As filed with the Securities and Exchange Commission on June 27, 2000
Registration No. 333-38762
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 2 [X]
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.
<PAGE>
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
<PAGE>
QUESTIONS AND ANSWERS
YOUR VOTE IS VERY IMPORTANT
Q. What are shareholders being asked to vote on
at the upcoming special shareholder meeting on
September 6, 2000?
A. 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").
Q. What are the differences between the Funds?
A. 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.
Q. What are the advantages for Global Bond Fund
shareholders?
A. The Bond Fund offers lower expense ratios than
the Global Bond Fund due to the Bond Fund's larger net
assets, greater economies of scale and 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.).
Q. Has the Global Bond Fund's Board of Directors
approved the proposal?
A. 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.
Q. What is the timetable for the reorganization?
A. If approved by shareholders on September 6,
2000, the Reorganization is expected to take effect on
September 29, 2000.
Q. Will I receive new shares in exchange for my
current shares?
A. 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.
Q. 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?
A. No. The shares received as a result of the
Reorganization will not be subject to this fee.
However, any Bond Fund shares you purchase six months
after completion of the Reorganization will be subject
to this fee if you hold those shares for less than six
months.
Q. Will this reorganization create a taxable
event for me?
<PAGE>
A. 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.
Q. Can I exchange or redeem my Global Bond Fund
shares before the Reorganization takes place?
A. 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.
Q. I'm a small investor. Why should I bother to vote?
A. 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!
Q. Who gets to vote?
A. 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.
Q. How can I vote?
A. 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.
Q. I plan to vote through the Internet. How does
Internet voting work?
A. To vote through the Internet, please read the
enclosed Voting Instructions.
Q. I plan to vote by telephone. How does
telephone voting work?
A. To vote by telephone, please read the enclosed
Voting Instructions.
Q. I plan to vote by mail. How should I sign my
proxy card?
A. 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").
<PAGE>
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 properly 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.
<PAGE>
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
<PAGE>
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. Information about the Global Bond Fund is
incorporated by reference in this combined proxy
statement and prospectus from the Global Bond Fund's
prospectus dated March 1, 2000, as supplemented on May
26, 2000. In addition, 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 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,
<PAGE>
* 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, including the Global
Bond Fund's current prospectus, 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.
<PAGE>
TABLE OF CONTENTS
Page
SYNOPSIS 1
PRINCIPAL RISK FACTORS 3
THE PROPOSED REORGANIZATION 4
COMPARISON OF THE FUNDS 6
VOTING INFORMATION 8
FINANCIAL HIGHLIGHTS 10
ADDITIONAL INFORMATION ABOUT THE FUNDS 11
OTHER MATTERS 11
SHAREHOLDER PROPOSALS 11
EXHIBIT A A-1
EXHIBIT B B-1
EXHIBIT C C-1
<PAGE>
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. The Global Bond Fund does not charge a
similar redemption fee. 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. The Global Bond Fund does
not charge a similar redemption fee. 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.
<PAGE>
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)
Amount
Fund Amount Per Share
Bond ($13,966,852) ($0.25)
Global Bond ($ 416,714) ($2.82)
Pro Forma Combined Bond ($14,383,566) ($0.26)
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 than
"Annual Fund Operating Expenses" for the Global Bond
Fund.
<PAGE>
Annual Fund Operating Expenses (as a percentage of average net assets)
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%
* 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:
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
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.
<PAGE>
Additional Risks. Unlike the Global Bond Fund,
the Bond Fund may invest in common stocks and invests
in 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 these
investments.
Mortgage and Asset-Backed Securities. Mortgage
and asset-backed securities are subject to prepayment
risk, which is the risk that the borrower will prepay
some or all of the principal owed to the issuer. If
that happens, the Bond Fund may have to replace the
security by investing the proceeds in a less attractive
security. This could reduce the Bond Fund's share
price and its income distributions.
Futures Contracts. Future contracts are
agreements for the future sale by one party and
purchase by another party of an underlying financial
instrument at a specified price on a specified date.
Because a future contract's value depends on the value
of an underlying financial instrument, futures
contracts may involve more risk and volatility than do
other fixed income securities. They may also increase
the Fund's expenses and, when used for hedging, reduce
the opportunity for gain.
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.
<PAGE>
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 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 Funds have the same investment objectives and
their investment policies and restrictions are
substantially compatible.
* The Bond Fund is much larger in size than the
Global Bond Fund and the Global Bond Fund's size is not
expected to increase.
* The Bond Fund has a lower expense ratio than the
Global Bond Fund.
* The Reorganization will be tax-free.
* The Funds have the same investment adviser and
shareholders of both Funds have the same shareholder
services, exchange options and investment and
withdrawal plans.
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
<PAGE>
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;
* 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. Although both Funds invest primarily
for income, they also employ techniques designed to
realize capital appreciation. For example, a Fund's
portfolio manager may select bonds with maturities and
coupon rates that position them for capital
appreciation for a variety of reasons including a
manager's view on the direction of future interest-rate
movements and the potential for a credit upgrade. 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
<PAGE>
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.
Calendar Year Total Returns
Year Bond Global Bond
1996 26.8% ---
1997 16.0% ---
1998 3.1% ---
1999 7.8% 5.7%
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-day 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 $42
billion. SCM's address is P.O. Box 2936, Milwaukee,
Wisconsin 53201.
The following individuals are co-managers of the
Bond Fund:
<PAGE>
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.
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
<PAGE>
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.
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.
<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>
April 30, Oct.31, Oct. 31, Oct. 31, Oct. 31,
Selected Per-Share Data (a) 2000(b) 1999 1998 1997 1996(c)
<S> <C> <C> <C> <C> <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.
(a) Information presented relates to a share of capital stock of the fund
outstanding for the entire period.
<PAGE>
(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
<PAGE>
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").
<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.
<PAGE>
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.
<PAGE>
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 accordance
<PAGE>
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.
<PAGE>
(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
<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
<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
<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.
<PAGE>
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 up to and including the Closing Date in
order that at Closing, when the Assets are added to the
<PAGE>
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,
<PAGE>
to the effect that the representations and warranties of
SIF 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 Acquiring Fund of the
transactions contemplated by this Agreement,
except such as have
<PAGE>
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.
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:
<PAGE>
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:
(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;
<PAGE>
(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 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.
<PAGE>
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.
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
<PAGE>
"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;
(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;
<PAGE>
(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.
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:
<PAGE>
(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 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
<PAGE>
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.
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.
<PAGE>
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.
<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
<PAGE>
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
<PAGE>
EXHIBIT C
THE STRONG HIGH-YIELD BOND FUND
Perspectives from the Managers
/s/ Jeffrey A. Koch /s/ Thomas M. Price
Jeffrey A. Koch Thomas M. Price
Portfolio Co-manager Portfolio Co-manager
Despite volatility throughout the year, 1999
marked a return to normalcy for the financial markets
as fixed-income markets unwound from the stimulus of
interest-rate cuts in 1998. Market interest rates led
the way to higher yields with the 10-year Treasury
rising steadily throughout the year to a peak of 6.24%
in October. The Federal Reserve followed with two
increases in the federal funds rate, taking it from
4.75% to 5.25%, and appeared poised to increase rates
at least once more in the next six to 12 months. We are
now in a more "normal" environment for this point in
the economic cycle.
Credit quality in several sectors was hurt by the
collapse in global financial markets and emerging
economies. In the high-yield market, the default rate
rose from 1.64% a year ago to 3.4% at the end of
October. Due to the decline in credit quality, the
yield premium of the high-yield market rose
dramatically over the past year and a half to a level
of 5.17% above the 10-year Treasury. Given our outlook
for continued solid growth in the U.S. economy, we view
this as an attractive valuation level for investing in
the high-yield market. Interest-rate stability
combined with attractive valuation levels could pave
the way for good total returns in the high-yield market
over the next 12 to 18 months.
As always, diligent credit research is key to
success in this market. Our efforts led us to
companies that exhibit positive momentum in their
credit quality - companies that can and will de-
leverage their balance sheets. Many of our best ideas
involve companies that produce a tremendous amount of
free cash flow and whose managements pursue a stated
goal of using free cash flow to de-leverage. Station
Casinos and Motors and Gears are two good examples.
Another opportunity is in companies in rapidly growing
industries (e.g., telecommunications) that are quickly
building asset value which is recognized through
strategic combinations or mergers. These combinations
frequently result in improved credit quality, as was
the case with MetroNet Communications and Global
Crossing, two of our successful investments in
telecommunications.
Our outlook is for continued strong but moderating
growth coupled with low inflation--an environment
supportive to bond yields at their current levels. We
are optimistic on the outlook for high-yield bonds and
thank you for the confidence you have placed in us.
Fund Highlights
* The Strong High-Yield Bond Fund returned 9.77% for
the year ended October 31, 1999. For the same period,
the Lehman Brothers High-Yield Bond Index returned
4.34%.*
* We maintained our emphasis on single-B rated
securities, targeting competitive local exchange
carriers, cable TV, and radio broadcasting.
* We focused on companies exhibiting rapid de-
leveraging potential, through internal cash flow
generation (Station Casinos and Motors and Gears) or
from a favorable merger and acquisition climate (Global
Crossing and MetroNet Communications).
___________
* The Lehman Brothers High-Yield Bond Index is an
unmanaged index generally representative of
corporate bonds rated below investment grade.
Source of the Lehman index data is Standard &
Poor's Micropal.
<PAGE>
Portfolio Statistics as of 10-31-99
30-day annualized yield(1) 11.36%
Average maturity(2) 7.5 years
Average quality rating(3) B
(1) Yields are historical and do not represent
future yields, which will fluctuate. Yield is as of
10-29-99.
(2) The Fund's average maturity includes the effect
of when-issued securities.
(3) For purposes of this average rating, the Fund's
short-term debt obligations have been assigned a
long-term rating by the Advisor.
