
1 Total return is not annualized and measures aggregate change in the value
of an investment in the Fund, assuming reinvestment of dividends.
13
<PAGE>
THE STRONG TOTAL RETURN FUND
FOR SEVERAL MONTHS WE'VE BEEN WORKING TO REDUCE THE FUND'S EXPOSURE TO LARGE
CONSUMER STOCKS AND BASIC INDUSTRY HOLDINGS.
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 with steady or growing
dividends.
LOOKING BACK AT THE YEAR
The past 12 months will most likely be remembered for October's market
volatility, marked by the stock market's steep decline one day and meteoric
recovery the next. Nonetheless, it's important to consider all the events of the
year, and what they indicate about the current market environment.
========================================
ASSET ALLOCATION
========================================
Based on net assets as of 10-31-97
[PIE CHART]
Common Stocks 82.6%
Short-Term Investments 11.5%
Convertible Securities 5.9%
========================================
The fiscal year began with a market rally in November and December 1996, as it
appeared growth would settle into sustainable levels. However, in 1997's first
quarter it became apparent the economy was stronger than anticipated. The
Federal Reserve responded in late March by raising short-term interest rates to
slow economic growth and head off inflation, leading to significant volatility
in the following weeks. The S&P 500 posted strong gains over this period, driven
by just a few of the very largest companies in the index. Our emphasis on
finding stocks with reasonable valuations tends to keep this Fund out of such
companies, so this environment resulted in underperformance.
The Fed's March increase proved sufficient to keep inflation in check, and the
markets drove strongly upward well into the summer. The late summer and fall
were marked alternately by jitters and optimism, with the resultant volatility
culminating in late October's sharp decline. The market broadened out
considerably over this period, with more stocks participating when the market
rose. Even though we were affected, as were most funds, by the events of the
last week of October, this broadening out had an overall positive impact on the
portfolio-- though not enough to completely counteract the underperformance
earlier in the year. In this environment, the Fund returned 23.38% for the year
ended October 31, 1997, while the S&P 500 returned 32.10%.
U.S. FUNDAMENTALS REMAIN POSITIVE
The market's recent downturn was largely tied to concerns about slowing growth
in Southeast Asia, not to any major changes in the generally favorable U.S.
market. Inflation remains low, and corporate earnings are still strong--and
their rate of growth appears to be slowing to sustainable levels. The recent
difficulties in Southeast Asia do present problems for those companies heavily
dependent on export into that region, but on the other hand the region's woes
will help keep domestic interest rates in check.
HOW WE'VE RESPONDED TO CHANGING MARKETS
Because U.S. fundamentals remain strong while some other regions are faltering,
we've been steadily turning the portfolio more and more toward companies that
are focused largely on the domestic market. For this reason, we've been adding
to our positions in premium retailers and service industries. We generally
haven't held stocks that are focused on Southeast Asia as a market, and we don't
intend to do so. Also, for several months we've been working to reduce the
Fund's exposure to large consumer stocks and basic industry holdings. We believe
these may be among the weaker sectors going forward.
================================================================================
FIVE LARGEST HOLDINGS
================================================================================
Based on net assets as of 10-31-97
% OF NET
SECURITY INDUSTRY ASSETS
- --------------------------------------------------------------------------------
Eli Lilly & Company Healthcare-Drug/Diversified 2.3%
................................................................................
Schlumberger, Ltd. Oil Well Equipment 2.2%
and Service
................................................................................
Warner-Lambert Company Healthcare-Drug/Diversified 2.1%
................................................................................
Starwood Lodging Trust Real Estate 1.9%
................................................................................
Kohl's Corporation Retail Department Store 1.8%
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
================================================================================
14
<PAGE>
We've further sought to add stability to the portfolio by increasing our
exposure to real estate investment trusts (REITs) and convertible issues during
the second half of the year. Income from these investments can serve as a buffer
during times of market volatility. And we're also continuing to invest
significantly in companies, particularly health-care and pharmaceutical firms,
that benefit from the aging of America. This is a longtime theme of the Fund,
and one that we believe has resilience through many types of market
environments. Finally, as the market continues to broaden out, we're starting to
add more mid-cap issues. This doesn't reflect a strategy change; we're carefully
selecting companies that are in keeping with the Fund's profile, and offer some
exposure to the market's broadening.
LOOKING AHEAD
We remain optimistic about the U.S. economy, and are bullish on the markets for
the long term. For the short term, however, we have taken action to structure
the portfolio for a more volatile, trading-oriented environment. We're seeking
to avoid stocks exposed to the worst of the problems rocking international
markets, staying with the strongest U.S.-oriented companies we can find, and
paying close attention to valuations. By taking these steps, as well as adding
some income with REITs and convertible issues, we believe we have positioned the
Fund well for the current circumstances.
[PHOTO OF RONALD C. OGNAR AND IAN J. ROGERS]
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 Co-managers
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 12-30-81 to 10-31-97
[GRAPH]
THE STRONG TOTAL S & P 500 Lipper Growth and
RETURN FUND Index Income Funds Index
12-81 10,000 10,000 10,000
12-82 13,250 12,155 12,417
12-83 18,720 14,896 15,243
12-84 20,685 15,830 15,897
12-85 25,936 20,853 20,436
12-86 31,121 24,745 24,039
12-87 33,002 26,044 24,673
12-88 38,141 30,370 29,201
12-89 39,140 39,993 36,132
12-90 36,367 38,751 33,966
12-91 48,578 50,557 43,393
12-92 48,844 54,408 47,573
12-93 59,851 59,892 54,528
12-94 59,027 60,684 54,302
12-95 74,963 83,487 71,211
12-96 85,512 102,656 85,945
10-97 103,000 128,628 104,390
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
==================================
As of 10-31-97
1-year 23.38%
3-year 19.60%
5-year 17.42%
10-year 12.26%
Since Inception 15.87%
(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
Standard & Poor's Micropal. Source of the Lipper index data is Lipper
Analytical Services, Inc.
15
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG AMERICAN UTILITIES FUND
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 93.0%
ELECTRIC UTILITY 31.6%
American Electric Power Company, Inc. 82,000 $ 3,874,500
CMS Energy Corporation 171,000 6,241,500
Centerior Energy Corporation 24,000 312,000
Duke Power Company 106,000 5,114,500
NIPSCO Industries, Inc. 19,000 834,812
Ohio Edison Company 40,000 990,000
PECO Energy Company 246,000 5,581,125
SCANA Corporation 123,000 3,105,750
The Southern Company 320,000 7,340,000
TECO Energy 363,000 8,666,625
TNP Enterprises, Inc. 21,000 532,875
----------
42,593,687
ENERGY RELATED 18.5%
Amoco Corporation 38,500 3,529,969
Apache Corporation 8,200 344,400
Baker Hughes, Inc. 26,000 1,194,375
British Petroleum PLC ADR 500 43,875
Chevron Corporation 2,000 165,875
Devon Energy Corporation 4,000 179,000
Dresser Industries, Inc. 27,300 1,150,012
Exxon Corporation 77,600 4,767,550
FMC Corporation (b) 46,000 3,717,375
Imperial Oil, Ltd. 36,500 2,272,125
Kerr McGee Corporation 2,100 141,881
Mobil Corporation 15,500 1,128,594
Noble Affiliates, Inc. 5,500 225,844
Pennzoil Company 500 37,000
Royal Dutch Petroleum Company - New York
Registry Shares 73,400 3,862,675
Schlumberger, Ltd. 11,900 1,041,250
Transocean Offshore, Inc. 3,400 183,600
USX-Marathon Group 11,000 393,250
Union Pacific Resources Group, Inc. 21,900 539,288
Union Texas Petroleum Holdings, Inc. 3,500 79,625
United Meridian Corporation (b) 500 16,969
----------
25,014,532
GAS UTILITY 8.0%
Burlington Resources, Inc. 10,100 494,269
Coastal Corporation 5,600 336,700
Energen Corporation 3,300 119,419
MCN Energy Group, Inc. 170,000 5,886,250
National Fuel Gas Company 32,000 1,412,000
Questar Corporation 32,500 1,255,312
Southwestern Energy Corporation 40,000 485,000
The Williams Companies, Inc. 15,500 789,531
----------
10,778,481
OTHER UTILITY 0.5%
American Water Works Company, Inc. 20,000 452,500
Lomak Petroleum, Inc. 9,300 172,631
----------
625,131
TELECOMMUNICATION 34.4%
Alltel Corporation 96,000 3,396,000
Ameritech Corporation 207,000 13,455,000
Bell Atlantic Corporation 124,000 9,904,500
BellSouth Corporation 105,000 4,967,813
GTE Corporation 4,000 169,750
SBC Communications, Inc. 227,000 14,442,875
----------
46,335,938
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $106,749,472) 125,347,769
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 7.0%
COMMERCIAL PAPER
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.16% $ 428,900 $ 428,900
General Mills, Inc., 5.15% 1,500,100 1,500,100
Johnson Controls, Inc., 5.18% 146,900 146,900
Warner Lambert Company, 5.14% 6,408,400 6,408,400
Wisconsin Electric Power Company, 5.21% 1,017,400 1,017,400
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $9,501,700) 9,501,700
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $116,251,172) 100.0% 134,849,469
Other Assets and Liabilities, Net 0.0% (54,839)
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $134,794,630
- --------------------------------------------------------------------------------
COUNTRY DIVERSIFICATION
- --------------------------------------------------------------------------------
Percentage of Net Assets
- --------------------------------------------------------------------------------
United States ......................................... 95.4%
Netherlands ........................................... 2.9
Canada ................................................ 1.7
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
================================================================================
STRONG ASSET ALLOCATION FUND
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 64.5%
AEROSPACE & DEFENSE 1.5%
B.F. Goodrich & Company 32,900 $1,466,106
Raytheon Company 20,000 1,085,000
United Technologies Corporation 23,100 1,617,000
----------
4,168,106
AUTO & TRUCK PARTS 0.3%
Lear Corporation (b) 18,400 884,350
AUTOMOBILE 1.0%
Ford Motor Company 20,000 873,750
General Motors Corporation 31,000 1,989,812
----------
2,863,562
BANK - MONEY CENTER 2.5%
BankAmerica Corporation 11,300 807,950
Chase Manhattan Corporation 18,100 2,088,287
Citicorp 18,100 2,263,631
NationsBank Corporation 30,000 1,796,250
----------
6,956,118
BANK - REGIONAL 1.2%
First American Corporation 24,000 1,140,000
