<PAGE>
[PHOTO]
[LOGO OF STRONG]
The Strong
INTERNATIONAL STOCK
Fund II
<TABLE>
<S> <C>
Investment Review
The Strong International Stock Fund II............................ 2
Financial Information
Schedule of Investments in Securities............................. 4
Statement of Assets and Liabilities............................... 5
Statement of Operations........................................... 6
Statements of Changes in Net Assets............................... 7
Notes to Financial Statements..................................... 8
Financial Highlights................................................ 11
</TABLE>
Semi-Annual Report . June 30, 2000
<PAGE>
THE STRONG INTERNATIONAL STOCK FUND II
--------------------------------------------------------------------------------
Fund highlights
. The Fund returned -11.91% for the six months ended June 30, 2000. The MSCI
EAFE Index, the Fund's benchmark, returned -4.06% for the same period./1/, *
. The Fund's performance was primarily driven by the portfolio's emphasis on
three dominant sectors: technology, media, and telecommunications. In
addition, the portfolio focused primarily on highly profitable companies with
dominant market share.
. We increased our weighting in a few battered old economy stocks with
attractively low valuations.
--------------------------------------------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS/1/
As of 6-30-00
1-year 48.20%
3-year 7.71%
Since Inception 9.60%
(on 10-20-95)
Equity funds are volatile investments and should only be considered for long-
term goals.
--------------------------------------------------------------------------------
FIVE LARGEST HOLDINGS
BY COUNTRY
As of 6-30-00
Country % of Net Assets
Japan 17.0%
United Kingdom 15.8%
Netherlands 14.1%
France 9.7%
Canada 8.7%
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
Perspectives from the Manager
/s/ David Lui
David Lui
Portfolio Manager
--------------------------------------------------------------------------------
During this period, several countries in addition to the United States raised
their interest rates for various reasons. The European Central Bank raised rates
to defend the Euro. The Japanese Central Bank raised interest rates in order to
stem the outflow of postal savings deposits and to raise the value of Japanese
assets to foreigners. We believe the Japanese government and the Japanese
Central Bank both appreciate the importance of a rising stock market and its
ability to lift the country out of a ten-year recession. While the United
States, Europe, and Japan were raising rates simultaneously, they were doing so
independently. Nevertheless, it remains a big concern to us. We believe that the
global stock markets will not be making big upward moves until the tightening
cycle is over.
On the other hand, the economic fundamentals in Europe could not be better. The
weak Euro makes European companies much more competitive than U.S. and Japanese
companies. Moreover, a weak Euro benefits the old economy stocks--the
manufacturing companies--more than new economy stocks. Therefore, we recently
started new positions in British Aerospace, British Airways, British Petroleum,
engineering company GKN, Netherlands-based health- and baby-food company Numico,
and the Germany company Adidas.
We did continue investing in technology and telecom stalwarts, although we did
trim our technology holdings from 55.3% at the beginning of the period to 39.5%
at the end. Mobile telephony is upgrading from voice to
--------------------------------------------------------------------------------
We believe that the global
stock markets will not be making big
upward moves until the tightening
cycle is over.
--------------------------------------------------------------------------------
/1/ The Fund's returns include the effect of deducting fund expenses, but do not
include charges and expenses attributable to any particular insurance
product. Excluding such fees and expenses from the Fund's return quotations
has the effect of increasing performance quoted. Average annual total return
and total return measure change in the value of an investment in the Fund,
assuming reinvestment of all dividends and capital gains. Average annual
total return reflects annualized change, while total return reflects
aggregate change and is not annualized.
2
<PAGE>
Internet, which should provide another surge in demand for a new generation of
cellular phones.
Although the global stock markets remain about 10% to 20% from their all-time
highs, we see little likelihood of a stock market correction. However, we do
expect more turbulence ahead. We concluded that risks in the global stock
markets have risen enough that we would like to reduce the risk profile of the
portfolio. That is why we held onto the high-quality issues such as Nokia and
STMicroelectronics and why we increased the exposure to a few old economy stocks
that we thought were oversold. We believe that the remainder of the year will be
an exciting ride, and hopefully you will be on the ride with us.
Thank you for your continued investment in the Strong International Stock Fund
II.
