HEARTLAND GROUP INC, DEFS14A, 1999-03-05

HEARTLAND GROUP INC
DEFS14A, 1999-03-05

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. N/A )

Filed by the Registrant [ X ]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12

HEARTLAND GROUP, INC
(Name of Registrant as Specified In Its Charter)

Not Applicable
------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

1) Amount Previously Paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3) Filing Party:
- --------------------------------------------------------------------------------
4) Date Filed:
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[ON HEARTLAND FUNDS LETTERHEAD]

March 5, 1999

Dear Valued Shareholder:

Over the past few months, Heartland Advisors has undertaken three important
initiatives that we believe will provide both near-term and long-term benefits
to you. Two of these initiatives involve service and communication enhancements
and product changes. The third initiative involves revisions to the Funds'
prospectuses and other legal documents. These revisions are designed to make
disclosure to investors more meaningful and to provide Heartland Advisors with
greater flexibility in administering the Funds and managing their investment
portfolios. We are writing to you today because some of the revisions require
your approval.

All of the Directors, a majority of whom are not affiliated with Heartland
Advisors, have unanimously approved the proposed changes in the Funds'
prospectuses and other legal documents. They recommend that you approve the
changes requiring shareholder approval.

Our first two initiatives involved a number of actions. You already may be aware
of some of them. In early 1998, we appointed Hugh Denison, retired Director of
Research for Heartland Advisors and a member of the Heartland Funds' Board of
Directors, to serve as our Shareholder Ombudsman. In November, we launched the
Heartland Funds website. In late 1998, we made selective changes in our product
line. First, we focused on our core investment strengths by merging the
Heartland Small Cap Contrarian Fund into the Value Fund. We also reopened the
Value Fund in response to investor interest. Then, to serve the short-term cash
management needs of investors, we launched the Taxable Short Duration Fund in
December.

Our third initiative involves revisions to the Funds' prospectuses and other
legal documents. Some of these revisions require shareholder approval of changes
to investment and operating policies of the Funds. Some changes are
nonsubstantive and designed to standardize or simplify the language used to
describe these policies. Other changes are substantive, and update policies by
allowing the Funds to be managed in a way that Heartland Advisors believes will
enhance the Funds' potential returns.

The proposed changes in investment and operating policies are described in
detail in the enclosed proxy statement. However, because the proxy statement is
a lengthy and technical document, we also have provided a summary that answers
many of the questions we think shareholders will have.

The Board of Directors and Heartland Advisors believe these initiatives are
important, and will help us continue to meet your financial needs and investment
objectives into the next millennium. Therefore, after you have taken time to
carefully review the enclosed materials, we ask you to vote promptly on the
proposals applicable to your Fund by completing and returning the enclosed proxy
card or via our website using the instructions provided. Please note that if you
have more than one Fund account, a separate proxy card is enclosed for each of
your accounts.

Sincerely,

William J. Nasgovitz
President
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IMPORTANT QUESTIONS AND ANSWERS ABOUT THE
HEARTLAND FUNDS SHAREHOLDER MEETING
ON
APRIL 28, 1999

Although you should read the full text of the enclosed proxy statement, we hope
the following information will assist you in understanding the voting procedures
and the most significant proposals you are being asked to vote on. This material
is organized into general information, information on voting procedures and
information on the proposals themselves. After reading this information and the
proxy statement, please vote promptly. Your prompt vote will help ensure a
quorum at the meeting and avoid the expense of having to solicit your proxy
again.

GENERAL INFORMATION
- -------------------

Are the Fund portfolio managers going to be speaking at this meeting?

The meeting on Wednesday, April 28, 1999, is a formal business meeting. It is
not the annual Heartland Funds informational meeting for shareholders at which
the Funds' portfolio managers offer their investment outlook and are available
to answer shareholder questions about the Funds and the stock markets in
general. That informational meeting is scheduled for Tuesday, May 11, 1999, at
the Italian Community Center in Milwaukee, Wisconsin. For further information on
the informational meeting, please call one of our shareholder service
representatives at 1-800-432-7856 or (414) 289-7000.

Do any of the proxy proposals involve an increase in fees charged to me or my
Fund?

No. None of the proposals involves an increase in management fees or other fees
or expenses charged to your Fund. In fact, many of the proposals standardize and
simplify Fund investment policies and restrictions, where appropriate, which
should allow the Funds to be managed more economically and efficiently.

Why are the proposed changes needed?

Heartland Advisors and your Board of Directors recommend the proposed changes
because they believe the changes will improve operational efficiencies, help
control Fund expenses, facilitate portfolio compliance monitoring and, in
certain cases, increase investment flexibility.

Who is asking for my vote?
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The Board of Directors of your Fund is soliciting your vote. Your directors, a
majority of whom are independent of Heartland Advisors, unanimously recommend
that you vote in favor of all proposals affecting your Fund.

Whom do I call if I have questions about the meeting after I read these
materials?

If you have questions about the meeting or the proposals after you read this
information and the proxy statement, please call one of our shareholder service
representatives at 1-800-611-0493 or (414) 289-7000. Please note that you may
also receive a call from our proxy solicitor, D.F. King & Co., Inc., reminding
you to vote and offering you their assistance in the voting process.

VOTING PROCEDURES
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How many votes am I entitled to cast?

The shareholder meeting is a joint meeting of the Heartland Funds. With the
enclosed proxy statement, you should have received a separate proxy card for
each account you have in each Fund. You are entitled to one vote for each share
held in each of your accounts on the meeting record date, February 19, 1999. The
number of shares you owned on that date is stated on the enclosed proxy card(s).
Not all proposals apply to each Fund. Only the proposals applying to your Fund
are listed on your Fund's proxy card.

How do I vote my shares?

You may vote two easy ways. Please choose the way that is most convenient for
you. Remember to vote your shares in each Heartland Fund separately.

By Internet. If you hold your shares directly with your Fund's transfer agent
(and not through an intermediary such as a broker-dealer), you may vote by
visiting Heartland Funds' website at www.heartlandfunds.com. Simply click on the
"proxy" icon at our home page. Then enter the control number from the upper left
corner of your proxy card and the last four digits of your social security
number. After that, follow the instructions provided for voting your shares. If
you hold your shares through an intermediary, please refer to your proxy card to
determine if they permit you to vote via another Internet site, and follow the
instructions provided on the proxy card. You do not need to return your proxy
card if you vote via an Internet site.

By Mail. Vote by completing and signing the enclosed proxy card and mailing it
in the enclosed postage paid envelope. Please be sure to sign your name exactly
as it appears in the account registration shown on the proxy card. If you are
signing as an officer of a company, a trustee or other fiduciary, please
indicate your capacity next to your

ii
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signature. Please do not enclose any purchase checks or other information with
your proxy card because the envelope will be mailed directly to your Fund's
proxy tabulator.

QUESTIONS ABOUT CERTAIN PROPOSALS
- ---------------------------------

The Proposals are expected to improve operational efficiencies, help control
costs, facilitate monitoring of portfolio compliance, increase investment
flexibility and, in some cases, make substantive changes in the Funds'
investment polices that will affect the way in which the Funds' portfolios are
managed. The proposals that would make substantive changes in the management of
the Funds are discussed below.

All Funds
- ---------

Why would I want my Fund to have increased borrowing authority?

Although the Funds' portfolio managers try to make sure the appropriate amount
of cash is available to settle securities transactions, pay operating expenses,
and fund redemption orders, it is not always possible to precisely predict a
Fund's daily cash needs. The proposal would provide the Funds with increased
borrowing authority so that portfolio managers can borrow temporarily while they
raise cash to repay the loan in a manner that they believe is less costly and
less disruptive to management of the portfolio. As a matter of operating policy,
a Fund would repay borrowed amounts within 60 days and would not borrow amounts
in excess of 20% of its assets.

Why would I want my Fund to invest in illiquid and restricted securities?

Because all mutual funds must stand ready to redeem their shares upon demand by
their shareholders, SEC policies prohibit a mutual fund from investing more than
15% of its net assets in "illiquid securities." The SEC defines illiquid
securities as securities that cannot be readily disposed of in the ordinary
course of business. Absent special circumstances, mutual funds generally
consider securities to be liquid unless they are a type that is presumed to be
illiquid under SEC or mutual fund operating guidelines. Sometimes a security may
need to be classified as illiquid as a technical matter under these guidelines,
even though the Fund might be able to dispose of it over a somewhat longer
period of time.

The proposal would enable the Funds to invest in illiquid securities to the
fullest extent permitted by the SEC. This change would give the Funds' portfolio
managers greater flexibility in making decisions regarding portfolio liquidity,
and allow them to purchase limited amounts of illiquid securities when they
believe it would be consistent with Fund investment objectives and policies.

Why is it important for Heartland Advisors to be able to influence the
management of companies that the Funds own?

iii
<PAGE>

Heartland Advisors manages your Fund's investments. It has no plans to alter
this mandate by acquiring companies to manage and operate. Using its Ten-Point
Value Investment Grids/TM/ , Heartland Advisors will continue to search for
undervalued portfolio companies that possess sound fundamentals. However,
in situations where it believes management is slow to recognize the needs and
concerns of shareholders, Heartland Advisors could be more proactive in
facilitating business decisions it thinks create value for Fund shareholders.
Eliminating the Funds' current policy prohibiting actions that come within the
technical definition of investing for "control" under the securities laws, would
remove a potential obstacle to actions believed to be in the best interests of
the Funds and their shareholders. Among other things, Heartland Advisors would
be able to be more responsive to inquiries from portfolio companies concerning
business strategies that could enhance shareholder value. It also would be able
to offer its business and investment experience to company management and
suggest sources of capital to them.

U.S. Government Securities Fund only
- ------------------------------------

Why would I want my Fund's policy on investing in U.S. Government securities to
change?

Your Board of Directors is proposing a change that they believe will increase
the Fund's yield potential. SEC policies require a mutual fund to invest at
least 65% of its assets in U.S. Government securities (that is, securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities)
if it refers to that type of security in its name. The balance of the fund's
investments may be in other types of securities consistent with its stated
investment objective and policies. Currently, your Fund is required to invest at
least 65% of its assets, and normally invests all of its assets, in U.S.
Government securities. The proposal would ensure that at least 80% of the Fund's
assets are normally invested in such securities, while allowing the Fund to seek
to enhance its yield potential by investing up to 20% of its assets in other
investments. Although these investments would not be issued or guaranteed by the
U.S. Government or its agencies, meaning that they would be subject to somewhat
greater risk of loss of principal and interest, all investments in non-U.S.
Government debt securities would still be investment grade.

Wisconsin Tax Free Fund only
- ----------------------------

Why would I want to authorize the Fund to invest more of its assets in
securities subject to alternative minimum tax ("AMT")?

Because the Fund invests virtually all of its assets in Wisconsin municipal
obligations and obligations of other local governments that are exempt from both
Wisconsin and federal personal income tax ("Wisconsin municipal obligations"),
the supply of securities available to the Fund is more limited than for a mutual
fund that does not limit its investments to those subject to the double tax
exemption. Prohibiting the Fund from investing more than 20% of its assets in
Wisconsin municipal obligations subject to AMT, as is currently the case, could
further restrict the supply of investments with

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attractive yield potential available to the Fund. This could impede the Fund's
growth and prevent it from realizing economies of scale. Heartland Advisors
believes that the higher yield potential of these securities would be sufficient
to offset the possible additional AMT some shareholders might incur on the
income the Fund distributes to them.

v
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HEARTLAND GROUP, INC.

