<PAGE>
THE STRONG
INTERNATIONAL
Funds
ANNUAL REPORT o OCTOBER 31, 1996
[PHOTO OF FAMILY]
[PICTURE OF WORLD]
[BAR GRAPH]
THE STRONG SHORT-TERM GLOBAL BOND FUND
THE STRONG INTERNATIONAL BOND FUND
THE STRONG INTERNATIONAL STOCK FUND
THE STRONG ASIA PACIFIC FUND
[STRONG FUNDS LOGO]
STRONG FUNDS
<PAGE>
EIGHT BASIC PRINCIPLES FOR SUCCESSFUL MUTUAL FUND INVESTING
These common-sense rules are followed by many successful investors. They make
sense for beginners, too. If you have a question on these principles, or would
like to discuss them with us, please contact us at 1-800-368-3863. We're here 24
hours a day, seven days a week to take your call.
- ---------------------------------------1----------------------------------------
Have a plan.
[PICTURE OF FOLDER LABELED INVESTMENTS]
Even a simple plan can help you take control of your financial future. Review
your plan once a year, or if your circumstances change.
- ---------------------------------------2----------------------------------------
Start investing as soon as possible.
[PICTURE OF CLOCK]
Make time a valuable ally. Let it put the power of compounding to work for you,
while helping to reduce your potential investment risk.
- ---------------------------------------3----------------------------------------
Diversify your portfolio.
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION]
By investing in different asset classes - stocks, bonds, and cash - you help
protect against poor performance in one type of investment while including
investments most likely to help you achieve your important goals.
- ---------------------------------------4----------------------------------------
Invest regularly.
[PICTURE OF MEMO REMINDER TO INVEST]
Investing is a process, not a one-time event. By investing regularly over the
long term, you reduce the impact of short-term market gyrations, and you attend
to your long-term plan before you're tempted to spend those assets on short-term
needs.
- ---------------------------------------5----------------------------------------
Maintain a long-term perspective.
[PICTURE OF GRAPH SLOPING UPWARD]
For most individuals, the best discipline is staying invested as market
conditions change. Reactive, emotional investment decisions are all too often a
source of regret - and of principal loss.
- ---------------------------------------6----------------------------------------
Consider stocks to help achieve major long-term goals.
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION EMPHASIZING STOCKS]
Over time, stocks have provided the more powerful returns needed to help the
value of your investments stay well ahead of inflation.
- ---------------------------------------7----------------------------------------
Keep a comfortable amount of cash in your portfolio.
[PICTURE OF DOLLAR SIGN]
To meet current needs, including emergencies, use a money market fund or a bank
account - not your long-term investment assets.
- ---------------------------------------8----------------------------------------
Know what you're buying.
[PICTURE OF MAGNIFYING GLASS]
Make sure you understand the potential risks and rewards associated with each of
your investments. Ask questions...request information...make up your own mind.
And choose a fund company that helps you make informed investment decisions.
<PAGE>
THE STRONG
INTERNATIONAL
Funds
ANNUAL REPORT o OCTOBER 31, 1996
TABLE OF CONTENTS
INVESTMENT REVIEWS
The Strong Short-Term Global Bond Fund......................2
The Strong International Bond Fund..........................4
The Strong International Stock Fund.........................6
The Strong Asia Pacific Fund................................8
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong Short-Term Global Bond Fund................10
The Strong International Bond Fund....................12
The Strong International Stock Fund...................14
The Strong Asia Pacific Fund..........................19
Statements of Operations...................................23
Statements of Assets and Liabilities.......................24
Statements of Changes in Net Assets........................25
Notes to Financial Statements..............................26
FINANCIAL HIGHLIGHTS..............................................29
REPORT OF INDEPENDENT ACCOUNTANTS.................................31
<PAGE>
The Strong SHORT-TERM GLOBAL BOND Fund
================================================================================
The Strong Short-Term Global Bond Fund seeks total return by investing for a
high level of income with a low degree of share-price fluctuation. The Fund
invests primarily in investment-grade debt obligations of U.S. and foreign
issuers. It normally will pay dividends quarterly and have an average effective
portfolio maturity of three years or less.
THE FUND PERFORMED WELL VERSUS ITS BENCHMARK AND ITS COMPETITION
The Fund performed well during the 1-year period ended October 31, 1996, posting
a total return of 10.43% in a period marked by diverse performances in global
bond markets. As the chart on this page illustrates, this gain bested our
benchmark index--the Salomon Brothers 1-3 Year World Government Bond Index
(Currency Hedged)--and our competition. The Fund outperformed over longer time
periods, as well.(1)
AVERAGE ANNUAL TOTAL RETURNS(1)
as of 10-31-96
<TABLE>
<CAPTION>
D SALOMON BROTHERS 1-3 YEAR
STRONG SHORT-TERM LIPPER SHORT WORLD MULTI- WORLD GOVERNMENT BOND
TIME PERIOD GLOBAL BOND FUND MARKET INCOME AVERAGE* INDEX (CURRENCY HEDGED)*
<S> <C> <C> <C>
1-year 10.43% 9.30% 7.73%
2-year 9.61% 5.88% 8.70%
Since inception 9.35% 4.89% 7.14%
(on 3-31-94)
</TABLE>
Please note that the Lipper index contains "pure" emerging markets funds as well
as international bond funds, and includes both hedged and unhedged funds.
INTEREST RATES IN THE U.S. REVERSED COURSE
Late last year and coming into 1996, interest rates in the U.S. and elsewhere
were declining, due to investors' expectations that the slow economic growth
that characterized 1995 would continue into 1996.
During the first quarter of this year, however, unexpectedly strong economic
indicators in the U.S. shattered this view, and interest rates reversed course
and quickly rose. The yield on the U.S. 5-year Treasury bond rose from a low of
5.24% at the beginning of the year to 6.63% by the end of May. Dollar-bloc
countries (Canada, Australia, New Zealand) followed suit, experiencing a similar
brief-but-vicious sell off in the first six months of 1996.
By late summer, however, economic indicators began to cool, and yields in the
dollar-bloc countries began to decline. By the end of the fiscal year, the yield
on the 5-Year Treasury had fallen to 6.07%
EUROPEAN AND BELOW INVESTMENT-GRADE MARKETS OUTPERFORMED
Meanwhile, the major European bond markets rallied during the first half of 1996
as European central banks actively lowered interest rates. As a result,
international bond markets have outperformed the U.S. so far this year, with the
lower-quality markets leading the way; in fact, it is likely that the
best-performing asset class in 1996 will be the bond markets of below-investment
grade countries.
OUR ACTIVE MANAGEMENT ADDED VALUE
One way we seek to add value in managing the Fund is to compare it to a relevant
unmanaged benchmark index--in our case, the Salomon Brothers 1-3 Year World
Government Bond Index (Currency Hedged)--and make strategic adjustments in the
Fund that we believe will give us the edge.
The value of this strategy was apparent in our moves throughout the fiscal year.
Given our outlook for lower interest rates in most foreign economies, we made a
decision to maintain a longer duration than that of the index over this period,
which made the Fund more sensitive to interest-rate changes. We also
overweighted our holdings in Europe. Both of these decisions contributed to the
Fund's outperformance.
We also increased our exposure to below-investment grade markets versus the
index weightings. However, we were careful not to build up large positions in
these countries (our maximum exposure during the fiscal year was approximately
15%). While these markets performed extremely well during 1996, their potential
volatility commands respect. Given the Fund's objective of income with a low
degree of share price fluctuation, we felt it prudent to limit our weightings in
these countries.
2
<PAGE>
By late summer, we started to build up our positions in the U.S. and dollar-bloc
countries, as we believed value had returned to these markets.
OUR OUTLOOK IS NEUTRAL
For the near term, our outlook on international bond markets can be described as
neutral to moderately bullish. For the U.S., we expect to see moderate economic
growth of 2-3%, and inflation in the same range. Therefore, it's difficult to
justify a drastic change from present levels.
Currently, international bond markets appear to offer reasonable value from an
income standpoint, and as long as the U.S. market remains relatively stable, we
believe global bond markets will be the same. Therefore, we intend to maintain a
duration that is roughly the same as our benchmark index or slightly longer, and
to closely monitor the prevailing environment.
As always, please keep in mind that the Fund's share price and returns will
fluctuate with changes in bond market conditions, currency values, interest
rates, foreign government regulations and economic and political conditions in
countries in which the Fund invests. These risks are intensified in emerging
markets. For long-term investors, however, we believe these risks are outweighed
by the benefits of global investing--namely, higher return potential and lower
overall portfolio risk through diversification, versus a U.S.-only portfolio.
We appreciate your investment in the Strong Short-Term Global Bond Fund, and we
look forward to earning your continued confidence.
Sincerely,
/s/ Shirish T. Malekar
Shirish T. Malekar
Portfolio Manager
[PHOTO OF SHIRISH T. MALEKAR]
TOP FIVE COUNTRIES
based on net assets as of 10-31-96
==================================
United States 53.4%
Indonesia 13.3%
Brazil 6.3%
Argentina 4.6%
Italy 4.1%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT
from 3-31-94 to 10-31-96
The Strong Salomon Brothers Lipper Short World
Short-Term Global 1-3 Year World Government Multi-Market
Bond Fund Bond Index (Currency Hedged)* Income Average*
3-94 10,000 10,000 10,000
6-94 10,180 9,995 9,922
9-94 10,404 10,075 10,051
12-94 10,513 10,153 9,760
3-95 10,641 10,457 9,691
6-95 11,042 10,771 10,049
9-95 11,309 11,006 10,284
12-95 11,612 11,286 10,536
3-96 11,833 11,396 10,657
6-96 12,113 11,587 10,898
9-96 12,444 11,833 11,198
10-96 12,597 11,951 11,313
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Salomon Brothers 1-3 Year World Government Bond Index (Currency Hedged) and the
Lipper Short World Multi-Market Income Average. Results include the reinvestment
of all dividends and capital gains distributions. Performance is historical and
does not represent future results. Investment returns and principal value vary,
and you may have a gain or loss when you sell shares.
30-DAY
ANNUALIZED
YIELD(2)
7.34%
AVERAGE CREDIT
QUALITY(3)
AA
AVERAGE EFFECTIVE
MATURITY(4)
1.9 years
As of 10-31-96
- --------------------------------------------------------------------------------
* The Salomon Brothers 1-3 Year World Government Bond Index (Currency Hedged)
is an unmanaged index generally representative of short-term, global fixed
income government securities. The Lipper Short World Multi-Market Income
Average represents funds that invest in non-U.S. dollar and U.S. dollar
debt instruments and, by policy, keep a dollar-weighted average maturity of
less than five years. Source of the Salomon index data is Salomon Brothers.
Source of the Lipper data is Lipper Analytical Services, Inc.
1 Average annual total return measures change in the value of an investment
in the Fund as an annualized average, assuming reinvestment of all
dividends and capital gains.
2 As of October 31, 1996, the Advisor was temporarily waiving fees of 0.625%
and absorbing expenses of 0.605%. Otherwise, the Fund's yield would have
been 6.11% and the total return would have been lower. Yields are
historical and do not represent future yields, which will vary.
3 For the purposes of the average, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
4 The Fund's average maturity includes the effect of futures contracts,
option contracts, and when-issued securities.
3
<PAGE>
The Strong INTERNATIONAL BOND Fund
================================================================================
The Strong International Bond Fund seeks high total return by investing for both
income and capital appreciation. The Fund invests primarily in
non-dollar-denominated, investment-grade debt obligations of foreign issuers.
Normally its average effective maturity will range from four to nine years.
ASSETS BY CREDIT-QUALITY RATING
based on net assets as of 10-31-96
AAA 37.3%
AA 18.5%
A 4.5%
BBB 2.0%
BB 8.3%
Short-Term Investments 29.4%
THE FUND'S STRONG PERFORMANCE CONTINUED
The Fund performed well during the 1-year period ended October 31, 1996, posting
a total return of 8.55% in a period marked by diverse performances in global
bond markets. As the chart on this page illustrates, this gain bested our
benchmark index--the Salomon Brothers Non-U.S. World Government Bond Index
(Currency Unhedged). In addition, the Fund continued to outperform the benchmark
for longer periods, and has done well versus its competition over the long
term.(1)
AVERAGE ANNUAL TOTAL RETURNS(1)
as of 10-31-96
<TABLE>
<CAPTION>
Salomon Brothers Non-U.S.
Strong International Lipper International World Government Bond
Time Period Bond Fund Income Funds Index* Index (Currency Unhedged)*
<S> <C> <C> <C>
1-year 8.55% 10.64% 5.47%
2-year 11.66% 12.36% 10.22%
Since inception 13.39% 9.20% 10.30%
(on 3-31-94)
</TABLE>
Please note that the Lipper index contains "pure" emerging markets funds as well
as international bond funds, and includes both hedged and unhedged funds.
DOLLAR-BLOC COUNTRIES HAVE A TOUGH SPRING, BUT RECOVER
The dollar-bloc countries treated investors to a mixed bag in 1996. Coming into
the year, these countries--the U.S., Canada, Australia, New Zealand--were
performing well. Interest rates declined in light of investors' expectations
that the slow economic growth that characterized 1995 would continue into 1996.
During the first quarter of 1996, however, this pessimistic view was shattered
in the U.S. by unexpectedly strong economic indicators. The yield on the U.S.
10-year Treasury bond rose from a low of 5.57% at the beginning of the year to
6.85% by the end of May. Dollar-bloc countries followed suit, experiencing a
similar brief-but-vicious sell off in first six months of 1996.
Economic indicators began to moderate by late summer, however, and yields in the
dollar-bloc countries began to decline. By the end of the fiscal year, the yield
on the 10-Year Treasury had fallen to 6.34%
EUROPEAN MARKETS AND LOWER-QUALITY MARKETS RALLIED
The major European bond markets tended to fare better than their dollar-bloc
counterparts. During 1996, European central banks actively lowered interest
rates, which helped them outperform the U.S. so far this year. Lower-quality
markets led the way by a wide margin.
From a currency standpoint, the U.S. dollar was up against all other currencies,
except the other dollar bloc-countries. In Europe, the high yield currencies
(particularly the Italian lira and the Spanish peseta) were up against
low-yielding anchor currencies like the Deutsch mark and the Swiss franc.
WE BENEFITED BY MAINTAINING A LONGER DURATION
Given our outlook for lower interest rates in most foreign economies, we made a
decision to maintain a longer duration than that of our benchmark index--the
Salomon Brothers Non-U.S. World Government Bond Index (Currency Unhedged). This
helped make the Fund more sensitive to interest rate changes, and helped us
outperform the index as interest rates fell in Europe.
Other strategic adjustments we made versus the Index's weightings were to
increase our exposure to below-investment grade markets, which also contributed
to the Fund's performance. In addition, we had underweighted our position in
Japan up until March, and overweighted our holdings in Europe. Thereafter, we
believed we had wrung most of the potential return out of the European markets,
and we reduced the Fund's position to be more in line with the benchmark. We
also trimmed our position in Japan, given our belief that the market had become
fully valued. By fiscal year-end, the Fund's duration was neutral, with
individual overweightings in Australia and New Zealand, and an underweighting in
Japan.
4
<PAGE>
WE EXPECT MODERATE ECONOMIC GROWTH TO CONTINUE
Currently, international bond markets appear to offer reasonable value from an
income standpoint, a climate we anticipate will continue as long as the U.S.
market remains relatively stable. For the U.S., we expect to see moderate
economic growth of 2-3%, and inflation in the same range. Therefore, it's
difficult to justify positioning the portfolio for a drastic change in either
direction from current levels.
Therefore, our outlook is neutral to moderately bullish. For the near term, we
intend to maintain a duration that is roughly the same as our benchmark index or
slightly longer, and to closely monitor the prevailing environment, making
strategic shifts to help add value.
As always, please keep in mind that the Fund's returns will fluctuate with
changes in bond market conditions, currency values, interest rates, foreign
government regulations and economic and political conditions in countries in
which the Fund invests. These risks are intensified in emerging markets. For
long-term investors, however, we believe these risks are outweighed by the
benefits of global investing --namely, higher return potential and lower overall
portfolio risk through diversification, versus a U.S.-only portfolio.
We appreciate your investment in the Strong International Bond Fund, and we look
forward to earning your continued confidence.
