<PAGE>
[LOGO]
[PHOTO]
The Strong MUNICIPAL INCOME Funds
The Strong High-Yield Municipal Bond Fund
The Strong Short-Term High Yield Municipal Fund
The Strong Municipal Bond Fund
The Strong Short-Term Municipal Bond Fund
Annual Report . August 31, 2000
<PAGE>
The Strong
Municipal Income
Funds
_____
ANNUAL REPORT . AUGUST 31, 2000
Table of Contents
<TABLE>
<S> <C>
Investment Reviews
The Strong High-Yield Municipal Bond Fund.................... 2
The Strong Short-Term High Yield Municipal Fund.............. 4
The Strong Municipal Bond Fund............................... 6
The Strong Short-Term Municipal Bond Fund.................... 8
Bond Glossary................................................... 10
Financial Information
Schedules of Investments in Securities
The Strong High-Yield Municipal Bond Fund............... 11
The Strong Short-Term High Yield Municipal Fund......... 14
The Strong Municipal Bond Fund.......................... 18
The Strong Short-Term Municipal Bond Fund............... 21
Statements of Assets and Liabilities......................... 27
Statements of Operations..................................... 29
Statements of Changes in Net Assets.......................... 31
Notes to Financial Statements................................ 33
Financial Highlights............................................ 38
Report of Independent Accountants............................... 43
</TABLE>
<PAGE>
THE STRONG HIGH-YIELD MUNICIPAL BOND FUND
-----------------------------------------
F U N D
highlights
. The Fund has increased its exposure to the utility and transportation sectors
and maintained its overweighting in health care.
. Over the past few quarters, we replaced lower-rated credits with higher-rated
issues to selectively upgrade the credit quality and sector diversification
of the portfolio.
--------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 8-31-00
INVESTOR CLASS
--------------
1-year -2.91%
3-year 2.01%
5-year 4.71%
Since Inception 5.02%
(10-1-93)
ADVISOR CLASS/1/
-------------
1-year -3.26%
3-year 1.64%
5-year 4.34%
Since Inception 4.64%
(10-1-93)
--------------------------------------------------------------------------------
PORTFOLIO STATISTICS
As of 8-31-00
----------------------------------------------
INVESTOR CLASS
30-day annualized yield/2/ 6.69%
----------------------------------------------
----------------------------------------------
ADVISOR CLASS
30-day annualized yield/2/ 6.26%
----------------------------------------------
Average maturity/3/ 15.2 years
Average
quality rating/4/ BB
Perspectives
from the Manager
/s/ Mary-Kay H. Bourbulas
Mary-Kay H. Bourbulas
Portfolio Manager
--------------------------------------------------------------------------------
It is sometimes hard to see large trends in slow markets. Municipal investments,
known as being conservative in nature, have come a long way in a year. Although
the Federal Reserve chose to raise short-term interest rates 125 basis points
over the past year, the effect has been one of tempering the economy and
actually lowering long-term interest rates as early signs of a slowdown start to
appear.
After a poor 1999, municipals have seen a significant turnaround. High-
quality municipals have delivered some of the best returns in the fixed-income
market in 2000 so far, but the rally has not spread to longer-term, lower-rated
municipal credits. The Fund's returns have been hampered by its high exposure to
BBB and lower-rated securities. This challenge appears to be abating--and
investors are starting to give municipals a second look.
State and local governments have benefited from the strong economy.
Municipalities have been able to set aside funds for a rainy day, and the
increased fiscal strength can be seen as credit upgrades well outpace
downgrades. Health care, however, continues to feel the pain of reduced
reimbursements. Health-care credits continue to face downgrades because of
revenue pressures and complications from industry consolidation. Investors have
demanded higher yields as compensation for potential credit downgrades. Signs of
improvement are, however, beginning to emerge. We continue to overweight the
sector
--------------------------------------------------------------------------------
After a poor 1999, municipals have seen a significant turnaround.
--------------------------------------------------------------------------------
From time to time, the Fund's advisor has waived its management fee and/or
absorbed fund expenses, which has resulted in higher yields and returns.
/1/ The performance of the Advisor Class shares prior to 2-29-00 is based on the
Fund's Investor Class shares' performance, restated for the higher expense
ratio of the Advisor Class shares. Please consult a prospectus for
information about all share classes.
/2/ Yields are historical and do not represent future yields, which will
fluctuate. Yields are as of 8-31-00. The Advisor Class has temporarily
absorbed expenses of 0.16%. Otherwise, the current yield would have been
6.10%, and returns would have been lower.
/3/ The Fund's average maturity includes the effect of futures and when-issued
securities.
2
<PAGE>
in the portfolio, where our research is crucial for identifying those
participants who can thrive in the challenging health-care field of today and
for capitalizing on the favorable demographics supporting the industry.
Earlier this year, the municipal market taught us an important lesson in
liquidity and diversification. We were able to meet redemptions but were forced
to sell securities at prices that were not indicative of their credit
fundamentals. With outflows abating, we have spent the past few quarters
repositioning the portfolio, selling lower-rated credits and replacing them with
higher-rated issues. Our goal was to selectively upgrade the Fund's credit
quality and sector diversification. We have decreased overall portfolio duration
to 8.57 years over the past several months, positioning the Fund to benefit from
the steady interest rate environment we anticipate over the next six months.
Looking forward, we foresee no major changes in Fed policy due to the fall
election. However, it is never too early to begin to think about how the
election results could affect the market.
We appreciate your investment in the Strong High-Yield Municipal Bond Fund and
look forward to working with you in the years to come.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 10-1-93 to 8-31-00
[GRAPH]
<TABLE>
<CAPTION>
Lipper
The Strong High Yield
High-Yield High-Yield Municipal
Municipal Municipal Debt Funds
Bond Fund Bond Index* Index*
<S> <C> <C> <C>
Sep 93 $10,000 $10,000 $10,000
Dec 93 $10,266 $10,164 $10,141
Dec 94 $10,165 $9,608 $9,636
Dec 95 $11,650 $11,361 $11,245
Dec 96 $12,247 $11,867 $11,674
Dec 97 $13,949 $13,164 $12,815
Dec 98 $14,684 $13,982 $13,528
Dec 99 $13,879 $13,730 $13,034
Aug 00 $14,028 $14,442 $13,551
</TABLE>
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. This graph is based on Investor Class shares only;
performance for other classes will vary due to differences in fee structures.
Y O U R F U N D'S
approach
The Strong High-Yield Municipal Bond Fund seeks total return by investing for a
high level of federally tax-exempt current income. The Fund invests primarily in
long-term, medium-and lower-quality municipal bonds. The Fund's manager
emphasizes bonds whose credit quality may be improving and issuers that
complement current investment themes, such as the "aging of America." The
manager also considers the overall interest rate environment. The Fund typically
maintains an average maturity between 15 and 25 years.
--------------------------------------------------------------------------------
M A R K E T
highlights
. For the year ended August 31, 2000, the High-Yield Municipal Bond Index
returned 2.41%.*
. Municipal funds saw outflows of more than $15 billion this year. However, net
new issuance is down more than 35% over last year, helping to keep supply and
demand in balance.
. The market continues to demand a significant yield premium from lower-rated
long-term debt. If rates hold steady or fall, this premium should shrink as
investors once again look for ways to boost income levels.
. After raising interest rates by 125 basis points, the Federal Reserve has
adopted a wait-and-see attitude on whether further tightening is needed.
--------------------------------------------------------------------------------
/4/ For purposes of this average rating, the Fund's short-term debt obligations
have been assigned long-term ratings by the Advisor.
* 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.
3
<PAGE>
THE STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND
-----------------------------------------------
F U N D
highlights
. We reduced the Fund's average duration to 2.2 years, reflecting our generally
neutral market outlook.
. The Fund has increased its exposure to the general obligation and utility
sectors. Increased tax receipts and a favorable deregulatory environment,
respectively, make these sectors attractive.
. Signs of stability are appearing in the health-care sector. We continue to
overweight this sector and see an improving trend emerging.
--------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 8-31-00
INVESTOR CLASS
--------------
1-year 1.25%
Since Inception 3.60%
(11-30-97)
ADVISOR CLASS/1/
-------------
1-year 0.86%
Since Inception 3.19%
(11-30-97)
--------------------------------------------------------------------------------
PORTFOLIO STATISTICS
As of 8-31-00
-----------------------------------------------------
INVESTOR CLASS
30-day annualized yield/2/ 5.41%
-----------------------------------------------------
ADVISOR CLASS
30-day annualized yield/2/ 4.94%
-----------------------------------------------------
Average maturity/3/ 2.4 years
Average
quality rating/4/ BB
Perspectives
from the Manager
/s/ Mary-Kay H. Bourbulas
Mary-Kay H. Bourbulas
Portfolio Manager
--------------------------------------------------------------------------------
Slow markets can sometimes hide large trends. Although mostly conservative in
nature, municipal investments have made strides over a year. After posting poor
returns in 1999, municipal securities have done considerably better in 2000,
with high-quality municipals delivering some of the best returns in the fixed-
income market. The rally has not, however, had a similar impact on lower-rated
municipal credits.
Municipal funds (excluding money market funds) saw net outflows of more than $15
billion over the past year. As flows return to the marketplace, the difference
in yield between AAA and BBB or lower-rated debt should narrow. The portfolio
continues to maintain an average credit quality rating of BB and is positioned
to take advantage of the narrowing spread.
With higher tax revenues from the strong economy, municipalities have been able
to set aside funds for a rainy day; this improved fiscal strength can be seen in
the pace of credit upgrades. Health care, however, continues to feel the pain of
reduced reimbursements. Although cutbacks by Medicare, Medicaid, and other
managed-care providers have subsided, the depth of cutbacks has affected
virtually every health-care-related bond. Nonetheless, signs of stabilization
are beginning to emerge. We continue to overweight health care, as demographic
trends in the U.S. indicate that the sector will face rising demand. Credit
research is key in evaluating bonds in this sector and is an essential part of
our job.
--------------------------------------------------------------------------------
Credit research is key in evaluating bonds in [the health-care sector] and is an
essential part of our job.
--------------------------------------------------------------------------------
From time to time, the Fund's advisor has waived its management fee and/or
absorbed fund expenses, which has resulted in higher yields and returns.
/1/ The performance of the Advisor Class shares prior to 2-29-00 is based on the
Fund's Investor Class shares' performance, restated for the higher expense
ratio of the Advisor Class shares. Please consult a prospectus for
information about all share classes.
/2/ Yields are historical and do not represent future yields, which will
fluctuate. Yields are as of 8-31-00. The Investor Class has temporarily
absorbed expenses of 0.05%. Otherwise, the current yield would have been
5.36%, and returns would have been lower. The Advisor Class has temporarily
absorbed expenses of 0.29%. Otherwise, the current yield would have been
4.65%, and returns would have been lower.
4
<PAGE>
Earlier this year, the municipal market taught us an important lesson in
liquidity and diversification. Although we were able to meet redemptions, we
were forced to sell securities at prices that were not indicative of credit
fundamentals. As cash has come back into the Fund, we concentrated on purchasing
securities in sectors favored by the marketplace, including general obligation
and utility bonds. Our goal was to selectively upgrade the Fund's credit quality
and sector diversification. We have made great strides in meeting these
goals -- and in improving liquidity.
Looking forward, we foresee no major changes in Fed policy due to the fall
election. However, it is never too early to begin to think about how the
election results could affect the market. Proposals for tax cuts, savings
incentives, and Alternative Minimum Tax relief have all been bandied about. The
next few months will be interesting and may present us with new opportunities
related to the election results.
We appreciate your investment in the Strong Short-Term High Yield Municipal Fund
and look forward to working with you in the years to come.
Growth of an Assumed 10,000 Investment from 11-30-97 to 8-31-00
<TABLE>
<CAPTION>
Lehman brothers
1-3 Year
The Strong Short-Term Non-Investment Lipper High Yield
high Yield Grade Municipal Municipal Debt
Municipal Fund Bond Index* funds Index*
<S> <C> <C> <C>
Nov 97 $10,000 $10,000 $10,000
Dec 97 $10,082 $10,052 $10,159
Jan 98 $10,458 $10,326 $10,463
Dec 98 $10,699 $10,599 $10,724
Jun 99 $10,849 $10,818 $10,691
Dec 99 $10,783 $10,987 $10,333
Jun 00 $10,880 $11,298 $10,506
Aug 00 $11,020 $11,440 $10,742
</TABLE>
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 vary,
and you may have a gain or loss when you sell shares.This graph is based on
Investor Class shares only; performance for other classes will vary due to
differences in fee structures.
Y O U R F U N D'S
approach
The Strong Short-Term High Yield Municipal Fund seeks total return by investing
for a high level of federally tax-exempt current income with a moderate degree
of share price fluctuation. The Fund invests primarily in short-and
intermediate-term, medium- and lower-quality municipal bonds. The Fund's manager
emphasizes bonds whose credit quality may be improving and issuers that
complement current investment themes, such as the "aging of America." The
manager also considers the overall interest rate environment. The Fund typically
maintains an average maturity between one and three years.
--------------------------------------------------------------------------------
M A R K E T
highlights
. For the year ended August 31, 2000, the Lehman Brothers 1-3 Year Non-
Investment Grade Municipal Bond Index returned 5.21%.*
. Although the municipal market typically exhibits a steep yield curve, the
municipal yield curve has actually flattened over the year.
. The market continues to demand a yield premium from BBB or lower-rated debt.
If rates hold steady or fall, yield spreads should tighten as investors look
for ways to boost investment income.
. After raising interest rates by 125 basis points, the Federal Reserve has
adopted a wait-and-see attitude.
--------------------------------------------------------------------------------
/3/ The Fund's average maturity includes the effect of futures and 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.
5
<PAGE>
THE STRONG MUNICIPAL BOND FUND
------------------------------
F U N D
highlights
. We are maintaining the Fund's overweighting in the health-care sector, as
fundamentals appear to have stabilized.
. A disciplined investment style that makes moderate bets relative to the
Fund's benchmark, combined with a proactive approach to credit research,
should help the Fund produce more consistent returns.
. At the end of the period, the Fund's duration stood at 7.4, slightly lower
than the benchmark Lehman Brothers Municipal Bond Index.*
AVERAGE ANNUAL
TOTAL RETURNS
As of 8-31-00
INVESTOR CLASS
--------------
1-year -0.86%
5-year 4.37%
10-year 6.42%
Since Inception 5.66%
(10-23-86)
ADVISOR CLASS/1/
-------------
1-year - 1.19%
5-year 4.02%
10-year 6.07%
Since Inception 5.31%
(10-23-86)
INSTITUTIONAL CLASS/2/
-------------------
1-year - 0.72%
5-year 4.40%
10-year 6.44%
Since Inception 5.67%
(10-23-86)
-------------------------------------------------
PORTFOLIO STATISTICS
As of 8-31-00
-------------------------------------------------
INVESTOR CLASS
30-day annualized yield/3/ 5.34%
-------------------------------------------------
ADVISOR CLASS
30-day annualized yield/3/ 4.99%
-------------------------------------------------
INSTITUTIONAL CLASS
30-day annualized yield/3/ 5.65%
-------------------------------------------------
Average maturity/4/ 9.5 years
Average
quality rating/5/ A
Perspectives
from the Manager
/s/ Lyle J. Fitterer
Lyle J. Fitterer
Portfolio Manager
--------------------------------------------------------------------------------
While municipal issues were among the worst performers in 1999, after a slow
start, they are proving to be one of the best-performing sectors of the fixed-
income markets in 2000. However, just as the highest-quality securities
(Treasuries) in the taxable market have outperformed almost all other sectors,
AAA-rated bonds have outperformed most sectors of the municipal market.
Early in the period, the Fund was positioned to take advantage of decreasing
interest rates by having a maturity that was much longer than our benchmark.
Unfortunately, many of the issues we owned were rated below AAA (the portfolio
maintained an average credit quality of A during the period) and did not fully
participate in the market's rally. This caused the Fund to underperform its
benchmark during the 12-month period.
Continued strength in the U.S. economy has created a windfall for many state and
local governments, and in the first half of 2000, credit upgrades outpaced
downgrades in the market by almost a six-to-one margin. The only sector that has
seen substantially more downgrades than upgrades is health care. Many health-
care credits have deteriorated over the past few years, as fee pressures have
driven down revenues while expenses have risen. We are, however, starting to see
some signs of stability in the health-care sector as companies have adjusted to
the new environment. The Fund has maintained
--------------------------------------------------------------------------------
...we have positioned the Fund with the view that interest rates will remain
fairly steady over the next few months.
--------------------------------------------------------------------------------
From time to time, the Fund's advisor has waived its management fee and/or
absorbed fund expenses, which has resulted in higher yields and returns.
/1/ The performance of the Advisor Class shares prior to 2-29-00 is based on
the Fund's Investor Class shares' performance, restated for the higher
expense ratio of the Advisor Class shares. Please consult a prospectus for
information about all share classes.
/2/ The performance of the Institutional Class shares prior to 7-31-00 is based
on the Fund's Investor Class shares' performance. Please consult a
prospectus for information about all share classes.
/3/ Yields are historical and do not represent future yields, which will
fluctuate. Yields are as of 8-31-00. The Advisor Class has temporarily
absorbed expenses of 0.03%. Otherwise, the current yield would have been
4.96%, and returns would have been lower.
6
<PAGE>
its overweighting in the sector; as the sector continues to stabilize, we expect
prices to improve. Over the past few months, we have also decreased our duration
in the Fund; it now stands at approximately 7.4, slightly lower than the
benchmark Lehman Brothers Municipal Bond Index.*
Recent data suggests that the U.S. economy may be slowing. The market has
reacted by starting to price in an easing of interest rates -- but with current
mortgage rates below the levels seen when the Federal Reserve started to raise
short-term rates just over a year ago, and with the stock market climbing again,
it is hard for us to argue that the economy will slow to a level that justifies
a Federal Reserve easing. Therefore, we have positioned the Fund with the view
that interest rates will remain fairly steady over the next few months. We will
pay careful attention to the upcoming election, looking for any hints of changes
in tax policies that could present opportunities within the municipal market.
We thank you for your investment in the Strong Municipal Bond Fund.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 10-23-86 to 8-31-00
[GRAPH]
<TABLE>
<CAPTION>
The Strong Lehman Brothers Lipper General
Municipal Municipal Bond Municipal
Bond Fund Index* Debt Funds Index*
<S> <C> <C> <C>
Sept 86 $10,000 $10,000 $10,000
Dec 86 $10,129 $10,216 $10,252
Dec 88 $10,705 $11,423 $11,370
Dec 90 $11,995 $13,578 $13,252
Dec 92 $15,256 $16,569 $16,170
Dec 94 $16,275 $17,642 $17,082
Dec 96 $18,569 $21,640 $20,757
Dec 98 $22,211 $25,160 $23,986
Aug 00 $21,450 $26,507 $24,653
</TABLE>
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 gains or loss
when you sell shares. To equalize the time periods, the indexes' performances
were prorated for the month of October 1986. This graph is based on Investor
Class shares only; performance for other classes will vary due to differences in
fee structures.
Y O U R F U N D'S
approach
The Strong Municipal Bond Fund seeks total return by investing for a high level
of federally tax-exempt current income with a moderate degree of share price
fluctuation. The Fund invests primarily in long-term, higher- and medium-quality
municipal bonds. The Fund's manager conducts intensive research on individual
issuers to uncover solid investment opportunities and especially looks for bonds
whose quality may be improving. The Fund typically maintains an average maturity
between 10 and 20 years.
--------------------------------------------------------------------------------
M A R K E T
highlights
. The Lehman Brothers Municipal Bond Index returned 6.77% for the year ended
August 31, 2000.*
. The municipal yield curve flattened over the past year, as short- and
intermediate-term rates trended higher and longer-term rates remained fairly
stable.
. Long-term municipal yields are running at about 97% of Treasury
yields -- before taking the impact of taxes into account.
. After raising rates by 125 basis points over the past year, the Federal
Reserve has entered a holding pattern as signs of economic slowing appear.
