<PAGE> 1
<PAGE> 1
ANNUAL REPORT
THE STRONG
GROWTH AND INCOME FUNDS
[PHOTO OF ANONYMOUS MAN AND BOY]
THE STRONG ASSET ALLOCATION FUND
THE STRONG AMERICAN UTILITIES FUND
THE STRONG TOTAL RETURN FUND
[STRONG LOGO]
DECEMBER 31, 1994
<PAGE> 2
SHAREHOLDER PRIVILEGES*
TELEPHONE PURCHASE
Make additional investments from $50 to $25,000 into any Strong Fund by calling
us toll-free at 1-800-368-3863.
TELEPHONE EXCHANGE
If your financial goals change, you can exchange between any of the Strong
Funds free of charge.
TELEPHONE REDEMPTION
You can call toll-free to redeem your mutual fund shares at any time. Your
shares will be redeemed no later than the close of the next business day.
AUTOMATIC INVESTMENT PLAN
This plan allows you to set up regular transfers from your bank checking or NOW
account to your Strong Funds account. The minimum amount per transfer is $50.
PAYROLL DIRECT DEPOSIT PLAN
You can automatically transfer all or a portion of your net pay at each pay
period. This eliminates the delay of depositing paychecks to your bank and then
sending a check through the mail to Strong Funds.
AUTOMATIC EXCHANGE PLAN
This plan allows you to exchange money from one Strong Fund to another. For
example, you may want to set up automatic exchanges from a money market fund to
an equity fund. The minimum amount per exchange is $50.
NO MINIMUM INVESTMENT PROGRAM
The Funds will waive the minimum initial investment for investors using the
Automatic Investment Plan.
For more information about these privileges, call us at 1-800-368-3863.
To reduce the volume of mail you receive, only one copy of certain materials,
such as prospectuses and shareholder reports, is mailed to your household.
Please call 1-800-368-3863 if you wish to receive additional copies, free of
charge.
*Each Fund reserves the right to terminate or modify any of these privileges.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
MESSAGE FROM THE CHAIRMAN . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT REVIEWS
The Strong Asset Allocation Fund . . . . . . . . . . . . . . . . . . . . 4
The Strong American Utilities Fund . . . . . . . . . . . . . . . . . . . 6
The Strong Total Return Fund . . . . . . . . . . . . . . . . . . . . . . 8
FINANCIAL INFORMATION
Historical Investment Returns . . . . . . . . . . . . . . . . . . . . . . 10
Summary of Investments . . . . . . . . . . . . . . . . . . . . . . . . . 10
Historical Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Schedules of Investments in Securities
The Strong Asset Allocation Fund . . . . . . . . . . . . . . . . . . . 12
The Strong American Utilities Fund . . . . . . . . . . . . . . . . . . 15
The Strong Total Return Fund . . . . . . . . . . . . . . . . . . . . . 16
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . 19
Statements of Assets and Liabilities . . . . . . . . . . . . . . . . . . 19
Statements of Changes in Net Assets . . . . . . . . . . . . . . . . . . . 20
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . 21
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
REPORT OF INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
<PAGE> 4
Message from the Chairman
Dear Strong Funds Investor:
We are pleased to report that 1994, our twentieth year, was extremely
successful. In a challenging investment environment, our results were, once
again, very satisfying, with many of our funds being among the top performers
in their categories.
Mutual fund assets under management grew past $8 billion, and active accounts
passed the 500,000 mark.
Morningstar, Inc., a nationally recognized authority on mutual funds, assigns
"star" ratings to funds, with 1 star as the lowest rating and 5 stars the
highest. Of the twelve Strong Funds that Morningstar currently rates, all have
at least a 3-star rating, and many carry 4 or 5 stars. We believe this
objective, unbiased recognition of Strong Funds speaks extremely well for the
talent and strength of our firm's investment department.
[PHOTO OF RICHARD S. STRONG]
We are very encouraged by the shift that has occurred in the Congress as a
result of the 1994 elections. Looking ahead, we believe this sweeping change
will have a number of important implications. Among them:
- - -Federal Reserve Board policies should be supported, not hampered, by Congress.
- - -The U.S. dollar may once again become a bastion of stability and confidence.
2
<PAGE> 5
- - -Inflation should trend downward over time.
- - -Entrepreneurial initiatives, investments and business should receive positive,
rather than negative, legislative treatment.
With another year of solid investment results behind us and a favorable
investment climate ahead, we are very confident in our future growth potential.
To fully realize this potential, we forged ahead this past year and implemented
strategic actions aimed at providing you with superior investment results, a
wide and expanding range of investment products, and exceptional service.
First and foremost, our strategy relies on having very talented and dedicated
people who are deeply committed to you and the stewardship of your investments.
Our team enjoys a dynamic balance of successful and experienced portfolio
managers, combined with our own rising young talent. Simply put, we believe
that we have developed an excellent investment management team to serve you.
To further enhance the effectiveness of our entire organization, we made
several significant additions to our management and administrative capabilities
in 1994. We were very pleased to have John Dragisic join us as Vice Chairman.
John brings with him many successful years of general management experience and
a unique perspective on the company as a former member of the Strong Funds
Board. Among several other new positions, we were particularly pleased with the
appointment of Rochelle Lamm Wallach as President of Strong Advisory Services,
a new unit that will lead our efforts in today's critically important
retirement and financial intermediary markets. These appointments, and the
others we have made during the past year, will contribute greatly to the
continued growth and success we expect in our third decade.
These are important changes for you, because they not only strengthen the
management of your Fund's advisor, but they also make it possible for us to
continue building on our strengths with better service and a wider array of
investment alternatives.
With these vital resources now in place, we look forward to the coming year
with great confidence. We thank you for your continued support.
Sincerely,
/s/ RICHARD S. STRONG
Richard S. Strong
Chairman
3
<PAGE> 6
The Strong Asset Allocation Fund
On December 20, 1994, shareholders of the Strong Investment Fund approved
several changes proposed by the Fund's Board of Directors. Key changes,
effective December 28, 1994, included:
- - -Changing the name of the Fund to the "Strong Asset Allocation Fund" and
changing its investment objective to "formerly known as the Strong Investment
Fund ...seeks high total return consistent with reasonable risk over the long
term"; and
- - -The amendment or adoption of certain investment limitations and the
elimination of others. These changes were designed to help the Fund operate
more efficiently by bringing its investment limitations into conformity with
those expected to become standard for all Strong Funds.
The Board also tightened the Fund's asset allocation ranges, and increased its
flexibility regarding investment in foreign securities and securities rated
below investment grade.
Overall, we expect these changes may benefit shareholders in two ways. First,
they enable the Fund to diversify holdings more broadly, which we believe will
increase the Fund's return potential without a substantial increase in risk.
Second, the Fund will be able to make greater use of Strong Funds' talented
team of domestic and international portfolio managers.
We would like to thank shareholders for voting their proxies, and we appreciate
your confidence in our investment expertise.
By allocating assets among domestic and international stocks, bonds, and
short-term securities-and by adjusting the asset mix in response to changing
market conditions-the Strong Asset Allocation Fund seeks high total return
consistent with reasonable risk over the long term.
GROWTH AND INCOME FUNDS
Strong Asset Allocation Fund
<TABLE>
<CAPTION>
Growth of an Assumed $10,000 Investment
from 12/30/81 to 12/31/94
Strong Asset Asset Allocation S&P 500 Stock
Allocation Fund Index Index
<S> <C> <C> <C>
12/81 10,000 10,000 10,000
12/82 13,320 12,374.18 12,154.66
12/83 19,344 14,118.84 14,896.94
12/84 21,234 15,605.33 15,831.53
12/85 25,346 19,226.07 20,854.35
12/86 29,819 22,122.90 24,746.79
12/87 29,734 23,442.18 26,046.18
12/88 32,467 26,057.93 30,372.01
12/89 36,104 31,267.38 39,995.77
12/90 37,107 32,579.22 38,754.21
12/91 44,393 38,960.09 50,561.18
12/92 45,824 41,627.90 54,412.10
12/93 52,469 45,207.81 59,896.53
12/94 51,679 45,314.15 60,687.76
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
through 12/31/94
<S> <C>
Since inception on 12/30/81 13.47%
10-year 9.30%
5-year 7.44%
3-year 5.20%
1-year -1.51%
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at the Fund's inception, with similar investments
in the Standard & Poor's 500 Stock Index ("S&P 500"), an unmanaged index
generally representative of the U.S. stock market, and the Asset Allocation
Index, a combination of three unmanaged indexes. The Asset Allocation Index is
composed of 40% S&P 500, 40% Salomon Brothers Broad Investment-Grade Bond Index
("Salomon BIG"), a market-capitalization weighted index generally
representative of government, mortgage, and investment-grade corporate
securities, and 20% Salomon Brothers 3-month Treasury Bill Index. Results
include the reinvestment of all dividends and capital gains. Previous
performance comparisons have shown the Fund compared to an equivalent
investment in the Salomon BIG Index. We have replaced this index with the Asset
Allocation Index because we believe it more accurately reflects the Fund's
asset allocation. For 1994, the Asset Allocation Index's total return was 0.24%
and the Salomon BIG Index's total return was -2.85%. Source for the index data
is Micropal. 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. Please see the Historical Investment Returns section for
more information on the Fund's performance
4
<PAGE> 7
A DIFFICULT YEAR FOR STOCK AND BOND INVESTORS
The Federal Reserve raised short-term rates repeatedly in 1994 in response to
stronger-than-expected economic activity and the potential for higher
inflation. These increases tended to make stocks and longer-term bonds less
attractive. As a result, many stock indexes finished the year in negative
territory, and only short-term bonds-those maturing in three years or
less-posted a positive total return.
OUR DEFENSIVE STRATEGY
As 1994 began, the economy's strong growth had led us to anticipate rising
short-term rates. We therefore entered the year defensively positioned, with a
greater-than-normal weighting in short-term investments, and reduced exposure
to stocks and longer-term bonds. In fact, during the second quarter of 1994,
short-term investments approached 40% of net assets.
Following the severe market declines in the first half of 1994, we became more
constructive on both stocks and bonds. Securities markets tend to be
discounting mechanisms, meaning that they anticipate conditions beyond the near
term. We believed that the Federal Reserve's tighter monetary policy would
eventually moderate the economy's growth rate, and thereby relieve the pressure
for higher long-term rates. Consequently, we implemented a more aggressive
asset allocation by gradually reducing our weighting in short-term securities,
modestly extending the duration of the bond portfolio, and shifting equity
assets into growth-oriented sectors, such as technology.
While the Fund experienced a total return of -3.95% for the first six months
of 1994, performance improved in the second half, resulting in a total return
of -1.51% for the year ended December 31.
<TABLE>
<CAPTION>
PIE CHART
ASSET BASED ON NET
ASSETS AS OF 12/31/94 ALLOCATION
<S> <C>
Short-term Investments 28.5%
Stocks 37.5%
Bonds 34.0%
</TABLE>
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio. The bonds category maintains no maturity limitation and
generally has an average duration of 2.0 or higher. The securities in the
short-term category have effective maturities of three years or less, and the
category generally has an average duration of 2.0 or lower. Duration is a
measure of sensitivity to interest rates.
GREATER POTENTIAL IN 1995
While we expect 1995 to be more rewarding for investors than 1994, near-term
caution is still warranted. We expect the Federal Reserve to maintain a
restrictive bias until clearer signs of an economic slowdown emerge. However,
when the end of the tightening cycle comes into view, we expect improvement in
both the stock and bond markets. While the exact timing of such a turnaround is
impossible to predict, we believe it may begin to occur as soon as the second
quarter of 1995.
