As filed with the Securities and Exchange Commission on June 30, 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. 3 [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 30, 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: What happens if shareholders of the Global
Bond Fund do not approve the Reorganization?
A. If the Reorganization is not approved, the
Reorganization will not take place and you will remain
a shareholder of the Global Bond Fund.
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
Vice President 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,
Cathleen A. Ebacher
Vice President
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
EXHIBIT D D-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. For performance information
on the Bond and Global Bond Funds, please see Exhibits
C and D, respectively, which are attached to this
combined proxy statement and prospectus.
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. Futures 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. Futures may not always be successful
hedges and their prices can be highly volatile. They
may not always successfully manage risk. Using them
could lower the Fund's total return, and the potential
loss from the use of futures can exceed the Fund's
initial investment in such contracts.
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 somewhat
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 advisor 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
30, 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 30, 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,
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 --- --- (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 Cathleen A. Ebacher,
Vice President of the Bond Fund at 100 Heritage
Reserve, Menomonee Falls, Wisconsin 53051, 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,
Cathleen A. Ebacher
Vice President
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, 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,
<PAGE>
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 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>
EXHIBIT D
THE STRONG GLOBAL HIGH-YIELD BOND FUND
Perspectives from the Managers
/s/ John T. Bender
John T. Bender
Portfolio Co-manager
Emerging-market debt posted healthy returns over
the period, a response to rising commodity prices and
signs of renewed economic growth. Of particular note
is the escalation in oil prices, which hit $21.75 per
barrel by the end of October 1999. Rising commodity
prices are of great importance to emerging markets,
which tend to rely on their natural resources to spur
their economies. Investors greeted this rebound in
commodity prices enthusiastically, with many returning
to developing markets for the first time since their
near-collapse in the fall of 1998.
Investments in Mexican and South Korean debt
helped the Fund's total return. Mexico has already
been upgraded and is still on positive credit watch, as
rising oil prices and fiscal prudence continue to
improve that country's credit profile. South Korean
debt has been upgraded several times in the past year,
as it continues to clean up problems with its banking
system and strengthen its economic performance.
The recent good news in Mexico and South Korea
does not, unfortunately, easily translate to countries
such as Venezuela, Brazil, and Russia. The economic
and political challenges facing these countries are
still quite substantial. Going forward, we will
continue to underweight these countries until we are
far more confident of their future prospects.
Heavy supply and a decline in credit quality have
characterized the domestic high-yield market in recent
months. Corporations have rushed to issue new debt
before year-end pressures increase. The net result is
that an entire year's supply was brought to market in
just the first three quarters of the year. This heavy
new-issue volume creates a poor technical environment
for high-yield debt. Compounding this problem is the
market's increasing concern about credit quality, in
the face of a rising default rate on high-yield debt
over the past year. These two factors have pushed
yield premiums to very attractive levels.
Our emphasis on credit research continues to be a
strength. Our security selection focuses primarily on
companies with the potential to de-leverage themselves
rapidly. Some of our most successful holdings during
the period include debt from MetroNet Communications
and Global Crossing.
We believe the combination of reduced supply, a
stabilization of the default rate, a more stable
interest-rate environment, and attractive valuation
levels will lead to solid returns from U.S. high-yield
debt over the next 12 to 18 months. Given this
outlook, we will continue to overweight this market
relative to our benchmark.
Thank you for investing in the Strong Global High-
Yield Bond Fund. We appreciate the confidence you've
shown in us.
Country Exposure(4) as of 10-31-99
Mexico
14.3%
Bermuda
7.8%
<PAGE>
South Korea
7.2%
Canada
4.4%
Argentina
3.7%
Fund Highlights
* The Strong Global High-Yield Bond Fund returned
9.12% during the year ended October 31, 1999. The
Global High-Yield Bond Index returned 14.32% for the
same period.*
* The Fund maintained its defensive posture relative
to emerging markets by investing mainly in higher-
quality emerging markets such as South Korea and
Mexico. These countries have demonstrated a
willingness to exercise fiscal discipline during
challenging economic times.
* We continue to overweight U.S. high-yield
securities in the portfolio, particularly those from
the telecommunications, energy, and chemical sectors.
______________________
* 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.
