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[PHOTO OF WOMEN WITH 3 KIDS]
[LOGO]
THE STRONG
CONSERVATIVE EQUITY
FUNDS
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The Strong American Utilities Fund
The Strong Asset Allocation Fund
The Strong Blue Chip 100 Fund
The Strong Equity Income Fund
The Strong Growth and Income Fund
The Strong Limited Resources Fund
The Strong Total Return Fund
ANNUAL REPORT - OCTOBER 31, 1999
<PAGE>
LETTER FROM THE CHAIRMAN
Dear Strong Investor,
The year was 1966. Lyndon B. Johnson was president, the Green Bay Packers were
headed for yet another NFL title, and I had just landed my first job in the
investment business. I was full of raw energy and exuberance and figured life
couldn't get much better. But it did--and fast. My first day on the job, the Dow
Jones Industrial Average crossed 1,000 for the first time in history. Even
though I was greener than grass, I knew that was BIG!
And now, almost 34 years later, it looks like the Dow will finish 1999 somewhere
above 11,000. A far cry from where the market was when I started in the
business. If you had told me back then that a massive bull market would start
running from around the 800-point mark in 1982, and that it would still be
roaring at the turn of the century, I would have given you a bewildered look.
That's not to say there haven't been plenty of bumps and bruises along the way.
I think we're still feeling the residual effects of the Vietnam War. We also
lived through 1973-74 when the stock market dropped 48%--not to mention the
dangerously high inflation and the rust bowl of the late 1970s, and the market
crash of October 1987.
But, mostly, it's been remarkably smooth sailing. The numbers tell the story
better than any words: The Dow has been increasing at an annual rate of 11.5%
since 1966. But, starting in 1982 it has been compounding at an astounding rate
of 19.0% per year. During the 1990s, inflation has averaged a modest 2.4%. As
the son of Depression Era parents, I can tell you that we have enjoyed the sort
of prosperity that the young people I grew up with didn't dare dream of.
Through thick and thin, however, one lesson sticks with me: In the investment
business, everything is cyclical. By all means, enjoy the good times, but bear
in mind that nothing--not even this bull market--will last forever. Boom
followed by economic correction is the nature of free enterprise. History has
proven that time and time again.
Since I started in the investment business, I've observed two significant
changes that have directly affected the investment world. First, people are
living much longer and healthier lives. Second, government and corporations have
gradually been shifting the financial responsibility for retirement directly
onto the shoulders of the individual. This phenomenon created new savings
vehicles such as IRAs and 401(k) plans. The fact that each of us will be
responsible for the financing of our own retirement is an awesome
responsibility. In truth, it's a job few of us have the training, aptitude, or
time to do well.
A long-term perspective is essential as you invest your precious retirement
money. A portfolio sensibly balanced between stocks and bonds should provide the
financial wherewithal for a long and financially viable retirement.
/s/ Dick
<PAGE>
THE STRONG
CONSERVATIVE EQUITY
FUNDS
-----------------
ANNUAL REPORT - OCTOBER 31, 1999
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 ............................23
The Strong Limited Resources Fund ............................25
The Strong Total Return Fund .................................26
Statements of Assets and Liabilities ...............................29
Statements of Operations ...........................................31
Statements of Changes in Net Assets ................................33
Notes to Financial Statements ......................................37
FINANCIAL HIGHLIGHTS .....................................................40
REPORT OF INDEPENDENT ACCOUNTANTS ........................................44
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THE STRONG AMERICAN UTILITIES FUND
----------------------------------
PERSPECTIVES
FROM THE MANAGER
/s/ William H. Reaves
William H. Reaves
Portfolio Manager
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The Fund's annual return of 11.81% was achieved in a climate of rising interest
rates and high market volatility. Sixty percent of all New York Stock Exchange
stocks suffered price declines to date in 1999, and the average S&P 500 stock
fell 23% from its 52-week high. Once again, utilities demonstrated their value
to an overall portfolio.
The Fund remains nearly fully invested with telephone, electric, and gas
utilities comprising 71% of the equity value of the portfolio.
- - The portfolio is concentrated in electric and gas utilities capable of
potentially high growth in value. Most of these stocks are priced at a large
discount to the market, providing potential for expansion of price-earnings
multiples.
- - Most utilities are now generating net free cash flows and paying back debt,
so higher interest rates should have negligible impact. Free cash flow also
is being dedicated to large stock buybacks.
- - The specter of large write-offs of electric assets has been largely removed.
In all 23 states with regulations providing for deregulation and competition,
utilities are recovering most of their potential "stranded" costs on an
accelerated basis.
Mergers and acquisitions in telecommunications also continued to benefit the
Fund. Bell Atlantic and Vodafone agreed to combine mobile phone networks and
create a network that will cover about 90% of the U.S. market. Bell Atlantic
also applied for permission to provide long distance
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MERGERS AND ACQUISITIONS IN TELECOMMUNICATIONS ALSO CONTINUED TO BENEFIT THE
FUND.
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[SIDENOTE]
FUND
HIGHLIGHTS
- - For the year ended October 31, 1999, the Strong American Utilities Fund
returned 11.81% compared to 25.67% for the S&P 500 Stock Index.*
- - Ameritech merged with SBC Communications and remained the Fund's largest
stock holding. Sales of Ameritech and SBC were made to avoid excessive
concentration, producing realized capital gains.
- - Energy holdings were increased throughout the period as OPEC limited oil
production. Oil prices continued to rise, contributing to a recovery in
energy companies' earnings.
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[SIDENOTE]
YIELD SUMMARY(1)
AS OF 10-29-99
30-day annualized
yield 2.28%
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[SIDENOTE]
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 10-31-99
1-year 11.81%
3-year 18.93%
5-year 18.08%
Since Inception 14.94%
(on 7-1-93)
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[SIDENOTE]
FIVE LARGEST STOCK
HOLDINGS
BASED ON NET ASSETS AS OF 10-31-99
SECURITY % OF NET ASSETS
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SBC Communications, Inc. 7.6%
Enron Corporation 5.5%
Alltel Corporation 5.2%
Royal Dutch Petroleum Company--
New York Registry Shares 5.1%
Atlantic Richfield Company 5.0%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
(1) Yields are historical and do not represent future yields, which will
fluctuate.
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
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services in New York, with the potential to further enhance revenue and
earnings. Continued sales of SBC Communications and Ameritech in anticipation of
their merger accounted for most of the reduction in assets invested in
telecommunications.
Proceeds from those sales were allocated to select energy stocks which should
benefit from rising oil and gas prices. Higher oil prices were due to OPEC's
discipline in lowering levels of production and to increased demand from
economic growth in Asia and Europe. Oil companies are beginning to realize
better earnings as anticipated; for most of the companies we hold, rising
earnings and cash flow should also lead to share repurchases and dividend
increases.
Valuations are attractive for the Fund's investment sectors, and in a market
driven primarily by the spectacular performance of a select few technology
issues, we believe the Fund offers the potential for a solid total return with
much less risk than the broader market.
We believe the Fund's strategy positions us well for the year ahead. Thank you
for your continued confidence in the Strong American Utilities Fund.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 7-1-93 TO 10-31-99
[GRAPH]
<TABLE>
<CAPTION>
THE STRONG AMERICAN S&P 500 Lipper Utility
UTILITIES FUND Stock Index* Funds Index*
------------------- ------------ --------------
<S> <C> <C> <C>
6/93 $10,000 $10,000 $10,000
12/93 $10,450 $10,496 $10,167
12/94 $10,178 $10,635 $ 9,223
12/95 $13,939 $14,631 $11,724
12/96 $15,106 $17,991 $12,818
12/97 $19,270 $23,993 $16,113
12/98 $23,190 $30,849 $19,077
10/99 $24,151 $34,562 $20,716
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Standard & Poor's 500 Stock Index ("S&P 500") 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.
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[SIDENOTE]
YOUR FUND'S
APPROACH
THE STRONG AMERICAN UTILITIES FUND INVESTS PRIMARILY IN PUBLIC UTILITY COMPANIES
HEADQUARTERED IN THE UNITED STATES. STOCKS ARE PICKED THAT WILL BENEFIT FROM
ECONOMIC, REGULATORY, POLITICAL, OR COMPANY-SPECIFIC CHANGES THAT THE MANAGER
HAS IDENTIFIED. THE GOAL IS TO ACHIEVE TOTAL RETURN BY INVESTING FOR BOTH INCOME
AND CAPITAL GROWTH. DIVIDEND INCOME PLAYS AN IMPORTANT ROLE IN GROWING VALUE AND
LESSENING RISK. CONSEQUENTLY, BOTH DIVIDEND YIELD AND THE POTENTIAL FOR GROWTH
IN DIVIDENDS ARE IMPORTANT CRITERIA THE MANAGER USES WHEN SELECTING STOCKS.
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[SIDENOTE]
MARKET
HIGHLIGHTS
- - Interest rates rose steadily throughout the fiscal year, accompanied by two
rate increases by the Federal Reserve. The hostile interest- rate climate
contributed to a sell-off in utility stocks.
- - The broad market represented by the S&P 500 rose, largely due to the strength
of technology stocks. Equity prices continued to be volatile.
- - The interest rate on 30-year Treasuries was 6.16% at the end of October
versus 5.16% a year ago. The booming U.S. economy, recovering overseas
economies, and rising commodities prices (particularly oil) caused
uncertainty regarding the future direction of interest rates.
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* The S&P 500 is an unmanaged index generally representative of the U.S. stock
market. 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 Inc.
3
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THE STRONG ASSET ALLOCATION FUND
--------------------------------
PERSPECTIVES
FROM THE MANAGERS
/s/ Rimas Milaitis /s/ Jeffrey A. Koch /s/ Bradley C. Tank
Rimas Milaitis Jeffrey A. Koch Bradley C. Tank
Portfolio Co-manager Portfolio Co-manager Portfolio Co-manager
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Early in the year, we expected global economies to begin recovering in response
to the global easing of monetary policy. Because a recovery would benefit
sectors of the economy that had been negatively impacted by the Asian crises, we
began to shift the equity portion of the Fund toward those sectors whose
earnings power was most influenced by economic recovery and marginally away from
those less dependent on recovery.
During this period, the fixed-income markets unwound from the stimulus of
interest-rate cuts in 1998. Market interest rates led the way to higher yields
with the 10-year Treasury rising steadily to a peak of 6.24% in October. The
Federal Reserve followed with two increases in the federal funds rate, taking it
from 4.75% to 5.25% by the end of October, and appeared poised to increase rates
at least once more in the next six to 12 months.
Due to a decline in credit quality, the yield premium of the high-yield market
rose dramatically over the past year and a half to a level of 5.17% above the
10-year Treasury. Consequently, during the year we de-emphasized the high-grade
area of the bond market due to its extremely depressed valuations and the high
yields of the high-yield securities. The relative safety of the high-grade area
was of less
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WE BEGAN TO SHIFT THE EQUITY PORTION OF THE FUND TOWARD THOSE SECTORS WHOSE
EARNINGS POWER WAS MOST INFLUENCED BY ECONOMIC RECOVERY...
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[SIDENOTE]
FUND
HIGHLIGHTS
- - The Strong Asset Allocation Fund returned 21.26% for the year ended October
31, 1999, versus 25.67% for the S&P 500 Index.*
- - The Fund's allocation remained relatively unchanged at about 65% stocks and
35% fixed-income securities. Stocks were positioned to leverage the expected
recovery in global economic activity. Our fixed-income exposure migrated away
from high-grade bonds toward a mix of high- and low-grade bonds.
- - Our emphasis was on recovery and how to exploit it, which led us to increase
the energy and capital goods sectors. Technology remained a focus, while we
underweighted the financial sector.
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[SIDENOTE]
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 10-31-99
1-year 21.26%
3-year 17.38%
5-year 15.52%
10-year 11.71%
Since Inception 14.21%
(on 12-30-81)
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[SIDENOTE]
ASSET ALLOCATIONS
10-31-98 10-31-99
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Stocks 68.4% 64.0%
Bonds 28.9% 31.3%
Short-Term
Investments 2.7% 4.7%
The Fund's asset allocation does not reflect any futures positions held by the
Fund.
4
<PAGE>
importance as global economies recovered during the year. This allowed us to
raise the yield on this portion of the portfolio.
Looking forward, the outlook for continued growth appears good. The same issues
that have caused volatility in the markets will remain, though, as Y2K looms
ahead and inflation fears persist. The Y2K phenomenon appears to be more
psychological at this point as corporations have spent billions of dollars on
its remediation. The debate over inflation will continue as conflicting economic
data is released. At this point, we find it rather surprising that inflation has
not recovered to a more normal level with the current pace of economic activity,
but we suspect there is more than enough capacity globally to enable this
expansion to continue into the foreseeable future.
Thank you for your continued confidence in the Strong Asset Allocation Fund. We
will endeavor to assist you in meeting your financial goals in the future.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 12-30-81 TO 10-31-99
[GRAPH]
<TABLE>
<CAPTION>
THE STRONG ASSET S&P 500 Lipper Flexible Portfolio
ALLOCATION FUND Stock Index* Funds Average*
---------------- ------------ -------------------------
<S> <C> <C> <C>
12-81 $ 10,000 $ 10,000 $10,000
12-83 $ 19,344 $ 14,896 $15,295
12-85 $ 25,346 $ 20,853 $20,132
12-87 $ 29,734 $ 26,044 $24,544
12-89 $ 36,104 $ 39,993 $31,881
12-91 $ 44,394 $ 50,557 $39,732
12-93 $ 52,469 $ 59,892 $48,072
12-95 $ 63,028 $ 83,487 $58,976
12-97 $ 81,219 $136,906 $79,409
10-99 $106,877 $197,212 $95,412
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at the Fund's inception, with the performance of
the Standard & Poor's 500 Stock Index ("S&P 500") and the Lipper Flexible
Portfolio Funds 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.
- -------------------------------------------------------------------------------
[SIDENOTE]
YOUR FUND'S
APPROACH
THE STRONG ASSET ALLOCATION FUND INVESTS IN THE THREE MAJOR ASSET CLASSES:
STOCKS, BONDS, AND CASH. THIS ALLOCATION IS BASED ON AN EVALUATION OF THE
ECONOMY AND MARKET CONDITIONS. IN AN AVERAGE ENVIRONMENT, THE FUND CONSISTS OF
ABOUT 60% STOCKS, 35% BONDS, AND 5% CASH. THE MANAGERS CHOOSE INDIVIDUAL STOCKS,
MOSTLY LARGE-CAPITALIZATION COMPANIES, THAT STAND TO BENEFIT FROM PROJECTED
ECONOMIC AND MARKET TRENDS. THE FUND'S INTERMEDIATE-TERM BOND INVESTMENTS HELP
TEMPER THE VOLATILITY OF THE FUND'S STOCKS, WHILE CORPORATE AND HIGH-YIELD BOND
INVESTMENTS, WITH YIELDS TYPICALLY HIGHER THAN TREASURIES, GENERATE DIVIDEND
INCOME.
- -------------------------------------------------------------------------------
[SIDENOTE]
MARKET
HIGHLIGHTS
- - The global recovery was well underway as Asian economic activity picked up
and commodity prices moved higher. The U.S. economy continued at a strong
pace with signs of recovery in the manufacturing sector.
- - Interest-rate cuts in late 1998 allowed global economic activity to resume
and, as a result, the Federal Reserve raised interest rates twice by the end
of October 1999 as the health of global economies returned.
- - The rise in interest rates set off a debate between the bulls and bears on
the subject of inflation and future Federal Reserve moves, and subjected the
markets to an increased level of volatility.
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* The S&P 500 Stock Index is an unmanaged index generally representative of the
U.S. stock market. The Lipper Flexible Portfolio Funds 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 S&P index data is Standard & Poor's Micropal. Source of the Lipper
index data is Lipper Inc.
5
<PAGE>
THE STRONG BLUE CHIP 100 FUND
-----------------------------
PERSPECTIVES
FROM THE MANAGER
/s/ Karen E. McGrath
Karen E. McGrath
Portfolio Manager
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The largest investments in the Strong Blue Chip 100 Fund are thought of as core
holdings that have been with the Fund since inception, including General
Electric, MCI WorldCom, Wal-Mart, American International Group, Chase Manhattan,
and Microsoft. They represent a broad sweep of the U.S. economy and are seasoned
companies with a history of profitability. They are financially sound leaders in
their respective sectors, and are expected to register steady growth in earnings
over the next three years.
Generally, our strategy has been to focus on individual stock selection of the
companies with above-average revenue growth and improving profit margins--and
thus, earnings growth. Occasionally, there are opportunities when it is
profitable to overweight a particular economic sector. Throughout most of this
year, we overweighted the technology sector. These companies continued to
deliver innovative products and services in computing and communications, which
generated above-average earnings growth.
As a result, for the 12 months ended October 31, 1999, the Strong Blue Chip 100
Fund recorded a total return of 36.71%, which compares favorably with the 25.67%
return of the S&P 500 during the same time period. However, most of this gain
took place during the first half of the fiscal year, as little net progress was
made from the end of the first quarter of 1999.
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UNTIL THERE IS A SIGNIFICANT CHANGE IN KEY FUNDAMENTAL FACTORS, WE EXPECT THE
FAVORABLE INVESTMENT ENVIRONMENT SHOULD CONTINUE THROUGH THE NEXT 12 MONTHS.
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[SIDENOTE]
FUND
HIGHLIGHTS
- - For the year ended October 31, 1999, the Strong Blue Chip 100 Fund returned
36.71%, outperforming its benchmark, the S&P 500 Stock Index at 25.67%.*
- - Most of the Fund's gain occurred during the first six months of the fiscal
year, as little progress has been made since the first quarter of 1999.
- - The Fund overweighted the technology sector for potential profit
opportunities throughout the year, as technology companies continued to
generate above-average earnings growth by delivering innovative products and
services in computing and communications.
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[SIDENOTE]
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 10-31-99
1-year 36.71%
Since Inception 29.44%
(on 6-30-97)
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[SIDENOTE]
FIVE LARGEST STOCK
HOLDINGS
BASED ON NET ASSETS AS OF 10-31-99
SECURITY % OF NET ASSETS
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Applied Materials, Inc. 5.3%
Texas Instruments, Inc. 4.9%
General Electric Company 4.8%
Microsoft Corporation 4.4%
MCI WorldCom, Inc. 4.1%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
6
<PAGE>
Initially, after the turmoil in international markets, investors' preferences
were for large companies that provided earnings stability and predictability.
This was an ideal environment for the holdings of the Strong Blue Chip 100 Fund,
and we were able to achieve above-average returns. But by the end of the first
quarter of 1999, the stocks had reached price levels that appeared to reflect
the full earnings progress of these companies--and they needed a rest.
We have had many similar consolidations in recent years. Usually, with the
passage of time and further gains in corporate earnings, these consolidations
eventually have ended with stock prices moving ahead to higher levels. We expect
that this will occur again, as structural and behavioral changes have enhanced
the ability of companies to avoid the imbalance in inventories and payrolls that
typically create a high risk of recession when growth in demand slows. Thus,
business expansions tend to last longer, which means profit growth lasts longer.
Until there is a significant change in key fundamental factors, we expect this
favorable investment environment should continue through the next 12 months.
