STRONG INTERNATIONAL EQUITY FUNDS INC
485APOS, 1998-12-31
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 As filed with the Securities and Exchange Commission on or about December 31,  
                                      1998                                      

                                        Securities Act Registration No. 33-45108
                                Investment Company Act Registration No. 811-6524

                       SECURITIES AND EXCHANGE COMMISSION                       
                             Washington D.C.  20549                             

                                   FORM N-1A                                    

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933     [   ]               
     Pre-Effective Amendment No.                            [   ] 
     Post-Effective Amendment No.   12                      [ X ] 
                                     and/or                                     
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940     [   ]       
     Amendment No.   13                                             [ X ] 
                        (Check appropriate box or boxes)                        

                    STRONG INTERNATIONAL EQUITY FUNDS, INC.                     
               (Exact Name of Registrant as Specified in Charter)               

          100 Heritage Reserve                                                  
    Menomonee Falls, Wisconsin                                        53051     
(Address of Principal Executive Offices)                            (Zip Code) 
      Registrant's Telephone Number, including Area Code:  (414) 359-3400       
                                Thomas P. Lemke                                 
                        Strong Capital Management, Inc.                         
                              100 Heritage Reserve                              
                       Menomonee Falls, Wisconsin  53051                        
                    (Name and Address of Agent for Service)                     


     It is proposed that this filing will become effective (check appropriate   
box).                                                                           

          [   ]  immediately upon filing pursuant to paragraph (b) of Rule 485  
          [   ]  on (date) pursuant to paragraph (b) of Rule 485             
          [   ]  60 days after filing pursuant to paragraph (a)(1) of Rule 485 
          [ X ]  on March 1, 1999 pursuant to paragraph (a)(1) of Rule 485     
          [   ]  75 days after filing pursuant to paragraph (a)(2) of Rule 485 
          [   ]  on (date) pursuant to paragraph (a)(2) of Rule 485          
                                                                                
     If appropriate, check the following box:                                   

          [   ]     this post-effective amendment designates a new effective    
date for a previously filed post-effective amendment.                           

     This Post-Effective Amendment to the Registration Statement of Strong      
International Equity Funds, Inc., which is currently comprised of three funds,  
Strong International Stock Fund, Strong Foreign MajorMarketsSM Fund and Strong  
Overseas Fund, are being updated through this Amendment.  This Post-Effective   
Amendment does not relate to, amend, supersede, or otherwise affect the         
Prospectus and Statement of Additional Information contained in Post-Effective  
Amendment No. 9 &11.                                                            

<PAGE>





THE STRONG                                                                      
INTERNATIONAL FUNDS                                                             

PROSPECTUS  MARCH 1, 1999                                                       
















THE STRONG GLOBAL HIGH-YIELD BOND FUND                                          

THE STRONG INTERNATIONAL BOND FUND                                              

THE STRONG SHORT-TERM GLOBAL BOND FUND                                          


THE STRONG ASIA PACIFIC FUND                                                    

THE STRONG FOREIGN MAJORMARKETSSM FUND                                        

THE STRONG INTERNATIONAL STOCK FUND                                             

THE STRONG OVERSEAS FUND                                                        



AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT  
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR      
ACCURACY OF THIS PROSPECTUS. ANYONE WHO INFORMS YOU OTHERWISE IS COMMITTING A   
CRIMINAL OFFENSE.                                                               



<PAGE>

TABLE OF CONTENTS                                                               
Your Investment.................................................................
Key Information.................................................................
What are the funds' goals?......................................................
What are the funds' principal investment strategies?............................
What are the main risks of investing in the funds?..............................
What are the funds' fees and expenses?..........................................
Who are the funds' investment advisor and portfolio managers?...................
Other Important Information You Should Know.....................................
Comparing the Funds.............................................................
A Word About Credit Quality.....................................................
Financial Highlights............................................................
Your Account....................................................................
Share Price.....................................................................
Buying Shares...................................................................
Selling Shares..................................................................
Additional Policies.............................................................
Distributions...................................................................
Taxes...........................................................................
Services For Investors..........................................................
Reserved Rights.................................................................
For More Information..................................................Back Cover
N THIS PROSPECTUS, "WE" REFERS TO STRONG CAPITAL MANAGEMENT, INC., THE          
INVESTMENT ADVISOR AND TRANSFER AGENT FOR THE STRONG FUNDS.                     

<PAGE>


                                                                 YOUR INVESTMENT

KEY INFORMATION                                                                 

WHAT ARE THE FUNDS' GOALS?                                                      

The STRONG GLOBAL HIGH-YIELD BOND FUND seeks total return by investing for a    
high level of current income and capital growth.                                

The STRONG INTERNATIONAL BOND FUND seeks high total return by investing for     
both income and capital growth.                                                 

The STRONG SHORT-TERM GLOBAL BOND FUND seeks total return by investing for a    
high level of income with a low degree of share-price fluctuation.              

The STRONG ASIA PACIFIC FUND, STRONG FOREIGN MAJORMARKETSSM FUND, STRONG        
INTERNATIONAL STOCK FUND and STRONG OVERSEAS FUND seek capital growth.          


WHAT ARE THE FUNDS' PRINCIPAL INVESTMENT STRATEGIES?                            

The GLOBAL HIGH-YIELD BOND FUND invests primarily in medium- and lower-quality  
bonds of U.S. and foreign issuers. The fund will normally maintain an average   
maturity of seven to twelve years. The fund's managers look for high-yield      
bonds that have the potential to improve their credit quality and that may      
benefit from changes in interest and currency-exchange rates. They may sell a   
holding when it no longer shows these qualities. The managers intend to limit   
the fund's exposure to foreign currency risk by using hedging strategies.       

The INTERNATIONAL BOND FUND invests primarily in higher- and medium-quality     
bonds issued in foreign countries and maintains an average maturity of four to  
nine years. To select bonds, the fund's manager first looks at overall trends   
in the global economy. He then examines the countries, sectors, and individual  
companies that may benefit from those trends. He may create synthetic bonds to  
make investments that are consistent with the fund's strategy and goals. When a 
bond no longer offers attractive return potential, the manager may sell it. The 
fund is not hedged against foreign currency fluctuations.                       

The SHORT-TERM GLOBAL BOND FUND primarily invests in higher- and medium-quality 
bonds from U.S. and foreign issuers. Under normal conditions, the fund          
maintains an average maturity of three years or less. The fund's managers       
intend to limit the fund's exposure to foreign currency risk by using hedging   
strategies. When a bond no longer offers attractive return potential, the       
manager may sell it.                                                            

Although the above funds invest primarily for income, they also employ          
techniques designed to realize capital appreciation. For example, a manager may 
select bonds with maturities and coupon rates that position them for potential  
capital appreciation for a variety of reasons including a manager's view on the 
direction of future interest-rate movements and the potential for a credit      
upgrade.                                                                        

The ASIA PACIFIC FUND invests primarily in stocks from companies located in     
Asia or the Pacific Basin. The fund's manager looks for companies with          
potential for above-average sales and earnings growth, overall financial        
strength, competitive advantages, and capable management. He may sell a holding 
when it no longer has these traits.                                             

The FOREIGN MAJORMARKETS FUND invests primarily in stocks issued by companies   
in the countries represented in the Morgan Stanley Capital International        
Europe, Australasia, Far East Index (EAFE Index), currently, Australia,         
Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, 
Japan, , Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,  
Switzerland, and the United Kingdom.  The fund's manager employs a disciplined, 
quantitative approach to identify undervalued foreign stocks. The manager then  
analyzes these stocks to make final selections.  The manager may sell stocks    
when they have reached price targets or to adjust the fund's weighting in       
specific countries. To manage foreign currency risk, the manager may hedge a    
portion of the fund's exposure to currency fluctuations.                        

The INTERNATIONAL STOCK FUND selects stocks from any country using a top-down   
approach that emphasizes three key elements: country allocation, currency       
management, and stock selection. The fund's manager identifies those areas of   
the world                                                                       
that offer above-average growth potential, then uses extensive in-house         
research and in-depth analysis to pick individual stocks within those           
countries. The manager also evaluates the liquidity of a market or stock before 
investing-that is, he focuses on those where the flow of investments in and out 
is relatively free.  When a stock's negative factors outweigh its positive      
ones, the fund's manager may sell it.                                           

The OVERSEAS FUND normally invests in stocks from 10 or more foreign countries. 
The fund's manager uses a top-down approach that emphasizes three key elements: 
country allocation, currency management, and stock selection. He first          
identifies those areas of the world that offer above-average growth potential,  
then uses extensive in-house research and in-depth analysis to pick individual  
stocks within those countries. The manager also evaluates the liquidity of a    
market or stock before investing-that is, he focuses on those where the flow of 
investments in and out is relatively free. At times, the fund may take          
aggressive positions in companies and countries. When a stock's negative        
factors outweigh its positive ones, the manager may sell it.                    

The managers may invest any amount in cash or cash-type securities as a         
temporary defensive position to avoid losses during adverse market conditions.  
This could reduce the benefit to the funds if the market goes up.  In this      
case, the funds may not achieve their investment goal.                          

WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?                              
                                                                                

FOR ALL FUNDS                                                                   
FOREIGN SECURITIES: The funds invest predominantly in securities from foreign   
markets. Foreign investments involve additional risks including currency        
fluctuations, political instability, differences in financial reporting         
standards, and less stringent regulation of securities markets.  These risks    
are greater in less-established, emerging markets.  Other risks of emerging     
foreign markets include, smaller securities markets and lower trading volumes   
which may lead to greater price volatility, national policies restricting       
investment opportunities, and less developed legal structures governing         
investments.                                                                    

FOR THE GLOBAL HIGH-YIELD BOND FUND, INTERNATIONAL BOND FUND AND SHORT-TERM     
GLOBAL BOND FUND                                                                
(INTERNATIONAL BOND FUNDS)                                                      
BOND RISKS: The funds' major risks are those of investing in the bond market. A 
bond's market value is affected significantly by changes in interest            
rates-generally, when interest rates rise, the bond's market value declines and 
when interest rates decline, its market value rises.  Generally, the longer a   
bond's maturity, the greater the risk and the higher its yield. Conversely, the 
shorter a bond's maturity, the lower the risk and the lower its yield. A bond's 
value can also be affected by changes in the bond's credit quality rating or    
its issuer's financial condition. Because bond values fluctuate, the fund's     
share price fluctuates.  So, when you sell your investment, you may receive     
more or less money than you originally invested.  These risks are magnified in  
foreign markets.                                                                

HIGH-YIELD BONDS: The GLOBAL HIGH-YIELD BOND FUND and, to a limited extent, the 
INTERNATIONAL BOND FUND and the SHORT-TERM GLOBAL BOND FUND invest in medium-   
and lower-quality bonds, including high-yield bonds. These bonds involve        
greater risks, including the increased possibility that the bond's issuer may   
not be able to make its payments of interest and principal. If that happens,    
the fund's share price would decrease and its income distributions would be     
reduced.  These risks are magnified in foreign markets.                         

SYNTHETIC BONDS: The INTERNATIONAL BOND FUND creates synthetic bonds to make    
investments that are consistent with the fund's strategy and goals, but which   
would not be practical, feasible, or otherwise competitively priced to acquire  
directly. Synthetic bonds are created by combining various investment           
contracts, such as futures, options, and foreign currency forward contracts to  
replicate the characteristics of some foreign government bonds. These synthetic 
bonds are exposed to the general risks of international government bond         
investing. In addition, the use of derivatives may increase default risks due   
to the possibility that the other party to one of these contracts will not      
fulfill its obligations.                                                        

CONCENTRATED PORTFOLIO: As a non-diversified fund, the INTERNATIONAL BOND FUND  
may take large positions in individual bonds. As a result, the fund's shares    
are likely to fluctuate in value more than those of a fund investing in a       
broader range of securities.                                                    

FOR THE ASIA PACIFIC FUND, FOREIGN MAJORMARKETS FUND, INTERNATIONAL STOCK FUND, 
AND OVERSEAS FUND (INTERNATIONAL STOCK FUNDS)                                   
GENERAL STOCK RISKS: The funds' major risks are those of investing in the stock 
market. That means the funds may experience sudden, unpredictable declines in   
value, as well as periods of poor performance. Because stock values go up and   
down, the value of your fund's shares may go up and down.  Therefore, when you  
sell your investment you may receive more or less money than you originally     
invested. These risks are magnified in foreign markets.                         

SMALLER COMPANIES: The funds invest a substantial portion of their assets in    
the stocks of smaller-size companies. Small- and medium-size companies often    
have narrower markets and more limited managerial and financial resources than  
larger, more established companies. As a result, their performance can be more  
volatile and they face greater risk of business failure, which could increase   
the volatility of the funds' portfolios. Generally, the smaller the company     
size, the greater these risks.                                                  

REGIONAL RISK: The ASIA PACIFIC FUND'S investments are focused in a single      
region. As a result, the fund's shares are likely to fluctuate in value more    
than those of a fund investing in a broader range of countries.                 

The funds are appropriate for investors who are comfortable with the risks      
described here. The funds are not appropriate for investors concerned primarily 
with principal stability. Also, the SHORT-TERM GLOBAL BOND FUND is appropriate  
for investors whose financial goals are two to four years in the future.  The   
GLOBAL HIGH-YIELD BOND FUND and the INTERNATIONAL BOND FUND are appropriate for 
investors whose financial goals are four to seven years in the future. The      
international stock funds are appropriate for investors whose financial goals   
are five or more years in the future.                                           

The return information below illustrates how the funds' performance can vary,   
which is one indication of the risks of investing in the funds. Please keep in  
mind that the funds' past performance does not represent how they will perform  
in the future.  The information assumes that you reinvested all dividends and   
distributions.  Only funds with at least one calendar year's performance appear 
below.                                                                          

CALENDAR YEAR TOTAL RETURNS                                                     
<TABLE>
<CAPTION>
<S>           <C>                  <C>                <C>                  <C>                      
    Year      International Stock     Asia Pacific    International Bond   Short-Term Global Bond 
- ------------  -------------------  -----------------  -------------------  -----------------------
    1993              X.X%                 --                  --                     --          
- ------------  -------------------  -----------------  -------------------  -----------------------
    1994              X.X%                X.X%                 --                     --          
- ------------  -------------------  -----------------  -------------------  -----------------------
    1995              X.X%                X.X%                X.X%                   X.X%         
- ------------  -------------------  -----------------  -------------------  -----------------------
    1996              X.X%                X.X%                X.X%                   X.X%         
- ------------  -------------------  -----------------  -------------------  -----------------------
    1997              X.X%                X.X%                X.X%                   X.X%         
- ------------  -------------------  -----------------  -------------------  -----------------------
    1998              X.X%                X.X%                X.X%                   X.X%         
- ------------  -------------------  -----------------  -------------------  -----------------------
</TABLE>

BEST AND WORST QUARTERLY PERFORMANCE                                            
(During the period shown above)                                                 

<TABLE>
<CAPTION>
<S>                      <C>                     <C>                     
FUND NAME                BEST QUARTER RETURN     WORST QUARTER RETURN  
- -----------------------  ----------------------  ----------------------
Asia Pacific             X.X% (Xst Q 19XX)       X.X% (Xst Q 19XX)     
International Bond       X.X% (Xst Q 19XX)       X.X% (Xst Q 19XX)     
International Stock      X.X% (Xst Q 19XX)       X.X% (Xst Q 19XX)     
Short-Term Global Bond   X.X% (Xst Q 19XX)       X.X% (Xst Q 19XX)     
</TABLE>


                                                                               
AVERAGE ANNUAL TOTAL RETURNS                                                    
                                        AS OF 12-31-98                          
FUND/INDEX                 1-YEAR          5-YEAR     SINCE INCEPTION           
ASIA PACIFIC               X.X%             -         X.X% (12-31-93)           
MSCI AP Index              X.X%                       X.X%  
INTERNATIONAL BOND         X.X%             -         X.X% (3-31-94)
Salomon Bros. Non-U.S.                                                          
World Gov't Bond Index     X.X%             -         X.X%
INTERNATIONAL STOCK        X.X%            X.X%       X.X% (3-4-92)   
EAFE Index                 X.X%            X.X%               
SHORT-TERM GLOBAL BOND     X.X%             -         X.X% (3-31-94)
Salomon Bros. 1-3 Yr.                                                           
World Gov't Bond Index     X.X%             -         X.X%

THE MORGAN STANLEY CAPITAL INTERNATIONAL AC ASIA PACIFIC FREE EX. JAPAN INDEX   
(MSCI AP INDEX) IS AN UNMANAGED INDEX GENERALLY REPRESENTATIVE OF DEVELOPED AND 
EMERGING MARKETS IN THE ASIA/PACIFIC REGION, EXCLUDING JAPAN. THE SALOMAN       
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 EAFE INDEX AS AN UNMANAGED INDEX GENERALLY          
REPRESENTATIVE OF MAJOR OVERSEAS STOCK MARKETS.  THE SALOMAN BOTHERS 1-3 YEAR   
WORLD GOVERNMENT BOND INDEX (CURRENCY HEDGED) IS AN UNMANAGED INDEX GENERALLY   
REPRESENTATIVE OF SHORT-TERM, GLOBAL FIXED INCOME GOVERNMENT SECURITIES.        
                                                                                
As of __________, 1999, the 30-day yields for the following funds were as       
follows: GLOBAL HIGH-YIELD BOND FUND, X.X %; INTERNATIONAL BOND, X.X%; and      
SHORT-TERM GLOBAL BOND, X.X%. Without fee waivers and absorptions, the GLOBAL   
HIGH-YIELD BOND FUND'S yield would have been 7.29%. For current yield           
information, call 1-800-368-3863.                                               

WHAT ARE THE FUNDS' FEES AND EXPENSES?                                          

This section describes the fees and expenses that you may pay if you buy and    
hold shares of the funds.                                                       

SHAREHOLDER FEES                                                                
(fees paid directly from your investment)                                       
The funds are 100% no-load, so you pay no sales charges (loads) to buy or sell  
shares.                                                                         

ANNUAL FUND OPERATING EXPENSES                                                  
(expenses that are deducted from fund assets)                                   
The costs of operating each fund are deducted from fund assets, which means you 
pay them indirectly. These costs are deducted before computing the daily share  
price or making distributions. As a result, they don't appear on your account   
statement, but instead reduce the total return you receive from your fund       
investment                                                                      

ANNUAL FUND OPERATING EXPENSES (AS A PERCENT OF AVERAGE NET ASSETS)             

<TABLE>
<CAPTION>
<S>                   <C>                <C>                <C>                
FUND                  MANAGEMENT FEES    OTHER EXPENSES     TOTAL EXPENSES** 
- --------------------  -----------------  -----------------  -----------------
Asia Pacific          X.X%               X.X%               X.X%             
Foreign MajorMarkets  X.X%               X.X%*              X.X%             
Global High-Yield     X.X%               X.X%*              X.X%             
International Bond    X.X%               X.X%               X.X%             
International Stock   X.X%               X.X%               X.X%             
Overseas              X.X%               X.X%*              X.X%             
Short-Term Global     X.X%               X.X%               X.X%             
</TABLE>

*BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR.                        
**TOTAL EXPENSES DO NOT REFLECT OUR WAIVER OF MANAGEMENT FEES AND/OR            
ABSORPTIONS. WITH WAIVERS AND/OR ABSORPTIONS, THE TOTAL EXPENSES WERE:          
SHORT-TERM GLOBAL BOND FUND, X.X% AND INTERNATIONAL BOND FUND, X.%.  WE CAN     
TERMINATE THE WAIVERS AND/OR ABSORPTIONS AT ANY TIME.  ALSO, WITH ALL THE       
FUNDS, WE MAY VOLUNTARILY WAIVE SOME OR ALL OF OUR MANAGEMENT FEE AND/OR ABSORB 
SOME FUND EXPENSES. ANY WAIVERS AND/OR ABSORPTIONS WOULD TEMPORARILY LOWER YOUR 
INVESTMENT'S EXPENSE RATIO AND INCREASE YOUR INVESTMENT RETURN.                 

EXAMPLE: This example is intended to help you compare the cost of investing in  
the funds with the cost of investing in other mutual funds. The example assumes 
that you invest $10,000 in the funds for the time periods indicated, and then   
redeem all of your shares at the end of those periods. The example also assumes 
that your investment has a 5% return each year and that the funds' operating    
expenses remain the same. Although your actual costs may be higher or lower,    
based on these assumptions, your costs would be:                                

<TABLE>
<CAPTION>
<S>                     <C>       <C>       <C>       <C>       
FUND                    1 YEAR    3 YEARS   5 YEARS   10 YEARS
- ----------------------  --------  --------  --------  --------
Asia Pacific            $XXX      $XXX      $XXX      $XXX    
Foreign MajorMarkets    $XXX      $XXX      $XXX      $XXX    
Global High-Yield Bond  $XXX      $XXX      $XXX      $XXX    
International Bond      $XXX      $XXX      $XXX      $XXX    
International Stock     $XXX      $XXX      $XXX      $XXX    
Overseas                $XXX      $XXX      $XXX      $XXX    
Short-Term Global Bond  $XXX      $XXX      $XXX      $XXX    
</TABLE>

WHO ARE THE FUNDS' INVESTMENT ADVISOR AND PORTFOLIO MANAGERS?                   

Strong Capital Management, Inc. (Strong) is the investment advisor for the      
funds. Strong provides investment management services for mutual funds and      
other investment portfolios representing assets of over $32 billion. Strong     
began conducting business in 1974. Since then, its principal business has been  
providing investment advice for individuals and institutional accounts, such as 
pension and profit-sharing plans, as well as mutual funds, several of which are 
available through variable insurance products.  Strong's address is P.O. Box    
2936, Milwaukee, WI 53201.                                                      

JOHN T. BENDER also co-manages the GLOBAL HIGH-YIELD BOND FUND. He has over ten 
years of investment experience and is a Chartered Financial Analyst and a       
Certified Public Accountant.  Mr. Bender joined Strong in February 1987. He has 
co-managed the GLOBAL HIGH-YIELD BOND FUND since January 1998.  Previously, he  
worked at Strong as an analyst, a trader, and an accountant. Mr. Bender         
received his bachelors degree in Accounting from Marquette University in 1988.  

ANTHONY L. T. CRAGG manages the ASIA PACIFIC FUND. He has over 18 years of      
investment experience and joined Strong as a portfolio manager in April 1993 to 
develop Strong's international investment activities. He has managed the ASIA   
PACIFIC FUND since its inception in December 1993.  Prior to joining Strong,    
for seven years, he helped establish Dillon, Read International Asset           
Management, where he was in charge of Japanese, Asian, and Australian           
investments. Mr. Cragg received his masters degree in English Literature in     
1977 from Christ Church, Oxford University. Mr. Cragg began his investment      
career in 1980 at Gartmore, Ltd., as an international investment manager, where 
his tenure included assignments in London, Hong Kong, and Tokyo.                

JEFFREY A. KOCH co-manages the GLOBAL HIGH-YIELD BOND FUND.  He has over nine   
years of investment experience and is a Chartered Financial Analyst.  Mr. Koch  
joined Strong in June 1989.  He has been a portfolio manager since January      
1990. He has co-managed the GLOBAL HIGH-YIELD BOND FUND since March 1998. Prior 
to joining Strong, Mr. Koch was employed by Fossett Corporation, a clearing     
firm, as a market maker clerk.  Mr. Koch received his bachelors in Economics    
from the University of Minnesota in 1987 and his masters of business            
administration in Finance from Washington University in 1989.                   

DAVID LUI manages the INTERNATIONAL STOCK FUND and OVERSEAS FUND. He has over   
five years of investment experience and is a Chartered Financial Analyst.  Mr.  
Lui joined Strong as a portfolio manager in May 1998 and has managed the        
INTERNATIONAL STOCK FUND since June 1998 and the OVERSEAS FUND since its        
inception in June 1998.  For three years prior to joining Strong, he served as  
a Vice President at Phoenix Duff & Phelps and international portfolio manager   
of five funds, including the Phoenix International Portfolio and the Phoenix    
Worldwide Opportunities Fund.  From 1993 to 1995, Mr. Lui was Vice President of 
Asian Equities at Alliance Capital Management.  From 1990 to 1993, he was an    
Associate of Global Markets at Bankers Trust Company. In 1982, he received his  
bachelors degree in Electrical Engineering from Massachusetts Institute of      
Technology which he achieved in three years.  He received his masters of        
business administration from Stanford University in 1990 where he graduated as  
an Arjay Miller Scholar.  He is fluent in English, French, and Chinese.         
SHIRISH T. MALEKAR manages the FOREIGN MAJORMARKETS FUND, INTERNATIONAL BOND    
FUND and SHORT-TERM GLOBAL BOND FUND, and co-manages the GLOBAL HIGH-YIELD BOND 
FUND and has over 11 years of investment experience.  He joined Strong as a     
portfolio manager in January 1994.  He has co-managed the SHORT-TERM GLOBAL     
BOND FUND since March 1997.  He has managed the FOREIGN MAJORMARKETS FUND since 
its inception in June 1998, INTERNATIONAL BOND FUND since March 1994 and GLOBAL 
HIGH-YIELD BOND FUND since January 1998.  Prior to joining Strong, he was an    
international bond portfolio manager at Pacific Investment Management Company   
for three years.  Prior to that, he was a bond trader at Harris Bank in Chicago 
for one year and a bond trader at Paine Webber incorporated in New York and     
Tokyo for more than two years.  Mr. Malekar received his bachelors in Chemical  
Engineering from the University of Bombay, India in 1980, his masters in        
Petroleum Engineering from the University of Pittsburgh in 1982, and his        
masters in Management from the Massachusetts Institute of Technology in 1987.   

((Side Box))                                                                    
YEAR 2000 ISSUES                                                                
Your investment could be adversely affected if the computer systems used by the 
funds and their service providers do not properly process and calculate         
date-related information before, on, and after January 1, 2000.  Year           
2000-related computer problems could have a negative impact on your investment, 
however, we are working to avoid these problems and to obtain assurances from   
our service providers that they are taking similar steps.                       

                                                                               
OTHER IMPORTANT INFORMATION YOU SHOULD KNOW                                     

COMPARING THE FUNDS                                                             

The following two charts will help you distinguish the funds and determine      
their suitability for your investment needs:                                    

INTERNATIONAL BOND FUNDS                                                        
<TABLE>
<CAPTION>
<S>                      <C>                             <C>                      <C>

                         SHORT-TERM GLOBAL BOND         INTERNATIONAL BOND       GLOBAL HIGH-YIELD BOND 

COUNTRY
DIVERSIFICATION          U.S. plus at least             At least 3 foreign        U.S. plus at least 
                         2 foreign countries            countries                 2 foreign countries
 
CREDIT QUALITY           At least 65% rated higher      At least 65% rated higher At least 80% rated medium 
                         Up to 35% rated lower          Up to 35% rated lower     or lower
                                                                                  Up to 10% in default

U.S. COMPONENT           At least 35%                   No more than 35%          At least 35% 

EXPOSURE TO FOREIGN
- -CURRENCY RISK           Primarily hedged               Primarily unhedged        Primarily hedged                          
- ------------------------------------------------------  ------------------------------------------------ 

INTERNATIONAL STOCK FUNDS                                                       

</TABLE>
<TABLE>
<CAPTION>
<S>                     <C>                <C>                   <C>                  <C>

                        ASIA PACIFIC       FOREIGN MAJORMARKETS  INTERNATIONAL STOCK  OVERSEAS

COUNTRY 
DIVERSIFICATION         At least 3 foreign Countries listed      At least 3 foreign   At least 10
                        countries          on EAFE Index         countries            foreign countries

ANTICIPATED EQUITY      65-100%            90-100%               90-100%              90-100%
EXPOSURE

INVESTMENT FOCUS       Asia and Pacific    Established
                       Basin               foreign markets       Non-U.S.             Non-U.S.              
                        ----------------------------  ------------------------------  --------------------  
</TABLE>


                                                                               
A WORD ABOUT CREDIT QUALITY                                                     

CREDIT QUALITY measures the issuer's expected ability to pay interest and       
principal payments on time.  Credit quality can be "higher-quality",            
"medium-quality", "lower-quality", or "in default".                             

HIGHER-QUALITY means bonds that are in any of the three highest categories.     
For example, bonds rated at least A by Standard & Poor's Rating Group (S&P)*.   

MEDIUM-QUALITY means bonds that are in the fourth-highest rating category.  For 
example, bonds rated BBB by S&P*.                                               

LOWER-QUALITY means bonds that are below the fourth-highest rating category.    
They are also known as non-investment, high-risk, high-yield, or "junk bonds".  
For example, bonds rated BB to C by S&P*.                                       

IN DEFAULT means the bond's issuer has not paid principal or interest on time.  
                                                                                
*OR THOSE RATED IN THIS CATEGORY BY ANY NATIONALLY RECOGNIZED STATISTICAL       
RATING ORGANIZATION.  S&P IS ONLY ONE EXAMPLE OF A NATIONALLY RECOGNIZED        
STATISTICAL RATING ORGANIZATION.                                                

This chart shows S&P's definition and ratings group for credit quality.  Other  
rating organizations use similar definitions.                                   

<TABLE>
<CAPTION>
<S>              <C>                  <C>                  <C>                  
CREDIT QUALITY   S&P'S DEFINITION     S&P'S RATINGS GROUP  RATING CATEGORY    
- ---------------  -------------------  -------------------  -------------------
                 Highest quality      AAA                  First highest      
Higher           High quality         AA                   Second highest     
                 Upper medium grade   A                    Third highest      
- ---------------  -------------------  -------------------  -------------------
Medium           Medium grade         BBB                  Fourth highest     
- ---------------  -------------------  -------------------  -------------------
                 Low grade            BB                                      
Lower            Speculative          B                                       
                 Submarginal          CCC, CC, C                              
- ---------------  -------------------  -------------------                     
In default       Probably in default  D                                       
- ---------------  -------------------  -------------------                     
</TABLE>

We determine a bond's credit quality rating at the time of investment by        
conducting credit research and analysis and by relying on credit ratings of     
several nationally recognized statistical rating organizations.  These          
organizations are called NRSROs. When we determine if a bond is in a specific   
category, we may use the highest rating assigned to it by any NRSRO. If a bond  
is not rated, we rely on our credit research and analysis to rate the bond.  If 
a bond's credit quality rating is downgraded after our investment, we monitor   
the situation to decide if we need to take any action such as selling the bond. 

Investments in lower-quality bonds will be more dependent on our credit         
analysis than would be higher-quality bonds because, while lower-quality bonds  
generally offer higher yields than higher-quality bonds with similar            
maturities, lower-quality bonds involve greater risks.  This includes the       
possibility of default or bankruptcy because the issuer's capacity to pay       
interest and repay principal is considered predominantly speculative.  Also,    
lower-quality bonds are less liquid, meaning that they may be harder to sell    
than bonds of higher quality because the demand for them may be lower and there 
are fewer potential buyers. This lack of  liquidity may lower the value of the  
fund and your investment.                                                       

FINANCIAL HIGHLIGHTS                                                            

This information describes investment performance for the periods shown.        
"Total return" shows how much your investment in the fund would have increased  
(or decreased) during each period, assuming you had reinvested all dividends    
and distributions.  These figures have been audited by PricewaterhouseCoopers   
LLP, whose report, along with the fund's financial statements, is included in   
the fund's annual report.                                                       

                            <<Financial Highlights>>                            

YOUR ACCOUNT                                                                    

All of the Strong Funds are 100% no-load.  This means that you may purchase,    
redeem, or exchange shares directly at their net asset value without paying a   
sales charge.                                                                   

SHARE PRICE                                                                     

Your transaction price for buying, selling, or exchanging shares is the net     
asset value per share (NAV).  NAV is generally calculated as of the close of    
trading on the New York Stock Exchange (usually 3:00 p.m. Central Time) every   
day the NYSE is open.  If the NYSE closes at any other time, or if an emergency 
exists, NAV may be calculated at a different time.  Your share price will be    
the next NAV calculated after we accept your order.                             

NAV is based on the market value of the securities in a fund's portfolio.  If   
market prices are not available, NAV is based on a security's fair value as     
determined in good faith by us under the supervision of the Board of Directors  
of the Strong Funds.                                                            

FOREIGN SECURITIES                                                              
The fund's portfolio securities may be listed on foreign exchanges that trade   
on days when we do not calculate an NAV.  As a result, the fund's NAV may       
change on days when you will not be able to purchase or redeem shares.  In      
addition, a foreign exchange may not value its listed securities at the same    
time that we calculate a fund's NAV.  Events affecting the values of portfolio  
securities that occur between the time a foreign exchange assigns a price to    
the portfolio securities and the time when we calculate a fund's NAV generally  
will not be reflected in the fund's NAV.  These events will be reflected in the 
fund's NAV when we, under the supervision of the Board of Directors of the      
Strong Funds, determine that they would have a material affect on the fund's    
NAV.                                                                            

((Side Box))                                                                    
We determine a fund's share price or NAV by dividing net assets (the value 
of its investments, cash, and other assets minus its liabilities) by the number
 of shares outstanding. 

BUYING SHARES                                                                   

INVESTMENT MINIMUMS: When buying shares, you must meet the following investment 
minimum requirements.                                                           

<TABLE>
<CAPTION>
<S>                                <C>                                <C>
                                   INITIAL INVESTMENT MINIMUM         ADDITIONAL INVESTMENT
                                                                      MINIMUN
- ------------------------------------------------------------------------------------------- 
Regular accounts                   $2,500                              $50           
Education IRAs                      $500                               $50            
Other IRAs and UGMA/UTMA Accounts   $250                               $50           
SIMPLE Plan, SEP-IRA, Keogh, 
Profit Sharing or Money Purchase 
Pension, or 403(b)(7) Account       $250                               $50           

- -------------------------------------------------------------------------------------------  
</TABLE>

PLEASE REMEMBER ...              
- - If you use an Automatic Investment Plan, we waive the initial investment      
  minimum to open an account and the additional investment minimum is $50.      
                                                                                
- - You cannot use an Automatic Investment Plan with an Education IRA.            
                                                                                
- - If you open a qualified retirement plan account where we or one of our        
  alliance partners provides administrative services, there is no initial       
  investment minimum.                                                           

                                                                               
 BUYING INSTRUCTIONS                                                            
 You can buy shares in several ways.                                            

 MAIL                                                                           
 You can open or add to an account by mail with a check or money order made     
 payable to Strong Funds.  Send it to the address listed on the back of this    
 prospectus, along with your account application (for a new account) or an      
 Additional Investment Form (for an existing account).                          

 TELEPHONE EXCHANGE                                                             
 Sign up for telephone exchange privileges when you open your account.  To add  
 this option to an existing account, call                                       
 1-800-368-3863 for a Shareholder Account Options Form.  Once you establish     
 telephone exchange privileges, you can call to open a new account or to add to 
 an existing one by exchanging assets from another identically registered       
 Strong Funds account.                                                          

 TELEPHONE PURCHASE                                                             
 You can make additional investments to your existing account directly from     
 your bank account.  If you didn't establish this option when you opened your   
 account, call us at 1-800-368-3863 for a Shareholder Account Options Form.     

 STRONG DIRECT(R)                                                               
 You can use Strong Direct(R)  to add to your investment from your bank account 
 or to exchange shares between Strong Funds by  calling 1-800-368-7550.  See    
 "Services for Investors" for more information.                                 

 STRONG NETDIRECT(R)                                                            
 You can use Strong netDirect(R)  at our web site, WWW.STRONGFUNDS.COM, to add  
 to your investment from your bank account or to exchange shares between Strong 
 Funds.  See "Services for Investors" for more information.                     

 INVESTOR CENTER                                                                
 You can visit our Investor Center in Menomonee Falls, Wisconsin, near          
 Milwaukee.  Call 1-800-368-3863 for hours and directions.  The Investor Center 
 only accepts checks or money orders payable to Strong Funds.  It does not      
 accept cash or third-party checks.                                             

 WIRE                                                                           
 Call 1-800-368-3863 for instructions before wiring funds either to open or add 
 to an account.  This helps to ensure that your account will be credited        
 promptly and correctly.                                                        

 AUTOMATIC INVESTMENT SERVICES                                                  
 See "Services for Investors" for detailed information on all of our automatic  
 investment services.  You can sign up for these plans when you open your       
 account or call 1-800-368-3863 for instructions on how to add them.            

 BROKER-DEALER                                                                  
 You may purchase shares through a broker-dealer or other intermediary who may  
 charge you a fee.                                                              

 PLEASE REMEMBER . . .                                                          
- - Make checks or money orders payable to Strong Funds.                          
                                                                                
- - We do not accept cash, third-party checks (checks payable to you written by   
  another party), or checks drawn on banks outside the U.S.                     
                                                                                
- - You will be charged $20 for every check, money order, wire, or Electronic     
  Funds Transfer returned unpaid.                                               

                                                                               
((Side Box))                                                                    
                                   QUESTIONS?                                   
                              Call 1-800-368-3863                               
                                 24 hours a day                                 
                                 7 days a week                                  

SELLING SHARES                                                                  

You can access the money in your account by selling (also called redeeming)     
some or all of your shares by one of the methods below.  After your redemption  
request is accepted, we normally send you the proceeds on the next business     
day.                                                                            

SELLING INSTRUCTIONS                                                            
You can sell shares in several ways.                                            

MAIL                                                                            
Write a letter of instruction.  It should specify your account number, the      
dollar amount or number of shares you wish to redeem, the names and signatures  
of the owners (or other authorized persons), and your mailing address.  Then,   
mail it to the  address listed on the back of this prospectus.                  

