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Rule 497(e)
1933 Act Reg. No. 33-11371
1940 Act File No. 811-4982
HEARTLAND NEBRASKA TAX FREE FUND
SUPPLEMENT DATED SEPTEMBER 23, 1996 TO
PROSPECTUS DATED APRIL 30, 1996
On September 20, 1996, following unanimous approval by its Board of
Directors, Heartland Group, Inc., acting on behalf of the Heartland Nebraska
Tax Free Fund (the "Heartland Fund"), entered into an Agreement and Plan of
Reorganization pursuant to which the Heartland Fund will transfer all of its
assets and stated liabilities to The Nebraska Municipal Fund, an existing
portfolio of Ranson Managed Portfolios (the "Ranson Fund"). In exchange, the
Ranson Fund will issue to the Heartland Fund shares of the Ranson Fund having
an aggregate net asset value equal to the value of the Heartland Fund assets
(net of the liabilities) so transferred. The Heartland Fund will then
distribute the Ranson Fund shares, pro rata, to the Heartland Fund
shareholders, liquidate and terminate its existence as a separate series of
Heartland Group, Inc. The transaction does not affect any of the other mutual
funds of Heartland Group.
As a result of the transaction, Heartland Fund shareholders will become
shareholders of the Ranson Fund. It is expected that the value of each
Heartland Fund shareholder's account in the Ranson Fund will be the same as the
value of such account in the Heartland Fund immediately prior to the
transaction. The Board of Directors of Heartland Group believes that the
transaction is fair to, and in the best interests of, the Heartland Fund
shareholders for several reasons, including the potential benefits of increased
portfolio diversification and greater economies of scale from a larger fund.
The transaction is intended to be structured as a tax-free reorganization
and, if it so qualifies, Heartland Fund shareholders will not recognize any
taxable gain or loss as a result of the exchange of their shares. In addition,
while the Ranson Fund imposes a maximum front-end sales charge of 4.25% on
purchases, Heartland Fund shareholders will not pay any sales load or
commission on the shares of the Ranson Fund they receive in the transaction.
If any Heartland Fund shares are subject to a contingent deferred sales charge
as a result of an exchange from another Heartland Fund, such charge will not be
imposed in connection with the transaction, and will not apply to redemptions
of Ranson Fund shares received in the transaction.
The transaction is subject to normal and customary closing conditions, and
to approval by the shareholders of the Heartland Fund at a special meeting to
be called and held for that purpose, which is anticipated to be in December,
1996. Heartland Fund shareholders will receive a separate proxy
statement/prospectus in connection with the special meeting.
The Ranson Fund currently has assets of more than $18 million and is
managed by Ranson Capital Corporation ("Ranson Capital"). Ranson Capital was
organized in 1990 and presently serves as investment adviser to two other
series of Ranson Managed Portfolios -- The Kansas Municipal Fund and Kansas
Insured Intermediate Fund. Ranson Capital also serves as distributor for all
series of Ranson Managed Portfolios. Ranson Capital is a wholly-owned
subsidiary of the Ranson Company, Inc., which is a wholly-owned subsidiary of
ND Holdings, Inc. ND Holdings, through its subsidiaries, manages eight
separate investment company portfolios (including six single-state tax-exempt
mutual funds), representing more than $320 million of total assets under
management. Ranson Capital's principal executive offices are located at 1
North Main, Minot, North Dakota 58703.
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The investment objectives of the Ranson Fund and the Heartland Fund are
similar. The Ranson Fund's investment objective is to achieve a high level of
current income exempt from both federal income tax and Nebraska income tax as
is consistent with the preservation of capital. In pursuit of its investment
objective, the Ranson Fund invests primarily in debt obligations, the interest
of which is, in the opinion of bond counsel to the issuer, exempt from both
federal and Nebraska income taxation. Under normal market conditions, the
Fund's assets will be invested in a portfolio of such tax-exempt securities
which, in the opinion of Ranson Capital, will produce a higher level of current
income than would be produced by a portfolio of such securities rated in only
the highest rating category, but contains securities which do not present a
significant risk of loss of principal due to credit characteristics. Unlike
the Heartland Fund, the Ranson Fund has not established any limit on its
investments in securities subject to the federal alternative minimum tax;
consequently, a substantial portion of the income produced by the Ranson Fund
may be includable in the calculation of alternative minimum taxable income.
If the transaction is consummated, Ranson Capital has agreed to continue
waiving fees and/or reimbursing expenses as necessary so that the ratio of the
Ranson Fund's total operating expenses to its average net assets does not
exceed 0.85% during each of its fiscal years ending July 31, 1997 and 1998.
The expense ratio for the Heartland Fund for the last fiscal year was 0.76%
after waivers and reimbursements, and 1.08% before waivers and reimbursements.
