STRONG SHORT TERM GLOBAL BOND FUND INC, 485APOS, 1995-02-24

STRONG SHORT TERM GLOBAL BOND FUND INC
485APOS, 1995-02-24

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<PAGE> 1

As filed with the Securities and Exchange Commission on or about
February 24, 1995.

Securities Act Registration No. 33-74580
Investment Company Act Registration No. 811-8320

SECURITIES AND EXCHANGE COMMISSION
Washington D.C.

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]

Pre-Effective Amendment No. _______ [ ]

Post-Effective Amendment No. 3 [X]
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]

Amendment No. 4 [X]
(Check appropriate box or boxes)

STRONG SHORT-TERM GLOBAL BOND FUND, INC.
(Exact Name of Registrant as Specified in Charter)

100 HERITAGE RESERVE
MENOMONEE FALLS, WISCONSIN 53051
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (414) 359-3400

THOMAS P. LEMKE
STRONG CAPITAL MANAGEMENT, INC.
100 HERITAGE RESERVE
MENOMONEE FALLS, WISCONSIN 53051
(Name and Address of Agent for Service)

Copies to

ROBERT A. WITTIE
KIRKPATRICK & LOCKHART
1800 M STREET, N.W.
WASHINGTON, D.C. 20036

Registrant has registered an indefinite amount of securities pursuant
to Rule 24f-2 under the Securities Act of 1933; the Registrant's Rule 24f-2
Notice for the fiscal year ended December 31, 1994 was filed on or about
January 27, 1995.

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

[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[X] on May 1, 1995 pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE> 2

STRONG SHORT-TERM GLOBAL BOND FUND, INC.

CROSS REFERENCE SHEET

(Pursuant to Rule 481 showing the location in the Prospectus and the
Statement of Additional Information of the responses to the Items of Parts A
and B of Form N-1A.)

<TABLE>
<CAPTION>
CAPTION OR SUBHEADING IN PROSPECTUS OR
ITEM NO. ON FORM N-1A STATEMENT OF ADDITIONAL INFORMATION
--------------------- -----------------------------------
<S> <C>
PART A - INFORMATION REQUIRED IN PROSPECTUS

1. Cover Page Cover Page

2. Synopsis Expenses; Highlights

3. Condensed Financial Information Financial Highlights

4. General Description of Registrant Strong International Income Funds; Investment
Objectives and Policies; Fundamentals of Fixed
Income Investing; Implementation of Policies and
Risks; About the Funds - Organization

5. Management of the Fund About the Funds - Management; Financial
Highlights

5A. Management's Discussion of Fund Performance *

6. Capital Stock and Other Securities About the Funds - Organization, - Distributions
and Taxes; Shareholders Manual - Shareholder
Services

7. Purchase of Securities Being Offered Shareholder Manual - How to Buy Shares, -
Determining Your Share Price, - Shareholder
Services

8. Redemption or Repurchase Shareholder Manual - How to Sell Shares, -
Determining Your Share Price, - Shareholder
Services

9. Pending Legal Proceedings Inapplicable

PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL
INFORMATION

10. Cover Page Cover page

11. Table of Contents Table of Contents

12. General Information and History **

13. Investment Objectives and Policies Investment Restrictions; Investment Policies and
Techniques

14. Management of the Fund Directors and Officers of the Fund

15. Control Persons and Principal Holders of Securities Principal Shareholder; Directors and Officers of
the Fund; Investment Advisor and Distributor

16. Investment Advisory and Other Services Investment Advisor and Distributor; About the
Funds - Management (in Prospectus); Custodian;
Transfer Agent and Dividend-Disbursing Agent;
Independent Accountants
</TABLE>

2
<PAGE> 3

18. Capital Stock and Other Securities Included in Prospectus under the heading About
the Funds - Organization and in the Statement of
Additional Information under the heading
Shareholder Meetings

19. Purchase, Redemption and Pricing of Securities Being Included in Prospectus under the headings:
Offered Shareholder Manual - How to Buy Shares, -
Determining Your Share Price, - How to Sell
Shares, - Shareholder Services; and in the
Statement of Additional information under the
headings: Shareholder Services; Investment
Advisor and Distributor; and Determination of
Net Asset Value

20. Tax Status Included in Prospectus under the heading About
the Funds - Distributions and Taxes; and in the
Statement of Additional Information under the
heading Taxes

21. Underwriters Investment Advisor and Distributor

22. Calculation of Performance Data Performance Information

23. Financial Statements Financial Statements
</TABLE>

* Complete answer to Item is contained in Registrant's Annual Report.
** Complete answer to Item is contained in Registrant's Prospectus.

3
<PAGE> 4

<PAGE> 1

Dated May 1, 1995

STRONG INTERNATIONAL INCOME FUNDS

STRONG SHORT-TERM GLOBAL BOND FUND, INC. STRONG FUNDS
STRONG INTERNATIONAL BOND FUND, INC. P.O. Box 2936
Milwaukee, Wisconsin 53201
Telephone: (414) 359-1400
Toll-Free: (800) 368-3863
Device for the Hearing Impaired:
(800) 999-2780

The Strong Family of Funds ("Strong Funds") is a family of twenty-four
separately incorporated, diversified and non-diversified, open-end management
investment companies, commonly called mutual funds. All of the Strong Funds are
no-load funds. There are no sales charges, redemption fees, or 12b-1 fees. The
Strong Funds include growth funds, growth and income funds, income funds,
municipal income funds, and money market. Two of these funds, the "Strong
International Income Funds," are described in this Prospectus.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

This Prospectus contains information you should consider before investing.
Please read it carefully and keep it for future reference. A Statement of
Additional Information for the Funds dated May 1, 1995, which contains further
information and is incorporated by reference into this Prospectus, has been
filed with the Securities and Exchange Commission ("SEC"). That Statement,
which may be revised from time to time, is available without charge upon
request to the above-noted address or telephone number.

<PAGE> 2

STRONG INTERNATIONAL INCOME FUNDS

Strong Short-Term Global Bond Fund, Inc. and Strong International Bond Fund,
Inc. (collectively, the "Funds" or the "International Income Funds") are
separately incorporated, non-diversified, open-end management investment
companies.

STRONG SHORT-TERM GLOBAL BOND FUND (the "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 bonds
of U.S. and foreign issuers. It will normally pay dividends quarterly and have
a dollar-weighted average effective maturity of three years or less.

STRONG INTERNATIONAL BOND FUND (the "International Bond Fund") seeks high total
return by investing for both income and capital appreciation. The Fund invests
primarily in investment-grade bonds of foreign issuers.

TABLE OF CONTENTS

<TABLE>
<S> <C>
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . 0

FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . 0

HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . 0

INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . 0

Comparing the Funds . . . . . . . . . . . . . 0
Strong Short-Term Global Bond Fund . . . . . . 0
Strong International Bond Fund . . . . . . . . 0

FUNDAMENTALS OF FIXED INCOME INVESTING . . . . . . . . . 0

IMPLEMENTATION OF POLICIES AND RISKS . . . . . . . . . . 0

ABOUT THE FUNDS . . . . . . . . . . . . . . . . . . . . 0

SHAREHOLDER MANUAL . . . . . . . . . . . . . . . . . . . 0

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . 0
</TABLE>

No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and the Statement
of Additional Information, and if given or made, such information or
representations may not be relied upon as having been authorized by the Strong
International Income Funds. This Prospectus does not constitute an offer to
sell securities in any state or jurisdiction in which such offering may not
lawfully be made.

I-2

<PAGE> 3

EXPENSES

The following information is provided in order to help you understand the
various costs and expenses that you, as an investor in the Funds, will bear
directly or indirectly.

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases . . . . . . . . . . . . . . NONE
Sales Load Imposed on Reinvested Dividends . . . . . . . . . NONE
Deferred Sales Load . . . . . . . . . . . . . . . . . . . . NONE
Redemption Fees . . . . . . . . . . . . . . . . . . . . . . NONE
Exchange Fees . . . . . . . . . . . . . . . . . . . . . . . NONE
</TABLE>

There are certain charges associated with retirement accounts and with certain
services offered by the Funds. Purchases and redemptions may also be made
through broker-dealers or others who may charge a commission or other
transaction fee for their services.

ANNUAL FUND OPERATING EXPENSES
(percentage of average net assets)

<TABLE>
<CAPTION>
SHORT-TERM INTERNATIONAL
GLOBAL BOND BOND
<S> <C> <C>
Management Fees .625% .700%
Other Expenses
12b-1 Fees NONE NONE
Total Fund Operating Expenses
Before Waivers
TOTAL FUND OPERATING EXPENSES
AFTER WAIVERS 0.000% 0.000%
</TABLE>

The Funds' investment advisor, Strong Capital Management, Inc. (formerly
Strong/Corneliuson Capital Management, Inc.) (the "Advisor"), has agreed to
voluntarily waive its management fee and absorb each Fund's operating expenses
from commencement of operations on March 31, 1994 through June 30, 1995. From
time to time thereafter, the Advisor may voluntarily waive its management fee
and/or absorb certain expenses for a Fund. The expenses specified in the table
have been estimated since the Funds did not commence operations until March 31,
1994. For additional information concerning fees and expenses, see "About the
Funds -- Management."

EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:

<TABLE>
<CAPTION>
PERIOD (IN YEARS)
<S> <C> <C>
1 3

Short-Term Global Bond $ $
International Bond

</TABLE>

I-3
<PAGE> 4

The Example is based on the "Total Fund Operating Expenses Before Waivers"
described above. PLEASE REMEMBER THAT THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND THAT ACTUAL EXPENSES MAY BE
HIGHER OR LOWER THAN THOSE SHOWN. The assumption in the Example of a 5% annual
return is required by regulations of the SEC applicable to all mutual funds.
The assumed 5% annual return is not a prediction of, and does not represent,
the projected or actual performance of a Fund's shares.

FINANCIAL HIGHLIGHTS

The following annual Financial Highlights for each of the Strong International
Income Funds has been audited by Coopers & Lybrand L.L.P., independent
certified public accountants. Their report for the fiscal period March 31, 1994
through December 31, 1994 is included in the Annual Report of the International
Income Funds that is contained in the Fund's Statement of Additional
Information. The Financial Highlights for the Funds should be read in
conjunction with the Financial Statements and related notes included in the
Funds' Annual Report. Additional information about each Fund's performance is
contained in the Funds' Annual Report, which may be obtained without charge by
calling or writing Strong Funds.

FINANCIAL HIGHLIGHTS (For each share of the Funds outstanding through out each
period)

The following Financial Highlights are based upon an unaudited period from
March 31, 1994 (inception) to December 31, 1994.

<TABLE>
<CAPTION>
SHORT-TERM GLOBAL INTERNATIONAL
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Realized and Unrealized Gains on Investments
TOTAL FROM INVESTMENT OPERATIONS

LESS DISTRIBUTIONS
Dividends From Net Investment Income
Distributions From Net Realized Gains
TOTAL DISTRIBUTIONS

NET ASSET VALUE, END OF PERIOD

Total Return(1)

Net Assets, End of Period (In Thousands)
Ratio of Expenses to Average Net Assets(2)(3)
Ratio of Net Investment Income to Average Net Assets(2)
Portfolio Turnover Rate(2)
</TABLE>

(1) Total return is not annualized.
(2) Calculated on an annualized basis.
(3) Since the inception of the Short-Term Global and International Bond
Funds, SCM voluntarily waived its advisory fees and absorbed all other
expenses. Without these waivers and absorptions, the ratio of expenses
to average net assets would have been 1.5% and 1.6%, respectively, for
the period. SCM will continue to voluntarily waive its advisory fee and
absorb each Fund's expenses through June 30, 1995.

I-4
<PAGE> 5

HIGHLIGHTS

INVESTMENT OBJECTIVES AND POLICIES
Each Fund has distinct investment objectives and policies. Each Fund seeks
total return consistent with its investment policies. The investment objective
of each Fund is set forth under "Investment Objectives and Policies."

IMPLEMENTATION OF POLICIES AND RISKS
The Funds will invest in foreign bonds and foreign currencies and may invest in
securities of issuers in developing countries. The Funds may invest in
non-investment grade securities (commonly called "junk bonds") within specified
limits. The Funds also may invest in derivative instruments, including options,
futures, options on futures, forward currency contracts, and swap agreements.
The Funds may also invest in repurchase agreements, when-issued securities, and
illiquid securities and may engage in reverse repurchase agreements and
mortgage dollar roll transactions. The Funds are "non-diversified" investment
companies, which means that they may invest a larger proportion of their
respective assets in the securities of a single issuer than diversified funds.
Each Fund's investment policies may result in high portfolio turnover rates.

Because of their ability to invest in foreign securities and currencies, each
Fund may offer the potential for greater returns -- and may experience greater
share-price volatility -- than funds investing only in comparable U.S.
securities. Consistent with the Short-Term Global Bond Fund's goal of capital
preservation, the Advisor will engage in hedging strategies to seek to limit
the share-price volatility of the Fund. In seeking to achieve the objective of
high total return, the International Bond Fund will remain primarily unhedged
against its exposure to foreign currency risk.

The foregoing investment practices involve risks that are different in some
respects from those associated with similar funds that do not use them. (See
"Fundamental of Fixed Income Investing -- High-Yield, High Risk Securities" and
"Implementation of Policies and Risks.")

MANAGEMENT
The Advisor, Strong Capital Management, Inc., serves as investment advisor to
the Funds. The Advisor provides investment management services for mutual funds
and other investment portfolios representing assets of over $11 billion. (See
"About the Funds -- Management.")

PURCHASE AND REDEMPTION OF SHARES
You may purchase or redeem shares of a Fund at net asset value. There are no
redemption or 12b-1 charges. The net asset values change daily with the value
of each Fund's portfolio. You can locate the net asset value in newspaper
listings of mutual fund prices under the "Strong Funds" heading. (See
"Shareholder Manual -- How to Buy Shares" and "-- How to Sell Shares.")

SHAREHOLDER SERVICES
Strong shareholder benefits include: telephone purchase, exchange, and
redemption privileges; professional representatives available 24 hours a day;
automatic investment, automatic dividend reinvestment, payroll direct deposit,
automatic exchange and systematic withdrawal plans; free check writing; and a
no-minimum investment program. (See "Shareholder Manual -- Shareholder
Services.")

DIVIDENDS AND OTHER DISTRIBUTIONS

I-5
<PAGE> 6

The policy of each Fund is to pay dividends from net investment income
quarterly and to distribute substantially all net realized capital gains
annually. Each Fund also may distribute all or a portion of any net realized
gains from foreign currency transactions quarterly. (See "About the Funds --
Distributions and Taxes.")

INVESTMENT OBJECTIVES AND POLICIES

The descriptions that follow are designed to help you choose the Fund that best
fits your investment objective. You may want to pursue more than one objective
by investing in more than one of the Funds or by investing in one of the other
Strong Funds, which are described in separate prospectuses. Each International
Income Fund's investment objective is discussed below in connection with the
Fund's investment policies. Because of the risks inherent in all investments,
there can be no assurance that the Funds will meet their objectives.

Each Fund's return and risk potential depend in part on the maturity and
credit-quality characteristics of the underlying investments in its portfolio.
In general, longer-maturity securities carry higher yields and greater price
volatility than shorter-term securities. Similarly, securities issued by less
creditworthy entities tend to carry higher yields than those with higher credit
ratings. (See "Fundamentals of Fixed-Income Investing" for a more detailed
discussion of the principals and risks associated with the fixed-income
securities.)

COMPARING THE FUNDS

The following chart is intended to help distinguish the Funds and help you
determine their suitability for your investments.

<TABLE>
<CAPTION>
SHORT-TERM INTERNATIONAL
GLOBAL INCOME BOND
<S> <C> <C>
Investment Total return from a high High total return from
Objective level of income with low both income and capital
degree of share-price appreciation
fluctuation

Quality At least 65% investment- At least 65% investment-
grade grade

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

Country At least 3 foreign At least 3 foreign
Diversification countries countries

Exposure to Primarily hedged Primarily unhedged
Foreign-
Currency Risk

Average 3 years or less Unconstrained, but
Effective currently expect 4 to 9
Maturity years
</TABLE>

Each Fund has adopted certain fundamental investment restrictions that are set
forth in the Statement of Additional Information ("SAI"). Those restrictions, a
Fund's investment objectives, and any other investment policies identified as
"fundamental" in this prospectus or the SAI cannot be changed without
shareholder approval. To further guide investment activities, each Fund has
also instituted a number of non-fundamental operating policies, which are
described throughout this prospectus and in the SAI. Although operating
policies may be changed by a Fund's Board of Directors without shareholder
approval, a Fund will promptly notify shareholders of any material change in
operating policies.

I-6

<PAGE> 7

STRONG SHORT-TERM GLOBAL BOND FUND

The 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 is designed for investors who are willing to accept some risk of
principal fluctuation in order to pursue a higher level of income than
money-market securities generally offer, and who are willing to accept the
risks of foreign investing in order to diversify their portfolios to pursue
potentially higher yields than comparable U.S. only funds. Because its share
price will vary, the Fund is not an appropriate investment for those whose
primary objective is absolute principal stability; and because it normally pays
its dividends quarterly, the Fund may not be an appropriate investment for
those whose primary objective is a steady stream of monthly income.

The Fund invests primarily in investment-grade bonds of U.S. and foreign
issuers. Although there are no maturity restrictions on the individual
securities in the portfolio, the Fund will normally maintain a dollar-weighted
average portfolio maturity of three years or less. Under normal market
conditions, the Fund will invest in at least three different countries,
including at least 35% of its total assets in securities of U.S. issuers. To
attempt to limit the Fund's exposure to foreign-currency risk, the Advisor
intends to employ hedging strategies. (See "Implementation of Policies and
Risks -- Derivative Instruments.")

STRONG INTERNATIONAL BOND FUND

The International Bond Fund seeks high total return by investing for both
income and capital appreciation.

The Fund is designed for long-term investors who are willing to accept the risk
of fluctuation in principal associated with longer-term securities in order to
pursue higher income than shorter-term securities generally provide, and who
are willing accept the risks of foreign investing in order to diversify their
portfolios to pursue potentially higher yields than comparable U.S. only funds.

The Fund invests primarily in investment-grade bonds of foreign issuers. Under
normal market conditions, the Fund will invest in at least 65% of its total
assets in securities of issuers in at least three foreign countries. Although
there are no maturity limitations on the Fund's portfolio, it is currently
anticipated that the Fund will maintain a dollar-weighted average portfolio
maturity of between four and nine years.

FUNDAMENTALS OF FIXED-INCOME INVESTING

The bonds in which each Fund may invest include fixed- and variable-rate bonds,
debentures, notes, certificates of deposit, commercial paper, banker's
acceptances, structured investments such as mortgage- and asset-backed
securities, loan participations and assignments, convertible debt, warrants,
and preferred stock issued by governmental or non-governmental issuers located
in the U.S. or in foreign countries or by supranational issuers, such as the
World Bank, the Asian Development Bank, the European Investment Bank and the
European Economic Community. Such securities may be denominated in U.S.
dollars, in foreign currencies or in multinational currencies, such as the
European Currency Unit.

Issuers of fixed-income securities have a contractual obligation to pay
interest at a specified rate ("coupon rate") on specified dates and to repay
principal ("face value" or

I-7
<PAGE> 8

"par value") on a specified maturity date. Certain fixed income securities
(usually intermediate- and long-term bonds) have provisions that allow the
issuer to redeem or "call" a bond before its maturity. Issuers are most likely
to call such securities during periods of falling interest rates. As a result,
a Fund may be required to invest the unanticipated proceeds of the called
security at lower interest rates, which may cause the Fund's income to decline.

While the net asset value of each Fund is expected to fluctuate, the Advisor
actively manages each Fund's portfolio and adjusts its average portfolio
maturity according to the Advisor's interest rate outlook in seeking to avoid
or reduce any negative change in a Fund's net asset value.

PRICE VOLATILITY. The market value of debt obligations is affected by changes
in prevailing interest rates. The market value of a debt obligation generally
reacts inversely to interest-rate changes, meaning, when prevailing interest
rates decline, an obligation's price usually rises, and when prevailing
interest rates rise, an obligation's price usually declines. A fund portfolio
consisting primarily of debt obligations will react similarly to changes in
interest rates.

MATURITY. In general, the longer the maturity of a debt obligation, the higher
its yield and the greater its sensitivity to changes in interest rates.
Conversely, the shorter the maturity, the lower the yield but the greater the
price stability. Commercial paper is generally considered the shortest form of
debt security. Notes, whose original maturities are two years or less, are
considered short-term obligations. The term "bond" generally refers to
securities with maturities longer than two years. Bonds with maturities of
three years or less are considered short-term, bonds with maturities between
three and seven years are considered intermediate-term, and bonds with
maturities greater than seven years are considered long-term.

CREDIT QUALITY. The values of debt securities may also be affected by changes
in the credit rating or financial condition of their issuers. Generally, the
lower the quality rating of a security, the higher the degree of risk as to the
payment of interest and return of principal. To compensate investors for taking
on such increased risk, those issuers deemed to be less creditworthy generally
must offer their investors higher interest rates than do issuers with better
credit ratings.

In conducting its credit research and analysis, the Advisor considers both
qualitative and quantitative factors to evaluate the creditworthiness of
individual issuers. The Advisor also relies, in part, on credit ratings
compiled by a number of NRSROs. Appendix A -- Ratings of Debt Securities"
presents the ratings of three well-known such organizations: Moody's Investors
Services, Inc., Standard & Poor's Ratings Group, and Fitch Investors Service,
Inc.

INVESTMENT-GRADE BONDS. Bonds rated in the highest- through the medium-quality
categories are commonly referred to as "investment-grade" bonds.
Investment-grade bonds include the following:

- - U.S. government bonds (See "Types of Portfolio Securities -- Government
Securities" below);

- - commercial paper rated in one of the three highest rating categories
(e.g., A-3 or higher by S&P);

- - short-term notes rated in one of the three highest rating categories
(e.g., SP-3 or higher by S&P);

I-8
<PAGE> 9

- - bonds rated in one of the four highest rating categories (e.g., rated BBB
or higher by S&P); and

- - unrated bonds determined by the Advisor to be of comparable quality.

