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Previous: BALCOR COLONIAL STORAGE INCOME FUND 86, SC 14D9, 1996-02-23 |
Next: KENT FUNDS, N-30D, 1996-02-23 |
<PAGE> 1
THE STRONG
MUNICIPAL INCOME
FUNDS
ANNUAL REPORT - DECEMBER 31, 1995
["PHOTO OF FATHER AND SON"]
THE STRONG MUNICIPAL MONEY MARKET FUND
THE STRONG SHORT-TERM MUNICIPAL BOND FUND
THE STRONG MUNICIPAL BOND FUND
THE STRONG INSURED MUNICIPAL BOND FUND
THE STRONG HIGH-YIELD MUNICIPAL BOND FUND
[STRONG FUNDS LOGO]
STRONG FUNDS
<PAGE> 2
EIGHT BASIC PRINCIPLES FOR SUCCESSFUL MUTUAL FUND INVESTING
These common-sense rules are followed by many successful investors. They make
sense for beginners, too. If you have a question on these principles, or would
like to discuss them with us, please contact us at 1-800-368-3863. We're here
24 hours a day, seven days a week to take your call.
- -----------------------------------------1--------------------------------------
Have a plan.
Even a simple plan can help you take control of your financial
future. Review your plan once a year, or if your circumstances
change.
- -----------------------------------------2--------------------------------------
Start investing as soon as possible.
Make time a valuable ally. Let it put the power of compounding to
work for you, while helping to reduce your potential
investment risk.
- -----------------------------------------3--------------------------------------
Diversify your portfolio.
By investing in different asset classes-stocks, bonds, and
cash-you help protect against poor performance in one type of
investment while including investments most likely to help you
achieve your important goals.
- -----------------------------------------4--------------------------------------
Invest regularly.
Investing is a process, not a one-time event. 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.
For most individuals, the best discipline is staying invested as
market conditions change. Reactive, emotional investment
decisions are all too often a souce of regret-and of principal
loss.
- -----------------------------------------6--------------------------------------
Consider stocks to help achieve major long-term goals.
Over time, stocks have provided the more powerful returns needed
to help the value of your investments stay well ahead of
inflation.
- -----------------------------------------7--------------------------------------
Keep a comfortable amount of cash in your portfolio.
To meet current needs, including emergencies, use a money market
fund or a bank account-not your long-term investment assets.
- -----------------------------------------8--------------------------------------
Know what you're buying.
Make sure you understand the potential risks and rewards
associated with each of your investments. Ask questions... request
information...make up your own mind. And choose a fund company
that helps you make informed investment decisions.
- --------------------------------------------------------------------------------
<PAGE> 3
THE STRONG
MUNICIPAL INCOME
Funds
ANNUAL REPORT -- DECEMBER 31, 1995
Table of Contents
INVESTMENT REVIEWS
The Strong Municipal Money Market Fund ................................ 2
The Strong Short-Term Municipal Bond Fund ............................. 4
The Strong Insured Municipal Bond Fund ................................ 6
The Strong Municipal Bond Fund ........................................ 6
The Strong High-Yield Municipal Bond Fund ............................. 6
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong Municipal Money Market Fund ............................ 10
The Strong Short-Term Municipal Bond Fund ......................... 18
The Strong Insured Municipal Bond Fund ............................ 19
The Strong Municipal Bond Fund .................................... 20
The Strong High-Yield Municipal Bond Fund ......................... 22
Statements of Operations .............................................. 25
Statements of Assets and Liabilities .................................. 26
Statements of Changes in Net Assets ................................... 27
Notes to Financial Statements ......................................... 29
FINANCIAL HIGHLIGHTS ...................................................... 32
REPORT OF INDEPENDENT ACCOUNTANTS ......................................... 35
<PAGE> 4
The Strong MUNICIPAL MONEY MARKET Fund
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.
[PHOTO OF PENCILS]
AS OF 12-29-95
7-DAY CURRENT YIELD(2)
4.72%
7-DAY EFFECTIVE YIELD(2)
4.83%
A Record of Continued Excellence
In keeping with its record of outstanding performance, the Fund once again
rewarded investors with superior returns in 1995. Based on total return through
December 31, the Fund ranked in the top 2% of all tax-exempt money market funds
tracked by Lipper Analytical Services for the one-year, five-year, and since
inception periods.
At year end, the Municipal Money Market Fund's 7-day current yield was 4.72%
and its 7-day effective yield--which reflects compounding--was 4.83%.(2). The
table on page 3 shows the Fund's equivalent taxable yield for each of 1995's
federal income tax brackets.
Correct Call on Interest Rates
Investors in the Fund benefited in 1995, in large part because we correctly
anticipated declining interest rates and positioned the portfolio accordingly.
The yield on the benchmark one-year Treasury bill fell 28.3 percent during the
year from 7.17% in January to 5.14% at year end. By investing in longer
maturities early in the year, we were able to take advantage of the higher
yields as rates declined through the year.
Inflation was not a significant factor in the market this year. The Federal
Reserve Board lowered the federal funds target rate twice in 1995, in largely
symbolic attempts to ease credit. The final result was a rate reduction of just
one-half percentage point to the current 5.5%. That compares to the seven rate
hikes the Fed initiated in 1994 and early 1995 in efforts to curb inflation.
However, as the interest-rate decline slowed in the second half of the year, we
moved the Fund into a more buoyant position by shortening the average maturity
of the Fund. A shorter position allows us to react quickly to interest-rate
changes. At year end the Fund's average maturity was 55 days.
Talk of Tax Reform Causes Concern
Calls for tax-law reform by members of Congress this year caused concern in the
municipal markets as investors anticipated possible negative effects of such
reform. Several of the changes being discussed--including the flat tax--could
lessen the appeal of municipal bonds.
We expect Congress to discuss tax reform at length this year, and we
think there is a significant chance for some kind of reform in 1997. However,
the market has already begun to discount that possibility, with interest rates
on short-term municipals holding up fairly well in response to this new
tax-reform risk.
The Portfolio Remains Conservative
The Strong Municipal Money Market Fund invests solely in short-term securities
with minimal credit risk. All of the Fund's holdings are rated within the top
two short-term rating categories or are of comparable quality.
To provide the Fund with a greater cushion of liquidity, at year end
approximately 62% of the portfolio carried a weekly or daily demand feature,
which means those securities can be sold in seven days or less at their
contractual par value.
At year end, approximately 93% of the portfolio carried some type of credit
enhancement, which represents a promise above and beyond the promise of the
original issuer to pay principal and interest--and boosts the quality of these
securities. And, as always, our investment philosophy remains one of commitment
to comprehensive credit research.
2
<PAGE> 5
Outlook for 1996
In 1996, we believe the bond market will depend in large part on the Federal
Reserve's ability to reduce rates further. The Fed is watching for signs that
Congress and the Administration are serious about their fiscal responsibilities
and will make solid progress toward reducing the federal budget deficit. If it
does not see progress, the Fed may be less willing to take the lead in reducing
rates.
Lipper Rankings
period ended 12-31-95
<TABLE>
<S> <C>
One-year #1 of 121
Five-year #1 of 85
Since inception (10-23-86) #1 of 57
</TABLE>
PLEASE NOTE THAT ALL RANKINGS ARE HISTORICAL AND DO NOT
REPRESENT FUTURE RESULTS.
All and all, this is a very good environment for the short-end of the municipal
market.
Early indications are that the economy is slowing and that the long-anticipated
soft landing is occurring, and we do not anticipate an imminent recession.
Thank You For Your Investment
We appreciate the opportunity to serve your investment needs and remain
committed to providing you with top-quality investment results. As always, we
look for opportunities to maintain the kind of yield that will give you, the
investor, a highly-competitive return on your money. 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(3)
as of 12-29-95
<TABLE>
YOUR TAX-EXEMPT EFFECTIVE
YIELD OF 4.83% IS EQUIVALENT
JOINT RETURN SINGLE RETURN MARGINAL TAX RATE TO A TAXABLE YIELD OF:
<S> <C> <C> <C>
$39,000 AND UNDER $23,350 AND UNDER 15% 5.68%
$39,001-94,250 $23,351-56,550 28% 6.71%
$94,251-143,600 $56,551-117,950 31% 7.00%
$143,601-256,500 $117,951-256,500 36% 7.55%
OVER $256,500 OVER $256,500 39.6% 8.00%
</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) Yields are annualized for the 7 days ended 12-29-95, are historical, and
will vary.
(3) Effective yield assumes reinvested income. The chart reflects 1995
marginal federal tax rates before limitations and phase-outs. Individuals
with adjusted gross income in excess of $114,700 should consult their tax
advisor to determine their actual 1995 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.
3
<PAGE> 6
The Strong SHORT-TERM MUNICIPAL BOND Fund
The Strong Short-Term Municipal Bond Fund seeks total return by investing for a
high level of federally tax-exempt current income with a low degree of
share-price fluctuation. The Fund invests primarily in short- and
intermediate-term, investment-grade municipal obligations and maintains an
average portfolio maturity of three years or less.
Equivalent Taxable Yields(1)
as of 12-29-95
<TABLE>
<CAPTION>
YOUR TAX-EXEMPT EFFECTIVE
YIELD OF 4.94% IS EQUIVALENT
JOINT RETURN SINGLE RETURN MARGINAL TAX RATE TO A TAXABLE YIELD OF:
<S> <C> <C> <C>
$39,000 AND UNDER $23,350 AND UNDER 15% 5.81%
$39,001-94,250 $23,351-56,550 28% 6.86%
$94,251-143,600 $56,551-117,950 31% 7.16%
$143,601-256,500 $117,951-256,500 36% 7.72%
OVER $256,500 OVER $256,500 39.6% 8.18%
</TABLE>
The Fund's income may be subject to state and local taxes and, depending on
your tax status, the Alternative Minimum Tax. The chart reflects 1995 marginal
federal tax rates before limitations and phase-outs. Individuals with adjusted
gross income in excess of $114,700 should consult their tax advisor to
determine their actual 1995 marginal tax rate.
As of December 29, 1995, the Strong Short-Term Municipal Bond Fund's annualized
30-day yield was 4.94%.(1) The table above shows the Fund's equivalent taxable
yields for each of 1995's federal income tax brackets.
At year end, the Fund was diversified across 38 different issuers and across 19
states plus Guam and the District of Columbia. The largest holding, Hillsboro,
Oregon Hospital Facility Authority, accounted for 7% of the portfolio's net
assets, and Michigan, totaling 10.6% of the portfolio, was the largest state
representation.
A Year of Ups and Downs
Municipal bond prices rebounded sharply in 1995, as short-term traders sent
bond prices into dramatic up-and-down swings. We were well-positioned to take
advantage of the rally early in the year, and the Fund's overall performance
was rewarded by that position.
However, we became more defensive in the second quarter when we felt the market
was overvalued and risky, with greater downside potential than upside. Instead
of chasing the market higher, we elected to concentrate on reducing price
volatility in the Fund. In 1995, our caution meant that we did not participate
fully in what turned out to be a significant market rally.
Speculation About Tax Reform
Causes Concern
Talk of tax reform in Washington had a significant impact on the municipal
markets this year. The municipal yield curve steepened as municipal investors,
concerned about the possible negative effects of tax reform, flocked into
short-term municipals.
Consequently, the rally in the municipal market lagged the robust rally in the
taxable bond market as the prospect of a flat tax pushed municipal yields to an
unprecedented 95% of Treasury bonds in December. That compares to the more
typical 86% level that prevailed at the beginning of the year. The relationship
of municipal yields to those of Treasuries is a benchmark for measuring
municipal bond valuations.
Although calls for tax reform will likely continue--especially going into an
election year--we believe the markets have already discounted much of the
possibility of tax reform. Should tax-reform legislation ultimately preserve
the municipal advantage, a significant rally in municipal bonds would likely
ensue.
4
<PAGE> 7
Our Strategy Has Not Changed
1995 was a classic trader's market. We rely on our time-tested approach of
utilizing intense credit research to select attractive investments for the
Fund, and believe our cautious philosophy remains the prudent choice for
longer-term investors.
AS OF 12-29-95
30-DAY ANNUALIZED YIELD(1)
4.94%
AVERAGE MATURITY(2)
2.9 YEARS
AVERAGE QUALITY
A
We remain committed to making investment decisions that are consistent with
what you hired us to do--build a portfolio that seeks total return by investing
for a high level of tax-exempt income with a low degree of share-price
fluctuation. While our investment strategy works best when interest rates are
stable or rising, we are confident this strategy will reward investors who are
willing to take a two- to four-year approach to municipal investing.
We appreciate the opportunity to serve you, and we thank you for your
investment with us.
Sincerely,
/s/ Steven D. Harrop
Steven D. Harrop
Portfolio Manager
[PHOTO STEVEN D. HARROP]
Growth of an Assumed $10,000 Investment
from 12-31-91 to 12-31-95
<TABLE>
<CAPTION>
The Strong Lehman Brothers
Short-Term 3-Year
Municipal Bond Municipal Bond
Fund Index
<S> <C> <C>
12-91 10000 10000
6-92 10345 10309
12-92 10716 10643
6-93 11118 11022
12-93 11441 11305
6-94 11322 11276
12-94 11256 11383
6-95 11428 11952
12-95 11861 12396
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
through 12-31-95
<S> <C>
1-year 5.37%
3-year 3.44%
Since inception 4.36%
(on 12-31-91)
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Lehman Brothers 3-year Municipal Bond Index, an unmanaged total return
performance benchmark for the 3-year, tax-exempt bond market. Source of 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) Yields are annualized for the 30 days ended 12-29-95, are historical, and
will vary.
(2) Futures contracts are reflected in the Fund's average maturity.
5
<PAGE> 8
The Strong
INSURED MUNICIPAL BOND Fund
The Strong
MUNICIPAL BOND Fund
The Strong
HIGH-YIELD MUNICIPAL BOND Fund
Market Overview
The bond market reacted favorably through the year as interest rates fell and
inflation remained under control. Despite indications that higher inflation
might return--including the robust rate of growth late in 1994, sharp rises in
the producer price index, and increased prices on raw materials and
intermediate goods early in 1995--inflation did not ignite. The good inflation
news stimulated a decline in long-term interest rates that continued through
year end. Accordingly, we positioned the Funds early in the year to take
advantage of the rally.
Municipal bond prices rebounded so sharply early in the year--as short-term
traders sent bond prices into dramatic up-and-down swings--that by early
spring, we felt the market had greater downside potential than upside.
Consequently, we locked in gains and positioned the Funds more defensively.
The Funds continued to post significant total returns throughout the year;
however, our caution meant that we did not participate fully in what turned
out to be an extended market rally.
We have since repositioned each of the portfolios--without sacrificing overall
credit quality. We have shifted the Funds to a more aggressive strategy by
substantially lengthening our average maturities. This move was implemented by
reducing cash, increasing longer-duration positions, and eliminating the
Treasury hedge in each of the Funds.
Talk of Tax Reform Prompts Change in Portfolios
The relative attractiveness of longer-term municipal securities versus taxable
alternatives caused many non-traditional buyers to step into the market as the
yield spread between municipals and treasuries tightened. This tightening was
due, in large part, to talk in Congress of tax reform. Municipal yields--which,
on a longer-term historical basis have tended to range between 84% and 86% of
treasury yields--traded at the rarely seen level of 95% of taxable bond yields
this year.