Sincerely,
/s/ Shirish T. Malekar
Shirish T. Malekar
Portfolio Manager
TOP FIVE COUNTRIES
based on net assets as of 10-31-96
==================================
Japan 21.3%
United States 16.4%
Germany 13.8%
Italy 10.0%
France 8.8%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT
from 3-31-94 to 10-31-96
Salomon Brothers
The Strong Non-U.S. World
International Government Bond Index Lipper International
Bond Fund (Currency Unhedged)* Income Funds Index*
3-94 10,000 10,000 10,000
6-94 10,560 10,169 9,729
9-94 10,810 10,337 9,745
12-94 10,866 10,396 9,837
3-95 12,295 11,897 10,526
6-95 12,879 12,478 10,942
9-95 12,611 12,176 11,153
12-95 12,937 12,428 11,700
3-96 12,857 12,219 11,597
6-96 13,042 12,269 11,811
9-96 13,578 12,668 12,293
10-96 13,834 12,882 12,551
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Salomon Brothers Non-U.S. World Government Bond Index (Currency Unhedged) and
the Lipper International 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.
30-DAY
ANNUALIZED
YIELD(2)
7.94%
AVERAGE CREDIT QUALITY(3)
AA
AVERAGE EFFECTIVE MATURITY(4)
5.7 years
As of 10-31-96
- --------------------------------------------------------------------------------
* The Salomon Brothers Non-U.S. World Government Bond Index (Currency
Unhedged) is an unmanaged index generally representative of liquid,
non-U.S. fixed income government securities. The Lipper International
Income Funds Index is an equally-weighted performance index of the largest
qualifying funds in this Lipper category. Source of the Salomon index data
is Micropal. Source of the Lipper index data is Lipper Analytical Services,
Inc.
1 Average annual total return measures change in the value of an investment
in the Fund as an annualized average, assuming reinvestment of all
dividends and capital gains.
2 As of October 31, 1996, the Advisor was temporarily waiving fees of 0.70%
and absorbing expenses of 1.10%. Otherwise, the Fund's yield would have
been 6.14% and the total return would have been lower. Yields are
historical, do not represent future results, and will vary.
3 For purposes of this average rating, the fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
4 The Fund's average maturity includes the effect of futures contracts,
options contracts, and when-issued securities.
5
<PAGE>
The Strong INTERNATIONAL STOCK Fund
================================================================================
By investing primarily in the stocks of companies based outside the United
States, the Strong International Stock Fund pursues capital growth. The Fund
provides convenient access to growth opportunities worldwide that, when compared
to a U.S.-only portfolio, may increase return potential.
TOP FIVE COUNTRIES
based on net assets as of 10-31-96
===================================
Japan 15.8%
Australia 6.0%
Italy 4.3%
Indonesia 4.2%
New Zealand 3.9%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
INTERNATIONAL STOCKS END HIGHER
On the whole, the one-year period ended October 31, 1996 was a decent year for
international stocks. The Fund finished the fiscal year with a return of 9.83%,
in line with international stocks in general, as measured by the MSCI EAFE(TM)
Index's 10.47% return for the same period.(1)*
This overall performance masks a somewhat difficult year for international
investors, however. During the first six months of the fiscal year, foreign
stock markets sustained a broad rally, particularly in Asia. The Fund's
substantial weighting in Asia contributed to a gain of 17.94% for the period,
compared to a gain of 13.21% for the MSCI EAFE(TM) Index.(1)
But from June through October, many international stock markets began to falter.
Asia was particularly hard hit, primarily due to political worries in Thailand
and Indonesia, and a cooling off of earnings and exports throughout the Pacific
Rim. As the fiscal year drew to a close, declines in these markets had reduced
the Fund's fiscal year return to just under 10%.
FIVE LARGEST STOCK HOLDINGS
based on net assets as of 10-31-96
===================================
Simint Spa 1.2%
Gemina Spa 1.1%
SGS Holdings SA 1.0%
Guinness Peat Group PLC 1.0%
CDL Hotels International, Ltd. 1.0%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
WE STUCK TO OUR STRATEGY
As you may be aware, we tend to use a "bottom-up" approach to stock investing.
While global economic climates certainly play a part in our selection process,
we place more emphasis on the strength and potential of individual companies
than on the temporary environment of the countries in which we invest. This
approach occasionally puts us at variance with conventional thinking, but it
also helps us find attractive opportunities in places that others may overlook.
Our bottom-up approach played a large part in our strategy during the fiscal
year. By and large, we did little to change our regional portfolio commitments,
other than trim our Japanese holdings, which we believed had become fully
valued.
o Pacific Rim--Throughout the fiscal year, we maintained a significant exposure
to Pacific Rim countries. As stated earlier, these markets accounted for much of
the Fund's outperformance during the first half of the fiscal year, and much of
the Fund's underperformance during the second half. Concerns about these markets
arose when their annual growth rates declined from 8%-9% to approximately 6%.
We believe the downdraft in Asian markets will be short-lived, however... 6%
annual growth is still very attractive compared to America's projected growth
rate of 3% annually, and less in Europe. Moreover, valuations in these markets
have become even more attractive, and we intend to maintain a large weighting in
the region.
o Europe--While Europe certainly doesn't appear to have the growth potential of
the Pacific Rim, many of the portfolio's best performers were in Europe--an
illustration of our "bottom-up" approach in action. Stocks of note include
Raisio, a Norwegian company that makes margarine with a cholesterol-lowering
drug...Tomra, another Norway-based firm that manufactures recycling machines for
use by the public...Simint, an Italian franchiser for Armani...and Kuoni, a
large Swiss travel agency.
o Latin America--We continue to underweight Mexico and some of the emerging
markets in Latin America. While a few of these markets performed well during the
fiscal year, we believe opportunities elsewhere remain just as attractive and
potentially less volatile.
In our selections, we tend to emphasize small and mid-sized companies. We favor
these companies because they tend to be very good at their particular business,
which gives them outstanding growth potential. In addition, they are a less
obvious way to play larger themes. For example, we hold a pair of smaller
Australian oil companies that are poised to benefit from the recent increase in
oil prices. But because they are relatively obscure, we have an opportunity to
buy them for less than a more widely-followed company. Thus, our research can
help add value to the portfolio.
6
<PAGE>
OPPORTUNITIES REMAIN IN GLOBAL MARKETS
Foreign stock markets as a whole have underperformed the U.S. market for nearly
two years. So a sense of impatience on the part of U.S. investors is
understandable. However, investors must remember that patience is a key
ingredient for success when investing in foreign markets. We don't know when a
strong period of outperformance may begin. But we do know that there are
outstanding values now available internationally. We believe this is
particularly true in small and mid-cap stocks. Going forward, we intend to use
our research and stock selection abilities to take advantage of inefficiencies
in these markets.
In addition, the reasons that make international investing so compelling for
long-term investors remain in place:
o With the U.S. market at an all-time high, we believe investors both here and
abroad may be prompted to look elsewhere for greater growth potential, which
should help drive international stock prices higher.
o Many of these markets continue to grow more than twice as fast as mature
markets.
o Investors have the potential to increase returns and lower overall portfolio
volatility by diversifying a U.S.-only stock portfolio internationally.
As always, keep in mind that the Fund is likely to be more volatile than a
U.S.-only fund, owing to changes in stock market conditions, currency values,
interest rates, local regulations and economic and political conditions. But
given the value currently available in international markets, we believe foreign
equities offer long-term investors an attractive opportunity.
We thank you for your support and look forward to earning your continued
confidence.
Sincerely,
/s/ Anthony L.T. Cragg
Anthony L.T. Cragg
Portfolio Manager
[PHOTO OF ANTHONY L.T.CRAGG]
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT
from 3-4-92 to 10-31-96
The Strong Lipper
International International
Stock Fund MSCI EAFE(TM)* Funds Index*
2-92 10,000 10,000 10,000
12-92 9,819 9,484 9,495
12-93 14,508 12,572 13,215
12-94 14,282 13,550 13,118
12-95 15,399 15,069 14,433
10-96 16,252 15,569 15,636
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Morgan Stanley Capital International Europe, Australasia, and Far East Index
("MSCI EAFE(TM)"), and the Lipper International Funds Index. To equalize the
time periods, the indexes' performance was prorated for the month of March 1992.
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.
AVERAGE ANNUAL
TOTAL RETURNS(1)
as of 10-31-96
1-YEAR
9.83%
3-YEAR
7.18%
SINCE INCEPTION
on 3-4-92
10.99%
- --------------------------------------------------------------------------------
* The MSCI EAFE(TM) is an unmanaged index generally representative of major
overseas stock markets. MSCI EAFE(TM) data is dollar-adjusted. Previous
reports have included a comparison to the Standard & Poor's 500 Stock Index
("S&P 500"). The S&P 500 is a an unmanaged index generally representative
of the market for U.S. stocks. We have replaced this index with the MSCI
EAFE(TM) index, because we believe it is a more meaningful broad-based
index against which to compare the Fund's performance. For the 1-year
period ended 10-31-96, the S&P 500 index's total return was 24.09%. The
Lipper International Funds Index is an equally-weighted performance index,
adjusted for capital gains distributions and income dividends, of the
largest qualifying funds in this Lipper category. Source of the MSCI
EAFE(TM) and S&P 500 index data is Micropal. Source of the Lipper index
data is Lipper Analytical Services, Inc.
1 Average annual total return and total return measure change in the value of
an investment in the Fund, assuming reinvestment of all dividends and
capital gains. Average annual total return reflects annualized change,
while total return reflects aggregate change.
7
<PAGE>
The Strong ASIA PACIFIC Fund
================================================================================
The Strong Asia Pacific Fund seeks capital growth. The Fund invests primarily in
the equity securities of issuers located in Asia or the Pacific Basin.
A "JEKYLL AND HYDE" YEAR FOR ASIA PACIFIC STOCKS
The one-year period ended October 31, 1996 turned out to be a volatile year for
stock markets in the Asia/Pacific Rim region. During the first six months of the
fiscal year, these markets staged a powerful but selective rally that helped
propel the Fund to a gain of 16.47%, in line with the Morgan Stanley AP Index,
which posted a return of 16.12% for the same period.(1)*
But from June through October, many Asian markets faltered. This was primarily
due to political worries in a few of the markets, and a cooling off of earnings
and exports throughout the Pacific Rim. Investors became concerned about
valuations after the strong rally, and, as the fiscal year drew to a close,
declines in these markets had wiped out most the previous six-month gain. For
the year, the Fund gained 3.76%. By way of comparison, the Morgan Stanley AP
Index's return was 10.11% for the Fund's fiscal year.(1)
TOP FIVE COUNTRIES
based on net assets as of 10-31-96
==================================
Japan 20.2%
Australia 13.1%
New Zealand 9.5%
Indonesia 8.2%
Singapore 6.3%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
WE STUCK TO OUR STRATEGY
As you may be aware, we tend to use a "bottom-up" approach to stock investing.
While global economic climates certainly play a part in our selection process,
we place more emphasis on the strength and potential of individual companies
than on the temporary environment of the countries in which we invest. This
approach occasionally puts us at variance with conventional thinking, but it
also helps us find attractive opportunities in places that others may overlook.
Our bottom-up approach played a large part in our strategy during the fiscal
year. By and large, we did little to change our regional portfolio commitments,
other than trim our Japanese holdings, which we believed had become fully
valued.
As stated earlier, concern about the growth rates of Asian countries was chiefly
responsible for their underperformance during the second half of the fiscal
year. However, upon closer inspection, their annual growth rates declined from
8%-9% to approximately 6%. This compares to America's projected growth rate of
3% annually, and less in Europe. So these countries are still growing more than
twice as fast as more established, mature economies.
In addition, much of these prior, near double-digit GDPs were the result of
aggressive building schedules for everything from highways and airports to the
world's tallest building project in Kuala Lumpur. So the moderation of growth
probably reflects a more realistic and sustainable output for these countries.
For these reasons, we believe the downdraft in Asian markets will be
short-lived. Growth remains strong. Moreover, valuations in these markets have
become very attractive, creating the opportunity to buy good quality companies
at what we believe to be fire sale prices.
In our selections, we tend to emphasize small and mid-sized companies. We favor
these companies because they tend to be very good at their particular business,
which gives them outstanding growth potential. In addition, they are a less
obvious way to play larger themes. For example, we hold a pair of smaller
Australian oil companies that are poised to benefit from the recent increase in
oil prices. But because they are relatively obscure, we have an opportunity to
buy them for less than a more widely-followed company. Thus, our firm-by-firm
research can help add value to the portfolio.
OPPORTUNITIES IN ASIA
Given the underperformance of Asian markets versus the domestic market, a sense
of impatience on the part of U.S. investors is understandable. However, it's
important to keep in mind that patience is vital when investing internationally.
We don't know when a strong period of outperformance may begin. But we do
believe that there are outstanding values available in Asia now, particularly in
small and mid-cap stocks. Going forward, we intend to use our research and stock
selection abilities to take advantage of inefficiencies we discover in these
markets.
Longer term, the reasons for investing in Asia and the Pacific Rim remain
compelling:
o With the U.S. market at an all-time high, we believe investors both here and
abroad may be prompted to look elsewhere for greater growth potential, which
should help drive international markets higher.
8
<PAGE>
FIVE LARGEST STOCK HOLDINGS
based on net assets as of 10-31-96
==================================
Guinness Peat Group PLC 1.4%
Sydney Aquarium, Ltd. 1.3%
Normandy Mining, Ltd. 1.2%
Novus Petroleum, Ltd. 1.2%
CDL Hotels International, Ltd. 1.2%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
o Many of these markets have continued to grow at rates far exceeding those of
more mature markets.
o Investors have the potential to increase returns and lower overall portfolio
volatility by diversifying a U.S.-only stock portfolio internationally.
Of course, shareholders should keep in mind that the Fund is likely to be more
volatile than a U.S.-only fund, owing to changes in stock market conditions,
currency values, and interest rates, as well as economic and political
conditions in international markets, and the Fund's concentration in one
geographical area. Risks are intensified in emerging markets. But given the
current value in international markets, we believe foreign equities offer
long-term investors an attractive opportunity.
Thank you for your investment, and we look forward to earning your continued
confidence.
Sincerely,
/s/ Anthony L.T. Cragg
Anthony L.T. Cragg
Portfolio Manager
[PHOTO OF ANTHONY L.T. CRAGG]
- --------------------------------------------------------------------------------
GROWTH OF AN ASSUMED $10,000 INVESTMENT
from 12-31-93 to 10-31-96
The Strong
Asia Pacific Fund MSCI EAFE(TM)* MSCI AP*
12-93 10,000 10,000 10,000
12-94 9,473 10,778 8,772
12-95 10,035 11,986 9,305
10-96 10,087 12,384 9,968
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at the Fund's inception, with a similar investment
in the Morgan Stanley Capital International Europe, Australasia, and Far East
Index ("MSCI EAFE(TM)"), and the Morgan Stanley Capital International AC Asia
Pacific Free ex-Japan Index ("MSCI AP"). Results include the reinvestment of
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.
AVERAGE ANNUAL
TOTAL RETURNS(1)
as of 10-31-96
1-YEAR
3.76%
SINCE INCEPTION
on 12-31-93
0.30%
- --------------------------------------------------------------------------------
* The MSCI EAFE(TM) is an unmanaged index generally representative of major
overseas stock markets. The MSCI AP Index is an unmanaged index generally
representative of developed and emerging markets in the Asia/Pacific
region, excluding Japan. Previous comparisons have included the Morgan
Stanley Capital International AC (Combined) Far East Free ex-Japan Index
("MSCI CFE(TM)"). The MSCI CFE(TM) is an unmanaged market
capitalization-weighted index generally representative of developed and
emerging markets in the Asia/Pacific region, excluding Japan. We have
replaced this index with the MSCI AP Index because we believe it more
accurately reflects the Fund's security selection. All indexes are
dollar-adjusted. For the 1-year period ended 10-31-96, the MSCI CFE(TM)
index's total return was 9.89%. Source of the MSCI EAFE(TM) index data is
Micropal. Source of the MSCI AP and MSCICFE(TM) index data is Morgan
Stanley.
1 Average annual total return and total return measure change in the value of
an investment in the Fund, assuming reinvestment of all dividends and
capital gains. Average annual total return reflects annualized change,
while total return reflects aggregate change.