Investment-grade bonds are generally believed to have relatively low degrees of
credit risk. However, medium-quality bonds, while considered investment-grade,
may have some speculative characteristics, since their issuers' capacity for
repayment may be more vulnerable to adverse economic conditions or changing
circumstances than that of higher-rated issuers.

A Fund's quality policies are applied at the time of purchase of a security.
These policies allow a Fund to retain a security whose credit quality is
downgraded after purchase. The Advisor will, however, monitor the credit
quality of any such security to consider what action, if any, the Fund should
take consistent with its investment objective.

HIGH-YIELD, HIGH-RISK SECURITIES. Each Fund may invest up to 35% of its total
assets in high-yield, high-risk securities. These securities, also referred to
as "junk bonds," are those securities rated lower than investment-grade and
unrated securities of comparable quality. Although these securities generally
offer higher yields than investment-grade securities with similar maturities,
lower-quality securities involve greater risks, including the possibility of
default or bankruptcy. In general, they are regarded to be predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal. Other potential risks associated with investing in high-yield
securities include:

- - substantial market-price volatility resulting from changes in interest
rates, changes in or uncertainty about economic conditions, and changes in
the actual or perceived ability of the issuer to meet its obligations;

- - greater sensitivity of highly leveraged issuers to adverse economic changes
and individual-issuer developments;

- - subordination to the prior claims of other creditors;

- - additional Congressional attempts to restrict the use or limit the tax and
other advantages of these securities; and

- - adverse publicity and changing investor perceptions about these securities.

As with any other asset in a Fund's portfolio, any reduction in the value of
such securities as a result of the factors listed above would be reflected in
the Fund's net asset value. In addition, a Fund that invests in lower-quality
securities may incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal and interest on its
holdings. As a result of the associated risks, successful investments in
high-yield, high-risk securities will be more dependent on the Advisor's credit
analysis than generally would be the case with investments in investment-grade
securities.

The market for high-yield, high-risk securities initially grew during a period
of economic expansion and has experienced mixed results thereafter. It is
uncertain how the high-yield market will perform during a prolonged period of
rising interest rates. A prolonged economic downturn or a prolonged period of
rising interest rates could adversely affect the market for these securities,
increase their volatility, and reduce their value and liquidity. In addition,
lower-quality securities tend to be less liquid than higher-quality debt
securities because the market for them is not as broad or active. If market
quotations are not available, these securities will be valued in accordance
with procedures established by a Fund's Board of Directors. Judgment may,
therefore, play a greater role in valuing these securities. The lack of a
liquid secondary market may have an adverse effect on market price and a Fund's
ability to sell particular securities.

I-9
<PAGE> 10

A Fund's quality policies are applied at the time of purchase of a security.
These policies do not prohibit a Fund from retaining a security whose credit
quality is downgraded after purchase. The Advisor will, however, monitor the
credit quality of any such security to consider what action, if any, the Fund
should take consistent with its investment objective.

IMPLEMENTATION OF POLICIES AND RISKS

In addition to the investment policies described above (and subject to certain
restrictions described below), the Funds may invest in some or all of the
following securities and may employ some or all of the following investment
techniques, some of which may present special risks as described below.
Presently, the Funds do not intend to engage in cross-trading. A more
complete discussion of certain of these securities and investment techniques
and their associated risks is contained in the Funds' SAI.

FOREIGN SECURITIES AND CURRENCIES
Foreign investments involve special risks including (i) expropriation,
confiscatory taxation, and withholding taxes on dividends and interest; (ii)
less extensive regulation of foreign brokers, securities markets and issuers;
(iii) less publicly available information and different accounting standards;
(iv) costs incurred in conversions between currencies, possible delays in
settlement in foreign securities markets, limitations on the use or transfer of
assets (including suspension of the ability to transfer currency from a given
country), and difficulty of enforcing obligations in other countries; and (v)
diplomatic developments, and political or social instability. Foreign economies
may differ favorably or unfavorably from the U.S. economy in various respects,
including growth of gross domestic product, rates of inflation, currency
depreciation, capital reinvestment, resource self-sufficiency, and balance of
payments positions. Many foreign securities are less liquid and their prices
more volatile than comparable U.S. securities. Although the Funds generally
invest only in securities that are regularly traded on recognized exchanges or
in over-the-counter markets, from time to time foreign securities may be
difficult to liquidate rapidly without adverse price effects. Certain costs
attributable to foreign investing, such as custody charges and brokerage costs,
are higher than those attributable to domestic investing.

The risks of investing in foreign markets generally are greater for investments
in developing or emerging markets and economies in which the Funds may invest.
Risks of investing in such markets include (i) less social, political, and
economic stability; (ii) smaller securities markets and lower trading volumes,
which may result in a lack of liquidity and in greater price volatility; (iii)
certain national policies that may restrict a Fund's investment opportunities,
including restrictions on investments in issuers or industries deemed sensitive
to national interests, or expropriation or confiscation of assets or property,
which could result in a Fund's loss of its entire investment in that market;
and (iv) less developed legal structures governing private or foreign
investment or allowing for judicial redress for injury to private property. In
addition, brokerage commissions, custodial services, withholding taxes, and
other costs relating to investment in emerging markets generally are more
expensive than in the U.S. and certain more established foreign markets.
Economies in emerging markets generally are heavily dependent upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values, and other protectionist measures negotiated or imposed by the
countries with which they trade.

The Advisor will actively manage the allocation of each Fund's investments
among countries, geographic regions, and currencies to attempt to achieve the
Fund's investment objective. In doing so, the Advisor will consider such
factors as the historical and

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<PAGE> 11

prospective relationships among currencies, current and anticipated interest
rates, inflation levels within various countries, prospects for economic
growth, government policies influencing currency exchange rates and business
conditions, as well as other macroeconomic, social and political factors. In
assessing investments in developing countries, the Advisor will consider, among
other things, whether the economic, political and interest rate environments in
such countries show signs of stabilizing or improving.

Because most foreign securities are denominated in non-U.S. currencies, the
investment performance of the Funds could be significantly affected by changes
in foreign currency exchange rates. The value of a Fund's assets denominated in
foreign currencies will increase or decrease in response to fluctuations in the
value of those foreign currencies relative to the U.S. dollar. Currency
exchange rates can be volatile at times in response to supply and demand in the
currency exchange markets, international balances of payments, governmental
intervention, speculation, and other political and economic conditions.

The Funds may purchase and sell foreign currency on a spot basis and may engage
in forward currency contracts, currency options, and futures transactions for
hedging or any other lawful purpose. The International Bond Fund generally does
not presently engage in foreign currency hedging. (See "Derivative
Transactions.")

SOVEREIGN DEBT
Each Fund may invest in debt securities issued or guaranteed by foreign
governments or their agencies, instrumentalities or political subdivisions, or
by supranational issuers ("sovereign debt"). Investment in sovereign debt
involves special risks. Certain foreign countries, particularly developing
countries, have experienced, and may continue to experience, high rates of
inflation, high interest rates, exchange rate fluctuations, large amounts of
external debt, balance of payments and trade difficulties, and extreme poverty
and unemployment. The issuer of the debt or the governmental authorities that
control the repayment of the debt may be unable or unwilling to repay principal
or interest when due in accordance with the terms of such debt, and the Funds
may have limited legal recourse in the event of default. Neither Fund will
invest more than 25% of its total assets in securities issued by any single
foreign government, but either Fund may invest more than 25% of its total
assets in securities of issuers in a single foreign country.

GOVERNMENT SECURITIES
U.S. government securities include securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities and are obligations supported
by the full faith and credit of the U.S., such as U.S. Treasury obligations and
the obligations of certain agencies, including the Government National Mortgage
Association, and securities that are backed only by (i) the right of the issuer
to borrow from the U.S. Treasury, such as the Federal Home Loan Bank; (ii) the
discretionary authority of the U.S. government to purchase such securities,
such as the Federal National Mortgage Association; or (iii) the credit of the
agency or instrumentality itself, such as the Student Loan Marketing
Association. While the U.S. government provides financial support to such U.S.
government-sponsored agencies or instrumentalities, no assurance can be given
that it always will do so. The U.S. government, its agencies, and
instrumentalities do not guarantee the market value of their securities and
consequently, the value of such securities may fluctuate.

DERIVATIVE INSTRUMENTS
Derivative transactions may be used by the Funds for any lawful purpose,
including hedging, risk management, or enhancing returns, but not for
speculation. Derivative

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<PAGE> 12

instruments are securities or agreements whose value is derived from the value
of some underlying asset, including securities, currencies, reference indexes,
or commodities. Options, futures, and options on futures transactions are
considered derivative transactions. Derivative instruments or agreements
generally have characteristics similar to forward contracts (under which one
party is obligated to buy and the other party is obligated to sell an
underlying asset at a specific price on a specific date) or option contracts
(under which the holder of the option has the right but not the obligation to
buy or sell an underlying asset at a specified date). Accordingly, the change
in value of a forward-based derivative is generally related to the change in
value of the underlying asset. Option-based derivative instruments generally
will increase in value from favorable fluctuations in the value of the
underlying asset and decrease in value from unfavorable fluctuations in the
value of the underlying asset. Derivative transactions may include elements of
leverage and, accordingly, the fluctuation of the value of the derivative
transaction in relation to the underlying asset may be magnified. The purchaser
of an option-based derivative will generally pay a premium in connection with
entering into such position and the seller of an option-based derivative will
generally receive a premium in connection with such position. In addition to
options, futures, and options on futures transactions, derivative transactions
may include short sales against the box, in which a Fund sells a security it
owns for delivery at a future date; swaps, in which the two parties agree to
exchange a series of cash flows in the future, such as interest rate payments;
interest rate caps, under which, in return for a premium, one party agrees to
make payments to the other to the extent that interest rates exceed a specified
rate, or "cap"; and interest rate floors, under which, in return for a premium,
one party agrees to make payments to the other to the extent that interest
rates fall below a specified level, or "floor". Derivative transactions may
also include forward currency contracts and foreign currency exchange-related
securities.

Derivative transactions may be exchange traded or over-the-counter transactions
between private parties. Over-the-counter transactions are subject to the
credit risk of the counterparty to the instrument and are less liquid than
exchange-traded derivatives since they often can only be closed out with the
other party to the transaction. When required by the SEC, a Fund will set aside
permissible liquid assets in a segregated account to secure its obligations
under derivative transactions. In order to maintain its required cover for a
derivative transaction, a Fund may need to sell portfolio securities at
disadvantageous prices or times since it may not be possible to liquidate a
derivative position.

The successful use of derivative transactions by a Fund is dependent upon the
Advisor's ability to correctly anticipate trends in the underlying asset. To
the extent that a Fund is engaging in derivative transactions other than for
hedging purposes, the Fund's successful use of such transactions is more
dependent upon the Advisor's ability to correctly anticipate such trends, since
losses in these transactions may not be offset in gains in the Fund's portfolio
or in lower purchase prices for assets it intends to acquire. The Advisor's
prediction of trends in underlying assets may prove to be inaccurate, which
could result in substantial losses to a Fund. Hedging transactions are also
subject to risks. If the Advisor incorrectly anticipates trends in the
underlying asset, a Fund may be in a worse position than if no hedging had
occurred. In addition, there may be imperfect correlation between a Fund's
derivative transactions and the instruments being hedged.

In connection with its futures and options on futures transactions, a Fund is
subject to certain restrictions on such transactions under the Commodity
Exchange Act and, accordingly, will use futures and options on futures
transactions solely for bona fide hedging transactions (within the meaning of
the Commodity Exchange Act). However, each Fund may, in addition to bona fide
hedging transactions, use futures and options on futures transactions if the
aggregate initial margin and premiums required to establish

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<PAGE> 13

such positions, less the amount by which any such options positions are in the
money (within the meaning of the Commodity Exchange Act), do not exceed 5% of
the Fund's net assets. In addition, each Fund follows certain other
restrictions concerning its options, futures, and options on futures
transactions and, accordingly, (i) the aggregate value of securities that
underlie call options on securities written by the Fund or obligations that
underlie put options on securities written by the Fund, determined as of the
date the options are written, will not exceed 50% of the Fund's net assets;
(ii) the aggregate premiums paid on all options purchased by the Fund and which
are being held will not exceed 20% of the Fund's net assets; (iii) the Fund
will not purchase put or call options, other than hedging positions, if, as a
result thereof, more than 5% of its total assets would be so invested; and (iv)
the aggregate margin deposits required on all futures and options on futures
transactions being held will not exceed 5% of a Fund's total assets.

"NON-DIVERSIFIED" INVESTMENT COMPANIES
The Funds are "non-diversified" investment companies, which means that they may
invest a larger portion of their respective assets in the securities of a
single issuer than diversified funds. However, each Fund intends to conduct its
operations so as to qualify as a "regulated investment company" for purposes of
the Internal Revenue Code of 1986, as amended (the "Code"), which will relieve
the Fund of any liability for federal income tax to the extent its earnings and
net realized capital gains are distributed to shareholders. (See "About the
Funds - Distributions and Taxes.") To so qualify, among other requirements,
each Fund will limit its investments so that, at the close of each quarter of
its taxable year, (i) not more than 25% of the market value of the Fund's total
assets will be invested in the securities of a single issuer, and (ii) with
respect to 50% of the market value of its total assets, not more than 5% of the
market value of its total assets will be invested in the securities of a single
issuer, and it will not own more than 10% of the outstanding voting securities
of a single issuer. Each Fund's investments in U.S. government securities are
not subject to these limitations. Because the Funds may invest in a smaller
number of individual issuers than diversified funds, an investment in a Fund
may present greater risk to an investor than an investment in a diversified
fund.

ILLIQUID SECURITIES
Each Fund may invest up to 15% of its net assets in illiquid securities.
Certain restricted securities that be resold to institutional investors
pursuant to Rule 144A under the Securities Act of 1933 and Section 4(2)
commercial paper, may be determined to be liquid under guidelines adopted by
each Fund's Board of Directors. See the Funds' SAI for further information.

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

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<PAGE> 14

installment loan contracts, home equity loans, leases of various types of
property and receivables from credit card or other revolving credit
arrangements. Payments or distributions of principal and interest on
asset-backed securities may be supported by non-governmental credit
enhancements similar to those utilized in connection with mortgage-backed
securities.

The yield characteristics of mortgage- and asset-backed securities differ from
those of traditional debt securities. Among the principal differences are that
interest and principal payments are made more frequently on mortgage- and
asset-backed securities, usually monthly, and that principal may be prepaid at
any time because the underlying mortgage loans or other assets generally may be
prepaid at any time. As a result, if a Fund purchases these securities at a
premium, a prepayment rate that is faster than expected will reduce yield to
maturity, while a prepayment rate that is slower than expected will have the
opposite effect of increasing the yield to maturity. Conversely, if a Fund
purchases these securities at a discount, a prepayment rate that is faster than
expected will increase yield to maturity, while a prepayment rate that is
slower than expected will reduce yield to maturity. Accelerated prepayments on
securities purchased by a Fund at a premium also impose a risk of loss of
principal because the premium may not have been fully amortized at the time the
principal is prepaid in full. The market for privately issued mortgage- and
asset-backed securities is smaller and less liquid than the market for
government sponsored mortgage-backed securities.

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

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

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

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<PAGE> 15

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

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

WHEN-ISSUED SECURITIES
Each Fund may invest in securities purchased on a when-issued or delayed
delivery basis without limitation. The Funds also may sell securities on a
delayed delivery basis. Although the payment and interest terms of these
securities are established at the time the purchaser enters into the
commitment, these securities may be delivered and paid for at a future date,
generally within 45 days. Purchasing when-issued securities allows a Fund to
lock in a fixed price or yield on a security it intends to purchase. However,
when a Fund purchases a when-issued security, it immediately assumes the risk
of ownership, including the risk of price fluctuation until the settlement
date.

The greater a Fund's outstanding commitments for these securities, the greater
the exposure to potential fluctuations in the net asset value of a Fund.
Purchasing when-issued securities may involve the additional risk that the
yield available in the market when the delivery occurs may be higher than that
obtained at the time of commitment. Although a Fund may be able to sell these
securities prior to the delivery date, it will purchase when-issued securities
for the purpose of actually acquiring the securities, unless after entering
into the commitment a sale appears desirable for investment reasons. To the
extent required by the SEC, each Fund will segregate and maintain cash, cash
equivalents, or other high-quality, liquid debt securities in an amount at
least equal to the amount of outstanding commitments for when-issued securities
at all times.

PORTFOLIO TURNOVER
Each Fund's historical portfolio turnover rates are listed under "Financial
Highlights." The annual portfolio turnover rate indicates changes in a Fund's
portfolio. The turnover rate may vary from year to year, as well as within a
year. It may also be affected by sales of portfolio securities necessary to
meet cash requirements for redemption of shares. High portfolio turnover in any
year will result in the payment by a Fund of above average amounts of
transaction costs and could result in the payment by shareholders of above

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<PAGE> 16

average amounts of taxes on realized investment gains. Under normal market
conditions, it is anticipated that the rate of portfolio turnover of each Fund
generally will not exceed 300%. This rate should not be considered a limiting
factor.

ABOUT THE FUNDS

MANAGEMENT
The Board of Directors of each Fund is responsible for managing its business
and affairs. Each of the Funds has entered into an investment advisory
agreement (collectively the "Advisory Agreements") with Strong Capital
Management, Inc. (the "Advisor"). Except for the advisory fee arrangements, the
Advisory Agreements are substantially identical. Under the terms of these
agreements, the Advisor manages each Fund's investments and business affairs
subject to the supervision of each Fund's Board of Directors.

ADVISOR. The Advisor began conducting business in 1974. Since then, its
principal business has been providing continuous investment supervision for
individuals and institutional accounts, such as pension funds and
profit-sharing plans. The Advisor also acts as investment advisor for each of
the mutual funds within the Strong Family of Funds. As of March 31, 1995, the
Advisor had over $11 billion under management. Mr. Richard S. Strong, the
Chairman of the Board of each Fund, is the controlling shareholder of the
Advisor.

As compensation for its services, each Fund pays the Advisor a monthly advisory
fee based on a percentage of each Fund's average daily net asset value. The
annual rates are as follows: Short-Term Global Bond Fund, .625% and
International Bond Fund, .70%. From time to time, the Advisor may voluntarily
waive all or a portion of its management fee and/or absorb certain Fund
expenses without further notification of the commencement or termination of
such waiver or absorption. Any such waiver or absorption will temporarily lower
a Fund's overall expense ratio and increase a Fund's overall return to
investors.

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

PORTFOLIO MANAGER. The following individual serves as portfolio manager for the
Strong International Income Funds.

MR. SHIRISH MALEKAR. Mr. Malekar joined the Advisor in 1994. He was an
international bond portfolio manager at Pacific Investment Management Company
in California for the previous three years. Prior to that, he was a bond trader
at Harris Bank in Chicago for one year and a bond trader at PaineWebber
Incorporated in New York and Tokyo for more than two years. He has a M.S. in
Management from the

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<PAGE> 17

Massachusetts Institute of Technology, a M.S. in Petroleum Engineering from the
University of Pittsburgh, and a B.S. in Chemical Engineering from the
University of Bombay, India.

TRANSFER AND DIVIDEND-DISBURSING AGENT

The Advisor also acts as dividend-disbursing agent and transfer agent for the
Funds. The Advisor is compensated for its services based on an annual fee per
account plus certain out-of-pocket expenses. The fees received and the services
provided as transfer agent and dividend-disbursing agent are in addition to
those received and provided for under the Advisory Agreements between the
Advisor and the Funds.

DISTRIBUTOR

Strong Funds Distributors, Inc., an indirect subsidiary of the Advisor, acts as
distributor of the shares of the Funds.

ORGANIZATION

SHAREHOLDER RIGHTS. Each Fund is a Wisconsin corporation that is authorized to
issue shares of common stock and series and classes of series of shares of
common stock. Each share of the Funds has one vote, and all shares participate
equally in dividends and other capital gains distributions by the respective
Fund and in the residual assets of the respective Fund in the event of
liquidation. Certificates will be issued for shares held in your account only
upon your written request. You will, however, have full shareholder rights
whether or not you request certificates. Generally, the Funds will not hold an
annual meeting of shareholders unless required by the Investment Company Act.
Shareholders have certain rights, including the right to call a meeting upon a
vote of 10% of a Fund's outstanding shares for the purpose of voting to remove
one or more directors or to transact any other business.

SHAREHOLDER PRIVILEGES. The shareholders of each Fund may benefit from the
privileges described in the "Shareholder Manual" (see page II-1). However,
each Fund reserves the right, at any time and without prior notice, to suspend,
limit, modify, or terminate any of these privileges or their use in any manner
by any person or class.

DISTRIBUTIONS AND TAXES

PAYMENT OF DIVIDENDS AND DISTRIBUTIONS. You may elect to have all your
dividends and capital gains distributions from the Funds automatically
reinvested in additional fund shares or in shares of another Strong Fund at the
net asset value determined on the dividend or capital gains distribution
payment date. If you request in writing that your dividends and other
distributions be paid in cash, the Fund will credit your bank account by
Electronic Fund Transfer ("EFT") or issue a check to you within five business
days of the reinvestment date. You may change your election at any time by
calling or writing the Strong Funds. Strong Funds must receive any such change
7 days (15 days for EFT) prior to a dividend or capital gains distribution
payment date in order for the change to be effective for that payment.

Dividends from a Fund's net investment income are declared and paid quarterly.
Net investment income includes accrued interest and earned discount, less
amortization of premium and accrued expenses. In addition, a Fund may (but is
not required to) distribute with its quarterly dividends all or a portion of
any net realized gains from foreign currency

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<PAGE> 18

transactions. Each Fund also distributes substantially all of its net capital
gain (the excess of net long-term capital gain over net short-term capital
loss) and net short-term capital gain, if any (after using any available
capital loss carryover), together with any undistributed net realized gains
from foreign currency transactions, before or shortly after the end of its
fiscal year. Each Fund may make additional distributions if necessary to avoid
a 4% excise tax on certain undistributed income and capital gain.

