As filed with the Securities and Exchange Commission on June 7, 2000
Registration No. 33-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 x
Pre-Effective Amendment No. __
Post-Effective Amendment No. __
(Check appropriate box or boxes)
STRONG INCOME FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
100 HERITAGE RESERVE
MENOMONEE FALLS, WISCONSIN 53051
(Number, Street, City, State, Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (414) 359-3400
ELIZABETH N. COHERNOUR
STRONG CAPITAL MANAGEMENT, INC.
100 HERITAGE RESERVE
MENOMONEE FALLS, WISCONSIN 53051
(Name and Address of Agent for Service)
Copies to:
SCOTT A. MOEHRKE
GODFREY & KAHN, S.C.
780 NORTH WATER STREET
MILWAUKEE, WISCONSIN 53202
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the Registration Statement.
No filing fee is required because of reliance on Section 24(f) of the
Investment Company Act of 1940. Pursuant to Rule 429 under the Securities Act
of 1933, the Prospectus and Proxy Statement relates to shares previously
registered on Form N-1A (File No. 33-37435).
It is proposed that this filing will become effective on July 14, 2000,
pursuant to Rule 488.
Title of Securities Being Registered........ Shares of Common Stock, par value
$.00001 per share.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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STRONG GLOBAL HIGH-YIELD BOND FUND
A SERIES OF STRONG INTERNATIONAL INCOME FUNDS, INC.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
July 14, 2000
Dear Shareholder:
Enclosed is a Combined Proxy Statement and Prospectus, which contains an
important proposal for you to consider. You are eligible to vote on this
proposal because you were a shareholder of record of the Strong Global
High-Yield Bond Fund (the "Global Bond Fund") on June 28, 2000.
The Global Bond Fund's Board of Directors has proposed that your fund be
combined with the Strong High-Yield Bond Fund (the "Bond Fund"), a series of
Strong Income Funds, Inc., in a tax-free reorganization. If shareholders of
the Global Bond Fund approve this proposal, you will become a shareholder of
the Bond Fund and your Global Bond Fund shares will be exchanged for an equal
amount of Bond Fund shares. No sales charges will be imposed in connection
with the reorganization. In addition, the reorganization will not cause you to
recognize any gains or losses on your shares in the Global Bond Fund.
The investment objective of the Global Bond Fund is to seek total return by
investing for a high level of current income and capital growth. The Global
Bond Fund's emphasis has been on medium- and lower-quality bonds of U.S. and
foreign issuers. Because of the combination of credit quality risks associated
with medium- and lower-quality bonds and the additional currency-related risks
associated with foreign investments, there has been a lack of investor interest
in the Global Bond Fund, and the Fund's management does not believe the Fund
can reach a sustainable size in the near future.
In light of the Global Bond Fund's small asset size, lack of expected asset
growth and lack of economies of scale, the Board believes that it is in the
best interests of the Global Bond Fund's shareholders to combine the Global
Bond Fund into the larger Bond Fund. The Bond Fund is the most appropriate
fund because it has the same investment objective and similar investment
policies as the Global Bond Fund. The Bond Fund also offers lower expense
ratios than the Global Bond Fund. Accordingly, the Board of Directors strongly
urges you to vote for the proposed reorganization.
The enclosed materials provide more information about these proposals. Please
read this information carefully and call our proxy solicitor, D.F. King & Co.,
Inc. at 800-290-6424 if you have any questions. Your vote is important to us,
no matter how many shares you own.
After you review the enclosed materials, we ask that you vote FOR the proposed
reorganization. Please vote for the proposal by completing, dating and signing
your proxy card, and mailing it to us today. You also may vote by toll-free
telephone or by Internet according to the enclosed Voting Instructions.
Thank you for your support.
Sincerely,
Richard S. Strong
Chairman
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QUESTIONS AND ANSWERS
YOUR VOTE IS VERY IMPORTANT
QUESTION: WHAT ARE SHAREHOLDERS BEING ASKED TO VOTE ON AT THE UPCOMING SPECIAL
SHAREHOLDER MEETING ON SEPTEMBER 6, 2000?
ANSWER: The Board of Directors of the Strong Global High-Yield Bond Fund (the
"Global Bond Fund") has called the special meeting at which you will be asked
to vote on a combination (the "Reorganization") of your fund into the Strong
High-Yield Bond Fund (the "Bond Fund").
QUESTION: WHAT ARE THE DIFFERENCES BETWEEN THE FUNDS?
ANSWER: The Bond Fund is a larger fund with the same investment objectives and
similar principal investment strategies as the Global Bond Fund. Both Funds
invest primarily in medium- and lower-quality corporate bonds. However, the
Bond Fund, unlike the Global Bond Fund, focuses on bonds of U.S. issuers. The
portfolio managers of both Funds look for high-yield bonds with improving
credit fundamentals. The average maturity of each Fund is also similar. The
Bond Fund typically maintains a dollar-weighted average maturity between five
and ten years, and the Global Bond Fund normally maintains an average maturity
of seven to twelve years. Although the Bond Fund has not historically invested
a significant amount of its assets in common stocks, the Bond Fund may invest
up to 20% of its assets in common stocks. The Bond Fund also offers lower
expense ratios than the Global Bond Fund. In evaluating the Reorganization,
you should consider the impact of investing in a bond fund that invests
primarily in U.S. issuers.
QUESTION: WHAT ARE THE ADVANTAGES FOR GLOBAL BOND FUND SHAREHOLDERS?
ANSWER: Management expects the proposed reorganization to slightly lower the
operating expenses as a percentage of net assets due to the Bond Fund's larger
net assets and greater economies of scale, and to lower portfolio transaction
costs. The Board believes that these potential benefits should offset the
risks associated with investing in high-yield bonds from a single country (the
U.S.).
QUESTION: HAS THE GLOBAL BOND FUND'S BOARD OF DIRECTORS APPROVED THE PROPOSAL?
ANSWER: The Fund's Board of Directors unanimously agreed that this
Reorganization is in your best interest and recommends that you vote in favor
of it.
QUESTION: WHAT IS THE TIMETABLE FOR THE REORGANIZATION?
ANSWER: If approved by shareholders on September 6, 2000, the Reorganization
is expected to take effect on September 29, 2000.
QUESTION: WILL I RECEIVE NEW SHARES IN EXCHANGE FOR MY CURRENT SHARES?
ANSWER: Yes. Upon approval and completion of the Reorganization, shareholders
of the Global Bond Fund will exchange their shares for shares of the Bond Fund
based upon a specified exchange ratio determined by the ratio of the respective
net asset values of the Funds. You will receive shares of the Investor Class
of the Bond Fund whose aggregate value at the time of issuance will equal the
aggregate value of your Global Bond Fund shares on that date.
QUESTION: IF I REDEEM OR EXCHANGE MY NEW SHARES WITHIN SIX MONTHS OF RECEIVING
THEM, WILL I BE CHARGED THE 1% REDEMPTION FEE TYPICALLY CHARGED ON BOND FUND
SHARES HELD FOR LESS THAN SIX MONTHS?
ANSWER: No. The new shares will not be subject to this fee.
QUESTION: WILL THIS REORGANIZATION CREATE A TAXABLE EVENT FOR ME?
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ANSWER: The Reorganization is intended to be done on a tax-free basis for
federal income tax purposes. Therefore, you will recognize no gain or loss for
federal income tax purposes as a result of the Reorganization. In addition,
the tax basis and holding period of the Bond Fund shares you receive will be
the same as the tax basis and holding period of your Global Bond Fund shares.
QUESTION: CAN I EXCHANGE OR REDEEM MY GLOBAL BOND FUND SHARES BEFORE THE
REORGANIZATION TAKES PLACE?
ANSWER: Yes. You may exchange your Global Bond Fund shares for shares of any
other Strong Fund, or redeem your shares, at any time before the Reorganization
takes place, which is expected to be on or about September 29, 2000. If you
choose to do so, your request will be treated as a normal exchange or
redemption of shares and will be a taxable transaction for federal income tax
purposes.
QUESTION: I'M A SMALL INVESTOR. WHY SHOULD I BOTHER TO VOTE?
ANSWER: Your vote makes a difference. If numerous shareholders just like you
fail to vote, the Global Bond Fund may not receive enough votes to go forward
with its meeting. If this happens, we will need to solicit votes again - a
costly proposition for the Global Bond Fund!
QUESTION: WHO GETS TO VOTE?
ANSWER: Any person who owned shares of the Global Bond Fund on the "record
date," which was June 28, 2000, gets to vote - even if the investor later sold
the shares. Shareholders are entitled to cast one vote for each Global Bond
Fund share owned on the record date. Shareholders of the Bond Fund do not get
to vote.
QUESTION: HOW CAN I VOTE?
ANSWER: You can vote your shares in any one of four ways:
- Through the Internet.
- By toll-free telephone.
- By mail, using the enclosed proxy card.
- In person at the meeting.
We encourage you to vote by Internet or telephone, using the number that
appears on your proxy card. These voting methods will save the Global Bond
Fund a good deal of money (because the Fund would not have to pay for
return-mail postage). Whichever method you choose, please take the time to
read the full text of the combined proxy statement and prospectus before you
vote.
QUESTION: I PLAN TO VOTE THROUGH THE INTERNET. HOW DOES INTERNET VOTING WORK?
ANSWER: To vote through the Internet, please read the enclosed Voting
Instructions.
QUESTION: I PLAN TO VOTE BY TELEPHONE. HOW DOES TELEPHONE VOTING WORK?
ANSWER: To vote by telephone, please read the enclosed Voting Instructions.
QUESTION: I PLAN TO VOTE BY MAIL. HOW SHOULD I SIGN MY PROXY CARD?
ANSWER: If you are an individual account owner, please sign exactly as your
name appears on the proxy card. Either owner of a joint account may sign the
proxy card, but the signer's name must exactly match one that appears on the
card. You should sign proxy cards for other types of accounts in a way that
indicates your authority (for instance, "John Brown, Custodian").
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STRONG GLOBAL HIGH-YIELD BOND FUND
A SERIES OF STRONG INTERNATIONAL INCOME FUNDS, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
The Strong Global High-Yield Bond Fund (the "Global Bond Fund"), a series of
Strong International Income Funds, Inc., will hold a Special Meeting of
Shareholders on Wednesday, September 6, 2000, at 8:00 a.m., Central Time. The
meeting will be held at 100 Heritage Reserve, Menomonee Falls, Wisconsin 53051.
At the meeting, shareholders will be asked to consider and act upon the items
noted below:
1. To approve the Agreement and Plan of Reorganization, including an amendment
to the Amended and Restated Articles of Incorporation of the Strong
International Income Funds, Inc. to eliminate the class of common stock that
constitutes shares of the Global Bond Fund, and the transactions it
contemplates.
2. To transact any other business property brought before the Special Meeting.
Only shareholders of record of the Global Bond Fund at the close of business on
June 28, 2000, the record date for this Special Meeting, are entitled to notice
of, and to vote at, the Special Meeting or any adjournments.
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YOUR VOTE IS IMPORTANT.
PLEASE PROMPTLY RETURN YOUR PROXY CARD
OR VOTE BY TOLL-FREE TELEPHONE OR AT OUR WEB SITE
IN ACCORDANCE WITH THE ENCLOSED VOTING INSTRUCTIONS.
AS A SHAREHOLDER OF THE GLOBAL BOND FUND, YOU ARE ASKED TO ATTEND THE SPECIAL
MEETING EITHER IN PERSON OR BY PROXY. IF YOU ARE UNABLE TO ATTEND THE SPECIAL
MEETING IN PERSON, WE URGE YOU TO VOTE BY PROXY. YOU CAN DO THIS IN ONE OF
THREE WAYS: BY (1) COMPLETING, DATING, SIGNING AND PROMPTLY RETURNING THE
ENCLOSED PROXY CARD USING THE ENCLOSED POSTAGE PREPAID ENVELOPE, (2) CALLING
OUR TOLL-FREE TELEPHONE NUMBER, OR (3) VISITING OUR WEB SITE. YOUR PROMPT
VOTING BY PROXY WILL HELP ASSURE A QUORUM AT THE SPECIAL MEETING AND AVOID
ADDITIONAL EXPENSES ASSOCIATED WITH FURTHER SOLICITATION. VOTING BY PROXY WILL
NOT PREVENT YOU FROM VOTING YOUR SHARES IN PERSON AT THE SPECIAL MEETING. YOU
MAY REVOKE YOUR PROXY BEFORE IT IS EXERCISED AT THE SPECIAL MEETING BY
SUBMITTING TO THE SECRETARY OF THE GLOBAL BOND FUND A WRITTEN NOTICE OF
REVOCATION OR A SUBSEQUENTLY SIGNED PROXY CARD, OR BY ATTENDING THE MEETING AND
VOTING IN PERSON. A PRIOR PROXY CAN ALSO BE REVOKED BY VOTING AGAIN THROUGH
THE WEB SITE OR TOLL-FREE TELEPHONE NUMBER LISTED ON THE ENCLOSED VOTING
INSTRUCTIONS.
By Order of the Board of Directors,
Stephen J. Shenkenberg
SECRETARY
Menomonee Falls, Wisconsin
July 14, 2000
2
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STRONG HIGH-YIELD BOND FUND
A SERIES OF STRONG INCOME FUNDS, INC.
STRONG GLOBAL HIGH-YIELD BOND FUND
A SERIES OF STRONG INTERNATIONAL INCOME FUNDS, INC.