Heartland Large Cap Value Fund Heartland U.S. Government Securities
Heartland Mid Cap Value Fund Fund
Heartland Value Plus Fund Heartland Short Duration High-Yield
Heartland Value Fund Municipal Fund
Heartland High-Yield Municipal Bond
Fund
Heartland Wisconsin Tax Free Fund

790 North Milwaukee Street
Milwaukee, Wisconsin 53202
(414) 289-7000 or 1-800-611-0493
www.heartlandfunds.com

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
on April 28, 1999

To the Shareholders of the above Funds:

A Special Meeting of Shareholders (the "Meeting") of each Fund named above
(each, a "Fund" and collectively, the "Funds"), will be held jointly on
Wednesday, April 28, 1999, at 10:00 a.m., Central Time, on the Third Floor of
the Milwaukee Athletic Club, 758 North Broadway, Milwaukee, Wisconsin. The
purpose of the Meeting is to consider and act upon the following proposals:

Proposal 1 To amend the policy on borrowing (All Funds)

Proposal 2 To amend the policy on investing in illiquid and restricted
securities (All Funds)

Proposal 3 To eliminate the policy against investing for control or
management (All Funds)

Proposal 4 To amend the policy on investing in U.S. Government
securities (U.S. Government Securities Fund)

Proposal 5 To amend the policy on investing in municipal securities
subject to alternative minimum tax (Wisconsin Tax Free Fund)

Proposal 6 To re-designate investment objectives from fundamental to
non-fundamental policies (Large Cap Value, Mid Cap Value,
Value Plus, Value and U.S. Government Securities Funds)

Proposal 7 To amend the policy on investing in securities involving
real estate (All Funds)

Proposal 8 To amend the policy on investing in other investment
companies (Value, U.S. Government Securities and Wisconsin
Tax Free Funds)

Proposal 9 To amend the policies on margin (Value and U.S. Government
Securities Funds)

Proposal 10 To amend policies on futures and options (Value and U.S.
Government Securities Funds)

Proposal 11 To eliminate the policy on investing in securities involving
oil and gas interests (All Funds except Wisconsin Tax Free
Fund)

Proposal 12 To eliminate policies on unseasoned issuers and warrants
(Value and U.S. Government Securities Funds)
<PAGE>

Proposal 13 To eliminate policies on unseasoned issues and warrants
(Value and U.S. Government Securities Funds)

Proposal 14 To simplify, standardize or re-define the language of the
policy on concentration (All Funds)

Proposal 15 To simplify, standardize or re-define the language of the
policy prohibiting loans (All Funds)

Proposal 16 To simplify, standardize or re-define the language of the
policy prohibiting underwriting (All Funds)

Proposal 17 To simplify, standardize or re-define the language of the
policy prohibiting issuance of senior securities (All
Funds)

Proposal 18 To simplify, standardize or re-define the language of the
policy prohibiting investments in commodities (All Funds)

Proposal 19 To transact such other business as may properly come before
the Special Meeting

This is a combined Notice and Proxy Statement. The shareholders of each
Fund will vote only on those matters being considered by their Fund. If you own
shares of more than one Fund, you have received a separate proxy for each Fund.

Persons entitled to notice of, and to vote at this meeting are shareholders
of record at the close of business on February 19, 1999.

By Order of the Board of Directors

LOIS J. SCHMATZHAGEN
Secretary

March 5, 1999

YOUR VOTE IS IMPORTANT!

To avoid additional expense to your Fund, Please vote promptly by (i) contacting
us at the above Internet address, or (ii) completing, signing and returning each
of the proxy cards in the enclosed envelope.

<PAGE>

HEARTLAND GROUP, INC.

Heartland Large Cap Value Fund Heartland U.S.Government Securties Fund
Heartland Mid Cap Value Fund Heartland Short Duration High Yield
Heartland Value Plus Fund Municipal Fund
Heartland Value Fund Heartland High-Yield Municipal
Bond Fund
Heartland Wisconsin Tax Free

790 North Milwaukee Street
Milwaukee, Wisconsin 53202
(414) 289-7000 or 1-800-611-0493
www.heartlandfunds.com

----------
PROXY STATEMENT
----------

INTRODUCTION

This Proxy Statement is solicited by the Board of Directors of Heartland Group,
Inc. ("Heartland") in connection with a Special Meeting of Shareholders (the
"Meeting") of each Fund named above (individually, the "Fund" and collectively,
the "Funds"). The Meeting will be held jointly on Wednesday, April 28, 1999, at
10:00 a.m., Central Time, on the Third Floor of the Milwaukee Athletic Club, 758
North Broadway, Milwaukee, Wisconsin. This Proxy Statement explains each of the
proposals (the "Proposals") that will be considered at the Meeting.

The Board of Directors, including all of the independent directors of Heartland,
recommends that you vote in favor of those Proposals affecting your Fund or
Funds. Subject to shareholder approval, each item will become effective on or
about May 1, 1999. If a Proposal is not approved, the item will remain
unchanged. We realize that some of the information in this Proxy Statement is
technical in nature, so please call us at 1-800-611-0493 if there is anything
you would like clarified.

This Proxy Statement is divided into the following sections:

<TABLE>
<CAPTION>
Section Page
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<S> <C>
I. Summary of Proposals............................................ 2

II. Detailed Discussion of Proposals................................ 3

III. Security Ownership of Beneficial Owners and Management.......... 15

IV. Solicitation and Voting Information............................. 17

V. Additional Information.......................................... 18

VI. Appendices...................................................... A-1
</TABLE>
<PAGE>

SECTION I - Summary of Proposals

Recently, Heartland Advisors, Inc. ("Heartland Advisors"), investment advisor
and distributor for the Heartland Funds, proposed to the Heartland Board of
Directors revisions to the Funds' prospectuses to simplify them and make their
disclosure more meaningful to investors. The revised prospectuses are scheduled
to become effective May 1, 1999.

Although many of the proposed prospectus revisions are being made at the
direction of the Board of Directors, certain revisions also require shareholder
approval because they involve changes to "fundamental" policies of the Funds.
"Fundamental" policies of a Fund are policies that cannot be changed without the
approval of a "majority" of the outstanding shares of the Fund as defined in the
Investment Company Act of 1940 ("1940 Act"). Non-fundamental policies may be
changed by the Board of Directors with notice to shareholders but without the
expense of holding a special meeting to obtain shareholder approval. The
proposed fundamental policies are set forth in this Proxy Statement. The Funds'
current fundamental policies are set forth in APPENDICES A through E. The
substance of the Funds' investment objectives will not be affected by the
Proposals.

The Proposals are expected to improve operational efficiencies, help control
costs, facilitate monitoring of portfolio compliance and, in certain cases,
increase investment flexibility. The Proposals involve three different types of
changes.

The first group of Proposals involves substantive changes that affect the way in
which certain of the Funds are managed. These changes are proposed because
Heartland Advisors believes they are needed to allow Heartland Advisors to
pursue the Funds' investment objectives more effectively. The second group of
Proposals involves substantive changes that afford the Funds' portfolio managers
greater investment flexibility, but they are not expected to materially affect
the way in which the Funds are managed. Several of the Proposals in the second
group involve elimination of policies that were imposed by state regulation of
mutual funds which has been pre-empted by federal legislation. The third group
of Proposals involves changes designed to simplify and standardize language
describing Fund policies or to clarify changes to definitions of investment
terms used to describe certain policies of the Funds.

The Board of Directors, including all of the Directors who are independent
Directors, has approved the Proposals and recommends that you vote in favor of
all of those affecting your Fund or Funds. The Board of Directors recommends
that you approve the Proposals because they believe the proposed changes are in
the best interest of the Funds and their shareholders.

<TABLE>
<CAPTION>
PROPOSALS FUNDS AFFECTED
- ----------- --------------
<S> <C>
Proposals Involving Policies Affecting Portfolio Management (Items 1 - 5)
- -------------------------------------------------------------------------

1. Policy on Borrowing All Funds

2. Policy on Investing in Illiquid and Restricted
Securities All Funds

3. Policy on Investing for Control or Management All Funds

4. Policy on Investing in U.S. Government Securities U.S. Government Securities Fund

5. Policy on Investing in Municipal Securities Subject Wisconsin Tax Free Fund
to Alternative Minimum Tax
</TABLE>

2
<PAGE>

Proposals Involving Policies Not Expected to Materially Affect Portfolio
- ------------------------------------------------------------------------
Management (Items 6 - 13)
- -------------------------
<TABLE>
<CAPTION>

<S> <C>
6. Re-designation of Investment Objectives from Large Cap Value, Mid Cap Value,
Fundamental to Non-Fundamental Policies Value Plus, Value and U.S. Government Securities Funds

7. Policy on Investing in Securities Involving All Funds
Real Estate

8. Policy on Investing in Other Investment Companies Value, U.S. Government Securities,
and Wisconsin Tax Free Funds

9. Policy on Use of Margin Value and U.S. Government
Securities Funds

10. Policy on Use of Futures and Options Value and U.S. Government
Securities Funds

11. Policy on Investing in Securities Involving All Funds except Wisconsin
Oil and Gas Interests Tax Free Fund

12. Policy on Investing in Unseasoned Issuers Value and U.S. Government
Securities Funds

13. Policy on Investing in Warrants Value and U.S. Government
Securities Funds

Proposals to Simplify, Standardize or Re-Define Policy Language (Items 14 - 18)
- -------------------------------------------------------------------------------

14. Policy on Concentration All Funds

15. Policy Prohibiting Loans All Funds

16. Policy Prohibiting Underwriting All Funds

17. Policy Prohibiting Issuance of Senior Securities All Funds

18. Policy Prohibiting Investments in Commodities All Funds
</TABLE>

SECTION II - Detailed Discussion of Proposals

PROPOSALS INVOLVING POLICIES AFFECTING PORTFOLIO MANAGEMENT (Items 1 - 5)
- -------------------------------------------------------------------------

Proposal 1 - POLICY ON BORROWING (All Funds)

The Board of Directors recommends that shareholders of each Fund vote to amend
and restate the Fund's current fundamental policy governing borrowing set forth
below.

"The Fund may not borrow money or property, except the Fund may (i) make
investments or engage in other transactions permissible under the 1940 Act
which may involve borrowing, provided that the combination of such
activities shall not exceed 33 1/3% of total assets (including the amount
borrowed),
<PAGE>

less the Fund's liabilities (other than borrowings) and (ii) borrow up to
an additional 5% of its total assets (not including the amount borrowed)
from a bank for non-investment and non-leveraging temporary or emergency
purposes. In addition to borrowing from banks, the Fund may borrow from
other Heartland Funds or other persons to the extent permitted by
applicable law. Any borrowing which comes to exceed these limits shall be
reduced in accordance with applicable law."

Each Fund's current fundamental policy on borrowing permits borrowing only from
banks and only for temporary or emergency purposes. There is significant
variation, however, in the maximum permissible amounts the Funds may borrow. The
Short Duration High-Yield Municipal and High-Yield Municipal Bond Funds may
borrow amounts not to exceed one-third of their respective assets, but those
Funds follow a non-fundamental operating policy of not borrowing more than 10%
of total assets. The remaining Funds are permitted to borrow amounts not to
exceed 10% of total assets. In addition, each Fund, other than the Short
Duration High-Yield Municipal and High-Yield Municipal Bond Funds, has a
restriction that prohibits investments in additional portfolio securities in the
event borrowings exceed 5%. Historically, the Funds have engaged in temporary
borrowings for the purpose of permitting the orderly sale of securities in order
to raise cash to meet large or unexpected redemptions.

The Proposal would standardize the maximum permissible amount a Fund could
borrow at an amount not to exceed 33 1/3% of total assets and would potentially
broaden and clarify the Fund's borrowing authority. However, each Fund's
borrowing activity would be limited as a matter of non-fundamental operating
policy in the following respects. First, the Fund would be permitted to borrow
only from banks. Second, borrowing would be strictly limited to periods of not
more than 60 days and to aggregate amounts of not more than 20% of total assets.

