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Previous: PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT /CT/, 497J, 1996-05-06 |
Next: REPUBLIC FUNDS, PRES14A, 1996-05-06 |
<PAGE> 1
THE STRONG CASH MANAGEMENT FUNDS
ANNUAL REPORT - FEBRUARY 29, 1996
[Photo of three children.]
THE STRONG HERITAGE MONEY FUND
THE STRONG MUNICIPAL MONEY MARKET FUND
THE STRONG MUNICIPAL ADVANTAGE FUND
THE STRONG ADVANTAGE FUND
[STRONG FUNDS LOGO]
<PAGE> 2
EIGHT BASIC PRINCIPLES FOR SUCCESSFUL MUTUAL FUND INVESTING
These common-sense rules are followed by many successful investors. They make
sense for beginners, too. If you have a question on these principles, or would
like to discuss them with us, please contact us at 1-800-368-3863. We're here
24 hours a day, seven days a week to take your call.
- ------------------------------------ 1 ----------------------------------------
Have a plan.
[GRAPHIC OF FILE FOLDER]
Even a simple plan can help you take control of your financial future. Review
your plan once a year, or if your circumstances change.
- ------------------------------------ 2 ----------------------------------------
Start investing as soon as possible.
[GRAPHIC OF CLOCK]
Make time a valuable ally. Let it put the power of compounding to work for you,
while helping to reduce your potential investment risk.
- ------------------------------------ 3 ----------------------------------------
Diversify your portfolio.
[GRAPHIC OF PIE CHART]
By investing in different asset classes-stocks, bonds, and cash-you help
protect against poor performance in one type of investment while including
investments most likely to help you achieve your important goals.
- ------------------------------------ 4 ----------------------------------------
Invest regularly.
[GRAPHIC OF NOTE]
Investing is a process, not a one-time event. By investing regularly over the
long term, you reduce the impact of short-term market gyrations, and you attend
to your long-term plan before you're tempted to spend those assets on
short-term needs.
- ------------------------------------ 5 ----------------------------------------
Maintain a long-term perspective.
[GRAPHIC OF LINE CHART]
For most individuals, the best discipline is staying invested as market
conditions change. Reactive, emotional investment decisions are all too often a
source of regret-and of principal loss.
- ------------------------------------ 6 ----------------------------------------
Consider stocks to help achieve major long-term goals.
[GRAPHIC OF PIE CHART]
Over time, stocks have provided the more powerful returns needed to help the
value of your investments stay well ahead of inflation.
- ------------------------------------ 7 ----------------------------------------
Keep a comfortable amount of cash in your portfolio.
[GRAPHIC OF DOLLAR SIGN]
To meet current needs, including emergencies, use a money market fund or a bank
account-not your long-term investment assets.
- ------------------------------------ 8 ----------------------------------------
Know what you're buying.
[GRAPHIC OF MAGNIFYING GLASS]
Make sure you understand the potential risks and rewards associated with each
of your investments. Ask questions... request information...make up your own
mind. And choose a fund company that helps you make informed investment
decisions.
<PAGE> 3
THE STRONG CASH MANAGEMENT FUNDS
ANNUAL REPORT - February 29, 1996
Dear Shareholder: As the Strong Family of Funds continues to grow, so too have
our reporting responsibilities to you. To help ensure that we can continue to
produce shareholder reports and other information on a timely basis, we have
changed the fiscal year-end of our money market funds and ultra-short funds to
February 29, beginning with this annual report. By staggering the Funds'
fiscal-year periods, and thereby their reporting schedules, we avoid a
potential "log-jam" at year-end. Please note that this change has no effect on
how the Funds are managed. It simply alters the reporting period of your
shareholder reports. If you have a question regarding the new schedule, please
don't hesitate to call us at 1-800-368-3863.
Table of Contents
INVESTMENT REVIEWS
The Strong Heritage Money Fund............................ 2
The Strong Municipal Money Market Fund.................... 4
The Strong Municipal Advantage Fund....................... 6
The Strong Advantage Fund................................. 8
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong Heritage Money Fund.......................10
The Strong Municipal Money Market Fund...............13
The Strong Municipal Advantage Fund..................22
The Strong Advantage Fund............................24
Statements of Operations..................................28
Statements of Assets and Liabilities......................29
Statements of Changes in Net Assets.......................30
Notes to Financial Statements.............................31
FINANCIAL HIGHLIGHTS...........................................34
REPORT OF INDEPENDENT ACCOUNTANTS..............................36
<PAGE> 4
THE STRONG HERITAGE MONEY FUND
YIELD SUMMARY
THROUGH 2-29-96
7-DAY CURRENT YIELD
5.55%
7-DAY EFFECTIVE YIELD
5.71%
AVERAGE MATURITY
77 DAYS
The Strong Heritage Money Fund seeks current income, a stable share price, and
daily liquidity.(1) The Fund invests in corporate, bank, and government
instruments that present minimal credit risk.
In addition, the Strong Heritage Money Fund is designed to offer investors a
permanent value. By keeping costs low, it pursues a higher yield over time than
typical money funds. It does so in two ways. First, investors must maintain
higher account balances, enabling the Fund to reduce costs through economies
of scale. Second, with certain exceptions, investors are charged a transaction
fee that is paid back to the Fund, helping to further defray costs.
PERFORMANCE OVERVIEW
The Strong Heritage Money Fund ranked #1 for yield among
the 225 general purpose money market funds tracked by IBC's Money Fund
Report(R), a service of IBC/Donoghue, Inc. for the 7 days ended 2-27-96.(2)
SHORT-TERM INTEREST RATES DRIFTED LOWER
Since the Fund's last report, dated August 31, 1995, we have maintained a
moderately long average maturity, due to our expectation for declining
short-term interest rates. Rates did in fact drift lower over the six month
period, as measured by the yield on the three-month Treasury bill-which lost
approximately 60 basis points, falling from just under 5.6% in July 1995 to 5%
at the end of February.
Over the same period, long-term rates reversed their declining trend, and rose
substantially in January and February. The steepening of the yield curve can
be attributed to a series of small reductions in short-term rates made by the
Federal Reserve Board over the past year. The Fed gradually cut rates in 0.25%
increments-in July and December of 1995, and again in January of 1996-which
brought the Fed Funds target rate down to 5.25%.
YIELDS ON TREASURY BILLS DECLINED
3 MONTH T-BILL YIELDS THROUGH 2-29-96
SOURCE: BLOOMBERG
[LINE GRAPH]
<TABLE>
<S> <C>
2-95 5.94%
3-95 5.87%
4-95 5.87%
5-95 5.80%
6-95 5.57%
7-95 5.58%
8-95 5.45%
9-95 5.41%
10-95 5.50%
11-95 5.49%
12-95 5.08%
1-96 5.05%
2-96 5.01%
</TABLE>
2
<PAGE> 5
POSITIONED FOR HIGHER YIELDS
We have maintained the Fund's average maturity in a fairly bullish position
since inception-in a range of 65 to 77 days (maturity of 40 to 50 days is
considered neutral). By positioning the Fund in longer maturities last year, we
were able to provide higher yields to shareholders as interest rates declined.
The pace of decline picked up speed in December, however, and lower short-term
rates made it more expensive to push out average maturity further. At the end
of February, the Fund's average maturity was 77 days.
SHORT-TERM OUTLOOK
We continue to be optimistic about the path of short-term interest rates given
the continued sluggishness in the U.S. economy and inflation's downward secular
trend. We expect the Fed to ease short-term rates further, until the economy's
"soft-landing" is completed, and we look for a Fed Funds target rate of 5%
before year end. Consequently, we expect to continue the portfolio's
longer-than-neutral average maturity.
Despite recent data, we believe economic fundamentals are still positive for
interest rates. U.S. economic growth is clearly below potential, suggesting few
inflationary pressures and creating a favorable combination for income
investors.
We thank you for your confidence and remain committed to meeting your
investment needs in the future.
Sincerely,
/s/Jay N. Mueller
Jay N. Mueller
Portfolio Manager
[Photo of Jay N. Mueller]
- -------------------------------------------------------------------------------
(1) An investment in the Fund is neither insured nor guaranteed by the U.S.
government. There can be no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
(2) Yields are annualized for the 7-day period ended 2-29-96. Effective yield
reflects the compounding of income. The Fund's advisor temporarily waived
fees of .47% and absorbed expenses of .09% during the 7-day period
ended 2-29-96. Otherwise, the Fund's current and effective yields would
have been 4.99% and 5.11%, respectively. Yields are historical and do not
represent future yields, which will fluctuate. Rankings are historical and
do not represent future performance.
3
<PAGE> 6
THE STRONG MUNICIPAL MONEY MARKET FUND
Lipper Rankings
Based on total return through the period
ending 2-29-96(2)
1-year #1 of 127
5-year #1 of 87
Since inception #1 of 59
Please note that all rankings are historical
and do not represent future results.
YIELD SUMMARY(3)
THROUGH 2-29-96
7-DAY CURRENT YIELD
3.51%
7-DAY EFFECTIVE YIELD
3.57%
AVERAGE MATURITY
48 DAYS
The Strong Municipal Money Market Fund seeks federally tax-exempt current
income, a stable share price, and daily liquidity.(1) The Fund invests solely in
high quality, short-term municipal obligations that present minimal credit
risk.
THE FUND RANKED ON TOP
Our record of outstanding performance continued through the Fund's new fiscal
year-end. Based on total return through February 29, 1996, the Fund ranked #1
of all tax-exempt money market funds tracked by Lipper Analytical Services,
Inc. for the one-year, five-year, and since inception periods.
As of February 29, 1996, the Municipal Money Market Fund's 7-day current yield
was 3.51% and its 7-day effective yield-which reflects compounding-was
3.57%.(3) The Equivalent Taxable Yield table shows the Fund's equivalent
taxable yield for each of 1996's federal income tax brackets.
A RECAP OF 1995
As stated in the Fund's annual report dated December 31, the Fund was
positioned throughout 1995 to take advantage of declining interest rates, and
shareholders were rewarded with superior returns as rates declined
substantially through the year. The yield on the benchmark one-year Treasury
bill fell by over two percentage points in 1995-from 7.17% in January, 1995 to
5.14% at year-end.
Talk of tax reform caused concern in the municipal markets during 1995 and into
the primary election season, because several of the changes being
discussed-including the flat tax-could lessen the appeal of municipal bonds. We
stated that we expected Congress to continue to discuss tax reform in 1996, but
that there was little significant chance for reform until 1997.
Inflation appeared to be under control last year, providing an impetus for the
Federal Reserve Board to lower short-term interest rates in 1995. As the rate
of decline slowed during the last half of the year, we shortened the Fund's
average maturity, which allowed us to react more quickly to additional
interest-rate changes. At year's end, the Fund's average maturity stood at 55
days.
1996 UPDATE
The fixed income markets experienced a period of substantial volatility in
January and February. Short-term rates continued to fall in January-due largely
to another cut in short-term rates by the Fed. During February, however, the
yield on the one-year Treasury bill increased, ending the month at 5.21%, up
from 4.90% at the end of January.
SHORT-TERM INTEREST RATES DECLINED SUBSTANTIALLY
1-YEAR T-BILL YIELDS THROUGH 2-29-96
Source: Bloomberg
LINE GRAPH
<TABLE>
<S> <C>
12-94 7.17%
1-95 6.79%
2-95 6.41%
3-95 6.49%
4-95 6.31%
5-95 5.80%
6-95 5.63%
7-95 5.65%
8-95 5.64%
9-95 5.68%
10-95 5.55%
11-95 5.36%
12-95 5.14%
1-96 4.90%
2-96 5.21%
</TABLE>
4
<PAGE> 7
At the same time, long-term interest rates rose in response to a temporary
surge in gold prices and some indications of a stronger economy, briefly
reigniting the specter of inflation. Easing by the Fed directly affects only
short-term rates. Long-term interest levels have been trending higher, and it
is yet to be seen whether the factors impacting short-term rates-or those
impacting long-term rates-will prevail.
By the end of February, the Fund's average maturity stood at 48
days-substantially shorter than at year-end. We were reluctant to make
long-term commitments at the new lower yields; additionally, a shorter average
maturity gives us ample room to lengthen out should the right opportunity
present itself.
THANK YOU FOR YOUR INVESTMENT
We continue to believe the environment for short-term municipals is very good,
and that the Fund will continue to be very competitive. Assets under
management in the Fund were at an all-time high of $1.6 billion at the end of
February-which we believe is a vote of confidence by more and more
shareholders.
We appreciate the opportunity to serve your investment needs and remain
committed to providing top-quality investment results. As always, we look for
opportunities to maintain the kind of yield that will provide you with a
highly-competitive return on your investment. We look forward to serving your
investment needs in the years to come.
Sincerely,
/s/Steven D. Harrop
Steven D. Harrop
Portfolio Manager
[Photo of Steven D. Harrop]
- -------------------------------------------------------------------------------
EQUIVALENT TAXABLE YIELDS(4)
AS OF 2-29-96
<TABLE>
<CAPTION>
YOUR TAX-EXEMPT
EFFECTIVE YIELD OF
3.57%
MARGINAL IS EQUIVALENT TO A
JOINT RETURN SINGLE RETURN TAX RATE TAXABLE YIELD OF:
<S> <C> <C> <C>
$40,100 $24,000 15% 4.20%
& under & under
$40,101- $24,001- 28% 4.96%
96,900 58,150
$96,901- $58,151- 31% 5.17%
147,700 121,300
$147,701- $121,301- 36% 5.58%
263,750 263,750
over over 39.6% 5.91%
$263,750 $263,750
</TABLE>
(1) An investment in the Fund is neither insured nor guaranteed by the U.S.
government, and there can be no assurance that the Fund will be able to
maintain a stable share price of $1.00.
(2) The since-inception ranking is based on performance from 10-31-86 to
2-29-96 for Tax-Exempt Money Market Funds tracked by Lipper. From time to
time, the Fund's advisor has waived its management fee, which has resulted
in higher returns.
(3) Yields are annualized for the 7 days ended 2-29-96, are historical, and
will vary.
(4) Effective yield assumes reinvested income. The chart reflects 1996 marginal
federal tax rates before limitations and phase-outs. Individuals with
adjusted gross income in excess of $117,950 should consult their tax
advisor to determine their actual 1996 marginal tax rate. The Fund's income
may be subject to state and local taxes and, depending on your tax status,
the Alternative Minimum Tax.
5
<PAGE> 8
THE STRONG MUNICIPAL ADVANTAGE FUND
As of 2-29-96
30-Day Yield(1)
4.79%
Average Effective Maturity(2)
1.0 year
Average Credit Quality(3)
A
The Fund seeks federally tax-exempt current income with a very low degree of
share-price fluctuation. The Fund invests primarily in ultra short-term,
investment-grade municipal obligations, and maintains an average effective
portfolio maturity of one year or less.
America's First
The Strong Municipal Advantage Fund is America's first
ultra-short municipal bond fund-the first to combine the benefits of
ultra-short and municipal investing. Because the Fund permits a low degree of
share price fluctuation, it can seek higher returns than a money fund. At the
same time, it provides the added benefit of income exempt from federal income
taxes.
Performance
To take advantage of higher yields available on longer securities,
we have structured the Fund in a "barbell" pattern by investing approximately
43% of its assets in short-term instruments, the majority of which has a
maturity of 7 days or less. The balance of the portfolio is invested in
longer-term holdings. This structure allows us to maintain the liquidity and
shorter average maturity desired while capturing higher yield potential. It
also serves to help stabilize the portfolio in both bull and bear markets.
This approach helped provide the Fund with an annualized 4.79% 30-day yield as
of 2-29-96.(1)
A QUALITY PORTFOLIO
Since the Fund's inception on 11-30-95 through the end of
February, the Fund has purchased only investment-grade securities. It is our
intention to invest at least 95% of the Fund's assets in investment-grade
issues although, by prospectus, the Fund may commit up to 10% in
non-investment-grade securities.
Since its introduction at $5.00 per share, the Fund's share price has
fluctuated in a narrow range-evidencing considerable stability in the face of
very volatile markets. We believe that relative share-price stability will
continue to be characteristic of the Fund.
NEAR-TERM OUTLOOK
The fixed-income markets experienced a period of substantial volatility in
January and February. The yield on the three-month Treasury bill continued to
decline-due in
- -------------------------------------------------------------------------------
Equivalent Taxable Yields
as of 2-29-96
<TABLE>
<CAPTION>
YOUR TAX-EXEMPT
EFFECTIVE YIELD OF
4.79%
MARGINAL IS EQUIVALENT TO A
JOINT RETURN SINGLE RETURN TAX RATE TAXABLE YIELD OF:
<S> <C> <C> <C>
$40,100 $24,000 15% 5.64%
& under & under
$40,101- $24,001- 28% 6.65%
96,900 58,150
$96,901- $58,151- 31% 6.94%
147,700 121,300
$147,701- $121,301- 36% 7.48%
263,750 263,750
over over 39.6% 7.93%
$263,750 $263,750
</TABLE>
- -------------------------------------------------------------------------------
Effective yield assumes reinvested income. The chart reflects 1996 marginal
federal tax rates before limitations and phase-outs. Individuals with adjusted
gross income in excess of $117,950 should consult their tax advisor to
determine their actual 1996 marginal tax rate. The Fund's income may be subject
to state and local taxes and, depending on your tax status, the Alternative
Minimum Tax.
