STRONG TOTAL RETURN FUND INC, DEF 14A, 1995-02-16

STRONG TOTAL RETURN FUND INC
DEF 14A, 1995-02-16

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant /X/

Filed by a party other than the registrant / /

Check the appropriate box:

/ / Preliminary proxy statement

/X/ Definitive proxy statement

/ / Definitive additional materials

/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

STRONG TOTAL RETURN FUND, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

STRONG TOTAL RETURN FUND, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):

/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

- - --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- - --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-1:(1)

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(4) Proposed maximum aggregate value of transaction:

- - --------------------------------------------------------------------------------

/X/ Fee paid previously with preliminary materials.

- - --------------------------------------------------------------------------------

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

- - --------------------------------------------------------------------------------

(2) Form, schedule or registration statement no.:

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(3) Filing party:

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(4) Date filed:

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- - ---------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2

<PAGE> 1

STRONG GROWTH AND INCOME FUNDS

You are cordially invited to the

STRONG FUNDS ANNUAL MEETING
Thursday, April 13, 1995

Italian Community Center Grand Ballroom
631 East Chicago Street
Milwaukee, Wisconsin

9:00 a.m. Investment Strategy Discussion
Questions & Answers

10:00 a.m. Annual Meeting
Questions & Answers

To make a reservation, call 1-800-368-0930.

- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------

This document describes a number of important proposals affecting the Strong
Funds in which you are invested. The package also includes a proxy card that you
can use to tell us how to vote on your behalf.

Please review and consider each of the issues carefully, and then complete the
enclosed proxy card and return it in the postage-paid envelope provided.

YOUR VOTE IS IMPORTANT.

NO MATTER HOW MANY SHARES YOU OWN, PLEASE VOTE. BECAUSE WE RE-SOLICIT
SHAREHOLDERS WHO DO NOT RETURN THEIR PROXIES, YOUR PROMPTNESS SAVES YOUR FUND
THE EXPENSE OF CONDUCTING FOLLOW-UP MAILINGS AND TELEPHONE CALLS.

PLEASE REVIEW THE MATERIALS AND VOTE TODAY.

G-1

<PAGE> 2

STRONG ASSET ALLOCATION FUND, INC.
STRONG TOTAL RETURN FUND, INC.
STRONG AMERICAN UTILITIES FUND, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that an Annual Meeting of Shareholders of each Fund as
noted above will be held jointly at the Italian Community Center, 631 E. Chicago
Street, Milwaukee, Wisconsin, on Thursday, April 13, 1995, at 10:00 a.m., local
time, to consider and act upon the proposals noted below (which also constitutes
an amendment to the Total Return Fund's Bylaws where noted in the proxy
statement) and to transact such other business as may properly come before the
Meeting or any adjournments thereof. PLEASE REFER TO THE TABLE ON PAGE 5 THAT
INDICATES WHICH FUND'S SHAREHOLDERS ARE SOLICITED WITH RESPECT TO EACH PROPOSAL.

1. To elect directors;
2. To ratify Coopers & Lybrand L.L.P. as independent public accountants;

3A. To adopt and ratify a revised Advisory Agreement;

3B. To approve and ratify the Subadvisory Agreement;

4. To adopt revised Articles of Incorporation; and

5. To amend the investment objective.

ADOPTION OF STANDARD INVESTMENT LIMITATIONS:

6. To amend or adopt a fundamental investment limitation concerning:
A. Diversification;
B. Concentration;
C. Lending;
D. Purchasing or selling real estate;
E. Borrowing;
F. Underwriting securities;
G. Purchasing or selling financial commodities;
H. Issuing senior securities; and
I. Investing in another open-end investment company with substantially the
same investment objective and policies (pooling funds).

7. To eliminate fundamental investment limitations concerning:
A. Short sales;
B. Use of margin;
C. Illiquid and restricted securities;
D. Purchase of investment company securities;
E. Purchasing securities of newly-formed issuers;
F. Investing in oil and gas interests;
G. Futures and options;
H. Pledging assets;
I. Securities investments of directors and officers;

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<PAGE> 3

J. Fund portfolio transactions with directors and officers;
K. Investing in securities for the purpose of management or control; and
L. Participating on a joint basis in any trading account.

Only shareholders of record at the close of business on February 16, 1995, the
record date for this Meeting, shall be entitled to notice of, and to vote at,
the Meeting or any adjournments thereof.

YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
- - --------------------------------------------------------------------------------

AS A SHAREHOLDER OF A FUND, YOU ARE ASKED TO ATTEND THE MEETING EITHER IN PERSON
OR BY PROXY. IF YOU ARE UNABLE TO ATTEND THE MEETING IN PERSON, WE URGE YOU TO
COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE
PREPAID ENVELOPE. YOUR PROMPT RETURN OF THE PROXY WILL HELP ASSURE A QUORUM AT
THE MEETING AND AVOID ADDITIONAL EXPENSES TO THE FUNDS ASSOCIATED WITH FURTHER
SOLICITATION. SENDING IN YOUR PROXY WILL NOT PREVENT YOU FROM VOTING YOUR SHARES
IN PERSON AT THE MEETING AND YOU MAY REVOKE YOUR PROXY BY ADVISING THE SECRETARY
OF THE FUNDS IN WRITING (BY SUBSEQUENT PROXY OR OTHERWISE) OF SUCH REVOCATION AT
ANY TIME BEFORE IT IS VOTED.

- - --------------------------------------------------------------------------------

By Order of the Board of Directors,

ANN E. OGLANIAN
Secretary

Menomonee Falls, Wisconsin
February 16, 1995

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<PAGE> 4

STRONG ASSET ALLOCATION FUND, INC.
STRONG TOTAL RETURN FUND, INC.
STRONG AMERICAN UTILITIES FUND, INC.
100 HERITAGE RESERVE
MENOMONEE FALLS, WISCONSIN 53051

PROXY STATEMENT

The enclosed proxy is being solicited by and on behalf of the Board of
Directors (the Directors) of the Funds, as set forth above (each a Fund and
collectively the Funds), for use at an Annual Meeting (Meeting) of Shareholders
of the Funds to be held jointly at the Italian Community Center, 631 E. Chicago
Street, Milwaukee, Wisconsin, on Thursday, April 13, 1995, at 10:00 a.m., local
time, and any adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders (the Notice). The Notice,
this Proxy Statement, and the accompanying proxy card(s) were first mailed to
shareholders on or about February 16, 1995. Subject to shareholder approval,
each item will become effective on or about May 1, 1995. If a proposal is not
approved, the item will remain unchanged.

The following table indicates which Fund's shareholders are solicited with
respect to each proposal.

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<PAGE> 5

SUMMARY OF PROPOSALS

<TABLE>
<CAPTION>
Asset Total American
Proposals Allocation Return Utilities
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Elect Director X X X
2. Ratify Selection of Auditors X X X
3A. Adopt Advisory Agreement X X X
3B. Approve Subadvisory Agreement X
4. Adopt Revised Articles X X X
5. Amend the Investment Objective X X
6. Amend or Adopt a Fundamental Investment Limitation Concerning:
6A. Diversification X
6B. Concentration X X
6C. Lending X X
6D. Real Estate X X
6E. Borrowing X X
6F. Underwriting Securities X X
6G. Financial Commodities X X
6H. Senior Securities X X
6I. Pooled Fund Structures X X
7. Eliminate a Fundamental Investment Limitation Concerning:
7A. Short Sales of Securities X
7B. Use of Margin X X
7C. Illiquid and Restricted Securities X
7D. Investment Company Securities X X
7E. Securities of Newly-Formed Issuers X
7F. Investing in Oil and Gas Interests X
7G. Futures and Options X X
7H. Pledging Assets X X
7I. Investments of Directors and Officers X
7J. Fund Portfolio Transactions X
7K. Investing for Management or Control X
7L. Joint Basis Trading Accounts X
</TABLE>

Shareholders may vote only on matters which concern the Fund or Funds in which
they hold shares. The record holders of outstanding shares of each Fund are
entitled to one vote per share (and a fractional vote per fractional share) on
all matters presented at the Meeting. Whether you expect to be personally
present at the Meeting or not, please complete, sign, date, and return the
accompanying proxy card (or cards if you have multiple accounts). Properly
executed proxies will be voted as you instruct. If no choice is indicated,
proxies will be voted FOR the specific proposals set forth in the Notice, and in
accordance with the best judgment of the persons named as proxies in the
enclosed proxy card(s) on such other business or matters that properly may come
before the Meeting. Any shareholder giving a proxy has the power to revoke it at
any time before the meeting by advising the Secretary of the Funds in writing
(by subsequent proxy or otherwise) of such revocation at any time before it is
voted. If not so revoked, the shares represented by

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<PAGE> 6

the proxy will be voted at the Meeting and any adjournments thereof. Attendance
by a shareholder at the Meeting does not in itself revoke a proxy.

Under each Fund's Bylaws, a quorum is constituted by the presence in person or
by proxy of a majority of the outstanding shares of common stock of a Fund
entitled to vote at the Meeting. Abstentions and broker non-votes (i.e., proxies
from brokers or nominees indicating that they have not received instructions
from the beneficial owners on an item for which the brokers or nominees do not
have discretionary power to vote) will be treated as present for determining the
quorum. Broker non-votes will not be counted as voting on any matter at the
Meeting, except that for any proposal requiring the affirmative vote of a Fund's
outstanding shares for approval, a broker non-vote will have the effect of a
vote against the proposal. In the event that a quorum is present at the Meeting
but sufficient votes to approve any of the proposals are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will be approved if
the votes cast in favor of such adjournment exceed the votes cast opposing such
adjournment. It is anticipated that the persons named as proxies will vote in
favor of any such adjournment.

Proxies will be solicited primarily by mail. The solicitation may also include
telephone, facsimile, telegraph, or oral communications by certain officers and
employees of each Fund's investment advisor, Strong Capital Management, Inc.
(SCM), who will not be paid for these services, and/or by D. F. King & Co.,
Inc., a professional proxy solicitor retained by the Funds for an estimated fee
of $20,000, plus out-of-pocket expenses. Except for the services provided by
SCM, the Funds will pay the costs of the Meeting, the solicitation of proxies,
and the fees of D. F. King & Co., Inc., as incurred by each Fund. The Funds will
also reimburse brokers and other nominees for their reasonable expenses in
communicating with the person(s) for whom they hold shares of the Funds.

Only the shareholders of record of each Fund at the close of business on
February 16, 1995 (the Record Date), will be entitled to notice of, and to vote
at, the Meeting or any adjournments thereof. As of January 31, 1995, there were
issued and outstanding shares of common stock for each Fund in the following
amounts: Asset Allocation, 13,650,086; Total Return, 24,599,718; American
Utilities, 4,889,532. As of January 31, 1995, Charles Schwab & Co., Inc., 101
Montgomery Street, San Francisco, California 94104, owned of record more than 5%
of the following Fund's outstanding shares:

<TABLE>
<CAPTION>
Fund Shares Percentage
- - ----------------------------------------------------------------------------
<S> <C> <C>
Asset Allocation 686,507 5.03%
American Utilities 928,146 18.98
</TABLE>

A copy of a Fund's Annual Report is available without charge upon request by
writing to P.O. Box 2936, Milwaukee, Wisconsin 53201 or by calling
1-800-368-3863.

VOTE REQUIRED: PROPOSAL 1 SHALL BE APPROVED BY A PLURALITY OF ALL VOTES CAST AT
THE MEETING. PROPOSAL 2 SHALL BE APPROVED IF THE VOTES CAST AT THE MEETING IN
FAVOR OF THE PROPOSAL EXCEED THE VOTES CAST OPPOSING SUCH PROPOSAL. PROPOSAL 4
REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF A FUND'S OUTSTANDING SHARES.
APPROVAL OF THE REMAINING

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<PAGE> 7

PROPOSALS REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING
SECURITIES" OF A FUND. UNDER THE INVESTMENT COMPANY ACT OF 1940 (THE 1940 ACT),
A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES" MEANS THE AFFIRMATIVE VOTE OF
THE LESSER OF (A) 67% OR MORE OF THE SHARES OF A FUND PRESENT AT THE MEETING OR
REPRESENTED BY PROXY IF THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING SHARES
ARE PRESENT AT THE MEETING OR REPRESENTED BY PROXY OR (B) MORE THAN 50% OF THE
OUTSTANDING SHARES.

1. TO ELECT DIRECTORS.

The Directors have fixed the number of Directors for election at the Meeting
at six for each Fund. Each Director shall hold office until a successor is
elected and qualified or until the Director's death, resignation, or removal.
Messrs. Strong, Nevins, and Davis, named below as nominees, are currently
Directors and have served in that capacity since originally elected or appointed
to the Board. Messrs. Strong and Nevins have served as Directors since each
Fund's inception. Mr. Davis has served as a Director since July 22, 1994. Mr.
Dragisic, also named below as a nominee, served the Funds as a Director as noted
in the table below. The current Directors also act as Directors for all of the
Strong Funds, which consist of twenty-four separately incorporated, diversified
and non-diversified funds. A shareholder using the enclosed proxy card(s) can
vote for or against any or all of the nominees. In the election of Directors,
those six nominees receiving the highest number of votes cast at the Meeting
shall be elected, provided that a quorum is present. Each of the nominees has
consented to be named in this Proxy Statement and to serve as a Director if
elected. The Directors have no reason to believe that any of the nominees will
become unavailable for election as a Director, but if that should occur before
the Meeting, proxies will be voted for such persons as the Directors may
recommend. More detailed information concerning nominees for Director follows:

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<PAGE> 8

<TABLE>
<CAPTION>
Name (Age), Funds, Principal Occupation For
Position(s) with Funds, Shares Owned,(1)(6) Last Five Years,
Address Director Since Directorships(2)
- - -----------------------------------------------------------------------------------
<S> <C> <C>
Richard S. Strong(3)(4) Asset Allocation: Director and Chairman of the Board
(52) 61 of SCM. Chief Investment Officer of
Director and Chairman 1981 SCM (1991).
P.O. Box 2936
Milwaukee, WI 53201 Total Return: Director and Chairman of Strong
42 Holdings, Inc. and Strong Funds
1981 Distributors, Inc. (1993). Director
and Chairman of Heritage Reserve
American Utilities: Development Corporation (1994).
10,101 Member of the Managing Boards of
1990 Fussville Real Estate Holdings
L.L.C. and Fussville Development
L.L.C. (1994). Director and
Chairman of the Strong Funds.
- - -----------------------------------------------------------------------------------
John Dragisic(4)(5) Asset Allocation: Vice Chairman of SCM (1994).
(54) 56
Vice Chairman Nominee President and Chief Executive
P.O. Box 2936 Officer of Grunau Company, Inc.
Milwaukee, WI 53201 Total Return: (1987-1994). Director of the Strong
43 Funds (1991-1994). Director of
Nominee Strong Holdings, Inc. and Strong
Funds Distributors, Inc. (1994).
American Utilities: Vice Chairman of Strong Funds
101 (1994).
Nominee
- - -----------------------------------------------------------------------------------
Marvin E. Nevins Asset Allocation: Private Investor.
(76) 1,124
Director 1981 Chairman of Wisconsin Centrifugal
6075 Pelican Bay Blvd. Inc. (1945-1980). Chairman of
Naples, FL 33962 Total Return: General Casting Corp. (1983-1986).
4,646 Formerly Chairman of the Wisconsin
1981 Association of Manufacturers &
Commerce, Regent of the Milwaukee
American Utilities: School of Engineering, and member
6,191 of the Board of Trustees of the
1990 Medical College of Wisconsin.
- - -----------------------------------------------------------------------------------
Willie D. Davis Asset Allocation: President and Chief Executive
(60) 64 Officer of All Pro Broadcasting,
Director July, 1994 Inc.
161 North La Brea
Inglewood, CA 90301 Total Return: Director of Alliance Bank, Sara Lee
48 Corporation, KMart Corporation,
July, 1994 YMCA Metropolitan -- Los Angeles,
Dow Chemical Company, MGM Grand,
American Utilities: Inc., WICOR, Inc., Johnson
115 Controls, Inc., L.A. Gear, and
July, 1994 Rally's Hamburger, Inc. Trustee of
the University of Chicago,
Marquette University, and
Occidental College. Director of the
Fireman's Fund (1975-1990).
- - -----------------------------------------------------------------------------------
</TABLE>

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<PAGE> 9

1 Shares owned beneficially as of February 2, 1995.

2 Unless indicated otherwise, each individual has held the office or offices
shown for the last five years.

3 On July 12, 1994, the Securities and Exchange Commission (the SEC) filed an
administrative action (Order) against SCM and Mr. Strong in connection with
conduct that occurred between 1987 and early 1990 (see the section entitled
"Investment Advisor" on page 13 for more information). The proceeding was
settled by consent without admitting or denying the allegations in the Order.

