<PAGE>
[STRONG LOGO]
THE STRONG MUNICIPAL
INCOME FUNDS
- ----------------------------------------------------------------------
SEMI-ANNUAL REPORT O FEBRUARY 28, 1999
THE STRONG HIGH-YIELD MUNICIPAL BOND FUND
THE STRONG MUNICIPAL BOND FUND
THE STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND
THE STRONG SHORT-TERM MUNICIPAL BOND FUND
[PICTURE OF STRONG FUNDS BUILDING]
<PAGE>
LETTER FROM THE CHAIRMAN
Dear Strong Investor,
As I review this past year, I can't help but conclude that we are living in
one of the most remarkable eras in modern history. In many ways, it is a Golden
Age of prosperity, with constantly improving living standards, virtually full
employment, and enormous cultural vitality.
Our golden era is primarily driven by the spirit of capitalism, which has
resulted in real economic growth of better than 3%, negligible inflation, and
the lowest unemployment rates in a quarter of a century. Things have rarely
looked so good. My advice: Enjoy it, but remember that good times have a way of
disappearing. Almost overnight.
Not everything in the world is coming up roses. As the fighting in Kosovo
demonstrates, conflict still looms large in the world. Kosovo illustrates just
how delicate the balance is between individual nations and their economies. And
it serves as a constant reminder that everything in life--economies included--is
cyclical.
While the U.S. market has been strong, not every security has shared in the
good times. What we are experiencing today--to borrow a Wall Street phrase--is a
two-tiered market. That is, a market with big differences between the "have" and
"have not" stocks. Close to 70% of stocks out there are still down 20% or more
from their tops, while a precious small percentage are near their historical
highs.
In plain English, today's market has one piece that may be over-valued, and
another piece that appears to be undervalued.
A family's investment portfolio has to distinguish between a careful
strategy and just "playing the market." A serious investor needs to realize that
some stock valuations are at extreme highs and that diversification is more
important than ever. In addition to blue chip and other large-cap stocks, fixed
income products (like long-term bonds) are very attractive and provide an
excellent vehicle for diversifying a portfolio.
(And, although currently out of favor with investors, small- and mid-cap
stocks will rise again. If you buy the idea that markets are cyclical, these
stocks could be an excellent place to invest over the next few years).
Likewise, value investing--the art of buying undervalued companies--is also
out of favor. Value stocks have already been through a pretty severe correction,
and by investing in them now, you can help protect yourself when large-cap and
technology stocks retreat.
At Strong, we're in business to help you achieve your financial goals. Our
Strong Advisor program works with shareholders to build a long term investment
program through balance.
The markets are made up of millions of pieces of input--facts, opinions,
trends, tips, dreams, emotions, speculation, and an abundance of good
old-fashioned hunches. There is also a good deal of wisdom built into the
markets. Some of this wisdom gets distorted over the short-term. Long-term,
however, the essential truth of the investment process emerges. Our job is to
help you maneuver through the clutter and emotion in the marketplace and find
that truth.
Give us a call. We're here to help.
/s/ Dick
<PAGE>
THE STRONG MUNICIPAL INCOME FUNDS
---------------------------------
SEMI-ANNUAL REPORT O FEBRUARY 28, 1999
TABLE OF CONTENTS
INVESTMENT REVIEWS
The Strong High-Yield Municipal Bond Fund .................. 2
The Strong Municipal Bond Fund ............................. 4
The Strong Short-Term High Yield Municipal Fund ............ 6
The Strong Short-Term Municipal Bond Fund .................. 8
BOND GLOSSARY ................................................10
FINANCIAL INFORMATION
Schedules of Investments in Securities .....................11
Statements of Assets and Liabilities .......................26
Statements of Operations ...................................28
Statements of Changes in Net Assets ........................30
Notes to Financial Statements ..............................32
FINANCIAL HIGHLIGHTS .........................................35
THE STRONG HIGH-YIELD MUNICIPAL BOND FUND
-----------------------------------------
FUND HIGHLIGHTS
o The Strong High-Yield Municipal Bond Fund returned 1.05% for the six months
ended February 28, 1999.
o New issue supply was up dramatically in 1998.
Demand was limited, and yield levels rose to meet interest.
o Market participants favored higher-rated securities, and demanded increased
yield compensation on lower-rated debt, as fear surfaced that an economic
downturn was developing.
o Two holdings, representing about 1% of the Fund defaulted during this
period. The Fund maintains position sizes between 1%-5%, to minimize
concentration risk.
----------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS (1)
As of 2-28-99
1-year 4.09%
3-year 8.27%
5-year 7.38%
Since Inception 7.44%
(on 10-1-93)
----------------------------------------
PORTFOLIO
STATISTICS
As of 2-26-99
30-day annualized yield (2) 5.42%
Average maturity (3) 12.2 years
Average quality rating (4) BB
PERSPECTIVES
FROM THE MANAGER
/s/ Mary-Kay H. Bourbulas
Mary-Kay H. Bourbulas
Portfolio Manager
- --------------------------------------------------------------------------------
The high-yield municipal market's performance over the past six months can be
attributed to too much supply and limited demand. This supply/demand imbalance
had a variety of effects, most notably pushing yields up on municipals versus
the yields of Treasury securities. For example, A-rated long-term municipal
revenue bonds yielded over 100% of the thirty-year Treasury bond over the past
five months, and got as high as 105%. On a historical basis, the ratio versus
the thirty-year Treasury ranged between 86% and 91%. The supply picture looks
brighter in 1999, with levels projected to decline. This should result in
improved prospects for municipals.
We continue to believe that individual security selection is the key to
delivering outstanding results over the long term. We continue to favor
securities which play off of our aging of America economic theme. As the U.S.
population ages, we are finding unique opportunities in sectors that cater to
this growing demographic trend. Seniors are more affluent and demand an active
lifestyle. They are seeking housing within retirement communities which will
offer them the ability to age in place, thus eliminating the need to move
elsewhere for health reasons. We believe that this sector is in an early growth
stage. During the past six months, we have increased our holdings in the
retirement sector to 22% from 18%. Credit-spread widening has created an
opportunity in the hospital sector. Hospitals in general have seen margins
decrease as managed care and government payors try to keep costs down. We
believe that hospitals serve an essential need and our focus is on rural
hospitals that face little or no competition in their service area.
We've increased the Fund's duration, or interest rate sensitivity, slightly in
response to declining yields. We don't believe in making large bets on the
direction of interest rates. Rather, we feel our efforts are best spent
monitoring and reviewing holdings. Although the last six months have been
difficult, we feel that the prices of many lower-rated credits already reflect
a potential economic downturn. Although at this point a severe slowdown looks
unlikely, we believe that our current holdings can weather through a downturn.
Thus, prospects look good over the next six months and the Fund's current
holdings should produce an attractive level of tax-free income.
Thank you for your continued investment in the Strong High-Yield Municipal Bond
Fund.
-----------------
MUNICIPAL BONDS
CONTINUE TO TRADE
AT THEIR LEAST
EXPENSIVE LEVELS
RELATIVE TO THE
TREASURY MARKET
IN OVER A DECADE.
-----------------
- --------------------------------------------------------------------------------
From time to time, the Fund's advisor has waived its management fee and/or
absorbed Fund expenses, which has resulted in higher returns and without these
waivers the rankings may have been lower.
1 Average annual total return and total return measure change in the value of
an investment in the Fund, assuming reinvestment of all dividends and
capital gains. Average annual total return reflects annualized change while
total return reflects aggregate change, and is not annualized.
2 Yield is annualized for the 30 days ended 2-26-99, is historical, and will
vary.
3 The Fund's average maturity includes the effect of futures and when-issued
securities.
4 For purposes of this average rating, the Fund's short-term
debt obligations have been assigned long-term ratings by the Advisor.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 10-1-93 to 2-28-99
[GRAPH]
The Strong High-Yield Lipper High
High-Yield Municipal Municipal Bond Yield Municipal
Bond Fund Index* Debt Funds Index*
9-93 10,000 10,000 10,000
12-93 10,266 10,164 10,141
12-94 10,165 9,609 9,637
12-95 11,651 11,362 11,245
12-96 12,248 11,867 11,674
12-97 13,949 13,165 12,816
12-98 14,685 13,982 13,529
2-99 14,754 14,119 13,605
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
High-Yield Municipal Bond Index and the Lipper High Yield 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 High-Yield Municipal Bond Index is comprised of the Lehman Brothers Baa
Municipal Bond Index from inception through December 31, 1995, and the
Lehman Brothers High-Yield Municipal Bond Index from January 1, 1996 to
present. The Lehman Brothers Baa Municipal Bond Index is an unmanaged index
generally representative of municipal bonds rated Baa. The Lehman Brothers
High-Yield Municipal Bond Index, which was instituted on January 1, 1996,
is an unmanaged index generally representative of municipal bonds rated
below Baa. The Lipper High Yield Municipal Debt Funds Index is an
equally-weighted performance index of the largest qualifying funds in this
Lipper category. Source of the High-Yield Index data is Lehman Brothers.
Source of the Lipper index data is Lipper Inc.
YOUR FUNDS APPROACH
The Strong High-Yield Municipal Bond Fund seeks to provide a high level of
tax-free income by investing in longer-term, lower-rated municipal securities.
Our investment approach begins with a top-down assessment of the economy, which
we constantly monitor as the framework for our portfolio. Next, we choose
sectors which appear attractive based on our economic assessment.
Finally, we individually select securities within attractive sectors. Security
analysis does not stop when we select a holding for the portfolio. Each bond we
own is monitored continually. Portfolio adjustments are made based on individual
bond performance and changes in the economic and competitive landscape.
- --------------------------------------------------------------------------------
MARKET HIGHLIGHTS
o Municipal bonds continue to trade at their least expensive levels relative
to the Treasury market in over a decade.
o Credit spreads between higher-rated and lower-rated securities widened as
investors demanded additional yield as compensation for a potential
slowdown in the U.S. economy. As a result, the investment performance
between a AAA-rated and a lower-rated municipal bond was dramatically
different.
o Recent economic statistics point to continued strength in the economy. More
importantly, inflation remains benign. Credit spreads have started to
narrow, which should improve the performance of lower-rated debt.
3
<PAGE>
THE STRONG MUNICIPAL BOND FUND
------------------------------
FUND HIGHLIGHTS
o For the six months ended February 28, 1999, the Fund posted a return of
2.45%. Its 30-day annualized yield stood at 4.85%. For investors in the 36%
tax bracket, this translates into a taxable equivalent yield of 7.58%.
o The Fund's duration of 7.8, while longer than it was six months ago, is
somewhat short compared with similar funds. The Fund's average quality
rating remains solidly at A, with 24% of assets in AAA holdings and 11% in
non-investment-grade issues.
o Issue selection drove performance. Sectors in which we found attractive
issues include education, utilities, retirement centers, and nursing homes.
----------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS(1)
As of 2-28-99
1-year 6.09%
5-year 5.70%
10-year 7.51%
Since Inception 6.74%
(on 10-23-86)
----------------------------------------
PORTFOLIO
STATISTICS
As of 2-26-99
30-day annualized yield (2) 4.85%
Average maturity (3) 12.5 years
Average quality rating (4) A
PERSPECTIVES
FROM THE MANAGER
/S/ Steven D. Harrop
Steven D. Harrop
Portfolio Manager
- --------------------------------------------------------------------------------
The past six months have seen unusual developments in the municipal markets. The
yields on AAA 30-year municipal issues have approached, and at times eclipsed,
those of 30-year Treasuries--even without calculating the impact of municipals'
federally tax exempt status. The current environment for municipal investing is
very attractive, and we look for long-term municipal securities to outperform
their taxable counterparts going forward.
That said, markets overall have been and remain volatile. Market pressures push
yields first higher, then lower. Investors over the past six to 12 months have
established a floor of sorts for taxable rates, quickly losing interest once
they go much below 5%. At the same time, a lack of inflation, a federal deficit
under control, and other external factors aren't doing much to nudge rates
upward. Recession elsewhere in the world has had a slight braking effect on the
U.S. economy, but so far our economy and markets remain robust. Under these
conditions, we don't anticipate that the Federal Reserve will take action in
either direction for the foreseeable future.
In this environment, we're continuing to work with the investment strategies
that have helped this fund to outperform in recent years. We've continued to
emphasize credit quality in the portfolio, though we also selectively use
non-investment-grade securities to enhance yield potential. We strive to manage
risk through our rigorous securities research and careful issue selection.
----------------------------
THE PAST
SIX MONTHS
HAVE SEEN
UNUSUAL DEVELOPMENTS
IN THE MUNICIPAL MARKETS.
----------------------------
- --------------------------------------------------------------------------------
From time to time, the Fund's advisor has waived its management fee and/or
absorbed Fund expenses, which has resulted in higher returns and without these
waivers the rankings may have been lower.
1 Average annual total return and total return measure change in the value of
an investment in the Fund, assuming reinvestment of all dividends and
capital gains. Average annual total return reflects annualized change while
total return reflects aggregate change, and is not annualized.
2 Yield is annualized for the 30 days ended 2-26-99, is historical, and will
vary.
4
<PAGE>
Diversification helps to keep risk in check as well; we believe that this is one
of the main attractions funds offer over investments in individual securities.
With 135 holdings in the Fund, if a single investment stumbles, it needn't bring
the whole portfolio down with it. At the same time, the Fund's positions are not
so diluted as to have little impact on performance--important for when things
are going well.
Although bond-by-bond research and individual issue selection drive the
portfolio, we are finding clusters of attractive bonds in the education,
utilities, retirement facilities, and nursing homes sectors. Hospitals continue
to underperform, largely the result of oversupply in the industry. This is an
area where we have shed holdings over the past several months.
We don't anticipate making significant changes to our investment approach over
the next several months, but as always we will monitor conditions carefully and,
should a change appear warranted, take appropriate steps.
Thank you for your investment in the Strong Municipal Bond Fund. We're happy to
have the opportunity to help investors pursue federally tax-exempt income.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 10-23-86 to 2-28-99
[GRAPH]
The Strong Leman Brothers Lipper General
Municipal Bond Municipal Bond Municipal Debt
Fund Index* Funds Index*
9-86 10,000 10,000 10,000
12-86 10,129 10,216 10,253
12-88 10,705 11,423 11,370
12-90 11,995 13,578 13,253
12-92 15,257 16,568 16,170
12-94 16,275 17,640 17,083
12-96 18,570 21,641 20,757
12-98 22,211 25,161 23,987
2-99 22,383 25,349 24,112
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 Bond Index and the Lipper General 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. To equalize the time periods, the indexes' performance was
prorated for the month of October 1986.
- --------------------------------------------------------------------------------
3 The Fund's average maturity includes the effect of futures and when-issued
securities.
4 For purposes of this average rating, the Fund's short-term debt obligations
have been assigned long-term ratings by the Advisor.
* The Lehman Brothers Municipal Bond Index is an unmanaged index generally
representative of investment-grade, tax-exempt bonds. The Lipper General
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 Standard & Poor's Micropal. Source of the Lipper index data
is Lipper Inc.
YOUR FUND'S APPROACH
The Strong Municipal Bond Fund seeks total return by investing for a high-level
of federally tax-exempt income. Because we believe that investors in a
municipal bond fund are seeking a steady stream of tax-exempt income, we strive
to maximize this income. We also work to keep share-price fluctuations in check
by keeping the Fund's sensitivity to interest-rate changes, its credit quality,
and its diversification at reasonable levels.
Our investment approach focuses on selection of individual securities, driven by
bond-by-bond research. Macroeconomic analysis also plays an important role in
shaping the portfolio.
- --------------------------------------------------------------------------------
MARKET HIGHLIGHTS
o With the AAA 30-year municipal bond yield running at 4.94%, compared with
the AAA 30-year Treasury's taxable yield of 5.58%, long-term municipal
investments were attractive to investors in any tax bracket.
o Interest rates generally declined over the period. In this environment,
keeping the Fund's yield at 4.85%, slightly ahead of its level of six
months ago, was an achievement.
o The Lehman Brothers Municipal Bond Index returned 2.62% for the six months
ended February 28, 1999, while the Lipper General Municipal Debt Funds
Index returned 1.86% for the same period.*
5
<PAGE>
THE STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND
-----------------------------------------------
FUND HIGHLIGHTS
o The Strong Short-Term High Yield Municipal Bond Fund returned 2.10% for the
six months ended February 28, 1999.
o Although new issue supply was up dramatically in 1998, this affected the
Fund minimally, since the Fund tends to purchase existing securities.
o The Fund's average maturity of less than three years, along with a high
average coupon, provided insulation as spreads widened between higher- and
lower- rated issues.
o The Fund experienced net inflows and took advantage of credit-spread
widening by purchasing lower-rated securities at attractive yields.
- ----------------------------------------
AVERAGE ANNUAL
TOTAL RETURN(1)
As of 2-28-99
1-year 5.33%
Since Inception 6.11%
(on 11-30-97)
- ----------------------------------------
PORTFOLIO
STATISTICS
As of 2-26-99
30-day annualized yield (2) 4.70%
Average maturity (3) 2.3 years
Average quality rating(4) BBB
PERSPECTIVES
FROM THE MANAGER
/s/ Mary-Kay H. Bourbulas
Mary-Kay H. Bourbulas
Portfolio Manager
- --------------------------------------------------------------------------------
The high-yield municipal market's performance over the past six months can be
attributed to too much supply and limited demand. This supply/demand imbalance
had a variety of effects, most notably pushing yields up on municipals versus
Treasury securities. The supply picture looks brighter in 1999, with levels
projected to decline. This should result in improved prospects for municipals.
We continue to believe that individual security selection is the key to
delivering outstanding results over the long term. We continue to favor
securities which play off of our aging of America economic theme. As the U.S.
population ages, we are finding unique opportunities in credits that cater to
this growing demographic trend. Seniors are more affluent and are seeking
housing within retirement communities which will offer them the ability to age
in place. We believe that this sector is in an early growth stage. During the
past six months, we have increased our holdings slightly in the retirement
sector to 23% from 22%. Credit spread widening has created an opportunity in the
hospital sector. Hospitals in general have seen margins decrease as managed care
and government payors try to keep costs down. We believe that hospitals serve
an essential need and our focus is on rural hospitals that face little or no
competition in their service area. We have increased our hospital exposure to
17% from 15%. The Fund typically purchases bonds priced to a short call date, or
to a final maturity, within an overall three-year time horizon. The Fund targets
securities with a high coupon, currently averaging 6.09%. The Fund experienced
strong cash inflows over the past six months, and this has helped provide ample
liquidity. As long as the yield spreads between varying investment grades
continue to widen and look attractive, we will be inclined to lower the Fund's
cash position in order to lock in attractive yields. The Fund's maturity has
averaged around 2.3 years, and we don't believe in making large bets on the
direction of interest rates. Rather we feel our efforts are best spent
monitoring and reviewing holdings.