100 HERITAGE RESERVE
MENOMONEE FALLS, WISCONSIN 53051
TELEPHONE: (414) 359-1400
TOLL FREE: (800) 368-3863
DEVICE FOR THE HEARING IMPAIRED: (800) 999-2780
COMBINED PROXY STATEMENT AND PROSPECTUS
DATED JULY 14, 2000
THIS COMBINED PROXY STATEMENT AND PROSPECTUS IS BEING SENT TO YOU IN CONNECTION
WITH THE SOLICITATION BY THE BOARD OF DIRECTORS (THE "BOARD") OF THE STRONG
INTERNATIONAL INCOME FUNDS, INC. ("SIIF") OF PROXIES TO BE VOTED AT THE SPECIAL
MEETING (THE "MEETING") OF SHAREHOLDERS OF THE STRONG GLOBAL HIGH-YIELD BOND
FUND (THE "GLOBAL BOND FUND") TO BE HELD AT 100 HERITAGE RESERVE, MENOMONEE
FALLS, WISCONSIN 53051, ON WEDNESDAY, SEPTEMBER 6, 2000, AT 8:00 A.M., CENTRAL
TIME, AND ANY ADJOURNMENTS OF THE MEETING. At the Meeting, shareholders will
be asked to approve an agreement and plan of reorganization that would combine
the Global Bond Fund with the Strong High-Yield Bond Fund (the "Bond Fund"), a
series of Strong Income Funds, Inc. ("SIF").
As a technical matter, the reorganization will have three steps:
- the transfer of the assets and liabilities of the Global Bond Fund to the
Bond Fund in exchange for Investor Class shares of the Bond Fund of
equivalent value to the net assets transferred,
- the pro rata distribution of those Investor Class shares of the Bond Fund to
shareholders of record of the Global Bond Fund as of the effective date of
the reorganization in full cancellation of those shareholders' shares in the
Global Bond Fund, and
- the immediate liquidation and termination of the Global Bond Fund.
As a result of the reorganization, you will become a shareholder of the Bond
Fund and your Global Bond Fund shares will be exchanged for Bond Fund shares
of the same net asset value. The reorganization will not cause you to
recognize any gains or losses for federal income tax purposes on any shares in
the Global Bond Fund.
This combined proxy statement and prospectus sets forth the basic information
you should know before voting on the proposal. You should read it and keep it
for future reference.
SIIF and SIF are open-end management investment companies. The following
documents have been filed with the Securities and Exchange Commission (the
"SEC") and are incorporated by reference in this combined proxy statement and
prospectus:
- Prospectus for the Global Bond Fund dated March 1, 2000, as supplemented on
May 26, 2000,
- Prospectus for the Investor Class of the Bond Fund dated February 29, 2000,
- Statement of Additional Information for the Global Bond Fund dated
March 1, 2000, as supplemented on May 15, 2000,
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- Statement of Additional Information for the Bond Fund dated February 29,
2000, and
- Statement of Additional Information relating to this combined proxy statement
and prospectus dated July 14, 2000.
Copies of these documents are available upon request and without charge by
writing to the Global Bond Fund or the Bond Fund at P.O. Box 2936, Milwaukee,
Wisconsin 53201, or by calling 800-368-3863.
The accompanying Notice of Special Meeting of Shareholders, this combined
proxy statement and prospectus and the accompanying proxy card were first
mailed to Global Bond Fund shareholders on or about July 14, 2000.
The SEC has not approved or disapproved these securities nor has it passed on
the accuracy or adequacy of this combined proxy statement and prospectus. Any
representation to the contrary is a criminal offense.
4
<PAGE>
TABLE OF CONTENTS
PAGE
SYNOPSIS.......................................................................
PRINCIPAL RISK FACTORS.........................................................
THE PROPOSED REORGANIZATION....................................................
COMPARISON OF THE FUNDS........................................................
VOTING INFORMATION.............................................................
FINANCIAL HIGHLIGHTS...........................................................
ADDITIONAL INFORMATION ABOUT THE FUNDS.........................................
LEGAL MATTERS..................................................................
EXPERTS........................................................................
OTHER MATTERS..................................................................
SHAREHOLDER PROPOSALS..........................................................
EXHIBIT A...................................................................A-1
EXHIBIT B...................................................................B-1
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SYNOPSIS
The following is a summary of certain information contained in other sections
of this combined proxy statement and prospectus, in the Agreement and Plan of
Reorganization (the "Agreement," which is attached as Exhibit A), the related
amendment to the Amended and Restated Articles of Incorporation of the Strong
International Income Funds, Inc. ("SIIF's Articles Amendment" which is
attached as Exhibit B), and in the Prospectuses of the Global Bond and Bond
Funds, which are incorporated in this combined proxy statement and prospectus
by reference.
THE REORGANIZATION. Shareholders of the Global Bond Fund will be asked at the
Meeting to approve the Agreement. Under the Agreement, the Global Bond Fund
will combine its assets and liabilities into the Bond Fund and the separate
existence of the Global Bond Fund will cease and the Bond Fund will be the
surviving fund. Shareholders of the Global Bond Fund will become shareholders
of the Bond Fund and will receive Investor Class shares of the Bond Fund
having a net asset value equal to the net asset value of Global Bond Fund
shares held by such shareholders.
Based upon their evaluation of all relevant information, the Boards of
Directors of the Global Bond and Bond Funds have determined that the
reorganization (the "Reorganization") is in the best interests of the
shareholders of each Fund. Approval of the Reorganization will be determined
solely by the shareholders of the Global Bond Fund. No vote by shareholders
of the Bond Fund is required.
INVESTMENT OBJECTIVES AND POLICIES. The Global Bond Fund and the Bond Fund
have the same investment objective - to seek total return by investing for a
high level of current income and capital growth. The Global Bond Fund's
emphasis has been on medium- and lower-quality bonds of U.S. and foreign
issuers. The Bond Fund's emphasis has been on medium- and lower-quality bonds
primarily of U.S. issuers. The Bond Fund also invests, to a limited extent,
in common stocks. The Global Bond Fund and the Bond Fund have the same
investment advisor, Strong Capital Management, Inc. ("SCM"), but have
different portfolio managers.
DISTRIBUTION AND PURCHASE PROCEDURES. The Global Bond Fund currently offers
one class of shares. These shares are not subject to any sales loads or
distribution fees. Accordingly, these shares are offered at the net asset
value per share as described in the Prospectus of the Global Bond Fund. The
Bond Fund currently offers two classes of shares: the Investor Class and the
Advisor Class. The Bond Fund's Investor Class shares are not subject to any
sales loads or distribution fees. Accordingly, these shares are offered at
the net asset value per share as described in the Prospectus of the Investor
Class of the Bond Fund. The Bond Fund's Advisor Class shares are subject to an
annual distribution and shareholder servicing fee of 0.25% of average net
assets. Pursuant to the Reorganization, Global Bond Fund shareholders will
receive shares of the Investor Class of the Bond Fund.
EXCHANGE RIGHTS. The Global Bond Fund and the Investor Class of the Bond Fund
currently offer shareholders similar exchange privileges. Shareholders of the
Global Bond Fund and the Investor Class of the Bond Fund may exchange their
shares for shares of another Strong fund. An exchange is not subject to an
initial sales charge. However, the Bond Fund charges a redemption fee of
1.00% on shares held for less than six months. Bond Fund shares received
pursuant to the Reorganization will not be subject to this 1% redemption fee.
REDEMPTION PROCEDURES. Shareholders of the Global Bond Fund may redeem their
shares at a redemption price equal to the net asset value of the shares as
described in the Prospectus of the Global Bond Fund. Shareholders of the Bond
Fund may also redeem their shares at a redemption price equal to the net asset
value of the shares as described in the Prospectus of the Investor Class of
the Bond Fund, unless they have held such shares for less than six months.
The Bond Fund charges a redemption fee of 1.00% on shares held for less than
six months. Bond Fund shares received pursuant to the Reorganization will not
be subject to this 1% redemption fee. The Global Bond Fund and the Bond Fund
generally send redemption proceeds on the business day after a shareholder's
redemption request is accepted.
DIVIDENDS AND DISTRIBUTIONS. The Global Bond Fund and the Bond Fund have the
same distribution policy. Each Fund generally pays dividends from net
investment income monthly and distributes any net capital gains that it
receives annually.
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EXPENSE STRUCTURES. The Global Bond Fund and the Bond Fund have different
expense structures. Both Funds pay a management fee to SCM. The Global Bond
Fund pays a management fee to SCM at an annual rate of 0.70% of average net
assets. The Bond Fund pays a management fee to SCM at an annual rate of
0.375% of average net assets. The Global Bond Fund also has higher annual
other expenses than the Bond Fund at 1.30% of average net assets as of October
31, 1999. The annual other expenses of the Investor Class of the Bond Fund
are 0.49% of average net assets as of October 31, 1999.
FEDERAL TAX CONSEQUENCES OF THE REORGANIZATION.
At the closing of the Reorganization, the Funds will receive an opinion of
counsel that:
- shareholders of the Global Bond Fund will receive no gain or loss for federal
income tax purposes on their receipt of shares of the Bond Fund,
- the aggregate tax basis of the Bond Fund shares, including any fractional
shares, received by each Global Bond Fund shareholder pursuant to the
Reorganization will be the same as the aggregate tax basis of the Global Bond
Fund shares held by such shareholder prior to the Reorganization, and
- the holding period of the Bond Fund shares, including fractional shares,
received by the Global Bond Fund shareholders will generally include the
holding period of the Global Bond Fund shares that were exchanged by such
shareholder.
The following table shows the capital loss carryforward of the Global Bond
Fund and the Bond Fund as of October 31, 1999, and pro forma for the combined
Bond Fund after the Reorganization and assuming the Reorganization took place
on October 31, 1999. As indicated below, upon effectiveness of the
Reorganization, the capital loss carryforward per share for the combined Bond
Fund is significantly lower than for the Global Bond Fund.
CAPITAL LOSS CARRYFORWARD (PER SHARE)
<TABLE>
<CAPTION>
<S> <C> <C>
AMOUNT PER
FUND AMOUNT SHARE
----------------------- ------------- ------------
Bond ($13,966,852) ($0.25)
Global Bond ($416,714) ($2.82)
Pro Forma Combined Bond ($14,383,566) ($0.26)
</TABLE>
RISK FACTORS. An investment in the Bond Fund is subject to specific risks
arising from the types of securities in which the Bond Fund invests and
general risks arising from investing in any mutual fund. Investors can lose
money by investing in the Bond Fund. There is no assurance that the Bond Fund
will meet its investment objective. Because the Bond Fund's investment
objective and policies are substantially similar to those of the Global Bond
Fund, an investment in the Bond Fund is subject to many of the same risks as
an investment in the Global Bond Fund. See "Principal Risk Factors" for the
principal risks associated with an investment in the Bond Fund.
COMPARATIVE FEE TABLES. The following table shows the fees and expenses of
shares of the Global Bond Fund and Investor Class shares of the Bond Fund as
of October 31, 1999, and pro forma fees for the combined Bond Fund after
giving effect to the Reorganization and assuming the Reorganization took place
on October 31, 1999. As indicated below, upon effectiveness of the
Reorganization, "Annual Fund Operating Expenses" for the combined Bond Fund
are expected to be lower then "Annual Fund Operating Expenses" for the Global
Bond Fund
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ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
TOTAL ANNUAL
MANAGEMENT 12B-1 OTHER FUND OPERATING
FUND FEES FEES EXPENSES EXPENSES
----------------------- ------------ ----------- ----------- --------------
Bond 0.375% None 0.49% 0.87%*
Global Bond 0.70% None 1.30% 2.00%
Pro Forma Combined Bond 0.375% None 0.49% 0.87%
</TABLE>
* The expense information has been restated to reflect current fees.
EXAMPLE
This example is intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the Fund and reinvest all dividends and
distributions for the time periods indicated, and then redeem all of your
shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------------------- --------- --------- --------- ---------
Bond $89 $278 $482 $1,073
Global Bond $203 $627 $1,078 $2,327
Pro Forma Combined Bond $89 $278 $482 $1,073
</TABLE>
PRINCIPAL RISK FACTORS
Because the Bond Fund's investment objective is identical to the Global Bond
Fund and its investment policies are similar to those of the Global Bond Fund,
an investment in the Bond Fund is subject to many of the same risks as an
investment in the Global Bond Fund. The following highlights the similarities
and differences with respect to the principal risk factors of the Bond Fund
and the Global Bond Fund.
An investment in the Bond Fund is subject to specific risks arising from the
types of securities in which the Bond Fund invests and general risks arising
from investing in any mutual fund. You can lose money by investing in the
Bond Fund. There is no assurance that the Bond Fund will meet its investment
objective.
BOND RISKS. The major risks of both Funds are investing in the bond market.
A bond's market value is affected by interest rate risk, maturity risk and
credit quality risk. If interest rates rise, bond prices in general are
likely to decline over short or extended periods. In addition, a bond's price
can be affected by changes in the issuer's financial condition.
HIGH-YIELD BONDS. Both Funds also invest in medium- and lower-quality bonds
(commonly referred to as junk bonds). These bonds involve greater interest
rate and credit quality risk than higher quality bonds. Issuers of high-yield
bonds may not be able to make interest and principal payments. An economic
downturn or period of rising interest rates could reduce a Fund's ability to
sell its high-yield bonds.
FOREIGN SECURITIES. Although both Funds invest in foreign securities, the
Global Bond Fund invests predominantly in foreign securities, and the Bond
Fund may only invest up to 25% of the assets in foreign securities. Foreign
investments involve additional risks including currency-rate fluctuations,
political and economic instability, differences in financial reporting
standards and less stringent regulation of securities markets. Accordingly,
the Bond Fund is subject to less foreign securities risk than the Global Bond
Fund.
NONDIVERSIFIED PORTFOLIO. Unlike the Bond Fund, the Global Bond Fund is
nondiversified so that it may take large positions in individual bonds. As a
result, shares of the Global Bond Fund are likely to fluctuate in value more
than shares of funds (like the Bond Fund) investing in a broader range of
securities.
