STRONG MONEY MARKET FUND INC, 485BPOS, 1999-06-25

STRONG MONEY MARKET FUND INC
485BPOS, 1999-06-25

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As filed with the Securities and Exchange Commission on or about June 25, 1999

Securities Act Registration No. 2-99439
Investment Company Act Registration No. 811-4374

SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 20 [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 21 [X]
(Check appropriate box or boxes)

STRONG MONEY MARKET FUND, INC.
(Exact Name of Registrant as Specified in Charter)

100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (414) 359-3400

Thomas P. Lemke
Strong Capital Management, Inc.
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
(Name and Address of Agent for Service)

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

[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ X ] on July 1, 1999 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

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<PAGE>

THE STRONG
CASH MANAGEMENT FUNDS

PROSPECTUS JULY 1, 1999

The Strong Heritage Money Fund

The Strong Investors Money Fund

The Strong Money Market Fund

The Strong Municipal Money Market Fund

The Strong Advantage Fund

The Strong Municipal Advantage Fund

AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANYONE WHO INFORMS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.

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TABLE OF CONTENTS
Your Investment.................................................................
Key Information.................................................................
What are the funds' goals?.....................................................1
What are the funds' principal investment strategies?...........................1
What are the main risks of investing in the funds?.............................3
What are the funds' fees and expenses?.........................................7
Who are the funds' investment advisor and portfolio managers?..................9
Other Important Information You Should Know.....................................
Comparing the Funds...........................................................11
A Word About Credit Quality...................................................12
Taxable Investments...........................................................13
If You Are Subject to Alternative Minimum Tax.................................14
Financial Highlights..........................................................14
Your Account....................................................................
Share Price...................................................................21
Buying Shares.................................................................23
Selling Shares................................................................27
Additional Policies...........................................................30
Distributions.................................................................31
Taxes.........................................................................32
Services For Investors........................................................33
Reserved Rights...............................................................36
For More Information.................................................Back Cover

IN THIS PROSPECTUS, "WE" REFERS TO STRONG CAPITAL MANAGEMENT, INC., THE
INVESTMENT ADVISOR AND TRANSFER AGENT FOR THE STRONG FUNDS.

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YOUR INVESTMENT

KEY INFORMATION

WHAT ARE THE FUNDS' GOALS?

The STRONG HERITAGE MONEY FUND, STRONG INVESTORS MONEY FUND, and STRONG MONEY
MARKET FUND seek current income, a stable share price, and daily liquidity.

The STRONG MUNICIPAL MONEY MARKET FUND seeks federally tax-exempt current
income, a stable share price, and daily liquidity.

The STRONG ADVANTAGE FUND seeks current income with a very low degree of
share-price fluctuation.

The STRONG MUNICIPAL ADVANTAGE FUND seeks federally tax-exempt current income
with a very low degree of share-price fluctuation.

WHAT ARE THE FUNDS' PRINCIPAL INVESTMENT STRATEGIES?

The HERITAGE MONEY FUND, INVESTORS MONEY FUND, and MONEY MARKET FUND are
managed to provide attractive yields and a stable share price of $1.00. They
invest in a portfolio of high-quality, short-term debt securities issued by
corporations, banks, and other financial institutions.

The MUNICIPAL MONEY MARKET FUND is managed to provide attractive yields and a
stable share price of $1.00. It invests in a portfolio of high-quality,
short-term debt securities primarily issued by states and their political
subdivisions, such as municipalities.

The managers may sell a holding if its fundamental qualities deteriorate, or to
take advantage of more attractive yield opportunities.

The ADVANTAGE FUND invests primarily in very short-term, corporate, and
mortgage- and asset-backed bonds. The fund invests primarily in higher- and
medium-quality bonds. To enhance its return potential, the fund also invests a
portion of its assets in bonds that have longer maturities or are of
lower-quality (high-yield or junk bonds), though it may not invest in bonds
rated below BB. The managers focus upon high-yield bonds rated BB with
positive or improving credit fundamentals. To help limit changes in share
price, the fund's average maturity is usually one year or less.

The MUNICIPAL ADVANTAGE FUND invests primarily in very short-term municipal
bonds. The fund invests primarily in higher and medium quality municipal bonds.
To enhance its return potential, the fund also invests a portion of its assets
in bonds that have longer maturities or are of lower-quality (high-yield or
junk bonds), though it may not invest in bonds rated below BB. The manager
focuses upon high-yield bonds rated BB with positive or improving credit
fundamentals. To help limit changes in share price, the fund's average maturity
is usually one year or less.

For the ADVANTAGE FUND and MUNICIPAL ADVANTAGE FUND, the managers may sell a
holding if its value becomes unattractive. Also, the managers may invest any
amount in cash or cash-type securities as a temporary defensive position to
avoid losses during adverse market conditions. This could reduce the benefit
to the funds if the market goes up. In this case, the funds may not achieve
their investment goal. The funds were designed for investors who seek higher
yields than those generally offered by money market funds and who are willing
to accept some modest share-price fluctuation to achieve that objective.

The MUNICIPAL MONEY MARKET and the MUNICIPAL ADVANTAGE FUNDS invest in
municipal bonds whose interest may be subject to the federal alternative
minimum tax (AMT).

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((Side Box))
Under normal market conditions, the MUNICIPAL MONEY MARKET and the MUNICIPAL
ADVANTAGE FUNDS will invest at least 80% of their assets in municipal bonds.
MUNICIPAL BONDS are debt obligations issued by or for U.S. states, territories,
and possessions and the District of Columbia and their political subdivisions,
agencies, and instrumentalities. Municipal bonds can be issued to obtain money
for public purposes or for privately operated facilities or projects. Some
municipal bonds pay interest which is exempt from federal income tax. Examples
of municipal bonds are general obligation bonds, revenue bonds, industrial
development bonds, notes, and municipal lease obligations.

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WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUNDS?

FOR THE HERITAGE MONEY, INVESTORS MONEY, MONEY MARKET, AND MUNICIPAL MONEY
MARKET FUNDS (MONEY MARKET FUNDS):

NOT INSURED: Your investment in the money market funds is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency. Each fund's goal is to preserve the value of your
investment at $1.00 per share. However, it is possible to lose money by
investing in these funds.

The money market funds are appropriate for investors who are comfortable with
the risks described here and who need cash immediately. They can also be used
as a permanent conservative part of your portfolio.

FOR THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS (BOND FUNDS):
BOND RISKS: The major risks of each bond fund are those of investing in the
bond market. A bond's market value is affected significantly by changes in
interest rates-generally, when interest rates rise, the bond's market value
declines and when interest rates decline, its market value rises (interest-rate
risk). Generally, the longer a bond's maturity, the greater the risk and the
higher its yield. Conversely, the shorter a bond's maturity, the lower the risk
and the lower its yield (maturity risk). A bond's value can also be affected by
changes in the bond's credit-quality rating or its issuer's financial condition
(credit-quality risk). Because bond values fluctuate, the fund's share price
fluctuates. So, when you sell your investment, you may receive more or less
money than you originally invested.

HIGH-YIELD BONDS: Each of the bond funds invest a limited portion of their
assets in medium- and lower-quality bonds, including high-yield bonds (commonly
referred to as junk bonds). Lower-quality bonds involve greater interest-rate
and credit-quality risks than higher- and medium-quality bonds. High-yield
bonds possess an increased possibility that the bond's issuer may not be able
to make its payments of interest and principal. If that happens, the fund's
share price would decrease and its income distributions would be reduced. An
economic downturn or period of rising interest rates could adversely affect the
high-yield bond market and reduce the fund's ability to sell its high-yield
bonds (liquidity risk). A lack of a liquid market for these bonds could
decrease the fund's share price.

FOREIGN SECURITIES: The ADVANTAGE FUND may invest up to 25% of its assets in
foreign securities. Foreign investments involve additional risks, including
currency-rate fluctuations, political and economic instability, differences in
financial reporting standards, and less-strict regulation of securities
markets.

MORTGAGE AND ASSET-BACKED SECURITIES: The ADVANTAGE FUND and MUNICIPAL
ADVANTAGE FUND invest in mortgage-backed and asset-backed securities. These
securities are subject to prepayment risk, which is the risk that the borrower
will prepay some or all of the principal owed to the issuer. If that happens,
the fund may have to replace the security by investing the proceeds in a less
attractive security. This could reduce the fund's share price and its income
distributions.

The share price of each of the bond funds will vary. The ADVANTAGE FUND and
MUNICIPAL ADVANTAGE FUND are not appropriate for investors concerned primarily
with principal stability.

The return information on the following page illustrates how the funds'
performance can vary, which is one indication of the risks of investing in the
funds. Please keep in mind that the funds' past performance does not represent
how they will perform in the future. The information assumes that you
reinvested all dividends and distributions. Only funds with at least one
calendar year's performance appear.

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CALENDAR YEAR TOTAL RETURNS

Year Heritage Money Money Market Municipal Money Advantage Municipal Advantage
Market
- ---- --------------- --------------- --------------- --------------- -------------------

1989 - 9.2% 6.1% 9.4% -
- ---- --------------- --------------- --------------- --------------- -------------------

1990 - 8.1% 6.1% 6.6% -
- ---- --------------- --------------- --------------- --------------- -------------------

1991 - 6.1% 5.2% 10.6% -
- ---- --------------- --------------- --------------- --------------- -------------------

1992 - 3.7% 3.4% 8.4% -
- ---- --------------- --------------- --------------- --------------- -------------------

1993 - 2.9% 2.5% 7.9% -
- ---- --------------- --------------- --------------- --------------- -------------------

1994 - 4.0% 2.9% 3.6% -
- ---- --------------- --------------- --------------- --------------- -------------------

1995 - 6.2% 4.1% 7.5% -
- ---- --------------- --------------- --------------- --------------- -------------------

1996 5.7% 5.3% 3.6% 6.7% 4.9%
- ---- --------------- --------------- --------------- --------------- -------------------

1997 5.6% 5.3% 3.6% 6.5% 5.1%
- ---- --------------- --------------- --------------- --------------- -------------------

1998 5.5% 5.3% 3.6% 4.8% 4.6%
- ---- --------------- --------------- --------------- --------------- -------------------
</TABLE>

The funds' year-to-date returns through March 31, 1999 are: Heritage Money
Fund 1.1%, Money Market Fund 1.1%, Municipal Money Market Fund .70%, Advantage
Fund 1.5% and Municipal Advantage Fund .93%.

BEST AND WORST QUARTERLY PERFORMANCE
(During the periods shown above)

<TABLE>
<CAPTION>
<S> <C> <C>
FUND NAME BEST QUARTER RETURN WORST QUARTER RETURN
- ---------------------- --------------------- ---------------------
Heritage Money 1.5% (4th Q 1995) 1.3% (1st Q 1998)
Money Market 2.4% (2nd Q 1989) 0.7% (3rd Q 1993)
Municipal Money Market 1.6% (2nd Q 1989) 0.6% (1st Q 1994)
Advantage 3.0% (1st Q 1989) 0.4% (2nd Q 1994)
Municipal Advantage 1.7% (3rd Q 1996) 0.6% (1st Q 1996)
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS
AS OF 12-31-98
FUND/INDEX 1-YEAR 5-YEAR 10-YEAR SINCE INCEPTION
HERITAGE MONEY 5.47% - - 5.69% (6-29-95)
Salomon Bros. 3-Month
Treasury Bill Index 5.06% - - 5.25%
MONEY MARKET 5.26% 5.22% 5.61% 5.91% (10-22-85)
Salomon Bros. 3-Month
Treasury Bill Index 5.06% 5.10% 5.44% 5.66%
MUNICIPAL MONEY MARKET 3.55% 3.54% 4.10% 4.23% (10-23-86)
Salomon Bros. 3-Month
Treasury Bill Index 5.06% 5.10% 5.44% 5.59%
ADVANTAGE 4.75% 5.79% 7.18% 7.21% (11-25-88)
Salomon Bros. 1-Year
Treasury Bill Index 5.89% 5.66% 6.45% 6.43%
MUNICIPAL ADVANTAGE 4.57% - - 5.01% (11-30-95)
Lehman Brothers Municipal
1 Year Bond Index 4.74% - - 4.58%

THE SALOMON BROTHERS 3-MONTH TREASURY BILL INDEX IS AN UNMANAGED INDEX
GENERALLY REPRESENTATIVE OF THE AVERAGE YIELD OF THREE-MONTH TREASURY BILLS.
THE SALOMON BROTHERS 1-YEAR TREASURY BENCHMARK-ON-THE-RUN INDEX ("1-YEAR
TREASURY BILL") IS AN UNMANAGED INDEX GENERALLY REPRESENTATIVE OF THE AVERAGE
YIELD ON ONE-YEAR TREASURY BILLS. THE LEHMAN BROTHERS MUNICIPAL 1 YEAR BOND
INDEX IS AN UNMANAGED INDEX GENERALLY REPRESENTATIVE OF ONE-YEAR, TAX-EXEMPT
BONDS.

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As of February 28, 1999, the 30-day yields for the following funds were as
follows: ADVANTAGE FUND, 5.85% and MUNICIPAL ADVANTAGE FUND, 3.59%. For
investors in the 36% tax bracket, the MUNICIPAL ADVANTAGE FUND'S taxable
equivalent yield was 5.61%. (Without fee waivers and absorptions, the MUNICIPAL
ADVANTAGE FUND'S yield would have been 3.54% and its taxable equivalent yield
would have been 5.53%.) For current yield information on any of the funds,
call 1-800-368-3863.

WHAT ARE THE FUNDS' FEES AND EXPENSES?

This section describes the fees and expenses that you may pay if you buy and
hold shares of the funds.

SHAREHOLDER FEES
(fees paid directly from your investment)
Each fund is 100% no-load, so you pay no sales charges (loads) to buy or sell
shares. For the HERITAGE MONEY FUND, a $3 fee will be charged for each
exchange, redemption, or check transaction. HOWEVER, WE WILL WAIVE THE $3 FEE
IF YOUR COMBINED STRONG FUNDS ACCOUNT BALANCE IS $100,000 (OR HIGHER) AT THE
END OF THE QUARTER IN WHICH YOU EXCHANGED, REDEEMED, OR WROTE A CHECK.

Redemption Fee* (Heritage Money Fund only) $3 per transaction

Exchange Fee (Heritage Money Fund only) $3 per transaction

* Including check transactions.

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from fund assets)
The costs of operating the funds are deducted from fund assets, which means you
pay them indirectly. These costs are deducted before computing the daily share
price or making distributions. As a result, they don't appear on your account
statement, but instead reduce the total return you receive from your fund
investment.

ANNUAL FUND OPERATING EXPENSES (AS A PERCENT OF AVERAGE NET ASSETS)

TOTAL ANNUAL FUND FEE WAIVERS
FUND MANAGEMENT OTHER OPERATING AND/OR NET FUND
FEES EXPENSES EXPENSES* ABSORPTIONS** EXPENSES
- ---------------------------------------- ---------- -------- ---------------------------------------- ------------- --------

Heritage Money 0.50% 0.07% 0.57%

Investors Money 0.50% 0.44% 0.94% 0.79% 0.15%

Money Market 0.50% 0.41% 0.91%

Municipal Money Market 0.50% 0.13% 0.63%

Advantage 0.60% 0.15% 0.75%

</TABLE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C><C>
Municipal Advantage 0.60% 0.05% 0.65%
</TABLE>

*TOTAL EXPENSES FOR THE HERITAGE MONEY FUND, THE MONEY MARKET FUND, AND THE
MUNICIPAL ADVANTAGE FUND DO NOT REFLECT OUR WAIVER OF MANAGEMENT FEES AND/OR
ABSORPTIONS. WITH WAIVERS AND/OR ABSORPTIONS, THE TOTAL EXPENSES WERE: HERITAGE
MONEY FUND, 0.32%, MONEY MARKET FUND, 0.62%, AND MUNICIPAL ADVANTAGE FUND,
0.55%. WE CAN TERMINATE WAIVERS AND/OR ABSORPTIONS FOR THESE FUNDS AT ANY TIME.

**WE HAVE CONTRACTUALLY AGREED TO WAIVE OUR MANAGEMENT FEES AND ABSORB EXPENSES
TO KEEP TOTAL EXPENSES AT OR BELOW (1) 0.15% UNTIL SEPTEMBER 30, 1999, AND (2)
0.25% FROM OCTOBER 1 UNTIL DECEMBER 31, 1999 FOR THE INVESTORS MONEY FUND.

EXAMPLE: This example is intended to help you compare the cost of investing in
the funds, before fee waivers and expense absorptions, with the cost of
investing in other mutual funds. The example assumes that you invest $10,000 in
the funds for the time periods indicated, and then redeem all of your shares at
the end of those periods. The example also assumes that your investment has a
5% return each year and that the funds' operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------- ------ ------- ------- --------
Heritage Money $58 $183 $318 $714

</TABLE>

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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Investors Money $96 $300 $520 $1,155

Money Market $93 $290 $504 $1,120

Municipal Money Market $64 $202 $351 $786

Advantage $77 $240 $417 $930

Municipal Advantage $66 $208 $362 $810
</TABLE>

WHO ARE THE FUNDS' INVESTMENT ADVISOR AND PORTFOLIO MANAGERS?

Strong Capital Management, Inc. (Strong) is the investment advisor for the
funds. Strong provides investment management services for mutual funds and
other investment portfolios representing assets of over $34 billion. Strong
began conducting business in 1974. Since then, its principal business has been
providing investment advice for individuals and institutional accounts, such as
pension and profit-sharing plans, as well as mutual funds, several of which are
available through variable insurance products. Strong's address is P.O. Box
2936, Milwaukee, WI 53201.

STEVEN D. HARROP co-manages the MUNICIPAL MONEY MARKET FUND and manages the
MUNICIPAL ADVANTAGE FUND. He has over 25 years of investment experience and is
a Chartered Financial Analyst. He joined Strong as a portfolio manager in March
1991. He has managed the MUNICIPAL MONEY MARKET FUND since March 1991 and the
MUNICIPAL ADVANTAGE FUND since November 1995. Prior to joining Strong, Mr.
Harrop was employed by USAA Investment Management Company, where he co-managed
a balanced fund and managed five tax-exempt funds. Mr. Harrop received his
bachelors degree in Business from Brigham Young University in 1972 and his
masters degree in Business from Northwestern University in 1973.

JOHN C. BONNELL co-manages the MUNICIPAL MONEY MARKET FUND. He has over 10
years of investment experience. He joined Strong as a co-portfolio manager of
the fund in May 1999. For ten years prior to joining Strong, Mr. Bonnell
worked at USAA Investment Management Company, most recently serving as an
executive director and portfolio manager. From 1995 to 1996, he was a senior
securities analyst and from 1991 to 1995 he served as a securities analyst.
From 1989 to 1991, Mr. Bonnell was a portfolio assistant. Mr. Bonnell received
his bachelors degree in Finance from the University of Texas in 1987 and his
Masters of Business Administration from St. Mary's University in 1991.

JEFFREY A. KOCH co-manages the ADVANTAGE FUND. He has over 10 years of
investment experience and is a Chartered Financial Analyst. He has been a
portfolio manager since January 1990. He joined Strong as a securities analyst
in June 1989. He has managed or co-managed the ADVANTAGE FUND since July 1991.
Prior to joining Strong, Mr. Koch was employed by Fossett Corporation, a
clearing firm, as a market maker clerk . Mr. Koch received his bachelors
degree in Economics from the University of Minnesota-Morris in 1987 and his
Masters of Business Administration in Finance from Washington University in
1989.

JAY N. MUELLER manages the HERITAGE MONEY FUND, MONEY MARKET FUND, and
INVESTORS MONEY FUND. He has over 15 years of investment experience and is a
Chartered Financial Analyst. He joined Strong as a securities analyst and
portfolio manager in September 1991. He has managed the HERITAGE MONEY FUND
since its inception in June 1995, the MONEY MARKET FUND since September 1991,
and the INVESTORS MONEY FUND since its inception in January 1998. For four
years prior to joining Strong, Mr. Mueller was employed by R. Meeder &
Associates as a securities analyst and portfolio manager. Mr. Mueller received
his bachelors degree in Economics from the University of Chicago in 1982.

THOMAS A. SONTAG co-manages the ADVANTAGE FUND. He has over 15 years of
industry experience. He joined Strong in November 1998 as a portfolio manager
of the ADVANTAGE FUND. For 13 years prior to joining Strong, Mr. Sontag worked
at Bear Stearns & Co., most recently serving as a Managing Director of the
Fixed Income Department from 1990 to November 1998. From September 1982 until
December 1985, Mr. Sontag was employed in the Fixed Income Department at
Goldman Sachs & Co. Mr. Sontag received his bachelors degree in
Economics/Finance from the University of Wisconsin in 1981 and his Masters of
Business Administration in Finance from the University of Wisconsin in 1982.

((Side Box))
YEAR 2000 ISSUES
Your investment could be adversely affected if the computer systems used by the
funds, Strong, and the funds' service providers do not properly process and
calculate date-related information before, on, and after January 1, 2000. Year
2000-related computer

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problems could have a negative impact on your fund and the fund's investments,
however, we are working to avoid these problems and to obtain assurances from
our service providers that they are taking similar steps.

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<PAGE>

OTHER IMPORTANT INFORMATION YOU SHOULD KNOW

COMPARING THE FUNDS

The following will help you distinguish the funds and determine their
suitability for your investment needs:

AVERAGE INCOME
FUND MATURITY CREDIT QUALITY POTENTIAL VOLATILITY
Heritage Money 90 days Two highest ratings Low Stable, but
Investors Money or less not guaranteed
Money Market
Municipal Money Market

Advantage 1 year or At least 75% rated Low to Very Low
less higher- and medium-quality Moderate
Up to 25% rated lower-quality

Municipal
Advantage 1 year or At least 90% rated Low to Very Low
less higher- and medium-quality Moderate
Up to 10% rated lower-quality

A WORD ABOUT CREDIT QUALITY

CREDIT QUALITY measures the issuer's expected ability to pay interest and
principal payments on time. Credit quality can be "higher-quality",
"medium-quality", "lower-quality", or "in default".

HIGHER-QUALITY means bonds that are in any of the three highest rating
categories. For example, bonds rated AAA to A by Standard & Poor's Ratings
Group (S&P)*.

MEDIUM-QUALITY means bonds that are in the fourth-highest rating category. For
example, bonds rated BBB by S&P*.

LOWER-QUALITY means bonds that are below the fourth-highest rating category.
They are also known as non-investment, high-risk, high-yield, or "junk bonds".
For example, bonds rated BB to C by S&P*.

IN DEFAULT means the bond's issuer has not paid principal or interest on time.

* OR THOSE RATED IN THIS CATEGORY BY ANY NATIONALLY RECOGNIZED STATISTICAL
RATING ORGANIZATION. S&P IS ONLY ONE EXAMPLE OF A NATIONALLY RECOGNIZED
STATISTICAL RATING ORGANIZATION.

This chart shows S&P's definition and ratings group for credit quality. Other
rating organizations use similar definitions.

CREDIT
QUALITY S&P'S DEFINITION S&P'S RATINGS GROUP RATING CATEGORY
- ---------- ---------------------- ---------------------- ----------------------
Higher Highest quality AAA First highest
High quality AA Second highest
Upper medium grade A Third highest
- ---------- ---------------------- ---------------------- ----------------------
Medium Medium grade BBB Fourth highest
- ---------- ---------------------- ---------------------- ----------------------
Lower Low grade BB
Speculative B
Submarginal CCC, CC, C
- ---------- ---------------------- ----------------------
In default Probably in default D
- ---------- ---------------------- ----------------------
</TABLE>

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<PAGE>

We determine a bond's credit quality rating at the time of investment by
conducting credit research and analysis and by relying on credit ratings of
several nationally recognized statistical rating organizations. These
organizations are called NRSROs. When we determine if a bond is in a specific
category, we may use the highest rating assigned to it by any NRSRO. If a bond
is not rated, we rely on our credit research and analysis to rate the bond. If
a bond's credit-quality rating is downgraded after our investment, we monitor
the situation to decide if we need to take any action such as selling the bond.

Typically, municipal bonds are not rated. This means that investments in
municipal bonds may require more credit analysis by us than investments in
taxable bonds. Also, investments in lower-quality bonds (junk bonds) will be
more dependent on our credit analysis than would be higher-quality bonds
because, while lower-quality bonds generally offer higher yields than
higher-quality bonds with similar maturities, lower-quality bonds involve
greater risks. These include the possibility of default or bankruptcy because
the issuer's capacity to pay interest and repay principal is considered
predominantly speculative. Also, lower-quality bonds are less liquid, meaning
that they may be harder to sell than bonds of higher quality because the demand
for them may be lower and there are fewer potential buyers. This lack of
liquidity may lower the value of the fund and your investment.

TAXABLE INVESTMENTS

The MUNICIPAL MONEY MARKET FUND and the MUNICIPAL ADVANTAGE FUND may invest up
to 20% of their net assets in U.S. government and corporate bonds, and other
debt securities that are of the same quality as the fund's investments in
municipal bonds. The MUNICIPAL ADVANTAGE FUND will generally invest in these
bonds to take advantage of capital gain opportunities. These bonds produce
taxable income, unlike municipal bonds which generally provide tax-exempt
income.

IF YOU ARE SUBJECT TO THE ALTERNATIVE MINIMUM TAX

The MUNICIPAL MONEY MARKET FUND and the MUNICIPAL ADVANTAGE FUND may invest,
without limitation, in municipal obligations whose interest is a tax-preference
item for purposes of the federal alternative minimum tax (AMT). If you are
subject to the AMT, a substantial portion of your fund's distributions to you
may not be exempt from federal income tax. If this is the case, a fund's net
return to you may be lower.

FINANCIAL HIGHLIGHTS

This information describes investment performance for the periods shown.
"Total Return" shows how much your investment in the fund would have increased
(or decreased) during each period, assuming you had reinvested all dividends
and distributions. These figures have been audited by PricewaterhouseCoopers
LLP, whose report, along with the fund's financial statements, is included in
the fund's annual report.

Strong Advantage Fund

Selected Per-Share Feb. 28, Feb. 28, Feb. 28, Feb. 29, Dec. 31, Dec. 31,
Data(a) 1999 1998 1997 1996(b) 1995 1994
Net Asset Value,
Beginning of Period $10.08 $10.09 $10.03 $10.04 $09.98 $10.19
Income From
Investment Operations
Net Investment Income 0.59 0.62 0.62 0.10 0.67 0.55
Net Realized and
Unrealized Gains (Losses)
on Investments (0.13) (0.01) 0.06 (0.01) 0.06 (0.19)
Total from Investment
Operations 0.46 0.61 0.68 0.09 0.73 0.36
Less Distributions
From Net Investment
Income (0.59) (0.62) (0.62) (0.10) (0.67) (0.55)
In Excess of Net
Realized Gains - - - - - (0.02)
Total Distributions (0.59) (0.62) (0.62) (0.10) (0.67) (0.57)
Net Asset Value,
End of Period $9.95 $10.08 $10.09 $10.03 $10.04 $9.98
Ratios and Supplemental Data
Total Return +4.6% +6.3% +7.0% +0.9% +7.5% +3.6%
Net Assets, End of Period
(In Millions) 2,766 $2,164 $1,520 $1,000 $990 $911
Ratio of Expenses to
Average Net Assets 0.7% 0.8% 0.8% 0.8%* 0.8% 0.8%
Ratio of Net Investment
Income to Average
Net Assets 5.8% 6.2% 6.2% 6.3%* 6.6% 5.6%
Portfolio Turnover
Rate 79.3% 109.6% 154.9% 17.2% 183.7% 221.0%

* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the fund
outstanding for the entire period.
(b) In 1996, the fund changed its fiscal year-end from December to February.