The Funds expect to borrow solely for the following purposes, but might borrow
for other purposes with approval of the Board of Directors. First, a Fund would
borrow to avoid liquidating securities under circumstances believed to be
unfavorable to the Fund and its shareholders, such as to meet large or
unexpected redemptions or to purchase debt obligations pending receipt of
proceeds in the settlement of the sale of other portfolio securities. Second, a
Fund would borrow when it is scheduled to receive cash in exchange for debt
obligations that are being retired, called or exchanged pursuant to a sinking
fund or put feature of the instrument. The extent to which a Fund would borrow
will depend, among other things, on market conditions and interest rates.

The Proposal would provide the Funds with greater flexibility to borrow to meet
shareholder redemption requests without liquidating securities at times that may
not be advantageous. The ability to borrow additional funds for such purposes
could adversely affect a Fund if it were unable to repay the borrowed funds
without liquidating securities at unfavorable prices or times.

In addition, although a Fund that borrows would earmark assets to repay the
borrowing, borrowing for investment purposes may involve "leverage." Leveraging
may create an opportunity for increased net income; however, it may also give
rise to special risks. For example, leveraging may exaggerate changes in the net
asset value of a Fund's shares and in the gains and losses on a Fund's
investments. Leveraging will create interest expense for a Fund that may exceed
the return on investments made with the borrowings. To the extent the income
derived from securities purchased with borrowed funds exceeds a Fund's costs of
borrowing, the Fund's net income may be greater than if leveraging were not
used. Conversely, if the income from the investment made with the borrowed funds
is not sufficient to cover the cost of leveraging, the net income of the Fund
will be less than if leveraging were not used and the value of the Fund's shares
may be adversely affected.

Proposal 2 - POLICY ON INVESTING IN ILLIQUID AND RESTRICTED SECURITIES (All
Funds)

The Board of Directors recommends that shareholders of each Fund vote to amend
and restate the Fund's current fundamental policy governing illiquid and
restricted securities as set forth below, and re-designate that policy as non-
fundamental.
<PAGE>

"The Fund may not purchase a security if, as a result, more than 15% of net
assets would be invested in illiquid securities."

A fundamental policy of a Fund may not be changed or revised in any respect
without the approval of both the Board of Directors and a "majority" of the
Fund's shareholders, as defined in the 1940 Act. Non-fundamental policies may be
changed by the Board of Directors with notice to shareholders, but without the
expense of a meeting to obtain shareholder approval. Depending on the number of
shareholders and funds involved and on the nature and extent of proxy
solicitation required, a shareholder meeting may cost in excess of $100,000.

"Illiquid securities" are securities that cannot be readily disposed of in the
ordinary course of business. Each Fund, other than the Value Fund, currently has
a fundamental policy permitting it to invest a certain percentage of Fund assets
in illiquid securities. These Funds are not permitted to invest more than 10% of
their respective assets in such securities, except for the Short Duration High-
Yield Municipal and High-Yield Municipal Bond Funds, which are permitted to
invest up to 15% of their respective assets in such securities. The Value Fund
currently is not permitted to invest in illiquid securities. In addition, the
Value and U.S. Government Securities Funds have an explicit prohibition against
purchasing securities with legal or contractual restrictions on resale, and the
Value Plus Fund must limit its aggregate investments in restricted and illiquid
securities to 10% of its assets.

The Proposal would enable each Fund to invest in illiquid securities to the full
extent permissible under the 1940 Act. Also, it would eliminate specific
references to types of securities that may be considered illiquid, such as
restricted securities and repurchase agreements maturing in more than seven
days. Consistent with the 1940 Act and under guidelines established by, and
subject to the oversight of, Heartland's Board of Directors, the Fund's
investment adviser would determine which securities are illiquid for purposes of
the policy. To the extent a Fund invests in illiquid securities, the Fund may
have difficulty determining a market value for such securities. In addition,
disposing of illiquid or restricted investments may involve time-consuming
negotiation and legal expense, and it may be difficult or impossible for a Fund
to sell such an investment promptly and at an acceptable price. Finally, if a
Fund holds a significant percentage of its assets in illiquid or restricted
securities, it may experience difficulty meeting its redemption obligations.

Proposal 3 - POLICY ON INVESTING FOR CONTROL OR MANAGEMENT (All Funds)

The Board of Directors recommends that shareholders of each of the Funds vote to
eliminate the Fund's current fundamental policy prohibiting investment for
control or management.

Each Fund is currently subject to a fundamental policy that prohibits the Fund
from acting to obtain control or management of a portfolio company. The Proposal
would eliminate this policy and thus permit each Fund to freely exercise its
rights as a shareholder of the various companies in which it may invest. The
Board of Directors believes that as a shareholder of its portfolio companies a
Fund should be allowed to freely communicate its views as a shareholder on
matters of policy to management, the board of directors, and other shareholders
when a policy may affect the value of the Fund's investment. Although the Board
of Directors believes that each Fund could engage in many of the activities
described above without necessarily violating its current policy, eliminating
the policy will remove any potential obstacle to protecting its interests as
a shareholder. The Funds do not intend to acquire companies for the purpose of
having Heartland Advisors run the companies' day-to-day operations. However, the
Board of Directors believes that Heartland Fund shareholders would benefit if
Heartland Advisors were permitted to share its years of investment and business
experience with the management and directors of portfolio companies.

Activities that might fall under the definition of "control" under the federal
securities laws may involve, for example, actively supporting or opposing
management of such companies. For example, a Fund might take steps, either
individually or as part of a group, to influence a company's decision-making, to
seek changes in a company's management or board of directors, to effect the sale
of all or some of a company's assets, or to vote to participate in or oppose a
takeover effort by or of a portfolio company. A Fund would engage in such
activities in an effort to protect and maximize the value of its investment on
behalf of its shareholders. The extent to which a Fund might invest for purposes
of obtaining control or management pursuant to this policy depends, among other
things, on facts and circumstances specific to the issuer as well as general
market conditions.

Investing for purposes of obtaining control or management could result in
additional expense to a Fund, including expenses associated with operational or
regulatory requirements and the ongoing cost of potential litigation as a
<PAGE>

plaintiff. It could also restrict a Fund's ability to freely trade in the
securities of a portfolio company with respect to which it is deemed to be
investing for control, which might adversely affect a Fund's liquidity as well
as the valuation of those securities. Finally, greater public disclosure would
be required regarding a Fund's investment and trading strategies in regulatory
filings relating to such securities.

It is expected that only the Value, Value Plus, Mid Cap Value and Large Cap
Value Funds would make investments for control, and would do so only on a
selective basis when the Funds' investment advisor believed it would be in the
best interests of the Funds and their respective shareholders. None of the other
Funds is expected to invest for control, but eliminating the current fundamental
policy would eliminate any unforeseen obstacle in managing those Funds'
investments.

Proposal 4 - POLICY ON INVESTING IN U.S. GOVERNMENT SECURITIES (U.S.
Government Securities Fund only)

The Board of Directors recommends that shareholders of the U.S. Government
Securities Fund vote to make the Fund's current fundamental policy relating to
investments in U.S. Government securities non-fundamental, to clarify the
meaning of the term "U.S. Government securities" and to change the amount
required to be so invested under the policy from 65% to 80% of total assets, as
set forth below.

"As a fundamental policy, the Fund will invest at least 80% of its total
assets in obligations issued or guaranteed by the U.S. Government, by its
agencies or instrumentalities or by other U.S. Government sponsored
entities, and repurchase agreements for such securities (`Government
securities')."

Although the Fund's fundamental policy requires it to invest a minimum of 65% of
its total assets in obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, the Fund currently invests all of its assets,
aside from liquid reserves or options and futures, in such securities under
normal market conditions. Coincident with the proposed effective date of this
change, on or about May 1, 1999, the Fund will have the flexibility to invest up
to 20% of its total assets in other investments consistent with the Fund's
investment objective and other stated investment policies. These investments
include, without limitation: pooled debt securities, such as mortgage-backed and
asset-backed securities issued by non-governmental entities; commercial paper
and other debt obligations of foreign governments, domestic and foreign
corporations and other business organizations; certificates of deposit, bankers'
acceptances and time deposits; and convertible securities and preferred stocks.
Because such securities and obligations are not issued or guaranteed by the U.S.
Government or its agencies or instrumentalities they are subject to greater risk
of loss of principal and interest. Any investments in debt securities will, at
the time of purchase, be rated investment grade or, if unrated, be of comparable
quality in the opinion of Heartland Advisors.

Proposal 5 - POLICY ON INVESTING IN MUNICIPAL SECURITIES SUBJECT TO
ALTERNATIVE MINIMUM TAX (Wisconsin Tax Free Fund only)

The Board of Directors recommends that shareholders of the Wisconsin Tax Free
Fund vote to eliminate the Fund's current fundamental policy set forth below
relating to investments in securities subject to the alternative minimum tax in
order to allow the Fund greater investment flexibility and conform the Fund's
policy with the policies of the other Heartland Funds that invest in municipal
obligations.

"As a matter of fundamental policy, the Fund will seek to invest its assets
so that at least 80% are invested so as to be exempt from the federal
alternative minimum tax. However, under abnormal conditions the

6
<PAGE>

Fund may invest as much as 100% of its assets in municipal securities
issued to finance private activities whose interest is a "tax preference
item" for purposes of the federal alternative minimum tax.".

The Fund invests primarily in municipal obligations that are exempt from
personal income tax in Wisconsin and under federal law, including certain
municipal obligations issued by Wisconsin entities and securities of other
entities meeting such criteria. The Board of Directors believes that limiting
the available supply of securities suitable for the Fund by imposing a
limitation on investments in municipal obligations, the interest on which is a
tax preference item for purposes of the federal alternative minimum tax ("AMT
Securities"), places the Fund at a competitive disadvantage with mutual funds
and other investors in municipal obligations of Wisconsin issuers. The
alternative minimum tax, an alternative tax computation that adds certain tax
preference items back into adjusted gross income, must be paid by a taxpayer if
it exceeds the taxpayer's regular tax liability for the year.

The current limitation on AMT Securities could restrict the Fund's ability to
invest in certain municipal obligations that the portfolio managers believe
offer attractive yields. This could ultimately impede the Fund's growth and
could prevent the Fund from realizing certain potential economies of scale.
Further, the Board of Directors believes that the higher yield on AMT Securities
in which the Fund would be permitted to invest because of the Proposal would be
sufficient to offset the federal alternative minimum tax impact some
shareholders may experience. In addition, the Board of Directors believes that
the standardization of this policy among all of the municipal funds managed by
Heartland Advisors will help promote operational efficiencies and facilitate
monitoring of portfolio compliance.

If the Proposal is approved, the Fund would have no fundamental policy with
respect to investments in securities whose interest is a tax-preference item for
purposes of the federal alternative minimum tax. Accordingly, the Fund's net
after-tax return may be lower for those taxpayers who are subject to the
alternative minimum tax.

PROPOSALS INVOLVING POLICIES NOT EXPECTED TO MATERIALLY AFFECT PORTFOLIO
- ------------------------------------------------------------------------
MANAGEMENT (Items 6 - 13)
- -------------------------

Proposal 6 - RE-DESIGNATION OF INVESTMENT OBJECTIVES FROM FUNDAMENTAL
TO NON-FUNDAMENTAL POLICIES (Large Cap Value, Mid Cap
Value, Value Plus, Value and U.S. Government Securities
Funds)

The Board of Directors recommends that shareholders of each of the Large Cap
Value, Mid Cap Value, Value Plus, Value and U.S. Government Securities Funds
vote to make the Fund's current fundamental investment objectives set forth
below non-fundamental:

Fund Investment Objective
- ---- --------------------
<S> <C>

Large Cap Value Fund Long-term capital appreciation through value investing in
large companies.

Mid Cap Value Fund Long-term capital appreciation through value investing in
mid-size companies.

Value Plus Fund Capital appreciation and current income.

Value Fund Long-term capital appreciation through value investing in
small companies.

