<PAGE>
================================================================================
THE STRONG
GROWTH FUND II
SEMI-ANNUAL REPORT o JUNE 30, 1997
[PICTURE OF PIE CHART OF ASSET DIVERSIFICATION EMPHASIZING STOCKS]
[STRONG FUNDS LOGO]
STRONG FUNDS
<PAGE>
================================================================================
THE STRONG
GROWTH FUND II
SEMI-ANNUAL REPORT o JUNE 30, 1997
TABLE OF CONTENTS
INVESTMENT REVIEW
The Strong Growth Fund II ........................................... 2
FINANCIAL INFORMATION
Schedule of Investments in Securities ............................... 4
Statement of Assets and Liabilities ................................. 6
Statement of Operations ............................................. 7
Statement of Changes in Net Assets .................................. 8
Notes to Financial Statements ....................................... 9
FINANCIAL HIGHLIGHTS .....................................................11
<PAGE>
THE STRONG GROWTH FUND II
WE'RE SEEING THE MARKET MOVE MORE TOWARD THE STYLE OF INVESTING THAT HAS ALLOWED
THIS FUND TO POST STRONG RETURNS IN THE RECENT PAST.
The Strong Growth Fund II seeks capital growth. The Fund invests primarily in
equity securities that the Fund's Advisor believes have above-average growth
prospects.
=================================
ASSET ALLOCATION
Based on net assets as of 6-30-97
[PIE CHART]
Stocks 94.0%
Short-Term Investments 6.0%
=================================
===========================================
TOP FIVE SECTORS
As of 6-30-97
Sector % of Net Assets
- -------------------------------------------
Technology 25.8%
...........................................
Healthcare 19.1%
...........................................
Financial 16.0%
...........................................
Consumer Cyclical 8.4%
...........................................
Retail 8.3%
...........................................
Please see the Schedule of Investments in
Securities for a complete listing of the
Fund's portfolio.
===========================================
A NARROW, BUT BROADENING MARKET
The past six months have been challenging for Funds not solely tied to large-cap
stocks. That's because the market has been driven primarily by a rush to the
very largest companies in the market. Even the S&P 500, itself a somewhat
exclusive group of 500 of the largest companies, has seen its performance driven
by just a handful of its biggest stocks.* Thus the benchmark has become less and
less reflective of what's happening in the broader market.
What's very positive is that we're finally seeing the market move more toward
the style of investing that has allowed this Fund to post strong returns.
Perhaps the clearest evidence of this broadening of the market's strength is our
return for the second quarter of this year, a healthy 16.98%. That's only a
shade behind the S&P 500's return for the same period. Given that our return for
the six months ended June 30 is 13.70%, it signifies a real improvement in the
broader market--and in the type of stocks we pick.(1)
WHAT'S DRIVING THE FUND
A look at some of the stocks, sectors and themes that have driven our recent
performance shows much about the criteria we use as we invest.
o Pharmaceuticals maker Warner-Lambert, currently our largest holding, has
been on a tear with the early success of two new drugs, Lipitor (for high
blood cholesterol) and Rezulin (an oral diabetes medication). These are
projected to become some of the fastest growing new drugs ever. We selected
Warner-Lambert not only for its strong fundamentals and its reasonable
valuation, but also for the strength and improvement we perceived in its
competitive position. In addition to these two new products, the company
has several other new drugs in the pipeline, as well as an array of
successful, established brands.
Our investment in Warner-Lambert also reflects one of the recurring themes
of this Fund: investing in health-care related companies, which stand to
benefit from the aging U.S. population. We continue to overweight this
sector.
o Kohl's, a department store chain, is a smaller but still important stock
for the Fund. Based in our back yard in Menomonee Falls, Kohl's has been
steadily picking up steam. Its expansion in the Washington-Philadelphia
corridor has been successful, and its comparable-store sales have enjoyed
double-digit growth. Our focus on the company's financial strength, and our
direct, on-site research, helped us to select this stock at an attractive
valuation.
