<PAGE>
THE STRONG
CASH
MANAGEMENT Funds
ANNUAL REPORT o FEBRUARY 28, 1997
[PHOTO OF CHILDREN] [BAR GRAPH]
[PIE CHART EMPHASIZING MONEY MARKETS]
Money Market Funds
THE STRONG HERITAGE MONEY FUND
THE STRONG MUNICIPAL MONEY MARKET FUND
Ultra-Short Bond Funds
THE STRONG MUNICIPAL ADVANTAGE FUND
THE STRONG ADVANTAGE FUND
[STRONG LOGO]
STRONG FUNDS
<PAGE>
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.
[PICTURE OF FOLDER LABELED INVESTMENTS]
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.
[PICTURE OF CLOCK]
Make time a valuable ally. Let it put the power of compounding to work for you,
while helping to reduce your potential investment risk.
- ---------------------------------------3----------------------------------------
Diversify your portfolio.
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION]
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.
[PICTURE OF MEMO REMINDER TO INVEST]
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.
[PICTURE OF GRAPH SLOPING UPWARD]
For most individuals, the best discipline is staying invested as market
conditions change. Reactive, emotional investment decisions are all too often a
source of regret - and of principal loss.
- ---------------------------------------6----------------------------------------
Consider stocks to help achieve major long-term goals.
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION EMPHASIZING STOCKS]
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.
[PICTURE OF DOLLAR SIGN]
To meet current needs, including emergencies, use a money market fund or a bank
account - not your long-term investment assets.
- ---------------------------------------8----------------------------------------
Know what you're buying.
[PICTURE OF MAGNIFYING GLASS]
Make sure you understand the potential risks and rewards associated with each of
your investments. Ask questions...request information...make up your own mind.
And choose a fund company that helps you make informed investment decisions.
<PAGE>
THE STRONG
CASH
MANAGEMENT Funds
ANNUAL REPORT o FEBRUARY 28, 1997
AN IMPORTANT NOTE FOR SHAREHOLDERS OF THE STRONG ADVANTAGE FUND
MR. LYLE J. FITTERER HAS JOINED MR. JEFFREY A. KOCH AS A CO-MANAGER OF THE
STRONG ADVANTAGE FUND, EFFECTIVE MARCH 1, 1997. Most recently, Mr. Fitterer
served as a fixed-income research analyst and trader. Since joining Strong
Capital Management in 1989, Mr. Fitterer has also served as an equity trader and
as manager of the Strong Funds' fixed income accounting department. Mr. Fitterer
is a Certified Public Accountant and a Certified Financial Analyst.
TABLE OF CONTENTS
INVESTMENT REVIEWS
The Strong Heritage Money Fund .......................................2
The Strong Municipal Money Market Fund ...............................4
The Strong Municipal Advantage Fund ..................................6
The Strong Advantage Fund ............................................8
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong Heritage Money Fund ..................................10
The Strong Municipal Money Market Fund ..........................14
The Strong Municipal Advantage Fund .............................22
The Strong Advantage Fund .......................................26
Statements of Operations ............................................31
Statements of Assets and Liabilities ................................32
Statements of Changes in Net Assets .................................33
Notes to Financial Statements .......................................34
FINANCIAL HIGHLIGHTS .....................................................37
REPORT OF INDEPENDENT ACCOUNTANTS ........................................39
<PAGE>
THE STRONG HERITAGE MONEY FUND
- --------------------------------------------------------------------------------
THE STRONG HERITAGE MONEY FUND CONTINUED TO PERFORM EXCEPTIONALLY WELL.
The Strong Heritage Money Fund seeks current income, a stable share price, and
daily liquidity. The Fund invests in corporate, bank, and government instruments
that present minimal credit risk.(1)
STRONG PERFORMANCE CONTINUED
The Strong Heritage Money Fund continued to perform exceptionally well. For the
periods ended 2-28-97, Lipper Analytical Services, Inc. ranked the Fund #1 since
inception and #2 for the 1-year period out of 274 and 291 money funds,
respectively, based on total return.(2)
SHORT RATES WERE SKITTISH, BUT STAYED NEAR 5%
For the 12-month period ended February 28, 1997, short-term interest rates
resembled a kiddy roller coaster-experiencing several ups and downs, but none of
them particularly severe. Most of these minor shocks were generated by
conflicting economic data, which routinely indicated a strengthening economy one
week and a weakening economy the next.
==================================
YIELD SUMMARY(3)
As of 2-28-97
==================================
7-day current yield 5.41%
7-day effective yield 5.56%
Average maturity 48 days
This environment is reflected in the performance of 3-month Treasury bills.
Despite modest choppiness, their yields remained in a fairly narrow range
between 5.0% and 5.4%.
OUR STRATEGY: STAY THE COURSE
Although the market's view of the economy changed frequently during the past
year, our view changed very little. Despite the swings brought about by shifting
investor perceptions, we never expected a sustained interest rate move in either
direction. Our reasoning was rooted in the economy's relative stability.
Inflation as measured by the Consumer Price Index never strayed far from 3%, the
economy's growth rate wandered between 2% and 4% annually, and capacity
utilization for the nation's businesses tended to remain near 80%. All in all,
it was a relatively stable picture, and one that we believed indicated no major
change in interest rates.
Given our view, we kept the portfolio neutrally positioned near a 45-day average
maturity target throughout most of the year. When rates moved up, we made modest
adjustments to help capture temporarily higher yields, which helped contribute
to the Fund's solid performance.
A WORD ABOUT MERCURY FINANCE
As you may be aware, one of the companies whose commercial paper we owned in the
Fund was Mercury Finance Corporation. In late January 1997, Mercury Finance
caught the financial community off guard by announcing that it had found
"accounting irregularities" that resulted in overstated earnings for the past
several years. The company's stock plummeted, and it was subsequently unable to
make payment on its commercial paper obligations.
2
<PAGE>
Strong Capital Management, Inc., the Fund's advisor, immediately took action to
protect shareholders by buying the commercial paper from the Fund at full face
value (i.e., its amortized cost). As a result, there was no impact to any
investors in the Fund.
Even though no investors were financially affected by this situation, we
understand that it can be disconcerting to hear about. That's why we want to
assure you that this situation had nothing to do with misreading a company's
creditworthiness; this was a matter of a company's audited and interim financial
statements not accurately representing the facts.
OUTLOOK: CAUTIOUS BUT POSITIVE
As of the end of the fiscal year, we were prepared for a modest interest-rate
hike by the Federal Reserve- and indeed such a move came in late March. Overall,
we intend to maintain our neutral investment stance and closely monitor the
economy for signs of a sustainable trend. Along the way, we hope to capture any
bumps in yield and to continue to pursue for our shareholders an attractive
money fund investment that combines solid returns with money market safety and
liquidity.
As always, we thank you for your confidence. We remain committed to meeting your
investment needs in the future.
Sincerely,
/s/Jay N. Mueller
Jay N. Mueller
Portfolio Manager
March 26, 1997
[PHOTO OF JAY N. MUELLER]
[GRAPH]
=====================================================
3-MONTH TREASURY BILL YIELDS
Through 2-28-97
=====================================================
2-96 5.03%
3-96 5.14%
4-96 5.15%
5-96 5.18%
6-96 5.16%
7-96 5.31%
8-96 5.28%
9-96 5.03%
10-96 5.15%
11-96 5.13%
12-96 5.17%
1-97 5.15%
2-97 5.22%
Source: Bloomberg
1 Investments in the Fund are neither insured nor guaranteed by the U.S.
government. There can be no assurance that the Fund will be able to
maintain its stable net asset value of $1.00 per share.
2 The since-inception ranking is based on performance from 6-30-95 to 2-28-97
for money market funds tracked by Lipper. From time to time, the Fund's
Advisor has waived its management fee which has resulted in higher returns.
Source: Lipper Analytical Services, Inc.
3 Yields are annualized for the 7-day period ended 2-28-97. Effective yields
reflect the compounding of income. Yields and rankings are historical and
do not represent future results. Yields will fluctuate. The Fund's Advisor
temporarily waived 0.39% in management fees and absorbed 0.08% in expenses
for the Fund. Otherwise, the Fund's current yield would have been 4.94%,
and its effective yield would have been 5.06%.
3
<PAGE>
THE STRONG MUNICIPAL MONEY MARKET FUND
- --------------------------------------------------------------------------------
WE DEVOTE OURSELVES TO PROVIDING A STEADY STREAM OF TAX-EXEMPT INCOME,
CONSISTENT WITH OUR OBJECTIVE OF A STABLE SHARE PRICE AND DAILY LIQUIDITY.
The Strong Municipal Money Market Fund seeks federally tax-exempt current
income, a stable share price, and daily liquidity. The Fund invests in high
quality, short-term municipal obligations that present minimal credit risk.(1)
Our goal is to provide a steady stream of tax-exempt income, consistent with our
objective of a stable share price and daily liquidity. This approach has not
only helped investors meet their goals, but it has also given the Fund an
inherently defensive quality. Of course, money market funds are intended to be
among the safest investments. This Fund can offer a conservative shelter while
still making a contribution to a balanced portfolio.
=====================================
YIELD SUMMARY(3)
As of 2-28-97
=====================================
7-day current yield 3.23%
7-day effective yield 3.28%
Average maturity 58 days
LOOKING BACK ON A GOOD YEAR
The Fund provided shareholders with outstanding performance for the year. For
the 12 months ended February 28, 1997, the Fund ranked #1 of 133 tax-exempt
money market funds tracked by Lipper Analytical Services, Inc., based on total
return. This is a continuation of a long trend: the Fund also ranks first for
the 3-, 5-, 10-year, and since-inception periods out of 111, 94, 58, and 58
funds, respectively.(2)
The Fund also continued to provide investors with an attractive tax-exempt
yield. As of February 28, 1997, the Municipal Money Market Fund's 7-day current
yield was 3.23%. Its 7-day effective yield - which reflects compounding - was
3.28%.(3)
ACTIVELY SEEKING OPPORTUNITIES
Our overriding philosophy in running the Fund is investors are paying us to
manage their money market assets, not to passively follow the market. Our
objective is to provide attractive yields consistent with the Fund's emphasis on
high quality and short maturity. We recognize that for some investors, this is a
first step out of bank CDs, and for others it is the conservative portion of a
long-term portfolio.
We scour the markets to identify issues with the most attractive yields. In
addition to working with large, prominent brokerage houses, we also work with
smaller, specialized brokerage firms. Their expertise in specific areas of the
market can present us with opportunities we might otherwise miss. In all cases,
research and judgment guide our decisions.
INTEREST RATES GLIDE UP, THEN RELAX A BIT
At the start of the fiscal year in March 1996, short-term interest rates were
near their low point for the year. They then rose to a peak around mid-year.
Although rates have eased back a bit since then, at the close of the fiscal year
in February rates remained significantly higher than they were a year earlier,
and appeared to be back on the upswing.
We make careful, conscious decisions for the Fund based on our perception of
where interest rates and the economy overall are going. In the past year, that
often meant we worked to avoid the "teeter-totter" effect that can afflict the
market when long-term interest rates rise. When these rates go up, many
investors retreat to the safety of money market funds. That creates strong
demand for the issues money funds invest in, driving their yields down. The
result is a teeter-totter: long rates rise while short rates fall. Normally,
they tend to track each other.
4
<PAGE>
Our response was simply to stop buying longer-term issues when their yields fell
below an acceptable level (for this Fund, longer issues are those with
maturities of 6 to 12 months). We waited for the relationship between long- and
short-term rates to right itself. Because we did not hold a great deal of
lower-yielding 6- to 12-month paper, we were able to maintain an attractive
yield despite the market's twists and turns.
THE YEAR AHEAD
The end of the fiscal year found interest rates turning up again. (In fact, in
late March the Federal Reserve did raise interest rates.) In the coming 12
months, we will continue to make tactical decisions based on our view of trends
in interest rates and the general economy. Further increases in interest rates
are possible if an especially strong economy produces higher inflation. We
believe that, in such an environment, the Strong Municipal Money Market Fund can
be a good place to be.
As of the end of the fiscal year, assets under management totaled $1.9 billion,
a new high. We appreciate that vote of confidence from all of our shareholders.
Thank you for the opportunity to serve your investment needs. We look forward to
helping you pursue your investment goals in the years to come.
Sincerely,
/s/Steven D. Harrop
Steven D. Harrop
Portfolio Manager
March 26, 1997
[PHOTO OF STEVEN D. HARROP]
================================================================================
EQUIVALENT TAXABLE YIELDS(3)
As of 2-28-97
================================================================================
YOUR TAX-EXEMPT EFFECTIVE
MARGINAL YIELD OF 3.28% IS EQUIVALENT
JOINT RETURN SINGLE RETURN TAX RATE TO A TAXABLE YIELD OF:
- --------------------------------------------------------------------------------
$41,201-99,600 $24,651-59,750 28.0% 4.56%
................................................................................
$99,601-151,750 $59,751-124,650 31.0% 4.75%
................................................................................
$151,751-271,050 $124,651-271,050 36.0% 5.13%
................................................................................
Over $271,050 Over $271,050 39.6% 5.43%
................................................................................
The chart reflects 1997 marginal federal tax rates before limitations and
phase-outs. Individuals with adjusted gross income in excess of $121,200 should
consult their tax advisor to determine their actual 1997 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.
- --------------------------------------------------------------------------------
1 An investment in the Fund is neither insured nor guaranteed by the U.S.
government, and there can be no assurance that the Fund will be able to
maintain a stable share price of $1.00.
2 The since-inception ranking is based on performance from 10-31-86 to
2-28-97 for Tax-Exempt Money Market funds tracked by Lipper. From time to
time, the Fund's Advisor has waived its management fee, which has resulted
in higher returns. Source: Lipper Analytical Services, Inc.
3 Yields are annualized for the 7 days ended 2-28-97, are historical, and
will vary. Effective yield assumes reinvested income.
5
<PAGE>
THE STRONG MUNICIPAL ADVANTAGE FUND
- --------------------------------------------------------------------------------
THE STRONG MUNICIPAL ADVANTAGE FUND IS THE FIRST MUTUAL FUND TO COMBINE THE
BENEFITS OF ULTRA-SHORT BONDS WITH THE TAX ADVANTAGES OF MUNICIPAL INVESTING.
The Strong Municipal Advantage Fund seeks federally tax-exempt current income
with a very low degree of share-price fluctuation. The Fund invests primarily in
ultra short-term, investment grade municipal obligations, and maintains an
average effective portfolio maturity of one year or less.
=============================================
PORTFOLIO STATISTICS
As of 2-28-97
=============================================
30-day annualized yield(2) 4.75%
Average effective maturity(3) 0.7 years
Average quality rating(4) A
The Strong Municipal Advantage Fund is the first mutual fund to combine the
benefits of ultra-short bonds with the tax advantages of municipal investing.
Unlike money funds, which seek to maintain a $1.00 share price, this Fund is
managed for a low degree of share-price fluctuation. This flexibility allows it
to pursue higher returns than tax-free money funds.
For the 12 months ended February 28, 1997, the Fund ranks #3 out of 30
short-term municipal bond funds based on total return, according to Lipper
Analytical Services, Inc.(1) The Fund continued to provide investors with an
attractive tax-advantaged yield. As of February 28, 1997, the Fund's 30-day
current yield was 4.75%.(2)
INTEREST RATES GLIDE UP, THEN RELAX A BIT
Short-term interest rates started the fiscal year in March 1996 near their low
point for the 12-month period, and reached a peak around August. Although they
have eased back a bit since then, at the close of the fiscal year rates remained
significantly higher than they were a year earlier, and appeared to be back on
the upswing.
Throughout the year, bond prices were subject to down-turns based on concern
that a strong economy would fuel higher interest rates. At times, federal
economic data sparked these fears; at other times, just a few cautionary words
from Federal Reserve Board Chairman Alan Greenspan were all it took to rattle
the markets.
INVESTORS LOOKED FOR AN ADVANTAGE
To help our investors pursue their goals, the Fund seeks the most attractive
yields consistent with our goals of minimal NAV fluctuation and maintaining high
credit quality. We succeeded in keeping NAV fluctuation at a very low level,
with share prices moving in a narrow range. We will strive to keep the share
price in a similarly tight range going forward.
Around mid-year we moved the Fund away from a barbell strategy-concentrating
assets in very short-term and fairly long-term assets, with little in between.
Instead, we put a laddered approach in place, which spreads assets more evenly
among a range of maturities. With this change, we were able to pick up some
intermediate (for this Fund, that means 1- to 3-year maturity) securities we
believed offered attractive value.
WE ARE SELECTIVE
To arrive at our combination of low share-price fluctuation and attractive
yields, we divide our assets into thirds. The first third focuses on issues that
offer stability and liquidity. The next third is devoted to issues that provide
higher yields. The final third is allocated to securities that primarily serve
to stabilize NAV, while still providing a reasonable level of income.
Whatever the security we may be considering, we are patient in waiting for the
right investment opportunities. Also, we have chosen to purchase only
investment-grade securities, even though the Fund's prospectus allows us to put
up to 10% of assets in lower-quality issues. In fact, currently almost 50% of
the Fund's assets are in AA or AAA (or equivalent rated) securities. We do not
anticipate any move into non-investment-grade issues at this time.
================================================================================
EQUIVALENT TAXABLE YIELDS(2)
As of 2-28-97
================================================================================
YOUR TAX-EXEMPT EFFECTIVE
YIELD OF 4.75% IS EQUIVALENT
JOINT RETURN SINGLE RETURN TAX RATE TO A TAXABLE YIELD OF:
- --------------------------------------------------------------------------------
$41,201-99,600 $24,651-59,750 28.0% 6.60%
................................................................................
$99,601-151,750 $59,751-124,650 31.0% 6.88%
................................................................................
$151,751-271,050 $124,651-271,050 36.0% 7.42%
................................................................................
Over $271,050 Over $271,050 39.6% 7.86%
................................................................................
The chart reflects 1997 marginal federal tax rates before limitations and
phase-outs. Individuals with adjusted gross income in excess of $121,200 should
consult their tax advisor to determine their actual 1997 marginal tax rate. The
Fund's income may be subject to state and local taxes and, depending on your tax
status, the Alternative Minimum Tax.
6
<PAGE>
Of course, our selectivity presents a bit more of a challenge in the face of the
strong cash inflows the Fund has enjoyed. Assets in the Fund grew from about
$140 million at the beginning of the fiscal year to more than $600 million at
its end. The yields available on shorter-term municipal issues have gone down,
so it can be difficult to find investments that fit our quality and maturity
standards, while also offering the kind of yields that we strive to deliver.
We will address this challenge with our usual tools: thorough research, our own
analysis and initiative, and information from both large, prominent brokerages
as well as smaller, specialized firms.
THE YEAR AHEAD
The end of the fiscal year found interest rates turning up again. (In fact, the
Federal Reserve raised rates in late March, shortly after the end of our fiscal
year.)
In the coming 12 months, we will continue to make tactical decisions based on
our view of trends in interest rates and the general economy. Should a
stronger-than-expected economy portend rising inflation, interest rates could
rise further.
We appreciate the confidence our shareholders have given us in just a little
more than a year of operation. Thank you for the opportunity to serve your
investment needs. We look forward to helping you pursue your investment goals in
the years to come.
Sincerely,
/s/Steven D. Harrop
Steven D. Harrop
Portfolio Manager
March 26, 1997
[PHOTO OF STEVEN D. HARROP]
============================
AVERAGE ANNUAL
TOTAL RETURNS
As of 2-28-97
============================
1-YEAR 5.12%
SINCE INCEPTION 5.27%
(on 11-30-95)
[GRAPH]
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 11-30-95 to 2-28-97
THE STRONG MUNICIPAL Lehman Brothers Municipal Lipper Short Municipal
ADVANTAGE FUND 1-Year Bond Index* Debt Funds Index*
11-95 10,000 10,000 10,000
12-95 10,085 10,038 10,041
3-96 10,145 10,127 10,100
6-96 10,272 10,226 10,159
9-96 10,443 10,336 10,269
12-96 10,577 10,474 10,386
2-97 10,663 10,568 10,466
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with similar investments in the
Lehman Brothers Municipal 1-Year Bond Index and the Lipper Short Municipal Debt
Funds Index. Results include the reinvestment of all dividends and capital gains
distributions. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell shares.
