<PAGE> 1
As filed with the Securities and Exchange Commission on or about August 3, 1995
Securities Act Registration No. 33-______
Investment Company Act Registration No. 811- ____
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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. ______ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. _____ [ ]
(Check appropriate box or boxes)
STRONG INSTITUTIONAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
100 HERITAGE RESERVE
MENOMONEE FALLS, WISCONSIN 53051
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (414) 359-3400
THOMAS P. LEMKE
STRONG CAPITAL MANAGEMENT, INC.
100 HERITAGE RESERVE
MENOMONEE FALLS, WISCONSIN 53051
(Name and Address of Agent for Service)
Copies to:
SCOTT A. MOEHRKE
GODFREY & KAHN, S.C.
780 NORTH WATER STREET
MILWAUKEE, WISCONSIN 53202
Approximate Date of Proposed Public Offering: As soon as practicable
after the Registration Statement becomes effective.
In accordance with Rule 24f-2(a)(1) under the Investment Company Act
of 1940, Registrant declares that an indefinite number of shares of its common
stock, $.01 par value, is being registered by this Registration Statement.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
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<PAGE> 2
STRONG INSTITUTIONAL FUNDS, INC.
CROSS REFERENCE SHEET
FOR STRONG INSTITUTIONAL MONEY FUND
(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
3. Condensed Financial Information Inapplicable
4. General Description of Registrant Investment Objective and Policies; Implementation
of Policies and Risks; About the Fund
5. Management of the Fund About the Fund
5A. Management's Discussion of Fund Performance Inapplicable
6. Capital Stock and Other Securities About the Fund; Additional Information
7. Purchase of Securities Being Offered How to Buy Shares, Determining Your Share Price,
Additional Information
8. Redemption or Repurchase How to Sell Shares, Determining Your Share Price,
Additional Information
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 Corporation
15. Control Persons and Principal Holders of Securities Principal Shareholders; Directors and Officers of
the Corporation; Investment Advisor and Distributor
16. Investment Advisory and Other Services Investment Advisor and Distributor; About the Fund
(in Prospectus); Custodian; Transfer Agent and
Dividend-Disbursing Agent; Independent
Accountants; Legal Counsel
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
CAPTION OR SUBHEADING IN PROSPECTUS OR
ITEM NO. ON FORM N-1A STATEMENT OF ADDITIONAL INFORMATION
--------------------- -----------------------------------
<S> <C>
17. Brokerage Allocation and Other Practices Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities Included in Prospectus under the heading About the
Fund 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 How to Buy Shares, Determining Your Share Price,
How to Sell Shares, Additional Information;
and in the Statement of Additional Information under
the headings: Investment Advisor and Distributor; and
Determination of Net Asset Value
20. Tax Status Included in Prospectus under the heading About the
Fund; 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 Statement of Assets and Liabilities
</TABLE>
* Complete answer to Item is contained in Strong Institutional Money
Fund's Prospectus.
<PAGE> 4
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
Prospectus
STRONG INSTITUTIONAL MONEY FUND
The Strong Institutional Money Fund is a diversified, no-load series of
Strong Institutional Funds, Inc. (the "Corporation"), an open-end management
investment company. Strong Institutional Money Fund seeks current income, a
stable share price, and daily liquidity. The Fund invests in corporate, bank,
and government instruments that present minimal credit risk. The Fund is
designed to provide access to the professional investment management services
offered by Strong Capital Management, Inc., the Fund's investment advisor.
Shares of the Fund are offered primarily for direct investment by investors such
as corporations, pension and profit-sharing plans, employee benefit trusts,
endowments, foundations, and other institutions.
Additional Information: This Prospectus contains information you should
consider before you invest. Please read it carefully and keep it for future
reference. A Statement of Additional Information for the Fund, dated September
___, 1995, contains further information, is incorporated by reference into this
Prospectus, and has been filed with the Securities and Exchange Commission
("SEC"). This Statement, which may be revised from time to time, is available
without charge by writing to Strong Capital Management, P.O. Box 2936,
Milwaukee, Wisconsin 53201 or by calling (800) 733-2274.
AN INVESTMENT IN THE STRONG INSTITUTIONAL MONEY FUND IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE FUND
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAP-
PROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECU-
RITIES AND EXCHANGE COMMISSION OR ANY STATE SECURI-
TIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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TOLL FREE: 800-733-CASH (2274)
September ___, 1995
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PROSPECTUS PAGE I-1
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
EXPENSES..................................... I-3
INVESTMENT OBJECTIVE AND POLICIES............ I-4
IMPLEMENTATION OF POLICIES AND RISKS......... I-5
ABOUT THE FUND............................... I-9
DETERMINING YOUR SHARE PRICE................. I-12
HOW TO BUY SHARES............................ I-13
HOW TO SELL SHARES........................... I-13
ADDITIONAL INFORMATION....................... I-14
</TABLE>
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PROSPECTUS PAGE I-2
<PAGE> 6
EXPENSES
The following information is provided in order to help you understand the
various costs and expenses that you, as an investor in the Fund, will bear
directly or indirectly.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases............. NONE
Sales Load Imposed on Reinvested
Dividends................................. NONE
Deferred Sales Load......................... NONE
Redemption Fee.............................. NONE
Exchange Fee................................ NONE
</TABLE>
Purchases and redemptions may also be made through broker-dealers or others
who may charge a commission or other transaction fee for their services. (See "
_______________.")
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management Fee.............................. .15%
Other Expenses.............................. .08%
Administrative Services Fee................. NONE
12b-1 Fees.................................. NONE
-------------------------------------------------
Total Operating Expenses.................... .23%
</TABLE>
Since the Fund is new and did not commence operations until September
___, 1995, the Other Expenses have been estimated. Strong Capital Management,
Inc., (the "Advisor") voluntarily has agreed that a portion of its management
fee will not be imposed. Had the reduction of the management fee otherwise
payable not been reflected in the above table, the management fee payable by the
Fund would be .35% of average daily net assets, and the total operating expenses
payable by the Fund would be .43%. For additional information concerning fees
and expenses, see "About the Fund -- Management."
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PROSPECTUS PAGE I-3
<PAGE> 7
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)
Fund 1 3
<S> <C> <C>
Strong Institutional Money Fund $ $
</TABLE>
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The Example is based on the Fund's "Total Operating Expenses", as 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 the Fund's shares.
INVESTMENT OBJECTIVE AND POLICIES
The Fund has adopted certain fundamental investment restrictions that are
designed to reduce the Fund's investment risk. A complete list of these and
other operating policies are set forth in the Fund's Statement of Additional
Information ("SAI"). To further guide investment activities, the 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 the Fund's Board of Directors without shareholder approval, the Fund
will promptly notify shareholders of any material change in operating policies.
Because of the risks inherent in all investments, there can be no assurance that
the Fund will meet its objective, which is discussed below.
STRONG INSTITUTIONAL MONEY FUND
The Fund seeks current income, a stable share price, and daily liquidity. The
Fund invests in corporate, bank, and government instruments that present minimal
credit risk. The Fund is designed for institutional investors who are seeking a
high rate of return, a stable net asset value, and convenient liquidation
privileges. The Fund's minimum account size is $1,000,000.
The Fund invests in a combination of bank, corporate, and government
obligations that present minimal credit risks. The Fund restricts its
investments to instruments that meet certain maturity and quality standards
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PROSPECTUS PAGE I-4
<PAGE> 8
required or permitted by Rule 2a-7 under the Investment Company Act of 1940
(the "1940 Act") for money market funds. Accordingly, the Fund:
(i) limits its average portfolio maturity to ninety days or less;
(ii) buys only securities with remaining maturities of thirteen months or
less; and
(iii) buys only U.S. dollar-denominated securities that present minimal
credit risk and are "high quality," as described below.
The Fund invests only in high-quality securities. Accordingly, the Fund will
invest at least 95% of its total assets in "first-tier" securities, generally
defined as those securities that, at the time of acquisition, are rated in the
highest rating category by at least two nationally recognized statistical rating
organizations ("NRSROs") or, if unrated, are determined by the Advisor to be of
comparable quality. The balance of the Fund, up to 5% of its total assets, may
be invested in securities that are considered "second-tier" securities,
generally defined as those securities that, at the time of acquisition, are
rated in the second-highest rating category or are determined by the Advisor to
be of comparable quality. (See the SAI for a description of ratings.)
Because the Fund seeks to maintain a constant net asset value of $1.00 per
share, capital appreciation is not expected to play a role in the Fund's
returns, and dividend income alone will provide its entire investment return.
All money market instruments can change in value when interest rates or an
issuer's creditworthiness change dramatically. THE FUND CANNOT GUARANTEE THAT IT
WILL ALWAYS BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE. An
investment in the Fund is neither insured nor guaranteed by the U.S. government.
IMPLEMENTATION OF POLICIES
AND RISKS
In addition to the investment policies described above (and subject to
certain restrictions described below), the Fund may invest in the following
securities and may employ the following investment techniques, some of which may
present special risks as described below. A more complete discussion of certain
of these securities and investment techniques and the associated risks is
contained in the Fund's SAI.
DEBT OBLIGATIONS
TYPES OF OBLIGATIONS. Debt obligations in which the Fund may invest include
(i) corporate debt obligations, including bonds, debentures, and notes; (ii)
bank obligations, such as certificates of deposit, banker's acceptances, and
time deposits of domestic and foreign banks and their subsidiaries and branches,
and domestic savings and loan associations (in amounts in excess of the
insurance coverage (currently $100,000 per account) provided by the
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PROSPECTUS PAGE I-5
<PAGE> 9
Federal Deposit Insurance Corporation); (iii) commercial paper (including
variable-amount master demand notes); (iv) repurchase agreements; (v) floating-
or variable-rate debt obligations; (vi) asset-backed debt obligations; (vii)
U.S. dollar denominated foreign debt obligations; (viii) U.S. Government
Securities issued or guaranteed by the U.S. Treasury (such as bills, notes, or
bonds) or by an agency or instrumentality of the U.S. government; and (ix)
municipal obligations. With regard to these types of investments, the Fund may
not invest in any debt obligation that does not meet the maturity and quality
standards of Rule 2a-7 under the 1940 Act for money market funds.
GOVERNMENT SECURITIES. U.S. government securities are issued or guaranteed by
the U.S. government or its agencies or instrumentalities. Securities issued by
the government include U.S. Treasury obligations, such as Treasury bills, notes,
and bonds. Securities issued or guaranteed by government agencies or
instrumentalities include the following:
- - the Federal Housing Administration, Farmers Home Administration, Export-Import
Bank of the United States, Small Business Administration, and the Government
National Mortgage Association, including GNMA pass-through certificates, whose
securities are supported by the full faith and credit of the United States;
- - the Federal Home Loan Banks, Federal Intermediate Credit Banks, and the
Tennessee Valley Authority, whose securities are supported by the right of the
agency to borrow from the U.S. Treasury;
- - the Federal National Mortgage Association, whose securities are supported by
the discretionary authority of the U.S. government to purchase certain
obligations of the agency or instrumentality; and
- - the Student Loan Marketing Association, the Interamerican Development Bank,
and International Bank for Reconstruction and Development, whose securities
are supported only by the credit of such agencies.
Although the U.S. government provides financial support to such U.S.
government-sponsored agencies or instrumentalities, no assurance can be given
that it will always do so. The U.S. government and its agencies and
instrumentalities do not guarantee the market value of their securities;
consequently, the value of such securities will fluctuate.
ASSET-BACKED DEBT OBLIGATIONS. The Fund may invest in asset-backed debt
obligations. Asset-backed debt obligations represent direct or indirect
participation in, or secured by and payable from, assets such as motor vehicle
installment sales contracts, other installment loan contracts, home equity
loans, leases of various types of property and receivables from credit card or
other revolving credit arrangements. Payments or distributions of principal and
interest on asset-backed debt obligations may be supported by non-governmental
credit enhancements including letters of credit, reserve funds,
overcollateralization, and guarantees by third parties.
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PROSPECTUS PAGE I-6
<PAGE> 10
MUNICIPAL OBLIGATIONS. The Fund may invest in municipal debt obligations
issued by or on behalf of states, territories, and possessions of the United
States and the District of Columbia and their political subdivisions, agencies,
and instrumentalities. Municipal obligations generally include debt obligations
issued to obtain funds for various public purposes. Certain types of municipal
obligations are issued in whole or in part to obtain funding for privately
operated facilities or projects. Municipal obligations include general
obligation bonds, revenue bonds, industrial development bonds, notes, and
municipal lease obligations.
FOREIGN SECURITIES
The Fund may invest up to 25% of its total assets directly in foreign
securities. In accordance with Rule 2a-7 under the 1940 Act, the Fund will limit
its investments in foreign securities to those denominated in U.S. dollars.
Foreign investments involve special risks, including:
- - expropriation, confiscatory taxation, and withholding taxes on dividends and
interest;
- - less extensive regulation of foreign brokers, securities markets, and issuers;
- - less publicly available information and different accounting standards;
- - possible delays in settlement in foreign securities markets, limitations on
the use or transfer of assets, and difficulty of enforcing obligations in
other countries; and
- - 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.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with certain banks and non-bank
dealers. In a repurchase agreement, the Fund buys a security at one price, and
at the time of sale, the seller agrees to repurchase the obligation at a
mutually agreed upon time and price (usually within seven days). The repurchase
agreement determines the yield during the purchaser's holding period, while the
seller's obligation to repurchase is secured by the value of the underlying
security. The Fund may enter into repurchase agreements with respect to any
security in which it may invest. The Advisor will monitor, on an ongoing basis,
the value of the underlying securities to ensure that the value
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PROSPECTUS PAGE I-7
<PAGE> 11
always equals or exceeds the repurchase price plus accrued interest.
Repurchase agreements could involve certain risks in the event of a default or
insolvency of the other party to the agreement, including possible delays or
restrictions upon the Fund's ability to dispose of the underlying securities.
Although no definitive creditworthiness criteria are used, the Advisor reviews
the creditworthiness of the banks and non-bank dealers with which the Fund
enters into repurchase agreements to evaluate those risks. The Fund may, under
certain circumstances, deem repurchase agreements collateralized by U.S.
government securities to be investments in U.S. government securities.
WHEN-ISSUED SECURITIES
The Fund may invest without limitation in securities purchased on a when-
issued or 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 the Fund to
lock in a fixed price or yield on a security it intends to purchase. However,
when the 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 the Fund's outstanding commitments for these securities, the
greater the exposure to potential fluctuations in the net asset value of the
Fund. Purchasing when-issued securities may involve the additional risk that the
yield available in the market when the delivery occurs may be higher or the
market price lower than that obtained at the time of commitment. Although the
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. When required by SEC guidelines, the Fund will set aside
permissible liquid assets in a segregated account to secure its outstanding
commitments for when-issued securities.
ILLIQUID SECURITIES
The Fund may invest up to 10% of its net assets in illiquid securities.
Illiquid securities are those securities that are not readily marketable,
including restricted securities and repurchase obligations maturing in more than
seven days. Certain restricted securities which may be resold to institutional
investors under Rule 144A under the Securities Act of 1933 and Section 4(2)
commercial paper may be determined to be liquid under guidelines adopted by the
Corporation's Board of Directors.
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PROSPECTUS PAGE I-8
<PAGE> 12
ABOUT THE FUND
MANAGEMENT
The Board of Directors of the Fund is responsible for managing its business
and affairs. The Fund has entered into an investment advisory agreement with
Strong Capital Management, Inc. (the "Advisor"). Under the terms of the
agreement, the Advisor manages the Fund's investments and business affairs
subject to the supervision of the 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, as well as mutual funds, seven of which are funding vehicles for variable
insurance products. As of August 30, 1995, the Advisor had over $________
billion under management. The Advisor's principal mailing address is P.O. Box
2936, Milwaukee, Wisconsin 53201. Mr. Richard S. Strong, the Chairman of the
Board of the Fund, is the controlling shareholder of the Advisor.
As compensation for its services, the Fund pays the Advisor a monthly
management fee based on a percentage of the Fund's average daily net asset
value. The annual rate is .35%. The Advisor has voluntarily agreed to waive a
portion of its advisory fee to .15% of average daily net assets. The Advisor has
no current intention to, but may in the future, discontinue or modify any of
such waiver at its discretion. 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 the Fund's
overall expense ratio and increase the Fund's overall return to investors.
Except for expenses assumed by the Advisor or Strong Funds Distributors,
Inc., 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 of printing and distribution costs of prospectuses to existing
shareholders; charges of custodians (including fees as custodian for keeping
books and similar services for a Fund), transfer agents (including the printing
and mailing of reports and notices to shareholders), registrars, auditing and
legal services, and clerical services related to record keeping 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. Mr. Jay N. Mueller serves as the portfolio manager for the
Fund. Mr. Mueller joined the Advisor in September 1991 as a securities
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PROSPECTUS PAGE I-9
<PAGE> 13
analyst and portfolio manager. For four years prior to that, he was a securities
analyst and portfolio manager with R. Meeder & Associates of Dublin, Ohio. Mr.
Mueller received his bachelor's degree in economics in 1982 from the University
of Chicago. Mr. Mueller is also a Chartered Financial Analyst. Mr. Mueller has
managed the Fund since its inception in June 1995. He also manages the Strong
Money Market Fund, Strong U.S. Treasury Money Fund, and Strong Heritage Money
Fund.
TRANSFER AND DIVIDEND-DISBURSING AGENT
The Advisor, P.O. Box 2936, Milwaukee, Wisconsin 53201, also acts as
dividend-disbursing agent and transfer agent for the Fund. The Advisor is
compensated for these 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 under the advisory agreement between the Advisor and the Fund.
DISTRIBUTOR
Strong Funds Distributors, Inc., P.O. Box 2936, Milwaukee, Wisconsin 53201,
an indirect subsidiary of the Advisor, acts as distributor of the shares of the
Fund.
ORGANIZATION
SHAREHOLDER RIGHTS. The Fund is a series of Common Stock of Strong
Institutional Funds, Inc., 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 Fund has one vote, and all shares participate equally
in dividends and other capital gains distributions and in the residual assets of
the 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
Fund will not hold an annual meeting of shareholders unless required by the 1940
Act. Shareholders have certain rights, including the right to call a meeting
upon a vote of 10% of the 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 the Fund may benefit from the
privileges described in the "Shareholder Manual." However, the 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.
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PROSPECTUS PAGE I-10
<PAGE> 14
DISTRIBUTIONS AND TAXES
PAYMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. Dividends from the Fund
automatically will be reinvested in additional shares of the Fund at the net
asset value determined on the payment date. If you request in writing that your
dividends be paid in cash, the Fund will credit your bank account by Electronic
Funds Transfer ("EFT") or issue a check to you within five business days of the
payment date. You may change your election at any time by calling or writing
Strong Funds. Strong Funds must receive any such change 7 days (15 days for EFT)
prior to a dividend or capital gain distribution payment date in order for the
change to be effective for that payment.
The policy of the Fund is to pay dividends from net investment income
monthly. The Fund declares dividends on each day its net asset value is
calculated. Income earned on weekends, holidays, and other days on which net
asset value is not calculated is declared as a dividend on the day on which the
Fund's net asset value was most recently calculated.
TAX STATUS OF DIVIDENDS. You will be subject to federal income tax at
ordinary income tax rates on any dividends you receive.
The Fund's distributions are taxable in the year they are paid, whether they
are taken in cash or reinvested in additional shares, except that certain
distributions declared in the last three months of the year and paid in January
are taxable as if paid on December 31. All state laws provide a pass-through to
mutual fund shareholders of the state and local income tax exemption afforded
owners of direct U.S. government obligations, although there are conditions to
this treatment in some states. You will be notified annually of the percentage
of the Fund's income that is derived from U.S. government securities.
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 paid
(or deemed paid) during the year.
SHARES SOLD. If you redeem all shares 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.
BACKUP WITHHOLDING. If you are an individual or certain other noncorporate
shareholder and do not furnish the Fund with a correct taxpayer identification
number, the Fund is required to withhold federal income tax at a rate of 31%
(backup withholding) from all dividends payable to you. To avoid backup
withholding, you must provide a taxpayer identification number and state that
you are not subject to backup withholding. This certification is included as
part of your application. Please complete it when you open your account.
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PROSPECTUS PAGE I-11
<PAGE> 15
TAX STATUS OF THE FUND. The Fund intends 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
timely distributed to its shareholders.
This section is not intended to be a full discussion of present or proposed
federal income tax law and its effects on the Fund and investors therein. See
the SAI for a further discussion. There may be other federal, state, or local
tax considerations applicable to a particular investor. You are therefore urged
to consult your own tax advisor.
PERFORMANCE INFORMATION
The Fund may advertise "yield," "effective 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 the Fund.
Yield is an annualized figure, which means that it is assumed that the Fund
generates the same level of net investment income over a one-year period. The
Fund's yield and effective yield are measures of the net investment income per
share earned by the Fund over a specific seven-day period and are shown as a
percentage of the investment. However, effective yield will be slightly higher
than the yield because effective yield assumes that the net investment income
earned by the Fund will be reinvested.
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 the Fund assuming
the reinvestment of all dividends. Total return figures are not annualized and
simply represent the aggregate change of the Fund's investments over a specified
period of time.
DETERMINING YOUR SHARE PRICE
The net asset value ("NAV") for the Fund is normally determined as of 12:00
noon Central Time ("CT") each day the New York Stock Exchange (the "Exchange")
is open. The Funds reserve the right to change the time at which purchases and
redemptions are priced if the Exchange closes at a time other than 12:00 noon CT
or if an emergency exists. The Fund's NAV is calculated by taking the fair value
of the Fund's total assets, subtracting all its liabilities, and dividing by the
total number of shares outstanding. Expenses are accrued and applied daily when
determining NAV.
The Fund attempts to stabilize the NAV of its shares at $1.00 by valuing the
portfolio securities using the amortized cost method. Under this method, 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
----------------------
PROSPECTUS PAGE I-12
<PAGE> 16
fluctuating interest rates on the market value of the instrument. The Fund
cannot guarantee that its net asset value will always remain at $1.00 per share.
HOW TO BUY SHARES
An institutional investor may purchase shares at the net asset value next
determined after an order is received in proper form. Although the Fund does not
impose any sales charge in connection with the purchase of its shares,
institutions may charge their clients fees in connection with purchases for
their accounts. The Fund may decline to accept your order when, in the judgment
of the Advisor, it would not be in the best interests of the existing
shareholders. The Fund may discontinue offering its shares at any time or in any
particular state without notice to shareholders. Shares must be purchased by
wire.
An initial investment in the Fund's shares must be preceded or accompanied by
a completed, signed application and the Fund's prospectus. The application
should be forwarded to: Strong Institutional Money Fund, 100 Heritage Reserve,
Menomonee Falls, Wisconsin 53051 (or fax to 414-____-____).
To purchase by wire, place an order by calling 1-800-733-2274 before 12:00
noon CT. Payment by federal funds must be received by the Fund's transfer agent
before 12:00 noon CT that day. The order is considered received when the Fund's
transfer agent receives the wire in good order. Federal funds should be wired as
follows: [insert wiring instructions].
<TABLE>
<CAPTION>
If order is received: Dividends Begin
- ------------------------- ------------------
<S> <C>
By _____ p.m. CT Same Business Day
After _____ p.m. CT Next Business Day
</TABLE>
HOW TO SELL SHARES
An institutional investor may redeem shares at the net asset value next
determined after an order is received in proper form. Although the Fund does not
impose any sales charge in connection with the redemption of its shares,
institutions may charge their clients fees in connection with redemptions for
their accounts. Shares must be redeemed by wire. The Fund will not charge wire
fees.
To redeem by wire, place an order by calling 1-800-733-2274 before 12:00 noon
CT. Share may be redeemed by calling 1-800-733-2274. To redeem by telephone, the
"Yes" box in the appropriate section of the account application must be checked.
In accordance with the following, redemption proceeds will be wired to the
bank account designated on a shareholder's application. All redemption
----------------------
PROSPECTUS PAGE I-13
<PAGE> 17
proceeds will ordinarily be wired the same or next business day, but in no
event more than seven days, after receipt of a redemption request.