Tax reforms currently under discussion could negatively impact the municipal
markets by eliminating the tax-exempt status of municipal bonds. We don't
believe, however, that tax reform will occur in 1996--if at all. Rather, we see
this anomaly in the yield spread as an excellent buying opportunity. We believe
that, at these levels, municipal prices have very limited downside versus the
taxable market.
Focus on Trends
Going into 1996, we continue to focus our purchases in sectors within our
primary investment themes, which include:
THE AGING OF AMERICA. We view the aging of America as a major catalyst for
long-term trends in the U.S. economy. As the baby boom generation grows older,
there will be an increased need for health care products and services, and
long-term care facilities. Many of our holdings--including hospitals, nursing
homes and CCRCs (congregate care retirement centers)--reflect this focus.
RECONSTRUCTION OF AMERICAN INFRASTRUCTURE. As American cities begin to invest
in rebuilding their basic infrastructures, we often find attractive
opportunities to invest in municipal bonds to rebuild toll roads, airports,
bridges, and water systems.
WASTE DISPOSAL. The ongoing dilemma in waste disposal--as landfills become
increasingly overburdened--has presented opportunities to invest in such
industries as solid waste disposal, resource recovery, and nuclear and medical
waste disposal.
With the recent stabilization in the long end of the municipal market,
and the relative attractiveness of longer-term securities, we continue to
reshape the portfolio. As always, credit research remains the driving factor
behind our security selection. We strive to keep a long-term perspective, and
we don't attempt to time the market with short-term plays that are dependent,
to a large degree, on market psychology.
Strong Insured Municipal Bond Fund
In the Insured Municipal Bond Fund, we have increased our holdings in general
obligation bonds, which typically command a slight premium in the market due to
their perception as
6
<PAGE> 9
stellar performers. We were able to add these securities at little or no
premium due to the large number of these securities that came to market at year
end. We continue to emphasize single- and multi-family housing, which we
believe offer greater yield potential, and hospitals, which continue to offer
an additional yield premium due to their association with the health care
sector. As of December 31, 1995, the Fund held the securities of 28 different
issuers, with no more than 14.6% of its assets concentrated in any single
state.
Strong Municipal Bond Fund
In the Municipal Bond Fund, we currently favor bonds that are trading at a
slight discount, those that offer the chance for price appreciation; and
premium callable bonds. By using this "barbell" approach, we stand to benefit
if rates remain stable or fall, while picking up incremental yield. We continue
to emphasize the health care sector, with hospitals among the Fund's largest
holdings. As always, we are committed to maintaining a diversified,
well-researched portfolio. At year end, the Fund held the securities of 66
distinct issuers, and the single largest state, Texas, accounted for 9.3% of
assets.
Portfolio Statistics as of 12-29-95
<TABLE>
<CAPTION>
30-day Average Average
Annualized Yield Maturity Quality Rating
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Insured Municipal Bond Fund 4.23% 21.7 years AAA
Municipal Bond Fund 5.11% 20.0 years AA
High-Yield Municipal Bond Fund 6.82% 19.8 years BB
</TABLE>
WHEN-ISSUED SECURITIES ARE REFLECTED IN THE FUND'S AVERAGE MATURITIES.
Strong High-Yield Municipal Bond Fund
We remain fairly fully invested in the High-Yield Municipal Bond Fund, with
approximately 64.3% of the holdings in unrated securities. We believe these
securities currently offer the best value because they don't move in line with
the market, and we believe they are
Equivalent Taxable Yields
as of 12-29-95
<TABLE>
<CAPTION>
INSURED MUNICIPAL MUNICIPAL HIGH-YIELD MUNICIPAL
BOND FUND BOND FUND BOND FUND
TAXABLE INCOME YOUR TAX-EXEMPT YIELD YOUR TAX-EXEMPT YIELD YOUR TAX-EXEMPT YIELD
JOINT SINGLE MARGINAL OF 4.23% IS EQUIVALENT OF 5.11% IS EQUIVALENT OF 6.82% IS EQUIVALENT
RETURN RETURN TAX RATE TO A TAXABLE YIELD OF: TO A TAXABLE YIELD OF: TO A TAXABLE YIELD OF:
<S> <C> <C> <C> <C> <C>
$39,000 AND UNDER $23,350 AND UNDER 15% 4.98% 6.01% 8.02%
$39,001-94,250 $23,351-56,550 28% 5.88% 7.10% 9.47%
$94,251-143,600 $56,551-117,950 31% 6.13% 7.41% 9.88%
$143,601-256,500 $117,951-256,500 36% 6.61% 7.98% 10.66%
OVER $256,500 OVER $256,500 39.6% 7.00% 8.46% 11.29%
</TABLE>
YIELDS ARE ANNUALIZED FOR THE 30 DAYS ENDED 12-29-95, ARE HISTORICAL, AND WILL
VARY. EACH FUND'S INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES AND, DEPENDING
ON YOUR TAX STATUS, THE ALTERNATIVE MINIMUM TAX. THE CHART REFLECTS 1995
MARGINAL FEDERAL TAX RATES BEFORE LIMITATIONS AND PHASE-OUTS. INDIVIDUALS WITH
ADJUSTED GROSS INCOME IN EXCESS OF $114,700 SHOULD CONSULT THEIR TAX ADVISOR TO
DETERMINE THEIR ACTUAL 1995 MARGINAL TAX RATE.
7
<PAGE> 10
Growth of an Assumed $10,000 Investment
The charts at right, provided in accordance with SEC regulations,
compare a $10,000 investment in each Fund, made at its inception, with a similar
investment in a relevant, unmanaged, total-return performance benchmark. Source
of 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 Fund shares.
THE STRONG INSURED MUNICIPAL BOND FUND
from 11-25-91 to 12-31-95
<TABLE>
<CAPTION>
The Lehman
Strong Insured Brothers Insured
Municipal Bond Municipal Bond
Fund Index
<S> <C> <C>
11-91 10000 10000
12-91 10335 10230
6-92 11082 10658
12-92 11685 11184
6-93 12621 12038
12-93 13186 12641
6-94 12361 11995
12-94 12333 11885
6-95 13073 13096
12-95 13901 14091
</TABLE>
THE STRONG MUNICIPAL BOND FUND
from 10-23-86 to 12-31-95
<TABLE>
<CAPTION>
The Lehman
Strong Insured Brothers Insured
Municipal Bond Municipal Bond
Fund Index
<S> <C> <C>
10-86 10000 10000
12-86 10129 10216
12-87 9949 10370
12-88 10705 11423
12-89 11463 12656
12-90 11995 13578
12-91 13598 15227
12-92 15256 16568
12-93 17052 18602
12-94 16275 17640
12-95 18128 20721
</TABLE>
THE STRONG HIGH-YIELD MUNICIPAL BOND FUND
from 10-1-93 to 12-31-95
<TABLE>
<CAPTION>
The Lehman
Strong High-Yield Brothers Baa
Municipal Bond Municipal Bond
Fund Index
<S> <C> <C>
10-93 10000 10000
12-93 10266 10164
3-94 10007 9627
6-94 10169 9757
9-94 10288 9803
12-94 10165 9609
3-95 10639 10232
6-95 10979 10530
9-95 11239 10869
12-95 11651 11362
</TABLE>
8
<PAGE> 11
undervalued. These securities will comprise the Fund's core holdings,
and we plan to hold them over the long term. In addition, we have eliminated
hedged securities from the Fund in order to reduce volatility. At the end of
December, the Fund held securities from 55 different issuers, the largest
holding was Cedar Rapids, Iowa First Mortgage Revenue (6.9% of net assets), and
the largest state representation was Pennsylvania, (21.9% of net assets).
A Constructive Outlook
Going forward into 1996, we remain positive on the market but realize that any
one of several variables could have a significant impact on interest rates.
Specifically, a derailment of the budget proposal, a continuation of December's
rise in commodity prices, or continued talk of tax reform could cause interest
rates to rise. However, several positive factors remain--including low
inflation and slowing growth, positive market psychology, and the
attractiveness of longer-term municipal securities relative to taxable
alternatives.
Thank you for your investment. We appreciate the confidence you've shown in our
management, and we look forward to serving your investment needs in 1996.
Sincerely,
/s/ Mary-Kay H. Bourbulas
Mary-Kay H. Bourbulas
Portfolio Manager
Strong Insured Municipal Bond Fund
Strong Municipal Bond Fund
Strong High-Yield Municipal Bond Fund
[PHOTO OF MARY-KAY H. BOURBULAS]
<TABLE>
<CAPTION>
Average Annual Total Returns
through 12-31-95
<S> <C>
1-year 12.71%
3-year 5.96%
Since inception
(on 11-25-91) 8.37%
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
through 12-31-95
<S> <C>
1-year 11.38%
3-year 5.92%
5-year 8.61%
Since inception
(on 10-23-86) 6.69%
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
through 12-31-95
<S> <C>
1-year 14.62%
Since inception
(on 10-1-93) 7.02%
</TABLE>
9
<PAGE> 12
SCHEDULES OF INVESTMENTS IN SECURITIES December 31, 1995
STRONG MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (c) COST (NOTE 2)
(In Thousands) (In Thousands)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MUNICIPAL BONDS 28.0%
ALABAMA 0.4%
Mobile, Alabama IDB Annual Tender PCR -
International Paper Company Project (b) $5,100 4.25% 11/15/96 $5,100
ARKANSAS 0.2%
Camden, Arkansas PCR -
International Paper Company Project (b) 2,785 4.25 11/15/96 2,785
CALIFORNIA 7.1%
California 4.60% Housing Finance
Agency Home Mortgage Revenue 5,000 4.60 2/01/96 5,000
Contra Costa County, California COP -
Concord Healthcare Center, Inc. Project (b) 3,730 4.55 6/01/96 3,730
Los Angeles, California MFHR -
Earthquake Rehabilitation Project (b) 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 12,020
Santa Paula, California 5.00% BANS -
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 4.52 8/14/96 46,384
Vallejo, California Housing Authority MFMR -
Highlands Apartments Project (b) 4,200 4.50 6/01/96 4,222
--------
100,566
COLORADO 0.8%
Aurora, Colorado 5.35% MFHR -
Aurora Meadows Apartments Project 11,750 5.35 9/01/96 11,750
FLORIDA 0.6%
Florida Housing Finance Agency MFHR -
Wood Forest II Project (b) 8,550 4.50 12/01/96 8,550
GUAM 0.4%
Guam 4.60% Government GO 5,000 4.41 9/01/96 5,006
ILLINOIS 9.0%
Illinois DFA IDR - Deerfield Executive Center Project (b) 4,445 4.38 9/01/96 4,445
Lakemoor, Illinois MFHR Mortgage -
Lakemoor Apartments Project (b):
Series B 50,000 5.10 4/12/96 50,000
Series C 10,000 5.25 3/01/96 10,000
Oakbrook Terrace, Illinois MFHR - Renaissance Project (b) 41,820 5.25 3/01/96 41,820
Oakbrook Terrace, Illinois MFHR - Renaissance Project (b) 15,000 4.75 4/01/96 15,000
Palatine, Illinois MFHR - Clover Ridge Apartments Project (b) 5,720 4.40 12/15/96 5,720
--------
126,985
MARYLAND 0.1%
Prince George's County, Maryland IDR Refunding -
International Paper Company Project (b) 1,100 4.01 7/15/96 1,100
MINNESOTA 0.2%
St. Paul, Minnesota Port Authority CDR Refunding -
Battle Creek Hotel Project (b) 3,565 4.35 4/01/96 3,568
MISSISSIPPI 0.1%
Rankin County, Mississippi Industrial Revenue -
Trilogy Communications, Inc. Project (b) 1,100 5.25 3/01/96 1,100
MONTANA 0.1%
Montana Board of Investments Municipal Finance
Consolidation Act - INTERCAP Revolving Program (b) 1,915 4.90 3/01/96 1,915
NEW HAMPSHIRE 0.4%
New Hampshire HFA SFMR (b) 6,000 4.55 4/01/96 6,000
NEW JERSEY 0.6%
Eastern States Tax-Exempt Mortgage Bond Trust (b) 4,855 5.19 3/01/96 4,855
Essex County, New Jersey 5.375% Utilities Authority -
Solid Waste System Project 3,000 4.72 4/13/96 3,005
-------
7,860
NEW MEXICO 0.1%
New Mexico Mortgage Finance Authority SFMR (b):
Series A 665 5.20 3/01/96 665
Series B 1,445 5.20 3/01/96 1,445
-------
2,110
NEW YORK 1.1%
Oneida County, New York 5.00% BAN 4,157 4.56 5/10/96 4,163
Oneida County, New York 5.00% RAN 11,000 4.56 3/29/96 11,011
Syracuse, New York 4.20% Industrial Development Agency
Pilot Revenue Refunding 1,000 4.20 10/15/96 1,000
--------
16,174
NORTH DAKOTA 1.3%
Oliver County, North Dakota PCR - Square Butte Electric
Cooperative Project (b):
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
</TABLE>
See notes to financial statements.
10
<PAGE> 13
STRONG MUNICIPAL MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (c) COST (NOTE 2)
(In Thousands) (In Thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OKLAHOMA 0.7%
Oklahoma Housing Finance Agency GNMA Collateralized SFMR (b) $9,290 4.00% 2/08/96 $9,290
PENNSYLVANIA 1.4%
Allegheny County, Pennsylvania Residential Finance Authority SFMR - GNMA
Mortgage-Backed Securities Program (b) 2,775 4.60 6/01/96 2,775
Pennsylvania Housing Finance Agency SFMR (b) 4,480 4.88 4/01/96 4,480
Philadelphia, Pennsylvania IDA CDR - Suite Hotel Project (b) 12,275 4.25 6/01/96 12,275
-------
19,530
RHODE ISLAND 0.5%
Rhode Island 4.75% Solid Waste Management Corporation Landfill Lease 6,405 4.41 8/01/96 6,417
SOUTH DAKOTA 0.3%
South Dakota HDA Homeownership Mortgage (b) 5,000 4.05 10/24/96 5,000
TENNESSEE 0.4%
Knox County, Tennessee 7.50% IDB IDR - Spartan Food Systems, Inc. Project 1,300 7.50 1/01/96 1,300
Knox County, Tennessee IDB Industrial Revenue - ETB Development, Inc.