Each Fund anticipates that a quarterly dividend may, from time to time,
represent more or less than the amount of net investment income earned by the
Fund in the period to which the dividend relates. Any undistributed net
investment income and net realized gains from foreign currency transactions
("undistributed income") would be available to supplement future dividends,
which might otherwise have been reduced by reason of a decrease in a Fund's
quarterly net income. Undistributed income will be reflected in a Fund's net
asset value, and correspondingly, distributions from undistributed income will
reduce the Fund's net asset value. The dividend rate on Fund shares will be
adjusted from time to time by each Fund's board of directors and will vary as a
result of the performance of each Fund.

TAX STATUS OF DIVIDENDS AND DISTRIBUTIONS. You are subject to federal income
tax at ordinary income tax rates on any dividends you receive that are derived
from investment company taxable income. Distributions of net capital gain (the
excess of net long-term capital gain over net short-term capital loss) are
taxable to you as long-term capital gains, regardless of how long you have held
your Fund shares. The Funds' distributions are taxable in the year they are
paid, whether they are taken in cash or reinvested in additional shares, except
that certain distributions declared in the last three months of the year and
paid in January are taxable as if paid on December 31. Most state laws provide
a pass-through of the state and local income tax exemption afforded owners of
direct U.S. government obligations. You will be notified annually of the
percentage of a Fund's income that is derived from U.S. government securities.

While neither Fund intends to declare, in any year, aggregate quarterly
dividends in excess of the net investment income and net realized gains from
foreign currency transactions for that year, it is possible that net losses
from foreign currency transactions late in the year could convert a portion of
those dividends to a non-taxable return of capital.

A dividend paid shortly after an investor has purchased Fund shares will reduce
the net asset value of the shares by the amount of the dividend, which will be
taxable to the shareholder.

YEAR-END TAX REPORTING. After the end of each calendar year, you will receive a
statement (Form 1099) of the federal income tax status of all dividends and
other distributions paid (or deemed paid) during the year.

SHARES SOLD OR EXCHANGED. Your redemption of Fund shares may result in taxable
gain or loss to you, depending upon whether the redemption proceeds payable to
you are more or less than your adjusted cost basis for the redeemed shares.
Similar tax consequences generally will result from an exchange of Fund shares
for shares of another Strong Fund. If you purchase shares of a Fund within
thirty days before or after redeeming shares of the same Fund at a loss, a
portion or all of that loss will not be deferred and will increase the cost
basis of the newly purchased shares. If you redeem out of a retirement account,
you will be subject to withholding for federal income tax purposes unless you
transfer the distribution directly to an "eligible retirement plan." In
addition, if you redeem all shares

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<PAGE> 19

in an account at any time during a month, dividends credited to the account
since the beginning of the month through the day of redemption will be paid
with the redemption proceeds.

TAX STATUS OF THE FUNDS. Each Fund intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Internal Revenue
Code and, if so qualified, will not be liable for federal income tax on
earnings and gains distributed to its shareholders in a timely manner. To do
so, each Fund distributes substantially all of its net investment income
monthly and net realized capital gains (after using any available capital loss
carryover) annually.

PERFORMANCE INFORMATION
Each Fund may advertise "yield," "average annual total return," "total return,"
and "cumulative total return." Each of these figures is based upon historical
results and is not necessarily representative of the future performance of a
Fund.

Yield is an annualized figure, which means that it is assumed that a Fund
generates the same level of net investment income over a one-year period. A
Fund's yield is a measure of the net investment income per share earned by a
Fund over a specific one-month period and is shown as a percentage of the net
asset value of the Fund's shares at the end of the period.

Average annual total return and total return figures measure both the net
investment income generated by, and the effect of any realized and unrealized
appreciation or depreciation of, the underlying investments in a Fund assuming
the reinvestment of all dividends and distributions. Total return figures are
not annualized and simply represent the aggregate change of a Fund's
investments over a specified period of time.

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SHAREHOLDER MANUAL

<TABLE>
<S> <C>
HOW TO BUY SHARES II-00
DETERMINING YOUR SHARE PRICE II-00
HOW TO SELL SHARES II-00
SHAREHOLDER SERVICES II-00
REGULAR INVESTMENT PLANS II-00
SPECIAL SITUATIONS II-00
</TABLE>

HOW TO BUY SHARES
All the Strong Funds are 100% no-load, meaning you may purchase, redeem, or
exchange shares directly at net asset value without paying a sales charge.
Because the Funds' net asset values change daily, your purchase price will be
the next net asset value determined after Strong receives and accepts your
purchase order. Your money will begin earning dividends the day after your
purchase order is accepted in proper form.

Whether you are opening a new account or adding to an existing one, Strong
Funds provides you with several methods to buy Fund shares.

<PAGE> 21

<TABLE>
<CAPTION>
TO OPEN A NEW ACCOUNT TO ADD TO AN EXISTING ACCOUNT
<S> <C> <C>
MAIL BY CHECK BY CHECK
- Complete and sign the application. Make your check - Complete an Additional Investment Form
or money order payable to "The Strong Funds." provided at the bottom of your account
statement, or write a note indicating your
fund account number and registration.
Make your check or money order payable to
"The Strong Funds."
- Mail to The Strong Funds, P.O. Box 2936, Milwaukee,
Wisconsin 53201. If you're using an express delivery
service, send to The Strong Funds, 100 Heritage
Reserve, Menomonee Falls, Wisconsin 53051. - Mail to The Strong Funds, P.O. Box 2936,
Milwaukee, Wisconsin 53201. If you're using
an express delivery service, send to The
Strong Funds, 100 Heritage Reserve,
Menomonee Falls, Wisconsin 53051.

BY EXCHANGE BY EXCHANGE
- Call 1-800-368-3863 for instructions on establishing - Call 1-800-368-3863 for instructions on
an account with an exchange by mail. exchanging by mail.

TELEPHONE BY EXCHANGE BY EXCHANGE
- Call 1-800-368-3863 to establish a new account by - Add to an account by exchanging funds from
exchanging funds from an existing Strong Funds another Strong Funds account.
1-800-368-3863 account.

- Sign up for telephone exchange services when you - Sign up for telephone exchange services
24 HOURS A DAY, open your account. To add the telephone exchange when you open your account. To add the
7 DAYS A WEEK option to your account, call 1-800-368-3863 for a telephone exchange option to your account,
Telephone Exchange Form. call 1-800-368-3863 for a Telephone
Exchange Form.

- Please note that your accounts must be identically Please note that the accounts must be
registered and that you must exchange enough into identically registered and that the minimum
the new account to meet the minimum initial exchange is $50 or the balance of your
investment. account, whichever is less.

BY TELEPHONE PURCHASE
- Complete the Request for Telephone Purchase
Form at the back of this Prospectus to make
additional investments from $50 to $25,000
into your Strong Funds account by telephone.

IN PERSON Stop by our Investor Center in Menomonee Falls, Wisconsin. Stop by our Investor Center in Menomonee
Call 1-800-368-3863 for hours and directions. Falls, Wisconsin. Call 1-800-368-3863 for
hours and directions.

The Investor Center can only accept checks or money orders. The Investor Center can only accept checks
or money orders.

WIRE Call 1-800-368-3863 for instructions on opening an account Call 1-800-368-3863 for instructions on
by wire. adding to an account by wire.
</TABLE>

II-2

<PAGE> 22

<TABLE>
<S> <C> <C>
AUTOMATICALLY USE STRONG'S "NO-MINIMUM INVESTMENT PROGRAM." USE ONE OF STRONG'S AUTOMATIC INVESTMENT
- If you sign up for Strong's Automatic Investment Plan when PROGRAMS. Sign up for these services when
you open your account, Strong Funds will waive the Fund's you open your account, or call 1-800-368-3863
minimum initial investment (see chart below). for instructions on how to add them to your
existing account.

- Complete both the Automatic Investment Plan application at - AUTOMATIC INVESTMENT PLAN. Make regular,
the back of this Prospectus and the new account systematic investments (minimum $50) into
application. your Strong Funds account from your bank
checking or NOW account. We've included
an application at the back of this
Prospectus.

- Mail to the address indicated on the application. - AUTOMATIC EXCHANGE PLAN. Make regular,
systematic exchanges (minimum $50) from
one Strong Funds account to another. Call
1-800-368-3863 for an application.

- PAYROLL DIRECT DEPOSIT. Have a specified
amount (minimum $50) regularly deducted
from your paycheck, social security check
military allotment or annuity payment
invested directly into your Strong Funds
account. Call 1-800-368-3863 for an
application.

- AUTOMATIC DIVIDEND REINVESTMENT. Unless
you choose otherwise, all your dividends
and capital gains distributions will be
automatically reinvested in additional Fund
shares. Or, you may elect to have your
dividends and capital gains distributions
automatically invested in shares of another
Strong Fund.

BROKER-DEALER - You may purchase shares in a Fund through a broker-dealer - You may purchase additional shares in a Fund
or other institution that may charge a transaction fee. through a broker-dealer or other
institution that may charge a transaction
fee.

- Strong Funds may only accept requests to purchase shares - Strong Funds may only accept requests to
into a broker-dealer street name account from the broker- purchase additional shares into a
dealer. broker-dealer street name account from
the broker-dealer.
</TABLE>

II-3
<PAGE> 23

WHAT YOU SHOULD KNOW ABOUT BUYING SHARES

- - Please make all checks or money orders payable to "The Strong Funds."

- - We cannot accept third-party checks or checks drawn on banks outside the
U.S..

- - You will be charged a $20 service fee for each check, wire, or Electronic
Funds Transfer ("EFT") purchase that is returned unpaid, and you will be
responsible for any losses suffered by a Fund as a result.

- - Further documentation may be requested from corporations, executors,
administrators, trustees, guardians, agents, or attorneys-in-fact.

- - A Fund may decline to accept your purchase order upon receipt when, in the
judgment of the Advisor, it would not be in the best interests of the
existing shareholders.

- - The exchange privileges are available in all 50 states because all the
Strong Funds intend to continue to qualify their shares for sale in all 50
states.

- - Minimum Investment Requirements:

<TABLE>
<S> <C>
To open a regular account $1,000
To open an IRA, Defined Contribution, or
UGMA/UTMA account $250
To open a 401(k) or 403(b) retirement account No Minimum
To add to an existing account $50
</TABLE>

The Funds offer a No-Minimum Investment Program that waives the minimum initial
investment requirements for investors who participate in the Strong Automatic
Investment Plan (described on page II-0). Unless you participate in the Strong
No-Minimum Investment Program, please ensure that your purchases meet the
minimum investment requirements.

Under certain circumstances (for example, if you discontinue a No-Minimum
Investment Program before you reach a Fund's minimum initial investment, or if,
after you reach a Fund's minimum, you reduce your balance to less than $1000),
each Fund reserves the right to close your account. Before taking such action,
a Fund will provide you with written notice and at least 60 days in which to
reinstate an investment program or otherwise reach the minimum initial
investment required.

WHAT YOU SHOULD KNOW ABOUT BUYING SHARES THROUGH A BROKER-DEALER

- - If you purchase shares through a program of services offered or
administered by a broker-dealer, financial institution, or other service
provider, you should read the program materials, including information
relating to fees, in connection with a Fund's Prospectus. Certain features
of a Fund may not be available or may be modified in connection with the
program of services provided.

- - Certain broker-dealers, financial institutions, or other service providers
that have entered into an agreement with the Distributor may enter purchase
orders on behalf of their customers by phone, with payment to follow within
several days as specified in the agreement. The Funds may effect such
purchase orders at the net asset value

II-4
<PAGE> 24

next determined after receipt of the telephone purchase order. It is the
responsibility of the broker-dealer, financial institution, or other service
provider to place the order with the Funds on a timely basis. If payment is not
received within the time specified in the agreement, the broker-dealer,
financial institution, or other service provider could be held liable for any
resulting fees or losses.

DETERMINING YOUR SHARE PRICE
Generally, when you make any purchases, sales, or exchanges, the price of your
shares will be the net asset value ("NAV") next determined after Strong Funds
receives your request in proper form. If Strong Funds receives such request
prior to the close of the New York Stock Exchange (the "Exchange") on a day on
which the Exchange is open, your share price will be the NAV determined that
day. The NAV for each Fund is normally determined as of 3:00 p.m. Central Time
("CT") each day the Exchange is open. The Funds reserve the right to change the
time at which purchases, redemptions, and exchanges are priced if the Exchange
closes at a time other than 3:00 p.m. CT or if an emergency exists. Each Fund's
NAV is calculated by taking the fair value of a Fund's total assets,
subtracting all its liabilities, and dividing by the total number of shares
outstanding. Expenses are accrued and applied daily when determining the net
asset value.

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

Securities quoted in foreign currency are valued daily in U.S. dollars at the
foreign currency exchange rates that are prevailing at the time the daily net
asset value per share is determined. Although the Funds value their foreign
assets in U.S. dollars on a daily basis, they do not intend to convert their
holdings of foreign currencies into U.S. dollars on a daily basis. Foreign
currency exchange rates are generally determined prior to the close of trading
on the Exchange. Occasionally, events affecting the value of foreign
investments and such exchange rates occur between the time at which they are
determined and the close of trading on the Exchange. Such events would not
normally be reflected in a calculation of a Fund's net asset value on that day.
If events that materially affect the value of a Fund's foreign investments or
the foreign currency exchange rates occur during such period, the investments
will be valued at their fair value as determined in good faith by or under the
direction of the Board of Directors.

HOW TO SELL SHARES
You can access the money in your account at any time by selling (redeeming)
some or all of your shares back to the Fund. Once your redemption request is
received in proper form, Strong will normally mail you the proceeds the next
business day and, in any event, no later than seven days thereafter.

II-5
<PAGE> 25

To redeem shares, you may use any of the methods described in the chart below.
However, if you are selling shares in a retirement account, please call
1-800-368-3863 for instructions. Please note that there is a $10.00 fee for
closing an IRA or other retirement account or for transferring assets to
another custodian. For your protection, certain requests may require a
signature guarantee.

II-6
<PAGE> 26

TO SELL SHARES
<S> <C>
MAIL FOR INDIVIDUAL, JOINT TENANT, AND UGMA/UTMA ACCOUNTS
Write a "letter of instruction" that includes the
following information: your account number, the dollar amount
or number of shares you wish to redeem, each owner's name,
your street address, and the signature of each owner as it
appears on the account.

Mail to The Strong Funds, P.O. Box 2936, Milwaukee,
Wisconsin 53201. If you're using an express delivery service,
send to 100 Heritage Reserve, Menomonee Falls, Wisconsin
53051.

FOR TRUST ACCOUNTS
Same as above. Please ensure that all trustees sign the
letter of instruction.

FOR OTHER REGISTRATIONS
- Call 1-800-368-3863 for instructions.

TELEPHONE Sign up for telephone redemption services when you open your
account by checking the "Yes" box in the appropriate section
of the account application. To add the telephone redemption
1-800-368-3863 option to your account, call 1-800-368-3863 for a
Telephone Redemption Form.
24 HOURS A DAY,
7 DAYS A WEEK Once the telephone redemption option is in place, you may
sell shares ($500 minimum) by phone and arrange to receive
the proceeds in one of three ways:

TO RECEIVE A CHECK BY MAIL
At no charge, we will mail a check to the address to
which your account is registered.

TO DEPOSIT BY EFT
At no charge, we will transmit the proceeds by Electronic
Funds Transfer (EFT) to a pre- authorized bank account.
Usually, the funds will arrive at your bank two banking days
after we process your redemption.

TO DEPOSIT BY WIRE
For a $10 fee, we will transmit the proceeds by wire to a
pre-authorized bank account. Usually, the funds will arrive at
your bank the next banking day after we process your
redemption.

</TABLE>

II-7
<PAGE> 27

<TABLE>
<S> <C>
CHECK WRITING Sign up for the free check-writing privilege when you open
your account. To add check writing to an existing account or
to order additional checks, call 1-800-368-3863.

Please keep in mind that all check redemptions must be for
a minimum of $500 and that you cannot write a check to close
an account.

AUTOMATICALLY You can set up automatic withdrawals from your account at
regular intervals. To establish the Systematic
Withdrawal Plan, request a form by calling 1-800-368-3863.

BROKER-DEALER You may also redeem shares through broker-dealers or others
who may charge a commission or other transaction fee.

</TABLE>

WHAT YOU SHOULD KNOW ABOUT SELLING SHARES

- - If you have recently purchased shares, please be aware that your redemption
request may not be honored until the purchase check has cleared your bank,
which generally occurs within ten calendar days.

- - The right of redemption may be suspended during any period when (i) trading
on the Exchange is restricted, as determined by the SEC, or the Exchange is
closed for other than weekends and holidays; (ii) the SEC has permitted
such suspension by order; or (iii) an emergency as determined by the SEC
exists, making disposal of portfolio securities or valuation of net assets
of a Fund not reasonably practicable.

- - If you are selling shares you hold in certificate form, you must submit the
certificates with your redemption request. Each registered owner must
endorse the certificates and all signatures must be guaranteed.

- - Further documentation may be requested from corporations, executors,
administrators, trustees, guardians, agents, or attorneys-in-fact.

WHAT YOU SHOULD KNOW ABOUT TELEPHONE REDEMPTIONS

- - The Funds reserve the right to refuse a telephone redemption if they
believe it advisable to do so.

- - Once you place your telephone redemption request, it cannot be canceled or
modified.

- - Investors will bear the risk of loss from fraudulent or unauthorized
instructions received over the telephone provided that the Fund reasonably
believes that such instructions are genuine. The Funds and their transfer
agent employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. The Funds may incur liability if
they do not follow these procedures.

- - Because of increased telephone volume, you may experience difficulty in
implementing a telephone redemption during periods of dramatic economic or
market changes.

II-8

<PAGE> 28

SHAREHOLDER SERVICES

INFORMATION SERVICES

24-HOUR ASSISTANCE. Strong Funds has registered representatives available to
help you 24 hours a day, 7 days a week. Call 1-414-359-1400 or toll-free
1-800-368-3863. You may also write to the Strong Funds at the address on the
cover of this Prospectus.

STATEMENTS AND REPORTS. At a minimum, each Fund will confirm all transactions
for your account on a quarterly basis. We recommend that you file each
quarterly statement -- and, especially, each calendar year-end statement --
with your other important financial papers, since you may need to refer to them
at a later date for tax purposes. Should you need additional copies of previous
statements, you may order confirmation statements for the current and preceding
year at no charge. Statements for earlier years are available for $10 each.
Call 1-800-368-3863 to order past statements.

Each year, you will also receive a statement confirming the tax status of any
distributions paid to you, as well as a semi-annual report and an annual report
containing audited financial statements.

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

More complete information regarding each Fund's investment policies and
services is contained in its Statement of Additional Information, which you may
request by calling or writing the Strong Funds at the phone number and address
on the cover of this Prospectus.

CHANGING YOUR ACCOUNT INFORMATION. So that you continue receiving your Strong
correspondence, including any dividend checks and statements, please notify us
in writing as soon as possible if your address changes. You may use the
Additional Investment Form at the bottom of your confirmation statement, or
simply write us a letter of instruction that contains the following
information:

1. a written request to change the address,
2. the account number(s) for which the address is to be changed,
3. the new address, and
4. the signatures of all owners of the accounts.

Please send your request to the address on the cover of this Prospectus.

Changes to an account's registrations -- such as adding or removing a joint
owner, changing an owner's name, or changing the type of your account -- must
also be submitted in writing. Please call 1-800-368-3863 for instructions. For
your protection, some requests may require a signature guarantee.

II-9

<PAGE> 29

TRANSACTION SERVICES

FREE EXCHANGE PRIVILEGE. You may exchange shares between identically registered
Strong Funds accounts, either in writing or by telephone. By establishing the
telephone exchange services, you authorize the Fund and its agents to act upon
your instruction by telephone to redeem or exchange shares from any account you
specify. Please obtain and read the appropriate Prospectus before investing in
any of the Strong Funds. Since an excessive number of exchanges may be
detrimental to the Funds, each Fund reserves the right to discontinue the
exchange privilege of any shareholder who makes more than five exchanges in a
year or three exchanges in a calendar quarter.

FREE CHECK-WRITING PRIVILEGES. You may also redeem shares by check in amounts
of $500 or more. There is no charge for this privilege. Redemption by check
cannot be honored if share certificates are outstanding and would need to be
liquidated to honor the check. Checks are supplied free of charge, and
additional checks will be sent to you upon request. The Funds do not return the
checks you write, although copies are available upon request.

You may place stop-payment requests on checks by calling the Strong Funds at
1-800-368-3863. A $10 fee will be charged for each stop-payment request. A stop
payment will remain in effect for two weeks following receipt of oral
instructions (six months following written instructions) by Strong Funds.

If there are insufficient cleared shares in your account to cover the amount of
your redemption by check, the check will be returned, marked "insufficient
funds," and a fee of $10 will be charged to the account.

REGULAR INVESTMENT PLANS
The Strong Funds' Automatic Investment Plan, Payroll Direct Deposit Plan, and
Automatic Exchange Plan, all discussed below, are methods of implementing
DOLLAR COST AVERAGING. Dollar cost averaging is an investment strategy that
involves investing a fixed amount of money at a regular time interval. By
always investing the same set amount, you will be purchasing more shares when
the price is low and fewer shares when the price is high. Ultimately, by using
this principle in conjunction with fluctuations in share price, your average
cost per share may be less than the average transaction price. A program of
regular investment cannot ensure a profit or protect against a loss during
declining markets. Since such a program involves continuous investment
regardless of fluctuating share values, you should consider your ability to
continue the program through periods of both low and high share-price levels.

AUTOMATIC INVESTMENT PLAN. The Automatic Investment Plan allows you to make
regular, systematic investments in a Fund from your bank checking or NOW
account. You may choose to make investments on any day of the month in amounts
of $50 or more. You can set up the Automatic Investment Plan with any financial
institution that is a member of the Automated Clearing House. Because each Fund
has the right to close an investor's account for failure to reach the minimum
initial investment, please consider your ability to continue this Plan until
you reach the minimum initial investment. Such closing may occur in periods of
declining share prices. To establish the Plan, complete the application at the
back of this Prospectus, or call 1-800-368-3863.