--------------------------------------------------------------------------------
/4/ The Fund's average maturity includes the effect of futures and when-issued
securities.
/5/ For purposes of this average rating, the Fund's short-term debt obligations
have been assigned 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.
7
<PAGE>
THE STRONG SHORT-TERM MUNICIPAL BOND FUND
-----------------------------------------
FUND
highlights
. The Fund's average portfolio maturity was reduced to 2.3 years, reflecting
our view that interest rates will be fairly stable over the next three to six
months.
. The Fund's average credit quality remains a solid A. We have reduced the
percentage of the Fund's securities that are subject to the Alternative
Minimum Tax.
--------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of 8-31-00
Investor Class
--------------
1-year 3.61%
3-year 4.23%
5-year 4.69%
Since Inception 4.53%
(12-31-91)
ADVISOR CLASS/1/
-------------
1-year 3.23%
3-year 3.85%
5-year 4.30%
Since Inception 4.14%
(12-31-91)
INSTITUTIONAL CLASS/2/
1-year 3.64%
3-year 4.24%
5-year 4.69%
Since Inception 4.53%
(12-31-91)
PORTFOLIO STATISTICS
As of 8-31-00
INVESTOR CLASS
------------------------------------------------
30-day annualized yield/3/ 4.85%
------------------------------------------------
ADVISOR CLASS
------------------------------------------------
30-day annualized yield/3/ 4.54%
INSTITUTIONAL CLASS
------------------------------------------------
30-day annualized yield/3/ 5.09%
Average maturity/4/ 2.3 years
Average
quality rating/5/ A
Perspectives
from the Manager
/s/ Lyle J. Fitterer
Lyle J. Fitterer
Portfolio Manager
--------------------------------------------------------------------------------
Fixed-income investors are finally being rewarded for their conservative nature,
as returns within the sector are outpacing many equity returns for the year to
date. Even though the Federal Reserve raised short-term interest rates by 125
basis points during the period, longer-term rates have actually declined. Many
investors believe that the Federal Reserve has once again engineered a soft
landing for the U.S. economy and that we have, therefore, reached a peak in
short-term interest rates.
Although municipal issues were among the worst performers in 1999, they have
turned out to comprise some of the best-performing sectors of the fixed-income
markets in 2000. Just as the highest-quality securities (Treasuries) have
outperformed in the taxable market, AAA-rated munis have outperformed most
sectors of the tax-free market. Even though the Fund has a greater exposure
versus its benchmark to bonds rated below AAA, the additional yield generated by
these securities has still allowed us to perform well over the past six months.
For the one-year period, a deterioration in the credit quality of a few
holdings, combined with a maturity that was at the longer end of the range,
caused the Fund to trail its benchmark.
While credit upgrades have exceeded downgrades by a six-to-one margin in the
municipal market, more health-care credits have actually been downgraded than
--------------------------------------------------------------------------------
Fixed-income investors are finally being rewarded for their conservative nature,
as returns within the sector are outpacing many equity returns for the year to
date.
--------------------------------------------------------------------------------
From time to time, the Fund's advisor has waived its management fee and/or
absorbed fund expenses, which has resulted in higher yields and returns.
/1/ The performance of the Advisor Class shares prior to 2-29-00 is based on the
Fund's Investor Class shares' performance, restated for the higher expense
ratio of the Advisor Class shares. Please consult a prospectus for
information about all share classes.
/2/ The performance of the Institutional Class shares prior to 7-31-00 is based
on the Fund's Investor Class shares' performance. Please consult a
prospectus for information about all share classes.
/3/ Yields are historical and do not represent future yields. Yields may
fluctuate. Yields are as of 8-31-00.
8
<PAGE>
upgraded. Although we may see a few more downgrades within this sector, we are
starting to see signs of stability. The Fund has maintained its overweighted
position in the health-care sector. We have also increased our exposure to the
utility sector, focusing on companies that have benefited from the changes
deregulation has brought to the industry.
Over the past few months, we have decreased the Fund's average maturity; it now
stands at 2.3 years. Recent data suggests the U.S. economy may be slowing, but
it is hard for us to argue that the economy will slow to a level that justifies
a Federal Reserve easing. Therefore, the Fund is positioned with the view that
interest rates will remain fairly steady over the next few months, though we
will keep an eye on developments in the Presidential elections that could
change this scenario.
We follow a disciplined investment style with a proactive approach to credit
research. We appreciate your investment in the Strong Short-Term Municipal Bond
Fund and look forward to working with you in the years to come.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-91 to 8-31-00
[GRAPH]
<TABLE>
<CAPTION>
The Strong Lehman Brothers Lipper Short
Short-Term Municipal Municipal
Municipal 3 Year Bond Debt Funds
Bond Fund Index* Average*
<S> <C> <C> <C>
Dec 91 $10,000 $10,000 $10,000
Dec 93 $11,440 $11,305 $11,130
Dec 95 $11,860 $12,391 $11,966
Dec 97 $13,300 $13,650 $12,999
Dec 99 $14,202 $14,643 $13,820
Aug 00 $14,679 $15,233 $14,256
</TABLE>
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
Funds Average. Results include the reinvestment of all dividends and capital
gains distributions. Performance is historical and does not represent future
results. Investment returns and principal value vary, and you may have a gain
or loss when you sell shares. This graph is based on Investor Class shares
only; performance for other classes will vary due to differences in fee
Y O U R F U N D'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. The Fund invests primarily in short-and intermediate-term,
higher-and medium-quality municipal bonds.The Fund's manager conducts intensive
research on individual issuers to uncover solid investment opportunities and
especially looks for bonds whose quality may be improving. The Fund typically
maintains an average maturity of three years or less.
-------------------------------------------------------------------------------
M A R K E T
highlights
. The Lehman Brothers Municipal 3 Year Bond Index returned 4.72% for the year
ended August 31, 2000.*
. Credit upgrades exceeded downgrades by almost a six-to-one margin in the
first half of 2000.
. Cash flows into municipal funds have stabilized recently, as performance has
improved and interest rates have started to trend lower.
. After raising rates by 125 basis points over the past year, the Federal
Reserve has apparently entered a "holding pattern," as signs of an economic
slowdown are appearing.
. While municipals have outperformed Treasuries recently, on a historical
basis, municipals' yields are still very attractive relative to taxable
alternatives.
--------------------------------------------------------------------------------
/4/ The Fund's average maturity includes the effect of futures and when-issued
securities.
/5/ 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 Funds 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.
9
<PAGE>
--------------------------------------------------------------------------------
B O N D
glossary
Bond Quality Ratings--There are services that analyze the financial condition of
a bond's issuer and then assign it a rating. The best-known rating agencies are
Standard and Poors and Moody's. The highest-quality bonds are rated AAA (S&P) or
Aaa (Moody's). The scale descends to AA, A, then BBB, and so on, down to D.
Bonds with a rating of BBB or higher are considered investment grade. Bonds
rated BB and below are considered "junk bonds." Typically, the lower a bond's
rating, the higher yield it must pay in order to compensate the bondholder for
the added risk.
Maturity--Like a loan, a bond must be paid off on a certain date. A bond's
maturity is the time remaining until it is paid off. Bonds typically mature in a
range from overnight to 30 years from now. Typically, bonds with longer
maturities will have higher yields and larger price changes in reaction to
interest rate changes. In rare situations, shorter-term bonds will have higher
yields; this is known as an inverted yield curve (see definition on this page).
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's 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.
10
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES August 31, 2000
--------------------------------------------------------------------------------
STRONG HIGH-YIELD MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------------------
<S> <C> <C>
Municipal Bonds 97.5%
Alabama 0.6%
West Jefferson, Alabama Amusement and Public
Park Authority First Mortgage Revenue -
Visionland Alabama Project,
6.00%, Due 2/01/08 $ 3,445,000 $ 2,618,200
Alaska 1.7%
Juneau, Alaska City and Borough Nonrecourse
Revenue - St. Ann's Care Center Project,
6.875%, Due 12/01/25 4,000,000 3,750,000
Seward, Alaska Revenue - Alaska Sealife Center
Project, 7.65%, Due 10/01/16 3,500,000 3,565,625
-------------
7,315,625
Arizona 0.4%
Maricopa County, Arizona IDA Senior Living
Facilities Revenue - Christian Care Mesa, Inc.
Project, 7.875%, Due 4/01/27 1,745,000 1,760,269
Arkansas 0.4%
Little Rock, Arkansas Hotel and Restaurant Gross
Receipts Tax Revenue, 7.375%, Due 8/01/15 1,500,000 1,788,750
California 4.0%
Millbrae, California Residential Facilities Revenue -
Magnolia of Millbrae Project,
7.375%, Due 9/01/27 6,000,000 6,052,500
San Francisco, California Redevelopment Agency
Residential Facilities Revenue - Coventry Park
Project, 8.50%, Due 12/01/26 5,000,000 5,106,250
San Joaquin Hills, California Transportation
Corridor Agency Toll Road Revenue Refunding,
Zero %, Due 1/15/21 (Rate Reset
Effective 1/15/07) 9,750,000 6,361,875
-------------
17,520,625
Colorado 1.5%
Colorado Health Facilities Authority Hospital
Revenue - Steamboat Springs Health Care
Association Project, 5.75%, Due 9/15/22 5,000,000 4,112,500
Colorado Health Facilities Authority Revenue -
Rocky Mountain Adventist Project, 6.625%,
Due 2/01/13 2,550,000 2,499,000
-------------
6,611,500
Connecticut 1.3%
Connecticut Health and EFA Revenue - New
Opportunities for Waterbury, Inc. Project,
6.75%, Due 7/01/28 3,895,000 3,870,656
Mashantucket Western Pequot Tribe
Subordinated Special Revenue Bonds:
Zero %, Due 9/01/15 2,000,000 795,000
Zero %, Due 9/01/16 2,000,000 735,000
Zero %, Due 9/01/18 1,100,000 352,000
-------------
5,752,656
Florida 5.7%
Arbor Greene Community Development District
Special Assessment Revenue, 7.00%,
Due 5/01/03 100,000 100,875
Cory Lakes, Florida Community Development
District Special Assessment Revenue, 8.375%,
Due 5/01/17 2,750,000 2,897,812
Florida HFA MFHR Refunding - Lake Side Villas
and Golf Villas at Sabal Palm Project:
6.75%, Due 12/01/10 $ 1,000,000 $ 952,500
7.00%, Due 12/01/16 2,600,000 2,427,750
7.25%, Due 12/01/25 (c) 4,400,000 4,042,500
Grand Haven Community Development District
Special Assessment Revenue,
6.90%, Due 5/01/19 970,000 985,763
Largo, Florida Sun Coast Health System
Revenue - Sun Coast Hospital Issue,
6.30%, Due 3/01/20 7,795,000 6,742,675
Palm Beach County, Florida Solid Waste IDR -
Okeelanta Power LP Project:
6.375%, Due 2/15/07 (Purchased in Default
on 1/28/98) 1,300,000 780,000
6.70%, Due 2/15/15 (Purchased in Default
on 2/04/98) 500,000 300,000
Palm Beach County, Florida Solid Waste IDR -
Osceola Power LP Project, 6.85%, Due 1/01/14
(Purchased in Default on 1/13/98-2/04/98) 450,000 270,000
Pinellas County, Florida EFA Revenue - College
Harbor Project, 8.50%, Due 12/01/28 4,685,000 4,749,419
Polk County, Florida HFA Subordinated Revenue -
Lake Wales Gardens Project,
Zero %, Due 4/01/20 4,385,000 783,819
-------------
25,033,113
Georgia 5.4%
Atlanta, Georgia Urban Residential Finance
Authority MFHR - Evergreen Village Estates
Project, 6.625%, Due 5/01/28 605,000 609,537
Atlanta, Georgia Urban Residential Finance
Authority MFHR - Park Place Apartments
Project, 6.75%, Due 3/01/31 6,000,000 5,655,000
Dekalb County, Georgia Residential Care Facilities
for the Elderly Authority First Lien Revenue -
King's Bridge Retirement Center, Inc. Project:
8.00%, Due 7/01/06 650,000 688,188
8.15%, Due 7/01/16 2,380,000 2,537,675
8.25%, Due 7/01/26 5,250,000 5,551,875
Fulton County, Georgia Housing Authority
MFHR - Washington Court Project:
6.40%, Due 2/01/19 765,000 713,362
6.50%, Due 2/01/28 1,750,000 1,601,250
Fulton County, Georgia Residential Care Facilities
Revenue - Residential Housing Authority
Assisted Living Project:
6.90%, Due 7/01/19 1,640,000 1,469,850
7.00%, Due 7/01/29 5,360,000 4,696,700
-------------
23,523,437
Illinois 5.7%
Godfrey, Illinois Revenue - United Methodist
Village Project, 5.875%, Due 11/15/29 5,000,000 3,912,500
Illinois DFA Hospital Revenue - Adventist Health
System/Sunbelt Obligation Project,
5.50%, Due 11/15/20 (c) 950,000 806,313
Illinois HDA MFHR, 5.00%, Due 7/01/25 (c) 3,750,000 3,089,062
Metropolitan Pier and Exposition Authority
Hospitality Facilities Revenue - McCormick Place
Convention Project, 7.00%, Due 7/01/26 3,000,000 3,581,250
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
</TABLE>
11
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) August 31, 2000
--------------------------------------------------------------------------------
STRONG HIGH-YIELD MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Robbins, Illinois Resource Recovery Revenue -
Restructuring Project:
Zero %, Due 10/15/09 $ 1,706,885 $ 793,702
7.25%, Due 10/15/09 850,426 844,048
7.25%, Due 10/15/24 3,676,918 3,534,437
Series A, 8.375%, Due 10/15/16 (Currently
Accruing at 0%) 5,480,468 1,370,117
Series B, 8.375%, Due 10/15/16 (Currently
Accruing at 0%) 2,144,531 536,133
-------------
25,217,562
Indiana 6.0%
Indiana Health Facility Financing Authority
Revenue - Hamilton Communities, Inc.
Project, 6.50%, Due 1/01/30 18,200,000 15,652,000
Indianapolis, Indiana EDR MFHR - Post Pointe
Apartments Project:
8.30%, Due 3/01/06 480,000 480,000
8.40%, Due 3/01/11 710,000 707,338
8.75%, Due 3/01/27 6,540,000 6,540,000
St. Joseph County, Indiana EDR - Hamilton
Communities Obligation Group Project,
7.15%, Due 7/01/29 3,155,000 3,131,337
-------------
26,510,675
Iowa 4.8%
Cedar Rapids, Iowa First Mortgage Revenue -
Cottage Grove Place Project:
5.875%, Due 7/01/28 (c) 7,635,000 6,174,806
9.00%, Due 7/01/25 (Pre-Refunding
at $102 on 7/01/05) (c) 6,000,000 7,207,500
Iowa Finance Authority Elder Care Facility First
Mortgage Revenue - Amity Fellowserve-Iowa,
Inc. Project, 6.00%, Due 10/01/28 8,820,000 7,485,975
-------------
20,868,281
Kentucky 2.8%
Kuttawa, Kentucky First Mortgage Revenue -
GF/Kentucky, Inc. Project, 6.75%, Due 3/01/29 2,900,000 2,504,875
Morgantown, Kentucky Solid Waste Disposal
Facilities Revenue - IMCO Recycling, Inc. Project:
6.00%, Due 5/01/23 4,100,000 3,638,750
7.65%, Due 5/01/16 5,740,000 5,991,125
-------------
12,134,750
Louisiana 1.6%
Iberia Parish, Louisiana Hospital Service District
Number 1 Revenue, 8.00%, Due 5/26/16 2,100,000 1,974,000
Louisiana Local Government Environment
Facilities Community Development Authority
Revenue - Capital Projects and Equipment
Acquisition Program, 6.55%, Due 9/01/25 (b) 2,000,000 2,080,000
Louisiana Public Facilities Authority Revenue -
Progressive Healthcare Providers, Inc.
Developmental Centers Project,
6.375%, Due 10/01/28 3,350,000 2,935,438
-------------
6,989,438
Massachusetts 4.6%
Massachusetts Development Finance Agency
Revenue Health Care Facility Alliance,
7.10%, Due 7/01/32 2,000,000 1,860,000
Massachusetts Health and EFA Revenue - Saints
Memorial Medical Center Project, 5.75%,
Due 10/01/06 1,885,000 1,720,062
Massachusetts Industrial Finance Agency
Assisted Living Facility Revenue - TNG Marina
Bay LLC Project, 7.50%, Due 12/01/27 4,220,000 4,214,725
Massachusetts Industrial Finance Agency Health
Care Facility Revenue - Metro Health
Foundation of Massachusetts, Inc. Project,
6.75%, Due 12/01/27 $ 3,000,000 $ 2,733,750
Massachusetts State Development Finance Agency
Revenue - Developmental Disabilities, Inc.
