<PAGE>
[PHOTO] [LOGO]
SEMI-ANNUAL REPORT
THE STRONG
INCOME
FUNDS
The Strong Bond Fund
The Strong Corporate Bond Fund
The Strong Government Securities Fund
The Strong Short-Term Bond Fund
The Strong High-Yield Bond Fund
The Strong Short-Term High Yield Bond Fund
SEMI-ANNUAL REPORT - APRIL 30, 2000
<PAGE>
LETTER FROM THE CHAIRMAN
Dear Strong Investor,
There is an old Wall Street saying that goes something like this: "Don't fight
the Fed." This is a basic rule you ignore at your own peril.
Since June of 1999, the Federal Reserve Board has raised short-term interest
rates five times with one goal in mind: to slow the economy. This past winter
and spring, the U.S. financial markets began to react to the Fed's actions
swiftly and dramatically. The speed and violence of the downdraft that followed
was enough to scare even the most seasoned investors.
What happened to the financial markets was capitalism doing what it does
best--separating the weak from the strong. Capitalism takes no prisoners. It has
an uncanny ability to seek out the excesses in the system and to separate
quality companies from deficient ones. To my way of thinking, that only serves
to underscore the importance of quality, balance, and diversification in a
portfolio. This spring's financial damage rather dramatically exposed the
excesses in technology and Internet investments and burst the bubble that had
formed around these sectors of the market.
Meanwhile, we are in the tenth year of an unprecedented economic expansion. A
large part of the credit for our good fortune belongs to Alan Greenspan's
shaping of monetary policy and the Fed's rather remarkable achievements in
managing interest rates. Under the current circumstances, the question most
investors need to ask is how to continue participating in the opportunities
available without exposing themselves to too much risk.
When I was a rookie in the investment business, an old-timer told me that too
many people treat investing as entertainment. Investing is not a game. It is a
vital component of the capitalist system. If you want to make your way through
the system without losing your shirt, you need to pick a specific financial
destination and get a reliable investment road map that will take you there.
A successful investment program involves finding companies with proven
management along with real products and services. In other words, invest in
people and companies who you are confident will do exactly what they say they
will do. Identifying them requires research, patience, and experience.
Investing is not a game of hot potato where you buy a stock, pray that the price
goes up, and then pass it to some poor soul when the price is on the way down.
That's not serious investing. That's more like a guarantee that someone--either
you or the next guy--is going to get burned.
/s/ Dick
<PAGE>
THE STRONG
INCOME
FUNDS
-----
SEMI-ANNUAL REPORT - APRIL 30, 2000
TABLE OF CONTENTS
INVESTMENT REVIEWS
The Strong Bond Fund ...........................................2
The Strong Corporate Bond Fund .................................4
The Strong Government Securities Fund ..........................6
The Strong Short-Term Bond Fund ................................8
The Strong High-Yield Bond Fund ...............................10
The Strong Short-Term High Yield Bond Fund ....................12
BOND GLOSSARY .......................................................14
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong Bond Fund .....................................15
The Strong Corporate Bond Fund ...........................18
The Strong Government Securities Fund ....................20
The Strong Short-Term Bond Fund ..........................23
The Strong High-Yield Bond Fund ..........................27
The Strong Short-Term High Yield Bond Fund ...............29
Statements of Assets and Liabilities ..........................32
Statements of Operations ......................................34
Statements of Changes in Net Assets ...........................36
Notes to Financial Statements .................................38
FINANCIAL HIGHLIGHTS ................................................46
<PAGE>
THE STRONG BOND FUND
--------------------
PERSPECTIVES
FROM THE MANAGERS
/s/ Bradley C. Tank /s/ Jeffrey A. Koch
Bradley C. Tank Jeffrey A. Koch
Portfolio Co-manager Portfolio Co-manager
--------------------------------------------------------------------------------
During the past six months, the U.S. economy continued to be very strong,
spurred on by healthy domestic demand. The economy, measured by real GDP, posted
solid first-quarter growth at 5.4%, while consumption was up an even stronger
8%. With the fed funds target rate going up by 75 basis points, two- and
five-year Treasury yields increased by 86 and 57 basis points, respectively.
Throughout the period, we generally maintained an overweighting in U.S.
high-yield debt. This sector was not in favor, but superior issue selection--in
both the high-yield and higher-quality portions of the Fund--allowed us to
overcome that fact. We undertook an "up in quality" initiative within the
higher-grade portion of the Fund, which served the Fund well in the current
period.
The international portion of the Fund performed well. All currency exposure was
hedged back to U.S. dollars, thus avoiding the adverse consequences of a
generally weak currency market.
In January, the U.S. Treasury announced plans to repurchase long-maturity
government debt. This caused longer-maturity government bonds to be the
best-performing sector of the investment-grade market. Yields on 30-year bonds
declined by 20 basis points, despite the increase in short- and
intermediate-term interest rates. The yield curve has now become inverted, with
yields on two-year notes approximately 70 basis points higher than those on
30-year bonds.
--------------------------------------
WE EMPLOYED A BARBELL STRATEGY FOR THE FUND, EMPHASIZING LONG-MATURITY TREASURY
SECURITIES ALONG WITH SHORT- AND INTERMEDIATE-MATURITY CORPORATE
BONDS.
--------------------------------------
[SIDENOTE]
FUND
HIGHLIGHTS
- Short- and intermediate-term interest rates increased, while
longer-maturity rates declined. The decline in long rates was, however,
limited to the Treasury market.
- We have reduced our overall portfolio duration and emphasized
higher-quality securities when purchasing long-maturity bonds.
-------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 4-30-00
<TABLE>
<CAPTION>
INVESTOR CLASS(1)
----------------
<S> <C>
1-year 1.73%
Since Inception 9.32%
(on 12-31-96)
ADVISOR CLASS(2)
---------------
1-year 1.17%
Since Inception 8.81%
(on 12-31-96)
INSTITUTIONAL CLASS
-------------------
1-year 1.92%
Since Inception 9.55%
(on 12-31-96)
</TABLE>
-------------------------------------
<TABLE>
<CAPTION>
PORTFOLIO STATISTICS
AS OF 4-30-00
INVESTOR CLASS
<S> <C>
30-day annualized yield(3) 7.37%
ADVISOR CLASS
30-day annualized yield(3) 6.81%
INSTITUTIONAL CLASS
30-day annualized yield(3) 7.63%
Average maturity(4) 7.1 years
Average
quality rating(5) AA
</TABLE>
--------------------------------------------------------------------------------
(1) The performance of the Investor Class shares prior to 8-30-99 is based on
the Fund's Institutional Class shares' performance, restated for the higher
expense ratio of the Investor Class shares. Please consult a prospectus for
information about all share classes.
(2) The performance of the Advisor Class shares prior to 8-30-99 is based on
the Fund's Institutional Class shares' performance, restated for the higher
expense ratio of the Advisor Class shares. Please consult a prospectus for
information about all share classes.
(3) Yields are historical and do not represent future yields, which will
fluctuate. Yields are as of 4-28-00. For the Advisor Class shares, the
advisor temporarily absorbed expenses of 0.25%. Otherwise, yield would have
been 6.56% and returns would have been lower.
2
<PAGE>
While corporate bonds typically play an important role in the Fund's ongoing
strategy, we maintained a meaningful position in long-maturity U.S. Treasuries
during the period. These holdings benefited from the Treasury's repurchase
activities.
We employed a barbell strategy for the Fund, emphasizing long-maturity Treasury
securities along with short- and intermediate-maturity corporate bonds. This
strategy added value because we participated in the strong performance of
longer-maturity government bonds and avoided some of the underperformance
experienced by the 30-year corporate bond market.
We expect that in the near term, the Fed will increase the fed funds rate by an
additional 50 to 75 basis points in order to slow economic growth and fend off
inflation. We anticipate that the Federal Reserve will continue its success in
containing any meaningful rise in inflation. Once it becomes clear that the Fed
has completed its rate hikes, we intend to adopt a more aggressive posture for
the portfolio with respect to both interest-rate and credit risk.
Thank you for your investment in the Strong Bond Fund. We appreciate the
confidence you have placed in us.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 12-31-96 TO 4-30-00
[GRAPH]
<TABLE>
<CAPTION>
Lehman Brothers Lipper Intermediate
The Strong Aggregate Investment Grade
Bond Fund Bond Index Debt Funds Index
<S> <C> <C> <C>
Dec 96 $10,000 $10,000 $10,000
Apr 97 $10,781 $10,093 $10,084
Aug 97 $11,357 $10,497 $10,471
Dec 97 $11,886 $10,965 $10,879
Apr 98 $12,235 $11,194 $11,099
Aug 98 $12,612 $11,606 $11,465
Dec 98 $13,174 $11,918 $11,735
Apr 99 $13,299 $11,896 $11,728
Aug 99 $13,060 $11,699 $11,516
Dec 99 $13,347 $11,820 $11,620
Apr 00 $13,554 $12,046 $11,776
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Lehman Brothers Aggregate Bond Index and the Lipper Intermediate Investment
Grade Debt Funds Index. Results include the reinvestment of all dividends and
capital gains distributions. Performance is historical and does not represent
future results. Investment returns and principal value vary, and you may have
a gain or loss when you sell shares. This graph is based on Institutional Class
shares only; performance for other classes will vary due to differences in fee
structures.
[SIDENOTE]
YOUR FUND'S
APPROACH
THE STRONG 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 HIGHER- AND MEDIUM-QUALITY CORPORATE, MORTGAGE- AND ASSET-BACKED,
U.S. GOVERNMENT, AND FOREIGN GOVERNMENT BONDS. THE FUND'S DURATION WILL NORMALLY
VARY BETWEEN THREE AND SIX YEARS. THE FUND MAY INVEST UP TO 20% OF ITS ASSETS IN
SECURITIES DENOMINATED IN FOREIGN CURRENCIES AND MAY INVEST BEYOND THIS LIMIT IN
U.S. DOLLAR-DENOMINATED SECURITIES OF FOREIGN ISSUERS. THE FUND MAY ALSO INVEST
UP TO 20% OF ITS ASSETS IN LOWER-QUALITY, HIGH-YIELD BONDS. IN SELECTING BONDS
FOR THE PORTFOLIO, THE MANAGERS ENGAGE IN RIGOROUS, SECURITY-BY-SECURITY
RESEARCH AS WELL AS THOROUGH ANALYSIS OF GENERAL ECONOMIC CONDITIONS. GENERALLY,
QUANTITATIVE ANALYSIS (FOCUSED ON SUCH FACTORS AS DURATION, YIELD SPREADS, AND
YIELD CURVES) DRIVES ISSUE SELECTION IN THE TREASURY AND MORTGAGE MARKETPLACE,
AND PROACTIVE CREDIT RESEARCH DRIVES CORPORATE ISSUE SELECTION.
---------------------------------------
MARKET
HIGHLIGHTS
- The Federal Reserve Board raised the federal funds target rate by 75 basis
points during the past six months in response to strong economic growth and
a cyclical increase in inflation.
- Increased budget surpluses led the U.S. Treasury to announce the planned
repurchase of $30 billion of government debt.
- Investment-grade bonds outperformed high-yield bonds. International bonds,
when hedged to eliminate currency risk, outperformed U.S. domestic bonds.
- The variance in returns among asset classes, sectors, and industries within
the bond market has increased significantly over the past two years.
--------------------------------------------------------------------------------
(4) The Fund's average maturity includes the effect of futures and when-issued
securities.
(5) For purposes of this average rating, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
* The Lehman Brothers Aggregate Bond Index is an unmanaged index composed of
investment-grade securities from the Lehman Brothers Government/Corporate
Bond Index, Mortgage-Backed Securities Index, and Asset-Backed Securities
Index. The Lipper Intermediate Investment Grade Debt Funds Index is an
equally-weighted performance index of the largest qualifying funds in this
Lipper category. Source of the Lehman index data is Standard & Poor's
Micropal. Source of the Lipper index data is Lipper Inc.
3
<PAGE>
THE STRONG CORPORATE BOND FUND
------------------------------
PERSPECTIVES
FROM THE MANAGERS
/s/ Jeffrey A. Koch /s/ John T. Bender /s/ Ivor Schucking
Jeffrey A. Koch John T. Bender Ivor Schucking
Portfolio Co-manager Portfolio Co-manager Portfolio Co-manager
--------------------------------------------------------------------------------
During the past six months, the U.S. economy continued to be very strong,
spurred on by very strong domestic demand. The economy, measured by real GDP,
posted solid first quarter growth at 5.4%, while consumption was up an even
stronger 8%. With the Central Bank raising the fed funds target rate by 75
basis points, two- and five-year Treasury yields increased by 86 and 57 basis
points, respectively.
In January, the U.S. Treasury announced a plan to repurchase long-maturity
government debt. This announcement caused longer-maturity government bonds to be
the best-performing sector of the investment-grade market. Yields on 30-year
bonds declined by 20 basis points, despite the increase in short- and
intermediate-term interest rates. The yield curve has now become inverted, with
yields on two-year notes approximately 70 basis points higher than those on
30-year bonds.
The combination of Fed tightening and Treasury debt buybacks led to the relative
underperformance of corporate bonds relative to government bonds. Fed tightening
caused investors to question the durability of the economic expansion and the
sustainability of earnings growth. The government debt buybacks hurt the
corporate market by heightening the distinction between Treasuries and the
corporate market: government supply is declining, while corporate bond supply is
now near record levels.
In this environment, we employed a barbell strategy for the Fund, emphasizing
long-maturity Treasury securities along with short- and intermediate-
----------------------------------------
WE ANTICIPATE THAT THE FUND WILL ADOPT A MORE AGGRESSIVE STANCE WITH RESPECT TO
BOTH INTEREST-RATE AND CREDIT RISK ONCE IT BECOMES CLEAR THAT THE FED HAS
COMPLETED ITS INTEREST-RATE HIKES.
----------------------------------------
[SIDENOTE]
FUND
HIGHLIGHTS
- Short- and intermediate-term interest rates increased, while
longer-maturity Treasury rates declined.
- Corporate bonds underperformed Treasury securities. The government's
buyback of Treasury debt and a modest deterioration in corporate credit
quality caused BBB and BB corporate bond yields to rise more than Treasury
yields.
- We have reduced our overall portfolio duration and emphasized
higher-quality securities when purchasing long-maturity bonds.
----------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 4-30-00
<TABLE>
<CAPTION>
INVESTOR CLASS
--------------
<S> <C>
1-year -0.64%
5-year 7.97%
10-year 8.45%
Since Inception 8.92%
(on 12-12-85)
ADVISOR CLASS(1)
---------------
1-year -0.91%
5-year 7.73%
10-year 8.21%
Since Inception 8.71%
(on 12-12-85)
INSTITUTIONAL CLASS(2)
---------------------
1-year -0.44%
5-year 8.01%
10-year 8.47%
Since Inception 8.94%
(on 12-12-85)
</TABLE>
----------------------------------------
PORTFOLIO STATISTICS
AS OF 4-30-00
<TABLE>
<CAPTION>
INVESTOR CLASS
<S> <C>
30-day annualized yield(3) 8.06%
ADVISOR CLASS
30-day annualized yield(3) 7.90%
INSTITUTIONAL CLASS
30-day annualized yield(3) 8.55%
Average maturity(4) 11.0 years
Average
quality rating(5) BBB
</TABLE>
--------------------------------------------------------------------------------
(1) The performance of the Advisor Class shares prior to 8-30-99 is based on
the Fund's Investor Class shares' performance, restated for the higher
expense ratio of the Advisor Class shares. Please consult a prospectus for
information about all share classes.
(2) The performance of the Institutional Class shares prior to 8-30-99 is based
on the Fund's Investor Class shares' performance. Please consult a
prospectus for information about all share classes.
(3) Yields are historical and do not represent future yields, which will
fluctuate. Yields are as of 4-28-00.
4
<PAGE>
maturity corporate bonds. This strategy added value because we participated in
the strong performance of longer-maturity government bonds and avoided some of
the underperformance experienced by the 30-year corporate bond market, the
worst-performing part of the corporate market.
We also increased shareholder returns through excellent credit selection
during the period. We were able to avoid investments in the worst-performing
companies and identify companies with improving fundamentals. Companies that
outperformed the market after seeing their credit ratings upgraded include Enron
and Cablevision.
We expect that in the near term, the Fed will increase the fed funds rate by an
additional 50 to 75 basis points in order to slow economic growth and
fend off inflation. Corporate bonds may lag Treasury returns as this occurs, but
corporate bond yields are at such attractive levels that these effects should be
largely mitigated by current income levels. We anticipate that the Fund will
adopt a more aggressive stance with respect to both interest-rate and credit
risk once it becomes clear that the Fed has completed its interest-rate hikes.
Thank you for your investment in the Strong Corporate Bond Fund. We appreciate
the confidence you have placed in us.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 12-12-85 TO 4-30-99
[GRAPH]
<TABLE>
<CAPTION>
Lipper Corporate
The Strong Corporate Lehman Brothers Debt Funds BBB
Bond Fund Corporate BAA Bond Index Rated Index
<S> <C> <C> <C>
Nov 85 $10,000 $10,000 $10,000
Dec 85 $10,300 $10,162 $10,184
Dec 87 $13,997 $12,323 $11,882
Dec 89 $15,800 $15,517 $14,342
Dec 91 $17,013 $19,490 $17,909
Dec 93 $21,732 $24,080 $21,839
Dec 95 $26,892 $28,606 $25,052
Dec 97 $31,752 $33,057 $28,800
Dec 99 $33,974 $35,030 $30,184
Apr 00 $34,190 $34,879 $30,374
</TABLE>
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Lehman Brothers Corporate BAA Bond Index and the Lipper Corporate Debt Funds BBB
Rated Index. Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares. To equalize the time periods, the indexes' performance was
prorated for the month of December 1985. This graph is based on Investor Class
shares only; performance for other classes will vary due to differences in fee
structures.
[SIDENOTE]
YOUR FUND'S
APPROACH
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 INTERMEDIATE-MATURITY BONDS ISSUED BY U.S. COMPANIES. THE
FUND INVESTS PRIMARILY IN HIGHER- AND MEDIUM-QUALITY BONDS. TO INCREASE THE
INCOME IT PAYS OUT, IT MAY ALSO INVEST A SMALL PORTION OF ITS ASSETS IN
LOWER-QUALITY, HIGH-YIELD BONDS. THE MANAGERS FOCUS PRIMARILY UPON HIGH-YIELD
BONDS RATED BB WITH POSITIVE OR IMPROVING CREDIT FUNDAMENTALS. THE FUND'S
DOLLAR-WEIGHTED AVERAGE MATURITY WILL NORMALLY BE BETWEEN SEVEN AND TWELVE
YEARS. TO A LIMITED EXTENT, THE FUND MAY ALSO INVEST IN FOREIGN SECURITIES.
--------------------------------------
MARKET
HIGHLIGHTS
- The Federal Reserve Board raised the federal funds target rate by 75 basis
points during the past six months in response to strong economic growth and
a cyclical increase in inflation.
- Increased budget surpluses led the U.S. Treasury to announce the planned
repurchase of $30 billion of government debt.
- The variance in returns among industries and companies within the
corporate bond market has increased significantly in the past two years, as
companies that disappoint bondholders now see the price of their debt
decline more rapidly than in the past. This creates an excellent
opportunity to add value through detailed company research.
--------------------------------------------------------------------------------
(4) The Fund's average maturity includes the effect of futures and options.
(5) For purposes of this average rating, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
* The Lehman Brothers Corporate BAA Bond Index is an unmanaged index
comprised of all issues within the Lehman Brothers Corporate Bond Index
that are rated BAA by Moody's Investors Services, Inc. The Lipper Corporate
Debt Funds BBB Rated Index is an equally-weighted performance index of the
largest qualifying funds in this Lipper category. Source of the Lehman
index data is Standard & Poor's Micropal. Source of the Lipper index data
is Lipper Inc.
5
<PAGE>
THE STRONG GOVERNMENT SECURITIES FUND
-------------------------------------
PERSPECTIVES
FROM THE MANAGERS
/s/ Bradley C. Tank /s/ Thomas Sontag
Bradley C. Tank Thomas Sontag
Portfolio Co-manager Portfolio Co-manager
--------------------------------------------------------------------------------
Strong economic growth and continued wage pressures due to tight labor markets
led the Federal Reserve Board to raise the fed funds rate by 25 basis points on
each of three separate occasions over the past six months. These hikes pushed
other short-term Treasury rates higher, with the result that two-and five-year
Treasury rates rose by 86 and 57 basis points, respectively.
On the other end of the spectrum, a supply/demand imbalance caused yields to
decline in the long-maturity sector of the U.S. Treasury market. Treasury
Secretary Lawrence Summers announced the first-ever cash buyback of government
debt in January, focusing on longer-term debt. Furthermore, the Treasury
indicated that it would reduce the size of future 30-year debt auctions. These
actions created demand for long Treasuries while reducing their future supply.
To take advantage of these events, we employed what is referred to as a barbell
strategy in the Fund. This is accomplished by increasing exposure to the long
end of the yield curve (where demand is great and supply low) while holding
offsetting cash positions to avoid increasing the overall duration of the
portfolio. We positioned the Fund to have a duration shorter than the overall
market during the past six months.
Recent economic releases have indicated that U.S. GDP continued to grow at a
robust rate
-------------------------------------
WE BELIEVE THE FUND'S NON-TREASURY HOLDINGS CURRENTLY OFFER COMPELLING INCOME
OPPORTUNITIES.
-------------------------------------
[SIDENOTE]
FUND
HIGHLIGHTS
- Interest rates for Treasuries rose in general during this period. The
exception was the 30-year Treasury sector, which experienced a decline of
approximately 20 basis points in yield due to supply reduction.
- We responded by reducing the overall interest-rate risk of the portfolio.
The Fund also benefited from its exposure to the 30-year Treasury sector.
- The incremental income paid by the Fund's mortgage-backed securities offset
their declining prices.
-------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 4-30-00
<TABLE>
<CAPTION>
INVESTOR CLASS
--------------
<S> <C>
1-year 1.16%
5-year 6.47%
10-year 8.20%
Since Inception 8.03%
(on 10-29-86)
ADVISOR CLASS(1)
-----------------
1-year 0.78%
5-year 6.14%
10-year 7.87%
Since Inception 7.71%
(on 10-29-86)
INSTITUTIONAL CLASS(2)
---------------------
1-year 1.53%
5-year 6.55%
10-year 8.24%
Since Inception 8.06%
(on 10-29-86)
</TABLE>
-----------------------------------------
PORTFOLIO STATISTICS
AS OF 4-30-00
<TABLE>
<CAPTION>
INVESTOR CLASS
<S> <C>
30-day annualized yield(3) 6.30%
ADVISOR CLASS
30-day annualized yield(3) 6.02%
INSTITUTIONAL CLASS
30-day annualized yield(3) 6.71%
Average maturity(4) 6.0 years
Average
quality rating(5) AAA
</TABLE>
--------------------------------------------------------------------------------
(1) The performance of the Advisor Class shares prior to 8-30-99 is based on
the Fund's Investor Class shares' performance, restated for the higher
expense ratio of the Advisor Class shares. Please consult a prospectus for
information about all share classes.
(2) The performance of the Institutional Class shares prior to 8-30-99 is based
on the Fund's Investor Class shares' performance. Please consult a
prospectus for information about all share classes.
(3) Yields are historical and do not represent future yields, which will
fluctuate. Yields are as of 4-28-00. The Advisor Class has temporarily
absorbed expenses of 0.08%. Otherwise, the current yield would have been
5.94%, and returns would have been lower.
6
<PAGE>
of 5.4% in the first quarter of 2000. In the first quarter of 2000, the closely
watched Employment Cost Index jumped 1.4%. Until we see a cooling in the
economy, we believe that the Federal Reserve will continue raising short-term
rates in an attempt to get out in front of inflation. We concur with the general
perception that the Fed will raise rates by another 50 to 75 basis points over
the next six months. Accordingly, we will continue to position the Fund
defensively in terms of interest-rate risk.
We believe the Fund's non-Treasury holdings currently offer compelling income
opportunities. Ten-year government agency securities offer yields in the 7.25%
area, while agency mortgage-backed securities yield approximately 8.00%. We
believe these to be quite attractive from a longer-term perspective.
Thank you for your investment in the Strong Government Securities Fund. We are
proud to help you pursue your investment income goals.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 10-29-86 TO 4-30-00
[GRAPH]
<TABLE>
<CAPTION>
The Strong Lipper General
Government Lehman Brothers U.S. Government
Securities Fund Aggregate Bond Index Funds Index
<S> <C> <C> <C>
Sep 86 $10,000 $10,000 $10,000
Dec 86 $10,218 $10,187 $10,171
Dec 88 $11,683 $11,294 $10,903
Dec 90 $13,953 $14,094 $13,239
Dec 92 $17,781 $17,559 $16,102
Dec 94 $19,364 $18,709 $16,615
Dec 96 $23,873 $22,970 $19,849
Dec 98 $28,153 $27,376 $23,357
Apr 00 $28,395 $27,670 $23,212
</TABLE>
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Lehman Brothers Aggregate Bond Index and the Lipper General U.S. Government
Funds Index. Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares. To equalize the time periods, the indexes' performance was
prorated for the month of October 1986. This graph is based on Investor Class
shares only; performance for other classes will vary due to differences in fee
structures.
[SIDENOTE]
YOUR FUND'S
APPROACH
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 INVESTS PRIMARILY IN HIGHER-QUALITY BONDS ISSUED BY THE U.S. GOVERNMENT.
THE FUND'S DOLLAR-WEIGHTED AVERAGE MATURITY WILL NORMALLY BE BETWEEN FIVE AND
TEN YEARS. TO A LIMITED EXTENT, THE FUND MAY ALSO INVEST IN DOLLAR-DENOMINATED
FOREIGN SECURITIES.
---------------------------------------
MARKET
HIGHLIGHTS
- Continued strong GDP growth, combined with some negative consumer price
news, has prompted the Federal Reserve Board to continue raising the
federal funds rate.
- Bolstered by the recent budget surplus, the U.S. Treasury announced it
would buy back large amounts of previously issued long-term Treasury debt.
- This combination of the Federal Reserve pushing short-term rates higher,
and Treasury buyback demand driving long-term rates lower, caused an
inversion of the yield curve. At the end of the period, two-year Treasuries
yielded almost 0.75% more than 30-year Treasuries.
--------------------------------------------------------------------------------
(4) The Fund's average maturity includes the effect of futures and options.
(5) For purposes of this average rating, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
* The Lehman Brothers Aggregate Bond Index is an unmanaged index composed of
investment-grade securities from the Lehman Brothers Government/Corporate
Bond Index, Mortgage-Backed Securities Index, and Asset-Backed Securities
Index. The Lipper General U.S. Government Funds Index is an
equally-weighted performance index of the largest qualifying funds in this
Lipper category. Fund shares are neither insured nor guaranteed by the U.S.
government. Source of the Lehman index data is Standard & Poor's Micropal.
Source of the Lipper index data is Lipper Inc.
7
<PAGE>
THE STRONG SHORT-TERM BOND FUND
-------------------------------
PERSPECTIVES
FROM THE MANAGERS
/s/ Bradley C. Tank /s/ John T. Bender
Bradley C. Tank John T. Bender
Portfolio Co-manager Portfolio Co-manager
--------------------------------------------------------------------------------
The prices of short-maturity bonds are directly influenced by changes in
monetary policy. During the past six months, the Federal Reserve Board has
become more aggressive in its efforts to restrain the economy. We believe the
Fed will continue to increase short-term interest rates until consumption slows
and inflationary pressures in the labor market subside. This means the fed funds
rate will likely increase an additional 50 to 75 basis points over the next six
months.
The corporate and mortgage bond sectors often underperform the Treasury market
during periods of monetary tightening. Although these sectors have lagged
government securities in the past several months, in this case most of the
underperformance has been concentrated in longer-maturity bonds where the
Treasury's announced buyback of long-term government debt has caused investors
to reevaluate their long-maturity corporate holdings.
Relative underperformance in the corporate sector has been greater than in the
mortgage sector. Investors are beginning to question the sustainability of both
the economic expansion and growth in corporate earnings as the Fed continues to
raise interest rates. Avoiding problem credits and industries throughout the
period was a meaningful contributor to the Fund's performance as the benchmark
indices contain a measure of both. Diligent credit research is now more
important than ever in the corporate sector.
----------------------------------------
BY EMPHASIZING CORPORATE AND MORTGAGE SECURITIES, WE BOOSTED THE FUND'S INCOME
LEVEL, WHILE EXCELLENT RESEARCH IN THE CORPORATE AND MORTGAGE MARKET ALLOWED US
TO IDENTIFY SECURITIES THAT PERFORMED BETTER THAN THEIR MARKET AVERAGES.
----------------------------------------
[SIDENOTE]
FUND
HIGHLIGHTS
- The Federal Reserve Board increased the federal funds rate by 75 basis
points over the past six months. This caused the yields on two-year
Treasury notes to rise to 6.68%, an increase of almost 90 basis points. To
contend with this environment, we shortened the portfolio's duration
slightly.
- The Fund maintained a significant overweighting in the corporate and
mortgage sectors in order to provide a higher level of income.