Project (b) 2,760 5.00 4/01/96 2,760
Maryville, Tennessee 7.50% IDB IDR - Spartan Food Systems, Inc. Project 1,300 7.50 1/01/96 1,300
-------
5,360
TEXAS 0.9%
Tarrant County, Texas HFC MFHR - Lincoln Meadows Project (b) 4,375 4.30 12/01/96 4,375
Texas Department of Housing and Community Affairs MFMR Refunding -
Folsom III Development Project (b) 8,480 4.25 12/01/96 8,480
-------
12,855
WISCONSIN 1.3%
Milwaukee, Wisconsin Redevelopment Authority Revenue - Dynapro Thin Film
Products Inc. Project 3,300 5.52 2/05/96 3,300
Milwaukee, Wisconsin Redevelopment Authority Development Revenue Refunding -
Washington Square Phase I Project (b) 2,390 5.55 2/01/96 2,390
Wisconsin HDA EDA Home Ownership Revenue - MERLOTS (b) 12,640 4.55 3/01/96 12,640
-------
18,330
-------
Total Municipal Bonds 396,271
MUNICIPAL COMMERCIAL PAPER 3.3%
CALIFORNIA 1.8%
Irvine, California Updates Improvement - Assessment District No. 85-7 (b) 9,754 4.30 1/12/96 9,754
Irvine, California Updates Improvement - Assessment District No. 85-7 (b) 10,000 4.10 1/16/96 10,000
Tustin, California Assessment District 86-2 Limited Obligation Improvement (b) 6,050 4.75 1/16/96 6,050
-------
25,804
MINNESOTA 0.8%
Bass Brook, Minnesota Customized Purchase PCR Refunding - Minnesota Power &
Light Company Project (b) 4,700 4.61 5/31/96 4,694
Cloquet, Minnesota Customized Purchase IDR Refunding - Minnesota Power &
Light Company Project (b) 2,450 4.61 5/31/96 2,447
Coleraine, Minnesota Customized Purchase IDR Refunding - Minnesota Power &
Light Company Project (b) 1,695 4.61 5/31/96 1,693
Hoyt Lakes, Minnesota Customized Purchase PCR Refunding - Minnesota Power &
Light Company Project (b) 2,000 4.61 5/31/96 1,998
Long Prairie, Minnesota IDR Refunding - Minnesota Power & Light Company
Project (b) 1,090 4.61 5/31/96 1,089
-------
11,921
NEVADA 0.7%
Las Vegas, Nevada Special Improvement District No. 404 - Summerlin Area -
UPDATES Local Improvement (b) 3,500 4.60 1/25/96 3,500
Las Vegas, Nevada Special Improvement District No. 404 - Summerlin Area -
UPDATES Local Improvement (b) 5,700 4.80 1/25/96 5,700
-------
9,200
-------
Total Municipal Commercial Paper 46,925
</TABLE>
See notes to financial statements.
11
<PAGE> 14
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1995
STRONG MUNICIPAL MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (c) COST (NOTE 2)
(In Thousands) (In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SEMIANNUAL VARIABLE RATE PUT BONDS 2.0%
INDIANA 0.1%
Decatur, Indiana EDR - Silberline Manufacturing Co., Inc.
Project (b) $1,080 4.31% 6/01/96 $1,081
LOUISIANA 1.0%
Louisiana Housing Finance Agency GNMA Collateralized SFMR
Municipal Exempt Receipts -
Liquidity Optional Tender (b) 14,620 4.35 5/01/96 14,620
UTAH 0.3%
Utah Housing Finance Agency SFMR (b) 3,560 4.13 7/01/96 3,560
WISCONSIN 0.6%
Milwaukee, Wisconsin Redevelopment Authority MFHR - City Hall
Square Apartments Project (b) 9,000 5.31 6/01/96 9,000
------
Total Semiannual Variable Rate Put Bonds 28,261
QUARTERLY VARIABLE RATE PUT BONDS 1.4%
WASHINGTON
Washington State Housing Finance Commission SFMR Refunding (b):
Series S-1A 2,095 4.90 3/01/96 2,095
Series S-3A 4,460 4.90 3/01/96 4,460
Series S-3B 4,180 4.80 3/01/96 4,180
Series S-4A 7,440 4.90 3/01/96 7,440
Series S-B 2,345 4.80 3/01/96 2,345
------
Total Quarterly Variable Rate Put Bonds 20,520
MONTHLY VARIABLE RATE PUT BONDS 3.1%
CALIFORNIA 0.1%
Tri-City, California Housing Finance Agency SFMR -
FNMA and GNMA Mortgage-Backed
Securities Program 2,090 4.30 2/01/96 2,090
COLORADO 0.2%
Jefferson County, Colorado IDR - Anthony A. Petrarca/Cedarwood
Construction Company, Inc. Project 2,420 4.85 2/01/96 2,420
ILLINOIS 0.3%
Green Leaf Ventures, Inc. Tax Exempt Bond Grantor Trust - Illinois 4,000 4.95 2/01/96 4,000
MARYLAND 0.5%
Prince George's County, Maryland EDR Refunding - Capital View II
Limited Partnership Facility 6,380 4.55 2/01/96 6,380
MICHIGAN 0.1%
Michigan Job Development Authority IDR - Anthony A. Petrarca/Cedarwood
Construction Company, Inc. Project 1,740 4.85 2/01/96 1,740
MINNESOTA 1.1%
Dakota County, Washington County, and the City of Anoka, Minnesota Housing and
Redevelopment Authority SFMR 15,847 4.35 2/01/96 15,847
NORTH CAROLINA 0.1%
Carolina Freight Tax Exempt Bond Grantor Trust 2,202 4.60 2/01/96 2,202
OHIO 0.2%
Summit County, Ohio Insured IDR - Anthony A. Petrarca/Cedarwood Construction
Company, Inc. Project 2,625 4.85 2/01/96 2,625
TENNESSEE 0.3%
GAF Corporation Tax Exempt Bond Grantor Trust 4,300 4.40 2/01/96 4,300
WISCONSIN 0.2%
Johnson Controls, Inc. Tax Exempt Bond Grantor Trust 2,515 4.50 2/01/96 2,515
------
Total Monthly Variable Rate Put Bonds 44,119
WEEKLY VARIABLE RATE PUT BONDS 61.1%
ALABAMA 3.2%
Alabama IDA IDR:
Decatur Aluminum Corporation Project 3,765 5.55 1/09/96 3,765
Research Genetics, Inc. Project 3,560 5.70 1/09/96 3,560
Whitesell Project 5,000 5.70 1/09/96 5,000
Arab, Alabama IDB IDR - Syncro Corporation Project 1,630 5.30 1/09/96 1,630
Birmingham, Alabama Baptist Medical Center - Special Care
Facilities Financing Authority
Revenue - Methodist Home for the Aging Project 12,270 5.80 1/09/96 12,270
Bridgeport, Alabama IDB IDR - Beaulieu Nylon, Inc. Project 10,000 5.75 1/09/96 10,000
Haleyville, Alabama IDB IDR - Cusseta Wood Products, Inc. Project 3,100 5.55 1/09/96 3,100
</TABLE>
See notes to financial statements.
12
<PAGE> 15
STRONG MUNICIPAL MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (c) COST (NOTE 2)
(In Thousands) (In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Madison County, Alabama MFHR Refunding:
Autumn Wood Project $3,065 5.35% 1/09/96 $3,065
Pinehurst Project 1,285 5.35 1/09/96 1,285
Montgomery, Alabama IDB IDR - Asphalt Contractors, Inc. Project 1,500 5.70 1/09/96 1,500
------
45,175
ARIZONA 1.2%
Chandler, Arizona IDA MFHR - Greentree Place Apartments Project 6,802 5.95 1/09/96 6,802
Phoenix, Arizona IDA Airport Facility Revenue - America West Airlines,
Inc. Project 10,300 5.60 1/09/96 10,300
------
17,102
ARKANSAS 2.4%
Conway County, Arkansas IDR - Cadron Creek Fibre Corporation Project 8,300 5.75 1/09/96 8,300
Faulkner County, Arkansas IDR - Spirit Homes, Inc. Project 3,000 5.75 1/09/96 3,000
Magnolia, Arkansas IDR - American Fuel Cell and Coated Fabrics
Company Project 4,055 5.90 1/09/96 4,055
Pulaski County, Arkansas Public Facilities Board MFHR -
Chenal Park Apartments Project 8,055 5.40 1/09/96 8,055
Searcy, Arkansas IDR - Yarnell Ice Cream Company, Inc. Project 2,800 5.75 1/09/96 2,800
Springdale, Arkansas IDR - Clarke Holding Corporation Project 6,000 5.50 1/09/96 6,000
Trumann, Arkansas IDR - Roach Manufacturing Corporation Project 2,000 5.75 1/09/96 2,000
------
34,210
CALIFORNIA 13.2%
Alameda, California Revenue - KQED, Inc. Project 11,300 6.00 1/09/96 11,300
Fairfield, California IDA IDR - Medical Design Concepts Project 1,100 5.75 1/09/96 1,100
Lancaster, California MFHR - Gangi Building Project 2,200 5.60 1/09/96 2,200
Los Angeles, California Community Redevelopment Agency MFHR -
The Grande Promenade Project 28,700 6.30 1/09/96 28,700
Los Angeles County, California IDA IDR - Goldberg & Solovy Foods,
Inc. Project 3,050 5.10 1/09/96 3,050
Ontario, California IDA IDR - P & S Development Project 3,400 5.75 1/09/96 3,400
Orange County, California Apartment Development Revenue:
Bear Brand Apartments Project 3,000 5.80 1/09/96 3,000
Laguna Summit Apartments Project 7,500 6.65 1/09/96 7,500
Pointe Niguel Project 5,000 5.50 1/09/96 5,000
WLCO LF Partners Project - Series 1 1,000 5.50 1/09/96 1,000
WLCO LF Partners Project - Series 2 1,500 5.50 1/09/96 1,500
WLCO LF Partners Project - Series 3 2,200 5.50 1/09/96 2,200
Orange County, California Special Financing Authority Teeter
Plan Revenue:
Series I-2 30,000 6.00 1/09/96 30,000
Series I-3 17,300 6.00 1/09/96 17,300
Riverside County, California IDA IDR - Medical Design Concepts IV Project 1,000 5.75 1/09/96 1,000
San Bernardino, California MFHR - Sandlewood Project 7,500 5.75 1/09/96 7,500
San Bernardino County, California COP - 1992 Justice Center/Airport
Improvements Refunding Project 1,960 5.80 1/09/96 1,960
San Bernardino County, California Housing Authority MFHR Refunding -
Brookside Meadows Project 18,000 6.35 1/09/96 18,000
San Diego, California Housing Authority MFHR:
La Cima Apartments Project 13,200 7.00 1/09/96 13,200
Nobel Court Apartments Project 12,410 6.30 1/09/96 12,410
San Marcos, California Redevelopment Agency MFHR -
San Marcos Retirement Village Project 7,500 4.01 1/09/96 7,500
Santa Fe Springs, California IDA - Tri-West Project 4,000 4.35 1/09/96 4,000
Upland, California Apartment Development Revenue - Mountain Springs Project 3,900 5.50 1/09/96 3,900
-------
186,720
COLORADO 1.4%
Aurora, Colorado IDR - Optima Batteries, Inc. Project 3,430 5.50 1/09/96 3,430
Jefferson County, Colorado IDR - Accutronics, Inc. Project 2,500 5.62 1/09/96 2,500
Lakewood, Colorado Jefferson County IDR - Verden Associates -
Holiday Inn Project
1,565 4.80 1/09/96 1,565
Westminster, Colorado IDR - Lifecare International Project 4,920 5.60 1/09/96 4,920
Westminster, Colorado MFHR - Lakeview Apartments Project 7,185 5.80 1/09/96 7,185
-------
19,600
CONNECTICUT 1.3%
Connecticut Development Authority Airport Hotel Revenue -
RK Bradley Associates Limited
Partnership Project 18,500 6.70 1/09/96 18,500
</TABLE>
See notes to financial statements.
13
<PAGE> 16
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1995
STRONG MUNICIPAL MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (c) COST (NOTE 2)
(In Thousands) (In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLORIDA 0.8%
Brevard County, Florida IDR - U. S. Space Camp Foundation Project $3,540 5.80% 1/09/96 $3,540
Dade County, Florida IDA IDR - Engelhard/ICC Project 8,000 5.75 1/09/96 8,000
------
11,540
GEORGIA 1.0%
Cobb County, Georgia Development Authority IDR - Datagraphic, Inc. Project 2,850 5.30 1/09/96 2,850
Fulton County, Georgia Development Authority IDR - STO Corporation Project 4,000 5.65 1/09/96 4,000
Lee County, Georgia Development Authority Revenue - Woodgrain Millwork,
Inc. Project 6,000 5.95 1/09/96 6,000
Savannah, Georgia EDA IDR - Savannah Steel & Metal Company Project 1,750 5.60 1/09/96 1,750
------
14,600
ILLINOIS 4.6%
East Hazel Crest, Illinois EDR Refunding - Columbia Sussex Corporation
Project 490 5.00 1/09/96 490
Evanston, Illinois IDR - Fountain Square Project 1,800 4.25 1/09/96 1,800
Hazel Crest, Illinois Retirement Center Revenue - Waterford Estates Project 1,025 5.80 1/09/96 1,025
Hazel Crest, Illinois Retirement Center Revenue - Waterford Estates Project 2,890 5.80 1/09/96 2,890
Illinois DFA EDR - Korex Corporation Project 4,000 5.65 1/09/96 4,000
Illinois DFA IDA - Toyomenka (America), Inc. Project 2,200 6.00 1/09/96 2,200
Illinois DFA IDR:
Associated Plastic Fabricators, Inc. Project 2,000 5.75 1/09/96 2,000
Fleetwood Systems, Inc. Project 5,635 5.60 1/09/96 5,635
Homak Manufacturing Company, Inc. Project 7,700 5.45 1/09/96 7,700
Jefferson Partners Limited Partnership - 216 South Jefferson Project 2,230 4.75 1/09/96 2,230
SMF, Inc. Project 4,510 5.60 1/09/96 4,510
Illinois Educational Facilities Authority Revenue - University Pooled
Financing Program 12,345 5.95 1/09/96 12,345
Merrionette Park, Illinois Industrial Project Revenue:
Southwick & Weglarz Project 6,495 5.80 1/09/96 6,495
Weglarz Project 1,886 5.80 1/09/96 1,886
Weglarz & Taxman Project 2,638 5.80 1/09/96 2,638
Springfield, Illinois Airport Authority - Allied-Signal Inc., Project 4,300 5.80 1/09/96 4,300
West Chicago, Illinois Industrial Revenue - Willamette Industries,
Inc. Project 2,800 5.45 1/09/96 2,800
------
64,944
INDIANA 0.6%
Greencastle, Indiana EDR - H. A. Parts Products of Indiana Company Project 4,000 5.95 1/09/96 4,000
Shelbyville, Indiana EDR - Nippisun Indiana Corp. Project 4,300 5.60 1/09/96 4,300
------
8,300
IOWA 1.0%
Cedar Rapids, Iowa IDR Refunding MMars First Program -
Columbus McKinnon Corporation
Project 1,455 5.55 1/09/96 1,455
Chillicothe, Iowa PCR Refunding - Iowa Southern Utilities Company Project 2,400 5.95 1/09/96 2,400
Iowa Falls, Iowa IDR Refunding - GENPAK Corporation Project 3,800 4.01 1/09/96 3,800
West Des Moines, Iowa Revenue - Woodgrain Millwork, Inc. Project 6,700 5.95 1/09/96 6,700
------
14,355
KANSAS 1.0%
Kansas City, Kansas Private Activity Revenue - Ex-L-Tube of Kansas,
Inc. Project 6,456 5.60 1/09/96 6,456
Kansas DFA MFHR - First Kansas State Partnership, L. P. Project 3,000 5.30 1/09/96 3,000
Osage City, Kansas Industrial Revenue - Marley Continental Homes of
Kansas Project 4,800 5.50 1/09/96 4,800
------
14,256
KENTUCKY 4.5%
Daviess County, Kentucky MFHR Refunding - Park Regency
Apartments Project 4,155 5.80 1/09/96 4,155
Jeffersontown, Kentucky IDR - Columbia Sussex Corporation Facility 6,830 5.00 1/09/96 6,830
Kentucky DFA IDR - Hesco Project 5,800 5.70 1/09/96 5,800
Ohio County, Kentucky PCR - Big Rivers Electric Corporation Project 25,000 5.45 1/09/96 25,000
Ohio County, Kentucky PCR - Big Rivers Electric Corporation Project 11,600 5.45 1/09/96 11,600
Somerset, Kentucky IBR - Tibbals Flooring Co. Project 10,000 5.70 1/09/96 10,000
------
63,385
LOUISIANA 0.1%
Louisiana Public Facilities Authority CP Program Hospital Equipment
Refunding Revenue 2,000 6.40 1/09/96 2,000
MAINE 0.1%
Orrington, Maine Resource Recovery Revenue - Penobscot Energy Recovery
Company Project 1,950 6.13 1/09/96 1,950
</TABLE>
See notes to financial statements.
