<PAGE> 1
SEMIANNUAL REPORT
JUNE 30, 1995
THE STRONG
INCOME FUNDS
[PHOTO OF TWO WOMEN]
THE STRONG U.S. TREASURY MONEY FUND
THE STRONG MONEY MARKET FUND
THE STRONG ADVANTAGE FUND
THE STRONG SHORT-TERM BOND FUND
THE STRONG GOVERNMENT SECURITIES FUND
THE STRONG CORPORATE BOND FUND
[STRONG LOGO]
<PAGE> 2
EIGHT BASIC PRINCIPLES FOR
SUCCESSFUL MUTUAL FUND INVESTING
These common sense rules are followed by many successful investors. They make
sense for beginners, too. If you have a question on these principles, or would
like to discuss them with us, please contact us at 1-800-368-3863. We're here
24 hours a day, seven days a week to take your call.
1. Have a plan. Even a simple plan can help you take control of your
financial future. Review your plan once a year, or if your circumstances
change.
2. Start investing as soon as possible. Make time a valuable ally. Let
it put the power of compounding to work for you, while helping to reduce
your potential investment risk.
3. Diversify your portfolio. By investing in different asset classes --
stocks, bonds, and cash -- you help protect against poor performance in one
type of investment while including investments most likely to help you
achieve your important goals.
4. Invest regularly. Investing is a process, not a one-time event.
Make a habit of investing. And make it easy for yourself with an "automatic
investment plan." This popular strategy not only helps you manage
investment risk, it also ensures you "pay yourself first" on a regular
basis.
5. Maintain a long-term perspective. For most individuals, the best
discipline is staying invested as market conditions change. Reactive,
emotional investment decisions are all too often a source of regret -- and
of principal loss.
6. Consider stocks to help achieve major long-term goals. Over time,
stocks have provided the more powerful returns needed to help the value of
your investments stay well ahead of inflation.
7. Keep a comfortable amount of cash in your portfolio. To meet
current needs, including emergencies, use a money market fund or a bank
account -- not your long-term investment assets.
8. Know what you're buying. Make sure you understand the potential
risks and rewards associated with each of your investments. Ask questions
... request information ... make up your own mind. And choose a fund
company that helps you make informed investment decisions.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Investment Reviews
The Strong U.S. Treasury Money Fund.................................................. 2
The Strong Money Market Fund......................................................... 2
The Strong Advantage Fund............................................................ 4
The Strong Short-Term Bond Fund...................................................... 6
The Strong Government Securities Fund................................................ 8
The Strong Corporate Bond Fund....................................................... 10
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong U.S. Treasury Money Fund................................................ 12
The Strong Money Market Fund....................................................... 12
The Strong Advantage Fund.......................................................... 16
The Strong Short-Term Bond Fund.................................................... 19
The Strong Government Securities Fund.............................................. 22
The Strong Corporate Bond Fund..................................................... 24
Statements of Operations............................................................. 26
Statements of Assets and Liabilities................................................. 27
Statements of Changes in Net Assets.................................................. 29
Notes to Financial Statements........................................................ 30
FINANCIAL HIGHLIGHTS.......................................................................... 38
</TABLE>
<PAGE> 4
The Strong U.S. Treasury Money Fund
& The Strong Money Market Fund
The Strong Money Market Fund and the Strong U.S. Treasury Money Fund seek
current income, a stable share price, and daily liquidity. The Strong Money
Market Fund invests in corporate, bank, and government instruments that present
minimal credit risk. The Strong U.S. Treasury Money Fund invests only in
securities issued directly by the U.S. government.
YIELD SUMMARY(1)
as of 6/30/95
<TABLE>
<CAPTION>
The Strong The Strong
U.S. Treasury Money Market
Money Fund Fund
<S> <C> <C>
7-Day Current Yield 4.66% 6.20%
7-Day Effective Yield 4.77% 6.39%
Average Maturity 50 days 50 days
</TABLE>
PERFORMANCE OVERVIEW
The Strong Money Market Fund was the best performing general purpose money fund
tracked by Lipper from January 1 through June 30, 1995, based on total return.
This performance was achieved through a combination of a temporary waiver of all
fees and expenses, and the value added by our portfolio management. For the
1-year, 5-year, and since-inception (on 10/22/85) periods, the Fund was #4 of
254 (top 2%), #10 of 174 (top 6%) and #4 of 109 (top 4%) funds, respectively.
(2)
The Strong U.S. Treasury Money Fund's 6-month total return as of June 30, 1995
was 2.45%, bringing its 1-year total return to 4.72%.
THE ECONOMY SLOWS IN 1995
Short-term interest rates were relatively stable in the first half of 1995,
fluctuating in a narrow range near 6%. As we expected, the Federal Reserve
Board voted to raise short-term rates once more at the beginning of February,
pushing the federal funds rate to 6%-the level already anticipated by the
market.
Soon after the February tightening, evidence of a significant slowdown in
economic activity
[Photo of 4 children]
2
<PAGE> 5
began to emerge. While the U.S. economy grew at a fairly strong pace in the
first quarter of 1995, data from April and May suggested that the second
quarter's growth rate would be low or possibly negative.
The speed of the slowdown caught financial markets by surprise and forced a
dramatic shift in expectations regarding the Federal Reserve's moves for the
remainder of the year. Whereas in January the market appeared to assume an
increase in short-term rates, the consensus at mid-year seemed to anticipate
easing.
FUND OVERVIEW
As stated in the Funds' 1994 Annual Report, we entered 1995 with a relatively
short maturity in anticipation of further tightening by the Federal Reserve,
and the possibility for higher yields. Given the Fed's February rate hike and
the weak economic statistics that followed, we concluded that short-term
rates were unlikely to move higher. Accordingly, we increased the Funds'
average maturity range to a modestly bullish 50 to 60 days in anticipation of a
possible interest rate cut by the Federal Reserve.
OUTLOOK
The Federal Reserve voted to reduce the federal funds rate by 0.25% on July 6.
It's too soon to tell whether the cut will be enough to halt the economic
slowdown so evident in April and May. Therefore, the outlook for the economy in
late 1995 and early 1996 at this point is somewhat uncertain. We intend to
maintain the portfolios' slightly bullish maturities and monitor the economic
environment closely.
While the Strong Money Market Fund's fees and expenses are scheduled to begin
being phased in on August 1, 1995, we will strive to continue providing
shareholders with the kind of superior investment value that has helped the Fund
remain highly ranked in its Lipper category over the long term.
As always, we thank you for your confidence and remain committed to helping
you meet your investment needs.
Cordially,
/s/ Jay N. Mueller
Jay N. Mueller
Portfolio Manager
[Photo of Jay N. Mueller]
(1) Yields are annualized for the 7-day period ended June 30, 1995. Effective
yields reflect the compounding of income. Investments in the Funds are
neither insured nor guaranteed by the U.S. government. There can be no
assurance that either Fund will be able to maintain its stable net asset
value of $1.00 per share. Yields are historical and do not represent future
yields, which will fluctuate. The Strong Money Market Fund's advisor
temporarily waived fees of .50% and absorbed expenses of .25% for the Fund.
Otherwise, the Fund's current yield would have been 5.45%, and its
effective yield would have been 5.64%.
(2) Lipper Analytical Services, Inc. rankings are based on total return with
dividends reinvested. The Fund was ranked #1 of 270 funds for the
6-month period ended 6/30/95. All performance rankings are historical
and do not represent future results. From time to time, the Fund's advisor
has waived its management fee and absorbed Fund expenses, resulting in
higher returns.
3
<PAGE> 6
The Strong Advantage Fund
As of 6/30/95
30-DAY
ANNUALIZED
YIELD
6.82%
AVERAGE
EFFECTIVE
MATURITY(1)
185 days
AVERAGE
QUALITY
RATING
A
The Strong Advantage Fund seeks current income with a very low degree of
share-price fluctuation. The Fund invests primarily in ultra short-term,
investment-grade debt obligations, and its average effective portfolio maturity
will normally be one year or less.
For the first six months of 1995, the Fund's total return was 3.79%. This
compares favorably with the 2.76% total return achieved by the average money
market fund as tracked by the Lipper Money Market Instruments Index. (Unlike
a money fund, the Advantage Fund's share price will vary).(2)
The Fund also continues to handily outperform its category average. Based on
total return for the six-month and 1-year periods ended June 30, 1995, the
Strong Advantage Fund was ranked #9 of 24 and #5 of 18 ultra-short obligation
bond funds tracked by Lipper Analytical Services, a respected mutual fund
ranking service. For the 5-year and since-inception periods ended 6/30/95,
Lipper ranked the Fund #1 of 9 and #1 of 6 funds, respectively.(3)
A GOOD MARKET FOR BONDS
Following a difficult 1994, the bond market staged a powerful rally during
the first six months of 1995. Investors, who in January were anticipating a
stronger economy and higher interest rates, were surprised by
unexpectedly weak economic numbers, particularly in April and May. With fears
of higher rates fading, longer-term bond prices rallied strongly.
Short-term rates, however, remained lodged in the 6% range.
A PRIMARY FOCUS
ON INCOME
Income generation remained a priority in 1995. We continued to emphasize
issues that we believed would offer steady income with very little potential
for price fluctuation.
As part of this strategy, we increased our holdings in callable bonds with
high coupons. This was due to our expectation for lower long-term rates. When
rates fall, bond issuers typically call their higher-yielding bonds so they
can reissue the bonds with a lower coupon and thereby reduce their debt
burden. (Basically, this is the same strategy homeowners use when they
refinance their mortgages.) The reduction in rates in 1995 prompted callable
bonds to trade according to their upcoming call dates rather than their
maturity dates--giving us the opportunity to purchase higher-yielding long
bonds and still maintain an ultra-short effective maturity.
In addition to identifying good income prospects, we also looked for
securities that gave us the opportunity for price appreciation. Through our
intensive research efforts, we sought to uncover bonds that we believed were
about to experience a credit upgrade, which usually results in a meaningful
increase in price.
The Fund remains substantially invested in investment-grade corporate bonds.
ASSET ALLOCATION
(as of 6/30/95)
[Pie Chart]
Corporate Bonds including Convertibles 57.9%
Non-Agency Mortgage-Backed Securities 34.1%
Cash Equivalents 6.9%
U.S. Gov't & Agency Issues 1.1%
The Fund's allocation does not reflect any futures positions held by the
Fund, and is presented as a percentage of net assets. Please see the Schedule
of Investments in Securities for a complete listing of the Fund's portfolio.
WE HOPE FOR MORE
OF THE SAME
For the second half of 1995, we expect the favorable environment for bonds to
continue. Economic statistics appear to be confirming a marked slowdown in
the economy, which has so far prompted one easing by the Federal Reserve on
July 6, and may augur for more cuts in the future. If additional moves
4
<PAGE> 7
appear likely, we would increase the Fund's average maturity in an effort to
lock in current yields and possibly benefit from some price appreciation.
While we're comfortable with the Fund's current average credit quality,
we might increase the portfolio's quality if the economy were to weaken
significantly. However, our research suggests that a downturn in the economy
would likely be short and shallow, and that most American companies have strong
enough balance sheets to weather such an event with little difficulty.
Regardless, the short-term nature of this Fund makes it far less susceptible to
rate moves and economic trends than longer-term investments. At the short
end of the market, it's active management and careful research that produce
superior results. We believe our short-term and long-term investment performance
illustrates that we've been adept at both.
Thank you for your investment in the Strong Advantage Fund. We appreciate
your continued confidence in our investment approach.
Sincerely,
/s/ Jeffrey A. Koch
Jeffrey A. Koch
Portfolio Manager
[Photo of Jeffrey A. Koch]
Growth of an assumed $10,000 investment
from 11/25/88 to 6/30/95
The Strong Advantage Fund
11/88 10000
12/88 10103
6/89 10715
12/89 11052
6/90 11418
12/90 11784
6/91 12319
12/91 13036
6/92 13632
12/92 14135
6/93 14743
12/93 15250
6/94 15417
12/94 15793
6/95 16391
1-yr Treasury Bill
11/88 10000
12/88 10039
6/89 10585
12/89 11050
6/90 11476
12/90 12036
6/91 12489
12/91 13088
6/92 13396
12/92 13720
6/93 13997
12/93 14245
6/94 14355
12/94 14621
6/95 15312
Average annual total returns
through 6/30/95
Since inception 7.78%
on 11/25/88
5-year 7.50%
3-year 6.34%
1-year 6.32%
This graph, provided in accordance with SEC regulations, compares a
$10,000 investment in the Fund, made at its inception, with a similar
investment in the Salomon Brothers 1-Year Treasury Benchmark-on-the-Run
Index ("1-Year Treasury Bill"). To equalize the time periods, the index's
performance was prorated for the month of November, 1988. Results include
the reinvestment of all dividends and capital gains distributions. The
Salomon Brothers 1-Year Treasury Benchmark-on-the-Run Index is an unmanaged
index generally representative of the performance of a Treasury security
with approximately one year to maturity. Performance is historical and does
not represent future results. Investment returns and principal value vary,
and you may have a gain or loss when you sell shares.
(1) The Fund's average maturity includes the effect of futures contracts.
(2) The Lipper Money Market Instruments Index is an equally-weighted
performance index, adjusted for capital gains and distributions
and income dividends of the largest qualifying funds in this investment
objective.
(3) The since inception ranking is based on performance from 11/25/88 to
6/30/95 for ultra-short obligation funds tracked by Lipper. Rankings are
historical and do not represent future results. From time to time,
the Fund's advisor has waived its management fee, which has resulted in
higher returns.
5
<PAGE> 8
The Strong Short-Term Bond Fund
As of 6/30/95
30-DAY
ANNUALIZED
YIELD
7.15%
AVERAGE
MATURITY(1)
1.8 years
AVERAGE
QUALITY
RATING
AA
The Strong Short-Term Bond Fund seeks total return by investing for a high
level of current income with a low degree of share-price fluctuation. The Fund
invests primarily in short- and intermediate-term, investment-grade debt
obligations, and its average portfolio maturity will normally be between one
and three years.
HOW QUICKLY THINGS CHANGE
Most investors know they should buy when prices are low. But while this
concept is most readily associated with stocks, it certainly can be true for
bonds as well. The bond market's performance in the first half of 1995
illustrates my point. After experiencing one of its toughest years on record
in 1994, the market has rallied strongly so far in 1995, buoyed by a stream
of unexpectedly weak economic numbers. Investors--many of whom had been
bearish due to fears of an overheating economy and the potential for higher
inflation--turned bullish, and prices rose dramatically at the long end of the
market. While 3-month T-bill prices have remained basically unchanged since
the start of the year, short-term bonds, as represented by 2-year Treasuries,
have provided price appreciation and have offered fairly attractive yields.
The Fund's total return for the first six months of 1995 was 6.76%.
THE POWER OF INCOME
In the Fund's last annual report, we talked about the importance of income, and
why we were loathe to dramatically reduce the Fund's average maturity and slash
its income in 1994, even though the result might have been a more stable
share price. We stated that most of a short-term bond's total return comes from
income, and our strategy focused on supporting the Fund's income level.
That strategy has been amply vindicated. For example, many investors in June
of 1994--roughly the bond market's nadir--may have been tempted to shift
assets into a money fund. But those with the discipline to remain in the Fund
for the next 12 months were rewarded with superior total returns:
TOTAL RETURN FROM
6/30/94 to 6/30/95
<TABLE>
<S> <C>
Strong Short-Term Bond Fund 7.13%
Average money market fund(2) 5.01%
</TABLE>
Unlike a money fund, the Short-Term Bond Fund's share price will vary.
This illustrates the importance of knowing your goal and investing accordingly.
We believe bond investors should consider a fund based on its normal maturity
range and their time horizons. For example, if your investment goal is 2-3
years away, consider funds with a similar average maturity. Doing so helps you
look past short-term fluctuations and avoid making emotional decisions that
may prove detrimental in the long run.
MANAGEMENT STRATEGY:
MORE OF THE SAME
No significant portfolio changes were necessary during the first half of
1995. Our usual overall strategy remained intact: seek out bonds offering
attractive levels of income and the potential for relatively stable prices.
We also sought to add value through active management-trading issues for
similar ones that offered an incrementally better yield or a better chance
for price appreciation through a
ASSET ALLOCATION
(as of 6/30/95)
[Pie Chart]
<TABLE>
<S> <C>
Preferred Stock 2.3%
Corporate Bonds including Convertibles 34.3%
Non-Agency Mortgage-Backed Securities 30.5%
U.S. Gov't & Agency Issues 32.9%
</TABLE>
When-issued securities are reflected in the Fund's allocation. The asset
allocation depicts market exposure and is not given as a percentage of net
assets. The allocation does not reflect any futures positions held by the
Fund. Please see the Schedule of Investments in Securities for a complete
listing of the Fund's portfolio.
6
<PAGE> 9
credit upgrade. Throughout the six-month period, we gradually trimmed our
corporate bond weighting in favor of mortgage-backed securities. By the end
of June, the portfolio was about evenly split between corporate bonds, U.S.
agency issues, and non-agency mortgage-backed securities. The Fund's average
credit quality was AA, up modestly from A at the start of the year.
OUTLOOK
Overall, we expect a good environment for bonds in the foreseeable future.
Economic growth appears to be moderating, and while bond prices have risen
quite a bit in the first six months of 1995, the market appears to be
anticipating lower rates, so there may be some upside potential remaining. Even
if prices don't move meaningfully from this point, we believe short-term bond
yields still provide an attractive level of income.
Near-term, we may see some nervousness in the bond market about the direction of
the economy. For this reason, the Fund's current position is more neutral than
bullish. However, our belief is that, if a downturn occurs, it will be
relatively short and shallow, and easily corrected by a modest cut in the
federal funds rate by the Federal Reserve. Our research suggests that,
generally, American companies presently enjoy healthy balance sheets compared to
most past cycles, and the banking problems that accompanied the last downturn in
1990 are no longer with us. Therefore, a short downturn should not be
problematic for the Fund.
We appreciate your investment in the Strong Short-Term
Bond Fund, and we will do our best to earn your continued confidence.
Sincerely,
/s/ Bradley C. Tank
Bradley C. Tank
Portfolio Manager
[Photo of Bradley C. Tank]
Growth of an assumed $10,000 investment
from 8/31/87 to 6/30/95
The Strong Short-Term Bond Fund
8/87 10000
12/87 10318
12/88 11362
12/89 12295
12/90 12945
12/91 14837
12/92 15827
12/93 17302
12/94 17023
6/95 18173
Short-Term Bond Index
8/87 10000
12/87 10299
12/88 10957
12/89 12154
12/90 13332
12/91 14914
12/92 15877
12/93 16773
12/94 16872
6/95 17987
Average annual total returns
through 6/30/95
Since inception 7.92%
on 8/31/87
5-year 8.07%
3-year 5.63%
1-year 7.13%
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in
the Salomon Brothers 1-3 year Treasury/Government-Sponsored/Corporate Bond Index
("Short-Term Bond Index"). Results include the reinvestment of all dividends
and capital gains distributions. Source for the index data is Salomon Brothers.
The Salomon Brothers Short-Term Bond Index is an unmanaged,
market-capitalization weighted index generally representative of the performance
of investment-grade, short-term bonds. Performance is historical and does not
represent future results. Investment returns and principal value vary, and you
may have a gain or loss when you sell shares.
(1) The Fund's average maturity includes the effect of futures contracts
and when-issued securities.
(2) Source: Lipper Money Fund Index
7
<PAGE> 10
The Strong Government Securities Fund
As of 6/30/95
30-DAY
ANNUALIZED
YIELD
6.31%
AVERAGE
MATURITY(1)
7.0 years
AVERAGE
QUALITY
RATING
AAA
The Strong Government Securities Fund seeks total return by investing for a
high level of current income with a moderate degree of share-price
fluctuation. The Fund normally invests at least 80% of its total assets in
U.S. government securities.