9
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES October 31, 1996
- --------------------------------------------------------------------------------
STRONG SHORT-TERM GLOBAL BOND FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
CORPORATE BONDS 3.7%
INDONESIA 0.7%
APP International Finance Floating Rate Notes,
8.2734%, Due 6/25/99 500 USD $ 487
MEXICO 1.5%
Grupo Industrial Durango SA de CV Notes,
12.625%, Due 8/01/03 500 USD 521
Imexsa Export Trust Senior Structured Pass-Thru
Certificates, Series 1996-1, 10.125%, Due 5/31/03
(Acquired 5/22/96; Cost $500) (d) 500 USD 515
-------
1,036
UNITED STATES 1.5%
Bank of Boston Corporation Subordinated Floating
Rate Notes, 5.6875%, Due 2/28/01 $100 99
Harrahs Operating, Inc. Guaranteed Senior
Subordinated Notes, 10.875%, Due 4/15/02 500 532
Viacom International, Inc. Reset Notes, 8.75%,
Due 5/15/01 (Rate Reset Effective 5/15/98) 450 461
-------
1,092
-------
TOTAL CORPORATE BONDS (COST $2,573) 2,615
GOVERNMENT & AGENCY ISSUES 28.3%
ARGENTINA 3.4%
Republic of Argentina BOCON Previsional 2
Floating Rate Notes, 5.4453%, Due 4/01/01 1,941 USD 1,760
Republic of Argentina Bote 10 Floating Rate Notes,
5.5625%, Due 4/01/00 590 USD 661
-------
2,421
BRAZIL 1.3%
Republic of Brazil IDU Debentures, 6.6875%,
Due 1/01/01 910 USD 875
CANADA 2.9%
Government of Canada Debentures:
9.25%, Due 12/01/99 1,250 CAD 1,049
10.25%, Due 12/01/98 1,200 CAD 999
-------
2,048
DENMARK 0.8%
Kingdom of Denmark Notes, 9.00%,
Due 11/15/00 3,000 DKK 581
FINLAND 2.6%
Government of Finland Bonds, 10.00%,
Due 9/15/01 7,000 FIM 1,849
FRANCE 1.8%
Government of France Debentures:
7.00%, Due 10/12/00 2,900 FRF 614
8.50%, Due 11/25/02 3,000 FRF 683
-------
1,297
GERMANY 1.6%
Republic of Germany Debentures, Series 90,
8.875%, Due 12/20/00 1,500 DEM 1,138
IRELAND 1.5%
Government of Ireland Debentures, 9.25%,
Due 7/11/03 570 IEP 1,065
ITALY 1.1%
Government of Italy Debentures, 12.00%,
Due 1/01/02 1,000,000 ITL 776
NEW ZEALAND 4.0%
Government of New Zealand Notes:
6.50%, Due 2/15/00 800 NZD 553
8.00%, Due 7/15/98 1,000 NZD 717
10.00%, Due 3/15/02 2,000 NZD 1,579
-------
2,849
SWEDEN 1.0%
Government of Sweden Debentures, 13.00%,
Due 6/15/01 3,500 SEK 668
UNITED KINGDOM 0.6%
Government of United Kingdom Treasury Notes,
7.25%, Due 3/30/98 250 GBP 410
UNITED STATES 5.7%
FHLMC Guaranteed Multiclass Variable Rate
Mortgage Participation Certificates, Series 1324,
Class 1324-B, 7.00%, Due 4/15/18 $ 960 961
FHLMC Variable Rate Participation Certificates,
7.271%, Due 7/01/24 384 394
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
10.50%, Due 8/01/20 615 682
Series 1989-73, Class A, Principal Only,
Due 8/25/14 6 6
United States Treasury Notes, 5.875%,
Due 10/31/98 2,000 2,006
-------
4,049
-------
TOTAL GOVERNMENT & AGENCY ISSUES
(COST $19,117) 20,026
NON-AGENCY MORTGAGE &
ASSET-BACKED SECURITIES 30.0%
Citicorp Mortgage Securities, Inc. Real Estate
Mortgage Investment Conduit
Pass-Thru Certificates:
Series 1988-3, Class A-2, 9.00%, Due 4/01/18 517 534
Series 1990-3, Class A-3, 9.75%, Due 2/25/05 183 189
Series 1990-17, Class M, 9.50%, Due 11/25/20 435 446
Series 1993-3, Class B1, 7.00%, Due 3/25/08
(Acquired 10/23/96; Cost $980) (d)(e) 995 988
Collateralized Mortgage Obligation Trust,
Series 14, Class Z, 8.00%, Due 1/01/17 1,020 1,043
DLJ Mortgage Acceptance Corporation Variable
Rate Mortgage Pass-Thru Certificates,
Series 1991-3, Class A1, 7.3477%, Due 2/20/21(e) 2,006 2,041
First Boston Mortgage Securities Corporation
Variable Rate Mortgage Pass-Thru Certificates,
Series 1994-MHC1, Class C, 6.60%, Due 4/25/11 500 502
GE Capital Mortgage Services, Inc. Real Estate
Mortgage Investment Conduit Pass-Thru
Certificates, Series 1994-11, Class A3, 6.50%,
Due 3/25/24 244 243
General Electric Capital Corporation Variable
Rate Commercial Mortgage Pass-Thru
Certificates, Series Matterhorn USA, Class A,
5.828%, Due 1/21/06 (Acquired 6/28/96;
Cost $1,159) (d) 1,161 1,161
Merrill Lynch Home Equity Acceptance, Inc.
Subordinated Variable Rate Mortgage-Backed
Certificates, Series 1994-A, Class A-1, 6.4375%,
Due 8/17/23 71 70
Merrill Lynch Mortgage Investors, Inc. Senior
Subordinated Variable Rate Pass-Thru Certificates:
Series 1994-F, Class M, 6.50%, Due 4/15/19 500 483
Series 1994-H, Class M, 6.50%, Due 6/15/19 1,120 1,091
See notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
STRONG SHORT-TERM GLOBAL BOND FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
Mortgage Obligation Structured Trust Pass-Thru
Certificates, Series 1993-1, Class A-1, 6.35%,
Due 10/25/18 $ 432 $ 432
RTC Mortgage Pass-Thru Securities, Inc.
Commercial Certificates, Series 1992-CHF,
Class B, 7.15%, Due 12/25/20 875 882
RTC Variable Rate Mortgage Pass-Thru
Securities, Inc.:
Series 1992-6, Class A-3, 7.6579%, Due 1/25/26 1,441 1,466
Series 1992-6, Class B-9, 6.4225%, Due 11/25/26 1,572 1,578
Series 1992-16, Class A-4, 7.5126%, Due 8/25/22 36 36
Series 1995-1, Class B-5, 6.7178%, Due 10/25/28 433 428
RTC Variable Rate Mortgage Pass-Thru Securities,
Inc. Manufactured Housing Certificates,
Series 1992-MH1, Class B2, 5.8375%, Due 8/15/19
(Acquired 4/21/95; Cost $890) (d) 904 888
Ryland Mortgage Securities Corporation Variable
Rate Mortgage Participation Securities:
Series 1991-1, 7.2924%, Due 3/25/20 1,290 1,322
Series 1992-3, Class A-2, 7.3689%, Due 6/25/20 1,139 1,154
Sears Mortgage Securities Corporation Variable
Rate Mortgage Pass-Thru Certificates,
Series 1992-17, Class M, 6.5756%, Due 6/25/22 1,871 1,861
Southern Pacific Thrift & Loan Association
Commercial Mortgage Pass-Thru Certificates,
Series 1996-C1, Class C, 6.375%, Due 4/25/28
(Acquired 9/26/96; Cost $1,463) (d) 1,500 1,468
Structured Asset Securities Corporation Variable
Rate Multiclass Pass-Thru Certificates,
Series 1996-C1, Class D, 6.375%, Due 10/25/10
(Acquired 9/27/96; Cost $995) (d) 1,000 995
-------
TOTAL NON-AGENCY MORTGAGE &
ASSET-BACKED SECURITIES (COST $21,148) 21,301
OPTIONS 0.5%
New Zealand Bond Call Options (Strike yield is
8.75%. Expiration date is 12/08/96.)(COST $48) 2,500 NZD 354
PREFERRED STOCK 2.0%
First International Funding Company, 9.0508%
(Acquired 9/10/96; COST $1,403) (d) 14 1,397
SHORT-TERM INVESTMENTS (a) 41.5%
COMMERCIAL PAPER 17.0%
DISCOUNTED 16.9%
BRAZIL 2.9%
Petroleo Brasileiro SA Eurodollar:
Due 12/06/96 470 USD 467
Due 1/02/97 1,000 USD 988
Due 5/23/97 600 USD 577
-------
2,032
INDONESIA 12.6%
Asia Pulp & Paper Company, Ltd., Due 3/27/97 1,500 USD 1,455
Polysindo EKA Perkasa PT:
Due 3/27/97 1,000 USD 964
Due 7/08/97 5,000,000 IDR 1,886
Texmaco Jaya PT:
Due 11/20/96 4,000,000 IDR 1,706
Due 1/16/97 3,000 USD 2,943
-------
8,954
THAILAND 1.4%
Thai Oil Company, Ltd., Due 12/02/96 25,000 THB 973
-------
11,959
INTEREST BEARING, DUE UPON DEMAND 0.1%
United States Cayman Eurodollar Call Deposit,
4.25% $84 84
-------
Total Commercial Paper 12,043
CORPORATE BONDS 3.6%
BRAZIL 2.1%
Banco Itau SA Eurodollar Notes, Zero %,
Due 1/06/97 1,000 USD 987
Petroleo Brasileiro SA Eurodollar, 8.75%,
Due 12/09/96 500 USD 500
-------
1,487
MEXICO 0.7%
Banco Nacional Comerciio de Exterior Floating
Rate Notes, 10.7578%, Due 6/23/97 (Acquired
6/15/96; Cost $500) (d) 500 USD 513
THAILAND 0.8%
Krungthai Thanakit PCL, Zero %, Due 5/21/97 15,000 THB 555
-------
Total Corporate Bonds 2,555
GOVERNMENT & AGENCY ISSUES 1.4%
ARGENTINA 1.2%
Republic of Argentina Bote 2, 5.5469%,
Due 9/01/97 879 USD 873
UNITED STATES 0.2%
United States Treasury Bills, Due 2/13/97 (c) $170 168
-------
Total Government & Agency Issues 1,041
TIME DEPOSITS 19.5%
EGYPT 1.4%
Citibank Time Deposit (with Egyptian Pound
indexation and interest based on the
Egyptian denominated deposit),
9.375%, Due 1/21/97 1,000 USD 994
UNITED STATES 18.1%
Bank of Scotland Time Deposit, 5.625%,
Due 11/01/96 $1,400 1,400
Bankers Trust Boston Time Deposit, 5.25%,
Due 11/01/96 1,400 1,400
Credite Agriculturale Time Deposit, 5.625%,
Due 11/01/96 1,400 1,400
Credite Suisse Time Deposit, 5.50%, Due 11/01/96 200 200
Deutsche Bank Time Deposit, 5.50%, Due 11/01/96 1,400 1,400
Morgan Guaranty London Time Deposit,
5.5625%, Due 11/01/96 1,400 1,400
Republic National Bank of New York Time
Deposit, 5.5625%, Due 11/01/96 1,400 1,400
Royal Bank of Canada Time Deposit, 5.625%,
Due 11/01/96 1,400 1,400
Societe Generale Time Deposit, 5.65%,
Due 11/01/96 1,400 1,400
Wachovia Time Deposit, 5.64%, Due 11/01/96 1,400 1,400
-------
12,800
-------
Total Time Deposits 13,794
-------
TOTAL SHORT-TERM INVESTMENTS
(COST $29,450) 29,433
-------
TOTAL INVESTMENTS IN SECURITIES
(COST $73,739) 106.0% 75,126
Other Assets and Liabilities, Net (6.0%) (4,253)
-------
NET ASSETS 100.0% $70,873
=======
WRITTEN OPTIONS DETAIL
New Zealand Bond Call Option (Strike yield is
8.40%. Expiration date is 12/08/96.) 2,500 NZD ($ 276)
New Zealand Bond Put Options (Strike yield is
9.17%. Expiration date is 12/08/96.) 2,500 NZD 0
-------
Total Written Options (PREMIUMS RECEIVED $48) ($ 276)
=======
See notes to financial statements.
11
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1996
- --------------------------------------------------------------------------------
STRONG SHORT-TERM GLOBAL BOND FUND (continued)
- --------------------------------------------------------------------------------
FUTURES
- -------
UNDERLYING UNREALIZED
AMOUNT APPRECIATION
EXPIRATION AT VALUE (DEPRECIATION)
DATE (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Purchased:
10 Ten-Year German
Government Bonds 12/96 $1,646 $33
13 Ten-Year Italian
Government Bonds 12/96 2,117 58
12 Two-Year U.S.
Treasury Notes 12/96 2,489 8
20 Five-Year U.S.
Treasury Notes 12/96 2,145 16
17 Ten-Year U.S.
Treasury Notes 12/96 1,864 28
Sold:
2 Ten-Year Australian
Government Bonds 12/96 (210) (7)
2 Ten-Year French
Government Bonds 12/96 (248) (9)
3 Ten-Year United Kingdom
Government Bonds 12/96 (267) (8)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
- -------------------------------------------
UNREALIZED
VALUE APPRECIATION
SETTLEMENT IN USD (DEPRECIATION)
DATE (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Purchased:
1,800,000 NZD 11/12/96 $1,270 $29
Sold:
3,880,000 AUD 11/12/96 3,068 25
2,720,000 CAD 3/17/97 2,050 (48)
3,550,000 DEM 11/13/96 2,341 64
3,300,000 DKK 4/17/97 571 (6)
8,600,000 FIM 4/24/97 1,914 (21)
6,500,000 FRF 1/16/97 1,275 (1)
850,000 GBP 12/09/96 1,381 (57)
4,000,000,000 IDR 11/21/96 1,710 (63)
5,000,000,000 IDR 7/09/97 2,029 (49)
4,300,000 SEK 1/15/97 655 (8)
25,000,000 THB 12/02/96 980 (3)
15,000,000 THB 5/21/97 587 (8)
PERCENTAGE OF
INDUSTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------
Foreign Government ................................. 30.1%
Bank - Regional .................................... 18.0
U.S. Government .................................... 12.1
Foreign Corporate .................................. 10.6
Non-Agency Single-Family ........................... 8.4
Non-Agency Commercial .............................. 5.9
Oil - International Integrated ..................... 4.9
Paper & Forest Products ............................ 3.5
Bank - Money Center ................................ 2.2
Finance - Miscellaneous ............................ 2.0
FHLMC .............................................. 1.9
Non-Agency Multi-Family ............................ 1.3
FNMA ............................................... 1.0
Bank - Super Regional .............................. 0.9
Non-Agency Asset-Backed ............................ 0.8
Leisure Service .................................... 0.7
Steel .............................................. 0.7
Media - Radio/TV ................................... 0.6
Non-Agency Manufactured Housing .................... 0.4
Other Assets and Liabilities, Net .................. (6.0)
-----
Total 100.0%
=====
- --------------------------------------------------------------------------------
STRONG INTERNATIONAL BOND FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
CORPORATE BONDS 3.5%
MEXICO 3.3%
Grupo Industrial Durango SA de CV Notes,
12.625%, Due 8/01/03 500 USD $ 521
Imexsa Export Trust Senior Structured Pass-Thru
Certificates, Series 1996-1, 10.125%, Due 5/31/03
(Acquired 5/22/96; Cost $500) (d) 500 USD 515
------
1,036
UNITED STATES 0.2%
Bank of Boston Corporation Subordinated Floating
Rate Notes, 5.6875%, Due 2/28/01 $50 50
------
TOTAL CORPORATE BONDS (COST $1,050 ) 1,086
GOVERNMENT & AGENCY ISSUES 41.5%
ARGENTINA 3.3%
Republic of Argentina BOCON Previsional 2
Floating Rate Notes, 5.4453%, Due 4/01/01 970 USD 889
Republic of Argentina Bote 10 Floating Rate
Notes, 5.5625%, Due 4/01/00 118 USD 132
------
1,021
CANADA 6.1%
Government of Canada Debentures:
8.50%, Due 3/01/00 1,000 CAD 826
10.25%, Due 12/01/98 1,300 CAD 1,082
------
1,908
DENMARK 3.9%
Kingdom of Denmark Notes:
8.00%, Due 3/15/06 4,500 DKK 831
9.00%, Due 11/15/00 2,000 DKK 388
------
1,219
FINLAND 2.6%
Government of Finland Bonds, 10.00%,
Due 9/15/01 3,000 FIM 792
FRANCE 4.4%
Government of France Debentures, 8.50%,
Due 11/25/02 6,000 FRF 1,366
GERMANY 9.3%
Republic of Germany Debentures, Series 94,
7.50%, Due 11/11/04 4,000 DEM 2,907
See notes to financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
STRONG INTERNATIONAL BOND FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
IRELAND 2.3%
Government of Ireland Debentures, 9.25%,
Due 7/11/03 380 IEP $ 710
NEW ZEALAND 5.6%
Government of New Zealand Notes:
6.50%, Due 2/15/00 1,700 NZD 1,175
8.00%, Due 7/15/98 800 NZD 574
-------
1,749
UNITED STATES 4.0%
FHLMC Variable Rate Participation Certificates,
7.271%, Due 7/01/24 $ 384 394
FNMA Adjustable Rate Mortgage-Backed Securities,
7.672%, Due 6/01/24 809 841
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates,
Series 1989-73, Class A, Principal Only,
Due 8/25/14 4 4
-------
1,239
-------
TOTAL GOVERNMENT & AGENCY ISSUES
(COST $12,296) 12,911
NON-AGENCY MORTGAGE &
ASSET-BACKED SECURITIES 23.7%
Citicorp Mortgage Securities, Inc. Real Estate
Mortgage Investment Conduit
Pass-Thru Certificates:
Series 1990-3, Class A-3, 9.75%, Due 2/25/05 183 189
Series 1990-17, Class M, 9.50%, Due 11/25/20 435 446
Series 1993-3, Class B1, 7.00%, Due 3/25/08
(Acquired 10/23/96; Cost $490) (d) (e) 497 494
DLJ Mortgage Acceptance Corporation Variable
Rate Mortgage Pass-Thru Certificates, Series
1991-3, Class A1, 7.3477%, Due 2/20/21 (e) 1,003 1,021
The Equitable Life Assurance Society of the
United States Collateralized Floating Rate Notes,
Series D-2, 6.4406%, Due 5/15/03
(Acquired 8/08/96; Cost $502) (d) 500 501
First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates, Series 1992-4,
Class A-5, Interest Only, 0.625%, Due 10/25/22 30,900 217
GE Capital Mortgage Services, Inc. Real Estate
Mortgage Investment Conduit
Pass-Thru Certificates:
Series 1993-13, Class B3, 6.00%, Due 10/25/08
(Acquired 9/26/95; Cost $477)(d) 583 513
Series 1994-11, Class A3, 6.50%, Due 3/25/24 244 243
Merrill Lynch Home Equity Acceptance, Inc.