We appreciate your confidence in the Strong Asset Allocation Fund, and we look
forward to serving your investment needs in the years to come.
[PHOTO OF BRADLEY C. TANK]
Sincerely,
/s/ BRADLEY C.TANK
Bradley C. Tank
Lead Portfolio Manager
5
<PAGE> 8
THE STRONG AMERICAN UTILITIES FUND
The Strong American Utilities Fund seeks a combination of current income and
capital appreciation by investing primarily in the stocks of U.S. telephone,
electric, and natural gas utilities, as well as selected energy companies.
A CHALLENGING YEAR FOR EQUITY MANAGERS
The past year was a difficult one for equities in general and for interest
rate-sensitive utility stocks in particular. On six separate occasions during
1994, the Federal Reserve raised short-term interest rates in an effort to slow
the economy's growth and head off a potential rise in inflation. Stock prices
declined in response, and utility stocks tended to decline more steeply than
the general market average. The Fund's total return in 1994 was -2.61%,
compared to -7.94% for the S&P Utilities Index. The overall stock market, as
measured by the S&P 500, posted a total return of 1.32% for the year.
As of 12/30/94
- - --------------
30-DAY
ANNUALIZED
CURRENT
YIELD
3.93%
Preservation of capital was a priority during the year because of the
challenging stock market conditions. Your Fund's investment flexibility allowed
us to minimize losses by decreasing holdings in electric utilities and adding
to positions in telecommunications and energy stocks. In addition, strategic
shifts within each sector and careful stock selection were important factors.
- - - Increased weighting in energy stocks. We normally use energy stocks to
complement and balance the portfolio. Generally, energy stocks are not as
sensitive to changes in interest rates as the utility groups, and tend to
have different market cycles. Further, they may act as a hedge against
inflation, and potentially profit from global disruptions that might hurt
other areas of the stock market. We increased our weighting in energy
stocks from 7.3% of net assets at the beginning of the year to 18.3% at
year-end.
- - - Emphasis on telecommunications stocks. We entered 1994 with 45.4% in
electric utilities and 28.5% in telecommunications. By mid-year, these
weightings were reversed, and at year-end, electrics represented 25.2% and
telecommunications 3%. We continue to believe telecommunications stocks
provide the greatest opportunity for growth among our market sectors. Major
technological advances are allowing these companies to introduce new
services while reducing operating expenses.
During the second half of the year, we purchased some selected electrics to
help the portfolio benefit from a leveling of interest rates and an improvement
in the market climate for utilities. These purchases included CMS Energy, Duke
Power, PECO Energy and Boston Edison.
Overall, our strategy during the year resulted in good performance for the Fund
relative to its competition. The Fund was ranked #5 for total return among the
66 utility funds tracked by Lipper Analytical Services for the 1-year period
ended 12/31/94.*
FIVE LARGEST STOCK HOLDINGS
(based on net assets as of 12/31/94)
<TABLE>
<CAPTION>
% of Net
Company Description Assets
<S> <C> <C>
Ameritech Telecommunications 11.0%
Corporation
Southwestern Bell Telecommunications 7.8%
Corporation
Bell Atlantic Telecommunications 7.7%
Corporation
AT&T Corporation Telecommunications 7.0%
GTE Corporation Telecommunications 7.0%
</TABLE>
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
6
<PAGE> 9
<TABLE>
<CAPTION>
[Bar Graph]
INDUSTRY ALLOCATION
(based on net assets as of 12/31/94)
<S> <C>
Telecommunications 43.3%
Electric Utilities 25.2%
Energy Related 18.3%
Gas Utilities 6.5%
Electric & Gas Utilities 1.6%
Other Utilities 1.0%
Petroleum 0.1%
</TABLE>
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
POTENTIAL INCREASED DEMAND FOR UTILITY STOCKS
We continue to expect good long-term investment performance from financially
strong, income-oriented equities. We believe dividends will be far more
important to equity performance in the coming years than they were in the
1980s, when capital gains were an unusually large proportion of total return.
[PHOTO OF WILLIAM H. REAVES]
Therefore, we would expect the market to continue to value the
income-generating potential of utility stocks.
Also, far-reaching legislative and regulatory changes are underway for
utilities. Some of these changes may offer well-managed, well-positioned
companies new opportunities for growth and profit. For experienced equity
managers who understand the regulatory process and its effect on particular
companies, we believe there will be added opportunity to identify the emergence
of "winners" and "losers" in the period ahead.
We appreciate your investment with us, and we look forward to earning your
continued confidence.
Sincerely,
/s/ William H. Reaves
William H. Reaves
Portfolio Manager
<TABLE>
<CAPTION>
Growth of an Assumed $10,000 Investment
from 7/1/93 to 12/31/94
Strong American S&P Utilities S&P 500 Stock
Utilities Fund Index Index
<S> <C> <C> <C>
6/93 10,000 10,000 10,000
7/93 10,170 10,231.50 9,959.80
8/93 10,760 10,726.91 10,337.67
9/93 10,801 10,700.31 10,258.38
10/93 10,821 10,681.37 10,470.63
11/93 10,370 10,142.92 10,370.85
12/93 10,450 10,090.48 10,496.23
1/94 10,573 10,155.66 10,853.10
2/94 10,173 9,581.97 10,558.55
3/94 9,894 9,257.05 10,098.20
4/94 10,257 9,489.31 10,227.65
5/94 10,029 9,232.34 10,395.49
6/94 10,020 9,254.95 10,140.70
7/94 10,483 9,565.64 10,473.72
8/94 10,493 9,536.47 10,903.14
9/94 10,278 9,298.53 10,636.56
10/94 10,523 9,371.43 10,875.56
11/94 10,182 9,237.14 10,479.47
12/94 10,178 9,288.87 10,634.88
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns*
through 12/31/94
<S> <C> <C>
Since inception on 7/1/93 1.18%
1-year -2.61%
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with similar investments in the
Standard and Poor's 500 Stock Index ("S&P 500") and the Standard and Poor's
Utilities Index ("S&P Utilities"). The S&P 500 is an unmanaged index generally
representative of the U.S. stock market. The S&P Utilities is an unmanaged
index generally representative of U.S. utility stocks. Results include the
reinvestment of all dividends and capital gains. Source for the index data is
Micropal. Performance is historical and does not represent future results.
Investment returns and principal value vary, and you may have a gain or loss
when you sell Fund shares. Please see the Historical Investment Returns section
for more information about the Fund's performance record.
*From time to time, the Fund's advisor has waived its management fee and
absorbed Fund expenses, which has resulted in higher returns. Rankings are
historical and do not represent future results.
7
<PAGE> 10
THE STRONG TOTAL RETURN FUND
The Strong Total Return Fund seeks a combination of income and capital
appreciation that will result in the highest total return while assuming
reasonable risks. The Fund's flexible charter enables it to invest in any
combination of stocks, bonds, and short-term cash equivalents.
A CHALLENGING YEAR FOR STOCKS AND BONDS
Stronger-than-expected economic growth and rising interest rates made 1994 a
challenging year for many investors. The Federal Reserve raised the federal
funds rate six times in an effort to slow economic growth and head off a
potential rise in inflation. Although corporate earnings grew strongly
throughout the year, investors' expectations of rising rates tended to make
stocks and bonds less attractive, generating a decline in bond prices and flat
returns for the overall stock market. Currently, we believe that pressure on
the markets from the Federal Reserve is in the final stages, creating a much
more favorable investment environment later in 1995 and into 1996.
[PHOTO OF TWO ANONYMOUS WOMEN]
SPOTLIGHTING GROWTH OPPORTUNITIES
Beginning in late 1993 and extending into early 1994, we structured the
portfolio to reflect our expectation of rising rates. We shifted assets out of
interest rate-sensitive stocks-including banks, insurance companies, real
estate investment trusts (REITS), and consumer durable companies-and into
industrial America. Sectors we emphasized included metals, building, chemical
and manufacturing firms. These decisions were designed to help the Fund benefit
from the strong earnings growth that these types of companies tend to
experience when the economy is expanding rapidly.
As the year progressed, industrial stocks moved up in price, and we took
profits in those that had become fully valued, based on our earnings
projections. Starting in the summer, we began increasing our positions in
growth stocks, most notably in the technology, health care and specialty
retailing sectors. Many such stocks had underperformed the market for most of
the year and had become very attractive according to our valuation research.
As the year drew to a close, we continued to invest in companies whose sales
and earnings were growing at above-average rates, and appeared to be less
threatened by a possible slower economy in 1995. In addition, we took new
positions in utility stocks and Treasury bonds, which we believed were paying
attractive yields and offered substantial capital gain potential in a falling
interest rate environment.
8
<PAGE> 11
<TABLE>
<CAPTION>
[Pie Chart]
ASSET ALLOCATION
(based on net assets as of 12/31/94)
<S> <C>
Common & Preferred Stocks including Convertibles 78.2%
Cash Equivalents 9.5%
Corporate Bonds including Convertibles 6.6%
U.S. Government Issues 5.7%
</TABLE>
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
A POSITIVE OUTLOOK
While 1994 was a difficult year, difficult times often create opportunity. We
believe several stock market sectors-particularly interest rate-sensitive and
growth stocks-are poised to benefit from a number of positive factors.
- - -Financial markets appear to be anticipating that interest rates will peak
soon, with a possible decline sometime in the coming year.
- - -We may have seen the end of the decline in the dollar, as attractive
interest rates, low inflation, and good economic growth make U.S. markets
more attractive to foreign investors.
- - -Certain American firms should be well positioned to benefit from the passage
of GATT and NAFTA, and trade balances could narrow in favor of the United
States.
- - -If the economy slows in 1995 as we expect, growth stocks should become
increasingly attractive to investors, as suggested by their strength in the
last few months of 1994.
[PHOTO OF RONALD C. OGNAR AND IAN J. ROGERS]
Overall, we anticipate a positive environment for the Fund in 1995. Thank you
for your confidence. We look forward to serving your investment needs in the
future.
Sincerely,
/s/ RONALD C. OGNAR
Ronald C. Ognar
Portfolio Manager
/s/ IAN J. ROGERS
Ian J. Rogers
Portfolio Manager
<TABLE>
<CAPTION>
Strong Total Return Fund
Growth of an Assumed $10,000 Investment
from 12/30/81 to 12/31/94
Strong Total S&P 500 Stock
Return Fund Index
<S> <C> <C>
12/81 10,000 10,000
12/82 13,250 12,154.66
12/83 18,720 14,896.94
12/84 20,685 15,831.53
12/85 25,936 20,854.35
12/86 31,121 24,746.79
12/87 33,002 26,046.18
12/88 38,141 30,372.01
12/89 39,140 39,995.77
12/90 36,367 38,754.21
12/91 48,578 50,561.18
12/92 48,844 54,412.10
12/93 59,851 59,896.53
12/94 59,027 60,687.76
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
through 12/31/94
----------------------------
<S> <C>
Since inception on 12/30/81 14.63%
10-year 11.06%
5-year 8.56%
3-year 6.71%
1-year -1.38%
</TABLE>
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Standard & Poor's 500 Stock Index, an unmanaged index generally representative
of the U.S. stock market. Results include the reinvestment of all dividends and
capital gains. Source for the index data is Micropal. Performance is historical
and does not represent future results. Investment returns and principal value
vary, and you may have a gain or loss when you sell Fund shares. Please see the
Historical Investment Returns section for more information about the Fund's
performance record.
