<PAGE>
- --------------------------------------------------------------------------------
THE STRONG
INTERNATIONAL FUNDS
ANNUAL REPORT o OCTOBER 31, 1997
[PHOTO OF WOMAN AND BOY COLLECTING SHELLS ON BEACH]
THE STRONG ASIA PACIFIC FUND
--------------------------------------
THE STRONG INTERNATIONAL STOCK FUND
--------------------------------------
THE STRONG INTERNATIONAL BOND FUND
--------------------------------------
THE STRONG SHORT-TERM GLOBAL BOND FUND
[STRONG LOGO]
STRONG FUNDS
<PAGE>
8
EIGHT BASIC PRINCIPLES FOR SUCCESSFUL MUTUAL FUND INVESTING
These common-sense rules are followed by many successful investors. They make
sense for beginners, too. If you have a question on these principles, or would
like to discuss them with us, please contact us at 1-800-368-3863. We're here 24
hours a day, seven days a week to take your call.
- --------------------------------------------------------------------------------
[PICTURE OF FOLDER LABELED INVESTMENTS]
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.
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[PICTURE OF CLOCK]
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.
- --------------------------------------------------------------------------------
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION]
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.
- --------------------------------------------------------------------------------
[PICTURE OF MEMO REMINDER TO INVEST]
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.
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[PICTURE OF GRAPH SLOPING UPWARD]
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 of principal loss.
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[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION EMPHASIZING STOCKS]
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.
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[PICTURE OF DOLLAR SIGN]
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.
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[PICTURE OF MAGNIFYING GLASS]
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.
<PAGE>
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THE STRONG
INTERNATIONAL FUNDS
ANNUAL REPORT o OCTOBER 31, 1997
TABLE OF CONTENTS
INVESTMENT REVIEWS
The Strong Asia Pacific Fund ........................................ 2
The Strong International Stock Fund ................................. 4
The Strong International Bond Fund .................................. 6
The Strong Short-Term Global Bond Fund .............................. 8
FINANCIAL INFORMATION
Schedules of Investments in Securities
The Strong Asia Pacific Fund ................................... 10
The Strong International Stock Fund ............................ 12
The Strong International Bond Fund ............................. 16
The Strong Short-Term Global Bond Fund ......................... 17
Statements of Assets and Liabilities ............................... 21
Statements of Operations ........................................... 22
Statements of Changes in Net Assets ................................ 23
Notes to Financial Statements ...................................... 24
FINANCIAL HIGHLIGHTS .................................................... 26
REPORT OF INDEPENDENT ACCOUNTANTS ....................................... 28
<PAGE>
THE STRONG ASIA PACIFIC FUND
CLEARLY THE NEXT STAGE FOR THE REGION IS FOR IT TO WORK TOWARD RECOVERY.
The Strong Asia Pacific Fund seeks capital growth. The Fund invests primarily in
the equity securities of issuers located in Asia or the Pacific Basin.
ASIAN MARKETS SUFFER STEEP LOSSES
To say that it's been a tough year in the Asia Pacific region would be an
understatement. Of the 10 major markets in Asia, all are down for the year. Four
of these are down by 50% or more in dollar terms. Thailand's deep troubles
proved contagious, with negative conditions spreading throughout the region,
ultimately affecting even the region's stronger economies, Taiwan and finally
Hong Kong. The latter nation in particular is one that most observers believed
would be immune to its neighbors' woes.
================================================================================
TOP FIVE COUNTRIES
================================================================================
Based on net assets as of 10-31-97
COUNTRY % OF NET ASSETS
- --------------------------------------------------------------------------------
Japan 19.0%
................................................................................
Australia 13.4%
................................................................................
New Zealand 10.6%
................................................................................
Singapore 8.5%
................................................................................
India 6.1%
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
================================================================================
We have contended with this environment by being as defensive as we can be,
given that this is a fund that focuses on Asia Pacific markets. We had
anticipated that Hong Kong could fall as the region's last domino during this
troubled period, so we had greatly reduced our exposure there. While the average
Asian fund held about 40% of its assets in Hong Kong, our position was down to
about 2.5% of assets when that market had its striking reversal in October.
================================================================================
FIVE LARGEST STOCK HOLDINGS
================================================================================
Based on net assets as of 10-31-97
SECURITY % OF NET ASSETS
- --------------------------------------------------------------------------------
Sydney Aquarium, Ltd. 2.8%
................................................................................
Guinness Peat Group PLC 2.6%
................................................................................
Normandy Mining, Ltd. 2.0%
................................................................................
Cinema Plus, Ltd. 1.7%
................................................................................
Evergreen Forests, Ltd. 1.6%
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
================================================================================
We also held just more than 20% of assets in cash equivalents, and had
considerable exposure to Australia and New Zealand. Those markets, while also
down for the year, have suffered less than most of their Pacific Rim neighbors.
We've also diversified the Fund into India, a market that's up nearly 20% for
the year.
For these reasons, the Fund has outperformed its benchmark, the Morgan Stanley
Capital International AC Asia Pacific Free ex Japan Index. For the 12 months
ended October 31, 1997, the Fund posted a loss of 21.46%, while the index
declined by 25.72%. As an investor in the Fund as well as its manager, I know
that comparing a decline of this magnitude with any benchmark is of little
comfort. At this point it makes the most sense to look forward at the prospects
for this region.
LOOKING AHEAD
Clearly the next stage for the region is for it to work toward recovery. I don't
believe we've seen the very end of the declines, but I do think we're at the
beginning of their end. This won't likely be a clean, V-shaped recovery, as some
of these markets have troubles that run too deep for quick solutions.
That said, there is some cause for optimism down the road. Some drastic steps
that were essential to straightening out this region have taken place. The
International Monetary Fund has provided aid to Indonesia, the Thai Prime
Minister has resigned, one of Japan's more troubled brokerages has closed up
shop, and Thailand and Indonesia have shut down insolvent banks.
2
<PAGE>
The conditions that demanded that sort of harsh action have clearly caused pain
for investors in this region. It would only compound the pain for investors to
miss the benefit of recovery. Although they're not likely to come in the next
few weeks, it's entirely possible that signs of recovery could appear in the
next year--and bounces in this region can be dramatic on the upside as well as
the down.
We're currently finding valuations in Asia that we haven't seen for at least 10
years, and even since the early `80s. The best companies behind these valuations
could provide considerable opportunity for growth in the years to come. While
we'll continue to follow some of the defensive measures we've already put in
place, we'll also be looking for the best companies at the best prices for the
Fund.
Of course, because of the markets this Fund invests in, it is likely to be more
volatile than a purely domestic investment. Changes in market conditions,
currency values, interest rates, and economic and political changes in the U.S.
and abroad can greatly affect this Fund's share price. The Fund's concentration
in a single geographic area and its investment in less-developed markets also
magnify its risk. Given the current value and growth potential in international
markets, however, we believe foreign stocks offer long-term investors a
substantial opportunity.
[PHOTO OF ANTHONY L.T. CRAGG]
We thank you for your continued confidence in the Strong Asia Pacific Fund.
Sincerely,
/s/Anthony L.T. Cragg
Anthony L.T. Cragg
Portfolio Manager
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 12-31-93 to 10-31-97
[GRAPH]
THE STRONG Lipper Pacific
ASIA PACIFIC FUND MSCI AP* Region Funds Index*
12-93 10,000 10,000 10,000
12-94 9,473 8,772 9,475
12-95 10,035 9,305 9,729
12-96 10,246 10,388 9,980
10-97 7,922 7,404 8,011
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Morgan Stanley Capital International AC Asia Pacific Free ex-Japan Index ("MSCI
AP") and the Lipper Pacific Region Funds Index . Results include the
reinvestment of all dividends and capital gains distributions. Performance is
historical and does not represent future results. Investment returns and
principal value vary, and you may have a gain or loss when you sell shares.
================================================================================
=======================================
AVERAGE ANNUAL
TOTAL RETURNS
=======================================
As of 10-31-97
1-year -21.46%
3-year -7.98%
Since Inception -5.90%
(on 12-31-93)
=======================================
- --------------------------------------------------------------------------------
* The MSCI AP Index is an unmanaged index generally representative of
developed and emerging markets in the Asia/Pacific region, excluding Japan.
MSCI AP data is U.S.dollar-adjusted. The Lipper Pacific Region Funds Index
is an equally-weighted performance index of the largest qualifying funds in
this Lipper category. Source of the MSCI index data is Bloomberg. Source of
the Lipper index data is Lipper Analytical Services, Inc.
3
<PAGE>
THE STRONG INTERNATIONAL STOCK FUND
A MORE NEUTRAL COUNTRY ALLOCATION GIVES OUR STOCK-PICKING ABILITY MORE ROOM
TO INFLUENCE PERFORMANCE.
The Strong International Stock Fund pursues capital growth by investing
primarily in the stocks of companies based outside the United States. The Fund
provides access to growth opportunities worldwide that may offer greater return
potential than U.S. companies.
================================================================================
TOP FIVE COUNTRIES
================================================================================
Based on net assets as of 10-31-97
COUNTRY % OF NET ASSETS
- --------------------------------------------------------------------------------
Japan 11.4%
................................................................................
United Kingdom 10.4%
................................................................................
Italy 8.3%
................................................................................
France 5.7%
................................................................................
Australia 4.5%
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
================================================================================
ADAPTING TO CURRENT CONDITIONS
Whenever a fund has endured a rocky period, it's essential to determine what the
root of the problem is and correct it. However difficult the past year has been,
the roots of the Fund's underperformance are identifiable, and therefore we have
been able to take appropriate steps to address them.
First, the Fund had an overweighting in Asia. The steep declines this region
suffered therefore significantly hurt performance. This drop has proven to be
deeper, broader, and more protracted than we had anticipated.
================================================================================
FIVE LARGEST STOCK HOLDINGS
================================================================================
Based on net assets as of 10-31-97
SECURITY % OF NET ASSETS
- --------------------------------------------------------------------------------
Games Workshop Group PLC 1.4%
................................................................................
Telecom Italia Spa Preferred 1.4%
................................................................................
IFI Istituto Finanziario Preferred 1.3%
................................................................................
Guinness Peat Group PLC 1.3%
................................................................................
Normandy Mining, Ltd. 1.2%
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
================================================================================
Second, the biggest movers in Europe's more successful markets were primarily
the largest, most liquid, and best-known names. While we do hold some of these
companies in the portfolio, and thus enjoyed their gains, we primarily focus on
smaller, lesser-known companies that may not yet be fully valued by the markets.
Although this strategy has succeeded in the past, it didn't find favor in this
environment. For the 12 months ended October 31, 1997, the Fund posted a loss of
5.71%, placing it behind its benchmark, the Morgan Stanley Capital International
Europe, Australasia, and Far East Index, which returned 4.63%.*
FOCUSING ON STOCK-PICKING
We can make changes to address the first issue. The majority of the Fund's
problems have come from our allocation of assets to countries and regions. So by
bringing the Fund's Asia weighting back in line with its benchmark's and its
peer group's, we have again made stock selection, not country allocation, the
driver of the Fund's performance. A more neutral country allocation gives our
stock-picking ability more room to influence performance. The stocks we owned in
Asia actually performed reasonably well, relative to other companies in the
region. We were also able to pick solid stocks in Europe and Latin America--we
just didn't give ourselves room to pick enough of them.
To change that, we've rebalanced the portfolio substantially. Where our Asia
allocation (ex Japan) was as high as 24%, now it's down to less than 10%. Our
Latin America position has increased, moving to 9% of assets from 3%. And
Europe, already a major allocation at about 22% of assets, now accounts for
about 36% of the portfolio. In all, these changes reflect a more conventional
country and regional breakdown for the Fund.
We've also worked to concentrate the portfolio more than in the recent past.
We've brought the Fund's roster of stocks down from about 300 names to 214. As
we've weeded out some stocks and kept those we like best, we've taken liquidity
into account.
These changes do not alter the fundamental characteristics of the Fund. Although
the market recently has focused on the largest, best-known companies, we still
believe that picking underfollowed stocks around the world is a sound approach.
We're seeking to enhance the Fund's strategy by allowing its performance to
benefit from what we do well--stock selection-- and not be overrun by world
events.
OUR OUTLOOK
Now that many of the world's markets have made their large moves, at some point,
these markets will get more selective. That means that individual stocks will
rise and fall more on their own merits, rather than those of the countries in
which they're domiciled. In this setting, our stock-specific approach makes
sense. The Fund's more balanced approach to all the world's markets has already
allowed it to benefit from a larger position in developed European markets,
particularly Italy, which accounts for about 8% of the portfolio. We're also
pleased with opportunities we're identifying in eastern Europe, and in Latin
America.
4
<PAGE>
Despite the difficulties, we're not writing off Asia, either. Asia remains a
region where big moves upward are possible. When things go wrong there it
happens in a big way, but the same can be true when things go right. The
portfolio is now anchored in western Europe, yet remains aggressive enough to
take advantage of the opportunities in less-developed areas of the world.
Of course, this Fund is likely to be more volatile than a fund that invests
solely in U.S. stocks. Changes in market conditions, currency values, interest
rates, local regulations, and economic and political conditions can have quick,
sharp impact on foreign markets. Given the value currently available
internationally, however, we believe foreign equities offer long-term investors
an attractive opportunity.
[PHOTO OF ANTHONY L.T. CRAGG]
Thank you for your investment in the Strong International Stock Fund. We look
forward to earning your continued confidence.
Sincerely,
/s/Anthony L.T. Cragg
Anthony L.T. Cragg
Portfolio Manager
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 3-4-92 to 10-31-97
[GRAPH]
THE STRONG INTERNATIONAL Lipper International
STOCK FUND MSCI EAFE* Funds Index*
2-92 10,000 10,000 10,000
12-92 9,819 9,484 9,495
12-93 14,508 12,572 13,215
12-94 14,282 13,550 13,118
12-95 15,399 15,069 14,433
12-96 16,660 15,980 16,515
10-97 15,324 16,290 17,724
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Morgan Stanley Capital International Europe, Australasia, and Far East Index
("MSCI EAFE(TM)") and the Lipper International Funds Index. Results include the
reinvestment of all dividends and capital gains distributions. Performance is
historical and does not represent future results. Investment returns and
principal value vary, and you may have a gain or loss when you sell shares. To
equalize the time periods, the indexes' performance was prorated for the month
of March 1992.
================================================================================
=====================================
AVERAGE ANNUAL
TOTAL RETURNS
=====================================
As of 10-31-97
1-year -5.71%
3-year 0.64%
5-year 10.46%
Since Inception 7.84%
(on 3-4-92)
====================================
- --------------------------------------------------------------------------------
* The MSCI EAFE(TM) is an unmanaged index generally representative of major
overseas stock markets. MSCI EAFE(TM) data is dollar-adjusted. The Lipper
International Funds Index is an equally-weighted performance index of the
largest qualifying funds in this Lipper category. Source of the MSCI index
data is Standard & Poor's Micropal. Source of the Lipper index data is
Lipper Analytical Services, Inc.
5
<PAGE>
THE STRONG INTERNATIONAL BOND FUND
PROBLEMS IN SOUTHEAST ASIA SPARKED DOUBT ABOUT THE ECONOMIC AND CURRENCY
POLICIES OF LATIN AMERICAN NATIONS, RUSSIA, AND OTHER EMERGING MARKETS.