6
<PAGE> 9
large part to late-1995 cuts in the federal funds target rate that totaled
one-half percentage point. The yield on the one-year Treasury bill, however,
bounced back in February on news of a temporary surge in gold prices and some
indications of a stronger economy.
It's important to remember that easing by the Fed directly affects only
short-term rates. Long-term interest levels have been trending higher, and it
is yet to be seen whether the factors impacting short-term rates-or those
impacting long-term rates-will prevail. We believe, however, that the
environment for short-term municipals is very good, as investors wary of
longer-term commitments flood into short-term securities.
THANK YOU FOR YOUR INVESTMENT
When we launched the Fund, we believed we were marking an evolutionary trend
toward providing an alternative to money market funds-an alternative with a
slightly longer maturity and the potential to provide higher yields. Of course,
unlike a money market fund, the Fund's share price will fluctuate. The Fund was
well received, and attracted $132 million in its first three months-a response
we believe validates the Fund's positioning.
Thank you for your investment in the Strong Municipal Advantage Fund. We
appreciate the opportunity to serve your investment needs and remain committed
to providing you with top-quality investment results.
Sincerely,
/s/ Steven D. Harrop
Steven D. Harrop
Portfolio Manager
[Photo of Steven D. Harrop]
- -------------------------------------------------------------------------------
Growth of an Assumed $10,000 Investment
11-30-95 through 2-29-96
The Strong Municipal Advantage Fund [LINE GRAPH]
<TABLE>
<S> <C>
11-95 10,000.00
12-95 10,085.00
1-96 10,124.95
2-96 10,143.44
</TABLE>
Lehman Brothers 1-year Municipal Bond Index
<TABLE>
<S> <C>
11-95 10,000.00
12-95 10,038.00
1-96 10,095.22
2-96 10,119.45
</TABLE>
Total Return
11-30-95 through 2-29-96
1.43%
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 1-year Municipal Bond Index, an unmanaged total return
performance benchmark for the 1-year tax-exempt bond market. Source of the
index data is Micropal. Results include the reinvestment of all dividends and
capital gains. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
- -------------------------------------------------------------------------------
(1) Yield is annualized for the 30 days ended 2-29-96, is historical, and will
vary. Since the Fund's inception, the Fund's advisor has waived its
management fee of 0.60% and absorbed Fund expenses of 0.33%. Otherwise,
current yield would have been 3.86% and returns would have been lower.
(2) The Fund's average effective maturity includes the effects of when-issued
securities, and anticipated calls.
(3) For purposes of this average rating, the Fund's short-term debt obligations
have been assigned a long-term rating by the advisor.
(4) Total return measures aggregate change in the value of an investment in
the Fund assuming reinvestment of dividends. Total return is not annualized.
<PAGE> 10
THE STRONG ADVANTAGE FUND
Lipper Rankings
Based on total return through the period
ending 2-29-96(1)
1-year #2 of 27
3-year #1 of 12
5-year #1 of 10
Since inception #1 of 6
Please note that all rankings are historical and do not represent future
results.
The Strong Advantage Fund seeks current income with a very low degree of
share-price fluctuation. The Fund invests primarily in ultra short-term,
investment-grade debt obligations, and its average effective portfolio maturity
will normally be one year or less.
STRONG PERFORMANCE CONTINUED
The Strong Advantage Fund continued to provide solid performance through
February, providing attractive returns compared to the majority of its
ultra-short competition. For the year ended February 29, 1996, the Fund ranked
#2 of the 27 ultra-short obligation funds ranked by Lipper Analytical Services.
The Fund remained the top-rated fund for longer periods, as well.
1995 RECAP
As stated in the Fund's annual report dated 12-31-95, corporate bond prices
rallied strongly in 1995, fueled by falling long-term interest rates and
strong corporate profits. When it became apparent in April and May that the
economy was slowing, the Federal Reserve moved to cut interest rates in order
to spur growth. The Fed eased short-term rates twice last year-in July and
December-by a total of one-half percentage point. With the threat of inflation
removed, a powerful bond rally continued nearly unabated through the end of the
year. Longer-maturity bonds made the biggest price gains in 1995, but
ultra-short maturities also appreciated, resulting in the Fund's 7.60% total
return for the year ended 2-29-96.
Income generation was a top priority in 1995-and remains so in 1996. As part of
this strategy, we increased our holdings in callable bonds with high coupons in
order for the Fund to benefit from higher yields while maintaining the required
ultra-short average maturity. In addition, we continued to use careful issue
selection to pursue attractive returns and reduce potential risk.
Throughout 1995 and the first two months of 1996, the Fund remained invested
primarily in investment-grade corporate and mortgage bonds.
ASSET ALLOCATION
as of 2-29-96
[Pie Chart]
Short-Term Investments 2.4%
U.S. Government & Agency Issues 6.2%
Non-Agency Mortgage Backed Securities 24.6%
Corporate Bonds 66.8%
The Fund's asset allocation is presented as a percentage of net assets and does
not reflect any futures positions held by the Fund. Please see the Schedule of
Investments in Securities for a complete listing of the Fund's portfolio.
As of 2-29-96
ANNUALIZED 30-DAY YIELD(1)
6.20%
AVERAGE EFFECTIVE MATURITY(2)
0.90
YEARSAVERAGE CREDIT QUALITY(3)
A
<PAGE> 11
1996 UPDATE
After drifting lower for much of the past year, short-term interest
rates-as measured by the yield on the one-year Treasury bill-bounced back in
February and ended the month at 5.21%. Given the moderate growth in the
economy, however, we believe that the Fed will continue to ease rates this
year. Consequently, we intend to maintain a long average effective
maturity-relative to the Fund's ultra-short investment restriction-in order to
provide higher yields should interest rates decline further.
A POSITIVE OUTLOOK FOR BONDS
We believe the outlook for the bond market continues to be positive, given the
environment of moderate growth, low inflation, and the possibility of further
interest-rate cuts. If short-term rates are eased once again, money fund yields
would likely fall both earlier and to a greater degree than ultra-short rates,
which should provide our shareholders with a sizable yield advantage over money
market funds. We continue to believe that at the short end of the market,
active management and careful research provide superior results-the kind of
results the Fund has provided over time.
Thank you for your investment in the Strong Advantage Fund. We appreciate your
continued confidence in our investment approach.
Sincerely,
/s/ Jeffrey A. Koch
Jeffrey A. Koch
Portfolio Manager
[Photo of Jeffrey A. Koch]
- -------------------------------------------------------------------------------
Growth of an Assumed $10,000 Investment
from 11-25-88 to 2-29-96
[Line Graph]
The Strong Advantage Fund
11-88 10,026.72
12-89 11,052.15
12-90 11,783.91
12-91 13,036.05
12-92 14,134.97
12-93 15,250.11
12-94 15,792.58
12-95 16,978.16
2-96 17,135.90
1-Year Treasury Bill
11-88 10,003.00
12-89 11,049.94
12-90 12,035.89
12-91 13,087.88
12-92 13,720.06
12-93 14,244.77
12-94 14,620.59
12-95 15,803.95
2-96 15,924.18
Average Annual Total Returns
through 2-29-96
1-year 7.60%
3-year 5.97%
5-year 7.38%
Since inception 7.69%
(on 11-25-88)
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Salomon Brothers 1-Year Treasury Benchmark-on-the-Run Index ("1-Year Treasury
Bill"). To equalize the time periods, the index's performance was prorated for
the month of November, 1988. The Salomon Brothers 1-Year Treasury
Benchmark-on-the-Run Index is an unmanaged index generally representative of
the performance of a Treasury security with approximately one year to maturity.
Source for the index data is Micropal. Results include the reinvestment of all
dividends and capital gains. Performance is historical and does not represent
future results. Investment returns and principal value vary, and you may have a
gain or loss when you sell shares.
- -------------------------------------------------------------------------------
(1) The since-inception ranking is based on performance from 11-30-88 to 2-29-96
for Ultra-Short Obligation Funds tracked by Lipper. Yields vary. From time
to time, the Fund's advisor has waived its management fee, which has
resulted in higher returns.
(2) The Fund's average effective maturity includes the effect of futures and
options contracts, and anticipated calls.
(3) For purposes of this average rating, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
9
<PAGE> 12
SCHEDULES OF INVESTMENTS IN SECURITIES February 29, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG HERITAGE MONEY FUND
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT TO DATE(d) COST (NOTE 2)
(In Thousands) MATURITY (In Thousands)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BANKER'S ACCEPTANCE 0.2%
Fuji Bank, Ltd. Chicago $ 2,000 5.38% 6/17/96 $ 1,968
CERTIFICATES OF DEPOSIT 8.2%
Advanta National Bank 33,000 5.31 8/27/96 33,000
15,000 5.17 2/07/97 15,152
Fuji Bank, Ltd. New York Yankee Dollar 20,000 5.62 6/14/96 20,006
Mitsubishi Bank, Ltd. New York Yankee Dollar 9,000 5.73 6/10/96 9,000
-------
Total Certificates of Deposit 77,158
COMMERCIAL PAPER 76.3%
American Family Financial Services, Inc. 178 4.94 Upon Demand 178
American Honda Finance Corporation 10,000 5.72 3/14/96 9,979
10,000 5.65 4/02/96 9,950
5,000 5.21 4/25/96 4,960
2,665 5.15 5/31/96 2,630
Anaheim, California Electric System 10,000 5.33 5/01/96 10,000
Anchor Funding Corporation 10,000 5.50 4/12/96 9,936
2,300 5.15 6/21/96 2,263
Arena Funding Corporation 9,266 5.08 7/15/96 9,088
Aristar, Inc. 5,150 5.29 4/08/96 5,121
3,257 5.24 4/26/96 3,230
Astro Capital Corporation 7,000 5.77 3/08/96 6,992
Brazos River Authority, Texas PCR 3,050 5.75 3/27/96 3,050
Calcot, Ltd. 5,000 5.47 3/18/96 4,987
2,500 5.40 3/25/96 2,491
Chrysler Financial Corporation 16,000 5.67 4/04/96 15,914
Creative Capital Corporation 10,000 5.50 4/16/96 9,930
2,559 5.25 6/27/96 2,515
Diamond Asset Funding Corporation 3,392 5.08 7/15/96 3,327
Dynamic Funding Corporation 10,000 5.60 3/08/96 9,989
4,112 5.45 4/01/96 4,093
4,000 5.25 4/18/96 3,972
15,000 5.23 5/02/96 14,865
9,733 5.50 5/31/96 9,598
Equitable of Iowa Companies 5,700 5.30 3/27/96 5,678
FP Funding Corporation 6,740 5.40 7/02/96 6,616
Finova Capital Corporation 7,400 5.53 3/06/96 7,394
3,600 5.79 3/07/96 3,597
6,785 5.46 3/13/96 6,773
9,800 5.45 3/15/96 9,779
12,600 5.30 4/11/96 12,524
5,000 5.30 4/12/96 4,969
1,200 5.27 4/26/96 1,190
Frontier Corporation 6,426 5.55 3/14/96 6,413
6,130 5.73 3/15/96 6,116
5,000 5.70 3/19/96 4,986
4,460 5.70 3/20/96 4,447
GTE South, Inc. 4,500 5.40 3/04/96 4,498
General Signal Corporation (Acquired 1/04/96; Cost $25,755) (b) 26,000 5.55 3/05/96 25,984
Hanson Finance PLC 7,000 5.17 5/28/96 6,912
Heller Financial, Inc. 13,500 5.65 4/04/96 13,428
4,000 5.52 5/09/96 3,958
5,470 5.16 6/06/96 5,394
5,000 5.33 6/24/96 4,915
Hilton Hotels Corporation 7,000 5.35 3/04/96 6,997
International Securitization 5,145 5.70 4/15/96 5,108
Jet Funding Corporation 7,410 5.35 5/31/96 7,310
Lehman Brothers Holdings, Inc. 10,100 5.55 3/01/96 10,100
26,125 5.00 7/11/96 25,646
</TABLE>
See notes to financial statements.
10
<PAGE> 13
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG HERITAGE MONEY FUND (continued)
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT TO DATE(d) COST (NOTE 2)
(In Thousands) MATURITY (In Thousands)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mercury Finance Corporation $ 7,900 5.92% 3/15/96 $ 7,882
6,000 5.33 4/16/96 5,959
3,400 5.52 4/23/96 3,372
2,500 5.50 4/26/96 2,479
1,012 5.25 5/06/96 1,002
2,900 5.25 5/10/96 2,870
4,000 5.23 5/20/96 3,954
1,500 5.22 5/21/96 1,482
1,850 5.23 5/23/96 1,828
1,650 5.70 5/28/96 1,627
2,600 5.24 5/30/96 2,566
5,000 5.45 6/18/96 4,917
500 5.45 6/21/96 492
3,000 5.47 6/24/96 2,948
Nynex Corporation 7,000 5.47 3/14/96 6,986
New York State Job Development Authority 6,050 5.78 3/25/96 6,050
14,100 5.86 4/03/96 14,100
6,500 5.17 8/05/96 6,500
6,675 5.20 8/20/96 6,675
City of New York GO 11,000 5.27 8/14/96 11,000
Oakland-Alameda County, California Coliseum Authority 3,100 5.73 3/01/96 3,100
Orix America, Inc. 1,000 5.45 3/04/96 1,000
8,000 5.70 5/29/96 7,887
14,000 5.30 7/03/96 13,744
8,683 5.30 7/10/96 8,516
7,900 5.25 7/15/96 7,743
2,000 5.24 7/26/96 1,957
Salomon, Inc. 18,705 5.45 3/04/96 18,697
4,000 5.45 3/12/96 3,993
2,500 5.50 3/13/96 2,495
19,500 5.40 3/21/96 19,442
2,350 5.40 3/26/96 2,341
San Diego, California IDR - San Diego Gas & Electric Company
(Acquired 12/18/95; Cost $3,500) (b) 3,500 5.90 3/07/96 3,500
Sapphire Funding Corporation 18,500 5.20 5/17/96 18,294
Seiko Corporation of America 5,000 5.52 4/30/96 4,954
Society of the New York Hospital Fund, Inc. 8,930 5.70 3/29/96 8,890
10,000 5.15 5/14/96 9,894
17,000 5.15 5/22/96 16,800
Spintab AB 13,700 5.58 3/18/96 13,664
20,500 5.48 4/15/96 20,359
2,000 5.49 4/17/96 1,986
5,700 5.38 4/19/96 5,658
Stellar Capital Corporation 5,710 5.50 3/11/96 5,701
8,720 5.24 5/07/96 8,635
Strategic Asset Funding Corporation 11,671 5.35 5/31/96 11,513
Sunshine State Government Finance 7,032 5.75 3/20/96 7,011
Svenska Handelsbanken 9,000 4.90 8/09/96 8,803
Tri-Lateral Capital, Inc. 2,166 5.60 3/28/96 2,157
5,883 5.60 4/01/96 5,855
6,440 5.60 4/04/96 6,406
7,400 5.20 5/16/96 7,319
Whirlpool Financial Corporation 1,200 5.29 5/08/96 1,188
Wisconsin Electric Power Company 50 4.98 Upon Demand 50
Working Capital Management Company, Limited Partnership 5,480 5.77 3/07/96 5,475
-------
TOTAL COMMERCIAL PAPER 719,506
CORPORATE FLOATING RATE NOTES 1.1%
American Honda Finance Corporation Medium Term Notes, Tranche #33
(Acquired 11/27/95; Cost $10,099) (b) 10,100 6.06 7/03/96 10,099
</TABLE>
See notes to financial statements.