TELEPHONE REDEMPTION                                                            
Sign up for telephone redemption privileges when you open your account or add   
it later by calling                                                             
1-800-368-3863 to request a Shareholder Account Options Form.  With this        
option, you may sell shares by phone and receive the proceeds in one of three   
ways:                                                                           

(1)  We can mail a check to your account's address.  Checks will not be         
     forwarded by the Postal Service, so please notify us if your address has   
     changed.                                                                   
(2)  We can transmit the proceeds by Electronic Funds Transfer to a properly    
     pre-authorized bank account.  The proceeds usually will arrive at your     
     bank two banking days after we process your redemption.                    
(3)  For a $10 fee, we can transmit the proceeds by wire to a properly          
     pre-authorized bank account. The proceeds usually will arrive at your bank 
     the first banking day after we process your redemption.                    

You can also redeem shares through Strong Direct(R) at 1-800-368-7550.  See     
"Services for Investors" for more information.                                  

STRONG NETDIRECT(R)                                                             
You can use Strong netDirect(R) at our web site, WWW.STRONGFUNDS.COM, to redeem 
shares.  See "Services for Investors" for more information.                     

INVESTOR CENTER                                                                 
You can visit our Investor Center in Menomonee Falls, Wisconsin, near           
Milwaukee.  Call                                                                
1-800-368-3863 for hours and directions.                                        

AUTOMATIC INVESTMENT SERVICES                                                   
You can set up automatic withdrawals from your account at regular intervals.    
See "Services for Investors" for information on all of our automatic investment 
services.                                                                       

BROKER-DEALER                                                                   
You may sell shares through a broker-dealer or other intermediary who may       
charge you a fee.                                                               

CHECKWRITING (INTERNATIONAL BOND FUNDS ONLY)                                    
Sign up for free checkwriting when you open your account or call 1-800-368-3863 
to add it later to an existing account.  Check redemptions must be for a        
minimum of $500.  You cannot write a check to close out an account.             

PLEASE REMEMBER ...                             
- - If you recently purchased shares, a redemption request on those shares will   
  not be honored until 10 days after we receive the purchase check or           
  electronic transaction.                                                       
                                                                                
- - You will be charged a $10 service fee for a stop-payment on a check written   
  on your Strong Funds account.                                                 
                                                                                
- - Some transactions and requests require a signature guarantee.                 
                                                                                
- - If you are selling shares you hold in certificate form, you must submit the   
  certificates with your redemption request. Each registered owner must sign    
  the certificates and all signatures must be guaranteed.                       
                                                                                
- - With an IRA (or other retirement account), you will be charged (1) a $10      
  annual account maintenance fee for each account up to a maximum of $30 and    
  (2) a $10 fee for transferring assets to another custodian or for closing an  
  account.                                                                      
                                                                                
- - If you sell shares out of a non-IRA retirement account and you are eligible   
  to roll the sale proceeds into another retirement plan, we will withhold for  
  federal income tax purposes a portion of the sale proceeds unless you         
  transfer all of it to an eligible retirement plan.                            

  ((Side Box))                                                                  
 There may be special distribution requirements that apply to retirement        
 accounts.  For instructions on                                                 
- - Roth and Traditional IRA accounts, call                                       
  1-800-368-3863, and                                                           
- - SIMPLE Plan, 403(b)(7), Keogh, SEP-IRA , Pension or Profit Sharing Accounts,  
  call                                                                          
  1-800-368-2882.                                                               

  ((Side Box))                                                                  
SIGNATURE GUARANTEES help ensure that major transactions or changes to your 
account are in fact authorized by you. For example, we require a signature 
guarantee on written redemption requests for more than $50,000.  You can obtain
 a signature guarantee for a nominal fee from most banks, brokerage firms, 
and other financial institutions.  A notary public stamp or seal cannot be 
substituted for a signature guarantee.

 ADDITIONAL POLICIES                                                            

 TELEPHONE TRANSACTIONS                                                         
 Once you place a telephone transaction request, it cannot be canceled or       
 modified. We use reasonable procedures to confirm that telephone transaction   
 requests are genuine.  We may be responsible if we do not follow these         
 procedures.  You are responsible for losses resulting from fraudulent or       
 unauthorized instructions received over the telephone, provided we reasonably  
 believe the instructions were genuine. During times of unusual market          
 activity, our phones may be busy and you may experience a delay placing a      
 telephone request. During these times, consider trying STRONG DIRECT(R), our   
 24-hour automated telephone system, by calling 1-800-368-7550, or STRONG       
 NETDIRECT(R), our on-line transaction center, by visiting WWW.STRONGFUNDS.COM. 
 Please remember that you must have telephone redemption as an option on your   
 account to redeem shares through STRONG DIRECT(R) or STRONG NETDIRECT(R).      

                                                                               
 INVESTING THROUGH A THIRD PARTY                                                
 If you invest through a third party (rather than directly with Strong Funds),  
 the policies and fees may be different than described in this prospectus.      
 Banks, brokers, 401(k) plans, financial advisors, and financial supermarkets   
 may charge transaction fees and may set different minimum investments or       
 limitations on buying or selling shares.  Consult a representative of your     
 plan or financial institution if you are not sure.                             

 DISTRIBUTIONS                                                                  

 DISTRIBUTION POLICY                                                            
 For the GLOBAL HIGH-YIELD BOND FUND and the INTERNATIONAL BOND FUND, your fund 
 generally pays you dividends from net investment income quarterly and          
 distributes any net capital gains that it realizes annually. For the           
 international stock funds, your fund generally pays you dividends from net     
 investment income and distributes any net capital gains that it realizes       
 annually.                                                                      

 For the SHORT-TERM GLOBAL BOND FUND, your fund generally pays you dividends    
 from net investment income monthly and distributes any net capital gains that  
 it realizes annually.  Dividends are declared on each day NAV is calculated,   
 except for bank holidays. Dividends earned on weekends, holidays, and days     
 when the fund's NAV is not calculated are declared on the first day preceding  
 these days that the fund's NAV is calculated.  Your investment generally earns 
 dividends from the first business day after we accept your purchase order.     

 REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS                       
 Your dividends and capital gain distributions will be automatically reinvested 
 in additional shares of the fund, unless you choose otherwise.  Your other     
 options are to receive checks for these payments, have them automatically      
 invested in another Strong Fund, or have them deposited into your bank         
 account.                                                                       

 EFFECTS OF FOREIGN CURRENCY ON DIVIDENDS FROM INTERNATIONAL BOND FUNDS         
 Foreign currency losses could cause an international bond fund's dividends to  
 exceed its net investment income in any year.  If this happens, all or a       
 portion of those dividends may be treated as a return of capital to its        
 shareholders.  To guard against a return of capital, we may adjust an          
 international bond fund's dividends to take currency fluctuations into account 
 - this may cause dividends to vary or be suspended.  Although a return of      
 capital is not taxed, it does reduce the cost basis of your shares.            

 TAXES                                                                          

 TAXABLE DISTRIBUTIONS                                                          
 Any net investment income and net short-term capital gain distributions you    
 receive are taxable as ordinary dividend income at your income tax rate.       
 Distributions of net capital gains are generally taxable as long-term capital  
 gains.  This is generally true no matter how long you have owned your shares   
 and whether you reinvest your distributions or take them in cash.  You may     
 also have to pay taxes when you exchange or sell shares if your shares have    
 increased in value since you bought them.                                      

  ((Side Box))                                                                  
  Generally, if your investment is in a traditional IRA or other TAX-DEFERRED
  ACCOUNT, your dividends and distributions will not be taxed at the time
  are paid, but instead at the time you withdraw them from your account.

 RETURN OF CAPITAL                                                              
 If your fund's (1) income distributions exceed its net investment income and   
 net short-term capital gains or (2) capital gain distributions exceed its net  
 capital gains in any year, all or a portion of those distributions may be      
 treated as a return of capital to you. Although a return of capital is not     
 taxed, it will reduce the cost basis of your shares.                           

                                                                               
 YEAR-END STATEMENT                                                             
 To assist you in tax preparation, after the end of each calendar year, we send 
 you a statement of your fund's ordinary dividends and net capital gain         
 distributions (Form 1099).                                                     

 BACKUP WITHHOLDING                                                             
 By law, we must withhold 31% of your distributions and proceeds if (1) you are 
 subject to backup withholding or (2) you have not provided us with complete    
 and correct taxpayer information such as your Social Security Number (SSN) or  
 Tax Identification Number (TIN).                                               

  ((Side Box))                                                                  
Unless your investment is in a tax-deferred retirement account such as an IRA, 
YOU MAY WANT TO AVOID: Investing a large amount in a fund close to the end of 
the calendar year.  If the fund makes a capital gains distribution, you may 
receive some of your investment back as a taxable distribution.
Selling shares of a mutual fund at a loss and then investing in the same fund 
within 30 days before or after the sale.  This is called a wash sale and you 
will not be allowed to claim a tax loss on the transaction.

((Side Box))                                                                  
COST BASIS is the amount that you paid for the shares. When you sell shares,
 you subtract the cost basis from the sale proceeds to determine whether you 
realized an investment gain or loss.   For example, if you bought a share of a 
fund at $10 and you sold it two years later at $11, your cost basis on the 
share is $10 and your gain is $1.      

 Because everyone's tax situation is unique, you should consult your tax        
 professional for assistance.                                                   

 SERVICES FOR INVESTORS                                                         

 Strong provides you with a variety of services to help you manage your         
 investment.  For more details, call 1-800-368-3863, 24 hours a day, 7 days a   
 week.  These services include:                                                 

 STRONG DIRECT (R) AUTOMATED TELEPHONE SYSTEM                                   
 Our 24-hour automated response system enables you to use a touch-tone phone to 
 access current share prices                                                    
  (1-800-368-3550), to access fund and account information (1-800-368-5550),    
 and to make purchases, exchanges, or redemptions among your existing accounts  
 if you have elected these services (1-800-368-7550).  Passwords help to        
 protect your account information.                                              

 STRONG ON-LINE                                                                 
 Visit us on-line at WWW.STRONGFUNDS.COM to access your fund's performance and  
 portfolio holding information.  In addition to general information about       
 investing, Strong On-line offers daily performance information, portfolio      
 manager commentaries, and information on available account options.            

 STRONGMAIL                                                                     
 If you register for StrongMail at WWW.STRONGMAIL.COM, you will receive your    
 fund's closing price by e-mail each business day.  In addition, StrongMail     
 offers market news and updates throughout the day.                             

 STRONG NETDIRECT(R)                                                            
 If you are a shareholder, you may use netDirect(R) to access your account      
 information 24 hours a day from your personal computer. Strong netDirect(R)    
 allows you to view account history, account balances, and recent dividend      
 activity, as well as to make purchases, exchanges, or redemptions among your   
 existing accounts if you have elected these services. Encryption technology    
 and passwords help to protect your account information.   You may register to  
 use netDirect(R) at WWW.STRONGFUNDS.COM.                                       

 STRONG EXCHANGE PRIVILEGE                                                      
 You may exchange shares of a Strong Fund for shares of another Strong Fund,    
 either in writing, by telephone, or through your personal computer, if the     
 accounts are identically registered (with the same name, address, and taxpayer 
 identification number).  Please ask us for the appropriate prospectus and read 
 it before investing in any of the Strong Funds.  Remember, an exchange is      
 considered a sale and a purchase of fund shares for tax purposes and may       
 result in a capital gain or loss. Some Strong Funds that you may want to       
 exchange into may charge a redemption fee of 0.50% to 1.00% on the sale of     
 shares held for less than six months.                                          

 STRONG CHECKWRITING                                                            
 Strong Funds offers checkwriting on most of its bond and money market funds.   
 Checks written on your account are subject to this prospectus and the terms    
 and conditions found in the front of the book of checks.                       

 STRONG AUTOMATIC INVESTMENT SERVICES                                           
 You may invest automatically in several ways, some of which may be subject to  
 additional restrictions or conditions.                                         

 AUTOMATIC INVESTMENT PLAN (AIP)                                                
 This plan allows you to make regular, automatic investments from your bank     
 checking or savings account.                                                   

 AUTOMATIC EXCHANGE PLAN                                                        
 This plan allows you to make regular, automatic exchanges from one eligible    
 Strong Fund to another.                                                        

 AUTOMATIC DIVIDEND REINVESTMENT                                                
 Your dividends and capital gains will be automatically reinvested in           
 additional shares of the Strong Fund that paid them, unless you choose         
 otherwise.  Your other options are to receive checks for these payments, have  
 them automatically invested in another Strong Fund, or have them deposited     
 into your bank account.                                                        

 NO-MINIMUM INVESTMENT PLAN                                                     
 This plan allows you to invest without meeting the minimum initial investment  
 requirements if you invest monthly and you participate in the AIP, Automatic   
 Exchange Plan, or Payroll Direct Deposit Plan.                                 

 PAYROLL DIRECT DEPOSIT PLAN                                                    
 This plan allows you to send all or a portion of your paycheck, social         
 security check, military allotment, or annuity payment to the Strong Funds of  
 your choice.                                                                   

 SYSTEMATIC WITHDRAWAL PLAN                                                     
 This plan allows you to redeem a fixed sum from your account on a regular      
 basis.  Payments may be sent electronically to a bank account or as a check to 
 you or anyone you properly designate.                                          

                                                                               
 STRONG RETIREMENT PLAN SERVICES                                                
 We offer a wide variety of retirement plans for individuals and institutions,  
 including large and small businesses.  For information on:                     

- - INDIVIDUAL RETIREMENT PLANS, including Traditional IRAs, Roth IRAs, and       
  SEP-IRAs (for one-person businesses), call                                    
  1-800-368-3863.                                                               
- - QUALIFIED RETIREMENT PLANS, including 401(k) plans, SIMPLEs, SEP-IRAs,        
  Keoghs, 403(b)(7), and pension and profit sharing plans, call 1-800-368-2882. 

 SOME OF THESE SERVICES MAY BE SUBJECT TO ADDITIONAL RESTRICTIONS OR            
 CONDITIONS.  CALL 1-800-368-3863 FOR MORE INFORMATION.                         

                                       
                                        


 RESERVED RIGHTS                                                                

 We reserve the right to:                                                       

- - Refuse, change, discontinue, or temporarily suspend account services,         
  including purchase, exchange, or telephone and netDirect(R) redemption        
  privileges, for any reason.                                                   
                                                                                
- - Reject any purchase request for any reason including exchanges from other     
  Strong Funds.  Generally, we do this if the purchase or exchange is           
  disruptive to the efficient management of a fund (due to the timing of the    
  investment or an investor's history of excessive trading).                    
                                                                                
- - Change the minimum or maximum investment amounts.                             
                                                                                
- - Delay sending out redemption proceeds for up to seven days (this generally    
  only applies to very large redemptions without notice, excessive trading, or  
  during unusual market conditions).                                            
                                                                                
- - Suspend redemptions or postpone payments when the NYSE is closed for any      
  reason other than its usual weekend or holiday closings, when trading is      
  restricted by the SEC, or under any emergency circumstances.                  
                                                                                
- - Make a redemption-in-kind (a payment in portfolio securities rather than      
  cash) if the amount you are redeeming is in excess of the lesser of (1)       
  $250,000 or (2) 1% of the fund's assets.  Generally, redemption-in-kind is    
  used when large redemption requests may cause harm to the fund and its        
  shareholders. This includes redemptions made by checkwriting.                 
                                                                                
- - Close any account that does not meet minimum investment requirements.  We     
  will give you notice and 60 days to begin an automatic investment program or  
  to increase your balance to the required minimum.                             
                                                                                
- - Reject any purchase or redemption request that does not contain all required  
  documentation.                                                                

                                       
                                        

FOR MORE INFORMATION                                                            

More information is available upon request at no charge, including:             

SHAREHOLDER REPORTS: Additional information that contains a letter from         
management, discusses recent market conditions, economic trends and investment  
strategies that significantly affected your investment's performance during the 
last fiscal year, and lists portfolio holdings.                                 

STATEMENT OF ADDITIONAL INFORMATION (SAI): More details about investment        
policies and techniques.  A current SAI is on file with the SEC and is          
incorporated into this prospectus by reference. This means that the SAI is      
legally considered a part of this prospectus even though it is not physically   
contained within this prospectus.                                               

To request information or to ask questions:                                     

BY TELEPHONE                         BY DEVICE FOR HEARING-IMPAIRED (TDD)       
(414) 359-1400 or (800) 368-3863     (800) 999-2780              

BY MAIL                              BY OVERNIGHT DELIVERY                      
Strong Funds                         Strong Funds                          
P.O. Box 2936                        900 Heritage Reserve                 
Milwaukee, Wisconsin 53201-2936      Menomonee Falls, Wisconsin   53051  

ON THE INTERNET                      BY E-MAIL                         
VIEW ONLINE OR DOWNLOAD DOCUMENTS:   [email protected] 
Strong Funds: WWW.STRONGFUNDS.COM                                               
SEC*: www.sec.gov                                                               

To reduce the volume of mail you receive, only one copy of most financial       
reports and prospectuses is mailed to your household. Call 1-800-368-3863 if    
you wish to receive additional copies, free of charge.                          

This prospectus is not an offer to sell securities in any place where it would  
be illegal to do so.                                                            

*You can also obtain copies by visiting the SEC's Public Reference Room in      
Washington, D.C. or by sending your request and a duplicating fee to the        
Securities and Exchange Commission's Public Reference Section, Washington, D.C. 
20549-6009. You can call 1-800-SEC-0330 for information on the operation of the 
Public Reference Room.                                                          

Strong Global High-Yield Bond Fund, a series of Strong International Income     
Funds, Inc., SEC file number 811-8318                                           
Strong International Bond Fund , a series of Strong International Income Funds, 
Inc., SEC file number 811-8318                                                  
Strong Short-Term Global Bond Fund, Inc., SEC file number 811-8320              

Strong Asia Pacific Fund, Inc., SEC file number 811-8098                        
Strong Foreign MajorMarketssm   Fund, a series of Strong International Equity   
Funds, Inc., SEC file number 811-6524                                           
Strong International Stock Fund, a series of Strong International Equity Funds, 
Inc., SEC file number 811-6524                                                  
Strong Overseas Fund, a series of Strong International Equity Funds, Inc., SEC  
file number 811-6524                                                            


<PAGE>

                  STATEMENT OF ADDITIONAL INFORMATION ("SAI")                   


STRONG ASIA PACIFIC FUND                                                        
   
STRONG FOREIGN MAJORMARKETSSM FUND, A SERIES FUND OF STRONG INTERNATIONAL       
EQUITY FUNDS, INC.                                                              
STRONG GLOBAL HIGH-YIELD BOND FUND, A SERIES FUND OF STRONG INTERNATIONAL       
INCOME FUNDS, INC.                                                              
STRONG INTERNATIONAL BOND FUND, A SERIES FUND OF STRONG INTERNATIONAL INCOME    
FUNDS, INC.                                                                     
STRONG INTERNATIONAL STOCK FUND, A SERIES FUND OF STRONG INTERNATIONAL EQUITY   
FUNDS, INC.                                                                     
STRONG OVERSEAS FUND, A SERIES FUND OF STRONG INTERNATIONAL EQUITY FUNDS, INC.  
    
STRONG SHORT-TERM GLOBAL BOND FUND                                              


P.O. Box 2936                                                                   
Milwaukee, Wisconsin 53201                                                      
Telephone: (414) 359-1400                                                       
Toll-Free: (800) 368-3863                                                       
e-mail: [email protected]                                                
   
Web Site:  http://www.strongfunds.com                                           
    

   
Throughout this SAI, "the Fund" is intended to refer to each Fund listed above, 
unless otherwise indicated.  This SAI is not a Prospectus and should be read    
together with the Prospectus for the Fund dated March 1, 1999.   Requests for   
copies of the Prospectus should be made by calling any number listed above.     
The financial statements appearing in the Annual Report, which accompanies this 
SAI, are incorporated into this SAI by reference.                               
    

























   
                                 March 1, 1999                                  
    


<PAGE>

   
TABLE OF CONTENTS                                                           PAGE

INVESTMENT RESTRICTIONS........................................................3
INVESTMENT POLICIES AND TECHNIQUES.............................................5
Borrowing......................................................................5
Convertible Securities.........................................................5
Depositary Receipts............................................................5
Derivative Instruments.........................................................6
Duration......................................................................15
Foreign Investment Companies..................................................16
Foreign Securities............................................................16
High-Yield (High-Risk) Securities.............................................16
Illiquid Securities...........................................................18
Lending of Portfolio Securities...............................................19
Loan Interests................................................................19
Maturity......................................................................20
Mortgage- and Asset-Backed Debt Securities....................................20
Municipal Obligations.........................................................21
Repurchase Agreements.........................................................22
Reverse Repurchase Agreements and Mortgage Dollar Rolls.......................22
Short Sales...................................................................23
Small and Medium Companies....................................................23
Sovereign Debt................................................................23
Variable- or Floating-Rate Securities.........................................25
Warrants......................................................................26
When-Issued and Delayed-Delivery Securities...................................26
Zero-Coupon, Step-Coupon, and Pay-in-Kind Securities..........................27
DIRECTORS AND OFFICERS........................................................27
PRINCIPAL SHAREHOLDERS........................................................29
INVESTMENT ADVISOR............................................................29
DISTRIBUTOR...................................................................32
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................33
CUSTODIAN.....................................................................36
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT..................................37
TAXES.........................................................................38
DETERMINATION OF NET ASSET VALUE..............................................40
ADDITIONAL SHAREHOLDER INFORMATION............................................41
ORGANIZATION..................................................................43
SHAREHOLDER MEETINGS..........................................................43
PERFORMANCE INFORMATION.......................................................43
GENERAL INFORMATION...........................................................50
PORTFOLIO MANAGEMENT..........................................................53
INDEPENDENT ACCOUNTANTS.......................................................54
LEGAL COUNSEL.................................................................54
FINANCIAL STATEMENTS..........................................................54
APPENDIX A - ASSET COMPOSITION BY BOND RATINGS................................55
APPENDIX B - DEFINITION OF BOND RATINGS.......................................56
    
No person has been authorized to give any information or to make any            
representations other than those contained in this SAI and its corresponding    
Prospectus, and if given or made, such information or representations may not   
be relied upon as having been authorized.  This SAI does not constitute an      
offer to sell securities.                                                       

   

INVESTMENT RESTRICTIONS                                                        
    

FUNDAMENTAL INVESTMENT LIMITATIONS                                              

   
The following are the Fund's fundamental investment limitations which, along    
with the Fund's investment objective (which is described in the Prospectus),    
cannot be changed without shareholder approval.  To obtain approval, a majority 
of the Fund's outstanding voting shares must vote for the change.  A majority   
of the Fund's outstanding voting securities means the vote of the lesser of:    
(1) 67% or more of the voting securities present, if more than 50% of the       
outstanding voting securities are present or represented, or (2)  more than 50% 
of the outstanding voting shares.                                               
    

Unless indicated otherwise below, the Fund:                                     

1.     May not with respect to 75% of its total assets, purchase the securities 
of any issuer (except securities issued or guaranteed by the U.S. government or 
its agencies or instrumentalities) if, as a result, (1) more than 5% of the     
Fund's total assets would be invested in the securities of that issuer, or (2)  
the Fund would hold more than 10% of the outstanding voting securities of that  
issuer.                                                                         

2.     May (1) borrow money from banks and (2) make other investments or engage 
in other transactions permissible under the Investment Company Act of 1940      
("1940 Act") which may involve a borrowing, provided that the combination of    
(1) and (2) shall not exceed 33 1/3% of the value of the Fund's total assets    
(including the amount borrowed), less the Fund's liabilities (other than        
borrowings), except that the Fund may borrow up to an additional 5% of its      
total assets (not including the amount borrowed) from a bank for temporary or   
emergency purposes (but not for leverage or the purchase of investments).  The  
Fund may also borrow money from the other Strong Funds or other persons to the  
extent permitted by applicable law.                                             

3.     May not issue senior securities, except as permitted under the 1940 Act. 

4.     May not act as an underwriter of another issuer's securities, except to  
the extent that the Fund may be deemed to be an underwriter within the meaning  
of the Securities Act of 1933 in connection with the purchase and sale of       
portfolio securities.                                                           

5.     May not purchase or sell physical commodities unless acquired as a       
result of ownership of securities or other instruments (but this shall not      
prevent the Fund from purchasing or selling options, futures contracts, or      
other derivative instruments, or from investing in securities or other          
instruments backed by physical commodities).                                    

6.     May not make loans if, as a result, more than 33 1/3% of the Fund's      
total assets would be lent to other persons, except through (1) purchases of    
debt securities or other debt instruments, or (2) engaging in repurchase        
agreements.                                                                     

7.     May not purchase the securities of any issuer if, as a result, more than 
25% of the Fund's total assets would be invested in the securities of issuers,  
the principal business activities of which are in the same industry.            

8.     May not purchase or sell real estate unless acquired as a result of      
ownership of securities or other instruments (but this shall not prohibit the   
Fund from purchasing or selling securities or other instruments backed by real  
estate or of issuers engaged in real estate activities).                        

9.     May, notwithstanding any other fundamental investment policy or          
restriction, invest all of its assets in the securities of a single open-end    
management investment company with substantially the same fundamental           
investment objective, policies, and restrictions as the Fund.                   

With respect to Short-Term Global Bond Fund, Fundamental Policy No. 1 does not  
apply because the Fund is non-diversified.                                      

With respect to International Bond Fund, Fundamental Policy No. 1 does not      
apply because the Fund is non-diversified.                                      

With respect to Global High-Yield Bond Fund, Fundamental Policy No. 1 does not  
apply because the Fund is non-diversified.                                      
NON-FUNDAMENTAL OPERATING POLICIES                                              

The following are the Fund's non-fundamental operating policies which may be    
changed by the Fund's Board of Directors without shareholder approval.          

   
Unless indicated otherwise below, the Fund may not:                             
    

1.     Sell securities short, unless the Fund owns or has the right to obtain   
securities equivalent in kind and amount to the securities sold short, or       
unless it covers such short sale as required by the current rules and positions 
of the Securities and Exchange Commission ("SEC") or its staff, and provided    
that transactions in options, futures contracts, options on futures contracts,  
or other derivative instruments are not deemed to constitute selling securities 
short.                                                                          

2.     Purchase securities on margin, except that the Fund may obtain such      
short-term credits as are necessary for the clearance of transactions; and      
provided that margin deposits in connection with futures contracts, options on  
futures contracts, or other derivative instruments shall not constitute         
purchasing securities on margin.                                                

3.     Invest in illiquid securities if, as a result of such investment, more   
than 15% (10% with respect to a money fund) of its net assets would be invested 
in illiquid securities, or such other amounts as may be permitted under the     
1940 Act.                                                                       

4.     Purchase securities of other investment companies except in compliance   
with the 1940 Act and applicable state law.                                     

5.     Invest all of its assets in the securities of a single open-end          
investment management company with substantially the same fundamental           
investment objective, restrictions and policies as the Fund.                    

6.     Engage in futures or options on futures transactions which are           
impermissible pursuant to Rule 4.5 under the Commodity Exchange Act and, in     
accordance with Rule 4.5, will use futures or options on futures transactions   
solely for bona fide hedging transactions (within the meaning of the Commodity  
Exchange Act), provided, however,  that the Fund may, in addition to bona fide  
hedging transactions, use futures and options on futures transactions if the    
aggregate initial margin and premiums required to establish such positions,     
less the amount by which any such options positions are in the money (within    
the meaning of the Commodity Exchange Act), do not exceed 5% of the Fund's net  
assets.                                                                         

7.     Borrow money except (1) from banks or (2) through reverse repurchase     
agreements or mortgage dollar rolls, and will not purchase securities when bank 
borrowings exceed 5% of its total assets.                                       

8.     Make any loans other than loans of portfolio securities, except through  
(1) purchases of debt securities or other debt instruments, or (2) engaging in  
repurchase agreements.                                                          

Unless noted otherwise, if a percentage restriction is adhered to at the time   
of investment, a later increase or decrease in percentage resulting from a      
change in the Fund's assets (I.E. due to cash inflows or redemptions) or in     
market value of the investment or the Fund's assets will not constitute a       
violation of that restriction.                                                  

                                                                               
   
                       INVESTMENT POLICIES AND TECHNIQUES                       
    

The following information supplements the discussion of the Fund's investment   
objective, policies, and techniques described in the Prospectus.                

BORROWING                                                                       

The Fund may borrow money from banks and make other investments or engage in    
other transactions permissible under the 1940 Act which may be considered a     
borrowing (such as mortgage dollar rolls and reverse repurchase agreements).    
However, the Fund may not purchase securities when bank borrowings exceed 5% of 
the Fund's total assets.  Presently, the Fund only intends to borrow from banks 
for temporary or emergency purposes.                                            

The Fund has established a line-of-credit ("LOC") with certain banks by which   
it may borrow funds for temporary or emergency purposes.  A borrowing is        
presumed to be for temporary or emergency purposes if it is repaid by the Fund  
within 60 days and is not extended or renewed.  The Fund intends to use the LOC 
to meet large or unexpected redemptions that would otherwise force the Fund to  
liquidate securities under circumstances which are unfavorable to the Fund's    
remaining shareholders.  The Fund pays a commitment fee to the banks for the    
LOC.                                                                            

CONVERTIBLE SECURITIES                                                          

Convertible securities are bonds, debentures, notes, preferred stocks, or other 
securities that may be converted into or exchanged for a specified amount of    
common stock of the same or a different issuer within a particular period of    
time at a specified price or formula.  A convertible security entitles the      
holder to receive interest normally paid or accrued on debt or the dividend     
paid on preferred stock until the convertible security matures or is redeemed,  
converted, or exchanged.  Convertible securities have unique investment         
characteristics in that they generally (1) have higher yields than common       
stocks, but lower yields than comparable non-convertible securities, (2) are    
less subject to fluctuation in value than the underlying stock since they have  
fixed income characteristics, and (3) provide the potential for capital         
appreciation if the market price of the underlying common stock increases.      
Most convertible securities currently are issued by U.S. companies, although a  
substantial Eurodollar convertible securities market has developed, and the     
markets for convertible securities denominated in local currencies are          
increasing.                                                                     

The value of a convertible security is a function of its "investment value"     
(determined by its yield in comparison with the yields of other securities of   
comparable maturity and quality that do not have a conversion privilege) and    
its "conversion value" (the security's worth, at market value, if converted     
into the underlying common stock).  The investment value of a convertible       
security is influenced by changes in interest rates, with investment value      
declining as interest rates increase and increasing as interest rates decline.  
The credit standing of the issuer and other factors also may have an effect on  
the convertible security's investment value.  The conversion value of a         
convertible security is determined by the market price of the underlying common 
stock.  If the conversion value is low relative to the investment value, the    
price of the convertible security is governed principally by its investment     
value.  Generally, the conversion value decreases as the convertible security   
approaches maturity.  To the extent the market price of the underlying common   
stock approaches or exceeds the conversion price, the price of the convertible  
security will be increasingly influenced by its conversion value.  A            
convertible security generally will sell at a premium over its conversion value 
by the extent to which investors place value on the right to acquire the        
underlying common stock while holding a fixed income security.                  

A convertible security may be subject to redemption at the option of the issuer 
at a price established in the convertible security's governing instrument.  If  
a convertible security is called for redemption, the Fund will be required to   
permit the issuer to redeem the security, convert it into the underlying common 
stock, or sell it to a third party.                                             

DEPOSITARY RECEIPTS                                                             

The Fund may invest in foreign securities by purchasing depositary receipts,    
including American Depositary Receipts ("ADRs") and European Depositary         
Receipts ("EDRs"), or other securities convertible into securities of foreign   
issuers.  These securities may not necessarily be denominated in the same       
currency as the securities into which they may be converted.  Generally, ADRs,  
in registered form, are denominated in U.S. dollars and are designed for use in 
the U.S. securities markets, while EDRs, in bearer form, may be denominated in  
other currencies and are designed for use in the European securities markets.   
ADRs are receipts typically issued by a U.S. bank or trust company evidencing   
ownership of the underlying securities.  EDRs are European receipts evidencing  
a similar arrangement.  For purposes of the Fund's investment policies, ADRs    
and EDRs are deemed to have the same classification as the underlying           
securities they represent, except that ADRs and EDRs shall be treated as        
indirect foreign investments.  For example, an ADR or EDR representing          
ownership of common stock will be treated as common stock.  Depositary receipts 
do not eliminate all of the risks associated with directly investing in the     
securities of foreign issuers.                                                  

ADR facilities may be established as either "unsponsored" or "sponsored." While 
ADRs issued under these two types of facilities are in some respects similar,   
there are distinctions between them relating to the rights and obligations of   
ADR holders and the practices of market participants.                           

A depositary may establish an unsponsored facility without participation by (or 
even necessarily the permission of) the issuer of the deposited securities,     
although typically the depositary requests a letter of non-objection from such  
issuer prior to the establishment of the facility.  Holders of unsponsored ADRs 
generally bear all the costs of such facility.  The depositary usually charges  
fees upon the deposit and withdrawal of the deposited securities, the           
conversion of dividends into U.S. dollars, the disposition of non-cash          
distributions, and the performance of other services.  The depositary of an     
unsponsored facility frequently is under no obligation to pass through voting   
rights to ADR holders in respect of the deposited securities.  In addition, an  
unsponsored facility is generally not obligated to distribute communications    
received from the issuer of the deposited securities or to disclose material    
information about such issuer in the U.S. and there may not be a correlation    
between such information and the market value of the depositary receipts.       

Sponsored ADR facilities are created in generally the same manner as            
unsponsored facilities, except that the issuer of the deposited securities      
enters into a deposit agreement with the depositary.  The deposit agreement     
sets out the rights and responsibilities of the issuer, the depositary, and the 
ADR holders.  With sponsored facilities, the issuer of the deposited securities 
generally will bear some of the costs relating to the facility (such as         
dividend payment fees of the depositary), although ADR holders continue to bear 
certain other costs (such as deposit and withdrawal fees).  Under the terms of  
most sponsored arrangements, depositories agree to distribute notices of        
shareholder meetings and voting instructions, and to provide shareholder        
communications and other information to the ADR holders at the request of the   
issuer of the deposited securities.                                             

DERIVATIVE INSTRUMENTS                                                          

IN GENERAL.  The Fund may use derivative instruments for any lawful purpose     
consistent with its investment objective such as hedging or managing risk.      
Derivative instruments are commonly defined to include securities or contracts  
whose values depend on (or "derive" from) the value of one or more other        
assets, such as securities, currencies, or commodities.  These "other assets"   
are commonly referred to as "underlying assets."                                

A derivative instrument generally consists of, is based upon, or exhibits       
characteristics similar to OPTIONS or FORWARD CONTRACTS. Options and forward    
contracts are considered to be the basic "building blocks" of derivatives. For  
example, forward-based derivatives include forward contracts, swap contracts,   
as well as exchange-traded futures. Option-based derivatives include privately  
negotiated, over-the-counter ("OTC") options (including caps, floors, collars,  
and options on forward and swap contracts) and exchange-traded options on       
futures. Diverse types of derivatives may be created by combining options or    
forward contracts in different ways, and by applying these structures to a wide 
range of underlying assets.                                                     

An option is a contract in which the "holder" (the buyer) pays a certain amount 
("premium") to the "writer" (the seller) to obtain the right, but not the       
obligation, to buy from the writer (in a "call") or sell to the writer (in a    
"put") a specific asset at an agreed upon price at or before a certain time.    
The holder pays the premium at inception and has no further financial           
obligation.  The holder of an option-based derivative generally will benefit    
from favorable movements in the price of the underlying asset but is not        
exposed to corresponding losses due to adverse movements in the value of the    
underlying asset.  The writer of an option-based derivative generally will      
receive fees or premiums but generally is exposed to losses due to changes in   
the value of the underlying asset.                                              

A forward is a sales contract between a buyer (holding the "long" position) and 
a seller (holding the "short" position) for an asset with delivery deferred     
until a future date.  The buyer agrees to pay a fixed price at the agreed       
future date and the seller agrees to deliver the asset.  The seller hopes that  
the market price on the delivery date is less than the agreed upon price, while 
the buyer hopes for the contrary. The change in value of a forward-based        
derivative generally is roughly proportional to the change in value of the      
underlying asset.                                                               

HEDGING.  The Fund may use derivative instruments to protect against possible   
adverse changes in the market value of securities held in, or are anticipated   
to be held in, its portfolio.  Derivatives may also be used to "lock-in"        
realized but unrecognized gains in the value of its portfolio securities.       
Hedging strategies, if successful, can reduce the risk of loss by wholly or     
partially offsetting the negative effect of unfavorable price movements in the  
investments being hedged.  However, hedging strategies can also reduce the      
opportunity for gain by offsetting the positive effect of favorable price       
movements in the hedged investments.  To the extent that a hedge matures prior  
to or after the disposition of the investment subject to the hedge, any gain or 
loss on the hedge will be realized earlier or later than any offsetting gain or 
loss on the hedged investment.                                                  

MANAGING RISK.  The Fund may also use derivative instruments to manage the      
risks of its portfolio.  Risk management strategies include, but are not        
limited to, facilitating the sale of portfolio securities, managing the         
effective maturity or duration of debt obligations in its portfolio,            
establishing a position in the derivatives markets as a substitute for buying   
or selling certain securities, or creating or altering exposure to certain      
asset classes, such as equity, debt, or foreign securities.  The use of         
derivative instruments may provide a less expensive, more expedient or more     
specifically focused way to invest than "traditional" securities (I.E., stocks  
or bonds) would.                                                                

EXCHANGE AND OTC DERIVATIVES.  Derivative instruments may be exchange-traded or 
traded in OTC transactions between private parties.  Exchange-traded            
derivatives are standardized options and futures contracts traded in an auction 
on the floor of a regulated exchange.  Exchange contracts are generally very    
liquid.  The exchange clearinghouse is the counterparty of every contract.      
Thus, each holder of an exchange contract bears the credit risk of the          
clearinghouse (and has the benefit of its financial strength) rather than that  
of a particular counterparty.  OTC transactions are subject to additional       
risks, such as the credit risk of the counterparty to the instrument, and are   
less liquid than exchange-traded derivatives since they often can only be       
closed out with the other party to the transaction.                             