PAYROLL DIRECT DEPOSIT PLAN. Once you meet a Fund's minimum initial investment
requirement, you may purchase additional Fund shares through the Payroll Direct
Deposit Plan. Through this Plan, periodic investments (minimum $50) are made
automatically

II-10

<PAGE> 30

from your payroll check into your existing Fund account. By enrolling in the
Plan, you authorize your employer or its agents to deposit a specified amount
from your payroll check into the Fund's bank account. In most cases, your Fund
account will be credited the day after the amount is received by the Fund's
bank. In order to participate in the Plan, your employer must have direct
deposit capabilities through Automated Clearing House available to its
employees. The Plan may be used for other direct deposits, such as social
security checks, military allotments, and annuity payments.

To establish a Direct Deposit for your account, call 1-800-368-3863 to obtain
an Authorization for Payroll Direct Deposit to a Strong Funds Account form.
Once the Plan is established, you may alter the amount of the deposit, alter
the frequency of the deposit, or terminate your participation in the program by
notifying your employer.

AUTOMATIC EXCHANGE PLAN. The Automatic Exchange Plan allows you to make
regular, systematic exchanges (minimum $50) from one Strong Funds account into
another Strong Funds account. By setting up the Plan, you authorize the Fund
and its agents to redeem a set dollar amount or number of shares from the first
account and purchase shares of a second Strong Fund. In addition, you authorize
a Fund and its agents to accept telephone instructions to change the dollar
amount and frequency of the exchange. An exchange transaction is a sale and
purchase of shares for federal income tax purposes and may result in a capital
gain or loss. To establish the Plan, request a form by calling 1-800-368-3863.

To participate in the Automatic Exchange Plan, you must have an initial account
balance of $2,500 in the first account and at least the minimum initial
investment in the second account. Exchanges may be made on any day or days of
your choice. If the amount remaining in the first account is less than the
exchange amount you requested, then the remaining amount will be exchanged. At
such time as the first account has a zero balance, your participation in the
Plan will be terminated. You may also terminate the Plan at any time by calling
or writing to the Fund. Once participation in the Plan has been terminated for
any reason, to reinstate the Plan you must do so in writing; simply investing
additional funds will not reinstate the Plan.

SYSTEMATIC WITHDRAWAL PLAN. You can set up automatic withdrawals from your
account at regular intervals. To begin distributions, you must have an initial
balance of $5,000 in your account and withdraw at least $50 per payment. To
establish the Systematic Withdrawal Plan, request a form by calling
1-800-368-3863. Depending upon the size of the account and the withdrawals
requested (and fluctuations in net asset value of the shares redeemed),
redemptions for the purpose of satisfying such withdrawals may reduce or even
exhaust the account. If the amount remaining in the account is not sufficient
to meet a payment, the remaining amount will be redeemed and the Plan will be
terminated.

SPECIAL SITUATIONS

POWER OF ATTORNEY. If you are investing as attorney-in-fact for another person,
please complete the account application in the name of such person and sign the
back of the application in the following form: "[applicant's name] by [your
name], attorney-in-fact." To avoid having to file an affidavit prior to each
transaction, please complete the Power of Attorney form available from Strong
Funds at 1-800-368-3863. However, if you would like to use your own power of
attorney form, please call the same number for instructions.

II-11

<PAGE> 31

CORPORATIONS AND TRUSTS. If you are investing for a corporation, please include
with your account application a certified copy of your corporate resolution
indicating which officers are authorized to act on behalf of the corporation.
As an alternative, you may complete a Certification of Authorized Individuals
form, which can be obtained from the Funds. Until a valid corporate resolution
or Certification of Authorized Individuals is received by the Fund, services
such as telephone redemption, wire redemption, and check writing will not be
established.

If you are investing as a trustee, please include the date of the trust. All
trustees must sign the application. If they do not, services such as telephone
redemption, wire redemption, and check writing will not be established. All
trustees must sign redemption requests unless proper documentation to the
contrary is provided to the Fund. Failure to provide these documents, or
signatures as required, when you invest may result in delays in processing
redemption requests.

SIGNATURE GUARANTEES. A signature guarantee is designed to protect you and the
Funds against fraudulent transactions by unauthorized persons. In the
following instances, the Funds will require a signature guarantee for all
authorized owners of an account:

- - when you add the telephone redemption or check writing options to your
existing account;

- - if you transfer the ownership of your account to another individual or
organization;

- - when you submit a written redemption request for more than $25,000;

- - when you request to redeem or redeposit shares that have been issued in
certificate form;

- - if you open an account and later decide that you want certificates;

- - when you request that redemption proceeds be sent to a different name or
address than is registered on your account;

- - if you add/change your name or add/remove an owner on your account; and

- - if you add/change the beneficiary on your transfer on death account.

A signature guarantee may be obtained from any eligible guarantor institution,
as defined by the SEC. These institutions include banks, savings associations,
credit unions, brokerage firms, and others. PLEASE NOTE THAT A NOTARY PUBLIC
STAMP OR SEAL IS NOT ACCEPTABLE.

II-12
<PAGE> 32

APPENDIX A

Ratings of Debt Securities:

<TABLE>
<CAPTION>
MOODY'S STANDARD & FITCH
INVESTORS POOR'S INVESTORS
SERVICE, INC. CORPORATION SERVICE, INC. DEFINITION
<S> <C> <C> <C> <C>
LONG-TERM Aaa AAA AAA Highest quality
Aa AA AA High quality
A A A Upper medium grade
Baa BBB BBB Medium grade
Ba BB BB Low grade
B B B Speculative
Caa, Ca, C CCC, CC, C CCC, CC, C Submarginal
D D DDD, DD, D Probably in default

MOODY'S S&P FITCH
SHORT-TERM MIG1/VMIG1 Best quality SP-1+ Very strong F-1+ Exceptionally
quality strong quality

MIG2/VMIG2 High quality SP-1 Strong quality F-1 Very strong quality
MIG3/VMIG3 Favorable SP-2 Satisfactory F-2 Good credit quality
quality grade
MIG4/VMIG4 Adequate F-3 Fair credit quality
quality
SG Speculative grade SP-3 Speculative grade F-S Weak credit quality
COMMERCIAL P-1 Superior quality A-1+ Extremely strong F-1+ Exceptionally
PAPER quality strong quality
A-1 Strong quality F-1 Very strong quality
P-2 Strong quality A-2 Satisfactory F-2 Good credit quality
quality
P-3 Acceptable quality A-3 Adequate quality F-3 Fair credit quality
B Speculative F-S Weak credit quality
quality
Not Prime C Doubtful quality D Default
</TABLE>

A-1

<PAGE> 33

Explanation of Quality Ratings:

<TABLE>
<CAPTION>
BOND
RATING EXPLANATION
<S> <C> <C>
MOODY'S Aaa Highest quality, smallest degree of investment risk.
INVESTORS
SERVICE, Aa High quality; together with Aaa bonds, they compose the
INC. high-grade bond group.
A Upper medium-grade obligations; many favorable
investment attributes.
Baa Medium-grade obligations; neither highly protected nor
poorly secured. Interest and principal appear adequate
for the present but certain protective elements may be
lacking or may be unreliable over any great length of
time.
Ba More uncertain, with speculative elements. Protection
of interest and principal payments not well safeguarded
during good and bad times.
B Lack characteristics of desirable investment;
potentially low assurance of timely interest and
principal payments or maintenance of other contract
terms over time.
Caa Poor standing, may be in default; elements of danger
with respect to principal or interest payments.
Ca Speculative in a high degree; could be in default or
have other marked shortcomings.
C Lowest-rated; extremely poor prospects of ever
attaining investment standing.
STANDARD & AAA Highest rating; extremely strong capacity to pay
POOR'S principal and interest.
CORP. AA High quality; very strong capacity to pay
principal and interest.
A Strong capacity to pay principal and interest; somewhat
more susceptible to the adverse effects of changing
circumstances and economic conditions.
BBB Adequate capacity to pay principal and interest;
normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances
more likely to lead to a weakened capacity to pay
principal and interest than for higher-rated bonds.
BB, B, Predominantly speculative with respect to the issuer's
capacity to meet required interest
CCC, and principal payments. BB - lowest degree of
speculation; C - the highest degree of
CC, C speculation. Quality and protective characteristics
outweighed by large uncertainties or major risk exposure
to adverse conditions.
CI No interest being paid.
D In default.
FITCH AAA Highest quality; obligor has exceptionally strong
INVESTORS ability to pay interest and repay principal, which is
SERVICE, unlikely to be affected by reasonably foreseeable
INC. events.
AA Very high quality; obligor's ability to pay interest
and repay principal is very strong. Because bonds
rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated
F-1+.
A High quality; obligor's ability to pay interest and
repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic
conditions and circumstances than higher-rated bonds.

BBB Satisfactory credit quality; obligor's ability to pay
interest and repay principal is considered
adequate. Unfavorable changes in economic conditions and
circumstances are more likely to adversely affect these
bonds and impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade
is higher than for higher-rated bonds.
BB, B, Not investment-grade; predominantly speculative with
respect to the issuer's capacity to
CCC, repay interest and repay principal in accordance with
the terms of the obligation for
CC, C bond issues not in default. BB is least speculative.
C is the most speculative.
DDD, Bonds are in default on interest and/or principal
payments. DDD represents the highest
DD, D potential for recovery of these bonds, and D represents
the lowest potential for recovery.

</TABLE>

A-2
<PAGE> 34

APPENDIX B

WEIGHTED AVERAGE RATINGS OF BONDS(1)

<TABLE>
<CAPTION>
AVERAGE PERCENTAGE OF ASSETS HELD DURING 1994(2) PERCENTAGE OF ASSETS HELD ON DECEMBER 31, 1994

SHORT-TERM GLOBAL INCOME SHORT-TERM GLOBAL INCOME
BOND BOND

EQUIVALENT EQUIVALENT
S&P MOODY'S RATED UNRATED(3) S&P MOODY'S RATED UNRATED(3)
<S> <C> <C> <C> <C> <C> <C> <C>
AAA Aaa(4) % - AAA Aaa(4) % -

AA Aa - AA Aa -

A A - A A - -

BBB Baa BBB Baa

BB Ba BB Ba

B B - B B -

CCC Caa - - CCC Caa - -

CC Ca - - CC Ca - -

C C - - C C - -

TOTALS % % TOTALS % %
</TABLE>

<TABLE>
<CAPTION>
AVERAGE PERCENTAGE OF ASSETS HELD ON DECEMBER 31, 1994(2) PERCENTAGE OF ASSETS HELD ON DECEMBER 31, 1994

INTERNATIONAL BOND INTERNATIONAL BOND

EQUIVALENT EQUIVALENT
S&P MOODY'S RATED UNRATED(3) S&P MOODY'S RATED UNRATED(3)

<S> <C> <C> <C> <C> <C> <C> <C>
AAA Aaa(4) % - AAA Aaa(4) % -

AA Aa - AA Aa -

A A - - A A -

BBB Baa BBB Baa

BB Ba BB Ba

B B - B B -

CCC Caa - - CCC Caa - -

CC Ca - - CC Ca - -

C C - - C C - -

TOTALS % % TOTALS % %
</TABLE>

B-1
<PAGE> 35

See the Appendix to the Funds' Statement of Additional Information for a more
complete description of ratings.

1. A security rated differently by the rating services is included in the
category representing the higher of the ratings assigned to the security.

2. Based on a weighted average of the securities held at the end of each
month. Investment grade bonds are those rated in one of the four highest
categories by a nationally recognized rating organization. See
"Implementation of Policies and Risks - High Yield (High Risk) Securities"
in this Prospectus for a discussion of the risks associated with
non-investment grade bonds and the Statement of Additional Information for
a description of credit ratings.

3. This category represents the comparable quality of unrated securities, as
determined by the Advisor.

4. Includes all U.S. government obligations.

B-2

<PAGE> 36

CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street, Boston, Massachusetts 02109

TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201

AUDITORS
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

Kirkpatrick & Lockhart
1800 M Street, N.W., Washington, D.C. 20036

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
<PAGE> 37

STATEMENT OF ADDITIONAL INFORMATION

STRONG SHORT-TERM GLOBAL BOND FUND, INC.
STRONG INTERNATIONAL BOND FUND, INC.

P.O. Box 2936
Milwaukee, Wisconsin 53201
Telephone: 1-414-359-1400
Toll-Free: 1-800-368-3863

This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Prospectus of Strong Short-Term Global
Bond Fund, Inc. (the "Short-Term Global Bond Fund") and Strong International
Bond Fund, Inc. (the "International Bond Fund") (collectively, the "Funds")
dated May 1, 1995. Requests for copies of the Prospectus should be made by
writing to the Funds at P.O. Box 2936, Milwaukee, Wisconsin 53201, Attention:
Corporate Secretary; or by calling one of the numbers listed above. The
financial statements appearing in the Funds' Annual Report, which accompanies
this Statement of Additional Information, are incorporated herein by reference.

This Statement of Additional Information is dated May 1, 1995.

<PAGE> 38

STRONG INTERNATIONAL INCOME FUNDS

<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
INVESTMENT POLICIES AND TECHNIQUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Illiquid Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Short Sales Against the Box . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Convertible Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Variable- or Floating-Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Foreign Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Sovereign Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Mortgage- and Asset-Backed Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
High Yield (High Risk) Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Derivative Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
When-Issued Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
DIRECTORS AND OFFICERS OF THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
PRINCIPAL SHAREHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
INVESTMENT ADVISOR AND DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
SHAREHOLDER MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
FUND ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
PORTFOLIO MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>

___________________________________________

No person has been authorized to give any information or to make any
representations other than those contained in this Statement of Additional
Information and the Prospectus dated May 1, 1995, and if given or made, such
information or representations may not be relied upon as having been authorized
by the Funds.

This Statement of Additional Information does not constitute an offer to sell
securities.
<PAGE> 39

INVESTMENT RESTRICTIONS

The investment objective of the Strong Short-Global Bond Fund is to
seek total return by investing for a high level of income with a low degree of
share price fluctuation. The investment objective of the Strong International
Bond Fund is to seek high total return by investing for both high income and
capital appreciation. The Funds' investment objectives and policies are
described in detail in the Prospectus under the caption "INVESTMENT OBJECTIVES
AND POLICIES." The following are the Funds' fundamental investment
limitations, which cannot be changed without shareholder approval.

Each Fund:

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

2. May not issue senior securities, except as permitted under the
Investment Company Act of 1940.

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

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

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

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

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

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

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

3
<PAGE> 40

The Funds may not:

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

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

3. Invest in illiquid securities if, as a result of such investment, more
than 15% of its net assets would be invested in illiquid securities,
or such other amounts as may be permitted under the Investment Company
Act of 1940.

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

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

6. Purchase the securities of any issuer (other than securities issued or
guaranteed by domestic or foreign governments or political
subdivisions thereof) if, as a result, more than 5% of its total
assets would be invested in the securities of issuers that, including
predecessor or unconditional guarantors, have a record of less than
three years of continuous operation. This policy does not apply to
securities of pooled investment vehicles or mortgage or asset-backed
securities.

7. Invest in direct interests in oil, gas, or other mineral exploration
programs or leases; however, the Fund may invest in the securities of
issuers that engage in these activities.

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

In addition, (i) the aggregate value of securities underlying call
options on securities written by the Fund or obligations underlying
put options on securities written by the Fund determined as of the
date of the options are written will not exceed 50% of the Fund's net
assets; (ii) the aggregate premiums paid on all options purchased by
the Fund and which are being held will not exceed 20% of the Fund's
net assets; (iii) the Fund will not purchase put or call options,
other than hedging positions, if, as a result thereof, more than 5% of
its total assets would be so invested; and (iv) the aggregate margin
deposits required on all futures and options on futures transactions
being held will not exceed 5% of the Fund's total assets.

9. Pledge, mortgage or hypothecate any assets owned by the Fund except as
may be necessary in connection with permissible borrowings or
investments and then such pledging, mortgaging, or hypothecating may
not exceed 33 1/3% of the Fund's total assets at the time of the
borrowing or investment.

10. Purchase or retain the securities of any issuer if any officer or
director of the Fund or its investment advisor beneficially owns more
than 1/2 of 1% of the securities of such issuer and such officers and
directors together own beneficially more than 5% of the securities of
such issuer.

11. Purchase warrants, valued at the lower of cost or market value, in
excess of 5% of the Fund's net assets. Included in that amount, but
not to exceed 2% of the Fund's net assets, may be warrants that are
not listed on the New York Stock

4
<PAGE> 41

Exchange or the American Stock Exchange. Warrants acquired by the
Fund in units or attached to securities are not subject to these
restrictions.

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

13. Make any loans other than loans of portfolio securities, except
through (i) purchases of debt securities or other debt instruments, or
(ii) engaging in repurchase agreements.

If a percentage restriction relating to a fundamental or
non-fundamental limitation is adhered to at the time of investment, a later
increase in percentage resulting from a change in market value of the
investment or the total assets will not constitute a violation of that
restriction. Except for the fundamental investment limitations listed above and
each Fund's investment objective, the other investment policies described in
the Prospectus and this Statement of Additional Information are not fundamental
and may be changed with approval of a Fund's Board of Directors.

INVESTMENT POLICIES AND TECHNIQUES

The following information supplements the discussion of the Funds'
investment objectives, policies, and techniques that are described in detail in
the Prospectus under the captions "Investment Objectives and Policies" and
"Implementation of Policies and Risks."

ILLIQUID SECURITIES

The Funds may invest in illiquid securities (i.e., securities that are
not readily marketable). However, a Fund will not acquire illiquid securities
if, as a result, they would comprise more than 15% of the value of the Fund's
net assets (or such other amounts as may be permitted under the Investment
Company Act). The Board of Directors of each Fund, or its delegate, has the
ultimate authority to determine, to the extent permissible under the federal
securities laws, which securities are illiquid for purposes of this limitation.
Certain securities exempt from registration or issued in transactions exempt
from registration under the Securities Act of 1933, as amended (the "Securities
Act"), including securities that may be resold pursuant to Rule 144A under the
Securities Act, may be considered liquid. The Board of Directors of each Fund
has delegated to Strong Capital Management, Inc. (the "Advisor") the day-to-day
determination of the liquidity of a security, although it has retained
oversight and ultimate responsibility for such determinations. Although no
definitive liquidity criteria are used, each Fund's Board of Directors has
directed the Advisor to look to such factors as (i) the nature of the market
for a security (including the institutional private resale market), (ii) the
terms of certain securities or other instruments allowing for the disposition
to a third party or the issuer thereof (e.g., certain repurchase obligations
and demand instruments), (iii) the availability of market quotations (e.g., for
securities quoted in the PORTAL system), and (iv) other permissible relevant
factors.

Restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which a registration
statement is in effect under the Securities Act. Where registration is
required, a Fund may be obligated to pay all or part of the registration
expenses and a considerable period may elapse between the time of the decision
to sell and the time the Fund may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, a Fund might obtain a less favorable price than
prevailed when it decided to sell. Restricted securities will be priced at
fair value as determined in good faith by the Board of Directors of each Fund.
If through the appreciation of restricted securities or the depreciation of
unrestricted securities, a Fund should be in a position where more than 15% of
the value of its net assets are invested in illiquid securities, including
restricted securities which are not readily marketable, the Fund will take such
steps as are deemed advisable, if any, to protect liquidity.

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

5
<PAGE> 42

SHORT SALES AGAINST THE BOX

Each Fund may sell securities short against the box to hedge
unrealized gains on portfolio securities. Selling securities short against the
box involves selling a security that the Fund owns or has the right to acquire,
for delivery at a specified date in the future. If the Fund sells securities
short against the box, it may protect unrealized gains, but will lose the
opportunity to profit on such securities if the price rises.

WARRANTS

Each Fund may acquire warrants. Warrants are securities giving the
holder the right, but not the obligation, to buy the stock of an issuer at a
given price (generally higher than the value of the stock at the time of
issuance) during a specified period or perpetually. Warrants may be acquired
separately or in connection with the acquisition of securities. A Fund will
purchase warrants, valued at the lower of cost or market value, in excess of 5%
of the Fund's net assets. Included in that amount, but not to exceed 2% of the
Fund's net assets, may be warrants that are not listed on the New York Stock
Exchange or the American Stock Exchange. Warrants acquired by the Fund in
units or attached to securities are not subject to these restrictions.
Warrants do not carry with them the right to dividends or voting rights with
respect to the securities that they entitle their holder to purchase, and they
do not represent any rights in the assets of the issuer. As a result, warrants
may be considered more speculative than certain other types of investments. In
addition, the value of a warrant does not necessarily change with the value of
the underlying securities, and a warrant ceases to have value if it is not
exercised prior to its expiration date.

CONVERTIBLE SECURITIES

The Funds may invest up to 5% of its total assets in convertible
securities, which are bonds, debentures, notes, preferred stocks, or other
securities that may be converted into or exchanged for a specified amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. A convertible security entitles the
holder to receive interest normally paid or accrued on debt or the dividend
paid on preferred stock until the convertible security matures or is redeemed,
converted, or exchanged. Convertible securities have unique investment
characteristics in that they generally (1) have higher yields than common
stocks, but lower yields than comparable non-convertible securities, (2) are
less subject to fluctuation in value than the underlying stock since they have
fixed income characteristics, and (3) provide the potential for capital
appreciation if the market price of the underlying common stock increases.
Most convertible securities currently are issued by U.S. companies, although a
substantial Eurodollar convertible securities market has developed, and the
markets for convertible securities denominated in local currencies are
increasing.

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

A convertible security might be subject to redemption at the option of
the issuer at a price established in the convertible security's governing
instrument. If a convertible security held by a Fund is called for redemption,
the Fund will be required to permit the issuer to redeem the security, convert
it into the underlying common stock or sell it to a third party. Any of these
actions could have an adverse effect on a Fund's ability to achieve its
investment objective.

PREFERRED STOCK

6
<PAGE> 43

Each Fund may invest up to 5% of its total assets in preferred stock
of U.S. and foreign companies. Preferred stock generally has a preference as
to dividends and upon liquidation over an issuer's common stock but ranks
junior to debt securities in an issuer's capital structure. Preferred stock
generally pays dividends in cash (or other shares of preferred stock) at a
defined rate but, unlike interest payments on debt securities, preferred stock
dividends are payable only if declared by the issuer's board of directors.
Dividends on preferred stock may be cumulative, meaning that, in the event the
issuer fails to make one or more dividend payments on the preferred stock, no
dividends may be paid on the issuer's common stock until all unpaid preferred
stock dividends have been paid. Preferred stock also may provide that, in the
event the issuer fails to make a specified number of dividend payments, the
holders of the preferred stock will have the right to elect a specified number
of directors to the issuer's board. Preferred stock also may be subject to
optional or mandatory redemption provisions.