Subordinated Variable Rate Mortgage-Backed
Certificates, Series 1994-A, Class A-1, 6.4375%,
Due 8/17/23 106 105
Merrill Lynch Mortgage Investors, Inc. Senior
Subordinated Variable Rate Pass-Thru
Certificates, Series 1994-H, Class M, 6.50%,
Due 6/15/19 75 73
RTC Mortgage Pass-Thru Securities, Inc.
Commercial Certificates, Series 1992-CHF,
Class B, 7.15%, Due 12/25/20 729 735
RTC Variable Rate Mortgage Pass-Thru
Securities, Inc., Series 1995-1, Class B-5, 6.7178%,
Due 10/25/28 895 886
Ryland Mortgage Securities Corporation Variable
Rate Mortgage Participation Securities:
Series 1991-1, 7.2924%, Due 3/25/20 1,026 1,051
Series 1992-2, Class B, 8.00%, Due 1/25/19 102 102
Suncoast Collateralized Mortgage Obligation
Trust III, Class C, 8.75%, Due 2/27/18 785 783
-------
TOTAL NON-AGENCY MORTGAGE &
ASSET-BACKED SECURITIES (COST $7,122) 7,359
OPTIONS 1.1%
New Zealand Bond Call Options (Strike yield is
8.75%. Expiration date is 12/08/96.)(COST $48) 2,500 NZD 354
PREFERRED STOCKS 1.9%
First International Funding Company, 9.0508%
(Acquired 9/10/96; COST $601) (d) 6 598
SHORT-TERM INVESTMENTS (a) 34.6%
COMMERCIAL PAPER 12.0%
DISCOUNTED 11.9%
INDONESIA 8.8%
Asia Pulp & Paper Company, Ltd., Due 3/27/97 500 USD 485
Polysindo EKA Perkasa PT, Due 3/27/97 1,000 USD 964
Texmaco Jaya PT, Due 11/20/96 3,000,000 IDR 1,279
-------
2,728
THAILAND 3.1%
Thai Oil Company, Ltd., Due 11/01/96 25,000 THB 980
-------
3,708
INTEREST BEARING, DUE UPON DEMAND 0.1%
United States Cayman Eurodollar Call Deposit,
4.25% $19 19
-------
Total Commercial Paper 3,727
CORPORATE BONDS 4.7%
BRAZIL 4.1%
Banco Itau SA Eurodollar Notes, Zero %,
Due 1/06/97 800 USD 790
Petroleo Brasileiro SA Eurodollar, 8.75%,
Due 12/09/96 500 USD 500
-------
1,290
CANADA 0.6%
Mobil Oil of Canada Corporation Senior
Unsubordinated Notes, 9.00%, Due 5/02/97 250 CAD 191
-------
Total Corporate Bonds 1,481
GOVERNMENT & AGENCY ISSUES 4.1%
ARGENTINA 2.8%
Republic of Argentina Bote 2, 5.5469%,
Due 9/01/97 880 USD 865
UNITED STATES 1.3%
United States Treasury Bills, Due 2/13/97 (c) $410 404
-------
Total Government & Agency Issues 1,269
TIME DEPOSITS 13.8%
EGYPT 1.6%
Citibank Time Deposit (with Egyptian Pound
indexation and interest based on the Egyptian
denominated deposit), 9.375%, Due 1/21/97 500 USD 497
LEBANON 0.9%
Citibank Time Deposit (with Lebanese Pound
indexation and interest based on the Lebanese
denominated deposit), 15.20%, Due 11/01/96 250 USD 281
UNITED STATES 11.3%
Credite Suisse Time Deposit, 5.50%, Due 11/01/96 $500 500
Deutsche Bank Time Deposit, 5.50%, Due 11/01/96 600 600
Republic National Bank of New York Time Deposit,
5.5625%, Due 11/01/96 600 600
Royal Bank of Canada Time Deposit, 5.625%,
Due 11/01/96 600 600
Societe Generale Time Deposit, 5.65%,
Due 11/01/96 600 600
Wachovia Time Deposit, 5.64%, Due 11/01/96 600 600
-------
3,500
-------
Total Time Deposits 4,278
-------
TOTAL SHORT-TERM INVESTMENTS
(COST $10,726) 10,755
See notes to financial statements.
13
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1996
- --------------------------------------------------------------------------------
STRONG INTERNATIONAL BOND FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(COST $31,843) 106.3% $33,063
Other Assets and Liabilities, Net (6.3%) (1,964)
-------
NET ASSETS 100.0% $31,099
=======
WRITTEN OPTIONS DETAIL
New Zealand Bond Call Option (Strike yield
is 8.40%. Expiration date is 12/08/96.) 2,500 NZD ($ 276)
New Zealand Bond Put Options, (Strike yield is
9.17%. Expiration date is 12/08/96.) 2,500 NZD 0
--------
Total Written Options (PREMIUMS RECEIVED $48) ($ 276)
========
FUTURES
- -------
UNDERLYING UNREALIZED
AMOUNT APPRECIATION
EXPIRATION AT VALUE (DEPRECIATION)
DATE (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Purchased:
3 Ten-Year Australian
Government Bonds 12/96 $ 315 $ 14
11 Ten-Year French
Government Bonds 12/96 1,361 51
14 Ten-Year German
Government Bonds 12/96 2,304 72
19 Ten-Year Italian
Government Bonds 12/96 3,095 217
6 Ten-Year Japanese
Government Bonds 12/96 6,619 325
11 Ten-Year United Kingdom
Government Bonds 12/96 979 27
Sold:
5 Five-Year U.S.
Treasury Notes 12/96 (536) (14)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
- -------------------------------------------
UNREALIZED
VALUE APPRECIATION
SETTLEMENT IN USD (DEPRECIATION)
DATE (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Purchased:
13,092,627 DEM 11/13/96 $8,634 ($237)
200,000,000 ESP 11/29/96 1,564 (15)
400,000 GBP 12/16/96 650 28
4,758,000,000 ITL 11/13/96 3,130 22
933,283,500 JPY 11/13/96 8,201 (545)
4,500,000 NZD 11/12/96 3,175 52
Sold:
2,200,000 AUD 11/12/96 (1,740) 14
1,873,000 CAD 3/17/97 (1,411) (33)
250,700 CHF 4/24/97 (201) 3
3,700,000 DKK 4/17/97 (640) (7)
6,750,000 FRF 4/15/97 (1,330) (13)
3,000,000,000 IDR 11/21/96 (1,283) (47)
2,402,000,000 ITL 11/13/96 (1,580) (11)
25,000,000 THB 11/01/96 (980) (1)
PERCENTAGE OF
INDUSTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------
Foreign Government ................................. 82.0%
Bank - Regional .................................... 9.6
Foreign Corporate .................................. 4.1
Non-Agency Commercial .............................. 3.3
Oil - International Integrated ..................... 3.2
Finance - Miscellaneous ............................ 1.9
Non-Agency Single Family ........................... 1.6
Oil - North American Integrated .................... 0.6
Other Assets and Liabilities, Net .................. (6.3)
------
Total 100.0%
======
- --------------------------------------------------------------------------------
STRONG INTERNATIONAL STOCK FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 86.1%
ARGENTINA 1.2%
Quilmes Industrial SA ADR 145,000 $ 1,523
YPF Sociedad Anonima ADR 90,000 2,048
-------
3,571
AUSTRALIA 4.9%
AAPC, Ltd. 1,903,853 1,145
Aberfoyle, Ltd. 405,000 846
Bank of Melbourne, Ltd. 175,440 1,208
Cinema Plus, Ltd. (b) 860,000 728
Coca-Cola Amatil, Ltd. 27,591 379
Coles Myer, Ltd. 56,360 206
ERG Australia, Ltd. 370,000 363
Email, Ltd. 108,070 297
Mount Edon Gold Mines, Ltd. 195,085 251
Newcrest Mining, Ltd. 1,807 6
Normandy Mining, Ltd. 1,742,763 2,372
Novus Petroleum, Ltd. 1,371,864 2,496
Oil Search, Ltd. 1,008,000 1,515
Resolute Samantha, Ltd. 234,000 474
Sydney Aquarium, Ltd. 577,100 1,598
Western Mining Corporation, Ltd. 169,439 1,063
-------
14,947
AUSTRIA 0.3%
Flughafen Wien AG 16,000 787
BELGIUM 0.8%
Algemene Maatschappij Voor Nijverheidskredit
Almanij 5,200 1,705
Audiofina 16,000 689
-------
2,394
BOTSWANA 0.3%
Sechaba Investment Trust Company, Ltd. (b) 1,090,000 748
BRAZIL 0.8%
Companhia Vale do Rio Doce Sponsored ADR 63,000 1,339
Usinas Siderurgicas de Minas Gerais
Sponsored ADR 120,000 1,230
-------
2,569
CANADA 0.3%
Direct Choice T.V., Inc. (b) 100,000 254
Indochina Goldfields, Ltd. (Acquired 6/13/96;
Cost $877) (b) (d) 80,000 574
-------
828
CHILE 0.8%
Chile Fund, Inc. 48,000 1,044
Five Arrows Chile Investment Trust, Ltd. 481,000 1,426
-------
2,470
CHINA 1.2%
The China Fund, Inc. 153,500 1,804
Ek Chor China Motorcycle Company, Ltd. 22,800 134
Inner Mongolia Erdos Cashmere 'B' 2,280,000 1,085
Shandong Huaneng Power Company, Ltd. ADR 70,000 639
-------
3,662
COLOMBIA 0.1%
Banco Ganadero SA ADS (representing Class C
Preference Shares) 12,000 237
EGYPT 1.5%
Commercial International Bank of Egypt GDR
(Acquired 7/19/96; Cost $333) (b) (d) 28,000 406
Egypt Investment Company, Ltd. (b) 33,000 392
Egypt Investment Company, Ltd. (Acquired 6/03/96;
Cost $1,071) (b) (d) 104,000 1,235
Misr Oil & Soap Company (b) 100,000 885
Nile for Matches (b) 49,220 398
Suez Cement (b) 78,000 1,105
-------
4,421
See notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
STRONG INTERNATIONAL STOCK FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
FINLAND 0.1%
Raision Tehtaat Oy 'V' Shares 5,600 $ 345
FRANCE 2.6%
Accor SA 12,000 1,504
Assurances Generales de France 28,600 842
Club Mediterranee SA 14,000 880
Europe 1 Communication 4,400 952
Genset SA Sponsored ADR (b) 35,000 608
Pathe SA (b) 8,077 2,174
Sabeton SA (b) 5,300 776
-------
7,736
GERMANY 0.9%
Eurobike AG (b) 55,000 1,214
Leica Camera AG (b) 46,000 1,546
-------
2,760
GHANA 0.5%
Ashanti Goldfields Company, Ltd. GDR 98,000 1,605
HONG KONG 3.5%
CDL Hotels International, Ltd. 5,644,300 2,920
Hong Kong Land Holdings, Ltd. 1,004,449 2,240
Jardine Matheson Holdings, Ltd. 107,089 605
Jardine Strategic Holdings, Ltd. 315,625 1,029
Peregrine Investment Holdings, Ltd. 1,121,000 1,805
Peregrine Investment Holdings, Ltd. Warrants,
Expire 5/15/98 (b) 125,100 23
C.P. Pokphand Company 2,900,000 966
VTech Holdings, Ltd. 586,000 1,144
-------
10,732
HUNGARY 0.3%
Hungarian Investment Company, Ltd. (b) 10,000 885
INDIA 2.2%
Asian Hotels, Ltd. 139,000 1,018
The India Gateway Fund, Ltd. (b) 125,000 608
The India Gateway Fund, Ltd. Warrants,
Expire 5/31/97 (b) 25,000 0
Indian Hotels Company, Ltd. 42,000 772
Industrial Credit & Investment Corporation, Ltd.