Strong Municipal Advantage Fund

Feb. 28, Feb. 28, Feb. 28, Feb. 29,
Selected Per-Share Data(a) 1999 1998 1997 1996(c)
Net Asset Value, Beginning
of Period $5.03 $5.01 $5.01 $5.00
Income From Investment Operations
Net Investment Income 0.21 0.22 0.25 0.06
Net Realized and Unrealized
Gains on Investments 0.01 0.02 0.00(b) 0.01
Total from Investment
Operations 0.22 0.24 0.25 0.07
Less Distributions
From Net Investment Income (0.21) (0.22) (0.25) (0.06)
From Net Realized Gains __ __ 0.00(b) __
Total Distributions (0.21) (0.22) (0.25) (0.06)
Net Asset Value, End
of Period $5.04 $5.03 $5.01 $5.01
Ratios and Supplemental Data
Total Return +4.5% +5.0% +5.1% +1.4%
Net Assets, End of Period
(In Millions) $2,171 $1,012 $644 $132
Ratio of Expenses to Average
Net Assets Without Waivers 0.6% 0.7% 0.7% 0.7%*
Ratio of Expenses to
Average Net Assets 0.5% 0.4% 0.0%(b) 0.0%*
Ratio of Net Investment
Income to Average Net Assets 4.1% 4.5% 5.0% 4.9%*
Portfolio Turnover Rate 36.0% 49.6% 40.8% 17.1%

* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the fund
outstanding for the entire period.
(b) Amount calculated is less than $0.01 or 0.01%.
(c) For the period from December 1, 1995 (commencement of operations) to
February 29, 1996.

Strong Heritage Money Fund

Feb. 28, Feb. 28, Feb. 28, Feb. 29,
Selected Per-Share Data(a) 1999 1998 1997 1996(c)
Net Asset Value,
Beginning of Period $1.00 $1.00 $1.00 $1.00
Income From Investment Operations
Net Investment Income 0.05 0.05 0.06 0.04
Net Realized Losses on
Investments - - (0.01) -
Total from Investment
Operations 0.05 0.05 0.05 0.04
Less Distributions
From Net Investment Income (0.05) (0.05) (0.06) (0.04)
Total Distributions (0.05) (0.05) (0.06) (0.04)
Capital Contribution - - 0.01 -
Net Asset Value,
End of Period $1.00 $1.00 $1.00 $1.00
Ratios and Supplemental Data
Total Return +5.3% +5.6% +5.7%(b) +4.1%
Net Assets, End of Period
(In Millions) $1,837 $1,484 $2,000 $942
Ratio of Expenses to Average
Net Assets Without Waivers 0.6% 0.6% 0.6% 0.6%*
Ratio of Expenses to
Average Net Assets 0.3% 0.2% 0.1% 0.0%*(d)
Ratio of Net Investment Income
to Average Net Assets 5.2% 5.4% 5.6% 5.9%*

* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the fund
outstanding for the entire period.
(b) Had the Advisor not made the capital contribution, the adjusted total
return would have been 5.0% for the fiscal year ended February 28, 1997.
(c) For the period from June 30, 1995 (commencement of operations) to
February 29, 1996.
(d) Amount calculated is less than 0.01%.

Strong Investors Money Fund

Feb. 28, Feb. 28,
Selected Per-Share Data(a) 1999 1998(b)
Net Asset Value, Beginning of Period $1.00 $1.00
Income From Investment Operations
Net Investment Income 0.06 0.00(c)
Total from Investment Operations 0.06 0.00(c)
Less Distributions
From Net Investment Income (0.06) -
Total Distributions (0.06) -
Net Asset Value, End of Period $1.00 $1.00
Ratios and Supplemental Data
Total Return +5.7% +0.5%
Net Assets, End of Period (In Millions) $256 $7
Ratio of Expenses to Average Net Assets
Without Waivers and Absorptions 0.9% 2.0%*
Ratio of Expenses to Average Net Assets 0.0% 0.0%*
Ratio of Net Investment Income to
Average Net Assets 5.4% 6.1%*

* 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 period from January 31, 1998 (inception) to February 28, 1998.
(c) Amount calculated is less than $0.01 or 0.01%.

Strong Money Market Fund

Feb. 28, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Dec. 31,
Selected Per-Share 1999(b) 1998 1997 1996 1995(d) 1994
Data(a)
Net Asset Value,
Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income From Investment Operations
Net Investment Income 0.02 0.05 0.05 0.05 0.05 0.04
Net Realized Losses
on Investments - - (0.01) - - -
Total from Investment
Operations 0.02 0.05 0.04 0.05 0.05 0.04
Less Distributions
From Net Investment
Income (0.02) (0.05) (0.05) (0.05) (0.05) (0.04)
Total Distributions (0.02) (0.05) (0.05) (0.05) (0.05) (0.04)
Capital Contribution - - 0.01 - - -
Net Asset Value, End
of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Ratios and Supplemental Data
Total Return +1.5% +5.3% +5.3%(c) +5.4% +5.2% +4.0%
Net Assets, End of
Period (In Millions)$1,926 $1,924 $1,838 $1,949 $1,934 $541
Ratio of Expenses to
Average Net Assets
Without Waivers 0.9%* 0.9% 0.9% 0.8% 0.7%* 0.9%
Ratio of Expenses to
Average Net Assets 0.6%* 0.5% 0.5% 0.4% 0.0%* 0.6%
Ratio of Net Investment
Income to Average
Net Assets 4.6%* 5.2% 5.2% 5.3% 6.1%* 4.0%

* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the fund
outstanding for the entire period.
(b) In 1999, the Fund changed its fiscal year-end from October to February.
(c) Had the Advisor not made the capital contribution, the adjusted total
return would have been 4.5% for the fiscal year ended October 31, 1997.
(d) In 1995, the fund changed its fiscal year-end from December to October.

Strong Municipal Money Market Fund

Feb. 28, Feb. 28, Feb. 28, Feb. 29, Dec. 31, Dec. 31,
Selected Per-Share 1999 1998 1997 1996(c) 1995 1994
Data(a)
Net Asset Value,
Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income From Investment Operations
Net Investment Income 0.03 0.04 0.03 0.01 0.04 0.03
Total from Investment
Operations 0.03 0.04 0.03 0.01 0.04 0.03
Less Distributions
From Net Investment
Income(b) (0.03) (0.04) (0.03) (0.01) (0.04) (0.03)
Total Distributions (0.03) (0.04) (0.03) (0.01) (0.04) (0.03)
Net Asset Value,
End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Ratios and Supplemental Data
Total Return +3.4% +3.6% +3.5% +0.6% +4.1% +2.9%
Net Assets, End of Period
(In Millions) $2,105 $1,871 $1,895 $1,609 $1,416 $1,261
Ratio of Expenses
to Average Net
Assets 0.6% 0.6% 0.6% 0.6%* 0.6% 0.6%
Ratio of Net Investment
Income to Average
Net Assets 3.4% 3.5% 3.5% 3.6%* 4.0% 2.9%

* Calculated on an annualized basis.
(a) Information presented relates to a share of capital stock of the fund
outstanding for the entire period.
(b) Tax-exempt for regular Federal income tax purposes.
(c) In 1996, the fund changed its fiscal year-end from December to February.

11
<PAGE>

YOUR ACCOUNT

All of the Strong Funds are 100% no-load. This means that you may purchase,
redeem, or exchange shares directly at their net asset value without paying a
sales charge.

SHARE PRICE

Your transaction price for buying, selling, or exchanging shares is the net
asset value per share (NAV). NAV is generally calculated as of the close of
trading on the New York Stock Exchange (usually 3:00 p.m. Central Time) every
day the NYSE is open. If the NYSE closes at any other time, or if an emergency
exists, NAV may be calculated at a different time. Your share price will be
the next NAV calculated after we accept your order.

For the money market funds, we use amortized cost to value money market fund
securities held by a fund.

((Side Box))
When we use AMORTIZED COST to value money market
fund securities, we generally mean that the security is
initially valued at the price we paid for it. After that, the
value of the security is gradually increased (amortizing a
discount) or decreased (amortizing a premium) each day
without regard to fluctuating interest rates.

For the bond funds, NAV is based on the market value of the securities in a
fund's portfolio. If market prices are not available, NAV is based on a
security's fair value as determined in good faith by us under the supervision
of the Board of Directors of the Strong Funds.

FOREIGN SECURITIES
Some of the bond funds' portfolio securities may be listed on foreign exchanges
that trade on days when we do not calculate an NAV. As a result, the market
value of securities in the fund's portfolio may change on days when you will
not be able to purchase or redeem shares. In addition, a foreign exchange may
not value its listed securities at the same time that we calculate a fund's
NAV. Events affecting the values of portfolio securities that occur between
the time a foreign exchange assigns a price to the portfolio securities and the
time when we calculate a fund's NAV generally will not be reflected in the
fund's NAV. These events will be reflected in the fund's NAV when we, under
the supervision of the Board of Directors of the Strong Funds, determine that
they would have a material effect on the fund's NAV.

((Side Box))
We determine a fund's share price or NAV by dividing
net assets (the value of its investments, cash, and other
assets minus its liabilities) by the number of shares
outstanding.

12
<PAGE>

BUYING SHARES

INVESTMENT MINIMUMS: When buying shares, you must meet the following investment
minimum requirements.

<TABLE>
<CAPTION>
<S> <C> <C>
INITIAL INVESTMENT MINIMUM ADDITIONAL INVESTMENT MINIMUM
- ----------------------------- -------------------------------------- --------------------------------------
Regular accounts $2,500 for all funds EXCEPT: $50 for all funds EXCEPT:
$1,000 for INVESTORS MONEY FUND $1,000 for HERITAGE MONEY FUND
$25,000 for HERITAGE MONEY FUND
- ----------------------------- -------------------------------------- --------------------------------------
Education IRA accounts $500 $50
(not available for HERITAGE
MONEY FUND)
- ----------------------------- -------------------------------------- --------------------------------------
Other IRAs and $250 for all funds EXCEPT: $50 for all funds EXCEPT:
UGMA/UTMA accounts $25,000 for HERITAGE MONEY FUND $1,000 for HERITAGE MONEY FUND
- ----------------------------- -------------------------------------- --------------------------------------
SIMPLE IRA, SEP-IRA, the lesser of $250 or $25 per month $50 for all funds EXCEPT:
403(b)(7), Keogh, Pension for all funds EXCEPT: $1,000 for HERITAGE MONEY FUND
Plan, and Profit Sharing Plan $25,000 for HERITAGE MONEY FUND
accounts
- ----------------------------- -------------------------------------- --------------------------------------
</TABLE>

PLEASE REMEMBER ...
- - If you use an Automatic Investment Plan, we waive the initial investment
minimum to open an account and the additional investment minimum is $50.
This waiver does not apply to the HERITAGE MONEY FUND.

- - You cannot use an Automatic Investment Plan with an Education IRA.

- - If you open a qualified retirement plan account where we or one of our
alliance partners provides administrative services, there is no initial
investment minimum, except for the HERITAGE MONEY FUND which is $25,000.

- - For the INVESTORS MONEY FUND:

- - You may only open one regular account. You may not make additional purchases
after your account reaches $50,000. If you participate in an Automatic
Investment Plan, we will discontinue the plan after your account reaches
$50,000.

- - You may open up multiple IRA accounts. You may not make additional purchases
into your IRA accounts once the aggregate value of all of your IRA accounts
in the fund reaches $50,000. If you participate in an Automatic Investment
Plan, we will discontinue the plan after the value of your IRA accounts
reaches $50,000.

BUYING INSTRUCTIONS
You can buy shares in several ways.

MAIL
You can open or add to an account by mail with a check or money order made
payable to Strong Funds. Send it to the address listed on the back of this
prospectus, along with your account application (for a new account) or an
Additional Investment Form (for an existing account).

EXCHANGE OPTION

Sign up for the exchange option when you open your account. To add this
option to an existing account, visit the Shareholder Services area of Strong
On-line (www.strongfunds.com) or call 1-800-368-3863 for a Shareholder Account
Options Form. Once you establish the exchange option, you can call or use the
internet to open a new account or to add to an existing one by exchanging
shares from another identically registered Strong Funds account.

13
<PAGE>

((Side Box))
Questions?
Call 1-800-368-3863
24 hours a day,
7 days a week

EXPRESS PURCHASESM

You can make additional investments to your existing account directly from
your bank account. If you didn't establish this option when you opened your
account, visit the Shareholder Services area of Strong On-line
(www.strongfunds.com) or call us at 1-800-368-3863 for a Shareholder Account
Options Form.

STRONG DIRECT(R)
You can use Strong Direct(R) to add to your investment from your bank account
or to exchange shares between Strong Funds by calling 1-800-368-7550. See
"Services for Investors" for more information.

STRONG NETDIRECT(R)
You can use Strong netDirect(R) at our web site, WWW.STRONGFUNDS.COM, to add
to your investment from your bank account or to exchange shares between Strong
Funds. See "Services for Investors" for more information.

INVESTOR CENTER
You can visit our Investor Center in Menomonee Falls, Wisconsin, near
Milwaukee. Call 1-800-368-3863 for hours and directions. The Investor Center
only accepts checks or money orders payable to Strong Funds. It does not
accept cash or third-party checks.

WIRE
Call 1-800-368-3863 for instructions before wiring funds either to open or add
to an account. This helps to ensure that your account will be credited
promptly and correctly.

AUTOMATIC INVESTMENT SERVICES
See "Services for Investors" for detailed information on all of our automatic
investment services. You can sign up for these plans when you open your
account or call 1-800-368-3863 for instructions on how to add them.

BROKER-DEALER
You may purchase shares through a broker-dealer or other intermediary who may
charge you a fee.

PLEASE REMEMBER . . .
- - Make checks or money orders payable to Strong Funds.

- - We do not accept cash, third-party checks (checks payable to you written by
another party), credit card convenience checks, or checks drawn on banks
outside the U.S.

- - You will be charged $20 for every check, money order, wire, or Electronic
Funds Transfer returned unpaid.

SELLING SHARES

You can access the money in your account by selling (also called redeeming)
some or all of your shares by one of the methods below. After your redemption
request is accepted, we normally send you the proceeds on the next business
day.

SELLING INSTRUCTIONS
You can sell shares in several ways.

14
<PAGE>

MAIL
Write a letter of instruction. It should specify your account number, the
dollar amount or number of shares you wish to redeem, the names and signatures
of the owners (or other authorized persons), and your mailing address. Then,
mail it to the address listed on the back of this prospectus.

REDEMPTION OPTION

Sign up for the redemption option when you open your account or add it later
by visiting the Shareholder Services area of Strong On-line
(www.strongfunds.com) or by calling 1-800-368-3863 to request a Shareholder
Account Options Form. With this option, you may sell shares by phone or via
the internet and receive the proceeds in one of three ways:

(1) We can mail a check to your account's address. Checks will not be
forwarded by the Postal Service, so please notify us if your address has
changed.

(2) We can transmit the proceeds by Electronic Funds Transfer to a
properly pre-authorized bank account. The proceeds usually will arrive at your
bank two banking days after we process your redemption.

(3) For a $10 fee, we can transmit the proceeds by wire to a properly
pre-authorized bank account. The proceeds usually will arrive at your bank the
first banking day after we process your redemption.

STRONG DIRECT(R)
You can redeem shares through Strong Direct(R) at 1-800-368-7550. See
"Services for Investors" for more information.

STRONG NETDIRECT(R)
You can use Strong netDirect(R) at our web site, WWW.STRONGFUNDS.COM, to
redeem shares. See "Services for Investors" for more information.

INVESTOR CENTER

You can visit our Investor Center in Menomonee Falls, Wisconsin, near
Milwaukee. Call 1-800-368-3863 for hours and directions. Please note that
the Investor Center is unable to provide you with a check during your visit.

AUTOMATIC INVESTMENT SERVICES
You can set up automatic withdrawals from your account at regular intervals.
See "Services for Investors" for information on all of our automatic
investment services.

BROKER-DEALER
You may sell shares through a broker-dealer or other intermediary who may
charge you a fee.

CHECKWRITING
Sign up for free checkwriting when you open your account or call
1-800-368-3863 to add it later to an existing account. Check redemptions must
be for a minimum of $500 ($1,000 for HERITAGE MONEY FUND). You cannot write a
check to close out an account.

PLEASE REMEMBER ...
- - If you recently purchased shares, a redemption request on those shares will
not be honored until 10 days after we receive the purchase check or
electronic transaction.
- - You will be charged a $10 service fee for a stop-payment on a check written
on your Strong Funds account.
- - Some transactions and requests require a signature guarantee.
- - If you are selling shares you hold in certificate form, you must submit the
certificates with your redemption request. Each registered owner must sign
the certificates and all signatures must be guaranteed.

- - With an IRA (or other retirement account), you will be charged (1) a $10
annual account maintenance fee for each account up to a maximum of $30, (2) a
$10 account liquidation fee, and (3) a $10 fee for transferring assets to
another custodian or for closing an account.

- - If you sell shares out of a non-IRA retirement account and you are eligible
to roll the sale proceeds into another retirement plan, we will withhold for
federal income tax purposes a portion of the sale proceeds unless you
transfer all of the proceeds to an eligible retirement plan.

15
<PAGE>

((Side Box))
There may be special distribution requirements that apply to retirement
accounts. For instructions on:
- - Roth and Traditional IRA accounts, call
1-800-368-3863, and
- - SIMPLE IRA, SEP-IRA , 403(b)(7), Keogh, Pension Plan, Profit Sharing Plan, or
401(k) Plan accounts, call 1-800-368-2882.

((Side Box))
SIGNATURE GUARANTEES help ensure that major
transactions or changes to your account are in fact
authorized by you. For example, we require a signature
guarantee on written redemption requests for more than
$50,000. You can obtain a signature guarantee for a
nominal fee from most banks, brokerage firms, and
other financial institutions. A notary public stamp or
seal cannot be substituted for a signature guarantee.

ADDITIONAL POLICIES

TELEPHONE TRANSACTIONS
Once you place a telephone transaction request, it cannot be canceled or
modified. We use reasonable procedures to confirm that telephone transaction
requests are genuine. We may be responsible if we do not follow these
procedures. You are responsible for losses resulting from fraudulent or
unauthorized instructions received over the telephone, provided we reasonably
believe the instructions were genuine. During times of unusual market
activity, our phones may be busy and you may experience a delay placing a
telephone request. During these times, consider trying STRONG DIRECT(R), our
24-hour automated telephone system, by calling 1-800-368-7550, or STRONG
NETDIRECT(R), our on-line transaction center, by visiting WWW.STRONGFUNDS.COM.
Please remember that you must have telephone redemption as an option on your
account to redeem shares through STRONG DIRECT(R) or STRONG NETDIRECT(R).

INVESTING THROUGH A THIRD PARTY
If you invest through a third party (rather than directly with Strong Funds),
the policies and fees may be different than described in this prospectus.
Banks, brokers, 401(k) plans, financial advisors, and financial supermarkets
may charge transaction fees and may set different minimum investments or
limitations on buying or selling shares. Consult a representative of your
plan or financial institution if you are not sure.

HERITAGE MONEY FUND ACCOUNT MAINTENANCE AND TRANSACTION FEES

For the HERITAGE MONEY FUND, a $3 fee will be charged for each exchange,
redemption, or check transaction. A $3 quarterly account maintenance fee is
also charged if the balance in your HERITAGE MONEY FUND is less than $25,000.
HOWEVER, WE WILL WAIVE THESE FEES IF YOUR COMBINED STRONG FUNDS' ACCOUNT
BALANCE IS $100,000 (OR HIGHER) AT THE END OF THE QUARTER DURING WHICH, (1)
YOU EXCHANGED, REDEEMED, OR WROTE A CHECK, OR (2) YOUR ACCOUNT BALANCE FELL
BELOW $25,000.

DISTRIBUTIONS

DISTRIBUTION POLICY
Each fund generally pays you dividends from net investment income monthly and
distributes any net capital gains that it realizes annually. Dividends are
declared on each day NAV is calculated, except for bank holidays. Dividends
earned on weekends, holidays, and days when the fund's NAV is not calculated
are declared on the first day preceding these days that the fund's NAV is
calculated. Your investment generally earns dividends from the first business
day after we accept your purchase order.

16
<PAGE>

REINVESTMENT OF DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Your dividends and capital gain distributions will be automatically reinvested
in additional shares of the fund, unless you choose otherwise. Your other
options are to receive checks for these payments, have them automatically
invested in another Strong Fund, or have them deposited into your bank
account.

TAXES

TAXABLE DISTRIBUTIONS
Any net investment income and net short-term capital gain distributions you
receive are taxable as ordinary dividend income at your income tax rate.
Distributions of net capital gains are generally taxable as long-term capital
gains. This is generally true no matter how long you have owned your shares
and whether you reinvest your distributions or take them in cash. You may also
have to pay taxes when you exchange or sell shares if your shares have
increased in value since you bought them.

TAX-EXEMPT DISTRIBUTIONS
Exempt-interest dividends from municipal funds are generally exempt from
federal income taxes, but may be subject to state and local tax. Also, if you
are subject to the Alternative Minimum Tax, you may have to pay federal tax on
a portion of your income from exempt-interest dividends.

((Side Box))
Generally, if your investment is in a Traditional IRA or
other TAX-DEFERRED ACCOUNT, your dividends and
distributions will not be taxed at the time they are paid,
but instead at the time you withdraw them from your
account.

RETURN OF CAPITAL
If your fund's (1) income distributions exceed its net investment income and
net short-term capital gains or (2) capital gain distributions exceed its net
capital gains in any year, all or a portion of those distributions may be
treated as a return of capital to you. Although a return of capital is not
taxed, it will reduce the cost basis of your shares.

YEAR-END STATEMENT
To assist you in tax preparation, after the end of each calendar year, we send
you a statement of your fund's ordinary dividends and net capital gain
distributions (Form 1099).

BACKUP WITHHOLDING
By law, we must withhold 31% of your distributions and proceeds if (1) you are
subject to backup withholding or (2) you have not provided us with complete
and correct taxpayer information such as your Social Security Number (SSN) or
Tax Identification Number (TIN).

((Side Box))

Unless your investment is in a tax-deferred retirement
account such as an IRA, YOU MAY WANT TO AVOID:
Selling shares of a mutual fund at a loss and then
investing in the same fund within 30 days before or
after the sale. This is called a wash sale and you will
not be allowed to claim a tax loss on the transaction.
- ---------------------------------------------------------

((Side Box))
COST BASIS is the amount that you paid for the shares.
When you sell shares, you subtract the cost basis from the
sale proceeds to determine whether you realized an
investment gain or loss. For example, if you bought a
share of a fund at $10 and you sold it two years later at
$11, your cost basis on the share is $10 and your gain is
$1.

17
<PAGE>

Because everyone's tax situation is unique, you should consult your tax
professional for assistance.

SERVICES FOR INVESTORS

Strong provides you with a variety of services to help you manage your
investment. For more details, call 1-800-368-3863, 24 hours a day, 7 days a
week. These services include:

STRONG DIRECT (R) AUTOMATED TELEPHONE SYSTEM
Our 24-hour automated response system enables you to use a touch-tone phone to
access current share prices
(1-800-368-3550), to access fund and account information (1-800-368-5550),
and to make purchases, exchanges, or redemptions among your existing accounts
if you have elected these services (1-800-368-7550). Passwords help to
protect your account information.

STRONG ON-LINE
Visit us on-line at WWW.STRONGFUNDS.COM to access your fund's performance and
portfolio holding information. In addition to general information about
investing, Strong On-line offers daily performance information, portfolio
manager commentaries, and information on available account options.

STRONGMAIL
If you register for StrongMail at WWW.STRONGMAIL.COM, you will receive your
fund's closing price by e-mail each business day. In addition, StrongMail
offers market news and updates throughout the day.

STRONG NETDIRECT(R)
If you are a shareholder, you may use netDirect(R) to access your account
information 24 hours a day from your personal computer. Strong netDirect(R)
allows you to view account history, account balances, and recent dividend
activity, as well as to make purchases, exchanges, or redemptions among your
existing accounts if you have elected these services. Encryption technology
and passwords help to protect your account information. You may register to
use netDirect(R) at WWW.STRONGFUNDS.COM.

STRONG EXCHANGE OPTION

You may exchange shares of a Strong Fund for shares of another Strong Fund,
either in writing, by telephone, or through your personal computer, if the
accounts are identically registered (with the same name, address, and taxpayer
identification number). Please ask us for the appropriate prospectus and read
it before investing in any of the Strong Funds. Remember, an exchange is
considered a sale and a purchase of fund shares for tax purposes and may
result in a capital gain or loss. Some Strong Funds that you may want to
exchange into may charge a redemption fee of 0.50% to 1.00% on the sale of
shares held for less than six months.

STRONG CHECKWRITING
Strong Funds offers checkwriting on most of its bond and money market funds.
Checks written on your account are subject to this prospectus and the terms
and conditions found in the front of the book of checks. You can write only
three checks on your accounts in the INVESTORS MONEY FUND.

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<PAGE>

STRONG AUTOMATIC INVESTMENT SERVICES
You may invest or redeem automatically in the following ways, some of which
may be subject to additional restrictions or conditions.

AUTOMATIC INVESTMENT PLAN (AIP)
This plan allows you to make regular, automatic investments from your bank
checking or savings account.

AUTOMATIC EXCHANGE PLAN
This plan allows you to make regular, automatic exchanges from one eligible
Strong Fund to another.

AUTOMATIC DIVIDEND REINVESTMENT
Your dividends and capital gains will be automatically reinvested in
additional shares of the Strong Fund that paid them, unless you choose
otherwise. Your other options are to receive checks for these payments, have
them automatically invested in another Strong Fund, or have them deposited
into your bank account.

NO-MINIMUM INVESTMENT PLAN
This plan allows you to invest without meeting the minimum initial investment
requirements if you invest monthly and you participate in the AIP, Automatic
Exchange Plan, or Payroll Direct Deposit Plan.

PAYROLL DIRECT DEPOSIT PLAN
This plan allows you to send all or a portion of your paycheck, social
security check, military allotment, or annuity payment to the Strong Funds of
your choice.

SYSTEMATIC WITHDRAWAL PLAN
This plan allows you to redeem a fixed sum from your account on a regular
basis. Payments may be sent electronically to a bank account or as a check to
you or anyone you properly designate.

STRONG RETIREMENT PLAN SERVICES
We offer a wide variety of retirement plans for individuals and institutions,
including large and small businesses. For information on:

- - INDIVIDUAL RETIREMENT PLANS, including Traditional IRAs and Roth IRAs, call
1-800-368-3863.

- - QUALIFIED RETIREMENT PLANS, including SIMPLE IRAs, SEP-IRAs, 403(b)(7)s,
Keoghs, Pension Plans, Profit Sharing Plans, and 401(k) Plans, call
1-800-368-2882.