14
<PAGE> 17
STRONG MUNICIPAL MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (c) COST (NOTE 2)
(In Thousands) (In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MARYLAND 0.6%
Charles County, Maryland Revenue - Chopp and Company, Inc. Facility $4,100 4.25% 1/09/96 $4,100
Washington County, Maryland EDR - Tandy Project 5,100 6.00 1/09/96 5,100
------
9,200
MASSACHUSETTS 1.3%
Massachusetts Industrial Finance Agency IDR:
Lightolier, Inc. Project 4,400 5.60 1/09/96 4,400
Portland Causeway Realty Trust 2,600 4.01 1/09/96 2,600
U. S. Tsubaki, Inc. Project 4,700 5.95 1/09/96 4,700
Salem, Massachusetts IDFA IDR - Applied Extrusion
Technologies, Inc. Project 6,500 4.01 1/09/96 6,500
------
18,200
MICHIGAN 1.2%
Lansing, Michigan Limited Obligation EDC IDR - Ashland Oil, Inc. Project 1,400 5.44 1/09/96 1,400
Michigan Strategic Fund Limited Obligation EDR -
Yamaha Musical Products,
Inc. Project 6,800 5.60 1/09/96 6,800
Michigan Strategic Fund Limited Obligation Revenue -
Coil Center Corporation Project 6,400 6.00 1/09/96 6,400
Saline, Michigan EDC Limited Obligation Revenue -
Associated Spring Project 2,000 5.90 1/09/96 2,000
------
16,600
MINNESOTA 0.5%
Mahtomedi, Minnesota Rental Housing Revenue -
Briarcliff of Mahtomedi Project 5,265 5.36 1/09/96 5,265
Princeton, Minnesota IDR - Plastic Products Company, Inc. Project 1,800 5.60 1/09/96 1,800
------
7,065
MISSISSIPPI 1.0%
Mississippi Business Finance Corporation IDR - Intex Plastics
Corporation Project 4,800 5.55 1/09/96 4,800
Prentiss County, Mississippi IDR - Heidelberg Eastern Project:
Series A 2,500 4.30 1/09/96 2,500
Series B 6,650 4.40 1/09/96 6,650
------
13,950
MISSOURI 3.2%
Berkeley, Missouri IDA Exempt Facility Revenue -
St. Louis Air Cargo Services, Inc. Project 7,875 5.85 1/09/96 7,875
St. Charles County, Missouri IDA IDR Refunding - Country Club
Apartments Project 25,000 5.70 1/09/96 25,000
St. Louis County, Missouri IDA - Hampton Inn Westport Associates Project 3,700 4.40 1/09/96 3,700
St. Louis County, Missouri IDA MFHR - Whispering Lakes Apartments Project 8,000 5.60 1/09/96 8,000
------
44,575
NEBRASKA 0.4%
Nebraska Investment Finance Authority Revenue Refunding -
Redick Tower Project 6,005 6.10 1/09/96 6,005
NEVADA 0.3%
Nevada Department of Commerce IDR - Master-Halco, Inc. Project 4,300 6.40 1/09/96 4,300
NEW HAMPSHIRE 0.4%
New Hampshire IDA Industrial Facility Revenue - Ferrofluidics Corporation -
Nashua Series Project 5,000 5.60 1/09/96 5,000
NEW JERSEY 0.1%
New Jersey EDA EDR - Hickory Industries, Inc. Project 2,000 5.90 1/09/96 2,000
NEW YORK 0.2%
Albany, New York IDA IDR - Historic Redevelopment Associates Project 2,500 5.75 1/09/96 2,500
North Carolina 0.7%
Gaston County, North Carolina Industrial Facilities and Pollution Control
Financing Authority IDR -
Spring-Ford Knitting Company, Inc. Project 4,500 5.18 1/09/96 4,500
North Carolina State Ports Authority Exempt Facility Revenue - Jordan Lumber &
Supply, Inc. Project 5,080 5.75 1/09/96 5,080
------
9,580
NORTH DAKOTA 0.2%
Mercer County, North Dakota PCR - Minnesota Power & Light Company Project 3,160 5.05 1/09/96 3,160
OHIO 0.8%
Cuyahoga County, Ohio IDR:
Edge Seal Technologies, Inc. and One Industry Drive, Inc. Project 3,200 5.70 1/09/96 3,200
Motch Corporation Project 4,000 5.65 1/09/96 4,000
Gallia County, Ohio IDR - Harsco Corporation Project 3,500 5.60 1/09/96 3,500
------
10,700
</TABLE>
See notes to financial statements.
15
<PAGE> 18
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1995
STRONG MUNICIPAL MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (c) COST (NOTE 2)
(In Thousands) (In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OREGON 0.5%
Oregon EDR - Eagle-Picher Industries, Inc. Project $6,400 5.80% 1/09/96 $6,400
PENNSYLVANIA 2.1%
Bucks County, Pennsylvania IDA - Double H Plastics, Inc. Project 2,445 5.65 1/09/96 2,445
Elk County, Pennsylvania IDA Solid Waste Disposal Revenue -
Willamette Industries, Inc. Project 16,000 5.55 1/09/96 16,000
Lycoming County, Pennsylvania IDA Manufacturing Facilities Revenue -
Coastal Aluminum
Rolling Mills, Inc. Project 4,000 5.65 1/09/96 4,000
Montgomery County, Pennsylvania IDA IDR - Laneko Engineering
Company Project 2,595 5.65 1/09/96 2,595
Montgomery County, Pennsylvania IDA IDR Refunding - Spring City Limited
Partnership Project 5,000 5.55 1/09/96 5,000
-------
30,040
SOUTH CAROLINA 1.1%
Charleston County, South Carolina Industrial Revenue -
Tandy Corporation Project 1,000 5.10 1/09/96 1,000
Richland County, South Carolina IDR - Ashland Oil Project 1,400 5.44 1/09/96 1,400
Rock Hill, South Carolina Industrial Revenue - Willamette Industries,
Inc. Project 7,500 5.60 1/09/96 7,500
South Carolina Jobs EDA IDR - Roller Bearing Company of America,
Inc. Project 5,000 5.60 1/09/96 5,000
-------
14,900
SOUTH DAKOTA 0.2%
Aberdeen, South Dakota IDR - Lomar Development Company Project 360 5.95 1/09/96 360
Brookings, South Dakota IDR - Lomar Development Company Project 2,200 5.85 1/09/96 2,200
Brookings, South Dakota IDR Refunding - Lomar Development
Company Project 600 5.95 1/09/96 600
-------
3,160
TENNESSEE 1.3%
Carter County, Tennessee IDB MFHR Refunding - Willow Run
Apartments Project 6,675 5.80 1/09/96 6,675
Coffee County, Tennessee Industrial Board Revenue - M-Tek Project 2,700 6.25 1/09/96 2,700
Knox County, Tennessee Health, Educational and Housing Facilities
Board Revenue -
Holston Long Term Care Project 4,500 5.65 1/09/96 4,500
Memphis and Shelby County, Tennessee IDB IDR - Techno Steel Corp. Project 4,000 5.85 1/09/96 4,000
-------
17,875
TEXAS 3.7%
Austin County, Texas IDC IDR - Gulf States Toyota, Inc. Project 4,750 5.76 1/09/96 4,750
Azle, Texas IDA IDR - Tandy Corporation Project 3,000 6.04 1/09/96 3,000
Deer Park, Texas Port Development Corporation IDR - Ashland Oil,
Inc. Project 4,700 5.44 1/09/96 4,700
Longview, Texas Industrial Corporation IDR - Longview Guest Inn Project 2,800 5.70 1/09/96 2,800
Midlothian, Texas IDC PCR - Box-Crow Cement Company Project 17,400 5.80 1/09/96 17,400
Montgomery County, Texas IDC IDR - Porous Media, Ltd. Project 3,000 5.62 1/09/96 3,000
NCNB Pooled Tax-Exempt Trust COP - Texas 4,475 4.25 1/09/96 4,475
Robstown, Texas IDC IDR - Concrete Pipe and Products Company, Inc. Project 2,000 5.50 1/09/96 2,000
San Antonio, Texas Higher Education Authority, Inc. Educational
Facilities Revenue - UTSA Phase I Dormitory Project 6,100 6.00 1/09/96 6,100
Texas Small Business IDC IDR - Moulding Products, Inc. Project 3,775 5.85 1/09/96 3,775
-------
52,000
VIRGINIA 2.3%
Bedford County, Virginia IDA IDR - Nekoosa Packaging Corporation Project 20,300 6.20 1/09/96 20,300
Fairfax County, Virginia LaSalle National Bank LeaseTOPS Trust 9,811 5.50 1/09/96 9,811
Oyster Point, Virginia Development Corporation MFHR -
Jefferson Point Development Project 3,000 5.65 1/09/96 3,000
-------
33,111
WASHINGTON 0.5%
Pierce County, Washington EDC - Brown & Haley Project 2,515 6.49 1/09/96 2,515
Port Moses Lake, Washington Public Corporation Industrial Revenue -
Basic American Foods Project 4,200 4.20 1/09/96 4,200
-------
6,715
WISCONSIN 1.8%
Amery, Wisconsin IDR - Plastech Corporation Project 2,300 5.62 1/09/96 2,300
Ashwaubenon, Wisconsin IDR - Pioneer Metal Finishing, Inc. Project 2,210 5.75 1/09/96 2,210
Columbus, Wisconsin IDR - Maysteel Corporation Project 2,000 5.70 1/09/96 2,000
Madison, Wisconsin IDR - Manchester Place Project 8,130 5.85 1/09/96 8,130
Menomonee Falls, Wisconsin IDR - Maysteel Corporation Project 3,000 5.70 1/09/96 3,000
Milwaukee, Wisconsin Redevelopment Authority Development Revenue -
Washington Square Phase III Project 8,495 5.75 1/09/96 8,495
-------
26,135
</TABLE>
See notes to financial statements.
16
<PAGE> 19
STRONG MUNICIPAL MONEY MARKET FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (c) COST (NOTE 2)
(In Thousands) (In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
WYOMING 0.3%
Lincoln County, Wyoming PCR - Champlin Petroleum Company Project $1,750 4.20% 1/09/96 $ 1,750
Uinta County, Wyoming PCR - Champlin Petroleum Company Project 2,900 4.20 1/09/96 2,900
---------
4,650
---------
Total Weekly Variable Rate Put Bonds 864,458
DAILY VARIABLE RATE PUT BONDS 1.2%
ALABAMA 0.3%
Phenix City, Alabama IDB Environmental Improvement Revenue -
Mead Coated Board Project 4,000 6.30 1/02/96 4,000
CALIFORNIA 0.9%
Orange County, California Limited Obligation Improvement -
Irvine Coast Assessment District No. 88-1 13,000 6.50 1/02/96 13,000
----------
Total Daily Variable Rate Put Bonds 17,000
----------
TOTAL INVESTMENTS IN SECURITIES 100.1% 1,417,554
Other Assets and Liabilities, Net (0.1%) (1,112)
----------
NET ASSETS 100.0% $1,416,442
==========
</TABLE>
17
See notes to financial statements.
<PAGE> 20
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1995
STRONG SHORT-TERM MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS 96.1%
ARIZONA 2.0%
Phoenix, Arizona IDA Hospital Revenue - John C.
Lincoln Hospital and Health Center Project,
4.65%, Due 12/01/99 $ 675 $ 675
Phoenix, Arizona Municipal Housing Revenue
Refunding - Fillmore Gardens and Sunnyslope
Manor - Section 8 Assisted Senior Housing
Project, 5.95%, 6/01/05 1,865 1,937
------
2,612
CALIFORNIA 6.0%
California Health Facilities Financing Authority
Hospital Revenue - Downey Community
Hospital, 4.90%, Due 5/15/00 2,325 2,319
Los Angeles, California MFHR - Earthquake
Rehabilitation Projects, 5.85%, Due 12/01/07 (c) 1,000 1,018
Orange, California MFHR - Villa Santiago
Rehabilitation Project, 5.60%, Due 10/01/05 (c) 2,500 2,556
Sacramento County, California MFHR Refunding -
Fairways II Apartments, 5.35%, Due 8/01/05 (c) 2,000 2,053
------
7,946
COLORADO 4.4%
Arapahoe County, Colorado E-470 Public Highway
Authority Capital Improvement Trust Fund
Highway Revenue - E-470 Project, Zero %,
Due 8/31/03 500 313
Westminster, Colorado MFHR Refunding - Oasis
Wexford Apartments Project, 5.35%,
Due 12/01/05 (c) 2,700 2,761
Westminster, Colorado MFHR Refunding - Semper
Village Apartments Project, 5.95%,
Due 9/01/06 (c) (e) 2,700 2,754
------
5,828
DISTRICT OF COLUMBIA 2.3%
District of Columbia Hospital Revenue Refunding -
Medlantic Healthcare Group, Inc., 6.50%,
Due 8/15/02 2,925 3,060
FLORIDA 1.6%
Florida Housing Finance Agency MFMR -
Hammocks Place Project, 6.25%, Due 12/01/06 2,000 2,108
GUAM 7.4%
Guam Airport Authority General Revenue:
5.80%, Due 10/01/99 1,450 1,474
6.00%, Due 10/01/00 (e) 1,100 1,123
6.40%, Due 10/01/05 2,300 2,366
Guam Government GO, 5.70%, Due 9/01/03 4,770 4,788
------
9,751
ILLINOIS 3.0%
Collinsville, Illinois Madison County IDR
Refunding, Drury Inn - Collinsville Project,
5.25%, Due 11/01/98 725 734
Illinois Educational Facilities Authority Revenue -
Lewis University Project:
4.50%, Due 10/01/99 900 897
5.30%, Due 10/01/04 1,390 1,388
Illinois Health Facilities Authority Revenue -
Trinity Medical Center, 6.15%, Due 7/01/98 1,000 1,016
------
IOWA 6.4% 4.035
Cedar Rapids, Iowa First Mortgage Revenue -
Cottage Grove Place Project, 7.25%,
Due 7/01/02 $6,000 $5,985
Iowa Finance Authority Mortgage Revenue
Refunding - Friendship Village Project,
4.95%, Due 11/01/00 2,500 2,491
------
8,476
KANSAS 5.7%
Kansas DFA MFHR Refunding - Woodridge
Apartments Project, 5.90%, Due 6/01/05 (c) 7,285 7,576
LOUISIANA 0.4%
Louisiana Public Facilities Authority Student
Loan Revenue, 6.75%, Due 9/01/06 525 566
MASSACHUSETTS 8.1%
Boston, Massachusetts IDFA First Mortgage
Revenue - Springhouse Project, 7.50%,
Due 1/01/98 3,750 3,756
Massachusetts Education Loan Authority
Education Loan Revenue, 7.45%, Due 1/01/02 1,695 1,799
Massachusetts Industrial Finance Agency Water
Treatment Revenue - Massachusetts-American
Hingham Project, 6.25%, Due 12/01/10 4,925 5,190
-------
10,745
MICHIGAN 10.6%
Detroit, Michigan GO Refunding, 7.00%,
Due 4/01/04 2,475 2,676
Flint, Michigan Hospital Building Authority
Revenue Refunding - Hurley Medical Center:
5.75%, Due 7/01/03 1,350 1,357
6.00%, Due 7/01/04 1,005 1,014
6.00%, Due 7/01/05 510 509
Greater Detroit, Michigan Resource Recovery
Authority Resource Recovery Revenue:
Series C, 9.25%, Due 12/13/08 1,300 1,342
Series D, 9.25%, Due 12/13/08 6,750 6,969
Series G, 9.25%, Due 12/13/08 250 258
-------
14,125
MISSISSIPPI 4.1%
Mississippi Higher Education Assistance
Corporation Student Loan Revenue:
5.60%, Due 9/01/04 2,505 2,605
5.80%, Due 9/01/06 2,050 2,132
Prentiss County, Mississippi Hospital Revenue,
5.40%, Due 12/01/97 680 690
-------
5,427
MISSOURI 1.1%
Lee's Summit, Missouri IDA Health Facilities
Revenue - John Knox Village Project, 5.875%,
Due 8/15/05 1,400 1,451
NEW JERSEY 1.5%
New Jersey Health Care Facilities Financing
Authority Revenue - Southern Ocean County
Hospital Project, 5.75%, Due 7/01/01 2,000 2,035
NEW YORK 3.9%
New York Dormitory Authority Court Facilities
Lease Revenue - City of New York Issue,
5.20%, Due 5/15/05 5,145 5,171
OREGON 7.0%
Hillsboro, Oregon Hospital Facility Authority
Revenue and Advance Refunding - Tuality
Heathcare Project, 4.80%, Due 10/01/00 9,190 9,270
</TABLE>
See notes to financial statements.