9
<PAGE> 12
HISTORICAL INVESTMENT RETURNS(1)
<TABLE>
<CAPTION>
STRONG STRONG AMERICAN STRONG
ASSET ALLOCATION FUND UTILITIES FUND TOTAL RETURN FUND
--------------------- --------------- -----------------
<S> <C> <C> <C>
1982 + 33.2%(2) -- + 32.5%(2)
1983 + 45.2% -- + 41.3%
1984 + 9.8% -- + 10.5%
1985 + 19.4% -- + 25.4%
1986 + 17.6% -- + 20.0%
1987 - 0.3% -- + 6.0%
1988 + 9.2% -- + 15.6%
1989 + 11.2% -- + 2.6%
1990 + 2.8% -- - 7.1%
1991 + 19.6% -- + 33.6%
1992 + 3.2% -- + 0.6%
1993 + 14.5% + 4.5%(2) + 22.5%
1994 - 1.5% - 2.6% - 1.4%
Since Inception + 416.8% + 1.8% + 490.3%
Average Annual Total Return
-One-Year Period Ended December 31, 1994 - 1.5% - 2.6% - 1.4%
-Five-Year Period Ended December 31, 1994 + 7.4% -- + 8.6%
-Ten-Year Period Ended December 31, 1994 + 9.3% -- + 11.1%
-Inception Date to December 31, 1994(2) + 13.5% + 1.2 + 14.6%
</TABLE>
YIELD INFORMATION
<TABLE>
<CAPTION>
Strong American
Utilities Fund
---------------
<S> <C>
Annualized for the 30-Day Period Ended December 30, 1994 3.93%
</TABLE>
SUMMARY OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
($ In Thousands)
Strong
Asset Allocation Fund
---------------------
<S> <C>
Common and Preferred Stocks including Convertibles $ 93,170 37%
Corporate Bonds and Non-Agency Issues 98,914 40
United States Government and Agency Issues 37,926 15
Cash Equivalents and Other Assets and Liabilities, Net 18,637 8
-------- ---
Net Assets $248,647 100%
======== ===
<CAPTION>
Strong American
Utilities Fund
---------------
Common Stocks $ 36,443 96%
Cash Equivalents and Other Assets and Liabilities, Net 1,501 4
-------- ---
Net Assets $ 37,944 100%
======== ===
<CAPTION>
Strong
Total Return Fund
-----------------
Common and Preferred Stocks including Convertibles $474,443 78%
Corporate Bonds including Convertibles 39,952 7
United States Government Issues 34,302 6
Cash Equivalents and Other Assets and Liabilities, Net 58,117 9
-------- ---
Net Assets $606,814 100%
======== ===
</TABLE>
(1) All performance is historical and does not represent future results.
Investment returns and principal value will vary, and you may have a gain or
loss when you sell shares. Returns assume reinvestment of all dividend and
capital gain distributions.
(2) Respective inception dates are December 30, 1981 for Strong Asset
Allocation Fund and Strong Total Return Fund, and July 1, 1993 for Strong
American Utilities Fund.
10
<PAGE> 13
HISTORICAL RECORD
The following table illustrates an assumed $10,000 investment in each Strong
Growth and Income Fund on the date of the initial public offering, with income
dividends, capital gains and other distributions reinvested in additional
shares.
<TABLE>
<CAPTION>
CAPITAL GAINS
NET ASSET AND OTHER INCOME GROWTH OF
VALUE PER DISTRIBUTIONS DIVIDENDS AN INITIAL $10,000
SHARE PER SHARE PER SHARE INVESTMENT
---------- ------------- --------- -------------------
<S> <C> <C> <C> <C>
Strong Asset Allocation Fund:
* December 30, 1981 $10.00 $-- $-- $10,000
December 31, 1982 13.32 -- -- 13,320
December 31, 1983 17.48 .90 .43 19,344
December 31, 1984 17.62 1.10 .31 21,234
December 31, 1985 20.12 .04 .75 25,346
December 31, 1986 22.18 .42 .95 29,819
December 31, 1987 17.60 2.95 1.78 29,734
December 31, 1988 17.57 .23 1.38 32,467
December 31, 1989 18.41 .14 .97 36,104
December 31, 1990 17.50 -- 1.38 37,107
December 31, 1991 19.68 .20 .97 44,393
December 31, 1992 18.49 .94 .87 45,824
December 31, 1993 19.06 1.24 .82 52,469
December 31, 1994 17.91 .16 .70 51,679
Strong American Utilities Fund:
* July 1, 1993 $10.00 $-- $-- $10,000
December 31, 1993 10.19 .08 .18 10,450
December 31, 1994 9.46 -- .46 10,178
Strong Total Return Fund:
* December 30, 1981 $10.00 $-- $-- $10,000
December 31, 1982 13.25 -- -- 13,250
December 31, 1983 16.48 1.13 .52 18,720
December 31, 1984 16.35 1.29 .37 20,685
December 31, 1985 19.56 .20 .58 25,936
December 31, 1986 21.61 1.04 .70 31,121
December 31, 1987 18.37 3.17 1.65 33,002
December 31, 1988 18.96 .25 1.96 38,141
December 31, 1989 17.72 .51 1.31 39,140
December 31, 1990 15.34 -- 1.14 36,367
December 31, 1991 20.24 -- .22 48,578
December 31, 1992 20.17 -- .17 48,844
December 31, 1993 24.30 .05 .33 59,851
December 31, 1994 23.62 -- .34 59,027
</TABLE>
*Date of Initial Public Offering
11
<PAGE> 14
SCHEDULE OF INVESTMENTS IN SECURITIES December 31, 1994
STRONG ASSET ALLOCATION FUND
<TABLE>
<CAPTION>
Shares or Value
Principal Amount (Note 2)
<S> <C>
COMMON STOCKS 36.6%*
UNITED STATES 32.0%*
AIRCRAFT & AEROSPACE 0.2%*
12,700 Boeing Company $ 593,725
AUTOMOTIVE RELATED 0.3%*
45,000 Masland Corporation 703,125
BANKING 1.2%*
16,000 BankAmerica Corporation 632,000
28,000 Boatmen's Bancshares, Inc. 759,500
18,000 Chase Manhattan Corporation 618,750
39,500 West One Bancorp 1,046,750
---------
3,057,000
CELLULAR TELEPHONES 0.4%*
37,500 AirTouch Communications + 1,092,187
COMMUNICATIONS, LODGING & ENTERTAINMENT 1.3%*
40,000 Hospitality Franchise Systems, Inc. + 1,060,000
45,800 Tele-Communications, Inc. + 996,150
30,361 Viacom International, Inc. + 1,233,416
---------
3,289,566
COMPUTERS & SOFTWARE 2.3%*
40,000 Adaptec, Inc. + 945,000
24,800 BMC Software, Inc. + 1,410,500
35,500 Cisco Systems, Inc. + 1,246,937
27,500 Compaq Computer Corporation + 1,086,250
18,000 Microsoft Corporation + 1,100,250
---------
5,788,937
CONGLOMERATES 0.5%*
23,500 Tyco International, Ltd. 1,116,250
CONSTRUCTION 0.7%*
37,000 Foster Wheeler Corporation 1,100,750
34,000 USG Corporation + 663,000
---------
1,763,750
CONSUMER RELATED PRODUCTS 3.3%*
12,000 The Gillette Company 897,000
45,000 IHOP Corporation + 1,226,250
30,000 Mattel, Inc. 753,750
28,000 McDonald's Corporation 819,000
15,000 NIKE, Inc. Class B 1,119,375
22,500 Premark International, Inc. 984,375
100,000 Ryan's Family Steak Houses, Inc. + 750,000
15,000 V.F. Corporation 729,375
54,000 Whitman Corporation 931,500
---------
8,210,625
ELECTRIC & GAS UTILITIES 1.1%*
20,500 The Detroit Edison Company 535,563
40,000 NIPSCO Industries, Inc. 1,190,000
33,000 Sonat, Inc. 924,000
---------
2,649,563
ELECTRICAL & ELECTRONICS 1.9%*
58,000 Dallas Semiconductor Corporation + 964,250
13,300 Hewlett-Packard Company 1,328,337
20,700 Intel Corporation 1,322,213
15,300 Texas Instruments, Inc. 1,145,588
---------
4,760,388
</TABLE>
<TABLE>
<CAPTION>
Shares or Value
Principal Amount (Note 2)
<S> <C>
ENERGY RELATED 2.1%*
35,000 Apache Corporation $ 875,000
25,000 Cabot Corporation 709,375
15,500 Exxon Corporation 941,625
10,000 Mobil Corporation 842,500
27,500 Phillips Petroleum Company 900,625
30,000 Unocal Corporation 817,500
---------
5,086,625
ENVIRONMENTAL 0.3%*
53,000 Dames & Moore, Inc. 781,750
FARM MACHINERY & EQUIPMENT 0.5%*
56,000 Case Corporation 1,204,000
FINANCIAL SERVICES 1.1%*
48,500 Green Tree Financial Corporation 1,473,187
35,000 Student Loan Marketing Association 1,137,500
---------
2,610,687
FOOD, BEVERAGE & TOBACCO 1.3%*
25,000 CPC International, Inc. 1,331,250
28,500 PepsiCo, Inc. 1,033,125
31,000 Universal Foods Corporation 852,500
---------
3,216,875
FOREST & PAPER PRODUCTS 0.3%*
17,500 The Mead Corporation 850,938
INDUSTRIAL 0.3%*
25,000 Snap-on Tools Corporation 831,250
INSURANCE & INSURANCE RELATED 0.6%*
36,000 Equitable of Iowa Companies 1,017,000
16,000 Travelers Corporation 520,000
---------
1,537,000
MANUFACTURING 0.9%*
38,000 Briggs & Stratton Corporation 1,244,500
21,100 General Electric Company 1,076,100
---------
2,320,600
MEDICAL SERVICES 1.8%*
42,500 Community Health Systems, Inc. + 1,158,125
52,000 FHP International Corporation + 1,339,000
36,000 Homedco Group, Inc. + 1,354,500
32,000 Humana, Inc. + 724,000
---------
4,575,625
MEDICAL SUPPLIES 0.4%*
20,000 Johnson & Johnson 1,095,000
METALS & MINING 1.1%*
26,037 American Barricks Resources Corporation 579,323
64,000 Freeport-McMoRan, Inc. 1,136,000
77,200 Santa Fe Pacific Gold Corporation + 993,950
---------
2,709,273
OIL FIELD SERVICES & EQUIPMENT 0.3%*
30,000 Helmerich & Payne, Inc. 768,750
PETROLEUM 0.6%*
14,000 Pennzoil Company 617,750
7,000 Royal Dutch Petroleum Company 752,500
---------
1,370,250
</TABLE>
See notes to financial statements.
