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Rule 497(e)
Registration No. 33-11371
File No. 811-4982
HEARTLAND GROUP, INC.
Select Value Fund
Value Plus Fund
Value Fund
Supplement Dated November 14, 2000
to
Prospectus Dated June 9, 2000
Reorganization of Heartland Advisors
As previously disclosed, on August 3, 2000, Heartland Advisors, Inc. (the
"Advisor"), investment advisor and distributor for the Heartland Funds, was
reorganized. The Advisor is now a wholly owned subsidiary of Heartland
Holdings, Inc., and is indirectly owned by its employees. Previously, the
Advisor had been directly owned by its employees. The reorganization did not
result in a change of management or control of the Advisor, nor have any effect
on its operations.
1.800.HEARTLN (1.800.432.7856)
www.heartlandfunds.com
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Rule 497(e)
Registration No. 33-11371
File No. 811-4982
HEARTLAND GROUP, INC.
Taxable Short Duration Municipal Fund
Short Duration High-Yield Municipal Fund
High-Yield Municipal Bond Fund
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Wisconsin Tax Free Fund
(available to Wisconsin residents only)
Supplement Dated November 14, 2000
to
Prospectus Dated June 9, 2000
Taxable Short Duration Municipal Fund, Short Duration High-Yield Municipal Fund
and High-Yield Municipal Bond Fund
Valuation Risk. Beginning on October 13, 2000, each of the Taxable Short
Duration Municipal Fund, the Short Duration High-Yield Municipal Fund and the
High-Yield Municipal Bond Fund began pricing its portfolio securities and
determining its daily net asset value based upon fair value pricing procedures
consistent with the Investment Company Act of 1940 and pursuant to pricing
policies and procedures approved by the Board of Directors. A pricing committee
appointed under these procedures prices the Funds' portfolio securities on each
trading day and determines the per share net asset value of each of the Funds.
To establish net asset values, the pricing committee ordinarily relies on
securities prices provided by an independent pricing service. However, because
of a current lack of liquidity in the high-yield municipal bond markets
generally, and because of credit quality concerns and a lack of market makers,
market bids and representative market transactions in the specific types of
securities held by the Funds, the pricing committee is considering factors and
information in addition to prices provided by the independent pricing service in
order to assess the current fair value of the Funds' securities.
While the daily prices established under these procedures represent the pricing
committee's best judgment of the price a Fund could expect to receive in a
current sale of a portfolio security, this valuing technique necessarily
involves numerous subjective factors. Accordingly, the price a Fund receives in
an actual sale of a portfolio security on any given day could be substantially
higher or lower than the price established under these fair value procedures.
Because of this uncertainty, the current lack of liquidity in the high-yield
municipal bond markets generally and the limited number of interested buyers for
the specific types of securities held by the Funds, there is a risk that a Fund
may not be able to liquidate securities in the ordinary course at prices
sufficient to meet redemptions at net asset value. Furthermore, information and
circumstances considered by the pricing committee to establish the fair value of
a Fund's securities could change from day to day, resulting in fluctuations in
the daily prices established for those securities and the daily net asset value
of the Fund.
The Funds will continue to use these fair value pricing procedures for so long
as the pricing committee determines that market conditions and the
characteristics of the Funds' portfolios cause prices determined under these
procedures to better represent the current value of the Funds' portfolio
securities. In addition to the risks associated with these Funds which are
discussed in the Funds' Prospectus, shareholders and prospective investors
should bear in mind that the fair value pricing procedures being used by the
Funds are necessarily imprecise, and expose the Funds' net asset values to a
higher risk of uncertainty and fluctuation.
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Liquidity Risk. From time to time and consistent with their policies on
borrowing described in the Prospectus, the Taxable Short Duration Municipal
Fund, the Short Duration High-Yield Municipal Fund and the High-Yield Municipal
Bond Fund have borrowed under an unsecured line of credit that they maintain
with a bank in order to, among other things, provide liquidity to meet
redemption requests on a current basis pending the sale of portfolio securities.
The credit facility is discussed in the notes to each Fund's financial
statements published in its June 30, 2000 semi-annual report.
On October 13, 2000, these three Funds reduced the current fair value of their
portfolio securities in accordance with their pricing policies and procedures.
See "Valuation Risk" above. Subsequently, the bank notified the Funds, that, as
a result of this action, it would not permit any further borrowings under the
line of credit. The bank also requested each Fund to repay all outstanding
borrowings. The Taxable Short Duration Municipal Fund and the Short Duration
High-Yield Municipal Fund each repaid its outstanding borrowings immediately.