11
<PAGE> 14
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 29, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG HERITAGE MONEY FUND (continued)
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT TO DATE (d) COST (NOTE 2)
(In Thousands) MATURITY (In Thousands)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE OBLIGATIONS 12.8%
AT&T Capital Corporation Medium Term Notes:
Tranche #436, 6.19% $ 4,150 5.91% 4/30/96 $ 4,152
Tranche #473, 8.03% 2,500 5.25 12/30/96 2,556
Tranche #483, 7.72% 13,000 5.26 1/31/97 13,285
Bankers Trust NY Corporation Notes, 4.70% 8,000 5.93 7/01/96 7,967
Chrysler Financial Corporation Medium Term Notes:
10.34% 4,090 6.29 5/15/96 4,124
Tranche #20, 6.00% 5,000 6.01 6/17/96 5,000
Tranche #181, 7.61% 7,920 5.92 10/30/96 8,006
Tranche #241, 7.81% 4,000 5.35 2/18/97 4,092
Cooper Industries, Inc. Medium Term Notes, 7.60% 3,000 5.97 10/15/96 3,030
Countrywide Funding Corporation Medium Term Notes, Tranche #20, 6.10% 1,000 6.01 7/31/96 1,000
First Interstate Bancorp Debentures, 10.50% 2,050 10.50 3/01/96 2,050
First National Bank Akron, Ohio Medium Term Notes, Tranche #1, 5.95% 7,000 5.91 8/01/96 7,001
General Motors Acceptance Corporation Medium Term Notes:
Tranche #533, 8.70% 5,450 6.04 5/01/96 5,474
Tranche #552, 8.60% 1,000 5.95 5/10/96 1,005
Tranche #428, 6.375% 2,900 5.77 5/23/96 2,904
Tranche #623, 8.80% 4,450 5.94 7/08/96 4,494
Tranche #694, 8.70% 1,100 6.10 8/02/96 1,112
Tranche #728, 8.375% 2,000 6.10 9/04/96 2,023
Tranche #757, 8.15% 2,000 5.32 9/17/96 2,030
Tranche #883, 7.80% 3,675 6.03 11/15/96 3,720
Tranche #868, 5.20% 8,000 5.05 12/13/96 8,009
Tranche #90, 7.75% 1,110 5.32 1/17/97 1,133
Tranche #105, 7.70% 1,500 5.19 1/24/97 1,533
Tranche #23, 5.00% 3,300 5.18 1/27/97 3,295
General Motors Acceptance Corporation Notes:
8.625% 2,000 5.86 7/15/96 2,020
8.00% 1,000 6.10 10/01/96 1,011
Harsco Corporation Debentures, 8.75% 2,350 6.04 5/15/96 2,363
Lehman Brothers, Inc. Notes, 9.75% 8,650 6.23 4/01/96 8,676
Shawmut Corporation Notes, 8.875% 2,200 6.02 4/01/96 2,206
Smith Barney Holdings, Inc. Notes, 5.375% 1,000 6.02 6/01/96 999
Washington Gas Light Company Bonds, 7.875% 2,500 6.03 9/01/96 2,522
Waste Management, Inc. Liquid Yield Option Notes, Zero % 4,550 6.20 6/30/96 1,753
-------
TOTAL CORPORATE OBLIGATIONS 120,545
TAXABLE MUNICIPAL VARIABLE RATE PUT BONDS 4.9%
Aurora, Kane & DuPage Counties, Illinois IDR 3,300 5.55 3/07/96 3,300
Bel Aire, L.L.C. 4,585 5.50 3/07/96 4,585
Galliano Marine Services, Inc. 6,300 5.50 3/07/96 6,300
Gardena, California First-Time Homebuyer Refunding Program 5,250 5.75 3/06/96 5,250
Kinder-Care Learning Centers, Inc. Industrial Refunding -
Kinder-Care Learning Centers, Inc. Projects 4,500 5.54 3/06/96 4,500
Maine Regional Waste System, Inc. - Solid Waste
Resource Recovery Revenue 2,200 5.60 3/06/96 2,200
Montgomery County, Pennsylvania IDA Revenue 830 5.65 3/07/96 830
New Jersey Sports & Exposition Authority Sports Complex
Subordinated Refunding Revenue 2,000 5.59 3/01/96 2,000
Passaic County, New Jersey GO Refunding 13,900 5.40 3/06/96 13,900
Thayer Properties, L.L.C. 3,200 5.50 3/07/96 3,200
--------
TOTAL TAXABLE MUNICIPAL VARIABLE RATE PUT BONDS 46,065
--------
TOTAL INVESTMENTS IN SECURITIES 103.5% 975,341
Other Assets and Liabilities, Net (3.5%) (33,288)
--------
NET ASSETS 100.0% $942,053
========
</TABLE>
See notes to financial statements.
12
<PAGE> 15
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG HERITAGE MONEY FUND (continued)
PERCENTAGE OF
INDUSTRY DIVERSIFICATION NET ASSETS
- ------------------------------------------------------------------------------
<S> <C>
Non-Agency Asset-Backed ............................................ 17.4%
Personal & Commercial Lending ...................................... 16.8
Automobile ......................................................... 12.2
Brokerage & Investment Management .................................. 10.7
Yankee Corporate.................................................... 8.6
General Obligation.................................................. 7.7
Bank - Regional..................................................... 6.1
Finance - Miscellaneous............................................. 4.3
Hospital Revenue.................................................... 3.8
Telecommunication Service........................................... 3.6
Electrical Equipment................................................ 2.8
Industrial Development Revenue...................................... 1.4
Leisure Service..................................................... 1.0
Single Family Mortgage Revenue...................................... 1.0
Agricultural Operations............................................. 0.8
Chemical............................................................ 0.7
Leisure Product..................................................... 0.7
Insurance - Life.................................................... 0.6
Commercial Service.................................................. 0.5
Consumer - Miscellaneous............................................ 0.5
Combined Utility Revenue............................................ 0.4
Water & Sewer Revenue............................................... 0.4
Machinery - Miscellaneous........................................... 0.3
Metal Products & Fabrication........................................ 0.3
Natural Gas Distribution............................................ 0.3
Pollution Control Revenue........................................... 0.3
Bank - Super Regional............................................... 0.2
Consumer Related Products........................................... 0.1
Other Assets and Liabilities, Net................................... (3.5)
-----
100.0%
=====
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL MONEY MARKET FUND
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT TO DATE (d) COST (NOTE 2)
(In Thousands) MATURITY (In Thousands)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS 19.3%
CALIFORNIA 6.7%
Contra Costa County, California 5.00% TRAN - West Contra Costa Unified
School District $16,000 4.75% 1/24/97 $ 16,034
Los Angeles, California MFHR - Earthquake Rehabilitation Project (e) 9,800 4.75 12/01/96 9,800
North Orange County, California 4.75% Community College District TRAN 12,000 4.41 7/01/96 12,013
Santa Paula, California 5.00% BAN - Water System Acquisition Project 19,410 5.00 4/01/96 19,410
South Coast, California 5.00% Local Education Agencies Pooled TRAN 46,250 4.53 8/14/96 46,349
Vallejo, California Housing Authority MFMR - Highlands Apartments
Project (e) 4,200 4.50 6/01/96 4,213
--------
107,819
COLORADO 0.7%
Aurora, Colorado 5.35% MFHR - Aurora Meadows Apartments Project 11,750 5.35 9/01/96 11,750
GUAM 0.3%
Guam 4.60% Government GO 5,000 4.41 9/01/96 5,005
ILLINOIS 7.3%
Lakemoor, Illinois MFHR Mortgage - Lakemoor Apartments Project (e):
Series B 50,000 5.10 4/12/96 50,000
Series C 10,000 4.20 9/05/96 10,000
Oakbrook Terrace, Illinois MFHR - Renaissance Project (e) 15,000 4.75 4/01/96 15,000
Oakbrook Terrace, Illinois MFHR - Renaissance Project (e) 41,820 4.25 11/01/96 41,820
--------
116,820
LOUISIANA 0.9%
Louisiana Housing Finance Agency GNMA Collateralized SFMR Municipal
Exempt Receipts - Liquidity Optional Tender (e) 14,620 4.35 5/01/96 14,620
</TABLE>
See notes to financial statements.
13
<PAGE> 16
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 29, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT TO DATE (d) COST (NOTE 2)
(In Thousands) MATURITY (In Thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MINNESOTA 0.2%
St. Paul, Minnesota Port Authority CDR Refunding -
Battle Creek Hotel Project (e) $ 3,565 4.37% 4/01/96 $ 3,566
NEW HAMPSHIRE 0.4%
New Hampshire HFA SFMR (e) 6,000 4.55 4/01/96 6,000
NEW JERSEY 0.2%
Essex County, New Jersey 5.375% Utilities Authority -
Solid Waste System Project 3,000 4.72 4/13/96 3,002
NEW YORK 1.0%
Oneida County, New York 5.00% BAN 4,157 4.57 5/10/96 4,160
Oneida County, New York 5.00% RAN 11,000 4.58 3/29/96 11,004
Syracuse, New York 4.20% Industrial Development
Agency Pilot Revenue Refunding 1,000 4.20 10/15/96 1,000
-------
16,164
RHODE ISLAND 0.4%
Rhode Island 4.75% Solid Waste Management
Corporation Landfill Lease 6,405 4.41 8/01/96 6,414
SOUTH DAKOTA 0.3%
South Dakota HDA Homeownership Mortgage (e) 5,000 4.05 10/24/96 5,000
WISCONSIN 0.9%
Milwaukee, Wisconsin Redevelopment Authority
Development Revenue Refunding -
Washington Square Phase I Project (e) 2,390 4.75 8/01/96 2,390
Wisconsin HDA EDA Home Ownership Revenue - MERLOTS (e) 12,640 4.00 3/01/97 12,640
-------
15,030
-------
TOTAL MUNICIPAL BONDS 311,190
MUNICIPAL COMMERCIAL PAPER 3.0%
INDIANA 0.6%
Indiana DFA Solid Waste Disposal Revenue - Pure Air
on the Lake, Limited Partnership Project 10,000 4.30 4/04/96 10,000
MINNESOTA 0.7%
Bass Brook, Minnesota Customized Purchase PCR
Refunding - Minnesota Power & Light Company Project 4,700 4.60 5/31/96 4,697
Cloquet, Minnesota Customized Purchase IDR
Refunding - Minnesota Power & Light Company Project 2,450 4.60 5/31/96 2,448
Coleraine, Minnesota Customized Purchase IDR
Refunding - Minnesota Power & Light Company Project 1,695 4.60 5/31/96 1,694
Hoyt Lakes, Minnesota Customized Purchase PCR
Refunding - Minnesota Power & Light Company Project 2,000 4.60 5/31/96 1,999
Long Prairie, Minnesota IDR Refunding -
Minnesota Power & Light Company Project 1,090 4.60 5/31/96 1,089
-------
11,927
NEVADA 0.2%
Las Vegas, Nevada Special Improvement District
No. 404 - Summerlin Area - UPDATES
Local Improvement 2,600 3.90 3/07/96 2,600
OHIO 0.1%
Montgomery County, Ohio Hospital Facilities -
Miami Valley Hospital Project 2,000 3.90 4/04/96 2,000
UTAH 1.4%
Tooele County, Utah Hazardous Waste Treatment
Revenue - Union Pacific Corporation/USPCI, Inc. Project 22,500 3.65 4/04/96 22,500
-------
TOTAL MUNICIPAL COMMERCIAL PAPER 49,027
ANNUAL PUT BONDS 5.9%
ALABAMA 0.3%
Mobile, Alabama IDB Annual Tender PCR -
International Paper Company Project (e) 5,100 4.25 11/15/96 5,100
ARKANSAS 0.2%
Camden, Arkansas PCR - International Paper Company Project (e) 2,785 4.25 11/15/96 2,785
CALIFORNIA 0.2%
Contra Costa County, California COP - Concord
Healthcare Center, Inc. Project (e) 3,730 4.55 6/01/96 3,730
</TABLE>
See notes to financial statements.
14
<PAGE> 17
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL MONEY MARKET FUND (Continued)
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT TO DATE(d) COST (NOTE 2)
(In Thousands) MATURITY (In Thousands)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLORIDA 0.5%
Florida Housing Finance Agency MFHR - Wood Forest II Project (e) $ 8,550 4.50% 12/01/96 $ 8,550
ILLINOIS 0.6%
Illinois DFA IDR - Deerfield Executive Center Project (e) 4,445 4.38 9/01/96 4,445
Palatine, Illinois MFHR - Clover Ridge Apartments Project (e) 5,720 4.40 12/15/96 5,720
-------
10,165
MARYLAND 0.1%
Prince George's County, Maryland IDR Refunding - International
Paper Company Project (e) 1,100 4.00 7/15/96 1,100
NEW JERSEY 0.3%
Eastern States Tax-Exempt Mortgage Bond Trust (e) 4,855 5.19 3/01/97 4,855
NEW MEXICO 0.1%
New Mexico Mortgage Finance Authority SFMR (e):
Series A 665 4.00 9/01/96 665
Series B 1,445 4.00 9/01/96 1,445
-------
2,110
NORTH DAKOTA 1.2%
Oliver County, North Dakota PCR - Square Butte Electric
Cooperative Project (e):
Series 1984 8,300 4.50 9/01/96 8,300
Series 1985-A 7,850 4.50 9/01/96 7,850
Series 1985-B 2,770 4.50 9/01/96 2,770
-------
18,920
PENNSYLVANIA 1.2%
Allegheny County, Pennsylvania Residential Finance
Authority SFMR - GNMA Mortgage-Backed Securities Program (e) 2,775 4.60 6/01/96 2,775
Pennsylvania Housing Finance Agency SFMR (e) 4,480 4.88 4/01/96 4,480
Philadelphia, Pennsylvania IDA CDR - Suite Hotel Project (e) 12,275 4.25 6/01/96 12,275
-------
19,530
TENNESSEE 0.4%
Knox County, Tennessee 7.50% IDB IDR - Spartan Food Systems,
Inc. Project 1,300 7.50 12/01/96 1,300
Knox County, Tennessee IDB Industrial Revenue - ETB Development,
Inc. Project (e) 2,760 5.00 4/01/96 2,760
Maryville, Tennessee 7.50% IDB IDR - Spartan Food Systems,
Inc. Project 1,300 7.50 12/01/96 1,300
-------
5,360
TEXAS 0.8%
Tarrant County, Texas HFC MFHR - Lincoln Meadows Project (e) 4,375 4.30 12/01/96 4,375
Texas Department of Housing and Community Affairs MFMR
Refunding - Folsom III Development Project (e) 8,480 4.25 12/01/96 8,480
-------
12,855
-------
TOTAL ANNUAL PUT BONDS 95,060
SEMIANNUAL VARIABLE RATE PUT BONDS 0.9%
INDIANA 0.1%
Decatur, Indiana EDR - Silberline Manufacturing Company, Inc. Project 1,080 4.31 6/01/96 1,081
UTAH 0.2%
Utah Housing Finance Agency SFMR 3,560 4.13 7/01/96 3,560
WISCONSIN 0.6%
Milwaukee, Wisconsin Redevelopment Authority MFHR -
City Hall Square Apartments Project 9,000 5.16 6/01/96 9,000
-------
TOTAL SEMIANNUAL VARIABLE RATE PUT BONDS 13,641
QUARTERLY VARIABLE RATE PUT BONDS 1.3%
WASHINGTON
Washington State Housing Finance Commission SFMR Refunding:
Series S-1A 2,095 4.90 6/01/96 2,095
Series S-3A 4,460 4.90 6/01/96 4,460
Series S-3B 4,180 4.80 6/01/96 4,180
Series S-4A 7,440 4.90 6/01/96 7,440
Series S-B 2,345 4.80 6/01/96 2,345
-------
TOTAL QUARTERLY VARIABLE RATE PUT BONDS 20,520
</TABLE>
See notes to financial statements.