12
<PAGE> 15
STRONG ASSET ALLOCATION FUND (continued)
<TABLE>
<CAPTION>
Shares or Value
Principal Amount (Note 2)
- - ---------------- ---------
<S> <C>
PHARMACEUTICALS 1.3%*
16,500 Eli Lilly and Company $ 1,082,813
29,800 Merck & Company, Inc. 1,136,125
12,500 Warner-Lambert Company 962,500
-----------
3,181,438
PUBLISHING 0.5%*
37,900 The Times Mirror Company 1,189,112
RAILROADS 0.3%*
37,000 Santa Fe Pacific Corporation 647,500
REAL ESTATE 0.6%*
35,000 Irvine Apartment Communities, Inc. 573,125
50,000 Summit Properties, Inc. 962,500
-----------
1,535,625
RETAIL 1.3%*
24,000 The Caldor Corporation + 534,000
40,000 Federated Department Stores, Inc. + 770,000
20,000 J.C. Penney Company, Inc. 892,500
26,000 Walgreen Company 1,137,500
-----------
3,334,000
TELECOMMUNICATIONS 1.5%*
24,000 AT&T Corporation 1,206,000
40,600 MCI Communications Corporation 746,025
25,600 Paging Network, Inc. + 870,400
30,000 Sprint Corporation 828,750
-----------
3,651,175
TIRES & RUBBER 0.4%*
31,500 The Goodyear Tire & Rubber Company 1,059,187
TRANSPORTATION 0.8%*
22,000 AMR Corporation + 1,171,500
30,000 Werner Enterprises, Inc. 712,500
-----------
1,884,000
WASTE CONTROL 0.5%*
40,000 Browning-Ferris Industries, Inc. 1,135,000
-----------
Total United States 79,600,776
FOREIGN 4.6%*
GERMANY 0.7%*
AUTOMOTIVE RELATED 0.3%*
2,600 Volkswagon AG 714,203
RETAIL 0.4%*
3,000 Kaufhof Holding AG 928,664
-----------
1,642,867
HONG KONG 0.2%*
BANKING
5,167 HSBC Holdings PLC ADR (USD) 557,635
MEXICO 1.6%*
CELLULAR TELEPHONES 0.2%*
31,500 Grupo Iusacell S.A. de C.V. ADR (USD) + 586,688
CONGLOMERATES 0.5%*
172,000 Grupo Financiero Serfin S.A.+ 1,281,224
TELECOMMUNICATIONS 0.9%*
55,400 Telefonos de Mexico S.A. ADR Series L (USD) 2,271,400
-----------
4,139,312
</TABLE>
<TABLE>
<CAPTION>
Shares or Value
Principal Amount (Note 2)
- - ---------------- --------
<S> <C>
NEW ZEALAND 0.6%*
FOREST & PAPER PRODUCTS 0.3%*
400,000 Carter Holt Harvey, Ltd. $ 818,944
TELECOMMUNICATIONS 0.3%*
14,000 Telecom Corporation of New Zealand,
Ltd. ADS (USD) 719,250
-----------
1,538,194
SPAIN 0.4%*
PETROLEUM
35,000 Repsol S.A. Sponsored ADR (USD) 953,750
SWEDEN 0.6%*
MEDICAL SUPPLIES
74,900 Arjo AB + 1,371,222
THAILAND 0.2%*
CONSTRUCTION
42,000 Sino-Thai Engineering and Construction
Public Company, Ltd. (Fgn Reg) 552,301
UNITED KINGDOM 0.3%*
PETROLEUM
9,176 British Petroleum PLC ADS (USD) 732,933
-----------
Total Foreign 11,488,214
-----------
Total Common Stocks (Cost $88,348,101) 91,088,990
CONVERTIBLE PREFERRED STOCKS 0.8%*
12,700 Battle Mountain Gold Company $3.25
Convertible Preferred Stock 774,700
14,200 Ford Motor Company $4.20 Series A
Convertible Preferred Stock 1,306,400
-----------
Total Convertible Preferred Stocks
(Cost $2,105,403) 2,081,100
CORPORATE BONDS 21.6%*
$3,000,000 American Reinsurance Corporation Senior
Subordinated Debentures, 10.875%, Due 9/15/04 3,191,250
1,100,000 Auburn Hills Guaranteed Exchangeable Adjustable
Rate Certificates, 12.375%, Due 5/01/20 1,456,686
2,500,000 Bank of New York, Inc. Subordinated Notes,
8.50%, Due 12/15/04 2,461,103
5,000,000 CCP Insurance, Inc. Senior Notes, 10.50%,
Due 12/15/04 4,977,400
2,000,000 Chase Manhattan Corporation Floating Rate
Notes, 6.50%, Due 12/30/09 1,920,000
5,691,000 Citicorp Floating Rate Notes, 6.50%, Due 5/01/04 5,702,371
2,500,000 GNS Finance Corporation Senior Subordinated
Notes, Series B, 9.25%, Due 3/15/03 2,412,500
3,900,000 Hook-SupeRx, Inc. Senior Notes, 10.125%,
Due 6/01/02 3,968,250
950,000 Joy Technologies, Inc. Senior Notes, 10.25%,
Due 9/01/03 997,500
1,000,000 Kaufman & Broad Home Corporation Senior
Notes, 10.375%, Due 9/01/99 1,005,000
2,500,000 Long Island Lighting Company First Mortgage
Bonds, 5.25%, Due 3/01/96 2,420,108
Marine Midland Banks, Inc. Floating Rate
Subordinated Notes:
2,000,000 6.50%, Due 12/20/00 1,957,500
3,000,000 6.5625%, Due 12/31/09 2,865,000
2,500,000 News America Holdings, Inc. Senior
Debentures, 7.75%, Due 2/01/24 2,058,142
100,000 Owens-Illinois, Inc. Senior Debentures, 11.00%,
Due 12/01/03 104,000
2,000,000 RJR Nabisco, Inc. Guaranteed Senior Notes,
8.75%, Due 4/15/04 1,842,540
</TABLE>
See notes to financial statements.
13
<PAGE> 16
SCHEDULE OF INVESTMENTS IN SECURITIES (continued)
STRONG ASSET ALLOCATION FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
- - -------------------------------------------------------------------------------------------------
<S> <C>
$ 2,170,000 RJR Nabisco, Inc. Notes, 8.00%, Due 1/15/00 $ 2,049,090
475,000 Republic N.Y. Corporation Subordinated Notes,
9.70%, Due 2/01/09 511,982
6,000,000 Rogers Cablesystems, Ltd. Senior Secured
Second Priority Notes, 9.625%, Due 8/01/02 5,745,000
500,000 Time Warner, Inc. Discount Notes, Zero %,
Due 8/15/02 (Putable at 100 on 8/15/95;
Rate Reset Effective 8/01/95) 472,500
1,500,000 Time Warner, Inc. Discount Notes, 8.875%,
Due 10/01/12 1,345,638
4,100,000 Tosco Corporation First Mortgage Bonds,
Series A, 9.00% , Due 3/15/97 4,146,125
------------
Total Corporate Bonds (Cost $54,193,446) 53,609,685
NON-AGENCY MORTGAGE-BACKED SECURITIES 18.2%*
2,660,000 CMC Securities Corporation III Variable
Rate Collateralized Mortgage Obligation,
Series 1994-C, Class A-12, 7.15%, Due 3/25/24 2,454,675
1,814,695 Chase Mortgage Finance Corporation
Mortgage Pass-Thru Certificates, Series
1990-G, Class A-Z1, 9.50%, Due 12/25/21 1,810,721
2,831,050 Collateralized Mortgage Securities Corporation
Collateralized Mortgage Obligation, Series
1991-9, Class H, 8.25%, Due 6/20/96 2,835,466
20,439,829 First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates, Series
1994-MHC1, Class A-1X, Interest Only,
1.8621%, Due 4/25/11 1,814,035
4,462,850 First Boston Mortgage Securities Corporation
Variable Rate Mortgage Pass-Thru
Certificates, Series 1994-MHC1, Class A-Z,
6.075%, Due 4/25/11 4,460,083
3,028,947 First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates, Series
1993-2, Class A-3, 7.50%, Due 3/25/33 2,752,556
2,029,000 GE Capital Mortgage Services, Inc. Real Estate
Mortgage Investment Conduit Multiclass
Pass-Thru Certificates, Series 1993-10,
Class A-15, 6.50%, Due 9/25/23 1,531,895
1,565,374 Green Tree Financial Corporation Manufactured
Housing Senior Subordinated Pass-Thru
Certificates, Series 1993-3, Class A-1, 4.60%,
Due 10/15/18 1,534,364
294,364 MDC Asset Investors Trust V Collateralized
Mortgage Obligation, Class V-2, 9.325%,
Due 12/01/17 298,450
Merrill Lynch Mortgage Investors, Inc.
Manufactured Housing Contract Pass-Thru
Certificates:
3,003,894 Series 1987-C, 10.10%, Due 11/15/07 3,132,700
1,275,244 Series 1992-E, Class B, 5.85%, Due 8/15/12 1,246,678
Merrill Lynch Mortgage Investors, Inc.
Senior Subordinated Variable Rate
Pass-Thru Certificates:
3,000,000 Series 1994-F, Class M, 6.375%, Due 3/15/24 2,718,000
1,000,000 Series 1994-H, Class M, 6.375%, Due 6/15/19 906,700
527,674 Prudential Home Mortgage Securities Company
Mortgage Pass-Thru Certificates, Series 1993-36,
Class A-15, 7.25%, Due 10/25/23 335,405
RTC Mortgage Pass-Thru Securities, Inc.
Commercial Certificates:
6,450,000 Series 1993-C1, Class C, 9.40%, Due 5/25/24 6,393,563
2,700,000 Series 1994-1, Class M5, 7.125%, Due 9/25/29 2,699,163
593,214 RTC Variable Rate Mortgage Pass-Thru Certificates,
Series 1992-6, Class A-2, 8.40%, Due 7/25/24 582,832
2,513,027 Residential Funding Mortgage Securities I, Inc.
Pass-Thru Certificates, Series 1993-S7,
Class A-6, 7.15%, Due 2/25/08 2,387,376
1,033,712 Ryland Mortgage Securities Corporation III
Variable Rate Collateralized Mortgage Bonds,
Series 1992-C, Class 3-A, 11.8046%,
Due 11/25/30 1,041,144
2,200,000 U.S. Home Equity Loan Asset Backed
Certificates, Series 1991-2, Class B, 9.125%,
Due 4/15/21 2,202,398
4,884,866 Westam Mortgage Financial Corporation
Collateralized Mortgage Bonds, Series 10,
Class 10-D, Principal Only, Due 7/26/18 2,166,145
------------
Total Non-Agency Mortgage-Backed Securities
(Cost $46,304,337) 45,304,349
UNITED STATES GOVERNMENT AND AGENCY ISSUES 15.3%*
FHLMC Guaranteed Multiclass Mortgage
Participation Certificates:
955,766 Series 1181, Class 1181-G, 7.50%, Due 8/15/05 933,592
673,603 Series 1257, Class 1257-J, 7.00%, Due 4/15/07 601,602
2,535,823 Series 1634, Class 1634-PA, 4.50%, Due 8/15/04 2,491,091
500,000 FHLMC Guaranteed Multiclass Variable Rate
Mortgage Participation Certificates, Series 1492,
Class 1492-FB, 4.50%, Due 1/15/20 488,750
FHLMC Guaranteed Pass-Thru Certificates:
252,932 9.50%, Due 1/01/06 259,829
246,557 10.25%, Due 3/01/15 259,193
56,071 10.50%, Due 1/01/16 59,312
1,620,095 FHLMC Guaranteed Variable Rate Multiclass
Mortgage Participation Certificates, Series
1544, Class 1544-TA, 4.787%, Due 7/15/08 1,547,580
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
2,711,092 6.50%, Due 9/01/08 2,572,149
315,977 11.00%, Due 10/01/00 through 11/01/00 331,577
1,586,736 Series 1991-G22, Class D, 6.00%, Due 4/25/11 1,577,660
2,615,264 Series 1991-125, Class Z, 8.50%, Due 9/25/21 2,506,338
747,063 Series 1992-137, Class BA, 3.50%, Due 1/25/17 632,799
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Variable Rate Pass-Thru
Certificates:
3,385,617 Series 1992-187, Class SA, 8.40%, Due 10/25/07 2,467,269
2,259,241 Series 1993-121, Class SG, 10.20%, Due 2/25/23 1,553,228
616,234 Series G92-61, Class FJ, 5.287%, Due 10/25/22 581,078
816,436 FNMA Stripped Mortgage-Backed Securities
Trust 25, Class 1, 6.00%, Due 2/25/13 734,792
2,620,000 Federal Home Loan Bank Floating Rate Notes,
Series IK97, 4.50%, Due 4/21/97 2,511,925
81,481 GNMA Guaranteed Pass-Thru Certificates,
10.25%, Due 10/15/98 84,613
5,412,120 GNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
Series 1994-7, Class G, 6.00%, Due 1/16/24 3,903,492
24,624,733 Small Business Administration Guaranteed
Loan Pool #440019, Interest Only Custodial
Receipts, Series 1993-1A, 2.531%, Due 2/15/18 2,870,259
2,014,193 USGI FHA Insured Project Pool #1988-6, 7.43%,
Due 10/25/16 1,752,348
United States Treasury Bonds:
4,000,000 6.25%, Due 8/15/23 3,250,000
1,700,000 7.50%, Due 11/15/24 1,625,625
United States Treasury Notes:
500,000 4.75%, Due 2/15/97 470,938
2,000,000 5.875%, Due 3/31/99 1,858,750
------------
Total United States Government and Agency
Issues (Cost $39,882,381) 37,925,789
============
</TABLE>
See notes to financial statements.