================================================================================
ASSETS BY CREDIT-QUALITY RATING
================================================================================
Based on net assets as of 10-31-97
[PIE CHART]
Short-Term Investments 39.3%
AAA 29.7%
AA 11.8%
A 3.9%
BBB 1.3%
BB 14.0%
Includes non-rated securities which have been determined to be of equivalent
quality as those rated.
================================================================================
The Strong International Bond Fund seeks high total return by investing for both
income and capital appreciation. The Fund invests primarily in
non-dollar-denominated, investment-grade debt obligations of foreign issuers.
Normally, the Fund will maintain an average maturity of four to nine years.
================================================================================
COUNTRY EXPOSURE
================================================================================
As of 10-31-97
COUNTRY % OF EXPOSURE*
- --------------------------------------------------------------------------------
Japan 18.4%
................................................................................
United States 17.1%
................................................................................
Indonesia 14.3%
................................................................................
Germany 9.6%
................................................................................
Italy 9.3%
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
* Exposure is calculated based on the sum of total market value of securities
and market value of futures.
================================================================================
LOOKING BACK AT A MIXED YEAR
At the beginning of the Fund's fiscal year (in late 1996 and early in 1997),
global bond markets were strong overall, and bond yields were in a downward
trend. The lower yields in developed countries drove many investors in search of
higher yields to below-investment grade issues in various sectors such as
corporate bonds and emerging markets.
A sell-off in the global bond markets began in February and March, in
anticipation that the Federal Reserve would raise U.S. interest rates. When the
Fed made the hike at the end of March, the sell-off continued. Hardest hit were
the North American markets, which were most directly affected by the interest
rate change. Also hurt were lower-quality, emerging-markets, and certain
European issues, as many investors moved toward higher-quality issues from more
established markets. That turmoil was short-lived, though, as most markets
settled into a calm for the rest of the spring and through the summer.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
================================================================================
As of 10-31-97
Strong Salomon Brothers Non-U.S.
International Lipper International World Government Bond
Time Period Bond Fund Income Funds Index* Index (Currency Unhedged)*
- --------------------------------------------------------------------------------
1-year -0.68% 4.18% -0.32%
................................................................................
3-year 7.39% 9.57% 6.59%
................................................................................
Since Inception
(on 3-31-94) 9.27% 7.77% 7.23%
................................................................................
Please note that the Lipper index contains "pure" emerging markets funds as well
as international bond funds, and includes both hedged and unhedged funds.
================================================================================
For the late summer through early fall, better-performing countries included
Australia, the U.K., Italy, Japan, the U.S., and Europe. On the economic front,
most European markets saw annual growth rates of 1.5% to 2%, while the United
Kingdom and North American economies grew at a rate of about 3%. Japan was in a
sluggish recovery phase, but fell back into a recession after the consumption
tax hike in April. Longer-maturity bonds in almost all bond markets rallied.
Shorter-maturity issues were mixed, however, as short-term interest rates went
up in core European markets.
DIFFICULTIES IN ASIA AND OTHER EMERGING MARKETS
However, as the summer progressed into autumn, more troubles emerged from a new
source. First Thailand, then other Southeast Asian countries, faced severe
economic crises. As a result, currencies in the region were devalued by 25% to
50%. This area's economic growth has slowed down considerably and may go into
recession. The impact is felt elsewhere, as the region had been the engine of
growth for the world.
The problems in Southeast Asia sparked doubt about the economic and currency
policies of Latin American nations, Russia, and other emerging markets. As a
result, bonds from those countries suffered severely. This sparked another
flight to quality in the market, as nervous investors favored the higher-quality
issues from the strongest countries, such as the U.S. and Germany.
PERFORMANCE RECAP
The autumn proved to be a difficult period for the Fund, one that saw us
underperform our benchmark, which we had been comfortably surpassing through
September. For the year ended October 31, 1997, the Fund posted a loss of 0.68%,
compared with a loss of 0.32% by the Salomon Brothers Non-U.S. World Government
Bond Index (Currency Unhedged).*
During the summer and early autumn, we had increased the Fund's duration, moving
from a bearish stance to neutral, and then to a slightly longer duration than
the index. This, along with other tactical interest-rate plays, helped to spark
outperformance for part of the year, but hurt the Fund during the Southeast Asia
crisis. Similarly, our position in below-investment-grade issues, which had
boosted performance earlier in the year, reacted negatively in October.
6
<PAGE>
OUR OUTLOOK ON THE MARKET'S OPPORTUNITIES
We believe that around the world, responsible fiscal policies, vigilant central
banks, and global competition will, over the next three years or so, lead to
declining interest rates in major countries. To capitalize on this, we intend to
emphasize issues from the higher credit-quality countries. The expected slowdown
in Asia will also help keep inflation in control and provide a favorable
backdrop for interest rates.
The emerging markets crisis has led to indiscriminate selling of bonds with
little regard for maturity and little differentiation among issuers. As a
result, we are finding great values--with shorter-term issues from some
countries and companies offering high yields--and we would like to continue to
take advantage of such opportunities in the next fiscal year.
As an investor in this Fund, please keep in mind that the Fund's returns will
fluctuate with changes in bond market conditions, currency values, interest
rates, foreign government regulations, and economic and political conditions in
countries in which the Fund invests. These risks are intensified in emerging
markets. For long-term investors, however, we believe these risks are outweighed
by the benefits of global investing--namely, higher return potential and lower
overall portfolio risk through diversification than a pure U.S. portfolio could
offer.
[PHOTO OF SHIRISH T. MALEKAR]
We appreciate your investment in the Strong International Bond Fund, and we look
forward to earning your continued confidence.
Sincerely,
/s/Shirish Malekar
Shirish T. Malekar
Portfolio Manager
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 3-31-94 to 10-31-97
[GRAPH]
THE STRONG Salomon Brothers
INTERNATIONAL Non-U.S. World Government Lipper International
BOND FUND Bond Index (Currency Unhedged)* Income Funds Index*
3-94 10,000 10,000 10,000
12-94 10,866 10,396 9,387
12-95 12,937 12,428 11,700
12-96 13,966 12,938 12,783
10-97 13,741 12,842 13,076
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Salomon Brothers Non-U.S. World Government Bond Index (Currency Unhedged) and
the Lipper International Income Funds Index. Results include the reinvestment of
all dividends and capital gains distributions. Performance is historical and
does not represent future results. Investment returns and principal value vary,
and you may have a gain or loss when you sell shares.
================================================================================
======================================
PORTFOLIO STATISTICS
======================================
As of 10-31-97
30-day annualized yield(1) 6.57%
Average credit quality(2) AA
Average maturity(3) 7.8 years
======================================
- --------------------------------------------------------------------------------
* The Salomon Brothers Non-U.S. World Government Bond Index (Currency
Unhedged) is an unmanaged index generally representative of liquid,
non-U.S. fixed income government securities. The Lipper International
Income Funds Index is an equally-weighted performance index of the largest
qualifying funds in this Lipper category. Source of the Salomon index data
is Standard & Poor's Micropal. Source of the Lipper index data is Lipper
Analytical Services, Inc.
1 As of October 31, 1997, the Advisor was temporarily waiving fees of 0.66%.
Otherwise, the Fund's yield would have been 5.91% and the total return
would have been lower. Yields are historical, do not represent future
results, and will vary.
2 For purposes of this average rating, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
3 The Fund's average maturity includes the effect of futures and options.
7
<PAGE>
THE STRONG SHORT-TERM GLOBAL BOND FUND
ALTHOUGH THE AUTUMN PROVED TO BE A DIFFICULT PERIOD FOR THE FUND, WE WERE ABLE
TO OUTPERFORM OUR BENCHMARK INDEX FOR THE YEAR.
The Strong Short-Term Global Bond Fund seeks total return by investing for a
high level of income with a low degree of share-price fluctuation. The Fund
invests primarily in investment-grade debt obligations of U.S. and foreign
issuers. The Fund will normally maintain an average portfolio maturity of three
years or less.
================================================================================
COUNTRY EXPOSURE
================================================================================
As of 10-31-97
COUNTRY % OF EXPOSURE*
- --------------------------------------------------------------------------------
United States 43.5%
................................................................................
Indonesia 13.9%
................................................................................
Argentina 7.0%
................................................................................
Brazil 5.4%
................................................................................
Italy 3.3%
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
* Exposure is calculated based on the sum of total market value of securities
and market value of futures.
================================================================================
LOOKING BACK AT A MIXED YEAR
At the beginning of the Fund's fiscal year (in late 1996 and early in 1997),
global bond markets were strong overall, and bond yields were in a downward
trend. The lower yields in developed countries drove many investors in search of
higher yields to below-investment grade issues in various sectors including
corporate bonds and emerging markets.
A sell-off in the global bond markets began in February and March, in
anticipation that the Federal Reserve would raise U.S. interest rates. When the
Fed made the hike at the end of March, the sell-off continued. Hardest hit were
the North American markets, which were most directly affected by the interest
rate change. Also hurt were lower-quality, emerging-markets, and certain
European issues, as many investors moved toward higher-quality issues from more
established markets. That turmoil was short-lived, though, as most markets
settled into a calm for the rest of the spring and through the summer.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
================================================================================
As of 10-31-97
LIPPER SHORT SALOMON BROTHERS 1-3 YEAR
STRONG SHORT-TERM WORLD MULTI-MARKET WORLD GOVERNMENT BOND
TIME PERIOD GLOBAL BOND FUND INCOME AVERAGE* INDEX (CURRENCY HEDGED)*
- --------------------------------------------------------------------------------
1-year 6.78% 4.90% 6.40%
................................................................................
3-year 8.66% 5.40% 7.93%
................................................................................
Since Inception
(on 3-31-94) 8.62% 4.77% 6.94%
................................................................................
Please note that the Lipper index contains "pure" emerging markets funds as well
as international bond funds, and includes both hedged and unhedged funds.
================================================================================
For the late summer through early fall, better-performing countries included
Australia, the U.K., Italy, Japan, the U.S., and Europe. On the economic front,
most European markets saw annual growth rates of 1.5% to 2%, while the United
Kingdom and North American economies grew at a rate of about 3%. Japan was in a
sluggish recovery phase, but fell back into a recession after the consumption
tax hike in April. Longer-maturity bonds in almost all bond markets rallied.
Shorter-maturity issues were mixed, however, as short-term interest rates went
up in core European markets.
DIFFICULTIES IN ASIA AND OTHER EMERGING MARKETS
However, as the summer progressed into autumn, more troubles emerged from a new
source. First Thailand, then other Southeast Asian countries, faced severe
economic crises. As a result, currencies in the region were devalued by 25% to
50%. This area's economic growth has slowed down considerably and eventually may
go into recession. The impact of this slowdown is felt elsewhere, as the region
had been the engine of growth for the world.
The problems in Southeast Asia sparked doubt about the economic and currency
policies of Latin American nations, Russia, and other emerging markets. As a
result, bonds from those countries suffered. This sparked another flight to
quality in the market, as nervous investors favored higher-quality issues from
the strongest countries, such as the U.S. and Germany.
OUTPERFORMANCE DESPITE A DIFFICULT MARKET
Although the autumn proved to be a difficult period for the Fund, we were able
to outperform our benchmark index for the year. For the 12 months ended October
31, 1997, the Fund returned 6.78%, compared with a 6.40% gain for the Salomon
Brothers 1-3 Year World Government Bond Index (Currency Hedged). We also
outpaced our peer group, as represented by the Lipper Short World Multi-Market
Income Average, which returned 4.90% for the same period.*
One of the factors driving this outperformance was our country
allocation--specifically, our overweighting in Australia, New Zealand, and
Europe. Our 20% position in non-investment-grade issues also helped the Fund
outperform for much of the year, although they were hurt during the October
correction. Tactical interest-rate plays also helped to boost the Fund's returns
for most of the period.
8
<PAGE>
OUR OUTLOOK ON THE MARKET'S OPPORTUNITIES
Around the world, we believe that responsible fiscal policies, vigilant central
banks, and global competition will over the next three years or so lead to
declining interest rates in major countries. To capitalize on this, we intend to
emphasize issues from the higher-quality countries. The expected slowdown in
Asia will also help keep inflation in control and provide a favorable backdrop
for interest rates.
The emerging markets crisis has led to indiscriminate selling of bonds with
little regard for maturity and little differentiation among issuers. As a
result, we are finding great values--with shorter-maturity issues from some
countries and companies offering high yields--and we would like to continue to
take advantage of such opportunities in the next fiscal year.
As an investor in this Fund, please keep in mind that the Fund's share price and
returns will fluctuate with changes in bond market conditions, currency values,
interest rates, foreign government regulations, and economic and political
conditions in countries in which the Fund invests. These risks are intensified
in emerging markets. For long-term investors, however, we believe these risks
are outweighed by the benefits of global investing--namely, higher return
potential and lower overall portfolio risk through diversification than a pure
U.S. portfolio could offer.
[PHOTO OF SHIRISH T. MALEKAR]
We appreciate your investment in the Strong Short-Term Global Bond Fund, and we
look forward to earning your continued confidence.
Sincerely,
/s/Shirish Malekar
Shirish T. Malekar
Portfolio Manager
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
================================================================================
From 3-31-94 to 10-31-97
[GRAPH]
THE STRONG Salomon Brothers 1-3 Year Lipper Short
SHORT-TERM GLOBAL World Government Bond World Multi-Market
BOND FUND Index (Currency Hedged)* Income Average*
3-94 10,000 10,000 10,000
12-94 10,513 10,153 9,707
12-95 11,612 11,286 10,475
12-96 12,775 12,088 11,444
10-97 13,450 12,716 11,817
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Salomon Brothers 1-3 Year World Government Bond Index (Currency Hedged) and the
Lipper Short World Multi-Market Income Average. Results include the reinvestment
of all dividends and capital gains distributions. Performance is historical and
does not represent future results. Investment returns and principal value vary,
and you may have a gain or loss when you sell shares.
================================================================================
==========================================
PORTFOLIO STATISTICS
==========================================
As of 10-31-97
30-day annualized yield(1) 7.39%
Average credit quality(2) A
Average maturity(3) 2.8 years
==========================================
- --------------------------------------------------------------------------------
* The Salomon Brothers 1-3 Year World Government Bond Index (Currency Hedged)
is an unmanaged index generally representative of short-term, global fixed
income government securities. Rolling one-month-forward exchange contracts
are used as the hedging instrument. The Lipper Short World Multi-Market
Income Average represents funds that invest in non-U.S. dollar and U.S.
dollar debt instruments and, by policy, keeps a dollar-weighted average
maturity of less than five years. Source of the Salomon index data is
Salomon Brothers. Source of the Lipper data is Lipper Analytical Services,
Inc.
1 As of October 31, 1997, the Advisor was temporarily waiving fees of 0.345%.
Otherwise, the Fund's yield would have been 7.05% and the total return
would have been lower. Yields are historical, do not represent future
yields, and will vary.
2 For the purposes of the average, the Fund's short-term debt obligations
have been assigned a long-term rating by the Advisor.