SAME-DAY DIVIDEND AND WIRE
You will earn a same-day dividend if you purchase shares and have, or with
your purchase will have, at least $5 million invested in the MUNICIPAL MONEY
MARKET FUND or the HERITAGE MONEY FUND and you have completed a special
application. The following rules also apply:

- - Call 1-800-733-2274 before 9:00 a.m. Central Time and place an irrevocable
purchase order.
- - You must send the purchase price via federal funds wire which must be
received by Firstar Bank Milwaukee, N.A. by 2:30 p.m. Central Time. If you do
not wire federal funds by this deadline, we may cancel the purchase order.
If we do not cancel the order and the MUNICIPAL MONEY MARKET FUND or the
HERITAGE MONEY FUND borrows an amount of money equal to your purchase price,
you may be liable for any interest expense caused by the borrowing.
- - Wires should be sent to:

19
<PAGE>

Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, WI 53202
ABA routing number: 075000022
Account number: 112737-090
For further credit to: (insert your account number and registration)

You may also receive a same-day redemption wire by calling 1-800-733-2274.
You must place your redemption order by 9:00 a.m. Central Time. Redemption
proceeds will not earn dividends on the day in which they are wired. If you
use a same-day redemption wire to close an account, dividends credited to your
account for the month up to the day of redemption will be paid the next
business day.

SOME OF THESE SERVICES MAY BE SUBJECT TO ADDITIONAL RESTRICTIONS OR
CONDITIONS. CALL 1-800-368-3863 FOR MORE INFORMATION.

RESERVED RIGHTS

We reserve the right to:

- - Refuse, change, discontinue, or temporarily suspend account services,
including purchase, exchange, or telephone and netDirect(R) redemption
privileges, for any reason.

- - Reject any purchase request for any reason including exchanges from other
Strong Funds. Generally, we do this if the purchase or exchange is
disruptive to the efficient management of a fund (due to the timing of the
investment or an investor's history of excessive trading).

- - Change the minimum or maximum investment amounts.

- - Delay sending out redemption proceeds for up to seven days (this generally
only applies to very large redemptions without notice, excessive trading, or
during unusual market conditions).

- - Suspend redemptions or postpone payments when the NYSE is closed for any
reason other than its usual weekend or holiday closings, when trading is
restricted by the SEC, or under any emergency circumstances.

- - Make a redemption-in-kind (a payment in portfolio securities rather than
cash) if the amount you are redeeming is in excess of the lesser of (1)
$250,000 or (2) 1% of the fund's assets. Generally, redemption-in-kind is
used when large redemption requests may cause harm to the fund and its
shareholders. This includes redemptions made by checkwriting.

- - Close any account that does not meet minimum investment requirements. We
will give you notice and 60 days to begin an automatic investment program or
to increase your balance to the required minimum.

- - Reject any purchase or redemption request that does not contain all required
documentation.

Additionally, with the STRONG INVESTORS MONEY FUND, we reserve the right to:

Redeem shares in your regular account that exceed $50,000 (exclusive of
dividends).

- - Redeem shares in your IRA accounts that, in the aggregate, exceed $50,000
(exclusive of dividends).

- - Close accounts and redeem all shares in the accounts if you have more than
one regular account.

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<PAGE>

FOR MORE INFORMATION

More information is available upon request at no charge, including:

SHAREHOLDER REPORTS: Additional information is available in the annual and
semi-annual report to shareholders. These reports contain a letter from
management, discuss recent market conditions, economic trends and investment
strategies that significantly affected your investment's performance during the
last fiscal year, and list portfolio holdings.

STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI contains more details about
investment policies and techniques. A current SAI is on file with the SEC and
is incorporated into this prospectus by reference. This means that the SAI is
legally considered a part of this prospectus even though it is not physically
contained within this prospectus.

To request information or to ask questions:

BY TELEPHONE FOR HEARING-IMPAIRED (TDD)
(414) 359-1400 or (800) 368-3863 (800) 999-2780

BY MAIL BY OVERNIGHT DELIVERY
Strong Funds Strong Funds
P.O. Box 2936 900 Heritage Reserve
Milwaukee, Wisconsin 53201-2936 Menomonee Falls, Wisconsin
53051

ON THE INTERNET BY E-MAIL
View online or download documents: [email protected]
Strong Funds: WWW.STRONGFUNDS.COM
SEC*: www.sec.gov

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

This prospectus is not an offer to sell securities in any place where it would
be illegal to do so.

*YOU CAN ALSO OBTAIN COPIES BY VISITING THE SEC'S PUBLIC REFERENCE ROOM IN
WASHINGTON, D.C. OR BY SENDING YOUR REQUEST AND A DUPLICATING FEE TO THE
SECURITIES AND EXCHANGE COMMISSION'S PUBLIC REFERENCE SECTION, WASHINGTON, D.C.
20549-6009. YOU CAN CALL 1-800-SEC-0330 FOR INFORMATION ON THE OPERATION OF THE
PUBLIC REFERENCE ROOM.

Strong Heritage Money Fund, a series of Strong Heritage Reserve Series, Inc.,
SEC file number: 811-7285
Strong Investors Money Fund, a series of Strong Heritage Reserve Series, Inc.,
SEC file number: 811-7285
Strong Money Market Fund, Inc., SEC file number: 811-4374
Strong Municipal Money Market Fund, a series of Strong Municipal Funds, Inc.,
SEC file number: 811-4770

Strong Advantage Fund, Inc., SEC file number: 811-5667
Strong Municipal Advantage Fund, a series of Strong Municipal Funds, Inc., SEC
file number: 811-4770

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION ("SAI")

STRONG HERITAGE MONEY FUND, A SERIES FUND OF STRONG HERITAGE RESERVE SERIES,
INC.
STRONG INVESTORS MONEY FUND, A SERIES FUND OF STRONG HERITAGE RESERVE SERIES,
INC.
STRONG MONEY MARKET FUND
STRONG MUNICIPAL MONEY MARKET FUND, A SERIES FUND OF STRONG MUNICIPAL FUNDS,
INC.

STRONG ADVANTAGE FUND
STRONG MUNICIPAL ADVANTAGE FUND, A SERIES FUND OF STRONG MUNICIPAL FUNDS, INC.

P.O. Box 2936
Milwaukee, Wisconsin 53201
Telephone: (414) 359-1400
Toll-Free: (800) 368-3863
e-mail: [email protected]
Web Site: http://www.strongfunds.com

Throughout this SAI, "the Fund" is intended to refer to each Fund listed above,
unless otherwise indicated. This SAI is not a Prospectus and should be read
together with the Prospectus for the Fund dated July 1, 1999. Requests for
copies of the Prospectus should be made by calling any number listed above.
The financial statements appearing in the Annual Report, which accompanies this
SAI, are incorporated into this SAI by reference.

July 1, 1999

1
<PAGE>

TABLE OF CONTENTS PAGE

INVESTMENT RESTRICTIONS........................................................4
INVESTMENT POLICIES AND TECHNIQUES.............................................7
Strong Heritage Money Fund.....................................................7
Strong Investors Money Fund....................................................7
Strong Money Market Fund.......................................................7
Strong Municipal Money Market Fund.............................................7
Strong Advantage Fund..........................................................7
Strong Municipal Advantage Fund................................................8
Asset-Backed Debt Obligations..................................................8
Borrowing......................................................................9
Cash Management................................................................9
Convertible Securities.........................................................9
Debt Obligations..............................................................10
Depositary Receipts...........................................................10
Derivative Instruments........................................................11
Duration......................................................................20
Foreign Investment Companies..................................................20
Foreign Securities............................................................21
High-Yield (High-Risk) Securities.............................................21
Illiquid Securities...........................................................23
Lending of Portfolio Securities...............................................23
Loan Interests................................................................24
Maturity......................................................................25
Mortgage- and Asset-Backed Debt Securities....................................25
Municipal Obligations.........................................................26
Participation Interests.......................................................27
Repurchase Agreements.........................................................27
Reverse Repurchase Agreements and Mortgage Dollar Rolls.......................28
Rule 2a-7: Maturity, Quality, and Diversification Restrictions...............28
Sector Concentration..........................................................29
Short Sales...................................................................30
Standby Commitments...........................................................30
Taxable Securities............................................................30
U.S. Government Securities....................................................30
Variable- or Floating-Rate Securities.........................................31
Warrants......................................................................32
When-Issued and Delayed-Delivery Securities...................................32
Zero-Coupon, Step-Coupon, and Pay-in-Kind Securities..........................32
DIRECTORS AND OFFICERS........................................................32
PRINCIPAL SHAREHOLDERS........................................................34
INVESTMENT ADVISOR............................................................35
DISTRIBUTOR...................................................................38
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................39
CUSTODIAN.....................................................................42
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT..................................43
TAXES.........................................................................44
DETERMINATION OF NET ASSET VALUE..............................................47
ADDITIONAL SHAREHOLDER INFORMATION............................................47
ORGANIZATION..................................................................51
SHAREHOLDER MEETINGS..........................................................51
PERFORMANCE INFORMATION.......................................................52
GENERAL INFORMATION...........................................................60
INDEPENDENT ACCOUNTANTS.......................................................62
LEGAL COUNSEL.................................................................62
FINANCIAL STATEMENTS..........................................................62
APPENDIX A - ASSET COMPOSITION BY BOND RATINGS................................64
APPENDIX B - DEFINITION OF BOND RATINGS.......................................65

2
<PAGE>

No person has been authorized to give any information or to make any
representations other than those contained in this SAI and its corresponding
Prospectus, and if given or made, such information or representations may not
be relied upon as having been authorized. This SAI does not constitute an
offer to sell securities.

3
<PAGE>

INVESTMENT RESTRICTIONS

FUNDAMENTAL INVESTMENT LIMITATIONS

The following are the Fund's fundamental investment limitations which, along
with the Fund's investment objective (which is described in the Prospectus),
cannot be changed without shareholder approval. To obtain approval, a majority
of the Fund's outstanding voting shares must vote for the change. A majority
of the Fund's outstanding voting securities means the vote of the lesser of:
(1) 67% or more of the voting securities present, if more than 50% of the
outstanding voting securities are present or represented, or (2) more than 50%
of the outstanding voting shares.

Unless indicated otherwise below, 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, (1) more than 5% of the
Fund's total assets would be invested in the securities of that issuer, or (2)
the Fund would hold more than 10% of the outstanding voting securities of that
issuer.

2. May (1) borrow money from banks and (2) make other investments or engage
in other transactions permissible under the Investment Company Act of 1940
("1940 Act") which may involve a borrowing, provided that the combination of
(1) and (2) 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 (1) purchases of
debt securities or other debt instruments, or (2) 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.

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.

10. May not, under normal market conditions, invest less than 80% of its
net assets in municipal securities.

With respect to Advantage, Heritage Money, Money Market, and Investors Money
Funds, Fundamental Policy No. 10 does not apply because they are not municipal
funds.

4
<PAGE>

With respect to Heritage Money Fund, Fundamental Policy No. 7 shall not limit
the Fund's purchases of obligations issued by domestic banks.

5
<PAGE>

NON-FUNDAMENTAL OPERATING POLICIES

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

Unless indicated otherwise below, 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 ("SEC") or its staff, and provided
that transactions in options, futures contracts, options on futures contracts,
or other derivative instruments are not deemed to constitute selling securities
short.

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

3. Invest in illiquid securities if, as a result of such investment, more
than 15% (10% with respect to a money fund) 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. 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.

7. Borrow money except (1) from banks or (2) through reverse repurchase
agreements or mortgage dollar rolls, and will not purchase securities when bank
borrowings exceed 5% of its total assets.

8. Make any loans other than loans of portfolio securities, except through
(1) purchases of debt securities or other debt instruments, or (2) engaging in
repurchase agreements.

9. 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.

With respect to the Advantage and Municipal Advantage Funds, Non-Fundamental
Policy No. 9 does not apply because they are not money market funds.

Unless noted otherwise, if a percentage restriction is adhered to at the time
of investment, a later increase or decrease in percentage resulting from a
change in the Fund's assets (I.E. due to cash inflows or redemptions) or in
market value of the investment or the Fund's assets will not constitute a
violation of that restriction.

6
<PAGE>

INVESTMENT POLICIES AND TECHNIQUES

The following information supplements the discussion of the Fund's investment
objective, policies, and techniques described in the Prospectus.

STRONG HERITAGE MONEY FUND

- - 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.

STRONG INVESTORS MONEY FUND

- - 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 NRSROs or, if unrated, are
determined by the Advisor to be of comparable quality.

STRONG MONEY MARKET FUND

- - 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 NRSROs or, if unrated, are
determined by the Advisor to be of comparable quality.

STRONG MUNICIPAL MONEY MARKET FUND

- - As a fundamental policy at least 80% of the Fund's net assets will be
invested in municipal securities under normal market conditions. Generally,
municipal obligations are those whose interest is exempt from federal income
tax. The Fund may invest, without limitation, in municipal obligations whose
interest is a tax-preference item for purposes of the federal alternative
minimum tax ("AMT"). For taxpayers who are subject to the AMT, a substantial
portion of the Fund's distributions may not be exempt from federal income
tax. Accordingly, the Fund's net return may be lower for those taxpayers.

- - The Fund may also invest up to 20% of its net assets in taxable securities of
comparable quality to its investments in municipal securities, including U.S.
government securities, bank and corporate obligations, and short-term
fixed-income securities.

STRONG ADVANTAGE FUND

- - Under normal market conditions, at least 75% of the Fund's net assets will be
invested in investment-grade debt obligations, which generally include a
range of obligations from those in the highest rating category to those rated
in the fourth-highest rating category (E.G., BBB or higher by S&P).

- - The Fund may also invest up to 25% of its net assets in non-investment-grade
debt obligations that are rated in the fifth-highest rating category (E.G.,
BB by S&P) or unrated securities of comparable quality.

- - The Fund may invest up to 25% of its net assets directly or indirectly in
foreign securities.

7
<PAGE>

STRONG MUNICIPAL ADVANTAGE FUND

- - Under normal market conditions, the Fund will invest at least 90% in
investment-grade debt obligations, which generally include a range of
obligations from those in the highest rating category to those in the
fourth-highest rating category (E.G., BBB or higher by S&P).

- - However, the Fund may invest up to 10% of its net assets in
non-investment-grade debt obligations that are rated in the fifth-highest
rating category (E.G., BB by S&P) or unrated securities of comparable
quality.

THE FOLLOWING SECTION APPLIES TO THE HERITAGE MONEY, MONEY MARKET, AND
INVESTORS MONEY FUNDS ONLY:
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. Asset-backed debt obligations may include collateralized
mortgage obligations ("CMOs") issued by private companies. The credit quality
of most asset-backed securities depends primarily on the credit quality of the
assets underlying such securities, how well the entity issuing the security is
insulated from the credit risk of the originator or any other affiliated
entities, and the amount and quality of any credit enhancement of the
securities. 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 market for privately issued asset-backed
debt obligations is smaller and less liquid than the market for government
sponsored mortgage-backed securities.

The rate of principal payment on asset-backed securities generally depends on
the rate of principal payments received on the underlying assets which in turn
may be affected by a variety of economic and other factors. As a result, the
yield on any asset-backed security is difficult to predict with precision and
actual yield to maturity may be more or less than the anticipated yield to
maturity. 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 these debt obligations are purchased at a premium, a
prepayment rate that is faster than expected will reduce yield to maturity,
while a prepayment rate that is slower than expected will have the opposite
effect of increasing the yield to maturity. Conversely, if these debt
obligations are purchased 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 at a premium also imposes a risk of loss of
principal because the premium may not have been fully amortized at the time the
principal is prepaid in full.

While many asset-backed securities are issued with only one class of security,
many asset-backed securities are issued in more than one class, each with
different payment terms. Multiple class asset-backed securities are issued for
two main reasons. First, multiple classes may be used as a method of providing
credit support. This is accomplished typically through creation of one or more
classes whose right to payments on the asset-backed security is made
subordinate to the right to such payments of the remaining class or classes.
Second, multiple classes may permit the issuance of securities with payment
terms, interest rates, or other characteristics differing both from those of
each other and from those of the underlying assets. Examples include so-called
"strips" (asset-backed securities entitling the holder to disproportionate
interests with respect to the allocation of interest and principal of the
assets backing the security), and securities with class or classes having
characteristics which mimic the characteristics of non-asset-backed securities,
such as floating interest rates (I.E., interest rates which adjust as a
specified benchmark changes) or scheduled amortization of principal.

Asset-backed securities backed by assets, other than as described above, or in
which the payment streams on the underlying assets are allocated in a manner
different than those described above may be issued in the future. The Fund may
invest in such asset-backed securities if such investment is otherwise
consistent with its investment objectives and policies and with the investment
restrictions of the Fund.

8
<PAGE>

BORROWING

The Fund may borrow money from banks and make other investments or engage in
other transactions permissible under the 1940 Act which may be considered a
borrowing (such as mortgage dollar rolls and reverse repurchase agreements).
However, the Fund may not purchase securities when bank borrowings exceed 5% of
the Fund's total assets. Presently, the Fund only intends to borrow from banks
for temporary or emergency purposes.

THE FOLLOWING PARAGRAPH APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:

The Fund has established a line-of-credit ("LOC") with certain banks by which
it may borrow funds for temporary or emergency purposes. A borrowing is
presumed to be for temporary or emergency purposes if it is repaid by the Fund
within 60 days and is not extended or renewed. The Fund intends to use the LOC
to meet large or unexpected redemptions that would otherwise force the Fund to
liquidate securities under circumstances which are unfavorable to the Fund's
remaining shareholders. The Fund pays a commitment fee to the banks for the
LOC.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:
CASH MANAGEMENT

The Fund may invest directly in cash and short-term fixed-income securities,
including, for this purpose, shares of one or more money market funds managed
by Strong Capital Management, Inc., the Fund's investment advisor ("Advisor")
(collectively, the "Strong Money Funds"). The Strong Money Funds seek current
income, a stable share price of $1.00, and daily liquidity. All money market
instruments can change in value when interest rates or an issuer's
creditworthiness change dramatically. The Strong Money Funds cannot guarantee
that they will always be able to maintain a stable net asset value of $1.00 per
share.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:
CONVERTIBLE SECURITIES

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

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

A convertible security may be subject to redemption at the option of the issuer
at a price established in the convertible security's governing instrument. If
a convertible security is called for redemption, the Fund will be required to
permit the issuer to redeem the security, convert it into the underlying common
stock, or sell it to a third party.

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DEBT OBLIGATIONS

The Fund may invest a portion of its assets in debt obligations. Issuers of
debt obligations have a contractual obligation to pay interest at a specified
rate on specified dates and to repay principal on a specified maturity date.
Certain debt obligations (usually intermediate- and long-term bonds) have
provisions that allow the issuer to redeem or "call" a bond before its
maturity. Issuers are most likely to call such securities during periods of
falling interest rates and the Fund may have to replace such securities with
lower yielding securities, which could result in a lower return for the Fund.

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

MATURITY. In general, the longer the maturity of a debt obligation, the higher
its yield and the greater its sensitivity to changes in interest rates.
Conversely, the shorter the maturity, the lower the yield but the greater the
price stability. Commercial paper is generally considered the shortest
maturity form of debt obligation.

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

In conducting its credit research and analysis, the Advisor considers both
qualitative and quantitative factors to evaluate the creditworthiness of
individual issuers. The Advisor also relies, in part, on credit ratings
compiled by a number of Nationally Recognized Statistical Rating Organizations
("NRSROs").

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE FUND ONLY:
DEPOSITARY RECEIPTS

The Fund may invest in foreign securities by purchasing depositary receipts,
including American Depositary Receipts ("ADRs") and European Depositary
Receipts ("EDRs"), or other securities convertible into securities of foreign
issuers. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. Generally, ADRs,
in registered form, are denominated in U.S. dollars and are designed for use in
the U.S. securities markets, while EDRs, in bearer form, may be denominated in
other currencies and are designed for use in the European securities markets.
ADRs are receipts typically issued by a U.S. bank or trust company evidencing
ownership of the underlying securities. EDRs are European receipts evidencing
a similar arrangement. For purposes of the Fund's investment policies, ADRs
and EDRs are deemed to have the same classification as the underlying
securities they represent, except that ADRs and EDRs shall be treated as
indirect foreign investments. For example, an ADR or EDR representing
ownership of common stock will be treated as common stock. Depositary receipts
do not eliminate all of the risks associated with directly investing in the
securities of foreign issuers.

ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants.

A depositary may establish an unsponsored facility without participation by (or
even necessarily the permission of) the issuer of the deposited securities,
although typically the depositary requests a letter of non-objection from such
issuer prior to the establishment of the facility. Holders of unsponsored ADRs
generally bear all the costs of such facility. The depositary usually charges
fees upon the deposit and withdrawal of the deposited securities, the
conversion of dividends into U.S. dollars, the disposition of non-cash
distributions, and the performance of other services. The depositary of an
unsponsored facility frequently is under no obligation to pass through voting
rights to ADR holders in respect of the deposited securities. In addition, an
unsponsored facility is generally not obligated to distribute communications
received from the issuer of the deposited securities or to disclose material
information about such issuer in the U.S. and there may not be a correlation
between such information and the market value of the depositary receipts.

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<PAGE>

Sponsored ADR facilities are created in generally the same manner as
unsponsored facilities, except that the issuer of the deposited securities
enters into a deposit agreement with the depositary. The deposit agreement
sets out the rights and responsibilities of the issuer, the depositary, and the
ADR holders. With sponsored facilities, the issuer of the deposited securities
generally will bear some of the costs relating to the facility (such as
dividend payment fees of the depositary), although ADR holders continue to bear
certain other costs (such as deposit and withdrawal fees). Under the terms of
most sponsored arrangements, depositories agree to distribute notices of
shareholder meetings and voting instructions, and to provide shareholder
communications and other information to the ADR holders at the request of the
issuer of the deposited securities.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY, EXCEPT THAT THE SECTION REGARDING FOREIGN CURRENCY DOES NOT APPLY TO THE
MUNICIPAL ADVANTAGE FUND:
DERIVATIVE INSTRUMENTS

IN GENERAL. The Fund may use derivative instruments for any lawful purpose
consistent with its investment objective such as hedging or managing risk.
Derivative instruments are commonly defined to include securities or contracts
whose values depend on (or "derive" from) the value of one or more other
assets, such as securities, currencies, or commodities. These "other assets"
are commonly referred to as "underlying assets."

A derivative instrument generally consists of, is based upon, or exhibits
characteristics similar to OPTIONS or FORWARD CONTRACTS. Options and forward
contracts are considered to be the basic "building blocks" of derivatives. For
example, forward-based derivatives include forward contracts, swap contracts,
as well as exchange-traded futures. Option-based derivatives include privately
negotiated, over-the-counter ("OTC") options (including caps, floors, collars,
and options on forward and swap contracts) and exchange-traded options on
futures. Diverse types of derivatives may be created by combining options or
forward contracts in different ways, and by applying these structures to a wide
range of underlying assets.

An option is a contract in which the "holder" (the buyer) pays a certain amount
("premium") to the "writer" (the seller) to obtain the right, but not the
obligation, to buy from the writer (in a "call") or sell to the writer (in a
"put") a specific asset at an agreed upon price at or before a certain time.
The holder pays the premium at inception and has no further financial
obligation. The holder of an option-based derivative generally will benefit
from favorable movements in the price of the underlying asset but is not
exposed to corresponding losses due to adverse movements in the value of the
underlying asset. The writer of an option-based derivative generally will
receive fees or premiums but generally is exposed to losses due to changes in
the value of the underlying asset.

A forward is a sales contract between a buyer (holding the "long" position) and
a seller (holding the "short" position) for an asset with delivery deferred
until a future date. The buyer agrees to pay a fixed price at the agreed
future date and the seller agrees to deliver the asset. The seller hopes that
the market price on the delivery date is less than the agreed upon price, while
the buyer hopes for the contrary. The change in value of a forward-based
derivative generally is roughly proportional to the change in value of the
underlying asset.

HEDGING. The Fund may use derivative instruments to protect against possible
adverse changes in the market value of securities held in, or are anticipated
to be held in, its portfolio. Derivatives may also be used to "lock-in"
realized but unrecognized gains in the value of its portfolio securities.
Hedging strategies, if successful, can reduce the risk of loss by wholly or
partially offsetting the negative effect of unfavorable price movements in the
investments being hedged. However, hedging strategies can also reduce the
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. To the extent that a hedge matures prior
to or after the disposition of the investment subject to the hedge, any gain or
loss on the hedge will be realized earlier or later than any offsetting gain or
loss on the hedged investment.

MANAGING RISK. The Fund may also use derivative instruments to manage the
risks of its portfolio. Risk management strategies include, but are not
limited to, facilitating the sale of portfolio securities, managing the
effective maturity or duration of debt obligations in its portfolio,
establishing a position in the derivatives markets as a substitute for buying
or selling certain securities, or creating or altering exposure to certain
asset classes, such as equity, debt, or foreign securities. The use of
derivative instruments may provide a less expensive, more expedient or more
specifically focused way to invest than "traditional" securities (I.E., stocks
or bonds) would.

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<PAGE>

EXCHANGE AND OTC DERIVATIVES. Derivative instruments may be exchange-traded or
traded in OTC transactions between private parties. Exchange-traded
derivatives are standardized options and futures contracts traded in an auction
on the floor of a regulated exchange. Exchange contracts are generally very
liquid. The exchange clearinghouse is the counterparty of every contract.
Thus, each holder of an exchange contract bears the credit risk of the
clearinghouse (and has the benefit of its financial strength) rather than that
of a particular counterparty. OTC transactions are subject to additional
risks, such as the credit risk of the counterparty to the instrument, and are
less liquid than exchange-traded derivatives since they often can only be
closed out with the other party to the transaction.

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

(1) MARKET RISK. The primary risk of derivatives is the same as the risk
of the underlying assets, namely that the value of the underlying asset may go
up or down. Adverse movements in the value of an underlying asset can expose
the Fund to losses. Derivative instruments may include elements of leverage
and, accordingly, the fluctuation of the value of the derivative instrument in
relation to the underlying asset may be magnified. The successful use of
derivative instruments depends upon a variety of factors, particularly the
ability of the Advisor to predict movements of the securities, currencies, and
commodity markets, which requires different skills than predicting changes in
the prices of individual securities. There can be no assurance that any
particular strategy adopted will succeed. The Advisor's decision to engage in
a derivative instrument will reflect its judgment that the derivative
transaction will provide value to the Fund and its shareholders and is
consistent with the Fund's objectives, investment limitations, and operating
policies. In making such a judgment, the Advisor will analyze the benefits and
risks of the derivative transaction and weigh them in the context of the Fund's
entire portfolio and investment objective.

(2) CREDIT RISK. The Fund will be subject to the risk that a loss may be
sustained as a result of the failure of a counterparty to comply with the terms
of a derivative instrument. The counterparty risk for exchange-traded
derivative instruments is generally less than for privately negotiated or OTC
derivative instruments, since generally a clearing agency, which is the issuer
or counterparty to each exchange-traded instrument, provides a guarantee of
performance. For privately negotiated instruments, there is no similar
clearing agency guarantee. In all transactions, the Fund will bear the risk
that the counterparty will default, and this could result in a loss of the
expected benefit of the derivative transaction and possibly other losses. The
Fund will enter into transactions in derivative instruments only with
counterparties that the Advisor reasonably believes are capable of performing
under the contract.

(3) CORRELATION RISK. When a derivative transaction is used to completely
hedge another position, changes in the market value of the combined position
(the derivative instrument plus the position being hedged) result from an
imperfect correlation between the price movements of the two instruments. With
a perfect hedge, the value of the combined position remains unchanged for any
change in the price of the underlying asset. With an imperfect hedge, the
values of the derivative instrument and its hedge are not perfectly correlated.
Correlation risk is the risk that there might be imperfect correlation, or even
no correlation, between price movements of an instrument and price movements of
investments being hedged. For example, if the value of a derivative
instruments used in a short hedge (such as writing a call option, buying a put
option, or selling a futures contract) increased by less than the decline in
value of the hedged investments, the hedge would not be perfectly correlated.
Such a lack of correlation might occur due to factors unrelated to the value of
the investments being hedged, such as speculative or other pressures on the
markets in which these instruments are traded. The effectiveness of hedges
using instruments on indices will depend, in part, on the degree of correlation
between price movements in the index and price movements in the investments
being hedged.