Growth of an Assumed $10,000 Investment
From 12-28-95 to 10-31-99
[GRAPH]
THE STRONG Lehman Brothers Lipper High
HIGH-YIELD HighYield Current Yield
BOND FUND Bond Index* Funds Index*
11-95 $10,000 $10,000 $10,000
12-95 $10,031 $10,015 $10,015
6-96 $11,425 $10,361 $10,440
12-96 $12,724 $11,152 $11,314
6-97 $13,607 $11,800 $11,969
12-97 $14,758 $12,575 $12,805
6-98 $15,652 $13,141 $13,418
12-98 $15,211 $12,810 $12,796
6-99 $15,881 $13,091 $13,290
10-99 $15,809 $12,819 $13,019
This graph, provided in accordance with SEC
regulations, compares a $10,000 investment in the Fund,
made at its inception, with the performance of the
Lehman Brothers High-Yield Bond Index and the Lipper
High Current Yield Funds Index. Results include the
reinvestment of all dividends and capital gains
distributions. Performance is historical and does not
represent future results. Investment returns and
principal value vary, and you may have a gain or loss
when you sell shares. To equalize the time periods,
the indexes' performance was prorated for the month of
December 1995.
____________
* 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. Source
of the Lehman index data is Standard & Poor's
Micropal. Source of the Lipper index data is Lipper
Inc.
<PAGE>
Average Annual Total Returns as of 10-31-99
1-year 9.77%
3-year 9.12%
Since Inception 12.65%
(on 12-28-95)
Your Fund's Approach
The Strong High-Yield Bond Fund seeks total return
by investing for a high level of current income and
capital growth. The Fund does this by using a
disciplined approach to the high-yield bond market.
The managers' investment process combines a top-down
outlook of broad economic and interest-rate trends with
a bottom-up analysis of individual bonds. The
formation of their macroeconomic outlook provides the
basis for structuring overall portfolio risk. The
Fund's interest-rate sensitivity and the credit quality
of its selections are consistent with this outlook.
Rigorous credit analysis and adherence to strict
valuation criteria provide the foundation for building
the portfolio from the bottom up.
Market Highlights
* The Federal Reserve raised interest rates twice,
taking the federal funds rate from 4.75% to 5.25%.
Interest rates across the rest of the yield curve rose
as well, with the 10-year Treasury rate climbing from
5.35 to 6.02%.
* The yield premium on high-yield bonds (i.e., the
extra yield earned on high-yield bonds versus U.S.
Treasury securities) rose slightly during 1999,
reaching a spread of 5.17% at the end of October.
* Default rates rose over the course of the year.
Emerging markets, energy, and healthcare bonds have
constituted over two-thirds of the default rate.
<PAGE>
PLEASE FILE THIS PROSPECTUS SUPPLEMENT WITH YOUR
RECORDS.
STRONG INTERNATIONAL BOND FUNDS
STRONG GLOBAL HIGH-YIELD BOND FUND
STRONG INTERNATIONAL BOND FUND
STRONG SHORT-TERM GLOBAL BOND FUND
STRONG INTERNATIONAL STOCK FUNDS
STRONG ASIA PACIFIC FUND
STRONG FOREIGN MAJORMARKETSSM FUND
STRONG INTERNATIONAL STOCK FUND
STRONG OVERSEAS FUND
Supplement to the Prospectus dated March 1, 2000
STRONG GLOBAL HIGH-YIELD BOND FUND
CLOSING OF THE STRONG GLOBAL HIGH-YIELD BOND FUND.
Effective May 26, 2000, the Strong Global High-Yield
Bond Fund ("Global Bond Fund") will be closed to new
investors and on June 26, 2000, the Global Bond Fund
will no longer accept additional investments by current
shareholders, except for reinvested dividends. For
investors who are currently using the Global Bond Fund
as part of an automatic investment plan, payroll direct-
deposit program, or company-sponsored retirement plan,
we will be contacting you shortly to make alternative
arrangements.
MERGER OF GLOBAL BOND FUND AND SPECIAL MEETING OF
SHAREHOLDERS. On May 5, 2000, the Global Bond Fund's
Board of Directors approved the merger of the fund into
the Strong High-Yield Bond Fund and called for a
Special Meeting of Shareholders to be held on September
6, 2000. The purpose of the meeting is to vote on
whether to approve an 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
Global Bond Fund's class of shares. The Global Bond
Fund's Board believes this is in the best interest of
the fund's shareholders because of the fund's small
asset size, lack of expected asset growth, and lack of
economies of scale. The fund's management does not
believe the fund can reach a sustainable size in the
near future because the combination of credit quality
risks associated with medium- and lower-quality bonds
and the additional currency-related risks associated
with foreign investments have resulted in a lack of
investor interest in the Global Bond Fund.
In July 2000, all Global Bond Fund shareholders will be
sent a proxy statement explaining the proposed merger
and notifying them of the time and date of the
shareholder meeting. Following the necessary approvals
at the shareholder meeting, your account in the Global
Bond Fund will automatically be converted - on a tax-
free basis - into shares of the Strong High-Yield Bond
Fund with a value equivalent to the value of your
account in the Global Bond Fund on the conversion date.
Before then, if you would like to arrange an exchange
or redemption of your shares, you may call us at the
number below. PLEASE BE AWARE, HOWEVER, THAT A
REDEMPTION OR EXCHANGE IS A TAXABLE EVENT THAT,
DEPENDING ON YOUR INDIVIDUAL CIRCUMSTANCES, MAY GIVE
RISE TO A TAX LIABILITY FOR YOU.
If you have any questions, please call us, day or
night, at 1-800-368-3863, 24 hours a day, 7 days a
week.
The date of this Prospectus Supplement is May 26, 2000.
<PAGE>
THE STRONG
INTERNATIONAL FUNDS
March 1, 2000
STRONG INTERNATIONAL BOND FUNDS
The Strong Global High-Yield Bond Fund
The Strong International Bond Fund
The Strong Short-Term Global Bond Fund
STRONG INTERNATIONAL STOCK FUNDS
The Strong Asia Pacific Fund
The Strong Foreign MajorMarketsSM Fund
The Strong International Stock Fund
The Strong Overseas Fund
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT
APPROVED OR DISAPPROVED OF
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS YOUR INVESTMENT
KEY INFORMATION
What are the funds' goals? 1
What are the funds' principal investment strategies? 1
What are the main risks of investing in the funds? 4
What are the funds' fees and expenses? 10
Who are the funds' investment advisor and portfolio managers? 11
OTHER IMPORTANT INFORMATION YOU SHOULD KNOW
Comparing the Funds 14
A Word About Credit Quality 15
Financial Highlights 16
YOUR ACCOUNT
Share Price 24
Buying Shares 25
Selling Shares 27
Additional Policies 30
Distributions 32
Taxes 33
Services For Investors 34
Reserved Rights 37
For More Information Back Cover
IN THIS PROSPECTUS, "WE" REFERS TO STRONG CAPITAL
MANAGEMENT, INC., THE INVESTMENT ADVISOR, ADMINISTRATOR,
AND TRANSFER AGENT FOR THE STRONG FUNDS.
<PAGE>
YOUR INVESTMENT
KEY INFORMATION
WHAT ARE THE FUNDS' GOALS?
The STRONG GLOBAL HIGH-YIELD BOND FUND seeks total
return by investing for a
high level of current income and capital growth.
The STRONG INTERNATIONAL BOND FUND seeks high total
return by investing for
both income and capital growth.
The STRONG SHORT-TERM GLOBAL BOND FUND seeks total
return by investing for a
high level of income with a low degree of share-price
fluctuation.
The STRONG ASIA PACIFIC FUND, STRONG FOREIGN
MAJORMARKETSSM FUND, STRONG INTERNATIONAL STOCK FUND
and STRONG OVERSEAS FUND seek capital growth.
WHAT ARE THE FUNDS' PRINCIPAL INVESTMENT STRATEGIES?
STRONG INTERNATIONAL BOND FUNDS
The GLOBAL HIGH-YIELD BOND FUND invests primarily in
medium- and lower-quality
bonds of U.S. and foreign issuers. The fund will
normally maintain an average
maturity of seven to twelve years. The fund's manager
looks for high-yield
bonds (commonly referred to as junk bonds) that have
the potential to improve
their credit quality and that may benefit from changes
in interest and
currency-exchange rates. The manager may sell a holding
when it no longer shows
these qualities. The manager intends to attempt to
limit the fund's exposure to
foreign currency risk by using hedging strategies. The
fund's active trading
approach may increase the fund's costs, which may
reduce the fund's
performance. The fund's active trading approach may
also increase the amount
of capital gains tax that you pay on the fund's return.
The INTERNATIONAL BOND FUND invests primarily in higher-
and medium-quality bonds issued in foreign countries.
The fund may also invest up to 35% of its
assets in lower-quality, high-yield bonds (commonly
referred to as junk bonds). The fund maintains an average maturity
of four to nine years. To select bonds, the fund's managers first look
at overall trends in the global economy. The managers then examine
the countries, sectors, and individual companies that may benefit from
those trends. They may create synthetic bonds to make investments
that are consistent with the fund's strategy and goals. When a
bond no longer offers attractive return potential, the managers may
sell it.
The SHORT-TERM GLOBAL BOND FUND invests primarily in
higher- and medium-quality bonds from U.S. and foreign issuers.
The fund may also invest up to 35% of its assets in lower-quality,
high-yield bonds (commonly referred to as junk bonds).
Under normal conditions, the fund maintains an average
maturity of three years or less. The fund's managers intend
to attempt to limit the fund's exposure to foreign currency risk
by using hedging strategies. When a bond no longer offers
attractive return potential, the manager may sell it.
Although each of the above funds invests primarily for
income, they also employ techniques designed to realize capital
appreciation. For example, a manager may select bonds with maturities
and coupon rates that position them for potential
capital appreciation for a variety of reasons including
a manager's view on the direction of future interest-rate
movements and the potential for a credit upgrade.
STRONG INTERNATIONAL STOCK FUNDS
The ASIA PACIFIC FUND invests primarily in stocks from
companies located in Asia or the Pacific Basin. The fund's manager
looks for companies with potential for above-average sales and
earnings growth, overall financial strength, competitive advantages,
and capable management. He may sell a holding when it no longer has
these traits. Due to its investments in Asia or the
Pacific Basin, the fund will generally incur higher
brokerage costs and foreign custody service fees than funds that
principally invest in the U.S. or more established foreign countries.