U.S. Government Securities Fund A high level of current income, liquidity and safety of
principal.
</TABLE>
<PAGE>

Neither the 1940 Act nor any other law requires a Fund's investment objective to
be fundamental. If a Fund's investment objective is fundamental, it may not be
changed or revised in any respect without the approval of both the Board of
Directors and shareholders. An investment objective that is not fundamental may
be changed by the Board of Directors with notice to shareholders, but without
the expense of a meeting to obtain shareholder approval. Depending on the number
of shareholders and funds involved and on the nature and extent of proxy
solicitation required for such a change, a shareholder meeting may cost in
excess of $100,000.

The Board of Directors believes that the Proposal is in the best interests of
each Fund's shareholders because it would allow the Directors to manage the
business affairs of the Fund more economically and efficiently. Although the
Board of Directors has no present plan to change any Fund's investment
objectives, the Proposal would allow the Board of Directors to do so in the
future if the Board of Directors determines that circumstances warrant a change
and that a change is in the best interests of shareholders.

Proposal 7 - POLICY ON INVESTING IN SECURITIES INVOLVING REAL ESTATE
(All Funds)

The Board of Directors recommends that shareholders of each Fund vote to amend
and restate the Fund's current fundamental policy governing real estate as
set forth below.

"The Fund may not purchase or sell real estate, except the Fund may (i)
acquire real estate as a result of ownership of securities or other
instruments, (ii) invest in securities or other instruments backed by real
estate, and (iii) invest in securities of companies that are engaged in the
real estate business and those that invest in real estate, including, but
not limited to, real estate investment trusts."

Although each Fund would continue to be precluded from directly investing in
real estate, the proposed fundamental policy would clarify the Fund's authority
with respect to possessing and disposing of real estate when it represents a
security interest in other permitted investments made by the Fund. The ability
to acquire investments secured by real estate may serve to protect a Fund, for
example, in the event of a default of an issuer of debt securities. The proposed
fundamental policy also would expand each Fund's authority to invest in
securitized real estate investment pools, such as real estate investment trusts
("REITs") and real estate limited partnerships. Because the Funds' policies
would be standardized, the Value Fund and the U.S. Government Securities Fund
would no longer be prohibited from investing in such pools. However, the U.S.
Government Securities Fund has no present intent to invest in them, and neither
Fund would invest in real estate pools unless such investment were consistent
with the Fund's investment objective. No Fund would invest more than 10% of its
total assets in such pools as a matter of non-fundamental operating policy.

REITs and real estate limited partnerships are non-corporate entities that pool
monies raised from investors to purchase commercial, industrial, and/or
residential real estate and, in some cases, to make mortgage loans secured by
such properties. These pools are subject to volatility from risks associated
with investments in real estate and investments dependent on real estate, such
as fluctuating demand for real estate and sensitivity to adverse economic
conditions. In addition, the failure of such pools to continue to satisfy
special requirements of the Internal Revenue Code could have an adverse impact
on the value of a Fund's investments

Proposal 8 - POLICY ON INVESTING IN OTHER INVESTMENT COMPANIES
(Value, U.S. Government Securities and Wisconsin Tax Free
Funds)

The Board of Directors recommends that shareholders of each of the Value Fund,
the U.S. Government Securities Fund and the Wisconsin Tax Free Fund vote to
amend and restate the Fund's current fundamental policy governing investments in
other investment companies as set forth below, and re-designate that policy as
non-fundamental.
<PAGE>

"The Fund may not purchase securities of other open-end or closed-end
investment companies, except as permitted by the 1940 Act. Subject to
approval by the Heartland Board of Directors, the Fund may invest all (or
substantially all) of its assets in the securities of a single open-end
investment company (or series thereof) with the same investment objective
and substantially all the same investment policies and restrictions as the
Fund in connection with a "master/feeder" arrangement. The Fund and one or
more other mutual funds or other eligible investors with identical
investment objectives ("Feeders") would invest all (or a portion) of their
respective assets in the shares of another investment company (the
"Master") that had the same investment objective and substantially the same
investment policies and restrictions as the Feeders. The Fund would invest
in this manner in an effort to achieve economies of scale associated with
having the Master make investments in portfolio companies on behalf of the
Feeders."

Each of the Value and U.S. Government Securities Funds currently has a
fundamental policy prohibiting the Fund from investing in securities of other
investment companies, except as may be acquired as part of a merger,
consolidation, reorganization or acquisition of assets. The Wisconsin Tax Free
Fund may not invest more than 10% of its assets in other investment companies in
the aggregate nor more than 5% of its assets in any one investment company; it
also may purchase no more than 3% the outstanding voting securities of another
investment company. None of the Wisconsin Tax Free Fund's limitations apply to
investment company securities acquired as part of a merger, consolidation,
reorganization or acquisition of assets.

The Proposal would permit each Fund the ability to invest in securities of other
investment companies to the full extent permissible under the 1940 Act. The 1940
Act currently prohibits a Fund from (a) investing more than 10% of its total
assets in the securities of other investment companies, (b) investing more than
5% of its total assets in the securities of any other investment company, or (c)
owning more than 3% of the outstanding voting securities of any other investment
company. These restrictions, which are identical to restrictions provided in the
Wisconsin Tax Free Fund's current fundamental policy, would apply to the Funds
regardless of whether or not they are recited as fundamental.

The Proposal would also permit each Fund to use a master/feeder structure. The
Funds, and other feeder funds, would be permitted to invest all of their assets
in a master investment company portfolio. The purpose of entering into a
master/feeder arrangement would be to reduce costs by spreading the fixed costs
of portfolio management over a larger pool of assets. The Board of Directors has
no current intent to use a master/feeder structure.

Proposal 9 - POLICY ON USE OF MARGIN (Value and U.S. Government
Securities Funds)

The Board of Directors recommends that shareholders of each of the Value Fund
and the U.S. Government Securities Fund vote to amend and restate the Fund's
current fundamental policy governing the use of margin as set forth below, and
re-designate that policy as non-fundamental.

"The Fund may not purchase securities on margin, except that the Fund may
(i) obtain short-term credit necessary for the clearance and settlement of
purchases and sales of portfolio securities, and (ii) make margin deposits
as required in connection with permissible options, futures, options on
futures, short selling and other arbitrage activities."

Each of the Value and U.S. Government Securities Funds currently has a
fundamental policy prohibiting the Fund from purchasing securities on margin.
"Margin" transactions involve the purchase of securities with money borrowed
from a broker, with cash or eligible securities placed as collateral against the
loan. Mutual funds are generally prohibited from entering into most types of
margin purchases because the SEC views the obligation to repay funds borrowed in
such an arrangement as a senior security. However, policies of the SEC allow a
mutual fund to use short-term credit for the clearance and settlement of
portfolio transactions and to use margin deposits for options, futures, short
selling and other arbitrage transactions. The Proposal would permit each Fund,
consistent with its investment objective and other policies, to purchase
securities on margin to the fullest extent permitted under the federal
securities and commodities laws, including the 1940 Act.
<PAGE>

Proposal 10 - POLICY ON USE OF FUTURES AND OPTIONS (Value and
U.S. Government Securities Funds)

The Board of Directors recommends that shareholders of each of the Value Fund
and the U.S. Government Securities Fund vote to amend and restate the Fund's
current fundamental policy governing purchasing and selling futures and options
as set forth below, and re-designate that policy as non-fundamental.

"The Fund may not purchase a futures contract or an option on a futures contract
if, with respect to positions in futures and futures options which do not
represent bona fide hedging transactions, the aggregate initial margin and
premiums required to establish such positions, less the amount by which such
positions are in the money within the meaning of the Commodity Exchange Act,
would exceed 5% of the Fund's net assets."

Each of the Value and U.S. Government Securities Funds is currently subject to a
fundamental policy prohibiting the Fund from purchasing or selling options,
except that the Fund may write covered call options or purchase put options,
unless, as a result of such transactions, (a) the aggregate market value of all
portfolio securities covering call options written by a Fund would exceed 25% of
the Fund's total assets, or (b) the aggregate value of all premiums paid for put
options purchased by the Fund would exceed 5% of the Fund's total assets. In
addition, the Funds are currently subject to a fundamental policy which provides
that a Fund may purchase or sell futures and options on futures, unless, as a
result of such transactions, (a) the then current aggregate futures market
prices and financial instruments required to be delivered under open futures
contract sales plus the then current aggregate purchase price of financial
instruments required to be purchased under open futures contracts purchases
would exceed 25% of the Fund's net assets, and (b) more than 5% of the Fund's
assets would be committed to initial margin and premiums paid on such futures
contracts.

The Proposal would permit each Fund to engage in futures and options
transactions consistent with its investment objective and other policies, to the
fullest extent permitted under the federal securities and commodities laws,
including the 1940 Act. Although futures transactions that were not bona fide
hedging transactions would be limited as set forth in the proposed policy, there
would be no limitation on the extent to which the Funds could engage in futures
transactions for hedging purposes or options transactions in general.

Options, futures and options on futures are forms of derivative instruments.
Derivative instruments can be volatile and involve special risks. Successful
derivative strategies require the ability to predict future movements to
securities prices, interest rates, and other economic factors. If price changes
in a Fund's derivative positions are poorly correlated with its other
investments, the positions may fail to produce anticipated gains or result in
losses that are not offset by gains in other investments. Some derivative
strategies, including selling futures, buying puts and writing calls, would tend
to hedge a Fund's investments against price fluctuations. Other strategies,
including buying futures, writing puts, and buying calls, would tend to increase
market exposure. The Funds would be permitted to engage in transactions in
futures contracts, options on futures contracts and other hybrid instruments to
(a) hedge against anticipated declines in the market value of its portfolio
securities or currencies and against increases in the market values of
securities or currencies it intends to acquire, (b) to manage exposure to
changing interest rates (duration management), (c) to enhance total return, or
(d) to invest in eligible asset classes with greater efficiency and lower cost
than is possible through direct investment.

Derivative transactions may be exchange-traded or over-the-counter ("OTC")
transactions between private parties. OTC options in which the Funds would be
permitted to invest are subject to risks in addition to those related to
exchange-traded options. Each Fund currently intends to treat the value of any
OTC options it purchases as illiquid and subject to its investment restriction
governing illiquid securities, as discussed under Proposal 2 above. Although
each Fund will enter into OTC options only with counterparties that are expected
to be capable of entering into closing transactions, there is no assurance that
a Fund will in fact be able to close out an OTC option position at any time
prior to its expiration or effect such closing transactions at a favorable
price.
<PAGE>

IMPORTANT NOTE CONCERNING PROPOSALS 11 THROUGH 13: The Funds originally adopted
the policies described in Proposals 11 through 13 primarily in response to state
securities law requirements that have since been pre-empted by the 1940 Act and
therefore no longer apply. Since the 1940 Act does not require such policies,
the Board of Directors recommends that they be eliminated. The elimination of
these policies is not expected to materially affect the investment management of
the Funds.

Proposal 11 - POLICY ON INVESTING IN SECURITIES INVOLVING OIL AND GAS
INTERESTS (All Funds except Wisconsin Tax Free Fund)

The Board of Directors recommends that shareholders of each of the Large Cap
Value Fund, the Mid Cap Value Fund, the Value Plus Fund, the Value Fund, the
U.S. Government Securities Fund, the Short Duration High-Yield Municipal Fund
and the High-Yield Municipal Bond Fund vote to eliminate the Fund's current
fundamental policy governing investments in oil and gas interests.

Each of the Large Cap Value, Mid Cap Value, Value Plus, Value, U.S. Government
Securities, Short Duration High-Yield Municipal and High-Yield Municipal Bond
Funds is currently subject to a fundamental policy prohibiting investments in
oil or gas interests. Although no Fund has a present intent to invest directly
in oil and gas interests and leases, consistent with its investment objective
and other policies, under the Proposal a Fund might acquire, from time to time,
a security or other instrument whose payments of interest and principal may be
secured by oil or gas interests or leases. The ability to acquire such
instruments may serve to protect the Funds in the event of a default of the
issuer. The prices of such securities or instruments may be more volatile than
other investments, and may be affected by unforeseen economic, business or
political developments, such as proposed legislation, shortages or price
increases of necessary materials, or declining market needs.