VARIABLE- OR FLOATING-RATE SECURITIES

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

Variable- or floating-rate securities frequently include a demand
feature entitling the holder to sell the securities to the issuer at par. In
many cases, the demand feature can be exercised at any time on 7 days notice;
in other cases, the demand feature is exercisable at any time on 30 days notice
or on similar notice at intervals of not more than one year. Some securities
which do not have variable or floating interest rates may be accompanied by
puts producing similar results and price characteristics. When considering the
maturity of any instrument which may be sold or put to the issuer or a third
party, each Fund may consider that instruments maturity to be shorter than its
stated maturity.

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

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

FOREIGN SECURITIES

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<PAGE> 44

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

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

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

SOVEREIGN DEBT

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

A sovereign debtors willingness or ability to repay principal and pay
interest in a timely manner may be affected by, among other factors, its cash
flow situation, the extent of its foreign reserves, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
the debt service burden to the economy as a whole, the sovereign debtor's
policy toward principal international lenders and the political constraints to
which a sovereign debtor may be subject. A country whose exports are
concentrated in a few commodities could be vulnerable to a decline in the
international price of such commodities. Increased protectionism on the part
of a country's trading partners, or political changes in those countries, could
also adversely affect its exports. Such events could diminish a country's
trade account surplus, if any, or the credit standing of a particular local
government or agency. Another factor bearing on the ability of a country to
repay sovereign debt is the level of the country's international reserves.
Fluctuations in the level of these reserves can affect the amount of foreign
exchange readily available for external debt payments and, thus, could have a
bearing on the capacity of the country to make payments on its sovereign debt.

To the extent that a country has a current account deficit (generally
when exports of merchandise and services are less than the country's imports of
merchandise and services plus net transfers (e.g., gifts of currency and goods)
to foreigners), it will need to depend on loans from foreign governments,
multilateral organizations or private commercial banks, aid payments from
foreign governments and inflows of foreign investment. The access of a country
to these forms of external funding may not be certain, and a withdrawal of
external funding could adversely affect the capacity of a government to make
payments on its obligations. In addition, the cost of servicing debt
obligations can be affected by a change in international interest rates since
the majority of these obligations carry interest rates that are adjusted
periodically based upon international rates.

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<PAGE> 45

With respect to sovereign debt of emerging market issuers, investors
should be aware that certain emerging market countries are among the largest
debtors to commercial banks and foreign governments. At times certain emerging
market countries have declared moratoria on the payment of principal and
interest on external debt.

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

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

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

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

Certain Brady Bonds have been collateralized as to principal due at
maturity by U.S. Treasury zero coupon bonds with maturities equal to the final
maturity of such Brady Bonds. Collateral purchases are financed by the IMF,
the World Bank, and the debtor nations' reserves. In the event of a default
with respect to collateralized Brady Bonds as a result of which the payment
obligations of the issuer are accelerated, the U.S. Treasury zero coupon
obligations held as collateral for the payment of principal will not be
distributed to investors, nor will such obligations be sold and the proceeds
distributed. The collateral will be held by the

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<PAGE> 46

collateral agent to the scheduled maturity of the defaulted Brady Bonds, which
will continue to be outstanding, at which time the face amount of the
collateral will equal the principal payments which would have then been due on
the Brady Bonds in the normal course. In addition, interest payments on
certain types of Brady Bonds may be collateralized by cash or high grade
securities in amounts that typically represent between 12 and 18 months of
interest accruals on these instruments with the balance of the interest
accruals being uncollateralized. Brady Bonds are often viewed as having
several valuation components: (1) the collateralized repayment of principal,
if any, at final maturity, (2) the collateralized interest payments, if any,
(3) the uncollateralized interest payments, and (4) any uncollateralized
repayment of principal at maturity (these uncollateralized amounts constitute
the "residual risk"). In light of the residual risk of Brady Bonds and, among
other factors, the history of defaults with respect to commercial bank loans by
public and private entities of countries issuing Brady Bonds, investments in
Brady Bonds are to be viewed as speculative. The Funds may purchase Brady
Bonds with no or limited collateralization, and will be relying for payment of
interest and (except in the case of principal collateralized Brady Bonds)
principal primarily on the willingness and ability of the foreign government to
make payment in accordance with the terms of the Brady Bonds. Brady Bonds
issued to date are purchased and sold in secondary markets through U.S.
securities dealers and other financial institutions and are generally
maintained through European transnational securities depositories.

MORTGAGE- AND ASSET-BACKED SECURITIES

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

Asset-backed securities have structural characteristics similar to
mortgage-backed securities. However, the underlying assets are not first lien
mortgage loans or interests therein, but include assets such as motor vehicle
installment sales contracts, other installment loan contracts, home equity
loans, leases of various types of property, and receivables from credit card or
other revolving credit arrangements. Payments or distributions of principal
and interest on asset-backed securities may be supported by non-governmental
credit enhancements similar to those utilized in connection with
mortgage-backed securities.

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

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

HIGH YIELD (HIGH RISK) SECURITIES

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IN GENERAL. Each Fund has the authority to invest up to 35% of its
total assets in non-investment grade debt securities. Non-investment grade
debt securities (hereinafter referred to as "lower-quality securities") include
(i) bonds rated as low as C by Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Corporation ("S&P"), or Fitch Investors Service, Inc.
("Fitch"), or CCC by Duff & Phelps, Inc. ("D&P"); (ii) commercial paper rated
as low as C by S&P, Not Prime by Moody's or Fitch 4 by Fitch; and (iii) unrated
debt securities of comparable quality. Lower-quality securities, while
generally offering higher yields than investment grade securities with similar
maturities, involve greater risks, including the possibility of default or
bankruptcy. They are regarded as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal. The special risk
considerations in connection with investments in these securities are discussed
below. Refer to the Appendix of this Statement of Additional Information for a
discussion of securities ratings.

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

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

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

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

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

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<PAGE> 48

whether to dispose of or to retain lower-quality and comparable unrated
securities whose credit ratings or credit quality may have changed.

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

NEW AND PROPOSED LEGISLATION. Recent legislation has been adopted,
and from time to time, proposals have been discussed, regarding new legislation
designed to limit the use of certain lower-quality and comparable unrated
securities by certain issuers. An example of legislation is a recent law which
requires federally insured savings and loan associations to divest their
investments in these securities over time. It is not currently possible to
determine the impact of the recent legislation or the proposed legislation on
the lower-quality and comparable unrated securities market. However, it is
anticipated that if additional legislation is enacted or proposed, it could
have a material affect on the value of these securities and the existence of a
secondary trading market for the securities.

DERIVATIVE INSTRUMENTS

GENERAL DESCRIPTION. As discussed in the Prospectus, the Advisor may
use a variety of derivative instruments, including options, futures contracts
(sometimes referred to as "futures"), options on futures contracts, forward
currency contracts and swap agreements for any lawful purpose, such as to hedge
a Fund's portfolio, risk management or to attempt to enhance returns.

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

In addition to the products, strategies and risks described below and
in the Prospectus, the Advisor expects to discover additional derivative
instruments and other hedging techniques. These new opportunities may become
available as the Advisor develops new techniques, as regulatory authorities
broaden the range of permitted transactions. The Advisor may utilize these
opportunities to the extent that they are consistent with a Fund's investment
objective and permitted by a Fund's investment limitations and applicable
regulatory authorities.

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

(1) Successful use of most of these instruments depends upon the
Advisor's ability to predict movements of the overall securities and currency
markets, which requires different skills than predicting changes in the prices
of individual securities. While the Advisor is experienced in the use of these
instruments, there can be no assurance that any particular strategy adopted
will succeed.

(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of investments
being hedged. For example, if the value of an instrument used in a short hedge
(such as writing a call option, buying a put option, or selling a futures
contract) increased by less than the decline in value of the hedged investment,

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<PAGE> 49

the hedge would not be fully successful. Such a lack of correlation might
occur due to factors unrelated to the value of the investments being hedged,
such as speculative or other pressures on the markets in which these
instruments are traded. The effectiveness of hedges using instruments on
indices will depend on the degree of correlation between price movements in the
index and price movements in the investments being hedged.

(3) Hedging strategies, if successful, can reduce risk of loss by
wholly or partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies can
also reduce opportunity for gain by offsetting the positive effect of favorable
price movements in the hedged investments. For example, if a Fund entered into
a short hedge because the Advisor projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by a
decline in the price of the instrument. Moreover, if the price of the
instrument declined by more than the increase in the price of the security, the
Fund could suffer a loss.

(4) As described below, a Fund might be required to maintain
assets as "cover," maintain segregated accounts, or make margin payments when
it takes positions in these instruments involving obligations to third parties
(i.e., instruments other than purchased options). If a Fund were unable to
close out its positions in such instruments, it might be required to continue
to maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair a Fund's ability to sell a
portfolio security or make an investment at a time when it would otherwise be
favorable to do so, or require that a Fund sell a portfolio security at a
disadvantageous time. A Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("counter party") to enter
into a transaction closing out the position. Therefore, there is no assurance
that any hedging position can be closed out at a time and price that is
favorable to a Fund.

For a discussion of the federal income tax treatment of the Funds'
derivative instruments, see "TAXES - Derivative Instruments" below.

GENERAL LIMITATIONS ON CERTAIN DERIVATIVE TRANSACTIONS. The Funds
have filed a notice of eligibility for exclusion from the definition of the
term "commodity pool operator" with the Commodity Futures Trading Commission
(the "CFTC") and the National Futures Association, which regulate trading in
the futures markets. Pursuant to Rule 4.5 of the regulations under the
Commodity Exchange Act (the "CEA"), the notice of eligibility for each Fund
includes representations that each Fund will use futures contracts, options on
futures contracts, and options on foreign currencies trading on a commodities
exchange only for bona fide hedging purposes within the meaning of CFTC
regulations, provided that a Fund may hold other positions in futures
contracts, options on futures contacts, and options on foreign currencies
trading on a commodities exchange that do not qualify as a bona fide hedging
position if the aggregate initial margin deposits and premiums required to
establish these positions, less the amount by which any such options positions
are "in the money," do not exceed 5% of the Fund's net assets. Adoption of
these guidelines does not limit the percentage of a Fund's assets at risk to
5%. A Fund may purchase a put or call option, including any straddles or
spreads, only if the value of its premium, when aggregated with the premiums
on all other options purchased by the Fund, does not exceed 5% of the Fund's
total assets.

In addition, (i) the aggregate value of securities underlying call
options on securities written by a Fund or obligations underlying put options
on securities written by a Fund determined as of the date the options are
written will not exceed 50% of the Fund's net assets; (ii) the aggregate
premiums paid on all options purchased by a Fund and which are being held will
not exceed 20% of the Fund's net assets; (iii) a Fund will not purchase put or
call options, other than hedging positions, if, as a result thereof, more than
5% of its total assets would be so invested; and (iv) the aggregate margin
deposits required on all futures and options on futures transactions being held
will not exceed 5% of a Fund's total assets.

The foregoing limitations are not fundamental policies of the Funds
and may be changed without shareholder approval as regulatory agencies permit.

Transactions using options (other than purchased options), futures
contracts, forward currency contracts, and swaps, expose the Funds to
counter-party risk. To the extent required by SEC guidelines, neither Fund
will enter into any such transactions unless it owns either (1) an offsetting
("covered") position in securities, currencies, or other options, futures, or
forward currency contracts or (2) cash and liquid high grade debt securities
with a value sufficient at all times to cover its potential

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<PAGE> 50

obligations to the extent not covered as provided in (1) above. Each Fund will
also set aside cash and/or appropriate liquid assets in a segregated custodial
account if required to do so by the SEC and CFTC regulations. Assets used as
cover or held in a segregated account cannot be sold while the position in the
corresponding option, futures contract, or forward currency contract is open,
unless they are replaced with similar assets. As a result, the commitment of a
large portion of a Fund's assets to cover or segregated accounts could impede
portfolio management or a Fund's ability to meet redemption requests or other
current obligations.

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

The value of an option position will reflect, among other things, the
historical price volatility of the underlying investment, the current market
value of the underlying investment, the time remaining until expiration, the
relationship of the exercise price to the market price of the underlying
investment, and general market conditions. Generally, the OTC debt and foreign
currency options used by the Funds are European-style options. This means that
the option is only exercisable immediately prior to its expiration. This is in
contrast to American-style options, which are exercisable at any time prior to
the expiration date of the option. Options that expire unexercised have no
value.

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

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

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

If a Fund were unable to effect a closing transaction for an option it
had purchased, it would have to exercise the option to realize any profit. The
inability to enter into a closing purchase transaction for a covered call
option written by a Fund could

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<PAGE> 51

cause material losses because the Fund would be unable to sell the investment
used as cover for the written option until the option expires or is exercised.

The Funds may purchase and write put and call options on indices of
debt and equity securities in much the same manner as the more traditional
options discussed above, except the index options may serve as a hedge against
overall fluctuations in the debt or equity securities market (or market
sectors) rather than anticipated increases or decreases in the value of a
particular security.

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

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

FUTURES CONTRACTS. The Funds may enter into interest rate, securities
index, and foreign currency futures contracts (hereinafter referred to as
"futures" or "futures contracts"). The Funds may also purchase put and call
options, and write covered put and call options, on futures in which it is
allowed to invest. The purchase of futures or call options thereon can serve
as a long hedge, and the sale of futures or the purchase of put options thereon
can serve as a short hedge. Writing covered call options on futures contracts
can serve as a limited short hedge, and writing covered put options on futures
contracts can serve as a limited long hedge, using a strategy similar to that
used for writing covered options in securities. The Funds' hedging may include
purchases of futures as an offset against the effect of expected increases in
currency exchange rates and securities prices and sales of futures as an offset
against the effect of expected declines in currency exchange rates and
securities prices. The Funds' futures transactions may be entered into for any
lawful purpose such as hedging purposes, risk management or to enhance returns.
The Funds may also write put options on interest rate futures contracts while
at the same time purchasing call options on the same futures contracts in order
to create synthetically a long futures contract position. Such options would
have the same strike prices and expiration dates. The Funds will engage in
this strategy only when the Advisor believes it is more advantageous to the
Funds than is purchasing the futures contract.

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

An interest rate futures contract provides for the future sale by one
party and purchase by another party of a specified amount of a specific
financial instrument (debt security) for a specified price at a designated
date, time, and place. An index futures contract is an agreement pursuant to
which the parties agree to take or make delivery of an amount of cash equal to
the difference between the value of the index at the close of the last trading
day of the contract and the price at which the index futures contract was
originally written. A foreign currency contract is a bilateral agreement
pursuant to which one party agrees to make and the other party agrees to accept
delivery of a specified type of currency at a specified future time and at a
specified price. Transaction costs are incurred when a futures contract is
bought or sold and margin deposits must be maintained. A futures contract may
be satisfied by delivery or purchase, as the case may be, of the instrument,
the currency or by payment of the change in the cash value of the index. More
commonly, futures contracts are closed out prior to delivery by entering into
an offsetting transaction in a matching futures contract. Although the value
of an index might be a function of the value of certain specified securities,
no physical delivery of those securities is made. If the offsetting purchase
price is less than the original sale price, a

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<PAGE> 52

Fund realizes a gain; if it is more, a Fund realizes a loss. Conversely, if
the offsetting sale price is more than the original purchase price, a Fund
realizes a gain; if it is less, a Fund realizes a loss. The transaction costs
must also be included in these calculations. There can be no assurance,
however, that a Fund will be able to enter into an offsetting transaction with
respect to a particular futures contract at a particular time. If a Fund is
not able to enter into an offsetting transaction, the Fund will continue to be
required to maintain the margin deposits on the futures contract.

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

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

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

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

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

FOREIGN CURRENCY-RELATED DERIVATIVE STRATEGIES--SPECIAL
CONSIDERATIONS. The Funds may also use options and futures on foreign
currencies, as described above, and forward currency contracts, as described
below, to hedge against movements in the values of the foreign currencies in
which a Fund's securities are denominated. A Fund may utilize foreign
currency-

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<PAGE> 53

related derivative instruments to seek to enhance returns through exposure to a
particular foreign currency. Such currency hedges can protect against price
movements in a security a Fund owns or intends to acquire that are attributable
to changes in the value of the currency in which it is denominated. Such
hedges do not, however, protect against price movements in the securities that
are attributable to other causes.

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

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

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

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

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

FORWARD CURRENCY CONTRACTS. A forward currency contract involves an
obligation to purchase or sell a specific currency at a specified future date,
which may be any fixed number of days from the contract date agreed upon by the
parties, at a price set at the time the contract is entered into.

A Fund may enter into forward currency contracts to purchase or sell
foreign currencies for a fixed amount of U.S. dollars or another foreign
currency for any lawful purpose. Such transactions may serve as long hedges --
for example, a Fund may purchase a forward currency contract to lock in the
U.S. dollar price of a security denominated in a foreign currency that the Fund
intends to acquire. Forward currency contracts may also serve as short hedges
- -- for example, a Fund may sell a forward currency contract to lock in the U.S.
dollar equivalent of the proceeds from the anticipated sale of a security
denominated in a foreign currency.

As noted above, a Fund may seek to hedge against changes in the value
of a particular currency by using forward contracts on another foreign currency
or a basket of currencies, the value of which the Advisor believes will have a
positive correlation to the values of the currency being hedged. In addition,
a Fund may use forward currency contracts to shift exposure to foreign currency
fluctuations from one country to another. For example, if a Fund owns
securities denominated in a foreign currency and the Advisor believes that
currency will decline relative to another currency, it might enter into a
forward contract to sell an appropriate amount of the first foreign currency,
with payment to be made in the second foreign currency. Transactions that use
two foreign currencies are sometimes referred to as "cross hedges." Use of
different foreign currency magnifies the risk

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<PAGE> 54

that movements in the price of the instrument will not correlate or will
correlate unfavorably with the foreign currency being hedged.

The cost to a Fund of engaging in forward currency contracts varies
with factors such as the currency involved, the length of the contract period
and the market conditions then prevailing. Because forward currency contracts
are usually entered into on a principal basis, no fees or commissions are
involved. When a Fund enters into a forward currency contract, it relies on
the counter party to make or take delivery of the underlying currency at the
maturity of the contract. Failure by the counter party to do so would result
in the loss of any expected benefit of the transaction.

As is the case with futures contracts, purchasers and sellers of
forward currency contracts can enter into offsetting closing transactions,
similar to closing transactions on futures, by selling or purchasing,
respectively, an instrument identical to the instrument purchased or sold.
Secondary markets generally do not exist for forward currency contracts, with
the result that closing transactions generally can be made for forward currency
contracts only by negotiating directly with the counter party. Thus, there can
be no assurance that a Fund will in fact be able to close out a forward
currency contract at a favorable price prior to maturity. In addition, in the
event of insolvency of the counter party, a Fund might be unable to close out a
forward currency contract at any time prior to maturity. In either event, the
Fund would continue to be subject to market risk with respect to the position,
and would continue to be required to maintain a position in securities
denominated in the foreign currency or to maintain cash or securities in a
segregated account.

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

Each Fund may enter into forward currency contracts or maintain a net
exposure to such contracts only if (1) the consummation of the contracts would
not obligate the Fund to deliver an amount of foreign currency in excess of the
value of its portfolio securities or other assets denominated in that currency,
or (2) the Fund maintains cash, U.S. government securities or liquid,
high-grade debt securities in a segregated account in an amount not less than
the value of its total assets committed to the consummation of the contract and
not covered as provided in (1) above, as marked to market daily.

When required by guidelines of the Securities and Exchange Commission,
the Funds will set aside permissible liquid assets in segregated accounts to
secure their respective potential obligations under forward currency contracts.

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

The "notional amount" of the swap agreement is only the agreed upon
basis for calculating the obligations that the parties to a swap agreement have
agreed to exchange. Under most swap agreements entered into by a Fund, the
obligations of the parties would be exchanged on a "net basis." Consequently, a
Fund's obligations (or rights) under a swap agreement will generally be equal
only to the net amount to be paid or received under the agreement based on the
relative values of the positions

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<PAGE> 55

held by each party to the agreement (the "net amount"). A Fund's obligations
under a swap agreement will be accrued daily (offset against amounts owed to
the Fund) and any accrued but unpaid net amounts owed to a swap counter party
will be covered by the maintenance of a segregated account consisting of cash,
or liquid high grade debt obligations.

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

The Funds will enter into swap agreements only with banks and
recognized securities dealers believed by the Advisor to present minimal credit
risks in accordance with guidelines established by each Fund's Board of
Directors. If there is a default by the other party to such a transaction, a
Fund will have to rely on its contractual remedies (which may be limited by
bankruptcy, insolvency or similar laws) pursuant to the agreements related to
the transaction.

REPURCHASE AGREEMENTS

The Funds may invest in repurchase agreements with certain banks or
non-bank dealers. In a repurchase agreement, a Fund buys a security at one
price, and at the time of sale, the seller agrees to repurchase the obligation
at a mutually agreed upon time and price (usually within seven days). The
repurchase agreement, thereby, determines the yield during the purchaser's
holding period, while the seller's obligation to repurchase is secured by the
value of the underlying security. If the value of such securities is less than
the repurchase price, plus any agreed-upon additional amount, the other party
to the agreement will be required to provide additional collateral so that at
all times the collateral is at least equal to the repurchase price, plus any
agreed-upon additional amount. The Advisor will monitor, on an ongoing basis,
the value of the underlying securities to ensure that the value always equals
or exceeds the repurchase price plus accrued interest. Repurchase agreements
could involve certain risks in the event of a default or insolvency of the
other party to the agreement, including possible delays or restrictions upon a
Fund's ability to dispose of the underlying securities. Although no definitive
creditworthiness criteria are used, the Advisor reviews the creditworthiness of
the banks and non-bank dealers with which the Funds enter into repurchase
agreements to evaluate those risks.