First Security Corporation 30,000 870,000
US Bancorp Delaware 12,080 1,228,385
----------
3,238,385
BANK - SUPER REGIONAL 1.7%
Banc One Corporation 20,000 1,042,500
Comerica, Inc. 17,700 1,399,406
First Union Corporation 19,300 946,906
Mellon Bank Corporation 24,500 1,263,281
----------
4,652,093
BEVERAGE - SOFT DRINK 0.7%
PepsiCo, Inc. 48,300 1,778,044
16
<PAGE>
================================================================================
STRONG ASSET ALLOCATION FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
COMPUTER - MAINFRAME 0.6%
International Business Machines Corporation 17,900 $ 1,755,319
COMPUTER - PERIPHERAL EQUIPMENT 0.4%
EMC Communications Corporation (b) 18,700 1,047,200
COMPUTER - PERSONAL & WORKSTATION 0.6%
Compaq Computer Corporation (b) 26,900 1,714,875
COMPUTER SOFTWARE 2.4%
Cisco Systems, Inc. (b) 26,300 2,157,422
Compuware Corporation (b) 22,000 1,454,750
Microsoft Corporation (b) 23,400 3,042,000
----------
6,654,172
CONTAINER 0.3%
Sealed Air Corporation (b) 13,600 701,250
COSMETIC & PERSONAL CARE 0.5%
The Gillette Company 14,600 1,300,313
DIVERSIFIED OPERATIONS 2.4%
Allied Signal, Inc. 42,200 1,519,200
Johnson Controls, Inc. 23,500 1,054,562
Textron, Inc. 29,900 1,728,594
Tyco International, Ltd. 60,166 2,271,267
----------
6,573,623
ELECTRICAL EQUIPMENT 2.0%
Emerson Electric Company 14,000 734,125
General Electric Company 55,200 3,563,850
Westinghouse Electric Corporation 41,000 1,083,938
----------
5,381,913
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.3%
General Motors Corporation Class H 14,900 942,425
ELECTRONICS - SEMICONDUCTOR/COMPONENT 0.3%
Intel Corporation 9,000 693,000
FINANCE - MISCELLANEOUS 0.7%
American Express Company 25,300 1,973,400
FOOD 1.1%
CPC International, Inc. 10,900 1,079,100
Interstate Bakeries Corporation 30,000 1,916,250
----------
2,995,350
HEALTHCARE - DRUG/DIVERSIFIED 4.0%
Bristol-Myers Squibb Company 22,200 1,948,050
Johnson & Johnson 16,100 923,737
Eli Lilly & Company 36,000 2,407,500
Pfizer, Inc. 30,000 2,122,500
SmithKline Beecham PLC Sponsored ADR 19,500 928,688
Warner-Lambert Company 19,900 2,849,431
----------
11,179,906
HEALTHCARE - MEDICAL SUPPLY 1.1%
Becton, Dickinson & Company 15,000 690,937
McKesson Corporation 22,700 2,435,994
----------
3,126,931
HEALTHCARE - PATIENT CARE 0.9%
HEALTHSOUTH Corporation (b) 43,500 1,111,969
Integrated Health Services, Inc. 45,800 1,454,150
----------
2,566,119
HOUSEHOLD APPLIANCES & FURNISHINGS 0.9%
Philips Electronics NV ADR 16,200 1,269,675
Sunbeam Corporation 25,800 1,169,063
----------
2,438,738
HOUSING RELATED 0.7%
Masco Corporation 42,800 1,877,850
INSURANCE - ACCIDENT & HEALTH 0.3%
Provident Companies, Inc. 27,000 901,125
INSURANCE - DIVERSIFIED 0.7%
Travelers Group, Inc. 27,600 1,932,000
INSURANCE - MULTI-LINE 0.8%
Horace Mann Educators Corporation 20,000 1,125,000
UNUM Corporation 22,100 1,077,375
----------
2,202,375
INSURANCE - PROPERTY & CASUALTY 1.3%
American International Group, Inc. 18,300 1,867,744
Chubb Corporation 25,400 1,682,750
----------
3,550,494
LEISURE SERVICE 0.3%
The Walt Disney Company 9,600 789,600
MACHINERY - MISCELLANEOUS 1.0%
Cooper Industries, Inc. 21,000 1,094,625
Ingersoll-Rand Company 43,050 1,676,259
----------
2,770,884
MACHINERY - TRANSPORTATION EQUIPMENT & PARTS 0.4%
Dana Corporation 22,700 1,062,644
MEDIA - PUBLISHING 1.3%
Houghton Mifflin Company 25,800 915,900
McGraw-Hill, Inc. 19,000 1,242,125
Time Warner, Inc. 26,100 1,505,644
----------
3,663,669
MEDIA - RADIO/TV 2.1%
American Telecasting, Inc. Warrants, Expire
8/10/00 (b) 350 0
Clear Channel Communications, Inc. (b) 29,700 1,960,200
Cox Communications, Inc. Class A (b) 33,800 1,039,350
News Corporation Exchange Trust Warrants
(Acquired 11/04/96; Cost $1,831,250)(b)(d) 50,000 1,700,000
Tele-Communications, Inc. Class A (b) 45,000 1,032,177
Tele-Communications, Inc. - TCI Ventures Group
Series A (b) 8,185 188,777
----------
5,920,504
METALS & MINING 0.4%
Southdown, Inc. 20,100 1,113,038
OFFICE AUTOMATION 1.0%
Pitney Bowes, Inc. 15,400 1,221,413
Xerox Corporation 21,200 1,681,425
----------
2,902,838
OIL - INTERNATIONAL INTEGRATED 1.6%
British Petroleum PLC ADR 17,600 1,544,400
Texaco, Inc. 30,000 1,708,125
YPF Sociedad Anonima ADR 38,500 1,232,000
----------
4,484,525
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 0.6%
Anadarko Petroleum Corporation 11,400 835,050
Apache Corporation 20,000 840,000
----------
1,675,050
OIL - NORTH AMERICAN INTEGRATED 1.0%
Amoco Corporation 15,700 1,439,494
Ashland, Inc. 26,000 1,239,875
----------
2,679,369
17
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG ASSET ALLOCATION FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
OIL WELL EQUIPMENT & SERVICE 8.0%
Baker Hughes, Inc. 46,200 $ 2,122,312
Camco International, Inc. 16,400 1,184,900
Cooper Cameron Corporation (b) 34,800 2,514,300
Diamond Offshore Drilling, Inc. (b) 30,000 1,867,500
EVI, Inc. (b) 38,800 2,490,475
Nabors Industries, Inc. (b) 46,500 1,912,312
Noble Drilling Corporation (b) 26,000 924,625
Reading & Bates Corporation (b) 54,400 2,305,200
Santa Fe International Corporation 19,400 954,238
Schlumberger, Ltd. 50,300 4,401,250
UTI Energy Corporation (b) 14,500 647,063
Weatherford Enterra, Inc. (b) 17,500 893,594
----------
22,217,769
PAPER & FOREST PRODUCTS 0.3%
Bowater, Inc. 17,400 727,537
PERSONAL & COMMERCIAL LENDING 1.5%
Associates First Capital Corporation 17,000 1,081,625
Household International, Inc. 16,700 1,891,275
SLM Holding Corporation 9,100 1,277,413
----------
4,250,313
POLLUTION CONTROL 0.4%
Browning-Ferris Industries, Inc. 30,000 975,000
RAILROAD 0.4%
Burlington Northern Santa Fe Corporation 12,200 1,159,000
REAL ESTATE 2.2%
Boston Properties, Inc. (b) 10,000 320,000
Crescent Real Estate Equities, Inc. 47,900 1,724,400
Duke Realty Investments, Inc. 21,400 481,500
Patriot American Hospitality, Inc. 49,600 1,636,800
Starwood Lodging Trust 32,100 1,919,981
----------
6,082,681
RETAIL - DRUG STORE 2.0%
CVS Corporation 19,000 1,164,937
Rite Aid Corporation 47,300 2,808,438
Walgreen Company 57,200 1,608,750
----------
5,582,125
RETAIL - MAJOR CHAIN 1.3%
Dayton Hudson Corporation 32,200 2,022,562
Wal-Mart Stores, Inc. 48,100 1,689,513
----------
3,712,075
RETAIL - SPECIALTY 1.5%
CUC International, Inc. (b) 33,000 973,500
Circuit City Stores, Inc. 24,000 957,000
The Home Depot, Inc. 38,000 2,113,750
----------
4,044,250
SOAP & CLEANING PREPARATION 1.9%
Clorox Company 21,200 1,484,000
Colgate Palmolive Company 25,100 1,625,225
The Procter & Gamble Company 33,000 2,244,000
----------
5,353,225
TELECOMMUNICATION EQUIPMENT 1.0%
Lucent Technologies, Inc. 22,000 1,813,625
Nokia Corporation Sponsored ADR 10,200 900,150
----------
2,713,775
TELECOMMUNICATION SERVICE 1.8%
AT&T Corporation 47,900 2,344,106
AirTouch Communications, Inc. (b) 35,300 1,363,462
American Communications Services, Inc. Warrants,
Expire 11/01/05 (Acquired 3/22/96; Cost
$107,188)(b)(d) 1,750 148,750
WorldCom, Inc. (b) 32,400 1,089,450
----------
4,945,768
TELEPHONE 0.9%
BellSouth Corporation 20,100 950,981
SBC Communications, Inc. 25,900 1,647,888
----------
2,598,869
TRUCKING 0.4%
CNF Transportation, Inc. 24,500 1,093,312
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $162,477,647) 178,566,856
- --------------------------------------------------------------------------------
PREFERRED STOCKS 2.2%
California Federal Bank 10.625% Series B 18,300 1,994,700
Nextlink Communications, Inc. 14.00% Senior
Exchangeable 43,231 2,572,245
Time Warner, Inc. 10.25% Exchangeable Series K 1,394 1,606,761
- --------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (COST $5,616,567) 6,173,706
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS 4.6%
Corestaff, Inc. Subordinated Notes, 2.94%,
Due 8/15/04 $ 725,000 597,219
Hewlett Packard Company Subordinated Liquid
Yield Option Notes, Zero %, Due 10/14/17
(Acquired 10/08/97; Cost $9,681,300) (d) 18,000,000 9,382,500
Hexcel Corporation Subordinated Notes, 7.00%,
Due 8/01/03 1,500,000 2,692,500
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS (COST $11,897,530) 12,672,219
- --------------------------------------------------------------------------------
CORPORATE BONDS 16.4%
AES Corporation Senior Subordinated Notes,
8.50%, Due 11/01/07 (Acquired 10/24/97;
Cost $2,994,000) (d) 3,000,000 2,962,500
Allied Holdings, Inc. Senior Notes, 8.625%, Due
10/01/07 (Acquired 9/24/97; Cost
$1,011,250)(d) 1,000,000 1,022,500
American Media Operations, Inc. Senior
Subordinated Notes, 11.625%, Due 11/15/04 775,000 848,625
Coast Savings Financial, Inc. Senior Notes,
10.00%, Due 4/01/00 250,000 266,250
Dial Call Communications, Inc. Senior Discount
Notes, Zero %, Due 4/15/04 (Rate Reset
Effective 4/15/99) 3,000,000 2,812,500
Echostar Satellite Broadcasting Corporation
Senior Secured Discount Notes, Zero %, Due
3/15/04 (Rate Reset Effective 3/15/00) 3,000,000 2,385,000
First Palm Beach Bancorp, Inc. Senior Debentures,
10.35%, Due 6/30/02 (Acquired 6/26/97;
Cost $1,000,000) (d) 1,000,000 1,038,700
Food 4 Less Holdings, Inc. Pay-In-Kind Senior
Subordinated Debentures, 13.625%, Due 6/15/07 1,602,195 1,930,645
Fox Kids Worldwide, Inc. Senior Notes, 9.25%,
Due 11/01/07 (Acquired 10/22/97; Cost
$3,000,000) (d) 5,000,000 4,831,250
Globalstar LP/Globalstar Capital Corporation
Senior Notes, 10.75%, Due 11/01/04
(Acquired 10/23/97; Cost $1,975,980) (d) 2,000,000 1,905,000
Grupo Imsa SA de CV Senior Yankee Notes, 8.93%,
Due 9/30/04 2,000,000 1,937,500
Harris Chemical North America Senior Secured
Discount Notes, 10.25%, Due 7/15/01 1,290,000 1,348,050
Intermedia Communications, Inc. Senior Notes,
8.875%, Due 11/01/07 (Acquired 10/24/97;
Cost $2,000,000) (d) 2,000,000 1,970,000
Intermedia Communications, Inc. Senior Notes,
Series B, 13.50%, Due 6/01/05 241,000 292,815
Iron Mountain, Inc. Senior Subordinated Notes,
8.75%, Due 9/30/09 (Acquired 10/21/97;
Cost $1,497,090) (d) 1,500,000 1,522,500
18
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG ASSET ALLOCATION FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
ITT Publimedia BV Senior Subordinated Notes,
9.375%, Due 9/15/07 (Acquired 9/30/97;
Cost $733,250) (d) $ 700,000 $ 717,500
KCS Energy, Inc. Senior Notes, Series B, 11.00%,
Due 1/15/03 775,000 850,562
NS Group, Inc. Senior Notes, 13.50%, Due 7/15/03 1,000,000 1,147,500
North Fork Bancorp Capital Trust Pass-Thru
Securities, 8.70%, Due 12/15/26 4,000,000 4,238,304
Panamsat International Systems, Inc. Senior
Subordinated Notes, 12.75%, Due 9/30/05 2,327,944 2,758,614
Panamsat LP/Panamsat Capital Corporation Senior
Secured Notes, 9.75%, Due 8/01/00 1,105,000 1,158,641
Qwest Communications International, Inc. Senior
Notes, Series B, 10.875%, Due 4/01/07 1,500,000 1,691,250
SD Warren Company Senior Subordinated Notes,
Series B, 12.00%, Due 12/15/04 150,000 168,000
Star Markets Company Senior Subordinated Notes,
13.00%, Due 11/01/04 500,000 571,250
United Stationer Supply Senior Subordinated
Notes, 12.75%, Due 5/01/05 1,000,000 1,142,500
USAir, Inc. Guaranteed Senior Notes, 10.00%,
Due 7/01/03 305,000 316,438
USAir, Inc. Senior Notes, 9.625%, Due 2/01/01 540,000 562,275
USAir 1993-A Pass-Thru Trust Certificates,
Series 1993-A2, 9.625%, Due 9/01/03 1,675,000 1,767,125
Winstar Communications, Inc. Senior Deferred
Interest Exchange Notes, 14.50%, Due 10/15/05 1,000,000 1,175,000
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (COST $44,972,727) 45,338,794
- --------------------------------------------------------------------------------