- --------------------------------------------------------------------------------
* The Lehman Brothers Municipal 1-Year Bond Index is an unmanaged index
generally representative of one-year, tax-exempt bonds. The Lipper Short
Municipal Debt Funds Index is an equally-weighted performance index of the
largest qualifying funds in this Lipper category. Source of the Lehman
index data is Micropal. Source of the Lipper index data is Lipper
Analytical Services, Inc.
1 The ranking is based on performance from 3-1-96 to 2-28-97 for Short
Municipal Debt Funds tracked by Lipper. From time to time, the Fund's
Advisor has waived its management fee, which has resulted in higher
returns. Source: Lipper Analytical Services, Inc.
2 Yield is annualized for the 30 days ended 2-28-97, is historical, and will
vary. The Fund's Advisor has waived its management fee of 0.54% and
absorbed expenses of 0.08%. Otherwise, current yield would have been 4.13%
and returns would have been lower.
3 The Fund's average effective maturity includes the effect of futures
contracts, when-issued securities, and anticipated calls.
4 For purposes of this average rating, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
7
<PAGE>
THE STRONG ADVANTAGE FUND
- --------------------------------------------------------------------------------
THE FUND'S ULTRA-SHORT MATURITY HELPED SHIELD THE PORTFOLIO FROM MOST OF THE
MARKET'S SKITTISHNESS.
The Strong Advantage Fund seeks current income with a very low degree of
share-price fluctuation. The Fund invests primarily in ultra short-term,
investment-grade debt obligations, and its average effective maturity will
normally be one year or less.
=========================================
PORTFOLIO STATISTICS
As of 2-28-97
=========================================
30-day annualized yield(2) 6.34%
Average effective maturity(3) 0.74 years
Average quality rating(4) A
THE FUND'S STRONG PERFORMANCE CONTINUED
The Strong Advantage Fund continued to turn in solid performance for the year
ended February 28, 1997, providing attractive returns versus both its
ultra-short competition and versus money market funds. Within the ultra-short
obligation Lipper category, the Fund ranked #4 of 29 funds for the 1-year period
ended 2-28-97. In that same group, it ranked #1 based on total return for the
5-year and since-inception periods out of 9 and 6 funds, respectively.(1)
The Fund's total return for the year was 6.97%, which compares favorably with
the 5.43% total return posted by the Lipper Ultra-Short Debt Funds Average.* (Of
course, unlike a money fund, the Advantage Fund's share price will vary. The
Fund also has a slightly longer maturity and may invest in lower-quality bonds
than can money funds.)
ULTRA-SHORT INTEREST RATES MOVED HIGHER
Although the short end of the bond market experienced a somewhat skittish period
over the Fund's fiscal year, overall, the economic backdrop was remarkably
stable. Over the course of the 12-month period, the economy's average growth
rate picked up somewhat. That led to slightly higher interest rates.
However, that slight increase was characterized by rapidly fluctuating rates
within a fairly narrow band. Investors tried to discern a long-term trend from
short-term data. Their response moved the market in fits and starts even though
economic data suggested that the economy remained entrenched in a 2% to 4%
annual growth rate, and inflation showed few signs of heating up beyond 3%
annually.
Contributing to the nervous climate were Federal Reserve Chairman Alan
Greenspan's occasional remarks expressing concern over the financial market's
exuberance. These modestly erratic conditions remained in place as the fiscal
year drew to a close.
OUR STRATEGY: STAY THE COURSE
The Fund's ultra-short maturity helped shield the portfolio from most of the
market's skittishness. A healthy position in higher-yielding, lower-rated bonds
also served as a buffer. We kept up to 25% of the Fund's assets - the maximum
allowed by prospectus - in BB rated bonds. Because the prices of these bonds are
determined not only by interest rates, but also by the strength of the companies
that issue them, they tend to experience smaller interest-rate fluctuations than
their higher-quality counterparts.
We also continued to seek and purchase cushion bonds, which are simply bonds
that are likely to be called back by the issuer in the near future. Because they
are actually long-maturity bonds, they offer fairly attractive yields. At the
same time, their somewhat short anticipated remaining life means their prices
fluctuate relatively little, as is typically the case with shorter-maturity
bonds. Also, analysts tend to follow these bonds less closely than they do
money-market instruments, so we can find some good values by doing our homework.
[PIE CHART]
====================================
ASSET ALLOCATION
Based on net assets as of 2-28-97
====================================
Corporate Bonds 63.8%
Non-Agency Mortgage
& Asset-Backed Securities 26.4%
Short-Term Investments 7.5%
Preferred Stocks 1.4%
U.S. Government &
Agency Issues 0.9%
This allocation does not reflect any futures positions held by the Fund.
8
<PAGE>
Toward the end of the fiscal year, we modified the Fund's sector allocation
modestly to increase our weighting in corporate bonds. This was a response to
the issuance of bank and finance securities with very attractive yields.
WE EXPECT PREVAILING CONDITIONS TO CONTINUE
The economy's slightly rising growth rate may prompt the Federal Reserve to make
a modest, pre-emptive rate hike within the next several months. That said, we
would not expect such a tightening to indicate a trend. The economy's growth
remains positive but not particularly robust, and inflation remains lodged near
3%. Therefore, while short-term moves may continue to be sharp, overall, the
climate appears good for financial assets.
If the choppy rate environment persists, we would likely maintain our current
neutral investment stance, and look for value on an individual bond basis,
focusing on those bonds that offer an incremental yield advantage.
Thank you for your investment in the Strong Advantage Fund. We appreciate your
continued confidence.
Sincerely,
/s/Jeffrey A. Koch
Jeffrey A. Koch
Portfolio Manager
March 26, 1997
[PHOTO OF JEFFREY A. KOCH]
===============================
AVERAGE ANNUAL
TOTAL RETURNS
As of 2-28-97
===============================
1-YEAR 6.97%
3-YEAR 6.06%
5-YEAR 6.64%
SINCE INCEPTION 7.61%
(on 11-25-88)
[GRAPH]
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 11-25-88 to 2-28-97
THE STRONG 1-Year Lipper Ultra Short
ADVANTAGE FUND Treasury Bill Obligation Average
10-88 10,000 10,000 10,000
12-88 10,103 10,103 10,072
12-89 11,052 11,050 11,004
12-90 11,784 12,036 11,884
12-91 13,036 13,088 12,745
12-92 14,135 13,720 13,262
12-93 15,250 14,245 13,792
12-94 15,793 14,621 14,207
12-95 16,978 15,804 15,142
12-96 18,112 16,698 15,944
2-97 18,331 16,842 16,084
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with similar investments in the
Salomon Brothers 1-Year Treasury Benchmark-on-the-Run Index ("1-Year Treasury
Bill") and the Lipper Ultra Short Obligation Average. Results include the
reinvestment of all dividends and capital gains distributions. Performance is
historical and does not represent future results. Investment returns and
principal value will vary, and you may have a gain or loss when you sell shares.
To equalize the time periods, the indexes' performance was prorated for the
month of November 1988.
- --------------------------------------------------------------------------------
* The Salomon Brothers 1-Year Treasury Benchmark-on-the-Run Index ("1-Year
Treasury Bill") is an unmanaged index generally representative of the
average yield of One-Year Treasury Bills. The Lipper Ultra Short Obligation
Average represents funds that invest at least 65% of assets in
investment-grade debt issues, or better, and maintains a portfolio
dollar-weighted average maturity between 91 days and 365 days. Source of
the Salomon index data is Micropal. Source of the Lipper index data is
Lipper Analytical Services, Inc.
1 The since-inception ranking is based on performance from 11-30-88 to
2-28-97 for Ultra Short Obligation Funds tracked by Lipper. From time to
time, the Fund's Advisor has waived its management fee, which has resulted
in higher returns. Source: Lipper Analytical Services, Inc.
2 Yield is annualized for the 30 days ended 2-28-97, is historical, and will
vary.
3 The Fund's average effective maturity includes the effect of futures and
options contracts, and anticipated calls.
4 For purposes of this average rating, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
9
<PAGE>
<TABLE>
SCHEDULES OF INVESTMENTS IN SECURITIES February 28, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG HERITAGE MONEY FUND
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT 0.3%
<S> <C> <C> <C> <C>
Advanta National Bank $ 7,000 5.88% 4/04/97 $ 7,000
COMMERCIAL PAPER 85.1%
AESOP Funding Corporation (Acquired 1/10/97; Cost $6,744) (b) 6,800 5.38 3/06/97 6,797
Alamo Funding L.P.:
(Acquired 2/12/97; Cost $5,256) (b) 5,299 5.34 4/08/97 5,271
(Acquired 2/19/97; Cost $10,295) (b) 10,370 5.30 4/09/97 10,314
(Acquired 2/12/97; Cost $9,418) (b) 9,500 5.34 4/11/97 9,445
(Acquired 2/19/97; Cost $3,074) (b) 3,100 5.30 4/17/97 3,079
Albion Capital Corporation (Acquired 1/02/97 - 1/06/97; Cost $30,608) (b) 31,016 5.47 4/01/97 30,879
American Home Products Corporation (Acquired 2/28/97; Cost $2,849) (b) 2,850 5.40 3/03/97 2,850
American Honda Finance Corporation 10,000 5.28 4/07/97 9,949
10,000 5.33 5/06/97 9,905
Anaheim, California Electric System 10,500 5.56 5/01/97 10,500
Anthem Insurance Company, Inc. (Acquired 1/23/97; Cost $9,910) (b) 10,000 5.40 3/24/97 9,969
Aristar, Inc. 11,000 5.36 3/14/97 10,982
Asset Backed Capital Financial:
(Acquired 12/06/96; Cost $11,778) (b) 12,000 5.41 4/08/97 11,935
(Acquired 12/06/96; Cost $11,698) (b) 12,000 5.42 5/22/97 11,855
Avon Capital Corporation:
(Acquired 1/13/97; Cost $18,483) (b) 18,650 5.40 3/14/97 18,619
(Acquired 2/20/97 - 2/21/97; Cost $9,466) (b) 9,500 5.30 3/19/97 9,478
(Acquired 2/24/97; Cost $1,593) (b) 1,600 5.30 3/24/97 1,595
Barnett Banks, Inc. 7,548 5.28 3/06/97 7,545
Browning-Ferris Industries, Inc.:
(Acquired 1/29/97; Cost $15,689) (b) 15,800 5.39 3/17/97 15,767
(Acquired 2/18/97; Cost $14,925) (b) 15,000 5.30 3/24/97 14,954
CSC Enterprises 4,500 5.28 3/20/97 4,489
15,000 5.32 4/11/97 14,914
10,000 5.32 4/18/97 9,932
Calcasieu Parish, Louisiana 14,200 5.47 3/11/97 14,200
6,700 5.73 3/27/97 6,700
Calcot, Ltd. 5,000 5.42 3/11/97 4,994
7,000 5.45 3/13/97 6,989
2,000 5.42 3/17/97 1,996
8,000 5.45 3/25/97 7,973
8,000 5.42 4/04/97 7,962
7,000 5.42 4/10/97 6,960
4,000 5.42 4/15/97 3,974
4,000 5.45 5/08/97 3,960
Coca-Cola Enterprises, Inc. (Acquired 2/03/97; Cost $24,840) (b) 25,000 5.34 3/18/97 24,944
Columbia/HCA Healthcare Corporation:
(Acquired 1/21/97; Cost $22,684) (b) 23,000 5.37 4/23/97 22,825
(Acquired 1/21/97; Cost $22,678) (b) 23,000 5.37 4/25/97 22,818
Cooper Industries, Inc. 30,000 5.38 3/03/97 30,000
Countrywide Home Loans 35,000 5.34 3/26/97 34,881
Credit Suisse First Boston, Inc. (Acquired 2/07/97; Cost $247) (b) 250 5.31 4/24/97 248
Dean Witter, Discover & Company 24,900 5.28 3/31/97 24,798
Delaware Group Dividend and Income Fund, Inc.:
(Acquired 1/03/97; Cost $12,808) (b) 13,000 5.48 4/10/97 12,925
(Acquired 2/06/97; Cost $9,878) (b) 10,000 5.40 4/28/97 9,916
(Acquired 2/25/97; Cost $4,932) (b) 5,000 5.30 5/28/97 4,937
EG & G, Inc. 7,000 5.35 3/11/97 6,992
Echlin, Inc. 7,000 5.39 4/22/97 6,948
5,000 5.39 4/24/97 4,961
7,000 5.38 4/29/97 6,940
9,000 5.38 5/01/97 8,921
14,765 5.39 5/02/97 14,632
Embarcadero Center-Venture Four 23,000 5.37 4/14/97 22,856
Empire District Electric Company 5,000 5.35 3/27/97 4,982
Equitable of Iowa Companies 12,825 5.42 3/05/97 12,821
2,600 5.36 3/14/97 2,596
5,100 5.31 3/25/97 5,084
FPL Fuels, Inc. 5,900 5.30 3/07/97 5,897
Finova Capital Corporation 8,000 5.42 4/17/97 7,946
13,725 5.40 4/18/97 13,630
5,000 5.34 4/24/97 4,961
See notes to financial statements.
10
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG HERITAGE MONEY FUND (continued)
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
First Data Corporation $ 9,000 5.29% 4/01/97 $ 8,962
18,000 5.29 4/02/97 17,921
Frontier Corporation:
(Acquired 2/10/97; Cost $5,434) (b) 5,450 5.36 3/03/97 5,450
(Acquired 2/10/97; Cost $12,725) (b) 12,780 5.36 3/11/97 12,765
(Acquired 2/11/97; Cost $16,288) (b) 16,380 5.34 3/21/97 16,336
Fundex Corporation 5,047 5.40 3/10/97 5,042
GTE Corporation 21,000 5.33 3/03/97 21,000
18,000 5.34 3/10/97 17,981
HSBC Americas, Inc. 25,000 5.37 3/26/97 24,914
Heller Financial, Inc. 17,550 5.55 3/12/97 17,526
12,000 5.55 3/13/97 11,982
Heller International Corporation 16,500 5.42 3/17/97 16,465
10,000 5.45 3/20/97 9,974
5,000 5.50 3/26/97 4,982
Hercules, Inc. 15,000 5.37 3/06/97 14,993
15,000 5.35 3/19/97 14,964
Household International, Inc. (Acquired 12/05/96; Cost $9,863) (b) 10,000 5.37 3/07/97 9,994
Iris Partners L.P. 9,000 5.40 4/14/97 8,943
Kamehameha Schools - Bishop Estate (Acquired 2/20/97; Cost $8,902) (b) 9,000 5.30 5/05/97 8,917
Lehman Brothers Holdings, Inc. 8,500 5.38 3/07/97 8,495
7,000 5.42 4/28/97 6,941
Lexington Parker Capital Corporation:
(Acquired 1/17/97; Cost $9,224) (b) 9,300 5.37 3/13/97 9,286
(Acquired 1/17/97; Cost $22,541) (b) 22,731 5.37 3/14/97 22,694
(Acquired 12/18/96 - 12/19/96; Cost $19,731) (b) 20,000 5.55 3/17/97 19,957
(Acquired 12/16/96; Cost $3,944) (b) 4,000 5.53 3/18/97 3,991
(Acquired 12/16/96; Cost $9,859) (b) 10,000 5.53 3/19/97 9,975
(Acquired 1/10/97; Cost $18,058) (b) 18,300 5.41 4/08/97 18,201
Locap, Inc. (Acquired 1/28/97; Cost $5,918) (b) 6,000 5.40 4/29/97 5,949
Manufacturers Investment Corporation 35,000 5.35 3/27/97 34,875
Market Street Funding Corporation:
(Acquired 2/03/97; Cost $29,800) (b) 29,925 5.35 3/03/97 29,925
(Acquired 2/14/97; Cost $8,959) (b) 9,000 5.30 3/17/97 8,981
Morton International, Inc. (Acquired 2/28/97; Cost $29,986) (b) 30,000 5.45 3/03/97 30,000
National Fuel Gas Company 5,000 5.38 4/21/97 4,963
New York GO 17,000 5.50 5/19/97 17,000
New York State Job Development Authority 9,000 5.42 4/09/97 9,000
5,800 5.40 4/28/97 5,800
14,300 5.44 4/30/97 14,300
Nordbanken N.A., Inc. 20,720 5.38 5/02/97 20,534
Northern Indiana Public Service Company 5,300 5.30 4/15/97 5,267
Nynex Corporation 15,000 5.34 3/05/97 14,996
15,000 5.37 3/14/97 14,975
Oakland-Alameda County, California Coliseum Authority 8,000 5.46 3/12/97 8,000
20,000 5.44 4/07/97 20,000
5,000 5.41 4/22/97 5,000
Oklahoma State IFA 4,720 5.60 5/01/97 4,720
Old Line Funding Corporation:
(Acquired 2/04/97; Cost $19,899) (b) 20,000 5.35 3/10/97 19,979
(Acquired 2/10/97; Cost $14,905) (b) 15,000 5.32 3/25/97 14,951
PHH Corporation 8,900 5.27 4/07/97 8,854
10,175 5.29 4/14/97 10,112
9,000 5.27 4/22/97 8,934
PaineWebber Group, Inc. 30,000 5.44 3/03/97 30,000
Progress Funding Corporation (Acquired 1/06/97; Cost $3,951) (b) 4,000 5.45 3/27/97 3,985
Salomon, Inc. 5,000 5.55 3/18/97 4,989
5,000 5.55 3/24/97 4,984
20,700 5.53 4/03/97 20,601
San Diego, California IDR - San Diego Gas & Electric Company
(Acquired 2/14/97; Cost $7,915) (b) 7,915 5.42 4/03/97 7,915
Sherwin-Williams Company:
(Acquired 1/07/97; Cost $24,556) (b) 25,000 5.42 5/05/97 24,763
(Acquired 1/07/97; Cost $24,548) (b) 25,000 5.42 5/07/97 24,755
(Acquired 1/07/97; Cost $19,618) (b) 20,000 5.42 5/14/97 19,783
Society of the New York Hospital Fund, Inc. 3,869 5.40 3/04/97 3,868
13,315 5.40 3/10/97 13,301
8,930 5.45 4/08/97 8,881
See notes to financial statements.