SOLID FUND PERFORMANCE
The Fund continues to perform well compared to its benchmark and its
competition. Its total return for the first six months of 1995 was 12.28%,
versus 11.51% for the Salomon Brothers Broad Investment-Grade Bond Index. The
Fund also remains the #1 ranked general U.S. government fund of the 48 funds
tracked by Lipper, based on total return since the Fund's inception on 10/29/86
through 6/30/95. For the 6-month, 1-year and 5-year periods ended 6/30/95, the
Fund was ranked #26 of 186 (top 14%), #16 of 159 (top 11%) and #2 of 79 (top
3%), respectively.(2)
BONDS BOUNCE BACK
After experiencing one of its toughest years on record in 1994, the bond market
has rallied strongly so far in 1995, buoyed by a stream of unexpectedly weak
economic numbers. Investors-many of whom had been bearish due to fears of an
overheating economy and the potential for higher inflation-turned bullish, and
prices rose dramatically at the long end of the market. Longer-maturity bonds
performed particularly well, and helped the Fund post a double-digit total
return for the first half of 1995.
RIDING THE MORTGAGE WAVE
As stated in the Fund's last annual report, we began the year heavily weighted
in mortgages and with a fairly long duration, due to our belief that a rally was
in store for the bond market. This proved to be a good call since, as long
rates fell, the extra sensitivity to rates created by our longer duration helped
provide excellent returns during the first half of 1995. In May, we felt we'd
captured most of the upside from our long mortgage position, and we began to
take some profits, reinvesting the proceeds in longer-term Treasuries. By the
end of June, mortgage-backed securities made up 59% of net assets, and
Treasuries 24%. Our average maturity was neutral at 7 years.
ASSET ALLOCATION
(as of 6/30/95)
[Pie Chart]
<TABLE>
<S> <C>
Preferred Stocks 3%
U.S. Gov't & Agency Issues 80%
Corporate Bonds 17%
</TABLE>
This allocation is presented as a percentage of net assets, includes the
effect of when-issued securities, and does not reflect any futures contracts
held by the Fund. Please see the Schedule of Investments in Securities for a
complete listing of the Fund's portfolio.
[Photo of children playing on bridge]
8
<PAGE> 11
A FAVORABLE ENVIRONMENT GOING FORWARD
Our outlook for the long-term government securities market remains favorable.
Although we've enjoyed a good rally so far this year, the market appears to be
anticipating further decreases in longer-term rates, so there may still be some
upside potential from here. In addition, while economic indicators suggest a
rapid slowing in the economy, there certainly isn't any evidence to suggest
a steep or prolonged downturn. Even after four years of economic expansion,
inflation has remained modest, American businesses have posted good profits, and
the banking system has improved dramatically since the economic contraction of
1990.
In short, while forecasts are always subject to revision, we currently don't see
any major, fundamental problems on the horizon. Given this "steady as she
goes" outlook, we intend to maintain our neutral positioning, seeking to add
value by identifying issues that offer an incremental yield advantage.
We appreciate your investment in the Strong Government Securities Fund, and
look forward to earning your continued confidence.
Sincerely,
/s/ Bradley C. Tank
Bradley C. Tank
Portfolio Manager
[Photo of Bradley C. Tank]
Growth of an assumed $10,000 investment
from 10/29/86 to 6/30/95
The Strong Government Securities Fund
10/86 10000
12/86 10218
12/87 10572
12/88 11683
12/89 12836
12/90 13953
12/91 16278
12/92 17781
12/93 20044
12/94 19364
6/95 21742
Salomon Brothers Broad Investment-Grade Bond Index
10/86 10000
12/86 10195
12/87 10459
12/88 11295
12/89 12926
12/90 14101
12/91 16352
12/92 17593
12/93 19337
12/94 18787
6/95 20949
Average annual total returns
through 6/30/95
Since inception 9.37%
on 10/29/86
5-year 10.42%
3-year 9.03%
1-year 13.44%
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Salomon Brothers Broad Investment-Grade Bond Index. Results include the
reinvestment of all dividends and capital gains distributions. The Salomon
Brothers Broad Investment-Grade Bond Index is an unmanaged index generally
representative of the performance of government, mortgage, and investment-grade
corporate securities. Source for the index data is Salomon Brothers.
Performance is historical and does not represent future results. Investment
returns and principal value vary, and you may have a gain or loss when you sell
shares.
(1) The Fund's average maturity includes the effect of futures contracts and
when-issued securities.
(2) Rankings are historical and do not represent future results. From time to
time, the Fund's advisor has waived its management fee and absorbed
expenses, which has resulted in higher returns.
9
<PAGE> 12
The Strong Corporate Bond Fund
As of 6/30/95
30-DAY
ANNUALIZED
YIELD
7.13%
AVERAGE
MATURITY(1)
9.61 years
AVERAGE
QUALITY
RATING
BBB
The most aggressive of our income funds, the Strong Corporate Bond Fund seeks
total return by investing for a high level of current income with a moderate
degree of share price fluctuation. The Fund invests primarily in
investment-grade corporate debt obligations.
SOLID PERFORMANCE
The Strong Corporate Bond Fund continues to perform well. For the first six
months of 1995, the Fund's total return was 14.89%, versus 14.58% for the
Salomon Brothers BBB-rated Corporate Bond Index, and 11.19% for the average
fund in Lipper's BBB-rated corporate debt category. Based on total return for
the 6-month and 1-year periods ended 6/30/95, the Fund was ranked #3 of 83
and #2 of 74 corporate BBB-rated bond funds tracked by Lipper, respectively.(2)
BOND PRICES BOUNCE BACK
IN EARLY 1995
The bond market staged a powerful rally during the first half of 1995.
Unexpectedly weak economic numbers, particularly in April and May, surprised
many investors who were anticipating a stronger economy and higher interest
rates. As fears of higher rates subsided, so did bond yields, and longer-term
bond prices rallied strongly.
[Photo of toddler with ice cream]
ADDING POTENTIAL THROUGH ACTIVE MANAGEMENT
The overall tone of the corporate bond market for the first half of 1995 was
fairly positive. Our aim, therefore, was to add value by making tactical shifts
in the portfolio to guard against both an increase in supply as rates fell and
pockets of weakness resulting from concerns about the rapidly slowing economy.
Such moves included a systematic reduction of the portfolio's corporate bond
weighting to about 80% of net assets in mid-May, accomplished in part by
lightening up our airline holdings, which had been our most aggressive position.
In May and June, we began to move back into the corporate bond market,
targeting issues that we believed offered particularly good value.
Specifically, we liked firms in the media sector, such as Time Warner,
Tele-Communications, News America, and Viacom. Deregulation is reducing much of
the legislative risk for these companies, giving them access to larger
subscription bases and increased cash flow. In addition, the bonds of many of
these companies offer attractive yields, are only modestly sensitive to economic
cycles, and provide the opportunity for credit upgrades that would positively
impact prices.
By the end of June, we had re-established our full market weighting, with
corporate bonds representing over 85% of net assets.
10
<PAGE> 13
ASSET ALLOCATION
(as of 6/30/95)
[Pie Chart]
<TABLE>
<S> <C>
U.S. Gov't & Agency Issues 2.4%
Preferred Stock 1.2%
Corporate Bonds 85.2%
Non-Agency Mortgage-Backed Securities 8.3%
Short-Term Investments 2.9%
</TABLE>
This allocation is presented as a percentage of net assets and does not
reflect any futures positions held by the Fund. Please see the Schedule of
Investments in Securities for a complete listing of the Fund's portfolio.
WE EXPECT A FIRM
MARKET FOR BONDS
While a repeat of the last six month's strong rally is unlikely, we expect a
favorable environment for bonds for the remainder of the year. Inflation remains
muted, while economic statistics appear to confirm a slowdown in the economy
that, if maintained, would help keep long-term rates relatively low.
While we're comfortable with the Fund's current average credit quality, we
might increase the portfolio's quality if the economy were to weaken
significantly. However, our research suggests that an economic downturn would
likely be short and shallow, and fairly easily remedied by a more accommodative
Federal Reserve policy. In addition, it appears that most American companies
have learned from the past, and, bolstered in part by a healthier banking
system, are operating efficiently enough to weather such a downturn and sustain
their debt payments.
Thank you for your investment in the Strong Corporate Bond Fund. We look
forward to serving your investment needs in the future.
Sincerely,
/S/ Jeffrey A. Kock
Jeffrey A. Koch
Portfolio Manager
[Photo of Jeffrey A. Koch]
Growth of an assumed $10,000 investment
from 12/12/85 to 6/30/95
The Strong Corporate Bond Fund
12/85 10000
12/86 13399
12/87 13997
12/88 15745
12/89 15800
12/90 14816
12/91 17013
12/92 18612
12/93 21732
12/94 21447
6/95 24640
Salomon Brothers BBB-rated Corporate Bond Index
12/85 10000
12/86 11827
12/87 12278
12/88 13593
12/89 15361
12/90 16220
12/91 19412
12/92 21310
12/93 24149
12/94 23353
6/95 26757
Average annual total returns
through 6/30/95
Since inception 9.90%
on 12/12/85
5-year 10.34%
3-year 11.44%
1-year 18.16%
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Salomon Brothers BBB-Corporate Bond Index. To equalize the time periods, the
index's performance was prorated for the month of December, 1985. Results
include the reinvestment of all dividends and capital gains distributions. The
Salomon Brothers BBB-Corporate Bond Index is an unmanaged, market
capitalization-weighted index generally representative of the performance of
BBB-rated corporate bonds. Performance is historical and does not represent
future results. Investment returns and principal value vary, and you may have a
gain or loss when you sell shares.
(1) The Fund's average maturity includes the effect of futures contracts.
(2) Rankings are historical and do not represent future results. For the 5-year
and since inception (12/12/85) periods, the Fund was
ranked #9 of 26 and #4 of 15 funds, respectively.
11
<PAGE> 14
SCHEDULE OF INVESTMENTS IN SECURITIES June 30, 1995 (Unaudited)
STRONG U.S. TREASURY MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
SECURITY AMOUNT MATURITY DATE*** COST **
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States Treasury Bills 100.4%* $ 85,000 5.65% 07/06/95 $ 84,960
24,830,000 5.31 07/27/95 24,738,431
195,000 5.36 08/10/95 193,883
405,000 5.45 09/14/95 400,524
16,890,000 5.46 09/21/95 16,688,324
-----------
TOTAL INVESTMENTS IN SECURITIES 100.4%* 42,106,122
Other Assets and Liabilities, Net (0.4%*) (171,800)
-----------
NET ASSETS 100.0%* $41,934,322
===========
<CAPTION>
STRONG MONEY MARKET FUND
PRINCIPAL YIELD TO MATURITY AMORTIZED
SECURITY AMOUNT MATURITY DATE*** COST **
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE COMMERCIAL PAPER 73.8%*
American Home Food Products, Inc. $10,000,000 6.00% 08/03/95 $ 9,948,333
American Home Products Corporation 21,000,000 5.96 08/10/95 20,867,886
4,000,000 5.92 09/05/95 3,957,902
American Honda Finance, Inc. 13,400,000 6.50 07/28/95 13,339,514
7,500,000 5.97 08/08/95 7,455,225
10,700,000 6.02 08/09/95 10,633,797
4,400,000 6.00 08/10/95 4,372,133
20,000,000 6.00 08/15/95 19,856,667
3,000,000 6.00 08/21/95 2,975,500
17,000,000 6.00 08/23/95 16,855,500
Aristar, Inc. 10,000,000 6.04 07/25/95 9,963,089
8,000,000 6.00 08/01/95 7,961,333
9,400,000 5.99 08/04/95 9,349,974
12,500,000 5.99 08/07/95 12,427,205
19,500,000 5.99 08/08/95 19,383,125
Barnett Banks, Inc. 10,000,000 5.95 07/07/95 9,993,389
14,000,000 6.00 07/11/95 13,981,333
Brazos River Authority, Texas Pollution Control Revenue 20,000,000 5.99 08/03/95 20,000,000
16,200,000 6.00 08/04/95 16,200,000
Brownsville Texas Utility Systems 11,356,000 6.02 08/09/95 11,285,738
CSC Enterprises 4,500,000 6.07 07/19/95 4,487,860
4,000,000 6.00 08/22/95 3,966,667
Calcot, Ltd. 6,000,000 6.02 07/10/95 5,992,977
8,500,000 6.00 07/13/95 8,485,833
5,000,000 6.00 07/14/95 4,990,833
5,000,000 6.05 07/17/95 4,988,236
3,000,000 6.02 07/18/95 2,992,475
7,000,000 6.05 07/19/95 6,981,178
5,000,000 6.10 07/27/95 4,979,667
Coca Cola Enterprises, Inc. 23,100,000 6.07 07/05/95 23,092,210
17,000,000 6.02 07/06/95 16,991,472
Cooper Industries, Inc. 18,000,000 5.98 07/12/95 17,973,090
26,000,000 5.98 07/13/95 25,956,811
Countrywide Funding Corporation 12,100,000 6.05 07/18/95 12,069,498
26,300,000 5.98 07/21/95 26,221,363
Dayton Hudson Corporation 20,250,000 6.00 08/04/95 20,142,000
Duracell, Inc. 16,020,000 6.05 07/06/95 16,011,923
9,500,000 5.97 08/04/95 9,449,587
15,000,000 5.98 08/28/95 14,860,467
EG&G Corporation 11,700,000 6.05 07/12/95 11,682,304
Eli Lilly & Company 47,400 5.55 Upon Demand 47,400
</TABLE>
See notes to financial statements.
12
<PAGE> 15
SCHEDULE OF INVESTMENTS IN SECURITIES (continued) June 30, 1995 (Unaudited)
STRONG MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
SECURITY AMOUNT MATURITY DATE*** COST **
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equitable of Iowa Companies $10,800,000 6.02% 07/19/95 $10,771,104
5,000,000 6.00 07/20/95 4,985,833
16,000,000 6.00 07/26/95 15,938,667
8,000,000 6.00 08/01/95 7,961,333
14,600,000 6.00 08/08/95 14,512,400
Finova Group, Inc. 14,000,000 6.13 07/10/95 13,983,313
14,000,000 6.16 07/13/95 13,976,044
5,000,000 6.10 07/17/95 4,988,139
7,000,000 6.05 07/18/95 6,982,354
4,000,000 6.08 07/19/95 3,989,191
4,000,000 6.07 07/26/95 3,984,488
13,250,000 5.93 07/31/95 13,188,877
3,800,000 6.03 08/01/95 3,781,541
5,000,000 6.00 08/07/95 4,970,833
22,000,000 6.00 08/09/95 21,864,251
11,000,000 6.01 08/30/95 10,893,489
Fleet Mortgage Group, Inc. 20,000,000 6.05 07/20/95 19,942,861
23,250,000 5.92 07/21/95 23,181,180
Fleet / Norstar Financial Group, Inc. 30,000,000 6.02 07/24/95 29,894,650
GTE Finance Corporation 12,000,000 6.12 07/14/95 11,977,560
14,110,000 5.99 08/09/95 14,023,133
4,800,000 5.99 08/14/95 4,766,456
14,800,000 6.00 08/17/95 14,689,000
GTE Hawaiian Telephone Company, Inc. 4,000,000 6.00 07/05/95 3,998,667
23,500,000 6.02 07/10/95 23,472,512
6,000,000 6.06 07/13/95 5,989,900
General Motors Acceptance Corporation 13,863,000 6.09 07/17/95 13,830,168
General Signal Corporation:
(Acquired 6/22/95; Cost $15,580,034)(r) 15,700,000 5.98 08/07/95 15,608,722
(Acquired 6/19/95; Cost $9,905,000)(r) 10,000,000 6.00 08/15/95 9,928,333
(Acquired 6/20/95; Cost $16,311,199)(r) 16,500,000 5.97 08/28/95 16,346,770
Great Western Bank 25,000,000 6.02 08/02/95 24,874,583
LOCAP, Inc. 18,135,000 6.00 08/29/95 17,962,718
Lehman Brothers Holdings, Inc. 3,000,000 6.30 07/03/95 3,000,000
25,000,000 6.07 07/07/95 24,983,144
13,500,000 6.06 07/18/95 13,465,912
5,000,000 6.12 07/21/95 4,984,700
Mercury Finance Corporation 3,000,000 6.10 07/10/95 2,996,442
5,000,000 6.08 07/19/95 4,986,489
1,000,000 6.02 07/28/95 995,819
13,335,000 6.14 08/07/95 13,255,462
10,000,000 6.11 08/11/95 9,933,808
18,300,000 6.06 08/18/95 18,158,256
6,000,000 6.00 08/21/95 5,951,000
12,000,000 6.00 08/22/95 11,900,000
7,500,000 6.07 08/24/95 7,434,199
8,000,000 6.05 08/25/95 7,928,744
16,000,000 6.07 08/28/95 15,848,924
Michigan Underground Storage Tank Financial Assurance Authority 23,290,000 6.12 07/10/95 23,262,285
Modesto, California District Irrigation Authority 18,600,000 6.02 08/18/95 18,456,925
New Hampshire State, New England Power Provider 18,000,000 6.13 07/27/95 18,000,000
New York State Job Development Authority 35,000,000 6.19 07/11/95 35,000,000
5,000,000 6.10 07/21/95 5,000,000
14,750,000 6.22 08/14/95 14,750,000
7,000,000 6.15 08/24/95 7,000,000
</TABLE>
See notes to financial statements.
13
<PAGE> 16
SCHEDULE OF INVESTMENTS IN SECURITIES (continued) June 30, 1995 (Unaudited)
STRONG MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
SECURITY AMOUNT MATURITY DATE*** COST **
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nynex Corporation $20,000,000 6.05% 07/14/95 $ 19,963,028
3,670,000 6.02 09/25/95 3,618,449
Nynex Credit Corporation 4,000,000 6.00 07/17/95 3,990,667
Pennsylvania Power and Light Company 5,350,000 6.00 07/14/95 5,340,192
Salomon, Inc. 4,440,000 6.40 07/03/95 4,440,000
17,385,000 6.18 07/31/95 17,301,436
8,000,000 6.13 08/01/95 7,960,496
21,635,000 5.99 08/02/95 21,526,981
9,000,000 6.12 08/21/95 8,925,030
San Diego, California Industrial Development Revenue --
San Diego Gas & Electric Company
(Acquired 6/08/95; Cost $14,915,000)(r) 14,915,000 6.01 07/14/95 14,915,000
Society of the New York Hospital Fund, Inc. 6,500,000 6.07 07/24/95 6,476,985
20,700,000 6.02 08/16/95 20,547,694
11,220,000 6.02 08/17/95 11,135,569
Southwestern Bell Telephone Company 163,800 5.71 Upon Demand 163,800
Sunshine State Governmental Financing Commission Florida Revenue 15,000,000 6.15 07/12/95 14,976,938
Tambrands, Inc. 9,000,000 6.15 07/06/95 8,995,388
Torchmark Corporation 20,300,000 6.07 07/10/95 20,276,039
8,000,000 6.00 07/24/95 7,972,000
15,500,000 6.00 07/25/95 15,443,167
7,000,000 6.00 07/26/95 6,973,167
12,000,000 6.04 08/01/95 11,941,638
5,000,000 6.05 08/07/95 4,970,590
11,500,000 5.99 08/24/95 11,400,499
2,700,000 6.00 08/25/95 2,676,150
16,000,000 6.00 08/30/95 15,845,333
3,000,000 5.93 09/05/95 2,968,373
Washington Square Mortgage Company 21,800,000 6.04 07/17/95 21,748,770
6,400,000 6.04 07/20/95 6,381,752
1,000,000 6.07 07/24/95 996,459
4,200,000 6.07 07/25/95 4,184,420
12,300,000 6.00 08/14/95 12,213,900
2,800,000 6.00 08/17/95 2,779,000
1,400,000 6.00 08/23/95 1,388,100
Whirlpool Corporation 31,500,000 6.06 07/20/95 31,409,857
Wisconsin Electric Power Company 100 5.77 Upon Demand 100
Yale University 15,000,000 6.05 08/11/95 14,901,688
--------------
Total Corporate Commercial Paper 1,524,471,328
CORPORATE FLOATING RATE NOTES 7.9%*
Bear Stearns Companies, Inc. Medium Term Notes, Tranche #00264 10,000,000 6.16 07/31/95 10,000,000
CS First Boston, Inc. Medium Term Notes (Acquired 6/30/95;
Cost $25,000,000)(r) 25,000,000 6.15 10/01/95 25,000,000
Caterpillar Financial Services Corporation Medium Term Notes,
Tranche #267 10,000,000 6.28 08/18/95 10,000,000
Fleet Mortgage Group Floating Rate Notes:
Tranche #19 2,000,000 5.17 09/20/95 2,005,480
Tranche #20 6,885,000 5.17 09/20/95 6,903,865
General Motors Acceptance Corporation Notes 10,000,000 6.35 04/21/96 10,000,000
Lehman Brothers Holdings, Inc. Medium Term Notes, Tranche #101 20,000,000 6.36 06/21/95 20,000,000
Shawmut Bank Connecticut:
Medium Term Notes 20,000,000 5.15 07/07/95 20,001,800
Medium Term Notes, Tranche #10 60,000,000 6.23 08/10/95 59,998,956
--------------
Total Corporate Floating Rate Notes 163,910,101
CORPORATE OBLIGATIONS 7.4%*
Chrysler Financial Corporation Medium Term Notes:
Tranche #55, 4.86% 10,000,000 6.10 10/02/95 9,969,027
Tranche #99, 4.82% 5,000,000 6.09 12/18/95 4,971,440
Chrysler Financial Corporation Notes:
6.00% 15,050,000 6.15 04/15/96 15,032,808
10.34% 22,679,000 6.25 05/15/96 23,457,031
</TABLE>
See notes to financial statements.