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 10-20-95 to 6-30-00
<TABLE>
<CAPTION>
The Strong International Stock Fund II MSCI EAFE Index* Lipper International Funds Index*
<S> <C> <C> <C>
Sep 95 $10,000 $10,000 $10,000
Oct 95 $10,090 $ 9,812 $ 9,926
Dec 95 $10,261 $10,491 $10,320
Dec 96 $11,326 $11,125 $11,809
Dec 97 $ 9,795 $11,323 $12,665
Dec 98 $ 9,327 $13,588 $14,269
Dec 99 $17,460 $17,251 $19,668
Jun 00 $15,380 $16,551 $18,859
</TABLE>
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with the performance of the
Morgan Stanley Capital International Europe, Australasia, and Far East Index
("MSCI EAFE") and the Lipper International Funds Index. Results include the
reinvestment of all dividends and capital gains distributions. Performance is
historical and does not represent future results. Investment returns and
principal value vary, and you may have a gain or loss when you sell shares. To
equalize time periods, the indexes' performances were prorated for the month of
October 1995.
--------------------------------------------------------------------------------
YOUR FUND'S
approach
The Strong International Stock Fund II seeks capital growth. It selects stocks
from any foreign country. The manager seeks stocks that appear to have strong
growth potential relative to their risk using a three-step investment process
involving country allocation, intensive in-house research, and currency
management. The manager examines the economic outlook of individual countries in
determining whether to invest and chooses individual stocks based on rigorous,
in-depth analysis, which may include interviews with company leaders.
MARKET
highlights
. Western Europe led international markets over the past six months.
Unfortunately, the European Central Bank was forced to raise interest rates
to defend the Euro and, as a result, capped Europe's stock markets.
. The Japanese market treaded water. The rest of Asia was more influenced by
the U.S. interest-rate cycle than any other region represented in the MSCI
EAFE Index.* Australia was also hampered by multiple rate increases by the
Reserve Bank of Australia, which was concerned about inflation and that
nation's weak dollar.
*The MSCI EAFE is an unmanaged index generally representative of major overseas
stock markets. MSCI EAFE data is U.S. dollar adjusted. The Lipper International
Funds Index is an equally weighted performance index of the largest qualifying
funds in this Lipper category. Source of the MSCI index data is Standard &
Poor's Micropal. Source of the Lipper index data is Lipper Inc.
3
<PAGE>
SCHEDULE OF INVESTMENTS IN SECURITIES June 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
STRONG INTERNATIONAL STOCK FUND II
<TABLE>
<CAPTION>
Shares or
Principal Value
Amount (Note 2)
--------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks 104.9%
Australia 3.0%
TABCORP Holdings, Ltd. 507,700 $ 2,907,781
Canada 8.7%
Exfo Electro-Optical Engineering, Inc. (b) 3,500 153,562
Nortel Networks Corporation 90,200 6,156,150
Rogers Communications, Inc. Class B (b) 38,100 1,080,148
Shaw Communications, Inc. Class B 47,700 1,176,624
------------
8,566,484
Egypt 0.0%
Suez Cement (b) 11 110
Finland 6.2%
Nokia Oyj 119,700 6,092,142
France 9.7%
BNP Paribas 10,700 1,027,005
Lafarge SA 11,400 883,603
Lagardere S.C.A 23,700 1,805,371
NRJ SA 1,500 771,282
Societe Generale 20,780 1,246,563
Societe Television Francaise (b) 26,000 1,807,276
Thomson Multimedia (b) 31,600 2,040,069
------------
9,581,169
Germany 1.0%
Adidas-Salomon AG 17,200 946,639