4 "Interested person" of each Fund.

5 On August 1, 1994, SCM granted 7% of its non-voting stock to Mr. Dragisic in
connection with his employment with SCM.

6 Less than 1% of the Fund's outstanding shares of common stock.

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<PAGE> 10

The Directors held four meetings during the last full fiscal year. It is
expected that the Directors will continue to meet at least four times a year at
regularly scheduled meetings. Each incumbent director attended 100% of the
meetings of the Directors. There are currently no standing audit, nominating, or
compensation committees of the Board of Directors, or other committees
performing similar functions. The officers of the Funds, other than those who
also serve as Directors or are nominees for Director, are:

<TABLE>
<CAPTION>
Principal Occupation For Last Five
Name Office Years
(Age) (Held Since) (Start Date)
- - ----------------------------------------------------------------------------
<S> <C> <C>
Lawrence A. Totsky Vice President Senior Vice President of SCM (1994).
(35) (5/93) Director of Mutual Fund
Administration (1991). Manager of
Shareholder Accounting and
Compliance for SCM (1987).
Thomas P. Lemke Vice President Senior Vice President, Secretary,
(40) (10/94) and General Counsel of SCM (1994).
Resident Counsel for Funds
Management at J.P. Morgan & Co.,
Inc. (1992). Associate General
Counsel to Sanford C. Bernstein Co.,
Inc. (1989). Of Counsel at the
Washington D.C. law firm of Tew
Jorden & Schulte (1987).
Ann E. Oglanian Secretary Associate Counsel of SCM (1992).
(33) (5/94) Associate Counsel of Kemper
Financial Services, Inc. (1989).
Thomas M. Zoeller Treasurer Treasurer of SCM (1991). Controller
(31) (11/91) for SCM (1991). Assistant Controller
for SCM (1989).
</TABLE>

As of February 2, 1995, the officers and directors of the Funds in the
aggregate beneficially owned less than 1% of each Fund's then outstanding
shares.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 1.

2. TO RATIFY THE SELECTION OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT PUBLIC
ACCOUNTANTS.

A majority of the Directors, including a majority of the Directors who are not
"interested persons" (as defined in the 1940 Act), have selected Coopers &
Lybrand L.L.P. (C&L) as independent public accountants for the Funds for the
fiscal year ending December 31, 1995. C&L has served each Fund as independent
public accountants since each Fund's inception. Each Fund has been advised by
C&L that it has no material direct or indirect financial interest in the Funds.
The ratification of the selection of independent public accountants is to be
voted upon at the Meeting and it is intended that the persons named in the
accompanying proxy will vote for C&L unless

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<PAGE> 11

shareholders express a contrary choice. A representative of C&L will be present
at the Meeting and will have the opportunity to make a statement and is expected
to be available to answer appropriate questions concerning each Fund's financial
statements.
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 2.

3A. TO ADOPT AND RATIFY A REVISED ADVISORY AGREEMENT.

SCM serves as investment advisor to each Fund pursuant to each Fund's Advisory
Agreement (the Agreement). The Directors have approved the adoption of, and
recommend that the shareholders of each Fund adopt and ratify a revised Advisory
Agreement (the Revised Agreement) in a form substantially similar to Exhibit A.

The terms and conditions of the Revised Agreement are substantially identical
to the terms and conditions of the existing Agreements, except that (i) the form
of the agreement has been changed to allow for the future conversion of each
Fund to a series Fund as discussed under Proposal 4 and (ii) with respect to the
Asset Allocation and Total Return Funds, a provision has been added that
expressly allows SCM to delegate some or all of its services subject to
necessary approval, which includes the delegation of its investment adviser
duties, to a subadvisor. The American Utilities Fund's existing agreement
contains such a provision. Any delegation of duties to a subadvisor would be
approved by shareholders as necessary under the law before being implemented.
Under any such subadvisory agreement, SCM would continue to have responsibility
for all investment advisory services furnished. This delegation provision has
been included in the Asset Allocation and Total Return Funds' Revised Agreement
for standardization purposes. Currently, SCM has no intention of hiring any
subadvisor for the Asset Allocation and Total Return Funds. THE REVISED
AGREEMENT DOES NOT INCLUDE A MANAGEMENT FEE INCREASE.

At its meeting on January 20, 1995, the Directors, including each of the
Directors who are not "interested persons" (as defined in the 1940 Act) of the
Funds or SCM (the Independent Directors), considered (i) information regarding
the nature and quality of the services provided by SCM, (ii) SCM's cost in
providing such services, (iii) the extent to which SCM realized economies of
scale if the asset-size of a Fund grew larger and the extent to which these
economies are shared with a Fund's shareholders, (iv) the investment
performance, expense ratios, and management fees for comparable investment
companies, (v) the profitability of SCM, (vi) the role played by the Independent
Directors, and (vii) the impact, if any, that other activities of SCM or its
affiliates may have on the management of the Funds. The Directors received all
information they deemed necessary to their evaluation of the terms and
conditions of the Agreement and Revised Agreement.

Based upon the Directors' review and evaluations of these materials and their
considerations of all factors deemed relevant, the Directors determined that the
Revised Agreement is reasonable, fair, and in the best interests of each Fund
and its shareholders.

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<PAGE> 12

Accordingly, the Directors, including all of the Independent Directors, approved
the adoption of the Revised Agreement and its submittal to each Fund's
shareholders for adoption and ratification. If the Revised Agreement is adopted
by shareholders of a Fund, it will remain in effect through March 31, 1997, and
will be thereafter subject to continuation by such Fund's Directors. If the
Revised Agreement is not adopted, the existing Agreement will continue in effect
through March 31, 1996, and thereafter will be subject to continuation by such
Fund's Directors. Additional information concerning the investment advisory
agreements and SCM is set forth below.

ADVISORY AGREEMENT. The advisory agreements are required to be approved
annually by each Fund's Directors or by vote of a majority of such Fund's
outstanding voting securities (as defined in the 1940 Act). In either case, such
annual renewal must be approved by the vote of a majority of the Independent
Directors, cast in person at a meeting called for the purpose of voting on such
approval. On January 21, 1994, the Directors of each Fund, including all
Independent Directors, voted unanimously to extend the existing Agreement for
each Fund for an additional period of one year, commencing May 1, 1994. On
January 20, 1995, the Directors of each Fund, including all Independent
Directors, voted unanimously to extend the existing Agreement for each Fund for
an additional period of one year, commencing May 1, 1995. The Asset Allocation
and Total Return Funds' Agreements, dated December 28, 1981, were last approved
for continuance by each Fund's shareholders on April 27, 1990. The American
Utilities Fund's Agreement, dated June 22, 1993, was initially adopted and
approved by the Fund's shareholders on June 22, 1993. The Agreement is
terminable, without penalty, on 60 days written notice by the Directors of a
Fund, by vote of a majority of such Fund's outstanding voting securities, or by
SCM. In addition, the Agreement will terminate automatically in the event of
assignment.

Each Fund pays SCM an advisory fee. The advisory fee is an annual percentage
of each Fund's average net assets, calculated and paid monthly. The table below
specifies the advisory fee rate, the advisory fees incurred in 1994, and the
asset size of each Fund.

<TABLE>
<CAPTION>
1994 Asset Size
Fund Advisory Fee Rate Advisory Fee (as of 1/31/95)
- - ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Allocation .85% up to $35,000,000, $2,077,850 $ 243,381,039
.80% above $35,000,000
Total Return .85% up to $35,000,000, 4,973,614 580,552,014
.80% above $35,000,000
American
Utilities* .75% 262,428 48,553,055
</TABLE>

- - ---------------
* SCM waived a portion of the Fund's advisory fee during the last fiscal year.

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<PAGE> 13

Under the terms of each Agreement, SCM manages a Fund's investments subject to
the supervision of the Fund's Directors. SCM is responsible for investment
decisions and supplies investment research and portfolio management. At its
expense, SCM provides office space and all necessary office facilities,
equipment, and personnel for servicing the investments of a Fund. SCM places all
orders for the purchase and sale of a Fund's portfolio securities at its
expense. Except for expenses assumed by SCM as set forth above or as described
below under "Distribution Agreement" with respect to the distribution of a
Fund's shares, each Fund is responsible for all its other expenses, including,
without limitation, interest charges, taxes, brokerage commissions, and similar
expenses; expenses of issue, sale, repurchase, or redemption of shares; expenses
of registering or qualifying shares for sale; expenses for printing and
distribution costs of prospectuses and semi-annual financial statements mailed
to existing shareholders; and charges of custodians, transfer agent fees
(including the printing and mailing of reports and notices to shareholders),
fees of registrars, fees for auditing and legal services, fees for clerical
services related to recordkeeping and shareholder relations, the cost of stock
certificates, and fees for directors who are not "interested persons" of SCM.
From time to time, SCM may voluntarily waive all or a portion of its management
fee for a Fund. The organizational expenses of the American Utilities Fund were
advanced by SCM and will be reimbursed by the Fund over a period of not more
than 60 months from the date of its inception.

Each Agreement requires SCM to reimburse a Fund in the event that the expenses
and charges payable by the Fund in any fiscal year, including the advisory fee
but excluding taxes, interest, brokerage commissions, and similar fees (and with
respect to the Revised Agreement, extraordinary expenses), exceed that
percentage of the average net asset value of the Fund for such year, which is
the most restrictive percentage provided by the state laws of the various states
in which the Fund's common stock is qualified for sale; or if the states in
which the Fund's common stock is qualified for sale impose no restrictions, then
2%. The most restrictive percentage limitation currently applicable to the Funds
is 2 1/2% of its average daily net assets up to $30,000,000, 2% on the next
$70,000,000 of its average daily net assets, and 1 1/2% of its average daily net
assets in excess of $100,000,000. Reimbursement of expenses in excess of the
applicable limitation will be made on a monthly basis and will be paid to a Fund
by reduction of SCM's fee, subject to later adjustment, month by month, for the
remainder of the Fund's fiscal year. From time to time, SCM may voluntarily
absorb expenses for a Fund in addition to the reimbursement of expenses in
excess of applicable limitations.

INVESTMENT ADVISOR. SCM, a Wisconsin corporation, is the Funds' investment
advisor. Mr. Richard S. Strong is the Chairman of SCM, who along with Messrs.
John Dragisic and Richard T. Weiss constitute the Board of Directors of SCM. The
address of the

13
<PAGE> 14

Advisor and each of these individuals is 100 Heritage Reserve, Menomonee Falls,
Wisconsin, 53051. The officers of the Funds and their positions with SCM are as
follows:

<TABLE>
<CAPTION>
Name Position with Funds Position with SCM
- - ------------------------------------------------------------------------------
<S> <C> <C>
Richard S. Strong Chairman Chairman
John Dragisic Vice Chairman Vice Chairman
Lawrence A. Totsky Vice President Senior Vice President
Thomas P. Lemke Vice President Senior Vice President, General
Counsel, and Secretary
Ann E. Oglanian Secretary Associate Counsel
Thomas M. Zoeller Treasurer Treasurer
</TABLE>

SCM began conducting business in 1974. Since then, its principal business has
been providing continuous investment advice to mutual funds, individuals, and
institutional accounts such as pension funds and profit-sharing plans. SCM acts
as investment advisor to each of the 24 Strong Funds and acts as a subadvisor to
various other investment products. As of December 31, 1994, SCM had over $10
billion under management. Mr. Strong is the controlling shareholder of SCM.

On July 12, 1994, the Securities and Exchange Commission (the SEC) filed an
administrative action (Order) against SCM, Mr. Strong, and another employee of
SCM in connection with conduct that occurred between 1987 and early 1990. In re
Strong/Corneliuson Capital Management, Inc., et al. Admin. Proc. File No.
3-8411. The proceeding was settled by consent without admitting or denying the
allegations in the Order. The Order alleged that SCM and Mr. Strong aided and
abetted violations of Section 17(a) of the 1940 Act by effecting trades between
mutual funds, and between mutual funds and Harbour Investments Ltd. (Harbour),
without complying with the exemptive provisions of SEC Rule 17a-7 or otherwise
obtaining an exemption. It further alleged that SCM violated, and Mr. Strong
aided and abetted violations of, the disclosure provisions of the 1940 Act and
the Investment Advisers Act of 1940 by misrepresenting SCM's policy on personal
trading and by failing to disclose trading by Harbour, an entity in which
principals of SCM owned between 18 and 25 percent of the voting stock. As part
of the settlement, the respondents agreed to a censure and a cease and desist
order and SCM agreed to various undertakings, including adoption of certain
procedures and a limitation for six months on accepting certain types of new
advisory clients.

TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT. SCM acts as dividend-disbursing
agent and transfer agent to the Funds. The fees received and the services
provided as transfer agent and dividend-disbursing agent are in addition to the
fees received and services provided under the advisory agreement. For transfer
agent and dividend-disbursing agent services in 1994, the Asset Allocation,
Total Return, and American Utilities Funds1 paid SCM $594,683, $1,617,511, and
$56,756, respectively, in per account charges and

- - ---------------

1 In 1994, SCM waived $77,829 in per account charges, $36,677 in out-of-pocket
expenses, and $3,109 in printing and mailing fees for the American Utilities
Fund.

14
<PAGE> 15

$158,509, $341,401, and $451, respectively, for out-of-pocket expenses. In
addition to the foregoing services, SCM provides certain printing and mailing
services for the Funds such as printing and mailing of shareholder account
statements, checks, and tax forms. For such services in 1994, the Asset
Allocation, Total Return, and American Utilities Funds paid SCM $14,340,
$36,448, and $798, respectively.

DISTRIBUTION AGREEMENT. Under a Distribution Agreement dated December 1, 1993
for each Fund (the Distribution Agreements), Strong Funds Distributors, Inc.
(SFD) acts as underwriter of each Fund's shares. SFD is an indirect subsidiary
of SCM and is controlled by SCM and Mr. Strong. The address of SFD is 100
Heritage Reserve, Menomonee Falls, Wisconsin, 53051. The Distribution Agreements
provide that SFD will use its best efforts to distribute each Fund's shares.
Since the Funds are "no-load" funds, no sales commissions are charged on the
purchase of a Fund's shares. The Distribution Agreements further provide that
SFD will bear the costs of printing prospectuses and shareholder reports which
are used for selling purposes, as well as advertising and other costs
attributable to the distribution of the Funds' shares. Each Distribution
Agreement is subject to the same termination and renewal provisions as are
described above with respect to the advisory agreements.

PORTFOLIO TRANSACTIONS AND BROKERAGE. SCM is responsible for decisions to buy
and sell securities for the Funds and for the placement of their portfolio
business and the negotiation of the commissions to be paid on such transactions.
It is the policy of SCM to seek the best execution at the best security price
available with respect to each transaction, in light of the overall quality of
brokerage and research services provided to SCM or the Funds. The best price to
the Funds means the best net price without regard to the mix between purchase or
sale price and commission, if any. In selecting broker-dealers and in
negotiating commissions, SCM considers the firm's reliability, the quality of
its execution services on a continuing basis, and its financial condition.
Brokerage will not be allocated based on the sale of a Fund's shares.

Section 28(e) of the Securities Exchange Act of 1934 (Section 28(e)) permits
an investment advisor, under certain circumstances, to cause an account to pay a
broker-dealer who supplies brokerage and research services a commission for
effecting a transaction in excess of the amount of commission another
broker-dealer would have charged for effecting the transaction. Brokerage and
research services include (a) furnishing advice as to the value of securities,
the advisability of investing, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; (b)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and performing functions
incidental thereto (such as clearance, settlement, and custody).

In carrying out the provisions of the Agreements, SCM may cause the Funds to
pay a broker-dealer which provides brokerage and research services to SCM a
commission for effecting a securities transaction in excess of the amount
another broker-dealer would have charged for effecting the transaction. SCM is
of the opinion that the continued

15
<PAGE> 16

receipt of supplemental investment research services from broker-dealers is
essential to its provision of high-quality portfolio management services to the
Funds. The Agreement provides that such higher commissions will not be paid by
the Funds unless (a) SCM determines in good faith that the amount is reasonable
in relation to the services in terms of the particular transaction or in terms
of SCM's overall responsibilities with respect to the accounts as to which it
exercises investment discretion; (b) such payment is made in compliance with the
provisions of Section 28(e), other applicable state and federal laws, and the
Agreement; and (c) in the opinion of SCM, the total commissions paid by a Fund
will be reasonable in relation to the benefits to a Fund over the long term. The
investment advisory fees paid by the Funds under the Agreements are not reduced
as a result of SCM's receipt of research services.