14
<PAGE> 17
STRONG MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
SECURITY AMOUNT MATURITY DATE*** COST **
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
General Motors Acceptance Corporation Medium Term Notes:
8.75% $ 5,000,000 6.82% 08/01/95 $ 5,008,355
Tranche #774, 4.875% 9,650,000 6.42 08/03/95 9,636,398
Tranche #543, 5.15% 10,000,000 7.25 09/14/95 9,957,535
Tranche #747, 7.90% 1,500,000 6.91 09/15/95 1,503,052
Tranche #550, 5.15% 4,970,000 6.60 09/21/95 4,954,021
7.50% 5,200,000 6.30 10/15/95 5,217,815
7.50% 10,500,000 6.36 10/15/95 10,534,300
8.75% 33,515,000 6.69 02/01/96 33,907,447
Huntington Bankshares, Inc. Medium Term Notes, Tranche #5, 6.55% 18,500,000 6.55 03/29/96 18,500,000
--------------
Total Corporate Obligations 152,649,229
TAXABLE MUNICIPAL SECURITIES 5.9%*
Alabama State Industrial Development Authority Variable Rate
Revenue Bond 8,000,000 6.20 07/06/95 8,000,000
Chattanooga Tennessee Industrial Development Board Revenue -
Radisson Read Variable Rate Notes 3,660,000 6.55 07/07/95 3,660,000
Community Health Systems, Inc. Variable Rate Weekly Put Bond 4,100,000 6.45 07/07/95 4,100,000
Health Midwest Ventures Group, Inc. Variable Rate Weekly Put Bond 8,800,000 6.15 07/07/95 8,800,000
Illinois Housing Development Authority Variable Rate Bond 14,345,000 6.21 07/02/95 14,345,000
Ivex of Delaware, Inc. Variable Rate Bond 6,400,000 6.35 07/01/95 6,400,000
J.H. Siroonian, Inc. Variable Rate Weekly Put Bond 8,200,000 6.20 07/06/95 8,200,000
Kinder-Care Learning Centers, Inc. Industrial Refunding Variable
Rate Weekly Put Bond - Kinder-Care Learning Centers, Inc. Projects 3,500,000 6.27 07/05/95 3,500,000
McQueen Village Limited Partnership Variable Rate Bond 3,200,000 6.20 07/01/95 3,200,000
Mississippi Business Finance Corporation Industrial
Development Variable Rate Monthly Put Bond 14,500,000 6.16 08/01/95 14,500,000
Missouri Economic Development, Export & Infrastructure Board
Variable Rate Weekly Put Bond 4,100,000 6.25 07/07/95 4,100,000
Montgomery County, Pennsylvania Industrial Development Authority
Revenue Bond 5,000,000 6.40 07/07/95 5,000,000
New Jersey Sports & Exposition Authority Sports Complex Subordinated
Refunding Revenue Bond 21,275,000 6.21 07/02/95 21,275,000
Presbyterian Homes, Inc. Variable Rate Weekly Put Bond 5,000,000 6.00 07/07/95 5,000,000
South Carolina Jobs - Economic Development Authority Variable Rate
Industrial Development Revenue Bond - Roller Bearing Company of
America, Inc. Project 3,000,000 6.35 07/07/95 3,000,000
Southeast Atlantic Properties, L.L.C. Variable Rate Bond 7,600,000 6.20 07/07/95 7,600,000
--------------
Total Taxable Municipal Securities 120,680,000
UNITED STATES GOVERNMENT AND AGENCY ISSUES 5.1%*
Federal Home Loan Banks 25,000,000 6.53 04/25/96 25,000,000
Federal National Mortgage Association Medium Term Notes 15,000,000 6.53 01/26/96 14,986,897
Small Business Administration Guaranteed Loan Certificates:
Pool #502604 1,936,680 8.26 10/01/95 1,930,628
Pool #502799 8,362,247 8.01 10/01/95 8,341,341
Pool #502847 9,029,847 8.01 10/01/95 9,007,273
Student Loan Marketing Association Floating Rate Notes: 5,000,000 5.70 07/04/95 5,000,000
10,000,000 5.72 07/04/95 10,000,000
United States Treasury Bills: 20,000,000 5.19 07/27/95 19,930,800
11,500,000 5.23 07/27/95 11,459,903
--------------
Total United States Government and Agency Issues 105,656,842
--------------
TOTAL INVESTMENTS IN SECURITIES 100.1%* 2,067,367,500
Other Assets and Liabilities, Net (0.1%*) (2,308,623)
--------------
NET ASSETS 100.0%* $2,065,058,877
==============
</TABLE>
See notes to financial statements.
15
<PAGE> 18
SCHEDULE OF INVESTMENTS IN SECURITIES (continued) June 30, 1995 (Unaudited)
STRONG ADVANTAGE FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
-----------------------------------------------------------------------------------
<S> <C>
Domestic Bonds 91.7%*
Convertible Bond 0.1%*
$ 2,350,000 ADT Operations, Inc. Convertible Liquid Yield
Option Notes, Zero %, Due 7/06/10
(Cost $900,262) $ 920,824
Corporate Bonds 56.4%*
22,700,000 Bank of Boston Corporation Subordinated
Floating Rate Notes, 6.1875%, Due 2/10/01 22,285,907
8,714,000 Bankers Life Holding Corporation Senior
Subordinated Notes, Series B, 13.00%,
Due 11/01/02 10,173,595
10,000,000 Cablevision Industries Corporation Senior
Notes, 10.75%, Due 1/30/02 10,900,000
30,270,000 Chase Manhattan Corporation Floating Rate
Notes, 6.1875%, Due 12/30/09 29,210,550
10,870,000 Citicorp Floating Rate Notes, 6.75%,
Due 5/01/04 10,833,259
1,315,000 Coltec Holdings, Inc. Debentures, 11.25%,
Due 12/01/15 1,397,188
8,000,000 Continental Cablevision, Inc. Floating Rate
Notes, 9.125%, Due 11/01/04 8,080,000
2,485,000 Delta Air Lines, Inc. Debentures, 10.375%,
Due 12/15/22 2,984,843
2,150,629 Exide Corporation Bank Drawdown Loan,
0.50%, Due 9/30/99 (Acquired 6/27/95,
6/28/95; Cost $0) (r) 0
955,965 Exide Corporation Floating Rate Bank Term
Loan, 8.5625%, Due 9/30/99 (Acquired
6/27/95; Cost $957,715) (r) 953,575
1,124,665 Exide Corporation Floating Rate Bank Term
Loan, 8.875%, Due 9/30/99 (Acquired
6/27/95; Cost $1,124,665) (r) 1,121,853
340,285 Exide Corporation Floating Rate Revolving
Bank Loan, 8.50%, Due 9/30/99 (Acquired
6/27/95; Cost $340,285) (r) 339,434
1,928,281 Exide Corporation Floating Rate Revolving
Bank Loan, 8.5625%, Due 9/30/99 (Acquired
6/27/95; Cost $1,928,281) (r) 1,923,461
1,179,654 Exide Corporation Floating Rate Revolving
Bank Loan, 8.625%, Due 9/30/99 (Acquired
6/27/95; Cost $1,179,654) (r) 1,176,705
113,428 Exide Corporation Floating Rate Revolving
Bank Loan, 10.25%, Due 9/30/99 (Acquired
6/29/95, 6/30/95; Cost $113,428) (r) 113,145
2,000,000 First Bank System, Inc. Floating Rate
Subordinated Notes, 6.25%, Due 11/30/10
(Putable at 100 on 11/30/00) 1,987,042
30,750,000 Fleming Companies, Inc. Senior Floating Rate
Notes, 8.3125%, Due 12/15/01 30,738,315
5,000,000 Ford Motor Credit Debt Unit with Premium
Call (Structured Enhanced Return Trusts
1995, Series R-20), 9.75%, Due 2/03/98
(Acquired 2/08/95; Cost $4,997,500) (r) 5,125,000
3,725,000 Grand Metropolitan Investment Corporation
Medium Term Notes, 7.45%, Due 4/15/35 3,856,001
770,000 Grumman Corporation Notes, 10.375%,
Due 1/01/99 786,507
$14,670,000 Harrahs Operating, Inc. Guaranteed Senior
Subordinated Notes, 10.875%, Due 4/15/02 $15,843,600
30,000,000 Health & Retirement Properties Trust Senior
Floating Rate Notes, Series B, 7.30%,
Due 7/13/99 29,906,280
11,000,000 MGM Grand Hotel Finance Corporation First
Mortgage Notes, 11.75%, Due 5/01/99 11,907,500
Magma Copper Company Senior Subordinated
Notes:
14,841,000 11.50%, Due 1/15/02 16,046,831
13,600,000 12.00%, Due 12/15/01 15,045,000
Marine Midland Banks, Inc. Floating Rate
Subordinated Notes:
12,500,000 6.0625%, Due 12/20/00 12,306,700
21,460,000 6.25%, Due 12/31/09 20,682,075
8,130,000 NBD Bancorp, Inc. Subordinated Floating
Rate Notes, 6.1875%, Due 12/18/05 8,115,618
5,000,000 National Cooperative Services Corporation
Guaranteed Bonds, 11.50%, Due 12/31/09 5,309,635
10,000,000 New American Capital, Inc. Floating Rate
Notes, Series C, 7.6875%, Due 4/12/00
(Acquired 3/16/95; Cost $10,000,000) (r) 10,000,000
1,245,000 News America Holdings, Inc. Senior Notes,
12.00%, Due 12/15/01 1,414,538
28,250,000 Newscorp Overseas Limited Floating Rate
Debt Unit with Swap Agreement (Structured
Enhanced Return Trusts 1995 Series R-27),
6.9625%, Due 6/30/99 (Acquired 6/12/95;
Cost $27,120,000) (r) 27,148,250
5,750,000 Oryx Energy Company Notes, 10.00%,
Due 6/15/99 6,046,395
18,380,000 Public Service Company of New Hampshire
Debentures, 15.23%, Due 7/01/00 21,299,479
1,082,000 Reebok International Limited Debentures,
9.75%, Due 9/15/98 1,090,549
12,000,000 Rogers Communications Inc. Floating Rate
Debt Unit with Premium Call (Medium
Term Structured Enhanced Return Trusts
1995, Series R-25), 9.1625%, Due 6/21/98
(Acquired 5/15/95; Cost $12,000,000) (r) 12,000,000
12,000,000 Santa Fe Pacific Gold Corporation Senior
Debentures, 8.375%, Due 7/01/05 11,955,000
6,260,000 Shawmut Corporation Floating Rate Notes,
6.25%, Due 2/24/97 6,256,870
3,530,000 System Energy Resources, Inc. First Mortgage
Bonds, 11.375%, Due 9/01/16 3,926,017
1,000,000 Texas New Mexico Power Company First
Mortgage, Series T, 11.25%, Due 1/15/97 1,048,750
3,000,000 Texas Utilities Electric Company Medium
Term Notes, 9.45%, Due 1/05/01 3,120,000
5,000,000 Time Warner, Inc. Debentures, 9.125%,
Due 1/15/13 5,241,965
11,000,000 Time Warner, Inc. Floating Rate Debt Unit
with Premium Call (Medium Term
Structured Enhanced Return Trusts 1994,
Series R-10), 7.4625%, Due 6/22/98
(Acquired 12/08/94; Cost $10,993,125) (r) 11,000,000
9,250,000 Time Warner, Inc. Notes, 7.75%, Due 6/15/05 9,219,854
</TABLE>
See notes to financial statements.
16
<PAGE> 19
STRONG ADVANTAGE FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
---------------------------------------------------------------------------
<S> <C>
$15,015,000 Transcontinental Gas Pipe Line Corporation
Floating Rate Notes, 6.21%, Due 5/15/00
(Putable at 100 on 5/15/96) $ 15,001,051
USG Corporation Senior Notes:
6,411,000 Series A, 10.25%, Due 12/15/02 6,507,165
20,037,000 Series B, 10.25%, Due 12/15/02 20,337,555
5,456,000 Unisys Corporation Notes, 9.50%, Due 7/15/98 5,498,486
5,290,000 Varity Corporation Senior Notes, 11.375%,
Due 11/15/98 5,660,300
27,800,000 Viacom, Inc. Senior Notes, 7.75%, Due 6/01/05 28,078,000
------------
TOTAL CORPORATE BONDS
(COST $488,702,970) 490,999,843
NON-AGENCY MORTGAGE BACKED SECURITIES 34.1%*
7,214,965 AFC Mortgage Loan Asset Trust Variable
Rate Certificates, Series 1994-1, Class 2,
A-1, 7.963%, Due 5/25/25 7,321,746
3,073,688 Bear Stearns Mortgage Securities, Inc.
Mortgage Pass-Thru Certificates, Series
1993-12, Class 1-A, 6.50%, Due 1/25/34 3,037,040
2,740,233 California Federal Bank, A Federal Savings
Bank of Los Angeles, Variable Rate Mortgage
Pass-Thru Certificates, Series 1988 PAL-1,
Class A, 8.1268%, Due 2/25/18 2,733,382
3,709,971 Chase Mortgage Finance Corporation Mortgage
Pass-Thru Certificates, Series 1990-G,
Class A-Z1, 9.50%, Due 12/25/21 3,798,083
10,000,000 DLJ Mortgage Acceptance Corporation Variable
Rate Mortgage Pass-Thru Certificates, Series
1992 MF-3, Class A-3, 7.7625%, Due 6/18/07 10,200,000
First Boston Mortgage Securities Corporation
Variable Rate Mortgage Pass-Thru
Certificates, Series 1994-MHC1:
9,600,000 Class C, 7.3935%, Due 4/25/11 9,552,000
5,200,000 Class D, 7.7625%, Due 4/25/11 5,174,000
Green Tree Securitized Net Interest Margin
Trust Certificates:
7,389,304 Series 1994-A, 6.90%, Due 2/15/04 7,412,654
7,572,699 Series 1994-B, 7.85%, Due 7/15/04 7,596,175
4,792,298 Greenwich Capital Acceptance, Inc.
Subordinated Mortgage Securities Trust
Pass-Thru Certificates, Series 1994-1,
Class A, 6.1588%, Due 2/28/19 (Acquired
4/12/94; Cost $4,684,471) (r) 4,534,712
8,593,168 Greenwich Capital Acceptance, Inc. Variable
Rate Mortgage Pass-Thru Certificates,
Class A, 7.0944%, Due 5/25/20 8,389,081
Homart Pooled Asset Financial Trust Floating
Rate Collateral Trust Certificates:
10,000,000 Class A-3, 7.75%, Due 12/29/01 (Acquired
12/21/93; Cost $10,000,000) (r) 9,987,500
10,000,000 Class A-4, 8.50%, Due 12/29/01 (Acquired
2/09/95; Cost $9,987,500) (r) 9,987,500
Merrill Lynch Credit Corporation Senior
Subordinated Variable Rate Mortgage
Pass-Thru Certificates:
9,375,000 Series 1994-B, Class A-4, 6.8625%,
Due 12/15/19 9,019,688
3,688,000 Series 1995-A, Class A-4, 6.8625%,
Due 7/15/20 3,526,650
$14,055,169 Merrill Lynch Home Equity Acceptance, Inc.
Subordinated Variable Rate Mortgage-
Backed Certificates, Series 1994-A,
Class A-1, 7.0625%, Due 8/17/23 $ 13,387,548
Merrill Lynch Mortgage Investors, Inc.
Manufactured Housing Contract Senior
Subordinated Pass-Thru Certificates:
296,442 Series 1992-D, Class A1, 5.90%, Due 7/15/17 295,959
4,492,171 Series 1992-E, Class B, 5.85%, Due 8/15/12 4,459,827
784,500 Merrill Lynch Mortgage Investors, Inc. Senior
Subordinated Pass-Thru Certificates,
Series 1988-H, Class A, 9.70%, Due 6/15/08 810,985
Merrill Lynch Mortgage Investors, Inc. Senior
Subordinated Variable Rate Pass-Thru
Certificates:
14,022,000 Series 1994-F, Class M, 7.0625%, Due 4/15/19 12,738,987
5,000,000 Series 1994-H, Class M, 7.0625%, Due 6/15/19 4,542,500
1,009,607 Merrill Lynch Mortgage Investors, Inc. Variable
Rate Mortgage Pass-Thru Certificates,
Series 1993-G, Class B, 5.40%, Due 12/15/13 989,576
1,355,318 Mortgage Capital Funding, Inc. Variable Rate
Mortgage Pass-Thru Certificates, Series
1993-C1, Class A-1, 5.25%, Due 5/25/15 1,337,825
5,010,670 RTC Multifamily Variable Rate Mortgage
Certificates, Series 1992-M2, Class B-1,
7.275%, Due 3/25/20 5,029,209
RTC Variable Rate Mortgage Pass-Thru
Securities, Inc.:
2,202,610 Series 1991-2, Class A, 6.675%, Due 4/25/21 2,215,011
779,917 Series 1991-4, Class A-1, 6.615%,
Due 11/25/20 778,700
18,282,369 Series 1992-3, Class B-4, 6.995%, Due 9/25/30 18,305,222
1,852,641 Series 1992-6, Class B-9, 6.985%,
Due 11/25/26 1,843,378
22,856,505 Series 1995-1, Class B-5, 7.4131%,
Due 10/25/28 22,285,092
9,596,543 Series 1995-1, Class M-5, 7.4131%,
Due 10/25/28 9,656,521
1,107,000 Series 1995-C1, Class A-4C, 6.85%,
Due 2/25/27 1,081,406
RTC Variable Rate Mortgage Pass-Thru
Securities, Inc. Manufactured Housing
Certificates:
1,111,756 Series 1992-MH1, Class A-1, 7.00%,
Due 2/15/19 1,116,290
7,561,075 Series 1992-MH1, Class B, 6.525%,
Due 8/15/19 (Acquired 4/21/95;
Cost $7,444,115) (r) 7,471,098
1,610,373 Series 1992-MH2, Class A-1, 7.00%,
Due 2/15/04 1,618,834
6,750,759 Ryan Mortgage Acceptance Corporation IX
Collateralized Mortgage Bonds, Series 4,
Class 4-Z, 9.45%, Due 4/01/16 6,804,495
3,597,328 Ryland Acceptance Corporation IV
Collateralized Mortgage Bonds, Series 53,
Class 53-E, 10.00%, Due 10/25/18 3,763,525
</TABLE>
See notes to financial statements.