Thank you for your continued investment in the Strong Blue Chip 100 Fund. We
appreciate the opportunity to serve you.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 6-30-97 TO 10-31-99
[GRAPH]
<TABLE>
<CAPTION>
THE STRONG BLUE S&P 500 Lipper Large-Cap
CHIP 100 FUND Stock Index* Growth Funds Index*
--------------- ------------ -------------------
<S> <C> <C> <C>
6-97 $10,000 $10,000 $10,000
9-97 $10,750 $10,749 $10,930
12-97 $10,872 $11,058 $10,933
3-98 $12,406 $12,600 $12,533
6-98 $13,233 $13,016 $13,171
9-98 $12,257 $11,721 $11,816
12-98 $15,647 $14,218 $14,920
3-99 $17,342 $14,926 $16,102
6-99 $17,634 $15,978 $16,708
9-99 $16,989 $14,981 $16,023
10-99 $18,260 $15,929 $17,251
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at the Fund's inception, with the performance of
the Standard & Poor's 500 Stock Index ("S&P 500") and the Lipper Large-Cap
Growth 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.
- -------------------------------------------------------------------------------
[SIDENOTE]
YOUR FUND'S
APPROACH
THE STRONG BLUE CHIP 100 FUND INVESTS SOLELY IN THE 100 LARGEST COMPANIES
PRIMARILY TRADED IN THE UNITED STATES. WITH HALF THE FUND'S ASSETS, THE MANAGER
SELECTS THE 20 TO 30 STOCKS CONSIDERED MOST ATTRACTIVE. THIS CONCENTRATION IS
DESIGNED TO INCREASE RETURNS ABOVE THOSE OF THE 100 COMPANIES AS A GROUP. IN THE
OTHER HALF OF THE PORTFOLIO, THE FUND STAYS ANCHORED IN AN INDEX OF ALL 100 OF
THE LARGEST STOCKS. THIS CAN HELP REDUCE VOLATILITY IN DIFFICULT MARKETS. THE
FUND SEEKS TOTAL RETURN BY INVESTING FOR CAPITAL GROWTH AND INCOME.
- -------------------------------------------------------------------------------
[SIDENOTE]
MARKET
HIGHLIGHTS
- - The U.S. economic expansion will soon complete its ninth year with core
inflation remaining at moderate levels.
- - A number of events and trends have helped shape the current economic
recovery: relative world peace, expansion of free markets, movement away from
big government, less aggressive fiscal policy, more responsible monetary
policy, and changes in the structure of the economy.
- - These structural and behavioral changes have enhanced the ability of
companies to avoid the imbalances in inventories and payrolls that typically
create a high risk of recession when growth in demand slows--meaning business
expansions tend to last longer.
- -------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S. stock
market. The Lipper Large-Cap Growth 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 Inc.
7
<PAGE>
THE STRONG EQUITY INCOME FUND
-----------------------------
PERSPECTIVES
FROM THE MANAGER
/s/ Rimas Milaitis
Rimas Milaitis
Portfolio Manager
- -------------------------------------------------------------------------------
Early in the year, we anticipated a global recovery in response to an easing of
monetary policy globally. Consequently, we shifted assets toward those sectors
whose earnings power was influenced by economic recovery, including energy and
basic materials, and marginally away from those sectors less dependent on such
an environment, specifically healthcare and consumer nondurables. The energy
sector illustrates the resumption of earnings growth that is leveraged to an
economic expansion.
The energy sector was badly hurt during the Asian crises, with oil prices
falling from the low- to mid-$20 range to around $10 per barrel. This crisis
depressed global economic activity and produced a glut of oil reserves,
depressing the price of the commodity. Stocks of oil companies at this time
reflected this adverse environment, driving them down to historically low
relative valuations. It was also during this period that global monetary
authorities began to ease interest rates in an attempt to rekindle growth. Many
of the oil- producing nations are very dependent upon oil-based revenues, and we
expected a response to this in the form of OPEC production cuts.
Thus, the stage was set for a recovery in the price of oil and the earnings of
these companies, as global economic growth slowly responded to stimulative rate
cuts and production cuts by the
- -------------------------------------------------------------------------------
WE SHIFTED ASSETS TOWARD THOSE SECTORS WHOSE EARNINGS POWER WAS INFLUENCED BY
ECONOMIC RECOVERY.
- -------------------------------------------------------------------------------
[SIDENOTE]
FUND
HIGHLIGHTS
- - For the year ended October 31, 1999, the Strong Equity Income Fund returned
20.07% versus 25.67% for the S&P 500 Stock Index.*
- - We exploited the global recovery by positioning assets in sectors most
sensitive to such an environment, including energy and basic materials, and
reducing our exposure to areas not dependent upon recovery.
- - The technology sector was the best performer during the year. Unfortunately,
the Fund was under-represented in this sector due to the sector's already
tremendous gains, rich valuations, heightened volatility, and lack of
dividend yield.
- -------------------------------------------------------------------------------
[SIDENOTE]
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 10-31-99
1-year 20.07%
3-year 22.13%
Since Inception 23.03%
(on 12-29-95)
- -------------------------------------------------------------------------------
[SIDENOTE]
TOP FIVE SECTORS
BASED ON NET ASSETS AS OF 10-31-99
- -------------------------------------------------------------------------------
SECTOR % OF NET ASSETS
Technology 19.5%
Financial 15.9%
Capital Equipment 14.4%
Retail 10.8%
Healthcare 9.1%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
8
<PAGE>
major oil-producing countries. As this process evolved, the price of oil
recovered back to pre-crisis levels, helping oil company earnings and stock
prices recover. We hope this is illustrative of how we utilize macro and micro
data in our investment process.
Looking forward, the outlook for continued economic growth appears good.
However, the same issues that have caused the volatility in the markets will
remain as Y2K looms ahead and inflation fears persist. The Y2K phenomenon looks
to be more psychological at this point as corporations have spent billions of
dollars on remediation efforts. On inflation, the debate will continue as
conflicting economic news is released. At this point, it is rather surprising
that inflation has not recovered to a more normal level with the current pace of
economic activity. We suspect that there is more than enough capacity globally
for this expansion to continue into the foreseeable future.
We thank you for your support and will continue to strive to help you attain
your financial goals.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 12-29-95 TO 10-31-99
[GRAPH]
<TABLE>
<CAPTION>
THE STRONG EQUITY S&P 500 Lipper Large-Cap
INCOME FUND Stock Index* Value Funds Index*
----------------- ------------ ------------------
<S> <C> <C> <C>
12-95 $10,000 $10,000 $10,000
6-96 $11,296 $11,010 $10,884
12-96 $12,810 $12,296 $12,107
6-97 $15,126 $14,830 $14,189
12-97 $16,822 $16,398 $15,554
6-98 $19,327 $19,303 $17,539
12-98 $20,632 $21,085 $18,391
6-99 $22,231 $23,696 $20,456
10-99 $22,132 $23,622 $19,696
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Standard & Poor's 500 Stock Index ("S&P 500") and the Lipper Large-Cap Value
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.
- -------------------------------------------------------------------------------
[SIDENOTE]
YOUR FUND'S
APPROACH
THE STRONG EQUITY INCOME FUND USES A TOP-DOWN ANALYSIS OF THE ECONOMY TO
DETERMINE WHICH SECTORS ARE LIKELY TO ALLOW COMPANIES TO GROW THEIR EARNINGS AND
WHICH ARE NOT. BASED ON THAT ANALYSIS, THE MANAGER INVESTS LARGER OR SMALLER
PORTIONS OF THE FUND'S ASSETS IN EACH OF THE SEVEN MAJOR ECONOMIC SECTORS OF THE
S&P 500 STOCK INDEX (S&P 500). HE CHOOSES INDIVIDUAL COMPANIES IN EACH SECTOR
THAT HE BELIEVES WILL BENEFIT MOST FROM HIS OUTLOOK FOR THE ECONOMIC
ENVIRONMENT. THE FUND INVESTS PRIMARILY IN LARGE, DIVIDEND-PAYING COMPANIES.
- -------------------------------------------------------------------------------
[SIDENOTE]
MARKET
HIGHLIGHTS
- - The volatility in the market was influenced predominantly by the surging U.S.
economy and its implications for inflation. The Federal Reserve raised
short-term interest rates twice, further adding to investor concerns.
- - The Fed continued to question the favorable inflation environment in light of
an economy that is fully employed, setting the stage for heightened scrutiny
of all economic data released.
- - The market's bias toward growth stocks remained, though for a short period
value-oriented stocks performed very well. Technology stocks were market
leaders, and their lofty valuations left little question as to the market's
bias toward this sector.
- -------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S. stock
market. The Lipper Large-Cap Value 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 Inc.
9
<PAGE>
THE STRONG GROWTH AND INCOME FUND
---------------------------------
PERSPECTIVES
FROM THE MANAGER
/s/ Rimas Milaitis
Rimas Milaitis
Portfolio Manager
- -------------------------------------------------------------------------------
As we began this year, our forecast was for global economies to begin to recover
in response to an easing of monetary policy globally. We realized that recovery
would benefit sectors that were negatively impacted by the Asian crises.
Therefore, we shifted the Fund's assets toward sectors whose earnings power is
influenced by economic recovery and marginally away from those that are less
dependent on such an environment. Healthcare and technology help illustrate this
point.
We have been underweighted in the healthcare sector relative to our benchmark.
This sector can be traditionally counted on to produce consistent results
because it is not dependent on economic growth--a characteristic investors value
highly during periods of uncertainty. Due to its consistency, investors sought
refuge in this area during the economic crises of 1997 and 1998.
Since that time, however, we allocated assets away from healthcare and toward
areas that are dependent upon economic growth, such as technology. With a
recovery underway and large- capitalization healthcare stocks fully valued, the
need for this consistency was not as great, and we sought to identify
undervalued sectors that could prosper and leverage the global economic
recovery.
Because of its cyclical nature, the technology sector was negatively affected by
overcapacity and
- -------------------------------------------------------------------------------
RECOGNIZING THE PENDING RECOVERY, WE REBUILT OUR POSITIONS TO CAPTURE THE RETURN
OF EARNINGS POWER IN THIS [TECHNOLOGY] SECTOR.
- -------------------------------------------------------------------------------
[SIDENOTE]
FUND
HIGHLIGHTS
- - For the year ended October 31, 1999, the Strong Growth and Income Fund
returned 34.88% versus 25.67% for the S&P 500 Stock Index.*
- - We fully expected a recovery in global growth and corporate profits, and
consequently shifted weights in the Fund to those sectors with the greatest
opportunity to realize superior returns.
- - The Fund's positioning was biased toward those areas of the economy with the
highest probability of showing a recovery in earnings growth.
- -------------------------------------------------------------------------------
[SIDENOTE]
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 10-31-99
1-year 34.88%
3-year 28.99%
Since Inception 29.14%
(on 12-29-95)
- -------------------------------------------------------------------------------
[SIDENOTE]
TOP FIVE SECTORS
BASED ON NET ASSETS AS OF 10-31-99
SECTOR % OF NET ASSETS
- -------------------------------------------------------------------------------
Technology 36.4%
Financial 13.1%
Capital Equipment 12.5%
Retail 8.7%
Healthcare 6.8%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
10
<PAGE>
a lack of demand due to the economic crises of 1997 and 1998. Valuations in this
sector were low and ripe for recovery as economies around the globe rebounded.
Recognizing the pending recovery, we rebuilt our positions to capture the return
of earnings power in this sector.
Looking forward, the outlook for continued growth appears good. However, the
same issues that have caused volatility in the markets remain as Y2K looms ahead
and inflation fears persist. The Y2K phenomenon appears more psychological at
this point as corporations have spent billions of dollars on its remediation.
The debate on inflation will likely continue. At this point, it is rather
surprising that inflation has not recovered to a more normal level with the
current pace of economic activity. We suspect that, since there is more than
enough capacity globally, this expansion can continue into the foreseeable
future.
As always, we will continue to pursue superior investment results and thank you
for your continued support.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 12-29-95 TO 10-31-99
[GRAPH]
<TABLE>
<CAPTION>
THE STRONG GROWTH S&P 500 Lipper Large-Cap
AND INCOME FUND Stock Index* Core Funds Index*
----------------- ------------ -----------------
<S> <C> <C> <C>
12-95 $10,000 $10,000 $10,000
6-96 $11,556 $11,010 $10,896
12-96 $13,191 $12,296 $11,984
6-97 $15,470 $14,830 $14,114
12-97 $17,199 $16,398 $15,486
6-98 $20,447 $19,303 $18,280
12-98 $22,866 $21,085 $19,658
6-99 $25,842 $23,696 $21,645
10-99 $26,654 $23,622 $21,471
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Standard & Poor's 500 Stock Index ("S&P 500") and the Lipper Large-Cap Core
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.
- -------------------------------------------------------------------------------
[SIDENOTE]
YOUR FUND'S
APPROACH
THE STRONG GROWTH AND INCOME FUND USES A TOP-DOWN ANALYSIS OF THE ECONOMY TO
DETERMINE WHETHER TO INVEST EITHER LARGE OR SMALL PORTIONS OF THE FUND'S ASSETS
IN EACH OF THE SEVEN MAJOR ECONOMIC SECTORS OF THE S&P 500 STOCK INDEX (S&P
500). FROM EACH SECTOR, THE MANAGER THEN CHOOSES THE INDIVIDUAL COMPANIES HE
BELIEVES WILL BENEFIT MOST FROM THE ECONOMIC ENVIRONMENT HE FORESEES. THE FUND
INVESTS PRIMARILY IN LARGE, DIVIDEND-PAYING COMPANIES, BUT MAY INVEST IN SOME
SMALLER COMPANIES UNDER CERTAIN MARKET CONDITIONS.
- -------------------------------------------------------------------------------
[SIDENOTE]
MARKET
HIGHLIGHTS
- - The global recovery was well underway as Asian economic activity picked up
and commodity prices moved higher. The U.S. economy continued at a strong
pace with signs of recovery in the manufacturing sector.
- - The Federal Reserve raised interest rates twice, setting off a debate on
inflation and future moves by the Fed. This debate increased the level of
market volatility as data favoring one side or the other was released.
- - In 1998, it was beneficial to be positioned in sectors dependent solely on
the domestic economy, such as healthcare. This year, having accurately
forecasted global recovery, we shifted our focus toward areas that would
benefit from recovery, including technology. This bias added significantly to
performance.
- -------------------------------------------------------------------------------
* The S&P 500 Stock Index is an unmanaged index generally representative of the
U.S. stock market. The Lipper Large-Cap Core 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 Inc.
11
<PAGE>
THE STRONG LIMITED RESOURCES FUND
---------------------------------
PERSPECTIVES
FROM THE MANAGER
/s/ Mark A. Baskir
Mark A. Baskir
Portfolio Manager
- -------------------------------------------------------------------------------
The past 12 months have seen what we believe was the bottom for both the Fund
and the natural resources area in general. Last fall, economic activity in
Southeast Asian countries affected by financial crises finally reached a low
point. As with the sharpness of the decline, the subsequent recovery in
stock-market and economic strength has been dramatic. This recovery gained steam
in the spring and summer, and economic activity also strengthened in the
industrialized West. As world economic growth gathers strength, demand for
energy and other natural resources also increases. The outlook for the resources
area now appears very bright.
All resources industries are now seeing increased demand for their products.
Copper, paper and forest products, steel, aluminum, and chemicals have all seen
higher prices in the past few months. Producers have reduced capacity and cut
inventories. As a result, supply is lower, demand is higher, prices have risen,
and profitability has increased dramatically.
Nowhere are these fundamentals more graphically demonstrated than in the energy
area. OPEC has remained firm in cutting production, demand is improving, and oil
prices have doubled since the winter. The situation is similar in North American
natural gas, as demand is strong, new supply sources are minimal, and prices
have risen significantly.
In the past few months, investors have responded positively to the improved
earnings results, with many resources stocks appreciating significantly during
this time. Nonetheless, we continue
- -------------------------------------------------------------------------------
AS WORLD ECONOMIC GROWTH GATHERS STRENGTH, DEMAND FOR ENERGY AND OTHER NATURAL
RESOURCES ALSO INCREASES.
- -------------------------------------------------------------------------------
[SIDENOTE]
FUND
HIGHLIGHTS
- - The Strong Limited Resources Fund returned 10.80% for the year ended October
31, 1999, while the S&P 500 Stock Index returned 25.67%.*
- - The Fund benefited during the second quarter of 1999 as the Asian economies
began to recover and the U.S. and European economies grew strongly.
- - In the winter, we shifted into a more aggressive posture in recognition of
improved resource-area fundamentals. We increased holdings in the more
volatile energy areas, such as oil and gas exploration, oil service, forest
products, and copper. We also added to our exposure in natural gas utilities
because of improved fundamentals and increasing takeover activity.
- -------------------------------------------------------------------------------
[SIDENOTE]
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 10-31-99
1-year 10.80%
Since Inception -6.79%
(on 9-30-97)
- -------------------------------------------------------------------------------
[SIDENOTE]
FIVE LARGEST STOCK
HOLDINGS
BASED ON NET ASSETS AS OF 10-31-99
SECURITY % OF NET ASSETS
- -------------------------------------------------------------------------------
Chevron Corporation 5.1%
Coastal Corporation 4.1%
E.I. Du Pont de Nemours & Co. 3.7%
Willamette Industries, Inc. 3.5%
El Paso Energy Corporation 3.4%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
12
<PAGE>
to believe that stocks in the resources area remain undervalued relative to
historical valuations, making them still very attractive candidates for future
appreciation.
We believe the outlook for the foreseeable future is very positive for resources
stocks. Fundamentals have just started to improve. World economic growth has
resumed the 3% to 4% annual pace that it experienced in the mid-1990s. As demand
for resources grows and supply remains tight, product prices will rise, and
corporate earnings will grow. In this environment, the stocks should perform
well.
In addition, many resources industries are experiencing major consolidation,
resulting from the need to reduce capacity, cut costs, and achieve a greater
market presence. Notable transactions include Exxon-Mobil, Dow Chemical-Union
Carbide, and International Paper-Union Camp. These takeovers also provide
investment opportunities for our Fund.
Overall, we believe that the Fund has begun to recover from the quick and sharp
correction it experienced last year. We are very optimistic about the
future and thank you for your patience and continued interest in the Strong
Limited Resources Fund.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 9-30-97 TO 10-31-99
[GRAPH]
<TABLE>
<CAPTION>
THE STRONG LIMITED S&P 500 Lipper Natural Resources
RESOURCES FUND Stock Index* Funds Average*
------------------ ------------ ------------------------
<S> <C> <C> <C>
9-97 $10,000 $10,000 $10,000
12-97 $ 9,306 $10,287 $ 8,480
3-98 $ 9,516 $11,722 $ 8,788
6-98 $ 8,626 $12,109 $ 7,910
9-98 $ 7,475 $10,905 $ 6,638
12-98 $ 7,275 $13,227 $ 6,416
3-99 $ 7,635 $13,886 $ 6,891
6-99 $ 8,988 $14,865 $ 8,148
9-99 $ 8,878 $13,937 $ 8,250
10-99 $ 8,637 $14,819 $ 7,920
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Standard & Poor's 500 Stock Index ("S&P 500") and the Lipper Natural
Resources Funds 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.