----------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 4-30-00
<TABLE>
<CAPTION>
INVESTOR CLASS
--------------
<S> <C>
1-year 3.35%
5-year 6.43%
10-year 7.09%
Since Inception 7.21%
(on 8-31-87)
ADVISOR CLASS(1)
---------------
1-year 3.08%
5-year 6.14%
10-year 6.80%
Since Inception 6.91%
(on 8-31-87)
INSTITUTIONAL CLASS(2)
---------------------
1-year 3.74%
5-year 6.51%
10-year 7.13%
Since Inception 7.24%
(on 8-31-87)
</TABLE>
----------------------------------------
PORTFOLIO STATISTICS
AS OF 4-30-00
<TABLE>
<CAPTION>
INVESTOR CLASS
<S> <C>
30-day annualized yield(3) 7.59%
ADVISOR CLASS
30-day annualized yield(3) 7.26%
INSTITUTIONAL CLASS
30-day annualized yield(3) 8.02%
Average maturity(4) 1.7 years
Average
quality rating(5) A
</TABLE>
--------------------------------------------------------------------------------
(1) The performance of the Advisor Class shares prior to 8-30-99 is based on
the Fund's Investor Class shares' performance, restated for the higher
expense ratio of the Advisor Class shares. Please consult a prospectus for
information about all share classes.
(2) The performance of the Institutional Class shares prior to 8-30-99 is based
on the Fund's Investor Class shares' performance. Please consult a
prospectus for information about all share classes.
(3) Yields are historical and do not represent future yields, which will
fluctuate. Yields are as of 4-28-00. The Advisor Class has temporarily
absorbed expenses of 0.05%. Otherwise, the yield would have been 7.21%, and
returns would have been lower.
8
<PAGE>
Several strategic decisions contributed to the Fund's strong performance
relative to its benchmark. We reduced our duration in order to reduce the impact
of rising short-term interest rates on the Fund's share price. By emphasizing
corporate and mortgage securities, we boosted the Fund's income level, while
excellent research in the corporate and mortgage market allowed us to identify
securities that performed better than their market averages. Our mortgage
holdings were concentrated in the asset-backed and commercial mortgage-backed
areas. Within the corporate portfolio, we upgraded the quality of the portfolio
to include such companies as Ford and General Electric.
Short-maturity corporate and mortgage yields are higher today than in recent
years. These high yields should provide adequate protection against further
increases in short-term interest rates. We would expect to increase our
interest-rate sensitivity later in the year once it becomes clear that the Fed
has completed its monetary tightening.
Thank you for your continued investment in the Strong Short-Term Bond Fund. We
appreciate the opportunity to help you pursue your important financial goals.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 8-31-87 TO 4-30-00
[GRAPH]
<TABLE>
<CAPTION>
Lehman Brothers
The Strong 1-3 Year Government/Corporate LipperShort Investment
Short-Term Bond Fund Bond Index Grade Debt Funds Average
<S> <C> <C> <C>
Aug 87 $10,000 $10,000 $10,000
Dec 87 $10,318 $10,303 $10,246
Dec 89 $12,295 $12,156 $12,139
Dec 91 $14,837 $14,913 $14,601
Dec 93 $17,302 $16,741 $16,477
Dec 95 $19,064 $18,678 $18,182
Dec 97 $21,809 $20,946 $20,205
Dec 99 $23,849 $23,114 $22,021
Apr 00 $24,142 $23,451 $22,293
</TABLE>
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Lehman Brothers 1-3 Year Government/Corporate Bond Index and the Lipper Short
Investment Grade Debt Funds Average. Results include the reinvestment of all
dividends and capital gains distributions. Performance is historical and does
not represent future results. Investment returns and principal value vary, and
you may have a gain or loss when you sell shares. This graph is based on
Investor Class shares only; performance for other classes will vary due to
differences in fee structures.
[SIDENOTE]
YOUR FUND'S
APPROACH
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 CORPORATE, MORTGAGE- AND ASSET-BACKED,
AND U.S. GOVERNMENT BONDS. THE FUND INVESTS PRIMARILY IN HIGHER- AND
MEDIUM-QUALITY BONDS. THE FUND'S DOLLAR-WEIGHTED AVERAGE MATURITY WILL NORMALLY
BE BETWEEN ONE AND THREE YEARS. THE FUND MAY ALSO INVEST A PORTION OF ITS ASSETS
IN LOWER-QUALITY, HIGH-YIELD BONDS. THE MANAGERS FOCUS PRIMARILY UPON HIGH-YIELD
BONDS RATED BB WITH POSITIVE OR IMPROVING CREDIT FUNDAMENTALS. TO A LIMITED
EXTENT, THE FUND MAY ALSO INVEST IN FOREIGN SECURITIES.
----------------------------------------
MARKET
HIGHLIGHTS
- A convergence of robust economic growth, tight labor markets, and rising
commodity prices contributed to the Federal Reserve's decision to raise
rates during the period. Short-term bond yields are more sensitive to
changes in Fed policy than those of longer-maturity bonds.
- The U.S. Treasury announced a plan to repurchase $30 billion of
long-maturity government bonds.
- This combination of events caused two-year yields to rise almost 90 basis
points even as 30-year government yields declined by 20 basis points. The
yield curve is now inverted by approximately 70 basis points.
--------------------------------------------------------------------------------
(4) The Fund's average maturity includes the effect of futures.
(5) For purposes of this average rating, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
* The Lehman Brothers 1-3 Year Government/Corporate Bond Index is an
unmanaged index generally representative of government and investment-grade
corporate securities with maturities of one to three years. The Lipper
Short Investment Grade Debt Funds Average represents funds that invest at
least 65% of assets in investment-grade debt issues (rated in the top four
grades) with dollar-weighted average maturities of less than three years.
Source of the Lehman index data is Bloomberg. Source of the Lipper index
data is Lipper Inc.
9
<PAGE>
THE STRONG HIGH-YIELD BOND FUND
-------------------------------
PERSPECTIVES
FROM THE MANAGERS
/s/ Jeffrey A. Koch /s/ Thomas M. Price
Jeffrey A. Koch Thomas M. Price
Portfolio Co-manager Portfolio Co-manager
--------------------------------------------------------------------------------
High-yield bonds suffered through lackluster performance over the past six
months, as the twin problems of rising interest rates and larger credit-risk
premiums took a bite out of returns. The Federal Reserve's efforts to combat
inflation remained front and center on the minds of market participants.
The rise in Treasury rates was not nearly as dramatic as the rise in credit-risk
premiums, however. The yield on the Lehman Brothers High-Yield Bond Index rose
to 12.72% from 11.19% during the six-month period. The rise in Treasury yields
was responsible for 0.19% of the index's yield increase, while 1.34% of the
increase was tied to a rise in credit-risk premiums--the yield in excess of
Treasury yields paid to high-yield bond investors as compensation for taking on
credit risk. Although the Federal Reserve is poised to continue raising
short-term interest rates, it appears to us that credit-risk premiums are at or
near their peaks for this cycle. We believe that, as a result, high-yield bonds
represent very good values at this time.
The market environment over the past 18 months has been characterized by a
generally conservative approach to financing new issues. Terms are very
attractive (with high yields and well-structured deals), and credit quality is
generally strong. Over the past six months, media and telecom companies have
represented a disproportionate share of the new-issue calendar. These have been
among the best-performing sectors of the market over the past two years, and
investors continue to favor these issues over those from other sectors. This
-----------------------------------
THE FEDERAL RESERVE'S EFFORTS TO COMBAT INFLATION REMAINED FRONT AND CENTER ON
THE MINDS OF MARKET PARTICIPANTS.
-----------------------------------
[SIDENOTE]
FUND
HIGHLIGHTS
- We maintained our emphasis on single-B-rated securities and the
telecommunications sector. Within the telecommunications sector, we
targeted competitive local exchange carriers, cable TV, and mobile wireless
communications companies.
- Issue selection was key to our outperformance during the period. We
continue to focus on companies with rapid deleveraging potential.
-----------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 4-30-00
<TABLE>
<CAPTION>
INVESTOR CLASS
--------------
<S> <C>
1-year 0.83%
Since Inception 11.81%
(on 12-28-95)
ADVISOR CLASS(1)
---------------
1-year 0.47%
Since Inception 11.50%
(on 12-28-95)
</TABLE>
-----------------------------------
PORTFOLIO STATISTICS
AS OF 4-30-00
<TABLE>
<CAPTION>
INVESTOR CLASS
<S> <C>
30-day annualized yield(2) 11.92%
ADVISOR CLASS
30-day annualized yield(2) 11.93%
Average maturity 6.6 years
Average
quality rating(3) B
</TABLE>
--------------------------------------------------------------------------------
(1) The performance of the Advisor Class shares prior to 2-28-00 is based on
the Fund's Investor Class shares' performance, restated for the higher
expense ratio of the Advisor Class shares. Please consult a prospectus for
information about all share classes.
(2) Yields are historical and do not represent future yields, which will
fluctuate. Yields are as of 4-28-00.
(3) For purposes of this average rating, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
10
<PAGE>
combination of attractive terms and good credit quality bode well for the
near-term health of the overall market.
We have geared our credit research toward finding companies that generate strong
free cash flow growth or that benefit from strong and growing asset value. We
also look for companies in industries that we expect to perform well in the
future and provide fertile ground for investment opportunities. We believe the
combination of good industry conditions and strong companies should result in a
good investment climate for the Fund in the near term.
Over the next six months, we expect the Federal Reserve to continue raising
interest rates in an effort to cool the economy from its blistering pace to a
more moderate and sustainable rate of growth going forward. High-yield bonds
offer attractive value and should benefit as investors begin to embrace this
outlook.
Thank you for investing in the Strong High-Yield Bond Fund. We value the trust
you have placed in us.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 12-28-95 TO 4-30-00
[GRAPH]
<TABLE>
<CAPTION>
The Strong Lehman Brothers Lipper High Current
High-Yield Bond Fund High-Yield Bond Index Yield Funds Index
<S> <C> <C> <C>
Nov 95 $10,000 $10,000 $10,000
Dec 95 $10,031 $10,015 $10,015
Dec 96 $12,724 $11,152 $11,314
Dec 97 $14,758 $12,575 $12,805
Dec 98 $15,211 $12,810 $12,795
Dec 99 $16,399 $13,116 $13,408
Apr 00 $16,244 $12,831 $13,146
</TABLE>
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Lehman Brothers High-Yield Bond Index and the Lipper High Current Yield Funds
Index. Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares. To equalize the time periods, the indexes' performance was
prorated for the month of December 1995. This graph is based on Investor Class
shares only; performance for other classes will vary due to differences in fee
structures.
[SIDENOTE]
YOUR FUND'S
APPROACH
THE STRONG HIGH-YIELD BOND FUND SEEKS TOTAL RETURN BY INVESTING FOR A HIGH LEVEL
OF CURRENT INCOME AND CAPITAL GROWTH. THE FUND INVESTS PRIMARILY IN MEDIUM- AND
LOWER-QUALITY CORPORATE BONDS. THE MANAGERS FOCUS PRIMARILY UPON HIGH-YIELD
BONDS WITH POSITIVE OR IMPROVING CREDIT FUNDAMENTALS. THE FUND WILL TYPICALLY
MAINTAIN A DOLLAR-WEIGHTED AVERAGE MATURITY BETWEEN FIVE AND TEN YEARS. THE FUND
INVESTS A PORTION OF ITS ASSETS (UP TO 20%) IN COMMON STOCKS. TO A LIMITED
EXTENT, THE FUND MAY ALSO INVEST IN FOREIGN SECURITIES.
-----------------------------------------
MARKET
HIGHLIGHTS
- The Federal Reserve raised interest rates three times during the period,
taking the federal funds rate to 6.00% from 5.25%. Longer-term interest
rates rose, as well, with the ten-year Treasury moving to 6.21% from 6.05%.
- Yield premiums on high-yield bonds rose during the period, as the spread
between the Lehman Brothers High-Yield Bond Index and ten-year Treasuries
widened to 6.51% from 5.17%. This left the yield on the index at 12.72%.
- New bond issuance was reduced dramatically from the same period one year
earlier and was dominated by media and telecom companies.
--------------------------------------------------------------------------------
* The Lehman Brothers High-Yield Bond Index is an unmanaged index generally
representative of corporate bonds rated below investment grade. The Lipper
High Current Yield Funds Index is an equally-weighted performance index of
the largest qualifying funds in this Lipper category. Source of the Lehman
index data is Standard & Poor's Micropal. Source of the Lipper index data
is Lipper Inc.
11
<PAGE>
THE STRONG SHORT-TERM HIGH YIELD BOND FUND
------------------------------------------
PERSPECTIVES
FROM THE MANAGERS
/s/ Jeffrey A. Koch /s/ Thomas M. Price
Jeffrey A. Koch Thomas M. Price
Portfolio Co-manager Portfolio Co-manager
--------------------------------------------------------------------------------
The combination of rising interest rates and widening credit-risk premiums cut
into the performance of high-yield bonds over the past six months. The Federal
Reserve continued to play a leading role, raising the federal funds rate by 75
basis points over the period. This continued effort to stave off inflation had
an impact on three-year and ten-year Treasury rates, as well.
Dwarfing the rise in Treasury yields, however, was the rise in credit-risk
premiums. The yield on the Lehman Brothers High-Yield Bond Index rose to 12.72%
from 11.19% over the six months--but just 19 basis points of that rise was
attributable to interest-rate hikes. The remainder reflected an increase in risk
premiums--the additional yield investors demand to compensate for the higher
risk associated with high-yield bonds. The Federal Reserve has continued to
raise short-term interest rates, but we believe the rise in risk premiums is at
or near an end for this cycle. This means that high-yield bonds currently
reflect attractive values.
One of the barometers that we use to judge the appetite for risk in the
high-yield marketplace is the new issue calendar. By carefully studying new
issues that come to market, we can learn a great deal about the market's stance
toward credit risk. Over the past 18 months, for example, the market environment
has been conservative, with high yields paid, well-structured deals, and
generally strong credit quality. This combination bodes well for the market's
overall near-term health.
------------------------------------------
... THE MARKET ENVIRONMENT HAS BEEN CONSERVATIVE, WITH HIGH YIELDS PAID,
WELL-STRUCTURED DEALS, AND GENERALLY STRONG CREDIT QUALITY. THIS COMBINATION
BODES WELL FOR THE MARKET'S OVERALL NEAR-TERM HEALTH.
------------------------------------------
[SIDENOTE]
FUND
HIGHLIGHTS
- We focus on finding investments with attractive income potential and low
volatility relative to the high-yield market as a whole. To this end, we
emphasize high-coupon, callable bonds and shorter-maturity issues.
- Our average credit quality is BB, which represents the highest-rated sector
of the high-yield market.
- Media and telecommunications are key sectors for the Fund. Many of the
companies in these industries are poised to refinance bonds that were
issued three to five years ago.
------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
AS OF 4-30-00
<TABLE>
<CAPTION>
INVESTOR CLASS
--------------
<S> <C>
1-year 2.41%
Since Inception 7.84%
(on 6-30-97)
ADVISOR CLASS(1)
---------------
1-year 2.09%
Since Inception 7.51%
(on 6-30-97)
</TABLE>
------------------------------------------
PORTFOLIO STATISTICS
AS OF 4-30-00
<TABLE>
<CAPTION>
INVESTOR CLASS
<S> <C>
30-day annualized yield(2) 9.82%
ADVISOR CLASS
30-day annualized yield(2) 9.43%
Average maturity 2.2 years
Average
quality rating(3) BB
</TABLE>
--------------------------------------------------------------------------------
(1) The performance of the Advisor Class shares prior to 2-28-99 is based on
the Fund's Investor Class shares' performance, restated for the higher
expense ratio of the Advisor Class shares. Please consult a prospectus for
information about all share classes.
(2) Yields are historical and do not represent future yields, which will
fluctuate. Yields are as of 4-28-00.
(3) For purposes of this average rating, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
12
<PAGE>
We continue to find attractive investments for the Fund. There are many
high-coupon callable bonds nearing their call dates as a result of heavy
issuance activity three to five years ago, especially in the media and
telecommunications sectors. An example would be Qwest Communications, with a
10 7/8% coupon and due 4/1/07. These bonds were issued in 1997, when Qwest
was a single-B-rated company. Qwest has since been upgraded, and is now rated
BB. These bonds first become callable on 4/1/02, and Qwest is likely to
refinance them at a lower rate.
Over the next six months, we expect the Federal Reserve to continue raising
interest rates in its ongoing effort to cool the economy. We expect the economy
to slow to a more moderate and sustainable rate of growth. Our portfolio, which
is designed to offer a low degree of volatility, is positioned well for the
environment we foresee.
Thank you for your investment in the Strong Short-Term High Yield Bond
Fund.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
FROM 6-30-97 TO 4-30-00
[GRAPH]
<TABLE>
<CAPTION>
The Strong Short-Term Short-Term High Lipper High Current
High Yield Bond Fund Yield Bond Index II Yield Funds Index
<S> <C> <C> <C>
Jun 97 $10,000 $10,000 $10,000
Dec 97 $10,777 $10,502 $10,699
Jun 98 $11,324 $10,933 $11,211
Dec 98 $11,680 $10,993 $10,691
Jun 99 $12,074 $11,347 $11,104
Dec 99 $12,301 $11,568 $11,202
Apr 00 $12,385 $11,448 $10,984
</TABLE>
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Short-Term High Yield Bond Index II and the Lipper High Current Yield Funds
Index. Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares. We are replacing the Short-Term High Yield Bond Index with
the Short-Term High Yield Bond Index II as we believe the Short-Term High Yield
Bond Index II more accurately reflects the fund's investment program. This graph
is based on Investor Class shares only; performance for other classes will vary
due to differences in fee structures.
[SIDENOTE]
YOUR FUND'S
APPROACH
THE STRONG SHORT-TERM HIGH YIELD 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 SHORT- AND INTERMEDIATE-TERM CORPORATE BONDS. THE
FUND INVESTS PRIMARILY IN MEDIUM- AND LOWER-QUALITY, HIGH-YIELD BONDS. THE
MANAGERS FOCUS PRIMARILY UPON HIGH-YIELD BONDS WITH POSITIVE OR IMPROVING CREDIT
FUNDAMENTALS. THE FUND'S DOLLAR-WEIGHTED AVERAGE MATURITY WILL NORMALLY BE
BETWEEN ONE AND THREE YEARS. TO A LIMITED EXTENT, THE FUND MAY ALSO INVEST IN
FOREIGN SECURITIES.
----------------------------------------
MARKET
HIGHLIGHTS
- The Federal Reserve raised interest rates three times during the period, by
a total of 75 basis points. The yield on three-year Treasuries rose to
6.62% from 5.91%.
- Yield premiums on high-yield bonds rose during the period.
- New issuance activity fell dramatically from the levels seen a year
earlier. Tender or refinancing activity slowed, as well.
--------------------------------------------------------------------------------
* The Short-Term High Yield Bond Index II is a market value weighted blend of
the Merrill Lynch High Yield U.S. Corporates, Cash Pay, BB Rated, 1-5 Years
Index and the Merrill Lynch High Yield U.S. Corporates, Cash Pay, B Rated,
1-5 Years Index. It is an unmanaged index generally representative of
corporate debt rated below investment-grade with maturities of one to five
years, which more closely approximates the performance of the Strong
Short-Term High Yield Bond Fund. The Lipper High Current Yield Funds Index
is an equally-weighted performance index of the largest qualifying funds in
this Lipper category. Source of the Short-Term High Yield Bond Fund Index
II is Bloomberg. Source of the Lipper High Current Yield Funds Index is
Lipper Inc.
13
<PAGE>
--------------------------------------------------------------------------------
BOND GLOSSARY
BOND QUALITY RATINGS--There are services that analyze the financial condition of
a bond's issuer and then assign it a rating. The best-known rating agencies are
Standard and Poors and Moody's. The highest-quality bonds are rated AAA (S&P) or
Aaa (Moody's). The scale descends to AA, A, then BBB, and so on, down to D.
Bonds with a rating of BBB or higher are considered investment-grade. Bonds
rated BB and below are considered "junk bonds." Typically, the lower a bond's
rating, the higher yield it must pay in order to compensate the bondholder for
the added risk.
MATURITY--Like a loan, a bond must be paid off on a certain date. A bond's
maturity is the time remaining until it is paid off. Bonds typically mature in a
range from overnight to 30 years from now. Typically, bonds with longer
maturities will have higher yields and larger price changes in reaction to
interest-rate changes. In rare situations, shorter-term bonds will have higher
yields; this is known as an inverted yield curve (see definition that follows).
DURATION--Duration is similar to maturity, but also accounts for the semi-annual
interest payments made by most bonds. Duration is a useful tool for determining
a bond or a bond fund's sensitivity to interest-rate changes. The higher the
duration, the more a bond's price will fluctuate when interest rates change.
TREASURY SPREAD--The Treasury spread is the difference in yield between a
Treasury bond (issued by the federal government) and a bond with an equal
maturity, but from another category, such as a corporate bond. This calculation
is used to measure the prices of corporate bonds, mortgage-backed securities,
and other non-government issues relative to Treasuries. Higher spreads occur in
uncertain times when investors buy Treasuries for their safety and sell other
types of bonds.
YIELD--Yield is the income your investment is generating. It is calculated by
taking the income paid by a bond in a given period of time, often 30 days,
annualizing it, and stating it as a percentage of the money invested.
YIELD CURVE--The yield curve is a graph that plots the yields of Treasury bonds
against their maturities. Under normal circumstances, this line will slope
upward, reflecting longer-maturity bonds having higher yields. In rare
circumstances, such as in a time of deflation, the yield curve may slope
downward, or "invert." The steepness of the yield curve shifts depending on
economic trends and outlooks. Properly positioned, a bond investor can profit
from these shifts.
14
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES April 30, 2000 (Unaudited)
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
STRONG BOND FUND
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Corporate Bonds 37.5%
@Entertainment, Inc. Senior Discount Notes,
Series B, Zero %, Due 7/15/08 (Rate Reset
Effective 7/15/03) $1,000,000 $ 655,000
APCOA/Standard Parking, Inc. Senior
Subordinated Notes, 9.25%, Due 3/15/08 1,500,000 712,500
Allied Waste North America, Inc. Senior
Subordinated Notes, 10.00%, Due 8/01/09 500,000 341,250
Atlas Air, Inc. Senior Notes, 10.75%, Due 8/01/05 275,000 276,375
Avencia Group PLC Notes, 11.00%,
Due 7/01/09 (b) 1,000,000 1,020,000
Bank of America Corporation Subordinated
Notes, 7.80%, Due 2/15/10 1,420,000 1,419,161
Bear Stearns Company, Inc. Floating Rate
Notes, 6.63%, Due 3/28/03 2,000,000 1,995,694
Bellsouth Capital Funding Corporation
Debentures, 7.875%, Due 2/15/30 1,165,000 1,174,750
Capital One Floating Rate Subordinated Capital
Income Securities, 7.5988%, Due 2/01/27 (b) 1,500,000 1,282,866
Cendant Corporation Notes, 7.75%,
Due 12/01/03 (c) 4,112,000 4,055,222
Columbia/HCA Healthcare Corporation
Notes, 8.36%, Due 4/15/24 1,000,000 899,250
Cumulus Media, Inc. Senior Subordinated
Notes, 10.375%, Due 7/01/08 1,000,000 912,500
DTE Capital Corporation Notes, 6.17%,
Due 6/15/03 (b) 845,000 807,981
El Paso Energy Corporation Senior
Notes, 6.625%, Due 7/15/01 2,035,000 2,009,683
Ford Motor Credit Company Notes, 5.80%,
Due 1/12/09 1,185,000 1,034,909
Fresenius Medical Care Capital Trust II
Guaranteed Preferred Securities, 7.875%,
Due 2/01/08 500,000 441,250
GS Escrow Corporation Senior Notes, 7.125%,
Due 8/01/05 2,000,000 1,756,582
Global Crossing Holdings, Ltd. Senior Yankee
Notes, 9.625%, Due 5/15/08 500,000 492,500
Graham Packaging Holdings Company/GPC
Capital Corporation II Senior Discount
Notes, Zero %, Due 1/15/09 (Rate Reset
Effective 1/15/03) 1,000,000 565,000
Hydro-Quebec Yankee Debentures, Series IF,
8.00%, Due 2/01/13 955,000 976,888
Intermedia Communications, Inc. Senior
Notes, 8.60%, Due 6/01/08 500,000 457,500
International Bank for Reconstruction and
Development Unsubordinated Yankee
Notes, 7.00%, Due 1/27/05 1,500,000 1,485,309
Lehman Brothers Holdings, Inc. Senior Notes,
8.80%, Due 3/01/15 450,000 469,214
Level 3 Communications, Inc. Senior Notes,
11.00%, Due 3/15/08 (b) 2,000,000 1,945,000
Lockheed Martin Corporation Bonds, 8.50%,
Due 12/01/29 1,420,000 1,400,333
Lockheed Martin Corporation Notes, 7.95%,
Due 12/01/05 1,330,000 1,311,723
Lyondell Chemical Company Senior Secured
Notes, Series B, 9.875%, Due 5/01/07 2,000,000 1,977,500
MCI Worldcom, Inc. Notes, 6.125%,
Due 4/15/12 (Remarketing Date 4/15/02) 685,000 666,369
MCI Worldcom, Inc. Senior Notes, 7.75%,
Due 4/01/27 1,215,000 1,215,487
MCI Worldcom, Inc. Unsecured Senior
Debentures, 7.125%, Due 6/15/27 605,000 597,150
Metromedia Fiber Network, Inc. Senior
Notes, 10.00%, Due 12/15/09 1,250,000 1,196,875
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
MetroNet Communications Corporation
Senior Yankee Notes:
12.00%, Due 8/15/07 $ 755,000 $ 850,085
10.625%, Due 11/01/08 1,350,000 1,498,454
Motors and Gears, Inc. Senior Notes,
Series C, 10.75%, Due 11/15/06 750,000 716,250
NTC Capital I Floating Rate Notes,
6.8013%, Due 1/15/27 520,000 499,087
NTL Communications Corporation
Senior Notes, Series B, 11.50%, Due 10/01/08 500,000 510,000
National Wine & Spirits, Inc. Senior
Notes, 10.125%, Due 1/15/09 750,000 720,000
Nextlink Communications, Inc. Senior
Discount Notes, Zero %, Due 6/01/09
(Rate Reset Effective 6/01/04) 1,000,000 590,000
Nextlink Communications, Inc. Senior
Notes, 10.75%, Due 6/01/09 1,000,000 987,500
Norcen Energy Resources, Ltd. Yankee
Debentures, 7.375%, Due 5/15/06 1,435,000 1,366,931
Northpoint Communications Group, Inc.