(4) LIQUIDITY RISK. Derivatives are also subject to liquidity risk.
Liquidity risk is the risk that a derivative instrument cannot be sold, closed
out, or replaced quickly at or very close to its fundamental value. Generally,
exchange contracts are very liquid because the exchange clearinghouse is the
counterparty of every contract. OTC transactions are less liquid than
exchange-traded derivatives since they often can only be closed out with the
other party to the transaction. The Fund might be required by applicable
regulatory requirement to maintain assets as "cover," maintain segregated
accounts, and/or make margin payments when it takes positions in derivative
instruments involving obligations to third parties (I.E., instruments other
than purchased options). If the Fund was unable to close out its positions in
such instruments, it might be required to continue to maintain such assets or
accounts or make such payments until the position expired, matured, or was
closed out. The requirements might impair the Fund's ability to sell a
portfolio security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund sell a portfolio security at a
disadvantageous time. The Fund's ability to sell or close out a position in an
instrument prior to expiration or maturity depends on the existence of a liquid
secondary market or, in

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<PAGE>

the absence of such a market, the ability and willingness of the counterparty
to enter into a transaction closing out the position. Therefore, there is no
assurance that any derivatives position can be sold or closed out at a time
and price that is favorable to the Fund.

(5) LEGAL RISK. Legal risk is the risk of loss caused by the legal
unenforcibility of a party's obligations under the derivative. While a party
seeking price certainty agrees to surrender the potential upside in exchange
for downside protection, the party taking the risk is looking for a positive
payoff. Despite this voluntary assumption of risk, a counterparty that has
lost money in a derivative transaction may try to avoid payment by exploiting
various legal uncertainties about certain derivative products.

(6) SYSTEMIC OR "INTERCONNECTION" RISK. Interconnection risk is the risk
that a disruption in the financial markets will cause difficulties for all
market participants. In other words, a disruption in one market will spill
over into other markets, perhaps creating a chain reaction. Much of the OTC
derivatives market takes place among the OTC dealers themselves, thus creating
a large interconnected web of financial obligations. This interconnectedness
raises the possibility that a default by one large dealer could create losses
at other dealers and destabilize the entire market for OTC derivative
instruments.

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

The Fund has filed a notice of eligibility for exclusion from the definition of
the term "commodity pool operator" with the CFTC and the National Futures
Association, which regulate trading in the futures markets. In accordance with
Rule 4.5 of the regulations under the Commodity Exchange Act ("CEA"), the
notice of eligibility for the Fund includes representations that the Fund will
use futures contracts and related options solely for bona fide hedging purposes
within the meaning of CFTC regulations, provided that the Fund may hold other
positions in futures contracts and related options that do not qualify as a
bona fide hedging position if the aggregate initial margin deposits and
premiums required to establish these positions, less the amount by which any
such futures contracts and related options positions are "in the money," do not
exceed 5% of the Fund's net assets. Adherence to these guidelines does not
limit the Fund's risk to 5% of the Fund's assets.

The SEC has identified certain trading practices involving derivative
instruments that involve the potential for leveraging the Fund's assets in a
manner that raises issues under the 1940 Act. In order to limit the potential
for the leveraging of the Fund's assets, as defined under the 1940 Act, the SEC
has stated that the Fund may use coverage or the segregation of the Fund's
assets. To the extent required by SEC guidelines, the Fund will not enter into
any such transactions unless it owns either: (1) an offsetting ("covered")
position in securities, options, futures, or derivative instruments; or (2)
cash or liquid securities positions with a value sufficient at all times to
cover its potential obligations to the extent that the position is not
"covered". The Fund will also set aside cash and/or appropriate liquid assets
in a segregated custodial account if required to do so by SEC and CFTC
regulations. Assets used as cover or held in a segregated account cannot be
sold while the derivative position is open, unless they are replaced with
similar assets. As a result, the commitment of a large portion of the Fund's
assets to segregated accounts could impede portfolio management or the Fund's
ability to meet redemption requests or other current obligations.

In some cases, the Fund may be required to maintain or limit exposure to a
specified percentage of its assets to a particular asset class. In such cases,
when the Fund uses a derivative instrument to increase or decrease exposure to
an asset class and is required by applicable SEC guidelines to set aside liquid
assets in a segregated account to secure its obligations under the derivative
instruments, the Advisor may, where reasonable in light of the circumstances,
measure compliance with the applicable percentage by reference to the nature of
the economic exposure created through the use of the derivative instrument and
not by reference to the nature of the exposure arising from the liquid assets
set aside in the segregated account (unless another interpretation is specified
by applicable regulatory requirements).

OPTIONS. The Fund may use options for any lawful purpose consistent with its
investment objective such as hedging or managing risk. An option is a contract
in which the "holder" (the buyer) pays a certain amount ("premium") to the
"writer" (the seller) to obtain the right, but not the obligation, to buy from
the writer (in a "call") or sell to the writer (in a "put") a specific asset at
an agreed upon price ("strike price" or "exercise price") at or before a
certain time ("expiration date"). The holder pays the premium at inception and
has no further financial obligation. The holder of an option will benefit from
favorable movements in the price of the underlying asset but is not exposed to
corresponding losses due to adverse movements in the value of the underlying
asset. The writer of an option will receive fees or premiums but is exposed to
losses due to changes in the

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<PAGE>

value of the underlying asset. The Fund may buy or write (sell) put and call
options on assets, such as securities, currencies, financial commodities, and
indices of debt and equity securities ("underlying assets") and enter into
closing transactions with respect to such options to terminate an existing
position. Options used by the Fund may include European, American, and Bermuda
style options. If an option is exercisable only at maturity, it is a
"European" option; if it is also exercisable prior to maturity, it is an
"American" option. If it is exercisable only at certain times, it is a
"Bermuda" option.

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

The value of an option position will reflect, among other things, the
historical price volatility of the underlying investment, the current market
value of the underlying investment, the time remaining until expiration, the
relationship of the exercise price to the market price of the underlying
investment, and general market conditions.

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

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

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

The Fund may engage in options transactions on indices in much the same manner
as the options on securities discussed above, except the index options may
serve as a hedge against overall fluctuations in the securities market
represented by the relevant market index.

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

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<PAGE>

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

FUTURES CONTRACTS. The Fund may use futures contracts for any lawful purpose
consistent with its investment objective such as hedging or managing risk. The
Fund may enter into futures contracts, including, but not limited to, interest
rate and index futures. The Fund may also purchase put and call options, and
write covered put and call options, on futures in which it is allowed to
invest. The purchase of futures or call options thereon can serve as a long
hedge, and the sale of futures or the purchase of put options thereon can serve
as a short hedge. Writing covered call options on futures contracts can serve
as a limited short hedge, and writing covered put options on futures contracts
can serve as a limited long hedge, using a strategy similar to that used for
writing covered options in securities. The Fund may also write put options on
futures contracts while at the same time purchasing call options on the same
futures contracts in order to create synthetically a long futures contract
position. Such options would have the same strike prices and expiration dates.
The Fund will engage in this strategy only when the Advisor believes it is more
advantageous to the Fund than purchasing the futures contract.

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

An interest rate futures contract provides for the future sale by one party and
purchase by another party of a specified amount of a specific financial
instrument (E.G., debt security) for a specified price at a designated date,
time, and place. An index futures contract is an agreement pursuant to which
the parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last trading day
of the contract and the price at which the index futures contract was
originally written. Transaction costs are incurred when a futures contract is
bought or sold and margin deposits must be maintained. A futures contract may
be satisfied by delivery or purchase, as the case may be, of the instrument or
by payment of the change in the cash value of the index. More commonly,
futures contracts are closed out prior to delivery by entering into an
offsetting transaction in a matching futures contract. Although the value of
an index might be a function of the value of certain specified securities, no
physical delivery of those securities is made. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is
more than the original purchase price, the Fund realizes a gain; if it is less,
the Fund realizes a loss. The transaction costs must also be included in these
calculations. There can be no assurance, however, that the Fund will be able
to enter into an offsetting transaction with respect to a particular futures
contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the futures contract.

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

Subsequent "variation margin" payments are made to and from the futures broker
daily as the value of the futures position varies, a process known as "marking
to market." Variation margin does not involve borrowing, but rather represents
a daily

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<PAGE>

settlement of the Fund's obligations to or from a futures broker. When the
Fund purchases an option on a future, the premium paid plus transaction costs
is all that is at risk. In contrast, when the Fund purchases or sells a
futures contract or writes a call or put option thereon, it is subject to daily
variation margin calls that could be substantial in the event of adverse price
movements. If the Fund has insufficient cash to meet daily variation margin
requirements, it might need to sell securities at a time when such sales are
disadvantageous. Purchasers and sellers of futures positions and options on
futures can enter into offsetting closing transactions by selling or
purchasing, respectively, an instrument identical to the instrument held or
written. Positions in futures and options on futures may be closed only on an
exchange or board of trade that provides a secondary market. The Fund intends
to enter into futures transactions only on exchanges or boards of trade where
there appears to be a liquid secondary market. However, there can be no
assurance that such a market will exist for a particular contract at a
particular time.

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

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

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

FOREIGN CURRENCIES. The Fund may purchase and sell foreign currency on a spot
basis, and may use currency-related derivatives instruments such as options on
foreign currencies, futures on foreign currencies, options on futures on
foreign currencies and forward currency contracts (I.E., an obligation to
purchase or sell a specific currency at a specified future date, which may be
any fixed number of days from the contract date agreed upon by the parties, at
a price set at the time the contract is entered into). The Fund may use these
instruments for hedging or any other lawful purpose consistent with the Fund's
investment objective, including transaction hedging, anticipatory hedging,
cross hedging, proxy hedging, and position hedging. The Fund's use of
currency-related derivative instruments will be directly related to the Fund's
current or anticipated portfolio securities, and the Fund may engage in
transactions in currency-related derivative instruments as a means to protect
against some or all of the effects of adverse changes in foreign currency
exchange rates on its investment portfolio. In general, if the currency in
which a portfolio investment is denominated appreciates against the U.S.
dollar, the dollar value of the security will increase. Conversely, a decline
in the exchange rate of the currency would adversely affect the value of the
portfolio investment expressed in U.S. dollars.

For example, the Fund might use currency-related derivative instruments to
"lock in" a U.S. dollar price for a portfolio investment, thereby enabling the
Fund to protect itself against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and the subject foreign currency
during the period between the date the security is purchased or sold and the
date on which payment is made or received. The Fund also might use
currency-related derivative instruments when the Advisor believes that one
currency may experience a substantial movement against another currency,
including the U.S. dollar, and it may use currency-related derivative
instruments to sell or buy the amount of the former foreign currency,
approximating the value of some or all of the Fund's portfolio securities
denominated in such foreign currency. Alternatively, where appropriate, the
Fund may use currency-related derivative instruments to hedge all or part of
its foreign currency exposure through the use of a basket of currencies or a
proxy currency where such currency or currencies act as an effective proxy for
other currencies. The use of this basket hedging technique may be more
efficient and economical than using separate currency

16
<PAGE>

related derivative instruments for each currency exposure held by the Fund.
Furthermore, currency-related derivative instruments may be used for short
hedges - for example, the Fund may sell a forward currency contract to lock in
the U.S. dollar equivalent of the proceeds from the anticipated sale of a
security denominated in a foreign currency.

In addition, the Fund may use a currency-related derivative instrument to shift
exposure to foreign currency fluctuations from one foreign country to another
foreign country where the Advisor believes that the foreign currency exposure
purchased will appreciate relative to the U.S. dollar and thus better protect
the Fund against the expected decline in the foreign currency exposure sold.
For example, if the Fund owns securities denominated in a foreign currency and
the Advisor believes that currency will decline, it might enter into a forward
contract to sell an appropriate amount of the first foreign currency, with
payment to be made in a second foreign currency that the Advisor believes would
better protect the Fund against the decline in the first security than would a
U.S. dollar exposure. Hedging transactions that use two foreign currencies are
sometimes referred to as "cross hedges." The effective use of currency-related
derivative instruments by the Fund in a cross hedge is dependent upon a
correlation between price movements of the two currency instruments and the
underlying security involved, and the use of two currencies magnifies the risk
that movements in the price of one instrument may not correlate or may
correlate unfavorably with the foreign currency being hedged. Such a lack of
correlation might occur due to factors unrelated to the value of the currency
instruments used or investments being hedged, such as speculative or other
pressures on the markets in which these instruments are traded.

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

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

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

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

When the Fund engages in a transaction in a currency-related derivative
instrument, it relies on the counterparty to make or take delivery of the
underlying currency at the maturity of the contract or otherwise complete the
contract. In other words, the Fund will be subject to the risk that a loss may
be sustained by the Fund as a result of the failure of the counterparty to
comply with the terms of the transaction. The counterparty risk for
exchange-traded instruments is generally less than for privately negotiated or
OTC currency instruments, since generally a clearing agency, which is the
issuer or counterparty to each instrument, provides a guarantee of performance.
For privately negotiated instruments, there is no similar clearing agency
guarantee. In all transactions, the Fund will bear the risk that the
counterparty will default, and this could result in a loss of the expected
benefit of the transaction and possibly other losses to the Fund. The Fund
will enter into transactions in currency-related derivative instruments only
with counterparties that the Advisor reasonably believes are capable of
performing under the contract.

17
<PAGE>

Purchasers and sellers of currency-related derivative instruments may enter
into offsetting closing transactions by selling or purchasing, respectively, an
instrument identical to the instrument purchased or sold. Secondary markets
generally do not exist for forward currency contracts, with the result that
closing transactions generally can be made for forward currency contracts only
by negotiating directly with the counterparty. Thus, there can be no assurance
that the Fund will in fact be able to close out a forward currency contract (or
any other currency-related derivative instrument) at a time and price favorable
to the Fund. In addition, in the event of insolvency of the counterparty, the
Fund might be unable to close out a forward currency contract at any time prior
to maturity. In the case of an exchange-traded instrument, the Fund will be
able to close the position out only on an exchange which provides a market for
the instruments. The ability to establish and close out positions on an
exchange is subject to the maintenance of a liquid market, and there can be no
assurance that a liquid market will exist for any instrument at any specific
time. In the case of a privately negotiated instrument, the Fund will be able
to realize the value of the instrument only by entering into a closing
transaction with the issuer or finding a third party buyer for the instrument.
While the Fund will enter into privately negotiated transactions only with
entities who are expected to be capable of entering into a closing transaction,
there can be no assurance that the Fund will in fact be able to enter into such
closing transactions.

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

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

There will be a cost to the Fund of engaging in transactions in
currency-related derivative instruments that will vary with factors such as the
contract or currency involved, the length of the contract period and the market
conditions then prevailing. The Fund using these instruments may have to pay a
fee or commission or, in cases where the instruments are entered into on a
principal basis, foreign exchange dealers or other counterparties will realize
a profit based on the difference ("spread") between the prices at which they
are buying and selling various currencies. Thus, for example, a dealer may
offer to sell a foreign currency to the Fund at one rate, while offering a
lesser rate of exchange should the Fund desire to resell that currency to the
dealer.

When required by the SEC guidelines, the Fund will set aside permissible liquid
assets in segregated accounts or otherwise cover the Fund's potential
obligations under currency-related derivatives instruments. To the extent the
Fund's assets are so set aside, they cannot be sold while the corresponding
currency position is open, unless they are replaced with similar assets. As a
result, if a large portion of the Fund's assets are so set aside, this could
impede portfolio management or the Fund's ability to meet redemption requests
or other current obligations.

The Advisor's decision to engage in a transaction in a particular
currency-related derivative instrument will reflect the Advisor's judgment that
the transaction will provide value to the Fund and its shareholders and is
consistent with the Fund's objectives and policies. In making such a judgment,
the Advisor will analyze the benefits and risks of the transaction and weigh
them in the context of the Fund's entire portfolio and objectives. The
effectiveness of any transaction in a currency-related derivative instrument is
dependent on a variety of factors, including the Advisor's skill in analyzing
and predicting currency values and upon a correlation between price movements
of the currency instrument and the underlying security. There might be
imperfect correlation, or even no correlation, between price movements of an
instrument and price movements of investments being hedged. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the markets
in which these instruments are traded. In addition, the Fund's use of
currency-related derivative instruments is always subject to the risk that the
currency in question could be devalued by the foreign government. In such a
case, any long currency positions would decline in value and could adversely
affect any hedging position maintained by the Fund.

The Fund's dealing in currency-related derivative instruments will generally be
limited to the transactions described above. However, the Fund reserves the
right to use currency-related derivatives instruments for different purposes
and under different circumstances. Of course, the Fund is not required to use
currency-related derivatives instruments and will not do so unless deemed
appropriate by the Advisor. It also should be realized that use of these
instruments does not eliminate, or protect

18
<PAGE>

against, price movements in the Fund's securities that are attributable to
other (I.E., non-currency related) causes. Moreover, while the use of
currency-related derivatives instruments may reduce the risk of loss due to a
decline in the value of a hedged currency, at the same time the use of these
instruments tends to limit any potential gain which may result from an increase
in the value of that currency.

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

The "notional amount" of the swap agreement is the agreed upon basis for
calculating the obligations that the parties to a swap agreement have agreed to
exchange. Under most swap agreements entered into by the Fund, the obligations
of the parties would be exchanged on a "net basis." Consequently, the Fund's
obligation (or rights) under a swap agreement will generally be equal only to
the net amount to be paid or received under the agreement based on the relative
values of the positions held by each party to the agreement ("net amount").
The Fund's obligation under a swap agreement will be accrued daily (offset
against amounts owed to the Fund) and any accrued but unpaid net amounts owed
to a swap counterparty will be covered by the maintenance of a segregated
account consisting of cash and/or other appropriate liquid assets.

Whether the Fund's use of swap agreements will be successful in furthering its
investment objective will depend, in part, on the Advisor's ability to predict
correctly whether certain types of investments are likely to produce greater
returns than other investments. Swap agreements may be considered to be
illiquid. Moreover, the Fund bears the risk of loss of the amount expected to
be received under a swap agreement in the event of the default or bankruptcy of
a swap agreement counterparty. Certain restrictions imposed on the Fund by the
Internal Revenue Code of 1986 ("IRC") may limit the Fund's ability to use swap
agreements. The swaps market is largely unregulated.

The Fund will enter swap agreements only with counterparties that the Advisor
reasonably believes are capable of performing under the swap agreements. If
there is a default by the other party to such a transaction, the Fund will have
to rely on its contractual remedies (which may be limited by bankruptcy,
insolvency or similar laws) pursuant to the agreements related to the
transaction.

ADDITIONAL DERIVATIVE INSTRUMENTS AND STRATEGIES. In addition to the
derivative instruments and strategies described above and in the Prospectus,
the Advisor expects to discover additional derivative instruments and other
hedging or risk management techniques. The Advisor may utilize these new
derivative instruments and techniques to the extent that they are consistent
with the Fund's investment objective and permitted by the Fund's investment
limitations, operating policies, and applicable regulatory authorities.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:
DURATION

Duration was developed as a more precise alternative to the concept of
"maturity." Traditionally, a debt obligations' maturity has been used as a
proxy for the sensitivity of the security's price to changes in interest rates
(which is the "interest rate risk" or "volatility" of the security). However,
maturity measures only the time until a debt obligation provides its final
payment, taking no account of the pattern of the security's payments prior to
maturity. In contrast, duration incorporates a bond's yield, coupon

19
<PAGE>

interest payments, final maturity and call features into one measure. Duration
management is one of the fundamental tools used by the Advisor.

Duration is a measure of the expected life of a debt obligation on a present
value basis. Duration takes the length of the time intervals between the
present time and the time that the interest and principal payments are
scheduled or, in the case of a callable bond, the time the principal payments
are expected to be received, and weights them by the present values of the cash
to be received at each future point in time. For any debt obligation with
interest payments occurring prior to the payment of principal, duration is
always less than maturity. In general, all other things being equal, the lower
the stated or coupon rate of interest of a fixed income security, the longer
the duration of the security; conversely, the higher the stated or coupon rate
of interest of a fixed income security, the shorter the duration of the
security.

Futures, options and options on futures have durations which, in general, are
closely related to the duration of the securities which underlie them. Holding
long futures or call option positions will lengthen the duration of the Fund's
portfolio by approximately the same amount of time that holding an equivalent
amount of the underlying securities would.

Short futures or put option positions have durations roughly equal to the
negative duration of the securities that underlie these positions, and have the
effect of reducing portfolio duration by approximately the same amount of time
that selling an equivalent amount of the underlying securities would.

There are some situations where even the standard duration calculation does not
properly reflect the interest rate exposure of a security. For example,
floating and variable rate securities often have final maturities of ten or
more years; however, their interest rate exposure corresponds to the frequency
of the coupon reset. Another example where the interest rate exposure is not
properly captured by duration is mortgage pass-through securities. The stated
final maturity of such securities is generally 30 years, but current prepayment
rates are more critical in determining the securities' interest rate exposure.
Finally, the duration of a debt obligation may vary over time in response to
changes in interest rates and other market factors.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE FUND ONLY:
FOREIGN INVESTMENT COMPANIES

The Fund may invest, to a limited extent, in foreign investment companies.
Some of the countries in which the Fund invests may not permit direct
investment by outside investors. Investments in such countries may only be
permitted through foreign government-approved or -authorized investment
vehicles, which may include other investment companies. In addition, it may be
less expensive and more expedient for the Fund to invest in a foreign
investment company in a country which permits direct foreign investment.
Investing through such vehicles may involve frequent or layered fees or
expenses and may also be subject to limitation under the 1940 Act. Under the
1940 Act, the Fund may invest up to 10% of its assets in shares of other
investment companies and up to 5% of its assets in any one investment company
as long as the investment does not represent more than 3% of the voting stock
of the acquired investment company. The Fund does not intend to invest in such
investment companies unless, in the judgment of the Advisor, the potential
benefits of such investments justify the payment of any associated fees and
expenses.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE FUND ONLY:
FOREIGN SECURITIES

Investing in foreign securities involves a series of risks not present in
investing in U.S. securities. Many of the foreign securities held by the Fund
will not be registered with the SEC, nor will the foreign issuers be subject to
SEC reporting requirements. Accordingly, there may be less publicly available
information concerning foreign issuers of securities held by the Fund than is
available concerning U.S. companies. Disclosure and regulatory standards in
many respects are less stringent in emerging market countries than in the U.S.
and other major markets. There also may be a lower level of monitoring and
regulation of emerging markets and the activities of investors in such markets,
and enforcement of existing regulations may be extremely limited. Foreign
companies, and in particular, companies in smaller and emerging capital markets
are not generally subject to uniform accounting, auditing and financial
reporting standards, or to other regulatory requirements comparable to those

20
<PAGE>

applicable to U.S. companies. The Fund's net investment income and capital
gains from its foreign investment activities may be subject to non-U.S.
withholding taxes.

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

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

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:
HIGH-YIELD (HIGH-RISK) SECURITIES

IN GENERAL. Non-investment grade debt obligations ("lower-quality securities")
include (1) bonds rated as low as C by Moody's Investors ("Moody's"), Standard
& Poor's Ratings Group ("S&P"), and comparable ratings of other nationally
recognized statistical rating organizations ("NRSROs"); (2) commercial paper
rated as low as C by S&P, Not Prime by Moody's, and comparable ratings of other
NRSROs; and (3) unrated debt obligations of comparable quality. Lower-quality
securities, while generally offering higher yields than investment grade
securities with similar maturities, involve greater risks, including the
possibility of default or bankruptcy. They are regarded as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal. The special risk considerations in connection with investments in
these securities are discussed below. Refer to the Appendix for a description
of the securities ratings.

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

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

As previously stated, the value of a lower-quality or comparable unrated
security will decrease in a rising interest rate market and accordingly, so
will the Fund's net asset value. If the Fund experiences unexpected net
redemptions in such a market, it may be forced to liquidate a portion of its
portfolio securities without regard to their investment merits. Due to the
limited liquidity of

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<PAGE>

lower-quality and comparable unrated securities (discussed below), the Fund may
be forced to liquidate these securities at a substantial discount. Any such
liquidation would force the Fund to sell the more liquid portion of its
portfolio.

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

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

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

LEGISLATION. Legislation may be adopted, from time to time, designed to limit
the use of certain lower-quality and comparable unrated securities by certain
issuers. It is anticipated that if additional legislation is enacted or
proposed, it could have a material affect on the value of these securities and
the existence of a secondary trading market for the securities.

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, the illiquid securities would comprise more than 15% (10% for
money market funds) of the value of the Fund's net assets (or such other
amounts as may be permitted under the 1940 Act). However, as a matter of
internal policy, the Advisor intends to limit the Fund's investments in
illiquid securities to 10% of its net assets.

The Board of Directors of the Fund, or its delegate, has the ultimate authority
to determine, to the extent permissible under the federal securities laws,
which securities are illiquid for purposes of this limitation. Certain
securities exempt from registration or issued in transactions exempt from
registration under the Securities Act of 1933, as amended ("Securities Act"),
such as securities that may be resold to institutional investors under Rule
144A under the Securities Act and Section 4(2) commercial paper, may be
considered liquid under guidelines adopted by the Fund's Board of Directors.

The Board of Directors of the Fund has delegated to the Advisor the day-to-day
determination of the liquidity of a security, although it has retained
oversight and ultimate responsibility for such determinations. The Board of
Directors has directed the

22
<PAGE>

Advisor to look to such factors as (1) the frequency of trades or quotes for a
security, (2) the number of dealers willing to purchase or sell the security
and number of potential buyers, (3) the willingness of dealers to undertake to
make a market in the security, (4) the nature of the security and nature of the
marketplace trades, such as the time needed to dispose of the security, the
method of soliciting offers, and the mechanics of transfer, (5) the likelihood
that the security's marketability will be maintained throughout the anticipated
holding period, and (6) any other relevant factors. The Advisor may determine
4(2) commercial paper to be liquid if (1) the 4(2) commercial paper is not
traded flat or in default as to principal and interest, (2) the 4(2) commercial
paper is rated in one of the two highest rating categories by at least two
NRSROs), or if only one NRSRO rates the security, by that NRSRO, or is
determined by the Advisor to be of equivalent quality, and (3) the Advisor
considers the trading market for the specific security taking into account all
relevant factors. With respect to any foreign holdings, a foreign security may
be considered liquid by the Advisor (despite its restricted nature under the
Securities Act) if the security can be freely traded in a foreign securities
market and all the facts and circumstances support a finding of liquidity.

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, the 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 in accordance with
pricing procedures adopted by the Board of Directors of the Fund. If through
the appreciation of restricted securities or the depreciation of unrestricted
securities the Fund should be in a position where more than 15% of the value of
its net assets are invested in illiquid securities, including restricted
securities which are not readily marketable (except for 144A Securities and
4(2) commercial paper deemed to be liquid by the Advisor), the Fund will take
such steps as is deemed advisable, if any, to protect the liquidity of the
Fund's portfolio.