- -------------------------------------------------------------------------------
[SIDENOTE]
YOUR FUND'S
APPROACH
THE STRONG LIMITED RESOURCES FUND SEEKS TOTAL RETURN BY INVESTING FOR CAPITAL
GROWTH AND INCOME. IT INVESTS IN ENERGY AND NATURAL RESOURCES COMPANIES WHICH
PROVIDE OPPORTUNITIES FOR CAPITAL APPRECIATION AND INCOME. WHEN ASSESSING
INVESTMENTS THE MANAGER STRESSES EACH COMPANY'S VALUATION, THE MANAGEMENT'S
TRACK RECORD AND COMMITMENT, AND ANY UNIQUE CIRCUMSTANCES THAT COULD GENERATE
ABOVE-AVERAGE LONG-TERM RETURNS. HE ALLOCATES THE FUND'S ASSETS TO INDIVIDUAL
RESOURCE SECTORS BASED ON THE ECONOMIC CYCLE AND EACH SECTOR'S ATTRACTIVENESS
RELATIVE TO THE OTHERS. STOCKS ARE SOLD IF A SIGNIFICANT NEGATIVE CHANGE OCCURS
IN THE COMPANY'S OUTLOOK OR IF THE STOCK SURPASSES HIS INVESTMENT TARGETS.
- -------------------------------------------------------------------------------
[SIDENOTE]
MARKET
HIGHLIGHTS
- - In recent months, natural resources stocks have performed as well as the
overall market. Investors' interest in the resources area was prompted by the
Asian recovery, improved economic performance in the U.S. and Europe, and
curtailed production of oil, gas, and other resources.
- - In general, the market has become more volatile in recent months. It
continued to be led by technology, consumer growth, and financial stocks.
- - Overall, the fundamental macroeconomic issues of inflation, interest rates,
and earnings results remain generally positive, but also remain under close
scrutiny by the stock and bond markets.
- - Demand for oil and other natural resources improved. Putting further upward
pressure on prices, OPEC curtailed oil production, and other resources
industries reduced capacity and slashed inventories.
- -------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S. stock
market. The Lipper Natural Resources Funds Average represents funds that
invest more than 65% of their equity commitment in natural resources stocks.
Source of the S&P 500 index data is Standard & Poor's Micropal. Source of the
Lipper Natural Resources Average is Lipper Inc.
13
<PAGE>
THE STRONG TOTAL RETURN FUND
----------------------------
PERSPECTIVES
FROM THE MANAGERS
/s/ Ronald C. Ognar /s/ Ian J. Rogers
Ronald C. Ognar Ian J. Rogers
Portfolio Co-manager Portfolio Co-manager
- -------------------------------------------------------------------------------
Although interest rates have calmed at least temporarily, the market remains
concerned about their longer-term direction. Europe recently raised interest
rates, taking steps to slow economic growth and reduce inflationary pressure.
That's an indication that we may not yet be out of the woods with regard to
interest-rate volatility. We believe the Fed may raise U.S. interest rates once,
perhaps twice, in the near future, assuming a more neutral stance as we enter
the presidential election campaign.
Regardless, there appears to be less need now to raise domestic interest rates
than there was a few months ago. Technological advances and lower prices for
labor and material input have kept the U.S. economy strong and inflation low.
U.S. companies continue to make significant gains in productivity without facing
any significant increases in cost. This has made for a strong, although at times
volatile, stock market.
In such an environment, we believe that stock-picking, rather than macroeconomic
predictions or sector bets, will drive performance. Our intention is to continue
with the management style that has been the strength of your Fund--focusing our
efforts on identifying the highest-quality growth companies available while
paying attention to possible dividends.
Among the areas where we'll be looking for current and future leaders is
technological telecommunications. We expect this sector to remain strong,
particularly among those companies that supply broadband access. For
- -------------------------------------------------------------------------------
TECHNOLOGICAL ADVANCES AND LOWER PRICES FOR LABOR AND MATERIAL INPUT HAVE KEPT
THE U.S. ECONOMY STRONG AND INFLATION LOW.
- -------------------------------------------------------------------------------
[SIDENOTE]
FUND
HIGHLIGHTS
- - The Strong Total Return Fund gained 44.26% for the year ended October 31,
1999--well above the 25.67% return of the S&P 500.*
- - Careful stock-picking--the strength of your Fund--was the key to success in
this volatile market. We focused on high-quality growth companies, leaders in
their industries.
- -------------------------------------------------------------------------------
[SIDENOTE]
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 10-31-99
1-year 44.26%
3-year 26.46%
5-year 22.91%
10-year 15.75%
Since Inception 17.17%
(on 12-30-81)
- -------------------------------------------------------------------------------
[SIDENOTE]
TOP FIVE SECTORS
BASED ON NET ASSETS AS OF 10-31-99
SECTOR % OF NET ASSETS
- -------------------------------------------------------------------------------
Technology 51.8%
Financial 10.5%
Healthcare 8.3%
Retail 7.9%
Capital Equipment 7.1%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
14
<PAGE>
now, there seems to be an insatiable appetite for this technology. We also
expect telecommunications equipment providers (notably wireless and cable),
software companies, data-storage equipment manufacturers, and Internet
infrastructure companies to provide us with excellent opportunities.
Going forward, we see increasing value in interest-rate sensitive stocks. Banks
and brokerages should prove particularly appealing, given the new business
avenues opened to them by the repeal of Glass-Steagall legislation. We are also
taking a closer look at pharmaceutical stocks. Valuations are becoming more
attractive, and some companies are likely to benefit from consolidation in this
industry.
The overall market for equities remains strong and we're very optimistic about
the Fund's prospects for the coming year. Ahead of us is real opportunity as we
continue to build the portfolio with companies that hold or are poised to take
leading roles in their respective industries. At the same time, we will remain
vigilant to any changes in company fundamentals or in the economic environment,
and take appropriate action as necessary.
Thank you for investing in the Strong Total Return Fund. We look forward to
serving you in the coming year.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 12-30-81 TO 10-31-99
[GRAPH]
<TABLE>
<CAPTION>
THE STRONG TOTAL S&P 500 Lipper Large-Cap
RETURN FUND Stock Index* Growth Funds Index*
---------------- ------------ -------------------
<S> <C> <C> <C>
12-81 $ 10,000 $ 10,000 $ 10,000
12-83 $ 18,720 $ 14,896 $ 15,808
12-85 $ 25,936 $ 20,853 $ 20,108
12-87 $ 33,002 $ 26,044 $ 24,258
12-89 $ 39,140 $ 39,993 $ 35,572
12-91 $ 48,578 $ 50,557 $ 47,967
12-93 $ 59,852 $ 59,892 $ 56,735
12-95 $ 74,963 $ 83,487 $ 75,916
12-97 $106,181 $136,906 $116,777
10-99 $168,835 $197,212 $184,274
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Standard & Poor's 500 Stock Index ("S&P 500") and the Lipper Large-Cap Growth
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.
- -------------------------------------------------------------------------------
[SIDENOTE]
YOUR FUND'S
APPROACH
THE STRONG TOTAL RETURN FUND SEEKS HIGH TOTAL RETURN BY INVESTING FOR CAPITAL
GROWTH AND INCOME. THE FUND INVESTS PRIMARILY IN LARGE- AND MEDIUM-SIZED
COMPANIES. IT FOCUSES ON FINDING HIGH-QUALITY COMPANIES THAT THE MANAGERS
BELIEVE ARE IN A STRONG PHASE OF PROFIT AND SALES GROWTH. A STOCK MUST ALSO HAVE
A PRICE-TO-EARNINGS RATIO THAT INDICATES IT IS A GOOD VALUE. ONCE A STOCK IS IN
THE PORTFOLIO, IT IS MONITORED TO MAKE SURE IT CONTINUES TO MEET THE FUND'S
CRITERIA.
- -------------------------------------------------------------------------------
[SIDENOTE]
MARKET
HIGHLIGHTS
- - Technology-driven advances, coupled with lower prices in labor and material
input, have kept productivity high and inflation low in the U.S.
- - During 1999, the U.S. economy stayed strong, with unemployment at record
lows.
- - When a resurgent Asia and an improving European economy caused concerns that
inflation might reignite, the Fed raised interest rates twice to nudge
economic growth a bit lower.
- - The tug-of-war over the interest- rate outlook that took place throughout the
year sparked greater stock market volatility as investors focused intently on
each new piece of economic data.
- -------------------------------------------------------------------------------
* The S&P 500 is an unmanaged index generally representative of the U.S. stock
market. The Lipper Large-Cap Growth Funds Index is an equally-weighted
performance index of the largest qualifying funds in this Lipper category.
Source of the S&P 500 Stock Index is Standard & Poor's Micropal. Source of the
Lipper index data is Lipper Inc.
15
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES October 31, 1999
- -----------------------------------------------------------------------------------------
STRONG AMERICAN UTILITIES FUND
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 94.4%
ELECTRIC POWER 0.1%
PG&E Corporation 5,000 $ 114,688
ELECTRIC UTILITY 32.0%
Ameren Corporation 324,000 12,251,250
CMS Energy Corporation 268,000 9,882,500
Dominion Resources, Inc. 35,500 1,708,438
Duke Energy Corporation 211,500 11,949,750
FirstEnergy Corporation 280,000 7,297,500
Illinova Corporation 67,900 2,160,069
NSTAR Companies 42,300 1,610,044
NiSource, Inc. 317,800 6,514,900
Northeast Utilities 22,000 457,875
Pinnacle West Capital Corporation 1,900 70,063
SCANA Corporation 331,900 8,256,013
TECO Energy 380,000 8,383,750
Texas Utilities Company 10,000 387,500
UNICOM Corporation 5,000 191,563
Wisconsin Energy Corporation 321,000 7,182,375
--------------
78,303,590
ENERGY RELATED 23.0%
Anadarko Petroleum Corporation 7,400 228,013
Apache Corporation 64,400 2,511,600
Atlantic Richfield Company 131,500 12,254,156
BP Amoco PLC Sponsored ADR 24,300 1,403,325
Burlington Resources, Inc. 16,000 558,000
Chevron Corporation 22,800 2,081,925
Dynegy, Inc. 6,500 148,688
Exxon Corporation 114,500 8,480,156
Imperial Oil, Ltd. 280,800 6,563,700
Kerr McGee Corporation 77,000 4,138,750
MidAmerican Energy Holdings Company 10,000 336,250
Petroleum Geo-Services A/S Sponsored ADR (b) 58,100 849,713
Royal Dutch Petroleum Company -
New York Registry Shares 210,200 12,598,863
Texaco, Inc. 27,500 1,687,813
USX-Marathon Group 81,200 2,364,950
--------------
56,205,902
GAS UTILITY 15.0%
Columbia Energy Group 5,500 357,500
Consolidated Natural Gas Company 69,800 4,467,200
El Paso Energy Corporation 22,000 902,000
Enron Corporation 336,000 13,419,000
Equitable Resources, Inc. 116,500 4,252,250
Halliburton Company 45,500 1,714,781
Indiana Energy, Inc. 135,300 2,731,369
MCN Energy Group, Inc. 11,000 268,813
National Fuel Gas Company 14,200 694,025
Oneok, Inc. 48,000 1,401,000
Providence Energy Corporation 13,700 382,744
Questar Corporation 283,000 5,094,000
SIGCORP, Inc. 5,000 130,000
Schlumberger, Ltd. 15,000 908,438
The Williams Companies, Inc. 2,000 75,000
--------------
36,798,120
OTHER UTILITY 0.5%
American Water Works Company, Inc. 47,000 1,371,813
TELECOMMUNICATION 23.8%
AT&T Corporation 23,000 1,075,250
Alltel Corporation 151,800 12,637,350
Bell Atlantic Corporation 171,000 11,104,313
GTE Corporation 72,500 5,437,500
MediaOne Group, Inc. (b) 116,000 8,243,250
SBC Communications, Inc. 363,685 18,525,205
Sprint Corporation 15,000 1,114,680
--------------
58,137,548
- -----------------------------------------------------------------------------------------
Total Common Stocks (Cost $188,712,680) 230,931,661
- -----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 4.5%
COMMERCIAL PAPER 0.5%
INTEREST BEARING, DUE UPON DEMAND
Pitney Bowes Credit Corporation, 5.01% $10,600 10,600
Warner Lambert Company, 4.99% 543,700 543,700
Wisconsin Electric Power Company, 4.99% 832,700 832,700
--------------
1,387,000
REPURCHASE AGREEMENTS 4.0%
ABN-AMRO Inc. (Dated 10/29/99), 5.22%,
Due 11/01/99 (Repurchase proceeds $9,704,220);
Collateralized by: SLMA Medium-Term Notes,
FNMA Bonds and Notes, FHLMC Bonds and
Notes, Federal Home Loan Bank Bonds and
Notes, Federal Farm Credit Bank Notes,
Resolution Funding Corporation Strips (e) 9,700,000 9,700,000
- -----------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $11,087,000) 11,087,000
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Total Investments in Securities (Cost $199,799,680) 98.9% 242,018,661
Other Assets and Liabilities, Net 1.1% 2,711,995
- -----------------------------------------------------------------------------------------
NET ASSETS 100.0% $ 244,730,656
=========================================================================================
<CAPTION>
STRONG ASSET ALLOCATION FUND
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 62.5%
AEROSPACE & DEFENSE 0.5%
United Technologies Corporation 30,200 $ 1,827,100
AUTOMOBILE 0.5%
Ford Motor Company 30,800 1,690,150
BANK - MONEY CENTER 3.0%
The Chase Manhattan Corporation 37,200 3,250,350
Citigroup, Inc. 129,500 7,009,187
--------------
10,259,537
BANK - SUPER REGIONAL 2.2%
The Bank of New York Company, Inc. 40,500 1,695,937
Comerica, Inc. 26,550 1,578,066
Mellon Financial Corporation 73,000 2,696,438
Wells Fargo Company 31,500 1,508,062
--------------
7,478,503
BEVERAGE - ALCOHOLIC 0.6%
Anheuser-Busch Companies, Inc. 29,400 2,111,287
BEVERAGE - SOFT DRINK 0.9%
The Coca-Cola Company 40,100 2,365,900
PepsiCo, Inc. 24,000 832,500
--------------
3,198,400
BROKERAGE & INVESTMENT MANAGEMENT 0.2%
Morgan Stanley, Dean Witter & Company 5,200 573,625
CHEMICAL 0.2%
Union Carbide Corporation 12,000 732,000
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND (continued)
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER - MANUFACTURERS 0.6%
International Business Machines Corporation 20,400 $ 2,006,850
COMPUTER - PERIPHERAL EQUIPMENT 0.4%
EMC Communications Corporation (b) 18,000 1,314,000
COMPUTER SERVICE 0.1%
Electronic Data Systems Corporation 9,400 549,900
COMPUTER SOFTWARE 5.1%
BMC Software, Inc. (b) 15,000 962,813
Cisco Systems, Inc. (b) 100,350 7,425,900
Microsoft Corporation (b) 98,500 9,117,406
--------------
17,506,119
CONTAINER 0.0%
SF Holdings Group, Inc. Class C (Acquired
1/05/99; Cost $3,750) (b) (d) 1,000 10
COSMETIC & PERSONAL CARE 0.2%
Estee Lauder Companies, Inc. Class A 13,400 624,775
DIVERSIFIED OPERATIONS 2.6%
Allied Signal, Inc. 18,200 1,036,263
E.I. Du Pont de Nemours & Company 11,000 708,812
Textron, Inc. 24,500 1,891,094
Tyco International, Ltd. 131,932 5,269,034
--------------
8,905,203
ELECTRIC POWER 0.6%
PECO Energy Company 26,300 1,004,331
Texas Utilities Company 4,700 182,125
UNICOM Corporation 23,500 900,344
--------------
2,086,800
ELECTRICAL EQUIPMENT 3.3%
General Electric Company 84,000 11,387,250
ELECTRONICS - SEMICONDUCTOR MANUFACTURING 3.0%
Altera Corporation (b) 15,000 729,375
Intel Corporation 59,200 4,584,300
STMicroelectronics NV 28,000 2,544,500
Texas Instruments, Inc. 13,000 1,166,750
Xilinx, Inc. (b) 15,500 1,218,687
--------------
10,243,612
FINANCE - MISCELLANEOUS 0.9%
American Express Company 14,600 2,248,400
First Data Corporation 20,000 913,750
--------------
3,162,150
FOOD 0.3%
Unilever NV - New York Shares 16,339 1,089,607
HEALTHCARE - DRUG/DIVERSIFIED 4.6%
Bristol-Myers Squibb Company 44,400 3,410,475
Johnson & Johnson 30,000 3,142,500
Merck & Company, Inc. 49,000 3,898,562
Pfizer, Inc. 66,600 2,630,700
Schering-Plough Corporation 29,600 1,465,200
Warner-Lambert Company 17,700 1,412,681
--------------
15,960,118
HOUSING RELATED 0.6%
Masco Corporation 71,000 2,165,500
INSURANCE - DIVERSIFIED 0.4%
Marsh & McLennan Companies, Inc. 18,000 1,423,125
INSURANCE - PROPERTY & CASUALTY 1.3%
