HEARTLAND GROUP INC, 497, 1996-05-06

HEARTLAND GROUP INC
497, 1996-05-06

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<PAGE> 1
Rule 497(c)
Reg. No.: 33-11371
File No.: 811-4982

PROSPECTUS 1p

HEARTLAND WISCONSIN TAX FREE FUND

Prospectus

April 30, 1996

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INVESTMENT SUMMARY

The Heartland Wisconsin Tax Free Fund's investment objective is to provide
investors with a high level of current income that is exempt from federal
income tax and Wisconsin personal income tax.

The Heartland Wisconsin Tax Free Fund (the "Fund") is a separate
non-diversified mutual fund portfolio of Heartland Group, Inc. ("Heartland").
This Prospectus contains information you should know about the Fund before you
invest. Please keep it for reference. A Statement of Additional Information for
the Fund (dated April 30, 1996) has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus. It is
available at no charge by calling the Fund's investment advisor and
distributor, Heartland Advisors, Inc. ("Heartland Advisors"), at 1-800-432-7856
or (414)289-7000.

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LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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

SHARES OF THE FUND ARE NOT OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANKING INSTITUTION, ARE NOT INSURED OR GUARANTEED BY THE
FDIC OR ANY OTHER GOVERNMENTAL AGENCY AND INVOLVE RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.

<PAGE> 2

2p PROSPECTUS

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TABLE OF CONTENTS

<TABLE>
<S> <C>
Fund Expenses............................. 3
Financial Highlights...................... 4
Investment Objective and Policies......... 6
How to Buy Shares.........................16
Shareholder Services......................18
Dividends, Distributions and Taxes........21
The Fund and the Heartland Organization...22
Net Asset Value Calculation...............24
Description of Fund Shares................24
Portfolio Transactions....................25
Performance Information...................26
How to Redeem Shares......................27
</TABLE>

<PAGE> 3

PROSPECTUS 3p

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FUND EXPENSES

The expense summary format below was developed for use by all mutual funds to
help you make your investment decisions. Of course, you should consider this
expense information along with other important information, including the
Fund's investment objective and performance.

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SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum sales load imposed on purchases None
Sales load imposed on reinvested dividends None
Redemption fees None (1)
Exchange fees None
</TABLE>

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ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management fees .65%
Rule 12b-1 distribution plan fees None
Other expenses .19%
Total Fund Operating Expenses .84%
</TABLE>

(1) The Agent charges a wire fee for the return of redemption proceeds
requested by wire transfer. The fee is currently $10.

EXAMPLE

You would pay the following expenses on a $1,000 investment, assuming: (1) 5%
annual rate of return; and (2) redemption at the end of each time period in the
Fund:

- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
One year $ 9
Three years $ 27
Five years $ 47
Ten years $104
</TABLE>
- --------------------------------------------------------------------------------

The purpose of this expense information is to assist you in understanding the
various costs and expenses that you would bear directly or indirectly as an
investor in the Fund. More detailed information concerning these expenses is
set forth in the sections of this Prospectus entitled "How To Buy Shares" and
"The Fund and The Heartland Organization."

THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

<PAGE> 4

4p PROSPECTUS

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FINANCIAL HIGHLIGHTS

The following Financial Highlights table for the Fund has been examined by
Arthur Andersen LLP, independent public accountants, whose report on the
financial statements of the Fund for the fiscal year ended December 31, 1995 is
included in the Fund's Annual Report to Shareholders for such period and
incorporated by reference into the Statement of Additional Information. The
table should be read in conjunction with the audited financial statements and
related notes appearing in the Annual Report. Additional information about the
Fund's performance is contained in the Annual Report, which may be obtained
without charge by writing or calling Heartland Advisors.

<PAGE> 5

PROSPECTUS 5p

<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31
----------------------------------------------
4/3/92(1)
to
1995 1994 1993 12/31/92
---- ---- ---- --------
<S> <C> <C> <C> <C>
PER SHARE DATA:

Net Asset Value, $9.21 $10.38 $9.85 $9.70
Beginning of Period
- ---------------------------------------------------------------------------------------------------------
Income from Investment Operations:

Net investment income .51 .51 .49 .37

Net realized and unrealized
gains (losses) on securities 1.09 (1.17) .55 .15
------------ ------------ ----------- -----------
Total from 1.60 (.66) 1.04 .52
Investment Operations
- ---------------------------------------------------------------------------------------------------------
Less Distributions:

Dividends from net (.51) (.51) (.49) (.37)
investment income

Distributions from - - (.02) -
net realized gains

Total distributions (.51) (.51) (.51) (.37)

Net asset value, $10.30 $9.21 $10.38 $9.85
end of period

Total Return(2) 17.78% (6.49)% 10.80% 7.32%(3)

- ---------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $118,513,120 $101,748,818 $99,349,617 $36,304,163

Ratio of total expenses to
average net assets 0.84% 0.85% 0.84% 0.82%(3)

Ratio of net investment
income to average net assets 5.23% 5.28% 4.81% 4.87%(3)

Portfolio turnover rate 10.84% 21.50% 6.29% 6.77%
</TABLE>

FINANCIAL HIGHLIGHTS

(1) Commencement of Operations.

(2) The front end sales charge in effect for the Fund prior to June 1, 1994 is
not reflected in Total Return as set forth in the table.

(3) Annualized.

<PAGE> 6

6p PROSPECTUS

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INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to provide investors with a high level
of current income that is exempt from federal and Wisconsin personal income
taxes. The Fund invests primarily in municipal securities that are exempt from
personal income tax in Wisconsin and under federal law, including certain
Wisconsin municipal securities and securities of other entities meeting such
criteria.

Only limited categories of municipal securities are exempt from Wisconsin
personal income taxes. These include higher education bonds issued by the
State of Wisconsin, public housing authority bonds issued by Wisconsin
municipalities, redevelopment authority bonds issued by Wisconsin
municipalities, certain bonds issued by the Wisconsin Housing and Economic
Development Authority, Wisconsin Housing Finance Authority bonds, certain
general obligation bonds issued by the District of Columbia, Puerto Rico, the
Virgin Islands and Guam, and certain public housing agency bonds issued by
agencies located outside of Wisconsin. Due to the limited availability and
liquidity of such securities issued within Wisconsin, it is possible that the
Fund may invest a significant portion of its assets in obligations issued by
territories and possessions of the United States, and the District of Columbia,
their agencies or instrumentalities. The Fund may invest up to 100% of its
assets in tax-exempt securities of issuers outside of Wisconsin if such
securities bear interest which is exempt from federal and Wisconsin personal
income taxes.

INVESTMENT POLICIES OF THE FUND

TAX-FREE INCOME. As a matter of fundamental policy, the Fund will seek to
invest at least 80% of its assets so that the income earned thereon will be
exempt from federal and Wisconsin personal income taxes. In practice, under
normal market conditions, the Fund will seek to invest all of its assets so
that income therefrom will be exempt from federal and Wisconsin personal income
tax, other than assets invested for hedging purposes. There can be no
assurance that the Fund will be successful in this investment policy or that it
will achieve its investment objective.

Also 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 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. If you are subject to the alternative
minimum tax, a portion of your income may not be exempt from federal income
tax. Income distributions that are a tax preference item

<PAGE> 7
PROSPECTUS 7p

for purposes of the federal alternative minimum tax are considered to be exempt
from federal income tax for purposes of the Fund's objective. See
"Dividends, Distributions and Taxes."

TAX-FREE INVESTMENTS. The term "municipal securities," as used in this
Prospectus, means debt obligations issued by or on behalf of states,
territories or possessions of the United States, the District of Columbia and
their political subdivisions, agencies, and instrumentalities, the interest on
which is generally exempt from federal income tax.

Municipal securities are classified principally as either "general obligations"
or "revenue obligations." General obligation bonds are secured by the
municipality's pledge of its credit and taxing power for the payment of
principal and interest. Revenue obligations are generally payable only from
the revenues derived from a particular facility or class of facilities, or in
some cases from the proceeds of a special excise tax or other specific revenue
source. Industrial development or revenue bonds are usually bonds the credit
quality of which is related directly to the credit standing of the industrial
user involved or of any entity which has provided a guaranty or enhancement of
such credit.

The Fund may invest in municipal lease obligations, which are issued by a state
or local government or authority to acquire land, equipment or facilities and
are not fully backed by the municipality's credit. These obligations typically
are secured by the municipality's obligation to make payments under the lease,
which may be subject to certain conditions, including future appropriation of
funds. If the municipality stops making lease payments, the obligations could
lose value. A more detailed description of lease obligations is set forth in
the Statement of Additional Information under "Investment Objective and
Policies - Tax-Exempt Obligations - State or Municipal Lease Obligations."

OTHER INVESTMENTS. The Fund may invest temporarily in certificates of deposit,
bankers' acceptances and other time deposits. Certificates of deposit are
certificates representing the obligation of a bank to repay the funds deposited
(plus interest thereon) at a time certain after the deposit. Bankers'
acceptances are credit instruments evidencing the obligation of a bank to pay a
draft drawn on it by a customer. Time deposits are non-negotiable deposits
maintained in a banking institution for a specified period of time at a stated
interest rate. Time deposits maturing in greater than seven days will be
considered illiquid securities.