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

LENDING OF PORTFOLIO SECURITIES

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. Although the Fund is authorized to lend, the Fund does not
presently intend to engage in 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.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE FUND ONLY:
LOAN INTERESTS

The Fund may acquire a loan interest (a "Loan Interest"). A Loan Interest is
typically originated, negotiated, and structured by a U.S. or foreign
commercial bank, insurance company, finance company, or other financial
institution ("Agent") for a lending syndicate of financial institutions. The
Agent typically administers and enforces the loan on behalf of the other
lenders in the syndicate. In addition, an institution, typically but not
always the Agent ("Collateral Bank"), holds collateral (if any) on behalf of
the lenders. These Loan Interests may take the form of participation interests
in, assignments of or novations of a loan during its secondary distribution, or
direct interests during a primary distribution. Such Loan Interests may be
acquired from U.S. or

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<PAGE>

foreign banks, insurance companies, finance companies, or other financial
institutions who have made loans or are members of a lending syndicate or from
other holders of Loan Interests. The Fund may also acquire Loan Interests
under which the Fund derives its rights directly from the borrower. Such Loan
Interests are separately enforceable by the Fund against the borrower and all
payments of interest and principal are typically made directly to the Fund from
the borrower. In the event that the Fund and other lenders become entitled to
take possession of shared collateral, it is anticipated that such collateral
would be held in the custody of a Collateral Bank for their mutual benefit.
The Fund may not act as an Agent, a Collateral Bank, a guarantor or sole
negotiator or structurer with respect to a loan.

The Advisor will analyze and evaluate the financial condition of the borrower
in connection with the acquisition of any Loan Interest. The Advisor also
analyzes and evaluates the financial condition of the Agent and, in the case of
Loan Interests in which the Fund does not have privity with the borrower, those
institutions from or through whom the Fund derives its rights in a loan
("Intermediate Participants").

In a typical loan, the Agent administers the terms of the loan agreement. In
such cases, the Agent is normally responsible for the collection of principal
and interest payments from the borrower and the apportionment of these payments
to the credit of all institutions which are parties to the loan agreement. The
Fund will generally rely upon the Agent or an Intermediate Participant to
receive and forward to the Fund its portion of the principal and interest
payments on the loan. Furthermore, unless under the terms of a participation
agreement the Fund has direct recourse against the borrower, the Fund will rely
on the Agent and the other members of the lending syndicate to use appropriate
credit remedies against the borrower. The Agent is typically responsible for
monitoring compliance with covenants contained in the loan agreement based upon
reports prepared by the borrower. The seller of the Loan Interest usually
does, but is often not obligated to, notify holders of Loan Interests of any
failures of compliance. The Agent may monitor the value of the collateral and,
if the value of the collateral declines, may accelerate the loan, may give the
borrower an opportunity to provide additional collateral or may seek other
protection for the benefit of the participants in the loan. The Agent is
compensated by the borrower for providing these services under a loan
agreement, and such compensation may include special fees paid upon structuring
and funding the loan and other fees paid on a continuing basis. With respect
to Loan Interests for which the Agent does not perform such administrative and
enforcement functions, the Fund will perform such tasks on its own behalf,
although a Collateral Bank will typically hold any collateral on behalf of the
Fund and the other lenders pursuant to the applicable loan agreement.

A financial institution's appointment as Agent may usually be terminated in the
event that it fails to observe the requisite standard of care or becomes
insolvent, enters Federal Deposit Insurance Corporation ("FDIC") receivership,
or, if not FDIC insured, enters into bankruptcy proceedings. A successor Agent
would generally be appointed to replace the terminated Agent, and assets held
by the Agent under the loan agreement should remain available to holders of
Loan Interests. However, if assets held by the Agent for the benefit of the
Fund were determined to be subject to the claims of the Agent's general
creditors, the Fund might incur certain costs and delays in realizing payment
on a loan interest, or suffer a loss of principal and/or interest. In
situations involving Intermediate Participants, similar risks may arise.

Purchasers of Loan Interests depend primarily upon the creditworthiness of the
borrower for payment of principal and interest. If the Fund does not receive
scheduled interest or principal payments on such indebtedness, the Fund's share
price and yield could be adversely affected. Loans that are fully secured
offer the Fund more protections than an unsecured loan in the event of
non-payment of scheduled interest or principal. However, there is no assurance
that the liquidation of collateral from a secured loan would satisfy the
borrower's obligation, or that the collateral can be liquidated. Indebtedness
of borrowers whose creditworthiness is poor involves substantially greater
risks, and may be highly speculative. Borrowers that are in bankruptcy or
restructuring may never pay off their indebtedness, or may pay only a small
fraction of the amount owed. Direct indebtedness of developing countries will
also involve a risk that the governmental entities responsible for the
repayment of the debt may be unable, or unwilling, to pay interest and repay
principal when due.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:
MATURITY

The Fund's average portfolio maturity represents an average based on the actual
stated maturity dates of the debt securities in the Fund's portfolio, except
that (1) variable-rate securities are deemed to mature at the next
interest-rate adjustment date, (2) debt securities with put features are deemed
to mature at the next put-exercise date, (3) the maturity of mortgage-backed
and certain other asset-backed securities is determined on an "expected life"
basis by the Advisor and (4) securities being hedged with futures contracts may
be deemed to have a longer maturity, in the case of purchases of futures
contracts, and a shorter maturity,

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<PAGE>

in the case of sales of futures contracts, than they would otherwise be deemed
to have. In addition, a security that is subject to redemption at the option
of the issuer on a particular date ("call date"), which is prior to the
security's stated maturity, may be deemed to mature on the call date rather
than on its stated maturity date. The call date of a security will be used to
calculate average portfolio maturity when the Advisor reasonably anticipates,
based upon information available to it, that the issuer will exercise its right
to redeem the security. The average portfolio maturity of the Fund is
dollar-weighted based upon the market value of the Fund's securities at the
time of the calculation.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:
MORTGAGE- AND ASSET-BACKED DEBT SECURITIES

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

Asset-backed securities have structural characteristics similar to
mortgage-backed securities. Asset-backed debt obligations represent direct or
indirect participation in, or are 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. The credit quality of most
asset-backed securities depends primarily on the credit quality of the assets
underlying such securities, how well the entity issuing the security is
insulated from the credit risk of the originator or any other affiliated
entities, and the amount and quality of any credit enhancement of the
securities. 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 market for privately issued asset-backed
debt obligations is smaller and less liquid than the market for government
sponsored mortgage-backed securities.

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

While many mortgage- and asset-backed securities are issued with only one class
of security, many are issued in more than one class, each with different
payment terms. Multiple class mortgage- and asset-backed securities are issued
for two main reasons. First, multiple classes may be used as a method of
providing credit support. This is accomplished typically through creation of
one or more classes whose right to payments on the security is made subordinate
to the right to such payments of the remaining class or classes. Second,
multiple classes may permit the issuance of securities with payment terms,
interest rates, or other characteristics differing both from those of each
other and from those of the underlying assets. Examples include so-called
"strips" (mortgage- and asset-backed securities entitling the holder to
disproportionate interests with respect to the allocation of

25
<PAGE>

interest and principal of the assets backing the security), and securities with
class or classes having characteristics which mimic the characteristics of
non-mortgage- or asset-backed securities, such as floating interest rates
(I.E., interest rates which adjust as a specified benchmark changes) or
scheduled amortization of principal.

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

Mortgage- and asset-backed securities backed by assets, other than as described
above, or in which the payment streams on the underlying assets are allocated
in a manner different than those described above may be issued in the future.
The Fund may invest in such securities if such investment is otherwise
consistent with its investment objectives and policies and with the investment
restrictions of the Fund.

MUNICIPAL OBLIGATIONS

IN GENERAL. Municipal obligations are 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.
Municipal obligations also 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 the Fund determines that an investment in any such type
of obligation is consistent with the Fund's investment objective.

BONDS AND NOTES. 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 commercial paper, demand
notes, and similar instruments.

LEASE OBLIGATIONS. 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. (See "Participation Interests" below.) 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.

MORTGAGE-BACKED BONDS. The Fund's investments in municipal obligations may
include mortgage-backed municipal obligations, which are a type of municipal
security issued by a state, authority, or municipality to provide financing for
residential housing mortgages to target groups, generally low-income
individuals who are first-time home buyers. The Fund's interest, evidenced by
such obligations, is an undivided interest in a pool of mortgages. Payments
made on the underlying mortgages and passed through to the Fund will represent
both regularly scheduled principal and interest payments. The Fund may also
receive additional principal payments representing prepayments of the
underlying mortgages. While a certain level of prepayments can be expected,
regardless of the interest rate environment, it is anticipated that prepayment
of the underlying

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<PAGE>

mortgages will accelerate in periods of declining interest rates. In the event
that the Fund receives principal prepayments in a declining interest-rate
environment, its reinvestment of such funds may be in bonds with a lower yield.

PARTICIPATION INTERESTS

A participation interest gives the Fund an undivided interest in a municipal
obligation in the proportion that the Fund's participation interest bears to
the principal amount of the obligation. These instruments may have fixed,
floating, or variable rates of interest. The Fund will only purchase
participation interests if accompanied by an opinion of counsel that the
interest earned on the underlying municipal obligations will be tax-exempt. If
the Fund purchases unrated participation interests, the Board of Directors or
its delegate must have determined that the credit risk is equivalent to the
rated obligations in which the Fund may invest. Participation interests may be
backed by a letter of credit or guaranty of the selling institution. When
determining whether such a participation interest meets the Fund's credit
quality requirements, the Fund may look to the credit quality of any financial
guarantor providing a letter of credit or guaranty.

REPURCHASE AGREEMENTS

The Fund may enter into repurchase agreements with certain banks or 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, 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. The Advisor will monitor, on an ongoing
basis, the value of the underlying securities to ensure that the value always
equals or exceeds the repurchase price plus accrued interest. Repurchase
agreements could involve certain risks in the event of a default or insolvency
of the other party to the agreement, including possible delays or restrictions
upon 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.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:

REVERSE REPURCHASE AGREEMENTS AND MORTGAGE DOLLAR ROLLS

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

The Fund may also enter into mortgage dollar rolls, in which the Fund would
sell mortgage-backed securities for delivery in the current month and
simultaneously contract to purchase substantially similar securities on a
specified future date. While 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. At the time the Fund would
enter into a mortgage dollar roll, it would set aside permissible liquid assets
in a segregated account to secure its obligation for the forward commitment to
buy mortgage-backed securities. Mortgage dollar roll transactions may be
considered a borrowing by the Fund.

The mortgage dollar rolls and reverse repurchase agreements 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 or repurchase
agreements that mature on or before the settlement date on the related mortgage
dollar roll or reverse repurchase agreements. Since the Fund will receive
interest on the securities or repurchase agreements in which it invests the
transaction proceeds, such transactions may

27
<PAGE>

involve leverage. However, since such securities or repurchase agreements will
be high quality and will mature on or before the settlement date of the
mortgage dollar roll or reverse repurchase agreement, the Advisor believes that
such arbitrage transactions do not present the risks to the Fund that are
associated with other types of leverage.

THE FOLLOWING SECTION APPLIES TO THE HERITAGE MONEY, MONEY MARKET, MUNICIPAL
MONEY, AND INVESTORS MONEY FUNDS ONLY:
RULE 2A-7: MATURITY, QUALITY, AND DIVERSIFICATION RESTRICTIONS

All capitalized but undefined terms in this discussion shall have the meaning
such terms have in Rule 2a-7 under the 1940 Act. The Fund is subject to
certain maturity restrictions in accordance with Rule 2a-7 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 (1) maintain a
dollar weighted average portfolio maturity of 90 days or less, and (2) will
purchase securities with a remaining maturity of no more than 13 months (397
calendar days). Further, the Fund will limit its investments to 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.

(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.

The Fund is subject to certain credit quality restrictions pursuant to Rule
2a-7 under the 1940 Act. 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 (1) obligations issued or guaranteed by the U.S. government,
its agencies, or instrumentalities; (2) 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; (3) 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 (4) unrated (other
than the type described in (3)) but determined by the Board of Directors of the
Fund 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 (1) rated by the required
rating agencies in one of the two highest rating categories for short-term debt
obligations; (2) 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

28
<PAGE>

comparable in priority and security with the obligation; or (3) unrated (other
than described in (2)) but determined by the Board of Directors of the Fund 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 guidelines, the Fund is subject to certain
diversification restrictions pursuant to Rule 2a-7 under the 1940 Act, which
include (1) the Fund will not 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 (2) the Fund will not invest more than 5%
of the Fund's assets in the securities (other than securities issued by the
U.S. government or any agency or instrumentality thereof) issued by a single
issuer, except for certain investments held for not more than 3 business days.

THE FOLLOWING SECTION APPLIES TO THE MUNICIPAL MONEY AND MUNICIPAL ADVANTAGE
FUNDS ONLY:
SECTOR CONCENTRATION

From time to time, the Fund may invest 25% or more of its assets in municipal
bonds that are related in such a way that an economic, business, or political
development or change affecting one such security could also affect the other
securities (for example, securities whose issuers are located in the same
state). Such related sectors may include hospitals, retirement centers,
pollution control, single family housing, multiple family housing, industrial
development, utilities, education, and general obligation bonds. The Fund also
may invest 25% or more of its assets in municipal bonds whose issuers are
located in the same state. Such states may include California, Pennsylvania,
Texas, New York, Florida, and Illinois.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:

29
<PAGE>

SHORT SALES

The Fund may sell securities short (1) to hedge unrealized gains on portfolio
securities or (2) if it covers such short sale with liquid assets as required
by the current rules and positions of the SEC or its staff. Selling securities
short against the box involves selling a security that the Fund owns or has the
right to acquire, for delivery at a specified date in the future. If the Fund
sells securities short against the box, it may protect unrealized gains, but
will lose the opportunity to profit on such securities if the price rises.

THE FOLLOWING SECTION APPLIES TO THE MUNICIPAL MONEY AND MUNICIPAL ADVANTAGE
FUNDS ONLY:
STANDBY COMMITMENTS

In order to facilitate portfolio liquidity, the Fund may acquire standby
commitments from brokers, dealers, or banks with respect to securities in its
portfolio. Standby commitments entitle the holder to achieve same-day
settlement and receive an exercise price equal to the amortized cost of the
underlying security plus accrued interest. Standby commitments generally
increase the cost of the acquisition of the underlying security, thereby
reducing the yield. Standby commitments are subject to the issuer's ability to
fulfill its obligation upon demand. Although no definitive creditworthiness
criteria are used, the Advisor reviews the creditworthiness of the brokers,
dealers, and banks from which the Fund obtains standby commitments to evaluate
those risks.

THE FOLLOWING SECTION APPLIES TO THE MUNICIPAL MONEY AND MUNICIPAL ADVANTAGE
FUNDS ONLY:
TAXABLE SECURITIES

From time to time when the Advisor deems it appropriate, the Fund may invest up
to 20% of its net assets on a temporary basis in taxable investments (of
comparable quality to their respective tax-free investments), which would
produce interest not exempt from federal income tax, including among others:
(1) obligations issued or guaranteed, as to principal and interest, by the
United States government, its agencies, or instrumentalities; (2) obligations
of financial institutions, including banks, savings and loan institutions,
insurance companies and mortgage banks, such as certificates of deposit,
bankers' acceptances, and time deposits; (3) corporate obligations, including
preferred stock and commercial paper, with equivalent credit quality to the
municipal securities in which the Fund may invest; and (4) repurchase
agreements with respect to any of the foregoing instruments. For example, the
Fund may invest in such taxable investments pending the investment or
reinvestment of such assets in municipal securities, in order to avoid the
necessity of liquidating portfolio securities to satisfy redemptions or pay
expenses, or when such action is deemed to be in the interest of the Fund's
shareholders. In addition, the Fund may invest up to 100% of its total assets
in private activity bonds, the interest on which is a tax-preference item for
taxpayers subject to the federal alternative minimum tax.

U.S. 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 by government agencies or instrumentalities include obligations of 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 ("GNMA"), 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.

30
<PAGE>

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.

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 generally 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 seven 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, the Fund may consider that instrument's maturity to
be shorter than its stated maturity.

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 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.

The Fund will not invest more than 15% of its net assets (10% for money market
funds) 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). 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.

In determining the Fund's weighted average portfolio maturity, the Fund will
consider a floating- or variable-rate security to have a maturity equal to its
stated maturity (or redemption date if it has been called for redemption),
except that it may consider (1) variable-rate securities to have a maturity
equal to the period remaining until the next readjustment in the interest
rate, unless subject to a demand feature, (2) variable-rate securities subject
to a demand feature to have a remaining maturity equal to the longer of (a)
the next readjustment in the interest rate or (b) the period remaining until
the principal can be recovered through demand, and (3) floating-rate
securities subject to a demand feature to have a maturity equal to the period
remaining until the principal can be recovered through demand. Variable- and
floating-rate securities generally are subject to less principal fluctuation
than securities without these attributes since the securities usually trade at
amortized cost following the readjustment in the interest rate.

31
<PAGE>

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE FUND ONLY:
WARRANTS

The Fund may acquire warrants. Warrants are securities giving the holder the
right, but not the obligation, to buy the stock of an issuer at a given price
(generally higher than the value of the stock at the time of issuance) during
a specified period or perpetually. Warrants may be acquired separately or in
connection with the acquisition of securities. Warrants do not carry with
them the right to dividends or voting rights with respect to the securities
that they entitle their holder to purchase, and they do not represent any
rights in the assets of the issuer. As a result, warrants may be considered
to have more speculative characteristics than certain other types of
investments. In addition, the value of a warrant does not necessarily change
with the value of the underlying securities, and a warrant ceases to have
value if it is not exercised prior to its expiration date.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES

The Fund may purchase securities on a when-issued or delayed-delivery basis.
The price of debt obligations so purchased, which may be expressed in yield
terms, generally is fixed at the time the commitment to purchase is made, but
delivery and payment for the securities take place at a later date. During
the period between the purchase and settlement, no payment is made by the Fund
to the issuer and no interest on the debt obligations 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
and delayed-delivery 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 these types of securities, 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 will be adversely affected by these types of securities purchases.

To the extent required by the SEC, the Fund will maintain cash and marketable
securities equal in value to commitments for when-issued or delayed-delivery
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 or delayed-delivery securities, the Fund will meet its obligations
from then-available cash flow, sale of the securities held in the separate
account, described above, sale of other securities or, although it would not
normally expect to do so, from the sale of the when-issued or delayed-delivery
securities themselves (which may have a market value greater or less than the
Fund's payment obligation).

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:
ZERO-COUPON, STEP-COUPON, AND PAY-IN-KIND SECURITIES

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

DIRECTORS AND OFFICERS

The Board of Directors of the Fund is responsible for managing the Fund's
business and affairs. Directors and officers of the Fund, 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 27 registered
open-end management investment companies consisting of 53 mutual funds
("Strong Funds"). The Strong Funds, in the aggregate, pay 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 Strong Fund. In addition, each disinterested director
is reimbursed by the Strong Funds for travel and other

32
<PAGE>

expenses incurred in connection with attendance at such meetings. Other
officers and directors of the Strong Funds receive no compensation or expense
reimbursement from the Strong Funds.

*RICHARD S. STRONG (DOB 5/12/42), Director and Chairman of the Board of the
Strong Funds.

Prior to August 1985, Mr. Strong was Chief Executive Officer of the Advisor,
which he founded in 1974. Since August 1985, Mr. Strong has been a Security
Analyst and Portfolio Manager of the Advisor. In October 1991, Mr. Strong
also became the Chairman of the Advisor. Mr. Strong is a Director of the
Advisor. Mr. Strong has been in the investment management business since
1967.

MARVIN E. NEVINS (DOB 7/19/18), Director of the Strong Funds.

Private Investor. From 1945 to 1980, Mr. Nevins was Chairman of Wisconsin
Centrifugal Inc., a foundry. Mr. Nevins is a former Chairman of the Wisconsin
Association of Manufacturers & Commerce. He has been a Director of A-Life
Medical, Inc., San Diego, CA since 1996 and Surface Systems, Inc. (a weather
information company), St. Louis, MO since 1992. 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 and Carroll College.

WILLIE D. DAVIS (DOB 7/24/34), Director of the Strong Funds.

Mr. Davis has been Director of Alliance Bank since 1980, Sara Lee Corporation
(a food/consumer products company) since 1983, KMart Corporation (a discount
consumer products company) since 1985, 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, and Rally's Hamburger, Inc. since 1994. Mr. Davis has been a
trustee of the University of Chicago since 1980 and Marquette University since
1988. 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.

STANLEY KRITZIK (DOB 1/9/30), Director of the Strong Funds.

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.

WILLIAM F. VOGT (DOB 7/19/47), Director of the Strong Funds.

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.

THOMAS P. LEMKE (DOB 7/30/54), Vice President of the Strong Funds.

Mr. Lemke has been Senior Vice President, Secretary, and General Counsel of
the Advisor since September 1994. For two years prior to joining the Advisor,
Mr. Lemke acted as Resident Counsel for Funds Management at J.P. Morgan & Co.,
Inc. From February 1989 until April 1992, Mr. Lemke acted as Associate
General Counsel to Sanford C. Bernstein & Co., Inc. For two years prior to
that, Mr. Lemke was Of Counsel at the Washington D.C. law firm of Tew Jorden &
Schulte, a successor of Finley, Kumble & Wagner. From August 1979 until
December 1986, Mr. Lemke worked at the SEC, 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).

STEPHEN J. SHENKENBERG (DOB 6/14/58), Vice President and Secretary of the
Strong Funds.

33
<PAGE>

Mr. Shenkenberg has been Deputy General Counsel of the Advisor since November
1996. From December 1992 until November 1996, Mr. Shenkenberg acted as
Associate Counsel to the Advisor. From June 1987 until December 1992, Mr.
Shenkenberg was an attorney for Godfrey & Kahn, S.C., a Milwaukee law firm.

JOHN S. WEITZER (DOB 10/31/67), Vice President of the Strong Funds.

Mr. Weitzer has been Senior Counsel of the Advisor since December 1997. From
July 1993 until December 1997, Mr. Weitzer acted as Associate Counsel to the
Advisor.

MARY F. HOPPA (DOB 5/31/64), Vice President of the Strong Funds.

Ms. Hoppa has been Vice President and Director of Mutual Fund Administration
of the Advisor since January 1998. From October 1996 to January 1998, Ms.
Hoppa acted as Director of Transfer Agency Services of the Advisor and, from
January 1988 to October 1996, as Transfer Agency Systems Liaison Manager of
the Advisor. From January 1987 to January 1988, Ms. Hoppa acted as a
Shareholder Services Associate of the Advisor.

JOHN W. WIDMER (DOB 1/19/65), Treasurer of the Strong Funds.

Mr. Widmer has been Manager of Financial Management & Sales Reporting Systems
since May 1997. From May 1992 to May 1997, Mr. Widmer was an Accounting and
Business Advisory Manager in the Milwaukee office of Arthur Andersen LLP. From
June 1987 to May 1992, Mr. Widmer was an accountant at Arthur Andersen LLP.

RHONDA K. HAIGHT (DOB 11/13/64), Assistant Treasurer of the Strong Funds.

Ms. Haight has been Manager of the Mutual Fund Accounting Department of the
Advisor since January 1994. From May 1990 to January 1994, Ms. Haight was a
supervisor in the Mutual Fund Accounting Department of the Advisor. From June
1987 to May 1990, Ms. Haight was a Mutual Fund Accountant of the Advisor.

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 34108. 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 2830 East Third Avenue, Denver, Colorado
80206.

Unless otherwise noted below, as of May 31, 1999, the officers and directors
of the Fund in the aggregate beneficially owned less than 1% of the Fund's
then outstanding shares.

</TABLE>

PRINCIPAL SHAREHOLDERS

Unless otherwise noted below, as of May 31, 1999 no persons owned of record or
are known to own of record or beneficially more than 5% of the Fund's then
outstanding shares.

34
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
NAME AND ADDRESS SHARES PERCENT
- ------------------------------ ----------------------------- -----------------------

Southwest Bank of Texas NA Municipal Money Market Fund - 6.84%
P.O. Box 27459 160,352,575
Houston, TX 77227-7479
Dean V. White Municipal Advantage Fund - 9.14%
1000 E. 80th Place, Suite 700N 39,229,364
Merrillville, IN 46410-5604

Batrus & Co. Municipal Advantage Fund -
c/o Banker Trust Co. 31,180,117 7.27%
Church Street Station
P.O. Box 9005
New York, NY 10008
</TABLE>

INVESTMENT ADVISOR

The Fund has entered into an Advisory Agreement with Strong Capital
Management, Inc. ("Advisor"). Mr. Strong controls the Advisor due to his
stock ownership of the Advisor. Mr. Strong is the Chairman and a Director of
the Advisor, Mr. Lemke is a Senior Vice President, Secretary, and General
Counsel of the Advisor, Mr. Shenkenberg is Vice President, Assistant
Secretary, and Deputy General Counsel of the Advisor, Ms. Hoppa is a Senior
Vice President of the Advisor, Mr. Weitzer is Senior Counsel of the Advisor,
Mr. Widmer is Treasurer and Manager of Financial Management & Sales Reporting
Systems of the Advisor, and Ms. Haight is Assistant Treasurer and Manager of
the Mutual Fund Accounting Department of the Advisor. As of May 31, 1999, the
Advisor had $34 billion under management.

The Advisory Agreement is required to be approved annually by either the Board
of Directors of the Fund 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 Fund's directors who
are not parties to the Advisory Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. The Advisory Agreement is terminable, without penalty, on 60 days
written notice by the Board of Directors of the Fund, by vote of a majority of
the Fund's outstanding voting securities, or by the Advisor, and 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 of Directors. The
Advisor is responsible for investment decisions and supplies investment
research and portfolio management. The Advisory Agreement authorizes the
Advisor to delegate its investment advisory duties to a subadvisor in
accordance with a written agreement under which the subadvisor would furnish
such investment advisory services to the Advisor. In that situation, the
Advisor continues to have responsibility for all investment advisory services
furnished by the subadvisor under the subadvisory agreement. At its expense,
the Advisor provides office space and all necessary office facilities,
equipment and personnel for servicing the investments of the Fund. The
Advisor places all orders for the purchase and sale of the Fund's portfolio
securities at the Fund's expense.

Except for expenses assumed by the Advisor, as set forth above, or by Strong
Investments, Inc. 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 with the states and the SEC; expenses for printing
and distribution of prospectuses to existing shareholders; charges of
custodians (including fees as custodian for keeping books and similar services
for the Fund),

35
<PAGE>

transfer agents (including the printing and mailing of reports and notices to
shareholders), registrars, auditing and legal services, and clerical services
related to recordkeeping and shareholder relations; printing of stock
certificates; fees for directors who are not "interested persons" of the
Advisor; expenses of indemnification; extraordinary expenses; and costs of
shareholder and director meetings.

As compensation for its services, the Fund pays to the Advisor a monthly
management fee at the annual rate specified below of the average daily net
asset value of the Fund. From time to time, the Advisor may voluntarily waive
all or a portion of its management fee for the Fund.