WHEN-ISSUED SECURITIES

The Funds may from time to time purchase securities, up to 25% of
total assets, on a "when-issued" basis. The price of debt securities purchased
on a when-issued basis, which may be expressed in yield terms, is fixed at the
time the commitment to purchase is made, but delivery and payment for the
securities take place at a later date. Normally, the settlement date occurs
within one month of the purchase. During the period between the purchase and
settlement, no payment is made by the Funds to the issuer and no interest on
debt securities accrues to the Funds. Forward commitments involve a risk of
loss if the value of the security to be purchased declines prior to the
settlement date, which risk is in addition to the risk of decline in value of
the Funds' other assets. While when-issued securities may be sold prior to the
settlement date, the Funds intend to purchase such securities with the purpose
of actually acquiring them unless a sale appears desirable for investment
reasons. At the time a Fund makes the commitment to purchase a security on a
when-issued basis, it will record the transaction and reflect the value of the
security in determining its net asset value. The Funds do not believe that
their respective net asset values or income will be adversely affected by its
purchases of securities on a when-issued basis.

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

LENDING OF PORTFOLIO SECURITIES

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

BORROWINGS

Each Fund may borrow money from banks, limited by each Fund's
fundamental investment restriction to 33 1/3% of its total assets, and may
engage in mortgage dollar roll transactions and reverse repurchase agreements
which may be considered a form of borrowing. (See "Implementation of Policies
and Risks - Mortgage Dollar Rolls and Reverse Repurchase Agreements" in the
Funds' Prospectus.) In addition, each Fund may borrow up to an additional 5%
of its total assets from banks for temporary or emergency purposes. A Fund will
not purchase securities when bank borrowings exceed 5% of the Fund's total
assets.

DIRECTORS AND OFFICERS OF THE FUNDS

Directors and officers of the Funds, together with information as to
their principal business occupations during the last five years, and other
information are shown below. Each director who is deemed an "interested
person," as defined in the Investment Company Act of 1940 ("Investment Company
Act"), is indicated by an asterisk. Each officer and director holds the same
position with the following registered investment companies: Strong Money
Market Fund, Inc., Strong U.S. Treasury Money Fund, Inc., Strong Municipal
Money Market Fund, Inc., Strong Municipal Bond Fund, Inc., Strong
Short-Intermediate Municipal Bond Fund, Inc., Strong Insured Municipal Bond
Fund, Inc., Strong Advantage Fund, Inc., Strong Short-Term Bond Fund, Inc.,
Strong Government Securities Fund, Inc., Strong Corporate Bond Fund, Inc.,
Strong Asset Allocation Fund, Inc., Strong Total Return Fund, Inc., Strong
Discovery Fund, Inc., Strong Opportunity Fund, Inc., Strong Common Stock Fund,
Inc., Strong International Stock Fund, Inc., Strong Discovery Fund II, Inc.,
Strong Special Fund II, Inc., Strong American Utilities Fund, Inc., Strong
High-Yield Municipal Bond Fund, Inc., Strong Growth Fund, Inc., Strong Asia
Pacific Fund, Inc., Strong Short-Term Global Bond Fund, Inc., and Strong
International Bond Fund, Inc. (collectively, the "Strong Funds").

*Richard S. Strong, Chairman of the Board and Director of the Funds.

Prior to August 1985, Mr. Strong was Chief Executive Officer of the
Advisor, which he founded in 1974. Since August 1985, Mr. Strong has been a
Security Analyst and Portfolio Manager of the Advisor. In October 1991, Mr.
Strong also became the Chairman of the Advisor. Mr. Strong is a director of
the Advisor. Since October 1993, Mr. Strong has been Chairman and a director
of Strong Holdings, Inc., a Wisconsin corporation and subsidiary of the Advisor
("Holdings"), and the Fund's underwriter, Strong Funds Distributors, Inc., a
Wisconsin corporation and subsidiary of Holdings ("Distributor"). Since
January 1994, Mr. Strong has been Chairman and a director of Heritage Reserve
Development Corporation, a Wisconsin Corporation and subsidiary of Holdings
("Heritage"); and since February 1994, Mr. Strong has been a member of the
Managing Boards of Fussville Real Estate Holdings L.L.C. ("Real Estate
Holdings"), a Wisconsin Limited Liability Company and subsidiary of the
Advisor, and Fussville Development L.L.C. ("Development"), a Wisconsin Limited
Liability Company and subsidiary of the Advisor, and certain of its
subsidiaries. Mr. Strong has served as a director and Chairman of the Board
of the Funds since January 1994. Mr. Strong has been in the investment
management business since 1967.

Marvin E. Nevins, Director of the Funds.

Private Investor. From 1945 to 1980, Mr. Nevins was Chairman of
Wisconsin Centrifugal Inc., a foundry. From July 1983 to December 1986, he was
Chairman, General Casting Corp., Waukesha, Wisconsin, a foundry. Mr. Nevins is
a former

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Chairman of the Wisconsin Association of Manufacturers & Commerce. He was also
a regent of the Milwaukee School of Engineering and a member of the Board of
Trustees of the Medical College of Wisconsin. Mr. Nevins has served as a
director of the Funds since January 1994.

Willie D. Davis, Director of the Funds.

Mr. Davis has been director of Alliance Bank since 1980, Sara Lee
Corporation (a food/consumer products company) since 1983, KMart Corporation (a
discount consumer products company) since 1985, YMCA Metropolitan - Los Angeles
since 1985, Dow Chemical Company since 1988, MGM Grand, Inc. (an
entertainment/hotel company) since 1990, WICOR, Inc. (a utility company) since
1990, Johnson Controls, Inc. (an industrial company) since 1992, L.A. Gear (a
footwear/sportswear company) since 1992, and Rally's Hamburger, Inc. since
1994. Mr. Davis has been a trustee of the University of Chicago since 1980,
Marquette University since 1988, and Occidental College since 1990. Since
1977, Mr. Davis has been President and Chief Executive Officer of All Pro
Broadcasting, Inc. Mr. Davis was a director of the Fireman's Fund (an
insurance company) from 1975 until 1990. Mr. Davis has served as a director of
the Funds since July 1994.

*John Dragisic, Vice Chairman and Director of the Funds.

Mr. Dragisic has been Vice Chairman of the Advisor and director of
Holdings and Distributor since July 1994. Mr. Dragisic previously served as a
director of the Funds from January 1994 until July 1994. Mr. Dragisic was the
President and Chief Executive Officer of Grunau Company, Inc. (a mechanical
contracting and engineering firm), Milwaukee, Wisconsin from 1987 until July
1994. From 1981 to 1987, he was an Executive Vice President with Grunau
Company, Inc. From 1969 until 1973, Mr. Dragisic worked for the Inter American
Development Bank. Mr. Dragisic received his Ph.D. in Economics in 1971 from
the University of Wisconsin-Madison, and his B.A. degree in Economics in 1962
from Lake Forest College. Mr. Dragisic has been Vice Chairman of the Funds
since July 1994 and a director of the Funds since April 1995.

Stanley Kritzik, Director of the Funds.

Mr. Kritzik has been a Partner of Metropolitan Associates since _____
and a Director of Aurora Health Care and Health Network Ventures, Inc. since
____. He has served as a Director of the Funds since April 1995.

William F. Vogt, Director of the Funds.

Mr. Vogt has been the President of Vogt Management Consulting, Inc.
(need description of Co.), Denver, Colorado since 1990. From 1982 until 1990,
he served as an executive director of University Physicians (need description),
Denver, Colorado. Mr. Vogt was also a Fellow of the Medical Group Management
Association, American College of Medical Practice Executives. He has served as
a director of the Fund since April 1995.

Lawrence A. Totsky, C.P.A., Vice President of the Funds.

Mr. Totsky has been Senior Vice President of the Advisor since
September 1994. Mr. Totsky served as Vice President of the Advisor from
December 1992 to September 1994. Mr. Totsky acted as the Advisor's Manager of
Shareholder Accounting and Compliance from June 1987 to June 1991 when he was
named Director of Mutual Fund Administration. Mr. Totsky has been a Vice
President of the Funds since January 1994.

Thomas P. Lemke, Vice President of the Funds.

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

21
<PAGE> 58

Ann E. Oglanian, Secretary of the Funds.

Ms. Oglanian has been an Associate Counsel of the Advisor since
January 1992. Ms. Oglanian acted as Associate Counsel for the Chicago-based
investment management firm, Kemper Financial Services, Inc. from June 1988
until December 1991. Ms. Oglanian has been the Secretary of the Funds since
May 1994.

Ronald A. Neville, Treasurer of the Funds.

Except for Messrs. Nevins, Davis, Kritzik and Vogt, the address of all
of the above persons is P.O. Box 2936, Milwaukee, Wisconsin 53201. Mr. Nevins'
address is 6075 Pelican Bay Boulevard, Naples, Florida 33963. Mr. Davis'
address is 161 North La Brea, Inglewood, California 90301. Mr. Kritzik's
address is 1123 North Astor Street, P.O. Box 92547, Milwaukee, Wisconsin
53202-0547. Mr. Vogt's address is 3003 Third Street Avenue, Denver, Colorado
80206.

As of January 31, 1995, the officers and directors of the Short-Term
Global Bond Fund in the aggregate beneficially owned 16,089 shares of common
stock, which was approximately 1.17% of the Fund's then outstanding shares. As
of January 31, 1995, the officers and directors of the International Bond Fund
in the aggregate beneficially owned 12,768 shares of common stock, which was
approximately 1.33% of the Fund's then outstanding shares. Directors and
officers of the Fund who are officers, directors, employees, or shareholders of
the Advisor do not receive any remuneration from the Fund for serving as
directors or officers.

PRINCIPAL SHAREHOLDER

As of January 31, 1995, the following persons owned of record or are
known by the Funds to own of record or beneficially, more than 5% of the listed
Fund's outstanding shares:

<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES PERCENT OF CLASS
---------------- ------ ----------------
<S> <C> <C>
Short-Term Global Bond
Charles Schwab & Co., Inc. 132,864 9.69%
101 Montgomery Street
San Francisco, California 94104

International Bond
Oshkosh B'Gosh, Inc. 308,777 32.24
P.O. Box 300
Oshkosh, Wisconsin 54902

Managed Health Services, Inc. 120,560 12.59
890 Elm Grove Road, #213
Elm Grove, Wisconsin 53122

International Bond
Schneider National, Inc. 102,926 10.75
P.O. Box 2545
Green Bay, Wisconsin 54306

Marshall & Ilsley Trust Co. 74,786 7.81
1000 North Water Street
Milwaukee, Wisconsin 53202

Charles Schwab & Co., Inc. 54,937 5.74

Roundy's, Inc. 48,652 5.08
</TABLE>

22
<PAGE> 59

P.O. Box 473
Milwaukee, Wisconsin 53201

INVESTMENT ADVISOR AND DISTRIBUTOR

The Advisor to the Funds is Strong Capital Management, Inc. Mr.
Richard S. Strong controls the Advisor. Mr. Strong is the Chairman and a
Director of the Advisor, Mr. Dragisic is the Vice Chairman and a Director of
the Advisor, Mr. Totsky is a Senior Vice President of the Advisor, Mr. Lemke is
a Senior Vice President, Secretary, and General Counsel of the Advisor, Ms.
Oglanian is the Associate Counsel of the Advisor, and Mr. Zoeller is the
Treasurer of the Advisor. A brief description of each Fund's investment
advisory agreement is set forth in the Prospectus under "About the Funds -
Management."

The Advisory Agreements, which are dated April 13, 1995 (the "Advisory
Agreements"), were approved by shareholders at the annual meeting of
shareholders held on April 13, 1995. Each Advisory Agreement is required to be
approved annually by its Board of Directors or by vote of a majority of the
Fund's outstanding voting securities (as defined in the Investment Company
Act). In either case, such annual renewal must be approved by the vote of a
majority of the Fund's directors who are not parties to the Advisory Agreement
or interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval. Each Advisory Agreement is terminable,
without penalty, on 60 days written notice by the Board of Directors of the
Fund, by vote of a majority of the Fund's outstanding voting securities, or by
the Advisor. In addition, an Advisory Agreement will terminate automatically
in the event of its assignment.

Under the terms of each Advisory Agreement, the Advisor manages a
Fund's investments subject to the supervision of the Fund's Board of Directors.
The Advisor is responsible for investment decisions and supplies investment
research and portfolio management. At its expense, the Advisor provides office
space and all necessary office facilities, equipment, and personnel for
servicing the investments of the Fund. The Advisor places all orders for the
purchase and sale of the Fund's portfolio securities at its expense.

Except for expenses assumed by the Advisor as set forth above or by
the Distributor as described below with respect to the distribution of a Fund's
shares, each Fund is responsible for all its other expenses, including, without
limitation, interest charges, taxes, brokerage commissions, and similar
expenses; expenses of issue, sale, repurchase, or redemption of shares;
expenses of registering or qualifying shares for sale; expenses for printing
and distribution costs of prospectuses and quarterly financial statements
mailed to existing shareholders; and charges of custodians, transfer agent fees
(including the printing and mailing of reports and notices to shareholders),
fees of registrars, fees for auditing and legal services, fees for clerical
services related to recordkeeping and shareholder relations, the cost of stock
certificates, and fees for directors who are not "interested persons" of the
Advisor.

As compensation for its services, the Short-Term Global Bond Fund pays
to the Advisor a monthly advisory fee at the annual rate of .625% of the Fund's
average daily net assets and the International Bond Fund pays to the Advisor a
monthly advisory fee at the annual rate of .70% of the Fund's average daily net
assets. (See "Shareholder Manual -- Determining Your Share Price" in the
Prospectus.) From time to time, the Advisor may voluntarily waive all or a
portion of its management fee for a Fund. The organizational expenses of the
Funds were advanced by the Advisor and will be reimbursed by each Fund over a
period of not more than 60 months.

23
<PAGE> 60

The following table sets forth certain information concerning advisory fees for
each Fund:

<TABLE>
<CAPTION>
Advisory Fee
Incurred Advisory Fee Advisory Fee
by Fund Waiver Paid by Fund
--------- ------- ------------
<S> <C> <C> <C>
Short-Term Global Bond Fund(1)
1994 $ $ $

International Bond Fund(2)
1994 $ $ $

</TABLE>

_______________________

(1) Commenced operations in ______________, 1994.

(2) Commenced operations in ______________, 1994.

Each Advisory Agreement requires the Advisor to reimburse a Fund in
the event that the expenses and charges payable by the Fund in any fiscal year,
including the advisory fee but excluding taxes, interest, brokerage
commissions, and similar fees, exceed that percentage of the average net asset
value of the Fund for such year. Such excess is determined by valuations made
as of the close of each business day of the year, which is the most restrictive
percentage provided by the state laws of the various states in which the Funds'
common stock is qualified for sale; or if the states in which the Funds' common
stock is qualified for sale impose no restrictions, the Advisor shall reimburse
the Funds in the event the expenses and charges payable by a Fund in any fiscal
year (as described above) exceed 2%. The most restrictive percentage
limitation currently applicable to the Funds is 2 1/2% of its average daily net
assets up to $30,000,000, 2% on the next $70,000,000 of its average daily net
assets, and 1 1/2% of its average daily net assets in excess of $100,000,000.
Reimbursement of expenses in excess of the applicable limitation will be made
on a monthly basis and will be paid to a Fund by reduction of the Advisor's
fee, subject to later adjustment, month by month, for the remainder of the
Fund's fiscal year. The Advisor may from time to time voluntarily absorb
expenses for a Fund in addition to the reimbursement of expenses in excess of
applicable limitations.

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

Under Distribution Agreements dated March 3, 1994, with each Fund (the
"Distribution Agreements"), Strong Funds Distributors, Inc. (the
"Distributor"), a subsidiary of the Advisor, acts as underwriter of each Funds'
shares. Each Distribution Agreement provides that the Distributor will use its
best efforts to distribute the Funds' shares. Since the Funds are "no-load"
funds, no sales commissions are charged on the purchase of a Fund's shares.
Each Distribution Agreement further provides that the Distributor will bear the
additional costs of printing prospectuses and shareholder reports which are
used for selling purposes, as well as advertising and other costs attributable
to the distribution of the Funds' shares. The Distributor is an indirect
subsidiary of the Advisor and controlled by the Advisor and Richard S. Strong.
Each Distribution Agreement is subject to the same termination and renewal
provisions as are described above with respect to the Advisory Agreements.

From time to time, the Distributor may hold in-house sales incentive
programs for its associated persons under which these persons may receive
non-cash compensation awards in connection with the sale and distribution of a
Fund's shares. These awards may include items such as, but not limited to,
gifts, merchandise, gift certificates, and payment of travel expenses, meals
and lodging. As required by the National Association of Securities Dealers,
Inc. or NASD's proposed rule amendments in this area, any in-house sales
incentive program will be multi-product oriented, i.e., any incentive will be
based on an associated

24
<PAGE> 61

person's gross production of all securities within a product type and will not
be based on the sales of shares of any specifically designated mutual fund.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Advisor is responsible for decisions to buy and sell securities
for the Funds and for the placement of the Funds' portfolio business and the
negotiation of the commissions to be paid on such transactions. It is the
policy of the Advisor to seek the best execution at the best security price
available with respect to each transaction, in light of the overall quality of
brokerage and research services provided to the Advisor or the Funds. In
over-the-counter transactions, orders are placed directly with a principal
market maker unless it is believed that a better price and execution can be
obtained using a broker. The best price to the Funds means the best net price
without regard to the mix between purchase or sale price and commission, if
any. In selecting broker-dealers and in negotiating commissions, the Advisor
considers the firm's reliability, the quality of its execution services on a
continuing basis, and its financial condition. Brokerage will not be allocated
based on the sale of any shares of the Strong Funds.

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

In carrying out the provisions of the Advisory Agreements, the Advisor
may cause the Funds to pay a broker which provides brokerage and research
services to the Advisor a commission for effecting a securities transaction in
excess of the amount another broker would have charged for effecting the
transaction. The Advisor is of the opinion that the continued receipt of
supplemental investment research services from brokers is essential to its
provision of high-quality portfolio management services to the Funds. The
Advisory Agreements provide that such higher commissions will not be paid by
the Funds unless (a) the Advisor determines in good faith that the amount is
reasonable in relation to the services in terms of the particular transaction
or in terms of the Advisor's overall responsibilities with respect to the
accounts as to which it exercises investment discretion; (b) such payment is
made in compliance with the provisions of Section 28(e), other applicable state
and federal laws, and the Advisory Agreements; and (c) in the opinion of the
Advisor, the total commissions paid by a Fund will be reasonable in relation to
the benefits to a Fund over the long term. The investment advisory fees paid by
the Funds under the Advisory Agreements are not reduced as a result of the
Advisor's receipt of research services.

The Short-Term Global Bond Fund paid brokerage commissions during 1994
of $______________. The International Bond Fund paid brokerage commissions
during 1994 of $_______________.

Generally, research services provided consist of portfolio pricing and
capital changes services and reports, research reports dealing with
macroeconomic trends and monetary and fiscal policy, research reports on
individual companies and industries, and information dealing with market trends
and technical analysis. Such brokers may pay for all or a portion of computer
hardware and software costs relating to the pricing of securities. Where the
Advisor itself receives both administrative benefits and research and brokerage
services from the services provided by brokers, it makes a good faith
allocation between the administrative benefits and the research and brokerage
services. The Advisor's receipt of these administrative benefits arises from
its ability, in certain cases, to direct brokerage to certain firms in
connection with its management of client portfolios. In making good faith
allocations between administrative benefits and research and brokerage
services, a conflict of interest may exist by reason of the Advisor's
allocation of the costs of such benefits and services between those that
primarily benefit the Advisor and those that primarily benefit its clients.

The Advisor places portfolio transactions for other advisory accounts,
including other mutual funds managed by the Advisor. Research services
furnished by firms through which the Funds effect their securities transactions
may be used by the Advisor in servicing all of its accounts; not all of such
services may be used by the Advisor in connection with the Funds. In the
opinion of the Advisor, it is not possible to separately measure the benefits
from research services to each of the accounts (including a Fund) managed by
the Advisor. Because the volume and nature of the trading activities of the
accounts are not

25
<PAGE> 62

uniform, the amount of commissions in excess of those charged by another broker
paid by each account for brokerage and research services will vary. However,
in the opinion of the Advisor, such costs to the Funds will not be
disproportionate to the benefits received by the Funds on a continuing basis.

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

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

CUSTODIAN

As custodian of the Funds' assets, Brown Brothers Harriman & Company
has custody of all securities and cash of the Funds, delivers and receives
payment for securities sold, receives and pays for securities purchased,
collects income from investments, and performs other duties, all as directed by
officers of the Funds. The custodian is in no way responsible for any of the
investment policies or decisions of the Funds.

TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT

The Advisor acts as dividend-disbursing agent and transfer agent for
the Funds. The Advisor is compensated based on an annual fee per open account
of the Funds of $31.50 plus certain out-of-pocket expenses, such as postage and
printing expenses in connection with shareholder communications. The Advisor
also receives an annual fee per closed account of $4.20 from each Fund, payable
monthly. The fees received and the services provided as transfer agent and
dividend-disbursing agent are in addition to the fees received and services
provided by the Advisor under the Advisory Agreements. In addition, the
Advisor provides certain printing and mailing services for the Funds, such as
printing and mailing of shareholder account statements, checks and tax forms.

The following table sets forth certain information concerning amounts
paid by the Funds for transfer agency and dividend disbursing and printing and
mailing services:

<TABLE>
<CAPTION>
Transfer Agency and Dividend Disbursement
Services Charges Incurred
Per Printing and Amounts Net Amount
Account Expense Mailing Waived By Paid By
Fund Charges Reimbursements Services Advisor Fund
<S> <C> <C> <C> <C> <C>
Short-Term Global Bond Fund
1994 $ $ $ $ $
International Bond Fund ------- ------- ------- ------- -------
1994 $ $ $ $ $
------- ------- ------- ------- -------
</TABLE>

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

26
<PAGE> 63

TAXES

GENERAL

As indicated under "About the Funds - Distribution and Taxes " in the
Prospectus, each Fund intends to qualify annually for treatment as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
("Code"). This qualification does not involve government supervision of the
Funds" management practices or policies.