--------------------
THIS SUPPLY/DEMAND
IMBALANCE HAD A
VARIETY OF EFFECTS,
MOST NOTABLY
PUSHING YIELDS UP
ON MUNICIPALS VERSUS
TREASURY SECURITIES.
--------------------
- --------------------------------------------------------------------------------
From time to time, the Fund's advisor has waived its management fee and/or
absorbed Fund expenses, which has resulted in higher returns and without these
waivers the rankings may have been lower.
1 Average annual total return and total return measure change in the value of
an investment in the Fund, assuming reinvestment of all dividends and
capital gains. Average annual total return reflects annualized change while
total return reflects aggregate change, and is not annualized.
2 Yield is annualized for the 30 days ended 2-26-99, is historical, and will
vary. The Fund's Advisor has waived its management fee of 0.31%. Otherwise,
current yields would have been 4.39% and returns would have been lower.
6
<PAGE>
The last six months have been good for the Fund and we feel that many
lower-rated credits have widened to the point where an economic downturn is
already priced in. Although at this point a severe slowdown looks unlikely, we
feel confident that our current holdings can weather through a downturn. Given
the short-term, income-maximization focus of the Fund, we believe it is well
situated to produce an attractive level of income even if an economic downturn
should emerge.
Thank you for your continued investment in the Strong Short-Term High Yield
Municipal Bond Fund.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 11-30-97 to 2-28-99
The Strong Short-Term Lehman Brothers 1-3 Year Lipper High Yield
High Yield Non-Investment Grade Municipal Debt
Municipal Fund Municipal Bond Index* Funds Index*
[GRAPH]
11-97 10,000 10,000 10,000
12-97 10,083 10,053 10,160
3-98 10,267 10,191 10,299
6-98 10,458 10,326 10,463
9-98 10,603 10,459 10,701
12-98 10,700 10,600 10,725
2-99 10,770 10,697 10,786
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Lehman Brothers 1-3 Year Non-Investment Grade Municipal Bond Index and the
Lipper High Yield 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 will
vary, and you may have a gain or loss when you sell shares.
- --------------------------------------------------------------------------------
3 The Fund's average maturity includes the effect of when-issued securities.
4 For the purposes of this average rating, the Fund's short-term debt
obligations have been assigned long-term ratings by the Advisor.
* The Lehman Brothers 1-3 Year Non-Investment Grade Municipal Bond Index is
an unmanaged index generally representative of municipal bonds rated below
Baa with maturities of one to three years. The Lipper High Yield 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 Lehman Brothers. Source of the Lipper index data is Lipper Inc.
YOUR FUND'S APPROACH
The Strong Short-Term High Yield Municipal Bond Fund seeks to provide a high
level of tax-free income by investing in short-term, lower rated municipal
securities. Our investment approach begins with a top-down assessment of the
economy, which we constantly monitor as the framework for our portfolio. Next,
we choose sectors which appear attractive based on our economic assessment.
Finally, we individually select securities within attractive sectors. Security
analysis does not stop when we select a holding for the portfolio. Each bond we
own is monitored continually.
Portfolio adjustments are made based on individual bond performance and changes
in the economic and competitive landscape.
- --------------------------------------------------------------------------------
MARKET HIGHLIGHTS
o Municipal bonds continue to trade at their least expensive levels relative
to the Treasury market in over a decade.
o Credit spreads between higher-rated and lower-rated securities widened as
investors demanded additional yield as compensation for a potential
slowdown in the U.S. economy. As a result, the investment performance
between a AAA-rated and a lower-rated municipal bond was dramatically
different.
o Recent economic statistics point to continued strength in the economy. More
importantly, inflation remains benign. Credit spreads have started to
narrow, which should improve the performance of lower-rated debt.
7
<PAGE>
THE STRONG SHORT-TERM MUNICIPAL BOND FUND
FUND HIGHLIGHTS
o For the six months ended February 28, 1999, the Fund posted a return of
2.91%. Its 30-day annualized yield stood at 3.92%. For investors in the 36%
tax bracket, this translates into a taxable equivalent yield of 6.13%.
o The Fund's average portfolio maturity, at 2.74 years, is very near the
maximum level permitted. The Fund's average quality rating remains solidly
at A.
o Vigorous bond-by-bond research and painstaking issue selection continue to
drive our investment process.
- ----------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS(1)
As of 2-28-99
1-year 5.68%
3-year 5.96%
5-year 4.38%
Since Inception 5.00%
(on 12-31-91)
- ----------------------------------------
PORTFOLIO
STATISTICS
As of 2-26-99
30-day annualized yield(2) 3.92%
Average maturity(3) 2.74 years
Average quality rating(4) A
PERSPECTIVES
FROM THE MANAGER
/s/Steven D. Harrop
Steven D. Harrop
- --------------------------------------------------------------------------------
Portfolio Manager
Unlike longer-term municipal markets, the markets for shorter-term municipal
issues have not experienced the unusual convergence of tax-exempt municipal
yields with taxable bond yields. (Usually, the yield on municipal issues is
lower, reflecting the federally tax-exempt status of the income they pay.) A
more normal relationship between the two has prevailed in shorter-maturity
issues--though it's worth reminding investors of the significant impact munis'
federally tax-exempt status can have on the yield that actually stays in your
pocket.
Markets overall have been volatile, with market pressures pushing yields first
higher, then lower. Yields of late have leveled off to a fairly narrow range.
When rates go much lower than their current levels, investors quickly lose
interest--which in turn spurs yields to move higher as prices move lower. The
lack of inflation, a federal deficit under control, and other external factors
should restrain rates from moving much higher, though. Recession elsewhere in
the world has had a slight braking effect on the U.S. economy, but so far our
economy and markets remain robust. Under these conditions, we don't anticipate
that the Federal Reserve will take action in either direction for the
foreseeable future.
In this environment, we're continuing to work with the investment strategies
that have helped this fund to outperform in recent years. We've continued to
emphasize credit quality in the portfolio, though we also selectively use
non-investment-grade securities to enhance yield potential. The Fund may invest
up to 15% of assets in non-investment-grade issues, and currently invests 10.3%
of the portfolio in them. We strive to manage risk through our rigorous
securities research and careful issue selection.
--------------------
Markets overall
have been
volatile, with
market pressures pushing yields
first higher,
then lower.
--------------------
- --------------------------------------------------------------------------------
From time to time, the Fund's advisor has waived its management fee and/or
absorbed Fund expenses, which has resulted in higher returns and without these
waivers the rankings may have been lower.
1 Average annual total return and total return measure change in the value of
an investment in the Fund, assuming reinvestment of all dividends and
capital gains. Average annual total return reflects annualized change while
total return reflects aggregate change, and is not annualized.
2 Yield is annualized for the 30 days ended 2-26-99, is historical, and will
vary.
8
<PAGE>
Diversification helps to keep risk in check as well; we believe that this is one
of the main attractions funds offer over investments in individual securities.
With 130 holdings in the Fund, if a single investment stumbles, it needn't bring
the whole portfolio down with it. At the same time, the Fund's positions are not
so diluted as to have little impact on performance--important for when things
are going well.
Although bond-by-bond research and individual issue selection drive the
portfolio, we are finding clusters of attractive bonds in the education,
utilities, retirement facilities, nursing homes, and multifamily housing
sectors.
We don't anticipate making significant changes to our investment approach over
the next several months, but as always we will monitor conditions carefully and,
should a change appear warranted, take appropriate steps.
Thank you for your investment in the Strong Short-Term Municipal Bond Fund.
We're pleased you've chosen us to help you pursue your important financial
goals.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-91 to 2-28-99
[GRAPH]
The Strong Lehman Brothers Lipper Short
Short-Term Municipal Municipal Municipal Debt
Bond Fund 3 Year Bond Index* Average*
12-91 10,000 10,000 10,000
12-92 10,716 10,643 10,579
12-93 11,441 11,305 11,132
12-94 11,256 11,383 11,168
12-95 11,861 12,396 11,975
12-96 12,439 12,946 12,422
12-97 13,301 13,655 12,998
12-98 14,039 14,367 13,577
2-99 14,182 14,513 13,652
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Lehman Brothers Municipal 3 Year Bond Index and the Lipper Short Municipal Debt
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.
- --------------------------------------------------------------------------------
3 The Fund's average maturity includes the effect of when-issued securities.
4 For the purposes of this average rating, the Fund's short-term debt
obligations have been assigned long-term ratings by the Advisor.
* The Lehman Brothers Municipal 3 Year Bond Index is an unmanaged index
generally representative of three-year, tax-exempt bonds. The Lipper Short
Municipal Debt Average represents funds that invest in municipal debt
issues with dollar-weighted average maturities of less than three years.
Source of the Lehman index data is Standard & Poor's Micropal. Source of
the Lipper index data is Lipper Inc.
YOUR FUND'S APPROACH
The Strong Short-Term Municipal Bond Fund seeks total return by investing for a
high-level of federally tax-exempt current income with a low degree of
share-price fluctuation. Because we believe that investors in a municipal bond
fund are seeking a steady stream of tax-exempt income, we strive to maximize
this income within the bounds of the Fund's maturity, quality, and
diversification goals. The Fund maintains an average portfolio maturity of three
years or less.
Our investment approach focuses on selection of individual securities, driven by
bond-by-bond research. Macroeconomic analysis also plays an important role in
shaping the portfolio.
MARKET HIGHLIGHTS
o The Lehman Brothers Municipal 3-Year Bond Index returned 2.65% for the six
months ended February 28, 1999, while the Lipper Short Municipal Debt
Average returned 1.95% for the same period.*
o Interest rates generally declined over the period, with demand for
shorter-term municipal issues running high and supply tight. This is
reflected in the Fund's yield, though we were able to reduce the impact of
declining yields through careful issue selection.
o Declining yields led some issuers to prepay their obligations-- also known
as prerefunding. This increased the number of prerefunded issues--which
have an effective credit quality of AAA--in the portfolio.
9
<PAGE>
- --------------------------------------------------------------------------------
BOND GLOSSARY
BOND QUALITY RATINGS--There are services that analyze the financial condition of
a bond's issuer and then assign it a rating. The best-known rating agencies are
Standard and Poors and Moody's. The highest-quality bonds are rated AAA (S&P) or
Aaa (Moody's.) The scale descends to AA, A, then BBB and so on, down to D. Bonds
with a rating of BBB or higher are considered investment-grade. Bonds rated CC
and below are considered "junk bonds." Typically, the lower a bond's rating, the
higher yield it must pay in order to compensate the bond-holder for the added
risk.
MATURITY--Like a loan, a bond must be paid off on a certain date. A bond's
maturity is the time remaining until it is paid off. Bonds typically mature in a
range from overnight to 30 years from now. Typically, bonds with longer
maturities will have higher yields and larger price changes in reaction to
interest rate changes. In rare situations, shorter-term bonds will have higher
yields; this is known as an inverted yield curve (see definition that follows.)
DURATION--Duration is similar to maturity, but also accounts for the semi-annual
interest payments made by most bonds. Duration is a useful tool for determining
a bond or a bond fund's sensitivity to interest rate changes. The higher the
duration, the more a bond's price will fluctuate when interest rates change.
TREASURY SPREAD--The Treasury spread is the difference in yield between a
Treasury bond (issued by the federal government) and a bond with an equal
maturity, but from another category, such as a corporate bond. This calculation
is used to measure the prices of corporate bonds, mortgage-backed securities and
other non-government issues relative to Treasuries. Higher spreads occur in
uncertain times when investors buy Treasuries for their safety and sell other
types of bonds.
YIELD--Yield is the income your investment is generating. It is
calculated by taking the income paid by a bond in a given period of time, often
30 days, annualizing it and stating it as a percentage of the money invested.
YIELD CURVE--The yield curve is a graph that plots the yields of Treasury bonds
against their maturities. Under normal circumstances, this line will slope
upward, reflecting longer-maturity bonds having higher yields. In rare
circumstances, such as in a time of deflation, the yield curve may slope
downward, or "invert." The steepness of the yield curve shifts depending on
economic trends and outlooks. Properly positioned, a bond investor can profit
from these shifts.
SCHEDULES OF INVESTMENTS IN SECURITIES FEBRUARY 28, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
===============================================================================
STRONG HIGH-YIELD MUNICIPAL BOND FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
MUNICIPAL BONDS 99.4%
ALABAMA 2.8%
West Jefferson, Alabama Amusement and Public
Park Authority First Mortgage Revenue -
Visionland, Alabama Project:
6.00%, Due 2/01/08 $ 3,445,000 $ 3,453,613
6.375%, Due 2/01/29 2,460,000 2,447,700
8.00%, Due 12/01/26 (Pre-Refunding at $102
on 12/01/00) 10,305,000 13,100,231
----------
19,001,544
ALASKA 0.6%
Seward, Alaska Revenue - Alaska Sealife Center
Project, 7.65%, Due 10/01/16 3,500,000 3,749,375
ARIZONA 2.1%
Maricopa County, Arizona IDA Senior Living
Facilities Revenue - Christian Care Mesa, Inc.
Project, 7.875%, Due 4/01/27 1,745,000 1,895,506
Navajo County, Arizona IDA IDR - Stone Container
Corporation Project:
7.20%, Due 6/01/27 5,675,000 6,270,875
7.40%, Due 4/01/26 5,500,000 6,091,250
----------
14,257,631
ARKANSAS 1.2%
Northwest Arkansas Regional Airport Authority
Airport Revenue, 7.625%, Due 2/01/27 7,000,000 8,216,250
CALIFORNIA 5.2%
ABAG Financial Authority for Nonprofit Corporations
COP - Eskaton Gold River Lodge Project:
6.375%, Due 11/15/15 1,000,000 992,500
6.375%, Due 11/15/28 3,000,000 2,943,750
Foothill/Eastern Transportation Corridor Agency
Toll Road Revenue:
Zero %, Due 1/01/17 5,000,000 1,950,000
Zero %, Due 1/01/26 7,000,000 1,688,750
Zero %, Due 1/01/28 24,000,000 5,190,000
Zero %, Due 1/01/29 8,335,000 1,708,675
Millbrae, California Residential Facilities
Revenue - Magnolia of Millbrae Project,
7.375%, Due 9/01/27 6,000,000 6,457,500
Modesto, California Irrigation District COP
Refunding and Capital Improvements, 5.30%,
Due 7/01/22 1,250,000 1,257,812
San Francisco, California Redevelopment Agency
Residential Facilities Revenue - Coventry Park
Project, 8.50%, Due 12/01/26 5,000,000 5,750,000
San Joaquin Hills, California Transportation
Corridor Agency Toll Road Revenue Refunding,
Zero %, Due 1/15/21 (Rate Reset Effective 1/15/07 10,000,000 6,925,000
----------
34,863,987
COLORADO 3.0%
Arapahoe County, Colorado E-470 Public Highway
Authority Capital Appreciation:
Zero %, Due 9/01/18 (c) 5,000,000 1,837,500
Zero %, Due 9/01/19 3,000,000 1,050,000
Zero %, Due 9/01/22 2,000,000 595,000
Zero %, Due 9/01/24 3,000,000 798,750
Arapahoe County, Colorado E-470 Public Highway
Authority Senior Revenue, 4.75%, Due 9/01/23 (c) 2,000,000 1,895,000
Bachelor Gulch, Colorado Metropolitan District
GO, 7.00%, Due 12/01/15 (c) 1,100,000 1,159,125
Black Hawk, Colorado Device Tax Revenue, 5.625%,
Due 12/01/21 1,500,000 1,479,375
Colorado Health Facilities Authority Hospital
Revenue - Steamboat Springs Health Care
Association Project, 5.75%, Due 9/15/22 5,000,000 5,081,250
Denver, Colorado Urban Renewal Authority Tax
Increment Revenue - Pavilions Project, 7.75%,
Due 9/01/16 1,760,000 1,942,600
Eaglebend, Colorado Affordable Housing
Corporation MFHR Refunding - Housing Project,
6.45%, Due 7/01/21 (c) 1,000,000 1,061,250
Englewood, Colorado MFHR Refunding - Marks
Apartments Project, 6.65%, Due 12/01/26 3,000,000 3,255,000
---------
20,154,850
CONNECTICUT 2.3%
Connecticut Development Authority PCR
Refunding - The Connecticut Light and Power
Company Project, 5.95%, Due 9/01/28 5,000,000 5,025,000
Connecticut Health and Educational Facilities
Authority Revenue - New Opportunities for
Waterbury, Inc., 6.75%, Due 7/01/28 3,895,000 4,138,437
Mashantucket Western Pequot Tribe Subordinated
Special Revenue:
Zero %, Due 9/01/15 2,000,000 777,500
Zero %, Due 9/01/16 2,000,000 730,000
Zero %, Due 9/01/18 1,100,000 350,625
5.50%, Due 9/01/28 2,200,000 2,147,750
6.40%, Due 9/01/11 1,710,000 1,898,100
---------
15,067,412
FLORIDA 5.4%
Arbor Greene Community Development District
Special Assessment Revenue:
5.75%, Due 5/01/06 985,000 987,463
7.00%, Due 5/01/03 575,000 592,969
Cory Lakes, Florida Community Development
District Special Assessment Revenue, 8.375%,
Due 5/01/17 3,360,000 3,666,600
Florida Housing Finance Agency MFHR
Refunding - Lake Side Villas and Golf
Villas at Sabal Palm Project:
6.75%, Due 12/01/10 1,000,000 997,500
7.00%, Due 12/01/16 2,600,000 2,593,500
7.25%, Due 12/01/25 4,400,000 4,394,500
Grand Haven Community Development District
Special Assessment Revenue, 6.90%, Due 5/01/19 1,000,000 1,052,500
Largo, Florida Sun Coast Health System Revenue -
Sun Coast Hospital Issue, 6.30%, Due 3/01/20 8,045,000 8,105,338
Palm Beach County, Florida Health Facilities
Authority Revenue Hospital Improvement -
Boca Raton Community Hospital, Inc.,
5.00%, Due 12/01/23 (b) 5,480,000 5,356,700
Palm Beach County, Florida Solid Waste IDR -
Okeelanta Power LP Project:
6.375%, Due 2/15/07 (Purchased in Default
on 1/28/98) 1,300,000 1,014,000
6.70%, Due 2/15/15 (Purchased in Default
on 2/04/98) 500,000 390,000
Palm Beach County, Florida Solid Waste IDR -
Osceola Power LP Project, 6.85%, Due 1/01/14
(Purchased in Default 1/13/98 - 2/04/98) 450,000 351,000
Pinellas County, Florida Educational Facilities
Authority Revenue - College Harbor Project,
8.50%, Due 12/01/28 5,185,000 5,541,469
Polk County, Florida HFA Subordinated Revenue -
Lake Wales Gardens Project, Zero %, Due 4/01/20 4,835,000 761,512
----------
35,805,051
GEORGIA 3.2%
Atlanta, Georgia Urban Residential Finance
Authority MFHR - Evergreen Village Estates
Project, 6.625%, Due 5/01/28 605,000 628,444
11
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES FEBRUARY 28, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
===============================================================================
STRONG HIGH-YIELD MUNICIPAL BOND FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
Atlanta, Georgia Urban Residential Finance
Authority MFHR - Franciscan Club Apartments
Projects, 7.75%, Due 4/01/22 (Defaulted
Effective 10/01/96) $4,840,000 $ 2,758,800
Dekalb County, Georgia Residential Care Facilities
for the Elderly Authority First Lien Revenue -
King's Bridge Retirement Center, Inc. Project:
8.00%, Due 7/01/06 650,000 736,125
8.15%, Due 7/01/16 2,380,000 2,710,225
8.25%, Due 7/01/26 5,250,000 5,925,937
Fulton County, Georgia Housing Authority
MFHR - Washington Court Project:
6.40%, Due 2/01/19 775,000 777,906
6.50%, Due 2/01/28 1,750,000 1,756,563
Savannah, Georgia EDA IDR - Stone Container
Corporation Project, 7.40%, Due 4/01/26 3,500,000 3,876,250
Savannah, Georgia Hospital Authority Revenue
Refunding and Improvement - Candler Hospital
Project, 7.00%, Due 1/01/23 (Pre-Refunding
at $102 on 1/01/03) (c) 2,000,000 2,260,000
---------
21,430,250
HAWAII 0.5%
Hawaii Department of Transportation Special Facility
Revenue - Continental Airlines, Inc. Project,
5.625%, Due 11/15/27 3,205,000 3,124,875
ILLINOIS 8.5%
Berwyn, Illinois GO, 4.25%, Due 12/01/15 1,795,000 1,651,400
Chicago, Illinois O'Hare International Airport Special
Facility Revenue Refunding - International
Terminal Project, 5.50%, Due 1/01/15 (b) 7,000,000 7,271,250
Chicago, Illinois O'Hare International Airport Special
Facility Revenue Refunding - United Air Lines, Inc.