NON-AGENCY MORTGAGE & ASSET-BACKED SECURITIES 2.5%
CS First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates:
Series 1993-2, Class A-3, 7.50%, Due 3/25/33 947 964
Series 1994-MHC1, Class A-1X, Interest Only,
3.3088%, Due 4/25/11 1,131,784 713
Chase Mortgage Finance Corporation Pass-Thru
Certificates, Series 1990-G, Class A-Z1, 9.50%,
Due 12/15/21 880,791 903,366
MDC Asset Investors Trust V Collateralized
Mortgage Obligations, Class V-2, 9.325%,
Due 12/01/17 36,713 36,592
Resolution Trust Corporation, Series 1992-7,
Class A-3, 7.4733%, Due 3/25/22 1,834,517 1,834,517
Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage Bonds,
Series 1992-C, Class 3-A, 11.7496%,
Due 11/25/30 345,738 364,539
Westam Mortgage Financial Corporation
Collateralized Mortgage Bonds, Series 10,
Class 10-D, Principal Only, Due 7/26/18 5,560,857 3,774,432
- --------------------------------------------------------------------------------
TOTAL NON-AGENCY MORTGAGE & ASSET-BACKED SECURITIES
(COST $6,562,411) 6,915,123
- --------------------------------------------------------------------------------
UNITED STATES GOVERNMENT & AGENCY ISSUES 3.5%
FHLMC Adjustable Rate Mortgage Participation
Certificates, 8.096%, Due 8/01/25 3,479,697 3,604,757
FHLMC Guaranteed Multiclass Mortgage
Participation Certificates, Series 1181,
Class 1181-G, 7.50%, Due 8/15/05 200,517 201,878
FHLMC Guaranteed Pass-Thru Certificates:
9.50%, Due 1/01/06 131,889 137,710
10.25%, Due 3/01/15 132,478 145,451
10.50%, Due 1/01/16 25,331 28,180
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
11.00%, Due 10/01/00 thru 11/01/00 117,507 124,296
Series 1992-137, Class BA, 3.50%, Due 1/25/17 361,372 353,104
FNMA Guaranteed Real Estate Mortgage Investment
Conduit Variable Rate Pass-Thru Certificates,
Series G92-61, Class FJ, 6.041%, Due 10/25/22 571,579 560,058
GNMA Guaranteed Pass-Thru Certificates, 7.50%,
Due 12/15/07 1,987,659 2,059,482
Small Business Administration Guaranteed Loan
Pool #440019, Interest Only Custodial
Receipts, Series 1993-1A, 2.5264%, Due
2/15/18 15,002,013 1,481,449
United States Treasury Notes, 6.875%, Due
5/15/06 835,000 888,493
- --------------------------------------------------------------------------------
TOTAL UNITED STATES GOVERNMENT & AGENCY ISSUES
(COST $10,005,828) 9,584,858
- --------------------------------------------------------------------------------
OPTIONS 0.3%
Merrill Lynch Swaption (The option to receive a
fixed interest rate of 7.75%; exercisable at
a strike price of 100 beginning 4/09/04 and
expiring 4/09/25.) 9,500,000 798,000
- --------------------------------------------------------------------------------
TOTAL OPTIONS (COST $439,881) 798,000
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 9.5%
COMMERCIAL PAPER 0.4%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc.,
5.16% $ 131,900 131,900
General Mills, Inc., 5.15% 398,600 398,600
Johnson Controls, Inc., 5.18% 596,400 596,400
Pitney Bowes Credit Corporation, 5.16% 2,400 2,400
Wisconsin Electric Power Company, 5.21% 4,600 4,600
----------
1,133,900
CORPORATE BONDS 0.5%
Russian Sovereign Risk Notes, Zero %, Due
1/14/98 1,500,000 1,458,000
REPURCHASE AGREEMENT 8.5%
Goldman, Sachs & Company, Inc. (Dated 10/31/97),
5.60%, Due 11/03/97 (Repurchase Proceeds
$23,611,013); Collateralized by: $21,880,000
United States Treasury Notes, 8.875%, Due
2/15/99 (Market Value $23,149,040) (e) 23,600,000 23,600,000
UNITED STATES GOVERNMENT & AGENCY ISSUES 0.1%
GNMA Guaranteed Pass-Thru Certificates, 10.25%,
Due 10/15/98 2,626 2,638
United States Treasury Bills, Due 1/15/98 (c) 155,000 153,416
----------
156,054
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $26,361,297) 26,347,954
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES 103.5% (COST $268,333,888) 286,397,510
Other Assets and Liabilities, Net (3.5%) (9,639,575)
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $276,757,935
- --------------------------------------------------------------------------------
FUTURES
- --------------------------------------------------------------------------------
UNDERLYING
EXPIRATION FACE AMOUNT UNREALIZED
DATE AT VALUE APPRECIATION
- --------------------------------------------------------------------------------
Purchased:
20 Two-Year U.S. Treasury Notes 12/97 $4,157,500 $ 27,975
70 Five-Year U.S. Treasury Notes 12/97 7,588,438 111,411
55 Ten-Year U.S. Treasury Notes 12/97 6,146,250 118,775
3 U.S. Treasury Bonds 12/97 355,406 8,790
19
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG ASSET ALLOCATION FUND (continued)
================================================================================
- --------------------------------------------------------------------------------
COUNTRY DIVERSIFICATION
- ---------------------------------------------------------------------
Percentage of Net Assets
- ---------------------------------------------------------------------
United States .........................................100.2%
United Kingdom ........................................ 0.9
Mexico ................................................ 0.7
Argentina ............................................. 0.5
Russia ................................................ 0.5
Netherlands ........................................... 0.4
Finland ............................................... 0.3
Other Assets and Liabilities, Net ..................... (3.5)
- ---------------------------------------------------------------------
Total 100.0%
- ---------------------------------------------------------------------
================================================================================
STRONG BLUE CHIP 100 FUND
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 98.1%
AEROSPACE & DEFENSE 2.5%
The Boeing Company 2,275 $108,916
Lockheed Martin Corporation 110 10,457
United Technologies Corporation 130 9,100
----------
128,473
AUTOMOBILE 1.3%
Chrysler Corporation 370 13,042
Ford Motor Company 620 27,086
General Motors Corporation 400 25,675
----------
65,803
BANK - MONEY CENTER 3.9%
BankAmerica Corporation 380 27,170
Chase Manhattan Corporation 930 107,299
Citicorp 250 31,266
J. P. Morgan & Company, Inc. 100 10,975
NationsBank Corporation 390 23,351
----------
200,061
BANK - REGIONAL 0.3%
US Bancorp Delaware 130 13,219
BANK - SUPER REGIONAL 4.1%
Banc One Corporation 320 16,680
The Bank of New York Company, Inc. 2,960 139,305
First Chicago NBD Corporation 160 11,640
First Union Corporation 310 15,209
Norwest Corporation 410 13,146
Wells Fargo & Company 50 14,569
----------
210,549
BEVERAGE - ALCOHOLIC 0.2%
Anheuser-Busch Companies, Inc. 270 10,783
BEVERAGE - SOFT DRINK 2.1%
The Coca-Cola Company 1,370 77,405
PepsiCo, Inc. 840 30,923
----------
108,328
BROKERAGE & INVESTMENT MANAGEMENT 1.8%
Merrill Lynch & Company, Inc. 1,405 95,013
CHEMICAL 0.5%
The Dow Chemical Company 130 11,797
Monsanto Company 320 13,680
----------
25,477
COMPUTER - MAINFRAME 1.0%
International Business Machines Corporation 540 52,954
COMPUTER - PERSONAL & WORKSTATION 5.3%
Compaq Computer Corporation (b) 2,020 128,775
Dell Computer Corporation (b) 1,370 109,771
Hewlett-Packard Company 580 35,779
----------
274,325
COMPUTER SOFTWARE 4.8%
Cisco Systems, Inc. (b) 370 30,352
Computer Associates International, Inc. 800 59,650
Microsoft Corporation (b) 1,220 158,600
----------
248,602
COMPUTER SYSTEMS 0.4%
Oracle Systems Corporation (b) 535 19,143
COSMETIC & PERSONAL CARE 0.5%
The Gillette Company 310 27,609
DIVERSIFIED OPERATIONS 1.3%
Allied Signal, Inc. 310 11,160
E.I. du Pont de Nemours & Company 620 35,262
Minnesota Mining & Manufacturing Company 230 21,045
----------
67,467
ELECTRIC POWER 0.2%
Duke Power Company 200 9,650
ELECTRICAL EQUIPMENT 3.4%
Emerson Electric Company 240 12,585
General Electric Company 2,525 163,020
----------
175,605
ELECTRONICS - SEMICONDUCTOR/COMPONENT 5.7%
Intel Corporation 1,900 146,300
Motorola, Inc. 330 20,378
Texas Instruments, Inc. 1,200 128,025
----------
294,703
FINANCE - MISCELLANEOUS 2.1%
American Express Company 1,100 85,800
First Data Corporation 240 6,975
Morgan Stanley, Dean Witter, Discover & Company 320 15,680
----------
108,455
FOOD 1.1%
Campbell Soup Company 250 12,891
Kellogg Company 230 9,904
Sara Lee Corporation 260 13,293
Unilever NV 350 18,681
----------
54,769
HEALTHCARE - DRUG/DIVERSIFIED 13.7%
Abbott Laboratories 420 25,751
American Home Products Corporation 360 26,685
Bristol-Myers Squibb Company 550 48,262
Johnson & Johnson 730 41,884
Eli Lilly & Company 2,550 170,531
Merck & Company, Inc. 670 59,798
Pfizer, Inc. 1,195 84,546
Pharmacia & Upjohn, Inc. 280 8,890
Schering-Plough Corporation 400 22,425
Warner-Lambert Company 1,510 216,213
----------
704,985
HEALTHCARE - INSTRUMENTATION 0.2%
Medtronic, Inc. 260 11,310
HEALTHCARE - PATIENT CARE 0.2%
Columbia/HCA Healthcare Corporation 350 9,887
20
<PAGE>
================================================================================
STRONG BLUE CHIP 100 FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
INSURANCE - DIVERSIFIED 1.8%
Travelers Group, Inc. 1,290 $ 90,300
INSURANCE - PROPERTY & CASUALTY 4.3%
The Allstate Corporation 1,555 128,968
American International Group, Inc. 925 94,408
----------
223,376
LEISURE PRODUCT 0.2%
Eastman Kodak Company 180 10,778
LEISURE SERVICE 0.6%
The Walt Disney Company 370 30,432
MACHINERY - CONSTRUCTION & MINING 0.2%
Caterpillar, Inc. 210 10,762
MEDIA - PUBLISHING 2.1%
Time Warner, Inc. 1,880 108,453
MORTGAGE & RELATED SERVICE 0.8%
Federal Home Loan Mortgage Corporation 380 14,393
Federal National Mortgage Association 580 28,094
----------
42,487
OFFICE AUTOMATION 0.3%
Xerox Corporation 180 14,276
OIL - INTERNATIONAL INTEGRATED 5.8%
Chevron Corporation 360 29,857
Exxon Corporation 1,360 83,555
Mobil Corporation 430 31,309
Royal Dutch Petroleum Company - New York
Registry Shares 1,180 62,098
Texaco, Inc. 1,590 90,531
----------
297,350
OIL - NORTH AMERICAN INTEGRATED 0.8%
Amoco Corporation 270 24,756
Atlantic Richfield Company 180 14,816
----------
39,572
OIL WELL EQUIPMENT & SERVICE 4.9%
Schlumberger, Ltd. 2,900 253,750
PAPER & FOREST PRODUCTS 0.3%
Kimberly-Clark Corporation 310 16,101
RAILROAD 0.2%
Union Pacific Corporation 140 8,575
RETAIL - MAJOR CHAIN 2.5%
Sears, Roebuck & Company 220 9,213
Wal-Mart Stores, Inc. 3,360 118,020
----------
127,233
RETAIL - RESTAURANT 0.3%
McDonald's Corporation 380 17,029
RETAIL - SPECIALTY 3.0%
The Home Depot, Inc. 2,805 156,028
SOAP & CLEANING PREPARATION 1.2%
Colgate Palmolive Company 160 10,360
The Procter & Gamble Company 750 51,000
----------
61,360
TELECOMMUNICATION EQUIPMENT 0.8%
Lucent Technologies, Inc. 350 28,853
Northern Telecom, Ltd. 140 12,556
----------
41,409
TELECOMMUNICATION SERVICE 5.6%
AT&T Corporation 890 43,554
Bell Atlantic Corporation 430 34,346
MCI Communications Corporation 310 11,005
Sprint Corporation 190 9,880
WorldCom, Inc. (b) 5,700 191,663
----------
290,448
TELEPHONE 2.1%
Ameritech Corporation 300 19,500
BellSouth Corporation 550 26,022
GTE Corporation 530 22,492
SBC Communications, Inc. 500 31,813
US WEST Communications, Inc. 270 10,749
----------
110,576
TOBACCO 3.7%
Philip Morris Companies, Inc. 4,840 191,785
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $5,092,440) 5,059,250
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 5.5%
COMMERCIAL PAPER
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.16% $ 67,100 67,100
Johnson Controls, Inc., 5.18% 214,300 214,300