18
<PAGE> 21
STRONG SHORT-TERM MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PENNSYLVANIA 3.8%
Delaware County, Pennsylvania Authority Health
Facilities Revenue - Mercy Health Corporation
of Southeastern Pennsylvania Obligated
Group, 6.00%, Due 11/15/07 $5,000 $5,069
SOUTH DAKOTA 4.4%
South Dakota Student Loan Corporation Student
Loan Revenue, 7.35%, Due 8/01/98 5,615 5,861
TEXAS 8.0%
Brazos, Texas Higher Education Authority, Inc.
Student Loan Revenue Refunding:
5.95%, Due 6/01/02 2,595 2,692
6.50%, Due 3/01/99 1,395 1,454
Trinity River Authority, Texas Refunding - Texas
Industries, Inc. Project, 6.375%, Due 9/01/07 1,290 1,290
Trinity River Authority, Texas Refunding - Texas
Industries, Inc. Project - Series A, 6.375%,
Due 9/01/07 5,200 5,200
----------
10,636
WASHINGTON 4.4%
Washington Health Care Facilities Authority
Revenue - Sisters of Providence, 5.375%,
Due 10/01/00 5,600 5,789
----------
TOTAL MUNICIPAL BONDS (COST $124,766) 127,537
CASH EQUIVALENTS (a) 2.7%
SHORT-TERM MUNICIPAL BONDS 1.4%
CALIFORNIA 0.6%
Glendale, California Hospital Revenue Refunding -
Verdugo Hills Hospital, 6.375%, Due 1/01/96 715 715
DISTRICT OF COLUMBIA 0.8%
District of Columbia Hospital Revenue Refunding -
Washington Hospital Center, 6.50%, Due 8/15/96 1,100 1,110
----------
Total Short-Term Municipal Bonds 1,825
WEEKLY VARIABLE RATE PUT BOND 1.3%
CALIFORNIA
Pasadena, California Community Development
Commission COP - Lake/Washington
Neighborhood Shopping Center 1,800 1,800
----------
Total Cash Equivalents (Cost $3,618) 3,625
----------
TOTAL INVESTMENTS IN SECURITIES
(COST $128,384) 98.8% 131,162
Other Assets and Liabilities, Net 1.2% 1,576
----------
NET ASSETS 100.0% $132,738
==========
<CAPTION>
FUTURES UNDERLYING
FACE AMOUNT UNREALIZED
EXPIRATION AT VALUE DEPRECIATION
DATE (In Thousands) (In Thousands)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sold:
160 Municipal Bond Index Futures 3/96 $19,365 $185
</TABLE>
STRONG INSURED MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS 92.6%
ALABAMA 2.6%
Northeast Morgan County, Alabama Water
Authority Water Revenue, 5.50%,
Due 5/01/15 $1,000 $1,005
CALIFORNIA 12.2%
California Housing Finance Agency Home
Mortgage Revenue, 6.05%, Due 8/01/15 500 510
Los Angeles, California Wastewater System
Revenue Refunding, 5.20%, Due 11/01/21 1,000 976
San Bernardino, California Joint Powers Financing
Authority Tax Allocation Refunding, 5.75%,
Due 10/01/25 1,500 1,523
Vista, California Community Development
Commission Tax Allocation - Vista
Redevelopment Project Area, 6.00%,
Due 9/01/25 1,735 1,807
--------
4,816
COLORADO 2.0%
Denver, Colorado City and County Airport System
Revenue, 5.40%, Due 11/15/08 785 796
DISTRICT OF COLUMBIA 4.1%
District of Columbia GO, 6.75%, Due 6/01/08 1,500 1,620
FLORIDA 14.6%
Collier County, Florida School Board Master Lease
Program COP, 5.00%, Due 2/15/16 1,250 1,203
Florida Housing Finance Agency Housing Revenue -
Brittany of Rosemont Phase II Apartments
Project:
6.05%, Due 7/01/15 1,000 1,027
6.25%, Due 7/01/35 855 882
Florida Housing Finance Agency Housing Revenue -
Holly Cove Apartments Project:
6.05%, Due 10/01/15 500 520
6.15%, Due 10/01/25 500 520
Florida Housing Finance Agency Housing Revenue -
Landings at Boot Ranch West Apartments
Project, 6.00%, Due 11/01/25 1,590 1,614
-------
5,766
ILLINOIS 8.6%
Cook and DuPage Counties, Illinois Lemont-
Bromberek Combined School District No. 113A,
Capital Appreciation School Building, Zero %,
Due 12/01/11 3,660 1,533
Illinois Health Facilities Authority Revenue and
Revenue Refunding - Evangelical Hospitals
Corporation, 6.25%, Due 4/15/22 1,800 1,865
-------
3,398
LOUISIANA 8.2%
Orleans, Louisiana Levee District Levee
Improvement, 5.95%, Due 11/01/14 1,400 1,447
Orleans Parish, Louisiana Parishwide School
District GO, 7.50%, Due 9/01/20 1,500 1,779
-------
3,226
MAINE 4.8%
Maine Housing Authority Mortgage Purchase:
6.125%, Due 11/15/12 850 871
6.25%, Due 11/15/24 1,000 1,020
-------
1,891
MASSACHUSETTS 2.5%
Massachusetts Water Resources Authority General
Revenue, 5.00%, Due 12/01/16 (d) 1,000 969
</TABLE>
See notes to financial statements.
19
<PAGE> 22
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1995
STRONG INSURED MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
MICHIGAN 4.3%
Michigan State Hospital Finance Authority
Hospital Revenue Refunding - Sisters of Mercy
Health Corporation Obligated Group, 5.25%,
Due 8/15/21 $ 1,000 $ 974
St. Louis, Michigan Public Schools Refunding
GO, 5.25%, Due 5/01/24 755 730
-------
1,704
MINNESOTA 3.9%
Minnesota Housing Finance Agency Rental
Housing, 5.95%, Due 2/01/18 1,500 1,526
NEW JERSEY 4.7%
New Jersey Housing and Mortgage Finance
Agency Home Buyer Revenue, 6.95%,
Due 10/01/22 1,750 1,859
NEW YORK 3.7%
New York State Medical Care Facilities Finance
Agency Mental Health Services Facilities
Improvement Revenue, 5.25%, Due 2/15/19 1,500 1,468
OHIO 3.4%
Cuyahoga County, Ohio Hospital Revenue -
Fairview General and Lutheran Hospital,
6.25%, 8/15/10 1,250 1,336
OKLAHOMA 3.8%
McAlester, Oklahoma Public Works Authority
Refunding and Improvement Revenue:
5.25%, Due 12/01/18 560 545
5.25%, Due 12/01/19 1,000 974
-------
1,519
PENNSYLVANIA 4.8%
Lehigh County, Pennsylvania IDA PCR -
Pennsylvania Power & Light Company Project,
6.40%, Due 11/01/21 1,765 1,900
TEXAS 0.6%
El Paso, Texas Property Finance Authority, Inc.
SFMR - GNMA Mortgage-Backed, 8.70%,
Due 12/01/18 210 230
Southeast Texas HFC SFMR, Zero %, Due 9/01/11 100 20
-------
250
WASHINGTON 3.8%
Washington Public Power Supply System Nuclear
Project No. 3 Refunding Revenue, 5.60%,
Due 7/01/17 1,500 1,502
-------
TOTAL MUNICIPAL BONDS (COST $35,469) 36,551
CASH EQUIVALENTS (a) 7.1%
DAILY VARIABLE RATE PUT BONDS
INDIANA 4.3%
Rockport, Indiana PCR Refunding - AEP Generating
Company Project 1,700 1,700
LOUISIANA 2.8%
Louisiana Recovery District Sales Tax 1,100 1,100
-------
Total Cash Equivalents (Cost $2,800) 2,800
-------
TOTAL INVESTMENTS IN SECURITIES
(COST $38,269) 99.7% 39,351
Other Assets and Liabilities, Net 0.3% 122
-------
NET ASSETS 100.0% $39,473
</TABLE>
STRONG MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS 97.7%
ALABAMA 0.5%
Northeast Morgan County, Alabama Water
Authority Water Revenue, 5.50%, Due 5/01/15 $1,325 1,332
ARIZONA 1.9%
Phoenix, Arizona IDA Mortgage Revenue
Refunding - Christian Care Retirement
Apartments, Inc. Project, 6.25%, Due 1/01/16 4,740 4,622
CALIFORNIA 3.6%
California Housing Finance Agency Home
Mortgage Revenue, Zero %, Due 8/01/20 4,000 585
Fresno, California Housing Authority MFHR -
Shaw Gardens/Village Apartments, 5.60%,
Due 12/01/05 (c) 1,000 1,016
Los Angeles, California Wastewater System
Revenue Refunding, 5.20%, Due 11/01/21 4,360 4,256
Student Education Loan Marketing Corporation
Student Loan Program Revenue - California
Senior Subordinate, 7.00%, Due 7/01/10 3,000 3,161
-------
9,018
COLORADO 7.0%
Adams County, Colorado MFHR Refunding - Oasis
Park Apartments Project, 6.15%, Due 1/01/26 6,660 6,802
Adams County, Colorado Multi-County
SFMR, Zero %, Due 6/01/16 1,245 388
Boulder County, Colorado MFHR - GNMA
Collateralized - The Legacy Apartments
Project, 6.10%, Due 11/20/25 3,285 3,306
Colorado Health Facilities Authority Hospital
Revenue - PSL Healthcare System Project,
8.25%, Due 2/15/06 1,000 1,025
Colorado Springs, Colorado Utilities System
Refunding Revenue, 6.125%, Due 11/15/20 3,400 3,553
Denver, Colorado City and County Airport
Revenue, 7.50%, Due 11/15/25 2,000 2,095
-------
17,169
DELAWARE 3.2%
Delaware EDA Hospital Revenue - Osteopathic
Hospital Association of Delaware/Riverside
Hospital:
6.00%, Due 1/01/03 1,915 1,992
6.50%, Due 1/01/08 2,695 2,857
6.75%, Due 1/01/13 2,760 2,967
-------
7,816
DISTRICT OF COLUMBIA 4.7%
District of Columbia Hospital Revenue - National
Rehabilitation Hospital, Inc. - Medlantic
Healthcare Group, 7.00%, Due 8/15/05 10,730 11,521
FLORIDA 3.5%
Collier County, Florida School Board Master Lease
Program COP, 5.00%, Due 2/15/16 5,750 5,534
Florida Housing Finance Agency Housing
Revenue - Landings at Boot Ranch West
Apartments Project:
5.875%, Due 11/01/15 475 481
6.10%, Due 11/01/35 2,500 2,547
-------
8,562
GEORGIA 0.8%
Savannah, Georgia Hospital Authority Revenue
Refunding and Improvement - Candler Hospital,
7.00%, Due 1/01/23 2,000 2,060
</TABLE>
See notes to financial statements.
20
<PAGE> 23
STRONG MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
GUAM 1.0%
Guam Government GO:
4.70%, Due 11/15/02 $1,500 $ 1,434
5.75%, Due 9/01/04 1,000 1,002
-------
2,436
IDAHO 3.9%
Idaho Housing Agency Housing Revenue - FHA
Insured Mortgage Loan - Park Place Project,
6.50%, Due 12/01/36 5,310 5,536
Idaho Housing Agency SFMR, 6.45%, Due 7/01/27 4,000 4,195
-------
9,731
ILLINOIS 7.8%
Chicago, Illinois Water Revenue, 5.00%,
Due 11/01/20 5,000 4,700
Cook and DuPage Counties, Illinois Lemont-
Bromberek Combined School District No.