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ADDITIONAL RISKS. Unlike the Global Bond Fund, the Bond Fund invests in
common stocks, mortgage and asset-backed securities and uses futures contracts
to manage risk or hedge against market volatility. As a result, the Bond Fund
is subject to the additional risks associated with their investments.
THE PROPOSED REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION. The terms and conditions of the
Reorganization are set forth in the Agreement. Significant provisions of the
Agreement are summarized below. This summary, however, is qualified in its
entirety by reference to the Agreement, a form of which is attached to this
combined proxy statement and prospectus as Exhibit A.
The Agreement contemplates:
- the acquisition by the Bond Fund, on the closing date of the Reorganization,
of all or substantially all of the assets of the Global Bond Fund by the Bond
Fund in exchange solely for Investor Class shares of the Bond Fund and the
assumption by the Bond Fund of all or substantially all of the liabilities of
the Global Bond Fund, and
- the distribution of Investor Class shares of the Bond Fund to the
shareholders of the Global Bond Fund in exchange for their respective shares
of the Global Bond Fund.
The assets of the Global Bond Fund to be acquired by the Bond Fund include,
without limitation, all securities, dividends and interest receivables, cash
and cash equivalents which are owned by the Global Bond Fund and any deferred
or prepaid expenses shown as assets on the books of the Global Bond Fund on
the closing date of the Reorganization. The Bond Fund will assume all
liabilities, expenses, costs, charges and reserves reflected on an unaudited
statement of assets and liabilities of the Global Bond Fund as of the closing
date (other than unamortized organizational expenses). The closing of the
Reorganization will occur on September 29, 2000, or such earlier or later date
as the Funds may agree.
The value of the Global Bond Fund's assets to be acquired and the net asset
value of the Investor Class shares of the Bond Fund will be determined as of
the close of regular trading on the New York Stock Exchange on the closing
date, using the valuation procedures set forth in the respective Fund's
then-current Prospectus and Statement of Additional Information. The number
of Investor Class shares of the Bond Fund to be issued to the Global Bond Fund
will be determined by dividing the Global Bond Fund's net assets by the net
asset value per share of the Investor Class of the Bond Fund.
The Agreement will be implemented through SIIF's Articles Amendment. This
Amendment is included as Exhibit B to the Agreement. On the closing date, the
Global Bond Fund will liquidate and distribute pro rata to its shareholders of
record the Bond Fund shares received by the Global Bond Fund in exchange for
their respective shares in the Global Bond Fund. This liquidation and
distribution will be accomplished by opening an account on the books of the
Bond Fund in the name of each shareholder of record in the Global Bond Fund
and by crediting to each account the shares due pursuant to the
reorganization. Every Global Bond Fund shareholder will own shares of the
Investor Class of the Bond Fund immediately after the Reorganization, the
value of which will be equal to the net asset value of the shareholder's
Global Bond Fund shares immediately prior to the Reorganization.
Prior to the closing date, the Bond Fund will declare a dividend or dividends
which, together with all previous dividends, will have the effect of
distributing to the Bond Fund shareholders all of its investment company
taxable income for all taxable years to and including the closing date
(computed without regard to any deduction for dividends paid) and all of its
net capital gains realized in all taxable years to and including the closing
date.
The closing of the Reorganization is subject to a number of conditions
included in the Agreement. The Agreement may be terminated and the
Reorganization abandoned at any time, before or after approval by the
shareholders of the Global Bond Fund, prior to the closing date, by mutual
agreement of the Funds or by either Fund if certain conditions are not met or
the other Fund materially breaches the Agreement. In addition, the Agreement
5
<PAGE>
may be amended by mutual agreement of the Funds, except that no amendment may
be made subsequent to the Meeting that would change the provisions for
determining the number of Bond Fund shares to be issued to shareholders of the
Global Bond Fund without their further approval.
REASONS FOR THE REORGANIZATION. The Boards of Directors of the Funds
determined that the Reorganization is in the best interests of the
shareholders of both Funds and that the Reorganization will not result in a
dilution of the interests of shareholders of either Fund.
In considering the Reorganization, the Boards considered a number of factors,
including the following:
- the compatibility of the Fund's investment objectives, policies and
restrictions,
- the relative size of the Funds and the growth prospects for the Global Bond
Fund,
- the relative expense ratios of the Funds,
- the tax consequences of the Reorganization, and
- the benefits to the shareholders of the Funds.
In approving the Reorganization, the Boards concluded that the Reorganization
would be a means of combining two funds with substantially similar investment
objectives and policies and would permit shareholders of the Global Bond Fund
to pursue their investment goals in a larger fund. The Boards also noted that
the Reorganization could result in economies of scale by spreading costs over
a larger asset base.
DESCRIPTION OF THE INVESTOR CLASS SHARES OF THE BOND FUND. Each Investor
Class share of the Bond Fund issued to shareholders of the Global Bond Fund
pursuant to the Reorganization will be duly authorized and validly issued,
fully paid and nonassessable, will be transferable without restriction and
will have no preemptive or conversion rights. Each Investor Class share of
the Bond Fund will represent an equal interest in the assets attributable to
the Investor Class of the Bond Fund. Investor Class shares of the Bond Fund
will be sold and redeemed based upon the net asset value of the Bond Fund
attributable to the Investor Class next determined after receipt of a purchase
or redemption request, as described in the Prospectus of the Investor Class of
the Bond Fund.
There are no material differences between the rights of shareholders of the
Global Bond Fund and the rights of Investor Class shareholders of the Bond
Fund.
FEDERAL INCOME TAX CONSEQUENCES. The Reorganization is intended to qualify
for federal income tax purposes as a reorganization under the Internal Revenue
Code of 1986, as amended (the "Code"). Pursuant to the Agreement, the Funds
must receive an opinion from Godfrey & Kahn, S.C., substantially to the effect
that:
- the transfer to the Bond Fund of all or substantially all of the assets of
the Global Bond Fund in exchange solely for Bond Fund shares and the
assumption by the Bond Fund of all of the liabilities of the Global Bond
Fund, followed by the distribution of Bond Fund shares to Global Bond Fund
shareholders in exchange for their shares of the Global Bond Fund in complete
liquidation of the Global Bond Fund, will constitute a "reorganization"
within the meaning of Section 368(a)(1) of the Code, and the Bond Fund and
the Global Bond Fund will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Code;
- in accordance with Section 361(a) of the Code, no gain or loss will be
recognized by the Global Bond Fund upon the transfer of the Global Bond
Fund's assets to the Bond Fund in exchange for Bond Fund shares and the
assumption by the Bond Fund of liabilities of the Global Bond Fund or upon
the distribution (whether actual or constructive) of the Bond Fund shares to
the Global Bond Fund's shareholders in exchange for their shares of the
Global Bond Fund under Section 361(c) of the Code;
6
<PAGE>
- in accordance with Section 362(b) of the Code, the basis of the assets of the
Global Bond Fund in the hands of the Bond Fund will be the same as the basis
of such assets of the Global Bond Fund immediately prior to the transfer;
- the holding period of the assets of the Global Bond Fund in the hands of the
Bond Fund will include the period during which such assets were held by the
Global Bond Fund;
- under Section 1032 of the Code, no gain or loss will be recognized by the
Bond Fund upon the receipt of the assets of the Global Bond Fund in exchange
for Bond Fund shares and the assumption by the Bond Fund of the liabilities
of the Global Bond Fund;
- in accordance with Section 354(a)(1) of the Code, no gain or loss will be
recognized by the Global Bond Fund shareholders upon the receipt of Bond Fund
shares solely in exchange for their shares of the Global Bond Fund as part of
the transaction;
- in accordance with Section 358 of the Code, the basis of the Bond Fund shares
received by the Global Bond Fund shareholders will be the same as the basis
of the shares of the Global Bond Fund exchanged therefor; and
- in accordance with Section 1223 of the Code, the holding period of Bond Fund
shares received by the Global Bond Fund shareholders will include the holding
period during which the shares of the Global Bond Fund exchanged therefor
were held, provided that at the time of the exchange the shares of the Global
Bond Fund were held as capital assets in the hands of the Global Bond Fund
shareholders.
CAPITALIZATION. The following table sets forth the capitalization of the Bond
Fund and the Global Bond Fund, and on a pro forma basis for the combined Bond
Fund as of May 31, 2000, giving effect to the proposed acquisition of net
assets of the Global Bond Fund at net asset value.
NET ASSET VALUE
FUND TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
Bond $689,579,274.37 67,873,846.187 $10.16
Global Bond $1,690,397.24 199,777.944 $8.46
Pro Forma Combined Fund $691,269,671.61 68,040,223.868 $10.16
COMPARISON OF THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES. The investment objective of the Bond
Fund and the Global Bond Fund is identical - to seek total return by investing
for a high level of current income and capital growth. The principal
investment strategies of the Funds are similar. Both funds invest primarily
in medium- and lower-quality corporate bonds. However, the Bond Fund, unlike
the Global Bond Fund, focuses on bonds of U.S. issuers. The portfolio managers
of both Funds look for high-yield bonds with improving credit fundamentals.
The portfolio manger of the Global Bond Fund also looks for high-yield bonds
that may benefit from changes in interest and currency-exchange rates. The
average maturity of each Fund is also similar. The Bond Fund typically
maintains a dollar-weighted average maturity between five and ten years, and
the Global Bond Fund normally maintains an average maturity of seven to twelve
years. Although the Bond Fund has not historically invested a significant
amount of its assets in common stocks, the Bond Fund may invest up to 20% of
its assets in common stocks.
COMPARATIVE PERFORMANCE INFORMATION. The following information
illustrates how the Funds' performance can vary, which is one indication of
risk. Please keep in mind that past performance is no guarantee of future
results. The information assumes that you reinvested all dividends and
distributions.
7
<PAGE>
CALENDAR YEAR TOTAL RETURNS
<TABLE>
<CAPTION>
<S> <C> <C>
Year Bond Global Bond
---- ----------- -----------
1996 26.8% ---
---- ----------- -----------
1997 16.0% ---
---- ----------- -----------
1998 3.1% ---
---- ----------- -----------
1999 7.8% 5.7%
---- ----------- -----------
</TABLE>
BEST AND WORST QUARTERLY PERFORMANCE (DURING THE PERIODS SHOWN ABOVE)
FUND NAME BEST QUARTER RETURN WORST QUARTER RETURN
Bond 8.2% (1st Q 1996) -5.3% (3rd Q 1998)
Global Bond 5.9% (4th Q 1998) -9.8% (3rd Q 1998)
AVERAGE ANNUAL TOTAL RETURNS (AS OF 12-31-99)
FUND/INDEX 1-YEAR SINCE INCEPTION
BOND 7.81% 13.13% (12-28-95)
Lehman Brothers High-Yield Bond Index 2.39% 7.00%
Lipper High Current Yield Funds Index 4.78% 7.58%
GLOBAL BOND 5.73% 1.23% (1-31-98)
Global High-Yield Bond Index 17.35% 3.52%
Lipper Global Income Funds Index -2.74% 1.37%
THE LEHMAN BROTHERS HIGH-YIELD BOND INDEX IS AN UNMANAGED INDEX GENERALLY
REPRESENTATIVE OF CORPORATE BONDS RATED BELOW INVESTMENT-GRADE. THE LIPPER
HIGH CURRENT YIELD FUNDS INDEX IS AN EQUALLY-WEIGHTED PERFORMANCE INDEX OF THE
LARGEST QUALIFYING FUNDS IN THIS LIPPER CATEGORY. THE GLOBAL HIGH-YIELD BOND
INDEX IS COMPRISED OF 65% J.P. MORGAN EMERGING MARKETS BOND INDEX+ AND 35%
LEHMAN BROTHERS HIGH-YIELD BOND INDEX. THE J.P. MORGAN EMERGING MARKETS BOND
INDEX+ IS AN UNMANAGED INDEX GENERALLY REPRESENTATIVE OF EMERGING MARKET DEBT
OBLIGATIONS. THE LEHMAN BROTHERS HIGH-YIELD BOND INDEX IS AN UNMANAGED INDEX
GENERALLY REPRESENTATIVE OF CORPORATE BONDS RATED BELOW INVESTMENT-GRADE. THE
LIPPER GLOBAL INCOME FUNDS INDEX IS AN EQUALLY-WEIGHTED PERFORMANCE INDEX OF
THE LARGEST QUALIFYING FUNDS IN THIS LIPPER CATEGORY.
As of May 31, 2000, the 30-days yields for the Funds were as follows: the BOND
FUND 12.26% and the GLOBAL BOND FUND 7.24%.
INVESTMENT ADVISOR AND PORTFOLIO MANAGERS. SCM is the investment advisor for
both Funds. Founded in 1974, SCM provides investment management services for
mutual funds and other investment portfolios representing assets as of May 31,
2000, of over $__ billion. SCM's address is P.O. Box 2936, Milwaukee,
Wisconsin 53201.
The following individuals are co-managers of the Bond Fund:
JEFFREY A. KOCH has over ten years of investment experience and is a Chartered
Financial Analyst. Mr. Koch joined SCM in June 1989. He has been a portfolio
manager since January 1990. He has managed or co-managed the Bond Fund since
its inception in December 1995. Prior to joining SCM, Mr. Koch was employed by
Fossett Corporation, a clearing firm, as a market maker clerk. Mr. Koch
received his bachelors degree in Economics from the University of Minnesota in
1987 and his Masters of Business Administration in Finance from Washington
University in 1989.
8
<PAGE>
THOMAS M. PRICE has over nine years of investment experience and is a Chartered
Financial Analyst. He has co-managed the Bond Fund since May 1998. He joined
SCM in April 1996 as a research analyst and became a co-portfolio manager in
May 1998. From July 1992 to April 1996 he was employed by Northwestern Mutual
Life Insurance as a high-yield bond analyst. He was a financial analyst at
Houlihan, Lokey, Howard & Zukin for two years prior to that. He received his
bachelors degree in Finance from the University of Michigan in 1989 and his
Masters of Management in Finance from the Kellogg Graduate School of
Management, Northwestern University in 1992.