Proposal 12 - POLICY ON INVESTING IN UNSEASONED ISSUERS (Value and
U.S. Government Securities Funds)

The Board of Directors recommends that shareholders of each of the Value Fund
and the U.S. Government Securities Fund vote to eliminate the Fund's current
fundamental policy governing investments in unseasoned issuers.

The Value and U.S. Government Securities Funds are currently subject to a
fundamental restriction which prohibits them from investing more than 5% of
their respective total assets in securities of companies which, including any
predecessors, have a record of less than three years of continuous operations.

Although neither Fund normally invests in unseasoned issuers, the Proposal would
eliminate any percentage limitation on each Fund's ability to invest in
unseasoned issuers. Since unseasoned issuers are typically smaller companies,
these investments entail risks in addition to those presented by investments in
larger, more established companies, including the potential for greater price
volatility and lower market liquidity. Newer companies may be more adversely
affected by poor economic or market conditions than companies with longer
operating histories.

Proposal 13 - POLICY ON INVESTING IN WARRANTS (Value and U.S.
Government Securities Funds)

The Value Fund is currently subject to a fundamental restriction which prohibits
the Fund from investing more than 5% of its net assets in warrants. Included
within this 5%, but not in excess of 2% of the Fund's net assets, may be
warrants which are not listed on the New York or American Stock Exchanges. The
U.S. Government Securities Fund's fundamental restriction prohibits investing in
warrants altogether. Although the Proposal would permit the
<PAGE>

Funds to invest in warrants without limitation, the U.S. Government Securities
Fund has no current intent to invest in warrants.

A warrant is a security which gives the holder the right, but not the
obligation, to purchase the underlying securities at a predetermined price
during a specified period or perpetually. Warrants are considered more
speculative than certain other types of investments because they generally have
no voting rights, pay no dividends, and have no rights with respect to the
assets of the corporation issuing them. In addition, the prices of warrants do
not necessarily move parallel to the prices of the underlying securities, and
they cease to have value if they are not exercised on or prior to their
expiration dates.

PROPOSALS TO SIMPLIFY, STANDARDIZE OR RE-DEFINE POLICY LANGUAGE (Items 14-18)
- -----------------------------------------------------------------------------

Proposal 14 - POLICY ON CONCENTRATION (All Funds)

The Board of Directors recommends that shareholders of each Fund vote to amend
and restate the Fund's current fundamental policy governing concentration as set
forth below.

"The Fund may not invest more than 25% of total assets in securities of
non-governmental issuers whose principal business activities are in the
same industry; provided there shall be no limitation on the purchase of
Municipal Obligations and securities issued or guaranteed by national
governments,/1/ their agencies or instrumentalities."

Each Fund's current fundamental policy governing concentration prevents it from
investing more than 25% of its assets in securities of issuers in any single
industry, exclusive of securities issued by the U.S. Government. The Proposal
would include "Municipal Obligations" within the types of governmental
securities excluded from the concentration policy. In addition, although the
current policy of certain Funds already excludes virtually all Municipal
Obligations from those securities subject to the concentration policy, the
Proposal would clarify that Municipal Obligations are excludable notwithstanding
their tax-exempt status. For purposes of the amended and restated fundamental
policy, unless otherwise defined in the Funds' prospectuses from time to time
the term "Municipal Obligations" means debt obligations issued by or on behalf
of states, territories or possessions of the United States; sovereign nations
within the territorial boundaries of the United States; the District of
Columbia; and their respective political subdivisions, agencies and
instrumentalities, and corporations duly authorized by them.

Proposal 15 - POLICY PROHIBITING LOANS (All Funds)

The Board of Directors recommends that shareholders of each Fund vote to amend
and restate the Fund's current fundamental policy governing loans as set forth
below.

"The Fund may not make loans, except the Fund may (i) acquire publicly
distributed or privately placed debt securities and purchase debt and (ii)
purchase money market instruments and enter into repurchase agreements and
(iii) lend portfolio securities. No Fund may lend portfolio securities if,
as a result thereof, the aggregate of all such loans would exceed 33 1/3%
of total assets taken at market value at the time of such loan."

Each Fund's current fundamental policy governing loans states that the Fund
generally may not make loans, except that it may acquire publicly offered debt
instruments. Also, each Fund, other than the Value and U.S. Government

- -----------------
/1/ For so long as it is the position of the staff of the SEC that foreign
governments are industries for purposes of mutual fund policies concerning
concentration, they shall not be included within the types of governmental
issuers excluded from the Funds' concentration policies.

12
<PAGE>

Securities Funds, may enter into repurchase agreements. Finally, each Fund,
other than the Short Duration High-Yield Municipal and High-Yield Municipal Bond
Funds, may lend portfolio securities provided that such loans do not exceed a
certain percentage of the value of the Fund's total assets. This percentage is
33 1/3% for the Large Cap Value and Mid Cap Value Funds and 30% for the
remaining Funds that are permitted to lend portfolio securities.

The Proposal would standardize the maximum permissible loan amount for each Fund
in an amount equal to 33 1/3% of total assets, which is the maximum percentage
permissible under the 1940 Act. In addition, all Funds would be permitted to
enter into portfolio lending arrangements. All portfolio lending arrangements
would be subject to a non-fundamental operating policy requiring each loan to be
callable at any time and continuously secured by collateral consisting of cash
or liquid assets at least equal to the value of the securities loaned. In
determining whether to lend portfolio securities, each Fund would continue to
take into account the credit-worthiness of the borrower since the Fund could
experience costs and delays in recovering loaned securities or exercising the
rights to the collateral in the event of bankruptcy of the borrower. Since a
Fund is the beneficial owner of securities it loans, any gain or loss in the
market price during the loan period inures to the Fund. Thus, when the loan is
terminated, the value of the securities may be more or less than their value at
the beginning of the loan.

In addition, the Proposal would permit each Fund to enter into repurchase
agreements. In a repurchase agreement, a Fund buys a security at one price and,
at the time of the 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 proposed policy also would permit each Fund to invest
in private placements of debt securities and purchase debt. All of these
investments, however, would be subject to the Fund's investment policy governing
illiquid securities, which limits all illiquid investments in the aggregate to
15% of net assets, as discussed under Proposal 2 above.

Proposal 16 - POLICY PROHIBITING UNDERWRITING (All Funds)

The Board of Directors recommends that shareholders of each Fund vote to amend
and restate the Fund's current fundamental policy governing underwriting as set
forth below.

"The Fund may not underwrite the securities of other persons, 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."

Proposal 17 - POLICY PROHIBITING ISSUANCE OF SENIOR SECURITIES (All
Funds)

The Board of Directors recommends that shareholders of each Fund vote to amend
and restate the Fund's current fundamental policy governing senior securities as
set forth below.

"The Fund may not issue senior securities, except to the extent permitted
under the 1940 Act."

Each Fund is currently subject to a fundamental restriction which prohibits it
from issuing senior securities; however, some Funds are expressly authorized to
engage in specific transactions that may be deemed to constitute the issuance of
"senior securities" under the 1940 Act, but are nevertheless permitted by the
law. The Proposal clarifies that each Fund may issue senior securities to the
full extent permissible under the 1940 Act.

Although the definition of a "senior security" is complex, a senior security is
generally thought of as a class of securities which has preference over a Fund's
common stock with respect to claims to the Fund's assets or earnings. Under the
1940 Act, mutual funds are generally prohibited from issuing senior securities;
however, certain
<PAGE>

transactions which may be deemed to involve "senior securities" are permissible
if certain conditions are met to safeguard shareholder interests.

Proposal 18 - POLICY PROHIBITING INVESTMENTS IN COMMODITIES (All Funds)

The Board of Directors recommends that shareholders of each Fund vote to amend
and restate the Fund's current fundamental policy governing commodity interests
as set forth below.

"The Fund may not purchase or sell physical commodities unless acquired as
a result of ownership of securities or other instruments, except the Fund
may purchase or sell futures contracts, options on futures contracts and
other derivative instruments, and it may invest in securities or other
instruments backed by physical commodities or in the securities of
companies engaged in commodities businesses."

Each Fund is currently subject to a fundamental policy which prohibits investing
in commodities, subject to certain limited exceptions. Each Fund may invest, for
example, in futures contracts and options on futures contracts to varying
degrees. Under the amended and restated policy, each Fund would be permitted to
engage in transactions in futures contracts, options on futures contracts and
other hybrid instruments to (a) hedge against anticipated declines in the market
value of its portfolio securities or currencies and against increases in the
market values of securities or currencies it intends to acquire, (b) to manage
exposure to changing interest rates (duration management), (c) to enhance total
return, or (d) to invest in eligible asset classes with greater efficiency and
lower cost than is possible through direct investment. Under a separate non-
fundamental policy, and assuming Proposal 10 is adopted with respect to the
Value and U.S. Government Securities Funds, each Fund's futures transactions
that were not bona fide hedging transactions would be limited to the extent that
the aggregate initial margin and premiums required to establish such positions,
less the amount by which such positions are in the money, could not exceed 5% of
the Fund's net assets.

The Proposal would clarify that each Fund may invest in securities of
corporations that deal in commodities. It also would make it explicit that each
Fund may acquire a security or other instrument whose payments of interest and
principal may be secured by physical commodities. The ability to acquire such
instruments may serve to protect a Fund, for example, in the event of a default
of an issuer of debt securities.

Proposal 19 - TO TRANSACT SUCH OTHER BUSINESS AS MAY COME BEFORE THE
SPECIAL MEETING

It is not anticipated that any action will be asked of shareholders other than
as discussed above, but if other matters are properly brought before the
meeting, the persons named in the proxy will vote in accordance with their
judgment.
<PAGE>

SECTION III - Security Ownership of Beneficial Owners and Management

The following table sets forth information with respect to each shareholder that
was known to hold of record or beneficially 5% or more of the outstanding shares
of any Fund as of January 29, 1999:

<TABLE>
<CAPTION>
Name of Record Number Percentage of
or Beneficial Holder of Shares Fund Outstanding Shares
- -------------------------------- --------- ----------------------------------- -------------------
<S> <C> <C> <C>
Charles Schwab & Co., Inc. 66,629 Large Cap Value 10.6%
ATTN: Mutual Funds 1,582,714 Mid Cap Value 57.8%
101 Montgomery Street 2,618,723 Value Plus 22.1%
San Francisco, CA 94104-4122 9,219,322 Value 18.5%
663,246 U.S. Government Securities 12.4%
4,153,630 Short Duration High-Yield Municipal 27.4%
2,203,817 High-Yield Municipal Bond 27.5%

National Financial Services 147,211 Mid Cap Value 5.4%
Corporation FBO The Exclusive 1,358,328 Value Plus 11.5%
Benefit of Our Customers 3,634,590 Value 7.3%
One World Financial Center, 1,809,253 Short Duration High-Yield Municipal 11.9%
5th Floor, 200 Liberty Street 1,045,483 High-Yield Municipal Bond 13.1%
New York, NY 10281-1003

The Trust Company of Knoxville 1,330,925 Value Plus 11.2%
P.O. Box 789
Knoxville, TN 37901-0789

Heartland Advisors, Inc. 43,522 Large Cap Value 6.9%
ATTN: Ken Della
790 North Milwaukee Street
Milwaukee, WI 53202-3712

Catherine J. Polaski 41,888 Large Cap Value 6.7%
5329 Highway 38
Franksville, WI 53126
</TABLE>

As of January 29, 1999, the directors and officers of Heartland as a group (12
persons) held of record or beneficially less than 1% of the outstanding shares
of each of the Mid Cap Value, Value Plus, Value Short Duration High-Yield
Municipal, High-Yield Municipal and Wisconsin Tax Free Funds. With respect to
the Large Cap Value and U.S. Government Securities Funds, the directors and
officers of Heartland as a group held 2.9% and 2.8%, respectively, of the
outstanding shares as of that date. The following table sets forth shares
beneficially owned in each Fund with respect to each director and officer of
Heartland. Each shareholder listed has sole or shared voting and investment
power with respect to the shares listed opposite his or her name.