14
<PAGE> 17
SCHEDULE OF INVESTMENTS IN SECURITIES
STRONG ASSET ALLOCATION FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
- - ----------------------------------------------------------------------------------------
<S> <C>
CASH EQUIVALENTS 6.9%*
COMMERCIAL PAPER 6.1%*
DISCOUNTED 5.8%*
$6,300,000 Pennsylvania Power & Light Company
Due 1/04/95 $ 6,298,941
5,100,000 Renaissance Energy Company
Due 1/03/95 5,100,000
3,200,000 Tyson Foods, Inc.
Due 1/05/95 3,198,903
------------
14,597,844
INTEREST BEARING, DUE UPON DEMAND 0.3%*
100 BarclaysAmericanCorp., 5.80% 100
196,900 General Mills, Inc., 5.73% 196,900
462,800 Pitney Bowes Credit Corporation, 5.73% 462,800
31,800 Wisconsin Electric Power Company, 5.77% 31,800
------------
691,600
------------
Total Commercial Paper 15,289,444
CORPORATE OBLIGATION 0.8%*
2,000,000 CEMEX I Security Repurchase Unit Trust
Euro Bonds Representing CEMEX, S.A.
Series B ADR, 6.25%, Due 10/25/95 1,960,000
------------
Total Cash Equivalents (Cost $17,322,292) 17,249,444
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $248,155,960) 99.4%* 247,259,357
Other Assets and Liabilities, Net 0.6%* 1,387,940
------------
NET ASSETS 100.0%* $248,647,297
============
</TABLE>
STRONG AMERICAN UTILITIES FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
- - ---------------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS 96.0%*
UNITED STATES 93.3%*
ELECTRIC & GAS UTILITIES 1.6%*
4,000 DPL, Inc. $ 82,000
8,000 Rochester Gas & Electric Corporation 167,000
1,900 SCANA Corporation 80,037
10,000 UNICOM Corporation 240,000
2,000 WPS Resources Corporation 53,500
-----------
622,537
ELECTRIC UTILITIES 25.2%*
23,000 Baltimore Gas & Electric Company 508,875
63,000 Boston Edison Company 1,504,125
61,000 CMS Energy Corporation 1,395,375
25,500 Duke Power Company 972,188
60,000 PECO Energy Company 1,470,000
57,000 Public Service Enterprise Group, Inc. 1,510,500
50,500 The Southern Company 1,010,000
59,000 TECO Energy 1,187,375
-----------
9,558,438
ENERGY RELATED 15.6%*
12,400 Amoco Corporation $ 733,150
4,400 Atlantic Richfield Company 447,700
9,000 Dresser Industries, Inc. 169,875
7,000 ENSERCH Corporation 91,875
19,500 Exxon Corporation 1,184,625
8,100 Kerr McGee Corporation 372,600
2,800 Mobil Corporation 235,900
1,000 Occidental Petroleum Corporation 19,250
5,500 Pennzoil Company 242,687
2,000 Phillips Petroleum Company 65,500
1,000 Plains Petroleum Company 23,500
18,500 Questar Corporation 508,750
12,000 Schlumberger, Ltd. 604,500
24,800 Southwestern Energy Corporation 368,900
9,800 Sun Company, Inc. 281,750
3,500 Texaco, Inc. 209,563
5,000 USX-Marathon Group 81,875
5,900 Union Pacific Corporation 269,187
-----------
5,911,187
GAS UTILITIES 6.5%*
6,500 Equitable Resources, Inc. 176,313
65,000 MCN Corporation 1,178,125
44,400 National Fuel Gas Company 1,132,200
-----------
2,486,638
OTHER UTILITIES 1.0%*
14,000 American Water Works Company, Inc. 378,000
PETROLEUM 0.1%*
2,000 Oryx Energy Company + 23,750
TELECOMMUNICATIONS 43.3%*
53,000 AT&T Corporation 2,663,250
8,000 AirTouch Communications + 233,000
103,000 Ameritech Corporation 4,158,625
59,000 Bell Atlantic Corporation 2,935,250
87,000 GTE Corporation 2,642,625
10,000 MCI Communications Corporation 183,750
73,000 Southwestern Bell Corporation 2,947,375
9,000 Sprint Corporation 248,625
12,000 US WEST Communications, Inc. 427,500
-----------
16,440,000
-----------
Total United States 35,420,550
FOREIGN 2.7%*
CANADA 2.1%*
ENERGY RELATED
24,000 Imperial Oil, Ltd. (USD) 792,000
UNITED KINGDOM 0.6%*
ENERGY RELATED
3,520 Shell Transport & Trading ADR (USD) 230,120
-----------
Total Foreign 1,022,120
-----------
Total Common Stocks (Cost $38,469,956) 36,442,670
CASH EQUIVALENTS 2.1%*
COMMERCIAL PAPER
INTEREST BEARING, DUE UPON DEMAND
$ 100 Eli Lilly & Company, 5.55% 100
105,100 General Mills, Inc., 5.73% 105,100
638,300 Southwestern Bell Telephone Company, 5.71% 638,300
40,900 Wisconsin Electric Power Company, 5.77% 40,900
-----------
Total Cash Equivalents (Cost $784,400) 784,400
-----------
TOTAL INVESTMENTS IN SECURITIES
(COST $39,254,356) 98.1%* 37,227,070
Other Assets & Liabilities, Net 1.9%* 717,028
-----------
NET ASSETS 100.0%* $37,944,098
===========
</TABLE>
See notes to financial statements.
15
<PAGE> 18
SCHEDULE OF INVESTMENTS IN SECURITIES (continued)
STRONG TOTAL RETURN FUND
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
- - ----------------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS 75.3%*
UNITED STATES 72.0%*
AUTOMOTIVE RELATED 1.4%*
150,000 Exide Corporation $ 8,437,500
BUSINESS SERVICES 2.5%*
150,000 Alco Standard Corporation 9,412,500
90,000 Career Horizons Corporation + 1,462,500
65,000 Gartner Group, Inc. + 2,535,000
71,000 Manpower, Inc. 1,996,875
-----------
15,406,875
CHEMICALS 2.0%*
110,000 Great Lakes Chemical Corporation 6,270,000
440,000 Methanex Corporation + 5,720,000
-----------
11,990,000
COMMUNICATIONS, LODGING & ENTERTAINMENT 1.6%*
78,000 The Walt Disney Company 3,597,750
150,000 Viacom International, Inc. + 6,093,750
-----------
9,691,500
COMPUTERS & SOFTWARE 9.4%*
250,000 Cisco Systems, Inc. + 8,781,250
100,000 Computer Sciences Corporation + 5,100,000
160,000 Digital Equipment Corporation + 5,320,000
260,000 EMC Communications Corporation + 5,622,500
160,000 Informix Corporation + 5,140,000
80,000 International Business Machines Corporation 5,880,000
105,000 Microsoft Corporation + 6,418,125
70,000 MicroTouch Systems, Inc. + 3,150,000
65,000 Network Peripherals, Inc. + 1,771,250
75,000 Silicon Graphics, Inc. + 2,315,625
140,000 StrataCom, Inc. + 4,900,000
50,000 3Com Corporation + 2,578,125
-----------
59,976,875
CONSUMER RELATED PRODUCTS 2.5%*
60,000 The Gillette Company 4,485,000
220,000 Harley-Davidson, Inc. 6,160,000
75,000 The Procter & Gamble Company 4,650,000
-----------
15,295,000
ELECTRIC & GAS UTILITIES 1.8%*
200,000 The Detroit Edison Company 5,225,000
250,000 UNICOM Corporation 6,000,000
-----------
11,225,000
ELECTRICAL & ELECTRONICS 5.3%*
125,000 Amphenol Corporation + 3,000,000
100,000 Atmel Corporation + 3,350,000
60,000 Hewlett-Packard Company 5,992,500
50,000 Intel Corporation 3,193,750
125,000 International Rectifier Corporation + 3,031,250
37,700 Kent Electronics Corporation
(Acquired 8/13/93; Cost $735,150)(r) + 1,493,863
75,000 LSI Logic Corporation + 3,028,125
80,000 Microchip Technology, Inc. + 2,200,000
50,000 Ultratech Stepper, Inc. + 1,900,000
80,000 Xilinx, Inc. + 4,740,000
-----------
31,929,488
ENERGY RELATED 2.6%*
120,000 Amoco Corporation 7,095,000
100,000 Mobil Corporation 8,425,000
-----------
15,520,000
FINANCIAL SERVICES 1.4%*
135,000 Green Tree Financial Corporation $ 4,100,625
175,000 MBNA Corporation 4,090,625
-----------
8,191,250
FOOD, BEVERAGE & TOBACCO 2.8%*
240,000 Archer Daniels Midland Company 4,950,000
150,000 The Coca-Cola Company 7,725,000
80,000 Philip Morris Companies, Inc. 4,600,000
-----------
17,275,000
FOREST & PAPER PRODUCTS 1.3%*
110,000 Scott Paper Company 7,603,750
INDUSTRIAL 0.9%*
270,000 Federal Signal Corporation 5,501,250
INSURANCE & INSURANCE RELATED 2.5%*
120,000 AMBAC, Inc. 4,470,000
230,000 MGIC Investment Corporation 7,618,750
100,000 Vesta Insurance Group, Inc. 2,850,000
-----------
14,938,750
MANUFACTURING 2.4%*
125,000 General Electric Company 6,375,000
300,000 Pall Corporation 5,625,000
73,800 Stewart & Stevenson Services, Inc. 2,546,100
-----------
14,546,100
MEDICAL SERVICES 2.3%*
270,000 Humana, Inc. + 6,108,750
100,000 Medaphis Corporation + 4,650,000
125,000 Vencor, Inc. + 3,484,375
-----------
14,243,125
MEDICAL SUPPLIES 4.1%*
100,000 Abbott Laboratories 3,262,500
90,000 Cardinal Health, Inc. 4,173,750
130,000 Johnson & Johnson 7,117,500
150,000 Medtronic, Inc. 8,343,750
60,000 Stryker Corporation 2,205,000
-----------
25,102,500
METALS & MINING 1.0%*
270,000 American Barricks Resources Corporation 6,007,500
OFFICE EQUIPMENT 0.9%*
55,000 Xerox Corporation 5,445,000
PHARMACEUTICALS 6.1%*
100,000 American Home Products Corporation 6,275,000
360,665 Biovail Corporation International + 2,975,486
300,000 Circa Pharmaceuticals, Inc. + 5,362,500
200,000 Merck & Company, Inc. 7,625,000
50,000 Pfizer, Inc. 3,862,500
150,000 R.P. Scherer Corporation + 6,806,250
55,000 Warner-Lambert Company 4,235,000
-----------
37,141,736
RAILROADS 0.8%*
125,000 Wisconsin Central Transportation Corporation + 5,156,250
REAL ESTATE 0.8%*
200,000 Omega Healthcare Investors, Inc. 4,825,000
</TABLE>
See notes to financial statements.