The FOREIGN MAJORMARKETSSM FUND invests primarily in
stocks issued by companies in the countries represented in the
Morgan Stanley Capital International Europe, Australasia, Far East Index
(MSCI EAFE Index), currently, Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy,
Japan, Netherlands, New Zealand, Norway, Portugal,
Singapore, Spain, Sweden, Switzerland, and the United Kingdom. The fund's
manager employs a disciplined, quantitative approach to identify
undervalued foreign stocks. The manager then analyzes these stocks to
make final selections. The manager may sell a stock when it has reached
price targets or to adjust the fund's weighting in specific
countries. To manage foreign currency risk, the manager
may hedge a portion of the fund's exposure to currency fluctuations.
The INTERNATIONAL STOCK FUND selects stocks from any
foreign country. The manager seeks stocks that appear to have strong growth
potential relative to their risk using a three-step investment process
involving country allocation, intensive in-house research, and currency
management. The manager examines the economic outlook of individual
countries in determining whether to invest and chooses individual stocks
based on rigorous, in-depth analysis which may include interviews with
company leaders. When a stock's negative factors outweigh its positive
ones, the manager may sell it.
The OVERSEAS FUND invests in stocks from ten or more
foreign countries. The manager seeks stocks that appear to have
strong growth potential relative to their risk using a three-step
investment process involving country allocation, intensive in-house
research, and currency management. The manager examines the
economic outlook of individual countries in determining whether to
invest and chooses individual stocks based on rigorous, in-depth
analysis which may include interviews with company leaders. At times, the
fund may take larger positions in companies and countries which may present
greater potential investment opportunities. When a stock's negative
factors outweigh its positive ones, the manager may sell it.
The managers of each of the funds may invest any amount
in cash or cash-type securities (high-quality, short-term debt securities
issued by corporations, financial institutions, the U.S. government,
or foreign governments) as a temporary defensive position to avoid losses
during adverse market conditions. This could reduce the benefit to
the funds if the market goes up. In this case, the funds may not achieve
their investment goal.
WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?
FOR ALL FUNDS
FOREIGN SECURITIES: Each of the funds invests predominantly in
securities from foreign markets. Foreign investments involve additional
risks including currency-rate fluctuations, political and economic
instability, differences in financial reporting standards, and less-strict
regulation of securities markets. These risks are greater in
less-established, emerging markets. Other risks of emerging foreign
markets include, smaller securities markets and lower
trading volumes which may lead to greater price volatility, national policies
restricting investment opportunities, and less developed legal and accounting
structures governing investments.
FOR THE GLOBAL HIGH-YIELD BOND, INTERNATIONAL BOND AND
SHORT-TERM GLOBAL BOND FUNDS (BOND FUNDS)
BOND RISKS: The major risks of each of the bond funds
are those of investing in the bond market. A bond's market value is affected
significantly by changes in interest rates-generally, when interest rates
rise, the bond's market value declines and when interest rates decline,
its market value rises (interest-rate risk). Generally, the longer a
bond's maturity, the greater the risk and the higher its yield.
Conversely, the shorter a bond's maturity, the lower the risk and the
lower its yield (maturity risk). A bond's value can also be affected by
changes in the bond's credit-quality rating or its issuer's financial
condition (credit-quality risk). Because bond values fluctuate,
the fund's share price fluctuates. So, when you sell your investment,
you may receive more or less money than you originally invested.
HIGH-YIELD BONDS: The GLOBAL HIGH-YIELD BOND FUND and,
to a limited extent, the INTERNATIONAL BOND FUND and the
SHORT-TERM GLOBAL BOND FUND invest in medium- and lower-quality bonds,
including high-yield bonds (commonly referred to as
junk bonds). Lower-quality bonds involve greater interest-rate and
credit-quality risks than higher- and medium-quality bonds. High-yield bonds
possess an increased possibility that the bond's issuer may not be able
to make its payments of interest and principal. If that
happens, the fund's share price would decrease and its income
distributions would be reduced. An economic downturn or period of rising
interest rates could adversely affect the high-yield bond market and
reduce the fund's ability to sell its high-yield bonds (liquidity risk).
A lack of a liquid market for these bonds could decrease the fund's
share price.
SYNTHETIC BONDS: The INTERNATIONAL BOND FUND creates synthetic bonds to make
investments that are consistent with the fund's strategy and goals, but which
would not be practical, feasible, or otherwise competitively priced to acquire
directly. Synthetic bonds are created by combining various investment
contracts, such as futures, options, and foreign currency forward contracts,
to replicate the characteristics of some foreign government bonds.
These synthetic bonds are exposed to the general risks of international
government bond investing. In addition, the use of derivatives may
increase default risks due to the possibility that the other party to one
of these contracts will not fulfill its obligations.
NONDIVERSIFIED PORTFOLIO: The GLOBAL HIGH-YIELD BOND FUND and the
INTERNATIONAL BOND FUND are nondiversified funds so they may take
large positions in individual bonds. As a result, the shares of these
funds are likely to fluctuate in value more than those of funds investing
in a broader range of securities.
FOR THE ASIA PACIFIC, FOREIGN MAJORMARKETS, INTERNATIONAL STOCK, AND OVERSEAS
FUNDS (STOCK FUNDS) GENERAL STOCK RISKS: The major risks of each of the
stock funds are those of investing in the stock market. That means the
funds may experience sudden, unpredictable declines in value, as well
as periods of poor performance. Because stock values go up and down,
the value of your fund's shares may go up and down. Therefore, when
you sell your investment you may receive more or less money than you
originally invested. These risks are magnified in foreign markets.
STYLE INVESTING: Different types of stocks tend to shift into and out of
favor with stock market investors depending on market and economic conditions.
Because each of the funds focuses on stocks selected in accordance with the
fund's goal and investment strategies, each fund's performance may at times
be better or worse than the performance of funds that focus on other types of
stocks or that have a broader investment style.
SMALLER COMPANIES: Each of the stock funds invests a substantial portion
of its assets in the stocks of smaller-capitalization companies. Small- and
medium-capitalization companies often have narrower markets and more limited
managerial and financial resources than larger, more established companies.
As a result, their performance can be more volatile and they face greater
risk of business failure, which could increase the volatility
of the funds' portfolios. Generally, the smaller the company size,
the greater these risks.
REGIONAL RISK: The ASIA PACIFIC FUND'S investments are
focused in a single region. As a result, the fund's shares are likely to
fluctuate in value more than those of a fund investing in a broader range of
countries.
The funds are appropriate for investors who are comfortable with the
risks described here. The funds are not appropriate for investors
concerned primarily with principal stability. Also, the SHORT-TERM GLOBAL
BOND FUND is appropriate for investors whose financial goals are two to four
years in the future. The GLOBAL HIGH-YIELD BOND FUND and the INTERNATIONAL
BOND FUND are appropriate for investors whose financial goals are four to
seven years in the future. The stock funds are appropriate for investors
whose financial goals are five or more years in the future.
The return information on the following pages illustrates how the funds'
performance can vary, which is one indication of the risks of investing in the
funds. Please keep in mind that the funds' past performance does not
represent how they will perform in the future. The information assumes that
you reinvested all dividends and distributions.
CALENDAR YEAR TOTAL RETURNS
<TABLE>
International International Short-Term Foreign Global High
Year Stock Asia Pacific Bond Global Bond MajorMarkets Yield Bond Overseas
<S> <C> <C> <C> <C> <C> <C> <C>
1993 47.7% -- -- -- -- -- --
1994 -1.6% -5.3% -- -- -- -- --
1995 7.8% 5.9% 19.1% 10.5% -- -- --
1996 8.2% 2.1% 8.0% 10.0% -- -- --
1997 -14.2% -31.0% -4.8% 6.7% -- -- --
1998 -7.0% -3.1% 15.3% 4.1% -- -- --
1999 92.7% 96.0% -7.4% 5.8% 42.4% 5.7% 96.3%
</TABLE>
BEST AND WORST QUARTERLY PERFORMANCE
(During the periods shown above)
FUND NAME BEST QUARTER RETURN WORST QUARTER RETURN
Asia Pacific 37.4% (2nd Q 1999) -22.5% (4th Q 1997)
Foreign MajorMarkets 26.2% (4th Q 1999) -15.3% (3rd Q 1998)
Global High-Yield Bond 5.9% (4th Q 1998) -9.8% (3rd Q 1998)
International Bond 13.2% (1st Q 1995) -5.4% (1st Q 1997)
International Stock 57.8% (4th Q 1999) -19.4% (3rd Q 1998)
Overseas 53.4% (4th Q 1999) -16.3% (3rd Q 1998)
Short-Term Global Bond 3.8% (2nd Q 1995) -0.1% (3rd Q 1998)
AVERAGE ANNUAL TOTAL RETURNS
AS OF 12-31-99
FUND/INDEX 1-YEAR 5-YEAR SINCE INCEPTION
ASIA PACIFIC 96.03% 7.22% 5.03% (12-31-93)
MSCI AP Index 49.83% 2.22% -0.36%
Lipper Pacific Region Funds Index 78.34% 5.86% 3.92%
FOREIGN MAJORMARKETS 42.39% - 26.40% (6-30-98)
MSCI EAFE Index 26.96% - 19.98%
Lipper International Funds Index 37.83% - 21.60%
GLOBAL HIGH-YIELD 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%
INTERNATIONAL BOND -7.42% 5.49% 6.28% (3-31-94)
Salomon Smith Barney Non-U.S.