<TABLE>
<CAPTION>
Position and/or Offices Number
Name with Heartland Funds of Shares Fund
- ---- -------------------- --------- ----
<S> <C> <C> <C>
Jilaine Hummel Bauer Vice President 562 Value
553 U.S. Government Securities
911 Short Duration High-Yield Municipal
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Position and/or Offices Number
Name with Heartland Funds of Shares Fund
- ---- ----------------------- --------- -----------------------------------
<S> <C> <C> <C>
Paul T. Beste Vice President and 738 Large Cap
Principal Accounting 720 Mid Cap
Officer 440 U.S. Government Securities
3,972 Short Duration High-Yield Municipal

Willard H. Davidson Director 2,698 Value
25,994 U.S. Government Securities
13,235 Short Duration High-Yield Municipal
31,556 High-Yield Municipal Bond

Kenneth J. Della Vice President 828 Large Cap
910 Mid Cap
662 Value
263 Value Plus
139 U.S. Government Securities
52 Short Duration High-Yield Municipal
223 High-Yield Municipal Bond

Hugh F. Denison Director 13,054 Value
7,627 Value Plus
5,685 U.S. Government Securities
74,338 Short Duration High-Yield Municipal
40,349 High-Yield Municipal Bond

Jon D. Hammes Director 23,959 Value
28,879 U.S. Government Securities

William J. Nasgovitz President and Director 15,010 Large Cap Value
12,143 Mid Cap Value
12,644 Value Plus
84,752 Value
81,917 U.S. Government Securities
1,492 Short Duration High-Yield Municipal

Patrick J. Retzer Vice President, Treasurer 174 Large Cap
and Director 12,212 Mid Cap
1,693 Value
143 Value Plus
199 U.S. Government Securities
33 Short Duration High-Yield Municipal

Lois J. Schmatzhagen Secretary 1,488 Large Cap
1,221 Mid Cap
3,554 Value
3,588 Value Plus
4,720 U.S. Government Securities
5,502 High-Yield Municipal Bond
5,146 Wisconsin Tax Free

A. Gary Shilling Director 531 Value
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Position and/or Offices Number
Name with Heartland Funds of Shares Fund
- ---- ----------------------- ---------- ------
<S> <C> <C> <C>
Alan H. Stefl Director 7,786 Value

Linda F. Stephenson Director 32 Value
</TABLE>

SECTION IV - Solicitation and Voting Information

Solicitation of Proxies

Solicitation of proxies will be conducted principally by the mailing of this
Proxy Statement and the accompanying proxy card. Proxies also may be solicited
in person, by telephone, electronically via the Internet or by facsimile.
Authorizations to execute proxies may be obtained by telephone or
electronically. If proxies are executed pursuant to telephonic or electronic
authorization, or if votes are recorded through the Internet, Heartland will use
procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been properly
recorded.

Costs of Solicitation

Expenses in connection with the solicitation of proxies, including any expenses
in connection with telephone or Internet voting, will be borne by the Funds.
Upon request, the Funds will reimburse brokers, dealers, banks and voting
trustees, or their nominees, for reasonable expenses incurred in forwarding
copies of the proxy materials to the beneficial owners of shares which such
persons hold of record. Additional solicitation may be performed by officers and
employees of Heartland Advisors, without special compensation, or by third party
solicitors. The Funds have engaged the services of D.F. King & Co., Inc. to
assist in the solicitation of proxies for estimated fees of up to $125,000, plus
reasonable out-of-pocket expenses.

Quorum

The presence at the Meeting, in person or by proxy, of shareholders representing
one-third of all shares outstanding and entitled to vote on a matter constitutes
a quorum for the transaction of business. Abstentions and "broker non-votes" (as
defined below) are counted for purposes of determining whether a quorum is
present, but do not represent votes cast with respect to any Proposal. "Broker
non-votes" are shares held by a broker or nominee for which an executed proxy is
received, but are not voted as to one or more Proposals because instructions
have not been received from the beneficial owners or persons entitled to vote
and the broker or nominee does not have discretionary voting power.

Required Vote

The Board of Directors has determined that the shares of each Fund are to be
voted as separate series for each of the Proposals. Approval of each of the
Proposals requires the affirmative vote of a "majority" of the outstanding
shares of the applicable Fund as defined in the 1940 Act. Under the 1940 Act,
"majority" means the lesser of (i) 67% of the shares of a Fund present at the
Meeting, if more than 50% of the outstanding shares of the Fund are present in
person or by proxy, or (ii) more than 50% of the outstanding shares.

Adjournment

In the event that sufficient votes in favor of a Proposal are not received by
the scheduled time of the Meeting, the persons named as proxies in the enclosed
proxy may propose and vote in favor of one or more adjournments of the Meeting
to permit further solicitation of proxies without the necessity of further
notice. Any such adjournment will require the affirmative vote of a majority of
the shares present at the session of the Meeting to be adjourned.
<PAGE>

Record Date

Shareholders of record at the close of business on February 19, 1999 (the
"Record Date"), are the only persons entitled to notice of, and to vote at, the
Meeting and any adjournments thereof. Each such shareholder will be entitled to
one vote for each share (and a fractional vote for each fractional share) held
by such shareholder on each matter presented at the Meeting. The following
indicates the number of outstanding shares of each Fund as of the Record Date:

Fund Name Outstanding Shares
- --------- ------------------

Large Cap Value Fund 607,869.930

Mid Cap Value Fund 2,563,477.973

Value Plus Fund 11,055,966.616

Value Fund 47,292,252.330

U.S. Government Securities Fund 5,281,728.059

Short Duration High-Yield Municipal Fund 15,459,165.062

High-Yield Municipal Bond Fund 8,535,454.600

Wisconsin Tax Free Fund 13,760,615.410

SECTION V - Additional Information

The Investment Advisor

The investment advisor and distributor of the Funds is Heartland Advisors, Inc.
("Heartland Advisors"). Heartland Advisors, founded in 1982, also serves as the
investment advisor and distributor to the Heartland Taxable Short Duration
Municipal Fund, an additional series of Heartland, and provides investment
management services to individuals as well as institutional accounts, such as
pension funds and profit-sharing plans, Heartland Advisors' offices are located
at 790 North Milwaukee Street, Milwaukee, Wisconsin 53202.

Shareholder Meetings

As permitted by Maryland law, Heartland's Bylaws provide that Heartland is not
required to hold annual shareholder meetings in any year in which the election
of directors, approval of an investment advisory agreement (or any sub-advisory
agreement) or ratification of the selection of independent public accountants is
not required to be acted upon by shareholders of Heartland or any of the Funds.
However, shareholders of any portfolio series wishing to submit proposals for
inclusion in a proxy statement for any future shareholder meetings should send
their written proposals to the Secretary of Heartland at 790 North Milwaukee
Street, Milwaukee, Wisconsin 53202.

Reports to Shareholders

Each Fund will furnish a copy of its most recent annual and semi-annual reports
to shareholders at no charge. To request a report, please direct such requests
in writing to the Fund at 790 North Milwaukee Street, Milwaukee, Wisconsin
53202 or call toll-free 1-800-432-7856.

<PAGE>

APPENDIX A
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
HEARTLAND VALUE FUND
HEARTLAND U.S. GOVERNMENT SECURITIES FUND

The fundamental investment restrictions and policies of the Value Fund and the
U.S. Government Securities Fund provide that such Funds may not:

(1) Invest more than 5% of the fair market value of its assets in securities of
any one issuer except for United States Government agency securities and
securities backed by the United States Government, its agencies or
instrumentalities, which may be purchased without limitation. For the purposes
of this limitation, the Funds will regard the entity which has the ultimate
responsibility for payment of principal and interest as the issuer.

(2) Purchase more than 10% of the outstanding voting securities of an issuer, or
invest in a company to get control or manage it.

(3) Invest more than 25% of its total assets, based on current market value at
the time of purchase, in securities of issuers in any single industry; provided
that there shall be no limitation on the purchase of securities issued or
guaranteed by the United States Government, its agencies or instrumentalities.

(4) Invest more than 5% of its total assets in securities of companies which,
including any predecessors, have a record of less than three years of continuous
operations.

(5) Invest in securities of other investment companies except as they may be
acquired as part of a merger, consolidation, reorganization or acquisition of
assets.

(6) Buy or sell real estate, real estate investment trusts, or oil and gas
interests, but this shall not prevent the Funds from investing in securities of
companies whose business involves the purchase or sale of real estate, except
that the U.S. Government Securities Fund will not invest in real estate limited
partnerships.

(7) Borrow money or property except for temporary or emergency purposes. If a
Fund ever should borrow money it would only borrow from banks and in an amount
not exceeding 10% of the market value of its total assets (not including the
amount borrowed). Neither Fund will pledge more than 15% of its net assets to
secure such borrowings. In the event a Fund's borrowing exceeds 5% of the market
value of its total assets the Fund will not invest in any additional portfolio
securities until its borrowings are reduced to below 5% of its total assets. For
purposes of these restrictions, collateral arrangements for premium and margin
payments in connection with a Fund's hedging activities are not to be deemed to
be a pledge of assets.

(8) Make loans, except that it may (i) acquire publicly distributed bonds,
debentures, notes and other debt securities and (ii) lend portfolio securities
provided that no such loan may be made if as a result the aggregate of such
loans would exceed 30% of the value of the Fund's total assets.

(9) Underwrite the securities of other issuers except where it might technically
be deemed to be an underwriter for purposes of the Securities Act of 1933 upon
the disposition of certain securities.

(10) Except with respect to investments in repurchase agreements by the U. S.
Government Securities Fund, purchase securities with legal or contractual
restrictions on resale.

(11) Issue senior securities.

A-1
<PAGE>

(12) Purchase securities on margin or effect short sales of securities, except
that the Value Fund may sell securities short where it either: (a) holds a long
position in the same security which equals or exceeds the number of shares sold
short; or (b) holds a long position in a security with respect to which there
has been a public announcement of a proposed transaction that would result in
the conversion of the securities so held into an equal or greater number of
shares of the securities sold short; provided that the Value Fund may not effect
any such short sale of securities if, as a result thereof, the aggregate value
of all of its open short positions would exceed 5% of the Value Fund's total
assets, or if more than 10% of the Value Fund's net assets would be held as
collateral for such short positions.

(13) Buy or sell commodities or commodity contracts or enter into an interest
rate futures contract or an option thereon, except that a Fund may purchase or
sell futures and options on futures and enter into closing transactions with
respect thereto unless, as a result thereof: (a) the then current aggregate
futures market prices and financial instruments required to be delivered under
open futures contract sales plus the then current aggregate purchase price of
financial instruments required to be purchased under open futures contract
purchases would exceed 25% of the Fund's net assets (taken at market value at
the time of entering into the contract and excluding the amount by which any of
its options on futures are in-the-money); and (b) more than 5% of the Fund's
total assets (taken at market value at the time of entering into the contract
and excluding the amount by which any of its options on futures are in-the-
money) would be committed to initial margin and premiums paid on such futures
contracts.

(14) Write, purchase or sell puts, calls, straddles, spreads or any combination
thereof, except that a Fund may write covered call options and purchase put
options on portfolio securities or securities indexes and enter into closing
transactions with respect to such options, and, subject to restriction (13)
above, a Fund may write covered call options and purchase put options on futures
contracts and enter into closing transactions with respect to such options on
futures, unless, as a result of any of the foregoing transactions: (a) the
aggregate market value of all portfolio securities covering call options written
by the Fund would exceed 25% of the Fund's total assets; or (b) the aggregate
value of all premiums paid for put options purchased by the Fund would exceed 5%
of the Fund's total assets (less the amount by which any such positions are in-
the-money), excluding puts purchased on closing transactions.