Senior Notes, 12.875%, Due 2/15/10 (b) 1,000,000 895,000
Park Place Entertainment Corporation Senior
Notes:
7.95%, Due 8/01/03 1,500,000 1,456,396
8.50%, Due 11/15/06 1,750,000 1,683,927
Pemex Finance, Ltd. Notes, 7.80%,
Due 2/15/13 (b) 655,000 650,611
Pogo Producing Company Senior Subordinated
Notes, 10.375%, Due 2/15/09 500,000 511,250
Premier International Foods PLC Senior Yankee
Notes, 12.00%, Due 9/01/09 (b) 1,000,000 950,000
Riggs Capital Trust II Preferred Securities,
Series B, 8.875%, Due 3/15/27 685,000 568,663
Snyder Oil Corporation Senior Subordinated
Notes, 8.75%, Due 6/15/07 750,000 740,625
Spanish Broadcasting System, Inc. Senior
Subordinated Notes, 9.625%, Due 11/01/09 1,000,000 985,000
Spectrasite Holdings, Inc. Senior Discount
Notes, Zero %, Due 3/15/10 (Rate
Reset Effective 3/15/05) (b) 2,000,000 1,045,000
Station Casinos, Inc. Senior Subordinated
Notes, 9.75%, Due 4/15/07 750,000 753,750
Stop & Shop Companies, Inc. Senior
Subordinated Notes, 9.75%, Due 2/01/02 530,000 546,075
SunAmerica, Inc. Debentures, 5.60%,
Due 7/31/97 (c) 2,145,000 1,525,189
SunTrust Capital III Floating Rate Notes,
6.80%, Due 3/15/28 (c) 2,125,000 1,999,901
Telewest PLC Senior Discount Debentures,
Zero %, Due 10/01/07 (Rate Reset
Effective 10/01/00) 1,000,000 945,000
360networks, Inc. Senior Yankee Notes, 13.00%,
Due 5/01/08 (b) 1,250,000 1,234,375
Transwestern Publishing Company LP/TWP
Capital Corporation Senior Subordinated
Notes, Series D, 9.625%, Due 11/15/07 850,000 811,750
Tri-State Outdoor Media Group, Inc. Senior
Notes, 11.00%, Due 5/15/08 250,000 240,000
Tricon Global Restaurants, Inc. Senior
Notes, 7.45%, Due 5/15/05 1,500,000 1,377,551
USX Marathon Group Notes, 6.65%, Due 2/01/06 15,000 13,995
United Industries Corporation Senior
Subordinated Notes, Series B, 9.875%,
Due 4/01/09 1,000,000 735,000
United International Holdings, Inc. Senior
Secured Discount Notes, Series B, Zero %,
Due 2/15/08 (Rate Reset Effective 2/15/03) 2,000,000 1,310,000
15
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 2000 (Unaudited)
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
STRONG BOND FUND (continued)
------------------------------------------------------------------------------------
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
United Mexican States Yankee Bonds,
11.375%, Due 9/15/16 $ 750,000 $ 850,500
Universal Compression, Inc. Senior Discount
Notes, Zero %, Due 2/15/08 (Rate Reset
Effective 2/15/03) 2,500,000 1,575,000
Verio, Inc. Senior Notes, 11.25%, Due 12/01/08 1,000,000 990,000
Viatel, Inc. Senior Notes, 11.25%, Due 4/15/08 1,000,000 915,000
Voicestream Wireless Corporation/Voicestream
Wireless Holdings Corporation Senior
Notes, 10.375%, Due 11/15/09 (b) 2,000,000 2,040,000
Wal-Mart Stores, Inc. Senior Notes, 6.875%,
Due 8/10/09 1,070,000 1,034,326
Williams Communications Group, Inc. Senior
Notes, 10.875%, Due 10/01/09 1,000,000 1,010,000
Winstar Communications, Inc. Senior Discount
Notes, Zero %, Due 4/15/10 (Rate Reset
Effective 4/15/05) (b) 1,924,000 870,610
Winstar Communications, Inc. Senior Notes,
12.75%, Due 4/15/10 (b) 657,000 630,720
------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $77,272,389) 74,185,342
------------------------------------------------------------------------------------
Convertible Bonds 1.0%
Bell Atlantic Financial Services, Inc. Senior
Notes, 5.75%, Due 4/01/03 (b) (c) 2,000,000 2,025,000
------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $2,017,382) 2,025,000
------------------------------------------------------------------------------------
Non-Agency Mortgage &
Asset-Backed Securities 23.0%
Asset Securitization Corporation Commercial
Mortgage Pass-Thru Certificates:
Series 1995-MD4, Class A-1, 7.10%, Due 8/13/29 1,673,659 1,638,721
Series 1996-MD6, Class A-1B, 6.88%,
Due 11/13/26 1,045,000 1,020,658
Bear Stearns Mortgage Securities, Inc. Mortgage
Pass-Thru Certificates, Series 1995-1, Class 2-P,
Principal Only, Due 7/25/10 161,076 130,003
Cistron Biotechnology, Inc. Asset-Backed Notes,
Series 1997-A, Class A-6, 6.35%, Due 4/15/11 445,000 439,079
DLJ Commercial Mortgage Corporation
Commercial Mortgage Pass-Thru Certificates,
Series 1999-CG3, Class A-1B, 7.34%,
Due 9/10/09 6,960,000 6,790,698
The Equitable Life Assurance Society of the
United States Floating Rate Notes,
Series 174, Class A2, 6.49%, Due 5/15/03 (b) 1,500,000 1,502,251
Fleet Credit Card Master Trust II Floating
Rate Asset-Backed Certificates, Series 2000-B,
Class A, 6.2636%, Due 9/15/05 1,285,000 1,285,000
Headlands Mortgage Securities, Inc. Mortgage
Pass-Thru Certificates, Series 1997-5,
Class AII1, 6.75%, Due 11/25/27 503,193 489,810
MBNA Master Credit Card Trust II Asset-Backed
Floating Rate Certificates, Series 1996-J,
Class A, 6.28%, Due 2/15/06 7,675,000 7,685,937
Metris Master Trust Floating Rate Asset-Backed
Securities, Series 1999-2, Class A, 6.65%,
Due 1/20/10 1,090,000 1,091,150
Morgan Stanley Capital I, Inc. Commercial
Mortgage Pass-Thru Certificates,
Series 1999-FNV1, Class A2, 6.53%, Due 3/15/31 870,000 803,514
Mountain Capital CLO I, Ltd./Mountain Capital
CLO I Corporation Floating Rate Bonds,
Series 1A, Class A-1, 6.8813%, Due 4/15/11 (b) 5,000,000 5,012,500
Nomura Asset Securities Corporation,
Series 1994-4B, Class 4PO, Principal Only,
Due 9/25/24 79,943 61,507
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Norwest Asset Securities Corporation Mortgage
Pass-Thru Certificates:
Series 1999-14, Class B3, 6.50%, Due 6/25/29 $2,080,224 $ 1,738,891
Series 1999-16, Class B3, 6.50%, Due 6/25/29 1,041,326 870,116
Series 1999-21, Class B3, 7.00%, Due 9/25/29 1,479,268 1,302,762
PECO Energy Transition Trust Transition Bonds,
Series 2000-A, Class A1, 7.18%, Due 9/01/03 2,810,000 2,809,438
PNC Mortgage Securities Corporation Mortgage
Pass-Thru Certificates:
Series 1998-1, Class 4B4, 6.75%, Due 3/25/13 (b) 342,099 269,081
Series 1998-11, Class 2B4, 6.25%, Due 11/25/13 (b) 351,673 264,468
Resolution Trust Corporation Mortgage Pass-Thru
Securities, Inc. Commercial Certificates:
Series 1995-C1, Class C, 6.90%, Due 2/25/27 1,000,000 985,255
Series 1995-C2, Class D, 7.00%, Due 5/25/27 968,557 955,409
Resolution Trust Corporation Mortgage Pass-Thru
Securities, Inc. Variable Rate Commercial
Certificates, Series 1992-C8, Class A-2, 7.495%,
Due 12/25/23 78,640 78,716
Rural Housing Trust 1987-1 Senior Mortgage
Pass-Thru Certificates, Series 1, Class D, 6.33%,
Due 4/01/26 1,118,867 1,097,446
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Thru Certificates, Series
1996-LB2, Class A-5, 7.25%, Due 10/25/26 453,388 451,767
Student Loan Marketing Association Student
Loan Trust Loan-Backed Floating Rate Notes,
Series 1998-1, Class A-1, 6.5137%, Due 1/25/07 4,690,806 4,686,467
Summit CBO I, Ltd./Summit CBO I Funding
Corporation Second Priority Senior Secured
Floating Rate Bonds, Series 1A, Class B,
7.0338%, Due 5/23/11 (b) 2,000,000 1,926,560
USAA Auto Loan Guarantor Trust Pass-Thru
Certificates, Series 1999-1, Class A, 6.10%,
Due 2/15/06 64,907 64,124
------------------------------------------------------------------------------------
Total Non-Agency Mortgage &
Asset-Backed Securities (Cost $45,646,190) 45,451,328
------------------------------------------------------------------------------------
Municipal Bonds 0.5%
New Jersey Economic Development Authority
State Pension Funding Revenue, 7.425%,
Due 2/15/29 975,000 940,700
------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $1,065,905) 940,700
------------------------------------------------------------------------------------
United States Government &
Agency Issues 36.3%
FHLMC Corporate Notes, 6.875%, Due 1/15/05 1,930,000 1,901,729
FHLMC Participation Certificates:
6.25%, Due 6/15/12 thru 9/15/22 (c) 2,640,000 2,469,830
7.00%, Due 1/15/15 (e) 6,000,000 5,861,280
7.20%, Due 10/01/06 2,603,637 2,562,135
10.50%, Due 8/01/19 747,744 800,033
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
6.085%, Due 10/01/08 68,852 62,788
6.52%, Due 7/25/08 965,323 929,389
6.95%, Due 10/01/06 54,793 54,464
7.085%, Due 9/01/06 833,384 826,617
7.50%, Due 12/25/29 thru 03/25/30 (e) 9,570,000 9,361,270
8.00%, Due 4/01/17 thru 9/01/23 (c) 2,511,467 2,518,966
8.33%, Due 7/15/20 (c) 2,224,196 2,255,754
8.50%, Due 8/01/12 thru 5/01/26 (c) 3,793,923 3,855,011
9.00%, Due 12/01/16 thru 8/01/17 (c) 1,973,659 2,037,758
9.50%, Due 6/01/05 531,797 545,873
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate Mortgage
Certificates, Pool #92117, 7.324%, Due 6/01/18 87,469 90,319
16
<PAGE>
------------------------------------------------------------------------------------
STRONG BOND FUND (continued)
------------------------------------------------------------------------------------
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Bank Bonds,
5.875%, Due 9/17/01 $ 585,000 $ 576,853
Federal Home Loan Bank Medium-Term
Notes, 7.903%, Due 8/01/25 679,189 689,264
GNMA Guaranteed Pass-Thru Certificates:
7.50%, Due 10/15/29 (e) 6,700,000 6,586,971
8.00%, Due 12/25/29 (e) 5,780,000 5,794,450
United States Treasury Bonds:
6.125%, Due 8/15/29 1,995,000 2,000,612
7.125%, Due 2/15/23 1,200,000 1,325,626
7.625%, Due 11/15/22 2,575,000 2,992,634
9.875%, Due 11/15/15 1,100,000 1,479,844
United States Treasury Notes:
5.875%, Due 11/15/04 4,065,000 3,959,566
6.50%, Due 10/15/06 thru 2/15/10 10,240,000 10,314,786
------------------------------------------------------------------------------------
Total United States Government &
Agency Issues (Cost $72,511,583) 71,853,822
------------------------------------------------------------------------------------
Foreign Government Issues 3.7%
Republic of Germany Bonds, Series 97, 6.00%,
Due 7/04/07 4,500,000 EUR 4,259,204
United Kingdom Treasury Bonds, 7.00%,
Due 6/07/02 2,000,000 GBP 3,156,091
------------------------------------------------------------------------------------
Total Foreign Government Issues (Cost $8,054,030) 7,415,295
------------------------------------------------------------------------------------
Preferred Stocks 1.7%
Caisse National De Credit Agricole Sponsored
ADR 10.375% Series A (b) 70,000 1,785,000
R&B Falcon Corporation 13.875% Senior 575 615,121
Superior Healthcare Management 7.75% Series A
(Acquired 12/30/97; Cost $1,006,460) (b) 1,000 1,009,270
------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $3,555,299) 3,409,391
------------------------------------------------------------------------------------
Common Stocks 0.0%
OpTel, Inc. Non-Voting (Acquired 4/14/98;
Cost $20,000) (b) (f) 500 2,500
------------------------------------------------------------------------------------
Total Common Stocks (Cost $20,000) 2,500
------------------------------------------------------------------------------------
Warrants 0.1%
MetroNet Communications Corporation Warrants,
Expire 8/15/07 350 52,500
R&B Falcon Corporation Warrants,
Expire 5/01/09 (b) 500 175,000
------------------------------------------------------------------------------------
Total Warrants (Cost $41,254) 227,500
------------------------------------------------------------------------------------
Short-Term Investments (a) 10.3%
Commercial Paper 0.7%
Interest Bearing, Due Upon Demand
Sara Lee Corporation, 5.76% $ 1,103,500 1,103,500
Warner Lambert Company, 5.76% 93,300 93,300
Wisconsin Electric Power Company, 5.76% 202,700 202,700
-----------
1,399,500
Corporate Bonds 0.1%
ARA Services, Inc. Guaranteed Notes, 10.625%,
Due 8/01/00 134,000 134,508
Repurchase Agreements 9.4%
ABN-AMRO Inc. (Dated 4/28/00), 5.78%,
Due 5/01/00 (Repurchase proceeds
$18,709,007); Collateralized by:
U.S. Government & Agency Issues (d) 18,700,000 18,700,000
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
United States Government Issues 0.1%
United States Treasury Bills,
Due 6/15/00 thru 7/06/00 (c) $ 135,000 $ 133,840
------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $20,368,266) 20,367,848
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Total Investments in Securities (Cost $230,552,298) 114.1% 225,878,726
Other Assets and Liabilities, Net (14.1%) (27,999,615)
------------------------------------------------------------------------------------
Net Assets 100.0% $197,879,111
====================================================================================
</TABLE>
FUTURES
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underlying
Expiration Face Amount Unrealized
Date at Value Appreciation
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchased:
55 U.S. Treasury Bonds 6/00 $5,310,938 $129,532
1 Ten-Year Japanese
Government Bonds 6/00 1,225,075 11,195
Sold:
63 Five-Year U.S. Treasury Notes 6/00 6,147,422 50,521
32 Ten-Year U.S Treasury Notes 6/00 3,102,500 28,457
</TABLE>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Settlement Unrealized
Date Value in USD Appreciation
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sold:
4,800,000 EUR 7/19/00 $4,400,374 $553,226
2,050,000 GBP 7/19/00 3,181,272 67,978
</TABLE>
SWAPS
-------------------------------------------------------------------------------
Open index rate swap contracts at April 30, 2000 consisted of the following:
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Notional Termination Interest Index Unrealized
Amount Date Sold Bought Depreciation
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$5,000,000 7/31/00 1 mo. LIBOR ERISA Eligible $32,920
Lehman CMBS*
</TABLE>
* Lehman Brothers Investment Grade Index- Erisa Eligible Sub Index
Collateralized Mortgage-Backed Securities Index Total Return Swap
WRITTEN OPTIONS ACTIVITY
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Contracts Premiums
------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at beginning of period -- $ --
Options written during the period 200 22,587
Options closed (200) (22,587)
Options expired -- --
Options exercised -- --
----- ---------
Options outstanding at end of period -- $ --
===== =========
Closed options resulted in a capital gain of $11,862.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 2000 (Unaudited)
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
STRONG CORPORATE BOND FUND
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Corporate Bonds 80.4%
@Entertainment, Inc. Senior Discount Notes,
Series B:
Zero %, Due 2/01/09 (Rate Reset Effective
2/01/04) $10,100,000 $ 6,211,500
Zero %, Due 7/15/08 (Rate Reset Effective
7/15/03) 3,000,000 1,965,000
AES Ironwood LLC Senior Secured Bonds,
8.857%, Due 11/30/25 (b) 6,500,000 6,356,019
American Airlines, Inc. Pass-Thru Trust
Certificates, Series 1999-1, Class C, 7.155%,
Due 10/15/04 2,000,000 1,941,970
Apache Corporation Debentures, 7.375%,
Due 8/15/47 9,000,000 7,885,782
Atlas Air, Inc. Pass-Thru Certificates:
Series 1998-1, Class C, 8.01%, Due 1/02/10 10,596,681 9,944,190
Series 1999-1, Class C, 8.77%, Due 7/02/12 1,913,979 1,835,516
Beaver Valley Funding Corporation Debentures,
8.625%, Due 6/01/07 (c) 8,254,000 8,150,825
Bellsouth Capital Funding Corporation
Debentures, 7.875%, Due 2/15/30 13,100,000 13,209,634
CMS Panhandle Holding Company Senior
Notes, 6.50%, Due 7/15/09 6,000,000 5,312,964
CSC Holdings, Inc. Debentures, 7.625%,
Due 7/15/18 9,800,000 8,500,618
CSC Holdings, Inc. Senior Debentures,
7.875%, Due 2/15/18 4,500,000 4,009,032
CSC Holdings, Inc. Senior Notes:
7.25%, Due 7/15/08 5,000,000 4,526,205
7.875%, Due 12/15/07 1,810,000 1,703,127
8.125%, Due 7/15/09 4,000,000 3,794,712
CalEnergy, Inc. Senior Bonds, 8.48%,
Due 9/15/28 (c) 11,955,000 11,921,108
Capital One Floating Rate Subordinated
Capital Income Securities, 7.5988%,
Due 2/01/27 (b) 7,500,000 6,414,330
Cendant Corporation Notes, 7.75%,
Due 12/01/03 (c) 13,420,000 13,234,697
Coastal Corporation Senior Debentures:
7.42%, Due 2/15/37 5,036,000 4,513,288
7.75%, Due 10/15/35 7,100,000 6,643,158
Colonial Capital I Securities, Series A, 8.92%,
Due 1/15/27 2,600,000 2,382,648
Columbia/HCA Healthcare Corporation
Debentures, 7.50%, Due 11/15/95 4,500,000 3,351,375
Columbia/HCA Healthcare Corporation
Notes, 8.36%, Due 4/15/24 4,500,000 4,046,625
Continental Airlines, Inc. Pass-Thru Certificates,
Series 1998-2B, 6.465%, Due 10/15/04 2,732,912 2,565,671
Delta Air Lines, Inc. Debentures, 9.75%,
Due 5/15/21 8,000,000 8,371,552
Delta Air Lines, Inc. Notes:
7.90%, Due 12/15/09 910,000 845,614
8.30%, Due 12/15/29 5,810,000 5,119,290
Delta Air Lines, Inc. Pass-Thru Certificates,
Series 1992-B1, 9.375%, Due 9/11/07 2,650,192 2,711,292
El Paso Electric Company First Mortgage
Notes, Series E, 9.40%, Due 5/01/11 (c) 5,998,000 6,222,937
Enron Corporation Notes, 6.95%, Due 7/15/28 14,205,000 12,149,479
First Nationwide Bank Subordinated
Debentures, 10.00%, Due 10/01/06 3,460,000 3,791,952
First Republic Bank Subordinated Notes, 7.75%,
Due 9/15/12 5,610,000 4,762,279
Fresenius Medical Care Capital Trust II Guaranteed
Preferred Securities, 7.875%, Due 2/01/08 (c) 7,000,000 6,177,500
GB Capital Trust Capital Securities, 10.25%,
Due 1/15/27 (b) 3,000,000 3,191,250
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
GS Escrow Corporation Floating Rate Senior
Notes, 7.0488%, Due 8/01/03 (c) $ 8,000,000 $ 7,636,360
GS Escrow Corporation Senior Notes:
7.00%, Due 8/01/03 13,540,000 12,408,462
7.125%, Due 8/01/05 500,000 439,146
Global Crossing Holdings, Ltd. Senior
Notes, 9.125%, Due 11/15/06 (b) 5,000,000 4,875,000
Global Crossing Holdings, Ltd. Senior Yankee
Notes, 9.625%, Due 5/15/08 7,500,000 7,387,500
Gulf Canada Resources, Ltd. Senior Yankee
Notes, 8.375%, Due 11/15/05 5,000,000 4,925,000
Homeside International, Inc. Senior Secured
Second Priority Notes, Series B, 11.25%,
Due 5/15/03 1,796,000 1,964,375
Imperial Capital Trust I Guaranteed Capital
Securities, 9.98%, Due 12/31/26 (c) 7,200,000 6,333,761
Imperial Tobacco Overseas BV Guaranteed Yankee
Notes, 7.125%, Due 4/01/09 7,500,000 6,569,865
Jones Intercable, Inc. Senior Notes:
8.875%, Due 4/01/07 9,250,000 9,428,423
9.625%, Due 3/15/02 4,490,000 4,600,800
KN Capital Trust I Pass-Thru Securities, 8.56%,
Due 4/15/27 5,000,000 4,765,345
KN Energy, Inc. Senior Notes, 6.65%,
Due 3/01/05 4,500,000 4,263,201
KPNQwest BV Senior Yankee Notes, 8.125%,
Due 6/01/09 11,500,000 10,982,500
Korea Electric Power Company Yankee
Debentures, 7.00%, Due 2/01/27 15,000,000 13,680,930
Lenfest Commmunications, Inc. Senior
Subordinated Notes, 10.50%, Due 6/15/06 7,700,000 8,482,143
Liberty Media Corporation Senior
Debentures, 8.25%, Due 2/01/30 (b) 6,250,000 5,841,319
Lockheed Martin Corporation Bonds,
8.50%, Due 12/01/29 23,140,000 22,810,579
Lockheed Martin Corporation Notes, 8.20%,
Due 12/01/09 2,735,000 2,681,651
MCI Worldcom, Inc. Senior Notes, 7.75%,
Due 4/01/27 2,000,000 2,000,802
MetroNet Communications Corporation
Senior Discount Yankee Notes:
Zero %, Due 11/01/07 (Rate Reset Effective
11/01/02) 1,500,000 1,266,291
Zero %, Due 6/15/08 (Rate Reset Effective
6/15/03) 11,000,000 8,675,975
MetroNet Communications Corporation
Senior Yankee Notes:
10.625%, Due 11/01/08 19,680,000 21,844,131
12.00%, Due 8/15/07 4,950,000 5,573,408
Midwest Energy, Inc. Senior Notes, 8.70%,
Due 10/15/09 (b) 9,000,000 8,984,727
News America Holdings, Inc. Debentures, 7.90%,
Due 12/01/95 (c) 6,175,000 5,096,826
Noble Drilling Corporation Senior Notes, 7.50%,
Due 3/15/19 7,710,000 7,174,463
Northrop Grumman Corporation Notes, 7.00%,
Due 3/01/06 4,000,000 3,720,744
Occidental Petroleum Corporation Senior Notes:
6.50%, Due 4/01/05 4,000,000 3,711,144
7.65%, Due 2/15/06 6,080,000 5,931,089
8.45%, Due 2/15/29 8,125,000 8,011,924
PSEG Energy Holdings, Inc. Senior Notes,
9.125%, Due 2/10/04 (b) 3,500,000 3,447,500
Park Place Entertainment Corporation
Senior Notes:
7.00%, Due 7/15/04 3,600,000 3,337,931
7.95%, Due 8/01/03 9,000,000 8,738,379
8.50%, Due 11/15/06 5,000,000 4,811,220
18
<PAGE>
------------------------------------------------------------------------------------
STRONG CORPORATE BOND FUND (continued)
------------------------------------------------------------------------------------
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Petroleos Mexicanos Guaranteed Notes, 8.85%,
Due 9/15/07 $ 2,500,000 $ 2,431,250
Pioneer Natural Resources Company Senior
Notes, 6.50%, Due 1/15/08 2,000,000 1,699,678
Qwest Communications International, Inc.