Hong Kong 8.2%
China Telecom, Ltd. (b) 94,000 829,004
Hutchison Whampoa, Ltd. 104,500 1,313,707
Johnson Electric Holdings, Ltd. 246,500 2,332,035
Li & Fung, Ltd. 720,000 3,602,078
------------
8,076,824
India 0.6%
ICICI, Ltd. Sponsored ADR 29,000 543,750
UTI-Mastergrowth 93 Fund 11,500 5,673
------------
549,423
Italy 7.1%
Bipop-Carire Spa 300,000 2,350,982
Mediaset Spa 73,300 1,123,022
Mediolanum Spa 149,300 2,428,152
Telecom Italia Mobile Spa 112,100 1,142,135
------------
7,044,291
Japan 17.0%
Daiwa Securities Group, Inc. 320,000 4,227,612
Fuji Television Network, Inc. 95 1,488,157
Keyence Corporation 3,600 1,189,016
NTT DoCoMo, Inc. 57 1,543,739
Nippon Television Network Corporation 1,140 743,362
Nomura Securities Company, Ltd. 121,000 2,963,056
Rohm Company, Ltd. 4,000 1,170,142
Takeda Chemical Industries, Ltd. 16,000 1,050,863
Tokyo Electron, Ltd. 17,000 2,329,338
------------
16,705,285
Mexico 2.7%
Fomento Economico Mexicano SA de CV
Sponsored ADR 25,300 1,089,481
Telefonos de Mexico SA ADR Series L 27,400 1,565,225
------------
2,654,706
Netherlands 14.1%
ASM Lithography Holding NV (b) 110,400 4,738,288
Koninklijke Numico NV 39,400 1,864,579
STMicroelectronics NV 98,400 6,183,968
Verenigde Nederlandse Uitgeversbedrijven NV 21,700 1,117,854
------------
13,904,689
Portugal 0.9%
Portugal Telecom SA 77,100 863,356
Singapore 1.0%
Singapore Press Holdings, Ltd. 63,300 989,063
Spain 0.8%
Banco Santander Central Hispano SA 75,326 792,566
Sweden 3.2%
Skandia Forsakrings AB 116,900 3,100,478
Switzerland 2.9%
Adecco SA 2,161 1,834,474
Novartis AG Sponsored ADR 26,400 1,056,000
------------
2,890,474
Taiwan 2.0%
Taiwan Semiconductor Manufacturing Company,
Ltd. Sponsored ADR (b) 49,600 1,922,000
United Kingdom 15.8%
BAA PLC 129,000 1,036,831
BAE SYSTEMS PLC 183,500 1,146,504
BG Group PLC 155,500 1,006,933
BP Amoco PLC Sponsored ADR 57,500 3,252,344
British Airways PLC 247,800 1,427,997
Energis PLC (b) 64,100 2,408,806
GKN PLC 88,600 1,132,671
Lloyds TSB Group PLC 164,700 1,558,549
Railtrack Group PLC 70,400 1,095,908
Scottish & Newcastle PLC 114,800 939,238
Vodafone AirTouch PLC 138,767 561,875
------------
15,567,656
------------------------------------------------------------------------
Total Common Stocks (Cost $67,938,091) 103,155,136
------------------------------------------------------------------------
Short-Term Investments (a) 13.3%
Commercial Paper 0.0%
Interest Bearing, Due Upon Demand
United States
United States Cayman Eurodollar
Call Deposit, 5.50% $ 3,000 3,000
Time Deposits 13.3%
United States
Bank of Scotland, 7.125%, Due 7/03/00 6,600,000 6,600,000
Wachovia Winston Grand Cayman, 6.65%,
Due 7/03/00 6,500,000 6,500,000
------------
13,100,000
------------------------------------------------------------------------
Total Short-Term Investments (Cost $13,103,000) 13,103,000
------------------------------------------------------------------------
------------------------------------------------------------------------
Total Investments in Securities
(Cost $81,041,091) 118.2% 116,258,136
Other Assets and Liabilities, Net (18.2%) (17,878,536)
------------------------------------------------------------------------
Net Assets 100.0% $ 98,379,600
========================================================================
</TABLE>
LEGEND
------------------------------------------------------------------------
(a) Short-term investments include any security which has a maturity of
less than one year.
(b) Non-income producing security.
Percentages are stated as a percent of net assets.