The High-Yield Municipal Bond Fund agreed to repay its outstanding borrowings no
later than November 17, 2000, and to comply with certain conditions including
repaying its outstanding borrowings immediately in the event its total net
assets should fall below $15 million. At the close of business on November 10,
2000, the High Yield Municipal Bond Fund's outstanding borrowings were $1.8
million, and its total net assets were approximately $17.9 million. The Fund
expects to repay its borrowings as requested by the bank.
Absent entering into other borrowing arrangements, each Fund will have to meet
redemptions through proceeds from the sale of portfolio securities. Delays and
difficulties, and increased transaction costs, in the sale of portfolio
securities may result to the extent such securities are illiquid. Such risks are
expected for the Short Duration High-Yield Municipal Fund and the High-Yield
Municipal Bond Fund because they hold a large number of portfolio securities
that are considered to be illiquid due to credit quality concerns and a lack of
market transactions in such securities. Although each Fund historically has paid
redemptions on the next business day, the Fund is permitted to pay within seven
days. Under the circumstances, it is possible that future redemption payments
may be delayed for up to seven days.
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Short Duration High-Yield Municipal Fund and High-Yield Municipal Bond Fund
Litigation Matters. The Heartland High-Yield Municipal Bond Fund and the
Heartland Short Duration High-Yield Municipal Fund recently were named as
defendants, together with Heartland Advisors, Inc. and a former co-manager of
those two Funds (the "Defendants"), in several class action lawsuits brought on
behalf of purchasers of shares of the Funds. The lawsuits allege, among other
things, that for some period of time prior to October 13, 2000 the Funds'
prospectuses and other disclosures to investors overstated the Funds' net asset
values and performance and understated risks associated with investing in the
Funds. These lawsuits allege that persons who purchased shares of the Funds
during the class period suffered unspecified damages, and seek recovery from the
Funds and the other defendants. It is possible that additional similar lawsuits
may be brought in the future with respect to these matters.
While the Defendants intend vigorously to defend against these and any other
similar suits, there can be no assurance that they will be successful in doing
so. If the plaintiffs ultimately are determined to be entitled to any recovery,
some or all of the amounts of such recoveries could be charged against the
Funds. Therefore, the Funds' assets are exposed to a risk of loss in connection
with these lawsuits and the potential loss could exceed the assets of the Funds.
Taxable Short Duration Municipal Fund, Short Duration High-Yield Municipal Fund,
High-Yield Municipal Bond Fund and Wisconsin Tax Free Fund
On September 28, 2000, Philip J. Fiskow and Derek J. Pawlak became co-portfolio
managers with Greg D. Winston for the Taxable Short Duration Municipal Fund, the
Short Duration High-Yield Municipal Fund, the High-Yield Municipal Bond Fund and
the Wisconsin Tax Free Fund. Mr. Fiskow joined Heartland Advisors on September
28, as Senior Vice President and Director of Fixed Income. Prior to joining
Heartland Advisors, he had been Treasurer and Chief Investment Officer for MMI
Companies, Inc. since 1997, Senior Vice President and Chief Investment Officer
for Pioneer Financial Services, Inc., from 1991 to 1997, and Senior Portfolio
Manager for Asset Allocation and Management from 1988 to 1991. Mr. Pawlak
joined Heartland Advisors as a credit analyst in February 1998 and is a Vice
President. Prior to joining Heartland Advisors, he had been an Assistant Vice
President-Underwriting/Registration for B.C. Ziegler and Company since April
1993, and a Vice President of its wholly owned subsidiary, Ziegler Mortgage
Securities, Inc. Mr. Pawlak has been a credit analyst for more than ten years,
specializing in high yield securities for more than seven years. Mr. Winston
will continue as a co-portfolio manager of the Funds, having previously served
as co-manager with Thomas J. Conlin, who has resigned from Heartland Advisors.
_______________
As previously disclosed, on August 3, 2000, Heartland Advisors, Inc. (the
"Advisor"), investment advisor and distributor for the Heartland Funds, was
reorganized. The Advisor is now a wholly owned subsidiary of Heartland
Holdings, Inc., and is indirectly owned by its employees. Previously, the
Advisor had been directly owned by its
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employees. The reorganization did not result in a change of management or
control of the Advisor, nor have any effect on its operations.
1.800.HEARTLN (1.800.432.7856)
www.heartlandfunds.com
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