The following individual manages the Global Bond Fund:
JOHN T. BENDER has over ten years of investment experience and is a Chartered
Financial analyst and a Certified Public Accountant. Mr. Bender joined SCM in
February 1987. He co-managed the Global Bond Fund from January 1998 to August
1999, at which point he became the Global Bond Fund's sole manager. In January
1996, Mr. Bender became a fixed income portfolio manager. From October 1990 to
January 1996, Mr. Bender was a fixed income research analyst and trader.
Mr. Bender received his bachelors degree in Accounting from Marquette
University in 1988.
VOTING INFORMATION
GENERAL. The record holders of outstanding shares of the Global Bond Fund are
entitled to one vote per share (and a fractional vote per fractional share) on
all matters presented at the Meeting. Whether you expect to be personally
present at the Meeting or not, we encourage you to vote by proxy. You can do
this in one of three ways. You may complete, date, sign and return the
accompanying proxy card using the enclosed postage prepaid envelope, you may
vote by calling our toll-free telephone number, or you may vote by visiting our
Web site in accordance with the enclosed Voting Instructions. By voting by
proxy, your shares will be voted as you instruct. If no choice is indicated,
your shares will be voted FOR the proposal, and in accordance with the best
judgment of the persons named as proxies on such other matters that properly
may come before the Meeting. Any shareholder giving a proxy may revoke it at
any time before it is exercised at the Meeting by submitting to the Secretary
of the Global Bond Fund a written notice of revocation or a subsequently signed
proxy card or by attending the Meeting and voting in person. A prior proxy can
also be revoked by voting again through the Web site or toll-free telephone
number listed on the enclosed Voting Instructions. If not so revoked, the
shares represented by the proxy will be voted at the Meeting and any
adjournments of the Meeting. Attendance by a shareholder at the Meeting does
not in itself revoke a proxy.
A quorum for the Meeting occurs if a majority of the outstanding shares of
common stock of the Global Bond Fund entitled to vote at the Meeting are
present in person or by proxy. Abstentions and broker non-votes (i.e., proxies
from brokers or nominees indicating that they have not received instructions
from the beneficial owners on an item for which the brokers or nominees do not
have discretionary power to vote) will be treated as present for determining
the quorum. Abstentions and broker non-votes will not, however, be counted as
voting on any matter at the Meeting. In the event that a quorum is not present
at the Meeting, or in the event that a quorum is present but sufficient votes
to approve the proposal are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of votes. Any such adjournment will require the affirmative vote of a majority
of those shares voting on the adjournment.
Shareholder votes will be solicited primarily by mail. The solicitation may
also include telephone, facsimile, telegraph or oral communications by certain
employees of the Global Bond Fund's investment advisor, SCM, who will not be
paid for these services, and/or by D.F. King & Co., Inc., a professional proxy
solicitor retained by the Global Bond Fund for an estimated fee of $6,000, plus
out-of-pocket expenses. Except for the services provided by SCM, the Global
Bond Fund will pay the costs of the Meeting and the costs of the solicitation
of proxies (i.e., votes) and the fees of D.F. King & Co., Inc. The Global Bond
Fund will also reimburse brokers and other nominees for their reasonable
expenses in communicating with the person(s) for whom they hold shares of the
Global Bond Fund.
Only the shareholders of record of the Global Bond Fund at the close of
business on June 28, 2000, will be entitled to notice of, and to vote at, the
Meeting or any adjournments thereof. As of June 28, 2000, there were
_____________ issued and outstanding shares of common stock of the Global Bond
Fund.
9
<PAGE>
REQUIRED VOTE. Approval of the Agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of the Global Bond Fund.
Although abstentions and broker non-votes will not be counted as voting on the
Agreement, abstentions and broker non-votes will have the effect of a vote
against the Agreement. Shareholders of the Bond Fund are not required to vote
on the Agreement.
APPRAISAL RIGHTS If the Agreement is approved at the Meeting, shareholders of
the Global Bond Fund will have the right to dissent and obtain payment of fair
value for their Global Bond Fund shares in accordance with the Wisconsin
Business Corporation Law. For these purposes, "fair value" means the value of
the Global Bond Fund shares immediately before the closing of the
Reorganization. However, the exercise of appraisal rights is subject to the
"forward pricing" requirements of Rule 22c-1 under the Investment Company Act
of 1940, as amended (the "1940 Act"), which supersedes contrary provisions of
state law. Accordingly, shareholders have the right to redeem their Global
Bond Fund shares at net asset value until the closing date of the
Reorganization. After the Reorganization, shareholders of the Global Bond Fund
will hold Investor Class shares of the Bond Fund, which may also be redeemed at
net asset value.
OWNERSHIP OF SECURITIES OF THE FUNDS. As of June 28, 2000, directors and
officers of the Global Bond Fund as a group owned less than 1% of the
outstanding voting securities of the Global Bond Fund. As of the same date,
the following persons owned beneficially or of record more than 5% of the
outstanding shares of the Global Bond Fund:
NAME AND ADDRESS SHARES PERCENTAGE
As of June 28, 2000, directors and officers of the Bond Fund as a group owned
less than 1% of the outstanding voting securities of the Bond Fund. As of the
same date, the following persons owned beneficially or of record more than 5%
of the outstanding shares of the Bond Fund:
NAME AND ADDRESS SHARES PERCENTAGE
RECOMMENDATION OF THE BOARD OF DIRECTORS. The Board of Directors recommends
that shareholders of the Global Bond Fund vote in favor of the Agreement.
10
<PAGE>
FINANCIAL HIGHLIGHTS
This information describes investment performance of the Investor Class shares
of the Bond Fund for the periods shown. Certain information reflects financial
results for a single Investor Class share of the Bond Fund. "Total Return"
shows how much an investment in the Investor Class shares of the Bond Fund
would have increased (or decreased) during each period, assuming you had
reinvested all dividends and distributions. These figures (except for the
six-month period ended April 30, 2000) have been audited by
PricewaterhouseCoopers LLP, whose report, along with the Bond Fund's financial
statements, is included in the Bond Fund's annual report. The figures for the
six-month period ended April 30, 2000 are unaudited and may be found along with
the Bond fund's financial statements, in the Fund's latest semi-annual report.
STRONG HIGH-YIELD BOND FUND - INVESTOR CLASS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
April 30, Oct. 31, Oct. 31, Oct. 31, Oct. 31,
SELECTED PER-SHARE DATA (A) 2000(b) 1999 1998 1997 1996(c)
----------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period............... $10.60 $10.73 $11.94 $11.26 $10.00
Income From Investment Operations
Net Investment Income...................... 0.56 1.09 1.05 1.05 0.84
Net Realized and
Unrealized Gains (Losses) on
Investments............... (0.27) (0.05) (0.89) 0.81 1.26
-----------------------------------------------------------------------------------
Total from Investment
Operations............... 0.29 1.04 0.16 1.86 2.10
Less Distributions
From Net Investment Income............ (0.56) (1.08) (1.04) (1.05) (0.84)
In Excess of Net
Investment Income......... --- --- (0.01) --- ---
From Net Realized Gains................. --- (0.09) (0.32) (0.13) ---
------------------------------------------------------------------------------------
Total Distributions.................. (0.56) (1.17) (1.37) (1.18) (0.84)
--------------------------------------------------------------------------------
Net Asset Value,
End of Period..................... $10.33 $10.60 $10.73 $11.94 $11.26
=====================================================
RATIOS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------
Total Return........................ +2.8% +9.8% +0.9% +17.3% +21.7%
Net Assets, End of Period
(In Millions)..... $708 $595 $462 $510 $217
Ratio of Expenses to Average Net
Assets without Waivers,
Absorptions Or Fees Paid
Indirectly by Advisor.... 0.8% 0.8% 0.8% 0.8% 1.0%*
Ratio of Expenses to
Average Net Assets... 0.8% 0.8% 0.8% 0.6% 0.0%*
Ratio of Net Investment
Income to Average Net Assets............10.6% 9.8% 8.8% 8.9% 9.6%*
Portfolio Turnover Rate(d)............ 46.0% 144.7% 224.4% 409.3% 390.8%
</TABLE>
* Calculated on an annualized basis.
11
<PAGE>
(a) Information presented relates to a share of capital stock of the fund
outstanding for the entire period.
(b) For the six months ended April 30, 2000 (unaudited).
(c) For the period from January 1, 1996 (Commencement of Operations) to
October 31, 1996.
(d) Calculated on the basis of the fund as a whole without distinguishing
between the classes of shares issued.
ADDITIONAL INFORMATION ABOUT THE FUNDS
The Global Bond Fund and the Bond Fund both file reports and other information
with the SEC. Reports, proxy statements, registration statements and other
information filed by the Global Bond Fund and the Bond Fund can be inspected
and copied at the public reference facilities of the SEC in Washington, D.C. at
450 Fifth Street, N.W., Washington, D.C. 20549 and the SEC's regional offices
in New York at Seven World Trade Center, New York, New York 10048 and Chicago
at Northwestern Atrium Center, 500 West Madison Street, Suite 1700, Chicago,
Illinois 60661. Copies of such materials also can be obtained by mail from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549 at prescribed rates.
The SEC maintains a Web site at http://www.sec.gov that contains reports and
other information about the Funds.
LEGAL MATTERS
Certain legal matters in connection with the Reorganization will be passed upon
for the Global Bond Fund and the Bond Fund by Godfrey & Kahn, S.C., 780 North
Water Street, Milwaukee, Wisconsin 53202.
EXPERTS
The financial highlights of the Bond Fund included in this combined proxy
statement and prospectus have been audited (except for the figures for the
six-month period ended April 30, 2000 which are unaudited) by
PricewaterhouseCoopers LLP, independent auditors, given on their authority as
experts in auditing and accounting. PricewaterhouseCoopers LLP will serve as
independent auditors of the combined Bond Fund after the Reorganization.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Meeting. However, if any other matters properly come before the Meeting, it is
the intention that proxy cards that do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the best judgment of
the persons named as proxies.
SHAREHOLDER PROPOSALS
As a Wisconsin corporation, the Bond Fund is not required to hold shareholder
meetings on a regular basis. Accordingly, the Bond Fund does not intend to
hold such meetings unless required to do so under the 1940 Act. Any
shareholder who wishes to submit a proposal for consideration at the next
meeting of shareholders, when and if such meeting is called, should submit such
proposal to the Bond Fund within a reasonable time before solicitation of
shareholder votes for such meeting occurs. Shareholders should be aware,
however, that unless certain federal rules are complied with, the mere
submission of a proposal to the Bond Fund does not guarantee that it will be
considered at the next meeting of shareholders.
By Order of the Board of Directors,
Stephen J. Shenkenberg
SECRETARY
Menomonee Falls, Wisconsin
July 14, 2000
12
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made on June 7,
2000, by and between Strong International Income Funds, Inc. ("SIIF"), a
Wisconsin corporation, on behalf of the Strong Global High-Yield Bond Fund (the
"Acquired Fund"), and Strong Income Funds, Inc. ("SIF"), a Wisconsin
corporation, on behalf of the Strong High-Yield Bond Fund (the "Acquiring
Fund"). (The Acquiring Fund and the Acquired Fund are sometimes referred to
collectively as the "Funds" and individually as a "Fund.")
All references in this Agreement to action taken by the Acquiring Fund or the
Acquired Fund shall be deemed to refer to action taken by SIF or SIIF, on
behalf of their respective portfolio series.
This Agreement is intended to be and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization ("Reorganization")
will consist of the transfer by the Acquired Fund of all or substantially all
of the assets of the Acquired Fund to the Acquiring Fund in exchange solely for
shares of common stock of the Investor Class of the Acquiring Fund ("Acquiring
Fund Shares") to the Acquired Fund, the assumption by the Acquiring Fund of all
the liabilities of the Acquired Fund and the distribution of the Acquiring Fund
Shares to the shareholders of the Acquired Fund in complete liquidation of the
Acquired Fund as provided herein, all upon the terms and conditions herein set
forth in this Agreement.
WHEREAS, SIF and SIIF are each open-end management investment companies
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Boards of Directors of the Funds have determined that the
Reorganization is in the best interests of each Fund and that the interests of
the existing shareholders of each Fund would not be diluted as a result of the
Reorganization.
NOW, THEREFORE, the parties mutually agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ACQUIRING FUND
SHARES AND LIQUIDATION OF THE ACQUIRED FUND
1.1 The Acquired Fund agrees to transfer all or substantially all of its
assets, (including accrued interest to the Closing Date), free and clear of all
liens, encumbrances and claims whatsoever as set forth in Section 1.2, below,
to the Acquiring Fund, and the Acquiring Fund agrees in exchange therefor: (a)
to deliver to the Acquired Fund the number of full and fractional Acquiring
Fund Shares, calculated in the manner set forth in Section 2.3, below, and (b)
to assume all the liabilities of the Acquired Fund, as set forth in Section
1.5, below. All Acquiring Fund Shares delivered to the Acquired Fund in
exchange for such assets shall be delivered at net asset value without sales
load, commission or other similar fee being imposed. These transactions shall
take place at the closing provided for in Section 3.1, below (the "Closing").
1
<PAGE>
1.2 The Acquired Fund shall transfer substantially all of its assets,
including, without limitation, all securities, dividends and interest
receivables, cash and cash equivalents owned by the Acquired Fund and any
deferred or prepaid expenses shown as assets on the Acquired Fund's books and
records on the closing date provided in Section 3.1, below (the "Closing
Date").