15
<PAGE> 18
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 29, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT TO DATE(d) COST (NOTE 2)
(In Thousands) MATURITY (In Thousands)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MONTHLY VARIABLE RATE PUT BONDS 1.6%
COLORADO 0.1%
Jefferson County, Colorado IDR - Anthony A. Petrarca/Cedarwood
Construction Company, Inc. Project $ 2,420 4.50% 4/01/96 $ 2,420
MARYLAND 0.4%
Prince George's County, Maryland EDR Refunding - Capital View II
Limited Partnership Facility 6,380 4.35 4/01/96 6,380
MICHIGAN 0.1%
Michigan Job Development Authority IDR - Anthony A. Petrarca/Cedarwood
Construction Company, Inc. Project 1,740 4.50 4/01/96 1,740
OHIO 0.2%
Summit County, Ohio Insured IDR - Anthony A. Petrarca/Cedarwood
Construction Company, Inc. Project 2,625 4.50 4/01/96 2,625
MULTIPLE STATES 0.8%
Carolina Freight Tax Exempt Bond Grantor Trust 2,053 4.40 4/01/96 2,053
GAF Corporation Tax Exempt Bond Grantor Trust 4,300 4.20 4/01/96 4,300
Green Leaf Ventures, Inc. Tax Exempt Bond Grantor Trust 4,000 4.75 4/01/96 4,000
Johnson Controls, Inc. Tax Exempt Bond Grantor Trust 2,515 4.30 4/01/96 2,515
-------
12,868
-------
TOTAL MONTHLY VARIABLE RATE PUT BONDS 26,033
WEEKLY VARIABLE RATE PUT BONDS 62.6%
ALABAMA 2.6%
Alabama IDA IDR:
Decatur Aluminum Corporation Project 3,765 3.60 3/07/96 3,765
Research Genetics, Inc. Project 3,560 3.95 3/07/96 3,560
Whitesell Project 5,000 3.95 3/07/96 5,000
Arab, Alabama IDB IDR - Syncro Corporation Project 1,630 3.70 3/07/96 1,630
Birmingham, Alabama Baptist Medical Center - Special Care Facilities
Financing Authority Revenue - Methodist Home for the Aging Project 12,085 3.75 3/07/96 12,085
Bridgeport, Alabama IDB IDR - Beaulieu Nylon, Inc. Project 10,000 3.80 3/07/96 10,000
Madison County, Alabama MFHR Refunding:
Autumn Wood Project 3,065 3.75 3/07/96 3,065
Pinehurst Project 1,285 3.75 3/07/96 1,285
Montgomery, Alabama IDB IDR - Asphalt Contractors, Inc. Project 1,500 3.95 3/07/96 1,500
-------
41,890
ARIZONA 1.4%
Chandler, Arizona IDA MFHR - Greentree Place Apartments Project 6,782 5.78 3/07/96 6,782
Maricopa County, Arizona Pollution Control Corporation PCR Refunding -
El Paso Electric Company Palo Verde Project 6,000 3.55 3/07/96 6,000
Phoenix, Arizona IDA Airport Facility Revenue - America West
Airlines, Inc. Project 10,300 3.75 3/07/96 10,300
-------
23,082
ARKANSAS 1.4%
Conway County, Arkansas IDR - Cadron Creek Fibre Corporation Project 8,300 4.60 3/07/96 8,300
Magnolia, Arkansas IDR - American Fuel Cell and Coated
Fabrics Company Project 4,055 3.70 3/07/96 4,055
Searcy, Arkansas IDR - Yarnell Ice Cream Company, Inc. Project 2,800 4.15 3/07/96 2,800
Springdale, Arkansas IDR - Clarke Holding Corporation Project 6,000 4.15 3/07/96 6,000
Trumann, Arkansas IDR - Roach Manufacturing Corporation Project 2,000 4.15 3/07/96 2,000
-------
23,155
CALIFORNIA 13.8%
Alameda, California Revenue - KQED, Inc. Project 11,300 4.40 3/07/96 11,300
Corona, California MFHR - Household Bank Project 5,200 3.53 3/07/96 5,200
Fairfield, California IDA IDR - Medical Design Concepts Project 1,100 4.30 3/07/96 1,100
Lancaster, California MFHR - Gangi Building Project 2,200 4.20 3/07/96 2,200
Los Angeles, California Community Redevelopment Agency MFHR -
The Grande Promenade Project 28,700 4.45 3/07/96 28,700
Los Angeles, California MFHR - Channel Gateway Apartments 41,800 4.00 3/07/96 41,800
Los Angeles County, California IDA IDR - Goldberg & Solovy
Foods, Inc. Project 3,050 4.95 3/07/96 3,050
Ontario, California IDA IDR - P & S Development Project 3,400 3.90 3/07/96 3,400
</TABLE>
See notes to financial statements.
16
<PAGE> 19
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT TO DATE(d) COST (NOTE 2)
(In Thousands) MATURITY (In Thousands)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Orange County, California Apartment Development Revenue:
Bear Brand Apartments Project $ 3,000 3.80% 3/07/96 $ 3,000
Laguna Summit Apartments Project 7,500 4.60 3/07/96 7,500
Pointe Niguel Project 5,000 3.70 3/07/96 5,000
WLCO LF Partners Project - Series 1 1,000 4.00 3/07/96 1,000
WLCO LF Partners Project - Series 2 1,500 4.00 3/07/96 1,500
WLCO LF Partners Project - Series 3 2,200 4.00 3/07/96 2,200
Orange County, California Special Financing Authority
Teeter Plan Revenue:
Series I-2 25,000 4.17 3/07/96 25,000
Series I-3 17,300 4.17 3/07/96 17,300
Paramount, California Housing Authority MFHR Refunding - Century
Place Apartments Project 4,250 4.08 3/07/96 4,250
Riverside County, California IDA IDR - Medical Design
Concepts IV Project 1,000 4.30 3/07/96 1,000
San Bernardino, California MFHR - Sandlewood Project 7,500 3.90 3/07/96 7,500
San Bernardino County, California COP - 1992 Justice Center/Airport
Improvements Refunding Project 1,960 3.90 3/07/96 1,960
San Bernardino County, California Housing Authority MFHR Refunding -
Brookside Meadows Project 18,000 4.45 3/07/96 18,000
San Diego, California Housing Authority MFHR - Nobel Court
Apartments Project 12,410 4.45 3/07/96 12,410
San Marcos, California Redevelopment Agency MFHR - San Marcos
Retirement Village Project 7,500 4.08 3/07/96 7,500
Santa Fe Springs, California IDA - Tri-West Project 4,000 4.05 3/07/96 4,000
Tri-City, California Housing Finance Agency SFMR - FNMA and
GNMA Mortgage-Backed Securities Program 2,090 4.10 3/07/96 2,090
Upland, California Apartment Development Revenue -
Mountain Springs Project 3,900 4.00 3/07/96 3,900
--------
221,860
COLORADO 1.2%
Aurora, Colorado IDR - Optima Batteries, Inc. Project 3,430 3.75 3/07/96 3,430
Jefferson County, Colorado IDR - Accutronics, Inc. Project 2,500 3.78 3/07/96 2,500
Lakewood, Colorado Jefferson County IDR - Verden Associates -
Holiday Inn Project 1,535 4.00 3/07/96 1,535
Westminster, Colorado IDR - Lifecare International Project 4,880 3.80 3/07/96 4,880
Westminster, Colorado MFHR - Lakeview Apartments Project 7,150 4.15 3/07/96 7,150
--------
19,495
FLORIDA 1.6%
Brevard County, Florida IDR - U. S. Space Camp Foundation Project 3,540 3.75 3/07/96 3,540
Broward County, Florida HFA MFHR - Sawgrass Pines Apartments Project 11,000 4.30 3/07/96 11,000
Dade County, Florida IDA IDR - Engelhard/ICC Project 8,000 3.85 3/07/96 8,000
Palm Beach County, Florida IDR - QO Chemicals, Inc. Project 4,000 4.20 3/07/96 4,000
--------
26,540
GEORGIA 0.9%
Cobb County, Georgia Development Authority IDR - Datagraphic,
Inc. Project 2,850 3.75 3/07/96 2,850
Fulton County, Georgia Development Authority IDR - STO Corporation
Project 3,800 3.80 3/07/96 3,800
Lee County, Georgia Development Authority Revenue - Woodgrain
Millwork, Inc. Project 6,000 3.90 3/07/96 6,000
Savannah, Georgia EDA IDR - Savannah Steel & Metal Company Project 1,750 3.90 3/07/96 1,750
--------
14,400
ILLINOIS 5.6%
Chicago, Illinois O'Hare International Airport - General Airport
Second Lien 11,085 3.30 3/07/96 11,085
East Hazelcrest, Illinois EDR Refunding - Columbia Sussex Corporation
Project 490 5.00 3/07/96 490
Evanston, Illinois IDR - Fountain Square Project 1,800 3.95 3/07/96 1,800
Hazel Crest, Illinois Retirement Center Revenue - Waterford Estates
Project 965 4.15 3/07/96 965
Hazel Crest, Illinois Retirement Center Revenue - Waterford Estates
Project 2,890 4.15 3/07/96 2,890
Illinois DFA EDR - Korex Corporation Project 4,000 3.82 3/07/96 4,000
Illinois DFA IDR:
Associated Plastic Fabricators, Inc. Project 2,000 3.95 3/07/96 2,000
Fleetwood Systems, Inc. Project 5,635 3.70 3/07/96 5,635
Homak Manufacturing Company, Inc. Project 7,700 3.70 3/07/96 7,700
Jefferson Partners Limited Partnership - 216 South Jefferson Project 2,230 4.75 3/07/96 2,230
SMF, Inc. Project 4,510 3.80 3/07/96 4,510
Illinois Educational Facilities Authority Revenue - University Pooled
Financing Program 12,345 4.35 3/07/96 12,345
Merrionette Park, Illinois Industrial Project Revenue:
Southwick & Weglarz Project 6,365 4.05 3/07/96 6,365
Weglarz & Taxman Project 2,589 4.05 3/07/96 2,589
Springfield, Illinois Airport Authority - Allied-Signal, Inc.
Project 4,300 3.90 3/07/96 4,300
Woodridge, DuPage and Will Counties, Illinois MFHR Refunding -
Hinsdale Lake Terrace Apartments Project 20,760 4.20 3/07/96 20,760
--------
89,664
</TABLE>
See notes to financial statements.
17
<PAGE> 20
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 29, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT TO DATE(d) COST (NOTE 2)
(In Thousands) MATURITY (In Thousands)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INDIANA 0.7%
Greencastle, Indiana EDR - H. A. Parts Products of Indiana
Company Project $ 4,000 4.15% 3/07/96 $ 4,000
Jeffersonville, Indiana EDR - Apollo America Corporation Project 7,100 4.40 3/07/96 7,100
-------
11,100
IOWA 1.0%
Cedar Rapids, Iowa IDR Refunding MMars First Program -
Columbus McKinnon Corporation Project 1,455 3.95 3/07/96 1,455
Chillicothe, Iowa PCR Refunding - Iowa Southern Utilities
Company Project 1,000 3.90 3/07/96 1,000
Chillicothe, Iowa PCR Refunding - Iowa Southern Utilities
Company Project 2,400 3.90 3/07/96 2,400
Iowa Falls, Iowa IDR Refunding - GENPAK Corporation Project 3,800 4.08 3/07/96 3,800
West Des Moines, Iowa Revenue - Woodgrain Millwork, Inc. Project 6,700 3.90 3/07/96 6,700
-------
15,355
KANSAS 0.9%
Kansas DFA MFHR - First Kansas State Partnership, L. P. Project 3,000 3.75 3/07/96 3,000
Kansas City, Kansas Private Activity Revenue - Ex-L-Tube of
Kansas, Inc. Project 6,456 3.80 3/07/96 6,456
Osage City, Kansas Industrial Revenue - Marley Continental Homes
of Kansas Project 4,800 3.65 3/07/96 4,800
-------
14,256
KENTUCKY 3.9%
Daviess County, Kentucky MFHR Refunding - Park Regency
Apartments Project 4,155 4.15 3/07/96 4,155
Jeffersontown, Kentucky IDR - Columbia Sussex Corporation Facility 6,830 5.00 3/07/96 6,830
Kentucky DFA IDR - Hesco Project 5,800 3.70 3/07/96 5,800
Ohio County, Kentucky PCR - Big Rivers Electric Corporation Project 25,000 3.70 3/07/96 25,000
Ohio County, Kentucky PCR - Big Rivers Electric Corporation Project 11,600 3.70 3/07/96 11,600
Somerset, Kentucky IBR - Tibbals Flooring Co. Project 10,000 3.95 3/07/96 10,000
-------
63,385
LOUISIANA 1.1%
Lake Charles, Louisiana Harbor & Terminal District Revenue -
Port Improvement 17,600 3.25 3/07/96 17,600
MAINE 0.1%
Orrington, Maine Resource Recovery Revenue - Penobscot Energy
Recovery Company Project 1,910 4.28 3/07/96 1,910
MARYLAND 1.0%
Charles County, Maryland Revenue - Chopp and Company, Inc. Facility 4,100 4.00 3/07/96 4,100
Maryland CDA Department of Housing and Community Development
Multi-Family Development
Revenue - Middle Branch Manor Project 6,565 3.60 3/07/96 6,565
Washington County, Maryland EDR - Tandy Project 5,100 4.65 3/07/96 5,100
-------
15,765
MASSACHUSETTS 1.1%
Massachusetts Industrial Finance Agency IDR:
Lightolier, Inc. Project 4,400 3.75 3/07/96 4,400
Portland Causeway Realty Trust 2,600 4.08 3/07/96 2,600
U. S. Tsubaki, Inc. Project 4,700 4.85 3/07/96 4,700
Salem, Massachusetts IDFA IDR - Applied Extrusion Technologies,
Inc. Project 6,500 4.08 3/07/96 6,500
-------
18,200
MICHIGAN 0.5%
Lansing, Michigan Limited Obligation EDC IDR - Ashland Oil,
Inc. Project 1,400 5.28 3/07/96 1,400
Saline, Michigan EDC Limited Obligation Revenue - Associated Spring
Project 7,000 4.50 3/07/96 7,000
-------
8,400
MINNESOTA 0.4%
Mahtomedi, Minnesota Rental Housing Revenue - Briarcliff of
Mahtomedi Project 5,265 5.20 3/07/96 5,265
Princeton, Minnesota IDR - Plastic Products Company, Inc. Project 1,800 3.80 3/07/96 1,800
-------
7,065
MISSISSIPPI 0.9%
Mississippi Business Finance Corporation IDR - Intex Plastics
Corporation Project 4,800 3.60 3/07/96 4,800
Prentiss County, Mississippi IDR - Heidelberg Eastern Project:
Series A 2,500 3.95 3/07/96 2,500
Series B 6,650 4.05 3/07/96 6,650
-------
13,950
MISSOURI 3.1%
Berkeley, Missouri IDA Exempt Facility Revenue - St. Louis Air Cargo
Services, Inc. Project 7,875 4.00 3/07/96 7,875
Kansas City, Missouri IDA IDR - Century Avenue Association Project 4,900 4.00 3/07/96 4,900
St. Charles County, Missouri IDA IDR Refunding - Country Club
Apartments Project 25,000 3.87 3/07/96 25,000
St. Louis County, Missouri IDA - Hampton Inn Westport
Associates Project 3,700 4.05 3/07/96 3,700
St. Louis County, Missouri IDA MFHR - Whispering Lakes Apartments
Project 8,000 3.60 3/07/96 8,000
-------
49,475
</TABLE>
See notes to financial statements.
18
<PAGE> 21
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT TO DATE(d) COST (NOTE 2)
(In Thousands) MATURITY (In Thousands)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEBRASKA 0.4%
Nebraska IFA Revenue Refunding - Redick Tower Project $ 6,005 4.30% 3/07/96 $ 6,005
NEVADA 0.3%
Nevada Department of Commerce IDR - Master-Halco, Inc. Project 4,300 5.00 3/07/96 4,300
NEW HAMPSHIRE 0.3%
New Hampshire IDA Industrial Facility Revenue - Ferrofluidics
Corporation - Nashua Series Project 5,000 4.00 3/07/96 5,000
NEW JERSEY 0.1%
New Jersey EDA EDR - Hickory Industries, Inc. Project 2,000 4.20 3/07/96 2,000
NEW YORK 1.1%
New York, New York GO 18,015 3.50 3/07/96 18,015
NORTH CAROLINA 0.8%
Alleghany County, North Carolina Industrial Facilities and Pollution
Control Financing Authority IDR - Spring-Ford Knitting Company,
Inc. Project 2,500 3.34 3/07/96 2,500
Gaston County, North Carolina Industrial Facilities and Pollution
Control Financing Authority IDR - Spring-Ford Knitting Company,
Inc. Project 4,500 3.34 3/07/96 4,500
North Carolina State Ports Authority Exempt Facility Revenue -
Jordan Lumber & Supply, Inc. Project 5,080 3.90 3/07/96 5,080
-------
12,080
NORTH DAKOTA 0.2%
Mercer County, North Dakota PCR - Minnesota Power & Light
Company Project 3,160 3.90 3/07/96 3,160
OHIO 0.7%
Cuyahoga County, Ohio IDR:
Edge Seal Technologies, Inc. and One Industry Drive, Inc. Project 3,200 4.10 3/07/96 3,200
Motch Corporation Project 4,000 3.80 3/07/96 4,000
Gallia County, Ohio IDR - Harsco Corporation Project 3,500 4.00 3/07/96 3,500
-------
10,700
OREGON 0.4%
Oregon EDR - Eagle-Picher Industries, Inc. Project 6,400 3.75 3/07/96 6,400
PENNSYLVANIA 2.8%
Bucks County, Pennsylvania IDA - Double H Plastics, Inc. Project 2,445 3.85 3/07/96 2,445
Elk County, Pennsylvania IDA Solid Waste Disposal Revenue - Willamette
Industries, Inc. Project 16,000 3.55 3/07/96 16,000
Emmaus, Pennsylvania General Authority Local Government Revenue:
Series B 5,300 3.90 3/07/96 5,300
Series D 4,400 3.90 3/07/96 4,400
Series E 5,000 3.90 3/07/96 5,000
Lycoming County, Pennsylvania IDA Manufacturing Facilities Revenue -
Coastal Aluminum Rolling Mills, Inc. Project 4,000 3.85 3/07/96 4,000
Montgomery County, Pennsylvania IDA IDR- Laneko Engineering
Company Project 2,595 3.85 3/07/96 2,595
Montgomery County, Pennsylvania IDA IDR Refunding - Spring City
Limited Partnership Project 5,000 4.35 3/07/96 5,000
-------
44,740
RHODE ISLAND 0.2%
Rhode Island Industrial Facilities Corporation IDR - Lenox,
Inc. Project 3,060 3.75 3/07/96 3,060
SOUTH CAROLINA 0.9%
Charleston County, South Carolina Industrial Revenue - Tandy
Corporation Project 1,000 4.90 3/07/96 1,000
Richland County, South Carolina IDR - Ashland Oil Project 1,400 5.28 3/07/96 1,400
Rock Hill, South Carolina Industrial Revenue - Willamette
Industries, Inc. Project 7,500 3.80 3/07/96 7,500
South Carolina Jobs EDA IDR - Roller Bearing Company of America,
Inc. Project 5,000 4.17 3/07/96 5,000
-------
14,900
SOUTH DAKOTA 0.2%
Aberdeen, South Dakota IDR - Lomar Development Company Project 360 4.15 3/07/96 360
Brookings, South Dakota IDR - Lomar Development Company Project 2,200 4.05 3/07/96 2,200
Brookings, South Dakota IDR Refunding - Lomar Development Company
Project 600 4.15 3/07/96 600
-------
3,160
</TABLE>
See notes to financial statements.