RISKS AND SPECIAL CONSIDERATIONS.  The use of derivative instruments involves   
risks and special considerations as described below.  Risks pertaining to       
particular derivative instruments are described in the sections that follow.    

   
(1)     MARKET RISK.  The primary risk of derivatives is the same as the risk   
of the underlying assets, namely that the value of the underlying asset may go  
up or down.  Adverse movements in the value of an underlying asset can expose   
the Fund to losses.  Derivative instruments may include elements of leverage    
and, accordingly, the fluctuation of the value of the derivative instrument in  
relation to the underlying asset may be magnified.  The successful use of       
derivative instruments depends upon a variety of factors, particularly the      
ability of the Advisor to predict movements of the securities, currencies, and  
commodity markets, which requires different skills than predicting changes in   
the prices of individual securities.  There can be no assurance that any        
particular strategy adopted will succeed.  The Advisor's decision to engage in  
a derivative instrument will reflect its judgment that the derivative           
transaction will provide value to the Fund and its shareholders and is          
consistent with the Fund's objectives, investment limitations, and operating    
policies.  In making such a judgment, the Advisor will analyze the benefits and 
risks of the derivative transaction and weigh them in the context of the Fund's 
entire portfolio and investment objective.                                      
    

(2)     CREDIT RISK.  The Fund will be subject to the risk that a loss may be   
sustained as a result of the failure of a counterparty to comply with the terms 
of a derivative instrument.  The counterparty risk for exchange-traded          
derivative instruments is generally less than for privately negotiated or OTC   
derivative instruments, since generally a clearing agency, which is the issuer  
or counterparty to each exchange-traded instrument, provides a guarantee of     
performance.  For privately negotiated instruments, there is no similar         
clearing agency guarantee.  In all transactions, the Fund will bear the risk    
that the counterparty will default, and this could result in a loss of the      
expected benefit of the derivative transaction and possibly other losses.  The  
Fund will enter into transactions in derivative instruments only with           
counterparties that the Advisor reasonably believes are capable of performing   
under the contract.                                                             

(3)     CORRELATION RISK.  When a derivative transaction is used to completely  
hedge another position, changes in the market value of the combined position    
(the derivative instrument plus the position being hedged) result from an       
imperfect correlation between the price movements of the two instruments.  With 
a perfect hedge, the value of the combined position remains unchanged for any   
change in the price of the underlying asset.  With an imperfect hedge, the      
values of the derivative instrument and its hedge are not perfectly correlated. 
Correlation risk is the risk that there might be imperfect correlation, or even 
no correlation, between price movements of an instrument and price movements of 
investments being hedged.  For example, if the value of a derivative            
instruments used in a short hedge (such as writing a call option, buying a put  
option, or selling a futures contract) increased by less than the decline in    
value of the hedged investments, the hedge would not be perfectly correlated.   
Such a lack of correlation might occur due to factors unrelated to the value of 
the investments being hedged, such as speculative or other pressures on the     
markets in which these instruments are traded.  The effectiveness of hedges     
using instruments on indices will depend, in part, on the degree of correlation 
between price movements in the index and price movements in the investments     
being hedged.                                                                   

(4)     LIQUIDITY RISK.  Derivatives are also subject to liquidity risk.        
Liquidity risk is the risk that a derivative instrument cannot be sold, closed  
out, or replaced quickly at or very close to its fundamental value.  Generally, 
exchange contracts are very liquid because the exchange clearinghouse is the    
counterparty of every contract.  OTC transactions are less liquid than          
exchange-traded derivatives since they often can only be closed out with the    
other party to the transaction.  The Fund might be required by applicable       
regulatory requirement to maintain assets as "cover," maintain segregated       
accounts, and/or make margin payments when it takes positions in derivative     
instruments involving obligations to third parties (I.E., instruments other     
than purchased options).  If the Fund was unable to close out its positions in  
such instruments, it might be required to continue to maintain such assets or   
accounts or make such payments until the position expired, matured, or was      
closed out.  The requirements might impair the Fund's ability to sell a         
portfolio security or make an investment at a time when it would otherwise be   
favorable to do so, or require that the Fund sell a portfolio security at a     
disadvantageous time.  The Fund's ability to sell or close out a position in an 
instrument prior to expiration or maturity depends on the existence of a liquid 
secondary market or, in the absence of such a market, the ability and           
willingness of the counterparty to enter into a transaction closing out the     
position.  Therefore, there is no assurance that any derivatives  position can  
be sold or closed out at a time and price that is favorable to the Fund.        

(5)     LEGAL RISK.  Legal risk is the risk of loss caused by the legal         
unenforcibility of a party's obligations under the derivative.  While a party   
seeking price certainty agrees to surrender the potential upside in exchange    
for downside protection, the party taking the risk is looking for a positive    
payoff.  Despite this voluntary assumption of risk, a counterparty that has     
lost money in a derivative transaction may try to avoid payment by exploiting   
various legal uncertainties about certain derivative products.                  

(6)     SYSTEMIC OR "INTERCONNECTION" RISK.  Interconnection risk is the risk   
that a disruption in the financial markets will cause difficulties for all      
market participants.  In other words, a disruption in one market will spill     
over into other markets, perhaps creating a chain reaction.  Much of the OTC    
derivatives market takes place among the OTC dealers themselves, thus creating  
a large interconnected web of financial obligations.  This interconnectedness   
raises the possibility that a default by one large dealer could create losses   
at other dealers and destabilize the entire market for OTC derivative           
instruments.                                                                    

GENERAL LIMITATIONS.  The use of derivative instruments is subject to           
applicable regulations of the SEC, the several options and futures exchanges    
upon which they may be traded, the Commodity Futures Trading Commission         
("CFTC"), and various state regulatory authorities.  In addition, the Fund's    
ability to use derivative instruments may be limited by certain tax             
considerations.                                                                 

The Fund has filed a notice of eligibility for exclusion from the definition of 
the term "commodity pool operator" with the CFTC and the National Futures       
Association, which regulate trading in the futures markets.  In accordance with 
Rule 4.5 of the regulations under the Commodity Exchange Act ("CEA"), the       
notice of eligibility for the Fund includes representations that the Fund will  
use futures contracts and related options solely for bona fide hedging purposes 
within the meaning of CFTC regulations, provided that the Fund may hold other   
positions in futures contracts and related options that do not qualify as a     
bona fide hedging position if the aggregate initial margin deposits and         
premiums required to establish these positions, less the amount by which any    
such futures contracts and related options positions are "in the money," do not 
exceed 5% of the Fund's net assets.  Adherence to these guidelines does not     
limit the Fund's risk to 5% of the Fund's assets.                               

The SEC has identified certain trading practices involving derivative           
instruments that involve the potential for leveraging the Fund's assets in a    
manner that raises issues under the 1940 Act.  In order to limit the potential  
for the leveraging of the Fund's assets, as defined under the 1940 Act, the SEC 
has stated that the Fund may use coverage or the segregation of the Fund's      
assets.  To the extent required by SEC guidelines, the Fund will not enter into 
any such transactions unless it owns either: (1) an offsetting ("covered")      
position in securities, options, futures, or derivative instruments; or (2)     
cash or liquid securities positions with a value sufficient at all times to     
cover its potential obligations to the extent that the position is not          
"covered".  The Fund will also set aside cash and/or appropriate liquid assets  
in a segregated custodial account if required to do so by SEC and CFTC          
regulations.  Assets used as cover or held in a segregated account cannot be    
sold while the derivative position is open, unless they are replaced with       
similar assets.  As a result, the commitment of a large portion of the Fund's   
assets to segregated accounts could impede portfolio management or the Fund's   
ability to meet redemption requests or other current obligations.               

In some cases, the Fund may be required to maintain or limit exposure to a      
specified percentage of its assets to a particular asset class.  In such cases, 
when the Fund uses a derivative instrument to increase or decrease exposure to  
an asset class and is required by applicable SEC guidelines to set aside liquid 
assets in a segregated account to secure its obligations under the derivative   
instruments, the Advisor may, where reasonable in light of the circumstances,   
measure compliance with the applicable percentage by reference to the nature of 
the economic exposure created through the use of the derivative instrument and  
not by reference to the nature of the exposure arising from the liquid assets   
set aside in the segregated account (unless another interpretation is specified 
by applicable regulatory requirements).                                         

OPTIONS.  The Fund may use options for any lawful purpose consistent with its   
investment objective such as hedging or managing risk.  An option is a contract 
in which the "holder" (the buyer) pays a certain amount ("premium") to the      
"writer" (the seller) to obtain the right, but not the obligation, to buy from  
the writer (in a "call") or sell to the writer (in a "put") a specific asset at 
an agreed upon price ("strike price" or "exercise price") at or before a        
certain time ("expiration date").  The holder pays the premium at inception and 
has no further financial obligation.  The holder of an option will benefit from 
favorable movements in the price of the underlying asset but is not exposed to  
corresponding losses due to adverse movements in the value of the underlying    
asset.  The writer of an option will receive fees or premiums but is exposed to 
losses due to changes in the value of the underlying asset.  The Fund may buy   
or write (sell) put and call options on assets, such as securities, currencies, 
financial commodities, and indices of debt and equity securities ("underlying   
assets") and enter into closing transactions with respect to such options to    
terminate an existing position.  Options used by the Fund may include European, 
American, and Bermuda style options.  If an option is exercisable only at       
maturity, it is a "European" option; if it is also exercisable prior to         
maturity, it is an "American" option.  If it is exercisable only at certain     
times, it is a "Bermuda" option.                                                

The Fund may purchase (buy) and write (sell) put and call options underlying    
assets and enter into closing transactions with respect to such options to      
terminate an existing position.  The purchase of a call option serves as a long 
hedge, and the purchase of a put option serves as a short hedge.  Writing put   
or call options can enable the Fund to enhance income by reason of the premiums 
paid by the purchaser of such options.  Writing call options serves as a        
limited short hedge because declines in the value of the hedged investment      
would be offset to the extent of the premium received for writing the option.   
However, if the security appreciates to a price higher than the exercise price  
of the call option, it can be expected that the option will be exercised and    
the Fund will be obligated to sell the security at less than its market value   
or will be obligated to purchase the security at a price greater than that at   
which the security must be sold under the option.  All or a portion of any      
assets used as cover for OTC options written by the Fund would be considered    
illiquid to the extent described under "Investment Policies and Techniques -    
Illiquid Securities."  Writing put options serves as a limited long hedge       
because decreases in the value of the hedged investment would be offset to the  
extent of the premium received for writing the option.  However, if the         
security depreciates to a price lower than the exercise price of the put        
option, it can be expected that the put option will be exercised and the Fund   
will be obligated to purchase the security at more than its market value.       

The value of an option position will reflect, among other things, the           
historical price volatility of the underlying investment, the current market    
value of the underlying investment, the time remaining until expiration, the    
relationship of the exercise price to the market price of the underlying        
investment, and general market conditions.                                      

The Fund may effectively terminate its right or obligation under an option by   
entering into a closing transaction.  For example, the Fund may terminate its   
obligation under a call or put option that it had written by purchasing an      
identical call or put option; this is known as a closing purchase transaction.  
Conversely, the Fund may terminate a position in a put or call option it had    
purchased by writing an identical put or call option; this is known as a        
closing sale transaction.  Closing transactions permit the Fund to realize the  
profit or limit the loss on an option position prior to its exercise or         
expiration.                                                                     

The Fund may purchase or write both exchange-traded and OTC options.            
Exchange-traded options are issued by a clearing organization affiliated with   
the exchange on which the option is listed that, in effect, guarantees          
completion of every exchange-traded option transaction.  In contrast, OTC       
options are contracts between the Fund and the other party to the transaction   
("counterparty") (usually a securities dealer or a bank) with no clearing       
organization guarantee.  Thus, when the Fund purchases or writes an OTC option, 
it relies on the counterparty to make or take delivery of the underlying        
investment upon exercise of the option.  Failure by the counterparty to do so   
would result in the loss of any premium paid by the Fund as well as the loss of 
any expected benefit of the transaction.                                        

The Fund's ability to establish and close out positions in exchange-listed      
options depends on the existence of a liquid market.  The Fund intends to       
purchase or write only those exchange-traded options for which there appears to 
be a liquid secondary market.  However, there can be no assurance that such a   
market will exist at any particular time.  Closing transactions can be made for 
OTC options only by negotiating directly with the counterparty, or by a         
transaction in the secondary market if any such market exists.  Although the    
Fund will enter into OTC options only with counter parties that are expected to 
be capable of entering into closing transactions with the Fund, there is no     
assurance that the Fund will in fact be able to close out an OTC option at a    
favorable price prior to expiration.  In the event of insolvency of the         
counterparty, the Fund might be unable to close out an OTC option position at   
any time prior to its expiration.  If the Fund were unable to effect a closing  
transaction for an option it had purchased, it would have to exercise the       
option to realize any profit.                                                   

The Fund may engage in options transactions on indices in much the same manner  
as the options on securities discussed above, except the index options may      
serve as a hedge against overall fluctuations in the securities market          
represented by the relevant market index.                                       

The writing and purchasing of options is a highly specialized activity that     
involves investment techniques and risks different from those associated with   
ordinary portfolio securities transactions.  Imperfect correlation between the  
options and securities markets may detract from the effectiveness of the        
attempted hedging.                                                              

SPREAD TRANSACTIONS.  The Fund may use spread transactions for any lawful       
purpose consistent with its investment objective such as hedging or managing    
risk.  The Fund may purchase covered spread options from securities dealers.    
Such covered spread options are not presently exchange-listed or                
exchange-traded.  The purchase of a spread option gives the Fund the right to   
put, or sell, a security that it owns at a fixed dollar spread or fixed yield   
spread in relation to another security that the Fund does not own, but which is 
used as a benchmark.  The risk to the Fund in purchasing covered spread options 
is the cost of the premium paid for the spread option and any transaction       
costs.  In addition, there is no assurance that closing transactions will be    
available.  The purchase of spread options will be used to protect the Fund     
against adverse changes in prevailing credit quality spreads, I.E., the yield   
spread between high quality and lower quality securities.  Such protection is   
only provided during the life of the spread option.                             

FUTURES CONTRACTS.  The Fund may use futures contracts for any lawful purpose   
consistent with its investment objective such as hedging or managing risk.  The 
Fund may enter into futures contracts, including, but not limited to, interest  
rate and index futures.  The Fund may also purchase put and call options, and   
write covered put and call options, on futures in which it is allowed to        
invest.  The purchase of futures or call options thereon can serve as a long    
hedge, and the sale of futures or the purchase of put options thereon can serve 
as a short hedge.  Writing covered call options on futures contracts can serve  
as a limited short hedge, and writing covered put options on futures contracts  
can serve as a limited long hedge, using a strategy similar to that used for    
writing covered options in securities.  The Fund may also write put options on  
futures contracts while at the same time purchasing call options on the same    
futures contracts in order to create synthetically a long futures contract      
position.  Such options would have the same strike prices and expiration dates. 
The Fund will engage in this strategy only when the Advisor believes it is more 
advantageous to the Fund than purchasing the futures contract.                  

To the extent required by regulatory authorities, the Fund only enters into     
futures contracts that are traded on national futures exchanges and are         
standardized as to maturity date and underlying financial instrument.  Futures  
exchanges and trading are regulated under the CEA by the CFTC.  Although        
techniques other than sales and purchases of futures contracts could be used to 
reduce the Fund's exposure to market or interest rate fluctuations, the Fund    
may be able to hedge its exposure more effectively and perhaps at a lower cost  
through the use of futures contracts.                                           

An interest rate futures contract provides for the future sale by one party and 
purchase by another party of a specified amount of a specific financial         
instrument (E.G., debt security) for a specified price at a designated date,    
time, and place.  An index futures contract is an agreement pursuant to which   
the parties agree to take or make delivery of an amount of cash equal to the    
difference between the value of the index at the close of the last trading day  
of the contract and the price at which the index futures contract was           
originally written.  Transaction costs are incurred when a futures contract is  
bought or sold and margin deposits must be maintained.  A futures contract may  
be satisfied by delivery or purchase, as the case may be, of the instrument or  
by payment of the change in the cash value of the index.  More commonly,        
futures contracts are closed out prior to delivery by entering into an          
offsetting transaction in a matching futures contract.  Although the value of   
an index might be a function of the value of certain specified securities, no   
physical delivery of those securities is made.  If the offsetting purchase      
price is less than the original sale price, the Fund realizes a gain; if it is  
more, the Fund realizes a loss.  Conversely, if the offsetting sale price is    
more than the original purchase price, the Fund realizes a gain; if it is less, 
the Fund realizes a loss.  The transaction costs must also be included in these 
calculations.  There can be no assurance, however, that the Fund will be able   
to enter into an offsetting transaction with respect to a particular futures    
contract at a particular time.  If the Fund is not able to enter into an        
offsetting transaction, the Fund will continue to be required to maintain the   
margin deposits on the futures contract.                                        

No price is paid by the Fund upon entering into a futures contract.  Instead,   
at the inception of a futures contract, the Fund is required to deposit in a    
segregated account with its custodian, in the name of the futures broker        
through whom the transaction was effected, "initial margin" consisting of cash  
and/or other appropriate liquid assets in an amount generally equal to 10% or   
less of the contract value.  Margin must also be deposited when writing a call  
or put option on a futures contract, in accordance with applicable exchange     
rules.  Unlike margin in securities transactions, initial margin on futures     
contracts does not represent a borrowing, but rather is in the nature of a      
performance bond or good-faith deposit that is returned to the Fund at the      
termination of the transaction if all contractual obligations have been         
satisfied.  Under certain circumstances, such as periods of high volatility,    
the Fund may be required by an exchange to increase the level of its initial    
margin payment, and initial margin requirements might be increased generally in 
the future by regulatory action.                                                

   
Subsequent "variation margin" payments are made to and from the futures broker  
daily as the value of the futures position varies, a process known as "marking  
to market."  Variation margin does not involve borrowing, but rather represents 
a daily settlement of the Fund's obligations to or from a futures broker.  When 
the Fund purchases an option on a future, the premium paid plus transaction     
costs is all that is at risk.  In contrast, when the Fund purchases or sells a  
futures contract or writes a call or put option thereon, it is subject to daily 
variation margin calls that could be substantial in the event of adverse price  
movements.  If the Fund has insufficient cash to meet daily variation margin    
requirements, it might need to sell securities at a time when such sales are    
disadvantageous.  Purchasers and sellers of futures positions and options on    
futures can enter into offsetting closing transactions by selling or            
purchasing, respectively, an instrument identical to the instrument held or     
written.  Positions in futures and options on futures may be closed only on an  
exchange or board of trade that provides a secondary market.  The Fund intends  
to enter into futures transactions only on exchanges or boards of trade where   
there appears to be a liquid secondary market.  However, there can be no        
assurance that such a market will exist for a particular contract at a          
particular time.                                                                
    

Under certain circumstances, futures exchanges may establish daily limits on    
the amount that the price of a future or option on a futures contract can vary  
from the previous day's settlement price; once that limit is reached, no trades 
may be made that day at a price beyond the limit.  Daily price limits do not    
limit potential losses because prices could move to the daily limit for several 
consecutive days with little or no trading, thereby preventing liquidation of   
unfavorable positions.                                                          

If the Fund were unable to liquidate a futures or option on a futures contract  
position due to the absence of a liquid secondary market or the imposition of   
price limits, it could incur substantial losses.  The Fund would continue to be 
subject to market risk with respect to the position.  In addition, except in    
the case of purchased options, the Fund would continue to be required to make   
daily variation margin payments and might be required to maintain the position  
being hedged by the future or option or to maintain cash or securities in a     
segregated account.                                                             

Certain characteristics of the futures market might increase the risk that      
movements in the prices of futures contracts or options on futures contracts    
might not correlate perfectly with movements in the prices of the investments   
being hedged.  For example, all participants in the futures and options on      
futures contracts markets are subject to daily variation margin calls and might 
be compelled to liquidate futures or options on futures contracts positions     
whose prices are moving unfavorably to avoid being subject to further calls.    
These liquidations could increase price volatility of the instruments and       
distort the normal price relationship between the futures or options and the    
investments being hedged.  Also, because initial margin deposit requirements in 
the futures markets are less onerous than margin requirements in the securities 
markets, there might be increased participation by speculators in the future    
markets.  This participation also might cause temporary price distortions.  In  
addition, activities of large traders in both the futures and securities        
markets involving arbitrage, "program trading" and other investment strategies  
might result in temporary price distortions.                                    

FOREIGN CURRENCIES.  The Fund may purchase and sell foreign currency on a spot  
basis, and may use currency-related derivatives instruments such as options on  
foreign currencies, futures on foreign currencies, options on futures on        
foreign currencies and forward currency contracts (I.E., an obligation to       
purchase or sell a specific currency at a specified future date, which may be   
any fixed number of days from the contract date agreed upon by the parties, at  
a price set at the time the contract is entered into).  The Fund may use these  
instruments for hedging or any other lawful purpose consistent with the Fund's  
investment objective, including transaction hedging, anticipatory hedging,      
cross hedging, proxy hedging, and position hedging.  The Fund's use of          
currency-related derivative instruments will be directly related to the Fund's  
current or anticipated portfolio securities, and the Fund may engage in         
transactions in currency-related derivative instruments as a means to protect   
against some or all of the effects of adverse changes in foreign currency       
exchange rates on its investment portfolio.  In general, if the currency in     
which a portfolio investment is denominated appreciates against the U.S.        
dollar, the dollar value of the security will increase.  Conversely, a decline  
in the exchange rate of the currency would adversely affect the value of the    
portfolio investment expressed in U.S. dollars.                                 

For example, the Fund might use currency-related derivative instruments to      
"lock in" a U.S. dollar price for a portfolio investment, thereby enabling the  
Fund to protect itself against a possible loss resulting from an adverse change 
in the relationship between the U.S. dollar and the subject foreign currency    
during the period between the date the security is purchased or sold and the    
date on which payment is made or received.  The Fund also might use             
currency-related derivative instruments when the Advisor believes that one      
currency may experience a substantial movement against another currency,        
including the U.S. dollar, and it may use currency-related derivative           
instruments to sell or buy the amount of the former foreign currency,           
approximating the value of some or all of the Fund's portfolio securities       
denominated in such foreign currency.  Alternatively, where appropriate, the    
Fund may use currency-related derivative instruments to hedge all or part of    
its foreign currency exposure through the use of a basket of currencies or a    
proxy currency where such currency or currencies act as an effective proxy for  
other currencies.  The use of this basket hedging technique may be more         
efficient and economical than using separate currency-related derivative        
instruments for each currency exposure held by the Fund.  Furthermore,          
currency-related derivative instruments may be used for short hedges - for      
example, the Fund may sell a forward currency contract to lock in the U.S.      
dollar equivalent of the proceeds from the anticipated sale of  a security      
denominated in a foreign currency.                                              

In addition, the Fund may use a currency-related derivative instrument to shift 
exposure to foreign currency fluctuations from one foreign country to another   
foreign country where the Advisor believes that the foreign currency exposure   
purchased will appreciate relative to the U.S. dollar and thus better protect   
the Fund against the expected decline in the foreign currency exposure sold.    
For example, if the Fund owns securities denominated in a foreign currency and  
the Advisor believes that currency will decline, it might enter into a forward  
contract to sell an appropriate amount of the first foreign currency, with      
payment to be made in a second foreign currency that the Advisor believes would 
better protect the Fund against the decline in the first security than would a  
U.S. dollar exposure.  Hedging transactions that use two foreign currencies are 
sometimes referred to as "cross hedges."  The effective use of currency-related 
derivative instruments by the Fund in a cross hedge is dependent upon a         
correlation between price movements of the two currency instruments and the     
underlying security involved, and the use of two currencies magnifies the risk  
that movements in the price of one instrument may not correlate or may          
correlate unfavorably with the foreign currency being hedged.  Such a lack of   
correlation might occur due to factors unrelated to the value of the currency   
instruments used or investments being hedged, such as speculative or other      
pressures on the markets in which these instruments are traded.                 

The Fund also might seek to hedge against changes in the value of a particular  
currency when no hedging instruments on that currency are available or such     
hedging instruments are more expensive than certain other hedging instruments.  
In such cases, the Fund may hedge against price movements in that currency by   
entering into transactions using currency-related derivative instruments on     
another foreign currency or a basket of currencies, the values of which the     
Advisor believes will have a high degree of positive correlation to the value   
of the currency being hedged.  The risk that movements in the price of the      
hedging instrument will not correlate perfectly with movements in the price of  
the currency being hedged is magnified when this strategy is used.              

The use of currency-related derivative instruments by the Fund involves a       
number of risks.  The value of currency-related derivative instruments depends  
on the value of the underlying currency relative to the U.S. dollar.  Because   
foreign currency transactions occurring in the interbank market might involve   
substantially larger amounts than those involved in the use of such derivative  
instruments, the Fund could be disadvantaged by having to deal in the odd lot   
market (generally consisting of transactions of less than $1 million) for the   
underlying foreign currencies at prices that are less favorable than for round  
lots (generally consisting of transactions of greater than $1 million).         

There is no systematic reporting of last sale information for foreign           
currencies or any regulatory requirement that quotations available through      
dealers or other market sources be firm or revised on a timely basis.           
Quotation information generally is representative of very large transactions in 
the interbank market and thus might not reflect odd-lot transactions where      
rates might be less favorable.  The interbank market in foreign currencies is a 
global, round-the-clock market.  To the extent the U.S. options or futures      
markets are closed while the markets for the underlying currencies remain open, 
significant price and rate movements might take place in the underlying markets 
that cannot be reflected in the markets for the derivative instruments until    
they re-open.                                                                   

Settlement of transactions in currency-related derivative instruments might be  
required to take place within the country issuing the underlying currency.      
Thus, the Fund might be required to accept or make delivery of the underlying   
foreign currency in accordance with any U.S.  or foreign regulations regarding  
the maintenance of foreign banking arrangements by U.S.  residents and might be 
required to pay any fees, taxes and charges associated with such delivery       
assessed in the issuing country.                                                

When the Fund engages in a transaction in a currency-related derivative         
instrument, it relies on the counterparty to make or take delivery of the       
underlying currency at the maturity of the contract or otherwise complete the   
contract.  In other words, the Fund will be subject to the risk that a loss may 
be sustained by the Fund as a result of the failure of the counterparty to      
comply with the terms of the transaction.  The counterparty risk for            
exchange-traded instruments is generally less than for privately negotiated or  
OTC currency instruments, since generally a clearing agency, which is the       
issuer or counterparty to each instrument, provides a guarantee of performance. 
For privately negotiated instruments, there is no similar clearing agency       
guarantee.  In all transactions, the Fund will bear the risk that the           
counterparty will default, and this could result in a loss of the expected      
benefit of the transaction and possibly other losses to the Fund.  The Fund     
will enter into transactions in currency-related derivative instruments only    
with counterparties that the Advisor reasonably believes are capable of         
performing under the contract.                                                  

Purchasers and sellers of currency-related derivative instruments may enter     
into offsetting closing transactions by selling or purchasing, respectively, an 
instrument identical to the instrument purchased or sold.  Secondary markets    
generally do not exist for forward currency contracts, with the result that     
closing transactions generally can be made for forward currency contracts only  
by negotiating directly with the counterparty.  Thus, there can be no assurance 
that the Fund will in fact be able to close out a forward currency contract (or 
any other currency-related derivative instrument) at a time and price favorable 
to the Fund.  In addition, in the event of insolvency of the counterparty, the  
Fund might be unable to close out a forward currency contract at any time prior 
to maturity.  In the case of an exchange-traded instrument, the Fund will be    
able to close the position out only on an exchange which provides a market for  
the instruments.  The ability to establish and close out positions on an        
exchange is subject to the maintenance of a liquid market, and there can be no  
assurance that a liquid market will exist for any instrument at any specific    
time.  In the case of a privately negotiated instrument, the Fund will be able  
to realize the value of the instrument only by entering into a closing          
transaction with the issuer or finding a third party buyer for the instrument.  
While the Fund will enter into privately negotiated transactions only with      
entities who are expected to be capable of entering into a closing transaction, 
there can be no assurance that the Fund will in fact be able to enter into such 
closing transactions.                                                           

The precise matching of currency-related derivative instrument amounts and the  
value of the portfolio securities involved generally will not be possible       
because the value of such securities, measured in the foreign currency, will    
change after the currency-related derivative instrument position has been       
established.  Thus, the Fund might need to purchase or sell foreign currencies  
in the spot (cash) market.  The projection of short-term currency market        
movements is extremely difficult, and the successful execution of a short-term  
hedging strategy is highly uncertain.                                           

Permissible foreign currency options will include options traded primarily in   
the OTC market.  Although options on foreign currencies are traded primarily in 
the OTC market, the Fund will normally purchase or sell OTC options on foreign  
currency only when the Advisor reasonably believes a liquid secondary market    
will exist for a particular option at any specific time.                        

There will be a cost to the Fund of engaging in transactions in                 
currency-related derivative instruments that will vary with factors such as the 
contract or currency involved, the length of the contract period and the market 
conditions then prevailing.  The Fund using these instruments may have to pay a 
fee or commission or, in cases where the instruments are entered into on a      
principal basis, foreign exchange dealers or other counterparties will realize  
a profit based on the difference ("spread") between the prices at which they    
are buying and selling various currencies.  Thus, for example, a dealer may     
offer to sell a foreign currency to the Fund at one rate, while offering a      
lesser rate of exchange should the Fund desire to resell that currency to the   
dealer.                                                                         

   
When required by the SEC guidelines, the Fund will set aside permissible liquid 
assets in segregated accounts or otherwise cover the Fund's potential           
obligations under currency-related derivatives instruments.  To the extent the  
Fund's assets are so set aside, they cannot be sold while the corresponding     
currency position is open, unless they are replaced with similar assets.  As a  
result, if a large portion of the Fund's assets are so set aside, this could    
impede portfolio management or the Fund's ability to meet redemption requests   
or other current obligations.                                                   
    

The Advisor's decision to engage in a transaction in a particular               
currency-related derivative instrument will reflect the Advisor's judgment that 
the transaction will provide value to the Fund and its shareholders and is      
consistent with the Fund's objectives and policies.  In making such a judgment, 
the Advisor will analyze the benefits and risks of the transaction and weigh    
them in the context of the Fund's entire portfolio and objectives.  The         
effectiveness of any transaction in a currency-related derivative instrument is 
dependent on a variety of factors, including the Advisor's skill in analyzing   
and predicting currency values and upon a correlation between price movements   
of the currency instrument and the underlying security.  There might be         
imperfect correlation, or even no correlation, between price movements of an    
instrument and price movements of investments being hedged.  Such a lack of     
correlation might occur due to factors unrelated to the value of the            
investments being hedged, such as speculative or other pressures on the markets 
in which these instruments are traded.  In addition, the Fund's use of          
currency-related derivative instruments is always subject to the risk that the  
currency in question could be devalued by the foreign government.  In such a    
case, any long currency positions would decline in value and could adversely    
affect any hedging position maintained by the Fund.                             

The Fund's dealing in currency-related derivative instruments will generally be 
limited to the transactions described  above.  However, the Fund reserves the   
right to use currency-related derivatives instruments for different purposes    
and under different circumstances.  Of course, the Fund is not required to use  
currency-related derivatives instruments and will not do so unless deemed       
appropriate by the Advisor.  It also should be realized that use of these       
instruments does not eliminate, or protect against, price movements in the      
Fund's securities that are attributable to other (I.E., non-currency related)   
causes.  Moreover, while the use of currency-related derivatives instruments    
may reduce the risk of loss due to a decline in the value of a hedged currency, 
at the same time the use of these instruments tends to limit any potential gain 
which may result from an increase in the value of that currency.                

SWAP AGREEMENTS.  The Fund may enter into interest rate, securities index,      
commodity, or security and currency exchange rate swap agreements for any       
lawful purpose consistent with the Fund's investment objective, such as for the 
purpose of attempting to obtain or preserve a particular desired return or      
spread at a lower cost to the Fund than if the Fund had invested directly in an 
instrument that yielded that desired return or spread.  The Fund also may enter 
into swaps in order to protect against an increase in the price of, or the      
currency exchange rate applicable to, securities that the Fund anticipates      
purchasing at a later date.  Swap agreements are two-party contracts entered    
into primarily by institutional investors for periods ranging from a few weeks  
to several years.  In a standard "swap" transaction, two parties agree to       
exchange the returns (or differentials in rates of return) earned or realized   
on particular predetermined investments or instruments.  The gross returns to   
be exchanged or "swapped" between the parties are calculated with respect to a  
"notional amount" (I.E., the return on or increase in value of a particular     
dollar amount invested at a particular interest rate) in a particular foreign   
currency, or in a "basket" of securities representing a particular index.  Swap 
agreements may include interest rate caps, under which, in return for a         
premium, one party agrees to make payments to the other to the extent that      
interest rates exceed a specified rate, or "cap;" interest rate floors, under   
which, in return for a premium, one party agrees to make payments to the other  
to the extent that interest rates fall below a specified level, or "floor;" and 
interest rate collars, under which a party sells a cap and purchases a floor,   
or vice versa, in an attempt to protect itself against interest rate movements  
exceeding given minimum or maximum levels.                                      

The "notional amount" of the swap agreement is the agreed upon basis for        
calculating the obligations that the parties to a swap agreement have agreed to 
exchange.  Under most swap agreements entered into by the Fund, the obligations 
of the parties would be exchanged on a "net basis."  Consequently, the Fund's   
obligation (or rights) under a swap agreement will generally be equal only to   
the net amount to be paid or received under the agreement based on the relative 
values of the positions held by each party to the agreement ("net amount").     
The Fund's obligation under a swap agreement will be accrued daily (offset      
against amounts owed to the Fund) and any accrued but unpaid net amounts owed   
to a swap counterparty will be covered by the maintenance of a segregated       
account consisting of cash and/or other appropriate liquid assets.              

Whether the Fund's use of swap agreements will be successful in furthering its  
investment objective will depend, in part, on the Advisor's ability to predict  
correctly whether certain types of investments are likely to produce greater    
returns than other investments.  Swap agreements may be considered to be        
illiquid.  Moreover, the Fund bears the risk of loss of the amount expected to  
be received under a swap agreement in the event of the default or bankruptcy of 
a swap agreement counterparty.  Certain restrictions imposed on the Fund by the 
Internal Revenue Code of 1986 ("IRC") may limit the Fund's ability to use swap  
agreements.  The swaps market is largely unregulated.                           

The Fund will enter swap agreements only with counterparties that the Advisor   
reasonably believes are capable of performing under the swap agreements.  If    
there is a default by the other party to such a transaction, the Fund will have 
to rely on its contractual remedies (which may be limited by bankruptcy,        
insolvency or similar laws) pursuant to the agreements related to the           
transaction.                                                                    

ADDITIONAL DERIVATIVE INSTRUMENTS AND STRATEGIES.  In addition to the           
derivative instruments and strategies described above and in the Prospectus,    
the Advisor expects to discover additional derivative instruments and other     
hedging or risk management techniques.  The Advisor may utilize these new       
derivative instruments and techniques to the extent that they are consistent    
with the Fund's investment objective and permitted by the Fund's investment     
limitations, operating policies, and applicable regulatory authorities.         

DURATION                                                                        

Duration was developed as a more precise alternative to the concept of          
"maturity." Traditionally, a debt obligations' maturity has been used as a      
proxy for the sensitivity of the security's price to changes in interest rates  
(which is the "interest rate risk" or "volatility" of the security). However,   
maturity measures only the time until a debt obligation provides its final      
payment, taking no account of the pattern of the security's payments prior to   
maturity. In contrast, duration incorporates a bond's yield, coupon interest    
payments, final maturity and call features into one measure. Duration           
management is one of the fundamental tools used by the Advisor.                 