17
<PAGE> 20
SCHEDULE OF INVESTMENTS IN SECURITIES (continued) June 30, 1995 (Unaudited)
STRONG ADVANTAGE FUND (continued)
<TABLE>
<CAPTION>
Shares or Value
Principal Amount (Note 2)
--------------------------------------------------------------------------------
<S> <C>
$24,985,000 Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage
Bonds, Series 1992-C, Class 3-A, 7.65%,
Due 11/25/30 $ 24,391,606
1,536,594 Ryland Mortgage Securities Corporation IV
Variable Rate Collateralized Mortgage
Bonds, Series 2, Class 3-A, 11.9499%,
Due 6/25/23 1,610,550
SML Commercial Mortgage Trust Variable
Rate Pass-Thru Certificates, Series 1994-C1:
4,799,500 Class A-1, 7.0625%, Due 9/18/99 4,796,524
9,000,000 Class A-2, 7.2625%, Due 9/18/99 9,000,000
1,821,143 Santa Barbara Savings & Loan Association
California Real Estate Mortgage Investment
Conduit Participation Certificates,
Series 1988-A, Class 2, Principal Only,
Due 9/01/18 1,429,598
20,470,000 TMS Trust Variable Rate Asset-Backed
Certificates, Series 1994-D, Class A-11,
6.8625%, Due 3/15/25 20,444,413
5,290,688 U-Haul Self-Storage Corporation Commercial
Mortgage Asset Trust Pass-Thru
Certificates, Series 1993-1, Class A1,
7.4625%, Due 12/01/20 (Acquired 12/02/93;
Cost $5,290,688) (r) 5,270,848
6,408,300 Western Federal Savings & Loan Association
Marina Del Rey California Variable Rate
Mortgage Pass-Thru Certificates,
Series 1991-4, Class A, 7.437%, Due 7/01/21 6,440,341
------------
TOTAL NON-AGENCY MORTGAGE-BACKED
SECURITIES (COST $297,204,727) 296,186,079
UNITED STATES GOVERNMENT AGENCY ISSUES 1.1%*
FHLMC Participation Certificates:
705,182 9.00%, Due 1/01/05 729,779
185,808 10.75%, Due 10/01/00 195,209
2,403,202 11.00%, Due 10/01/00 thru 9/01/20 2,643,569
2,565,703 11.75%, Due 5/01/11 thru 4/01/13 2,859,043
917,689 12.00%, Due 9/01/11 thru 2/01/15 1,028,976
1,569,306 12.25%, Due 7/01/15 1,766,772
235,716 12.50%, Due 2/01/15 267,533
108,360 FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
13.50%, Due 9/01/14 125,205
GNMA Guaranteed Pass-Thru Certificates:
203,318 13.50%, Due 6/15/10 thru 11/15/14 239,191
57,339 15.00%, Due 8/15/11 thru 9/15/12 68,399
------------
TOTAL UNITED STATES GOVERNMENT AGENCY
ISSUES (COST $9,100,187) 9,923,676
------------
TOTAL DOMESTIC BONDS
(COST $795,908,146) 798,030,422
FOREIGN BOND 1.2%*
JAPAN
10,000,000 USD Okobank Subordinated Step-Up Perpetual
Floating Rate Notes, 7.70%,
Due 10/14/49 (Cost $9,962,500) $10,005,000
OPTION 0.2%*
32,666,667 Merrill Lynch Swaption (The option to
receive a fixed interest rate of 7.75%;
exercisable at a strike price of 100
beginning 4/09/94 and expiring 4/09/25.
Putable on 11/16/95) (Cost $1,512,573) 1,894,667
DOMESTIC CASH EQUIVALENTS 5.9%*
COMMERCIAL PAPER 0.4%*
DISCOUNTED 0.2%*
$ 1,900,000 Paine Webber Group, 6.35%, Due 7/03/95 1,900,000
INTEREST BEARING, DUE UPON DEMAND 0.2%*
3,100 General Mills, Inc., 5.72% 3,100
223,900 Pitney Bowes Credit Corporation, 5.73% 223,900
1,068,800 Southwestern Bell Telephone Company,
5.71% 1,068,800
12,000 Wisconsin Electric Power Company, 5.77% 12,000
-----------
1,307,800
-----------
Total Commercial Paper 3,207,800
CORPORATE OBLIGATIONS 4.8%*
10,830,000 ARKLA, Inc. Medium Term Notes, 9.37%,
Due 3/15/96 thru 3/27/96 11,013,600
9,850,000 Lehman Brothers Holdings, Inc. Medium
Term Floating Rate Notes, 6.2625%,
Due 3/01/96 9,850,000
5,000,000 Lehman Brothers, Inc., Floating Rate Notes,
6.75%, Due 5/17/96 5,013,945
2,500,000 Long Island Lighting Company First
Mortgage Bonds, 5.25%, Due 3/01/96 2,477,940
6,000,000 Lyondell Petrochemical Company Notes,
9.95%, Due 6/01/96 6,182,418
7,000,000 Oryx Energy Company Medium Term
Notes, 6.23%, Due 12/27/95 6,973,708
-----------
Total Corporate Obligations 41,511,611
TIME DEPOSIT 0.3%*
3,000,000 Citibank Nassau, 6.8625%, Due 7/25/95 3,000,000
UNITED STATES GOVERNMENT ISSUES 0.4%*
United States Treasury Bills:
105,000 Due 7/13/95 104,853
400,000 Due 7/20/95 399,059
675,000 Due 7/27/95 672,669
35,000 Due 8/10/95 34,796
80,000 Due 9/21/95 79,047
1,960,000 Due 11/16/95 1,919,571
-----------
3,209,995
-----------
Total Domestic Cash Equivalents 50,929,406
</TABLE>
See notes to financial statements.
18
<PAGE> 21
STRONG ADVANTAGE FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
--------------------------------------------------------------------------------
<S> <C>
FOREIGN CASH EQUIVALENT 0.9%*
FOREIGN OBLIGATION
SOUTH AFRICA
8,000,000 South African Transnet LINCs Series 1994-1
USD (A trust established by CS First Boston
Structured Products Corporation), 8.207%,
Due 10/02/95 (Acquired 10/18/94;
Cost $8,000,000) (r) $ 8,060,000
------------
Total Cash Equivalents (Cost $58,547,906) 58,989,406
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $865,931,125) 99.9%* 868,919,495
Other Assets and Liabilities, Net 0.1%* 1,051,199
------------
NET ASSETS 100.0%* $869,970,694
============
STRONG SHORT-TERM BOND FUND
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
--------------------------------------------------------------------------------
<S> <C>
DOMESTIC BONDS 96.4%*
CONVERTIBLE BOND 1.9%*
$58,000,000 Time Warner, Inc. Convertible Liquid Yield
Option Notes, Zero %, Due 12/17/12
(Cost $18,777,198) $ 19,430,000
CORPORATE BONDS 30.4%*
2,000,000 ARA Services, Inc. Guaranteed Notes,
10.625%, Due 8/01/00 2,285,844
5,550,000 American Reinsurance Corporation Senior
Subordinated Debentures, 10.875%,
Due 9/15/04 6,147,602
8,850,000 Bank of Boston Corporation Subordinated
Floating Rate Notes, 6.1875%, Due 2/28/01 8,688,558
21,357,000 Citicorp Floating Rate Notes, 6.75%,
Due 5/01/04 21,284,813
17,000,000 Deere & Company Medium Term Notes,
8.38%, Due 5/12/97 17,485,860
21,015,000 Federated Department Stores, Inc. Senior
Notes, 10.00%, Due 2/15/01 22,669,931
4,000,000 First Bank System, Inc. Floating Rate Notes,
6.1875%, Due 11/29/96 3,998,000
4,000,000 First Bank System, Inc. Floating Rate
Subordinated Notes, 6.25%, Due 11/30/10
(Putable at 100 on 11/30/00) 3,974,084
10,000,000 Ford Motor Credit Debt Unit with Premium
Call (Structured Enhanced Return Trusts
1995, Series R-20), 9.75%, Due 2/03/98
(Acquired 2/08/95; Cost $9,995,000) (r) 10,250,000
6,675,000 Harrahs Operating, Inc. Guaranteed Senior
Subordinated Notes, 8.75%, Due 3/15/00 6,775,125
10,000,000 Health & Retirement Properties Trust Senior
Floating Rate Notes, Series B, 7.30%,
Due 7/13/99 9,968,760
8,180,000 Hook-SupeRx, Inc. Senior Notes, 10.125%,
Due 6/01/02 8,797,246
8,836,000 Kaufman & Broad Home Corporation Senior
Notes, 10.375%, Due 9/01/99 8,968,540
13,310,000 Magma Copper Company Senior Subordinated
Notes, 8.70%, Due 5/15/05 13,210,175
Marine Midland Banks, Inc. Floating Rate
Subordinated Notes:
$ 5,000,000 6.0625%, Due 12/20/00 $ 4,922,680
4,400,000 6.25%, Due 12/31/09 4,240,500
5,000,000 NBD Bancorp, Inc. Subordinated Floating
Rate Notes, 6.1875%, Due 12/18/05 4,991,155
20,000,000 News America Holdings Debt Unit with
Premium Call (Medium Term Structured
Enhanced Return Trusts 1995, Series R-26),
7.26%, Due 3/11/98 (Acquired 5/15/95;
Cost $20,000,000) (r) 20,040,000
10,000,000 News America Holdings, Inc. Debentures,
8.50%, Due 2/23/25 11,014,700
13,050,000 News America Holdings, Inc. Senior Notes,
12.00%, Due 12/15/01 14,827,084
2,200,000 Public Service Company of New Hampshire
Debentures, 15.23%, Due 7/01/00 2,549,448
10,800,000 Revco D.S., Inc. Senior Notes, 9.125%,
Due 1/15/00 11,286,000
12,000,000 Santa Fe Pacific Gold Corporation Senior
Debentures, 8.375%, Due 7/01/05 11,955,000
10,315,000 Tele-Communications, Inc. Non-Redeemable
Senior Debentures, 9.80%, Due 2/01/12 11,351,895
10,000,000 Time Warner, Inc. Debt Unit with Premium
Call (Medium Term Structured Enhanced
Return Trusts 1994, Series R-21), 8.58%,
Due 6/22/98 (Acquired 2/24/95;
Cost $9,965,800) (r) 10,319,000
19,295,000 Time Warner, Inc. Notes, 7.75%, Due 6/15/05 19,232,118
41,000,000 Viacom, Inc. Senior Notes, 7.75%, Due 6/01/05 41,410,000
8,000,000 Whitman Corporation Notes, 7.625%,
Due 6/15/15 7,891,952
------------
TOTAL CORPORATE BONDS
(COST $316,033,456) 320,536,070
NON-AGENCY MORTGAGE-Backed SECURITIES 30.8%*
294,223,459 American Housing Trust XI Mortgage
Pass-Thru Certificates, Class 3-1, Interest
Only, 0.663%, Due 1/25/22 5,607,899
16,948,489 CMC Securities Corporation III Collateralized
Mortgage Obligation, Series 1994-F,
Class A-1, 6.25%, Due 5/25/14 16,763,768
10,195,000 Central Life Assurance Company Mortgage
Pass-Thru Certificates, Series 1988-1,
Class A-4, 9.00%, Due 5/01/97 10,474,649
Chase Mortgage Finance Corporation
Mortgage Pass-Thru Certificates:
4,946,628 Series 1990-G, Class A-Z1, 9.50%,
Due 12/25/21 5,064,111
9,000,000 Series 1994-D, Class A-2, 6.00%,
Due 2/25/25 8,907,390
2,953,784 Citicorp Mortgage Securities, Inc. Real
Estate Mortgage Investment Conduit
Pass-Thru Certificates, Series 1988-3,
Class A-2, 9.00%, Due 4/01/18 3,067,711
2,503,708 Collateralized Mortgage Obligation Inverse
Floating Rate Trust, Series 13, Class Q,
14.4648%, Due 1/20/03 2,675,277
1,558,252 Collateralized Mortgage Obligation Trust 47,
Class E, Principal Only, Due 9/01/18 747,961
</TABLE>
See notes to financial statements.
19
<PAGE> 22
SCHEDULE OF INVESTMENTS IN SECURITIES (continued) June 30, 1995 (Unaudited)
STRONG SHORT-TERM BOND FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
--------------------------------------------------------------------------------
<S> <C> <C>
First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates:
$ 5,500,000 Series 1993-2, Class A-3, 7.50%, Due 3/25/33 $ 5,451,875
86,536,885 Series 1994-MHC1, Class A-1X, Interest Only,
1.8621%, Due 4/25/11 7,855,818
5,000,000 First Boston Mortgage Securities Corporation
Variable Rate Mortgage Pass-Thru
Certificates, Series 1994-MHC1, Class D,
7.7625%, Due 4/25/11 4,975,000
8,325,313 GMBS, Inc. Countrywide Funding
Certificates, Series 1990-1, Class Z, 9.25%,
Due 1/28/20 8,618,031
11,161,917 Green Tree Financial Corporation Certificates,
Series 1994-BII, Class A-1, 7.85%,
Due 7/15/09 11,182,824
Green Tree Securitized Net Interest Margin
Trust Certificates:
7,489,060 Series 1994-A, 6.90%, Due 2/15/04 7,512,725
3,819,956 Series 1994-B, 7.85%, Due 7/15/04 3,831,798
13,772,050 Greenwich Capital Acceptance, Inc. Mortgage
Securities, Series 1993-P01, Class E,
Principal Only, Due 11/26/17 9,227,274
4,339,905 Greenwich Capital Acceptance, Inc.
Subordinated Mortgage Securities Trust
Pass-Thru Certificates, Series 1994-1,
Class A, 6.1588%, Due 2/28/19
(Acquired 4/12/94; Cost $4,242,257) (r) 4,106,635
1,921,228 Home Equity Loan Real Estate Mortgage
Investment Conduit Trust, Closed-End
Asset-Backed Certificates, Series 1992-1,
Class B, 5.85%, Due 11/17/14 1,859,998
17,608,578 ML TR X Collateralized Mortgage Obligation,
Class C, Principal Only, Due 7/25/17 14,483,055
Merrill Lynch Credit Corporation Senior
Subordinated Variable Rate Mortgage
Pass-Thru Certificates:
13,423,000 Series 1994-A, Class M1, 6.8625%,
Due 8/15/19 12,516,948
10,605,000 Series 1994-B, Class A4, 6.8625%,
Due 12/15/19 10,203,071
13,554,805 Merrill Lynch Home Equity Acceptance, Inc.
Subordinated Variable Rate Mortgage-Backed
Certificates, Series 1994-A, Class A-1, 7.0625%,
8/17/23 12,910,952
176,242,630 Merrill Lynch Mortgage Investors, Inc.
Mortgage Pass-Thru Certificates,
Series 1994-C1, Interest Only, 0.644%,
Due 11/25/20 3,877,338
11,543,000 Merrill Lynch Mortgage Investors, Inc. Senior
Subordinated Variable Rate Pass-Thru
Certificates, Series 1994-H, Class M, 7.0625%,
Due 6/15/19 10,486,816
38,681,845 Mortgage Obligation Structured Trust
Pass-Thru Certificates, Series 1993-1,
Class A-1, 6.35%, Due 10/25/18 38,440,083
$13,497,885 RTC Mortgage Pass-Thru Certificates,
Series 1992-9, Class A-2B, 8.00%,
Due 7/25/29 $ 13,481,013
RTC Variable Rate Mortgage Pass-Thru
Securities, Inc.:
9,617,379 Series 1991-6, Class A, 6.9492%, Due 5/25/19 9,572,273
66,813 Series 1992-6, Class A-2, 8.40%, Due 7/25/24 65,644
8,213,821 Series 1995-1, Class B-11, 7.725%,
Due 10/25/28 8,213,821
9,842,608 Series 1995-1, Class M-5, 7.4131%,
Due 10/25/28 9,904,125
7,043,193 RTC Variable Rate Mortgage Pass-Thru
Securities, Inc. Manufactured Housing
Certificates, Series 1992-MH1, Class B,
6.525%, Due 8/15/19 (Acquired 4/21/95;
Cost $6,934,244) (r) 6,959,379
2,097,567 Ryland Acceptance Corporation IV
Collateralized Mortgage Bonds, Series 53,
Class 53-E, 10.00%, Due 10/25/18 2,194,475
6,333,567 Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage
Bonds, Series 1992-C, Class 3-A, 11.8272%,
Due 11/25/30 6,636,375
4,362,014 Ryland Mortgage Securities Corporation IV
Variable Rate Collateralized Mortgage Bonds,
Series 2, Class 3-A, 11.9499%, Due 6/25/23 4,571,957
2,730,471 Salomon Brothers Mortgage Securities VI, Inc.