19
<PAGE> 22
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 29, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT TO DATE(d) COST (NOTE 2)
(In Thousands) MATURITY (In Thousands)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TENNESSEE 1.1%
Carter County, Tennessee IDB MFHR Refunding - Willow Run Apartments
Project $ 6,675 4.15% 3/07/96 $ 6,675
Coffee County, Tennessee Industrial Board Revenue - M-Tek Project 2,700 4.40 3/07/96 2,700
Knox County, Tennessee Health, Educational, and Housing Facilities
Board Revenue - Holston Long Term Care Project 4,500 4.05 3/07/96 4,500
Memphis and Shelby County, Tennessee IDB IDR - Techno Steel Corporation
Project 4,000 4.00 3/07/96 4,000
-----------
17,875
TEXAS 3.9%
Austin County, Texas IDC IDR - Gulf States Toyota, Inc. Project 4,750 4.03 3/07/96 4,750
Azle, Texas IDA IDR - Tandy Corporation Project 3,000 4.67 3/07/96 3,000
Deer Park, Texas Port Development Corporation IDR - Ashland Oil,
Inc. Project 4,700 5.28 3/07/96 4,700
Longview, Texas Industrial Corporation IDR - Longview Guest Inn
Project 2,800 3.85 3/07/96 2,800
Midlothian, Texas IDC PCR - Box-Crow Cement Company Project 17,400 3.75 3/07/96 17,400
Montgomery County, Texas IDC IDR - Porous Media Ltd. Project 3,000 3.78 3/07/96 3,000
Pooled Puttable Tax-Exempt Receipts 14,935 3.60 3/07/96 14,935
Robstown, Texas IDC IDR - Concrete Pipe and Products Company,
Inc. Project 2,000 3.85 3/07/96 2,000
San Antonio, Texas Higher Education Authority, Inc. Educational
Facilities Revenue - UTSA Phase I Dormitory Project 6,100 4.50 3/07/96 6,100
Texas Small Business IDC IDR - Moulding Products, Inc. Project 3,775 3.95 3/07/96 3,775
-----------
62,460
VIRGINIA 2.2%
Bedford County, Virginia IDA IDR - Nekoosa Packaging
Corporation Project 20,300 4.10 3/07/96 20,300
Fairfax County, Virginia LaSalle National Bank
LeaseTOPS Trust 9,119 3.65 3/07/96 9,119
Oyster Point, Virginia Development Corporation MFHR - Jefferson Point
Development Project 5,200 3.75 3/07/96 5,200
-----------
34,619
WASHINGTON 1.0%
Pierce County, Washington EDC - Brown & Haley Project 2,515 4.60 3/07/96 2,515
Pierce County, Washington EDC Pooled Bond Program Industrial
Revenue:
America Nichirel Foods Project 4,500 4.15 3/07/96 4,500
Northwest Baking Project 4,875 3.60 3/07/96 4,875
Port Moses Lake, Washington Public Corporation Industrial Revenue -
Basic American Foods Project 4,200 4.00 3/07/96 4,200
-----------
16,090
WISCONSIN 1.6%
Amery, Wisconsin IDR - Plastech Corporation Project 2,300 3.78 3/07/96 2,300
Ashwaubenon, Wisconsin IDR - Pioneer Metal Finishing, Inc.
Project 2,210 3.95 3/07/96 2,210
Columbus, Wisconsin IDR - Maysteel Corporation Project 2,000 3.95 3/07/96 2,000
Madison, Wisconsin IDR - Manchester Place Project 8,130 4.05 3/07/96 8,130
Menomonee Falls, Wisconsin IDR - Maysteel Corporation Project 3,000 3.95 3/07/96 3,000
Milwaukee, Wisconsin Redevelopment Authority Development Revenue -
Washington Square Phase III Project 8,495 4.30 3/07/96 8,495
-----------
26,135
WYOMING 0.9%
Campbell County, Wyoming IDR - Powder Basin Properties Project 6,170 3.65 3/07/96 6,170
Lincoln County, Wyoming PCR - Champlin Petroleum Company Project 1,750 4.05 3/07/96 1,750
Uinta County, Wyoming PCR - Champlin Petroleum Company Project 6,775 4.05 3/07/96 6,775
-----------
14,695
MULTIPLE STATES 0.3%
NCNB Pooled Tax-Exempt Trust COP 4,475 4.13 3/07/96 4,475
-----------
TOTAL WEEKLY VARIABLE RATE PUT BONDS 1,006,416
DAILY VARIABLE RATE PUT BONDS 4.7%
ALABAMA 0.3%
Phenix County, Alabama IDB Environmental Improvement Revenue -
Mead Coated Board Project 5,700 3.70 3/01/96 5,700
CALIFORNIA 0.6%
Irvine Ranch, California Water District Consolidated
Refunding GO 9,600 3.55 3/01/96 9,600
Pooled Puttable Tax Exempt Receipts - Koch Financial Corporation
Lease 85 3.50 3/01/96 85
-----------
9,685
ILLINOIS 0.2%
Illinois Health Facilities Authority Revenue - Cent DuPage
Healthcorp Project 4,000 3.65 3/01/96 4,000
INDIANA 0.7%
Indianapolis, Indiana Resource Recovery Revenue - Ogden Martin
Systems Project 11,460 3.55 3/01/96 11,460
</TABLE>
See notes to financial statements.
20
<PAGE> 23
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD MATURITY AMORTIZED
AMOUNT (In TO DATE(d) COST (NOTE 2)
Thousands) MATURITY (In Thousands)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
KENTUCKY 0.2%
Kentucky Pollution Abatement & Water Resources Finance
Authority PCR - Toyota Motor Corporation Project $ 2,600 3.60% 3/01/96 $ 2,600
MASSACHUSETTS 0.5%
Massachusetts Health & Educational Facilities Authority
Revenue - Capital Asset Program Issue 8,000 3.70 3/01/96 8,000
MICHIGAN 0.2%
Michigan Strategic Fund Limited Obligation Revenue -
Dow Chemical Company Project 2,500 3.70 3/01/96 2,500
MISSOURI 0.2%
Jackson County, Missouri Industrial Sewer Facilities
Revenue - Chevron USA Project 3,000 3.55 3/01/96 3,000
NEW YORK 0.5%
New York Energy Research & Development Authority PCR -
Niagara Power Corporation Project 8,000 3.60 3/01/96 8,000
NORTH CAROLINA 0.1%
Person County, North Carolina Industrial Facilities
and Pollution Control Financing Authority Solid Waste
Disposal Revenue - Carolina Power & Light Company Project 2,000 3.60 3/01/96 2,000
OREGON 0.5%
Port Morrow, Oregon Revenue - Portland General Electric
Company Project 8,440 3.50 3/01/96 8,440
TEXAS 0.7%
Brazos River Authority, Texas PCR - Utilities Electric
Company Project 5,155 3.55 3/01/96 5,155
Harris County, Texas IDC IDR - Yokohama Tire Corporation
Project 5,400 3.90 3/01/96 5,400
----------
10,555
----------
TOTAL DAILY VARIABLE RATE PUT BONDS 75,940
----------
TOTAL INVESTMENTS IN SECURITIES 99.3% 1,597,827
Other Assets and Liabilities, Net 0.7% 11,078
----------
NET ASSETS 100.0% $1,608,905
==========
</TABLE>
See notes to financial statements.
21
<PAGE> 24
SCHEDULES OF INVESTMENTS IN SECURITIES (CONTINUED) February 29, 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL ADVANTAGE FUND
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In thousands)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS 57.1%
CALIFORNIA 4.4%
Adelanto, California Public Financing Authority
Local Agency Second Subordinated Revenue:
5.05%, Due 9/01/98 $ 160 $ 160
5.25%, Due 9/01/99 170 170
5.35%, Due 9/01/00 175 175
California Educational Facilities Authority Revenue -
Pooled College & University Projects, 4.90%,
Due 12/01/98 270 271
California Hospital Revenue - Valley Health System
Refunding and Improvement Project, 5.50%,
Due 5/15/00 740 731
Los Angeles, California Unified School District
Partnership - Multiple Properties Project, 5.40%,
Due 11/01/09 1,000 999
Los Angeles County, California Pension Obligation,
6.70%, Due 6/30/01 250 257
Santa Ana, California Community Redevelopment
Refunding, 7.50%, Due 9/01/16 3,000 3,101
---------
5,864
COLORADO 2.0%
Denver, Colorado City and County Airport Revenue,
7.50%, Due 11/15/25 2,500 2,688
CONNECTICUT 5.0%
Connecticut Resources Recovery Authority Revenue -
American REF-FUEL Company of Southeastern
Connecticut Project, 8.00%, Due 11/15/15 6,000 6,570
FLORIDA 0.1%
Florida Housing Finance Agency MFHR - Cypress
Lake Apartment Project, 5.75%, Due 12/01/07 200 200
ILLINOIS 9.0%
Alton, Illinois Hospital Facilities Revenue and
Refunding - St. Anthony's Health Center:
4.65%, Due 9/01/98 1,350 1,343
4.95%, Due 9/01/99 1,400 1,391
5.15%, Due 9/01/00 1,355 1,348
Illinois Health Facilities Authority Revenue
Refunding - Carle Foundation, 6.00%, Due 1/01/15 2,500 2,572
Illinois Health Facilities Authority Revenue
Refunding - Westlake Community Hospital,
7.875%, Due 1/01/13 4,950 5,266
---------
11,920
INDIANA 1.2%
Huntington, Indiana EDR Refunding - Quanex
Corporation Project, 6.50%, Due 2/01/10 1,665 1,638
KANSAS 0.4%
Kansas City, Kansas Residual Revenue Capital
Appreciation, Zero %, Due 5/01/12 1,805 508
MASSACHUSETTS 0.1%
Brockton, Massachusetts Municipal Purpose Loan,
6.00%, Due 12/15/99 95 99
MICHIGAN 8.8%
Greater Detroit, Michigan Resource Recovery
Authority, 9.25%, Due 12/13/08:
Series A 4,200 4,337
Series E 500 516
Series H 5,000 5,162
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In thousands)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Pontiac, Michigan Hospital Financing Authority
Hospital Revenue - NOMC Obligation Group:
5.20%, Due 8/01/97 $ 600 $ 604
5.40%, Due 8/01/98 840 848
5.60%, Due 8/01/99 200 202
---------
11,669
MISSISSIPPI 4.6%
Claiborne County, Mississippi PCR - Middle South
Energy, Inc., 9.50%, Due 4/01/16 5,950 6,155
NEVADA 0.4%
Henderson, Nevada Local Improvement Districts
Number T-4, 6.00%, Due 11/01/01 505 510
NEW JERSEY 3.0%
New Jersey Health Care Facilities Financing
Authority Revenue - Zurbrugg Memorial Hospital:
7.60%, Due 7/01/97 75 77
8.50%, Due 7/01/12 3,665 3,857
---------
3,934
NEW YORK 3.6%
Battery Park, New York City Authority Housing
Revenue - FHA Insured Mortgage Loan, 5.75%,
Due 6/01/23 2,500 2,469
New York State Energy Research and Development
Authority Electric Facilities Revenue -
Consolidated Edison Company of New York, Inc.
Project, 7.50%, Due 1/01/26 2,000 2,185
New York State Housing Finance Agency Non-Profit
Housing Project:
6.10%, Due 11/01/99 50 51
6.50%, Due 11/01/99 50 51
---------
4,756
NORTH CAROLINA 0.4%
North Carolina Eastern Municipal Power Agency
Power System Revenue Refunding, 7.25%,
Due 1/01/21 500 518
OHIO 2.2%
Ohio Department of Transportation COP -
Rickenbacker Port, 6.125%, Due 4/15/15 1,150 1,186
Youngstown, Ohio City School District RAN, 5.40%,
Due 6/15/98 1,730 1,751
---------
2,937
TEXAS 7.3%
Texas State Lease COP, 6.35%, Due 12/01/13 8,678 8,841
Trinity River Authority, Texas Refunding - Texas
Industries, Inc. Project:
6.188%, Due 9/01/07 500 502
Series A, 6.188%, Due 9/01/07 305 307
---------
9,650
UTAH 3.8%
Utah Associated Municipal Power Systems Revenue
Refunding - Hunter Project, 5.50%, Due 7/01/12 5,000 4,981
WEST VIRGINIA 0.8%
Harrison County, West Virginia First Mortgage
Medical Facilities Revenue Refunding - Salem
Health Care Corporation Project, 9.875%,
Due 6/01/10 1,005 1,052
---------
TOTAL MUNICIPAL BONDS (COST $75,806) 75,649
</TABLE>
See notes to financial statements.
22
<PAGE> 25
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL ADVANTAGE FUND (continued)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In thousands)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
CASH EQUIVALENTS (a) 44.3%
Short-Term Municipal Bonds 2.1%
California 1.5%
Contra Costa County, California TRAN - West
Contra Costa Unified School District, 5.00%,
Due 1/24/97 $2,000 $ 2,007
MISSOURI 0.5%
Branson, Missouri BAN - Water Treatment Plant
Project, 5.00%, Due 6/01/96 630 632
NEW YORK 0.1%
Orleans County, New York IDA IDR - Anchor
Savings Bank FSB Project, 7.50%, Due 12/01/96 200 200
-------
Total Short-Term Municipal Bonds 2,839
MUNICIPAL COMMERCIAL PAPER 10.0%
INDIANA 6.2%
Indiana DFA Solid Waste Disposal Revenue - Pure
Air on the Lake, Limited Partnership Project
Due 4/04/96 7,250 7,250
Indiana DFA Solid Waste Disposal Revenue - Pure
Air on the Lake, Limited Partnership Project
Due 4/04/96 1,000 1,000
-------
8,250
NEVADA 2.7%
Las Vegas, Nevada Special Improvement District
No. 404 - Summerlin Area - UPDATES Local
Improvement, Due 3/07/96 3,500 3,500
OHIO 1.1%
Montgomery County, Ohio Hospital Facilities -
Miami Valley Hospital Project, Due 4/04/96 1,500 1,500
-------
Total Municipal Commercial Paper 13,250
ANNUAL PUT BONDS 3.5%
COLORADO 0.3%
Thornton, Colorado MFHR - Thornhill Farms
Project (e) 500 507
ILLINOIS 0.1%
Illinois DFA Solid Waste Disposal Revenue -
Horsehead Resource Development Company, Inc.
Project (e) 100 100
MINNESOTA 0.2%
Crosby, Minnesota IDR - Minnesota Power & Light
Company Project (e) 240 240
OHIO 0.1%
Sharonville, Ohio IDR - Ralston Purina Company
Project (e) 100 101
TENNESSEE 0.3%
Knox County, Tennessee 7.50% IDB IDR - Spartan
Food Systems, Inc. Project 200 200
Maryville, Tennessee 7.50% IDB IDR - Spartan
Food Systems, Inc. Project 200 200
-------
400
WISCONSIN 2.5%
Milwaukee, Wisconsin Redevelopment Authority
Revenue - Dynapro Thin Film Products, Inc.