GDR (Acquired 8/02/96; Cost $690) (b) (d) 60,000 518
IS Himilayan Fund NV (b) 65,000 780
Oriental Bank of Commerce 528,000 1,063
Peregrine Indian Smaller Companies Fund (b) 7,100 380
State Bank of India, Ltd. 51,060 332
Steel Authority of India, Ltd. GDR (Acquired
3/07/96; Cost $830) (d) 64,000 544
Titan Industries, Ltd. 270,000 783
-------
6,798
INDONESIA 4.2%
Astra International PT (Fgn Reg) 2,000 4
Bank Bali PT (Fgn Reg) 280,450 584
Bank Negara Indonesia PT (b) 1,250,000 461
Bank Tiara Asia PT (Fgn Reg) 756,000 682
Bukaka Teknik Utama PT (Fgn Reg) 962,000 868
Ciputra Development PT (Fgn Reg) 1,086,000 793
Ciputra Development PT Rights 543,000 55
Davomas Abadi PT 1,850,000 1,708
Daya Guna Samudera PT (Acquired 10/16/96;
Cost $421) (b) (d) 496,500 485
Jaya Real Property PT (Fgn Reg) 372,000 405
Kalbe Farma PT 900,000 1,063
Komatsu Indonesia PT (Fgn Reg) 1,156,500 770
Modern Photo Film Company PT 210,000 580
Semen Cibinong PT (Fgn Reg) 509,000 1,115
Semen Gresik PT (Fgn Reg) 415,000 1,194
Super Indah Makmur PT 440,000 510
Tambang Timah PT Sponsored GDR 104,000 1,589
-------
12,866
IRELAND 0.3%
First Ireland Investment Company 400,000 852
ISRAEL 1.0%
Ampal-American Israel Corporation Class A 85,300 405
Gilat Satellite Networks, Ltd. (b) 44,000 858
Koor Industries, Ltd. ADR 81,000 1,407
Tecnomatix Technologies, Ltd. (b) 15,100 262
-------
2,932
ITALY 4.1%
Arnoldo Mondadori Editore Spa 150,000 1,105
Costa Crociere Spa 738,000 1,154
De Rigo Spa ADR (b) 49,600 539
Gemina Spa (b) 7,594,000 3,387
Instrumentation Laboratory Spa ADR (b) 83,000 1,006
Pininfarina Spa 40,600 333
STET - Societa' Finanziaria Telefonica PA 434,000 1,503
Simint Spa (b) 1,291,000 3,571
-------
12,598
JAPAN 15.8%
Amway Japan, Ltd. Premium Exchangeable
Participating Shares Trust 25,600 477
C-Cube Corporation 15,000 119
Canon Sales Company, Inc. 53,000 1,344
Charle Company 23,000 295
Chubu Steel Plate Company, Ltd. 324,000 1,773
Daiwa House Industry Company, Ltd. Warrants,
Expire 10/30/97 (b) 1,700 213
Descente, Ltd. 120,000 726
Diamond City Company 152,000 1,187
Eiden Sakakiya Company, Ltd. Warrants,
Expire 11/30/99 (b) 1,400 823
FamilyMart 42,400 1,770
Heiwa 78,000 1,362
Higashi Nihon House 55,000 791
Hirata Technical Company, Ltd. 24,000 293
Horipro, Inc. 61,000 722
Imagineer Company, Ltd. (b) 26,000 1,608
Ishiguro Homa Corporation 41,000 737
Ishikawajima Harima Heavy Industries
Company, Ltd. 335,000 1,543
Japan Cash Machine Company, Ltd. 50,000 899
Japan Industrial Land Development 20,900 601
Marubeni Corporation 344,000 1,590
Mitsubishi Corporation 127,000 1,415
Mitsui Fudosan 186,000 2,301
Morgan Stanley Group, Inc. Nikkei 225 Index
Call Warrants, Expire 8/15/97 (b) 146,800 1,028
Mori Seiki Company, Ltd. 53,000 781
Nichiha 82,500 1,520
Nippon Felt Company, Ltd. 120,000 769
Nippon Shinpan Company 214,000 1,293
Nippon Telegraph & Telephone Corporation 201 1,402
Nomura Securities Company, Ltd. 78,000 1,286
OJI Paper Company, Ltd. Warrants,
Expire 7/30/98 (b) 975,000,000 667
Ohmoto Gumi Company, Ltd. 80,000 1,235
Powdertech 76,000 933
Roland 60,000 1,226
SXL Corporation Warrants, Expire 2/26/99 (b) 6,300 457
Salomon & Taylor Made Company, Ltd. 60,000 574
Shinseido Company, Ltd. 89,000 734
Shiseido Company, Ltd. 120,000 1,400
See notes to financial statements.
15
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1996
- --------------------------------------------------------------------------------
STRONG INTERNATIONAL STOCK FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
Shochiku Warrants, Expire 12/29/99 (b) 1,150 $ 848
Sony Music Entertainment, Inc. 16,000 616
TOC Company, Ltd. 201,000 2,204
Takeda Printing Company, Ltd. 61,000 813
Takihyo Company, Ltd. 61,000 819
Toho Company 11,110 1,705
Toho Real Estate 27,000 229
Trinity Industrial 152,000 1,213
Xebio Company, Ltd. 40,000 1,298
Yodogawa Steel Works Warrants,
Expire 12/10/97 (b) 550 406
-------
48,045
MALAYSIA 3.8%
ACP Industries BHD 36,000 236
Batu Kawan BHD 487,500 1,023
Highlands & Lowlands BHD 484,000 843
IJM Corporation BHD 'A' 480,000 1,045
Kumpulan Guthrie BHD 580,000 895
Malaysian Resources Corporation BHD 480,000 1,843
Rashid Hussain BHD 192,000 1,201
Road Builder Holdings BHD 157,000 808
Sime UEP Properties BHD 400,000 1,100
TA Enterprise BHD 760,000 1,041
Technology Resources Industries BHD (b) 618,000 1,480
-------
11,515
MEXICO 0.9%
Mexico Fund 144,100 2,035
Panamerican Beverages, Inc. Class A 8,000 349
Telefonos de Mexico SA ADR Series L 12,000 366
-------
2,750
MOROCCO 0.2%
Banque Marocaine Du Commerce Exterieur
Sponsored GDR (Acquired 3/29/96;
Cost $508) (b) (d) 40,000 635
NAMIBIA 0.2%
Namibia Breweries 1,105,400 582
NETHERLANDS 0.5%
Philips Electronics NV ADR 44,000 1,551
NEW ZEALAND 2.9%
CDL Hotels New Zealand, Ltd. (b) 1,000,000 325
Direct Capital Partners, Ltd. 400,000 206
Fernz Corporation, Ltd. 226,320 791
Guinness Peat Group PLC 5,355,533 2,951
Shortland Properties, Ltd. 2,838,000 1,965
Sky City, Ltd. (b) 319,500 1,828
Tourism Holdings, Ltd. 153,000 324
Tranz Rail Holdings, Ltd. (b) 20,000 328
-------
8,718
NORWAY 1.0%
Alvern Norway AS (b) 122,000 1,473
Schibsted Group AS 110,000 1,676
-------
3,149
PAKISTAN 0.6%
Pakistan Investment Fund, Inc. (b) 233,000 1,252
Pakistan Telecommunications Corporation
Sponsored GDR (b) 8,000 616
-------
1,868
PAPUA/NEW GUINEA 0.1%
Lihir Gold, Ltd. (b) 240,000 429
PERU 0.5%
Compania de Minas Buenaventura SA
Sponsored ADR (b) 60,000 1,005
Minsur SA 60,000 539
-------
1,544
PHILLIPINES 1.0%
Belle Corporation (b) 3,160,000 843
Benpres Holdings Corporation Sponsored GDR (b) 109,000 790
Primetown Property Group, Inc. (b) 3,552,000 745
SM Prime Holdings, Inc. GDR (b) 69,360 676
-------
3,054
POLAND 0.3%
The Fleming Poland Fund, Ltd. Redeemable
Participating Preference 'A' Shares (b) 90,000 889
The Fleming Poland Fund, Ltd. Warrants,
Expire 1/31/99 (b) 30,612 77
-------
966
PORTUGAL 1.0%
Cimpor-Cimentos de Portugal SA 70,000 1,468
Portugal Fund, Inc. 62,600 806
Portugal Telecom SA Sponsored ADR 24,000 621
-------
2,895
RUSSIA 2.7%
The Central European Growth Fund PLC 2,657,000 2,582
First NIS Regional Fund (b) 40,000 440
The Fleming Russia Securities Fund, Ltd.
(Acquired 8/17/94-6/26/96; Cost $1,557) (b)(d) 150,000 1,557
Morgan Stanley Russia & New Europe Fund, Inc. (b) 80,000 1,460
Red October Russian Depository Trust Certificates
(Acquired 8/12/96-10/07/96; Cost $573) (b) (d) 8 620
Trade House GUM Sponsored ADR
(Acquired 8/12/96-10/23/96; Cost $1,308)(b)(d) 32,000 1,504
-------
8,163
SINGAPORE 3.3%
Acma, Ltd. 274,800 608
Acma, Ltd. Warrants, Expire 7/24/01 (b) 68,700 44
The Development Bank of Singapore,
Ltd. (Fgn Reg) 35,000 420
Hong Leong Finance, Ltd. (Fgn Reg) 296,000 903
Jardine Strategic Holdings Warrants,
Expire 5/02/98 (b) 46,625 14
Kay Hian James Capel Holdings, Ltd. 1,600,000 1,329
Keppel Corporation, Ltd. 262,000 1,952
Robinson & Company, Ltd. 220,000 906
ST Computer Systems & Services, Ltd. (Fgn Reg) 254,000 176
Singapore Airlines, Ltd. (Fgn Reg) 105,000 924
Singapore Land, Ltd. 124,000 686
Singapore Sesdaq Fund (b) 36,000 621
United Overseas Land, Ltd. 544,000 776
United Overseas Land, Ltd. Warrants,
Expire 5/28/01 (b) 54,400 24
Van Der Horst, Ltd. 170,000 627
-------
10,010
SOUTH AFRICA 1.1%
Energy Africa, Ltd. GDR (Acquired 2/23/96-5/21/96;
Cost $1,276) (b) (d) 100,000 1,500
Energy Africa, Ltd. GDS (b) 15,000 225
Morgan Stanley Africa Investment Fund, Inc. 48,000 612
The South African Breweries, Ltd.
(Acquired 10/04/96; Cost $1,017) (d) 40,000 1,040
-------
3,377
SOUTH KOREA 1.8%
Hotel Shilla Company 76,000 784
Kookmin Bank 76,581 1,227
Korea Electric Power Corporation 38,210 1,127
See notes to financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
STRONG INTERNATIONAL STOCK FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
Korean Air Lines Company, Ltd. 46,218 $ 864
Ssangyong Investment & Securities
Company, Ltd. (b) 88,920 1,360
--------
5,362
SPAIN 1.8%
Construcciones y Auxiliar de Ferrocarriles SA 30,000 1,174
Cortefiel SA 45,900 1,279
Fomento de Construcciones y Contratas SA 11,600 941
Sol Melia SA (b) 46,000 1,223
Sotogrande SA (b) 410,950 788
--------
5,405
SWEDEN 0.8%
Argonaut AB 'B' Shares (b) 467,000 937
Medical Invest Svenska AB 'B' Shares (b) 33,000 785
Rottneros AB 710,000 820
--------
2,542
SWITZERLAND 3.7%
Crossair AG 2,250 870
Magazine Zum Globus Registered Shares 3,000 1,692
Nestle AG 855 926
Oerlikon - Buehrle Holding AG 'R' (b) 18,000 1,771
Reisebuero Kuoni AG 600 1,347
SGS (Societe Generale de Surveillance)Holdings SA 1,400 3,169
Schindler Holding AG 1,550 1,575
--------
11,350
TAIWAN 1.0%
Jardine Fleming Fund 1,835,000 660
Kwang Hua Fortune Fund 986,000 385
NITC Fu-yuan Fund 1,979,000 823
The Taipei Fund IDR (b) 60 519
Yuan Ta Duo Yuan Fund 1,759,000 556
--------
2,943
THAILAND 3.0%
Finance One PCL (Fgn Reg) 318,000 897
Italian-Thai Development PCL 20,000 106
Italian-Thai Development PCL (Fgn Reg) 108,600 575
Krung Thai Bank Republic Company, Ltd. 184,000 498
Land & House PCL (Fgn Reg) 85,000 706
Loxley PCL (Fgn Reg) 52,400 380
Matichon PCL (Fgn Reg) 234,000 908
Property Perfect PCL (Fgn Reg) 240,000 390
The Ruam Pattana Two Fund (Fgn Reg) (b) 2,473,300 1,139
Saha Union PCL (Fgn Reg) 759,800 886
Shinawatra Computer Company PLC (Fgn Reg) 32,000 517
The Siam Cement PCL (Fgn Reg) 25,000 855
Siam City Cement PCL (Fgn Reg) 173,000 1,017
Thai Airways International PCL (Fgn Reg) 203,000 358
--------
9,232
TURKEY 0.3%
The Turkey Trust PLC 120,000 387
Turkish Investment Fund, Inc. 109,600 589
--------
976
UNITED KINGDOM 3.6%
Allied Domecq PLC 154,000 1,190
Body Shop International PLC 380,000 1,224
British Aerospace PLC 20,119 381
British Biotech PLC (b) 197,500 713
Games Workshop Group PLC 197,000 1,679
General Cable PLC ADR (b) 92,800 1,601
Inchcape PLC 317,263 1,494
Lonrho PLC 215,717 526
Somerfield PLC (b) 400,000 1,008
Trocadero PLC (b) 1,285,000 1,118
--------
10,934
UNITED STATES 0.5%
Showboat, Inc. 26,500 504
Sunshine Mining and Refining Company (b) 800,000 1,000
--------
1,504
VIETNAM 0.2%
Vietnam Frontier Fund (b) 54,000 567
ZIMBABWE 1.0%
Meikles Africa, Ltd. (Acquired 10/24/96;
Cost $1,736) (b) (d) 1,312,900 1,772
Trans Zambezi Industries, Ltd. GDR (Acquired
7/16/96; Cost $1,305) (b) (d) 580,000 1,189
--------
2,961
OTHER 0.6%
The Foreign & Colonial Emerging Middle East
Fund, Inc. (b) 84,000 1,040
Schroder Asian Growth Fund, Inc. (b) 77,000 924
--------
1,964
--------
TOTAL COMMON STOCKS (COST $278,550) 261,734
PREFERRED STOCKS 2.7%
AUSTRALIA 0.8%
The News Corporation, Ltd. (b) 543,271 2,386
BRAZIL 0.6%
Companhia Antartica Paulista - Industria
Brasileira de Bebidas e Conexos 12,340 1,682
GERMANY 1.2%
BBS Kraftfahrzeugtechnik AG (b) 4,000 771
Hornbach Holding AG 13,000 814
KSB Group Non-Voting 8,000 1,036
Porsche AG Non-Voting (b) 1,690 1,141
--------
3,762
SOUTH KOREA 0.1%
Daeyu Securities Company, Ltd. 40,000 277
--------
TOTAL PREFERRED STOCKS (COST $8,118) 8,107
CORPORATE BONDS 0.6%
AUSTRALIA 0.3%
UIH Australia/PAC, Inc. Senior Discounted Notes,
Series B, 14.00%, Due 5/15/06 1,375 USD 725
BRAZIL 0.3%
OPP Petroquimica Bonds, 11.50%, Due 2/23/04
(Acquired 2/15/96; Cost $997) (d) 1,000 USD 1,023
--------
TOTAL CORPORATE BONDS (COST $1,741) 1,748
GOVERNMENT & AGENCY ISSUES 1.6%
ARGENTINA 0.4%
Republic of Argentina Variable Rate Debentures,
6.625%, Due 3/31/05 1,470 USD 1,208
ITALY 0.2%
Republic of Italy Convertible Notes, 5.00%,
Due 6/28/01 500 USD 503
NEW ZEALAND 1.0%
Government of New Zealand Notes, 8.00%,
Due 11/15/06 (b) 4,090 NZD 3,029
--------
TOTAL GOVERNMENT & AGENCY
ISSUES (COST $4,413) 4,740
SHORT-TERM INVESTMENTS (a) 7.3%
COMMERCIAL PAPER 0.4%
DISCOUNTED 0.4%
INDONESIA
Polysindo Eka Perkasa PT, Due 11/20/96 3,000,000 IDR 1,279
See notes to financial statements.