Project, 5.35%, Due 9/01/16 2,500,000 2,490,625
Chicago, Illinois School Reform Board of
Trustees of the Board of Education
Capital Appreciation GO:
Zero %, Due 12/01/20 5,000,000 1,618,750
Zero %, Due 12/01/21 7,500,000 2,306,250
Zero %, Due 12/01/23 5,000,000 1,375,000
Zero %, Due 12/01/25 2,000,000 492,500
Chicago State University Board of Trustees
Auxiliary Facilities System Revenue, 5.50%,
Due 12/01/23 1,000,000 1,062,500
Godfrey, Illinois Revenue - United Methodist
Village Project, 5.875%, Due 11/15/29 5,000,000 4,787,500
Illinois DFA Hospital Revenue - Adventist Health
System/Sunbelt Obligation Project:
5.50%, Due 11/15/20 2,000,000 1,952,500
5.50%, Due 11/15/29 5,000,000 4,825,000
Illinois HDA MFHR, 5.00%, Due 7/01/25 3,750,000 3,192,187
Illinois Health Facilities Authority Revenue -
Delnor Community Residential Project, 6.15%,
Due 11/15/27 1,000,000 1,006,250
Metropolitan Pier and Exposition Authority
Refunding - McCormick Place Expansion
Project, 7.00%, Due 7/01/26 6,000,000 7,342,500
Riverdale, Illinois Environmental Improvement
Revenue - Acme Metals, Inc. Project:
7.90%, Due 4/01/24 (Defaulted Effective 9/29/98) 2,500,000 2,250,000
7.95%, Due 4/01/25 (Defaulted Effective 9/29/98) 5,000,000 4,500,000
Robbins, Illinois Resource Recovery Revenue:
8.375%, Due 10/15/10 4,000,000 2,200,000
8.375%, Due 10/15/16 11,250,000 6,187,500
---------
56,511,712
INDIANA 4.9%
Indiana Health Facility Financing Authority
Revenue - Hamilton Communities, Inc. Project,
6.50%, Due 1/01/30 18,200,000 18,268,250
Indiana HFA SFMR, 5.90%, Due 1/01/27 2,000,000 2,065,000
Indianapolis, Indiana EDR MFHR - Post Pointe
Apartments Project:
8.30%, Due 3/01/06 480,000 499,800
8.40%, Due 3/01/11 710,000 748,163
8.75%, Due 3/01/27 6,540,000 6,907,875
St. Joseph County, Indiana Hospital Authority
Health System Revenue - Memorial Health
System Project, 4.625%, Due 8/15/28 5,000,000 4,531,250
---------
33,020,338
IOWA 4.2%
Asbury, Iowa Elderly Care and Retirement Facilities
Revenue - Stonehill Project, 6.00%, Due 9/01/28 2,905,000 2,890,475
Cedar Rapids, Iowa First Mortgage Revenue -
Cottage Grove Place Project:
5.875%, Due 7/01/28 7,635,000 7,444,125
9.00%, Due 7/01/25 (Pre-Refunding at $102
on 7/01/05) 6,000,000 7,732,500
Iowa Finance Authority Community Provider
Revenue - Boys and Girls Home and Family
Services, Inc. Project, 6.25%, Due 12/01/28 1,000,000 967,500
Iowa Finance Authority Elder Care Facility
First Mortgage Revenue - Amity Fellowserve-
Iowa, Inc. Project, 6.00%, Due 10/01/28 8,820,000 8,775,900
---------
27,810,500
KENTUCKY 1.6%
Morgantown, Kentucky Solid Waste Disposal
Facilities Revenue - IMCO Recycling, Inc. Project:
6.00%, Due 5/01/23 4,100,000 4,084,625
7.65%, Due 5/01/16 5,740,000 6,385,750
---------
10,470,375
LOUISIANA 2.4%
Iberia Parish, Louisiana Hospital Service District
Number 1 Revenue, 8.00%, Due 5/26/16 2,100,000 2,202,375
Louisiana Health and Education Authority Revenue
Refunding - Lambeth House, Inc. Project:
6.15%, Due 1/01/18 1,885,000 1,873,219
6.20%, Due 1/01/28 2,750,000 2,746,563
Louisiana Public Facilities Authority Revenue -
Progressive Healthcare Providers, Inc.
Developmental Centers Project, 6.375%,
Due 10/01/28 3,350,000 3,270,438
Louisiana Public Facilities Authority Senior Lien
Revenue - Progressive Healthcare Providers, Inc.
Developmental Centers Project, 8.00%,
Due 1/01/13 (Pre-Refunding at $103 on 1/01/02) 5,175,000 5,776,594
---------
15,869,189
MASSACHUSETTS 1.9%
Massachusetts Health and Educational Facilities
Authority Revenue - Saints Memorial Medical
Center Project, 5.75%, Due 10/01/06 1,885,000 1,889,712
Massachusetts Industrial Finance Agency Assisted
Living Facility Revenue - TNG Marina Bay LLC
Project, 7.50%, Due 12/01/27 4,220,000 4,583,975
Massachusetts Industrial Finance Agency Health Care
Facility Revenue - Metro Health Foundation of
Massachusetts, Inc. Project, 6.75%, Due 12/01/27 3,000,000 3,123,750
Massachusetts Industrial Finance Agency
Revenue - Institute for Developmental Disabilities
Project, 9.25%, Due 6/01/09 2,980,000 3,048,510
---------
12,645,947
12
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
STRONG HIGH-YIELD MUNICIPAL BOND FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
MICHIGAN 1.4%
Michigan Strategic Fund Resource Recovery
Limited Obligation Revenue - Central Wayne
Energy Recovery LP Project:
6.90%, Due 7/01/19 $ 2,200,000 $ 227,500
7.00%, Due 7/01/27 6,800,000 6,885,000
---------
9,112,500
MINNESOTA 1.1%
St. Paul, Minnesota Housing and Redevelopment
Authority Hospital Facility Revenue - HealthEast
Project:
Series A, 6.625%, Due 11/01/17 3,895,000 4,036,194
Series B, 6.625%, Due 11/01/17 3,410,000 3,533,612
---------
7,569,806
MISSISSIPPI 0.4%
Mississippi Development Bank Special Obligation
Refunding - Diamond Lakes Utilities and
Improvements District Project, 6.25%,
Due 12/01/17 2,500,000 2,546,875
MISSOURI 1.9%
Bridgeton, Missouri IDA Senior Housing Revenue -
The Sarah Community Project,
5.90%, Due 5/01/28 3,500,000 3,469,375
Saline County, Missouri IDA Health
Facilities Revenue - John Fitzgibbon Memorial
Hospital, Inc. Project, 6.50%, Due 12/01/28 5,465,000 5,348,869
Springfield, Missouri Land Clearance Redevelopment
Authority Industrial Revenue Refunding -
University Plaza Redevelopment Corporation
Project, 6.90%, Due 10/01/16 3,440,000 3,556,100
---------
12,374,344
MONTANA 0.2%
Crow Finance Authority Tribal Purpose Revenue,
5.70%, Due 10/01/27 1,000,000 1,027,500
NEBRASKA 0.2%
Nebraska IFA SFHR, 5.85%, Due 9/01/28 1,000,000 1,033,750
NEVADA 0.7%
Clark County, Nevada IDR - Nevada Power
Company Project, 5.60%, Due 10/01/30 4,500,000 4,432,500
NEW JERSEY 4.7%
Camden County, New Jersey Improvement Authority
Lease Revenue - Kaighn Port Marine Terminal A
Project, 8.00%, Due 6/01/27 4,890,000 5,513,475
New Jersey EDA - Leisure Park Project, 5.875%,
Due 12/01/27 2,800,000 2,796,500
New Jersey EDA EDR - Kapkowski Road Landfill
Reclamation Improvement District Project:
Zero %, Due 4/01/04 160,000 118,600
Zero %, Due 4/01/05 310,000 215,837
Zero %, Due 4/01/06 1,020,000 668,100
Zero %, Due 4/01/07 1,025,000 629,094
Zero %, Due 4/01/09 1,020,000 549,525
6.375%, Due 4/01/31 15,000,000 15,543,750
6.50%, Due 4/01/31 5,000,000 5,193,750
New Jersey EDA Senior Mortgage Revenue
Refunding - Arbor Glen of Bridgewater Project,
6.00%, Due 5/15/28 500,000 493,750
----------
31,722,381
NEW YORK 2.1%
New York Energy Research and Development
Authority PCR - Long Island Lighting Company
Project, 5.15%, Due 3/01/16 (b) 3,000,000 3,000,060
New York Energy Research and Development
Authority PCR - Rochester Gas and Electric
Corporation Project, 5.95%, Due 9/01/33 2,000,000 2,200,000
New York, New York Industrial Development
Agency IDR Refunding - LaGuardia Association
LP Project, 6.00%, Due 11/01/28 6,000,000 6,045,000
Rockland County, New York Industrial
Development Agency Civic Facility Revenue -
Dominican College Project, 6.25%, Due 5/01/28 2,775,000 2,771,531
---------
14,016,591
NORTH CAROLINA 4.3%
Fletcher, North Carolina First Mortgage Housing
Revenue - Avery's View Retirement Facilities, Inc.
Project, 7.00%, Due 3/01/28 21,365,000 21,471,825
Macon County, North Carolina HFC Revenue -
Chestnut Hill Highlands Project, 8.50%,
Due 7/01/27 8,145,000 7,055,606
---------
28,527,431
NORTH DAKOTA 1.7%
North Dakota Housing Finance Agency Revenue
Housing Finance Program - Home Mortgage
Finance Program, 5.90%, Due 1/01/29 970,000 1,005,162
Ward County, North Dakota Health Care Facility
Revenue - St. Joseph's Hospital Corporation
Project, 8.875%, Due 11/15/24
(Pre-Refunding at $101 on 11/15/04) 8,210,000 10,344,600
----------
11,349,762
OHIO 3.7%
Akron, Ohio COP - Akron Municipal Baseball
Stadium Project, Zero %, Due 12/01/16
(Rate Reset Effective 12/01/01) 1,500,000 1,458,750
Cleveland, Ohio Airport Special Revenue
Refunding - Continental Airlines, Inc. Project:
5.50%, Due 12/01/08 (b) 9,045,000 8,965,856
5.70%, Due 12/01/19 (b) 7,000,000 6,746,250
Cuyahoga County, Ohio MFHR - The Park Lane
Apartments Project:
7.80%, Due 7/01/07 470,000 487,038
7.90%, Due 7/01/12 680,000 709,750
8.25%, Due 7/01/28 1,930,000 2,014,438
Medina County, Ohio EDR MFHR - Camelot Place,
Ltd. Project, 8.375%, Due 10/01/23 400,000 411,000
Pike County, Ohio Hospital Facilities Revenue -
Pike Health Services, Inc. Project, 6.75%,
Due 7/01/17 3,660,000 3,875,025
---------
24,668,107
PENNSYLVANIA 7.9%
Bucks County, Pennsylvania IDA CDR - Attleboro
Associates, Ltd. Nursing Facility Project:
8.00%, Due 12/01/05 685,000 768,912
8.25%, Due 6/01/11 3,265,000 3,660,881
Delaware County, Pennsylvania Authority Health
Care Facility First Mortgage Revenue -
GF/Longwood Care, Inc. Project:
8.50%, Due 4/15/10 530,000 555,837
9.00%, Due 4/15/25 5,860,000 6,145,675
Horsham, Pennsylvania IDA CDA Health Care
Facilities Revenue - GF/Pennsylvania
Properties, Inc. Project:
7.375%, Due 9/01/08 440,000 447,150
8.375%, Due 9/01/24 6,000,000 6,390,000
Lehigh County, Pennsylvania General Purpose
Authority Revenue - Kidspeace Obligation
Group, 6.20%, Due 11/01/14 (b) 3,585,000 3,576,038
Montgomery County, Pennsylvania IDA Revenue -
Wordsworth Academy Project, 8.00%,
Due 9/01/24 6,840,000 7,190,550
13
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) FEBRUARY 28, 1999(UNAUDITED)
- -------------------------------------------------------------------------------
===============================================================================
STRONG HIGH-YIELD MUNICIPAL BOND FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
Pennsylvania EDFA Exempt Facilities Revenue -
National Gypsum Company Project, 6.125%,
Due 11/01/27 $ 10,000,000 $ 9,987,500
Pennsylvania EDFA Qualified Residential Rent
Project Revenue - RSI Properties/Butler LLC
Project, 8.00%, Due 9/01/27 3,000,000 3,075,000
Pennsylvania EDFA Qualified Residential Rent
Project Revenue - RSI Properties/Greensburg
LLC Project, 8.00%, Due 9/01/27 3,000,000 3,075,000
Philadelphia, Pennsylvania IDA CDR Refunding -
Doubletree Guest Suites Project, 6.50%,
Due 10/01/27 3,500,000 3,714,375
Scranton-Lackawanna, Pennsylvania Health and
Welfare Authority Hospital Revenue - Marian
Community Hospital Project, 7.125%,
Due 1/15/13 1,000,000 1,105,000
Wilkinsburg, Pennsylvania Municipal Authority
Health Facilities Revenue - Monroeville Christian
Project, 8.25%, Due 3/01/27 3,000,000 3,067,500
---------
52,759,418
PUERTO RICO 0.7%
Commonwealth of Puerto Rico Public Improvement
GO, 4.75%, Due 7/01/23 5,000,000 4,793,750
SOUTH CAROLINA 6.7%
Connector 2000 Association, Inc. Subordinate Capital
Appreciation Toll Road Revenue - Greenville, South
Carolina Southern Connector Project:
Zero %, Due 1/01/15 4,400,000 1,622,500
Zero %, Due 1/01/16 4,600,000 1,592,750
Zero %, Due 1/01/17 5,600,000 1,820,000
Zero %, Due 1/01/18 5,800,000 1,769,000
Zero %, Due 1/01/19 5,900,000 1,688,875
Zero %, Due 1/01/23 7,400,000 1,609,500
Zero %, Due 1/01/24 7,500,000 1,528,125
Zero %, Due 1/01/25 8,700,000 1,663,875
Zero %, Due 1/01/26 9,000,000 1,608,750
Zero %, Due 1/01/27 9,100,000 1,535,625
Zero %, Due 1/01/28 9,300,000 1,464,750
Zero %, Due 1/01/29 10,500,000 1,548,750
Zero %, Due 1/01/30 10,800,000 1,498,500
Zero %, Due 1/01/31 11,000,000 1,430,000
Zero %, Due 1/01/32 11,200,000 1,372,000
Zero %, Due 1/01/33 11,500,000 1,322,500
Zero %, Due 1/01/34 11,700,000 1,257,750
Zero %, Due 1/01/35 12,000,000 1,215,000
Zero %, Due 1/01/36 12,200,000 1,159,000
Zero %, Due 1/01/37 12,400,000 1,100,500
Zero %, Due 1/01/38 17,200,000 1,419,000
Florence County, South Carolina IDR - Stone
Container Corporation Project, 7.375%,
Due 2/01/07 2,400,000 2,568,000
South Carolina Jobs - EDA Solid Waste Recycling
Facilities Revenue, 9.00%, Due 12/01/11 1,000,000 1,048,750
South Carolina Jobs - EDA Solid Waste Recycling
Facilities Revenue - Santee River Rubber Project,
8.00%, Due 12/01/14 10,000,000 10,012,500
----------
44,856,000
SOUTH DAKOTA 0.3%
Mobridge, South Dakota Health Care Facilities
Revenue - Mobridge Regional Hospital Project,
6.50%, Due 12/01/22 1,860,000 1,904,175
TENNESSEE 0.3%
Shelby County, Tennessee Health, Educational and
Housing Facility Board Health Care Facilities
Revenue - Kirby Pines Retirement Community
Project, 6.375%, Due 11/15/25 2,100,000 2,168,250
TEXAS 2.0%
DeSoto, Texas IDA IDR - Wintergreen Commercial
Partnership Project, 7.00%, Due 1/01/17 3,772,033 3,828,614
Hidalgo County, Texas Health Services Corporation
Hospital Revenue - Mission Hospital, Inc. Project,
6.75%, Due 8/15/16 3,000,000 3,311,250
Houston, Texas Airport System Special Facilities
Revenue - Continental Airlines, Inc. Airport
Improvement Projects, 6.125%, Due 7/15/27 1,450,000 1,484,437
Jefferson County, Texas Health Facilities
Development Corporation Hospital Revenue -
Baptist Health Care System Project, 8.30%,
Due 10/01/14 4,630,000 4,809,181
---------
13,433,482
VIRGINIA 3.9%
Alexandria, Virginia Redevelopment and Housing
Authority MFHR Refunding - Park Center
Apartments Project, 6.375%, Due 4/01/34 14,400,000 14,274,000
Dulles Town Center Community Development
Authority Special Assessment - Dulles Town
Center Project, 6.25%, Due 3/01/26 3,000,000 3,022,500
Hampton, Virginia Redevelopment and Housing
Authority First Mortgage Revenue Refunding -
Olde Hampton Project, 6.50%, Due 7/01/16 1,540,000 1,557,325
Loudoun County, Virginia IDA IDR Refunding -
Dulles Airport Marriott Hotel Project, 7.125%,
Due 9/01/15 5,000,000 5,443,750
Virginia Small Business Financing Authority IDR -
Albion Enterprises LLC Project, 6.40%,
Due 1/01/14 1,750,000 1,752,188
---------
26,049,763
WASHINGTON 0.6%
Washington Housing Finance Commission Single
Family Program Revenue, Zero %, Due 12/01/25 7,495,000 4,337,731
WEST VIRGINIA 0.2%
Marion County, West Virginia County Commission
Solid Waste Disposal Facility Revenue - Adirondack
Recycling Project:
8.00%, Due 12/01/25 1,389,734 1,250,760
10.00%, Due 12/01/25 193,916 174,525
---------
1,425,285
WISCONSIN 4.3%
Brookfield, Wisconsin IDR Refunding - Midway
Motor Lodge Project, 8.40%, Due 4/01/12 5,130,000 5,636,588
Wisconsin Health and EFA Revenue - Aurora
Medical Group, Inc. Project, 9.00%, Due 11/15/25 2,460,000 2,638,350
Wisconsin Health and EFA Revenue - National
Regency of New Berlin, Inc. Project:
7.75%, Due 8/15/15 5,000,000 5,600,000
8.00%, Due 8/15/25 6,500,000 7,296,250
Wisconsin Health and EFA Revenue - Richland
Hospital, Inc. Project, 5.375%, Due 6/01/28 2,500,000 2,509,375
Wisconsin Housing and EDA Home Ownership
Revenue:
6.20%, Due 3/01/27 (c) 3,000,000 3,150,000
7.10%, Due 9/01/15 (c) 1,785,000 1,923,337
---------
28,753,900
14
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
STRONG HIGH-YIELD MUNICIPAL BOND FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
WYOMING 0.3%
Teton County, Wyoming Hospital District Hospital
Revenue Refunding and Improvement, 5.80%,
Due 12/01/17 $ 1,950,000 $ 2,032,875
Wyoming Community Development Authority
Housing Revenue, 5.85%, Due 6/01/28 55,000 55,000
-----------
2,087,875
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (COST $645,415,797) 662,950,462
- -------------------------------------------------------------------------------
TAXABLE MUNICIPAL BONDS 0.1%
IOWA
Iowa Finance Authority Elder Care Facility First
Mortgage Revenue - Amity Fellowserve-Iowa, Inc.