<TABLE>
<CAPTION>
<S> <C>
FUND ANNUAL RATE
- --------------------------- --------------------
Heritage Money Fund 0.50%
Investors Money Fund 0.50%
Money Market Fund 0.50%
Municipal Money Market Fund 0.50%
Advantage Fund 0.60%
Municipal Advantage Fund 0.60%
</TABLE>

36
<PAGE>

The Fund paid the following management fees for the time periods indicated:

<TABLE>
<CAPTION>
<S> <C> <C> <C>
MANAGEMENT FEE
FISCAL YEAR ENDED MANAGEMENT FEE ($) WAIVER($) AFTER WAIVER ($)
- ----------------- ------------------ ---------------- ----------------
</TABLE>

Heritage Money Fund

2/28/97 7,586,904 6,800,327 786,576
2/28/98 8,707,440 4,390,949 4,316,491
2/28/99 7,652,154 2,785,677 4,866,477
</TABLE>

Investors Money Fund

Money Market Fund

10/31/97 9,599,484 482,401 9,117,083
10/31/98 9,389,083 313,309 9,075,774
2/28/99* 3,174,056 0 3,174,056
</TABLE>

Municipal Money Market Fund

2/28/97 8,729,286 0 8,729,286
2/28/98 9,310,640 0 9,310,640
2/28/99 10,267,586 0 10,267,586
</TABLE>

Advantage Fund

2/28/97 7,395,454 0 7,395,454
2/28/98 11,086,463 0 11,086,463
2/28/99 15,176,159 0 15,176,159
</TABLE>

Municipal Advantage Fund

2/28/97 2,321,942 2,287,263 34,679
2/28/98 5,033,884 1,266,133 3,767,751
</TABLE>

* For the four-month fiscal year ended February 28, 1999.
(1) Commenced operations on January 31, 1998.

36
<PAGE>

The organizational expenses for the Fund which were advanced by the Advisor and
which will be reimbursed by the Fund over a period of not more than 60 months
from the Fund's date of inception are listed below.

<TABLE>
<CAPTION>
<S> <C>
FUND ORGANIZATIONAL EXPENSES
- ------------------------ ------------------------
Heritage Money Fund $92,657

Investors Money Fund $1,334
Municipal Advantage Fund $82,660
</TABLE>

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 management fee but excluding taxes, interest, brokerage
commissions, and similar fees and to the extent permitted extraordinary
expenses, exceed two percent (2%) of the average net asset value of the Fund
for such year, as determined by valuations made as of the close of each
business day of the year. 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 applicable limitations.

On July 12, 1994, 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 found 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 found 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.

On June 6, 1996, the Department of Labor ("DOL") filed an action against the
Advisor for equitable relief alleging violations of the Employee Retirement
Income Security Act of 1974 ("ERISA") in connection with cross trades that
occurred between 1987 and late 1989 involving certain pension accounts managed
by the Advisor. Contemporaneous with this filing, the Advisor, without
admitting or denying the DOL's allegations, agreed to the entry of a consent
judgment resolving all matters relating to the allegations. Reich v. Strong
Capital Management, Inc., (U.S.D.C. E.D. WI) ("Consent Judgment"). Under the
terms of the Consent Judgment, the Advisor agreed to reimburse the affected
accounts a total of $5.9 million. The settlement did not have any material
impact on the Advisor's financial position or operations.

The Fund and the Advisor have adopted a Code of Ethics ("Code") which governs
the personal trading activities of all "Access Persons" of the Advisor.
Access Persons include every director and officer of the Advisor and the
investment companies managed by the Advisor, including the Fund, as well as
certain employees of the Advisor who have access to information relating to
the purchase or sale of securities by the Advisor on behalf of accounts
managed by it. The Code is based upon the principal that such Access Persons
have a fiduciary duty to place the interests of the Fund and the Advisor 's
other clients ahead of their own.

The Code requires Access Persons (other than Access Persons who are
independent directors of the investment companies managed by the Advisor,
including the Fund) to, among other things, preclear their securities
transactions (with limited exceptions, such as transactions in shares of
mutual funds, direct obligations of the U.S. government, and certain options
on broad-based securities market indexes) and to execute such transactions
through the Advisor's trading department. The Code, which applies to all
Access Persons (other than Access Persons who are independent directors of the
investment companies managed by the Advisor, including the Fund), includes a
ban on acquiring any securities in an initial public offering, other than a

37
<PAGE>

new offering of a registered open-end investment company, and a prohibition
from profiting on short-term trading in securities. In addition, no Access
Person may purchase or sell any security which is contemporaneously being
purchased or sold, or to the knowledge of the Access Person, is being
considered for purchase or sale, by the Advisor on behalf of any mutual fund or
other account managed by it. Finally, the Code provides for trading "black
out" periods of seven calendar days during which time Access Persons who are
portfolio managers may not trade in securities which have been purchased or
sold by any mutual fund or other account managed by the portfolio manager.

The Advisor provides investment advisory services for multiple clients through
different types of investment accounts (E.G., mutual funds, hedge funds,
separately managed accounts, etc.) who may have similar or different
investment objectives and investment policies (E.G., some accounts may have an
active trading strategy while others follow a "buy and hold" strategy). In
managing these accounts, the Advisor seeks to maximize each account's return,
consistent with the account's investment objectives and investment strategies.
While the Advisor's policies are designed to ensure that over time
similarly-situated clients receive similar treatment, to the maximum extent
possible, because of the range of the Advisor's clients, the Advisor may give
advice and take action with respect to one account that may differ from the
advice given, or the timing or nature of action taken, with respect to another
account (the Advisor, its principals and associates also may take such actions
in their personal securities transactions, to the extent permitted by and
consistent with the Code). For example, the Advisor may use the same
investment style in managing two accounts, but one may have a shorter-term
horizon and accept high-turnover while the other may have a longer-term
investment horizon and desire to minimize turnover. If the Advisor reasonably
believes that a particular security may provide an attractive opportunity due
to short-term volatility but may no longer be attractive on a long-term basis,
the Advisor may cause accounts with a shorter-term investment horizon to buy
the security at the same time it is causing accounts with a longer-term
investment horizon to sell the security. The Advisor takes all reasonable
steps to ensure that investment opportunities are, over time, allocated to
accounts on a fair and equitable basis relative to the other
similarly-situated accounts and that the investment activities of different
accounts do not unfairly disadvantage other accounts.

From time to time, the Advisor votes the shares owned by the Fund according to
its Statement of General Proxy Voting Policy ("Proxy Voting Policy"). The
general principal of the Proxy Voting Policy is to vote any beneficial
interest in an equity security prudently and solely in the best long-term
economic interest of the Fund and its beneficiaries considering all relevant
factors and without undue influence from individuals or groups who may have an
economic interest in the outcome of a proxy vote. Shareholders may obtain a
copy of the Proxy Voting Policy upon request from the Advisor.

The Advisor also provides a program of custom portfolio management called the
Strong Advisor. This program is designed to determine which investment
approach fits an investor's financial needs and then provides the investor
with a custom built portfolio of Strong Funds based on that allocation. The
Advisor, on behalf of participants in the Strong Advisor program, may
determine to invest a portion of the program's assets in any one Strong Fund,
which investment, particularly in the case of a smaller Strong Fund, could
represent a material portion of the Fund's assets. In such cases, a decision
to redeem the Strong Advisor program's investment in a Fund on short notice
could raise a potential conflict of interest for the Advisor, between the
interests of participants in the Strong Advisor program and of the Fund's
other shareholders. In general, the Advisor does not expect to direct the
Strong Advisor program to make redemption requests on short notice. However,
should the Advisor determine this to be necessary, the Advisor will use its
best efforts and act in good faith to balance the potentially competing
interests of participants in the Strong Advisor program and the Fund's other
shareholders in a manner the Advisor deems most appropriate for both parties
in light of the circumstances.

From time to time, the Advisor may make available to third parties current and
historical information about the portfolio holdings of the Advisor's mutual
funds or other clients. Release may be made to entities such as fund ratings
entities, industry trade groups, and financial publications. Generally, the
Advisor will release this type of information only where it is otherwise
publicly available. This information may also be released where the Advisor
reasonably believes that the release will not be to the detriment of the best
interests of its clients.

For more complete information about the Advisor, including its services,
investment strategies, policies, and procedures, please call 1-800-368-3863
and ask for a copy of the Advisor's Form ADV.

DISTRIBUTOR

Under a Distribution Agreement with the Fund ("Distribution Agreement"),
Strong Investments, Inc. ("Distributor"), P.O. Box 2936, Milwaukee, Wisconsin,
53201, acts as underwriter of the Fund's shares. Mr. Strong is the Chairman
and Director of the

39
<PAGE>

Distributor, Mr. Lemke is a Vice President of the Distributor, Mr. Shenkenberg
is a Vice President and Secretary of the Distributor, and Ms. Hoppa is Vice
President of the Distributor. 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
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 proposed rule amendments of the National
Association of Securities Dealers, Inc. ("NASD"), 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 investment 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 OTC
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.

The Advisor has adopted procedures that provide generally for the Advisor to
seek to bunch orders for the purchase or sale of the same security for the
Fund, other mutual funds managed by the Advisor, and other advisory clients
(collectively, "client accounts"). The Advisor will bunch orders when it
deems it to be appropriate and in the best interest of the client accounts.
When a bunched order is filled in its entirety, each participating client
account will participate at the average share price for the bunched order on
the same business day, and transaction costs shall be shared pro rata based on
each client's participation in the bunched order. When a bunched order is
only partially filled, the securities purchased will be allocated on a pro
rata basis to each client account participating in the bunched order based
upon the initial amount requested for the account, subject to certain
exceptions, and each participating account will participate at the average
share price for the bunched order on the same business day.

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 (1) 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; (2) furnishing analyses and
reports concerning issuers, industries, securities, economic factors and
trends, portfolio strategy, and the performance of accounts; and (3) 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 (1) 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; (2) such payment is made in compliance with the
provisions of Section 28(e), other applicable

40
<PAGE>

state and federal laws, and the Advisory Agreement; and (3) 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
management fee paid by the Fund under the Advisory Agreement is 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 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 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 new issues of securities for the
Fund in a fixed income 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
NASD 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).

At least annually, 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 has informal arrangements with various brokers whereby, in
consideration for providing research services and subject to Section 28(e),
the Advisor allocates brokerage to those firms, provided that the value of any
research and brokerage services was reasonable in relationship to the amount
of commission paid and was subject to best execution. In no case will the
Advisor make binding commitments as to the level of brokerage commissions it
will allocate to a broker, nor will it commit to pay cash if any informal
targets are not met. The Advisor anticipates it will continue to enter into
such brokerage arrangements.

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 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.

41
<PAGE>

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.

Where consistent with a client's investment objectives, investment
restrictions, and risk tolerance, the Advisor may purchase securities sold in
underwritten public offerings for client accounts, commonly referred to as
"deal" securities. The Advisor has adopted deal allocation procedures
("Procedures"), summarized below, that reflect the Advisor's overriding policy
that deal securities must be allocated among participating client accounts in
a fair and equitable manner and that deal securities may not be allocated in a
manner that unfairly discriminates in favor of certain clients or types of
clients.

The Procedures provide that, in determining which client accounts a portfolio
manager team will seek to have purchase deal securities, the team will
consider all relevant factors including, but not limited to, the nature, size,
and expected allocation to the Advisor of deal securities; the size of the
account(s); the accounts' investment objectives and restrictions; the risk
tolerance of the client; the client's tolerance for possibly higher portfolio
turnover; the amount of commissions generated by the account during the past
year; and the number and nature of other deals the client has participated in
during the past year.

Where more than one of the Advisor's portfolio manager team seeks to have
client accounts participate in a deal and the amount of deal securities
allocated to the Advisor by the underwriting syndicate is less than the
aggregate amount ordered by the Advisor (a "reduced allocation"), the deal
securities will be allocated among the portfolio manager teams based on all
relevant factors. The primary factor shall be assets under management,
although other factors that may be considered in the allocation decision
include, but are not limited to, the nature, size, and expected allocation of
the deal; the amount of brokerage commissions or other amounts generated by
the respective participating portfolio manager teams; and which portfolio
manager team is primarily responsible for the Advisor receiving securities in
the deal. Based on relevant factors, the Advisor has established general
allocation percentages for its portfolio manager teams, and these percentages
are reviewed on a regular basis to determine whether asset growth or other
factors make it appropriate to use different general allocation percentages
for reduced allocations.

When a portfolio manager team receives a reduced allocation of deal
securities, the portfolio manager team will allocate the reduced allocation
among client accounts in accordance with the allocation percentages set forth
in the team's initial allocation instructions for the deal securities, except
where this would result in a DE MINIMIS allocation to any client account. On
a regular basis, the Advisor reviews the allocation of deal securities to
ensure that they have been allocated in a fair and equitable manner that does
not unfairly discriminate in favor of certain clients or types of clients.

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

The Fund paid the following brokerage commissions for the time periods
indicated:

<TABLE>
<CAPTION>
<S> <C>
FISCAL YEAR ENDED BROKERAGE COMMISSIONS ($)
- ---------------------- -------------------------
</TABLE>

Heritage Money Fund

2/28/97 0
2/28/98 0
2/28/99 0
</TABLE>

Investors Money Fund

2/28/98(1) 0
</TABLE>

42
<PAGE>

Money Market Fund

10/31/97 0
10/31/98 0
2/28/99* 0
</TABLE>

Municipal Money Market Fund

2/28/97 0
2/28/98 0
2/28/99 0
</TABLE>

Advantage Fund

2/28/97 127,430
2/28/98 244,178
2/28/99 276,758
</TABLE>

Municipal Advantage Fund

2/28/97 12,642
2/28/98 5,300
2/28/99 0
</TABLE>

* For the four-month fiscal year ended February 28, 1999.

(1) Commenced operations on January 31, 1998.

Unless otherwise noted below, the Fund has not acquired securities of its
regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) or
their parents.

REGULAR BROKER OR DEALER (OR PARENT) ISSUER VALUE OF SECURITIES OWNED AS OF FEBRUARY 28, 1999
- ----------------------------------------------- -------------------------------------------------

Goldman Sachs & Company $110,629,000 (Advantage)

</TABLE>

43
<PAGE>

Merrill Lynch, Pierce, Fenner & Smith, Inc. $14,625,000 (Advantage)

Saloman Smith Barney, Inc. $4,359,000 (Advantage)

Merrill Lynch, Pierce, Fenner & Smith, Inc. $2,686,000 (Investors Money)
Goldman Sachs & Company $1,307,000 (Investors Money)
J.P. Morgan Securities, Inc. $2,042,000 (Investors Money)
Merrill Lynch, Pierce, Fenner & Smith, Inc. $27,557,000 (Heritage Money)
Morgan Stanley, Dean Witter, Discover & Co. $26,861,000 (Heritage Money)
Goldman Sachs & Company $14,659,000 (Heritage Money)
Credit Suisse First Boston $13,073,000 (Heritage Money)
J.P. Morgan Securities, Inc. $11,334,000 (Heritage Money)
Goldman Sachs & Company $21,118,000 (Money Market)
Morgan Stanley, Dean Witter & Company $16,845,000 (Money Market)
CS First Boston Corporation $16,787,000 (Money Market)
J.P. Morgan Securities, Inc. $15,717,000 (Money Market)
Merrill Lynch, Pierce, Fenner & Smith, Inc. $8,257,000 (Money Market)
</TABLE>

CUSTODIAN

As custodian of the Fund's assets, Firstar Bank Milwaukee, N.A., P.O. Box 761,
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 officers of the Fund. The custodian is in no way
responsible for any of the investment policies or decisions of the Fund.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

The Advisor, P.O. Box 2936, Milwaukee, Wisconsin, 53201, acts as transfer
agent and dividend-disbursing agent for the Fund. The Advisor is compensated
based on an annual fee per open account of $21.75 for equity funds, $31.50 for
income and municipal income funds, and $32.50 for money market funds, 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 $4.20 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 Agreements. 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, and/or the Advisor may pay amounts to third parties that provide
transfer agent type services 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, transfer agent type activities, answering inquiries
relating to the Fund, transmitting 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 based on the number of beneficial owners at a rate that is
greater than the rate the Fund is currently paying the Advisor for providing
these services to Fund shareholders.

The Fund paid the following amounts for the time periods indicated for
transfer agency and dividend disbursing and printing and mailing services:

44
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PER ACCOUNT OUT-OF-POCKET PRINTING/MAILING TOTAL COST AFTER
FUND CHARGES ($) EXPENSES ($) SERVICES ($) WAIVER ($) WAIVER ($)
- ------------ ------------ ------------- ---------------- ------------ ----------------
</TABLE>

Heritage Money Fund

2/28/97 354,819 453,008 9,070 816,897 0
2/28/98 477,274 431,083 9,553 917,910 0
2/28/99 429,562 437,379 6,934 873,875 0
</TABLE>

Money Market Fund

10/31/97 4,578,923 1,388,238 97,226 6,064,387 0
10/31/98 4,749,829 1,706,745 71,810 4,626,242 1,902,142
</TABLE>

Municipal Money Fund

2/28/97 920,594 755,631 25,882 0 1,702,107
2/28/98 867,309 773,566 20,806 0 1,661,681
2/28/99 838,904 1,196,575 15,506 0 2,050,985
</TABLE>

Investors Money Fund

2/28/98(1) 1,891 229 0 2,120 0
2/28/99 251,864 49,571 4,445 305,880 0
</TABLE>

Advantage Fund

2/28/97 1,760,983 216,305 27,756 0 2,005,044
2/28/98 2,273,544 216,681 27,375 0 2,517,600
2/28/99 2,751,398 258,389 20,905 0 3,030,692
</TABLE>

Municipal Advantage Fund

2/28/97 146,569 49,738 3,424 199,731 0
2/28/98 280,757 93,357 4,766 256,950 121,930
</TABLE>

* For the four-month fiscal year ended February 28, 1999.
(1) Commenced operations on January 31, 1998.

45
<PAGE>

TAXES

GENERAL

The Fund intends to qualify annually for treatment as a regulated investment
company ("RIC") under Subchapter M of the IRC. If so qualified, the Fund will
not be liable for federal income tax on earnings and gains distributed to its
shareholders in a timely manner. This qualification does not involve
government supervision of the Fund's management practices or policies. The
following federal tax discussion is intended to provide you with an overview
of the impact of federal income tax provisions on the Fund or its
shareholders. These tax provisions are subject to change by legislative or
administrative action at the federal, state, or local level, and any changes
may be applied retroactively. Any such action that limits or restricts the
Fund's current ability to pass-through earnings without taxation at the Fund
level, or otherwise materially changes the Fund's tax treatment, could
adversely affect the value of a shareholder's investment in the Fund. Because
the Fund's taxes are a complex matter, you should consult your tax adviser for
more detailed information concerning the taxation of the Fund and the federal,
state, and local tax consequences to shareholders of an investment in the
Fund.

In order to qualify for treatment as a RIC under the IRC, the Fund must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of taxable net
investment income, net short-term capital gain, and net gains from certain
foreign currency transactions, if applicable) ("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 if applicable) or other income (including gains from options,
futures, or forward contracts) derived with respect to its business of
investing in securities ("Income Requirement"); (2) 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 (3) 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.

If Fund shares are sold at a loss after being held for 12 months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares.

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.

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 and capital gain net
income for the one-year period ending on October 31 of that year, plus certain
other amounts. The Fund may make additional distributions if necessary to
avoid imposition of a 4% excise tax on undistributed income and gains.

THE FOLLOWING SECTION APPLIES TO THE MUNICIPAL MONEY MARKET AND MUNICIPAL
ADVANTAGE FUNDS ONLY:
PASS-THROUGH INCOME TAX EXEMPTION

Most 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. You will be notified annually of the percentage of a Fund's
income that is derived from U.S. government securities.

MUNICIPAL SECURITIES

46
<PAGE>

A substantial portion of the dividends paid by the Fund will qualify as
exempt-interest dividends and thus will be excludable from gross income by its
shareholders, if the Fund satisfies the requirement that, at the close of each
quarter of its taxable year, at least 50% of the value of its total assets
consists of securities the interest on which is excludable from gross income
under section 103(a); the Fund intends to continue to satisfy this
requirement. The aggregate dividends excludable from the Fund's shareholders'
gross income may not exceed the Fund's net tax-exempt income. The
shareholders' treatment of dividends from the Fund under local and state
income tax laws may differ from the treatment thereof under the Tax Code.

Tax-exempt interest attributable to certain private activity bonds ("PABs")
(including, in the case of a RIC receiving interest on such bonds, a
proportionate part of the exempt-interest dividends paid by that RIC) is
subject to the alternative minimum tax. Exempt-interest dividends received by
a corporate shareholder also may be indirectly subject to that tax without
regard to whether the Fund's tax-exempt interest was attributable to such
bonds. Entities or persons who are "substantial users" (or persons related to
"substantial users") of facilities financed by PABs or industrial development
bonds ("IDBs") should consult their tax advisors before purchasing shares of
the Fund because, for users of certain of these facilities, the interest on
such bonds is not exempt from federal income tax. For these purposes, the
term "substantial user" is defined generally to include a "non-exempt person"
who regularly uses in trade or business a part of a facility financed from the
proceeds of PABs or IDBs.

The Fund may invest in municipal bonds that are purchased, generally not on
their original issue, with market discount (that is, at a price less than the
principal amount of the bond or, in the case of a bond that was issued with
original issue discount, a price less than the amount of the issue price plus
accrued original issue discount) ("municipal market discount bonds"). Market
discount generally arises when the value of the bond declines after issuance
(typically, because of an increase in prevailing interest rates or a decline
in the issuer's creditworthiness). Gain on the disposition of a municipal
market discount bond purchased by the Fund after April 30, 1993 (other than a
bond with a fixed maturity date within one year from its issuance), generally
is treated as ordinary (taxable) income, rather than capital gain, to the
extent of the bond's accrued market discount at the time of disposition.
Market discount on such a bond generally is accrued ratably, on a daily basis,
over the period from the acquisition date to the date of maturity. In lieu of
treating the disposition gain as above, the Fund may elect to include market
discount in its gross income currently, for each taxable year to which it is
attributable.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE FUND ONLY:
FOREIGN TRANSACTIONS

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

The Fund holding foreign securities in its investment portfolio maintains its
accounts and calculates its income in U.S. dollars. In general, gain or loss
(1) from the disposition of foreign currencies and forward currency contracts,
(2) from the disposition of foreign-currency-denominated debt securities that
are attributable to fluctuations in exchange rates between the date the
securities are acquired and their disposition date, and (3) attributable to
fluctuations in exchange rates between the time the Fund accrues interest or
other receivables or expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects those receivables or pays
those liabilities, will be treated as ordinary income or loss. A
foreign-currency-denominated debt security acquired by the Fund may bear
interest at a high normal rate that takes into account expected

47
<PAGE>

decreases in the value of the principal amount of the security due to
anticipated currency devaluations; in that case, the Fund would be required to
include the interest in income as it accrues but generally would realize a
currency loss with respect to the principal only when the principal was
received (through disposition or upon maturity).

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

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:
DERIVATIVE INSTRUMENTS

The use of derivatives strategies, such as purchasing and selling (writing)
options and futures and entering into forward currency contracts, if
applicable, involves complex rules that will determine for income tax purposes
the character and timing of recognition of the gains and losses the Fund
realizes in connection therewith. Gains from the disposition of foreign
currencies, if any (except certain gains therefrom that may be excluded by
future regulations), and income from transactions in options, futures, and
forward currency contracts, if applicable, derived by the Fund with respect to
its business of investing in securities or foreign currencies, if applicable,
will qualify as permissible income under the Income Requirement.

For federal income tax purposes, the Fund is required to recognize as income
for each taxable year its net unrealized gains and losses on options, futures,
or forward currency contracts, if any, that are subject to section 1256 of the
IRC ("Section 1256 Contracts") and are held by the Fund as of the end of the
year, as well as gains and losses on Section 1256 Contracts actually realized
during the year. Except for Section 1256 Contracts that are part of a "mixed
straddle" and with respect to which the Fund makes a certain election, any
gain or loss recognized with respect to Section 1256 Contracts is considered
to be 60% long-term capital gain or loss and 40% short-term capital gain or
loss, without regard to the holding period of the Section 1256 Contract.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:
ZERO-COUPON, STEP-COUPON, AND PAY-IN-KIND SECURITIES

The Fund may acquire zero-coupon, step-coupon, or other securities issued with
original issue discount. As a holder of those securities, the Fund must
include in its income the original issue discount that accrues on the
securities during the taxable year, even if the Fund receives no corresponding
payment on the securities during the year. Similarly, the Fund must include
in its income securities it receives as "interest" on pay-in-kind securities.
Because the Fund annually must distribute substantially all of its investment
company taxable income, including any original issue discount and other
non-cash income, to satisfy the Distribution Requirement and avoid imposition
of the Excise Tax, it may be required in a particular year to distribute as a
dividend an amount that is greater than the total amount of cash it actually
receives. Those distributions may be made from the proceeds on sales of
portfolio securities, if necessary. The Fund may realize capital gains or
losses from those sales, which would increase or decrease its investment
company taxable income or net capital gain, or both.

DETERMINATION OF NET ASSET VALUE

The Fund is 100% no load. This means that an investor may purchase, redeem or
exchange shares at the Fund's net asset value ("NAV") without paying a sales
charge. Generally, when an investor makes any purchases, sales, or exchanges,
the price of the investor's shares will be the NAV next determined after
Strong Funds receives a request in proper form (which includes receipt of all
necessary and appropriate documentation and subject to available funds). If
Strong Funds receives such a request prior to

48
<PAGE>

the close of the New York Stock Exchange ("NYSE") on a day on which the NYSE is
open, the share price will be the NAV determined that day. The NAV for each
Fund is normally determined as of 3:00 p.m. Central Time ("CT") each day the
NYSE is open. The NYSE is open for trading Monday through Friday except, New
Year's Day, Martin Luther King Jr. 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 reserves the right to
change the time at which purchases, redemptions, and exchanges are priced if
the NYSE closes at a time other than 3:00 p.m. 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 daily and applied when determining
the NAV. The Fund's portfolio securities are valued based on market quotations
or at fair value as determined by the method selected by the Fund's Board of
Directors.

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

THE FOLLOWING PARAGRAPH APPLIES TO THE HERITAGE MONEY, MONEY MARKET, MUNICIPAL
MONEY, AND INVESTORS MONEY FUNDS ONLY:
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 Fund's Board of
Directors 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.

ADDITIONAL SHAREHOLDER INFORMATION

FUND REDEMPTIONS

Shareholders can gain access to the money in their accounts by selling (also
called redeeming) some or all of their shares by mail, telephone, computer,
automatic withdrawals, through a broker-dealer, or by writing a check
(assuming all the appropriate documents and requirements have been met for
these account options). After a redemption request is processed, the proceeds
from the sale will normally be sent on the next business day but, in any
event, no more than seven days later.

TELEPHONE AND INTERNET EXCHANGE/REDEMPTION PRIVILEGES

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

MOVING ACCOUNT OPTIONS AND INFORMATION

49
<PAGE>

When establishing a new account by exchanging funds from an existing Strong
Funds account, some account options (such as checkwriting, telephone exchange,
telephone purchase and telephone redemption), if existing on the account from
which money is exchanged, will automatically be made available on the new
account unless the shareholder indicates otherwise, or the option is not
available on the new account. Subject to applicable Strong Funds policies,
other account options, including automatic investment, automatic exchange and
systematic withdrawal, may be moved to the new account at the request of the
shareholder. If allowed by Strong Funds policies (i) once the account options
are established on the new account, the shareholder may modify or amend the
options, and (ii) account options may be moved or added from one existing
account to another new or existing account. Account information, such as the
shareholder's address of record and social security number, will be copied
from the existing account to the new account.