Duration is a measure of the expected life of a debt obligation on a present    
value basis. Duration takes the length of the time intervals between the        
present time and the time that the interest and principal payments are          
scheduled or, in the case of a callable bond, the time the principal payments   
are expected to be received, and weights them by the present values of the cash 
to be received at each future point in time. For any debt obligation with       
interest payments occurring prior to the payment of principal, duration is      
always less than maturity. In general, all other things being equal, the lower  
the stated or coupon rate of interest of a fixed income security, the longer    
the duration of the security; conversely, the higher the stated or coupon rate  
of interest of a fixed income security, the shorter the duration of the         
security.                                                                       

Futures, options and options on futures have durations which, in general, are   
closely related to the duration of the securities which underlie them. Holding  
long futures or call option positions will lengthen the duration of the Fund's  
portfolio by approximately the same amount of time that holding an equivalent   
amount of the underlying securities would.                                      

Short futures or put option positions have durations roughly equal to the       
negative duration of the securities that underlie these positions, and have the 
effect of reducing portfolio duration by approximately the same amount of time  
that selling an equivalent amount of the underlying securities would.           

There are some situations where even the standard duration calculation does not 
properly reflect the interest rate exposure of a security. For example,         
floating and variable rate securities often have final maturities of ten or     
more years; however, their interest rate exposure corresponds to the frequency  
of the coupon reset. Another example where the interest rate exposure is not    
properly captured by duration is mortgage pass-through securities. The stated   
final maturity of such securities is generally 30 years, but current prepayment 
rates are more critical in determining the securities' interest rate exposure.  
Finally, the duration of a debt obligation may vary over time in response to    
changes in interest rates and other market factors.                             

FOREIGN INVESTMENT COMPANIES                                                    

The Fund may invest, to a limited extent, in foreign investment companies.      
Some of the countries in which the Fund invests may not permit direct           
investment by outside investors.  Investments in such countries may only be     
permitted through foreign government-approved or -authorized investment         
vehicles, which may include other investment companies.  In addition, it may be 
less expensive and more expedient for the Fund to invest in a foreign           
investment company in a country which permits direct foreign investment.        
Investing through such vehicles may involve frequent or layered fees or         
expenses and may also be subject to limitation under the 1940 Act.  Under the   
1940 Act, the Fund may invest up to 10% of its assets in shares of other        
investment companies and up to 5% of its assets in any one investment company   
as long as the investment does not represent more than 3% of the voting stock   
of the acquired investment company.  The Fund does not intend to invest in such 
investment companies unless, in the judgment of the Advisor, the potential      
benefits of such investments justify the payment of any associated fees and     
expenses.                                                                       

FOREIGN SECURITIES                                                              

Investing in foreign securities involves a series of risks not present in       
investing in U.S. securities.  Many of the foreign securities held by the Fund  
will not be registered with the SEC, nor will the foreign issuers be subject to 
SEC reporting requirements.  Accordingly, there may be less publicly available  
information concerning foreign issuers of securities held by the Fund than is   
available concerning U.S. companies.  Disclosure and regulatory standards in    
many respects are less stringent in emerging market countries than in the U.S.  
and other major markets.  There also may be a lower level of monitoring and     
regulation of emerging markets and the activities of investors in such markets, 
and enforcement of existing regulations may be extremely limited.  Foreign      
companies, and in particular, companies in smaller and emerging capital markets 
are not generally subject to uniform accounting, auditing and financial         
reporting standards, or to other regulatory requirements comparable to those    
applicable to U.S. companies.  The Fund's net investment income and capital     
gains from its foreign investment activities may be subject to non-U.S.         
withholding taxes.                                                              

The costs attributable to foreign investing that the Fund must bear frequently  
are higher than those attributable to domestic investing; this is particularly  
true with respect to emerging capital markets.  For example, the cost of        
maintaining custody of foreign securities exceeds custodian costs for domestic  
securities, and transaction and settlement costs of foreign investing also      
frequently are higher than those attributable to domestic investing.  Costs     
associated with the exchange of currencies also make foreign investing more     
expensive than domestic investing.  Investment income on certain foreign        
securities in which the Fund may invest may be subject to foreign withholding   
or other government taxes that could reduce the return of these securities.     
Tax treaties between the U.S. and foreign countries, however, may reduce or     
eliminate the amount of foreign tax to which the Fund would be subject.         

Foreign markets also have different clearance and settlement procedures, and in 
certain markets there have been times when settlements have failed to keep pace 
with the volume of securities transactions, making it difficult to conduct such 
transactions.  Delays in settlement could result in temporary periods when      
assets of the Fund are uninvested and are earning no investment return.  The    
inability of the Fund to make intended security purchases due to settlement     
problems could cause the Fund to miss investment opportunities.  Inability to   
dispose of a portfolio security due to settlement problems could result either  
in losses to the Fund due to subsequent declines in the value of such portfolio 
security or, if the Fund has entered into a contract to sell the security,      
could result in possible liability to the purchaser.                            

HIGH-YIELD (HIGH-RISK) SECURITIES                                               

IN GENERAL. Non-investment grade debt obligations ("lower-quality securities")  
include (1) bonds rated as low as C by Moody's Investors Service ("Moody's"),   
Standard & Poor's Ratings Group ("S&P"), and comparable ratings of other        
nationally recognized statistical rating organizations ("NRSROs"); (2)          
commercial paper rated as low as C by S&P, Not Prime by Moody's, and comparable 
ratings of other NRSROs; and (3) unrated debt obligations of comparable         
quality.  Lower-quality securities, while generally offering higher yields than 
investment grade securities with similar maturities, involve greater risks,     
including the possibility of default or bankruptcy.  They are regarded as       
predominantly speculative with respect to the issuer's capacity to pay interest 
and repay principal.  The special risk considerations in connection with        
investments in these securities are discussed below.  Refer to the Appendix for 
a description of the securities ratings.                                        

EFFECT OF INTEREST RATES AND ECONOMIC CHANGES.  The lower-quality and           
comparable unrated security market is relatively new and its growth has         
paralleled a long economic expansion.  As a result, it is not clear how this    
market may withstand a prolonged recession or economic downturn.  Such          
conditions could severely disrupt the market for and adversely affect the value 
of such securities.                                                             

All interest-bearing securities typically experience appreciation when interest 
rates decline and depreciation when interest rates rise.  The market values of  
lower-quality and comparable unrated securities tend to reflect individual      
corporate developments to a greater extent than do higher rated securities,     
which react primarily to fluctuations in the general level of interest rates.   
Lower-quality and comparable unrated securities also tend to be more sensitive  
to economic conditions than are higher-rated securities.  As a result, they     
generally involve more credit risks than securities in the higher-rated         
categories.  During an economic downturn or a sustained period of rising        
interest rates, highly leveraged issuers of lower-quality and comparable        
unrated securities may experience financial stress and may not have sufficient  
revenues to meet their payment obligations.  The issuer's ability to service    
its debt obligations may also be adversely affected by specific corporate       
developments, the issuer's inability to meet specific projected business        
forecasts or the unavailability of additional financing.  The risk of loss due  
to default by an issuer of these securities is significantly greater than       
issuers of higher-rated securities because such securities are generally        
unsecured and are often subordinated to other creditors.  Further, if the       
issuer of a lower-quality or comparable unrated security defaulted, the Fund    
might incur additional expenses to seek recovery.  Periods of economic          
uncertainty and changes would also generally result in increased volatility in  
the market prices of these securities and thus in the Fund's net asset value.   

As previously stated, the value of a lower-quality or comparable unrated        
security will decrease in a rising interest rate market and accordingly, so     
will the Fund's net asset value.  If the Fund experiences unexpected net        
redemptions in such a market, it may be forced to liquidate a portion of its    
portfolio securities without regard to their investment merits.  Due to the     
limited liquidity of lower-quality and comparable unrated securities (discussed 
below), the Fund may be forced to liquidate these securities at a substantial   
discount.  Any such liquidation would force the Fund to sell the more liquid    
portion of its portfolio.                                                       

PAYMENT EXPECTATIONS.  Lower-quality and comparable unrated securities          
typically contain redemption, call or prepayment provisions which permit the    
issuer of such securities containing such provisions to, at its discretion,     
redeem the securities.  During periods of falling interest rates, issuers of    
these securities are likely to redeem or prepay the securities and refinance    
them with debt securities with a lower interest rate.  To the extent an issuer  
is able to refinance the securities, or otherwise redeem them, the Fund may     
have to replace the securities with a lower yielding security, which would      
result in a lower return for the Fund.                                          

CREDIT RATINGS.  Credit ratings issued by credit rating agencies are designed   
to evaluate the safety of principal and interest payments of rated securities.  
They do not, however, evaluate the market value risk of lower-quality           
securities and, therefore, may not fully reflect the true risks of an           
investment.  In addition, credit rating agencies may or may not make timely     
changes in a rating to reflect changes in the economy or in the condition of    
the issuer that affect the market value of the security.  Consequently, credit  
ratings are used only as a preliminary indicator of investment quality.         
Investments in lower-quality and comparable unrated obligations will be more    
dependent on the Advisor's credit analysis than would be the case with          
investments in investment-grade debt obligations.  The Advisor employs its own  
credit research and analysis, which includes a study of existing debt, capital  
structure, ability to service debt and to pay dividends, the issuer's           
sensitivity to economic conditions, its operating history and the current trend 
of earnings.  The Advisor continually monitors the investments in the Fund's    
portfolio and carefully evaluates whether to dispose of or to retain            
lower-quality and comparable unrated securities whose credit ratings or credit  
quality may have changed.                                                       

LIQUIDITY AND VALUATION.  The Fund may have difficulty disposing of certain     
lower-quality and comparable unrated securities because there may be a thin     
trading market for such securities.  Because not all dealers maintain markets   
in all lower-quality and comparable unrated securities, there is no established 
retail secondary market for many of these securities.  The Fund anticipates     
that such securities could be sold only to a limited number of dealers or       
institutional investors.  To the extent a secondary trading market does exist,  
it is generally not as liquid as the secondary market for higher-rated          
securities.  The lack of a liquid secondary market may have an adverse impact   
on the market price of the security.  As a result, the Fund's asset value and   
ability to dispose of particular securities, when necessary to meet the Fund's  
liquidity needs or in response to a specific economic event, may be impacted.   
The lack of a liquid secondary market for certain securities may also make it   
more difficult for the Fund to obtain accurate market quotations for purposes   
of valuing the Fund's portfolio.  Market quotations are generally available on  
many lower-quality and comparable unrated issues only from a limited number of  
dealers and may not necessarily represent firm bids of such dealers or prices   
for actual sales.  During periods of thin trading, the spread between bid and   
asked prices is likely to increase significantly.  In addition, adverse         
publicity and investor perceptions, whether or not based on fundamental         
analysis, may decrease the values and liquidity of lower-quality and comparable 
unrated securities, especially in a thinly traded market.                       

LEGISLATION.  Legislation may be adopted, from time to time, designed to limit  
the use of certain lower-quality and comparable unrated securities by certain   
issuers.  It is anticipated that if additional legislation is enacted or        
proposed, it could have a material affect on the value of these securities and  
the existence of a secondary trading market for the securities.                 

ILLIQUID SECURITIES                                                             

The Fund may invest in illiquid securities (I.E., securities that are not       
readily marketable).  However, the Fund will not acquire illiquid securities    
if, as a result, the illiquid securities would comprise more than 15% (10% for  
money market funds) of the value of the Fund's net assets (or such other        
amounts as may be permitted under the 1940 Act).  However, as a matter of       
internal policy, the Advisor intends to limit the Fund's investments in         
illiquid securities to 10% of its net assets.                                   

 The Board of Directors of the Fund, or its delegate, has the ultimate          
authority to determine, to the extent permissible under the federal securities  
laws, which securities are illiquid for purposes of this limitation.  Certain   
securities exempt from registration or issued in transactions exempt from       
registration under the Securities Act of 1933, as amended ("Securities Act"),   
such as securities that may be resold to institutional investors under Rule     
144A under the Securities Act and Section 4(2) commercial paper, may be         
considered liquid under guidelines adopted by the Fund's Board of Directors.    
   
The Board of Directors of the Fund has delegated to the Advisor the day-to-day  
determination of the liquidity of a security, although it has retained          
oversight and ultimate responsibility for such determinations.  The Board of    
Directors has directed the Advisor to look to such factors as (1) the frequency 
of trades or quotes for a security, (2) the number of dealers willing to        
purchase or sell the security and number of potential buyers, (3) the           
willingness of dealers to undertake to make a market in the security, (4) the   
nature of the security and nature of the marketplace trades, such as the time   
needed to dispose of the security, the method of soliciting offers, and the     
mechanics of transfer, (5) the likelihood that the security's marketability     
will be maintained throughout the anticipated holding period, and (6) any other 
relevant factors.  The Advisor may determine 4(2) commercial paper to be liquid 
if (1) the 4(2) commercial paper is not traded flat or in default as to         
principal and interest, (2) the 4(2) commercial paper is rated in one of the    
two highest rating categories by at least two NRSROs, or if only one NRSRO      
rates the security, by that NRSRO, or is determined by the Advisor to be of     
equivalent quality, and (3) the Advisor considers the trading market for the    
specific security taking into account all relevant factors.  With respect to    
any foreign holdings, a foreign security may be considered liquid by the        
Advisor (despite its restricted nature under the Securities Act) if the         
security can be freely traded in a foreign securities market and all the facts  
and circumstances support a finding of liquidity.                               
    
Restricted securities may be sold only in privately negotiated transactions or  
in a public offering with respect to which a registration statement is in       
effect under the Securities Act.  Where registration is required, the Fund may  
be obligated to pay all or part of the registration expenses and a considerable 
period may elapse between the time of the decision to sell and the time the     
Fund may be permitted to sell a security under an effective registration        
statement.  If, during such a period, adverse market conditions were to         
develop, the Fund might obtain a less favorable price than prevailed when it    
decided to sell.  Restricted securities will be priced in accordance with       
pricing procedures adopted by the Board of Directors of the Fund.  If through   
the appreciation of restricted securities or the depreciation of unrestricted   
securities the Fund should be in a position where more than 15% of the value of 
its net assets are invested in illiquid securities, including restricted        
securities which are not readily marketable (except for 144A Securities and     
4(2) commercial paper deemed to be liquid by the Advisor), the Fund will take   
such steps as is deemed advisable, if any, to protect the liquidity of the      
Fund's portfolio.                                                               

The Fund may sell OTC options and, in connection therewith, segregate assets or 
cover its obligations with respect to OTC options written by the Fund.  The     
assets used as cover for OTC options written by the Fund will be considered     
illiquid unless the OTC options are sold to qualified dealers who agree that    
the Fund may repurchase any OTC option it writes at a maximum price to be       
calculated by a formula set forth in the option agreement.  The cover for an    
OTC option written subject to this procedure would be considered illiquid only  
to the extent that the maximum repurchase price under the formula exceeds the   
intrinsic value of the option.                                                  

LENDING OF PORTFOLIO SECURITIES                                                 

The Fund is authorized to lend up to 33 1/3% of the total value of its          
portfolio securities to broker-dealers or institutional investors that the      
Advisor deems qualified, but only when the borrower maintains with the Fund's   
custodian bank collateral either in cash or money market instruments in an      
amount at least equal to the market value of the securities loaned, plus        
accrued interest and dividends, determined on a daily basis and adjusted        
accordingly.  Although the Fund is authorized to lend, the Fund does not        
presently intend to engage in lending.  In determining whether to lend          
securities to a particular broker-dealer or institutional investor, the Advisor 
will consider, and during the period of the loan will monitor, all relevant     
facts and circumstances, including the creditworthiness of the borrower.  The   
Fund will retain authority to terminate any loans at any time.  The Fund may    
pay reasonable administrative and custodial fees in connection with a loan and  
may pay a negotiated portion of the interest earned on the cash or money market 
instruments held as collateral to the borrower or placing broker.  The Fund     
will receive reasonable interest on the loan or a flat fee from the borrower    
and amounts equivalent to any dividends, interest or other distributions on the 
securities loaned.  The Fund will retain record ownership of loaned securities  
to exercise beneficial rights, such as voting and subscription rights and       
rights to dividends, interest or other distributions, when retaining such       
rights is considered to be in the Fund's interest.                              

THE FOLLOWING SECTION APPLIES TO THE GLOBAL HIGH-YIELD BOND, INTERNATIONAL      
BOND, AND SHORT-TERM GLOBAL BOND FUNDS ONLY:                                    
LOAN INTERESTS                                                                  

The Fund may acquire a loan interest (a "Loan Interest").  A Loan Interest is   
typically originated, negotiated, and structured by a U.S. or foreign           
commercial bank, insurance company, finance company, or other financial         
institution ("Agent") for a lending syndicate of financial institutions.  The   
Agent typically administers and enforces the loan on behalf of the other        
lenders in the syndicate.  In addition, an institution, typically but not       
always the Agent ("Collateral Bank"), holds collateral (if any) on behalf of    
the lenders.  These Loan Interests may take the form of participation interests 
in, assignments of or novations of a loan during its secondary distribution, or 
direct interests during a primary distribution.  Such Loan Interests may be     
acquired from U.S. or foreign banks, insurance companies, finance companies, or 
other financial institutions who have made loans or are members of a lending    
syndicate or from other holders of Loan Interests.  The Fund may also acquire   
Loan Interests under which the Fund derives its rights directly from the        
borrower.  Such Loan Interests are separately enforceable by the Fund against   
the borrower and all payments of interest and principal are typically made      
directly to the Fund from the borrower.  In the event that the Fund and other   
lenders become entitled to take possession of shared collateral, it is          
anticipated that such collateral would be held in the custody of a Collateral   
Bank for their mutual benefit.  The Fund may not act as an Agent, a Collateral  
Bank, a guarantor or sole negotiator or structurer with respect to a loan.      

The Advisor will analyze and evaluate the financial condition of the borrower   
in connection with the acquisition of any Loan Interest.  The Advisor also      
analyzes and evaluates the financial condition of the Agent and, in the case of 
Loan Interests in which the Fund does not have privity with the borrower, those 
institutions from or through whom the Fund derives its rights in a loan         
("Intermediate Participants").                                                  

In a typical loan, the Agent administers the terms of the loan agreement.  In   
such cases, the Agent is normally responsible for the collection of principal   
and interest payments from the borrower and the apportionment of these payments 
to the credit of all institutions which are parties to the loan agreement.  The 
Fund will generally rely upon the Agent or an Intermediate Participant to       
receive and forward to the Fund its portion of the principal and interest       
payments on the loan.  Furthermore, unless under the terms of a participation   
agreement the Fund has direct recourse against the borrower, the Fund will rely 
on the Agent and the other members of the lending syndicate to use appropriate  
credit remedies against the borrower.  The Agent is typically responsible for   
monitoring compliance with covenants contained in the loan agreement based upon 
reports prepared by the borrower.  The seller of the Loan Interest usually      
does, but is often not obligated to, notify holders of Loan Interests of any    
failures of compliance.  The Agent may monitor the value of the collateral and, 
if the value of the collateral declines, may accelerate the loan, may give the  
borrower an opportunity to provide additional collateral or may seek other      
protection for the benefit of the participants in the loan.  The Agent is       
compensated by the borrower for providing these services under a loan           
agreement, and such compensation may include special fees paid upon structuring 
and funding the loan and other fees paid on a continuing basis.  With respect   
to Loan Interests for which the Agent does not perform such administrative and  
enforcement functions, the Fund will perform such tasks on its own behalf,      
although a Collateral Bank will typically hold any collateral on behalf of the  
Fund and the other lenders pursuant to the applicable loan agreement.           

A financial institution's appointment as Agent may usually be terminated in the 
event that it fails to observe the requisite standard of care or becomes        
insolvent, enters Federal Deposit Insurance Corporation ("FDIC") receivership,  
or, if not FDIC insured, enters into bankruptcy proceedings.  A successor Agent 
would generally be appointed to replace the terminated Agent, and assets held   
by the Agent under the loan agreement should remain available to holders of     
Loan Interests.  However, if assets held by the Agent for the benefit of the    
Fund were determined to be subject to the claims of the Agent's general         
creditors, the Fund might incur certain costs and delays in realizing payment   
on a loan interest, or suffer a loss of principal and/or interest.  In          
situations involving Intermediate Participants, similar risks may arise.        

Purchasers of Loan Interests depend primarily upon the creditworthiness of the  
borrower for payment of principal and interest.  If the Fund does not receive   
scheduled interest or principal payments on such indebtedness, the Fund's share 
price and yield could be adversely affected.  Loans that are fully secured      
offer the Fund more protections than an unsecured loan in the event of          
non-payment of scheduled interest or principal.  However, there is no assurance 
that the liquidation of collateral from a secured loan would satisfy the        
borrower's obligation, or that the collateral can be liquidated.  Indebtedness  
of borrowers whose creditworthiness is poor involves substantially greater      
risks, and may be highly speculative.  Borrowers that are in bankruptcy or      
restructuring may never pay off their indebtedness, or may pay only a small     
fraction of the amount owed.  Direct indebtedness of developing countries will  
also involve a risk that the governmental entities responsible for the          
repayment of the debt may be unable, or unwilling, to pay interest and repay    
principal when due.                                                             

THE FOLLOWING SECTION APPLIES TO THE GLOBAL HIGH-YIELD BOND, INTERNATIONAL      
BOND, AND SHORT-TERM GLOBAL BOND FUNDS ONLY:                                    
MATURITY                                                                        

   
The Fund's average portfolio maturity represents an average based on the actual 
stated maturity dates of the debt securities in the Fund's portfolio, except    
that (1) variable-rate securities are deemed to mature at the next              
interest-rate adjustment date, (2) debt securities with put features are deemed 
to mature at the next put-exercise date, (3) the maturity of mortgage-backed    
and certain other asset-backed securities is determined on an "expected life"   
basis by the Advisor and (4) securities being hedged with futures contracts may 
be deemed to have a longer maturity, in the case of purchases of futures        
contracts, and a shorter maturity, in the case of sales of futures contracts,   
than they would otherwise be deemed to have.  In addition, a security that is   
subject to redemption at the option of the issuer on a particular date ("call   
date"), which is prior to the security's stated maturity, may be deemed to      
mature on the call date rather than on its stated maturity date.  The call date 
of a security will be used to calculate average portfolio maturity when the     
Advisor reasonably anticipates, based upon information available to it, that    
the issuer will exercise its right to redeem the security.  The average         
portfolio maturity of the Fund is dollar-weighted based upon the market value   
of the Fund's securities at the time of the calculation.                        
    

MORTGAGE- AND ASSET-BACKED DEBT SECURITIES                                      

Mortgage-backed securities represent direct or indirect participations in, or   
are secured by and payable from, mortgage loans secured by real property, and   
include single- and multi-class pass-through securities and collateralized      
mortgage obligations.  Such securities may be issued or guaranteed by U.S.      
government agencies or instrumentalities, such as the Government National       
Mortgage Association and the Federal National Mortgage Association, or by       
private issuers, generally originators and investors in mortgage loans,         
including savings associations, mortgage bankers, commercial banks, investment  
bankers, and special purpose entities (collectively, "private lenders").        
Mortgage-backed securities issued by private lenders may be supported by pools  
of mortgage loans or other mortgage-backed securities that are guaranteed,      
directly or indirectly, by the U.S. government or one of its agencies or        
instrumentalities, or they may be issued without any governmental guarantee of  
the underlying mortgage assets but with some form of non-governmental credit    
enhancement.                                                                    

Asset-backed securities have structural characteristics similar to              
mortgage-backed securities.  Asset-backed debt obligations represent direct or  
indirect participation in, or are secured by and payable from, assets such as   
motor vehicle installment sales contracts, other installment loan contracts,    
home equity loans, leases of various types of property, and receivables from    
credit card or other revolving credit arrangements.  The credit quality of most 
asset-backed securities depends primarily on the credit quality of the assets   
underlying such securities, how well the entity issuing the security is         
insulated from the credit risk of the originator or any other affiliated        
entities, and the amount and quality of any credit enhancement of the           
securities.  Payments or distributions of principal and interest on             
asset-backed debt obligations may be supported by non-governmental credit       
enhancements including letters of credit, reserve funds, overcollateralization, 
and guarantees by third parties.  The market for privately issued asset-backed  
debt obligations is smaller and less liquid than the market for government      
sponsored mortgage-backed securities.                                           

The rate of principal payment on mortgage- and asset-backed securities          
generally depends on the rate of principal payments received on the underlying  
assets which in turn may be affected by a variety of economic and other         
factors.  As a result, the yield on any mortgage- and asset-backed security is  
difficult to predict with precision and actual yield to maturity may be more or 
less than the anticipated yield to maturity.  The yield characteristics of      
mortgage- and asset-backed securities differ from those of traditional debt     
securities.  Among  the principal differences are that interest and principal   
payments are made more frequently on mortgage-and asset-backed securities,      
usually monthly, and that principal may be prepaid at any time because the      
underlying mortgage loans or other assets generally may be prepaid at any time. 
As a result, if the Fund purchases these securities at a premium, a prepayment  
rate that is faster than expected will reduce yield to maturity, while a        
prepayment rate that is slower than expected will have the opposite effect of   
increasing the yield to maturity.  Conversely, if the Fund purchases these      
securities at a discount, a prepayment rate that is faster than expected will   
increase yield to maturity, while a prepayment rate that is slower than         
expected will reduce yield to maturity.  Amounts available for reinvestment by  
the Fund are likely to be greater during a period of declining interest rates   
and, as a result, are likely to be reinvested at lower interest rates than      
during a period of rising interest rates.  Accelerated prepayments on           
securities purchased by the Fund at a premium also impose a risk of loss of     
principal because the premium may not have been fully amortized at the time the 
principal is prepaid in full.  The market for privately issued mortgage- and    
asset-backed securities is smaller and less liquid than the market for          
government-sponsored mortgage-backed securities.                                

While many mortgage- and asset-backed securities are issued with only one class 
of security, many are issued in more than one class, each with different        
payment terms.  Multiple class mortgage- and asset-backed securities are issued 
for two main reasons.   First, multiple classes may be used as a method of      
providing credit support.  This is accomplished typically through creation of   
one or more classes whose right to payments on the security is made subordinate 
to the right to such payments of the remaining class or classes.  Second,       
multiple classes may permit the issuance of securities with payment terms,      
interest rates, or other characteristics differing both from those of each      
other and from those of the underlying assets.  Examples include so-called      
"strips" (mortgage- and asset-backed securities entitling the holder to         
disproportionate interests with respect to the allocation of interest and       
principal of the assets backing the security), and securities with class or     
classes having characteristics which mimic the characteristics of non-mortgage- 
or asset-backed securities, such as floating interest rates (I.E., interest     
rates which adjust as a specified benchmark changes) or scheduled amortization  
of principal.                                                                   

The Fund may invest in stripped mortgage- or asset-backed securities, which     
receive differing proportions of the interest and principal payments from the   
underlying assets.  The market value of such securities generally is more       
sensitive to changes in prepayment and interest rates than is the case with     
traditional mortgage- and asset-backed securities, and in some cases such       
market value may be extremely volatile.  With respect to certain stripped       
securities, such as interest only and principal only classes, a rate of         
prepayment that is faster or slower than anticipated may result in the Fund     
failing to recover all or a portion of its investment, even though the          
securities are rated investment grade.                                          

Mortgage- and asset-backed securities backed by assets, other than as described 
above, or in which the payment streams on the underlying assets are allocated   
in a manner different than those described above may be issued in the future.   
The Fund may invest in such securities if such investment is otherwise          
consistent with its investment objectives and policies and with the investment  
restrictions of the Fund.                                                       

THE FOLLOWING SECTION APPLIES TO THE GLOBAL HIGH-YIELD BOND, INTERNATIONAL      
BOND, AND SHORT-TERM GLOBAL BOND FUNDS ONLY:                                    
MUNICIPAL OBLIGATIONS                                                           

General obligation bonds are secured by the issuer's pledge of its full faith,  
credit, and taxing power for the payment of interest and principal.  Revenue    
bonds are payable only from the revenues derived from a project or facility or  
from the proceeds of a specified revenue source.  Industrial development bonds  
are generally revenue bonds secured by payments from and the credit of private  
users.  Municipal notes are issued to meet the short-term funding requirements  
of state, regional, and local governments.  Municipal notes include tax         
anticipation notes, bond anticipation notes, revenue anticipation notes, tax    
and revenue anticipation notes, construction loan notes, short-term discount    
notes, tax-exempt commercial paper, demand notes, and similar instruments.      
Municipal obligations include obligations, the interest on which is exempt from 
federal income tax, that may become available in the future as long as the      
Board of Directors of the Fund determines that an investment in any such type   
of obligation is consistent with that Fund's investment objective.              

Municipal lease obligations may take the form of a lease, an installment        
purchase, or a conditional sales contract.  They are issued by state and local  
governments and authorities to acquire land, equipment, and facilities, such as 
state and municipal vehicles, telecommunications and computer equipment, and    
other capital assets.  The Fund may purchase these obligations directly, or it  
may purchase participation interests in such obligations.  Municipal leases are 
generally subject to greater risks than general obligation or revenue bonds.    
State constitutions and statutes set forth requirements that states or          
municipalities must meet in order to issue municipal obligations.  Municipal    
leases may contain a covenant by the state or municipality to budget for,       
appropriate, and make payments due under the obligation.  Certain municipal     
leases may, however, contain "non-appropriation" clauses which provide that the 
issuer is not obligated to make payments on the obligation in future years      
unless funds have been appropriated for this purpose each year.  Accordingly,   
such obligations are subject to "non-appropriation" risk.  While municipal      
leases are secured by the underlying capital asset, it may be difficult to      
dispose of any such asset in the event of non-appropriation or other default.   

REPURCHASE AGREEMENTS                                                           

   
The Fund may enter into repurchase agreements with certain banks or non-bank    
dealers.  In a repurchase agreement, the Fund buys a security at one price, and 
at the time of sale, the seller agrees to repurchase the obligation at a        
mutually agreed upon time and price (usually within seven days).  The           
repurchase agreement, thereby, determines the yield during the purchaser's      
holding period, while the seller's obligation to repurchase is secured by the   
value of the underlying security.  The Advisor will monitor, on an ongoing      
basis, the value of the underlying securities to ensure that the value always   
equals or exceeds the repurchase price plus accrued interest.  Repurchase       
agreements could involve certain risks in the event of a default or insolvency  
of the other party to the agreement, including possible delays or restrictions  
upon the Fund's ability to dispose of the underlying securities.  Although no   
definitive creditworthiness criteria are used, the Advisor reviews the          
creditworthiness of the banks and non-bank dealers with which the Fund enters   
into repurchase agreements to evaluate those risks.  The Fund may, under        
certain circumstances, deem repurchase agreements collateralized by U.S.        
government securities to be investments in U.S. government securities.          
    

   
In addition, the Fund may invest in foreign repurchase agreements.  Foreign     
repurchase agreements may include agreements to purchase and sell foreign       
securities in exchange for fixed U.S. dollar amounts, or in exchange for        
specified amounts of foreign currency.  In the event of default by the          
counterparty, the Fund may suffer a loss if the value of the security           
purchased, I.E., the collateral, in U.S. dollars, is less than the agreed-upon  
repurchase price, or if the Fund is unable to successfully assert a claim to    
the collateral under foreign laws.  As a result, foreign repurchase agreements  
may involve greater credit risk than repurchase agreements in U.S. markets, as  
well as risks associated with currency fluctuations.  Repurchase agreements     
with foreign counterparties may have more risk than with U.S. counterparties,   
since less financial information may be available about the foreign             
counterparties and they may be less creditworthy.                               
    

REVERSE REPURCHASE AGREEMENTS AND MORTGAGE DOLLAR ROLLS                         

The Fund may engage in reverse repurchase agreements to facilitate portfolio    
liquidity, a practice common in the mutual fund industry, or for arbitrage      
transactions as discussed below.  In a reverse repurchase agreement, the Fund   
would sell a security and enter into an agreement to repurchase the security at 
a specified future date and price.  The Fund generally retains the right to     
interest and principal payments on the security.  Since the Fund receives cash  
upon entering into a reverse repurchase agreement, it may be considered a       
borrowing.  When required by guidelines of the SEC, the Fund will set aside     
permissible liquid assets in a segregated account to secure its obligations to  
repurchase the security.                                                        

The Fund may also enter into mortgage dollar rolls, in which the Fund would     
sell mortgage-backed securities for delivery in the current month and           
simultaneously contract to purchase substantially similar securities on a       
specified future date.  While the Fund would forego principal and interest paid 
on the mortgage-backed securities during the roll period, the Fund would be     
compensated by the difference between the current sales price and the lower     
price for the future purchase as well as by any interest earned on the proceeds 
of the initial sale.  The Fund also could be compensated through the receipt of 
fee income equivalent to a lower forward price.  At the time the Fund would     
enter into a mortgage dollar roll, it would set aside permissible liquid assets 
in a segregated account to secure its obligation for the forward commitment to  
buy mortgage-backed securities.  Mortgage dollar roll transactions may be       
considered a borrowing by the Fund.                                             

The mortgage dollar rolls and reverse repurchase agreements entered into by the 
Fund may be used as arbitrage transactions in which the Fund will maintain an   
offsetting position in investment grade debt obligations or repurchase          
agreements that mature on or before the settlement date on the related mortgage 
dollar roll or reverse repurchase agreements.  Since the Fund will receive      
interest on the securities or repurchase agreements in which it invests the     
transaction proceeds, such transactions may involve leverage.  However, since   
such securities or repurchase agreements will be high quality and will mature   
on or before the settlement date of the mortgage dollar roll or reverse         
repurchase agreement, the Advisor believes that such arbitrage transactions do  
not present the risks to the Fund that are associated with other types of       
leverage.                                                                       

SHORT SALES                                                                     

The Fund may sell securities short (1) to hedge unrealized gains on portfolio   
securities or (2) if it covers such short sale with liquid assets as required   
by the current rules and positions of the SEC or its staff.  Selling securities 
short against the box involves selling a security that the Fund owns or has the 
right to acquire, for delivery at a specified date in the future.  If the Fund  
sells securities short against the box, it may protect unrealized gains, but    
will lose the opportunity to profit on such securities if the price rises.      

   
THE FOLLOWING SECTION APPLIES TO THE ASIA PACIFIC, FOREIGN MAJORMARKETS,        
INTERNATIONAL STOCK, AND OVERSEAS FUNDS  ONLY:                                  
    
SMALL AND MEDIUM COMPANIES                                                      

   
The Fund may invest a substantial portion of its assets in small and medium     
companies.  While small and medium companies generally have the potential for   
rapid growth, investments in small and medium companies often involve greater   
risks than investments in larger, more established companies because small and  
medium companies may lack the management experience, financial resources,       
product diversification, and competitive strengths of larger companies.  In     
addition, in many instances the securities of small and medium companies are    
traded only OTC or on a regional securities exchange, and the frequency and     
volume of their trading is substantially less than is typical of larger         
companies.  Therefore, the securities of small and medium companies may be      
subject to greater and more abrupt price fluctuations.  When making large       
sales, the Fund may have to sell portfolio holdings at discounts from quoted    
prices or may have to make a series of small sales over an extended period of   
time due to the trading volume of small and medium company securities.          
Investors should be aware that, based on the foregoing factors, an investment   
in the Fund may be subject to greater price fluctuations than an investment in  
the Fund that invests primarily in larger, more established companies.  The     
Advisor's research efforts may also play a greater role in selecting securities 
for the Fund than in the Fund that invests in larger, more established          
companies.                                                                      
    

THE FOLLOWING SECTION APPLIES TO THE GLOBAL HIGH-YIELD BOND, INTERNATIONAL      
BOND, AND SHORT-TERM GLOBAL BOND FUNDS ONLY:                                    
SOVEREIGN DEBT                                                                  

Sovereign debt differs from debt obligations issued by private entities in      
that, generally, remedies for defaults must be pursued in the courts of the     
defaulting party.  Legal recourse is therefore limited.  Political conditions,  
especially a sovereign entity's willingness to meet the terms of its debt       
obligations, are of considerable significance.  Also, there can be no assurance 
that the holders of commercial bank loans to the same sovereign entity may not  
contest payments to the holders of sovereign debt in the event of default under 
commercial bank loan agreements.                                                

A sovereign debtor's willingness or ability to repay principal and pay interest 
in a timely manner may be affected by a variety of factors, including among     
others, its cash flow situation, the extent of its foreign reserves, the        
availability of sufficient foreign exchange on the date a payment is due, the   
relative size of the debt service burden to the economy as a whole, the         
sovereign debtor's policy toward principal international lenders and the        
political constraints to which a sovereign debtor may be subject.  A country    
whose exports are concentrated in a few commodities could be vulnerable to a    
decline in the international price of such commodities.  Increased              
protectionism on the part of a country's trading partners, or political changes 
in those countries, could also adversely affect its exports.  Such events could 
diminish a country's trade account surplus, if any, or the credit standing of a 
particular local government or agency.  Another factor bearing on the ability   
of a country to repay sovereign debt is the level of the country's              
international reserves.  Fluctuations in the level of these reserves can affect 
the amount of foreign exchange readily available for external debt payments     
and, thus, could have a bearing on the capacity of the country to make payments 
on its sovereign debt.                                                          
   
To the extent that a country has a current account deficit (generally when its  
exports of merchandise and services are less than its country's imports of      
merchandise and services plus net transfers (E.G., gifts of currency and goods) 
to foreigners), it may need to depend on loans from foreign governments,        
multilateral organizations or private commercial banks, aid payments from       
foreign governments and inflows of foreign investment.  The access of a country 
to these forms of external funding may not be certain, and a withdrawal of      
external funding could adversely affect the capacity of a government to make    
payments on its obligations.  In addition, the cost of servicing debt           
obligations can be adversely affected, by a change in international interest    
rates since the majority of these obligations carry interest rates that are     
adjusted periodically based upon international rates.                           
    