Project, 7.00%, Due 10/01/06 860,000 857,850
- -------------------------------------------------------------------------------
TOTAL TAXABLE MUNICIPAL BONDS (COST $860,000) 857,850
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 4.1%
MUNICIPAL MONEY MARKET FUNDS
MULTIPLE STATES
Strong Municipal Money Market Fund (d) 27,300,000 27,300,000
- -------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $27,300,000) 27,300,000
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $673,575,797) 103.6% 691,108,312
Other Assets and Liabilities, Net (3.6%) (23,832,271)
- -------------------------------------------------------------------------------
NET ASSETS 100.0% $667,276,041
===============================================================================
FUTURES
- --------------------------------------------------------------------------------
Underlying
Expiration Face Amount Unrealized
Date at Value Appreciation
Sold:
305 Municipal Bond Futures 3/99 $38,010,625 $63,063
===============================================================================
STRONG MUNICIPAL BOND FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
MUNICIPAL BONDS 100.3%
ALABAMA 2.2%
Courtland, Alabama IDB Solid Waste Disposal
Revenue - Champion International Corporation
Project:
5.70%, Due 10/01/28 $ 3,000,000 $ 2,970,000
6.375%, Due 3/01/29 3,425,000 3,613,375
Troy, Alabama IDB Solid Waste Revenue - Alabama
Protein Recycling LLC Project, 7.75%,
Due 5/01/19 2,000,000 2,010,000
---------
8,593,375
ALASKA 1.4%
Alaska HFC Capital Appreciation Mortgage
Revenue, Zero %, Due 12/01/27 8,500,000 1,445,000
Valdez, Alaska Marine Terminal Revenue
Refunding - BP Pipelines (Alaska), Inc.
Project, 5.65%, Due 12/01/28 4,000,000 4,105,000
---------
5,550,000
ARIZONA 1.3%
Arizona Health Facilities Authority Revenue -
Bethesda Foundation - Bethesda Gardens
Project, 6.40%, Due 8/15/27 1,000,000 1,052,500
Phoenix, Arizona IDA Mortgage Revenue
Refunding - Christian Care Retirement
Apartments, Inc. Project, 6.25%, Due 1/01/16 3,740,000 3,950,375
---------
5,002,875
ARKANSAS 1.3%
Northwest Arkansas Regional Airport Authority
Airport Revenue, 7.625%, Due 2/01/27 3,000,000 3,521,250
Pulaski County, Arkansas Public Facilities Board
MFHR - Plantation House and Indian Hills
Apartments Project, 6.05%, Due 8/01/27 1,500,000 1,554,375
---------
5,075,625
CALIFORNIA 1.9%
California Tri-City Housing Finance Agency
SFMR - FNMA and GNMA Collateralized, 6.45%,
Due 12/01/28 1,950,000 2,067,000
Foothill/Eastern Transportation Corridor Agency
Toll Road Revenue:
Zero %, Due 1/01/28 12,060,000 2,607,975
Zero %, Due 1/01/30 4,110,000 801,450
Los Angeles, California MFHR - Earthquake
Rehabilitation Projects, 5.85%, Due 12/01/27 1,535,000 1,661,638
---------
7,138,063
COLORADO 7.5%
Arapahoe County, Colorado E-470 Public Highway
Authority Capital Improvement Trust Fund
Highway Revenue, Zero %, Due 8/31/08 (Pre-
Refunding at $82.9449 on 8/31/05) 4,500,000 2,868,750
Castle Rock Ranch, Colorado Public Improvements
Authority Public Facilities Revenue:
6.25%, Due 12/01/17 9,820,000 11,145,700
6.30%, Due 12/01/07 3,115,000 3,566,675
6.375%, Due 12/01/11 2,000,000 2,300,000
6.40%, Due 12/01/08 3,310,000 3,810,637
6.50%, Due 12/01/09 3,525,000 4,093,406
Colorado Health Facilities Authority Retirement
Housing Revenue - Liberty Heights Project,
Zero %, Due 7/15/20 2,900,000 917,125
-------
28,702,293
CONNECTICUT 0.4%
Connecticut Health and EFA Revenue - Edgehill
Issue, 6.875%, Due 7/01/17 1,500,000 1,614,375
DELAWARE 0.6%
Delaware EDA Revenue, 6.30%, Due 5/01/22 2,250,000 2,413,125
FLORIDA 1.3%
Broward County, Florida HFA MFHR - Cross Keys
Apartments Project, 5.75%, Due 10/01/28 500,000 514,375
Broward County, Florida HFA MFHR - Pembroke
Park Apartments Project, 5.65%, Due 10/01/28 1,300,000 1,330,875
Leon County, Florida EFA Revenue Refunding -
Southgate Residence Hall Project, 6.75%,
Due 9/01/28 1,000,000 1,022,500
Manatee County, Florida HFA SFMR, 7.45%,
Due 5/01/27 950,000 1,068,750
Pinellas County, Florida EFA Revenue - College
Harbor Project, 6.50%, Due 12/01/20 1,020,000 1,095,225
---------
5,031,725
15
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued)FEBRUARY 28, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
===============================================================================
STRONG MUNICIPAL BOND FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
GEORGIA 9.2%
Atlanta, Georgia Urban Residential Finance Authority
MFHR - Evergreen Village Estates Project:
5.875%, Due 5/01/07 $ 820,000 $ 866,125
6.375%, Due 5/01/17 1,675,000 1,800,625
6.50%, Due 5/01/27 2,965,000 3,205,906
Colquitt County, Georgia Development Authority
Revenue - Southern Care Corporation Facility,
Zero %, Due 12/01/21 7,270,000 2,035,600
George L. Smith II Georgia World Congress Center
Authority Revenue Refunding - Domed Stadium
Project, 5.75%, Due 7/01/15 (b) 4,000,000 4,185,000
Houston County, Georgia MFHR - Emerald Coast
Housing II, Inc. Corder Crossing Apartments
Project, 7.00%, Due 8/01/28 8,170,000 8,057,663
Richmond County, Georgia Development Authority
First Mortgage Revenue, Zero %, Due 12/01/21 20,000,000 5,600,000
Washington, Georgia Wilkes Payroll Development
Authority Subordinated Revenue - Southern Care
Corporation Facility Project:
Series A, Zero %, Due 12/01/21 8,125,000 2,275,000
Series C, Zero %, Due 12/01/21 25,595,000 7,166,600
---------
35,192,519
IDAHO 0.6%
Idaho Housing Agency SFMR, 6.45%, Due 7/01/27 2,000,000 2,115,000
ILLINOIS 11.3%
Illinois DFA Hospital Revenue - Adventist Health
System/Sunbelt Obligation, 5.50%, Due 11/15/29 6,000,000 5,790,000
Illinois DFA Retirement Housing Revenue - Regency
Park at Lincolnwood Project:
Zero %, Due 7/15/23 30,000,000 7,875,000
Zero %, Due 7/15/25 7,000,000 1,610,000
Illinois EFA Revenue Refunding - DePaul
University Project, 5.50%, Due 10/01/19 4,365,000 4,523,231
Illinois Health Facilities Authority Refunding
Revenue - Lutheran Social Services of Illinois,
6.125%, Due 8/15/20 9,160,000 9,377,550
Kane, Cook and DuPage Counties, Illinois School
District Number U-46 Capital Appreciation
School Building:
Zero %, Due 1/01/11 1,800,000 1,030,500
Zero %, Due 1/01/13 2,500,000 1,278,125
Metropolitan Pier and Exposition Authority
Capital Appreciation - McCormick
Place Expansion Project, Zero %, Due 6/15/16 1,250,000 523,437
Metropolitan Pier and Exposition Authority
Refunding - McCormick Place Expansion Project,
7.00%, Due 7/01/26 1,500,000 1,835,625
Silvis, Rock Island County, Illinois Special
Service Area GO, 5.65%, Due 1/01/18 1,105,000 1,163,013
Will County, Illinois Exempt Facilities Revenue -
Mobil Oil Refining Corporation Project, 6.40%,
Due 4/01/26 5,000,000 5,475,000
Zion, Illinois Park District GO Revenue, 6.50%,
Due 12/30/17 2,485,000 2,578,188
---------
43,059,669
INDIANA 5.1%
Indiana Health Facility Financing Authority
Hospital Revenue - Jackson County Schneck
Memorial Hospital Project, 7.50%, Due 2/15/22
(Pre-Refunding at $102 on 2/15/02) 6,790,000 7,638,750
Petersburg, Indiana PCR Refunding - Indianapolis
Power & Light Company Project, 5.50%,
Due 10/01/23 4,425,000 4,507,969
St. Joseph County, Indiana Hospital Authority
Health System Revenue - Madison Center, Inc.
Project, 5.80%, Due 2/15/24 7,300,000 7,245,250
---------
19,391,969
IOWA 1.4%
Iowa Finance Authority Hospital Facility Refunding
and Revenue - Jennie Edmundson Memorial
Hospital Project, 7.65%, Due 11/01/16 (Pre-
Refunding at $102 on 11/01/01) 4,850,000 5,450,187
LOUISIANA 4.6%
Iberia Parish, Louisiana IDB IDR - Arcadia Board
Company, Ltd. Project, 7.50%, Due 8/01/22 2,500,000 2,493,750
New Orleans, Louisiana Regional Transit Authority
Tax-Exempt Lease-Purchase Agreements:
Lease M98147, 6.125%, Due 5/01/10 13,736,428 13,839,451
Lease M98159, 6.125%, Due 5/01/10 1,292,101 1,301,792
---------
17,634,993
MASSACHUSETTS 1.0%
Massachusetts IFA IDR - Welch Foods, Inc., 5.60%,
Due 12/01/17 1,700,000 1,746,750
Massachusetts Municipal Wholesale Electric
Company Power Supply System Revenue, 4.75%,
Due 7/01/11 2,000,000 2,027,500
---------
3,774,250
MICHIGAN 1.4%
Dearborn, Michigan EDC Hospital Revenue
Refunding - Oakwood Obligated Group, 5.25%,
Due 8/15/21 (c) 2,765,000 2,803,019
Michigan Hospital Finance Authority Hospital
Revenue Refunding - Pontiac Osteopathic Hospital,
6.00%, Due 2/01/14 2,500,000 2,600,000
---------
5,403,019
MINNESOTA 2.2%
Golden Valley, Minnesota Governmental Facilities
Revenue - Local Government Information Systems
Association Project, 6.10%, Due 12/01/17 1,125,000 1,140,469
St. Paul, Minnesota Housing and Redevelopment
Authority Lease Revenue - Community of Peace
Academy Project, 6.10%, Due 11/01/29 3,570,000 3,570,000
Woodbury, Minnesota IDR Refunding - Harvey
Vogel Manufacturing Company Project, 5.80%,
Due 12/01/28 3,510,000 3,518,775
---------
8,229,244
MISSOURI 1.7%
St. Louis, Missouri Municipal Finance Corporation
Leasehold Revenue Refunding, 5.85%,
Due 7/15/09 3,600,000 3,789,000
Springfield, Missouri Land Clearance Redevelopment
Authority Industrial Revenue Refunding -
University Plaza Project, 6.60%, Due 10/01/11 2,465,000 2,606,737
---------
6,395,737
MONTANA 0.4%
Crow Finance Authority Tribal Purpose Revenue,
5.70%, Due 10/01/27 1,500,000 1,541,250
NEW HAMPSHIRE 0.7%
New Hampshire Higher Educational and Health
Facilities Authority Revenue - Franklin Pierce
College Issue, 5.30%, Due 10/01/28 2,500,000 2,493,750
NEW MEXICO 1.2%
Albuquerque, New Mexico Industrial Revenue -
MCT Industries, Inc. Project, 6.50%, Due 4/01/17 4,330,000 4,660,163
16
<PAGE>
- -------------------------------------------------------------------------------
================================================================================
STRONG MUNICIPAL BOND FUND (CONTINUED)
================================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
NEW YORK 1.9%
Dutchess County, New York Resource Recovery
Agency Solid Waste System Revenue, 5.40%,
Due 1/01/13 (b) $ 1,710,000 $ 1,769,850
New York Housing Corporation Revenue
Refunding, 5.00%, Due 11/01/13 1,000,000 1,008,750
New York, New York GO, 5.875%, Due 3/15/14 1,720,000 1,857,600
New York Urban Development Corporation
Revenue, 5.50%, Due 4/01/19 (c) 1,500,000 1,561,875
New York Urban Development Corporation
Revenue - University Facilities Grants Project,
5.875%, Due 1/01/21 1,045,000 1,141,662
---------
7,339,737
NORTH DAKOTA 1.5%
North Dakota Housing Finance Agency - Home
Mortgage Finance Program, 6.40%, Due 1/01/28 1,335,000 1,421,775
Oakes, North Dakota IDR - Omniquip International,
Inc. Project, 5.80%, Due 2/01/14 4,515,000 4,503,713
---------
5,925,488
OHIO 4.6%
Medina County, Ohio EDR MFHR - Camelot Place,
Ltd. Project, 8.375%, Due 10/01/23 3,800,000 3,904,500
Montgomery County, Ohio Health Care Facilities
Revenue Refunding - Friendship Village of
Dayton Project, 6.25%, Due 2/01/22 1,250,000 1,259,375
Ohio Housing Finance Agency Residential
Mortgage Revenue, 5.95%, Due 9/01/27 1,950,000 2,035,312
Toledo, Ohio MFMR - Commodore Perry
Apartments Project, 7.00%, Due 12/01/28 7,500,000 7,593,750
Toledo, Ohio Multi-Family Housing Mortgage
GO - Commodore Perry Apartments Project,
5.45%, Due 12/01/28 2,680,000 2,723,550
---------
17,516,487
OKLAHOMA 4.0%
Oklahoma County, Oklahoma Finance Authority
MFHR First Mortgage - Multiple Apartments
Project, 7.125%, Due 4/01/28 10,170,000 10,195,425
Oklahoma Ordinance Works Authority PCR
Refunding - Ralston Purina Company Project,
6.30%, Due 9/01/15 1,500,000 1,633,125
Shawnee, Oklahoma Hospital Authority Revenue -
MidAmerica HealthCare, Inc., 8.00%, Due 4/01/04 2,265,000 2,345,657
Washington County, Oklahoma Medical Authority
Revenue - Bartlesville Jane Phillips Episcopal
Hospital Project, 6.125%, Due 11/01/14 1,000,000 1,032,810
---------
15,207,017
OREGON 0.3%
Washington County, Oregon MFHR - Bethany
Meadows Project, 6.25%, Due 8/01/10 1,000,000 1,032,500
PENNSYLVANIA 6.6%
Montgomery County, Pennsylvania IDA First
Mortgage Revenue Refunding - The Meadowood
Corporation, 6.25%, Due 12/01/17 1,500,000 1,561,875
Montgomery County, Pennsylvania IDA Retirement
Community Revenue - ACTS Retirement-Life
Communities, 5.25%, Due 11/15/28 8,350,000 8,068,187
Pennsylvania EDA Qualified Residential Rent
Project Revenue - RSI Properties/Butler LLC
Project, 8.00%, Due 9/01/27 2,360,000 2,419,000
Pennsylvania EDA Qualified Residential Rent
Project Revenue - RSI Properties/Greensburg
LLC Project, 8.00%, Due 9/01/27 2,655,000 2,721,375
Philadelphia, Pennsylvania Hospitals and Higher
EFA Hospital Revenue - Temple University
Hospital Project, 6.50%, Due 11/15/08 3,900,000 4,397,250
Scranton-Lackawanna, Pennsylvania Health and
Welfare Authority Hospital Revenue - Marian
Community Hospital Project, 6.50%, Due 1/15/07 1,500,000 1,591,875
Scranton-Lackawanna, Pennsylvania Health and
Welfare Authority Hospital Revenue - Moses
Taylor Hospital Project, 6.25%, Due 7/01/20 4,200,000 4,383,750
---------
25,143,312
RHODE ISLAND 0.4%
Rhode Island Health and Education Building
Corporation Hospital Financing Revenue -
South County Hospital Project, 6.00%,
Due 11/15/17 1,630,000 1,723,725
SOUTH CAROLINA 5.5%
Connector 2000 Association, Inc. Senior Capital
Appreciation Toll Road Revenue - Greenville,
South Carolina Southern Connector Project:
Zero %, Due 1/01/12 3,900,000 1,891,500
Zero %, Due 1/01/14 4,560,000 1,960,800
Zero %, Due 1/01/15 1,000,000 403,750
Zero %, Due 1/01/26 10,000,000 2,025,000
Zero %, Due 1/01/32 12,100,000 1,694,000
Connector 2000 Association, Inc. Senior Current
Interest Toll Road Revenue - Greenville, South
Carolina Southern Connector Project, 5.25%,
Due 1/01/23 8,800,000 8,041,000
York County, South Carolina Exempt Facility
Industrial Revenue - Hoechst Celanese Corporation
Project, 5.70%, Due 1/01/24 4,890,000 4,963,350
---------
20,979,400
SOUTH DAKOTA 1.8%
Education Loans, Inc. South Dakota Student Loan
Revenue Subordinated Asset-Backed, 5.60%,
Due 6/01/20 3,000,000 3,026,250
Sisseton-Wahpeton Sioux Tribe of the Lake Traverse
Reservation GO:
7.00%, Due 11/01/13 850,000 891,438
7.00%, Due 11/01/23 1,290,000 1,312,575
South Dakota EDFA EDR Pooled Loan Program -
Midstates Printing, Inc. Project, 5.50%,
Due 4/01/18 685,000 668,731
South Dakota HDA Homeownership Mortgage,
6.40%, Due 5/01/16 1,000,000 1,060,000
---------
6,958,994
TENNESSEE 0.5%
Shelby County, Tennessee Health, Educational and
Housing Facilities Board Revenue - Ave Maria
Assisted Living Project, 5.50%, Due 12/01/31 2,000,000 1,997,500
TEXAS 8.5%
El Paso, Texas Property Finance Authority, Inc.