Project (e) 3,300 3,300
-------
Total Annual Put Bonds 4,648
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In thousands)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
QUARTERLY VARIABLE RATE PUT BONDS 0.9%
WASHINGTON
Washington State Housing Finance Commission
SFMR Refunding:
Series S-2B $ 500 $ 500
Series S-3A 230 230
Series 10-A 450 450
-------
Total Quarterly Variable Rate Put Bonds 1,180
WEEKLY VARIABLE RATE PUT BONDS 22.3%
CALIFORNIA 7.1%
Los Angeles, California MFHR - Channel Gateway
Apartments 1,700 1,700
Orange County, California Apartment Development
Revenue - Bear Brand Apartments Project 3,100 3,100
Pasadena, California Community Development
Commission COP:
Kings Plaza Project 895 895
Lake/Washington Neighborhood Shopping Center
Project 750 750
Riverside, California MFHR - Spruce Grove Project 950 950
Riverside County, California Housing Authority
MFHR - Tyler Village Project 1,015 1,015
Sacramento County, California Housing Authority
MFHR Refunding - Bradshaw Courte Apartments,
Limited 300 300
Upland, California Apartment Development
Revenue - Mountain Springs Project 700 700
-------
9,410
FLORIDA 3.2%
Broward County, Florida HFA MFHR - Sawgrass
Pines Apartments Project 1,000 1,000
Marion County, Florida HFA MFHR:
Belvedere Apartments Project 1,200 1,200
Oakhurst Apartments Project 2,000 2,000
-------
4,200
ILLINOIS 2.0%
Illinois DFA IDA - Toyomenka (America), Inc.
Project 2,200 2,200
Illinois Educational Facilities Authority Revenue -
University Pooled Financing Program 430 430
-------
2,630
MINNESOTA 0.4%
Maplewood, Minnesota Rental Housing Revenue -
Carefree Cottages of Maplewood III Project 340 340
Vadnais Heights, Minnesota Rental Housing
Revenue - Cottages of Vadnais Heights Project 210 210
-------
550
NEVADA 0.2%
Nevada Department of Commerce IDR - Master-
Halco, Inc. Project 300 300
NEW YORK 1.6%
New York, New York IDA IDR - Brooklyn Navy Yard
Cogeneration Project 2,100 2,100
PENNSYLVANIA 1.6%
Emmaus, Pennsylvania General Authority Local
Government Revenue:
Series B 1,000 1,000
Series D 1,100 1,100
-------
2,100
</TABLE>
See notes to financial statements.
23
<PAGE> 26
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 29, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL ADVANTAGE FUND (continued)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In thousands)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
TEXAS 1.2%
Robertson County, Texas IDC IDR - CR/PL Project $ 1,000 $ 1,000
San Antonio, Texas Higher Education Authority, Inc.
Educational Facilities Revenue - UTSA Phase I
Dormitory Project 375 375
Texas Small Business IDC IDR - Mita Copystar
America, Inc. Project 250 250
--------
1,625
WASHINGTON 3.8%
Pierce County, Washington EDC Industrial
Revenue - Pooled Bond Program 2,200 2,200
Pierce County, Washington EDC Industrial
Revenue - Pooled Bond Program - America
Nichirel Foods Project 2,000 2,000
Washington Community Economic Revitalization
Board Umbrella Bond Program EDR 875 875
--------
5,075
WISCONSIN 0.8%
Pleasant Prairie, Wisconsin IDR - Chicago Lock
Company Project 1,000 1,000
WYOMING 0.4%
Lincoln County, Wyoming PCR - Champlin
Petroleum Company Project 570 570
--------
Total Weekly Variable Rate Put Bonds 29,560
DAILY VARIABLE RATE PUT BONDS 5.5%
CALIFORNIA 0.8%
Irvine Ranch, California Water District Consolidated
Refunding 1,000 1,000
GEORGIA 0.8%
Peachtree City, Georgia Development Authority
Revenue - FORMTEC, Inc. Project 1,000 1,000
LOUISIANA 1.4%
Calcasieu Parish, Louisiana IDB Environmental
Revenue Refunding - CITGO Petroleum
Corporation Project 1,800 1,800
OREGON 1.5%
Port of St. Helens, Oregon PCR - Portland General
Electric Company Project 2,000 2,000
TEXAS 1.0%
Brazos River Authority, Texas PCR - Utilities
Electric Company Project 1,400 1,400
--------
Total Daily Variable Rate Put Bonds 7,200
--------
TOTAL CASH EQUIVALENTS (COST $58,670) 58,677
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $134,476) 101.4% 134,326
Other Assets and Liabilities, Net (1.4%) (1,833)
--------
NET ASSETS 100.0% $132,493
========
<CAPTION>
STRONG ADVANTAGE FUND
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In thousands)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS 66.6%
AB Spintab Subordinated Floating Rate Notes,
6.4414%, Due 10/29/49 (Acquired 10/10/95;
Cost $5,000) (b) $ 5,000 $ 4,925
American Reinsurance Corporation Senior
Subordinated Debentures, 10.875%, Due 9/15/04 415 461
American Standard, Inc. Senior Debentures,
11.375%, Due 5/15/04 23,680 26,166
Arkla, Inc. Notes, 9.875%, Due 4/15/97 3,000 3,116
Bank of Boston Corporation Subordinated Floating
Rate Notes, 5.4375%, Due 2/28/01 22,700 22,479
Bankers Life Holding Corporation Senior
Subordinated Notes, Series B, 13.00%,
Due 11/01/02 10,229 11,968
Boyd Gaming Corporation Senior Subordinated
Notes, Series B, 10.75%, Due 9/01/03 33,000 35,063
Cablevision Industries Corporation Senior Notes,
10.75%, Due 1/30/02 18,205 19,752
Caesars World, Inc. Senior Subordinated
Debentures, 8.875%, Due 8/15/02 1,700 1,777
Chase Manhattan Corporation Floating Rate Notes,
5.9375%, Due 12/30/09 30,270 29,513
Citicorp Floating Rate Notes:
5.6875%, Due 11/27/35 10,000 9,300
6.50%, Due 5/01/04 20,896 20,893
Coltec Industries, Inc. Debentures, 11.25%,
Due 12/01/15 415 442
Continental Homes Holding Corporation Senior
Notes, 12.00%, Due 8/01/99 1,930 2,089
Domtar, Inc. Debentures, 11.25%, Due 9/15/17 2,900 3,089
Exide Corporation Floating Rate Revolving Bank Loan:
8.375%, Due 9/30/99 (Acquired 6/27/95;
Cost $113) (b) 113 112
8.375%, Due 9/30/99 (Acquired 6/27/95;
Cost $340) (b) 340 337
8.75%, Due 9/30/99 (Acquired 12/18/95-12/26/95;
Cost $159) (b) 159 157
First Bank System, Inc. Floating Rate Subordinated
Notes, 5.4375%, Due 11/30/10 (Putable at 100 on
11/30/00) 6,980 6,986
Fleming Companies, Inc. Senior Floating Rate Notes,
8.125%, Due 12/15/01 8,500 7,145
Ford Motor Credit Debt Unit with Premium Call
(Structured Enhanced Return Trusts 1995,
Series R-20), 9.75%, Due 2/03/98 (Acquired 2/08/95;
Cost $4,998) (b) 5,000 5,350
Harrahs Operating, Inc. Guaranteed Senior
Subordinated Notes, 10.875%, Due 4/15/02 30,835 33,456
Health & Retirement Properties Trust Senior
Floating Rate Notes, Series B, 6.3177%,
Due 7/13/99 30,000 30,021
Hook-SupeRx, Inc. Senior Notes, 10.125%,
Due 6/01/02 10,920 11,923
Lenfest Communications, Inc. Senior Notes, 8.375%,
Due 11/01/05 3,000 3,000
MGM Grand Hotel Finance Corporation First
Mortgage Notes:
11.75%, Due 5/01/99 8,500 9,095
12.00%, Due 5/01/02 23,080 25,503
Magma Copper Company Senior Subordinated
Notes, 12.00%, Due 12/15/01 16,505 18,321
Marine Midland Banks, Inc. Floating Rate
Subordinated Notes:
5.875%, Due 12/31/09 21,460 20,494
5.9375%, Due 12/20/00 12,500 12,355
</TABLE>
See notes to financial statements.
24
<PAGE> 27
STRONG ADVANTAGE FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
McDermott International, Inc. Senior Notes,
12.875%, Due 7/15/02 $10,300 $ 11,665
NBD Bancorp, Inc. Subordinated Floating Rate
Notes, 5.8125%, Due 12/18/05 23,505 23,273
National Westminster Bank Floating Rate Notes:
5.375%, Due 11/29/49 10,000 8,309
6.30%, Due 9/29/49 5,000 4,913
New American Capital, Inc. Floating Rate Notes,
Series C, 6.9648%, Due 4/12/00 (Acquired 3/16/95;
Cost $10,000) (b) 10,000 10,025
Newscorp Overseas Limited Floating Rate Debt Unit
with Swap Agreement (Structured Enhanced
Return Trusts 1995 Series R-27), 6.5875%,
Due 6/30/99 (Acquired 6/12/95; Cost $27,120) (b) 28,250 26,661
Okobank Subordinated Step-Up Perpetual Floating
Rate Notes:
7.0477%, Due 10/29/49 10,000 10,170
7.0477, Due 10/29/49 (Acquired 2/02/96;
Cost $5,078) (b) 5,000 5,085
Oryx Energy Company Notes:
9.50%, Due 11/01/99 5,000 5,297
10.00%, Due 6/15/99 5,750 6,182
Purity Supreme, Inc. Senior Secured Notes, Series B,
11.75%, Due 8/01/99 8,625 9,488
Republic of Argentina Bonds, 9.25%, Due 2/23/01 5,000 4,750
Riverwood International Corporation Senior Notes,
10.75%, Due 6/15/00 3,150 3,402
Rogers Cantel Mobile, Inc., Guaranteed Senior
Subordinated Notes, 11.125%, Due 7/15/02 15,000 16,313
Rogers Communications Inc. Floating Rate Debt
Unit with Premium Call (Medium Term Structured
Enhanced Return Trusts 1995, Series R-25),
8.4125%, Due 6/21/98 (Acquired 5/15/95;
Cost $12,000) (b) 12,000 11,970
Royal Caribbean Cruises, Ltd. Senior Subordinated
Notes, 11.375%, Due 5/15/02 7,000 7,648
SCI Television, Inc. First Secured Loan Facility
Variable Rate Notes, 7.50%, Due 6/30/98 12,000 12,060
Santa Fe Pacific Gold Corporation Senior
Debentures, 8.375%, Due 7/01/05 9,000 9,315
System Energy Resources, Inc. First Mortgage
Bonds, 11.375%, Due 9/01/16 3,530 3,841
Time Warner, Inc. Debt Unit with Premium Call
(Medium Term Structured Enhanced Return
Trusts 1995, Series R-29), 6.8125%, Due 12/17/97
(Acquired 9/12/95; Cost $5,000)(b) 5,000 5,015
Triton Energy Corporation Senior Subordinated
Discount Notes, Zero %, Due 11/01/97 13,500 11,846
UCAR Global Enterprises, Inc. Floating Rate Term
Loan, Tranche B, 7.5625%, Due 11/17/02
(Acquired 11/17/95; Cost $4,513) (b) 4,491 4,502
Union Bank of Norway Dual Basis Notes (Medium
Term Structured Enhanced Return Trusts 1995,
Series R-31) 7.0121%, Due 10/25/00 (Acquired
11/06/95; Cost $15,000) (b) 15,000 15,023
Varity Corporation Senior Notes, 11.375%,
Due 11/15/98 6,040 6,249
Viacom, Inc. Senior Notes, 7.75%, Due 6/01/05 27,800 28,252
Viacom International, Inc. Notes, 9.125%,
Due 8/15/99 18,500 19,427
Westinghouse Term Loan I, 7.0625%, Due 3/12/98 5,000 5,000
Westinghouse Term Loan II, 7.0625%, Due 9/12/02 5,000 5,000
--------
TOTAL CORPORATE BONDS (COST $664,050) 665,969
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
NON-AGENCY MORTGAGE & ASSET-BACKED
SECURITIES 24.6%
AFC Mortgage Loan Asset Trust Variable Rate
Certificates, Series 1994-1, Class 2, A-1, 7.9422%,
Due 5/25/25 $ 4,987 $ 5,026
California Federal Bank, A Federal Savings Bank of
Los Angeles, Variable Rate Mortgage Pass-Thru
Certificates, Series 1988 PAL-1, Class A, 7.57%,
Due 2/25/18 2,409 2,406
Chase Mortgage Finance Corporation Mortgage
Pass-Thru Certificates, Series 1990-G, Class A-Z1,
9.50%, Due 12/25/21 3,203 3,254
Collateralized Mortgage Obligation Trust Two-2,
Class E, 9.00%, Due 6/20/17 3,394 3,403
First Boston Mortgage Securities Corporation
Variable Rate Mortgage Pass-Thru Certificates,
Series 1994-MHC1:
Class C, 6.6625%, Due 4/25/11 9,600 9,636
Class D, 7.2626%, Due 4/25/11 5,200 5,200
Green Tree Securitized Net Interest Margin Trust
Certificates:
Series 1994-A, 6.90%, Due 2/15/04 6,389 6,398
Series 1994-B, 7.85%, Due 7/15/04 6,273 6,382
Series 1995-A, 7.25%, Due 7/15/05 8,507 8,597
Greenwich Capital Acceptance, Inc. Subordinated
Mortgage Securities Trust Pass-Thru Certificates,
Series 1994-1, Class A, 6.828%, Due 02/28/19
(Acquired 4/12/94; Cost $4,601) (b) 4,707 4,533
Homart Pooled Asset Financial Trust Floating Rate
Collateral Trust Certificates:
Class A-3, 7.4375%, Due 12/29/01 (Acquired
12/21/93; Cost $10,000) (b) 10,000 9,988
Class A-4, 8.1875%, Due 12/29/01 (Acquired
2/09/95; Cost $9,988) (b) 10,000 9,988
Merrill Lynch Home Equity Acceptance, Inc.
Subordinated Variable Rate Mortgage-Backed
Certificates, Series 1994-A, Class A-1, 6.625%,
Due 8/17/23 13,868 13,036
Merrill Lynch Mortgage Investors, Inc.
Manufactured Housing Contract Senior
Subordinated Pass-Thru Certificates,
Series 1992-E, Class B, 5.85%, Due 8/15/12 2,826 2,818
Merrill Lynch Mortgage Investors, Inc. Senior
Subordinated Pass-Thru Certificates,
Series 1988-H, Class A, 9.70%, Due 6/15/08 490 503
Merrill Lynch Mortgage Investors, Inc. Senior
Subordinated Variable Rate Pass-Thru Certificates:
Series 1993-B, Class B, 6.6875%, Due 11/15/17 4,000 3,756
Series 1993-G, Class B, 5.40%, Due 12/15/13 639 634
Series 1994-F, Class M, 6.3125%, Due 3/15/24 16,497 15,597
Series 1994-H, Class M, 6.3125%, Due 6/15/19 5,000 4,727
Morgan Stanley Capital I, Inc. Collateralized
Mortgage Obligation, Series 86-C, Class C-4, 9.00%,
Due 5/01/16 984 1,015
Morgan Stanley Mortgage Trust Variable Rate
Collateralized Mortgage Obligation, Series 35:
Class 35-1, 6.00%, Due 4/20/21 7,166 7,216
Class 35-2, Interest Only, 7,511.00%, Due 4/20/21 5 741
RTC Multifamily Variable Rate Mortgage
Certificates, Series 1992-M2, Class B-1, 6.525%,
Due 3/25/20 5,015 4,997
</TABLE>
See notes to financial statements.