================================================================================
FIVE LARGEST STOCK HOLDINGS
As of 6-30-97
% OF NET
SECURITY INDUSTRY ASSETS
- --------------------------------------------------------------------------------
Warner-Lambert Company Healthcare-Drug/Diversified 3.0%
................................................................................
Danka Business Systems Office Automation 2.9%
PLC Sponsored ADR
................................................................................
HEALTHSOUTH Corporation Healthcare-Patient Care 2.4%
................................................................................
Pfizer, Inc. Healthcare-Drug/Diversified 2.3%
................................................................................
Eli Lilly & Company Healthcare-Drug/Diversified 2.1%
................................................................................
Please see the Schedule of Investments in Securities for a complete listing of
the Fund's portfolio.
================================================================================
2
<PAGE>
o Oil services and drilling has been an important sector. We've been
investing with this theme for some time, and it appears to us that it still
has a couple of years left to run. Driving this sector has been new
exploration; as this activity has paid off with new oil reserves, it has
added to these companies' earnings power.
o We've also enjoyed success as the market has favored other themes of ours,
including technology and financials.
We ask investors to consider the Strong Growth Fund II a long-term investment,
and that's how we'll continue to invest ourselves. We will stick with what we
consider to be the best strategy for the long term--looking among small-,
medium-, and large-cap companies for the highest-quality firms with reasonable
valuations in sectors that are poised for growth. We believe we have positioned
the portfolio to benefit from the broadening of the bull market that has begun,
and that we anticipate will continue.
We thank you for your investment with the Strong Growth Fund II, and appreciate
your continued support. We look forward to helping you pursue your important
financial goals for years to come.
[PHOTO OF RONALD C. OGNAR]
Sincerely,
/s/Ronald C. Ognar
Ron Ognar
Portfolio Manager
================================================================================
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 12-31-96 to 6-30-97
[GRAPH]
Strong Growth S & P 500 Lipper Growth
Fund II Index Funds Index
------- ----- -----------
12-96 10,000 10,000 10,000
1-97 10,720 10,625 10,525
2-97 10,320 10,708 10,444
3-97 9,720 10,268 9,966
4-97 10,110 10,881 10,404
5-97 10,830 11,544 11,124
6-97 11,370 12,061 11,540
This graph, provided in accordance with SEC regulations, compares a $10,000
investment in the Fund, made at its inception, with a similar investment in the
Standard & Poor's 500 Stock Index ("S&P 500") and the Lipper Growth 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.
================================================================================
TOTAL RETURN(1)
As of 6-30-97
Since Inception 13.70%
(on 12-31-96)
==============================
* The S&P 500 is an unmanaged index generally representative of the U.S.
stock market, without regard to company size. The Lipper Growth Funds Index
is an equally-weighted performance index of the largest funds in this
Lipper category. Source of the S&P index data is Micropal. Source of the
Lipper index data is Lipper Analytical Services, Inc.
1 Total return is not annualized and measures aggregate change in the value
of an investment in the Fund, assuming reinvestment of dividends. The
Fund's returns include the effect of deducting the Fund's expenses, but do
not include charges and expenses attributable to any particular insurance
product. Including such insurance fees and expenses from the Fund's return
quotations has the effect of decreasing the performance quoted.