<PAGE> 8

8p PROSPECTUS

Under abnormal market conditions or for defensive purposes, the Fund may invest
more than 20% of its assets in fixed-income securities, the interest on which
is subject to federal and/or Wisconsin personal income tax. Investments in
securities subject to federal income tax will be primarily in securities issued
or guaranteed by the United States government, its agencies, instrumentalities
or authorities; corporate debt securities rated in the highest three categories
by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P"), or Fitch Investors Service, Inc. ("Fitch"); commercial paper rated in
the highest category by S&P or Moody's; unrated variable rate demand notes
which Heartland Advisors believes have investment characteristics comparable to
debt securities rated in one of the top three rating categories by Moody's, S&P
or Fitch; or certificates of deposit of the 100 largest domestic banks in terms
of assets which are subject to federal or state regulatory supervision.

INVESTMENT QUALITY

The Fund invests primarily in municipal bonds judged by Heartland Advisors to
be of investment grade quality. Such securities are considered by Heartland
Advisors to include securities rated at the time of purchase within the four
highest rating categories assigned by Moody's, S&P, or Fitch, or securities
which are unrated, provided that such securities are judged by Heartland
Advisors, at the time of purchase, to be of comparable quality to securities
rated within such four highest categories. A description of the ratings
assigned by Moody's, S&P and Fitch is contained in the Statement of Additional
Information. Investment grade bonds have adequate to strong protection of
principal and interest payments. The investment grade rating of some bonds may
result from various enhancements, such as insurance or letters of credit,
rather than the credit of the issuer. Bonds rated in the fourth highest rating
category are more sensitive to economic changes than are bonds rated in one of
the top three categories, and such bonds have speculative characteristics.

The Fund may invest up to 25% of its assets in lower quality bonds (those rated
below the four highest categories by Moody's, S&P or Fitch or judged by
Heartland Advisors to be of comparable quality, commonly known as "junk
bonds"), provided that it may not invest in bonds rated below B at the time of
purchase. Bonds rated below the top four rating categories are regarded, on
balance, as predominantly speculative with respect to the capacity to pay
interest and repay principal in accordance with the terms of the obligation.
While such bonds typically offer higher rates of return, they involve greater
risk, including greater risk of default and loss of principal.

<PAGE> 9

PROSPECTUS 9p

The prices of these lower rated bonds may be less sensitive to interest rate
changes than higher rated bonds, but more sensitive to adverse economic
changes. Periods of economic uncertainty and change may cause market price
volatility in these higher yielding bonds and corresponding volatility in the
Fund's net asset value. Furthermore, higher yielding bonds may contain
redemption or call provisions which, if exercised during a declining interest
rate environment, may require the Fund to replace the security with a lower
yielding security, resulting in a decreased return to the Fund. Finally, the
secondary trading market for higher yielding bonds may not be as active as for
lower yielding bonds. As a result, it may be difficult to accurately assess the
value of such bonds (and therefore the Fund's securities portfolio), and the
Fund's ability to dispose of such bonds may be limited. For a more detailed
discussion of the risks associated with investing in lower rated securities,
see "Investment Objective and Policies - Tax-Exempt Obligations -
Non-Investment Grade Bonds" in the Statement of Additional Information.

Subsequent to their purchase by the Fund, particular obligations may cease to
be rated or their ratings may be reduced below the minimum rating required for
purchase by the Fund. Neither event will require the elimination of an
investment from the Fund's portfolio, but Heartland Advisors will consider such
an event in its determination of whether the Fund should continue to hold an
investment in its portfolio.

Rated as well as unrated municipal securities will be analyzed by Heartland
Advisors on the basis of available information as to creditworthiness and with
a view to various qualitative factors and trends affecting municipal securities
generally. It should be noted, however, that the amount of information about
the financial condition of an issuer of municipal securities or an obligor
thereon may not be as extensive or as readily available as information
regarding securities that are more actively traded.

<PAGE> 10

10p PROSPECTUS

ASSET COMPOSITION

The following table provides a summary of the Fund's debt holdings as rated by
S&P or, in the case of unrated securities, as determined by Heartland Advisors.
These figures are dollar-weighted averages of month-end portfolio holdings of
the Fund during the fiscal year ended December 31, 1995, presented as a
percentage of total investments. These percentages are historical and are not
necessarily indicative of the quality of current or future Fund holdings, which
may vary.

<TABLE>
<CAPTION>
- -------------------------------------------------------------
S&P Rating Fund
or Equivalent Average
- -------------------------------------------------------------
<S> <C>
AAA 24.7%
AA 2.7%
A 60.8%
BBB 11.8%
BB 0%
B 0%
- -------------------------------------------------------------
</TABLE>

The dollar-weighted average of debt securities included in these figures and
not rated by S&P amounted to 39.8% for the Fund. This may include securities
rated by other nationally recognized rating organizations, as well as unrated
securities. Unrated securities are not necessarily lower-quality securities.
Issuers of municipal securities frequently choose not to incur the expense of
obtaining a rating. Please refer to the Statement of Additional Information
for a more complete discussion of these ratings.

OTHER INVESTMENT PRACTICES

In addition to the investments described above, the Fund may invest in certain
securities and employ certain investment techniques, which may present special
risks as described below. A more complete discussion of these securities and
investment techniques and their associated risks, as well as further investment
restrictions to which the Fund may be subject, is contained in the Statement of
Additional Information.

<PAGE> 11

PROSPECTUS 11p

selling futures, buying puts and writing calls, tend to hedge the Fund's
investments against price fluctuations. Other strategies, including buying
futures, writing puts, and buying calls, tend to increase market exposure.
Options and futures may be combined with each other in order to adjust the risk
and return characteristics of the Fund's overall strategy.

The Fund may purchase and write put and call options that are traded on
recognized U.S. exchanges with respect to any type of security or index related
to its investments, and may enter into closing transactions with respect to
such options. The Fund may purchase and sell futures contracts, including
interest rate futures and index futures, that are traded on a recognized U.S.
exchange, board of trade or similar entity, or quoted on an automated quotation
system. The Fund may also purchase and write put and call options on futures
contracts and enter into closing transactions with respect to such options.

The Fund will limit its use of these hedging instruments so that: (i) no more
than 5% of the Fund's total assets would be committed to initial margin
deposits or premiums on futures contracts; (ii) no more than 20% of the Fund's
net assets would be subject to futures contracts; (iii) no more than 5% of the
Fund's total assets would be committed to premiums paid for options; and (iv)
no more than 20% of the Fund's total assets would be subject to options. Each
of these limitations applies immediately after a purchase. A subsequent change
in the applicable percentage resulting from market fluctuations does not
require elimination of any security, option or future from the Fund's
portfolio. Consequently, the Fund's assets could be hedged in excess of the
above percentages at a date subsequent to the hedging transaction.

Options and futures can be highly volatile investments and involve certain
risks. Successful hedging strategies require the ability to predict future
movements in securities prices, interest rates and other economic factors.
Heartland Advisors' attempts to use such investments for hedging purposes may
not be successful and could result in reduction of the Fund's total return.
The Fund's potential losses from the use of futures extends beyond its initial
investment in such contracts.

Because available exchange-traded options and futures contracts will not match
the Fund's current or anticipated investments exactly, there is a risk that the
options or futures positions will not track the performance of the Fund's other
investments. The Fund could also experience losses if the prices of its
options or futures positions were poorly correlated with its other investments,
or if it was unable to close out its positions due to disruptions in the market
or lack of liquidity.

<PAGE> 12

12p PROSPECTUS

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued or delayed delivery basis, i.e., obligate itself to
purchase or sell securities with delivery and payment to occur at a later date
in order to secure what is considered to be an advantageous price and yield at
the time of entering into the obligation. The Fund will make such commitments
only with the intention of actually acquiring the securities, but may sell the
securities before settlement date if it is deemed advisable for investment
reasons. At the time the Fund makes a commitment to purchase an obligation, it
will record the transaction and reflect the value of the obligation in
determining its net asset value. The Custodian will maintain on a daily basis
a separate account consisting of cash or liquid securities with a value at
least equal to the amount of the Fund's commitments to purchase when-issued
obligations.

REPURCHASE AGREEMENTS. The Fund also may invest in collateralized repurchase
agreements, but has no present intention to do so. Such repurchase agreements
are described in the Statement of Additional Information under "Investment
Objective and Policies - Taxable Obligations - Repurchase Agreements."

BORROWING. The Fund may borrow from banks for temporary or emergency purposes
up to 10% of its total assets and pledge up to 10% of its total assets in
connection therewith.

PORTFOLIO TURNOVER AND MATURITY

While it is not the policy of the Fund to trade actively for short-term
profits, it will dispose of securities without regard to the time they have
been held when such action appears advisable to Heartland Advisors. Frequent
portfolio trades may result in higher transaction and other costs. The Fund's
portfolio turnover rate for the fiscal year ended December 31, 1995 was 10.84%.
The Fund is not restricted as to the average maturity of its portfolio.

<PAGE> 13

PROSPECTUS 13p

INVESTMENT LIMITATIONS

The Fund's investment policies discussed above are subject to further
restrictions which are described in the Statement of Additional Information.
Three principal investment limitations are that:

1. Under normal market conditions, the Fund will seek to invest at least
80% of its assets so that the income earned thereon will be exempt from
federal and Wisconsin personal income taxes.