American International Group, Inc. 42,502 4,375,050
INTERNET - ISP/CONTENT 1.6%
Akamai Technologies (b) 600 87,112
America Online, Inc. (b) 42,800 5,550,625
--------------
5,637,737
MACHINERY - MISCELLANEOUS 0.3%
Ingersoll-Rand Company 17,350 906,537
MEDIA - PUBLISHING 1.1%
Gannett Company, Inc. 16,200 1,249,425
McGraw-Hill, Inc. 41,800 2,492,325
--------------
3,741,750
MEDIA - RADIO/TV 3.9%
AT&T Corporation-Liberty Media Group
Class A (b) 66,000 2,619,375
CBS Corporation (b) 63,000 3,075,188
Clear Channel Communications, Inc. (b) 39,200 3,150,700
Cox Communications, Inc. Class A (b) 37,000 1,681,188
Time Warner, Inc. 42,000 2,926,875
--------------
13,453,326
MORTGAGE & RELATED SERVICE 1.6%
Federal Home Loan Mortgage Corporation 53,200 2,876,125
Federal National Mortgage Association 37,000 2,617,750
--------------
5,493,875
NATURAL GAS DISTRIBUTION 0.1%
Enron Corporation 10,000 399,375
OIL - INTERNATIONAL INTEGRATED 3.2%
BP Amoco PLC Sponsored ADR 33,000 1,905,750
Chevron Corporation 22,600 2,063,663
Exxon Corporation 39,900 2,955,094
Mobil Corporation 19,500 1,881,750
Royal Dutch Petroleum Company - New
York Registry Shares 35,000 2,097,813
--------------
10,904,070
PAPER & FOREST PRODUCTS 0.2%
International Paper Company 14,000 736,750
PERSONAL & COMMERCIAL LENDING 0.5%
Associates First Capital Corporation 48,904 1,784,996
RETAIL - DRUG STORE 1.0%
CVS Corporation 45,000 1,954,688
Walgreen Company 63,500 1,599,406
--------------
3,554,094
RETAIL - FOOD CHAIN 0.9%
The Kroger Company (b) 89,400 1,860,638
Safeway, Inc. (b) 37,000 1,306,563
--------------
3,167,201
RETAIL - MAJOR CHAIN 2.6%
Dayton Hudson Corporation 40,500 2,617,313
Wal-Mart Stores, Inc. 109,000 6,178,937
--------------
8,796,250
RETAIL - RESTAURANT 0.3%
McDonald's Corporation 24,000 990,000
RETAIL - SPECIALTY 2.6%
Gap, Inc. 30,825 1,144,378
The Home Depot, Inc. 57,600 4,348,800
Lowe's Companies, Inc. 41,800 2,299,000
Tandy Corporation 16,200 1,019,587
--------------
8,811,765
SOAP & CLEANING PREPARATION 1.2%
Clorox Company 22,000 900,625
The Procter & Gamble Company 29,000 3,041,375
--------------
3,942,000
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1999
- -----------------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND (continued)
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATION EQUIPMENT 2.7%
Lucent Technologies, Inc. 61,600 $ 3,957,800
Motorola, Inc. 33,400 3,254,413
Nortel Networks Corporation 32,000 1,982,000
--------------
9,194,213
TELECOMMUNICATIONS - SERVICES 5.6%
AT&T Corporation 81,750 3,821,813
Allied Riser Communication (b) 1,600 28,900
Bell Atlantic Corporation 37,600 2,441,650
MCI WorldCom, Inc. (b) 86,887 7,455,991
MediaOne Group, Inc. (b) 24,800 1,762,350
Sprint Corporation 52,000 3,864,250
--------------
19,374,954
TELEPHONE 1.0%
SBC Communications, Inc. 66,539 3,389,330
- -----------------------------------------------------------------------------------------
Total Common Stocks (Cost $125,725,521) 214,948,894
- -----------------------------------------------------------------------------------------
WARRANTS 0.5%
Aladdin Gaming Holdings LLC Warrants,
Expire 3/01/10 40,000 400
American Telecasting, Inc. Warrants,
Expire 8/10/00 350 0
CD Radio, Inc. Warrants, Expire 5/15/09
(Acquired 5/13/99; Cost $75) (d) 7,500 393,750
Concentric Network Warrants, Expire 12/15/07
(Acquired 12/15/97; Cost $6,980) (d) 2,000 50,000
e.spire Communications, Inc. Warrants, Expire
11/01/05 (Acquired 3/22/96; Cost $107,188) (d) 1,750 22,750
Key Energy Services, Inc. Warrants, Expire 1/15/09 1,000 2,000
MEDIQ, Inc. Warrants, Expire 6/01/09 (Acquired
5/21/98; Cost $0) (d) 3,750 37
News Corporation Exchange Trust Warrants,
Expire 11/12/16 (Acquired 11/04/96; Cost
$1,831,250) (d) 50,000 837,500
R&B Falcon Corporation, Expire 5/01/09
(Acquired 4/29/99; Cost $123,750) (d) 1,500 375,000
- -----------------------------------------------------------------------------------------
Total Warrants (Cost $2,079,143) 1,681,437
- -----------------------------------------------------------------------------------------
PREFERRED STOCKS 1.1%
Nextlink Communications, Inc. 14.00%
Senior Exchangeable 39,713 2,035,291
R&B Falcon Corporation 13.875%
Senior Preferred (f) 1,611 1,530,450
- -----------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $3,391,715) 3,565,741
- -----------------------------------------------------------------------------------------
CORPORATE BONDS 28.6%
AKI, Inc. Senior Notes, 10.50%, Due 7/01/08 $ 800,000 709,000
APCOA/Standard Parking, Inc. Senior
Subordinated Notes, 9.25%, Due 3/15/08 2,250,000 1,881,562
Aladdin Gaming Holdings LLC/Aladdin
Capital Corporation Senior Discount
Notes, Zero %, Due 3/01/10 (Rate Reset
Effective 3/01/03) 4,000,000 1,400,000
Allegiance Telecom, Inc. Senior Discount
Notes, Zero %, Due 2/15/08 (Rate Reset
Effective 2/15/03) 1,000,000 685,000
Allied Waste North America, Inc. Senior
Subordinated Notes, 10.00%, Due 8/01/09
(Acquired 7/27/99; Cost $2,990,040) (d) 3,000,000 2,553,750
@Entertainment, Inc. Senior Discount Notes,
Series B, Zero %, Due 7/15/08 (Rate Reset
Effective 7/15/03) 1,500,000 971,250
@Entertainment, Inc. Senior Discount Notes,
Series B, Zero %, Due 2/01/09 (Rate Reset
Effective 2/01/04) 500,000 308,750
Atlas Air, Inc. Senior Notes, 10.75%, Due 8/01/05 2,000,000 1,990,000
Buhrmann US, Inc. Guaranteed Senior
Subordinated Notes, 12.25%, Due 11/01/09
(Acquired 10/26/99; Cost $1,971,840) (d) 2,000,000 1,995,000
CD Radio, Inc. Senior Secured Notes, 14.50%,
Due 5/15/09 (Acquired 5/13/99;
Cost $2,499,925) (d) 2,500,000 2,175,000
William Carter Senior Subordinated Notes,
Series A, 10.375%, Due 12/01/06 1,000,000 975,000
Cendant Corporation Notes, 7.75%,
Due 12/01/03 2,000,000 1,997,140
Crown Castle International Corporation
Senior Discount Notes, Zero %, Due 5/15/11
(Rate Reset Effective 5/15/04) 3,000,000 1,792,500
e.spire Communications, Inc. Senior Discount
Notes, Zero %, Due 7/01/08 (Rate Reset
Effective 7/01/03) 2,000,000 770,000
Exide Corporation Senior Notes, 10.00%,
Due 4/15/05 1,000,000 925,000
Fresenius Medical Care Capital Trust II
Guaranteed Preferred Securities, 7.875%,
Due 2/01/08 2,000,000 1,820,000
GS Escrow Corporation Senior Notes, 7.00%,
Due 8/01/03 5,000,000 4,708,035
Grove Worldwide LLC Senior Subordinated
Notes, 9.25%, Due 5/01/08 420,000 157,500
Hyperion Telecommunications, Inc. Senior
Subordinated Notes, 12.00%, Due 11/01/07 1,000,000 1,040,000
Intermedia Communications, Inc. Senior
Notes, Series B, 13.50%, Due 6/01/05 241,000 265,862
International Game Technology Senior Notes,
8.375%, Due 5/15/09 2,750,000 2,633,125
KMC Telecom Holdings, Inc. Senior Notes,
13.50%, Due 5/15/09 (Acquired 5/19/99;
Cost $1,000,000) (d) 1,000,000 985,000
Key Energy Services, Inc. Senior Subordinated
Notes, 14.00%, Due 1/15/09 1,000,000 1,080,000
Lyondell Chemical Company Senior Secured
Notes, Series B, 9.875%, Due 5/01/07 2,000,000 2,000,000
Lyondell Chemical Company Senior
Subordinated Notes, 10.875%, Due 5/01/09 1,000,000 1,000,000
MCI Worldcom Senior Notes, 13.50%,
Due 12/15/02 3,400,000 3,867,500
MEDIQ, Inc. Senior Discount Debentures,
Zero%, Due 6/01/09 (Rate Reset
Effective 6/01/03) 3,750,000 393,750
MetroNet Communications, Inc. Senior Yankee
Notes, 10.625%, Due 11/01/08 2,000,000 2,280,000
Motors and Gears, Inc. Senior Notes, Series
C, 10.75%, Due 11/15/06 2,800,000 2,646,000
NTL, Inc. Senior Notes, Series B, 10.00%,
Due 2/15/07 1,500,000 1,537,500
Nextlink Communications, Inc. Senior
Discount Notes, Zero %, Due 6/01/09
(Rate Reset Effective 6/01/04) 4,000,000 2,360,000
Niagara Mohawk Power Corporation Senior
Notes, Series C, 7.125%, Due 7/01/01 9,073,170 9,084,683
Orbital Imaging Corporation Senior Notes,
Series D, 11.625%, Due 3/01/05 2,000,000 1,430,000
Premier Graphics, Inc. Senior Notes, 11.50%,
Due 12/01/05 2,500,000 2,325,000
Primus Telecommunications Group, Inc.
Senior Notes, 12.75%, Due 10/15/09
(Acquired 10/12/99; Cost $1,500,000) (d) 1,500,000 1,488,750
RCN Corporation Senior Discount Notes,
Zero %, Due 2/15/08 (Rate Reset
Effective 2/15/03) 1,000,000 636,250
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND (continued)
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Renaissance Media Louisiana LLC/
Renaissance Media Tennessee/ Renaissance
Media Capital Corporation Senior Discount
Notes, Zero %, Due 4/15/08 (Rate Reset
Effective 4/15/03) $ 3,000,000 $ 2,100,000
Rose Hills Company Senior Subordinated
Notes, 9.50%, Due 11/15/04 175,000 144,375
Russel Metals, Inc./RMI USA LLC Units,
10.00%, Due 6/01/09 500,000 511,875
SF Holdings Group, Inc. Senior Secured
Discount Notes, Zero %, Due 3/15/08
(Rate Reset Effective 3/15/03) 500,000 217,500
Sabreliner Corporation Senior Notes, 11.00%,
Due 6/15/08 (Acquired 6/19/98;
Cost $2,500,000) (d) 2,500,000 1,862,500
Stater Brothers Holdings, Inc. Senior
Notes, 10.75%, Due 8/15/06 2,000,000 2,045,000
Sutter CBO, Ltd./Sutter CBO Corporation,
Series 1999-1, Class B2, 13.442%, Due
11/30/14 (Acquired 10/05/99; Cost
$2,000,000) (d) (f) 2,000,000 2,002,500
Telecorp PCS, Inc. Senior Subordinated
Discount Notes, Zero %, Due 4/15/09
(Rate Reset Effective 4/15/04) (Acquired
4/20/99 - 5/06/99; Cost $1,687,200) (d) 3,000,000 1,852,500
Telemundo Holdings, Inc. Senior Discount
Notes, Zero %, Due 8/15/08 (Rate
Reset Effective 8/15/03) 2,250,000 1,293,750
Teligent, Inc. Senior Notes, 11.50%,
Due 12/01/07 1,000,000 923,750
Town Sports International, Inc. Senior Notes,
9.75%, Due 10/15/04 (Acquired 6/10/99;
Cost $941,630) (d) 1,000,000 937,500
Transportation Manufacturing Operations,
Inc. Senior Subordinated Notes, 11.25%,
Due 5/01/09 (Acquired 6/14/99;
Cost $1,232,187) (d) 1,250,000 1,231,250
Transwestern Publishing Company LP/TWP
Capital Corporation Senior Subordinated
Notes, Series D, 9.625%, Due 11/15/07 1,000,000 968,750
US Air 1993-A Pass-Thru Trust Certificates,
Series 1993-A2, 9.625%, Due 9/01/03 1,675,000 1,641,500
United Industries Corporation Senior
Subordinated Notes, 9.875%, Due 4/01/09
(Acquired 7/08/99; Cost $1,683,000) (d) 1,800,000 1,620,000
United International Holdings, Inc. Senior
Secured Discount Notes, Series B, Zero %,
Due 2/15/08 (Rate Reset Effective 2/15/03) 1,500,000 858,750
United Rentals, Inc. Senior Subordinated Notes,
Series B, 9.25%, Due 1/15/09 1,000,000 925,000
Universal Compression, Inc. Senior Discount
Notes, Zero %, Due 2/15/08 (Rate Reset
Effective 2/15/03) 675,000 421,875
Venetian Casino Resort LLC/Las Vegas Sands,
Inc. Secured Mortgage Notes, 12.25%,
Due 11/15/04 1,000,000 780,000
Versatel Telecom International NV Senior
Yankee Notes, 11.875%, Due 7/15/09 1,000,000 932,831
Viatel, Inc. Senior Notes, 11.25%, Due 4/15/08 2,000,000 1,890,000
Vintage Petroleum, Inc. Senior Subordinated
Notes, 9.75%, Due 6/30/09 1,500,000 1,518,750
Williams Communications Group, Inc. Senior
Notes, 10.875%, Due 10/01/09 3,000,000 3,090,000
Winstar Communications, Inc. Senior Subordinated
Deferred Interest Notes, Zero %, Due 3/01/07
(Rate Reset Effective 9/01/02) 1,000,000 1,180,000
Worldwide Fiber, Inc. Senior Yankee Notes,
12.50%, Due 12/15/05 1,000,000 1,027,500
ZSC Specialty Chemicals PLC Senior
Yankee Notes, 11.00%, Due 7/01/09 (Acquired
6/24/99; Cost $1,500,000) (d) $ 1,500,000 $ 1,509,375
- -----------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $104,457,222) 98,354,738
- -----------------------------------------------------------------------------------------
CONVERTIBLE BONDS 0.4%
Corporate Express, Inc. Subordinated Notes,
4.50%, Due 7/01/00 1,500,000 1,490,625
- -----------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $1,477,080) 1,490,625
- -----------------------------------------------------------------------------------------
NON-AGENCY MORTGAGE &
ASSET-BACKED SECURITIES 0.1%
Chase Mortgage Finance Corporation Mortgage
Pass-Thru Certificates, Series 1990-G, Class
A-Z1, 9.50%, Due 12/25/21 225,720 229,142
First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates, Series 1993-2,
Class A-3, 7.50%, Due 3/25/33 747 749
Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage Bonds,
Series 1992-C, Class 3-A, 11.7547%, Due 11/25/30 42,858 42,718
- -----------------------------------------------------------------------------------------
Total Non-Agency Mortgage & Asset-Backed
Securities (Cost $269,331) 272,609
- -----------------------------------------------------------------------------------------
UNITED STATES GOVERNMENT & AGENCY ISSUES 2.5%
FHLMC Adjustable Rate Mortgage Participation
Certificates, 7.915%, Due 8/01/25 1,201,954 1,224,233
FHLMC Guaranteed Pass-Thru Certificates:
9.50%, Due 1/01/06 32,291 33,305
10.25%, Due 3/01/15 73,334 78,648
10.50%, Due 1/01/16 13,095 14,119
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
11.00%, Due 11/01/00 2,495 2,547
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate Pass-Thru
Certificates, Series G92-61, Class FJ, 5.662%,
Due 10/25/22 526,463 524,545
GNMA Guaranteed Pass-Thru Certificates,
7.50%, Due 12/15/07 1,184,579 1,206,545
United States Treasury Bonds:
5.25%, Due 2/15/29 1,500,000 1,297,970
6.50%, Due 11/15/26 1,550,000 1,567,923
United States Treasury Notes:
5.75%, Due 4/30/03 1,500,000 1,491,095
6.00%, Due 8/15/04 1,280,000 1,283,200
- -----------------------------------------------------------------------------------------
Total United States Government & Agency
Issues (Cost $8,745,048) 8,724,130
- -----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 3.9%
COMMERCIAL PAPER 1.2%
INTEREST BEARING, DUE UPON DEMAND
Pitney Bowes Credit Corporation, 5.01% 1,771,100 1,771,100
Warner Lambert Company, 4.99% 820,700 820,700
Wisconsin Electric Power Company, 4.99% 1,614,200 1,614,200
--------------
4,206,000
REPURCHASE AGREEMENTS 2.4%
ABN-AMRO Inc. (Dated 10/29/99), 5.22%,
Due 11/01/99 (Repurchase proceeds $8,403,654);
Collateralized by: SLMA Medium-Term
Notes, FNMA Bonds and Notes, FHLMC
Bonds and Notes, Federal Farm Credit
Bank Notes, and Resolution Funding
Corporation Strips (e) 8,400,000 8,400,000
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1999
- -----------------------------------------------------------------------------------------
STRONG ASSET ALLOCATION FUND (continued)
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES GOVERNMENT & AGENCY ISSUES 0.3%
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
11.00%, Due 10/01/00 $ 23,334 $ 23,827
United States Treasury Bills, Due 11/04/99
thru 1/20/00 (c) 885,000 884,339
--------------
908,166
- -----------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $13,490,323) 13,514,166
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Total Investments in Securities (Cost $259,635,383) 99.6% 342,552,340
Other Assets and Liabilities, Net 0.4% 1,355,761
- -----------------------------------------------------------------------------------------
NET ASSETS 100.0% $ 343,908,101
=========================================================================================
<CAPTION>
FUTURES
- ----------------------------------------------------------------------------------------
Underlying
Face Amount Unrealized
Expiration Date at Value Depreciation
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchased:
20 Two-Year U.S. Treasury Notes 12/99 $ 4,140,938 $ 3,835
Sold:
18 Five-Year U.S. Treasury Notes 12/99 1,943,156 14,748
20 Ten-Year U.S. Treasury Notes 12/99 2,194,375 9,460
35 S&P 500 Index 12/99 12,041,750 245,438
- ----------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------
STRONG BLUE CHIP 100 FUND
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 97.5%
AEROSPACE & DEFENSE 0.5%
The Boeing Company 28,600 $ 1,317,387
United Technologies Corporation 14,400 871,200
--------------
2,188,587
AUTOMOBILE 0.7%
Ford Motor Company 36,000 1,975,500
General Motors Corporation 19,200 1,348,800
--------------
3,324,300
BANK - MONEY CENTER 6.7%