16
<PAGE> 19
SCHEDULE OF INVESTMENTS IN SECURITIES (continued)
STRONG TOTAL RETURN FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
- - ----------------------------------------------------------------------------------------
<S> <C>
RETAIL 5.4%*
170,000 Dollar General Corporation $ 5,100,000
70,000 Ellett Brothers, Inc. 1,050,000
130,000 Hollywood Entertainment Corporation + 3,932,500
125,000 Kohl's Corporation + 4,968,750
75,000 Micro Warehouse, Inc. + 2,625,000
80,000 OfficeMax, Inc. + 2,120,000
150,000 Safeway, Inc. + 4,781,250
220,000 Staples, Inc. + 5,445,000
122,400 Sunglass Hut International, Inc. + 2,815,200
------------
32,837,700
STEEL 1.8%*
200,000 Nucor Corporation 11,100,000
TELECOMMUNICATIONS 7.5%*
100,000 ALC Communications Corporation + 3,112,500
220,000 Ameritech Corporation 8,882,500
100,000 Andrew Corporation + 5,225,000
112,000 DSC Communications Corporation + 4,018,000
100,000 GTE Corporation 3,037,500
210,000 Motorola, Inc. 12,153,750
160,000 Tellabs, Inc. + 8,920,000
------------
45,349,250
TRANSPORTATION 0.7%*
125,000 Landstar Systems, Inc. + 4,093,750
OTHER 0.2%*
75,000 Equity Corporation International + 993,750
------------
Total United States 436,823,899
FOREIGN 3.3%*
FINLAND 1.1%*
ELECTRICAL & ELECTRONICS
90,000 Nokia Corporation ADR (USD) + 6,750,000
MEXICO 0.3%*
FOOD, BEVERAGE & TOBACCO
130,000 Grupo Embotellador de Mexico S.A. de C.V.
ADR (USD) + 1,868,750
NETHERLANDS 0.8%*
PUBLISHING
70,000 Wolters Kluwer NV ADR (USD) 5,179,461
UNITED KINGDOM 1.1%*
BUSINESS SERVICES
300,000 Danka Business Systems PLC ADR (USD) 6,487,500
------------
Total Foreign 20,285,711
------------
Total Common Stocks (Cost $412,895,438) 457,109,610
CONVERTIBLE PREFERRED STOCKS 2.9%*
50,000 Ceridian Corporation 5.50% Convertible
Preferred Stock 3,150,000
50,000 Citicorp Series 13 $5.375 Convertible
Preferred Stock (Acquired 9/14/93 - 1/07/94;
Cost $5,637,500) (r) 5,731,250
49,000 Dell Computer Corporation Series A
Convertible Preferred Stock (Acquired
12/16/94, 12/20/94; Cost $8,054,590) (r) 8,452,500
------------
Total Convertible Preferred Stocks
(Cost $16,608,278) 17,333,750
CORPORATE BONDS 2.2%*
$ 3,750,000 Auburn Hills Guaranteed Exchangeable
Adjustable Rate Certificates, 12.375%,
Due 5/01/20 $ 4,965,975
5,000,000 News America Holdings, Inc. Senior Notes,
12.00%, Due 12/15/01 5,569,055
3,000,000 Time Warner, Inc. Discount Notes, Zero %,
Due 8/15/02 (Putable at 100 on 8/15/95;
Rate Reset Effective 8/1/95) 2,835,000
------------
Total Corporate Bonds (Cost $14,135,397) 13,370,030
CONVERTIBLE CORPORATE BONDS 4.4%*
4,000,000 First Financial Management Corporation Senior
Convertible Debentures, 5.00%, Due 12/15/99 4,150,000
3,000,000 General Instrument Corporation Junior
Subordinated Convertible Notes, 5.00%,
Due 6/15/00 4,020,000
5,000,000 Home Depot, Inc. Convertible Subordinated
Notes, 4.50%, Due 2/15/97 5,950,000
860,000 LSI Logic Corporation Convertible Subordinated
Notes, 5.50%, Due 3/15/01 (Acquired 12/15/94;
Cost $1,560,470) (r) 1,466,300
2,500,000 Manpower, Inc. Convertible Subordinated
Notes, 6.25%, Due 10/01/02 (Acquired
8/02/94, 8/03/94; Cost $3,486,255) (r) 3,862,500
1,694,000 Medaphis Corporation Convertible Subordinated
Debentures, 6.50%, Due 1/01/00 (Acquired
1/14/94 - 5/05/94; Cost $2,334,425) (r) 2,833,215
8,000,000 Office Depot, Inc. Subordinated Liquid Yield
Option Notes, Zero %, Due 11/01/08 4,300,000
-----------
Total Convertible Corporate Bonds
(Cost $25,438,802) 26,582,015
UNITED STATES GOVERNMENT ISSUES 5.7%*
5,000,000 United States Treasury Bonds, 7.50%,
Due 11/15/24 4,781,250
United States Treasury Notes:
2,000,000 7.125%, Due 10/15/98 1,958,750
3,000,000 7.25%, Due 11/30/96 2,977,500
5,000,000 7.75%, Due 11/30/99 4,982,810
18,950,000 8.875%, Due 11/15/98 19,601,406
------------
Total United States Government Issues
(Cost $34,321,966) 34,301,716
CASH EQUIVALENTS 6.7%*
COMMERCIAL PAPER 6.5%*
DISCOUNTED 6.2%*
1,700,000 Pennsylvania Power & Light Company
Due 1/04/95 1,699,714
20,800,000 Renaissance Energy Company
Due 1/03/95 20,800,000
15,000,000 Textron, Inc.
Due 1/05/95 14,994,834
------------
37,494,548
</TABLE>
See notes to financial statements.
17
<PAGE> 20
SCHEDULE OF INVESTMENTS IN SECURITIES
STRONG TOTAL RETURN FUND (continued)
<TABLE>
<CAPTION>
SHARES OR VALUE
PRINCIPAL AMOUNT (NOTE 2)
- - ---------------------------------------------------------------------------------------
<S> <C>
INTEREST BEARING, DUE UPON DEMAND 0.3%*
$ 200 BarclaysAmericanCorp., 5.80% $ 200
227,300 Eli Lilly & Company, 5.55% 227,300
272,600 General Mills, Inc., 5.73% 272,600
79,800 Pitney Bowes Credit Corporation, 5.73% 79,800
454,900 Sara Lee Corporation, 5.71% 454,900
584,400 Southwestern Bell Telephone Company, 5.71% 584,400
351,400 Wisconsin Electric Power Company, 5.77% 351,400
------------
1,970,600
------------
Total Commercial Paper 39,465,148
UNITED STATES GOVERNMENT ISSUES 0.2%*
1,470,000 United States Treasury Bills, Due 2/23/95 1,458,400
------------
Total Cash Equivalents (Cost $40,923,548) 40,923,548
------------
TOTAL INVESTMENTS IN SECURITIES
(COST $544,323,429) 97.2%* 589,620,669
Other Assets and Liabilities, Net 2.8%* 17,192,843
------------
NET ASSETS 100.0%* $606,813,512
============
</TABLE>
* Percentages are calculated as a percentage of net assets.
(USD) U.S. Dollar-denominated.
(r) Restricted security.
+ Non-income producing.
See notes to financial statements.
18
<PAGE> 21
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1994
<TABLE>
<CAPTION>
(In Thousands)
STRONG STRONG AMERICAN STRONG
ASSET ALLOCATION FUND UTILITIES FUND TOTAL RETURN FUND
--------------------- -------------- -----------------
<S> <C> <C> <C>
INCOME:
Dividends $ 2,007 $1,646 $ 9,735
Interest 10,852 183 4,319
-------- ------- --------
Total Income 12,859 1,829 14,054
EXPENSES:
Investment Advisory Fees 2,092 264 4,999
Custodian Fees 56 18 96
Shareholder Servicing Costs 594 135 1,617
Professional Fees 44 27 48
Reports to Shareholders 327 63 576
Federal and State Registration Fees 48 54 56
Other 17 11 40
-------- ------- --------
Total Expenses before Waivers and Absorptions 3,178 572 7,432
Voluntary Expense Waivers and Absorptions by Advisor -- (407) --
-------- ------- --------
Expenses, Net 3,178 165 7,432
-------- ------- --------
NET INVESTMENT INCOME 9,681 1,664 6,622
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments (1,168) (2,007) 4,102
Futures Contracts and Options -- -- (187)
Foreign Currencies 11 -- --
Change in Unrealized Appreciation/Depreciation on Investments (12,535) (664) (20,243)
-------- ------- --------
NET LOSS (13,692) (2,671) (16,328)
-------- ------- --------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ($ 4,011) ($1,007) ($ 9,706)
======== ======= ========
</TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1994
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
STRONG STRONG AMERICAN STRONG
ASSET ALLOCATION FUND UTILITIES FUND TOTAL RETURN FUND
--------------------- -------------- -----------------
<S> <C> <C> <C>
ASSETS:
Investments in Securities, at Value (Cost of $248,156,
$39,254 and $544,323, respectively) $247,259 $ 37,227 $589,621
Receivable from Brokers for Securities Sold 527 808 17,294
Dividends and Interest Receivable 2,078 207 3,235
Other Assets 27 27 31
-------- ----------- --------
Total Assets 249,891 38,269 610,181
LIABILITIES:
Payable to Brokers for Securities Purchased 881 235 2,744
Accrued Operating Expenses and Other Liabilities 363 90 623
-------- ----------- --------
Total Liabilities 1,244 325 3,367
-------- ----------- --------
NET ASSETS $248,647 $ 37,944 $606,814
======== =========== ========
Capital Shares
Authorized 300,000 10,000,000 300,000
Outstanding 13,879 4,010 25,685
NET ASSET VALUE PER SHARE $ 17.91 $ 9.46 $ 23.62
======== =========== =========
</TABLE>
See notes to financial statements.
19
<PAGE> 22
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
(In Thousands)
STRONG STRONG AMERICAN
ASSET ALLOCATION FUND UTILITIES FUND
------------------------ ----------------------
OPERATIONS: 1994 1993 1994 1993*
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Investment Income $ 9,681 $ 9,608 $ 1,664 $ 532
Net Realized Gain (Loss) (1,157) 15,308 (2,007) 143
Change in Unrealized Appreciation/Depreciation (12,535) 5,564 (664) (1,363)
-------- -------- -------- --------
Increase (Decrease) in Net Assets Resulting from Operations (4,011) 30,480 (1,007) (688)
CAPITAL SHARE TRANSACTIONS 10,200 40,541 8,157 33,841
DISTRIBUTIONS:
From Net Investment Income (9,681) (9,608) (1,663) (532)
In Excess of Net Investment Income (33) -- -- (2)
From Net Realized Gains -- (15,342) -- (143)
In Excess of Net Realized Gains (2,267) -- -- (119)
-------- -------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS (5,792) 46,071 5,487 32,357
NET ASSETS:
Beginning of Period 254,439 208,368 32,457 100
-------- -------- -------- --------
End of Period $248,647 $254,439 $ 37,944 $ 32,457
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
STRONG
TOTAL RETURN FUND
-------------------------
OPERATIONS: 1994 1993
---- ----
<S> <C> <C>
Net Investment Income $ 6,622 $ 8,327
Net Realized Gain 3,915 80,612
Change in Unrealized Appreciation/Depreciation (20,243) 25,975
-------- --------
Increase (Decrease) in Net Assets Resulting from Operations (9,706) 114,914
CAPITAL SHARE TRANSACTIONS (4,929) (62,726)
DISTRIBUTIONS:
From Net Investment Income (6,696) (8,372)
In Excess of Net Investment Income (2,204) --
In Excess of Net Realized Gains -- (1,340)
-------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS (23,535) 42,476
NET ASSETS:
Beginning of Year 630,349 587,873
-------- --------
End of Year $606,814 $630,349
======== ========
</TABLE>
*For the Period July 1, 1993 (Inception) through December 31, 1993.