3
<PAGE>
SCHEDULE OF INVESTMENTS IN SECURITIES June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
COMMON STOCKS 94.0%
AIRLINE 1.0%
Midwest Express Holdings, Inc. (b) 150 $ 4,106
BANK - MONEY CENTER 1.4%
Citicorp 50 6,028
BANK - REGIONAL 2.6%
First Bank System, Inc. 100 8,537
Northern Trust Company 50 2,419
--------
10,956
BANK - SUPER REGIONAL 0.7%
Norwest Corporation 50 2,813
BEVERAGE - SOFT DRINK 0.9%
PepsiCo, Inc. 100 3,756
BROKERAGE & INVESTMENT MANAGEMENT 2.2%
Franklin Resources, Inc. 100 7,256
The Charles Schwab Corporation 50 2,034
--------
9,290
CHEMICAL 0.5%
Monsanto Company 50 2,153
COMMERCIAL SERVICE 2.3%
Accustaff, Inc. (b) 100 2,369
Outdoor Systems, Inc. (b) 100 3,825
Romac International, Inc. (b) 100 3,275
--------
9,469
COMPUTER - PERSONAL & WORKSTATION 1.4%
Dell Computer Corporation (b) 50 5,872
COMPUTER SERVICE 2.8%
Fiserv, Inc. (b) 100 4,462
National Data Corporation 50 2,166
Sykes Enterprises, Inc. (b) 200 5,200
--------
11,828
COMPUTER SOFTWARE 7.5%
CBT Group PLC ADR (b) 50 3,156
Cisco Systems, Inc. (b) 100 6,712
Great Plains Software, Inc. (b) 100 2,700
McAfee Associates, Inc. (b) 100 6,312
Microsoft Corporation (b) 50 6,319
PeopleSoft, Inc. (b) 50 2,638
Visio Corporation (b) 50 3,525
--------
31,362
CONSUMER - MISCELLANEOUS 0.8%
Service Corporation International 100 3,287
DIVERSIFIED OPERATIONS 1.3%
Corning, Inc. 100 5,562
ELECTRICAL EQUIPMENT 0.9%
General Electric Company 60 3,922
ELECTRONIC PARTS DISTRIBUTION 0.4%
Kent Electronics Corporation (b) 50 1,834
ELECTRONICS - SEMICONDUCTOR/COMPONENT 5.1%
ASM Lithography Holding NV (b) 50 2,925
Altera Corporation (b) 100 5,050
Applied Materials, Inc. (b) 50 3,541
Intel Corporation 20 2,836
Teradyne, Inc. (b) 100 3,925
Uniphase Corporation (b) 50 2,912
--------
21,189
ENERGY - ALTERNATE SOURCE 0.8%
The AES Corporation (b) 50 3,538
FINANCE - MISCELLANEOUS 2.4%
American Express Company 100 7,450
Nationwide Financial Services, Inc. Class A 100 2,656
--------
10,106
HEALTHCARE - DRUG/DIVERSIFIED 8.1%
Abbott Laboratories 50 3,338
Eli Lilly & Company 80 8,745
Pfizer, Inc. 80 9,560
Warner-Lambert Company 100 12,425
--------
34,068
HEALTHCARE - INSTRUMENTATION 1.9%
Medtronic, Inc. 100 8,100
HEALTHCARE - MEDICAL SUPPLY 3.8%
Amerisource Health Corporation Class A (b) 100 4,988
McKesson Corporation 100 7,750
Parexel International Corporation (b) 100 3,175
--------
15,913
HEALTHCARE - PATIENT CARE 4.2%
HEALTHSOUTH Corporation (b) 400 9,975
Oxford Health Plans, Inc. (b) 50 3,588
Vencor, Inc. (b) 100 4,225
--------
17,788
HEALTHCARE - PRODUCT 1.0%
Guidant Corporation 50 4,250
HOUSEHOLD APPLIANCES & FURNISHINGS 1.8%
Sunbeam Corporation 200 7,550
INSURANCE - DIVERSIFIED 1.5%
Travelers Group, Inc. 100 6,306
INSURANCE - LIFE 1.5%
Hartford Life, Inc. Class A (b) 100 3,750
Western National Corporation 100 2,681
--------
6,431
INSURANCE - MULTI-LINE 1.1%
MGIC Investment Corporation 100 4,794
LEISURE SERVICE 3.3%
CapStar Hotel Company (b) 200 6,400
Carnival Corporation Class A 100 4,125
Wyndham Hotel Corporation (b) 100 3,263
--------
13,788
MEDIA - RADIO/TV 1.5%
Clear Channel Communications, Inc. (b) 100 6,150
METAL PRODUCTS & FABRICATION 1.2%
Illinois Tool Works, Inc. 100 4,994
OFFICE AUTOMATION 4.8%
Danka Business Systems PLC Sponsored ADR 300 12,263
Xerox Corporation 100 7,887
--------
20,150
OIL - NORTH AMERICAN EXPLORATION &
PRODUCTION 1.0%
Gulf Canada Resources, Ltd. ADR (b) 500 4,156
OIL WELL EQUIPMENT & SERVICE 3.0%
Cooper Cameron Corporation (b) 100 4,675
EVI, Inc. (b) 100 4,200
Schlumberger, Ltd. 30 3,750
--------
12,625
See notes to financial statements.