Bank of America Corporation 51,418 3,310,034
The Chase Manhattan Corporation 180,500 15,771,188
Citigroup, Inc. 247,450 13,393,231
--------------
32,474,453
BANK - SUPER REGIONAL 1.4%
The Bank of New York Company, Inc. 21,800 912,875
Bank One Corporation 34,840 1,308,678
First Union Corporation 28,600 1,220,862
Fleet Boston Corporation 27,400 1,195,325
Wells Fargo Company 49,200 2,355,450
--------------
6,993,190
BEVERAGE - ALCOHOLIC 0.2%
Anheuser-Busch Companies, Inc. 14,000 1,005,375
Beverage - Soft Drink 1.2%
The Coca-Cola Company 73,400 4,330,600
PepsiCo, Inc. 43,600 1,512,375
--------------
5,842,975
BROKERAGE & INVESTMENT MANAGEMENT 1.0%
The Charles Schwab Corporation 24,400 950,075
The Goldman Sachs Group, Inc. 13,200 937,200
Merrill Lynch & Company, Inc. 11,000 863,500
Morgan Stanley, Dean Witter & Company 17,000 1,875,313
--------------
4,626,088
CHEMICAL 0.2%
The Dow Chemical Company 6,600 780,450
COMPUTER - MANUFACTURERS 6.0%
Compaq Computer Corporation 50,800 965,200
Dell Computer Corporation (b) 75,800 3,041,475
Hewlett-Packard Company 30,300 2,244,094
International Business Machines Corporation 54,000 5,312,250
Sun Microsystems, Inc. (b) 165,900 17,554,294
--------------
29,117,313
COMPUTER - PERIPHERAL EQUIPMENT 0.4%
EMC Communications Corporation (b) 30,200 2,204,600
COMPUTER SERVICE 0.4%
Automatic Data Processing, Inc. 18,400 886,650
Electronic Data Systems Corporation 14,700 859,950
--------------
1,746,600
COMPUTER SOFTWARE 9.5%
Cisco Systems, Inc. (b) 145,200 10,744,800
Computer Associates International, Inc. 16,100 909,650
Microsoft Corporation (b) 231,100 21,391,194
Oracle Systems Corporation (b) 272,850 12,977,428
--------------
46,023,072
COSMETIC & PERSONAL CARE 0.2%
The Gillette Company 32,400 1,172,475
DIVERSIFIED OPERATIONS 1.4%
Allied Signal, Inc. 16,400 933,775
E.I. Du Pont de Nemours & Company 31,000 1,997,563
Minnesota Mining & Manufacturing Company 12,000 1,140,750
Monsanto Company 19,000 731,500
Tyco International, Ltd. 50,000 1,996,875
--------------
6,800,463
ELECTRICAL EQUIPMENT 5.0%
Emerson Electric Company 13,000 780,813
General Electric Company 173,025 23,455,702
--------------
24,236,515
ELECTRONICS - SEMICONDUCTOR EQUIPMENT 5.3%
Applied Materials, Inc. (b) 283,600 25,470,825
ELECTRONICS - SEMICONDUCTOR MANUFACTURING 6.4%
Intel Corporation 98,600 7,635,337
Texas Instruments, Inc. 262,600 23,568,350
--------------
31,203,687
FINANCE - MISCELLANEOUS 3.0%
American Express Company 94,400 14,537,600
HEALTHCARE - BIOMEDICAL/GENETIC 0.3%
Amgen, Inc. (b) 15,200 1,212,200
HEALTHCARE - DRUG/DIVERSIFIED 6.2%
Abbott Laboratories 45,400 1,833,025
American Home Products Corporation 38,800 2,027,300
Bristol-Myers Squibb Company 59,000 4,531,937
Johnson & Johnson 40,000 4,190,000
Eli Lilly & Company 32,600 2,245,325
Merck & Company, Inc. 69,800 5,553,462
Pfizer, Inc. 115,400 4,558,300
Pharmacia & Upjohn, Inc. 15,000 809,062
Schering-Plough Corporation 43,600 2,158,200
Warner-Lambert Company 25,400 2,027,237
--------------
29,933,848
HEALTHCARE - INSTRUMENTATION 0.2%
Medtronic, Inc. 35,000 1,211,875
INSURANCE - PROPERTY & CASUALTY 3.3%
American International Group, Inc. 155,165 15,972,297
INTERNET - E*COMMERCE 0.1%
Amazon.com, Inc. (b) 10,000 706,250
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
STRONG BLUE CHIP 100 FUND (continued)
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
INTERNET - ISP/CONTENT 6.3%
America Online, Inc. (b) 133,700 $ 17,339,219
Yahoo! Inc. (b) 73,800 13,214,813
--------------
30,554,032
LEISURE SERVICE 0.5%
Carnival Corporation 18,200 809,900
The Walt Disney Company (b) 61,200 1,614,150
--------------
2,424,050
MEDIA - RADIO/TV 5.3%
AT&T Corporation-Liberty
Media Group Class A (b) 177,600 7,048,500
CBS Corporation (b) 21,000 1,025,062
Comcast Corporation Class A 22,200 935,175
Time Warner, Inc. 240,100 16,731,969
--------------
25,740,706
MORTGAGE & RELATED SERVICE 0.7%
Federal Home Loan Mortgage Corporation 20,600 1,113,687
Federal National Mortgage Association 30,400 2,150,800
--------------
3,264,487
NATURAL GAS DISTRIBUTION 1.4%
Enron Corporation 171,200 6,837,300
OFFICE AUTOMATION 0.1%
Xerox Corporation 19,900 557,200
OIL - INTERNATIONAL INTEGRATED 2.1%
Chevron Corporation 19,600 1,789,725
Exxon Corporation 72,200 5,347,312
Mobil Corporation 23,400 2,258,100
Texaco, Inc. 16,400 1,006,550
--------------
10,401,687
OIL WELL EQUIPMENT & SERVICE 3.3%
Schlumberger, Ltd. 267,800 16,218,638
PAPER & FOREST PRODUCTS 0.2%
Kimberly-Clark Corporation 15,800 997,375
PERSONAL & COMMERCIAL LENDING 0.2%
Associates First Capital Corporation 21,620 789,130
RETAIL - DRUG STORE 0.2%
Walgreen Company 29,800 750,587
RETAIL - MAJOR CHAIN 3.8%
Dayton Hudson Corporation 13,200 853,050
Wal-Mart Stores, Inc. 309,600 17,550,450
--------------
18,403,500
RETAIL - RESTAURANT 0.3%
McDonald's Corporation 40,400 1,666,500
RETAIL - SPECIALTY 0.9%
Gap, Inc. 25,600 950,400
The Home Depot, Inc. 44,200 3,337,100
--------------
4,287,500
SOAP & CLEANING PREPARATION 1.1%
Colgate Palmolive Company 17,400 1,052,700
The Procter & Gamble Company 39,700 4,163,538
--------------
5,216,238
TELECOMMUNICATION EQUIPMENT 2.3%
Lucent Technologies, Inc. 91,400 5,872,450
Motorola, Inc. 18,000 1,753,875
Nortel Networks Corporation 39,800 2,465,112
Qualcomm, Inc. (b) 4,800 1,069,200
--------------
11,160,637
TELECOMMUNICATIONS - CELLULAR 0.2%
Sprint Corporation - PCS Group (b) 13,100 1,086,481
TELECOMMUNICATIONS - SERVICES 6.9%
AT&T Corporation 95,028 4,442,559
Bell Atlantic Corporation 46,200 3,000,112
BellSouth Corporation 56,200 2,529,000
MCI WorldCom, Inc. (b) 234,370 20,111,876
MediaOne Group, Inc. (b) 18,000 1,279,125
Sprint Corporation 25,800 1,917,263
--------------
33,279,935
TELEPHONE 1.7%
GTE Corporation 29,200 2,190,000
SBC Communications, Inc. 101,728 5,181,770
US WEST, Inc. 15,000 915,938
--------------
8,287,708
TOBACCO 0.4%
Philip Morris Companies, Inc. 71,200 1,793,350
- -----------------------------------------------------------------------------------------
Total Common Stocks (Cost $394,308,368) 472,502,079
- -----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 0.9%
COMMERCIAL PAPER 0.1%
INTEREST BEARING, DUE UPON DEMAND
Warner Lambert Company, 4.99% $ 647,900 647,900
Wisconsin Electric Power Company, 4.99% 97,600 97,600
--------------
745,500
REPURCHASE AGREEMENTS 0.8%
ABN-AMRO Inc. (Dated 10/29/99), 5.22%,
Due 11/01/99 (Repurchase proceeds $3,701,610);
Collateralized by: SLMA Medium-Term Notes,
FNMA Bonds and Notes, FHLMC Bonds and
Notes, Federal Home Loan Bank Bonds and
Notes, Federal Farm Credit Bank Notes, and
Resolution Funding Corporation Strips (e) 3,700,000 3,700,000
- -----------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $4,445,500) 4,445,500
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Total Investments in Securities (Cost $398,753,868) 98.4% 476,947,579
Other Assets and Liabilities, Net 1.6% 7,892,526
- -----------------------------------------------------------------------------------------
NET ASSETS 100.0% $ 484,840,105
=========================================================================================
<CAPTION>
- -----------------------------------------------------------------------------------------
STRONG EQUITY INCOME FUND
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 95.8%
AEROSPACE & DEFENSE 0.9%
United Technologies Corporation 26,000 $ 1,573,000
AUTOMOBILE 0.7%
Ford Motor Company 22,000 1,207,250
BANK - MONEY CENTER 4.2%
The Chase Manhattan Corporation 29,100 2,542,612
Citigroup, Inc. 93,948 5,084,936
--------------
7,627,548
BANK - SUPER REGIONAL 3.4%
The Bank of New York Company, Inc. 29,300 1,226,937
Comerica, Inc. 18,700 1,111,481
Mellon Financial Corporation 58,000 2,142,375
Wells Fargo Company 36,300 1,737,862
--------------
6,218,655
BEVERAGE - ALCOHOLIC 1.0%
Anheuser-Busch Companies, Inc. 24,200 1,737,862
BEVERAGE - SOFT DRINK 0.4%
PepsiCo, Inc. 19,500 676,406
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1999
- -----------------------------------------------------------------------------------------
STRONG EQUITY INCOME FUND (continued)
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
BROKERAGE & INVESTMENT MANAGEMENT 0.3%
Morgan Stanley, Dean Witter & Company 4,500 $ 496,406
COMMERCIAL SERVICE 1.4%
The Interpublic Group of Companies, Inc. 61,800 2,510,625
COMPUTER - MANUFACTURERS 1.2%
International Business Machines Corporation 16,500 1,623,187
Sun Microsystems, Inc. (b) 4,500 476,156
--------------
2,099,343
COMPUTER SERVICE 0.2%
Electronic Data Systems Corporation 7,600 444,600
COMPUTER SOFTWARE 1.1%
BMC Software, Inc. (b) 9,000 577,688
Oracle Systems Corporation (b) 31,600 1,502,975
--------------
2,080,663
COSMETIC & PERSONAL CARE 0.3%
Estee Lauder Companies, Inc. Class A 11,400 531,525
DIVERSIFIED OPERATIONS 5.3%
Allied Signal, Inc. 23,200 1,320,950
E.I. Du Pont de Nemours & Company 21,200 1,366,075
Textron, Inc. 21,900 1,690,406
Tyco International, Ltd. 130,208 5,200,182
--------------
9,577,613
ELECTRIC POWER 2.3%
Duke Energy Corporation 27,500 1,553,750
PECO Energy Company 14,900 568,994
The Southern Company 15,500 411,719
Texas Utilities Company 22,500 871,875
UNICOM Corporation 20,200 773,913
--------------
4,180,251
ELECTRICAL EQUIPMENT 5.6%
Emerson Electric Company 17,000 1,021,062
General Electric Company 68,000 9,218,250
--------------
10,239,312
ELECTRONICS - SEMICONDUCTOR MANUFACTURING 4.4%
Intel Corporation 46,000 3,562,125
LSI Logic Corporation (b) 24,800 1,319,050
STMicroelectronics NV 23,500 2,135,562
Xilinx, Inc. (b) 13,000 1,022,125
--------------
8,038,862
FINANCE - MISCELLANEOUS 1.4%
American Express Company 12,100 1,863,400
First Data Corporation 16,000 731,000
--------------
2,594,400
HEALTHCARE - DRUG/DIVERSIFIED 9.1%
Bristol-Myers Squibb Company 49,000 3,763,813
Johnson & Johnson 24,500 2,566,375
Eli Lilly & Company 7,000 482,125
Merck & Company, Inc. 47,500 3,779,219
Pfizer, Inc. 50,400 1,990,800
Schering-Plough Corporation 55,000 2,722,500
Warner-Lambert Company 14,800 1,181,225
--------------
16,486,057
HOUSING RELATED 1.0%
Masco Corporation 62,200 1,897,100
INSURANCE - DIVERSIFIED 0.6%
Marsh & McLennan Companies, Inc. 14,850 1,174,078
INSURANCE - PROPERTY & CASUALTY 2.7%
American International Group, Inc. 46,896 4,827,358
INTERNET ISP/CONTENT 0.0%
Akamai Technologies, Inc. (b) 500 72,593
LEISURE PRODUCT 0.3%
Eastman Kodak Company 7,500 517,030
MACHINERY - MISCELLANEOUS 0.7%
Ingersoll-Rand Company 25,200 1,316,700
MEDIA - PUBLISHING 1.9%
Gannett Company, Inc. 17,000 1,311,125
McGraw-Hill, Inc. 36,600 2,182,275
--------------
3,493,400
MEDIA - RADIO/TV 4.6%
AT&T Corporation-Liberty Media Group Class A (b) 53,000 2,103,438
CBS Corporation (b) 48,000 2,343,000
Time Warner, Inc. 55,200 3,846,750
--------------
8,293,188
METAL PRODUCTS & FABRICATION 0.5%
Illinois Tool Works, Inc. 12,600 922,950
METALS & MINING 0.8%
Alcoa, Inc. 24,000 1,458,000
MORTGAGE & RELATED SERVICE 2.5%
Federal Home Loan Mortgage Corporation 46,000 2,486,875
Federal National Mortgage Association 30,000 2,122,500
--------------
4,609,375
NATURAL GAS DISTRIBUTION 0.2%
Enron Corporation 9,200 367,425
OIL - INTERNATIONAL INTEGRATED 5.8%
BP Amoco PLC Sponsored ADR 5,200 300,300
Chevron Corporation 12,800 1,168,800
Exxon Corporation 49,000 3,629,063
Mobil Corporation 18,100 1,746,650
Royal Dutch Petroleum Company -
New York Registry Shares 50,000 2,996,875
Texaco, Inc. 12,100 742,637
--------------
10,584,325
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 0.2%
Burlington Resources, Inc. 13,000 453,375
OIL - NORTH AMERICAN INTEGRATED 0.2%
USX-Marathon Group 13,500 393,188
OIL WELL EQUIPMENT & SERVICE 0.7%
Halliburton Company 34,500 1,300,219
PAPER & FOREST PRODUCTS 1.6%
International Paper Company 23,000 1,210,375
The Mead Corporation 26,800 964,800
Temple-Inland, Inc. 12,000 697,500
--------------
2,872,675
PERSONAL & COMMERCIAL LENDING 0.8%
Associates First Capital Corporation 37,522 1,369,554
RETAIL - DRUG STORE 1.0%
Walgreen Company 72,000 1,813,500
Retail - Major Chain 4.4%
Dayton Hudson Corporation 34,500 2,229,563
Wal-Mart Stores, Inc. 102,400 5,804,800
--------------
8,034,363
RETAIL - RESTAURANT 0.6%
McDonald's Corporation 27,000 1,113,750
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
STRONG EQUITY INCOME FUND (continued)
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
RETAIL - SPECIALTY 4.8%
Gap, Inc. 26,325 $ 977,315
The Home Depot, Inc. 51,100 3,858,050
Lowe's Companies, Inc. 45,300 2,491,500
Tandy Corporation 21,000 1,321,688
--------------
8,648,553
SOAP & CLEANING PREPARATION 2.5%
Clorox Company 35,000 1,432,813
The Procter & Gamble Company 30,400 3,188,200
--------------
4,621,013
STEEL 0.1%
USX-US Steel Group 10,300 263,294
TELECOMMUNICATION EQUIPMENT 2.7%
Corning, Inc. 14,266 1,121,664
Motorola, Inc. 26,500 2,582,094
Nortel Networks Corporation 18,000 1,114,875
--------------
4,818,633
TELECOMMUNICATIONS - CELLULAR 0.7%
Vodafone AirTouch PLC Sponsored ADR 27,000 1,294,313
TELECOMMUNICATIONS - SERVICES 9.2%
AT&T Corporation 72,450 3,387,038
Allied Riser Communications Corporation (b) 1,300 23,481
Bell Atlantic Corporation 36,500 2,370,219
BellSouth Corporation 24,000 1,080,000
MCI WorldCom, Inc. (b) 64,048 5,496,119
Sprint Corporation 57,800 4,295,262
--------------
16,652,119
TELEPHONE 1.5%
SBC Communications, Inc. 52,449 2,671,620
- -----------------------------------------------------------------------------------------
Total Common Stocks (Cost $113,220,078) 174,174,069
- -----------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS 2.6%
Houston Industries, Inc. 7.00% Automatic
Common Exchange Securities 30,000 3,442,500
The Seagram Company, Ltd. 7.50% 24,100 1,191,444
- -----------------------------------------------------------------------------------------
Total Convertible Preferred Stocks (Cost $2,586,137) 4,633,944
- -----------------------------------------------------------------------------------------
CONVERTIBLE BONDS 0.2%
Loews Corporation Exchangeable Subordinated
Notes, 3.125%, Due 9/15/07 $ 500,000 410,625
- -----------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $500,000) 410,625
- -----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 1.5%
COMMERCIAL PAPER 0.3%
INTEREST BEARING, DUE UPON DEMAND
Warner Lambert Company, 4.99% 350,500 350,500
Wisconsin Electric Power Company, 4.99% 131,700 131,700
--------------
482,200
REPURCHASE AGREEMENTS 1.2%
ABN-AMRO Inc. (Dated 10/29/99), 5.22%,
Due 11/01/99 (Repurchase proceeds $2,301,001);
Collateralized by: SLMA Medium-Term Notes,
FNMA Bonds and Notes, FHLMC Bonds and
Notes, Federal Home Loan Bank Bonds and
Notes, Federal Farm Credit Bank Notes,
and Resolution Funding Corporation Strips (e) 2,300,000 2,300,000
- -----------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $2,782,200) 2,782,200
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Total Investments in Securities (Cost $119,088,415) 100.1% 182,000,838
Other Assets and Liabilities, Net (0.1%) (223,321)
- -----------------------------------------------------------------------------------------
NET ASSETS 100.0% $ 181,777,517
=========================================================================================
<CAPTION>
- -----------------------------------------------------------------------------------------
WRITTEN OPTIONS ACTIVITY
- -----------------------------------------------------------------------------------------
Contracts Premiums
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at beginning of year -- $ --
Options written during the year 320 255,031
Options closed (320) (255,031)
Options expired -- --
Options exercised -- --
-------- --------------
Options outstanding at end of year -- $ --
======== ==============
Closed options resulted in a capital loss of $49,929.
