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HEARTLAND LARGE CAP VALUE FUND
HEARTLAND MID CAP VALUE FUND
HEARTLAND VALUE PLUS FUND
HEARTLAND VALUE FUND
HEARTLAND U.S. GOVERNMENT SECURITIES FUND
Supplement dated February 23, 1999
to
Prospectus dated November 9, 1998
Minimum Investments (page 27). The minimum initial investment for the Value
Fund has been reduced from $25,000 to $5,000. The minimum initial investment
for each of the other Funds remains $1,000.
Fund Expenses (page 4). Effective April 1, 1999, Heartland Advisors, Inc.
("Heartland Advisors") will contractually undertake to waive fees paid to it by
certain Funds and to pay other ordinary expenses of those Funds, year by year,
through April 30, 2000 so that annual operating expenses do not exceed the
following amounts: 0.95% of average net assets for the Large Cap Value Fund;
1.25% of average net assets for the Mid Cap Value Fund; and 0.80% of average net
assets for the U.S. Government Securities Fund. After that date, these expense
reimbursement undertakings may be continued, terminated or revised at any time.
If a Fund's operating expenses fall below the current expense limitation, the
Fund will repay Heartland Advisors for expenses previously reimbursed.
Repayment will continue for up to three years after the fiscal year in which the
reimbursement occurred, subject to any expense limitation then in effect.
Repayment will stop when a Fund has repaid the entire amount or the three-year
period ends.
All Funds Except U.S. Government Securities Fund. Although not a principal
investment strategy of any Fund other than the Value Plus Fund, each Fund may
invest in debt securities. The Value Plus Fund invests primarily in income-
producing equity securities, but also may invest up to 35% of its total assets
in debt securities and cash equivalents. No Fund may invest in debt securities
rated below B and the Value Plus Fund may not invest more than 25% of its assets
in non-investment grade debt securities. Effective May 1, 1999, the Funds'
investments in debt securities will not be subject to any specific credit rating
limitations, but such investments will continue to be made only if believed to
be consistent with the Funds' respective objectives, policies and risk profiles.
In addition, Heartland Advisors will continue to engage in ongoing intensive
credit research on debt securities that are not investment grade. Non-investment
grade debt securities involve greater investment risk and may be considered more
speculative than higher quality debt securities with similar maturities.
Amendment and Restatement of Fund Policies. Effective May 1, 1999, the Funds'
Prospectus will be revised to make the disclosure more meaningful and
understandable to investors. In connection with this revision, the Funds'
Directors, a majority of whom are
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not affiliated with Heartland Advisors, have unanimously approved changes in
certain Fund policies, subject to shareholder approval at a meeting scheduled
for April 28, 1999.
Some of these changes are not substantive and are designed to standardize or
simplify language or clarify investment terms used to describe Fund policies.
Other changes are substantive. Most of these substantive changes provide
greater investment flexibility, but are not expected to materially affect the
principal investment strategies or risks involved in managing the Funds.
However, some of these substantive changes may be considered material and are
described below.
. Re-designation of Investment Objectives from Fundamental to Non-Fundamental.
No Fund's investment objective is proposed to be changed, and each Fund's
portfolio will continue to be managed by employing Heartland Advisors'
proprietary value criteria. However, each Fund's investment objective is
proposed to be re-designated from a "fundamental" policy to a "non-
fundamental" policy. A "fundamental" policy may not be changed or revised in
any respect without the approval of both the Board of Directors and
shareholders. Re-designating a Fund's investment objective as a non-
fundamental policy will make it possible to change the objective with Board
approval and notice to shareholders, but without the expense of a shareholder
meeting.