Senior Notes, Series B, 10.875%, Due 4/01/07 10,125,000 10,831,867
Raytheon Company Notes:
8.20%, Due 3/01/06 (b) 8,750,000 8,741,241
8.30%, Due 3/01/10 (b) 8,750,000 8,639,575
Riggs Capital Trust Preferred Securities,
Series A, 8.625%, Due 12/31/26 16,420,000 13,278,509
Riggs Capital Trust II Preferred Securities,
Series B, 8.875%, Due 3/15/27 1,185,000 983,746
Rogers Cablesystems, Ltd. Senior Secured Second
Priority Notes, Series B, 10.00%, Due 3/15/05 4,750,000 4,963,750
Saks, Inc. Guaranteed Notes, 7.00%, Due 7/15/04 7,000,000 6,177,486
Seagull Energy Corporation Senior
Notes, 7.875%, Due 8/01/03 6,000,000 5,850,000
Stop & Shop Companies, Inc. Senior
Subordinated Notes, 9.75%, Due 2/01/02 12,100,000 12,467,005
Telefonica de Argentina SA Medium-Term
Notes, 9.125%, Due 5/07/08 (b) 15,000,000 14,287,500
Tenet Healthcare Corporation Senior Notes:
7.875%, Due 1/15/03 2,500,000 2,443,750
8.625%, Due 12/01/03 3,000,000 2,919,144
Texas Utilities Company Senior Floating Rate
Notes, Series E, 6.50%, Due 8/16/04
(Remarketing Date 8/16/02) (c) 11,250,000 11,097,214
Time Warner Entertainment Company LP
Senior Notes, 10.15%, Due 5/01/12 5,265,000 6,095,222
Time Warner, Inc. Debentures, 9.15%,
Due 2/01/23 4,000,000 4,341,836
Tosco Corporation First Mortgage Bonds,
Series B, 9.625%, Due 3/15/02 6,000,000 6,147,888
Tosco Corporation Notes, 8.125%, Due 2/15/30 10,640,000 10,244,618
Tricon Global Restaurants, Inc. Senior Notes:
7.45%, Due 5/15/05 7,300,000 6,704,079
7.65%, Due 5/15/08 14,340,000 12,730,407
Triton Energy, Ltd./Triton Energy Corporation
Senior Notes, 8.75%, Due 4/15/02 4,800,000 4,776,000
USX-Marathon Group Debentures, 9.125%,
Due 1/15/13 2,000,000 2,109,347
USX-Marathon Group Notes, 6.85%,
Due 3/01/08 6,850,000 6,310,117
Ultramar Diamond Shamrock Corporation
Senior Notes, 7.20%, Due 10/15/17 (c) 6,000,000 5,337,816
United Air Lines, Inc. Debentures, Series A,
10.67%, Due 5/01/04 6,305,000 6,615,685
United Air Lines Pass-Thru Trust Certificates,
Series 1995-A1, 9.02%, Due 4/19/12 5,283,292 5,358,288
United International Holdings, Inc. Senior
Secured Discount Notes, Series B, Zero %,
Due 2/15/08 (Rate Reset Effective 2/15/03) 12,350,000 8,089,250
United Mexican States Yankee Bonds,
11.375%, Due 9/15/16 15,500,000 17,577,000
United Pan-Europe Communications NV Senior
Notes, Series B, 11.25%, Due 2/01/10 (b) 2,000,000 1,870,000
United Pan-Europe Communications NV Senior
Yankee Notes, 10.875%, Due 11/01/07 (b) 5,000,000 4,575,000
Univision Network Holding LP Subordinated
Notes, 7.00%, Due 12/17/02 (c) 7,855,000 10,368,600
Washington Mutual, Inc. Subordinated
Notes, 8.25%, Due 4/01/10 8,650,000 8,529,514
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Waste Management, Inc. Senior Notes, 6.50%,
Due 12/15/02 $10,605,000 $ 9,711,879
YPF Sociedad Anonima Yankee Notes, 7.75%,
Due 8/27/07 8,520,000 8,148,808
------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $719,986,430) 688,619,122
------------------------------------------------------------------------------------
Convertible Bonds 0.2%
CUC International, Inc. Subordinated
Notes, 3.00%, Due 2/15/02 2,000,000 1,840,000
------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $1,844,967) 1,840,000
------------------------------------------------------------------------------------
Municipal Bonds 0.9%
New Jersey Economic Development Bonds,
Series B, Zero %, Due 2/15/14 21,500,000 7,688,400
------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $7,414,325) 7,688,400
------------------------------------------------------------------------------------
Non-Agency Mortgage &
Asset-Backed Securities 12.3%
BCF LLC Mortgage Pass-Thru Certificates, Series
1997-R2, Class 3-A1, 7.00%, Due 12/25/35 (b) 977,391 973,682
Bear Stearns Mortgage Securities, Inc. Mortgage
Pass-Thru Certificates, Series 1995-1,
Class 2-P, Principal Only, Due 7/25/10 (c) 489,116 394,763
Chase Credit Card Master Trust Floating
Rate Asset-Backed Notes, Series 2000-2,
Class A, 6.23%, Due 3/17/03 25,000,000 25,000,000
Chase Mortgage Finance Trust Multiclass
Mortgage Pass-Thru Certificates:
Series 1999-S8, Class B2, 6.75%, Due 7/25/29 2,479,334 2,112,554
Series 1999-S11, Class B2, 6.75%, Due 9/25/29 1,590,121 1,354,202
Citicorp Mortgage Securities, Inc. Pass-Thru
Certificates, Series 1999-7, Class B-2, 7.00%,
Due 9/25/29 1,114,676 967,667
Commercial Trust I Lease-Backed Certificates,
Series 1993-K-A, Class A2, 7.63%,
Due 12/15/13 (b) 8,441,298 6,999,440
DLJ Mortgage Acceptance Corporation Variable
Rate Multi-Family Mortgage Pass-Thru
Certificates, Series 1993-MF10, Class A-1,
Interest Only, 0.80%, Due 7/15/03 30,166,471 37,708
DLJ Mortgage Acceptance Corporation Variable
Rate Trust Certificates, Series 1997-E,
Class A, 7.55%, Due 12/28/26 (b) 5,383,473 4,742,516
Discover Card Master Trust I Floating Rate
Credit Card Asset-Backed Certificates,
Series 2000-3, Class A, 6.2525%, Due 9/15/05 25,000,000 24,980,750
FMAC Loan Receivables Trust Notes, Series
1997-C, Class B, 7.15%, Due 12/15/19 (b) 7,239,000 6,334,125
Golden National Mortgage Asset-Backed
Certificates, Series 1998-GNI, Class M-2,
8.02%, Due 2/25/27 6,000,000 5,796,450
Mid State Trust Virgin Islands Asset-Backed
Notes, Series 6, Class A-2, 7.40%, Due 7/01/35 2,738,322 2,604,828
Norwest Asset Securities Corporation Mortgage
Pass-Thru Certificates, Series 1998-23,
Class B-3, 6.75%, Due 10/25/28 3,544,284 3,039,525
Resolution Trust Corporation Mortgage Pass-Thru
Securities, Inc. Commercial Mortgage
Certificates, Series 1995-C1, Class D, 6.90%,
Due 2/25/27 12,000,000 11,677,560
Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage Bonds,
Series 1992-C, Class 3-A, 11.7264%,
Due 11/25/30 32,690 32,574
19
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 2000 (Unaudited)
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
STRONG CORPORATE BOND FUND (continued)
------------------------------------------------------------------------------------
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Thru Certificates, Series
1997-A, Class B-3, 7.3887%, Due 10/01/25 (b) $ 4,530,600 $ 3,651,392
Sutter CBO, Ltd./Sutter CBO Corporation Notes,
Series 1999-1, Class B1, 9.942%,
Due 11/30/14 (b) 5,000,000 4,771,900
------------------------------------------------------------------------------------
Total Non-Agency Mortgage &
Asset-Backed Securities (Cost $109,868,871) 105,471,636
------------------------------------------------------------------------------------
United States Government &
Agency Issues 0.1%
FHLMC Participation Certificates:
14.00%, Due 9/01/12 (c) 17,027 19,246
14.75%, Due 3/01/10 (c) 8,166 9,261
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
13.50%, Due 4/01/11 (c) 40,813 45,609
GNMA Guaranteed Pass-Thru Certificates,
15.00%, Due 8/15/11 thru 10/15/12 (c) 59,855 70,350
Small Business Administration Guaranteed Loan
Pool #40013, Interest Only Strips, 2.419%,
Due 9/30/17 (c) 3,216,604 152,788
------------------------------------------------------------------------------------
Total United States Government &
Agency Issues (Cost $1,389,331) 297,254
------------------------------------------------------------------------------------
Options 0.0%
MCI Worldcom, Inc. Call Options: (Strike price
is $100. Expiration date is 6/20/03.) 25,000,000 187,500
------------------------------------------------------------------------------------
Total Options (Cost $562,500) 187,500
------------------------------------------------------------------------------------
Preferred Stocks 3.3%
Caisse National De Credit Agricole Sponsored
ADR 10.375% Series A (b) 400,000 10,200,000
Centaur Funding Corporation 9.08% Series B (b) 5,360 5,594,500
Golden State Bancorp, Inc. 9.125% Exchangeable
Series A 100,000 2,225,000
Parmalat Capital Finance 8.3588% Series B 253,000 5,819,000
Webster Capital Corporation 7.375% Series A 5,000 5,040,600
------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $31,152,717) 28,879,100
------------------------------------------------------------------------------------
Foreign Preferred Stocks 0.1%
Magna International, Inc. 8.65% Series A 40,000 631,799
------------------------------------------------------------------------------------
Total Foreign Preferred Stocks (Cost $619,109) 631,799
------------------------------------------------------------------------------------
Short-Term Investments (a) 1.0%
Commercial Paper 0.4%
Interest Bearing, Due Upon Demand
Sara Lee Corporation, 5.76% $2,047,900 2,047,900
Warner Lambert Company, 5.76% 836,500 836,500
Wisconsin Electric Power Company, 5.76% 156,700 156,700
------------
3,041,100
Corporate Bonds 0.5%
ARA Services, Inc. Guaranteed Notes, 10.625%,
Due 8/01/00 4,355,000 4,371,523
United States Government Issues 0.1%
United States Treasury Bills,
Due 7/20/00 thru 7/27/00 (c) 450,000 444,343
------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $7,872,089) 7,856,966
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Total Investments in Securities (Cost $880,710,339) 98.3% 841,471,777
Other Assets and Liabilities, Net 1.7% 14,925,072
------------------------------------------------------------------------------------
Net Assets 100.0% $856,396,849
====================================================================================
</TABLE>
FUTURES
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underlying Unrealized
Expiration Face Amount Appreciation
Date at Value (Depreciation)
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchased:
170 Two-Year U.S. Treasury Notes 6/00 $33,529,844 ($ 83,066)
44 U.S. Treasury Bonds 6/00 4,248,750 9,813
Sold:
20 five-year u.S. Treasury notes 6/00 1,951,563 24,900
395 ten-Year U.S Treasury Notes 6/00 38,296,484 178,340
</TABLE>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Settlement Unrealized
Date Value in USD Appreciation
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Sold:
748,000 CAD 6/16/00 $506,076 $5,220
</TABLE>
SWAPS
-------------------------------------------------------------------------------
Open index rate swap contracts at April 30, 2000 consisted of the following:
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Notional Termination Interest Index Unrealized
Amount Date Sold Bought Depreciation
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$25,000,000 6/01/00 1 mo. LIBOR Lehman Brothers $535,664
Baa
20,000,000 7/31/00 1 mo. LIBOR ERISA Eligible 131,680
Lehman CMBS*
50,000,000 1/01/01 1 mo. LIBOR Lehman Brothers 995,606
Baa
</TABLE>
* Lehman Brothers Investment Grade Index- Erisa Eligible Sub Index
Collateralized Mortgage-Backed Securities Index Total Return Swap
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
STRONG GOVERNMENT SECURITIES FUND
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
United States Government &
Agency Issues 89.1%
FHA Insured Project Loan #956-55054, 2.93%,
Due 11/01/12 $ 3,533,603 $ 2,769,461
FHLMC Guaranteed Multiclass Variable Rate
Mortgage Participation Certificates:
Pool #611023, 7.378%, Due 10/01/26 8,788,991 9,000,454
Pool #786210, 7.054%, Due 1/01/26 2,890,852 2,933,574
Pool #865496, 7.525%, Due 5/01/26 2,427,088 2,442,117
Series 1539, Class FB, 5.667%, Due 6/15/05 788,410 786,930
FHLMC Notes, 6.875%, Due 1/15/05 5,770,000 5,685,481
FHLMC Participation Certificates:
5.50%, Due 12/15/08 2,813,787 2,783,975
6.05%, Due 6/25/14 (c) 13,515,030 13,428,331
6.25%, Due 9/15/22 (c) 6,305,000 5,903,907
6.59%, Due 6/25/12 2,266,883 2,257,600
6.775%, Due 11/01/03 (c) 6,079,723 5,992,357
7.00%, Due 5/01/03 thru 1/25/21 (e) 35,411,086 34,604,432
7.20%, Due 10/01/06 10,118,840 9,957,545
7.25%, Due 7/01/08 724,742 723,049
7.26%, Due 6/01/06 6,618,233 6,548,742
7.625%, Due 8/25/22 268,650 267,615
8.00%, Due 7/01/08 thru 2/01/17 4,466,637 4,455,481
8.50%, Due 10/01/05 thru 6/01/17 (c) 20,551,300 20,906,419
9.00%, Due 9/15/05 thru 4/01/17 7,161,555 7,324,529
9.30%, Due 7/15/21 2,814,380 2,884,135
9.50%, Due 4/01/07 thru 4/01/25 6,578,043 6,872,026
9.75%, Due 8/01/02 341,246 348,789
10.00%, Due 10/01/05 thru 6/01/20 2,077,734 2,162,196
20
<PAGE>
------------------------------------------------------------------------------------
STRONG GOVERNMENT SECURITIES FUND (continued)
------------------------------------------------------------------------------------
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
10.50%, Due 6/01/04 thru 8/01/20 $ 3,985,247 $ 4,257,011
11.75%, Due 10/01/15 57,994 62,879
12.00%, Due 11/01/15 24,085 26,450
12.25%, Due 7/01/15 thru 12/01/15 204,867 224,756
12.50%, Due 10/01/09 thru 1/01/15 127,147 140,425
13.00%, Due 7/01/14 43,903 49,012
13.75%, Due 5/01/02 23,945 24,917
14.00%, Due 6/01/11 thru 4/01/16 360,447 406,042
14.50%, Due 3/01/11 thru 12/01/11 6,354 7,209
14.75%, Due 8/01/11 thru 4/01/13 5,089 5,768
15.00%, Due 8/01/11 23,621 26,987
16.00%, Due 6/01/12 6,110 7,120
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
5.00%, Due 7/01/06 (c) 55,752,874 50,804,806
5.60%, Due 5/01/04 thru 11/01/05 1,955,240 1,841,215
6.00%, Due 1/25/39 337,975 332,379
6.09%, Due 1/01/03 12,460,130 12,006,965
6.125%, Due 11/25/03 868,444 858,911
6.30%, Due 12/25/15 2,768,390 2,651,540
6.32%, Due 8/15/08 (c) 11,500,000 10,624,908
6.49%, Due 12/25/25 6,829,199 6,758,551
6.50%, Due 6/18/27 thru 8/01/28 (c) 30,717,192 28,298,534
6.53%, Due 7/01/02 2,369,371 2,316,723
7.00%, Due 9/01/07 thru 6/25/22 (c) 21,672,622 21,110,945
7.11%, Due 10/01/09 4,981,437 4,809,330
7.17%, Due 10/01/09 4,340,688 4,206,348
7.18%, Due 10/01/09 3,439,629 3,335,194
7.50%, Due 7/01/03 thru 3/25/30 (c) (e) 90,653,856 89,228,172
8.00%, Due 4/01/17 thru 11/01/26 27,404,795 27,478,950
8.25%, Due 1/25/06 944,838 949,936
8.40%, Due 2/25/09 (c) 18,741,936 18,974,795
8.50%, Due 7/01/10 thru 5/01/26 (c) 28,257,643 28,761,120
8.55%, Due 8/25/26 2,552,049 2,591,938
8.75%, Due 1/01/10 873,836 897,179
9.00%, Due 9/01/21 thru 11/01/21 5,668,950 5,851,819
9.25%, Due 4/25/18 949,999 990,049
9.40%, Due 10/25/19 3,456,994 3,580,801
9.50%, Due 6/01/05 thru 7/01/28 (c) 11,983,175 12,537,866
10.00%, Due 4/01/20 1,828,755 1,935,186
11.00%, Due 2/01/19 1,745,191 1,919,950
11.50%, Due 2/01/19 971,099 1,068,137
11.75%, Due 12/01/10 77,713 85,042
12.00%, Due 1/01/16 thru 2/01/19 1,615,160 1,786,959
12.25%, Due 7/01/14 19,289 20,998
12.50%, Due 2/01/11 114,989 127,754
13.25%, Due 4/01/12 3,123 3,541
13.50%, Due 1/01/12 4,203 4,691
13.75%, Due 10/01/10 5,974 6,571
14.00%, Due 1/01/12 thru 11/01/14 65,072 71,814
14.25%, Due 12/01/14 32,244 35,699
14.50%, Due 1/01/12 6,127 6,812
14.75%, Due 3/01/12 85,965 99,783
15.00%, Due 10/01/12 9,755 10,976
15.50%, Due 10/01/12 7,046 7,976
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
Pool #313629, 8.50%, Due 11/01/02 321,509 324,415
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate Certificates:
Pool #54844, 6.102%, Due 9/01/27 (c) 13,076,635 12,720,716
Pool #66414, 6.798%, Due 9/01/28 (c) 9,916,990 10,198,234
Pool #70279, 6.626%, Due 4/01/19 773,935 789,196
Pool #70843, 6.321%, Due 4/01/20 1,519,945 1,526,907
Pool #92068, 7.215%, Due 1/01/18 683,408 706,383
Pool #109031, 6.695%, Due 8/01/05 10,000,000 9,578,428
Pool #110238, 6.334%, Due 1/01/16 3,405,188 3,418,455
Pool #124013, 7.114%, Due 10/01/21 1,132,479 1,173,303
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Pool #176367, 7.063%, Due 4/01/15 $ 1,534,986 $ 1,570,470
Pool #181826, 7.085%, Due 10/01/22 594,840 616,377
Pool #201427, 7.72%, Due 1/01/23 1,115,141 1,152,934
Pool #323127, 6.814%, Due 8/01/15 (c) 15,995,999 15,826,121
Pool #380317, 6.292%, Due 5/01/05 (c) 9,209,936 8,702,646
Pool #380727, 6.07%, Due 10/01/08 6,731,493 6,249,650
Pool #457277, 7.373%, Due 10/01/27 21,323,759 21,591,212
Pool #530074, 6.892%, Due 3/01/30 5,098,698 4,969,836
Pool #534738, 7.247%, Due 5/01/27 (c) 6,717,267 6,889,430
Series 1997-M4, Class C, 7.2984%,
Due 8/17/18 5,683,000 5,541,522
Series 1998-M6, Class A, 7.3938%,
Due 8/17/03 288,080 288,161
Series 1999-W6, Class A, 9.0902%,
Due 9/25/28 11,147,240 11,509,525
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate Mortgage
Securities, 6.10%, Due 3/01/18 2,560,609 2,495,343
FNMA Medium-Term Notes:
5.75%, Due 2/03/04 4,050,000 3,844,264
6.05%, Due 4/17/03 4,812,000 4,661,731
FNMA Notes, 7.25%, Due 1/15/10 35,850,000 35,758,439
FNMA Stripped Mortgage-Backed Securities:
Series B, Class B-1, 6.00%, Due 5/01/09 2,034,134 1,967,681
Series C, Class C-1, 6.00%, Due 5/01/09 1,774,293 1,716,192
Series K, Class K-1, 6.00%, Due 11/01/08 10,399,841 10,129,767
FNMA Stripped Mortgage-Backed Securities,
Interest Only Custodial Receipts, Series 161,
Class 2, 8.50%, Due 7/25/22 3,075,964 924,571
Federal Agricultural Mortgage Corporation
Guaranteed Mortgage Variable Rate
Pass-Thru Certificates:
Series BA-1001, Class 1, 7.013%, Due 1/25/03 2,695,466 2,644,926
Series CS-1001, Class 1, 7.185%, Due 7/25/01 1,999,536 1,984,540
Series CS-1004, Class 1, 7.11%, Due 1/25/02 4,534,326 4,503,176
Series CS-1010, Class 1, 7.436%, Due 7/25/02 7,067,962 7,045,911
Series GS-1001, Class 1, 7.023%, Due 1/25/08 1,235,323 1,203,279
Series GS-1002, Class 1, 6.71%, Due 7/25/08 434,532 419,189
GNMA Guaranteed Pass-Thru Certificates:
8.00%, Due 6/01/10 thru 12/25/29 (c) (e) 76,675,000 76,851,188
8.35%, Due 4/15/20 15,801,305 16,086,302
8.40%, Due 5/15/20 8,390,443 8,558,926
9.00%, Due 12/15/06 thru 12/15/09 (c) 8,139,152 8,372,900
12.50%, Due 4/15/19 2,115,618 2,373,076
13.00%, Due 12/15/10 thru 11/15/14 310,451 349,323
13.50%, Due 7/15/10 thru 10/15/12 81,817 93,480
14.00%, Due 4/15/12 thru 12/20/14 84,901 96,447
14.50%, Due 9/15/12 thru 11/15/12 186,583 213,389
15.00%, Due 1/15/12 thru 9/15/12 88,060 102,369
16.00%, Due 4/15/12 9,246 10,612
GNMA Guaranteed Variable Rate
Pass-Thru Certificates:
Pool #8333, 6.375%, Due 3/20/18 915,183 923,969
Pool #8489, 6.375%, Due 4/20/19 204,173 205,635
Pool #8678, 6.75%, Due 8/20/20 6,864,873 6,914,194
Pool #8714, 7.125%, Due 11/20/20 5,247,019 5,327,932
HHS Project Loan, 7.83%, Due 11/01/01 929,878 939,177
Small Business Administration Guaranteed
Loan Interest Only Custodial Receipts:
Series 1992-6A, 2.473%, Due 10/15/17 24,935,927 1,090,947
Series 1993-1A, 2.5312%, Due 2/15/18 19,733,944 851,125
USGI FHA Insured Project Pool #2040,
3.025%, Due 11/01/06 4,765,107 4,345,206
United States Department of Veterans
Affairs Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates -
Vendee Mortgage Trust:
Series 1992-1, Class 2J, 7.75%, Due 3/15/05 11,801,000 11,836,462
Series 1995-1, Class 3I, 8.00%, Due 4/15/06 10,000,000 10,085,750
21
<PAGE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 2000 (Unaudited)
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
STRONG GOVERNMENT SECURITIES FUND (contined)
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
United States Department of Veterans
Affairs Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate Pass-Thru
Certificates - Vendee Mortgage Trust:
Series 1995-1, Class 4, 8.8519%, Due 2/15/25 $ 6,128,236 $ 6,321,181
Series 1995-2, Class 3, 8.7925%,
Due 6/15/25 (c) 14,167,851 14,802,590
United States Treasury Bonds:
6.00%, Due 2/15/26 41,630,000 40,498,205
6.125%, Due 11/15/27 (c) 13,125,000 13,001,953
6.125%, Due 8/15/29 27,130,000 27,206,317
6.50%, Due 11/15/26 5,000,000 5,189,065
6.75%, Due 8/15/26 10,000,000 10,693,750
6.875%, Due 8/15/25 (c) 15,300,000 16,552,688
7.875%, Due 2/15/21 (c) 10,900,000 12,879,037
8.75%, Due 5/15/17 5,500,000 6,873,284
9.25%, Due 2/15/16 (c) 17,700,000 22,799,813
11.75%, Due 2/15/10 8,900,000 10,705,036
United States Treasury Notes:
5.875%, Due 11/15/04 27,950,000 27,225,061
6.125%, Due 8/15/07 3,950,000 3,868,531
6.50%, Due 10/15/06 3,745,000 3,739,150
6.50%, Due 2/15/10 2,820,000 2,877,283
------------------------------------------------------------------------------------
Total United States Government &
Agency Issues (Cost $1,108,249,388) 1,090,772,867
------------------------------------------------------------------------------------
Corporate Bonds 4.8%
Atlas Air, Inc. Pass-Thru Certificates, Series
1998-1, Class B, 7.68%, Due 1/02/14 (c) 9,711,806 8,973,174
Bank United Medium-Term Bank Notes,
Tranche 00001, 8.00%, Due 3/15/09 5,000,000 4,439,795
GS Escrow Corporation Senior Notes, 7.00%,
Due 8/01/03 (c) 19,400,000 17,778,742
International Bank for Reconstruction and
Development Unsubordinated Yankee Notes,
7.00%, Due 1/27/05 8,300,000 8,218,710
Riggs Capital Trust Preferred Securities,
Series A, 8.625%, Due 12/31/26 (c) 9,490,000 7,674,364
United Air Lines, Inc. Debentures, 10.25%,
Due 7/15/21 10,735,000 11,372,197
------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $65,783,939) 58,456,982
------------------------------------------------------------------------------------
MUNICIPAL BONDS 0.3%
Arkansas Development Finance Authority GNMA
Guaranteed Bonds, 9.75%, Due 11/15/14 3,100,000 3,517,818
------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $3,753,910) 3,517,818
------------------------------------------------------------------------------------
Non-Agency Mortgage &
Asset-Backed Securities 12.4%
ABN AMRO Mortgage Corporation Mortgage
Pass-Thru Certificates:
Series 1999-6, Class B-2, 7.00%, Due 9/25/29 1,790,141 1,554,729
Series 1999-8, Class B-2, 7.75%, Due 12/25/29 1,184,732 1,089,533
Bank of America Mortgage Securities, Inc.
Mortgage Pass-Thru Certificates:
Series 1999-12, Class B3, 7.50%, Due 12/25/29 1,010,151 913,353
Series 2000-1, Class B3, 7.50%, Due 2/25/30 1,459,927 1,313,993
Citicorp Mortgage Securities, Inc. Real Estate
Mortgage Investment Conduit Pass-Thru
Certificates, Series 1999-3, Class B2, 6.50%,
Due 5/25/29 1,343,016 1,199,497
Community Program Loan Trust Bonds,
Series 1987-A, Class A5, 4.50%, Due 4/01/29 2,480,000 1,753,831
DLJ Commercial Mortgage Corporation
Commercial Mortgage Pass-Thru Certificates,
Series 1999-CG3, Class A-1B, 7.34%,
Due 9/10/09 2,510,000 2,448,944
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
GE Capital Mortgage Services, Inc. Mortgage
Pass-Thru Certificates:
Series 1999-3, Class B2, 6.50%, Due 5/25/29 $ 2,225,123 $ 1,862,906
Series 1999-20, Class B2, 7.25%, Due 12/25/29 1,540,419 1,365,019
Norwest Asset Securities Corporation Mortgage
Pass-Thru Certificates:
Series 1999-18, Class B3, 6.50%, Due 7/25/29 2,949,793 2,463,859
Series 1999-20, Class B3, 6.75%, Due 8/25/29 2,530,873 2,155,558
Series 1999-23, Class B3, 7.00%, Due 10/25/29 1,120,726 973,289
Series 1999-26, Class B3, 7.25%, Due 12/25/29 1,142,652 1,012,190
Residential Funding Mortgage Securities I, Inc.
Mortgage Pass-Thru Certificates:
Series 1999-S18, Class M3, 7.00%, Due 8/25/29 1,651,511 1,435,006
Series 1999-S23, Class M3, 7.25%, Due 11/25/29 1,537,496 1,362,183
Series 1999-S24, Class M3, 7.50%, Due 12/25/29 1,175,482 1,061,419
Series 2000-S1, Class M3, 7.50%, Due 1/25/30 1,416,444 1,278,107
Student Loan Marketing Association Student
Loan Trust Floating Rate Securities:
Series 1995-1, Class A1, 6.357%, Due 4/25/04 1,531,276 1,528,436
Series 1996-1, Class A1, 6.342%, Due 7/26/04 11,202,462 11,173,391
Series 1996-3, Class A1, 6.272%, Due 10/25/04 27,763,861 27,629,346
Series 1996-4, Class A1, 6.262%, Due 7/25/04 9,439,263 9,392,586
Series 1997-1, Class A1, 6.242%, Due 10/25/05 5,552,598 5,518,810
Series 1997-3, Class A1, 6.382%, Due 4/25/06 30,253,002 30,137,284
Series 1998-1, Class A-1, 6.492%,
Due 1/25/07 (c) 26,581,232 26,556,645
Series 1998-2, Class A1, 6.462%, Due 4/25/07 9,780,105 9,731,449
Series 1999-2, Class A1L, 6.39%, Due 7/25/04 4,479,451 4,481,399
------------------------------------------------------------------------------------
Total Non-Agency Mortgage &
Asset-Backed Securities (Cost $151,677,296) 151,392,762
------------------------------------------------------------------------------------
Options 0.0%
MCI Worldcom, Inc. Call Options: (Strike price
is $100. Expiration date is 6/20/03.) 25,000,000 187,500
United States Treasury 10 Year Call Options:
(Strike Price is $101. Expiration date is
5/19/00) 200,000 3,125
United States Treasury 10 Year Put Options:
(Strike Price is $90. Expiration date is 5/19/00) 200,000 3,125
(Strike Price is $93. Expiration date is 5/19/00) 200,000 3,125
(Strike Price is $94. Expiration date is 5/19/00) 250,000 11,719
(Strike Price is $96. Expiration date is 5/19/00) 600,000 178,125
(Strike Price is $97. Expiration date is 5/19/00) 200,000 134,375
------------------------------------------------------------------------------------
Total Options (Cost $849,981) 521,094
------------------------------------------------------------------------------------
Preferred Stocks 1.0%
Centaur Funding Corporation 9.08% Series B (b) 12,135 12,665,906
------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $12,213,251) 12,665,906
------------------------------------------------------------------------------------
Short-Term Investments (a) 5.5%
Commercial Paper 0.5%
Interest Bearing, Due Upon Demand
Sara Lee Corporation, 5.76% $ 3,983,400 3,983,400
Warner Lambert Company, 5.76% 1,320,500 1,320,500
Wisconsin Electric Power Company, 5.76% 1,001,900 1,001,900
------------
6,305,800
Repurchase Agreements 1.2%
Barclays Capital, Inc. (Dated 4/28/00), 5.70%,
Due 5/01/00 (Repurchase proceeds
$14,006,850); Collateralized by: United
States Treasury Notes (d) 14,000,000 14,000,000
United States Government Issues 3.8%
FHLMC Guaranteed Multiclass Variable Rate
Mortgage Participation Certificates, Series
1572, Class SA, 2.942%, Due 10/15/00 1,869,380 1,840,101
FHLMC Participation Certificates:
11.00%, Due 1/01/01 1,506 1,516
11.25%, Due 1/01/01 9,444 9,511
22
<PAGE>
------------------------------------------------------------------------------------
STRONG GOVERNMENT SECURITIES FUND (contined)
------------------------------------------------------------------------------------
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
8.305%, Due 4/01/01 $ 5,302,922 $ 5,317,829
8.43%, Due 4/01/01 10,239,531 10,275,555
Federal Home Loan Banks Consolidated Bond:
5.125% Due 5/19/00 (e) 20,000,000 19,989,460
5.19%, Due 3/01/01 (c) 10,000,000 9,890,150
United States Treasury Bills, Due 7/06/00 (c) 525,000 519,610
------------
47,843,732
------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $68,322,450) 68,149,532
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Total Investments in Securities (Cost $1,410,850,215) 113.1% 1,385,476,961
Other Assets and Liabilities, Net (13.1%) (160,949,441)
------------------------------------------------------------------------------------
Net Assets 100.0% $1,224,527,520
====================================================================================
</TABLE>
<TABLE>
<CAPTION>
FUTURES
------------------------------------------------------------------------------------
Underlying Unrealized
Expiration Face Amount Appreciation
Date at Value (Depreciation)
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchased:
325 90-Day Euro Dollar 9/00 $ 75,477,188 ($ 266,381)
1,103 Five-Year U.S. Treasury Notes 6/00 107,628,672 1,053,031
50 Ten-Year U.S. Agency Notes 6/00 4,553,125 (65,056)
28 Ten-Year U.S. Treasury Notes 9/00 2,708,125 (1,869)
Sold:
325 90-Day Euro Dollar 9/01 75,245,625 247,994
344 Ten-Year U.S. Treasury Notes 6/00 33,351,875 (690,540)
179 U.S. Treasury Bonds 6/00 17,284,688 (277,652)
</TABLE>
SWAPS
--------------------------------------------------------------------------------
Open index rate swap contracts at April 30, 2000 consisted of the following:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Notional Termination Interest Index Unrealized
Amount Date Sold Bought Appreciation
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$50,000,000 7/31/00 1 mo. LIBOR ERISA Eligible $113,703
Lehman CMBS*
</TABLE>
* Lehman Brothers Investment Grade Index - ERISA Eligible Sub Index
Collateralized Mortgage-Backed Securities Index Total Return Swap
<TABLE>
<CAPTION>
WRITTEN OPTIONS ACTIVITY
------------------------------------------------------------------------------------
Contracts Premiums
------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at beginning of period 52,950 $ 199,088
Options written during the period 10,101 1,776,528
Options closed (55,401) (1,340,568)
Options expired (5,750) (272,812)
Options exercised -- --
------- ----------
Options outstanding at end of period 1,900 $ 362,236
======= ==========
</TABLE>
Closed options resulted in a capital gain of $13,764.
-------------------------------------------------------------------------------
WRITTEN OPTIONS DETAIL
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Contracts
(1000 shares Value
per contract) (Note 2)
---------------------------------------------------------------------------------------------------
<S> <C> <C>
United States Treasury Bond Futures Options:
Calls: (Strike price is $101.00. Expiration date is 5/19/00.
Premium received is $18,325.) 100 ($ 1,563)
Calls: (Strike price is $102.00. Expiration date is 5/19/00.
Premium received is $11,650.) 200 (3,125)
Calls: (Strike price is $103.00. Expiration date is 5/19/00.
Premium received is $5,400.) 200 (3,125)
Calls: (Strike price is $99.00. Expiration date is 8/18/00.
Premium received is $63,638.) 100 (60,938)
Puts: (Strike price is $88.00. Expiration date is 5/19/00.
Premium received is $11,650.) 200 (3,125)
Puts: (Strike price is $89.00. Expiration date is 5/19/00.
Premium received is $14,775.) 200 (3,125)
Puts: (Strike price is $94.00. Expiration date is 5/19/00.
Premium received is $52,700.) 100 (4,688)
Puts: (Strike Price is $95.00. Expiration date is 5/19/00.
Premium received is $184,099.) 800 (100,000)
----- ----------
1,900 ($179,689)
===== ===========
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
STRONG SHORT-TERM BOND FUND
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Corporate Bonds 56.7%
Allstate Corporation Notes, 7.875%, Due 5/01/05 $ 3,000,000 $ 2,972,970
Atlas Air, Inc. Pass-Thru Certificates, Series 1998-1,
Class C, 8.01%, Due 1/02/10 8,700,032 8,164,328
Beaver Valley Funding Corporation Debentures,
8.625%, Due 6/01/07 9,860,000 9,736,750
CMS Energy Corporation Senior Notes, 8.375%,
Due 7/01/13 (Remarketing Date 7/01/03) (c) 10,000,000 9,560,760
CSC Holdings, Inc. Senior Subordinated
Debentures:
9.875%, Due 2/15/13 3,275,000 3,340,500
9.875%, Due 4/01/23 8,875,000 9,107,969
CSC Holdings, Inc. Senior Subordinated Notes,
9.25%, Due 11/01/05 6,350,000 6,397,625
CalEnergy, Inc. Senior Bonds, 8.48%, Due 9/15/28 2,875,000 2,866,849
Cendant Corporation Notes, 7.75%, Due 12/01/03 11,540,000 11,380,656
Continental Airlines, Inc. Senior Notes, 9.50%,
Due 12/15/01 14,750,000 15,045,000
Custom Repackaged Asset Vehicle Trusts -
Wal-Mart Credit-Linked Trust Certificates,
Series 1996-401, 7.35%, Due 7/17/06 (b) 3,665,599 3,572,445
Custom Repackaged Asset Vehicle Trusts -
Walt Disney Credit-Linked Trust Certificates,
Series 1996-403, 7.20%, Due 1/10/07 (b) 3,540,522 3,440,024
Delta Air Lines, Inc. Pass-Thru Certificates:
Series 1992-B1, 9.375%, Due 9/11/07 10,600,767 10,845,168
Series 1993-A1, 9.875%, Due 4/30/08 14,151,247 14,820,954
El Paso Electric Company First Mortgage
Notes, Series E, 9.40%, Due 5/01/11 6,018,000 6,243,687
First Industrial LP Notes, 6.50%, Due 4/05/11
(Remarketing Date 3/15/01) (c) 10,000,000 9,856,490
Ford Motor Credit Company Notes, 6.70%,
Due 7/16/04 9,750,000 9,389,864
GS Escrow Corporation Floating Rate
Senior Notes:
7.0488%, Due 8/01/03 5,000,000 4,772,725
7.125%, Due 8/01/05 5,000,000 4,391,455
23
<PAGE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 2000 (Unaudited)
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
STRONG SHORT-TERM BOND FUND (contined)
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
GS Escrow Corporation Senior Notes:
6.75%, Due 8/01/01 $34,500,000 $ 33,306,438
7.00%, Due 8/01/03 8,700,000 7,972,941
General Electric Capital Corporation
Medium-Term Notes:
Series A, 7.25%, Due 5/03/04 2,250,000 2,242,845
Tranche 00445, 7.00%, Due 2/03/03 5,000,000 4,963,655
Global Crossing Holdings, Ltd. Senior Notes,
9.125%, Due 11/15/06 (b) 5,000,000 4,875,000
Homeside International, Inc. Senior Secured
Second Priority Notes, Series B, 11.25%,
Due 5/15/03 28,924,000 31,635,625
Huntington Capital I Variable Rate Capital
Income Securities, 6.7488%, Due 2/01/27 16,500,000 15,417,353
Imperial Capital Trust I Guaranteed Capital
Securities, 9.98%, Due 12/31/26 5,000,000 4,398,445
Jones Intercable, Inc. Senior Notes, 9.625%,
Due 3/15/02 15,325,000 15,703,175
KPNQwest BV Senior Yankee Notes, 8.125%,
Due 6/01/09 10,000,000 9,550,000
Korea Electric Power Corporation Notes, 8.00%,
Due 7/01/02 (c) 12,100,000 11,940,582
Lilly Del Mar, Inc. Floating Rate Capital Securities,
7.2975%, Due 8/05/29 (b) (c) 15,000,000 15,159,000
Lockheed Martin Corporation Notes, 7.95%,
Due 12/01/05 10,000,000 9,862,580
MetroNet Communications Corporation
Senior Discount Yankee Notes:
Zero %, Due 11/01/07 (Rate Reset
Effective 11/01/02) 4,000,000 3,376,776
Zero %, Due 6/15/08 (Rate Reset
Effective 6/15/03) 13,000,000 10,253,425
MetroNet Communications Corporation
Senior Yankee Notes:
10.625%, Due 11/01/08 (c) 22,000,000 24,419,252
12.00%, Due 8/15/07 15,000,000 16,889,115
NWA Trust Structured Enhanced Return Trusts
1998, 9.0538%, Due 4/15/11 (b) 15,000,000 13,425,000
News Corporation, Ltd. Senior Subordinated
Notes, 8.75%, Due 2/15/06 10,754,000 10,646,460
Niagara Mohawk Power Corporation Senior
Notes, Series C, 7.125%, Due 7/01/01 10,207,316 10,097,526
Northern Trust Company Medium-Term Bank
Notes, Tranche 00047, 7.50%, Due 2/11/05 3,000,000 2,988,039
Occidental Petroleum Corporation Senior Notes:
6.50%, Due 4/01/05 6,000,000 5,566,716
8.45%, Due 2/15/29 4,125,000 4,067,592
PSEG Energy Holdings, Inc. Senior Notes, 9.125%,
Due 2/10/04 (b) 5,500,000 5,417,500
Petroleos Mexicanos Guaranteed Notes, 8.85%,
Due 9/15/07 2,500,000 2,431,250
Qwest Communications International, Inc.