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $281,400) 281,400
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $5,373,840) 103.6% 5,340,650
Other Assets & Liabilities, Net (3.6%) (187,383)
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $5,153,267
- --------------------------------------------------------------------------------
COUNTRY DIVERSIFICATION
- --------------------------------------------------------------------------------
Percentage of Net Assets
- --------------------------------------------------------------------------------
United States .........................................101.8%
Netherlands ........................................... 1.6
Canada ................................................ 0.2
Other Assets and Liabilities, Net ..................... (3.6)
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
================================================================================
STRONG EQUITY INCOME FUND
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 88.6%
AEROSPACE & DEFENSE 3.1%
B.F. Goodrich & Company 29,600 $1,319,050
Raytheon Company 13,500 732,375
Thiokol Corporation 10,600 970,563
United Technologies Corporation 16,900 1,183,000
----------
4,204,988
AUTOMOBILE 1.5%
Ford Motor Company 15,600 681,525
General Motors Corporation 20,200 1,296,587
----------
1,978,112
21
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG EQUITY INCOME FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
BANK - MONEY CENTER 4.0%
BankAmerica Corporation 13,600 $ 972,400
Chase Manhattan Corporation 12,400 1,430,650
Citicorp 12,600 1,575,787
NationsBank Corporation 22,400 1,341,200
----------
5,320,037
BANK - SUPER REGIONAL 3.6%
Banc One Corporation 13,200 688,050
The Bank of New York Company, Inc. 14,100 663,581
Comerica, Inc. 16,200 1,280,812
First Union Corporation 18,200 892,938
Mellon Bank Corporation 26,100 1,345,781
----------
4,871,162
BEVERAGE - SOFT DRINK 1.0%
PepsiCo, Inc. 35,300 1,299,481
CHEMICAL - SPECIALTY 0.9%
Betzdearborn, Inc. 18,800 1,205,550
COMMERCIAL SERVICE 1.3%
Avery Dennison Corporation 16,800 668,850
The Interpublic Group of Companies, Inc. 24,000 1,140,000
----------
1,808,850
COMPUTER - MAINFRAME 1.0%
International Business Machines Corporation 13,400 1,314,038
CONTAINER 0.4%
Sealed Air Corporation (b) 9,400 484,688
COSMETIC & PERSONAL CARE 0.7%
The Gillette Company 10,700 952,969
DIVERSIFIED OPERATIONS 3.0%
Allied Signal, Inc. 26,400 950,400
Harsco Corporation 13,500 560,250
Johnson Controls, Inc. 16,000 718,000
Olin Corporation 10,600 481,638
Textron, Inc. 21,900 1,266,094
----------
3,976,382
ELECTRICAL EQUIPMENT 4.1%
Emerson Electric Company 17,000 891,437
General Electric Company 41,400 2,672,887
Parker-Hannifin Corporation 22,350 934,510
Westinghouse Electric Corporation 40,000 1,057,500
----------
5,556,334
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.5%
General Motors Corporation Class H 10,100 638,825
FINANCE - MISCELLANEOUS 1.5%
American Express Company 16,500 1,287,000
Morgan Stanley, Dean Witter, Discover & Company 14,500 710,500
----------
1,997,500
FOOD 2.6%
CPC International, Inc. 8,000 792,000
Dean Foods Company 21,400 1,012,488
Hershey Foods Corporation 2,000 110,500
Sara Lee Corporation 18,400 940,700
Unilever NV 12,800 683,200
----------
3,538,888
HEALTHCARE - DRUG/DIVERSIFIED 5.4%
Bristol-Myers Squibb Company 22,000 1,930,500
Johnson & Johnson 10,700 613,912
Eli Lilly & Company 24,000 1,605,000
Pfizer, Inc. 22,300 1,577,725
SmithKline Beecham PLC Sponsored ADR 8,000 381,000
Warner-Lambert Company 7,800 1,116,863
----------
7,225,000
HEALTHCARE - MEDICAL SUPPLY 1.5%
Becton, Dickinson & Company 10,000 460,625
McKesson Corporation 15,100 1,620,419
----------
2,081,044
HEALTHCARE - PATIENT CARE 1.3%
HEALTHSOUTH Corporation (b) 29,000 741,312
Integrated Health Services, Inc. 33,600 1,066,800
----------
1,808,112
HOUSEHOLD APPLIANCES & FURNISHINGS 0.9%
Philips Electronics NV ADR 15,500 1,214,813
HOUSING RELATED 1.6%
Masco Corporation 28,300 1,241,662
Snap-on, Inc. 14,700 632,100
Sherwin Williams Company 11,600 321,900
----------
2,195,662
INSURANCE - ACCIDENT & HEALTH 0.5%
Provident Companies, Inc. 18,500 617,438
INSURANCE - DIVERSIFIED 1.2%
Travelers Group, Inc. 22,866 1,600,620
INSURANCE - LIFE 0.3%
Reliastar Financial Corporation 12,400 463,450
INSURANCE - MULTI-LINE 0.6%
UNUM Corporation 16,300 794,625
INSURANCE - PROPERTY & CASUALTY 2.4%
The Allstate Corporation 12,300 1,020,131
American International Group, Inc. 11,550 1,178,821
Chubb Corporation 15,800 1,046,750
----------
3,245,702
LEISURE SERVICE 0.4%
The Walt Disney Company 6,100 501,725
MACHINERY - AGRICULTURE 0.5%
Deere & Company 12,000 631,500
MACHINERY - MISCELLANEOUS 1.2%
Cooper Industries, Inc. 13,500 703,687
Ingersoll-Rand Company 25,200 981,225
----------
1,684,912
MACHINERY - TRANSPORTATION EQUIPMENT & PARTS 0.5%
Dana Corporation 15,500 725,594
MEDIA - PUBLISHING 1.9%
Gannett Company, Inc. 17,000 893,563
Houghton Mifflin Company 13,800 489,900
McGraw-Hill, Inc. 17,100 1,117,912
----------
2,501,375
MEDIA - RADIO/TV 0.5%
Tele-Communications, Inc. Class A (b) 30,000 688,125
METAL PRODUCTS & FABRICATION 0.5%
Illinois Tool Works, Inc. 12,600 619,763
METALS & MINING 0.5%
Southdown, Inc. 12,800 708,800
22
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG EQUITY INCOME FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
MORTGAGE & RELATED SERVICE 0.9%
Federal National Mortgage Assocation 24,300 $ 1,177,031
NATURAL GAS DISTRIBUTION 0.9%
MCN Energy Group, Inc. 36,500 1,263,813
OFFICE AUTOMATION 2.2%
Pitney Bowes, Inc. 17,400 1,380,037
Xerox Corporation 20,200 1,602,113
----------
2,982,150
OIL - INTERNATIONAL INTEGRATED 1.5%
Royal Dutch Petroleum Company-New York
Registry Shares 19,600 1,031,450
Texaco, Inc. 18,200 1,036,262
----------
2,067,712
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 0.4%
Burlington Resources, Inc. 12,000 587,250
OIL - NORTH AMERICAN INTEGRATED 2.0%
Amoco Corporation 9,900 907,706
Ashland, Inc. 16,700 796,381
USX-Marathon Group 28,900 1,033,175
----------
2,737,262
OIL WELL EQUIPMENT & SERVICE 8.0%
Baker Hughes, Inc. 29,000 1,332,188
Camco International, Inc. 10,400 751,400
Cooper Cameron Corporation (b) 17,000 1,228,250
EVI, Inc. (b) 24,400 1,566,175
Nabors Industries, Inc. (b) 31,100 1,278,988
Reading & Bates Corporation (b) 30,700 1,300,912
Santa Fe International Corporation 12,900 634,519
Schlumberger, Ltd. 24,800 2,170,000
UTI Energy Corporation (b) 9,800 437,325
----------
10,699,757
PAPER & FOREST PRODUCTS 1.0%
Bowater, Inc. 11,800 493,387
The Mead Corporation 13,400 810,700
----------
1,304,087
PERSONAL & COMMERCIAL LENDING 1.7%
Household International, Inc. 12,200 1,381,650
SLM Holding Corporation 6,000 842,250
----------
2,223,900
POLLUTION CONTROL 0.8%
Browning-Ferris Industries, Inc. 32,700 1,062,750
RAILROAD 0.7%
Burlington Northern Santa Fe Corporation 9,600 912,000
REAL ESTATE 4.0%
Boston Properties, Inc. (b) 7,400 236,800
Bradley Real Estate, Inc. 28,100 551,462
Crescent Real Estate Equities, Inc. 32,000 1,152,000
Duke Realty Investments, Inc. 13,400 301,500
First Union Real Estate Equity & Mortgage
Investments 30,100 479,718
Patriot American Hospitality, Inc. 36,500 1,204,500
Starwood Lodging Trust 23,800 1,423,537
----------
5,349,517
RETAIL - DRUG STORE 2.1%
Rite Aid Corporation 31,600 1,876,250
Walgreen Company 36,000 1,012,500
----------
2,888,750
RETAIL - MAJOR CHAIN 1.9%
Dayton Hudson Corporation 23,000 1,444,687
Wal-Mart Stores, Inc. 32,500 1,141,563
----------
2,586,250
RETAIL - SPECIALTY 1.5%
Circuit City Stores, Inc. 16,400 653,950
The Home Depot, Inc. 25,550 1,421,219
----------
2,075,169
SOAP & CLEANING PREPARATION 2.5%
Clorox Company 6,400 448,000
Colgate Palmolive Company 18,400 1,191,400
The Procter & Gamble Company 24,700 1,679,600
----------
3,319,000
TELECOMMUNICATION EQUIPMENT 0.5%
Nokia Corporation Sponsored ADR 7,500 661,875
TELECOMMUNICATION SERVICE 2.8%
AT&T Corporation 35,300 1,727,494
AirTouch Communications, Inc. (b) 34,100 1,317,113
MCI Communications Corporation 5,800 205,900
WorldCom, Inc. (b) 17,000 571,625
----------
3,822,132
TELEPHONE 1.7%
BellSouth Corporation 21,800 1,031,413
SBC Communications, Inc. 19,000 1,208,875
----------
2,240,288
TRUCKING 0.6%
CNF Transportation, Inc. 17,100 763,088
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $104,342,618) 119,179,845
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS 3.1%
Corning LP Monthly Income 6.00% Securities 9,300 674,250
Houston Industries, Inc. 7.00% Automatic Common
Exchange Securities 30,000 1,642,500
Merrill Lynch & Company, Inc. Structured Yield
Product, 6.50%, Due 8/15/98 5,800 591,600
Ralston Purina Company Stock Appreciation Income
Linked Securities, 7.00%, Due 8/01/00 10,000 630,000
SunAmerica, Inc. 8.50% Preferred Equity
Redeemable Security Units 13,400 588,762
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $3,407,192) 4,127,112
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS 3.0%
Altera Corporation Subordinated Notes, 5.75%,
Due 6/15/02 $ 155,000 278,612
Diamond Offshore Drilling, Inc. Subordinated
Notes, 3.75%, Due 2/15/07 750,000 1,210,313
Federated Department Stores, Inc. Subordinated
Notes, 5.00%, Due 10/01/03 200,000 275,000
Hexcel Corporation Subordinated Notes, 7.00%,
Due 8/01/03 410,000 735,950
Loews Corporation Exchangeable Subordinated
Notes, 3.125%, Due 9/15/07 (Exchangeable into
Diamond Offshore Drilling, Inc. Common Stock) 500,000 566,875
World Color Press, Inc. Delaware Senior
Subordinated Notes, 6.00%, Due 10/01/07 1,000,000 950,000
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS (COST $3,200,799) 4,016,750
- --------------------------------------------------------------------------------
23
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG EQUITY INCOME FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 8.2%
COMMERCIAL PAPER 1.8%
INTEREST-BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.16% $ 539,600 $ 539,600
General Mills, Inc., 5.15% 100 100
Johnson Controls, Inc., 5.18% 321,600 321,600
Pitney Bowes Credit Corporation, 5.16% 370,000 370,000
Sara Lee Corporation, 5.14% 250,000 250,000
Warner Lambert Company, 5.14% 705,700 705,700
Wisconsin Electric Power Company, 5.21% 189,900 189,900
----------
2,376,900
REPURCHASE AGREEMENT 6.4%
Goldman, Sachs & Company, Inc. (Dated 10/31/97),
5.60%, Due 11/03/97 (Repurchase Proceeds
$8,604,013); Collateralized by: $7,655,000 United
States Treasury Bonds, 7.25%, Due 5/15/16
(Market Value $8,780,285) (e) 8,600,000 8,600,000
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $10,976,900) 10,976,900
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $121,927,509) 102.9% 138,300,607
Other Assets & Liabilities, Net (2.9%) (3,814,194)
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $134,486,413
- --------------------------------------------------------------------------------
COUNTRY DIVERSIFICATION
- ----------------------------------------------------------------------
Percentage of Net Assets
- ----------------------------------------------------------------------
United States ........................................ 99.9%
Netherlands .......................................... 2.2
Finland .............................................. 0.5
United Kingdom ....................................... 0.3
Other Assets and Liabilities, Net .................... (2.9)
- ----------------------------------------------------------------------