2. 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.

3. The Fund will not purchase a security if, as a result thereof, (i)
more than 25% of its 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 or (ii) more than 10% of its
net assets would be invested in illiquid securities.

The above "Investment Limitations" are fundamental policies of the Fund and can
be changed only by a majority vote of its shareholders. However, neither the
investment objective nor policies of the Fund are fundamental and they may be
changed by Heartland's Board of Directors. If there is a future change in the
investment objective, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial position and
needs.

RISK FACTORS

MARKET RISK. The principal value of the Fund's assets would be expected to
vary with changes in interest rates. It may be expected that a decline in
prevailing levels of interest rates generally will increase the value of
securities held by the Fund, and an increase in rates will generally have the
opposite effect. The Fund may employ hedging techniques to reduce the effects
of interest rate fluctuations; however, there can be no assurance that such
techniques will be successful. Thus, interest rate fluctuations will affect
the Fund's net asset value per share, but not the income received by it from
its existing portfolio securities. Because yields on securities available for
purchase by the Fund will vary over time, no specific yield on the Fund's
portfolio can be assured.

<PAGE> 14

14p PROSPECTUS

Total returns on bonds tend to fluctuate in much wider ranges than fluctuations
in interest rates because gain or loss in bond value is combined with interest
to calculate total return. The amount of increase or decrease in value and
total return will also be affected by the average maturity of the Fund, with
shorter maturities tending to minimize changes and longer maturities tending to
produce greater changes.

CREDIT RISK

GEOGRAPHIC CONCENTRATION. Ordinarily, an investment company concentrating its
investments in limited geographic areas, such as the Fund, would be exposed to
greater credit risks than an investment company investing in a nationally
diversified portfolio of municipal securities. The value of municipal
securities may be closely tied to local, political, and economic conditions and
developments within Wisconsin. Other risks include possible tax changes,
legislative or judicial action, environmental concerns, and differing levels of
supply and demand for debt obligations exempt from federal and Wisconsin
personal income taxes.

The Fund's policies and programs seek to minimize this geographic concentration
risk in a number of ways. First, the Fund intends to comply with the
provisions of Subchapter M of the Internal Revenue Code which, in part, require
that, at the close of each quarter of the taxable year, those issues which
represent more than 5% of the Fund's total assets be limited in the aggregate
to 50% of the Fund's total assets, and that no single issue exceed 25% of the
Fund's total assets. Moreover, since the Fund's policies and programs permit
it to purchase securities issued by territories or possessions of the United
States, including, Puerto Rico, the Virgin Islands, Guam and the District of
Columbia, which are exempt from federal and Wisconsin personal income taxes,
the geographic concentration is less than if the Fund was limited solely to
investments in one state.

Wisconsin Economy. Wisconsin's economy, which, although fairly diverse, is
primarily concentrated in the services industry (accounting for approximately
25% of its total non-farm employment) and secondarily in trade and
manufacturing, has continued to outperform the national economy. The state's
unemployment rate has been below the national average for the past eight years.
The state government has also maintained a balanced budget during that same
period. As a result, revenues and assets necessary to support and
collateralize interest and principal payments on bonds issued by Wisconsin
public and private issuers in which the Fund may invest remain relatively
strong.

<PAGE> 15

PROSPECTUS 15p

Puerto Rico Economy. Historically, a significant portion of the Fund has been
invested in municipal securities issued by or on behalf of Puerto Rico, its
agencies or instrumentalities. Since the early 1970s, manufacturing has been
the primary force in Puerto Rican development. Other major sectors of Puerto
Rico's economy include government, trade and services. Puerto Rico's
unemployment rate remains relatively high at approximately 14-16% and per
capita income is less than half of the U.S. average. Debt ratios for the
Commonwealth are high as it assumes much of the responsibility for financing
improvements in the local infrastructure. Puerto Rico's economic base remains
centered around tax advantages offered to U.S. manufacturing firms.
Legislation or other action that would eliminate or reduce such tax incentives
might give rise to economic instability and volatility in the market for the
securities.

Industry Concentration. The Fund may invest 25% or more of its total assets in
municipal securities whose revenue sources are from similar types of projects,
for example, community development, education, electric utilities, health care,
housing, redevelopment, transportation, or water, sewer and gas utilities.
There may be economic, business or political developments or changes that
affect all securities of a similar type, such as proposed legislation affecting
the financing of certain projects, judicial decisions relating to the validity
of certain projects or the means of financing them, shortages or price
increases of necessary materials, or declining market needs for such projects.
Therefore, developments affecting a single issuer or industry, or the
securities financing similar types of projects, could have a significant effect
on the Fund's performance.

The Fund historically has invested a substantial portion of its assets in
housing authority obligations. Since housing authority obligations may be
supported to a large extent by federal housing subsidy programs, the failure of
a housing authority to meet the qualifications required for coverage under the
federal programs could result in a decrease or elimination of subsidies
available for payment of principal and interest on the housing authority's
obligations. Economic developments, including fluctuations in interest rates,
failure or inability to increase rentals and increasing construction and
operating costs may adversely impact the revenues of housing authorities, and
adverse economic conditions may result in an increasing rate of default by
mortgagors on the underlying mortgage loans. For some housing authorities,
inability to obtain additional financing could also reduce revenues available
to pay existing obligations. In addition, certain housing authority
obligations may be subject to early redemption at par based on unused proceeds
from the issue and/or prepayment of underlying mortgage obligations.

<PAGE> 16

16p PROSPECTUS

Obligations issued to finance the operation or expansion of utilities may be
affected by various economic and other conditions which adversely impact
utility entities, including inflation, increases in financing requirements,
increases in raw material, construction and other operating costs, changes in
the demand for services and the effects of environmental and other governmental
regulations. In particular, recent laws regulating air quality standards and
future legislation regarding other environmental and toxic waste regulation may
further increase the cost of utility services.

HOW TO BUY SHARES

SHARE PRICE

The Fund's shares are sold without a sales charge. The Fund's share price is
the net asset value per share next determined following receipt of an order in
proper form, or receipt of funds if purchase is made by wire, by the Fund or
its authorized service agent or sub-agent. Net asset value is calculated daily
as described under "Net Asset Value Calculation." Firstar Trust Company serves
as the Fund's transfer and dividend disbursing agent (the "Agent").

OPENING AN ACCOUNT AND PURCHASING SHARES

BY MAIL TO: BY OVERNIGHT MAIL TO:
Firstar Trust Company Firstar Trust Company
Mutual Fund Services, 3rd Floor Mutual Fund Services, 3rd Floor
P.O. Box 701 615 East Michigan Street
Milwaukee, WI 53201-0701 Milwaukee, WI 53202

To Open an Account:

Complete and sign the Account Application. Make your check payable to the
Heartland Wisconsin Tax Free Fund and mail to one of the addresses above.

To Add to and Account:

Make you check payable to the Fund, indicate your Fund account number on your
check, and mail to one of the addresses above. You may also include an
"Additional Investment Form" from a prior account statement with your check.

<PAGE> 17

PROSPECTUS 17p

BY WIRE:
Firstar National Bank
ABA #0750-00022
Firstar Trust MFS A/C #112-952-137
777 East Wisconsin Avenue
Milwaukee, WI 53202

CREDIT TO: Heartland Wisconsin Tax Free Fund, (your account number and the
title of the account)

To Open an Account: To Add to an Account:

Call the Agent at 1-800-443-2862 prior Specify Fund name, include your
to sending the wire. Specify Fund name, name and account number, and
include your name, and wire as described wire as described above.
above. Then complete, sign and mail
the Account Application to one of the
addresses above for mail or overnight
mail.

BY TELEPHONE:
1-800-432-7856 or 414-289-7000

To Open an Account: To Add to and Account:

Unless you have elected not to have Unless you have elected not to
this privilege on the Account have this privilege on the Account
Application, you may call to Application, you may call to
exchange from another Heartland fund exchange from another Heartland fund
account with the same registration, account with the same registration,
including name, address and taxpayer including name, address and taxpayer
ID number. See "Shareholder ID. See "Shareholder
Services-Exchange Privilege." Services-Exchange Privilege."

AUTOMATICALLY:

To Open an Account: To Add to and Account:

Not available. Use Heartland's automatic investment
plan. Sign up for this service on
your Account Application, or call
1-800-432-7856 for information on
how to add this service.

<PAGE> 18

18p PROSPECTUS

THROUGH SECURITIES REPRESENTATIVES:

To Open an Account: To Add to an Account:

You may purchase shares through a You may purchase shares through a
broker-dealer or financial broker-dealer or financial
institution which must promptly institution which must promptly
forward the order, together with forward the order, together with
payment, to the Agent. The payment, to the Agent. The
broker-dealer or financial broker-dealer or financial
institution may charge a fee for institution may charge a fee for
such services. such services.

CONDITIONS OF YOUR PURCHASE.

MINIMUM INVESTMENTS. The minimum initial investment for the Fund is $1,000.
The minimum additional investment, except for reinvestments of distributions
and investments under the automatic investment plan, is $100.