(15) Invest in illiquid securities, except that the U.S. Government Securities
Fund may invest up to 10% of its net assets in illiquid securities, including
investments in repurchase agreements which mature in more than seven days.

(16) Purchase warrants, except that the Value Fund may purchase warrants which,
when valued at lower of cost or market, do not exceed 5% of the value of the
Fund's net assets; included within the 5%, but not in excess of 2% of the Fund's
net assets, may be warrants which are not listed on the New York or American
Stock Exchanges.

(17) With respect to the U.S. Government Securities Fund, purchase or retain the
securities of any issuer if the officers, directors, advisors or managers of the
fund owning beneficially more than one and one-half of one percent of the
securities of such issuer together own beneficially 5% of such securities;
provided no officer or director shall be deemed to own beneficially securities
held in other accounts managed by such person or held in employee or similar
plans for which such person acts as trustee.

A-2
<PAGE>

APPENDIX B
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
HEARTLAND LARGE CAP VALUE FUND
HEARTLAND MID CAP VALUE FUND

The fundamental investment restrictions and policies of the Mid Cap Value Fund
and the Large Cap Value Fund provide that each such Fund may not:

(1) With respect to 75% of its total assets, invest more than 5% of the fair
market value of its assets in securities of any one issuer, other than
securities issued or guaranteed by the U.S. Government, its agencies, or
instrumentalities;

(2) Invest in a company to get control or manage it or, with respect to 75% of
its total assets, purchase more than 10% of the outstanding voting securities of
an issuer;

(4) Buy or sell real estate or oil and gas interests or leases, but this shall
not prevent the Fund from investing in securities secured by real estate or real
estate interests or issued by companies, including real estate investment
trusts, that invest in real estate or real estate interests or whose business
involves the purchase or sale of real estate.

(5) Borrow money or property except for temporary or emergency purposes. If the
Fund ever should borrow money it would only borrow from banks and in an amount
not exceeding 10% of the market value of its total assets (not including the
amount borrowed). No Fund will pledge more than 15% of its net assets to secure
such borrowings. In the event the Fund's borrowing exceeds 5% of the market
value of its total assets the Fund will not invest in any additional portfolio
securities until its borrowings are reduced to below 5% of its total assets. For
purposes of these restrictions, collateral arrangements for premium and margin
payments in connection with the Fund's hedging activities are not to be deemed
to be a pledge of assets.

(6) Mortgage, hypothecate, or pledge any of its assets as security for any of
its obligations, except as required for otherwise permissible borrowings
(including reverse repurchase agreements), short sales, futures, options, and
other hedging activities.

(7) Make loans, except that it may: (i) acquire publicly distributed bonds,
debentures, notes, and other debt securities; (ii) lend portfolio securities
provided that no such loan may be made if as a result the aggregate of such
loans would exceed one-third of the value of the Fund's total assets; and (iii)
enter into repurchase agreements.

(8) Underwrite the securities of other issuers, although it may invest in
companies that engage in such businesses if it does so in accordance with
policies established by Heartland's Board of Directors, and except where it
might technically be deemed to be an underwriter for purposes of the Securities
Act of 1933 upon the disposition of certain securities.

(9) Purchase a security if, as a result, more than 10% of the value of the
Fund's total assets would be invested in: (a) securities that are not readily
marketable or that would require registration under the Securities Act of 1933,
as amended, upon disposition; and (b) repurchase agreements which do not provide
for payment within 7 days.

(10) Issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Fund from making any otherwise
permissible borrowings, mortgages or pledges, or entering into permissible
reverse repurchase agreements, or hedging activities.

(11) Invest in commodities, but the Fund may purchase or sell futures contracts,
options on futures, and options.

B-1
<PAGE>

APPENDIX C
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
HEARTLAND VALUE PLUS FUND

The fundamental investment restrictions and policies of the Value Plus Fund
provide that such Fund may not:

(1) With respect to 75% of the Fund's total assets, invest more than 5% of the
fair market value of its assets in securities of any one issuer, other than
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities;

(2) Invest more than 10% of the fair market value of its total assets in
securities of any one issuer, other than securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities;

(3) Purchase more than 10% of the outstanding voting securities of an issuer, or
invest in a company to get control or manage it.

(4) Invest more than 25% of its total assets, based on current market value at
the time of purchase, in securities of issuers in any single industry; provided
that there shall be no limitation on the purchase of securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.

(5) Buy or sell real estate or oil and gas interests or leases, but this shall
not prevent the Fund from investing in securities secured by real estate or real
estate interests or issued by companies, including real estate investment
trusts, that invest in real estate or real estate interests or whose business
involves the purchase or sale of real estate.

(6) Borrow money or property except for temporary or emergency purposes. If the
Fund ever should borrow money it would only borrow from banks and in an amount
not exceeding 10% of the market value of its total assets (not including the
amount borrowed). The Fund will not pledge more than 15% of its net assets to
secure such borrowings. In the event the Fund's borrowing exceeds 5% of the
market value of its total assets the Fund will not invest in any additional
portfolio securities until its borrowings are reduced to below 5% of its total
assets. For purposes of these restrictions, collateral arrangements for premium
and margin payments in connection with the Fund's hedging activities are not to
be deemed to be a pledge of assets.

(7) Make loans, except that it may: (i) acquire publicly distributed bonds,
debentures, notes and other debt securities; (ii) lend portfolio securities
provided that no such loan may be made if as a result the aggregate of such
loans would exceed 30% of the value of the Fund's total assets; and (iii) enter
into repurchase agreements.

(8) Underwrite the securities of other issuers except where it might technically
be deemed to be an underwriter for purposes of the Securities Act of 1933 upon
the disposition of certain securities.

(9) Purchase a security if, as a result, more than 10% of the value of the
Fund's total assets would be invested in: (a) securities with legal or
contractual restrictions on resale (other than investments in repurchase
agreements); (b) securities for which market quotations are not readily
available; and (c) repurchase agreements which do not provide for payment within
7 days.

(10) Issue senior securities.

(11) Invest in commodities, but the Fund may invest in futures contracts,
options on futures, and options.

C-1
<PAGE>

APPENDIX D
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
HEARTLAND SHORT DURATION HIGH-YIELD MUNICIPAL FUND
HEARTLAND HIGH-YIELD MUNICIPAL BOND FUND

The fundamental investment restrictions and policies of each Fund provide that
such Fund may not:

(2) Invest in an issuer to get control or manage it, or, with respect to 75% of
the Fund's total assets, purchase more than 10% of the outstanding voting
securities of an issuer;

(3) Invest more than 25% of its total assets, based on current market value at
the time of purchase, in securities of issuers in any single industry or sector;
provided that there shall be no such limitation on the purchase of municipal
obligations and securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities.

(5) Borrow money or property, except from banks for temporary purposes or in
connection with otherwise permissible leverage activities, and then only in an
amount not in excess of one-third of the value of the Fund's total assets. For
purposes of this restriction, collateralized repurchase agreements, when issued
and delayed-delivery securities are not considered borrowings.

(6) Mortgage, hypothecate, or pledge any of its assets as security for any of
its obligations, except as required for otherwise permissible borrowings,
including reverse repurchase agreements, when issued and delayed-delivery
securities, futures, options and other hedging activities.

(7) Make loans, except that it may: (i) acquire publicly distributed bonds,
debentures, notes and other debt securities; and (ii) enter into repurchase
agreements.

(9) Purchase a security if, as a result, more than 15% of the value of the
Fund's total assets would be invested in: (a) securities that are not readily
marketable or that would require registration under the Securities Act of 1933,
as amended, upon disposition; and (b) repurchase agreements which do not provide
for payment within 7 days.

(10) Issue senior securities, as defined in the Investment Company Act of 1940
(the "1940 Act"), except that this restriction shall not be deemed to prohibit
the Fund from making any otherwise permissible borrowings, mortgages or pledges,
reverse repurchase agreements, when issued and delayed-delivery securities, or
hedging activities.

(11) Invest in commodities, but the Fund may purchase or sell futures contracts,
options on futures, and options.

D-1
<PAGE>

APPENDIX E
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
HEARTLAND WISCONSIN TAX FREE FUND

The Fund may not:

(1) Purchase more than 10% of the outstanding voting securities of an issuer, or
invest in a company to get control or manage it.

(2) Invest more than 25% of its total assets, based on current market value at
the time of purchase, in securities of issuers in any single industry; provided
that there shall be no such limitation on the purchase of Tax-Exempt
Obligations, housing obligations and securities issued or guaranteed by the
United States Government, its agencies or instrumentalities.

(3) Purchase securities of other investment companies if, as a result, more than
10% of the value of the Fund's assets would be so invested; provided that no
investment will be made in the securities of any investment company if,
immediately after such investment, more than 3% of the outstanding voting
securities of such company would be owned by the Fund or more than 5% of the
value of the Fund's total assets would be invested in such company; provided
further, that no such restriction shall apply to a purchase of investment
company securities in connection with a merger, consolidation, acquisition or
reorganization.

(4) Borrow money or property except for temporary or emergency purposes. If the
Fund ever should borrow money it would only borrow from banks and in an amount
not exceeding 10% of the market value of its total assets (not including the
amount borrowed). The Fund will not pledge more than 10% of its net assets to
secure such borrowings. In the event the Fund's borrowings exceed 5% of the
market value of its total assets, the Fund will not invest in any additional
portfolio securities until its borrowings are reduced to below 5% of its total
assets.

(5) Make loans, except that the Fund may: (i) acquire publicly distributed
bonds, debentures, notes and other debt securities in which the Fund may invest
consistent with its investment policies described in the Prospectus; (ii) lend
portfolio securities, provided that no such loan may be made if as a result the
aggregate of such loans would exceed 30% of the value of the Fund's total
assets; and (iii) through repurchase agreements.

(6) Underwrite the securities of other issuers except where it might technically
be deemed to be an underwriter for purposes of the Securities Act of 1933 upon
the disposition of certain securities.

(7) Issue senior securities.

(8) Buy or sell real estate.

(9) Buy or sell commodities.

(10) Invest in a security if, as a result thereof, more than 25% of the Fund's
total assets would be invested in a single issuer, other than securities issued
or guaranteed by the United States government, or a state or territory of the
United States, or the District of Columbia, or their agencies,
instrumentalities, municipalities or political subdivisions.

(11) Invest in: (i) securities which, in the opinion of Heartland Advisors, as
the Fund's advisor, are not, at the time of such investment, readily marketable;
(ii) securities the disposition of which is restricted under federal securities
laws (as described in nonfundamental restriction (c) below); or (iii) repurchase
agreements maturing in more than seven days, if, as a result, more than 10% of
the Fund's net assets (taken at current value) would be invested in securities
described in clauses (i), (ii) and (iii) of this restriction (11).

E-1
<PAGE>

VOTE ON THE INTERNET
- --------------------

PLEASE VISIT OUR WEBSITE
www.heartlandfunds.com
(See enclosed insert for further instructions on voting on the internet)
[Large Cap Value Fund/Mid Cap Value Fund/Value Plus Fund]
Revocable Proxy for Special Meeting of Shareholders. This proxy is solicited on
behalf of the Board of Directors.

The undersigned hereby appoints William J. Nasgovitz, Patrick J. Retzer and
Willard H. Davidson, and each of them, proxy, with full power of substitution,
to vote all shares of stock the undersigned is entitled to vote at the Special
Meeting of Shareholders of the Fund to be held on the Third Floor of the
Milwaukee Athletic Club, 758 North Broadway, Milwaukee, Wisconsin, at 10:00 a.m.
on Wednesday, April 28, 1999, or at any adjournment thereof, with respect to the
matters set forth on this proxy and described in the Notice of Special Meeting
and Proxy Statement, receipt of which is hereby acknowledged.