With respect to sovereign debt of emerging market issuers, investors should be  
aware that certain emerging market countries are among the largest debtors to   
commercial banks and foreign governments.  At times, certain emerging market    
countries have declared moratoria on the payment of principal and interest on   
external debt.                                                                  

Certain emerging market countries have experienced difficulty in servicing      
their sovereign debt on a timely basis which led to defaults on certain         
obligations and the restructuring of certain indebtedness.  Restructuring       
arrangements have included, among other things, reducing and rescheduling       
interest and principal payments by negotiating new or amended credit agreements 
or converting outstanding principal and unpaid interest to Brady Bonds          
(discussed below), and obtaining new credit to finance interest payments.       
Holders of sovereign debt, including the Fund, may be requested to participate  
in the rescheduling of such debt and to extend further loans to sovereign       
debtors, and the interests of holders of sovereign debt could be adversely      
affected in the course of restructuring arrangements or by certain other        
factors referred to below.  Furthermore, some of the participants in the        
secondary market for sovereign debt may also be directly involved in            
negotiating the terms of these arrangements and may therefore have access to    
information not available to other market participants, such as the Fund.       
Obligations arising from past restructuring agreements may affect the economic  
performance and political and social stability of certain issuers of sovereign  
debt.  There is no bankruptcy proceeding by which sovereign debt on which a     
sovereign has defaulted may be collected in whole or in part.                   

Foreign investment in certain sovereign debt is restricted or controlled to     
varying degrees.  These restrictions or controls may at times limit or preclude 
foreign investment in such sovereign debt and increase the costs and expenses   
of the Fund.  Certain countries in which the Fund may invest require            
governmental approval prior to investments by foreign persons, limit the amount 
of investment by foreign persons in a particular issuer, limit the investment   
by foreign persons only to a specific class of securities of an issuer that may 
have less advantageous rights than the classes available for purchase by        
domiciliaries of the countries, or impose additional taxes on foreign           
investors.  Certain issuers may require governmental approval for the           
repatriation of investment income, capital or the proceeds of sales of          
securities by foreign investors.  In addition, if a deterioration occurs in a   
country's balance of payments, the country could impose temporary restrictions  
on foreign capital remittances.  The Fund could be adversely affected by delays 
in, or a refusal to grant, any required governmental approval for repatriation  
of capital, as well as by the application to the Fund of any restrictions on    
investments.  Investing in local markets may require the Fund to adopt special  
procedures, seek local government approvals or take other actions, each of      
which may involve additional costs to the Fund.                                 

The sovereign debt in which the Fund may invest includes Brady Bonds, which are 
securities issued under the framework of the Brady Plan, an initiative          
announced by former U.S.  Treasury Secretary Nicholas F.  Brady in 1989 as a    
mechanism for debtor nations to restructure their outstanding external          
commercial bank indebtedness.  In restructuring its external debt under the     
Brady Plan framework, a debtor nation negotiates with its existing bank lenders 
as well as multilateral institutions such as the International Monetary Fund    
("IMF").  The Brady Plan framework, as it has developed, contemplates the       
exchange of commercial bank debt for newly issued Brady Bonds.  Brady Bonds may 
also be issued in respect of new money being advanced by existing lenders in    
connection with the debt restructuring.  The World Bank and the IMF support the 
restructuring by providing Fund pursuant to loan agreements or other            
arrangements which enable the debtor nation to collateralize the new Brady      
Bonds or to repurchase outstanding bank debt at a discount.                     

There can be no assurance that the circumstances regarding the issuance of      
Brady Bonds by these countries will not change.  Investors should recognize     
that Brady Bonds do not have a long payment history.  Agreements implemented    
under the Brady Plan to date are designed to achieve debt and debt-service      
reduction through specific options negotiated by a debtor nation with its       
creditors.  As a result, the financial packages offered by each country differ. 
The types of options have included the exchange of outstanding commercial bank  
debt for bonds issued at 100% of face value of such debt, which carry a         
below-market stated rate of interest (generally known as par bonds), bonds      
issued at a discount from the face value of such debt (generally known as       
discount bonds), bonds bearing an interest rate which increases over time, and  
bonds issued in exchange for the advancement of new money by existing lenders.  
Regardless of the stated face amount and stated interest rate of the various    
types of Brady Bonds the Fund will purchase Brady Bonds, if any, in secondary   
markets, as described below, in which the price and yield to the investor       
reflect market conditions at the time of purchase.                              

Certain Brady Bonds have been collateralized as to principal due at maturity by 
U.S. Treasury zero coupon bonds with maturities equal to the final maturity of  
such Brady Bonds.  Collateral purchases are financed by the IMF, the World      
Bank, and the debtor nations' reserves.  In the event of a default with respect 
to collateralized Brady Bonds as a result of which the payment obligations of   
the issuer are accelerated, the U.S. Treasury zero coupon obligations held as   
collateral for the payment of principal will not be distributed to investors,   
nor will such obligations be sold and the proceeds distributed.  The collateral 
will be held by the collateral agent to the scheduled maturity of the defaulted 
Brady Bonds, which will continue to be outstanding, at which time the face      
amount of the collateral will equal the principal payments which would have     
then been due on the Brady Bonds in the normal course.  In addition, interest   
payments on certain types of Brady Bonds may be collateralized by cash or high  
grade securities in amounts that typically represent between 12 and 18 months   
of interest accruals on these instruments with the balance of the interest      
accruals being uncollateralized.  Brady Bonds are often viewed as having        
several valuation components:  (1) the collateralized repayment of principal,   
if any, at final maturity, (2) the collateralized interest payments, if any,    
(3) the uncollateralized interest payments, and (4) any uncollateralized        
repayment of principal at maturity (these uncollateralized amounts constitute   
the "residual risk").  In light of the residual risk of Brady Bonds and, among  
other factors, the history of defaults with respect to commercial bank loans by 
public and private entities of countries issuing Brady Bonds, investments in    
Brady Bonds have speculative characteristics.  The Fund may purchase Brady      
Bonds with no or limited collateralization, and will be relying for payment of  
interest and (except in the case of principal collateralized Brady Bonds)       
principal primarily on the willingness and ability of the foreign government to 
make payment in accordance with the terms of the Brady Bonds.  Brady Bonds      
issued to date are purchased and sold in secondary markets through U.S.         
securities dealers and other financial institutions and are generally           
maintained through European transnational securities depositories.              

VARIABLE- OR FLOATING-RATE SECURITIES                                           

The Fund may invest in securities which offer a variable- or floating-rate of   
interest.  Variable-rate securities provide for automatic establishment of a    
new interest rate at fixed intervals (E.G., daily, monthly, semi-annually,      
etc.).  Floating-rate securities generally provide for automatic adjustment of  
the interest rate whenever some specified interest rate index changes.  The     
interest rate on variable- or floating-rate securities is ordinarily determined 
by reference to or is a percentage of a bank's prime rate, the 90-day U.S.      
Treasury bill rate, the rate of return on commercial paper or bank certificates 
of deposit, an index of short-term interest rates, or some other objective      
measure.                                                                        

Variable- or floating-rate securities frequently include a demand feature       
entitling the holder to sell the securities to the issuer at par.  In many      
cases, the demand feature can be exercised at any time on seven days notice; in 
other cases, the demand feature is exercisable at any time on 30 days notice or 
on similar notice at intervals of not more than one year.  Some securities      
which do not have variable or floating interest rates may be accompanied by     
puts producing similar results and price characteristics.  When considering the 
maturity of any instrument which may be sold or put to the issuer or a third    
party, the Fund may consider that instrument's maturity to be shorter than its  
stated maturity.                                                                

Variable-rate demand notes include master demand notes which are obligations    
that permit the Fund to invest fluctuating amounts, which may change daily      
without penalty, pursuant to direct arrangements between the Fund, as lender,   
and the borrower.  The interest rates on these notes fluctuate from time to     
time.  The issuer of such obligations normally has a corresponding right, after 
a given period, to prepay in its discretion the outstanding principal amount of 
the obligations plus accrued interest upon a specified number of days notice to 
the holders of such obligations.  The interest rate on a floating-rate demand   
obligation is based on a known lending rate, such as a bank's prime rate, and   
is adjusted automatically each time such rate is adjusted.  The interest rate   
on a variable-rate demand obligation is adjusted automatically at specified     
intervals.  Frequently, such obligations are secured by letters of credit or    
other credit support arrangements provided by banks.  Because these obligations 
are direct lending arrangements between the lender and borrower, it is not      
contemplated that such instruments will generally be traded.  There generally   
is not an established secondary market for these obligations, although they are 
redeemable at face value.  Accordingly, where these obligations are not secured 
by letters of credit or other credit support arrangements, the Fund's right to  
redeem is dependent on the ability of the borrower to pay principal and         
interest on demand.  Such obligations frequently are not rated by credit rating 
agencies and, if not so rated, the Fund may invest in them only if the Advisor  
determines that at the time of investment the obligations are of comparable     
quality to the other obligations in which the Fund may invest.  The Advisor, on 
behalf of the Fund, will consider on an ongoing basis the creditworthiness of   
the issuers of the floating- and variable-rate demand obligations in the Fund's 
portfolio.                                                                      

The Fund will not invest more than 15% of its net assets (10% for money market  
funds) in variable- and floating-rate demand obligations that are not readily   
marketable (a variable- or floating-rate demand obligation that may be disposed 
of on not more than seven days notice will be deemed readily marketable and     
will not be subject to this limitation).  In addition, each variable- or        
floating-rate obligation must meet the credit quality requirements applicable   
to all the Fund's investments at the time of purchase.  When determining        
whether such an obligation meets the Fund's credit quality requirements, the    
Fund may look to the credit quality of the financial guarantor providing a      
letter of credit or other credit support arrangement.                           

   
In determining the Fund's weighted average portfolio maturity, the Fund will    
consider a floating- or variable-rate security to have a maturity equal to its  
stated maturity (or redemption date if it has been called for redemption),      
except that it may consider (1) variable-rate securities to have a maturity     
equal to the period remaining until the next readjustment in the interest rate, 
unless subject to a demand feature, (2) variable-rate securities subject to a   
demand feature to have a remaining maturity equal to the longer of (a) the next 
readjustment in the interest rate or (b) the period remaining until the         
principal can be recovered through demand, and (3) floating-rate securities     
subject to a demand feature to have a maturity equal to the period remaining    
until the principal can be recovered through demand.  Variable- and             
floating-rate securities generally are subject to less principal fluctuation    
than securities without these attributes since the securities usually trade at  
amortized cost following the readjustment in the interest rate.                 
    

WARRANTS                                                                        

The Fund may acquire warrants.  Warrants are securities giving the holder the   
right, but not the obligation, to buy the stock of an issuer at a given price   
(generally higher than the value of the stock at the time of issuance) during a 
specified period or perpetually.  Warrants may be acquired separately or in     
connection with the acquisition of securities.  Warrants do not carry with them 
the right to dividends or voting rights with respect to the securities that     
they entitle their holder to purchase, and they do not represent any rights in  
the assets of the issuer.  As a result, warrants may be considered to have more 
speculative characteristics than certain other types of investments.  In        
addition, the value of a warrant does not necessarily change with the value of  
the underlying securities, and a warrant ceases to have value if it is not      
exercised prior to its expiration date.                                         

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES                                     

The Fund may purchase securities on a when-issued or delayed-delivery basis.    
The price of debt obligations so purchased, which may be expressed in yield     
terms, generally is fixed at the time the commitment to purchase is made, but   
delivery and payment for the securities take place at a later date.  During the 
period between the purchase and settlement, no payment is made by the Fund to   
the issuer and no interest on the debt obligations accrues to the Fund.         
Forward commitments involve a risk of loss if the value of the security to be   
purchased declines prior to the settlement date, which risk is in addition to   
the risk of decline in value of the Fund's other assets.  While when-issued and 
delayed-delivery securities may be sold prior to the settlement date, the Fund  
intends to purchase such securities with the purpose of actually acquiring them 
unless a sale appears desirable for investment reasons.  At the time the Fund   
makes the commitment to purchase these types of securities, it will record the  
transaction and reflect the value of the security in determining its net asset  
value.  The Fund does not believe that its net asset value will be adversely    
affected by these types of securities purchases.                                

   
To the extent required by the SEC, the Fund will maintain cash and marketable   
securities equal in value to commitments for when-issued or delayed-delivery    
securities.  Such segregated securities either will mature or, if necessary, be 
sold on or before the settlement date.  When the time comes to pay for          
when-issued or delayed-delivery securities, the Fund will meet its obligations  
from then-available cash flow, sale of the securities held in the separate      
account, described above, sale of other securities or, although it would not    
normally expect to do so, from the sale of the when-issued or delayed-delivery  
securities themselves (which may have a market value greater or less than the   
Fund's payment obligation).                                                     
    

ZERO-COUPON, STEP-COUPON, AND PAY-IN-KIND SECURITIES                            

The Fund may invest in zero-coupon, step-coupon, and pay-in-kind securities.    
These securities are debt securities that do not make regular cash interest     
payments.  Zero-coupon and step-coupon securities are sold at a deep discount   
to their face value.  Pay-in-kind securities pay interest through the issuance  
of additional securities.  Because such securities do not pay current  cash     
income, the price of these securities can be volatile when interest rates       
fluctuate.  While these securities do not pay current cash income, federal      
income tax law requires the holders of zero-coupon, step-coupon, and            
pay-in-kind securities to include in income each year the portion of the        
original issue discount (or deemed discount) and other non-cash income on such  
securities accruing that year.  In order to continue to qualify as a "regulated 
investment company"  or "RIC" under the IRC and avoid a certain excise tax, the 
Fund may be required to distribute a portion of such discount and income and    
may be required to dispose of other portfolio securities, which may occur in    
periods of adverse market prices, in order to generate cash to meet these       
distribution requirements.                                                      

                             DIRECTORS AND OFFICERS                             

   
The Board of Directors of the Fund is responsible for managing the Fund's       
business and affairs.  Directors and officers of the Fund, together with        
information as to their principal business occupations during the last five     
years, and other information are shown below.  Each director who is deemed an   
"interested person," as defined in the 1940 Act, is indicated by an asterisk    
(*).  Each officer and director holds the same position with the 27 registered  
open-end management investment companies consisting of 53 mutual funds ("Strong 
Funds").  The Strong Funds, in the aggregate, pay each Director who is not a    
director, officer, or employee of the Advisor, or any affiliated company (a     
"disinterested director") an annual fee of $50,000, plus $100 per Board meeting 
for each Strong Fund.  In addition, each disinterested director is reimbursed   
by the Strong Funds for travel and other expenses incurred in connection with   
attendance at such meetings.  Other officers and directors of the Strong Funds  
receive no compensation or expense reimbursement from the Strong Funds.         
    

*RICHARD S. STRONG (DOB 5/12/42), Director and Chairman of the Board of the     
Strong Funds.                                                                   

Prior to August 1985, Mr. Strong was Chief Executive Officer of the Advisor,    
which he founded in 1974. Since August 1985, Mr. Strong has been a Security     
Analyst and Portfolio Manager of the Advisor.  In October 1991, Mr. Strong also 
became the Chairman of the Advisor.  Mr. Strong is a Director of the Advisor.   
Mr. Strong has been in the investment management business since 1967.           

MARVIN E. NEVINS (DOB 7/19/18), Director of the Strong Funds.                   

   
Private Investor.  From 1945 to 1980, Mr. Nevins was Chairman of Wisconsin      
Centrifugal Inc., a foundry. Mr. Nevins is a former Chairman of the Wisconsin   
Association of Manufacturers & Commerce.  He has been a Director of A-Life      
Medical, Inc., San Diego, CA since 1996 and Surface Systems, Inc. (a weather    
information company), St. Louis, MO since 1992.  He was also a regent of the    
Milwaukee School of Engineering and a member of the Board of Trustees of the    
Medical College of Wisconsin and Carroll College.                               
    

WILLIE D. DAVIS (DOB 7/24/34), Director of the Strong Funds.                    
   
Mr. Davis has been Director of Alliance Bank since 1980, Sara Lee Corporation   
(a food/consumer products company) since 1983, KMart Corporation (a discount    
consumer products company) since 1985, Dow Chemical Company since 1988, MGM     
Grand, Inc. (an entertainment/hotel company) since 1990, WICOR, Inc. (a utility 
company) since 1990, Johnson Controls, Inc. (an industrial company) since 1992, 
and Rally's Hamburger, Inc. since 1994.  Mr. Davis has been a trustee of the    
University of Chicago since 1980 and Marquette University since 1988.  Since    
1977, Mr. Davis has been President and Chief Executive Officer of All Pro       
Broadcasting, Inc.  Mr. Davis was a Director of the Fireman's Fund (an          
insurance company) from 1975 until 1990.                                        
    
STANLEY KRITZIK (DOB 1/9/30), Director of the Strong Funds.                     

Mr. Kritzik has been a Partner of Metropolitan Associates since 1962, a         
Director of Aurora Health Care since 1987, and Health Network Ventures, Inc.    
since 1992.                                                                     

WILLIAM F. VOGT (DOB 7/19/47), Director of the Strong Funds.                    

Mr. Vogt has been the President of Vogt Management Consulting, Inc. since 1990. 
From 1982 until 1990, he served as Executive Director of University Physicians  
of the University of Colorado.  Mr. Vogt is the Past President of the Medical   
Group Management Association and a Fellow of the American College of Medical    
Practice Executives.                                                            

THOMAS P. LEMKE (DOB 7/30/54), Vice President of the Strong Funds.              
                                                                                
   
Mr. Lemke has been Senior Vice President, Secretary, and General Counsel of the 
Advisor since September 1994.  For two years prior to joining the Advisor, Mr.  
Lemke acted as Resident Counsel for Funds Management at J.P. Morgan & Co., Inc. 
From February 1989 until April 1992, Mr. Lemke acted as Associate General       
Counsel to Sanford C. Bernstein & Co., Inc.  For two years prior to that, Mr.   
Lemke was Of Counsel at the Washington D.C. law firm of Tew Jorden & Schulte, a 
successor of Finley, Kumble & Wagner.  From August 1979 until December 1986,    
Mr. Lemke worked at the SEC, most notably as the Chief Counsel to the Division  
of Investment Management (November 1984 - December 1986), and as Special        
Counsel to the Office of Insurance Products, Division of Investment Management  
(April 1982 - October 1984).                                                    
    

STEPHEN J. SHENKENBERG (DOB  6/14/58), Vice President and Secretary of the      
Strong Funds.                                                                   

   
Mr. Shenkenberg has been Deputy General Counsel of the Advisor since November   
1996.  From December 1992 until November 1996, Mr. Shenkenberg acted as         
Associate Counsel to the Advisor.  From June 1987 until December 1992, Mr.      
Shenkenberg was an attorney for Godfrey & Kahn, S.C., a Milwaukee law firm.     
    

JOHN S. WEITZER (DOB 10/31/67), Vice President of the Strong Funds.             

Mr. Weitzer has been Senior Counsel of the Advisor since December 1997.  From   
July 1993 until December 1997, Mr. Weitzer acted as Associate Counsel to the    
Advisor.                                                                        

MARY F. HOPPA (DOB 5/31/64), Vice President of the Strong Funds.                

Ms. Hoppa has been Vice President and Director of Mutual Fund Administration of 
the Advisor since January 1998.  From October 1996 to January 1998, Ms. Hoppa   
acted as Director of Transfer Agency Services of the Advisor and, from January  
1988 to October 1996, as Transfer Agency Systems Liaison Manager of the         
Advisor.  From January 1987 to January 1988, Ms. Hoppa acted as a Shareholder   
Services Associate of the Advisor.                                              

   
DANA J. RUSSART (DOB 12/1/58), Treasurer of the Strong Funds.                   
    

   
Ms. Russart has been Director of Retail Marketing Operations and Administration 
of the Advisor since May 1997.  From April 1996 to May 1997, Ms. Russart was    
the Principal and Director of Operations of the Institutional Investment        
Adviser at Baird Capital Management LLC.  From July 1993 to April 1996 Ms.      
Russart served Firstar Corporation as President of the Broker/Dealer Subsidiary 
Elan Investment Services, Inc. (January 1995 to April 1996), as a Vice          
President of the Trust and Investment Division (April 1994 to April 1996) and   
she was a Vice President of the Investment Advisory Subsidiary, Firstar         
Investment Research & Management Company (July 1993 to April 1994).  For three  
years prior to that, Ms. Russart was an Executive Vice President at Sunstone    
Financial Group, Inc. (Mutual Fund Service Company).  From July 1981 to March   
1990 Ms. Russart served Price Waterhouse as a Manager (1986 to 1990) and as a   
Senior Accountant (1981 to 1986).                                               
    

Except for Messrs. Nevins, Davis, Kritzik, and Vogt, the address of all of the  
above persons is P.O. Box 2936, Milwaukee, Wisconsin 53201.  Mr. Nevins'        
address is 6075 Pelican Bay Boulevard, Naples, Florida 34108. Mr. Davis'        
address is 161 North La Brea, Inglewood, California 90301.  Mr. Kritzik's       
address is 1123 North Astor Street, P.O. Box 92547, Milwaukee, Wisconsin        
53202-0547.  Mr. Vogt's address is 2830 East Third Avenue, Denver, Colorado     
80206.                                                                          




   
Unless otherwise noted below, as of January 31, 1999, the officers and          
directors of the Fund in the aggregate beneficially owned less than 1% of the   
Fund's then outstanding shares.                                                 
    

<TABLE>
<CAPTION>
<S>   <C>     <C>      
FUND  SHARES  PERCENT
- ----  ------  -------
None                 
</TABLE>

                             PRINCIPAL SHAREHOLDERS                             

   
Unless otherwise noted below, as of January 31, 1999 no persons owned of record 
or are known to own of record or beneficially more than 5% of the Fund's then   
outstanding shares.                                                             
    

   
<TABLE>
<CAPTION>
<S>               <C>     <C>      
NAME AND ADDRESS  SHARES  PERCENT
- ----------------  ------  -------
                                 
</TABLE>
    

INVESTMENT ADVISOR                               

   
The Fund has entered into an Advisory Agreement with Strong Capital Management, 
Inc. ("Advisor").  Mr. Strong controls the Advisor due to his stock ownership   
of the Advisor.  Mr. Strong is the Chairman and a Director of the Advisor, Mr.  
Lemke is a Senior Vice President, Secretary, and General Counsel of the         
Advisor, Mr. Shenkenberg is Vice President, Assistant Secretary, and Deputy     
General Counsel of the Advisor, Ms. Hoppa is a Senior Vice President of the     
Advisor, and Mr. Weitzer is Senior Counsel of the Advisor.  As of  January 31,  
1999, the Advisor had $___ billion under management.                            
    
   
The Advisory Agreement is required to be approved annually by either the Board  
of Directors of the Fund or by vote of a majority of the Fund's outstanding     
voting securities (as defined in the 1940 Act).  In either case, each annual    
renewal must be approved by the vote of a majority of the Fund's directors who  
are not parties to the Advisory Agreement or interested persons of any such     
party, cast in person at a meeting called for the purpose of voting on such     
approval. The Advisory Agreement is terminable, without penalty, on 60 days     
written notice by the Board of Directors of the Fund, by vote of a majority of  
the Fund's outstanding voting securities, or by the Advisor, and will terminate 
automatically in the event of its assignment.                                   
    
   
Under the terms of the Advisory Agreement, the Advisor manages the Fund's       
investments subject to the supervision of the Fund's Board of Directors.  The   
Advisor is responsible for investment decisions and supplies investment         
research and portfolio management.  The Advisory Agreement authorizes  the      
Advisor to delegate its investment advisory duties to a subadvisor in           
accordance with a written agreement under which the subadvisor would furnish    
such investment advisory services to the Advisor.  In that situation, the       
Advisor continues to have responsibility for all investment advisory services   
furnished by the subadvisor under the subadvisory agreement.  At its expense,   
the Advisor provides office space and all necessary office facilities,          
equipment and personnel for servicing the investments of the Fund.  The Advisor 
places all orders for the purchase and sale of the Fund's portfolio securities  
at the Fund's expense.                                                          
    

Except for expenses assumed by the Advisor, as set forth above, or by Strong    
Funds Distributors, Inc. with respect to the distribution of the Fund's shares, 
the Fund is responsible for all its other expenses, including, without          
limitation, interest charges, taxes, brokerage commissions, and similar         
expenses; expenses of issue, sale, repurchase or redemption of shares; expenses 
of registering or qualifying shares for sale with the states and the SEC;       
expenses for printing and distribution of prospectuses to existing              
shareholders; charges of custodians (including fees as custodian for keeping    
books and similar services for the Fund), transfer agents (including the        
printing and mailing of reports and notices to shareholders), registrars,       
auditing and legal services, and clerical services related to recordkeeping and 
shareholder relations; printing of stock certificates; fees for directors who   
are not "interested persons" of the Advisor; expenses of indemnification;       
extraordinary expenses; and costs of shareholder and director meetings.         

As compensation for its services, the Fund pays to the Advisor a monthly        
management fee at the annual rate specified below of the average daily net      
asset value of the Fund.  From time to time, the Advisor may voluntarily waive  
all or a portion of its management fee for the Fund.                            



<TABLE>
<CAPTION>
<S>                          <C>          
            FUND             ANNUAL RATE
- ---------------------------  -----------
          Asia Pacific Fund        1.00%
Global High-Yield Bond Fund        0.70%
    International Bond Fund        0.70%
   International Stock Fund        1.00%
Short-Term Global Bond Fund       0.625%
</TABLE>

The Fund paid the following management fees for the time periods indicated:     
   
    
<TABLE>
<CAPTION>
<S>                  <C>                   <C>          <C>                               

FISCAL YEAR ENDED  MANAGEMENT FEE ($)  WAIVER($)  MANAGEMENT FEE AFTER WAIVER ($)
- -------------------  --------------------  -----------  --------------------------------
</TABLE>

Asia Pacific Fund                                                               

   
<TABLE>
<CAPTION>
<S>        <C>      <C><C>      
                              
10/31/95*  470,598  0  470,598
 10/31/96  978,527  0  978,527
 10/31/97  568,150  0  568,150
 10/31/98                     
</TABLE>
    

   
Foreign MajorMarkets Fund                                                       
    

   
<TABLE>
<CAPTION>
<S>          <C><C><C>
10/31/98(1)         
</TABLE>
    

   
Global High-Yield Bond Fund                                                     
    

   
<TABLE>
<CAPTION>
<S>          <C><C><C>
10/31/98(2)         
</TABLE>
    

International Bond Fund                                                         

   
<TABLE>
<CAPTION>
<S>        <C>      <C>      <C>     
                                   
10/31/95*   83,484   83,484       0
 10/31/96  189,233  189,233       0
 10/31/97  222,163  206,614  15,549
 10/31/98                          
</TABLE>
    

International Stock Fund                                                        

   
<TABLE>
<CAPTION>
<S>        <C>        <C><C>        
                                  
10/31/95*  1,899,806  0  1,899,806
 10/31/96  2,965,504  0  2,965,504
 10/31/97  2,819,112  0  2,819,112
 10/31/98                         
</TABLE>
    

   
Overseas Fund                                                                   
    

   
<TABLE>
<CAPTION>
<S>          <C><C><C>
10/31/98(3)         
</TABLE>
    

Short-Term Global Bond Fund                                                     

   
<TABLE>
<CAPTION>
<S>        <C>      <C>      <C>      
                                    
10/31/95*   92,605   92,605        0
 10/31/96  231,291  231,291        0
 10/31/97  563,944  257,899  306,045
 10/31/98                           
</TABLE>
    

*For the ten-month fiscal year ended October 31, 1995.                          
   
(1)  Commenced operations on June 30, 1998. 
    
   
(2)  Commenced operations on January 31, 1998.                                  
    
   
(3)  Commenced operations on June 30, 1998.                                     
    

The organizational expenses for the Fund which were advanced by the Advisor and 
which will be reimbursed by the Fund over a period of not more than 60 months   
from the Fund's date of inception are listed below.                             

<TABLE>
<CAPTION>
<S>                          <C>                      
            FUND             ORGANIZATIONAL EXPENSES
- ---------------------------  -----------------------
          Asia Pacific Fund                  $31,742
    International Bond Fund                  $79,833
Short-Term Global Bond Fund                  $81,832
Global High-Yield Bond Fund                   $2,350
</TABLE>

The Advisory Agreement requires the Advisor to reimburse the Fund in the event  
that the expenses and charges payable by the Fund in any fiscal year, including 
the management fee but excluding taxes, interest, brokerage commissions, and    
similar fees and to the extent permitted extraordinary expenses, exceed two     
percent (2%) of the average net asset value of the Fund for such year, as       
determined by valuations made as of the close of each business day of the year. 
Reimbursement of expenses in excess of the applicable limitation will be made   
on a monthly basis and will be paid to the Fund by reduction of the Advisor's   
fee, subject to later adjustment, month by month, for the remainder of the      
Fund's fiscal year.  The Advisor may from time to time voluntarily absorb       
expenses for the Fund in addition to the reimbursement of expenses in excess of 
applicable limitations.                                                         

On July 12, 1994, the SEC filed an administrative action ("Order") against the  
Advisor, Mr. Strong, and another employee of the Advisor in connection with     
conduct that occurred between 1987 and early 1990. In re Strong/Corneliuson     
Capital Management, Inc., et al. Admin. Proc. File No. 3-8411. The proceeding   
was settled by consent without admitting or denying the allegations in the      
Order. The Order found that the Advisor and Mr. Strong aided and abetted        
violations of Section 17(a) of the 1940 Act by effecting trades between mutual  
funds, and between mutual funds and Harbour Investments Ltd. ("Harbour"),       
without complying with the exemptive provisions of SEC Rule 17a-7 or otherwise  
obtaining an exemption. It further found that the Advisor violated, and Mr.     
Strong aided and abetted violations of, the disclosure provisions of the 1940   
Act and the Investment Advisers Act of 1940 by misrepresenting the Advisor's    
policy on personal trading and by failing to disclose trading by Harbour, an    
entity in which principals of the Advisor owned between 18 and 25 percent of    
the voting stock. As part of the settlement, the respondents agreed to a        
censure and a cease and desist order and the Advisor agreed to various          
undertakings, including adoption of certain procedures and a limitation for six 
months on accepting certain types of new advisory clients.                      

On June 6, 1996, the Department of Labor ("DOL") filed an action against the    
Advisor for equitable relief alleging violations of the Employee Retirement     
Income Security Act of 1974 ("ERISA") in connection with cross trades that      
occurred between 1987 and late 1989 involving certain pension accounts managed  
by the Advisor.  Contemporaneous with this filing, the Advisor, without         
admitting or denying the DOL's allegations, agreed to the entry of a consent    
judgment resolving all matters relating to the allegations.  Reich v. Strong    
Capital Management, Inc., (U.S.D.C. E.D. WI) ("Consent Judgment").  Under the   
terms of the Consent Judgment, the Advisor agreed to reimburse the affected     
accounts a total of $5.9 million.  The settlement did not have any material     
impact on the Advisor's financial position or operations.                       

The Fund and the Advisor have adopted a Code of Ethics ("Code") which governs   
the personal trading activities of all "Access Persons" of the Advisor.  Access 
Persons include every director and officer of the Advisor and the investment    
companies managed by the Advisor, including the Fund, as well as certain        
employees of the Advisor who have access to information relating to the         
purchase or sale of securities by the Advisor on behalf of accounts managed by  
it.  The Code is based upon the principal that such Access Persons have a       
fiduciary duty to place the interests of the Fund and the Advisor 's other      
clients ahead of their own.                                                     

The Code requires Access Persons (other than Access Persons who are independent 
directors of the investment companies managed by the Advisor, including the     
Fund) to, among other things, preclear their securities transactions (with      
limited exceptions, such as transactions in shares of mutual funds, direct      
obligations of the U.S. government, and certain options on broad-based          
securities market indexes) and to execute such transactions through the         
Advisor's  trading department. The Code, which applies to all Access Persons    
(other than Access Persons who are independent directors of the investment      
companies managed by the Advisor, including the Fund), includes a ban on        
acquiring any securities in an initial public offering, other than a new        
offering of a registered open-end investment company, and a prohibition from    
profiting on short-term trading in securities.  In addition, no Access Person   
may purchase or sell any security which is contemporaneously being purchased or 
sold, or to the knowledge of the Access Person, is being considered for         
purchase or sale, by the Advisor on behalf of any mutual fund or other account  
managed by it.  Finally, the Code provides for trading "black out" periods of   
seven calendar days during which time Access Persons who are portfolio managers 
may not trade in securities which have been purchased or sold by any mutual     
fund or other account managed by the portfolio manager.                         

   
The Advisor provides investment advisory services for multiple clients through  
different types of investment accounts (e.g., mutual funds, hedge funds,        
separately managed accounts, etc.) who may have similar or different investment 
objectives and investment policies (e.g., some accounts may have an active      
trading strategy while others follow a "buy and hold" strategy).  In managing   
these accounts, the Advisor seeks to maximize each account's return, consistent 
with the account's investment objectives and investment strategies.  While the  
Advisor's policies are designed to ensure that over time similarly-situated     
clients receive similar treatment, to the maximum extent possible, because of   
the range of the Advisor's clients, the Advisor may give advice and take action 
with respect to one account that may differ from the advice given, or the       
timing or nature of action taken, with respect to another account (the Advisor, 
its principals and associates also may take such actions in their personal      
securities transactions, to the extent permitted by and consistent with the     
Code).  For example, the Advisor may use the same investment style in managing  
two accounts, but one may have a shorter-term horizon and accept high-turnover  
while the other may have a longer-term investment horizon and desire to         
minimize turnover.  If the Advisor reasonably believes that a particular        
security may provide an attractive opportunity due to short-term volatility but 
may no longer be attractive on a long-term basis, the Advisor may cause         
accounts with a shorter-term investment horizon to buy the security at the same 
time it is causing accounts with a longer-term investment horizon to sell the   
security.  The Advisor takes all reasonable steps to ensure that investment     
opportunities are, over time, allocated to accounts on a fair and equitable     
basis relative to the other similarly-situated accounts and that the investment 
activities of different accounts do not unfairly disadvantage other accounts.   
    

From time to time, the Advisor votes the shares owned by the Fund according to  
its Statement of General Proxy Voting Policy ("Proxy Voting Policy").  The      
general principal of the Proxy Voting Policy is to vote any beneficial interest 
in an equity security prudently and solely in the best long-term economic       
interest of the Fund and its beneficiaries considering all relevant factors and 
without undue influence from individuals or groups who may have an economic     
interest in the outcome of a proxy vote.  Shareholders may obtain a copy of the 
Proxy Voting Policy upon request from the Advisor.                              