See notes to financial statements.
20
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
1. ORGANIZATION
The Strong Growth and Income Funds consist of Strong Asset Allocation Fund,
Inc. (formerly Strong Investment Fund, Inc.), Strong American Utilities
Fund, Inc. and Strong Total Return Fund, Inc. The Funds are separately
incorporated, diversified and non-diversified, open-end management
investment companies registered with the Securities and Exchange Commission
under the Investment Company Act of 1940.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.
(A) Security Valuation -- Investments in securities for which market
quotations are readily available are valued at fair value as determined
by a pricing service on the basis of the average of the most recent bid
and asked prices in the principal market (closing sales prices if the
principal market is an exchange) in which such securities are normally
traded. Securities for which 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 Directors of the Funds. Debt securities which are purchased within
60 days of their stated maturity are valued at amortized cost, which
approximates current value.
Strong Total Return Fund owns certain investment securities which are
restricted as to resale. These securities are valued by the Fund after
giving due consideration to pertinent factors including recent private
sales, market conditions and the issuer's financial performance. Where
future disposition of these securities requires registration under the
Securities Act of 1933, the Fund has the right to include its securities
in such registration, generally without cost to the Fund. Aggregate cost
and fair value of these restricted securities held at December 31, 1994
were $21,808,390 and $23,839,628 respectively, representing 3.9% of net
assets of the Fund.
(B) Federal Income and Excise Taxes and Distributions to Shareholders -- It
is the Funds' policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of their taxable income to their
shareholders in a manner which results in no tax cost to the Funds.
Therefore, no Federal income or excise tax provision is required.
The character of distributions made during the year from net investment
income or net realized gains may differ from the characterization for
federal income tax purposes due to differences in the recognition of
income and expense items for financial statement and tax purposes.
(C) Realized Gains and Losses on Investment Transactions -- The Funds
determine the gain or loss realized on investment transactions by
comparing the identified cost of the security lot sold with the net
sales proceeds.
(D) Futures -- The Funds may enter into futures contracts to provide
protection against adverse movements in the prices of securities in the
portfolio. Upon entering into a futures contract, the Funds pledge to
the broker cash or U.S. Government securities equal to the minimum
"initial margin" requirements of the exchange. Additionally, the Funds
receive from or pay to the broker an amount of cash equal to the daily
fluctuation in value of the contract. Such receipts or payments are
known as "variation margin," and are recorded by the Funds as unrealized
gains or losses. When the futures contract is closed, the Funds record a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was
closed.
The use of futures contracts involves, to varying degrees, elements of
market risk in excess of the amount recognized in the statement of
assets and liabilities. The predominant risk is that the movement in the
price of the futures contract may not correlate perfectly with the
movement in the prices of the assets being hedged. A lack of correlation
could render the portfolio's hedging strategy unsuccessful and could
result in a loss to the portfolio.
(E) Options -- The Funds may engage in options transactions to hedge against
expected declines of their portfolio securities. Premiums received by
the Funds upon writing covered call options are recorded in each Fund's
statement of assets and liabilities as an asset with a corresponding
liability which is subsequently adjusted to the current market value of
the option. When an option expires, is exercised, or is closed, each
Fund realizes a gain or loss, and the liability is eliminated. Each Fund
continues to bear the risk of a decline in the price of the underlying
security during the period, although any potential loss during the
period would be reduced by the amount of the option premium received.
The Funds may also purchase stock index options for any purpose, write
covered stock index options for hedging purposes, and enter into related
closing transactions. A stock index option is generally similar to an
option covering a specific security, except that delivery of cash rather
than the underlying security is made.
The use of written option contracts involves elements of market risk in
excess of the amount recognized in the statement of assets and
liabilities. The contract value represents a Fund's involvement in these
financial instruments. When required, a Fund will set aside permissible
liquid assets in a segregated account to secure its potential
obligations under its options positions.
21
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1994
(F) Foreign Currency Translation -- Investment securities and other assets
and liabilities denominated in foreign currencies are converted to U.S.
dollars based upon current exchange rates. Purchases and sales of
foreign investment securities and income are converted to U.S. dollars
based upon currency exchange rates prevailing on the respective dates of
such transactions. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a
component of such gains or losses.
(G) When-Issued Securities -- The Funds may purchase securities on a
when-issued or delayed delivery basis. Although the payment and interest
terms of these securities are established at the time the purchaser
enters into the agreement, these securities may be delivered and paid
for at a future date, generally within 45 days. The Funds record
purchases of when-issued securities and reflect the values of such
securities in determining net asset value in the same manner as other
portfolio securities. The Funds segregate and maintain at all times
cash, cash equivalents, or other high-quality liquid debt securities in
an amount at least equal to the amount of outstanding commitments for
when-issued securities.
(H) Other -- Portfolio transactions are recorded on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend
date. Interest income is recorded on the accrual basis.
3. NET ASSETS
Net assets as of December 31, 1994 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG TOTAL
ALLOCATION FUND UTILITIES FUND RETURN FUND
--------------- -------------- -----------
<S> <C> <C> <C>
Capital Stock $252,310 $42,098 $607,211
Undistributed Net Investment Income (22) -- --
Undistributed Net Realized Loss (2,744) (2,127) (45,694)
Net Unrealized Appreciation (Depreciation) (897) (2,027) 45,297
-------- ------- --------
Net Assets $248,647 $37,944 $606,814
======== ======= ========
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds during 1994 and 1993 were as follows (in
thousands):
<TABLE>
<CAPTION>
1994 1993
--------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
------ ------- ------ -------
<S> <C> <C> <C> <C>
STRONG ASSET ALLOCATION FUND
Shares Sold 2,972 $ 55,431 3,094 $ 60,623
Shares Issued in Reinvestment of Dividends 634 11,547 1,262 24,147
Shares Redeemed (3,077) (56,778) (2,276) (44,229)
------ -------- ------ --------
Net Increase 529 $ 10,200 2,080 $ 40,541
====== ======== ====== ========
STRONG AMERICAN UTILITIES FUND
Shares Sold 3,551 $ 34,838 3,670 $ 39,087
Shares Issued in Reinvestment of Dividends 148 1,414 70 716
Shares Redeemed (2,874) (28,095) (565) (5,962)
------ -------- ------ --------
Net Increase 825 $ 8,157 3,175 $ 33,841
====== ======== ====== ========
STRONG TOTAL RETURN FUND
Shares Sold 6,259 $150,873 4,622 $106,118
Shares Issued in Reinvestment of Dividends 365 8,656 419 9,430
Shares Redeemed (6,880) (164,458) (8,245) (178,274)
------ -------- ------ --------
Net Decrease (256) ($ 4,929) (3,204) ($ 62,726)
====== ======== ====== ========
</TABLE>
5. RELATED PARTY TRANSACTIONS
Strong Capital Management, Inc. (the "Advisor"), with whom
certain officers and a director of the Funds are affiliated, provides
investment advisory services and shareholder recordkeeping and related
services to the Funds. Investment advisory fees, which are established by
terms of the Advisory Agreements, are based on annualized rates of .75% of
the average daily net assets of Strong American Utilities Fund, and .85% of
the first $35,000,000 and .80% of the average daily net assets in excess of
that amount for Strong Asset Allocation Fund and Strong Total Return Fund.
Advisory fees are subject to reimbursement by the Advisor if the Funds'
operating expenses exceed certain levels. Shareholder recordkeeping and
related service fees are based on contractually established rates for each
open and closed shareholder account. In addition, the Advisor is compensated
for certain other services related to costs incurred for reports to
shareholders.
22
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (continued)
Under a subadvisory agreement between the Advisor and W.H. Reaves & Co.,
Inc. (the "Subadvisor"), the Subadvisor, pursuant to the oversight and
supervision of the Fund's Board of Directors and the Advisor, provides a
continuous investment program for Strong American Utilities Fund. Under the
subadvisory agreement, the Subadvisor is responsible for determining the
securities to be purchased and sold by the Fund and for executing those
transactions, except that the Advisor is responsible for managing the cash
equivalents maintained by the Fund. The Subadvisor is compensated by the
Advisor (not the Fund) under the terms provided in the subadvisory
agreement. The Subadvisor bears all of its own expenses in providing
subadvisory services to the Fund. In addition, the Subadvisor directly
effects purchases and sales of securities for the Fund. In conjunction
therewith, brokerage commissions paid by the Fund for the year ended
December 31, 1994 were $136,188.
Certain information regarding these transactions, excluding the effects of
waivers and reimbursements, for the year ended December 31, 1994 is as
follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG
ALLOCATION FUND UTILITIES FUND TOTAL RETURN FUND
<S> <C> <C> <C>
Payable to Advisor at December 31, 1994 $185 $54 $417
Other Shareholder Servicing Expenses Paid to Advisor 14 4 36
Unaffiliated Directors' Fees 4 2 9
</TABLE>
An affiliated company is a company in which a Fund has ownership of at least
5% of the voting securities. During the year, Strong Total Return Fund
purchased 2,000 shares of Kentucky Electric Steel, Inc., an affiliate, at a
cost of $24,500. Proceeds of $2,565,990 were received for sales of 257,000
shares, including shares purchased in prior years, resulting in losses of
$518,510.
During 1994, the Advisor settled an SEC administrative action involving
security transactions between mutual funds managed by the Advisor. The
SEC's order alleged that certain transactions involved did not fully comply
with Rule 17a-7 under the Investment Company Act of 1940 that sets forth a
number of detailed requirements for cross trades. As part of the settlement,
the Advisor reimbursed Strong Total Return Fund $327,506 for pricing errors
in effecting certain of these trades between 1987 and early 1990.
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities during 1994 were
as follows (in thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG
ALLOCATION FUND UTILITIES FUND TOTAL RETURN FUND
<S> <C> <C> <C>
Purchases:
U.S. Government and Agency $270,719 $ -- $ 48,826
Other 560,836 42,696 1,550,668
Sales:
U.S. Government and Agency 273,846 -- 19,211
Other 520,440 35,613 1,570,271
</TABLE>
7. INCOME TAX INFORMATION
At December 31, 1994, the investment cost, gross unrealized appreciation and
depreciation on investments and capital loss carryovers (expiring in varying
amounts through 2002) for Federal income tax purposes were as follows (in
thousands):
<TABLE>
<CAPTION>
STRONG ASSET STRONG AMERICAN STRONG
ALLOCATION FUND UTILITIES FUND TOTAL RETURN FUND
<S> <C> <C> <C>
Aggregate Investment Cost $249,088 $39,419 $546,430
Aggregate Unrealized:
Appreciation $7,123 $324 $ 51,387
Depreciation (8,952) (2,516) (8,196)
-------- ------- --------
Capital Loss Carryovers ($ 1,829) ($2,192) $ 43,191
======== ======= ========
$ 1,815 $ 1,977 $ 43,587
======== ======= ========
</TABLE>
For corporate shareholders in the Funds, the percentage of total "dividend"
transactions shown on the year end account statement which are designated as
qualifying for the dividends received deduction are: Strong Asset Allocation
Fund 20.4%, Strong American Utilities Fund 94.1%, and Strong Total Return
Fund 86.6%.