OTHER CONDITIONS. All purchases must be made in U.S. dollars and checks must
be drawn on U.S. banks. Cash will not be accepted for the purchase of shares.
If a check fails to clear, the purchase to which the check relates will be
canceled and the prospective investor will be liable for any losses or fees
incurred by the Fund or the Fund's Agent, including without limitation a $20
fee to cover bank handling charges for returning checks due to insufficient
funds. When purchases are made by check, the Fund can hold payment on
redemption of shares so purchased until it is reasonably satisfied that the
check has cleared. To avoid such a delay, an investor can wire federal funds as
described above from a bank, which may charge a fee for that service. Wiring
federal funds means that the bank sends money to a bank account maintained by
the Fund through the Federal Reserve System.

SHAREHOLDER SERVICES

The Fund offers a number of shareholder services designed to facilitate
investment in its shares. Full details of each of the services and
instructions as to how to participate in the various services can be obtained
from the Fund or Heartland Advisors.

<PAGE> 19

PROSPECTUS 19p

any sales charge or fees. You may change your election at any time by writing
or calling Heartland Advisors. Heartland Advisors must receive any change seven
days prior to a payment date for it to be effective for that payment.

AUTOMATIC INVESTMENT PLAN. The automatic investment plan of the Fund offers a
simple way to maintain a regular investment program. By completing the
automatic investment portion of the account application attached to this
Prospectus, you may arrange automatic transfers (minimum $50 per transaction)
from your checking or savings account to your account in the Fund on a monthly
or twice-monthly basis. The application must be accompanied by a "voided"
check, and be received at least 14 business days prior to the initial
transaction. Once enrolled in the automatic investment plan, you may change the
monthly amount or terminate your participation at any time by writing the
Agent. Allow five business days for a change to become effective. Your bank
must be a member of Automated Clearing House. If the automatic purchase cannot
be made due to insufficient funds or a stop payment, a $20 service fee will be
assessed. If you stop making automatic investments when your aggregate
investment in the Fund is less than $500, the Fund reserves the right to redeem
your account after giving 60 days notice, unless you make additional
investments to bring your account value to $1,000. The program will
automatically be terminated upon redemption of all shares, including an
exchange of all shares to another fund. You will receive quarterly
confirmations of your transactions from the Agent and your regular bank account
statement will show the debit transaction each month.

SYSTEMATIC WITHDRAWAL PLAN. You can set up automatic withdrawals from your
account at monthly, quarterly, or annual intervals. To begin distributions, you
must have an initial balance of $25,000 in your account and withdraw at least
$100 per payment. To establish the systematic withdrawal plan, request a form
by calling 1-800-432-7856. The systematic withdrawal plan may be terminated by
you or by the Fund at any time by written notice.

EXCHANGE PRIVILEGE. Shares of the Fund which have been registered in your name
for at least 15 days may be exchanged for shares of any other Heartland fund,
or for shares in the Portico Money Market Fund, provided the fund into which
you wish to exchange is qualified for sale in the jurisdiction of residence
which you state at the time you make the exchange. Before initiating an
exchange, you should obtain from Heartland Advisors and carefully read the
prospectus relating to the fund into which you wish to exchange.

Exchanges Among Heartland Funds. Under the exchange privilege, each Heartland

<PAGE> 20

20p PROSPECTUS

fund offers to exchange its shares for shares of another Heartland fund on the
basis of relative net asset value per share, without the payment of any fees or
charges. In order to qualify for the exchange privilege without further
approval of the fund, it is required that the shares being exchanged have a net
asset value of at least $1,000, but not more than $500,000. In addition, if
you have certificates for any shares being exchanged, you must surrender such
certificates in the same manner as in redemption of shares. Shares of the Fund
acquired in exchange for shares of another Heartland fund that was purchased
between February 12, 1993 and June 1, 1994 subject to a contingent deferred
sales charge will remain subject to any such charge applicable upon ultimate
redemption of the shares.

Exchanges with Portico. Shareholders may exchange all or a portion of their
shares in the Fund for shares of the Portico Money Market Fund at their
relative net asset values and may also exchange back into a Heartland fund
without the imposition of any charges or fees. These exchanges are subject to
the minimum purchase and redemption amounts set forth in the prospectus for the
Portico Money Market Fund. No charge to shareholders is imposed in connection
with this exchange; however, Heartland Advisors, as distributor, is entitled to
receive a fee from the Portico Money Market Fund for certain distribution and
support services at the annual rate of .20 of 1% of the average daily net asset
value of the shares for which it is the holder or dealer of record.

How to Exchange. To exercise the exchange privilege, you need to do one of the
following: (a) contact Heartland Advisors by telephone (1-800-432-7856 or
414-289-7000) and request the exchange, unless you have elected not to have
this telephone privilege by so indicating on the Account Application; (b)
complete an Exchange Application available from Heartland Advisors and submit
it to the Agent; or (c) contact your securities representative (either in
writing or by telephone), who will advise Heartland of the exchange, but who
may charge a fee for such service. See "HOW TO REDEEM SHARES - Telephone
Redemptions" for information on transactions by telephone.

Tax and Other Considerations. An exchange between funds is treated as a sale
for federal income tax purposes and, depending upon the circumstances, a short
or long-term capital gain or loss may be realized. If you have questions as to
the tax consequences of an exchange, you should consult your tax advisor. The
exchange privilege may be modified or terminated at any time upon 60 days prior
written notice. Although an investor may make up to four exchanges in any
calendar year, Heartland reserves the right to limit the number of exchanges
beyond that.

<PAGE> 21

PROSPECTUS 21p

DIVIDENDS, DISTRIBUTIONS AND TAXES

DISTRIBUTIONS. The Fund will accrue income dividends daily and distribute all
of its net investment income to shareholders monthly. Capital gains dividends,
if any, will be distributed annually. Dividends and capital gains
distributions will be reinvested in additional shares of the Fund, unless the
shareholder has indicated on the account application or otherwise notified
Heartland Advisors by telephone or in writing that he or she elects to receive
such dividends and distributions in cash.

FEDERAL TAXES. Interest earned by the Fund on municipal securities is in
general federally tax-free when distributed to you as dividends. If the Fund
earns taxable income from any of its investments, it would be distributed as a
taxable dividend. Gains from the Fund's hedging transactions will be
distributed as short-term and long-term capital gains.

The Fund may invest in municipal obligations whose interest (less any related
expenses) is subject to the federal alternative minimum tax for individuals
(private activity securities). To the extent that the Fund invests in private
activity securities, individuals who are subject to the alternative minimum tax
will be required to report a portion of the Fund's dividends as a "tax
preference item" in determining their federal alternative minimum tax.
Liability for the federal alternative minimum tax will depend on each
investor's individual tax circumstances.

Distribution from the Fund's short-term capital gains are federally taxable as
dividends, and long-term capital gain distributions are federally taxable as
long-term capital gains. Distributions of long-term capital gains will be
taxable to the investor as long-term capital gains regardless of the length of
time shares have been held. The Fund's distributions are taxable when they are
paid, whether you take them in cash or reinvest them in additional shares,
except that distributions declared in December and paid in January are taxable
as if paid on December 31. You will receive information annually indicating
the tax status of the dividends received in the prior year under federal and
Wisconsin law.

STATE TAXES. To the extent that the Fund's distributions are derived from
obligations whose interest is tax-free under Wisconsin law, its dividends paid
from tax-exempt interest will be exempt from Wisconsin personal income tax.
Wisconsin also imposes a state alternative minimum tax dependent upon an
investor's individual tax circumstances, which is based on federal alternative
minimum tax with certain modifications. Distributions from short-term and
long-term capital gains will be taxable as dividends and as capital gains,
respectively, for state tax purposes.

<PAGE> 22

22p PROSPECTUS

"BUYING A DIVIDEND." On the record date for a distribution from capital gains
by the Fund, its share price is reduced by the amount of the distribution. If
you buy shares just before the record date ("buying a dividend"), you will pay
the full price for the shares, and then receive a portion of the price back as
a taxable distribution.

OTHER TAX INFORMATION. Under federal tax law, some investors may be subject to
a 31% withholding on reportable dividends, capital gains distributions, and
redemption payments ("backup withholding"). Generally, investors subject to
backup withholding will be those for whom a taxpayer identification number is
not on file with the Fund or who, to the Fund's knowledge, have furnished an
incorrect number. In order to avoid this withholding requirement, an investor
must certify on the account application that the taxpayer identification number
provided is correct and that the investment is not otherwise subject to backup
withholding, or is exempt from backup withholding.

The foregoing discussion relates to federal and Wisconsin taxation as of the
date of this Prospectus and is general in nature; each investor is advised to
consult his or her tax advisor for additional information. Distributions from
the Fund, including exempt-interest dividends, may be subject to tax in other
states.

THE FUND AND THE HEARTLAND ORGANIZATION

Heartland's Board of Directors provides broad supervision over the affairs of
the Fund, and the officers are responsible for its operations.

HEARTLAND ADVISORS

Heartland Advisors provides the Fund with overall investment advisory and
administrative services under an Investment Advisory Agreement with Heartland.
Subject to policies established by Heartland's Board of Directors, Heartland
Advisors makes investment decisions on behalf of the Fund, makes available
research and statistical data, and supervises the acquisition and disposition
of investments by the Fund. Heartland Advisors is also the distributor for the
Fund.