REDEMPTION-IN-KIND

The Fund has elected to be governed by Rule 18f-1 under the 1940 Act, which
obligates the Fund to redeem shares in cash, with respect to any one
shareholder during any 90-day period, up to the lesser of $250,000 or 1% of
the assets of the Fund. 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 (a
"redemption-in-kind"). Shareholders receiving securities or other financial
assets in a redemption-in-kind may realize a gain or loss for tax purposes,
and will incur any costs of sale, as well as the associated inconveniences.
If you expect to make a redemption in excess of the lesser of $250,000 or 1%
of the Fund's assets during any 90-day period and would like to avoid any
possibility of being paid with securities in-kind, you may do so by providing
Strong Funds with an unconditional instruction to redeem at least 15 calendar
days prior to the date on which the redemption transaction is to occur,
specifying the dollar amount or number of shares to be redeemed and the date
of the transaction (please call 1-800-368-3863). This will provide the Fund
with sufficient time to raise the cash in an orderly manner to pay the
redemption and thereby minimize the effect of the redemption on the interests
of the Fund's remaining shareholders.

Redemption checks in excess of the lesser of $250,000 or 1% of the Fund's
assets during any 90-day period may not be honored by the Fund if the Advisor
determines that existing conditions make cash payments undesirable.

SHARES IN CERTIFICATE FORM

Certificates will be issued for shares held in a Fund account only upon
written request. A shareholder will, however, have full shareholder rights
whether or not a certificate is requested.

DOLLAR COST AVERAGING

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

FINANCIAL INTERMEDIARIES

If an investor purchases or redeems shares of the Fund through a financial
intermediary, certain features of the Fund relating to such transactions may
not be available or may be modified. In addition, certain operational
policies of the Fund, including those related to settlement and dividend
accrual, may vary from those applicable to direct shareholders of the Fund and
may vary among intermediaries. Please consult your financial intermediary for
more information regarding these matters. In addition, the Fund may pay,
directly or indirectly through arrangements with the Advisor, amounts to
financial intermediaries that provide transfer agent type and/or other
administrative services to their customers provided, however, that the Fund
will not pay more for these services through intermediary relationships than
it would if the intermediaries' customers were direct shareholders in the
Fund. Certain financial intermediaries may charge an advisory, transaction,
or other fee for their services. Investors will not be

50
<PAGE>

charged for such fees if investors purchase or redeem Fund shares directly from
the Fund without the intervention of a financial intermediary.

SIGNATURE GUARANTEES

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

- - when adding the telephone redemption option to an existing account;
- - when transferring the ownership of an account to another individual or
organization;
- - when submitting a written redemption request for more than $50,000;
- - when requesting to redeem or redeposit shares that have been issued in
certificate form;
- - if requesting a certificate after opening an account;
- - when requesting that redemption proceeds be sent to a different name or
address than is registered on an account;
- - if adding/changing a name or adding/removing an owner on an account; and
- - if adding/changing the beneficiary on a transfer-on-death account.

A signature guarantee may be obtained from any eligible guarantor institution,
as defined by the SEC. These institutions include banks, savings
associations, credit unions, brokerage firms, and others. Please note that a
notary public stamp or seal is not acceptable.

RIGHT OF SET-OFF

To the extent not prohibited by law, the Fund, any other Strong Fund, and the
Advisor, each has the right to set-off against a shareholder's account balance
with a Strong Fund, and redeem from such account, any debt the shareholder may
owe any of these entities. This right applies even if the account is not
identically registered.

BROKERS RECEIPT OF PURCHASE AND REDEMPTION ORDERS

The Fund has authorized certain brokers to accept purchase and redemption
orders on the Fund's behalf. These brokers are, in turn, authorized to
designate other intermediaries to accept purchase and redemption orders on the
Fund's behalf. The Fund will be deemed to have received a purchase or
redemption order when an authorized broker or, if applicable, a broker's
authorized designee, accepts the order. Purchase and redemption orders
received in this manner will be priced at the Fund's net asset value next
computed after they are accepted by an authorized broker or the broker's
authorized designee.

PROMOTIONAL ITEMS OF NOMINAL VALUE

From time to time, the Advisor and/or Distributor may give de minimis gifts or
other immaterial consideration to investors who open new accounts or add to
existing accounts with the Strong Funds.

RETIREMENT PLANS

TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNT (IRA): Everyone under age 70 1/2
with earned income may contribute to a tax-deferred Traditional IRA. The
Strong Funds offer a prototype plan for you to establish your own Traditional
IRA. You are allowed to contribute up to the lesser of $2,000 or 100% of your
earned income each year to your Traditional IRA (or up to $4,000 between your
Traditional IRA and your non-working spouses' Traditional IRA). Under certain
circumstances, your contribution will be deductible.

ROTH IRA: Taxpayers, of any age, who have earned income, and whose adjusted
gross income ("AGI") does not exceed $110,000 (single) or $160,000 (joint) can
contribute to a Roth IRA. Allowed contributions begin to phase-out at $95,000

51
<PAGE>

(single) or $150,000 (joint). You are allowed to contribute up to the lesser
of $2,000 or 100% of earned income each year into a Roth IRA. If you also
maintain a Traditional IRA, the maximum contribution to your Roth IRA is
reduced by any contributions that you make to your Traditional IRA.
Distributions from a Roth IRA, if they meet certain requirements, may be
federally tax free. If your AGI is $100,000 or less, you can convert your
Traditional IRAs into a Roth IRA. Conversions of earnings and deductible
contributions are taxable in the year of the distribution. The early
distribution penalty does not apply to amounts converted to a Roth IRA even if
you are under age 59 1/2.

EDUCATION IRA: Taxpayers may contribute up to $500 per year into an Education
IRA for the benefit of a child under age 18. Total contributions to any one
child cannot exceed $500 per year. The contributor must have adjusted income
under $110,000 (single) or $160,000 (joint) to contribute to an Education IRA.
Allowed contributions begin to phase-out at $95,000 (single) or $150,000
(joint). Withdrawals from the Education IRA to pay qualified higher
education expenses are federally tax free. Any withdrawal in excess of higher
education expenses for the year are potentially subject to tax and an
additional 10% penalty.

DIRECT ROLLOVER IRA: To avoid the mandatory 20% federal withholding tax on
distributions, you must transfer the qualified retirement or IRC section
403(b) plan distribution directly into an IRA. The distribution must be
eligible for rollover. The amount of your Direct Rollover IRA contribution
will not be included in your taxable income for the year.

SIMPLIFIED EMPLOYEE PENSION PLAN (SEP-IRA): A SEP-IRA plan allows an employer
to make deductible contributions to separate IRA accounts established for each
eligible employee.

SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN (SAR SEP-IRA): A SAR SEP-IRA
plan is a type of SEP-IRA plan in which an employer may allow employees to
defer part of their salaries and contribute to an IRA account. These deferrals
help lower the employees' taxable income. Please note that you may no longer
open new SAR SEP-IRA plans (since December 31, 1996). However, employers with
SAR SEP-IRA plans that were established prior to January 1, 1997 may still
open accounts for new employees.

SIMPLIFIED INCENTIVE MATCH PLAN FOR EMPLOYEES (SIMPLE-IRA): A SIMPLE-IRA plan
is a retirement savings plan that allows employees to contribute a percentage
of their compensation, up to $6,000, on a pre-tax basis, to a SIMPLE-IRA
account. The employer is required to make annual contributions to eligible
employees' accounts. All contributions grow tax-deferred.

DEFINED CONTRIBUTION PLAN: A defined contribution plan allows self-employed
individuals, partners, or a corporation to provide retirement benefits for
themselves and their employees. Plan types include: profit-sharing plans,
money purchase pension plans, and paired plans (a combination of a
profit-sharing plan and a money purchase plan).

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

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

ORGANIZATION

The Fund is either a "Corporation" or a "Series" of common stock of a
Corporation, as described in the chart below:

52
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Incorporation Date Series Authorized Par
Corporation Date Created Shares Value ($)
- --------------------------------------- ------------- ------------ ----------------- ----------
Strong Heritage Reserve Series, Inc. 06/02/89 Indefinite .00001
-Strong Heritage Money Fund 05/11/95 Indefinite .00001
-Strong Investors Money Fund 1/21/98 Indefinite .00001
Strong Money Market Fund, Inc. 07/19/85 Indefinite .0001
Strong Municipal Funds, Inc. (1) 07/28/96 Indefinite .00001
-Strong Municipal Money Market Fund 07/28/86 Indefinite .000001
-Strong Municipal Advantage Fund 10/27/95 Indefinite .00001
Strong Advantage Fund, Inc. 08/31/88 Indefinite .0001
</TABLE>

(1) Prior to October 27, 1995, the Fund's name was Strong Municipal Money
Market Fund, Inc.

The Strong Advantage Fund, Inc. and the Strong Money Market Fund, Inc. are
separately incorporated, diversified open-end management investment companies.
The Strong Heritage Money and the Strong Investors Money Funds are
diversified series of Strong Heritage Reserve Series, Inc., which is an
open-end management company. The Strong Municipal Money Market Fund and the
Strong Municipal Advantage Funds are diversified series of Strong Municipal
Funds, Inc., which is an open-end management investment company.

The Corporation is a Wisconsin corporation that is authorized to offer
separate series of shares representing interests in separate portfolios of
securities, each with differing investment objectives. The shares in any one
portfolio may, in turn, be offered in separate classes, each with differing
preferences, limitations or relative rights. However, the Articles of
Incorporation for the Corporation provide that if additional series of shares
are issued by the Corporation, such new series of shares may not affect the
preferences, limitations or relative rights of the Corporation's outstanding
shares. In addition, the Board of Directors of the Corporation 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
within 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 are entitled to vote.
Each share of the Fund has one vote, and all shares participate equally in
dividends and other capital gains distributions by the Fund and in the
residual assets of the Fund in the event of liquidation. Fractional shares
have the same rights proportionately as do full shares. Shares of the
Corporation have no preemptive, conversion, or subscription rights. If the
Corporation 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 its 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 Fund'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 Fund shall promptly call a special meeting of
shareholders for the purpose of voting upon the question of removal of any
director. 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 Fund of such costs, the Fund shall give not less than ten nor
more than sixty days notice of the special meeting.

PERFORMANCE INFORMATION

The Strong Funds may advertise a variety of types of performance information
as more fully described below. The Fund's performance is historical and past
performance does not guarantee the future performance of the Fund. From time
to time, the

53
<PAGE>

Advisor may agree to waive or reduce its management fee and/or to absorb
certain operating expenses for the Fund. Waivers of management fees and
absorption of expenses will have the effect of increasing the Fund's
performance.

THE FOLLOWING SECTION APPLIES TO THE HERITAGE MONEY, MONEY MARKET, MUNICIPAL
MONEY MARKET, AND INVESTORS MONEY FUNDS ONLY:
7-DAY CURRENT AND EFFECTIVE YIELD

The Fund's 7-day 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 amortized
discount, 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. The Fund's effective yield is determined by taking the base
period return (computed as described above) and calculating the effect of
assumed compounding. Effective yield is equal [(base period return +
1)(365/7)]- 1.

THE FOLLOWING SECTION APPLIES TO THE ADVANTAGE AND MUNICIPAL ADVANTAGE FUNDS
ONLY:
30-DAY YIELD

The Fund's yield is computed in accordance with a standardized method
prescribed by rules of the SEC. Under that method, the current yield
quotation for the Fund is based on a one month or 30-day period. In computing
its yield, the Fund follows certain standardized accounting practices
specified by rules of the SEC. These practices are not necessarily consistent
with those that the Fund uses to prepare annual and interim financial
statements in conformity with generally accepted accounting principles. The
yield is computed by dividing the net investment income per share earned
during the 30-day or one month period by the maximum offering price per share
on the last day of the period, according to the following formula:

YIELD = 2[( A-B + 1)6 - 1]
cd
Where a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period that
were
entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.

THE FOLLOWING SECTION APPLIES TO THE MUNICIPAL MONEY MARKET AND MUNICIPAL
ADVANTAGE FUNDS ONLY:
TAXABLE EQUIVALENT YIELD

The Fund's tax-equivalent yield is computed by dividing that portion of the
Fund's yield (computed as described above) that is tax-exempt by one minus
the stated federal income tax rate and adding the result to that portion, if
any, of the yield of the Fund that is not tax-exempt. Tax-equivalent yield
does not reflect possible variations due to the federal alternative minimum
tax.

An investor may want to determine which investment, tax-exempt or taxable,
will provide you with a higher after-tax return. To determine the
tax-equivalent yield, simply divide the yield from the tax-exempt investment
by the sum of (1 minus the investor's marginal tax rate). The tables below
are provided for making this calculation for selected tax-exempt yield and
taxable income levels. These yields are presented for purposes of illustration
only and are not representative of any yield that a Fund may generate.

The following table is based upon the 1999 federal tax rates in effect as of
January 1, 1999.

<TABLE>
<CAPTION>
<S> <C><C>
A TAX-FREE YIELD OF:
- -- - --------------------
</TABLE>

54
<PAGE>

<TABLE>
<CAPTION>
4% 5% 6% 7% 8%
1999 Taxable Income Levels*
- ---------------------------------------- -------- ----- ----- ----- ------ ------------------------------
Single Married Filing Marginal IS EQUIVALENT TO A TAXABLE YIELD OF:

Jointly Tax Rate
- -------------- -------------------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
under 25,750 under 43,050 15% 4.71% 5.88% 7.06% 8.24% 9.41%
- -------------- -------------------------- -------- ----- ----- ----- ------ ------------------------------
25,750-62,450 43,050-104,050 28% 5.56% 6.94% 8.33% 9.72% 11.11%
- -------------- -------------------------- -------- ----- ----- ----- ------ ------------------------------
62,450-130,250 104,050-158,550 31% 5.80% 7.25% 8.70% 10.14% 11.59%
- -------------- -------------------------- -------- ----- ----- ----- ------ ------------------------------
130,250 158,550-283,150 36% 6.25% 7.81% 9.38% 10.94% 12.50%
283,150
- -------------- -------------------------- -------- ----- ----- ----- ------ ------------------------------
over 283,150 over 283,150 39.6% 6.62% 8.28% 9.93% 11.59% 13.25%
- -------------- -------------------------- -------- ----- ----- ----- ------ ------------------------------
</TABLE>

* A taxpayer with an adjusted gross income in excess of $126,600 may, to
the extent such taxpayer itemizes deductions, be subject to a higher effective
marginal rate.

DISTRIBUTION RATE

The distribution rate for the Fund 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
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.

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 calculated 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 of the Fund on the reinvestment dates during the period.
Total return may also be shown as the increased dollar value of the
hypothetical investment over the period.

CUMULATIVE TOTAL RETURN

Cumulative total return represents the simple change in value of an investment
over a stated period and may be quoted as a percentage or as a dollar amount.
Total returns 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.

SPECIFIC FUND PERFORMANCE

7-DAY YIELD

55
<PAGE>

(7-day period ended May 31, 1999)

<TABLE>
<CAPTION>
Without Waivers/Absorptions
- --------- ------- --------- -------------- ---------- --------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Current Effective Tax Equivalent Waived Absorbed Current Yield Effective Yield
Fund Yield Yield Yield (31% Tax Management Expenses
Bracket) Fees
- --------- ------- --------- -------------- ---------- --------- ------------- ---------------

Heritage 4.61% 4.72% N/A 0.14% 0.06% 4.41% 4.51%
Money
- --------- ------- --------- -------------- ---------- --------- ------------- ---------------

Money 4.32% 4.41% N/A --- 0.14% 4.18% 4.27%
Market
- --------- ------- --------- -------------- ---------- --------- ------------- ---------------

Municipal 3.19% 3.24% 4.62% 4.70% --- --- 3.19% 3.24%
Money
Market
- --------- ------- --------- -------------- ---------- --------- ------------- --------------- -------------------------

Investors 4.93% 5.05% N/A 0.50% 0.24% 4.19% 4.28%
Money
- --------- ------- --------- -------------- ---------- --------- ------------- ---------------
</TABLE>

30-DAY YIELD

(30-day period ended May 31, 1999)

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Tax Equivalent Waived
Yield (31% Tax Management Absorbed Yield Without
Fund Yield Bracket) Fees Expenses Waivers and
Absorptions
- --------- ------ -------------- ---------- --------- -------------

Advantage 6.13% N/A --- --- 6.13%
- --------- ------ -------------- ---------- --------- -------------

Municipal 4.16% 6.03% .01% .04% 4.11%
Advantage
- --------- ------ -------------- ---------- --------- -------------
</TABLE>

TOTAL RETURN

HERITAGE MONEY FUND

Time Period Initial $10,000 Ending $ value Cumulative Average Annual
Investment February 28, 1999 Total Return Total Return
- ------------- --------------- ----------------- ------------ --------------

One Year $10,000 $10,531 5.31% 5.31%
- ------------- --------------- ----------------- ------------ --------------

Life of Fund* $10,000 $12,230 22.30% 5.63%
- ------------- --------------- ----------------- ------------ --------------
</TABLE>

* Commenced operations July 29, 1995.

56
<PAGE>

MONEY MARKET FUND

One Year $10,000 $10,509 5.09% 5.09%
- ------------- --------------- ----------------- ------------ ---------------

Five Year $10,000 $12,929 29.29% 5.27%
- ------------- --------------- ----------------- ------------ ---------------

Ten Year $10,000 $17,131 71.31% 5.53%
- ------------- --------------- ----------------- ------------ ---------------

Life of Fund* $10,000 $21,470 114.70% 5.89%
- ------------- --------------- ----------------- ------------ ---------------
</TABLE>

* Commenced operations on October 22, 1985.

MUNICIPAL MONEY MARKET FUND

One Year $10,000 $10,344 3.44% 3.44%
- ------------- --------------- ----------------- ------------ ---------------

Five Year $10,000 $11,909 19.09% 3.56%
- ------------- --------------- ----------------- ------------ ---------------

Ten Year $10,000 $14,864 48.64% 4.04%
- ------------- --------------- ----------------- ------------ ---------------

Life of Fund* $10,000 $16,642 66.42% 4.21%
- ------------- --------------- ----------------- ------------ ---------------
</TABLE>

* Commenced operations on October 23, 1986.

STRONG INVESTORS MONEY FUND

Initial $10,000 Ending $ value Cumulative Average Annual
Time Period Investment February 28, 1999 Total Return Total Return
- ------------- --------------- ----------------- ------------ ---------------
One Year $10,000 $10,565 5.65% 5.65%
- ------------- --------------- ----------------- ------------ ---------------

Life of Fund* $10,000 $10,612 6.12% 5.63%
- ------------- --------------- ----------------- ------------ ---------------
</TABLE>

* Commenced operations on January 31, 1998.

57
<PAGE>

STRONG ADVANTAGE FUND

One Year $10,000 $10,464 4.64% 4.64%
- ------------- --------------- ----------------- ------------ ---------------

Five Year $10,000 $13,267 32.67% 5.82%
- ------------- --------------- ----------------- ------------ ---------------
Ten Year $10,000 $19,823 98.23% 7.08%
- ------------- --------------- ----------------- ------------ ---------------

Life of Fund* $10,000 $20,383 103.83% 7.18%
- ------------- --------------- ----------------- ------------ ---------------
</TABLE>

* Commenced operations on November 25, 1988

STRONG MUNICIPAL ADVANTAGE FUND

One Year $10,000 $10,446 4.46% 4.46%
- ------------ --------------- ----------------- ------------ ---------------

Life of Fund $10,000 $11,695 16.95% 4.94%
- ------------ --------------- ----------------- ------------ ---------------
</TABLE>

* Commenced operations on November 30, 1995.

COMPARISONS

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 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.

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.

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.

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

58
<PAGE>

asset value, with all income and capital gains 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.

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

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

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 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.

INDICES. The Fund may compare its performance to a wide variety of indices.
There are differences and similarities between the investments that a Fund may
purchase and the investments measured by the indices.

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. Stocks are generally more volatile than bonds. In return
for this volatility, stocks have generally performed better than bonds or cash
over time. 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, in the case of U.S. Treasury
obligations, backed by the full faith and credit of the U.S. Treasury.

STRONG FUNDS. The Strong Funds offer a comprehensive range of conservative to
aggressive investment options. The Strong Funds and their investment
objectives are listed below. The Funds are listed in ascending order of risk
and return, as determined by the Funds' Advisor.

59
<PAGE>

FUND NAME INVESTMENT OBJECTIVE
<TABLE>
<CAPTION>
<S> <C>
Strong Investors Money Fund Current income, a stable share price, and daily liquidity.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Money Market Fund Current income, a stable share price, and daily liquidity.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Heritage Money Fund Current income, a stable share price, and daily liquidity.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Municipal Money Market Fund Federally tax-exempt current income, a stable share-price, and daily liquidity.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Municipal Advantage Fund Federally tax-exempt current income with a very low degree of share-price
fluctuation.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Advantage Fund Current income with a very low degree of share-price fluctuation.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Short-Term Municipal Bond Total return by investing for a high level of federally tax-exempt current income
Fund with a low degree of share-price fluctuation.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Short-Term Bond Fund Total return by investing for a high level of current income with a low degree of
share-price fluctuation.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Short-Term Global Bond Fund Total return by investing for a high level of income with a low degree of share
price fluctuation.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Short-Term High Yield Total return by investing for a high level of federally tax-exempt current income
Municipal Fund with a moderate degree of share-price fluctuation.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Short-Term High Yield Bond Total return by investing for a high level of current income with a moderate
Fund degree of share-price fluctuation.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Government Securities Fund Total return by investing for a high level of current income with a moderate
degree of share-price fluctuation.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Municipal Bond Fund Total return by investing for a high level of federally tax-exempt current income
with a moderate degree of share-price fluctuation.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Corporate Bond Fund Total return by investing for a high level of current income with a moderate
degree of share-price fluctuation.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong High-Yield Municipal Bond Total return by investing for a high level of federally tax-exempt current income.
Fund
- ---------------------------------- -----------------------------------------------------------------------------------
Strong High-Yield Bond Fund Total return by investing for a high level of current income and capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Global High-Yield Bond Fund Total return by investing for a high level of current income and capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong International Bond Fund High total return by investing for both income and capital appreciation.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Asset Allocation Fund High total return consistent with reasonable risk over the long term.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Equity Income Fund Total return by investing for both income and capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong American Utilities Fund Total return by investing for both income and capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Blue Chip 100 Fund Total return by investing for both income and capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Limited Resources Fund Total return by investing for both capital growth and income.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Total Return Fund High total return by investing for capital growth and income.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Growth and Income Fund High total return by investing for capital growth and income.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Index 500 Fund To approximate as closely as practicable (before fees and expenses) the
capitalization-weighted total rate of return of that portion of the U.S. market for
publicly traded common stocks composed of the larger capitalized companies.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Schafer Balanced Fund Total return by investing for both income and capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Schafer Value Fund Long-term capital appreciation principally through investment in common stocks
and other equity securities. Current income is a secondary objective.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Dow 30 Value Fund Capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Value Fund Capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Opportunity Fund Capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Mid Cap Disciplined Fund Capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Mid Cap Growth Fund Capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Common Stock Fund* Capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Strategic Growth Fund Capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Small Cap Value Fund Capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
Strong Growth Fund Capital growth.
- ---------------------------------- -----------------------------------------------------------------------------------
</TABLE>

60
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
Strong Discovery Fund Capital growth.
- ---------------------------------- ---------------
Strong U.S. Emerging Growth Fund Capital growth.
- ---------------------------------- ---------------
Strong Enterprise Fund Capital growth.
- ---------------------------------- ---------------

Strong Growth 20 Fund Capital growth.
- ---------------------------------- ---------------
Strong International Stock Fund Capital growth.
- ---------------------------------- ---------------
Strong Overseas Fund Capital growth.
- ---------------------------------- ---------------
Strong Foreign MajorMarketsSM Fund Capital growth.
- ---------------------------------- ---------------
Strong Asia Pacific Fund Capital growth.
- ---------------------------------- ---------------
</TABLE>

* The Fund is closed to new investors, except the Fund may continue to
offer its shares through certain 401(k) plans and similar company-sponsored
retirement plans.

The Advisor also serves as Advisor to several management investment companies,
some of which fund variable annuity separate accounts of certain insurance
companies.

The Fund may from time to time be compared to other Strong Funds based on a
risk/reward spectrum. In general, the amount of risk associated with any
investment product is commensurate with that product's potential level of
reward. The Strong Funds risk/reward continuum or any Fund's position on the
continuum may be described or diagrammed in marketing materials. The Strong
Funds risk/reward continuum positions the risk and reward potential of each
Strong Fund relative to the other Strong Funds, but is not intended to
position any Strong Fund relative to other mutual funds or investment
products. Marketing materials may also discuss the relationship between risk
and reward as it relates to an individual investor's portfolio.

TYING TIME FRAMES TO YOUR GOALS. There are many issues to consider as you
make your investment decisions, including analyzing your risk tolerance,
investing experience, and asset allocations. You should start to organize
your investments by learning to link your many financial goals to specific
time frames. Then you can begin to identify the appropriate types of
investments to help meet your goals. As a general rule of thumb, the longer
your time horizon, the more price fluctuation you will be able to tolerate in
pursuit of higher returns. For that reason, many people with longer-term
goals select stocks or long-term bonds, and many people with nearer-term goals
match those up with for instance, short-term bonds. The Advisor developed the
following suggested holding periods to help our investors set realistic
expectations for both the risk and reward potential of our funds. (See table
below.) Of course, time is just one element to consider when making your
investment decision.

61
<PAGE>

STRONG FUNDS SUGGESTED MINIMUM HOLDING PERIODS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
UNDER 1 YEAR 1 TO 2 YEARS 4 TO 7 YEARS 5 OR MORE YEARS
- ---------------------- -------------------------- --------------------------- -------------------------
Money Market Fund Advantage Fund Government Securities Fund Asset Allocation Fund
Heritage Money Fund Municipal Advantage Fund Municipal Bond Fund American Utilities Fund
Municipal Money Market Corporate Bond Fund Index 500 Fund
Fund 2 TO 4 YEARS International Bond Fund Total Return Fund
Investors Money Fund Short-Term Bond Fund High-Yield Municipal Bond Opportunity Fund
Short-Term Municipal Bond Fund Growth Fund
Fund High-Yield Bond Fund Common Stock Fund*
Short-Term Global Bond Global High-Yield Bond Fund Discovery Fund
Fund International Stock Fund
Short-Term High Yield Bond Asia Pacific Fund
Fund Value Fund
Short-Term High Yield Growth and Income Fund
Municipal Fund Equity Income Fund
Mid Cap Growth Fund
Schafer Value Fund
Growth 20 Fund
Blue Chip 100 Fund
Small Cap Value Fund
Dow 30 Value Fund
Schafer Balanced Fund
Limited Resources Fund
Overseas Fund
Foreign MajorMarketsSM
Fund
Strategic Growth Fund
Enterprise Fund
Mid Cap Disciplined Fund
U.S. Emerging Growth Fund
</TABLE>

* This Fund is closed to new investors, except the Fund may continue to
offer its shares through certain 401(k) plans and similar company-sponsored
retirement plans.

ADDITIONAL FUND INFORMATION

PORTFOLIO CHARACTERISTICS. In order to present a more complete picture of the
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.

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:

62
<PAGE>

Standard deviation = the square root of S(xi - xm)2

n-1

Where: S = "the sum of",
xi = each individual return during the time period,
xm = the average return over the time period, and
n = the number of individual returns during the time period.

Statistics may also be used to discuss the 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.