<TABLE>
<CAPTION>
Redemption request received by Redemption
Strong Institutional Funds proceeds ordinarily Dividends
- ------------------------------ ----------------------- -----------------
<S> <C> <C>
By 12:00 noon CT Wired Same Business Day Not earned on Day
request is
received
After 12:00 noon CT Wired Next Business Day Earned on Day
request is
received
</TABLE>
WHAT YOU SHOULD KNOW ABOUT REDEEMING SHARES
If you have recently purchased shares, please be aware that your redemption
request may not be honored until the purchase check has been converted to
federal funds, which generally occurs within the next business day after the
check is received. The right of redemption may be suspended during any period in
which (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 the Fund not reasonably practicable.
WHAT YOU SHOULD KNOW ABOUT TELEPHONE REDEMPTIONS
The Fund reserves the right to refuse a telephone redemption if it believes
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 Fund
and its transfer agent employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. The Fund 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.
ADDITIONAL INFORMATION
ADVANCE NOTICE OF LARGE TRANSACTIONS
To allow the Advisor to manage the Fund most effectively, investors are
strongly urged to initiate all purchases and redemptions as early in the day as
possible and to notify the Advisor at least one day in advance of transactions
in excess of $5 million. In making advance notification of a purchase or
redemption transaction, an investor must provide the Advisor with its name and
----------------------
PROSPECTUS PAGE I-14
<PAGE> 18
account number. To protect the Fund's performance and shareholders, the
Advisor discourages frequent trading in response to short-term market
fluctuations.
REDEMPTIONS IN KIND
If the Advisor determines that existing conditions make cash payments
undesirable, redemption payments may be made in whole or in part in securities
or other financial assets, valued for this purpose as they are valued in
computing the NAV for the Fund's shares. Shareholders receiving securities or
other financial assets on redemption may realize a gain or loss for tax
purposes, and will incur any costs of sale, as well as the associated
inconveniences.
MINIMUM INVESTMENT AND ACCOUNT BALANCE
The minimum initial investment to establish a new account in the Fund is $1
million. Subsequent investments may be made in any amount. If an account balance
falls below $1 million due to redemption, the account may be closed and the
proceeds wired to the bank account of record. An investor will be given 30 days'
notice that the account will be closed unless an additional investment is made
to increase the account balance to the $1 million minimum.
CERTIFICATES, STATEMENTS, AND REPORTS
The Fund does not issue share certificates. The Fund will send investors a
confirmation statement after every transaction (except a reinvestment of
dividends or capital gains) on an account, and will confirm all transactions for
an account on a quarterly basis. 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
1-800-733-2274 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.
SIGNATURE GUARANTEES
Investors requesting (i) a redemption of $__________ or more, (ii) a
redemption of any amount to be sent to an address other than that on record
with the Fund, (iii) a redemption payable other than to the shareholder of
record, or (iv) a change in the account's registration must have their
signatures guaranteed by 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.
----------------------
PROSPECTUS PAGE I-15
<PAGE> 19
STRONG INSTITUTIONAL FUNDS
[address]
TOLL FREE: 800-733-CASH (2274)
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 Fund.
This Prospectus does not constitute an offer to sell securities in any state or
jurisdiction in which such offering may not lawfully be made.
----------------------
PROSPECTUS PAGE I-16
<PAGE> 20
STATEMENT OF ADDITIONAL INFORMATION
STRONG INSTITUTIONAL MONEY FUND
P.O. Box 2936
Milwaukee, Wisconsin 53201
Telephone: (414) _____________
Toll-Free: (800) _____________
Strong Institutional Money Fund (the "Fund") is a diversified series of
Strong Institutional Funds, Inc. (the "Corporation"), an open-end management
investment company. This Statement of Additional Information ("SAI") is not a
Prospectus and should be read in conjunction with the Prospectus of the Fund,
dated September ___, 1995. Requests for copies of the Prospectus should be
made by writing to the Fund at P.O. Box 2936, Milwaukee, Wisconsin 53201,
Attention: Corporate Secretary, or by calling one of the numbers listed
above.
This Statement of Additional Information is dated September ___, 1995.
<PAGE> 21
STRONG INSTITUTIONAL MONEY FUND
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT POLICIES AND TECHNIQUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Maturity and Quality Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Illiquid Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
When-Issued Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Variable- or Floating-Rate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Asset-Backed Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Municipal Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Mortgage Dollar Rolls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
DIRECTORS AND OFFICERS OF THE CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
INVESTMENT ADVISOR AND DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
FUND ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SHAREHOLDER MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
PORTFOLIO MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
LEGAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
STATEMENT OF ASSETS AND LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
No person has been authorized to give any information or to make any
representations other than those contained in this SAI and the Prospectus dated
September ___, 1995 and, if given or made, such information or representations
may not be relied upon as having been authorized by the Fund.
This Statement of Additional Information does not constitute an
offer to sell securities.
<PAGE> 22
INVESTMENT RESTRICTIONS
The investment objective of the Strong Institutional Money Fund is to
seek current income, a stable share price, and daily liquidity. The Fund's
investment objective and policies are described in detail in the Prospectus
under the caption "Investment Objective and Policies." The following are the
Fund's fundamental investment limitations which cannot be changed without
shareholder approval.
The Fund:
1. May not with respect to 75% of its total assets, purchase the
securities of any issuer (except securities issued or guaranteed by
the U.S. government or its agencies or instrumentalities) if, as a
result, (i) more than 5% of the Fund's total assets would be invested
in the securities of that issuer, or (ii) the Fund would hold more
than 10% of the outstanding voting securities of that issuer.
2. May (i) borrow money from banks and (ii) make other investments or
engage in other transactions permissible under the Investment Company
Act of 1940 (the 1940 Act) 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.
3. May not issue senior securities, except as permitted under the 1940
Act.
4. May not act as an underwriter of another issuer's securities, except
to the extent that the Fund may be deemed to be an underwriter within
the meaning of the Securities Act of 1933 in connection with the
purchase and sale of portfolio securities.
5. May not purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall
not prevent the Fund from purchasing or selling options, futures
contracts, or other derivative instruments, or from investing in
securities or other instruments backed by physical commodities).
6. May not make loans if, as a result, more than 33 1/3% of the Fund's
total assets would be lent to other persons, except through (i)
purchases of debt securities or other debt instruments, or (ii)
engaging in repurchase agreements.
7. May not purchase the securities of any issuer if, as a result, more
than 25% of the Fund's total assets would be invested in the
securities of issuers, the principal business activities of which are
in the same industry. This limitation shall not limit the Fund's
purchases of obligations issued by domestic banks.
8. May not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prohibit the Fund from purchasing or selling securities or other
instruments backed by real estate or of issuers engaged in real estate
activities).
9. May, notwithstanding any other fundamental investment policy or
restriction, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and restrictions as the
Fund.
-3-
<PAGE> 23
The following are the Fund's non-fundamental operating policies which
may be changed by the Board of Directors of the Corporation without shareholder
approval.
The Fund may not:
1. Sell securities short, unless the Fund owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short,
or unless it covers such short sale as required by the current rules
and positions of the Securities and Exchange Commission 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 10% of its net assets would be invested in illiquid securities,
or such other amounts as may be permitted under the 1940 Act.
4. Purchase securities of other investment companies except in compliance
with the 1940 Act and applicable state law.
5. Invest all of its assets in the securities of a single open-end
investment management company with substantially the same fundamental
investment objective, restrictions and policies as the Fund.
6. 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 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.
-4-
<PAGE> 24
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 any 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.
14. Engage in any transaction or practice which is not permissible under
Rule 2a-7 of the 1940 Act, notwithstanding any other fundamental
investment limitation or non-fundamental operating policy.
Except for the fundamental investment limitations listed above and the
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 the Fund's Board.
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the discussion of the Fund's
investment objective, policies and techniques that are described in detail in
the Prospectus under the captions "Investment Objective and Policies" and
"Implementation of Policies and Risks."
MATURITY AND QUALITY RESTRICTIONS
The Fund is subject to certain maturity restrictions pursuant to Rule
2a-7 under the 1940 Act for money market funds that use the amortized cost
method of valuation to maintain a stable net asset value of $1.00 per share.
Accordingly, the Fund will (i) maintain a dollar weighted average portfolio
maturity of 90 days or less, and (ii) will purchase securities with a remaining
maturity of no more than 13 months (397 calendar days). The Fund will buy only
U.S. dollar-denominated securities which represent minimal credit risks and
meet certain credit quality and diversification requirements. For purposes of
calculating the maturity of portfolio instruments, the Fund will follow the
requirements of Rule 2a-7. Under Rule 2a-7, the maturity of portfolio
instruments is calculated as indicated below.
Generally, the maturity of a portfolio instrument shall be deemed to
be the period remaining (calculated from the trade date or such other date on
which the Fund's interest in the instrument is subject to market action) until
the date noted on the face of the instrument as the date on which the principal
amount must be paid, or in the case of an instrument called for redemption, the
date on which the redemption payment must be made, except that:
(1) An instrument that is issued or guaranteed by the U.S. government
or any agency thereof which has a variable rate of interest readjusted no less
frequently than every 762 days shall be deemed to have a maturity equal to the
period remaining until the next readjustment of the interest rate.
(2) A Variable Rate Instrument, the principal amount of which is
scheduled on the face of the instrument to be paid on 397 calendar days or less
shall be deemed to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
-5-
<PAGE> 25
(3) A Variable Rate Instrument that is subject to a Demand Feature
shall be deemed to have a maturity equal to the longer of the period remaining
until the next readjustment of the interest rate or the period remaining until
the principal amount can be recovered through demand.
(4) A Floating Rate Instrument that is subject to a Demand Feature
shall be deemed to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
(5) A repurchase agreement shall be deemed to have a maturity equal
to the period remaining until the date on which the repurchase of the
underlying securities is scheduled to occur, or, where no date is specified,
but the agreement is subject to a demand, the notice period applicable to a
demand for the repurchase of the securities.
As used herein, all capitalized but undefined terms shall have the meaning such
terms have in Rule 2a-7.
The Fund will invest at least 95% of its assets in instruments
determined to present minimal credit risks and, at the time of acquisition, are
(i) obligations issued or guaranteed by the U.S. government, its agencies, or
instrumentalities; (ii) rated by at least two nationally recognized rating
agencies (or by one agency if only one agency has issued a rating) (the
"required rating agencies") in the highest rating category for short-term debt
obligations; (iii) unrated but whose issuer is rated in the highest category by
the required rating agencies with respect to a class of short-term debt
obligations or any security within that class that is comparable in priority
and security with the instrument; or (iv) unrated (other than the type
described in (iii)) but determined by the Fund's Board to be of comparable
quality to the foregoing (provided the unrated security has not received a
short-term rating, and with respect to a long-term security with a remaining
maturity within the Fund's maturity restrictions, has not received a long-term
rating from any agency that is other than in its highest rating category). The
foregoing are referred to as "first-tier securities."
The balance of the securities in which the Fund may invest are
instruments determined to present minimal credit risks, which do not qualify as
first-tier securities, and, at the time of acquisition, are (i) rated by the
required rating agencies in one of the two highest rating categories for
short-term debt obligations; (ii) unrated but whose issuer is rated in one of
the two highest categories by the required rating agencies with respect to a
class of short-term debt obligations or any security within that class that is
comparable in priority and security with the obligation; or (iii) unrated
(other than described in (ii)) but determined by the Fund's Board to be of
comparable quality to the foregoing (provided the unrated security has not
received a short-term rating and, with respect to a long-term security with a
remaining maturity within the Fund's maturity restrictions, has not received a
long-term rating from any agency that is other than in one of its highest two
rating categories). The foregoing are referred to as "second-tier securities."
In addition to the foregoing quality guidelines, the Fund follows
certain diversification standards and will not (i) acquire a second-tier
security of an issuer if, after giving effect to the acquisition, the Fund
would have invested more than the greater of 1% of its total assets or one
million dollars in second-tier securities issued by that issuer, or (ii) invest
more than 5% of the Fund's total assets in the securities (other than
securities issued by the U.S. government or any agency or instrumentality
thereof) issued by a single issuer.
ILLIQUID SECURITIES
The Fund may invest in illiquid securities (i.e., securities that are
not readily marketable). However, the Fund will not acquire illiquid
securities if, as a result, they would comprise more than 10% of the value of
the Fund's net assets (or such other amounts as may be permitted under the 1940
Act). The Corporation's Board of Directors, 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 Corporation's Board of Directors
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, the Board of Directors has
directed the Advisor to look to such factors as (i) the
-6-
<PAGE> 26
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 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, the 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. If through
the appreciation of restricted securities or the depreciation of unrestricted
securities, a Fund should be in a position where more than 10% 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
is deemed advisable, if any, to protect liquidity.
WHEN-ISSUED SECURITIES
The Fund may from time to time purchase securities 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 Fund to the issuer and no interest on debt securities accrues to
the Fund. Forward commitments involve a risk of loss if the value of the
security to be purchased declines prior to the settlement date, which risk is
in addition to the risk of decline in value of the Fund's other assets. While
when-issued securities may be sold prior to the settlement date, the Fund
intends to purchase such securities with the purpose of actually acquiring them
unless a sale appears desirable for investment reasons. At the time the Fund
makes the commitment to purchase 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 Fund does not believe that its net asset value or income
will be adversely affected by purchases of securities on a when-issued basis.
The Fund 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 Fund will meet its
obligations from then-available cash flow, sale of the securities held in the
separate account, 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 Fund's payment obligation).
LENDING OF PORTFOLIO SECURITIES
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The Fund is authorized to lend up to 33 1/3% of the total value of its
portfolio securities to broker-dealers or institutional investors that the
Advisor deems qualified, but only when the borrower maintains with the Fund's
custodian bank collateral either in cash or money market instruments in an
amount at least equal to the market value of the securities loaned, plus
accrued interest and dividends, determined on a daily basis and adjusted
accordingly. However, the Fund does 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. The Fund will retain authority
to terminate any loans at any time. The Fund may pay reasonable administrative
and custodial fees in connection with a loan and may pay a negotiated portion
of the interest earned on the cash or money market instruments held as
collateral to the borrower or placing broker. The Fund will receive reasonable
interest on the loan or a flat fee from the borrower and amounts equivalent to
any dividends, interest or other distributions on the securities loaned. The
Fund will retain record ownership of loaned securities to exercise beneficial
rights, such as voting and subscription rights and rights to dividends,
interest or other distributions, when retaining such rights is considered to be
in the Fund's interest.
VARIABLE- OR FLOATING-RATE SECURITIES
The Fund may invest in securities which offer a variable- or
floating-rate of interest. Variable-rate securities provide for automatic
establishment of a new interest rate at fixed intervals (e.g., daily, monthly,
semi-annually, etc.). Floating-rate securities provide for automatic
adjustment of the interest rate whenever some specified interest rate index
changes. The interest rate on variable- or floating-rate securities is
ordinarily determined by reference to or is a percentage of a bank's prime
rate, the 90-day U.S. Treasury bill rate, the rate of return on commercial
paper or bank certificates of deposit, an index of short-term interest rates,
or some other objective measure.
Variable- or floating-rate securities frequently include a demand
feature entitling the holder to sell the securities to the issuer at par. In
many cases, the demand feature can be exercised at any time on 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 instrument's maturity to be shorter than its
stated maturity. Any such determination by the Fund will be made in accordance
with Rule 2a-7.
Variable-rate demand notes include master demand notes which are
obligations that permit the Fund to invest fluctuating amounts, which may
change daily without penalty, pursuant to direct arrangements between the Fund,
as lender, and the borrower. The interest rates on these notes fluctuate from
time to time. The issuer of such obligations normally has a corresponding
right, after a given period, to prepay in its discretion the outstanding
principal amount of the obligations plus accrued interest upon a specified
number of days' notice to the holders of such obligations. The interest rate
on a floating-rate demand obligation is based on a known lending rate, such as
a bank's prime rate, and is adjusted automatically each time such rate is
adjusted. The interest rate on a variable-rate demand obligation is adjusted
automatically at specified intervals. Frequently, such obligations are secured
by letters of credit or other credit support arrangements provided by banks.
Because these obligations are direct lending arrangements between the lender
and borrower, it is not contemplated that such instruments will generally be
traded. There generally is not an established secondary market for these
obligations, although they are redeemable at face value. Accordingly, where
these obligations are not secured by letters of credit or other credit support
arrangements, the Fund's right to redeem is dependent on the ability of the
borrower to pay principal and interest on demand. Such obligations frequently
are not rated by credit rating agencies and, if not so rated, the Fund may
invest in them only if the Fund's Advisor determines that at the time of
investment the obligations are of comparable quality to the other obligations
in which the Fund may invest. The Advisor, on behalf of the Fund, will consider
on an ongoing basis the creditworthiness of the issuers of the floating- and
variable-rate demand obligations in the Fund's portfolio.
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<PAGE> 28
The Fund will not invest more than 10% 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 Fund's investments
at the time of purchase. When determining whether such an obligation meets the
Fund's credit quality requirements, the Fund may look to the credit quality of
the financial guarantor providing a letter of credit or other credit support
arrangement.
ASSET-BACKED DEBT OBLIGATIONS
The Fund may invest in asset-backed debt obligations. Asset-backed
debt obligations represent direct or indirect participation in, or secured by
and payable from assets such as motor vehicle installment sales contracts,
other installment loan contracts, home equity loans, leases of various types of
property and receivables from credit card or other revolving credit
arrangements. Payments or distributions of principal and interest on
asset-backed debt obligations may be supported by non-governmental credit
enhancements including letters of credit, reserve funds, overcollateralization,
and guarantees by third parties.
The yield characteristics of asset-backed debt obligations differ from
those of traditional debt obligations. Among the principal differences are
that interest and principal payments are made more frequently on asset-backed
debt obligations, usually monthly, and that principal may be prepaid at any
time because the underlying assets generally may be prepaid at any time. As a
result, if a Fund purchases these debt obligations at a premium, a prepayment
rate that is faster than expected will reduce yield to maturity, while a
prepayment rate that is slower that expected will have the opposite effect of
increasing the yield to maturity. Conversely, if a Fund purchases these debt
obligations 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 debt
obligations 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 asset-backed
debt obligations is smaller and less liquid than the market for government
sponsored mortgage-backed securities.
MUNICIPAL OBLIGATIONS
General obligation bonds are secured by the issuer's pledge of its full
faith, credit, and taxing power for the payment of interest and principal.
Revenue bonds are payable only from the revenues derived from a project or
facility or from the proceeds of a specified revenue source. Industrial
development bonds are generally revenue bonds secured by payments from and the
credit of private users. Municipal notes are issued to meet the short-term
funding requirements of state, regional, and local governments. Municipal
notes include tax anticipation notes, bond anticipation notes, revenue
anticipation notes, tax and revenue anticipation notes, construction loan
notes, short-term discount notes, tax-exempt commerical paper, demand notes,
and similar instruments. Municipal obligations include obligations, the
interest on which is exempt from federal income tax, that may become available
in the future as long as the Board of Directors of a Fund determines that an
investment in any such type of obligation is consistent with that Fund's
investment objective.
Municipal lease obligations may take the form of a lease, an
installment purchase, or a conditional sales contract. They are issued by
state and local governments and authorities to acquire land, equipment, and
facilities, such as state and municipal vehicles, telecommunications and
computer equipment, and other capital assets. The Fund may purchase these
obligations directly, or it may purchase participation interests in such
obligations. Municipal leases are generally subject to greater risks than
general obligation or revenue bonds. State constitutions and statutes set
forth requirements that states or municipalities must meet in order to issue
municipal obligations. Municipal leases may contain a covenant by the state or
municipality to budget for, appropriate, and make payments due under the
obligation. Certain municipal leases may, however, contain "non-appropriation"
clauses which provide that the issuer is not obligated to make payments on the
obligation in future years unless funds have been appropriated for this purpose
each year. Accordingly, such obligations are subject to "non-appropriation"
risk. While municipal leases are secured by the underlying capital asset, it
may be difficult to dispose of any such asset in the event of non-appropriation
or other default.
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements. In a repurchase
agreement, the Fund buys a security at one price, and at the time of sale, the
seller agrees to repurchase the obligation at a mutually agreed upon time and
price (usually within seven days). The repurchase agreement, thereby,
determines the yield during the purchaser's holding period, while the seller's
obligation to repurchase is secured by the value of the underlying security.
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. The Fund may, under certain
circumstances, deem repurchase agreements, collateralized by U.S. government
securities to be investments in U.S. government securities.
BORROWING
The Fund may borrow money from banks, limited by the 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. In addition, the Fund may borrow
up to an additional 5% of its total assets from banks for temporary or
emergency purposes. The Fund will not purchase securities when bank borrowings
exceed 5% of the Fund's total assets.
MORTGAGE DOLLAR ROLLS
The Fund may enter into mortgage dollar rolls, in which the Fund would
sell mortgage-backed securities for delivery in the current month and
simultaneously contract to purchase substantially similar securities on a
specified future date. While the Fund would forego principal and interest paid
on the mortgage-backed securities during the roll period, the Fund would be
compensated by the difference between the current sales price and the lower
price for the future purchase as well as by any interest earned on the proceeds
of the initial sale. The Fund also could be compensated through the receipt of
fee income equivalent to a lower forward price. When required by SEC
guidelines, the Fund would set aside permissible liquid assets in a segregated
account to secure its obligation for the forward commitment to buy
mortgage-backed securities. Mortgage dollar roll transactions may be considered
a borrowing by the Fund.
The mortgage dollar rolls entered into by the Fund may be used as
arbitrage transactions in which the Fund will maintain an offsetting position
in investment-grade debt obligations that mature on or before the settlement
date of the related mortgage dollar roll. Since the Fund will receive interest
on the securities in which it invests the transaction proceeds, such
transactions may involve leverage. However, since such securities will be high
quality and will mature on or before the settlement date of the mortgage dollar
roll, the Advisor believes that such arbitrage transactions do not present the
risks to the Fund that are associated with other types of leverage. The Fund
will only engage in transactions permissible under Rule 2a-7.
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<PAGE> 29
DIRECTORS AND OFFICERS OF THE CORPORATION
Directors and officers of the Corporation, together with information as
to their principal business occupations during the last five years, and other
information are shown below. Each director who is deemed an "interested
person," as defined in the 1940 Act, is indicated by an asterisk. Each officer
and director holds the same position with the following registered investment
companies: 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 Corporate Bond Fund, Inc.; Strong Discovery
Fund, Inc.; Strong Government Securities Fund, Inc.; Strong Growth Fund, Inc.;
Strong Herigage Reserve Series, Inc.; Strong High-Yield Municipal Bond 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 Global Bond Fund, Inc.; Strong Short-Term Municipal Bond Fund, Inc.;
Strong Total Return Fund, Inc.; and Strong U.S. Treasury Money Fund, Inc.
(collectively, the "Strong Funds") and Strong Special Fund II, Inc. and Strong
Variable Insurance Funds, Inc.
*Richard S. Strong (DOB 5/12/42), Chairman of the Board and Director
of the Corporation.
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;
and since February 1994, Mr. Strong has been a member of the Managing Boards of
Fussville Real Estate Holdings L.L.C., a Wisconsin Limited Liability Company
and subsidiary of the Advisor, and Fussville Development L.L.C. 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 Corporation since July 1995. Mr. Strong has been in the investment
management business since 1967.
Marvin E. Nevins (DOB 7/9/18), Director of the Corporation.
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 of General Casting Corp., Waukesha, Wisconsin, a foundry. Mr. Nevins
is a former 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 Corporation since July 1995.
Willie D. Davis (DOB 7/24/34), Director of the Corporation.
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 Corporation since July 1995.
*John Dragisic (DOB 11/26/40), Vice Chairman and Director of the
Corporation.
Mr. Dragisic has been Vice Chairman and a director of the Advisor and
a director of Holdings and Distributor since July 1994. Mr. Dragisic
previously served as a director of the Strong Funds between 1991 and
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<PAGE> 30
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 InterAmerican 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 served
as Vice Chairman and director of the Corporation since July 1995.
Stanley Kritzik (DOB 1/9/30), Director of the Corporation.