<CAPTION>
- -----------------------------------------------------------------------------------------
STRONG GROWTH AND INCOME FUND
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 99.2%
AEROSPACE & DEFENSE 1.0%
United Technologies Corporation 144,000 $ 8,712,000
AUTOMOBILE 0.3%
Ford Motor Company 39,500 2,167,562
BANK - MONEY CENTER 4.7%
The Chase Manhattan Corporation 132,000 11,533,500
Citigroup, Inc. 540,000 29,227,500
--------------
40,761,000
BANK - SUPER REGIONAL 1.6%
The Bank of New York Company, Inc. 74,000 3,098,750
Mellon Financial Corporation 166,000 6,131,625
Wells Fargo Company 95,500 4,572,062
--------------
13,802,437
BEVERAGE - ALCOHOLIC 1.2%
Anheuser-Busch Companies, Inc. 141,000 10,125,562
BEVERAGE - SOFT DRINK 1.3%
The Coca-Cola Company 126,000 7,434,000
PepsiCo, Inc. 100,000 3,468,750
--------------
10,902,750
BROKERAGE & INVESTMENT MANAGEMENT 0.8%
Morgan Stanley, Dean Witter & Company 64,500 7,115,156
CHEMICAL 0.6%
Union Carbide Corporation 77,000 4,697,000
COMMERCIAL SERVICE 0.4%
The Interpublic Group of Companies, Inc. 73,900 3,002,187
COMPUTER - MANUFACTURERS 2.5%
International Business Machines Corporation 76,900 7,565,037
Sun Microsystems, Inc. (b) 130,000 13,755,625
--------------
21,320,662
COMPUTER - PERIPHERAL EQUIPMENT 0.8%
EMC Communications Corporation (b) 94,000 6,862,000
COMPUTER SOFTWARE 8.3%
BMC Software, Inc. (b) 124,000 7,959,250
Cisco Systems, Inc. (b) 320,000 23,680,000
Microsoft Corporation (b) 368,000 34,063,000
Oracle Systems Corporation (b) 128,000 6,088,000
--------------
71,790,250
COSMETIC & PERSONAL CARE 0.1%
Estee Lauder Companies, Inc. Class A 26,400 1,230,900
DIVERSIFIED OPERATIONS 5.9%
Allied Signal, Inc. 106,500 6,063,844
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1999
- -----------------------------------------------------------------------------------------
STRONG GROWTH AND INCOME FUND (continued)
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
E.I. Du Pont de Nemours & Company 77,000 $ 4,961,687
Minnesota Mining & Manufacturing Company 55,000 5,228,438
Textron, Inc. 65,500 5,055,781
Tyco International, Ltd. 749,000 29,913,187
--------------
51,222,937
ELECTRIC POWER 0.5%
PECO Energy Company 122,000 4,658,875
ELECTRICAL EQUIPMENT 4.7%
General Electric Company 297,000 40,262,063
ELECTRONIC PRODUCTS - MISCELLANEOUS 0.6%
General Motors Corporation Class H (b) 35,000 2,548,437
Solectron Corporation (b) 40,000 3,010,000
--------------
5,558,437
ELECTRONICS - SEMICONDUCTOR EQUIPMENT 1.0%
Applied Materials, Inc. (b) 96,000 8,622,000
ELECTRONICS - SEMICONDUCTOR MANUFACTURING 8.9%
Altera Corporation (b) 154,000 7,488,250
Intel Corporation 225,000 17,423,437
Maxim Integrated Products, Inc. (b) 70,000 5,525,625
Micron Technology, Inc. (b) 53,000 3,779,563
STMicroelectronics NV 161,000 14,630,875
Texas Instruments, Inc. 163,500 14,674,125
Xilinx, Inc. (b) 165,500 13,012,437
76,534,312
FINANCE - MISCELLANEOUS 2.1%
American Express Company 80,000 12,320,000
First Data Corporation 124,500 5,688,094
--------------
18,008,094
FOOD 0.2%
Unilever NV - New York Shares 27,946 1,863,649
HEALTHCARE - DRUG/DIVERSIFIED 6.8%
American Home Products Corporation 65,000 3,396,250
Bristol-Myers Squibb Company 150,000 11,521,875
Johnson & Johnson 121,000 12,674,750
Merck & Company, Inc. 130,000 10,343,125
Pfizer, Inc. 111,000 4,384,500
Schering-Plough Corporation 144,000 7,128,000
Warner-Lambert Company 119,000 9,497,688
--------------
58,946,188
HOUSING RELATED 0.3%
Masco Corporation 96,000 2,928,000
INSURANCE - DIVERSIFIED 0.5%
Marsh & McLennan Companies, Inc. 55,000 4,348,438
INSURANCE - PROPERTY & CASUALTY 1.5%
American International Group, Inc. 129,088 13,287,996
INTERNET - ISP/CONTENT 2.1%
Akamai Technologies, Inc. (b) 2,500 362,969
America Online, Inc. (b) 97,500 12,644,531
Yahoo! Inc. (b) 27,000 4,834,688
--------------
17,842,188
MACHINERY - MISCELLANEOUS 0.3%
Ingersoll-Rand Company 53,000 2,769,250
MEDIA - PUBLISHING 0.9%
Gannett Company, Inc. 38,000 2,930,750
McGraw-Hill, Inc. 74,600 4,448,025
--------------
7,378,775
MEDIA - RADIO/TV 4.8%
AT&T Corporation-Liberty Media Group
Class A (b) 144,000 5,715,000
CBS Corporation (b) 205,000 10,006,563
Clear Channel Communications, Inc. (b) 122,000 9,805,750
Cox Communications, Inc. Class A (b) 75,000 3,407,812
Time Warner, Inc. 179,000 12,474,063
--------------
41,409,188
METAL PRODUCTS & FABRICATION 0.2%
Illinois Tool Works, Inc. 23,000 1,684,750
METALS & MINING 0.9%
Alcoa, Inc. 130,000 7,897,500
MORTGAGE & RELATED SERVICE 1.3%
Federal Home Loan Mortgage Corporation 108,000 5,838,750
Federal National Mortgage Association 80,000 5,660,000
--------------
11,498,750
NATURAL GAS DISTRIBUTION 0.4%
Enron Corporation 90,000 3,594,375
OIL - INTERNATIONAL INTEGRATED 4.5%
BP Amoco PLC Sponsored ADR 178,000 10,279,500
Chevron Corporation 34,300 3,132,019
Exxon Corporation 116,500 8,628,281
Mobil Corporation 69,000 6,658,500
Royal Dutch Petroleum Company
New York Registry Shares 169,000 10,129,438
--------------
38,827,738
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 0.1%
Burlington Resources, Inc. 36,000 1,255,500
OIL WELL EQUIPMENT & SERVICE 1.3%
Halliburton Company 252,000 9,497,250
Nabors Industries, Inc. (b) 77,000 1,746,938
--------------
11,244,188
PAPER & FOREST PRODUCTS 1.6%
Georgia-Pacific Corporation 90,000 3,571,875
International Paper Company 193,000 10,156,625
--------------
13,728,500
PERSONAL & COMMERCIAL LENDING 0.4%
Associates First Capital Corporation 103,000 3,759,500
RETAIL - DRUG STORE 0.7%
CVS Corporation 85,000 3,692,188
Walgreen Company 102,800 2,589,275
--------------
6,281,463
RETAIL - FOOD CHAIN 0.7%
The Kroger Company (b) 168,000 3,496,500
Safeway, Inc. (b) 68,000 2,401,250
--------------
5,897,750
RETAIL - MAJOR CHAIN 2.8%
Dayton Hudson Corporation 144,000 9,306,000
Wal-Mart Stores, Inc. 257,000 14,568,688
--------------
23,874,688
RETAIL - RESTAURANT 0.8%
McDonald's Corporation 158,000 6,517,500
RETAIL - SPECIALTY 3.8%
Best Buy Company, Inc. (b) 60,200 3,344,863
Gap, Inc. 45,000 1,670,625
The Home Depot, Inc. 119,000 8,984,500
Lowe's Companies, Inc. 155,000 8,525,000
Tandy Corporation 159,000 10,007,062
--------------
32,532,050
SOAP & CLEANING PREPARATION 1.9%
Colgate Palmolive Company 94,000 5,687,000
The Procter & Gamble Company 100,000 10,487,500
--------------
16,174,500
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
STRONG GROWTH AND INCOME FUND (continued)
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATION EQUIPMENT 5.8%
Lucent Technologies, Inc. 202,000 $ 12,978,500
Motorola, Inc. 162,000 15,784,875
Nokia Corporation Sponsored ADR 57,000 6,587,063
Nortel Networks Corporation 140,000 8,671,250
Tellabs, Inc. (b) 93,500 5,913,875
--------------
49,935,563
TELECOMMUNICATIONS - CELLULAR 0.5%
Vodafone AirTouch PLC Sponsored ADR 85,000 4,074,688
TELECOMMUNICATIONS - SERVICES 6.0%
AT&T Corporation 275,000 12,856,250
Allied Riser Communications Corporation (b) 6,000 108,375
Bell Atlantic Corporation 119,000 7,727,562
MCI WorldCom, Inc. (b) 169,153 14,515,442
MediaOne Group, Inc. (b) 49,000 3,482,062
Sprint Corporation 169,000 12,558,812
--------------
51,248,503
TELEPHONE 0.8%
SBC Communications, Inc. 128,951 6,568,441
- -----------------------------------------------------------------------------------------
Total Common Stocks (Cost $616,730,014) 854,725,803
- -----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 0.8%
COMMERCIAL PAPER 0.1%
INTEREST BEARING, DUE UPON DEMAND
Pitney Bowes Credit Corporation, 5.01% $ 11,300 11,300
Warner Lambert Company, 4.99% 453,600 453,600
Wisconsin Electric Power Company, 4.99% 111,300 111,300
--------------
576,200
REPURCHASE AGREEMENTS 0.7%
Barclays Capital, Inc. (Dated 10/29/99),
5.22%, Due 11/01/99 (Repurchase proceeds
$5,802,523); Collateralized by: United States
Treasury Notes (e) 5,800,000 5,800,000
- -----------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $6,376,200) 6,376,200
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Total Investments in Securities (Cost $623,106,214) 100.0% 861,102,003
Other Assets and Liabilities, Net 0.0% 360,279
- -----------------------------------------------------------------------------------------
NET ASSETS 100.0% $ 861,462,282
=========================================================================================
<CAPTION>
WRITTEN OPTIONS ACTIVITY
- -----------------------------------------------------------------------------------------
Contracts Premiums
- -----------------------------------------------------------------------------------------
Options outstanding at beginning of year -- $ --
Options written during the year 700 557,881
Options closed (700) (557,881)
Options expired -- --
Options exercised -- --
--------- --------------
Options outstanding at end of year -- $ --
========= ==============
Closed options resulted in a capital loss of $109,219.
<CAPTION>
- -----------------------------------------------------------------------------------------
STRONG LIMITED RESOURCES FUND
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 94.5%
CHEMICAL - SPECIALTY 4.6%
Cabot Corporation 5,000 $ 93,125
OM Group, Inc. 2,000 75,000
Praxair, Inc. 2,500 116,875
--------------
285,000
DIVERSIFIED OPERATIONS 3.7%
E.I. Du Pont de Nemours & Company 3,500 225,531
METALS & MINING 3.5%
Alcoa, Inc. 2,100 127,575
Phelps Dodge Corporation 1,500 84,563
--------------
212,138
NATURAL GAS DISTRIBUTION 18.5%
Coastal Corporation 6,000 252,750
El Paso Energy Corporation 5,000 205,000
Enron Corporation 5,000 199,688
Equitable Resources, Inc. 2,500 91,250
MCN Energy Group, Inc. 5,000 122,188
Questar Corporation 9,000 162,000
Western Gas Resources, Inc. 6,000 98,625
--------------
1,131,501
OIL - INTERNATIONAL INTEGRATED 10.9%
Chevron Corporation 3,400 310,463
Mobil Corporation 2,000 193,000
Royal Dutch Petroleum Company -
New York Registry Shares 2,700 161,831
--------------
665,294
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 21.8%
Anadarko Petroleum Corporation 4,800 147,900
Apache Corporation 5,000 195,000
Devon Energy Corporation 5,000 194,375
EOG Resources, Inc. 6,000 124,875
Gulf Canada Resources, Ltd. ADR (b) 37,000 145,687
Harken Energy Corporation (b) 40,000 40,000
Newfield Exploration Company (b) 5,000 147,187
Ocean Energy, Inc. (b) 10,000 91,875
Union Pacific Resources Group, Inc. 7,000 101,500
Vastar Resources, Inc. 2,400 141,750
--------------
1,330,149
OIL - NORTH AMERICAN INTEGRATED 9.7%
Amerada Hess Corporation 3,500 200,812
Transmontaigne, Inc. (b) 12,000 139,500
Unocal Corporation 3,500 120,750
USX-Marathon Group 4,500 131,063
--------------
592,125
OIL WELL EQUIPMENT & SERVICE 14.0%
Cooper Cameron Corporation (b) 4,300 166,356
ENSCO International, Inc. 8,000 155,000
Halliburton Company 3,200 120,600
Nabors Industries, Inc. (b) 6,500 147,469
Schlumberger, Ltd. 2,100 127,181
Smith International, Inc. (b) 4,000 138,250
--------------
854,856
PAPER & FOREST PRODUCTS 6.5%
Kimberly-Clark Corporation 1,500 94,687
The Mead Corporation 2,500 90,000
Willamette Industries, Inc. 5,200 216,125
--------------
400,812
STEEL 1.3%
AK Steel Holding Corporation (b) 4,500 77,906
- -----------------------------------------------------------------------------------------
Total Common Stocks (Cost $5,352,887) 5,775,312
- -----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 5.3%
COMMERCIAL PAPER
INTEREST BEARING, DUE UPON DEMAND
Warner Lambert Company, 4.99% $ 144,300 144,300
Wisconsin Electric Power Company, 4.99% 176,900 176,900
- -----------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $321,200) 321,200
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Total Investments in Securities (Cost $5,674,087) 99.8% 6,096,512
Other Assets and Liabilities, Net 0.2% 10,696
- -----------------------------------------------------------------------------------------
NET ASSETS 100.0% $ 6,107,208
=========================================================================================
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1999
- -----------------------------------------------------------------------------------------
STRONG TOTAL RETURN FUND
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS 96.9%
BANK - MONEY CENTER 4.3%
The Chase Manhattan Corporation 275,000 $ 24,028,125
Citigroup, Inc. 300,000 16,237,500
J.P. Morgan & Company, Inc. 105,000 13,741,875
--------------
54,007,500
BANK - SUPER REGIONAL 2.1%
Fleet Boston Corporation 140,000 6,107,500
Mellon Financial Corporation 300,000 11,081,250
Northern Trust Company 90,000 8,690,625
--------------
25,879,375
BROKERAGE & INVESTMENT MANAGEMENT 1.3%
The Charles Schwab Corporation 40,000 1,557,500
The Goldman Sachs Group, Inc. 115,000 8,165,000
Morgan Stanley, Dean Witter & Company 55,000 6,067,188
--------------
15,789,688
COMMERCIAL SERVICE 1.1%
Omnicom Group, Inc. 115,000 10,120,000
Paychex, Inc. 100,000 3,937,500
--------------
14,057,500
COMPUTER - MANUFACTURERS 2.1%
Dell Computer Corporation (b) 100,000 4,012,500
Sun Microsystems, Inc. (b) 210,000 22,220,625
--------------
26,233,125
COMPUTER - PERIPHERAL EQUIPMENT 1.8%
EMC Communications Corporation (b) 175,000 12,775,000
Lexmark International Group, Inc. Class A (b) 120,000 9,367,500
--------------
22,142,500
COMPUTER SERVICE 0.3%
Automatic Data Processing, Inc. 75,000 3,614,063
COMPUTER SOFTWARE 9.8%
Cisco Systems, Inc. (b) 865,000 64,010,000
Foundry Networks, Inc. (b) 20,000 3,790,000
Microsoft Corporation (b) 415,000 38,413,437
Oracle Systems Corporation (b) 230,000 10,939,375
Veritas Software Corporation (b) 50,000 5,393,750
--------------
122,546,562
DIVERSIFIED OPERATIONS 0.9%
Allied Signal, Inc. 120,000 6,832,500
Minnesota Mining & Manufacturing Company 50,000 4,753,125
--------------
11,585,625
ELECTRICAL EQUIPMENT 5.1%
General Electric Company 325,000 44,057,813
Hitachi, Ltd. ADR 130,000 14,137,500
Honeywell, Inc. 30,000 3,163,125
Parker-Hannifin Corporation 50,000 2,290,625
--------------
63,649,063
ELECTRONIC PRODUCTS - MISCELLANEOUS 1.5%
General Motors Corporation Class H (b) 120,000 8,737,500
Solectron Corporation (b) 130,000 9,782,500
--------------
18,520,000
ELECTRONICS - SEMICONDUCTOR EQUIPMENT 2.4%
ASM Lithography Holding NV (b) 145,000 10,530,625
Applied Materials, Inc. (b) 90,000 8,083,125
KLA-Tencor Corporation (b) 70,000 5,543,125
Teradyne, Inc. (b) 170,000 6,545,000
--------------
30,701,875
ELECTRONICS - SEMICONDUCTOR MANUFACTURING 9.4%
Analog Devices, Inc. (b) 65,000 3,453,125
Broadcom Corporation (b) 40,000 5,112,500
Intel Corporation 390,000 30,200,625
Maxim Integrated Products, Inc. (b) 100,000 7,893,750
Micron Technology, Inc. (b) 150,000 10,696,875
STMicroelectronics NV 145,000 13,176,875
Texas Instruments, Inc. 380,000 34,105,000
Xilinx, Inc. (b) 175,000 13,759,375
--------------
118,398,125
FINANCE - MISCELLANEOUS 1.2%
American Express Company 95,000 14,630,000
FOOD 0.6%
Kellogg Company 200,000 7,962,500
HEALTHCARE - BIOMEDICAL/GENETIC 1.7%
Amgen, Inc. (b) 120,000 9,570,000
Biogen, Inc. (b) 160,000 11,860,000
--------------
21,430,000
HEALTHCARE - DRUG/DIVERSIFIED 6.4%
Bristol-Myers Squibb Company 330,000 25,348,125
Johnson & Johnson 250,000 26,187,500
Merck & Company, Inc. 270,000 21,481,875
Pfizer, Inc. 190,000 7,505,000
--------------
80,522,500
HEALTHCARE - INSTRUMENTATION 0.1%
Medtronic, Inc. 50,000 1,731,250
HOUSEHOLD APPLIANCES & FURNISHINGS 2.0%
Sony Corporation Sponsored ADR 155,000 24,761,250
INSURANCE - LIFE 0.7%
Jefferson-Pilot Corporation 95,000 7,130,937
Lincoln National Corporation 50,000 2,306,250
--------------
9,437,187
INSURANCE - PROPERTY & CASUALTY 0.4%
American International Group, Inc. 50,000 5,146,875
INTERNET - E*COMMERCE 0.5%
Internet Capital Group, Inc. (b) 50,000 5,818,750
INTERNET - ISP/CONTENT 2.3%
America Online, Inc. (b) 110,000 14,265,625
Yahoo! Inc. (b) 80,000 14,325,000
--------------
28,590,625
INTERNET - NETWORK SEC/SOLUTIONS 2.1%
Juniper Networks, Inc. (b) 95,000 26,184,375
MEDIA - PUBLISHING 0.7%
Tribune Company 150,000 9,000,000
MEDIA - RADIO/TV 2.3%
AMFM, Inc. (b) 200,000 14,000,000
AT&T Corporation-Liberty Media Group Class A (b) 130,000 5,159,375
CBS Corporation (b) 160,000 7,810,000
Clear Channel Communications, Inc. (b) 20,000 1,607,500
--------------
28,576,875
MORTGAGE & RELATED SERVICE 0.6%
Federal National Mortgage Association 100,000 7,075,000
NATURAL GAS DISTRIBUTION 0.9%
Enron Corporation 270,000 10,783,125
OIL - INTERNATIONAL INTEGRATED 0.8%
Mobil Corporation 25,000 2,412,500
Texaco, Inc. 125,000 7,671,875
--------------
10,084,375
OIL - NORTH AMERICAN EXPLORATION & PRODUCTION 0.3%
Apache Corporation 100,000 3,900,000
OIL - NORTH AMERICAN INTEGRATED 1.0%
Atlantic Richfield Company 40,000 3,727,500
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
STRONG TOTAL RETURN FUND (continued)
- -----------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Kerr McGee Corporation 140,000 $ 7,525,000
USX-Marathon Group 50,000 1,456,250
--------------
12,708,750
OIL WELL EQUIPMENT & SERVICE 1.3%
Baker Hughes, Inc. 305,000 8,520,937
Halliburton Company 135,000 5,087,812
Schlumberger, Ltd. 55,000 3,330,938
--------------
16,939,687
RETAIL - DEPARTMENT STORE 1.3%
Kohl's Corporation (b) 215,000 16,084,687
RETAIL - DRUG STORE 0.3%
Walgreen Company 125,000 3,148,437
RETAIL - MAJOR CHAIN 2.2%
Wal-Mart Stores, Inc. 485,000 27,493,438
RETAIL - SPECIALTY 4.1%
The Home Depot, Inc. 324,999 24,537,425
Lowe's Companies, Inc. 200,000 11,000,000
Tandy Corporation 260,000 16,363,750
--------------
51,901,175
SOAP & CLEANING PREPARATION 0.9%
The Procter & Gamble Company 110,000 11,536,250
TELECOMMUNICATION EQUIPMENT 12.1%
General Instrument Corporation (b) 125,000 6,726,562
JDS Uniphase Corporation (b) 330,000 55,068,750
Lucent Technologies, Inc. 215,000 13,813,750
Motorola, Inc. 190,000 18,513,125
Nokia Corporation Sponsored ADR 140,000 16,178,750
Nortel Networks Corporation 380,000 23,536,250
Tellabs, Inc. (b) 280,000 17,710,000
--------------
151,547,187
TELECOMMUNICATIONS - CELLULAR 2.9%
Sprint Corporation - PCS Group (b) 200,000 16,587,500
VoiceStream Wireless Corporation (b) 200,000 19,750,000
--------------
36,337,500
TELECOMMUNICATIONS - SERVICES 4.6%
COLT Telecom Group PLC Sponsored ADR (b) 90,000 10,665,000
Global Crossing, Ltd. (b) 100,000 3,462,500
MCI WorldCom, Inc. (b) 120,000 10,297,500
Nextel Communications, Inc. Class A (b) 120,000 10,342,500
Nippon Telegraph & Telephone Corporation
Sponsored ADR 155,000 11,993,125
Sprint Corporation 60,000 4,458,750
Williams Communications Group, Inc. (b) 213,400 6,802,125
--------------
58,021,500
TELEPHONE 0.5%
Alltel Corporation 50,000 4,162,500
Cincinnati Bell, Inc. 100,000 2,081,250
--------------
6,243,750
- -----------------------------------------------------------------------------------------
Total Common Stocks (Cost $913,508,385) 1,214,722,049
- -----------------------------------------------------------------------------------------
CONVERTIBLE BONDS 1.2%
Exodus Communications, Inc. Subordinated Notes,
5.00%, Due 3/15/06 $ 2,000,000 7,660,000
Veritas Software Corporation/Veritas Operating
Corporation Subordinated Notes,
1.856%, Due 8/13/06 5,000,000 6,987,500
- -----------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $10,760,037) 14,647,500
- -----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 5.6%
COMMERCIAL PAPER 0.2%
INTEREST BEARING, DUE UPON DEMAND
Pitney Bowes Credit Corporation, 5.01% 1,057,700 1,057,700
Warner Lambert Company, 4.99% 1,465,900 1,465,900
Wisconsin Electric Power Company, 4.99% 405,900 405,900
--------------
2,929,500
REPURCHASE AGREEMENTS 5.2%
Barclays Capital, Inc. (Dated 10/29/99), 5.22%,
Due 11/01/99 (Repurchase proceeds
$65,428,449); Collateralized by:
United States Treasury Notes (e) 65,400,000 65,400,000
UNITED STATES GOVERNMENT & AGENCY ISSUES 0.2%
United States Treasury Bills, Due 11/18/99 (c) 2,000,000 1,995,968
- -----------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $70,325,108) 70,325,468
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Total Investments in Securities
(cost $994,593,530) 103.7% 1,299,695,017
Other Assets and Liabilities, Net (3.7%) (46,470,823)
- -----------------------------------------------------------------------------------------
NET ASSETS 100.0% $1,253,224,194
=========================================================================================
<CAPTION>
WRITTEN OPTIONS ACTIVITY
- -----------------------------------------------------------------------------------------
Contracts Premiums
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at beginning of year 200 $ 254,966
Options written during the year 52,735 65,528,571
Options closed (44,405) (58,745,149)
Options expired 0 0
Options exercised 0 0
--------- --------------
Options outstanding at end of year 8,530 $ 7,038,388
========= ==============
Closed written options resulted in a capital loss of $5,690,684.