Stripped Coupon Mortgage Pass-Thru
Certificates, Series 1987-3, Class A, Principal
Only, Due 10/23/17 2,084,193
2,630,540 Santa Barbara Savings & Loan Association
California Real Estate Mortgage Investment
Conduit Participation Certificates, Series
1988-A, Class 2, Principal Only, Due 9/01/18 2,064,974
19,400,000 Structured Asset Securities Corporation
Collateralized Mortgage Obligation, Series
1991-2, Class SC, 15.54%, Due 1/20/20 20,673,222
2,227,278 Structured Mortgage Asset Residential Trust
Multiclass Pass-Thru Certificates, Series
1992-5, Class BO, Principal Only,
Due 6/25/23 1,751,086
10,969,914 TMS Home Equity Loan Trust Asset Backed
Certificates, Series 1993-D, Class A-2, 5.075%,
Due 2/15/18 10,500,292
4,979,209 U-Haul Self-Storage Corporation Commercial
Mortgage Asset Trust Pass-Thru Certificates,
Series 1993-1, Class A1, 7.4625%, Due 12/01/20
(Acquired 12/02/93; Cost $4,979,209) (r) 4,960,537
------------
TOTAL NON-AGENCY MORTGAGE-BACKED
SECURITIES (COST $321,171,762) 324,482,373
20
</TABLE>
<PAGE> 23
STRONG SHORT-TERM BOND FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
--------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES GOVERNMENT AND AGENCY ISSUES 33.3%*
FHLMC Participation Certificates:
$10,000,000 6.00%, Due 5/15/22 $ 9,587,500
15,941,734 6.50%, Due 12/15/19 15,877,011
1,775,966 8.50%, Due 4/01/01 thru 1/01/05 1,819,578
2,003,966 8.75%, Due 10/01/01 2,046,791
2,337,530 9.00%, Due 6/01/16 2,461,021
1,030,326 9.50%, Due 3/01/11 1,087,128
6,794,764 9.75%, Due 8/01/02 7,062,138
636,869 11.25%, Due 11/01/09 703,313
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
4,402,522 6.50%, Due 9/01/08 4,366,157
13,315,426 12.00%, Due 3/01/17 (w) 15,107,017
354,372 FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
Series 1992-41, Class J, Accretion Directed
Interest Only, 1005.049%, Due 12/25/02 407,527
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate
Pass-Thru Certificates:
35,000,000 6.314%, Due 9/01/08 (w) 35,197,050
36,008,350 8.723%, Due 4/01/02 37,010,210
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate
Pass-Thru Certificates:
3,211,018 Series 1992-187, Class SA, 8.40%,
Due 10/25/07 2,928,063
7,106,558 Series 1992-G64, Class SE, 8.0173%,
Due 3/25/22 4,852,286
1,958,834 Series 1993-93, Class S, 8.50%, Due 5/25/08 1,622,169
FNMA Stripped Mortgage-Backed Securities:
5,613,961 Series G-4, Class C, Principal Only,
Due 5/25/16 5,383,227
193,246,872 Series 1993-M1, Class N, Interest Only, 0.84%,
Due 4/25/20 4,154,808
23,200,000 Series 1993-12, Class C, Principal Only,
Due 2/25/23 17,154,312
25,021,849 Series 1995-G2, Class IO, Interest Only,
2.796%, Due 5/25/20 2,007,078
GNMA Guaranteed Pass-Thru Certificates:
3,198,934 9.75%, Due 9/15/05 thru 11/15/05 3,338,408
1,472,157 10.00%, Due 2/20/18 1,589,532
455,221 11.50%, Due 4/15/13 516,312
22,320,000 GNMA Guaranteed Variable Rate Pass-Thru
Certificates, 6.00%, Due 8/01/25 (w) 22,124,700
59,233,124 GNMA Guaranteed Platinum Pool Pass-Thru
Certificates, 12.50%, Due 4/15/19 68,710,423
18,928,138 Riely FHA Insured Project Loan #123, 7.43%,
Due 8/15/18 18,999,118
34,637,246 Riely FHA Insured Project Loan #125, 7.43%,
Due 1/01/14 35,113,508
29,200,359 Small Business Administration Guaranteed
Loan Group #0190, Variable Rate Interest
Only Certificates, 3.111%, Due 7/30/18 3,474,843
17,965,797 Small Business Administration Guaranteed
Loan Pool #440019, Interest Only Custodial
Receipts, Series 1993-1A, 2.531%,
Due 2/15/18 2,237,282
$ 7,000,000 United States Treasury Notes, 6.125%,
Due 5/15/98 $ 7,048,125
3,202,613 USGI FHA Insured Project Pool #846,
6.93%, Due 10/01/13 3,170,587
13,513,431 USGI FHA Insured Project Pool #2047,
6.90%, Due 8/01/14 13,124,920
--------------
TOTAL UNITED STATES GOVERNMENT
AND AGENCY ISSUES
(COST $353,504,858) 350,282,142
--------------
TOTAL DOMESTIC BONDS
(COST $1,009,487,274) 1,014,730,585
FOREIGN BONDS 2.2%*
JAPAN
11,200,000 USD Okobank Subordinated Step-Up Perpetual
Floating Rate Notes, 7.70%,
Due 10/14/49 11,205,600
MEXICO
14,600,000 USD Petroleos Mexicanos Guaranteed
Floating Rate Notes, 6.9375%,
Due 3/08/99 11,992,922
--------------
TOTAL FOREIGN BONDS
(COST $20,478,237) 23,198,522
OPTIONS 0.2%*
(250,000) July United States Treasury Bond Put
Option (Strike price is 100.226,
Expiration date is 7/13/95) (31,250)
39,583,333 Merrill Lynch Swaption (The option to
receive a fixed interest rate of 7.75%;
excercisable at a strike price of 100
beginning 4/09/04 and expiring
4/09/25. Putable on 11/16/95) 2,295,833
--------------
TOTAL OPTIONS (COST $1,799,635) 2,264,583
PREFERRED STOCK 2.3%*
115,000 Norwest Corporation Series A,
Cumulative Tracking Preferred
Stock/Residential Home Mortgage
L.L.C. (Acquired 12/16/94;
Cost $23,000,000) (r) 24,628,630
DOMESTIC CASH EQUIVALENTS 3.0%*
COMMERCIAL PAPER 1.9%*
DISCOUNTED 1.9%*
$19,800,000 Paine Webber Group, Due 7/03/95 19,800,000
INTEREST BEARING, DUE UPON DEMAND 0.0%*
62,400 Eli Lilly & Company, 5.55% 62,400
136,600 General Mills, Inc., 5.72% 136,600
13,300 Wisconsin Electric Power
Company, 5.77% 13,300
--------------
212,300
--------------
Total Commercial Paper 20,012,300
TIME DEPOSIT 0.7%*
7,000,000 Citibank Nassau, 6.8625%,
Due 7/25/95 7,000,000
</TABLE>
21
<PAGE> 24
SCHEDULE OF INVESTMENTS IN SECURITIES (continued) June 30, 1995 (Continued)
STRONG SHORT-TERM BOND FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
-----------------------------------------------------------------------------
<S> <S>
UNITED STATES GOVERNMENT ISSUES 0.4%*
United States Treasury Bills:
$ 55,000 Due 7/06/95 $ 54,974
360,000 Due 7/20/95 359,051
430,000 Due 8/10/95 427,590
1,115,000 Due 9/21/95 1,101,719
2,375,000 Due 11/16/95 2,326,011
--------------
4,269,345
--------------
Total Domestic Cash Equivalents 31,281,645
FOREIGN CASH EQUIVALENTS 3.6%*
FOREIGN OBLIGATIONS 3.2%*
BRAZIL
9,000,000 USD Lehman Brothers Holdings, Inc. Notes
(with Brazilian Real indexation and
interest based on Brazilian Government
Securities) 8.125%, Due 9/01/95
(Acquired 6/22/95; Cost $9,000,000) (r) 9,000,000
MEXICO
10,750,000 USD Petroleos Mexicanos Medium Term
Notes, Tranche #1, 6.125%,
Due 6/15/96 10,284,514
SOUTH AFRICA
14,900,000 USD South African Transnet LINCs Series
1994-1 (A trust established by CS
First Boston Structured Products
Corporation), 8.207%, Due 10/02/95
(Acquired 10/18/94; Cost
$14,900,000) (r) 15,011,750
--------------
34,296,264
TIME DEPOSIT 0.4%*
PHILLIPINE ISLANDS
4,000,000 USD Citibank Time Deposit (with Philippine
Peso indexation and interest based on
the Philippine denominated deposit),
12.85%, Due 9/05/95 4,042,280
--------------
Total Foreign Cash Equivalents 38,338,544
--------------
Total Cash Equivalents (Cost $69,911,770) 69,620,189
--------------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,124,676,916) 107.7%* 1,134,442,509
OTHER ASSETS AND LIABILITIES, NET (7.7%*) (81,089,794)
--------------
NET ASSETS 100.0%* $1,053,352,715
==============
STRONG GOVERNMENT SECURITIES FUND
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
----------------------------------------------------------------------------
<S> <C>
CORPORATE BONDS 11.1%*
$41,475,000 Coca Cola Enterprises, Inc. Notes, Zero %,
Due 6/20/20 $ 7,047,349
6,000,000 Grace W.R. & Company Notes, 8.00%,
Due 8/15/04 6,368,736
1,500,000 News America Holdings, Inc. Senior
Debentures, 7.75%, Due 2/01/24 1,455,371
7,100,000 News America Holdings, Inc. Senior
Debentures, 9.50%, Due 7/15/24 8,295,746
6,000,000 Time Warner, Inc. Notes, 7.75%, Due 6/15/05 5,980,446
10,000,000 Viacom, Inc. Senior Notes, 7.75%, Due 6/01/05 10,100,000
TOTAL CORPORATE BONDS -----------
(COST $38,374,017) 39,247,648
MUNICIPAL BOND 1.1%*
3,100,000 Arkansas State Development Authority, 9.75%,
Due 11/15/14 (Cost $3,857,420) 3,878,875
NON-AGENCY MORTGAGE-BACKED SECURITY 4.6%*
19,025,000 Community Program Loan Trust Bonds,
Series 1987, Class A-4, 4.50%, Due 10/01/18
(Cost $15,322,168) 16,127,892
UNITED STATES GOVERNMENT AND AGENCY ISSUES 80.1%*
4,355,988 FHA Insured Project Loan #956-55054, 2.93%,
Due 11/01/12 3,401,766
2,604,696 FHLMC Guaranteed Multiclass Mortgage
Participation Certificates, Series 1679,
Class 1679-N, Principal Only, Due 2/15/09 1,265,831
2,706,643 FHLMC Guaranteed Multiclass Variable Rate
Mortgage Participation Certificates,
Series 1324, Class 1324-B, 7.00%, Due 4/15/18 2,714,574
FHLMC Participation Certificates:
3,176,603 7.25%, Due 7/01/08 3,191,755
10,785,334 8.00%, Due 7/01/08 thru 12/01/10 11,048,332
3,638,728 8.50%, Due 5/01/16 3,763,937
10,888,307 9.00%, Due 12/01/01 thru 6/01/16 11,377,070
3,814,604 9.75%, Due 8/01/02 3,964,709
776,194 10.00%, Due 6/01/20 835,341
1,783,097 10.50%, Due 8/01/20 1,965,116
174,435 11.00%, Due 1/01/01 184,085
197,288 11.25%, Due 1/01/01 208,864
238,301 11.75%, Due 10/01/15 265,680
98,643 12.00%, Due 11/01/15 110,637
731,198 12.25%, Due 7/01/15 thru 12/01/15 823,254
499,933 12.50%, Due 10/01/09 thru 1/01/15 568,804
109,362 13.00%, Due 7/01/14 125,018
138,599 13.75%, Due 5/01/02 thru 5/01/12 156,126
1,570,717 14.00%, Due 9/01/10 thru 4/01/16 1,805,692
56,485 14.50%, Due 12/01/02 thru 12/01/11 64,748
11,613 14.75%, Due 8/01/11 thru 4/01/13 13,395
75,184 15.00%, Due 8/01/11 86,781
7,379 16.00%, Due 6/01/12 8,555
--------------
44,548,304
</TABLE>
See notes to financial statements.
22
<PAGE> 25
STRONG GOVERNMENT SECURITIES FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
--------------------------------------------------------------------------------
<S> <C>
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
$ 4,046,943 6.50%, Due 9/01/08 $ 4,013,515
3,827,019 8.50%, Due 7/01/10 3,982,052
5,308,601 10.00%, Due 4/01/20 5,803,098
285,058 11.75%, Due 12/01/10 321,133
4,918,329 12.00%, Due 1/01/16 thru 2/01/19 5,574,688
53,837 12.25%, Due 7/01/14 60,598
9,190,515 12.50%, Due 2/01/11 thru 5/01/15 10,569,081
3,319,000 13.00%, Due 1/24/15 (w) 3,857,309
3,752 13.25%, Due 4/01/12 4,361
67,066 13.50%, Due 1/01/11 thru 1/01/12 75,627
11,636 13.75%, Due 10/01/10 13,413
159,421 14.00%, Due 1/01/12 thru 11/01/14 184,094
34,452 14.25%, Due 12/01/14 40,055
8,422 14.50%, Due 1/01/12 9,753
273,994 14.75%, Due 11/01/10 thru 3/01/12 322,405
19,069 15.00%, Due 10/01/12 22,220
24,337 15.50%, Due 10/01/12 28,367
10,303,971 FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
Series 1991-125, Class Z, 8.50%, Due 9/25/21 10,893,874
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate
Pass-Thru Certificates:
9,541,437 Series 1991-57, Class S, 7.0109%, Due 5/25/20 9,124,371
1,129,848 Series 1991-141, Class SC, 9.804%,
Due 10/25/21 1,136,910
FNMA Stripped Mortgage-Backed Securities:
5,394,937 Series 1992-74, Class IO, Interest Only, 8.50%,
Due 5/25/22 1,431,293
5,709,980 Series 1992-154, Class A, Principal Only,
Due 8/25/22 4,298,816
-----------
61,767,033
15,998,251 GMAC #12 FHA Project Loan, 7.43%,
Due 5/01/21 16,233,265
GNMA Guaranteed Pass-Thru Certificates:
19,510,520 9.00%, Due 1/15/08 thru 12/15/09 (w) 20,336,974
1,165,358 13.00%, Due 11/15/10 thru 11/15/14 1,360,328
397,973 13.50%, Due 7/15/10 thru 10/15/12 467,000
376,567 14.00%, Due 6/15/11 thru 12/20/14 440,226
464,875 14.50%, Due 6/15/11 thru 11/15/12 550,452
202,298 15.00%, Due 1/15/12 thru 9/15/12 240,735
65,487 16.00%, Due 4/15/12 78,229
8,477,649 GNMA Guaranteed Platinum Pool Pass-Thru
Certificates, 12.50%, Due 4/15/19 9,834,074
17,000,000 GNMA Guaranteed Variable Rate Pass-Thru
Certificates, 6.00%, Due 8/01/25 (w) 16,851,250
-----------
50,159,268
3,203,470 Riely FHA Insured Project Loan #5, 7.43%,
Due 10/01/22 3,235,506
24,064,755 Small Business Administration Guaranteed
Loan Pool #440019, Interest Only Custodial
Receipts, Series 1993-1A, 2.531%,
Due 2/15/18 2,996,784
6,200,000 Tennessee Valley Authority Global Bonds,
Series 1995A, 6.375%, Due 6/15/05 6,130,200
United States Treasury Bonds:
$ 5,845,000 7.500%, Due 11/15/24 $ 6,475,167
7,950,000 7.625%, Due 2/15/25 8,971,074
3,220,000 9.250%, Due 2/15/16 4,139,713
United States Treasury Notes:
25,570,000 6.125%, Due 5/31/97 25,713,831
7,500,000 6.250%, Due 5/31/00 7,586,715
6,500,000 6.375%, Due 8/15/02 6,573,125
2,200,000 7.500%, Due 2/15/05 2,397,311
9,225,000 7.750%, Due 12/31/99 9,850,575
10,400,000 11.625%, Due 11/15/04 14,303,245
------------
86,010,756
9,402,741 USGI FHA Insured Project Pool #2040,
3.025%, Due 11/01/06 8,214,235
------------
TOTAL UNITED STATES GOVERNMENT AND
AGENCY ISSUES (COST $279,351,492) 282,697,117
OPTION 0.2%*
12,166,667 Merrill Lynch Swaption (The option to
receive a fixed interest rate of 7.75%;
excercisable at a strike price of 100
beginning 4/09/04 and expiring 4/09/25.
Putable on 11/16/95) (Cost $563,357) 705,667
PREFERRED STOCK 3.0%*
50,000 Norwest Corporation Series A, Cumulative
Tracking Preferred Stock/Residential Home
Mortgage L.L.C. (Acquired 12/16/94;
Cost $10,000,000) (r) 10,708,100
CASH EQUIVALENTS 11.0%*
COMMERCIAL PAPER 0.1%*
INTEREST BEARING, DUE UPON DEMAND
$ 36,800 Pitney Bowes Credit Corporation, 5.73% 36,800
287,800 Southwestern Bell Telephone Company, 5.71% 287,800
6,600 Wisconsin Electric Power Company, 5.77% 6,600
------------
331,200
REPURCHASE AGREEMENT 10.5%*
37,100,000 Cantor Fitzgerald & Co., Inc.
(Collateralized by $26,225,000 United
States Treasury Bonds, 6.125%,
Due 5/15/98; $25,000,000 United States
Treasury Bills Due 9/28/95), 6.23%,
Due 7/03/95+ 37,100,000
UNITED STATES GOVERNMENT ISSUES 0.4%*
United States Treasury Bills:
50,000 Due 7/06/95 49,977
515,000 Due 8/10/95 512,113
730,000 Due 11/16/95 714,942
------------
1,278,032
------------
Total Cash Equivalents (Cost $38,707,604) 38,708,232
------------
TOTAL INVESTMENT IN SECURITIES
(COST $386,176,058) 111.1%* 392,073,531
Other Assets and Liabilities, Net (11.1%*) (39,079,488)
------------
NET ASSETS 100.0%* $352,994,043
============
</TABLE>
See notes to financial statements.
23
<PAGE> 26
SCHEDULE OF INVESTMENTS IN SECURITIES (continued) June 30, 1995 (Unaudited)
STRONG CORPORATE BOND FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
--------------------------------------------------------------------------
<S> <C>
DOMESTIC BONDS 93.5%*
CORPORATE BONDS 82.8%*
$ 5,415,000 ARA Services, Inc. Guaranteed Notes, 10.625%,
Due 8/01/00 $6,188,923
3,445,000 Bankers Life Holding Corporation Senior
Subordinated Notes, Series B, 13.00%,
Due 11/01/02 4,022,038
2,400,000 CNA Financial Corporation Debentures, 7.25%,
Due 11/15/23 2,169,864
2,000,000 Centex Corporation Subordinated Notes,
7.375%, Due 6/01/05 1,970,330
26,610,000 Coca Cola Enterprises, Inc. Notes, Zero %,
Due 6/20/20 4,521,518
3,700,000 Delta Air Lines, Inc. Debentures, 10.375%,
Due 12/15/22 4,444,233
3,600,000 Dr Pepper/Seven-Up Companies, Inc. Senior
Subordinated Notes, Zero%, Due 11/01/02
(Rate Reset Effective 11/01/97) 3,204,000
4,000,000 Exide Corporation Senior Notes, 10.00%,
Due 4/15/05 (Acquired 4/21/95, 5/09/95;
Cost $4,075,000) (r) 4,090,000
3,000,000 Federal Express Corporation Pass-Thru
Certificates, Series 1993-C2, 7.96%,
Due 3/28/17 3,037,419
4,000,000 Federated Department Stores, Inc. Senior
Notes, 10.00%, Due 2/15/01 4,315,000
5,285,000 GNS Finance Corporation Senior Subordinated
Notes, Series B, 9.25%, Due 3/15/03 5,628,525
5,970,000 Grace W.R. & Company Notes, 8.00%,
Due 8/15/04 6,336,892
3,000,000 Harrahs Operating, Inc. Guaranteed Senior
Subordinated Notes, 8.75%, Due 3/15/00 3,045,000
3,870,000 Hayes Wheels International, Inc. Senior Notes,
9.25%, Due 11/15/02 4,121,550
3,250,000 Kaufman & Broad Home Corporation Senior
Notes, 10.375%, Due 9/01/99 3,298,750
8,600,000 Magma Copper Company Senior Subordinated
Notes, 8.70%, Due 5/15/05 8,535,500
1,425,000 News America Holdings, Inc. Debentures,
8.45%, Due 8/01/34 1,569,796
6,600,000 News America Holdings, Inc. Notes, 8.25%,
Due 8/10/18 6,819,793
2,500,000 Owens-Illinois, Inc. Senior Debentures,
11.00%, Due 12/01/03 2,768,750
1,700,000 Principal Mutual Life Insurance Company
Surplus Notes, 8.00%, Due 3/01/44
(Acquired 5/08/95; Cost $1,560,039)(r) 1,591,625
2,895,000 Ralston Purina Company Debentures, 7.875%,
Due 6/15/25 2,907,205
3,700,000 Revco D.S., Inc. Senior Notes, 9.125%,
Due 1/15/00 3,866,500
1,000,000 SCI Television, Inc. Senior Secured Notes,
11.00%, Due 6/30/05 1,042,500
4,000,000 Santa Fe Pacific Gold Corporation Senior
Debentures, 8.375%, Due 7/01/05 3,985,000
4,000,000 Southern Pacific Rail Corporation Senior
Notes, 9.375%, Due 8/15/05 4,130,000
2,800,000 Station Casinos, Inc. Senior Subordinated
Notes, 9.625%, Due 6/01/03 2,618,000
$ 250,000 Stop & Shop Companies, Inc. Senior
Subordinated Notes, 9.75%, Due 2/01/02 $ 269,375
3,500,000 System Energy Resources, Inc. First
Mortgage Bonds, 11.375%, Due 9/01/16 3,892,651
7,450,000 Tele-Communications, Inc. Non-Redeemable
Senior Debentures, 9.80%, Due 2/01/12 8,198,896
4,000,000 Tenet Healthcare Corporation Senior Notes,
9.625%, Due 9/01/02 4,250,000
3,545,000 Time Warner Entertainment Company Senior
Debentures, 8.375%, Due 3/15/23 3,561,023
Time Warner, Inc. Debentures:
2,025,000 9.125%, Due 1/15/13 2,122,996
970,000 9.15%, Due 2/01/23 1,022,652
1,600,000 Time Warner, Inc. Notes, 7.75%, Due 6/15/05 1,594,786
1,880,000 Tosco Corporation Guaranteed First Mortgage
Bonds, 8.25%, Due 5/15/03 1,995,037
2,000,000 Transco Energy Company Debentures, 9.875%,
Due 6/15/20 2,502,778
3,000,000 Union Planters Corporation Subordinated
Notes, 6.25%, Due 11/01/03 2,815,635
4,000,000 United Air Lines, Inc. Debentures, Series A,
10.67%, Due 5/01/04 4,552,120
8,500,000 Viacom, Inc. Senior Notes, 7.75%,
Due 6/01/05 8,585,000
------------
TOTAL CORPORATE BONDS
(COST $140,801,449) 145,591,660
NON-AGENCY MORTGAGE-BACKED SECURITIES 8.3%*
1,289,487 Bear Stearns Mortgage Securities, Inc.