25
<PAGE> 28
SCHEDULES OF INVESTMENTS IN SECURITIES (CONTINUED) February 29, 1996
- --------------------------------------------------------------------------------
STRONG ADVANTAGE FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
RTC Variable Rate Mortgage Pass-Thru
Securities, Inc.:
Series 1991-2, Class A, 5.925%, Due 4/25/21 $ 807 $ 811
Series 1991-16, Class A1, 7.8881%, Due 1/25/25 7,059 7,202
Series 1992-3, Class B-4, 6.245%, Due 9/25/30 17,919 17,941
Series 1992-6, Class B-9, 6.235%, Due 11/25/26 1,853 1,843
Series 1995-1, Class B-5, 7.0732%, Due 10/25/28 25,075 24,667
RTC Variable Rate Mortgage Pass-Thru Securities,
Inc. Manufactured Housing Certificates:
Series 1992-MH1, Class A-1, 7.00%, Due 2/15/19 756 759
Series 1992-MH1, Class B-2, 5.7125%, Due 8/15/19
(Acquired 4/21/95; Cost $7,175) (b) 7,288 7,196
Series 1992-MH2, Class A-1, 7.00%, Due 2/15/04 893 897
Ryan Mortgage Acceptance Corporation IX
Collateralized Mortgage Bonds, Series 4, Class 4-Z,
9.45%, Due 4/01/16 5,704 5,682
Ryland Acceptance Corporation IV Collateralized
Mortgage Bonds, Series 53, Class 53-E, 10.00%,
Due 10/25/18 3,267 3,476
Ryland Mortgage Securities Corporation III Variable
Rate Collateralized Mortgage Bonds,
Series 1992-C, Class 3-A, 7.65%, Due 11/25/30 24,985 24,977
Ryland Mortgage Securities Corporation IV Variable
Rate Collateralized Mortgage Bonds, Series 2,
Class 3-A, 11.9981%, Due 6/25/23 1,317 1,362
SML Commercial Mortgage Trust Variable Rate
Pass-Thru Certificates, Series 1994-C1, Class A-1,
6.4688%, Due 9/18/99 4,800 4,797
Santa Barbara Savings & Loan Association
California Real Estate Mortgage Investment
Conduit Participation Certificates, Series 1988-A,
Class 2, Principal Only, Due 9/01/18 1,579 1,252
Suncoast Collateralized Mortgage Obligation
Trust III, Class C, 8.75%, Due 2/27/18 2,020 2,034
U-Haul Self-Storage Corporation Commercial
Mortgage Asset Trust Pass-Thru Certificates,
Series 1993-1, Class A1, 6.90%, Due 12/01/20
(Acquired 12/02/93; Cost $3,937) (b) 3,937 3,959
Western Federal Savings & Loan Association
Marina Del Rey California Variable Rate Mortgage
Pass-Thru Certificates, Series 1991-4, Class A,
7.156%, Due 7/01/21 7,540 7,587
-----------
TOTAL NON-AGENCY MORTGAGE & ASSET-BACKED
SECURITIES (COST $245,516) 246,293
UNITED STATES GOVERNMENT AND AGENCY
ISSUES 6.2%
FHLMC Participation Certificates:
7.56%, Due 7/01/24 19,985 20,423
9.00%, Due 1/01/05 578 605
9.50%, Due 8/01/19 2,410 2,608
10.75%, Due 10/01/00 109 115
11.00%, Due 10/01/00 thru 9/01/20 2,195 2,442
11.75%, Due 5/01/11 thru 6/01/11 2,005 2,258
12.00%, Due 9/01/11 thru 2/01/15 797 900
12.25%, Due 7/01/15 1,379 1,564
12.50%, Due 2/01/15 225 257
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
13.50%, Due 9/01/14 58 68
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
FNMA Guaranteed Real Estate Mortgage Investment
Conduit Variable Rate Pass-Thru Certificates:
7.948%, Due 6/01/24 $23,572 $ 24,353
7.957%, Due 12/01/17 6,023 6,169
GNMA Guaranteed Pass-Thru Certificates:
13.50%, Due 6/15/10 thru 11/15/14 169 200
15.00%, Due 8/15/11 thru 9/15/12 53 63
-----------
TOTAL UNITED STATES GOVERNMENT AND
AGENCY ISSUES (COST $61,368) 62,025
OPTION 0.2%
Merrill Lynch Swaption (The option to receive a
fixed interest rate of 7.75%; exercisable at a strike
price of 100 beginning 4/09/04 and expiring
4/09/25.) (Cost $1,513) 32,667 1,957
CASH EQUIVALENTS (a) 3.5%
COMMERCIAL PAPER 1.7%
DISCOUNTED 1.6%
Salomon, Inc., Due 3/01/96 15,800 15,800
INTEREST BEARING, DUE UPON DEMAND 0.1%
American Family Financial Services, Inc., 4.94% 161 161
General Mills, Inc., 4.93% 88 88
Sara Lee Corporation, 4.92% 1,105 1,105
Wisconsin Electric Power Company, 4.98% 59 59
-----------
1,413
-----------
Total Commercial Paper 17,213
CORPORATE BONDS 1.7%
Texas New Mexico Power Company First Mortgage,
Series T, 11.25%, Due 1/15/97 13,134 13,758
USG Corporation Senior Notes, 8.00%,
Due 12/15/96 2,980 3,002
-----------
Total Corporate Bonds 16,760
UNITED STATES GOVERNMENT ISSUES 0.1%
United States Treasury Bills:
Due 3/14/96 (c) 105 105
Due 4/18/96 (c) 210 209
Due 5/09/96 (c) 125 124
Due 5/16/96 (c) 265 262
Due 5/30/96 (c) 140 138
Due 8/08/96 (c) 150 147
-----------
985
-----------
TOTAL CASH EQUIVALENTS (COST $34,756) 34,958
-----------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,007,203) 101.1% 1,011,202
Other Assets and Liabilities, Net (1.1%) (11,422)
-----------
NET ASSETS 100.0% $ 999,780
===========
<CAPTION>
FUTURES
UNDERLYING UNREALIZED
FACE AMOUNT APPRECIATION
EXPIRATION AT VALUE (DEPRECIATION)
DATE (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchased:
400 90-Day Eurodollar 12/96 $94,620 ($660)
Sold:
422 Ten-Year U.S. Treasury Note 6/96 (46,737) 214
</TABLE>
See notes to financial statements.
26
<PAGE> 29
STRONG ADVANTAGE FUND (continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
PERCENTAGE OF
INDUSTRY DIVERSIFICATION NET ASSETS
- -------------------------------------------------------------------------------------
<S> <C>
Non-Agency Single-Family ............................................ 12.8%
Leisure Service ..................................................... 11.3
Media - Radio/TV .................................................... 9.5
Yankee Corporate .................................................... 8.1
Bank - Super Regional ............................................... 7.5
Non-Agency Asset-Backed ............................................. 6.5
Non-Agency Manufactured Housing ..................................... 4.1
Media - Publishing .................................................. 3.2
FHLMC ............................................................... 3.1
FNMA ................................................................ 3.1
Bank - Money Center ................................................. 3.0
Real Estate ......................................................... 3.0
Diversified Operations .............................................. 2.6
Oil - North American Exploration & Production ....................... 2.3
Metals & Mining ..................................................... 1.8
Brokerage & Investment Management ................................... 1.6
Telecommunication Service ........................................... 1.6
Electric Power ...................................................... 1.4
Energy - Alternate Source ........................................... 1.2
Insurance - Life .................................................... 1.2
Retail - Drug Store ................................................. 1.2
Food ................................................................ 1.1
Household Appliance & Furnishings ................................... 1.0
Savings & Loan ...................................................... 1.0
Precious Metal/Gem/Stone ............................................ 0.9
Auto & Truck Parts .................................................. 0.7
Bank - Regional ..................................................... 0.7
Non-Agency Multi-Family ............................................. 0.7
Retail - Food Chain ................................................. 0.7
Paper & Forest Products ............................................. 0.6
Automobile .......................................................... 0.5
Foreign Government .................................................. 0.5
Non-Agency Commercial ............................................... 0.5
Steel ............................................................... 0.5
Electric Utility .................................................... 0.4
Housing Related ..................................................... 0.3
Natural Gas Distribution ............................................ 0.3
Finance - Miscellaneous ............................................. 0.2
Housing ............................................................. 0.2
Insurance - Property & Casualty ..................................... 0.1
U.S. Government ..................................................... 0.1
Other Assets and Liabilities, Net ................................... (1.1)
------
Total ............................................................... 100.0%
======
<CAPTION>
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- -------------------------------------------------------------------------------------
<S> <C>
United States ..................................................... 90.6%
United Kingdom .................................................... 4.6
Canada ............................................................ 1.9
Finland ........................................................... 1.5
Norway ............................................................ 1.5
Argentina ......................................................... 0.5
Sweden ............................................................ 0.5
Other Assets and Liabilities, Net ................................. (1.1)
------
Total ............................................................. 100.0%
======
</TABLE>
- --------------------------------------------------------------------------------
LEGEND
(a) Cash equivalents includes any security which has a 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) Maturity date represents actual maturity, earliest put date, or for U.S.
Government Agency Securities, the next interest adjustment date.
(e) Variable rate security.
All principal amounts and costs are stated in thousands.
Percentages are stated as a percent of net assets.
ABBREVIATIONS
The following is a list of abbreviations which may be used in the Schedules of
Investments in Securities:
BAN -- Bond Anticipation Notes
CDA -- Commercial Development Authority
CDR -- Commercial Development Revenue
COP -- Certificates of Participation
DFA -- Development Finance Authority
EDA -- Economic Development Authority
EDC -- Economic Development Corporation
EDR -- Economic Development Revenue
GO -- General Obligation
HDA -- Housing Development Authority
HDC -- Housing Development Corporation
HFA -- Housing Finance Authority
HFC -- Housing Finance Corporation
IBA -- Industrial Building Authority
IBR -- Industrial Building Revenue
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDC -- Industrial Development Corporation
IDFA -- Industrial Development Finance Authority
IDR -- Industrial Development Revenue
IFA -- Investment Finance Authority
MFHR -- Multi-Family Housing Revenue
MFMR -- Multi-Family Mortgage Revenue
PCR -- Pollution Control Revenue
RAN -- Revenue Anticipation Notes
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
TAN -- Tax Anticipation Notes
TRAN -- Tax and Revenue Anticipation Notes
See notes to financial statements.
27
<PAGE> 30
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
For the Period Ended February 29, 1996 (Note 1)
<TABLE>
<CAPTION>
(In Thousands)
STRONG HERITAGE STRONG MUNICIPAL
MONEY FUND MONEY MARKET FUND
--------------- -----------------
<S> <C> <C>
Interest Income $19,007 $10,606
Expenses:
Investment Advisory Fees 1,619 1,248
Custodian Fees 25 19
Shareholder Servicing Costs 62 149
Reports to Shareholders 172 108
Other 30 43
-------- -------
Total Expenses before Waivers and Absorptions 1,908 1,567
Voluntary Expense Waivers and Absorptions by Advisor (1,856) --
-------- -------
Expenses, Net 52 1,567
-------- -------
NET INVESTMENT INCOME $18,955 $ 9,039
======== =======
<CAPTION>
STRONG MUNICIPAL STRONG
ADVANTAGE FUND ADVANTAGE FUND
---------------- --------------
<S> <C> <C>
INTEREST INCOME $ 531 $11,511
EXPENSES:
Investment Advisory Fees 68 974
Custodian Fees 1 16
Shareholder Servicing Costs 3 236
Other 5 99
-------- -------
Total Expenses before Waivers and Absorptions 77 1,325
Voluntary Expense Waivers and Absorptions by Advisor (77) --
-------- -------
Expenses, Net -- 1,325
-------- -------
NET INVESTMENT INCOME 531 10,186
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 1 182
Futures Contracts, Options and Forward Currency Contracts -- 532
Foreign Currencies -- (12)
Change in Unrealized Appreciation/Depreciation on:
Investments (150) (1,373)
Futures Contracts, Options and Forward Currency Contracts -- (91)
-------- -------
NET LOSS (149) (762)
-------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OEPRAIOTNS $ 382 $ 9,424
======== =======
</TABLE>
See notes to financial statements.
28
<PAGE> 31
STATEMENTS OF ASSETS AND LIABILITIES
February 29, 1996
<TABLE>
<CAPTION>
(in thousands, except per share amounts)
STRONG HERITAGE STRONG MUNICIPAL
MONEY FUND MONEY MARKET FUND
ASSETS: --------------- -----------------
<S> <C> <C>
Investments in Securities, at Amortized Cost $ 975,341 $1,597,827
Receivable from Brokers for Securities Sold -- 74,937
Interest Receivable 3,667 12,459
Other Assets 80 190
---------- ----------
Total Assets 979,088 1,685,413
LIABILITIES:
Payable to Brokers for Securities Purchased 33,000 71,425
Dividends Payable 3,919 4,360
Accrued Operating Expenses and Other Liabilities 116 723
---------- ----------
Total Liabilities 37,035 76,508
---------- ----------
NET ASSETS $ 942,053 $1,608,905
========== ==========
Capital Shares
Authorized 2,000,000 3,000,000
Outstanding 942,053 1,608,905
NET ASSET VALUE PER SHARE $1.00 $1.00
========== ==========
<CAPTION>
STRONG MUNICIPAL STRONG
ADVANTAGE FUND ADVANTAGE FUND
---------------- --------------
<S> <C> <C>
ASSETS:
Investments in Securities, at Value (Cost of $134,476 and
$1,007,203, respectively) $ 134,326 $1,011,202
Receivable from Brokers for Securities Sold 1,070 342
Interest Receivable 1,423 14,624
Other Assets 252 --
---------- ----------
Total Assets 137,071 1,026,168
LIABILITIES:
Payable to Brokers for Securities Purchased 4,124 20,132
Dividends Payable 371 4,971
Accrued Operating Expenses and Other Liabilities 83 1,285
---------- ----------
Total Liabilities 4,578 26,388
---------- ----------
NET ASSETS $ 132,493 $ 999,780
========== ==========
Capital Shares
Authorized 300,000 1,000,000
Outstanding 26,453 99,645
NET ASSET VALUE PER SHARE $5.01 $10.03
========== ==========
</TABLE>
See Notes to financial statements
29
<PAGE> 32
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(in thousands)
STRONG HERITAGE STRONG MUNICIPAL
MONEY FUND MONEY MARKET FUND
--------------- -----------------------------------
PERIOD ENDED PERIOD ENDED YEAR ENDED
FEB. 29, 1996 FEB. 29, 1996 DEC. 31, 1995
-------------- ------------- -------------
(NOTE 1) (NOTE 1)
<S> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 18,955 $ 9,039 $ 52,328
CAPITAL SHARE TRANSACTIONS 941,953 192,463 155,825
DISTRIBUTIONS:
From Net Investment Income (18,955) (9,039) (52,328)
-------- --------- ---------
Total Increase in Net Assets 941,953 192,463 155,825
NET ASSETS:
Beginning of Period 100 1,416,442 1,260,617
-------- --------- ---------
End of Period $942,053 $1,608,905 $1,416,442
======== ========== ==========
<CAPTION>
STRONG MUNICIPAL STRONG
ADVANTAGE FUND ADVANTAGE FUND
---------------- ----------------------------------
PERIOD ENDED PERIOD ENDED YEAR ENDED
FEB. 29, 1996 FEB. 29, 1996 DEC. 31, 1995
---------------- ------------- -------------
(NOTE 1) (NOTE 1)
OPERATIONS:
Net Investment Income $ 531 $ 10,186 $ 59,697
Net Realized Gain (Loss) 1 702 (5,847)
Change in Unrealized Appreciation/Depreciation (150) (1,464) 10,677
-------- ---------- ----------
Increase in Net Assets Resulting from Operations 382 9,424 64,527
CAPITAL SHARE TRANSACTIONS 132,642 10,812 74,507
DISTRIBUTIONS:
From Net Investment Income (531) (10,157) (59,697)
In Excess of Net Investment Income -- -- (144)
-------- ---------- ----------
TOTAL INCREASE IN NET ASSETS 132,493 10,079 79,193
NET ASSETS:
Beginning of Period -- 989,701 910,508
-------- ---------- ----------
End of Period $132,493 $ 999,780 $ 989,701
======== ========== ==========
</TABLE>
See Notes to financial statements
30
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
February 29, 1996
1. ORGANIZATION
The accompanying financial statements represent the Strong Cash Management
Funds, which include the following diversified, open-end management
investment companies registered under the Investment Company Act of 1940:
- Strong Heritage Money Fund (a series of Strong Heritage Reserve Series,
Inc.)
- Strong Municipal Money Market Fund (a series of Strong Municipal Funds,
Inc.)
- Strong Municipal Advantage Fund (a series of Strong Municipal Funds,
Inc.)
- Strong Advantage Fund, Inc.
The Board of Directors approved changing the Strong Municipal Money Market
Fund and the Strong Advantage Fund, Inc. fiscal year-ends from December 31
to February 29; therefore, this report encompasses financial information for
the two months ended February 29, 1996 for those funds. Inception dates for
the Strong Heritage Money Fund and the Strong Municipal Advantage Fund were
June 29, 1995 and November 30, 1995, respectively.
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 Strong Municipal Advantage
Fund and the Strong Advantage Fund, 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 and all investments in the Strong Heritage Money
Fund and the Strong Municipal Money Market Fund are valued at amortized
cost, which approximates current value. Amortized cost for Federal
income tax and financial reporting purposes is the same.
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
February 29, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG HERITAGE STRONG
MONEY FUND ADVANTAGE FUND
--------------- --------------
<S> <C> <C>
Aggregate Fair Value $39,583 $124,826
Aggregate Cost 39,354 125,022
Percent of Net Assets 4.2% 12.5%
</TABLE>
(B) Federal Income and Excise Taxes and Distributions to Shareholders
-- It is the Funds' policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of their taxable income to their
shareholders in a manner which results in no tax cost to the Funds.
Therefore, no Federal income or excise tax provision is required.
The character of distributions made during the year from net investment
income or net realized gains may differ from the characterization for
Federal income tax purposes due to differences in the recognition of
income and expense items for financial statement and tax purposes.
Where appropriate, reclassifications between net asset accounts are made
for such differences that are permanent in nature.