Senior Notes, Series B, 10.875%, Due 4/01/07 13,609,741 14,559,892
Raytheon Company Notes, 7.90%, Due 3/01/03 (b) 9,000,000 8,973,765
Riggs Capital Trust Preferred Securities, Series A,
8.625%, Due 12/31/26 3,685,000 2,979,982
Rogers CableSystems, Ltd. Senior Secured Second
Priority Yankee Debentures, 10.125%, Due 9/01/12 6,575,000 6,854,438
Saks, Inc. Guaranteed Notes, 7.00%, Due 7/15/04 2,000,000 1,764,996
Saks, Inc. Notes, 7.25%, Due 12/01/04 3,000,000 2,650,068
Shoppers Food Warehouse Corporation Senior
Notes, 9.75%, Due 6/15/04 7,000,000 7,350,000
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Spintab AB Floating Rate Subordinated
Yankee Notes, 6.7088%, Due 12/29/49 (b) (c) $30,000,000 $ 29,716,140
Sprint Spectrum LP/Sprint Spectrum Finance
Corporation Senior Notes, 11.00%, Due 8/15/06 14,648,000 15,791,657
Star Capital Trust I Floating Rate Securities,
6.915%, Due 6/15/27 10,000,000 9,722,800
Stop & Shop Companies, Inc. Senior Subordinated
Notes, 9.75%, Due 2/01/02 4,750,000 4,894,072
Superior Financial Corporation Senior Notes,
8.65%, Due 4/01/03 1,250,000 1,173,438
Swedbank Floating Rate Debt Unit (Medium-Term
Structured Enhanced Return Trusts 1996,
Series R-35), 7.07%, Due 11/10/02 (b) (c) 10,000,000 9,650,000
Tenet Healthcare Corporation Senior Notes:
7.875%, Due 1/15/03 12,000,000 11,730,000
8.625%, Due 12/01/03 10,000,000 9,730,480
Tricon Global Restaurants, Inc. Senior Notes,
7.45%, Due 5/15/05 17,770,000 16,319,382
Triumph Capital CBO I, Ltd./Triumph Capital
CBO I, Inc. Senior Secured Floating Rate Notes,
Class A-2, 6.79%, Due 6/15/11 (b) 18,000,000 18,090,000
Unisys Corporation Senior Notes, 11.75%,
Due 10/15/04 8,475,000 9,195,375
United Air Lines, Inc. Debentures, 10.25%,
Due 7/15/21 4,850,000 5,137,881
United Mexican States Yankee Bonds, 11.375%,
Due 9/15/16 5,000,000 5,670,000
Univision Network Holding LP Subordinated
Notes, 7.00%, Due 12/17/02 19,730,000 26,043,600
Waste Management, Inc. Senior Notes, 6.125%,
Due 7/15/01 4,110,000 3,919,337
Williams Communications Group, Inc. Senior
Notes, 10.875%, Due 10/01/09 3,000,000 3,030,000
YPF Sociedad Anonima Yankee Notes, 8.00%,
Due 2/15/04 10,000,000 9,763,800
------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $677,529,535) 657,223,612
------------------------------------------------------------------------------------
Non-Agency Mortgage &
Asset-Backed Securities 19.8%
Asset Securitization Corporation Commercial
Mortgage Pass-Thru Certificates, Series 1995-
MD4, Class A-1, 7.10%, Due 8/13/29 18,028,939 17,652,585
BCF LLC Mortgage Pass-Thru Certificates, Series
1997-R2, Class 3-A1, 7.00%, Due 12/25/35 (b) 1,466,087 1,460,523
Blackstone Hotel Acquisitions Company Debt Unit
(Medium-Term Structured Enhanced Return
Trusts 1998), Series R-38, 7.0938%, Due 6/30/03
(Acquired 7/30/98; Cost $13,702,937) (b) 13,702,937 13,617,294
CS First Boston Mortgage Securities Corporation
Mortgage-Backed Certificates, 7.25%,
Due 8/25/27 1,021,240 1,017,467
Chase Mortgage Finance Corporation Mortgage
Pass-Thru Certificates, Series 1990-G,
Class A-Z1, 9.50%, Due 12/25/21 602,412 602,412
Chase Mortgage Finance Corporation Variable
Rate Multiclass Mortgage Pass-Thru Certificates,
Series 1992-2,Class B2, 7.95%, Due 8/28/23 (b) 1,855,492 1,847,680
Cistron Biotechnology, Inc. Asset-Backed Notes,
Series 1997-A, Class A-6, 6.35%, Due 4/15/11 8,055,000 7,947,828
Citicorp Mortgage Securities, Inc. Real Estate
Mortgage Investment Conduit Pass-Thru
Certificates:
Series 1988-8, Class A-1, 7.7041%, Due 6/25/18 2,861,125 2,873,613
Series 1993-3, Class B1, 7.00%, Due 3/25/08 (b) 1,534,255 1,482,558
24
<PAGE>
<CAPTION>
------------------------------------------------------------------------------------
STRONG SHORT-TERM BOND FUND (contined)
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Cityscape Home Loan Owners Trust Asset-Backed
Notes, Series 1997-1, Class A-3, 6.63%,
Due 3/25/18 $ 1,453,712 $ 1,447,934
Collateralized Mortgage Obligation Trust 47,
Class E, Principal Only, Due 9/01/18 560,536 328,548
Collateralized Mortgage Obligation Trust Inverse
Floating Rate Collateralized Mortgage
Obligation, Series 13, Class Q, 14.8704%,
Due 1/20/03 287,450 293,617
ContiMortgage Home Equity Loan Trust Interest
Only Senior Strip Certificates, Series 1996-2,
Class A, 0.8272%, Due 7/15/27 56,703,557 744,518
ContiSecurities Residual Corporation
ContiMortgage Net Interest Margin Notes,
Series 1997-A, 7.23%, Due 7/16/28
(Acquired 9/18/97; Cost $2,027,568) (b) 2,027,568 1,013,784
Countrywide Mortgage-Backed Securities, Inc.
Variable Rate Mortgage Pass-Thru Certificates,
Series 1994-D, Class A6, 4.6495%, Due 3/25/24 3,826,471 3,456,055
DLJ Mortgage Acceptance Corporation Variable
Rate Multi-Family Mortgage Pass-Thru
Certificates, Series 1993-MF10, Class A-1,
Interest Only, 0.80%, Due 7/15/03 21,098,027 26,373
Drexel Burnham Lambert Collateralized Mortgage
Obligation Trust, Series T, Class T-4, 8.45%,
Due 9/20/19 6,600,000 6,658,623
The Equitable Life Assurance Society of the
United States Floating Rate Notes, Series 174,
Class A2, 6.3638%, Due 5/15/03 (b) 10,000,000 10,015,009
FirstPlus Global Issuance Corporation
Asset-Backed Notes, Series 1998-4, Class A,
Interest Only, 6.10%, Due 9/10/24 52,379,000 777,304
GMBS, Inc. Countrywide Funding Certificates,
Series 1990-1, Class Z, 9.25%, Due 1/28/20 1,235,077 1,230,439
GS Mortgage Securities Corporation Variable
Rate Mortgage Participation Securities,
Series 1998-1, Class A, 8.00%, Due 9/20/27 (b) 6,962,954 6,978,371
GS Mortgage Securities Corporation II
Commercial Mortgage Pass-Thru Certificates,
Series 1999-C1, Class X, Interest Only, 1.1614%,
Due 11/18/30 117,975,406 6,355,925
Greenwich Capital Acceptance, Inc. Mortgage
Securities, Series 1993-P01, Class E, Principal
Only, Due 11/26/17 (c) 4,316,442 3,018,833
Greenwich Capital Acceptance, Inc. Variable Rate
Mortgage Pass-Thru Certificates, Series 1991-1,
Class A, 7.1542%, Due 2/25/21 (b) 4,688,836 4,680,068
Kmart CMBS Financing, Inc. Floating Rate
Commercial Mortgage Pass-Thru Certificates,
Series 1997-1, Class D, 7.2325%,
Due 3/01/07 (b) 4,500,000 4,479,052
Merrill Lynch Home Equity Acceptance, Inc.
Subordinated Variable Rate Mortgage-Backed
Certificates, Series 1994-A, Class A-1, 7.1563%,
Due 8/17/23 3,591,282 3,573,325
Merrill Lynch Mortgage Investors, Inc. Senior
Subordinated Pass-Thru Certificates,
Series 1994-A, Class A-5, 7.035%, Due 2/15/24 12,565,609 12,024,220
Mid-State Trust II Mortgage-Backed Notes,
Class A4, 9.625%, Due 4/01/03 4,461,000 4,564,607
Morgan Stanley Capital I, Inc. Variable Rate
Commercial Mortgage Pass-Thru Certificates:
Series 1997-RR, Class A, 6.8862%,
Due 4/30/39 (b) 2,575,324 2,517,380
Series 1999-WF1, Class X, Interest Only,
0.8393%, Due 10/15/18 (b) 95,341,125 4,395,703
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
NPF XI, Inc. Health Care Receivables
Program 97-1 Notes, Class A, 6.815%,
Due 7/01/01 (b) $ 5,000,000 $ 4,993,750
Option One Mortgage Securities Corporation Net
Interest Margin Trust, Series 1999-2, 9.66%,
Due 6/26/29 (b) 4,569,385 4,537,993
Oregon Commercial Mortgage, Inc. Variable Rate
Commercial Mortgage Pass-Thru Certificates,
Series 1995-1, Class E, 9.9863%, Due 6/25/26 (b) 515,452 511,911
Paine Webber Mortgage Acceptance
Corporation IV Mortgage Pass-Thru
Certificates, Series 1995-M1, Class B, 6.95%,
Due 1/15/07 (b) 13,000,000 12,841,985
Prudential Home Mortgage Securities Company
Mortgage Pass-Thru Certificates, Series 1992-26,
Class A-18, 7.50%, Due 8/25/07 1,407,010 1,412,286
Residential Funding Mortgage Securities I, Inc.
Mortgage Pass-Thru Certificates,
Series 1993-M23, Class A-1, 6.97%, Due 8/28/23 617,088 609,254
Resolution Trust Corporation Mortgage Pass-Thru
Securities, Inc. Commercial Certificates:
Series 1994-C2, Class E, 8.00%, Due 4/25/25 11,093,966 10,976,981
Series 1995-C2, Class D, 7.00%, Due 5/25/27 4,911,390 4,844,718
Resolution Trust Corporation Mortgage Pass-Thru
Securities, Inc. Variable Rate Certificates,
Series 1991-11, Class 1-L, 8.625%, Due 10/25/21 (c) 5,510,984 5,491,778
Rural Housing Trust 1987-1 Senior Mortgage
Pass-Thru Certificates, Series 1, Class D, 6.33%,
Due 4/01/26 283,428 278,002
Rural Housing Trust 1987-1 Senior Mortgage
Pass-Thru Subordinated Certificates, Class 3B,
7.33%, Due 4/01/26 7,351,631 7,301,309
Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage Bonds,
Series 1992-C, Class 3-A, 11.726%, Due 11/25/30 227,823 227,011
Ryland Mortgage Securities Corporation IV
Variable Rate Collateralized Mortgage Bonds,
Series 2, Class 3-A, 12.062%, Due 6/25/23 1,016,837 1,018,424
SL Commercial Mortgage Trust Mortgage
Pass-Thru Certificates, Series 1997-C1, Class A,
6.875%, Due 7/25/04 (b) 19,693,344 19,307,059
SWP Mortgage Securities Trust Mortgage
Pass-Thru Certificates Series 1993-1, Class A,
6.54%, Due 12/15/02 (b) 2,443,191 2,431,733
Salomon Brothers Mortgage Securities VI, Inc.
Stripped Coupon Mortgage Pass-Thru
Certificates, Series 1987-3, Class A, Principal
Only, Due 10/23/17 963,406 792,228
Sequoia Mortgage Trust Adjustable Rate
Asset-Backed Certificates, Series 3, Class M-1,
6.85%, Due 6/25/28 11,127,300 10,693,577
Shearson Lehman Pass-Thru Securities, Inc.
Asset Trust Variable Rate Pass-Thru Certificates,
Series 88-3, 6.9928%, Due 9/15/18 (c) 3,444,775 3,440,981
Structured Mortgage Asset Residential Trust
Multiclass Pass-Thru Certificates, Series 1992-5,
Class BO, Principal Only, Due 6/25/23 408,538 324,107
Structured Mortgage Trust Commercial
Mortgage-Backed Securities, Series 1997-2,
Class A, 6.9705%, Due 1/30/06
(Acquired 5/12/98; Cost $10,592,586) (b) 10,712,139 10,062,769
------------------------------------------------------------------------------------
Total Non-Agency Mortgage &
Asset-Backed Securities (Cost $232,711,676) 229,179,504
------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 2000 (Unaudited)
------------------------------------------------------------------------------------
STRONG SHORT-TERM BOND FUND (contined)
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
United States Government &
Agency Issues 13.4%
FHLMC Participation Certificates:
6.50%, Due 5/01/04 $ 831,290 $ 800,640
8.50%, Due 7/01/01 thru 1/01/05 142,478 144,881
8.75%, Due 10/01/01 228,133 229,688
9.00%, Due 5/01/06 thru 8/01/18 6,471,861 6,676,543
9.50%, Due 3/01/11 132,375 138,080
9.75%, Due 8/01/02 607,845 621,280
10.25%, Due 7/01/09 thru 1/01/10 384,711 405,151
10.50%, Due 1/01/16 thru 7/01/19 6,746,538 7,214,180
10.75%, Due 9/01/09 thru 10/01/17 334,473 355,631
11.25%, Due 11/01/09 329,596 353,355
FHLMC Variable Rate Participation Certificates,
7.539%, Due 5/01/26 (c) 4,386,888 4,414,051
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
7.00%, Due 6/25/22 6,004,312 5,826,117
8.00%, Due 12/01/13 thru 9/01/23 28,247,305 28,373,764
8.50%, Due 4/01/08 thru 2/01/23 (c) 16,767,570 17,073,775
9.00%, Due 11/01/24 2,023,456 2,089,305
9.40%, Due 10/25/19 7,407,845 7,673,144
9.50%, Due 2/01/11 thru 2/15/11 6,094,119 6,356,695
10.00%, Due 7/01/04 thru 6/25/19 8,907,950 9,387,770
11.00%, Due 10/15/20 16,044,553 17,645,451
12.00%, Due 3/01/17 2,923,140 3,232,435
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
Series 1992-41, Class J, Accretion Directed
Interest Only, 1005.0493%, Due 12/25/02 8,133 6,669
FNMA Guaranteed Real Estate Mortgage Investment
Conduit Variable Rate Pass-Thru Certificates,
Series 1995-G2, Interest Only, 8.6596%,
Due 5/25/20 5,968,419 1,716,911
FNMA Stripped Mortgage-Backed Securities:
Series 107, Class 1, Principal Only, Due 10/25/06 1,174,090 1,004,941
Series 1993-M1, Class N, Interest Only, 0.84%,
Due 4/25/20 2,501,403 775
GNMA Guaranteed Pass-Thru Certificates:
7.50%, Due 12/15/07 4,067,211 4,035,616
8.00%, Due 12/15/08 1,433,802 1,457,921
8.50%, Due 5/15/10 1,120,839 1,146,577
9.00%, Due 11/15/24 1,296,484 1,347,780
9.75%, Due 9/15/05 thru 11/15/05 985,173 1,018,904
10.00%, Due 2/20/18 292,651 309,422
11.50%, Due 4/15/13 39,037 42,889
12.50%, Due 4/15/19 14,781,465 16,580,280
Small Business Administration Guaranteed Loan
Group #0190, Variable Rate Interest Only
Certificates, 3.092%, Due 7/30/18 (c) 12,640,425 429,774
USGI FHA Insured Project Pool Banco 85,
7.4408%, Due 11/24/19 2,405,910 2,272,454
United States Treasury Notes, 5.50%, Due 1/31/03 4,600,000 4,470,625
------------------------------------------------------------------------------------
Total United States Government &
Agency Issues (Cost $157,485,763) 154,853,474
------------------------------------------------------------------------------------
Preferred Stocks 4.4%
Caisse National De Credit Agricole Sponsored
ADR 10.375% Series A (b) 699,479 17,836,715
Golden State Bancorp, Inc. 9.125% Exchangeable
Series A 325,000 7,231,250
Newscorp Overseas, Ltd. 6.696% Series B 18,300 299,662
Parmalat Capital Finance 8.55% Series B 300,000 6,900,000
TCI Communications Financing IV Trust 9.72% 347,300 9,029,800
Webster Capital Corporation 7.375% Series A 10,000 10,081,200
------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $55,105,784) 51,378,627
------------------------------------------------------------------------------------
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Short-Term Investments (a) 4.4%
Commercial Paper 0.3%
Interest Bearing, Due Upon Demand
Sara Lee Corporation, 5.76% $ 1,315,900 $ 1,315,900
Warner Lambert Company, 5.76% 878,200 878,200
Wisconsin Electric Power Company, 5.76% 1,163,900 1,163,900
---------
3,358,000
Corporate Bonds 2.2%
ARA Services, Inc. Guaranteed Notes, 10.625%,
Due 8/01/00 5,273,000 5,293,006
Amerco Asset-Backed Bonds, 6.89%, Due 10/15/00
(Acquired 10/17/97; Cost $10,000,000) (b) 10,000,000 9,905,400
Custom Repackaged Asset Vehicle Trusts -
CRAVE Trust Certificates, Series 1997-800,
6.86%, Due 8/12/00 (b) (c) 5,000,000 4,974,500
ITT Corporation Notes, 6.25%, Due 11/15/00 5,500,000 5,425,222
----------
25,598,128
Non-Agency Mortgage & Asset-Backed Securities 1.2%
Greenwich Capital Markets, Inc. Commercial
Mortgage Loan Facility Variable Rate Funding
Certificates, Series 1998 SFT-1, Class B, 9.25%,
Due 3/31/01 (Acquired 9/29/98 - 3/30/00;
Cost $14,427,767) (b) 14,427,767 14,391,697
Repurchase Agreements 0.6%
ABN-AMRO Inc. (Dated 4/28/00), 5.78%,
Due 5/01/00 (Repurchase proceeds
$6,703,227); Collateralized by:
U.S. Government & Agency Issues (d) 6,700,000 6,700,000
United States Government & Agency Issues 0.1%
FHLMC Participation Certificates, 8.50%,
Due 4/01/01 81,664 82,360
United States Treasury Bills, Due 5/25/00
thru 7/06/00 (c) 1,375,000 1,367,859
--------------
1,450,219
------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $51,696,790) 51,498,044
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Total Investments in Securities (Cost $1,174,529,548) 98.7% 1,144,133,261
Other Assets and Liabilities, Net 1.3% 15,021,434
------------------------------------------------------------------------------------
Net Assets 100.0% $1,159,154,695
====================================================================================
<CAPTION>
FUTURES
--------------------------------------------------------------------------------
Underlying Unrealized
Expiration Face Amount Appreciation
Date at Value (Depreciation)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchased:
3 U.S. Treasury Bonds 6/00 $ 289,688 $ 5,331
Sold:
80 Two-Year U.S. Treasury Notes 6/00 15,778,750 41,223
1,005 Five-Year U.S. Treasury Notes 6/00 98,066,016 (830,131)
351 Ten-Year U.S. Treasury Notes 6/00 34,030,547 (600,627)
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
STRONG HIGH-YIELD BOND FUND
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Corporate Bonds 84.2%
@Entertainment, Inc. Senior Discount Notes,
Series B:
Zero %, Due 7/15/08 (Rate Reset Effective
7/15/03) $27,350,000 $ 17,914,250
Zero %, Due 2/01/09 (Rate Reset Effective
2/01/04) 12,050,000 7,410,750
AMFM Operating, Inc. Senior Subordinated
Exchange Debentures, 12.625%,
Due 10/31/06 2,828,100 3,252,315
AP Holdings, Inc. Senior Discount Notes,
Zero %, Due 3/15/08 (Rate Reset Effective
3/15/03) 7,950,000 993,750
APCOA/Standard Parking, Inc. Senior
Subordinated Notes, 9.25%, Due 3/15/08 11,210,000 5,324,750
ASAT Finance LLC Units, 12.50%,
Due 11/01/06 (b) 5,000,000 5,900,000
Adelphia Business Solutions, Inc. Senior
Discount Notes, Zero %, Due 4/15/03
(Rate Reset Effective 4/15/01) 3,000,000 2,797,500
Adelphia Communications Corporation Senior
Notes, 7.875%, Due 5/01/09 5,000,000 4,293,750
Airgate PCS, Inc. Senior Subordinated Discount
Notes, Zero %, Due 10/01/09 (Rate Reset
Effective 10/01/04) 10,000,000 5,875,000
Aladdin Gaming Holdings LLC/Aladdin Capital
Corporation Senior Discount Notes, Zero %,
Due 3/01/10 (Rate Reset Effective 3/01/03) 8,000,000 4,160,000
Allegiance Telecom, Inc. Senior Discount Notes,
Zero %, Due 2/15/08 (Rate Reset Effective
2/15/03) 11,000,000 7,810,000
Allied Waste North America, Inc. Senior
Subordinated Notes, 10.00%, Due 8/01/09 8,300,000 5,664,750
Anchor Glass Container Corporation First
Mortgage Notes, 11.25%, Due 4/01/05 9,500,000 6,507,500
Anthony Crane Rental Holdings LP/Anthony
Crane Holdings Capital Corporation Senior
Discount Debentures, Zero %, Due 8/01/09
(Rate Reset Effective 8/01/03) 8,400,000 3,570,000
Argosy Gaming Company Senior Subordinated
Notes, 10.75%, Due 6/01/09 4,000,000 4,180,000
Atlas Air, Inc. Senior Notes, 10.75%, Due 8/01/05 9,725,000 9,773,625
Avencia Group PLC Notes, 11.00%,
Due 7/01/09 (b) 8,500,000 8,670,000
Azurix Corporation Senior Notes, 10.75%,
Due 2/15/10 (b) 8,000,000 8,080,000
BankUnited Capital Trust Preferred Securities,
Series A, 10.25%, Due 12/31/26 4,300,000 3,708,750
Capstar Broadcasting Partners, Inc. Subordinated
Debentures, 12.00%, Due 7/01/09 7,146,000 8,217,900
Carson, Inc. Senior Subordinated Notes,
Series B, 10.375%, Due 11/01/07 4,370,000 4,522,950
William Carter Senior Subordinated Notes,
Series A, 10.375%, Due 12/01/06 8,000,000 6,840,000
Centennial Communications Senior
Subordinated Notes, 10.75%, Due 12/15/08 (b) 2,000,000 2,000,000
Charter Communications Holdings LLC/
Charter Communications Holdings Capital
Corporation Senior Notes, 10.00%,
Due 4/01/09 (b) 4,500,000 4,353,750
Charter Communications Holdings LLC Senior
Notes, 8.625%, Due 4/01/09 5,000,000 4,393,750
Chattem, Inc. Senior Subordinated Notes,
8.875%, Due 4/01/08 6,600,000 5,709,000
Crown Castle International Corporation Senior
Discount Notes, Zero %, Due 5/15/11 (Rate
Reset Effective 5/15/04) 5,000,000 3,025,000
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Cumulus Media, Inc. Senior Subordinated Notes,
10.375%, Due 7/01/08 $10,000,000 $ 9,125,000
Focal Communications Corporation Senior
Discount Notes, Series B, Zero %, Due 2/15/08
(Rate Reset Effective 2/15/03) 5,825,000 3,815,375
Focal Communications Corporation Senior
Notes, 11.875%, Due 1/15/10 (b) 4,000,000 4,025,000
Fox Family Worldwide, Inc. Senior Discount
Notes, Zero %, Due 11/01/07 (Rate Reset
Effective 11/01/02) 4,000,000 2,460,000
Fresenius Medical Care Capital Trust II
Guaranteed Preferred Securities, 7.875%,
Due 2/01/08 5,305,000 4,681,663
GT Group Telecom, Inc. Units, Zero %, Due
2/01/10 (Rate Reset Effective 2/01/05) (b) 16,000,000 8,640,000
General Binding Corporation Senior
Subordinated Notes, 9.375%, Due 6/01/08 5,720,000 3,174,600
Georgia Gulf Corporation Senior Subordinated
Notes, 10.375%, Due 11/01/07 (b) 1,500,000 1,545,000
Global Crossing Holdings, Ltd. Senior Notes,
9.125%, Due 11/15/06 (b) 6,000,000 5,850,000
Golden Sky Systems, Inc. Senior Subordinated
Notes, Series B, 12.375%, Due 8/01/06 4,750,000 5,248,750
Graham Packaging Holdings Company/GPC
Capital Corporation II Senior Discount Notes,
Zero %, Due 1/15/09 (Rate Reset Effective
1/15/03) 8,150,000 4,604,750
Hollywood Entertainment Corporation Senior
Subordinated Notes, Series B, 10.625%,
Due 8/15/04 6,750,000 5,940,000
Imperial Capital Trust I Guaranteed Capital
Securities, 9.98%, Due 12/31/26 6,000,000 5,278,134
Iron Mountain, Inc. Senior Subordinated
Notes, 10.125%, Due 10/01/06 4,195,000 4,121,587
Jackson Products, Inc. Senior Subordinated
Notes, Series B, 9.50%, Due 4/15/05 4,000,000 3,660,000
Jazz Casino Company LLC Senior Subordinated
Notes, 5.867%, Due 11/15/09 2,648,175 837,485
Key Energy Services, Inc. Senior Subordinated
Notes, 14.00%, Due 1/15/09 4,000,000 4,390,000
La Petite Academy, Inc./LPA Holding
Corporation Senior Notes, Series B, 10.00%,
Due 5/15/08 6,300,000 3,843,000
Leap Wireless International, Inc. Units, Zero %,
Due 4/15/10 (Rate Reset Effective 4/15/05) 10,000,000 4,800,000
Level 3 Communications, Inc. Senior Notes,
11.00%, Due 3/15/08 (b) 15,000,000 14,587,500
Lyondell Chemical Company Senior Secured
Notes, Series B, 9.875%, Due 5/01/07 15,900,000 15,721,125
MJD Communications, Inc. Senior
Subordinated Notes, 9.50%, Due 5/01/08 3,000,000 2,745,000
Mediacom LLC/Mediacom Capital Corporation
Senior Notes, Series B, 8.50%, Due 4/15/08 9,000,000 8,415,000
Metromedia Fiber Network, Inc. Senior Notes:
10.00%, Due 11/15/08 5,000,000 4,775,000
10.00%, Due 12/15/09 5,750,000 5,505,625
Millicom International SA Senior Subordinated
Discount Yankee Notes, Zero %, Due 6/01/06
(Rate Reset Effective 6/01/01) 5,000,000 4,225,000
Motors and Gears, Inc. Senior Notes, Series C,
10.75%, Due 11/15/06 9,400,000 8,977,000
NATG Holdings LLC/Orius Capital Corporation
Senior Subordinated Notes, 12.75%,
Due 2/01/10 (b) 6,000,000 6,090,000
NTL Communications Corporation Senior
Notes, Series B, 11.50%, Due 10/01/08 5,500,000 5,610,000
NTL, Inc. Senior Notes, Zero %,
Due 4/01/08 (Rate Reset Effective 4/01/03) 5,500,000 3,499,375
27
<PAGE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 2000 (Unaudited)
------------------------------------------------------------------------------------
STRONG HIGH-YIELD BOND FUND (contined)
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
National Wine & Spirits, Inc. Senior Notes,
10.125%, Due 1/15/09 $ 8,250,000 $ 7,920,000
Nextlink Communications, Inc. Senior Discount
Notes, Zero %, Due 6/01/09 (Rate Reset
Effective 6/01/04) 8,000,000 4,720,000
Nextlink Communications, Inc. Senior Notes:
10.50%, Due 12/01/09 (b) 6,000,000 5,820,000
10.75%, Due 11/15/08 2,000,000 1,970,000
Northpoint Communications Group, Inc.