Generally, research services provided consist of portfolio pricing and capital
changes services and reports, research reports dealing with macroeconomic trends
and monetary and fiscal policy, research reports on individual companies and
industries, and information dealing with market trends and technical analysis.
Such brokers may pay for all or a portion of computer hardware and software
costs relating to the pricing of securities. Where SCM itself receives both
administrative benefits and research and brokerage services from the services
provided by brokers, it makes a good faith allocation between the administrative
benefits and the research and brokerage services. SCM's receipt of these
administrative benefits arises from its ability, in certain cases, to direct
brokerage to certain firms in connection with its management of client
portfolios. In making good faith allocations between administrative benefits and
research and brokerage services, a conflict of interest may exist by reason of
SCM's allocation of the costs of such benefits and services between those that
primarily benefit SCM and those that primarily benefit its clients.

SCM places portfolio transactions for other advisory accounts, including other
mutual funds managed by SCM. Research services furnished by firms through which
the Funds effect their securities transactions may be used by SCM in servicing
all of its accounts; not all of such services may be used by SCM in connection
with the Funds. In the opinion of SCM, it is not possible to separately measure
the benefits from research services to each of the accounts (including a Fund)
managed by SCM. Because the volume and nature of the trading activities of the
accounts are not uniform, the amount of commissions in excess of those charged
by another broker paid by each account for brokerage and research services will
vary. However, in the opinion of SCM, such costs to the Funds will not be
disproportionate to the benefits received by the Funds on a continuing basis.

SCM seeks to allocate portfolio transactions equitably whenever concurrent
decisions are made to purchase or sell securities by each Fund and another
advisory account. In some cases, this procedure could have an adverse effect on
the price or the amount of securities available to a Fund. In making such
allocations between a Fund and other advisory accounts, the main factors
considered by SCM are the respective investment objectives, the relative size of
portfolio holdings of the same or comparable securities, the availability of
cash for investment, the size of investment commitments generally held, and the
opinions of the persons responsible for recommending the investment.

16
<PAGE> 17

TRANSACTIONS WITH AFFILIATED BROKERS AND DEALERS. As provided in the Agreements
between the Funds and SCM, SCM is responsible not only for making decisions with
respect to the purchase and sale of the Funds' portfolio securities, but also
for implementing these decisions, including the negotiation of commissions and
the allocation of portfolio brokerage and principal business. The Directors for
the Funds have authorized W.H. Reaves & Co., Inc. (Reaves), the subadvisor for
Strong American Utilities Fund, and a member of the New York Stock Exchange, to
act as an affiliated broker to the Funds subject to procedures set forth in Rule
17e-1 under the 1940 Act. As such, in order for Reaves to effect any portfolio
transactions for a Fund on an exchange, the commissions, fees or other
remuneration received by Reaves must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
an exchange during a comparable period of time. This standard would allow Reaves
to receive no more than the remuneration which would be expected to be received
by an unaffiliated broker in a commensurate arm's-length transaction. In 1994,
Strong American Utilities Fund paid Reaves $136,188 in commissions, which
represented 99.45% of the Fund's aggregate brokerage commissions.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 3A.
<R/>

3B. TO APPROVE AND RATIFY THE SUBADVISORY AGREEMENT.
(AMERICAN UTILITIES FUND)

W.H. Reaves & Co., Inc. (Reaves) serves as the subadvisor to the American
Utilities Fund pursuant to a subadvisory agreement dated June 25, 1993 with SCM
(the Subadvisory Agreement). The Directors have approved, and recommend that
shareholders of the American Utilities Fund approve and ratify the Subadvisory
Agreement between SCM and Reaves.

At its meeting on January 20, 1995, the Directors, including each of the
Directors who are not "interested persons" (as defined in the 1940 Act) of the
Funds or SCM (the Independent Directors), considered (i) information regarding
the nature and quality of the services provided by Reaves, (ii) Reaves' cost in
providing such services, and (iii) the investment performance, expense ratios,
and management fees for comparable investment companies. The Directors received
all information they deemed necessary to their evaluation of the terms and
conditions of the Subadvisory Agreement. Based upon the Directors' review and
evaluations of these materials and their consideration of all factors deemed
relevant, the Directors determined that the Subadvisory Agreement is reasonable,
fair, and in the best interests of the Fund and its shareholders. Accordingly,
the Directors, including all of the Independent Directors, approved the
Subadvisory Agreement and its submission to the Fund's shareholders for approval
and ratification. If the Subadvisory Agreement is not approved and ratified by
the Fund's shareholders, the Subadvisory Agreement will continue in effect
through March 31, 1996, and thereafter will be subject to continuation by the
Fund's Directors.

17
<PAGE> 18

ADDITIONAL INFORMATION CONCERNING THE SUBADVISORY AGREEMENT AND SUBADVISOR. The
Subadvisory Agreement is required to be approved annually by the Fund's
Directors or by vote of a majority of a Fund's outstanding voting securities (as
defined in the 1940 Act). In either case, such annual renewal must be approved
by the vote of a majority of the Fund's Directors who are Independent Directors,
cast in person at a meeting called for the purpose of voting on such approval.
On January 20, 1995, the Directors of the Fund, including all independent
directors, voted unanimously to extend the Subadvisory Agreement for the Fund
for an additional period of one year, commencing May 1, 1995. The Subadvisory
Agreement was initially adopted and approved by the Fund's sole shareholder on
June 25, 1993. The Subadvisory Agreement may be terminated at any time, without
payment of any penalty, by a vote of the Directors of the Fund or by a vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to Reaves. The Subadvisory Agreement may also be terminated by SCM for
breach upon 20 days notice, immediately in the event that Reaves becomes unable
to discharge its duties and obligations, and upon 60 days notice for any reason.
The Subadvisory Agreement may be terminated by Reaves upon 180 days notice for
any reason. The Subadvisory Agreement will terminate automatically in the event
of assignment.

Under the terms of the Subadvisory Agreement, Reaves furnishes investment
advisory and portfolio management services to the Fund with respect to its
investments. Reaves is responsible for decisions to buy and sell the Fund's
investments and all other transactions related to investment therein and the
negotiation of brokerage commissions, if any, except that SCM is responsible for
managing the cash equivalent investments maintained by the Fund in the ordinary
course of its business and which, on average, was approximately 4.0% of the
Fund's net assets during 1994. Purchases and sales of securities on a securities
exchange are effected through brokers who charge a negotiated commission for
their services. However, because Reaves is a member of the New York Stock
Exchange, Reaves directly effects purchases and sales of securities for the Fund
on the Exchange and is paid a commission for such services commensurate with the
commissions charged by unaffiliated brokers in arm's-length transactions. (See
"Transactions with Affiliated Brokers and Dealers" set forth above under
Proposal 3A.) During the term of the Subadvisory Agreement, Reaves will bear all
expenses incurred by it in connection with its services under such agreement.

The Subadvisory Agreement requires SCM, not the Fund, to pay the Subadvisor a
fee, computed and paid monthly, at an annual rate of 0.50% on the first $200
million of the Fund's average daily net assets plus 40% of SCM's net management
fee (after any waivers thereof) on that portion of the Fund's average daily net
assets in excess of $200 million, except that the foregoing percentage will be
50% on average daily net assets between $1.0 billion and $1.5 billion. In 1994,
Reaves received $172,390 in subadvisory fees from SCM pursuant to the
Subadvisory Agreement. The Subadvisory Agreement also requires Reaves to
contribute to the payment by SCM of certain start-up costs of the Fund at the
rate of 0.25% of the Fund's average daily net asset value until the earlier of
the Fund reaching $100 million in net assets or one year from the date the Fund
commenced operations and at the rate of 0.15% of the Fund's average daily net
asset value until the

18
<PAGE> 19

earlier of the Fund reaching $200 million in net assets or two years from the
date the Fund commenced operations.

Reaves began conducting business in 1961. Since then, its principal business
has been providing continuous investment supervision to institutional investors
such as corporations, corporate pension funds, employee savings plans,
foundations, and endowments. Reaves is a Delaware corporation. Mr. William H.
Reaves is the controlling shareholder of Reaves. As of January 31, 1995, the
Subadvisor had over $1 billion under management. Reaves' address is 30
Montgomery Street, Jersey City, New Jersey 07302.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 3B.

4. TO ADOPT REVISED ARTICLES OF INCORPORATION.

The Directors have unanimously approved the adoption of Amended and Restated
Articles of Incorporation (the Revised Articles) for each of the Funds, which
are Wisconsin corporations. According to the Wisconsin Business Corporation Law
(the WBCL), changes to a Fund's Articles of Incorporation must be approved by
the vote of a majority of outstanding shares of such Fund. If shareholders do
not approve this Proposal, the existing Articles will remain in full force and
effect.

In addition, certain of the changes included within the Revised Articles are
designed to standardize the language of the existing Articles; however, other
changes are substantive. The Revised Articles would: (i) eliminate the
enumerated list of authorized corporate powers contained in the existing
Articles and to add a provision allowing a Fund to engage in any activity
permissible under the WBCL, (ii) eliminate the provision that limits a Fund's
ability to redeem small shareholder accounts ($500 or less) and, instead,
provide that a Fund may redeem small shareholders accounts under procedures
adopted by the Directors and in accordance with the 1940 Act, (iii) eliminate
the 1% cap on redemption fees and include a provision permitting the Directors
to set forth in the By-Laws the terms and conditions under which redemption fees
are to be imposed, (iv) eliminate the indemnification provisions from the Asset
Allocation and Total Return Funds' existing Articles because such provisions are
already contained in each Fund's By-Laws, (v) specify that an affirmative
majority vote of all votes cast at a shareholder meeting is sufficient to amend
the Revised Articles, provided that a quorum is present, (vi) remove the
borrowing limitation for the Total Return Fund, (vii) eliminate the express
denial of preemptive rights because preemptive rights, under the WBCL, are not
effective unless affirmatively expressed in articles of incorporation; and thus,
because it is not affirmatively expressed, its presence in the existing Articles
is unnecessary and meaningless, (viii) grant the Directors authority to convert
each Fund into a series fund and allow the Directors to add additional series,
and (ix) allow the Directors to designate additional classes of shares. In
addition, by approving the Revised Articles, shareholders also authorize SCM to
make changes to the Articles as may be necessary in order to facilitate filing
them with the State of Wisconsin.

19
<PAGE> 20

If shareholders of the Total Return Fund approve this Proposal, and thus
remove the 10% borrowing limitation from the Fund's Articles of Incorporation,
but do not approve Proposal 6E concerning borrowing, the Fund will remain
subject to a 5% borrowing limitation as described under Proposal 6E. If
shareholders of the Fund do not approve this Proposal and approve Proposal 6E,
the Fund will remain subject to the 10% limitation in the Fund's Articles of
Incorporation, even though the new fundamental investment limitation concerning
borrowing would allow the Fund to borrow up to 33 1/3% of its total assets.

The Revised Articles would allow the Directors to convert each Fund into a
series fund and to designate additional classes of shares, each without
additional shareholder approval.2 The Directors have no current intention to
implement either a series structure or additional classes of shares. However,
these amendments would allow the Directors the future flexibility to adopt such
structures. By adding series to a Fund, such Fund may achieve certain
operational efficiencies.3 In addition, adding additional classes would permit
each Fund to take advantage of additional distribution channels (with
alternative pricing structures) for selling Fund shares. The ability to utilize
alternative distribution channels may increase the size of a Fund, which may
result in certain economies of scale and reduced operating expenses -- thus
benefiting both existing and future shareholders.

THE ADDITION OF CLASSES TO ALREADY OUTSTANDING SHARES WOULD NOT AFFECT AN
EXISTING SHAREHOLDER'S INVESTMENT IN THE FUND. Each series would represent
interests in a different portfolio of assets and a shareholder interest is
limited to the portfolio in which shares are held. The Revised Articles also
provide that a Fund may issue additional classes of shares, including new
classes of the outstanding Common Stock, provided these classes do not affect
the preferences, limitations, or relative rights of the outstanding shares.
Under the Revised Articles, the Directors are authorized to allocate assets,
liabilities, income, and expenses to each series and class. Classes within a
series may have different expense arrangements than other classes of the same
series and, accordingly, the net asset value of shares within a series may
differ. Under the Revised Articles, all holders of shares of a Fund would vote
on each matter presented to shareholders for action except with respect to any
matter which affects only one or more series or classes, in which case only the
shares of the affected series or class shall be entitled to vote.

- - ---------------

2 The term "series" in the mutual fund industry is used to refer to shares that
represent interests in a separate portfolio of investments with differing
investment objectives. "Classes" of shares represent sub-divisions of series
with differing preferences, limitations, or relative rights as the Directors may
determine and, in most circumstances, differing marketing attributes. These
terms do not correspond to the terms that are used under the WBCL, but will be
used for ease of reference in this discussion.

3 If the Directors determine to add new series to a Fund, the first series of
the Fund will retain the name of the Fund in which shareholders are invested and
the Directors will designate the umbrella entity with a generic name that is
consistent with the name of the first series (i.e., the Fund) and any subsequent
series. Thus, shareholders in a Fund will continue to own shares in an entity
with the same name as the entity in which they originally invested, except that
this entity will be one of a number of series in the umbrella entity.

20
<PAGE> 21

At such time as the Directors determine that it is in the best interests of a
Fund to add additional series or a multiple class structure, such Fund will
obtain all necessary regulatory approvals before such a structure is
implemented.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 4.

5. TO AMEND THE INVESTMENT OBJECTIVE. (AMERICAN UTILITIES AND TOTAL RETURN
FUNDS)

The Directors unanimously recommend that the shareholders of the American
Utilities and Total Return Funds vote to replace each Fund's current investment
objective as noted below. The purpose of the proposed objectives is to clarify
and more concisely describe each Fund's goal. The proposed objectives are not
intended to alter the way in which the Funds are managed. If shareholders do not
vote to change a Fund's objective, the Fund's current objective will remain in
place.

The American Utilities Fund's current investment objective states:

"The American Utilities Fund's investment objective is to seek a
combination of income and capital appreciation by investing primarily in
the equity securities of "public utility companies" headquartered in the
U.S."

The proposed investment objective of the American Utilities Fund states:

"The American Utilities Fund seeks total return by investing for both
income and capital growth."

The Total Return Fund's current investment objective states:

"The Total Return Fund's investment objective is to seek a combination
of income and capital appreciation which will produce the highest total
return while assuming reasonable risks."

The proposed investment objective of the Total Return Fund states:

"The Total Return Fund seeks high total return by investing for capital
growth and income."

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 5.

ADOPTION OF STANDARD INVESTMENT LIMITATIONS:

The primary purpose of Proposals 6A through 6I is to revise or adopt
investment limitations for the Total Return and American Utilities Funds to
conform to limitations that are expected to become standard for all funds
managed by SCM. The Directors have asked SCM to analyze the various fundamental
and non-fundamental investment

21
<PAGE> 22

limitations of the Strong Funds, and, where appropriate to a Fund's investment
objective, (i) to adopt standard non-fundamental limitations, and (ii) to
propose to shareholders the adoption of standard fundamental limitations and to
eliminate certain fundamental limitations. SCM believes that increased
standardization will help to promote operational efficiencies, facilitate
monitoring of compliance with fundamental and non-fundamental investment
limitations, and enhance the management of the Funds' investments in light of
future regulatory, business, or investment conditions. In addition,
standardization will reduce the future costs associated with holding a
shareholders' meeting to change fundamental investment restrictions that are not
required.

Proposals 7A through 7I relate to investment limitations that restate
requirements imposed by state law as a condition of registering shares of the
Funds for sale in certain states or are imposed as non-fundamental investment
limitations by the 1940 Act. Currently, these limitations are fundamental and
can only be changed by shareholder vote. As a result, if the state laws were
changed, or if they no longer applied to the Funds, the Funds would be required
to call a shareholder meeting to adapt to changed state or federal regulatory
requirements. The Directors recommend that these limitations be made non-
fundamental so that they can be changed by the Directors as state laws permit.
Proposals 7J through 7L relate to investment limitations that are not required
by state or federal law to be fundamental or non-fundamental policies. The
Directors recommend that these limitations be eliminated outright.