SFMR - GNMA Mortgage-Backed, 8.70%,
Due 12/01/18 490,000 526,138
Grape Creek-Pulliam, Texas Independent School
District Public Facility Corporation School Facility
Lease Revenue:
7.00%, Due 5/15/10 1,000,000 1,126,250
7.25%, Due 5/15/21 1,300,000 1,452,750
17
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) FEBRUARY 28,1999 (UNAUDITED)
- -------------------------------------------------------------------------------
===============================================================================
STRONG MUNICIPAL BOND FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
Guadalupe-Blanco River Authority Sewage
and Solid Waste Disposal Facility - E.I. du Pont de
Nemours and Company Project, 6.40%,
Due 4/01/26 $ 4,000,000 $ 4,365,000
Lufkin, Texas Health Facilities Development
Corporation Health System Revenue and
Refunding - Memorial Health System of East
Texas Project, 6.875%, Due 2/15/26 8,095,000 8,874,144
Port Arthur, Texas HFC Mortgage Revenue
Refunding - FHA Insured Mortgage Loans -
Port Arthur UDAG Projects, 6.40%, Due 1/01/28 3,565,000 3,778,900
Ranger, Texas Housing Corporation MFMR
Refunding - FHA Insured Mortgage Loans -
Ranger Apartments Project, 8.80%, Due 3/01/24 1,160,000 1,342,700
Texas Department of Housing and Community
Affairs Residential Mortgage Revenue, 5.50%,
Due 1/01/21 (b) 5,115,000 5,159,756
Texas Department of Housing and Community
Affairs SFMR, 6.00%, Due 9/01/17 1,310,000 1,382,050
Woodville, Texas HFC MFHR - Dogwood Terrace
Apartments Project, 7.50%, Due 10/01/29 4,450,000 4,444,437
---------
32,452,125
UTAH 1.2%
Eagle Mountain, Utah Special Assessment, 5.90%,
Due 12/15/07 1,455,000 1,457,823
Salt Lake County, Utah College Revenue -
Westminster College of Salt Lake City Project,
5.75%, Due 10/01/27 1,700,000 1,731,875
Salt Lake County, Utah Housing Authority MFHR -
Millcreek Pines Apartments Project, 6.80%,
Due 9/01/17 1,390,000 1,436,912
---------
4,626,610
VIRGINIA 0.5%
Pocahontas Parkway Association Route 895
Connector Toll Road Revenue, Zero %,
Due 8/15/17 5,000,000 1,787,500
WASHINGTON 2.1%
Chelan County, Washington Public Utility
District Number 1 - Chelan Hydro Consolidated
System Revenue, 5.60%, Due 7/01/32 1,000,000 1,026,250
Grant County, Washington Public Utility District
Number 2 - Wanapum Hydroelectric Development
Second Series Revenue Refunding, 5.375%,
Due 1/01/16 (b) 1,365,000 1,375,238
Spokane, Washington Downtown Foundation
Parking Revenue - River Park Square Project,
5.60%, Due 8/01/19 3,350,000 3,446,313
Washington EDFA Nonrecourse Revenue - Lindal
Cedar Homes, Inc. Project, 5.80%, Due 11/01/17 2,175,000 2,232,094
---------
8,079,895
WISCONSIN 2.2%
Wisconsin Health and EFA Revenue - Howard
Young Medical Center, Inc. Project, 5.75%,
Due 8/15/13 1,250,000 1,301,562
Wisconsin Health and EFA Revenue - St. John's
Home of Milwaukee and Sunrise Care Center, Inc.
Obligated Group Project, 5.625%, Due 12/15/22 5,450,000 5,429,562
Wisconsin Housing and EDA Home Ownership
Revenue, 6.20%, Due 3/01/27 1,480,000 1,554,000
---------
8,285,124
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (COST $364,994,330) 383,518,620
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 1.9%
WEEKLY VARIABLE RATE PUT BONDS 1.2%
COLORADO 0.3%
Colorado Health Facilities Authority Refunding
Revenue - Valley View Hospital Association
Project, 4.50%, Due 3/03/99 945,000 945,000
LOUISIANA 0.2%
Louisiana Housing Finance Agency MFHR
Refunding - The New Orleanian Project, 5.15%,
Due 3/03/99 865,000 865,000
NORTH CAROLINA 0.3%
Cabarrus County, North Carolina Industrial Facilities
and Pollution Control Financing Authority
Revenue - Oiles America Corporation Project,
4.45%, Due 3/03/99 1,300,000 1,300,000
TEXAS 0.4%
Harris County, Texas IDC IDR - Chusei USA, Inc.
Project, 4.70%, Due 3/02/99 1,400,000 1,400,000
---------
Total Weekly Variable Rate Put Bonds 4,510,000
MUNICIPAL FUNDS 0.7%
MULTIPLE STATES
Nuveen Premium Income Municipal Fund 17,400 263,175
Nuveen Premium Income Municipal Fund 4 54,400 805,800
Strong Municipal Money Market Fund (d) 1,700,000 1,700,000
---------
Total Municipal Funds 2,768,975
- -------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $7,265,366) 7,278,975
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $372,259,696) 102.2% 390,797,595
Other Assets and Liabilities, Net (2.2%) (8,616,573)
- -------------------------------------------------------------------------------
NET ASSETS 100.0% $382,181,022
===============================================================================
FUTURES
- -------------------------------------------------------------------------------
Underlying Unrealized
Expiration Face Amount Appreciation
Date at Value (Depreciation)
- -------------------------------------------------------------------------------
Sold:
15 Municipal Bonds 3/99 $1,869,375 $ 938
Purchased:
15 U. S. Treasury Bonds 3/99 1,822,031 (30,938)
18
<PAGE>
- -------------------------------------------------------------------------------
===============================================================================
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS 86.9%
ALABAMA 4.3%
West Jefferson Amusement and Public Park
Authority First Mortgage Revenue - Visionland
Alabama Project, 5.875%, Due 2/01/06 $ 6,510,000 $ 6,526,275
ARIZONA 0.6%
Winslow, Arizona IDA Hospital Revenue - Winslow
Memorial Hospital Project, 4.95%, Due 6/01/03 845,000 847,112
CALIFORNIA 0.1%
Los Angeles, California Regional Airports
Improvement Corporation Lease Revenue
Facilities - Continental Airlines, Inc. Project,
9.25%, Due 8/01/24 85,000 101,044
COLORADO 1.3%
Black Hawk, Colorado Business Improvement
District Special Assessment Special Improvement
District Number 1997-1, 6.00%, Due 12/01/09 1,470,000 1,473,675
Colorado Health Facilities Authority Hospital
Revenue - Steamboat Springs Health Care
Association Project:
4.80%, Due 9/15/01 245,000 246,225
4.90%, Due 9/15/02 230,000 231,438
-------
1,951,338
CONNECTICUT 0.8%
Connecticut Health and EFA Revenue - New
Opportunities for Waterbury, Inc. Project, 6.75%,
Due 7/01/13 1,205,000 1,223,075
FLORIDA 5.9%
Arbor Greene Community Development
District Special Assessment Revenue, 7.00%,
Due 5/01/03 450,000 464,063
Broward County, Florida IDR - Beverly Enterprises-
Florida, Inc. Project, 9.80%, Due 11/01/10 1,000,000 1,088,750
Grand Haven Community Development District
Special Assessment Revenue, 6.30%, Due 5/01/02 2,800,000 2,866,500
Leon County, Florida IDR - Beverly Enterprises-
Florida, Inc. Project, 9.80%, Due 6/01/11 860,000 927,725
Orlando and Orange County, Florida Expressway
Authority Expressway Revenue Refunding, 5.95%,
Due 7/01/23 10,000 10,237
Tarpon Springs, Florida Health Facilities Authority
Hospital Revenue Refunding - Tarpon Springs
Hospital Foundation Project, 8.75%, Due 5/01/12 3,420,000 3,497,292
---------
8,854,567
GEORGIA 0.7%
Atlanta, Georgia Special Purpose Facilities
Revenue - Delta Air Lines Project, 7.90%,
Due 12/01/18 950,000 991,591
HAWAII 0.0%
Hawaii Department of Transportation Special
Facility Revenue - Continental Airlines, Inc.
Project, 9.60%, Due 6/01/08 50,000 53,750
IDAHO 0.0%
Idaho Student Loan Fund Marketing Association,
Inc. Student Loan Revenue, 5.10%, Due 10/01/02 10,000 9,987
ILLINOIS 9.8%
Carol Stream, Illinois First Mortgage Revenue -
Windsor Park Manor Project, 6.25%, Due 12/01/01 250,000 257,500
Chicago, Illinois O'Hare International Airport
Special Facilities Revenue - American Airlines,
Inc. Project, 7.875%, Due 11/01/25 165,000 177,375
Chicago, Illinois O'Hare International Airport
Special Facilities Revenue - United Air Lines, Inc.
Project:
8.40%, Due 5/01/18 2,690,000 2,786,248
8.95%, Due 5/01/18 1,800,000 1,975,500
Granite City, Illinois Hospital Revenue Refunding -
St. Elizabeth Medical Center Project, 8.125%,
Due 6/01/08 915,000 933,300
Illinois DFA Industrial Revenue Refunding - Great
Plains Hotel Corporation of Illinois Project, 7.50%,
Due 4/01/16 270,000 270,848
Illinois DFA MFHR - Town and Garden Apartments
Project, 7.20%, Due 9/01/08 2,250,000 2,393,437
Illinois Health Facilities Authority Revenue
Refunding - Bohemian-Tabor Hills Project,
5.90%, Due 11/15/21 1,700,000 1,702,125
Illinois Health Facilities Authority Revenue
Refunding - Lifelink Corporation Obligated
Group, 5.95%, Due 2/15/21 2,000,000 2,000,460
Sauk Village, Illinois GO, 6.25%, Due 12/01/10 2,300,000 2,291,375
---------
14,788,168
INDIANA 4.2%
Anderson, Indiana EDR Refunding and
Improvement - Anderson University Project,
5.05%, Due 10/01/03 3,265,000 3,248,675
Indiana Health Facility Financing Authority
Revenue - Hamilton Communities, Inc. Project,
6.00%, Due 1/01/10 2,800,000 2,810,500
Indianapolis, Indiana EDR MFHR - Post Pointe
Apartments Project, 8.20%, Due 3/01/01 210,000 212,888
-------
6,272,063
IOWA 4.4%
Asbury, Iowa Elderly Care and Retirement Facilities
Revenue - Stonehill Project, 5.00%, Due 9/01/03 4,000,000 4,003,800
Harlan, Iowa Revenue - American Baptist Homes of
the Midwest - Baptist Memorial Home Project,
5.875%, Due 5/15/23 920,000 921,150
Ottumwa, Iowa Hospital Facility Revenue Refunding
and Improvement - Ottumwa Regional Health
Center, Inc. Project, 6.00%, Due 10/01/18 25,000 25,875
Ottumwa, Iowa Revenue Refunding - Regional
Retirement Living Project, 5.90%, Due 2/15/24 1,740,000 1,742,419
---------
6,693,244
KANSAS 1.8%
Lawrence, Kansas CDR Refunding - Holiday Inn
Project, 7.00%, Due 7/01/00 190,000 193,800
Manhattan, Kansas CDR Refunding - Holiday Inn
Project, 7.00%, Due 7/01/00 190,000 193,800
Topeka, Kansas IDR Refunding - Reser's Fine Foods,
Inc. Project:
4.75%, Due 4/01/00 100,000 100,309
5.00%, Due 4/01/01 300,000 300,000
5.20%, Due 4/01/03 300,000 300,375
5.30%, Due 4/01/04 300,000 300,375
Wathena, Kansas IDR - Skyjack Equipment, Inc.
Project:
5.00%, Due 5/01/01 85,000 85,212
5.15%, Due 5/01/02 390,000 391,462
5.25%, Due 5/01/03 130,000 130,487
5.40%, Due 5/01/04 345,000 347,156
5.50%, Due 5/01/05 335,000 337,094
-------
2,680,070
19
SCHEDULES OF INVESTMENTS IN SECURITIES (continued)FEBRUARY 28, 1999 (UNAUDITED
- -------------------------------------------------------------------------------
===============================================================================
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
LOUISIANA 3.2%
Hodge, Louisiana Utility Revenue - Stone Container
Corporation Project, 9.00%, Due 3/01/10 $ 100,000 $ 105,377
Louisiana Public Facilities Authority Revenue -
Progressive Healthcare Providers Project, 5.75%,
Due 10/01/03 1,390,000 1,386,525
West Feliciana Parish, Louisiana PCR - Gulf States
Utilities Company III Project, 7.70%, Due 12/01/14 3,000,000 3,307,500
---------
4,799,402
MAINE 1.4%
Maine Finance Authority Solid Waste Disposal
Revenue - Boise Cascade Corporation Project,
7.90%, Due 6/01/15 2,000,000 2,112,500
MARYLAND 0.8%
Baltimore County, Maryland IDR - Barre-National,
Inc. Equipment Project, 6.875%, Due 7/01/09 1,200,000 1,084,500
Howard County, Maryland IDR Refunding -
Keebler Company Project, 5.95%, Due 3/01/00 65,000 65,686
---------
1,150,186
MASSACHUSETTS 4.0%
Massachusetts Health and EFA Revenue - Saints
Memorial Medical Center Project, 5.50%,
Due 10/01/02 3,500,000 3,535,000
Massachusetts Industrial Finance Agency Health
Care Facility Revenue - Metro Health Foundation
of Massachusetts, Inc. Project, 6.25%,
Due 12/01/03 1,720,000 1,737,200
Massachusetts Industrial Finance Agency Revenue -
Institute for Developmental Disabilities Project,
9.25%, Due 6/01/09 765,000 782,587
-------
6,054,787
MINNESOTA 3.1%
Burnsville, Minnesota CDR Refunding - Holiday Inn
Project, 5.875%, Due 4/01/08 1,430,000 1,453,238
Maplewood, Minnesota Health Care Facility
Revenue - HealthEast Project:
5.70%, Due 11/15/02 1,000,000 1,001,250
5.80%, Due 11/15/03 1,000,000 1,001,250
St. Paul, Minnesota Housing and Redevelopment
Authority Hospital Revenue - HealthEast Project:
4.60%, Due 11/01/00 500,000 493,125
4.75%, Due 11/01/01 750,000 733,125
-------
4,681,988
MISSOURI 1.5%
Columbia, Missouri IDR - American Air Filter
Company, Inc. Project, 7.45%, Due 7/01/04 1,280,000 1,285,274
Saline County, Missouri IDA Health Facilities
Revenue - John Fitzgibbon Memorial Hospital,
Inc. Project, 5.75%, Due 12/01/03 1,010,000 1,010,000
---------
2,295,274
MONTANA 0.2%
Crow Finance Authority Tribal Purpose Revenue,
4.75%, Due 10/01/00 290,000 295,800
NEBRASKA 0.2%
Scottsbluff, Nebraska CDR - WSL-RBJ, A Minnesota
Limited Partnership Project, 8.75%, Due 11/01/06 300,000 300,156
NEW MEXICO 2.6%
Chaves County, New Mexico Hospital Revenue -
Eastern New Mexico Medical Center Project,
7.25%, Due 12/01/10 (Pre-Refunding at $102
on 12/01/02) $ 1,810,000 $ 2,027,200
Santa Fe County, New Mexico Project Revenue - El
Castillo Retirement Residences Project, 5.80%,
Due 5/15/18 1,835,000 1,837,294
---------
3,864,494
NEW YORK 6.6%
Monroe County, New York IDR Agency - Empire
Sports Project, 6.50%, Due 3/01/08 1,105,000 1,134,006
New York Energy Research and Development
Authority PCR - Long Island Lighting Company
Project, 5.15%, Due 3/01/16 (b) 2,000,000 2,000,040
Rockland County, New York IDR Agency Civic
Facility - Dominican College Project, 5.50%,
Due 5/01/02 740,000 740,000
Tompkins County, New York IDR Agency Life Care
Community - Kendal at Ithaca, Inc. Project:
7.25%, Due 6/01/03 90,000 91,641
7.625%, Due 6/01/09 445,000 452,672
United Nations Development Corporation Revenue
Refunding:
Series B, 5.60%, Due 7/01/26 2,500,000 2,508,525
Series C, 5.60%, Due 7/01/26 3,000,000 3,010,230
---------
9,937,114
NORTH CAROLINA 0.9%
Fletcher, North Carolina First Mortgage Housing
Revenue - Avery's View Retirement Facilities, Inc.