<PAGE> 23

PROSPECTUS 23p

March 31, 1996, Heartland Advisors had approximately $2.2 billion in assets
under management. Heartland Advisors' principal mailing address is 790 North
Milwaukee Street, Milwaukee, Wisconsin 53202. William J. Nasgovitz, a Director
and President of Heartland and Heartland Advisors, is a controlling person of
Heartland Advisors through his ownership of a majority of its voting common
stock.

Heartland Advisors bears all of its expenses in providing services under its
Investment Advisory Agreement and pays all salaries, fees and expenses of the
officers and directors of Heartland who are affiliated with Heartland Advisors.
The Fund bears all of its other expenses including, but not limited to,
necessary office space, telephone and other communications facilities and
personnel competent to perform administrative, clerical and shareholder
relations functions; a pro rata portion of salary, fees and expenses (including
legal fees) of those directors, officers and employees of Heartland who are not
officers, directors or employees of Heartland Advisors; interest expenses, fees
and expenses of the Custodian, Transfer and Dividend Disbursing Agent; taxes
and governmental fees; brokerage commissions and other expenses incurred in
acquiring or disposing of portfolio securities; expenses of registering and
qualifying shares for sale with the Securities and Exchange Commission and
state securities commissions; accounting and legal costs; insurance premiums;
expenses of maintaining the Fund's legal existence and of shareholder meetings;
expenses of preparation and distribution to existing shareholders of reports,
proxies and prospectuses; and fees and expenses of membership in industry
organizations.

For the fiscal year ended December 31, 1995, the Fund paid advisory fees of
$728,848, or approximately 0.65 of 1% of average net assets.

PORTFOLIO MANAGER. Patrick J. Retzer has served as portfolio manager for the
Fund since commencement of its operations. Mr. Retzer is also portfolio
manager of the Heartland Nebraska Tax Free Fund and co-manager of the Heartland
U.S. Government Securities Fund. Mr. Retzer has been Vice President and
Treasurer of Heartland Advisors and Heartland since 1987, a Director of
Heartland Advisors since 1988 and a Director of Heartland since 1993.

<PAGE> 24

24p PROSPECTUS

NET ASSET VALUE CALCULATION

The Fund's net asset value per share is computed daily by dividing the total
value of the investments and other assets of the Fund, less any liabilities, by
the total outstanding shares of the Fund. The net asset value per share is
determined as of the close of the New York Stock Exchange regular trading
(generally 4:00 p.m. Eastern time) on each day the New York Stock Exchange is
opened.

Securities owned by the Fund are valued on the basis of market quotations or at
their fair value. The Fund generally uses fair value, as market quotations for
most municipal bonds are not readily available on a daily basis. Fair value of
the Fund's debt securities is determined by a pricing service approved by
Heartland's Board of Directors, based primarily upon information concerning
market transactions and dealer quotations for similar securities. Debt
securities having maturities of 60 days or less may be valued at acquisition
cost, plus or minus any amortized discount or premium. Any securities or other
assets for which market quotations are not readily available will be valued in
good faith at their fair market value using methods determined by Heartland's
Board of Directors.

DESCRIPTION OF FUND SHARES

Heartland is a diversified open-end management investment company registered
under the Investment Company Act of 1940, which was organized in 1986 as a
Maryland corporation. The authorized common stock of Heartland consists of
one billion shares, $0.001 par value per share. Heartland is a series company,
which means the Board of Directors may establish additional series, and may
increase or decrease the number of shares in each series. The Fund is a
separate non-diversified mutual fund series of Heartland. Currently, the
Heartland family of funds consists of the following series:

<TABLE>
<S> <C> <C>
COMMENCED AUTHORIZED
FUND OPERATIONS SHARES
- --------------------------------------------------------------------------
Value Fund 12/28/84 100,000,000
Small Cap Contrarian Fund 4/27/95 100,000,000
Value & Income Fund 10/26/93 100,000,000
U.S. Government Securities Fund 4/9/87 100,000,000
Wisconsin Tax Free Fund 4/3/92 100,000,000
Nebraska Tax Free Fund 9/27/93 100,000,000
</TABLE>

<PAGE> 25

PROSPECTUS 25p

Each share has one vote, and when issued and paid for in accordance with the
terms of the offering will be fully paid and non-assessable. On matters
affecting an individual Heartland fund (such as approval of advisory contracts
and changes in fundamental policy of a fund) a separate vote of the shares of
that fund is required. Shares of a fund are not entitled to vote on any matter
not affecting that fund. All shares of each Heartland fund vote together in
the election of Directors at each meeting of shareholders at which directors
are to be elected and on other matters as provided by law, or Heartland's
Articles of Incorporation or Bylaws. Heartland's Bylaws do not require that
meetings of shareholders be held annually. However, special meetings of
shareholders may be called for purposes such as electing or removing Directors,
changing fundamental policies or approving investment advisory contracts.

Shares of stock are redeemable at net asset value, less any applicable
contingent deferred sales charge, at the option of the shareholder. Shares
have no preemptive, cumulative voting, subscription or conversion rights and
are freely transferable. Shares can be issued as full shares or fractions of
shares. A fraction of a share has the same kind of rights and privileges as a
full share on a pro rata basis. Shareholder inquiries should be directed to
the Fund at the address shown on the back cover of the Prospectus.

PORTFOLIO TRANSACTIONS

As provided in its Investment Advisory Agreement, Heartland Advisors is
responsible for the Fund's portfolio decisions and the placing of portfolio
transactions. Purchase and sale orders for the Fund's portfolio securities may
be effected through brokers who charge a commission for their services,
although it is expected that transactions in debt securities will generally be
conducted with dealers acting as principals. In executing such transactions,
Heartland Advisors seeks to obtain the best net results for the Fund, taking
into account such factors as price (including the brokerage commission or
dealer spread), size of order, competitive commissions on similar transactions,
difficulty of execution and operation facilities of the firm involved and the
firm's risk in positioning a block of securities. While Heartland Advisors
seeks reasonably competitive rates, it does not necessarily pay the lowest
commission or spreads available. Transactions in smaller issues of municipal
securities may involve specialized services on the part of the broker and
thereby entail higher spreads than would be paid in transactions involving more
widely traded securities.

<PAGE> 26

26p PROSPECTUS

The Fund will not deal with Heartland Advisors in any transaction in which
Heartland Advisors acts as a principal. However, Heartland Advisors may serve
as broker to the Fund in over-the-counter transactions conducted on an agency
basis. Pursuant to plans adopted by Heartland's Board of Directors under, and
subject to, the provisions of Rule 10f-3 under the Investment Company Act of
1940, the Fund may purchase securities in an offering from an underwriter which
is a member of an underwriting syndicate of which Heartland Advisors is also a
member. The plans and Rule 10f-3 limit the securities that may be so
purchased, the time and manner of purchase, the underwriting discount and
amount of purchase, and require a review by the Board of Directors of any such
transactions at least quarterly.

Although Heartland Advisors may serve as a broker for the Fund, such
transactions are expected to be infrequent because the Fund will generally
effect transactions only with dealers acting as principal. In order for
Heartland Advisors to effect any portfolio transactions for the Fund, the
commissions, fees or other remuneration received by Heartland Advisors must be
reasonable and fair compared to, and will not ordinarily be larger than, the
commissions, fees or other remuneration paid to other brokers in connection
with comparable transactions involving similar securities being purchased or
sold in similar markets during a comparable period of time.

Allocation of transactions, including their frequency, to various dealers is
determined by Heartland Advisors, as the Fund's advisor, in its best judgment
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt and efficient execution of orders in an effective
manner at the most favorable price. Subject to this primary consideration,
Heartland Advisors may also consider the provision of supplemental research
services and sales of the shares of Heartland funds as factors in the selection
of broker-dealers to execute portfolio transactions.

PERFORMANCE INFORMATION

From time to time the Fund may advertise its "yield" and "total return." Yield
is based on historical earnings and total return is based on historical
distributions; neither is intended to indicate future performance. The "yield"
of the Fund refers to the income generated by an investment in the Fund over a
one-month period (which period will be stated in the advertisement). This
income is then "annualized." That is, the amount of income generated by the
investment during the month is assumed to be generated each month over a
12-month period and is shown as a percentage of the investment.

<PAGE> 27

PROSPECTUS 27p

"Total return" of the Fund refers to the average annual total return for one,
five and ten-year periods (or the portion thereof during which the Fund has
been in existence). Total return is the change in redemption value of shares
purchased with an initial $1,000 investment, assuming the reinvestment of
dividends and capital gain distributions, and the redemption of the shares at
the end of the period. Performance information should be considered in light
of the Fund's investment objective and policies, characteristics and quality of
its portfolio securities and the market conditions during the applicable
period, and should not be considered as a representation of what may be
achieved in the future. The Fund may also advertise total returns other than
those described above if such information is deemed informative to investors
for use in evaluating the Fund.

In connection with the standardized yield and total return quotations described
above, the Fund may also advertise a standardized tax equivalent yield which
illustrates the yield that would be required on a fully taxable investment to
result in the same net income to an investor in the Fund, after payment of
federal and Wisconsin taxes at the stated rate. The yield is computed by
dividing that portion of the Fund's current yield which is tax-exempt by one
minus a stated federal and Wisconsin income tax rate, and then adding the
product to the value of any yield of the Fund which is not tax-exempt.