1.3 The Assets shall be delivered to Firstar Bank Milwaukee, N.A., as
custodian for the Acquiring Fund (the "Custodian") for the benefit of the
Acquiring Fund, duly endorsed in proper form for transfer in such condition as
to constitute a good delivery thereof, free and clear of all liens,
encumbrances and claims whatsoever, in accordance with the custom of brokers.
1.4 If the Acquired Fund is unable to make delivery pursuant to Section 1.3
to the Custodian of any of the Acquired Fund's securities for the reason that
any of such securities purchased by the Acquired Fund have not yet been
delivered to it by the Acquired Fund's broker or brokers, then, in lieu of such
delivery, the Acquired Fund shall deliver to the Custodian, with respect to
said securities, executed copies of an agreement of assignment and due bills
executed on behalf of said broker or brokers, together with such other
documents as may be required by the Acquiring Fund or Custodian, including
brokers' confirmation slips.
1.5 The Acquired Fund shall endeavor to discharge all of its known
liabilities prior to the Closing Date. The Acquiring Fund shall assume all
liabilities, expenses, costs, charges and reserves reflected in an unaudited
statement of assets and liabilities of the Acquired Fund (other than
unamortized organizational expenses), calculated as provided in Section 2.1,
below, all as of the Closing Date, in accordance with generally accepted
accounting principles consistently applied from the prior audited period.
1.6 Liabilities shall include all of the Acquired Fund's liabilities,
debts, obligations, and duties of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the ordinary
course of business, whether or not determinable at the Closing Date, and
whether or not specifically referred to in this Agreement.
1.7 Immediately after the transfer of assets provided for in Section 1.1,
above, the Acquired Fund shall liquidate and distribute pro rata to its
shareholders of record at the Closing Time on the Closing Date (the "Acquired
Fund Shareholders") the Acquiring Fund Shares received by the Acquired Fund
pursuant to Section 1.1 hereof. In addition, each Acquired Fund Shareholder
shall have the right to receive any dividends or other distributions that were
declared prior to the Closing Date, but unpaid at that time, with respect to
the Acquired Fund Shares that are held by such Acquired Fund Shareholders on
the Closing Date. Such liquidation and distribution shall be accomplished by
Strong Capital Management, Inc. ("SCM"), in its capacity as transfer agent for
the Funds, opening accounts on the share records of the Acquiring Fund in the
names of the Acquired Fund Shareholders and transferring to each such Acquired
Fund Shareholder account the pro rata number of Acquiring Fund Shares due each
such Acquired Fund Shareholder from the Acquiring Fund Shares then credited to
the account of the Acquired Fund on the Acquiring Fund's books and records.
All issued and outstanding shares of the Acquired Fund shall simultaneously be
canceled on the books of the Acquired Fund. The Acquiring Fund shall not issue
certificates representing Acquiring Fund Shares in connection with such
exchange.
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1.8 Any Acquired Fund Shareholders holding certificates representing their
ownership of shares of the Acquired Fund may be requested to surrender such
certificates or deliver an affidavit with respect to lost certificates, in such
form as the Acquired Fund may require prior to the Closing Date. On the
Closing Date, the Acquired Fund certificates that remain outstanding shall be
deemed to be canceled. SIIF's transfer books with respect to the Acquired
Fund's shares shall be closed permanently as of the close of business on the
day immediately prior to the Closing Date. All unsurrendered Acquired Fund
certificates shall no longer evidence ownership of common stock of the Acquired
Fund and shall be deemed for all corporate purposes to evidence ownership of
the number of Acquiring Fund Shares into which the Acquired Fund shares were
effectively converted. Unless and until any such certificate has been
surrendered or an affidavit with respect to lost certificates has been
delivered to the Acquiring Fund, dividends and other distributions payable by
the Acquiring Fund subsequent to the Closing Date with respect to such
Acquiring Fund Shares shall be paid to the holder of such certificate(s), but
such shareholders may not redeem or transfer Acquiring Fund Shares received in
the Reorganization with respect to unsurrendered Acquired Fund share
certificates.
1.9 Any transfer taxes payable upon issuance of Acquiring Fund Shares in a
name other than the registered holder of the Acquiring Fund Shares on the books
of the Acquired Fund as of that time shall, as a condition of such issuance and
transfer, be paid by the person to whom such Acquiring Fund Shares are to be
issued and transferred.
1.10 As soon as practicable following the Closing Date, SIIF shall take all
steps necessary to end the existence of the Acquired Fund, including the
amendment of SIIF's Amended and Restated Articles of Incorporation to eliminate
the class of SIIF's common stock constituting the Acquired Fund Shares as set
forth in Exhibit A (the "Articles Amendment").
2. VALUATION
2.1 The net asset value of the Acquiring Fund Shares and the value of the
Acquired Fund's net assets shall in each case be determined as of the close of
regular trading on the New York Stock Exchange ("NYSE") on the Closing Date,
provided that on such date (a) the NYSE is open for unrestricted trading and
(b) no significant changes in interest rates are announced or otherwise occur.
The net asset value per share of Acquiring Fund Shares shall be computed in
accordance with the policies and procedures set forth in the then-current
Prospectus and Statement of Additional Information of the Acquiring Fund and
shall be computed to not fewer than two decimal places. The value of the
Acquired Fund's net assets shall be computed in accordance with the policies
and procedures set forth in the then-current Prospectus and Statement of
Additional Information of the Acquired Fund.
2.2 In the event that on the proposed Closing Date trading or the reporting
of trading on the NYSE or elsewhere shall be disrupted (including as noted in
Section 2.1 concerning interest rates) so that accurate appraisal of the net
asset value of the Acquiring Fund or the value of the Acquired Fund's net
assets is impracticable, the Closing Date shall be postponed until the first
business day when regular trading on the NYSE shall have been fully resumed and
reporting shall have been restored and other trading markets are otherwise
stabilized.
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2.3 The number of Acquiring Fund Shares to be issued (including fractional
shares, if any) in exchange for the Acquired Fund's net assets shall be
determined by dividing the Acquired Fund's net assets by the Acquiring Fund's
net asset value per share, both as determined in accordance with Section 2.1
hereof.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be September 29, 2000, or such earlier or later
date as the parties may agree. The Closing Time shall be at 3:30 p.m., Central
Time, and the Closing shall be held at the offices of SCM, 100 Heritage
Reserve, Menomonee Falls, Wisconsin 53051, or at such other time and/or place
as the parties may agree.
3.2 The Acquired Fund shall arrange for SCM, in its capacity as transfer
agent for the Acquired Fund, to deliver to the Acquiring Fund at the Closing
Time a list of the names, addresses, federal taxpayer identification numbers,
and backup withholding and nonresident alien withholding status of Acquired
Fund Shareholders and the number of outstanding shares of common stock of the
Acquired Fund owned by each such Acquired Fund Shareholder, all as of the close
of regular trading on the NYSE on the Closing Date, certified by an appropriate
officer of SCM (the "Shareholder List"). The Acquiring Fund shall arrange for
SCM, in its capacity as transfer agent for the Acquiring Fund, to issue and
deliver to the Acquired Fund a confirmation evidencing the Acquiring Fund
Shares to be credited to each Acquired Fund Shareholder on the Closing Date, or
provide documentation satisfactory to the Acquired Fund that such Acquiring
Fund Shares have been credited to each Acquired Fund Shareholder's account on
the books of the Acquiring Fund. At the Closing, each Fund shall deliver to
the other Fund such bills of sale, checks, assignments, certificates, receipts
or other documents as the other Fund or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 SIIF, on behalf of the Acquired Fund, represents and warrants as
follows:
(a) SIIF is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wisconsin.
(b) SIIF is an open-end management investment company registered
under the 1940 Act, and such registration is in full force and effect.
(c) The Acquired Fund is a separate series of SIIF duly authorized in
accordance with the applicable provisions of SIIF's Amended and Restated
Articles of Incorporation. SIIF and the Acquired Fund are in compliance in all
material respects with the 1940 Act and the rules and regulations thereunder.
(d) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of SIIF's Board of
Directors, on behalf of the Acquired Fund, and subject to the approval of the
Acquired Fund Shareholders, this Agreement constitutes a valid and binding
obligation of SIIF, enforceable in
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accordance with its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and transfer, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(e) SIIF is not, and the execution, delivery and performance of this
Agreement will not result, in violation of any provision of the Amended and
Restated Articles of Incorporation or Bylaws of SIIF or of any agreement,
indenture, instrument, contract, lease or other arrangement or undertaking to
which SIIF is a party or by which it or any of its properties are bound.
(f) For each taxable year of its operations, the Acquired Fund has met the
requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such.
(g) The financial statements of the Acquired Fund as of and for the fiscal
year ended October 31, 1999, which were audited by its independent accountants
(copies of which have been forwarded to the Acquiring Fund), present fairly the
financial position of the Acquired Fund as of the date indicated and the
results of its operations and changes in net assets for the respective stated
periods (in accordance with generally accepted accounting principles
consistently applied).
(h) The Acquired Fund shall furnish to the Acquiring Fund (i) an unaudited
statement of assets and liabilities and the portfolio of investments and the
related statements of operations and changes in net assets of the Acquired Fund
for the period ended April 30, 2000 and (ii) an unaudited statement of assets
and liabilities as of and for the interim period ending on the Closing Date;
such financial statements will represent fairly the financial position and
portfolio of investments and the results of the Acquired Fund's operations as
of, and for the period ending on, the dates of such statements in conformity
with generally accepted accounting principles applied on a consistent basis
during the periods involved and the results of its operations and changes in
financial position for the periods then ended; and such financial statements
shall be certified by the Treasurer of the Acquired Fund as complying with the
requirements hereof.
(i) No legal or administrative proceeding or investigation of or before any
court or governmental body is currently pending or, to its knowledge,
threatened as to SIIF or the Acquired Fund or any of their properties or assets
which would, if adversely determined, materially affect the Acquired Fund's
financial condition. SIIF and the Acquired Fund know of no facts which might
form the basis for the institution of such proceedings and are not parties to
or subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects their business or
their ability to consummate the transactions contemplated in this Agreement.
(j) The Acquired Fund has no material contracts or other commitments (other
than this Agreement) which will be terminated with liability to the Acquired
Fund prior to the Closing Date.
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(k) Since October 31, 1999, there has not been any material adverse change
in the Acquired Fund's financial condition, assets, liabilities or business
other than charges occurring in the ordinary course of its business.
(l) At the date of this Agreement and by the Closing Date, all federal,
state and other tax returns and reports of the Acquired Fund required by law to
have been filed or furnished by such dates shall have been filed or furnished,
and all federal, state and other taxes, interest and penalties shall have been
paid so far as due, or adequate provision shall have been made on the Acquired
Fund's books for the payment thereof, and to the best of the Acquired Fund's
knowledge no such tax return is currently under audit and no tax deficiency or
liability has been asserted with respect to such tax returns or reports by the
Internal Revenue Service or any state or local tax authority.
(m) At the Closing Date, SIIF will have good and marketable title to the
Acquired Fund's net assets, and subject to approval by the Acquired Fund
Shareholders, full right, power and authority to sell, assign, transfer and
deliver such assets hereunder free of any liens or encumbrances, and upon
delivery and in payment for such assets, the Acquiring Fund will acquire good
and marketable title thereto.
(n) The Combined Proxy Statement/Prospectus of the Funds referred to in
Section 5.7 hereof (the "Proxy Statement/Prospectus") to be included in the
Form N-14 Registration Statement referred to in Section 5.7 of this Agreement
and any Prospectus or Statement of Additional Information of the Acquired Fund
contained or incorporated by reference in the Form N-14 Registration Statement,
and any supplement or amendment to such documents (other than written
information furnished by the Acquiring Fund for inclusion therein as covered by
the Acquiring Fund's warranty in Section 4.2(o) of this Agreement), on the
effective date of the Form N-14 Registration Statement, on the date of the
Special Meeting of Acquired Fund Shareholders, and on the Closing Date: (a)
shall comply in all material respects with the provisions of the Securities Act
of 1933, as amended (the "1933 Act"), and the 1940 Act, and the rules and
regulations thereunder, and (b) shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances under
which such statements were made, not misleading.
(o) All of the issued and outstanding shares of common stock of the
Acquired Fund are, and at the Closing Date will be, duly authorized and validly
issued, fully paid and nonassessable except to the extent provided in Section
180.0622(2)(b) of the Wisconsin Statutes. As of the date of this Agreement and
at the Closing Date, the Acquired Fund has only one class of shares of common
stock authorized, issued and outstanding and does not have any options,
warrants or other rights to subscribe for or purchase any shares of Acquired
Fund common stock. All of the issued and outstanding shares of common stock of
the Acquired Fund will, at the time of Closing, be held by the persons and in
the amounts set forth in the Shareholder List.
(p) The information to be furnished by SIIF for use in preparing
applications for orders, the Form N-14 Registration Statement, proxy materials
and other documents
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<PAGE>
which may be necessary in connection with the transactions contemplated hereby
shall be accurate and complete and shall comply in all material respects with
federal securities and other laws and regulations thereunder applicable
thereto.
4.2 SIF, on behalf of the Acquiring Fund, represents and warrants as
follows:
(a) SIF is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wisconsin.
(b) SIF is an open-end management investment company registered
under the 1940 Act, and such registration is in full force and effect.
(c) The Acquiring Fund is a separate series of SIF duly authorized in
accordance with the applicable provisions of SIF's Amended and Restated
Articles of Incorporation. SIF and the Acquiring Fund are in compliance in all
material respects with the 1940 Act and the rules and regulations thereunder.
(d) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of SIF's Board of
Directors, on behalf of the Acquiring Fund, and this Agreement constitutes a
valid and binding obligation of the Acquiring Fund enforceable in accordance
with its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and transfer, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(e) SIF is not, and the execution, delivery and performance of this
Agreement by SIF will not result in violation of any provisions of the Amended
and Restated Articles of Incorporation or Bylaws of SIF or of any agreement,
indenture, instrument, contract, lease or other arrangement or undertaking to
which SIF is a party or by which it or any of its properties are bound.