Project, 8.00%, Due 6/01/20 9,675,000 9,844,313
-------------
20,372,850
Michigan 1.9%
Michigan Strategic Fund Resource Recovery
Limited Obligation Revenue - Central Wayne
Energy Recovery LP Project:
6.90%, Due 7/01/19 2,200,000 2,029,500
7.00%, Due 7/01/27 6,800,000 6,196,500
-------------
8,226,000
Minnesota 3.0%
Rochester, Minnesota MFHR - Wedum Shorewood
Campus Project, 6.60%, Due 6/01/36 5,350,000 4,982,187
St. Paul, Minnesota Housing and Redevelopment
Authority Hospital Facility Revenue -
HealthEast Project:
5.50%, Due 11/01/09 1,580,000 1,386,450
Series A, 6.625%, Due 11/01/17 3,000,000 2,636,250
Series B, 6.625%, Due 11/01/17 3,320,000 2,917,450
Washington County, Minnesota Housing and
Redevelopment Authority Hospital Facility
Revenue - HealthEast Project,
5.375%, Due 11/15/18 1,840,000 1,400,700
-------------
13,323,037
Missouri 1.8%
Saline County, Missouri IDA Health Facilities
Revenue - John Fitzgibbon Memorial Hospital,
Inc. Project, 6.50%, Due 12/01/28 5,465,000 4,481,300
Springfield, Missouri Land Clearance
Redevelopment Authority Industrial Revenue
Refunding - University Plaza Project,
6.90%, Due 10/01/16 3,440,000 3,341,100
-------------
7,822,400
Montana 0.2%
Crow Finance Authority Tribal Purpose Revenue,
5.70%, Due 10/01/27 1,000,000 948,750
New Hampshire 0.5%
New Hampshire Business Finance Authority
Revenue Air Cargo Facility - Pease LLC Project,
6.75%, Due 4/01/24 2,450,000 2,275,438
New Jersey 4.2%
Camden County, New Jersey Improvement
Authority Lease Revenue - Kaighn Port Marine
Terminal A Project, 8.00%, Due 6/01/27 4,890,000 4,938,900
New Jersey EDA Assisted Living Revenue -
Meridian Assisted Living Project,
6.75%, Due 8/01/30 5,000,000 4,381,250
New Jersey EDA EDR - Kapkowski Road Landfill
Reclamation Improvement District Project:
Zero %, Due 4/01/04 160,000 128,600
Zero %, Due 4/01/05 310,000 233,275
Zero %, Due 4/01/06 1,020,000 717,825
Zero %, Due 4/01/07 1,025,000 672,656
Zero %, Due 4/01/09 1,020,000 583,950
6.375%, Due 4/01/31 7,000,000 6,921,250
-------------
18,577,706
New York 0.5%
Rockland County, New York IDA Civic Facility
Revenue - Dominican College Project, 6.25%,
Due 5/01/28 2,275,000 2,081,625
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
STRONG HIGH-YIELD MUNICIPAL BOND FUND (continued)
Shares or
Principal Value
Amount (Note 2)
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
North Carolina 3.9%
Charlotte, North Carolina Special Facilities
Revenue - Douglas International Airport-
US Airways Project, 7.75%, Due 2/01/28 (b) $ 1,250,000 $ 1,207,812
Fletcher, North Carolina First Mortgage
Housing Revenue - Avery's View Retirement
Facilities, Inc. Project, 7.00%, Due 3/01/28
(Rate Reset Effective 3/01/05)
(Defaulted Effective 8/24/00) 15,000,000 12,750,000
Macon County, North Carolina HFC Revenue -
Chestnut Hill Highlands Project, 8.50%,
Due 7/01/27 (Defaulted Effective 8/09/99) 8,145,000 3,176,550
-------------
17,134,362
Ohio 3.9%
Akron, Ohio COP - Akron Municipal Baseball
Stadium Project, Zero %, Due 12/01/16
(Rate Reset Effective 12/01/01) 1,500,000 1,490,625
Cleveland, Ohio Airport Special Revenue
Refunding - Continental Airlines, Inc. Project:
5.50%, Due 12/01/08 4,045,000 3,827,581
5.70%, Due 12/01/19 4,000,000 3,510,000
Cuyahoga County, Ohio MFHR -
The Park Lane Apartments Project:
7.80%, Due 7/01/07 470,000 467,063
7.90%, Due 7/01/12 680,000 671,500
8.25%, Due 7/01/28 1,930,000 1,879,337
Medina County, Ohio EDR MFHR -
Camelot Place, Ltd. Project,
8.375%, Due 10/01/23 400,000 386,500
Ohio Air Quality Development Authority PCR -
Ohio Edison Project, 5.80%, Due 6/01/16
(Mandatory Put at $100 on 12/01/04) 1,525,000 1,559,313
Pike County, Ohio Hospital Facilities Revenue -
Pike Health Services, Inc. Project,
6.75%, Due 7/01/17 3,660,000 3,426,675
-------------
17,218,594
Pennsylvania 9.5%
Allegheny County, Pennsylvania Hospital
Development Authority Revenue -
Health System Project:
9.25%, Due 11/15/22 1,000,000 955,000
9.25%, Due 11/15/30 4,000,000 3,770,000
Bucks County, Pennsylvania IDA CDR -
Attleboro Associates, Ltd. Nursing
Facility Project:
8.00%, Due 12/01/05 570,000 594,937
8.25%, Due 6/01/11 3,025,000 3,180,031
Delaware County, Pennsylvania Authority
Health Care Facility First Mortgage Revenue -
GF/Longwood Care, Inc. Project:
8.50%, Due 4/15/10 530,000 522,050
9.00%, Due 4/15/25 5,860,000 5,735,475
Horsham, Pennsylvania IDA CDA Health Care
Facilities Revenue - GF/Pennsylvania Properties,
Inc. Project:
7.375%, Due 9/01/08 440,000 429,550
8.375%, Due 9/01/24 6,000,000 6,007,500
Montgomery County, Pennsylvania
IDA Revenue - Wordsworth Academy Project,
8.00%, Due 9/01/24 6,840,000 6,908,400
Pennsylvania EDFA Qualified Residential
Rent Project Revenue - RSI Properties/Butler
LLC Project, 8.00%, Due 9/01/27
(Defaulted Effective 9/01/99) 3,000,000 1,905,000
Pennsylvania EDFA Qualified Residential Rent
Project Revenue - RSI Properties/Greensburg
LLC Project, 8.00%, Due 9/01/27
(Defaulted Effective 9/01/99) $ 3,000,000 $ 1,905,000
Philadelphia, Pennsylvania Hospitals and
Higher EFA Revenue - Temple University
Children's Medical Center Project,
5.75%, Due 6/15/29 7,105,000 5,852,744
Scranton-Lackawanna, Pennsylvania Health
and Welfare Authority Hospital Revenue -
Marian Community Hospital Project,
7.125%, Due 1/15/13 1,000,000 997,500
Wilkinsburg, Pennsylvania Municipal Authority
Health Facilities Revenue - Monroeville
Christian Project, 8.25%, Due 3/01/27 3,000,000 3,026,250
-------------
41,789,437
South Carolina 6.6%
Connector 2000 Association, Inc. Subordinate
Capital Appreciation Toll Road Revenue -
Greenville, South Carolina Southern
Connector Project:
Zero %, Due 1/01/15 4,400,000 1,430,000
Zero %, Due 1/01/16 4,600,000 1,380,000
Zero %, Due 1/01/17 5,600,000 1,554,000
Zero %, Due 1/01/18 5,800,000 1,486,250
Zero %, Due 1/01/19 5,900,000 1,401,250
Zero %, Due 1/01/23 7,400,000 1,258,000
Zero %, Due 1/01/24 7,500,000 1,171,875
Zero %, Due 1/01/25 8,700,000 1,261,500
Zero %, Due 1/01/26 9,000,000 1,203,750
Zero %, Due 1/01/27 9,100,000 1,126,125
Zero %, Due 1/01/28 9,300,000 1,057,875
Zero %, Due 1/01/29 10,500,000 1,102,500
Zero %, Due 1/01/30 10,800,000 1,053,000
Zero %, Due 1/01/31 11,000,000 990,000
Zero %, Due 1/01/32 11,200,000 924,000
Zero %, Due 1/01/33 11,500,000 876,875
Zero %, Due 1/01/34 11,700,000 833,625
Zero %, Due 1/01/35 12,000,000 780,000
Zero %, Due 1/01/36 12,200,000 732,000
Zero %, Due 1/01/37 12,400,000 697,500
Zero %, Due 1/01/38 17,200,000 881,500
Loris, South Carolina Community Hospital
District Hospital Revenue, 5.625%, Due 1/01/29 2,350,000 1,882,938
South Carolina Jobs - EDA Solid Waste Recycling
Facilities Revenue - Santee River Rubber Project,
8.00%, Due 12/01/14 4,000,000 3,760,000
-------------
28,844,563
South Dakota 0.4%
Mobridge, South Dakota Health Care Facilities
Revenue - Mobridge Regional Hospital Project,
6.50%, Due 12/01/22 1,860,000 1,615,875
Tennessee 0.3%
Memphis, Tennessee Health Educational and
Housing Facility Board MFHR - Hickory Pointe
Apartments Project, 8.50%, Due 7/01/10 1,250,000 1,260,937
Texas 2.6%
DeSoto, Texas IDA IDR - Wintergreen Commercial
Partnership Project, 7.00%, Due 1/01/17 3,611,848 3,611,848
Hidalgo County, Texas Health Services
Corporation Hospital Revenue - Mission
Hospital, Inc. Project, 6.75%, Due 8/15/16 3,000,000 2,966,250
</TABLE>
13
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) August 31, 2000
-------------------------------------------------------------------------------
STRONG HIGH-YIELD MUNICIPAL BOND FUND (continued)
Shares or
Principal Value
Amount (Note 2)
--------------------------------------------------------------------------------
Jefferson County, Texas Health Facilities
Development Corporation Hospital Revenue -
Baptist Health Care System Project,
8.30%, Due 10/01/14 $ 4,630,000 $ 4,681,671
------------
11,259,769
Virginia 5.7%
Alexandria, Virginia Redevelopment and Housing
Authority MFHR Refunding - Park at Landmark
Project, 8.75%, Due 12/01/29
(Mandatory Put at $100 on 7/01/05) (b) 4,000,000 4,000,000
Alexandria, Virginia Redevelopment and Housing
Authority MFHR Refunding - Park Center
Apartments Project, 6.375%, Due 4/01/34 (c) 14,400,000 12,852,000
Peninsula Ports Authority of Virginia Port
Facility Revenue Refunding - Ziegler Coal
Project, 6.90%, Due 5/02/22 12,000,000 6,600,000
Virginia Small Business Financing Authority IDR -
Albion Enterprises LLC Project,
6.40%, Due 1/01/14 1,750,000 1,647,188
----------
25,099,188
Wisconsin 5.5%
Brookfield, Wisconsin IDR Refunding - Midway
Motor Lodge Project, 8.40%, Due 4/01/12 4,755,000 5,105,681
Wisconsin Health and EFA Revenue - Divine
Savior Hospital, Inc. Project, 5.70%, Due 6/01/28 3,000,000 2,351,250
Wisconsin Health and EFA Revenue - FH Healthcare
Development, Inc. Project, 6.25%, Due 11/15/28 3,000,000 2,520,000
Wisconsin Health and EFA Revenue - Heartland-
Edgerton Group Project, 9.00%, Due 11/15/25 2,435,000 2,386,300
Wisconsin Health and EFA Revenue -
National Regency of New Berlin, Inc. Project:
7.75%, Due 8/15/15 4,690,000 4,871,737
8.00%, Due 8/15/25 6,415,000 6,679,619
----------
23,914,587
Wyoming 0.5%
Teton County, Wyoming Hospital District Hospital
Revenue Refunding and Improvement,
5.80%, Due 12/01/17 2,200,000 2,175,250
--------------------------------------------------------------------------------
Total Municipal Bonds (Cost $479,177,211) 427,585,249
--------------------------------------------------------------------------------
Taxable Municipal Bonds 0.2%
Iowa
Iowa Finance Authority Elder Care Facility First
Mortgage Revenue - Amity Fellowserve-Iowa,
Inc. Project, 7.00%, Due 10/01/06 860,000 809,475
--------------------------------------------------------------------------------
Total Taxable Municipal Bonds (Cost $860,000) 809,475
--------------------------------------------------------------------------------
Short-Term Investments (a) 2.5%
Municipal Money Market Funds
Multiple States
Strong Municipal Money Market Fund (d) 11,050,000 11,050,000
--------------------------------------------------------------------------------
Total Short-Term Investments (Cost $11,050,000) 11,050,000
--------------------------------------------------------------------------------
Total Investments in Securities (Cost $491,087,211) 100.2% 439,444,724
Other Assets and Liabilities, Net (0.2%) (725,767)
--------------------------------------------------------------------------------
Net Assets 100.0% $438,718,957
================================================================================
FUTURES
--------------------------------------------------------------------------------
Underlying
Expiration Face Amount Unrealized
Date at Value Depreciation
--------------------------------------------------------------------------------
Sold:
205 Municipal Bond Futures 12/00 $ 20,333,438 $ 66,094
--------------------------------------------------------------------------------
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND
Shares or
Principal Value
Amount (Note 2)
-------------------------------------------------------------------------------
Municipal Bonds 74.5%
Alabama 3.5%
West Jefferson, Alabama Amusement and Public
Park Authority First Mortgage Revenue -
Visionland Alabama Project,
5.875%, Due 2/01/06 $ 6,510,000 $ 4,947,600
Alaska 0.9%
Juneau, Alaska City and Borough Nonrecourse
Revenue - St. Ann's Care Center Project,
5.875%, Due 12/01/04 1,350,000 1,306,125
American Samoa 0.8%
Territory of American Samoa GO
Refunding, 5.75%, Due 9/01/03 1,115,000 1,137,300
Arizona 0.4%
Winslow, Arizona IDA Hospital Revenue -
Winslow Memorial Hospital Project,
4.95%, Due 6/01/03 570,000 552,900
California 0.4%
Los Angeles, California Regional Airports
Improvement Corporation Lease Revenue
Facilities - Continental Airlines Project,
9.25%, Due 8/01/24 84,027 94,425
Tustin, California Unified School District BAN -
Community Facilities Project, 6.10%,
Due 9/01/02 500,000 501,250
------------
595,675
Colorado 3.8%
Black Hawk, Colorado Business Improvement
District Special Assessment - Gilpin County
Project, 6.00%, Due 12/01/09 1,075,000 1,053,500
Black Hawk, Colorado Business Improvement
District Special Assessment - The Lodge At
Black Hawk Project, 6.25%, Due 12/01/11 1,825,000 1,731,469
Colorado Health Facilities Authority Hospital
Revenue - Steamboat Springs Health Care
Association Project:
4.30%, Due 9/15/01 115,000 113,040
4.40%, Due 9/15/02 380,000 371,925
4.70%, Due 9/15/05 85,000 81,494
4.80%, Due 9/15/01 245,000 243,596
4.80%, Due 9/15/06 455,000 433,956
4.90%, Due 9/15/02 230,000 224,825
4.90%, Due 9/15/07 20,000 18,975
Meridian, Colorado Metropolitan District GO,
7.00%, Due 12/01/01 1,000,000 1,027,500
------------
5,300,280
Connecticut 0.9%
Connecticut Health and EFA Revenue -
New Opportunities for Waterbury, Inc.
Project, 6.75%, Due 7/01/13 1,205,000 1,206,410
District of Columbia 1.1%
District of Columbia Revenue - American
Geophysical Union Project, 5.50%,
Due 9/01/03 585,000 582,806
District of Columbia Revenue - Methodist
Home Issue, 4.80%, Due 1/01/05 985,000 939,444
------------
1,522,250
Florida 4.7%
Arbor Greene Community Development
District Special Assessment Revenue,
7.00%, Due 5/01/03 80,000 80,700
14
<PAGE>
--------------------------------------------------------------------------------
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND (continued)
Shares or
Principal Value
Amount (Note 2)
--------------------------------------------------------------------------------
Grand Haven Community Development
District Special Assessment Revenue,
6.30%, Due 5/01/02 $ 2,300,000 $ 2,311,500
Leon County, Florida IDR - Beverly Enterprises-
Florida, Inc. Project, 9.80%, Due 6/01/11 785,000 813,794
Orlando and Orange County, Florida
Expressway Authority Revenue Refunding,
5.95%, Due 7/01/23 10,000 10,050
Tarpon Springs, Florida Health Facilities
Authority Hospital Revenue Refunding -
Tarpon Springs Hospital Foundation Project,
8.75%, Due 5/01/12 3,420,000 3,442,435
---------
6,658,479
Georgia 0.7%
Atlanta, Georgia Urban Residential Finance
Authority MFHR - Park Place Apartments
Project, 6.00%, Due 9/01/06 1,060,000 1,032,175
Hawaii 0.0%
Hawaii Department of Transportation Special
Facility Revenue - Continental Airlines, Inc.
Project, 9.60%, Due 6/01/08 50,000 51,000
Idaho 0.0%
Idaho Student Loan Fund Marketing
Association, Inc. Student Loan Revenue,
5.10%, Due 10/01/02 10,000 9,988
Illinois 8.6%
Chicago, Illinois O'Hare International Airport
Special Facilities Revenue - American Airlines,
Inc. Project, 7.875%, Due 11/01/25 165,000 168,899
Granite City, Illinois Hospital Revenue Refunding -
St. Elizabeth Medical Center Project,
8.125%, Due 6/01/08 795,000 765,187
Hoopeston, Illinois Hospital Capital Improvement
Revenue Refunding - Hoopeston Community
Memorial Hospital Project, 5.25%, Due 11/15/03 490,000 474,075
Illinois DFA IDR Refunding - Great Plains Hotel
Corporation of Illinois Project,
7.50%, Due 4/01/16 485,000 486,111
Illinois DFA MFHR - Town and Garden
Apartments Project, 7.20%, Due 9/01/08 (c) 2,250,000 2,311,875
Illinois DFA Revenue - Community Rehabilitation
Providers Project, 5.00%, Due 7/01/04 1,010,000 967,075
Illinois Health Facilities Authority Revenue,
6.724%, Due 6/19/15 (Pre-Refunding
at $102 on 6/07/02) 3,000,000 3,161,250
Illinois Health Facilities Authority Revenue -
Riverside Health System Project,
5.90%, Due 11/15/02 (c) 445,000 448,894
Illinois Health Facilities Authority Revenue
Refunding - Bohemian-Tabor Hills Project,
5.90%, Due 11/15/21 1,700,000 1,570,375
Illinois Health Facilities Authority Revenue
Refunding - Lifelink Corporation Obligated
Group Project, 5.95%, Due 2/15/21 2,000,000 1,712,500
----------
12,066,241
Indiana 3.9%
Anderson, Indiana EDR Refunding and
Improvement - Anderson University Project,
5.05%, Due 10/01/03 2,930,000 2,904,363
Indiana Health Facility Financing Authority
Revenue - Hamilton Communities, Inc.
Project, 6.00%, Due 1/01/10 2,800,000 2,569,000
----------
5,473,363
Iowa 1.6%
Harlan, Iowa Revenue - American Baptist
Homes of the Midwest - Baptist Memorial
Home Project, 5.875%, Due 5/15/23 $ 920,000 $ 752,100
Ottumwa, Iowa Hospital Facility Revenue
Refunding and Improvement - Ottumwa
Regional Health Center, Inc. Project, 6.00%,
Due 10/01/18 25,000 23,031
Ottumwa, Iowa Revenue Refunding -
Regional Retirement Living Project,
5.90%, Due 2/15/24 1,740,000 1,498,575
---------
2,273,706
Kansas 1.3%
Topeka, Kansas Industrial Revenue Refunding -
Reser's Fine Foods, Inc. Project:
5.20%, Due 4/01/03 300,000 294,000
5.30%, Due 4/01/04 300,000 292,875
Wathena, Kansas IDR - Skyjack Equipment,
Inc. Project:
5.15%, Due 5/01/02 390,000 384,150
5.25%, Due 5/01/03 130,000 127,075
5.40%, Due 5/01/04 345,000 335,944
5.50%, Due 5/01/05 335,000 324,531
---------
1,758,575
Kentucky 2.6%
Jefferson County, Kentucky Health Facilities
Revenue Refunding - Beverly Enterprises,
Inc. Project, 5.40%, Due 5/01/03 430,000 419,250
Kenton County, Kentucky Airport Board
Special Facilities Revenue - Mesaba Aviation,
Inc. Project, 6.00%, Due 7/01/05 985,000 980,075
Kentucky EDFA Hospital System Refunding
and Improvement Revenue - Appalachian
Regional Healthcare, Inc. Project, 5.10%,
Due 10/01/03 250,000 229,687
Logan and Todd Counties, Kentucky Regional
Water Commission BAN Revenue, 5.50%,
Due 8/01/03 (b) 2,000,000 2,007,500
---------
3,636,512
Louisiana 0.1%
Hodge, Louisiana Utility Revenue - Stone
Container Corporation Project, 9.00%,
Due 3/01/10 100,000 102,313
Maryland 0.7%
Baltimore County, Maryland IDR -
Barre-National, Inc. Equipment Project,
6.875%, Due 7/01/09 1,200,000 1,042,500
Massachusetts 3.6%
Massachusetts Development Finance Agency
Revenue - Developmental Disabilities, Inc.