Total 100.0%
- ----------------------------------------------------------------------
================================================================================
STRONG GROWTH & INCOME FUND
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 96.2%
AEROSPACE & DEFENSE 1.9%
B.F. Goodrich & Company 50,600 $2,254,862
United Technologies Corporation 28,700 2,009,000
----------
4,263,862
AUTOMOBILE 1.5%
Ford Motor Company 24,500 1,070,344
General Motors Corporation 35,300 2,265,819
----------
3,336,163
BANK - MONEY CENTER 3.9%
BankAmerica Corporation 20,400 1,458,600
Chase Manhattan Corporation 19,900 2,295,962
Citicorp 22,000 2,751,375
NationsBank Corporation 38,100 2,281,237
----------
8,787,174
BANK - SUPER REGIONAL 3.1%
Banc One Corporation 22,300 1,162,387
The Bank of New York Company, Inc. 19,700 927,131
Comerica, Inc. 26,300 2,079,344
First Union Corporation 23,000 1,128,437
Mellon Bank Corporation 33,500 1,727,344
----------
7,024,643
BEVERAGE - SOFT DRINK 1.0%
PepsiCo, Inc. 60,200 2,216,112
COMMERCIAL SERVICE 0.5%
The Interpublic Group of Companies, Inc. 26,850 1,275,375
COMPUTER - MAINFRAME 1.0%
International Business Machines Corporation 22,700 2,226,019
COMPUTER - PERIPHERAL EQUIPMENT 0.6%
EMC Communications Corporation (b) 23,500 1,316,000
COMPUTER - PERSONAL & WORKSTATION 0.9%
Compaq Computer Corporation (b) 33,600 2,142,000
COMPUTER SOFTWARE 3.7%
Cisco Systems, Inc. (b) 34,200 2,805,469
Compuware Corporation (b) 27,900 1,844,887
Microsoft Corporation (b) 29,700 3,861,000
----------
8,511,356
CONTAINER 0.4%
Sealed Air Corporation (b) 16,500 850,781
COSMETIC & PERSONAL CARE 0.7%
The Gillette Company 18,200 1,620,937
DIVERSIFIED OPERATIONS 3.3%
Allied Signal, Inc. 40,800 1,468,800
Johnson Controls, Inc. 28,200 1,265,475
Textron, Inc. 37,200 2,150,625
Tyco International, Ltd. 67,452 2,546,313
----------
7,431,213
ELECTRICAL EQUIPMENT 3.9%
Emerson Electric Company 28,000 1,468,250
General Electric Company 69,600 4,493,550
Parker-Hannifin Corporation 39,150 1,636,959
Westinghouse Electric Corporation 51,100 1,350,956
----------
8,949,715
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.5%
General Motors Corporation Class H 17,300 1,094,225
ELECTRONICS - SEMICONDUCTOR/COMPONENT 0.4%
Intel Corporation 11,500 885,500
FINANCE - MISCELLANEOUS 1.4%
American Express Company 28,900 2,254,200
Morgan Stanley, Dean Witter, Discover & Company 18,500 906,500
----------
3,160,700
FOOD 1.7%
CPC International, Inc. 13,600 1,346,400
Interstate Bakeries Corporation 24,100 1,539,388
Unilever NV 18,800 1,003,450
----------
3,889,238
HEALTHCARE - DRUG/DIVERSIFIED 5.8%
Bristol-Myers Squibb Company 35,900 3,150,225
Johnson & Johnson 18,700 1,072,913
Eli Lilly & Company 46,300 3,096,312
Pfizer, Inc. 38,000 2,688,500
Warner-Lambert Company 22,700 3,250,356
----------
13,258,306
HEALTHCARE - MEDICAL SUPPLY 1.6%
Becton, Dickinson & Company 17,400 801,488
McKesson Corporation 26,400 2,833,050
----------
3,634,538
24
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG GROWTH & INCOME FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
HEALTHCARE - PATIENT CARE 1.6%
HEALTHSOUTH Corporation (b) 70,000 $1,789,375
Integrated Health Services, Inc. 57,300 1,819,275
----------
3,608,650
HOUSEHOLD APPLIANCES & FURNISHINGS 1.4%
Philips Electronics NV ADR 25,400 1,990,725
Sunbeam Corporation 28,300 1,282,344
----------
3,273,069
HOUSING RELATED 0.9%
Masco Corporation 46,100 2,022,637
INSURANCE - ACCIDENT & HEALTH 0.5%
Provident Companies, Inc. 32,500 1,084,687
INSURANCE - DIVERSIFIED 1.2%
Travelers Group, Inc. 38,800 2,716,000
INSURANCE - LIFE 0.3%
Reliastar Financial Corporation 19,000 710,125
INSURANCE - MULTI-LINE 0.6%
UNUM Corporation 27,800 1,355,250
INSURANCE - PROPERTY & CASUALTY 2.1%
The Allstate Corporation 18,900 1,567,519
American International Group, Inc. 22,000 2,245,375
Chubb Corporation 16,200 1,073,250
----------
4,886,144
LEISURE SERVICE 0.5%
The Walt Disney Company 13,500 1,110,375
MACHINERY - AGRICULTURE 0.5%
Deere & Company 20,600 1,084,075
MACHINERY - MISCELLANEOUS 1.2%
Cooper Industries, Inc. 22,500 1,172,813
Ingersoll-Rand Company 39,900 1,553,606
----------
2,726,419
MACHINERY - TRANSPORTATION EQUIPMENT & PARTS 0.6%
Dana Corporation 27,000 1,263,938
MEDIA - PUBLISHING 2.0%
Houghton Mifflin Company 25,800 915,900
McGraw-Hill, Inc. 26,900 1,758,588
Time Warner, Inc. 32,300 1,863,306
----------
4,537,794
MEDIA - RADIO/TV 2.6%
Clear Channel Communications, Inc. (b) 37,700 2,488,200
Cox Communications, Inc. Class A (b) 60,000 1,845,000
Tele-Communications, Inc. Class A (b) 70,000 1,605,625
----------
5,938,825
METAL PRODUCTS & FABRICATION 0.6%
Illinois Tool Works, Inc. 25,600 1,259,200
METALS & MINING 0.5%
Southdown, Inc. 20,300 1,124,113
MORTGAGE & RELATED SERVICE 0.9%
Federal National Mortgage Assocation 42,500 2,058,594
OFFICE AUTOMATION 2.1%
Pitney Bowes, Inc. 29,000 2,300,062
Xerox Corporation 31,900 2,530,069
----------
4,830,131
OIL - INTERNATIONAL INTEGRATED 2.5%
British Petroleum PLC ADR 19,400 1,702,350
Royal Dutch Petroleum Company - New York Registry
Shares 25,620 1,348,253
Texaco, Inc. 22,400 1,275,400
YPF Sociedad Anonima ADR 44,100 1,411,200
----------
5,737,203
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 1.3%
Anadarko Petroleum Corporation 13,200 966,900
Apache Corporation 22,700 953,400
Burlington Resources, Inc. 20,500 1,003,219
----------
2,923,519
OIL - NORTH AMERICAN INTEGRATED 1.2%
Amoco Corporation 15,500 1,421,156
Ashland, Inc. 26,000 1,239,875
----------
2,661,031
OIL WELL EQUIPMENT & SERVICE 10.4%
Camco International, Inc. 16,000 1,156,000
Cooper Cameron Corporation (b) 44,900 3,244,025
Diamond Offshore Drilling, Inc. (b) 48,500 3,019,125
EVI, Inc. (b) 40,200 2,580,337
Nabors Industries, Inc. (b) 54,300 2,233,087
Reading & Bates Corporation (b) 70,600 2,991,675
Santa Fe International Corporation 40,600 1,997,013
Schlumberger, Ltd. 64,200 5,617,500
UTI Energy Corporation (b) 17,100 763,088
----------
23,601,850
PAPER & FOREST PRODUCTS 0.4%
Bowater, Inc. 20,800 869,700
PERSONAL & COMMERCIAL LENDING 2.3%
Associates First Capital Corporation 21,100 1,342,487
Household International, Inc. 20,700 2,344,275
SLM Holding Corporation 10,400 1,459,900
----------
5,146,662
POLLUTION CONTROL 0.5%
Browning-Ferris Industries, Inc. 34,800 1,131,000
RAILROAD 0.5%
Burlington Northern Santa Fe Corporation 12,000 1,140,000
REAL ESTATE 3.2%
Boston Properties, Inc. (b) 12,600 403,200
Crescent Real Estate Equities, Inc. 55,700 2,005,200
Duke Realty Investments, Inc. 21,000 472,500
Patriot American Hospitality, Inc. 62,000 2,046,000
Starwood Lodging Trust 40,400 2,416,425
----------
7,343,325
RETAIL - DISCOUNT & VARIETY 0.7%
Consolidated Stores Corporation (b) 38,500 1,535,188
RETAIL - DRUG STORE 2.7%
CVS Corporation 24,000 1,471,500
Rite Aid Corporation 55,100 3,271,563
Walgreen Company 51,400 1,445,625
----------
6,188,688
RETAIL - MAJOR CHAIN 1.8%
Dayton Hudson Corporation 39,500 2,481,094
Wal-Mart Stores, Inc. 47,000 1,650,875
----------
4,131,969
RETAIL - SPECIALTY 2.1%
CUC International, Inc. (b) 37,000 1,091,500
Circuit City Stores, Inc. 28,400 1,132,450
The Home Depot, Inc. 43,900 2,441,938
----------
4,665,888
25
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG GROWTH & INCOME FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
SOAP & CLEANING PREPARATION 3.0%
Clorox Company 26,200 $ 1,834,000
Colgate Palmolive Company 31,300 2,026,675
The Procter & Gamble Company 41,900 2,849,200
----------
6,709,875
TELECOMMUNICATION EQUIPMENT 1.5%
Lucent Technologies, Inc. 27,500 2,267,031
Nokia Corporation Sponsored ADR 12,900 1,138,425
----------
3,405,456
TELECOMMUNICATION SERVICE 2.7%
AT&T Corporation 60,300 2,950,931
AirTouch Communications, Inc. (b) 52,600 2,031,675
WorldCom, Inc. (b) 36,200 1,217,225
----------
6,199,831
TELEPHONE 0.9%
SBC Communications, Inc. 32,500 2,067,813
TRUCKING 0.6%
CNF Transportation, Inc. 30,000 1,338,750
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $195,995,081) 218,261,631
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS 1.7%
Merrill Lynch & Company, Inc. Structured Yield
Product, 6.50%, Due 8/15/98 8,800 897,600
SunAmerica, Inc. 8.50% Preferred Equity
Redeemable Security Unit 19,000 834,812
WBK Strypes Trust 10.00% 70,000 2,170,000
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $3,527,678) 3,902,412
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 5.8%
COMMERCIAL PAPER 0.8%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.16% $ 223,100 223,100
General Mills, Inc., 5.15% 100 100
Johnson Controls, Inc., 5.18% 701,100 701,100
Pitney Bowes Credit Corporation, 5.16% 300,000 300,000
Warner Lambert Company, 5.14% 518,500 518,500
Wisconsin Electric Power Company, 5.21% 127,900 127,900
----------
1,870,700
REPURCHASE AGREEMENT 5.0%
Goldman Sachs & Company, Inc. (Dated 10/31/97),
5.60%, Due 11/03/97 (Repurchase proceeds
$11,405,320); Collateralized by: $9,340,000
United States Treasury Bonds, 8.125%, Due
8/15/21 (Market Value $11,637,640) (e) 11,400,000 11,400,000
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $13,270,700) 13,270,700
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES 103.7% (COST $212,793,459) 235,434,743
Other Assets and Liabilities, Net (3.7%) (8,434,268)
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $227,000,475
- --------------------------------------------------------------------------------
COUNTRY DIVERSIFICATION
- ----------------------------------------------------------------------
Percentage of Net Assets
- ----------------------------------------------------------------------
United States ......................................... 99.9%
Netherlands ........................................... 1.9
United Kingdom ........................................ 0.8
Argentina ............................................. 0.6
Finland ............................................... 0.5
Other Assets and Liabilities, Net ..................... (3.7)
- ----------------------------------------------------------------------
Total 100.0%
- ----------------------------------------------------------------------
================================================================================
STRONG LIMITED RESOURCES FUND
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 90.4%
DIVERSIFIED OPERATIONS 3.8%
E.I. du Pont de Nemours & Company 3,600 $ 204,750
METALS & MINING 3.6%
Aluminum Company of America 2,600 189,800
NATURAL GAS DISTRIBUTION 14.4%
Coastal Corporation 3,200 192,400
Enron Corporation 4,700 178,600
KN Energy, Inc. 4,400 191,400
Questar Corporation 5,400 208,575
----------
770,975
OIL - INTERNATIONAL INTEGRATED 6.9%
Chevron Corporation 2,300 190,756
YPF Sociedad Anonima ADR 5,500 176,000
----------
366,756
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 29.8%
Enron Oil & Gas Company 10,500 221,156
Gulf Canada Resources, Ltd. ADR (b) 24,300 203,512
Mitchell Energy & Development Corporation 8,200 205,000
Noble Affiliates, Inc. 4,500 184,781
Ocean Energy, Inc. (b) 3,700 228,475
Renaissance Energy, Ltd. (b) 7,100 164,665
Seagull Energy Corporation (b) 8,400 205,275
Union Pacific Resources Group, Inc. 7,400 182,225
----------
1,595,089
OIL - NORTH AMERICAN INTEGRATED 7.8%
Amerada Hess Corporation 3,500 215,031
Transmontaigne Oil Company (b) 11,700 201,825
----------
416,856
OIL WELL EQUIPMENT & SERVICE 14.1%
Dresser Industries, Inc. 4,600 193,775
Dril-Quip, Inc. (b) 4,000 143,500
Schlumberger, Ltd. 2,300 201,250