3 The Fund's average maturity includes the effect of futures and options.
9
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG ASIA PACIFIC FUND
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 74.4%
AUSTRALIA 13.4%
AAPC, Ltd. 409,846 $ 143,651
Australian Tourism Group 150,000 73,605
CI Technologies Group, Ltd. (Acquired 5/20/97;
Cost $281,991) (b) (d) 250,000 341,738
Cinema Plus, Ltd. (b) 653,000 503,528
Corporate Express Australia (b) 200,000 103,748
Cue Energy Resources NL (b) 2,318,000 292,485
Foster's Brewing Group, Ltd. 101,000 191,163
Freeport-McMoran Copper & Gold, Inc. Class B 6,500 155,188
MIM Holdings, Ltd. 76,048 66,637
Normandy Mining, Ltd. 555,308 603,370
Oil Search, Ltd. 39,300 71,077
Orogen Minerals, Ltd. GDR (Acquired 10/31/96;
Cost $87,104) (d) 5,500 152,625
Peptide Technology, Ltd. 100,000 13,319
Ramsay Health Care, Ltd. (Acquired 9/16/97;
Cost $162,779) (b) (d) 122,000 165,057
Simeon Wines, Ltd. 2,000 4,907
Spectrum Network Systems, Ltd. (b) 550,000 185,064
Sydney Aquarium, Ltd. 300,450 842,462
Western Mining Corporation, Ltd. 30,642 108,474
----------
4,018,098
CHINA 3.1%
C.H. China Investment, Ltd. (b) 390,500 112,234
C.H. China Investment, Ltd. Warrants,
Expire 7/01/99 (b) 237,500 8,324
China Southern Airlines Company, Ltd. ADR (b) 8,000 166,000
First Tractor Company, Ltd. `H Shares' (Acquired
6/18/97 - 9/03/97; Cost $193,305) (b)(d) 320,000 248,431
New World Infrastructure, Ltd. (b) 105,000 207,867
Shanghai Industrial Holdings, Ltd. (Acquired
4/10/97 - 10/29/97; Cost $161,826) (d) 40,000 178,042
----------
920,898
HONG KONG 2.6%
Amoy Properties, Ltd. 60,000 51,627
CDL Hotels International, Ltd. 416,399 119,879
Glorius Sun Enterprises 480,000 124,216
Guoco Group, Ltd. 57,000 124,643
Hong Kong Land Holdings, Ltd. 39,494 90,046
Jardine Strategic Holdings, Ltd. 40,750 130,400
Peregrine Investment Holdings, Ltd. 150,000 147,506
----------
788,317
INDIA 6.1%
Asian Hotels, Ltd. 74,000 346,047
Hindalco Industries, Ltd. 4,000 104,573
IS Himilayan Fund NV (b) 14,000 154,000
The India Gateway Fund, Ltd. 501 2,209
Indian Hotels Company, Ltd. 25,000 405,303
The Indian Smaller Companies Fund, Ltd. 10,173 87,081
Marico Industries, Ltd. 17,000 154,077
Oriental Bank of Commerce 500 816
Peregrine Indian Smaller Companies Fund (b) 2,000 116,000
Reliance Industries, Ltd. 300 1,558
Titan Industries, Ltd. 50,300 103,233
UTI-Mastergrowth 93 Fund (b) 500,000 176,997
Videsh Sanchar Nigam, Ltd. 7,000 173,554
----------
1,825,448
INDONESIA 1.6%
Gulf Indonesia Resources, Ltd. (b) 6,000 126,000
Jaya Real Property PT (Fgn Reg) 190,000 33,170
Lautan Luas PT 146,000 55,057
Lippo Life Insurance PT (Fgn Reg) 1,146,600 152,133
Siloam Gleneagles Health Care PT
(Acquired 3/12/97; Cost $206,715) (d) 168,000 117,318
----------
483,678
JAPAN 18.6%
The Bank of Tokyo - Mitsubishi 17,000 221,678
Chubu Steel Plate Company, Ltd. 36,000 91,196
Diamond City Company 6,000 24,169
Fidelity Japan OTC and Regional
Markets Fund, Ltd. (b) 25,500 102,000
Fontaine Company, Ltd. 7,000 140,698
H I S Company, Ltd. 3,300 107,168
Heiwa 4,000 67,110
Higashi Nihon House 18,000 134,552
Hokuetsu Metal 44,000 73,090
Horipro, Inc. 26,000 185,714
Imagineer Company, Ltd. 13,000 145,764
Japan Associated Finance 6,000 284,052
Japan Industrial Land Development 10,000 33,555
Japan OTC Equity Fund, Inc. (b) 170 80,750
Japan Tobacco, Inc. 20 163,953
Justsystem Corporation (Acquired 10/08/97;
Cost $206,441) (b) (d) 10,000 195,183
Lion Corporation Warrants, Expire 6/18/99 (b) 1,800 51,465
Marubeni Corporation 21,000 65,580
Mikasa Coca-Cola Bottling Warrants,
Expire 1/05/00 (b) 1,000 11,437
Misawa Homes Warrants, Expire 10/29/99 (b) 1,500 37,527
Mitsubishi Corporation 40,000 342,193
Mitsubishi Motors Corporation 34,000 149,103
Mitsui Fudosan 20,000 225,914
Miyota Company, Ltd. 16,000 172,757
Nippon Broadcasting System 5,000 305,232
Nippon Shinpan Company 84,000 175,814
Nippon Telegraph & Telephone Corporation 300 254,153
Nittetsu Mining 28,000 156,744
Nomura International PLC Warrants,
Expire 4/26/00 (b) 400 20,000
Ohmoto Gumi Company, Ltd. 18,000 102,409
Pioneer Electronic Corporation 5,000 82,226
SXL Corporation Warrants, Expire 2/26/99 (b) 2,900 12,437
Shochiku Warrants, Expire 12/29/99 (b) 525 78,750
Showa Denko K.K. (b) 88,000 158,605
Softbank Corporation 3,600 115,714
Takihyo Company, Ltd. 11,000 86,703
Toho Company 3,410 447,492
Tokio Marine & Fire Insurance Company 17,000 169,435
Toko Seiki Company 26,000 62,625
Tokushu Paper Manufacturing Company, Ltd.
Warrants, Expire 4/26/01 (b) 900 73,338
Tsutsumi Jewelry Company, Ltd. 3,100 43,256
Yasuda Trust & Banking, Ltd. 60,000 159,967
----------
5,611,508
KAZAKHSTAN 0.3%
Kazakhstan Investment Fund 19,000 80,750
MALAYSIA 0.9%
Highlands & Lowlands BHD 49,000 55,372
Leader Universal Holdings BHD 126,000 76,843
Malaysia International Shipping BHD (Fgn Reg) 40,000 66,966
Sime UEP Properties BHD 50,000 46,338
Technology Resources Industries BHD 30,000 29,058
----------
274,577
10
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG ASIA PACIFIC FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
NEW ZEALAND 10.6%
Air New Zealand, Ltd. Class B 95,000 $ 200,842
CDL Hotels New Zealand, Ltd. 952,000 248,621
Corporate Investments, Ltd. (b) 300,000 167,886
Direct Capital Partners, Ltd. 200,000 84,565
Evergreen Forests, Ltd. (b) 1,300,000 468,837
Guinness Peat Group PLC 1,408,117 770,499
Kiwi Income Property Trust 384,000 274,587
Kiwi Income Property Trust `B Shares' (b) 96,000 49,545
Pacific Capital Assets, Ltd. (Acquired 8/19/97;
Cost $139,041) (b) (d) 431,000 101,838
Restaurant Brands New Zealand, Ltd. (b) 270,000 349,203
Seafresh Fisheries New Zealand, Ltd. 135,000 21,825
Shortland Properties, Ltd. 690,000 407,590
Tourism Holdings, Ltd. 41,600 46,560
----------
3,192,398
PHILIPPINES 1.1%
Cosmos Bottling Corporation (b) 560,000 93,066
Empire East Land Holdings, Inc. (b) 2,199,567 53,570
Guoco Holdings (Philippines) (b) 1,000,000 31,519
San Miguel Corporation Class B 140,000 158,453
----------
336,608
SINGAPORE 8.4%
Courts (Singapore), Ltd. 435,000 171,510
Cycle & Carriage, Ltd. 26,000 114,086
DBS Land, Ltd. 20,000 34,086
The Development Bank of Singapore,
Ltd. (Fgn Reg) 28,000 261,749
FJ Benjamin Holdings, Ltd. (b) 413,000 106,369
Fraser & Neave, Ltd. 19,000 95,453
Hong Leong Finance, Ltd. (Fgn Reg) 99,000 135,358
Keppel Bank 100,000 163,434
Keppel Corporation, Ltd. 45,500 144,095
Kim Eng Holdings, Ltd. 130,000 59,523
Osprey Maritime, Ltd. 200,000 188,235
Robinson & Company, Ltd. 20,000 69,952
Sembawang Corporation, Ltd. 72,000 221,609
Singapore Airlines, Ltd. (Fgn Reg) 18,000 135,072
Singapore Sesdaq Fund (b) 15,000 210,000
United Overseas Bank, Ltd. 36,000 199,173
United Overseas Land, Ltd. 188,000 162,595
Van Der Horst, Ltd. 79,000 69,329
----------
2,541,628
SOUTH KOREA 1.3%
Daehan City Gas Company 4,500 120,000
Fidelity Advisor Korea Fund (b) 6,300 30,319
Hana Bank 4 25
Kookmin Bank 14,472 117,584
Yukong, Ltd. 8,000 108,333
----------
376,261
SRI LANKA 1.5%
John Keells Holdings, Ltd. (b) 35,000 178,661
National Development Bank, Ltd. (b) 31,000 124,519
Sri Lanka Growth Fund (b) 30,000 142,500
----------
445,680
TAIWAN 1.4%
Jardine Fleming Fund 320,000 146,405
Kwang Hua Fortune Fund 499,000 257,654
The R.O.C. Taiwan Fund 3,500 30,406
----------
434,465
THAILAND 1.5%
Industrial Finance Corporation of
Thailand (Fgn Reg) 122,800 104,120
Matichon PCL (Fgn Reg) 26,000 26,259
Royal Garden Resort PCL (Fgn Reg) 434,000 124,464
Ruang Khao Fund Units (b) 610,000 83,666
Sermsuk PCL (Fgn Reg) 14,000 92,868
TelecomAsia Corporation PCL (b) 15,000 6,733
----------
438,110
VIETNAM 1.4%
Beta Mekong Fund (b) 25,000 227,500
Beta Mekong Fund Warrants, Expire 10/31/09 (b) 5,000 __
Vietnam Frontier Fund 34,000 204,000
----------
431,500
OTHER 0.6%
Morgan Stanley Emerging Markets Fund, Inc. 14,000 188,125
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $33,857,692) 22,388,049
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS 0.4%
JAPAN
Fuji International Finance Trust 0.25% 18,000,000 121,657
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $147,291) 121,657
- --------------------------------------------------------------------------------
PREFERRED STOCKS 0.1%
SINGAPORE 0.1%
Osprey Maritime, Ltd. 54,000 30,219
SOUTH KOREA 0.0%
Korean Air Lines Company, Ltd. (b) 760 2,518
- --------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (COST $50,709) 32,737
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 17.9%
COMMERCIAL PAPER 0.9%
DISCOUNTED 0.8%
INDONESIA
Polysindo EKA Perkasa PT Notes,
Zero %, Due 4/09/98 1,000,000,000 IDR 247,742
INTEREST BEARING DUE UPON DEMAND 0.1%
United States Cayman Eurodollar
Call Deposit, 4.50% $ 43,000 43,000
TIME DEPOSITS 17.0%
UNITED STATES
Bank of Scotland Time Deposit 5.625%,
Due 11/03/97 600,000 600,000
Dresdner Bank Time Deposit, 5.65%,
Due 11/03/97 1,500,000 1,500,000
Societe Generale Time Deposit, 5.625%,
Due 11/03/97 1,500,000 1,500,000
Wachovia Time Deposit, 5.57%, Due 11/03/97 1,500,000 1,500,000
----------
Total Time Deposits 5,100,000
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $5,450,086) 5,390,742
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $39,505,778) 92.8% 27,933,185
Other Assets and Liabilities, Net 7.2% 2,152,971
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $30,086,156
- --------------------------------------------------------------------------------
11
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG ASIA PACIFIC FUND (continued)
================================================================================
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
- --------------------------------------------------------------------------------
Settlement Value Unrealized
Date in USD Appreciation
- --------------------------------------------------------------------------------
Sold:
45,472,000 THB 11/04/97 ($1,146,218) $253,781
INDUSTRY DIVERSIFICATION
- --------------------------------------------------------------------------------
Percentage of Net Assets
- --------------------------------------------------------------------------------
Leisure Service ...................................... 11.3%
Closed-End Fund ...................................... 8.1
Conglomerate ......................................... 8.0
Real Estate .......................................... 5.1
Bank - Money Center .................................. 4.6
Metals & Mining ...................................... 4.2
Computer Software .................................... 2.7
Finance - Miscellaneous .............................. 2.3
Telecommunication Service ............................ 2.2
Oil - International Integrated ....................... 2.0
Paper & Forest Products .............................. 1.8
Airline .............................................. 1.7
Shipping ............................................. 1.7
Media - Radio/TV ..................................... 1.6
Beverage - Soft Drink ................................ 1.5
Retail - Specialty ................................... 1.4
Beverage - Alcoholic ................................. 1.2
Retail - Restaurant .................................. 1.2
Electronic Products - Miscellaneous .................. 1.1
Automobile ........................................... 0.9
Healthcare - Patient Care ............................ 0.9
Engineering & Construction ........................... 0.8
Machinery - Agriculture .............................. 0.8
Brokerage & Investment Management .................... 0.7
Chemical ............................................. 0.7
Shoe & Apparel Manufacturing ......................... 0.7
Consumer - Miscellaneous ............................. 0.6
Insurance - Diversified .............................. 0.6
Cosmetic & Personal Care ............................. 0.5
Insurance - Life ..................................... 0.5
Precious Metal/Gem/Stone ............................. 0.5
Tobacco .............................................. 0.5
Housing .............................................. 0.4
Natural Gas Distribution ............................. 0.4
Metal Products & Fabrication ......................... 0.3
Steel ................................................ 0.3
Agricultural Operations .............................. 0.2
Machinery - Miscellaneous ............................ 0.2
Retail - Department Store ............................ 0.2
Soap & Cleaning Preparation .......................... 0.2
Food ................................................. 0.1
Insurance - Property & Casualty ...................... 0.1
Media - Publishing ................................... 0.1
Short-Term Investments ............................... 17.9
Other Assets and Liabilities, Net .................... 7.2
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
================================================================================
STRONG INTERNATIONAL STOCK FUND
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 83.9%
ARGENTINA 1.1%
Banco Rio de La Plata SA ADR 42,000 $ 441,000
Dragados y Construcciones Argentina 126,000 441,260
Quilmes Industrial SA ADR 40,000 495,000
Sunshine Mining and Refining Company (b) 650,000 568,750
----------
1,946,010
AUSTRALIA 4.5%
AAPC, Ltd. 1,103,853 386,900
Cinema Plus, Ltd. (b) 902,000 695,533
Cue Energy Resources NL (b) 2,900,000 365,922
Foster's Brewing Group, Ltd. 670,000 1,268,109
Freeport-McMoran Copper & Gold, Inc. Class B 39,000 931,125
Normandy Mining, Ltd. 1,968,543 2,138,920
Simeon Wines, Ltd. 8,500 20,855
Sydney Aquarium, Ltd. 637,100 1,786,428
Western Mining Corporation, Ltd. 150,439 532,562
----------
8,126,354
AUSTRIA 0.5%
Austria Tabakwerke AG (Acquired 10/30/97;
Cost $831,960) (d) 20,000 832,578
BOTSWANA 0.2%
Sechaba Breweries, Ltd. (b) 310,000 358,027
BRAZIL 1.4%
Avipal SA Avicultura e Agropecauria 158,140,000 487,688
Companhia de Electricidade do Estado
de Rio de Janeiro (b) 843,000,000 535,238
Companhia de Saneamento Basico do Estado
de Sao Paulo 3,300,540 583,769
Companhia Paranaense de Energia - Copel
Sponsored ADR 45,000 537,188
Petroleo Brasileiro SA Sponsored ADR
(Acquired 8/05/97; Cost $534,900) (b)(d) 20,000 380,000
Telecomunicacoes de Rio de Janeiro SA Rights,
Expire 11/12/97 (b) 160,473 2,183
----------
2,526,066
CANADA 1.3%
Cae Industries, Ltd. 218,000 1,827,248
Distribucion y Servicio SA ADR (b) 31,000 544,438
----------
2,371,686
CHILE 1.3%
Quimica y Minera Chile SA Sponsored ADR 19,900 1,032,313
Quinenco SA ADR (b) 49,500 723,938
Santa Isabel SA Sponsored ADR 33,250 615,124
----------
2,371,375
CHINA 1.7%
China Southern Airlines Company, Ltd. ADR (b) 22,000 456,500
First Tractor Company, Ltd. `H Shares'
(Acquired 9/03/97; Cost $687,141) (b)(d) 900,000 698,713
New World Infrastructure, Ltd. (b) 475,000 940,350
Shanghai Industrial Holdings, Ltd.