                                  DISTRIBUTOR                                   

   
Under a Distribution Agreement with the Fund ("Distribution Agreement"), Strong 
Funds Distributors, Inc. ("Distributor"), P.O. Box 2936, Milwaukee, Wisconsin,  
53201, acts as underwriter of the Fund's shares.  Mr. Strong is the Chairman    
and Director of the Distributor,  Mr. Lemke is a Vice President of the          
Distributor, and Mr. Shenkenberg is a Vice President and Secretary of the       
Distributor.  The Distribution Agreement provides that the Distributor will use 
its best efforts to distribute the Fund's shares.  Since the Fund is a          
"no-load" fund, no sales commissions are charged on the purchase of Fund        
shares.  The Distribution Agreement further provides that the Distributor will  
bear the additional costs of printing prospectuses and shareholder reports      
which are used for selling purposes, as well as advertising and any other costs 
attributable to the distribution of the Fund's shares.  The Distributor is an   
indirect subsidiary of the Advisor and controlled by the Advisor and Richard S. 
Strong.  The Distribution Agreement is subject to the same termination and      
renewal provisions as are described above with respect to the Advisory          
Agreement.                                                                      
    

From time to time, the Distributor may hold in-house sales incentive programs   
for its associated persons under which these persons may receive non-cash       
compensation awards in connection with the sale and distribution of the Fund's  
shares.  These awards may include items such as, but not limited to, gifts,     
merchandise, gift certificates, and payment of travel expenses, meals, and      
lodging.  As required by the proposed rule amendments of the National           
Association of Securities Dealers, Inc. ("NASD"), any in-house sales incentive  
program will be multi-product oriented, I.E., any incentive will be based on an 
associated person's gross production of all securities within a product type    
and will not be based on the sales of shares of any specifically designated     
mutual fund.                                                                    



                      PORTFOLIO TRANSACTIONS AND BROKERAGE                      

   
The Advisor is responsible for decisions to buy and sell securities for the     
Fund and for the placement of the Fund's investment business and the            
negotiation of the commissions to be paid on such transactions.  It is the      
policy of the Advisor, to seek the best execution at the best security price    
available with respect to each transaction, in light of the overall quality of  
brokerage and research services provided to the Advisor, or the Fund.  In OTC   
transactions, orders are placed directly with a principal market maker unless   
it is believed that a better price and execution can be obtained using a        
broker.  The best price to the Fund means the best net price without regard to  
the mix between purchase or sale price and commissions, if any.  In selecting   
broker-dealers and in negotiating commissions, the Advisor considers a variety  
of factors, including best price and execution, the full range of brokerage     
services provided by the broker, as well as its capital strength and stability, 
and the quality of the research and research services provided by the broker.   
Brokerage will not be allocated based on the sale of any shares of the Strong   
Funds.                                                                          
    

The Advisor has adopted procedures that provide generally for the Advisor to    
seek to bunch orders for the purchase or sale of the same security for the      
Fund, other mutual funds managed by the Advisor, and other advisory clients     
(collectively, "client accounts").  The Advisor will bunch orders when it deems 
it to be appropriate and in the best interest of the client accounts.  When a   
bunched order is filled in its entirety, each participating client account will 
participate at the average share price for the bunched order on the same        
business day, and transaction costs shall be shared pro rata based on each      
client's participation in the bunched order.  When a bunched order is only      
partially filled, the securities purchased will be allocated on a pro rata      
basis to each client account participating in the bunched order based upon the  
initial amount requested for the account, subject to certain exceptions, and    
each participating account will participate at the average share price for the  
bunched order on the same business day.                                         

Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)") permits  
an investment advisor, under certain circumstances, to cause an account to pay  
a broker or dealer a commission for effecting a transaction in excess of the    
amount of commission another broker or dealer would have charged for effecting  
the transaction in recognition of the value of the brokerage and research       
services provided by the broker or dealer.  Brokerage and research services     
include (1) furnishing advice as to the value of securities, the advisability   
of investing in, purchasing or selling securities, and the availability of      
securities or purchasers or sellers of securities; (2) furnishing analyses and  
reports concerning issuers, industries, securities, economic factors and        
trends, portfolio strategy, and the performance of accounts; and (3) effecting  
securities transactions and performing functions incidental thereto (such as    
clearance, settlement, and custody).                                            

In carrying out the provisions of the Advisory Agreement, the Advisor may cause 
the Fund to pay a broker, which provides brokerage and research services to the 
Advisor, a commission for effecting a securities transaction in excess of the   
amount another broker would have charged for effecting the transaction.  The    
Advisor believes it is important to its investment decision-making process to   
have access to independent research.  The Advisory Agreement provides that such 
higher commissions will not be paid by the Fund unless (1) the Advisor          
determines in good faith that the amount is reasonable in relation to the       
services in terms of the particular transaction or in terms of the Advisor's    
overall responsibilities with respect to the accounts as to which it exercises  
investment discretion; (2) such payment is made in compliance with the          
provisions of Section 28(e), other applicable state and federal laws, and the   
Advisory Agreement; and (3) in the opinion of the Advisor, the total            
commissions paid by the Fund will be reasonable in relation to the benefits to  
the Fund over the long term.  The investment management fee paid by the Fund    
under the Advisory Agreement is not reduced as a result of the Advisor's        
receipt of research services.                                                   

Generally, research services provided by brokers may include information on the 
economy, industries, groups of securities, individual companies, statistical    
information, accounting and tax law interpretations, political developments,    
legal developments affecting portfolio securities, technical market action,     
pricing and appraisal services, credit analysis, risk measurement analysis,     
performance analysis, and analysis of corporate responsibility issues. Such     
research services are received primarily in the form of written reports,        
telephone contacts, and personal meetings with security analysts. In addition,  
such research services may be provided in the form of access to various         
computer-generated data, computer hardware and software, and meetings arranged  
with corporate and industry spokespersons, economists, academicians, and        
government representatives. In some cases, research services are generated by   
third parties but are provided to the Advisor by or through brokers. Such       
brokers may pay for all or a portion of computer hardware and software costs    
relating to the pricing of securities.                                          

Where the Advisor itself receives both administrative benefits and research and 
brokerage services from the services provided by brokers, it makes a good faith 
allocation between the administrative benefits and the research and brokerage   
services, and will pay for any administrative benefits with cash.  In making    
good faith allocations between administrative benefits and research and         
brokerage services, a conflict of interest may exist by reason of the Advisor's 
allocation of the costs of such benefits and services between those that        
primarily benefit the Advisor and those that primarily benefit the Fund and     
other advisory clients.                                                         

From time to time, the Advisor may purchase new issues of securities for the    
Fund in a fixed income price offering. In these situations, the seller may be a 
member of the selling group that will, in addition to selling the securities to 
the Fund and other advisory clients, provide the Advisor with research. The     
NASD has adopted rules expressly permitting these types of arrangements under   
certain circumstances. Generally, the seller will provide research "credits" in 
these situations at a rate that is higher than that which is available for      
typical secondary market transactions. These arrangements may not fall within   
the safe harbor of Section 28(e).                                               

At least annually, the Advisor considers the amount and nature of research and  
research services provided by brokers, as well as the extent to which such      
services are relied upon, and attempts to allocate a portion of the brokerage   
business of the Fund and other advisory clients on the basis of that            
consideration. In addition, brokers may suggest a level of business they would  
like to receive in order to continue to provide such services. The actual       
brokerage business received by a broker may be more or less than the suggested  
allocations, depending upon the Advisor's evaluation of all applicable          
considerations.                                                                 

The Advisor has informal arrangements with various brokers whereby, in          
consideration for providing research services and subject to Section 28(e), the 
Advisor allocates brokerage to those firms, provided that the value of any      
research and brokerage services was reasonable in relationship to the amount of 
commission paid and was subject to best execution.  In no case will  the        
Advisor make binding commitments as to the level of brokerage commissions it    
will allocate to a broker, nor will it commit to pay cash if any informal       
targets are not met.  The Advisor anticipates it will continue to enter into    
such brokerage arrangements.                                                    

The Advisor may direct the purchase of securities on behalf of the Fund and     
other advisory clients in secondary market transactions, in public offerings    
directly from an underwriter, or in privately negotiated transactions with an   
issuer. When the Advisor believes the circumstances so warrant, securities      
purchased in public offerings may be resold shortly after acquisition in the    
immediate aftermarket for the security in order to take advantage of price      
appreciation from the public offering price or for other reasons. Short-term    
trading of securities acquired in public offerings, or otherwise, may result in 
higher portfolio turnover and associated brokerage expenses.                    

With respect to the Fund's foreign equity investing, the Advisor is responsible 
for selecting brokers in connection with foreign securities transactions.  The  
fixed commissions paid in connection with most foreign stock transactions are   
usually higher than negotiated commissions on U.S. stock transactions.  Foreign 
stock exchanges and brokers are subject to less government supervision and      
regulation as compared with the U.S. exchanges and brokers.  In addition,       
foreign security settlements may in some instances be subject to delays and     
related administrative uncertainties.                                           

The Advisor places portfolio transactions for other advisory accounts,          
including other mutual funds managed by the Advisor.  Research services         
furnished by firms through which the Fund effects its securities transactions   
may be used by the Advisor in servicing all of its accounts; not all of such    
services may be used by the Advisor in connection with the Fund.  In the        
opinion of the Advisor, it is not possible to measure separately the benefits   
from research services to each of the accounts managed by the Advisor. Because  
the volume and nature of the trading activities of the accounts are not         
uniform, the amount of commissions in excess of those charged by another broker 
paid by each account for brokerage and research services will vary.  However,   
in the opinion of the Advisor, such costs to the Fund will not be               
disproportionate to the benefits received by the Fund on a continuing basis.    

The Advisor seeks to allocate portfolio transactions equitably whenever         
concurrent decisions are made to purchase or sell securities by the Fund and    
another advisory account. In some cases, this procedure could have an adverse   
effect on the price or the amount of securities available to the Fund.  In      
making such allocations between the Fund and other advisory accounts, the main  
factors considered by the Advisor are the respective investment objectives, the 
relative size of portfolio holdings of the same or comparable securities, the   
availability of cash for investment, the size of investment commitments         
generally held, and the opinions of the persons responsible for recommending    
the investment.                                                                 

Where consistent with a client's investment objectives, investment              
restrictions, and risk tolerance, the Advisor may purchase securities sold in   
underwritten public offerings for client accounts, commonly referred to as      
"deal" securities.  The Advisor has adopted deal allocation procedures          
("Procedures"), summarized below, that reflect the Advisor's overriding policy  
that deal securities must be allocated among participating client accounts in a 
fair and equitable manner and that deal securities may not be allocated in a    
manner that unfairly discriminates in favor of certain clients or types of      
clients.                                                                        

The Procedures provide that, in determining which client accounts a portfolio   
manager team will seek to have purchase deal securities, the team will consider 
all relevant factors including, but not limited to, the nature, size, and       
expected allocation to the Advisor of deal securities; the size of the          
account(s); the accounts' investment objectives and restrictions; the risk      
tolerance of the client; the client's tolerance for possibly higher portfolio   
turnover; the amount of commissions generated by the account during the past    
year; and the number and nature of other deals the client has participated in   
during the past year.                                                           

Where more than one of the Advisor's portfolio manager team seeks to have       
client accounts participate in a deal and the amount of deal securities         
allocated to the Advisor by the underwriting syndicate is less than the         
aggregate amount ordered by the Advisor (a "reduced allocation"), the deal      
securities will be allocated among the portfolio manager teams based on all     
relevant factors.  The primary factor shall be assets under management,         
although other factors that may be considered in the allocation decision        
include, but are not limited to, the nature, size, and expected allocation of   
the deal; the amount of brokerage commissions or other amounts generated by the 
respective participating portfolio manager teams; and which portfolio manager   
team is primarily responsible for the Advisor receiving securities in the deal. 
Based on relevant factors, the Advisor has established general allocation       
percentages for its portfolio manager teams, and these percentages are reviewed 
on a regular basis to determine whether asset growth or other factors make it   
appropriate to use different general allocation percentages for reduced         
allocations.                                                                    

When a portfolio manager team receives a reduced allocation of deal securities, 
the portfolio manager team will allocate the reduced allocation among client    
accounts in accordance with the allocation percentages set forth in the team's  
initial allocation instructions for the deal securities, except where this      
would result in a DE MINIMIS allocation to any client account.  On a regular    
basis, the Advisor reviews the allocation of deal securities to ensure that     
they have been allocated in a fair and equitable manner that does not unfairly  
discriminate in favor of certain clients or types of clients.                   

Transactions in futures contracts are executed through futures commission       
merchants ("FCMs").  The Fund's procedures in selecting FCMs to execute the     
Fund's transactions in futures contracts are similar to those in effect with    
respect to brokerage transactions in securities.                                

The Fund paid the following brokerage commissions for the time periods          
indicated:                                                                      
   
    
<TABLE>
<CAPTION>
<S>                 <C>                        
FISCAL YEAR ENDED   BROKERAGE COMMISSIONS ($)
- ------------------  -------------------------
</TABLE>

Asia Pacific Fund                                                               

   
<TABLE>
<CAPTION>
<S>        <C>      
                  
10/31/95*  549,000
 10/31/96  830,527
 10/31/97  673,983
 10/31/98         
</TABLE>
    

   
Foreign MajorMarkets Fund                                                       
    

   
<TABLE>
<CAPTION>
<S>          <C>
10/31/98(1)   
</TABLE>
    



   
Global High-Yield Bond Fund                                                     
    

   
<TABLE>
<CAPTION>
<S>          <C>
10/31/98(2)   
</TABLE>
    

International Bond Fund                                                         

   
<TABLE>
<CAPTION>
<S>        <C>    
                
10/31/95*      0
 10/31/96      0
 10/31/97  4,814
 10/31/98       
</TABLE>
    

International Stock Fund                                                        

   
<TABLE>
<CAPTION>
<S>        <C>        
                    
10/31/95*  2,114,000
 10/31/96  3,212,759
 10/31/97  3,067,460
 10/31/98           
</TABLE>
    

   
Overseas Fund                                                                   
    

   
<TABLE>
<CAPTION>
<S>          <C>
10/31/98(3)   
</TABLE>
    


Short-Term Global Bond Fund                                                     

   
<TABLE>
<CAPTION>
<S>        <C>     
                 
10/31/95*       0
 10/31/96       0
 10/31/97  12,267
 10/31/98        
</TABLE>
    

*  For the ten-month fiscal year ended October 31, 1995.                        
   
(1)  Commenced operations on June 30, 1998.   
    
   
(2)  Commenced operations on January 31, 1998.                                  
    
   
(3)  Commenced operations on June 30, 1998.                                     
    

Unless otherwise noted below, the Fund has not acquired securities of its       
regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) or     
their parents:                                                                  

   
<TABLE>
<CAPTION>
<S>                                          <C>                                               
                                                                                             
- -------------------------------------------  ------------------------------------------------
                                                                                             
REGULAR BROKER OR DEALER (OR PARENT) ISSUER  VALUE OF SECURITIES OWNED AS OF OCTOBER 31, 1998
- -------------------------------------------  ------------------------------------------------
                                                                                             
</TABLE>
    

For the ten-month fiscal period ended October 31, 1995, the Short-Term Global   
Bond Fund's portfolio turnover rate was 437.3%.  For the fiscal period ended    
October 31, 1996, the ten-month fiscal period ended October 31, 1995, and the   
fiscal year ended December 31, 1994, the International Bond Fund's portfolio    
turnover rates were 258.3%, 473.3%, and 679.3%, respectively.  The above listed 
portfolio turnover rates for the respective Funds were higher than anticipated  
primarily because each Fund employed a trading strategy to take advantage of    
yield opportunities to help enhance the Fund's total return.                    

                                   CUSTODIAN                                    

As custodian of the Fund's assets, Brown Brothers Harriman & Co., 40 Water      
Street, Boston, Massachusetts 02109, has custody of all securities and cash of  
the Fund, delivers and receives payment for securities sold, receives and pays  
for securities purchased, collects income from investments, and performs other  
duties, all as directed by officers of the Fund.  The custodian is in no way    
responsible for any of the investment policies or decisions of the Fund.  In    
addition, the Fund, with the approval of the Board of Directors and subject to  
the rules of the SEC, will have sub-custodians in those foreign countries in    
which their respective assets may be invested.  The custodian and, if           
applicable, the sub-custodian are in no way responsible for any of the          
investment policies or decisions of the Funds.                                  

                  TRANSFER AGENT AND DIVIDEND DISBURSING AGENT                  

   
The Advisor, P.O. Box 2936, Milwaukee, Wisconsin, 53201, acts as transfer agent 
and dividend-disbursing agent for the Fund.  The Advisor is compensated based   
on an annual fee per open account of $21.75 for equity funds, $31.50 for income 
and municipal income funds, and $32.50 for money market funds, plus             
out-of-pocket expenses, such as postage and printing expenses in connection     
with shareholder communications. The Advisor also receives an annual fee per    
closed account of $4.20 from the Fund. The fees received and the services       
provided as transfer agent and dividend disbursing agent are in addition to     
those received and provided by the Advisor under the Advisory Agreements. In    
addition, the Advisor provides certain printing and mailing services for the    
Fund, such as printing and mailing of shareholder account statements, checks,   
and tax forms.                                                                  
    

From time to time, the Fund, directly or indirectly through arrangements with   
the Advisor, and/or the Advisor may pay amounts to third parties that provide   
transfer agent type services and other administrative services relating to the  
Fund to persons who beneficially own interests in the Fund, such as             
participants in 401(k) plans.  These services may include, among other things,  
sub-accounting services, transfer agent type activities, answering inquiries    
relating to the Fund, transmitting proxy statements, annual reports, updated    
prospectuses, other communications regarding the Fund, and related services as  
the Fund or beneficial owners may reasonably request.  In such cases, the Fund  
will not pay fees based on the number of beneficial owners at a rate that is    
greater than the rate the Fund is currently paying the Advisor for providing    
these services to Fund shareholders.                                            

The Fund paid the following amounts for the time periods indicated for transfer 
agency and dividend disbursing and printing and mailing services:               
   
    
   
<TABLE>
<CAPTION>
<S>     <C>                      <C>                         <C>                            <C>           <C> 
                                                                                                            
- ------  -----------------------  --------------------------  -----------------------------  ------------  --------------

FUND  PER ACCOUNT CHARGES ($)  OUT-OF-POCKET EXPENSES ($)  PRINTING/MAILING SERVICES ($)  WAIVER ($)  TOTAL COST AFTER
                                                                                                      WAIVER ($)
- ------  -----------------------  --------------------------  -----------------------------  ------------  --------------
</TABLE>
    

Asia Pacific Fund                                                               

   
<TABLE>
<CAPTION>
<S>        <C>      <C>     <C>    <C><C>      
                                             
10/31/95*  217,628  25,363  4,546  0  247,537
 10/31/96  295,177  30,846  5,800  0  331,823
 10/31/97  258,045  22,741  2,790  0  283,576
 10/31/98                                    
</TABLE>
    

   
Foreign MajorMarkets Fund                                                       
    

   
<TABLE>
<CAPTION>
<S>          <C><C><C><C><C>
10/31/98(1)               
</TABLE>
    

   
Global High-Yield Bond Fund                                                     
    

   
<TABLE>
<CAPTION>
<S>          <C><C><C><C><C>
10/31/98(2)               
</TABLE>
    

International Bond Fund                                                         

   
<TABLE>
<CAPTION>
<S>        <C>      <C>    <C>    <C>     <C>     
                                                
10/31/95*   25,070  8,837  1,933  34,996       0
 10/31/96   85,427  8,924  1,020  93,371       0
 10/31/97  102,111  6,676  1,038  11,363  98,462
 10/31/98                                       
</TABLE>
    




International Stock Fund                                                        

   
<TABLE>
<CAPTION>
<S>        <C>      <C>     <C>     <C><C>      
                                              
10/31/95*  669,687  78,972  13,567  0  762,226
 10/31/96  790,025  77,125  15,706  0  882,856
 10/31/97  880,264  63,925   8,229  0  952,418
 10/31/98                                     
</TABLE>
    

   
Overseas Fund                                                                   
    

   
<TABLE>
<CAPTION>
<S>          <C><C><C><C><C>
10/31/98(3)               
</TABLE>
    

Short-Term Global Bond Fund                                                     

   
<TABLE>
<CAPTION>
<S>        <C>      <C>     <C>    <C>     <C>      
                                                  
10/31/95*   35,710   9,306  1,872  46,888        0
 10/31/96   79,178  10,160    884  90,223        0
 10/31/97  156,221  11,580  1,557  13,024  156,334
 10/31/98                                         
</TABLE>
    

*  For the ten-month fiscal year ended October 31, 1995.                        
   
(1)  Commenced operations on June 30, 1998.                        
    
   
(2)  Commenced operations on January 31, 1998.                                  
    
   
(3)  Commenced operations on June 30, 1998.                                     
    

                                     TAXES                                      

GENERAL                                                                         

   
The Fund intends to qualify annually for treatment as a regulated investment    
company ("RIC") under Subchapter M of the IRC.  If so qualified, the Fund will  
not be liable for federal income tax earnings and gains distributed to its      
shareholders in a timely manner.  This qualification does not involve           
government supervision of the Fund's management practices or policies.  The     
following federal tax discussion is intended to provide you with an overview of 
the impact of federal income tax provisions on the Fund or its shareholders.    
These tax provisions are subject to change by legislative or administrative     
action at the federal, state, or local level, and any changes may be applied    
retroactively.  Any such action that limits or restricts the Fund's current     
ability to pass-through earnings without taxation at the Fund level, or         
otherwise materially changes the Fund's tax treatment, could adversely affect   
the value of a shareholder's investment in the Fund.  Because the Fund's taxes  
are a complex matter, you should consult your tax adviser for more detailed     
information concerning the taxation of the Fund and the federal, state, and     
local tax consequences to shareholders of an investment in the Fund.            
    

In order to qualify for treatment as a RIC under the IRC, the Fund must         
distribute to its shareholders for each taxable year at least 90% of its        
investment company taxable income (consisting generally of taxable net          
investment income, net short-term capital gain, and net gains from certain      
foreign currency transactions, if applicable) ("Distribution Requirement") and  
must meet several additional requirements.  These requirements include the      
following: (1) the Fund must derive at least 90% of its gross income each       
taxable year from dividends, interest, payments with respect to securities      
loans, and gains from the sale or other disposition of securities (or foreign   
currencies if applicable) or other income (including gains from options,        
futures, or forward contracts) derived with respect to its business of          
investing in securities ("Income Requirement"); (2) at the close of each        
quarter of the Fund's taxable year, at least 50% of the value of its total      
assets must be represented by cash and cash items, U.S. government securities,  
securities of other RICs, and other securities, with these other securities     
limited, in respect of any one issuer, to an amount that does not exceed 5% of  
the value of the Fund's total assets and that does not represent more than 10%  
of the issuer's outstanding voting securities; and (3) at the close of each     
quarter of the Fund's taxable year, not more than 25% of the value of its total 
assets may be invested in securities (other than U.S. government securities or  
the securities of other RICs) of any one issuer.  From time to time the Advisor 
may find it necessary to make certain types of investments for the purpose of   
ensuring that the Fund continues to qualify for treatment as a RIC under the    
IRC.                                                                            

If Fund shares are sold at a loss after being held for six months or less, the  
loss will be treated as long-term, instead of short-term, capital loss to the   
extent of any capital gain distributions received on those shares.              

   
The Fund's distributions are taxable in the year they are paid, whether they    
are taken in cash or reinvested in additional shares, except that certain       
distributions declared in the last three months of the year and paid in January 
are taxable as if paid on December 31.                                          
    

   
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the 
extent it fails to distribute by the end of any calendar year substantially all 
of its ordinary income for that year and capital gain net income for the        
one-year period ending on October 31 of that year, plus certain other amounts.  
The Fund may make additional distributions if necessary to avoid imposition of  
a 4% excise tax on undistributed income and gains.                              
    

FOREIGN TRANSACTIONS                                                            

   
Dividends and interest received by the Fund may be subject to income,           
withholding, or other taxes imposed by foreign countries and U.S. possessions   
that would reduce the yield on its securities.  Tax conventions between certain 
countries and the U.S may reduce or eliminate these foreign taxes, however, and 
many foreign countries do not impose taxes on capital gains in respect of       
investments by foreign investors.  If more than 50% of the value of the Fund's  
total assets at the close of its taxable year consists of securities of foreign 
corporations, it will be eligible to, and may, file an election with the        
Internal Revenue Service that would enable its shareholders, in effect, to      
receive the benefit of the foreign tax credit with respect to any foreign and   
U.S. possessions income taxes paid by it.  The Fund would treat those taxes as  
dividends paid to its shareholders and each shareholder would be required to    
(1) include in gross income, and treat as paid by the shareholder, the          
shareholder's proportionate share of those taxes, (2) treat the shareholder's   
share of those taxes and of any dividend paid by the Fund that represents       
income from foreign or U.S. possessions sources as the shareholder's own income 
from those sources, and (3) either deduct the taxes deemed paid by the          
shareholder in computing the shareholder's taxable income or, alternatively,    
use the foregoing information in calculating the foreign tax credit against the 
shareholder's federal income tax.  The Fund will report to its shareholders     
shortly after each taxable year their respective shares of its income from      
sources within, and taxes paid to, foreign countries and U.S. possessions if it 
makes this election.                                                            
    

The Fund holding foreign securities in its investment portfolio maintains its   
accounts and calculates its income in U.S. dollars.  In general, gain or loss   
(1) from the disposition of foreign currencies and forward currency contracts,  
(2) from the disposition of foreign-currency-denominated debt securities that   
are attributable to fluctuations in exchange rates between the date the         
securities are acquired and their disposition date, and (3) attributable to     
fluctuations in exchange rates between the time the Fund accrues interest or    
other receivables or expenses or other liabilities denominated in a foreign     
currency and the time the Fund actually collects those receivables or pays      
those liabilities, will be treated as ordinary income or loss.  A               
foreign-currency-denominated debt security acquired by the Fund may bear        
interest at a high normal rate that takes into account expected decreases in    
the value of the principal amount of the security due to anticipated currency   
devaluations; in that case, the Fund would be required to include the interest  
in income as it accrues but generally would realize a currency loss with        
respect to the principal only when the principal was received (through          
disposition or upon maturity).                                                  

The Fund may invest in the stock of "passive foreign investment companies"      
("PFICs") in accordance with its investment objective, policies and             
restrictions.  A PFIC is a foreign corporation that, in general, meets either   
of the following tests: (1) at least 75% of its gross income is passive or (2)  
an average of at least 50% of its assets produce, or are held for the           
production of, passive income.  Under certain circumstances, the Fund will be   
subject to federal income tax on a portion of any "excess distribution"         
received on the stock or of any gain on disposition of the stock (collectively, 
"PFIC income"), plus interest thereon, even if the Fund distributes the PFIC    
income as a taxable dividend to its shareholders.  The balance of the PFIC      
income will be included in the Fund's investment company taxable income and,    
accordingly, will not be taxable to it to the extent that income is distributed 
to its shareholders.  If the Fund invests in a PFIC and elects to treat the     
PFIC as a "qualified electing fund," then in lieu of the foregoing tax and      
interest obligation, the Fund will be required to include in income each year   
its pro rata share of the qualified electing fund's annual ordinary earnings    
and net capital gain (the excess of net long-term capital gain over net         
short-term capital loss) -- which probably would have to be distributed to its  
shareholders to satisfy the Distribution Requirement and avoid imposition of    
the Excise Tax -- even if those earnings and gain were not received by the      
Fund.  In most instances it will be very difficult, if not impossible, to make  
this election because of certain requirements thereof.                          

DERIVATIVE INSTRUMENTS                                                          

The use of derivatives strategies, such as purchasing and selling (writing)     
options and futures and entering into forward currency contracts, if            
applicable, involves complex rules that will determine for income tax purposes  
the character and timing of recognition of the gains and losses the Fund        
realizes in connection therewith.  Gains from the disposition of foreign        
currencies, if any (except certain gains therefrom that may be excluded by      
future regulations), and income from transactions in options, futures, and      
forward currency contracts, if applicable, derived by the Fund with respect to  
its business of investing in securities or foreign currencies, if applicable,   
will qualify as permissible income under the Income Requirement.                

For federal income tax purposes, the Fund is required to recognize as income    
for each taxable year its net unrealized gains and losses on options, futures,  
or forward currency contracts, if any, that are subject to section 1256 of the  
IRC ("Section 1256 Contracts") and are held by the Fund as of the end of the    
year, as well as gains and losses on Section 1256 Contracts actually realized   
during the year.  Except for Section 1256 Contracts that are part of a "mixed   
straddle" and with respect to which the Fund makes a certain election, any gain 
or loss recognized with respect to Section 1256 Contracts is considered to be   
60% long-term capital gain or loss and 40% short-term capital gain or loss,     
without regard to the holding period of the Section 1256 Contract.              

ZERO-COUPON, STEP-COUPON, AND PAY-IN-KIND SECURITIES                            

The Fund may acquire zero-coupon, step-coupon, or other securities issued with  
original issue discount.  As a holder of those securities, the Fund must        
include in its income the original issue discount that accrues on the           
securities during the taxable year, even if the Fund receives no corresponding  
payment on the securities during the year.  Similarly, the Fund must include in 
its income securities it receives as "interest" on pay-in-kind securities.      
Because the Fund annually must distribute substantially all of its investment   
company taxable income, including any original issue discount and other         
non-cash income, to satisfy the Distribution Requirement and avoid imposition   
of the Excise Tax, it may be required in a particular year to distribute as a   
dividend an amount that is greater than the total amount of cash it actually    
receives.  Those distributions may be made from the proceeds on sales of        
portfolio securities, if necessary.  The Fund may realize capital gains or      
losses from those sales, which would increase or decrease its investment        
company taxable income or net capital gain, or both.                            

                        DETERMINATION OF NET ASSET VALUE                        

   
The Fund is 100% no load.  This means that an investor may purchase, redeem or  
exchange shares at the Fund's net asset value ("NAV") without paying a sales    
charge.  Generally, when an investor makes any purchases, sales, or exchanges,  
the price of the investor's shares will be the NAV next determined after Strong 
Funds receives a request in proper form (which includes receipt of all          
necessary and appropriate documentation and subject to available funds).  If    
Strong Funds receives such a request prior to the close of the New York Stock   
Exchange ("NYSE") on a day on which the NYSE is open, the share price will be   
the NAV determined that day.  The NAV for each Fund is normally determined as   
of 3:00 p.m. Central Time ("CT") each day the NYSE is open.  The NYSE is open   
for trading Monday through Friday except, New Year's Day, Presidents' Day, Good 
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and        
Christmas Day.  Additionally, if any of the aforementioned holidays falls on a  
Saturday, the NYSE will not be open for trading on the preceding Friday, and    
when any such holiday falls on a Sunday, the NYSE will not be open for trading  
on the succeeding Monday, unless unusual business conditions exist, such as the 
ending of a monthly or yearly accounting period.   The Fund reserves the right  
to change the time at which purchases, redemptions, and exchanges are priced if 
the NYSE closes at a time other than 3:00 p.m. CT or if an emergency exists.    
The Fund's NAV is calculated by taking the fair value of the Fund's total       
assets, subtracting all its liabilities, and dividing by the total number of    
shares outstanding.  Expenses are accrued daily and applied when determining    
the NAV. The Fund's portfolio securities are valued based on market quotations  
or at fair value as determined by the method selected by the Fund's Board of    
Directors.                                                                      
    

   
Debt securities are valued by a pricing service that utilizes electronic data   
processing techniques to determine values for normal institutional-sized        
trading units of debt securities without regard to sale or bid prices when such 
values are believed to more accurately reflect the fair market value for such   
securities. Otherwise, sale or bid prices are used. Any securities or other     
assets for which market quotations are not readily available are valued at fair 
value as determined in good faith by the Board of Directors of the Fund. Debt   
securities having remaining maturities of 60 days or less are valued by the     
amortized cost method when the Fund's Board of Directors determines that the    
fair value of such securities is their amortized cost. Under this method of     
valuation, a security is initially valued at its acquisition cost, and          
thereafter, amortization of any discount or premium is assumed each day,        
regardless of the impact of the fluctuating rates on the market value of the    
instrument.                                                                     
    

                       ADDITIONAL SHAREHOLDER INFORMATION                       

TELEPHONE AND INTERNET EXCHANGE/REDEMPTION PRIVILEGES                           

The Fund employs reasonable procedures to confirm that instructions             
communicated by telephone or the Internet are genuine. The Fund may not be      
liable for losses due to unauthorized or fraudulent instructions. Such          
procedures include but are not limited to requiring a form of personal          
identification prior to acting on instructions received by telephone or the     
Internet, providing written confirmations of such transactions to the address   
of record, tape recording telephone instructions and backing up Internet        
transactions.                                                                   

REDEMPTION-IN-KIND                                                              

The Fund has elected to be governed by Rule 18f-1 under the 1940 Act, which     
obligates the Fund to redeem shares in cash, with respect to any one            
shareholder during any 90-day period, up to the lesser of $250,000 or 1% of the 
assets of the Fund.  If the Advisor determines that existing conditions make    
cash payments undesirable, redemption payments may be made in whole or in part  
in securities or other financial assets, valued for this purpose as they are    
valued in computing the NAV for the Fund's shares (a "redemption-in-kind").     
Shareholders receiving securities or other financial assets in a                
redemption-in-kind may realize a gain or loss for tax purposes, and will incur  
any costs of sale, as well as the associated inconveniences.  If you expect to  
make a redemption in excess of the lesser of $250,000 or 1% of the Fund's       
assets during any 90-day period and would like to avoid any possibility of      
being paid with securities in-kind, you may do so by providing Strong Funds     
with an unconditional instruction to redeem at least 15 calendar days prior to  
the date on which the redemption transaction is to occur, specifying the dollar 
amount or number of shares to be redeemed and the date of the transaction       
(please call 1-800-368-3863).  This will provide the Fund with sufficient time  
to raise the cash in an orderly manner to pay the redemption and thereby        
minimize the effect of the redemption on the interests of the Fund's remaining  
shareholders.                                                                   

Redemption checks in excess of the lesser of $250,000 or 1% of the Fund's       
assets during any 90-day period may not be honored by the Fund if the Advisor   
determines that existing conditions make cash payments undesirable.             

RIGHT OF SET-OFF                                                                

To the extent not prohibited by law, the Fund, any other Strong Fund, and the   
Advisor, each has the right to set-off against a shareholder's account balance  
with a Strong Fund, and redeem from such account, any debt the shareholder may  
owe any of these entities.  This right applies even if the account is not       
identically registered.                                                         

BROKERS RECEIPT OF PURCHASE AND REDEMPTION ORDERS                               

The Fund has authorized certain brokers to accept purchase and redemption       
orders on the Fund's behalf.  These brokers are, in turn, authorized to         
designate other intermediaries to accept purchase and redemption orders on the  
Fund's behalf.  The Fund will be deemed to have received a purchase or          
redemption order when an authorized broker or, if applicable, a broker's        
authorized designee, accepts the order.  Purchase and redemption orders         
received in this manner will be priced at the Fund's net asset value next       
computed after they are accepted by an authorized broker or the broker's        
authorized designee.                                                            

RETIREMENT PLANS                                                                

   
TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNT (IRA): Everyone under age 70 1/2 with 
earned income may contribute to a tax-deferred Traditional IRA. The Strong      
Funds offer a prototype plan for you to establish your own Traditional IRA. You 
are allowed to contribute up to the lesser of $2,000 or 100% of your earned     
income each year to your Traditional IRA (or up to $4,000 between your          
Traditional IRA and your non-working spouses' Traditional IRA).  Under certain  
circumstances, your contribution will be deductible.                            
    

   
ROTH IRA:  Taxpayers, of any age, who have earned income, and whose adjusted    
gross income ("AGI") does not exceed $110,000 (single) or $160,000 (joint) can  
contribute to a Roth IRA.  Allowed contributions begin to phase-out at $95,000  
(single) or $150,000 (joint).  You are allowed to contribute up to the lesser   
of $2,000 or 100% of earned income each year into a Roth IRA.  If you also      
maintain a Traditional IRA, the maximum contribution to your Roth IRA is        
reduced by any contributions that you make to your Traditional IRA.             
Distributions from a Roth IRA, if they meet certain requirements, may be        
federally tax free.  If your AGI is $100,000 or less, you can convert your      
Traditional IRAs into a Roth IRA.  Conversions of earnings and deductible       
contributions are taxable in the year of the distribution.  The early           
distribution penalty does not apply to amounts converted to a Roth IRA even if  
you are under age 59 1/2.                                                       
    

EDUCATION IRA:  Taxpayers may contribute up to $500 per year into an Education  
IRA for the benefit of a child under age 18.  Total contributions to any one    
child cannot exceed $500 per year.  The contributor must have adjusted income   
under $110,000 (single) or $160,000 (joint) to contribute to an Education IRA.  
Allowed contributions begin to phase-out at $95,000 (single) or $150,000        
(joint).   Withdrawals from the Education IRA to pay qualified higher education 
expenses are federally tax free.  Any withdrawal in excess of higher education  
expenses for the year are potentially subject to tax and an additional 10%      
penalty.                                                                        

   
DIRECT ROLLOVER IRA: To avoid the mandatory 20% federal withholding tax on      
distributions,  you must transfer the qualified retirement or IRC section       
403(b) plan distribution directly into an IRA. The distribution must be         
eligible for rollover.  The amount of your Direct Rollover IRA contribution     
will not be included in your taxable income for the year.                       
    

SIMPLIFIED EMPLOYEE PENSION PLAN (SEP-IRA): A SEP-IRA plan allows an employer   
to make deductible contributions to separate IRA accounts established for each  
eligible employee.                                                              

SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN (SAR SEP-IRA): A SAR SEP-IRA  
plan is a type of SEP-IRA plan in which an employer may allow employees to      
defer part of their salaries and contribute to an IRA account. These deferrals  
help lower the employees' taxable income.   Please note that you may no longer  
open new SAR SEP-IRA plans (since December 31, 1996).  However, employers with  
SAR SEP-IRA plans that were established prior to January 1, 1997 may still open 
accounts for new employees.                                                     

SIMPLIFIED INCENTIVE MATCH PLAN FOR EMPLOYEES (SIMPLE-IRA):  A SIMPLE-IRA plan  
is a retirement savings plan that allows employees to contribute a percentage   
of their compensation, up to $6,000, on a pre-tax basis, to a SIMPLE-IRA        
account.  The employer is required to make annual contributions to eligible     
employees' accounts.  All contributions grow tax-deferred.                      

DEFINED CONTRIBUTION PLAN: A defined contribution plan allows self-employed     
individuals, partners, or a corporation to provide retirement benefits for      
themselves and their employees.  Plan types include: profit-sharing plans,      
money purchase pension plans, and paired plans (a combination of a              
profit-sharing plan and a money purchase plan).                                 

401(K) PLAN: A 401(k) plan is a type of profit-sharing plan that allows         
employees to have part of their salary contributed on a pre-tax basis to a      
retirement plan which will earn tax-deferred income. A 401(k) plan is funded by 
employee contributions, employer contributions, or a combination of both.       