. Limitations on Borrowing. In general, investment companies are prohibited
from borrowing in excess of 33 1/3% of total assets under the federal
securities laws. An investment company may borrow up to an additional 5% of
total assets from banks for non-investment and non-leveraging temporary or
emergency purposes. Currently, each Fund is authorized to borrow up to 10% of
total assets on a temporary basis to raise cash to meet large or unexpected
redemptions, rather than liquidate portfolio securities at unfavorable prices
or times. The proposed change would increase the percentage limit on Fund
borrowings to the maximum permissible amount. It also would broaden and
clarify a Fund's borrowing authority to permit, for example, temporary
borrowings to purchase securities pending receipt of proceeds from the sale
of securities or from other types of portfolio transactions. As a matter of
operating policy, assets would continue to be earmarked to repay borrowed
amounts and no Fund would borrow for a period of more than 60 days or in an
amount in excess of 20% of total assets. A Fund still may be required to
liquidate portfolio securities at unfavorable prices or times to repay
borrowed funds. Borrowing for investment purposes may involve leverage that
might increase share price volatility, and interest expense may exceed the
return on investments made with borrowed amounts.
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. Restrictions on Illiquid Securities. An investment company is permitted to
invest up to 15% of net assets in illiquid securities. A security is deemed
"illiquid" if it cannot be disposed of in the ordinary course of business
within seven days at approximately the amount at which it is valued. An
investment company also is permitted to invest in securities with legal or
contractual restrictions on resale ("restricted securities"), subject to the
aforesaid limitation on illiquid securities.
Currently, the Value Fund is not permitted to invest in restricted or
illiquid securities, and the U.S. Government Securities Fund is not permitted
to invest in restricted securities. The other Funds may invest in restricted
and illiquid securities subject to certain percentage limitations. The
proposed change would permit each Fund to invest in restricted securities and
up to 15% of net assets in illiquid securities. Restricted securities would
be subject to this limitation unless they were deemed liquid. Illiquid
securities may sometimes be more difficult to value and dispose of and their
disposition may involve greater expense than the disposition of liquid
securities.
. Investing for Control or Management. Currently, each Fund is prohibited from
acting to obtain control or management of a portfolio company. This policy is
proposed to be eliminated in order to clarify the Funds' authority to seek to
protect and maximize the value of their portfolios by freely exercising their
rights as shareholders of their portfolio companies. In particular, the
proposed change would enable the Funds to more freely communicate their views
on company affairs to a portfolio company's management, board of directors
and shareholders. Although a Fund only would undertake this type of activity
when it believed it would enhance potential investment returns, it is
possible that this type of activity could result in additional expense to the
Fund and limit its ability to freely trade in the securities of the portfolio
companies with respect to which it takes such action.
. U.S. Government Securities Fund Only. Currently, as a matter of fundamental
policy that cannot be changed without approval of shareholders, the Fund is
required to invest at least 65% of its total assets in U.S. Government
securities. However, as a matter of operating policy the Fund currently
invests all of its assets in such securities. These policies are proposed to
be replaced with a non-fundamental policy that would require the Fund to
invest not less than 80% of total assets in U.S. Government securities. The
balance of the Fund's assets could be invested in non-U.S. Government
securities. This policy could be changed with approval of the Board of
Directors, a majority of whom are not affiliated with Heartland Advisors, and
notice to, but not approval of, shareholders. Assets invested in non-U.S.
Government debt securities would be investment grade, but would be subject to
greater potential investment risk than U.S. Government securities.
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In addition to this change, the Board of Directors has approved the
elimination of an operating policy limiting the Fund's investments in U.S.
Government-backed mortgage-related securities to 65% of Fund assets. This
change is not subject to shareholder approval.
For further information on these proposed changes, please refer to the Funds'
March 1999 proxy statement. A copy will be mailed in early March to all
shareholders of record as of February 19, 1999. Other investors may obtain a
copy by calling 1-800-432-7856 or by accessing the Heartland Funds' web site at
www.heartlandfunds.com.
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HEARTLAND SHORT DURATION HIGH-YIELD
MUNICIPAL FUND
HEARTLAND HIGH-YIELD MUNICIPAL
BOND FUND
Supplement dated February 23, 1999
to
Prospectus dated May 1, 1998
Effective May 1, 1999, the Funds' Prospectus will be revised to make the
disclosure more meaningful and understandable to investors. In connection with
this revision, the Funds' Directors, a majority of whom are not affiliated with
Heartland Advisors, Inc. ("Heartland Advisors"), have unanimously approved
changes in certain Fund policies, subject to shareholder approval at a meeting
scheduled for April 28, 1999.