(C) Realized Gains and Losses on Investment Transactions -- Gains or
losses realized on investment transactions are determined by comparing
the identified cost of the security lot sold with the net sales
proceeds.
(D) Futures -- Upon entering into a futures contract, the Funds pledge
to the broker cash, U.S. government securities or other liquid,
high-grade debt obligations equal to the minimum "initial margin"
requirements of the exchange. The Funds also receive from or pay to
the broker an amount of cash equal to the daily fluctuation in the
value of the contract. Such receipts or payments are known as
"variation margin," and are recorded as unrealized gains or losses.
When the futures contract is closed, a realized gain or loss is
recorded equal to the difference between the value of the contract at
the time it was opened and the value at the time it was closed.
(E) Options -- Premiums received by the Funds upon writing put or call
options are recorded as an asset with a corresponding liability which
is subsequently adjusted to the current market value of the option.
When an option expires, is exercised, or is closed, the Funds realize a
gain or loss, and the liability is eliminated. The Funds continue to
bear the risk of adverse movements in the price of the underlying asset
during the period of the option, although any potential loss during the
period would be reduced by the amount of the option premium received.
31
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
February 29, 1996
(F) Foreign Currency Translation -- Investment securities and other
assets and liabilities initially expressed in foreign currencies are
converted to U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income are converted to
U.S. dollars based upon currency exchange rates prevailing on the
respective dates of such transactions. The effect of changes in
foreign exchange rates on realized and unrealized security gains or
losses is reflected as a component of such gains or losses.
(G) Forward Foreign Currency Exchange Contracts -- Forward foreign
currency exchange contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the Funds record
an exchange gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it was
closed.
(H) Additional Investment Risk -- The use of futures contracts,
options, foreign denominated assets and forward foreign currency
exchange contracts for purposes of hedging the Funds' investment
portfolios involves, to varying degrees, elements of market risk in
excess of the amount recognized in the statement of assets and
liabilities. The predominant risk with futures contracts is an
imperfect correlation between the value of the contracts and the
underlying securities. Foreign denominated assets and forward foreign
currency exchange contracts may involve greater risks than domestic
transactions, including currency, political and economic, regulatory
and market risks.
(I) Other -- Investment security transactions are recorded as of the
trade date. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on the
accrual basis and includes amortization of premium and discounts.
3. NET ASSETS
Net assets as of February 29, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG HERITAGE STRONG MUNICIPAL STRONG MUNICIPAL STRONG
MONEY FUND MONEY MARKET FUND ADVANTAGE FUND ADVANTAGE FUND
--------------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
Capital Stock $942,053 $1,608,905 $132,642 $1,003,773
Undistributed Net Realized Gain (Loss) -- -- 1 (7,546)
Net Unrealized Appreciation (Depreciation) -- -- (150) 3,553
-------- ---------- -------- ----------
$942,053 $1,608,905 $132,493 $ 999,780
======== ========== ======== ==========
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the period ended February 29, 1996
and the year ended December 31, 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
STRONG HERITAGE MONEY FUND
Shares Sold 1,417,145 $1,417,145
Dividends Reinvested 13,892 13,892
Shares Redeemed (489,084) (489,084)
--------- ----------
941,953 $ 941,953
========= ==========
STRONG MUNICIPAL MONEY MARKET FUND
Shares Sold 700,050 $ 700,050 2,581,413 $ 2,581,413
Dividends Reinvested 9,703 9,703 48,824 48,824
Shares Redeemed (517,290) (517,290) (2,474,412) (2,474,412)
--------- ---------- ---------- -----------
192,463 $ 192,463 155,825 $ 155,825
========= ========== ========== ===========
STRONG MUNICIPAL ADVANTAGE FUND
Shares Sold 28,453 $ 142,671
Dividends Reinvested 26 131
Shares Redeemed (2,026) (10,160)
--------- ----------
26,453 $ 132,642
========= ==========
STRONG ADVANTAGE FUND
Shares Sold 15,171 $ 152,433 79,688 $ 797,729
Dividends Reinvested 938 9,418 5,253 52,563
Shares Redeemed (15,034) (151,039) (77,565) (775,785)
--------- ---------- ---------- -----------
1,075 $ 10,812 7,376 $ 74,507
========= ========== ========== ===========
</TABLE>
32
<PAGE> 35
5. RELATED PARTY TRANSACTIONS
Strong Capital Management, Inc. (the "Advisor"), with whom certain officers
and directors of the Funds are affiliated, provides investment advisory
services and shareholder recordkeeping and related services to the Funds.
Investment advisory fees, which are established by terms of the Advisory
Agreements, are based on the following annualized rates of the average daily
net assets: Strong Heritage Money Fund and Strong Municipal Money Market
Fund .50%, Strong Municipal Advantage Fund and Strong Advantage Fund .60%.
Advisory fees are subject to reimbursement by the Advisor if the Funds'
operating expenses exceed certain levels. Shareholder recordkeeping and
related service fees are based on contractually established rates for each
open and closed shareholder account. In addition, the Advisor is
compensated for certain other services related to costs incurred for reports
to shareholders. Certain information regarding related party transactions
for the period ended February 29, 1996, excluding the effect of waivers and
absorptions, is as follows (in thousands):
<TABLE>
<CAPTION>
STRONG HERITAGE STRONG MUNICIPAL STRONG MUNICIPAL STRONG
MONEY FUND MONEY MARKET FUND ADVANTAGE FUND ADVANTAGE FUND
--------------- ----------------- ---------------- --------------
<S> <C> <C> <C> <C>
Payable to Advisor at February 29, 1996 $119 $723 $83 $587
Other Shareholder Servicing Expenses
Paid to Advisor 1 6 -- 7
Unaffiliated Directors' Fees 4 6 -- 4
</TABLE>
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the period
ended February 29, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG MUNICIPAL STRONG
ADVANTAGE FUND ADVANTAGE FUND
---------------- --------------
<S> <C> <C>
Purchases:
U.S. Government and Agency $ -- $ 20,600
Other 81,708 172,224
Sales:
U.S. Government and Agency -- 17,160
Other 5,853 149,653
</TABLE>
7. INCOME TAX INFORMATION
At February 29, 1996, the investment cost, gross unrealized appreciation and
depreciation on investments and capital loss carryovers (expiring in varying
amounts through 2003) for Federal income tax purposes were as follows (in
thousands):
<TABLE>
<CAPTION>
STRONG MUNICIPAL STRONG
ADVANTAGE FUND ADVANTAGE FUND
---------------- --------------
<S> <C> <C>
Aggregate Investment Cost $134,476 $1,007,203
========= ==========
Aggregate Unrealized
Appreciation $ 120 $ 8,702
Depreciation (270) (4,703)
--------- ----------
($ 150) $ 3,999
========= ==========
Capital Loss Carryovers -- $ 7,989
========= ==========
</TABLE>
33
<PAGE> 36
FINANCIAL HIGHLIGHTS
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
STRONG HERITAGE MONEY FUND
<TABLE>
<CAPTION>
1996(a)
---------
(NOTE 1)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
Net Investment Income 0.04
Dividends from Net Investment Income (0.04)
---------
NET ASSET VALUE, END OF PERIOD $ 1.00
=========
Total Return +4.1%
Net Assets, End of Period (In Thousands) $ 942,053
Ratio of Expenses to Average Net Assets 0.0%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.6%*
Ratio of Net Investment Income to Average Net Assets 5.9%*
</TABLE>
STRONG MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
1996(b) 1995 1994 1993 1992
------- ---- ---- ---- ----
(Note 1)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.01 0.04 0.03 0.02 0.03
Dividends from Net Investment Income(c) (0.01) (0.04) (0.03) (0.02) (0.03)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return +0.6% +4.1% +2.9% +2.5% +3.4%
Net Assets, End of Period (In Thousands) $1,608,905 $1,416,442 $1,260,617 $1,172,560 $1,105,491
Ratio of Expenses to Average Net Assets 0.6%* 0.6% 0.6% 0.7% 0.7%
Ratio of Expenses to Average Net Assets
Without Waivers 0.6%* 0.6% 0.6% 0.7% 0.7%
Ratio of Net Investment Income to Average Net Assets 3.6%* 4.0% 2.9% 2.5% 3.3%
<CAPTION>
1991 1990 1989 1988 1987
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.05 0.06 0.06 0.05 0.05
Dividends from Net Investment Income(c) (0.05) (0.06) (0.06) (0.05) (0.05)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return +5.2% +6.1% +6.1% +5.2% +4.7%
Net Assets, End of Period (In Thousands) $ 782,482 $ 218,205 $ 73,802 $ 77,465 $ 59,085
Ratio of Expenses to Average Net Assets 0.7% 0.8% 0.9% 0.8% 0.6%
Ratio of Expenses to Average Net Assets
Without Waivers 0.7% 0.8% 0.9% 0.8% 1.0%
Ratio of Net Investment Income to Average Net Assets 5.0% 6.0% 5.9% 5.0% 4.7%
</TABLE>
* Calculated on an annualized basis.
(a) For the period from June 29, 1995 (inception) to February 29, 1996.
Total return is not annualized.
(b) For the two month period ended February 29, 1996. Total return is not
annualized.
(c) Tax-exempt for regular Federal income tax purposes.
34
<PAGE> 37
FINANCIAL HIGHLIGHTS
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
STRONG MUNICIPAL ADVANTAGE FUND
<TABLE>
<CAPTION>
1996(a)
-------
(NOTE 1)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 5.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.06
Net Realized and Unrealized Gains on Investments 0.01
--------
TOTAL FROM INVESTMENT OPERATIONS 0.07
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.06)
--------
TOTAL DISTRIBUTIONS (0.06)
--------
NET ASSET VALUE, END OF PERIOD $ 5.01
========
Total Return +1.4%
Net Assets, End of Period (In Thousands) $132,493
Ratio of Expenses to Average Net Assets 0.0%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.7%*
Ratio of Net Investment Income to Average Net Assets 4.9%*
Portfolio Turnover Rate 17.1%
</TABLE>
STRONG ADVANTAGE FUND
<TABLE>
<CAPTION>
1996(c) 1995 1994 1993 1992 1991
------- ---- ---- ---- ---- ----
(NOTE 1)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.04 $ 9.98 $ 10.19 $ 10.01 $ 9.90 $ 9.67
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.10 0.67 0.55 0.59 0.70 0.76
Net Realized and Unrealized Gains (Losses)
on Investments (0.01) 0.06 (0.19) 0.18 0.11 0.23
-------- ------- ------- ------- ------- --------
TOTAL FROM INVESTMENT OPERATIONS 0.09 0.73 0.36 0.77 0.81 0.99
LESS DISTRIBUTIONS
From Net Investment Income (0.10) (0.67) (0.55) (0.59) (0.70) (0.76)
In Excess of Net Realized Gains -- -- (0.02) -- -- --
-------- ------- ------- ------- ------- --------
TOTAL DISTRIBUTIONS (0.10) (0.67) (0.57) (0.59) (0.70) (0.76)
-------- ------- ------- ------- ------- --------
NET ASSET VALUE, END OF PERIOD $ 10.03 $ 10.04 $ 9.98 $ 10.19 $ 10.01 $ 9.90
======== ======== ======== ======== ======== ========
Total Return +0.9% +7.5% +3.6% +7.9% +8.4% +10.6%
Net Assets, End of Period (In Thousands) $999,780 $989,701 $910,508 $415,465 $272,348 $143,215
Ratio of Expenses to Average Net Assets 0.8%* 0.8% 0.8% 0.9% 1.0% 1.2%
Ratio of Expenses to Average Net Assets
Without Waivers 0.8%* 0.8% 0.8% 0.9% 1.0% 1.2%
Ratio of Net Investment Income to Average Net Assets 6.3%* 6.6% 5.6% 5.8% 7.0% 7.8%
Portfolio Turnover Rate 17.2% 183.7% 221.0% 304.8% 316.1% 503.0%
<CAPTION>
1990 1989 1988(b)
---- ---- -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.87 $ 10.00 $ 9.99
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.83 1.03 0.09
Net Realized and Unrealized Gains (Losses)
on Investments (0.20) (0.13) 0.01
-------- -------- --------
Total from Investment Operations 0.63 0.90 0.10
LESS DISTRIBUTIONS
From Net Investment Income (0.83) (1.03) (0.09)
In Excess of Net Realized Gains -- -- --
-------- -------- --------
TOTAL DISTRIBUTIONS (0.83) (1.03) (0.09)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 9.67 $ 9.87 $ 10.00
======== ======== ========
Total Return +6.6% +9.4% +1.0%
Net Assets, End of Period (In Thousands) $119,189 $142,807 $ 7,544
Ratio of Expenses to Average Net Assets 1.2% 1.1% 1.1%*
Ratio of Expenses to Average Net Assets
Without Waivers 1.2% 1.2% 1.7%*
Ratio of Net Investment Income to Average Net Assets 8.5% 10.0% 11.1%*
Portfolio Turnover Rate 274.1% 211.3% 22.9%
</TABLE>
* Calculated on an annualized basis.
(a) For the period from November 30, 1995 (inception) to February 29, 1996.
Total return and portfolio turnover rate are not annualized.
(b) Inception date is November 25, 1988 for Strong Advantage Fund. Total
return and portfolio turnover rate are not annualized.
(c) For the two month period ended February 29, 1996. Total return and
portfolio turnover rate are not annualized.
35
<PAGE> 38
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of the
Strong Cash Management Funds
We have audited the accompanying statement of assets and liabilities of Strong
Heritage Money Fund (one of the portfolios constituting the Strong Heritage
Reserve Series, Inc.), including the schedule of investments in securities, as
of February 29, 1996, and the related statements of operations and changes in
net assets, and financial highlights for the period from June 29, 1995
(inception) to February 29, 1996. We have also audited the accompanying
statements of assets and liabilities of Strong Municipal Money Market Fund (one
of the portfolios constituting the Strong Municipal Funds, Inc.) and Strong
Advantage Fund, Inc., including the schedules of investments in securities, as
of February 29, 1996, and the related statements of operations for the period
from January 1, 1996 to February 29, 1996, the statements of changes in net
assets for the period from January 1, 1996 to February 29, 1996 and for the
year ended December 31, 1995, and the financial highlights for the periods
indicated. We have also audited the statement of assets and liabilities of
Strong Municipal Advantage Fund (one of the portfolios constituting the Strong
Municipal Funds, Inc.), including the schedule of investments in securities,
as of February 29, 1996, and the related statements of operations and changes
in net assets, and financial highlights for the period from November 30, 1995
(inception) to February 29, 1996. These Funds are collectively referred to
herein as the "Strong Cash Management Funds". These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of February 29, 1996 by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Strong Cash Management Funds as of February 29, 1996, the results of
their operations, the changes in their net assets, and the financial highlights
for each of the periods indicated, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
March 25, 1996
36
<PAGE> 39
SHAREHOLDER PRIVILEGES*
[STRONG FUNDS LOGO
24-HOUR SERVICE]
TELEPHONE PURCHASE
Make additional investments into any Strong Fund by calling us toll-free at
1-800-368-3863.
TELEPHONE EXCHANGE
If your financial goals change, you can exchange your investments between any
of the Strong Funds.
TELEPHONE REDEMPTION
You can call toll-free to redeem your mutual fund shares at any time. Your
shares will be redeemed no later than the close of the next business day.
[STRONG FUNDS LOGO
AUTOMATIC EXCHANGE]
AUTOMATIC INVESTMENT PLAN
This plan allows you to set up regular transfers from your bank checking or NOW
account to your Strong Funds account.
PAYROLL DIRECT DEPOSIT PLAN
You can automatically transfer all or a portion of your net pay at each pay
period. This eliminates the delay of depositing paychecks to your bank and then
sending a check through the mail to Strong Funds.
AUTOMATIC EXCHANGE PLAN
This plan allows you to exchange money from one Strong Fund to another. For
example, you may want to set up automatic exchanges from a money market fund
to an equity fund.
FOR MORE INFORMATION ABOUT THESE PRIVILEGES, CALL US AT 1-800-368-3863.
To reduce the volume of mail you receive, only one copy of certain materials,
such as prospectuses and shareholder reports, is mailed to your household.
Please call 1-800-368-3863 if you wish to receive additional copies, free of
charge.
* Each Fund reserves the right to terminate or modify any of these privileges.
<PAGE> 40
Bulk Rate
U.S. Postage
PAID
FOR LITERATURE AND INFORMATION REQUESTS, Mailed from
Zip Code 94545
Permit No. 23
CALL 1-800-368-1030
TO DISCUSS AN EXISTING ACCOUNT OR
CONDUCT A TRANSACTION,
CALL 1-800-368-3863
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 annual report does not constitute an offer for
the sale of securities. Strong Funds are offered for sale by prospectus only.
[STRONG FUNDS LOGO]
STONG FUNDS DISTRIBUTORS INC.
P.O. BOX 2936
MILWAUKEE, WISCONSIN 53201
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