Mortgage Pass-Thru Certificates, Series
1995-1, Class 2-P, Principal Only,
Due 7/25/10 962,018
5,715,000 Community Program Loan Trust Bonds,
Series 1987, Class A-4, 4.50%,
Due 10/01/18 4,844,726
8,900,936 First Boston Mortgage Securities
Corporation Mortgage Pass-Thru
Certificates, Series 1994-MHC1,
Class A-1X, Interest Only, 1.8621%,
Due 4/25/11 808,027
300,000 Green Tree Financial Corporation
Manufactured Housing Senior
Subordinated Pass-Thru Certificates,
Series 1995-4, Class B1, 7.30%,
Due 8/15/25 297,000
2,475,000 RTC Variable Rate Mortgage Pass-Thru
Securities, Inc., Series 1995-C1,
Class A-4C, 6.85%, Due 2/25/27 2,417,778
797,957 Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage
Bonds, Series 1992-C, Class 3-A, 11.8272%,
Due 11/25/30 836,108
7,970,296 Westam Mortgage Financial Corporation
Collateralized Mortgage Bonds, Series 10,
Class 10-D, Principal Only, Due 7/26/18 4,490,784
------------
TOTAL NON-AGENCY MORTGAGE-BACKED
SECURITIES (COST $14,046,826) 14,656,441
</TABLE>
See notes to financial statements.
24
<PAGE> 27
STRONG CORPORATE BOND FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
-------------------------------------------------------------------------
<S> <C>
UNITED STATES GOVERNMENT AGENCY ISSUES 2.4%*
FHLMC Participation Certificates:
$ 47,012 14.00%, Due 9/01/12 $ 54,108
27,680 14.75%, Due 3/01/10 31,949
212,819 FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru
Certificates, 13.50%, Due 4/01/11 245,580
1,500,000 FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate
Pass-Thru Certificates, Series 1992-29,
Class S, 16.1399%, Due 4/25/16 (w) 1,560,000
159,721 GNMA Guaranteed Pass-Thru Certificates,
15.00%, Due 8/15/11 thru 10/15/12 190,524
17,648,403 Small Business Administration Guaranteed
Loan Pool #40013, Interest Only Strips,
2.419%, Due 9/30/17 2,142,693
------------
TOTAL UNITED STATES GOVERNMENT
AGENCY ISSUES (COST $4,017,913) 4,224,854
------------
TOTAL DOMESTIC BONDS
(COST $158,866,188) 164,472,955
FOREIGN BOND 2.4%*
CANADA
4,000,000 USD Rogers Cablesystems, Ltd. Senior Secured
2nd Priority Notes, 10.00%, Due 3/15/05
(Cost $4,092,071) 4,140,000
OPTION 0.2%*
6,083,333 Merrill Lynch Swaption (The option to
receive a fixed interest rate of 7.75%;
excercisable at a strike price of 100
beginning 4/09/04 and expiring
4/09/25. Putable on 11/16/95)
(Cost $281,678) 352,833
PREFERRED STOCK 1.2%*
10,000 Norwest Corporation Series A, Cumulative
Tracking Preferred Stock/Residential
Home Mortgage L.L.C. (Acquired
12/16/94; Cost $2,000,000) (r) 2,141,620
DOMESTIC CASH EQUIVALENTS 2.0%*
COMMERCIAL PAPER 1.7%*
DISCOUNTED 1.6%*
$2,800,000 Burlington Northern Railroad Company,
Due 7/03/95 2,800,000
INTEREST BEARING, DUE UPON DEMAND 0.1%*
123,800 Eli Lilly & Company, 5.55% 123,800
11,800 Wisconsin Electric Power Company, 5.77% 11,800
------------
135,600
------------
Total Commercial Paper 2,935,600
UNITED STATES GOVERNMENT ISSUES 0.3%*
United States Treasury Bills:
175,000 Due 7/20/95 174,588
100,000 Due 8/10/95 99,431
365,000 Due 11/16/95 357,471
------------
631,490
------------
Total Domestic Cash Equivalents 3,567,090
FOREIGN CASH EQUIVALENT 0.6%*
FOREIGN OBLIGATION
POLAND
1,000,000 USD Morgan Guaranty Discounted Certificate
of Deposit (with Polish Zloty
indexation based on the Polish
denominated deposit) Due 7/21/95 $ 987,210
------------
Total Cash Equivalents (Cost $4,554,639) 4,554,300
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $169,794,576) 99.9%* 175,661,708
Other Asset and Liabilites, Net 0.1%* 260,163
------------
NET ASSETS 100.0%* $175,921,871
============
</TABLE>
* Percentages are calculated as a percentage of net assets.
** Cost for Federal income tax and financial reporting purposes
is the same as amortized cost.
*** Maturity date represents actual maturity, earliest put date,
or for U.S. Government Agency Securities, the next interest
adjustment date.
+ The Funds may engage in repurchase agreements where the underlying
collateral consists of U.S. government securities which are
maintained in a segregated account with a custodian. The market
value of the collateral must exceed the principal amount of the
repurchase agreement by at least two percent on a daily basis.
(r) Restricted security.
(w) When-Issued security.
See notes to financial statements.
25
<PAGE> 28
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
(In Thousands)
STRONG U.S. TREASURY STRONG MONEY
MONEY FUND MARKET FUND
-------------------- ------------
<S> <C> <C>
INTEREST INCOME $ 1,360 $44,787
EXPENSES
Investment Advisory Fees 97 2,760
Custodian Fees 4 49
Shareholder Servicing Costs 47 1,031
Reports to Shareholders 15 434
Federal and State Registration Fees 18 78
Other 18 36
------- -------
Total Expenses before Waivers and Absorptions 199 4,388
Voluntary Expense Waivers and Absorptions by Advisor (9) (4,388)
------- -------
Expenses, Net 190 --
------- -------
NET INVESTMENT INCOME $ 1,170 $44,787
======= =======
<CAPTION>
STRONG STRONG SHORT-TERM
ADVANTAGE FUND BOND FUND
-------------- -----------------
<S> <C> <C>
INTEREST INCOME $32,126 $41,645
EXPENSES:
Investment Advisory Fees 2,563 3,179
Custodian Fees 69 93
Shareholder Servicing Costs 698 1,116
Reports to Shareholders 128 286
Federal and State Registration Fees 96 143
Other 44 101
------- -------
Total Expenses 3,598 4,918
------- -------
NET INVESTMENT INCOME 28,528 36,727
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 3,772 (19,182)
Futures Contracts, Options and Forward Currency Contracts (9,399) (12,308)
Change in Unrealized Appreciation/Depreciation on Investments 8,706 62,775
------- -------
NET GAIN 3,079 31,285
------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $31,607 $68,012
======= =======
</TABLE>
See notes to financial statements.
26
<PAGE> 29
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
(In Thousands)
STRONG GOVERNMENT STRONG CORPORATE
SECURITIES FUND BOND FUND
----------------- ----------------
<S> <C> <C>
INTEREST INCOME $11,390 $ 6,670
EXPENSES:
Investment Advisory Fees 919 471
Custodian Fees 33 29
Shareholder Servicing Costs 308 214
Reports to Shareholders 61 70
Federal and State Registration Fees 34 25
Other 31 21
------- --------
Total Expenses 1,386 830
------- --------
NET INVESTMENT INCOME 10,004 5,840
REALIZED AND UNREALIZED GAIN:
Net Realized Gain on:
Investments 10,764 7,980
Futures Contracts, Options and Forward Currency Contracts 2,402 398
Change in Unrealized Appreciation/Depreciation on Investments 12,552 7,029
------- --------
NET GAIN 25,718 15,407
------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $35,722 $21,247
======= ========
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1995 (Unaudited)
<CAPTION>
(In Thousands, Except Per Share Amounts)
STRONG STRONG
U.S. TREASURY MONEY MARKET
MONEY FUND FUND
------------- ------------
<S> <C> <C>
ASSETS:
Investments in Securities, at Amortized Cost $ 42,106 $ 2,067,368
Receivable from Brokers for Securities Sold -- 87
Interest Receivable -- 8,384
Other 41 3
---------- -----------
Total Assets 42,147 2,075,842
LIABILITIES:
Dividends Payable 171 10,774
Accrued Operating Expenses and Other Liabilities 42 9
---------- -----------
Total Liabilities 213 10,783
---------- -----------
NET ASSETS $ 41,934 $ 2,065,059
========== ===========
Capital Shares
Authorized 10,000,000 10,000,000
Outstanding 41,934 2,065,059
NET ASSET VALUE PER SHARE $ 1.00 $ 1.00
========== ===========
</TABLE>
See notes to financial statements.
27
<PAGE> 30
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Amounts)
STRONG STRONG SHORT-TERM
ADVANTAGE FUND BOND FUND
-------------- -----------------
<S> <C> <C>
ASSETS:
Investments in Securities, at Value (Cost of $865,931 and $1,124,677,
respectively) $ 868,919 $1,134,443
Receivable from Brokers for Securities Sold 18,055 174
Dividends and Interest Receivable 10,936 11,494
--------- ----------
Total Assets 897,910 1,146,111
LIABILITIES:
Payable to Brokers for Securities Purchased 22,085 85,184
Dividends Payable 5,099 6,295
Accrued Operating Expenses and Other Liabilities 755 1,279
--------- ----------
Total Liabilities 27,939 92,758
--------- ----------
NET ASSETS $ 869,971 $1,053,353
========= ==========
Capital Shares
Authorized 1,000,000 1,000,000
Outstanding 86,821 108,426
NET ASSET VALUE PER SHARE $ 10.02 $ 9.71
========= ==========
<CAPTION>
STRONG GOVERNMENT STRONG CORPORATE
SECURITIES FUND BOND FUND
----------------- ----------------
<S> <C> <C>
ASSETS:
Investments in Securities, at Value (Cost of $386,176 and $169,795,
respectively) $ 392,074 $ 175,662
Receivable from Brokers for Securities Sold 3,885 7,225
Dividends and Interest Receivable 4,146 3,414
Other 48 --
--------- ----------
Total Assets 400,153 186,301
LIABILITIES:
Payable to Brokers for Securities Purchased 45,121 9,151
Dividends Payable 1,786 1,052
Accrued Operating Expenses and Other Liabilities 252 176
--------- ----------
Total Liabilities 47,159 10,379
--------- ----------
NET ASSETS $ 352,994 $ 175,922
========= ==========
Capital Shares
Authorized 100,000 300,000
Outstanding 33,703 16,992
NET ASSET VALUE PER SHARE $ 10.47 $ 10.35
========= ==========
</TABLE>
See notes to financial statements.
28
<PAGE> 31
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1995 (Unaudited) and the Year Ended
December 31, 1994
<TABLE>
<CAPTION>
(In Thousands)
STRONG U.S. TREASURY STRONG
MONEY FUND MONEY MARKET FUND
------------------------------ ------------------------------
JUNE 30, 1995 DEC. 31, 1994 JUNE 30, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 1,170 $ 2,651 $ 44,787 $ 17,481
CAPITAL SHARE TRANSACTIONS (25,593) 25,676 1,524,076 210,995
DISTRIBUTIONS:
From Net Investment Income (1,170) (2,651) (44,787) (17,481)
-------- -------- ---------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS (25,593) 25,676 1,524,076 210,995
NET ASSETS:
Beginning of Period 67,527 41,851 540,983 329,988
-------- -------- ---------- ---------
End of Period $ 41,934 $ 67,527 $2,065,059 $ 540,983
======== ======== ========== =========
<CAPTION>
STRONG STRONG SHORT-TERM
ADVANTAGE FUND BOND FUND
----------------------------- -----------------------------
JUNE 30, 1995 DEC. 31, 1994 JUNE 30, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 28,528 $ 37,235 $ 36,727 $ 90,851
Net Realized Loss (5,627) (2,744) (31,490) (50,796)
Change in Unrealized Appreciation/Depreciation 8,706 (10,098) 62,775 (66,022)
-------- --------- ---------- ----------
Increase (Decrease) in Net Assets Resulting from Operations 31,607 24,393 68,012 (25,967)
CAPITAL SHARE TRANSACTIONS (43,466) 508,148 (19,567) (373,029)
DISTRIBUTIONS:
From Net Investment Income (26,570) (36,644) (28,568) (90,851)
In Excess of Net Investment Income (2,108) -- (7,605) (699)
In Excess of Net Realized Gains -- (854) -- --
-------- -------- ---------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS (40,537) 495,043 12,272 (490,546)
NET ASSETS:
Beginning of Period 910,508 415,465 1,041,081 1,531,627
-------- -------- ---------- ----------
End of Period $869,971 $910,508 $1,053,353 $1,041,081
======== ======== ========== ==========
</TABLE>
See notes to financial statements.
29
<PAGE> 32
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1995 (Unaudited) and the Year Ended
December 31, 1994
<TABLE>
<CAPTION>
(In Thousands)
STRONG GOVERNMENT STRONG CORPORATE
SECURITIES FUND BOND FUND
----------------------------- -----------------------------
JUNE 30, 1995 DEC. 31, 1994 JUNE 30, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 10,004 $ 16,009 $ 5,840 $ 9,401
Net Realized Gain (Loss) 13,166 (16,921) 8,378 (7,208)
Change in Unrealized Appreciation/Depreciation 12,552 (8,007) 7,029 (4,027)
-------- -------- -------- --------
Increase (Decrease) in Net Assets Resulting from Operations 35,722 (8,919) 21,247 (1,834)
CAPITAL SHARE TRANSACTIONS 50,444 79,799 37,210 11,225
DISTRIBUTIONS:
From Net Investment Income (10,004) (16,009) (5,840) (9,401)
In Excess of Net Investment Income -- -- -- (85)
------- -------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 76,162 54,871 52,617 (95)
NET ASSETS:
Beginning of Period 276,832 221,961 123,305 123,400
-------- -------- -------- --------
End of Period $352,994 $276,832 $175,922 $123,305
======== ======== ======== ========
See notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1995 (Unaudited)
1. ORGANIZATION
The Strong Income Funds consist of Strong U.S. Treasury Money Fund,
Inc., Strong Money Market Fund, Inc., Strong Advantage Fund, Inc., Strong
Short-Term Bond Fund, Inc., Strong Government Securities Fund, Inc. and
Strong Corporate Bond Fund, Inc. (formerly Strong Income Fund, Inc.). The
Funds are separately incorporated, diversified, open-end management
investment companies registered with the Securities and Exchange Commission
under the Investment Company Act of 1940.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Funds in the preparation of their financial statements.
(A) Security Valuation -- Debt securities are valued on the basis of
valuations furnished by a pricing service that utilizes electronic
data processing techniques to determine valuations for normal
institutional-size trading units of debt securities without regard to
sale or bid prices when such valuations are believed to more accurately
reflect the fair value of such securities. Otherwise, sale or bid
prices are used. Securities for which quotations are not readily
available are valued at fair value as determined in good faith under
consistently applied procedures established by and under the general
supervision of the Directors of the Funds. Debt securities which are
purchased within 60 days of their stated maturity are valued at
amortized cost, which approximates current value.
Investments in Strong U.S. Treasury Money Fund and Strong Money
Market Fund are valued using the amortized cost method (which
approximates current value), whereby investments purchased at a
discount or premium are valued by amortizing the difference between the
original purchase price and maturity value of the issue over the
period to maturity.
30
<PAGE> 33
The Funds own certain investment securities which are restricted as to
resale. These securities are valued by the Funds after giving due
consideration to pertinent factors including recent private sales,
market conditions, and the issuer's financial performance. The Funds
bear the costs, if any, associated with the disposition of restricted
securities. Where such disposition depends on a security's
registration under the Securities Act of 1933, the Funds will bear
such registration costs unless the Funds have registration rights, in
which case the issuer will bear such costs. Aggregate cost and fair
value of these restricted securities held at June 30, 1995 were as
follows:
<TABLE>
<CAPTION>
STRONG MONEY STRONG STRONG SHORT-TERM STRONG GOVERNMENT STRONG CORPORATE
MARKET FUND ADVANTAGE FUND BOND FUND SECURITIES FUND BOND FUND
------------ -------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Aggregate Cost $81,711,233 $116,161,427 $103,016,510 $10,000,000 $7,635,039
Aggregate Fair Value 81,798,825 116,213,081 105,275,931 10,708,100 7,823,245
Percent of Net Assets 4.0% 13.4%* 10.0% 3.0% 4.5%
</TABLE>
*Of these securities, which are restricted from resale, 54% are
eligible for resale pursuant to Rule 144A under the Securities Act of
1933 and also have been determined to be liquid by the Advisor based
upon guidelines established by the Fund's Board of Directors.
(B) Federal Income and Excise Taxes and Distributions to Shareholders -- It
is the Funds' policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of their taxable income to their
shareholders in a manner which results in no tax cost to the Funds.
Therefore, no Federal income or excise tax provision is required.
The character of distributions made during the year from net investment
income or net realized gains may differ from the characterization for
federal income tax purposes due to differences in the recognition of
income and expense items for financial statement and tax purposes.
(C) Realized Gains and Losses On Investment Transactions -- The Funds
determine the gain or loss realized on investment transactions by
comparing the identified cost of the security lot sold with the net
sales proceeds.
(D) Futures -- The Funds, except for Strong U.S. Treasury Money Fund and
Strong Money Market Fund, may enter into futures contracts for any
lawful purpose, including hedging, risk management, or enhancing
returns, but not for speculation. Upon entering into a futures
contract, the Funds deposit cash, U.S. government securities or other
liquid, high-grade debt obligations in a segregated account with their
custodians, in the name of the futures broker through whom the
transaction was effected, equal to the minimum "initial margin"
requirements of the applicable futures exchange. Additionally, the
Funds receive from or pay to the broker an amount of cash equal to the
daily fluctuation in the value of the contract. Such receipts or
payments are known as "variation margin," and are recorded by the
Funds as unrealized gains or losses. When the contract is closed, the
Funds record a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed.
The use of futures contracts may involve, to varying degrees,
elements of market risk in excess of the amount recognized in the
statement of assets and liabilities. The successful use of futures
contracts by the Funds is dependent upon the ability of Strong Capital
Management, Inc. (the "Advisor") to correctly anticipate trends in the
underlying assets of the futures contracts. To the extent that the Funds
are engaging in futures contracts other than for hedging purposes, the
Funds' successful use of such transactions is more dependent upon the
Advisor's ability to correctly anticipate such trends, since losses in
these transactions may not be offset in gains in the Funds' portfolio or
in lower purchase prices for assets it intends to acquire. The Advisor's
prediction of trends in underlying assets may prove to be inaccurate,
which could result in substantial losses to the Funds. Hedging
transactions are also subject to risks. If the Advisor incorrectly
anticipates trends in the underlying asset, the Funds may be in a worse
position than if no hedging had occurred. In addition, there may be
imperfect correlation between the Funds' use of futures contracts and
the assets being hedged. Futures contracts open at June 30, 1995 were as
follows:
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
CONTRACT VALUE (DEPRECIATION)
FUND COLLATERAL (PAR VALUE) CONTRACTS (IN THOUSANDS) EXPIRATION (IN THOUSANDS)
---- ---------------------- --------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advantage U.S. Treasury Bills: 226 Two-Year U.S. Treasury Notes (Short) ($46,874) Sept. 1995 ($104)
$ 105,000 Due 7/13/95 47 Five-Year U.S. Treasury Notes (Short) (5,045) Sept. 1995 3
400,000 Due 7/20/95 629 Ten-Year U.S. Treasury Notes (Short) (69,249) Sept. 1995 73
675,000 Due 7/27/95 63 U.S. Treasury Bonds (Short) (7,152) Sept. 1995 86
35,000 Due 8/10/95
20,000 Due 9/21/95
Short-Term Bond U.S. Treasury Bills: 1,199 Ten-Year U.S. Treasury Notes (Short) (132,002) Sept. 1995 112
55,000 Due 7/06/95 72 U.S. Treasury Bonds (Short) (8,174) Sept. 1995 42
360,000 Due 7/20/95
290,000 Due 8/10/95
1,115,000 Due 9/21/95
</TABLE>
31
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1995 (Unaudited)
Futures contracts open at June 30, 1995 (continued):
<TABLE>
<CAPTION>
Unrealized
Appreciation
Contract Value (Depreciation)
Fund Collateral (par value) Contracts (In Thousands) Expiration (In Thousands)
---- ---------------------- --------- ------------ ---------- --------------
<S> <C> <C> <C> <C> <C>
Government Securities U.S. Treasury Bills: 218 Ten-Year U.S. Treasury Notes (Short) ($24,000) Sept. 1995 ($ 34)
$ 50,000 Due 7/06/95 200 U.S. Treasury Bonds (Long) 22,706 Sept. 1995 (326)
515,000 Due 8/10/95
Corporate Bond U.S. Treasury Bills: 64 Ten-Year U.S. Treasury Notes (Short) (7,046) Sept. 1995 (7)
175,000 Due 7/20/95 41 U.S. Treasury Bonds (Long) 4,655 Sept. 1995 63
100,000 Due 8/10/95 23 U.S. Treasury Bonds (Short) (2,611) Sept. 1995 26
365,000 Due 11/16/95
</TABLE>
(E) Options -- The Funds, except for Strong U.S. Treasury Money Fund and
Strong Money Market Fund, may engage in options transactions for any lawful
purpose, including hedging, risk management, or enhancing returns, but not
for speculation. The Funds may purchase or write put and call options on
securities, futures contracts, indices, and foreign currency, and enter into
closing transactions with respect to such options to terminate an existing
position.