8. FOREIGN INVESTMENTS
Investments in foreign markets can pose more risks than U.S. investments,
and to the extent that each Fund invests in foreign securities, each Fund's
share price is expected to be more volatile than that of a U.S.-only fund.
The value of each Fund's foreign securities will fluctuate with changes in
stock market conditions, currency values, interest rates, foreign government
regulations, and economic and political conditions in countries in which
each Fund invests. These risks are generally intensified for investments in
emerging markets.
23
<PAGE> 26
FINANCIAL HIGHLIGHTS
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
STRONG ASSET ALLOCATION FUND
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 19.06 $ 18.49 $ 19.68 $ 17.50 $ 18.41
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.70 0.82 0.87 0.94 1.12
Net Realized and
Unrealized Gains
(Losses) on
Investments (0.99) 1.81 (0.25) 2.41 (0.65)
-------- ------ ------- ------ -------
TOTAL FROM INVESTMENT
OPERATIONS (0.29) 2.63 0.62 3.35 0.47
LESS DISTRIBUTIONS
From Net Investment
Income (0.70) (0.82) (0.87) (0.97) (1.38)
From Net Realized Gains -- (1.24) (0.94) (0.20) --
In Excess of Net
Realized Gains (0.16) -- -- -- --
From Capital -- -- -- -- --
-------- ------ ------- ------ -------
TOTAL DISTRIBUTIONS (0.86) (2.06) (1.81) (1.17) (1.38)
-------- ------ ------- ------ -------
NET ASSET VALUE, END
OF PERIOD $ 17.91 $ 19.06 $ 18.49 $ 19.68 $ 17.50
======== ======== ======== ======== ========
Total Return - 1.5% +14.5% +3.2% +19.6% +2.8%
Net Assets, End of Period
(In Thousands) $248,647 $254,439 $208,368 $214,951 $203,562
Ratio of Expenses to
Average Net Assets 1.2% 1.2% 1.2% 1.3% 1.3%
Ratio of Net Investment
Income to Average
Net Assets 3.8% 4.2% 4.4% 5.1% 6.1%
Portfolio Turnover
Rate 359.7% 348.3% 320.4% 418.4% 319.6%
</TABLE>
STRONG AMERICAN UTILITIES FUND
<TABLE>
<CAPTION>
1994 1993**
---- ----
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.19 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.46 0.18
Net Realized and Unrealized Gains
(Losses) on Investments (0.73) 0.27
------ -------
TOTAL FROM INVESTMENT OPERATIONS (0.27) 0.45
LESS DISTRIBUTIONS
From Net Investment Income (0.46) (0.18)
From Net Realized Gains -- (0.05)
In Excess of Net Realized Gains -- (0.03)
------ -------
TOTAL DISTRIBUTIONS (0.46) (0.26)
------ -------
NET ASSET VALUE, END OF PERIOD $9.46 $10.19
======= =======
Total Return - 2.6% + 4.5%
Net Assets, End of Period (In Thousands) $37,944 $32,457
Ratio of Expenses to Average Net Assets 0.5% 0.0%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 1.6% 1.4%*
Ratio of Net Investment Income to
Average Net Assets 4.8% 5.6%*
Portfolio Turnover Rate 105.4% 178.6%*
</TABLE>
* Calculated on an annualized basis.
** Inception date is July 1, 1993. Total return is not annualized.
24
<PAGE> 27
FINANCIAL HIGHLIGHTS
The following presents information relating to a share of capital stock of each
of the Funds, outstanding for the entire period.
STRONG ASSET ALLOCATION FUND
<TABLE>
<CAPTION>
1989 1988 1987 1986 1985
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 17.57 $ 17.60 $ 22.18 $ 20.12 $ 17.62
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 1.22 1.39 0.85 0.89 0.84
Net Realized and
Unrealized Gains
(Losses) on
Investments 0.73 0.19 (0.70) 2.54 2.45
------ ------ ------- ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 1.95 1.58 0.15 3.43 3.29
LESS DISTRIBUTIONS
From Net Investment
Income (0.97) (1.38) (1.78) (0.95) (0.75)
From Net Realized Gains (0.14) -- (2.95) (0.42) (0.04)
In Excess of Net
Realized Gains -- -- -- -- --
From Capital -- (0.23) -- -- --
------ ------ ------- ------ ------
TOTAL DISTRIBUTIONS (1.11) (1.61) (4.73) (1.37) (0.79)
------ ------ ------- ------ ------
NET ASSET VALUE, END
OF PERIOD $ 18.41 $ 17.57 $ 17.60 $ 22.18 $ 20.12
======== ======== ======== ======== ========
Total Return +11.2% +9.2% - 0.3% +17.6% +19.4%
Net Assets, End of Period
(In Thousands) $240,549 $256,089 $272,899 $339,405 $220,556
Ratio of Expenses to
Average Net Assets 1.3% 1.2% 1.1% 1.1% 1.1%
Ratio of Net Investment
Income to Average
Net Assets 6.6% 7.5% 4.2% 4.7% 5.4%
Portfolio Turnover
Rate 206.5% 426.2% 336.5% 80.4% 143.6%
</TABLE>
* Calculated on an annualized basis.
** Inception date is July 1, 1993. Total return is not annualized.
25
<PAGE> 28
FINANCIAL HIGHLIGHTS (continued)
STRONG TOTAL RETURN FUND
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 24.30 $ 20.17 $ 20.24 $ 15.34 $ 17.72
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.25 0.33 0.18 0.22 0.95
Net Realized and
Unrealized Gains
(Losses) on Investments (0.59) 4.18 (0.08) 4.90 (2.19)
-------- ------ ------ ------ -------
TOTAL FROM INVESTMENT
OPERATIONS (0.34) 4.51 0.10 5.12 (1.24)
LESS DISTRIBUTIONS
From Net Investment
Income (0.26) (0.33) (0.17) (0.22) (1.14))
In Excess of Net
Investment Income (0.08) -- -- -- --
From Net Realized Gains -- -- -- -- -- )
In Excess of Net
Realized Gains -- (0.05) -- -- --
From Capital -- -- -- -- --
-------- ------ ------ ------ -------
TOTAL DISTRIBUTIONS (0.34) (0.38) (0.17) (0.22) (1.14))
-------- ------ ------ ------ -------
NET ASSET VALUE,
END OF PERIOD $ 23.62 $ 24.30 $ 20.17 $ 20.24 $ 15.34
======== ======== ======== ======== ========
Total Return - 1.4% +22.5% +0.6% +33.6% - 7.1%
Net Assets,
End of Period
(In Thousands) $606,814 $630,349 $587,873 $691,327 $646,579
Ratio of Expenses to
Average Net Assets 1.2% 1.2% 1.3% 1.4% 1.4%
Ratio of Net Investment
Income to Average
Net Assets 1.1% 1.4% 0.9% 1.3% 5.4%
Portfolio Turnover Rate 290.4% 271.3% 371.8% 426.4% 312.3%
</TABLE>
26
<PAGE> 29
FINANCIAL HIGHLIGHTS (continued)
STRONG TOTAL RETURN FUND
<TABLE>
<CAPTION>
1989 1988 1987 1986 1985
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 18.96 $ 18.37 $ 21.61 $ 19.56 $ 16.35
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 1.55 1.95 0.97 0.66 0.59
Net Realized and
Unrealized Gains
(Losses) on Investments (0.97) 0.85 0.61 3.13 3.40
-------- -------- -------- ------- ------
TOTAL FROM INVESTMENT
OPERATIONS 0.58 2.80 1.58 3.79 3.99
LESS DISTRIBUTIONS
From Net Investment
Income (1.31) (1.96) (1.65) (0.70) (0.58)
In Excess of Net
Investment Income -- -- -- -- --
From Net Realized Gains (0.51) -- (3.17) (1.04) (0.20)
In Excess of Net
Realized Gains -- -- -- -- --
From Capital -- (0.25) -- -- --
-------- -------- -------- ------- ------
TOTAL DISTRIBUTIONS (1.82) (2.21) (4.82) (1.74) (0.78)
-------- -------- -------- ------- ------
NET ASSET VALUE,
END OF PERIOD $ 17.72 $ 18.96 $ 18.37 $ 21.61 $ 19.56
========= ========== ======== ======== =======
Total Return +2.6% +15.6% +6.0% +20.0% +25.4%
Net Assets,
End of Period
(In Thousands) $1,065,278 $1,005,192 $802,442 $518,760 $233,956
Ratio of Expenses to
Average Net Assets 1.2% 1.2% 1.1% 1.1% 1.1%
Ratio of Net Investment
Income to Average
Net Assets 7.7% 10.1% 5.2% 4.3% 5.0%
Portfolio Turnover Rate 305.3% 281.1% 224.4% 153.5% 304.6%
</TABLE>
27
<PAGE> 30
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of the
Strong Growth and Income Funds
We have audited the accompanying statements of assets and liabilities of Strong
Asset Allocation Fund, Inc., Strong American Utilities Fund, Inc. and Strong
Total Return Fund, Inc. (collectively referred to herein as the "Strong Growth
and Income Funds"), including the schedules of investments in securities, as of
December 31, 1994, and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended for the Strong Asset Allocation Fund, Inc. and the Strong
Total Return Fund, Inc. and for the period from July 1, 1993 (inception) to
December 31, 1993 and for the year ended December 31, 1994 for the Strong
American Utilities Fund, Inc., and the financial highlights for each of the
periods indicated. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Strong Growth and Income Funds as of December 31, 1994, the results of
their operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended for the Strong Asset Allocation
Fund, Inc. and the Strong Total Return Fund, Inc. and for the period from July
1, 1993 (inception) to December 31, 1993 and for the year ended December 31,
1994 for the Strong American Utilities Fund, Inc., and the financial highlights
for each of the periods indicated, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND, L.L.P.
Milwaukee, Wisconsin
January 24, 1995
28
<PAGE> 31
DIRECTORS OF THE FUND
Richard S. Strong
Marvin E. Nevins
Willie D. Davis
OFFICERS OF THE FUND
Richard S. Strong
Chairman of the Board
John Dragisic
Vice Chairman
Lawrence A. Totsky
Vice President
Thomas P. Lemke
Vice President
Ann E. Oglanian
Secretary
Thomas M. Zoeller
Treasurer
Investment Advisor
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
Subadvisor
Strong American Utilities Fund
W.H. Reaves & Co., Inc.
30 Montgomery Street, Jersey City, New Jersey 07302
Distributor
Strong Funds Distributors, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
Custodian
Firstar Trust Company
P.O. Box 701, Milwaukee, Wisconsin 53201
Transfer Agent and Dividend-Disbursing Agent
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
Auditors
Coopers & Lybrand, L.L.P.
411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
Legal Counsel
Godfrey & Kahn, S.C.
780 North Water Street, Milwaukee, Wisconsin 53202
Ticker Symbols
STAAX - The Strong Asset Allocation Fund
SAMUX - The Strong American Utilities Fund
STRFX - The Strong Total Return Fund
<PAGE> 32
FOR LITERATURE AND INFORMATION REQUESTS,
CALL 1-800-368-1030.
TO DISCUSS AN EXISTING ACCOUNT OR
CONDUCT A TRANSACTION,
CALL 1-800-368-3863.
This report must be preceded or accompanied by the prospectus for
the Strong Growth and Income Funds.
[STRONG LOGO]
STRONG FUNDS DISTRIBUTORS, INC.
P.O. Box 2936
Milwaukee, Wisconsin 53201