Where adoption of a new or revised limitation or the elimination of a
limitation is likely to have an impact on the investment techniques employed by
the Funds, the potential impact is noted. In all cases, the proposed changes are
expected to contribute to the overall objective of standardization. Where noted,
a vote to approve a proposal for the Total Return Fund also gives the Directors
the authority to eliminate corresponding provisions of the Fund's Bylaws.
Affected sections of the Total Return Fund's Bylaws are set forth in Exhibit B
to this Proxy Statement.

6A. TO AMEND A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING DIVERSIFICATION.
(TOTAL RETURN FUND)

The Total Return Fund's current fundamental investment limitation concerning
diversification states:

"The Fund may not purchase the securities of any issuer if such purchase
would cause more than 5% of the value of the Fund's total assets to be
invested in securities of any one issuer (except securities of the U.S.
government or any instrumentality thereof), or purchase more than 10% of the
outstanding securities of any class or more than 10% of the outstanding
voting securities of any one issuer."

The Directors recommend that shareholders vote to replace this limitation with
the following fundamental investment limitation governing diversification:

"The Fund may not, with respect to 75% of its total assets, purchase the
securities of any issuer (except securities issued or guaranteed by the U.S.
government or its

22
<PAGE> 23

agencies or instrumentalities) if, as a result, (i) more than 5% of the Fund's
total assets would be invested in the securities of that issuer, or (ii) the
Fund would hold more than 10% of the outstanding voting securities of that
issuer."

The primary purpose of the proposal is to revise the Total Return Fund's
fundamental diversification limitation to conform to a limitation that is
expected to become standard for all diversified funds managed by SCM. Although
adoption of the new limitation is not likely to have a significant impact on the
investment techniques employed by the Fund, it will contribute to the overall
objectives of standardization. (See "Adoption of Standard Investment
Limitations" on page 21.) If the proposal is approved, the new fundamental
diversification limitation cannot be changed, under the 1940 Act, without a
future vote of the Fund's shareholders. The proposed limitation (i) imposes the
diversification requirements on 75% of the Fund's total assets rather than on
100% of the Fund's total assets, and (ii) eliminates the requirement that the
Fund not purchase more than 10% of any class of an issuer's securities.
Accordingly, the proposed limitation allows the Fund greater flexibility for
making investments in a single issuer, which may result in additional risk to
the Fund. Voting for this proposal also eliminates the current limitation
concerning diversification in the Total Return Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 6A.

6B. TO AMEND A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING CONCENTRATION.
(TOTAL RETURN AND AMERICAN UTILITIES FUNDS)

The Total Return Fund's current fundamental investment limitation concerning
concentration states:

"The Fund may not concentrate its investments in any particular industry or
industries, except that the Fund may invest not more than 25% of the value
of its total assets in a single industry."

The American Utilities Fund's current fundamental investment limitation
concerning concentration states:

"The Fund may not concentrate more than 25% of its total assets in any
particular industry, except that the Fund will, under normal market
conditions, invest more than 25% of its total assets in the securities of
companies in the public utility industry. For this purpose, "industry" does
not include the U.S. Government, its agencies, and instrumentalities."

23
<PAGE> 24

The Directors recommend that shareholders vote to replace these limitations
with the following new fundamental investment limitation governing
concentration:

"The Fund may not purchase the securities of any issuer if, as a result,
more than 25% of the Fund's total assets would be invested in the securities
of issuers, the principal business activities of which are in the same
industry." However, the American Utilities Fund will, under normal market
conditions, invest at least 65% of its total assets in the securities of
issuers in the public utility industry.

The primary purpose of the proposal is to revise each Fund's fundamental
limitation concerning concentration to conform to a limitation that is expected
to become standard for the majority of the funds managed by SCM. Although
adoption of the new limitation is not likely to have a significant impact on the
investment techniques employed by the Funds, it will contribute to the overall
objectives of standardization. (See "Adoption of Standard Investment
Limitations" on page 21.) If the proposal is approved, the new fundamental
limitation concerning concentration cannot be changed, under the 1940 Act,
without a future vote of a Fund's shareholders. This proposed limitation
eliminates the American Utilities Fund's reference to obligations issued or
guaranteed by the U.S. government because the SEC does not consider the U.S.
government, its agencies or instrumentalities to be in any "industry" and
therefore this express reference is unnecessary. Voting for this proposal also
eliminates the current limitation concerning concentration in the Total Return
Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 6B.

6C. TO AMEND A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING LENDING. (TOTAL
RETURN AND AMERICAN UTILITIES FUNDS)

The Total Return Fund's current fundamental investment limitation concerning
lending states:

"The Fund may not lend any funds or other assets, except that it may (i)
purchase a portion of an issue of publicly distributed bonds, debentures, or
other debt securities; (ii) acquire repurchase agreements and commercial
paper of corporations; (iii) lend portfolio securities provided no such loan
may be made, if as a result the aggregate of such loans of portfolio
securities exceed 30% of the value of the Fund's total assets; and (iv)
acquire private issues of debt securities subject to the limitations in Item
9 below."4

The American Utilities Fund's current fundamental investment limitation
concerning lending states:

"The Fund may not make loans, except through (i) the purchase of investments
permissible under the Fund's investment policies, or (ii) the lending of
portfolio

- - ---------------

4 Item 9 of the Fund's fundamental investment limitation, which currently
restricts the Fund's illiquid and restricted securities purchases, is discussed
under 7C.

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<PAGE> 25

securities provided that no such loan of portfolio securities may be made if,
as a result, the aggregate of such loans would exceed 33 1/3% of the value of
the Fund's total assets."

The Directors recommend that shareholders vote to replace these limitations
with the following new fundamental investment limitation governing lending:

"The Fund may not make loans if, as a result, more than 33 1/3% of the
Fund's total assets would be lent to other persons, except through (i)
purchases of debt securities or other debt instruments, or (ii) engaging in
repurchase agreements."

The primary purpose of the proposal is to revise each Fund's fundamental
limitation concerning lending to conform to a limitation that is expected to
become standard for all funds managed by SCM. Although adoption of the new
limitation is not likely to have a significant impact on the investment
techniques employed by the Funds, it will contribute to the overall objectives
of standardization. (See "Adoption of Standard Investment Limitations" on page
21.) If the proposal is approved, the new fundamental limitation concerning
lending cannot be changed, under the 1940 Act, without a future vote of a Fund's
shareholders.

The proposed limitation (i) increases the securities lending authority of the
Total Return Fund from 30% of total assets to 33 1/3% of total assets, which is
the maximum percentage permissible under the 1940 Act, and (ii) authorizes other
lending transactions permissible under the 1940 Act, including an interfund
lending program briefly discussed under Proposal 6E. The proposed limitation
would allow a Fund to acquire an entire issue of debt securities, whether
privately or publicly offered subject to a Fund's other investment limitations.
If a Fund purchases an entire issue of debt securities it may have difficulty
establishing a price for the securities or liquidating the securities in a
timely fashion.

Subject to shareholder approval of the revised investment limitation
concerning lending, the Directors will adopt a non-fundamental operating policy,
which may be changed by the Directors without shareholder approval, that states:

"The Fund may not make any loans other than loans of portfolio securities,
except through (i) purchases of debt securities or other debt instruments,
or (ii) engaging in repurchase agreements."

This operating policy clarifies that the Funds do not intend to make any loans
other than securities loans, purchases of debt securities or other debt
instruments, or repurchase agreements. This policy would be amended by the
Directors should the Funds seek and obtain an exemptive order permitting an
interfund lending program. Voting for this proposal also eliminates the current
limitation concerning lending in the Total Return Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 6C.

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<PAGE> 26

6D. TO AMEND A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING PURCHASING OR
SELLING REAL ESTATE. (TOTAL RETURN AND AMERICAN UTILITIES FUNDS)

The Total Return Fund's current fundamental investment limitation concerning
purchasing or selling real estate states:

"The Fund may not purchase, hold or deal . . . in real estate, but this
shall not prohibit the Fund from investing in marketable securities of
companies engaged in real estate activities or investments."5

The American Utilities Fund's current fundamental investment limitation
concerning purchasing or selling real estate states:

"The Fund may not . . . purchase or sell real estate, other than, to the
extent permitted under the Fund's investment policies, instruments secured
by real estate or interests therein or instruments issued by entities that
invest in real estate or interests therein."6

The Directors recommend that shareholders vote to replace these limitations
with the following fundamental investment limitation governing purchasing or
selling real estate:

"The Fund may not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this shall not prohibit
the Fund from purchasing or selling securities or other instruments backed
by real estate or of issuers engaged in real estate activities)."

The primary purpose of the proposal is to revise each Fund's fundamental
limitation concerning purchasing or selling real estate to conform to a
limitation that is expected to become standard for all funds managed by SCM.
Although adoption of the new limitation is not likely to have a significant
impact on the investment techniques employed by the Funds, it will contribute to
the overall objectives of standardization. (See "Adoption of Standard Investment
Limitations" on page 21.) If the proposal is approved, the new fundamental
limitation concerning purchasing or selling real estate cannot be changed, under
the 1940 Act, without a future vote of a Fund's shareholders.

The proposed limitation (i) clarifies that the Total Return Fund may purchase
real estate related securities of corporate or non-corporate issuers (e.g.,
partnerships or trusts), (ii) clarifies that the Funds may invest in securities
or other instruments backed by real estate, (iii) permits the Funds to dispose
of real estate acquired as a result of permissible investments, and (iv) allows
the Total Return Fund to invest in illiquid real estate securities, subject to
the Fund's investment limitation on illiquid securities, as discussed under 7C.
Voting for this proposal also eliminates the current limitation concerning
purchasing or selling real estate in the Total Return Fund's Bylaws.

- - ---------------

5 The deleted language relates to the Fund's commodities limitation discussed
under 6G.

6 The deleted language relates to the Fund's commodities limitation discussed
under 6G.

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<PAGE> 27

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 6D.

6E. TO AMEND A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING BORROWING. (TOTAL
RETURN AND AMERICAN UTILITIES FUNDS)

The Total Return Fund's current fundamental investment limitation concerning
borrowing states:

"The Fund may not borrow money except from banks for temporary or emergency
purposes (but not for the purpose of purchase of investments), and then,
only in an amount not to exceed 5% of the value of the Fund's net assets at
the time the borrowing is incurred; provided, however, the Fund may enter
into transactions in options, futures and options on futures."

The American Utilities Fund's current fundamental investment limitation
concerning borrowing states:

"The Fund may not borrow money except from banks for temporary or emergency
purposes (but not for the purpose of purchase of investments) and then, only
in an amount not to exceed 33 1/3% of the value of the Fund's net assets at
the time the borrowing is incurred; provided, however, the Fund may engage
in transactions in options, futures contracts, options on futures, and
forward currency contracts. The Fund may not purchase securities when
borrowings exceed 5% of its total assets."

The Directors recommend that shareholders vote to replace these limitations
with the following fundamental investment limitation governing borrowing:

"The Fund may (i) borrow money from banks and (ii) make other investments or
engage in other transactions permissible under the Investment Company Act of
1940 which may involve a borrowing, provided that the combination of (i) and
(ii) shall not exceed 33 1/3% of the value of the Fund's total assets
(including the amount borrowed), less the Fund's liabilities (other than
borrowings), except that the Fund may borrow up to an additional 5% of its
total assets (not including the amount borrowed) from a bank for temporary
or emergency purposes (but not for leverage or the purchase of investments).
The Fund may also borrow money from the other Strong Funds or other persons
to the extent permitted by applicable law."

The primary purpose of the proposal is to revise each Fund's fundamental
borrowing limitation to conform to a limitation that is expected to become
standard for all funds managed by SCM which will contribute to the overall
objectives of standardization. (See "Adoption of Standard Investment
Limitations" on page 21.) If the proposal is approved, the new fundamental
borrowing limitation cannot be changed, under the 1940 Act, without a future
vote of a Fund's shareholders.

The proposed limitation accomplishes five specific goals. First, it increases
the permitted borrowings from 5% to 33 1/3% of total assets (including the
amount borrowed),

27
<PAGE> 28
for the Total Return Fund, allowing the Fund greater flexibility to meet
shareholder redemption requests without liquidating securities at unfavorable
prices or times should the need arise. The ability to borrow additional funds
for such purposes could adversely affect the Fund if it were unable to repay the
borrowed funds without liquidating securities at unfavorable prices or times.
Second, it eliminates the Funds' prohibition against other (i.e., non-bank)
permissible borrowings, such as reverse repurchase agreements and mortgage
dollar roll transactions. In a reverse repurchase agreement, a Fund would sell a
security and enter into an agreement to repurchase the security at a specified
future date and price. Since a Fund receives cash upon entering into a reverse
repurchase agreement, it may be considered a borrowing. In mortgage dollar
rolls, a Fund would sell mortgage-backed securities for delivery in the current
month and simultaneously contract to purchase substantially similar securities
on a specified future date. While a Fund would forego principal and interest
paid on the mortgage-backed securities during the roll period, the Fund would be
compensated by the difference between the current sales price and the lower
price for the future purchase as well as by any interest earned on the proceeds
of the initial sale. Third, the proposed limitation eliminates the Funds'
existing exception from the borrowing money limitation for transactions in
options, futures, and options on futures because such transactions do not
involve borrowing money. Fourth, the proposed limitation permits each Fund to
borrow up to an additional 5% of its total assets (not including the amount
borrowed) for temporary or emergency purposes. Fifth, it permits the Funds to
borrow money from the other Strong Funds ("interfund lending") if an order were
obtained from the SEC permitting such borrowings. The purpose of an interfund
lending program for the Strong Funds would be to reduce borrowing costs (and
increase interest received by the lending Strong Fund) from that available
through other sources, such as bank borrowings or reverse repurchase agreements.
An interfund lending program would involve certain risks. For example, there is
the risk that a lending fund could experience delays in obtaining prompt
repayment of a loan or a borrowing fund could be required to repay funds on
short notice. The Directors have no current intention of pursuing such an SEC
order.

If shareholders of the Total Return Fund approve Proposal 4, and thus remove
the 10% borrowing limitation from the Fund's Articles of Incorporation, but do
not approve this Proposal concerning borrowing, the Fund will remain subject to
a 5% borrowing limitation as described above. If shareholders of the Fund do not
approve Proposal 4 and approve this Proposal, the Fund will remain subject to
the 10% limitation in the Fund's Articles of Incorporation, even though the new
fundamental investment limitation concerning borrowing would allow the Fund to
borrow up to 33 1/3% of its total assets.

Subject to shareholder approval of the revised investment limitation
concerning borrowing, the Directors will adopt a non-fundamental operating
policy, which may be changed by the Directors without shareholder approval, that
states:

"The Fund may not borrow money except (i) from banks or (ii) through reverse
repurchase agreements or mortgage dollar rolls, and will not purchase
securities when bank borrowings exceed 5% of its total assets."

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<PAGE> 29

This operating policy clarifies that the Funds do not intend, following
adoption of the amended fundamental investment limitation, to borrow money
through bank borrowing transactions other than reverse repurchase agreements and
mortgage dollar roll transactions. This policy would be amended by the Directors
should the Funds seek and obtain an exemptive order permitting an interfund
lending program.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 6E.

6F. TO AMEND A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING UNDERWRITING
SECURITIES. (TOTAL RETURN AND AMERICAN UTILITIES FUNDS)

The Total Return Fund's current fundamental investment limitation concerning
underwriting securities states:

"The Fund may not act as an underwriter of securities of other issuers."

The American Utilities Fund's current fundamental investment limitation
concerning underwriting securities states:

"The Fund may not act as an underwriter of another issuer's securities."

The Directors recommend that shareholders vote to replace this limitation with
the following fundamental investment limitation governing underwriting
securities:

"The Fund may not act as an underwriter of another issuer's securities,
except to the extent that the Fund may be deemed to be an underwriter within
the meaning of the Securities Act of 1933 in connection with the purchase
and sale of portfolio securities."