   
403(B)(7) PLAN: A 403(b)(7) plan is  a tax-sheltered custodial account designed 
to qualify under section 403(b)(7) of the IRC and is available for use by       
employees of certain educational, non-profit, hospital, and charitable          
organizations.                                                                  
    
                                                                                
                                                                                


                                  ORGANIZATION                                  

The Fund is either a "Corporation" or a "Series" of common stock of a           
Corporation, as described in the chart below:                                   

   
<TABLE>
<CAPTION>
<S>                                         <C>            <C>          <C>         <C>        
                                            Incorporation  Date Series  Authorized     Par   
                Corporation                      Date        Created      Shares    Value ($)
- ------------------------------------------  -------------  -----------  ----------  ---------
Strong Asia Pacific Fund, Inc.                 12/28/90                 Indefinite     .00001
                                                                                             
                                                                                             
                                                                                             
                                                                                             
Strong International Equity Funds, Inc.(1)     12/28/90                 Indefinite     .00001
- - Strong Foreign MajorMarkets Fund                           5/22/98    Indefinite     .00001
- - Strong Overseas Fund                                       5/22/98    Indefinite     .00001
Strong International Income Funds, Inc.(2)     01/05/94                 Indefinite        .01
- - Strong International Bond Fund                             01/05/94   Indefinite        .01
- - Strong Global High-Yield Bond Fund                         01/22/98   Indefinite        .01
Strong Short-Term Global Bond Fund, Inc.       01/05/94                 Indefinite        .01
</TABLE>
    

   
(1)  Prior to May 22, 1998, the Corporation's name was Strong International     
Stock Fund, Inc.                                                                
    
   
(2)  Prior to January 22, 1998, the Corporation's name was Strong International 
Bond Fund, Inc.                                                                 
    

   
The Corporation is a Wisconsin corporation that is authorized to offer separate 
series of shares representing interests in separate portfolios of securities,   
each with differing investment objectives.  The shares in any one portfolio     
may, in turn, be offered in separate classes, each with differing preferences,  
limitations or relative rights.  However, the Articles of Incorporation for the 
Corporation provide that if additional series of shares are issued by the       
Corporation, such new series of shares may not affect the preferences,          
limitations or relative rights of the Corporation's outstanding shares.  In     
addition, the Board of Directors of the Corporation is authorized to allocate   
assets, liabilities, income and expenses to each series and class.  Classes     
within a series may have different expense arrangements than other classes of   
the same series and, accordingly, the net asset value of shares within a series 
may differ.  Finally, all holders of shares of the Corporation may vote on each 
matter presented to shareholders for action except with respect to any matter   
which affects only one or more series or class, in which case only the shares   
of the affected series or class are entitled to vote.  Each share of the Fund   
has one vote, and all shares participate equally in dividends and other capital 
gains distributions by the Fund and in the residual assets of the Fund in the   
event of liquidation.  Fractional shares have the same rights proportionately   
as do full shares. Shares of the Corporation have no preemptive, conversion, or 
subscription rights.  If the Corporation issues additional series, the assets   
belonging to each series of shares will be held separately by the custodian,    
and in effect each series will be a separate fund.                              
    

                              SHAREHOLDER MEETINGS                              

The Wisconsin Business Corporation Law permits registered investment companies, 
such as the Fund, to operate without an annual meeting of shareholders under    
specified circumstances if an annual meeting is not required by the 1940 Act.   
The Fund has adopted the appropriate provisions in its Bylaws and may, at its   
discretion, not hold an annual meeting in any year in which the election of     
directors is not required to be acted on by shareholders under the 1940 Act.    

The Fund's Bylaws allow for a director to be removed by its shareholders with   
or without cause, only at a  meeting called for the purpose of removing the     
director.  Upon the written request of the holders of shares entitled to not    
less than ten percent (10%) of all the votes entitled to be cast at such        
meeting, the Secretary of the Fund shall promptly call a special meeting of     
shareholders for the purpose of voting upon the question of removal of any      
director. The Secretary shall inform such shareholders of the reasonable        
estimated costs of preparing and mailing the notice of the meeting, and upon    
payment to the Fund of such costs, the Fund shall give not less than ten nor    
more than sixty days notice of the special meeting.                             

                            PERFORMANCE INFORMATION                             

The Strong Funds may advertise a variety of types of performance information as 
more fully described below.  The Fund's performance is historical and past      
performance does not guarantee the future performance of the Fund.  From time   
to time, the Advisor may agree to waive or reduce its management fee and/or to  
absorb certain operating expenses for the Fund.  Waivers of management fees and 
absorption of expenses will have the effect of increasing the Fund's            
performance.                                                                    

30-DAY YIELD                                                                    

The Fund's yield is computed in accordance with a standardized method           
prescribed by rules of the SEC.  Under that method, the current yield quotation 
for the Fund is based on a one month or 30-day period.  In computing its yield, 
the Fund follows certain standardized accounting practices specified by rules   
of the SEC.  These practices are not necessarily consistent with those that the 
Fund uses to prepare annual and interim financial statements in conformity with 
generally accepted accounting principles.  The yield is computed by dividing    
the net investment income per share earned during the 30-day or one month       
period by the maximum offering price per share on the last day of the period,   
according to the following formula:                                             

                           YIELD = 2[( A-B + 1)6 - 1]                           
                                          cd                                    
Where      a = dividends and interest earned during the period.                 
     b = expenses accrued for the period (net of reimbursements).               
     c = the average daily number of shares outstanding during the period that  
were                                                                            
            entitled to receive dividends.                                      
     d = the maximum offering price per share on the last day of the period.    

DISTRIBUTION RATE                                                               

The distribution rate for the Fund is computed, according to a non-standardized 
formula, by dividing the total amount of actual distributions per share paid by 
the Fund over a twelve month period by the Fund's net asset value on the last   
day of the period.  The distribution rate differs from the Fund's yield because 
the distribution rate includes distributions to shareholders from sources other 
than dividends and interest, such as short-term capital gains.  Therefore, the  
Fund's distribution rate may be substantially different than its yield.  Both   
the Fund's yield and distribution rate will fluctuate.                          

AVERAGE ANNUAL TOTAL RETURN                                                     

The Fund's average annual total return quotation is computed in accordance with 
a standardized method prescribed by rules of the SEC.  The average annual total 
return for the Fund for a specific period is calculated by first taking a       
hypothetical $10,000 investment ("initial investment") in the Fund's shares on  
the first day of the period and computing the "redeemable value" of that        
investment at the end of the period.  The redeemable value is then divided by   
the initial investment, and this quotient is taken to the Nth root (N           
representing the number of years in the period) and 1 is subtracted from the    
result, which is then expressed as a percentage.  The calculation assumes that  
all income and capital gains dividends paid by the Fund have been reinvested at 
net asset value on the reinvestment dates during the period.                    

TOTAL RETURN                                                                    

Calculation of the Fund's total return is not subject to a standardized         
formula.  Total return performance for a specific period is calculated by first 
taking an investment (assumed below to be $10,000) ("initial investment") in    
the Fund's shares on the first day of the period and computing the "ending      
value" of that investment at the end of the period.  The total return           
percentage is then determined by subtracting the initial investment from the    
ending value and dividing the remainder by the initial investment and           
expressing the result as a percentage.  The calculation assumes that all income 
and capital gains dividends paid by the Fund have been reinvested at net asset  
value of the Fund on the reinvestment dates during the period.  Total return    
may also be shown as the increased dollar value of the hypothetical investment  
over the period.                                                                

CUMULATIVE TOTAL RETURN                                                         

Cumulative total return represents the simple change in value of an investment  
over a stated period and may be quoted as a percentage or as a dollar amount.   
Total returns and cumulative total returns may be broken down into their        
components of income and capital (including capital gains and changes in share  
price) in order to illustrate the relationship between these factors and their  
contributions to total return.                                                  


SPECIFIC FUND PERFORMANCE                                                       
   
    
30-DAY YIELD                                                                    
   
    
   
<TABLE>
<CAPTION>
<S>                          <C>       <C>                      <C>                  <C>                                  
           
Fund                         Yield     Waived Management Fees  Absorbed Expenses     Yield After Waivers and Absorptions
- ---------------------------  --------  -----------------------  -------------------  -----------------------------------
International Bond Fund                                                                                                 
- ---------------------------  --------  -----------------------  -------------------  -----------------------------------
Short-Term Global Bond Fund                                                                                             
- ---------------------------  --------  -----------------------  -------------------  -----------------------------------
</TABLE>
    

                                 TOTAL RETURN                                   

ASIA PACIFIC FUND                                                               

   
<TABLE>
<CAPTION>
<S>            <C>                         <C>                             <C>                        <C>   
                                                                                                                                   
- -------------  --------------------------  ------------------------------  -------------------------  ------------------

Time Period  Initial $10,000 Investment  Ending value October 31, 1998  Cumulative Total Return  Average Annual Total
                                                                                                    Return
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
One Year                     $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
Life of Fund*                $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
</TABLE>
    

*  Commenced operations on December 31, 1993.                                   

   
FOREIGN MAJORMARKETS FUND                                                       
    

   
<TABLE>
<CAPTION>
<S>            <C>                         <C>                             <C>                        <C>  
                                                                                                                                   
- -------------  --------------------------  ------------------------------  -------------------------  ------------------

Time Period    Initial $10,000 Investment  Ending value October 31, 1998  Cumulative Total Return     Average Annual 
                                                                                                      Total Return
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
Life of Fund*          $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
</TABLE>
    

   
*  Commenced operations on June 30, 1998                                        
    

   
GLOBAL HIGH-YIELD BOND FUND                                                     
    

   
<TABLE>
<CAPTION>
<S>            <C>                         <C>                             <C>                        <C>   

Time Period  Initial $10,000 Investment  Ending value October 31, 1998    Cumulative Total Return     Average Annual 
                                                                                                      Total Return
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
Life of Fund*                     $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
</TABLE>
    

   
*  Commenced operations on January 31, 1998.                                    
    

   
INTERNATIONAL BOND FUND                                                         
    

   
<TABLE>
<CAPTION>
<S>            <C>                         <C>                             <C>                        <C>   

Time Period  Initial $10,000 Investment  Ending value October 31, 1998     Cumulative Total Return    Average Annual 
                                                                                                      Total Return
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
     One Year            $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
Life of Fund*            $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
</TABLE>
    

*  Commenced operations on March 31, 1994.                                      


INTERNATIONAL STOCK FUND                                                        

   
<TABLE>
<CAPTION>
<S>            <C>                         <C>                             <C>                        <C>  
                                                                                                                                   
- -------------  --------------------------  ------------------------------  -------------------------  ------------------

Time Period  Initial $10,000 Investment    Ending value October 31, 1998   Cumulative Total Return    Average Annual 
                                                                                                      Total Return
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
     One Year                     $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
    Five Year                     $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
Life of Fund*                     $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
</TABLE>
    

*  Commenced operations on March 4, 1992.                                       

   
OVERSEAS FUND                                                                   
    

   
<TABLE>
<CAPTION>
<S>            <C>                         <C>                             <C>                        <C>  

Time Period  Initial $10,000 Investment    Ending value October 31, 1998   Cumulative Total Return    Average Annual 
                                                                                                      Total Return
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
Life of Fund*                     $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
</TABLE>
    

   
*  Commenced operations on June 30, 1998.                                       
    

SHORT-TERM GLOBAL BOND FUND                                                     

   
<TABLE>
<CAPTION>
<S>            <C>                         <C>                             <C>                        <C>  
                                                                                                                                   
- -------------  --------------------------  ------------------------------  -------------------------  ------------------

Time Period    Initial $10,000 Investment  Ending value October 31, 1998   Cumulative Total Return    Average Annual 
                                                                                                      Total Return
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
     One Year                     $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
Life of Fund*                     $10,000                                                                                          
- -------------  --------------------------  ------------------------------  -------------------------  ------------------
</TABLE>
    

*  Commenced operations on March 31, 1994.                                      

COMPARISONS                                                                     

U.S. TREASURY BILLS, NOTES, OR BONDS.  Investors may want to compare the        
performance of the Fund to that of U.S. Treasury bills, notes, or bonds, which  
are issued by the U.S. Government.  Treasury obligations are issued in selected 
denominations.  Rates of Treasury obligations are fixed at the time of issuance 
and payment of principal and interest is backed by the full faith and credit of 
the Treasury.  The market value of such instruments will generally fluctuate    
inversely with interest rates prior to maturity and will equal par value at     
maturity.  Generally, the values of obligations with shorter maturities will    
fluctuate less than those with longer maturities.                               

CERTIFICATES OF DEPOSIT.  Investors may want to compare the Fund's performance  
to that of certificates of deposit offered by banks and other depositary        
institutions.  Certificates of deposit may offer fixed or variable interest     
rates and principal is guaranteed and may be insured.  Withdrawal of the        
deposits prior to maturity normally will be subject to a penalty.  Rates        
offered by banks and other depositary institutions are subject to change at any 
time specified by the issuing institution.                                      

MONEY MARKET FUNDS.  Investors may also want to compare performance of the Fund 
to that of money market funds.  Money market fund yields will fluctuate and     
shares are not insured, but share values usually remain stable.                 

LIPPER ANALYTICAL SERVICES, INC. ("LIPPER") AND OTHER INDEPENDENT RANKING       
ORGANIZATIONS.  From time to time, in marketing and other fund literature, the  
Fund's performance may be compared to the performance of other mutual funds in  
general or to the performance of particular types of mutual funds with similar  
investment goals, as tracked by independent organizations.  Among these         
organizations, Lipper, a widely used independent research firm which ranks      
mutual funds by overall performance, investment objectives, and assets, may be  
cited.  Lipper performance figures are based on changes in net asset value,     
with all income and capital gains dividends reinvested.  Such calculations do   
not include the effect of any sales charges imposed by other funds.  The Fund   
will be compared to Lipper's appropriate fund category, that is, by fund        
objective and portfolio holdings.  The Fund's performance may also be compared  
to the average performance of its Lipper category.                              

MORNINGSTAR, INC.  The Fund's performance may also be compared to the           
performance of other mutual funds by Morningstar, Inc., which rates funds on    
the basis of historical risk and total return.  Morningstar's ratings range     
from five stars (highest) to one star (lowest) and represent Morningstar's      
assessment of the historical risk level and total return of a fund as a         
weighted average for 3, 5, and 10 year periods.  Ratings are not absolute and   
do not represent future results.                                                

INDEPENDENT SOURCES.  Evaluations of fund performance made by independent       
sources may also be used in advertisements concerning the Fund, including       
reprints of, or selections from, editorials or articles about the Fund,         
especially those with similar objectives.  Sources for fund performance and     
articles about the Fund may include publications such as Money, Forbes,         
Kiplinger's, Smart Money, Financial World, Business Week, U.S. News and World   
Report, The Wall Street Journal, Barron's, and a variety of investment          
newsletters.                                                                    

INDICES.  The Fund may compare its performance to a wide variety of indices.    
There are differences and similarities between the investments that a Fund may  
purchase and the investments measured by the indices.                           

HISTORICAL ASSET CLASS RETURNS.  From time to time, marketing materials may     
portray the historical returns of various asset classes.  Such presentations    
will typically compare the average annual rates of return of inflation, U.S.    
Treasury bills, bonds, common stocks, and small stocks. There are important     
differences between each of these investments that should be considered in      
viewing any such comparison.  The market value of stocks will fluctuate with    
market conditions, and small-stock prices generally will fluctuate more than    
large-stock prices.  Stocks are generally more volatile than bonds.  In return  
for this volatility, stocks have generally performed better than bonds or cash  
over time.  Bond prices generally will fluctuate inversely with interest rates  
and other market conditions, and the prices of bonds with longer maturities     
generally will fluctuate more than those of shorter-maturity bonds. Interest    
rates for bonds may be fixed at the time of issuance, and payment of principal  
and interest may be guaranteed by the issuer and, in the case of U.S. Treasury  
obligations, backed by the full faith and credit of the U.S. Treasury.          

HISTORICAL FOREIGN CURRENCY INFORMATION.  Because the Fund's investments        
primarily are denominated in foreign currencies, the strength or weakness of    
the U.S. dollar against these currencies may account for part of the Fund's     
investment performance.  Historical information regarding the value of the      
dollar versus foreign currencies may be used from time to time in               
advertisements concerning the Funds.  Such historical information is not        
indicative of future fluctuations in the value of the U.S. dollar against these 
currencies.  Marketing materials may cite country and economic statistics and   
historical stock or bond market performance for any of the countries in which   
the Fund may invest, including, but not limited to, the following:  population  
growth, gross domestic product, inflation rate, average stock market price      
earnings ratios, selected returns on stocks or bonds, and the total value of    
stock or bond markets.  Sources of such statistics may include official         
publications of various foreign governments, exchanges, or investment research  
firms.  In addition, marketing materials may cite the portfolio management's    
views or interpretations of such statistical data or historical performance.    

   
STRONG FUNDS.   The Strong Funds offer a comprehensive range of conservative to 
aggressive investment options. The Strong Funds and their investment objectives 
are listed below. The Funds are listed in ascending order of risk and return,   
as determined by the Funds' Advisor.                                            
    

FUND NAME                    INVESTMENT OBJECTIVE                               
   
<TABLE>
<CAPTION>
<S>                                     <C>                                                                                  
Strong Investors Money Fund             Current income, a stable share price, and daily liquidity.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Money Market Fund                Current income, a stable share price, and daily liquidity.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Heritage Money Fund              Current income, a stable share price, and daily liquidity.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Municipal Money Market Fund      Federally tax-exempt current income, a stable share-price, and daily liquidity.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Municipal Advantage Fund         Federally tax-exempt current income with a very low degree of share-price
                                        fluctuation.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Advantage Fund                   Current income with a very low degree of share-price fluctuation.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Short-Term Municipal Bond        Total return by investing for a high level of federally tax-exempt current 
Fund                                    income with a low degree of share-price fluctuation.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Short-Term Bond Fund             Total return by investing for a high level of current income with a low degree 
                                        of share-price fluctuation.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Short-Term Global Bond Fund      Total return by investing for a high level of income with a low degree of share
                                        price fluctuation.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Short-Term High Yield Municipal  Total return by investing for a high level of federally tax-exempt current 
Fund                                    income with a moderate degree of share-price fluctuation.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Short-Term High Yield Bond       Total return by investing for a high level of current income with a moderate
Fund                                    degree of share-price fluctuation.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Government Securities Fund       Total return by investing for a high level of current income with a moderate
                                        degree of share-price fluctuation.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Municipal Bond Fund              Total return by investing for a high level of federally tax-exempt current 
                                        income with a moderate degree of share-price fluctuation.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Corporate Bond Fund              Total return by investing for a high level of current income with a moderate 
                                        degree of share-price fluctuation.
- --------------------------------------  --------------------------------------------------------------------------------
Strong High-Yield Municipal Bond Fund   Total return by investing for a high level of federally tax-exempt current 
                                        income.
- ------------------------------------ --  -------------------------------------------------------------------------------
Strong High-Yield Bond Fund             Total return by investing for a high level of current income and capital growth.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Global High-Yield Bond Fund      Total return by investing for a high level of current income and capital growth.
- --------------------------------------  --------------------------------------------------------------------------------
Strong International Bond Fund          High total return by investing for both income and capital appreciation.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Asset Allocation Fund            High total return consistent with reasonable risk over the long term.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Equity Income Fund               Total return by investing for both income and capital growth.
- --------------------------------------  --------------------------------------------------------------------------------
Strong American Utilities Fund          Total return by investing for both income and capital growth. 
- --------------------------------------  --------------------------------------------------------------------------------
Strong Blue Chip 100 Fund               Total return by investing for both income and capital growth.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Limited Resources Fund           Total return by investing for both capital growth and income.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Total Return Fund                High total return by investing for capital growth and income.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Growth and Income Fund           High total return by investing for capital growth and income.
- --------------------------------------  ------------------------------------------------------------------------------
Strong Index 500 Fund                   To approximate as closely as practicable (before fees and expenses) the
                                        capitalization-weighted total rate of return of that portion of the U.S. market 
                                        for publicly traded common stocks composed of the larger capitalized companies.
- --------------------------------------  --------------------------------------------------------------------------------
Strong Schafer Balanced Fund            Total return by investing for both income and capital growth.
- --------------------------------------  --------------------------------------------------------------------------------
</TABLE>

                                      40
<PAGE>


    
   
<TABLE>
<CAPTION>
<S>                                 <C>                                                                             
Strong Schafer Value Fund           Long-term capital appreciation principally through investment in common stocks
                                    and other equity securities.  Current income is a secondary objective.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Dow 30 Value Fund            Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Value Fund                   Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Opportunity Fund             Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Mid Cap Disciplined Fund     Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Mid Cap Fund                 Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Common Stock Fund*           Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Strategic Growth Fund        Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Small Cap Value Fund         Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Growth Fund                  Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Discovery Fund               Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong U.S. Emerging Growth Fund    Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Enterprise Fund              Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Growth 20 Fund               Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong International Stock Fund     Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Overseas Fund                Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Foreign MajorMarketsSM Fund  Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
Strong Asia Pacific Fund            Capital growth.
- ----------------------------------  ------------------------------------------------------------------------------
</TABLE>
    

*     The Fund is closed to new investors, except the Fund may continue to      
offer its shares through certain 401(k) plans and similar company-sponsored     
retirement plans.                                                               

The Advisor also serves as Advisor to several management investment companies,  
some of which fund variable annuity separate accounts of certain insurance      
companies.                                                                      
   
The Fund may from time to time be compared to other Strong Funds based on a     
risk/reward spectrum.  In general, the amount of risk associated with any       
investment product is commensurate with that product's potential level of       
reward. The Strong Funds risk/reward continuum or any Fund's position on the    
continuum may be described or diagrammed in marketing materials.  The Strong    
Funds risk/reward continuum positions the risk and reward potential of each     
Strong Fund relative to the other Strong Funds, but is not intended to position 
any Strong Fund relative to other mutual funds or investment products.          
Marketing materials may also discuss the relationship between risk and reward   
as it relates to an individual investor's portfolio.                            
    
TYING TIME FRAMES TO YOUR GOALS.  There are many issues to consider as you make 
your investment decisions, including analyzing your risk tolerance, investing   
experience, and asset allocations.  You should start to organize your           
investments by learning to link your many financial goals to specific time      
frames.  Then you can begin to identify the appropriate types of investments to 
help meet your goals.  As a general rule of thumb, the longer your time         
horizon, the more price fluctuation you will be able to tolerate in pursuit of  
higher returns.  For that reason, many people with longer-term goals select     
stocks or long-term bonds, and many people with nearer-term goals match those   
up with for instance, short-term bonds.  The Advisor developed the following    
suggested holding periods to help our investors set realistic expectations for  
both the risk and reward potential of our funds.  (See table below.)  Of        
course, time is just one element to consider when making your investment        
decision.                                                                       

STRONG FUNDS SUGGESTED MINIMUM HOLDING PERIODS                                  

STRONG FUNDS SUGGESTED MINIMUM HOLDING PERIODS                                  


   
<TABLE>
<CAPTION>
<S>                     <C>                         <C>                          <C>                        
     UNDER 1 YEAR              1 TO 2 YEARS                 4 TO 7 YEARS              5 OR MORE YEARS     
- ----------------------  --------------------------  ---------------------------  -------------------------
Money Market Fund                   Advantage Fund  Government Securities Fund   Asset Allocation Fund    
Heritage Money Fund       Municipal Advantage Fund  Municipal Bond Fund          American Utilities Fund  
Municipal Money Market                              Corporate Bond Fund          Index 500 Fund           
Fund                                  2 TO 4 YEARS  International Bond Fund      Total Return Fund        
Investors Money Fund          Short-Term Bond Fund  High-Yield Municipal Bond    Opportunity Fund
                         Short-Term Municipal Bond  Fund                         Growth Fund
                                              Fund  High-Yield Bond Fund         Common Stock Fund*       
                            Short-Term Global Bond  Global High-Yield Bond Fund  Discovery Fund           
                                              Fund                               International Stock Fund 
                        Short-Term High Yield Bond                               Asia Pacific Fund        
                                              Fund                               Value Fund               
                             Short-Term High Yield
                                    Municipal Fund                               Growth and Income Fund
                                                                                 Equity Income Fund
                                                                                 Mid Cap Fund             
                                                                                 Schafer Value Fund       
                                                                                 Growth 20 Fund           
                                                                                 Blue Chip 100 Fund       
                                                                                 Small Cap Value Fund     
                                                                                 Dow 30 Value Fund        
                                                                                 Schafer Balanced Fund    
                                                                                 Limited Resources Fund   
                                                                                 Overseas Fund            
                                                                                 Foreign MajorMarketsSM   
                                                                                 Fund                     
                                                                                 Strategic Growth Fund    
                                                                                 Enterprise Fund          
                                                                                 Mid Cap Disciplined Fund 
                                                                                 U.S. Emerging Growth Fund
                                                                                                          
</TABLE>
    

* This Fund is closed to new investors, except the Fund may continue to     
offer its shares through certain 401(k) plans and similar company-sponsored     
retirement plans.                                                               


ADDITIONAL FUND INFORMATION                                                     

PORTFOLIO CHARACTERISTICS.  In order to present a more complete picture of the  
Fund's portfolio, marketing materials may include various actual or estimated   
portfolio characteristics, including but not limited to median market           
capitalizations, earnings per share, alphas, betas, price/earnings ratios,      
returns on equity, dividend yields, capitalization ranges, growth rates,        
price/book ratios, top holdings, sector breakdowns, asset allocations, quality  
breakdowns, and breakdowns by geographic region.                                

ADDITIONAL FUND INFORMATION                                                     

PORTFOLIO CHARACTERISTICS.  In order to present a more complete picture of the  
Fund's portfolio, marketing materials may include various actual or estimated   
portfolio characteristics, including but not limited to median market           
capitalizations, earnings per share, alphas, betas, price/earnings ratios,      
returns on equity, dividend yields, capitalization ranges, growth rates,        
price/book ratios, top holdings, sector breakdowns, asset allocations, quality  
breakdowns, and breakdowns by geographic region.                                

MEASURES OF VOLATILITY AND RELATIVE PERFORMANCE.  Occasionally statistics may   
be used to specify fund volatility or risk. The general premise is that greater 
volatility connotes greater risk undertaken in achieving performance.  Measures 
of volatility or risk are generally used to compare the Fund's net asset value  
or performance relative to a market index.  One measure of volatility is beta.  
Beta is the volatility of a fund relative to the total market as represented by 
the Standard & Poor's 500 Stock Index.  A beta of more than 1.00 indicates      
volatility greater than the market, and a beta of less than 1.00 indicates      
volatility less than the market.  Another measure of volatility or risk is      
standard deviation. Standard deviation is a statistical tool that measures the  
degree to which a fund's performance has varied from its average performance    
during a particular time period.                                                

Standard deviation is calculated using the following formula:                   

     Standard deviation = the square root of  S(xi - xm)2                       
                                                                                
                              n-1                                               

Where:     S = "the sum of",                                                    
     xi  = each individual return during the time period,                       
     xm = the average return over the time period, and                          
     n = the number of individual returns during the time period.               

Statistics may also be used to discuss the Fund's relative performance. One     
such measure is alpha. Alpha measures the actual return of a fund compared to   
the expected return of a fund given its risk (as measured by beta).  The        
expected return is based on how the market as a whole performed, and how the    
particular fund has historically performed against the market. Specifically,    
alpha is the actual return less the expected return. The expected return is     
computed by multiplying the advance or decline in a market representation by    
the Fund's beta. A positive alpha quantifies the value that the fund manager    
has added, and a negative alpha quantifies the value that the fund manager has  
lost.                                                                           

Other measures of volatility and relative performance may be used as            
appropriate. However, all such measures will fluctuate and do not represent     
future results.                                                                 

DURATION.  Duration is a calculation that seeks to measure the price            
sensitivity of a bond or a bond fund to changes in interest rates.  It measures 
bond price sensitivity to interest rate changes by taking into account the time 
value of cash flows generated over the bond's life.  Future interest and        
principal payments are discounted to reflect their present value and then are   
multiplied by the number of years they will be received to produce a value that 
is expressed in years.  Since duration can also be computed for the Fund, you   
can estimate the effect of interest rates on the Fund's share price.  Simply    
multiply the Fund's duration by an expected change in interest rates.  For      
example, the price of the Fund with a duration of two years would be expected   
to fall approximately two percent if market interest rates rose by one          
percentage point.                                                               

                              GENERAL INFORMATION                               

BUSINESS PHILOSOPHY                                                             

The Advisor is an independent, Midwestern-based investment advisor, owned by    
professionals active in its management. Recognizing that investors are the      
focus of its business, the Advisor strives for excellence both in investment    
management and in the service provided to investors. This commitment affects    
many aspects of the business, including professional staffing, product          
development, investment management, and service delivery.                       

The increasing complexity of the capital markets requires specialized skills    
and processes for each asset class and style. Therefore, the Advisor believes   
that active management should produce greater returns than a passively managed  
index.  The Advisor has brought together a group of top-flight investment       
professionals with diverse product expertise, and each concentrates on their    
investment specialty. The Advisor believes that people are the firm's most      
important asset. For this reason, continuity of professionals is critical to    
the firm's long-term success.                                                   

INVESTMENT ENVIRONMENT                                                          

Discussions of economic, social, and political conditions and their impact on   
the Fund may be used in advertisements and sales materials.  Such factors that  
may impact the Fund include, but are not limited to, changes in interest rates, 
political developments, the competitive environment, consumer behavior,         
industry trends, technological advances, macroeconomic trends, and the supply   
and demand of various financial instruments.  In addition, marketing materials  
may cite the portfolio management's views or interpretations of such factors.   

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.              

1.     HAVE A PLAN - 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. 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. 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. 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. 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 principal loss. 

6.     CONSIDER STOCKS TO HELP ACHIEVE MAJOR LONG-TERM GOALS. 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. 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. 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.                                             

STRONG RETIREMENT PLAN SERVICES                                                 
Strong Retirement Plan Services offers a full menu of high quality, affordable  
retirement plan options, including traditional money purchase pension and       
profit sharing plans, 401(k) plans, simplified employee pension plans, salary   
reduction plans, Keoghs, and 403(b) plans.  Retirement plan specialists are     
available to help companies determine which type of retirement plan may be      
appropriate for their particular situation.                                     

MARKETS.  The retirement plan services provided by the Advisor focus on four    
distinct markets, based on the belief that a retirement plan should fit the     
customer's needs, not the other way around.                                     
1.     SMALL COMPANY PLANS.  Small company plans are designed for companies     
with 1-50 plan participants.  The objective is to incorporate the features and  
benefits typically reserved for large companies, such as sophisticated          
recordkeeping systems, outstanding service, and investment expertise, into a    
small company plan without administrative hassles or undue expense.  Small      
company plan sponsors receive a comprehensive plan administration manual as     
well as toll-free telephone support.                                            
2.     LARGE COMPANY PLANS.  Large company plans are designed for companies     
with between 51 and 1,000 plan participants.  Each large company plan is        
assigned a team of professionals consisting of an account manager, who is       
typically an attorney, CPA, or holds a graduate degree in business, a           
conversion specialist (if applicable), an accounting manager, a legal/technical 
manager, and an education/communications educator.                              
3.     WOMEN-OWNED BUSINESSES.                                                  
4.     NON-PROFIT AND EDUCATIONAL ORGANIZATIONS (THE 403(B) MARKET).            

TURNKEY APPROACH.  The retirement plans offered by the Advisor are designed to  
be streamlined and simple to administer.  To this end, the Advisor has invested 
heavily in the equipment, systems, and people necessary to adopt or convert a   
plan, and to keep it running smoothly.  The Advisor provides all aspects of the 
plan, including plan design, administration, recordkeeping, and investment      
management.  To streamline plan design, the Advisor provides customizable       
IRS-approved prototype documents.  The Advisor's services also include annual   
government reporting and testing as well as daily valuation of each             
participant's account.  This structure is intended to eliminate the confusion   
and complication often associated with dealing with multiple vendors.  It is    
also designed to save plan sponsors time and expense.                           

The Advisor strives to provide one-stop retirement savings programs that        
combine the advantages of proven investment management, flexible plan design,   
and a wide range of investment options.  The open architecture design of the    
plans allow for the use of the family of mutual funds managed by the Advisor as 
well as a stable asset value option.  Large company plans may supplement these  
options with their company stock (if publicly traded) or funds from other       
well-known mutual fund families.                                                

EDUCATION.  Participant education and communication is key to the success of    
any retirement program, and therefore is one of the most important services     
that the Advisor provides.  The Advisor's goal is twofold: to make sure that    
plan participants fully understand their options and to educate them about the  
lifelong investment process.  To this end, the Advisor provides attractive,     
readable print materials that are supplemented with audio and video tapes, and  
retirement education programs.                                                  

SERVICE.  The Advisor's goal is to provide a world class level of service.  One 
aspect of that service is an experienced, knowledgeable team that provides      
ongoing support for plan sponsors, both at adoption or conversion and           
throughout the life of a plan.  The Advisor is committed to delivering accurate 
and timely information, evidenced by straightforward, complete, and             
understandable reports, participant account statements, and plan summaries.     

The Advisor has designed both "high-tech" and "high-touch" systems, providing   
an automated telephone system as well as personal contact.  Participants can    
access daily account information, conduct transactions, or have questions       
answered in the way that is most comfortable for them.                          

STRONG FINANCIAL ADVISORS GROUP                                                 

The Strong Financial Advisors Group is dedicated to helping financial advisors  
better serve their clients.  Financial advisors receive regular updates on the  
mutual funds managed by the Advisor, access to portfolio managers through       
special conference calls, consolidated mailings of duplicate confirmation       
statements, access to the Advisor's network of regional representatives, and    
other specialized services.  For more information on the Strong Financial       
Advisors Group, call 1-800-368-1683.                                            


                              PORTFOLIO MANAGEMENT                              

The Fund's portfolio manager(s) works with a team of analysts, traders, and     
administrative personnel. From time to time, marketing materials may discuss    
various members of the team, including their education, investment experience,  
and other credentials.                                                          

GLOBAL HIGH YIELD BOND FUND, INTERNATIONAL BOND FUND, AND SHORT-TERM GLOBAL     
BOND FUND                                                                       

The Advisor's investment philosophy includes (1) active management to deliver a 
superior total return with low to moderate risk versus benchmarks; (2) a        
long-term outlook; (3) controlled country and currency exposure; (4) duration   
managed within a narrow band; and (5) value added by use of all available       
sectors and instruments.  The Advisor also believes that (1) over time,         
international diversification may help reduce total portfolio risk and increase 
return potential; and (2) foreign and emerging markets are often inefficient,   
providing significant growth opportunities for investors who do their homework. 

The Advisor's investment process generally follows a five-step approach. The    
first step is the global "satellite" view. This top-down approach, driven by a  
secular outlook, determines duration and blocs.  Second, the Advisor takes a    
continental "airplane" view. Major continental allocations are based on global  
economic cycles and relative values.  The third step is the country/currency    
"helicopter" view.  Country allocations are determined based on                 
country-specific policies and prospects along with risk management              
considerations. Fourth, the Advisor considers the country structure "car" view. 
Consideration of each country's economic outlook, combined with an analysis of  
the yield curve, determines the portfolio structure and sector composition.     
Finally, issue selection is done "by foot". Individual securities are chosen    
from alternatives such as sovereigns, corporates, mortgages, futures, and       
options. The Advisor's currency risk management approach involves short-,       
intermediate-, and long-term analysis.  Within each time frame, the Advisor may 
utilize various econometric models and trading systems in its analysis of       
currency risk.                                                                  

INTERNATIONAL STOCK AND ASIA PACIFIC FUNDS                                      

The Advisor's investment philosophy is that (1) active management with focused  
security and country selection can generate superior returns over passive       
benchmarks; (2) local knowledge and local contacts are essential for effective  
international investing; (3) application of U.S. and non-U.S. financial         
analysis techniques can be used to value certain international securities; (4)  
attractive investment opportunities exist in all areas-established and          
developing markets, large and small companies; (5) seeking out under-researched 
and undervalued companies is as valid in international investing as in domestic 
investing; and (6) risk can be reduced by underweighting the least attractive   
markets, not overweighting volatile markets, and making bold allocations to     
attractive markets and securities.                                              

The Advisor's investment process includes (1) global market analysis to         
determine which countries/currencies to emphasize and avoid; (2) combining U.S. 
and non-U.S. fundamental research techniques where possible; (3) utilizing      
local knowledge and local contacts to closely monitor companies and unearth new 
candidates for investment opportunities; (4) focusing on stock selection in     
moderately attractive markets; (5) focusing on sector/industry weightings in    
the most attractive markets; (6) emphasizing growth companies in smaller and    
emerging markets; (7) emphasizing value plays and turnaround situations in more 
mature equity markets; and (8) utilizing hedging of foreign currency risk on an 
opportunistic basis.                                                            

The Advisor considers selling a stock when there is a high price/cash flow or   
price/earnings multiple relative to the country and/or industry, deterioration  
in country policies towards investors, or deterioration in company fundamentals 
and management.                                                                 

   
STRONG FOREIGN MAJORMARKETS FUND                                                
    

   
In selecting stocks for the Fund, the portfolio manager uses a disciplined,     
quantitative approach to identify foreign stocks that are undervalued.          
    