4
<PAGE>
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS 1.2%
Fort Howard Corporation (b) 100 $ 5,063
PERSONAL & COMMERCIAL LENDING 0.8%
Firstplus Financial Group (b) 100 3,400
REAL ESTATE 1.6%
Patriot American Hospitality, Inc. 100 2,550
Starwood Lodging Trust 100 4,269
--------
6,819
RETAIL - DEPARTMENT STORE 1.3%
Kohl's Corporation (b) 100 5,294
RETAIL - DISCOUNT & VARIETY 3.6%
Consolidated Stores Corporation (b) 125 4,344
Dollar General Corporation 150 5,625
Dollar Tree Stores, Inc. (b) 50 2,519
Shopko Stores, Inc. 100 2,550
--------
15,038
RETAIL - DRUG STORE 1.3%
Walgreen Company 100 5,363
RETAIL - MAJOR CHAIN 0.8%
Wal-Mart Stores, Inc. 100 3,381
RETAIL - SPECIALTY 1.4%
The Home Depot, Inc. 50 3,447
Staples, Inc. (b) 100 2,325
--------
5,772
SHOE & APPAREL MANUFACTURING 1.1%
Wolverine World Wide, Inc. 150 4,556
TELECOMMUNICATION EQUIPMENT 3.1%
Lucent Technologies, Inc. 50 3,603
Nokia Corporation Sponsored ADR 50 3,687
Tellabs, Inc. (b) 100 5,588
--------
12,878
TELECOMMUNICATION SERVICE 0.8%
WorldCom, Inc. (b) 100 3,200
TELEPHONE 1.2%
Cincinnati Bell, Inc. 160 5,040
TOBACCO 1.1%
Philip Morris Companies, Inc. 100 4,438
--------
TOTAL COMMON STOCKS (COST $332,931) 394,376
SHORT-TERM INVESTMENTS (a) 5.7%
COMMERCIAL PAPER 5.7%
INTEREST BEARING, DUE UPON DEMAND
Johnson Controls, Inc., 5.31% $ 1,100 1,100
Wisconsin Electric Power Company, 5.33% 22,800 22,800
--------
TOTAL SHORT-TERM INVESTMENTS (COST $23,900) 23,900
--------
TOTAL INVESTMENTS IN SECURITIES
(COST $356,831) 99.7% 418,276
Other Assets and Liabilities, Net 0.3% 1,198
--------
NET ASSETS 100.0% $419,474
========
PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- ------------------------------------------------------------------
United States ......................................... 93.5%
United Kingdom ........................................ 2.9
Canada. ............................................... 1.0
Finland ............................................... 0.9
Ireland ............................................... 0.7
Netherlands ........................................... 0.7
Other Assets and Liabilities, Net ..................... 0.3
-----
Total 100.0%
=====
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.
See notes to financial statements.
5
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
June 30, 1997 (Unaudited)
ASSETS:
Investments in Securities, at Value (Cost of $356,831) $418,276
Receivable from Brokers for Securities Sold 4,180
Dividends and Interest Receivable 330
Other Assets 13,915
--------
Total Assets 436,701
LIABILITIES:
Payable to Brokers for Securities Purchased 5,261
Accrued Operating Expenses and Other Liabilities 11,966
--------
Total Liabilities 17,227
--------
NET ASSETS $419,474
========
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) $361,563
Accumulated Net Investment Loss (1,155)
Accumulated Net Realized Loss (2,379)
Net Unrealized Appreciation 61,445
--------
Net Assets $419,474
========
Capital Shares Outstanding (Unlimited Number Authorized) 36,888
NET ASSET VALUE PER SHARE $11.37
======
See notes to financial statements.