The primary purpose of the proposal is to revise each Fund's fundamental
underwriting securities limitation to conform to a limitation that is expected
to become standard for all funds managed by SCM. Although adoption of the new
limitation is not likely to have a significant impact on the investment
techniques employed by the Funds, it will contribute to the overall objectives
of standardization. (See "Adoption of Standard Investment Limitations" on page
21.) If the proposal is approved, the new fundamental underwriting securities
limitation cannot be changed, under the 1940 Act, without a future vote of a
Fund's shareholders. The proposed limitation primarily clarifies that the
disposition of portfolio instruments is not prohibited even if a Fund may be
considered an "underwriter" within the meaning of the federal securities laws.
Voting for this proposal also eliminates the current limitation concerning
underwriting securities in the Total Return Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 6F.

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<PAGE> 30

6G. TO AMEND A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING PURCHASING OR
SELLING FINANCIAL COMMODITIES. (TOTAL RETURN AND AMERICAN UTILITIES FUNDS)

The Total Return Fund's current fundamental investment limitation concerning
purchasing or selling commodities states:

"The Fund may not purchase, hold, or deal in commodities or commodity
contracts (except that the Fund may enter into futures contracts subject to
Item 18 and options on futures contracts subject to Items 13, 18, and
19) . . . ."7

The American Utilities Fund's current fundamental investment limitation
concerning purchasing or selling commodities states:

"The Fund may not purchase, hold, or deal in commodities or commodity
contracts (except that the Fund may engage in futures, options on futures,
and foreign currency transactions) . . . ."8

The Directors recommend that shareholders vote to replace these limitations
with the following new fundamental investment limitation governing purchasing or
selling of commodities:

"The Fund may not purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling options, futures contracts, or
other derivative instruments, or from investing in securities or other
instruments backed by physical commodities)."

The primary purpose of the proposal is to revise each Fund's fundamental
limitation concerning purchasing or selling commodities to conform to a
limitation that is expected to become standard for all funds managed by SCM. The
adoption of the new limitation may have a significant impact on the investment
techniques employed by the Funds (as discussed below) and will contribute to the
overall objectives of standardization. (See "Adoption of Standard Investment
Limitations" on page 21.) If the proposal is approved, the new fundamental
limitation concerning purchasing or selling commodities cannot be changed, under
the 1940 Act, without a future vote of a Fund's shareholders. The proposed
limitation (i) permits a Fund to engage in derivative transactions that may be
based upon the value, in whole or in part, of some "commodity," subject to the
Fund's investment objective, and policies, and (ii) clarifies that a Fund may
acquire an interest in physical commodities as a result of the ownership of
securities or other instruments. The

- - ---------------

7 The deleted language relates to the Fund's real estate limitations discussed
under 6D. Items 13, 18, and 19 of the Fund's fundamental investment limitations,
which currently restrict the nature and extent of the Fund's options and futures
transactions, are discussed under 7G.

8 The deleted language relates to the Fund's real estate limitations discussed
under 6D.

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<PAGE> 31

use of derivative instruments is likely to result in certain additional risks to
a Fund, as more fully described below.

Derivative instruments are securities or agreements whose value is derived
from the value of some underlying asset, including without limitation,
securities, currencies, reference indexes, or commodities. Derivative
transactions may include certain attributes of leverage and, accordingly, the
fluctuation of the value of the derivative transaction in relation to the
underlying asset may be magnified. Derivative transactions may be used by a Fund
for a variety of purposes, such as hedging or enhancing returns.

Derivative transactions may be exchange traded or over-the-counter
transactions between private parties. Over-the-counter transactions are subject
to the credit risk of the counterparty to the instrument and are generally
illiquid since they often can only be closed out with the other party to the
transaction. When required by the SEC, a Fund will set aside permissible liquid
assets in a segregated account to secure its obligations under derivative
transactions. In order to maintain its required cover for a derivative
transaction, a Fund may need to sell portfolio securities at disadvantageous
prices or times since it may not be possible to liquidate a derivative position.

The successful use of derivative transactions by a Fund is dependent upon
SCM's ability to correctly anticipate trends in the underlying asset. To the
extent that a Fund engages in derivative transactions other than for hedging
purposes, a Fund's successful use of such transactions is more dependent upon
SCM's ability to correctly anticipate such trends, since losses in these
transactions may not be offset by gains in a Fund's portfolio or in lower
purchase prices for assets it intends to acquire. SCM's prediction of trends by
underlying assets may prove to be inaccurate, which could result in substantial
losses to a Fund. Hedging transactions are also subject to risks. If SCM
incorrectly anticipates trends in the underlying asset, a Fund may be in a worse
position than if no hedging had occurred. In addition, there may be imperfect
correlation between a Fund's derivative transactions and the instruments being
hedged.

While shareholders should understand the foregoing risks of authorizing a Fund
to engage in derivative transactions (other than futures and options
transactions), the Directors believe that the flexibility added by such
authorization warrants the adoption of the amended fundamental investment
restriction. Voting for this proposal also eliminates the current limitation
concerning purchasing or selling commodities in the Total Return Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 6G.

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<PAGE> 32

6H. TO AMEND OR ADOPT A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING ISSUING
SENIOR SECURITIES. (TOTAL RETURN AND AMERICAN UTILITIES FUNDS)

The Total Return Fund has no express statement regarding issuing senior
securities, but has authorization in its fundamental investment limitations to
engage in certain options and futures transactions, as discussed under 7G.
Accordingly, the Total Return Fund does not issue senior securities or engage in
transactions which may raise senior security issues, except as specifically
authorized. The American Utilities Fund's current fundamental investment
limitation concerning issuing senior securities states:

"The Fund may not issue senior securities. For purposes of this investment
restriction, the futures, options, forward currency and borrowing
transactions permitted under the Fund's investment policies are not deemed
to be the issuance of senior securities."

The Directors recommend that shareholders adopt, the following fundamental
investment limitation concerning issuing senior securities:

"The Fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940."

The primary purpose of the proposal is to adopt a fundamental limitation
regarding issuing senior securities that is expected to become the standard for
all funds managed by SCM. Although adoption of the new limitation is not likely
to have a significant impact on the investment techniques employed by the Funds,
it will contribute to the overall objectives of standardization. (See "Adoption
of Standard Investment Limitations" on page 21.) If the proposal is approved,
the new fundamental limitation concerning issuing senior securities cannot be
changed, under the 1940 Act, without a future vote of a Fund's shareholders.

The proposed limitation (i) increases the Total Return Fund's authorization to
engage in transactions that may raise senior security issues to the extent
permissible under the 1940 Act, and (ii) clarifies that the American Utilities
Fund may engage in other non-specified transactions which raise senior security
issues (i.e., transactions other than futures, options, forward currency
contracts and borrowing transactions) to the extent permitted under the 1940
Act. The 1940 Act restricts a fund's ability to issue senior securities. While
the definition of "senior security" involves complex statutory and regulatory
concepts, a senior security is generally thought of as a class of security
having preference over shares of a Fund with respect to the Fund's assets or
earnings. It generally does not include borrowings by a Fund (which might occur
to meet shareholder redemption requests) in accordance with federal law and a
Fund's investment limitations. Various investment techniques that obligate a
Fund to pay money at a future date (e.g., the purchase of securities for
settlement on a date that is longer than normal) occasionally raise questions as
to whether a "senior security" is created. While the proposed fundamental
investment limitation concerning issuing senior securities will generally
increase a Fund's ability to engage in transactions which may raise senior

32
<PAGE> 33

security issues, the Funds utilize such techniques only in accordance with
applicable regulatory requirements. Voting for this proposal also eliminates the
current limitation concerning issuing senior securities in the Total Return
Fund's Bylaws.
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 6H.

6I. TO ADOPT A FUNDAMENTAL INVESTMENT POLICY CONCERNING POOLED FUND STRUCTURES.
(TOTAL RETURN AND AMERICAN UTILITIES FUNDS)

The Directors have approved, subject to a shareholder vote, the adoption of a
new fundamental investment policy that would permit each Fund to invest all of
its assets in another open-end investment company with substantially the same
investment objectives and policies (a Pooled Fund Structure). To allow the Funds
to invest in a Pooled Fund at a future date, the Directors recommend that the
shareholders approve the following fundamental policy:

"The Fund may, notwithstanding any other fundamental investment policy or
restriction, invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental
investment objective, policies, and restrictions as the Fund."

If the proposal is adopted, the Directors intend to adopt the following
non-fundamental operating policy:

"The Fund may not invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, restrictions, and policies as the Fund."

The primary purpose of the proposal is to adopt a fundamental policy regarding
Pooled Fund Structures that is expected to become a standard fundamental policy
for all funds managed by SCM. (See "Adoption of Standard Investment Limitations"
on page 21.) The adoption of the new fundamental policy is not likely to have
any impact on the investment techniques employed by the Funds because the
Directors have no present intention of investing either Fund's assets in a
Pooled Fund. If the proposal is approved, the new fundamental investment policy
concerning Pooled Fund Structures cannot be changed, under the 1940 Act, without
a future vote of a Fund's shareholders.

The purpose of a Pooled Fund Structure is to achieve operational efficiencies
and cost reductions through the consolidation of portfolio management while
maintaining different distribution and servicing structures. In the future, SCM
may manage a number of funds with similar investment objectives, policies, and
limitations, but with different features and services. In such a case, the
pooling of their assets would generally achieve operational efficiencies and
cost reductions. If a Fund invested all of its assets in a Pooled Fund, the Fund
would hold only a single investment security and the Pooled Fund would directly
invest in individual securities pursuant to its investment objective.

33
<PAGE> 34

While neither SCM nor the Directors have determined that the Funds should
invest in a Pooled Fund, the Directors believe that it could be in the best
interest of a Fund to adopt such a structure at a future date. However, the
Directors will only authorize such an arrangement (i) if it is permitted under a
Fund's investment policies, (ii) if they determine that it is in the best
interests of a Fund, and (iii) if, upon advice of counsel, they determine that
the investment will not have material adverse tax consequences to a Fund or its
shareholders.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 6I.

7A. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING SHORT SALES OF
SECURITIES.
(TOTAL RETURN FUND)

The Total Return Fund's current fundamental investment limitation concerning
short sales of securities states:

"The Fund may not sell securities short except where a long position is held
in the security, which equals or exceeds the number of shares sold
short . . . ."9

The Directors recommend that shareholders vote to eliminate the above
fundamental investment limitation. Subject to shareholder approval of this
recommendation, the Directors intend to implement the following non-fundamental
operating policy:

"The Fund may not sell securities short, unless the Fund owns or has the
right to obtain securities equivalent in kind and amount to the securities
sold short, or unless it covers such short sale as required by the current
rules and positions of the SEC or its staff, and provided that transactions
in options, futures contracts, options on futures contracts, or other
derivative instruments are not deemed to constitute selling securities
short."

The primary purpose of the proposal is to eliminate the Total Return Fund's
fundamental limitation concerning short sales of securities and adopt a
non-fundamental operating policy that would conform to a non-fundamental
operating policy that is expected to become standard for all funds managed by
SCM. Adoption of the non-fundamental policy may have an impact on the investment
techniques employed by the Fund (as discussed below), and it will contribute to
the overall objectives of standardization. (See "Adoption of Standard Investment
Limitations" on page 21.) If the proposal is approved, the new non-fundamental
investment policy concerning short sales of securities could be changed by the
Directors without a future vote of the Fund's shareholders.

The proposed non-fundamental operating policy concerning short sales of
securities (i) permits the Fund to engage in short sales against the box, and
(ii) clarifies that options,

- - ---------------

9 The deleted language relates to the Fund's use of margin limitation discussed
under 7B.

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<PAGE> 35

futures, options on futures, and certain other transactions, which may involve a
"short" position relative to a security, do not constitute short sale
transactions under the operating policy. In a short sale transaction, the Fund
sells a borrowed security and agrees to return the same security to the lender.
A short sale is "against the box" when the Fund owns or has the right to obtain
securities identical to those sold short. If the Fund sells securities short
against the box, it may protect unrealized gains, but will lose the opportunity
to profit on such securities if the price rises. Short-sale transactions, other
than covered short sale transactions such as short sales against the box, are
considered prohibited senior security issuances under the 1940 Act and certain
state regulations concerning short sales currently prohibit mutual funds from
entering into any short sales, other than short sales against the box. Voting
for this proposal also eliminates the current limitation concerning short sales
of securities from the Total Return Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 7A.

7B. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING USE OF MARGIN.
(TOTAL RETURN AND AMERICAN UTILITIES FUNDS)

The Total Return Fund's current fundamental investment limitation concerning
use of margin states:

"The Fund may not . . . purchase any securities on margin."10

The American Utilities Fund's current fundamental investment limitation
concerning use of margin states:

"The Fund may not purchase any securities on margin, except for the use of
short-term credit necessary for clearance of purchases of portfolio
securities, the payment of initial and variation margin deposits in
connection with futures contracts and options thereon, and the purchase and
sale of options."

The Directors recommend that shareholders vote to eliminate the above
fundamental investment limitations. Subject to shareholder approval of this
recommendation, the Directors intend to implement the following non-fundamental
operating policy:

"The Fund may not purchase securities on margin, except that the Fund may
obtain such short-term credits as are necessary for the clearance of
transactions; and provided that margin deposits in connection with futures
contracts, options on futures contracts, or other derivative instruments
shall not constitute purchasing securities on margin."

The primary purpose of the proposal is to eliminate each Fund's fundamental
limitations concerning the use of margin and adopt a non-fundamental operating
policy

- - ---------------

10 The deleted language relates to short sales of securities discussed under 7A.

35
<PAGE> 36

that would conform to a non-fundamental operating policy that is expected to
become standard for all funds managed by SCM. Although adoption of the
non-fundamental policy is not likely to have a significant impact on the
investment techniques employed by the Funds, it will contribute to the overall
objectives of standardization. (See "Adoption of Standard Investment
Limitations" on page 21.) If the proposal is approved, the new non-fundamental
investment policy concerning use of margin could be changed by the Directors
without a future vote of a Fund's shareholders.

The proposed non-fundamental operating policy concerning use of margin (i)
clarifies that the Funds may use short-term credit for the clearance of
portfolio transactions and margin deposits for options, futures, and derivative
transactions, (ii) permits the Funds to engage in futures and options
transactions subject to the limitations discussed under 6G concerning purchasing
or selling commodities, and (iii) clarifies that premiums paid under other
derivative transactions do not constitute prohibited margin purchases. Margin
purchases involve the purchase of securities with money borrowed from a broker.
"Margin" is the cash or securities that the borrower places with its broker as
collateral against this loan. Under the 1940 Act, the SEC views the obligation
to repay funds borrowed in a margin arrangement as a senior security and,
therefore, such an arrangement is prohibited. Voting for this proposal also
eliminates the current limitation concerning use of margin from the Total Return
Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 7B.

7C. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING ILLIQUID AND
RESTRICTED SECURITIES.
(TOTAL RETURN FUND)

The Total Return Fund's current fundamental investment limitation concerning
illiquid and restricted securities states:

"The Fund may not invest in restricted securities (restricted as to
disposition under federal securities laws), illiquid securities, or other
securities without readily available market quotations, including repurchase
agreements maturing in more than seven days if, as a result of any such
investment, more than 10% of the value of the Fund's total assets would be
invested in restricted, illiquid, or other securities without readily
available market quotations."

"The Fund may not invest in illiquid securities if, as a result of such
investment, more than 15% of its net assets would be invested in illiquid
securities, or such other amounts as may be permitted under the Investment
Company Act of 1940."

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<PAGE> 37

The primary purpose of the proposal is to eliminate the Total Return Fund's
fundamental limitation concerning illiquid and restricted securities and adopt a
non-fundamental operating policy that would conform to a non-fundamental
operating policy that is expected to become standard for all funds managed by
SCM. This will permit the Fund to purchase restricted securities. Adoption of
the non-fundamental operating policy will also contribute to the overall
objectives of standardization. (See "Adoption of Standard Investment
Limitations" on page 21.) If the proposal is approved, the new non-fundamental
investment policy concerning illiquid and restricted securities could be changed
by the Directors without a future vote of the Fund's shareholders.

The proposed non-fundamental operating policy concerning illiquid and
restricted securities (i) increases the Total Return Fund's authority to invest
in illiquid securities from 10% of total assets to 15% of net assets as
permitted under the 1940 Act, and (ii) conforms the Fund's illiquid securities
limitation to the requirements of the 1940 Act by eliminating specific
references to various types of securities which may be considered illiquid, such
as repurchase agreements maturing in more than seven days and restricted
securities. If the Fund holds a material percentage of its assets in illiquid or
restricted securities or other assets for which there is no established trading
market, there may be a question as to the Fund's ability to meet its redemption
obligations (or accurately to calculate its net asset value). Voting for this
proposal also eliminates the current limitation concerning illiquid and
restricted securities from the Total Return Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 7C.