World Government Bond Index
(Currency Unhedged) -5.07% 5.90% 5.83%
Lipper International Income Funds Index -4.46% 7.42% 6.11%
INTERNATIONAL STOCK 92.67% 12.38% 12.76% (3-4-92)
MSCI EAFE Index 26.96% 12.83% 12.29%
Lipper International Funds Index 37.83% 15.96% 13.80%
OVERSEAS 96.27% - 61.53% (6-30-98)
MSCI EAFE Index 26.96% - 19.98%
Lipper International Funds Index 37.83% - 21.60%
SHORT-TERM GLOBAL BOND 5.77% 7.37% 7.31% (3-31-94)
Salomon Smith Barney 1-3 Year World
Government Bond Index (Currency Hedged) 4.17% 7.20% 6.51%
Lipper Short World Multi-Market
Income Funds Average 1.24% 4.89% 3.73%
THE MORGAN STANLEY CAPITAL INTERNATIONAL AC ASIA
PACIFIC FREE EX. JAPAN INDEX (MSCI AP INDEX) IS AN UNMANAGED INDEX GENERALLY
REPRESENTATIVE OF DEVELOPED AND EMERGING MARKETS IN THE ASIA/PACIFIC REGION,
EXCLUDING JAPAN. MSCI AP DATA IS U.S. DOLLAR ADJUSTED. THE LIPPER
PACIFIC REGION FUNDS INDEX IS AN EQUALLY-WEIGHTED PERFORMANCE INDEX OF THE
LARGEST QUALIFYING FUNDS IN THIS LIPPER CATEGORY. THE MORGAN STANLEY CAPITAL
INTERNATIONAL EUROPE, AUSTRALASIA, AND FAR EAST INDEX (MSCI EAFE INDEX)
IS AN UNMANAGED INDEX GENERALLY REPRESENTATIVE OF MAJOR OVERSEAS STOCK
MARKETS. MSCI EAFE DATA IS U.S. DOLLAR ADJUSTED. THE LIPPER INTERNATIONAL
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. THE SALOMON SMITH BARNEY NON-U.S. WORLD GOVERNMENT
BOND INDEX (CURRENCY UNHEDGED) IS AN UNMANAGED INDEX GENERALLY REPRESENTATIVE
OF LIQUID, NON-U.S. FIXED INCOME GOVERNMENT SECURITIES. THE LIPPER
INTERNATIONAL INCOME FUNDS INDEX IS AN EQUALLY-WEIGHTED PERFORMANCE INDEX
OF THE LARGEST QUALIFYING FUNDS IN THIS LIPPER CATEGORY. THE SALOMON
SMITH BARNEY 1-3 YEAR WORLD GOVERNMENT BOND INDEX (CURRENCY HEDGED) IS AN
UNMANAGED INDEX GENERALLY REPRESENTATIVE OF SHORT-TERM, GLOBAL FIXED INCOME
GOVERNMENT SECURITIES. ROLLING ONE-MONTH FORWARD EXCHANGE CONTRACTS ARE
USED AS THE HEDGING INSTRUMENT. THE LIPPER SHORT WORLD MULTI-MARKET
INCOME FUNDS AVERAGE REPRESENTS FUNDS THAT INVEST IN NON-U.S.
DOLLAR AND U.S. DOLLAR DEBT INSTRUMENTS AND, BY POLICY, KEEP A DOLLAR-WEIGHTED
AVERAGE MATURITY OF LESS THAN FIVE YEARS.
As of October 29, 1999, the 30-day yields for the following funds were as
follows: GLOBAL HIGH-YIELD BOND FUND, 7.66%; INTERNATIONAL BOND FUND,
3.51%; and SHORT-TERM GLOBAL BOND FUND, 6.61%. For current
yield information, call 800-368-3863.
Recent returns for the ASIA PACIFIC FUND, the INTERNATIONAL STOCK FUND,
and the OVERSEAS FUND were primarily achieved during favorable
conditions in the market, particularly for technology companies. You
should not expect that such favorable returns can be consistently achieved.
WHAT ARE THE FUNDS' FEES AND EXPENSES?
This section describes the fees and expenses that you
may pay if you buy and hold shares of the funds.
SHAREHOLDER FEES
(fees paid directly from your investment)
The funds are 100% no-load, so you pay no sales charges
(loads) to buy or sell shares.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
The costs of operating the funds are deducted from fund
assets, which means you pay them indirectly. These costs are
deducted before computing the daily share
price or making distributions. As a result, they don't
appear on your account statement, but instead reduce the total return you
receive from your fund investment.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENT OF AVERAGE NET ASSETS)
OTHER TOTAL ANNUAL FUND
FUND MANAGEMENT FEES EXPENSES OPERATING EXPENSES*
---------------------- ------------------ ---------- -------------------
Asia Pacific 1.00% 1.00% 2.00%
Foreign MajorMarkets 1.00% 1.00% 2.00%
Global High-Yield Bond 0.70% 1.30% 2.00%
International Bond 0.70% 0.93% 1.63%
International Stock 1.00% 0.77% 1.77%
Overseas 1.00% 1.00% 2.00%
Short-Term Global Bond 0.625% 0.46% 1.09%
------------
*TOTAL OPERATING EXPENSES DO NOT REFLECT OUR WAIVER OF
MANAGEMENT FEES AND/OR ABSORPTIONS. WITH WAIVERS AND/OR ABSORPTIONS,
THE TOTAL ANNUAL OPERATING EXPENSES FOR THE ASIA PACIFIC FUND AND
THE OVERSEAS FUND WERE 1.74% AND 1.99%, RESPECTIVELY. WE CAN TERMINATE
WAIVERS AND ABSORPTIONS FOR THESE FUNDS AT ANY TIME.
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:
FUND 1YEAR 3 YEARS 5 YEARS 10 YEARS
Asia Pacific $203 $627 $1,078 $2,327
Foreign MajorMarkets $203 $627 $1,078 $2,327
Global High-Yield Bond $203 $627 $1,078 $2,327
International Bond $166 $514 $887 $1,933
International Stock $180 $557 $959 $2,084
Overseas $203 $627 $1,078 $2,327
Short-Term Global Bond $111 $347 $601 $1,329
WHO ARE THE FUNDS' INVESTMENT ADVISOR AND PORTFOLIO MANAGERS?
Strong Capital Management, Inc. (Strong) is the investment advisor for the
funds. Strong provides investment management services for mutual funds and
other investment portfolios representing assets of over $38 billion. Strong
began conducting business in 1974. Since then, its principal business has
been providing investment advice for individuals and institutional accounts,
such as pension and profit-sharing plans, as well as mutual funds,
several of which are available through variable insurance products.
Strong's address is P.O. Box 2936, Milwaukee, WI 53201.
JOHN T. BENDER manages the GLOBAL HIGH-YIELD BOND FUND and co-manages the
INTERNATIONAL BOND FUND. He has over ten years of investment experience
and is a Chartered Financial Analyst and a Certified Public Accountant.
Mr. Bender joined Strong in February 1987. He co-managed the
GLOBAL HIGH-YIELD BOND FUND from January 1998 to August 1999, at which
point he became the fund's sole manager. He has co-managed the
INTERNATIONAL BOND FUND since August 1999. 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.
ANTHONY L. T. CRAGG manages the ASIA PACIFIC FUND. He has over 20 years of
investment experience and joined Strong as a portfolio manager in April
1993 to develop Strong's international investment activities.
He has managed the ASIA PACIFIC FUND since its inception in December 1993.
Prior to joining Strong, for seven years, he helped establish Dillon, Read
International Asset Management, where he was in charge of Japanese, Asian,
and Australian investments. Mr. Cragg began his investment career in
1980 at Gartmore, Ltd., as an international investment manager, where his
tenure included assignments in London, Hong Kong, and Tokyo. Mr. Cragg
received his masters degree in English Literature in 1977 from Christ Church,
Oxford University.
JEFFREY A. KOCH co-manages the SHORT-TERM GLOBAL BOND FUND. He has over ten
years of investment experience and is a Chartered Financial Analyst. Mr. Koch
joined Strong in June 1989. He has been a portfolio manager since January
1990 and has co-managed the SHORT-TERM GLOBAL BOND FUND since August 1999.
Prior to joining Strong, 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.
DAVID LUI manages the FOREIGN MAJORMARKETS FUND, INTERNATIONAL STOCK FUND, and
the OVERSEAS FUND. He has over seven years of investment experience and is a
Chartered Financial Analyst. Mr. Lui joined Strong as a portfolio manager in
May 1998 and has managed the INTERNATIONAL STOCK FUND since May 1998, the
OVERSEAS FUND since its inception in June 1998, and the FOREIGN MAJORMARKETS
FUND since August 1999. For three years prior to joining Strong, he served as
a Vice President at Phoenix Investment Partners and international portfolio
manager of five funds, including the Phoenix International Portfolio and the
Phoenix Worldwide Opportunities Fund. From 1993 to 1995, Mr. Lui was Vice
President of Asian Equities at Alliance Capital Management. From 1990 to 1993,
he was an Associate of Global Markets at Bankers Trust Company. In 1982, he
received his bachelors degree in Electrical Engineering from Massachusetts
Institute of Technology which he achieved in three years. He received his
Masters of Business Administration from Stanford University in 1990 where he
graduated as an Arjay Miller Scholar. He is fluent in English, French, and
Chinese.
BRADLEY C. TANK co-manages the INTERNATIONAL BOND FUND and the SHORT-TERM
GLOBAL BOND FUND. He has over 15 years of investment experience. Mr. Tank
joined Strong in June 1990. He has been a portfolio manager of fixed income
funds since 1990 and has co-managed the INTERNATIONAL BOND FUND and the
SHORT-TERM GLOBAL BOND FUND since August 1999. For eight years prior to
joining Strong, he worked for Salomon Brothers Inc. He was a vice president
and fixed income specialist for six years and for the two years prior to that,
a fixed income specialist. He received his bachelors degree in English from
the University of Wisconsin in 1980 and his Masters of Business
Administration in Finance from the University of Wisconsin in 1982, where he
also completed the Applied Securities Analysis Program. Mr. Tank chairs
Strong's Fixed Income Investment Committee.