The Fund may, from time to time, compare its performance to other mutual funds
with similar investment objectives and to the industry as a whole, as quoted by
ranking services and publications, such as Lipper Analytical Services, Inc.,
Morningstar, Inc., CDA Technologies, Forbes, Fortune, Money and Business Week.
These rating services and magazines rank the performance of the Fund against
all funds over specified periods and in specified categories. The Fund may
also compare its performance to recognized bond market indices, such as the
Lehman Brothers Municipal Bond Index. Further information is contained in the
Statement of Additional Information.

HOW TO REDEEM SHARES

Shareholders may have any or all of their shares redeemed as described below on
any day the Fund is open for business at the next determined net asset value
(see "Net Asset Value Calculation"). Shares of the Fund acquired in exchange
for shares of a Heartland fund subject to a contingent deferred sales charge
may be redeemed at the next determined net asset value less any applicable
contingent deferred sales charge.

<PAGE> 28

28p PROSPECTUS

- --------------------------------------------------------------------------------
BY TELEPHONE:
1-800-432-7856 You may redeem by calling Heartland
or Advisors unless you elected not to have
(414) 289-7000 this privilege on your account application.

- --------------------------------------------------------------------------------
THROUGH SECURITIES REPRESENTATIVES:

You may redeem shares through a broker-dealer or financial institution, which
must promptly forward your instructions to the Agent. The broker-dealer or
financial institution may charge a fee for such services.

- --------------------------------------------------------------------------------
BY MAIL TO:
Firstar Trust Company Send a written request specifying the name of the
Mutual Fund Services Fund, the number of shares to be redeemed, your
3rd Floor name, your account number, and any additional
P.O. Box 701 documents listed below that apply to your
Milwaukee, WI 53201-0701 particular account. The Agent cannot accept
requests specifying a particular date for
BY OVERNIGHT DELIVERY TO: redemption or other special conditions. A
Firstar Trust Company signature guarantee is required for certain
Mutual Fund Services redemptions, including written redemptions over
3rd Floor $25,000. For further information, see "Signature
615 East Michigan St. Guarantees."
Milwaukee, WI 53202

<PAGE> 29

PROSPECTUS 29p

- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
TYPE OF
REGISTRATION REQUIREMENTS
Individual, Joint Tenants, Letter of instruction signed by all persons authorized
Sole Proprietorship, to sign for the account, exactly as it is registered,
Custodial, General Partners accompanied by signature guarantee(s) if required.

Corporations, Associations Letter of instruction accompanied by a corporate
resolution. The letter must be signed by at least one
individual authorized (via corporate resolution) to act
on the account. The corporate resolution must
include a corporate seal or signature guarantee.

Trusts Letter of instruction signed by the Trustee(s) (as Trustee(s)),
with signature guarantee(s). (If the Trustee's name is not registered
on the account, provide a copy of the trust document, certified
within the last 60 days.)
</TABLE>

If you do not fall into any of these registration categories (i.e.,
executors, administrators, conservators, or guardians), please call Heartland
Advisors for further instructions.

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

TELEPHONE REDEMPTIONS. Shares may be redeemed by telephone, unless the
shareholder elects not to have this privilege on the account application. By
establishing the telephone redemption service, the shareholder assumes some
risks for unauthorized transactions. Heartland Advisors has implemented
procedures designed to reasonably assure that telephone instructions are
genuine. These procedures include recording telephone conversations,
requesting verification of various pieces of personal information and providing
written confirmation of such transactions. If the Agent, the Fund, Heartland
Advisors or any of their employees fails to abide by these procedures, the Fund
may be liable to a shareholder for losses he or she suffers from any resulting
unauthorized transaction(s). However, none of the Agent, the Custodian, the
Fund, Heartland Advisors or any of their employees will be liable for losses
suffered by a shareholder which result from following telephone instructions
reasonably believed to be genuine after verification pursuant to these
procedures.

<PAGE> 30

30p PROSPECTUS

There is currently no charge for telephone redemptions, although a
charge may be imposed in the future. Subject to waiver by the Fund in certain
instances, the minimum amount that may be redeemed by telephone is $1,000; all
other redemptions may be done in writing. During periods of substantial
economic or market changes, telephone redemptions may be difficult to
implement. If a shareholder is unable to contact Heartland Advisors or the
Agent by telephone, shares may also be redeemed by delivering the redemption
request to the Agent in person or by mail as described above. The Agent and
the Fund reserve the right to change, modify or terminate this telephone
redemption service at any time.

SIGNATURE GUARANTEES. To protect your account, the Agent and the Fund from
fraud, signature guarantees are required for certain redemptions. Signature
guarantees enable the Agent to be sure that you are the person who has
authorized a redemption from your account. Signature guarantees are required
for: (1) any redemption by mail if the proceeds are to be paid to someone other
than the person(s) or organization in whose name the account is registered or
are to be sent to an address other than the address of the registered holder of
the shares; (2) any redemptions by mail which request that the proceeds be
wired to a bank; (3) any redemptions by mail where the redemption proceeds
exceed $25,000; and (4) requests to transfer the registration of shares to
another owner. These requirements may be waived by the Fund in certain
instances.

The following institutions are acceptable guarantors: (a) commercial banks,
savings and loan associations and savings banks, which are members of the
Federal Deposit Insurance Corporation; (b) credit unions; (c) trust companies;
(d) firms which are members of a domestic stock exchange; and (e) foreign
branches of any of the above. The Agent cannot accept guarantees from notaries
public.

SENDING REDEMPTION PROCEEDS. The Agent will not send redemption proceeds until
all payments for the shares being redeemed have cleared, which may take up to
15 days from the purchase date.

By Mail. The Agent mails checks for redemption proceeds typically within one
or two days, but not later than seven days, after it receives the request and
all necessary documents. The Agent will send redemption proceeds in accordance
with your instructions.

<PAGE> 31

PROSPECTUS 31p

The Agent currently deducts a $10 wire charge from the redemption proceeds.
This charge is subject to change. You will be responsible for any charges
which your bank may make for receiving wires.

CERTAIN CONDITIONS. If, due to redemptions, exchanges or other transfers, a
shareholder's account drops below $500 for three months or more, the Fund has
the right to redeem the shareholder's account, after giving 60 days notice,
unless the shareholder makes additional investments to bring the account value
to $1,000. Alternatively, the Fund may, after giving notice, impose a fee on
accounts maintained below the minimum investment level without an active
automatic investment plan.

The Fund may suspend the right to redeem shares for any period during which
(a) the New York Stock Exchange is closed or the Securities and Exchange
Commission determines that trading on the Exchange is restricted; (b) there is
an emergency as a result of which it is not reasonably practicable for the Fund
to sell its portfolio securities or to calculate the fair value of its net
assets; or (c) the Securities and Exchange Commission may permit for the
protection of shareholders.

<PAGE> 32
32p PROSPECTUS

HEARTLAND FUNDS

General Information and Account/Price Information (24 hrs.):
1-800-432-7856 or (414) 289-7000

HEARTLAND FUNDS

790 North Milwaukee Street
Milwaukee, Wisconsin 53202

INVESTMENT ADVISOR AND DISTRIBUTOR

Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, Wisconsin 53202

CUSTODIAN, TRANSFER AND
DIVIDEND DISBURSING AGENT

Firstar Trust Company
Mutual Fund Services, 3rd Floor
P. O. Box 701
Milwaukee, Wisconsin 53201-0701

AUDITOR

Arthur Andersen LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

COUNSEL

Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

<PAGE> 33
<TABLE>
<S><C>
OVERNIGHT MAIL TO: REGULAR MAIL TO:
Firstar Trust Company Firstar Trust Company
HEARTLAND FUNDS 615 E. Michigan P.O. Box 701
Milwaukee, WI 53202 Milwaukee, WI 53201-0701
AMERICA'S VALUE INVESTOR --------------------------------------------------------
ACCOUNT APPLICATION Shareholder Services: 1-800-432-7856 or (414)289-7000
Wisconsin Tax Free Fund Current Prices, Account Information and Market Updates
--------------------------------------------------------
</TABLE>

1a. INDIVIDUAL AND JOINT ACCOUNTS

Individual Account: Use Lines 1 & 3
Joint Account: Use Lines 1, 2 & 3

1. ____________________________________________________________
FIRST NAME INITIAL LAST NAME

2. ____________________________________________________________
JOINT TENANT INITIAL LAST NAME

SOCIAL SECURITY NUMBER

3. ____________________________________________________________
SOCIAL SECURITY NUMBER OF INDIVIDUAL ON LINE 1

1b. UNIFORM GIFT TO MINOR ACCOUNT (UGMA)

4. ____________________________________________________________
CUSTODIAN'S NAME

5. ____________________________________________________________
MINOR'S NAME MINOR'S SOCIAL SECURITY NUMBER

1c. CORPORATE PARTNERSHIPS, TRUSTS & OTHER

6. ____________________________________________________________
NAME OF CORPORATION OR ENTITY

____________________________________________________________
TAX ID NUMBER

7. REGISTRATION TYPE: / / Unincorporated Association
/ / Corporation / / Partnership / / Trust

2. MAILING ADDRESS

8. ____________________________________________________________
STREET OR P.O. BOX

____________________________________________________________
CITY / STATE / ZIP

____________________________________________________________
HOME PHONE (AREA CODE + NUMBER) WORK PHONE

3. EMPLOYER INFORMATION (required by the NASD)

9. ____________________________________________________________
EMPLOYER NAME

____________________________________________________________
OCCUPATION

____________________________________________________________
STREET OR P.O. BOX

____________________________________________________________
CITY / STATE / ZIP

/ / Yes / / No I am an associated person of a National
Association of Securities Dealers (NASD) Member Firm, other
than Heartland Advisors, Inc.
If yes, name of NASD Member Firm:
____________________________________________________________

4. INVESTMENT

I wish to open a Heartland account in the indicated amount
(minimum initial investment of $1,000, or no minimum
initial investment with the Automatic Investment Plan):

PLEASE MAKE CHECK PAYABLE TO: AMOUNT

Heartland Wisconsin Tax Free Fund $________________

5. AUTOMATIC MONTHLY INVESTMENT PLAN

Each month on the / / 5th, / / 20th or / / 5th and 20th, please withdraw
from my checking account in the amount of $_____________ and invest in my
Wisconsin Tax Free Fund ($50 minimum).