Project, 8.00%, Due 3/01/10 1,000,000 1,046,920
North Carolina Medical Care Commission Health
Care Facilities First Mortgage Revenue - DePaul
Community Facilities Project, 5.75%, Due 1/01/03 270,000 271,013
-------
1,317,933
OHIO 6.3%
Cleveland, Ohio Airport Special Revenue Refunding -
Continental Airlines, Inc. Project, 5.25%,
Due 12/01/02 (b) 6,475,000 6,458,813
Cuyahoga County, Ohio MFHR - The Park Lane
Apartments Project, 7.70%, Due 7/01/02 270,000 274,387
Ohio Water Development Authority Solid Waste
Disposal Revenue - Bay Shore Power Project,
5.375%, Due 9/01/02 2,800,000 2,807,000
---------
9,540,200
OKLAHOMA 0.6%
Leflore County, Oklahoma Hospital Authority
Hospital Revenue:
4.90%, 6/01/00 185,000 185,462
5.05%, 6/01/01 205,000 205,513
5.25%, 6/01/02 235,000 235,881
5.45%, 6/01/03 260,000 261,300
-------
888,156
PENNSYLVANIA 4.4%
Bucks County, Pennsylvania IDA CDR - Attleboro
Associates, Ltd. Nursing Facility Project, 8.00%,
Due 12/01/05 1,275,000 1,431,188
Dauphin County, Pennsylvania Subordinated Office
and Parking Revenue - River Front Office Center
Project, 5.35%, Due 1/01/02 820,000 818,975
Harrisburg, Pennsylvania Authority Office and
Parking Revenue, 5.25%, Due 5/01/02 1,030,000 1,032,575
Luzerne County, Pennsylvania IDA IDR, 6.25%,
Due 3/15/08 900,000 902,214
20
- -------------------------------------------------------------------------------
===============================================================================
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
Pennsylvania EDFA Qualified Residential Rent
Project Revenue - RSI Properties/Butler LLC
Project, 7.00%, Due 9/01/02 $ 300,000 $ 303,000
Pennsylvania EDFA Qualified Residential Rent
Project Revenue - RSI Properties/Greensburg
LLC Project, 7.00%, Due 9/01/02 300,000 303,000
Westmoreland County, Pennsylvania IDA Health
Care Facilities Revenue Refunding - Redstone
Presbyterian Senior Care Obligated Group Project,
5.90%, Due 11/15/21 1,915,000 1,905,425
---------
6,696,377
SOUTH DAKOTA 0.6%
Lincoln County, South Dakota Revenue - American
Baptist Homes of the Midwest-Trail Ridge
Project, 5.875%, Due 11/15/21 945,000 946,181
TEXAS 4.7%
Alliance Airport Authority, Inc. Texas Special
Facilities Revenue - American Airlines, Inc.
Project, 7.50%, Due 12/01/29 3,000,000 3,206,250
DeSoto, Texas IDA IDR - Wintergreen Commercial
Partnership Project, 7.00%, Due 1/01/17 1,419,047 1,440,333
Jefferson County, Texas Health Facilities
Development Corporation Hospital Revenue -
Baptist Health Care System Project, 8.875%,
Due 6/01/21 2,350,000 2,418,549
---------
7,065,132
VIRGINIA 1.0%
Hampton, Virginia Redevelopment and Housing
Authority First Mortgage Revenue Refunding -
Olde Hampton Project, 6.00%, Due 7/01/03 1,210,000 1,216,050
Virginia Small Business Financing Authority IDR -
Albion Enterprises LLC Project, 6.00%,
Due 1/01/02 250,000 250,312
-------
1,466,362
WEST VIRGINIA 0.0%
Harrison County, West Virginia CDR Refunding -
Kmart Corporation Project, 7.625%, Due 12/01/14 80,000 86,500
WISCONSIN 9.3%
Glendale, Wisconsin Community Development
Authority Lease Revenue:
5.50%, Due 9/01/17 3,000,000 3,007,500
5.50%, Due 9/01/19 1,500,000 1,503,750
Madison, Wisconsin IDR - McCaughey Development
Association Project, 5.875%, Due 4/01/10 1,080,000 1,078,650
Wisconsin Health and EFA Revenue - Attic Angel
Obligation Group Project, 6.00%, Due 11/15/28 1,490,000 1,493,725
Wisconsin Health and EFA Revenue - Beaver Dam
Community Hospital, Inc. Project, 5.70%,
Due 8/15/18 2,000,000 2,000,000
Wisconsin Health and EFA Revenue - Linden
Grove, Inc. Project, 6.15%, Due 11/01/19 405,000 405,478
Wisconsin Health and EFA Revenue - Lutheran
Home for the Aging Project, 7.00%, Due 9/01/25 30,000 31,163
Wisconsin Health and EFA Revenue - Oakwood
Project, 5.90%, Due 8/15/28 3,565,000 3,551,631
Wisconsin Health and EFA Revenue - Oconomowoc
Memorial Hospital, Inc. Project, 6.20%,
Due 7/01/12 950,000 963,062
-------
14,034,959
WYOMING 1.6%
Sweetwater County, Wyoming Solid Waste Disposal
Revenue - FMC Corporation Project, 7.00%,
Due 6/01/24 1,000,000 1,096,250
Teton County, Wyoming Hospital District Hospital
Revenue Refunding and Improvement, 4.85%,
Due 12/01/02 1,265,000 1,266,581
---------
2,362,831
- -------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (COST $130,505,279) 130,888,616
- -------------------------------------------------------------------------------
VARIABLE RATE PUT BONDS 6.6%
ARIZONA 2.0%
Maricopa County, Arizona IDA IDR - Borden, Inc.
Project, 4.39%, Due 10/01/12 (Putable at $100 and
Rate Reset Effective 10/01/00) 3,000,000 2,962,500
FLORIDA 1.3%
St. John's County, Florida IDA IDR Refunding -
Vicar's Landing Project, 5.125%, Due 2/15/17 2,000,000 1,997,500
NEW JERSEY 2.0%
New Jersey EDA Senior Mortgage Revenue Refunding
EXTRAS - Arbor Glen of Bridgewater Project,
5.375%, Due 5/15/32 3,000,000 3,007,500
TEXAS 1.3%
Abilene, Texas Health Facilities Development
Corporation - Sears Methodist Retirement System
Obligated Group Project EXTRAS, 5.25%,
Due 11/15/28 (Putable at $100 and Rate Reset
Effective 11/15/03) 2,025,000 2,022,469
- -------------------------------------------------------------------------------
TOTAL VARIABLE RATE PUT BONDS (COST $9,967,000) 9,989,969
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 10.8%
MUNICIPAL BONDS 0.9%
KANSAS 0.4%
Lawrence, Kansas CDR Refunding - Holiday Inn
Project, 7.00%, Due 7/01/99 180,000 181,719
Manhattan, Kansas CDR Refunding - Holiday Inn
Project, 7.00%, Due 7/01/99 180,000 181,719
Topeka, Kansas IDR Refunding - Reser's Fine
Foods, Inc. Project, 4.50%, Due 4/01/99 175,000 175,058
-------
538,496
MARYLAND 0.0%
Howard County, Maryland IDR Refunding - Keebler
Company Project, 5.70%, Due 3/01/99 50,000 50,000
MINNESOTA 0.5%
St. Paul, Minnesota Housing and Redevelopment
Authority Hospital Revenue - HealthEast Project,
4.50%, Due 11/01/99 725,000 721,694
-------
Total Municipal Bonds 1,310,190
WEEKLY VARIABLE RATE PUT BONDS 2.3%
WASHINGTON
Pierce County, Washington EDC Pooled Bond
Program Industrial Revenue - Northwest
Banking Project, 3.00%, Due 3/02/99 3,400,000 3,400,000
DAILY VARIABLE RATE PUT BONDS 4.1%
MICHIGAN 1.0%
Wayne County, Michigan Airport Revenue -
Floating Rate Receipts, Series SSP-24, 3.40%,
Due 3/03/99 1,500,000 1,500,000
Nevada 1.0%
Clark County, Nevada IDR - Nevada Cogeneration
Association 2 Project, 3.40%, Due 3/05/99 1,600,000 1,600,000
21
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) FEBRUARY 28,1999 (UNAUDITED)
- -------------------------------------------------------------------------------
===============================================================================
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
MULTIPLE STATES 2.1%
Puttable Floating Option Tax-Exempt Receipts,
Series PPT-4, 3.10%, Due 3/03/99 $ 3,120,000 $ 3,120,000
------------
Total Daily Variable Rate Put Bonds 6,220,000
MUNICIPAL MONEY MARKET FUNDS 3.5%
MULTIPLE STATES
Strong Municipal Money Market Fund (d) 5,350,000 5,350,000
- -------------------------------------------------------------------------------
Total Short-Term Investments (Cost $16,278,462) 16,280,190
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Investments in Securities (Cost $156,750,741) 104.3% 157,158,775
Other Assets and Liabilities, Net (4.3%) (6,525,785)
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $150,632,990
===============================================================================
===============================================================================
STRONG SHORT-TERM MUNICIPAL BOND FUND
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
MUNICIPAL BONDS 81.1%
ALABAMA 1.3%
Bessemer, Alabama IDB IDR - Berman Brothers
Project, 7.65%, Due 9/01/00 $ 505,000 $ 507,525
Birmingham, Alabama Airport Authority Airport
Revenue Refunding, 5.25%, Due 7/01/03 (b) 3,070,000 3,219,663
---------
3,727,188
ARIZONA 0.3%
Maricopa County, Arizona IDA MFHR - Mercy Bond
Properties Arizonia I-A, 5.20%, Due 1/01/04 855,000 883,856
CALIFORNIA 1.3%
California Health Facilities Financing Authority
Hospital Revenue - Downey Community Hospital
Project, 4.90%, Due 5/15/00 2,325,000 2,365,687
Intermodal Container Transfer Facility Joint Powers
Authority Refunding Revenue, 7.70%,
Due 11/01/14 1,500,000 1,535,490
---------
3,901,177
COLORADO 3.2%
Arapahoe County, Colorado E-470 Public Highway
Authority Capital Improvement Trust Fund
Highway Revenue, Zero %, Due 8/31/03 500,000 420,625
Castle Rock Ranch, Colorado Public Improvements
Authority Public Facilities Revenue:
5.70%, Due 12/01/06 1,000,000 1,098,750
5.90%, Due 12/01/03 1,475,000 1,591,156
6.10%, Due 12/01/05 2,780,000 3,089,275
Eaglebend, Colorado Affordable Housing Corporation
MFHR Refunding Project, 5.45%, Due 7/01/02 980,000 995,925
Mesa County, Colorado IDR Refunding - Joy
Technologies, Inc. Project, 8.50%, Due 9/15/06 1,020,000 1,120,725
Miners Mesa, Colorado Commercial Metropolitan
District GO, 6.75%, Due 12/01/02 685,000 685,747
Moffat County, Colorado PCR Refunding - Tri-State
Generation Project, 5.50%, Due 11/01/02 575,000 610,219
-------
9,612,422
CONNECTICUT 0.5%
Connecticut IDA - The Olympic Hotel Corporation
Project, 6.95%, Due 8/01/03 1,331,351 1,347,994
DISTRICT OF COLUMBIA 1.1%
District of Columbia Hospital Revenue Refunding -
Medlantic Healthcare Group, Inc. Project, 6.50%,
Due 8/15/02 2,925,000 3,177,281
FLORIDA 3.6%
Capital Projects Finance Authority Solid
Waste Disposal Revenue Loan, 7.50%,
Due 11/01/18 3,000,000 3,000,000
Duval County, Florida School District GO
Refunding, 6.00%, Due 8/01/03 1,000,000 1,083,750
Florida Housing Finance Agency MFMR -
Hammocks Place Project, 6.25%, Due 12/01/06 2,000,000 2,087,500
Miami Beach, Florida Redevelopment Agency
Incremental Tax Revenue, 9.125%, Due 12/01/04 3,910,000 4,516,050
---------
10,687,300
GEORGIA 2.2%
Athens-Clarke County, Georgia Residential Care
Facilities for the Elderly Authority Revenue - Wesley
Woods of Athens, Inc. Project, 5.30%,
Due 10/01/01 1,000,000 1,007,500
George L. Smith II Georgia World Congress Center
Authority Revenue Refunding - Domed Stadium
Project, 7.875%, Due 7/01/20 5,225,000 5,623,406
---------
6,630,906
GUAM 4.6%
Guam Airport Authority General Revenue:
6.00%, Due 10/01/00 2,300,000 2,369,000
6.40%, Due 10/01/05 7,045,000 7,705,469
Guam Government GO, 5.70%, Due 9/01/03 3,630,000 3,662,743
---------
13,737,212
ILLINOIS 1.7%
Illinois EFA Revenue - Lewis University Project,
5.30%, Due 10/01/04 1,390,000 1,436,912
Illinois Health Facilities Authority Revenue -
Covenant Retirement Communities Project, 7.60%,
Due 12/01/12 750,000 839,062
Naperville, DuPage County and Will County, Illinois
EDR Refunding - Illinois Hospital and Health
Systems Association Project, 5.70%, Due 5/01/04 2,650,000 2,772,563
---------
5,048,537
IOWA 0.4%
Iowa Finance Authority Mortgage Revenue
Refunding - Friendship Village Project, 4.95%,
Due 11/01/00 1,270,000 1,285,875
KENTUCKY 3.0%
Mount Sterling, Kentucky League of Cities Funding
Trust Lease Program Revenue, 5.625%,
Due 3/01/03 3,250,000 3,440,937
Pendleton County, Kentucky Multi-County Lease
Revenue - Kentucky Association of Counties
Leasing Trust Program, 6.50%, Due 3/01/19 5,000,000 5,406,250
---------
8,847,187
LOUISIANA 0.1%
Louisiana Public Facilities Authority Student Loan
Revenue, 6.75%, Due 9/01/06 410,000 435,625
MAINE 2.1%
Maine Educational Loan Marketing Corporation
Student Loan Revenue Refunding, 6.90%,
Due 11/01/03 2,490,000 2,630,063
Maine Finance Authority Electric Rate Stabilization
Revenue Refunding - Penobscot Energy Recovery
Company LP Project, 5.20%, Due 7/01/18 3,625,000 3,656,719
---------
6,286,782
22
- --------------------------------------------------------------------------------
===============================================================================
STRONG SHORT-TERM MUNICIPAL BOND FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
MARYLAND 1.7%
Baltimore, Maryland Refunding COP - Board of
Education Administrative Headquarters/Municipal
Capital Projects:
4.55%, Due 4/01/01 (b) $ 1,000,000 $ 1,015,000
4.65%, Due 4/01/02 (b) 1,975,000 2,016,969
4.75%, Due 4/01/03 (b) 2,065,000 2,121,787
---------
5,153,756
MASSACHUSETTS 3.6%
Massachusetts Education Loan Authority Education
Loan Revenue, 7.45%, Due 1/01/02 1,165,000 1,197,166
Massachusetts Industrial Finance Agency Revenue
Refunding - Beloit Corporation Project, 7.60%,
Due 12/01/11 1,000,000 1,091,250
Massachusetts Industrial Finance Agency Revenue
Refunding - Emerson College Issue, 8.50%,
Due 1/01/03 3,200,000 3,548,000
Massachusetts Industrial Finance Agency Water
Treatment Revenue - Massachusetts-American
Hingham Project, 6.25%, Due 12/01/10 4,450,000 4,844,937
---------
10,681,353
MICHIGAN 1.4%
Flint, Michigan Hospital Building Authority Revenue
Refunding - Hurley Medical Center Project:
5.75%, Due 7/01/03 2,355,000 2,469,806
6.00%, Due 7/01/04 1,005,000 1,070,325
6.00%, Due 7/01/05 510,000 545,700
-------
4,085,831
MINNESOTA 2.7%
St. Paul, Minnesota Housing and Redevelopment
Authority Hospital Facility Revenue - HealthEast
Project, 6.625%, Due 11/01/17 7,845,000 8,129,381
MISSISSIPPI 1.6%
Mississippi Higher Education Assistance Corporation
Student Loan Revenue:
5.60%, Due 9/01/04 2,505,000 2,617,725
5.80%, Due 9/01/06 2,050,000 2,139,687
---------
4,757,412
Missouri 0.6%
Springfield, Missouri Land Clearance Redevelopment
Authority Industrial Revenue Refunding -
University Plaza Project, 6.30%, Due 10/01/06 1,790,000 1,899,638
NEW JERSEY 0.4%
New Jersey Health Care Facilities Finance Authority
Revenue - Southern Ocean County Hospital Project,
5.75%, Due 7/01/01 1,100,000 1,135,750
NEW YORK 2.7%
Albany, New York Housing Authority - Tax Credit-
Lark Drive Association Project, 5.25%,
Due 6/01/01 3,300,000 3,337,125
New Rochelle, New York Municipal Housing
Authority Mortgage Revenue, 4.70%,
Due 12/01/03 1,610,000 1,630,125
New York Environmental Facilities Corporation
State Water Revolving Fund PCR - Pilgrim State
Sewage Treatment Project, 5.625%, Due 3/15/04 1,200,000 1,290,000
New York, New York GO, 5.875%, Due 8/01/03 1,500,000 1,618,125
---------
7,875,375
NORTH CAROLINA 1.2%
North Carolina Housing Finance Agency Home
Ownership Revenue, 4.55%, Due 1/01/24 (b) 3,605,000 3,605,000
OHIO 4.5%
Akron, Ohio COP - Akron Municipal Baseball
Stadium Project:
Zero %, Due 12/01/01 1,000,000 895,000
Zero %, Due 12/01/02 1,240,000 1,116,000
Cleveland, Ohio City School District Energy
Conservation Improvement GO:
6.53%, Due 3/15/00 650,000 668,804
6.53%, Due 9/15/00 670,000 699,313
6.53%, Due 3/15/01 690,000 727,087
6.53%, Due 9/15/01 715,000 760,352
6.53%, Due 3/15/02 740,000 786,738
6.53%, Due 9/15/02 760,000 808,002
6.53%, Due 3/15/03 785,000 834,581
6.53%, Due 9/15/03 815,000 866,475
6.53%, Due 3/15/04 840,000 892,584
6.53%, Due 9/15/04 865,000 919,149
Cuyahoga County, Ohio IDR Refunding - Joy
Technologies, Inc. Project, 8.75%, Due 9/15/07 1,000,000 1,105,000
Montgomery County, Ohio Health Care Facilities
Revenue Refunding - Friendship Village of Dayton
Project, 5.15%, Due 2/01/22
(Putable at $100 on 2/01/03) 2,025,000 2,026,499
Wood County, Ohio IDR - Abbey Etna Machine
Company Project, 7.625%, Due 7/01/01 285,000 294,619
-------
13,400,203
OREGON 1.4%
Hillsboro, Oregon Hospital Facility Authority
Revenue and Advance Refunding - Tuality
Healthcare Project, 4.80%, Due 10/01/00 3,940,000 4,013,875
PENNSYLVANIA 15.4%
Delaware County, Pennsylvania Authority Health
Facilities Revenue - Mercy Health Corporation of
Southeastern Pennsylvania Obligated Group,
6.00%, Due 11/15/07 (Pre-Refunding at $100
on 11/15/05) 5,575,000 6,118,562
Horizon Hospital System Authority Hospital
Revenue, 5.40%, Due 5/15/01 1,680,000 1,726,200
Montgomery County, Pennsylvania IDA First
Mortgage Revenue - Pennsylvania Nursing and
Rehabilitation Center Project, 7.625%,
Due 7/01/18 4,700,000 5,604,750
Pennsylvania Housing Finance Agency SFMR:
6.875%, Due 10/01/24 9,000,000 9,630,000
7.50%, Due 10/01/25 8,350,000 8,965,813
Sharon, Pennsylvania Regional Health Systems
Authority Hospital Refunding Revenue - Sharon
Regional Health Systems Project:
6.40%, Due 12/01/00 705,000 742,013
6.50%, Due 12/01/01 255,000 275,081
6.60%, Due 12/01/02 800,000 882,000
Southern Chester County, Pennsylvania Health and
Higher Education Authority Mortgage Revenue -
Jenner's Pond Retirement Community Project:
Series 1998, 5.15%, Due 11/01/03 7,500,000 7,434,375
Series 1999, 5.15%, Due 11/01/03 4,500,000 4,460,625
---------
45,839,419
SOUTH CAROLINA 1.6%
Aiken County, South Carolina IDR Refunding - Beloit
Corporation Project, 7.60%, Due 12/01/11 1,500,000 1,636,875
Charleston County, South Carolina First Mortgage
Health Facilities Revenue - The Episcopal Church
Home Project, 5.40%, Due 4/01/04 3,020,000 3,042,650
---------
4,679,525
23
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) FEBRUARY 28,1999(UNAUDITED)
- -------------------------------------------------------------------------------
===============================================================================
STRONG SHORT-TERM MUNICIPAL BOND FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
SOUTH DAKOTA 0.5%
South Dakota EDFA EDR Refunding - Pooled Loan
Program - Technical Ordinance Project, 5.75%,
Due 4/01/07 $ 1,500,000 $ 1,606,875
TENNESSEE 3.1%
Tennessee Housing Development Agency
Homeownership Program Revenue:
Zero %, Due 7/01/05 1,585,000 1,176,862
7.375%, Due 7/01/23 7,665,000 8,029,088
---------
9,205,950
TEXAS 8.6%
Brazos, Texas Higher Education Authority, Inc.