Mr. Kritzik has been a Partner of Metropolitan Associates since 1962,
a Director of Aurora Health Care since 1987, and Health Network Ventures, Inc.
since 1992. He has served as a director of the Corporation since July 1995.
William F. Vogt (DOB 7/19/47), Director of the Corporation.
Mr. Vogt has been the President of Vogt Management Consulting, Inc.
since 1990. From 1982 until 1990, he served as Executive Director of
University Physicians of the University of Colorado. Mr. Vogt is the Past
President of the Medical Group Management Association and a Fellow of the
American College of Medical Practice Executives. He has served as a director
of the Corporation since July 1995.
Lawrence A. Totsky (DOB 5/6/59), C.P.A., Vice President of the
Corporation.
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 Corporation since July 1995.
Thomas P. Lemke (DOB 7/30/54), Vice President of the Corporation.
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 Corporation since July 1995.
Ann E. Oglanian (DOB 12/7/61), Secretary of the Corporation.
Ms. Oglanian has been an Associate Counsel to 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 Corporation
since July 1995.
Ronald A. Neville (DOB 5/21/47), C.P.A., Treasurer of the Corporation.
Mr. Neville has been the Senior Vice President and Chief Financial
Officer of the Advisor since January 1995. For fourteen years prior to that,
Mr. Neville worked at Twentieth Century Companies, Inc., most notably as Senior
Vice President and Chief Financial Officer (1988 until December 1994). Mr.
Neville received his M.B.A. in 1972 from the University of Missouri - Kansas
City and his B.A. degree in Business Administration and Economics in 1969 from
Drury College. Mr. Neville has been the Treasurer of the Corporation since
July 1995.
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 East Third Avenue, Denver, Colorado
80206.
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<PAGE> 31
The mutual fund complex that is managed by the Advisor, which is
composed of 26 open-end management investment companies consisting of 31 mutual
funds, of which the Fund is a part, in the aggregate, pays each Director who
is not a director, officer, or employee of the Advisor, or any affiliated
company (a "disinterested director") an annual fee of $50,000, plus $100 per
Board meeting for each mutual fund. In addition, each disinterested director
is reimbursed by the mutual fund for travel and other expenses incurred in
connection with attendance at such meetings. Other officers and directors of
the mutual funds receive no compensation or expense reimbursement from the
mutual funds.
As of _______, 1995, the officers and directors of the Corporation in
the aggregate beneficially owned less than 1% of the Fund's then outstanding
shares.
PRINCIPAL SHAREHOLDERS
As of _______, 1995, Strong Capital Management, Inc. owned of record
and beneficially 100,000 shares, representing all of the Fund's outstanding
common stock.
INVESTMENT ADVISOR AND DISTRIBUTOR
The Advisor to the Fund 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, Mr.
Neville is a Senior Vice President and Chief Financial Officer of the Advisor,
Ms. Oglanian is an Associate Counsel of the Advisor, and Mr. Thomas M. Zoeller
is the Treasurer of the Advisor. A brief description of the Fund's investment
advisory agreement ("Advisory Agreement") is set forth in the Prospectus under
"About the Fund - Management."
The Fund's Advisory Agreement is dated ______, 1995 and will remain
in effect as to the Fund for a period of two years. The Advisory Agreement was
last approved by the sole shareholder on ______, 1995. Thereafter, the
Advisory Agreement is required to be approved annually by the Board of
Directors of the Corporation or by vote of a majority of the Fund's outstanding
voting securities (as defined in the 1940 Act). In either case, each annual
renewal must be approved by the vote of a majority of the Corporation's
directors who are not parties to the Advisory Agreement or interested persons
of any such party, cast in person at a meeting called for the purpose of voting
on such approval. The Advisory Agreement is terminable, without penalty, on 60
days' written notice by the Board of Directors of the Corporation, by vote of a
majority of the Fund's outstanding voting securities, or by the Advisor. In
addition, the Advisory Agreement will terminate automatically in the event of
its assignment.
Under the terms of the Advisory Agreement, the Advisor manages the
Fund's investments subject to the supervision of the Fund's Board. 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 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 the
Fund's shares, the Fund is responsible for all its other expenses, including,
without limitation, interest charges, taxes, brokerage commissions, and similar
expenses; expenses of issue, sale, repurchase, or redemption of shares;
expenses of registering or qualifying shares for sale; expenses for printing
and distribution costs of Prospectuses and quarterly financial statements
mailed to existing shareholders; and charges of custodians, transfer agents
(including the printing and mailing of reports and notices to shareholders),
registrars, auditing and legal services, clerical services related to
recordkeeping and shareholder relations, printing stock certificates; and fees
for directors who are not "interested persons" of the Advisor, and its
allocable share of the Corporation's expenses.
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<PAGE> 32
As compensation for its services, the Fund pays to the Advisor a
monthly advisory fee at the annual rate of .35% of the Fund's average daily net
assets. 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 Fund,
which were $______, were advanced by the Advisor and will be reimbursed by the
Fund over a period of not more than 60 months from the Fund's date of
inception.
The Advisory Agreement requires the Advisor to reimburse the Fund in
the event that the expenses and charges payable by the Fund in any fiscal year,
including the advisory fee but excluding taxes, interest, brokerage
commissions, and similar fees and to the extent permitted extraordinary
expenses, exceed the 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 laws of the various states in which the Fund's shares are
qualified for sale; or if the states in which the Fund's shares are qualified
for sale impose no restrictions, the Advisor shall reimburse the Fund in the
event the expenses and charges payable by the Fund in any fiscal year (as
described above) exceed 2%. The most restrictive percentage limitation
currently applicable to the Fund is 2.5% 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
1.5% 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 the Fund by reduction of the Advisor's fee, subject
to later adjustment, month by month, for the remainder of the Fund's fiscal
year. The Advisor may from time to time voluntarily absorb expenses for the
Fund in addition to the reimbursement of expenses in excess of application
limitations.
On July 12, 1994, the Securities and Exchange Commission (the SEC)
filed an administrative action (Order) against the Advisor, Mr. Strong, and
another employee of the Advisor in connection with conduct that occurred
between 1987 and early 1990. In re Strong/Corneliuson Capital Management, Inc.,
et al. Admin. Proc. File No. 3-8411. The proceeding was settled by consent
without admitting or denying the allegations in the Order. The Order alleged
that the Advisor and Mr. Strong aided and abetted violations of Section 17(a)
of the 1940 Act by effecting trades between mutual funds, and between mutual
funds and Harbour Investments Ltd. ("Harbour"), without complying with the
exemptive provisions of SEC Rule 17a-7 or otherwise obtaining an exemption. It
further alleged that the Advisor violated, and Mr. Strong aided and abetted
violations of, the disclosure provisions of the 1940 Act and the Investment
Advisers Act of 1940 by misrepresenting the Advisor's policy on personal
trading and by failing to disclose trading by Harbour, an entity in which
principals of the Advisor owned between 18 and 25 percent of the voting stock.
As part of the settlement, the respondents agreed to a censure and a cease and
desist order and the Advisor agreed to various undertakings, including adoption
of certain procedures and a limitation for six months on accepting certain
types of new advisory clients.
The staff of the U.S. Department of Labor (the "Staff") has contacted
the Advisor regarding alleged cross-trading of securities between 1987 and
early 1990 involving various customer accounts subject to the Employee
Retirement Security Act of 1974 ("ERISA") and managed by the Advisor. The
Advisor has informed the Staff of the basis for its position that the trades
complied with ERISA and that, in any event, any alleged noncompliance was not
the cause of any losses to the accounts. The Staff has stated that it
disagrees with the Advisor's positions, although to date it has not filed any
action against the Advisor. At this time, the Advisor is negotiating with the
Staff regarding a possible resolution of the matter, but it cannot presently
determine whether the matter will be settled or litigated or, if it is settled
or litigated, how it ultimately will be resolved. However, management
presently believes, based on current knowledge and the Advisor's insurance
coverage, that the ultimate resolution of this matter should not have a
material adverse effect on the Advisor's financial position.
Under a Distribution Agreement dated _______, 1995 with the
Corporation (the "Distribution Agreement"), Strong Funds Distributors, Inc.
("Distributor"), a subsidiary of the Advisor, acts as underwriter of the Fund's
shares. The Distribution Agreement provides that the Distributor will use its
best efforts to distribute the Fund's shares. Since the Fund is a "no-load"
fund, no sales commissions are charged on the purchase of Fund shares. The
Distribution Agreement further provides that the Distributor will bear the
additional costs of printing Prospectuses and shareholder reports which are
used for selling purposes, as well as advertising and any other costs
attributable to the distribution of the Fund's shares. The Distributor is an
indirect subsidiary of the Advisor and controlled by the
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<PAGE> 33
Advisor and Richard S. Strong. The Distribution Agreement is subject to the
same termination and renewal provisions as are described above with respect to
the Advisory Agreement.
From time to time, the Distributor may hold in-house sales incentive
programs for its associated persons under which these persons may receive
non-cash compensation awards in connection with the sale and distribution of
the Fund's shares. These awards may include items such as, but not limited to,
gifts, merchandise, gift certificates, and payment of travel expenses, meals
and lodging. As required by the 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 person's gross production of all securities within a
product type and will not be based on the sales of shares of any specifically
designated mutual fund.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Advisor is responsible for decisions to buy and sell securities
for the Fund and for the placement of the Fund's 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 Fund. 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 Fund means the best net price
without regard to the mix between purchase or sale price and commissions, if
any. In selecting broker-dealers and in negotiating commissions, the Advisor
considers a variety of factors, including best price and execution, the full
range of brokerage services provided by the broker, as well as its capital
strength and stability, and the quality of the research and research services
provided by the broker. Brokerage will not be allocated based on the sale of
any shares of the Strong Funds.
Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment advisor, under certain circumstances, to cause an account
to pay a broker or dealer a commission for effecting a transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting the transaction in recognition of the value of the brokerage and
research services provided by the broker or dealer. Brokerage and research
services include (a) furnishing advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; (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 Agreement, the Advisor
may cause the Fund to pay a broker, which provides brokerage and research
services to the Advisor, a commission for effecting a securities transaction in
excess of the amount another broker would have charged for effecting the
transaction. The Advisor believes it is important to its investment
decision-making process to have access to independent research. The Advisory
Agreement provides that such higher commissions will not be paid by the Fund
unless (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 Agreement; and (c) in the opinion of the
Advisor, the total commissions paid by the Fund will be reasonable in relation
to the benefits to the Fund over the long term. The investment advisory fees
paid by the Fund under the Advisory Agreement are not reduced as a result of
the Advisor's receipt of research services.
Generally, research services provided by brokers may include
information on the economy, industries, groups of securities, individual
companies, statistical information, accounting and tax law interpretations,
political developments, legal developments affecting portfolio securities,
technical market action, pricing and appraisal services, credit analysis, risk
measurement analysis, performance analysis, and analysis of corporate
responsibility issues. Such research services are received primarily in the
form of written reports, telephone contacts, and personal
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<PAGE> 34
meetings with security analysts. In addition, such research services may be
provided in the form of access to various computer-generated data, computer
hardware and software, and meetings arranged with corporate and industry
spokespersons, economists, academicians, and government representatives. In
some cases, research services are generated by third parties but are provided
to the Advisor by or through brokers. Such brokers may pay for all or a portion
of computer hardware and software costs relating to the pricing of securities.
Where the Advisor itself receives both administrative benefits and
research and brokerage services from the services provided by brokers, it makes
a good faith allocation between the administrative benefits and the research
and brokerage services, and will pay for any administrative benefits with cash.
In making good faith allocations of costs between administrative benefits and
research and brokerage services, a conflict of interest may exist by reason of
the Advisor's allocation of the costs of such benefits and services between
those that primarily benefit the Advisor and those that primarily benefit the
Fund and other advisory clients.
From time to time, the Advisor may purchase securities for the Fund in
a fixed price offering. In these situations, the seller may be a member of the
selling group that will, in addition to selling the securities to the Fund and
other advisory clients, provide the Advisor with research. The National
Association of Securities Dealers has adopted rules expressly permitting these
types of arrangements under certain circumstances. Generally, the seller will
provide research "credits" in these situations at a rate that is higher than
that which is available for typical secondary market transactions. These
arrangements may not fall within the safe harbor of Section 28(e).
Each year, the Advisor considers the amount and nature of research and
research services provided by brokers, as well as the extent to which such
services are relied upon, and attempts to allocate a portion of the brokerage
business of the Fund and other advisory clients on the basis of that
consideration. In addition, brokers may suggest a level of business they would
like to receive in order to continue to provide such services. The actual
brokerage business received by a broker may be more or less than the suggested
allocations, depending upon the Advisor's evaluation of all applicable
considerations.
The Advisor may direct the purchase of securities on behalf of the
Fund and other advisory clients in secondary market transactions, in public
offerings directly from an underwriter, or in privately negotiated transactions
with an issuer. When the Advisor believes the circumstances so warrant,
securities purchased in public offerings may be resold shortly after
acquisition in the immediate aftermarket for the security in order to take
advantage of price appreciation from the public offering price or for other
reasons. Short-term trading of securities acquired in public offerings, or
otherwise, may result in higher portfolio turnover and associated brokerage
expenses.
The Advisor places portfolio transactions for other advisory accounts,
including other mutual funds managed by the Advisor. Research services
furnished by firms through which the Fund effects its securities transactions
may be used by the Advisor in servicing all of its accounts; not all of such
services may be used by the Advisor in connection with the Fund. In the
opinion of the Advisor, it is not possible to measure separately the benefits
from research services to each of the accounts (including the Fund) managed by
the Advisor. Because the volume and nature of the trading activities of the
accounts are not uniform, the amount of commissions in excess of those charged
by another broker paid by each account for brokerage and research services will
vary. However, in the opinion of the Advisor, such costs to the Fund will not
be disproportionate to the benefits received by the Fund on a continuing basis.
The Advisor seeks to allocate portfolio transactions equitably
whenever concurrent decisions are made to purchase or sell securities by the
Fund and another advisory account. In some cases, this procedure could have an
adverse effect on the price or the amount of securities available to the Fund.
In making such allocations between the Fund and other advisory accounts, the
main factors considered by the Advisor are the respective investment
objectives, the relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of investment
commitments generally held, and the opinions of the persons responsible for
recommending the investment.
CUSTODIAN
As custodian of the Fund's assets, Firstar Trust Company, P.O. Box
701, Milwaukee, Wisconsin 53201, has custody of all securities and cash of the
Fund, delivers and receives payment for securities sold, receives and pays for
securities purchased, collects income from investments, and performs other
duties, all as directed by the officers of the Fund. The Fund's custodian has
entered into a sub-custodial arrangement with Bankers Trust Company ("BTC")
pursuant to which BTC may retain custody of certain of the Fund's
dollar-denominated foreign securities. The custodian and, if applicable, the
sub-custodian are in no way responsible for any of the investment policies or
decisions of the Fund.
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<PAGE> 35
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
The Advisor acts as transfer agent and dividend-disbursing agent for
the Fund. The Advisor is compensated based on an annual fee per open account of
$_____, plus out-of-pocket expenses, such as postage and printing expenses in
connection with shareholder communications. The Advisor also receives an annual
fee per closed account of $____ from the Fund. The fees received and the
services provided as transfer agent and dividend disbursing agent are in
addition to those received and provided by the Advisor under the Advisory
Agreement. In addition, the Advisor provides certain printing and mailing
services for the Fund, such as printing and mailing of shareholder account
statements, checks, and tax forms.
From time to time, the Fund, directly or indirectly through
arrangements with the Advisor, may pay amounts to third parties that provide
transfer agent and other administrative services relating to the Fund to
persons who beneficially own interests in the Fund, such as participants in
401(k) plans. These services may include, among other things, sub-accounting
services, answering inquiries relating to the Fund, transmitting, on behalf of
the Fund, proxy statements, annual reports, updated Prospectuses, other
communications regarding the Fund, and related services as the Fund or
beneficial owners may reasonably request. In such cases, the Fund will not pay
fees at a rate that is greater than the rate the Fund is currently paying the
Advisor for providing these services to Fund shareholders.
TAXES
GENERAL
As indicated under "About the Fund - Distributions and Taxes" in the
Prospectus, the Fund intends to qualify annually for treatment as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
(the "Code"). This qualification does not involve government supervision of
the Fund's management practices or policies.
In order to qualify for treatment as a RIC under the Code, the 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. These requirements include the following: (1) the Fund
must derive at least 90% of its gross income each taxable year from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of securities or foreign currencies or other income
(including gains from options, futures, or forward currency contracts) derived
with respect to its business of investing in securities or these currencies
("Income Requirement"); (2) the Fund must derive less than 30% of its gross
income each taxable year from the sale or other disposition of securities, that
were held for less than three months ("30% Limitation"); (3) at the close of
each quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government securities,
securities of other RICs, and other securities, with these other securities
limited, in respect of any one issuer, to an amount that does not exceed 5% of
the value of the Fund's total assets and that does not represent more than 10%
of the issuer's outstanding voting securities; and (4) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than U.S. government securities or
the securities of other RICs) of any one issuer.
The Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year.
FOREIGN TRANSACTIONS
Interest and dividends received by the Fund may be subject to income,
withholding, or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the 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. The Fund maintains its accounts
and calculates its income in U.S. dollars.
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<PAGE> 36
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 the Fund will be
determined as of the close of trading on each day the New York Stock Exchange
(the "NYSE") is open for trading. The New York Stock Exchange is open for
trading Monday through Friday except New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. Additionally, if any of the aforementioned holidays falls on a
Saturday, the NYSE will not be open for trading on the preceding Friday, and
when any such holiday falls on a Sunday, the NYSE will not be open for trading
on the succeeding Monday, unless unusual business conditions exist, such as the
ending of a monthly or yearly accounting period.
The Fund values its securities on the amortized cost basis and seek to
maintain their net asset value at a constant $1.00 per share. In the event a
difference of 1/2 of 1% or more were to occur between the net asset value
calculated by reference to market values and the Fund's $1.00 per share net
asset value, or if there were any other deviation which the Board of Directors
of the Corporation believed would result in a material dilution to shareholders
or purchasers, the Board of Directors would consider taking any one or more of
the following actions or any other action considered appropriate: selling
portfolio securities to shorten average portfolio maturity or to realize
capital gains or losses, reducing or suspending shareholder income accruals,
redeeming shares in kind, or utilizing a value per unit based upon available
indications of market value. Available indications of market value may
include, among other things, quotations or market value estimates of securities
and/or values based on yield data relating to money market securities that are
published by reputable sources.
-17-
<PAGE> 37
FUND ORGANIZATION
The Fund is a series of common stock of Strong Institutional Funds,
Inc., a Wisconsin corporation (the "Corporation"). The Corporation was
incorporated on July 1, 1994 and is authorized to issue 200,000,000,000 shares
of common stock and series and classes of series of shares of common stock,
with a par value of $.01 per share. The Corporation is authorized to issue
10,000,000,000 shares of common stock of the Fund. The shares in any one
portfolio may, in turn, be offered in separate classes, each with differing
preferences, limitations or relative rights. However, the Corporation's
Articles of Incorporation provides that if additional classes of shares are
issued by the Fund, such new classes of shares may not affect the preferences,
limitations or relative rights of the Fund's outstanding shares. In addition,
the Corporation's Board 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. Finally,
all holders of shares of the Corporation may vote on each matter presented to
shareholders for action except with respect to any matter which affects only
one or more series or class, in which case only the shares of the affected
series or class is
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<PAGE> 38
entitled to vote. Fractional shares have the same rights proportionately as do
full shares. Shares of the Fund have no preemptive, conversion, or subscription
rights. The Fund currently has only one series of common stock outstanding. If
the 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
The Wisconsin Business Corporation Law permits registered investment
companies, such as the Fund, to operate without an annual meeting of
shareholders under specified circumstances if an annual meeting is not required
by the 1940 Act. The Fund has adopted the appropriate provisions in its Bylaws
and may, at their discretion, not hold an annual meeting in any year in which
the election of directors is not required to be acted on by shareholders under
the 1940 Act.
The Corporation's Bylaws allow for a director to be removed by its
shareholders with or without cause, only at a meeting called for the purpose
of removing the director. Upon the written request of the holders of shares
entitled to not less than ten percent (10%) of all the votes entitled to be
cast at such meeting, the Secretary of the Corporation shall promptly call a
special meeting of shareholders for the purpose of voting upon the question of
removal of any director. The Secretary of the Corporation shall inform such
shareholders of the reasonable estimated costs of preparing and mailing the
notice of the meeting, and upon payment to the Corporation of such costs, the
Corporation shall give not less than ten nor more than sixty days notice of the
special meeting.
PERFORMANCE INFORMATION
As described in the "About the Fund - Performance Information" section
of the Fund's Prospectus, the Fund's historical performance or return may be
shown in the form of "yield," "average annual total return," "total return,"
"cumulative total return," and "effective yield." From time to time, the
Advisor agrees to waive or reduce its management fee and to absorb certain
operating expenses for the Fund.
CURRENT YIELD
The Fund's current yield quotation is based on a seven-day period and
is computed as follows. The first calculation is net investment income per
share, which is accrued interest on portfolio securities, plus or minus
amortized premium, less accrued expenses. This number is then divided by the
price per share (expected to remain constant at $1.00) at the beginning of the
period ("base period return"). The result is then divided by 7 and multiplied
by 365 and the resulting yield figure is carried to the nearest one-hundredth
of one percent. Realized capital gains or losses and unrealized appreciation
or depreciation of investments are not included in the calculation.
EFFECTIVE YIELD
The Fund's effective yield is determined by taking the base period
return (computed as described above) and calculating the effect of assumed
compounding. The formula for the effective yield is: (base period return +
1)(365/7) - 1.
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 its yield. Both the Fund's yield and distribution
rate will fluctuate.
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<PAGE> 39
AVERAGE ANNUAL TOTAL RETURN
The Fund's average annual total return quotation is computed in
accordance with a standardized method prescribed by rules of the SEC. The
average annual total return for the Fund for a specific period is 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 the Fund have been
reinvested at net asset value on the reinvestment dates during the period.
TOTAL RETURN
Calculation of the Fund's total return is not subject to a
standardized formula. Total return performance for a specific period is
calculated by first taking an investment (assumed below to be $10,000)
("initial investment") in the Fund's shares on the first day of the period and
computing the "ending value" of that investment at the end of the period. The
total return percentage is then determined by subtracting the initial
investment from the ending value and dividing the remainder by the initial
investment and expressing the result as a percentage. The calculation assumes
that all income and capital gains dividends paid by the Fund have been
reinvested at net asset value 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
Calculation of the Fund's cumulative total return is not subject to a
standardized formula and represents the simple change in value of our
investment over a stated period and may be quoted as a percentage or as a
dollar amount. Total returns and cumulative total returns may be broken down
into their components of income and capital (including capital gains and
changes in share price) in order to illustrate the relationship between these
factors and their contributions to total return.
The Fund's performance figures are based upon historical results and
do not represent future results. The Fund's shares are sold at net asset value
per share. The yield for the Fund will fluctuate. While the Fund seeks to
maintain a stable net asset value of $1.00, there is no assurance that the Fund
will be able to do so. An investment in the Fund is neither insured nor
guaranteed by the U.S. government. Factors affecting the 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.
COMPARISONS
(1) U.S. TREASURY BILLS, NOTES, OR BONDS
Investors may want to compare the performance of the Fund to that of
U.S. Treasury bills, notes or bonds, which are issued by the U.S. government.
Treasury obligations are issued in selected denominations. Rates of Treasury
obligations are fixed at the time of issuance and payment of principal and
interest is backed by the full faith and credit of the 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 the Fund's performance to that of
certificates of deposit offered by banks and other depositary institutions.
Certificates of deposit may offer fixed or variable interest rates and
principal is guaranteed and may be insured. Withdrawal of the deposits prior to
maturity normally will be subject to a penalty. Rates offered by banks and
other depositary institutions are subject to change at any time specified by
the issuing institution.
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<PAGE> 40
(3) MONEY MARKET FUNDS
Investors may also want to compare performance of the Fund to that of
money market funds. Money market fund yields will fluctuate and shares are not
insured, but share values usually remain stable.