I (We) have read and understand the conditions of Heartland Funds Automatic
Investment Plan. I (We) also understand that the Plan may be terminated or

modified at any time without notice by Heartland Funds or Firstar Trust
Company.

AUTHORIZATION TO MY BANK- Please Attach Voided Check -
(Conditions on reverse side.)

____________________________________________________________
BANK NAME
____________________________________________________________
NAME(S) ON YOUR BANK ACCOUNT
____________________________________________________________
BANK ADDRESS
____________________________________________________________
ACCOUNT NUMBER
____________________________________________________________
CITY / STATE / ZIP
____________________________________________________________
SIGNATURE OF OWNER(S) - REQUIRED FOR AUTOMATIC INVESTING

<PAGE> 34

Be sure to complete all applicable sections and sign!
-----------------------------------------------------

6. DIVIDENDS AND CAPITAL GAINS

All dividends and capital gains distributions will be reinvested in the same
Heartland Fund UNLESS the box below is checked.

/ / Pay dividends and capital gains distributions in cash.
/ / I would like to diversify my portfolio by investing my
distributions in another Heartland Fund - A/C#_________________

7. TELEPHONE PRIVILEGES

I (We) hereby authorize the Agent to honor any telephone requests believed
to be genuine in accordance with the procedures discussed in the prospectus
UNLESS refused by checking the appropriate box below.

TO WITHHOLD SUCH AUTHORIZATION, YOU MUST CHECK THE APPROPRIATE BOX BELOW:

Telephone EXCHANGE Privilege

/ / NO TELEPHONE EXCHANGE PRIVILEGE FOR ME OR MY ADVISOR.

Telephone REDEMPTION Privilege

/ / NO TELEPHONE REDEMPTION PRIVILEGE FOR ME OR MY ADVISOR.

8. OPTIONAL INFORMATION

$________________________ $_______________________
ANNUAL INCOME NET WORTH

9. OTHER FUNDS

/ / Please send a prospectus and application for other Heartland Funds.

/ / Please send a prospectus for the Portico Money Market Fund.

10. DUPLICATE STATEMENT FOR ADVISOR/PLANNER

Please send duplicate confirmation statements to the Financial Advisor,
Planner or other interested party as listed below:

____________________________________________________________
NAME OF ADVISOR / PLANNER / DEALER
____________________________________________________________
COMPANY NAME
____________________________________________________________
ADDRESS
____________________________________________________________
CITY / STATE / ZIP
____________________________________________________________
ADVISOR / PLANNER / DEALER NO.

X
____________________________________________________________
CUSTOMER SIGNATURE (AUTHORIZES DUPLICATE STATEMENTS)

11. SHAREHOLDER SIGNATURE(S)

I (We) am (are) of legal age to have received and read the Prospectus and
agree to its terms. I (We) authorize any instruction contained herein.

I CERTIFY, UNDER PENALTY OF PERJURY:

1. THAT THE SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION
NUMBER IS CORRECT, AND (STRIKE IF NOT TRUE)

2. THAT I AM NOT SUBJECT TO WITHHOLDING EITHER BECAUSE I HAVE
NOT BEEN NOTIFIED THAT I AM SUBJECT TO WITHHOLDING AS A
RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR I WAS
SUBJECT TO WITHHOLDING AND THE INTERNAL REVENUE SERVICE HAS
NOTIFIED ME THAT I AM NO LONGER SUBJECT TO WITHHOLDING.

THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER
THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.

X
____________________________________________________________
SIGNATURE OF SHAREHOLDER DATE

X
____________________________________________________________
SIGNATURE OF CO-OWNER (IF ANY) DATE

SIGN HERE IF APPLICABLE TO YOUR ACCOUNT:
____________________________________________________________

CORPORATE OFFICER / PARTNER / TRUSTEE TITLE

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

________________________________________________________________________________

AUTOMATIC INVESTING - AUTHORIZATION TO MY BANK
(continued from reverse side)

I (We) authorize you via the ACH Network to honor all debit entries initiated by
me from time to time through Firstar Bank, Milwaukee, N.A. on behalf of the
Firstar Trust Company. All such debits are subject to sufficient collected funds
in my account to pay the debit when presented.

I (We) agree that your treatment of each entry, and your rights to respect it,
shall be the same as if it were signed personally by me (or either or both
of us as appropriate). I (We) further agree that if any such entries are
dishonored with good and sufficient cause, you shall be under no liability
whatsoever.

P L E A S E A T T A C H A V O I D E D C H E C K H E R E

<PAGE> 35
RULE 497(c)
REG. NO. 33-11371
FILE NO. 811-4982

HEARTLAND WISCONSIN TAX FREE FUND

The Fund's address is 790 North Milwaukee Street, Milwaukee, Wisconsin
53202, and its telephone number is 414-289-7000 or 1-800-432-7856.

This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus dated April 30, 1996. A copy of the
Prospectus may be obtained without charge by telephone or written request to
the distributor, Heartland Advisors, Inc. ("Heartland Advisors"), or
participating dealers or financial institutions. Shareholder inquiries should
be directed to the Fund in writing or by telephone.

================================================================================

Statement of Additional Information

================================================================================

Shares may be purchased directly from Heartland Advisors, 790 North
Milwaukee Street, Milwaukee, Wisconsin 53202, without a sales charge. For more
complete information, including an account application form, see the Prospectus
or call Heartland Advisors toll free at 1-800-432-7856. Shares may also be
purchased through a broker-dealer or financial institution who may charge a fee
for such service.

THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS APRIL 30, 1996.

<PAGE> 36

INTRODUCTION TO THE HEARTLAND FUNDS

The Heartland family of funds consists of separate series of Heartland
Group, Inc. ("Heartland"), a Maryland corporation registered as an open-end
management investment company. This Statement of Additional Information
relates only to the Heartland Wisconsin Tax Free Fund (the "Fund") which is a
non-diversified fund with a distinct investment objective and program. A
separate Prospectus and related Statement of Additional Information for the
other Heartland funds are available from Heartland Advisors.

The Fund commenced operations on April 3, 1992 and, as of December 31,
1995, the Fund had total assets in excess of $118 million. Based on this
information, the Fund is the oldest and largest double tax free fund in the
State of Wisconsin. The Fund is the only double tax free fund that is 100%
no-load to all investors in the State of Wisconsin.

INVESTMENT OBJECTIVE AND POLICIES

GENERAL

The following information supplements the discussion of the Fund's
investment objective and policies discussed in the Prospectus. Unless
otherwise specified, the investment objective, policies and restrictions of the
Fund are not fundamental, and are therefore subject to change by the Board of
Directors of Heartland without shareholder approval. However, shareholders
will be notified prior to a material change in any such objective, policy or
restriction. The fundamental policies of the Fund, on the other hand, may not
be changed without the approval of at least a majority of the outstanding
shares of the Fund or, if it is less, 67% of the shares represented at a
meeting of shareholders of the Fund at which the holders of 50% or more of the
shares are represented.

TAX EXEMPT OBLIGATIONS

General. The term "Tax Exempt Obligations" as used herein refers to debt
obligations issued by or on behalf of states, territories or possessions of the
United States or the District of Columbia, or their agencies,
instrumentalities, municipalities and

<PAGE> 37

political subdivisions, the interest payable on which is, in the opinion of bond
counsel, excludable from gross income both for purposes of federal income
taxation (except, in certain instances, the alternative minimum tax, depending
upon the shareholder's tax status) and Wisconsin personal income tax. Tax Exempt
Obligations are generally issued to obtain funds for various public purposes,
including the construction or improvement of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass transportation,
schools, streets and water and sewer works. Other public purposes for which Tax
Exempt Obligations may be issued include refunding outstanding obligations,
obtaining funds for general operating expenses and lending such funds to other
public institutions and facilities. In addition, Tax Exempt Obligations may be
issued by or on behalf of public bodies to obtain funds to provide for the
construction, equipping, repair or improvement of housing facilities, convention
or trade show facilities, airport, mass transit, industrial, port or parking
facilities and certain local facilities for water supply, gas, electricity,
sewage or solid waste disposal.

The yields on Tax Exempt Obligations are dependent on a variety of
factors, including the financial condition of the issuer or other obligor
thereon or the revenue source from which debt service is payable, general
economic and monetary conditions, conditions in the relevant market, the size
of a particular issue, maturity of the obligation and the rating of the issue.