OTHER IMPORTANT INFORMATION YOU SHOULD KNOW
COMPARING THE FUNDS
The following two charts will help you distinguish the
funds and determine their suitability for your investment needs:
BOND FUNDS
EXPOSURE TO
COUNTRY CREDIT U.S. FOREIGN-
FUND DIVERSIFICATION QUALITY COMPONENT CURRENCY RISK
SHORT-TERM U.S. plus at At least 65% rated At least 35% Primarily
GLOBAL BOND least 2 foreign higher- and medium- hedged
countries quality
Up to 35% rated
lower-quality
INTERNATIONAL At least 3 At least 65% rated No more Unhedged
BOND foreign higher- and medium- than 35%
countries quality
Up to 35% rated
lower-quality
GLOBAL HIGH- U.S. plus at At least 80% rated At least 35% Primarily
YIELD least 2 foreign medium- or lower- hedged
BOND countries quality
Up to 10% in default
STOCK FUNDS
ANTICIPATED
COUNTRY EQUITY INVESTMENT
FUND DIVERSIFICATION EXPOSURE FOCUS
ASIA PACIFIC At least 3 65 to 100% Asia and Pacific
foreign countries Basin
FOREIGN MAJORMARKETS Countries listed on MSCI 90 to 100% Established
EAFE Index markets foreign
INTERNATIONAL STOCK At least 3 90 to 100% Non-U.S.
foreign countries
OVERSEAS At least 10 foreign 90 to 100% Non-U.S.
countries
A WORD ABOUT CREDIT QUALITY
CREDIT QUALITY measures the issuer's expected ability
to pay interest and principal payments on time. Credit quality can be
"higher-quality", "medium-quality", "lower-quality", or "in default".
HIGHER-QUALITY means bonds that are in any of the three
highest rating categories. For example, bonds rated AAA to A by
Standard & Poor's Ratings Group (S&P)*.
MEDIUM-QUALITY means bonds that are in the fourth-
highest rating category. For example, bonds rated BBB by S&P*.
LOWER-QUALITY means bonds that are below the fourth-
highest rating category. They are also known as non-investment,
high-risk, high-yield, or "junk bonds". For example, bonds rated BB to
C by S&P*.
IN DEFAULT means the bond's issuer has not paid
principal or interest on time.
*OR THOSE RATED IN THIS CATEGORY BY ANY NATIONALLY
RECOGNIZED STATISTICAL RATING ORGANIZATION. S&P IS ONLY ONE EXAMPLE OF A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION.
This chart shows S&P's definition and ratings group for
credit quality. Other rating organizations use similar definitions.
CREDIT S&P'S DEFINITION S&P'S RATINGS GROUP RATING CATEGORY
QUALITY
Higher Highest quality AAA First highest
High quality AA Second highest
Upper medium grade A Third highest
-------- --------------------- --------------------- ---------------------
Medium Medium grade BBB Fourth highest
-------- --------------------- --------------------- ---------------------
Lower Low grade BB
Speculative B
Submarginal CCC, CC, C
---------- ------------------- ---------------------
In default Probably in default D
---------- ------------------- ---------------------
We determine a bond's credit quality rating at the time
of investment by conducting credit research and analysis and by relying
on credit ratings of several nationally recognized statistical rating
organizations. These organizations are called NRSROs. When we determine if a
bond is in a specific category, we may use the highest rating assigned to it
by any NRSRO. If a bond is not rated, we rely on our credit research and
analysis to rate the bond. If a bond's credit quality rating is downgraded
after our investment, we monitor the situation to decide if we need to
take any action such as selling the bond.
Investments in lower-quality bonds (junk bonds) will be
more dependent on our credit analysis than would be higher-quality bonds
because, while lower-quality bonds generally offer higher yields than
higher-quality bonds with similar maturities, lower-quality bonds
involve greater risks. These include the possibility of default or
bankruptcy because the issuer's capacity to pay interest and repay
principal is considered predominantly speculative. Also,
lower-quality bonds are less liquid, meaning that they may be harder to sell
than bonds of higher quality because the demand for them may be lower
and there are fewer potential buyers. This lack of liquidity may
lower the value of the fund and your investment.
FINANCIAL HIGHLIGHTS
The information below describes investment performance
for the periods shown. Certain information reflects financial results for a
single fund share outstanding for the entire period. "Total Return"
shows how much your investment in the fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been audited by PricewaterhouseCoopers LLP,
whose report, along with the fund's financial statements, is included in
the fund's annual report.
STRONG GLOBAL HIGH-YIELD BOND FUND
Oct. 31, Oct. 31,
SELECTED PER-SHARE DATA(a) 1999 1998(b)
Net Asset Value, Beginning of Period $8.71 $10.00
Income From Investment Operations:
Net Investment Income 0.67 0.53
Net Realized and Unrealized Gains
(Losses) on Investments 0.12 (1.29)
-------- --------
Total from Investment Operations 0.79 (0.76)
Less Distributions:
From Net Investment Income (0.67) (0.53)
Total Distributions (0.67) (0.53)
Net Asset Value, End of Period $8.83 $8.71
RATIOS AND SUPPLEMENTAL DATA
Total Return +9.1% -8.0%
Net Assets, End of Period (In Millions) $1 $2
Ratio of Expenses to Average Net Assets 2.0% 2.0%*
Ratio of Net Investment Income
to Average Net Assets 7.2% 7.2%*
Portfolio Turnover Rate 380.1% 680.3%
* Calculated on an annualized basis.
(a) Information presented relates to a share of
capital stock of the Fund outstanding for the entire period.
(b) For the period from January 31, 1998
(inception) to October 31, 1998.
STRONG INTERNATIONAL BOND FUND
<TABLE>
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Dec. 31,
SELECTED PER-SHARE DATA(a) 1999 1998 1997 1996 1995(b) 1994(c)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.89 $11.58 $11.87 $11.48 $10.36 $10.00
Income From Investment Operations:
Net Investment Income 0.54 0.57 1.03 0.80 0.78 0.46
Net Realized and Unrealized
Gains (Losses) on Investments (1.14) 0.58 (1.11) 0.15 1.00 0.40
------------------------------------------------------------------------------------------
Total from Investment Operations (0.60) 1.15 (0.08) 0.95 1.78 0.86
Less Distributions:
From Net Investment Income (0.65) (0.58) (0.20) (0.50) (0.66) (0.46)
In Excess of Net Investment Income - - - - - (0.02)
From Net Realized Gains - - - (0.06) - -
In Excess of Net Realized Gains - (0.26) (0.01) - - (0.02)
------------------------------------------------------------------------------------------
Total Distributions (0.65) (0.84) (0.21) (0.56) (0.66) (0.50)
------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.64 $11.89 $11.58 $11.87 $11.48 $10.36
RATIOS AND SUPPLEMENTAL DATA
Total Return -5.3% +10.9% -0.7% +8.6% +17.3% +8.7%
Net Assets, End of Period
(In Millions) $19 $20 $28 $31 $21 $10
Ratio of Expenses to Average
Net Assets without Waivers
and Absorptions 1.6% 1.6% 1.5% 1.8% 2.0%* 2.0%*
Ratio of Expenses to
Average Net Assets 1.6% 1.5% 0.7% 0.0% 0.0%* 0.0%*
Ratio of Net Investment
Income to Average Net Assets 4.7% 5.3% 8.1% 7.4% 8.3%* 7.9%*
Portfolio Turnover Rate 45.7% 158.8% 208.4% 258.3% 473.3% 679.3%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the
Fund outstanding for the entire period.
(b) In 1995, the Fund changed its fiscal year-end
from December to October.
(c) For the period from March 31, 1994
(inception) to December 31, 1994.
STRONG SHORT-TERM GLOBAL BOND FUND
<TABLE>
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Dec. 31,
SELECTED PER-SHARE DATA(a) 1999 1998 1997 1996 1995(b) 1994(c)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.17 $10.48 $10.74 $10.46 $10.15 $10.00
Income From Investment Operations:
Net Investment Income 0.68 0.60 0.81 0.71 0.65 0.35
Net Realized and Unrealized
Gains (Losses) on Investments (0.02) (0.21) (0.10) 0.34 0.20 0.16
----------------------------------------------------------------------------------------------
Total from Investment Operations 0.66 0.39 0.71 1.05 0.85 0.51
Less Distributions:
From Net Investment Income (0.62) (0.59) (0.85) (0.77) (0.54) (0.35)
In Excess of Net Investment Income - (0.03) (0.12) - - -
From Net Realized Gains - (0.08) - - - -
In Excess of Net Realized Gains - - - - - (0.01)
----------------------------------------------------------------------------------------------
Total Distributions (0.62) (0.70) (0.97) (0.77) (0.54) (0.36)
----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.21 $10.17 $10.48 $10.74 $10.46 $10.15
RATIOS AND SUPPLEMENTAL DATA
Total Return +6.7% +3.8% +6.8% +10.4% +8.5% +5.1%
Net Assets, End of Period
(In Millions) $44 $75 $116 $71 $25 $20
Ratio of Expenses to Average Net
Assets Without Waivers and Absorptions 1.1% 1.0% 1.0% 1.5% 2.0%* 1.7%*
Ratio of Expenses to Average Net Assets 1.1% 0.9% 0.7% 0.0% 0.0%* 0.0%*
Ratio of Net Investment
Income to Average Net Assets 5.6% 5.7% 7.6% 7.4% 8.2%* 7.7%*
Portfolio Turnover Rate 73.1% 145.2% 168.0% 179.7% 437.3% 287.8%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the
Fund outstanding for the entire period.
(b) In 1995, the Fund changed its fiscal year-end from December to
October.
(c) For the period from March 31, 1994 (inception) to December 31, 1994.
STRONG ASIA PACIFIC FUND
<TABLE>
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Dec. 31,
SELECTED PER-SHARE DATA(a) 1999 1998 1997 1996 1995(b) 1994
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $5.43 $7.35 $9.51 $9.55 $9.35 $10.00
Income From Investment Operations:
Net Investment Income 0.05 0.07 0.01 0.06 0.04 0.05
Net Realized and Unrealized
Gains (Losses) on Investments 4.14 (1.90) (2.01) 0.31 0.20 (0.57)
-----------------------------------------------------------------------------------------------
Total from Investment Operations 4.19 (1.83) (2.00) 0.37 0.24 (0.52)
Less Distributions:
From Net Investment Income - (0.07) (0.01) (0.06) (0.03) (0.01)
In Excess of Net Investment Income - (0.02) (0.03) (0.35) (0.01) -
From Net Realized Gains - - (0.10) - - -
In Excess of Net Realized Gains - - (0.02) - - (0.12)
-----------------------------------------------------------------------------------------------
Total Distributions - (0.09) (0.16) (0.41) (0.04) (0.13)
-----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.62 $5.43 $7.35 $9.51 $9.55 $9.35
-----------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Total Return +77.2% -25.1% -21.5% +3.8% +2.6% -5.3%
Net Assets, End of Period (In Millions) $103 $22 $30 $72 $55 $58
Ratio of Expenses to Average
Net Assets without Waivers or
Absorptions 2.0% 2.0% 2.0% 2.0% 2.0%* 2.0%
Ratio of Expenses to Average Net Assets 1.7% 2.0% 2.0% 2.0% 2.0%* 2.0%
Ratio of Net Investment Income
to Average Net Assets 0.2% 1.1% 0.1% 0.2% 0.5%* 0.6%
Portfolio Turnover Rate 206.1% 192.9% 96.7% 91.4% 104.3% 103.3%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the
Fund outstanding for the entire period.