11
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 28, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG HERITAGE MONEY FUND (continued)
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
Spintab AB $15,000 5.40% 4/11/97 $ 14,912
8,000 5.40 4/14/97 7,950
11,000 5.41 4/15/97 10,929
10,000 5.42 4/17/97 9,932
20,000 5.41 4/21/97 19,853
7,000 5.40 4/23/97 6,946
SunAmerica, Inc. 15,300 5.29 3/03/97 15,300
14,450 5.35 3/31/97 14,390
Texas Instruments, Inc. 25,000 5.32 4/04/97 24,882
Torchmark Corporation 7,200 5.38 3/26/97 7,175
5,000 5.40 4/08/97 4,973
7,000 5.34 4/23/97 6,947
6,000 5.34 5/01/97 5,948
Tribune Company (Acquired 2/25/97; Cost $6,972) (b) 7,000 5.28 3/24/97 6,978
Triple-A One Funding Corporation:
(Acquired 2/14/97; Cost $11,444) (b) 11,501 5.28 3/20/97 11,472
(Acquired 2/14/97; Cost $11,084) (b) 11,164 5.29 4/04/97 11,112
(Acquired 2/20/97; Cost $5,950) (b) 6,000 5.28 4/18/97 5,960
UNIfunding, Inc. 22,000 5.27 4/21/97 21,842
West Baton Rouge Parish, Louisiana 6,300 5.47 3/04/97 6,300
Wisconsin Electric Power Company 175 5.05 Upon Demand 175
Wood Street Funding Corporation:
(Acquired 2/19/97; Cost $7,965) (b) 8,000 5.28 3/21/97 7,979
(Acquired 2/14/97; Cost $4,671) (b) 4,700 5.30 3/28/97 4,683
(Acquired 1/21/97; Cost $10,885) (b) 11,000 5.38 4/01/97 10,952
(Acquired 2/07/97; Cost $5,448) (b) 5,500 5.35 4/11/97 5,468
----------
TOTAL COMMERCIAL PAPER 1,701,839
CORPORATE OBLIGATIONS 7.7%
Chrysler Financial Corporation Medium Term Notes, 7.30% 1,125 5.96 3/18/97 1,126
Discover Credit Corporation Corporate Depositary Trust Transferrable Medium
Term Notes, Series II, 7.81% 5,000 5.94 3/18/97 5,004
First Interstate Bancorp Subordinated Notes, 12.75% 4,200 6.14 5/01/97 4,245
General Motors Acceptance Corporation Medium Term Notes:
6.00% 2,400 5.83 3/24/97 2,400
7.50% 3,000 7.50 3/03/97 3,000
7.90% 4,850 5.98 3/12/97 4,852
Tranche #187, 7.85% 1,000 6.62 3/05/97 1,000
Tranche #598, 7.50% 5,150 5.80 11/04/97 5,207
General Motors Acceptance Corporation Notes:
7.75% 13,498 5.96 4/15/97 13,527
8.375% 5,080 5.76 5/01/97 5,102
IBM Corporation Medium Term Notes, 5.65% 30,000 5.75 1/22/98 29,974
MGM Grand Hotel Finance Corporation First Mortgage Notes, 12.00%
(Defeased to call at $105.33 on 5/01/97) 42,200 6.45 5/01/97 44,806
Philip Morris Companies, Inc. Notes, 9.75% 10,000 6.22 5/01/97 10,057
Providian National Bank Notes, 5.48% (Acquired 1/08/97; Cost $21,000) (b) 21,000 5.48 4/09/97 21,000
Waste Management, Inc. Liquid Yield Option Notes, Zero % 4,550 5.75 6/30/97 1,863
----------
TOTAL CORPORATE OBLIGATIONS 153,163
TAXABLE VARIABLE RATE PUT BONDS 2.7%
Aurora, Kane & DuPage Counties, Illinois IDR 3,300 5.60 3/06/97 3,300
Bel Aire, LLC 4,510 5.50 3/06/97 4,510
Galliano Marine Services, Inc. 5,880 5.50 3/06/97 5,880
Gardena, California First-Time Homebuyer Refunding Program 5,250 5.60 3/05/97 5,250
Kinder-Care Learning Centers, Inc. Industrial Refunding - Kinder-Care Learning
Centers, Inc. Projects 4,500 5.56 3/05/97 4,500
Maine Regional Waste System, Inc.- Solid Waste Resource Recovery Revenue 2,200 5.45 3/05/97 2,200
Montgomery County, Pennsylvania IDA Revenue 630 5.50 3/05/97 630
New Jersey Sports & Exposition Authority Sports Complex Subordinated
Refunding Revenue 2,000 5.54 3/03/97 2,000
Nufunding, Inc. Adjustable Rate Taxable Health Care Revenue Bond 5,000 5.48 3/05/97 5,000
Passaic County, New Jersey GO Refunding 13,900 5.35 3/05/97 13,900
Thayer Properties, LLC 3,175 5.50 3/06/97 3,175
Tifton Mall, Inc. 3,100 5.50 3/06/97 3,100
----------
TOTAL TAXABLE VARIABLE RATE PUT BONDS 53,445
See notes to financial statements.
12
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG HERITAGE MONEY FUND (continued)
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
UNITED STATES GOVERNMENT AND AGENCY ISSUES 4.3%
Federal Home Loan Bank Bonds, 5.78% $10,000 5.78% 1/28/98 $ 10,000
Federal National Mortgage Association Medium Term Notes, 5.51% 25,000 5.59 2/24/98 24,981
United States Treasury Notes, 8.75% 50,000 5.43 10/15/97 51,001
----------
TOTAL UNITED STATES GOVERNMENT AND AGENCY ISSUES 85,982
----------
TOTAL INVESTMENTS IN SECURITIES 100.1% 2,001,429
Other Assets and Liabilities, Net (0.1%) (1,271)
----------
NET ASSETS 100.0% $2,000,158
==========
</TABLE>
PERCENTAGE OF
INDUSTRY DIVERSIFICATION NET ASSETS
- ----------------------------------------------------------------------------
Non-Agency Asset Backed ..........................................15.5%
Finance - Miscellaneous ...........................................6.0
General Obligation ................................................5.2
Brokerage & Investment Management .................................3.8
Bank - Regional ...................................................3.7
Foreign Corporate .................................................3.5
Housing Related ...................................................3.5
Personal & Commercial Lending .....................................3.5
Telephone .........................................................3.5
Mortgage & Related Service ........................................3.1
Chemical - Specialty ..............................................3.0
Automobile ........................................................2.8
Commercial Service ................................................2.8
Industrial Development Revenue ....................................2.6
U.S. Government ...................................................2.6
Healthcare - Patient Care .........................................2.5
Insurance - Life ..................................................2.3
Agricultural Operations ...........................................2.2
Leisure Service ...................................................2.2
Auto & Truck Parts ................................................2.1
Telecommunication Service .........................................1.7
Pollution Control .................................................1.6
Computer - Mainframe ..............................................1.5
Computer Software .................................................1.5
Cosmetic & Personal Care ..........................................1.5
Machinery - Miscellaneous .........................................1.5
Closed-End Fund ...................................................1.4
Computer Service ..................................................1.3
FNMA ..............................................................1.3
Hospital Revenue ..................................................1.3
Beverage - Soft Drink .............................................1.2
Electronics - Semiconductor/Component .............................1.2
Real Estate .......................................................0.9
Bank - Super Regional .............................................0.6
Savings & Loan ....................................................0.6
Diversified Operations ............................................0.5
Electric Power ....................................................0.5
FHLMC .............................................................0.5
Insurance - Accident & Health .....................................0.5
Natural Gas Distribution ..........................................0.5
Single Family Mortgage Revenue ....................................0.5
Electronic Instrumentation ........................................0.4
Media - Publishing ................................................0.4
Leisure Product ...................................................0.3
Oil - North American Exploration & Production .....................0.3
Healthcare - Drug/Diversified .....................................0.1
Utility Revenue ...................................................0.1
Other Assets and Liabilities, Net ................................(0.1)
-----
Total 100.0%
=====
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- ------------------------------------------------------------------------
United States ...................................................95.0%
Sweden .......................................................... 3.5
Luxembourg ...................................................... 1.6
Other Assets and Liabilities, Net ...............................(0.1)
-----
Total 100.0%
=====
See notes to financial statements.
13
<PAGE>
<TABLE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 28, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG MUNICIPAL MONEY MARKET FUND
<CAPTION>
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS 24.1%
CALIFORNIA 3.0%
<S> <C> <C> <C> <C>
Gardena, California 3.95% TRAN $ 4,715 4.05% 6/30/97 $ 4,713
Long Beach, California Harbor Revenue (Putable at $101.378) (e) 5,040 4.28 3/10/97 5,110
North County, California Schools Financing Authority 4.75% TRAN 4,200 4.17 7/01/97 4,208
Orange County, California 4.25% Recovery COP 11,095 4.11 7/01/97 11,100
Riverside County, California School Financing Authority 4.625% RAN School
Districts Financing Program 6,000 4.07 7/17/97 6,012
South Coast, California Local Education Agencies Pooled 4.75% TRAN Program Note
Participations 6,500 4.09 6/30/97 6,514
Tuolumne County, California Board of Education 4.19% TRAN 9,065 4.15 6/30/97 9,066
Vallejo, California Unified School District 4.15% TRAN 9,500 4.10 12/09/97 9,503
----------
56,226
COLORADO 0.2%
Stonegate Village, Colorado Metropolitan District Refunding & Improvement (e) 3,330 4.41 12/01/97 3,355
ILLINOIS 6.1%
Lakemoor, Illinois MFHR Mortgage - Lakemoor Apartments Project:
Series B (e) 50,000 5.00 9/04/97 50,000
Series C (e) 10,000 4.75 9/04/97 10,000
Oakbrook Terrace, Illinois MFHR - Renaissance II Project (e) 15,000 4.90 11/03/97 15,000
Oakbrook Terrace, Illinois MFHR - Renaissance III Project (e) 41,820 4.90 11/03/97 41,820
----------
116,820
INDIANA 0.5%
Lawrence, Indiana EDR - Charleston Bay Project (e) 10,000 4.10 4/01/97 10,000
KENTUCKY 4.0%
Kentucky Association of Counties Advance Revenue/Cash Flow Borrowing 4.30% TRAN 61,469 4.08 6/30/97 61,513
Kentucky School Districts 4.18% TRAN COP 14,165 4.15 6/30/97 14,166
----------
75,679
LOUISIANA 0.6%
Louisiana Housing Finance Agency SFMR (e) 8,000 4.10 9/15/97 8,000
Louisiana Public Facilities Authority Capital Program Health & Education Capital
Facilities (e) 2,755 4.06 6/01/97 2,777
----------
10,777
MICHIGAN 0.3%
Detroit, Michigan GO Refunding (e) 6,120 4.41 5/01/97 6,134
MINNESOTA 0.8%
Dakota County, Washington County, and Anoka, Minnesota Housing and Redevelopment
Authorities SFMR - GNMA Mortgage-Backed Securities Program - Municipal Exempt
Receipts-Liquidity Optional Tender (e) 15,680 4.05 6/01/97 15,680
MISSOURI 2.5%
Missouri Health and Educational Facilities Authority School District 4.50%
Advance Funding Program 47,000 4.11 9/08/97 47,094
NEW JERSEY 2.8%
Bayonne, New Jersey 4.49% TAN 8,500 4.00 9/22/97 8,523
Jersey City, New Jersey 4.75% GO BAN 20,630 4.06 9/26/97 20,709
Jersey City, New Jersey 4.30% GO Refunding 8,740 4.15 9/26/97 8,747
Jersey City, New Jersey 4.50% GO Refunding 14,900 4.05 1/16/98 14,958
----------
52,937
NEW MEXICO 0.6%
Bernalillo County, New Mexico MFHR - Westwood Villas Project (e) 6,830 4.25 7/01/97 6,830
New Mexico Mortgage Finance Authority SFMR (e) 4,580 4.05 8/29/97 4,580
----------
11,410
OHIO 0.7%
Ohio Housing Finance Agency Residential Mortgage Revenue - Mortgage-Backed
Securities Program (e) 13,000 4.00 8/13/97 13,000
PENNSYLVANIA 0.2%
Pennsylvania Housing Finance Agency SFMR (e) 3,580 4.13 4/01/97 3,580
RHODE ISLAND 0.2%
Rhode Island Solid Waste Management Corporation 4.50% Landfill Lease 3,500 4.16 8/01/97 3,505
See notes to financial statements.
14
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG MUNICIPAL MONEY MARKET FUND (continued) PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN 1.6%
Southeastern Wisconsin Professional Baseball Park District Sales Tax Revenue (e)$25,000 4.10% 12/15/97 $ 25,000
Wisconsin HDA EDA Home Ownership Revenue - MERLOTS (e) 6,040 4.05 6/01/97 6,040
----------
31,040
----------
TOTAL MUNICIPAL BONDS 457,237
MUNICIPAL COMMERCIAL PAPER 2.3%
MINNESOTA 0.7%
Bass Brook, Minnesota Customized Purchase PCR Refunding - Minnesota
Power & Light Company Project 8,400 4.70 6/02/97 8,400
Cloquet, Minnesota Customized Purchase IDR Refunding - Minnesota Power & Light
Company Project 2,450 4.70 6/02/97 2,450
Coleraine, Minnesota Customized Purchase IDR Refunding - Minnesota Power & Light
Company Project 1,695 4.70 6/02/97 1,695
Long Prairie, Minnesota IDR Refunding - Minnesota Power & Light Company Project 1,090 4.70 6/02/97 1,090
----------
13,635
NEW YORK 1.6%
Niagara County, New York Industrial Development Agency Solid Waste
Disposal Revenue:
American Refunding Fuel Company Project 13,100 3.95 3/05/97 13,100
American Refunding Fuel Company Project 17,700 4.00 6/26/97 17,700
----------
30,800
----------
TOTAL MUNICIPAL COMMERCIAL PAPER 44,435
ANNUAL PUT BONDS 3.8%
COLORADO 0.3%
Dove Valley, Colorado Metropolitan District GO Refunding (e) 4,975 4.15 11/01/97 4,975
DISTRICT OF COLUMBIA 0.5%
District of Columbia Supplemental Student Loan Revenue - The Consern Loan
Program (e) 9,000 4.06 7/01/97 9,008
FLORIDA 0.4%
Florida Housing Finance Agency MFHR - Wood Forest II Project (e) 8,600 4.13 12/01/97 8,600
ILLINOIS 0.4%
Lombard, Illinois 3.80% MFHR - Clover Creek Apartments Project 6,765 3.93 12/15/97 6,758
KENTUCKY 0.8%
Pendleton County, Kentucky Self-Insurance Funding Revenue - Kentucky
Association of Counties All Lines Fund (e) 15,000 4.25 7/01/97 15,000
NEW JERSEY 0.3%
Eastern States Tax-Exempt Mortgage Bond Trust (e) 4,830 5.19 3/01/98 4,830
PENNSYLVANIA 0.6%
Allegheny County, Pennsylvania Residential Finance Authority SFMR -
GNMA Mortgage-Backed Securities Program (e) 1,720 4.25 6/01/97 1,720
Westmoreland County, Pennsylvania IDA Revenue - National Waste and Energy
Corporation - Valley Landfill Expansion Project (e) 9,900 4.38 5/01/97 9,900
----------
11,620
TENNESSEE 0.3%
Shelby County, Tennessee Health, Educational and Housing Facility Board
Hospital Revenue - Methodist Health Systems, Inc. Project (e) 6,700 4.05 8/01/97 6,700
TEXAS 0.2%
Tarrant County, Texas HFC MFHR - Lincoln Meadows Project (e) 4,375 5.01 12/01/97 4,375
----------
TOTAL ANNUAL PUT BONDS 71,866
SEMI-ANNUAL VARIABLE RATE PUT BONDS 1.5%
LOUISIANA 0.7%
Louisiana Housing Finance Agency GNMA Collateralized SFMR Municipal Exempt
Receipts - Liquidity Optional Tender 12,760 4.25 5/01/97 12,760
NEVADA 0.2%
Nevada Housing Division Single Family Program - Federally Insured or Guaranteed
Mortgage Loans 3,265 4.20 4/01/97 3,265
UTAH 0.1%
Utah Housing Finance Agency SFMR 2,565 4.25 7/01/97 2,565
See notes to financial statements.
15
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 28, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
WISCONSIN 0.5%
Milwaukee, Wisconsin Redevelopment Authority MFHR - City Hall Square Apartments
Project $ 9,000 4.97% 6/01/97 $ 9,000
----------
TOTAL SEMI-ANNUAL VARIABLE RATE PUT BONDS 27,590
MONTHLY VARIABLE RATE PUT BONDS 1.2%
COLORADO 0.1%
Jefferson County, Colorado IDR - Anthony A. Petrarca/Cedarwood Construction
Company, Inc. Project 2,420 4.50 4/01/97 2,420
MARYLAND 0.4%
Prince George's County, Maryland EDR Refunding - Capital View II Limited
Partnership Facility 6,380 4.20 4/01/97 6,380
MICHIGAN 0.1%
Michigan Job Development Authority IDR - Anthony A. Petrarca/Cedarwood
Construction Company, Inc. Project 1,740 4.50 4/01/97 1,740
OHIO 0.1%
Summit County, Ohio Insured IDR - Anthony A. Petrarca/Cedarwood Construction
Company, Inc. Project 2,625 4.50 4/01/97 2,625
MULTIPLE STATES 0.5%
Carolina Freight Tax Exempt Bond Grantor Trust 776 4.25 4/01/97 776
GAF Corporation Tax Exempt Bond Grantor Trust 4,300 4.10 4/01/97 4,300
Green Leaf Ventures, Inc. Tax Exempt Bond Grantor Trust 2,000 4.50 4/01/97 2,000
Johnson Controls, Inc. Tax Exempt Bond Grantor Trust 2,345 4.20 4/01/97 2,345
----------
9,421
----------
TOTAL MONTHLY VARIABLE RATE PUT BONDS 22,586
WEEKLY VARIABLE RATE PUT BONDS 60.3%
ALABAMA 2.4%
Alabama IDA IDR:
Decatur Aluminum Corporation Project 3,755 3.50 3/10/97 3,755
Research Genetics, Inc. Project 3,345 3.80 3/10/97 3,345
Scientific Utilization, Inc. Project 3,500 3.60 3/10/97 3,500
Whitesell Project 5,000 3.80 3/10/97 5,000
Birmingham, Alabama Baptist Medical Center - Special Care Facilities Financing
Authority Revenue - Methodist Home for the Aging Project 11,885 3.75 3/10/97 11,885
Bridgeport, Alabama IDB IDR - Beaulieu Nylon, Inc. Project 10,000 3.75 3/10/97 10,000
Grove Hill, Alabama IDB IDR - Hamilton Woods Veneer Project 2,900 3.60 3/10/97 2,900
Madison County, Alabama MFHR Refunding:
Autumn Wood Project 2,995 3.75 3/10/97 2,995
Pinehurst Project 1,255 3.75 3/10/97 1,255
Montgomery, Alabama IDB IDR - Asphalt Contractors, Inc. Project 1,400 3.85 3/10/97 1,400
----------
46,035
ARIZONA 0.9%
Chandler, Arizona IDA MFHR - Greentree Place Apartments Project 6,659 5.78 3/10/97 6,659
Phoenix, Arizona IDA Airport Facility Revenue - America West Airlines, Inc.
Project 10,300 3.55 3/10/97 10,300
----------
16,959
ARKANSAS 0.9%
Conway County, Arkansas IDR - Cadron Creek Fibre Corporation Project 8,300 3.50 3/10/97 8,300
Magnolia, Arkansas IDR - American Fuel Cell and Coated Fabrics Company Project 3,855 3.70 3/10/97 3,855
Searcy, Arkansas IDR - Yarnell Ice Cream Company, Inc. Project 2,800 3.90 3/10/97 2,800
Trumann, Arkansas IDR - Roach Manufacturing Corporation Project 2,000 3.90 3/10/97 2,000
----------
16,955
CALIFORNIA 3.4%
Fairfield, California IDA IDR - Medical Design Concepts Project 1,000 4.00 3/10/97 1,000
Los Angeles, California MFHR - Channel Gateway Apartments Project 28,400 3.45 3/10/97 28,400
Los Angeles County, California IDA IDR - Goldberg & Solovy Foods, Inc. Project 2,975 4.95 3/10/97 2,975
Ontario, California IDA IDR - P & S Development Project 3,450 3.90 3/10/97 3,450
Orange County, California Apartment Development Revenue - WLCO LF Partners
Project 6,600 3.85 3/10/97 6,600
Paramount, California Housing Authority MFHR Refunding - Century Place
Apartments Project 4,250 3.95 3/10/97 4,250
San Bernardino County, California COP - 1992 Justice Center/Airport Improvements
Refunding Project 1,960 3.95 3/10/97 1,960
San Marcos, California Redevelopment Agency MFHR - San Marcos Retirement Village
Project 7,100 4.21 3/10/97 7,100
Santa Fe Springs, California IDA - Tri-West Project 4,000 3.70 3/10/97 4,000
Upland, California Apartment Development Revenue - Mountain Springs Project 4,600 3.70 3/10/97 4,600
----------
64,335
See notes to financial statements.