Senior Notes, 12.875%, Due 2/15/10 (b) 10,000,000 8,950,000
Ono Finance PLC Yankee Notes, 13.00%,
Due 5/01/09 3,000,000 3,075,000
Orbital Imaging Corporation Senior Notes:
Series B, 11.625%, Due 3/01/05 3,500,000 1,767,500
Series D, 11.625%, Due 3/01/05 3,000,000 1,515,000
PSINet, Inc. Senior Notes, 10.50%,
Due 12/01/06 (b) 8,000,000 7,060,000
PSINet, Inc. Senior Yankee Notes, 11.00%,
Due 8/01/09 4,000,000 3,540,000
Park Place Entertainment Corporation Senior
Subordinated Notes, 9.375%, Due 2/15/07 (b) 5,000,000 4,962,500
Perry Ellis International, Inc. Senior
Subordinated Notes, 12.25%, Due 4/01/06 3,500,000 3,325,000
Pierce Leahy Corporation Senior Subordinated
Notes, 11.125%, Due 7/15/06 1,000,000 1,025,000
Pogo Producing Company Senior Subordinated
Notes, 10.375%, Due 2/15/09 4,815,000 4,923,338
Premier International Foods PLC Senior Yankee
Notes, 12.00%, Due 9/01/09 (b) 10,000,000 9,500,000
Renaissance Media Louisiana LLC/ Renaissance
Media Tennessee/ Renaissance Media Capital
Corporation Senior Discount Notes, Zero %,
Due 4/15/08 (Rate Reset Effective 4/15/03) 4,000,000 2,720,000
Repap New Brunswick Senior Yankee Notes,
10.625%, Due 4/15/05 7,750,000 7,343,125
Rhythms NetConnections, Inc. Senior Notes,
14.00%, Due 2/15/10 (b) 5,000,000 4,450,000
SF Holdings Group, Inc. Senior Secured
Discount Notes, Zero %, Due 3/15/08 (Rate
Reset Effective 3/15/03) 5,000,000 2,687,500
Sabreliner Corporation Senior Notes, 11.00%,
Due 6/15/08 (b) 6,000,000 5,040,000
Simmons Company Senior Subordinated Notes,
Series B, 10.25%, Due 3/15/09 5,700,000 4,845,000
Sirius Satellite Radio, Inc. Senior Secured Notes,
14.50%, Due 5/15/09 3,500,000 3,220,000
Snyder Oil Corporation Senior Subordinated
Notes, 8.75%, Due 6/15/07 2,400,000 2,370,000
Sovereign Specialty Chemicals, Inc. Senior
Subordinated Notes, 11.875%, Due 3/15/10 (b) 5,000,000 5,075,000
Spectrasite Holdings, Inc. Senior Discount Notes:
Zero %, Due 4/15/09 (Rate Reset Effective
4/15/04) 12,500,000 6,937,500
Zero %, Due 3/15/10 (Rate Reset Effective
3/15/05) (b) 10,625,000 5,551,563
Steel Heddle Manufacturing Company Senior
Subordinated Notes, 10.625%, Due 6/01/08 5,000,000 2,525,000
Superior National Capital Trust I Notes,
10.75%, Due 12/01/17 5,405,000 1,094,512
Telecorp PCS, Inc. Senior Subordinated
Discount Notes, Zero %, Due 4/15/09
(Rate Reset Effective 4/15/04) 4,000,000 2,640,000
Telemundo Holdings, Inc. Senior Discount
Notes, Zero %, Due 8/15/08 (Rate Reset
Effective 8/15/03) 5,300,000 3,445,000
Telewest Communications PLC Senior Discount
Notes, Zero %, Due 4/15/09 (Rate Reset
Effective 4/15/04) (b) 2,500,000 1,431,250
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Telewest Communications PLC Senior Yankee
Notes, 9.875%, Due 2/01/10 (b) $ 7,000,000 $ 6,895,000
Teligent, Inc. Senior Notes, 11.50%,
Due 12/01/07 9,500,000 8,217,500
360networks, Inc. Senior Yankee Notes, 13.00%,
Due 5/01/08 3,250,000 3,209,375
Time Warner Telecom LLC Senior Notes,
9.75%, Due 7/15/08 5,000,000 4,925,000
Town Sports International, Inc. Senior Notes,
Series B, 9.75%, Due 10/15/04 8,100,000 7,573,500
Transwestern Publishing Company LP/TWP
Capital Corporation II Senior Subordinated
Notes, Series D, 9.625%, Due 11/15/07 8,880,000 8,480,400
Tri-State Outdoor Media Group, Inc. Senior
Notes, 11.00%, Due 5/15/08 6,300,000 6,048,000
Triarc Consumer Products Group LLC/Triarc
Beverage Holdings Corporation Senior
Subordinated Notes, 10.25%, Due 2/15/09 6,130,000 5,792,850
Ubiquitel Operating Company Units, Zero %,
Due 4/15/10 (Rate Reset Effective 4/15/05) (b) 5,000,000 2,900,000
United Industries Corporation Senior
Subordinated Notes, Series B, 9.875%,
Due 4/01/09 7,250,000 5,328,750
United International Holdings, Inc. Senior
Secured Discount Notes, Series B, Zero %,
Due 2/15/08 (Rate Reset Effective 2/15/03) 14,925,000 9,775,875
Universal Compression Holdings, Inc. Senior
Discount Notes, Zero %, Due 2/15/09 (Rate
Reset Effective 2/15/03) 2,850,000 2,109,000
Universal Compression, Inc. Senior Discount
Notes, Zero %, Due 2/15/08 (Rate Reset
Effective 2/15/03) 12,425,000 7,827,750
Venetian Casino Resort LLC/Las Vegas Sands,
Inc. Secured Mortgage Notes, 12.25%,
Due 11/15/04 5,000,000 4,900,000
Verio, Inc. Senior Notes, 13.50%, Due 6/15/04 6,500,000 6,873,750
Versatel Telecom BV Senior Yankee Notes,
13.25%, Due 5/15/08 3,000,000 3,060,000
Versatel Telecom International NV Senior
Yankee Notes, 11.875%, Due 7/15/09 3,000,000 2,955,000
Viatel, Inc. Senior Notes, 11.50%, Due 3/15/09 5,000,000 4,325,000
Voicestream Wireless Corporation/Voicestream
Wireless Holdings Corporation Senior
Discount Notes, Zero %, Due 11/15/09
(Rate Reset Effective 11/15/04) (b) 8,000,000 4,960,000
Voicestream Wireless Corporation/Voicestream
Wireless Holdings Corporation Senior Notes,
10.375%, Due 11/15/09 (b) 4,500,000 4,590,000
Williams Communications Group, Inc. Senior
Notes, 10.875%, Due 10/01/09 9,000,000 9,090,000
Winstar Communications, Inc. Senior Discount
Notes, Zero %, Due 4/15/10 (Rate Reset
Effective 4/15/05) (b) 13,472,000 6,096,080
Winstar Communications, Inc. Senior Notes,
12.75%, Due 4/15/10 (b) 7,599,000 7,295,040
Worldwide Fiber, Inc. Senior Yankee Notes,
12.00%, Due 8/01/09 9,000,000 8,370,000
XM Satellite Radio, Inc. Units, 14.00%, Due
3/15/10 (b) 2,500,000 2,262,500
------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $650,985,978) 596,449,167
------------------------------------------------------------------------------------
Convertible Bonds 0.7%
Exide Corporation Senior Subordinated Notes,
2.90%, Due 12/15/05 (b) 5,000,000 2,900,000
Total Renal Care Holdings, Inc. Subordinated
Notes, 5.625%, Due 7/15/06 3,000,000 1,841,250
------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $5,716,309) 4,741,250
------------------------------------------------------------------------------------
28
<PAGE>
<CAPTION>
------------------------------------------------------------------------------------
STRONG HIGH-YIELD BOND FUND (contined)
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Non-Agency Mortgage &
Asset-Backed Securities 2.2%
Aircraft Lease Portfolio Securitization Pass-Thru
Trust Certificates, Series 1996-1,
Class D, 12.75%, Due 6/15/06 $ 4,298,934 $ 4,126,977
Blaylock Mortgage Capital Corporation
Subordinated Notes, Series 1997-A, Class B3,
6.425%, Due 10/25/03 (Acquired 3/11/98;
Cost $3,158,335) (b) 3,351,574 2,828,930
CS First Boston Mortgage Securities
Corporation Mortgage Pass-Thru Certificates,
Series 1992-4, Class A5, Interest Only,
0.625%, Due 10/25/22 8,487,391 87,420
Chase Mortgage Finance Trust Multiclass
Mortgage Pass-Thru Certificates, Series
1999-S2, Class B3, 6.50%, Due 3/25/29 (b) 1,556,196 1,087,329
Norwest Asset Securities Corporation Mortgage
Pass-Thru Certificates:
Series 1998-30, Class B4, 6.25%, Due
12/25/28 (b) 1,183,598 815,025
Series 1999-4, Class B4, 6.50%, Due 3/25/29 (b) 2,076,962 1,451,713
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Thru Certificates, Series
1997-A, Class B3, 7.3887%, Due 10/01/25 (b) 2,949,189 2,376,870
Sutter CBO, Ltd./Sutter CBO Corporation
Notes, Series 1999-1, Class B2, 13.442%,
Due 11/30/14 (Acquired 10/05/99;
Cost $3,000,000) (b) 3,000,000 2,805,930
------------------------------------------------------------------------------------
Total Non-Agency Mortgage &
Asset-Backed Securities (Cost $16,976,817) 15,580,194
------------------------------------------------------------------------------------
Preferred Stocks 7.6%
Dobson Communications Corporation 12.25%
Senior Exchangeable 3,720 3,692,100
Global Crossing Holdings, Ltd. 10.50% Senior
Exchangeable 40,000 3,930,000
Intermedia Communications, Inc. 13.50%
Series B Exchangeable 9,913 9,491,763
NTL, Inc. 13.00% Series B Senior Exchangeable 7,718 7,891,907
Nextel Communications, Inc. 13.00% Series D
Exchangeable 7,328 7,602,800
Nextlink Communications, Inc. 14.00% Senior
Exchangeable (e) 58,440 2,878,182
R&B Falcon Corporation 13.875% Senior (e) 12,493 13,367,028
Rural Cellular Corporation 12.50% Junior
Exchangeable 5,000 4,862,500
------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $56,164,636) 53,716,280
------------------------------------------------------------------------------------
Common Stocks 0.6%
Key Energy Services, Inc. (f) 43,468 423,813
NTL, Inc. (f) 5,937 454,181
OpTel, Inc. Non-Voting (Acquired 2/07/97 -
5/07/98; Cost $596,280) (b) (f) 17,175 85,875
Powertel, Inc. (f) 3,494 234,971
SF Holdings Group, Inc. Class C (Acquired
3/05/98; Cost $20,000) (b) (f) 1,000 10
Verio, Inc. (f) 53,080 1,993,817
Versatel Telecom International NV Sponsored
ADR (f) 33,262 1,345,035
------------------------------------------------------------------------------------
Total Common Stocks (Cost $1,728,942) 4,537,702
------------------------------------------------------------------------------------
Warrants 0.7%
Aladdin Gaming Holdings LLC Warrants,
Expire 3/01/10 80,000 800
American Telecasting, Inc. Warrants, Expire
8/10/00 150 0
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
CD Radio, Inc. Warrants, Expire 5/15/09 (b) $ 10,500 $ 1,134,000
e.spire Communications, Inc. Warrants,
Expire 11/01/05 1,500 112,500
MetroNet Communications Corporation
Warrants, Expire 8/15/07 3,000 450,000
Ono Finance PLC Warrants, Expire 5/31/09 (b) 3,000 451,500
Orbital Imaging Corporation Warrants, Expire
3/01/05 (Acquired 2/20/98 - 5/04/98; Cost $1) (b) 6,500 130,000
R&B Falcon Corporation Warrants, Expire
5/01/09 (b) 7,000 2,450,000
21st Century Telecom Group, Inc. Warrants, Expire
2/15/10 (Acquired 2/02/98; Cost $55,000) (b) 1,000 20,000
------------------------------------------------------------------------------------
Total Warrants (Cost $880,561) 4,748,800
------------------------------------------------------------------------------------
Short-Term Investments (a) 2.0%
Commercial Paper 0.2%
Interest Bearing, Due Upon Demand
Sara Lee Corporation, 5.76% 4,200 4,200
Warner Lambert Company, 5.76% 526,600 526,600
Wisconsin Electric Power Company, 5.76% 950,900 950,900
------------
1,481,700
Repurchase Agreements 1.8%
ABN-AMRO Inc. (Dated 4/29/00), 5.78%, Due
5/01/00 (Repurchase proceeds $12,405,973);
Collateralized by U.S. Government & Agency
Issues (d) 12,400,000 12,400,000
------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $13,881,700) 13,881,700
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Total Investments in Securities (Cost $746,334,943) 98.0% 693,655,093
Other Assets and Liabiliities, Net 2.0% 14,507,783
------------------------------------------------------------------------------------
Net Assets 100.0% $708,162,876
====================================================================================
<CAPTION>
------------------------------------------------------------------------------------
STRONG SHORT-TERM HIGH YIELD BOND FUND
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Corporate Bonds 79.5%
AMFM Operating, Inc. Senior Subordinated
Exchange Debentures, 12.625%, Due 10/31/06 $ 4,060,700 $ 4,669,805
Adelphia Business Solutions, Inc. Senior
Discount Notes, Zero %, Due 4/15/03
(Rate Reset Effective 4/15/01) 3,000,000 2,797,500
Adelphia Communications Corporation
Senior Notes:
9.25%, Due 10/01/02 5,000,000 4,925,000
Series B, 7.50%, Due 1/15/04 3,000,000 2,767,500
Allegiance Telecom, Inc. Senior Notes, 12.875%,
Due 5/15/08 1,000,000 1,095,000
CSC Holdings, Inc. Senior Subordinated
Notes, 9.875%, Due 5/15/06 2,500,000 2,562,500
Capstar Broadcasting Partners, Inc. Senior
Discount Notes, Zero %, Due 2/01/09
(Rate Reset Effective 2/01/02) 2,200,000 1,947,000
Capstar Broadcasting Partners, Inc.
Subordinated Debentures, 12.00%, Due 7/01/09 119,000 136,850
Century Communications Corporation Senior
Discount Notes, Zero %, Due 3/15/03 4,000,000 2,960,000
Clearnet Communications, Inc. Senior Discount
Yankee Notes, Zero %, Due 12/15/05
(Rate Reset Effective 12/15/00) 5,200,000 5,304,000
Coinmach Corporation Senior Notes, Series D,
11.75%, Due 11/15/05 2,000,000 1,770,000
Continental Airlines, Inc. Senior Notes, 9.50%,
Due 12/15/01 2,000,000 2,040,000
29
<PAGE>
<CAPTION>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) April 30, 2000 (Unaudited)
------------------------------------------------------------------------------------
STRONG SHORT-TERM HIGH YIELD BOND FUND (contined)
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Del Monte Corporation Senior Subordinated
Notes, 12.25%, Due 4/15/07 $ 2,600,000 $ 2,769,000
FrontierVision Operating Partners LP/
FrontierVision Capital Corporation Senior
Subordinated Notes, 11.00%, Due 10/15/06 2,500,000 2,562,500
GS Escrow Corporation Senior Notes, 7.00%,
Due 8/01/03 4,000,000 3,665,720
Graham Packaging Company/GPC Capital
Corporation I Floating Rate Notes, 9.845%,
Due 1/15/08 1,000,000 870,000
Hyperion Telecommunications, Inc. Senior
Secured Notes, 12.25%, Due 9/01/04 6,000,000 6,255,000
ISP Holdings, Inc. Senior Notes, 9.00%,
Due 10/15/03 2,000,000 1,840,000
Intermedia Communications, Inc. Senior
Discount Notes, Zero %, Due 5/15/06
(Rate Reset Effective 5/15/01) 3,000,000 2,835,000
Interpool, Inc. Notes, 6.625%, Due 3/01/03 5,000,000 4,444,235
Keebler Corporation Senior Subordinated
Notes, 10.75%, Due 7/01/06 5,000,000 5,311,275
MJD Communications, Inc. Floating Rate
Notes, 10.3213%, Due 5/01/08 5,000,000 4,820,800
MetroNet Communications Corporation
Senior Yankee Notes, 12.00%, Due 8/15/07 4,000,000 4,503,764
Microcell Telecommunications, Inc. Senior
Discount Yankee Notes, Series B, Zero %,
Due 6/01/06 (Rate Reset Effective 12/01/01) 3,000,000 2,722,500
NL Industries Senior Secured Notes, 11.75%,
Due 10/15/03 5,355,000 5,515,650
NS Group, Inc. Senior Notes, 13.50%,
Due 7/15/03 1,458,000 1,494,450
NTL, Inc. Senior Deferred Coupon Notes,
Series A, Zero %, Due 4/15/05
(Rate Reset Effective 4/15/00) 4,500,000 4,646,250
Nextlink Communications LLC Senior Notes,
12.50%, Due 4/15/06 8,000,000 8,400,000
Olympus Communications LP/Olympus
Capital Corporation Senior Notes, 10.625%,
Due 11/15/06 1,000,000 1,020,000
Oregon Steel Mills, Inc. First Mortgage
Notes, 11.00%, Due 6/15/03 3,000,000 2,235,000
Paxson Communications Corporation Senior
Subordinated Notes, 11.625%, Due 10/01/02 3,000,000 3,067,500
Pegasus Media & Communications, Inc. Senior
Subordinated Notes, Series B, 12.50%,
Due 7/01/05 5,000,000 5,337,500
Pinnacle Entertainment, Inc. Secured Notes,
Series B, 13.00%, Due 8/15/03 5,025,000 5,401,875
Players International, Inc. Senior Notes,
10.875%, Due 4/15/05 3,000,000 3,127,500
Price Communications Wireless, Inc. Senior
Subordinated Notes, 11.75%, Due 7/15/07 3,000,000 3,255,000
Qwest Communications International, Inc.
Senior Notes, Series B, 10.875%, Due 4/01/07 3,250,000 3,476,896
R&B Falcon Corporation Senior Notes,
Series B, 6.50%, Due 4/15/03 5,700,000 5,244,000
Radio One, Inc. Senior Subordinated Notes,
Series B, 7.00%, Due 5/15/04
(Rate Reset Effective 5/15/00) 5,000,000 5,325,000
Rogers Cablesystems, Ltd. Senior Secured
Second Priority Notes, 9.625%, Due 8/01/02 1,625,000 1,649,375
SC International Services, Inc. Senior
Subordinated Notes, 9.25%, Due 9/01/07 4,500,000 4,117,500
SD Warren Company Debentures, 14.00%,
Due 12/15/06 6,532,207 7,152,767
Selmer Company, Inc. Senior Subordinated
Notes, 11.00%, Due 5/15/05 3,945,000 4,102,800
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Shopper's Food Warehouse Corporation Senior
Notes, 9.75%, Due 6/15/04 $ 5,000,000 $ 5,250,000
Sprint Spectrum LP/Sprint Spectrum Finance
Corporation Senior Notes, 11.00%,
Due 8/15/06 3,945,000 4,253,010
Statia Terminals International/Statia Terminals
Canada, Inc. First Mortgage Notes,
Series B, 11.75%, Due 11/15/03 5,935,000 5,905,325
Superior Financial Corporation Senior
Notes, 8.65%, Due 4/01/03 2,000,000 1,877,500
Telewest PLC Senior Discount Debentures,
Zero %, Due 10/01/07 (Rate Reset
Effective 10/01/00) 3,000,000 2,835,000
Tenet Healthcare Corporation Senior
Notes, 8.625%, Due 12/01/03 1,000,000 973,048
Triton Energy, Ltd./Triton Energy Corporation
Senior Notes, 8.75%, Due 4/15/02 8,000,000 7,960,000
United Stationers Supply Senior Subordinated
Notes, 12.75%, Due 5/01/05 4,000,000 4,260,000
Univision Network Holding LP Subordinated
Notes, 7.00%, Due 12/17/02 6,000,000 7,920,000
Viacom International, Inc. Senior Subordinated
Notes, 10.25%, Due 9/15/01 2,000,000 2,067,480
Waste Management, Inc. Senior Notes:
6.125%, Due 7/15/01 2,000,000 1,907,220
6.50%, Due 12/15/02 500,000 457,891
Young Broadcasting, Inc. Senior Subordinated
Notes, 11.75%, Due 11/15/04 2,200,000 2,216,500
------------------------------------------------------------------------------------
Total Corporate Bonds (Cost $204,034,254) 198,026,986
------------------------------------------------------------------------------------
Convertible Bonds 0.2%
CUC International, Inc. Subordinated
Notes, 3.00%, Due 2/15/02 500,000 460,000
------------------------------------------------------------------------------------
Total Convertible Bonds (Cost $474,760) 460,000
------------------------------------------------------------------------------------
Non-Agency Mortgage &
Asset-Backed Securities 3.8%
Blaylock Mortgage Capital Corporation
Subordinated Notes, Series 1997-A,
Class B3, 6.425%, Due 10/25/03
(Acquired 3/11/98; Cost $1,884,688) (b) 2,000,000 1,688,120
Lehman Relocation Mortgage Trust Subordinated
Variable Rate Mortgage-Backed Certificates,
Series 1997-2, Class B1, 7.1263%,
Due 6/28/26 (b) 2,416,627 1,726,753
Mellon Residential Funding Corporation
Variable Rate Mortgage Pass-Thru Certificates,
Series 1999-TBC3:
Class B-4, 6.5861%, Due 10/20/29 (b) 1,029,000 808,413
Class B-5, 6.5861%, Due 10/20/29 (b) 617,000 467,088
Merrill Lynch Mortgage Investors, Inc. Variable
Rate Mortgage Pass-Thru Certificates,
Series 1994-M1, Class E, 8.4393%,
Due 6/25/22 (Acquired 11/19/98;
Cost $2,910,000) (b) 3,000,000 2,962,605
Oregon Commercial Mortgage, Inc. Variable Rate
Commercial Mortgage Pass-Thru Certificates,
Series 1995-1, Class E, 9.9862%, Due 6/25/26 (b) 134,093 133,171
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Thru Certificates, Series 1994-5,
Class B2, 8.0134%, Due 4/25/24 1,540,754 1,576,671
------------------------------------------------------------------------------------
Total Non-Agency Mortgage &
Asset-Backed Securities (Cost $9,972,439) 9,362,821
------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
STRONG SHORT-TERM HIGH YIELD BOND FUND (continued)
------------------------------------------------------------------------------------
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS 5.8%
CSC Holdings, Inc. 11.125% Series M 65,830 $ 7,109,595
NTL, Inc. 13.00% Series B Senior Exchangeable 7,175 7,336,277
------------------------------------------------------------------------------------
Total Preferred Stocks (Cost $15,247,305) 14,445,872
------------------------------------------------------------------------------------
Short-Term Investments (a) 9.4%
Commercial Paper 0.8%
Interest Bearing, Due Upon Demand
Sara Lee Corporation, 5.76% $1,481,900 1,481,900
Warner Lambert Company, 5.76% 39,000 39,000
Wisconsin Electric Power Company, 5.76% 409,400 409,400
------------
1,930,300
Corporate Bonds 5.8%
ITT Corporation Notes, 6.25%, Due 11/15/00 7,000,000 6,904,828
Lyondell Chemical Company Debentures,
9.90%, Due 11/01/00 5,000,000 4,995,480
US Air, Inc. Senior Notes, 9.625%, Due 2/01/01 2,660,000 2,628,109
------------
14,528,417
Repurchase Agreements 2.8%
ABN-AMRO Inc. (Dated 4/28/00), 5.78%,
Due 5/01/00 (Repurchase proceeds $7,103,420);
Collateralized by: U.S. Government & Agency
Issues (d) 7,100,000 7,100,000
------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $23,678,129) 23,558,717
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Total Investments in Securities (Cost $253,406,887) 98.7% 245,854,396
Other Assets and Liabilities, Net 1.3% 3,229,459
------------------------------------------------------------------------------------
Net Assets 100.0% $249,083,855
====================================================================================
</TABLE>
--------------------------------------------------------------------------------
LEGEND
--------------------------------------------------------------------------------
(a) Short-term investments include any security which has a remaining maturity
of less than one year.
(b) Restricted security.
(c) All or a portion of security pledged to cover margin requirements for
futures contracts.
(d) See Note 2(I) of Notes to Financial Statements.
(e) All or a portion of security is when-issued.
(f) Non-income producing security.
Percentages are stated as a percent of net assets.
CURRENCY ABBREVIATIONS
--------------------------------------------------------------------------------
CAD Canadian Dollar
EUR Euro
GBP British Pound
USD United States Dollar
31
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
-------------------------------------------------------------------------------
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except As Noted)
Strong Strong Strong
Strong Corporate Government Short-Term
Bond Fund Bond Fund Securities Fund Bond Fund
--------- --------- --------------- ---------
<S> <C> <C> <C> <C>
Assets:
Investments in Securities, at Value
(Cost of $230,552, $880,710, $1,410,850 and
$1,174,529, respectively) $225,879 $841,472 $1,385,477 $1,144,133
Receivable for Securities Sold 9,354 6,685 84,340 11,670
Receivable for Fund Shares Sold 1 639 609 87
Interest and Dividends Receivable 3,005 18,070 13,008 18,853
Other Assets 153 33 -- --
-------- -------- ---------- ----------
Total Assets 238,392 866,899 1,483,434 1,174,743
Liabilities:
Payable for Securities and Forward
Foreign Currency Contracts Purchased 39,307 3,825 252,589 9,027
Written Options, at Value
(Premiums Received of $0, $0, $362 and
$0, respectively) -- -- 180 --
Payable for Fund Shares Redeemed 25 395 415 131
Dividends Payable 1,113 4,567 5,591 5,833
Accrued Operating Expenses and Other Liabilities 68 1,715 131 597
-------- -------- ---------- ----------
Total Liabilities 40,513 10,502 258,906 15,588
-------- -------- ---------- ----------
Net Assets $197,879 $856,397 $1,224,528 $1,159,155
======== ======== ========== ==========
Net Assets Consist of:
Capital Stock (par value and paid-in capital) $205,747 $937,514 $1,296,604 $1,295,099
Accumulated Net Investment Income (Loss) (93) 165 -- (43)
Accumulated Net Realized Loss (3,886) (40,508) (46,999) (104,121)
Net Unrealized Depreciation (3,889) (40,774) (25,077) (31,780)
-------- -------- ---------- ----------
Net Assets $197,879 $856,397 $1,224,528 $1,159,155
======== ======== ========== ==========
Investor Class ($ and shares in full)
Net Assets $4,647,157 $846,321,781 $1,213,411,724 $1,138,655,586
Capital Shares Outstanding (Unlimited Number Authorized) 439,377 82,068,164 120,374,476 122,557,701
Net Asset Value Per Share $10.58 $10.31 $10.08 $9.29
====== ====== ====== =====
Institutional Class ($ and shares in full)
Net Assets $193,215,997 $3,123,517 $11,033,732 $20,483,223
Capital Shares Outstanding (Unlimited Number Authorized) 18,290,177 303,198 1,094,020 2,202,641
Net Asset Value Per Share $10.56 $10.30 $10.09 $9.30
====== ====== ====== =====
Advisor Class ($ and shares in full)
Net Assets $15,957 $6,951,550 $82,064 $15,886
Capital Shares Outstanding (Unlimited Number Authorized) 1,510 674,246 8,143 1,709
Net Asset Value Per Share $10.57 $10.31 $10.08 $9.30
====== ====== ====== =====
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (continued)
-------------------------------------------------------------------------------
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except As Noted)
Strong High-Yield Strong Short-Term
Bond Fund High Yield Bond Fund
----------------- --------------------
<S> <C> <C>
Assets:
Investments in Securities, At Value
(Cost of $746,335 and $253,407, respectively) $693,655 $245,854
Receivable for Securities Sold 4,131 1,006
Receivable for Fund Shares Sold 92 --
Interest and Dividends Receivable 16,206 4,851
Other Assets 2,698 51
-------- --------
Total Assets 716,782 251,762
Liabilities:
Payable for Securities Purchased 1,564 1,000
Payable for Fund Shares Redeemed 228 91
Dividends Payable 6,277 1,304
Accrued Operating Expenses and Other Liabilities 550 283
-------- --------
Total Liabilities 8,619 2,678
-------- --------
Net Assets $708,163 $249,084
======== ========
Net Assets Consist of:
Capital Stock (par value and paid-in capital) $773,494 $260,888
Accumulated Net Realized Loss (12,651) (4,252)
Net Unrealized Depreciation (52,680) (7,552)
-------- --------
Net Assets $708,163 $249,084
======== ========
Investor Class ($ and shares in full)
Net Assets $708,148,453 $249,069,050
Capital Shares Outstanding (Unlimited Number Authorized) 68,581,770 25,112,913
Net Asset Value Per Share $10.33 $9.92
====== =====
Advisor Class ($ and shares in full)
Net Assets $14,423 $14,805
Capital Shares Outstanding (Unlimited Number Authorized) 1,397 1,493
NET ASSET VALUE PER SHARE $10.32 $9.92
====== =====
</TABLE>
See Notes to Financial Statements.