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1999
- -----------------------------------------------------------------------------------------
STRONG TOTAL RETURN FUND (continued)
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
WRITTEN OPTIONS DETAIL
- -----------------------------------------------------------------------------------------
Contracts
(100 shares Value
per contract) Note 2)
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Analog Devices, Inc.
(Strike Price is $45. Expiration Date is
1/21/00. Premium Received is $690,523) 650 ($ 715,000)
Baker Hughes, Inc.
(Strike Price is $25. Expiration Date is
1/21/00. Premium Received is $1,434,122) 2150 (994,375)
Biogen, Inc.
(Strike Price is $80. Expiration Date is
1/21/00. Premium Received is $185,684) 130 (60,125)
Broadcom Corporation
(Strike Price is $115. Expiration Date is
1/21/00. Premium Received is $445,635) 200 (428,750)
Dell Computer Corporation
(Strike Price is $35. Expiration Date is
1/21/00. Premium Received is $865,721) 1000 (725,000)
Enron Corporation
(Strike Price is $35. Expiration Date is
1/21/00. Premium Received is $705,719) 1450 (870,000)
Halliburton Company
(Strike Price is $35. Expiration Date is
1/21/00. Premium Received is $615,529) 650 (341,250)
(Strike Price is $40. Expiration Date is
1/21/00. Premium Received is $556,005) 700 (194,688)
Honeywell, Inc.
(Strike Price is $105. Expiration Date is
2/18/00. Premium Received is $232,042) 150 (136,875)
Medtronic, Inc.
(Strike Price is $30. Expiration Date is
1/21/00. Premium Received is $133,196) 200 (123,750)
Schlumberger, Ltd.
(Strike Price is $55. Expiration Date is
1/21/00. Premium Received is $573,956) 550 (453,750)
Texas Instruments, Inc.
(Strike Price is $75. Expiration Date is
1/21/00. Premium Received is $378,488) 250 (448,437)
(Strike Price is $105. Expiration Date is
1/21/00. Premium Received is $221,768) 450 (154,688)
----- --------------
8,530 ($ 5,646,688)
===== ==============
</TABLE>
- --------------------------------------------------------------------------------
LEGEND
- --------------------------------------------------------------------------------
(a) Short-term investments include any security which has a remaining 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) See note 2(I) of notes to financial statements.
(f) When-issued security.
Percentages are stated as a percent of net assets.
See Notes to Financial Statements.
28
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Amounts)
STRONG AMERICAN STRONG ASSET STRONG BLUE CHIP STRONG EQUITY
UTILITIES FUND ALLOCATION FUND 100 FUND INCOME FUND
-------------- --------------- ---------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in Securities, at Value
(Cost of $199,800, $259,635, $398,754 and
$119,088, respectively) $ 242,019 $ 342,552 $ 476,948 $ 182,001
Receivable for Securities Sold 3,706 3,677 7,705 643
Receivable for Fund Shares Sold -- -- 65 10
Dividends and Interest Receivable 521 2,830 304 178
Other Assets 10 -- 10 31
--------- --------- --------- ---------
Total Assets 246,256 349,059 485,032 182,863
LIABILITIES:
Payable for Securities Purchased 1,446 4,848 -- 1,049
Payable for Fund Shares Redeemed 47 41 82 1
Accrued Operating Expenses and Other Liabilities 32 262 110 35
--------- --------- --------- ---------
Total Liabilities 1,525 5,151 192 1,085
--------- --------- --------- ---------
NET ASSETS $ 244,731 $ 343,908 $ 484,840 $ 181,778
========= ========= ========= =========
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $ 180,248 $ 250,246 $ 410,256 $ 114,632
Accumulated Net Investment Income (Loss) 113 1,331 -- --
Accumulated Net Realized Gain (Loss) 22,151 9,687 (3,610) 4,233
Net Unrealized Appreciation 42,219 82,644 78,194 62,913
--------- --------- --------- ---------
Net Assets $ 244,731 $ 343,908 $ 484,840 $ 181,778
========= ========= ========= =========
Capital Shares Outstanding (Unlimited Number Authorized) 14,242 13,801 26,793 8,832
NET ASSET VALUE PER SHARE $ 17.18 $ 24.92 $ 18.10 $ 20.58
========= ========= ========= =========
</TABLE>
29
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (continued)
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Amounts)
STRONG GROWTH STRONG LIMITED STRONG TOTAL
AND INCOME FUND RESOURCES FUND RETURN FUND
--------------- -------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments in Securities, at Value
(Cost of $623,106, $5,674 and $994,594, respectively) $861,102 $6,097 $1,299,695
Receivable for Securities Sold 11,911 -- 18,545
Receivable for Fund Shares Sold 531 -- 18
Dividends and Interest Receivable 507 3 467
Other Assets 26 18 113
-------- ------- ----------
Total Assets 874,077 6,118 1,318,838
LIABILITIES:
Payable for Securities Purchased 12,347 -- 59,870
Written Options, at Value
(Premiums Received of $0, $0 and $7,038, respectively) -- -- 5,647
Payable for Fund Shares Redeemed 113 -- 10
Accrued Operating Expenses and Other Liabilities 155 11 87
-------- ------- ----------
Total Liabilities 12,615 11 65,614
-------- ------- ----------
NET ASSETS $861,462 $6,107 $1,253,224
======== ====== ==========
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $625,537 $6,817 $ 726,416
Accumulated Net Realized Gain (Loss) (2,071) (1,133) 220,315
Net Unrealized Appreciation 237,996 423 306,493
-------- ------- ----------
Net Assets $861,462 $6,107 $1,253,224
======== ====== ==========
Capital Shares Outstanding (Unlimited Number Authorized) 34,099 709 30,186
NET ASSET VALUE PER SHARE $25.26 $8.62 $41.52
======== ====== ==========
</TABLE>
30
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1999
<TABLE>
<CAPTION>
(In Thousands)
STRONG AMERICAN STRONG ASSET STRONG BLUE STRONG EQUITY
UTILITIES FUND ALLOCATION FUND CHIP 100 FUND INCOME FUND
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
INCOME:
Dividends (net of foreign withholding taxes of $46,
$32, $0 and $12, respectively) $ 7,332 $ 2,660 $ 2,666 $ 2,472
Interest 564 10,538 332 70
--------- --------- --------- ---------
Total Income 7,896 13,198 2,998 2,542
EXPENSES:
Investment Advisory Fees 1,822 2,646 2,605 1,472
Custodian Fees 26 20 71 9
Shareholder Servicing Costs 467 597 939 355
Professional Fees 24 31 24 22
Reports to Shareholders 87 134 231 67
Federal and State Registration Fees 39 30 129 31
Other 11 17 10 19
--------- --------- --------- ---------
Total Expenses 2,476 3,475 4,009 1,975
--------- --------- --------- ---------
NET INVESTMENT INCOME (LOSS) 5,420 9,723 (1,011) 567
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 22,724 9,361 (1,779) 5,172
Futures Contracts and Options -- 531 -- (50)
--------- --------- --------- ---------
Net Realized Gain (Loss) 22,724 9,892 (1,779) 5,122
Net Change in Unrealized Appreciation/Depreciation on:
Investments (2,801) 42,392 70,997 27,461
Futures Contracts and Options -- (1,134) -- --
--------- --------- --------- ---------
Net Change in Unrealized Appreciation/Depreciation (2,801) 41,258 70,997 27,461
--------- --------- --------- ---------
NET GAIN ON INVESTMENTS 19,923 51,150 69,218 32,583
--------- --------- --------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 25,343 $ 60,873 $ 68,207 $ 33,150
========= ========= ========= =========
</TABLE>
31
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF OPERATIONS (continued)
- --------------------------------------------------------------------------------
For the Year Ended October 31, 1999
<TABLE>
<CAPTION>
(In Thousands)
STRONG GROWTH STRONG LIMITED STRONG TOTAL
AND INCOME FUND RESOURCES FUND RETURN FUND
--------------- -------------- ------------
<S> <C> <C> <C>
INCOME:
Dividends (net of foreign withholding taxes of $83,
$0 and $3, respectively) $ 6,107 $ 79 $ 7,212
Interest 194 21 3,014
--------- --------- ---------
Total Income 6,301 100 10,226
EXPENSES:
Investment Advisory Fees 5,169 57 8,908
Custodian Fees 30 1 80
Shareholder Servicing Costs 1,530 14 1,543
Professional Fees 31 9 46
Reports to Shareholders 326 2 359
Federal and State Registration Fees 113 27 36
Other 34 5 46
--------- --------- ---------
Total Expenses 7,233 115 11,018
--------- --------- ---------
NET INVESTMENT LOSS (932) (15) (792)
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 5,883 (465) 241,788
Futures Contracts and Options (109) -- (6,933)
--------- --------- ---------
Net Realized Gain (Loss) 5,774 (465) 234,855
Net Change in Unrealized Appreciation/Depreciation on:
Investments 162,221 1,071 143,190
Futures Contracts and Options -- -- 1,392
--------- --------- ---------
Net Change in Unrealized Appreciation/Depreciation 162,221 1,071 144,582
--------- --------- ---------
NET GAIN ON INVESTMENTS 167,995 606 379,437
--------- --------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 167,063 $ 591 $ 378,645
========= ========= =========
</TABLE>
32
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands)
STRONG AMERICAN STRONG ASSET
UTILITIES FUND ALLOCATION FUND
------------------------------- -------------------------------
Year Ended Year Ended Year Ended Year Ended
Oct. 31, 1999 Oct. 31, 1998 Oct. 31, 1999 Oct. 31, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 5,420 $ 4,546 $ 9,723 $ 7,355
Net Realized Gain 22,724 8,595 9,892 798
Net Change in Unrealized Appreciation/Depreciation (2,801) 26,422 41,258 23,055
--------- --------- --------- ---------
Net Increase in Net Assets Resulting from Operations 25,343 39,563 60,873 31,208
DISTRIBUTIONS:
From Net Investment Income (5,845) (4,541) (9,224) (7,231)
From Net Realized Gains (8,562) (8,984) -- (25,895)
In Excess of Net Realized Gains -- -- -- (281)
--------- --------- --------- ---------
Total Distributions (14,407) (13,525) (9,224) (33,407)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 108,126 167,228 61,188 39,754
Proceeds from Reinvestment of Distributions 13,629 12,867 8,844 32,136
Payment for Shares Redeemed (102,225) (126,663) (66,165) (58,057)
--------- --------- --------- ---------
Net Increase in Net Assets from Capital Share Transactions 19,530 53,432 3,867 13,833
--------- --------- --------- ---------
TOTAL INCREASE IN NET ASSETS 30,466 79,470 55,516 11,634
NET ASSETS:
Beginning of Year 214,265 134,795 288,392 276,758
--------- --------- --------- ---------
End of Year $ 244,731 $ 214,265 $ 343,908 $ 288,392
========= ========= ========= =========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 6,418 10,931 2,544 1,850
Issued in Reinvestment of Distributions 810 859 370 1,623
Redeemed (6,123) (8,303) (2,752) (2,743)
--------- --------- --------- ---------
Net Increase in Shares of the Fund 1,105 3,487 162 730
========= ========= ========= =========
</TABLE>
33
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands)
STRONG BLUE STRONG EQUITY
CHIP 100 FUND INCOME FUND
------------------------------- -------------------------------
Year Ended Year Ended Year Ended Year Ended
Oct. 31, 1999 Oct. 31, 1998 Oct. 31, 1999 Oct. 31, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) ($ 1,011) $ 288 $ 567 $ 1,095
Net Realized Gain (Loss) (1,779) (1,799) 5,122 (473)
Net Change in Unrealized Appreciation/Depreciation 70,997 7,230 27,461 19,078
--------- --------- --------- ---------
Net Increase in Net Assets Resulting from Operations 68,207 5,719 33,150 19,700
DISTRIBUTIONS:
From Net Investment Income (6) (296) (639) (1,075)
From Net Realized Gains -- -- -- (5,636)
In Excess of Net Realized Gains -- -- -- (416)
--------- --------- --------- ---------
Total Distributions (6) (296) (639) (7,127)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 506,740 112,429 63,876 88,635
Proceeds from Reinvestment of Distributions 5 278 612 6,807
Payment for Shares Redeemed (180,014) (33,375) (85,977) (71,745)
--------- --------- --------- ---------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 326,731 79,332 (21,489) 23,697
--------- --------- --------- ---------
TOTAL INCREASE IN NET ASSETS 394,932 84,755 11,022 36,270
NET ASSETS:
Beginning of Year 89,908 5,153 170,756 134,486
--------- --------- --------- ---------
End of Year $ 484,840 $ 89,908 $ 181,778 $ 170,756
========= ========= ========= =========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 30,780 8,949 3,277 5,275
Issued in Reinvestment of Distributions -- 22 31 436
Redeemed (10,779) (2,674) (4,402) (4,278)
--------- --------- --------- ---------
Net Increase (Decrease) in Shares of the Fund 20,001 6,297 (1,094) 1,433
========= ========= ========= =========
</TABLE>
34
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands)
STRONG GROWTH STRONG LIMITED
AND INCOME FUND RESOURCES FUND
------------------------------- -------------------------------
Year Ended Year Ended Year Ended Year Ended
Oct. 31, 1999 Oct. 31, 1998 Oct. 31, 1999 Oct. 31, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income (Loss) ($ 932) $ 447 ($ 15) ($ 23)
Net Realized Gain (Loss) 5,774 (7,055) (465) (668)
Net Change in Unrealized Appreciation/Depreciation 162,221 53,134 1,071 (373)
--------- --------- --------- ---------
Net Increase (Decrease) in Net Assets Resulting
from Operations 167,063 46,526 591 (1,064)
DISTRIBUTIONS:
From Net Investment Income (59) (478) -- (1)
In Excess of Net Investment Income -- -- (8) --
From Net Realized Gains -- (9,141) -- (2)
In Excess of Net Realized Gains -- (797) -- --
--------- --------- --------- ---------
Total Distributions (59) (10,416) (8) (3)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 493,658 266,590 6,191 4,984
Proceeds from Reinvestment of Distributions 57 10,114 6 3
Payment for Shares Redeemed (198,145) (140,926) (5,619) (4,319)
--------- --------- --------- ---------
Net Increase in Net Assets from Capital Share Transactions 295,570 135,778 578 668
--------- --------- --------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS 462,574 171,888 1,161 (399)
NET ASSETS:
Beginning of Year 398,888 227,000 4,946 5,345
--------- --------- --------- ---------
End of Year $ 861,462 $ 398,888 $ 6,107 $ 4,946
========= ========= ========= =========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 21,496 14,701 755 570
Issued in Reinvestment of Distributions 3 632 1 --
Redeemed (8,695) (7,921) (682) (497)
--------- --------- --------- ---------
Net Increase in Shares of the Fund 12,804 7,412 74 73
========= ========= ========= =========
</TABLE>
35
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands)
STRONG TOTAL
RETURN FUND
-------------------------------
Year Ended Year Ended
Oct. 31, 1999 Oct. 31, 1998
------------- -------------
<S> <C> <C>
OPERATIONS:
Net Investment Income (Loss) ($ 792) $ 3,536
Net Realized Gain 234,855 3,209
Net Change in Unrealized Appreciation/Depreciation 144,582 99,387
---------- --------
Net Increase in Net Assets Resulting from Operations 378,645 106,132
DISTRIBUTIONS:
From Net Investment Income -- (3,788)
In Excess of Net Investment Income (195) --
From Net Realized Gains (11,003) (172,676)
In Excess of Net Realized Gains -- (2,593)
---------- --------
Total Distributions (11,198) (179,057)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 221,427 220,335
Proceeds from Reinvestment of Distributions 10,867 174,336
Payment for Shares Redeemed (209,165) (290,682)
---------- --------
Net Increase in Net Assets from Capital Share Transactions 23,129 103,989
---------- --------
TOTAL INCREASE IN NET ASSETS 390,576 31,064
NET ASSETS:
Beginning of Year 862,648 831,584
---------- --------
End of Year $1,253,224 $862,648
========== ========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 5,973 7,400
Issued in Reinvestment of Distributions 314 6,717
Redeemed (5,746) (9,929)
---------- --------
Net Increase in Shares of the Fund 541 4,188
========== ========
</TABLE>
36
See Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
October 31, 1999
1. ORGANIZATION
The accompanying financial statements represent the Strong Conservative
Equity Funds (the "Funds"), which include the following funds, each with
its own investment objectives and policies:
- Strong American Utilities Fund(3) (a series of Strong Conservative
Equity Funds, Inc.(1))
- Strong Asset Allocation Fund, Inc.(1) (2)
- Strong Blue Chip 100 Fund(2) (a series of Strong Conservative Equity
Funds, Inc.(1))
- Strong Equity Income Fund(2) (a series of Strong Conservative Equity
Funds, Inc.(1))
- Strong Growth and Income Fund(2) (a series of Strong Conservative
Equity Funds, Inc.(1))
- Strong Limited Resources Fund(2) (a series of Strong Conservative
Equity Funds, Inc.(1))
- Strong Total Return Fund, Inc.(1) (2)
(1) An open-end management investment company registered under the
Investment Company Act of 1940.