(b) In 1995, the Fund changed its fiscal-year end from December to October.
STRONG FOREIGN MAJORMARKETS FUND
Oct. 31, Oct. 31,
SELECTED PER-SHARE DATA(a) 1999 1998(b)
Net Asset Value, Beginning of Period $9.31 $10.00
Income From Investment Operations:
Net Investment Income (Loss) 0.03 (0.01)
Net Realized and Unrealized Gains
(Losses) on Investments 2.44 (0.68)
--------------------------------------------------------------------------
Total from Investment Operations 2.47 (0.69)
Less Distributions:
From Net Investment Income - -
--------------------------------------------------------------------------
Total Distributions - -
--------------------------------------------------------------------------
Net Asset Value, End of Period $11.78 $9.31
RATIOS AND SUPPLEMENTAL DATA
Total Return +26.5% -6.9%
Net Assets, End of Period (In Millions) $2 $1
Ratio of Expenses to Average Net Assets 2.0% 2.0%*
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.2% (0.5%)*
Portfolio Turnover Rate 144.5% 16.5%
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the
Fund outstanding for the entire period.
(b) For the period from June 30, 1998 (inception) to October 31, 1998.
STRONG INTERNATIONAL STOCK FUND
<TABLE>
Oct. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Dec. 31,
SELECTED PER-SHARE DATA(a) 1999 1998 1997 1996 1995(b) 1994
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $8.95 $11.99 $13.75 $13.03 $12.65 $14.18
Income From Investment Operations:
Net Investment Income (Loss) (0.09) 0.00(c) 0.01 0.17 0.08 0.06
Net Realized and Unrealized
Gains (Losses) on Investments 4.19 (2.48) (0.69) 1.11 0.37 (0.27)
---------------------------------------------------------------------------------------
Total from Investment Operations 4.10 (2.48) (0.68) 1.28 0.45 (0.21)
Less Distributions:
From Net Investment Income - (0.00)(c) (0.01) (0.18) (0.07) (0.01)
In Excess of Net Investment Income(0.06) (0.30) (0.26) (0.38) - -
From Net Realized Gains - (0.26) (0.81) - - (1.25)
In Excess of Net Realized Gains - - - - - (0.06)
---------------------------------------------------------------------------------------
Total Distributions (0.06) (0.56) (1.08) (0.56) (0.07) (1.32)
---------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.99 $8.95 $11.99 $13.75 $13.03 $12.65
---------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Total Return +46.0% -21.4% -5.7% +9.8% +3.6% -1.6%
Net Assets, End of Period
(In Millions) $112 $96 $180 $304 $211 $258
Ratio of Expenses to
Average Net Assets 1.8% 1.9% 1.6% 1.7% 1.8%* 1.7%
Ratio of Net Investment Income
(Loss) to Average Net Assets (0.7%) (0.1%) 0.5% 0.6% 0.8%* 0.3%
Portfolio Turnover Rate 84.9% 228.2% 143.7% 108.6% 102.0% 136.5%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the
Fund outstanding for the entire period.
(b) In 1995, the Fund changed its fiscal year- end from December to
October.
(c) Amount calculated is less than $0.00.
STRONG OVERSEAS FUND
Oct. 31, Oct. 31,
SELECTED PER-SHARE DATA(a) 1999 1998(b)
Net Asset Value,
Beginning of Period $8.20 $10.00
Income From Investment Operations:
Net Investment Loss (0.08) (0.02)
Net Realized and Unrealized
Gains (Losses) on Investments 6.25 (1.78)
----------------------------------------------------------------
Total from Investment Operations 6.17 (1.80)
Less Distributions:
From Net Investment Income - -
----------------------------------------------------------------
Total Distributions - -
----------------------------------------------------------------
Net Asset Value, End of Period $14.37 $8.20
----------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Total Return +75.2% -18.0%
Net Assets, End of Period
(In Millions) $7 $3
Ratio of Expenses to
Average Net Assets 2.0% 2.0%*
Ratio of Net Investment
Loss to Average Net Assets (0.9%) (0.7%)*
Portfolio Turnover Rate 106.4% 59.5%
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the
Fund outstanding for the entire period.
(b) For the period from June 30, 1998 (inception) to October 31, 1998.
YOUR ACCOUNT
SHARE PRICE
Your transaction price for buying, selling, or
exchanging shares is the net asset value per share (NAV). NAV is generally
calculated as of the close of trading on the New York Stock Exchange
(usually 3:00 p.m. Central Time) every day the NYSE is open. If
the NYSE closes at any other time, or if an emergency
exists, NAV may be calculated at a different time. Your share price will be
the next NAV calculated after we accept your order.
NAV is based on the market value of the securities in a fund's portfolio. If
market prices are not available, NAV is based on a security's fair value as
determined in good faith by us under the supervision of the Board of Directors
of the Strong Funds.
((Side Box))
We determine a fund's share price or NAV by dividing net
assets (the value of its investments, cash, and other assets
minus its liabilities) by the number of shares outstanding.
FOREIGN SECURITIES
The fund's portfolio securities may be listed on
foreign exchanges that trade on days when we do not calculate an NAV.
As a result, a fund's NAV may change on days when you will not be able
to purchase or redeem shares. In addition, a foreign exchange may not
value its listed securities at the same time that we calculate a
fund's NAV. Events affecting the values of portfolio securities
that occur between the time a foreign exchange assigns a price to the
portfolio securities and the time when we calculate a fund's NAV
generally will not be reflected in the fund's NAV. These events will be
reflected in the fund's NAV when we, under the supervision of the Board of
Directors of the Strong Funds, determine that they would have a material
effect on the fund's NAV.
BUYING SHARES
INVESTMENT MINIMUMS: When buying shares, you must meet
the following investment minimum requirements.
INITIAL ADDITIONAL
INVESTMENT MINIMUM INVESTMENT MINIMUM
Regular accounts $2,500 $50
Education IRA accounts $500 $50
Other IRAs and UGMA/UTMA accounts $250 $50
SIMPLE IRA, SEP-IRA, 403(b)(7), the lesser of $250 $50
Keogh, Pension Plan , and Profit or $25 per month
Sharing Plan accounts
PLEASE REMEMBER ...
* If you use an Automatic Investment Plan, we waive the
initial investment minimum to open an account and the additional
investment minimum is $50.
* You cannot use an Automatic Investment Plan with an
Education IRA.
* If you open a qualified retirement plan account where
we or one of our alliance partners provides administrative services,
there is no initial investment minimum.
BUYING INSTRUCTIONS
You can buy shares in several ways.
MAIL
You can open or add to an account by mail with a check
or money order made payable to Strong. Send it to the address listed on
the back of this prospectus, along with your account application (for a
new account) or an Additional Investment Form (for an existing account).
EXCHANGE OPTION
Sign up for the exchange option when you open your
account. To add this option to an existing account, visit the Investor
Services area at WWW.ESTRONG.COM or call 800-368-3863 for a Shareholder
Account Options Form.
EXPRESS PURCHASES
You can make additional investments to your existing
account directly from your bank account. If you didn't establish this
option when you opened your account, visit the Investor Services area at
WWW.ESTRONG.COM or call us at 800-368-3863 for a Shareholder Account
Options Form.
((Side Box))
Questions?
Call 800-368-3863
24 hours a day
7 days a week
STRONG DIRECT(R)
You can use Strong Direct(R) to add to your investment
from your bank account or to exchange shares between Strong Funds by calling
800-368-7550. See "Services for Investors" for more information.
STRONG NETDIRECT(R)
You can use Strong netDirect(R) at WWW.ESTRONG.COM, to
add to your investment from your bank account or to exchange shares between
Strong Funds. See "Services for Investors" for more information.
INVESTOR CENTERS
You can visit our Investor Center in Menomonee Falls,
Wisconsin, near Milwaukee. Call 800-368-3863 for hours and directions,
or for the location of our other Investor Centers. The Investor Centers only
accept checks or money orders payable to Strong. They do not accept cash,
third-party checks (checks payable to you written by another party),
credit card convenience checks, or checks drawn on banks outside the U.S.
WIRE
Call 800-368-3863 for instructions before wiring funds
either to open or add to an account. This helps to ensure that your account
will be credited promptly and correctly.
AUTOMATIC INVESTMENT SERVICES
See "Services for Investors" for detailed information
on all of our automatic investment services. You can sign up for these plans
when you open your account, or you can add them later by visiting the
Investor Services area at WWW.ESTRONG.COM or by calling 800-368-3863 for the
appropriate form.
BROKER-DEALER
You may purchase shares through a broker-dealer or
other intermediary who may charge you a fee. Broker-dealers, including each
fund's distributor, and other intermediaries may also from time to time
sponsor or participate in promotional programs pursuant to which investors
receive incentives for establishing with the broker-dealer or intermediary
an account and/or for purchasing shares of the Strong Funds through the
account(s). Investors should contact the broker-dealer or intermediary and
consult the Statement of Additional Information for more information about
promotional programs.
PLEASE REMEMBER . . .
* Make checks or money orders payable to Strong.
* We do not accept cash, third-party checks (checks
payable to you written by another party), credit card convenience checks, or
checks drawn on banks outside the U.S.
* You will be charged $20 for every check, money order, wire, or Electronic
Funds Transfer returned unpaid.
SELLING SHARES
You can access the money in your account by selling
(also called redeeming) some or all of your shares by one of the methods
below. After your redemption request is accepted, we normally send you
the proceeds on the next business day.
SELLING INSTRUCTIONS
You can sell shares in several ways.
MAIL
Write a letter of instruction. It should specify your account number, the
dollar amount or number of shares you wish to redeem, he names and signatures
of the owners (or other authorized persons), and your mailing address. Then,
mail it to the address listed on the back of this prospectus.