Please note that the Special Meeting is a joint meeting. Only proposals
affecting your Fund are listed on the reverse side. Be sure to read the detailed
discussion of these proposals in the Proxy Statement.

PROPOSAL FOR
[ ]
To vote for the Board of Directors'
recommendation of all proposals, check
here.

Dated: _______________________, 1999

(Please sign exactly as name appears at left. If
stock is owned by more than one person, all owners
should sign. Persons signing as executors,
administrators, trustees or in similar capacities
should so indicate.)

BE SURE TO SIGN YOUR PROXY CARD!
<PAGE>

Shares represented by this proxy will be voted as directed by the shareholder.
IF NO DIRECTION IS SUPPLIED, THIS PROXY WILL BE VOTED FOR ALL OF THE PROPOSALS.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF ALL OF THE
PROPOSALS.

Please vote by filling in the appropriate boxes below.

<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Proposals Involving Policies Affecting Portfolio Management
(Items 1 - 3)

To vote for the Board of Directors' recommendation on [ ]
Proposals 1 - 3, check here.

1. Policy on Borrowing [ ] [ ] [ ]

2. Policy on Investing in Illiquid and Restricted [ ] [ ] [ ]
Securities

3. Policy on Investing for Control or Management [ ] [ ] [ ]

- --------------------------------------------------------------------------------------------------------

FOR AGAINST ABSTAIN
Proposals Involving Policies Not Expected to Materially
Affect Portfolio Management (Items 6, 7 and 11)

To vote for the Board of Directors' recommendation on [ ]
Proposals 6, 7 and 11, check here.

6. Re-designation of Investment Objectives from [ ] [ ] [ ]
Fundamental to Non-Fundamental Policies

7. Policy on Investing in Securities Involving Real Estate [ ] [ ] [ ]

11. Policy on Investing in Securities Involving Oil and [ ] [ ] [ ]
Gas Interests

- --------------------------------------------------------------------------------------------------------

FOR AGAINST ABSTAIN
Proposals to Simplify, Standardize or Re-Define Policy
Language (Items 14 - 18)

To vote for the Board of Directors' recommendations on [ ]
Proposals 14 - 18, check here.

14. Policy on Concentration [ ] [ ] [ ]

15. Policy Prohibiting Loans [ ] [ ] [ ]

16. Policy Prohibiting Underwriting [ ] [ ] [ ]

17. Policy Prohibiting Issuance of Senior Securities [ ] [ ] [ ]

18. Policy Prohibiting Investments in Commodities [ ] [ ] [ ]
</TABLE>
<PAGE>

VOTE ON THE INTERNET
- --------------------

PLEASE VISIT OUR WEBSITE
www.heartlandfunds.com
(See enclosed insert for further instructions on voting on the internet)
[Value Fund]
Revocable Proxy for Special Meeting of Shareholders. This proxy is solicited on
behalf of the Board of Directors.

PROPOSAL FOR
[ ]
To vote for the Board of Directors'
recommendation of all proposals, check
here.

Dated: _______________________, 1999

BE SURE TO SIGN YOUR PROXY CARD!

Please vote by filling in the appropriate boxes below.

<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Proposals Involving Policies Affecting Portfolio Management
(Items 1 - 3)

To vote for the Board of Directors' recommendation on [ ]
Proposals 1 - 3, check here.

1. Policy on Borrowing [ ] [ ] [ ]

2. Policy on Investing in Illiquid and Restricted [ ] [ ] [ ]
Securities

3. Policy on Investing for Control or Management [ ] [ ] [ ]

- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Proposals Involving Policies Not Expected to Materially
Affect Portfolio Management (Items 6 - 13)

To vote for the Board of Directors' recommendation on [ ]
Proposals, 6 - 13 check here.

6. Re-designation of Investment Objectives from [ ] [ ] [ ]
Fundamental to Non-Fundamental Policies

7. Policy on Investing in Securities Involving Real Estate [ ] [ ] [ ]

8. Policy on Investing in Other Investment Companies [ ] [ ] [ ]

9. Policy on Use of Margin [ ] [ ] [ ]

10. Policy on Use of Futures and Options [ ] [ ] [ ]

11. Policy on Investing in Securities Involving Oil and [ ] [ ] [ ]
Gas Interests

12. Policy on Investing in Unseasoned Issuers [ ] [ ] [ ]

13. Policy on Investing in Warrants [ ] [ ] [ ]

- --------------------------------------------------------------------------------------------------------

FOR AGAINST ABSTAIN
Proposals to Simplify, Standardize or Re-Define Policy
Language (Items 14 - 18)

To vote for the Board of Directors' recommendation on [ ]
Proposals 14 - 18, check here.

14. Policy on Concentration [ ] [ ] [ ]

15. Policy Prohibiting Loans [ ] [ ] [ ]

16. Policy Prohibiting Underwriting [ ] [ ] [ ]

17. Policy Prohibiting Issuance of Senior Securities [ ] [ ] [ ]

18. Policy Prohibiting Investments in Commodities [ ] [ ] [ ]
</TABLE>
<PAGE>

VOTE ON THE INTERNET
- --------------------

PLEASE VISIT OUR WEBSITE
www.heartlandfunds.com
(See enclosed insert for further instructions on voting on the internet)
[U.S. Government Securities Fund]
Revocable Proxy for Special Meeting of Shareholders. This proxy is solicited on
behalf of the Board of Directors.

PROPOSAL FOR
[ ]
To vote for the Board of Directors'
recommendation of all proposals, check
here.

Dated: _______________________, 1999

BE SURE TO SIGN YOUR PROXY CARD!

Please vote by filling in the appropriate boxes below.

<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Proposals Involving Policies Affecting Portfolio Management
(Items 1 - 4)

To vote for the Board of Directors' recommendation on [ ]
Proposals 1 - 4, check here.

1. Policy on Borrowing [ ] [ ] [ ]

2. Policy on Investing in Illiquid and Restricted [ ] [ ] [ ]
Securities

3. Policy on Investing for Control or Management [ ] [ ] [ ]

4. Policy on Investing in U.S. Government Securities [ ] [ ] [ ]

- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Proposals Involving Policies Not Expected to Affect
Portfolio Management (Items 6 - 13)

To vote for the Board of Directors' recommendation on [ ]
Proposals 6 - 13, check here.

6. Re-designation of Investment Objectives from [ ] [ ] [ ]
Fundamental to Non-Fundamental Policies

7. Policy on Investing in Securities Involving Real Estate [ ] [ ] [ ]

8. Policy on Investing in Other Investment Companies [ ] [ ] [ ]

9. Policy on Use of Margin [ ] [ ] [ ]

10. Policy on Use of Futures and Options [ ] [ ] [ ]

11. Policy on Investing in Securities Involving Oil and [ ] [ ] [ ]
Gas Interests

12. Policy on Investing in Unseasoned Issuers [ ] [ ] [ ]

13. Policy on Investing in Warrants [ ] [ ] [ ]

- --------------------------------------------------------------------------------------------------------

FOR AGAINST ABSTAIN
Proposals to Simplify, Standardize or Re-Define Policy
Language (Items 14 - 18)

To vote for the Board of Directors' recommendation on [ ]
Proposals 14 - 18, check here.

14. Policy on Concentration [ ] [ ] [ ]

15. Policy Prohibiting Loans [ ] [ ] [ ]

16. Policy Prohibiting Underwriting [ ] [ ] [ ]

17. Policy Prohibiting Issuance of Senior Securities [ ] [ ] [ ]

18. Policy Prohibiting Investments in Commodities [ ] [ ] [ ]
</TABLE>
<PAGE>

VOTE ON THE INTERNET
- --------------------

PLEASE VISIT OUR WEBSITE
www.heartlandfunds.com
(See enclosed insert for further instructions on voting on the internet)
[Short Duration High-Yield Municipal Fund/High-Yield Municipal Bond Fund]
Revocable Proxy for Special Meeting of Shareholders. This proxy is solicited on
behalf of the Board of Directors.

PROPOSAL FOR
[ ]
To vote for the Board of Directors'
recommendation of all proposals, check
here.

Dated: _______________________, 1999

BE SURE TO SIGN YOUR PROXY CARD!
<PAGE>

Please vote by filling in the appropriate boxes below.

<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Proposals Involving Policies Affecting Portfolio Management
(Items 1 - 3)

To vote for the Board of Directors' recommendation on [ ]
Proposals 1 - 3, check here.

1. Policy on Borrowing [ ] [ ] [ ]

2. Policy on Investing in Illiquid and Restricted [ ] [ ] [ ]
Securities

3. Policy on Investing for Control or Management [ ] [ ] [ ]

- --------------------------------------------------------------------------------------------------------

FOR AGAINST ABSTAIN
Proposals Involving Policies Not Expected to Materially
Affect Portfolio Management (Items 7 and 11)

To vote for the Board of Directors' recommendation on [ ]
Proposals 7 and 11, check here.

7. Policy on Investing in Securities Involving Real Estate [ ] [ ] [ ]

11. Policy on Investing in Securities Involving Oil and [ ] [ ] [ ]
Gas Interests

- --------------------------------------------------------------------------------------------------------

FOR AGAINST ABSTAIN
Proposals to Simplify, Standardize or Re-Define Policy
Language (Items 14 - 18)

To vote for the Board of Directors' recommendation on [ ]
Proposals 14 - 18, check here.

14. Policy on Concentration [ ] [ ] [ ]

15. Policy Prohibiting Loans [ ] [ ] [ ]

16. Policy Prohibiting Underwriting [ ] [ ] [ ]

17. Policy Prohibiting Issuance of Senior Securities [ ] [ ] [ ]

18. Policy Prohibiting Investments in Commodities [ ] [ ] [ ]
</TABLE>
<PAGE>

VOTE ON THE INTERNET
- --------------------

PLEASE VISIT OUR WEBSITE
www.heartlandfunds.com
(See enclosed insert for further instructions on voting on the internet)
[Wisconsin Tax Free Fund]
Revocable Proxy for Special Meeting of Shareholders. This proxy is solicited on
behalf of the Board of Directors.

PROPOSAL FOR
[ ]
To vote for the Board of Directors'
recommendation of all proposals, check
here.

Dated: _______________________, 1999

BE SURE TO SIGN YOUR PROXY CARD!
<PAGE>

Please vote by filling in the appropriate boxes below.

<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
Proposals Involving Policies Affecting Portfolio Management
(Items 1 -3 and 5)

To vote for the Board of Directors' recommendations on [ ]
Proposals 1 - 3 and 5,check here.

1. Policy on Borrowing [ ] [ ] [ ]

2. Policy on Investing in Illiquid and Restricted [ ] [ ] [ ]
Securities

3. Policy on Investing for Control or Management [ ] [ ] [ ]

5. Policy on Investing in Municipal Securities Subject to [ ] [ ] [ ]
Alternative Minimum Tax

- --------------------------------------------------------------------------------------------------------

FOR AGAINST ABSTAIN
Proposals Involving Policies Not Expected to Materially
Affect Portfolio Management (Items 7 and 8)

To vote for the Board of Directors' recommendation on [ ]
Proposals 7 and 8, check here.

7. Policy on Investing in Securities Involving Real Estate [ ] [ ] [ ]

8. Policy on Investing in Other Investment Companies [ ] [ ] [ ]

- --------------------------------------------------------------------------------------------------------

FOR AGAINST ABSTAIN
Proposals to Simplify, Standardize or Re-Define Policy
Language (Items 14 - 18)

To vote for the Board of Directors' recommendation on [ ]
Proposals 14 - 18, check here.

14. Policy on Concentration [ ] [ ] [ ]

15. Policy Prohibiting Loans [ ] [ ] [ ]

16. Policy Prohibiting Underwriting [ ] [ ] [ ]

17. Policy Prohibiting Issuance of Senior Securities [ ] [ ] [ ]

18. Policy Prohibiting Investments in Commodities [ ] [ ] [ ]
</TABLE>