   
In analyzing foreign companies for investment, the Advisor will ordinarily look 
for one or more of the following characteristics:                               
    
   
- - overall financial strength, including sound financial and accounting policies 
  and a strong balance sheet;                                                   
    
   
- - significant competitive advantages, including innovative products and         
  efficient service;                                                            
    
   
- - effective research, product development, and marketing;                       
    
   
- - stable, capable management; and                                               
    
   
- - other general operating characteristics that will enable the company to       
  compete successfully in its marketplace.                                      
    

   
 The manager will sell stocks when they have reached price targets or to adjust 
 the Fund's weighting in specific countries.  To manage foreign currency risk,  
 the manager may hedge a portion of the Fund's exposure to currency             
 fluctuations.                                                                  
    

   
 STRONG OVERSEAS FUND                                                           
    

   
 The Fund's manager selects stocks using a top-down approach that emphasizes    
 three key elements:  country allocation, currency management, and stock        
 selection.                                                                     
    

   
- - COUNTRY ALLOCATION-By focusing on factors such as a country's:  (i) gross     
  domestic product ("GDP") growth rate; (ii) political landscape; (iii) market  
  liquidity; and (iv) fiscal and monetary environments.                         
    
   
- - CURRENCY MANAGEMENT-By focusing on factors such as a country's: (i) relative  
  interest rates; (ii) relative GDP growth rate; (iii) relative inflation rate; 
  and (iv) currency supply and demand.                                          
    
   
- - STOCK SELECTION-By researching stocks through (i) information gathering       
  including one-on-one meetings with company senior executives; and (ii)        
  information analysis including use of various earnings models to identify     
  companies with one or more of the following attributes:                       
    
   
- - rising revenue                                                                
    
   
- - expanding operating margins                                                   
    
   
- - earnings per share growth rate exceeding profits and earnings ratio           
    
   
- - quality management with demonstrated consistent revenue and profit growth.    
    

   
 The manager also evaluates the liquidity of a market or stock before           
 investing-that is, he focuses on those where the flow of investments in and    
 out is relatively free.  As a way of controlling costs and improving           
 shareholders' after-tax return, the manager intends to keep turnover low.      
 When a stock's negative factors outweigh its positive ones, the manager may    
 sell it.                                                                       
    

                             INDEPENDENT ACCOUNTANTS                            

   
PricewaterhouseCoopers LLP, 411 East Wisconsin Avenue, Milwaukee, Wisconsin     
53202, are the independent accountants for the Fund, providing audit services   
and assistance and consultation with respect to the preparation of filings with 
the SEC.                                                                        
    

                                  LEGAL COUNSEL                                 

 Godfrey & Kahn, S.C., 780 North Water Street, Milwaukee, Wisconsin  53202,     
 acts as legal counsel for the Fund.                                            

                              FINANCIAL STATEMENTS                              

 The Annual Report for the Fund that is attached to this SAI contains the       
 following audited financial information:                                       

 1.     Schedule of Investments in Securities.                                  
 2.     Statement of Operations.                                                
 3.     Statement of Assets and Liabilities.                                    
 4.     Statement of Changes in Net Assets.                                     
 5.     Notes to Financial Statements.                                          
 6.     Financial Highlights.                                                   
 7.     Report of Independent Accountants.                                      


   
APPENDIX A - ASSET COMPOSITION BY BOND RATINGS                                  
    

   
 For the fiscal year ended October 31, 1998, the Fund's assets were invested in 
 the credit categories shown below. Percentages are computed on a               
 dollar-weighted basis and are an average of twelve monthly calculations.       
    

   
 STRONG SHORT-TERM GLOBAL BOND FUND                                             
    

   
<TABLE>
<CAPTION>
<S>     <C>          <C>                          
           RATED         ADVISOR'S ASSESSMENT   
RATING  SECURITIES*     OF UNRATED SECURITIES   
- ------  -----------  ---------------------------
AAA     x.x%                        x%          
AA      x.x                         x           
A       x.x                         x           
BBB     x.x                         x           
BB      x.x                         x           
B       x.x                         x           
CCC     x.x                         x           
CC      x.x                         x           
C       x.x                         x           
D       x.x                         x           
Total   x.x          +               x.x     =x%
</TABLE>
    

   
 STRONG INTERNATIONAL BOND FUND                                                 
    

   
<TABLE>
<CAPTION>
<S>     <C>          <C>                          
           RATED         ADVISOR'S ASSESSMENT   
RATING  SECURITIES*     OF UNRATED SECURITIES   
- ------  -----------  ---------------------------
AAA     x.x%                        x%          
AA      x.x                         x           
A       x.x                         x           
BBB     x.x                         x           
BB      x.x                         x           
B       x.x                         x           
CCC     x.x                         x           
CC      x.x                         x           
C       x.x                         x           
D       x.x                         x           
Total   x.x          +               x.x     =x%
</TABLE>
    

   
 * The indicated percentages are based on the highest rating received from any  
 one NRSRO. Each of the NRSROs utilizes rating categories that are              
 substantially similar to those used in this chart (see the information below   
 for the rating categories of several NRSROs).                                  
    
   
                    
APPENDIX B - DEFINITION OF BOND RATINGS                    
    

                     STANDARD & POOR'S ISSUE CREDIT RATINGS                     

   
 A Standard & Poor's issue credit rating is a current opinion of the            
 creditworthiness of an obligor with respect to a specific financial            
 obligation, a specific class of financial obligations, or a specific financial 
 program (including ratings on medium-term note programs and commercial paper   
 programs).  It takes into consideration the creditworthiness of guarantors,    
 insurers, or other forms of credit enhancement of the obligation and takes     
 into account the currency in which the obligation is denominated.  The issue   
 credit rating is not a recommendation to purchase, sell, or hold a financial   
 obligation, inasmuch as it does not comment as to market price or suitability  
 for a particular investor.                                                     
    

   
Issue credit ratings are based on current information furnished by the obligors 
or obtained by Standard & Poor's from other sources it considers to be          
reliable.  Standard & Poor's does not perform an audit in connection with any   
credit rating and may, on occasion, rely on unaudited financial information.    
Credit ratings may be changed, suspended, or withdrawn as a result of changes   
in, or unavailability of, such information, or based on other circumstances.    
    

 Issue credit ratings can be either long-term or short-term.  Short-term        
 ratings are generally assigned to those obligations considered short-term in   
 the relevant market.  In the U.S., for example, that means obligations with an 
 original maturity of no more than 365 days - including commercial paper.       
 Short-term ratings are also used to indicate the creditworthiness of an        
 obligor with respect to put features on long-term obligations.  The result is  
 a dual rating, in which the short-term rating addresses the put feature, in    
 addition to the usual long-term rating.  Medium-term notes are assigned        
 long-term ratings.                                                             

 Issue credit ratings are based, in varying degrees, on the following           
 considerations:                                                                

 1.     Likelihood of payment capacity and willingness of the obligor to meet   
 its financial commitment on an obligation in accordance with the terms of the  
 obligation.                                                                    

 2.     Nature of and provisions of the obligation.                             

 3.     Protection afforded by, and relative position of, the obligation in the 
 event of bankruptcy, reorganization, or other arrangement under the laws of    
 bankruptcy and other laws affecting creditors' rights.                         

   
The issue rating definitions are expressed in terms of default risk.  As such,  
they pertain to senior obligations of an entity.  Junior obligations are        
typically rated lower than senior obligations, to reflect the lower priority in 
bankruptcy, as noted above.  (Such differentiation applies when an entity has   
both senior and subordinated obligations, secured and unsecured obligations, or 
operating company and holding company obligations.)  Accordingly, in the case   
of junior debt, the rating may not conform exactly with the category            
definition.                                                                     
    

   
 'AAA'                                                                          
    

   
An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's. 
The obligor's capacity to meet its financial commitment on the obligation is    
EXTREMELY STRONG.                                                               
    

   
 'AA'                                                                           
    

   
An obligation rated 'AA' differs from the highest rated obligations only in     
small degree.  The obligor's capacity to meet its financial commitment on the   
obligation is VERY STRONG.                                                      
    

   
 'A'                                                                            
    

   
An obligation rated 'A' is somewhat more susceptible to the adverse effects of  
changes in circumstances and economic conditions than obligations in higher     
rated categories.  However, the obligor's capacity to meet its financial        
commitment on the obligation is still STRONG.                                   
    

   
 'BBB'                                                                          
    

   
An obligation rated 'BBB' exhibits ADEQUATE protection parameters.  However,    
adverse economic conditions or changing circumstances are more likely to lead   
to a weakened capacity of the obligor to meet its financial commitment on the   
obligation.                                                                     
    

 Obligations rated 'BB', 'B', 'CCC', 'CC' and 'C' are regarded as having        
 significant speculative characteristics.  'BB' indicates the least degree of   
 speculation and 'C' the highest.  While such obligations will likely have some 
 quality and protective characteristics, these may be outweighed by large       
 uncertainties or major exposures to adverse conditions.                        

   
 'BB'                                                                           
    

   
An obligation rated 'BB' is LESS VULNERABLE to nonpayment than other            
speculative issues.  However, it faces major ongoing uncertainties or exposure  
to adverse business, financial, or economic conditions which could lead to the  
obligor's inadequate capacity to meet its financial commitment on the           
obligation.                                                                     
    

   
 'B'                                                                            
    

   
An obligation rated 'B' is MORE VULNERABLE to nonpayment than obligations rated 
'BB', but the obligor currently has the capacity to meet its financial          
commitment on the obligation.  Adverse business, financial, or economic         
conditions will likely impair the obligor's capacity or willingness to meet its 
financial commitment on the obligation.                                         
    

   
 'CCC'                                                                          
    

   
An obligation rated 'CCC' is CURRENTLY VULNERABLE to nonpayment, and is         
dependent upon favorable business, financial, and economic conditions for the   
obligor to meet its financial commitment on the obligation.  In the event of    
adverse business, financial, or economic conditions, the obligor is not likely  
to have the capacity to meet its financial commitment on the obligation.        
    

   
 'CC'                                                                           
    

   
An obligation rated 'CC' is  CURRENTLY HIGHLY VULNERABLE to nonpayment.         
    

   
 'C'                                                                            
    

   
The 'C' rating may be used to cover a situation where a bankruptcy petition has 
been filed or similar action has been taken, but payments on this obligation    
are being continued.                                                            
    

   
 'D'                                                                            
    

   
An obligation rated 'D' is in payment default.  The 'D' rating category is used 
when payments on an obligation are not made on the date due, even if the        
applicable grace period has not expired, unless Standard & Poor's believes that 
such payments will be made during such grade period.  The 'D' rating also will  
be used upon the filing of a bankruptcy petition or the taking of a similar     
action if payments on an obligation are jeopardized.                            
    

                         MOODY'S LONG-TERM DEBT RATINGS                         

   
 Aaa  - Bonds which are rated Aaa are judged to be of the best quality.  They   
 carry the smallest degree of investment risk and are generally referred to as  
 "gilt edged."  Interest payments are protected by a large or by an             
 exceptionally stable margin and principal is secure.  While the various        
 protective elements are likely to change, such changes as can be visualized    
 are most unlikely to impair the fundamentally strong position of such issues.  
    

 Aa - Bonds which are rated Aa are judged to be of high quality by all          
 standards.  Together with the Aaa group they comprise what are generally known 
 as high-grade bonds.  They are rated lower than the best bonds because margins 
 of protection may not be as large as in Aaa securities or fluctuation of       
 protective elements may be of greater amplitude or there may be other elements 
 present which make the long-term risk appear somewhat larger than in Aaa       
 securities.                                                                    

 A - Bonds which are rated A possess many favorable investment attributes and   
 are to be considered as upper-medium-grade obligations.  Factors giving        
 security to principal and interest are considered adequate, but elements may   
 be present which suggest a susceptibility to impairment some time in the       
 future.                                                                        

 Baa - Bonds which are rated Baa are considered as medium-grade obligations     
 (I.E., they are neither highly protected nor poorly secured).  Interest        
 payments and principal security appear adequate for the present but certain    
 protective elements may be lacking or may be characteristically unreliable     
 over any great length of time.  Such bonds lack outstanding investment         
 characteristics and in fact have speculative characteristics as well.          

 Ba - Bonds which are rated Ba are judged to have speculative elements; their   
 future cannot be considered as well-assured. Often the protection of interest  
 and principal payments may be very moderate, and thereby not well safeguarded  
 during both good and bad times over the future.  Uncertainty of position       
 characterizes bonds in this class.                                             

   
 B - Bonds which are rated B generally lack characteristics of the desirable    
 investment.  Assurance of interest and principal payments or of maintenance of 
 other terms of the contract over any long period of time may be small.         
    

 Caa - Bonds which are rated Caa are of poor standing.  Such issues may be in   
 default or there may be present elements of danger with respect to principal   
 or interest.                                                                   

 Ca - Bonds which are rated Ca represent obligations which are speculative in a 
 high degree.  Such issues are often in default or have other marked            
 shortcomings.                                                                  

 C - Bonds which are rated C are the lowest rated class of bonds, and issues so 
 rated can be regarded as having extremely poor prospects of ever attaining any 
 real investment standing.                                                      

          FITCH IBCA, INC. ("FITCH") LONG-TERM NATIONAL CREDIT RATINGS          

 AAA                                                                            

 Obligations which have the highest rating assigned by Fitch on its national    
 rating scale for that country.  This rating is automatically assigned to all   
 obligations issued or guaranteed by the sovereign state.  Capacity for timely  
 repayment of principal and interest is extremely strong, relative to other     
 obligors in the same country.                                                  

 AA                                                                             

 Obligations for which capacity for timely repayment of principal and interest  
 is very strong relative to other obligors in the same country.  The risk       
 attached to these obligations differs only slightly from the country's highest 
 rated debt.                                                                    

 A                                                                              

 Obligations for which capacity for timely repayment of principal and interest  
 is strong relative to other obligors in the same country.  However, adverse    
 changes in business, economic or financial conditions are more likely to       
 affect the capacity for timely repayment than for obligations in higher rated  
 categories.                                                                    

 BBB                                                                            

 Obligations for which capacity for timely repayment of principal and interest  
 is adequate relative to other obligors in the same country.  However, adverse  
 changes in business, economic or financial conditions are more likely to       
 affect the capacity for timely repayment than for obligations in higher rated  
 categories.                                                                    


 BB                                                                             

 Obligations for which capacity for timely repayment of principal and interest  
 is uncertain relative to other obligors in the same country.  Within the       
 context of the country, these obligations are speculative to some degree and   
 capacity for timely repayment remains susceptible over time to adverse changes 
 in business, financial or economic conditions.                                 

 B                                                                              

 Obligations for which capacity for timely repayment of principal and interest  
 is uncertain relative to other obligors in the same country.  Timely repayment 
 of principal and interest is not sufficiently protected against adverse        
 changes in business, economic or financial conditions and these obligations    
 are more speculative than those in higher rated categories.                    

 CCC                                                                            

   
 Obligations for which there is a current perceived possibility of default      
 relative to other obligors in the same country.  Timely repayment of principal 
 and interest is dependent on favorable business, economic or financial         
 conditions and these obligations are far more speculative than those in higher 
 rated categories.                                                              
    

 CC                                                                             

 Obligations which are highly speculative relative to other obligors in the     
 same country or which have a high risk of default.                             

 C                                                                              

 Obligations which are currently in default.                                    

   
       DUFF & PHELPS, INC. LONG-TERM DEBT AND PREFERRED STOCK RATING SCALE      
    

 Rating      Definition                                                         

 AAA     Highest credit quality.  The risk factors are negligible, being only   
 slightly more                                                                  
      than for risk-free U.S. Treasury debt.                                    
   
 AA+     High credit quality.  Protection factors are strong.  Risk is modest   
 but may                                                                        
 AA     vary slightly from time to time because of economic conditions.         
 AA-                                                                            
    
 A+     Protection factors are average but adequate.  However, risk factors are 
 more                                                                           
   
 A     variable in periods of greater economic stress.                          
    
 A-                                                                             

   
 BBB+     Below-average protection factors but still considered sufficient for  
 prudent                                                                        
    
 BBB     investment.  Considerable variability in risk during economic cycles.  
 BBB-                                                                           

 BB+     Below investment grade but deemed likely to meet obligations when due. 
                                                                                
 BB     Present or prospective financial protection factors fluctuate according 
 to                                                                             
   
BB-     industry conditions.  Overall quality may move up or down frequently    
    
   
      within this category.                                                     
    

 B+     Below investment grade and possessing risk that obligations will not be 
 met                                                                            
 B     when due.  Financial protection factors will fluctuate widely according  
 to                                                                             
 B-     economic cycles, industry conditions and/or company fortunes.           
 Potential                                                                      
      exists for frequent changes in the rating within this category or into a  
 higher                                                                         
      or lower rating grade.                                                    

   
 CCC     Well below investment-grade securities.  Considerable uncertainty      
 exists as to                                                                   
    
   
      timely payment of principal, interest or preferred dividends.  Protection 
 factors                                                                        
    
   
      are narrow and risk can be substantial with unfavorable economic/industry 
                                                                                
    
      conditions, and/or with unfavorable company developments.                 

 DD     Defaulted debt obligations.  Issuer failed to meet scheduled principal  
 and/or                                                                         
      interest payments.                                                        

 DP     Preferred stock with dividend arrearages.                               

                    THOMSON BANKWATCH LONG-TERM DEBT RATINGS                    

 Long-Term Debt Ratings assigned by Thomson BankWatch ALSO WEIGH HEAVILY        
 GOVERNMENT OWNERSHIP AND SUPPORT.  The quality of both the company's           
 management and franchise are of even greater importance in the Long-Term Debt  
 Rating decisions.  Long-Term Debt Ratings look out over a cycle and are not    
 adjusted frequently for what it believes are short-term performance            
 aberrations.                                                                   

 Long-Term Debt Ratings can be restricted to local currency debt - ratings will 
 be identified by the designation LC.  In addition, Long-Term Debt Ratings may  
 include a plus (+) or minus (-) to indicate where within the category the      
 issue is placed.  BankWatch Long-Term Debt Ratings are based on the following  
 scale:                                                                         

 INVESTMENT GRADE                                                               

 AAA (LC-AAA) - Indicates that the ability to repay principal and interest on a 
 timely basis is extremely high.                                                
                                                                                
 AA (LC-AA) - Indicates a very strong ability to repay principal and interest   
 on a timely basis, with limited incremental risk compared to issues rated in   
 the highest category.                                                          
                                                                                
 A (LC-A) - Indicates the ability to repay principal and interest is strong.    
 Issues rated A could be more vulnerable to adverse developments (both internal 
 and external) than obligations with higher ratings.                            

 BBB (LC-BBB) - The lowest investment-grade category; indicates an acceptable   
 capacity to repay principal and interest.  BBB issues are more vulnerable to   
 adverse developments (both internal and external) than obligations with higher 
 ratings.                                                                       

 NON-INVESTMENT GRADE - may be speculative in the likelihood of timely          
 repayment of principal and interest                                            

 BB (LC-BB) - While not investment grade, the BB rating suggests that the       
 likelihood of default is considerably less than for lower-rated issues.        
 However, there are significant uncertainties that could affect the ability to  
 adequately service debt obligations.                                           

   
 B (LC-B) - Issues rated B show a higher degree of uncertainty and therefore    
 greater likelihood of default than higher-rated issues.  Adverse developments  
 could negatively affect the payment of interest and principal on a timely      
 basis.                                                                         
    

 CCC (LC-CCC) - Issues rated CCC clearly have a high likelihood of default,     
 with little capacity to address further adverse changes in financial           
 circumstances.                                                                 

 CC (LC-CC) - CC is applied to issues that are subordinate to other obligations 
 rated CCC and are afforded less protection in the event of bankruptcy or       
 reorganization.                                                                

 D (LC-D) - Default.                                                            


                               SHORT-TERM RATINGS                               

                STANDARD & POOR'S SHORT-TERM ISSUE CREDIT RATINGS               

 'A-1'                                                                          

 A short-term obligation rated 'A-1' is rated in the highest category by        
 Standard & Poor's.  The obligor's capacity to meet its financial commitment on 
 the obligation is strong.  Within this category, certain obligations are       
 designated with a plus sign (+).  This indicates that the obligor's capacity   
 to meet its financial commitment on these obligations is extremely strong.     

 'A-2'                                                                          
   
 A short-term obligation rated 'A-2' is somewhat more susceptible to the averse 
 effects of changes in circumstances and economic conditions than obligations   
 in higher rating categories.  However, the obligor's capacity to meet its      
 financial commitment on the obligation is satisfactory.                        
    
 'A-3'                                                                          

 A short-term obligation rated 'A-3' exhibits adequate protection parameters.   
 However, adverse economic conditions or changing circumstances are more likely 
 to lead to a weakened capacity of the obligor to meet its financial commitment 
 on the obligation.                                                             

'B'                                                                             
   
 A short-term obligation rated 'B' is regarded as having significant            
 speculative characteristics.  The obligor currently has the capacity to meet   
 its financial commitment on the obligation; however, it faces major ongoing    
 uncertainties which could lead to the obligor's inadequate capacity to meet    
 its financial commitment on the obligation.                                    
    
 'C'                                                                            

 A short-term obligation rated 'C' is currently vulnerable to nonpayment and is 
 dependent upon favorable business, financial, and economic conditions for the  
 obligor to meet its financial commitment on the obligation.                    

 'D'                                                                            

   
 A short-term obligation rated 'D' is in payment default. The 'D' rating        
 category is used when payments on an obligation are not made on the date due   
 even if the applicable grace period has not expired, unless Standard & Poor's  
 believes that such payments will be made during such grace period.  The 'D'    
 rating also will be used upon the filing of a bankruptcy petition or the       
 taking of a similar action if payments on an obligation are jeopardized.       
    

                         MOODY'S SHORT-TERM DEBT RATINGS                        

 Moody's short-term debt ratings are opinions of the ability of issuers to      
 repay punctually senior debt obligations.  These obligations have an original  
 maturity not exceeding one year, unless explicitly noted.                      

 Moody's employs the following three designations, all judged to be investment  
 grade, to indicate the relative repayment ability of rated issuers:            

   
 PRIME - 1     Issuers rated Prime-1 (or supporting institutions) have a        
 superior ability for repayment of senior short-term Debt        
 obligations.  Prime-1 repayment ability will often be evidenced by many of the 
 following characteristics:                                 
    
   
Leading market positions in well-established industries.                        
    
   
High rates of return on funds employed.                                         
    
   
Conservative capitalization structure with moderate reliance on debt and ample  
asset protection.                                                               
    
   
- - Broad margins in earnings coverage of fixed financial charges and high        
  internal cash generation.                                                     
    
   
Well-established access to a range of financial markets and assured sources of  
alternate liquidity.                                                            
    

   
PRIME - 2     Issuers rated Prime-2 (or supporting institutions) have a strong  
ability for repayment of senior short-term debt obligations.     
This will normally be evidenced by many of the characteristics cited above, but 
to a lesser degree. Earnings trends and coverage ratios, while   
sound, may be more subject to variation.  Capitalization                        
characteristics, while still appropriate, may be more affected by external      
conditions.  Ample alternate liquidity is maintained.            
    

   
PRIME - 3     Issuers rated Prime-3 (or supporting institutions) have an        
acceptable ability for repayment of senior short-term            
obligations.  The effect of industry characteristics and market compositions    
may be more pronounced.  Variability in earnings and profitability    
may result in changes in the level of debt protection measurements              
and may require relatively high financial leverage.  Adequate alternate         
liquidity is maintained.                                                        
    

   
NOT PRIME     Issuers rated Not Prime do not fall within any of the Prime       
rating categories.                                                              
    

         FITCH IBCA, INC. ("FITCH") SHORT-TERM NATIONAL CREDIT RATINGS          

   
F1                                                                              
    

Obligations assigned this rating have the highest capacity for timely repayment 
under Fitch's national rating scale for that country, relative to other         
obligations in the same country.  This rating is automatically assigned to all  
obligations issued or guaranteed by the sovereign state.  Where issues possess  
a particularly strong credit feature, a "+" is added to the assigned rating.    

   
F2                                                                              
    

   
Obligations supported by a strong capacity for timely repayment relative to     
other obligors in the same country.  However, the relative degree of risk is    
slightly higher than for issues classified as 'A1' and capacity for timely      
repayment may be susceptible to adverse changes in business, economic, or       
financial conditions.                                                           
    

   
F3                                                                              
    

Obligations supported by an adequate capacity for timely repayment relative to  
other obligors in the same country.  Such capacity is more susceptible to       
adverse changes in business, economic, or financial conditions than for         
obligations in higher categories.                                               

B                                                                               

Obligations for which the capacity for timely repayment is uncertain relative   
to other obligors in the same country.  The capacity for timely repayment is    
susceptible to adverse changes in business, economic, or financial conditions.  

C                                                                               

Obligations for which there is a high risk of default to other obligors in the  
same country or which are in default.                                           
   

                                                                               
    
                  DUFF & PHELPS, INC. SHORT-TERM DEBT RATINGS                   

RATING:          DEFINITION                                                     

          HIGH GRADE                                                            

D-1+     Highest certainty of timely payment.  Short-term liquidity, including  
internal operating factors and/or access to alternative sources of funds, is    
outstanding, and safety is just below risk-free U.S. Treasury short-term        
obligations.                                                                    

D-1     Very high certainty of timely payment.  Liquidity factors are excellent 
and supported by good fundamental protection factors.  Risk factors are minor.  

D-1-     High certainty of timely payment.  Liquidity factors are strong and    
supported by good fundamental protection factors.  Risk factors are very small. 

GOOD GRADE                                                                      

D-2     Good certainty of timely payment.  Liquidity factors and company        
fundamentals are sound.  Although ongoing funding needs may enlarge total       
financing requirements, access to capital markets is good.  Risk factors are    
small.                                                                          

SATISFACTORY GRADE                                                              

D-3     Satisfactory liquidity and other protection factors qualify issues as   
to investment grade.  Risk factors are larger and subject to more variation.    
Nevertheless, timely payment is expected.                                       

NON-INVESTMENT GRADE                                                            

D-4     Speculative investment characteristics.  Liquidity is not sufficient to 
insure against disruption in debt service.  Operating factors and market access 
may be subject to a high degree of variation.                                   

DEFAULT                                                                         

D-5          Issuer failed to meet scheduled principal and/or interest          
payments.                                                                       

                   THOMSON BANKWATCH (TBW) SHORT-TERM RATINGS                   

TBW assigns Short-Term Debt Ratings to specific debt instruments with original  
maturities of one year or less.                                                 

TBW-1 (LC-1)  The highest category; indicates a very high likelihood that       
principal and interest will be paid on a timely basis.                          

   
TBW-2 (LC-2)  The second-highest category; while the degree of safety regarding 
timely repayment of principal and interest is strong, the relative degree of    
safety is not as high as for issues rated TBW-1.                                
    

TBW-3 (LC-3)  The lowest investment-grade category; indicates that while the    
obligation is more susceptible to adverse developments (both internal and       
external) than those with higher ratings, the capacity to service principal and 
interest in a timely fashion is considered adequate.                            

TBW-4 (LC-4)  The lowest rating category; this rating is regarded as            
non-investment grade and therefore speculative.                                 

<PAGE>



                    STRONG INTERNATIONAL EQUITY FUNDS, INC.                     

                                     PART C                                     
                               OTHER INFORMATION                                

Item 23. EXHIBITS                                                               

     (a)     Articles of Incorporation dated July 31, 1996(3)                   
     (a.1)   Amendment to Articles of Incorporation dated May 21, 1998(4)     
     (b)     Bylaws dated October 20, 1995(2)                                   
     (b.1)   Amendment to Bylaws dated May 1, 1998(4)                         
     (c)     Specimen Stock Certificate(2)                                      
     (d)     Investment Advisory Agreement(1)                                   
     (e)     Distribution Agreement(2)                                          
     (f)     Inapplicable                                                       
     (g)     Custody Agreement(2)                                               
     (g.1)   Amendment to Custody Agreement dated August 26, 1996(3)          
     (h)     Shareholder Servicing Agent Agreement(2)                           
     (i)     Inapplicable                                                       
     (j)     Inapplicable                                                       
     (k)     Inapplicable                                                       
     (l)     Inapplicable                                                       
     (m)     Inapplicable                                                       
     (n)     Inapplicable                                                       
     (o)     Inapplicable                                                       
     (p)     Power of Attorney dated February 25, 1997(3)                       
     (q)     Inapplicable                                                       
     (r)     Code of Ethics for Access Persons dated October 18, 1996(3)        
     (r.1)   Code of Ethics for Non-Access Persons dated October 18, 1996(3)  
                                                                                

(1)     Incorporated herein by reference to Post-Effective Amendment No. 6 to   
the Registration Statement on Form N-1A of Registrant filed on or about April   
20, 1995.                                                                       

(2)     Incorporated herein by reference to Post-Effective Amendment No. 7 to   
the Registration Statement on Form N-1A of Registrant filed on or about         
February 28, 1996.                                                              

(3)     Incorporated herein by reference to Post-Effective Amendment No. 8 to   
the Registration Statement on Form N-1A of the Registrant filed on or about     
February 27, 1997.                                                              

(4)     Incorporated herein by reference to Post-Effective Amendment No. 11 to  
the Registration Statement on Form N-1A of Registrant filed on or about June    
26, 1998.                                                                       

Item 24.  PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT         

     Registrant neither controls any person nor is under common control with    
any other person.                                                               

Item 25.  INDEMNIFICATION                                                       

     Officers and directors are insured under a joint errors and omissions      
insurance policy underwritten by American International Group and Great         
American Insurance Company in the aggregate amount of $100,000,000, subject to  
certain deductions.  Pursuant to the authority of the Wisconsin Business        
Corporation Law ("WBCL"), Article VII of Registrant's Bylaws provides as        
follows:                                                                        

                                       1
<PAGE>


     ARTICLE VII.  INDEMNIFICATION OF OFFICERS AND DIRECTORS                    

     SECTION 7.01.  MANDATORY INDEMNIFICATION.  The Corporation shall           
indemnify, to the full extent permitted by the WBCL, as in effect from time to  
time, the persons described in Sections 180.0850 through 180.0859 (or any       
successor provisions) of the WBCL or other provisions of the law of the State   
of Wisconsin relating to indemnification of directors and officers, as in       
effect from time to time.  The indemnification afforded such persons by this    
section shall not be exclusive of other rights to which they may be entitled as 
a matter of law.                                                                

     SECTION 7.02.  PERMISSIVE SUPPLEMENTARY BENEFITS.  The Corporation may,    
but shall not be required to, supplement the right of indemnification under     
Section 7.01 by (a) the purchase of insurance on behalf of any one or more of   
such persons, whether or not the Corporation would be obligated to indemnify    
such person under Section 7.01; (b) individual or group indemnification         
agreements with any one or more of such persons; and (c) advances for related   
expenses of such a person.                                                      

     SECTION 7.03.  AMENDMENT.  This Article VII may be amended or repealed     
only by a vote of the shareholders and not by a vote of the Board of Directors. 

     SECTION 7.04.  INVESTMENT COMPANY ACT.  In no event shall the Corporation  
indemnify any person hereunder in contravention of any provision of the         
Investment Company Act.                                                         

Item 26.  BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR                  

     The information contained under "Who are the funds' investment advisor and 
portfolio managers?" in the Prospectus and under "Directors and Officers,"      
"Investment Advisor," and "Distributor" in the Statement of Additional          
Information is hereby incorporated by reference pursuant to Rule 411 under the  
Securities Act of 1933.                                                         

Item 27.  PRINCIPAL UNDERWRITERS                                                

     (a) Strong Investments, Inc., principal underwriter for Registrant, also   
serves as principal underwriter for Strong Advantage Fund, Inc.; Strong Asia    
Pacific Fund, Inc.; Strong Asset Allocation Fund, Inc.; Strong Common Stock     
Fund, Inc.; Strong Conservative Equity Funds, Inc.; Strong Corporate Bond Fund, 
Inc.; Strong Discovery Fund, Inc.; Strong Equity Funds, Inc.; Strong Government 
Securities Fund, Inc.; Strong Heritage Reserve Series, Inc.; Strong High-Yield  
Municipal Bond Fund, Inc.; Strong Income Funds, Inc.; Strong Institutional      
Funds, Inc.; Strong International Income Funds, Inc.; Strong Money Market Fund, 
Inc.; Strong Municipal Bond Fund, Inc.; Strong Municipal Funds, Inc.; Strong    
Opportunity Fund, Inc.; Strong Opportunity Fund II, Inc.; Strong Schafer Funds, 
Inc.; Strong Schafer Value Fund, Inc.; Strong Short-Term Bond Fund, Inc.;       
Strong Short-Term Global Bond Fund, Inc.; Strong Short-Term Municipal Bond      
Fund, Inc.; Strong Total Return Fund, Inc.; and Strong Variable Insurance       
Funds, Inc.                                                                     

     (b)                                                                        

Name and Principal        Positions and Offices      Positions and Offices 
BUSINESS ADDRESS          WITH UNDERWRITER           WITH FUND    
                                                                                

Richard S. Strong         Director and Chairman      Director and Chairman of
900 Heritage Reserve      of the Board               the Board         
Menomonee Falls, WI  53051                                                      

Thomas P. Lemke           Vice President and Chief   Vice President  
900 Heritage Reserve      Compliance Officer                           
Menomonee Falls, WI  53051                                                      

                                       2
<PAGE>


Stephen J. Shenkenberg     Vice President, Deputy     Vice President 
900 Heritage Reserve       Chief Compliance Officer   and Secretary  
Menomonee Falls, WI  53051 and Secretary                               

Peter D. Schwab            Vice President               none            
900 Heritage Reserve                                                            
Menomonee Falls, WI  53051                                                      

Joseph R. DeMartine        Vice President               none             
900 Heritage Reserve                                                            
Menomonee Falls, WI  53051                                                      

Anthony J. D'Amato         Vice President               none              
900 Heritage Reserve                                                            
Menomonee Falls, WI  53051                                                      

Thomas M. Zoeller          Treasurer and Chief          none               
900 Heritage Reserve       Financial Officer                            
Menomonee Falls, WI  53051                                                      

Richard T. Weiss           Director                    none            
900 Heritage Reserve                                                            
Menomonee Falls, WI  53051                                                      

     (c)  None                                                                  

Item 28.  LOCATION OF ACCOUNTS AND RECORDS                                      

     All accounts, books, or other documents required to be maintained by       
Section 31(a) of the Investment Company Act of 1940 and the rules promulgated   
thereunder are in the physical possession of Registrant's Vice President,       
Thomas P. Lemke, at Registrant's corporate offices, 100 Heritage Reserve,       
Menomonee Falls, Wisconsin 53051.                                               

Item 29.  MANAGEMENT SERVICES                                                   

     All management-related service contracts entered into by Registrant are    
discussed in Parts A and B of this Registration Statement.                      

Item 30.  UNDERTAKINGS                                                          

     None                                                                       

                                       3
<PAGE>

                                   SIGNATURES                                   

     Pursuant to the requirements of the Securities Act of 1933 and the         
Investment Company Act of 1940, the Registrant certifies that it has duly       
caused this Post-Effective Amendment No. 12 to the Registration Statement on    
Form N-1A  to be signed on its behalf by the undersigned, duly authorized, in   
the Village of Menomonee Falls, and State of Wisconsin on the 30th day of       
December, 1998.                                                                 

                         STRONG INTERNATIONAL EQUITY FUNDS, INC.                
                         (Registrant)                                           


                         By:      /S/ THOMAS P. LEMKE                           
                              Thomas P. Lemke, Vice President                   

     Pursuant to the requirements of the Securities Act of 1933, this           
Post-Effective Amendment No. 12 to the Registration Statement on Form N-1A has  
been signed below by the following persons in the capacities and on the date    
indicated.                                                                      

<TABLE>
<CAPTION>
<S>                            <C>                                 <C>                
             NAME                             TITLE                       DATE      
- -----------------------------  ----------------------------------  -----------------
                                                                                    
                                                                                    
                               Chairman of the Board (Principal                     
/s/ Richard S. Strong          Executive Officer) and a Director   December 30, 1998
- -----------------------------                                                       
Richard S. Strong                                                                   
                                                                                    
                                                                                    
                               Treasurer (Principal Financial and                   
/s/ Dana J. Russart            Accounting Officer)                 December 30, 1998
- -----------------------------                                                       
Dana J. Russart                                                                     
                                                                                    

                                                                                  
                               Director                            December 30, 1998
- -----------------------------                                                       
Marvin E. Nevins*                                                                   
                                                                                    

                                                                                  
                               Director                            December 30, 1998
- -----------------------------                                                       
Willie D. Davis*                                                                    
                                                                                    

                                                                                  
                               Director                            December 30, 1998
- -----------------------------                                                       
William F. Vogt*                                                                    
                                                                                    

                                                                                  
                               Director                            December 30, 1998
- -----------------------------                                                       
Stanley Kritzik*                                                                    
</TABLE>

*     John S. Weitzer signs this document pursuant to powers of attorney filed  
with Post-Effective Amendment No. 8 to      the Registration Statement on Form  
N-1A.                                                                           


                         By:  /S/ JOHN S. WEITZER                          
                              John S. Weitzer                                   


                                       1
<PAGE>

                                 EXHIBIT INDEX                                  

<TABLE>
<CAPTION>
<S>          <C>                       <C>          
                                          EDGAR   
EXHIBIT NO.           EXHIBIT          EXHIBIT NO.
- -----------  ------------------------             
                                                  
None                                              
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
</TABLE>
                                                                                


                                       1
<PAGE>




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