4 See Notes to Financial Statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Strong International
Stock Fund II
--------------------
<S> <C>
Assets:
Investments in Securities, at Value (Cost of $81,041,091) $ 116,258,136
Dividends and Interest Receivable 215,655
Other Assets 11,648
-------------
Total Assets 116,485,439
Liabilities:
Payable for Securities Purchased 91,000
Payable for Fund Shares Redeemed 17,964,644
Accrued Operating Expenses and Other Liabilities 50,195
-------------
Total Liabilities 18,105,839
-------------
Net Assets $ 98,379,600
=============
Net Assets Consist of:
Capital Stock (par value and paid-in capital) $ 69,266,432
Accumulated Net Investment Loss (8,509
Accumulated Net Realized Loss (6,096,062
Net Unrealized Appreciation 35,217,739
-------------
Net Assets $ 98,379,600
=============
Capital Shares Outstanding (Unlimited Number Authorized) 6,823,173
Net Asset Value Per Share $ 14.42
=============
</TABLE>
See Notes to Financial Statements. 5
<PAGE>
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Strong International
Stock Fund II
--------------------
<S> <C>
Income:
Dividends (net of foreign withholding taxes of $60,149) $ 636,672
Interest 112,181
------------
Total Income 748,853
Expenses:
Investment Advisory Fees 623,315
Custodian Fees 103,788
Shareholder Servicing Costs 99,274
Interest Expense 128,566
Other 20,137
------------
Total Expenses before Fees Paid Indirectly by Advisor 975,080
Fees Paid Indirectly by Advisor (Note 3) (217,718)
------------
Expenses, Net 757,362
------------
Net Investment Loss (8,509)
Realized and Unrealized Gain (Loss):
Net Realized Gain (Loss) on:
Investments 13,213,399
Futures Contracts and Forward Foreign Currency Contracts (1,400,291)
Foreign Currencies (132)
------------
Net Realized Gain 11,812,976
Net Change in Unrealized Appreciation/Depreciation on:
Investments (19,173,654)
Futures Contracts and Forward Foreign Currency Contracts (851,387)
Foreign Currencies 2,783
------------
Net Change in Unrealized Appreciation/Depreciation (20,022,258)
------------
Net Loss on Investments (8,209,282)
------------
Net Decrease in Net Assets Resulting from Operations ($ 8,217,791)
============
</TABLE>
6 See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Strong International Stock Fund II
--------------------------------------
Six Months Ended Year Ended
June 30, 2000 Dec. 31, 1999
---------------- ----------------
(Unaudited)
<S> <C> <C>
Operations:
Net Investment Loss ($ 8,509) ($ 113,481)
Net Realized Gain 11,812,976 749,983
Net Change in Unrealized Appreciation/Depreciation (20,022,258) 50,223,820
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations (8,217,791) 50,860,322
Distributions From Net Investment Income -- (177,022)
Capital Share Transactions:
Proceeds from Shares Sold 413,512,713 209,610,228
Proceeds from Reinvestment of Distributions -- 177,022
Payment for Shares Redeemed (432,231,914) (182,434,715)
------------ ------------
Net Increase (Decrease) in Net Assets from Capital Share Transactions (18,719,201) 27,352,535
------------ ------------
Total Increase (Decrease) in Net Assets (26,936,992) 78,035,835
Net Assets:
Beginning of Period 125,316,592 47,280,757
------------ ------------
End of Period $ 98,379,600 $125,316,592
============ ============
Transactions in Shares of the Fund:
Sold 26,766,580 19,257,000
Issued in Reinvestment of Distributions -- 19,869
Redeemed (27,598,446) (17,009,003)
------------ ------------
Net Increase (Decrease) in Shares of the Fund (831,866) 2,267,866
============ ============
</TABLE>
See Notes to Financial Statements. 7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
June 30, 2000 (Unaudited)
1. Organization
Strong International Stock Fund II is a diversified series of Strong
Variable Insurance Funds, Inc., an open-end management investment company
registered under the Investment Company Act of 1940, as amended. The Fund
offers and sells its shares only to separate accounts of insurance
companies for the purpose of funding variable annuity and variable life
insurance contracts. At June 30, 2000, approximately 85% of the Fund's
shares were owned by the separate accounts of one insurance company.
2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
(A) Security Valuation -- Securities of the Fund are valued at fair value
through valuations obtained by a commercial pricing service or the
mean of the bid and asked prices when no last sales price is
available. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith under
consistently applied procedures established by and under the general
supervision of the Board of Directors. Securities which are purchased
within 60 days of their stated maturity are valued at amortized cost,
which approximates fair value.
The Fund may own certain investment securities which are restricted as
to resale. These securities are valued after giving due consideration
to pertinent factors, including recent private sales, market
conditions and the issuer's financial performance. The Fund generally
bears the costs, if any, associated with the disposition of restricted
securities. The Fund held no restricted securities at June 30, 2000.
(B) Federal Income and Excise Taxes and Distributions to Shareholders --
The Fund intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders
in a manner which results in no tax cost to the Fund. Therefore, no
federal income or excise tax provision is required.