REDEMPTION OPTION
Sign up for the redemption option when you open your account or add it
later by visiting the Investor Services area at WWW.ESTRONG.COM, or by calling
800-368-3863, to request a Shareholder Account Options Form. With this option,
you may sell shares by phone and receive the proceeds in one of three ways:
(1) We can mail a check to your account's address.
Checks will not be forwarded by the Postal Service, so please notify
us if your address has changed.
(2) We can transmit the proceeds by Electronic Funds Transfer to a properly
pre-authorized bank account. The proceeds usually will
arrive at your bank two banking days after we process your redemption.
(3) For a $10 fee, we can transmit the proceeds by
wire to a properly pre-authorized bank account. The proceeds usually
will arrive at your bank the first banking day after we process your
redemption.
STRONG DIRECT(R)
You can redeem shares through Strong Direct(R) at 800-
368-7550. See "Services for Investors" for more information.
STRONG NETDIRECT(R)
You can use Strong netDirect(R) at WWW.ESTRONG.COM to
redeem shares. See "Services for Investors" for more information.
INVESTOR CENTERS
You can visit our Investor Center in Menomonee Falls,
Wisconsin, near Milwaukee. Call 800-368-3863 for hours and directions,
or for the location of our other Investor Centers.
AUTOMATIC INVESTMENT SERVICES
You can set up automatic withdrawals from your account
at regular intervals. See "Services for Investors" for detailed information
on all of our automatic investment services. You can sign up for these plans
when you open your account, or you can add them later by visiting the
Investor Services area at WWW.ESTRONG.COM or by calling 800-368-3863 for the
appropriate form.
BROKER-DEALER
You may sell shares through a broker-dealer or other
intermediary who may charge you a fee.
CHECKWRITING (BOND FUNDS ONLY)
Sign up for free checkwriting when you open your
account or call 800-368-3863 to add it later to an existing account. Check
redemptions must be for a minimum of $500. You cannot write a check to
close out an account.
PLEASE REMEMBER ...
* If you recently purchased shares, a redemption
request on those shares will generally not be honored until 10 days
after we receive the purchase check or electronic transaction.
* You will be charged a $10 service fee for a stop-payment on a check written
on your Strong Funds account.
* Some transactions and requests require a signature guarantee.
* If you are selling shares you hold in certificate form, you must submit the
certificates with your redemption request. Each registered owner must sign
the certificates and all signatures must be guaranteed.
* With an IRA (or other retirement account), you will be charged (1) a $10
annual account maintenance fee for each account up to a maximum of $30 and
(2) a $50 fee for transferring assets to another custodian or for closing
an account.
* If you sell shares out of a non-IRA retirement account and you are eligible
to roll the sale proceeds into another retirement plan, we will withhold
for federal income tax purposes a portion of the sale proceeds unless you
transfer all of the proceeds to an eligible retirement plan.
((Side Box))
There may be special distribution requirements that apply to retirement
accounts. For instructions on:
* Roth and Traditional IRA accounts, call 800-368-3863, and
* SIMPLE IRA, SEP-IRA , 403(b)(7), Keogh, Pension Plan, Profit Sharing Plan,
or 401(k) Plan accounts, call 800-368-2882.
((Side Box))
SIGNATURE GUARANTEES help ensure that major
transactions or changes to your account are in fact
authorized by you. For example, we require a
signature guarantee on written redemption requests
for more than $50,000. You can obtain a signature
guarantee for a nominal fee from most banks,
brokerage firms, and other financial institutions. A
notary public stamp or seal cannot be substituted
for a signature guarantee.
-----------------------------------------------------
ADDITIONAL POLICIES
TELEPHONE AND INTERNET TRANSACTIONS
Once you place a telephone or Internet transaction
request, it cannot be canceled or modified. We use reasonable procedures to
confirm that telephone and Internet transaction requests are genuine. We may
be responsible if we do not follow these procedures. You are responsible for
losses resulting from fraudulent or unauthorized instructions received over
the telephone or by computer, provided we reasonably believe the
instructions were genuine. To safeguard your account, please keep your Strong
Direct(R) and Strong netDirect(R) passwords confidential. Contact us
immediately if you believe there is a discrepancy between a transaction you
performed and the confirmation statement you received, or if you believe
someone has obtained unauthorized access to your account or password.
During times of unusual market activity, our phones may be busy and you may
experience a delay placing a telephone request. During
these times, consider trying Strong Direct(R), our 24-hour automated
telephone system, by calling 800-368-7550, or Strong netDirect(R), our
on-line transaction center, by visiting WWW.ESTRONG.COM. Please remember
that you must have telephone redemption as an option on your account to
redeem shares through Strong Direct(R) or Strong netDirect(R).
INVESTING THROUGH A THIRD PARTY
If you invest through a third party (rather than directly with Strong), the
policies and fees may be different than described in this prospectus. Banks,
brokers, 401(k) plans, financial advisors, and financial supermarkets may
charge transaction fees and may set different minimum investments or
limitations on buying or selling shares. Consult a representative of your
plan or financial institution if you are not sure.
PURCHASES IN KIND
You may, if we approve, purchase shares of the fund
with securities that are eligible for purchase by the fund (consistent with
the fund's investment restrictions, policies, and goal) and that have a
value that is readily ascertainable in accordance with the fund's valuation
policies.
LOW BALANCE ACCOUNT FEE
Because of the high cost of maintaining small
accounts, an annual low balance account fee of $10 (or the value of the
account if the account value is less than $10) will be charged to all
accounts that fail to meet the initial investment minimum. The fee,
which is payable to the transfer agent, will not apply to (1) any
retirement accounts, (2) accounts with an automatic investment plan
(unless regular investments have beendiscontinued), or (3)
shareholders whose combined Strong Funds accounts total $100,000 or more. We
may waive the fee, in our discretion, in the event that a significant market
correction lowers an account balance below the account's initial investment
minimum. The effective date of this policy is September 1, 2000.
DISTRIBUTIONS
DISTRIBUTION POLICY
For the stock funds, your fund generally pays you
dividends from net investment income and distributes any net capital
gains that it realizes annually. For the INTERNATIONAL BOND FUND, your fund
generally pays you dividends from net investment income quarterly and
distributes any net capital gains that it realizes annually. For the SHORT-TERM
GLOBAL BOND FUND and GLOBAL HIGH-YIELD BOND FUND, your fund generally pays
you dividends from net investment income monthly and distributes any net
capital gains that it realizes annually. Dividends are declared on each day
NAV is calculated, except for bank holidays. Dividends earned on
weekends, holidays, and days when the fund's NAV is not calculated are
declared on the first day preceding these days that the fund's NAV is
calculated. Your investment generally earns dividends from the first
business day after we accept your purchase order.
REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Your dividends and capital gain distributions will be
automatically reinvested in additional shares, unless you choose otherwise.
Your other options are to receive checks for these payments, have them
automatically invested in another Strong Fund, or have them deposited
into your bank account. To change the current option for payment of
dividends and capital gain distributions, please call 800-368-3863.
EFFECTS OF FOREIGN CURRENCY ON DIVIDENDS FROM INTERNATIONAL BOND FUNDS
Foreign currency losses could cause an international bond fund's dividends to
exceed its net investment income in any year. If this happens, all or a
portion of those dividends may be treated as a return of capital to its
shareholders. To guard against a return of capital, we may adjust a bond
fund's dividends to take currency fluctuations into account - this may cause
dividends to vary or be suspended. Although a return of capital is not taxed,
it does reduce the cost basis of your shares.
TAXES
TAXABLE DISTRIBUTIONS
Any net investment income and net short-term capital gain distributions you
receive are taxable as ordinary dividend income at your income tax rate.
Distributions of net capital gains are generally taxable as long-term capital
gains. This is generally true no matter how long you
have owned your shares and whether you reinvest your distributions or take
them in cash. You may also have to pay taxes when you exchange or sell
shares if your shares have increased in value since you bought them.
((Side Box))
Generally, if your investment is in a Traditional
IRA or other TAX-DEFERRED ACCOUNT, your
dividends and distributions will not be taxed at the
time they are paid, but instead at the time you
withdraw them from your account.
----------------------------------------------------
RETURN OF CAPITAL
If your fund's (1) income distributions exceed its net investment income and
net short-term capital gains or (2) capital gain distributions exceed its net
capital gains in any year, all or a portion of those distributions may be
treated as a return of capital to you. Although a return of capital is not
taxed, it will reduce the cost basis of your shares.
((Side Box))
Unless your investment is in a tax-deferred
retirement account such as an IRA, you may want to
avoid:
* Investing a large amount in a fund close to the
end of the calendar year. If the fund makes a
capital gain distribution, you may receive some
of your investment back as a taxable distribution.
* Selling shares of a mutual fund at a loss and
then investing in the same fund within 30 days
before or after the sale. This is called a wash
sale and you will not be allowed to claim a tax
loss on the transaction.
--------------------------------------------------
YEAR-END STATEMENT
To assist you in tax preparation, after the end of each calendar year,
we send you a statement of your fund's ordinary dividends and
net capital gain distributions (Form 1099).
((Side Box))
COST BASIS is the amount that you paid for the
shares. When you sell shares, you subtract the cost
basis from the sale proceeds to determine whether
you realized an investment gain or loss. For example,
if you bought a share of a fund at $10 and you sold it
two years later at $11, your cost basis on the share is
$10 and your gain is $1.
-------------------------------------------------------
BACKUP WITHHOLDING
By law, we must withhold 31% of your distributions and
proceeds if (1) you are subject to backup withholding or (2) you have not
provided us with complete and correct taxpayer information such as your
Social Security Number (SSN) or Tax Identification Number (TIN).
Because everyone's tax situation is unique, you should
consult your tax professional for assistance.
SERVICES FOR INVESTORS
Strong provides you with a variety of services to help
you manage your investment. For more details, call 800-368-3863, 24
hours a day, 7 days a week. These services include:
STRONG DIRECT(R) AUTOMATED TELEPHONE SYSTEM
Our 24-hour automated response system enables you to
use a touch-tone phone to access current share prices (800-368-3550),
to access fund and account information (800-368-5550), and to make
purchases, exchanges, or redemptions among your existing accounts if you
have elected these services (800-368-7550). Passwords help to protect
your account information.