(Acquired 4/10/97-10/29/97; Cost $822,416)(d) 203,000 903,565
----------
2,999,128
EGYPT 0.9%
AL-Ahram Beverages Company SAE (b) 39,200 1,078,000
MISR International Bank SAE GDR
(Acquired 6/25/97; Cost $395,000) (d) 25,000 406,250
Nile for Matches (b) 24,900 182,722
Suez Cement 600 13,147
----------
1,680,119
FINLAND 0.6%
Valmet Oyj 66,000 1,039,360
FRANCE 5.7%
Accor SA 4,000 744,076
Alliance Et Gestion Comm 11,750 435,924
Castorama Dubois Investissement SA 12,200 1,269,953
Club Mediterranee SA (b) 9,000 639,116
Edap Tms SA ADR (b) 115,000 805,000
12
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG INTERNATIONAL STOCK FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
Esker SA 34,000 $ 659,554
Genset SA Sponsored ADR (b) 102,500 1,947,500
Groupe Danone 6,300 962,415
Louis Dreyfus Citrus (b) 11,419 340,181
Pernod Ricard 10,000 462,969
SEFIMEG (Societe Francaise d'Investissements
Immobiliers et de Gestion) 15,000 909,311
Sabeton SA 5,247 672,506
Skis Rossignol SA 21,500 425,636
----------
10,274,141
GERMANY 1.4%
Holsten-Brauerei AG 5,230 1,054,130
Leica Camera AG 64,000 1,484,832
----------
2,538,962
GHANA 0.7%
Ashanti Goldfields Company, Ltd. GDR 130,029 1,284,036
GREECE 0.3%
Hellinic Telecommunication Organization SA 28,000 584,661
HONG KONG 1.5%
CDL Hotels International, Ltd. 1,187,935 342,001
Glorius Sun Enterprises 2,400,000 621,078
Guoco Group, Ltd. 139,000 303,953
Hong Kong Land Holdings, Ltd. 49,178 112,126
Jardine Strategic Holdings, Ltd. 140,625 450,000
Peregrine Investment Holdings, Ltd. 940,000 924,370
----------
2,753,528
HUNGARY 0.3%
Euronet Services, Inc. (b) 53,000 530,000
INDIA 3.8%
Asian Hotels, Ltd. 238,000 1,112,962
Bajaj Auto, Ltd. 13,450 214,440
Hindalco Industries, Ltd. 10,150 265,354
IS Himilayan Fund NV (b) 40,000 440,000
The India Gateway Fund, Ltd. 2,504 11,043
Indian Hotels Company, Ltd. 101,000 1,637,424
The Indian Smaller Companies Fund, Ltd. 54,584 467,239
Marico Industries, Ltd. 65,000 589,118
Oriental Bank of Commerce 1,500 2,448
Peregrine Indian Smaller Companies Fund (b) 7,100 411,800
Titan Industries, Ltd. 100,000 205,234
UTI-Mastergrowth 93 Fund (b) 2,050,000 725,689
Videsh Sanchar Nigam, Ltd. 27,400 679,339
----------
6,762,090
INDONESIA 0.7%
Gulf Indonesia Resources, Ltd. (b) 9,000 189,000
Lippo Life Insurance PT (Fgn Reg) 4,091,100 542,814
Siloam Gleneagles Health Care PT
(Acquired 3/12/97; Cost $1,004,046)(d) 816,000 569,832
----------
1,301,646
IRELAND 0.9%
Connemara Green Marble Quarries PLC (Acquired
11/21/96 - 6/20/97; Cost $635,000)(b)(d) 50,800 635,000
Connemara Green Marble Quarries Warrants,
Expire 9/30/02 (b) 8,000 __
Fyffes PLC 550,000 938,553
----------
1,573,553
ITALY 5.6%
Assicurazioni Generali 61,000 1,362,331
Csp International Industria Calze Spa (b) 145,000 1,597,404
Eni Spa 244,000 1,379,486
Filatura del Brembo Spa 127,500 1,265,328
Industrie Natuzzi Spa Sponsored ADR 88,000 1,969,000
Pirelli Spa 387,000 985,712
Zucchini Spa 204,000 1,440,320
----------
9,999,581
JAPAN 11.0%
The Bank of Tokyo - Mitsubishi 72,000 938,870
Chubu Steel Plate Company, Ltd. 130,000 329,320
Fidelity Japan OTC and Regional
Markets Fund, Ltd. (b) 115,000 460,000
Fontaine Company, Ltd. 32,000 643,190
H I S Company, Ltd. 18,700 607,284
Higashi Nihon House 73,000 545,681
Horipro, Inc. 98,000 700,000
Imagineer Company, Ltd. 51,000 571,844
Japan Associated Finance 22,000 1,041,528
Japan Industrial Land Development 42,000 140,930
Japan OTC Equity Fund, Inc. (b) 900 427,500
Japan Tobacco, Inc. 75 614,826
Lion Corporation Warrants, Expire 6/18/99 (b) 8,500 243,031
Mitsubishi Corporation. 147,000 1,257,558
Mitsubishi Motors Corporation 203,000 890,233
Miyota Company, Ltd. 82,000 885,382
Nippon Broadcasting System 20,000 1,220,930
Nippon Shinpan Company 254,000 531,628
Nippon Telegraph & Telephone Corporation 130 1,101,329
Nittetsu Mining 146,000 817,309
Ohmoto Gumi Company, Ltd. 78,000 443,771
Pioneer Electronic Corporation 15,000 246,678
Shochiku Warrants, Expire 12/29/99 (b) 1,650 247,500
Showa Denko K.K. (b) 338,000 609,186
Softbank Corporation 14,700 472,500
Takihyo Company, Ltd. 53,000 417,749
Toho Company 12,210 1,602,309
Tokio Marine & Fire Insurance Company 79,000 787,375
Tokushu Paper Manufacturing Company, Ltd.
Warrants, Expire 4/26/01 (b) 3,600 293,352
Tsutsumi Jewelry Company, Ltd. 12,000 167,442
Yasuda Trust & Banking, Ltd. 240,000 639,867
----------
19,896,102
KAZAKHSTAN 0.7%
Firebird Republics Fund 4,116 800,123
Kazakhstan Investment Fund 113,000 480,250
----------
1,280,373
MALAYSIA 0.3%
Leader Universal Holdings BHD 359,000 218,941
Malaysia International Shipping BHD (Fgn Reg) 225,000 376,682
----------
595,623
MALI 0.3%
Randgold Resources, Ltd. GDR (Acquired 6/26/97;
Cost $1,039,500) (d) 63,000 598,500
MEXICO 2.0%
Cemex SA de CV CPO (b) 138,000 547,355
Grupo Cementos Chihuah SA de CV `B Shares' 368,000 349,423
Grupo Financiero Banamex Accival SA de CV (b) 340,000 687,356
Grupo Financiero Serfin 82,000 527,284
Grupo Mexico SA 155,000 429,417
Kimberly-Clark de Mexico SA de CV 15,000 326,250
Organizacion Soriana SA de CV `B Shares' 238,000 802,392
----------
3,669,477
MIDDLE EAST 0.3%
The Foreign & Colonial Emerging
Middle East Fund, Inc. (b) 29,000 514,750
NAMIBIA 0.9%
Namibia Breweries 905,400 564,405
Namibian Minerals Corporation (b) 259,000 1,068,375
----------
1,632,780
NETHERLANDS 0.7%
Content Beheer NV 9,000 282,407
Heineken NV 6,000 974,692
----------
1,257,099
13
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG INTERNATIONAL STOCK FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
NEW ZEALAND 4.3%
Air New Zealand, Ltd. Class B 460,000 $ 972,495
CDL Hotels New Zealand, Ltd. 2,789,000 728,364
Evergreen Forests, Ltd. (b) 2,000,000 721,288
Guinness Peat Group PLC 4,136,402 2,263,373
Kiwi Income Property Trust (b) 473,800 353,531
Pacific Capital Assets, Ltd. (Acquired
8/19/97 - 10/28/97; Cost $803,419) (b) (d) 2,540,000 600,161
Restaurant Brands New Zealand, Ltd. (b) 700,000 905,341
Shortland Properties, Ltd. 2,101,200 1,241,200
----------
7,785,753
NORWAY 0.2%
Alvern Norway AS (b) 44,626 279,887
PERU 1.1%
Compania de Minas Buenaventura SA
Sponsored ADR 40,000 717,500
Telefonica del Peru SA Sponsored ADR
Representing Class B Shares 20,000 395,000
Union de Cervecerias Perunas 858,701 785,822
----------
1,898,322
PHILIPPINES 0.8%
Cosmos Bottling Corporation (b) 3,400,000 565,043
Empire East Land Holdings, Inc. (b) 5,385,427 131,164
San Miguel Corporation Class B 590,000 667,765
----------
1,363,972
POLAND 0.1%
@Entertainment, Inc. (b) 21,000 241,500
PORTUGAL 0.4%
Telecel-Comunicacoes Pessoais SA (b) 7,500 677,557
ROMANIA 1.1%
The Romanian Investment Fund, Ltd.
(Acquired 5/08/97; Cost $1,900,000) (d) 1,900 1,928,500
RUSSIA 1.8%
Irkutsk Electrosvyaz (b) 152,000 211,280
KamAZ 327,000 998,985
Morgan Stanley Russia & New Europe Fund, Inc. 12,000 332,250
Ramco Energy PLC 30,000 381,569
Red October Russian Depository Trust
Certificates (Acquired 8/14/96 - 12/06/96;
Cost $969,000) (b) (d) 12 1,350,000
----------
3,274,084
SAUDI ARABIA 0.1%
The Saudi Arabian Investment Fund (b) 25,000 234,375
SINGAPORE 3.4%
Cycle & Carriage, Ltd. 137,000 601,145
The Development Bank of Singapore,
Ltd. (Fgn Reg) 120,000 1,121,781
FJ Benjamin Holdings, Ltd. (b) 1,360,000 350,270
Hong Leong Finance, Ltd. (Fgn Reg) 172,000 235,166
Hour Glass, Ltd. 200,000 80,763
Osprey Maritime, Ltd. 1,050,000 988,235
Sembawang Corporation, Ltd. 243,000 747,930
Singapore Sesdaq Fund (b) 36,000 504,000
United Overseas Bank, Ltd. 150,000 829,889
United Overseas Land, Ltd. 534,000 461,838
Van Der Horst, Ltd. 140,000 122,862
----------
6,043,879
SOUTH AFRICA 1.0%
Baring Simba Fund (b) 66,000 668,250
Baring Simba Fund Warrants, Expire 9/30/00 (b) 77,000 115,500
De Beers Centenary Linked Units 36,000 858,764
Morgan Stanley Africa Investment Fund, Inc. 11,000 167,750
----------
1,810,264
SOUTH KOREA 0.4%
Daehan City Gas Company 20,000 533,333
Fidelity Advisor Korea Fund (b) 41,700 200,682
----------
734,015
SPAIN 0.5%
Baron de Ley SA (b) 51,000 965,244
SRI LANKA 1.0%
John Keells Holdings, Ltd. (b) 192,000 980,084
National Development Bank, Ltd. (b) 76,000 305,272
Sri Lanka Growth Fund (b) 95,000 451,250
----------
1,736,606
SWEDEN 0.7%
Munters AB (b) 66,000 667,465
Pricer AB `B Shares' (b) 28,000 648,303
----------
1,315,768
SWITZERLAND 3.0%
Moevenpick Holding AG 2,800 1,010,721
SGS (Societe Generale de Surveillance)
Holdings SA 720 1,389,564
SMH (Suisse Microelectronique et d'Horlogerie) 3,500 1,953,896
Zurich Versicherungsgesellschaft 2,600 1,074,196
----------
5,428,377
TAIWAN 0.3%
Kwang Hua Fortune Fund 1,166,000 602,052
THAILAND 0.7%
Industrial Finance Corporation of
Thailand (Fgn Reg) 530,200 449,546
Ruang Khao Fund Units (b) 3,200,000 438,903
Sermsuk PCL (Fgn Reg) 50,000 331,671
----------
1,220,120
UKRAINE 0.8%
Ukrainian Opportunity Fund 118,800 1,508,760
UNITED KINGDOM 10.4%
Bluebird Toys PLC 530,000 948,758
Burton Group PLC 590,000 1,258,514
Caledonia Investments PLC 28,000 287,154
Dr. Solomon's Group PLC Sponsored ADR (b) 25,000 765,625
Eidos PLC (b) 170,000 2,033,532
Games Workshop Group PLC 217,000 2,486,830
General Electric Company PLC 234,000 1,490,568
Hamleys PLC 175,000 1,010,074
Inchcape PLC 97,263 353,104
Lonrho PLC 300,717 488,006
Low & Bonar PLC 160,000 848,546
LucasVarity PLC 423,000 1,447,204
Pearson PLC 125,000 1,585,168
Pilkington PLC 565,000 1,427,320
W.H. Smith Group PLC 99,000 626,070
Trocadero PLC 1,435,000 480,150
Vickers PLC 290,000 1,106,188
----------
18,642,811
VENEZUELA 0.3%
Compania La Electricidad de Caracas 384,106 504,946
VIETNAM 0.3%
Vietnam Frontier Fund 84,000 504,000
OTHER 0.6%
Morgan Stanley Emerging Markets Fund, Inc. 56,000 752,500
The Regent Central Asia Investments 38,000 361,000
----------
1,113,500
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS (COST $184,342,252) 151,111,897
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG INTERNATIONAL STOCK FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS 0.4%
JAPAN
Fuji International Finance Trust 0.25% 96,000,00 $ 648,837
- --------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $772,484) 648,837
- --------------------------------------------------------------------------------
PREFERRED STOCKS 4.8%
BRAZIL 1.2%
Companhia Antartica Paulista - Industria
Brasileira de Bebidas e Conexos 12,340 1,119,274
Telecomunicacoes de Sao Paulo SA 2,486,788 651,866
Telecomunicacoes de Sao Paulo SA Rights,
Expire 11/12/97 (b) 109,902 52
Telecomunicacoes do Rio de Janeiro SA - Telerj 4,138,669 394,159
----------
2,165,351
COLOMBIA 0.3%
Banco Ganadero SA ADS Representing Class C
Preference Shares 22,700 544,800
GERMANY 0.5%
Porsche AG Non-Voting 610 896,903
ITALY 2.7%
IFI Istituto Finanziario (Acquired 1/20/97 -
1/23/97; Cost $2,205,497) (d) 186,000 2,381,513
Telecom Italia Spa 609,000 2,453,214
----------
4,834,727
SINGAPORE 0.1%
Osprey Maritime, Ltd. 283,500 158,652
- --------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (COST $8,448,879) 8,600,433
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 9.2%
COMMERCIAL PAPER 0.0%
INTEREST BEARING, DUE UPON DEMAND
United States Cayman Eurodollar Call
Deposit, 4.50% $ 1,000 1,000
TIME DEPOSITS 9.2%
UNITED STATES
Bank of Scotland Time Deposit, 5.625%,
Due 11/03/97 7,600,000 7,600,000
Societe Generale Time Deposit, 5.625%,
Due 11/03/97 9,000,000 9,000,000
----------
Total Time Deposits 16,600,000
- --------------------------------------------------------------------------------
TOTAL SHORT TERM INVESTMENTS (COST $16,601,000) 16,601,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $210,164,615) 98.3% 176,962,167
Other Assets and Liabilities, Net 1.7% 3,143,485
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $180,105,652
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
- --------------------------------------------------------------------------------
Unrealized
Settlement Value Appreciation
Date in USD (Depreciation)
- --------------------------------------------------------------------------------
Sold:
10,810,200 DEM 1/26/98 ($6,301,549) ($301,549)
162,400,000 THB 11/04/97 (4,093,636) 906,364
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
- --------------------------------------------------------------------------------
Percentage of Net Assets
- --------------------------------------------------------------------------------
Conglomerate ............................................8.2%
Closed-End Fund .........................................7.5
Leisure Service .........................................5.7
Beverage - Alcoholic ....................................5.1
Telecommunication Service ...............................4.0
Bank - Money Center .....................................3.6
Metals & Mining .........................................3.4
Automobile ..............................................2.6
Consumer - Miscellaneous ................................2.6
Precious Metal/Gem/Stone ................................2.6
Real Estate .............................................2.4
Retail - Specialty ......................................2.4
Engineering & Construction ..............................2.3
Finance - Miscellaneous .................................2.3
Food ....................................................2.3
Retail - Major Chain ....................................2.2
Auto & Truck Parts ......................................2.1
Computer Software .......................................2.1
Insurance - Diversified .................................1.8