(4) LIPPER ANALYTICAL SERVICES, INC. ("LIPPER") AND OTHER INDEPENDENT
RANKING ORGANIZATIONS
From time to time, in marketing and other fund literature, the Fund's
performance may be compared to the performance of other mutual funds in general
or to the performance of particular types of mutual funds, with similar
investment goals, as tracked by independent organizations. Among these
organizations, Lipper, a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives, and assets, may be
cited. Lipper performance figures are based on changes in net asset value,
with all income and capital gain dividends reinvested. Such calculations do
not include the effect of any sales charges imposed by other funds. The Fund
will be compared to Lipper's appropriate fund category, that is, by fund
objective and portfolio holdings. The Fund's performance may also be compared
to the average performance of its Lipper category.
(5) MORNINGSTAR, INC.
The Fund's performance may also be compared to the performance of
other mutual funds by Morningstar, Inc. which ranks funds on the basis of
historical risk and total return. Morningstar's rankings 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. Rankings are not absolute and do not represent future
results.
(6) IBC/DONOGHUE, INC.
IBC/Donoghue, Inc. is an independently operated financial newsletter
publishing firm specializing in the statistical analysis of the trends in the
money market mutual fund industry. From time to time, in marketing and other
fund literature, IBC/Donoghue data may be quoted or compared to the fund's
performance. IBC/Donoghue, Inc. provides current (7 and 30 day yields) and
historical performance (1, 3, and 5 year returns), rankings and category
averages for over 1,100 money market mutual funds.
(7) INDEPENDENT SOURCES
Evaluations of Fund performance made by independent sources may also
be used in advertisements concerning a Fund, including reprints of, or
selections from, editorials or articles about the Fund, especially those with
similar objectives. Sources for Fund performance information and articles
about the Fund may include publications such as Money, Forbes, Kiplinger's,
Smart Money, Morningstar, Inc., Financial World, Business Week, U.S. News and
World Report, The Wall Street Journal, Barron's, and a variety of investment
newsletters.
(8) VARIOUS BANK PRODUCTS
The Fund's performance also may be compared on a before or after-tax
basis to various bank products, including the average rate of bank and thrift
institution money market deposit accounts, Super N.O.W. accounts and
certificates of deposit of various maturities as reported in the Bank Rate
Monitor, National Index of 100 leading banks, and thrift institutions as
published by the Bank Rate Monitor, Miami Beach, Florida. The rates published
by the Bank Rate Monitor National Index are averages of the personal account
rates offered on the Wednesday prior to the date of publication by 100 large
banks and thrifts in the top ten Consolidated Standard Metropolitan Statistical
Areas. The rates provided for the bank accounts assume no compounding and are
for the lowest minimum deposit required to open an account. Higher rates may
be available for larger deposits.
With respect to money market deposit accounts and Super N.O.W.
accounts, account minimums range upward from $2,000 in each institution and
compounding methods vary. Super N.O.W. accounts generally offer unlimited
check writing while money market deposit accounts generally restrict the number
of checks that may be written. If more than one rate is offered, the lowest
rate is used. Rates are determined by the financial institution and are
subject to change at any time specified by the institution. Generally, the
rates offered for these products take market conditions and competitive product
yields into consideration when set. Bank products represent a taxable
alternative income producing product. Bank and thrift institution deposit
accounts may be insured. Shareholder accounts in the Fund are not insured.
Bank passbook savings accounts compete with money market
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<PAGE> 41
mutual fund products with respect to certain liquidity features but may not
offer all of the features available from a money market mutual fund, such as
check writing. Bank passbook savings accounts normally offer a fixed rate of
interest while the yield of the Fund fluctuates. Bank checking accounts
normally do not pay interest but compete with money market mutual fund products
with respect to certain liquidity features (e.g., the ability to write checks
against the account). Bank certificates of deposit may offer fixed or variable
rates for a set term. (Normally, a variety of terms are available.)
Withdrawal of these deposits prior to maturity will normally be subject to a
penalty. In contrast, shares of the Fund are redeemable at the net asset value
(normally, $1.00 per share) next determined after a request is received,
without charge.
(9) INDICES
The Fund may compare its performance to a wide variety of indices
including the following:
(a) The Consumer Price Index
(b) Merrill Lynch 91 Day Treasury Bill Index
(c) Merrill Lynch Government/Corporate 1-3 Year Index
(d) IBC/Donoghue's Taxable Money Fund Average(TM)
(e) IBC/Donoghue's Government Money Fund AverageTM
(f) Salomon Brothers 1-Month Treasury Bill Index
(g) Salomon Brothers 3-Month Treasury Bill Index
(h) Salomon Brothers 1-Year Treasury Benchmark-on-the-Run Index
(i) Salomon Brothers 1-3 Year Treasury/Government-Sponsored/
Corporate Bond Index
(j) Salomon Brothers Broad Investment-Grade Bond Index
(k) Lehman Brothers Aggregate Bond Index
(l) Lehman Brothers 1-3 Year Government/Corporate Bond Index
There are differences and similarities between the investments which
the 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.
(10) HISTORICAL ASSET CLASS RETURNS
From time to time, marketing materials may portray the historical
returns of various asset classes. Such presentations will typically compare
the average annual rates of return of inflation, U.S. Treasury bills, bonds,
common stocks, and small stocks. There are important differences between each
of these investments that should be considered in viewing any such comparison.
The market value of stocks will fluctuate with market conditions, and
small-stock prices generally will fluctuate more than large-stock prices. Bond
prices generally will fluctuate inversely with interest rates and other market
conditions, and the prices of bonds with longer maturities generally will
fluctuate more than those of shorter-maturity bonds. Interest rates for bonds
may be fixed at the time of issuance, and payment of principal and interest may
be guaranteed by the issuer and backed by the full faith and credit of the U.S.
Treasury.
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<PAGE> 42
(1) DURATION
Duration is a calculation that measures the price sensitivity of a fund to
changes in interest rates. Theoretically, if a fund had a duration of 2.0, a 1%
increase in interest rates would cause the prices of the bonds in the fund to
decrease by approximately 2%. Conversely, a 1% decrease in interest rates would
cause the prices of the bonds in the fund to increase by approximately 2%.
Depending on the direction of market interest rates, a fund's duration may be
shorter or longer than its average maturity.
(2) PORTFOLIO CHARACTERISTICS
In order to present a more complete picture of a fund's portfolio,
marketing materials may include various actual or estimated portfolio
characteristics, including but not limited to median market capitalizations,
earnings per share, alphas, betas, price/earnings ratios, returns on equity,
dividend yields, capitalization ranges, growth rates, price/book ratios, top
holdings, sector breakdowns, asset allocations, quality breakdowns, and
breakdowns by geographic region.
(3) MEASURES OF VOLATILITY AND RELATIVE PERFORMANCE
Occasionally statistics may be used to specify Fund volatility or risk.
The general premise is that greater volatility connotes greater risk undertaken
in achieving performance. Measures of volatility or risk are generally used to
compare the fund's net asset value or performance relative to a market index.
One measure of volatility is beta. Beta is the volatility of a fund relative
to the total market as represented by the Standard & Poor's 500 Stock Index. A
beta of more than 1.00 indicates volatility greater than the market, and a beta
of less than 1.00 indicates volatility less than the market. Another measure
of volatility or risk is standard deviation. Standard deviation is a
statistical tool that measures the degree to which a fund's performance has
varied from its average performance during a particular time period.
Standard deviation is calculated using the following formula:
2
Standard deviation = the square root of +(x - x )
i m
-----------
n-1
where + = "the sum of",
x = each individual return during the time period,
i
x = the average return over the time period, and
m
n = the number of individual returns during the time period.
Statistics may also be used to discuss a fund's relative performance. One
such measure is alpha. Alpha measures the actual return of a fund compared to
the expected return of a fund given its risk (as measured by beta). The
expected return is based on how the market as a whole performed, and how the
particular fund has historically performed against the market. Specifically,
alpha is the actual return less the expected return. The expected return is
computed by multiplying the advance or decline in a market representation by
the fund's beta. A positive alpha quantifies the value that the fund manager
has added, and a negative alpha quantifies the value that the fund manager has
lost.
Other measures of volatility and relative performance may be used as
appropriate. However, all such measures will fluctuate and do not represent
future results.
GENERAL INFORMATION
BUSINESS PHILOSOPHY
23
<PAGE> 43
The Advisor is an independent, Midwestern-based investment advisor, owned
by professionals active in its management. Recognizing that investors are the
focus of its business, the Advisor strives for excellence both in investment
management and in the service provided to investors. This commitment affects
many aspects of the business, including professional staffing, product
development, investment management, and service delivery. 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.
The increasing complexity of the capital markets requires specialized
skills and processes for each asset class and style. Therefore, the Advisor
believes that active management should produce greater returns than a passively
managed index. The Advisor has brought together a group of top-flight
investment professionals with diverse product expertise, and each concentrates
on their investment specialty. The Advisor believes that people are the firm's
most important asset. For this reason, continuity of professionals is critical
to the firm's long-term success.
INVESTMENT ENVIRONMENT
Discussions of economic, social, and political conditions and their impact
on the Fund may be used in advertisements and sales materials. Such factors
that may impact the Fund include, but are not limited to, changes in interest
rates, political developments, the competitive environment, consumer behavior,
industry trends, technological advances, macroeconomic trends, and the supply
and demand of various financial instruments. In addition, marketing materials
may cite the portfolio management's views or interpretations of such factors.
EIGHT BASIC PRINCIPLES FOR SUCCESSFUL MUTUAL FUND INVESTING
These common sense rules are followed by many successful investors. They
make sense for beginners, too. If you have a question on these principles, or
would like to discuss them with us, please contact us at 1-800-368-3863.
1. Have a plan - even a simple plan can help you take control of your
financial future. Review your plan once a year, or if your circumstances
change.
2. Start investing as soon as possible. Make time a valuable ally. Let it put
the power of compounding to work for you, while helping to reduce your
potential investment risk.
3. Diversify your portfolio. By investing in different asset classes -
stocks, bonds, and cash - you help protect against poor performance in one
type of investment while including investments most likely to help you
achieve your important goals.
4. Invest regularly. Investing is a process, not a one-time event. Make a
habit of investing. And make it easy for yourself with an "automatic
investment plan." This popular strategy not only helps you manage
investment risk, it also ensures you "pay yourself first" on a regular
basis.
5. Maintain a long-term perspective. For most individuals, the best
discipline is staying invested as market conditions change. Reactive,
emotional investment decisions are all too often a source of regret - and
principal loss.
6. Consider stocks to help achieve major long-term goals. Over time, stocks
have provided the more powerful returns needed to help the value of your
investments stay well ahead of inflation.
7. Keep a comfortable amount of cash in your portfolio. To meet current
needs, including emergencies, use a money market fund or a bank account -
not your long-term investment assets.
24
<PAGE> 44
8. Know what you're buying. Make sure you understand the potential risks and
rewards associated with each of your investments. Ask questions... request
information...make up your own mind. And choose a fund company that helps
you make informed investment decisions.
PORTFOLIO MANAGEMENT
Each portfolio manager works with a team of analysts, traders, and
administrative personnel. From time to time, marketing materials may discuss
various members of the team, including their education, investment experience,
and other credentials.
The Advisor believes that actively managing the Fund's portfolio and
adjusting the average portfolio maturity according to the Advisor's interest
rate outlook is the best way to achieve the Fund's objectives. This policy is
based on a fundamental belief that economic and financial conditions create
favorable and unfavorable investment periods (or seasons) and that these
different seasons require different investment approaches.
LEGAL COUNSEL
Godfrey & Kahn, S.C., 780 North Water Street, Milwaukee, Wisconsin 53202,
acts as outside legal counsel for the Fund.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., 411 East Wisconsin Avenue, Milwaukee, Wisconsin
53202, are the independent accountants for the Fund, providing audit services
and assistance and consultation with respect to the preparation of filings with
the SEC.
25
<PAGE> 45
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder
Strong Institutional Funds, Inc. -
Strong Institutional Money Fund
We have audited the accompanying statement of assets and liabilities of Strong
Institutional Funds, Inc. - Strong Institutional Money Fund as of _______, 1995.
This financial statement is the responsibility of the Fund's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets and liabilities is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit of
the statement of assets and liabilities provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Strong
Institutional Funds, Inc. - Strong Institutional Money Fund as of _______, 1995,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Milwaukee, Wisconsin
_______, 1995
STATEMENT OF ASSETS AND LIABILITIES
STRONG INSTITUTIONAL FUNDS, INC. -
STRONG INSTITUTIONAL MONEY FUND
STATEMENT OF ASSETS AND LIABILITIES - _______, 1995
<TABLE>
<S> <C>
ASSETS:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100,000
Deferred organizational costs (Note 2) . . . . . . . . . . . . . . . . 000,000
---------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . 000,000
LIABILITIES:
Due to Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 000,000
--------
NET ASSETS:
Net assets applicable to 100,000 issued and outstanding shares of
$.01 par value Common Stock; authorized ten
billion shares . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100,000
=========
NET ASSET VALUE:
Net asset value, redemption price and offering price per
share ($100,000/100,000) . . . . . . . . . . . . . . . . . . . . . $ 1.00
=========
</TABLE>
- ---------------
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
1. Strong Institutional Funds, Inc. (the "Corporation") was incorporated in
the State of Wisconsin; 100,000 shares of Common Stock of Strong Institutional
Funds, Inc. - Strong Institutional Money Fund (the "Fund") were issued to
Strong Capital Management, Inc. (the "Advisor"). The Corporation may establish
multiple series; currently one series has been established.
2. Costs incurred by the Fund in connection with its organization and
public offering of shares, estimated at $000,000, are deferred and will be
amortized over a period of not more than five years beginning with the date of
sales of shares to the public. These costs were advanced by the Advisor and will
be reimbursed by the Fund over a period of not more than 60 months. The proceeds
of any redemption of the initial shares by any holder thereof will be reduced by
any unamortized deferred organizational costs in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares
outstanding at the time of such redemption.
26
<PAGE> 46
APPENDIX
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-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.
STANDARD & POOR'S NOTE RATINGS
A S&P note rating reflects the liquidity factors and market-access risks
unique to notes. Notes maturing in three years or less will likely receive a
note rating. Notes maturing beyond three years will most likely receive a
long-term debt rating.
The following criteria will be used in making the assessment:
- Amortization schedule - the larger the final maturity relative to
other maturities, the more likely the issue is to be treated as a
note.
- Source of payment - the more the issue depends on the market for its
refinancing, the more likely it is to be considered a note.
The note rating symbols and definitions are as follows:
SP-1 Strong capacity to pay principal and interest. Issues determined
to possess very strong characteristics are given a plus (+) designation.
SP-2 Satisfactory capacity to pay interest and principal, with some
vulnerability to adverse financial and economic changes over the term of the
notes.
SP-3 Speculative capacity to pay principal and interest.
A-1
<PAGE> 47
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 (or 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.
MOODY'S NOTE RATINGS
MIG 1/VMIG 1 This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad based access to the market for refinancing.
MIG 2/VMIG 2 This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
MIG 3/VMIG 3 This designation denotes favorable quality. All security
elements are accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.
MIG 4/VMIG 4 This designation denotes adequate quality. Protection
commonly regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.
SG This designation denotes speculative quality. Debt instruments in
this category lack margins of protection.
A-2
<PAGE> 48
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.
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 as defined 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.
Rating Scale: Definition
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.
A-3
<PAGE> 49
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.
Non-investment Grade
Duff 4 Speculative investment characteristics. Liquidity is not
sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high
degree of variation.
Default
Duff 5 Issuer failed to meet scheduled principal and/or interest
payments.
A-4
<PAGE> 50
STRONG INSTITUTIONAL FUNDS, INC.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements for Strong Institutional Money Fund (all
included in Part B)
Report of Independent Accountants
Statement of Assets and Liabilities
(b) Exhibits
(1) Amended and Restated Articles of Incorporation
(2) Bylaws
(3) Inapplicable
(4) Specimen Stock Certificate
(5) Investment Advisory Agreement
(6) Distribution Agreement
(7) Inapplicable
(8) Custody Agreement
(9) Shareholder Servicing Agent Agreement
(10) Opinion of Counsel
(11) Consent of Auditors
(12) Inapplicable
(13) Subscription Agreement
(14) Inapplicable
(15) Inapplicable
(16) Inapplicable
(17) Inapplicable
(18) 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.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of September , 1995
-------------- ------------------------
Common Stock, $.01 par value
Strong Institutional Money Fund 1
C-1
<PAGE> 51
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 Bylaws provides
as follows:
ARTICLE VII. INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 7.01. Mandatory Indemnification. The
corporation shall indemnify, to the full extent permitted by the WBCL,
as in effect from time to time, the persons described in Sections
180.0850 through 180.0859 (or any successor provisions) of the WBCL or
other provisions of the law of the State of Wisconsin relating to
indemnification of directors and officers, as in effect from time to
time. The indemnification afforded such persons by this section shall
not be exclusive of other rights to which they may be entitled as a
matter of law.
SECTION 7.02. Permissive Supplementary Benefits.
The Corporation may, but shall not be required to, supplement the
right of indemnification under Section 7.01 by (a) the purchase of
insurance on behalf of any one or more of such persons, whether or not
the Corporation would be obligated to indemnify such person under
Section 7.01; (b) individual or group indemnification agreements with
any one or more of such persons; and (c) advances for related expenses
of such a person.
SECTION 7.03. Amendment. This Article VII may be
amended or repealed only by a vote of the shareholders and not by a
vote of the Board of Directors.
SECTION 7.04. Investment Company Act. In no event
shall the Corporation indemnify any person hereunder in contravention
of any provision of the Investment Company Act.
Item 28. Business and Other Connections of Investment Advisor
The information contained under "About the Fund - Management" in the
Prospectus and under "Directors and Officers of the Corporation" 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
Corporate Bond Fund, Inc.; Strong Discovery Fund, Inc.; Strong Government
Securities Fund, Inc.; Strong Growth Fund, Inc.; Strong Heritage Reserve
Series, Inc.; Strong High-Yield Municipal Bond 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
Global Bond Fund, Inc.; Strong Short-Term Municipal Bond Fund, Inc.; Strong
Special Fund II, Inc.; Strong Total Return Fund, Inc.; Strong U.S. Treasury
Money Fund, Inc.; and Strong Variable Insurance Funds, Inc.
(b) The information contained under "About the Fund - Management" in
the Prospectus and under "Directors and Officers of the Corporation" 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.
(c) Inapplicable
C-2
<PAGE> 52
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, Ronald A.
Neville, 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
(a) Inapplicable.
(b) Registrant undertakes to file a post-effective amendment to this
Registration Statement within four to six months of the effective date of this
Registration Statement which will contain financial statements (which need not
be certified) as of and for the time period reasonably close or as soon as
practicable to the date of such post-effective amendment.
(c) 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> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
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 21st day of July, 1995.
STRONG INSTITUTIONAL FUNDS, INC.
(Registrant)
BY: /s/ John Dragisic
-----------------------------------------
John Dragisic, Vice Chairman
Pursuant to the requirements of the Securities Act of 1933, this
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>
/s/ John Dragisic Vice Chairman of the Board (Principal
- ---------------------------- Executive Officer) July 21, 1995
John Dragisic
/s/ Ronald A. Neville Treasurer (Principal Financial and
- ---------------------------- Accounting Officer) July 21, 1995
Ronald A. Neville
/s/ Richard S. Strong Chairman of the Board and a Director July 21, 1995
- ----------------------------
Richard S. Strong
Director July 21, 1995
- ----------------------------
Marvin E. Nevins*
Director July 21, 1995
- ----------------------------
Willie D. Davis*
Director July 21, 1995
- ----------------------------
William F. Vogt*
Director July 21, 1995
- ----------------------------
Stanley Kritzik*
</TABLE>
* Ann E. Oglanian signs this document pursuant to powers of attorney filed with
this Registration Statement of Registrant.
<PAGE> 54
STRONG INSTITUTIONAL FUNDS, INC.
(Registrant)
POWER OF ATTORNEY
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 this Registration Statement on Form N-1A, and
any and all amendments thereto, and to file the same, with all exhibits, and
any other documents in connection therewith, with the Securities and Exchange
Commission and any other regulatory body 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.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
Vice Chairman of the Board (Principal
- -------------------------- Executive Officer) and a Director
John Dragisic
Treasurer (Principal Financial and
- ------------------------- Accounting Officer)
Ronald A. Neville
- ------------------------- Chairman of the Board and a Director
Richard S. Strong
/s/ Marvin E. Nevins Director July 21, 1995
- -------------------------
Marvin E. Nevins
/s/ Willie D. Davis Director July 21, 1995
- -------------------------
Willie D. Davis
/s/ William F. Vogt Director July 21, 1995
- -------------------------
William F. Vogt
/s/ Stanley Kritzik Director July 21, 1995
- -------------------------
Stanley Kritzik
</TABLE>
<PAGE> 55
EXHIBIT INDEX
<TABLE>
<CAPTION> EDGAR
Exhibit No. Exhibit Exhibit No.
----------- ------- -----------
<S> <C> <C>
(1) Amended and Restated Articles of Incorporation EX-99.B1
(2) Bylaws EX-99.B2
(3) Inapplicable
(4) Specimen Stock Certificate EX-99.B4
(5) Investment Advisory Agreement EX-99.B5
(6) Distribution Agreement EX-99.B6
(7) Inapplicable
(8) Custody Agreement EX-99.B8
(9) Shareholder Servicing Agent Agreement EX-99.B9
(10) Opinion of Counsel*
(11) Consent of Auditor*
(12) Inapplicable
(13) Subscription Agreement EX-99.B13
(14) Inapplicable
(15) Inapplicable
(16) Inapplicable
(17) Inapplicable
(18) Power of Attorney (see the page immediately following the
signature page)
- --------------------
</TABLE>
* To be included by a Pre-Effective Amendment prior to the effective date of
this Registration Statement.
<PAGE> 1
EXHIBIT-99.B1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF STRONG INSURANCE PRODUCTS FUNDS, INC.
These Amended and Restated Articles of Incorporation shall supersede and
replace the heretofore existing Articles of Incorporation of Strong Insurance
Products Funds, Inc., as amended to date, a corporation organized
under Chapter 180 of the Wisconsin Statutes:
ARTICLE I
---------
The name of the corporation (hereinafter, the "Corporation") is:
Strong Institutional Funds, Inc.
ARTICLE II
----------
The period of existence of the Corporation shall be perpetual.
ARTICLE III
-----------
The purpose for which the Corporation is organized is, without limitation,
to act as an investment company pursuant to the Investment Company Act of 1940,
as amended from time to time (the "Investment Company Act"), and for any other
purposes for which corporations may be organized under Chapter 180 of the
Wisconsin Statutes, as amended from time to time (the "WBCL").
ARTICLE IV
----------
A. The aggregate number of shares which the Corporation shall have the
authority to issue is Two Hundred Billion (200,000,000,000) shares of Common
Stock with a par value of $.01 per share. Subject to the following paragraph
the authorized shares are classified as follows:
Class Authorized Number of Shares
----- ---------------------------
Strong Institutional Money Fund 10,000,000,000
The remaining One Hundred Ninety Billion (190,000,000,000) shares of Common
Stock shall remain unclassified until action is taken by the Board of Directors
pursuant to the following paragraph.
B. The Board of Directors is authorized to classify or to reclassify
(i.e. into classes and series of classes), from time to time, any unissued
shares of the Corporation, whether now or hereafter authorized, by setting,
changing, or eliminating the distinguishing designation and the preferences,
limitations, and relative rights, in whole or in part, to the fullest extent
permissible under the WBCL.
Unless otherwise provided by the Board of Directors prior to the issuance
of shares, the shares of any and all classes and series shall be subject to the
following:
1. The Board of Directors may redesignate a class or series
whether or not shares of such class or series are issued and outstanding,
provided that such redesignation does not affect the preferences, limitations,
and relative rights, in whole or in part, of such class or series.
2. The assets and liabilities and the income and expenses for
each class shall be attributable to that class. The assets and liabilities and
the income and expenses of each series within a class shall be determined
separately and, accordingly, the net asset value of shares may vary from series
to series within a class. The income or gain and the
1
<PAGE> 2
expense or liabilities of the Corporation shall be allocated to each class or
series as determined by or under the direction of the Board of Directors.