6
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 1997 (Unaudited)
INCOME:
Dividends $ 1,456
Interest 1,549
-------
Total Income 3,005
EXPENSES:
Investment Advisory Fees 2,060
Custodian Fees 7,629
Shareholder Servicing Costs 1,150
Legal Fees 1,031
Audit Fees 1,451
Reports to Shareholders 1,157
Other 750
-------
Total Expenses before Waivers and Absorptions 15,228
Involuntary Waivers and Absorptions by Advisor (11,068)
-------
Expenses, Net 4,160
-------
NET INVESTMENT LOSS (1,155)
REALIZED AND UNREALIZED GAIN (LOSS):
Net Realized Loss on Investments (2,379)
Change in Unrealized Appreciation/Depreciation on Investments 61,445
-------
NET GAIN 59,066
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $57,911
=======
See notes to financial statements.
7
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1997
(UNAUDITED)
-----------
(NOTE 1)
OPERATIONS:
Net Investment Loss ($ 1,155)
Net Realized Loss (2,379)
Change in Unrealized Appreciation/Depreciation 61,445
--------
Increase in Net Assets Resulting from Operations 57,911
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold 511,580
Payment for Shares Redeemed (150,017)
--------
Increase in Net Assets from Capital Share Transactions 361,563
--------
TOTAL INCREASE IN NET ASSETS 419,474
NET ASSETS:
Beginning of Period ---
--------
End of Period $419,474
========
TRANSACTIONS IN SHARES OF THE FUND:
Sold 51,115
Redeemed (14,227)
------
Net Increase 36,888
======
See notes to financial statements.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1997 (Unaudited)
1. ORGANIZATION
The Strong Growth Fund II commenced operations on December 31, 1996, and is
a diversified series of the Strong Variable Insurance Funds, Inc., an
open-end management investment company registered under the Investment
Company Act of 1940.
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 -- Portfolio securities traded primarily on a
principal securities exchange are valued at the last reported sales
price or the mean between the latest bid and asked prices where no
last sales price is available. Securities traded over-the-counter are
valued at the mean of the latest bid and asked prices or at the last
reported sales price. Debt securities not traded on a principal
securities exchange are valued through valuations obtained from a
commercial pricing service, otherwise sale or bid prices are used.
Securities for which market quotations are not readily available, when
held by the Fund, are valued at fair value as determined in good faith
under consistently applied procedures established by and under the
general supervision of the Board of Directors. Securities which are
purchased within 60 days of their stated maturity are valued at
amortized cost, which approximates current value.
The 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.
(B) Federal Income and Excise Taxes and Distributions to Shareholders --
It is the Fund's policy 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.
The character of distributions made during the year from net
investment income or net realized gains may differ from the
characterization for federal income tax purposes due to differences in
the recognition of income and expense items for financial statement
and tax purposes. Where appropriate, reclassifications between net
asset accounts are made for such differences that are permanent in
nature.
(C) Realized Gains and Losses on Investment Transactions -- Gains or
losses realized on investment transactions are determined by comparing
the identified cost of the security lot sold with the net sales
proceeds.
(D) Futures -- Upon entering into a futures contract, the Fund pledges to
the broker cash or other investments equal to the minimum "initial
margin" requirements of the exchange. 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.
(E) Options -- 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.
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 be reduced by the amount of the option premium
received.
(F) Foreign Currency Translation -- Investment securities and other assets
and liabilities initially expressed in foreign currencies are
converted to U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income are converted to
U.S. dollars based upon currency exchange rates prevailing on the
respective dates of such transactions. The effect of changes in
foreign exchange rates on realized and unrealized security gains or
losses is reflected as a component of such gains or losses.