Oil - International Integrated ..........................1.5
Shoe & Apparel Manufacturing ............................1.5
Shipping ................................................1.3
Media - Radio/TV ........................................1.2
Healthcare - Drug/Diversified ...........................1.1
Household Appliances & Furnishings ......................1.1
Retail - Restaurant .....................................1.1
Aerospace & Defense .....................................1.0
Electronic Products - Miscellaneous .....................1.0
Paper & Forest Products .................................1.0
Beverage - Soft Drink ...................................0.9
Chemical ................................................0.9
Cosmetic & Personal Care ................................0.9
Electric Power ..........................................0.9
Machinery - Miscellaneous ...............................0.9
Media - Publishing ......................................0.9
Airline .................................................0.8
Leisure Product .........................................0.8
Machinery - Transportation Equipment & Parts ............0.8
Tobacco .................................................0.8
Retail - Food Chain .....................................0.6
Brokerage & Investment Management .......................0.5
Healthcare - Instrumentation ............................0.4
Machinery - Agriculture .................................0.4
Healthcare - Patient Care ...............................0.3
Housing .................................................0.3
Insurance - Life ........................................0.3
Natural Gas Distribution ................................0.3
Steel ...................................................0.2
Metal Products & Fabrication ............................0.1
Soap & Cleaning Preparation .............................0.1
Short-Term Investments ..................................9.2
Other Assets and Liabilities, Net .......................1.7
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
15
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG INTERNATIONAL BOND FUND
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
CORPORATE BONDS 12.0%
INDONESIA 7.1%
Polysindo EKA Perkasa PT Notes, 19.00%,
Due 4/26/99 (Linked to cross currency
interest rate swap to yield LIBOR +
3.96%) 5,000,000,000 IDR $2,019,152
IRELAND 1.7%
Tatneft Finance PLC Notes, 9.00%,
Due 10/29/02 (Acquired 10/02/97;
Cost $499,445) (d) 500,000 USD 477,500
MEXICO 1.8%
Imexsa Export Trust Senior Structured
Pass-Thru Certificates, Series 1996-1,
10.125%, Due 5/31/03 (Acquired 5/22/96;
Cost $500,000) (d) 500,000 USD 505,000
NEW ZEALAND 1.2%
International Bank for Reconstruction &
Development Senior Notes, Zero%,
Due 8/20/07 1,000,000 NZD 324,580
UNITED STATES 0.2%
Bank of Boston Corporation Subordinated
Floating Rate Notes, 5.875%, Due 2/28/01 50,000 USD 49,877
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (COST $3,451,184) 3,376,109
- --------------------------------------------------------------------------------
GOVERNMENT & AGENCY ISSUES 31.3%
ARGENTINA 3.4%
Republic of Argentina BOCON Previsional 4
Floating Rate Notes, 5.6563%, Due 9/01/02 750,000 USD 838,125
Republic of Argentina Bote 10 Floating
Rate Notes, 5.7188%, Due 4/01/00 109,750 USD 118,848
----------
956,973
AUSTRALIA 5.1%
Australian Government Bonds, 8.75%,
Due 8/15/08 1,825,000 AUD 1,435,147
DENMARK 3.6%
Kingdom of Denmark Notes:
7.00%, Due 11/15/07 4,250,000 DKK 688,242
9.00%, Due 11/15/00 2,000,000 DKK 337,261
----------
1,025,503
FINLAND 2.4%
Government of Finland Bonds, 10.00%,
Due 9/15/01 3,000,000 FIM 675,826
FRANCE 4.3%
Government of France Debentures, 8.50%,
Due 11/25/02 6,000,000 FRF 1,196,965
GERMANY 9.2%
Republic of Germany Debentures, Series 94,
7.50%, Due 11/11/04 4,000,000 DEM 2,601,009
IRELAND 2.4%
Government of Ireland Debentures, 9.25%,
Due 7/11/03 380,000 IEP 668,226
URUGUAY 0.9%
Republic of Uruguay Bonds, 7.875%,
Due 7/15/27 300,000 USD 266,863
- --------------------------------------------------------------------------------
TOTAL GOVERNMENT & AGENCY ISSUES (COST $9,588,565) 8,826,512
- --------------------------------------------------------------------------------
NON-AGENCY MORTGAGE & ASSET-BACKED SECURITIES 15.3%
CS First Boston Mortgage Securities Corporation
Mortgage Pass-Thru Certificates, Series
1992-4, Class A-5, Interest Only, 0.625%,
Due 10/25/22 $27,419,295 282,693
Citicorp Mortgage Securities, Inc. Real Estate
Mortgage Investment Conduit
Pass-Thru Certificates:
Series 1990-17, Class M, 9.50%, Due 11/25/20 116,726 121,395
Series 1993-3, Class B1, 7.00%, Due 3/25/08
(Acquired 10/23/96; Cost $458,449)(d) 465,320 467,502
DLJ Mortgage Acceptance Corporation Variable
Rate Mortgage Pass-Thru Certificates:
Series 1990-2, Class A, 7.5604%, Due 1/25/22 415,363 424,189
Series 1991-3, Class A1, 7.4412%, Due 2/20/21 818,544 832,869
GE Capital Mortgage Services, Inc. Real Estate
Mortgage Investment Conduit MC Pass-Thru
Certificates, Series 1994-11, Class A3, 6.50%,
Due 3/25/24 30,045 29,957
Merrill Lynch Home Equity Acceptance, Inc.
Subordinated Variable Rate Mortgage-Backed
Certificates, Series 1994-A, Class A-1, 6.625%,
Due 8/17/23 87,856 86,992
RTC Variable Rate Mortgage
Pass-Thru Securities, Inc.:
Series 1992-16, Class B-3, 10.5981%,
Due 5/25/24 500,016 517,516
Series 1995-1, Class B-5, 6.8344%,
Due 10/25/28 748,774 758,134
Ryland Mortgage Securities Variable Rate
Corporation Mortgage Participation Securities,
Series 1991-1, 7.4911%, Due 3/25/20 793,355 809,222
- --------------------------------------------------------------------------------
TOTAL NON-AGENCY MORTGAGE & ASSET-BACKED
SECURITIES (COST $3,976,197) 4,330,469
- --------------------------------------------------------------------------------
PREFERRED STOCKS 2.1%
First International Funding Company, 3.50%
(Acquired 9/10/96) (d) 6 598,500
- --------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (COST $601,358) 598,500
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 29.0%
COMMERCIAL PAPER 14.0%
DISCOUNTED 13.6%
INDONESIA
Asia Pulp & Paper Company, Ltd.:
Due 12/08/97 4,000,000,000 IDR 1,102,227
Due 3/19/98 3,000,000,000 IDR 747,486
Polysindo EKA Perkasa PT, Due 3/18/98 4,000,000,000 IDR 988,827
Texmaco Jaya PT, Due 11/12/97 1,000,000 USD 998,475
----------
3,837,015
INTEREST BEARING, DUE UPON DEMAND 0.4%
United States Cayman Eurodollar Call
Deposit, 4.50% $ 100,000 100,000
----------
Total Commercial Paper 3,937,015
GOVERNMENT & AGENCY ISSUES 6.6%
PHILIPPINES 3.4%
Ing Bank NV London Branch Secured Notes,
Zero%, Due 8/14/98 (Acquired 8/07/97;
Cost $1,000,000) (d) 1,000,000 USD 970,000
16
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
STRONG INTERNATIONAL BOND FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
RUSSIA 1.7%
Russian Sovereign Risk Notes, Zero %,
Due 1/14/98 500,000 USD $ 486,000
UNITED STATES 1.5%
United States Treasury Bills, Due 1/08/98 (c) $425,000 421,073
----------
Total Government & Agency Issues 1,877,073
TIME DEPOSITS 8.4%
CHILE 1.8%
Citibank Time Deposit (with Chilean Peso
indexation and interest based on the Chilean
denominated deposit), 11.55%, Due 11/12/97 500,000 USD 497,034
EL SALVADOR 2.7%
Citibank Time Deposit (with El Salvador
Colon indexation and interest based on
the El Salvador denominated deposit), 9.00%,
Due 11/20/97 750,000 USD 749,572
UNITED STATES 3.9%
Bank of Scotland Time Deposit, 5.625%,
Due 11/03/97 $1,100,000 1,100,000
----------
Total Time Deposits 2,346,606
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $9,789,714) 8,160,694
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $27,407,018) 89.7% 25,292,284
Other Assets and Liabilities, Net 10.3% 2,912,192
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $28,204,476
- --------------------------------------------------------------------------------
FUTURES
- --------------------------------------------------------------------------------
Underlying Unrealized
Expiration Face Amount Appreciation
Date at Value (Depreciation)
- --------------------------------------------------------------------------------
Purchased:
21 Ten-Year French Government Bonds 12/97 $1,805,577 $ 2,919
9 Ten-Year German Government Bonds 12/97 1,344,169 12,289
29 Ten-Year Italian Government Bonds 12/97 3,829,032 114,913
7 Ten-Year Japanese Government Bonds 3/98 7,547,684 72,337
17 Ten-Year United Kingdom
Government Bonds 12/97 1,692,176 65,923
10 Five-Year U.S. Treasury Notes 12/97 1,084,063 19,219
Sold:
9 Ten-Year Australian Government
Bonds 12/97 (919,373) (33,035)
3 Ten-Year U.S. Treasury Notes 12/97 (335,250) (9,563)
3 U.S. Treasury Bonds 12/97 (355,406) (18,469)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
- --------------------------------------------------------------------------------
Unrealized
Settlement Value Appreciation
Date in USD (Depreciation)
- --------------------------------------------------------------------------------
Purchased:
849,740 AUD 11/12/97 $ 595,498 ($ 40,184)
1,512,935 AUD 2/12/98 1,063,388 (71,964)
1,152,000 CAD 2/12/98 822,469 (13,191)
1,835,500 DEM 11/12/97 1,068,182 68,182
23,377,845 DEM 2/12/98 13,639,455 885,585
200,000,000 ESP 2/12/98 1,379,103 98,636
1,123,317,000 JPY 11/12/97 9,366,501 (271,569)
Sold:
4,700,000 AUD 2/12/98 ($3,303,463) 147,277
2,690,400 DEM 11/12/97 (1,565,697) (65,697)
2,522,184 DEM 2/12/98 (1,471,531) (71,531)
3,700,000 DKK 11/12/97 (565,732) (39,760)
6,750,000 FRF 11/12/97 (1,171,989) (85,907)
4,000,000,000 IDR 12/09/97 (1,105,889) 476,702
4,000,000,000 IDR 3/19/98 (1,068,773) 506,031
3,000,000,000 IDR 3/20/98 (801,306) 379,332
5,000,000,000 IDR 4/26/99 (2,059,308) __
117,558,000 JPY 11/12/97 (980,228) 19,772
INDUSTRY DIVERSIFICATION
- --------------------------------------------------------------------------------
Percentage of Net Assets
- --------------------------------------------------------------------------------
Foreign Government .................................... 42.0%
Foreign Corporate ..................................... 14.2
Non-Agency Single-Family .............................. 11.2
Paper & Forest Products ............................... 6.6
Non-Agency Asset-Backed ............................... 4.2
Bank - Regional ....................................... 3.9
Finance - Miscellaneous ............................... 2.1
Steel ................................................. 1.8
U.S. Government ....................................... 1.8
Oil - International Integrated ........................ 1.7
Bank - Super Regional ................................. 0.2
Other Assets and Liabilities, Net ..................... 10.3
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
================================================================================
STRONG SHORT-TERM GLOBAL BOND FUND
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
CORPORATE BONDS 21.5%
ARGENTINA 3.3%
Autopistas Del Sol SA Senior Notes, 9.35%,
Due 8/01/04 (Acquired 7/24/97;
Cost $2,000,000) (d) 2,000,000 USD $1,945,000
Mendoza Province Bonds, 10.00%, Due
9/04/07 (Acquired 8/22/97; Cost
$1,986,340) (d) 2,000,000 USD 1,910,000
----------
3,855,000
BRAZIL 4.8%
Banco de Boston SA Floating Rate Eurodollar
Notes, 9.505%, Due 1/16/02 3,690,000 USD 3,690,000
MRS Logistica SA Senior Notes, Series B,
10.625%, Due 8/15/05 (Acquired 8/07/97;
Cost $995,510) (d) 1,000,000 USD 945,000
Sharp Do Brasil SA Notes, 9.625%, Due
10/30/05 (Acquired 10/20/97; Cost
$998,080) (d) 1,000,000 USD 952,500
----------
5,587,500
CANADA 0.8%
Telecommunications, Inc. Senior Discount
Notes, Zero %, Due 10/15/07 (Acquired
10/08/97; Cost $1,053,321) (d) 2,500,000 CAD 985,580
INDIA 1.5%
Power Finance, Ltd. Notes, 7.50%, Due
7/31/09 (Acquired 8/15/97; Cost
$1,951,000) (d) 2,000,000 USD 1,772,740
17
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG SHORT-TERM GLOBAL BOND FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
INDONESIA 3.9%
APP International Finance Floating Rate
Notes, 8.3789%, Due 6/25/99 500,000 USD $ 488,750
Polysindo EKA Perkasa PT Notes, 19.00%,
Due 4/26/99 (Linked to cross
currency interest rate swap to yield
LIBOR + 3.96%) 10,000,000,000 IDR 4,038,303
----------
4,527,053
IRELAND 1.7%
Tatneft Finance PLC Notes, 9.00%, Due
10/29/02 (Acquired 10/02/97; Cost
$1,997,780) (d) 2,000,000 USD 1,910,000
MEXICO 1.7%
Grupo Imsa SA de CV Senior Yankee Notes,
8.93%, Due 9/30/04 1,000,000 USD 968,750
Imexsa Export Trust Senior Structured
Pass-Thru Certificates, Series 1996-1,
10.125%, Due 5/31/03 (Acquired 5/22/96;
Cost $500,000) (d) 500,000 USD 505,000
Vicap SA de CV Guaranteed Senior Notes,
10.25%, Due 5/15/02 (Acquired 5/07/97;
Cost $498,250) (d) 500,000 USD 502,500
----------
1,976,250
NEW ZEALAND 0.3%
International Bank for Reconstruction &
Development Senior Notes, Zero%,
Due 8/20/07 1,000,000 NZD 324,580
POLAND 0.4%
Netia Holdings BV Senior Discount Notes,
Zero %, Due 11/01/07 (Rate Reset
Effective 11/01/01) (Acquired 10/24/97;
Cost $463,693) (d) 1,250,000 DEM 411,447
RUSSIA 0.8%
Russian Federation Bonds, 10.00%, Due
6/26/07 (Acquired 6/19/97; Cost
$991,640)(d) 1,000,000 USD 897,500
UNITED STATES 2.3%
Atlas Air, Inc. Senior Notes, 10.75%,
Due 8/01/05 (Acquired 8/08/97;
Cost $1,000,000) (d) 1,000,000 USD 1,060,000
Bank of Boston Corporation Subordinated
Floating Rate Notes, 5.875%, Due 2/28/01 100,000 USD 99,754
Oil Purchase Corporation Notes, 7.10%, Due
10/31/02 (Acquired 10/21/97;