17
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1996
- --------------------------------------------------------------------------------
STRONG INTERNATIONAL STOCK FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
INTEREST BEARING, DUE UPON DEMAND 0.0%
UNITED STATES
United States Cayman Eurodollar Call Deposit, 4.25% $1 $1
--------
Total Commercial Paper 1,280
TIME DEPOSITS 6.9%
EGYPT 0.3%
Citibank Time Deposit (with Egyptian Pound
indexation and interest based on the Egyptian
denominated deposit), 9.375%, Due 1/21/97 1,000 USD 994
LEBANON 0.8%
Citibank Time Deposit (with Lebanese Pound
indexation and interest based on the Lebanese
denominated deposit), 14.00%, Due 4/11/97 1,000 USD 1,010
Citibank Time Deposit (with Lebanese Pound
indexation and interest based on the Lebanese
denominated deposit), 14.20%, Due 11/12/96 500 USD 542
Citibank Time Deposit (with Lebanese Pound
indexation and interest based on the Lebanese
denominated deposit), 15.20%, Due 11/01/96 750 USD 843
--------
2,395
UNITED STATES 5.8%
Bank of Scotland Time Deposit, 5.625%,
Due 11/01/96 $ 2,400 2,400
Credite Agriculturale Time Deposit, 5.625%,
Due 11/01/96 15,200 15,200
--------
17,600
--------
Total Time Deposits 20,989
--------
TOTAL SHORT-TERM INVESTMENTS
(COST $22,127) 22,269
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $314,949) 98.3% 298,598
Other Assets and Liabilities, Net 1.7% 5,299
--------
NET ASSETS 100.0% $303,897
========
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
- -------------------------------------------
UNREALIZED
VALUE APPRECIATION
SETTLEMENT IN USD (DEPRECIATION)
DATE (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Purchased:
25,000,000 FRF 2/14/97 $ 4,910 $ 55
Sold:
13,329,800 CHF 3/25/97 (10,666) 334
9,090,000 DEM 4/25/97 (6,057) (57)
25,000,000 FRF 2/14/97 (4,910) 70
38,475,000 FRF 4/25/97 (7,584) (84)
8,951,407 GBP 1/03/97 (14,540) (540)
3,000,000,000 IDR 11/21/96 (1,283) (53)
1,686,330,000 JPY 2/03/97 (14,994) 6
PERCENTAGE OF
INDUSTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------
Closed-End Fund .................................... 9.6%
Conglomerate ....................................... 8.2
Leisure Service .................................... 6.5
Real Estate ........................................ 6.3
Engineering & Construction ......................... 5.5
Metals & Mining .................................... 3.9
Finance - Miscellaneous ............................ 3.4
Bank - Money Center ................................ 3.3
Retail - Specialty ................................. 2.7
Oil - International Integrated ..................... 2.6
Brokerage & Investment Management .................. 2.5
Shoe & Apparel Manufacturing ....................... 2.4
Telecommunication Service .......................... 2.4
Media - Publishing ................................. 2.3
Food ............................................... 2.0
Machinery - Miscellaneous .......................... 1.9
Beverage - Alcoholic ............................... 1.8
Steel .............................................. 1.7
Foreign Government ................................. 1.6
Electronic Products - Miscellaneous ................ 1.3
Consumer - Miscellaneous ........................... 1.2
Retail - Major Chain ............................... 1.2
Media - Radio/TV ................................... 1.2
Airline ............................................ 1.0
Retail - Food Chain ................................ 0.9
Agricultural Operations ............................ 0.8
Household Appliance & Furnishings .................. 0.8
Retail - Department Store .......................... 0.8
Cosmetic & Personal Care ........................... 0.7
Paper & Forest Products ............................ 0.7
Computer Software .................................. 0.6
Electric Power ..................................... 0.6
Healthcare - Drug/Diversified ...................... 0.6
Leisure Product .................................... 0.6
Automobile ......................................... 0.5
Diversified Operations ............................. 0.5
Housing Related .................................... 0.5
Metal Products & Fabrication ....................... 0.5
Telecommunication Equipment ........................ 0.5
Machinery - Transportation Equipment & Parts ....... 0.4
Auto & Truck Parts ................................. 0.3
Chemical ........................................... 0.3
Healthcare - Instrumentation ....................... 0.3
Healthcare - Medical Supply ........................ 0.3
Housing ............................................ 0.3
Index Based ........................................ 0.3
Insurance - Diversified ............................ 0.3
Machine Tool ....................................... 0.3
Machinery - Construction & Mining .................. 0.3
Shipping ........................................... 0.3
Transportation Service ............................. 0.3
Yankee Corporate ................................... 0.3
Beverage - Soft Drink .............................. 0.2
Healthcare - Biomedical/Genetic .................... 0.2
Aerospace & Defense ................................ 0.1
Bank - Regional .................................... 0.1
Computer Service ................................... 0.1
Railroad ........................................... 0.1
Telephone .......................................... 0.1
Short-Term Investments ............................. 7.3
Other Assets and Liabilities, Net .................. 1.7
------
Total 100.0%
======
See notes to financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
STRONG ASIA PACIFIC FUND
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS 84.8%
AUSTRALIA 11.8%
AAPC, Ltd. 459,846 $ 276
Aberfoyle, Ltd. 235,000 491
Australian Tourism Group 300,000 195
Bank of Melbourne, Ltd. 47,472 327
Boral, Ltd. 50,342 125
Cinema Plus, Ltd. (b) 868,000 735
Coca-Cola Amatil, Ltd. 13,903 191
Coles Myer, Ltd. 15,000 55
ERG Australia, Ltd. 61,159 60
Email, Ltd. 50,000 137
MIM Holdings, Ltd. 174,461 226
Macmahon Holdings, Ltd. 145,000 115
Mount Edon Gold Mines, Ltd. 146,000 188
Nautilus Australia, Ltd. (b) 276,000 131
Newcrest Mining, Ltd. 512 2
Normandy Mining, Ltd. (b) 645,756 879
Novus Petroleum, Ltd. 473,220 861
Oil Search, Ltd. 552,000 830
Peptide Technology, Ltd. (b) 330,000 159
Polartechnics, Ltd. (b) 155,000 348
Resolute Samantha, Ltd. 39,000 79
Sea World Property Trust 150,000 159
Southern Star Group, Ltd. (b) 300,000 425
Sydney Aquarium, Ltd. 337,950 936
Sydney Harbour Casino Holdings, Ltd. (b) 202,000 288
Western Mining Corporation, Ltd. 44,642 280
------
8,498
CANADA 0.2%
Indochina Goldfields, Ltd. (Acquired 6/13/96;
Cost $296) (b) (d) 27,000 194
CHINA 2.7%
The China Fund, Inc. 60,400 710
China International Marine Containers,
Ltd. 'B' Shares 250,000 215
Ek Chor China Motorcycle Company, Ltd. 8,750 51
Guangshen Railway Company, Ltd. Sponsored
ADR (b) 13,000 242
Inner Mongolia Erdos Cashmere 'B' 727,000 346
Shandong Huaneng Power Company, Ltd. ADR 41,000 374
------
1,938
HONG KONG 5.2%
CDL Hotels International, Ltd. 1,611,338 834
China Overseas Land & Investment, Ltd. 1,030,000 383
Guoco Group, Ltd. 1,000 5
Hong Kong Land Holdings, Ltd. 354,295 790
Jardine Matheson Holdings, Ltd. 25,877 146
Jardine Strategic Holdings, Ltd. 108,750 355
Peregrine Investment Holdings, Ltd. 349,000 562
Peregrine Investment Holdings, Ltd. Warrants,
Expire 5/15/98 (b) 43,400 8
C.P. Pokphand Company 1,130,000 376
Tingyi (Cayman Island) Holding Company (b) 165,000 36
VTech Holdings, Ltd. 133,000 260
------
3,755
INDIA 2.7%
Asian Hotels, Ltd. 40,000 293
IS Himilayan Fund NV (b) 24,000 288
The India Gateway Fund, Ltd. (b) 25,000 122
The India Gateway Fund, Ltd. Warrants,
Expire 5/31/97 (b) 5,000 0
Indian Hotels Company, Ltd. 14,000 257
Industrial Credit & Investment Corporation,
Ltd. GDR (Acquired 8/02/96; Cost $184) (b) (d) 16,000 138
Oriental Bank of Commerce 128,000 258
Peregrine Indian Smaller Companies Fund (b) 2,000 107
State Bank of India, Ltd. 16,070 104
Steel Authority of India, Ltd. GDR 5,000 43
Steel Authority of India, Ltd. GDR (Acquired
3/07/96; Cost $104) (d) 8,000 68
Titan Industries, Ltd. 88,300 256
------
1,934
INDONESIA 8.2%
Bank Bali PT (Fgn Reg) 142,100 296
Bank Negara Indonesia PT (b) 500,000 184
Bank Tiara Asia PT (Fgn Reg) 360,000 325
Bukaka Teknik Utama PT (Fgn Reg) 389,000 351
Ciputra Development PT (Fgn Reg) 282,000 206
Ciputra Development PT Rights 141,000 14
Davomas Abadi PT 750,000 693
Daya Guna Samudera PT (Acquired 10/16/96;
Cost $105) (b) (d) 124,000 121
Jaya Real Property PT (Fgn Reg) 160,000 174
Kalbe Farma PT 280,000 331
Kawasan Industries Jababeka PT (Fgn Reg) 5,500 7
Komatsu Indonesia PT (Fgn Reg) 494,000 329
Lippo Bank PT (Fgn Reg) 300,000 435
Modern Photo Film Company PT 54,000 149
Ramayana Lestari Sentosa (Fgn Reg) (b) 195,000 331
Semen Cibinong PT (Fgn Reg) 204,000 447
Semen Gresik PT (Fgn Reg) 145,000 417
Steady Safe PT (Fgn Reg) 224,400 219
Super Indah Makmur PT 125,000 145
Tambang Timah PT Sponsored GDR
(Acquired 10/06/95-1/26/96; Cost $588) (d) 46,000 703
------
5,877
JAPAN 20.2%
Amway Japan, Ltd. Premium Exchangeable
Participating Shares Trust 6,800 127
Benesse Corporation 50 3
C-Cube Corporation 14,000 111
Canon Sales Company, Inc. 21,000 532
Chubu Steel Plate Company, Ltd. 105,000 575
Daiwa House Industry Company, Ltd. Warrants,
Expire 10/30/97 (b) 1,450 181
Descente, Ltd. 30,000 182
Diamond City Company 38,000 297
Eiden Sakakiya Company, Ltd. Warrants,
Expire 11/30/99 (b) 350 206
FamilyMart 11,000 459
Heiwa 28,000 489
Higashi Nihon House 13,000 187
Hirata Technical Company, Ltd. 7,000 85
Hokuetsu Metal 44,000 197
Horipro, Inc. 20,000 237
Imagineer Company, Ltd. (b) 6,000 371
Ishiguro Homa Corporation 15,000 270
Ishikawajima Harima Heavy Industries
Company, Ltd. 120,000 553
Japan Cash Machine Company, Ltd. 13,000 234
Japan Industrial Land Development 5,500 158
Marubeni Corporation 81,000 374
Mitsubishi Corporation 35,000 390
Mitsui Fudosan 57,000 705
Morgan Stanley Group, Inc. Nikkei 225 Index
Call Warrants, Expire 8/15/97 (b) 42,000 294
Mori Seiki Company, Ltd. 12,000 177
Nichiha 23,100 425
Nippon Felt Company, Ltd. 34,000 218
Nippon Shinpan Company 74,000 447
See notes to financial statements.
19
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1996
- --------------------------------------------------------------------------------
STRONG ASIA PACIFIC FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corporation 38 $ 265
Nomura Securities Company, Ltd. 30,000 495
OJI Paper Company, Ltd. Warrants,
Expire 7/30/98 (b) 250,000,000 171
Ohmoto Gumi Company, Ltd. 18,640 288
Powdertech 16,000 196
Roland 15,000 307
SXL Corporation Warrants, Expire 2/26/99 (b) 900 65
Salomon & Taylor Made Company, Ltd. 17,000 163
Shinseido Company, Ltd. 33,000 272
Shiseido Company, Ltd. 34,000 397
Shochiku Warrants, Expire 12/29/99 (b) 375 277
Sony Music Entertainment, Inc. 4,000 154
TOC Company, Ltd. 51,000 559
Takeda Printing Company, Ltd. 29,000 387
Takefuji Corporation (b) 1,000 72
Takihyo Company, Ltd. 13,000 174
Toho Company 3,110 477
Toho Real Estate 13,000 110
Toko Seiki Company 26,000 162
Trinity Industrial 72,000 575
Xebio Company, Ltd. 14,000 454
Yodogawa Steel Works Warrants, Expire 12/10/97(b) 100 74
-------
14,578
MALAYSIA 5.3%
ACP Industries BHD 35,000 230
Batu Kawan BHD 213,500 448
Highlands & Lowlands BHD 124,000 216
IJM Corporation BHD 'A' 183,000 398
Kumpulan Guthrie BHD 163,000 252
Malaysian Resources Corporation BHD 168,000 645
Rashid Hussain BHD 39,000 244
Road Builder Holdings BHD 74,000 381
Selangor Dredging BHD 107,000 71
Sime UEP Properties BHD 95,000 261
TA Enterprise BHD 220,000 301
Technology Resources Industries BHD (b) 155,000 371
-------
3,818
NEW ZEALAND 8.3%
AFFCO Holdings, Ltd. 757,914 268
CDL Hotels New Zealand, Ltd. (b) 552,000 179
Corporate Investments, Ltd. (b) 1,100,000 466
Dairy Brands New Zealand, Ltd. 430,000 172
Direct Capital Partners, Ltd. 800,000 413
Evergreen Forests, Ltd. (b) 1,300,000 560
Fernz Corporation, Ltd. 68,470 239
Guinness Peat Group PLC 1,811,625 998
Hellaby Holdings, Ltd. 200,400 273
Kiwi Income Property Trust 480,000 353
Lane Walker Rudkin Industries, Ltd. 150,000 169
Shortland Properties, Ltd. 1,140,000 789
Sky City, Ltd. (b) 109,000 624
Tourism Holdings, Ltd. 91,600 194
Tranz Rail Holdings, Ltd. (b) 5,000 82
Trans Tasman Properties 372,000 194
-------
5,973
PAKISTAN 0.8%
Pakistan Investment Fund, Inc. (b) 58,000 312
Pakistan Telecommunications, Ltd. GDR
(Acquired 9/16/94-4/18/96; Cost $366) (b) (d) 3,000 231
-------
543
PAPUA/NEW GUINEA 0.3%
Lihir Gold, Ltd. (b) 130,000 232
PHILLIPINES 2.4%
Belle Corporation (b) 660,000 176
Benpres Holdings Corporation
(Acquired 10/25/94-1/30/96; Cost $561) (b)(d) 63,080 457
The Filipino Fund, Inc. 10,790,000 325
HI Cement Corporation (b) 160,000 49
Primetown Property Group, Inc. (b) 811,000 170
SM Prime Holdings, Inc. GDR (Acquired 6/15/94;
Cost $95) (b) (d) 14,821 145
Solid Group, Inc. (b) 1,220,000 251
Urban Bank, Inc. 23,000 148
-------
1,721
RUSSIA 0.5%
The Fleming Russia Securities Fund, Ltd.