(f) For each taxable year of its operations, the Acquiring Fund has met the
requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such.
(g) The financial statements of the Acquiring Fund, as of and for the
fiscal year ended October 31, 1999, which were audited by its independent
accountants (copies of which have been furnished to the Acquired Fund), present
fairly the financial position of the Acquiring Fund as of the dates indicated
and the results of its operations and changes in net assets for the respective
stated periods (in accordance with generally accepted accounting principles
consistently applied).
(h) The Acquiring Fund shall furnish to the Acquired Fund (i) an unaudited
statement of assets and liabilities and the portfolio of investments and the
related statements of operations and changes in net assets of the Acquiring
Fund for the period ended April 30, 2000 and (ii) an unaudited statement of
assets and liabilities as of and for
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<PAGE>
the interim period ending on the Closing Date; such financial statements will
represent fairly the financial position and portfolio of investments and the
results of the Acquiring Fund's operations as of, and for the period ending on,
the dates of such statements in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved and the
results of its operations and changes in financial position for the periods
then ended; and such financial statements shall be certified by the Treasurer
of the Acquiring Fund as complying with the requirements hereof.
(i) No legal or administrative proceeding, or investigation of or before
any court or governmental body is currently pending or, to its knowledge,
threatened as to SIF or the Acquired Fund or any of its properties or assets
which would, if adversely determined, materially affect the Acquired Fund's
financial condition. SIF and the Acquired Fund know of no facts which might
form the basis for the institution of such proceedings and are not parties to
or subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects their business or
their ability to consummate the transactions contemplated in this Agreement.
(j) Since October 31, 1999, there has not been any material adverse change
in the Acquiring Fund's financial condition, assets, liabilities, or business
other than changes occurring in the ordinary course of its business.
(k) At the date of this Agreement and by the Closing Date, all federal,
state and other tax returns and reports of the Acquiring Fund required by law
to have been filed or furnished by such dates shall have been filed or
furnished, and all federal, state and other taxes, interest, and penalties
shall have been paid so far as due, or adequate provision shall have been made
on the Acquiring Fund's books for the payment thereof, and to the best of the
Acquiring Fund's knowledge no such tax return is currently under audit and no
tax deficiency or liability has been asserted with respect to such tax returns
or reports by the Internal Revenue Service or any state or local tax authority.
(l) The Form N-14 Registration Statement referred to in Section 5.7 of this
Agreement (other than written information furnished by SIIF for inclusion
therein as covered by SIIF's warranty in Section 4.1(p) of this Agreement) and
any Prospectus or Statement of Additional Information of the Acquiring Fund
contained or incorporated therein by reference, and any supplement or amendment
to the Form N-14 Registration Statement or any such Prospectus or Statement of
Additional Information, on the effective date of the Form N-14 Registration
Statement, on the date of the Special Meeting of the Acquired Fund
Shareholders, and on the Closing Date: (a) shall comply in all material
respects with the provisions of the 1993 Act and the 1940 Act, and the rules
and regulations thereunder, and (b) shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which the statements were made, not misleading.
(m) All of the issued and outstanding shares of common stock of the
Acquiring Fund are, and at the Closing Date will be, duly authorized and
validly issued, fully paid
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<PAGE>
and nonassessable except to the extent provided in Section 180.0622(2)(b) of
the Wisconsin Statutes.
(n) The Acquiring Fund Shares to be issued and delivered to the Acquired
Fund pursuant to the terms of this Agreement, when so issued and delivered, (i)
will be duly authorized and validly issued Acquiring Fund shares and will be
fully paid and nonassessable by the Acquiring Fund except to the extent
provided in Section 180.0622(2)(b) of the Wisconsin Statutes, and (ii) will be
duly registered in conformity with applicable federal and state securities
laws, and no shareholder of the Acquiring Fund shall have any option, warrant
or preemptive right of subscription or purchase with respect thereto.
(o) The information to be furnished by SIF for use in preparing the Proxy
Statement/Prospectus, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto.
5. COVENANTS OF THE FUNDS
5.1 Each Fund shall operate its business in the ordinary course between the
date hereof and the Closing Date, it being understood that such ordinary course
of business will include the declaration and payment of customary dividends and
distributions and any other distribution necessary or desirable to avoid
federal income or excise taxes.
5.2 The Acquired Fund and Acquiring Fund shall file all reports required to
be filed by the Acquired Fund and Acquiring Fund with the SEC between the date
of this Agreement and the Closing Date and shall deliver to the other party
copies of all such reports promptly after the same are filed. Except where
prohibited by applicable statutes and regulations, each party shall promptly
provide the other (or its counsel) with copies of all other filings made by
such party with any state, local or federal government agency or entity in
connection with this Agreement or the transactions contemplated hereby. Each
of the Acquired Fund and the Acquiring Fund shall use all reasonable efforts to
obtain all consents, approvals, and authorizations required in connection with
the consummation of the transactions contemplated by this Agreement and to make
all necessary filings with the Secretary of State of the State of Wisconsin.
5.3 SIIF agrees to call a Special Meeting of the Acquired Fund Shareholders
to consider and vote upon this Agreement and the transactions contemplated
hereby (including the Articles Amendment), and SIIF shall take all other
actions reasonably necessary to obtain approval of the transactions
contemplated herein.
5.4 SIIF and the Acquired Fund covenant that they shall not sell or
otherwise dispose of any of the Acquiring Fund Shares to be received in the
transactions contemplated in this Agreement, except in distribution to the
Acquired Fund Shareholders as contemplated in this Agreement.
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5.5 The Acquired Fund shall provide such information within its possession
or reasonably obtainable as the Acquiring Fund may reasonably request
concerning the beneficial ownership of the Acquired Fund shares.
5.6 Subject to the provisions of this Agreement, each Fund shall take, or
cause to be taken, all action, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.
5.7 The Acquired Fund shall promptly prepare and provide the
Prospectus/Proxy Statement to the Acquiring Fund, for inclusion in a Form N-14
Registration Statement, in connection with the Special Meeting of Acquired Fund
Shareholders and the Acquiring Fund shall promptly prepare and file with the
SEC the Registration Statement, in which the Prospectus/Proxy Statement will be
included as a prospectus. In connection with the Registration Statement and the
Prospectus/Proxy Statement, each party will cooperate with the other and
furnish to the other the information relating to the Acquired Fund or Acquiring
Fund, as the case may be, required by the Securities Act or the Exchange Act
and the rules and regulations thereunder, as the case may be, to be set forth
in the Registration Statement or the Prospectus/Proxy Statement, as the case
may be. In connection with the Registration Statement, insofar as it relates
to the Acquired Fund and its affiliated persons, the Acquiring Fund shall only
include such information as is approved by the Acquired Fund for use in the
Registration Statement. The Acquiring Fund shall not amend or supplement any
such information regarding the Acquired Fund and such affiliates without the
prior written consent of the Acquired Fund which consent shall not be
unreasonably withheld or delayed. The Acquiring Fund shall promptly notify and
provide the Acquired Fund with copies of all amendments or supplements filed
with respect to the Registration Statement. The Acquiring Fund shall use all
reasonable efforts to have the Registration Statement declared effective under
the Securities Act as promptly as practicable after such filing. The Acquiring
Fund shall also take any action (other than qualifying to do business in any
jurisdiction in which it is now not so qualified) required to be taken under
any applicable state securities laws in connection with the issuance of the
Acquiring Fund's shares of common stock in the transactions contemplated by
this Agreement, and the Acquired Fund shall furnish all information concerning
the Acquired Fund and the holders of the Acquired Fund's shares of common stock
as may be reasonably requested in connection with any such action.
5.8 During the period prior to the Closing Date, the Acquired Fund shall
make available to the Acquiring Fund a copy of each report, schedule,
registration statement and other document (the "Documents") filed or received
by it during such period pursuant to the requirements of Federal or state
securities laws (other than Documents which such party is not permitted to
disclose under applicable law). During the period prior to the Closing Date,
the Acquiring Fund shall make available to the Acquired Fund each Document
pertaining to the transactions contemplated hereby filed or received by it
during such period pursuant to Federal or state securities laws (other than
Documents which such party is not permitted to disclose under applicable law).
5.9 The Acquired Fund and Acquiring Fund covenant and agree to coordinate
the respective portfolios of the Acquired Fund and Acquiring Fund from the date
of the Agreement
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up to and including the Closing Date in order that at Closing, when the Assets
are added to the Acquiring Fund's portfolio, the resulting portfolio will meet
the Acquiring Fund's investment objective, policies and restrictions, as set
forth in the Acquiring Fund's Prospectus, a copy of which has been delivered to
the Acquired Fund.
5.10 For a period of time from the date of this Agreement to the Closing
Date, the Acquired Fund and the Acquiring Fund will consult with each other
before issuing any press releases or otherwise making any public statements
with respect to this Agreement or the transactions contemplated herein and
shall not issue any press release or make any public statement prior to such
consultation, except as may be required by law.
5.11 The intention of the parties is that the transaction will qualify as a
reorganization within the meaning of Section 368(a) of the Code. Neither SIF,
SIIF, the Acquiring Fund nor the Acquired Fund shall take any action, or cause
any action to be taken (including, without limitation, the filing of any tax
return) that is inconsistent with such treatment or results in the failure of
the transaction to qualify as a reorganization within the meaning of Section
368(a) of the Code. At or prior to the Closing Date, SIF, SIIF, the Acquiring
Fund and the Acquired Fund will take such action, or cause such action to be
taken, as is reasonably necessary to enable Godfrey & Kahn, S.C., counsel to
the Acquired Fund, to render the tax opinion contemplated herein.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SIIF AND THE ACQUIRED FUND
The obligations of SIIF and the Acquired Fund hereunder shall be subject to the
following conditions:
6.1 This Agreement and the transactions contemplated by this Agreement
shall have been approved by the Board of Directors of SIF in the manner
required by SIF's Amended and Restated Articles of Incorporation and applicable
laws and the Acquired Fund's shareholders shall have approved this Agreement
and the transactions contemplated by this Agreement, including the Articles
Amendment.
6.2 As of the Closing Date, there shall have been no material adverse
change in the financial position, assets or liabilities of the Acquiring Fund
since the dates of the financial statements referred to in Sections 4.2(g) and
(h) hereof. For purposes of this Section 6.2, a decline in the net asset value
per share of the Acquiring Fund due to the effect of normal market conditions
on liquid securities shall not constitute a material adverse change.
6.3 All representations and warranties of SIF and the Acquiring Fund made
in this Agreement except as they may be affected by the transactions
contemplated by this Agreement, shall be true and correct in all material
respects as if made at and as of the Closing Date.
6.4 SIF shall have delivered to SIIF a certificate executed in its name by
its President or Vice President and its Treasurer or Assistant Treasurer, in a
form reasonably satisfactory to SIIF, and dated as of the Closing Date, to the
effect that the representations and warranties of SIF
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made in this Agreement are true and correct in all material respects at and as
of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement and as to other matters as SIIF shall reasonably
request.
6.5 SIF shall have performed and complied in all material respects with its
obligations, agreements and covenants required by this Agreement to be
performed or complied with by it prior to or at the Closing Date.
6.6 SIIF shall have received an opinion of Godfrey & Kahn, S.C.,
counsel to both Funds, regarding the transaction, in form reasonably
satisfactory to SIIF, and dated as of the Closing Date, to the effect that:
(a) SIF is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wisconsin;
(b) the shares of the Acquiring Fund issued and outstanding at the
Closing Date are duly authorized and validly issued, fully paid and
non-assessable by the Acquiring Fund, except to the extent provided in Section
180.0622(2)(b) of the Wisconsin Statutes, and the Acquiring Fund Shares to be
delivered to the Acquired Fund, as provided for by this Agreement, are duly
authorized and upon delivery pursuant to the term of this Agreement will be
validly issued, fully paid, and non-assessable by the Acquiring Fund, except to
the extent provided in Section 180.0622(2)(b) of the Wisconsin Statutes, and no
shareholder of the Acquiring Fund has any option, warrant or preemptive right
to subscription or purchase in respect thereof based on a review of the
Acquiring Fund's Amended and Restated Articles of Incorporation and By-laws and
otherwise to such counsel's knowledge.
(c) the Board of Directors of SIF has duly authorized the Acquiring Fund as
a series of SIF pursuant to the terms of the Amended and Restated Articles of
Incorporation of SIF;
(d) This Agreement has been duly authorized, executed and delivered by SIF
and represents a valid and binding contract of SIF, enforceable in accordance
with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and transfer, and other
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles; provided, however, that no opinion
need be expressed with respect to provisions of this Agreement relating to
indemnification;
(e) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated by this Agreement will not,
violate the Amended and Restated Articles of Incorporation or Bylaws of SIF or
any material agreement known to such counsel to which SIF is a party or by
which it is bound;
(f) to the knowledge of such counsel no consent, approval authorization, or
order of any court or governmental authority is required for the consummation by
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Acquiring Fund of the transactions contemplated by this Agreement, except such
as have been obtained under the 1933 Act, state securities laws, the 1940 Act,
the rules and regulations under those statutes; and
(g) SIF is registered as an investment company under the 1940 Act and such
registration with the SEC as an investment company under the 1940 Act is in
full force and effect.