33
<PAGE>
STATEMENTS OF OPERATIONS
-------------------------------------------------------------------------------
For the Six Months Ended April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
(In Thousands)
Strong Strong Strong
Strong Corporate Government Short-Term
Bond Fund Bond Fund Securities Fund Bond Fund
--------- --------- --------------- ----------
<S> <C> <C> <C> <C>
INCOME:
Interest $6,527 $33,917 $41,714 $43,651
Dividends (net of withholding taxes of $0, $10, $0 and
$3, respectively) 204 1,835 752 2,526
------ ------- ------- -------
Total Income 6,731 35,752 42,466 46,177
EXPENSES:
Investment Advisory Fees 203 1,584 2,220 2,281
Administrative Fee - Investor Class 2 1,050 1,576 1,498
Administrative Fee - Institutional Class 18 -- 1 2
Administrative Fee - Advisor Class -- 4 -- --
Custodian Fees 9 21 30 23
Shareholder Servicing Costs - Investor Class 1 909 1,202 1,000
Shareholder Servicing Costs - Institutional Class 13 -- 1 1
Shareholder Servicing Costs - Advisor Class -- 3 -- --
12b-1 Fees - Advisor Class -- 4 -- --
Reports to Shareholders - Investor Class 1 140 117 205
Reports to Shareholders - Institutional Class 7 -- -- 2
Federal and State Registration Fees 47 49 43 40
Other 21 35 58 61
------ ------- ------- -------
Total Expenses before Fees Paid Indirectly by Advisor 322 3,799 5,248 5,113
Fees Paid Indirectly by Advisor - Investor Class -- (24) (21) (13)
------ ------- ------- -------
Expenses, Net 322 3,775 5,227 5,100
------ ------- ------- -------
Net Investment Income 6,409 31,977 37,239 41,077
Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investments 392 (12,680) (7,782) (7,771)
Futures Contracts, Options and Forward
Foreign Currency Contracts (356) (1,364) (5,350) 2,433
Foreign Currencies 4 (118) -- --
------ ------- ------- -------
Net Realized Gain (Loss) 40 (14,162) (13,132) (5,338)
Net Change in Unrealized Appreciation/Depreciation on:
Investments (2,929) (9,854) (8,029) (10,084)
Futures Contracts, Options and Forward
Foreign Currency Contracts 1,054 (1,246) 2,041 (540)
Foreign Currencies (25) (8) -- --
------ ------- ------- -------
Net Change in Unrealized Appreciation/Depreciation (1,900) (11,108) (5,988) (10,624)
------ ------- ------- -------
Net Loss on Investments (1,860) (25,270) (19,120) (15,962)
------ ------- ------- -------
Net Increase in Net Assets Resulting from Operations $4,549 $ 6,707 $18,119 $25,115
====== ======= ======= =======
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
STATEMENTS OF OPERATIONS (continued)
-------------------------------------------------------------------------------
For the Six Months Ended April 30, 2000 (Unaudited)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands)
Strong High-Yield Strong Short-Term
Bond Fund High Yield Bond Fund
----------------- --------------------
<S> <C> <C>
Income:
Interest $34,442 $10,413
Dividends 3,554 826
------- ------
Total Income 37,996 11,239
Expenses:
Investment Advisory Fees 1,243 484
Administrative Fee - Investor Class 835 324
Custodian Fees 12 5
Shareholder Servicing Costs - Investor Class 432 176
Transfer Agency Banking Charges - Investor Class -- 2
Reports to Shareholders - Investor Class 96 29
Other 70 34
------- ------
Total Expenses before Fees Paid Indirectly by Advisor 2,688 1,054
Fees Paid Indirectly by Advisor - Investor Class (10) --
------- ------
Expenses, Net 2,678 1,054
------- ------
Net Investment Income 35,318 10,185
Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on Investments 1,805 (4,251)
Net Change in Unrealized Appreciation/Depreciation on Investments (23,322) (3,503)
------- ------
Net Loss on Investments (21,517) (7,754)
------- ------
Net Increase in Net Assets Resulting from Operations $13,801 $2,431
======= ======
</TABLE>
See Notes to Financial Statements.
35
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands)
Strong Corporate
Strong Bond Fund Bond Fund
--------------------------------------------------- ---------------------------------
Six Months Ended Year Ended Year Ended Six Months Ended Year Ended
April 30, 2000 Oct. 31, 1999 Feb. 28, 1999 April 30, 2000 Oct. 31, 1999
---------------- ------------- ------------- ---------------- -------------
(Unaudited) (Note 1) (Unaudited)
<S> <C> <C> <C> <C> <C>
Operations:
Net Investment Income $ 6,409 $ 6,858 $ 5,136 $ 31,977 $ 58,297
Net Realized Gain (Loss) 40 (3,704) 1,556 (14,162) (20,215)
Net Change in Unrealized
Appreciation/Depreciation (1,900) (1,937) (825) (11,108) (19,954)
-------- -------- -------- -------- --------
Net Increase in Net Assets
Resulting from Operations 4,549 1,217 5,867 6,707 18,128
Distributions:
From Net Investment Income:
Investor Class (62) (1) -- (30,289) (58,058)
Institutional Class (6,419) (6,898) (5,167) (62) (3)
Advisor Class -- -- -- (107) --
From Net Realized
Gains - Institutional Class -- (732) (1,721) -- --
-------- -------- -------- -------- --------
Total Distributions (6,481) (7,631) (6,888) (30,458) (58,061)
Capital Share Transactions (Note 4):
Net Increase in Net Assets from
Capital Share Transactions 33,940 37,569 79,173 11,079 90,355
-------- -------- -------- -------- --------
Total Increase (Decrease) in Net Assets 32,008 31,155 78,152 (12,672) 50,422
Net Assets:
Beginning of Period 165,871 134,716 56,564 869,069 818,647
-------- -------- -------- -------- --------
End of Period $197,879 $165,871 $134,716 $856,397 $869,069
======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands)
Strong Government Strong Short-Term
Securities Fund Bond Fund
-------------------------------- --------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
April 30, 2000 Oct. 31, 1999 April 30, 2000 Oct. 31, 1999
---------------- ------------- ---------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operations:
Net Investment Income $ 37,239 $ 73,567 $ 41,077 $ 85,378
Net Realized Loss (13,132) (31,092) (5,338) (3)
Net Change in Unrealized Appreciation/Depreciation (5,988) (43,774) (10,624) (23,050)
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 18,119 (1,299) 25,115 62,325
Distributions:
From Net Investment Income:
Investor Class (37,114) (73,567) (40,172) (84,060)
Institutional Class (231) (1) (605) (27)
Advisor Class (1) -- -- --
From Net Realized Gains - Investor Class -- (27,673) -- --
----------- ----------- ---------- ---------
Total Distributions (37,346) (101,241) (40,777) (84,087)
Capital Share Transactions (note 4):
Net Increase (Decrease) in Net Assets from
Capital Share Transactions (96,307) 133,700 (110,735) (21,821)
----------- ----------- ----------- ---------
TOTAL INCREASE (DECREASE) IN NET ASSETS (115,534) 31,160 (126,397) (43,583)
NET ASSETS:
Beginning of Period 1,340,062 1,308,902 1,285,552 1,329,135
---------- ---------- ---------- ----------
End of Period $1,224,528 $1,340,062 $1,159,155 $1,285,552
========== ========== ========== ==========
<CAPTION>
Strong High-Yield Strong Short-Term
Bond Fund High Yield Bond Fund
-------------------------------- --------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
April 30, 2000 Oct. 31, 1999 April 30, 2000 Oct. 31, 1999
---------------- ------------- ---------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operations:
Net Investment Income $ 35,318 $ 58,548 $ 10,185 $ 15,322
Net Realized Gain (Loss) 1,805 (13,400) (4,251) 354
Net Change in Unrealized Appreciation/Depreciation (23,322) 6,755 (3,503) (1,822)
-------- -------- -------- --------
Net Increase in Net Assets Resulting from Operations 13,801 51,903 2,431 13,854
Distributions:
From Net Investment Income - Investor Class (35,282) (58,243) (10,185) (15,322)
From Net Realized Gains - Investor Class -- (4,243) (54) (632)
-------- -------- -------- --------
Total Distributions (35,282) (62,486) (10,239) (15,954)
Capital Share Transactions (Note 4):
Net Increase in Net Assets from Capital Share Transactions 134,447 143,280 4,394 148,364
-------- -------- -------- --------
Total Increase (Decrease) in Net Assets 112,966 132,697 (3,414) 146,264
Net Assets:
Beginning of Period 595,197 462,500 252,498 106,234
-------- -------- -------- --------
End of Period $708,163 $595,197 $249,084 $252,498
======== ======== ======== ========
</TABLE>
See Notes to Financial Statements.
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
April 30, 2000 (Unaudited)
1. Organization
The accompanying financial statements represent the Strong Income Funds (the
"Funds"), which include the following funds, each with its own investment
objectives and policies:
- Strong Bond Fund (a series of Strong Income Funds II, Inc.(1)) (formerly
known as Strong Institutional Bond Fund, a series of Strong Institutional
Funds, Inc.)
- Strong Corporate Bond Fund, Inc.(1)
- Strong Government Securities Fund, Inc.(1)
- Strong Short-Term Bond Fund, Inc.(1)
- Strong High-Yield Bond Fund (a series of Strong Income Funds, Inc.(1))
- Strong Short-Term High Yield Bond Fund (a series of Strong Income Funds,
Inc.(1))
(1) A diversified, open-end management investment company registered under
the Investment Company Act of 1940, as amended.
During 1999, the Board of Directors of the Strong Bond Fund approved
changing the Fund's fiscal year-end from February 28th to October 31st.
Effective September 1, 1999, the Strong Bond Fund, Strong Corporate Bond
Fund, Strong Government Securities Fund and Strong Short-Term Bond Fund have
issued three classes of shares: Investor Class, Institutional Class and
Advisor Class. The Advisor Class shares are subject to an annual
distribution fee as described in Note 3. Each class of shares has identical
rights and privileges except with respect to voting rights on matters
pertaining to that class. Income, expenses (other than expenses attributable
to a specific class), and realized and unrealized gains or losses on
investments are allocated to each class of shares based on its relative net
assets.
Effective March 1, 2000, the Strong High-Yield Bond Fund and Strong
Short-Term High Yield Bond Fund issued two classes of shares: Investor Class
and Advisor Class. The Advisor Class shares are subject to an annual
distribution fee as described in Note 3. Each class of shares has identical
rights and privileges except with respect to voting rights on matters
pertaining to that class. Income, expenses (other than expenses attributable
to a specific class), and realized and unrealized gains or losses on
investments are allocated to each class of shares based on its relative net
assets.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.
(A) Security Valuation -- Securities of the Funds are valued at fair value
through valuations obtained by a commercial pricing service or the mean
of the bid and asked prices when no last sales price is available.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith under consistently
applied procedures established by and under the general supervision of
the Board of Directors. Securities which are purchased within 60 days
of their stated maturity are valued at amortized cost, which
approximates fair value.
The Funds may own certain investment securities which are restricted as
to resale. These securities are valued after giving due consideration
to pertinent factors, including recent private sales, market conditions
and the issuer's financial performance. The Funds generally bear the
costs, if any, associated with the disposition of restricted
securities. Aggregate cost and fair value of these restricted
securities held at April 30, 2000 were as follows:
<TABLE>
<CAPTION>
Aggregate Aggregate Percent of
Cost Fair Value Net Assets Liquid*
------------ ------------ ---------- -------
<S> <C> <C> <C> <C>
Strong Bond Fund $ 27,848,211 $ 27,343,794 13.8% 96.3%
Strong Corporate Bond Fund 126,906,091 120,491,016 14.1% 100.0%
Strong Government Securities Fund 12,213,251 12,665,906 1.0% 100.0%
Strong Short-Term Bond Fund 274,697,465 266,601,808 23.0% 81.6%
Strong High-Yield Bond Fund 183,083,245 181,117,365 25.6% 96.8%
Strong Short-Term High Yield Bond Fund 8,227,566 7,786,150 3.1% 40.3%
</TABLE>
*Percentage of restricted securities which are either Section 4(2)
commercial paper or are eligible for resale pursuant to Rule 144A under
the Securities Act of 1933 and also have been determined to be liquid
by the Advisor based upon guidelines established by the Funds' Board of
Directors.
(B) Federal Income and Excise Taxes and Distributions to Shareholders --
The Funds intend to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of their taxable income to their
shareholders in a manner which results in no tax cost to the Funds.
Therefore, no federal income or excise tax provision is required.
38
<PAGE>
--------------------------------------------------------------------------------
Net investment income and net realized gains for financial statement
purposes may differ from the characterization for federal income tax
purposes due to differences in the recognition of income and expense
items for financial statement and tax purposes. Where appropriate,
reclassifications between net asset accounts are made for such
differences that are permanent in nature.
Each Fund generally pays dividends from net investment income monthly
and distributes any net capital gains that it realizes annually.
Dividends are declared on each day that the net asset value is
calculated, except for bank holidays.
(C) Realized Gains and Losses on Investment Transactions -- Investment
security transactions are recorded as of the trade date. Gains or
losses realized on investment transactions are determined by comparing
the identified cost of the security lot sold with the net sales
proceeds.
(D) Certain Investment Risks -- The Funds may utilize derivative
instruments including options, futures and other instruments with
similar characteristics to the extent that they are consistent with the
Fund's investment objectives and limitations. The Funds intend to use
such derivative instruments primarily to hedge or protect from adverse
movements in securities prices or interest rates. The use of these
instruments may involve risks such as the possibility of illiquid
markets or imperfect correlation between the value of the instruments
and the underlying securities, or that the counterparty will fail to
perform its obligations.
Investments in foreign denominated assets or forward currency
contracts may involve greater risks than domestic investments due to
currency, political, economic, regulatory and market risks.
(E) Futures -- Upon entering into a futures contract, the Funds pledge to
the broker cash or other investments equal to the minimum "initial
margin" requirements of the exchange. Additional securities held by the
Funds may be designated as collateral on open futures contracts. The
Funds also receive from or pay to the broker an amount of cash equal to
the daily fluctuation in the value of the contract. Such receipts or
payments are known as "variation margin," and are recorded as
unrealized gains or losses. When the futures contract is closed, a
realized gain or loss is recorded equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed.
(F) Options -- The Funds may write put or call options. Premiums received
by the Funds upon writing put or call options are recorded as an asset
with a corresponding liability which is subsequently adjusted to the
current market value of the option. Changes between the initial
premiums received and the current market value of the options are
recorded as unrealized gains or losses. When an option expires, is
exercised, or is closed, the Funds realize a gain or loss, and the
liability is eliminated. The Funds continue to bear the risk of adverse
movements in the price of the underlying asset during the period of the
option, although any potential loss during the period would be reduced
by the amount of the option premium received. Securities held by the
Funds may be designated as collateral on written options.
(G) Foreign Currency Translation -- Investment securities and other assets
and liabilities initially expressed in foreign currencies are converted
daily to U.S. dollars based upon current exchange rates. Purchases and
sales of foreign investment securities and income are converted to U.S.
dollars based upon currency exchange rates prevailing on the respective
dates of such transactions. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected
as a component of such gains or losses.
(H) Forward Foreign Currency Exchange Contracts -- Forward foreign currency
exchange contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the Funds record
an exchange gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it was
closed.
(I) Repurchase Agreements -- The Funds may enter into repurchase agreements
with institutions that the Funds' investment advisor, Strong Capital
Management, Inc. ("the Advisor"), has determined are creditworthy
pursuant to criteria adopted by the Board of Directors. Each repurchase
agreement is recorded at cost. The Funds require that the collateral,
represented by securities (primarily U.S. Government securities), in a
repurchase transaction be maintained in a segregated account with a
custodian bank in a manner sufficient to enable the Funds to obtain
those securities in the event of a default of the repurchase agreement.
On a daily basis, the Advisor monitors the value of the collateral,
including accrued interest, to ensure it is at least equal to the
amounts owed to the Funds under each repurchase agreement.
(J) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts in these financial statements. Actual results could differ from
those estimates.
(K) Other -- Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of premiums and discounts.
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
April 30, 2000 (Unaudited)
3. Related Party Transactions
The Advisor, with whom certain officers and directors of the Funds are
affiliated, provides investment advisory, administrative, shareholder
recordkeeping and related services to the Funds. Investment advisory and
administrative fees, which are established by terms of the Advisory
Agreements, are based on the following annualized rates of the average daily
net assets of the respective Fund:
<TABLE>
<CAPTION>
Administrative Administrative Administrative
Fees - Fees - Fees -
Advisory Fees Investor Class Institutional Class Advisor Class
Nov. 1, Nov. 1, Nov. 1, Nov. 1,
1999-April 30, 1999-April 30, 1999-April 30, 1999-April 30,
2000 2000 2000 2000
-------------- -------------- ------------------- --------------
<S> <C> <C> <C> <C>
Strong Bond Fund 0.23% 0.25% 0.02% 0.25%
Strong Corporate Bond Fund 0.375% 0.25% 0.02% 0.25%
Strong Government Securities Fund 0.35% 0.25% 0.02% 0.25%
Strong Short-Term Bond Fund 0.375% 0.25% 0.02% 0.25%
Strong High-Yield Bond Fund 0.375% 0.25% * 0.25%**
Strong Short-Term High Yield Bond Fund 0.375% 0.25% * 0.25%**
</TABLE>
*The Strong High-Yield Bond Fund and the Strong Short-Term High Yield Bond
Fund do not offer Institutional Class shares.
**Effective March 1, 2000.
Based on the terms of the Advisory Agreements, advisory fees, administrative
fees and other expenses will be waived or absorbed by the Advisor if the
Fund's operating expenses exceed 2% of the average daily net assets of the
Fund. In addition, the Fund's Advisor may voluntarily waive or absorb
certain expenses at its discretion. Shareholder recordkeeping and related
service fees are based on contractually established rates for each open and
closed shareholder account. The Advisor also allocates to each Fund certain
charges or credits resulting from transfer agency banking activities based
on each Fund's level of subscription and redemption activity. Charges
allocated to the Funds by the Advisor are included in Other Expenses in the
Funds' Statement of Operations, except where indicated. Credits allocated by
the Advisor serve to reduce the shareholder servicing expenses incurred by
the Funds and are reported as Fees Paid Indirectly by Advisor in the Funds'
Statement of Operations. The Advisor is also compensated for certain other
services related to costs incurred for reports to shareholders.
The Funds have entered into a distribution agreement with Strong
Investments, Inc. (the "Distributor"), pursuant to Rule 12b-1 under the 1940
Act, on behalf of each of the Fund's Advisor Class shares. Under the
agreement, the Distributor is paid an annual rate of 0.25% of the average
daily net assets of the Advisor Class shares as compensation for services
provided and expenses incurred, including amounts paid to brokers or
dealers, in connection with the sale of each Fund's shares. 12b-1 fees (over
$1,000) incurred by the Funds are reported in the Funds' Statements of
Operations. During the period November 1, 1999 to April 30, 2000, 12b-1 fees
(under $1,000) incurred by Strong Bond Fund, Strong Government Securities
Fund, Strong Short-Term Bond Fund, Strong High-Yield Bond Fund and Strong
Short-Term High Yield Bond Fund were $11, $42, $11, $6 and $6, respectively.
The Funds may invest cash in money market funds sponsored and managed by the
Advisor, subject to certain limitations. The terms of such transactions are
identical to those of non-related entities except that, to avoid duplicate
investment advisory fees, advisory fees of each Fund are reduced by an
amount equal to advisory fees paid to the Advisor under its investment
advisory agreements with the money market funds.
Certain information regarding related party transactions, excluding the
effect of waivers and absorptions, for the six months ended April 30, 2000
is as follows:
<TABLE>
<CAPTION>
Payable to/(Receivable Shareholder Servicing Transfer Agency Unaffiliated
from) Advisor at and Other Expenses Banking Directors'
April 30, 2000 Paid to Advisor Charges/(Credits) Fees
---------------------- --------------------- ----------------- ------------
<S> <C> <C> <C> <C>
Strong Bond Fund $25,133 $14,256 ($63) $2,910
Strong Corporate Bond Fund 37,617 914,048 (23,865) 12,898
Strong Government Securities Fund 8,332 1,204,515 (21,060) 19,691
Strong Short-Term Bond Fund 145,394 1,004,463 (13,001) 18,881
Strong High-Yield Bond Fund (46,279) 432,892 (9,657) 9,800
Strong Short-Term High Yield Bond Fund 36,104 176,709 2,179 4,346
</TABLE>
The Advisor owns 100%, 19.5%, 100%, 99% and 100% of the outstanding Advisor
Class shares of the Strong Bond Fund, Strong Government Securities Fund,
Strong Short-Term Bond Fund, Strong High-Yield Bond Fund, and Strong
Short-Term High Yield Bond Fund, respectively. One shareholder owns 80.5% of
the outstanding Advisor Class shares of the Strong Government Securities
Fund.
40
<PAGE>
--------------------------------------------------------------------------------
4. Capital Share Transactions
<TABLE>
<CAPTION>
Strong Bond Fund
-------------------------------------------------------------
Six Months Ended Year Ended Year Ended
April 30, 2000 Oct. 31, 1999 Feb. 28, 1999
---------------- ------------- -------------
(Unaudited) (Note 1)
<S> <C> <C> <C>
Capital Share transactions of each class of
shares of the Funds were as follows:
INVESTOR CLASS
Proceeds from Shares Sold $ 4,943,438 $ 50,909 $ --
Proceeds from Reinvestment of Distributions 35,824 29 --
Payment for Shares Redeemed (331,018) (26,443) --
----------- ----------- -----------
Net Increase in Net Assets from
Capital Share Transactions 4,648,244 24,495 --
INSTITUTIONAL CLASS
Proceeds from Shares Sold 64,758,498 46,264,460 86,338,180
Proceeds from Reinvestment of Distributions 6,155,178 7,303,493 6,064,592
Payment for Shares Redeemed (41,636,162) (16,024,859) (13,230,237)
------------- ------------- ------------
Net Increase in Net Assets from
Capital Share Transactions 29,277,514 37,543,094 79,172,535
ADVISOR CLASS
Proceeds from Shares Sold 15,000 1,000 --
Proceeds from Reinvestment of Distributions -- -- --
Payment for Shares Redeemed -- -- --
----------- ----------- -----------
Net Increase in Net Assets from
Capital Share Transactions 15,000 1,000 --
----------- ----------- -----------
Net Increase in Net Assets from
Capital Share Transactions $33,940,758 $37,568,589 $79,172,535
=========== =========== ===========
Transactions in Shares of each class of
the Funds were as follows:
INVESTOR CLASS
Sold 464,930 4,755 --
Issued in Reinvestment of Distributions 3,370 3 --
Redeemed (31,191) (2,490) --
--------- --------- ---------
Net Increase in Shares 437,109 2,268 --
INSTITUTIONAL CLASS
Sold 6,089,109 4,218,165 7,695,552
Issued in Reinvestment of Distributions 578,609 669,679 542,552
Redeemed (3,913,660) (1,470,954) (1,180,209)
--------- --------- ---------
Net Increase in Shares 2,754,058 3,416,890 7,057,895
ADVISOR CLASS
Sold 1,417 94 --
Issued in Reinvestment of Distributions -- -- --
Redeemed -- -- --
--------- --------- ---------
Net Increase in Shares 1,417 94 --
--------- --------- ---------
Net Increase in Shares of the Fund 3,192,584 3,419,252 7,057,895
========= ========= =========
</TABLE>
41
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
-------------------------------------------------------------------------------
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Strong Corporate Strong Government
Bond Fund Securities Fund
---------------------------------- -----------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
April 30, 2000 Oct. 31, 1999 April 30, 2000 Oct. 31, 1999
---------------- ------------- ---------------- -------------
(Unaudited) (Note 1) (Unaudited) (Note 1)
<S> <C> <C> <C> <C>
Capital Share transactions of each class of
shares of the Funds were as follows:
INVESTOR CLASS
Proceeds from Shares Sold $202,881,872 $429,535,815 $279,047,715 $755,357,728
Proceeds from Reinvestment of Distributions 24,744,364 49,946,788 33,898,375 91,843,389
Payment for Shares Redeemed (226,033,140) (389,860,325) (420,233,720) (713,679,897)
------------ ------------ ------------ ------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions 1,593,096 89,622,278 (107,287,630) 133,521,220
INSTITUTIONAL CLASS
Proceeds from Shares Sold 2,400,635 731,831 12,147,334 177,782
Proceeds from Reinvestment of Distributions 48,916 -- 180,433 --
Payment for Shares Redeemed (8,000) -- (1,428,624) --
------------ ------------ ------------ ------------
Net Increase in Net Assets from
Capital Share Transactions 2,441,551 731,831 10,899,143 177,782
ADVISOR CLASS
Proceeds from Shares Sold 7,270,391 1,000 80,475 1,000
Proceeds from Reinvestment of Distributions 75,201 -- 639 --
Payment for Shares Redeemed (301,436) -- -- --
------------ ------------ ------------ ------------
Net Increase in Net Assets from
Capital Share Transactions 7,044,156 1,000 81,114 1,000
------------ ------------ ------------ ------------
Net Increase (Decrease) In Net Assets
from Capital Share Transactions $ 11,078,803 $ 90,355,109 ($ 96,307,373) $133,700,002
============ ============ ============ ============
Transactions In Shares Of Each Class Of
The Funds Were As Follows:
INVESTOR CLASS
Sold 19,325,807 39,176,996 27,568,378 71,553,931
Issued in Reinvestment of Distributions 2,354,982 4,551,881 3,348,920 8,657,453
Redeemed (21,539,553) (35,637,373) (41,564,691) (67,792,818)
---------- ---------- ---------- ----------
Net Increase (Decrease) in Shares 141,236 8,091,504 (10,647,393) 12,418,566
INSTITUTIONAL CLASS
Sold 229,468 69,830 1,199,982 17,429
Issued in Reinvestment of Distributions 4,671 -- 17,878 --
Redeemed (771) -- (141,270) --
---------- ---------- ---------- ----------
Net Increase in Shares 233,368 69,830 1,076,590 17,429
ADVISOR CLASS
Sold 695,738 95 7,982 98
Issued in Reinvestment of Distributions 7,179 -- 63 --
Redeemed (28,765) -- -- --
---------- ---------- ---------- ----------
Net Increase in Shares 674,152 95 8,045 98
---------- ---------- ---------- ----------
Net Increase (Decrease) in Shares of the Fund 1,048,756 8,161,429 (9,562,758) 12,436,093
========== ========== ========== ==========
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Strong Short-Term
Bond Fund
--------------------------------------
Six Months Ended Year Ended
April 30, 2000 Oct. 31, 1999
---------------- -------------
(Unaudited) (Note 1)
<S> <C> <C>
Capital Share transactions of each class of
shares of the Funds were as follows:
INVESTOR CLASS
Proceeds from Shares Sold $183,433,464 $508,980,681
Proceeds from Reinvestment of Distributions 34,356,798 71,427,426
Payment for Shares Redeemed (335,851,087) (615,610,523)
------------ ------------
Net Decrease in Net Assets from
Capital Share Transactions (118,060,825) (35,202,416)
INSTITUTIONAL CLASS
Proceeds from Shares Sold 7,779,178 13,380,825
Proceeds from Reinvestment of Distributions 520,751 --
Payment for Shares Redeemed (989,223) --
------------ ------------
Net Increase in Net Assets from
Capital Share Transactions 7,310,706 13,380,825
ADVISOR CLASS
Proceeds from Shares Sold 15,000 1,000
Proceeds from Reinvestment of Distributions -- --
Payment for Shares Redeemed -- --
------------ ------------
Net Increase in Net Assets from
Capital Share Transactions 15,000 1,000
------------ ------------
Net Decrease in Net Assets from
Capital Share Transactions ($110,735,119) ($ 21,820,591)
============ ============
Transactions in shares of each class of
the Funds were as follows:
INVESTOR CLASS
Sold 19,588,133 53,341,059
Issued in Reinvestment of Distributions 3,667,951 7,487,998
Redeemed (35,865,253) (64,563,131)
---------- ----------
Net Decrease in Shares (12,609,169) (3,734,074)
INSTITUTIONAL CLASS
Sold 829,194 1,423,492
Issued in Reinvestment of Distributions 55,589 --
Redeemed (105,634) --
---------- ----------
Net Increase in Shares 779,149 1,423,492
ADVISOR CLASS
Sold 1,603 106
Issued in Reinvestment of Distributions -- --
Redeemed -- --
---------- ----------
Net Increase in Shares 1,603 106
---------- ----------
Net Decrease in Shares of the Fund (11,828,417) (2,310,476)
========== ==========
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
NOTES TO FINANCIAL STATEMENTS (continued)
------------------------------------------------------------------------------------------------------------------------------------
April 30, 2000 (Unaudited)
Strong High-Yield Strong Short-Term High
Bond Fund Yield Bond Fund
-------------------------------- ---------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
April 30, 2000 Oct. 31, 1999 April 30, 2000 Oct. 31, 1999
---------------- ------------- ---------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Capital Share transactions of each class of
shares of the Funds were as follows:
INVESTOR CLASS
Proceeds from Shares Sold $299,028,612 $521,184,654 $151,018,108 $301,740,464
Proceeds from Reinvestment of Distributions 25,681,943 47,980,853 9,098,574 12,650,126
Payment for Shares Redeemed (190,278,404) (425,885,389) (155,737,749) (166,026,909)
------------ ------------ ------------ ------------
Net Increase in Net Assets from
Capital Share Transactions 134,432,151 143,280,118 4,378,933 148,363,681
ADVISOR CLASS
Proceeds from Shares Sold 15,060 -- 15,025 --
Proceeds from Reinvestment of Distributions -- -- -- --
Payment for Shares Redeemed -- -- (25) --
------------ ------------ ------------ ------------
Net Increase in Net Assets from
Capital Share Transactions 15,060 -- 15,000 --
------------ ------------ ------------ ------------
Net Increase in Net Assets from
Capital Share Transactions $134,447,211 $143,280,118 $ 4,393,933 $148,363,681
============ ============ ============ ============
Transactions in Shares of each class of
the Funds were as follows:
INVESTOR CLASS
Sold 27,889,614 47,126,183 14,951,708 29,118,632
Issued in Reinvestment of Distributions 2,410,113 4,349,203 900,748 1,223,033
Redeemed (17,869,890) (38,435,669) (15,458,284) (16,039,459)
---------- ---------- ---------- ----------
Net Increase in Shares of the Fund 12,429,837 13,039,717 394,172 14,302,206
ADVISOR CLASS
Sold 1,397 -- 1,495 --
Issued in Reinvestment of Distributions -- -- -- --
Redeemed -- -- (3) --
---------- ---------- ---------- ----------
Net Increase in Shares of the Fund 1,397 -- 1,492 --
---------- ---------- ---------- ----------
Net Increase in Shares of the Fund 12,431,234 13,039,717 395,664 14,302,206
========== ========== ========== ==========
</TABLE>
44
<PAGE>
5. Investment Transactions
The aggregate purchases and sales of long-term securities for the six months
ended April 30, 2000 were as follows:
<TABLE>
<CAPTION>
Purchases Sales
---------------------------------- ----------------------------------
U.S. Government U.S. Government
and Agency Other and Agency Other
--------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Strong Bond Fund $ 265,584,030 $210,152,952 $ 246,717,826 $185,115,387
Strong Corporate Bond Fund 433,173,938 871,040,209 435,396,253 870,260,238
Strong Government Securities Fund 1,889,927,841 197,748,979 1,770,751,674 240,244,931
Strong Short-Term Bond Fund 148,599,477 326,360,678 172,443,967 416,767,963
Strong High-Yield Bond Fund -- 398,662,347 -- 292,392,311
Strong Short-Term High Yield Bond Fund -- 109,830,365 -- 104,734,809
</TABLE>
6. Line of Credit
The Strong Funds have established a line of credit agreement ("LOC") with
certain financial institutions to be used for temporary or emergency
purposes, primarily for financing redemption payments. Combined borrowings
among all participating Strong Funds are subject to a $350 million cap on
the total LOC. For an individual Fund, borrowings under the LOC are limited
to either the lesser of 15% of the market value of the Fund's total assets
or any explicit borrowing limits in the Fund's prospectus. Principal and
interest on each borrowing under the LOC are due not more than 60 days after
the date of the borrowing. Borrowings under the LOC bear interest based on
prevailing market rates as defined in the LOC. A commitment fee of 0.08% per
annum is incurred on the unused portion of the LOC and is allocated to all
participating Strong Funds. At April 30, 2000, there were no borrowings by
the Funds under the LOC.