Net investment income or net realized gains for financial statement
purposes may differ from the characterization for federal income tax
purposes due to differences in the recognition of income and expense
items for financial statement and tax purposes. Where appropriate,
reclassifications between net asset accounts are made for such
differences that are permanent in nature.
The Fund generally pays dividends from net investment income and
distributes any net capital gains that it realizes annually.
(C) Realized Gains and Losses on Investment Transactions -- Investment
security transactions are recorded as of the trade date. Gains or
losses realized on investment transactions are determined on a
first-in, first-out basis.
(D) Certain Investment Risks -- The Fund may utilize derivative
instruments including options, futures and other instruments with
similar characteristics to the extent that they are consistent with
the Fund's investment objectives and limitations. The Fund intends to
use such derivative instruments primarily to hedge or protect from
adverse movements in securities prices or interest rates. The use of
these instruments may involve risks such as the possibility of
illiquid markets or imperfect correlation between the value of the
instruments and the underlying securities, or that the counterparty
will fail to perform its obligations.
Investments in foreign denominated assets or forward currency
contracts may involve greater risks than domestic investments due to
currency, political, economic, regulatory and market risks.
(E) Futures -- Upon entering into a futures contract, the Fund pledges to
the broker cash or other investments equal to the minimum "initial
margin" requirements of the exchange. Additional securities held by
the Fund may be designated as collateral on open futures contracts.
The Fund also receives from or pays to the broker an amount of cash
equal to the daily fluctuation in the value of the contract. Such
receipts or payments are known as "variation margin" and are recorded
as unrealized gains or losses. When the futures contract is closed, a
realized gain or loss is recorded equal to the difference between the
value of the contract at the time it was opened and the value at the
time it was closed.
(F) Options -- The Fund may write put or call options (none were written
during the period). Premiums received by the Fund upon writing put or
call options are recorded as an asset with a corresponding liability
which is subsequently adjusted to the current market value of the
option. Changes between the initial premiums received and the current
market value of the options are recorded as unrealized gains or
losses. When an option expires, is exercised, or is closed, the Fund
realizes a gain or loss, and the liability is eliminated. The Fund
continues to bear the risk of adverse movements in the price of the
underlying asset during the period of the option, although any
potential loss during the period would
8
<PAGE>
be reduced by the amount of the option premium received. Securities
held by the Fund may be designated as collateral on written options.
(G) Foreign Currency Translation -- Investment securities and other assets
and liabilities initially expressed in foreign currencies are
converted daily to U.S. dollars based upon current exchange rates.
Purchases and sales of foreign investment securities and income are
converted to U.S. dollars based upon currency exchange rates
prevailing on the respective dates of such transactions. The effect of
changes in foreign exchange rates on realized and unrealized security
gains or losses is reflected as a component of such gains or losses.
(H) Forward Foreign Currency Exchange Contracts -- Forward foreign
currency exchange contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the Fund records
an exchange gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it
was closed.
(I) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts in these financial statements. Actual results could differ
from those estimates.
(J) Other -- Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on the
accrual basis and includes amortization of premium and discounts.
3. Related Party Transactions
Strong Capital Management, Inc. (the "Advisor"), with whom certain officers
and directors of the Fund are affiliated, provides investment advisory
services and shareholder recordkeeping and related services to the Fund.
Investment advisory fees, which are established by terms of the Advisory
Agreement, are based on an annualized rate of 1.00% of the average daily
net assets of the Fund. Based on the terms of the Advisory Agreement,
advisory fees and other expenses will be waived or absorbed by the Advisor
if the Fund's operating expenses exceed 2% of the average daily net assets
of the Fund. In addition, the Fund's Advisor may voluntarily waive or
absorb certain expenses at its discretion. Shareholder recordkeeping and
related service fees are based on the lesser of various agreed-upon
contractual percentages of the average daily net assets of the Fund or a
contractually established rate for each participant account. The Advisor
also allocates to the Fund certain charges or credits resulting from
transfer agency banking activities based on the Fund's level of
subscription and redemption activity. Charges allocated to the Fund by the
Advisor are included in Other Expenses in the Fund's Statement of
Operations. Credits allocated by the Advisor serve to reduce the
shareholder servicing expenses incurred by the Fund and are reported as
Fees Paid Indirectly by Advisor in the Fund's Statement of Operations. The
Advisor is also compensated for certain other services related to costs
incurred for reports to shareholders.