Project, 7.25%, Due 6/01/04 1,070,000 1,078,025
Massachusetts Development Finance Agency
Revenue Health Care Facility Alliance,
6.50%, Due 7/01/03 820,000 802,575
Massachusetts Health and EFA Revenue -
Saints Memorial Medical Center Project,
5.50%, Due 10/01/02 1,880,000 1,830,650
Massachusetts Industrial Finance Agency Health
Care Facility Revenue - Metro Health
Foundation of Massachusetts, Inc. Project,
6.25%, Due 12/01/03 1,420,000 1,379,175
---------
5,090,425
15
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) August 31, 2000
--------------------------------------------------------------------------------
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND (continued)
Shares or
Principal Value
Amount (Note 2)
--------------------------------------------------------------------------------
Minnesota 3.2%
Burnsville, Minnesota CDR Refunding - Holiday
Inn Project, 5.875%, Due 4/01/08 $ 1,430,000 $ 1,430,200
Maplewood, Minnesota Health Care Facility
Revenue - HealthEast Project:
5.70%, Due 11/15/02 1,000,000 977,500
5.80%, Due 11/15/03 1,400,000 1,356,250
St. Paul, Minnesota Housing and Redevelopment
Authority Hospital Revenue - HealthEast
Project, 4.75%, Due 11/01/01 750,000 730,313
-----------
4,494,263
Missouri 1.5%
Columbia, Missouri IDR - American Air Filter
Company, Inc. Project, 7.45%, Due 7/01/04 915,000 916,427
Ellisville, Missouri IDA IDR Refunding -
Gambrill Gardens Project:
4.80%, Due 6/01/02 110,000 107,800
5.10%, Due 6/01/05 125,000 118,437
5.20%, Due 6/01/06 135,000 126,731
Saline County, Missouri IDA Health Facilities
Revenue - John Fitzgibbon Memorial
Hospital, Inc. Project, 5.75%, Due 12/01/03 840,000 804,300
-----------
2,073,695
New Hampshire 0.6%
New Hampshire Higher Educational and Health
Facilities Authority Revenue - New England
College Project, 5.375%, Due 3/01/05 845,000 821,763
New Mexico 1.1%
Santa Fe County, New Mexico Project Revenue -
El Castillo Retirement Residences Project,
5.80%, Due 5/15/18 (c) 1,835,000 1,582,687
New York 1.0%
Monroe County, New York IDR Agency -
Empire Sports Project, 6.50%, Due 3/01/08 1,105,000 1,080,138
Rockland County, New York IDR Civic Facility
Agency - Dominican College Project,
5.50%, Due 5/01/02 390,000 385,612
-----------
1,465,750
North Carolina 0.7%
Fletcher, North Carolina First Mortgage
Housing Revenue - Avery's View Retirement
Facilities, Inc. Project, 8.00%, Due 3/01/10
(Defaulted Effective 8/24/00) 1,000,000 850,000
North Carolina Medical Care Commission Health
Care Facilities First Mortgage Revenue - DePaul
Community Facilities Project,
5.75%, Due 1/01/03 210,000 203,963
-----------
1,053,963
Ohio 4.3%
Cleveland, Ohio Airport Special Revenue
Refunding - Continental Airlines, Inc. Project,
5.25%, Due 12/01/02 (c) 5,475,000 5,440,781
Cuyahoga County, Ohio MFHR - The Park
Lane Apartments Project, 7.70%, Due 7/01/02 145,000 144,819
Dayton, Ohio Special Facilities Revenue - AFCO
Cargo Day LLC Project, 5.875%, Due 4/01/04 400,000 391,000
-----------
5,976,600
Oklahoma 0.3%
Leflore County, Oklahoma Hospital Authority
Hospital Revenue:
5.25%, Due 6/01/02 235,000 229,712
5.45%, Due 6/01/03 260,000 251,225
-----------
480,937
Pennsylvania 4.6%
Bucks County, Pennsylvania IDA CDR - Attleboro
Associates, Ltd. Nursing Facility Project,
8.00%, Due 12/01/05 $ 1,065,000 $ 1,111,594
Clarion County, Pennsylvania IDA Health
Facilities Revenue Refunding - Beverly
Enterprises, Inc. Project, 5.50%, Due 5/01/03 450,000 439,313
Dauphin County, Pennsylvania Subordinated
Office and Parking Revenue - River Front
Office Center Project, 5.35%, Due 1/01/02 395,000 391,544
Harrisburg, Pennsylvania Authority Office and
Parking Revenue, 5.25%, Due 5/01/02 545,000 539,550
Pennsylvania EDFA Qualified Residential Rent
Project Revenue - RSI Properties/Butler LLC
Project, 7.00%, Due 9/01/02
(Defaulted Effective 9/01/99) 300,000 190,500
Pennsylvania EDFA Qualified Residential Rent
Project Revenue - RSI Properties/Greensburg
LLC Project, 7.00%, Due 9/01/02
(Defaulted Effective 9/01/99) 300,000 190,500
Philadelphia, Pennsylvania Hospitals and Higher
EFA Revenue - Chestnut Hill Hospital Project,
6.50%, Due 11/15/22 1,500,000 1,425,000
Philadelphia, Pennsylvania Hospitals and Higher
EFA Revenue - Temple University Children's
Medical Center Project, 4.55%, Due 6/15/02 470,000 455,312
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 1,651,688
-----------
6,395,001
South Carolina 0.7%
Richland County, South Carolina PCR
Refunding - Union Camp Corporation
Project, 6.10%, Due 11/01/04 900,000 930,375
South Dakota 0.3%
Lincoln County, South Dakota Revenue -
American Baptist Homes of the Midwest-
Trail Ridge Project, 5.875%, Due 11/15/21 445,000 362,119
Texas 5.7%
DeSoto, Texas IDA IDR - Wintergreen
Commercial Partnership Project,
7.00%, Due 1/01/17 1,358,785 1,358,785
Jefferson County, Texas Health Facilities
Development Corporation Hospital
Revenue - Baptist Health Care System
Project, 8.875%, Due 6/01/21 (c) 5,650,000 5,662,712
Matagorda County, Texas Navigation District
Number 1 Revenue Refunding - Reliant
Energy, Inc. Project, 5.20%, Due 5/01/29 1,000,000 1,001,250
---------
8,022,747
Vermont 1.7%
Vermont Educational and Health Buildings
Financing Agency Revenue - Vermont Council
of Developmental and Mental Health
Project, 6.20%, Due 12/15/05 1,790,000 1,734,063
Vermont Educational and Health Buildings
Financing Agency Revenue Health Care Facility -
Copley Manor Project, 5.40%, Due 4/01/06 710,000 667,400
-----------
2,401,463
16
<PAGE>
--------------------------------------------------------------------------------
STRONG STRONG-TERM HIGH YIELD MUNICIPAL FUND (continued)
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Virginia 3.0%
Alexandria, Virginia Redevelopment and Housing
Authority MFHR Refunding - Park at Landmark
Project, 8.50%, Due 12/01/29 (Mandatory Put
at $100 on 7/01/02) (b) $ 2,000,000 $ 2,000,000
Hampton, Virginia Redevelopment and Housing
Authority First Mortgage Revenue
Refunding - Olde Hampton Project,
6.00%, Due 7/01/03 1,020,000 1,009,800
Metropolitan Washington D.C. Airports
Authority, Virginia General Airport
Revenue, 7.25%, Due 10/01/10 1,000,000 1,021,680
Virginia Small Business Financing Authority
IDR - Albion Enterprises LLC Project,
6.00%, Due 1/01/02 250,000 247,812
------------
4,279,292
West Virginia 0.1%
Harrison County, West Virginia CDR
Refunding - Kmart Corporation Project,
7.625%, Due 12/01/04 80,000 83,200
Wisconsin 5.2%
Madison, Wisconsin IDR - McCaughey
Development Association Project,
5.875%, Due 4/01/10 975,000 917,719
Menomonee Falls, Wisconsin BAN,
4.875%, Due 7/01/02 1,000,000 1,002,680
Wisconsin Health and EFA Revenue - Attic
Angel Obligation Group Project,
6.00%, Due 11/15/28 1,000,000 825,000
Wisconsin Health and EFA Revenue - Divine
Savior Hospital, Inc. Project:
4.30%, Due 6/01/02 220,000 214,775
4.45%, Due 6/01/03 225,000 216,844
4.60%, Due 6/01/04 240,000 228,300
Wisconsin Health and EFA Revenue -
FH Healthcare Development, Inc. Project,
5.00%, Due 11/15/02 1,360,000 1,319,200
Wisconsin Health and EFA Revenue - Kenosha
Hospital and Medical Center Project,
4.50%, Due 5/15/02 560,000 552,300
Wisconsin Health and EFA Revenue - Lutheran Home
Project, 7.00%, Due 9/01/25 30,000 30,113
Wisconsin Health and EFA Revenue - Marquette
University Project, 6.45%, Due 12/01/19
(Pre-Refunding at $101 on 12/01/04) 675,000 733,219
Wisconsin Health and EFA Revenue - Oakwood
Project, 5.90%, Due 8/15/28 1,565,000 1,240,262
------------
7,280,412
Wyoming 0.9%
Teton County, Wyoming Hospital District
Hospital Revenue Refunding and
Improvement, 4.85%, Due 12/01/02 1,265,000 1,227,050
---------------------------------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $110,148,471) 104,695,134
---------------------------------------------------------------------------------------------------------------
Variable Rate Put Bonds 12.5%
Arizona 1.8%
Maricopa County, Arizona Pollution Control
Corporation PCR Refunding - El Paso
Electric Company Project, 6.15%, Due 12/01/14
(Putable at $100 on 8/01/02) 2,500,000 2,503,125
Florida 1.4%
St. John's County, Florida IDA IDR
Refunding - Vicar's Landing Project, 5.125%,
Due 2/15/17 (Putable at $100 and Rate
Reset Effective 2/15/04) $ 2,000,000 $ 1,922,500
Montana 0.7%
Forsyth, Montana PCR Refunding - Portland
General Electric Company Project, 4.60%,
Due 5/01/33 (Putable at $100 and Rate
Reset Effective 5/01/03) 1,000,000 987,500
New Jersey 2.1%
New Jersey EDA Senior Mortgage Revenue
Refunding EXTRAS - Arbor Glen of
Bridgewater Project, 5.375%, Due 5/15/32
(Putable at $100 and Rate Reset
Effective 5/15/04) 3,000,000 2,898,750
Pennsylvania 1.0%
Beaver County, Pennsylvania IDA PCR
Refunding - Ohio Edison Company Project,
4.65%, Due 6/01/33 (Mandatory Put at
$100 on 6/01/04) 1,500,000 1,458,750
Tennessee 1.7%
Shelby County, Tennessee Health, Educational
and Housing Facilities Board Health Care
Facilities Revenue EXTRAS - Kirby Pines
Retirement Community Project, 5.50%,
Due 11/15/27 (Putable at $100 and Rate
Reset Effective 11/15/02) 2,450,000 2,391,812
Texas 3.8%
Abilene, Texas Health Facilities Development
Corporation Retirement Facilities Revenue
EXTRAS - Sears Methodist Retirement
System Obligated Group Project, 5.25%,
Due 11/15/28 (Mandatory Put at
$100 on 11/15/03) 2,025,000 1,954,125
Brazos River Authority Revenue Refunding -
Reliant Energy, Inc. Project, 5.20%,
Due 12/01/18 (Mandatory Put at
$100 on 12/01/02) 1,000,000 1,001,250
Dallas-Fort Worth, Texas International Airport
Facility Improvement Corporation Revenue
Refunding - American Airlines, Inc. Project,
5.95%, Due 5/01/29 (Mandatory Put at
$100 on 11/01/03) 400,000 402,500
Lubbock, Texas Health Facilities Development
Corporation First Mortgage Revenue -
Carillon, Inc. Project, 5.75%, Due 7/01/29
(Mandatory Put at $100 on 7/01/04) 2,000,000 1,962,500
------------
5,320,375
---------------------------------------------------------------------------------------------------------------
Total Variable Rate Put Bonds (Cost $17,787,520) 17,482,812
---------------------------------------------------------------------------------------------------------------
Short-Term Investments (a) 14.7%
Municipal Bonds 7.2%
Colorado 1.1%
Denver, Colorado City and County Airport
Revenue, 8.50%, Due 11/15/23
(Pre-Refunding at $102 on 11/15/00) 1,570,000 1,612,657
</TABLE>
17
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) August 31, 2000
--------------------------------------------------------------------------------
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND (continued)
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Florida 0.7%
Broward County, Florida IDR - Beverly Enterprises-
Florida, Inc. Project, 9.80%, Due 11/01/10
(Pre-Refunding at $103 on 11/01/00) $ 1,000,000 $ 1,037,730
Guam 0.2%
Government of Guam GO, 5.375%, Due 9/01/00 250,000 250,001
Indiana 0.1%
Indianapolis, Indiana EDR MFHR - Post Pointe
Apartments Project, 7.00%, Due 3/01/01 75,000 75,025
Kansas 0.5%
Kansas State Independent College Finance
Authority RAN - Sterling College
Project, 5.75%, Due 6/01/01 300,000 302,745
Topeka, Kansas Industrial Revenue Refunding -
Reser's Fine Foods, Inc. Project,
5.00%, Due 4/01/01 300,000 298,215
Wathena, Kansas IDR - Skyjack Equipment, Inc.
Project, 5.00%, Due 5/01/01 85,000 84,419
-------------
685,379
Michigan 1.1%
Lakeville, Michigan Community School District
State Aid Notes, 5.50%, Due 6/29/01 1,500,000 1,513,890
Minnesota 0.4%
St. Paul, Minnesota Housing and Redevelopment
Authority Hospital Revenue - HealthEast
Project, 4.60%, Due 11/01/00 500,000 498,145
Montana 0.1%
Crow Finance Authority Tribal Purpose Revenue,
4.75%, Due 10/01/00 150,000 150,021
New York 1.1%
Schenectady, New York City School District BAN,
5.50%, Due 6/29/01 1,500,000 1,505,745
Oklahoma 0.1%
Leflore County, Oklahoma Hospital Authority
Hospital Revenue, 5.05%, Due 6/01/01 205,000 203,020
Pennsylvania 0.1%
Philadelphia, Pennsylvania Hospitals and Higher
EFA Revenue - Temple University Children's
Medical Center Project, 4.40%, Due 6/15/01 200,000 197,414
Tennessee 0.1%
Tennergy Corporation Gas Revenue,
4.25%, Due 6/01/01 140,000 138,562
Wisconsin 1.6%
Dodgeland, Wisconsin School District BAN,
5.20%, Due 4/01/01 1,000,000 1,001,110
Lac Du Flambeau, Wisconsin School District
Number 1 RAN TAN, 5.40%, Due 7/26/01 1,100,000 1,104,312
Wisconsin Health and EFA Revenue - Divine
Savior Hospital, Inc. Project,
4.15%, Due 6/01/01 210,000 207,789
-------------
2,313,211
-------------
Total Municipal Bonds 10,180,800
Variable Rate Put Bonds 4.3%
Alabama 1.4%
Selma, Alabama IDB PCR - International Paper
Company Project, 5.50%, Due 7/15/06
(Putable at $100 on 7/15/01) $ 2,000,000 $ 2,001,040
Arizona 2.2%
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 2,996,550
Ohio 0.7%
Ohio Water Development Authority Facilities
PCR Refunding - Ohio Edison Company
Project, 4.25%, Due 6/01/33 (Mandatory
Put at $100 on 6/01/01) 1,000,000 992,870
-------------
Total Variable Rate Put Bonds 5,990,460
Annual Variable Rate Put Bonds 2.1%
Florida 0.7%
Miami Beach, Florida Health Facilities Authority
Hospital Revenue - Mount Sinai Medical
Center Project, 6.98%, Due 8/15/01 1,000,000 1,000,000
South Carolina 1.4%
South Carolina Education Assistance Authority
Revenue Refunding - Guaranteed Student
Loan, 4.90%, Due 5/30/01 2,000,000 2,002,040
-------------
Total Annual Variable Rate Put Bonds 3,002,040
Municipal Money Market Funds 1.1%
Multiple States
Strong Municipal Money Market Fund (d) 1,500,000 1,500,000
------------------------------------------------------------------------------------------------------------------------
Total Short-Term Investments (Cost $20,600,870) 20,673,300
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Total Investments in Securities (Cost $148,536,861) 101.7% 142,851,246
Other Assets and Liabilities, Net (1.7%) (2,436,863)
------------------------------------------------------------------------------------------------------------------------
Net Assets 100.0% $ 140,414,383
========================================================================================================================
</TABLE>
FUTURES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Underlying
Expiration Face Amount Unrealized
Date at Value Depreciation
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sold:
70 Municipal Bond Futures 12/00 $ 6,943,125 $16,875
</TABLE>
--------------------------------------------------------------------------------
STRONG MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Municipal Bonds 90.3%
Alabama 0.6%
Troy, Alabama IDB Solid Waste Revenue -
Alabama Protein Recycling LLC Project,
7.75%, Due 5/01/19 $2,000,000 $1,665,000
Arizona 0.3%
Phoenix, Arizona IDA Mortgage Revenue
Refunding - Christian Care Retirement
Apartments, Inc. Project, 6.25%, Due 1/01/16 1,000,000 910,000
</TABLE>
18
<PAGE>
--------------------------------------------------------------------------------
STRONG MUNICIPAL BOND FUND (continued)
Shares or
Principal Value
Amount (Note 2)
--------------------------------------------------------------------------------
Colorado 8.6%
Castle Rock Ranch, Colorado Public Improvements
Authority Public Facilities Revenue:
6.25%, Due 12/01/17 (c) $ 9,820,000 $ 10,323,275
6.30%, Due 12/01/07 (c) 3,115,000 3,422,606
6.375%, Due 12/01/11 (c) 2,000,000 2,220,000
6.40%, Due 12/01/08 (c) 3,310,000 3,674,100
6.50%, Due 12/01/09 (c) 3,525,000 3,930,375
-----------
23,570,356
Connecticut 1.2%
Stamford, Connecticut Housing Authority
MFHR - Fairfield Apartments Project,
4.75%, Due 12/01/28 (Mandatory Put at
$100 on 12/01/08) 3,500,000 3,333,750
Florida 0.7%
Leon County, Florida EFA Revenue Refunding -
Southgate Residence Hall Project,
6.75%, Due 9/01/28 1,000,000 948,750
Pinellas County, Florida EFA Revenue - College
Harbor Project, 6.50%, Due 12/01/20 1,020,000 956,250
----------
1,905,000
Georgia 9.5%
Atlanta, Georgia Urban Residential Finance
Authority MFHR - Evergreen Village
Estates Project:
5.875%, Due 5/01/07 (c) 700,000 716,625
6.375%, Due 5/01/17 1,675,000 1,746,187
6.50%, Due 5/01/27 (c) 2,965,000 3,083,600
Colquitt County, Georgia Development
Authority Revenue - Southern Care
Corporation Facility, Zero %, Due 12/01/21 7,270,000 1,872,025
Houston County, Georgia MFHR - Emerald
Coast Housing Project, 7.00%, Due 8/01/28 7,000,000 4,900,000
Richmond County, Georgia Development
Authority First Mortgage Revenue,
Zero %, Due 12/01/21 20,000,000 4,825,000
Washington, Georgia Wilkes Payroll Development
Authority Subordinated Revenue - Southern
Care Corporation Facility Project,
Zero %, Due 12/01/21:
Series A 8,125,000 2,122,656
Series C (c) 25,595,000 6,686,694
----------
25,952,787
Illinois 7.5%
Chicago, Illinois O'Hare International Airport
Special Facility Revenue - United Airlines, Inc.
Project, 8.85%, Due 5/01/18 2,500,000 2,583,875
Illinois Health Facilities Authority Refunding
Revenue - Lutheran Social Services of Illinois,
6.125%, Due 8/15/20 9,160,000 7,763,100
Illinois Health Facilities Authority Revenue,
6.724%, Due 6/19/15 (Pre-Refunding
at $102 on 6/07/02) 3,000,000 3,161,250
Kane, Cook and DuPage Counties, Illinois School
District Number U-46 Capital Appreciation
School Building:
Zero %, Due 1/01/11 1,800,000 1,064,250
Zero %, Due 1/01/13 (c) 2,500,000 1,303,125
Metropolitan Pier and Exposition Authority
Capital Appreciation - McCormick Place
Expansion Project, Zero %, Due 6/15/16 1,250,000 523,438
Metropolitan Pier and Exposition Authority
Hospitality Facilities Revenue - McCormick
Place Convention Project, 7.00%, Due 7/01/26 1,500,000 1,790,625
Zion, Illinois Park District GO Revenue,
6.50%, Due 12/30/17 $ 2,485,000 $ 2,425,981
------------
20,615,644
Indiana 1.8%
St. Joseph County, Indiana Hospital Authority
Health System Revenue - Madison Center,
Inc. Project, 5.80%, Due 2/15/24 6,000,000 4,830,000
Kentucky 1.5%
Logan and Todd Counties, Kentucky Regional
Water Commission BAN Revenue,
5.50%, Due 8/01/03 4,000,000 4,015,000
Louisiana 10.2%
Claiborne Parish, Louisiana Law Enforcement
District Revenue - Claiborne Correctional
Facilities Project, 6.25%, Due 3/01/19 7,500,000 7,031,250
Iberia Parish, Louisiana IDB IDR - Acadia Board
Company, Ltd. Project, 7.50%, Due 8/01/22 2,180,000 2,005,600
Louisiana Local Government Environment
Facilities Community Development Authority
Revenue - Capital Projects and Equipment
Acquisition Program, 6.55%, Due 9/01/25 (b) 3,000,000 3,120,000
New Orleans, Louisiana Regional Transit
Authority Tax-Exempt Lease-Purchase
Agreements, 6.125%, Due 5/01/10:
Lease M98147 (c) 13,736,428 14,474,761
Lease M98159 1,292,101 1,361,551
----------
27,993,162
Massachusetts 1.6%
Massachusetts IFA IDR - Welch Foods, Inc.