16
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
COLORADO 1.0%
Aurora, Colorado IDR - Optima Batteries, Inc. Project $ 3,430 3.60% 3/10/97 $ 3,430
Jefferson County, Colorado IDR - Accutronics, Inc. Project 2,975 3.82 3/10/97 2,975
Lakewood, Colorado Jefferson County IDR - Verden Associates
- Holiday Inn Project 1,475 4.25 3/10/97 1,475
Westminster, Colorado IDR - Lifecare International Project 4,720 3.70 3/10/97 4,720
Westminster, Colorado MFHR - Lakeview Apartments Project 7,110 3.80 3/10/97 7,110
----------
19,710
FLORIDA 2.2%
Bay County, Florida Revenue - Methodist Homes Project 4,000 3.75 3/10/97 4,000
Brevard County, Florida IDR - U. S. Space Camp Foundation Project 3,540 3.75 3/10/97 3,540
Broward County, Florida HFA MFHR - Palm Aire-Oxford Project 3,600 3.50 3/10/97 3,600
Broward County, Florida HFA MFHR - Sawgrass Pines Apartments Project 11,000 4.30 3/10/97 11,000
Dade County, Florida IDA IDR - Engelhard/ICC Project 8,000 3.70 3/10/97 8,000
Orange County, Florida Health Facilities Authority Municipal Securities Trust
Receipts 6,835 3.55 3/10/97 6,835
Palm Beach County, Florida IDR - QO Chemicals, Inc. Project 4,000 4.00 3/10/97 4,000
----------
40,975
GEORGIA 1.3%
Fulton County, Georgia Development Authority IDR - STO Corporation Project 3,600 3.85 3/10/97 3,600
Georgia Municipal Electric Authority Power Revenue Municipal Securities Trust:
Receipts Series 1996 SAK 14 8,000 3.55 3/10/97 8,000
Receipts Series 1996 SAK 15 5,040 3.55 3/10/97 5,040
Lee County, Georgia Development Authority Revenue - Woodgrain Millwork, Inc.
Project 6,000 3.85 3/10/97 6,000
Savannah, Georgia EDA IDR - Savannah Steel & Metal Company Project 1,635 3.85 3/10/97 1,635
----------
24,275
ILLINOIS 4.5%
Chicago, Illinois GO Refunding Municipal Securities Trust Receipts 3,380 3.55 3/10/97 3,380
Cicero, Cook County, Illinois IDR - Harris Steel Company Project 3,370 3.57 3/10/97 3,370
Evanston, Illinois IDR - Fountain Square Project 1,740 3.95 3/10/97 1,740
Hazel Crest, Illinois Retirement Center Revenue - Waterford Estates Project 895 3.80 3/10/97 895
Hazel Crest, Illinois Retirement Center Revenue - Waterford Estates Project 2,890 3.80 3/10/97 2,890
Illinois DFA EDR - Korex Corporation Project 4,000 3.85 3/10/97 4,000
Illinois DFA IDR:
Associated Plastic Fabricators, Inc. Project 1,900 3.85 3/10/97 1,900
Fleetwood Systems, Inc. Project 5,260 3.55 3/10/97 5,260
Homak Manufacturing Company, Inc. Project 7,185 3.60 3/10/97 7,185
Jefferson Partners Limited Partnership - 216 South Jefferson Project 2,115 4.60 12/01/97 2,115
U.G.N., Inc. Project 3,000 3.75 3/10/97 3,000
Illinois Health Facilities Authority Revenue Refunding - Advocate Healthcare
Network Project 9,930 3.40 3/10/97 9,930
Merrionette Park, Illinois Industrial Project Revenue:
Southwick & Weglarz Project 6,225 3.90 3/10/97 6,225
Weglarz & Taxman Project 2,536 3.90 3/10/97 2,535
Southwestern Illinois Development Authority Revenue - AEL Industries, Inc.
Project 5,645 3.70 3/10/97 5,645
Springfield, Illinois Airport Authority - Allied-Signal, Inc. Project 4,300 3.60 3/10/97 4,300
Woodridge, DuPage and Will Counties, Illinois MFHR Refunding -
Hinsdale Lake Terrace Apartments Project 20,760 3.80 3/10/97 20,760
----------
85,130
INDIANA 0.2%
Greencastle, Indiana EDR - H.A. Parts Products of Indiana Company Project 3,000 3.80 3/10/97 3,000
IOWA 0.6%
Cedar Rapids, Iowa IDR Refunding First Program - Columbus McKinnon Corporation
Project 1,245 3.90 3/10/97 1,245
Iowa Falls, Iowa IDR Refunding - GENPAK Corporation Project 3,800 4.21 3/10/97 3,800
West Des Moines, Iowa Revenue - Woodgrain Millwork, Inc. Project 6,700 3.85 3/10/97 6,700
----------
11,745
KANSAS 0.7%
Kansas City, Kansas Private Activity Revenue - Ex-L-Tube of Kansas, Inc. Project 5,811 3.70 3/10/97 5,811
Kansas DFA MFHR - First Kansas State Partnership, L. P. Project 3,000 3.80 3/10/97 3,000
Osage City, Kansas Industrial Revenue - Marley Continental Homes of Kansas
Project 4,800 3.68 3/10/97 4,800
----------
13,611
KENTUCKY 5.0%
Berea, Kentucky IDR - Tokico Manufacturing Corporation Project 6,000 3.90 3/10/97 6,000
Bowling Green, Kentucky IBR - Bando Manufacturing of America, Inc. Project 3,645 3.75 3/10/97 3,645
Daviess County, Kentucky MFHR Refunding - Park Regency Apartments Project 4,155 3.80 3/10/97 4,155
Jeffersontown, Kentucky IDR - Columbia Sussex Corporation Facility 6,430 5.00 3/10/97 6,430
Kentucky DFA IDR - Hesco Project 5,800 3.75 3/10/97 5,800
Ohio County, Kentucky PCR - Big Rivers Electric Corporation Project 25,300 3.90 3/10/97 25,300
Ohio County, Kentucky PCR - Big Rivers Electric Corporation Project 20,300 3.90 3/10/97 20,300
See notes to financial statements.
17
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 28, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
Richmond, Kentucky IBR - Mikron Project $ 9,500 3.45% 3/10/97 $ 9,500
Somerset, Kentucky IBR - Tibbals Flooring Company Project 10,000 3.80 3/10/97 10,000
Walton, Kentucky IDR - Dynamec, Inc., a/k/a NAMCO, Inc. Project 3,500 3.75 3/10/97 3,500
----------
94,630
LOUISIANA 0.4%
New Orleans, Louisiana Aviation Board Revenue - Passenger
Facility Charge Project 3,775 3.60 3/10/97 3,775
Ouachita Parish, Louisiana IDB, Inc. IDR - Epco Carbon Dioxide Products Project 3,200 3.70 3/10/97 3,200
----------
6,975
MARYLAND 0.5%
Charles County, Maryland Revenue - Chopp and Company, Inc. Facility 3,800 4.00 3/10/97 3,800
Washington County, Maryland EDR - Tandy Project 5,100 4.50 3/10/97 5,100
----------
8,900
MASSACHUSETTS 1.2%
Massachusetts Industrial Finance Agency IDR:
Lightolier, Inc. Project 4,400 3.70 3/10/97 4,400
Portland Causeway Realty Trust 2,600 4.21 3/10/97 2,600
Sundstrand Corporation Project 4,000 3.50 3/10/97 4,000
U. S. Tsubaki, Inc. Project 4,700 4.40 3/10/97 4,700
Salem, Massachusetts IDFA IDR - Applied Extrusion Technologies, Inc. Project 6,500 4.21 3/10/97 6,500
----------
22,200
MICHIGAN 0.9%
Lansing, Michigan Limited Obligation EDC IDR - Ashland Oil, Inc. Project 1,400 5.28 3/10/97 1,400
Michigan Strategic Fund Limited Obligation Revenue - Coil Center Corporation
Project 8,850 4.30 3/10/97 8,850
Saline, Michigan EDC Limited Obligation Revenue - Associated Spring Project 7,000 4.00 3/10/97 7,000
----------
17,250
MINNESOTA 0.3%
Princeton, Minnesota IDR - Plastic Products Company, Inc. Project 1,600 3.70 3/10/97 1,600
St. Louis Park, Minnesota IDR - Unicare Home, Inc. Project 4,800 4.00 3/10/97 4,800
----------
6,400
MISSISSIPPI 1.0%
Mississippi Business Finance Corporation IDR:
Barclay Furniture Company Project 1,500 3.65 3/10/97 1,500
Lindsay Wire, Inc. Project 4,750 3.50 3/10/97 4,750
Panola County, Mississippi - Moog Automotive, Inc. Project 3,500 3.60 3/10/97 3,500
Prentiss County, Mississippi IDR - Heidelberg Eastern Project:
Series A 2,500 4.10 3/10/97 2,500
Series B 6,650 4.20 3/10/97 6,650
----------
18,900
MISSOURI 2.3%
Berkeley, Missouri IDA Exempt Facility Revenue - St. Louis Air Cargo
Services, Inc. Project 7,775 3.60 3/10/97 7,775
St. Charles County, Missouri IDA IDR Refunding - Country Club Apartments Project 25,000 3.80 3/10/97 25,000
St. Louis County, Missouri IDA - Hampton Inn Westport Associates Project 3,500 4.20 3/10/97 3,500
St. Louis County, Missouri IDA MFHR - Whispering Lakes Apartments Project 8,000 3.65 3/10/97 8,000
----------
44,275
NEBRASKA 0.2%
Douglas County, Nebraska IDR - QO Chemicals, Inc. Project 3,500 4.00 3/10/97 3,500
NEVADA 0.2%
Nevada Department of Commerce IDR - Master-Halco, Inc. Project 4,300 5.00 3/10/97 4,300
NEW HAMPSHIRE 0.3%
New Hampshire IDA Industrial Facility Revenue - Ferrofluidics Corporation -
Nashua Series Project 5,000 4.00 3/10/97 5,000
NEW JERSEY 0.3%
New Jersey EDA - Center for the Aging 3,700 3.55 3/10/97 3,700
New Jersey EDA EDR - Hickory Industries, Inc. Project 1,850 4.15 3/10/97 1,850
----------
5,550
NEW YORK 2.1%
Niagara County, New York Industrial Development Agency Solid Waste Disposal
Revenue - American Refunding Fuel Company Project 40,000 3.90 3/10/97 40,000
NORTH CAROLINA 0.9%
Alleghany County, North Carolina Industrial Facilities and Pollution Control
Financing Authority IDR - Spring-Ford Knitting Company, Inc. Project 2,500 3.60 3/10/97 2,500
Gaston County, North Carolina Industrial Facilities and Pollution Control
Financing Authority IDR - Spring-Ford Knitting Company, Inc. Project 4,330 3.60 3/10/97 4,330
See notes to financial statements.
18
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
North Carolina State Ports Authority Exempt Facility Revenue -
Jordan Lumber & Supply, Inc. Project $ 5,080 3.80% 3/10/97 $ 5,080
Robeson County, North Carolina Industrial Facilities and Pollution Control
Financing Authority IDR - Core Industries, Inc. Project 5,000 3.55 3/10/97 5,000
----------
16,910
NORTH DAKOTA 0.2%
Mercer County, North Dakota PCR - Minnesota Power & Light Company Project 3,160 4.00 3/10/97 3,160
OHIO 0.5%
Cuyahoga County, Ohio IDR:
Edge Seal Technologies, Inc. and One Industry Drive, Inc. Project 2,960 3.90 3/10/97 2,960
Motch Corporation Project 4,000 3.85 3/10/97 4,000
Gallia County, Ohio IDR - Harsco Corporation Project 3,500 3.85 3/10/97 3,500
----------
10,460
OREGON 1.3%
Metropolitan Service District, Oregon Waste Disposal Project Revenue -
Riedel Oregon Compost Company, Inc. Project 3,900 3.60 3/10/97 3,900
Oregon EDR:
Behlen Manufacturing Company Project 5,500 3.55 3/10/97 5,500
JAE Oregon, Inc. Project 5,500 3.68 3/10/97 5,500
Kyotaru Oregon, Inc. Project 3,600 3.68 3/10/97 3,600
Toyo Tanso USA, Inc. Project 6,000 3.68 3/10/97 6,000
----------
24,500
PENNSYLVANIA 4.6%
Bucks County, Pennsylvania IDA - Double H Plastics, Inc. Project 2,230 3.75 3/10/97 2,230
Harrisburg, Pennsylvania Authority Pooled Financing Revenue -
Pennsylvania Pool Financing Fund 50,000 3.45 3/10/97 50,000
Lycoming County, Pennsylvania IDA Manufacturing Facilities Revenue -
Coastal Aluminum Rolling Mills, Inc. Project 4,000 3.75 3/10/97 4,000
Mercer County, Pennsylvania IDA IDR - Penntecq, Inc. Project 4,000 3.50 3/10/97 4,000
Montgomery County, Pennsylvania IDA - Laneko Engineering Company Project 2,595 3.75 3/10/97 2,595
Montgomery County, Pennsylvania IDA IDR Refunding - Spring City Limited
Partnership Project 5,000 3.95 3/10/97 5,000
Pennsylvania COP Municipal Securities Trust Receipts 6,165 3.55 3/10/97 6,165
Philadelphia, Pennsylvania IDA Revenue - 30th Street Station Project 13,100 4.05 3/10/97 13,100
----------
87,090
RHODE ISLAND 0.2%
Rhode Island Industrial Facilities Corporation IDR - Lenox, Inc. Project 3,060 3.50 3/10/97 3,060
SOUTH CAROLINA 1.5%
Charleston County, South Carolina Industrial Revenue - Tandy Corporation Project 1,000 4.95 3/10/97 1,000
Richland County, South Carolina IDR - Ashland Oil Project 1,400 5.28 3/10/97 1,400
Rock Hill, South Carolina Industrial Revenue - Willamette Industries, Inc.
Project 7,500 3.90 3/10/97 7,500
South Carolina Jobs EDA EDR:
Galvstar LLC Project 2,650 3.85 3/10/97 2,650
Glo-Tex Chemicals, Inc. Project 3,000 3.80 3/10/97 3,000
Quoizel, Inc. Project 8,000 3.80 3/10/97 8,000
Roller Bearing Company of America, Inc. Project 5,000 4.10 3/10/97 5,000
----------
28,550
SOUTH DAKOTA 0.1%
Aberdeen, South Dakota IDR - Lomar Development Company Project 290 4.20 3/10/97 290
Brookings, South Dakota IDR - Lomar Development Company Project 2,160 4.00 3/10/97 2,160
Brookings, South Dakota IDR - Lomar Development Company Project 475 3.95 3/10/97 475
----------
2,925
TENNESSEE 2.4%
Blount County, Tennessee IDB IDR - Advanced Crystal Technology, Inc. Project 3,300 3.75 3/10/97 3,300
Carter County, Tennessee IDB MFHR Refunding - Willow Run Apartments Project 6,675 3.80 3/10/97 6,675
Coffee County, Tennessee Industrial Board Revenue - M-Tek Project 2,700 4.55 3/10/97 2,700
Hamilton County, Tennessee IDB MFHR - The Waterford Place Apartments Project 10,100 3.80 3/10/97 10,100
Knox County, Tennessee Health, Educational and Housing Facilities Board
Revenue - Holston Long Term Care Project 4,400 3.90 3/10/97 4,400
Memphis and Shelby County, Tennessee IDB IDR - Techno Steel Corporation Project 4,000 3.70 3/10/97 4,000
Memphis and Shelby County, Tennessee IDB PCR - Birmingham Steel Corporation
Project 9,000 3.50 3/10/97 9,000
Roane County, Tennessee IDB Solid Waste Disposal Revenue -
Horsehead Residential Development Project 5,000 4.15 3/10/97 5,000
----------
45,175
See notes to financial statements.
19
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 28, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
TEXAS 1.6%
Austin County, Texas IDC IDR - Gulf States Toyota, Inc. Project $ 4,500 4.00% 3/10/97 $ 4,500
Azle, Texas IDA IDR - Tandy Corporation Project 3,000 4.50 3/10/97 3,000
Comal County, Texas IDA IDR - The Simpson Companies Project 3,000 3.50 3/10/97 3,000
Deer Park, Texas Port Development Corporation IDR - Ashland Oil, Inc. Project 4,700 5.28 3/10/97 4,700
Grand Prairie, Texas IDA IDR:
NTA Leasing Company Project 2,240 3.60 3/10/97 2,240
Precision/API Ketema Project 3,800 3.60 3/10/97 3,800
Longview, Texas Industrial Corporation IDR - Longview Guest Inn Project 2,600 3.70 3/10/97 2,600
Montgomery County, Texas IDC IDR - Porous Media, Ltd. Project 3,500 3.82 3/10/97 3,500
Robstown, Texas IDC IDR - Concrete Pipe and Products Company, Inc. Project 2,000 3.80 3/10/97 2,000
Tarrant County, Texas IDC IDR - Al-Ko Southwest, Inc. Project 2,000 4.00 3/10/97 2,000
----------
31,340
VIRGINIA 1.6%
Bedford County, Virginia IDA IDR - Nekoosa Packaging Corporation Project 20,300 3.65 3/10/97 20,300
Fairfax County, Virginia LaSalle National Bank LeaseTOPS Trust 5,597 3.50 3/10/97 5,597
Oyster Point, Virginia Development Corporation MFHR - Jefferson Point
Development Project 5,200 3.65 3/12/97 5,200
----------
31,097
WASHINGTON 2.4%
Pierce County, Washington EDC - Brown & Haley Project 2,215 4.64 3/10/97 2,215
Pierce County, Washington EDC Pooled Bond Program Industrial Revenue -
America Nichirel Foods Project 4,500 4.30 3/10/97 4,500
Pilchuck, Washington Development Public Corporation Industrial Revenue -
Kohkoku USA, Inc. Project 4,000 3.68 3/10/97 4,000
Port Moses Lake, Washington Public Corporation Industrial Revenue:
Basic American Foods Project 4,200 3.90 3/10/97 4,200
Moses Lake Industries Project 3,000 3.55 3/10/97 3,000
Washington Housing Finance Commission MFMR:
Lake Washington Apartments Project 3,750 3.45 3/10/97 3,750
Meridian Court Apartments Project 4,000 3.45 3/10/97 4,000
Washington Public Power Supply System Nuclear Project Number 1 Revenue
Municipal Securities Trust Receipts 9,900 3.55 3/10/97 9,900
Washington Public Power Supply System Nuclear Project Number 2 Revenue
Municipal Securities Trust Receipts 9,900 3.55 3/10/97 9,900
----------
45,465
WISCONSIN 1.6%
Amery, Wisconsin IDR - Plastech Corporation Project 2,200 3.82 3/10/97 2,200
Ashwaubenon, Wisconsin IDR - Pioneer Metal Finishing, Inc. Project 1,870 3.75 3/10/97 1,870
Columbus, Wisconsin IDR - Maysteel Corporation Project 2,000 3.80 3/10/97 2,000
De Pere, Wisconsin IDR - Cleaning Systems, Inc. Project 4,000 3.70 3/10/97 4,000
Madison, Wisconsin IDR - Manchester Place Project 7,925 3.80 3/10/97 7,925
Milwaukee, Wisconsin Redevelopment Authority Development Revenue -
Washington Square Phase III Project 8,495 4.20 3/10/97 8,495
New London, Wisconsin IDR - Steel King Industries, Inc. Project 4,170 3.70 3/10/97 4,170
----------
30,660
WYOMING 0.9%
Campbell County, Wyoming IDR - Powder Basin Properties Project 6,170 3.70 3/10/97 6,170
Lincoln County, Wyoming PCR - Champlin Petroleum Company Project 2,525 4.20 3/10/97 2,525
Uinta County, Wyoming PCR - Champlin Petroleum Company Project 7,775 4.20 3/10/97 7,775
----------
16,470
MULTIPLE STATES 7.7%
Capital Realty Investments Tax Exempt Fund, Ltd. Floating Rate Certificates:
Series 1996-2 27,785 3.60 3/10/97 27,785
Series 1996-4 30,520 3.70 3/10/97 30,520
IBM Tax-Exempt Grantor Trust Puttable Floating Option Tax-Exempt Receipts:
Series PL-2B 45,300 3.55 3/10/97 45,300
Series PL-2C 7,160 3.55 3/10/97 7,160
NCNB Pooled Tax-Exempt Trust COP - Texas 2,575 4.13 3/10/97 2,575
Puttable Floating Option Tax-Exempt Receipts, Series PL-3F 32,350 3.55 3/10/97 32,350
----------
145,690
----------
TOTAL WEEKLY VARIABLE RATE PUT BONDS 1,143,162
DAILY VARIABLE RATE PUT BONDS 6.2%
DELAWARE 0.3%
Delaware EDA Revenue - Delmarva Power & Light Company Project 6,300 3.60 3/03/97 6,300
See notes to financial statements.