113A, Capital Appreciation School Building:
Zero %, Due 12/01/09 3,320 1,569
Zero %, Due 12/01/10 3,485 1,551
Zero %, Due 12/01/12 4,100 1,630
Zero %, Due 12/01/13 4,305 1,609
Granite City, Illinois Hospital Revenue
Refunding - Saint Elizabeth Medical Center,
8.125%, Due 6/01/08 6,000 6,315
Metropolitan Pier and Exposition Authority -
50% McCormick Place Expansion Project,
Zero %, Due 6/15/15 5,440 1,836
-------
19,210
INDIANA 5.3%
Indiana Health Facility Financing Authority
Hospital Revenue - Jackson County Schneck
Memorial Hospital Project:
7.50%, Due 2/15/12 1,000 1,072
7.50%, Due 2/15/22 7,790 8,306
LaPorte and St. Joseph Counties, Indiana New
Prairie United School Building Corporation
First Mortgage Refunding, 5.50%, Due 7/05/20 3,690 3,644
-------
13,022
KENTUCKY 1.0%
Martin County, Kentucky Mortgage Revenue
Refunding - FHA Insured Mortgage Loan -
Section 8 Assisted Project, 6.25%, Due 7/01/23 2,400 2,439
LOUISIANA 2.5%
Orleans, Louisiana Levee District Levee
Improvement, 5.95%, Due 11/01/14 6,000 6,202
MAINE 0.6%
Maine State Housing Authority Mortgage Purchase,
6.25%, Due 11/15/24 1,450 1,479
MASSACHUSETTS 1.4%
Massachusetts Industrial Finance Agency First
Mortgage Revenue - Reeds Landing Project,
7.75%, Due 10/01/00 3,415 3,513
MICHIGAN 3.7%
Greater Detroit, Michigan Resource Recovery
Authority Revenue:
Series C, 9.25%, Due 12/13/08 4,000 4,130
Series E, 9.25%, Due 12/13/08 1,000 1,032
Michigan State HDA SFMR, 6.25%, Due 12/01/18 3,000 3,067
Michigan State Hospital Finance Authority
Hospital Revenue Refunding - Sisters of Mercy
Health Corporation Obligated Group, 5.25%,
Due 8/15/21 1,000 974
-------
9,203
MINNESOTA 2.5%
New Hope, Minnesota MFHR Development
Refunding - GNMA Collateralized - North
Ridge Care Center, Inc. Project:
6.05%, Due 1/01/17 $ 450 $ 459
6.20%, Due 1/01/31 2,970 3,029
St. Paul, Minnesota Housing & Redevelopment
Authority Sales Tax Revenue - Civic Center
Project, 5.45%, Due 11/01/13 1,560 1,580
Twin Valley, Minnesota Mortgage Revenue
Refunding - FHA Insured Mortgage Loan -
Lutheran Memorial Home Project, 6.05%,
Due 2/01/18 1,035 1,049
-------
6,117
MISSISSIPPI 0.8%
Delta, Mississippi Correctional Facility Authority
Mortgage Revenue, 5.80%, Due 7/01/15 1,900 1,917
NEBRASKA 3.7%
Nebraska IFA MFHR, 6.20%, Due 6/01/28 4,000 4,125
Nebraska IFA MFHR Refunding - Wycliffe West
Apartments Project, 5.50%, Due 12/01/05 (c) 5,000 5,100
-------
9,225
NEVADA 1.2%
Nevada Housing Division Single Family Program,
6.20%, Due 10/01/23 (d) 3,000 3,030
NEW MEXICO 1.5%
New Mexico Educational Assistance Foundation
Student Loan Program:
5.50%, Due 11/01/03 1,345 1,345
5.85%, Due 11/01/06 1,825 1,832
Santa Fe, New Mexico SFMR, 8.45%, Due 12/01/11 457 495
-------
3,672
NEW YORK 2.4%
New York State Medical Care Facilities Finance
Agency Mental Health Services Facilities
Improvement Revenue, 5.25%, Due 2/15/19 6,000 5,872
OHIO 2.2%
Medina County, Ohio Economic Development
MFHR - Camelot Place, Ltd. Project, 8.375%,
Due 10/01/23 3,800 3,781
Springdale, Ohio Hospital Facilities First Mortgage
Revenue - Southwestern Ohio Seniors'
Services, Inc., 6.00%, Due 11/01/18 1,700 1,655
-------
5,436
OKLAHOMA 1.4%
Shawnee, Oklahoma Hospital Authority Revenue -
MidAmerica HealthCare, Inc., 8.00%, Due 4/01/04 3,165 3,438
PENNSYLVANIA 3.8%
Blair County, Pennsylvania Hospital Authority First
Mortgage Revenue, Mercy Hospital Sublessee,
8.125%, Due 2/01/14 6,000 6,412
Philadelphia, Pennsylvania School District GO
Refunding, 5.50%, Due 9/01/25 3,000 2,992
-------
9,404
SOUTH CAROLINA 4.4%
Berkeley County, South Carolina School District,
Berkeley School Facilities Group, Inc. COP,
5.25%, Due 2/01/16 4,500 4,399
Kershaw County, South Carolina Hospital Facilities
Revenue Refunding - Kershaw County Memorial
Hospital Project, 8.00%, Due 9/15/17 1,435 1,521
</TABLE>
See notes to financial statements.
21
<PAGE> 24
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) December 31, 1995
STRONG MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Piedmont, South Carolina Municipal Power
Agency Electric Revenue Refunding, 7.25%,
Due 1/01/22 $1,850 $ 1,894
South Carolina State Housing Finance and
Development Authority Mortgage Revenue
Refunding - FHA Insured Mortgage Loan -
Heritage Court Apartments Section 8 Assisted
Project, 6.15%, Due 7/01/25 2,900 2,951
--------
10,765
SOUTH DAKOTA 5.0%
South Dakota Student Loan Corporation
Student Loan Revenue:
6.15%, Due 8/01/03 5,250 5,381
7.625%, Due 8/01/06 6,455 6,867
--------
12,248
TENNESSEE 0.5%
Knox County, Tennessee IDB MFMR Refunding -
FHA Insured Mortgage Loan - Waterford Village
Apartments Project, 5.95%, Due 3/01/28 1,250 1,255
TEXAS 9.3%
El Paso, Texas Property Finance Authority, Inc.
SFMR - GNMA Mortgage-Backed, 8.70%,
Due 12/01/18 540 591
Lufkin, Texas Health Facilities Development
Corporation Health System Revenue and
Refunding - Memorial Health System of East
Texas, 6.875%, Due 2/15/26 (d) 3,000 2,977
North Central Texas Health Facilities Development
Corporation - Tri-City Health Centre, Inc. Project,
9.50%, Due 5/01/21 10,000 9,500
Port Arthur, Texas HFC Mortgage Revenue
Refunding - FHA Insured Mortgage Loans -
Port Arthur UDAG Projects, 6.40%,
Due 1/01/28 (d) 3,565 3,574
Ranger, Texas Housing Corporation MFMR
Refunding - FHA Insured Mortgage Loan -
Ranger Apartments Project, 8.80%, Due 3/01/24 1,160 1,309
Texas Turnpike Authority Dallas North Tollway
System Revenue - President George Bush
Turnpike Project, 5.25%, Due 1/01/23 (d) 5,000 4,906
--------
22,857
WASHINGTON 2.5%
Washington Health Care Facilities Authority
Revenue - Sisters of Providence, 6.25%,
Due 10/01/13 5,000 5,144
Washington Public Power Supply System Nuclear
Project No. 2 Refunding Revenue, 6.00%,
Due 7/01/12 1,000 1,014
--------
6,158
WYOMING 4.1%
Wyoming Community Development Authority
Housing Revenue, 6.25%, Due 6/01/27 10,000 10,188
--------
TOTAL MUNICIPAL BONDS (COST $235,833) 240,917
CASH EQUIVALENTS (a) 6.1%
DAILY VARIABLE RATE PUT BONDS
ARIZONA 1.2%
Maricopa County, Arizona Pollution Control
Corporation PCR Refunding - Arizona Public
Service Company Palo Verde Project 3,000 3,000
CALIFORNIA 3.6%
Los Angeles, California Regional Airports
Improvement Corporation Facilities Sublease
Revenue - LAX Two Corporation - Los Angeles
International Airport 9,000 9,000
ILLINOIS 0.1%
Illinois DFA IDR - Webster-Wayne Shopping
Center Project 170 170
TENNESSEE 1.2%
Bradley County, Tennessee IDB Revenue
Refunding - Olin Corporation Projects 2,900 2,900
--------
Total Daily Variable Rate Put Bonds (Cost $15,070) 15,070
TOTAL INVESTMENTS IN SECURITIES --------
(COST $250,903) 103.8% 255,987
Other Assets and Liabilities, Net (3.8%) (9,263)
--------
NET ASSETS 100.0% $246,724
========
</TABLE>
STRONG HIGH-YIELD MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS 98.8%
CONNECTICUT 0.8%
Connecticut Development Authority First
Mortgage Gross Revenue Health Care Project
- Connecticut Baptist Homes, Inc. Project,
9.00%, Due 9/01/22 $ 1,940 $ 2,115
DELAWARE 1.3%
Delaware EDA First Mortgage Revenue -
Gilpin Hall Project:
7.375%, Due 7/01/15 1,000 1,021
7.625%, Due 7/01/25 1,800 1,838
Delaware EDA Hospital Revenue - Osteopathic
Hospital Association of Delaware/Riverside
Hospital, 6.75%, Due 1/01/13 435 468
--------
3,327
FLORIDA 3.6%
Brevard County, Florida Health Facilities Authority
Revenue Refunding - Courtenay Springs
Village Project:
7.375%, Due 11/15/04 990 1,010
7.75%, Due 11/15/17 2,000 2,033
Florida Housing Finance Agency Housing
Revenue - Holly Cove Apartments Project,
6.25%, Due 10/01/35 1,000 1,044
Highlands County, Florida IDA First Mortgage
Health Care Revenue - Church of All Faiths, Inc.
Project, 9.375%, Due 10/01/21 725 508
Orange County, Florida Health Facilities Authority
First Mortgage Revenue - RHA/Princeton
Hospital, Inc. Project, 9.00%, Due 7/01/21 5,000 4,137
Polk County, Florida HFA Subordinated Revenue -
Lake Wales Gardens Project, Zero %, Due 4/01/20 7,585 939
--------
9,671
GEORGIA 7.6%
Atlanta, Georgia HDC Mortgage Revenue
Refunding - FHA Insured Mortgage Loan -
Bedford Tower Section 8 Assisted Project:
6.25%, Due 1/01/15 835 866
6.35%, Due 1/01/23 1,495 1,551
Atlanta, Georgia Urban Residential Finance
Authority MFHR - Cascade Pines Affordable
Housing Project, 6.25%, Due 9/01/10 1,830 1,883
</TABLE>
See notes to financial statements.
22
<PAGE> 25
STRONG HIGH-YIELD MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Atlanta, Georgia Urban Residential Finance
Authority MFHR - Franciscan Club
Apartments Projects, 7.75%, Due 4/01/22 $ 4,840 $ 4,991
Dekalb County, Georgia Residential Care Facilities
for the Elderly Authority First Lien Revenue -
King's Bridge Retirement Center, Inc. Project:
8.00%, Due 7/01/06 (d) 650 653
8.15%, Due 7/01/16 (d) 2,380 2,395
8.25%, Due 7/01/26 (d) 5,250 5,283
Savannah, Georgia Hospital Authority Revenue
Refunding and Improvement - Candler Hospital:
7.00%, Due 1/01/11 1,335 1,380
7.00%, Due 1/01/23 1,320 1,360
-------
20,362
ILLINOIS 12.2%
Granite City, Illinois Hospital Revenue Refunding -
Saint Elizabeth Medical Center, 8.125%,
Due 6/01/08 1,030 1,084
Illinois DFA Community Rehabilitation Providers
Facilities Acquisition Program Revenue:
7.25%, Due 3/01/04 1,095 1,105
7.50%, Due 3/01/14 3,070 3,047
Illinois DFA MFHR -Town and Garden Apartments
Project, 7.20%, Due 9/01/08 9,460 9,673
Illinois DFA Solid Waste Disposal Facility
Revenue - Ford Heights Waste Tire To Energy
Project, 7.875%, Due 4/01/11 5,000 4,906
Illinois Health Facilities Authority Revenue
Refunding - Westlake Community Hospital,
7.875%, Due 1/01/13 5,000 5,313
Robbins, Illinois Resource Recovery Revenue -
Robbins Resource Recovery Partners, L.P.
Project, 9.25%, Due 10/15/14 7,000 7,525
-------
32,653
INDIANA 0.6%
Wells County, Indiana Hospital Authority Hospital
Facility Revenue Refunding - Caylor-Nickel
Medical Center, Inc. Project, 8.75%, Due 4/15/12 1,500 1,605
IOWA 9.2%
Cedar Rapids, Iowa First Mortgage Revenue -
Cottage Grove Place Project:
7.25%, Due 7/01/02 6,000 5,985
9.00%, Due 7/01/25 12,435 12,404
Iowa Finance Authority First Mortgage Elder Care
Facility Revenue - Amity Fellowserve-Iowa, Inc.
Project, 8.75%, Due 10/01/25 6,165 6,180
-------
24,569
LOUISIANA 2.2%
Louisiana Public Facilities Authority Senior Lien
Revenue - Progressive Healthcare Providers, Inc.
Developmental Centers, 8.00%, Due 1/01/13 5,885 5,819
MASSACHUSETTS 6.9%
Boston, Massachusetts IDFA First Mortgage
Revenue - Springhouse Project, 9.25%,
Due 7/01/25 4,725 4,743
Massachusetts Health and Educational Facilities
Authority Revenue - Saints Memorial
Medical Center:
5.75%, Due 10/01/06 2,885 2,564
6.00%, Due 10/01/23 7,000 5,696
Massachusetts Industrial Finance Agency First
Mortgage Revenue - Evanswood Bethzatha
Corporation Project, 7.875%, Due 1/15/20 2,285 2,425
Massachusetts Industrial Finance Agency
Revenue - Edgewood Retirement Community
Project, 9.00%, Due 11/15/25 3,050 3,061
-------
18,489
MICHIGAN 2.2%
Michigan Hospital Finance Authority Hospital
Revenue and Refunding - Detroit-Macomb
Hospital Corporation, 7.30%, Due 6/01/01 3,800 3,819
Michigan Hospital Finance Authority Hospital
Revenue and Refunding - Detroit Osteopathic
Hospital Corporation, 7.50%, Due 11/01/10 1,805 1,949
-------
5,768
NEW HAMPSHIRE 2.1%
New Hampshire Higher Educational and Health
Facilities Authority First Mortgage Revenue -
Rivermead at Peterborough Project:
7.375%, Due 7/01/00 4,000 4,040
8.50%, Due 7/01/24 1,610 1,654
-------
5,694
NEW JERSEY 1.4%
Mercer County, New Jersey Improvement Authority
Solid Waste Revenue - Resource Recovery Project,
6.80%, Due 4/01/05 3,750 3,778
NEW YORK 1.2%
Orange County, New York Industrial Development
Agency Life Care Community Revenue -
The Glen Arden, Inc. Project, 8.25%, Due 1/01/02 3,000 3,116
OHIO 3.7%
East Liverpool, Ohio Hospital Improvement
Revenue - East Liverpool City Hospital Project,
8.00%, Due 10/01/21 1,595 1,711
Medina County, Ohio Economic Development
MFHR - Camelot Place, Ltd. Project, 8.375%,
Due 10/01/23 400 398
Mount Vernon, Ohio Hospital Refunding Revenue -
Knox Community Hospital, 7.875%, Due 6/01/12 2,500 2,579
Springdale, Ohio Hospital Facilites First Mortgage
Revenue - Southwestern Ohio Seniors' Services,
Inc., 6.00%, Due 11/01/18 600 584
Stark County, Ohio Hospital Facilities Revenue -
Doctors Hospital, Inc. of Stark County, 6.00%,
Due 4/01/24 5,000 4,544
-------
9,816
OKLAHOMA 1.7%
Jackson County, Oklahoma Memorial Hospital
Authority Hospital Revenue Refunding -
Jackson County Memorial Hospital Project,
5.875%, Due 8/01/97 1,405 1,394
Tulsa, Oklahoma Trustees Municipal Airport
Trust - American Airlines, Inc., 7.375%,
Due 12/01/20 3,000 3,206
-------
4,600
PENNSYLVANIA 21.9%
Bucks County, Pennsylvania IDA CDR -
Attleboro Associates, Ltd. Nursing Facility
Project:
8.00%, Due 12/01/05 2,140 2,223
8.25%, Due 6/01/11 3,670 3,844
Delaware County, Pennsylvania Authority Health
Care Facility First Mortgage Revenue -
GF/Longwood Care, Inc. Project:
8.50%, Due 4/15/10 530 537
9.00%, Due 4/15/25 5,860 5,941
</TABLE>
See notes to financial statements.