Tidewater, Inc. 3,300 216,769
----------
755,294
PAPER & FOREST PRODUCTS 10.0%
Kimberly-Clark Corporation 4,100 212,944
Weyerhaeuser Company 3,700 176,675
Willamette Industries, Inc. 4,300 142,169
----------
531,788
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $5,107,013) 4,831,308
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 9.6%
COMMERCIAL PAPER
INTEREST BEARING, DUE UPON DEMAND
General Mills, Inc., 5.15% $ 100 100
Johnson Controls, Inc., 5.18% 61,200 61,200
Pitney Bowes Credit Corporation, 5.16% 143,000 143,000
Warner Lambert Company, 5.14% 12,800 12,800
Wisconsin Electric Power Company, 5.21% 296,600 296,600
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $513,700) 513,700
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $5,620,713) 100.0% 5,345,008
Other Assets and Liabilities, Net 0.0% 309
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $5,345,317
- --------------------------------------------------------------------------------
26
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG LIMITED RESOURCES FUND (continued)
================================================================================
- --------------------------------------------------------------------------------
COUNTRY DIVERSIFICATION
- --------------------------------------------------------------------
Percentage of Net Assets
- --------------------------------------------------------------------
United States ......................................... 89.8%
Canada ................................................ 6.9%
Argentina ............................................. 3.3%
- --------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------
================================================================================
STRONG TOTAL RETURN FUND
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 82.6%
AUTOMOBILE 1.4%
Ford Motor Company 100,000 $ 4,368,750
General Motors Corporation 115,000 7,381,562
----------
11,750,312
BANK - MONEY CENTER 1.8%
BankAmerica Corporation 50,000 3,575,000
Chase Manhattan Corporation 50,000 5,768,750
Citicorp 45,000 5,627,812
----------
14,971,562
BANK - REGIONAL 2.9%
Northern Trust Company 200,000 11,700,000
US Bancorp Delaware 125,000 12,710,937
----------
24,410,937
BANK - SUPER REGIONAL 2.5%
The Bank of New York Company, Inc. 130,000 6,118,125
Mellon Bank Corporation 120,000 6,187,500
Norwest Corporation 250,000 8,015,625
----------
20,321,250
BEVERAGE - SOFT DRINK 0.5%
PepsiCo, Inc. 110,000 4,049,375
BROKERAGE & INVESTMENT MANAGEMENT 2.1%
Franklin Resources, Inc. 75,000 6,740,625
Merrill Lynch & Company, Inc. 160,000 10,820,000
----------
17,560,625
COMMERCIAL SERVICE 0.7%
Avis Rent A Car, Inc. (b) 210,000 5,761,875
COMPUTER - MAINFRAME 0.5%
International Business Machines Corporation 40,000 3,922,500
COMPUTER - PERSONAL & WORKSTATION 0.2%
Dell Computer Corporation (b) 25,000 2,003,125
COMPUTER SERVICE 0.6%
HBO & Company 120,000 5,220,000
COMPUTER SOFTWARE 3.0%
Cisco Systems, Inc. (b) 110,000 9,023,437
Microsoft Corporation (b) 90,000 11,700,000
PeopleSoft, Inc. (b) 70,000 4,401,250
----------
25,124,687
COSMETIC & PERSONAL CARE 0.7%
The Gillette Company 65,000 5,789,062
DIVERSIFIED OPERATIONS 1.4%
Tyco International, Ltd. 300,000 11,325,000
ELECTRICAL EQUIPMENT 3.3%
General Electric Company 200,000 12,912,500
Parker-Hannifin Corporation 80,000 3,345,000
Westinghouse Electric Corporation 420,000 11,103,750
----------
27,361,250
ELECTRONICS - SEMICONDUCTOR/COMPONENT 0.5%
Intel Corporation 50,000 3,850,000
FINANCE - MISCELLANEOUS 1.4%
American Express Company 100,000 7,800,000
Morgan Stanley, Dean Witter, Discover & Company 70,000 3,430,000
----------
11,230,000
HEALTHCARE - DRUG/DIVERSIFIED 6.6%
American Home Products Corporation 50,000 3,706,250
Eli Lilly & Company 290,000 19,393,750
Pfizer, Inc. 170,000 12,027,500
Schering-Plough Corporation 50,000 2,803,125
Warner-Lambert Company 120,000 17,182,500
----------
55,113,125
HEALTHCARE - INSTRUMENTATION 0.9%
Medtronic, Inc. 180,000 7,830,000
HEALTHCARE - MEDICAL SUPPLY 2.7%
Cardinal Health, Inc. 110,000 8,167,500
McKesson Corporation 130,000 13,950,625
----------
22,118,125
HEALTHCARE - PATIENT CARE 0.7%
HEALTHSOUTH Corporation (b) 235,000 6,007,188
HOUSEHOLD APPLIANCES & FURNISHINGS 1.5%
Sunbeam Corporation 280,000 12,687,500
INSURANCE - DIVERSIFIED 1.3%
Travelers Group, Inc. 150,000 10,500,000
INSURANCE - MULTI-LINE 1.1%
MGIC Investment Corporation 145,000 8,745,313
INSURANCE - PROPERTY & CASUALTY 0.7%
The Allstate Corporation 50,000 4,146,875
American International Group, Inc. 20,000 2,041,250
----------
6,188,125
LEISURE SERVICE 1.9%
The Walt Disney Company 40,000 3,290,000
HFS, Inc. (b) 110,000 7,755,000
Hilton Hotels Corporation 150,000 4,621,875
----------
15,666,875
MACHINERY - MISCELLANEOUS 0.4%
Ingersoll-Rand Company 85,000 3,309,688
MACHINERY - TRANSPORTATION EQUIPMENT & PARTS 1.4%
Dana Corporation 200,000 9,362,500
PACCAR, Inc. 50,000 2,253,125
----------
11,615,625
MEDIA - PUBLISHING 0.6%
Time Warner, Inc. 90,000 5,191,875
MORTGAGE & RELATED SERVICE 0.6%
Federal Home Loan Mortgage Corporation 75,000 2,840,625
Federal National Mortgage Association 50,000 2,421,875
----------
5,262,500
27
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG TOTAL RETURN FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
NATURAL GAS DISTRIBUTION 1.3%
Enron Corporation 170,000 $ 6,460,000
The Williams Companies, Inc. 90,000 4,584,375
----------
11,044,375
OFFICE AUTOMATION 0.6%
Xerox Corporation 60,000 4,758,750
OIL - INTERNATIONAL INTEGRATED 2.0%
Chevron Corporation 105,000 8,708,438
Texaco, Inc. 140,000 7,971,250
----------
16,679,688
OIL - NORTH AMERICAN INTEGRATED 0.8%
Atlantic Richfield Company 80,000 6,585,000
OIL WELL EQUIPMENT & SERVICE 9.1%
Baker Hughes, Inc. 100,000 4,593,750
Camco International, Inc. 105,000 7,586,250
Cooper Cameron Corporation (b) 124,800 9,016,800
Diamond Offshore Drilling, Inc. 110,000 6,847,500
Halliburton Company 180,000 10,732,500
Helmerich & Payne, Inc. 80,000 6,455,000
Nabors Industries, Inc. (b) 50,000 2,056,250
Santa Fe International Corporation 150,000 7,378,125
Schlumberger, Ltd. 205,000 17,937,500
Smith International, Inc. (b) 45,000 3,431,250
----------
76,034,925
PAPER & FOREST PRODUCTS 1.3%
Fort James Corporation 270,000 10,715,625
PERSONAL & COMMERCIAL LENDING 0.9%
Household International, Inc. 67,400 7,633,050
REAL ESTATE 5.2%
Cali Realty Corporation 100,000 4,050,000
Glenborough Realty Trust, Inc. 178,900 4,584,313
Meditrust Corporation 125,000 5,343,750
Patriot American Hospitality, Inc. 285,000 9,405,000
Starwood Lodging Trust 270,000 16,149,375
Vornado Realty Trust 86,000 3,837,750
----------
43,370,188
RETAIL - DEPARTMENT STORE 1.8%
Kohl's Corporation (b) 225,000 15,103,125
RETAIL - DRUG STORE 2.7%
CVS Corporation 100,000 6,131,250
Rite Aid Corporation 170,000 10,093,750
Walgreen Company 230,000 6,468,750
----------
22,693,750
RETAIL - FOOD CHAIN 0.9%
Safeway, Inc. (b) 125,000 7,265,625
RETAIL - MAJOR CHAIN 1.2%
Dayton Hudson Corporation 105,000 6,595,313
Wal-Mart Stores, Inc. 90,000 3,161,250
----------
9,756,563
RETAIL - SPECIALTY 2.0%
The Gap, Inc. 50,000 2,659,375
The Home Depot, Inc. 120,000 6,675,000
Nordstrom, Inc. 120,000 7,350,000
----------
16,684,375
SAVINGS & LOAN 3.8%
H.F. Ahmanson & Company 100,000 5,900,000
TCF Financial Corporation 215,000 12,228,125
Washington Mutual, Inc. 200,000 13,687,500
----------
31,815,625
SOAP & CLEANING PREPARATION 0.4%
The Procter & Gamble Company 50,000 3,400,000
TELECOMMUNICATION EQUIPMENT 2.2%
LM Ericsson Telephone Company ADR Class B 80,000 3,540,000
Lucent Technologies, Inc. 110,000 9,068,125
Tellabs, Inc. (b) 100,000 5,400,000
----------
18,008,125
TELECOMMUNICATION SERVICE 1.5%
AT&T Corporation 90,000 4,404,375
Bell Atlantic Corporation 30,000 2,396,250
WorldCom, Inc. (b) 170,000 5,716,250
----------
12,516,875
TELEPHONE 0.3%
BellSouth Corporation 50,000 2,365,625
TRUCKING 0.7%
CNF Transportation, Inc. 125,000 5,578,125
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $628,375,568) 686,896,913
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS 3.2%
Automatic Common Exchange Securities
Trust II 6.50% 50,000 1,412,500
Chancellor Media 6.00% (Acquired 6/11/97;
Cost $6,000,000) (d) 120,000 7,440,000
Houston Industries, Inc. Automatic Common
Exchange Securities 7.00% 150,000 8,212,500
McKesson Financing Trust 5.00% (Acquired 2/13/97;
Cost $2,500,000) (d) 50,000 3,834,400
Snyder Trust Structured Yield Product
(Exchangeable for Snyder Communications, Inc.
Common Stock), 6.50%, Due 11/15/00 125,000 3,500,000
WorldCom, Inc. 8.00% 20,000 2,340,000
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $23,956,450) 26,739,400
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS 2.7%
Capstar Hotel Corporation Subordinated Notes,
4.75%, Due 10/15/04 $1,500,000 1,548,750
Corestaff, Inc. Subordinated Notes, 2.94%,
Due 8/15/04 3,950,000 3,253,812
EVI, Inc. Subordinated Debentures, 5.00%, Due
11/01/27 (Acquired 10/29/97; Cost $3,000,000)
(d) 3,000,000 3,007,500
Halter Marine Group, Inc. Subordinated Notes,
4.50%, Due 9/15/04 (Acquired 9/10/97 - 10/06/97;
Cost $2,630,000) (d) 2,500,000 3,156,250
Home Depot, Inc. Subordinated Notes, 3.25%,
Due 10/01/01 2,000,000 2,577,500
Interpublic Group Companies, Inc. Subordinated
Notes, 1.80%, Due 9/16/04 (Acquired 9/10/97;
Cost $2,400,210) (d) 3,000,000 2,456,250
Rite Aid Corporation Subordinated Notes, 5.25%,
Due 9/15/02 (Acquired 10/29/97; Cost
$2,122,500) (d) 2,000,000 2,157,500
Staples, Inc. Subordinated Debentures, 4.50%,
Due 10/01/00 (Acquired 9/12/95 - 10/07/97;
Cost $3,814,375) (d) 3,500,000 4,466,875
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS (COST $21,405,633) 22,624,437
- --------------------------------------------------------------------------------
28
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG TOTAL RETURN FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 9.1%
COMMERCIAL PAPER 0.1%
INTEREST BEARING, DUE UPON DEMAND
American Family Financial Services, Inc., 5.16% $ 161,900 $ 161,900
Johnson Controls, Inc., 5.18% 735,000 735,000
Wisconsin Electric Power Company, 5.21% 144,400 144,400
----------
1,041,300
REPURCHASE AGREEMENT 9.0%
Goldman, Sachs & Company (Dated 10/31/97),
5.60%, Due 11/03/97 (Repurchase proceeds
$74,534,767); Collateralized by: $71,880,000
United States Treasury Bonds, 8.875%,
Due 2/15/99 (Market Value $76,049,040)(e) 74,500,000 74,500,000
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $75,541,300) 75,541,300
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $749,278,951) 97.6% 811,802,050
Other Assets and Liabilites, Net 2.4% 19,782,124
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $831,584,174
- --------------------------------------------------------------------------------
COUNTRY DIVERSIFICATION
- ----------------------------------------------------------------------
Percentage of Net Assets
- ----------------------------------------------------------------------
United States ......................................... 97.2%
Sweden ................................................ 0.4
Other Assets and Liabilities, Net ..................... 2.4
- ----------------------------------------------------------------------
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) 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.
Percentages are stated as a percent of net assets.
See notes to financial statements.