(Acquired 8/17/94-9/28/94; Cost $366) (b) (d) 36,000 374
SINGAPORE 6.3%
Acma, Ltd. 172,800 383
Acma, Ltd. Warrants, Expire 7/24/01 (b) 43,200 27
Cosco Investments, Ltd. 45,000 47
The Development Bank of Singapore, Ltd.(Fgn Reg) 5,000 60
GB Holdings, Ltd. 129,000 82
GP Batteries International, Ltd. 174,000 505
Hong Leong Finance, Ltd. (Fgn Reg) 144,000 439
Indonesia Development Fund, Ltd. 40,000 292
Jardine Strategic Holdings Warrants,
Expire 5/02/98 (b) 12,750 4
Kay Hian James Capel Holdings, Ltd. 430,000 357
Keppel Corporation, Ltd. 70,000 522
Lim Kah Ngam, Ltd. 77,000 85
Robinson & Company, Ltd. 71,000 292
ST Computer Systems & Services, Ltd. (Fgn Reg) 29,000 20
Singapore Airlines, Ltd. (Fgn Reg) 35,000 308
Singapore Land, Ltd. 60,000 332
Singapore Sesdaq Fund (b) 23,000 397
United Overseas Land, Ltd. 114,000 163
United Overseas Land, Ltd. Warrants,
Expire 5/28/01 (b) 11,400 5
Van Der Horst, Ltd. 54,000 199
-------
4,519
SOUTH KOREA 2.6%
Hana Bank 24,230 368
Hana Bank-New (b) 4,195 61
Hotel Shilla Company 19,000 196
Kookmin Bank 16,497 264
Korea Electric Power Corporation 13,800 407
Korean Air Lines Company, Ltd. 7,200 134
Ssangyong Investment & Securities
Company, Ltd. (b) 30,024 459
-------
1,889
TAIWAN 2.2%
Core Pacific Pioneer Fund (b) 166,000 55
Evergreen Marine Corporation 30,728 53
Jardine Fleming Fund 520,000 187
Kwang Hua Fortune Fund 249,000 97
NITC Fu-yuan Fund 547,000 228
ROC Taiwan Fund (b) 15,000 146
The Taipei Fund IDR (b) 80 692
Yuan Ta Duo Yuan Fund 506,000 160
-------
1,618
THAILAND 4.0%
Finance One PCL (Fgn Reg) 80,400 227
Italian-Thai Development PCL (Fgn Reg) 39,000 206
Krung Thai Bank Republic Company, Ltd. 90,000 243
Land & House PCL (Fgn Reg) 25,000 208
Loxley PCL (Fgn Reg) 18,000 131
See notes to financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
STRONG ASIA PACIFIC FUND (continued)
SHARES OR VALUE
PRINCIPAL (NOTE 2)
AMOUNT (In Thousands)
- --------------------------------------------------------------------------------
Matichon PCL (Fgn Reg) 76,000 $ 295
Property Perfect PCL (Fgn Reg) 70,000 114
The Ruam Pattana Two Fund 90,000 41
The Ruam Pattana Two Fund (Fgn Reg) (b) 435,000 200
Saha Union PCL (Fgn Reg) 422,700 493
Shinawatra Computer Company PLC (Fgn Reg) 8,000 129
The Siam Cement PCL (Fgn Reg) 8,000 274
Siam City Cement PCL (Fgn Reg) 38,000 223
Thai Airways International PCL (Fgn Reg) 42,000 74
-------
2,858
VIETNAM 0.7%
Beta Mekong Fund, Ltd. (b) 5,000 243
Vietnam Frontier Fund (b) 22,000 231
-------
474
OTHER 0.4%
Schroder Asian Growth Fund, Inc. (b) 22,000 264
-------
TOTAL COMMON STOCKS (COST $66,976) 61,057
PREFERRED STOCKS 1.2%
AUSTRALIA 1.0%
The News Corporation, Ltd. (b) 166,134 730
SOUTH KOREA 0.2%
Korean Air Lines Company, Ltd. 17,660 167
-------
TOTAL PREFERRED STOCKS (COST $971) 897
CONVERTIBLE BONDS 0.0%
AUSTRALIA
Sydney Aquarium, Ltd. Notes, 11.50%,
Due 3/15/08 (Cost $18) 13 AUD 34
CORPORATE BONDS 0.3%
AUSTRALIA
UIH Australia/PAC, Inc. Senior Discounted Notes,
Series B, 14.00%, Due 5/15/06 (COST $216) 400 USD 211
GOVERNMENT & AGENCY ISSUES 1.2%
NEW ZEALAND
Government of New Zealand Notes, 8.00%,
Due 11/15/06 (b) (COST $767) 1,120 NZD 830
SHORT-TERM INVESTMENTS (a) 11.0%
COMMERCIAL PAPER 0.7%
DISCOUNTED 0.6%
INDONESIA
Polysindo Eka Perkasa PT, Due 11/20/96 1,000,000 IDR 426
INTEREST BEARING, DUE UPON DEMAND 0.1%
UNITED STATES
United States Cayman Eurodollar Call Deposit,
4.25% $ 72 72
-------
Total Commercial Paper 498
TIME DEPOSITS 10.3%
UNITED STATES
Bank of Scotland Time Deposit, 5.625%,
Due 11/01/96 3,600 3,600
Credite Agriculturale Time Deposit, 5.625%,
Due 11/01/96 3,600 3,600
Deutsche Bank Time Deposit, 5.50%, Due 11/01/96 200 200
-------
Total Time Deposits 7,400
-------
TOTAL SHORT-TERM INVESTMENTS
(COST $7,897) 7,898
-------
TOTAL INVESTMENTS IN SECURITIES
(COST $76,845) 98.5% 70,927
Other Assets and Liabilities, Net 1.5% 1,112
-------
NET ASSETS 100.0% $72,039
=======
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
- -------------------------------------------
UNREALIZED
VALUE APPRECIATION
SETTLEMENT IN USD (DEPRECIATION)
DATE (In Thousands) (In Thousands)
- --------------------------------------------------------------------------------
Sold:
1,000,000,000 IDR 11/21/96 ($ 428) ($17)
393,477,000 JPY 2/03/97 (3,499) 1
PERCENTAGE OF
INDUSTRY DIVERSIFICATION NET ASSETS
- --------------------------------------------------------------------------------
Real Estate .......................................... 8.6%
Conglomerate ......................................... 8.5
Leisure Service ...................................... 7.9
Closed-End Fund ...................................... 7.6
Engineering & Construction ........................... 6.7
Metals & Mining ...................................... 5.0
Bank - Money Center .................................. 4.9
Brokerage & Invesment Management ..................... 3.1
Oil - International Integrated ....................... 2.3
Electronic Products - Miscellaneous .................. 2.2
Media - Publishing ................................... 2.0
Shoe & Apparel Manufacturing ......................... 1.9
Finance - Miscellaneous .............................. 1.6
Machinery - Miscellaneous ............................ 1.5
Agricultural Operations .............................. 1.4
Food ................................................. 1.4
Paper & Forest Products .............................. 1.3
Foreign Government ................................... 1.2
Media - Radio/TV ..................................... 1.2
Telecommunication Service ............................ 1.2
Electric Power ....................................... 1.1
Steel ................................................ 1.1
Consumer - Miscellaneous ............................. 1.0
Metal Products & Fabrication ......................... 1.0
Airline .............................................. 0.9
Cosmetic & Personal Care ............................. 0.9
Retail - Major Chain ................................. 0.8
Diversified Operation ................................ 0.7
Housing Related ...................................... 0.6
Leisure Product ...................................... 0.6
Retail - Food Chain .................................. 0.6
Retail - Specialty ................................... 0.6
Shipping ............................................. 0.6
Computer Software .................................... 0.5
Healthcare - Drug/Diversified ........................ 0.5
Healthcare - Instrumentation ......................... 0.5
Machinery - Construction & Mining .................... 0.5
Household Appliance & Furnishings .................... 0.4
Index Based .......................................... 0.4
Railroad ............................................. 0.4
Retail - Department Store ............................ 0.4
Beverage - Soft Drink ................................ 0.3
Chemical ............................................. 0.3
Housing .............................................. 0.3
Transportation Service ............................... 0.3
Healthcare - Biomedical/Genetic ...................... 0.2
Machine Tool ......................................... 0.2
Telecommunication Equipment .......................... 0.2
Auto & Truck Parts ................................... 0.1
Short-Term Investments ............................... 11.0
Other Assets and Liabilities, Net .................... 1.5
-----
Total 100.0%
=====
See notes to financial statements.
21
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LEGEND
- ------
(a) Short-Term Investments include any security which has a maturity of less
than one year.
(b) Non-income producing security.
(c) All or a portion of security pledged to cover margin requirements for
futures contracts.
(d) Restricted security.
(e) All or a portion of security is When-Issued.
All principal amounts and costs are stated in thousands.
Percentages are stated as a percent of net assets.
CURRENCY ABBREVIATIONS
- ----------------------
AUD Australian Dollar
CAD Canadian Dollar
CHF Swiss Franc
DEM German Mark
DKK Danish Krona
ESP Spanish Peseta
FIM Finish Mark
FRF French Franc
GBP British Pound
IDR Indonesian Rupiah
IEP Irish Punt
ITL Italian Lira
JPY Japanese Yen
NZD New Zealand Dollar
SEK Swedish Krona
THB Thailand Baht
USD United States Dollar
See notes to financial statements.
22
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------
For the Year Ended October 31, 1996
<CAPTION>
(In Thousands)
STRONG SHORT-TERM STRONG INTERNATIONAL
GLOBAL BOND FUND BOND FUND
----------------- --------------------
<S> <C> <C>
INTEREST INCOME $ 2,826 $2,021
EXPENSES:
Investment Advisory Fees 231 189
Custodian Fees 167 143
Shareholder Servicing Costs 79 85
Reports to Shareholders 24 27
Federal and State Registration Fees 36 33
Other 35 27
------- -------
Total Expenses before Waivers and Absorptions 572 504
Voluntary Expense Waivers and Absorptions by Advisor (572) (504)
------- -------
Expenses, Net -- --
------- -------
NET INVESTMENT INCOME 2,826 2,021
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 102 16
Futures Contracts, Options and Forward Foreign Currency Contracts 87 (228)
Foreign Currencies 1 (1)
Change in Unrealized Appreciation/Depreciation on:
Investments 725 530
Futures Contracts, Options and Forward Foreign Currency Contracts 194 (82)
Foreign Currencies (2) (4)
------- -------
NET GAIN 1,107 231
------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,933 $ 2,252
======= =======
STRONG INTERNATIONAL STRONG ASIA
STOCK FUND PACIFIC FUND
-------------------- ------------
INCOME:
Dividends (net of withholding taxes of $711 and $208, respectively) $ 4,830 $ 1,278
Interest 1,962 616
------- -------
Total Income 6,792 1,894
EXPENSES:
Investment Advisory Fees 2,966 979
Custodian Fees 826 359
Shareholder Servicing Costs 790 295
Other 366 136
------- -------
Total Expenses 4,948 1,769
------- -------
NET INVESTMENT INCOME 1,844 125
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 18,103 1,753
Forward Foreign Currency Contracts 8,286 2,422
Foreign Currencies (7) (3)
Change in Unrealized Appreciation/Depreciation on:
Investments (5,310) (1,193)
Forward Foreign Currency Contracts (4,328) (1,253)
Foreign Currencies (6) --
------- -------
NET GAIN 16,738 1,726
------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $18,582 $ 1,851
======= =======
</TABLE>
23
See notes to financial statements.
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
- ---------------------------------------------------------------------------------------------------------------------------
October 31, 1996
<CAPTION>
(In Thousands, Except Per Share Amounts)
STRONG SHORT-TERM STRONG INTERNATIONAL
GLOBAL BOND FUND BOND FUND
----------------- --------------------
<S> <C> <C>
ASSETS:
Investments in Securities, at Value (Cost of $73,739 and $31,843, respectively) $ 75,126 $33,063
Receivable from Brokers for Securities and Forward Foreign Currency Contracts Sold 120 6
Receivable for Fund Shares Sold 359 15
Interest Receivable 644 600
Other Assets 92 121
-------- -------
Total Assets 76,341 33,805
LIABILITIES:
Payable to Brokers for Securities and Forward Foreign Currency Contracts Purchased 5,067 2,361
Written Options, at Value (Premiums Received of $48 and $48, respectively) 276 276
Payable for Fund Shares Redeemed 55 --
Payable to Advisor for Organizational Costs 70 69
-------- -------
Total Liabilities 5,468 2,706
-------- -------
NET ASSETS $ 70,873 $31,099
======== =======
Capital Shares Outstanding (Unlimited Number Authorized) 6,602 2,619
NET ASSET VALUE PER SHARE $10.74 $11.87
====== ======
STRONG INTERNATIONAL STRONG ASIA
STOCK FUND PACIFIC FUND
-------------------- ------------
ASSETS:
Investments in Securities, at Value (Cost of $314,949 and $76,845, respectively) $298,598 $70,927
Receivable from Brokers for Securities and Forward Foreign Currency Contracts Sold 3,761 905
Receivable for Fund Shares Sold 27 26
Dividends and Interest Receivable 851 144
Other Assets 2,479 490
-------- -------
Total Assets 305,716 72,492
LIABILITIES:
Payable to Brokers for Securities and Forward Foreign Currency Contracts Purchased 1,296 272
Payable for Fund Shares Redeemed 24 9
Accrued Operating Expenses and Other Liabilities 499 172
-------- -------
Total Liabilities 1,819 453
-------- -------
NET ASSETS $303,897 $72,039
======== =======
Capital Shares Outstanding (Unlimited Number Authorized) 22,098 7,572
NET ASSET VALUE PER SHARE $13.75 $9.51
====== =====
</TABLE>
24
See notes to financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(In Thousands)
STRONG SHORT-TERM STRONG INTERNATIONAL
GLOBAL BOND FUND BOND FUND
----------------------------- ----------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
OCT. 31, 1996 OCT. 31, 1995 OCT. 31, 1996 OCT. 31, 1995
------------- ------------- ------------- -------------
(NOTE 1) (NOTE 1)
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 2,826 $ 1,212 $ 2,021 $ 990
Net Realized Gain (Loss) 190 (99) (213) 458
Change in Unrealized Appreciation/Depreciation 917 269 444 340
-------- -------- ------- -------
Increase in Net Assets Resulting from Operations 3,933 1,382 2,252 1,788
CAPITAL SHARE TRANSACTIONS 44,452 5,072 8,765 10,451
DISTRIBUTIONS:
From Net Investment Income (2,683) (965) (1,116) (850)
From Net Realized Gains -- -- (137) --
-------- -------- -------- --------
TOTAL INCREASE IN NET ASSETS 45,702 5,489 9,764 11,389
NET ASSETS:
Beginning of Period 25,171 19,682 21,335 9,946
-------- -------- -------- --------
End of Period $ 70,873 $ 25,171 $31,099 $21,335
======== ======== ======== ========
STRONG INTERNATIONAL STRONG ASIA
STOCK FUND PACIFIC FUND
----------------------------- ----------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
OCT. 31, 1996 OCT. 31, 1995 OCT. 31, 1996 OCT. 31, 1995
------------- ------------- ------------- ------------
(NOTE 1) (NOTE 1)
OPERATIONS:
Net Investment Income $ 1,844 $ 1,492 $ 125 $ 234
Net Realized Gain (Loss) 26,382 (806) 4,172 (369)
Change in Unrealized Appreciation/Depreciation (9,644) 6,549 (2,446) 1,787
-------- -------- -------- --------
Increase in Net Assets Resulting from Operations 18,582 7,235 1,851 1,652
CAPITAL SHARE TRANSACTIONS 84,288 (52,367) 18,249 (4,451)
DISTRIBUTIONS:
From Net Investment Income (1,929) (1,293) (125) (234)
In Excess of Net Investment Income (8,449) -- (2,584) (43)
-------- -------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS 92,492 (46,425) 17,391 (3,076)
NET ASSETS:
Beginning of Period 211,405 257,830 54,648 57,724
-------- -------- -------- --------
End of Period $303,897 $211,405 $72,039 $54,648
======== ======== ======== ========
</TABLE>
25
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
October 31, 1996
1. ORGANIZATION
The Strong International Funds consist of Strong Short-Term Global Bond
Fund, Inc., Strong International Bond Fund, Inc., Strong International
Stock Fund, Inc. and Strong Asia Pacific Fund, Inc. The Funds are
separately incorporated, diversified and non-diversified, open-end
management investment companies registered under the Investment Company Act
of 1940. The Board of Directors of the Funds approved changing the Funds'
fiscal year-ends from December 31 to October 31 in 1995.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.
(A) Security Valuation -- Portfolio securities traded primarily on a
principal securities exchange are valued at the last reported sales
price, or the mean between the latest bid and asked prices where no
last sales price is available. Securities traded over-the-counter are
valued at either the mean of the latest bid and asked prices or at the
latest reported sales price, depending on local convention or
regulation. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith under
consistently applied procedures established by and under the general
supervision of the Board of Directors. Securities which are purchased
within 60 days of their stated maturity are valued at amortized cost,
which approximates current value.
The Funds may own certain investment securities which are restricted
as to resale. These securities are valued after giving due
consideration to pertinent factors including recent private sales,
market conditions and the issuer's financial performance. The Funds
generally bear the costs, if any, associated with the disposition of
restricted securities. Aggregate cost and fair value of these
restricted securities held at October 31, 1996 were as follows:
<TABLE>
<CAPTION>
STRONG SHORT-TERM STRONG INTERNATIONAL STRONG INTERNATIONAL STRONG ASIA
GLOBAL BOND FUND BOND FUND STOCK FUND PACIFIC FUND
----------------- -------------------- -------------------- ------------
<S> <C> <C> <C> <C>
Aggregate Cost $7,890 $2,570 $14,499 $2,665
Aggregate Fair Value 7,925 2,621 14,602 2,431
Percent of Net Assets 11.2%* 8.4% 4.8% 3.4%
</TABLE>
*Of these securities, which are restricted to resale, 71% are
eligible for resale pursuant to Rule 144A under the Securities Act of
1933 and also have been determined to be liquid by the Advisor based
upon guidelines established by the Fund's Board of Directors.
(B) Federal Income and Excise Taxes and Distributions to Shareholders --
It is the Funds' policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of their taxable income to their
shareholders in a manner which results in no tax cost to the Funds.
Therefore, no Federal income or excise tax provision is required.
The character of distributions made during the year from net
investment income or net realized gains may differ from the
characterization for Federal income tax purposes due to differences in
the recognition of income and expense items for financial statement
and tax purposes. Where appropriate, reclassifications between net
asset accounts are made for such differences that are permanent in
nature.
(C) Realized Gains and Losses on Investment Transactions -- Gains or
losses realized on investment transactions are determined by comparing
the identified cost of the security lot sold with the net sales
proceeds.
(D) Futures -- Upon entering into a futures contract, the Funds pledge to
the broker cash or other investments equal to the minimum "initial
margin" requirements of the exchange. The Funds also receive from or
pay to the broker an amount of cash equal to the daily fluctuation in
the value of the contract. Such receipts or payments are known as
"variation margin," and are recorded as unrealized gains or losses.
When the futures contract is closed, a realized gain or loss is
recorded equal to the difference between the value of the contract at
the time it was opened and the value at the time it was closed.