3. Shares of each class or series shall be entitled to such
dividends or distributions, in shares or in cash or both, as may be declared
from time to time by the Board of Directors with respect to such class or
series. Dividends or distributions shall be paid on shares of a class or series
only out of the assets belonging to that class or series.
4. Any shares redeemed by the Corporation shall be deemed to be
canceled and restored to the status of authorized but unissued shares of the
particular class or series.
5. In the event of the liquidation or dissolution of the
Corporation, the holders of a class or series shall be entitled to receive, as
a class or series, out of the assets of the Corporation available for
distribution to shareholders, the assets belonging to that class or series less
the liabilities allocated to that class or series. The assets so distributable
to the holders of a class or series shall be distributed among such holders in
proportion to the number of shares of that class or series held by them and
recorded on the books of the Corporation. In the event that there are any
assets available for distribution that are not attributable to any particular
class or series, such assets shall be allocated to all classes or series in
proportion to the net asset value of the respective class or series.
6. All holders of shares shall vote as a single class and series
except with respect to any matter which affects only one or more series or
class of shares, in which case only the holders of shares of the class or
series affected shall be entitled to vote.
7. For purposes of the Corporation's Registration Statement filed
with the Securities and Exchange Commission under the Securities Act of 1933
and the Investment Company Act of 1940, including all prospectuses and
Statements of Additional Information, and other reports filed under the
Investment Company Act of 1940, references therein to "classes" of the
Corporation's common stock shall mean "series", as used in these Articles of
Incorporation and the WBCL, and references therein to "series" shall mean
"class", as used in these Articles of Incorporation and the WBCL.
C. The Corporation may issue fractional shares. Any fractional shares
shall carry proportionately all the rights of whole shares, including, without
limitation, the right to vote and the right to receive dividends and
distributions.
D. The Board of Directors of the Corporation may authorize the issuance
and sale of any class or series of shares from time to time in such amount and
on such terms and conditions, for such purposes and for such amounts or kind of
consideration as the Board of Directors shall determine, subject to any limits
required by then applicable law. Nothing in this paragraph shall be construed
in any way as limiting the Board of Directors authority to issue the
Corporation's shares in connection with a share dividend under the WBCL.
E. Subject to the suspension of the right of redemption or postponement
of the date of payment or satisfaction upon redemption in accordance with the
Investment Company Act, each holder of any class or series of the Common Stock
of the Corporation, upon request and after complying with the redemption
procedures established by or under the supervision of the Board of Directors,
shall be entitled to require the Corporation to redeem out of legally available
funds all or any part of the Common Stock standing in the name of such holder
on the books of the Corporation at the net asset value (as determined in
accordance with the Investment Company Act) of such shares (less any applicable
redemption fee). Any such redeemed shares shall be cancelled and restored to
the status of authorized but unissued shares.
F. The Board of Directors may authorize the Corporation, at its option
and to the extent permitted by and in accordance with the Investment Company
Act, to redeem any shares of Common Stock of any class or series of the
Corporation owned by any shareholder under circumstances deemed appropriate by
the Board of Directors in its sole discretion from time to time, including
without limitation the failure to maintain ownership of a specified minimum
number or value of shares of Common Stock of any class or series of the
Corporation, at the net asset value (as determined in accordance with the
Investment Company Act) of such shares (less any applicable redemption fee).
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G. The Board of Directors of the Corporation may, upon reasonable notice
to the holders of Common Stock of any class or series of the Corporation,
impose a fee for the redemption of shares, such fee to be not in excess of the
amount set forth in the Corporation's then existing By-Laws and to apply in the
case of such redemptions and under such terms and conditions as the Board of
Directors shall determine. The Board of Directors shall have the authority to
rescind imposition of any such fee in its discretion and to reimpose the
redemption fee from time to time upon reasonable notice.
H. No holder of the Common Stock of any class or series of the
Corporation shall, as such holder, have any right to purchase or subscribe for
any shares of the Common Stock of any class or series of the Corporation which
it may issue or sell (whether out of the number of shares authorized by these
Articles of Incorporation, or out of any shares of the Common Stock of any
class or series of the Corporation acquired by it after the issue thereof, or
otherwise) other than such right, if any, as the Board of Directors, in its
sole discretion, may determine.
I. With respect to any class or series, the Board of Directors may adopt
provisions to seek to maintain a stable net asset value per share. Without
limiting the foregoing, the Board of Directors may determine that the net asset
value per share of any class or series should be maintained at a designated
constant value and may establish procedures, not inconsistent with applicable
law, to accomplish that result. Such procedures may include a requirement, in
the event of a net loss with respect to the particular class or series from
time to time, for automatic pro rata capital contributions from each
shareholder of that class or series in amounts sufficient to maintain the
designated constant share value.
ARTICLE V
---------
The number of directors shall be fixed by the By-Laws of the Corporation.
ARTICLE VI
----------
The Corporation reserves the right to enter into, from time to time,
investment advisory agreements providing for the management and supervision of
the investments of the Corporation, the furnishing of advice to the Corporation
with respect to the desirability of investing in, purchasing or selling
securities or other assets and the furnishing of clerical and administrative
services to the Corporation. Such agreements shall contain such other terms,
provisions and conditions as the Board of Directors of the Corporation may deem
advisable and as are permitted by the Investment Company Act.
The Corporation may, without limitation, designate distributors,
custodians, transfer agents, registrars and/or disbursing agents for the stock
and assets of the Corporation and employ and fix the powers, rights, duties,
responsibilities and compensation of each such distributor, custodian, transfer
agent, registrar and/or disbursing agent.
ARTICLE VII
-----------
The registered office of the Corporation is located at 100 Heritage
Reserve, in the Village of Menomonee Falls, Waukesha County, Wisconsin 53051
and the name of the registered agent at such address is Ann E. Oglanian.
ARTICLE VIII
------------
The name and address of the incorporator is Stephen J. Shenkenberg; 100
Heritage Reserve, in the Village of Menomonee Falls, Waukesha County, Wisconsin
53051.
This instrument was drafted by:
John S. Weitzer
Strong Capital Management, Inc.
100 Heritage Reserve
Menomonee Falls, WI 53051
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EXHIBIT 99.B2
BYLAWS
ARTICLE I. OFFICES
SECTION 1.01. Principal and Other Offices. The principal
office of the Corporation shall be located at any place either within or
outside the State of Wisconsin as designated in the Corporation's most current
Annual Report filed with the Wisconsin Secretary of State. The Corporation may
have such other offices, either within or outside the State of Wisconsin, as
the Board of Directors may designate or as the business of the Corporation may
require from time to time.
SECTION 1.02. Registered Office. The registered office of
the Corporation required by the Wisconsin Business Corporation Law (the "WBCL")
to be maintained in the State of Wisconsin may, but need not, be the same as
any of its places of business. The registered office may be changed from time
to time.
SECTION 1.03. Registered Agent. The registered agent of the
Corporation required by the WBCL to maintain a business office in the State of
Wisconsin may, but need not, be an officer or employee of the Corporation as
long as such agent's business office is identical with the registered office.
The registered agent may be changed from time to time.
ARTICLE II. SHAREHOLDERS
SECTION 2.01. Annual Meeting. The annual meeting of the
shareholders, if the annual meeting shall be held, shall be held in April of
each year, or at such other time and date as may be fixed by or under the
authority of the Board of Directors, for the purpose of electing directors and
for the transaction of such other business as may properly come before the
meeting. The Corporation shall not be required to hold an annual meeting in
any year in which none of the following is required to be acted on by
shareholders under the Investment Company Act of 1940, as amended, and the
rules and regulations promulgated thereunder (the "Investment Company Act"):
(i) Election of directors;
(ii) Approval of the Corporation's investment advisory
contract;
(iii) Ratification of the selection of the Corporation's
independent public accountants; or
(iv) Approval of the Corporation's distribution agreement.
<PAGE> 2
SECTION 2.02. Special Meetings. Special meetings of the
shareholders for any purpose or purposes, unless otherwise prescribed by the
WBCL, may be called by the Board of Directors, the Chairman of the Board, Vice
Chairman or President. Notwithstanding any other provision of these By-Laws,
the Corporation shall call a special meeting of shareholders in the event that
the holders of at least 10% of all of the votes entitled to be cast on any
issue proposed to be considered at the proposed special meeting sign, date and
deliver to the Corporation one or more written demands for the meeting
describing one or more purposes for which it is to be held. The Secretary
shall inform such shareholders of the reasonable estimated costs of preparing
and mailing the notice of the meeting, and upon payment to the Corporation of
such costs, the Corporation shall give not less than ten nor more than sixty
days notice of the special meeting.
SECTION 2.03. Place of Meeting. The Board of Directors may
designate any place, either within or without the State of Wisconsin, as the
place of meeting for any annual or special meeting of shareholders. If no
designation is made, the place of meeting shall be the principal office of the
Corporation. Any meeting may be adjourned to reconvene at any place designated
by vote of a majority of the shares represented thereat.
SECTION 2.04. Notice of Meeting. Written notice stating the
date, time and place of any meeting of shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten days nor more than sixty days before the date of
the meeting (unless a different time is provided by applicable law or
regulation or the Articles of Incorporation), either personally or by mail, by
or at the direction of the Chairman of the Board, Vice Chairman, President or
Secretary, to each shareholder of record entitled to vote at such meeting and
to such other persons as required by the WBCL. If mailed, such notice shall be
deemed to be effective when deposited in the United States mail, addressed to
the shareholder at his or her address as it appears on the stock record books
of the Corporation, with postage thereon prepaid. If an annual or special
meeting of shareholders is adjourned to a different date, time or place, the
Corporation shall not be required to give notice of the new date, time or place
if the new date, time or place is announced at the meeting before adjournment;
provided, however, that if a new record date for an adjourned meeting is or
must be fixed, the Corporation shall give notice of the adjourned meeting to
persons who are shareholders as of the new record date.
SECTION 2.05. Waiver of Notice. A shareholder may waive any
notice required by the WBCL, the Articles of Incorporation or these By-Laws
before or after the date and time stated in the notice. The waiver shall be in
writing and signed by the shareholder entitled to the notice, contain the same
information that would have been required in the notice
<PAGE> 3
under applicable provisions of the WBCL (except that the time and place of
meeting need not be stated) and be delivered to the Corporation for inclusion
in the corporate records. A shareholder's attendance at a meeting, in person
or by proxy, waives objection to all of the following: (a) lack of notice or
defective notice of the meeting, unless the shareholder at the beginning of the
meeting or promptly upon arrival objects to holding the meeting or transacting
business at the meeting; and (b) consideration of a particular matter at the
meeting that is not within the purpose described in the meeting notice, unless
the shareholder objects to considering the matter when it is presented.
SECTION 2.06. Fixing of Record Date. For the purpose of
determining shareholders of any voting group entitled to notice of or to vote
at any meeting of shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any distribution or dividend, or in order to
make a determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date for any such
determination of shareholders. Such record date shall not be more than 70 days
prior to the date on which the particular action, requiring such determination
of shareholders, is to be taken. If no record date is so fixed for the
determination of shareholders entitled to notice of, or to vote at a meeting of
shareholders, or shareholders entitled to receive a share dividend or
distribution, the record date for determination of such shareholders shall be
at the close of business on:
(a) With respect to an annual shareholders meeting or any
special shareholders meeting called by the Board of Directors or any
person specifically authorized by the Board of Directors or these
By-Laws to call a meeting, the day before the first notice is mailed
to shareholders;
(b) With respect to a special shareholders meeting demanded
by the shareholders, the date the first shareholder signs the demand;
(c) With respect to the payment of a share dividend, the date
the Board of Directors authorizes the share dividend; and
(d) With respect to a distribution to shareholders (other
than one involving a repurchase or reacquisition of shares), the date
the Board of Directors authorizes the distribution.
SECTION 2.07. Voting Lists. After fixing a record date for a
meeting, the Corporation shall prepare a list of the name of all its
shareholders who are entitled to notice of a shareholders meeting. The list
shall be arranged by class or series of shares and show the address of and the
number of shares held by each shareholder. The shareholders list must be
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<PAGE> 4
available for inspection by any shareholder, beginning two business days after
notice of the meeting is given for which the list was prepared and continuing
to the date of the meeting. The list shall be available at the Corporation's
principal office or at a place identified in the meeting notice in the city
where the meeting is to be held. Subject to the provisions of the WBCL, a
shareholder or his or her agent or attorney may, on written demand, inspect and
copy the list during regular business hours and at his expense, during the
period it is available for inspection. The Corporation shall make the
shareholders list available at the meeting, and any shareholder or his or her
agent or attorney may inspect the list at any time during the meeting or any
adjournment thereof. Refusal or failure to prepare or make available the
shareholders list shall not affect the validity of any action taken at such
meeting.
SECTION 2.08. Shareholder Quorum and Voting Requirements.
Shares entitled to vote as a separate voting group may take action on a matter
at a meeting only if a quorum of those shares exists with respect to that
matter. Unless the Articles of Incorporation or the WBCL provide otherwise, a
majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
If the Articles of Incorporation or the WBCL provide for
voting by two or more voting groups on a matter, action on that matter is taken
only when voted upon by each of those voting groups counted separately as
provided in the WBCL. Action may be taken by one voting group on a matter even
though no action is taken by another voting group entitled to vote on the
matter. A voting group described in the WBCL constitutes a single voting group
for purpose of voting on the matter on which the shares are entitled to vote,
unless otherwise required under applicable laws and regulations, including the
Investment Company Act.
Once a share is represented for any purpose at a meeting,
other than for the purpose of objecting to holding the meeting or transacting
business at the meeting, it is deemed present for purposes of determining
whether a quorum exists, for the remainder of the meeting and for any
adjournment of that meeting to the extent provided in Section 2.13.
If a quorum exists, action on a matter, other than the
election of directors, by a voting group is approved if the votes cast within
the voting group favoring the action exceed the votes cast opposing the action,
unless the Articles of Incorporation, the By-Laws, the WBCL or other applicable
laws and regulations, including the Investment Company Act, require a greater
number of affirmative votes. With respect to the election of directors, unless
otherwise provided in the Articles of Incorporation, directors are elected by a
plurality of the votes cast by the shares entitled to vote. For purposes of
this Section 2.08, "plurality" means that the individuals with the largest
number of votes are elected as directors up to the maximum number of directors
to be chosen at the election.
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SECTION 2.09. Proxies. For all meetings of shareholders, a
shareholder may appoint a proxy to vote or otherwise act for the shareholder by
signing an appointment form, either personally or by a duly authorized
attorney-in-fact. Such proxy shall be effective when filed with the Secretary
of the Corporation or other officer or agent authorized to tabulate votes
before or at the time of the meeting. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise provided in the proxy.
SECTION 2.10. Voting of Shares. Unless otherwise provided in
the Articles of Incorporation, each outstanding share, regardless of class, is
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders.
No shares in the Corporation held by another corporation may
be voted if the Corporation owns, directly or indirectly, a sufficient number
of shares entitled to elect a majority of the directors of such other
corporation; provided, however, that the Corporation shall not be limited in
its power to vote any shares, including its own shares, held by it in a
fiduciary capacity.
Redeemable shares are not entitled to vote after written
notice of redemption that complies with the WBCL is mailed to the holders
thereof and a sum sufficient to redeem the shares has been deposited with a
bank, trust company or other financial institution under an irrevocable
obligation to pay the holders the redemption price on surrender of the shares.
SECTION 2.11. Voting Shares Owned by the Corporation. Shares
of the Corporation belonging to it shall not be voted directly or indirectly at
any meeting and shall not be counted in determining the total number of
outstanding shares at any given time, but shares held by the Corporation in a
fiduciary capacity may be voted and shall be counted in determining the total
number of outstanding shares at any given time.
SECTION 2.12. Acceptance of Instruments Showing Shareholder
Action.
(a) If the name signed on a vote, consent, waiver or proxy
appointment corresponds to the name of a shareholder, the Corporation,
if acting in good faith, may accept the vote, consent, waiver or proxy
appointment and give it effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver or proxy
appointment does not correspond to the name of a shareholder, the
Corporation, if acting in good faith,
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<PAGE> 6
may accept the vote, consent, waiver or proxy appointment and give it effect as
the act of the shareholder if any of the following apply:
(1) the shareholder is an entity, within the meaning
of the WBCL, and the name signed purports to be that of an
officer or agent of the entity;
(2) the name signed purports to be that of a
personal representative, administrator, executor, guardian or
conservator representing the shareholder and, if the
Corporation or its agent request, evidence of fiduciary status
acceptable to the Corporation is presented with respect to the
vote, consent, waiver or proxy appointment;
(3) the name signed purports to be that of a
receiver or trustee in bankruptcy of the shareholder and, if
the Corporation or its agent request, evidence of this status
acceptable to the Corporation is presented with respect to the
vote, consent, waiver or proxy appointment;
(4) the name signed purports to be that of a
pledgee, beneficial owner, or attorney-in-fact of the
shareholder and, if the Corporation or its agent request,
evidence acceptable to the Corporation of the signatory's
authority to sign for the shareholder is presented with
respect to the vote, consent, waiver or proxy appointment; or
(5) two or more persons are the shareholders as
cotenants or fiduciaries and the name signed purports to be
the name of at least one of the coowners and the persons
signing appears to be acting on behalf of all coowners.
(c) The Corporation may reject a vote, consent, waiver or
proxy appointment if the Secretary or other officer or agent of the
Corporation who is authorized to tabulate votes, acting in good faith,
has reasonable basis for doubt about the validity of the signature on
it or about the signatory's authority to sign for the shareholder.
SECTION 2.13. Adjournments. An annual or special meeting of
shareholders may be adjourned at any time, including after action on one or
more matters, by a majority of shares represented, even if less than a quorum.
The meeting may be adjourned for any purpose, including, but not limited to,
allowing additional time to solicit votes on one or more matters, to
disseminate additional information to shareholders or to count votes. Upon
being reconvened, the adjourned meeting shall be deemed to be a continuation of
the initial meeting.
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(a) Quorum. Once a share is represented for any purpose at
the original meeting, other than for the purpose of objecting to
holding the meeting or transacting business at a meeting, it is
considered present for purposes of determining if a quorum exists, for
the remainder of the meeting and for any adjournment of that meeting
unless a new record date is or must be set for that adjourned meeting.
(b) Record Date. When a determination of shareholders
entitled to notice of or to vote at any meeting of shareholders has
been made as provided in Section 2.06, such determination shall be
applied to any adjournment thereof unless the Board of Directors fixes
a new record date, which it shall do if the meeting is adjourned to a
date more than 120 days after the date fixed for the original meeting.
(c) Notice. Unless a new record date for an adjourned
meeting is or must be fixed pursuant to Section 2.13(b), the
Corporation is not required to give notice of the new date, time or
place if the new date, time or place is announced at the meeting
before adjournment.
SECTION 2.14. Waiver of Notice by Shareholders. A
shareholder may waive any notice required by the WBCL, the Articles of
Incorporation or the By-Laws before or after the date and time stated in the
notice. The waiver shall be in writing and signed by the shareholder entitled
to the notice, contain the same information that would have been required in
the notice under any applicable provisions of the WBCL, except that the time
and place of the meeting need not be stated, and be delivered to the
Corporation for inclusion in the Corporation's records. A shareholder's
attendance at a meeting, in person or by proxy, waives objection to (i) lack of
notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting or promptly upon arrival objects to the holding of the
meeting or transacting business at the meeting, and (ii) consideration of a
particular matter at the meeting that is not within the purpose described in
the meeting notice, unless the shareholder objects to considering the matter
when it is presented.
SECTION 2.15. Conduct of Meeting. The Chairman of the Board,
Vice Chairman, President or any person chosen by the Chairman of the Board,
shall call the meeting of the shareholders to order and shall act as chairman
of the meeting, and the Secretary of the Corporation or any other person
appointed by the chairman of the meeting, shall act as secretary of all
meetings of the shareholders.
SECTION 2.16. Unanimous Consent without Meeting. Any action
required or permitted to be taken at a meeting of shareholders may be taken
without a meeting only by
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unanimous written consent or consents signed by all of the shareholders of the
Corporation and delivered to the Corporation for inclusion in the Corporation's
records.
ARTICLE III. BOARD OF DIRECTORS
SECTION 3.01. General Powers and Number. All corporate
powers shall be exercised by or under the authority of, and the business and
affairs of the Corporation managed under the direction of, the Board of
Directors. The number of directors of the Corporation shall be six.
SECTION 3.02. Tenure and Qualifications. Each director shall
hold office until the next annual meeting of shareholders and until his or her
successor shall have been elected and, if necessary, qualified, or until there
is a decrease in the number of directors which takes effect after the
expiration of his or her term, or until his or her prior death, resignation or
removal. A director may be removed by the shareholders, with or without cause,
only at a meeting called for the purpose of removing the director, and the
meeting notice shall state that the purpose, or one of the purposes, of the
meeting is removal of the director. A director may resign at any time by
delivering written notice which complies with the WBCL to the Board of
Directors, to the Chairman of the Board or to the Corporation. A director's
resignation is effective when the notice is delivered unless the notice
specifies a later effective date. Directors need not be residents of the State
of Wisconsin or shareholders of the Corporation.
SECTION 3.03. Regular Meetings. A regular meeting of the
Board of Directors shall be held without other notice than this Section 3.03
immediately before or after the annual meeting of shareholders and each
adjourned session thereof. The place of such regular meeting shall be the same
as the place of the meeting of shareholders which precedes or follows it, as
the case may be, or such other suitable place as may be announced at such
meeting of shareholders. The Board of Directors shall provide, by resolution,
the date, time and place, either within or without the State of Wisconsin, for
the holding of additional regular meetings of the Board of Directors without
other notice than such resolution. Regular meetings of the Board of Directors
may also be called by the Chairman of the Board, Vice Chairman, President or
Secretary.
SECTION 3.04. Special Meetings. Special meetings of the
Board of Directors may be called by or at the request of the Chairman of the
Board, Vice Chairman, President, Secretary or any two directors. The Chairman
of the Board, Vice Chairman, President or Secretary may fix any place, either
within or without the State of Wisconsin, as the place for holding any special
meeting of the Board of Directors, and if no other place is fixed the place of
the meeting shall be the principal business office of the Corporation in the
State of Wisconsin.
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SECTION 3.05. Notice; Waiver. Notice of special meetings
shall be given at least twenty-four hours previously thereto and shall state
the date, time and place of the meeting of the Board of Directors or committee.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the Board of Directors or committee need be specified in the
notice of such meeting. Notice may be communicated in person, by telephone,
telegraph, teletype, facsimile or other form of wire or wireless communication,
or by mail or private carrier. Written notice is effective at the earliest of
the following: (1) when received; (2) when mailed postpaid and correctly
addressed; (3) when given to a telegram carrier; or (4) the date it is
deposited with a private carrier. Oral notice is deemed effective when
communicated. Facsimile or teletype notice is deemed effective when sent.
A director may waive any notice required by the WBCL, the
Articles of Incorporation or the By-Laws before or after the date and time
stated in the notice. The waiver shall be in writing, signed by the director
entitled to the notice and retained by the Corporation. Notwithstanding the
foregoing, a director's attendance at or participation in a meeting waives any
required notice to such director of the meeting unless the director at the
beginning of the meeting or promptly upon such director's arrival objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
SECTION 3.06. Quorum. Except as otherwise provided by the
WBCL, the Articles of Incorporation or the By-Laws, a majority of the number of
directors specified in Section 3.01 shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors. A majority
of the directors present (though less than such quorum) may adjourn any meeting
of the Board of Directors or any committee thereof, as the case may be, from
time to time without further notice.
SECTION 3.07. Manner of Acting. The affirmative vote of a
majority of the directors present at a meeting of the Board of Directors at
which a quorum is present shall be the act of the Board of Directors, unless
the WBCL, the Articles of Incorporation, the By-Laws or other applicable law or
regulation, including the Investment Company Act, require the vote of a greater
number of directors.