DURATION. Duration is a calculation that seeks to measure the price
sensitivity of a bond or a bond fund to changes in interest rates. It
measures bond price sensitivity to interest rate changes by taking into
account the time value of cash flows generated over the bond's life. Future
interest and principal payments are discounted to reflect their present value
and then are multiplied by the number of years they will be received to
produce a value that is expressed in years. Since duration can also be
computed for the Fund, you can estimate the effect of interest rates on the
Fund's share price. Simply multiply the Fund's duration by an expected change
in interest rates. For example, the price of the Fund with a duration of two
years would be expected to fall approximately two percent if market interest
rates rose by one percentage point.

GENERAL INFORMATION

BUSINESS PHILOSOPHY

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.

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

63
<PAGE>

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. By
investing regularly over the long term, you reduce the impact of short-term
market gyrations, and you attend to your long-term plan before you're tempted
to spend those assets on short-term needs.

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.

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.

STRONG RETIREMENT PLAN SERVICES
Strong Retirement Plan Services offers a full menu of high quality, affordable
retirement plan options, including traditional money purchase pension and
profit sharing plans, 401(k) plans, simplified employee pension plans, salary
reduction plans, Keoghs, and 403(b) plans. Retirement plan specialists are
available to help companies determine which type of retirement plan may be
appropriate for their particular situation.

MARKETS. The retirement plan services provided by the Advisor focus on four
distinct markets, based on the belief that a retirement plan should fit the
customer's needs, not the other way around.
1. SMALL COMPANY PLANS. Small company plans are designed for companies
with 1-50 plan participants. The objective is to incorporate the features and
benefits typically reserved for large companies, such as sophisticated
recordkeeping systems, outstanding service, and investment expertise, into a
small company plan without administrative hassles or undue expense. Small
company plan sponsors receive a comprehensive plan administration manual as
well as toll-free telephone support.
2. LARGE COMPANY PLANS. Large company plans are designed for companies
with between 51 and 1,000 plan participants. Each large company plan is
assigned a team of professionals consisting of an account manager, who is
typically an attorney, CPA, or holds a graduate degree in business, a
conversion specialist (if applicable), an accounting manager, a
legal/technical manager, and an education/communications educator.
3. WOMEN-OWNED BUSINESSES.
4. NON-PROFIT AND EDUCATIONAL ORGANIZATIONS (THE 403(B) MARKET).

TURNKEY APPROACH. The retirement plans offered by the Advisor are designed to
be streamlined and simple to administer. To this end, the Advisor has
invested heavily in the equipment, systems, and people necessary to adopt or
convert a plan, and to

64
<PAGE>

keep it running smoothly. The Advisor provides all aspects of the plan,
including plan design, administration, recordkeeping, and investment
management. To streamline plan design, the Advisor provides customizable
IRS-approved prototype documents. The Advisor's services also include annual
government reporting and testing as well as daily valuation of each
participant's account. This structure is intended to eliminate the confusion
and complication often associated with dealing with multiple vendors. It is
also designed to save plan sponsors time and expense.

The Advisor strives to provide one-stop retirement savings programs that
combine the advantages of proven investment management, flexible plan design,
and a wide range of investment options. The open architecture design of the
plans allow for the use of the family of mutual funds managed by the Advisor
as well as a stable asset value option. Large company plans may supplement
these options with their company stock (if publicly traded) or funds from
other well-known mutual fund families.

EDUCATION. Participant education and communication is key to the success of
any retirement program, and therefore is one of the most important services
that the Advisor provides. The Advisor's goal is twofold: to make sure that
plan participants fully understand their options and to educate them about the
lifelong investment process. To this end, the Advisor provides attractive,
readable print materials that are supplemented with audio and video tapes, and
retirement education programs.

SERVICE. The Advisor's goal is to provide a world class level of service.
One aspect of that service is an experienced, knowledgeable team that provides
ongoing support for plan sponsors, both at adoption or conversion and
throughout the life of a plan. The Advisor is committed to delivering
accurate and timely information, evidenced by straightforward, complete, and
understandable reports, participant account statements, and plan summaries.

The Advisor has designed both "high-tech" and "high-touch" systems, providing
an automated telephone system as well as personal contact. Participants can
access daily account information, conduct transactions, or have questions
answered in the way that is most comfortable for them.

STRONG FINANCIAL ADVISORS GROUP

The Strong Financial Advisors Group is dedicated to helping financial advisors
better serve their clients. Financial advisors receive regular updates on the
mutual funds managed by the Advisor, access to portfolio managers through
special conference calls, consolidated mailings of duplicate confirmation
statements, access to the Advisor's network of regional representatives, and
other specialized services. For more information on the Strong Financial
Advisors Group, call 1-800-368-1683.

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 100 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.

LEGAL COUNSEL

Godfrey & Kahn, S.C., 780 North Water Street, Milwaukee, Wisconsin 53202,
acts as legal counsel for the Fund.

FINANCIAL STATEMENTS

The Annual Report for the Fund that is attached to this SAI contains the
following audited financial information:

1. Schedule of Investments in Securities.
2. Statement of Operations.
3. Statement of Assets and Liabilities.
4. Statement of Changes in Net Assets.
5. Notes to Financial Statements.
6. Financial Highlights.
7. Report of Independent Accountants.

65
<PAGE>

APPENDIX A - ASSET COMPOSITION BY BOND RATINGS

For the period ended February 28, 1999, the Fund's assets were invested in the
credit categories shown below. Percentages are computed on a dollar-weighted
basis and are an average of twelve monthly calculations.

STRONG ADVANTAGE FUND

<TABLE>
<CAPTION>
<S> <C> <C>
RATED ADVISOR'S ASSESSMENT
RATING SECURITIES* OF UNRATED SECURITIES
- ------ ----------- -----------------------------------

AAA 22.03 0.68
AA 11.80 0.44
A 15.55 2.56
BBB 27.47 2.12
BB 12.85 3.71
B 0.79 --
CCC -- --
CC -- --
C -- --
D -- --
Total 90.49 + 9.51 =100%
</TABLE>

STRONG MUNICIPAL ADVANTAGE FUND

<TABLE>
<CAPTION>
<S> <C> <C>
RATED ADVISOR'S ASSESSMENT
RATING SECURITIES* OF UNRATED SECURITIES
- ------ ----------- ---------------------

AAA 19.9% 1.3%
AA 17.7 4.1
A 22.1 2.0
BBB 13.1 17.0
BB 1.5 1.3
B -- --
</TABLE>

66
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
CCC -- --
CC -- --
C -- --
D -- --
Total 74.3 + 25.7 =100%
</TABLE>

* The indicated percentages are based on the highest rating received from any
one NRSRO. Each of the NRSROs utilizes rating categories that are
substantially similar to those used in this chart (see the information below
for the rating categories of several NRSROs).

67
<PAGE>

APPENDIX B - DEFINITION OF BOND RATINGS

STANDARD & POOR'S ISSUE CREDIT RATINGS

A Standard & Poor's issue credit rating is a current opinion of the
creditworthiness of an obligor with respect to a specific financial
obligation, a specific class of financial obligations, or a specific financial
program (including ratings on medium-term note programs and commercial paper
programs). It takes into consideration the creditworthiness of guarantors,
insurers, or other forms of credit enhancement of the obligation and takes
into account the currency in which the obligation is denominated. The issue
credit rating is not a recommendation to purchase, sell, or hold a financial
obligation, inasmuch as it does not comment as to market price or suitability
for a particular investor.

Issue credit ratings are based on current information furnished by the
obligors or obtained by Standard & Poor's from other sources it considers to
be reliable. Standard & Poor's does not perform an audit in connection with
any credit rating and may, on occasion, rely on unaudited financial
information. Credit ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information, or based on
other circumstances.

Issue credit ratings can be either long-term or short-term. Short-term
ratings are generally assigned to those obligations considered short-term in
the relevant market. In the U.S., for example, that means obligations with an
original maturity of no more than 365 days - including commercial paper.
Short-term ratings are also used to indicate the creditworthiness of an
obligor with respect to put features on long-term obligations. The result is
a dual rating, in which the short-term rating addresses the put feature, in
addition to the usual long-term rating. Medium-term notes are assigned
long-term ratings.

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

1. Likelihood of payment capacity and willingness of the obligor to meet
its financial commitment on an obligation in accordance with the terms of the
obligation.

2. Nature of and provisions of the obligation.

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

The issue rating definitions are expressed in terms of default risk. As such,
they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority
in bankruptcy, as noted above. (Such differentiation applies when an entity
has both senior and subordinated obligations, secured and unsecured
obligations, or operating company and holding company obligations.)
Accordingly, in the case of junior debt, the rating may not conform exactly
with the category definition.

'AAA'

An obligation rated 'AAA' has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is EXTREMELY STRONG.

'AA'

An obligation rated 'AA' differs from the highest rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is VERY STRONG.

'A'

An obligation rated 'A' is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still STRONG.

68
<PAGE>

'BBB'

An obligation rated 'BBB' exhibits ADEQUATE protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity of the obligor to meet its financial commitment on the
obligation.

Obligations rated 'BB', 'B', 'CCC', 'CC' and 'C' are regarded as having
significant speculative characteristics. 'BB' indicates the least degree of
speculation and 'C' the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.

'BB'

An obligation rated 'BB' is LESS VULNERABLE to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.

'B'

An obligation rated 'B' is MORE VULNERABLE to nonpayment than obligations
rated 'BB', but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet
its financial commitment on the obligation.

'CCC'

An obligation rated 'CCC' is CURRENTLY VULNERABLE to nonpayment, and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.

'CC'

An obligation rated 'CC' is CURRENTLY HIGHLY VULNERABLE to nonpayment.

'C'

The 'C' rating may be used to cover a situation where a bankruptcy petition
has been filed or similar action has been taken, but payments on this
obligation are being continued.

'D'

An obligation rated 'D' is in payment default. The 'D' rating category is
used when payments on an obligation are not made on the date due, even if the
applicable grace period has not expired, unless Standard & Poor's believes
that such payments will be made during such grade period. The 'D' rating also
will be used upon the filing of a bankruptcy petition or the taking of a
similar action if payments on an obligation are jeopardized.

69
<PAGE>

MOODY'S LONG-TERM DEBT RATINGS

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

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

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

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

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

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

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

Ca - Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

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

FITCH IBCA, INC. ("FITCH") LONG-TERM NATIONAL CREDIT RATINGS

AAA

Obligations which have the highest rating assigned by Fitch on its national
rating scale for that country. This rating is automatically assigned to all
obligations issued or guaranteed by the sovereign state. Capacity for timely
repayment of principal and interest is extremely strong, relative to other
obligors in the same country.

Obligations for which capacity for timely repayment of principal and interest
is very strong relative to other obligors in the same country. The risk
attached to these obligations differs only slightly from the country's highest
rated debt.

70
<PAGE>

Obligations for which capacity for timely repayment of principal and interest
is strong relative to other obligors in the same country. However, adverse
changes in business, economic or financial conditions are more likely to
affect the capacity for timely repayment than for obligations in higher rated
categories.

BBB

Obligations for which capacity for timely repayment of principal and interest
is adequate relative to other obligors in the same country. However, adverse
changes in business, economic or financial conditions are more likely to
affect the capacity for timely repayment than for obligations in higher rated
categories.

Obligations for which capacity for timely repayment of principal and interest
is uncertain relative to other obligors in the same country. Within the
context of the country, these obligations are speculative to some degree and
capacity for timely repayment remains susceptible over time to adverse changes
in business, financial or economic conditions.

Obligations for which capacity for timely repayment of principal and interest
is uncertain relative to other obligors in the same country. Timely repayment
of principal and interest is not sufficiently protected against adverse
changes in business, economic or financial conditions and these obligations
are more speculative than those in higher rated categories.

CCC

Obligations for which there is a current perceived possibility of default
relative to other obligors in the same country. Timely repayment of principal
and interest is dependent on favorable business, economic or financial
conditions and these obligations are far more speculative than those in higher
rated categories.

Obligations which are highly speculative relative to other obligors in the
same country or which have a high risk of default.

Obligations which are currently in default.

DUFF & PHELPS, INC. LONG-TERM DEBT AND PREFERRED STOCK RATING SCALE

Rating Definition

AAA Highest credit quality. The risk factors are negligible, being only
slightly more
than for risk-free U.S. Treasury debt.

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

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

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

71
<PAGE>

BBB-

BB+ Below investment grade but deemed likely to meet obligations when due.

BB Present or prospective financial protection factors fluctuate according
to
BB- industry conditions. Overall quality may move up or down frequently
within this category.

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

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

conditions, and/or with unfavorable company developments.

DD Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or
interest payments.

DP Preferred stock with dividend arrearages.

THOMSON BANKWATCH LONG-TERM DEBT RATINGS

Long-Term Debt Ratings assigned by Thomson BankWatch ALSO WEIGH HEAVILY
GOVERNMENT OWNERSHIP AND SUPPORT. The quality of both the company's
management and franchise are of even greater importance in the Long-Term Debt
Rating decisions. Long-Term Debt Ratings look out over a cycle and are not
adjusted frequently for what it believes are short-term performance
aberrations.

Long-Term Debt Ratings can be restricted to local currency debt - ratings will
be identified by the designation LC. In addition, Long-Term Debt Ratings may
include a plus (+) or minus (-) to indicate where within the category the
issue is placed. BankWatch Long-Term Debt Ratings are based on the following
scale:

INVESTMENT GRADE

AAA (LC-AAA) - Indicates that the ability to repay principal and interest on a
timely basis is extremely high.

AA (LC-AA) - Indicates a very strong ability to repay principal and interest
on a timely basis, with limited incremental risk compared to issues rated in
the highest category.

A (LC-A) - Indicates the ability to repay principal and interest is strong.
Issues rated A could be more vulnerable to adverse developments (both internal
and external) than obligations with higher ratings.

BBB (LC-BBB) - The lowest investment-grade category; indicates an acceptable
capacity to repay principal and interest. BBB issues are more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.

NON-INVESTMENT GRADE - may be speculative in the likelihood of timely
repayment of principal and interest

BB (LC-BB) - While not investment grade, the BB rating suggests that the
likelihood of default is considerably less than for lower-rated issues.
However, there are significant uncertainties that could affect the ability to
adequately service debt obligations.

B (LC-B) - Issues rated B show a higher degree of uncertainty and therefore
greater likelihood of default than higher-rated issues. Adverse developments
could negatively affect the payment of interest and principal on a timely
basis.

72
<PAGE>

CCC (LC-CCC) - Issues rated CCC clearly have a high likelihood of default,
with little capacity to address further adverse changes in financial
circumstances.

CC (LC-CC) - CC is applied to issues that are subordinate to other obligations
rated CCC and are afforded less protection in the event of bankruptcy or
reorganization.

D (LC-D) - Default.

SHORT-TERM RATINGS

STANDARD & POOR'S SHORT-TERM ISSUE CREDIT RATINGS

'A-1'

A short-term obligation rated 'A-1' is rated in the highest category by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is strong. Within this category, certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity
to meet its financial commitment on these obligations is extremely strong.

'A-2'

A short-term obligation rated 'A-2' is somewhat more susceptible to the averse
effects of changes in circumstances and economic conditions than obligations
in higher rating categories. However, the obligor's capacity to meet its
financial commitment on the obligation is satisfactory.

'A-3'

A short-term obligation rated 'A-3' exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

'B'

A short-term obligation rated 'B' is regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet
its financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet
its financial commitment on the obligation.

'C'

A short-term obligation rated 'C' is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.

'D'

A short-term obligation rated 'D' is in payment default. The 'D' rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The 'D'
rating also will be used upon the filing of a bankruptcy petition or the
taking of a similar action if payments on an obligation are jeopardized.

73
<PAGE>

MOODY'S SHORT-TERM DEBT RATINGS

Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations. These obligations have an original
maturity not exceeding one year, unless explicitly noted.

Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:

PRIME - 1 Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term Debt
obligations. Prime-1 repayment ability will often be evidenced by many of the
following characteristics:
- - Leading market positions in well-established industries.
- - High rates of return on funds employed.
- - Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
- - Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- - Well-established access to a range of financial markets and assured sources
of alternate liquidity.

PRIME - 2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt 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, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.

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

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

FITCH IBCA, INC. ("FITCH") SHORT-TERM NATIONAL CREDIT RATINGS

Obligations assigned this rating have the highest capacity for timely repayment
under Fitch's national rating scale for that country, relative to other
obligations in the same country. This rating is automatically assigned to all
obligations issued or guaranteed by the sovereign state. Where issues possess
a particularly strong credit feature, a "+" is added to the assigned rating.

Obligations supported by a strong capacity for timely repayment relative to
other obligors in the same country. However, the relative degree of risk is
slightly higher than for issues classified as 'A1' and capacity for timely
repayment may be susceptible to adverse changes in business, economic, or
financial conditions.

Obligations supported by an adequate capacity for timely repayment relative to
other obligors in the same country. Such capacity is more susceptible to
adverse changes in business, economic, or financial conditions than for
obligations in higher categories.

74
<PAGE>

Obligations for which the capacity for timely repayment is uncertain relative
to other obligors in the same country. The capacity for timely repayment is
susceptible to adverse changes in business, economic, or financial conditions.

Obligations for which there is a high risk of default to other obligors in the
same country or which are in default.

DUFF & PHELPS, INC. SHORT-TERM DEBT RATINGS

RATING: DEFINITION

HIGH GRADE

D-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.

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

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

GOOD GRADE

D-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

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

NON-INVESTMENT GRADE

D-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

D-5 Issuer failed to meet scheduled principal and/or interest
payments.

75
<PAGE>

THOMSON BANKWATCH (TBW) SHORT-TERM RATINGS

TBW assigns Short-Term Debt Ratings to specific debt instruments with original
maturities of one year or less.

TBW-1 (LC-1) The highest category; indicates a very high likelihood that
principal and interest will be paid on a timely basis.

TBW-2 (LC-2) The second-highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated TBW-1.

TBW-3 (LC-3) The lowest investment-grade category; indicates that while the
obligation is more susceptible to adverse developments (both internal and
external) than those with higher ratings, the capacity to service principal and
interest in a timely fashion is considered adequate.

TBW-4 (LC-4) The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.

<PAGE>

STRONG MONEY MARKET FUND, INC.

PART C
OTHER INFORMATION

Item 23. EXHIBITS

(a) Articles of Incorporation dated July 31, 1996(3)
(b) Bylaws dated October 20, 1995(2)
(b.1) Amendment to Bylaws dated May 1, 1998(4)
(c) Specimen Stock Certificate and Article IV to the Articles of
Incorporation(2)
(d) Investment Advisory Agreement(1)
(e) Distribution Agreement(2)
(f) Inapplicable
(g) Custody Agreement(2)
(h) Shareholder Servicing Agent Agreement(2)
(i) Inapplicable
(j) Consent of Independent Accountants
(k) Inapplicable
(l) Inapplicable
(m) Inapplicable
(n) Financial Data Schedule
(o) Inapplicable
(p) Power of Attorney dated February 25, 1999(5)
(q) Letter of Representation
(r) Code of Ethics for Access Persons dated January 1, 1999(5)
(r.1) Code of Ethics for Non-Access Persons dated January 1, 1999(5)
__________________________
(1) Incorporated herein by reference to Post-Effective Amendment No. 13 to
the Registration Statement on Form N-1A of Registrant filed on or about April
24, 1995.

(2) Incorporated herein by reference to Post-Effective Amendment No. 14 to
the Registration Statement on Form N-1A of Registrant filed on or about
February 26, 1996.

(3) Incorporated herein by reference to Post-Effective Amendment No. 15 to
the Registration Statement on Form N-1A of Registrant filed on or about
February 26, 1997.

(4) Incorporated herein by reference to Post-Effective Amendment No. 17 to
the Registration Statement on Form N-1A of Registrant filed on or about June
26, 1998.

(5) Incorporated herein by reference to Post-Effective Amendment No. 19 to
the Registration Statement on Form N-1A of Registrant filed on or about
February 26, 1999.

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

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

Item 25. INDEMNIFICATION

Officers and directors of the Fund, its advisor and underwriter are
insured under a joint directors and officers/errors and omissions insurance
policy underwritten by a group of insurance companies in the aggregate amount
of $115,000,000, subject to certain deductions. Pursuant to the authority of
the Wisconsin Business Corporation Law ("WBCL"), Article VII of Registrant's
Bylaws provides as follows:

1
<PAGE>

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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR

The information contained under "Who are the funds' investment advisor and
portfolio managers?" in the Prospectus and under "Directors and Officers,"
"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 27. PRINCIPAL UNDERWRITERS

(a) Strong Investments, Inc., principal underwriter for Registrant, also
serves as principal underwriter for Strong Advantage Fund, Inc.; Strong Asia
Pacific Fund, Inc.; Strong Asset Allocation Fund, Inc.; Strong Common Stock
Fund, Inc.; Strong Conservative Equity Funds, Inc.; Strong Corporate Bond Fund,
Inc.; Strong Discovery Fund, Inc.; Strong Equity Funds, Inc.; Strong Government
Securities Fund, Inc.; Strong Heritage Reserve Series, Inc.; Strong High-Yield
Municipal Bond Fund, Inc.; Strong Income Funds, Inc.; Strong Institutional
Funds, Inc.; Strong International Equity Funds, Inc.; Strong International
Income Funds, Inc.; Strong Life Stage Series, Inc.; Strong Municipal Bond Fund,
Inc.; Strong Municipal Funds, Inc.; Strong Opportunity Fund, Inc.; Strong
Opportunity Fund II, Inc.; Strong Schafer Funds, Inc.; Strong Schafer Value
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 Variable Insurance Funds, Inc.

(b)

Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH UNDERWRITER WITH FUND

Richard S. Strong Director and Chairman Director and Chairman of
900 Heritage Reserve of the Board the Board
Menomonee Falls, WI 53051

Thomas P. Lemke Vice President and Chief Vice President
900 Heritage Reserve Compliance Officer
Menomonee Falls, WI 53051

2
<PAGE>

Stephen J. Shenkenberg Vice President, Deputy Vice President
900 Heritage Reserve Chief Compliance Officer and Secretary
Menomonee Falls, WI 53051 and Secretary

Peter D. Schwab Vice President none
900 Heritage Reserve
Menomonee Falls, WI 53051

Joseph R. DeMartine Vice President none
900 Heritage Reserve
Menomonee Falls, WI 53051

Anthony J. D'Amato Vice President none
900 Heritage Reserve
Menomonee Falls, WI 53051

Dana J. Russart Vice President none
900 Heritage Reserve
Menomonee Falls, WI 53051

Mary F. Hoppa Vice President none
900 Heritage Reserve
Menomonee Falls, WI 53051

Thomas M. Zoeller Treasurer and Chief none
900 Heritage Reserve Financial Officer
Menomonee Falls, WI 53051

Richard T. Weiss Director none
900 Heritage Reserve
Menomonee Falls, WI 53051

Item 28. 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 Vice President,
Thomas P. Lemke, at Registrant's corporate offices, 100 Heritage Reserve,
Menomonee Falls, Wisconsin 53051.

Item 29. MANAGEMENT SERVICES

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

Item 30. UNDERTAKINGS

None

3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 20 to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933, and has duly caused this Post-Effective Amendment No. 20 to the
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the Village of Menomonee Falls, and State of Wisconsin on
the 24th day of June, 1999.

STRONG MONEY MARKET FUND, INC.
(Registrant)

By: /S/ THOMAS P. LEMKE
Thomas P. Lemke, Vice President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 20 to the Registration Statement on Form N-1A has
been signed below by the following persons in the capacities and on the date
indicated.

<TABLE>
<CAPTION>
<S> <C> <C>
NAME TITLE DATE
- --------------------------- ---------------------------------- ----------------

Chairman of the Board (Principal
/s/ Richard S. Strong Executive Officer) and a Director June 24, 1999
- ---------------------------
Richard S. Strong

Treasurer (Principal Financial and
/s/ John W. Widmer Accounting Officer) June 24, 1999
- ---------------------------
John W. Widmer

Director June 24, 1999
- ---------------------------
Marvin E. Nevins*

Director June 24, 1999
- ---------------------------
Willie D. Davis*

Director June 24, 1999
- ---------------------------
William F. Vogt*

Director June 24, 1999
- ---------------------------
Stanley Kritzik*
</TABLE>

* John S. Weitzer signs this document pursuant to powers of attorney filed
with Post-Effective Amendment No. 19 to the Registration Statement on Form
N-1A.

By: /S/ JOHN S. WEITZER
John S. Weitzer

1
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
<S> <C> <C>
EDGAR
EXHIBIT NO. EXHIBIT EXHIBIT NO.
- ----------- -----------------------------------------

(j) Consent of Independent Accountants EX-99.j

(n) Financial Data Schedule EX-27.CLASS A

(q) Letter of Representation EX-99.q

</TABLE>

1
<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
Strong Money Market Fund, Inc.

We consent to the incorporation by reference in Post-Effective Amendment No. 20
to the Registration Statement of Strong Money Market Fund, Inc., on Form N-1A
of our report dated April 7, 1999, on our audit of the financial statements and
financial highlights of Strong Advantage Fund, Inc., which report is included
in the Annual Report to Shareholders for the year ended February 28, 1999,
which is incorporated by reference in the Post-Effective Amendment to the
Registration Statement. We also consent to the references to our Firm under
the captions "Independent Accountants" in the Statement of Additional
Information and "Financial Highlights" in the Prospectus.

PricewaterhouseCoopers LLP

Milwaukee, Wisconsin
June 24, 1999

1
<PAGE>

<ARTICLE> 6
<CIK> 0000773918
<NAME> Strong Money Market Fund, Inc.
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> Feb-28-1999
<PERIOD-START> Nov-01-1998
<PERIOD-END> Feb-28-1999
<INVESTMENTS-AT-COST> 1983259
<INVESTMENTS-AT-VALUE> 1983259
<RECEIVABLES> 4398
<ASSETS-OTHER> 225
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1987882
<PAYABLE-FOR-SECURITIES> 55200
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6493
<TOTAL-LIABILITIES> 61693
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1926189
<SHARES-COMMON-STOCK> 1926189
<SHARES-COMMON-PRIOR> 1923824
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1926189
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 33105
<OTHER-INCOME> 0
<EXPENSES-NET> 3,926
<NET-INVESTMENT-INCOME> 29179
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 29179
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (29,179)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1042350
<NUMBER-OF-SHARES-REDEEMED> (1,069,859)
<SHARES-REINVESTED> 29874
<NET-CHANGE-IN-ASSETS> 2365
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3174
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,781
<AVERAGE-NET-ASSETS> 1930789
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.6<F1>
<FN>
<F1> Expense ratio without waivers and absorptions would have been 0.9%.
</FN>

</TABLE>

GODFREY & KAHN, S.C.
ATTORNEYS AT LAW
780 North Water Street
Milwaukee, Wisconsin 53202
Phone (414) 273-3500 Fax (414) 273-5198

June 24, 1999

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: STRONG MONEY MARKET FUND, INC.

Gentlemen:

We represent Strong Money Market Fund, Inc. (the "Company"), in connection
with its filing of Post-Effective Amendment No. 20 (the "Post-Effective
Amendment") to the Company's Registration Statement (Registration Nos. 2-99439;
811-4374) on Form N-1A under the Securities Act of 1933 (the "Securities Act")
and the Investment Company Act of 1940. The Post-Effective Amendment is being
filed pursuant to Rule 485(b) under the Securities Act.

We have reviewed the Post-Effective Amendment and, in accordance with Rule
485(b)(4) under the Securities Act, hereby represent that the Post-Effective
Amendment does not contain disclosures which would render it ineligible to
become effective pursuant to Rule 485(b).

Very truly yours,

GODFREY & KAHN, S.C.

/s/Renee Hardt Torr

Renee Hardt Torr

1
<PAGE>