Project, 5.60%, Due 12/01/17 1,700,000 1,608,625
Massachusetts State Housing Finance Agency
Housing Revenue, 5.50%, Due 7/01/13 2,770,000 2,790,775
----------
4,399,400
Michigan 0.8%
Michigan Hospital Finance Authority Hospital
Revenue Refunding - Pontiac Osteopathic
Hospital Project, 6.00%, Due 2/01/14 2,500,000 2,221,875
Minnesota 2.4%
St. Paul, Minnesota Housing and Redevelopment
Authority Lease Revenue - Community of Peace
Academy Project, 6.10%, Due 11/01/29 3,570,000 3,288,863
Woodbury, Minnesota IDR Refunding - Harvey
Vogel Manufacturing Company Project,
5.80%, Due 12/01/28 3,465,000 3,304,744
----------
6,593,607
Missouri 0.9%
Springfield, Missouri Land Clearance
Redevelopment Authority Industrial
Revenue Refunding - University Plaza
Project, 6.60%, Due 10/01/11 2,465,000 2,545,112
Montana 1.1%
Crow Finance Authority Tribal Purpose
Revenue, 5.70%, Due 10/01/27 1,500,000 1,423,125
Miles City, Montana MFHR - Birchwood
Properties LP Project, 6.75%, Due 5/01/29 1,645,000 1,511,344
----------
2,934,469
New Mexico 1.6%
Albuquerque, New Mexico IDR - MCT
Industries, Inc. Project, 6.50%, Due 4/01/17 4,330,000 4,519,438
19
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) August 31, 2000
--------------------------------------------------------------------------------
STRONG MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
North Dakota 2.3%
Richland County, North Dakota MFHR -
Birchwood Properties LP Project,
6.75%, Due 5/01/29 $ 5,130,000 $ 4,713,187
Three Affiliated Tribes of the Fort Berthold
Reservation GO, 6.30%, Due 11/15/10 1,515,000 1,479,019
-------------
6,192,206
Ohio 4.4%
Medina County, Ohio EDR MFHR - Camelot
Place, Ltd. Project, 8.375%, Due 10/01/23 3,800,000 3,671,750
Montgomery County, Ohio Health Care Facilities
Revenue Refunding - Friendship Village of
Dayton Project, 6.25%, Due 2/01/22 1,250,000 1,004,687
Toledo, Ohio MFMR - Commodore Perry
Apartments Project, 7.00%, Due 12/01/28 7,495,000 7,382,575
-------------
12,059,012
Oklahoma 3.3%
Oklahoma County, Oklahoma Finance
Authority MFHR First Mortgage - Multiple
Apartments Project, 7.125%, Due 4/01/28
(Defaulted Effective 4/19/00) 10,170,000 6,102,000
Shawnee, Oklahoma Hospital Authority Revenue -
MidAmerica HealthCare, Inc. Project,
8.00%, Due 4/01/04 1,745,000 1,763,829
Washington County, Oklahoma Medical
Authority Revenue - Bartlesville Jane
Phillips Episcopal Hospital Project,
6.125%, Due 11/01/14 1,000,000 1,035,000
-------------
8,900,829
Pennsylvania 7.4%
Allegheny County, Pennsylvania Hospital
Development Authority Revenue - Saint
Francis Medical Center Project:
5.75%, Due 5/15/17 1,660,000 1,388,175
5.75%, Due 5/15/27 3,965,000 3,077,831
Montgomery County, Pennsylvania IDA First
Mortgage Revenue Refunding - The
Meadowood Corporation Project,
6.25%, Due 12/01/17 1,500,000 1,333,125
Pennsylvania EDFA Qualified Residential Rent
Project Revenue - RSI Properties/Butler
LLC Project, 8.00%, Due 9/01/27
(Defaulted Effective 9/01/99) 2,360,000 1,498,600
Pennsylvania EDFA Qualified Residential Rent
Project Revenue - RSI Properties/Greensburg
LLC Project, 8.00%, Due 9/01/27
(Defaulted Effective 9/01/99) 2,655,000 1,685,925
Philadelphia, Pennsylvania Hospitals and Higher
EFA Revenue - Temple University Children's
Medical Center Project, 5.75%, Due 6/15/29 3,000,000 2,471,250
Philadelphia, Pennsylvania Hospitals and Higher
EFA Revenue - Temple University Hospital
Project, 6.50%, Due 11/15/08 3,700,000 3,681,500
Scranton-Lackawanna, Pennsylvania Health
and Welfare Authority Hospital Revenue -
Marian Community Hospital Project,
6.50%, Due 1/15/07 1,500,000 1,460,625
Scranton-Lackawanna, Pennsylvania Health
and Welfare Authority Hospital Revenue -
Moses Taylor Hospital Project,
6.25%, Due 7/01/20 4,200,000 3,654,000
-------------
20,251,031
Rhode Island 0.6%
Rhode Island Health and Education Building
Corporation Hospital Financing Revenue -
South County Hospital Project,
6.00%, Due 11/15/17 1,630,000 1,589,250
South Carolina 4.9%
Connector 2000 Association, Inc. Senior Capital
Appreciation Toll Road Revenue - Greenville,
South Carolina Southern Connector Project:
Zero %, Due 1/01/12 $ 3,900,000 $ 1,735,500
Zero %, Due 1/01/14 4,560,000 1,738,500
Zero %, Due 1/01/15 1,000,000 351,250
Zero %, Due 1/01/26 10,000,000 1,525,000
Zero %, Due 1/01/32 12,100,000 1,179,750
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 6,754,000
-------------
13,284,000
South Dakota 2.1%
Education Loans, Inc. Student Loan Revenue
Subordinated Asset-Backed Bonds,
5.60%, Due 6/01/20 3,000,000 2,872,500
Sisseton-Wahpeton Sioux Tribe of the Lake
Traverse Reservation GO:
7.00%, Due 11/01/13 815,000 830,281
7.00%, Due 11/01/23 1,290,000 1,270,650
South Dakota EDFA EDR Pooled Loan
Program - Midstates Printing, Inc.
Project, 5.50%, Due 4/01/18 685,000 656,744
-------------
5,630,175
Texas 5.7%
Dallas County, Texas Utility and Reclamation
District GO Refunding, 6.70%,
Due 2/15/25 (b) 5,000,000 5,081,250
El Paso, Texas Property Finance Authority, Inc.
SFMR - GNMA Mortgage-Backed Securities
Program, 8.70%, Due 12/01/18 330,000 346,088
Grape Creek-Pulliam, Texas Independent School
District Public Facility Corporation School
Facility Lease Revenue:
7.00%, Due 5/15/10 1,000,000 1,080,000
7.25%, Due 5/15/21 1,300,000 1,399,125
Lufkin, Texas Health Facilities Development
Corporation Health System Revenue
Refunding - Memorial Health System of
East Texas Project, 6.875%, Due 2/15/26 4,515,000 4,249,744
Ranger, Texas Housing Corporation MFMR
Refunding - FHA Insured Mortgage Loans -
Ranger Apartments Project,
8.80%, Due 3/01/24 1,160,000 1,299,200
Woodville, Texas HFC MFHR - Dogwood
Terrace Apartments Project,
7.50%, Due 10/01/29 2,450,000 2,272,375
-------------
15,727,782
Utah 0.9%
Eagle Mountain, Utah Special Assessment
Bonds, 5.90%, Due 12/15/07 1,121,000 1,140,618
Salt Lake County, Utah Housing Authority
MFHR - Millcreek Pines Apartments
Project, 6.80%, Due 9/01/17 1,390,000 1,383,050
-------------
2,523,668
Virginia 0.6%
Pocahontas Parkway Association Route 895
Connector Toll Road Revenue,
Zero %, Due 8/15/17 5,000,000 1,625,000
Washington 4.7%
Ocean Shores, Washington Water and Sewer
Revenue Notes, 5.00%, Due 12/01/01 2,360,000 2,357,003
Port Seattle, Washington Revenue Bonds,
5.625%, Due 2/01/30 5,000,000 5,006,250
</TABLE>
20
<PAGE>
--------------------------------------------------------------------------------
STRONG MUNICIPAL BOND FUND (continued)
Shares or
Principal Value
Amount (Note 2)
--------------------------------------------------------------------------------
Spokane, Washington Downtown Foundation
Parking Revenue - River Park Square Project,
5.60%, Due 8/01/19 $ 3,350,000 $ 3,320,687
Washington EDFA Nonrecourse Revenue -
Lindal Cedar Homes, Inc. Project,
5.80%, Due 11/01/17 2,175,000 2,142,375
------------
12,826,315
West Virginia 1.5%
Kanawha County, West Virginia Residential
Mortgage Revenue, 7.375%, Due 9/01/10 3,670,000 4,151,687
Wisconsin 1.6%
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 (c) 5,450,000 4,400,875
-------------------------------------------------------------------------------
Total Municipal Bonds (Cost $266,355,596) 247,166,430
-------------------------------------------------------------------------------
Variable Rate Put Bonds 4.7%
Mississippi 1.4%
Jackson, Mississippi Housing Authority
MFHR - Elton Park Apartments Project,
5.40%, Due 4/01/39 (Mandatory Put
at $100 on 4/01/19) 4,000,000 3,875,000
New Hampshire 1.1%
New Hampshire Business Finance Authority
PCR Refunding - United Illuminating
Company Project, 4.55%, Due 7/01/27
(Mandatory Put at $100 on 2/01/04) 3,000,000 2,940,000
Pennsylvania 1.1%
Beaver County, Pennsylvania IDA PCR
Refunding - Ohio Edison Company
Project, 4.65%, Due 6/01/33 (Mandatory
Put at $100 on 6/01/04) 3,000,000 2,917,500
Texas 1.1%
Dallas-Fort Worth, Texas International Airport
Facility Improvement Corporation Revenue
Refunding - American Airlines, Inc. Project,
5.95%, Due 5/01/29 (Mandatory Put at
$100 on 11/01/03) 3,000,000 3,018,750
-------------------------------------------------------------------------------
Total Variable Rate Put Bonds (Cost $12,632,350) 12,751,250
-------------------------------------------------------------------------------
Short-Term Investments (a) 8.6%
Monthly Variable Rate Put Bonds 0.5%
New Mexico
New Mexico State Hospital Equipment
Loan Council Hospital Revenue -
Presbyterian Health Care Services Project,
5.73%, Due 9/07/00 1,500,000 1,500,000
Municipal Funds 8.1%
Multiple States
Blackrock Insured Municipal 2008 Term Trust 136,400 2,003,375
Nuveen Insured Premium Income
Municipal Fund 165,000 1,907,813
Strong Municipal Money Market Fund (d) 18,200,000 18,200,000
------------
Total Municipal Funds 22,111,188
-------------------------------------------------------------------------------
Total Short-Term Investments (Cost $23,549,465) 23,611,188
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Investments in Securities (Cost $302,537,411) 103.6% 283,528,868
Other Assets and Liabilities, Net (3.6%) (9,848,172)
--------------------------------------------------------------------------------
Net Assets 100.0% $273,680,696
================================================================================
--------------------------------------------------------------------------------
FUTURES
--------------------------------------------------------------------------------
Underlying
Expiration Face Amount Unrealized
Date at Value Depreciation
--------------------------------------------------------------------------------
Sold:
280 Municipal Bond Futures 9/00 $27,973,750 $1,234,688
--------------------------------------------------------------------------------
STRONG SHORT-TERM MUNICIPAL BOND FUND
Shares or
Principal Value
Amount (Note 2)
--------------------------------------------------------------------------------
Municipal Bonds 56.1%
American Samoa 0.3%
Territory of American Samoa GO
Refunding, 5.50%, Due 9/01/02 $1,010,000 $1,020,100
Arizona 0.2%
Maricopa County, Arizona IDA MFHR -
Mercy Bond Properties Arizona I-A,
5.20%, Due 1/01/04 620,000 626,200
Colorado 2.4%
Castle Rock Ranch, Colorado Public
Improvements Authority Public
Facilities Revenue:
5.70%, Due 12/01/06 1,000,000 1,058,750
5.90%, Due 12/01/03 1,475,000 1,534,000
6.10%, Due 12/01/05 2,780,000 2,967,650
Eaglebend, Colorado Affordable Housing
Corporation MFHR Refunding,
5.45%, Due 7/01/02 595,000 593,513
Meridian, Colorado Metropolitan
District GO, 7.00%, Due 12/01/01 1,250,000 1,284,375
----------
7,438,288
Connecticut 0.6%
Connecticut Development Authority PCR
Refunding - United Illuminating Company
Project, 4.35%, Due 6/01/26 (Mandatory
Put at $100 on 2/01/04) 2,000,000 1,932,500
Florida 1.8%
Capital Projects Finance Authority Solid Waste
Disposal Revenue Capital Projects Loan
Program - Peerless Dade, Inc. Project,
7.50%, Due 11/01/18 3,000,000 2,190,000
Miami Beach, Florida Redevelopment Agency
Incremental Tax Revenue,
9.125%, Due 12/01/04 3,390,000 3,517,125
----------
5,707,125
Georgia 1.7%
Athens-Clarke County, Georgia Residential
Care Facilities for the Elderly Authority
Revenue - Wesley Woods of Athens, Inc.
Project, 5.30%, Due 10/01/01 1,000,000 990,880
Burke County, Georgia Development
Authority PCR - Georgia Power Company
Plant Project, 4.53%, Due 9/01/30
(Mandatory Put at $100 on 3/01/02) 3,000,000 3,003,750
Columbus, Georgia Development Authority
Revenue Refunding - Jordan Company
Project, 5.50%, Due 9/01/09 (Mandatory
Put at $100 on 9/01/01) 1,205,000 1,209,386
----------
5,204,016
Illinois 3.3%
Chicago, Illinois O'Hare International Airport
Special Facility Revenue - United Airlines,
Inc. Project, 8.85%, Due 5/01/18 2,000,000 2,067,100
21
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (Continued) August 31, 2000
--------------------------------------------------------------------------------
STRONG SHORT-TERM MUNICIPAL BOND FUND (Continued)
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
------------------------------------------------------------------------------------
<S> <C> <C>
Illinois EFA Revenue - Lewis University
Project, 5.30%, Due 10/01/04 $ 1,390,000 $ 1,402,163
Illinois Health Facilities Authority Revenue,
6.724%, Due 6/19/15 (Pre-Refunding
at $102 on 6/07/02) 4,000,000 4,215,000
Illinois Health Facilities Authority Revenue -
Covenant Retirement Communities Project,
7.60%, Due 12/01/12 750,000 791,250
Naperville, Illinois DuPage County and Will
County, EDR Refunding - Illinois Hospital
and Health Systems Association Project,
5.70%, Due 5/01/04 1,880,000 1,901,150
------------
10,376,663
Indiana 0.7%
Michigan City, Indiana PCR - Northern Indiana
Public Service Company Project,
5.70%, Due 10/01/03 (b) 2,000,000 2,012,700
Kentucky 4.8%
Carrollton and Henderson, Kentucky Public
Energy Authority Gas Trust Revenue:
4.00%, Due 1/01/03 (c) 2,300,000 2,216,625
4.75%, Due 1/01/04 1,500,000 1,473,750
Kenton County, Kentucky Airport Board
Special Facilities Revenue - Delta
Airlines, Inc. Project, 6.75%, Due 2/01/02 2,000,000 2,032,500
Logan and Todd Counties, Kentucky Regional
Water Commission BAN Revenue,
5.50%, Due 8/01/03 6,000,000 6,022,500
Pendleton County, Kentucky Multi-County
Lease Revenue - Kentucky Association of
Counties Leasing Trust Program,
6.50%, Due 3/01/19 (c) 3,000,000 3,127,500
------------
14,872,875
Louisiana 0.7%
Louisiana Local Government Environment
Facilities Community Development Authority
Revenue - Public Projects Construction
Notes, 5.25%, Due 2/15/02 2,000,000 2,017,500
Maine 0.9%
Maine Finance Authority Electric Rate
Stabilization Revenue Refunding - Penobscot
Energy Recovery Company LP Project,
5.20%, Due 7/01/18 2,900,000 2,896,375
Massachusetts 4.4%
Massachusetts Education Loan Authority
Education Loan Revenue, 7.45%, Due 1/01/02 695,000 699,517
Massachusetts Health and EFA Competitive
Lease Program - Whitehead Institute for
Biomedical Research Project,
4.595%, Due 10/15/03 5,928,892 5,951,126
Massachusetts Industrial Finance Agency
Refunding Revenue - Emerson College
Issue, 8.50%, Due 1/01/03 2,500,000 2,621,875
Massachusetts Industrial Finance Agency Water
Treatment Revenue - Massachusetts-American
Hingham Project, 6.25%, Due 12/01/10 4,190,000 4,436,163
------------
13,708,681
Michigan 1.6%
Flint, Michigan Hospital Building Authority
Revenue Refunding - Hurley Medical
Center Project:
5.75%, Due 7/01/03 2,355,000 2,328,506
6.00%, Due 7/01/04 1,005,000 1,001,231
6.00%, Due 7/01/05 510,000 506,175
Flint, Michigan Hospital Building Authority
Revenue Rental - Hurley Medical Center
Project, 5.00%, Due 7/01/03 $ 1,050,000 $ 1,006,687
------------
4,842,599
Minnesota 3.1%
Maplewood, Minnesota Health Care
Facility Revenue - HealthEast Project,
5.70%, Due 11/15/02 1,740,000 1,700,850
St. Paul, Minnesota Housing and
Redevelopment Authority Hospital
Revenue - HealthEast Project,
6.625%, Due 11/01/17 5,000,000 4,393,750
Woodbury, Minnesota Lease Revenue -
Minnesota Math and Science Academy
Project, 5.50%, Due 11/01/28 (Mandatory
Put at $100 on 5/01/02) 3,555,000 3,519,450
------------
9,614,050
Missouri 1.9%
Springfield, Missouri Land Clearance
Redevelopment Authority Industrial
Revenue Refunding - University Plaza
Project, 6.30%, Due 10/01/06 1,790,000 1,843,700
St. Louis, Missouri Airport Revenue:
6.00%, Due 1/01/04 1,000,000 1,008,750
6.25%, Due 1/01/02 1,440,000 1,452,600
6.25%, Due 1/01/03 1,500,000 1,520,625
------------
5,825,675
Nebraska 1.2%
American Public Energy Agency Gas Supply
Revenue - Nebraska Public Gas Agency
Project, 4.375%, Due 6/01/10 (c) 4,205,000 3,779,244
Nevada 1.0%
Nevada Housing Division SFMR,
5.20%, Due 4/01/30 1,500,000 1,500,000
Reno-Sparks, Nevada Convention and
Visitors Authority Limited Obligation
Refunding, 6.40%, Due 11/01/03 1,530,000 1,556,775
------------
3,056,775
New Hampshire 0.1%
New Hampshire IDA Industrial Facilities
Revenue - Permattach Tool Project,
7.70%, Due 12/01/01 225,000 226,607
New Jersey 0.3%
West Milford Township, New Jersey
Municipal Utlilites Authority Revenue,
5.125%, Due 12/01/01 1,000,000 1,003,750
New York 0.6%
New Rochelle, New York Municipal
Housing Authority Mortgage Revenue,
4.70%, Due 12/01/03 1,165,000 1,163,544
New York Environmental Facilities
Corporation State Water Revolving Fund
PCR - Pilgrim State Sewage Treatment
Project, 5.625%, Due 3/15/04 800,000 829,000
------------
1,992,544
North Carolina 1.1%
North Carolina Housing Finance Agency
Home Ownership Revenue,
4.55%, Due 1/01/24 3,575,000 3,512,437
</TABLE>
22
<PAGE>
--------------------------------------------------------------------------------
STRONG SHORT-TERM MUNICIPAL BOND FUND (continued)
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount (Note2)
-----------------------------------------------------------------------------------
<S> <C> <C>
Ohio 3.8%
Akron, Ohio COP - Akron Municipal Baseball
Stadium Project:
Zero %, Due 12/01/01 $ 1,000,000 $ 943,750
Zero %, Due 12/01/02 1,240,000 1,176,450
Cleveland, Ohio City School District Energy
Conservation Improvement GO:
6.53%, Due 9/15/01 715,000 728,471
6.53%, Due 3/15/02 740,000 759,425
6.53%, Due 9/15/02 760,000 786,600
6.53%, Due 3/15/03 785,000 817,381
6.53%, Due 9/15/03 815,000 854,731
6.53%, Due 3/15/04 840,000 886,200
6.53%, Due 9/15/04 865,000 917,981
Montgomery County, Ohio Health Care
Facilities Revenue Refunding - Friendship
Village of Dayton Project, 5.15%, Due 2/01/03 1,370,000 1,330,613
Montgomery County, Ohio Health Care
Facilities Revenue Refunding EXTRAS -
Friendship Village of Dayton Project, 5.375%,
Due 2/01/22 (Putable at $100 on 2/01/03) 1,050,000 1,025,062
Ohio Housing Finance Agency Residential
Mortgage Revenue, 5.00%, Due 9/01/04 1,650,000 1,668,563
------------
11,895,227
Pennsylvania 6.5%
Pennsylvania Housing Finance Agency
SFMR, 4.50%, Due 4/01/28 6,905,000 6,775,531
Southern Chester County, Pennsylvania Health
and Higher Education Authority Mortgage
Revenue - Jenner's Pond Retirement
Community Project, 5.15%, Due 11/01/03:
Series 1998 7,500,000 7,200,000
Series 1999 4,500,000 4,320,000
Washington County, Pennsylvania Hospital
Authority Revenue - Canonsburg General
Hospital Project, 7.35%, Due 6/01/13
(Pre-Refunding at $102 on 6/01/03) 1,705,000 1,828,612
------------
20,124,143
Puerto Rico 0.7%
Commonwealth of Puerto Rico Tax-Exempt
Lease Certificates, 5.10%, Due 4/01/04 2,108,380 2,147,912
Rhode Island 0.8%
Rhode Island EDC Revenue - Providence
Place Mall Project:
5.25%, Due 7/01/02 1,140,000 1,149,975
5.35%, Due 7/01/03 1,200,000 1,215,000
------------
2,364,975
South Dakota 0.4%
South Dakota EDFA EDR Refunding
Pooled Loan Program - Technical
Ordinance Project, 5.75%, Due 4/01/07 1,230,000 1,276,125
Tennessee 0.7%
Municipal Energy Acquisition Corporation
Gas Revenue, 5.00%, Due 3/01/03 1,000,000 998,750
Tennessee Housing Development Agency -
Homeownership Program Project,
Zero %, Due 7/01/05 1,585,000 1,256,113
------------
2,254,863
Texas 6.5%
Brazos, Texas Higher Education Authority, Inc.