SECTION 3.08. Conduct of Meetings. The Chairman of the
Board, and in his absence, the Vice Chairman or any director chosen by the
directors present, shall call meetings of the Board of Directors to order and
shall act as chairman of the meeting. The Secretary of the Corporation shall
act as secretary of all meetings of the Board of Directors unless the presiding
officer appoints another person present to act as secretary of the meeting.
Minutes of any
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regular or special meeting of the Board of Directors shall be prepared and
distributed to each director.
SECTION 3.09. Vacancies. Except as provided below, any
vacancy occurring in the Board of Directors, including a vacancy resulting from
an increase in the number of directors, may be filled, subject to the
requirements of the Investment Company Act, by any of the following: (a) the
shareholders; (b) the Board of Directors; or (c) if the directors remaining in
office constitute fewer than a quorum of the Board of Directors, the directors,
by the affirmative vote of a majority of all directors remaining in office. If
the vacant office was held by a director elected by a voting group of
shareholders, only the holders of shares of that voting group may vote to fill
the vacancy if it is filled by the shareholders, and only the remaining
directors elected by that voting group may vote to fill the vacancy if it is
filled by the directors. A vacancy that will occur at a specific later date,
because of a resignation effective at a later date or otherwise, may be filled
before the vacancy occurs, but the new director may not take office until the
vacancy occurs.
SECTION 3.10. Compensation. No director shall receive any
stated salary or fees from the Corporation for his services as such director if
such director is, otherwise than by reason of being such director, an
interested person (as such term is defined by the Investment Company Act) of
the Corporation or its investment adviser. Except as provided in the preceding
sentence, directors shall be entitled to receive such compensation from the
Corporation for their services as may from time to time be voted by the Board
of Directors.
SECTION 3.11. Presumption of Assent. A director who is
present and is announced as present at a meeting of the Board of Directors,
when corporate action is taken, assents to the action taken unless any of the
following occurs: (a) the director objects at the beginning of the meeting or
promptly upon his or her arrival to holding the meeting or transacting business
at the meeting; (b) the director dissents or abstains from an action taken and
minutes of the meeting are prepared that show the director's dissent or
abstention; (c) the director delivers written notice that complies with the
WBCL of his or her dissent or abstention to the presiding officer of the
meeting before its adjournment or to the Corporation immediately after
adjournment of the meeting; or (d) the director dissents or abstains from an
action taken, minutes of the meeting are prepared that fail to show the
director's dissent or abstention from the action taken and the director
delivers to the Corporation a written notice of that failure that complies with
the WBCL promptly after receiving the minutes. Such right of dissent or
abstention shall not apply to a director who votes in favor of the action
taken.
SECTION 3.12. Telephonic Meetings. Except as herein provided
and notwithstanding any place set forth in the notice of the meeting or these
By-Laws, members of
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the Board of Directors may participate in regular or special meetings by, or
through the use of, any means of communication by which all participants may
simultaneously hear each other, such as by conference telephone. If a meeting
is conducted by such means, then at the commencement of such meeting the
presiding officer shall inform the participating directors that a meeting is
taking place at which official business may be transacted. Any participant in
a meeting by such means shall be deemed present in person at such meeting.
Notwithstanding the foregoing, no action may be taken at any meeting held by
such means (i) on any particular matter which the presiding officer determines,
in his or her sole discretion, to be inappropriate under the circumstances for
action at a meeting held by such means (such determination shall be made and
announced in advance of such meeting), or (ii) if the action must be approved
in person pursuant to the requirements of the Investment Company Act.
SECTION 3.13. Action Without Meeting. Any action required or
permitted by the WBCL to be taken at a meeting of the Board of Directors may be
taken without a meeting if the action is taken by all members of the Board.
The action shall be evidenced by one or more written consents describing the
action taken, signed by each director and retained by the Corporation. Such
action shall be effective when the last director signs the consent, unless the
consent specifies a different effective date. Notwithstanding this Section
3.13, no action may be taken by the Board of Directors pursuant to a written
consent with respect to which the action must be approved in person pursuant to
the requirements of the Investment Company Act.
ARTICLE IV. OFFICERS
SECTION 4.01. Number. The principal officers of the
Corporation shall be a Chairman of the Board, a Vice Chairman of the Board, a
President, the number of Vice Presidents as authorized from time to time by the
Board of Directors, a Secretary, and a Treasurer, each of whom shall be elected
by the Board of Directors. Such other officers and assistant officers as may
be deemed necessary may be elected or appointed by the Board of Directors. The
Board of Directors may also authorize any duly authorized officer to appoint
one or more officers or assistant officers. Any two or more offices may be
held by the same person.
SECTION 4.02. Election and Term of Office. The officers of
the Corporation to be elected by the Board of Directors shall be elected
annually by the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of the shareholders, if any, or on or
after the anniversary of the last annual meeting if no annual meeting is held.
If the election of officers shall not be held at such first meeting of the
Board of Directors, such election shall be held as soon thereafter as is
practicable. Each officer shall hold office until his or her successor shall
have been duly elected or until his or her prior death, resignation or removal.
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SECTION 4.03. Removal. The Board of Directors may remove any
officer and, unless restricted by the Board of Directors or these By-Laws, an
officer may remove any officer or assistant officer appointed by that officer.
An officer may be removed at any time, with or without cause and
notwithstanding the contract rights, if any, of the officer removed. The
appointment of an officer does not of itself create contract rights.
SECTION 4.04. Resignation. An officer may resign at any time
by delivering notice to the Corporation that complies with the WBCL. The
resignation shall be effective when the notice is delivered, unless the notice
specifies a later effective date and the Corporation accepts the later
effective date.
SECTION 4.05. Vacancies. A vacancy in any principal office
because of death, resignation, removal, disqualification or otherwise, shall be
filled by the Board of Directors for the unexpired portion of the term. If a
resignation of an officer is effective at a later date as contemplated by
Section 4.04 hereof, the Board of Directors may fill the pending vacancy before
the effective date if the Board provides that the successor may not take office
until the effective date of the registration.
SECTION 4.06. Chairman of the Board. The Chairman of the
Board shall be the chief executive officer of the Corporation. The Chairman of
the Board shall preside at all meetings of the shareholders and directors,
shall have general and active management of the business of the Corporation,
and shall see that all orders and resolutions of the Board of Directors are
carried into effect.
SECTION 4.07. The Vice Chairman. During the absence or
disability of the Chairman of the Board, the Vice Chairman shall exercise all
the functions of the Chairman of the Board. The Vice Chairman shall perform
all duties incident to the office of the Vice Chairman and such other duties as
shall from time to time be assigned by the Board of Directors, the Chairman of
the Board or as prescribed by these By-Laws.
SECTION 4.08. President. The President shall be the chief
operating officer of the Corporation and, subject to the direction of the Board
of Directors, shall in general supervise and control all of the business and
affairs of the Corporation. The President shall, when present, preside at all
meetings of the shareholders in the absence of the Chairman of the Board and
the Vice Chairman. The President shall have authority, subject to such rules
as may be prescribed by the Board of Directors, to appoint such agents and
employees of the Corporation as he or she shall deem necessary, to prescribe
their powers, duties and compensation, and to delegate authority to them. Such
agents and employees shall hold office at the discretion of the President.
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<PAGE> 13
The President shall have authority to sign, execute and acknowledge, on behalf
of the Corporation, all deeds, mortgages, bonds, stock certificates, contracts,
leases, reports and all other documents or instruments necessary or proper to
be executed in the course of the Corporation's regular business, or which shall
be authorized by resolution of the Board of Directors; and, except as otherwise
provided by law or the Board of Directors, he or she may authorize any Vice
President or other officer or agent of the Corporation to sign, execute and
acknowledge such documents or instruments in his or her place and stead. In
general he or she shall perform all duties incident to the office of President
and such other duties as may be prescribed by the Board of Directors from time
to time.
SECTION 4.09. The Vice Presidents. In the absence of the
President or in the event of the President's death, inability or refusal to
act, or in the event for any reason it shall be impracticable for the President
to act personally, the Vice President (or in the event there be more than one
Vice President, the Vice Presidents in the order designated by the Board of
Directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. Any Vice President may sign, with the Secretary or Assistant
Secretary, certificates for shares of the Corporation; and shall perform such
other duties and have such authority as from time to time may be delegated or
assigned to him or her by the Chairman of the Board, Vice Chairman or President
or by the Board of Directors. The execution of any instrument of the
Corporation by any Vice President shall be conclusive evidence, as to third
parties, of his or her authority to act for the Corporation.
SECTION 4.10. The Secretary. The Secretary shall: (a) keep
minutes of the meetings of the shareholders and of the Board of Directors (and
of committees thereof) in one or more books provided for that purpose
(including records of actions taken by the shareholders or the Board of
Directors (or committees thereof) without a meeting); (b) see that all notices
are duly given in accordance with the provisions of these By-Laws or as
required by the WBCL; (c) be custodian of the corporate records and of the seal
of the Corporation and see that the seal of the Corporation is affixed to all
documents the execution of which on behalf of the Corporation under its seal is
duly authorized; (d) maintain a record of the shareholders of the Corporation,
in a form that permits preparation of a list of the names and addresses of all
shareholders, by class or series of shares and showing the number and class or
series of shares held by each shareholder; (e) sign with the President, a Vice
President, or any other officer authorized by the Board of Directors,
certificates for shares of the Corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors; (f) have general
charge of the stock transfer books of the Corporation; and (g) in general
perform all duties incident to the office of Secretary and have such other
duties and exercise such authority as from time to time may be
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<PAGE> 14
delegated or assigned by the Chairman of the Board, Vice Chairman, President or
the Board of Directors.
SECTION 4.11. The Treasurer. The Treasurer shall be the
principal financial and accounting officer of the Corporation and shall have
general charge of the finances and books of account of the Corporation. Except
as otherwise provided by the Board of Directors, he or she shall have general
supervision of the funds and property of the Corporation and of the performance
by the Custodian of its duties with respect thereto. The Treasurer shall
render to the Board of Directors, whenever directed by the Board, an account of
the financial condition of the Corporation and of all his or her transactions
as Treasurer. The Treasurer shall perform all acts incidental to the office of
Treasurer, subject to the control of the Board of Directors.
SECTION 4.12. Assistant Secretaries and Assistant Treasurers.
There shall be such number of Assistant Secretaries and Assistant Treasurers as
the Board of Directors may from time to time authorize. The Assistant
Secretaries may sign with the President, a Vice President or any other officer
authorized by the Board of Directors, certificates for shares of the
Corporation the issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Secretaries and Assistant Treasurers, in
general, shall perform such duties and have such authority as shall from time
to time be delegated or assigned to them by the Secretary or the Treasurer,
respectively, or by the Chairman of the Board, Vice Chairman, President or the
Board of Directors.
SECTION 4.13. Other Assistants and Acting Officers. The
Board of Directors shall have the power to appoint, or to authorize any duly
appointed officer of the Corporation to appoint, any person to act as assistant
to any officer, or as agent for the Corporation in his or her stead, or to
perform the duties of such officer whenever for any reason it is impracticable
for such officer to act personally, and such assistant or acting officer or
other agent so appointed by the Board of Directors or an authorized officer
shall have the power to perform all the duties of the office to which he or she
is so appointed to be an assistant, or as to which he or she is so appointed to
act, except as such power may be otherwise defined or restricted by the Board
of Directors or the appointing officer.
SECTION 4.14. Surety Bonds. The Board of Directors may
require any officer or agent of the Corporation to execute a bond (including,
without limitation, any bond required by the Investment Company Act of 1940) to
the Corporation in such sum and with such surety or sureties as the Board of
Directors may determine, conditioned upon the faithful performance of his or
her duties to the Corporation, including responsibility for negligence and for
the accounting of any of the Corporation's property, funds or securities that
may come into his or her hands.
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ARTICLE V. CERTIFICATES FOR SHARES; TRANSFER OF SHARES
SECTION 5.01. Certificates for Shares. Each shareholder
shall be entitled upon request to have a certificate or certificates which
shall represent and certify the number and kind of shares owned by him or her
in the Corporation. Certificates representing shares of the Corporation shall
be in such form, consistent with the WBCL, as shall be determined by the Board
of Directors. Such certificates shall be signed, either manually or in
facsimile, by the President, a Vice President or any other officer authorized
by the Board of Directors and by the Secretary or an Assistant Secretary. All
certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and class of shares and series,
if any, and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except as provided in Section 5.04.
Shares may also be issued without certificates. Within a
reasonable time after issuance or transfer of shares without certificates, the
Corporation shall send the shareholder a written statement of the information
required on share certificates under the WBCL, including the following:
(a) the name of the Corporation;
(b) the name of the person to whom shares were issued;
(c) the number and class of shares and the designation of the
series, if any, of the shares issued; and
(d) either (i) a summary of the designations, relative
rights, preferences and limitations, applicable to each class, and the
variations in rights, preferences and limitations determined for each
series and the authority of the Board of Directors to determine
variations for future series, or (ii) a conspicuous statement that the
Corporation will furnish the information specified in clause (i),
above, on request, in writing and without charge.
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SECTION 5.02. Signature by Former Officers. The validity of
a share certificate is not affected if a person who signed the certificate
(either manually or in facsimile) no longer holds office when the certificate
is issued.
SECTION 5.03. Transfer of Shares. Prior to due presentment
of a certificate for shares for redemption or registration of transfer, the
Corporation may treat the registered owner of such shares as the person
exclusively entitled to vote, to receive notifications and otherwise to have
and exercise all the rights and power of an owner. Where a certificate for
shares is presented to the Corporation with a request for redemption or to
register for transfer, the Corporation shall not be liable to the owner or any
other person suffering loss as a result of such registration of transfer or
redemption if (a) there were on or with the certificate the necessary
endorsements, and (b) the Corporation had no duty to inquire into adverse
claims or has discharged any such duty. The Corporation may require reasonable
assurance that such endorsements are genuine and effective and compliance with
such other regulations as may be prescribed by or under the authority of the
Board of Directors. All certificates and uncertificated shares surrendered to
the Corporation for redemption shall be cancelled, returned to the status of
authorized and unissued shares and the transaction recorded in the stock
transfer books. Transfer or redemption of shares of the Corporation shall be
made only on the stock transfer books of the Corporation by the holder of
record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto duly authorized
by power of attorney duly executed and filed with the transfer agent or the
Secretary of the Corporation, and on surrender for cancellation of the
certificate for such shares, if any.
SECTION 5.04. Lost, Destroyed or Stolen Certificates. Where
the owner claims that certificates for shares have been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if the
owner (a) so requests before the Corporation has notice that such shares have
been acquired by a bona fide purchaser, (b) files with the Corporation a
sufficient indemnity bond if required by the Board of Directors or any
principal officer, and (c) satisfies such other reasonable requirements as may
be prescribed by or under the authority of the Board of Directors.
SECTION 5.05. Stock Regulations. The Board of Directors
shall have the power and authority to make all such further rules and
regulations not inconsistent with law as it may deem expedient concerning the
issue, transfer and registration of shares of the Corporation and to appoint or
designate one or more stock transfer agents and one or more stock registrars.
ARTICLE VI. SEAL
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SECTION 6.01. The seal of the Corporation shall be circular
in form and shall bear, at a minimum, the name of the Corporation, Wisconsin as
its state of incorporation and the words "Corporate Seal."
ARTICLE VII. INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 7.01. Mandatory Indemnification. The Corporation
shall indemnify, to the full extent permitted by the WBCL, as in effect from
time to time, the persons described in Sections 180.0850 through 180.0859 (or
any successor provisions) of the WBCL or other provisions of the law of the
State of Wisconsin relating to indemnification of directors and officers, as in
effect from time to time. The indemnification afforded such persons by this
section shall not be exclusive of other rights to which they may be entitled as
a matter of law.
SECTION 7.02. Permissive Supplementary Benefits. The
Corporation may, but shall not be required to, supplement the right of
indemnification under Section 7.01 by (a) the purchase of insurance on behalf
of any one or more of such persons, whether or not the Corporation would be
obligated to indemnify such person under Section 7.01; (b) individual or group
indemnification agreements with any one or more of such persons; and (c)
advances for related expenses of such a person.
SECTION 7.03. Amendment. This Article VII may be amended or
repealed only by a vote of the shareholders and not by a vote of the Board of
Directors.
SECTION 7.04. Investment Company Act. In no event shall the
Corporation indemnify any person hereunder in contravention of any provision of
the Investment Company Act.
ARTICLE VIII. AMENDMENTS
SECTION 8.01. By Shareholders. These By-Laws may be amended
or repealed and new By-Laws may be adopted by the shareholders at any annual or
special meeting of the shareholders at which a quorum is in attendance.
SECTION 8.02. By Board of Directors. Except as otherwise
provided by the WBCL, the Articles of Incorporation or a particular By-Law
herein, these By-Laws may also be amended or repealed and new By-Laws may be
adopted by the Board of Directors by affirmative vote of a majority of the
number of directors present at any meeting at which a quorum is in
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<PAGE> 18
attendance; provided, however, that the shareholders in adopting, amending or
repealing a particular By-Law may provide therein that the Board of Directors
may not amend, repeal or readopt that By-Law.
SECTION 8.03. Implied Amendments. Any action taken or
authorized by the shareholders or by the Board of Directors which would be
inconsistent with the By-Laws then in effect but which is taken or authorized
by affirmative vote of not less than the number of shares or the number of
directors required to amend the By-Laws so that the By-Laws would be consistent
with such action shall be given the same effect as though the By-Laws had been
temporarily amended or suspended so far, but only so far, as is necessary to
permit the specific action so taken or authorized.
ARTICLE IX. DEPOSITARIES, CUSTODIANS, ENDORSEMENTS
SECTION 9.01. Depositories. The funds of the Corporation
shall be deposited with such banks or other depositories as the Board of
Directors of the Corporation may from time to time determine in accordance with
the requirements of the Investment Company Act.
SECTION 9.02. Custodians. All securities and other similar
investments of the Corporation shall be deposited in the safekeeping of such
banks or other companies as the Board of Directors may from time to time
determine in accordance with the requirements of the Investment Company Act.
Every arrangement entered into with any bank or other company for the
safekeeping of the securities and other similar investments of the Corporation
shall contain provisions complying with the requirements of the Investment
Company Act.
SECTION 9.03. Checks, Notes, Drafts, etc. Checks, notes,
drafts, acceptances, bills of exchange and other orders or obligations for the
payment of money shall be signed by such officer or officers or such person or
persons as designated from time to time by the Board of Directors.
SECTION 9.04. Endorsements, Assignments and Transfer of
Securities. All endorsements, assignments, stock powers or other instruments
of transfer of securities standing in the name of the Corporation or its
nominee or directions for the transfer of securities belonging to the
Corporation shall be made by such officer or officers or other person or
persons as may be designated from time to time by the Board of Directors.
ARTICLE X. INDEPENDENT PUBLIC ACCOUNTANTS
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SECTION 10.01. Independent Public Accountants. The
Corporation shall employ an independent public accountant or a firm of
independent public accountants as its accountants to examine the accounts of
the Corporation and to sign and certify financial statements filed by the
Corporation.
ARTICLE XI. SALES AND REDEMPTION OF SHARES; DIVIDENDS
SECTION 11.01. Sale of Shares. Shares of Common Stock of the
Corporation shall be sold by it for the net asset value per share of such
Common Stock calculated in accordance with the requirements of the Investment
Company Act, and the Corporation's then current prospectus.
SECTION 11.02. Periodic Investment, Dividend Reinvestment and
Other Plans. The Corporation shall offer such periodic investment, dividend
reinvestment, periodic redemption or other plans as are specified in the
Corporation's then current prospectus, provided such plans are offered in
accordance with the requirements of the Investment Company Act. Any such plans
may be discontinued at any time if determined advisable by or under the
authority of the Board of Directors.
SECTION 11.03. Redemption of Shares. Subject to the
suspension of the right of redemption or postponement of the date of payment or
satisfaction upon redemption in accordance with the Investment Company Act,
each shareholder, upon request and after complying with the redemption
procedures established by or under the supervision of the Board of Directors,
shall be entitled to require the Corporation to redeem out of legally available
funds all or any part of the Common Stock standing in the name of such holder
at the net asset value per share calculated in accordance with the requirements
of the Investment Company Act, and the Corporation's then current prospectus.
SECTION 11.04. Dividends and Other Distributions. The
Corporation shall pay such dividends and make other distributions to
shareholders, at such times and in such amounts as are determined by or under
the authority of the Board of Directors, from time to time and in accordance
with the requirements of the WBCL, the Investment Company Act, and other
applicable laws and regulations.
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<PAGE> 1
EXHIBIT 99.B4
SPECIMEN STOCK CERTIFICATE
NUMBER STRONG LOGO SHARES
________ _______
CUSIP ___________
STRONG INSTITUTIONAL MONEY FUND, A SERIES OF
STRONG INSTITUTIONAL FUNDS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF WISCONSIN
This Certifies that is the owner of
Shares of the Common Stock, Par Value $.01 per share, of Strong Institutional
Funds, Inc. - Strong Institutional Money Fund transferable on the books of
the Corporation by the holder hereof in person or by duly authorized attorney
upon surrender of this certificate properly endorsed.
This certificate is not valid until countersigned by the Transfer
Agent.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
CORPORATE SEAL
/s/ Ann E. Oglanian /s/ John Dragisic
Secretary Vice Chairman
Countersigned:
Strong Capital Management, Inc.
Transfer Agent
Authorized Signature
<PAGE> 2
The following abbreviations, when used in the inscription on the face of
this certificate shall be construed as though they were written out in full
according to applicable laws or regulations:
UNIF GIFT MIN ACT _____Custodian_______
(Cust) (Minor)
Under Uniform Gift to Minors
Act - _________________________________
State
TEN COM - as tenants in common
TEN ENT - as tenants by the
entireties UNIF TRANS MIN ACT ____Custodian _______
JT TEN - as joint tenants with (Cust) (Minor)
right of survivorship
and not as tenants Under Uniform Transfers to Minors
in common Act - _________________________________
State
Additional abbreviations also may be used though not in the above list.
For Value Received, __________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
Shares of capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
________________________________________________________________________________
Attorney, to transfer the said shares on the books of the within named
Corporation with full power of substitution in the premises.
Date ________________________________ ___________________________________
Signature
___________________________________
Signature
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER.
___________________________________
Signature(s) Guarantee
Strong Institutional Funds, Inc. is authorized to issue common stock for
multiple series. Upon request, a Shareholder will be given a summary of the
designations, relative rights, preferences and limitations determined by the
Board of Directors for each series in writing and without charge. The Board of
Directors is authorized to determine variations for different series.
<PAGE> 1
EXHIBIT 99.B5
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on this ____ day of _________,
1995, between STRONG INSTITUTIONAL FUNDS, INC., a Wisconsin corporation
(the "Corporation"), and STRONG CAPITAL MANAGEMENT, INC., a Wisconsin
corporation (the "Adviser");
WITNESSETH
WHEREAS, the Corporation is an open-end management investment company
under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Corporation is authorized to create separate series, each
with its own separate investment portfolio; and,
WHEREAS, the Corporation desires to retain the Adviser, which is a
registered investment adviser under the Investment Advisers Act of 1940, to act
as investment adviser for each series of the Corporation listed in Schedule A
attached hereto, and to manage each of their assets;
NOW, THEREFORE, the Corporation and the Adviser do mutually agree and
promise as follows:
1. Employment. The Corporation hereby appoints Adviser as
investment adviser for each series of the Corporation listed on Schedule A
attached hereto (a "Portfolio" or collectively, the "Portfolios"), and Adviser
accepts such appointment. Subject to the supervision of the Board of Directors
of the Corporation and the terms of this Agreement, the Adviser shall act as
investment adviser for and manage the investment and reinvestment of the assets
of any Portfolio. The Adviser is hereby authorized to delegate some or all of
its services subject to necessary approval, which includes without limitation,
the delegation of its investment adviser duties hereunder to a subadvisor
pursuant to a written agreement (a "Subadvisory Agreement") under which the
subadvisor shall furnish the services specified therein to the Adviser. The
Adviser will continue to have responsibility for all investment advisory
services furnished pursuant to a Subadvisory Agreement. The Adviser shall (i)
provide for use by the Corporation, at the Adviser's expense, office space and
all necessary office facilities, equipment and personnel for servicing the
investments of each Portfolio and maintaining the Corporation's organization,
(ii) pay the salaries and fees of all officers and directors of the Corporation
who are "interested persons" of the Adviser as such term is defined under the
1940 Act, and (iii) pay for all clerical services relating to research,
statistical and investment work.