20
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG MUNICIPAL MONEY MARKET FUND (continued)
PRINCIPAL YIELD TO MATURITY AMORTIZED
AMOUNT MATURITY DATE (d) COST (NOTE 2)
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
NEVADA 0.8%
Clark County, Nevada IDR:
Nevada Cogeneration Association 1 Project $ 8,400 3.55% 3/03/97 $ 8,400
Nevada Cogeneration Association 2 Project 6,900 3.55 3/03/97 6,900
----------
15,300
NORTH CAROLINA 2.3%
Person County, North Carolina Industrial Facilities and Pollution Control
Financing Authority Solid Waste Disposal Revenue - Carolina Power & Light
Company Project 4,600 3.60 3/03/97 4,600
Puttable Floating Option Tax-Exempt Receipts:
Series PPT-4 9,735 3.60 3/03/97 9,735
Series PPT-6 28,495 3.70 3/03/97 28,495
----------
42,830
PENNSYLVANIA 0.2%
Schuylkill County, Pennsylvania IDA Residential Recovery Revenue - Northeastern
Power Company Project 4,700 3.55 3/03/97 4,700
TEXAS 2.3%
Brazos River Authority Texas PCR Refunding - Texas Utilities Electric Company
Project 5,000 3.50 3/03/97 5,000
Brazos River Texas Harbor Navigation District Harbor Revenue - Dow Chemical
Company Project 6,900 3.55 3/03/97 6,900
Gulf Coast Waste Disposal Authority PCR - Amoco Oil Company Project 16,100 3.55 3/03/97 16,100
Matagorda County, Texas Navigation District Number 1 Revenue Refunding -
Houston Lighting & Power Company Project 10,200 3.50 3/03/97 10,200
West Side Calhoun County, Texas Navigation District Sewer &
Solid Waste Disposal - BP Chemicals, Inc. Project 5,300 3.55 3/03/97 5,300
----------
43,500
VIRGINIA 0.3%
Richmond, Virginia IDA Revenue - Cogentrix of Richmond, Inc. Project 4,800 3.90 3/03/97 4,800
----------
TOTAL DAILY VARIABLE RATE PUT BONDS 117,430
----------
TOTAL INVESTMENTS IN SECURITIES 99.4% 1,884,306
Other Assets and Liabilities, Net 0.6% 10,591
----------
NET ASSETS 100.0% $1,894,897
==========
See notes to financial statements.
21
</TABLE>
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 28, 1997
- --------------------------------------------------------------------------------
STRONG MUNICIPAL ADVANTAGE FUND
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS 40.7%
ARIZONA 0.5%
Gila County, Arizona IDA PCR Refunding -
ASARCO, Inc. Project, 8.90%, Due 7/01/06 $ 3,000 $ 3,130
ARKANSAS 1.5%
Fayetteville, Arkansas Public Facilities Board
Refunding and Improvement Revenue - Butterfield
Trail Village Project:
8.25%, Due 9/01/00 1,090 1,099
9.50%, Due 9/01/14 3,385 3,702
Little Rock, Arkansas Collateralized IDR -
Lexicon, Inc. Project, 6.48%, Due 7/01/06 4,575 4,604
--------
9,405
CALIFORNIA 2.6%
California Hospital Revenue - Valley Health System
Refunding and Improvement Project, 5.50%,
Due 5/15/00 740 741
Long Beach, California Harbor Revenue, 7.25%,
Due 5/15/19 3,550 3,719
Los Angeles, California Unified School District
Refunding COP - Multiple Properties Project,
5.625%, Due 11/01/13 6,420 6,421
Orange County, California Airport Revenue
Refunding, 5.00%, Due 7/01/98 (f) 3,000 3,034
Santa Ana, California Community Redevelopment
Refunding, 7.50%, Due 9/01/16 3,000 3,109
--------
17,024
COLORADO 0.7%
Central City, Gilpin County, Colorado Excise Tax
Refunding, 5.40%, Due 12/01/00 4,400 4,460
CONNECTICUT 1.8%
Connecticut Resources Recovery Authority Revenue -
American REF-FUEL Company of Southeastern
Connecticut Project, 8.00%, Due 11/15/15 10,800 11,624
FLORIDA 1.8%
Bayside, Florida Community Improvement
Development District BAN, 5.75%, Due 6/01/98 7,870 8,034
Tampa, Florida Capital Improvement Program
Revenue, 8.375%, Due 10/01/18 4,000 4,210
--------
12,244
IDAHO 0.8%
Boise, Idaho Housing Authority Revenue - Hobbler
Place Project, 5.25%, Due 2/01/02 5,000 4,994
ILLINOIS 5.4%
Alton, Madison County, Illinois Hospital Facility
Revenue Refunding - Saint Anthony's Health
Center Project:
4.65%, Due 9/01/98 1,350 1,348
4.95%, Due 9/01/99 1,400 1,397
5.00%. Due 9/01/01 850 837
5.15%, Due 9/01/00 1,355 1,352
Chicago, Illinois MFHR - Chicago Beach Apartments
Project, 5.50%, Due 2/01/17 3,065 3,074
Hodgkins, Illinois GO Tax Allocation, 9.50%,
Due 12/01/09 2,600 3,208
Illinois DFA EDR Refunding - Drury Inn-
Schaumburg Project, 7.125%, Due 9/15/12 2,115 2,148
Illinois Health Facilities Authority Revenue
Refunding - Carle Foundation, 6.00%, Due 1/01/15 3,900 4,027
Illinois Health Facilities Authority Revenue
Refunding - Westlake Community Hospital Project:
7.625%, Due 1/01/99 1,525 1,586
7.875%, Due 1/01/13 4,450 4,700
Kane, McHenry, Cook and DeKalb Counties, Illinois
Community Unit School District Number 300 GO
Lease Secured COP - School Building Project,
6.90%, Due 12/01/04 3,685 3,915
Romeoville, Will County, Illinois COP:
7.30%, Due 12/01/99 2,250 2,317
7.30%, Due 12/01/00 2,000 2,075
Sauget, St. Clair County, Illinois GO, 7.25%,
Due 2/01/01 3,000 3,046
--------
35,030
INDIANA 1.3%
Fishers, Indiana First Mortgage EDR - United
Student Aid Funds, Inc. Project, 8.375%,
Due 9/01/14 3,250 3,392
Huntington, Indiana EDR Refunding - Quanex
Corporation Project, 6.50%, Due 8/01/10 1,665 1,702
Jefferson County, Indiana Hospital Authority
Hospital Revenue Refunding - King's Daughters'
Hospital, 8.50%, Due 8/15/13 3,000 3,191
--------
8,285
KANSAS 0.1%
Kansas City, Kansas Residual Revenue Capital
Appreciation, Zero %, Due 5/01/12 1,805 537
MASSACHUSETTS 1.3%
Commonwealth of Massachusetts Department of
Revenue Tax-Exempt Equipment Lease, 5.40%,
Due 9/30/99 4,646 4,710
Commonwealth of Massachusetts Tax-Exempt
Master Equipment Lease, 5.62%, Due 10/01/01 2,750 2,791
Massachusetts Industrial Finance Agency Industrial
Revenue - John T. Spinelli Project, 7.00%,
Due 11/01/00 948 948
--------
8,449
MICHIGAN 0.7%
Detroit, Michigan EDC Resource Recovery
Revenue, 7.00%, Due 5/01/01 2,950 3,175
Pontiac, Michigan Hospital Financing Authority
Hospital Revenue - NOMC Obligation Group:
5.40%, Due 8/01/98 840 844
5.60%, Due 8/01/99 200 201
--------
4,220
MINNESOTA 3.3%
St. Paul, Minnesota Housing & Redevelopment
Authority Hospital Facility Revenue - HealthEast
Project, 9.75%, Due 11/01/17 (Crossover Refunding
date is 11/01/97) 20,000 21,057
MISSOURI 0.2%
Springfield, Missouri Land Clearance Redevelopment
Authority Industrial Revenue - University Plaza
Project, 5.90%, Due 10/01/01 1,210 1,213
NEBRASKA 1.0%
Omaha Tribe of Nebraska Public Improvements
Authority Omaha Tribe of Nebraska GO Guaranty,
7.50%, Due 12/01/02 6,300 6,347
NEVADA 1.1%
Clark County, Nevada Airport Improvement Revenue
Airport System Improvements, 8.25%, Due 7/01/15 5,000 5,319
Henderson, Nevada Local Improvement Districts
Number T-4, 6.00%, Due 11/01/01 480 484
Reno-Sparks Convention & Visitors Authority,
Limited Obligation Refunding, 6.25%,
Due 11/01/01 1,540 1,577
--------
7,380
See notes to financial statements.
22
<PAGE>
- --------------------------------------------------------------------------------
STRONG MUNICIPAL ADVANTAGE FUND (continued)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands)
- --------------------------------------------------------------------------------
NEW JERSEY 2.6%
New Jersey EDA Senior Mortgage Revenue - Arbor
Glen of Bridgewater Project:
6.00%, Due 5/15/26 $ 1,750 $ 1,752
7.00%, Due 5/15/06 11,525 11,655
New Jersey Health Care Facilities Financing
Authority Revenue - Kimball Medical Project,
8.00%, Due 7/01/98 3,110 3,192
--------
16,599
NEW YORK 2.3%
Battery Park, New York City Authority Housing
Revenue - FHA Insured Mortgage Loan, 5.75%,
Due 6/01/23 2,500 2,500
New York Medical Care Facilities Finance Agency
Revenue Hospital & Nursing Home Mortgage,
8.00%, Due 2/15/27 12,100 12,578
--------
15,078
OHIO 1.8%
Cleveland, Ohio City School District Energy
Conservation Improvement GO:
6.53%, Due 3/15/98 570 583
6.53%, Due 9/15/98 590 611
6.53%, Due 3/15/99 610 631
6.53%, Due 9/15/99 630 658
Lucas County, Ohio Hospital Revenue Refunding -
Riverside Hospital Project, 7.625%, Due 6/01/15 2,400 2,453
Ohio Department of Transportation COP -
Rickenbacker Port Project, 6.125%, Due 4/15/15 1,150 1,187
Youngstown, Ohio City School District Energy
Conservation Measures, 6.80%, Due 3/15/05 4,965 5,176
--------
11,299
OREGON 0.4%
Washington County, Oregon Housing Authority
Tax Credit - Bethany Meadows Project, 5.00%,
Due 9/30/98 2,260 2,277
PENNSYLVANIA 1.3%
Delaware County, Pennsylvania IDA Refunding
Revenue - Resource Recovery Project, 8.10%,
Due 12/01/13 1,500 1,566
Lancaster County, Pennsylvania Solid Waste
Management Authority Resource Recovery
System Revenue, 8.50%, Due 12/15/10 4,460 4,711
Philadelphia, Pennsylvania Hospitals and Higher
Education Facilities Authority Revenue, 8.375%,
Due 6/01/04 1,840 2,001
--------
8,278
SOUTH CAROLINA 0.2%
Charleston County, South Carolina Industrial
Revenue Refunding - Coburg Dairy, Inc. Project,
6.875%, Due 10/01/06 1,400 1,444
TEXAS 6.5%
Dallas-Fort Worth, Texas International Airport
Facilities Improvement Corporation Revenue -
American Airlines, Inc. Project, 7.50%,
Due 11/01/25 3,450 3,696
Denison, Texas Hospital Authority Hospital Revenue
Refunding and Improvement - Texoma Medical
Center Project, 8.00%, Due 9/01/16 7,000 7,206
Garland, Texas EDA - Yellow Freight Systems, Inc.
Project, 8.00%, Due 12/01/16 2,750 2,854
Port of Corpus Christi, Texas IDC Refunding
Revenue - Valero Refining and Marketing
Company Project, 10.25%, Due 6/01/17 17,590 18,350
Texas State Lease COP, 6.35%, Due 12/01/13 4,749 4,891
Texas Turnpike Authority Dallas North Tollway
Revenue, 7.125%, Due 1/01/15 3,675 3,850
Trinity River Authority Refunding - Texas
Industries, Inc. Project, 6.1875%, Due 9/01/07 480 484
Trinity River Authority Refunding - Texas
Industries, Inc. Project, Series A, 6.1875%,
Due 9/01/07 285 287
--------
41,618
UTAH 1.2%
Utah Associated Municipal Power Systems Revenue
Refunding - Hunter Project, 5.50%, Due 7/01/12 8,000 8,000
WEST VIRGINIA 0.3%
Kanawha County, West Virginia County Commission
IDR - Union Carbide Chemicals and Plastics
Company, Inc. Project, 8.00%, Due 8/01/20 1,930 2,099
--------
TOTAL MUNICIPAL BONDS (Cost $260,102) 262,091
PUT BONDS 8.7%
CALIFORNIA 0.7%
Vallejo, California Housing Authority MFMR -
Highlands Apartments Project, 5.00%, Due 6/01/07
(Putable at $100 and Rate Reset Effective
6/01/99)(e) 4,690 4,719
FLORIDA 3.2%
Escambia County, Florida Escambia Housing
Corporation Housing Revenue:
Royal Arms Project, 7.00%, Due 7/01/17
(Putable at $100 on 7/01/99) 9,360 9,407
Wellington Arms Project, 7.375%, Due 9/01/16
(Putable at $100 on 9/01/99) 10,650 10,810
Florida Housing Finance Agency MFHR - Cypress
Lake Apartment Project, 5.75%, Due 12/01/07
(Putable at $100 and Rate Reset Effective
12/01/02)(e) 200 202
--------
20,419
MAINE 0.9%
Maine Finance Authority MFHR - Back Bay Tower
Project, 5.25%, Due 9/01/18
(Putable at $100 on 9/01/99) 6,000 6,037
MINNESOTA 1.2%
St. Paul, Minnesota Port Authority CDR Refunding -
Battle Creek Hotel Project, 4.95%, Due 7/01/12
(Putable at $100 on 4/01/98) 7,970 8,017
OHIO 0.2%
Lorain County, Ohio IDR - Gilford Instrument
Laboratories, Inc. Project, 5.25%, Due 7/01/14
(Putable at $100 and Rate Reset Effective
7/01/99)(e) 1,000 1,019
PENNSYLVANIA 0.4%
Chester County, Pennsylvania Health and Education
Facilities Authority Revenue - Barclay Friends
Project, 4.90%, Due 8/01/25
(Putable at $100 on 8/01/99) 2,500 2,531
TEXAS 0.8%
Bell County, Texas Health Facilities Development
Corporation Revenue Refunding - Central Texas
Pooled Health Care Loan Program, 4.75%,
Due 10/01/23 (Putable at $100 on 10/01/98) 4,935 4,954
VIRGINIA 0.7%
Norfolk, Virginia Redevelopment and Housing
Authority Multifamily Rental Housing Facility
Revenue - 1016 Limited Partnership-Sussex
Apartments Project, 5.25%, Due 9/01/26
(Putable at $100 on 3/01/98)(c) 4,700 4,727
See notes to financial statements.
23
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 28, 1997
- --------------------------------------------------------------------------------
STRONG MUNICIPAL ADVANTAGE FUND (continued)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands)
- --------------------------------------------------------------------------------
WISCONSIN 0.6%
Lac Courte Oreilles Band of Lake Superior
Chippewa Indians Public Purpose Infrastructure
Revenue, 6.25%, Due 8/01/01 (Putable at $100
and Rate Reset Effective 8/01/98)(e) $ 3,850 $ 3,864
--------
TOTAL PUT BONDS (COST $55,862) 56,287
SHORT-TERM INVESTMENTS (a) 50.1%
MUNICIPAL BONDS 9.4%
CONNECTICUT 0.2%
Waterbury, Connecticut GO BAN, 4.75%,
Due 4/24/97 1,000 1,001
ILLINOIS 4.0%
Kane, McHenry, Cook and DeKalb Counties, Illinois
Community Unit School District Number 300 GO
Lease Secured COP - School Building Project,
5.00%, Due 12/01/97 470 473
Winnebago & Boone Counties, Illinois School
District Number 205 TAN, 5.25%, Due 10/30/97 25,000 25,115
--------
25,588
MICHIGAN 0.1%
Pontiac, Michigan Hospital Financing Authority
Hospital Revenue - NOMC Obligation Group,
5.20%, Due 8/01/97 600 601
MISSOURI 1.3%
Branson, Missouri BAN - Water Treatment Plant
Project, 5.25%, Due 5/31/97 8,030 8,058
NEW JERSEY 1.2%
East Orange, New Jersey TAN, 5.25%, Due 6/30/97 8,000 8,022
NEW YORK 2.0%
Buffalo, New York BAN, 4.85%, Due 3/06/97 1,000 1,000
Buffalo, New York BAN, 5.00%, Due 3/06/97 10,000 10,002
Troy, New York City School District BAN, 5.20%,
Due 8/15/97 1,900 1,905
--------
12,907
OHIO 0.2%
Cleveland, Ohio City School District Energy
Conservation Improvement GO:
6.53%, Due 3/15/97 535 535
6.53%, Due 9/15/97 555 562
--------
1,097
OKLAHOMA 0.4%
Oklahoma School District and County Revenue
Anticipation Program COP, 6.99%, Due 6/30/97 2,650 2,676
--------
Total Municipal Bonds 59,950
MUNICIPAL COMMERCIAL PAPER 3.6%
NEW YORK
Niagara County, New York Industrial Development
Agency Solid Waste Disposal Revenue - American
Refunding Fuel Company Project 14,200 14,200
Niagara County, New York Industrial Development
Agency Solid Waste Disposal Revenue - American
Refunding Fuel Company Project - Series B 9,400 9,400
--------
Total Municipal Commercial Paper 23,600
PUT BONDS 5.8%
LOUISIANA 1.6%
Louisiana Public Facilities Authority MFHR -
Southfork Village Apartments Project, 8.00%,
Due 11/01/05 (Putable at $100 and Rate Reset
Effective 4/30/97)(e) 10,500 10,557
PUERTO RICO 3.4%
Puerto Rico Highway and Transportation Authority
Highway Revenue, 3.95%, Due 7/01/10 (Putable
at $100 and Rate Reset Effective 3/18/97)(e) 5,000 5,000
Puerto Rico Highway and Transportation Authority
Highway Revenue Refunding, 3.875%,
Due 7/01/10 (Putable at $100 and Rate Reset
Effective 3/31/97) (e) 16,900 16,900
--------
21,900
WYOMING 0.8%
Wyoming Student Loan Corporation Student Loan
Revenue, 3.75%, Due 2/01/32 (Putable at $100 and
Rate Reset Effective 3/26/97) (e) 5,000 5,000
--------
Total Put Bonds 37,457
ANNUAL PUT BONDS 2.6%
ALABAMA 0.4%
Auburn, Alabama Non-Profit HDC MFHR -
Lakeside Apartments Project (e) 2,500 2,573
OHIO 0.1%
Sharonville, Ohio IDR - Ralston Purina Company
Project (e) 1,000 1,000
TENNESSEE 0.5%
Knox County, Tennessee 7.50% IDB IDR - Spartan
Food Systems, Inc. Project 1,500 1,504
Maryville, Tennessee 7.50% IDB IDR - Spartan
Food Systems, Inc. Project 1,500 1,504
--------
3,008
WISCONSIN 1.6%
Southeastern Wisconsin 4.10% Professional
Baseball Park District Sales Tax Revenue 10,000 10,031
--------
Total Annual Put Bonds 16,612
QUARTERLY VARIABLE RATE PUT BONDS 1.4%
WASHINGTON
Washington Housing Finance Commission
SFMR Refunding:
Series S-1A 555 555
Series S-2B 4,325 4,325
Series S-3A 430 430
Series S-3B 1,385 1,385
Series S-4A 2,435 2,435
--------
Total Quarterly Variable Rate Put Bonds 9,130
WEEKLY VARIABLE RATE PUT BONDS 20.9%
ALABAMA 2.2%
Birmingham, Alabama IDB IDR - Home Baking
Company, Inc. Project 5,390 5,390
Huntsville, Alabama Educational Building
Authority Revenue - Faulkner University Project 1,150 1,150
Montgomery, Alabama Educational Building
Authority Facilities Revenue - Faulkner
University Project 7,585 7,585
--------
14,125
CALIFORNIA 1.1%
Pasadena, California Community Development
Commission COP:
Kings Plaza Project 885 885
Lake/Washington Neighborhood Shopping Center 2,545 2,545
Riverside, California MFHR - Spruce Grove Project 3,360 3,360
--------
6,790
See notes to financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
STRONG MUNICIPAL ADVANTAGE FUND (continued)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
(In Thousands)
- --------------------------------------------------------------------------------
COLORADO 0.4%
Arapahoe County, Colorado IDR - Denver
JetCenter, Inc. Project $ 1,600 $ 1,600
Grand Junction, Colorado IDR - Sundstrand
Corporation Project 1,000 1,000
--------
2,600
FLORIDA 0.6%
Broward County, Florida HFA MFHR:
Quiet Creek Apartments Project 2,900 2,900
Sawgrass Pines Apartments Project 1,000 1,000
--------
3,900
ILLINOIS 1.5%
Carol Stream, Illinois IDR -
MI Enterprises Project 2,850 2,850
Illinois DFA IDA -
Toyomenka (America), Inc. Project 2,200 2,200
Illinois DFA IDR - Sumitomo Machinery
Corporation Project 2,000 2,000
Illinois IDA Revenue - Uhlich Children's
Home Project 2,500 2,500
--------
9,550
INDIANA 1.5%
Madison, Indiana EDR - Arvin Sango, Inc. Project 9,600 9,600
IOWA 0.5%
Creston, Iowa IDR - CF Processing, L.C. Project 3,190 3,190
MINNESOTA 4.6%
Harmony, Minnesota Rental Housing Revenue -
Zedakah Foundation Project 10,700 10,700
Mahtomedi, Minnesota Rental Housing Revenue -
Briarcliff of Mahtomedi Project 965 965
Plymouth, Minnesota MFHR - At The Lake
Apartments Project 7,685 7,685
University of Minnesota Regents GO 10,000 10,000
Vadnais Heights, Minnesota Rental Housing
Revenue - Cottages of Vadnais Heights Project 210 210
--------
29,560
MISSOURI 0.3%
Jefferson County, Missouri IDA Industrial Revenue
Refunding - Festus Manor Nursing Home Project 1,620 1,620
NEVADA 0.0%
Nevada Department of Commerce IDR -
Master-Halco, Inc. Project 300 300
NEW YORK 2.1%
Niagara County, New York IDA Solid Waste
Disposal Facility Revenue - American Ref-Fuel
Company of Niagara, L.P. Facility Project 13,410 13,410
NORTH CAROLINA 0.2%
New Hanover County, North Carolina Industrial
Facilities Revenue - Wilmington
Machinery, Inc. Project 1,015 1,015
OHIO 0.9%
Ohio Housing Finance Agency Refunding -
10 Wilmington Place Project 5,910 5,910
PENNSYLVANIA 2.3%
Berks County, Pennsylvania IDA Manufacturing
Facilities Revenue:
Berks Products Corporation Project 2,875 2,875
Grafika Commercial Printing, Inc. Project 1,885 1,885
Philadelphia, Pennsylvania IDA Revenue -
30th Street Station Project 10,000 10,000
--------
14,760
SOUTH CAROLINA 0.6%
South Carolina Jobs EDA EDR -
B.F. Shaw, Inc. Project 4,000 4,000
TENNESSEE 0.3%
Anderson County, Tennessee IDB Revenue -
Becromal of America, Inc. Project 2,000 2,000
TEXAS 0.6%
San Antonio, Texas Airport Lease Revenue -
Hedrick Beechcraft, Inc. Project 4,100 4,100
VIRGINIA 0.3%
Buena Vista, Virginia IDA IDR Refunding -
Everbrite, Inc. Project 2,045 2,045
WASHINGTON 0.9%
Pierce County, Washington EDC Pooled Bond
Program Industrial Revenue - America Nichirel
Foods Project 2,000 2,000
Washington Community Economic Revitalization
Board Economic Revenue 3,035 3,035
Washington Community Economic Revitalization
Board Umbrella Bond Program EDR 1,070 1,070
--------
6,105
--------
Total Weekly Variable Rate Put Bonds 134,580
DAILY VARIABLE RATE PUT BONDS 6.4%
NEW YORK 0.8%
New York Job Develpment Authority Revenue 5,000 5,000
NORTH CAROLINA 0.2%
Halifax County, North Carolina Industrial Facilities
and Pollution Control Financing Authority Revenue 1,445 1,445
TENNESSEE 0.9%
Chattanooga-Hamilton County, Tennessee Hospital
Authority Hospital Revenue - Erlanger Medical
Center Project 5,500 5,500
TEXAS 2.0%
Brazos River Authority Texas PCR Refunding -
Texas Utilities Electric Company Project:
Series A 4,000 4,000
Series B 1,000 1,000
Series C 5,900 5,900
Brazos River, Texas Harbor Navigation District
Brazoria County Revenue - Dow Chemical
Company Project 2,200 2,200
--------
13,100
VIRGINIA 0.3%
King George County, Virginia IDA Exempt Facility
Revenue - Birchwood Power Partners, L.P. Project 2,000 2,000
MULTIPLE STATES 2.2%
Puttable Floating Option Tax-Exempt Receipts:
Series PPT-4 11,400 11,400
Series PPT-6 2,780 2,780
--------
14,180
--------
Total Daily Variable Rate Put Bonds 41,225
--------
TOTAL SHORT-TERM INVESTMENTS
(COST $322,462) 322,554
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $638,426) 99.5% 640,932
Other Assets and Liabilities, Net 0.5% 3,331
--------
NET ASSETS 100.0% $644,263
========
See notes to financial statements.