23
<PAGE> 26
SCHEDULES OF INVESTMENTS IN SECURITIES (CONTINUED) December 31, 1995
STRONG HIGH-YIELD MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands) (In Thousands)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Delaware County, Pennsylvania IDA Revenue -
Martins Run Project:
5.40%, Due 12/15/01 $ 1,000 $ 986
6.00%, Due 12/15/06 1,500 1,479
Horsham, Pennsylvania IDA CDA Health Care
Facilities Revenue - GF/Pennsylvania
Properties, Inc. Project:
7.375%, Due 9/01/08 440 433
8.375%, Due 9/01/24 6,000 6,135
Montgomery County, Pennsylvania Higher
Education and Health Authority Hospital
Revenue - United Hospitals, Inc. Project:
Series A, 8.375%, Due 11/01/11 7,635 8,265
Series B, 8.375%, Due 11/01/11 3,525 3,816
Montgomery County, Pennsylvania Higher
Education and Health Authority Hospital
Revenue - United Hospitals, Inc. -
St. Christopher's Hospital for Children Project:
7.50%, Due 11/01/13 350 357
8.25%, Due 11/01/03 1,000 1,051
8.50%, Due 11/01/17 230 242
Montgomery County, Pennsylvania IDA Health
Care Facility First Mortgage Revenue -
AHF/Ambler, Inc. Project, 8.50%, Due 12/01/23 1,000 991
Montgomery County, Pennsylvania IDA
Retirement Community Revenue Refunding -
G. D. L. Farms Corporation Project:
6.30%, Due 1/01/13 2,000 1,783
6.50%, Due 1/01/20 4,660 4,130
Montgomery County, Pennsylvania IDA Revenue -
Wordsworth Academy Project, 8.00%,
Due 9/01/24 6,840 6,994
Philadelphia, Pennsylvania Hospitals and
Higher Education Facilities Authority
Hospital Revenue - Methodist Hospital Project,
9.00%, Due 7/01/10 3,360 3,486
Shenango Valley, Mercer County, Pennsylvania
Osteopathic Hospital Authority Hospital Gross
Revenue Refunding - Shenango Valley Medical
Center Project, 7.875%, Due 4/01/10 5,655 5,782
--------
58,475
TEXAS 7.0%
Denison, Texas Hospital Authority Hospital
Revenue Refunding and Improvement -
Texoma Medical Center Project, 8.00%,
Due 9/01/16 7,000 7,258
DeSoto, Texas IDA IDR - Wintergreen Commercial
Partnership Project, 7.00%, Due 1/01/17 4,767 4,636
Jefferson County, Texas Health Facilities
Development Corporation Hospital Revenue -
Baptist Health Care System Project:
8.30%, Due 10/01/14 4,000 4,220
8.875%, Due 6/01/21 2,435 2,587
--------
18,701
VERMONT 1.5%
Vermont IDA Mortgage Revenue - Wake Robin
Corporation Project, 8.75%, Due 4/01/23 3,665 3,880
VIRGINIA 0.8%
Norfolk, Virginia IDA IDR Mortgage Refunding -
Comfort Inn - Norfolk Naval Station Project:
6.75%, Due 12/01/08 625 605
7.00%, Due 12/01/16 1,575 1,516
--------
2,121
WEST VIRGINIA 1.3%
Marion County, West Virginia Solid Waste
Disposal Facility Revenue - American Fiber
Resources Project, 9.25%, Due 12/01/11 3,400 3,409
WISCONSIN 9.6%
Brookfield, Wisconsin IDR Refunding - Midway
Motor Lodge Project, 8.40%, Due 4/01/12 5,555 6,083
Wisconsin Health and Educational Facilities
Authority Revenue - Aurora Medical Group,
Inc. Project, 9.00%, Due 11/15/25 2,500 2,572
Wisconsin Health and Educational Facilities
Authority Revenue - National Regency of
New Berlin, Inc. Project:
7.75%, Due 8/15/15 5,000 4,869
8.00%, Due 8/15/25 12,500 12,125
--------
25,649
--------
TOTAL MUNICIPAL BONDS (COST $255,673) 263,617
CASH EQUIVALENT (a) 1.3%
DAILY VARIABLE RATE PUT BOND
TEXAS
Gulf Coast, Texas IDA Solid Waste Disposal
Revenue - CITGO Petroleum Corporation
Project (Cost $3,500) 3,500 3,500
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $259,173) 100.1% 267,117
Other Assets and Liabilities, Net (0.1%) (162)
--------
NET ASSETS 100.0% $266,955
========
</TABLE>
LEGEND
(a) Cash equivalents include any security which has a maturity of less than one
year.
(b) Variable rate bonds.
(c) Maturity date represents actual maturity, earliest put date or
pre-refunding date.
(d) When-issued security.
(e) Security pledged to cover margin requirements for futures contracts.
All costs are stated in thousands.
Percentages are stated as a percent of net assets.
See notes to financial statements.
24
<PAGE> 27
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended December 31, 1995 (In Thousands)
STRONG MUNICIPAL STRONG SHORT-TERM
MONEY MARKET FUND MUNICIPAL BOND FUND
----------------- -------------------
<S> <C> <C>
INTEREST INCOME $60,746 $ 8,139
EXPENSES:
Investment Advisory Fees 6,526 727
Custodian Fees 126 26
Shareholder Servicing Costs 865 179
Reports to Shareholders 672 60
Federal and State Registration Fees 93 44
Other 136 68
------- --------
Total Expenses 8,418 1,104
------- --------
NET INVESTMENT INCOME 52,328 7,035
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments -- 3,067
Futures Contracts and Options -- (8,579)
Change in Unrealized Appreciation/Depreciation on:
Investments -- 6,073
Futures Contracts and Options -- 136
------- --------
NET GAIN -- 697
------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $52,328 $ 7,732
======= ========
</TABLE>
<TABLE>
<CAPTION>
STRONG INSURED STRONG MUNICIPAL STRONG HIGH-YIELD
MUNICIPAL BOND FUND BOND FUND MUNICIPAL BOND FUND
------------------- ---------------- -------------------
<S> <C> <C> <C>
INTEREST INCOME $2,351 $17,629 $14,217
EXPENSES:
Investment Advisory Fees 210 1,704 1,137
Custodian Fees 11 40 23
Shareholder Servicing Costs 77 407 143
Reports to Shareholders 27 113 54
Federal and State Registration Fees 31 47 119
Other 57 59 39
------ ------- -------
Total Expenses before Waivers and Absorptions by Advisor 413 2,370 1,515
Voluntary Expense Waivers and Absorptions by Advisor -- -- (798)
------ ------- -------
Expenses, Net 413 2,370 717
------ ------- -------
NET INVESTMENT INCOME 1,938 15,259 13,500
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 3,388 17,409 1,648
Futures Contracts and Options (1,087) (9,194) (2,705)
Change in Unrealized Appreciation/Depreciation on:
Investments 945 6,852 12,823
Futures Contracts and Options -- -- (14)
------ ------- -------
NET GAIN 3,246 15,067 11,752
------ ------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,184 $30,326 $25,252
====== ======= =======
</TABLE>
See notes to financial statements.
25
<PAGE> 28
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1995
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Amounts)
STRONG MUNICIPAL STRONG SHORT-TERM
MONEY MARKET FUND MUNICIPAL BOND FUND
----------------- -------------------
<S> <C> <C>
ASSETS:
Investments in Securities, at Value (Cost of $1,417,554
and $128,384, respectively) $ 1,417,554 $ 131,162
Receivable from Brokers for Securities Sold 4,052 --
Interest Receivable 11,723 1,988
Other 909 311
----------- -----------
Total Assets 1,434,238 133,461
LIABILITIES:
Payable to Brokers for Securities Purchased 11,567 --
Dividends Payable 5,472 584
Accrued Operating Expenses and Other Liabilities 757 139
----------- -----------
Total Liabilities 17,796 723
----------- -----------
NET ASSETS $ 1,416,442 $ 132,738
=========== ===========
Capital Shares
Authorized 3,000,000 10,000,000
Outstanding 1,416,442 13,581
NET ASSET VALUE PER SHARE $ 1.00 $ 9.77
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
STRONG INSURED STRONG MUNICIPAL STRONG HIGH-YIELD
MUNICIPAL BOND FUND BOND FUND MUNICIPAL BOND FUND
------------------- ---------------- -------------------
<S> <C> <C> <C>
ASSETS:
Investments in Securities, at Value (Cost of $38,269,
$250,903, and $259,173, respectively) $ 39,351 $ 255,987 $ 267,117
Receivable from Brokers for Securities Sold -- -- 3,758
Interest Receivable 436 3,664 5,652
Other 845 2,923 524
----------- ----------- -----------
Total Assets 40,632 262,574 277,051
LIABILITIES:
Payable to Brokers for Securities Purchased 934 14,576 8,297
Dividends Payable 136 1,072 1,566
Accrued Operating Expenses and Other Liabilities 89 202 233
----------- ----------- -----------
Total Liabilities 1,159 15,850 10,096
----------- ----------- -----------
NET ASSETS $ 39,473 $ 246,724 $ 266,955
=========== =========== ===========
Capital Shares
Authorized 10,000,000 100,000 1,000,000
Outstanding 3,699 25,906 26,940
NET ASSET VALUE PER SHARE $ 10.67 $ 9.52 $ 9.91
=========== =========== ===========
</TABLE>
See notes to financial statements.
26
<PAGE> 29
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Years Ended December 31, 1995 and 1994 (In Thousands)
STRONG MUNICIPAL STRONG SHORT-TERM
MONEY MARKET FUND MUNICIPAL BOND FUND
---------------------- ---------------------
1995 1994 1995 1994
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 52,328 $ 38,535 $ 7,035 $ 8,985
Net Realized Loss -- -- (5,512) (6,513)
Change in Unrealized Appreciation/Depreciation -- -- 6,209 (6,339)
---------- ---------- -------- --------
Increase (Decrease) in Net Assets Resulting from Operations 52,328 38,535 7,732 (3,867)
CAPITAL SHARE TRANSACTIONS 155,825 88,057 (29,202) (41,777)
DIVIDENDS PAID FROM:
Net Investment Income (52,328) (38,535) (7,035) (8,985)
Net Realized Gain on Investments -- -- -- (308)
---------- ---------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 155,825 88,057 (28,505) (54,937)
NET ASSETS:
Beginning of Year 1,260,617 1,172,560 161,243 216,180
---------- ---------- -------- --------
End of Year $1,416,442 $1,260,617 $132,738 $161,243
========== ========== ======== ========
</TABLE>
See notes to financial statements.
27
<PAGE> 30
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Years Ended December 31, 1995 and 1994 (In Thousands)
STRONG INSURED STRONG MUNICIPAL
MUNICIPAL BOND FUND BOND FUND
-------------------- ------------------
1995 1994 1995 1994
-------- -------- -------- -------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 1,938 $ 2,529 $ 15,259 $ 19,953
Net Realized Gain (Loss) 2,301 (3,993) 8,215 (23,725)
Change in Unrealized Appreciation/Depreciation 945 (2,405) 6,852 (14,892)
-------- -------- -------- --------
Increase (Decrease) in Net Assets Resulting from Operations 5,184 (3,869) 30,326 (18,664)
CAPITAL SHARE TRANSACTIONS (13,731) (3,791) (42,434) (80,486)
DIVIDENDS PAID FROM:
Net Investment Income (1,938) (2,529) (15,259) (19,953)
In Excess of Net Investment Income (1,066) -- (5,717) --
-------- -------- -------- --------
TOTAL DECREASE IN NET ASSETS (11,551) (10,189) (33,084) (119,103)
NET ASSETS:
Beginning of Year 51,024 61,213 279,808 398,911
-------- -------- -------- --------
End of Year $ 39,473 $ 51,024 $246,724 $279,808
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
STRONG HIGH-YIELD
MUNICIPAL BOND FUND
--------------------
1995 1994
-------- ---------
<S> <C> <C>
OPERATIONS:
Net Investment Income $ 13,500 $ 5,945
Net Realized Loss (1,057) (1,961)
Change in Unrealized Appreciation/Depreciation 12,809 (4,978)
-------- --------
Increase (Decrease) in Net Assets Resulting from Operations 25,252 (994)
CAPITAL SHARE TRANSACTIONS 147,648 93,661
DIVIDENDS PAID FROM:
Net Investment Income (13,500) (5,945)
Net Realized Gain on Investments -- (7)
-------- --------
TOTAL INCREASE IN NET ASSETS 159,400 86,715
NET ASSETS:
Beginning of Year 107,555 20,840
-------- --------
End of Year $266,955 $107,555
======== ========
</TABLE>
See notes to financial statements.
28
<PAGE> 31
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. ORGANIZATION
The Strong Municipal Money Market Fund is a diversified series of the Strong
Municipal Funds, Inc., an open-end management investment company registered
under the Investment Company Act of 1940, and is included in the Strong
Municipal Income Funds. The Strong Municipal Income Funds also include
Strong Short-Term Municipal Bond Fund, Inc., Strong Insured Municipal Bond
Fund, Inc., Strong Municipal Bond Fund, Inc. and Strong High-Yield Municipal
Bond Fund, Inc., which are diversified, open-end management investment
companies registered under the Investment Company Act of 1940.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements.
(A) Security Valuation -- Securities of the Funds, except the Strong
Municipal Money Market Fund, for which market quotations are readily
available 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 Municipal Money Market Fund are valued at amortized cost,
which approximates current value.
The Funds may own certain investment securities which are restricted as
to resale. These securities are valued after giving due consideration to
pertinent factors, including recent private sales, market conditions and
the issuer's financial performance. The Funds generally bear the costs,
if any, associated with the disposition of restricted securities.
(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.
(F) Additional Investment Risk -- The use of futures contracts and
options 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.
(G) 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.