2. Allocation of Portfolio Brokerage. The Adviser is authorized,
subject to the supervision of the Board of Directors of the Corporation, to
place orders for the purchase and sale of securities and to negotiate
commissions to be paid on such transactions. The Adviser may, on behalf of each
Portfolio, pay brokerage commissions to a broker which provides brokerage and
research services to the Adviser in excess of the
<PAGE> 2
amount another broker would have charged for effecting the transaction,
provided (i) the Adviser determines in good faith that the amount is reasonable
in relation to the value of the brokerage and research services provided by the
executing broker in terms of the particular transaction or in terms of the
Adviser's overall responsibilities with respect to a Portfolio and the accounts
as to which the Adviser exercises investment discretion, (ii) such payment is
made in compliance with Section 28(e) of the Securities Exchange Act of 1934
and other applicable state and federal laws, and (iii) in the opinion of the
Adviser, the total commissions paid by a Portfolio will be reasonable in
relation to the benefits to such Portfolio over the long term.
3. Expenses. Each Portfolio will pay all its expenses and the
Portfolio's allocable share of the Corporation's expenses, other than those
expressly stated to be payable by the Adviser hereunder, which expenses payable
by a Portfolio shall include, 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 of printing and distributing prospectuses to existing shareholders,
charges of custodians (including sums as custodian and for keeping books and
similar services of the Portfolios), transfer agents (including the printing
and mailing of reports and notices to shareholders), registrars, auditing and
legal services, clerical services related to recordkeeping and shareholder
relations, printing of share certificates, fees for directors who are not
"interested persons" of the Adviser, and other expenses not expressly assumed
by the Adviser under Paragraph 1 above. If expenses payable by a Portfolio,
except interest charges, taxes, brokerage commissions and similar fees, and to
the extent permitted, extraordinary expenses, in any given fiscal year exceed
that percentage of the average net asset value of the Portfolio for such year,
as determined by valuations made as of the close of each business day of such
year, which is the most restrictive percentage expense limitation provided by
the laws of the various states in which the Portfolio's shares are qualified
for sale, or if the states in which the shares qualified for sale impose no
restrictions, then 2%, the Adviser shall reimburse the Portfolio for such
excess. Reimbursement of expenses by the Adviser shall be made on a monthly
basis and will be paid to a Portfolio by a reduction in the Adviser's fee,
subject to later adjustment month by month for the remainder of the Portfolio's
fiscal year.
4. Authority of Adviser. The Adviser shall for all purposes
herein be considered an independent contractor and shall not, unless expressly
authorized and empowered by the Corporation or any Portfolio, have authority to
act for or represent the Corporation or any Portfolio in any way, form or
manner. Any authority granted by the Corporation on behalf of itself or any
Portfolio to the Adviser shall be in the form of a resolution or resolutions
adopted by the Board of Directors of the Corporation.
5. Compensation of Adviser. For the services to be furnished
during any month by the Adviser hereunder, each Portfolio listed in Schedule A
shall pay the Adviser, and the Adviser agrees to accept as full compensation
for all services rendered hereunder, an Advisory Fee as soon as practical after
the last day of such month. The Advisory Fee shall be an amount equal to 1/12th
of the annual fee as set forth in Schedule B of the average of the net asset
value of the Portfolio determined as of the close of business on each business
day throughout the month (the "Average Asset Value"). In case of termination of
this Agreement with respect to any Portfolio during any month, the fee for that
month shall be reduced proportionately on the basis of the number of calendar
days during which it is in effect and the fee computed upon the Average Asset
Value of the business days during which it is so in effect.
2
<PAGE> 3
6. Rights and Powers of Adviser. The Adviser's rights and powers
with respect to acting for and on behalf of the Corporation or any Portfolio,
including the rights and powers of the Adviser's officers and directors, shall
be as follows:
(a) Directors, officers, agents and shareholders of the
Corporation are or may at any time or times be interested in the Adviser as
officers, directors, agents, shareholders or otherwise. Correspondingly,
directors, officers, agents and shareholders of the Adviser are or may at any
time or times be interested in the Corporation as directors, officers, agents
and as shareholders or otherwise, but nothing herein shall be deemed to require
the Corporation to take any action contrary to its Articles of Incorporation or
any applicable statute or regulation. The Adviser shall, if it so elects, also
have the right to be a shareholder in any Portfolio.
(b) Except for initial investments in a Portfolio, not in excess
of $100,000 in the aggregate for the Corporation, the Adviser shall not take
any long or short positions in the shares of the Portfolios and that insofar as
it can control the situation it shall prevent any and all of its officers,
directors, agents or shareholders from taking any long or short position in the
shares of the Portfolios. This prohibition shall not in any way be considered
to prevent the Adviser or an officer, director, agent or shareholder of the
Adviser from purchasing and owning shares of any of the Portfolios for
investment purposes. The Adviser shall notify the Corporation of any sales of
shares of any Portfolio made by the Adviser within two months after purchase by
the Adviser of shares of any Portfolio.
(c) The services of the Adviser to each Portfolio and the
Corporation are not to be deemed exclusive and Adviser shall be free to render
similar services to others as long as its services for others does not in any
way hinder, preclude or prevent the Adviser from performing its duties and
obligations under this Agreement. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Corporation or to any of the Portfolios or to any shareholder
for any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security.
7. Duration and Termination. The following shall apply with
respect to the duration and termination of this Agreement:
(a) This Agreement shall begin for each Portfolio as of the date
of this Agreement and shall continue in effect for two years. With respect to
each Portfolio added by execution of an Addendum to Schedule A, the term of
this Agreement shall begin on the date of such execution and, unless sooner
terminated as hereinafter provided, this Agreement shall remain in effect to
the date two years after such execution. Thereafter, in each case, this
Agreement shall remain in effect, for successive periods of one year, subject
to the provisions for termination and all of the other terms and conditions
hereof if: (a) such continuation shall be specifically approved at least
annually by either (i) the affirmative vote of a majority of the Board of
Directors of the Corporation, including a majority of the Directors who are not
parties to this Agreement or interested persons of any such party (other than
as Directors of the Corporation), cast in person at a meeting called for that
purpose or (ii) by the affirmative vote of a majority of a Portfolio's
outstanding voting securities; and (b) Adviser shall not have notified a
Portfolio in writing at least sixty (60) days prior to the anniversary date of
this Agreement in any year thereafter that it does not desire such continuation
with respect to that Portfolio. Prior to
3
<PAGE> 4
voting on the renewal of this Agreement, the Board of Directors of the
Corporation may request and evaluate, and the Adviser shall furnish, such
information as may reasonably be necessary to enable the Corporation's Board of
Directors to evaluate the terms of this Agreement.
(b) Notwithstanding whatever may be provided herein to the
contrary, this Agreement may be terminated at any time with respect to any
Portfolio, without payment of any penalty, by affirmative vote of a majority of
the Board of Directors of the Corporation, or by vote of a majority of the
outstanding voting securities of that Portfolio, as defined in Section 2(a)(42)
of the 1940 Act, or by the Adviser, in each case, upon sixty (60) days' written
notice to the other party and shall terminate automatically in the event of its
assignment.
8. Amendment. This Agreement may be amended by mutual consent of
the parties, provided that the terms of each such amendment shall be approved
by the vote of a majority of the Board of Directors of the Corporation,
including a majority of the Directors who are not parties to this Agreement or
interested persons of any such party to this Agreement (other than as Directors
of the Corporation) cast in person at a meeting called for that purpose, and,
where required by Section 15(a)(2) of the 1940 Act, on behalf of a Portfolio by
a majority of the outstanding voting securities (as defined in Section 2(a)(42)
of the 1940 Act) of such Portfolio. If such amendment is proposed in order to
comply with the recommendations or requirements of the Securities and Exchange
Commission or state regulatory bodies or other governmental authority, or to
obtain any advantage under state or federal laws, the Corporation shall notify
the Adviser of the form of amendment which it deems necessary or advisable and
the reasons therefor, and if the Adviser declines to assent to such amendment,
the Corporation may terminate this Agreement forthwith.
9. Notice. Any notice that is required to be given by the parties
to each other under the terms of this Agreement shall be in writing, addressed
and delivered, or mailed postpaid to the other party at the principal place of
business of such party.
10. Assignment. This Agreement shall neither be assignable nor
subject to pledge or hypothecation and in the event of assignment, pledge or
hypothecation shall automatically terminate. For purposes of determining
whether an "assignment" has occurred, the definition of "assignment" in Section
2(a)(4) of the 1940 Act shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed as of the day and year first stated above.
Attest: Strong Capital Management, Inc.
______________________________________ ____________________________________
Thomas P. Lemke, Senior Vice President John Dragisic, Vice Chairman
Attest: Strong Institutional Funds, Inc.
______________________________________ ____________________________________
Ann E. Oglanian, Secretary Lawrence A. Totsky, Vice President
4
<PAGE> 5
SCHEDULE A
The Portfolio(s) of Strong Institutional Funds, Inc. currently subject to
this Agreement are as follows:
Date of Addition
Portfolio(s) to this Agreement
------------ -----------------
Strong Institutional Money Fund
Attest: Strong Capital Management, Inc.
______________________________________ ___________________________________
Thomas P. Lemke, Senior Vice President John Dragisic, Vice Chairman
Attest: Strong Institutional Funds, Inc.
______________________________________ ___________________________________
Ann E. Oglanian, Secretary Lawrence A. Totsky, Vice President
<PAGE> 6
SCHEDULE B
Compensation pursuant to Paragraph 5 of this Agreement shall be calculated in
accordance with the following schedules:
Portfolio(s) Annual Fee
------------ ----------
Strong Institutional Money Fund .35%
Attest: Strong Capital Management, Inc.
______________________________________ ___________________________________
Thomas P. Lemke, Senior Vice President John Dragisic, Vice Chairman
Attest: Strong Institutional Funds, Inc.
_____________________________________ ___________________________________
Ann E. Oglanian, Secretary Lawrence A. Totsky, Vice President
<PAGE> 1
EXHIBIT 99.B6
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into on this ______day of
___________,1995, between Strong Institutional Funds, Inc., a Wisconsin
corporation (the "Company"), and STRONG FUNDS DISTRIBUTORS, INC., a Wisconsin
corporation (the "Distributor"):
WITNESSETH:
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940 (the "Investment Company
Act");
WHEREAS, the Company is authorized to create separate series, each
with its own separate investment portfolio, and the beneficial interest in each
such series will be represented by a separate series of shares;
WHEREAS, the Company is authorized to issue shares of its $.01
par value common stock (the "Shares") in separate series;
WHEREAS, the Distributor is a registered broker-dealer under state and
federal laws and regulations and is a member of the National Association of
Securities Dealers (the "NASD"); and
WHEREAS, the Company desires to retain Distributor as the distributor
of the Shares of each series on whose behalf this Agreement has been executed.
NOW, THEREFORE, the Company and Distributor mutually agree and promise
as follows:
1. Appointment of Distributor
The Company hereby appoints the Distributor as its agent for the
distribution of the Shares of each series of the Company listed on Schedule A
attached hereto (each series is hereinafter referred to as a "Fund"), as such
Schedule may be amended from time to time, in jurisdictions wherein the Shares
may legally be offered for sale; provided, however, that the Company may (a)
issue or sell Shares directly to holders of such Shares upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the
payment or reinvestment of dividends or distributions, or otherwise; or (b)
issue or sell Shares at net asset value to the shareholders of any other
investment company, as defined in the Investment Company Act, for which the
Distributor shall act as exclusive distributor, who wish to exchange all or a
portion of their investment in shares of such other investment company for
Shares of the Company.
2. Acceptance; Services of Distributor
The Distributor hereby accepts appointment as agent for the
distribution of the Shares and agrees that it will use its best efforts with
reasonable promptness to sell such part of the authorized Shares remaining
unissued as from time to time shall be effectively registered under the
Securities Act of 1933 (the "Securities Act"), at prices determined as
hereinafter provided and on terms hereinafter set forth, all
<PAGE> 2
subject to applicable federal and state laws and regulations and the Articles
of Incorporation and By-Laws of the Company.
3. Manner of Sale; Compliance with Securities Laws and Regulations
a. The Distributor shall sell Shares to or through qualified
dealers or others in such manner, not inconsistent with the provisions hereof
and the Company's then effective Registration Statement under the Securities
Act, as the Distributor may determine from time to time, provided that no
dealer or other person shall be appointed or authorized to act as agent of the
Company without the prior consent of the Company. The Distributor shall cause
subscriptions for Shares to be transmitted in accordance with any subscription
agreement then in force for the purchase of Shares. Distributor and Company
shall cooperate in implementing procedures to ensure that the sales commission,
if any, payable on the purchase of Shares is paid to the Distributor in a
timely manner.
b. The Distributor, as agent of and for the account of the
Company, may repurchase Shares at such prices and upon such terms and
conditions as shall be specified in the Company's current prospectus relating
to each Fund.
c. The Company will furnish to the Distributor from time to time
such information with respect to the Company, each Fund, and the Shares as the
Distributor may reasonably request for use in connection with the sale of the
Shares. The Distributor agrees that it will not use or distribute or authorize
the use, distribution or dissemination by its dealers or others, in connection
with the sale of such Shares, of any statements, other than those contained in
the Company's current prospectus relating to each Fund, except such
supplemental literature or advertising as shall be lawful under federal and
state securities laws and regulations, and that it will furnish the Company
with copies of all such material.
d. In selling or reacquiring Shares for the account of the
Company, the Distributor will in all respects conform to the requirements of
all state and federal laws and the Rules of Fair Practice of the NASD, relating
to such sale or reacquisition, as the case may be, and will indemnify and save
harmless the Company, each Fund, each person who has been, is or may hereafter
be a director or officer of the Company or any Fund from any damage or expense
on account of any wrongful act by the Distributor or any employee,
representative or agent of the Distributor. The Distributor will observe and
be bound by all the provisions of the Articles of Incorporation of the Company
(and of any fundamental policies adopted by the Company and/or each Fund
pursuant to the Investment Company Act, notice of which shall have been given
to the Distributor) which at the time in any way require, limit, restrict or
prohibit or otherwise regulate any action on the part of the Distributor.
e. The Distributor will require each dealer to conform to the
provisions hereof and the Registration Statement (and related prospectus or
prospectuses) at the time in effect under the Securities Act with respect to
the public offering price of the Shares.
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<PAGE> 3
4. Price of Shares
a. Shares offered for sale or sold by the Distributor for the
account of the Company shall be so offered or sold at a price per Share
determined in accordance with the then current prospectus relating to the sale
of such Shares except as departure from such prices shall be permitted by the
rules and regulations of the Securities and Exchange Commission (the "SEC").
b. The price the Company shall receive for all Shares purchased
from the Company shall be the net asset value used in determining the public
offering price applicable to the sale of each Fund's Shares. The excess, if
any, of the sales price over the net asset value of the Shares sold by the
Distributor as agent for the account of the Company shall be retained by the
Distributor as a commission for its services hereunder.
5. Registration of Shares and Distributor
a. The Company agrees that it will use its best efforts to keep
effectively registered under the Securities Act for sale as herein contemplated
such Shares as the Distributor shall reasonably request and as the SEC shall
permit to be so registered.
b. The Company on behalf of each Fund will execute any and all
documents and furnish any and all information which may be reasonably necessary
in connection with the qualification of its Shares for sale (including the
qualification of the Company or a Fund as a dealer where necessary or
advisable) in such states as the Distributor may reasonably request (it being
understood that the Company shall not be required without its consent to comply
with any requirement which in its opinion is unduly burdensome). The
Distributor, at its own expense, will effect all required qualifications of the
Distributor as a dealer or broker or otherwise under all applicable state or
federal laws in order that the Shares may be sold in as broad a territory as is
reasonably practicable.
c. Notwithstanding any other provision hereof, the Company on
behalf of a Fund may terminate, suspend or withdraw the offering of its Shares
whenever, in its sole discretion, the Company deems such action to be
desirable.
6. Expenses
The Company or respective Fund will pay or cause to be paid the
expenses (including the fees and disbursements of its own counsel) of any
registration of the Shares under the Securities Act, expenses of qualifying or
continuing the qualification of the Shares for sale, and in connection
therewith, of qualifying or continuing the qualification of the Company or
respective Fund as a dealer or broker under the laws of such states as may be
designated by the Distributor under the conditions herein specified, and
expenses incident to the issuance of Shares, such as the cost of share
certificates, issue taxes and fees of the transfer agent. The Distributor will
pay all other expenses (other than expenses which one or more dealers may bear
pursuant to any agreement with the Distributor) incident to the sale and
distribution of the Shares issued or sold hereunder, including, without
limiting the generality of the foregoing, all (a) expenses of printing and
distributing or disseminating any other literature, advertising
3
<PAGE> 4
and selling aids in connection with such offering of the Shares for sale
(except that such expenses shall not include expenses incurred by the Company
or any Fund in connection with the preparation, printing and distribution of
any report or other communication to holders of Shares in their capacity as
such); and (b) expenses of advertising in connection with such offering. No
transfer taxes, if any, which may be payable in connection with the issue or
delivery of Shares sold as herein contemplated or of the certificates for such
Shares shall be borne by the Company or any Fund, and the Distributor will
indemnify and hold harmless the Company and each Fund against liability for all
such transfer taxes.
7. Duration and Termination
a. This Agreement shall become effective as of the date hereof
and shall continue in effect until March 31, 1996, and from year to year
thereafter, but only so long as such continuance is specifically approved each
year by either (i) the Board of Directors of the Company, or (ii) the
affirmative vote of a majority of the relevant Fund's respective outstanding
voting securities. In addition to the foregoing, each renewal of this
Agreement must be approved by the vote of a majority of the Company's directors
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
Prior to voting on the renewal of this Agreement, the Board of Directors of the
Company shall request and evaluate, and the Distributor shall furnish, such
information as may reasonably be necessary to enable the Company's Board of
Directors to evaluate the terms of this Agreement.
b. Notwithstanding whatever may be provided herein to the
contrary, this Agreement may be terminated at any time, without payment of any
penalty, by vote of a majority of the Board of Directors of the Company, or by
vote of a majority of the outstanding voting securities of the relevant Fund,
or by the Distributor, in each case, on not more than sixty (60) days' written
notice to the other party and shall terminate automatically in the event of its
assignment as set forth in paragraph 9 of this Agreement.
8. Notice
Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may from time to time designate for the receipt of such
notice.
9. Assignment
This Agreement shall neither be assignable nor subject to pledge or
hypothecation and in the event of assignment, pledge or hypothecation shall
automatically terminate. For purposes of determining whether an "assignment"
has occurred, the definition of "assignment" in Section 2(a)(4) of the
Investment Company Act shall control.
10. Miscellaneous
4
<PAGE> 5
a. This Agreement shall be construed in accordance with the laws
of the State of Wisconsin, provided that nothing herein shall be construed in a
manner inconsistent with the Investment Company Act, the Securities Act, the
Securities Exchange Act of 1934 or any rule or order of the SEC under such Acts
or any rule of the NASD.
b. The captions of this Agreement are included for convenience
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
c. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the provisions of
this Agreement shall be deemed to be severable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed as of the day and year first stated above.
Attest: Strong Funds Distributors, Inc.
__________________________________________ ___________________________________
Thomas M. Zoeller, Treasurer and Secretary Stephen J. Shenkenberg, President
Attest: Strong Institutional Funds, Inc.
__________________________________________ ___________________________________
Ann E. Oglanian, Secretary Lawrence A. Totsky, Vice President
5
<PAGE> 6
SCHEDULE A
The Fund(s) of the Company currently subject to this Agreement are as follows:
Date of Addition
Fund(s) to this Agreement
------- -----------------
Strong Institutional Money Fund
Attest: Strong Funds Distributors, Inc.
__________________________________________ __________________________________
Thomas M. Zoeller, Treasurer and Secretary Stephen J. Shenkenberg, President
Attest: Strong Institutional Funds, Inc.
__________________________________________ __________________________________
Ann E. Oglanian, Secretary Lawrence A. Totsky, Vice President
6
<PAGE> 1
EXHIBIT 99.B8
CUSTODIAN AGREEMENT
THIS AGREEMENT is made and entered into on this ___ day of ________,
1995, between Strong Institutional Funds, Inc., a Wisconsin corporation (the
"Company"), on behalf of the Funds (as defined below) of the Company, and
FIRSTAR TRUST COMPANY, a Wisconsin corporation (the "Custodian").
WITNESSETH:
WHEREAS, the Company is registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940;
WHEREAS, the Company is authorized to create separate series, each
with its own separate investment portfolio, and the beneficial interest in each
such series will be represented by a separate series of shares (each series
indicated on Schedule A is hereinafter individually referred to as a "Fund" and
collectively as the "Funds");
WHEREAS, the Company desires to retain the Custodian to hold and
administer the securities and cash of each Fund listed in Schedule A hereto,
and any additional Funds the Company and the Custodian may agree upon and
include in Schedule A as such Schedule may be amended from time to time,
pursuant to the terms of this Agreement.
NOW, THEREFORE, the Company and the Custodian do mutually agree and
promise as follows:
1. Definitions
The word "securities" as used herein includes stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or direction or
certification in writing signed in the name of the Company by any two of the
President, a Vice President, the Secretary and the Treasurer of the Company, or
any other persons duly authorized to sign by the Board of Directors.
The word "Board" shall mean the Board of Directors the Company.
2. Names, Titles and Signatures of the Company's Officers
An officer of the Company will certify to the Custodian the names and
signatures of those persons authorized to sign the officers' certificates
described in Section 1, hereof, and the names of the members of the Board of
Directors, together with any changes which may occur from time to time.
<PAGE> 2
3. Receipt and Disbursement of Money
A. The Custodian shall open and maintain a separate account or
accounts in the name of each Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement. The Custodian shall
hold in such account or accounts, subject to the provisions hereof, all cash
received by it from or for the account of a Fund. The Custodian shall make
payments of cash to, or for the account of, a Fund from such cash only:
(a) for the purchase of securities for the portfolio of a
Fund upon the delivery of such securities to the Custodian, registered
in the name of the Fund or of the nominee of the Custodian referred to
in Section 7 or in proper form for transfer;
(b) for the purchase or redemption of shares of common
stock of a Fund upon delivery thereof to Custodian, or upon proper
instructions from the Fund;
(c) for the payment of interest, dividends, taxes,
investment adviser's fees or operating expenses (including, without
limitation thereto, fees for legal, accounting, auditing and custodian
services and expenses for printing and postage);
(d) for payments in connection with the conversion,
exchange or surrender of securities owned or subscribed to by a Fund
held by or to be delivered to Custodian; or
(e) for other proper corporate purposes certified by
resolution of the Board of Directors of the Company, on behalf of a
Fund.
Before making any such payment, the Custodian shall receive
(and may rely upon) an officers' certificate requesting such payment
and stating that it is for a purpose permitted under the terms of
items (a), (b), (c) or (d) of this Subsection A, and also, in respect
of item (e), upon receipt of an officers' certificate specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment is to
be made, provided, however, that an officers' certificate need not
precede the disbursement of cash for the purpose of purchasing a money
market instrument, or any other security with same or next-day
settlement, if the President, a Vice President, the Secretary or the
Treasurer of the Company, on behalf of a particular Fund, issues
appropriate oral or facsimile instructions to the Custodian and an
appropriate officers' certificate is received by the Custodian within
two business days thereafter.
Regardless of the foregoing, if the Company's investment
advisor (the "Advisor") is a member of the Institutional Delivery
("ID") system and desires to affirm trades on behalf of a Fund with
the Depository Trust Company ("DTC") for those transactions affirmed
through the ID system; or (ii) has established an automated interface
to transmit trade authorization detail to the Custodian, then no
officers' certificate is required; provided that the appropriate
ID/DTC letter agreement or automated trade authorization agreement has
been executed by both the Advisor and the Custodian.