Cost $999,330) (d) 1,000,000 USD 996,650
Viacom International, Inc. Reset Notes,
8.75%, Due 5/15/01 (Rate Reset Effective
5/15/98) 450,000 USD 459,068
----------
2,615,472
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (COST $25,847,108) 24,863,122
- --------------------------------------------------------------------------------
GOVERNMENT & AGENCY ISSUES 29.0%
ARGENTINA 3.7%
Republic of Argentina BOCON Previsional 4
Floating Rate Notes, 5.6563%, Due
9/01/02 2,500,000 USD 2,793,750
Republic of Argentina Bonds, 8.75%,
Due 5/09/02 1,000,000 USD 900,000
Republic of Argentina Bote 10 Floating Rate
Notes, 5.7188%, Due 4/01/00 548,750 USD 594,241
----------
4,287,991
AUSTRALIA 1.5%
Australian Government Bonds, 8.75%,
Due 8/15/08 2,175,000 AUD 1,710,380
BRAZIL 0.6%
Republic of Brazil IDU Variable Rate
Debentures, Series A, 6.8125%,
Due 1/01/01 785,000 USD 718,766
CANADA 1.8%
Government of Canada Notes, 6.125%,
Due 7/15/02 2,000,000 USD 2,007,460
DENMARK 0.4%
Kingdom of Denmark Notes, 9.00%,
Due 11/15/00 3,000,000 DKK 505,891
FRANCE 1.0%
Government of France Debentures:
7.00%, Due 10/12/00 2,900,000 FRF 533,729
8.50%, Due 11/25/02 3,000,000 FRF 598,483
----------
1,132,212
GERMANY 0.8%
Republic of Germany Debentures, Series 90,
8.875%, Due 12/20/00 1,500,000 DEM 972,420
IRELAND 0.9%
Government of Ireland Debentures, 9.25%,
Due 7/11/03 570,000 IEP 1,002,340
ITALY 0.6%
Government of Italy Debentures, 12.00%,
Due 1/01/02 1,000,000,000 ITL 722,405
NEW ZEALAND 2.1%
Government of New Zealand Notes, 6.50%,
Due 2/15/00 4,000,000 NZD 2,466,706
PANAMA 1.3%
Republic of Panama Floating Rate Notes,
7.0313%, Due 5/14/02 1,538,475 USD 1,515,398
SWEDEN 1.8%
Statens Bostadsfinansier Bonds, 9.00%,
Due 6/15/01 14,500,000 SEK 2,103,011
UNITED STATES 12.0%
FHLMC Participation Certificates:
7.913%, Due 7/01/10 $ 748,892 766,910
9.00%, Due 8/01/18 1,485,314 1,605,075
10.00%, Due 6/01/05 1,096,416 1,157,760
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Adjustable Rate
Mortgage Certificates, Pool #365418,
7.422%, Due 1/01/23 660,514 681,842
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Adjustable Rate Mortgage
Securities, 6.126%, Due 3/01/18 3,661,867 3,685,083
FNMA Guaranteed Real Estate Mortgage
Investment Conduit Pass-Thru Certificates:
8.50%, Due 11/01/02 3,619,023 3,741,165
10.50%, Due 8/01/20 519,309 520,529
11.00%, Due 4/01/12 602,982 677,980
United States Treasury Notes, 6.00%,
Due 7/31/02 1,000,000 1,010,000
----------
13,846,344
URUGUAY 0.5%
Republic of Uruguay Bonds, 7.875%,
Due 7/15/27 700,000 USD 622,678
- --------------------------------------------------------------------------------
TOTAL GOVERNMENT & AGENCY ISSUES (COST $34,560,312) 33,614,002
- --------------------------------------------------------------------------------
18
<PAGE>
================================================================================
STRONG SHORT-TERM GLOBAL BOND FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
NON-AGENCY MORTGAGE & ASSET-BACKED SECURITIES 27.9%
CS First Boston Mortgage Securities
Corporation Variable Rate Mortgage Pass-Thru
Certificates, Series 1994-MHC1, Class C,
6.7563%, Due 4/25/11 $ 500,000 $ 501,875
Citicorp Mortgage Securities, Inc. Real Estate
Mortgage Investment Conduit
Pass-Thru Certificates:
Series 1988-3, Class A-2, 9.00%, Due 4/01/18 336,750 335,619
Series 1990-17, Class M, 9.50%, Due 11/25/20 116,726 121,395
Series 1993-3, Class B1, 7.00%, Due 3/25/08
(Acquired 10/23/96; Cost $916,898) (d) 930,640 935,005
Collateralized Mortgage Obligation Trust,
Series 14, Class Z, 8.00%, Due 1/01/17 2,981,952 3,031,334
DLJ Acceptance Trust Collateralized Mortgage
Obligation, Series 1989-1, Class F, 11.00%,
Due 8/01/19 3,488,338 3,973,391
DLJ Mortgage Acceptance Corporation Variable
Rate Mortgage Pass-Thru Certificates:
Series 1990-2, Class A, 7.5604%, Due 1/25/22 1,661,450 1,696,756
Series 1991-3, Class A1, 7.4412%, Due 2/20/21 1,637,088 1,665,737
Series 92-Q4, Class A-2, 7.5242%, Due 7/25/22 717,529 722,911
GE Capital Mortgage Services, Inc. Real Estate
Mortgage Investment Conduit MC Pass-Thru
Certificates, Series 1994-11, Class A3, 6.50%,
Due 3/25/24 30,045 29,957
Green Tree Financial Corporation Certificates,
Series 1994-E, Class A, 9.15%, Due 1/15/15 1,854,286 1,920,632
Kmart CMBS Financing, Inc. Floating Rate
Commercial Mortgage Pass-Thru Certificates,
Series 1997-1, Class D, 6.7563%, Due 3/01/07
(Acquired 2/21/97; Cost $2,000,000) (d) 2,000,000 2,000,000
Merrill Lynch Home Equity Acceptance, Inc.
Subordinated Variable Rate Mortgage-Backed
Certificates, Series 1994-A, Class A-1,
6.625%, Due 8/17/23 58,571 57,994
Mortgage Obligation Structured Trust Pass-Thru
Certificates, Series 1993-1, Class A-1, 6.35%,
Due 10/25/18 28,678 28,606
NPF IX, Inc. 97-1 Healthcare Receivables Notes,
Class A, 6.339%, Due 7/01/00 (Acquired
7/24/97; Cost $1,999,975) (d) 2,000,000 1,995,000
RTC Mortgage Pass-Thru Securities, Inc.
Mortgage Pass-Thru Certificates, Series 92-18P,
Class B-5, 7.50%, Due 1/25/21 2,000,000 2,007,500
RTC Variable Rate Mortgage Pass-Thru
Securities, Inc.:
Series 1992-6, Class A-3, 7.7541%,
Due 1/25/26 1,166,692 1,171,067
Series 1992-6, Class B-9, 6.5475%,
Due 11/25/26 570,815 572,956
Series 1992-15, Class B-7, 7.0175%,
Due 7/25/27 1,743,000 1,749,536
Series 1992-16, Class A-4, 7.6859%,
Due 8/25/22 27,117 27,538
Series 1992-16, Class B-3, 10.5981%,
Due 5/25/24 1,500,048 1,552,549
Series 1995-1, Class B-5, 6.8344%,
Due 10/25/28 362,083 366,609
Ryland Mortgage Securities Corporation Variable
Rate Mortgage Participation Securities:
Series 1990-C1, Class A, 6.2849%, Due 10/25/20 901,329 905,836
Series 1991-1, 7.4911%, Due 3/25/20 997,361 1,017,308
Series 1992-3, Class A-2, 7.5457%, Due 6/25/20 918,421 923,014
Ryland Mortgage Securities Corporation Variable
Rate Senior Mortgage Partnership Securities,
Series 89-1, Class 1A, Perpetual Savings Bank,
7.8033%, Due 9/25/19 745,839 745,093
Structured Asset Securities Corporation Variable
Rate Multiclass Pass-Thru Certificates,
Series 1996-C1, Class D, 6.6563%, Due
10/25/10 (Acquired 9/27/96; Cost $994,840)(d) 1,000,000 1,000,000
Western Federal Savings & Loan Association
Collateralized Mortgage Obligation,
Series 1989-5, Class A, 6.8247%,
Due 7/25/19 1,179,907 1,177,300
- --------------------------------------------------------------------------------
TOTAL NON-AGENCY MORTGAGE & ASSET-BACKED
SECURITIES (COST $32,027,267) 32,232,518
- --------------------------------------------------------------------------------
OPTIONS 0.0%
COLOMBIA
Columbian Peso Currency Call Options (Strike
price is equal to the daily exchange rate,
currently 1281.20. Expiration date is
1/12/98.) 2,000,000 COP 9,400
- --------------------------------------------------------------------------------
TOTAL OPTIONS (COST $26,000) 9,400
- --------------------------------------------------------------------------------
PREFERRED STOCKS 1.2%
UNITED STATES
First International Funding, 3.50% (Acquired
9/10/96) (d) 14 1,396,500
- --------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS (COST $1,403,168) 1,396,500
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (a) 16.4%
COMMERCIAL PAPER 6.8%
DISCOUNTED 6.8%
INDONESIA
Asia Pulp & Paper Company, Ltd.:
Due 12/08/97 6,000,000,000 IDR 1,653,341
Due 3/19/98 6,000,000,000 IDR 1,494,972
Polysindo EKA Perkasa PT, Due 3/18/98 7,000,000,000 IDR 1,730,447
Texmaco Jaya PT, Due 11/12/97 3,000,000 USD 2,995,410
----------
7,874,170
INTEREST BEARING, DUE UPON DEMAND 0.0%
United States Cayman Eurodollar Call
Deposit, 4.50% $ 1,000 1,000
----------
Total Commercial Paper 7,875,170
GOVERNMENT & AGENCY ISSUES 6.8%
INDONESIA 3.4%
Polysindo EKA Perkasa PT Notes, Zero %,
Due 1/14/98 4,000,000 USD 3,922,000
RUSSIA 0.8%
Russian Sovereign Risk Notes, Zero %,
Due 1/14/98 1,000,000 USD 972,000
UKRAINE 2.0%
Ukranian T-Bill Linked Hedged Promissory
Notes, 11.00%, Due 2/20/98 2,262,000 USD 2,265,738
UNITED KINGDOM 0.4%
Government of United Kingdom Treasury Notes,
7.25%, Due 3/30/98 250,000 GBP 418,773
UNITED STATES 0.2%
United States Treasury Bills, Due 1/08/98 (c) $240,000 237,782
----------
Total Government & Agency Issues 7,816,293
TIME DEPOSITS 2.8%
CHILE 1.3%
Citibank Time Deposit (with Chilean Peso
indexation and interest based on the
Chilean denominated deposit), 11.55%,
Due 11/12/97 1,500,000 USD 1,491,103
19
<PAGE>
SCHEDULES OF INVESTMENTS IN SECURITIES (continued) October 31, 1997
- --------------------------------------------------------------------------------
================================================================================
STRONG SHORT-TERM GLOBAL BOND FUND (continued)
================================================================================
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
EL SALVADOR 1.5%
Citibank Time Deposit (with El Salvador Colon
indexation and interest based on the El
Salvador denominated deposit), 9.00%,
Due 11/20/97 1,750,000 USD $ 1,749,001
------------
Total Time Deposits 3,240,104
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (COST $21,665,321) 18,931,567
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES (COST $115,529,176) 96.0% 111,047,109
Other Assets & Liabilities, Net 4.0% 4,677,312
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $115,724,421
- --------------------------------------------------------------------------------
FUTURES
- --------------------------------------------------------------------------------
Underlying Unrealized
Expiration Face Amount Appreciation
Date at Value (Depreciation)
- --------------------------------------------------------------------------------
Purchased:
5 Ten-Year French Government Bonds 12/97 $ 429,899 $ 695
17 Ten-Year German Government Bonds 12/97 2,538,987 23,212
24 Ten-Year Italian Government Bonds 12/97 3,169,051 95,382
3 Ten-Year United Kingdom
Government Bonds 12/97 298,619 11,633
12 Five-Year U.S. Treasury Notes 12/97 1,300,875 23,063
1 Ten-Year U.S. Treasury Notes 12/97 111,750 (188)
Sold:
9 Ten-Year Australian
Government Bonds 12/97 (919,373) (33,035)
7 U.S. Treasury Bonds 12/97 (829,281) (43,094)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
- --------------------------------------------------------------------------------
Unrealized
Settlement Value Appreciation
Date in USD (Depreciation)
- --------------------------------------------------------------------------------
Purchased:
1,168,022 AUD 2/12/98 $ 820,922 ($ 59,475)
Sold:
(6,680,000) AUD 8/12/98 (4,718,284) (2,204)
(7,204,375) DEM 11/12/97 (4,181,918) (163,325)
(858,125) DEM 5/04/98 (502,726) 1,579
(3,300,000) DKK 11/12/97 (503,341) (34,231)
(6,500,000) FRF 2/12/98 (1,132,265) (18,355)
(850,000) GBP 11/12/97 (1,421,261) (79,766)
(6,000,000,000) IDR 12/09/97 (1,659,109) 714,779
(7,000,000,000) IDR 3/19/98 (1,870,124) 885,781
(6,000,000,000) IDR 3/20/98 (1,602,421) 758,854
(10,000,000,000) IDR 4/26/99 (4,118,616) --
(3,100,000) NZD 2/12/98 (1,916,060) 32,290
(16,342,956) SEK 11/12/97 (2,175,988) (53,001)
- --------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION
- --------------------------------------------------------------------------------
Percentage of Net Assets
- --------------------------------------------------------------------------------
Foreign Government .....................................25.0%
Non-Agency Single-Family ...............................18.7
Foreign Corporate ......................................11.0
FNMA ................................................... 8.0
Non-Agency Asset-Backed ................................ 5.2
Bank - Money Center .................................... 4.8
FHLMC .................................................. 3.1
Paper & Forest Products ................................ 3.1
Non-Agency Commercial .................................. 2.6
Oil - International Integrated ......................... 2.5
Transportation Service ................................. 2.5
Finance - Miscellaneous ................................ 2.0
Telecommunication Service .............................. 1.2
U.S. Government ........................................ 1.1
Savings & Loan ......................................... 1.0
Airline ................................................ 0.9
Electronic Products - Miscellaneous .................... 0.8
Metal Products & Fabrication ........................... 0.8
Diversified Operations ................................. 0.4
Media - Radio/TV ....................................... 0.4
Non-Agency Manufactured Housing ........................ 0.4
Steel .................................................. 0.4
Bank - Super Regional .................................. 0.1
Other Assets and Liabilities, Net ...................... 4.0
- --------------------------------------------------------------------------------
Total 100.0%
- --------------------------------------------------------------------------------
CURRENCY ABBREVIATIONS
- --------------------------------------------------------------------------------
AUD Australian Dollar
CAD Canadian Dollar
COP Columbian Peso
DEM German Mark
DKK Danish Krona
ESP Spanish Peseta
FIM Finish Mark
FRF French Franc
GBP British Pound
IDR Indonesian Rupiah
IEP Irish Punt
ITL Italian Lira
JPY Japanese Yen
NZD New Zealand Dollar
SEK Swedish Krona
THB Thailand Baht
USD United States Dollar
LEGEND
- --------------------------------------------------------------------------------
(a) Short-term investments include any security which has a maturity of less
than one year.