Some of these changes are not substantive and are designed to standardize or
simplify language or clarify investment terms used to describe Fund policies.
Other changes are substantive. Most of these substantive changes provide
greater investment flexibility, but are not expected to materially affect the
principal investment strategies or risks involved in managing the Funds.
However, some of these substantive changes may be considered material and are
described below.
. Limitations on Borrowing. In general, investment companies are prohibited
from borrowing in excess of 33 1/3% of total assets under the federal
securities laws. An investment company may borrow up to an additional 5% of
total assets from banks for non-investment and non-leveraging temporary or
emergency purposes. Currently, each Fund is authorized to borrow up to 33% of
total assets, but has operated under a policy limiting borrowings to 10% of
total assets for temporary or emergency purposes. A Fund might borrow, for
example, to raise cash to meet large or unexpected redemptions rather than
liquidate portfolio securities at unfavorable prices or times.
To standardize the borrowing limits for all Heartland Funds, the proposed
change would increase the percentage limit on authorized borrowings from 33%
to 33 1/3%, and increase the operating limit from 10% to 20%. It also would
broaden and clarify each Fund's borrowing authority to permit, for example,
temporary borrowings to purchase securities pending receipt of proceeds from
the sale of securities or from other types of portfolio transactions. As a
matter of operating policy, assets would continue to be earmarked to repay
borrowed amounts and neither Fund would borrow for a period of more than 60
days. A Fund still may be required to liquidate portfolio securities at
unfavorable prices or times to repay borrowed funds. Borrowing for investment
purposes may involve leverage that might increase share price volatility,
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and interest expense may exceed the return on investments made with borrowed
amounts.
. Investing for Control or Management. Currently, each Fund is prohibited from
acting to obtain control or management of a portfolio company. This policy is
proposed to be eliminated in order to clarify the Funds' authority to seek to
protect and maximize the value of their portfolios by freely exercising their
rights as shareholders of their portfolio companies. In particular, the
proposed change would enable the Funds to more freely communicate their views
on company affairs to a portfolio company's management, board of directors
and shareholders. Although a Fund only would undertake this type of activity
when it believed it would enhance potential investment returns, it is
possible that this type of activity could result in additional expense to the
Fund and limit its ability to freely trade in the securities of the portfolio
companies with respect to which it takes such action.
For further information on these proposed changes, please refer to the Funds'
March 1999 proxy statement. A copy will be mailed in early March to all
shareholders of record as of February 19, 1999. Other investors may obtain a
copy by calling 1-800-432-7856 or by accessing the Heartland Funds' web site at
www.heartlandfunds.com.
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HEARTLAND WISCONSIN TAX FREE
FUND
Supplement dated February 23, 1999
to
Prospectus dated May 1, 1998
Effective May 1, 1999, the Fund's Prospectus will be revised to make the
disclosure more meaningful and understandable to investors. In connection with
this revision, the Fund's Directors, a majority of whom are not affiliated with
Heartland Advisors, Inc. ("Heartland Advisors"), have unanimously approved
changes in certain Fund policies.
Some of these changes are not substantive and are designed to standardize or
simplify language or clarify investment terms used to describe Fund policies.
Other changes are substantive, and certain substantive changes are subject to
shareholder approval at a meeting scheduled for April 28, 1999. Most of the
substantive changes provide greater investment flexibility, but are not expected
to materially affect the principal investment strategies or risks involved in
managing the Fund. However, some of these substantive changes may be considered
material and are described below.
Investment Quality (page 8). The Fund seeks to provide investors with a high
level of current income that is exempt from both federal and Wisconsin personal
income tax by investing primarily in investment grade municipal securities.