7. Income Tax Information
The investment cost, gross unrealized appreciation and depreciation on
investments and capital loss carryovers (expiring in varying amounts through
2007) for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
at April 30, 2000 at October 31, 1999
-------------------------------------------------------------- -------------------
Federal Tax Unrealized Unrealized Net Net Capital Loss
Cost Appreciation Depreciation Depreciation Carryovers
-------------- ------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
Strong Bond Fund $ 230,749,171 $ 543,551 $ 5,413,996 $ 4,870,445 $ --
Strong Corporate Bond Fund 881,536,065 647,433 40,711,721 40,064,288 26,021,145
Strong Government Securities Fund 1,414,005,630 3,174,074 31,655,025 28,480,951 28,942,438
Strong Short-Term Bond Fund 1,181,873,928 -- 37,740,667 37,740,667 95,200,461
Strong High-Yield Bond Fund 746,865,899 14,845,254 68,056,060 53,210,806 14,013,144
Strong Short-Term High Yield Bond Fund 253,407,600 697,240 8,250,444 7,553,204 --
</TABLE>
45
<PAGE>
FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------------
STRONG BOND FUND - INVESTOR CLASS
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period Ended
-----------------------
April 30, Oct. 31,
Selected Per-Share Data (a) 2000(b) 1999(c)
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $10.69 $10.68
Income From Investment Operations:
Net Investment Income 0.20 0.12
Net Realized and Unrealized Gains on Investments 0.06 0.01
--------------------------------------------------------------------------------------------------
Total from Investment Operations 0.26 0.13
Less Distributions:
From Net Investment Income (0.37) (0.12)
--------------------------------------------------------------------------------------------------
Total Distributions (0.37) (0.12)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.58 $10.69
==================================================================================================
Ratios and Supplemental Data
--------------------------------------------------------------------------------------------------
Total Return +2.4% +1.2%
Net Assets, End of Period (In Millions) $5 $0(d)
Ratio of Expenses to Average Net Assets without
Fees Paid Indirectly by Advisor 0.8%* 0.6%*
Ratio of Expenses to Average Net Assets 0.7%* 0.6%*
Ratio of Net Investment Income (Loss) to Average Net Assets (1.2%)* 7.7%*
Portfolio Turnover Rate(e) 235.2% 250.7%
</TABLE>
<TABLE>
<CAPTION>
STRONG BOND FUND - INSTITUTIONAL CLASS
------------------------------------------------------------------------------------------------------------------------------------
Period Ended
----------------------------------------------------------
April 30, Oct. 31, Feb. 28, Feb. 28, Dec. 31,
Selected Per-Share Data(a) 2000(b) 1999(f) 1999 1998(g) 1997
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.67 $11.12 $11.18 $11.06 $10.00
Income From Investment Operations:
Net Investment Income 0.39 0.48 0.67 0.11 0.66
Net Realized and Unrealized Gains (Losses) on Investments (0.11) (0.39) 0.19 0.12 1.18
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.28 0.09 0.86 0.23 1.84
Less Distributions:
From Net Investment Income (0.39) (0.48) (0.68) (0.11) (0.66)
In Excess of Net Investment Income -- -- -- (0.00)(h) --
From Net Realized Gains -- (0.06) (0.24) -- (0.12)
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.39) (0.54) (0.92) (0.11) (0.78)
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.56 $10.67 $11.12 $11.18 $11.06
====================================================================================================================================
Ratios and Supplemental Data
------------------------------------------------------------------------------------------------------------------------------------
Total Return +2.6% +0.9% +7.9% +2.1% +18.9%
Net Assets, End of Period (In Millions) $193 $166 $135 $57 $52
Ratio of Expenses to Average Net Assets without Waivers or Absorptions 0.4%* 0.4%* 0.4% 0.4%* 0.7%
Ratio of Expenses to Average Net Assets 0.4%* 0.4%* 0.4% 0.4%* 0.4%
Ratio of Net Investment Income to Average Net Assets 7.3%* 6.6%* 6.0% 6.2%* 6.3%
Portfolio Turnover Rate(e) 235.2% 250.7% 305.4% 68.1% 358.6%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the six months ended April 30, 2000 (unaudited).
(c) For the period from September 1, 1999 (Commencement of Class) to
October 31, 1999 (Note 1).
(d) Amount calculated is less than $500,000.
(e) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(f) In 1999, the Fund changed its fiscal year-end from February to October
(Note 1).
(g) In 1997, the Fund changed its fiscal year-end from December to February.
(h) Amount calculated is less than $0.01.
46
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued)
------------------------------------------------------------------------------------------------------------------------------------
STRONG BOND FUND - ADVISOR CLASS
-------------------------------------------------------------------------------------------------------
Period Ended
--------------------------
April 30, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999(c)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $10.68 $10.68
Income From Investment Operations:
Net Investment Income 0.34 0.11
Net Realized and Unrealized Losses on Investments (0.11) --
-------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.23 0.11
Less Distributions:
From Net Investment Income (0.34) (0.11)
-------------------------------------------------------------------------------------------------------
Total Distributions (0.34) (0.11)
-------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.57 $10.68
=======================================================================================================
-------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data
-------------------------------------------------------------------------------------------------------
Total Return +2.2% +1.0%
Net Assets, End of Period (In Millions) $0(d) $0(d)
Ratio of Expenses to Average Net Assets without Waivers or Absorptions 1.2%* 1.3%*
Ratio of Expenses to Average Net Assets 1.1%* 1.3%*
Ratio of Net Investment Income to Average Net Assets 6.7%* 6.2%*
Portfolio Turnover Rate(e) 235.2% 250.7%
</TABLE>
<TABLE>
<CAPTION>
STRONG CORPORATE BOND FUND - INVESTOR CLASS
------------------------------------------------------------------------------------------------------------------------------------
Period Ended
-----------------------------------------------------------------
April 30, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999 1998 1997 1996 1995(f)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.60 $11.09 $11.08 $10.64 $10.56 $ 9.36
Income From Investment Operations:
Net Investment Income 0.40 0.73 0.73 0.74 0.73 0.63
Net Realized and Unrealized Gains (Losses) on Investments (0.31) (0.49) 0.02 0.44 0.08 1.22
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.09 0.24 0.75 1.18 0.81 1.85
Less Distributions:
From Net Investment Income (0.38) (0.73) (0.73) (0.74) (0.73) (0.63)
In Excess of Net Investment Income -- -- (0.01) -- -- (0.02)
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.38) (0.73) (0.74) (0.74) (0.73) (0.65)
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.31 $10.60 $11.09 $11.08 $10.64 $10.56
====================================================================================================================================
Ratios and Supplemental Data
------------------------------------------------------------------------------------------------------------------------------------
Total Return +0.8% +2.2% +6.8% +11.5% +8.0% +20.3%
Net Assets, End of Period (In Millions) $846 $868 $819 $492 $298 $218
Ratio of Expenses to Average Net Assets without
Fees Paid Indirectly by Advisor 0.9%* 0.8% 0.9% 1.0% 1.0% 1.0%*
Ratio of Expenses to Average Net Assets 0.9%* 0.8% 0.9% 1.0% 1.0% 1.0%*
Ratio of Net Investment Income to Average Net Assets 7.6%* 6.7% 6.5% 6.8% 7.0% 7.5%*
Portfolio Turnover Rate(e) 156.8% 403.2% 366.9% 542.4% 672.8% 621.4%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the six months ended April 30, 2000 (unaudited).
(c) For the period from September 1, 1999 (Commencement of Class) to
October 31, 1999 (Note 1).
(d) Amount calculated is less than $500,000.
(e) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(f) In 1995, the Fund changed its fiscal year-end from December to October.
47
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued)
------------------------------------------------------------------------------------------------------------------------------------
STRONG CORPORATE BOND FUND - INSTITUTIONAL CLASS
--------------------------------------------------------------------------------------------------
Period Ended
------------------------
April 30, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999(c)
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $10.59 $10.58
Income From Investment Operations:
Net Investment Income 0.40 0.13
Net Realized and Unrealized Gains (Losses) on Investments (0.29) 0.01
--------------------------------------------------------------------------------------------------
Total from Investment Operations 0.11 0.14
Less Distributions:
From Net Investment Income (0.40) (0.13)
--------------------------------------------------------------------------------------------------
Total Distributions (0.40) (0.13)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.30 $10.59
==================================================================================================
Ratios and Supplemental Data
--------------------------------------------------------------------------------------------------
Total Return +1.0% +1.4%
Net Assets, End of Period (In Millions) $3 $1
Ratio of Expenses to Average Net Assets 0.5%* 0.4%*
Ratio of Net Investment Income to Average Net Assets 7.7%* 6.9%*
Portfolio Turnover Rate(d) 156.8% 403.2%
<CAPTION>
STRONG CORPORATE BOND FUND - ADVISOR CLASS
------------------------------------------------------------------------------------------------------------------------------------
Period Ended
------------------------
April 30, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999(c)
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $10.59 $10.58
Income From Investment Operations:
Net Investment Income 0.36 0.12
Net Realized and Unrealized Gains (Losses) on Investments (0.28) 0.01
--------------------------------------------------------------------------------------------------
Total from Investment Operations 0.08 0.13
Less Distributions:
From Net Investment Income (0.36) (0.12)
--------------------------------------------------------------------------------------------------
Total Distributions (0.36) (0.12)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.31 $10.59
==================================================================================================
Ratios and Supplemental Data
--------------------------------------------------------------------------------------------------
Total Return +0.8% +1.2%
Net Assets, End of Period (In Millions) $7 $0(e)
Ratio of Expenses to Average Net Assets without
Fees Paid Indirectly by Advisor 1.1%* 1.2%*
Ratio of Expenses to Average Net Assets 1.1%* 1.2%*
Ratio of Net Investment Income to Average Net Assets 6.7%* 6.8%*
Portfolio Turnover Rate(d) 156.8% 403.2%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the six months ended April 30, 2000 (unaudited).
(c) For the period from September 1, 1999 (Commencement of Class) to
October 31, 1999 (Note 1).
(d) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(e) Amount calculated is less than $500,000.
48
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (continued)
------------------------------------------------------------------------------------------------------------------------------------
STRONG GOVERNMENT SECURITIES FUND - INVESTOR CLASS
------------------------------------------------------------------------------------------------------------------------------------
Period Ended
------------------------------------------------------------------
April 30, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999 1998 1997 1996 1995(c)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.23 $11.04 $10.70 $10.44 $10.60 $ 9.63
Income From Investment Operations:
Net Investment Income 0.30 0.58 0.60 0.65 0.63 0.54
Net Realized and Unrealized Gains (Losses) on Investments (0.15) (0.58) 0.34 0.26 (0.16) 0.99
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.15 0.00 0.94 0.91 0.47 1.53
Less Distributions:
From Net Investment Income (0.30) (0.58) (0.60) (0.65) (0.63) (0.54)
In Excess of Net Investment Income -- -- -- -- -- (0.02)
From Net Realized Gains -- (0.23) -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.30) (0.81) (0.60) (0.65) (0.63) (0.56)
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.08 $10.23 $11.04 $10.70 $10.44 $10.60
====================================================================================================================================
Ratios and Supplemental Data
------------------------------------------------------------------------------------------------------------------------------------
Total Return +1.5% 0.0%(d) +9.1% +9.1% +4.6% +16.2%
Net Assets, End of Period (In Millions) $1,213 $1,340 $1,309 $843 $638 $456
Ratio of Expenses to Average Net Assets without
Fees Paid Indirectly by Advisor 0.8%* 0.8% 0.8% 0.8% 0.9% 0.9%*
Ratio of Expenses to Average Net Assets 0.8%* 0.8% 0.8% 0.8% 0.9% 0.9%*
Ratio of Net Investment Income to Average Net Assets 5.9%* 5.5% 5.5% 6.2% 6.0% 6.2%*
Portfolio Turnover Rate(e) 157.6% 185.3% 284.1% 474.9% 457.6% 409.2%
</TABLE>
<TABLE>
<CAPTION>
STRONG GOVERNMENT SECURITIES FUND - INSTITUTIONAL CLASS
--------------------------------------------------------------------------------------------------
Period Ended
------------------------
April 30, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999(f)
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $10.22 $10.21
Income From Investment Operations:
Net Investment Income 0.32 0.11
Net Realized and Unrealized Gains (Losses) on Investments (0.13) 0.01
--------------------------------------------------------------------------------------------------
Total from Investment Operations 0.19 0.12
Less Distributions:
From Net Investment Income (0.32) (0.11)
--------------------------------------------------------------------------------------------------
Total Distributions (0.32) (0.11)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.09 $10.22
==================================================================================================
Ratios and Supplemental Data
---------------------------------------------------------------------------------------------------
Total Return +1.9% +1.1%
Net Assets, End of Period (In Millions) $11 $0(g)
Ratio of Expenses to Average Net Assets 0.4%* 0.4%*
Ratio of Net Investment Income to Average Net Assets 6.3%* 5.9%*
Portfolio Turnover Rate(e) 157.6% 185.3%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the six months ended April 30, 2000 (unaudited).
(c) In 1995, the Fund changed its fiscal year-end from December to October.
(d) Amount calculated is less than 0.1%.
(e) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(f) For the period from September 1, 1999 (Commencement of Class) to
October 31, 1999 (Note 1).
(g) Amount is less than $500,000.
49
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
-------------------------------------------------------------------------------
STRONG GOVERNMENT SECURITIES FUND - ADVISOR CLASS
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period Ended
------------------------
April 30, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999(c)
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $10.22 $10.21
Income From Investment Operations:
Net Investment Income 0.27 0.09
Net Realized and Unrealized Gains (Losses) on Investments (0.14) 0.01
--------------------------------------------------------------------------------------------------
Total from Investment Operations 0.13 0.10
Less Distributions:
From Net Investment Income (0.27) (0.09)
--------------------------------------------------------------------------------------------------
Total Distributions (0.27) (0.09)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.08 $10.22
==================================================================================================
Ratios and Supplemental Data
--------------------------------------------------------------------------------------------------
Total Return +1.3% +1.0%
Net Assets, End of Period (In Millions) $0(d) $0(d)
Ratio of Expenses to Average Net Assets without Waivers or Absorptions 1.1%* 1.2%*
Ratio of Expenses to Average Net Assets 1.1%* 1.2%*
Ratio of Net Investment Income to Average Net Assets 5.6%* 5.4%*
Portfolio Turnover Rate(e) 157.6% 185.3%
</TABLE>
<TABLE>
<CAPTION>
STRONG SHORT-TERM BOND FUND - INVESTOR CLASS
------------------------------------------------------------------------------------------------------------------------------------
Period Ended
-------------------------------------------------------------------
April 30, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999 1998 1997 1996 1995(f)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.41 $9.57 $9.78 $9.75 $9.77 $9.42
Income From Investment Operations:
Net Investment Income 0.31 0.62 0.66 0.69 0.69 0.56
Net Realized and Unrealized Gains (Losses) on Investments (0.12) (0.17) (0.21) 0.03 (0.02) 0.35
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.19 0.45 0.45 0.72 0.67 0.91
Less Distributions:
From Net Investment Income (0.31) (0.61) (0.66) (0.69) (0.69) (0.56)
In Excess of Net Investment Income -- -- 0.00(g) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.31) (0.61) (0.66) (0.69) (0.69) (0.56)
------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.29 $9.41 $9.57 $9.78 $9.75 $9.77
====================================================================================================================================
Ratios and Supplemental Data
------------------------------------------------------------------------------------------------------------------------------------
Total Return +2.1% +4.8% +4.7% +7.6% +7.1% +9.9%
Net Assets, End of Period (In Millions) $1,139 $1,272 $1,329 $1,310 $1,148 $1,083
Ratio of Expenses to Average Net Assets without
Fees Paid Indirectly by Advisor 0.8%* 0.8% 0.8% 0.9% 0.9% 0.9%*
Ratio of Expenses to Average Net Assets 0.8%* 0.8% 0.8% 0.9% 0.9% 0.9%*
Ratio of Net Investment Income to Average Net Assets 6.7%* 6.5% 6.7% 7.0% 7.1% 7.0%*
Portfolio Turnover Rate(e) 39.8% 124.2% 138.3% 193.8% 191.5% 317.1%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the six months ended April 30, 2000 (unaudited).
(c) For the period from September 1, 1999 (Commencement of Class) to
October 31, 1999 (Note 1).
(d) Amount is less than $500,000.
(e) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(f) In 1995 the Fund changed its fiscal year end from December to October.
(g) Amount calculated is less than $0.01.
50
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
-------------------------------------------------------------------------------
STRONG SHORT-TERM BOND FUND - INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
Period Ended
------------------------
April 30, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999(c)
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $9.42 $9.42
Income From Investment Operations:
Net Investment Income 0.33 0.11
Net Realized and Unrealized Losses on Investments (0.12) --
---------------------------------------------------------------------------------------------------
Total from Investment Operations 0.21 0.11
Less Distributions:
From Net Investment Income (0.33) (0.11)
---------------------------------------------------------------------------------------------------
Total Distributions (0.33) (0.11)
---------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.30 $9.42
===================================================================================================
Ratios and Supplemental Data
---------------------------------------------------------------------------------------------------
Total Return +2.3% +1.2%
Net Assets, End of Period (In Millions) $20 $13
Ratio of Expenses to Average Net Assets 0.5%* 0.4%*
Ratio of Net Investment Income to Average Net Assets 7.1%* 6.8%*
Portfolio Turnover Rate(d) 39.8% 124.2%
<CAPTION>
STRONG SHORT-TERM BOND FUND - ADVISOR CLASS
---------------------------------------------------------------------------------------------------
Period Ended
------------------------
April 30, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999(c)
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $9.41 $9.42
Income From Investment Operations:
Net Investment Income 0.29 0.10
Net Realized and Unrealized Losses on Investments (0.11) (0.01)
---------------------------------------------------------------------------------------------------
Total from Investment Operations 0.18 0.09
Less Distributions:
From Net Investment Income (0.29) (0.10)
---------------------------------------------------------------------------------------------------
Total Distributions (0.29) (0.10)
---------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.30 $9.41
===================================================================================================
Ratios and Supplemental Data
---------------------------------------------------------------------------------------------------
Total Return +2.0% +0.9%
Net Assets, End of Period (In Millions) $0(e) $0(e)
Ratio of Expenses to Average Net Assets without Waivers or Absorptions 1.1%* 1.2%*
Ratio of Expenses to Average Net Assets 1.1%* 1.2%*
Ratio of Net Investment Income to Average Net Assets 6.5%* 6.3%*
Portfolio Turnover Rate(d) 39.8% 124.2%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the six months ended April 30, 2000 (unaudited).
(c) For the period from September 1, 1999 (Commencement of Class) to
October 31, 1999 (Note 1).
(d) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(e) Amount is less than $500,000.
51
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
-------------------------------------------------------------------------------
STRONG HIGH-YIELD BOND FUND - INVESTOR CLASS
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period Ended
--------------------------------------------------------
April 30, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999 1998 1997 1996(c)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.60 $10.73 $11.94 $11.26 $10.00
Income From Investment Operations:
Net Investment Income 0.56 1.09 1.05 1.05 0.84
Net Realized and Unrealized Gains (Losses) on Investments (0.27) (0.05) (0.89) 0.81 1.26
------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.29 1.04 0.16 1.86 2.10
Less Distributions:
From Net Investment Income (0.56) (1.08) (1.04) (1.05) (0.84)
In Excess of Net Investment Income -- -- (0.01) -- --
From Net Realized Gains -- (0.09) (0.32) (0.13) --
------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.56) (1.17) (1.37) (1.18) (0.84)
------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.33 $10.60 $10.73 $11.94 $11.26
========================================================================================================================
Ratios and Supplemental Data
------------------------------------------------------------------------------------------------------------------------
Total Return +2.8% +9.8% +0.9% +17.3% +21.7%
Net Assets, End of Period (In Millions) $708 $595 $462 $510 $217
Ratio of Expenses to Average Net Assets without Waivers,
Absorptions or Fees Paid Indirectly by Advisor 0.8%* 0.8% 0.8% 0.8% 1.0%*
Ratio of Expenses to Average Net Assets 0.8%* 0.8% 0.8% 0.6% 0.0%*
Ratio of Net Investment Income to Average Net Assets 10.6%* 9.8% 8.8% 8.9% 9.6%*
Portfolio Turnover Rate(d) 46.0% 144.7% 224.4% 409.3% 390.8%
</TABLE>
<TABLE>
<CAPTION>
STRONG HIGH-YIELD BOND FUND - ADVISOR CLASS
-----------------------------------------------------------------------------------------
Period Ended
------------
April 30,
SELECTED PER-SHARE DATA(a) 2000(e)
-----------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $10.60
Income From Investment Operations:
Net Investment Income 0.19
Net Realized and Unrealized Losses on Investments (0.28)
-----------------------------------------------------------------------------------------
Total from Investment Operations (0.09)
Less Distributions:
From Net Investment Income (0.19)
-----------------------------------------------------------------------------------------
Total Distributions (0.19)
-----------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.32
=========================================================================================
Ratios and Supplemental Data
-----------------------------------------------------------------------------------------
Total Return -2.5%
Net Assets, End of Period (In Millions) $ 0(f)
Ratio of Expenses to Average Net Assets 1.1%*
Ratio of Net Investment Income to Average Net Assets 10.6%*
Portfolio Turnover Rate(d) 46.0%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the six months ended April 30, 2000 (unaudited).
(c) For the period from January 1, 1996 (Commencement of Operations) to
October 31, 1996.
(d) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(e) For the period from March 1, 2000 (Commencement of Class) to April 30, 2000
(Note 1) (unaudited).
(f) Amount is less than $500,000.
52
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
-------------------------------------------------------------------------------
STRONG SHORT-TERM HIGH YIELD BOND FUND - INVESTOR CLASS
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period Ended
---------------------------------------------
April 30, Oct. 31, Oct. 31, Oct. 31,
Selected Per-Share Data(a) 2000(b) 1999 1998 1997(c)
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.21 $10.20 $10.24 $10.00
Income From Investment Operations:
Net Investment Income 0.40 0.79 0.77 0.25
Net Realized and Unrealized Gains (Losses) on Investments (0.29) 0.06 0.01 0.24
-----------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.11 0.85 0.78 0.49
Less Distributions:
From Net Investment Income (0.40) (0.79) (0.77) (0.25)
From Net Realized Gains -- (0.05) (0.05) --
-----------------------------------------------------------------------------------------------------------------------
Total Distributions (0.40) (0.84) (0.82) (0.25)
-----------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.92 $10.21 $10.20 $10.24
=======================================================================================================================
Ratios and Supplemental Data
-----------------------------------------------------------------------------------------------------------------------
Total Return +1.1% +8.5% +7.7% +4.9%
Net Assets, End of Period (In Millions) $249 $252 $106 $45
Ratio of Expenses to Average Net Assets 0.8%* 0.8% 0.9% 1.0%*
Ratio of Net Investment Income to Average Net Assets 7.9%* 7.6% 7.4% 7.7%*
Portfolio Turnover Rate(d) 43.0% 60.1% 190.1% 96.2%
</TABLE>
<TABLE>
<CAPTION>
STRONG SHORT-TERM HIGH YIELD BOND FUND - ADVISOR CLASS
---------------------------------------------------------------------------------------
Period Ended
------------
April 30,
Selected Per-Share Data(a) 2000(e)
---------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $10.21
Income From Investment Operations:
Net Investment Income 0.12
Net Realized and Unrealized Losses on Investments (0.29)
---------------------------------------------------------------------------------------
Total from Investment Operations (0.17)
Less Distributions:
From Net Investment Income (0.12)
---------------------------------------------------------------------------------------
Total Distributions (0.12)
---------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.92
=======================================================================================
Ratios and Supplemental Data
---------------------------------------------------------------------------------------
Total Return -0.1%
Net Assets, End of Period (In Millions) $0(f)
Ratio of Expenses to Average Net Assets 1.1%*
Ratio of Net Investment Income to Average Net Assets 7.1%*
Portfolio Turnover Rate(d) 43.0%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the six months ended April 30, 2000 (unaudited).
(c) For the period from June 30, 1997 (inception) to October 31, 1997.
(d) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(e) For the period from March 1, 2000 (Commencement of Class) to April 30, 2000
(Note 1) (unaudited).
(f) Amount is less than $500,000.
53
See Notes to Financial Statements.
<PAGE>
Directors
Richard S. Strong
Marvin E. Nevins
William F. Vogt
Willie D. Davis
Stanley Kritzik
Neal Malicky
Officers
Richard S. Strong, CHAIRMAN OF THE BOARD
Thomas M. Zoeller, VICE PRESIDENT
Dennis A. Wallestad, VICE PRESIDENT
Stephen J. Shenkenberg, VICE PRESIDENT AND SECRETARY
John S. Weitzer, VICE PRESIDENT
John W. Widmer, TREASURER
Rhonda K. Haight, ASSISTANT TREASURER
Investment Advisor
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
Distributor
Strong Investments, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
Custodian
Firstar Bank, N.A.
P.O. Box 701, Milwaukee, Wisconsin 53201
Transfer Agent and Dividend-Disbursing Agent
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
Independent Accountants
PricewaterhouseCoopers LLP
100 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
Legal Counsel
Godfrey & Kahn, S.C.
780 North Water Street, Milwaukee, Wisconsin 53202>
<PAGE>
For a prospectus containing more complete information, including
management fees and expenses, please call 1-800-368-1030. Please read
it carefully before investing or sending money. This report does not
constitute an offer for the sale of securities. Strong Funds are
offered for sale by prospectus only. Strong Investments, Inc.
RT4756-0600
To order a free prospectus kit, call
1-800-368-1030
To learn more about our funds, discuss an existing account, or conduct
a transaction, call 1-800-368-3863
If you are a Financial Professional, call
1-800-368-1683
Visit our web site at
www.eStrong.com
[LOGO]
STRONG INVESTMENTS
P.O. Box 2936
Milwaukee, Wisconsin 53201