(b) Non-income producing security.
(c) All or a portion of security pledged to cover margin requirements for
futures contracts.
(d) Restricted security.
Percentages are stated as a percent of net assets.
See notes to financial statements.
20
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
October 31, 1997 (In Thousands, Except Per Share Amounts)
<CAPTION>
STRONG ASIA STRONG INTERNATIONAL
PACIFIC FUND STOCK FUND
------------ --------------------
ASSETS:
<S> <C> <C>
Investments in Securities, at Value (Cost of $39,506 and $210,165, respectively) $27,933 $176,962
Receivable for Securities and Forward Foreign Currency Contracts Sold 976 6,785
Receivable for Fund Shares Sold 1 --
Dividends and Interest Receivable 72 425
Cash 1,988 1,782
Other Assets 36 15
------- --------
Total Assets 31,006 185,969
LIABILITIES:
Payable for Securities Purchased 307 4,485
Payable for Fund Shares Redeemed 536 1,106
Accrued Operating Expenses and Other Liabilities 77 272
------- --------
Total Liabilities 920 5,863
------- --------
NET ASSETS $30,086 $180,106
======= ========
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $44,460 $206,643
Undistributed Net Investment Income 121 2,188
Undistributed Net Realized Gain (Loss) (3,011) 3,999
Net Unrealized Depreciation (11,484) (32,724)
------- --------
Net Assets $30,086 $180,106
======= ========
Capital Shares Outstanding (Unlimited Number Authorized) 4,091 15,019
NET ASSET VALUE PER SHARE $7.35 $11.99
===== ======
STRONG INTERNATIONAL STRONG SHORT-TERM
BOND FUND GLOBAL BOND FUND
-------------------- -----------------
ASSETS:
Investments in Securities, at Value (Cost of $27,407 and $115,529, respectively) $25,292 $111,047
Receivable for Securities and Forward Foreign Currency Contracts Sold 2,401 9,020
Receivable for Fund Shares Sold 4 6
Interest Receivable 662 1,727
Other Assets 1,018 2,362
------- --------
Total Assets 29,377 124,162
LIABILITIES:
Payable for Securities Purchased 475 7,359
Payable for Fund Shares Redeemed 610 168
Dividends Payable -- 815
Accrued Operating Expenses and Other Liabilities 88 96
------- --------
Total Liabilities 1,173 8,438
------- --------
NET ASSETS $28,204 $115,724
======= ========
NET ASSETS CONSIST OF:
Capital Stock (par value and paid-in capital) $27,275 $117,063
Undistributed Net Investment Income 331 281
Undistributed Net Realized Gain 588 798
Net Unrealized Appreciation (Depreciation) 10 (2,418)
------- --------
Net Assets $28,204 $115,724
======= ========
Capital Shares Outstanding (Unlimited Number Authorized) 2,436 11,041
NET ASSET VALUE PER SHARE $11.58 $10.48
===== ======
See notes to financial statements.
21
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
For the Year Ended October 31, 1997 (In Thousands)
<CAPTION>
STRONG ASIA STRONG INTERNATIONAL
PACIFIC FUND STOCK FUND
------------ --------------------
INCOME:
<S> <C> <C>
Dividends (net of witholding taxes of $105 and $500, respectively) $ 793 $ 5,068
Interest 381 978
------ -------
Total Income 1,174 6,046
EXPENSES:
Investment Advisory Fees 568 2,819
Custodian Fees 220 539
Shareholder Servicing Costs 258 880
Other 120 274
------ -------
Total Expenses before Waivers and Absorptions 1,166 4,512
Involuntary Expense Waivers and Absorptions by Advisor (30) __
------ -------
Expenses, Net 1,136 4,512
------ -------
NET INVESTMENT INCOME 38 1,534
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments (2,895) 6,138
Forward Foreign Currency Contracts 392 4,294
Foreign Currencies (15) (99)
------ -------
Net Realized Gain (Loss) (2,518) 10,333
Change in Unrealized Appreciation/Depreciation on:
Investments (5,655) (16,851)
Futures Contracts, Options and Forward Foreign Currency Contracts 270 874
Foreign Currencies (163) (111)
------ -------
Change in Unrealized Appreciation/Depreciation (5,548) (16,088)
------ -------
NET LOSS (8,066) (5,755)
------ -------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ($8,028) ($ 4,221)
====== =======
STRONG INTERNATIONAL STRONG SHORT-TERM
BOND FUND GLOBAL BOND FUND
-------------------- -----------------
INCOME:
Interest $2,715 $7,311
Dividends (net of withholding taxes of $1 and $29, respectively) 54 115
------ ------
Total Income 2,769 7,426
EXPENSES:
Investment Advisory Fees 222 564
Custodian Fees 80 91
Shareholder Servicing Costs 102 156
Other 79 105
------ ------
Total Expenses before Waivers and Absorptions 483 916
Voluntary Expense Waivers and Absorptions by Advisor (259) (276)
------ ------
Expenses, Net 224 640
------ ------
NET INVESTMENT INCOME 2,545 6,786
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Gain (Loss) on:
Investments 361 340
Futures Contracts, Options and Forward Foreign Currency Contracts (2,359) 1,867
Foreign Currencies (18) (65)
------ ------
Net Realized Gain (Loss) (2,016) 2,142
Change in Unrealized Appreciation/Depreciation on:
Investments (3,029) (5,547)
Futures Contracts, Options and Forward Foreign Currency Contracts 2,168 1,993
Foreign Currencies (21) 3
------ ------
Change in Unrealized Appreciation/Depreciation (882) (3,551)
------ ------
NET LOSS (2,898) (1,409)
------ ------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ($ 353) $5,377
====== ======
</TABLE>
See notes to financial statements.
22
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
For the years ended October 31, 1997 and October 31, 1996 (In Thousands)
<CAPTION>
STRONG ASIA STRONG INTERNATIONAL
PACIFIC FUND STOCK FUND
------------------------- ------------------------
1997 1996 1997 1996
-------- -------- -------- --------
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income $ 38 $ 125 $ 1,534 $ 1,844
Net Realized Gain (Loss) (2,518) 4,172 10,333 26,382
Change in Unrealized Appreciation/Depreciation (5,548) (2,446) (16,088) (9,644)
-------- -------- -------- --------
Increase (Decrease) in Net Assets Resulting from Operations (8,028) 1,851 (4,221) 18,582
DISTRIBUTIONS:
From Net Investment Income (39) (125) (1,534) (1,929)
In Excess of Net Investment Income (181) (2,584) (3,812) (8,449)
From Net Realized Gains (749) -- (17,009) --
In Excess of Net Realized Gains (117) -- -- --
-------- -------- -------- --------
Total Distributions (1,086) (2,709) (22,355) (10,378)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 70,733 134,865 189,644 288,061
Proceeds from Reinvestment of Dividends 1,050 2,633 21,807 10,102
Payment for Shares Redeemed (104,622) (119,249) (308,666) (213,875)
-------- -------- -------- --------
Increase (Decrease) in Net Assets from Capital Share Transactions (32,839) 18,249 (97,215) 84,288
-------- -------- -------- --------
TOTAL INCREASE (DECREASE) IN NET ASSETS (41,953) 17,391 (123,791) 92,492
NET ASSETS:
Beginning of Period 72,039 54,648 303,897 211,405
-------- -------- -------- --------
End of Period $ 30,086 $ 72,039 $180,106 $303,897
======== ======== ======== ========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 7,557 13,443 13,682 20,236
Issued in Reinvestment of Distributions 110 266 1,630 725
Redeemed (11,147) (11,861) (22,390) (15,083)
------ ------ ------ ------
Increase (Decrease) in Shares of the Fund (3,480) 1,848 (7,078) 5,878
====== ====== ====== ======
STRONG INTERNATIONAL STRONG SHORT-TERM
BOND FUND GLOBAL BOND FUND
----------------------- -----------------------
1997 1996 1997 1996
------- ------- -------- -------
OPERATIONS:
Net Investment Income $ 2,545 $ 2,021 $ 6,786 $ 2,826
Net Realized Gain (Loss) (2,016) (213) 2,142 190
Change in Unrealized Appreciation/Depreciation (882) 444 (3,551) 917
------- ------- -------- -------
Increase (Decrease) in Net Assets Resulting from Operations (353) 2,252 5,377 3,933
DISTRIBUTIONS:
From Net Investment Income (585) (1,116) (7,236) (2,683)
In Excess of Net Investment Income -- -- (1,002) --
From Net Realized Gains -- (137) -- --
In Excess of Net Realized Gains (42) -- -- --
------- ------- -------- -------
Total Distributions (627) (1,253) (8,238) (2,683)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 25,686 31,035 147,712 79,731
Proceeds from Reinvestment of Dividends 589 1,203 6,904 2,465
Payment for Shares Redeemed (28,190) (23,473) (106,904) (37,744)
------- ------- -------- -------
Increase (Decrease) in Net Assets from Capital Share Transactions (1,915) 8,765 47,712 44,452
------- ------- -------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS (2,895) 9,764 44,851 45,702
NET ASSETS:
Beginning of Period 31,099 21,335 70,873 25,171
------- ------- -------- -------
End of Period $28,204 $31,099 $115,724 $70,873
======= ======= ======== =======
TRANSACTIONS IN SHARES OF THE FUND:
Sold 2,239 2,700 13,724 7,520
Issued in Reinvestment of Distributions 50 105 647 234
Redeemed (2,472) (2,045) (9,933) (3,559)
----- ----- ------ -----
Increase (Decrease) in Shares of the Fund (183) 760 4,438 4,195
===== ===== ====== =====
See notes to financial statements.
23
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
October 31, 1997
1. ORGANIZATION
The Strong International Funds ("The Funds") consist of Strong Asia Pacific
Fund, Inc.*, Strong International Stock Fund, Inc.*, Strong International
Bond Fund, Inc.** and Strong Short-Term Global Bond Fund, Inc.** The Funds
are separately incorporated, diversified and non-diversified, open-end
management investment companies registered under the Investment Company Act
of 1940.
* Diversified
** Non-Diversified
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.
(A) Security Valuation-- Portfolio securities traded primarily on a
principal securities exchange are valued at the last reported sales
price, or the mean between the latest bid and asked prices where no
last sales price is available. Securities traded over-the-counter are
valued at either the mean of the latest bid and asked prices or at the
latest reported sales price, depending on local convention or
regulation. Securities for which market quotations are not readily
available, when held by the Funds, are valued at fair value as
determined in good faith under consistently applied procedures
established by and under the general supervision of the Board of
Directors. Securities which are purchased within 60 days of their
stated maturity are valued at amortized cost, which approximates
current value.
The Funds may own certain investment securities which are restricted
as to resale. These securities are valued after giving due
consideration to pertinent factors including recent private sales,
market conditions and the issuer's financial performance. The Funds
generally bear the costs, if any, associated with the disposition of
restricted securities. Aggregate cost and fair value of these
restricted securities held at October 31, 1997 were as follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE PERCENT OF
COST FAIR VALUE NET ASSETS LIQUID*
----------- ----------- ---------- --------
<S> <C> <C> <C> <C>
Strong Asia Pacific Fund $ 1,439,202 $ 1,500,232 5.0% 100.0%
Strong International Stock Fund 11,827,879 11,284,612 6.3% 94.4%
Strong International Bond Fund 3,059,252 3,018,502 10.7% 80.2%
Strong Short-Term Global Bond Fund 22,749,825 22,120,422 19.1% 93.7%
*Of these securities, which are restricted from resale, the above percentage is eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 and also has been determined to be liquid by the Advisor based upon
guidelines established by the Funds' Board of Directors.
</TABLE>
(B) Federal Income and Excise Taxes and Distributions to Shareholders --
It is the Funds' policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of their taxable income to their
shareholders in a manner which results in no tax cost to the Funds.
Therefore, no Federal income or excise tax provision is required.
The character of distributions made during the year from net
investment income or net realized gains may differ from the
characterization for federal income tax purposes due to differences in
the recognition of income and expense items for financial statement
and tax purposes. Where appropriate, reclassifications between net
asset accounts are made for such differences that are permanent in
nature.
(C) Realized Gains and Losses on Investment Transactions -- Gains or
losses realized on investment transactions are determined by comparing
the identified cost of the security lot sold with the net sales
proceeds.
(D) Futures -- Upon entering into a futures contract, the Funds pledge to
the broker cash or other investments equal to the minimum "initial
margin" requirements of the exchange. The Funds also receive from or
pay to the broker an amount of cash equal to the daily fluctuation in
the value of the contract. Such receipts or payments are known as
"variation margin," and are recorded as unrealized gains or losses.
When the futures contract is closed, a realized gain or loss is
recorded equal to the difference between the value of the contract at
the time it was opened and the value at the time it was closed.