Student Loan Revenue Refunding,
5.95%, Due 6/01/02 3,005,000 3,068,856
Falcons Lair, Texas Utility and Reclamation
District COP, 7.10%, Due 10/15/06 $5,855,000 $ 5,759,856
Harris County, Texas HFC MFHR - Bryant
Development Project, 7.125%, Due 9/01/05 504,629 510,306
Laguna Madre, Texas Water District Capital
Appreciation Refunding:
Zero %, Due 6/01/02 1,240,000 1,145,450
Zero %, Due 6/01/03 1,130,000 995,812
Zero %, Due 6/01/04 1,175,000 988,469
Lancaster, Texas HFC MFHR -
Intervest-Lancaster Project:
6.30%, Due 6/15/04 2,925,000 2,935,969
6.956%, Due 6/15/04 377,812 379,229
Odessa, Texas Housing Authority MFMR -
Section 8 Assisted Project:
5.875%, Due 10/01/03 975,000 977,438
6.375%, Due 10/01/11 2,735,000 2,731,581
Robstown, Texas Certificates of Obligation:
7.75%, Due 10/01/12 80,000 83,000
7.75%, Due 10/01/12 (Pre-Refunding at
$100 on 10/01/02) 410,000 432,550
------------
20,008,516
Utah 1.6%
Eagle Mountain, Utah Water and Sewer
Revenue BAN, 5.375%, Due 9/01/01 4,910,000 4,892,078
Virginia 0.3%
Metropolitan Washington D.C. Airports
Authority, Virginia General Airport
Revenue, 7.25%, Due 10/01/10 1,000,000 1,021,680
Washington 1.2%
Walla Walla, Washington Housing Authority
Revenue - Wilbur Manor Project,
6.25%, Due 12/01/11 1,365,000 1,337,700
Washington Public Power Supply System
Revenue Refunding - Nuclear Project
Number 3, 7.375%, Due 7/01/04 2,300,000 2,348,875
------------
3,686,575
Wisconsin 0.9%
Menomonee Falls, Wisconsin BAN,
4.875%, Due 7/01/02 2,750,000 2,757,370
------------------------------------------------------------------------------------
Total Municipal Bonds (Cost $174,919,273) 174,096,168
------------------------------------------------------------------------------------
Variable Rate Put Bonds 20.7%
Arizona 1.9%
Scottsdale, Arizona IDA First Mortgage Revenue
Refunding - Westminster Village, Inc. Project:
5.25%, Due 6/01/16 (Putable at $100 and
Rate Reset Effective 6/01/04) 3,300,000 3,180,375
6.00%, Due 6/01/17 (Putable at $100 and
Rate Reset Effective 12/01/03) 2,700,000 2,676,375
------------
5,856,750
Connecticut 0.4%
Connecticut IDA - The Olympic Hotel
Corporation Project, 7.65%, Due 8/01/03 1,300,689 1,287,683
Georgia 1.8%
Atlanta, Georgia Urban Residential Finance
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 5,655,000
</TABLE>
23
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (Continued) August 31, 2000
--------------------------------------------------------------------------------
STRONG SHORT-TERM MUNICIPAL BOND FUND (Continued)
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
-----------------------------------------------------------------------------------------
<S> <C> <C>
Massachusetts 1.1%
Massachusetts Development Finance Agency 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 $ 3,381,875
Mississippi 0.7%
Moss Point, Mississippi Redevelopment
Authority Urban Development Revenue -
Jackson County Motel Project,
5.50%, Due 8/01/05 2,190,000 2,190,263
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) 1,235,000 1,236,544
Montana 1.9%
Forsyth, Montana PCR Refunding - Portland
General Electric Company Project:
4.60%, Due 5/01/33 (Mandatory Put at
$100 on 5/01/03) 5,000,000 4,937,500
4.75%, Due 5/01/33 (Mandatory Put at
$100 on 5/01/03) 1,000,000 987,500
------------
5,925,000
New Hampshire 1.9%
New Hampshire Business Finance Authority
PCR Refunding - United Illuminating
Company Project, 4.55%, Due 7/01/27
(Mandatory Put at $100 on 2/01/04) 6,000,000 5,880,000
Ohio 0.8%
Perry County, Ohio Nursing Facilities Revenue
Refunding - New Lexington Health Care
Project, 6.50%, Due 9/01/10 (Mandatory
Put at $100 on 9/01/03) (b) 2,420,000 2,451,000
Pennsylvania 1.2%
Beaver County, Pennsylvania IDA PCR
Refunding - Ohio Edison Company
Project, 4.65%, Due 6/01/33 (Mandatory
Put at $100 on 6/01/04) 4,000,000 3,890,000
South Carolina 0.8%
South Carolina Jobs EDA EDR Refunding
EXTRAS - Westminster Presbyterian Center,
Inc. Project, 5.20%, Due 11/15/28 (Putable
at $100 and Rate Reset Effective 11/15/03) 2,455,000 2,369,075
Texas 6.8%
Bexar County, Texas HFC MFHR - Park Ridge
Apartments Project, 5.50%, Due 5/01/35
(Mandatory Put at $100 on 5/01/03) 4,775,000 4,721,281
Brazos River Authority Revenue Refunding -
Reliant Energy, Inc. Project, 5.20%, Due
12/01/18 (Mandatory Put at $100 on 12/01/02) 4,000,000 4,005,000
Dallas-Fort Worth, Texas International Airport
Facility Improvement Corporation Revenue
Refunding - American Airlines, Inc. Project,
5.95%, Due 5/01/29 (Mandatory Put at
$100 on 11/01/03) (c) 5,000,000 5,031,250
Northwest Trails Apartment Trust Pass-Thru
Certificates, 5.25%, Due 4/01/13 (Mandatory
Put at $100 on 10/01/01) 7,425,000 7,390,474
------------
21,148,005
Virginia 1.0%
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 $ 3,000,930
-----------------------------------------------------------------------------------------
Total Variable Rate Put Bonds (Cost $64,302,460) 64,272,125
-----------------------------------------------------------------------------------------
Short-Term Investments (a) 24.7%
Municipal Bonds 9.5%
Colorado 1.0%
Denver, Colorado City and County Airport
Revenue, 8.50%, Due 11/15/23
(Pre-Refunding at $102 on 11/15/00) 3,000,000 3,081,510
Illinois 0.2%
Illinois DFA Solid Waste Disposal
Revenue - Waste Management, Inc.
Project, 7.125%, Due 1/01/01 640,000 642,752
Iowa 0.2%
Iowa Finance Authority Mortgage Revenue
Refunding - Friendship Village Project,
4.95%, Due 11/01/00 650,000 649,473
Kansas 1.1%
Kansas State Indendent College Finance
Authority RAN - Benedictine College
Project, 5.75%, Due 6/01/01 1,200,000 1,210,980
Kansas State Indendent College Finance
Authority RAN - Mid America Nazarene
University Project, 5.75%, Due 6/01/01 1,400,000 1,412,810
Kansas State Indendent College Finance
Authority RAN - Southwestern College
Project, 6.00%, Due 6/01/01 800,000 808,736
------------
3,432,526
Michigan 0.5%
Lakeville, Michigan Community School
District State Aid Notes, 5.50%, Due 6/29/01 1,391,000 1,403,881
New Jersey 1.1%
Jersey City, New Jersey Municipal Utilities
Authority Project Notes, 5.75%, Due 7/27/01 3,000,000 3,012,510
New Jersey Health Care Facilities Finance
Authority Revenue - Southern Ocean
County Hospital Project, 5.75%, Due 7/01/01 300,000 300,138
------------
3,312,648
New York 2.0%
Albany, New York Housing Authority - Tax
Credit-Lark Drive Association,
5.25%, Due 6/01/01 3,300,000 3,316,104
Schenectady, New York City School
District BAN, 5.50%, Due 6/29/01 3,000,000 3,011,490
------------
6,327,594
Ohio 1.4%
American Municipal Power-Ohio, Inc. BAN -
Grafton Village Project, 5.40%, Due 6/21/01 1,500,000 1,509,390
American Municipal Power-Ohio, Inc. BAN -
Montpelier Village Project, 5.15%, Due 7/13/01 1,300,000 1,305,707
Cleveland, Ohio City School District Energy
Conservation Improvement GO:
6.53%, Due 9/15/00 670,000 670,288
6.53%, Due 3/15/01 690,000 696,893
Wood County, Ohio IDR - Abbey Etna Machine
Company Project, 7.625%, Due 7/01/01 140,000 140,910
------------
4,323,188
</TABLE>
24
<PAGE>
--------------------------------------------------------------------------------
STRONG SHORT-TERM MUNICIPAL BOND FUND (continued)
Shares or
Principal Value
Amount (Note 2)
-------------------------------------------------------------------------------
Oregon 0.7%
Hillsboro, Oregon Hospital Facility Authority
Revenue and Advance Refunding - Tuality
Healthcare Project, 4.80%, Due 10/01/00 $ 2,020,000 $ 2,019,859
Pennsylvania 0.2%
Horizon Hospital System Authority Hospital
Revenue, 5.40%, Due 5/15/01 585,000 584,538
Texas 0.5%
Hidalgo County, Texas Health Services
Corporation Hospital Revenue - Mission
Hospital, Inc. Project, 5.75%, Due 8/15/01 480,000 480,283
Laguna Madre, Texas Water District
Capital Appreciation Refunding,
Zero %, Due 6/01/01 1,265,000 1,224,254
-----------
1,704,537
Wisconsin 0.6%
Wittenberg-Birnamwood, Wisconsin School
District TRAN, 4.90%, Due 8/24/01 2,000,000 2,000,000
-----------
Total Municipal Bonds 29,482,506
Variable Rate Put Bonds 4.1%
Alabama 1.9%
Selma, Alabama IDB PCR - International
Paper Company Project:
5.50%, Due 7/15/06 (Putable at $100 and
Rate Reset Effective 7/15/01) 800,000 800,416
5.50%, Due 7/15/08 (Putable at $100 and
Rate Reset Effective 7/15/01) 5,150,000 5,152,678
-----------
5,953,094
Florida 1.5%
Miami Beach, Florida Health Facilities
Authority Hospital Revenue - Mount Sinai
Medical Center Project, 6.98%, Due 8/15/01 4,500,000 4,500,000
Ohio 0.6%
Ohio Air Quality Development Authority
Revenue Refunding - Ohio Edison Company
Project, 4.25%, Due 6/01/33 (Mandatory
Put at $100 on 6/01/01) 2,000,000 1,984,040
Texas 0.1%
Farmers Branch, Texas IDC IDR - Thermalloy,
Inc. Project, 5.735%, Due 4/24/01 235,000 235,000
-----------
Total Variable Rate Put Bonds 12,672,134
Annual Variable Rate Put Bonds 2.4%
Illinois 1.2%
Peoria County, Illinois Congregate Care
Revenue - St. Francis Woods Project,
5.625%, Due 4/01/01 3,760,000 3,760,000
Missouri 1.2%
Jackson County, Missouri IDA MFHR -
Pine Valley Apartments Project,
5.625%, Due 3/01/01 3,765,000 3,765,000
-----------
Total Annual Variable Rate Put Bonds 7,525,000
Monthly Variable Rate Put Bonds 1.5%
New Mexico
New Mexico State Hospital Equipment Loan
Council Hospital Revenue - Presbyterian
Health Care Services Project,
5.73%, Due 9/07/00 4,500,000 4,500,000
Daily Variable Rate Put Bonds 3.2%
District of Columbia 1.6%
District of Columbia Revenue - Medlantic
Project, 5.60%, Due 9/01/00 $ 5,000,000 $ 5,000,000
Illinois 1.6%
Illinois DFA Revenue - Provena Health
Project, 5.75%, Due 9/01/00 5,000,000 5,000,000
-----------
Total Daily Variable Rate Put Bonds 10,000,000
Municipal Money Market Funds 4.0%
Multiple States
Strong Municipal Money Market Fund (d) 12,400,000 12,400,000
-------------------------------------------------------------------------------
Total Short-Term Investments (Cost $76,483,320) 76,579,640
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Investments in Securities (Cost $315,705,053) 101.5% 314,947,933
Other Assets and Liabilites, Net (1.5%) (4,635,207)
-------------------------------------------------------------------------------
Net Assets 100.0% 310,312,726
===============================================================================
FUTURES
--------------------------------------------------------------------------------
Underlying
Expiration Face Amount Unrealized
Date at Value Depreciation
--------------------------------------------------------------------------------
Sold:
30 Municipal Bond Futures 9/00 $ 2,997,187 $154,688
LEGEND
--------------------------------------------------------------------------------
(a) Short-term investments include any security which has a remaining 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 or segregated as collateral on open
futures contracts or when-issued securities.
(d) Affiliated issuer (see Note 8 of Notes to Financial Statements).
Maturity date represents actual maturity or the longer of the next put date or
interest adjustment date.
Percentages are stated as a percent of net assets.