29
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (continued)
December 31,1995
3. NET ASSETS
Net assets as of December 31, 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG MUNICIPAL STRONG SHORT-TERM STRONG INSURED
MONEY MARKET FUND MUNICIPAL BOND FUND MUNICIPAL BOND FUND
----------------- ------------------- -------------------
<S> <C> <C> <C>
Capital Stock $1,416,442 $142,170 $41,225
Undistributed Net Realized Loss -- (12,025) (2,834)
Net Unrealized Appreciation -- 2,593 1,082
---------- -------- -------
$1,416,442 $132,738 $39,473
========== ======== =======
</TABLE>
<TABLE>
<CAPTION>
STRONG STRONG HIGH-YIELD
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
------------------- -------------------
<S> <C> <C>
Capital Stock $263,138 $262,029
Undistributed Net Realized Loss (21,498) (3,018)
Net Unrealized Appreciation 5,084 7,944
-------- --------
$246,724 $266,955
======== ========
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the years ended December 31, 1995 and
1994 were as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
-------------------- --------------------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
STRONG MUNICIPAL MONEY MARKET FUND
Shares Sold 2,581,413 $2,581,413 2,652,872 $2,652,872
Dividends Reinvested 48,824 48,824 34,513 34,513
Shares Redeemed (2,474,412) (2,474,412) (2,599,328) (2,599,328)
---------- ---------- ----------- -----------
155,825 $155,825 88,057 $88,057
========== ========== =========== ===========
STRONG SHORT-TERM MUNICIPAL BOND FUND
Shares Sold 5,815 $56,792 14,809 $150,226
Dividends Reinvested 618 6,037 799 8,049
Shares Redeemed (9,429) (92,031) (19,907) (200,052)
---------- ---------- ----------- -----------
(2,996) ($29,202) (4,299) ($41,777)
========== ========== =========== ===========
STRONG INSURED MUNICIPAL BOND FUND
Shares Sold 1,106 $11,694 3,835 $40,236
Dividends Reinvested 209 2,217 179 1,922
Shares Redeemed (2,624) (27,642) (4,347) (45,949)
---------- ---------- ----------- -----------
(1,309) ($13,731) (333) ($3,791)
========== ========== =========== ===========
STRONG MUNICIPAL BOND FUND
Shares Sold 9,798 $93,037 17,346 $168,663
Dividends Reinvested 1,777 16,879 1,675 16,211
Shares Redeemed (15,997) (152,350) (27,598) (265,360)
---------- ---------- ----------- -----------
(4,422) ($42,434) (8,577) ($80,486)
========== ========== =========== ===========
STRONG HIGH-YIELD MUNICIPAL BOND FUND
Shares Sold 26,320 $253,347 21,216 $205,563
Dividends Reinvested 975 9,387 400 3,848
Shares Redeemed (11,927) (115,086) (12,107) (115,750)
---------- ---------- ----------- -----------
15,368 $ 147,648 9,509 $ 93,661
========== ========== =========== ===========
</TABLE>
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 Municipal Money Market Fund, Strong Short-Term Municipal
Bond Fund and Strong Insured Municipal Bond Fund .50%, Strong Municipal Bond
Fund and Strong High-Yield Municipal Bond 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.
30
<PAGE> 33
Certain information regarding related party transactions for the year ended
December 31, 1995, excluding the effect of waivers and absorptions, is as
follows (in thousands):
<TABLE>
<CAPTION>
STRONG MUNICIPAL STRONG SHORT-TERM STRONG INSURED
MONEY MARKET FUND MUNICIPAL BOND FUND MUNICIPAL BOND FUND
----------------- ------------------- -------------------
<S> <C> <C> <C>
Payable to Advisor at December 31, 1995 $662 $94 $60
Other Shareholder Servicing Expenses Paid to Advisor 29 4 2
Unaffiliated Directors' Fees 28 5 1
STRONG STRONG HIGH-YIELD
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
------------------- -------------------
Payable to Advisor at December 31, 1995 $138 $170
Other Shareholder Servicing Expenses Paid to Advisor 8 2
Unaffiliated Directors' Fees 7 5
</TABLE>
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the year ended
December 31, 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG SHORT-TERM STRONG INSURED STRONG STRONG HIGH-YIELD
MUNICIPAL BOND FUND MUNICIPAL BOND FUND MUNICIPAL BOND FUND MUNICIPAL BOND FUND
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Purchases $301,882 $256,274 $1,278,717 $350,460
Sales 341,945 262,393 1,285,020 203,411
</TABLE>
7. INCOME TAX INFORMATION
At December 31, 1995, 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 SHORT-TERM STRONG INSURED
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
------------------- -------------------
<S> <C> <C>
Aggregate Investment Cost $128,384 $ 38,269
======== ========
Aggregate Unrealized
Appreciation $ 2,793 $ 1,082
Depreciation (15) --
-------- --------
$ 2,778 $ 1,082
======== ========
Capital Loss Carryovers $ 12,209 $ 2,835
======== ========
STRONG STRONG HIGH-YIELD
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
------------------- -------------------
Aggregate Investment Cost $250,965 $259,212
======== ========
Aggregate Unrealized
Appreciation $ 5,623 $ 8,133
Depreciation (601) (228)
-------- --------
$ 5,022 $ 7,905
======== ========
Capital Loss Carryovers $ 21,436 $ 2,980
======== ========
</TABLE>
8. ABBREVIATIONS
The following is a list of abbreviations that may be used in the Schedules of
Investments in Securities:
<TABLE>
<S> <C>
BAN -- Bond Anticipation Notes IBR -- Industrial Building Revenue
CDA -- Commercial Development Authority IDA -- Industrial Development Authority
CDR -- Commercial Development Revenue IDB -- Industrial Development Board
COP -- Certificates of Participation IDC -- Industrial Development Corporation
DFA -- Development Finance Authority IDFA-- Industrial Development Finance Authority
EDA -- Economic Development Authority IDR -- Industrial Development Revenue
EDC -- Economic Development Corporation IFA -- Investment Finance Authority
EDR -- Economic Development Revenue MFHR-- Multi-Family Housing Revenue
GO -- General Obligation MFMR-- Multi-Family Mortgage Revenue
HDA -- Housing Development Authority PCR -- Pollution Control Revenue
HDC -- Housing Development Corporation RAN -- Revenue Anticipation Notes
HFA -- Housing Finance Authority SFHR-- Single Family Housing Revenue
HFC -- Housing Finance Corporation SFMR-- Single Family Mortgage Revenue
IBA -- Industrial Building Authority TAN -- Tax Anticipation Notes
TRAN-- Tax and Revenue Anticipation Notes
</TABLE>
31
<PAGE> 34
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 MONEY MARKET FUND
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.04 0.03 0.02 0.03 0.05
Dividends from Net Investment Income(b) (0.04) (0.03) (0.02) (0.03) (0.05)
--------- --------- -------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ======== ========= =========
Total Return +4.1% +2.9% +2.5% +3.4% +5.2%
Net Assets, End of Period (In Thousands) $1,416,442 $1,260,617 $1,172,560 $1,105,491 $ 782,482
Ratio of Expenses to Average Net Assets 0.6% 0.6% 0.7% 0.7% 0.7%
Ratio of Expenses to Average Net Assets
Without Waivers 0.6% 0.6% 0.7% 0.7% 0.7%
Ratio of Net Investment Income to Average Net Assets 4.0% 2.9% 2.5% 3.3% 5.0%
<CAPTION>
1990 1989 1988 1987 1986(a)
---- ---- ---- ---- -------
<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 0.06 0.06 0.05 0.05 0.01
Dividends from Net Investment Income(b) (0.06) (0.06) (0.05) (0.05) (0.01)
--------- --------- -------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ======== ========= =========
Total Return +6.1% +6.1% +5.2% +4.7% +0.7%
Net Assets, End of Period (In Thousands) $ 218,205 $ 73,802 $ 77,465 $ 59,085 $ 2,401
Ratio of Expenses to Average Net Assets 0.8% 0.9% 0.8% 0.6% 0.5%*
Ratio of Expenses to Average Net Assets
Without Waivers 0.8% 0.9% 0.8% 1.0% 0.5%*
Ratio of Net Investment Income to Average Net Assets 6.0% 5.9% 5.0% 4.7% 3.7%*
<CAPTION>
STRONG SHORT-TERM MUNICIPAL BOND FUND
1995 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.73 $ 10.36 $ 10.20 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.47 0.45 0.44 0.48
Net Realized and Unrealized Gains
(Losses) on Investments 0.04 (0.62) 0.23 0.22
--------- --------- -------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.51 (0.17) 0.67 0.70
LESS DISTRIBUTIONS
From Net Investment Income(b) (0.47) (0.45) (0.44) (0.48)
From Net Realized Gains -- (0.01) (0.07) (0.02)
--------- --------- -------- ---------
TOTAL DISTRIBUTIONS (0.47) (0.46) (0.51) (0.50)
--------- --------- -------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.77 $ 9.73 $ 10.36 $ 10.20
========= ========= ========= =========
Total Return +5.4% - 1.6% +6.8% +7.2%
Net Assets, End of Period (In Thousands) $ 132,738 $ 161,243 $ 216,180 $ 110,816
Ratio of Expenses to Average Net Assets 0.8% 0.7% 0.6% 0.2%
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.8% 0.7% 0.7% 0.8%
Ratio of Net Investment Income to Average Net Assets 4.8% 4.5% 4.2% 4.9%
Portfolio Turnover Rate 226.8% 273.2% 141.5% 139.9%
</TABLE>
* Calculated on an annualized basis.
(a) Inception date is October 23, 1986 for Strong Municipal Money Market
Fund. Total return is not annualized.
(b) Tax-exempt for regular Federal income tax purposes.
32
<PAGE> 35
FINANCIAL HIGHLIGHTS (continued)
STRONG INSURED MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991(a)
---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.19 $ 11.46 $ 10.82 $ 10.28 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.50 0.54 0.56 0.62 0.06
Net Realized and Unrealized Gains
(Losses) on Investments 0.77 (1.27) 0.80 0.68 0.28
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.27 (0.73) 1.36 1.30 0.34
LESS DISTRIBUTIONS
From Net Investment Income(b) (0.51) (0.54) (0.56) (0.62) (0.06)
In Excess of Net Investment Income (0.28) -- -- -- --
From Net Realized Gains -- -- (0.16) (0.14) --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.79) (0.54) (0.72) (0.76) (0.06)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.67 $ 10.19 $ 11.46 $ 10.82 $ 10.28
======== ======== ======== ======== ========
Total Return +12.7% - 6.5% +12.8% +13.1% +3.4%
Net Assets, End of Period (In Thousands) $ 39,473 $ 51,024 $ 61,213 $ 21,367 $ 1,308
Ratio of Expenses to Average Net Assets 1.0% 1.0% 0.6% 0.2% 0.5%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 1.0% 1.0% 0.9% 1.1% 1.0%*
Ratio of Net Investment Income to Average Net Assets 4.6% 5.0% 4.9% 5.8% 5.6%*
Portfolio Turnover Rate 724.9% 411.1% 110.7% 289.6% 24.2%
</TABLE>
STRONG MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.23 $ 10.25 $ 10.00 $ 9.76 $ 9.22 $ 9.47
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.52 0.56 0.58 0.65 0.65 0.66
Net Realized and Unrealized Gains
(Losses) on Investments 0.51 (1.02) 0.57 0.50 0.54 (0.25)
------- ------- ------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 1.03 (0.46) 1.15 1.15 1.19 0.41
LESS DISTRIBUTIONS
From Net Investment Income(b) (0.54) (0.56) (0.58) (0.65) (0.65) (0.66)
In Excess of Net Investment Income (0.20) -- -- -- -- --
From Net Realized Gains -- -- (0.32) (0.26) -- --
------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (0.74) (0.56) (0.90) (0.91) (0.65) (0.66)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 9.52 $ 9.23 $ 10.25 $ 10.00 $ 9.76 $ 9.22
======= ======= ======= ======= ======= =======
Total Return +11.4% - 4.6% +11.8% +12.2% +13.4% +4.6%
Net Assets, End of Period (In Thousands) $246,724 $279,808 $398,911 $289,751 $115,230 $ 31,560
Ratio of Expenses to Average Net Assets 0.8% 0.8% 0.7% 0.1% 0.1% 0.3%
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.8% 0.8% 0.8% 0.9% 1.1% 1.5%
Ratio of Net Investment Income to Average Net Assets 5.4% 5.8% 5.6% 6.4% 6.9% 7.2%
Portfolio Turnover Rate 513.8% 311.0% 156.7% 324.0% 465.2% 586.0%
<CAPTION>
1989 1988 1987 1986(a)
---- ---- ---- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.35 $ 9.16 $ 10.01 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.52 0.49 0.67 0.12
Net Realized and Unrealized Gains
(Losses) on Investments 0.12 0.19 (0.85) 0.01
-------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 0.64 0.68 (0.18) 0.13
LESS DISTRIBUTIONS
From Net Investment Income(b) (0.52) (0.49) (0.67) (0.12)
In Excess of Net Investment Income -- -- -- --
From Net Realized Gains -- -- -- --
-------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.52) (0.49) (0.67) (0.12)
-------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 9.47 $ 9.35 $ 9.16 $ 10.01
======== ======== ======== ========
Total Return +7.1% +7.6% - 1.8% +1.3%
Net Assets, End of Period (In Thousands) $ 18,735 $ 18,275 $ 19,070 $ 2,212
Ratio of Expenses to Average Net Assets 1.7% 1.3% 1.0% 0.4%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 1.8% 1.4% 1.3% 1.0%*
Ratio of Net Investment Income to Average Net Assets 5.6% 5.3% 7.0% 6.4%*
Portfolio Turnover Rate 243.3% 343.6% 284.0% 21.9%
</TABLE>
* Calculated on an annualized basis.
(a) Respective inception dates are November 25, 1991 for Strong Insured
Municipal Bond Fund and October 23, 1986 for Strong Municipal Bond Fund.
Total return and portfolio turnover rate are not annualized.
(b) Tax-exempt for regular Federal income tax purposes.
33
<PAGE> 36
FINANCIAL HIGHLIGHTS (continued)
STRONG HIGH-YIELD MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
1995 1994 1993(a)
---- ---- -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.29 $ 10.10 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.69 0.71 0.16
Net Realized and Unrealized Gains
(Losses) on Investments 0.62 (0.81) 0.10
-------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 1.31 (0.10) 0.26
LESS DISTRIBUTIONS
From Net Investment Income(b) (0.69) (0.71) (0.16)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 9.91 $ 9.29 $ 10.10
======== ======== ========
Total Return +14.6% - 1.0% +2.7%
Net Assets, End of Period (In Thousands) $266,955 $107,555 $ 20,840
Ratio of Expenses to Average Net Assets 0.4% 0.0% 0.0%
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.8% 0.8% 1.1%*
Ratio of Net Investment Income to Average Net Assets 7.1% 7.5% 6.8%*
Portfolio Turnover Rate 113.8% 198.1% 28.0%
</TABLE>
* Calculated on an annualized basis.
(a) Inception date is October 1, 1993. Total return and portfolio
turnover rate are not annualized.
(b) Tax-exempt for regular Federal income tax purposes.
34
<PAGE> 37
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of the
Strong Municipal Income Funds
We have audited the accompanying statements of assets and liabilities of Strong
Municipal Money Market Fund (one of the portfolios constituting the Strong
Municipal Funds, Inc.), Strong Short-Term Municipal Bond Fund, Inc., Strong
Insured Municipal Bond Fund, Inc., Strong Municipal Bond Fund, Inc. and Strong
High-Yield Municipal Bond Fund, Inc. (collectively referred to herein as the
"Strong Municipal Income Funds"), including the schedules of investments in
securities, as of December 31, 1995, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of
the two years in the period then ended, and the financial highlights for each
of the periods indicated. 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 December 31, 1995 by correspondence with the custodians 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 Municipal Income Funds as of December 31, 1995, the results of
their operations for the year then ended, the changes in their net assets for
each of two years in the period then ended, and the financial highlights for
each of the periods indicated, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
February 6, 1996
35
<PAGE> 38
NOTES
36
<PAGE> 39
SHAREHOLDER PRIVILEGES*
STRONG FUNDS
[PICTURE OF TELEPHONE]
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
[PICTURE OF DOLLAR SIGN]
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 propectuses 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
Mailed from
Zip Code 94545
Permit No. 23
FOR LITERATURE AND INFORMATION REQUESTS.
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]
STRONG FUNDS DISTRIBUTORS, INC.
P.O. Box 2936
Milwaukee, Wisconsin 53201
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