ESTRONG.COM
Visit us on-line at WWW.ESTRONG.COM to access your
fund's performance and portfolio holding information. In addition to general
information about investing, our web site offers daily performance
information, portfolio manager commentaries, and information on available
account options.
STRONG NETDIRECT(R)
If you are a shareholder, you may use Strong
netDirect(R) to access your account information 24 hours a day from your
personal computer. Strong netDirect(R) allows you to view account history,
account balances, and recent dividend activity, as well as to make purchases,
exchanges, or redemptions among your existing accounts if you have elected these
services. Encryption technology and passwords help to protect your account
information. You may register to use Strong netDirect(R) at WWW.ESTRONG.COM.
STRONGMAIL
If you register for StrongMail at WWW.STRONGMAIL.COM,
you will receive your fund's closing price by e-mail each business day. In
addition, StrongMail offers market news and updates throughout the day.
STRONG EXCHANGE OPTION
You may exchange your shares of a fund for shares of another Strong Fund,
either in writing, by telephone, or through your personal computer, if the
accounts are identically registered (with the same name, address, and taxpayer
identification number). Please ask us for the appropriate prospectus and read
it before investing in any of the Strong Funds. Remember, an exchange of
shares of one Strong Fund for those of another Strong Fund is considered a
sale and a purchase of shares for tax purposes and may result in a capital
gain or loss. Some Strong Funds that you may want to exchange into may charge
a redemption fee of 0.50% to 1.00% on the sale of shares held for less than
six months.
STRONG CHECKWRITING
Strong Funds offers checkwriting on most of its bond and money market funds.
Checks written on your account are subject to this Prospectus and the terms
and conditions found in the front of the book of checks.
STRONG AUTOMATIC INVESTMENT SERVICES
You may invest or redeem automatically in the following ways, some of which
may be subject to additional restrictions or conditions.
AUTOMATIC INVESTMENT PLAN (AIP)
This plan allows you to make regular, automatic
investments from your bank checking or savings account.
AUTOMATIC EXCHANGE PLAN
This plan allows you to make regular, automatic
exchanges from one eligible Strong Fund to another.
AUTOMATIC DIVIDEND REINVESTMENT
Your dividends and capital gains will be automatically
reinvested in additional shares unless you choose otherwise. Your
other options are to receive checks for these payments, have them
automatically invested in another Strong Fund, or have them deposited
into your bank account.
NO-MINIMUM INVESTMENT PLAN
This plan allows you to invest without meeting the minimum initial investment
requirements if you invest monthly and you participate in the AIP, Automatic
Exchange Plan, or Payroll Direct Deposit Plan.
PAYROLL DIRECT DEPOSIT PLAN
This plan allows you to send all or a portion of your
paycheck, social security check, military allotment, or annuity payment
to the Strong Funds of your choice.
SYSTEMATIC WITHDRAWAL PLAN
This plan allows you to redeem a fixed sum from your
account on a regular basis. Payments may be sent electronically to a bank
account or as a check to you or anyone you properly designate.
STRONG RETIREMENT PLAN SERVICES
We offer a wide variety of retirement plans for
individuals and institutions, including large and small businesses. For
information on:
* INDIVIDUAL RETIREMENT PLANS, including Traditional IRAs and Roth IRAs, call
800-368-3863.
* QUALIFIED RETIREMENT PLANS, including SIMPLE IRAs, SEP-IRAs, 403(b)(7)s,
Keoghs, Pension Plans, Profit Sharing Plans, and 401(k) Plans, call
800-368-2882.
SOME OF THESE SERVICES MAY BE SUBJECT TO ADDITIONAL RESTRICTIONS OR
CONDITIONS. CALL 800-368-3863 FOR MORE INFORMATION.
RESERVED RIGHTS
We reserve the right to:
* Refuse, change, discontinue, or temporarily suspend account services,
including purchase, exchange, or telephone and Strong netDirect(R)
redemption privileges, for any reason.
* Reject any purchase request for any reason including exchanges from other
Strong Funds. Generally, we do this if the purchase or exchange is
disruptive to the efficient management of a fund (due to the timing of the
investment or an investor's history of excessive trading).
* Change the minimum or maximum investment amounts.
* Delay sending out redemption proceeds for up to seven days (this generally
only applies to very large redemptions without notice, excessive trading, or
during unusual market conditions).
* Suspend redemptions or postpone payments when the NYSE is closed for any
reason other than its usual weekend or holiday closings, when trading is
restricted by the SEC, or under any emergency circumstances.
* Make a redemption-in-kind (a payment in portfolio securities rather than
cash) if the amount you are redeeming is in excess of the lesser of (1)
$250,000 or (2) 1% of the fund's assets. Generally, redemption-in-kind is
used when large redemption requests may cause harm to the fund and its
shareholders. This includes redemptions made by checkwriting.
* Close any account that does not meet minimum investment requirements. We
will give you notice and 60 days to begin an automatic investment program or
to increase your balance to the required minimum. We may waive the minimum
initial investment at our discretion.
* Reject any purchase or redemption request that does not contain all required
documentation.
FOR MORE INFORMATION
More information is available upon request at no charge, including:
SHAREHOLDER REPORTS: Additional information is available in the annual and
semi-annual report to shareholders. These reports contain a letter from
management, discuss recent market conditions, economic trends and investment
strategies that significantly affected your investment's performance during
the last fiscal year, and list portfolio holdings.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI contains more details
about investment policies and techniques. A current SAI is
on file with the SEC and is incorporated into this prospectus by reference.
This means that the SAI is legally considered a part of this prospectus even
though it is not physically contained within this prospectus.
To request information or to ask questions:
BY TELEPHONE FOR HEARING-IMPAIRED (TDD)
414-359-1400 or 800-368-3863 800-999-2780
BY MAIL BY OVERNIGHT DELIVERY
Strong Funds Strong Funds
P.O. Box 2936 900 Heritage Reserve
Milwaukee, WI 53201-2936 Menomonee Falls, WI 53051
ON THE INTERNET BY E-MAIL
VIEW ON-LINE OR DOWNLOAD DOCUMENTS: [email protected]
Strong Funds: WWW.ESTRONG.COM
SEC*: www.sec.gov
To reduce the volume of mail you receive, only one copy
of financial reports, prospectuses, and other regulatory materials is mailed
to your household. You can call us at 800-368-3863, or write to us at the
address listed above, to request (1) additional copies free of charge, or (2)
that we discontinue our practice of householding regulatory materials.
This prospectus is not an offer to sell securities in places other than the
United States and its territories.
*INFORMATION ABOUT A FUND (INCLUDING THE SAI) CAN ALSO BE REVIEWED AND COPIED
AT THE SECURITIES AND EXCHANGE COMMISSION'S PUBLIC REFERENCE ROOM IN
WASHINGTON, D.C. YOU MAY CALL THE COMMISSION AT 202-942-8090 FOR INFORMATION
ABOUT THE OPERATION OF THE PUBLIC REFERENCE ROOM. REPORTS AND OTHER
INFORMATION ABOUT A FUND ARE ALSO AVAILABLE FROM THE EDGAR DATABASE ON THE
COMMISSION'S INTERNET SITE AT WWW.SEC.GOV. YOU MAY OBTAIN A COPY OF THIS
INFORMATION, AFTER PAYING A DUPLICATING FEE, BY SENDING A WRITTEN REQUEST TO
THE COMMISSION'S PUBLIC REFERENCE SECTION, WASHINGTON, D.C. 20549-0102, OR BY
SENDING AN ELECTRONIC REQUEST TO THE FOLLOWING E-MAIL ADDRESS:
[email protected].
Strong Global High-Yield Bond Fund, a series of Strong International Income
Funds, Inc., SEC file number 811-8318
Strong International Bond Fund, a series of Strong International Income
Funds, Inc., SEC file number 811-8318
Strong Short-Term Global Bond Fund, Inc., SEC file number 811-8320
Strong Asia Pacific Fund, Inc., SEC file number 811-8098
Strong Foreign MajorMarkets Fund, a series of Strong International Equity
Funds, Inc., SEC file number 811-6524
Strong InternationaL STOCK FUND, A SERIES OF STRONG INTERNATIONal Equity Funds,
Inc., SEC file number 811-6524
Strong Overseas Fund, a series of Strong International Equity Funds, Inc., SEC
file number 811-6524
<PAGE>
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
<PAGE>
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)
<PAGE>
(7)(c) Dealer Agreement (9)
(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 (10)
(12) Opinion and Consent of Counsel relating to tax matters (10)
(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 (10)
(17) Form of Proxy Card (10)
______________
(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.
<PAGE>
(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.
(10) Incorporated herein by reference to the
Registration Statement on Form N-14 of the Registrant
filed on or about June 7, 2000.
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.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to the Registration
Statement has been signed on behalf of the Registrant,
in the Village of Menomonee Falls and State of
Wisconsin on the 27th day of June, 2000.
STRONG INCOME FUNDS, INC.
(Registrant)
By: /s/ Stephen J. Shenkenberg
----------------------------
Stephen J. Shenkenberg, Vice President
As required by the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to the Registration
Statement has been signed below by the following
persons in the capacities and on the date(s) indicated.
Name Title Date
--------------------- Chairman of the Board June 27, 2000
Richard S. Strong* (Principal Executive Officer)
and a Director
/s/ John W. Widmer Treasurer (Principal Financial June 27, 2000
----------------------- and Accounting Officer)
John W. Widmer
----------------------- Director June 27, 2000
Marvin E. Nevins*
---------------------- Director June 27, 2000
Willie D. Davis*
---------------------- Director June 27, 2000
William F. Vogt*
---------------------- Director June 27, 2000
Stanley Kritzik*
---------------------- Director June 27, 2000
Neal Malicky*
* Cathleen A. Ebacher signs this document on behalf of
each director marked with an asterisk pursuant to power
of attorney previously filed as Exhibit 16 to this
Registration Statement.
By: /s/ Cathleen A. Ebacher
----------------------------
Cathleen A. Ebacher
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
(14) Consent of Independent Accountants