25
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) August 31, 2000
-----------------------------------------------------------------------
-----------------------------------------------------------------------------
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
MERLOT - Municipal Exempt Receipt - Liquidity Optional Tender
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
PCFA - Pollution Control Financing Authority
PCR - Pollution Control Revenue
RAN - Revenue Anticipation Notes
SFHR - Single Family Housing Revenue
SFMR - Single Family Mortgage Revenue
TAN - Tax Anticipation Notes
TRAN - Tax and Revenue Anticipation Notes
See Notes to Financial Statements
26
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
August 31, 2000
<TABLE>
<CAPTION>
(In Thousands, Except As Noted)
Strong Short-Term
Strong High-Yield High Yield
Municipal Bond Fund Municipal Fund
------------------- -----------------
<S> <C> <C>
Assets:
Investments in Securities, at Value
Unaffiliated Issuers (Cost of $480,037 and $147,037, respectively) $428,395 $141,351
Affiliated Issuers (Cost of $11,050 and $1,500, respectively) 11,050 1,500
Receivable for Fund Shares Sold 52 --
Interest and Dividends Receivable 9,066 2,184
Other Assets 66 80
-------- --------
Total Assets 448,629 145,115
Liabilities:
Payable for Securities Purchased 7,277 4,019
Payable for Fund Shares Redeemed 57 9
Dividends Payable 2,410 617
Variation Margin Payable 102 35
Accrued Operating Expenses and Other Liabilities 64 21
-------- --------
Total Liabilities 9,910 4,701
-------- --------
Net Assets $438,719 $140,414
======== ========
Net Assets Consist of:
Capital Stock (par value and paid-in capital) $509,602 $149,022
Undistributed Net Investment Income 8 --
Accumulated Net Realized Loss (19,182) (2,905)
Net Unrealized Depreciation (51,709) (5,703)
-------- --------
Net Assets $438,719 $140,414
======== ========
Investor Class ($ and shares in full)
Net Assets $438,703,917 $140,399,437
Capital Shares Outstanding (Unlimited Number Authorized) 49,231,205 14,626,590
Net Asset Value Per Share $8.91 $9.60
===== =====
Advisor Class ($ and shares in full)
Net Assets $15,039 $14,946
Capital Shares Outstanding (Unlimited Number Authorized) 1,687 1,558
Net Asset Value Per Share $8.91 $9.60
===== =====
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (continued)
--------------------------------------------------------------------------------
August 31, 2000
<TABLE>
<CAPTION>
(In Thousands, Except As Noted)
Strong Municipal Strong Short-Term
Bond Fund Municipal Bond Fund
---------------- -------------------
<S> <C> <C>
Assets:
Investments in Securities, at Value
Unaffiliated Issuers (Cost of $284,337 and $303,305, respectively) $265,329 $302,548
Affiliated Issuers (Cost of $18,200 and $12,400, respectively) 18,200 12,400
Receivable for Fund Shares Sold -- 1,327
Interest and Dividends Receivable 3,959 4,230
Other Assets 162 136
------------ ------------
Total Assets 287,650 320,641
Liabilities:
Payable for Securities Purchased 12,255 8,897
Payable for Fund Shares Redeemed 314 50
Dividends Payable 1,213 1,330
Variation Margin Payable 140 15
Accrued Operating Expenses and Other Liabilities 47 36
------------ ------------
Total Liabilities 13,969 10,328
------------ ------------
Net Assets $273,681 $310,313
============ ============
Net Assets Consist of:
Capital Stock (par value and paid-in capital) $330,566 $327,287
Undistributed Net Investment Income -- 2
Accumulated Net Realized Loss (36,642) (16,064)
Net Unrealized Depreciation (20,243) (912)
------------ ------------
Net Assets $273,681 $310,313
============ ============
Investor Class ($ and shares in full)
Net Assets $273,650,353 $307,282,338
Capital Shares Outstanding (Unlimited Number Authorized) 31,151,346 31,885,113
Net Asset Value Per Share $8.78 $9.64
============ ============
Institutional Class ($ and shares in full)
Net Assets $15,095 $15,043
Capital Shares Outstanding (Unlimited Number Authorized) 1,718 1,561
Net Asset Value Per Share $8.79 $9.64
============ ============
Advisor Class ($ and shares in full)
Net Assets $15,249 $3,015,345
Capital Shares Outstanding (Unlimited Number Authorized) 1,736 312,829
Net Asset Value Per Share $8.78 $9.64
============ ============
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
For the Year Ended August 31, 2000
<TABLE>
<CAPTION>
(In Thousands)
Strong Short-Term
Strong High-Yield High Yield
Municipal Bond Fund Municipal Fund
------------------- -----------------
<S> <C> <C>
Income:
Interest $ 35,233 $ 7,982
Dividends - Affiliated Issuers 458 134
-------- --------
Total Income 35,691 8,116
Expenses:
Investment Advisory Fees 2,371 659
Administrative Fees - Investor Class 562 156
Custodian Fees 20 8
Shareholder Servicing Costs - Investor Class 412 69
Transfer Agency Banking Charges - Investor Class -- 4
Reports to Shareholders - Investor Class 107 18
Federal and State Registration Fees 59 57
Other 124 26
-------- --------
Total Expenses before Waivers, Absorptions and Fees Paid Indirectly by Advisor 3,655 997
Voluntary Expense Waivers and Absorptions by Advisor -- (115)
Fees Paid Indirectly by Advisor - Investor Class (13) --
-------- --------
Expenses, Net 3,642 882
-------- --------
Net Investment Income 32,049 7,234
Realized and Unrealized Gain (Loss):
Net Realized Loss on:
Investments (13,012) (2,369)
Futures Contracts (652) (381)
-------- --------
Net Realized Loss (13,664) (2,750)
Net Change in Unrealized Appreciation/Depreciation on:
Investments (38,406) (3,277)
Futures Contracts 364 152
-------- --------
Net Change in Unrealized Appreciation/Depreciation (38,042) (3,125)
-------- --------
Net Loss on Investments (51,706) (5,875)
-------- --------
Net Increase (Decrease) in Net Assets
Resulting from Operations ($ 19,657) $ 1,359
======== ========
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
STATEMENTS OF OPERATIONS (continued)
--------------------------------------------------------------------------------
For the Year Ended August 31, 2000
<TABLE>
<CAPTION>
(In Thousands)
Strong Municipal Strong Short-Term
Bond Fund Municipal Bond Fund
---------------- -------------------
<S> <C> <C>
Income:
Interest $ 19,039 $ 15,330
Dividends - Unaffiliated Issuers 18 -
Dividends - Affiliated Issuers 382 487
-------- --------
Total Income 19,439 15,817
Expenses:
Investment Advisory Fees 1,428 1,050
Administrative Fees - Investor Class 350 353
Administrative Fees - Advisor Class - 1
Custodian Fees 12 13
Shareholder Servicing Costs - Investor Class 326 189
Shareholder Servicing Costs - Advisor Class - 1
Transfer Agency Banking Charges - Investor Class - 8
12b-1 Fees - Advisor Class - 1
Reports to Shareholders - Investor Class 99 55
Other 107 80
-------- --------
Total Expenses before Fees Paid Indirectly by Advisor 2,322 1,751
Fees Paid Indirectly by Advisor - Investor Class (5) -
-------- --------
Expenses, Net 2,317 1,751
-------- --------
Net Investment Income 17,122 14,066
Realized and Unrealized Gain (Loss):
Net Realized Loss on:
Investments (8,807) (744)
Futures Contracts (236) (134)
-------- --------
Net Realized Loss (9,043) (878)
Net Change in Unrealized Appreciation/Depreciation on:
Investments (12,331) (2,844)
Futures Contracts (1,235) (155)
-------- --------
Net Change in Unrealized Appreciation/Depreciation (13,566) (2,999)
-------- --------
Net Loss on Investments (22,609) (3,877)
-------- --------
Net Increase (Decrease) in Net Assets
Resulting from Operations $ (5,487) $ 10,189
======== ========
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands)
Strong High-Yield Municipal Strong Short-Term High Yield
Bond Fund Municipal Fund
----------------------------- -----------------------------
Year Ended Year Ended Year Ended Year Ended
Aug. 31, 2000 Aug. 31, 1999 Aug. 31, 2000 Aug. 31, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Operations:
Net Investment Income $ 32,049 $ 38,005 $ 7,234 $ 7,483
Net Realized Loss (13,664) (3,099) (2,750) (73)
Net Change in Unrealized Appreciation/Depreciation (38,042) (42,223) (3,125) (3,120)
------------- ------------- ------------- -------------
Net Increase (Decrease) in Net Assets
Resulting from Operations (19,657) (7,317) 1,359 4,290
Distributions:
From Net Investment Income - Investor Class (32,049) (38,005) (7,234) (7,483)
From Net Realized Gains - Investor Class -- (3,100) -- --
------------- ------------- ------------- -------------
Total Distributions (32,049) (41,105) (7,234) (7,483)
Capital Share Transactions (Note 4):
Net Increase (Decrease) in Net Assets from
Capital Share Transactions (144,953) 16,534 (35,408) 84,253
------------- ------------- ------------- -------------
Total Increase (Decrease) in Net Assets (196,659) (31,888) (41,283) 81,060
Net Assets:
Beginning of Year 635,378 667,266 181,697 100,637
------------- ------------- ------------- -------------
End of Year $ 438,719 $ 635,378 $ 140,414 $ 181,697
============= ============= ============= =============
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(In Thousands)
Strong Municipal Strong Short-Term Municipal
Bond Fund Bond Fund
----------------------------- -----------------------------
Year Ended Year Ended Year Ended Year Ended
Aug. 31, 2000 Aug. 31, 1999 Aug. 31, 2000 Aug. 31, 1999
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Operations:
Net Investment Income $ 17,122 $ 19,010 $ 14,066 $ 13,391
Net Realized Gain (Loss) (9,043) 1,016 (878) (2,632)
Net Change in Unrealized Appreciation/Depreciation (13,566) (25,676) (2,999) (4,117)
------------ ------------ ------------ ------------
Net Increase (Decrease) in Net Assets Resulting
from Operations (5,487) (5,650) 10,189 6,642
Distributions:
From Net Investment Income:
Investor Class (17,122) (19,010) (14,046) (13,391)
Advisor Class -- -- (22) --
------------ ------------ ------------ ------------
Total Distributions (17,122) (19,010) (14,068) (13,391)
Capital Share Transactions (Note 4):
Net Increase (Decrease) in Net Assets from
Capital Share Transactions (73,922) 107,958 (10,547) 120,693
------------ ------------ ------------ ------------
Total Increase (Decrease) in Net Assets (96,531) 83,298 (14,426) 113,944
Net Assets:
Beginning of Year 370,212 286,914 324,739 210,795
------------ ------------ ------------ ------------
End of Year $ 273,681 $ 370,212 $ 310,313 $ 324,739
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
August 31, 2000
1. Organization
The accompanying financial statements represent the Strong Municipal Income
Funds (the "Funds"), which include the following funds, each with its own
investment objectives and policies:
- Strong High-Yield Municipal Bond Fund, Inc./(1)/
- Strong Short-Term High Yield Municipal Fund (a series of Strong Municipal
Funds, Inc./(1)/)
- Strong Municipal Bond Fund, Inc./(1)/
- Strong Short-Term Municipal Bond Fund, Inc./(1)/
/(1)/ A diversified, open-end management investment company registered
under the Investment Company Act of 1940, as amended.
Effective March 1, 2000, the Strong High-Yield Municipal Bond Fund, Strong
Short-Term High Yield Municipal Fund, Strong Municipal Bond Fund and Strong
Short-Term Municipal Bond Fund have issued two classes of shares: Investor
Class and Advisor Class. Effective August 1, 2000, the Strong Municipal
Bond Fund and Strong Short-Term Municipal Bond Fund have issued an
additional class of shares: Institutional Class. The Advisor Class shares
are subject to an annual distribution fee as described in Note 3. Each
class of shares has identical rights and privileges except with respect to
voting rights on matters pertaining to that class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.
(A) Security Valuation -- Securities of the Funds are valued at fair
value through valuations obtained by a commercial pricing service
or the mean of the bid and asked prices when no last sales price
is available. Securities for which market quotations are not
readily available are valued at fair value as determined in good
faith under consistently applied procedures established by and
under the general supervision of the Board of Directors.
Securities which are purchased within 60 days of their stated
maturity are valued at amortized cost, which approximates fair
value.
The Funds may own certain investment securities which are
restricted as to resale. These securities are valued after giving
due consideration to pertinent factors, including recent private
sales, market conditions and the issuer's financial performance.
The Funds generally bear the costs, if any, associated with the
disposition of restricted securities. The Funds held no
restricted securities at August 31, 2000.
(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.
Net investment income or net realized gains for financial
statement purposes may differ from the characterization for
federal income tax purposes due to differences in the recognition
of income and expense items for financial statement and tax
purposes. Where appropriate, reclassifications between net asset
accounts are made for such differences that are permanent in
nature. Each Fund generally pays dividends from net investment
income monthly and distributes any net capital gains that it
realizes annually. Dividends are declared on each day the net
asset value is calculated except bank holidays.
(C) Realized Gains and Losses on Investment Transactions --
Investment security transactions are recorded as of the trade
date. Gains or losses realized on investment transactions are
determined by comparing the identified cost of the security lot
sold with the net sales proceeds.
(D) Certain Investment Risks -- The Funds may utilize derivative
instruments including options, futures and other instruments with
similar characteristics to the extent that they are consistent
with the 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.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
August 31, 2000
(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) Use of Estimates -- The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates
and assumptions that affect the reported amounts in these
financial statements. Actual results could differ from those
estimates.
(G) Expense Offset Arrangements -- Certain Funds pay a portion of
their custodian fees indirectly through expense offset
arrangements. Custodian fees are reduced for Funds that maintain
compensating balances in non-interest bearing accounts. The Funds
could have invested the assets used to pay for the custodian
fees, had the assets not been used in the expense offset
arrangements. For the year ended August 31, 2000, there were no
amounts paid through expense offset arrangements of the Funds.
(H) Other -- Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on
the accrual basis and includes amortization of premiums and
discounts. Income, expenses (other than expenses attributable to
a specific class), and realized and unrealized gains or losses on
investments are allocated to each class of shares based on its
relative net assets.
3. Related Party Transactions
Strong Capital Management, Inc. (the "Advisor"), with whom certain officers
and directors of the Funds are affiliated, provides investment advisory,
administrative, shareholder recordkeeping and related services to the
Funds. Investment advisory and administrative fees, which are established
by terms of the advisory agreements, are based on the following annualized
rates of the average daily net assets of the respective Funds:
<TABLE>
<CAPTION>
Administrative Fees- Administrative Fees- Administrative Fees-
Advisory Fees Advisory Fees Investor Class Institutional Class Advisor Class
Sept. 1, 1999- Mar. 1, 2000- Mar. 1, 2000- Aug. 1, 2000- Mar. 1, 2000-
Feb. 29, 2000 Aug. 31, 2000 Aug. 31, 2000 Aug. 31, 2000 Aug. 31, 2000
-------------- ------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C>
Strong High-Yield Municipal
Bond Fund 0.60% 0.35% 0.25% * 0.25%
Strong Short-Term High
Yield Municipal Fund 0.60% 0.35% 0.25% * 0.25%
Strong Municipal Bond
Fund 0.60% 0.35% 0.25% 0.02% 0.25%
Strong Short-Term Municipal
Bond Fund 0.50% 0.25% 0.25% 0.02% 0.25%
</TABLE>
*The Strong High-Yield Municipal Bond Fund and Strong Short-Term High Yield
Municipal Fund do not offer Institutional Class shares.
Based on the terms of the advisory agreements, advisory fees,
administrative fees and other expenses will be waived or absorbed by the
Advisor if the Fund's operating expenses exceed 2% of the average daily net
assets of the Fund. In addition, the Fund's Advisor may voluntarily waive
or absorb certain expenses at its discretion. Shareholder recordkeeping and
related service fees are based on contractually established rates for each
open and closed shareholder account. The Advisor also allocates to each
Fund certain charges or credits resulting from transfer agency banking
activities based on each Fund's level of subscription and redemption
activity. Charges allocated to the Funds by the Advisor are included in
Other Expenses in the Funds' Statement of Operations. Credits allocated by
the Advisor serve to reduce the shareholder servicing expenses incurred by
the Funds and are reported as Fees Paid Indirectly by Advisor in the Funds'
Statement of Operations. The Advisor is also compensated for certain other
services related to costs incurred for reports to shareholders.
The Funds have entered into a distribution agreement with Strong
Investments, Inc. (the "Distributor"), pursuant to Rule 12b-1 under the
1940 Act, on behalf of each of the Funds' Advisor Class shares. Under the
agreement, the Distributor is paid an annual rate of 0.25% of the average
daily net assets of the Advisor Class shares as compensation for services
provided and expenses incurred, including amounts paid to brokers or
dealers, in connection with the sale of each Funds' shares. The Strong
High-Yield Municipal Bond Fund, Strong Short-Term High Yield Municipal
Fund, Strong Municipal Bond Fund and Strong Short-Term Municipal Bond Fund
incurred 12b-1 fees of $19, $18, $19 and $1,190, respectively.
The Funds may invest cash in money market funds sponsored and managed by
the Advisor, subject to certain limitations. The terms of such transactions
are identical to those of non-related entities except that, to avoid
duplicate investment advisory fees, advisory fees of each Fund are reduced
by an amount equal to advisory fees paid to the Advisor under its
investment advisory agreement with the money market funds.
34
<PAGE>
Certain information regarding related party transactions, excluding the
effects of waivers and absorptions, for the year ended August 31, 2000, is
as follows:
<TABLE>
<CAPTION>
Shareholder Servicing Transfer Agency Unaffiliated
Payable to Advisor at and Other Expenses Banking Directors'
August 31, 2000 Paid to Advisor Charges/(Credits) Fees
--------------------- --------------------- ----------------- ------------
<S> <C> <C> <C> <C>
Strong High-Yield Municipal Bond Fund $26,014 $412,492 ($13,561) $10,665
Strong Short-Term High Yield Municipal Fund 9,249 69,518 4,191 3,022
Strong Municipal Bond Fund 25,230 326,614 (5,133) 6,840
Strong Short-Term Municipal Bond Fund 15,940 190,686 7,550 6,142
</TABLE>
The Advisor owns 99%, 100%, and 100% of the outstanding Advisor Class
shares of the Strong High-Yield Municipal Bond Fund, Strong Short-Term High
Yield Municipal Fund and Strong Municipal Bond Fund, respectively. The
Advisor owns 100% of the outstanding Institutional Class shares of the
Strong Municipal Bond Fund and Strong Short-Term Municipal Bond Fund.
4. Capital Share Transactions
<TABLE>
<CAPTION>
Strong High-Yield Municipal Strong Short-Term High Yield
Bond Fund Municipal Fund
--------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
Aug. 31, 2000 Aug. 31, 1999 Aug. 31, 2000 Aug. 31, 1999
---------------- --------------- --------------- --------------
(Note 1) (Note 1)
<S> <C> <C> <C> <C>
Capital Share Transactions of Each Class of
Shares of the Funds Were as Follows:
INVESTOR CLASS
Proceeds from Shares Sold $ 201,847,580 $ 502,307,378 $ 110,528,131 $ 210,900,967
Proceeds from Reinvestment of Distributions 24,790,708 31,468,598 5,984,624 5,750,550
Payment for Shares Redeemed (371,606,766) (517,242,032) (151,935,441) (132,398,739)
-------------- -------------- -------------- --------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions (144,968,478) 16,533,944 (35,422,686) 84,252,778
ADVISOR CLASS
Proceeds from Shares Sold 15,050 -- 15,019 --
Proceeds from Reinvestment of Distributions 1 -- -- --
Payment for Shares Redeemed -- -- (19) --
-------------- -------------- -------------- --------------
Net Increase in Net Assets from
Capital Share Transactions 15,051 -- 15,000 --
-------------- -------------- -------------- --------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions ($144,953,427) $ 16,533,944 ($35,407,686) $ 84,252,778
============== ============== ============== ==============
Transactions in Shares of Each Class of
the Funds Were as Follows:
INVESTOR CLASS
Sold 22,005,077 48,707,320 11,390,809 20,835,883
Issued in Reinvestment of Distributions 2,698,065 3,057,459 614,318 568,449
Redeemed (40,359,824) (50,294,494) (15,570,456) (13,107,327)
-------------- -------------- -------------- --------------
Net Increase (Decrease) in Shares (15,656,682) 1,470,285 (3,565,329) 8,297,005
ADVISOR CLASS
Sold 1,687 -- 1,560 --
Issued in Reinvestment of Distributions -- -- -- --
Redeemed -- -- (2) --
-------------- -------------- -------------- --------------
Net Increase in Shares 1,687 -- 1,558 --
-------------- -------------- -------------- --------------
Net Increase (Decrease) in Shares of the Fund (15,654,995) 1,470,285 (3,563,771) 8,297,005
============== ============== ============== ==============
</TABLE>
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
August 31, 2000
<TABLE>
<CAPTION>
Strong Municipal Strong Short-Term Municipal
Bond Fund Bond Fund
----------------------------- -----------------------------
Year Ended Year Ended Year Ended Year Ended
Aug. 31, 2000 Aug. 31, 1999 Aug. 31, 2000 Aug. 31, 1999
------------- ------------- -------------- -------------
(Note 1) (Note 1)
<S> <C> <C> <C> <C>
Capital Share Transactions of Each Class of
Shares of the Funds Were as Follows:
INVESTOR CLASS
Proceeds from Shares Sold $ 97,511,732 $ 275,238,572 $ 159,090,226 $ 277,898,076
Proceeds from Reinvestment of Distributions 13,892,617 14,880,671 12,103,035 11,310,921
Payment for Shares Redeemed (185,355,967) (182,161,223) (184,754,970) (168,515,800)
------------- ------------- ------------- -------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions (73,951,618) 107,958,020 (13,561,709) 120,693,197
INSTITUTIONAL CLASS
Proceeds from Shares Sold 15,000 -- 15,000 --
Proceeds from Reinvestment of Distributions -- -- -- --
Payment for Shares Redeemed -- -- -- --
------------- ------------- ------------- -------------
Net Increase in Net Assets from Capital Share
Transactions 15,000 -- 15,000 --
ADVISOR CLASS
Proceeds from Shares Sold 15,025 -- 3,015,025 --
Proceeds from Reinvestment of Distributions -- -- -- --
Payment for Shares Redeemed (25) -- (15,094) --
------------- ------------- ------------- -------------
Net Increase in Net Assets from Capital Share
Transactions 15,000 -- 2,999,931 --
------------- ------------- ------------- -------------
Net Increase (Decrease) in Net Assets from
Capital Share Transactions $ (73,921,618) $107,958,020 $ (10,546,778) $120,693,197
============= ============= ============= =============
Transactions in Shares of Each Class of
the Funds Were as Follows:
INVESTOR CLASS
Sold 10,969,952 27,799,032 16,532,816 27,951,790
Issued in Reinvestment of Distributions 1,564,196 1,507,576 1,255,840 1,137,711
Redeemed (20,913,021) (18,591,274) (19,180,956) (17,004,715)
------------- ------------- ------------- -------------
Net Increase (Decrease) in Shares (8,378,873) 10,715,334 (1,392,300) 12,084,786
INSTITUTIONAL CLASS
Sold 1,718 -- 1,561 --
Issued in Reinvestment of Distributions -- -- -- --
Redeemed -- -- -- --
------------- ------------- ------------- -------------
Net Increase in Shares 1,718 -- 1,561 --
ADVISOR CLASS
Sold 1,739 -- 314,395 --
Issued in Reinvestment of Distributions -- -- -- --
Redeemed (3) -- (1,566) --
------------- ------------- ------------- -------------
Net Increase in Shares 1,736 -- 312,829 --
------------- ------------- ------------- -------------
Net Increase (Decrease) in Shares of the Fund (8,375,419) 10,715,334 (1,077,910) 12,084,786
============= ============= ============= =============
</TABLE>
36
<PAGE>
--------------------------------------------------------------------------------
5. Line of Credit
The Strong Funds have established a line of credit agreement ("LOC") with
certain financial institutions to be used for temporary or emergency
purposes, primarily for financing redemption payments. Combined borrowings
among all participating Strong Funds are subject to a $350 million cap on
the total LOC. For an individual Fund, borrowings under the LOC are limited
to either the lesser of 15% of the market value of the Fund's total assets
or any explicit borrowing limits in the Funds' prospectus. Principal and
interest of each borrowing on the LOC are due not more than 60 days after
the date of the borrowing. Borrowings under the LOC bear interest based on
prevailing market rates as defined in the LOC. A commitment fee of 0.08% per
annum is incurred on the unused portion of the LOC and is allocated to all
participating Strong Funds. At August 31, 2000, there were no borrowings by
the Funds outstanding under the LOC.