The Fund may invest cash in money market funds sponsored and managed by the
Advisor, subject to certain limitations. The terms of such transactions are
identical to those of non-related entities except that, to avoid duplicate
investment advisory fees, advisory fees of the Fund are reduced by an
amount equal to advisory fees paid to the Advisor under its investment
advisory agreement with the money market funds.
The amount payable to the Advisor at June 30, 2000, shareholder servicing
and other expenses paid to the Advisor, transfer agency banking credits and
unaffiliated directors' fees for the six months then ended, were $21,583,
$99,274, $217,718 and $2,402, respectively.
4. Line of Credit
The Strong Funds have established a line of credit agreement ("LOC") with
certain financial institutions to be used for temporary or emergency
purposes, primarily for financing redemption payments. Combined borrowings
among all participating Strong Funds are subject to a $350 million cap on
the total LOC. For an individual Fund, borrowings under the LOC are limited
to either the lesser of 15% of the market value of the Fund's total assets
or any explicit borrowing limits in the Fund's prospectus. Principal and
interest on each borrowing under the LOC are due not more than 60 days
after the date of the borrowing. Borrowings under the LOC bear interest
based on prevailing market rates as defined in the LOC. A commitment fee of
0.08% per annum is incurred on the unused portion of the LOC and is
allocated to all participating Strong Funds. At June 30, 2000, there were
no borrowings by the Fund outstanding under the LOC.
5. Investment Transactions
The aggregate purchases and sales of long-term securities, other than
long-term government securities, for the six months ended June 30, 2000
were $73,445,692 and $101,657,132, respectively. There were no purchases or
sales of long-term government securities during the six months ended June
30, 2000.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
--------------------------------------------------------------------------------
June 30, 2000 (Unaudited)
6. Income Tax Information
At June 30, 2000, the cost of investments in securities for federal income
tax purposes was $82,496,762. Net unrealized appreciation of securities was
$33,761,374 consisting of gross unrealized appreciation and depreciation of
$37,872,014 and $4,110,640, respectively. At December 31, 1999, the Fund
had a capital loss carryover of $15,488,899, which expires in 2006.
10
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
STRONG INTERNATIONAL STOCK FUND II
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period Ended
-----------------------------------------------------------------------------
June 30, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
Selected Per-Share Data/(a)/ 2000/(b)/ 1999 1998 1997 1996 1995/(c)/
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 16.37 $ 8.78 $ 9. 32 $ 11.23 $ 10.22 $ 10.00
Income From Investment Operations:
Net Investment Income (Loss) -- (0.01) 0.03 0.06 0.03 0.01
Net Realized and Unrealized Gains (Losses)
on Investments (1.95) 7.64 (0.46) (1.50) 1.03 0.25
-------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.95) 7.63 (0.43) (1.44) 1.06 0.26
Less Distributions:
From Net Investment Income -- (0.04) (0.11) (0.06) (0.03) (0.01)
In Excess of Net Investment Income -- -- -- (0.12) (0.02) (0.03)
From Net Realized Gains -- -- -- (0.29) -- --
-------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.04) (0.11) (0.47) (0.05) (0.04)
-------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 14.42 $ 16.37 $ 8.78 $ 9.32 $ 11.23 $ 10.22
===============================================================================================================================
Ratios and Supplemental Data
-------------------------------------------------------------------------------------------------------------------------------
Total Return -11.9% +87.2% -4.8% -13.5% +10.4% +2.6%
Net Assets, End of Period (In Millions) $ 98 $ 125 $ 47 $ 60 $ 75 $ 2
Ratio of Expenses to Average Net Assets without
Fees Paid Indirectly by Advisor 1.6%* 1.3% 1.6% 1.5% 1.9% 2.0%*
Ratio of Expenses to Average Net Assets 1.2%* 1.2% 1.6% 1.5% 1.9% 2.0%*
Ratio of Net Investment Income (Loss) to
Average Net Assets 0.0%* (0.2%) 0.3% 0.6% 0.4% 1.0%*
Portfolio Turnover Rate 59.6% 80.8% 255.2% 169.2% 126.0% 26.9%
</TABLE>
* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the Fund
outstanding for the entire period.
(b) For the six months ended June 30, 2000 (unaudited).
(c) For the period from October 20, 1995 (inception) to December 31, 1995.
See Notes to Financial Statements. 11
<PAGE>
RT5370-0700