In order to qualify for treatment as a RIC under the Code, each Fund
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain, and net gains from certain foreign
currency transactions) ("Distribution Requirement") and must meet several
additional requirements. Among these requirements are the following: (1) a
Fund must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of securities or foreign currencies, or other
income (including gains from options, futures, or forward currency contracts)
derived with respect to its business of investing in securities or those
currencies ("Income Requirement"); (2) a Fund must derive less than 30% of its
gross income each taxable year from the sale or other disposition of
securities, or any of the following, that were held for less than three months
- - options or futures (other than those on foreign currencies), or foreign
currencies (or options, futures, or forward currency contracts thereon) that
are not directly related to a Fund's principal business of investing in
securities (or options and futures with respect to securities) ("30%
Limitation"); (3) at the close of each quarter of a Fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. government securities, securities of other RICs, and other
securities, with these other securities limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of the Fund's total assets
and that does not represent more than 10% of the issuer's outstanding voting
securities; and (4) at the close of each quarter of a Fund's taxable year, not
more than 25% of the value of its total assets may be invested in securities
(other than U.S. government securities or the securities of other RICs) of any
one issuer.

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

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

FOREIGN TRANSACTIONS

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

Each Fund will maintain its accounts and calculate its income in U.S.
dollars. In general, gain or loss (1) from the disposition of foreign
currencies and forward foreign currency contracts, (2) from the disposition of
foreign-currency-denominated debt securities that are attributable to
fluctuations in exchange rates between the date the securities are acquired and
their disposition date, and (3) that are attributable to fluctuations in
exchange rates between the time a Fund accrues interest or other receivables or
expenses or other liabilities denominated in a foreign currency and the time
the Fund actually collects those

27
<PAGE> 64

receivables or pays those liabilities, will be treated as ordinary income or
loss. A foreign-currency-denominated debt security acquired by a Fund may bear
interest at a high nominal rate that takes into account expected decreases in
the value of the principal amount of the security due to anticipated currency
devaluations; in that case, a Fund would be required to include the interest in
income as it accrues but generally would realize a currency loss with respect
to the principal only when the principal was received (through disposition or
upon maturity).

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

Three bills passed by Congress in 1991 and 1992 and vetoed by
President Bush would have substantially modified the taxation of U.S.
shareholders of foreign corporations, including eliminating the provisions
described above dealing with PFICs and replacing them (and other provisions)
with a regulatory scheme involving entities called "passive foreign
corporations." The "Tax Simplification and Technical Corrections Bill of
1993," approved in November 1993 by the House Ways and Means Committee,
contains the same modifications. It is unclear at this time whether, and in
what form, the proposed modifications may be enacted into law.

Pursuant to proposed regulations, open-end RICs such as the Funds
would be entitled to elect to "mark-to-market" their stock in certain PFICs.
"Marking-to-market," in this context, means recognizing as gain for each
taxable year the excess, as of the end of that year, of the fair market value
of such PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).

DERIVATIVE INSTRUMENTS

The use of derivatives strategies, such as purchasing and selling
(writing) options and futures and entering into forward currency contracts,
involves complex rules that will determine for income tax purposes the
character and timing of recognition of the gains and losses the Funds realize
in connection therewith. Gains from the disposition of foreign currencies
(except certain gains therefrom that may be excluded by future regulations),
and income from transactions in options, futures, and forward currency
contracts derived by a Fund with respect to its business of investing in
securities or foreign currencies, will qualify as permissible income under the
Income Requirement. However, income from the disposition of options and
futures (other than those on foreign currencies) will be subject to the 30%
Limitation if they are held for less than three months. Income from the
disposition of foreign currencies, and options, futures, and forward currency
contracts on foreign currencies, that are not directly related to a Fund's
principal business of investing in securities (or options and futures with
respect to securities) also will be subject to the 30% Limitation if they are
held for less than three months.

If a Fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the Fund satisfies the
30% Limitation. Thus, only the net gain (if any) from the designated hedge
will be included in gross income for purposes of that limitation. Each Fund
intends that, when it engages in hedging strategies, the hedging transactions
will qualify for this treatment, but at the present time it is not clear
whether this treatment will be available for all of the Funds' hedging
transactions. To the extent this treatment is not available or is not elected
by a Fund, it may be forced to defer the closing out of certain options,
futures, and forward currency contracts beyond the time when it otherwise would
be advantageous to do so, in order for the Fund to qualify as a RIC.

28
<PAGE> 65

For federal income tax purposes, a Fund is required to recognize as
income for each taxable year its net unrealized gains and losses on options and
futures contracts that are subject to section 1256 of the Code ("Section 1256
Contracts") and are held by the Fund as of the end of the year, as well as
gains and losses on Section 1256 Contracts actually realized during the year.
Except for Section 1256 Contracts that are part of a "mixed straddle" and with
respect to which a Fund makes a certain election, any gain or loss recognized
with respect to Section 1256 Contracts is considered to be 60% long-term
capital gain or loss and 40% short-term capital gain or loss, without regard to
the holding period of the Section 1256 Contract. Unrealized gains on Section
1256 Contracts that have been held by a Fund for less than three months as of
the end of its taxable year, and that are recognized for federal income tax
purposes as described above, will not be considered gains on investments held
for less than three months for purposes of the 30% Limitation.

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

Each Fund may acquire zero-coupon, step-coupon, or other securities
issued with original issue discount. As the holder of those securities, a Fund
must include in its income the original issue discount that accrues on the
securities during the taxable year, even if the Fund receives no corresponding
payment on the securities during the year. Similarly, each Fund must include
in its gross income securities it receives as "interest" on pay-in-kind
securities. Because each Fund annually must distribute substantially all of
its investment company taxable income, including any original issue discount
and other non-cash income, to satisfy the Distribution Requirement and to avoid
imposition of the Excise Tax, it may be required in a particular year to
distribute as a dividend an amount that is greater than the total amount of
cash it actually receives. Those distributions may be made from the proceeds
on sales of portfolio securities, if necessary. A Fund may realize capital
gains or losses from those sales, which would increase or decrease its
investment company taxable income or net capital gain, or both. In addition,
any such gains may be realized on the disposition of securities held for less
than three months. Because of the 30% Limitation, any such gains would reduce
the Fund's ability to sell other securities, or options, futures, or forward
currency contracts, held for less than three months that it might wish to sell
in the ordinary course of its portfolio management.

DETERMINATION OF NET ASSET VALUE

As set forth in the Prospectus under the caption "Shareholder Manual
- -- Determining Your Share Price," the net asset value of a Fund will be
determined as of the close of trading on each day the NYSE is open for trading.
The NYSE is open for trading Monday through Friday except New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. Additionally, if any of the
aforementioned holidays fall on a Saturday, the NYSE will not be open for
trading on the preceding Friday, and when any such holiday falls on a Sunday,
the NYSE will not be open for trading on the succeeding Monday unless unusual
business conditions exist, such as the ending of a monthly or the yearly
accounting period.

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

SHAREHOLDER SERVICES

As described under "About the Funds -- Distributions and Taxes" in the
Prospectus, all income dividends and capital gain distributions will be
invested automatically in additional Fund shares unless a Fund is otherwise
notified in writing.

SYSTEMATIC WITHDRAWAL PLAN

29
<PAGE> 66

You can set up automatic withdrawals from your account at monthly,
quarterly, or annual intervals. To begin distributions, you must have an
initial balance of $5,000 in your account. To establish the Systematic
Withdrawal Plan, call 1-800-368-3863 and request an application. To establish
the Systematic Withdrawal Plan, you deposit your Fund shares with a Fund and
appoint it as your agent to effect redemptions of Fund shares held in your
account for the purpose of making monthly, quarterly, or annual withdrawal
payments of a fixed amount to you out of your account. Fund shares deposited
by you in your account must be endorsed or accompanied by a stock power. Your
signature should be guaranteed by an eligible guarantor institution as
described under "Shareholder Manual -- Special Situations" in the Prospectus.

The minimum amount of a withdrawal payment is $50. These payments will
be made from the proceeds of periodic redemption of shares in the account at
net asset value. Redemptions will be made on the fifth business day preceding
the last day of each month or, if that day is a holiday, on the next preceding
business day.

Withdrawal payments cannot be considered to be yield or income on the
shareholder's investment since portions of each payment will normally consist
of a return of capital. Depending on the size or the frequency of the
disbursements requested and the fluctuation in the value of a Fund's portfolio,
redemptions for the purpose of making such disbursements may reduce or even
exhaust your account.

You may vary the amount or frequency of withdrawal payments,
temporarily discontinue them, or change the designated payee or payee's address
by notifying a Fund.

AUTOMATIC INVESTMENT PLAN

An Automatic Investment Plan may be established at any time. By
participating in the Automatic Investment Plan, you may automatically make
purchases of shares of a Fund on a regular, convenient basis. You may choose to
make contributions on the fifth and/or twentieth day of each month in amounts
of $50 or more.

Under the Automatic Investment Plan, your bank or other financial
institution debits preauthorized amounts drawn on your account each month and
applies such amounts to the purchase of shares of a Fund. The Automatic
Investment Plan can be implemented with any financial institution that is a
member of the Automated Clearing House. An Automatic Investment Plan form is
attached to the Prospectus. No service fees are charged by the Funds for
participating in the Automatic Investment Plan.

GENERAL PROCEDURES FOR SHAREHOLDER ACCOUNTS

As set forth under "About the Funds -- Organization" in the
Prospectus, a Fund's share certificates are only issued upon written request.

Either an investor or a Fund, by written notice to the other, may
terminate the investor's participation in the plans, programs, privileges, or
other services described under "Shareholder Manual -- Shareholder Services" in
the Prospectus without penalty at any time, except as discussed in the
Prospectus.

Your account may be terminated by a Fund on not less than 30 days
notice if, at the time of any transfer or redemption of shares in the account,
the value of the remaining shares in the account at the current net asset value
falls below $500. Upon any such termination, the shares will be redeemed at
the then current net asset value and a check for the proceeds of redemption
sent within seven days of such redemption.

TELEPHONE EXCHANGE AND REDEMPTION PRIVILEGES AND AUTOMATIC EXCHANGE

A discussion of the Telephone Exchange Privilege and Automatic
Exchange is set forth in the Prospectus under the caption "Shareholder Manual
- -- Shareholder Services."

Shares of the Funds and any other funds sponsored by the Advisor may
be exchanged for each other at relative net asset values. Exchanges will be
effected by redemption of shares of a Fund held and purchase of shares of the
fund for which Fund shares are being exchanged (the "New Fund"). For federal
income tax purposes, any such exchange constitutes a sale upon

30
<PAGE> 67

which a capital gain or loss will be realized, depending upon whether the value
of the shares being exchanged is more or less than the shareholder's adjusted
cost basis. If you are interested in exercising any of these exchange
privileges, you should obtain prospectuses of other funds sponsored by the
Advisor from the Advisor. Upon a telephone exchange, the transfer agent
establishes a new account in the New Fund with the same registration and
dividend and capital gains options as the redeemed account, unless otherwise
specified, and confirms the purchase to you. In order to establish a
Systematic Withdrawal Plan for the new account, however, an exchanging
shareholder must file a specific written request.

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

The Telephone Exchange and Redemption Privileges and Automatic
Exchange are available only in states where shares of the New Fund may be sold,
and may be modified or discontinued at any time. Additional information
regarding the Telephone Exchange and Redemption Privileges and Automatic
Exchange Plan is contained in the Funds' Prospectus.

RETIREMENT PLANS

Individual Retirement Account (IRA): Everyone under age 70 1/2 with earned
income may contribute to a tax-deferred IRA. The Strong Funds offer a prototype
plan for you to establish your own IRA. You are allowed to contribute up to the
lesser of $2,000 or 100% of your earned income each year to your IRA. Under
certain circumstances, your contribution will be deductible.

Direct Rollover IRA: To avoid the mandatory 20% federal withholding tax on
certain distributions from qualified retirement plans, you must elect to
transfer the distribution directly into an "eligible retirement plan,"
including an IRA. This tax cannot be avoided if you receive the distribution
and then roll it over into an IRA. The amount of your Direct Rollover IRA
contribution will not be included in your taxable income for the year.

Simplified Employee Pension Plan (SEP-IRA): A SEP-IRA allows an employer to
make deductible contributions to separate IRA accounts established for each
eligible employee.

Salary Reduction Simplified Employee Pension Plan (SAR SEP-IRA): A SAR SEP-IRA
is a type of SEP-IRA in which an employer may allow employees to defer part of
their salaries and contribute into an IRA account. These deferrals help lower
the employees' taxable income.

Defined Contribution Plan: A defined contribution plan allows self-employed
individuals, partners, or a corporation to provide retirement benefits for
themselves and their employees. There are three plan types: a profit-sharing
plan, a money purchase pension plan, and a paired plan (a combination of a
profit-sharing plan and a money purchase plan).

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

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

FUND ORGANIZATION

Each Fund is a Wisconsin corporation that is authorized to offer
separate series of shares representing interests in separate portfolios of
securities, each with differing investment objectives. The shares in any one
portfolio may, in turn, be offered in separate classes, each with differing
preferences, limitations or relative rights. However, the Articles of
Incorporation for each of the Funds provides that if additional classes of
shares are issued by a Fund, such new classes of shares may not affect the
preferences, limitations or relative rights of the Fund's outstanding shares.
In addition, the Board of Directors of each Fund is authorized to allocate
assets, liabilities, income and expenses to each series and class. Classes
within a series may have different expense arrangements than other classes of
the same series and, accordingly, the net asset value of shares with a series
may differ.

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<PAGE> 68

Finally, all holders of shares of a Fund may vote on each matter presented to
shareholders for action except with respect to any matter which affects only
one or more series or class, in which case only the shares of the affected
series or class is entitled to vote. Fractional shares have the same rights
proportionately as do full shares. Shares of the Funds have no preemptive,
conversion, or subscription rights. Each Fund currently has only one series of
common stock outstanding. If a Fund issues additional series, the assets
belonging to each series of shares will be held separately by the custodian,
and in effect each series will be a separate fund.

SHAREHOLDER MEETINGS

Each Fund is a Wisconsin corporation organized on the following dates
with the following authorized shares of capital stock:

<TABLE>
<CAPTION>
Incorporation Authorized
Fund Date Shares Par Value ($)
---- --------------- -------------- -------------
<S> <C> <C> <C>
Short-Term Global Bond Fund January 5, 1994 10,000,000,000 .01
International Bond Fund January 5, 1994 10,000,000,000 .01
</TABLE>

The Funds' By-Laws also contain procedures for the removal of
directors by its shareholders. At any meeting of shareholders, duly called and
at which a quorum is present, the shareholders may, by the affirmative vote of
the holders of a majority of the votes entitled to be cast thereon, remove any
director or directors from office and may elect a successor or successors to
fill any resulting vacancies for the unexpired terms of removed directors.

Upon the written request of the holders of shares entitled to not less
than ten percent (10%) of all the votes entitled to be cast at such meeting,
the Secretary of a Fund shall promptly call a special meeting of shareholders
for the purpose of voting upon the question of removal of any director.
Whenever ten or more shareholders of record who have been such for at least six
months preceding the date of application, and who hold in the aggregate either
shares having a net asset value of at least $25,000 or at least one percent
(1%) of the total outstanding shares, whichever is less, shall apply to a
Fund's Secretary in writing, stating that they wish to communicate with other
shareholders with a view to obtaining signatures to a request for a meeting as
described above and accompanied by a form of communication and request which
they wish to transmit, the Secretary shall within five business days after such
application either: (1) afford to such applicants access to a list of the names
and addresses of all shareholders as recorded on the books of the Funds; or (2)
inform such applicants as to the approximate number of shareholders of record
and the approximate cost of mailing to them the proposed communication and form
of request.

If the Secretary elects to follow the course specified in clause (2)
of the last sentence of the preceding paragraph, the Secretary, upon the
written request of such applicants, accompanied by a tender of the material to
be mailed and of the reasonable expenses of mailing, shall, with reasonable
promptness, mail such material to all shareholders of record at their addresses
as recorded on the books unless within five business days after such tender the
Secretary shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement signed by at
least a majority of the Board of Directors to the effect that in their opinion
either such material contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would be
in violation of applicable law, and specifying the basis of such opinion.

After opportunity for hearing upon the objections specified in the
written statement so filed, the Commission may, and if demanded by the Board of
Directors or by such applicants shall, enter an order either sustaining one or
more of such objections or refusing to sustain any of them. If the Commission
shall enter an order refusing to sustain any of such objections, or if, after
the entry of an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all objections so
sustained have been met, and shall enter an order so declaring, the Secretary
shall mail copies of such material to all shareholders with reasonable
promptness after the entry of such order and the renewal of such tender.

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<PAGE> 69

PERFORMANCE INFORMATION

As described under "About the Funds -- Performance" in the Prospectus,
each Fund's historical performance or return may be shown in the form of
"yield," "distribution rate," "average annual total return," "total return,"
and "cumulative total return." From time to time, the Advisor may voluntarily
waive all or a portion of its management fee and/or absorb certain expenses for
each Fund. Without these waivers and absorption of expenses, the performance
results for the Funds noted herein would have been lower. All performance and
returns noted herein are historical and do not necessarily represent the future
performance of a Fund.

YIELD

Each Fund's yield is computed in accordance with a standardized method
prescribed by rules of the Commission. Under that method, the current yield
quotation for a Fund is based on a one month or 30-day period. Each Fund's
yield is computed by dividing the net investment income per share earned during
the 30-day or one month period by the maximum offering price per share on the
last day of the period, according to the following formula:

YIELD = 2[( a-b + 1)6 - 1]
---
cd

Where a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares outstanding
during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the
last day of the period.

In computing their yield, the Funds follow certain standardized
accounting practices specified by Commission rules. These practices are not
necessarily consistent with those that the Funds use to prepare annual and
interim financial statements in conformity with generally accepted accounting
principles.

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

AVERAGE ANNUAL TOTAL RETURN

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

TOTAL RETURN

Calculation of the Funds' total return is not subject to a
standardized formula. Total return performance for a specific period is
calculated by first taking an investment (assumed below to be $10,000)
("initial investment") in a Fund's shares on the first day of the period and
computing the "ending value" of that investment at the end of the period. The
total return

33
<PAGE> 70

percentage is then determined by subtracting the initial investment from the
ending value and dividing the remainder by the initial investment and
expressing the result as a percentage. The calculation assumes that all income
and capital gains dividends paid by a Fund have been reinvested at net asset
value on the reinvestment dates during the period. Total return may also be
shown as the increased dollar value of the hypothetical investment over the
period.

CUMULATIVE TOTAL RETURN

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

Each Fund's performance figures are based upon historical results and
are not necessarily representative of future performance. A Fund's shares are
sold at net asset value per share. The Funds' returns and net asset value
will fluctuate and shares are redeemable at the then current net asset value of
each Fund, which may be more or less than original cost. Factors affecting a
Fund's performance include general market conditions, operating expenses and
investment management. Any additional fees charged by a dealer or other
financial services firm would reduce the returns described in this section.

The figures below show performance information for various periods
ended December 31, 1994. No adjustment has been made for taxes, if any,
payable on dividends. The periods indicated were ones of fluctuating
securities prices.

SHORT-TERM GLOBAL BOND FUND

<TABLE>
<CAPTION>
Total Average Annual
Return Total Return
------ ------------
Initial Ending Value
$10,000 December 31, Percentage Percentage
Investment 1994 Increase Increase
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Life of Fund(1) $10,000 $ % %
</TABLE>
-----------------------
(1) From March 31, 1994

INTERNATIONAL BOND FUND

</TABLE>

-----------------------
(1) From March 31, 1994

34
<PAGE> 71

COMPARISONS

(1) U.S. TREASURY BILLS, NOTES, OR BONDS
Each Fund may compare its performance to that of United States
Treasury Bills, Notes or Bonds because such instruments represent alternative
income producing products. Treasury obligations are issued in selected
denominations. Rates of Treasury obligations are fixed at the time of issuance
and payment of principal and interest is backed by the full faith and credit of
the United States Treasury. The market value of such instruments will
generally fluctuate inversely with interest rates prior to maturity and will
equal par value at maturity. Generally, the values of obligations with shorter
maturities will fluctuate less than those with longer maturities.

(2) CERTIFICATES OF DEPOSIT
Investors may want to compare a Fund's performance to that of
certificates of deposit offered by banks and other depository institutions.
Certificates of deposit represent an alternative (taxable) income-producing
product. Certificates of deposit may offer fixed or variable interest rates
and principal is guaranteed and may be insured. Withdrawal of the deposits
prior to maturity normally will be subject to a penalty. Rates offered by
banks and other depository institutions are subject to change at any time
specified by the issuing institution. The bonds held by the Funds are
generally of longer term than most certificates of deposit and may reflect
longer term market interest rate fluctuations.

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

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

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

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

(7) INDICES
Each Fund may compare its performance to a wide variety of indices
including the following:

(a) The Consumer Price Index.
(b) The CDA U.S. Treasury Bill Index.
(c) The JP Morgan Global Short-Term Government Bond Index.
(d) The JP Morgan Non-U.S. Government Bond Index.
(e) The Salomon Brothers Non-U.S. World Government Bond Index
(Currency Unhedged).
(f) The Salomon Brothers Broad Investment Grade Bond Index.

35
<PAGE> 72

(g) The Salomon Brothers 1-3 Year World Government Bond Index
(Currency Hedged).
(h) The Lehman Brothers Intermediate Government Corporate Index.
(i) The Merrill Lynch 1-3 Year Government Corporate Index.

There are differences and similarities between the investments which a
Fund may purchase and the investments measured by the indices which are noted
herein. The market prices and yields of taxable and tax-exempt bonds will
fluctuate. There are important differences among the various investments
included in the indices that should be considered in reviewing this
information.

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

(9) STRONG FAMILY OF FUNDS
The Strong Family of Funds offers a comprehensive range of
conservative to aggressive investment options. The Funds may from time to time
be compared to the other funds in the Strong Family of Funds based on a
risk/reward spectrum. The following graph illustrates the risk/reward spectrum
for the Strong Family of Funds and the Funds' places on that spectrum.