29
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------------------------------------------------------
October 31, 1997
(In Thousands, Except Per Share Amounts)
<CAPTION>
STRONG AMERICAN STRONG ASSET STRONG BLUE STRONG EQUITY
UTILITIES FUND ALLOCATION FUND CHIP 100 FUND INCOME FUND
--------------- --------------- ------------- -------------
ASSETS:
Investments in Securities, at Value (Cost of $116,251,
<S> <C> <C> <C> <C>
$268,334, $5,374 and $121,928, respectively) $134,849 $286,398 $5,341 $138,301
Receivable for Securities Sold 197 4,705 84 155
Receivable for Fund Shares Sold 5 __ 1 30
Dividends and Interest Receivable 699 1,046 5 177
Other Assets 17 28 2 28
-------- -------- ------ --------
Total Assets 135,767 292,177 5,433 138,691
LIABILITIES:
Payable for Securities Purchased 925 15,333 278 4,139
Accrued Operating Expenses and Other Liabilities 47 86 2 66
-------- -------- ------ --------
Total Liabilities 972 15,419 280 4,205
-------- -------- ------ --------
NET ASSETS $134,795 $276,758 $5,153 $134,486
======== ======== ====== ========
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $107,285 $232,546 $5,211 $112,424
Undistributed Net Investment Income 534 784 6 72
Undistributed Net Realized Gain (Loss) 8,378 25,097 (31) 5,617
Net Unrealized Appreciation (Depreciation) 18,598 18,331 (33) 16,373
-------- -------- ------ --------
Net Assets $134,795 $276,758 $5,153 $134,486
======== ======== ====== ========
Capital Shares Outstanding (Unlimited Number Authorized) 9,650 12,910 496 8,492
NET ASSET VALUE PER SHARE $13.97 $21.44 $10.39 $15.84
====== ====== ====== ======
STRONG GROWTH & STRONG LIMITED STRONG TOTAL
INCOME FUND RESOURCES FUND RETURN FUND
--------------- -------------- ------------
ASSETS:
Investments in Securities, at Value
(Cost of $212,793, $5,621 and $749,279, respectively) $235,435 $5,345 $811,802
Receivable for Securities Sold 2,266 __ 40,980
Receivable for Fund Shares Sold 4 __ __
Dividends and Interest Receivable 245 4 716
Other Assets 26 3 51
-------- ------ --------
Total Assets 237,976 5,352 853,549
LIABILITIES:
Payable for Securities Purchased 10,789 __ 21,826
Payable for Fund Shares Redeemed 90 __ 2
Accrued Operating Expenses and Other Liabilities 97 7 137
-------- ------ --------
Total Liabilities 10,976 7 21,965
-------- ------ --------
NET ASSETS $227,000 $5,345 $831,584
======== ====== ========
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $195,162 $5,618 $599,327
Undistributed Net Investment Income 56 __ 267
Undistributed Net Realized Gain 9,141 3 169,467
Net Unrealized Appreciation (Depreciation) 22,641 (276) 62,523
-------- ------ --------
Net Assets $227,000 $5,345 $831,584
======== ====== ========
Capital Shares Outstanding (Unlimited Number Authorized) 13,883 562 25,458
NET ASSET VALUE PER SHARE $16.35 $9.51 $32.66
====== ===== ======
See notes to financial statements.
</TABLE>
30
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
For the Period Ended October 31, 1997 (Note 1)
(In Thousands)
<CAPTION>
STRONG STRONG STRONG STRONG STRONG STRONG STRONG
AMERICAN ASSET BLUE CHIP EQUITY GROWTH LIMITED TOTAL
UTILITIES ALLOCATION 100 INCOME & INCOME RESOURCES RETURN
FUND FUND FUND FUND FUND FUND FUND
--------- ---------- --------- ------ -------- --------- ------
INCOME:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends $ 5,027 $ 3,582 $15 $ 1,540 $ 2,077 $ 2 $ 10,308
Interest 335 8,373 3 198 171 5 2,831
------- ------- --- ------- ------- ---- --------
Total Income 5,362 11,955 18 1,738 2,248 7 13,139
EXPENSES:
Investment Advisory Fees 974 2,231 9 668 1,056 3 6,412
Custodian Fees 20 82 1 16 24 __ 71
Shareholder Servicing Costs 328 594 5 164 320 1 1,578
Professional Fees 17 25 2 13 14 2 40
Reports to Shareholders 54 78 4 30 64 __ 242
Federal and State Registration Fees 49 33 3 54 86 1 36
Other 22 21 __ 7 9 __ 56
------- ------- --- ------- ------- ---- --------
Total Expenses before Waivers and
Absorptions 1,464 3,064 24 952 1,573 7 8,435
Voluntary and Involuntary Expense Waivers
and Absorptions by Advisor __ __ (12) __ __ __ __
------- ------- --- ------- ------- ---- --------
Expenses, Net 1,464 3,064 12 952 1,573 7 8,435
------- ------- --- ------- ------- ---- --------
NET INVESTMENT INCOME 3,898 8,891 6 786 675 __ 4,704
REALIZED AND UNREALIZED
GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 8,697 25,882 (31) 5,862 9,170 3 173,451
Futures Contracts, Options and Forward
Foreign Currency Contracts __ 1,843 -- __ __ __ (182)
------- ------- --- ------- ------- ---- --------
Net Realized Gain (Loss) 8,697 27,725 (31) 5,862 9,170 3 173,269
Change in Unrealized Appreciation/
Depreciation on:
Investments 9,980 11,549 (33) 14,009 21,494 (276) (12,034)
Futures Contracts, Options and Forward
Foreign Currency Contracts -- 468 -- __ -- __ __
------- ------- --- ------- ------- ---- --------
Net Change in Unrealized
Appreciation/Depreciation 9,980 12,017 (33) 14,009 21,494 (276) (12,034)
------- ------- --- ------- ------- ---- --------
NET GAIN (LOSS) 18,677 39,742 (64) 19,871 30,664 (273) 161,235
------- ------- --- ------- ------- ---- --------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $22,575 $48,633 ($58) $20,657 $31,339 ($273) $165,939
======= ======= === ======= ======= ==== ========
See notes to financial statements.
31
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
STRONG AMERICAN STRONG ASSET
UTILITIES FUND ALLOCATION FUND
----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCT. 31, 1997 OCT. 31, 1996 OCT. 31, 1997 OCT. 31, 1996
------------- ------------- ------------- -------------
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income $ 3,898 $ 4,070 $ 8,891 $ 10,344
Net Realized Gain 8,697 8,401 27,725 18,985
Change in Unrealized Appreciation/Depreciation 9,980 (1,982) 12,017 (5,538)
-------- -------- -------- --------
Increase in Net Assets Resulting from Operations 22,575 10,489 48,633 23,791
DISTRIBUTIONS:
From Net Investment Income (3,740) (3,904) (8,891) (11,071)
In Excess of Net Investment Income -- -- (1,239) --
From Net Realized Gains (6,816) -- (19,794) (15,048)
-------- -------- -------- --------
Total Distributions (10,556) (3,904) (29,924) (26,119)
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold 65,936 158,043 30,437 42,832
Proceeds from Reinvestment of Dividends 9,984 3,644 28,934 25,146
Payment for Shares Redeemed (75,630) (137,482) (64,492) (63,202)
-------- -------- -------- --------
Increase (Decrease) in Net Assets from Capital Share Transactions 290 24,205 (5,121) 4,776
-------- -------- -------- --------
TOTAL INCREASE IN NET ASSETS 12,309 30,790 13,588 2,448
NET ASSETS:
Beginning of Period 122,486 91,696 263,170 260,722
-------- -------- -------- --------
End of Period $134,795 $122,486 $276,758 $263,170
======== ======== ======== ========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 5,000 12,627 1,500 2,141
Issued in Reinvestment of Dividends 776 293 1,472 1,274
Redeemed (5,817) (11,043) (3,143) (3,168)
------ ------- ------ ------
Net Increase (Decrease)in Shares of the Fund (41) 1,877 (171) 247
====== ======= ====== ======
STRONG BLUE STRONG EQUITY
CHIP 100 FUND INCOME FUND
------------- ----------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED
OCT. 31, 1997 OCT. 31, 1997 OCT. 31, 1996
------------- ------------- -------------
(NOTE 1) (NOTE 1)
OPERATIONS:
Net Investment Income $ 6 $ 786 $ 220
Net Realized Gain (Loss) (31) 5,862 (226)
Change in Unrealized Appreciation/Depreciation (33) 14,009 2,365
------ ------- ------
Increase (Decrease) in Net Assets Resulting from Operations (58) 20,657 2,359
DISTRIBUTIONS:
From Net Investment Income -- (742) (212)
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold 7,694 134,486 30,697
Proceeds from Reinvestment of Dividends -- 709 207
Payment for Shares Redeemed (2,483) (49,347) (4,328)
------ ------- ------
Increase in Net Assets from Capital Share Transactions 5,211 85,848 26,576
TOTAL INCREASE IN NET ASSETS 5,153 105,763 28,723
NET ASSETS:
Beginning of Period -- 28,723 --
------ -------- --------
End of Period $5,153 $134,486 $ 28,723
====== ======== ========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 730 9,463 2,756
Issued in Reinvestment of Dividends -- 48 18
Redeemed (234) (3,407) (386)
--- ----- -----
Net Increase in Shares of the Fund 496 6,104 2,388
=== ===== =====
See notes to financial statements.
</TABLE>
32
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(In Thousands)
STRONG GROWTH STRONG LIMITED
& INCOME FUND RESOURCES FUND
----------------------------- --------------
YEAR ENDED PERIOD ENDED PERIOD ENDED
OCT. 31, 1997 OCT. 31, 1996 OCT. 31, 1997
------------- ------------- -------------
(NOTE 1) (NOTE 1)
OPERATIONS:
<S> <C> <C> <C>
Net Investment Income $ 675 $ 30 $ __
Net Realized Gain 9,170 27 3
Change in Unrealized Appreciation/Depreciation 21,494 1,147 (276)
-------- ------- ------
Increase (Decrease) in Net Assets Resulting from Operations 31,339 1,204 (273)
DISTRIBUTIONS:
From Net Investment Income (627) (21) --
From Net Realized Gains (56) -- --
-------- ------- ------
Total Distributions (683) (21) --
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold 240,930 20,948 5,885
Proceeds from Reinvestment of Dividends 663 19 --
Payment for Shares Redeemed (63,239) (4,160) (267)
-------- ------- ------
Increase in Net Assets from Capital Share Transactions 178,354 16,807 5,618
-------- ------- ------
TOTAL INCREASE IN NET ASSETS 209,010 17,990 5,345
NET ASSETS:
Beginning of Period 17,990 -- --
-------- ------- ------
End of Period $227,000 $17,990 $5,345
======== ======= ======
TRANSACTIONS IN SHARES OF THE FUND:
Sold 16,654 1,816 590
Issued in Reinvestment of Dividends 44 2 --
Redeemed (4,267) (365) (28)
------ ----- ---
Net Increase in Shares of the Fund 12,431 1,453 562
====== ===== ===
STRONG TOTAL
RETURN FUND
----------------------------
YEAR ENDED YEAR ENDED
OCT. 31, 1997 OCT. 31, 1996
------------- -------------
OPERATIONS:
Net Investment Income $ 4,704 $ 5,816
Net Realized Gain 173,269 116,429
Change in Unrealized Appreciation/Depreciation (12,034) (4,578)
-------- --------
Increase in Net Assets Resulting from Operations 165,939 117,667
DISTRIBUTIONS:
From Net Investment Income (4,704) (5,816)
In Excess of Net Investment Income (4,072) (1,467)
From Net Realized Gains (111,146) (29,798)
-------- --------
Total Distributions (119,922) (37,081)
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold 199,390 181,834
Proceeds from Reinvestment of Dividends 117,046 36,262
Payment for Shares Redeemed (291,089) (209,420)
-------- --------
Increase in Net Assets from Capital Share Transactions 25,347 8,676
-------- --------
TOTAL INCREASE IN NET ASSETS 71,364 89,262
NET ASSETS:
Beginning of Period 760,220 670,958
-------- --------
End of Period $831,584 $760,220
======== ========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 6,598 6,135
Issued in Reinvestment of Dividends 4,226 1,272
Redeemed (9,605) (7,115)
----- -----
Net Increase in Shares of the Fund 1,219 292
===== =====
See notes to financial statements.
33
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
October 31, 1997
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 American Utilities Fund (a series of Strong Conservative Equity
Funds, Inc.)**
- Strong Asset Allocation Fund, Inc.*
- Strong Blue Chip 100 Fund (a series of Strong Conservative Equity Funds,
Inc.)*
- Strong Equity Income Fund (a series of Strong Conservative Equity Funds,
Inc.)*
- Strong Growth & Income Fund (a series of Strong Conservative Equity
Funds, Inc.)*
- Strong Limited Resources Fund (a series of Strong Conservative Equity
Funds, Inc.)*
- Strong Total Return Fund, Inc.*
* Diversified fund
** Non-diversified fund
The inception date for Strong Equity Income Fund and Strong Growth & Income
Fund is December 29, 1995. The inception date for Strong Blue Chip 100 Fund
is June 30, 1997. The inception date for Strong Limited Resources Fund is
September 30, 1997.
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, when
held by the Funds, 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 acquisition cost and fair value of
these restricted securities held at October 31, 1997 were as follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE PERCENT OF
COST FAIR VALUE NET ASSETS LIQUID*
----------- ----------- ---------- -------
<S> <C> <C> <C> <C>
Strong Asset Allocation Fund $25,831,308 $27,201,200 9.8% 89.4%
Strong Total Return Fund 22,467,085 26,518,775 3.2% 100.0%
</TABLE>
*Of these securities, which are restricted from resale, the above
percentage is Section 4(2) commercial paper or is eligible for
resale pursuant to Rule 144A under the Securities Act of 1933 and
also has 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.
34
<PAGE>
- --------------------------------------------------------------------------------
(E) Options -- Premiums received by the Funds upon writing put or call
options are recorded as an asset with a corresponding liability which
is subsequently adjusted to the current market value of the option.
When an option expires, is exercised, or is closed, the Funds realize
a gain or loss, and the liability is eliminated. The Funds continue to
bear the risk of adverse movements in the price of the underlying
asset during the period of the option, although any potential loss
during the period would be reduced by the amount of the option premium
received.
(F) Foreign Currency Translation -- Investment securities and other assets
and liabilities initially expressed in foreign currencies are
converted to U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income are converted to
U.S. dollars based upon currency exchange rates prevailing on the
respective dates of such transactions. The effect of changes in
foreign exchange rates on realized and unrealized security gains or
losses is reflected as a component of such gains or losses.