Such opinion: (a) shall state that while such counsel have not verified, and
are not passing upon and do not assume responsibility for, the accuracy,
completeness, or fairness of any portion of the Form N-14 Registration
Statement or any amendment thereof or supplement thereto, they have generally
reviewed and discussed certain information included therein with respect to the
Acquiring Fund with certain of its officers and that in the course of such
review and discussion no facts came to the attention of such counsel which
caused them to believe that, on the respective effective or clearance dates of
the Form N-14 Registration Statement and any amendment thereof or supplement
thereto and only insofar as they relate to information with respect to SIF and
the Acquiring Fund, the Form N-14 Registration Statement or any amendment
thereof or supplement thereto contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; (b) shall state that such
counsel does not express any opinion or belief as to the financial statements,
other financial data, statistical data, or information relating to SIF or the
Acquiring Fund contained or incorporated by reference in the Form N-14
Registration Statement; and (c) shall state that such opinion is solely for the
benefit of SIIF and its Board of Directors and officers.
In giving such opinion, Godfrey & Kahn, S.C. may rely upon officers'
certificates and certificates of public officials.
6.7 SIIF shall have received from SIF: all other documents, including but
not limited to, checks, share certificates, if any, and receipts, which SIIF or
its counsel may reasonably request.
6.8 SCM, in its capacity as transfer agent for the Acquiring Fund, shall
have issued and delivered to SIF, on behalf of the Acquired Fund, a
confirmation statement evidencing the Acquiring Fund Shares to be credited at
the Closing Date or provide evidence satisfactory to SIIF that the Acquiring
Fund Shares have been credited to the accounts of each of the Acquired Fund
Shareholders on the books of the Acquiring Fund.
6.9 At the Closing Date, the registration of SIF with the SEC as an
investment company under the 1940 Act with respect to each series of shares
that it offers will be in full force and effect.
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7. CONDITIONS PRECEDENT TO OBLIGATIONS OF SIF AND THE ACQUIRING FUND
The obligations of SIF and the Acquiring Fund hereunder shall be subject to the
following conditions:
7.1 This Agreement and the transactions contemplated by this Agreement,
including the Articles Amendment, shall have been approved by the Board of
Directors of SIIF and the Acquired Fund's shareholders in the manner required
by SIIF's Amended and Restated Articles of Incorporation and Bylaws and
applicable law.
7.2 SIIF shall have delivered to SIF a statement of the Acquired Fund's
assets and liabilities, together with a list of the securities owned by the
Acquired Fund and the respective federal income tax bases thereof, as of the
Closing Date, certified on its behalf by its Treasurer or Assistant Treasurer.
7.3 As of the Closing Date, there shall have been no material adverse
change in the financial position, assets or liabilities of the Acquired Fund
since the dates of the financial statements referred to in Sections 4.1(g) and
(h) hereof. For purposes of this Section 7.3, a decline in the value of the
Acquired Fund's net assets due to the effect of normal market conditions on
liquid securities shall not constitute a material adverse change.
7.4 All representations and warranties of SIIF and the Acquired Fund made
in this Agreement, except as they may be affected by the transactions
contemplated by this Agreement, shall be true and correct in all material
respects as if made at and as of the Closing Date.
7.5 SIIF shall have delivered to SIF a certificate executed in its name by
its President or Vice President and its Treasurer or Assistant Treasurer, in a
form reasonably satisfactory to SIF, and dated as of the Closing Date, to the
effect that the representations and warranties of SIIF made in this Agreement
are true and correct in all material respects at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement and as to other matters as SIF shall reasonably request.
7.6 SIIF shall have performed and complied in all material respects with
each of its obligations, agreements and covenants required by this Agreement to
be performed or complied with by it prior to or at the Closing Date.
7.7 SIIF shall have duly executed and delivered to SIF: (a) bills of sale,
assignments, certificates and other instruments of transfer ("Transfer
Documents") as SIF may deem necessary or desirable to transfer all of Acquired
Fund's right title, and interest in and to the Acquired Fund's net assets; and
(b) all such other documents, including but not limited to, checks, share
certificates, if any, and receipts, which SIF may reasonably request.
7.8 SIF shall have received an opinion of Godfrey & Kahn, S.C.,
counsel to both Funds, regarding the transaction, in form reasonably
satisfactory to SIF, and dated as of the Closing Date, to the effect that:
14
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(a) SIIF is a Wisconsin corporation duly organized, validly
existing and in good standing under the laws of the State of Wisconsin;
(b) the Board of Directors of SIIF has duly authorized the Acquired Fund as
a series of SIIF pursuant to the terms of the Amended and Restated Articles of
Incorporation of SIIF;
(c) the shares of the Acquired Fund issued and outstanding at the Closing
Date are duly authorized and validly issued, fully paid and non-assessable by
SIIF, except to the extent provided in Section 180.0622(2)(b) of the Wisconsin
Statutes;
(d) This Agreement and the Transfer Documents have been duly authorized,
executed and delivered by SIIF and represent valid and binding contracts of
SIIF, enforceable in accordance with their terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
transfer, and other similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles; provided,
however, that no opinion need be expressed with respect to provisions of this
Agreement relating to indemnification nor with respect to provisions of this
Agreement intended to limit liability for particular matters to the Acquired
Fund and its assets;
(e) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated by this Agreement will not,
violate the Amended and Restated Articles of Incorporation or Bylaws of SIIF or
any material agreement known to such counsel to which SIIF is a party or by
which it is bound;
(f) to the knowledge of such counsel no consent, approval, authorization,
or order of any court or governmental authority is required for the
consummation by SIIF of the transactions contemplated by this Agreement, except
such as have been obtained under the 1933 Act, state securities laws, the 1940
Act, the rules and regulations under those statutes and such as may be required
under state securities laws, rules and regulations; and
(g) SIIF is registered as an investment company under the 1940 Act and such
registration with the SEC as an investment company under the 1940 Act is in
full force and effect.
Such opinion: (a) shall state that while such counsel have not verified, and
are not passing upon and do not assume responsibility for, the accuracy,
completeness, or fairness of any portion of the Form N-14 Registration
Statement or any amendment thereof or supplement thereto, they have generally
reviewed and discussed certain information included therein with respect to
SIIF and the Acquired Fund with certain officers of SIIF and that in the course
of such review and discussion no facts came to the attention of such counsel
which caused them to believe that, on the respective effective or clearance
dates of the Form N-14 Registration Statement, and any amendment thereof or
supplement thereto and only insofar as they relate to information with respect
to SIIF and the Acquired Fund, the Form N-14 Registration Statement
15
<PAGE>
or any amendment thereof or supplement thereto, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; (b) shall
state that such counsel does not express any opinion or belief as to the
financial statements, other financial data, statistical data, or any
information relating to SIIF or the Acquired Fund contained or incorporated by
reference in the Form N-14 Registration Statement; and (c) shall state that
such opinion is solely for the benefit of SIF and its Board of Directors and
officers.
In giving such opinion, Godfrey & Kahn, S.C. may rely upon officers'
certificates and certificates of public officials.
7.9 The property and assets to be transferred to the Acquiring Fund under
this Agreement shall include no assets that the Acquiring Fund may not properly
acquire pursuant to its investment objective, policies or limitations, or may
not otherwise lawfully acquire.
7.10 Prior to the Closing Date, the Acquired Fund shall have declared a
dividend or dividends, which, together with all previous dividends, shall have
the effect of distributing to its shareholders all of its net investment
company income, if any, for each taxable period or year ending prior to the
Closing Date and for the periods from the end of each such taxable period or
year to and including the Closing Date (computed without regard to any
deduction for dividends paid), and all of its net capital gain, if any,
realized in each taxable period or year ending prior to the Closing Date and in
the periods from the end of each such taxable period or year to and including
the Closing Date.
7.11 SCM, in its capacity as transfer agent for the Acquired Fund, shall
have furnished to the Acquiring Fund immediately prior to the Closing Date a
list of the names and addresses of the Acquired Fund Shareholders and the
number and percentage ownership of outstanding Acquired Fund Shares owned by
each such shareholder as of the close of regular trading on the NYSE on the
Closing Date, certified on behalf of the Acquired Fund by SIIF's President.
7.12 At the Closing Date, the registration of SIIF with the SEC as an
investment company under the 1940 Act shall be in full force and effect.
8. FURTHER CONDITIONS PRECEDENT
The obligations of SIF and SIIF hereunder shall also be subject to the
following conditions:
8.1 No action, suit or other proceeding shall be threatened or pending before
any court or governmental agency in which it is sought to restrain or
prohibit or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein.
8.2 The Form N-14 Registration Statement shall have become effective under the
1933 Act and no stop order suspending the effectiveness shall have been
instituted, or to the knowledge of the Funds, contemplated by the SEC.
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<PAGE>
8.3 The SEC shall not have issued any unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceedings seeking to
enjoin consummation of the transactions contemplated by this Agreement
under Section 25(c) of the 1940 Act.
8.4 All necessary approvals, registrations, and exemptions under federal
and state securities laws shall have been obtained.
8.5 No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
transactions contemplated by this Agreement shall be in effect, nor shall any
proceeding by any state, local or federal government agency or entity asking
any of the foregoing be pending. There shall not be any action taken or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the transactions contemplated by this Agreement, which makes the
consummation of the transactions contemplated by this Agreement illegal or
which has a material adverse effect on business operations of the Acquiring
Fund or the Acquired Fund.
8.6 The parties shall have received an opinion of Godfrey & Kahn, S.C.
substantially to the effect that, based upon certain facts, assumptions and
representations, for federal income tax purposes:
(a) the transfer to the Acquiring Fund of all or substantially all of the
assets of the Acquired Fund in exchange solely for Acquiring Fund Shares
and the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund, followed by the distribution of Acquiring Fund Shares to
Acquired Fund Shareholders in exchange for their shares of the Acquired
Fund in complete liquidation of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and
the Acquiring Fund and the Acquired Fund will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code;
(b) in accordance with Section 361(a) of the Code, no gain or loss will be
recognized by the Acquired Fund upon the transfer of the Acquired Fund's
assets to the Acquiring Fund in exchange for Acquiring Fund Shares and the
assumption by the Acquiring Fund of liabilities of the Acquired Fund or
upon the distribution (whether actual or constructive) of the Acquiring
Fund Shares to the Acquired Fund's Shareholders in exchange for their
shares of the Acquired Fund under Section 361(c) of the Code;
(c) in accordance with Section 362(b) of the Code, the basis of the assets of
the Acquired Fund in the hands of the Acquiring Fund will be the same as
the basis of such assets of the Acquired Fund immediately prior to the
transfer;
17
<PAGE>
(d) the holding period of the assets of the Acquired Fund in the hands of the
Acquiring Fund will include the period during which such assets were held
by the Acquired Fund;
(e) under Section 1032 of the Code, no gain or loss will be recognized by the
Acquiring Fund upon the receipt of the assets of the Acquired Fund in
exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund
of the liabilities of the Acquired Fund;
(f) in accordance with Section 354(a)(1) of the Code, no gain or loss will be
recognized by the Acquired Fund Shareholders upon the receipt of Acquiring
Fund Shares solely in exchange for their shares of the Acquired Fund as
part of the transaction;
(g) in accordance with Section 358 of the Code, the basis of the Acquiring Fund
Shares received by the Acquired Fund Shareholders will be the same as the
basis of the shares of the Acquired Fund exchanged therefor; and
(h) in accordance with Section 1223 of the Code, the holding period of
Acquiring Fund Shares received by the Acquired Fund Shareholders will
include the holding period during which the shares of the Acquired Fund
exchanged therefor were held, provided that at the time of the exchange the
shares of the Acquired Fund were held as capital assets in the hands of the
Acquired Fund Shareholders.
9. FEES AND OTHER EXPENSES
9.1 Each party represents and warrants to the other that there is no person
or entity entitled to receive any broker's fees or other similar fees or
commission payments in connection with the transactions provided for herein.
9.2 Each Fund shall be solely liable for its own expenses incurred in
connection with entering into and carrying out the transactions contemplated by
this Agreement, whether or not the transactions contemplated hereby are
consummated.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The parties agree that neither party has made any representation,
warranty or covenant not set forth herein and that this Agreement constitutes
the entire agreement between the parties and supersedes any and all prior
agreements, arrangements and undertakings relating to the matters provided for
herein.
10.2 Except for the covenants to be performed after Closing and for the
obligations set forth in Sections 12 and 13, the representations, warranties
and covenants contained in this Agreement or in any document delivered pursuant
hereto or in connection herewith shall not survive the consummation of the
transactions contemplated herein.
18
<PAGE>
11. TERMINATION
11.1 This Agreement may be terminated and the Reorganization abandoned by
the mutual agreement of the Boards of the Acquired Fund and the Acquiring Fund.
In addition, either party may at its option terminate this Agreement and
abandon the Reorganization at or prior to the Closing Date because of:
(a) a material breach by the other party of any representation, warranty or
agreement contained herein to be performed at or prior to the Closing Date and
a failure to cure such breach promptly;
(b) a condition precedent to the obligations of either party has not been
met and which reasonably appears will not or cannot be met.
11.2 In the event of any such termination, there shall be no liability for
damages on the part of either Fund, SIIF or SIF, or their respective Boards of
Directors or officers.
12. INDEMNIFICATION
12.1 The Acquiring Fund shall indemnify, defend and hold harmless the
Acquired Fund, its directors, officers, employees and agents against all
losses, claims, demands, liabilities and expenses, including reasonable legal
and other expenses incurred in defending third party claims, actions, suits or
proceedings, arising from any of its representations, warranties, covenants or
agreements set forth in this Agreement.
12.2 The Acquired Fund, with respect to any claim asserted prior to the
Closing Date, shall indemnify, defend and hold harmless the Acquiring Fund, its
directors, officers, employees and agents against all losses, claims, demands,
liabilities and expenses, including reasonable legal and other expenses
incurred in defending third party claims, actions, suits or proceedings,
arising from any of its representations, warranties, covenants or agreements
set forth in this Agreement.