7D. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING THE PURCHASE OF
INVESTMENT COMPANY SECURITIES. (TOTAL RETURN AND AMERICAN UTILITIES FUNDS)

The Total Return and American Utilities Funds' current fundamental investment
limitation concerning the purchase of investment company securities states:

"The Fund may not purchase securities of other investment companies."

"The Fund may not purchase securities of other investment companies except
in compliance with the Investment Company Act of 1940 and applicable state
law."

The primary purpose of the proposal is to eliminate each Fund's fundamental
limitation concerning purchasing investment company securities and adopt a
non-fundamental operating policy that would conform to a non-fundamental
operating policy that is expected to become standard for all funds managed by
SCM. Although adoption of the non-fundamental policy is not likely to have a
significant impact on the investment techniques employed by the Funds, it will
contribute to the overall objectives of

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standardization. (See "Adoption of Standard Investment Limitations" on page 21.)
If the proposal is approved, the new non-fundamental investment policy
concerning purchase of investment company securities could be changed by the
Directors without a future vote of a Fund's shareholders.

The proposed non-fundamental operating policy concerning purchase of
investment company securities allows the Fund to invest in investment companies
to the extent allowed by the 1940 Act and state law. Under the 1940 Act, the
Fund is subject to certain limitations regarding purchasing the securities of
other investment companies. In general, the 1940 Act prevents a Fund from (i)
investing more than 10% of its total assets in the securities of other
investment companies, (ii) owning more than 3% of the outstanding voting stock
of any other investment company, and (iii) having more than 5% of its total
assets invested in securities of another investment company. There are also
additional limitations regarding investments in closed-end investment companies,
and a few states currently impose additional limitations on purchases of
investment company securities. Voting for this proposal also eliminates the
current limitation concerning illiquid and restricted securities from the Total
Return Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 7D.

7E. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING PURCHASING SECURITIES OF NEWLY-FORMED ISSUERS. (TOTAL RETURN
FUND)

The Total Return Fund's current fundamental investment limitation concerning
purchasing securities of newly-formed issuers states:

"The Fund may not purchase securities of any company having less than three
years' continuous operation (including operations of any predecessors) if
such purchase would cause the value of the Fund's investments in all such
companies to exceed 5% of the value of its assets."

"The Fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by domestic or foreign governments or
political subdivisions thereof) if, as a result, more than 5% of its total
assets would be invested in the securities of issuers that, including
predecessor or unconditional guarantors, have a record of less than three
years of continuous operation. This policy does not apply to securities of
pooled investment vehicles or mortgage or asset-backed securities."

The primary purpose of the proposal is to eliminate the Total Return Fund's
fundamental limitation concerning purchasing securities of newly-formed issuers
and adopt a non-fundamental operating policy that would conform to a
non-fundamental

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<PAGE> 39

operating policy that is expected to become standard for all funds managed by
SCM. Although adoption of the non-fundamental policy is not likely to have a
significant impact on the investment techniques employed by the Fund, it will
contribute to the overall objectives of standardization. (See "Adoption of
Standard Investment Limitations" on page 21.) If the proposal is approved, the
new non-fundamental investment policy concerning purchasing securities of
newly-formed issuers could be changed by the Directors without a future vote of
the Fund's shareholders.

The proposed non-fundamental operating policy concerning purchasing securities
of newly-formed issuers clarifies that the limitation is inapplicable to pools
of asset-backed securities and U.S. government and foreign government
securities. Newly-formed issuers or "unseasoned issuers" are generally defined
as issuers with less than three years of continuous operation, including
predecessors. Voting for this proposal also eliminates the current limitation
concerning purchasing securities of newly-formed issuers from the Total Return
Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 7E.

7F. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING INVESTING IN OIL AND GAS INTERESTS.
(TOTAL RETURN FUND)

The Total Return Fund's current fundamental investment limitation concerning
investing in oil and gas interests states:

"The Fund may not invest in interests in oil, gas, or other mineral
exploration programs."

"The Fund may not invest in direct interests in oil, gas, or other mineral
exploration programs or leases; however, the Fund may invest in the
securities of issuers that engage in these activities."

The primary purpose of the proposal is to eliminate the Total Return Fund's
fundamental limitation concerning investing in oil and gas interests and adopt a
non-fundamental operating policy that would conform to a non-fundamental
operating policy that is expected to become standard for all funds managed by
SCM. Although adoption of the non-fundamental policy is not likely to have a
significant impact on the investment techniques employed by the Fund, it will
contribute to the overall objectives of standardization. (See "Adoption of
Standard Investment Limitations" on page 21.) If the proposal is approved, the
new non-fundamental investment policy concerning investing in oil and gas
interests could be changed by the Directors without a future vote of the Fund's
shareholders. The proposed non-fundamental operating policy concerning investing
in oil

39
<PAGE> 40

and gas interests clarifies that the Fund may invest in securities of issuers
engaged in oil, gas, or other mineral exploration activities. Voting for this
proposal also eliminates the current limitation concerning investing in oil and
gas interests from the Total Return Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 7F.

7G. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING FUTURES AND
OPTIONS. (TOTAL RETURN AND
AMERICAN UTILITIES FUNDS)

The Total Return Fund's current fundamental investment limitation concerning
futures and options states:

"The Fund may not engage in the purchase and sale of put or call options on
securities, indexes, or futures contracts or in writing such options, except
that the Fund may, subject to the provisions of Item 19 hereof: (i) purchase
covered spread options provided that the value of such options at any time
does not exceed 5% of the Fund's net assets, (ii) write covered call options
and purchase covered put options with respect to all of its portfolio
securities and enter into closing transactions with respect to such options,
(iii) write call options and purchase put options on futures contracts and
enter into closing transactions with respect to such options, (iv) purchase
stock index options for any purpose and enter into closing transactions with
respect to such options, and (v) write covered stock index options for
hedging purposes."

"The Fund may not enter into a futures contract or an option thereon unless
if, as a result thereof, (i) not more than 30% of the Fund's net assets
would be represented by futures contracts (including the then current
aggregate futures market prices of financial instruments required to be
delivered under open futures contract sales plus the then current aggregate
purchase prices of financial instruments required to be purchased under open
futures contract purchases) and (ii) not more than 5% of the Fund's total
assets (taken at market value at the time of entering into the contract)
would be committed to initial margin and premiums paid on futures contracts
and options on futures contracts. Transactions in futures contracts and
options on futures contracts may be entered into only for hedging purposes."

"The Fund may not purchase or write options on securities, indexes, and
futures contracts if, as a result thereof, (i) the aggregate market value of
all portfolio securities covering such options exceeds 25% of the Fund's net
assets, (ii) the value of all options exceeds 5% of the Fund's total assets,
or (iii) the aggregate premiums paid for all such options held exceeds 5% of
the Fund's net assets."

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<PAGE> 41

The American Utilities Fund's current fundamental investment limitation
concerning futures and options states:

"The Fund may not (i) write covered put or call options if the value of the
Fund's assets covering such options exceeds 25% of the Fund's total assets,
or (ii) purchase put or call options if the value of all premiums paid for
such options exceeds 5% of the Fund's total assets."

"The Fund may not engage in futures or options on futures transactions which
are impermissible pursuant to Rule 4.5 under the Commodity Exchange Act and,
in accordance with Rule 4.5, will use futures or options on futures
transactions solely for bona fide hedging transactions (within the meaning
of the Commodity Exchange Act), provided, however, that the Fund may, in
addition to bona fide hedging transactions, use futures and options on
futures transactions if the aggregate initial margin and premiums required
to establish such positions, less the amount by which any such options
positions are in the money (within the meaning of the Commodity Exchange
Act), do not exceed 5% of the Fund's net assets.

In addition, (i) the aggregate value of securities underlying call options
on securities written by the Fund or obligations underlying put options on
securities written by the Fund determined as of the date the options are
written will not exceed 50% of the Fund's net assets; (ii) the aggregate
premiums paid on all options purchased by the Fund and which are being held
will not exceed 20% of the Fund's net assets; (iii) the Fund will not
purchase put or call options, other than hedging positions, if, as a result
thereof, more than 5% of its total assets would be so invested; and (iv) the
aggregate margin deposits required on all futures and options on futures
transactions being held will not exceed 5% of the Fund's total assets."

The primary purpose of the proposal is to eliminate the Funds' fundamental
limitation concerning purchasing or selling options and adopt a non-fundamental
operating policy for the Funds that is expected to become standard for most
funds managed by SCM. Although adoption of the non-fundamental policy is not
likely to have a significant impact on the investment techniques employed by the
Funds, it will contribute to the overall objectives of standardization. (See
"Adoption of Standard Investment Limitations" on page 21.) If the proposal is
approved, the new non-fundamental investment policy concerning futures and
options could be changed by the Directors without a future vote of a Fund's
shareholders.

Currently, the Funds may hedge an unrealized gain by purchasing covered put
options on specific equity securities and, with respect to the American
Utilities Fund, other portfolio securities, which allows the Fund to sell
securities to the writer (seller) of the option at a set price on or before the
expiration date of the option. Both Funds may purchase stock index options for
any purpose, write covered stock index options for

41
<PAGE> 42

hedging purposes, and enter into closing transactions on these options. Options
on securities and stock indexes in which the Funds may invest are exchange
traded or, with respect to the American Utilities Fund, may be traded
over-the-counter.

The Total Return Fund may invest in index and interest rate futures contracts.
The Fund may also write call options and purchase put options on index and
interest rate futures contracts and enter into closing transactions with respect
to those options. The American Utilities Fund may engage in futures and options
on futures transactions. The Fund's futures transactions may include instruments
such as index and interest rate futures contracts and options thereon. Futures
transactions may be used for several reasons, including hedging unrealized
portfolio gains, minimizing adverse principal fluctuations in a Fund's debt
securities, or as a means of adjusting exposure to various markets.

The proposed limitation is not expected to materially change the Funds'
investment programs, although such changes generally increase a Fund's authority
to engage in futures and options transactions by increasing the assets of a Fund
that may be committed to such transactions or by broadening the purposes for
which a Fund may engage in such transactions. The risks associated with
derivative transactions, including futures and options transactions, are
discussed under 6G. Voting for this proposal also eliminates the current
limitation concerning futures and options from the Total Return Fund's Bylaws.
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 7G.

7H. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING PLEDGING ASSETS.
(TOTAL RETURN AND AMERICAN UTILITIES FUNDS)

The Total Return Fund's current fundamental investment limitation concerning
pledging assets states:

"The Fund may not pledge, mortgage, hypothecate, or otherwise encumber any
of its assets, except as may be necessary in connection with options,
futures and options on futures and in connection with permissible loans of
portfolio securities."

The American Utilities Fund's current fundamental investment limitation
concerning pledging assets states:

"The Fund may not pledge, mortgage, hypothecate, or otherwise encumber any
of its assets, except to secure permitted borrowings and except that the
Fund may invest in options, futures contracts, options on futures contracts
and forward currency contracts."

42
<PAGE> 43

"The Fund may not pledge, mortgage or hypothecate any assets owned by the
Fund except as may be necessary in connection with permissible borrowings or
investments and then such pledging, mortgaging, or hypothecating may not
exceed 33 1/3% of the Fund's total assets at the time of the borrowing or
investment."

The primary purpose of the proposal is to eliminate each Fund's fundamental
limitation concerning pledging assets and adopt a non-fundamental operating
policy that would conform to a non-fundamental operating policy that is expected
to become standard for all funds managed by SCM. Although adoption of the
non-fundamental policy is not likely to have a significant impact on the
investment techniques employed by the Funds, it will contribute to the overall
objectives of standardization. (See "Adoption of Standard Investment
Limitations" on page 21.) If the proposal is approved, the new non-fundamental
investment policy concerning pledging assets could be changed by the Directors
without a future vote of a Fund's shareholders.

The proposed non-fundamental operating policy concerning pledging assets (i)
allows the Total Return Fund to pledge up to 33 1/3% of its total assets in
connection with permitted borrowings, (ii) allows pledging in connection with
borrowings, and (iii) clarifies that a Fund may pledge its assets in connection
with permissible investments, without limiting those investments. Pledging
transactions may arise, for example, when a Fund engages in reverse repurchase
agreements or securities lending transactions. Pledging assets is not without
risk and the proposed policy represents an increase in the amount of assets
subject to pledging. Assets that have been pledged to other parties may not be
readily available to a Fund. Therefore, a Fund may have less flexibility in
liquidating such assets if it became necessary to do so. Allowing a Fund to
pledge a greater portion of its assets could impair the Fund's ability to meet
current obligations or impede portfolio management. Voting for this proposal
also eliminates the current limitation concerning pledging assets from the Total
Return Fund's Bylaws.
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 7H.

7I. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING SECURITIES
INVESTMENTS OF DIRECTORS AND OFFICERS. (TOTAL RETURN FUND)

The Total Return Fund's current fundamental investment limitation concerning
securities investments of directors and officers states:

"The Fund may not purchase or retain the securities of any issuer if those
officers or directors of the Fund or its investment advisor owning
individually more than 1/2 of

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<PAGE> 44

1% of the securities of such issuer together own more than 5% of the
securities of such issuer."

"The Fund may not purchase or retain the securities of any issuer if any
officer or director of the Fund or its investment advisor beneficially owns
more than 1/2 of 1% of the securities of such issuer and such officers and
directors together own beneficially more than 5% of the securities of such
issuer."

The purpose of the proposal is to eliminate the Total Return Fund's
fundamental limitation concerning director and officer securities investments
and adopt a non-fundamental operating policy that would conform to a
non-fundamental operating policy that is expected to become standard for all
funds managed by SCM. Although adoption of the non-fundamental policy is not
likely to have any impact on the investment techniques employed by the Fund, it
will contribute to the overall objectives of standardization. (See "Adoption of
Standard Investment Limitations" on page 21.) Directors and officers may
purchase securities owned by the Fund only in accordance with the 1940 Act and
the Fund's Code of Ethics. If the proposal is approved, the new non-fundamental
investment policy concerning director and officer securities investments could
be changed by the Directors without a future vote of the Fund's shareholders.
Voting for this proposal also eliminates the current limitation concerning
director and officer securities investments from the Total Return Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT
SHAREHOLDERS VOTE FOR PROPOSAL 7I.

7J. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING FUND PORTFOLIO
TRANSACTIONS WITH DIRECTORS AND OFFICERS. (TOTAL RETURN FUND)

The Total Return Fund's current fundamental investment limitation concerning
fund portfolio transactions with directors and officers states:

"The Fund may not purchase from or sell to any of its officers or directors
or firms of which any of them are members any securities (other than capital
stock of the Fund)."

Subject to shareholder approval, the Directors intend to eliminate this
fundamental investment limitation. Although elimination of the fundamental
policy is not likely to have any impact on the investment techniques employed by
the Fund, it will contribute to the overall objectives of standardization. (See
"Adoption of Standard Investment Limitations" on page 21.) The 1940 Act
prohibits many types of affiliated transactions including those covered by the
Fund's current investment limitation. However, because the current investment
limitation covers only a small portion of prohibited activities governed by the

44
<PAGE> 45

1940 Act, the Directors recommend eliminating the limitation because it does not
fully cover prohibited transactions. Voting for this proposal also eliminates
the current limitation concerning purchases and sales of securities to directors
and officers from the Total Return Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT
SHAREHOLDERS VOTE FOR PROPOSAL 7J.

7K. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING INVESTING IN
SECURITIES FOR THE PURPOSE OF MANAGEMENT OR CONTROL. (TOTAL RETURN FUND)

The Total Return Fund's current fundamental investment limitation concerning
investing in securities for the purpose of management or control states:

"The Fund may not invest in the securities of a company for the purpose of
management or the exercise of control."

Subject to shareholder approval, the Directors intend to eliminate this
fundamental investment limitation. Although elimination of the fundamental
policy is not likely to have a significant impact on the investment techniques
employed by the Fund, it will contribute to the overall objectives of
standardization. (See "Adoption of Standard Investment Limitations" on page 21.)
While the Fund has no present intention of investing in issuers for the purpose
of management or control, elimination of this fundamental investment limitation
would allow the Fund do so in the future, subject to applicable regulatory
requirements. Voting for this proposal also eliminates the current limitation
concerning investing in securities for the purpose of management or control from
the Total Return Fund's Bylaws.
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT

SHAREHOLDERS VOTE FOR PROPOSAL 7K.