25
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 28, 1997
- --------------------------------------------------------------------------------
STRONG MUNICIPAL ADVANTAGE FUND (continued)
- --------------------------------------------------------------------------------
FUTURES
- -------
UNDERLYING UNREALIZED
FACE AMOUNT APPRECIATION
EXPIRATION AT VALUE (DEPRECIATION)
DATE (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Sold:
10 U.S. Treasury Bond Futures 6/97 ($1,104) $ __
- --------------------------------------------------------------------------------
STRONG ADVANTAGE FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
CORPORATE BONDS 63.7%
ADT Operations, Inc. Guaranteed Senior
Subordinated Notes, 9.25%, Due 8/01/03 $ 3,335 $ 3,548
Advance Bank Australia Floating Rate Subordinated
Notes, 6.25%, Due 3/14/06 15,000 15,150
Arcadian Partners LP Senior Notes, Series B,
10.75%, Due 5/01/05 2,000 2,195
Bank of Ireland Perpetual Floating Rate Junior
Subordinated Notes, 6.5625%, Due 9/29/49 5,000 5,000
Bank of Scotland Variable Rate Subordinated Notes,
6.50%, Due 8/29/49 14,960 14,941
Barnett Capital III Floating Rate Capital
Securities, 6.1875%, Due 2/01/27
(Acquired 2/06/97; Cost $9,752) (b) 10,000 9,777
CTC Mansfield Funding Corporation Secured Lease
Obligation Bond, 11.125%, Due 9/30/16 9,235 9,881
Caesars World, Inc. Senior Subordinated
Debentures, 8.875%, Due 8/15/02 1,700 1,776
Capital One Floating Rate Subordinated Capital
Income Securities, 7.1125%, Due 2/01/27
(Acquired 1/28/97 - 2/10/97; Cost $19,781)(b) 20,000 19,938
Chase Manhattan Corporation Floating Rate Notes,
5.6875%, Due 12/30/09 30,930 30,327
Chesapeake Energy Corporation Guaranteed Senior
Notes, 12.00%, Due 3/01/01 (Defeased to call at
$106 on 3/01/98) 14,450 15,755
Citicorp Floating Rate Notes:
6.50%, Due 5/01/04 14,022 14,097
Series W, 5.625%, Due 11/27/35 10,000 9,425
Series X, 5.5375%, Due 11/27/35 10,000 9,350
Clark Oil & Refining Corporation Senior Notes,
10.50%, Due 12/01/01 7,165 7,469
CoreStates Capital III Floating Rate Capital Trust
Pass-Thru Securities, 6.1325%, Due 2/15/27
(Acquired 2/11/97; Cost $20,418) (b) 20,855 20,075
Cort Furniture Rental Corporation Senior Notes,
12.00%, Due 9/01/00 14,603 16,246
Credit Lyonnais Paris Perpetual Floating Rate
Subordinated Notes, 6.625%, Due 9/19/49 20,000 19,775
Crestar Financial I Capital Securities, 8.16%,
Due 12/15/26 (Acquired 12/20/96;
Cost $8,000)(b) 8,000 8,016
Delta Air Lines, Inc. Pass-Thru Trust Certificates,
Series 1993-C2, 9.59%, Due 1/12/17 2,900 3,355
Ferrellgas L.P./Ferrellgas Financial Corporation
Senior Notes, 10.00%, Due 8/01/01 5,000 5,331
First Bank System, Inc. Subordinated Floating Rate
Notes, 5.6875%, Due 11/30/10 (Putable at $100
on 11/30/00) 6,980 7,039
First Chicago NBD Capital I Floating Rate Preferred
Securities, 6.1125%, Due 2/01/27 5,225 5,154
First Maryland Capital II Floating Rate Subordinated
Capital Income Securities, 6.4125%, Due 2/01/27
(Acquired 2/14/97; Cost $10,239) (b) 10,250 10,221
Foreningsbanken AB Perpetual Floating Rate
Subordinated Step-Up Notes, 6.293%, Due
12/29/49 (Acquired 12/10/96; Cost $9,979) (b) 10,000 10,010
Health & Retirement Properties Trust Senior
Floating Rate Notes, Series B, 6.2825%,
Due 7/13/99 20,000 19,818
Healthsouth Corporation Senior Subordinated
Notes, 9.50%, Due 4/01/01 19,385 20,693
Hook-SupeRx, Inc. Senior Notes, 10.125%,
Due 6/01/02 12,670 13,415
Huntington Capital I Variable Rate Capital Income
Securities, 6.2625%, Due 2/01/27
(Acquired 1/23/97 - 1/30/97; Cost $18,066) (b) 18,500 18,141
Indspec Chemical Corporation Senior Subordinated
Discount Notes, Series B, Zero %, Due 12/01/03
(Rate Reset 12/01/98) 38,571 35,967
The Kroger Company Senior Notes, 8.15%,
Due 7/15/06 12,000 12,394
Long Island Lighting Company General and
Refunding Bond, 8.625%, Due 4/15/04 10,000 10,293
Marine Midland Banks, Inc. Floating Rate
Subordinated Notes, 5.8125%, Due 12/31/09 21,460 20,880
Marshall & Ilsley Capital Trust A Pass-Thru
Securities, 7.65%, Due 12/01/26
(Acquired 12/02/96; Cost $1,324) (b) 1,330 1,284
McDermott International, Inc. Senior Notes,
12.875%, Due 7/15/02 11,000 12,004
Mohegan Tribal Gaming Authority Connecticut
Senior Secured Notes, Series B, 13.50%,
Due 11/15/02 3,975 5,307
NBD Bancorp, Inc. Subordinated Floating Rate
Notes, 5.75%, Due 12/18/05 23,505 23,453
NWCG Holdings Corporation Senior Secured
Discount Notes, Series B, Zero %, Due 6/15/99 27,000 23,287
National Westminster Bank Floating Rate Notes,
6.3625%, Due 9/29/49 35,475 35,439
News Corporation, Ltd. Senior Secured Notes,
11.00%, Due 6/30/05 21,075 22,603
Newscorp Overseas Limited Floating Rate Debt
Unit with Swap Agreement (Structured Enhanced
Return Trusts 1995, Series R-27), 6.4938%,
Due 6/30/99 (Acquired 6/12/95; Cost $27,120) (b) 28,250 25,425
North Fork Bancorp Capital Trust Pass-Thru
Securities, 8.70%, Due 12/15/26
(Acquired 12/23/96; Cost $8,469) (b) 8,500 8,645
Northwest Airlines, Inc. Guaranteed Senior Notes,
12.091%, Due 12/31/00 537 556
Nuevo Energy Company Senior Subordinated Notes,
12.50%, Due 6/15/02 1,000 1,052
Okobank Subordinated Step-Up Perpetual Floating
Rate Notes, 7.0125%, Due 10/29/49 550 562
Old Kent Capital Trust I Subordinated Floating Rate
Capital Income Securities, 6.3625%, Due 2/01/27
(Acquired 2/03/97; Cost $5,931) (b) 6,000 5,966
Panamsat L.P./ Panamsat Capital Corporation
Senior Secured Notes, 9.75%, Due 8/01/00 37,505 39,849
Repap New Brunswick, Inc. First Priority Senior
Secured Floating Rate Notes, 8.875%, Due 7/15/00 25,600 25,216
Revco D.S., Inc. Senior Notes, 9.125%, Due 1/15/00 3,800 3,957
Riggs Capital Trust Preferred Securities, Series A,
8.625%, Due 12/31/26 (Acquired 12/20/96;
Cost $3,009) (b) 3,000 3,027
Rogers Cantel Mobile, Inc. Guaranteed Senior
Subordinated Notes, 11.125%, Due 7/15/02 17,000 17,850
See notes to financial statements.
26
<PAGE>
- --------------------------------------------------------------------------------
STRONG ADVANTAGE FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
Rogers Communications, Inc. Floating Rate Debt
Unit with Premium Call (Medium Term
Structured Enhanced Return Trusts 1995,
Series R-25), 8.475%, Due 6/21/98
(Acquired 5/15/95; Cost $12,000) (b) $12,000 $ 11,910
Rowan Companies, Inc. Senior Notes, 11.875%,
Due 12/01/01 6,250 6,625
Santa Fe Energy Resources, Inc. Senior
Subordinated Debentures, 11.00%, Due 5/15/04 15,920 17,671
Santa Fe Pacific Gold Corporation Senior
Debentures, 8.375%, Due 7/01/05 6,500 6,797
Swedbank Floating Rate Debt Unit (Medium Term
Structured Enhanced Return Trusts 1996):
Series R-34, 6.4469%, Due 11/10/02
(Acquired 5/23/96; Cost $25,000) (b) 25,000 25,013
Series R-35, 6.3969%, Due 11/10/02
(Acquired 10/16/96; Cost $20,000) (b) 20,000 20,000
System Energy Resources, Inc. First Mortgage
Bonds, 11.375%, Due 9/01/16 790 851
TCI Communications, Inc. Remarketed Floating
Rate Reset Notes, 6.1852%, Due 9/15/03 5,000 5,008
Tele Communications, Inc. Variable Rate Medium
Term Notes:
Tranche #58, 6.293%, Due 12/20/00 10,000 9,906
Tranche #59, 6.293%, Due 12/20/00 5,000 4,953
Tenet Healthcare Corporation Senior Notes,
7.875%, Due 1/15/03 25,000 25,375
Time Warner Pass-Thru Asset Trust Securities,
Series 1997-1, 6.10%, Due 12/30/01
(Acquired 1/08/97; Cost $22,896) (b) 24,000 22,828
Triangle Pacific Corporation Senior Notes, 10.50%,
Due 8/01/03 1,170 1,258
Trident NGL, Inc. Subordinated Notes, 10.25%,
Due 4/15/03 2,500 2,728
Triton Energy Corporation Senior Subordinated
Notes, 9.75%, Due 12/15/00 5,000 5,287
UCAR Global Enterprises, Inc. Floating Rate Term
Loan, Tranche B, 7.375%, Due 11/17/02
(Acquired 11/17/95; Cost $3,611) (b) 3,593 3,593
Union Bank of Norway Dual Basis Floating Rate
Notes (Medium Term Structured Enhanced Return
Trusts 1995, Series R-31), 6.875%, Due 10/25/00
(Acquired 11/06/95; Cost $15,000) (b) 15,000 15,255
Union Planters Capital Trust A Capital Securities,
8.20%, Due 12/15/26 (Acquired 12/05/96;
Cost $14,920) (b) 15,000 14,979
Van Kampen Merritt Companies, Inc. Senior
Secured Notes, 9.75%, Due 2/15/03 11,550 12,299
Viacom International, Inc. Notes, 9.125%,
Due 8/15/99 29,036 29,767
Viacom International, Inc. Reset Notes, 8.75%,
Due 5/15/01 (Rate Reset Effective 5/15/98) 24,815 25,556
Wolverine Tube, Inc. Senior Subordinated Notes,
10.125%, Due 9/01/02 16,831 17,799
Wyman Gordon Company Senior Notes, 10.75%,
Due 3/15/03 1,820 1,968
----------
TOTAL CORPORATE BONDS (COST $966,807) 968,360
NON-AGENCY MORTGAGE & ASSET-BACKED
SECURITIES 26.4%
AFC Mortgage Loan Trust Variable Rate
Asset-Backed Certificates, Series 1994-1,
Class 2A-1, 7.4659%, Due 5/25/25 3,343 3,410
Bellaire Finance, Inc. Commercial Mortgage
Pass-Thru Trust Certificates, Class B, 9.32%,
Due 2/20/08 (Acquired 3/01/96; Cost $6,090) (b) 5,800 6,032
California Federal Bank, A Federal Savings Bank
of Los Angeles Variable Rate Mortgage
Pass-Thru Certificates, Series 1988 PAL-1,
Class A, 8.755%, Due 2/25/18 2,546 2,542
Chase Mortgage Finance Corporation Mortgage
Pass-Thru Certificates, Series 1990-G, Class A-Z1,
9.50%, Due 12/25/21 2,337 2,349
Citicorp Mortgage Securities, Inc. Adjustable Rate
Real Estate Mortgage Investment Conduit
Pass-Thru Certificates, Series 1992-7, Class A,
7.315%, Due 3/25/22 6,941 7,183
Collateralized Mortgage Obligation Trust, Series 14,
Class Z, 8.00%, Due 1/01/17 2,084 2,104
DLJ Mortgage Acceptance Corporation Variable
Rate Mortgage Pass-Thru Certificates:
Series 1990-2, Class A, 7.4228%, Due 1/25/22 9,876 10,074
Series 1991-3, Class A1, 7.3634%, Due 2/20/21 1,347 1,367
DLJ Mortgage Acceptance Corporation Variable
Rate Multifamily Mortgage Pass-Thru
Certificates, Series 1992-MF10, Class A-1,
7.3438%, Due 12/22/02 5,897 5,956
Equipment Pass-Thru Investment Certificates Trust
Floating Rate Senior Certificates, Series 1996-1:
Class A, 6.8516%, Due 9/25/09 (Acquired 6/14/96;
Cost $4,950) (b) 4,950 4,981
Class B, 7.6016%, Due 9/25/09 (Acquired 7/01/96;
Cost $5,445) (b) 5,445 5,472
Class C, 10.8516%, Due 9/25/03 (Acquired 6/28/96;
Cost $4,950) (b) 4,876 5,120
The Equitable Life Assurance Society of the United
States Collateralized Floating Rate Notes,
Series D-2, 6.4719%, Due 5/15/03
(Acquired 5/23/96 - 8/08/96; Cost $11,521) (b) 11,500 11,529
First Boston Mortgage Securities Corporation
Variable Rate Mortgage Pass-Thru Certificates,
Series 1994-MHC1:
Class C, 6.5375%, Due 4/25/11 9,600 9,645
Class D, 7.1375%, Due 4/25/11 5,200 5,207
Fund America Investors Corporation Variable Rate
Senior Pass-Thru Certificates, Series 1993-A,
Class A-1, 7.4726%, Due 6/25/23 19,278 20,026
Glendale Federal Bank Variable Rate Mortgage
Pass-Thru Certificates, Series 1990-3, Class A-1,
7.2212%, Due 3/01/30 3,689 3,762
Glendale Federal Bank Variable Rate Senior
Pass-Thru Mortgage Securities, Series 1990-1,
Class A, 7.4649%, Due 10/25/29 2,185 2,199
Greenwich Capital Acceptance, Inc. Variable Rate
Mortgage Pass-Thru Certificates, Series 1991-1,
Class A, 7.195%, Due 2/25/21 (Acquired 4/18/96;
Cost $20,532) (b) 20,129 20,532
Homart Pooled Asset Financial Trust Floating
Rate Collateral Trust Certificates:
Class A-3, 7.4141%, Due 12/29/01
(Acquired 12/21/93; Cost $10,000) (b) 10,000 10,006
Class A-4, 8.1641%, Due 12/29/01
(Acquired 2/09/95; Cost $9,988) (b) 10,000 10,006
Kmart CMBS Financing, Inc. Floating Rate
Commercial Mortgage Pass-Thru Certificates,
Series 1997-1, Class D, 6.475%, Due 3/01/07
(Acquired 2/21/97; Cost $9,500) (b) (f) 9,500 9,507
Malan Mortgage Securities Trust Floating Rate
Commercial Mortgage Pass-Thru Certificates,
Series 1995-1, Class A2A, 6.2375%, Due 8/15/05
(Acquired 2/21/97; Cost $4,010) (b) 4,000 4,005
See notes to financial statements.