Although this principal investment strategy is not changing, in order to expand
the number of municipal securities that are eligible for investment by the Fund,
current limitations on investments in securities below investment grade are
proposed to be revised. Effective May 1, 1999, the Fund will be permitted to
invest in municipal securities below investment grade provided no more than 20%
of total assets may be invested in securities below B-. Heartland Advisors will
continue to engage in ongoing intensive credit research on municipal securities
that are not investment grade. Non-investment grade municipal securities
involve greater investment risk and may be considered more speculative than
higher quality municipal securities with similar maturities.
Other Fund Policies. Subject to shareholder approval, effective May 1, 1999,
the following additional policies of the Fund will be changed.
. Investing in Municipal Securities Subject to Alternative Minimum Tax. Under
normal conditions, the Fund currently is required to invest so that at least
80% of its assets are invested so as to be exempt from the federal
alternative minimum tax. The Board of Directors believes that this
requirement unduly limits the available supply of securities in which the
Fund may invest, and thereby places the Fund at a competitive disadvantage in
seeking to achieve its investment objective of high current income.
Therefore, this requirement is proposed to be eliminated. This could result
in the
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Fund's net investment return being lower for certain investors who are
subject to the federal alternative minimum tax.
. Limitations on Borrowing. In general, investment companies are prohibited
from borrowing in excess of 33 1/3% of total assets under the federal
securities laws. An investment company may borrow up to an additional 5% of
total assets from banks for non-investment and non-leveraging temporary or
emergency purposes. Currently, the Fund is authorized to borrow up to 10% of
total assets on a temporary basis to raise cash to meet large or unexpected
redemptions, rather than liquidate portfolio securities at unfavorable prices
or times. The proposed change would increase the percentage limit on
borrowings to the maximum permissible amount. It also would broaden and
clarify the Fund's borrowing authority to permit, for example, temporary
borrowings to purchase securities pending receipt of proceeds from the sale
of securities or from other types of portfolio transactions. As a matter of
operating policy, assets would continue to be earmarked to repay borrowed
amounts and the Fund would not borrow for a period of more than 60 days or in
an amount in excess of 20% of total assets. However, the Fund still may be
required to liquidate portfolio securities at unfavorable prices or times to
repay borrowed funds. Borrowing for investment purposes may involve leverage
that might increase share price volatility, and interest expense may exceed
the return on investments made with borrowed amounts.
. Restrictions on Illiquid Securities. An investment company is permitted to
invest up to 15% of net assets in illiquid securities. A security is deemed
"illiquid" if it cannot be disposed of in the ordinary course of business
within seven days at approximately the amount at which it is valued. An
investment company also is permitted to invest in securities with legal or
contractual restrictions on resale ("restricted securities"), subject to the
aforesaid limitation on illiquid securities. Currently, the Fund is permitted
to invest up to 10% of its assets in restricted and illiquid securities. The
proposed change would permit the Fund to invest up to 15% of net assets in
illiquid securities. Restricted securities only would be subject to this
limitation if they were not deemed to be liquid. Illiquid securities may
sometimes be more difficult to value and dispose of and their disposition may
involve greater expense than the disposition of liquid securities.
. Investing for Control or Management. Currently, the Fund is prohibited from
acting to obtain control or management of a portfolio company. This policy is
proposed to be eliminated in order to clarify the Fund's authority to seek to
protect and maximize the value of its portfolio by freely exercising its
rights as a shareholder of its portfolio companies. In particular, the
proposed change would enable the Fund to more freely communicate its views on
company affairs to a portfolio company's management, board of directors and
shareholders. Although the Fund only would undertake this
2
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type of activity when it believed it would enhance potential investment
returns, it is possible that this type of activity could result in additional
expense to the Fund and limit its ability to freely trade in the securities
of the portfolio companies with respect to which it takes such action.
For further information on these proposed changes, please refer to the Fund's
March 1999 proxy statement. A copy will be mailed in early March to all
shareholders of record as of February 19, 1999. Other investors may obtain a
copy by calling 1-800-432-7856 or by accessing the Heartland Funds' web site at
www.heartlandfunds.com.
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