7L. TO ELIMINATE A FUNDAMENTAL INVESTMENT LIMITATION CONCERNING PARTICIPATING ON
A JOINT BASIS IN ANY TRADING ACCOUNT. (TOTAL RETURN FUND)

The Total Return Fund's current fundamental investment limitation concerning
participating on a joint basis in any trading account states:

"The Fund may not participate on a joint or joint-and-several basis in any
trading account in any securities."

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<PAGE> 46

person of a Fund from effecting any transaction in which the Fund is a joint or
joint and several participant. The 1940 Act also prohibits an affiliated person
of a Fund from participating in or effecting any transaction in connection with
a joint enterprise or arrangement without prior approval from the SEC. Because
the current fundamental investment limitation only covers a small portion of the
activities which are prohibited by the 1940 Act, the Directors recommend that
this fundamental investment limitation be eliminated so that there is no
implication that other joint transactions are permissible. Elimination of this
investment limitation could also permit the Fund to seek an order from the SEC
permitting the Fund to enter into a joint repurchase agreement with other Strong
Funds if the Directors determine that such an order would be advisable; however,
the Directors have no current intention to do so. Voting for this proposal also
eliminates the current limitation concerning participating on a joint basis in
any trading account from the Total Return Fund's Bylaws.

THE DIRECTORS UNANIMOUSLY RECOMMEND THAT
SHAREHOLDERS VOTE FOR PROPOSAL 7L.

OTHER MATTERS

The Directors know of no other matters that may come before the Meeting. If
any other matters properly come before the Meeting, it is the intention of the
persons acting pursuant to the enclosed proxy card(s) to vote the shares
represented by such proxies in accordance with their best judgment with respect
to such matters.

SHAREHOLDER PROPOSALS

Any shareholder proposals to be presented at the 1996 Annual Meeting of
Shareholders of the Funds, if such meeting is held, must be received at the
executive offices of a Fund on or before October 31, 1995.

By Order of the Board of Directors,

ANN E. OGLANIAN
Secretary

Menomonee Falls, Wisconsin
February 16, 1995

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EXHIBIT A

INVESTMENT ADVISORY AGREEMENT

THIS AGREEMENT is made and entered into on this day of , 19 ,
between STRONG , INC., a Wisconsin corporation (the "Fund"),
and STRONG CAPITAL MANAGEMENT, INC., a Wisconsin corporation (the "Adviser");

WITNESSETH

WHEREAS, the Fund is registered with the Securities and Exchange Commission as
an open-end management investment company under the Investment Company Act of
1940 (the "1940 Act");

WHEREAS, the Fund is authorized to create separate series, each with its own
separate investment portfolio; and,

WHEREAS, the Fund desires to retain the Adviser, which is a registered
investment adviser under the Investment Advisers Act of 1940, to act as
investment adviser for the Fund or each series of the Fund, if any, listed in
Schedule A attached hereto, and to manage each of their assets;

NOW, THEREFORE, the Fund and the Adviser do mutually agree and promise as
follows:

1. Employment. The Fund hereby appoints Adviser as investment adviser for the
Fund or each series of the Fund, if any, listed on Schedule A attached hereto (a
"Portfolio" or collectively, the "Portfolios"), and Adviser accepts such
appointment. Subject to the supervision of the Board of Directors of the Fund
and the terms of this Agreement, the Adviser shall act as investment adviser for
and manage the investment and reinvestment of the assets of any Portfolio. The
Adviser is hereby authorized to delegate some or all of its services subject to
necessary approval, which includes without limitation, the delegation of its
investment adviser duties hereunder to a subadvisor pursuant to a written
agreement (a "Subadvisory Agreement") under which the subadvisor shall furnish
the services specified therein to the Adviser. The Adviser will continue to have
responsibility for all investment advisory services furnished pursuant to a
Subadvisory Agreement. The Adviser shall (i) provide for use by the Fund, at the
Adviser's expense, office space and all necessary office facilities, equipment
and personnel for servicing the investments of each Portfolio and maintaining
the Fund's organization, (ii) pay the salaries and fees of all officers and
directors of the Fund who are "interested persons" of the Adviser as such term
is defined under the 1940 Act, and (iii) pay for all clerical services relating
to research, statistical and investment work.

2. Allocation of Portfolio Brokerage. The Adviser is authorized, subject to
the supervision of the Board of Directors of the Fund, to place orders for the
purchase and sale of securities and to negotiate commissions to be paid on such
transactions. The Adviser may, on behalf of each Portfolio, pay brokerage
commissions to a broker which provides

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<PAGE> 48
brokerage and research services to the Adviser in excess of the amount another
broker would have charged for effecting the transaction, provided (i) the
Adviser determines in good faith that the amount is reasonable in relation to
the value of the brokerage and research services provided by the executing
broker in terms of the particular transaction or in terms of the Adviser's
overall responsibilities with respect to a Portfolio and the accounts as to
which the Adviser exercises investment discretion, (ii) such payment is made in
compliance with Section 28(e) of the Securities Exchange Act of 1934 and other
applicable state and federal laws, and (iii) in the opinion of the Adviser, the
total commissions paid by a Portfolio will be reasonable in relation to the
benefits to such Portfolio over the long term.

3. Expenses. Each Portfolio will pay all its expenses and the Portfolio's
allocable share of Fund expenses, other than those expressly stated to be
payable by the Adviser hereunder, which expenses payable by a Portfolio shall
include, without limitation, interest charges, taxes, brokerage commissions and
similar expenses, expenses of issue, sale, repurchase or redemption of shares,
expenses of registering or qualifying shares for sale, expenses of printing and
distributing prospectuses to existing shareholders, charges of custodians
(including sums as custodian and for keeping books and similar services of the
Portfolios), transfer agents (including the printing and mailing of reports and
notices to shareholders), registrars, auditing and legal services, clerical
services related to recordkeeping and shareholder relations, printing of share
certificates, fees for directors who are not "interested persons" of the
Adviser, and other expenses not expressly assumed by the Adviser under Paragraph
1 above. If expenses payable by a Portfolio, except interest charges, taxes,
brokerage commissions and similar fees and to the extent permitted extraordinary
expenses, in any given fiscal year exceed that percentage of the average net
asset value of the Portfolio for such year, as determined by valuations made as
of the close of each business day of such year, which is the most restrictive
percentage expense limitation provided by the laws of the various states in
which the Portfolio's shares are qualified for sale, or if the states in which
the shares qualified for sale impose no restrictions, then 2%, the Adviser shall
reimburse the Portfolio for such excess. Reimbursement of expenses by the
Adviser shall be made on a monthly basis and will be paid to a Portfolio by a
reduction in the Adviser's fee, subject to later adjustment month by month for
the remainder of the Fund's fiscal year.

4. Authority of Adviser. The Adviser shall for all purposes herein be
considered an independent contractor and shall not, unless expressly authorized
and empowered by the Fund or any Portfolio, have authority to act for or
represent the Fund or any Portfolio in any way, form or manner. Any authority
granted by the Fund on behalf of itself or any Portfolio to the Adviser shall be
in the form of a resolution or resolutions adopted by the Board of Directors of
the Fund.

5. Compensation of Adviser. For the services to be furnished during any month
by the Adviser hereunder, each Portfolio listed in Schedule A shall pay the
Adviser, and the Adviser agrees to accept as full compensation for all services
rendered hereunder, an Advisory Fee as soon as practical after the last day of
such month. The Advisory Fee shall be an amount equal to 1/12th of the annual
fee as set forth in Schedule B of the average of

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<PAGE> 49
the net asset value of the Portfolio determined as of the close of business on
each business day throughout the month (the "Average Asset Value"). In case of
termination of this Agreement with respect to any Portfolio during any month,
the fee for that month shall be reduced proportionately on the basis of the
number of calendar days during which it is in effect and the fee computed upon
the Average Asset Value of the business days during which it is so in effect.

6. Rights and Powers of Adviser. The Adviser's rights and powers with respect
to acting for and on behalf of the Fund or any Portfolio, including the rights
and powers of the Adviser's officers and directors, shall be as follows:

(a) Directors, officers, agents and shareholders of the Fund are or may at
any time or times be interested in the Adviser as officers, directors, agents,
shareholders or otherwise. Correspondingly, directors, officers, agents and
shareholders of the Adviser are or may at any time or times be interested in
the Fund as directors, officers, agents and as shareholders or otherwise, but
nothing herein shall be deemed to require the Fund to take any action contrary
to its Articles of Incorporation or any applicable statute or regulation. The
Adviser shall, if it so elects, also have the right to be a shareholder in any
Portfolio.

(b) Except for initial investments in a Portfolio, not in excess of $100,000
in the aggregate for the Fund, the Adviser shall not take any long or short
positions in the shares of the Portfolios and that insofar as it can control
the situation it shall prevent any and all of its officers, directors, agents
or shareholders from taking any long or short position in the shares of the
Portfolios. This prohibition shall not in any way be considered to prevent the
Adviser or an officer, director, agent or shareholder of the Adviser from
purchasing and owning shares of any of the Portfolios for investment purposes.
The Adviser shall notify the Fund of any sales of shares of any Portfolio made
by the Adviser within two months after purchase by the Adviser of shares of
any Portfolio.

(c) The services of the Adviser to each Portfolio and the Fund are not to be
deemed exclusive and Adviser shall be free to render similar services to
others as long as its services for others does not in any way hinder, preclude
or prevent the Adviser from performing its duties and obligations under this
Agreement. In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties hereunder on the part of the
Adviser, the Adviser shall not be subject to liability to the Fund or to any
of the Portfolios or to any shareholder for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security.

7. Duration and Termination. The following shall apply with respect to the
duration and termination of this Agreement:

(a) This Agreement shall begin for each Portfolio as of the date of this
Agreement and shall continue in effect for two years. With respect to each
Portfolio added by execution of an Addendum to Schedule A, the term of this
Agreement shall begin on

49
<PAGE> 50
the date of such execution and, unless sooner terminated as hereinafter
provided, this Agreement shall remain in effect to the date two years after
such execution. Thereafter, in each case, this Agreement shall remain in
effect, for successive periods of one year, subject to the provisions for
termination and all of the other terms and conditions hereof if: (a) such
continuation shall be specifically approved at least annually by either (i)
the affirmative vote of a majority of the Board of Directors of the Fund,
including a majority of the Directors who are not parties to this Agreement or
interested persons of any such party (other than as Directors of the Fund),
cast in person at a meeting called for that purpose or (ii) by the affirmative
vote of a majority of a Portfolio's outstanding voting securities; and (b)
Adviser shall not have notified a Portfolio in writing at least sixty (60)
days prior to the anniversary date of this Agreement in any year thereafter
that it does not desire such continuation with respect to that Portfolio.
Prior to voting on the renewal of this Agreement, the Board of Directors of
the Fund may request and evaluate, and the Adviser shall furnish, such
information as may reasonably be necessary to enable the Fund's Board of
Directors to evaluate the terms of this Agreement.

(b) Notwithstanding whatever may be provided herein to the contrary, this
Agreement may be terminated at any time with respect to any Portfolio, without
payment of any penalty, by affirmative vote of a majority of the Board of
Directors of the Fund, or by vote of a majority of the outstanding voting
securities of that Portfolio, as defined in Section 2(a)(42) of the 1940 Act,
or by the Adviser, in each case, upon sixty (60) days' written notice to the
other party and shall terminate automatically in the event of its assignment.

8. Amendment. This Agreement may be amended by mutual consent of the parties,
provided that the terms of each such amendment shall be approved by the vote of
a majority of the Board of Directors of the Fund, including a majority of the
Directors who are not parties to this Agreement or interested persons of any
such party to this Agreement (other than as Directors of the Fund) cast in
person at a meeting called for that purpose, and, where required by Section
15(a)(2) of the 1940 Act, on behalf of a Portfolio by a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act)
of such Portfolio. If such amendment is proposed in order to comply with the
recommendations or requirements of the Securities and Exchange Commission or
state regulatory bodies or other governmental authority, or to obtain any
advantage under state or federal laws, the Fund shall notify the Adviser of the
form of amendment which it deems necessary or advisable and the reasons
therefor, and if the Adviser declines to assent to such amendment, the Fund may
terminate this Agreement forthwith.

9. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed and
delivered, or mailed postpaid to the other party at the principal place of
business of such party.

10. Assignment. This Agreement shall neither be assignable nor subject to
pledge or hypothecation and in the event of assignment, pledge or hypothecation
shall automatically

50
<PAGE> 51

terminate. For purposes of determining whether an "assignment" has occurred, the
definition of "assignment" in Section 2(a)(4) of the 1940 Act shall control.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
as of the day and year first stated above.

<TABLE>
<S> <C>
Attest: Strong Capital Management, Inc.
- - --------------------------------- ---------------------------------
[Name and Title] [Name and Title]

Attest: [Name of Fund]
- - --------------------------------- ---------------------------------
[Name and Title] [Name and Title]
</TABLE>

SCHEDULE A

The Portfolio(s) of Strong , Inc. currently subject to
this Agreement are as follows:

<TABLE>
<CAPTION>
Date of Addition
Portfolio(s) to this Agreement
- - ---------------------------------------------------------------------
<S> <C>

</TABLE>

SCHEDULE B

Compensation pursuant to Paragraph 5 of this Agreement shall be calculated in
accordance with the following schedules:

<TABLE>
<CAPTION>
Portfolio(s) Annual Fee
- - ---------------------------------------------------------------------
<S> <C>

</TABLE>

51
<PAGE> 52

EXHIBIT B

THE TOTAL RETURN FUND'S BYLAW PROVISIONS
PROPOSED FOR AMENDMENT AT THE MEETING

The following provisions of the Total Return Fund's Bylaws will be considered
for amendment at the Meeting as described in the Proxy Statement. The bracketed
language after each Section refers to the Proposals in the Proxy Statement.

ARTICLE VIII AMENDMENTS

"8.01 By Shareholders. The shareholders shall have the power at any regular
meeting or at any special meeting if notice thereof be included in the notice of
such special meeting to alter or repeal any bylaws of the corporation as
provided in Section 2.08 of Article II except that Section 2.08(a) of Article
II, Sections 1, 2 and 3 of this Article VIII or any provision of Article XI of
these bylaws shall be altered, amended or repealed only upon the affirmative
vote of a majority of the outstanding voting securities of the corporation,
which means the lesser of (a) sixty-seven percent (67%) or more of the voting
securities present at such meeting, if the holders of more than fifty percent
(50%) of the outstanding voting securities of the corporation are present or
represented by proxy; or (b) more than fifty percent (50%) of the outstanding
voting securities of the corporation.

8.02 By Directors. The board of directors shall have the power at any regular
meeting or at any special meeting if notice thereof be included in the notice of
such special meeting, to alter or repeal any bylaw of the corporation and to
make new bylaws except that the Board of Directors shall not alter or repeal any
bylaws made by the shareholders and shall not alter or repeal Section 2.08(a) of
Article II, Sections 1, 2 or 3 of this Article VIII, or any provision of Article
XI of these bylaws.