Premiums received by the Funds upon writing put or call options are
recorded in the Funds' statements of assets and liabilities as an asset with
a corresponding liability which is subsequently adjusted to the current
market value of the option. When an option that is written by the Funds
expires, is exercised, or is closed, the Funds realize a gain or loss, and
the liability is eliminated. The Funds continue to bear the risk of adverse
movements in the price of the underlying asset during the period of the
option, although any potential loss during the period would be reduced by
the amount of the option premium received. The use of written option
contracts may involve elements of market risk in excess of the amount
recognized in the statements of assets and liabilities. The contract value
represents the Funds' involvement in these financial instruments. When
required by SEC guidelines, the Fund will set aside permissible liquid
assets in a segregated account to secure its potential obligations under its
written options positions.
The successful use of option contracts by the Funds are dependent upon
the ability of the Advisor to correctly anticipate trends in the underlying
assets of the option contracts. To the extent that the Funds are engaging
in option contracts other than for hedging purposes, the Funds' successful
use of such transactions are more dependent upon the Advisor's ability to
correctly anticipate such trends, since losses in these transactions may
not be offset in gains in the Funds' portfolio or in lower purchase prices
for assets it intends to acquire. The Advisor's prediction of trends in
underlying assets may prove to be innaccurate, which could result in
substantial losses to the Funds. Hedging transactions are also subject to
risks. If the Advisor incorrectly anticipates trends in the underlying
asset, the Funds may be in a worse position than if no hedging had
occurred. In addition, there may be imperfect correlation between the
Funds' use of option contracts and the assets being hedged.
Written Option activity for Strong Short-Term Bond Fund for the six months
ended June 30, 1995 is as follows:
<TABLE>
<CAPTION>
Notional Par Value Premiums
(In Thousands) (In Thousands)
------------------ --------------
<S> <C> <C>
Options outstanding at December 31, 1994 0 $ 0
Options written during the period 175,000 361
Options exercised (150,000) (328)
-------- ----
Options outstanding at June 30, 1995 25,000 $ 33
======== ====
</TABLE>
Exercised options resulted in a capital loss of $597,656.
(F) Foreign Currency Translation -- Investment securities and other
assets and liabilities denominated in foreign currencies are converted to
U.S. dollars based upon current exchange rates. Purchases and sales of
foreign investment securities and income are converted to U.S. dollars based
upon currency exchange rates prevailing on the respective dates of such
transactions. The effect of changes in foreign exchange rates on realized
and unrealized security gains or losses is reflected as a component of such
gains or losses.
(G) When-Issued Securities -- The Funds may purchase securities on a
when-issued or delayed delivery basis. Although the payment and interest
terms of these securities are established at the time the purchaser enters
into the agreement, these securities may be delivered and paid for at a
future date, generally within 45 days. The Funds record purchases of
when-issued securities and reflect the values of such securities in
determining net asset value in the same manner as other portfolio
securities. The Funds segregate and maintain at all times permissible liquid
assets in an amount at least equal to the amount of outstanding commitments
for when-issued securities.
(H) Average Years to Maturity -- A Fund's average portfolio maturity is
generally based on the actual stated maturity date of a security. However,
the maturity date of a variable rate security is the next interest rate
adjustment date and for a debt security with a put or demand feature, the
next put or demand exercise date is considered its maturity. The maturity of
a mortgage-backed security is determined on an "expected life" basis.
Notwithstanding the foregoing, the use of futures contracts and options may
impact the effective maturity of a portfolio security and accordingly, the
calculated average years to maturity of a Fund's portfolio. An average
effective maturity is also calculated for the Strong Advantage Fund. For
purposes of this calculation, the call date of a security subject to
redemption and reasonably expected to be called is used in determining the
effective maturity of the Fund portfolio.
32
<PAGE> 35
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1995 (Unaudited)
(I) Other -- Portfolio transactions are recorded on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend
date. Interest income is recorded on the accrual basis.
3. NET ASSETS
Net assets as of June 30, 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
Strong U.S. Treasury Strong Money
Money Fund Market Fund
------------------ -------------
<S> <C> <C>
Capital Stock and Total Net Assets $ 41,934 $2,065,059
======== ==========
<CAPTION>
Strong Strong Short-Term Strong Government Strong Corporate
Advantage Fund Bond Fund Securities Fund Bond Fund
-------------- --------- --------------- ---------
<S> <C> <C> <C> <C>
Capital Stock $875,003 $1,131,172 $352,986 $219,467
Undistributed Net Investment Income 1,958 8,159 -- --
Undistributed Net Realized Loss (10,036) (95,898) (5,530) (49,494)
Net Unrealized Appreciation 3,046 9,920 5,538 5,949
-------- ---------- -------- --------
Net Assets $869,971 $1,053,353 $352,994 $175,922
======== ========== ======== ========
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the six months ended June 30, 1995
and the year ended December 31, 1994 were as follows
(in thousands):
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------------------- --------------------------
Shares Dollars Shares Dollars
------- --------- -------- ---------
<S> <C> <C> <C> <C>
STRONG U.S. TREASURY MONEY FUND
Shares Sold 42,389 $ 42,389 165,274 $ 165,274
Shares Issued in Reinvestment of Dividends 1,143 1,143 2,002 2,002
Shares Redeemed (69,125) (69,125) (141,600) (141,600)
---------- ---------- --------- ----------
Net Increase (Decrease) (25,593) ($ 25,593) 25,676 $ 25,676
========== ========== ========= ==========
STRONG MONEY MARKET FUND
Shares Sold 2,680,341 $2,680,341 1,084,908 $1,084,908
Shares Issued in Reinvestment of Dividends 33,652 33,652 14,688 14,688
Shares Redeemed (1,189,917) (1,189,917) (888,601) (888,601)
---------- ---------- --------- ----------
Net Increase 1,524,076 $1,524,076 210,995 $ 210,995
========== ========== ========= ==========
STRONG ADVANTAGE FUND
Shares Sold 37,212 $ 371,370 112,510 $1,132,912
Shares Issued in Reinvestment of Dividends 2,543 25,371 3,025 30,452
Shares Redeemed (44,130) (440,207) (65,131) (655,216)
---------- ---------- --------- ----------
Net Increase (Decrease) (4,375) ($ 43,466) 50,404 $508,148
========== ========== ========= ==========
STRONG SHORT-TERM BOND FUND
Shares Sold 19,080 $ 181,890 85,039 $ 852,010
Shares Issued in Reinvestment of Dividends 3,169 30,109 7,807 77,038
Shares Redeemed (24,382) (231,566) (132,054) (1,302,077)
---------- ---------- --------- ----------
Net Decrease (2,133) ($ 19,567) (39,208) ($ 373,029)
========== ========== ========= ==========
STRONG GOVERNMENT SECURITIES FUND
Shares Sold 12,330 $ 124,042 22,577 $ 227,816
Shares Issued in Reinvestment of Dividends 824 8,233 1,285 12,889
Shares Redeemed (8,209) (81,831) (16,028) (160,906)
---------- ---------- --------- ----------
Net Increase 4,945 $ 50,444 7,834 $ 79,799
========== ========== ========= ==========
STRONG CORPORATE BOND FUND
Shares Sold 7,076 $ 69,659 6,978 $ 67,971
Shares Issued in Reinvestment of Dividends 460 4,493 727 7,032
Shares Redeemed (3,724) (36,942) (6,570) (63,778)
---------- ---------- --------- ----------
Net Increase 3,812 $ 37,210 1,135 $ 11,225
========== ========== ========= ==========
</TABLE>
33
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1995 (Unaudited)
5. RELATED PARTY TRANSACTIONS
Strong Capital Management, Inc. (the "Advisor"), with whom certain
officers and directors of the Funds are affiliated, provides investment
advisory services and shareholder recordkeeping and related services to the
Funds. Investment advisory fees, which are established by terms of the
Advisory Agreements, are based on annualized rates of .40% of the average
daily net assets of Strong U.S. Treasury Money Fund, .50% of the average
daily net assets of Strong Money Market Fund, .60% of the average daily net
assets of Strong Advantage Fund and Strong Government Securities Fund, and
.625% of the average daily net assets of Strong Short-Term Bond Fund and
Strong Corporate Bond Fund. Advisory fees are subject to reimbursement by
the Advisor if the Funds' operating expenses exceed certain levels.
Shareholder recordkeeping and related service fees are based on
contractually established rates for each open and closed shareholder
account. In addition, the Advisor is compensated for certain other services
related to costs incurred for reports to shareholders.
Certain information regarding these transactions, excluding the effects
of waivers and reimbursements, for the six months ended June 30, 1995 is as
follows (in thousands):
<TABLE>
<CAPTION>
Strong U.S. Treasury Strong Strong
Money Fund Money Market Fund Advantage Fund
-------------------- ----------------- --------------
<S> <C> <C> <C>
Payable to Advisor at June 30, 1995 $ 29 $ 30 $475
Other Shareholder Servicing Expenses Paid to Advisor 2 29 13
Unaffiliated Directors' Fees 1 5 9
<CAPTION>
Strong Short-Term Strong Government Strong Corporate
Bond Fund Securities Fund Bond Fund
----------------- ----------------- ----------------
<S> <C> <C> <C>
Payable to Advisor at June 30, 1995 $592 $182 $105
Other Shareholder Servicing Expenses Paid to Advisor 24 5 5
Unaffiliated Directors' Fees 10 3 2
</TABLE>
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the six
months ended June 30, 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
Strong Strong Short-Term
Advantage Fund Bond Fund
-------------- ------------------
<S> <C> <C>
Purchases:
U.S. Government and Agency $ 28,152 $ 988,304
Other 820,750 1,388,635
Sales:
U.S. Government and Agency 28,995 857,901
Other 852,344 1,466,609
<CAPTION>
Strong Government Strong Corporate
Securities Fund Bond Fund
----------------- ----------------
<S> <C> <C>
Purchases:
U.S. Government and Agency $ 718,803 $ 256,850
Other 235,833 381,860
Sales:
U.S. Government and Agency 650,382 259,850
Other 221,397 340,902
</TABLE>
7. INCOME TAX INFORMATION
At June 30, 1995, the investment cost and gross unrealized appreciation
and depreciation on investments for Federal income tax purposes were as
follows (in thousands):
<TABLE>
<CAPTION>
Strong Strong Short-Term
Advantage Fund Bond Fund
-------------- -----------------
<S> <C> <C>
Aggregate Investment Cost $ 865,969 $1,135,831
Aggregate Unrealized:
Appreciation $ 6,212 $ 17,380
Depreciation (3,262) (18,768)
--------- ----------
$ 2,950 ($ 1,388)
========= ==========
Strong Government Strong Corporate
Securities Fund Bond Fund
----------------- ----------------
<S> <C> <C>
Aggregate Investment Cost $ 386,261 $ 169,823
Aggregate Unrealized:
Appreciation $ 7,861 $ 6,478
Depreciation (2,048) (639)
--------- ----------
$ 5,813 $ 5,839
========= ==========
</TABLE>
34
<PAGE> 37
8. FOREIGN INVESTMENTS
Investments in foreign markets can pose more risks than U.S.
investments, and, to the extent that each Fund invests in foreign
securities, each Fund's share price is expected to be more volatile than
that of a U.S.-only fund. The value of each Fund's foreign securities will
fluctuate with changes in market conditions, currency values, interest
rates, foreign government regulations, and economic and political
conditions in countries in which each Fund invests. These risks are
generally intensified for investments in emerging markets.
9. ANNUAL MEETING
A shareholder meeting was held on April 13, 1995 in Milwaukee,
Wisconsin. Results of the shareholder vote, calculated as a percentage of
total shares voted, are as follows:
<TABLE>
<CAPTION>
STRONG U.S. TREASURY MONEY FUND STRONG MONEY MARKET FUND
SHARES VOTED 32,912,660.800 SHARES VOTED 684,415,936.870
--------------------------------- ---------------------------------
PROPOSALS AFFIRMATIVE WITHHOLD AFFIRMATIVE WITHHOLD
--------- ----------- -------- ----------- -------
<S> <C> <C> <C> <C>
1 Election of Directors
Richard S. Strong 96.45% 3.55% 97.44% 2.56%
John Dragisic 95.93 4.07 97.12 2.88
Marvin E. Nevins 96.00 4.00 97.11 2.89
Willie D. Davis 94.60 5.40 96.63 3.37
William F. Vogt 96.08 3.92 96.97 3.03
Stanley Kritzik 95.62 4.38 96.72 3.28
<CAPTION>
AFFIRMATIVE AGAINST ABSTAIN AFFIRMATIVE AGAINST ABSTAIN
----------- ------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
2 Ratify Selection of Auditors 95.37% 1.74% 2.89% 96.18% 0.91% 2.91%
3 Adopt Advisory Agreement 87.78 5.03 7.19 91.52 3.91 4.57
4 Adopt Revised Articles 84.84 9.02 6.14 90.72 4.74 4.54
5 Amend Investment Objective 85.98 7.75 6.27 87.53 6.90 5.57
6 Amend or Adopt a Fundamental
Investment Limitation Concerning:
6A Diversification 85.06 6.47 8.47 87.50 5.03 7.47
6B Concentration 85.51 5.95 8.54 86.36 6.18 7.46
6C Lending 85.20 6.32 8.48 85.34 7.21 7.45
6D Purchasing or Selling Real Estate 81.22 10.45 8.33 85.85 6.77 7.38
6E Borrowing 83.75 7.77 8.48 84.03 8.53 7.44
6F Underwriting Securities 82.97 8.66 8.37 87.37 5.19 7.44
6G Purchasing or Selling
Financial Commodities 81.22 10.78 8.00 82.76 9.86 7.38
6H Issuing Senior Securities 86.25 5.25 8.50 87.56 5.01 7.43
6I Pooled Fund Structures 85.12 6.39 8.49 86.65 5.91 7.44
7 Eliminate a Fundamental Investment
Limitation Concerning:
7A Short Sales of Securities 81.63 7.10 11.27 81.92 8.69 9.39
7B Use of Margin 81.12 7.72 11.16 81.29 9.32 9.39
7C Illiquid and Restricted Securities N/A N/A N/A N/A N/A N/A
7D Purchase of Investment
Company Securities 83.09 5.63 11.28 85.46 5.10 9.44
7E Purchasing Securities of
Newly-Formed Issuers 83.03 5.70 11.27 84.76 5.80 9.44
7F Warrants N/A N/A N/A N/A N/A N/A
7G Investing in Oil and Gas Interests 81.68 7.07 11.25 82.74 7.87 9.39
7H Futures and Options 79.36 9.51 11.13 80.83 9.75 9.42
7I Pledging Assets 79.92 8.93 11.15 81.45 9.13 9.42
7J Securities Investments of
Directors and Officers 81.44 7.40 11.16 83.66 6.97 9.37
7K Fund Portfolio Transactions
with Directors and Officers 80.86 8.02 11.12 83.36 7.29 9.35
7L Investing in Securities for the
Purpose of Management
or Control 81.62 7.10 11.28 82.47 8.17 9.36
7M Participating on a Joint Basis
in Any Trading Account 82.81 5.91 11.28 84.44 6.11 9.45
</TABLE>
35
<PAGE> 38
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1995 (Unaudited)
9. ANNUAL MEETING (continued)
<TABLE>
<CAPTION>
STRONG ADVANTAGE FUND STRONG SHORT-TERM BOND FUND
SHARES VOTED 48,766,922.606 SHARES VOTED 63,365,567.745
--------------------------------- ---------------------------------
PROPOSALS AFFIRMATIVE WITHHOLD AFFIRMATIVE WITHHOLD
--------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C>
1 Election of Directors
Richard S. Strong 98.36% 1.64% 97.42% 2.58%
John Dragisic 98.22 1.78 97.22 2.78
Marvin E. Nevins 98.17 1.83 97.17 2.83
Willie D. Davis 97.88 2.12 96.67 3.33
William F. Vogt 98.22 1.78 97.25 2.75
Stanley Kritzik 98.15 1.85 96.66 3.34
<CAPTION>
AFFIRMATIVE AGAINST ABSTAIN AFFIRMATIVE AGAINST ABSTAIN
----------- ------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
2 Ratify Selection of Auditors 95.53% 0.87% 3.60% 95.94% 1.30% 2.76%
3 Adopt Advisory Agreement 92.84 3.48 3.68 91.39 4.22 4.39
4 Adopt Revised Articles 91.13 4.06 4.81 89.75 5.82 4.43
5 Amend Investment Objective 89.82 5.05 5.13 89.91 5.81 4.28
6 Amend or Adopt a Fundamental
Investment Limitation Concerning:
6A Diversification 90.67 4.76 4.57 89.47 4.52 6.01
6B Concentration 92.26 3.10 4.64 90.34 3.64 6.02
6C Lending 88.54 6.84 4.62 88.93 5.07 6.00
6D Purchasing or Selling Real Estate 85.91 9.50 4.59 88.22 5.75 6.03
6E Borrowing 86.54 8.83 4.63 87.84 6.18 5.98
6F Underwriting Securities 90.12 5.31 4.57 89.55 4.45 6.00
6G Purchasing or Selling Financial
Commodities 85.53 9.82 4.65 86.22 7.86 5.92
6H Issuing Senior Securities 89.66 5.69 4.65 89.73 4.26 6.01
6I Pooled Fund Structures 88.95 6.45 4.60 88.79 5.10 6.11
7 Eliminate a Fundamental Investment
Limitation Concerning:
7A Short Sales of Securities 83.37 8.57 8.06 86.35 6.30 7.35
7B Use of Margin 82.87 9.08 8.05 85.73 6.95 7.32
7C Illiquid and Restricted Securities 82.68 9.16 8.16 85.42 7.24 7.34
7D Purchase of Investment
Company Securities 85.97 5.94 8.09 88.19 4.43 7.38
7E Purchasing Securities of
Newly-Formed Issuers 88.07 3.86 8.07 87.64 5.00 7.36
7F Warrants N/A N/A N/A N/A N/A N/A
7G Investing in Oil and Gas Interests 85.35 6.60 8.05 87.15 5.51 7.34
7H Futures and Options 82.61 9.36 8.03 85.25 7.48 7.27
7I Pledging Assets 82.82 9.08 8.10 85.50 7.19 7.31
7J Securities Investments of
Directors and Officers 84.92 7.00 8.08 86.47 6.19 7.34
7K Fund Portfolio Transactions
with Directors and Officers 84.78 7.11 8.11 85.98 6.66 7.36
7L Investing in Securities for the
Purpose of Management or Control 84.72 7.14 8.14 86.92 5.75 7.33
7M Participating on a Joint Basis
in Any Trading Accoun 84.74 7.10 8.16 87.55 5.08 7.37
7N Purchasing Restricted Securities
of a Single Issuer 83.49 8.43 8.08 N/A N/A N/A
</TABLE>
36
<PAGE> 39
9. ANNUAL MEETING (CONTINUED)
<TABLE>
<CAPTION>
STRONG GOVERNMENT SECURITIES FUND STRONG CORPORATE BOND FUND
SHARES VOTED 16,334,247.252 SHARES VOTED 8,799,302.021
----------------------------------- ------------------------------
PROPOSALS AFFIRMATIVE WITHHOLD AFFIRMATIVE WITHHOLD
<S> <C> <C> <C> <C>
1 Election of Directors
Richard S. Strong 98.18% 1.82% 97.96% 2.04%
John Dragisic 98.34 1.66 97.82 2.18
Marvin E. Nevins 98.20 1.80 97.89 2.11
Willie D. Davis 98.20 1.80 97.60 2.40
William F. Vogt 98.31 1.69 97.90 2.10
Stanley Kritzik 98.10 1.90 97.60 2.40
<CAPTION>
AFFIRMATIVE AGAINST ABSTAIN AFFIRMATIVE AGAINST ABSTAIN
----------- ------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
2 Ratify Selection of Auditors 96.55% 0.64% 2.81% 96.31% 1.07% 2.62%
3 Adopt Advisory Agreement 92.92 2.73 4.35 92.99 2.76 4.25
4 Adopt Revised Articles 91.91 3.69 4.40 92.17 3.94 3.89
5A Change the Fund's Name N/A N/A N/A 89.35 6.45 4.20
5B Amend Investment Objective 90.59 4.73 4.68 90.30 5.46 4.24
6 Amend or Adopt a Fundamental
Investment Limitation Concerning:
6A Diversification 86.79 7.86 5.35 90.99 3.34 5.67
6B Concentration 90.68 3.88 5.44 91.52 2.80 5.68
6C Lending 88.58 5.99 5.43 90.23 4.29 5.48
6D Purchasing or Selling Real Estate 86.37 8.26 5.37 89.53 4.91 5.56
6E Borrowing 85.09 9.58 5.33 89.38 5.14 5.48
6F Underwriting Securities 89.43 5.27 5.30 91.04 3.47 5.49
6G Purchasing or Selling Financial
Commodities 82.14 12.63 5.23 88.25 6.29 5.46
6H Issuing Senior Securities 89.35 5.30 5.35 90.60 3.84 5.56
6I Pooled Fund Structures 88.74 5.92 5.34 90.37 4.04 5.59
7 Eliminate a Fundamental Investment
Limitation Concerning:
7A Short Sales of Securities 84.25 9.58 6.17 88.39 4.88 6.73
7B Use of Margin 83.06 10.76 6.18 87.40 5.90 6.70
7C Illiquid and Restricted
Securities 82.77 11.01 6.22 87.73 5.59 6.68
7D Purchase of Investment
Company Securities 85.91 7.81 6.28 90.06 3.20 6.74
7E Purchasing Securities of
Newly-Formed Issuers 85.07 8.64 6.29 89.65 3.54 6.81
7F Warrants 84.41 9.19 6.40 89.60 3.53 6.87
7G Investing in Oil and Gas
Interests 82.80 10.94 6.26 88.81 4.32 6.87
7H Futures and Options 82.22 11.66 6.12 87.29 5.96 6.75
7I Pledging Assets 83.00 10.89 6.11 87.35 5.95 6.70
7J Securities Investments of
Directors and Officers 82.09 11.82 6.09 88.26 5.00 6.74
7K Fund Portfolio Transactions
with Directors and Officers 81.92 11.80 6.28 87.86 5.41 6.73
7L Investing in Securities for
the Purpose of Management
or Control 85.40 8.44 6.16 88.24 5.01 6.75
7M Participating on a Joint Basis
in Any Trading Account 88.41 5.38 6.21 88.91 4.36 6.73
</TABLE>
37
<PAGE> 40
FINANCIAL HIGHLIGHTS
The following presents information relating to a share of capital stock of
each of the Funds, outstanding for the entire period.
