Heartland Exits Bond Business

By Staff Writer

August 19, 2002 at 08:00 PM

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Aug. 16, 2002 — Heartland Advisors Inc., which saw two of its municipal bond funds put into receivership last year following steep portfolio write-downs, is exiting the bond business.

The company has agreed to sell Heartland Group:Wisconsin Tax Free Fund (HRWIX), its remaining bond fund, to North Track Funds Inc., which will merge the fund into North Track Funds Wisconsin Tax Exempt Port (PWTEX), subject to shareholder approval.

Heartland is leaving the bond market in order to focus on investing in undervalued stocks, where the firm believes it has expertise, said company spokesman Aaron Picard.

Heartland sharply marked down the value of the Heartland High Yield Municipal Bond fund and the Heartland Short Duration High Yield Municipal fund in October 2000 because it determined that many of the securities the funds held had been inaccurately priced.

The move caused one-day share price drops of 70% in the High Yield Municipal fund, and 44% in the Short Duration High Yield Municipal fund. Those funds and a third fund were put into receivership at the request of the Securities and Exchange Commission.

The Heartland Wisconsin Tax Free fund has about $91 million in assets, and the North Track Wisconsin Tax Exempt fund has about $55 million. North Track, a unit of Ziegler Cos (ZCO), also offers four so-called enhanced index stock funds and two other bond funds.

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