(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 Risks -- The Funds may utilize derivative
instruments including options, futures and other instruments with
similar characteristics to the extent that they are consistent with
the Fund's investment objectives and limitations. The Funds intend to
use such derivative instruments primarily to hedge or protect from
adverse movements in securities prices or interest rates. The use of
these instruments may involve risks such as the possibility of
illiquid markets or imperfect correlation between the value of the
instruments and the underlying securities, or that the counterparty
will fail to perform its obligations.
Foreign denominated assets and forward currency 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. 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 and Strong Blue Chip 100
Fund 0.75%, Strong Equity Income Fund and Strong Growth &Income Fund 0.80%,
Strong Asset Allocation Fund and Strong Total Return Fund 0.85% of the
first $35 million and 0.80% thereafter, and Strong Limited Resources Fund
1.00%. Advisory fees are subject to reimbursement by the Advisor if a
Fund's 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. ("Reaves") manages the investments of Strong
American Utilities Fund under an agreement with the Advisor. Reaves is
compensated by the Advisor (not the Fund) and bears all of its own expenses
in providing subadvisory services. In addition, Reaves directly effects
purchases and sales of securities for the Fund. In conjunction therewith,
brokerage commissions paid by the Fund for the year ended October 31, 1997
totaled $244,297.
Scarborough Investment Advisors LLC ("Scarborough") manages the investments
of Strong Limited Resources Fund under an agreement with the Advisor.
Scarborough is compensated by the Advisor (not the Fund) and bears all of
its own expenses in providing subadvisory services.
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
October 31, 1997
The Funds may invest cash reserves in money market funds sponsored and
managed by the Advisor, 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, advisory fees of each Fund
invested in such money market funds are reduced by an amount equal to
advisory fees paid to the Advisor under its investment advisory agreements
with the money market funds.
Certain information regarding related party transactions, excluding the
effects of waivers and reimbursements, for the period ended October 31,
1997 is as follows:
<TABLE>
<CAPTION>
PAYABLE TO OTHER SHAREHOLDER
(RECEIVABLE FROM) SERVICING UNAFFILIATED
ADVISOR AT EXPENSES PAID DIRECTORS'
OCTOBER 31, 1997 TO ADVISOR FEES
---------------- ----------------- ------------
<S> <C> <C> <C>
Strong American Utilities Fund $23,936 $ 4,109 $ 2,849
Strong Asset Allocation Fund 971 9,704 4,767
Strong Blue Chip 100 Fund 1,753 160 __
Strong Equity Income Fund 31,663 1,992 1,531
Strong Growth & Income Fund 29,947 4,989 1,753
Strong Limited Resources Fund 3,147 __ __
Strong Total Return Fund (16,497) 17,860 11,267
</TABLE>
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the period
ended October 31, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------------------------- -------------------------------
U.S. GOVERNMENT U.S. GOVERNMENT
AND AGENCY OTHER AND AGENCY OTHER
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Strong American Utilities Fund $ __ $ 75,914,525 $ __ $ 84,815,755
Strong Asset Allocation Fund 62,488,452 643,769,722 69,872,906 658,818,245
Strong Blue Chip 100 Fund __ 5,982,307 __ 858,621
Strong Equity Income Fund __ 200,401,691 10,272 119,984,376
Strong Growth & Income Fund __ 476,796,281 31,513 302,058,990
Strong Limited Resources Fund __ 5,163,903 __ 59,483
Strong Total Return Fund __ 2,979,229,315 __ 3,132,014,878
</TABLE>
5. INCOME TAX INFORMATION
At October 31, 1997, the investment cost, gross unrealized appreciation and
depreciation on investments and capital loss carryovers (expiring in
varying amounts through 2005) for federal income tax purposes were as
follows:
<TABLE>
<CAPTION>
NET
FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION/ NET CAPITAL LOSS
COST APPRECIATION DEPRECIATION (DEPRECIATION) CARRYOVERS
------------ ------------ ------------ -------------- ----------------
<S> <C> <C> <C> <C> <C>
Strong American Utilities Fund $116,832,061 $19,617,915 $1,600,507 $18,017,408 $ __
Strong Asset Allocation Fund 268,991,420 23,321,853 5,915,763 17,406,090 __
Strong Blue Chip 100 Fund 5,392,526 197,024 248,900 (51,876) 12,561
Strong Equity Income Fund 122,229,785 17,832,502 1,761,680 16,070,822 __
Strong Growth & Income Fund 213,128,042 26,504,871 4,198,170 22,306,701 __
Strong Limited Resources Fund 5,620,713 71,100 346,805 (275,705) __
Strong Total Return Fund 754,625,525 72,383,778 15,207,253 57,176,525 __
</TABLE>
For corporate shareholders in the Funds, the percentages of dividend income
distributed for the period ended October 31, 1997 which is designated as
qualifying for the dividends-received deduction are as follows: Strong
American Utilities Fund 100.0%, Strong Asset Allocation Fund 10.5%, Strong
Blue Chip 100 Fund 0.0%, Strong Equity Income Fund 100.0%, Strong Growth
&Income Fund 100.0%, Strong Limited Resources Fund 0.0%, and Strong Total
Return Fund 13.6%.
36
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
STRONG AMERICAN UTILITIES FUND
- ---------------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA (a)
- ---------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ----------------------------------------------
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>
Oct. 31, 1997 $12.64 $0.40 $1.98 $2.38 ($0.38) ($0.67) __ ($1.05) $13.97
Oct. 31, 1996 11.73 0.40 0.90 1.30 (0.39) __ __ (0.39) 12.64
Oct. 31, 1995(c) 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(d) 10.00 0.18 0.27 0.45 (0.18) (0.05) ($0.03) (0.26) 10.19
</TABLE>
<TABLE>
STRONG AMERICAN UTILITIES FUND (continued)
- -------------------------------------------------------------------------------------------------------
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------
Net Ratio of Expenses 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>
Oct. 31, 1997 +19.7% $135 1.1% 1.1% 3.0% 61.9% $0.0598
Oct. 31, 1996 +11.2% 122 1.2% 1.2% 3.2% 84.0% 0.0599
Oct. 31, 1995(c) +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(d) +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) Total return and portfolio turnover rate are not annualized. In 1995, the
Fund changed its fiscal year end from December to October.
(d) Inception date is July 1, 1993. Total return and portfolio turnover rate
are not annualized.
<TABLE>
STRONG ASSET ALLOCATION FUND
- ------------------------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA(a)
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ -------------------------------------------------------
Net Realized
Net Asset and Unrealized Total In Excess In Excess Net Asset
Value, Net Gains from From Net of Net From Net of Net Value,
Beginning Investment (Losses) on Investment Investment Investment Realized Realized Total End of
of Period Income Investments Operations Income Income Gains Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 $20.12 $0.67 $2.96 $3.63 ($0.67) ($0.10) ($1.54) __ ($2.31) $21.44
Oct. 31, 1996 20.31 0.78 1.05 1.83 (0.84) __ (1.18) __ (2.02) 20.12
Oct. 31, 1995(c) 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>
<TABLE>
STRONG ASSET ALLOCATION FUND (continued)
- -------------------------------------------------------------------------------------
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
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>
Oct. 31, 1997 +19.3% $277 1.1% 3.2% 276.5% $0.0443
Oct. 31, 1996 +9.5% 263 1.1% 3.9% 446.7% 0.0469
Oct. 31, 1995(c) +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) Total return and portfolio turnover rate are not annualized. In 1995, the
Fund changed its fiscal year end from December to October.
<TABLE>
STRONG BLUE CHIP 100 FUND
- ---------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA(a)
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ -------------------------
Net Asset Net Realized Total Net Asset
Value, Net and Unrealized from From Net Value,
Beginning Investment Gains on Investment Investment Total End of
of Period Income Investments Operations Income Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997(b) $10.00 $0.01 $0.38 $0.39 __ __ $10.39
</TABLE>
<TABLE>
STRONG BLUE CHIP 100 FUND (continued)
- -------------------------------------------------------------------------------------------------------
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------------------------
Net Ratio of Expenses 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>
Oct. 31, 1997(b) +3.9% $5 1.0%* 2.0%* 0.6%* 21.5% $0.0209
</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) Inception date is June 30, 1997. Total return and portfolio turnover rate
are not annualized.
37
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
- ---------------------------------------------------------------------------------------------------------
STRONG EQUITY INCOME FUND
- ---------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA(a)
- ---------------------------------------------------------------------------------------------------------
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ -------------------------
Net Asset Net Realized Total Net Asset
Value, Net and Unrealized from From Net Value,
Beginning Investment Gains on Investment Investment Total End of
of Period Income Investments Operations Income Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 $12.03 $0.13 $3.81 $3.94 ($0.13) ($0.13) $15.84
Oct. 31, 1996(b) 10.00 0.12 2.02 2.14 (0.11) (0.11) 12.03
</TABLE>
<TABLE>
STRONG EQUITY INCOME FUND (continued)
- -------------------------------------------------------------------------------------
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
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>
Oct. 31, 1997 +32.9% $134 1.1% 0.9% 152.6% $0.0689
Oct. 31, 1996(b) +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) Inception date is December 29, 1995. Total return and portfolio turnover
rate are not annualized.
<TABLE>
STRONG GROWTH & INCOME FUND
- ----------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA (a)
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ ------------------------------------
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>
Oct. 31, 1997 $12.38 $0.07 $3.99 $4.06 ($0.07) ($0.02) ($0.09) $16.35
Oct. 31, 1996(b) 10.00 0.04 2.38 2.42 (0.04) __ (0.04) 12.38
</TABLE>
<TABLE>
STRONG GROWTH & INCOME FUND (continued)
- ------------------------------------------------------------------------------------
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------
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>
Oct. 31, 1997 +32.9% $227 1.2% 0.5% 237.8% $0.0687
Oct. 31, 1996(b) +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) Inception date is December 29, 1995. Total return and portfolio turnover
rate are not annualized.
<TABLE>
STRONG LIMITED RESOURCES FUND
- ---------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA(a)
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ -------------------------
<CAPTION>
Net Asset Net Realized Total Net Asset
Value, Net and Unrealized from From Net Value,
Beginning Investment Gains on Investment Investment Total End of
of Period Income Investments Operations Income Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 (b) $10.00 __ ($0.49) ($0.49) __ __ $9.51
</TABLE>
<TABLE>
STRONG LIMITED RESOURCES FUND (continued)
- -------------------------------------------------------------------------------------
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
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>
Oct. 31, 1997 (b) -4.9% $5 2.0%* 0.0% 1.2% $0.0586
</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) Inception date is September 30, 1997. Total return and portfolio turnover
rate are not annualized.
<TABLE>
STRONG TOTAL RETURN FUND
- -----------------------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA (a)
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------ --------------------------------------------------------
Net Realized
Net Asset and Unrealized Total In Excess In Excess Net Asset
Value, Net Gains from From Net of Net From Net of Net Value,
Beginning Investment (Losses) on Investment Investment Investment Realized Realized Total End of
of Period Income Investments Operations Income Income Gains Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 $31.36 $0.19 $6.21 $6.40 ($0.19) ($0.17) ($4.74) __ ($5.10) $32.66
Oct. 31, 1996 28.02 0.24 4.65 4.89 (0.24) (0.06) (1.25) __ (1.55) 31.36
Oct. 31, 1995(c) 23.62 0.26 4.41 4.67 (0.26) (0.01) __ __ (0.27) 28.02
Dec. 31, 1994 24.30 0.25 (0.59) (0.34) (0.26) (0.08) __ __ (0.34) 23.62
Dec. 31, 1993 20.17 0.33 4.18 4.51 (0.33) __ __ ($0.05) (0.38) 24.30
Dec. 31, 1992 20.24 0.18 (0.08) 0.10 (0.17) __ __ __ (0.17) 20.17
</TABLE>
<TABLE>
STRONG TOTAL RETURN FUND (continued)
- -------------------------------------------------------------------------------------
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
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>
Oct. 31, 1997 +23.4% $832 1.1% 0.6% 404.6% $0.0696
Oct. 31, 1996 +18.0% 760 1.1% 0.8% 502.4% 0.0584
Oct. 31, 1995(c) +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) Total return and portfolio turnover rate are not annualized. In 1995, the
Fund changed its fiscal year end from December to October.
38
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of the
Strong Conservative Equity Funds
We have audited the accompanying statements of assets and liabilities of Strong
American Utilities Fund, Strong Growth & Income Fund, Strong Equity Income Fund,
Strong Blue Chip 100 Fund, Strong Limited Resources Fund (all five portfolios
constituting the Strong Conservative Equity Funds, Inc.), Strong Asset
Allocation Fund, Inc. and Strong Total Return Fund, Inc., (collectively referred
to herein as the "Strong Conservative Equity Funds"), including the schedules of
investments in securities, as of October 31, 1997, and the related statements of
operations, statements of changes in net assets and the financial highlights for
each of the periods indicated. These financial statements and financial
highlights are the responsibility of the Strong Conservative Equity Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Strong Conservative Equity Funds as of October 31, 1997, the results of
their operations, the changes in their net assets, and the financial highlights
for each of the periods indicated, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
December 9, 1997
39
<PAGE>
NOTES
- --------------------------------------------------------------------------------
40
<PAGE>
DIRECTORS
Richard S. Strong
Willie D. Davis
Stanley Kritzik
Marvin E. Nevins
William F. Vogt
OFFICERS
Richard S. Strong, Chairman of the Board
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
CUSTODIAN
Firstar Trust Company
P.O. Box 701, 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. 6685L97 97ACEQ