(2) Diversified Fund
(3) Non-Diversified Fund
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 -- Securities of the Funds are valued at fair value
through valuations obtained by a commercial pricing service or the
mean of the bid and asked prices when no last sales price is
available. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith under
consistently applied procedures established by and under the general
supervision of the Board of Directors. Securities which are purchased
within 60 days of their stated maturity are valued at amortized cost,
which approximates fair 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, 1999 were as follows:
<TABLE>
<CAPTION>
Aggregate Aggregate Percent of
Cost Fair Value Net Assets Liquid*
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Strong Asset Allocation Fund $23,578,815 $21,892,172 6.4% 99.8%
</TABLE>
*Percentage of restricted securities which are either Section 4(2)
commercial paper or are eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 and also have been determined to be
liquid by the Advisor based upon guidelines established by the Fund's
Board of Directors.
(B) FEDERAL INCOME AND EXCISE TAXES AND DISTRIBUTIONS TO SHAREHOLDERS --
The Funds intend 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.
Net investment income or net realized gains for financial statement
purposes 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.
Each Fund generally pays dividends from net investment income
quarterly and distributes any net capital gains that it realizes
annually.
(C) REALIZED GAINS AND LOSSES ON INVESTMENT TRANSACTIONS -- Investment
security transactions are recorded as of the trade date. 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) CERTAIN 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.
Investments in foreign denominated assets or forward currency
contracts may involve greater risks than domestic investments, due to
currency, political and economic, regulatory and market risks.
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
October 31, 1999
(E) 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. Additional securities held by
the Funds may be designated as collateral on open futures contracts.
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.
(F) OPTIONS -- The Funds may write put or call 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.
Additional securities held by the Funds may be designated as
collateral on written options.
(G) 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.
(H) 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.
(I) REPURCHASE AGREEMENTS -- The Funds may enter into repurchase
agreements with institutions that the Funds' investment advisor,
Strong Capital Management, Inc. ("the Advisor"), has determined are
creditworthy pursuant to criteria adopted by the Board of
Directors. Each repurchase agreement is recorded at cost. The Funds
require that the collateral, represented by securities (primarily
U.S. Government securities), in a repurchase transaction be
maintained in a segregated account with a custodian bank in a
manner sufficient to enable the Funds to obtain those securities in
the event of a default of the repurchase agreement. On a daily
basis, the Advisor monitors the value of the collateral, including
accrued interest, to ensure it is at least equal to the amounts
owed to the Funds under each repurchase agreement.
(J) 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 in these financial statements. Actual results could differ
from those estimates.
(K) OTHER -- 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
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 and 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%. Based on the terms of
the Advisory Agreements, advisory fees and other expenses will be waived by
the Advisor if the Fund's operating expenses exceed 2% of the average daily
net assets of the Fund. In addition, the Fund's Advisor may voluntarily
waive or absorb certain expenses at its discretion. Shareholder
recordkeeping and related service fees are based on contractually
established rates for each open and closed shareholder account. 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, 1999
totaled $488,513.
Scarborough Investment Advisors LLC 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.
38
<PAGE>
The Funds may invest cash 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 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, for the year
ended October 31, 1999 is as follows:
<TABLE>
<CAPTION>
Payable to Shareholder Servicing Unaffiliated
Advisor at and Other Expenses Directors'
October 31, 1999 Paid to Advisor Fees
---------------- --------------------- ------------
<S> <C> <C> <C>
Strong American Utilities Fund $10,968 $ 467,816 $3,481
Strong Asset Allocation Fund 13,687 607,925 4,172
Strong Blue Chip 100 Fund 13,140 915,162 2,429
Strong Equity Income Fund 20,249 359,139 3,023
Strong Growth and Income Fund 38,548 1,520,904 5,105
Strong Limited Resources Fund 3,608 14,584 1,500
Strong Total Return Fund 27,401 1,587,964 9,938
</TABLE>
4. LINE OF CREDIT
The Strong Funds have established a line of credit agreement ("LOC") with
certain financial institutions to be used for temporary or emergency
purposes, primarily for financing redemption payments. Combined borrowings
among all participating Strong Funds are subject to a $350 million cap on
the total line of credit. For individual Funds, borrowings under the LOC
are limited to either the lesser of 15% of the market value of total assets
or any explicit borrowing limits in the Funds' prospectus. Borrowings under
the LOC bear interest based on prevailing market rates as defined in the
LOC. A commitment fee of .08% per annum is incurred on the unused portion
of the line of credit and is allocated to all participating Strong Funds.
There were no borrowings by the Funds under the LOC during the year ended
October 31, 1999.
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the year
ended October 31, 1999 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 $ -- $ 181,943,152 $ -- $ 172,030,347
Strong Asset Allocation Fund 10,176,133 193,319,953 5,625,245 204,591,616
Strong Blue Chip 100 Fund -- 565,946,743 -- 251,799,399
Strong Equity Income Fund -- 58,898,198 -- 79,062,629
Strong Growth and Income Fund -- 622,945,899 -- 334,286,273
Strong Limited Resources Fund -- 3,504,678 -- 2,905,358
Strong Total Return Fund -- 4,270,990,020 -- 4,233,193,340
</TABLE>
6. INCOME TAX INFORMATION
At October 31, 1999, the investment cost, gross unrealized appreciation and
depreciation on investments and capital loss carryovers (expiring in
varying amounts through 2007) for federal income tax purposes were as
follows:
<TABLE>
<CAPTION>
Federal Tax Unrealized Unrealized Net Appreciation/ Net Capital Loss
Cost Appreciation Depreciation (Depreciation) Carryovers
----------- ------------ ------------ ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Strong American Utilities Fund $ 200,769,355 $ 47,420,371 $ 6,171,065 $ 41,249,306 $ --
Strong Asset Allocation Fund 260,480,857 91,137,961 9,066,479 82,071,482 --
Strong Blue Chip 100 Fund 400,050,377 88,148,775 11,251,573 76,897,202 2,312,330
Strong Equity Income Fund 118,964,703 63,975,054 938,919 63,036,135 --
Strong Growth and Income Fund 625,696,293 243,057,577 7,651,867 235,405,710 --
Strong Limited Resources Fund 5,696,227 812,031 411,746 400,285 1,110,232
Strong Total Return Fund 1,007,826,491 292,550,468 681,941 291,868,527 --
</TABLE>
During the year ended October 31, 1999, the Funds paid capital gains
distributions (taxable as long-term capital gains at 20%) to shareholders
as follows (unaudited): Strong American Utilities Fund $7,967,693, Strong
Asset Allocation Fund $0, Strong Blue Chip 100 Fund $0, Strong Equity
Income Fund $0, Strong Growth and Income Fund $0, Strong Limited Resources
Fund $0, and Strong Total Return Fund $11,003,156.
For corporate shareholders in the Funds, the percentages of dividend income
distributed for the year ended October 31, 1999 which is designated as
qualifying for the dividends-received deduction are as follows (unaudited):
Strong American Utilities Fund 100%, Strong Asset Allocation Fund 26.3%,
Strong Blue Chip 100 Fund 100%, Strong Equity Income Fund 100%, Strong
Growth and Income Fund 100%, Strong Limited Resources Fund 100%, and Strong
Total Return Fund 100%.
39
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STRONG AMERICAN UTILITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------------------------
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Dec. 31,
Selected Per-Share Data(a) 1999 1998 1997 1996 1995(b) 1994
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 16.31 $ 13.97 $ 12.64 $ 11.73 $ 9.46 $ 10.19
Income From Investment Operations:
Net Investment Income 0.37 0.35 0.40 0.40 0.27 0.46
Net Realized and Unrealized Gains (Losses) on Investments 1.52 3.12 1.98 0.90 2.25 (0.73)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.89 3.47 2.38 1.30 2.52 (0.27)
Less Distributions:
From Net Investment Income (0.41) (0.37) (0.38) (0.39) (0.25) (0.46)
From Net Realized Gains (0.61) (0.76) (0.67) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.02) (1.13) (1.05) (0.39) (0.25) (0.46)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 17.18 $ 16.31 $ 13.97 $ 12.64 $ 11.73 $ 9.46
===================================================================================================================================
Ratios and Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return +11.8% +25.7% +19.7% +11.2% +26.9% -2.6%
Net Assets, End of Period (In Millions) $ 245 $ 214 $ 135 $ 122 $ 92 $ 38
Ratio of Expenses to Average Net Assets without Waivers 1.0% 1.0% 1.1% 1.2% 1.2%* 1.6%
Ratio of Expenses to Average Net Assets 1.0% 1.0% 1.1% 1.2% 1.2%* 0.5%
Ratio of Net Investment Income to Average Net Assets 2.2% 2.4% 3.0% 3.2% 3.4%* 4.8%
Portfolio Turnover Rate 74.9% 69.0% 61.9% 84.0% 56.4% 105.4%
</TABLE>
STRONG ASSET ALLOCATION FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------------------------
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Dec. 31,
Selected Per-Share Data(a) 1999 1998 1997 1996 1995(b) 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 21.14 $ 21.44 $ 20.12 $ 20.31 $ 17.91 $ 19.06
Income From Investment Operations:
Net Investment Income 0.71 0.55 0.67 0.78 0.66 0.70
Net Realized and Unrealized Gains (Losses) on Investments 3.75 1.75 2.96 1.05 2.32 (0.99)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 4.46 2.30 3.63 1.83 2.98 (0.29)
Less Distributions:
From Net Investment Income (0.68) (0.54) (0.67) (0.84) (0.58) (0.70)
In Excess of Net Investment Income -- -- (0.10) -- -- --
From Net Realized Gains -- (2.04) (1.54) (1.18) -- --
In Excess of Net Realized Gains -- (0.02) -- -- -- (0.16)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.68) (2.60) (2.31) (2.02) (0.58) (0.86)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 24.92 $ 21.14 $ 21.44 $ 20.12 $ 20.31 $ 17.91
===================================================================================================================================
Ratios and Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return +21.3% +11.8% +19.3% +9.5% +16.8% -1.5%
Net Assets, End of Period (In Millions) $ 344 $ 288 $ 277 $ 263 $ 261 $ 249
Ratio of Expenses to Average Net Assets 1.1% 1.0% 1.1% 1.1% 1.2%* 1.2%
Ratio of Net Investment Income to Average Net Assets 3.0% 2.5% 3.2% 3.9% 4.1%* 3.8%
Portfolio Turnover Rate 64.7% 185.9% 276.5% 446.7% 326.8% 359.7%
</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) In 1995, the Fund changed its fiscal year end from December to October.
40
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- -------------------------------------------------------------------------------
STRONG BLUE CHIP 100 FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
---------------------------------------------
Oct. 31, Oct. 31, Oct. 31,
Selected Per-Share Data(a) 1999 1998 1997(b)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 13.24 $ 10.39 $ 10.00
Income From Investment Operations:
Net Investment Income (Loss) (0.04) 0.10 0.01
Net Realized and Unrealized Gains on Investments 4.90 2.86 0.38
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 4.86 2.96 0.39
Less Distributions:
From Net Investment Income (0.00)(c) (0.11) --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.00)(c) (0.11) --
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 18.10 $ 13.24 $ 10.39
==================================================================================================================================
Ratios and Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return +36.7% +28.6% +3.9%
Net Assets, End of Period (In Millions) $ 485 $ 90 $ 5
Ratio of Expenses to Average Net Assets without Waivers 1.2% 1.3% 2.0%*
Ratio of Expenses to Average Net Assets 1.2% 0.6% 1.0%*
Ratio of Net Investment Income (Loss) to Average Net Assets (0.3%) 0.7% 0.6%*
Portfolio Turnover Rate 75.4% 46.5% 21.5%
</TABLE>
STRONG EQUITY INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
---------------------------------------------------------
Oct. 31, Oct. 31, Oct. 31, Oct. 31,
Selected Per-Share Data(a) 1999 1998 1997 1996(d)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 17.20 $ 15.84 $ 12.03 $ 10.00
Income From Investment Operations:
Net Investment Income 0.06 0.11 0.13 0.12
Net Realized and Unrealized Gains on Investments 3.39 2.05 3.81 2.02
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 3.45 2.16 3.94 2.14
Less Distributions:
From Net Investment Income (0.07) (0.11) (0.13) (0.11)
From Net Realized Gains -- (0.64) -- --
In Excess of Net Realized Gains -- (0.05) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.07) (0.80) (0.13) (0.11)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 20.58 $ 17.20 $ 15.84 $ 12.03
==================================================================================================================================
Ratios and Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return +20.1% +14.2% +32.9% +21.5%
Net Assets, End of Period (In Millions) $ 182 $ 171 $ 134 $ 29
Ratio of Expenses to Average Net Assets 1.1% 1.1% 1.1% 1.3%*
Ratio of Net Investment Income to Average Net Assets 0.3% 0.7% 0.9% 1.6%*
Portfolio Turnover Rate 32.3% 83.2% 152.6% 158.3%
</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) For the period from June 30, 1997 (inception) to October 31, 1997.
(c) Amount calculated is less than $0.01 or 0.1%.
(d) For the period from December 31, 1995 (inception) to October 31, 1996.
41
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- -------------------------------------------------------------------------------
STRONG GROWTH AND INCOME FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
---------------------------------------------------------
Oct. 31, Oct. 31, Oct. 31, Oct. 31,
Selected Per-Share Data(a) 1999 1998 1997 1996(b)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 18.73 $ 16.35 $ 12.38 $ 10.00
Income From Investment Operations:
Net Investment Income (Loss) (0.03) 0.03 0.07 0.04
Net Realized and Unrealized Gains on Investments 6.56 3.07 3.99 2.38
- ----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 6.53 3.10 4.06 2.42
Less Distributions:
From Net Investment Income (0.00)(c) (0.03) (0.07) (0.04)
From Net Realized Gains -- (0.62) (0.02) --
In Excess of Net Realized Gains -- (0.07) -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.00)(c) (0.72) (0.09) (0.04)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 25.26 $ 18.73 $ 16.35 $ 12.38
==================================================================================================================================
Ratios and Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return +34.9% +19.7% +32.9% +24.2%
Net Assets, End of Period (In Millions) $ 861 $ 399 $ 227 $ 18
Ratio of Expenses to Average Net Assets 1.1% 1.1% 1.2% 1.9%*
Ratio of Net Investment Income (Loss) to Average Net Assets (0.1%) 0.1% 0.5% 0.6%*
Portfolio Turnover Rate 52.3% 107.5% 237.8% 174.1%
</TABLE>
STRONG LIMITED RESOURCES FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
----------------------------------------------
Oct. 31, Oct. 31, Oct. 31,
Selected Per-Share Data(a) 1999 1998 1997(d)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 7.79 $ 9.51 $ 10.00
Income From Investment Operations:
Net Investment Loss (0.02) (0.04) --
Net Realized and Unrealized Gains (Losses) on Investments 0.86 (1.68) (0.49)
- ------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.84 (1.72) (0.49)
Less Distributions:
From Net Investment Income -- (0.00)(c) --
In Excess of Net Investment Income (0.01) -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.01) (0.00)(c) --
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 8.62 $ 7.79 $ 9.51
==============================================================================================================================
Ratios and Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------
Total Return +10.8% -18.0% -4.9%
Net Assets, End of Period (In Millions) $ 6 $ 5 $ 5
Ratio of Expenses to Average Net Assets 2.0% 2.0% 2.0%*
Ratio of Net Investment Income (Loss) to Average Net Assets (0.3%) (0.4%) 0.0%*(c)
Portfolio Turnover Rate 55.4% 61.2% 1.2%
</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) For the period from December 31, 1995 (inception) to October 31, 1996.
(c) Amount calculated is less than $0.01 or 0.1%.
(d) For the period from September 30, 1997 (inception) to October 31, 1997.
42
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
STRONG TOTAL RETURN FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------------------------
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Dec. 31,
Selected Per-Share Data(a) 1999 1998 1997 1996 1995(b) 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 29.10 $ 32.66 $ 31.36 $ 28.02 $ 23.62 $ 24.30
Income From Investment Operations:
Net Investment Income (Loss) (0.03) 0.13 0.19 0.24 0.26 0.25
Net Realized and Unrealized Gains (Losses) on Investments 12.84 3.44 6.21 4.65 4.41 (0.59)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 12.81 3.57 6.40 4.89 4.67 (0.34)
Less Distributions:
From Net Investment Income -- (0.14) (0.19) (0.24) (0.26) (0.26)
In Excess of Net Investment Income (0.01) -- (0.17) (0.06) (0.01) (0.08)
From Net Realized Gains (0.38) (6.89) (4.74) (1.25) -- --
In Excess of Net Realized Gains -- (0.10) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.39) (7.13) (5.10) (1.55) (0.27) (0.34)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 41.52 $ 29.10 $ 32.66 $ 31.36 $ 28.02 $ 23.62
===================================================================================================================================
Ratios and Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return +44.3% +13.6% +23.4% +18.0% +19.8% -1.4%
Net Assets, End of Period (In Millions) $ 1,253 $ 863 $ 832 $ 760 $ 671 $ 607
Ratio of Expenses to Average Net Assets 1.0% 1.0% 1.1% 1.1% 1.1%* 1.2%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.1%) 0.4% 0.6% 0.8% 1.2%* 1.1%
Portfolio Turnover Rate 402.3% 267.8% 404.6% 502.4% 298.8% 290.4%
</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) In 1995, the Fund changed its fiscal year end from December to October.
43
See Notes to Financial Statements.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of the
Strong Conservative Equity Funds
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Strong American Utilities Fund,
Strong Blue Chip 100 Fund, Strong Equity Income Fund, Strong Growth and Income
Fund, Strong Limited Resources Fund (five of the portfolios constituting the
Strong Conservative Equity Funds, Inc.), Strong Asset Allocation Fund, Inc. and
Strong Total Return Fund, Inc. (the "Funds") at October 31, 1999, the results of
each of their operations, the changes in each of their net assets and the
financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1999 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where broker confirmations were not received, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
December 6, 1999
44
<PAGE>
DIRECTORS
Richard S. Strong
Marvin E. Nevins
William F. Vogt
Willie D. Davis
Stanley Kritzik
OFFICERS
Richard S. Strong, CHAIRMAN OF THE BOARD
Thomas M. Zoeller, VICE PRESIDENT
Dennis A. Wallestad, VICE PRESIDENT
Stephen J. Shenkenberg, VICE PRESIDENT AND SECRETARY
John S. Weitzer, VICE PRESIDENT
John W. Widmer, TREASURER
Rhonda K. Haight, ASSISTANT TREASURER
INVESTMENT ADVISOR
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
DISTRIBUTOR
Strong Investments, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
CUSTODIAN
Firstar Bank Milwaukee, N.A.
P.O. Box 701, Milwaukee, Wisconsin 53201
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
100 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. Strong
Investments, Inc. 13452L99
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
Visit our web site at
www.eStrong.com
[LOGO]
STRONG FUNDS-REGISTERED TRADEMARK-
P.O. Box 2936
Milwaukee, Wisconsin 53201
ACEQ