* * *

ARTICLE XI. RESTRICTIONS

11.01 Margin Transactions. The Corporation shall not purchase any securities
on margin. [Proposal 7B]

11.02 Trading Accounts. The Corporation shall not participate on a joint or
joint and several basis in any trading account in any securities. [Proposal 7L]

11.03 Short Sales. The Corporation shall not sell securities short except
where a long position is held in the same security which equals or exceeds the
number of shares sold short. [Proposal 7A]

11.04 Percentage of Assets in Securities of One Issuer. The Corporation shall
not purchase the securities of any person, firm, association, corporation,
syndicate, combination, organization, government (other than the Government of
the United States of America) or any subdivision thereof, if such purchase will
cause more than five percent

52
<PAGE> 53
(5%) of the market value of its total assets at the time of such purchase to be
invested in the securities of such person, firm, association, corporation,
syndicate, combination, organization, government or subdivision. [Proposal 6A]

11.05 Borrowing. The Corporation shall not borrow any money, except from banks
as a temporary measure for extra-ordinary or emergency purposes, and then the
Corporation's borrowing shall not exceed five percent (5%) of the value of its
total assets at the time the loan is made, provided, however, the Fund may enter
into transactions in options, futures and options on futures. [Proposal 6E]

11.06 Lending of Assets. The Corporation shall not lend any funds or other
assets except that it may (i) purchase a portion of an issue of publicly
distributed bonds, debentures or other debt securities, (ii) acquire repurchase
agreements and commercial paper of corporations, (iii) lend portfolio securities
provided no such loan may be made if as a result the aggregate of such loans of
portfolio securities exceed 30% of the value of the Fund's total assets, and
(iv) acquire private issues of debt securities subject to the limitations set
forth herein. [Proposal 6C]

11.07 Percentage of Securities of One Issue. The Corporation shall not
purchase the securities of any person, firm, association, corporation,
syndicate, combination, organization, government or any subdivision thereof, if,
upon such purchase, the Corporation would own more than ten percent (10%) of any
class of the outstanding securities or more than ten percent (10%) of the voting
securities of such person, firm, association, corporation, syndicate,
combination, organization, government or subdivision. For the purposes of this
restriction, all kinds of securities of a company representing debt shall be
deemed to constitute a single class, regardless of relative priorities,
maturities, conversion rights and other differences, and all kinds of stock of a
company preferred over the common stock as to dividends or in liquidation shall
be deemed to constitute a single class regardless of relative priorities, series
designations, conversion rights and other differences. [Proposal 6A]

11.08 Securities of Other Investment Companies. The Corporation shall not
purchase the securities of any investment company other than of the Corporation.
[Proposal 7D]

11.09 Securities of New Issuers. The Corporation shall not purchase the
securities of any person, firm, association, corporation, syndicate, combination
or organization, the business of which has been in continuous operation for less
than three (3) years, such period to include the period of operation of any
predecessor if the issuer whose securities are proposed to be acquired has come
into existence as the result of a merger, consolidation, reorganization or the
purchase of substantially all of the assets of such predecessor, if the purchase
by the Corporation of any such securities at the time thereof would cause more
than five per cent (5%) of the market value of the total assets of the
Corporation as of the time of purchase to be invested in securities of the type
described in this paragraph. [Proposal 7E]

11.10 Securities in Which Officers or Directors Have Beneficial Interest. The
Corporation shall not purchase the securities of any person, firm, association,
corporation,

53
<PAGE> 54
syndicate, combination or organization if any officer or director of the
Corporation, any person or organization furnishing investment advisory services
to the Corporation, or any officer, director, partner or trustee of, or person
owning of record more than ten percent (10%) of the stock of, any person or
organization furnishing such investment advisory services, owns beneficially
more than one-half of one percent (.5%) of the outstanding securities of such
issuer and the persons or organizations so owning more than one-half of one
percent (.5%) of such securities together own beneficially more than five
percent (5%) of such securities. [Proposal 7I]

11.11 Transactions With Officers and Directors. The directors and officers of
the Corporation and of the investment adviser of the Corporation shall have no
dealings for or on behalf of the Corporation with themselves, as principal or
agent, or with any corporation or partnership in which they have a financial
interest, provided, however, that this Section shall not prevent: (a) officers
and directors from having a financial interest in the investment adviser of the
Corporation; (b) the purchase or the sale of securities by the Corporation
through a securities dealer one or more of whose partners, officers or directors
is an officer or director of the Corporation (if such transactions are handled
in the capacity of broker only and if the commissions and charges do not exceed
the customary charges for such service); (c) the employment of legal counsel,
registrar, transfer agent, dividend disbursing agent or custodian having a
partner, officer or director who is an officer or director of the Corporation
(if only customary fees are charged for the services rendered to or for the
benefit of the Corporation). [Proposal 7J]

11.12 Participation in Underwritings. The Corporation shall not underwrite the
sale of, or participate in any underwriting or selling group in connection with
the public distribution of, any securities (other than the Common Stock of the
Corporation), provided, however, that this provision shall not be construed to
prevent or limit in any manner the right of the Corporation to purchase
securities for investment purposes. [Proposal 6F]

11.13 Real Estate and Commodity Contracts. The Corporation shall not purchase,
hold or deal in commodities or commodities contracts (except that it may enter
into futures contracts in accordance with Section 19 and options on futures
contracts in accordance with Sections 16, 19 and 20 of this ARTICLE XI), or in
real estate, but this shall not prohibit the Corporation from investing in
marketable securities of companies engaged in real estate activities or
investments. [Proposal 6D for real estate and 6G for commodities]

11.14 Restricted and Illiquid Securities. The Corporation may not invest in
restricted securities (restricted as to disposition under Federal securities
laws) or illiquid or other securities without readily available market
quotations, including repurchase agreements maturing in more than seven days, if
as a result of any such investment, more than 10% of the value of the
Corporation's total assets would be invested in restricted, illiquid or other
securities without readily available market quotations. [Proposal 7C]

11.15 Investment for Control. The Corporation shall not invest in the
securities of a company for the purpose of management or the exercise of
control. [Proposal 7K]

54
<PAGE> 55
11.16 Puts and Calls. The Corporation shall not engage in the purchase and
sale of put or call options on securities, indexes or futures contracts, or in
writing such options, except that the Corporation may, subject to the provisions
of Section 20 hereof: (i) purchase covered spread options provided that the
value of such options at any time does not exceed 5% of the Corporation's net
assets, (ii) write covered call options and purchase covered put options with
respect to all of its portfolio securities and enter into closing transactions
with respect to such options, (iii) write call options and purchase put options
on futures contracts and enter into closing transactions with respect to such
options, (iv) purchase stock index options for any purpose and enter into
closing transactions with respect to such options, and (v) write covered stock
index options for hedging purposes. [Proposal 6G and 7G]

11.17 Concentration of Investments. The Corporation shall not concentrate its
investments in any particular industry or industries, except that the
Corporation may invest not more than twenty-five percent (25%) of the value of
its total assets in a single industry. [Proposal 6B]

11.18 Pledge of Assets. The Corporation shall not pledge, mortgage,
hypothecate or otherwise encumber any of its assets, except as may be necessary
in connection with options, futures and options on futures and in connection
with permissible loans of portfolio securities. [Proposal 7H]

11.19 Futures Contracts. The Corporation shall not enter into a futures
contract or an option thereon unless if, as a result thereof, (i) not more than
30% of the Corporation's net assets would be represented by futures contracts
(including the then current aggregate futures market prices of financial
instruments required to be delivered under open futures contract sales plus the
then current aggregate purchase prices of financial instruments required to be
purchased under open futures contract purchases) and (ii) not more than 5% of
the Corporation's total assets (taken at market value at the time of entering
into the contract) would be committed to initial margin and premiums paid on
futures contracts and options on futures contracts. Transactions in futures
contracts may be entered into only for hedging purposes. [Proposal 6G and 7G]

11.20 Options. The Corporation shall not purchase or write options on
securities, indexes and futures contracts if, as a result thereof, (i) the
aggregate market value of all portfolio securities covering such options exceeds
25% of the Corporation's net assets, (ii) the value of all options exceeds 5% of
the Corporation's total assets, or (iii) the aggregate premiums paid for all
such options held exceeds 5% of the Corporation's net assets. [Proposal 6G and
7G]

11.21 Oil and Gas Interests. The Corporation shall not invest in oil, gas or
other mineral exploration programs. [Proposal 7F]

If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage resulting from a change in values of assets
will not constitute a violation of that restriction."

55
<PAGE> 56
* * *

If each of the Proposals is approved by shareholders, Article VIII would be
amended to provide as follows (additions and deletions noted) and Article XI
would be deleted in its entirety:

ARTICLE VIII AMENDMENTS

"8.01 By Shareholders. The shareholders shall have the power at any regular
meeting or at any special meeting if notice thereof be included in the notice of
such special meeting to alter or repeal any bylaws of the corporation as
provided in Section 2.08 of Article II except that Section 2.08(a) of Article II
# or Sections 1, 2 or 3 of this Article VIII # shall be altered, amended or
repealed only upon the affirmative vote of a majority of the outstanding voting
securities of the corporation, which means the lesser of (a) sixty-seven percent
(67%) or more of the voting securities present at such meeting, if the holders
of more than fifty percent (50%) of the outstanding voting securities of the
corporation are present or represented by proxy; or (b) more than fifty percent
(50%) of the outstanding voting securities of the corporation.

* * *

If any of the proposals are not approved, Section 8.01 and 8.02 will be
amended only to the extent of the approved proposals.

<PAGE> 3

<TABLE>
<S><C>
WE NEED YOUR VOTE BEFORE APRIL 13, 1995
___________________________________________________________________________________________________________________________________

THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR OF ALL PROPOSALS AND IN THE
DISCRETION OF THE PROXIES UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. Please indicate by filling in the
appropriate box below, as shown, using blue or black ink or dark pencil. Do not use red ink. [ ]

1. Election of Directors. FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote [ ] 1.
(except as marked to the contrary) for all nominees listed below

TO WITHHOLD AUTHORITY FOR AN INDIVIDUAL NOMINEE STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW

Richard S. Strong John Dragisic Marvin E. Nevins Willie D. Davis William F. Vogt Stanley Kritzik

2. To ratify the selection of independent public accountants. FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.

3A. To adopt and ratify the revised Advisory Agreement. FOR [ ] AGAINST [ ] ABSTAIN [ ] 3A.

4. To adopt revised Articles of Incorporation. FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.

5. To amend the investment objective. FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.

6. To amend or adopt fundamental investment limitations. FOR [ ] (Except as marked below) ABSTAIN [ ] 6.
If you do NOT wish to approve an investment limitation change, please check the appropriate box below:

(A) [ ] Diversification (D) [ ] Purchasing or selling real estate (G) [ ] Purchasing or selling financial commodities
(B) [ ] Concentration (E) [ ] Borrowing (H) [ ] Issuing senior securities
(C) [ ] Lending (F) [ ] Underwriting securities (I) [ ] Pooled fund structures

7. To eliminate fundamental investment limitations. FOR [ ] (Except as marked below) ABSTAIN [ ] 7.
If you do NOT wish to approve elimination of an investment limitation, please check the appropriate box below:

(A) [ ] Short sales of securities (H) [ ] Pledging assets
(B) [ ] Use of margin (I) [ ] Securities investments of directors and officers
(C) [ ] Illiquid and restricted securities (J) [ ] Fund portfolio transactions with directors and officers
(D) [ ] Purchase of investment company securities (K) [ ] Investing in securities for the purpose of management or control
(E) [ ] Purchasing securities of newly-formed issuers (L) [ ] Participating on a joint basis in any trading account
(F) [ ] Investing in oil and gas interests
(G) [ ] Futures and options
___________________________________________________________________________________________________________________________________
TO BE COMPLETED AND SIGNED ON REVERSE SIDE OF CARD.

WE NEED YOUR VOTE BEFORE APRIL 13, 1995
__________________________________________________________________________________________________________________________
[LOGO]
PLEASE, your vote is important and, as a shareholder, you are asked to be at the Annual Meeting either in person or by
proxy. If you are unable to attend the Meeting in person, we urge you to complete, sign, date, and return this proxy card
using the enclosed postage prepaid envelope. Your prompt return of the proxy will help assure quorum at the Meeting and
avoid additional expenses to your Fund associated with further solicitation. Sending in your proxy will not prevent you from
personally voting your shares at the Meeting and you may revoke your proxy by advising the Secretary of the Fund in
writing (by subsequent proxy or otherwise) of such revocation at any time before it is voted.
__________________________________________________________________________________________________________________________
THANK YOU FOR YOUR TIME

STRONG TOTAL RETURN FUND, INC. PROXY FOR ANNUAL MEETING OF SHAREHOLDERS

The undersigned hereby constitutes and appoints John Dragisic, Thomas P. Lemke, and Ann E. Oglanian as proxies, each with power to
appoint his or her substitute, and hereby authorizes them to represent and to vote by majority, as designated on the reverse side,
all shares of stock of the Fund, which the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held at the
Italian Community Center, 631 E. Chicago Street, Milwaukee, Wisconsin, on April 13, 1995, at 10:00 a.m., local time, and any
adjournments thereof, with respect to the matters set forth on the reverse side and described in the Notice of Annual Meeting
and Proxy Statement dated February 16, 1995, receipt of which is hereby acknowledged.

DATE: __________________________

NOTE: Please sign exactly as your name appears on this
Proxy. If joint owners, EITHER may sign this Proxy.
When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give
your full title.

_______________________________________________________
Signature(s) (Title(s), if applicable)
</TABLE>

<PAGE> 4
STRONG FUNDS
P.O. Box 2936 . Milwaukee, Wisconsin 53201 . Telephone 1-800-368-3863

February 1995

Dear Fellow Shareholder:

You are cordially invited to attend the joint Annual Meeting of Shareholders of
the Strong Funds, to be held at 10:00 a.m., Thursday, April 13, 1995, at the
Italian Community Center, 631 East Chicago Street, Milwaukee, Wisconsin.
Preceding the Meeting, there will be an Investment Strategy Discussion Session
starting at 9:00 a.m.

PLEASE READ THE ENCLOSED MATERIALS AND VOTE.

The accompanying "Notice of Annual Meeting and Proxy Statement"
describes a number of important proposals affecting the Strong Funds in which
you are invested. To save printing and administrative expenses, we have created
a single "omnibus" Proxy Statement that encompasses the changes to all the
Strong Growth and Income Funds. Some of the proposals in the Statement,
therefore, may not apply to your Fund. To help identify the specific issues
that affect your Fund, please refer to the summary table on page 5 of the
booklet. PLEASE REVIEW AND CONSIDER EACH OF THESE ISSUES CAREFULLY.

The Funds' Board of Directors has reviewed these proposed changes and believes
them to be in the best interests of the Funds' shareholders. Accordingly, THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH PROPOSED CHANGE.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD(S) IN THE POSTAGE-PAID ENVELOPE PROVIDED.

Please vote. And do so as soon as possible. No matter how many shares you own,
your vote - and its promptness - are important. You may be contacted by D.F.
King & Co., Inc., who has been engaged to solicit proxies on behalf of each
Fund's Board. If you have questions about these proposals, please call us at
1-800-359-3369.

SUMMARY OF PROPOSED CHANGES

As discussed fully in the Proxy Statement, you are being asked to elect an
expanded Board of Directors and ratify the re-appointment of Coopers & Lybrand
as the Funds' auditors. You are also being asked to adopt and ratify revised
Advisory Agreements that govern each Fund's arrangement with Strong Capital
Management, Inc. to provide certain investment management and administrative
services. PLEASE NOTE THAT THESE AGREEMENTS DO NOT PROPOSE AN INCREASE IN ANY
FEES PAID BY A FUND OR SUCH FUND'S SHAREHOLDERS.

(over)

G-1

<PAGE> 5
In addition, we have proposed various changes - outlined below - to the Funds'
Articles of Incorporation, investment objectives, and fundamental investment
limitations. In general, these changes are part of our overall effort to
standardize and clarify both the language that describes and the policies that
guide the entire family of Strong Funds.

AMENDED ARTICLES OF INCORPORATION will allow the Board more
flexibility in managing future operations. In part, the changes
address the Board's authority to set redemption policies, approve
stock splits, and add alternative fund structures designed to
reduce costs.

REVISED INVESTMENT OBJECTIVES represent the next step in our
long-term initiative to simplify our shareholder communications
and make our publications easier to use and understand. These
revisions are designed to describe each Fund's goal more clearly
and are not intended to change the manner in which the Funds are
managed.

STANDARDIZED INVESTMENT LIMITATIONS are intended to conform and
clarify the policies that guide the day-to-day management of the
Funds, including the amounts and types of securities in which
each Fund may invest, as well as the investment techniques the
Funds may employ. By using uniform limitations wherever possible,
we expect to facilitate portfolio compliance and gain certain
operational efficiencies. In general, the changes are not
intended to significantly alter the way the Strong Growth and
Income Funds are managed. However, in some cases, they do expand
a Fund's ability to take advantage of certain investment
opportunities. We have noted these exceptions within the Proxy
Statement.

Again, I encourage you to review these proposals carefully and cast your vote
using the enclosed proxy card(s) and postage-paid envelope. EVEN IF YOU DO PLAN
TO ATTEND THE MEETING, PLEASE VOTE AS SOON AS POSSIBLE. BY VOTING PROMPTLY, YOU
HELP US AVOID THE EXPENSE OF HAVING TO RE-SOLICIT YOUR PROXY - AND HELP US KEEP
FUND EXPENSES DOWN.

Thank you for your participation in this important initiative. I look forward
to seeing many of you on April 13th.

Sincerely,

/s/ Richard S. Strong

Richard S. Strong
Chairman of the Board

Enclosures

P.S. If you plan to join us at the meeting, please call 1-800-368-0930 to make
a reservation. Your reply will help us make the appropriate accommodations for
the meeting room.