6. Investment Transactions
The aggregate purchases and sales of long-term securities, other than
government securities, for the year ended August 31, 2000, were as follows:
Purchases Sales
--------- -----
Strong High-Yield Municipal Bond Fund $ 84,461,849 $212,706,814
Strong Short-Term High Yield Municipal Fund 38,142,449 69,846,836
Strong Municipal Bond Fund 58,273,481 152,880,944
Strong Short-Term Municipal Bond Fund 132,380,994 161,899,994
There were no purchases or sales of long-term government securities for the
year ended August 31, 2000.
7. Income Tax Information
At August 31, 2000, the investment cost, gross unrealized appreciation and
depreciation on investments and capital loss carryovers (expiring in varying
amounts through 2008) for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
Federal Tax Unrealized Unrealized Net Capital
Cost Appreciation Depreciation Depreciation Loss Carryovers
------------ ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Strong High-Yield Municipal Bond Fund $491,109,968 $6,351,947 $58,017,191 $51,665,244 $ 6,053,826
Strong Short-Term High Yield Municipal Fund 148,536,861 264,282 5,949,897 5,685,615 340,267
Strong Municipal Bond Fund 302,537,411 4,122,534 23,131,077 19,008,543 27,308,192
Strong Short-Term Municipal Bond Fund 315,726,857 1,945,184 2,724,108 778,924 15,128,391
</TABLE>
The Strong Municipal Bond Fund and Strong Short-Term Municipal Bond Fund
utilized $291,188 and $55,683, respectively, of their capital loss
carryovers during the year ended August 31, 2000.
The Strong High-Yield Municipal Bond Fund, Strong Short-Term High Yield
Municipal Fund, Strong Municipal Bond Fund and Strong Short-Term Municipal
Bond Fund each realized, on a tax basis, post-October losses through August
31, 2000 of $13,171,308, $2,581,521, $10,619,999 and $1,069,370,
respectively, which are not recognized for tax purposes until the first day
of the following fiscal year.
8. 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 for the
year ended August 31, 2000 is as follows:
<TABLE>
<CAPTION>
Balance of Balance of Dividend
Shares Gross Gross Sales Shares Value Income
Held Purchases and Held Aug. 31, Sept. 1, 1999-
Sept. 1, 1999 and Additions Reductions Aug. 31, 2000 2000 Aug. 31, 2000
------------- ------------- ----------- ------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Strong High-Yield Municipal Bond Fund
-------------------------------------
Strong Municipal Money Market Fund 39,100,000 142,350,000 170,400,000 11,050,000 $11,050,000 $458,014
Strong Short-Term High Yield Municipal Fund
-------------------------------------------
Strong Municipal Money Market Fund 9,500,000 77,800,000 85,800,000 1,500,000 1,500,000 133,972
Strong Municipal Bond Fund
--------------------------
Strong Municipal Money Market Fund 6,500,000 129,300,000 117,600,000 18,200,000 18,200,000 381,937
Strong Short-Term Municipal Bond Fund
-------------------------------------
Strong Municipal Money Market Fund 10,000,000 163,200,000 160,800,000 12,400,000 12,400,000 486,875
</TABLE>
37
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
STRONG HIGH-YIELD MUNICIPAL BOND FUND -- INVESTOR CLASS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
---------------------------------------------------------------------------
Aug. 31, Aug. 31, Aug. 31, Aug. 31, Aug. 31, Dec. 31,
Selected Per-Share Data/(a)/ 2000 1999 1998 1997 1996/(c)/ 1995
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.79 $10.52 $10.09 $ 9.45 $ 9.91 $ 9.29
Income From Investment Operations:
Net Investment Income 0.59 0.58 0.59 0.61 0.44 0.69
Net Realized and Unrealized Gains (Losses) on
Investments (0.88) (0.68) 0.45 0.64 (0.46) 0.62
-----------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (0.29) (0.10) 1.04 1.25 (0.02) 1.31
Less Distributions:
From Net Investment Income/(b)/ (0.59) (0.58) (0.59) (0.61) (0.44) (0.69)
From Net Realized Gains -- (0.05) (0.02) -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.59) (0.63) (0.61) (0.61) (0.44) (0.69)
-----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 8.91 $ 9.79 $10.52 $10.09 $ 9.45 $ 9.91
===================================================================================================================================
Ratios and Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Total Return -2.9% -1.1% +10.5% +13.6% -0.1% +14.6%
Net Assets, End of Period (In Millions) $ 439 $ 635 $ 667 $ 361 $ 238 $ 267
Ratio of Expenses to Average Net Assets Without
Waivers, Absorptions and Fees Paid Indirectly
by Advisor 0.7% 0.7% 0.7% 0.7% 0.7%* 0.8%
Ratio of Expenses to Average Net Assets 0.7% 0.7% 0.7% 0.7% 0.7%* 0.4%
Ratio of Net Investment Income to Average Net Assets 6.4% 5.7% 5.7% 6.2% 6.9%* 7.1%
Portfolio Turnover Rate/(d)/ 17.5% 52.5% 66.5% 92.1% 106.8% 113.8%
</TABLE>
STRONG HIGH-YIELD MUNICIPAL BOND FUND -- ADVISOR CLASS
-----------------------------------------------------------------------------
Year Ended
------------
Aug. 31,
Selected Per-Share Data/(a)/ 2000/(e)/
-----------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 8.92
Income From Investment Operations:
Net Investment Income 0.28
Net Realized and Unrealized Losses on Investments (0.01)
---------------------------------------------------------------------------
Total from Investment Operations 0.27
Less Distributions:
From Net Investment Income/(b)/ (0.28)
---------------------------------------------------------------------------
Total Distributions (0.28)
---------------------------------------------------------------------------
Net Asset Value, End of Period $ 8.91
===========================================================================
Ratios and Supplemental Data
---------------------------------------------------------------------------
Total Return +3.1%
Net Assets, End of Period (In Millions) $0/(f)/
Ratio of Expenses to Average Net Assets Without Waivers
and Absorptions 1.1%*
Ratio of Expenses to Average Net Assets 1.1%*
Ratio of Net Investment Income to Average Net Assets 6.3%*
Portfolio Turnover Rate/(d)/ 17.5%
* 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) In 1996, the Fund changed its fiscal year-end from December to August.
(d) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(e) For the period from March 1, 2000 (Commencement of Class) to August 31,
2000 (Note 1).
(f) Amount is less than $500,000.
See Notes to Financial Statements.
38
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
--------------------------------------------------------------------------------
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND -- INVESTOR CLASS
----------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------
Aug. 31, Aug. 31, Aug. 31,
Selected Per-Share Data/(a)/ 2000 1999 1998/(c)/
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.99 $ 10.17 $10.00
Income From Investment Operations:
Net Investment Income 0.51 0.50 0.37
Net Realized and Unrealized Gains (Losses) on Investments (0.39) (0.18) 0.17
---------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.12 0.32 0.54
Less Distributions:
From Net Investment Income/(b)/ (0.51) (0.50) (0.37)
---------------------------------------------------------------------------------------------------------------
Total Distributions (0.51) (0.50) (0.37)
---------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.60 $ 9.99 $10.17
===============================================================================================================
Ratios and Supplemental Data
---------------------------------------------------------------------------------------------------------------
Total Return +1.3% +3.2% +5.5%
Net Assets, End of Period (In Millions) $ 140 $ 182 $ 101
Ratio of Expenses to Average Net Assets Without Waivers
and Absorptions 0.7% 0.7% 1.0%*
Ratio of Expenses to Average Net Assets 0.6% 0.4% 0.4%*
Ratio of Net Investment Income to Average Net Assets 5.2% 4.9% 5.0%*
Portfolio Turnover Rate/(d)/ 27.9% 22.7% 8.1%
</TABLE>
STRONG SHORT-TERM HIGH YIELD MUNICIPAL FUND -- ADVISOR CLASS
--------------------------------------------------------------
Year Ended
------------
Aug. 31,
Selected Per-Share Data/(a)/ 2000/(e)/
-----------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 9.63
Income From Investment Operations:
Net Investment Income 0.24
Net Realized and Unrealized Losses on investments (0.03)
---------------------------------------------------------------------------
Total from Investment Operations 0.21
Less Distributions:
From Net Investment Income/(b)/ (0.24)
---------------------------------------------------------------------------
Total Distributions (0.24)
---------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.60
===========================================================================
Ratios and Supplemental Data
---------------------------------------------------------------------------
Total Return +2.2%
Net Assets, End of Period (In Millions) $ 0/(f)/
Ratio of Expenses to Average Net Assets Without Waivers
and Absorptions 1.2%*
Ratio of Expenses to Average Net Assets 1.1%*
Ratio of Net Investment Income to Average Net Assets 4.9%*
Portfolio Turnover Rate/(d)/ 27.9%
* 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 period from November 30, 1997 (inception) to August 31, 1998.
(d) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(e) For the period from March 1, 2000 (Commencement of Class) to August 31,
2000 (Note 1).
(f) Amount is less than $500,000.
39
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
--------------------------------------------------------------------------------
STRONG MUNICIPAL BOND FUND-- INVESTOR CLASS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
-----------------------------------------------------------------
Aug. 31, Aug. 31, Aug. 31, Aug. 31, Aug. 31, Dec. 31,
Selected Per-Share Data/(a)/ 2000 1999 1998 1997 1996/(c)/ 1995
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.37 $ 9.96 $ 9.52 $ 8.99 $ 9.52 $ 9.23
Income From Investment Operations:
Net Investment Income 0.50 0.51 0.51 0.50 0.33 0.52
Net Realized and Unrealized Gains (Losses) on Investments (0.59) (0.59) 0.44 0.53 (0.53) 0.51
-----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (0.09) (0.08) 0.95 1.03 (0.20) 1.03
Less Distributions:
From Net Investment Income/(b)/ (0.50) (0.51) (0.51) (0.50) (0.33) (0.54)
In Excess of Net Investment Income -- -- -- -- -- (0.20)
-----------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.50) (0.51) (0.51) (0.50) (0.33) (0.74)
-----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 8.78 $ 9.37 $ 9.96 $ 9.52 $ 8.99 $ 9.52
=============================================================================================================================
Ratios and Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------
Total Return -0.9% -1.0% +10.1% +11.8% -2.1% +11.4%
Net Assets, End of Period (In Millions) $ 274 $ 370 $ 287 $ 232 $ 247 $ 247
Ratio of Expenses to Average Net Assets without Fees Paid
Indirectly by Advisor 0.8% 0.7% 0.7% 0.8% 0.8%* 0.8%
Ratio of Expenses to Average Net Assets 0.8% 0.7% 0.7% 0.8% 0.8%* 0.8%
Ratio of Net Investment Income to Average Net Assets 5.6% 5.1% 5.2% 5.4% 5.4%* 5.4%
Portfolio Turnover Rate/(d)/ 19.2% 22.4% 58.5% 85.0% 172.9% 513.8%
</TABLE>
STRONG MUNICIPAL BOND FUND-- INSTITUTIONAL CLASS
--------------------------------------------------------------------------
Year Ended
--------------
Aug. 31,
Selected Per-Share Data/(a)/ 2000/(e)/
--------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 8.73
Income From Investment Operations:
Net Investment Income 0.04
Net Realized and Unrealized Gains on Investments 0.06
--------------------------------------------------------------------------
Total from Investment Operations 0.10
Less Distributions:
From Net Investment Income/(b)/ (0.04)
--------------------------------------------------------------------------
Total Distributions (0.04)
--------------------------------------------------------------------------
Net Asset Value, End of Period $ 8.79
==========================================================================
Ratios and Supplemental Data
--------------------------------------------------------------------------
Total Return +1.2%
Net Assets, End of Period (In Millions) $0/(f)/
Ratio of Expenses to Average Net Assets 0.4%*
Ratio of Net Investment Income to Average Net Assets 5.5%*
Portfolio Turnover Rate/(d)/ 19.2%
* 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) In 1996, the Fund changed its fiscal year-end from December to August.
(d) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(e) For the period from August 1, 2000 (Commencement of Class) to August
31, 2000 (Note 1).
(f) Amount is less than $500,000.
See Notes to Financial Statements.
40
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
--------------------------------------------------------------------------------
STRONG MUNICIPAL BOND FUND--ADVISOR CLASS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
----------
Aug. 31,
Selected Per-Share Data/(a)/ 2000/(c)/
------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $ 8.64
Income From Investment Operations:
Net Investment Income 0.24
Net Realized and Unrealized Gains on Investments 0.14
------------------------------------------------------------------------------------
Total from Investment Operations 0.38
Less Distributions:
From Net Investment Income/(b)/ (0.24)
------------------------------------------------------------------------------------
Total Distributions (0.24)
------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 8.78
====================================================================================
Ratios and Supplemental Data
------------------------------------------------------------------------------------
Total Return +4.4%
Net Assets, End of Period (In Millions) $ 0/(d)/
Ratio of Expenses to Average Net Assets Without Waivers and Absorptions 1.1%*
Ratio of Expenses to Average Net Assets 1.1%*
Ratio of Net Investment Income to Average Net Assets 5.4%*
Portfolio Turnover Rate/(e)/ 19.2%
<CAPTION>
STRONG SHORT-TERM MUNICIPAL BOND FUND--INVESTOR CLASS
-----------------------------------------------------------------------------------------------------------------------------------
Year Ended
--------------------------------------------------------------
Aug. 31, Aug. 31, Aug. 31, Aug. 31, Aug. 31, Dec. 31,
Selected Per-Share Data/(a)/ 2000 1999 1998 1997 1996/(f)/ 1995
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 9.76 $ 9.95 $ 9.82 $ 9.67 $ 9.77 $ 9.73
Income From Investment Operations:
Net Investment Income 0.46 0.47 0.48 0.49 0.33 0.47
Net Realized and Unrealized Gains (Losses) on Investments (0.12) (0.19) 0.13 0.15 (0.10) 0.04
------------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.34 0.28 0.61 0.64 0.23 0.51
Less Distributions:
From Net Investment Income/(b)/ (0.46) (0.47) (0.48) (0.49) (0.33) (0.47)
-----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.46) (0.47) (0.48) (0.49) (0.33) (0.47)
-----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.64 $ 9.76 $ 9.95 $ 9.82 $ 9.67 $ 9.77
====================================================================================================================================
Ratios and Supplemental Data
------------------------------------------------------------------------------------------------------------------------------------
Total Return +3.6% +2.8% +6.3% +6.7% +2.4% +5.4%
Net Assets, End of Period (In Millions) $ 307 $ 325 $ 211 $ 165 $ 136 $ 133
Ratio of Expenses to Average Net Assets 0.6% 0.6% 0.6% 0.7% 0.7%* 0.8%
Ratio of Net Investment Income to Average Net Assets 4.8% 4.7% 4.8% 5.0% 5.1%* 4.8%
Portfolio Turnover Rate/(e)/ 48.6% 22.7% 15.7% 26.2% 38.0% 226.8%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Tax-exempt for regular federal income tax purposes.
(c) For the period from March 1, 2000 (Commencement of Class) to August 31,
2000 (Note 1).
(d) Amount is less than $500,000.
(e) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(f) In 1996, the Fund changed its fiscal year-end from December to August.
See Notes to Financial Statements.
41
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
--------------------------------------------------------------------------------
STRONG SHORT-TERM MUNICIPAL BOND FUND--INSTITUTIONAL CLASS
---------------------------------------------------------------------
Year Ended
-----------
Aug. 31,
Selected Per-Share Data/(a)/ 2000/(c)/
---------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 9.61
Income From Investment Operations:
Net Investment Income 0.04
Net Realized and Unrealized Gains on Investments 0.03
---------------------------------------------------------------------
Total from Investment Operations 0.07
Less Distributions:
From Net Investment Income/(b)/ (0.04)
---------------------------------------------------------------------
Total Distributions (0.04)
---------------------------------------------------------------------
Net Asset Value, End of Period $9.64
=====================================================================
Ratios and Supplemental Data
---------------------------------------------------------------------
Total Return +0.8%
Net Assets, End of Period (In Millions) $0/(d)/
Ratio of Expenses to Average Net Assets 0.3%*
Ratio of Net Investment Income to Average Net Assets 5.3%*
Portfolio Turnover Rate/(e)/ 48.6%
STRONG SHORT-TERM MUNICIPAL BOND FUND--ADVISOR CLASS
---------------------------------------------------------------------
Year Ended
-----------
Aug. 31,
Selected Per-Share Data/(a)/ 2000/(f)/
---------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 9.58
Income From Investment Operations:
Net Investment Income 0.22
Net Realized and Unrealized Gains on Investments 0.06
---------------------------------------------------------------------
Total from Investment Operations 0.28
Less Distributions:
From Net Investment Income/(b)/ (0.22)
---------------------------------------------------------------------
Total Distributions (0.22)
---------------------------------------------------------------------
Net Asset Value, End of Period $ 9.64
=====================================================================
Ratios and Supplemental Data
---------------------------------------------------------------------
Total Return +2.9%
Net Assets, End of Period (In Millions) $ 3
Ratio of Expenses to Average Net Assets 0.9%*
Ratio of Net Investment Income to Average Net Assets 4.5%*
Portfolio Turnover Rate/(e)/ 48.6%
* 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 period from August 1, 2000 (Commencement of Class) to August 31,
2000 (Note 1).
(d) Amount is less than $500,000.
(e) Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
(f) For the period from March 1, 2000 (Commencement of Class) to August 31,
2000 (Note 1).
See Notes to Financial Statements.
42
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and Board of Directors of the
Strong Municipal Income Funds
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Strong High-Yield Municipal Bond
Fund, Inc., Strong Short-Term High Yield Municipal Fund (one of the portfolios
constituting the Strong Municipal Funds, Inc.), Strong Municipal Bond Fund, Inc.
and Strong Short-Term Municipal Bond Fund, Inc. (all four of the portfolios
collectively referred to herein as the "Strong Municipal Income Funds") at
August 31, 2000, the results of each of their operations, the changes in each of
their net assets and the financial highlights for the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Strong Municipal
Income Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
October 6, 2000
43
<PAGE>
NOTES
--------------------------------------------------------------------------------
44
<PAGE>
Directors
Richard S. Strong
Willie D. Davis
Stanley Kritzik
Neal Malicky
Marvin E. Nevins
William F. Vogt
Officers
Richard S. Strong, Chairman of the Board
Elizabeth N. Cohernour, Vice President and Secretary
Cathleen A. Ebacher, Vice President and Assistant Secretary
Susan A. Hollister, Vice President and Assistant Secretary
Dennis A. Wallestad, Vice President
Thomas M. Zoeller, Vice President
John W. Widmer, Treasurer
Rhonda K. Haight, Assistant Treasurer
Investment Advisor
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
Distributor
Strong Investments, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
Custodian
Firstar Bank, N.A.
P.O. Box 701, Milwaukee, Wisconsin 53201
Transfer Agent and Dividend-Disbursing Agent
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
Independent Accountants
PricewaterhouseCoopers LLP
100 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
Legal Counsel
Godfrey & Kahn, S.C.
780 North Water Street, Milwaukee, Wisconsin 53202
<PAGE>
For a prospectus containing more complete information, including
management fees and expenses, please call 1-800-368-1030. Please read it
carefully before investing or sending money. This report does not
constitute an offer for the sale of securities. Strong Funds are offered
for sale by prospectus only. Strong Investments, Inc. RT7076-0900
To order a free prospectus kit, call
1-800-368-1030
To learn more about our funds, discuss an existing
account, or conduct a transaction, call
1-800-368-3863
If you are a Financial Professional, call
1-800-368-1683
Visit our web site at
www.eStrong.com
STRONG INVESTMENTS
P.O. Box 2936
[LOGO] Milwaukee, Wisconsin 53201
AMUNI