(G) Forward Foreign Currency Exchange Contracts -- Forward foreign
currency exchange contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded as an
unrealized gain or loss. When the contract is closed, the 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.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
June 30, 1997 (Unaudited)
(H) Additional Investment Risk -- The use of futures contracts, options,
foreign denominated assets, forward foreign currency exchange
contracts and other similar instruments for purposes of hedging the
Fund's investment portfolio involves, to varying degrees, elements of
market risk in excess of the amount recognized in the statement of
assets and liabilities. The predominant risk with futures contracts is
an imperfect correlation between the value of the contracts and the
underlying securities. Foreign denominated assets and forward foreign
currency exchange contracts may involve greater risks than domestic
transactions, including currency, political and economic, regulatory
and market risks.
(I) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the
reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ
from those estimates.
(J) Other -- Investment security transactions are recorded as of the trade
date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of 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 to the Fund. The investment advisory fee, which is established by
terms of the Advisory Agreement, is based on an annualized rate of 1.00% of
the average daily net assets of the Fund. Advisory fees are subject to
reimbursement by the Advisor if the Fund's operating expenses exceed
certain levels.
The Fund may invest cash reserves in money market funds sponsored and
managed by Strong Capital Management, Inc., 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, the
Advisor remits to the Fund an amount equal to all fees otherwise due to it
under its investment advisory agreement for the assets invested in such
money market funds.
The amount payable to the Advisor at June 30, 1997 and unaffiliated
directors' fees, excluding the effects of waivers and reimbursements, for
the six months ended June 30, 1997, were $11,544 and $750, respectively.
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of long-term securities for the six
months ended June 30, 1997, were $973,461 and $640,148, respectively.
5. INCOME TAX INFORMATION
At June 30, 1997, the cost of investments in securities for federal income
tax purposes was $358,074. Net unrealized appreciation of securities was
$60,202, consisting of gross unrealized appreciation and depreciation of
$62,206 and $2,004, respectively.
10
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SELECTED PER-SHARE DATA (a)
-----------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
-------------------------------------- -------------------------------------
Net Asset Net Realized Total In Excess Net Asset
Value, Net and Unrealized from From Net of Net Value,
Beginning Investment Gains on Investment Investment Investment Total End of
of Period Loss Investments Operations Income Income Distributions Period
<S> <C> <C> <C> <C> <C> <C> <C> <C>
June 30, 1997 (b) $10.00 ($0.03) $1.40 $1.37 --- --- --- $11.37
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (Continued)
RATIOS AND SUPPLEMENTAL DATA
-----------------------------------------------------------------------
Net Ratio of Net
Assets, Ratio of Investment Average
End of Expenses Income Portfolio Commission
Total Period (In to Average to Average Turnover Rate
Return Thousands) Net Assets Net Assets Rate Paid
<S> <C> <C> <C> <C> <C> <C>
June 30, 1997 (b) +13.7% $419 2.0%* -0.6%* 177.5% $0.0660
</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, 1997. (Unaudited) Total return and
portfolio turnover rate are not annualized.
11
<PAGE>
NOTES
- --------------------------------------------------------------------------------
12
<PAGE>
DIRECTORS
Richard S. Strong
John Dragisic
Willie D. Davis
Stanley Kritzik
Marvin E. Nevins
William F. Vogt
OFFICERS
Richard S. Strong, Chairman of the Board
John Dragisic, President
Lawrence A. Totsky, Vice President
Thomas P. Lemke, Vice President
John S. Weitzer, Vice President
Stephen J. Shenkenberg, Vice President and Secretary
John A. Flanagan, Treasurer
INVESTMENT ADVISOR
Strong Capital Management, Inc.
P.O. Box 2936, Milwaukee, Wisconsin 53201
CUSTODIAN
Firstar Trust Company
P.O. Box 701, Milwaukee, Wisconsin 53201
AUDITOR
Coopers & Lybrand L.L.P.
411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street, Milwaukee, Wisconsin 53202
<PAGE>
[STRONG LOGO]
STRONG FUNDS DISTRIBUTORS, INC.
P.O. Box 2936 o Milwaukee, Wisconsin 53201 5526G97
Strong Funds are offered by prospectus only.