27
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 28, 1997
- --------------------------------------------------------------------------------
STRONG ADVANTAGE FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
Merrill Lynch Home Equity Acceptance, Inc.
Subordinated Variable Rate Mortgage-Backed
Certificates, Series 1994-A, Class A-1, 6.50%,
Due 8/17/23 $12,967 $ 12,851
Merrill Lynch Mortgage Investors, Inc. Senior
Subordinated Mortgage Pass-Thru Certificates,
Series 1993-G, Class B, 5.40%, Due 12/15/13 129 128
Merrill Lynch Mortgage Investors, Inc. Senior
Subordinated Pass-Thru Certificates,
Series 1988-H, Class A, 9.70%, Due 6/15/08 77 77
Merrill Lynch Mortgage Investors, Inc. Senior
Subordinated Variable Rate Pass-Thru Certificates,
Series 1994-F, Class M, 6.50%, Due 4/15/19 16,497 15,932
Morgan Stanley Capital I, Inc. Collateralized
Mortgage Obligation, Series 86-C, Class C-4,
9.00%, Due 5/01/16 791 802
Morgan Stanley Mortgage Trust Variable Rate
Collateralized Mortgage Obligation, Series 35,
Class 35-2, Interest Only, 7,417.25%, Due 4/20/21 4 574
Perpetual Savings Bank Variable Rate Mortgage
Pass-Thru Certificates, Series 1991-1, Class B1,
7.5435%, Due 6/25/19 (Acquired 9/17/96;
Cost $1,310) (b) 1,297 1,313
Prudential Home Mortgage Securities Company
Mortgage Pass-Thru Certificates, Series 1995-2,
Class A-3, 8.50%, Due 6/25/25 2,278 2,274
Prudential Home Mortgage Securities Company
Variable Rate Mortgage Pass-Thru Certificates,
Series 1988-1, Class A, 7.626%, Due 4/25/18 1,841 1,878
Prudential Home Thirty-Year Mortgage Trust
Subordinated Mortgage Securities, Series 1992-A,
Class 1B1, 7.20%, Due 4/28/22
(Acquired 12/12/96; Cost $1,826) (b) 1,826 1,808
RTC Adjustable Rate Mortgage Loan Pass-Thru
Certificates, Series 1991-1, Class A-1, 7.133%,
Due 4/26/21 16,816 17,058
RTC Mortgage Pass-Thru Securities, Inc.
Commercial Certificates, Series 1992-C7, Class C,
9.25%, Due 6/25/23 1,217 1,240
RTC Mortgage Pass-Thru Securities, Inc.,
Series 1995-2, Class A-1A, 6.70%, Due 5/25/29 1,562 1,562
RTC Mortgage Pass-Thru Securities, Inc.
Manufactured Housing Certificates:
Series 1992-MH1, Class A-1, 7.00%, Due 2/15/19 295 296
Series 1992-MH2, Class A-1, 7.00%, Due 2/15/04 52 52
RTC Multifamily Variable Rate Mortgage
Certificates, Series 1992-M2, Class B-1, 6.525%,
Due 3/25/20 5,020 4,980
RTC Variable Rate Mortgage Pass-Thru
Securities, Inc.:
Series 1992-6, Class A-3, 7.6766%, Due 1/25/26 12,063 12,274
Series 1992-6, Class B-9, 6.36%, Due 11/25/26 3,004 3,016
Series 1992-15, Class B-7, 6.705%, Due 7/25/27 1,000 1,008
Series 1995-1, Class B-5, 6.8428%, Due 10/25/28 22,312 22,396
Series 1995-1, Class B-11, 6.975%, Due 10/25/28 4,770 4,829
Residential Funding Mortgage Securities II, Inc.
Variable Rate Interest Only Home Equity Loan
Pass-Thru Certificates, Series 1996-HS2, Class A,
1.70%, Due 9/25/12 52,568 1,544
Ryland Acceptance Corporation IV Collateralized
Mortgage Bonds, Series 53, Class 53-E, 10.00%,
Due 10/25/18 2,578 2,718
Ryland Mortgage Securities Corporation III
Collateralized Mortgage Bonds, Series 1992-C,
Class 3-A, 7.65%, Due 11/25/30 14,757 14,842
Ryland Mortgage Securities Corporation IV Variable
Rate Collateralized Mortgage Bonds, Series 2,
Class 3-A, 12.0036%, Due 6/25/23 1,058 1,111
Ryland Mortgage Securities Corporation Variable
Rate Mortgage Participation Securities:
Series 1990-C1, Class A, 6.2352%, Due 10/25/20 22,232 22,016
Series 1992-3, Class A-2, 7.3867%, Due 6/25/20 17,212 17,384
SML Commercial Mortgage Trust Variable Rate
Pass-Thru Certificates, Series 1994-C1,
Class A-1, 6.4375%, Due 9/18/99 22,490 22,517
Salomon, Inc. Senior Consumer Price Index-Linked
Bonds, 3.65%, Due 2/14/02 14,875 14,669
Santa Barbara Savings & Loan Association
California Real Estate Mortgage Investment
Conduit Participation Certificates, Series 1988-A,
Class 2, Principal Only, Due 9/01/18 1,218 890
Southern Pacific Thrift & Loan Association
Commercial Mortgage Variable Rate Pass-Thru
Certificates, Series 1996-C1:
Class C, 6.375%, Due 4/25/28 (Acquired
9/26/96 - 9/30/96; Cost $11,251) (b) 11,500 11,550
Class D, 6.875%, Due 4/25/28 (Acquired 9/26/96;
Cost $2,284) (b) 2,347 2,378
Structured Asset Securities Corporation Variable
Rate Multiclass Pass-Thru Certificates,
Series 1996-C1:
Class D, 6.375%, Due 10/25/10 (Acquired 9/27/96;
Cost $5,969) (b) 6,000 6,000
Class E, 6.625%, Due 10/25/10 (Acquired 9/27/96;
Cost $2,871) (b) 2,894 2,894
Suncoast Collateralized Mortgage Obligation
Trust III, Class C, 8.75%, Due 2/27/18 1,554 1,563
U-Haul Self-Storage Corporation Commercial
Mortgage Asset Trust Variable Rate Pass-Thru
Certificates, Series 1993-1, Class A1, 6.90%,
Due 12/01/20 (Acquired 12/02/93; Cost $2,128)(b) 2,128 2,138
Western Federal Savings & Loan Association
Marina Del Rey California Variable Rate
Mortgage Pass-Thru Certificates, Series 1991-4,
Class A, 7.093%, Due 7/01/21 7,741 7,896
----------
TOTAL NON-AGENCY MORTGAGE & ASSET-BACKED
SECURITIES (COST $398,069) 401,472
UNITED STATES GOVERNMENT & AGENCY ISSUES 0.9%
FHLMC Participation Certificates:
9.00%, Due 1/01/05 444 463
9.50%, Due 8/01/19 1,874 2,019
10.75%, Due 10/01/00 85 89
11.00%, Due 10/01/00 thru 9/01/20 1,828 2,036
11.75%, Due 5/01/11 thru 6/01/11 1,643 1,861
12.00%, Due 9/01/11 thru 2/01/15 607 692
12.25%, Due 7/01/15 1,106 1,260
12.50%, Due 2/01/15 189 217
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
13.50%, Due 9/01/14 57 68
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate Pass-Thru
Certificates, 7.576%, Due 12/01/17 4,964 5,167
GNMA Guaranteed Pass-Thru Certificates:
13.50%, Due 8/15/14 thru 11/15/14 128 155
15.00%, Due 8/15/11 thru 9/15/12 48 59
----------
TOTAL UNITED STATES GOVERNMENT & AGENCY
ISSUES (COST $13,227) 14,086
OPTIONS 0.1%
Merrill Lynch Swaption (The option to receive a
fixed interest rate of 7.75%; exercisable at a
strike price of $100 beginning 4/09/04 and
expiring 4/09/25.) (COST $1,513) 32,667 1,842
See notes to financial statements.
28
<PAGE>
- --------------------------------------------------------------------------------
STRONG ADVANTAGE FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
PREFERRED STOCKS 1.4%
Banco Central Hispanoamericano, SA Eurocap
Preferred, 7.8469% 600,000 $ 15,468
California Federal Bank, A Federal Savings Bank,
Los Angeles Preferred, Series B, 10.625% 10,000 1,107
Riggs National Corporation Preferred,
Series B, 10.75% 179,884 5,082
----------
TOTAL PREFERRED STOCKS (COST $21,524) 21,657
SHORT-TERM INVESTMENTS (a) 6.7%
COMMERCIAL PAPER 0.0%
INTEREST BEARING, DUE UPON DEMAND
Johnson Controls, Inc., 5.03% $ 211 211
Sara Lee Corporation, 4.99% 268 268
Warner Lambert Company, 4.98% 120 120
Wisconsin Electric Power Company, 5.05% 7 7
----------
606
CORPORATE BONDS 2.5%
Arkla, Inc. Notes, 9.875%, Due 4/15/97 3,000 3,013
Ford Motor Credit Debt Unit with Premium Call
(Structured Enhanced Return Trusts 1995,
Series R-20), 9.75%, Due 2/03/98
(Acquired 2/08/95; Cost $4,997) (b) 5,000 5,425
News Corporation, Ltd. First Secured Loan Facility
Variable Rate Notes, 8.50%, Due 6/30/98 (Called
at $100 on 3/06/97) 12,000 12,000
Triton Energy Corporation Senior Subordinated
Discount Notes, Zero %, Due 11/01/97 17,700 16,992
----------
37,430
REPURCHASE AGREEMENT 4.0%
Cantor Fitzgerald & Company, Inc., 5.34%,
Due 3/03/97(g) 60,500 60,500
UNITED STATES GOVERNMENT ISSUES 0.2%
United States Treasury Bills:
Due 3/06/97 (c) 790 790
Due 3/13/97 (c) 780 779
Due 3/20/97 (c) 320 319
Due 3/27/97 (c) 130 130
Due 4/10/97 (c) 325 323
Due 5/01/97 (c) 60 59
Due 5/22/97 (c) 15 15
----------
2,415
----------
TOTAL SHORT-TERM INVESTMENTS
(COST $100,376) 100,951
----------
TOTAL INVESTMENTS IN SECURITIES
(COST $1,501,516) 99.2% 1,508,368
Other Assets and Liabilities, Net 0.8% 11,326
----------
NET ASSETS 100.0% $1,519,694
==========
FUTURES
- -------
UNDERLYING UNREALIZED
FACE AMOUNT APPRECIATION
EXPIRATION AT VALUE (DEPRECIATION)
DATE (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Purchased:
28 Ten-Year U.S. Treasury Notes 6/97 $ 3,015 $ 1
Sold:
1,075 Five-Year U.S. Treasury Notes 3/97 (114,000) 755
221 Ten-Year U.S. Treasury Notes 6/97 (23,799) 19
290 Thirty-Year U.S. Treasury Bonds 6/97 (32,027) (33)
PERCENTAGE OF
INDUSTRY DIVERSIFICATION NET ASSETS
- ------------------------------------------------------------------
Bank - Money Center ...................................14.2%
Non-Agency Single Family ..............................13.1
Media - Radio/TV ......................................11.1
Bank - Regional ........................................7.7
Non-Agency Commercial ..................................5.5
U.S. Government and Agency .............................5.1
Non-Agency Asset-Backed ................................4.7
Bank - Super Regional ..................................4.5
Telecommunication Service ..............................3.8
Healthcare - Patient Care ..............................3.0
Oil - North American Exploration & Production ..........2.7
Chemical ...............................................2.5
Non-Agency Manufactured Housing ........................2.1
Brokerage & Investment Management ......................1.7
Media - Publishing .....................................1.7
Paper & Forest Products ................................1.7
Finance - Miscellaneous ................................1.4
Real Estate ............................................1.3
Household Appliances & Furnishings .....................1.2
Metal Products & Fabrication ...........................1.2
Energy - Alternate Source ..............................1.1
Retail - Drug Store ....................................1.1
Energy Related .........................................1.0
Retail - Food Chain ....................................0.8
Electric Power .........................................0.7
Electric Utility .......................................0.7
Leisure Service ........................................0.5
Oil - North American Integrated ........................0.5
Precious Metal/Gem/Stone ...............................0.5
Automobile .............................................0.4
Natural Gas Distribution ...............................0.4
Oil Well Equipment & Service ...........................0.4
Airline ................................................0.3
Commercial Service .....................................0.2
Steel ..................................................0.2
Aerospace & Defense ....................................0.1
Savings & Loan .........................................0.1
Other Assets and Liabilities, Net ......................0.8
-----
Total 100.0%
=====
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- -----------------------------------------------------------------
United States .........................................82.6%
United Kingdom .........................................4.7
Canada .................................................3.6
Sweden .................................................3.6
France .................................................1.3
Australia ..............................................1.0
Norway .................................................1.0
Spain ..................................................1.0
Ireland ................................................0.3
Finland ................................................0.1
Other Assets and Liabilities, Net ......................0.8
-----
Total 100.0%
=====
See notes to financial statements.
29
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) February 28, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LEGEND
- ------
(a) Short-term investments include any security which has a maturity of less
than one year.
(b) Restricted security.
(c) All or a portion of security pledged to cover margin requirements for
futures contracts.
(d) Maturity date represents actual maturity or the longer of the next put date
or interest adjustment date. For U.S. Government Agency Securities,
maturity date represents actual maturity or the next interest adjustment
date.
(e) Variable rate security.
(f) When-issued security.
(g) Underlying collateral consists of U.S. Government securities which have a
market value of at least 102% of the principal amount of the repurchase
agreement and are maintained in a segregated custodial account.
All principal amounts and costs are stated in thousands.
Percentages are stated as a percent of net assets.
ABBREVIATIONS
- -------------
The following is a list of abbreviations which may be used in the Schedules of
Investments in Securities:
BAN -- Bond Anticipation Notes
CDA -- Commercial Development Authority
CDR -- Commercial Development Revenue
COP -- Certificates of Participation
DFA -- Development Finance Authority
EDA -- Economic Development Authority
EDC -- Economic Development Corporation
EDFA -- Economic Development Finance Authority
EDR -- Economic Development Revenue
GO -- General Obligation
HDA -- Housing Development Authority
HDC -- Housing Development Corporation
HFA -- Housing Finance Authority
HFC -- Housing Finance Corporation
IBA -- Industrial Building Authority
IBR -- Industrial Building Revenue
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDC -- Industrial Development Corporation
IDFA -- Industrial Development Finance Authority
IDR -- Industrial Development Revenue
IFA -- Investment Finance Authority
MFHR -- Multi-Family Housing Revenue
MFMR -- Multi-Family Mortgage Revenue
PCR -- Pollution Control Revenue
RAN -- Revenue Anticipation Notes
SFHR -- Single Family Housing Revenue
SFMR -- Single Family Mortgage Revenue
TAN -- Tax Anticipation Notes
TRAN -- Tax and Revenue Anticipation Notes
See notes to financial statements.
30
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
- ----------------------------------------------------------------------------------------------
For the Year Ended February 28, 1997
(In Thousands)
<CAPTION>
STRONG HERITAGE STRONG MUNICIPAL
MONEY FUND MONEY MARKET FUND
---------- -----------------
<S> <C> <C>
INTEREST INCOME $85,511 $71,488
EXPENSES:
Investment Advisory Fees 7,587 8,729
Custodian Fees 77 65
Shareholder Servicing Costs 355 921
Reports to Shareholders 578 1,035
Other 489 429
------- -------
Total Expenses before Waivers and Absorptions 9,086 11,179
Voluntary Expense Waivers and Absorptions
by Advisor (8,297) --
------- -------
Expenses, Net 789 11,179
------- -------
NET INVESTMENT INCOME 84,722 60,309
NET REALIZED LOSS ON INVESTMENTS (13,448) --
------- -------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $71,274 $60,309
======= =======
STRONG MUNICIPAL STRONG
ADVANTAGE FUND ADVANTAGE FUND
-------------- --------------
INCOME:
Dividends $ -- $ 740
Interest 19,390 85,408
------- -------
Total Income 19,390 86,148
EXPENSES:
Investment Advisory Fees 2,322 7,395
Custodian Fees 28 84
Shareholder Servicing Costs 146 1,761
Federal and State Registration Fees 182 255
Other 140 560
------- -------
Total Expenses before Waivers and Absorptions 2,818 10,055
Voluntary Expense Waivers and Absorptions
by Advisor (2,784) --
------- -------
Expenses, Net 34 10,055
------- -------
NET INVESTMENT INCOME 19,356 76,093
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments (17) 2,803
Futures Contracts, Options and Forward Foreign
Currency Contracts (1,607) 1,201
Change in Unrealized Appreciation/Depreciation on:
Investments 2,656 2,968
Futures Contracts, Options and Forward Foreign
Currency Contracts -- 1,074
------- -------
NET GAIN 1,032 8,046
------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $20,388 $84,139
======= =======
See notes to financial statements.
</TABLE>
31
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
- ---------------------------------------------------------------------------------------------------------------------------
February 28, 1997
(In Thousands, Except Per Share Amounts)
<CAPTION>
STRONG HERITAGE STRONG MUNICIPAL
MONEY FUND MONEY MARKET FUND
---------- -----------------
ASSETS:
<S> <C> <C>
Investments in Securities, at Amortized Cost $2,001,429 $1,884,306
Receivable from Brokers for Securities Sold -- 26,838
Interest Receivable 6,993 14,713
Other Assets 69 655
---------- ----------
Total Assets 2,008,491 1,926,512
LIABILITIES:
Payable to Brokers for Securities Purchased -- 26,550
Dividends Payable 8,199 4,771
Accrued Operating Expenses and Other Liabilities 134 294
---------- ----------
Total Liabilities 8,333 31,615
---------- ----------
NET ASSETS $2,000,158 $1,894,897
========== ==========
Capital Shares Outstanding (Unlimited Number Authorized) 2,000,158 1,894,897
NET ASSET VALUE PER SHARE $1.00 $1.00
===== =====
STRONG MUNICIPAL STRONG
ADVANTAGE FUND ADVANTAGE FUND
-------------- --------------
ASSETS:
Investments in Securities, at Value (Cost of $638,426
and $1,501,516, respectively) $ 640,932 $1,508,368
Receivable from Brokers for Securities Sold -- 14,294
Receivable for Fund Shares Sold 30 991
Interest Receivable 8,476 18,687
Other Assets 430 --
---------- ----------
Total Assets 649,868 1,542,340
LIABILITIES:
Payable to Brokers for Securities Purchased 3,025 14,278
Payable for Fund Shares Redeemed 186 529
Dividends Payable 2,326 7,027
Accrued Operating Expenses and Other Liabilities 68 812
---------- ----------
Total Liabilities 5,605 22,646
---------- ----------
NET ASSETS $ 644,263 $1,519,694
========== ==========
Capital Shares Outstanding (Unlimited Number Authorized) 128,604 150,653
NET ASSET VALUE PER SHARE $5.01 $10.09
===== ======
</TABLE>
See notes to financial statements.