STRONG U.S. TREASURY MONEY FUND
<TABLE>
<CAPTION>
1995** 1994 1993 1992 1991
--------- ------- -------- ------ ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.02 0.04 0.03 0.04 0.06
Dividends From Net Investment Income (0.02) (0.04) (0.03) (0.04) (0.06)
---------- ---------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========= ========= =========
Total Return +2.5% +3.8% +2.9% +3.7% +5.8%
Net Assets, End of Period (In Thousands) $ 41,934 $ 67,527 $ 41,851 $ 29,390 $ 20,431
Ratio of Expenses to Average Net Assets 0.8%* 0.2% 0.2% 0.3% 0.3%
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.8%* 0.8% 1.0% 0.9% 1.0%
Ratio of Net Investment Income to
Average Net Assets 4.9%* 3.8% 2.9% 3.6% 5.4%
<CAPTION>
STRONG MONEY MARKET FUND
1995** 1994 1993 1992 1991
--------- ------- -------- ------ ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.03 0.04 0.03 0.03 0.06
Dividends From Net Investment Income (0.03) (0.04) (0.03) (0.03) (0.06)
---------- ---------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========= ========= =========
Total Return +3.1% + 4.0% +2.9% +3.7% +6.1%
Net Assets, End of Period (In Thousands) $2,065,059 $ 540,983 $ 329,988 $ 390,003 $ 533,869
Ratio of Expenses to Average Net Assets 0.0%* 0.6% 0.7% 0.8% 0.7%
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.6%* 0.9% 1.0% 1.1% 1.0%
Ratio of Net Investment Income to
Average Net Assets 6.3%* 4.0% 2.9% 3.7% 6.0%
<CAPTION>
1990 1989 1988 1987 1986
--------- ------- -------- ------ ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.08 0.09 0.07 0.06 0.06
Dividends From Net Investment Income (0.08) (0.09) (0.07) (0.06) (0.06)
---------- ---------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========= ========= =========
Total Return +8.1% +9.2% +7.5% +6.4% +6.5%
Net Assets, End of Period (In Thousands) $ 768,870 $ 829,332 $ 464,459 $ 194,963 $ 26,363
Ratio of Expenses to Average Net Assets 0.7% 0.7% 1.1% 0.8% 0.8%
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.9% 1.0% 1.1% 1.1% 1.3%
Ratio of Net Investment Income to
Average Net Assets 7.8% 8.8% 7.4% 6.6% 5.8%
</TABLE>
38
<PAGE> 41
FINANCIAL HIGHLIGHTS (continued)
STRONG ADVANTAGE FUND
<TABLE>
<CAPTION>
1995*** 1994 1993 1992 1991 1990
--------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.98 $ 10.19 $ 10.01 $ 9.90 $ 9.67 $ 9.87
INCOME FROM INVESTMENT OPERATIONS
---------------------------------
Net Investment Income 0.33 0.55 0.59 0.70 0.76 0.83
Net Realized and Unrealized Gains
(Losses) on Investments 0.04 (0.19) 0.18 0.11 0.23 (0.20)
--------- --------- --------- --------- --------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.37 0.36 0.77 0.81 0.99 0.63
LESS DISTRIBUTIONS
------------------
From Net Investment Income (0.31) (0.55) (0.59) (0.70) (0.76) (0.83)
In Excess of Net Investment Income (0.02) -- -- -- -- --
In Excess of Net Realized Gains -- (0.02) -- -- -- --
--------- --------- --------- --------- --------- ----------
TOTAL DISTRIBUTIONS (0.33) (0.57) (0.59) (0.70) (0.76) (0.83)
--------- --------- --------- --------- --------- ----------
NET ASSET VALUE, END OF PERIOD $ 10.02 $ 9.98 $ 10.19 $ 10.01 $ 9.90 $ 9.67
========= ========= ========= ========= ========= ==========
Total Return +3.8% +3.6% +7.9% +8.4% +10.6% +6.6%
Net Assets, End of Period (In Thousands) $ 869,971 $ 910,508 $ 415,465 $ 272,348 $ 143,215 $ 119,189
Ratio of Expenses to Average Net Assets 0.8%* 0.8% 0.9% 1.0% 1.2% 1.2%
Ratio of Expenses to Average Net Assets
Without Waivers 0.8%* 0.8% 0.9% 1.0% 1.2% 1.2%
Ratio of Net Investment Income to
Average Net Assets 6.7%* 5.6% 5.8% 7.0% 7.8% 8.5%
Portfolio Turnover Rate 103.5% 221.0% 304.8% 316.1% 503.0% 274.1%
<CAPTION>
1989 1988
--------- ---------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $ 9.99
INCOME FROM INVESTMENT OPERATIONS
---------------------------------
Net Investment Income 1.03 0.09
Net Realized and Unrealized Gains
(Losses) on Investments (0.13) 0.01
--------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.90 0.10
LESS DISTRIBUTIONS
------------------
From Net Investment Income (1.03) 0.09
In Excess of Net Investment Income -- --
In Excess of Net Realized Gains -- --
--------- ---------
TOTAL DISTRIBUTIONS (1.03) (0.09)
--------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.87 $ 10.00
========= =========
Total Return +9.4% +1.0%
Net Assets, End of Period (In Thousands) $ 142,807 $ 7,544
Ratio of Expenses to Average Net Assets 1.1% 1.1%*
Ratio of Expenses to Average Net Assets
Without Waivers 1.2% 1.7%*
Ratio of Net Investment Income to
Average Net Assets 10.0% 11.1%*
Portfolio Turnover Rate 211.3% 231.8%*
STRONG SHORT-TERM BOND FUND
<CAPTION>
1995*** 1994 1993 1992 1991 1990
---------- ---------- ---------- --------- ---------- ----------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.42 $ 10.23 $ 9.99 $ 10.12 $ 9.53 $ 9.86
INCOME FROM INVESTMENT OPERATIONS
---------------------------------
Net Investment Income 0.34 0.64 0.66 0.76 0.75 0.81
Net Realized and Unrealized Gains
(Losses) on Investments 0.29 (0.80) 0.25 (0.11) 0.59 (0.33)
---------- ---------- ---------- --------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.63 (0.16) 0.91 0.65 1.34 0.48
LESS DISTRIBUTIONS
------------------
From Net Investment Income (0.27) (0.65) (0.66) (0.76) (0.75) (0.81)
In Excess of Net Investment Income (0.07) -- (0.01) -- -- --
From Net Realized Gains -- -- -- (0.02)(1) -- --
---------- ---------- ---------- --------- ---------- ----------
TOTAL DISTRIBUTIONS (0.34) (0.65) (0.67) (0.78) (0.75) (0.81)
---------- ---------- ---------- --------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 9.71 $ 9.42 $ 10.23 $ 9.99 $ 10.12 $ 9.53
========== ========== ========== ========= ========== ==========
Total Return +6.8% -1.6% +9.3% +6.7% +14.6% +5.3%
Net Assets, End of Period (In Thousands) $1,053,353 $1,041,081 $1,531,627 $ 756,867 $ 164,954 $ 80,070
Ratio of Expenses to Average Net Assets 1.0%* 0.9% 0.8% 0.6% 1.0% 1.3%
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 1.0%* 0.9% 0.9% 0.9% 1.2% 1.3%
Ratio of Net Investment Income to
Average Net Assets 7.2%* 6.5% 6.3% 7.3% 7.8% 8.6%
Portfolio Turnover Rate 239.2% 249.7% 444.9% 353.3% 398.1% 313.8%
<CAPTION>
1989 1988 1987**
---------- ---------- ----------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.09 $ 10.03 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
---------------------------------
Net Investment Income 0.99 0.86 0.27
Net Realized and Unrealized Gains
(Losses) on Investments (0.18) 0.13 0.04
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.81 0.99 0.31
LESS DISTRIBUTIONS
------------------
From Net Investment Income (0.99) (0.86) (0.27)
In Excess of Net Investment Income -- -- --
From Net Realized Gains (0.05) (0.07) (0.01)
---------- ---------- ----------
TOTAL DISTRIBUTIONS (1.04) (0.93) (0.28)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 9.86 $ 10.09 $ 10.03
========== ========== ==========
Total Return +8.2% +10.1% +3.2%
Net Assets, End of Period (In Thousands) $ 130,001 $ 102,175 $ 17,128
Ratio of Expenses to Average Net Assets 1.1% 1.0% 0.1%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 1.2% 1.2% 0.8%*
Ratio of Net Investment Income to
Average Net Assets 9.7% 8.5% 8.8%*
Portfolio Turnover Rate 177.0% 461.3% 135.5%*
</TABLE>
* Calculated on an annualized basis.
** Respective inception dates are November 25, 1988 and August 31,
1987, for Strong Advantage Fund and Strong Short-Term Bond Fund.
Total return is not annualized.
*** For the six months ended June 30, 1995. (Unaudited) Total return and
portfolio turnover rate are not annualized.
(1) Ordinary income distribution is for tax purposes.
39
<PAGE> 42
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
STRONG GOVERNMENT SECURITIES FUND
1995*** 1994 1993 1992 1991
------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.63 $ 10.61 $ 10.39 $ 10.77 $ 10.10
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.33 0.62 0.66 0.80 0.77
Net Realized and Unrealized Gains
(Losses) on Investments 0.84 (0.98) 0.63 0.11 0.84
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.17 (0.36) 1.29 0.91 1.61
LESS DISTRIBUTIONS
From Net Investment Income (0.33) (0.62) (0.66) (0.80) (0.77)
From Net Realized Gains -- -- (0.32) (0.49) (0.17)
In Excess of Net Realized Gains -- -- (0.09) -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.33) (0.62) (1.07) (1.29) (0.94)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.47 $ 9.63 $ 10.61 $ 10.39 $ 10.77
======== ======== ======== ======== ========
Total Return +12.3% -3.4% +12.7% +9.2% +16.7%
Net Assets, End of Period (In Thousands) $352,994 $276,832 $221,961 $ 82,169 $ 51,934
Ratio of Expenses to Average Net Assets 0.9%* 0.9% 0.8% 0.7% 0.8%
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.9%* 0.9% 1.0% 1.2% 1.4%
Ratio of Net Investment Income to
Average Net Assets 6.5%* 6.2% 6.0% 7.7% 7.5%
Portfolio Turnover Rate 306.0% 479.0% 520.9% 628.8% 292.9%
<CAPTION>
1990 1989 1988 1987 1986**
---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.08 $ 9.98 $ 9.75 $ 10.09 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.72 0.78 0.68 0.65 0.13
Net Realized and Unrealized Gains
(Losses) on Investments 0.12 0.17 0.32 (0.34) 0.09
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 0.84 0.95 1.00 0.31 0.22
LESS DISTRIBUTIONS
From Net Investment Income (0.72) (0.78) (0.68) (0.65) (0.13)
From Net Realized Gains (0.10) (0.07) (0.09) -- --
In Excess of Net Realized Gains -- -- -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.82) (0.85) (0.77) (0.65) (0.13)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.10 $ 10.08 $ 9.98 $ 9.75 $ 10.09
======== ======== ======== ======== ========
Total Return +8.7% +9.9% +10.5% +3.4% +2.2%
Net Assets, End of Period (In Thousands) $ 41,099 $ 35,119 $ 25,408 $ 11,380 $ 880
Ratio of Expenses to Average Net Assets 1.3% 1.3% 0.4% 1.0% 0.6%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 1.5% 1.6% 1.6% 1.6% 1.2%*
Ratio of Net Investment Income to
Average Net Assets 7.2% 7.6% 6.9% 6.6% 7.2%*
Portfolio Turnover Rate 254.2% 421.6% 1,727.8% 715.0% 0.0%*
<CAPTION>
STRONG CORPORATE BOND FUND
1995*** 1994 1993 1992 1991
------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.36 $ 10.24 $ 9.40 $ 9.37 $ 8.87
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.38 0.73 0.70 0.82 0.76
Net Realized and Unrealized Gains
(Losses) on Investments 0.99 (0.87) 0.84 0.03 0.50
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.37 (0.14) 1.54 0.85 1.26
LESS DISTRIBUTIONS
From Net Investment Income (0.38) (0.73) (0.70) (0.82) (0.76)
In Excess of Net Investment Income -- (0.01) -- -- --
From Net Realized Gains -- -- -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.38) (0.74) (0.70) (0.82) (0.76)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.35 $ 9.36 $ 10.24 $ 9.40 $ 9.37
======== ======== ======== ======== ========
Total Return +14.9% -1.3% +16.8% +9.4% +14.8%
Net Assets, End of Period (In Thousands) $175,922 $123,305 $123,400 $102,783 $ 92,364
Ratio of Expenses to Average Net Assets 1.1%* 1.1% 1.1% 1.3% 1.5%
Ratio of Net Investment Income to
Average Net Assets 7.8%* 7.6% 7.0% 8.7% 8.4%
Portfolio Turnover Rate 415.7% 603.0% 665.8% 557.0% 392.4%
<CAPTION>
1990 1989 1988 1987 1986
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.57 $ 11.88 $ 11.64 $ 12.65 $ 10.30
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 1.06 1.40 1.17 1.23 0.98
Net Realized and Unrealized Gains
(Losses) on Investments (1.70) (1.31) 0.24 (0.67) 2.08
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS (0.64) 0.09 1.41 0.56 3.06
LESS DISTRIBUTIONS
From Net Investment Income (1.06) (1.40) (1.17) (1.53) (0.71)
In Excess of Net Investment Income -- -- -- -- --
From Net Realized Gains -- -- -- (0.04) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (1.06) (1.40) (1.17) (1.57) (0.71)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 8.87 $ 10.57 $ 11.88 $ 11.64 $ 12.65
======== ======== ======== ======== ========
Total Return -6.2% +0.4% +12.5% +4.5% +30.0%
Net Assets, End of Period (In Thousands) $ 92,201 $195,350 $202,623 $137,898 $118,727
Ratio of Expenses to Average Net Assets 1.4% 1.2% 1.2% 1.1% 1.0%
Ratio of Net Investment Income to
Average Net Assets 11.2% 12.1% 9.8% 10.6% 11.3%
Portfolio Turnover Rate 293.5% 207.2% 400.2% 245.4% 204.9%
</TABLE>
* Calculated on an annualized basis.
** The inception date is October 29, 1986 for Strong Government Securities
Fund. Total return is not annualized.
*** For the six months ended June 30, 1995. (Unaudited) Total return and
portfolio turnover rate are not annualized.
40
<PAGE> 43
SHAREHOLDER PRIVILEGES*
TELEPHONE PURCHASE
Make additional investments into any Strong Fund by calling us toll-free at
1-800-368-3863.
TELEPHONE EXCHANGE
If your financial goals change, you can exchange your investments between any
of the Strong Funds.
TELEPHONE REDEMPTION
You can call toll-free to redeem your mutual fund shares at any time. Your
shares will be redeemed no later than the close of the next business day.
AUTOMATIC INVESTMENT PLAN
This plan allows you to set up regular transfers from your bank checking or NOW
account to your Strong Funds account.
PAYROLL DIRECT DEPOSIT PLAN
You can automatically transfer all or a portion of your net pay at each pay
period. This eliminates the delay of depositing paychecks to your bank and
then sending a check through the mail to Strong Funds.
AUTOMATIC EXCHANGE PLAN
This plan allows you to exchange money from one Strong Fund to another. For
example, you may want to set up automatic exchanges from a money market fund to
an equity fund.
For more information about these privileges, call us at 1-800-368-3863.
To reduce the volume of mail you receive, only one copy of certain materials,
such as prospectuses and shareholder reports, is mailed to your household.
Please call 1-800-368-3863 if you wish to receive additional copies, free of
charge.
*Each Fund reserves the right to terminate or modify any of these privileges.
<PAGE> 44
FOR LITERATURE AND INFORMATION REQUESTS,
CALL 1-800-368-1030.
TO DISCUSS AN EXISTING ACCOUNT OR
CONDUCT A TRANSACTION,
CALL 1-800-368-3863.
This report must be preceded or accompanied by the prospectus for
the Strong Income Funds.
[STRONG LOGO]
STRONG FUNDS DISTRIBUTORS, INC.
P.O. Box 2936
Milwaukee, Wisconsin 53201