13. LIABILITY OF SIF AND SIIF
13.1 Each party acknowledges and agrees that all obligations of SIIF under
this Agreement are binding only with respect to the Acquired Fund; that any
liability of SIIF under this Agreement with respect to the Acquired Fund, or in
connection with the transactions contemplated herein with respect to the
Acquired Fund, shall be discharged only out of the assets of the Acquired Fund,
and that no other portfolio or series of SIIF shall be liable with respect to
the Agreement or in connection with the transactions contemplated herein.
13.2 Each party acknowledges and agrees that all obligations of SIF under
this Agreement are binding with respect to the Acquiring Fund; that any
liability of SIF under this Agreement with respect to the Acquiring Fund, or in
connection with the transactions contemplated herein with respect to the
Acquiring Fund, shall be discharged only out of the
19
<PAGE>
assets of the Acquiring Fund, and that no other series of SIF (within the
meaning of the 1940 Act) shall be liable with respect to the Agreement or in
connection with the transactions contemplated herein.
14. AMENDMENTS
This Agreement my be amended, modified or supplemented in such manner as may be
mutually agreed upon in writing by SIIF and SIF; provided, however, that
following the Special Meeting of Acquired Fund Shareholders called by SIIF's
Board of Directors pursuant to Section 5.3 hereof, no such amendment may have
the effect of changing the provisions for determining the number of Acquiring
Fund Shares to be issued to Acquired Fund Shareholders under this Agreement to
the detriment of such shareholders without their further approval.
15. BOOKS AND RECORDS
The Acquired Fund and the Acquiring Fund agree that copies of the books and
records of the Acquired Fund relating to the Assets including, but not limited
to all files, records, written materials; e.g., closing transcripts,
surveillance files and credit reports shall be delivered by the Acquired Fund
to the Acquiring Fund at the Closing Date. In addition to, and without limiting
the foregoing, the Acquired Fund and the Acquiring Fund agree to take such
action as may be necessary in order that the Acquiring Fund shall have
reasonable access to such other books and records as may be reasonably
requested, all for three years after the Closing Date and for the last three
tax years ending October 31, 1997, October 31, 1998, and October 31, 1999;
namely, general ledger, journal entries, voucher registers; distribution
journal; payroll register, monthly balance owing report; income tax returns;
tax depreciation schedules; and investment tax credit basis schedules.
16. ENTIRE AGREEMENT
This Agreement supersedes all prior agreements between the parties (written or
oral), is intended as a complete and exclusive statement of the terms of the
Agreement between the parties, and may not be amended, modified or changed or
terminated orally.
17. NOTICES
Any notice, report, statement or demand required or permitted by any provisions
of this Agreement shall be in writing and shall be deemed to be properly given
when delivered personally or by telecopier to the party entitled to receive the
notice or when sent by certified or registered mail postage prepaid, or
delivered to a recognized overnight courier service, in each case properly
addressed to the party entitled to receive such notice or communication at 100
Heritage Reserve, Menomonee Falls, Wisconsin 53051, attention: Elizabeth N.
Cohernour, General Counsel, or such other address as may hereafter be furnished
in writing by notice similarly given by one party to the other with a copy to
Godfrey & Kahn, S.C., 780 North Water Street, Milwaukee, Wisconsin 53202,
attention: Scott A. Moehrke.
20
<PAGE>
18. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
18.1 The Article and Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
18.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
18.3 This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Wisconsin.
18.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any, rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm, or corporation, other than the parties hereto and their respective
successors and assigns, any fights or remedies under or by reason of this
Agreement.
21
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by a duly authorized officer as of the date set forth above.
Attest: STRONG INTERNATIONAL INCOME
FUNDS, INC.
_________________________________ _____________________________________
Stephen J. Shenkenberg Cathleen A. Ebacher
Vice President and Secretary Vice President
Attest: STRONG INCOME FUNDS, INC.
_________________________________ _____________________________________
Stephen J. Shenkenberg Cathleen A. Ebacher
Vice President and Secretary Vice President
22
<PAGE>
EXHIBIT B
AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
STRONG INTERNATIONAL INCOME FUNDS, INC.
The undersigned Vice President of Strong International Income Funds, Inc. (the
"Corporation"), hereby certifies that, in accordance with Section 180.1003 of
the Wisconsin Statutes, the following Amendment was duly adopted by the Board
of Directors of the Corporation on May 5, 2000, and approved by its
shareholders on [September 6, 2000] in order to terminate the outstanding shares
of the Strong Global High-Yield Bond Fund in connection with a reorganization
effected pursuant to the terms of the Agreement and Plan of Reorganization
between the Corporation and the Strong Income Funds, Inc., attached hereto as
Exhibit A (the "Agreement").
1. Paragraph A of Article IV is hereby amended by deleting Paragraph A
thereof and inserting the following as a new paragraph:
"A. The Corporation shall have the authority to issue an indefinite number
of shares of Common Stock with a par value of $.01 per share. Subject to the
following paragraph the authorized shares are classified as follows:
CLASS AUTHORIZED NUMBER OF SHARES
Strong International Bond Fund Indefinite"
2. Articles IV of the Amended and Restated Articles of Incorporation is
hereby amended by adding a new paragraph, labeled Paragraph J, and inserting
the following language:
"J. On the Closing Date (as defined in the Agreement), each outstanding share
of Common Stock of the Strong Global High-Yield Bond Fund shall be deemed
canceled and restored to the status of authorized but unissued shares, and
shall be automatically converted into the right to receive Acquiring Fund
Shares (as defined in the Agreement) in accordance with the terms of the
Agreement. Certificates representing shares of the Strong Global High-Yield
Bond Fund shall be surrendered at the time and in the manner set forth in the
Agreement. Any such certificates that remain outstanding on the Closing Date
shall be deemed to be automatically canceled, and shares represented by such
certificates shall be restored to the status of authorized but unissued shares,
and shall be automatically converted as noted above."
3. The Amendment herein certified shall become effective on the date it is
recorded for filing by the Department of Financial Institutions.
Executed in duplicate this ____ day of ______________, 2000.
STRONG INTERNATIONAL INCOME FUNDS, INC.
By:
Cathleen A. Ebacher
Vice President
This instrument was drafted by
Renee M. Hardt
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
1
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STATEMENT OF ADDITIONAL INFORMATION ("SAI")
STRONG HIGH-YIELD BOND FUND,
A SERIES FUND OF STRONG INCOME FUNDS, INC.
STRONG GLOBAL HIGH-YIELD BOND FUND,
A SERIES FUND OF STRONG INTERNATIONAL INCOME FUNDS, INC.
P.O. Box 2936
Milwaukee, Wisconsin 53201
Telephone: (414) 359-1400
Toll-Free: (800) 368-3863
e-mail: [email protected]
Web Site: www.eStrong.com
This SAI is not a prospectus and should be read in conjunction with the
Combined Proxy Statement and Prospectus of the STRONG HIGH-YIELD BOND FUND (the
"Bond Fund") and the STRONG GLOBAL HIGH-YIELD BOND FUND (the "Global Bond
Fund"), dated July 14, 2000.
A copy of the Combined Proxy Statement and Prospectus is available without
charge upon request to the above-noted addresses, telephone numbers or Web
site.
This SAI relates to the proposed acquisition of all or substantially all of the
Global Bond Fund by the Bond Fund in exchange for shares of the Investor Class
of the Bond Fund and the assumption by the Bond Fund of liabilities of the
Global Bond Fund.
This SAI consists of the following documents, each of which accompanies this
SAI and is incorporated herein by reference. These documents provide
information relating to each Fund and include audited financial statements.
- SAI for the Bond Fund dated February 29, 2000,
- SAI for the Global Bond Fund dated March 1, 2000, as supplemented on May 15,
2000,
- Annual Report of the Bond Fund for the year ended October 31, 1999 (and, if
applicable, any more recent semi-annual report), and
- Annual Report of the Global Bond Fund for the year ended October 31, 1999
(and, if applicable, any more recent semi-annual report).
July 14, 2000
1
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PART C
OTHER INFORMATION
Item 15. INDEMNIFICATION
Officers and directors of the Fund, its advisor and underwriter are insured
under a joint directors and officers/errors and omissions insurance policy
underwritten by a group of insurance companies in the aggregate amount of
$115,000,000, subject to certain deductions. Pursuant to the authority of the
Wisconsin Business Corporation Law ("WBCL"), Article VII of the Registrant's
Bylaws provides as follows:
ARTICLE VII. INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 7.01. MANDATORY INDEMNIFICATION. The Corporation shall indemnify,
to the full extent permitted from time to time, the persons described in
Sections 180.0850 through 180.0859 (or any successor provisions) of the WBCL or
other provisions of the law of the State of Wisconsin relating to
indemnification of directors and officers, as in effect from time to time. The
indemnification afforded such persons by this section shall not be exclusive of
other rights to which they may be entitled as a matter of law.
SECTION 7.02. PERMISSIVE SUPPLEMENTARY BENEFITS. The Corporation may, but
shall not be required to, supplement the right of indemnification under Section
7.01 by (a) the purchase of insurance on behalf of any one or more of such
person under Section 7.01; (b) individual or group indemnification agreements
with any one or more of such persons; and (c) advances for related expenses of
such a person.
SECTION 7.03. AMENDMENT. This Article VII may be amended or repealed only
by a vote of the shareholders and not by a vote of the Board of Directors.
SECTION 7.04. INVESTMENT COMPANY ACT. In no event shall the Corporation
indemnify any person hereunder in contravention of any provision of the
Investment Company Act.
Item 16. EXHIBITS
(1)(a) Articles of Incorporation dated September 19, 1996 (3)
(1)(b) Amendment to Articles of Incorporation dated August 30, 1996 (3)
(1)(c) Amendment to Articles of Incorporation dated June 24, 1997 (4)
(1)(d) Amendment to Articles of Incorporation dated February 22, 2000 (9)
(2)(a) Bylaws dated October 20, 1995 (1)
(2)(b) Amendment to Bylaws dated May 1, 1998 (5)
(3) None
(4) Agreement and Plan of Reorganization [Included in Part A of this
Registration Statement]
(5) None
(6) Amended and Restated Investment Advisory Agreement (7)
(7)(a) Distribution Agreement - Investor and Institutional Class (7)
(7)(b) Distribution Agreement - Advisor Class (9)
(7)(c) Dealer Agreement (9)
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(7)(d) Services Agreement (9)
(8) None
(9)(a) Custody Agreement with Firstar (2)
(9)(b) Global Custody Agreement with Brown Harriman & Co. (2)
(9)(c) Amendment to Global Custody Agreement dated August 26, 1996 (3)
(10)(a) Amended and Restated Rule 12b-1 Plan (9)
(10)(b) Amended and Restated Rule 18f-3 Plan (9)
(11) Opinion and Consent of Counsel
(12) Opinion and Consent of Counsel relating to tax matters
(13)(a) Amended and Restated Transfer and Dividend Disbursing Agreement (9)
(13)(b) Administration Agreement - Investor Class (7)
(13)(c) Administration Agreement - Advisor Class (9)
(14) Consent of Independent Accountants
(15) None
(16) Powers of Attorney
(17) Form of Proxy Card
______________
(1) Incorporated herein by reference to Post-Effective Amendment No. 8 to
the Registration Statement on Form N-1A as filed on or about December 14, 1995.
(2) Incorporated herein by reference to Post-Effective Amendment No. 10 to the
Registration Statement on Form N-1A of Registrant filed on or about June
26, 1996.
(3) Incorporated herein by reference to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A of the Registrant filed on or about
February 26, 1997.
(4) Incorporated herein by reference to Post-Effective Amendment No. 13 to the
Registration Statement on Form N-1A of the Registrant filed on or about
June 27, 1997.
(5) Incorporated herein by reference to Post-Effective Amendment No. 16 to the
Registration Statement on Form N-1A of the Registrant filed on or about
December 31, 1998.
(6) Incorporated herein by reference to Post-Effective Amendment No. 17 to the
Registration Statement on Form N-1A of the Registrant filed on or about
February 26, 1999.
(7) Incorporated herein by reference to Post-Effective Amendment No. 18 to the
Registration Statement on Form N-1A of the Registrant filed on or about
September 8, 1999.
(8) Incorporated herein by reference to Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A of the Registrant filed on or about
January 3, 2000.
(9) Incorporated herein by reference to Post-Effective Amendment No. 20 to the
Registration Statement on Form N-1A of the Registrant filed on or about
February 24, 2000.
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<PAGE>
Item 17. UNDERTAKINGS
(1) The undersigned registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part
of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the
registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new registration statement
for the securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering of them.
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SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has been
signed on behalf of the Registrant, in the Village of Menomonee Falls and State
of Wisconsin on the 6th day of June, 2000.
STRONG INCOME FUNDS, INC. (Registrant)
By: /s/ Elizabeth N. Cohernour
Elizabeth N. Cohernour, Vice President
As required by the Securities Act of 1933, this Registration Statement has been
signed below by the following persons in the capacities and on the date(s)
indicated.
NAME TITLE DATE
/s/ Richard S. Strong Chairman of the Board June 6, 2000
Richard S. Strong (Principal Executive Officer)
and a Director
Treasurer (Principal Financial June 6, 2000
John W. Widmer* and Accounting Officer)
Director June 6, 2000
Marvin E. Nevins*
Director June 6, 2000
Willie D. Davis*
Director June 6, 2000
William F. Vogt*
Director June 6, 2000
Stanley Kritzik*
Director June 6, 2000
Neal Malicky*
* Cathleen A. Ebacher signs this document on behalf of each director marked
with an asterisk pursuant to power of attorney filed as Exhibit 16 to this
Registration Statement.
By: /s/ Cathleen A. Ebacher
Cathleen A. Ebacher
4
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EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
(11) Opinion and Consent of Counsel
(12) Opinion and Consent of Counsel relating to tax matters
(14) Consent of Independent Accountants
(16) Powers of Attorney
(17) Form of Proxy Card
1
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