LOWER RISK AND HIGHER RISK AND
RETURN POTENTIAL RETURN POTENTIAL
__
--------------------| |--------------------------------------------------
| MONEY MARKET | | | INCOME | GROWTH | GROWTH |
| FUNDS | | | FUNDS | & INCOME | FUNDS |
| | | | | FUNDS | |
--------------------|__|--------------------------------------------------

THE STRONG SHORT-TERM
GLOBAL BOND FUND

LOWER RISK AND HIGHER RISK AND
RETURN POTENTIAL RETURN POTENTIAL
__
--------------------------------| |--------------------------------------
| MONEY MARKET | INCOME | | | GROWTH | GROWTH |
| FUNDS | FUNDS | | | & INCOME | FUNDS |
| | | | | FUNDS | |
--------------------------------|__|--------------------------------------

THE STRONG
INTERNATIONAL BOND FUND

36
<PAGE> 73

The Funds are members of the Strong Family of Funds. All of the
members of the Strong Family and their investment objectives are listed below.

<TABLE>
<CAPTION>
FUND NAME INVESTMENT OBJECTIVE
<S> <C>
Strong U.S. Treasury Money Fund Current income, a stable share price and daily liquidity.
Strong Money Market Fund Current income, a stable share price and daily liquidity.
Strong Advantage Fund Current income with a very low degree of share-price fluctuation.
Strong Short-Term Bond Fund Total return by investing for a high level of current income with a low
degree of share-price fluctuation.
Strong Short-Term Global Bond Total return by investing for a high level of income with a low degree
Fund of share-price fluctuation.
Strong Government Securities Total return by investing for a high level of current income with a
Fund moderate degree of share-price fluctuation.
Strong Corporate Fund Total return by investing for a high level of current income with a
moderate degree of share-price fluctuation.
Strong International Bond Fund A high total return by investing for both income and capital
appreciation.
Strong Asset Allocation Fund A high total return consistent with reasonable risk over the long term.
Strong Total Return Fund A high total return by investing for capital growth and income.
Strong American Utilities Fund Total return by investing for both income and capital growth.
Strong Opportunity Fund Capital growth.
Strong Growth Fund Capital growth.
Strong Common Stock Fund* Capital growth.
Strong Discovery Fund Capital growth.
Strong International Stock Fund Capital growth.
Strong Asia Pacific Fund Capital growth.
Strong Municipal Money Market Federally tax-exempt current income, a stable share-price and daily
Fund liquidity.
Strong Short-Intermediate Total return by investing for a high level of federally tax-exempt
Municipal Bond Fund current income with a low degree of share-price fluctuation.
Strong Insured Municipal Bond Total return by investing for a high level of federally tax-exempt
Fund current income with a moderate degree of share-price fluctuation.
Strong Municipal Bond Fund Total return by investing for a high level of federally tax-exempt
current income with a moderate degree of share-price fluctuation.
Strong High-Yield Municipal Bond Total return by investing for a high level of federally tax-exempt
Fund current income.
Strong Special Fund II** Capital growth.
Strong Discovery Fund II** Capital growth.
</TABLE>

* The Strong Common Stock Fund is currently closed to new investors.

** The Fund is an investment vehicle that funds variable annuity accounts.

Financial goals vary from person to person. You may choose one or
more of the Strong Funds to help you reach your financial goals. To help you
better understand the Strong International Income Funds and determine which
Fund or combination of Funds best meets your personal investment objectives,
they are described in the same Prospectus. Though they appear in the same
Prospectus, each of the Growth Funds is a separately incorporated investment
company. Because the Funds share a Prospectus, there may be the possibility of
cross liability between the Funds.

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<PAGE> 74

GENERAL INFORMATION

SERVICE ORIENTATION

The Advisor is an independent, Midwestern-based investment advisor,
unaffiliated with any bank, securities brokerage, or insurance company. The
Advisor strives for excellence both in investment management and in the service
provided to investors. This commitment affects many aspects of the business,
including professional staffing, product development, investment management,
and service delivery. Through its commitment to excellence, the Advisor
intends to benefit investors and to encourage them to think of Strong Funds as
their mutual fund family.

INVESTMENT ENVIRONMENT

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

PORTFOLIO MANAGEMENT

The Advisor's investment philosophy consists of the maintenance of a
long-term outlook, control of country and currency exposure, constraint of the
Funds' duration, and the attempt to add value from all available sectors and
instruments. In selecting investments for the portfolio, the Advisor utilizes
a top-down approach driven by a secular outlook. The investment process begins
with a global analysis and then focuses on continental, country, and individual
issue selections. The Advisor's currency risk management approach involves
short-, intermediate-, and long-term analysis. Within each time frame, the
Advisor may utilize various econometric models and trading systems in its
analysis of currency risk.

INDEPENDENT ACCOUNTANTS

Coopers & Lybrand L.L.P., 411 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, are the independent accountants for the Funds, providing audit
services and assistance and consultation with respect to the preparation of
filings with the SEC.

FINANCIAL STATEMENTS

The Annual Report that is attached hereto contains the following
financial information for each Fund:

(a) Schedule of Investments in Securities.
(b) Statements of Operations.
(c) Statements of Assets and Liabilities.
(d) Statements of Changes in Net Assets.
(e) Notes to Financial Statements.
(f) Financial Highlights.

(g) Report of Independent Accountants.

38
<PAGE> 75

APPENDIX

BOND RATINGS

STANDARD & POOR'S DEBT RATINGS

A Standard & Poor's corporate or municipal debt rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers, or lessees.

The debt rating is not a recommendation to purchase, sell, or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.

The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable. S&P does not
perform an audit in connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings may be changed, suspended, or
withdrawn as a result of changes in, or unavailability of, such information, or
for other circumstances.

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

1. Likelihood of default -- capacity and willingness of the
obligor as to the timely payment of interest and repayment
of principal in accordance with the terms of the
obligation.

2. Nature of and provisions of the obligation.

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

INVESTMENT GRADE
AAA Debt rated 'AAA' has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.

AA Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

A Debt rated 'A' has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.

BBB Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

SPECULATIVE GRADE
Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. 'BB' indicates the least degree of speculation
and 'C' the highest. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.

BB Debt rated 'BB' has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
The 'BB' rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied 'BBB-' rating.

B Debt rated 'B' has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest

A-1
<PAGE> 76

and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating.

CCC Debt rated 'CCC' has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial, or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'B' or 'B-' rating.

CC Debt rated 'CC' typically is applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.

C Debt rated 'C' typically is applied to debt subordinated to senior
debt which is assigned an actual or implied 'CCC-' debt rating. The 'C' rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.

CI The rating 'CI' is reserved for income bonds on which no interest
is being paid.

D Debt rated 'D' is in payment default. The 'D' rating category is
used when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grade period. The 'D' rating also will
be used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

MOODY'S LONG-TERM DEBT RATINGS

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

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

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

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

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

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

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

A-2
<PAGE> 77
Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.

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

FITCH INVESTORS SERVICE, INC. BOND RATINGS

Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
represent Fitch's assessment of the issuer's ability to meet the obligations of
a specific debt issue or class of debt in a timely manner.

The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength and credit quality.

Fitch ratings do not reflect any credit enhancement that may be
provided by insurance policies or financial guaranties unless otherwise
indicated.

Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.

Fitch ratings are not recommendations to buy, sell, or hold any
security. Ratings do not comment on the adequacy of market price, the
suitability of any security for a particular investor, or the tax-exempt nature
or taxability of payments made in respect of any security.

Fitch ratings are based on information obtained from issuers, other
obligors, underwriters, their experts, and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.

AAA Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong
ability to pay interest and repay principal, which is unlikely
to be affected by reasonably foreseeable events.

AA Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and
repay principal is very strong, although not quite as strong
as bonds rated "AAA". Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of the
issuers is generally rated "F-1+".

A Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more
vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes
in economic conditions and circumstances, however, are more
likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than
for bonds with higher ratings.

Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
("BB" to "C") represent Fitch's assessment of the likelihood of timely payment
of principal and interest in accordance with the terms of obligation for bond
issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an
assessment of the ultimate recovery value through reorganization or
liquidation.

A-3
<PAGE> 78

Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories cannot fully reflect the
differences in the degrees of credit risk. Moreover, the character of the risk
factor varies from industry to industry and between corporate, health care and
municipal obligations.

BB Bonds are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by
adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor
in satisfying its debt service requirements.

B Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and
interest reflects the obligor's limited margin of safety and
the need for reasonable business and economic activity
throughout the life of the issue.

CCC Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet
obligations requires an advantageous business and economic
environment.

CC Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.

C Bonds are in imminent default in payment of interest or
principal.

DDD, DD
and D Bonds are in default on interest and/or principal payments.
Such bonds are extremely speculative and should be valued on
the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. "DDD" represents the highest
potential for recovery of these bonds, and "D" represents the
lowest potential for recovery.

DUFF & PHELPS, INC. LONG-TERM DEBT RATINGS

These ratings represent a summary opinion of the issuer's long-term
fundamental quality. Rating determination is based on qualitative and
quantitative factors which may vary according to the basic economic and
financial characteristics of each industry and each issuer. Important
considerations are vulnerability to economic cycles as well as risks related to
such factors as competition, government action, regulation, technological
obsolescence, demand shifts, cost structure, and management depth and
expertise. The projected viability of the obligor at the trough of the cycle
is a critical determination.

Each rating also takes into account the legal form of the security,
(e.g., first mortgage bonds, subordinated debt, preferred stock, etc.). The
extent of rating dispersion among the various classes of securities is
determined by several factors including relative weightings of the different
security classes in the capital structure, the overall credit strength of the
issuer, and the nature of covenant protection. Review of indenture
restrictions is important to the analysis of a company's operating and
financial constraints.

The Credit Rating Committee formally reviews all ratings once per
quarter (more frequently, if necessary). Ratings of "BBB-" and higher fall
within the definition of investment grade securities, as defined by bank and
insurance supervisory authorities.

<TABLE>
<CAPTION>
RATING SCALE DEFINITION
- ------------- -------------
<S> <C>
AAA Highest credit quality. The risk factors are negligible, being only slightly more
</TABLE>

A-4
<PAGE> 79

<TABLE>
<S> <C>
than for risk-free U.S. Treasury debt.

AA+ High credit quality. Protection factors are strong. Risk is modest, but may
AA vary slightly from time to time because of economic conditions.
AA-

A+ Protection factors are average but adequate. However, risk factors are more
A variable and greater in periods of economic stress.
A-

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

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

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

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

DD Defaulted debt obligations. Issuer failed to meet scheduled principal and/or
interest payments.
DP Preferred stock with dividend arrearages.
</TABLE>

SHORT-TERM RATINGS

STANDARD & POOR'S COMMERCIAL PAPER RATINGS

A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment of debt considered short-term in the relevant
market.

Ratings graded into several categories, ranging from 'A-1' for the
highest quality obligations to 'D' for the lowest. These categories are as
follows:

A-1 This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.

A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated 'A-1'.

A-5
<PAGE> 80

A-3 Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes
in circumstances than obligations carrying the higher designations.

B Issues rated "B" are regarded as having only speculative capacity
for timely payment.

C This rating is assigned to short-term debt obligations with doubtful
capacity for payment.

D Debt rated "D" is in payment default. The "D" rating category is
used when interest payments or principal payments are not made on the date due,
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period.

MOODY'S COMMERCIAL PAPER RATINGS

The term "commercial paper" as used by Moody's means promissory
obligations not having an original maturity in excess of nine months. Moody's
makes no representation as to whether such commercial paper is by any other
definition "commercial paper" or is exempt from registration under the
Securities Act of 1933, as amended.

Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of nine months. Moody's makes no representation that such
obligations are exempt from registration under the Securities Act of 1933, nor
does it represent that any specific note is a valid obligation of a rated
issuer or issued in conformity with any applicable law. Moody's employs the
following three designations, all judged to be investment grade, to indicate
the relative repayment capacity of rated issuers:

Issuers rated PRIME-1 (for related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
(i) leading market positions in well established industries, (ii) high rates of
return on funds employed, (iii) conservative capitalization structures with
moderate reliance on debt and ample asset protection, (iv) broad margins in
earnings coverage of fixed financial charges and high internal cash generation,
and (v) well established access to a range of financial markets and assured
sources of alternate liquidity.

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

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

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

FITCH INVESTORS SERVICE, INC. SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.

The short-term rating places greater emphasis than a long-term rating
on the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.

F-1+ (Exceptionally Strong Credit Quality) Issues assigned this
rating are regarded as having the strongest degree of
assurance for timely payment.

A-6
<PAGE> 81

F-1 (Very Strong Credit Quality) Issues assigned this rating
reflect an assurance of timely payment only slightly less in
degree than issues rated "F-1+".

F-2 (Good Credit Quality) Issues assigned this rating have a
satisfactory degree of assurance for timely payment but the
margin of safety is not as great as for issues assigned "F-1+"
and "F-1" ratings.

F-3 (Fair Credit Quality) Issues assigned this rating have
characteristics suggesting that the degree of assurance for
timely payment is adequate, however, near-term adverse changes
could cause these securities to be rated below investment
grade.

F-S (Weak Credit Quality) Issues assigned this rating have
characteristics suggesting a minimal degree of assurance for
timely payment and are vulnerable to near-term adverse changes
in financial and economic conditions.

D (Default) Issues assigned this rating are in actual or
imminent payment default.

LOC The symbol LOC indicates that the rating is based on a letter
of credit issued by a commercial bank.

DUFF & PHELPS, INC. SHORT-TERM DEBT RATINGS

Duff & Phelps' short-term ratings are consistent with the rating
criteria utilized by money market participants. The ratings apply to all
obligations with maturities of under one year, including commercial paper, the
uninsured portion of certificates of deposit, unsecured bank loans, master
notes, bankers acceptances, irrevocable letters of credit, and current
maturities of long-term debt. Asset-backed commercial paper is also rated
according to this scale.

Emphasis is placed on liquidity which we define as not only cash from
operations, but also access to alternative sources of funds including trade
credit, bank lines, and the capital markets. An important consideration is the
level of an obligor's reliance on short-term funds on an ongoing basis.

<TABLE>
<CAPTION>
Rating Scale: Definition
------------ ----------
<S> <C>
Duff 1+ Highest certainty of timely payment. Short-term liquidity, including internal operating factors
and/or access to alternative sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.

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

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

Good Grade
----------

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

Satisfactory Grade
------------------

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

</TABLE>

A-7

<PAGE> 5

STRONG SHORT-TERM GLOBAL BOND FUND, INC.

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements

Inapplicable

(b) Exhibits
(1) Articles of Incorporation
(2) By-Laws
(3) Inapplicable
(4) Specimen Stock Certificate
(5) Investment Advisory Agreement
(6) Distribution Agreement
(7) Inapplicable
(8) Custody Agreement
(9) Shareholder Servicing Agent Agreement
(10) Inapplicable
(11) Inapplicable
(12) Inapplicable
(13) Subscription Agreement
(14.1) Prototype Defined Contribution Retirement Plan with
Standardized Adoption Agreements
(14.2) Individual Retirement Custodial Account
(14.3) Section 403(b)(7) Retirement Plan
(15) Inapplicable
(16) Computation of Performance Figures
(17) Power of Attorney

Item 25. Persons Controlled by or under Common Control with Registrant

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

C - 1
<PAGE> 6

Item 26. Number of Holders of Securities

Number of Record Holders
Title of Class as of January 31, 1995
-------------- ----------------------

Common Stock, $.01 par value 1,043

Item 27. Indemnification

Officers and directors are insured under a joint errors and omissions
insurance policy underwritten by American International Surplus Lines Insurance
Company and First State Insurance Company in the aggregate amount of
$10,000,000, subject to certain deductions. Pursuant to the authority of the
Wisconsin Business Corporation Law, Article VII of Registrant's By-Laws
provides as follows:

ARTICLE VII. INDEMNIFICATION OF OFFICERS AND DIRECTORS

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

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

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

7.04. Investment Company Act. In no event shall the
corporation indemnify any person hereunder in contravention of any
provision of the Investment Company Act of 1940.

Item 28. Business and Other Connections of Investment Advisor

The information contained under "About the Funds - Management" in the
Prospectus and under "Directors and Officers of the Funds" and "Investment
Advisor and Distributor" in the Statement of Additional Information is hereby
incorporated by reference pursuant to Rule 411 under the Securities Act of
1933.

Item 29. Principal Underwriters

(a) Strong Funds Distributors, Inc., principal underwriter for
Registrant, also serves as principal underwriter for Strong Advantage Fund,
Inc.; Strong American Utilities Fund, Inc.; Strong Asia Pacific Fund, Inc.;
Strong Asset Allocation Fund, Inc.; Strong Common Stock Fund, Inc.; Strong
Discovery Fund II, Inc.; Strong Discovery Fund, Inc.; Strong Government
Securities Fund, Inc.; Strong Growth Fund, Inc.; Strong High-Yield Municipal
Bond Fund, Inc.; Strong Income Fund, Inc.; Strong Insured Municipal Bond Fund,
Inc.; Strong International Bond Fund, Inc.; Strong International Stock Fund,
Inc.; Strong Money Market Fund, Inc.; Strong Municipal Bond Fund, Inc.; Strong
Municipal Money Market Fund, Inc.; Strong Opportunity Fund, Inc.; Strong
Short-Term Bond Fund, Inc.; Strong Short-Term Municipal Bond Fund, Inc.; Strong
Special Fund II, Inc.; Strong Total Return Fund, Inc.; and Strong U.S. Treasury
Money Fund, Inc.

C - 2
<PAGE> 7

(b) The information contained under "About the Funds - Management" in
the Prospectus and under "Directors and Officers of the Funds" and "Investment
Advisor and Distributor" in the Statement of Additional Information is hereby
incorporated by reference pursuant to Rule 411 under the Securities Act of
1933.

Item 30. Location of Accounts and Records

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

Item 31. Management Services

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

Item 32. Undertakings

Registrant undertakes to call a special meeting of shareholders for
the purpose of voting upon the question of removal of any director, when
requested to do so in writing by the record holders of not less than ten
percent (10%) of the registrant's outstanding shares and further, to assist in
communications with other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.

The Registrant undertakes to furnish to each person to whom a
prospectus is delivered, upon request and without charge, a copy of the
Registrant's latest annual report to shareholders.

C - 3
<PAGE> 8

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 3 to the Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
Village of Menomonee Falls, and State of Wisconsin on the 23rd day of February,
1995.

STRONG SHORT-TERM GLOBAL BOND FUND, INC.
(Registrant)

BY: /s/ John Dragisic
-----------------------------------
John Dragisic, Vice Chairman

Each person whose signature appears below constitutes and appoints
John Dragisic, Thomas P. Lemke, Lawrence A. Totsky, and Ann E. Oglanian, and
each of them, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all post-effective amendments to this
Registration Statement on Form N-1A and to file the same, with all exhibits
thereto, and any other documents in connection therewith, with the Securities
and Exchange Commission and any other regulatory body on or before May 30,
1996, granting unto said attorney-in-fact and agent, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes, as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 3 to the Registration Statement on Form N-1A has
been signed below by the following persons in the capacities and on the date
indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
Vice Chairman of the Board (Principal
/s/ John Dragisic Executive Officer) February 23, 1995
- ----------------------------------------
John Dragisic

Treasurer (Principal Financial and
/s/ Thomas M. Zoeller Accounting Officer) February 23, 1995
- ----------------------------------------
Thomas M. Zoeller

/s/ Richard S. Strong Chairman of the Board and a Director February 23, 1995
- ----------------------------------------
Richard S. Strong

/s/ Marvin E. Nevins Director February 23, 1995
- ----------------------------------------
Marvin E. Nevins

/s/ Willie D. Davis Director February 23, 1995
- ----------------------------------------
Willie D. Davis
</TABLE>

<PAGE> 9

EXHIBIT INDEX

<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit No. Exhibit Page No.
----------- ------- --------
<S> <C> <C>
(1) Articles of Incorporation(1)

(2) Bylaws(1)

(3) Inapplicable

(4) Specimen Stock Certificate(1)

(5) Investment Advisory Agreement(1)

(6) Distribution Agreement(1)

(7) None

(8) Custody Agreement(2)

(9) Shareholder Servicing Agent Agreement(1)

(10) Inapplicable

(11) Inapplicable

(12) Inapplicable

(13) Subscription Agreement(1)

(14.1) Prototype Defined Contribution Retirement Plan with Standardized Adoption
Agreements(1)

(14.2) Individual Retirement Custodial Account(1)

(14.3) Section 403(b)(7) Retirement Plan(1)

(15) Inapplicable

(16) Computation of Performance Figures

(17) Power of Attorney (See Signature Page)
</TABLE>

__________________________
(1) Incorporated herein by reference to the Registration Statement on Form
N-1A filed on or about January 28, 1994. Exhibit Nos. 14.1 refers to
(14)(a), 14.2 refers to (14)(b), and 14.3 refers to (14)(c).

(2) Incorporated herein by reference to Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-1A filed on or about March 18,
1994.

<PAGE> 1

EXHIBIT 16

Strong Short-Term Global Bond Fund, Inc.

SCHEDULE OF COMPUTATION OF
PERFORMANCE QUOTATIONS

I. CURRENT ANNUALIZED YIELD: 30 days ended December 30, 1994

A. Formula

a-b
YIELD = 2[(---------- + 1)6 - 1]
cd

Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during
the period.
d = the maximum offering price per share on the last day
of the period.

B. Calculation

165,645.33 - 0
YIELD = 2[(---------------------------------- + 1)6 - 1]
2,179,576.942 x 10.15

YIELD = 9.15%

II. AVERAGE ANNUAL TOTAL RETURN

A. Formula
_____
P (1 + T)n = ERV or T = \n/ERV/P - 1

Where: P = a hypothetical initial payment of $10,000

T = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical $10,000
payment made at the beginning of the stated periods
at the end of the stated periods.

<PAGE> 2

B. Calculation

_____
T = \n/ERV/P - 1

Since inception 03-31-94 through 12-31-94

_____________
6.87% = \0.753/10,513/10,000 - 1

(This section is only intended to illustrate the
calculation of the Fund's one year average annual total
return. The Fund has been in existence for 9 months.)

III. TOTAL RETURN

A. Formula

EV-IV
-----
IV = TR

Where: EV = Value at the end of the periods, including
reinvestment of all dividends and capital gains
distributions

IV = Initial value of a hypothetical investment at the
net asset value

TR = Total Return

B. Calculation

EV-IV
-----
IV = TR

Period since inception 03-31-94 through 12-31-94

10,513 - 10,000
---------------
10,000 = 5.13 %