(E) Options -- Premiums received by the Funds upon writing put or call
options are recorded as an asset with a corresponding liability which
is subsequently adjusted to the current market value of the option.
When an option expires, is exercised, or is closed, the Funds realize
a gain or loss, and the liability is eliminated. The Funds continue to
bear the risk of adverse movements in the price of the underlying
asset during the period of the option, although any potential loss
during the period would be reduced by the amount of the option premium
received.
(F) Foreign Currency Translation -- Investment securities and other assets
and liabilities initially expressed in foreign currencies are
converted to U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income are converted to
U.S. dollars based upon currency exchange rates prevailing on the
respective dates of such transactions. The effect of changes in
foreign exchange rates on realized and unrealized security gains or
losses is reflected as a component of such gains or losses.
26
<PAGE>
(G) Forward Foreign Currency Exchange Contracts -- Forward foreign
currency exchange contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the Funds record
an exchange gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
(H) Additional Investment Risk -- The use of futures contracts, options,
foreign denominated assets, forward foreign currency exchange
contracts and other similar instruments for purposes of hedging the
Funds' investment portfolios involves, to varying degrees, elements of
market risk in excess of the amount recognized in the statement of
assets and liabilities. The predominant risk with futures contracts is
an imperfect correlation between the value of the contracts and the
underlying securities. Foreign denominated assets and forward foreign
currency exchange contracts may involve greater risks than domestic
transactions, including currency, political and economic, regulatory
and market risks.
(I) Other -- Investment security transactions are recorded as of the trade
date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of premiums and discounts.
3. NET ASSETS
Net assets as of October 31, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG SHORT-TERM STRONG INTERNATIONAL STRONG INTERNATIONAL STRONG ASIA
GLOBAL BOND FUND BOND FUND STOCK FUND PACIFIC FUND
----------------- -------------------- -------------------- ------------
<S> <C> <C> <C> <C>
Capital Stock $69,351 $29,190 $303,858 $77,299
Undistributed Net Investment Income (Loss) 463 961 (42) (73)
Undistributed Net Realized Gain (Loss) (74) 56 16,717 748
Net Unrealized Appreciation (Depreciation) 1,133 892 (16,636) (5,935)
------- ------- -------- -------
$70,873 $31,099 $303,897 $72,039
======= ======= ======== =======
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
<TABLE>
Transactions in shares of the Funds for the year ended October 31, 1996 and the ten months ended October 31, 1995
were as follows (in thousands):
1996 1995
------------------- -------------------
<CAPTION>
SHARES DOLLARS SHARES DOLLARS
====== ======= ====== =======
<S> <C> <C> <C> <C>
STRONG SHORT-TERM GLOBAL BOND FUND
Shares Sold 7,520 $ 79,731 2,106 $ 21,870
Dividends Reinvested 234 2,465 86 883
Shares Redeemed (3,559) (37,744) (1,724) (17,681)
------- -------- ------- --------
4,195 $ 44,452 468 $ 5,072
======= ======== ======= ========
STRONG INTERNATIONAL BOND FUND
Shares Sold 2,700 $ 31,035 1,689 $ 19,496
Dividends Reinvested 105 1,203 71 813
Shares Redeemed (2,045) (23,473) (861) (9,858)
------- -------- ------- --------
760 $ 8,765 899 $ 10,451
======= ======== ======= ========
STRONG INTERNATIONAL STOCK FUND
Shares Sold 20,236 $288,061 8,480 $107,112
Dividends Reinvested 725 10,102 100 1,258
Shares Redeemed (15,083) (213,875) (12,739) (160,737)
------- -------- ------- --------
5,878 $ 84,288 (4,159) ($ 52,367)
======= ======== ======= ========
STRONG ASIA PACIFIC FUND
Shares Sold 13,443 $134,865 6,167 $ 57,648
Dividends Reinvested 266 2,633 28 264
Shares Redeemed (11,861) (119,249) (6,648) (62,363)
------- -------- ------- --------
1,848 $ 18,249 (453) ($ 4,451)
======= ======== ======= ========
</TABLE>
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
October 31, 1996
5. RELATED PARTY TRANSACTIONS
Strong Capital Management, Inc. (the "Advisor"), with whom certain officers
and directors of the Funds are affiliated, provides investment advisory
services and shareholder recordkeeping and related services to the Funds.
Investment advisory fees, which are established by terms of the Advisory
Agreements, are based on the following annualized rates of the average
daily net assets: Strong Short-Term Global Bond Fund .625%, Strong
International Bond Fund .70%, Strong International Stock Fund and Strong
Asia Pacific Fund 1.00%. Advisory fees are subject to reimbursement by the
Advisor if the Funds' operating expenses exceed certain levels. Shareholder
recordkeeping and related service fees are based on contractually
established rates for each open and closed shareholder account. In
addition, the Advisor is compensated for certain other services related to
costs incurred for reports to shareholders.
Certain information regarding related party transactions for the year ended
October 31, 1996 is as follows (in thousands):
<TABLE>
<CAPTION>
STRONG SHORT-TERM STRONG INTERNATIONAL STRONG INTERNATIONAL STRONG ASIA
GLOBAL BOND FUND BOND FUND STOCK FUND PACIFIC FUND
----------------- -------------------- -------------------- ------------
<S> <C> <C> <C> <C>
Payable to Advisor at October 31, 1996 $68 $69 $319 $94
Other Shareholder Servicing Expenses Paid
to Advisor 1 1 16 6
Unaffiliated Directors' Fees 1 1 4 1
</TABLE>
6. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the year
ended October 31, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
STRONG SHORT-TERM STRONG INTERNATIONAL STRONG INTERNATIONAL STRONG ASIA
GLOBAL BOND FUND BOND FUND STOCK FUND PACIFIC FUND
----------------- -------------------- -------------------- ------------
<S> <C> <C> <C> <C>
Purchases:
U.S. Government and Agency $ 6,428 $ 2,953 -- --
Other 71,868 57,454 $354,899 $72,540
Sales:
U.S. Government and Agency 4,203 2,260 -- --
Other 47,931 51,317 283,987 60,471
</TABLE>
7. INCOME TAX INFORMATION
At October 31, 1996, the investment cost, gross unrealized appreciation and
depreciation on investments and capital loss carryovers (expiring in
varying amounts through 2003) for Federal income tax purposes were as
follows (in thousands):
<TABLE>
<CAPTION>
STRONG SHORT-TERM STRONG INTERNATIONAL STRONG INTERNATIONAL STRONG ASIA
GLOBAL BOND FUND BOND FUND STOCK FUND PACIFIC FUND
----------------- -------------------- -------------------- ------------
<S> <C> <C> <C> <C>
Aggregate Investment Cost $73,739 $31,843 $316,456 $77,010
======= ======= ======== =======
Aggregate Unrealized:
Appreciation $ 1,445 $ 1,295 $ 17,685 $ 4,598
Depreciation (58) (75) (35,543) (10,681)
------- ------- -------- -------
$ 1,387 $ 1,220 ($ 17,858) ($ 6,083)
======= ======= ======== =======
Capital Loss Carryovers $ 19 -- -- --
======= ======= ======== =======
</TABLE>
For corporate shareholders in the Funds, the percentages of dividend income
distributed for the year ended October 31, 1996, which are designated as
qualifying for the dividends-received deduction are: Strong International
Stock Fund 0.0% and Strong Asia Pacific Fund 0.1%.
28
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
STRONG SHORT-TERM GLOBAL BOND FUND 10-31-96 10-31-95(a) 12-31-94(b)
-------- ----------- -----------
(NOTE 1)
SELECTED PER-SHARE DATA(c)
- --------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.46 $ 10.15 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.71 0.65 0.35
Net Realized and Unrealized Gains on Investments 0.34 0.20 0.16
-------- -------- --------
Total from Investment Operations 1.05 0.85 0.51
LESS DISTRIBUTIONS:
From Net Investment Income (0.77) (0.54) (0.35)
In Excess of Net Realized Gains -- -- (0.01)
-------- -------- --------
Total Distributions (0.77) (0.54) (0.36)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 10.74 $ 10.46 $ 10.15
======== ======== ========
TOTAL RETURN +10.4% +8.5% +5.1%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $ 70,873 $ 25,171 $ 19,682
Ratio of Expenses to Average Net Assets 0.0% 0.0%* 0.0%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 1.5% 2.0%* 1.7%*
Ratio of Net Investment Income to Average Net Assets 7.4% 8.2%* 7.7%*
Portfolio Turnover Rate 179.7% 437.3% 287.8%
STRONG INTERNATIONAL BOND FUND 10-31-96 10-31-95(a) 12-31-94(b)
-------- ----------- -----------
(NOTE 1)
SELECTED PER-SHARE DATA(c)
- --------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.48 $ 10.36 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.80 0.78 0.46
Net Realized and Unrealized Gains on Investments 0.15 1.00 0.40
-------- -------- --------
Total from Investment Operations 0.95 1.78 0.86
LESS DISTRIBUTIONS:
From Net Investment Income (0.50) (0.66) (0.46)
In Excess of Net Investment Income -- -- (0.02)
From Net Realized Gains (0.06) -- --
In Excess of Net Realized Gains -- -- (0.02)
-------- -------- --------
Total Distributions (0.56) (0.66) (0.50)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 11.87 $ 11.48 $ 10.36
======== ======== ========
TOTAL RETURN +8.6% +17.3% +8.7%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $ 31,099 $ 21,335 $ 9,946
Ratio of Expenses to Average Net Assets 0.0% 0.0%* 0.0%*
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 1.8% 2.0%* 2.0%*
Ratio of Net Investment Income to Average Net Assets 7.4% 8.3%* 7.9%*
Portfolio Turnover Rate 258.3% 473.3% 679.3%
</TABLE>
* Calculated on an annualized basis.
(a) Total return and portfolio turnover rate are not annualized.
(b) Inception date is March 31, 1994 for both Strong Short-Term Global Bond
Fund and Strong International Bond Fund. Total return and portfolio
turnover rate are not annualized.
(c) Information presented relates to a share of capital stock of the fund
outstanding for the entire period.
29
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
STRONG INTERNATIONAL STOCK FUND 10-31-96 10-31-95(a) 12-31-94 12-31-93 12-31-92(b)
-------- ----------- -------- -------- -----------
(NOTE 1)
SELECTED PER-SHARE DATA(d)
- --------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.03 $ 12.65 $ 14.18 $ 9.77 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.17 0.08 0.06 -- 0.05
Net Realized and Unrealized Gains (Losses)
on Investments 1.11 0.37 (0.27) 4.66 (0.23)
-------- -------- -------- -------- --------
Total from Investment Operations 1.28 0.45 (0.21) 4.66 (0.18)
LESS DISTRIBUTIONS:
From Net Investment Income (0.18) (0.07) (0.01) -- (0.05)
In Excess of Net Investment Income (0.38) -- -- (0.02) --
From Net Realized Gains -- -- (1.25) (0.23) --
In Excess of Net Realized Gains -- -- (0.06) -- --
-------- -------- -------- -------- --------
Total Distributions (0.56) (0.07) (1.32) (0.25) (0.05)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 13.75 $ 13.03 $ 12.65 $ 14.18 $ 9.77
======== ======== ======== ======== ========
TOTAL RETURN +9.8% +3.6% -1.6% +47.8% -1.8%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $303,897 $211,405 $257,830 $128,445 $ 12,723
Ratio of Expenses to Average Net Assets 1.7% 1.8%* 1.7% 1.9% 2.0%*
Ratio of Net Investment Income to Average Net Assets 0.6% 0.8%* 0.3% (0.3%) 0.8%*
Portfolio Turnover Rate 108.6% 102.0% 136.5% 139.9% 20.8%
Average Commission Rate Paid(c) $ 0.0166
STRONG ASIA PACIFIC FUND 10-31-96 10-31-95(a) 12-31-94
-------- ----------- --------
(NOTE 1)
SELECTED PER-SHARE DATA(d)
- --------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.55 $ 9.35 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.06 0.04 0.05
Net Realized and Unrealized Gains (Losses)
on Investments 0.31 0.20 (0.57)
-------- -------- --------
Total from Investment Operations 0.37 0.24 (0.52)
LESS DISTRIBUTIONS:
From Net Investment Income (0.06) (0.03) (0.01)
In Excess of Net Investment Income (0.35) (0.01) --
In Excess of Net Realized Gains -- -- (0.12)
-------- -------- --------
Total Distributions (0.41) (0.04) (0.13)
-------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 9.51 $ 9.55 $ 9.35
======== ======== ========
TOTAL RETURN +3.8% +2.6% -5.3%
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------
Net Assets, End of Period (In Thousands) $ 72,039 $ 54,648 $ 57,724
Ratio of Expenses to Average Net Assets 2.3% 2.0%* 2.0%
Ratio of Net Investment Income to Average Net Assets 0.2% 0.5%* 0.6%
Portfolio Turnover Rate 91.4% 104.3% 103.3%
Average Commission Rate Paid(c) $ 0.0104
</TABLE>
* Calculated on an annualized basis.
(a) Total return and portfolio turnover rate are not annualized.
(b) Inception date is March 4, 1992. Total return and portfolio turnover rate
are not annualized.
(c) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
(d) Information presented relates to a share of capital stock of the fund
outstanding for the entire period.
30
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of the
Strong International Funds
We have audited the accompanying statements of assets and liabilities of Strong
Short-Term Global Bond Fund, Inc., Strong International Bond Fund, Inc., Strong
International Stock Fund, Inc. and Strong Asia Pacific Fund, Inc., (collectively
referred to herein as the "Strong International Funds"), including the schedules
of investments in securities, as of October 31, 1996, and the related statements
of operations for the year then ended, the statements of changes in net assets
for the year ended October 31, 1996 and for the period from January 1, 1995 to
October 31, 1995, and the financial highlights for each of the periods
indicated. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Strong International Funds as of October 31, 1996, the results of their
operations, the changes in their net assets and the financial highlights for
each of the periods indicated, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
December 4, 1996
31
<PAGE>
NOTES
- --------------------------------------------------------------------------------
32
<PAGE>
SHAREHOLDER PRIVILIGES*
STRONG FUNDS
[PICTURE OF TELEPHONE]
24-HOUR SERVICE
TELEPHONE PURCHASE
Make additional investments into any Strong Fund by calling us toll-free at
1-800-368-3863.
TELEPHONE EXCHANGE
If your financial goals change, you can exchange your investments between any of
the Strong Funds.
TELEPHONE REDEMPTION
You can call toll-free to redeem your mutual fund shares at any time. Your
shares will be redeemed no later than the close of the next business day.
STRONG FUNDS
[PICTURE OF DOLLAR SIGN]
AUTOMATIC EXCHANGE
AUTOMATIC INVESTMENT PLAN
This plan allows you to set up regular transfers from your bank checking or NOW
account to your Strong Funds account.
PAYROLL DIRECT DEPOSIT PLAN
You can automatically transfer all or a portion of your net pay at each pay
period. This eliminates the delay of depositing paychecks to your bank and then
sending a check through the mail to Strong Funds.
AUTOMATIC EXCHANGE PLAN
This plan allows you to exchange money from one Strong Fund to another. For
example, you may want to set up automatic exchanges from a money market fund to
an equity fund.
FOR MORE INFORMATION ABOUT THESE PRIVILEGES, CALL US AT 1-800-368-3863.
To reduce the volume of mail you receive, only one copy of certain materials,
such as prospectuses and shareholder reports, is mailed to your household.
Please call 1-800-368-3863 if you wish to receive additional copies, free of
charge.
* Each Fund reserves the right to terminate or modify any of these privileges.
<PAGE>
Bulk Rate
U.S. Postage
PAID
Milwaukee, WI
Permit No. 2652
FOR LITERATURE AND INFORMATION REQUESTS,
CALL 1-800-368-1030.
TO DISCUSS AN EXISTING ACCOUNT OR
CONDUCT A TRANSACTION,
CALL 1-800-368-3863.
For a prospectus containing more complete information, including management fees
and expenses, please call 1-800-368-1030. Please read it carefully before
investing or sending money. This annual report does not constitute an offer for
the sale of securities. Strong Funds are offered for sale by prospectus only.
[STRONG LOGO]
STRONG FUNDS DISTRIBUTORS, INC.
P.O. Box 2936
Milwaukee, Wisconsin 53201
http://www.strong-funds.com
4017J96P