2
<PAGE> 3
B. The Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received by the
Custodian for each Fund's account.
C. The Custodian shall, upon receipt of proper instructions, make
federal funds available to the Funds as of specified times agreed upon from
time to time by the Company, on behalf of the Funds, and the Custodian in the
amount of checks received in payment for shares of the Funds which are
deposited into the respective Fund's account.
4. Segregated Accounts
Upon receipt of proper instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to paragraph 14
hereof, (i) in accordance with the provisions of any agreement among the
Company, on behalf of a Fund or Funds, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the National Association of
Securities Dealers, Inc. (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of the
Options Clearing Corporation and of any registered national securities exchange
(or the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions for a Fund, (ii) for the
purpose of segregating cash or securities in connection with options purchased,
sold or written for a Fund or commodity futures contracts or options thereon
purchased or sold for a Fund, (iii) for the purpose of compliance by the
Company or a Fund with the procedures required by any release or
interpretations of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies, and (iv)
as mutually agreed upon from time to time between the Company, on behalf of a
Fund or Funds, and the Custodian.
5. Transfer, Exchange, Redelivery, etc. of Securities
The Custodian shall have sole power to release or deliver any
securities of the Funds held by it pursuant to this Agreement. The Custodian
agrees to transfer, exchange or deliver securities held by it hereunder only:
(a) for sales of such securities for the account of a Fund upon
receipt by Custodian of payment therefore;
(b) when such securities are called, redeemed or retired or
otherwise become payable;
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom;
(d) in exchange for, or upon conversion into, other securities
alone or other securities and cash whether pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment, or otherwise;
3
<PAGE> 4
(e) upon conversion of such securities pursuant to their terms
into other securities;
(f) upon exercise of subscription, purchase or other similar
rights represented by such securities;
(g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities;
(h) for the purpose of redeeming in kind shares of common stock of
a Fund upon delivery thereof to the Custodian; or
(i) for other proper corporate purposes.
As to any deliveries made by the Custodian pursuant to items (a), (b),
(d), (e), (f), and (g), securities or cash receivable in exchange therefore
shall be deliverable to the Custodian.
Before making any such transfer, exchange or delivery, the Custodian
shall receive (and may rely upon) an officers' certificate requesting such
transfer, exchange or delivery, and stating that it is for a purpose permitted
under the terms of items (a), (b), (c), (d), (e), (f), (g) or (h) of this
Section 5 and also, in respect of item (i), upon receipt of an officers'
certificate specifying the securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to whom delivery of
such securities shall be made, provided, however, that an officers' certificate
need not precede any such transfer, exchange or delivery of a money market
instrument, or any other security with same or next-day settlement, if the
President, a Vice President, the Secretary or the Treasurer of the Company, on
behalf of a particular Fund, issues appropriate oral or facsimile instructions
to the Custodian and an appropriate officers' certificate is received by the
Custodian within two business days thereafter.
Regardless of the foregoing, if the Company's investment advisor (the
"Advisor") is a member of the Institutional Delivery ("ID") system and desires
to affirm trades on behalf of a Fund with the Depository Trust Company ("DTC")
for those transactions affirmed through the ID system; or (ii) has established
an automated interface to transmit trade authorization detail to the Custodian,
then no officers' certificate is required; provided that the appropriate ID/DTC
letter agreement or automated trade authorization agreement has been executed
by both the Advisor and the Custodian.
6. Custodian's Acts Without Instructions
Unless and until the Custodian receives an officers' certificate to
the contrary, the Custodian shall: (a) present for payment all coupons and
other income items held by it for the account of each Fund which call for
payment upon presentation, and hold the cash received by it upon such payment
for the account of the respective Fund; (b) collect interest and cash dividends
received, with notice to each Fund, for the account of the respective Fund; (c)
hold for the account of each Fund hereunder all stock dividends, rights and
similar securities issued with respect to any securities held by it hereunder;
and (d) execute, as agent on behalf of each Fund, all necessary ownership
certificates required by the Internal
4
<PAGE> 5
Revenue Code or the Income Tax Regulations of the United States Treasury
Department or under the laws of any state now or hereafter in effect, inserting
the Fund's name on such certificates as the owner of the securities covered
thereby, to the extent it may lawfully do so.
7. Registration of Securities
Except as otherwise directed by an officers' certificate, the
Custodian shall register all securities, except such as are in bearer form, in
the name of a registered nominee of the Custodian as defined in the Internal
Revenue Code and any Regulations of the Treasury Department issued hereunder or
in any provision of any subsequent federal tax law exempting such transaction
from liability for stock transfer taxes, and shall execute and deliver all such
certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. The Custodian shall use its best
efforts to the end that the specific securities held by it hereunder shall be
at all times identifiable in its records.
The Company shall from time to time furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee, any
securities which it may hold for the account of the Funds and which may from
time to time be registered in the name of a particular Fund.
8. Voting and Other Action
Neither the Custodian nor any nominee of the Custodian shall vote any
of the securities held hereunder by or for the account of any Fund, except in
accordance with the instructions contained in an officers' certificate. The
Custodian shall deliver, or cause to be executed and delivered, to the Company
all notices, proxies and proxy soliciting materials with relation to such
securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of a Fund), but without
indicating the manner in which such proxies are to be voted.
9. Transfer Tax and Other Disbursements
The Company, on behalf of the Funds, shall pay or reimburse the
Custodian from time to time for any transfer taxes payable upon transfers of
securities made hereunder, and for all other necessary and proper disbursements
and expenses made or incurred by the Custodian in the performance of this
Agreement.
The Custodian shall execute and deliver such certificates in
connection with securities delivered to it or by it under this Agreement as may
be required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws of
any state, to exempt from taxation any exemptable transfers and/or deliveries
of any such securities.
10. Concerning Custodian
The Custodian shall be paid as compensation for its services pursuant
to this Agreement such compensation as may from time to time be agreed upon in
writing between the Company, on behalf of
5
<PAGE> 6
the Funds, and the Custodian. Until modified in writing, such compensation
shall be as set forth in Schedule B attached hereto.
The Custodian shall not be liable for any action taken in good faith
upon any certificate herein described or certified copy of any resolution of
the Board, and may rely on the genuineness of any such document which it may in
good faith believe to have been validly executed.
The Company, on behalf of the Funds, agrees to indemnify and hold
harmless the Custodian and its nominee from all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees) incurred or
assessed against it or by its nominee in connection with the performance of
this Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct. The
Custodian is authorized to charge the applicable account of a Fund for such
items.
11. Subcustodians
The Custodian is hereby authorized to engage another bank or trust
company as a Subcustodian for all or any part of the Company's assets, so long
as any such bank or trust company meets the requirements of the Investment
Company Act of 1940, as amended and the rules and regulations thereunder (the
"Investment Company Act") and provided further that, if the Custodian utilizes
the services of a Subcustodian, the Custodian shall remain fully liable and
responsible for any losses caused to any of the Funds by the Subcustodian as
fully as if the Custodian was directly responsible for any such losses under
the terms of the Custodian Agreement.
Notwithstanding anything contained herein, if the Company requires the
Custodian to engage specific Subcustodians for the safekeeping and/or clearing
of assets, the Company agrees to indemnify and hold harmless the Custodian from
all claims, expenses and liabilities incurred or assessed against it in
connection with the use of such Subcustodian in regard to the Company's assets,
except as may arise from its own negligent action, negligent failure to act or
willful misconduct.
12. Reports by Custodian
The Custodian shall furnish the Company periodically as agreed upon
with a statement summarizing all transactions and entries for the account of
each Fund. The Custodian shall furnish to the Company, at the end of every
month, a list of the securities held by each Fund, showing the aggregate cost
of each issue. The books and records of the Custodian pertaining to its
actions under this Agreement shall be open to inspection and audit at
reasonable times by officers of, and of auditors employed by, the Company.
13. Termination or Assignment
This Agreement may be terminated by the Company, on behalf of the
Funds, or by the Custodian, on ninety (90) days notice, given in writing and
sent by registered mail to the Custodian at P. O. Box 2054, Milwaukee,
Wisconsin 53201, or to the Company at 100 Heritage Reserve, Menomonee Falls,
Wisconsin 53051, as the case may be. Upon any termination of this Agreement,
pending appointment of a successor to the Custodian or a vote of the
shareholders of the Company to dissolve or
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<PAGE> 7
to function without a custodian of its cash, securities and other property, the
Custodian shall not deliver cash, securities or other property of the Company
to the Company, but may deliver them to a bank or trust company of its own
selection, that meets the requirements of the Investment Company Act as a
Custodian for the Company to be held under terms similar to those of this
Agreement, provided, however, that the Custodian shall not be required to make
any such delivery or payment until full payment shall have been made by the
Company of all liabilities constituting a charge on or against the properties
then held by the Custodian or on or against the Custodian, and until full
payment shall have been made to the Custodian of all its fees, compensation,
costs and expenses, subject to the provisions of Section 10 of this Agreement.
This Agreement may not be assigned by the Custodian without the
consent of the Company, authorized or approved by a resolution of its Board of
Directors.
14. Deposits of Securities in Securities Depositories
No provision of this Agreement shall be deemed to prevent the use by
the Custodian of a central securities clearing agency or securities depository,
provided, however, that the Custodian and the central securities clearing
agency or securities depository meet all applicable federal and state laws and
regulations, including the requirements of the Investment Company Act, and the
Board of Directors of the Company approves by resolution the use of such
central securities clearing agency or securities depository.
15. Records
To the extent that the Custodian in any capacity prepares or maintains
any records required to be maintained and preserved by the Company pursuant to
the provisions of the Investment Company Act, the Custodian agrees to make any
such records available to the Company upon request and to preserve such records
for the periods prescribed in Rule 31a-2 under the Investment Company Act.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above
Attest: Firstar Trust Company
____________________________________ ___________________________________
By: By:
Its: Its:
Attest: Strong Institutional Funds, Inc.
____________________________________ ___________________________________
By: Ann E. Oglanian By: Lawrence A. Totsky
Its: Secretary Its: Vice President
7
<PAGE> 8
SCHEDULE A
The Fund(s) of the Company currently subject to this Agreement are as follows:
Fund(s) Date of Addition
------- to this Agreement
-----------------
Strong Institutional Money Fund
Attest: Firstar Trust Company
______________________ ______________________________
By: By:
Its: Its:
Attest: Strong Institutional Funds, Inc.
_______________________ ______________________________
By: Ann E. Oglanian By: Lawrence A. Totsky
Its: Secretary Its: Vice President
<PAGE> 9
SCHEDULE B
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
MUTUAL FUND CUSTODIAL AGENT SERVICE
ANNUAL FEE SCHEDULE FOR THE
STRONG MUTUAL FUNDS
EFFECTIVE JULY 1, 1993
Annual fee on the aggregate market value of all Strong Mutual Funds
$0.10 per $1,000 (one basis point) on the first $2 billion
$0.08 per $1,000 (.8 basis point) on the balance
Aggregate fee shall be apportioned among the funds(1) based upon
market value.
Investment transactions; (purchase, sale, exchange, tender,
redemption, maturity, receipt, delivery)
$ 9.00 per Depository Trust Company or Federal Reserve System
trade, automated and non-automated
$25.00 per definitive security (physical)
$ 8.50 per commercial paper trade
$50.00 per Euroclear
$ 6.00 per principal reduction on pass-through certificates
$35.00 per option/futures contract
$ 7.50 per variation margin transaction
$ 7.50 per Fed wire deposit or withdrawal
__________________________________
1 The term "fund" includes each series of a series company.
<PAGE> 1
EXHIBIT 99.B9
SHAREHOLDER SERVICING AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this ___ day of _____,
1995, between STRONG INSTITUTIONAL FUNDS, INC., a Wisconsin corporation
(the "Company"), on behalf of the Funds (as defined below) of the Company, and
STRONG CAPITAL MANAGEMENT, INC., a Wisconsin corporation ("Strong").
WITNESSETH
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940;
WHEREAS, the Company is authorized to create separate series, each
with its own separate investment portfolio, and the beneficial interest in each
such series will be represented by a separate series of shares (each series is
hereinafter individually referred to as a "Fund" and collectively, the
"Funds");
WHEREAS, the Company is authorized to issue shares of its $.01 par
value common stock (the "Shares") of each Fund;
WHEREAS, the Company desires to retain Strong as the shareholder
servicing agent of the Shares of each Fund on whose behalf this Agreement has
been executed.
NOW, THEREFORE, the Company and Strong do mutually agree and promise
as follows:
1. Appointment. The Company hereby appoints Strong to act as
shareholder servicing agent of the Shares of each Fund listed on Schedule A
hereto, as such Schedule may be amended from time to time. Strong shall, at
its own expense, render the services and assume the obligations herein set
forth subject to being compensated therefor as herein provided.
2. Authority of Strong. Strong is hereby authorized by the
Company to receive all cash which may from time to time be delivered to it by
or for the account of the Funds; to issue confirmations and/or certificates for
Shares of the Funds upon receipt of payment; to redeem or repurchase on behalf
of the Funds Shares upon receipt of certificates properly endorsed or properly
executed written requests as described in the current prospectus of each Fund
and to act as dividend disbursing agent for the Funds.
3. Duties of Strong. Strong hereby agrees to:
A. Process new accounts.
<PAGE> 2
B. Process purchases, both initial and subsequent, of
Fund Shares in accordance with conditions set forth
in the prospectus of each Fund as mutually agreed by
the Company and Strong.
C. Transfer Fund Shares to an existing account or to a
new account upon receipt of required documentation
in good order.
D. Redeem uncertificated and/or certificated shares upon
receipt of required documentation in good order.
E. Issue and/or cancel certificates as instructed;
replace lost, stolen or destroyed certificates upon
receipt of satisfactory indemnification or bond.
F. Distribute dividends and/or capital gain
distributions. This includes disbursement as cash or
reinvestment and to change the disbursement option at
the request of shareholders.
G. Process exchanges between Funds (process and direct
purchase/redemption and initiate new account or
process to existing account).
H. Make miscellaneous changes to records.
I. Prepare and mail a confirmation to shareholders as
each transaction is recorded in a shareholder
account. Duplicate confirmations to be available on
request within current year.
J. Handle phone calls and correspondence in reply to
shareholder requests except those items set forth in
Referrals to Company, below.
K. Prepare Reports for the Funds:
i. Monthly analysis of transactions and accounts
by types.
ii. Quarterly state sales analysis; sales by
size; analysis of systematic withdrawals,
Keogh, IRA and 403(b)(7) plans; print-out of
shareholder balances.
L. Perform daily control and reconciliation of Fund
Shares with Strong's records and the Company's
office records.
M. Prepare address labels or confirmations for four
reports to shareholders per year.
2
<PAGE> 3
N. Mail and tabulate proxies for one Annual Meeting of
Shareholders, including preparation of certified
shareholder list and daily report to Company
management, if required.
O. Prepare and mail required Federal income taxation
information to shareholders to whom dividends or
distributions are paid, with a copy for the IRS and a
copy for the Company if required.
P. Provide readily obtainable data which may from time
to time be requested for audit purposes.
Q. Replace lost or destroyed checks.
R. Continuously maintain all records for active and
closed accounts.
S. Furnish shareholder data information for a current
calendar year in connection with IRA and Keogh Plans
in a format suitable for mailing to shareholders.
4. Referrals to Company. Strong hereby agrees to refer to the
Company for reply the following:
A. Requests for investment information, including
performance and outlook.
B. Requests for information about specific plans (i.e.,
IRA, Keogh, Systematic Withdrawal).
C. Requests for information about exchanges between the
Funds.
D. Requests for historical Fund prices.
E. Requests for information about the value and timing
of dividend payments.
F. Questions regarding correspondence from the Company
and newspaper articles.
G. Any requests for information from non-shareholders.
H. Any other types of shareholder requests as the
Company may request from Strong in writing.
5. Compensation to Strong. Strong shall be compensated for its
services hereunder in accordance with the Shareholder Servicing Fee Schedule
(the "Fee Schedule") attached hereto as Schedule B and as such Fee Schedule may
from time to time be amended in writing between the two parties. The Company
will reimburse Strong for all out-of-pocket expenses, including, but not
3
<PAGE> 4
necessarily limited to, postage, confirmation forms, etc. Special projects,
not included in the Fee Schedule and requested by proper instructions from the
Company with respect to the relevant Funds, shall be completed by Strong and
invoiced to the Company and the relevant Funds as mutually agreed upon.
6. Rights and Powers of Strong. Strong's rights and powers with
respect to acting for and on behalf of the Company, including rights and powers
of Strong's officers and directors, shall be as follows:
A. No order, direction, approval, contract or obligation
on behalf of the Company with or in any way affecting Strong shall be
deemed binding unless made in writing and signed on behalf of the
Company by an officer or officers of the Company who have been duly
authorized to so act on behalf of the Company by its Board of
Directors.
B. Directors, officers, agents and shareholders of the
Company are or may at any time or times be interested in Strong as
officers, directors, agents, shareholders, or otherwise.
Correspondingly, directors, officers, agents and shareholders of
Strong are or may at any time or times be interested in the Company as
directors, officers, agents, shareholders or otherwise. Strong shall,
if it so elects, also have the right to be a shareholder of the
Company.
C. The services of Strong to the Company are not to be
deemed exclusive and Strong shall be free to render similar services
to others as long as its services for others do not in any manner or
way hinder, preclude or prevent Strong from performing its duties and
obligations under this Agreement.
D. The Company will indemnify Strong and hold it
harmless from and against all costs, losses, and expenses which may be
incurred by it and all claims or liabilities which may be asserted or
assessed against it as a result of any action taken by it without
negligence and in good faith, and for any act, omission, delay or
refusal made by Strong in connection with this agency in reliance upon
or in accordance with any instruction or advice of any duly authorized
officer of the Company.
7. Effective Date. This Agreement shall become effective as of
the date hereof.
8. Termination of Agreement. This Agreement shall continue in
force and effect until terminated or amended to such an extent that a new
Agreement is deemed advisable by either party. Notwithstanding anything herein
to the contrary, this Agreement may be terminated at any time, without payment
of any penalty, by the Company or Strong upon ninety (90) days' written notice
to the other party.
9. Amendment. This Agreement may be amended by the mutual
written consent of the parties. If, at any time during the existence of this
Agreement, the Company deems it necessary or advisable in the best interests of
Company that any amendment of this Agreement be made in order to
4
<PAGE> 5
comply with the recommendations or requirements of the Securities and Exchange
Commission or state regulatory agencies or other governmental authority, or to
obtain any advantage under state or federal laws, the Company shall notify
Strong of the form of amendment which it deems necessary or advisable and the
reasons therefor, and if Strong declines to assent to such amendment, the
Company may terminate this Agreement forthwith.
10. Notice. Any notice that is required to be given by the
parties to each other under the terms of this Agreement shall be in writing,
addressed and delivered, or mailed postpaid to the other party at the principal
place of business of such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed as of the day and year first stated above.
Attest: Strong Capital Management, Inc.
______________________________________ ___________________________________
Thomas P. Lemke, Senior Vice President John Dragisic, Vice Chairman
Attest: Strong Institutional Funds, Inc.
______________________________________ ___________________________________
Ann E. Oglanian, Secretary Lawrence A. Totsky, Vice President
5
<PAGE> 6
SCHEDULE A
The Fund(s) of the Company currently subject to this Agreement are as follows:
Date of Addition
Fund(s) to this Agreement
------- -----------------
Strong Institutional Money Fund
Attest: Strong Capital Management, Inc.
______________________________________ ____________________________________
Thomas P. Lemke, Senior Vice President John Dragisic, Vice Chairman
Attest: Strong Institutional Funds, Inc.
______________________________________ ____________________________________
Ann E. Oglanian, Secretary Lawrence A. Totsky, Vice President
6
<PAGE> 7
SCHEDULE B
SHAREHOLDER SERVICING FEE SCHEDULE
Until such time that this schedule is replaced or modified, Strong
Institutional Funds, Inc. (the "Company"), on behalf of each Fund set forth
on Schedule A to this Agreement, agrees to compensate Strong Capital
Management, Inc. ("Strong") for performing as shareholder servicing agent as
specified below per open Fund account, plus out-of-pocket expenses attributable
to the Company and the Fund(s).
Annual Rate per
Fund(s) Open Fund Account
------- -----------------
Strong Institutional Money Fund $
Out-of-pocket expenses include, but are not limited to, the following:
1. All materials, paper and other costs associated with necessary
and ordinary shareholder correspondence.
2. Postage and printing of confirmations, statements, tax forms
and any other necessary shareholder correspondence. Printing
is to include the cost of printing account statements and
confirmations by third-party vendors as well as the cost of
printing the actual forms.
3. The cost of mailing (sorting, inserting, etc.) by third-party
vendors.
4. All banking charges of Company, including deposit slips and
stamps, checks and share drafts, wire fees not paid by
shareholders, and any other deposit account or checking
account fees.
5. The cost of storage media for Company records, including phone
recorder tapes, microfilm and microfiche, forms and paper.
6. Offsite storage costs for older Company records.
7. Charges incurred in the delivery of Company materials and mail.
8. Any costs for outside contractors used in providing necessary
and ordinary services to the Company, a Fund or shareholders,
not contemplated to be performed by Strong.
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<PAGE> 8
9. Any costs associated with enhancing, correcting or developing
the record keeping system currently used by the Company,
including the development of new statement or tax form
formats.
For purposes of calculating Strong's compensation pursuant to this
Agreement, all subaccounts which hold shares in a Fund through 401(k) plans,
401(k) alliances, and financial institutions, such as insurance companies,
broker/dealers, and investment advisors shall be treated as direct open
accounts of the Fund upon approval of such arrangement by the Company's Board
of Directors. Out-of-pocket expenses will be charged to the applicable Fund,
except for those out-of-pocket expenses attributable to the Company in general,
which shall be charged pro rata to each Fund.
In addition, a Fund will pay a fee for closed accounts at an annual
rate of $____ per account. All fees will be billed to the Company monthly
based upon the number of open and closed accounts existing on the last day of
the month plus any out-of-pocket expenses paid by Strong during the month.
These fees are in addition to any fees the Company may pay Strong for providing
investment management services or for underwriting the sale of Company shares.
Attest: Strong Capital Management, Inc.
______________________________________ ____________________________________
Thomas P. Lemke, Senior Vice President John Dragisic, Vice Chairman
Attest: Strong Institutional Funds, Inc.
______________________________________ ____________________________________
Ann E. Oglanian, Secretary Lawrence A. Totsky, Vice President
8
<PAGE> 1
EXHIBIT 99.B13
STRONG INSTITUTIONAL FUNDS, INC. -
STRONG INSTITUTIONAL MONEY FUND
STOCK SUBSCRIPTION AGREEMENT
To the Board of Directors of Strong Institutional Funds, Inc.:
The undersigned purchaser (the "Purchaser") hereby subscribes to
100,000 shares (the "Shares") of common stock, $.01 par value (the "Common
Stock"), of Strong Institutional Funds, Inc. - Strong Institutional Money Fund
in consideration for which the Purchaser agrees to transfer to you upon demand
cash in the amount of One Hundred Thousand Dollars ($100,000).
It is understood that a certificate representing the Shares shall be
issued to the undersigned upon request at any time after receipt by you of
payment therefore, and said Shares shall be deemed fully paid and
nonassessable, except to the extent provided in Section 180.0622(2)(b) of the
Wisconsin Statutes, as interpreted by courts of competent jurisdiction, or any
successor provision to said Section 180.0622(2)(b).
The Purchaser agrees that the Shares are being purchased for
investment with no present intention of reselling or redeeming said Shares.
Dated and effective this _____ day of _______, 1995.
Strong Capital Management, Inc.
By: _________________________
Ronald A. Neville
Senior Vice President
ACCEPTANCE
The foregoing subscription is hereby accepted. Dated and effective as
of this _____ day of _______, 1995.
STRONG INSTITUTIONAL FUNDS, INC. -
STRONG INSTITUTIONAL MONEY FUND
By: _________________________
Lawrence A. Totsky
Vice President
Attest: _____________________
Ann E. Oglanian
Secretary