32
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
STRONG HERITAGE STRONG MUNICIPAL
MONEY FUND MONEY MARKET FUND
------------------------------- -------------------------------------------------
<CAPTION>
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
FEB. 28, 1997 FEB. 29, 1996 FEB. 28, 1997 FEB. 29, 1996 DEC. 31, 1995
------------- ------------- ------------- ------------- -------------
(NOTE 1) (NOTE 1)
OPERATIONS:
<S> <C> <C> <C> <C> <C>
Net Investment Income $ 84,722 $ 18,955 $ 60,309 $ 9,039 $ 52,328
Net Realized Loss (13,448) -- -- -- --
---------- -------- ---------- ---------- ----------
Increase in Net Assets Resulting
from Operations 71,274 18,955 60,309 9,039 52,328
CAPITAL SHARE TRANSACTIONS 1,058,105 941,953 285,992 192,463 155,825
CAPITAL CONTRIBUTION (NOTE 6) 13,448 -- -- -- --
DISTRIBUTIONS:
From Net Investment Income (84,722) (18,955) (60,309) (9,039) (52,328)
---------- -------- ---------- ---------- ----------
TOTAL INCREASE IN NET ASSETS 1,058,105 941,953 285,992 192,463 155,825
NET ASSETS:
Beginning of Period 942,053 100 1,608,905 1,416,442 1,260,617
---------- -------- ---------- ---------- ----------
End of Period $2,000,158 $942,053 $1,894,897 $1,608,905 $1,416,442
========== ======== ========== ========== ==========
</TABLE>
<TABLE>
STRONG MUNICIPAL STRONG
ADVANTAGE FUND ADVANTAGE FUND
------------------------------- ------------------------------------------------
<CAPTION>
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
FEB. 28, 1997 FEB. 29, 1996 FEB. 28, 1997 FEB. 29, 1996 DEC. 31, 1995
------------- ------------- ------------- ------------- -------------
(NOTE 1) (NOTE 1)
OPERATIONS:
<S> <C> <C> <C> <C> <C>
Net Investment Income $ 19,356 $ 531 $ 76,093 $ 10,186 $ 59,697
Net Realized Gain (Loss) (1,624) 1 4,004 702 (5,847)
Change in Unrealized Appreciation/
Depreciation 2,656 (150) 4,042 (1,464) 10,677
---------- -------- ---------- ---------- ----------
Increase in Net Assets Resulting
from Operations 20,388 382 84,139 9,424 64,527
CAPITAL SHARE TRANSACTIONS 510,739 132,642 511,526 10,812 74,507
DISTRIBUTIONS:
From Net Investment Income (19,356) (531) (75,751) (10,157) (59,697)
In Excess of Net Investment Income -- -- -- -- (144)
From Net Realized Gains (1) -- -- -- --
---------- -------- ---------- ---------- ----------
TOTAL INCREASE IN NET ASSETS 511,770 132,493 519,914 10,079 79,193
NET ASSETS:
Beginning of Period 132,493 -- 999,780 989,701 910,508
---------- -------- ---------- ---------- ----------
End of Period $ 644,263 $132,493 $1,519,694 $ 999,780 $ 989,701
========== ======== ========== ========== ==========
See notes to financial statements.
33
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
February 28, 1997
1. ORGANIZATION
The accompanying financial statements represent the Strong Cash Management
Funds, which include the following diversified, open-end management
investment companies registered under the Investment Company Act of 1940:
- Strong Heritage Money Fund (a series of Strong Heritage Reserve
Series, Inc.)
- Strong Municipal Money Market Fund (a series of Strong Municipal
Funds, Inc.)
- Strong Municipal Advantage Fund (a series of Strong Municipal Funds,
Inc.)
- Strong Advantage Fund, Inc.
The Board of Directors approved changing the Strong Municipal Money Market
Fund and the Strong Advantage Fund, Inc. fiscal year-ends from December 31
to February 29 in 1995. Inception dates for the Strong Heritage Money Fund
and the Strong Municipal Advantage Fund were June 29, 1995 and November 30,
1995, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.
(A) Security Valuation -- Securities of the Strong Municipal Advantage
Fund and the Strong Advantage Fund, Inc. 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, when held by the Funds, are valued at fair value as
determined in good faith under consistently applied procedures
established by and under the general supervision of the Board of
Directors. Securities which are purchased within 60 days of their
stated maturity and all investments in the Strong Heritage Money Fund
and the Strong Municipal Money Market Fund are valued at amortized
cost, which approximates current value. Amortized cost for Federal
income tax and financial reporting purposes is the same.
The Funds may own certain investment securities which are restricted
as to resale. These securities are valued after giving due
consideration to pertinent factors, including recent private sales,
market conditions and the issuer's financial performance. The Funds
generally bear the costs, if any, associated with the disposition of
restricted securities. Aggregate cost and fair value of these
restricted securities held at February 28, 1997 were as follows (in
thousands):
STRONG HERITAGE STRONG
MONEY FUND ADVANTAGE FUND
---------- --------------
Aggregate Fair Value $675,576 $374,799
Aggregate Cost 671,896 375,137
Percent of Net Assets 33.8%* 24.7%**
*Of these securities which are restricted to resale, 96.9% are Section
4(2) commercial paper or are eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 and also have been determined to be
liquid by the Advisor based upon guidelines established by the Fund's
Board of Directors.
**Of these securities which are restricted to resale, 84.7% are
eligible for resale pursuant to Rule 144A under the Securities Act of
1933 and also have been determined to be liquid by the Advisor based
upon guidelines established by the Fund's Board of Directors.
(B) Federal Income and Excise Taxes and Distributions to Shareholders --
It is the Funds' policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of their taxable income to their
shareholders in a manner which results in no tax cost to the Funds.
Therefore, no Federal income or excise tax provision is required.
The character of distributions made during the year from net
investment income or net realized gains may differ from the
characterization for Federal income tax purposes due to differences in
the recognition of income and expense items for financial statement
and tax purposes. 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 or other investments 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.
34
<PAGE>
- --------------------------------------------------------------------------------
(F) Foreign Currency Translation -- Investment securities and other assets
and liabilities initially expressed in foreign currencies are
converted to U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income are converted to
U.S. dollars based upon currency exchange rates prevailing on the
respective dates of such transactions. The effect of changes in
foreign exchange rates on realized and unrealized security gains or
losses is reflected as a component of such gains or losses.
(G) Forward Foreign Currency Exchange Contracts -- Forward foreign
currency exchange contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the Funds record
an exchange gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
(H) Additional Investment Risk -- The use of futures contracts, options,
foreign denominated assets, forward foreign currency exchange
contracts and other similar instruments for purposes of hedging the
Funds' investment portfolios involves, to varying degrees, elements of
market risk in excess of the amount recognized in the statement of
assets and liabilities. The predominant risk with futures contracts is
an imperfect correlation between the value of the contracts and the
underlying securities. Foreign denominated assets and forward foreign
currency exchange contracts may involve greater risks than domestic
transactions, including currency, political and economic, regulatory
and market risks.
(I) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the
reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ
from those estimates.
(J) Other -- Investment security transactions are recorded as of the trade
date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of premium and discounts.
3. NET ASSETS
Net assets as of February 28, 1997 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG HERITAGE STRONG MUNICIPAL STRONG MUNICIPAL STRONG
MONEY FUND MONEY MARKET FUND ADVANTAGE FUND ADVANTAGE FUND
--------------- ----------------- ---------------- --------------
<S> <C> <C> <C> <C>
Capital Stock $2,000,158 $1,894,897 $643,381 $1,515,299
Undistributed Net Realized Loss -- -- (1,624) (3,199)
Net Unrealized Appreciation -- -- 2,506 7,594
---------- ---------- -------- ----------
$2,000,158 $1,894,897 $644,263 $1,519,694
========== ========== ======== ==========
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the year ended February 28, 1997,
the period ended February 29, 1996, and the year ended December 31, 1995
were as follows (in thousands):
<TABLE>
<CAPTION>
FEBRUARY 28, 1997 FEBRUARY 29, 1996 DECEMBER 31, 1995
------------------ ------------------ -----------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------ ------- ------ ------- ------ -------
STRONG HERITAGE MONEY FUND
<S> <C> <C> <C> <C> <C> <C>
Shares Sold 3,030,732 $3,030,732 1,417,145 $1,417,145
Dividends Reinvested 75,780 75,780 13,892 13,892
Shares Redeemed (2,048,407) (2,048,407) (489,084) (489,084)
---------- ---------- -------- --------
1,058,105 $1,058,105 941,953 $ 941,953
========= ========== ======= ==========
STRONG MUNICIPAL MONEY MARKET FUND
Shares Sold 3,223,480 $3,223,480 700,050 $ 700,050 2,581,413 $2,581,413
Dividends Reinvested 56,751 56,751 9,703 9,703 48,824 48,824
Shares Redeemed (2,994,239) (2,994,239) (517,290) (517,290) (2,474,412)(2,474,412)
---------- ---------- -------- -------- ---------- ----------
285,992 $ 285,992 192,463 $ 192,463 155,825 $ 155,825
========== ========== ======= ========== ========== ==========
STRONG MUNICIPAL ADVANTAGE FUND
Shares Sold 172,620 $ 863,029 28,453 $ 142,671
Dividends Reinvested 3,010 15,060 26 131
Shares Redeemed (73,479) (367,350) (2,026) (10,160)
------- -------- ------ -------
102,151 $ 510,739 26,453 $ 132,642
======= ========== ====== ==========
STRONG ADVANTAGE FUND
Shares Sold 135,808 $1,362,671 15,171 $ 152,433 79,688 $ 797,729
Dividends Reinvested 6,528 65,491 938 9,418 5,253 52,563
Shares Redeemed (91,328) (916,636) (15,034) (151,039) (77,565) (775,785)
------- -------- ------- -------- ------- --------
51,008 $ 511,526 1,075 $ 10,812 7,376 $ 74,507
======= ========== ======= ========== ======= ==========
35
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
February 28, 1997
5. RELATED PARTY TRANSACTIONS
Strong Capital Management, Inc. (the "Advisor"), with whom certain officers
and directors of the Funds are affiliated, provides investment advisory
services and shareholder recordkeeping and related services to the Funds.
Investment advisory fees, which are established by terms of the Advisory
Agreements, are based on the following annualized rates of the average
daily net assets: Strong Heritage Money Fund and Strong Municipal Money
Market Fund .50%, Strong Municipal Advantage Fund and Strong Advantage Fund
.60%. Advisory fees are subject to reimbursement by the Advisor if the
Funds' operating expenses exceed certain levels. Shareholder recordkeeping
and related service fees are based on contractually established rates for
each open and closed shareholder account. In addition, the Advisor is
compensated for certain other services related to costs incurred for
reports to shareholders.
Strong Municipal Advantage Fund and Strong Advantage Fund may invest cash
reserves in money market funds sponsored and managed by Strong Capital
Management, Inc., subject to certain limitations. The terms of such
transactions are identical to those of non-related entities except that, to
avoid duplicate investment advisory fees, the Advisor remits to each Fund
an amount equal to all fees otherwise due to them under their investment
advisory agreement for the assets invested in such money market funds.
Certain information regarding related party transactions for the period
ended February 28, 1997, excluding the effect of waivers and absorptions,
is as follows (in thousands):
<TABLE>
<CAPTION>
STRONG HERITAGE STRONG MUNICIPAL STRONG MUNICIPAL STRONG
MONEY FUND MONEY MARKET FUND ADVANTAGE FUND ADVANTAGE FUND
---------- ----------------- -------------- --------------
<S> <C> <C> <C> <C>
Payable to Advisor at February 28, 1997 $134 $41 $68 $101
Other Shareholder Servicing Expenses
Paid to Advisor 9 26 3 28
Unaffiliated Directors' Fees 15 23 3 17
</TABLE>
6. CAPITAL CONTRIBUTION
On January 31, 1997, the Advisor purchased a security from the Strong
Heritage Money Fund for $13,448,000 in excess of the security's fair value.
The Fund recorded a realized loss on the sale and a capital contribution of
an equal amount from the Advisor. The Advisor received no shares of Strong
Heritage Money Fund or other consideration in exchange for such
contribution. For tax purposes, these capital contributions reduced the
realized losses for the year ended February 28, 1997.
7. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the period
ended February 28, 1997 were as follows (in thousands):
STRONG MUNICIPAL STRONG
ADVANTAGE FUND ADVANTAGE FUND
-------------- --------------
Purchases:
U.S. Government and Agency $ -- $ 45,710
Other 307,204 2,261,447
Sales:
U.S. Government and Agency -- 93,976
Other 75,810 1,765,606
8. INCOME TAX INFORMATION
At February 28, 1997, the investment cost, gross unrealized appreciation
and depreciation on investments and capital loss carryovers (expiring in
varying amounts through 2005) for Federal income tax purposes were as
follows (in thousands):
STRONG MUNICIPAL STRONG
ADVANTAGE FUND ADVANTAGE FUND
-------------- --------------
Aggregate Investment Cost $638,438 $1,501,600
======== ==========
Aggregate Unrealized:
Appreciation $ 2,588 $ 11,332
Depreciation (94) (4,564)
-------- ----------
$ 2,494 $ 6,768
======== ==========
Capital Loss Carryovers $ 1,612 $ 2,408
======== ==========
36
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
STRONG HERITAGE MONEY FUND 2-28-97 2-29-96(b)
------- ----------
(NOTE 1)
SELECTED PER-SHARE DATA(a)
- --------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.06 0.04
Net Realized Losses on Investments (0.01) --
--------- ---------
Total from Investment Operations 0.05 0.04
LESS DISTRIBUTIONS
From Net Investment Income (0.06) (0.04)
--------- ---------
Total Distributions (0.06) (0.04)
CAPITAL CONTRIBUTION (NOTE 6) 0.01 --
--------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
========= =========
TOTAL RETURN +5.7%(e) +4.1%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $2,000,158 $ 942,053
Ratio of Expenses to Average Net Assets 0.1% 0.0%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.6% 0.6%*
Ratio of Net Investment Income to Average
Net Assets 5.6% 5.9%*
<TABLE>
<CAPTION>
STRONG MUNICIPAL MONEY MARKET FUND 2-28-97 2-29-96(c) 12-31-95 12-31-94 12-31-93 12-31-92
------- ---------- -------- -------- -------- --------
(NOTE 1)
SELECTED PER-SHARE DATA(a)
- --------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income 0.03 0.01 0.04 0.03 0.02 0.03
Distributions from Net Investment Income(d) (0.03) (0.01) (0.04) (0.03) (0.02) (0.03)
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= =========
TOTAL RETURN +3.5% +0.6% +4.1% +2.9% +2.5% +3.4%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $1,894,897 $1,608,905 $1,416,442 $1,260,617 $1,172,560 $1,105,491
Ratio of Expenses to Average Net Assets 0.6% 0.6%* 0.6% 0.6% 0.7% 0.7%
Ratio of Net Investment Income to Average
Net Assets 3.5% 3.6%* 4.0% 2.9% 2.5% 3.3%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the period from June 29, 1995 (inception) to February 29, 1996. Total
return is not annualized.
(c) For the two month period ended February 29, 1996. Total return is not
annualized.
(d) Tax-exempt for regular Federal income tax purposes.
(e) Had the Advisor not made the capital contribution as described in the notes
to the financial statements, the adjusted total return would have been 5.0%
for the fiscal year ended February 28, 1997.
37
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRONG MUNICIPAL ADVANTAGE FUND 2-28-97 2-29-96(b)
------- ----------
(NOTE 1)
SELECTED PER-SHARE DATA(a)
- --------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 5.01 $ 5.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.25 0.06
Net Realized and Unrealized Gains
on Investments -- 0.01
--------- --------
Total from Investment Operations 0.25 0.07
LESS DISTRIBUTIONS:
From Net Investment Income (0.25) (0.06)
--------- --------
Total Distributions (0.25) (0.06)
--------- --------
NET ASSET VALUE, END OF PERIOD $ 5.01 $ 5.01
========= ========
TOTAL RETURN +5.1% +1.4%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $ 644,263 $132,493
Ratio of Expenses to Average Net Assets 0.0% 0.0%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.7% 0.7%*
Ratio of Net Investment Income to Average
Net Assets 5.0% 4.9%*
Portfolio Turnover Rate 40.8% 17.1%
</TABLE>
<TABLE>
<CAPTION>
STRONG ADVANTAGE FUND 2-28-97 2-29-96(c) 12-31-95 12-31-94 12-31-93 12-31-92
------- ---------- -------- -------- -------- --------
(NOTE 1)
SELECTED PER-SHARE DATA(a)
- --------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.03 $ 10.04 $ 9.98 $ 10.19 $ 10.01 $ 9.90
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.62 0.10 0.67 0.55 0.59 0.70
Net Realized and Unrealized Gains
(Losses) on Investments 0.06 (0.01) 0.06 (0.19) 0.18 0.11
---------- -------- -------- -------- -------- ---------
Total from Investment Operations 0.68 0.09 0.73 0.36 0.77 0.81
LESS DISTRIBUTIONS:
From Net Investment Income (0.62) (0.10) (0.67) (0.55) (0.59) (0.70)
In Excess of Net Realized Gains -- -- -- (0.02) -- --
---------- -------- -------- -------- -------- ---------
Total Distributions (0.62) (0.10) (0.67) (0.57) (0.59) (0.70)
---------- -------- -------- -------- -------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.09 $ 10.03 $ 10.04 $ 9.98 $ 10.19 $ 10.01
========== ======== ======== ======== ======== =========
TOTAL RETURN +7.0% +0.9% +7.5% +3.6% +7.9% +8.4%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $1,519,694 $999,780 $989,701 $910,508 $415,465 $272,348
Ratio of Expenses to Average Net Assets 0.8% 0.8%* 0.8% 0.8% 0.9% 1.0%
Ratio of Net Investment Income to Average
Net Assets 6.2% 6.3%* 6.6% 5.6% 5.8% 7.0%
Portfolio Turnover Rate 154.9% 17.2% 183.7% 221.0% 304.8% 316.1%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the period from November 30, 1995 (inception) to February 29, 1996.
Total return and portfolio turnover rate are not annualized.
(c) For the two month period ended February 29, 1996. Total return and
portfolio turnover rate are not annualized.
38
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
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To the Shareholders and Board of Directors of the
Strong Cash Management Funds
We have audited the accompanying statement of assets and liabilities of Strong
Heritage Money Fund (one of the portfolios constituting the Strong Heritage
Reserve Series, Inc.), including the schedule of investments in securities, as
of February 28, 1997, and the related statement of operations for the year then
ended, and the statements of changes in net assets and the financial highlights
for the year ended February 28, 1997 and for the period from June 29, 1995
(inception) to February 29, 1996. We have also audited the accompanying
statements of assets and liabilities of Strong Municipal Money Market Fund (one
of the portfolios constituting the Strong Municipal Funds, Inc.) and Strong
Advantage Fund, Inc., including the schedules of investments in securities, as
of February 28, 1997, and the related statements of operations for the year then
ended, and the statements of changes in net assets for the year ended February
28, 1997 and for the period from January 1, 1996 to February 29, 1996 and for
the year ended December 31, 1995, and the financial highlights for the periods
indicated. We have also audited the statement of assets and liabilities of
Strong Municipal Advantage Fund (one of the portfolios constituting the Strong
Municipal Funds, Inc.), including the schedule of investments in securities, as
of February 28, 1997, and the related statement of operations for the year then
ended, and the statements of changes in net assets and the financial highlights
for the year ended February 28, 1997 and for the period from November 30, 1995
(inception) to February 29, 1996. These Funds are collectively referred to
herein as the "Strong Cash Management Funds". These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Strong Cash Management Funds as of February 28, 1997, the results of
their operations, the changes in their net assets, and the financial highlights
for each of the periods indicated, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
April 2, 1997
39
<PAGE>
NOTES
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40
<PAGE>
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 prospectuses and shareholder reports, is mailed to your household.
Please call 1-800-368-3863 if you wish to receive additional copies, free of
charge.
* Each Fund reserves the right to terminate or modify any of these privileges.
<PAGE>
Bulk Rate
U.S. Postage
PAID
Milwaukee, WI
Permit No. 2652
[PICTURE OF TELEPHONE]
To order a free prospectus kit,
CALL 1-800-368-1030.
To learn more about our funds,
discuss an existing account,
or conduct a transaction,
CALL 1-800-368-3863.
--------------------
If you are a
Financial Professional,
CALL 1-800-368-1683
[PICTURE OF COMPUTER FEATURING STRONG WEB SITE]
Strong Funds On-Line
http://www.strong-funds.com
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 LOGO]
STRONG FUNDS DISTRIBUTORS, INC.
P.O. Box 2936
Milwaukee, Wisconsin 53201
4983C97Q