Student Loan Revenue Refunding, 5.95%,
Due 6/01/02 3,040,000 3,184,400
Falcons Lair Utility and Reclamation District COP,
7.10%, Due 10/15/03 5,855,000 5,942,825
Farmers Branch, Texas IDC IDR -
Thermalloy, Inc. Project:
Series A, 5.735%, Due 4/24/00 215,000 215,537
Series B, 5.735%, Due 4/24/00 215,000 215,538
Series A, 5.735%, Due 4/24/01 235,000 235,588
Series B, 5.735%, Due 4/24/01 235,000 235,588
Harris County, Texas HFC MFHR - Bryant
Development Project, 5.812%, Due 9/01/05 564,629 570,275
Hidalgo County, Texas Health Services Corporation
Hospital Revenue - Mission Hospital, Inc. Project,
5.75%, Due 8/15/01 1,355,000 1,399,038
Lancaster, Texas HFC MFHR - Intervest-Lancaster
Project:
5.58%, Due 6/15/04 2,925,000 2,932,312
6.161%, Due 6/15/04 377,812 378,757
Mesquite, Texas HFC MFHR - GTR Associates
Project-Prescott Place Apartments Project:
Series A, 5.425%, Due 12/15/03 4,304,453 4,315,214
Series B, 5.425%, Due 12/15/03 1,434,818 1,438,405
Odessa, Texas Housing Authority MFMR - Section 8
Assisted Project:
5.875%, Due 10/01/03 1,185,000 1,196,850
6.375%, Due 10/01/11 2,735,000 2,782,862
Robstown, Texas Combination Tax and Limited
Pledge Revenue COP, 7.75%, Due 10/01/12 510,000 578,850
-------
25,622,039
UTAH 1.7%
Eagle Mountain, Utah Water and Sewer Revenue
BAN, 5.375%, Due 9/01/01 4,910,000 4,917,610
WASHINGTON 2.3%
Seattle, Washington Solid Waste Revenue Refunding,
4.75%, Due 8/01/00 2,930,000 2,992,262
Walla Walla, Washington Housing Authority
Revenue - Wilbur Manor Project, 6.25%,
Due 12/01/11 1,440,000 1,479,600
Washington Health Care Facilities Authority
Revenue - Sisters of Providence, 5.375%,
Due 10/01/00 2,400,000 2,478,000
---------
6,949,862
WISCONSIN 0.7%
Wisconsin Housing and EDA Home Ownership
Revenue, 5.30%, Due 9/01/20 (b) 2,000,000 2,027,500
- --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (COST $234,217,535) 241,195,696
- --------------------------------------------------------------------------------
VARIABLE RATE PUT BONDS 11.0%
CALIFORNIA 0.7%
Sacramento County, California MFHR Refunding -
Fairways II Apartments Project, 5.35%,
Due 8/01/25 (Mandatory Put at $100 on 8/01/05) 1,920,000 2,001,600
GEORGIA 1.9%
Atlanta, Georgia Urban Residential Financing
Authority MFHR Refunding - Ford Factory
Square Apartments Project, 6.00%, Due 12/01/30
(Mandatory Put at $100 on 12/01/02) 5,655,000 5,690,344
MASSACHUSETTS 1.2%
Massachusetts DFA First Mortgage Revenue -
LaSell Village Project, 5.625%, Due 12/01/28
(Putable at $100 and Rate Reset
Effective 12/01/03) 3,500,000 3,504,375
MISSOURI 0.4%
St. Louis County, Missouri IDA MFHR Refunding -
Heatherbrook Gardens Project, 5.10%, Due 3/01/05
(Mandatory Put at $100 on 3/01/02) 1,320,000 1,344,750
OHIO 0.4%
Montgomery County, Ohio Health Care Facilities
Revenue Refunding EXTRAS - Friendship Village
of Dayton Project, 5.375%, Due 2/01/22
(Putable at $100 and Rate Reset
Effective on 2/01/03) 1,050,000 1,055,250
SOUTH CAROLINA 0.8%
South Carolina Jobs EDA EDR Refunding, 5.20%,
Due 11/15/28 (Putable at $100 and Rate Reset
Effective 11/15/03) 2,455,000 2,455,000
TEXAS 4.3%
Northwest Trails Apartment Trust Pass-Thru
Certificates, 5.25%, Due 4/01/13 (Putable at $100
and Rate Reset Effective on 10/01/01) 7,425,000 7,443,563
Trinity River Authority Refunding - Texas
Industries, Inc. Project, 6.375%, Due 9/01/07
(Putable at $100 and Rate Reset Effective
11/01/01) 1,380,000 1,417,950
Trinity River Authority Refunding - Texas
Industries, Inc. Project, Series A, 6.375%,
Due 9/01/07 (Putable at $100 and Rate Reset
Effective 11/01/01) 3,935,000 4,043,213
---------
12,904,726
VIRGINIA 1.3%
James City County, Virginia IDA Residential Care
Facility First Mortgage Revenue - Williamsburg
Landing, Inc. Project, 5.75%, Due 3/01/26
(Putable at $100 and Rate Reset Effective
9/01/01) 3,000,000 3,046,860
Prince William County, Virginia IDA Residential
Care Facility First Mortgage Revenue -
Westminster Presbyterian Retirement Project,
6.00%, Due 1/01/25 (Putable at $100 and Rate
Reset Effective 1/01/03) 700,000 704,438
-------
3,751,298
- --------------------------------------------------------------------------------
TOTAL VARIABLE RATE PUT BONDS (COST $32,270,703) 32,707,343
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 11.8%
MUNICIPAL BONDS 1.2%
ARIZONA 0.1%
Phoenix, Arizona IDA Hospital Revenue - John C.
Lincoln Hospital and Health Center Project, 4.65%,
Due 12/01/99 225,000 226,874
FLORIDA 0.2%
Duval County, Florida School District GO Refunding,
5.50%, Due 8/01/99 535,000 540,623
24
<PAGE>
- --------------------------------------------------------------------------------
===============================================================================
STRONG SHORT-TERM MUNICIPAL BOND FUND (continued)
===============================================================================
Shares or
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
GUAM 0.5%
Guam Airport Authority General Revenue, 5.80%,
Due 10/01/99 $ 1,450,000 $ 1,468,864
ILLINOIS 0.1%
Illinois EFA Revenue - Lewis University Project,
4.50%, Due 10/01/99 240,000 241,217
OHIO 0.1%
Sidney, Ohio IDR - Richard Klinger Project, 7.70%,
Due 12/01/99 335,000 337,780
Wood County, Ohio IDR - Abbey Etna Machine
Company Project, 7.55%, Due 7/01/99 145,000 146,182
-------
483,962
TEXAS 0.1%
Farmers Branch, Texas IDC IDR - Thermalloy, Inc.
Project:
Series A, 6.29%, Due 4/24/99 195,000 195,488
Series B, 6.29%, Due 4/24/99 195,000 195,487
-------
390,975
WISCONSIN 0.1%
Wisconsin Rapids, Wisconsin GO, 6.10%, Due 9/01/99 225,000 228,398
-------
Total Municipal Bonds 3,580,913
VARIABLE RATE PUT BONDS 0.9%
ARIZONA
Scottsdale, Arizona IDA First Mortgage Revenue
Refunding - Westminster Village, Inc. Project, 5.50%,
Due 6/01/17 (Putable at $100 and Rate Reset
Effective 12/01/99) 2,600,000 2,611,648
ANNUAL VARIABLE RATE PUT BONDS 2.5%
ILLINOIS 1.2%
Peoria County, Illinois Congregate Care Revenue -
St. Francis Woods Project, 5.625%, Due 4/01/99 3,775,000 3,777,982
MISSOURI 1.3%
Jackson County, Missouri IDA MFHR - Pine Valley
Apartments Project, 5.625%, Due 3/15/99 3,825,000 3,825,000
---------
TOTAL ANNUAL VARIABLE RATE PUT BONDS 7,602,982
WEEKLY VARIABLE RATE PUT BONDS 0.4%
CALIFORNIA
Local Government Finance Joint Powers Authority
COP, 4.40%, Due 3/03/99 1,100,000 1,100,000
CORPORATE NOTES 1.1%
Water Quality Management Corporation, Series 98-A
Taxable, 5.50%, Due 8/15/99 3,250,000 3,246,490
MUNICIPAL MONEY MARKET FUNDS 5.7%
MULTIPLE STATES
Strong Municipal Money Market Fund (d) 16,900,000 16,900,000
- -------------------------------------------------------------------------------
Total Short-Term Investments (Cost $35,002,283) 35,042,033
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total Investments in Securities (Cost $301,490,521) 103.9% 308,945,072
Other Assets and Liabilities, Net (3.9%) (11,699,643)
- -------------------------------------------------------------------------------
Net Assets 100.0% $297,245,429
===============================================================================
LEGEND
- -------------------------------------------------------------------------------
(a) Short-term investments include any security which has a maturity of
less than one year.
(b) All or a portion of security is when-issued.
(c) All or a portion of security is pledged to cover margin requirements
for futures contracts.
(d) Affiliated issuer (see Note 7 of Notes to Financial Statements).
Percentages are stated as a percent of net assets.
Maturity date represents actual maturity or the longer of the next put date or
interest adjustment date.
See Notes to Financial Statements.
ABBREVIATIONS
- -------------------------------------------------------------------------------
The following is a list of abbreviations that 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
EFA -- Educational Facilities Authority
EXTRAS -- Extendable Rate Adjustable Securities
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
25
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
- -----------------------------------------------------------------------------------------------------
February 28, 1999 (Unaudited)
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STRONG HIGH-YIELD STRONG MUNICIPAL
MUNICIPAL BOND FUND BOND FUND
------------------- ---------
ASSETS:
<S> <C> <C>
Investments in Securities, at Value
(Cost of $673,576 and $372,260, respectively) $691,108 $390,798
Receivable for Securities Sold 12,973 --
Receivable for Fund Shares Sold 74 19
Interest Receivable 11,921 5,028
Other Assets 166 97
-------- --------
Total Assets 716,242 395,942
LIABILITIES:
Payable for Securities Purchased 46,069 12,148
Payable for Fund Shares Redeemed 45 155
Dividends Payable 2,828 1,443
Accrued Operating Expenses and Other Liab 24 15
-------- --------
Total Liabilities 48,966 13,761
-------- --------
NET ASSETS $667,276 $382,181
======== ========
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $652,944 $392,159
Accumulated Net Realized Loss (3,263) (28,486)
Net Unrealized Appreciation 17,595 18,508
Net Assets $667,276 $382,181
-------- --------
Capital Shares Outstanding (Unlimited Number Authorized) 64,861 38,398
NET ASSET VALUE PER SHARE $10.29 $9.95
====== ======
See Notes to Financial Statements.
26
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
- --------------------------------------------------------------------------------------------------------
February 28, 1999 (Unaudited)
<CAPTION>
(In Thousands, Except Per Share Amounts)
STRONG SHORT-TERM
HIGH YIELD STRONG SHORT-TERM
MUNICIPAL FUND MUNICIPAL BOND FUND
-------------- -------------------
ASSETS:
<S> <C> <C>
Investments in Securities, at Value
(Cost of $156,751 and $301,491, respectively) $157,159 $308,945
Receivable for Securities Sold -- 2,475
Receivable for Fund Shares Sold 5 209
Interest Receivable 2,261 4,765
Other Assets 353 99
-------- --------
Total Assets 159,778 316,493
LIABILITIES:
Payable for Securities Purchased 8,468 16,255
Payable for Fund Shares Redeemed 120 1,943
Dividends Payable 539 1,038
Accrued Operating Expenses and Other Liabilities 18 12
-------- --------
Total Liabilities 9,145 19,248
-------- --------
NET ASSETS $150,633 $297,245
======== ========
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $150,631 $302,236
Accumulated Net Realized Loss (406) (12,445)
Net Unrealized Appreciation 408 7,454
--- -----
NET ASSETS $150,633 $297,245
======== ========
Capital Shares Outstanding (Unlimited Number Authorized) 14,867 29,720
NET ASSET VALUE PER SHARE $10.13 $10.00
====== ======
See Notes to Financial Statements.
27
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1999 (Unaudited)
<CAPTION>
(In Thousands)
STRONG HIGH-YIELD STRONG MUNICIPAL
MUNICIPAL BOND FUND BOND FUND
------------------- ---------
INCOME:
<S> <C> <C>
Interest $20,085 $9,562
Dividends - Affiliated Issuers 510 194
Dividends - Unaffiliated Issuers -- 4
------- ------
Total Income 20,595 9,760
EXPENSES:
Investment Advisory Fees 1,899 981
Custodian Fees 18 11
Shareholder Servicing Costs 151 127
Other 101 52
------- ------
Total Expenses 2,169 1,171
------- ------
NET INVESTMENT INCOME 18,426 8,589
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments (837) 118
Futures Contracts (1) 11
------- ------
Net Realized Gain (Loss) (838) 129
Change in Unrealized Appreciation/Depreciation on:
Investments (11,471) (461)
Futures Contracts 510 (30)
------- ------
Net Change in Unrealized Appreciation/Depreciation (10,961) 491
------- ------
NET LOSS ON INVESTMENTS (11,799) (362)
------- ------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 6,627 $8,227
======= ======
See Notes to Financial Statements.