Portfolio Statistics as of 10-31-99
30-day annualized yield(1) 7.66%
Average credit quality(2) BB
Average maturity(3) 5.7 years
(1) Yields are historical and do not represent
future yields, which will fluctuate. Yield is as of 10-29-99.
(2) For the purposes of the average, the Fund's
short-term debt obligations have been assigned a
long-term rating by the Advisor.
(3) The Fund's average maturity includes the effect of futures.
(4) Please see the Schedule of Investments in
Securities in the Fund's Annual Report for a
complete listing of the Fund's portfolio. Exposure
is calculated based on the sum of total market value
of securities and market value of futures. Country
exposure does not reflect U.S. holdings.
Growth of an Assumed $10,000 Investment
From 1-31-98 to 10-31-99
[GRAPH]
<PAGE>
THE STRONG GLOBAL Global High-Yield Lipper Global Income
HIGH-YIELD BOND FUND Bond Index* Funds Index*
1-98 $10,000 $10,000 $10,000
3-98 $10,448 $10,404 $10,128
6-98 $10,135 $10,041 $10,166
9-98 $ 9,146 $ 8,495 $10,248
12-98 $ 9,683 $ 9,106 $10,555
3-99 $10,123 $ 9,464 $10,388
6-99 $ 9,963 $ 9,799 $10,176
9-99 $ 9,948 $ 9,826 $10,283
10-99 $10,040 $10,049 $10,269
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
Global High-Yield Bond Index and the Lipper Global
Income Funds Index. Results include the reinvestment
of all dividends and capital gains distributions.
Performance is historical and does not represent future
results. Investment returns and principal value vary,
and you may have a gain or loss when you sell shares.
______________________
* The 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. Source of the Global High-Yield Bond
Index data is Bloomberg and Standard & Poor's
Micropal. Source of the Lipper index data is Lipper Inc.
Average Annual Total Returns as of 10-31-99
1-year 9.12%
Since Inception (on 1-31-98) 0.23%
Your Fund's Approach
The Strong Global High-Yield Bond Fund pursues a
high level of current income and capital appreciation.
The Fund invests primarily in medium- and lower-quality
bonds issued by U.S. and foreign companies. The
managers start their investment process with a broad,
top-down analysis of world market and financial
conditions. This analysis leads them to countries and
companies whose bonds are believed to offer the
potential for high income and capital appreciation. In
uncertain economic times, they may avoid emerging
markets and may even invest only in U.S. high-yield
bonds and two foreign countries.
Market Highlights
* Rising commodity prices and improved economic
performance resulted in decent returns on emerging-
market debt. The J.P. Morgan Emerging Markets Bond
Index +, a measure of these markets' performance and a
component of the Fund's own benchmark, returned 19.98%
for the one-year period.*
* The U.S. high-yield market performed well but did
not keep pace with emerging markets. The Merrill Lynch
High-Yield Master II Index returned 5.61% for the year.
<PAGE>
* The yield premium paid by high-yield corporate
bonds (relative to investment-grade issues) rose
slightly. In contrast, the premium paid on government
bonds issued by emerging markets remained mostly
unchanged from April 30 to October 31.
___________________
* The J.P. Morgan Emerging Markets Bond Index + is an
unmanaged index generally representative of emerging-
market debt obligations.
<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)
(7)(c) Dealer Agreement (9)
<PAGE>
(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 (11)
(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.
(11) Incorporated herein by reference to Pre-Effective
Amendment No. 2 to the Registration Statement on Form
N-14 of the Registrant filed on or about June 27, 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. 3 to the Registration
Statement has been signed on behalf of the Registrant,
in the Village of Menomonee Falls and State of
Wisconsin on the 30th 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. 3 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 30, 2000
Richard S. Strong* (Principal Executive Officer)
and a Director
/s/ John W. Widmer
----------------------- Treasurer (Principal Financial June 30, 2000
John W. Widmer and Accounting Officer)
_______________________ Director June 30, 2000
Marvin E. Nevins*
_______________________ Director June 30, 2000
Willie D. Davis*
----------------------- Director June 30, 2000
William F. Vogt*
----------------------- Director June 30, 2000
Stanley Kritzik*
_______________________ Director June 30, 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