(E) Options -- Premiums received by the Funds upon writing put or call
options are recorded as an asset with a corresponding liability which
is subsequently adjusted to the current market value of the option.
When an option expires, is exercised, or is closed, the Funds realize
a gain or loss, and the liability is eliminated. The Funds continue to
bear the risk of adverse movements in the price of the underlying
asset during the period of the option, although any potential loss
during the period would be reduced by the amount of the option premium
received.
24
<PAGE>
- --------------------------------------------------------------------------------
(F) Foreign Currency Translation -- Investment securities and other assets
and liabilities initially expressed in foreign currencies are
converted to U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income are converted to
U.S. dollars based upon currency exchange rates prevailing on the
respective dates of such transactions. The effect of changes in
foreign exchange rates on realized and unrealized security gains or
losses is reflected as a component of such gains or losses.
(G) Forward Foreign Currency Exchange Contracts -- Forward foreign
currency exchange contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the Funds record
an exchange gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
(H) Additional Investment Risks -- The Funds may utilize derivative
instruments including options, futures and other instruments with
similar characteristics to the extent that they are consistent with
the Fund's investment objectives and limitations. The Funds intend to
use such derivative instruments primarily to hedge or protect from
adverse movements in securities prices or interest rates. The use of
these instruments may involve risks such as the possibility of
illiquid markets or imperfect correlation between the value of the
instruments and the underlying securities, or that the counterparty
will fail to perform its obligations.
Foreign denominated assets and forward currency contracts may involve
greater risks than domestic transactions, including currency,
political and economic, regulatory and market risks.
(I) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the
reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ
from those estimates.
(J) Other -- Investment security transactions are recorded as of the trade
date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of premiums and discounts.
3. RELATED PARTY TRANSACTIONS
Strong Capital Management, Inc. (the "Advisor"), with whom certain officers
and directors of the Funds are affiliated, provides investment advisory
services and shareholder recordkeeping and related services to the Funds.
Investment advisory fees, which are established by terms of the Advisory
Agreements, are based on the following annualized rates of the average
daily net assets: Strong Asia Pacific Fund and Strong International Stock
Fund 1.00%, Strong International Bond Fund 0.70%, and Strong Short-Term
Global Bond Fund 0.625%. Advisory fees are subject to reimbursement by the
Advisor if a Fund's operating expenses exceed certain levels. Shareholder
recordkeeping and related service fees are based on contractually
established rates for each open and closed shareholder account. In
addition, the Advisor is compensated for certain other services related to
costs incurred for reports to shareholders.
The Funds may invest cash reserves in money market funds sponsored and
managed by the Advisor, subject to certain limitations. The terms of such
transactions are identical to those of non-related entities except that, to
avoid duplicate investment advisory fees, advisory fees of each Fund
invested in such money market funds are reduced by an amount equal to
advisory fees paid to the Advisor under its investment advisory agreements
with the money market funds.
Certain information regarding related party transactions for the year ended
October 31, 1997 is as follows:
<TABLE>
<CAPTION>
OTHER SHAREHOLDER
PAYABLE TO SERVICING UNAFFILIATED
ADVISOR AT EXPENSES PAID DIRECTORS'
OCTOBER 31, 1997 TO ADVISOR FEES
---------------- ----------------- ------------
<S> <C> <C> <C>
Strong Asia Pacific Fund $18,658 $2,790 $1,352
Strong International Stock Fund 12,787 8,229 4,768
Strong International Bond Fund 52,371 1,038 1,244
Strong Short-Term Global Bond Fund 50,974 1,557 1,495
</TABLE>
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
October 31, 1997
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the year
ended October 31, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------------------------- --------------------------------
U.S. GOVERNMENT U.S. GOVERNMENT
AND AGENCY OTHER AND AGENCY OTHER
--------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Strong Asia Pacific Fund $ ___ $ 45,953,349 $ ___ $ 77,777,538
Strong International Stock Fund ___ 367,798,863 ___ 472,402,604
Strong International Bond Fund 257,891 45,322,023 1,257,878 48,252,541
Strong Short-Term Global Bond Fund 13,061,015 148,247,410 7,935,969 100,765,241
</TABLE>
5. INCOME TAX INFORMATION
At October 31, 1997, the investment cost, gross unrealized appreciation and
depreciation on investments and capital loss carryovers for federal income
tax purposes were as follows:
<TABLE>
<CAPTION>
FEDERAL TAX UNREALIZED UNREALIZED NET NET CAPITAL LOSS
COST APPRECIATION DEPRECIATION DEPRECIATION CARRYOVERS
------------ ------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
Strong Asia Pacific Fund $ 39,522,593 $1,009,352 ($12,598,760) ($11,589,408) $3,279,010
Strong International Stock Fund 210,426,796 8,884,648 (42,349,277) (33,464,629) ___
Strong International Bond Fund 27,407,111 381,009 (2,495,836) (2,114,827) ___
Strong Short-Term Global Bond Fund 115,529,729 631,830 (5,114,450) (4,482,620) ___
</TABLE>
Capital loss carryovers expire in varying amounts through 2005.
For corporate shareholders in the Funds, the percentages of dividend income
distributed for the year ended October 31, 1997, which are designated as
qualifying for the dividends-received deduction are Strong Asia Pacific
Fund 0.0%, Strong International Stock Fund 0.0%, Strong International Bond
Fund 9.0%, and Strong Short-Term Global Bond Fund 1.6%.
<TABLE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG ASIA PACIFIC FUND
- ------------------------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA (a)
---------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------- ---------------------------------------------------------
<CAPTION>
Net Realized
Net Asset and Unrealized Total In Excess In Excess Net Asset
Value, Net Gains from From Net of Net From Net of Net Value,
Beginning Investment (Losses) on Investment Investment Investment Realized Realized Total End of
of Period Income Investments Operations Income Income Gains Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 $ 9.51 $0.01 ($2.01) ($2.00) ($0.01) ($0.03) ($0.10) ($0.02) ($0.16) $7.35
Oct. 31, 1996 9.55 0.06 0.31 0.37 (0.06) (0.35) __ __ (0.41) 9.51
Oct. 31, 1995 (c) 9.35 0.04 0.20 0.24 (0.03) (0.01) __ __ (0.04) 9.55
Dec. 31, 1994 10.00 0.05 (0.57) (0.52) (0.01) __ __ (0.12) (0.13) 9.35
</TABLE>
<TABLE>
STRONG ASIA PACIFIC FUND (continued)
- -------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
<CAPTION>
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Return Millions) Net Assets Net Assets Rate Paid (b)
<S> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 -21.5% $30 2.0% 0.1% 96.7% $0.0073
Oct. 31, 1996 +3.8% 72 2.3% 0.2% 91.4% 0.0104
Oct. 31, 1995 (c) +2.6% 55 2.0%* 0.5%* 104.3%
Dec. 31, 1994 -5.3% 58 2.0% 0.6% 103.3%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
(c) In 1995, the Fund changed its fiscal year end from December to October.
Total return and portfolio turnover rate are not annualized.
26
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
STRONG INTERNATIONAL STOCK FUND
- ------------------------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA (a)
---------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------- --------------------------------------------------------
<CAPTION>
Net Realized
Net Asset and Unrealized Total In Excess In Excess Net Asset
Value, Net Gains from From Net of Net From Net of Net Value,
Beginning Investment (Losses) on Investment Investment Investment Realized Realized Total End of
of Period Income Investments Operations Income Income Gains Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 $13.75 $0.01 ($0.69) ($0.68) ($0.01) ($0.26) ($0.81) __ ($1.08) $11.99
Oct. 31, 1996 13.03 0.17 1.11 1.28 (0.18) (0.38) __ __ (0.56) 13.75
Oct. 31, 1995 (c) 12.65 0.08 0.37 0.45 (0.07) __ __ __ (0.07) 13.03
Dec. 31, 1994 14.18 0.06 (0.27) (0.21) (0.01) __ (1.25) ($0.06) (1.32) 12.65
Dec. 31, 1993 9.77 __ 4.66 4.66 __ (0.02) (0.23) __ (0.25) 14.18
Dec. 31, 1992 (d) 10.00 0.05 (0.23) (0.18) (0.05) __ __ __ (0.05) 9.77
</TABLE>
<TABLE>
STRONG INTERNATIONAL STOCK FUND (continued)
- -------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
------------------------------------------------------------------
<CAPTION>
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Return Millions) Net Assets Net Assets Rate Paid (b)
<S> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 -5.7% $180 1.6% 0.5% 143.7% $0.0023
Oct. 31, 1996 +9.8% 304 1.7% 0.6% 108.6% 0.0166
Oct. 31, 1995 (c) +3.6% 211 1.8%* 0.8%* 102.0%
Dec. 31, 1994 -1.6% 258 1.7% 0.3% 136.5%
Dec. 31, 1993 +47.8% 128 1.9% (0.3%) 139.9%
Dec. 31, 1992 (d) -1.8% 13 2.0%* 0.8%* 20.8%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) Disclosure required, effective for reporting periods beginning after
September 1, 1995.
(c) In 1995, the Fund changed its fiscal year end from December to October.
Total return and portfolio turnover rate are not annualized.
(d) Inception date is March 4, 1992. Total return and portfolio turnover rate
are not annualized.
<TABLE>
STRONG INTERNATIONAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA (a)
---------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------- --------------------------------------------------------
<CAPTION>
Net Realized
Net Asset and Unrealized Total In Excess In Excess Net Asset
Value, Net Gains from From Net of Net From Net of Net Value,
Beginning Investment (Losses) on Investment Investment Investment Realized Realized Total End of
of Period Income Investments Operations Income Income Gains Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 $11.87 $1.03 ($1.11) ($0.08) ($0.20) __ __ ($0.01) ($0.21) $11.58
Oct. 31, 1996 11.48 0.80 0.15 0.95 (0.50) __ ($0.06) __ (0.56) 11.87
Oct. 31, 1995 (b) 10.36 0.78 1.00 1.78 (0.66) __ __ __ (0.66) 11.48
Dec. 31, 1994 (c) 10.00 0.46 0.40 0.86 (0.46) ($0.02) __ (0.02) (0.50) 10.36
</TABLE>
<TABLE>
STRONG INTERNATIONAL BOND FUND (continued)
- ---------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------
<CAPTION>
Net Ratio of Expenses Ratio of Net
Assets, Ratio of to Average Net Investment
End of Expenses Assets Without Income Portfolio
Total Period (In to Average Waivers and to Average Turnover
Return Millions) Net Assets Absorptions Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 -0.7% $28 0.7% 1.5% 8.1% 208.4%
Oct. 31, 1996 +8.6% 31 0.0% 1.8% 7.4% 258.3%
Oct. 31, 1995 (b) +17.3% 21 0.0%* 2.0%* 8.3%* 473.3%
Dec. 31, 1994 (c) +8.7% 10 0.0%* 2.0%* 7.9%* 679.3%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) In 1995, the Fund changed its fiscal year end from December to October.
Total return and portfolio turnover rate are not annualized.
(c) Inception date is March 31, 1994. Total return and portfolio turnover rate
are not annualized.
<TABLE>
STRONG SHORT-TERM GLOBAL BOND FUND
- -------------------------------------------------------------------------------------------------------------------------------
SELECTED PER-SHARE DATA (a)
----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
------------------------------------- --------------------------------------------------
<CAPTION>
Net
Net Asset Realized and Total In Excess In Excess Net Asset
Value, Net Unrealized from From Net of Net of Net Value,
Beginning Investment Gains on Investment Investment Investment Realized Total End of
of Period Income Investments Operations Income Income Gains Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 $10.74 $0.81 ($0.10) $0.71 ($0.85) ($0.12) __ ($0.97) $10.48
Oct. 31, 1996 10.46 0.71 0.34 1.05 (0.77) __ __ (0.77) 10.74
Oct. 31, 1995 (b) 10.15 0.65 0.20 0.85 (0.54) __ __ (0.54) 10.46
Dec. 31, 1994 (c) 10.00 0.35 0.16 0.51 (0.35) __ ($0.01) (0.36) 10.15
</TABLE>
<TABLE>
STRONG SHORT-TERM GLOBAL BOND FUND (continued)
- ---------------------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------
<CAPTION>
Net Ratio of Expenses Ratio of Net
Assets, Ratio of to Average Net Investment
End of Expenses Assets Without Income Portfolio
Total Period (In to Average Waivers and to Average Turnover
Return Millions) Net Assets Absorptions Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Oct. 31, 1997 +6.8% $116 0.7% 1.0% 7.6% 168.0%
Oct. 31, 1996 +10.4% 71 0.0% 1.5% 7.4% 179.7%
Oct. 31, 1995 (b) +8.5% 25 0.0%* 2.0%* 8.2%* 437.3%
Dec. 31, 1994 (c) +5.1% 20 0.0%* 1.7%* 7.7%* 287.8%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) In 1995, the Fund changed its fiscal year end from December to October.
Total return and portfolio turnover rate are not annualized.
(c) Inception date is March 31, 1994. Total return and portfolio turnover rate
are not annualized.
27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of the
Strong International Funds
We have audited the accompanying statements of assets and liabilities of Strong
Short-Term Global Bond Fund, Inc., Strong International Bond Fund, Inc., Strong
International Stock Fund, Inc. and Strong Asia Pacific Fund, Inc., (collectively
referred to herein as the "Strong International Funds"), including the schedules
of investments in securities, as of October 31, 1997, and the related statements
of operations for the year then ended, the statements of changes in net assets
for the years ended October 31, 1997 and 1996, and the financial highlights for
each of the periods indicated. These financial statements and financial
highlights are the responsibility of the Strong International Funds' management.
Our responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Strong International Funds as of October 31, 1997, the results of their
operations for the year ended, the changes in their net assets for each of the
two years in the period then ended, and the financial highlights for each of the
periods indicated, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
December 9, 1997
28
<PAGE>
DIRECTORS
Richard S. Strong
Willie D. Davis
Stanley Kritzik
Marvin E. Nevins
William F. Vogt
OFFICERS
Richard S. Strong, Chairman of the Board
Lawrence A. Totsky, Vice President
Thomas P. Lemke, Vice President
John S. Weitzer, Vice President
Stephen J. Shenkenberg, Vice President and Secretary
John A. Flanagan, Treasurer
INVESTMENT ADVISOR
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
DISTRIBUTOR
Strong Funds Distributors, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
CUSTODIAN
Brown Brothers Harriman & Company
40 Water Street, Boston, Massachusetts 02109
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
AUDITOR
Coopers & Lybrand L.L.P.
411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street, Milwaukee, Wisconsin 53202
<PAGE>
For a prospectus containing more complete information, including management fees
and expenses, please call 1-800-368-1030. Please read it carefully before
investing or sending money. This report does not constitute an offer for the
sale of securities. Strong Funds are offered for sale by prospectus only.
[PICTURE OF TELEPHONE]
To order a free prospectus kit,
CALL 1-800-368-1030.
To learn more about our funds,
discuss an existing account,
or conduct a transaction,
CALL 1-800-368-3863.
--------------------
If you are a
Financial Professional,
CALL 1-800-368-1683
[PICTURE OF STRONG WEB SITE ON COMPUTER]
Strong On-line
www.strong-funds.com
[STRONG LOGO]
STRONG FUNDS
P.O. Box 2936 o Milwaukee, Wisconsin 53201
Strong Funds Distributors, Inc. 6682L97 97AINT