28
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS (CONTINUED)
- -------------------------------------------------------------------------------------------------------
For the Six Months Ended February 28, 1999 (Unaudited)
<CAPTION>
(In Thousands)
STRONG SHORT-TERM
HIGH YIELD STRONG SHORT-TERM
MUNICIPAL FUND MUNICIPAL BOND FUND
-------------- -------------------
INCOME:
<S> <C> <C>
Interest $3,049 $6,453
Dividends - Affiliated Issuers 87 147
------ ------
Total Income 3,136 6,600
EXPENSES:
Investment Advisory Fees 345 592
Custodian Fees 4 8
Shareholder Servicing Costs 17 73
Federal and State Registration Fees 28 15
Other 6 27
------ ------
Total Expenses before Waivers and Absorptions 400 715
Expense Waivers and Absorptions by Advisor (253) --
------ ------
Expenses, Net 147 715
------ ------
NET INVESTMENT INCOME 2,989 5,885
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on Investments (323) 105
Net Change in Unrealized Appreciation/Depreciation on Investme (134) 1,250
------ ------
NET GAIN (LOSS) ON INVESTMENTS (457) 1,355
------ ------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,532 $7,240
====== ======
29
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(In Thousands)
Strong High-Yield Strong Municipal
Municipal Bond Fund Bond Fund
--------------------------------- ------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
Feb. 28, 1999 Aug. 31, 1998 Feb. 28, 1999 Aug. 31, 1998
---------------- ------------- ---------------- ------------
(Unaudited) (Unaudited)
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income $ 18,426 $ 28,877 $ 8,589 $ 13,272
Net Realized Gain (Loss) (838) 2,108 129 3,091
Net Change in Unrealized Appreciation/Depreciation (10,961) 16,708 (491) 7,968
-------- -------- -------- --------
Net Increase in Net Assets Resulting from Operations 6,627 47,693 8,227 24,331
DISTRIBUTIONS:
From Net Investment Income (18,426) (28,877) (8,589) (13,272)
From Net Realized Gains (3,100) (743) -- --
-------- -------- -------- --------
Total Distributions (21,526) (29,620) (8,589) (13,272)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 295,418 513,592 153,990 134,471
Proceeds from Reinvestment of Distributions 16,523 21,163 6,564 10,102
Payment for Shares Redeemed (297,032) (247,044) (64,925) (100,839)
-------- -------- ------- --------
Net Increase in Net Assets from Capital Share Transactions 14,909 287,711 95,629 43,734
-------- -------- -------- --------
TOTAL INCREASE IN NET ASSETS 10 305,784 95,267 54,793
NET ASSETS:
Beginning of Period 667,266 361,482 286,914 232,121
-------- -------- -------- --------
End of Period $667,276 $667,266 $382,181 $286,914
======== ======== ======== ========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 28,333 49,323 15,444 13,683
Issued in Reinvestment of Distributions 1,588 2,036 658 1,033
Redeemed (28,477) (23,751) (6,519) (10,296)
------ ------ ----- ------
Net Increase in Shares of the Fund 1,444 27,608 9,583 4,420
====== ====== ===== ======
30
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
Strong Short-Term Strong Short-Term
High Yield Municipal Fund Municipal Bond Fund
-------------------------------- --------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
Feb. 28, 1999 Aug. 28, 1998 Feb. 28, 1999 Aug. 31, 1998
---------------- ------------- ---------------- -------------
(Unaudited) (Note 1) (Unaudited)
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income $ 2,989 $ 1,643 $ 5,885 $ 9,310
Net Realized Gain (Loss) (323) (83) 105 (268)
Net Change in Unrealized Appreciation/Depreciation (134) 543 1,250 2,618
-------- -------- -------- --------
Net Increase in Net Assets Resulting from Operations 2,532 2,103 7,240 11,660
DISTRIBUTIONS FROM NET INVESTMENT INCOME (2,989) (1,643) (5,885) (9,310)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 103,167 124,691 142,072 167,477
Proceeds from Reinvestment of Distributions 2,234 971 4,849 7,757
Payment for Shares Redeemed (54,948) (25,485) (61,826) (131,741)
-------- -------- -------- --------
Net Increase in Net Assets from Capital Share Transactions 50,453 100,177 85,095 43,493
-------- -------- -------- --------
TOTAL INCREASE IN NET ASSETS 49,996 100,637 86,450 45,843
NET ASSETS:
Beginning of Period 100,637 -- 210,795 164,952
-------- -------- -------- --------
End of Period $150,633 $100,637 $297,245 $210,795
======== ======== ======== ========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 10,166 12,315 14,238 16,920
Issued in Reinvestment of Distributions 220 96 486 784
Redeemed (5,414) (2,516) (6,196) (13,308)
------ ------ ------ ------
Net Increase in Shares of the Fund 4,972 9,895 8,528 4,396
====== ====== ====== ======
See Notes to Financial Statements.
31
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
February 28, 1999 (Unaudited)
1. ORGANIZATION
The accompanying financial statements represent the Strong Municipal Income
Funds, which include the following diversified, open-end management
investment companies registered under the Investment Company Act of 1940:
- Strong High-Yield Municipal Bond Fund, Inc.
- Strong Municipal Bond Fund, Inc.
- Strong Short-Term High Yield Municipal Fund (a series of Strong
Municipal Funds, Inc.)
- Strong Short-Term Municipal Bond Fund, Inc.
The inception date for Strong Short-Term High Yield Municipal Fund is
November 30, 1997.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.
(A) Security Valuation -- Securities of the Funds are valued through
valuations obtained by a commercial pricing service or the mean of the
bid and asked prices when no last sales price is available. Securities
for which market quotations are not readily available are valued at
fair value as determined in good faith under consistently applied
procedures established by and under the general supervision of the
Board of Directors. Securities which are purchased within 60 days of
their stated maturity are valued at amortized cost, which approximates
fair value, whereby a portfolio security is valued at its cost
initially and thereafter valued to reflect a constant amortization to
maturity of any discount or premium.
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. The Funds held no restricted securities at
February 28, 1999.
(B) Federal Income and Excise Taxes and Distributions to Shareholders --
The Funds intend to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of their taxable income to their
shareholders in a manner which results in no tax cost to the Funds.
Therefore, no federal income or excise tax provision is required.
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.
Each Fund generally pays dividends from net investmet income monthly
and distributes any net capital gains that it realizes annually.
Dividends are declared on each day the net asset value is calculated
except bank holidays.
(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) Certain Investment Risks -- The Funds may utilize derivative
instruments including options, futures and other instruments with
similar characteristics to the extent that they are consistent with
the Funds' investment objectives and limitations. The Funds intend to
use such derivative instruments primarily to hedge or protect from
adverse movements in securities prices or interest rates. The use of
these instruments may involve risks such as the possibility of
illiquid markets or imperfect correlation between the value of the
instruments and the underlying securities, or that the counterparty
will fail to perform its obligations.
(E) Futures -- Upon entering into a futures contract, the Funds pledge to
the broker cash or other investments equal to the minimum "initial
margin" requirements of the exchange. Additional securities held by
the Funds may be designated as collateral on open futures contracts.
The Funds also receive from or pay to the broker an amount of cash
equal to the daily fluctuation in the value of the contract. Such
receipts or payments are known as "variation margin," and are recorded
as unrealized gains or losses. When the futures contract is closed, a
realized gain or loss is recorded equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed.
(F) Options -- The Funds may write put or call options (none were written
during the period). 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.
(G) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts in these financial statements. Actual results could differ
from those estimates.
32
<PAGE>
- --------------------------------------------------------------------------------
3. 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 average daily
net assets: Strong Short-Term Municipal Bond Fund 0.50%, Strong Municipal
Bond Fund, Strong High-Yield Municipal Bond Fund and Strong Short-Term High
Yield Municipal Fund 0.60%. Based on the terms of the Advisory Agreements,
advisory fees and other expenses will be waived by the Advisor if the
Fund's operating expenses exceed 2% of the average daily net assets of the
Fund. In addition, the Fund's Advisor may voluntarily waive or absorb
certain expenses at their discretion. 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.
The Funds may invest cash reserves in money market funds sponsored and
managed by the Advisor, subject to certain limitations. The terms of such
transactions are identical to those of non-related entities except that, to
avoid duplicate investment advisory fees, advisory fees of each Fund are
reduced by an amount equal to advisory fees paid to the Advisor under its
investment advisory agreement with the money market funds.
Certain information regarding related party transactions for the six months
ended February 28, 1999, is as follows:
<TABLE>
<CAPTION>
Payable to /(Receivable Shareholder Servicing Unaffiliated
From) Advisor at and Other Expenses Directors'
February 28, 1999 Paid to Advisor Fees
----------------- --------------- ----
<S> <C> <C> <C>
Strong High-Yield Municipal Bond Fund $ 7,977 $210,359 $3,176
Strong Municipal Bond Fund 200 165,315 2,058
Strong Short-Term High Yield Municipal Fund (57,852) 18,114 750
Strong Short-Term Municipal Bond Fund 1,743 80,807 1,738
</TABLE>
4. LINE OF CREDIT
The Strong Funds have established a line of credit agreement ("LOC") with
certain financial institutions to be used for temporary or emergency
purposes, primarily for financing redemption payments. Combined borrowings
among all participating Strong Funds are subject to a $350 million cap on
the total line of credit. For individual Funds, borrowings under the LOC
are limited to either the lesser of 15% of the market value of total assets
or any explicit borrowing limits in the Fund's prospectus. Borrowings under
the LOC bear interest based on prevailing market rates as defined in the
LOC. A commitment fee of .07% per annum is incurred on the unused portion
of the line of credit and is allocated to all participating Strong Funds.
At February 28, 1999, there were no borrowings by the Funds outstanding
under the LOC.
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the six
months ended February 28, 1999, were as follows:
Purchases Sales
------------ ------------
Strong High-Yield Municipal Bond Fund $206,592,321 $189,035,339
Strong Municipal Bond Fund 146,615,135 49,845,825
Strong Short-Term High Yield Municipal Fund 61,714,776 12,725,345
Strong Short-Term Municipal Bond Fund 107,272,544 29,207,892
33
<PAGE>
FEBRUARY 28, 1999 (UNAUDITED)
- -------------------------------------------------------------------------------
6. INCOME TAX INFORMATION
The investment cost, gross unrealized appreciation and depreciation on
investments and capital loss carryovers (expiring in varying amounts
through 2006) for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
At February 28, 1999 At August 31, 1998
------------------------------------------------------------ ------------------
Federal Tax Unrealized Unrealized Net Capital Loss
Cost Appreciation Depreciation Appreciation Carryovers
----------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Strong High-Yield Municipal Bond Fund $673,601,617 $32,040,536 $14,533,840 $17,506,696 $ __
Strong Municipal Bond Fund 372,362,407 19,010,674 575,486 18,435,188 28,512,902
Strong Short-Term High Yield Municipal Fund 156,750,741 502,459 94,424 408,035 82,846
Strong Short-Term Municipal Bond Fund 301,491,121 7,500,232 46,280 7,453,952 12,549,981
</TABLE>
7. INVESTMENTS IN AFFILIATES
Affiliated issuers, as defined under the Investment Company Act of 1940,
include those in which the Fund's holdings of an issuer represent 5% or
more of the outstanding voting securities of the issuer and any other
Strong Fund. A summary of transactions in the securities of these issuers
during the six months ended February 28, 1999 is as follows:
<TABLE>
<CAPTION>
Balance of Balance of Dividend
Shares Gross Gross Sales Shares Value Income
Held Purchases and Held Feb. 28, Sept.1, 1998 -
Sept. 1, 1998 and Additions Reductions Feb. 28, 1999 1999 Feb. 28, 1999
------------- ------------- ---------- ------------- ---------- -------------
STRONG HIGH-YIELD MUNICIPAL BOND FUND
- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Strong Municipal Money Market Fund 52,800,000 152,100,000 (177,600,000) 27,300,000 $27,300,000 $510,234
STRONG MUNICIPAL BOND FUND
- --------------------------
Strong Municipal Money Market Fund 3,000,000 95,200,000 (96,500,000) 1,700,000 1,700,000 194,689
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND
- -------------------------------------------
Strong Municipal Money Market Fund 4,700,000 14,050,000 (13,400,000) 5,350,000 5,350,000 87,069
STRONG SHORT-TERM MUNICIPAL BOND FUND
- -------------------------------------
Strong Municipal Money Market Fund 4,900,000 116,100,000 (104,100,000) 16,900,000 16,900,000 147,353
34
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------------
STRONG HIGH-YIELD MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Period Ended
----------------------------------------------------
Feb. 28, Aug. 31, Aug. 31, Aug. 31, Dec. 31, Dec.31,
Selected Per-Share Data(a) 1999(c) 1998 1997 1996(d) 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.52 $10.09 $ 9.45 $9.91 $9.29 $10.10
Income From Investment Operations
Net Investment Income 0.29 0.59 0.61 0.44 0.69 0.71
Net Realized and Unrealized Gains (Losses) on Investments (0.18) 0.45 0.64 (0.46) 0.62 (0.81)
- -------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.11 1.04 1.25 (0.02) 1.31 (0.10)
Less Distributions
From Net Investment Income (b) (0.29) (0.59) (0.61) (0.44) (0.69) (0.71)
From Net Realized Gains (0.05) (0.02) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (0.34) (0.61) (0.61) (0.44) (0.69) (0.71)
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.29 $10.52 $10.09 $9.45 $9.91 $ 9.29
==================================================================================================================
Ratios and Supplemental Data
- -------------------------------------------------------------------------------------------------------------------
Total Return +1.1% +10.5% +13.6% -0.1% +14.6% -1.0%
Net Assets, End of Period (In Millions) $667 $667 $361 $238 $267 $108
Ratio of Expenses to Average Net Assets 0.7%* 0.7% 0.7% 0.7%* 0.4% 0.0%
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.7%* 0.7% 0.7% 0.7%* 0.8% 0.8%
Ratio of Net Investment Income to Average Net Assets 5.6%* 5.7% 6.2% 6.9%* 7.1% 7.5%
Portfolio Turnover Rate 28.9% 66.5% 92.1% 106.8% 113.8% 198.1%
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund outstanding for the entire period.
(b) Tax-exempt for regular federal income tax purposes.
(c) For the six months ended February 28, 1999 (unaudited).
(d) In 1996, the Fund changed its fiscal year end from December to August.
</TABLE>
<TABLE>
STRONG MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Period Ended
----------------------------------------------------
Feb. 28, Aug. 31, Aug. 31, Aug. 31,Dec. 31, Dec. 31,
Selected Per-Share Data(a) 1999(c) 1998 1997 1996(d) 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.96 $9.52 $8.99 $9.52 $9.23 $10.25
Income From Investment Operations
Net Investment Income 0.25 0.51 0.50 0.33 0.52 0.56
Net Realized and Unrealized Gains (Losses) on Investments (0.01) 0.44 0.53 (0.53) 0.51 (1.02)
- -------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.24 0.95 1.03 (0.20) 1.03 (0.46)
Less Distributions
From Net Investment Income (b) (0.25) (0.51) (0.50) (0.33) (0.54) (0.56)
In Excess of Net Investment Income -- -- -- -- (0.20) --
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (0.25) (0.51) (0.50) (0.33) (0.74) (0.56)
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.95 $9.96 $9.52 $8.99 $9.52 $9.23
===================================================================================================================
Ratios and Supplemental Data
- -------------------------------------------------------------------------------------------------------------------
Total Return +2.5% +10.1% +11.8% -2.1% +11.4% -4.6%
Net Assets, End of Period (In Millions) $382 $287 $232 $247 $247 $280
Ratio of Expenses to Average Net Assets 0.7%* 0.7% 0.8% 0.8%* 0.8% 0.8%
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.7%* 0.7% 0.8% 0.8%* 0.8% 0.8%
Ratio of Net Investment Income to Average Net Assets 5.1%* 5.2% 5.4% 5.4%* 5.4% 5.8%
Portfolio Turnover Rate 14.9% 58.5% 85.0% 172.9% 513.8% 311.0%
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund outstanding for the entire period.
(b) Tax-exempt for regular federal income tax purposes.
(c) For the six months ended February 28, 1999 (unaudited).
(d) In 1996, the Fund changed its fiscal year from December to August.
35
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period Ended
Feb. 28, Aug. 31,
Selected Per-Share Data(a) 1999(c) 1998(d)
- --------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $10.17 $10.00
Income From Investment Operations
Net Investment Income 0.25 0.37
Net Realized and Unrealized Gains (Losses) on Investments (0.04) 0.17
- --------------------------------------------------------------------------------
Total from Investment Operations 0.21 0.54
Less Distributions
From Net Investment Income (b) (0.25) (0.37)
- --------------------------------------------------------------------------------
Total Distributions (0.25) (0.37)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.13 $10.17
================================================================================
Ratios and Supplemental Data
- --------------------------------------------------------------------------------
Total Return +2.1% +5.5%
Net Assets, End of Period (In Millions) $151 $101
Ratio of Expenses to Average Net Assets 0.2%* 0.4%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.7%* 1.0%*
Ratio of Net Investment Income to Average Net Assets 5.0%* 5.0%*
Portfolio Turnover Rate 11.1% 8.1%
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund outstanding for the entire period.
(b) Tax-exempt for regular federal income tax purposes.
(c) For the six months ended February 28, 1999 (unaudited).
(d) For the period from November 30, 1997 (inception) to August 31, 1998.
</TABLE>
<TABLE>
STRONG SHORT-TERM MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Period Ended
----------------------------------------------------
Feb. 28, Aug. 31, Aug. 31, Aug. 31,Dec. 31, Dec. 31,
Selected Per-Share Data(a) 1999(c) 1998 1997 1996(d) 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.95 $9.82 $9.67 $9.77 $9.73 $10.36
Income From Investment Operations
Net Investment Income 0.24 0.48 0.49 0.33 0.47 0.45
Net Realized and Unrealized Gains (Losses) on Investments 0.05 0.13 0.15 (0.10) 0.04 (0.62)
- -------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.29 0.61 0.64 0.23 0.51 (0.17)
Less Distributions
From Net Investment Income (b) (0.24) (0.48) (0.49) (0.33) (0.47) (0.45)
From Net Realized Gains -- -- -- -- -- (0.01)
- -------------------------------------------------------------------------------------------------------------------
Total Distributions (0.24) (0.48) (0.49) (0.33) (0.47) (0.46)
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.00 $9.95 $9.82 $9.67 $9.77 $ 9.73
===================================================================================================================
Ratios and Supplemental Data
- -------------------------------------------------------------------------------------------------------------------
Total Return +2.9% +6.3% +6.7% +2.4% +5.4% -1.6%
Net Assets, End of Period (In Millions) $297 $211 $165 $136 $133 $161
Ratio of Expenses to Average Net Assets 0.6%* 0.6% 0.7% 0.7%* 0.8% 0.7%
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.6%* 0.6% 0.7% 0.7%* 0.8% 0.7%
Ratio of Net Investment Income to Average Net Assets 4.8%* 4.8% 5.0% 5.1%* 4.8% 4.5%
Portfolio Turnover Rate 12.3% 15.7% 26.2% 38.0% 226.8% 273.2%
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund outstanding for the entire period.
(b) Tax-exempt for regular federal income tax purposes.
(c) For the six months ended February 28, 1999 (unaudited).
(d) In 1996, the Fund changed its fiscal year end from December to August.
</TABLE>
36
<PAGE>
DIRECTORS
Richard S. Strong
Willie D. Davis
Stanley Kritzik
Marvin E. Nevins
William F. Vogt
OFFICERS
Richard S. Strong, Chairman of the Board
Mary F. Hoppa, Vice President
Thomas P. Lemke, Vice President
John S. Weitzer, Vice President
Stephen J. Shenkenberg, Vice President and Secretary
Dana J. Russart, Treasurer
INVESTMENT ADVISOR
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
DISTRIBUTOR
Strong Investments, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
CUSTODIAN
Firstar Bank Milwaukee, N.A.
P.O. Box 701, Milwaukee, Wisconsin 53201
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
100 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street, Milwaukee, Wisconsin 53202
<PAGE>
For a prospectus containing more complete information, including management fees
and expenses, please call 1-800-368-1030. Please read it carefully before
investing or sending money. This report does not constitute an offer for the
sale of securities. Strong Funds are offered for sale by prospectus only.
[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 STRONG WEB SITE ON COMPUTER]
Strong On-line
www.strongfunds.com
[STRONG LOGO]
STRONG FUNDS
P.O. Box 2936 o Milwaukee, Wisconsin 53201
Strong Investments, Inc. 11103C99 AMUNI