Securities in which the Fund may invest, including Tax Exempt Obligations,
are subject to the provisions of bankruptcy, insolvency, reorganization and
other laws affecting the rights and remedies of creditors, such as the Federal
Bankruptcy Code, and laws, if any, which may be enacted by Congress, state
legislatures or other governmental agencies extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations within constitutional limitations. There is also the
possibility that, as a result of litigation or other conditions, the power or
ability of issuers to make interest and principal payments on their Tax Exempt
Obligations may be materially impaired.

From time to time, legislation has been introduced in Congress for the
purpose of restricting the availability of or eliminating the federal income
tax exemption for interest on Tax

<PAGE> 38

Exempt Obligations, some of which have been enacted. Additional proposals may
be introduced in the future which, if enacted, could affect the availability of
Tax Exempt Obligations for investment by the Fund and the value of the Fund's
portfolio. In such event, management of the Fund may discontinue the issuance
of shares to new investors and may re-evaluate the Fund's investment objective
and policies and adopt and implement possible changes to them and the
investment program of the Fund.

As noted in the Prospectus, the Fund invests primarily in municipal bonds
judged by Heartland Advisors, the Fund's investment advisor, to be of
investment grade quality. Heartland Advisors considers Tax Exempt Obligations
to be investment grade if rated by Moody's, S&P or Fitch within their four
highest rating categories for municipal securities, or securities which are
unrated, provided that such securities are judged by Heartland Advisors, at the
time of purchase, to be of comparable quality to securities rated within such
four highest categories. A description of the rating categories is contained
in Appendix A attached to this Statement of Additional Information. Bonds
rated in the fourth highest rating category are generally more sensitive to
economic changes than are those rated in one of the top three categories, and
these bonds generally have speculative characteristics.

Subsequent to being purchased by the Fund, an issue of rated Tax Exempt
Obligations may cease to be rated or its rating may be reduced below the top
four categories. Neither event will require the sale of such Tax Exempt
Obligations by the Fund, but Heartland Advisors will consider such event in
determining whether the Fund should continue to hold the Tax Exempt
Obligations. To the extent that the ratings given by Moody's, S&P or Fitch for
Tax Exempt Obligations may change as a result of changes in such organizations
or their rating systems, the Fund will attempt to use comparable ratings as
standards for their investments in accordance with the investment policies
contained in the Prospectus and this Statement of Additional Information.

The ratings of Moody's, S&P and Fitch represent their opinions as to the
quality of the Tax Exempt Obligations which they undertake to rate. Investors
should bear in mind, however, that ratings are relative and subjective and are
not absolute standards of quality. Although these ratings are an initial

<PAGE> 39

consideration for selection of portfolio investments, Heartland Advisors will
subject these securities to other evaluative criteria prior to investing in
such securities, and may invest in unrated securities which it believes, based
on information available to it and its own analysis, are of comparable quality
to those securities that are rated in the top four categories.

Non-Investment Grade Bonds. The Fund may invest up to 25% of its assets
in non-investment grade bonds (those rated below the four highest categories by
Moody's, S&P or Fitch or, if unrated, judged by Heartland Advisors to be of
comparable quality), provided that the Fund may not invest in bonds rated below
B at the time of purchase. These so-called "junk bonds" are regarded, on
balance, as predominantly speculative with respect to the capacity of the
issuer to pay interest and repay principal in accordance with the terms of the
obligation. While such bonds typically offer higher rates of return than
investment grade bonds, they also involve greater risk, including greater risk
of default. An economic downturn could severely disrupt the market for such
high yield bonds and adversely affect their value and the ability of the
issuers to repay principal and interest. The rate of incidence of default on
junk bonds is likely to increase during times of economic downturns and
extended periods of increasing interest rates. Yields on junk bonds will
fluctuate over time, and are generally more volatile than yields on investment
grade bonds.

The secondary trading market for junk bonds may be less well established
than for investment grade bonds, and such bonds may therefore be only thinly
traded. As a result, there may be no readily ascertainable market value of
such securities, in which case it will be more difficult for Heartland's Board
of Directors to value accurately the securities, and consequently the
investment portfolio. Under such circumstances, the Board's subjective
judgment will play a greater role in the valuation. Additionally, adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidities of junk bonds, especially in
a thinly traded market. To the extent such securities are or become "illiquid"
in the judgment of Heartland's Board of Directors, the Fund's ability to
purchase and hold such securities will be subject to its investment restriction
limiting its investment in illiquid

<PAGE> 40

securities to 10% of its net assets. See "Investment Restrictions."

As noted above, the Fund will not invest in junk bonds that are rated
below the fifth or sixth rating categories by any of S&P, Moody's, or Fitch (Ba
and B for Moody's and BB and B for S&P and Fitch) or, if unrated, judged
comparable by Heartland Advisors. Bonds rated in the first of those categories
have less near-term vulnerability to default than other speculative issues,
however they face major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate capacity to
meet timely interest and principal payments. However, business and financial
alternatives available to obligors of such bonds can generally be identified
which could assist them in satisfying their debt service requirements. Bonds
rated in the second of these two categories are considered highly speculative.
While the issuers of such bonds must be currently meeting debt service
requirements in order to achieve this rating, adverse business, financial or
economic conditions could likely impair the issuer's capacity or willingness to
pay interest and repay principal. A detailed description of the
characteristics associated with the various debt credit ratings established by
S&P, Moody's and Fitch is set forth in Appendix A to this Statement of
Additional Information.

While rating categories help identify credit risks associated with bonds,
they do not evaluate the market value risk of junk bonds. Additionally, the
credit rating agencies may fail to promptly change the credit ratings to
reflect subsequent events. Accordingly, Heartland's Board of Directors and
Heartland Advisors continuously monitor the issuers of junk bonds held in the
Fund's portfolio to assess and determine whether the issuers will have
sufficient cash flow to meet required principal and interest payments, and to
assure the continued liquidity of such bonds so that the Fund can meet
redemption requests.

Floating and Variable Rate Demand Notes. The Fund may purchase floating
and variable rate demand notes. Generally, such notes are secured by letters
of credit or other credit support arrangements provided by banks. Such notes
normally have a stated long-term maturity but permit the holder to tender the
note for purchase and payment of principal and accrued interest upon a
specified number of days notice. The issuer of floating and

<PAGE> 41

variable rate demand notes normally has a corresponding right, after a given
period, to prepay in its discretion the outstanding principal amount of the
note plus accrued interest upon a specified number of days notice to the
noteholders. The interest rate on a floating rate demand note is based on a
specified interest index, such as a bank's prime rate, and is adjusted
automatically with changes in the index. The interest rate on a variable rate
demand note is adjusted at specified intervals, based upon current market
conditions. Heartland Advisors monitors the creditworthiness of issuers of
floating and variable rate demand notes in the Fund's portfolio.

State or Municipal Lease Obligations. The Fund may invest a portion of
its assets in state or municipal leases and participation interests therein.
The leases may take the form of a lease with an option to purchase, an
installment purchase or a conditional sales contract which is entered into by
state and local governments and authorities to purchase or lease a wide array
of equipment such as fire, sanitation or police vehicles or telecommunications
equipment, buildings or other capital assets. State or municipal lease
obligations frequently have the special risks described below which are not
associated with general obligation or revenue bonds issued by public bodies.

The constitution and statutes of many states contain requirements with
which the state and municipalities must comply whenever incurring debt.
Depending on the circumstances, these requirements may include approving voter
referenda, debt limits, interest rate limits and public sale requirements.
Leases have evolved as a means for public bodies to acquire property and
equipment without needing to comply with all of the constitutional and
statutory requirements for the issuance of debt. The debt-issuance limitations
may be inapplicable for one or more of the following reasons: (i) the
inclusion in many leases or contracts of "nonappropriation" clauses that
provide that the public body has no obligation to make future payments under
the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis (the
"nonappropriation" clause); (ii) the exclusion of a lease or conditional sales
contract from the definition of indebtedness under relevant state law; or (iii)
the lease provides for termination at the option of the public body at the end
of each

<PAGE> 42

fiscal year for any reason or, in some cases, automatically if not
affirmatively renewed.

Typically, if the lease is terminated by the public body for
nonappropriation or another reason not constituting a default under the lease,
the lessor, or holder of participation interest in the lease, is without
recourse to the general credit of the public body and may be limited to
repossession of the leased property. The disposition of the leased property by
the lessor in the event of a lease termination might prove difficult and could
result in a loss to the holders of participation interests.

When-Issued Purchases. The Fund may make commitments to purchase Tax
Exempt Obligations on a "when-issued" basis, that is, delivery and payment for
the obligations normally takes place at a date after the commitment to purchase
although the payment obligation and the coupon rate have been established
before the time the Fund enters into the commitment. The settlement date
usually occurs within one week of the purchase of notes and within one month of
the purchase of bonds. The Fund intends to make commitments to purchase
obligations with the intention of actually acquiring them, but may sell the
obligations before the settlement date if such action is advisable or necessary
as a matter of investment strategy. At the time the Fund makes a commitment to
purchase an obligation, it will record the transaction and reflect the value of
the obligation in determining its net asset value. The Fund's custodian,
Firstar Trust Company (the "Custodian"), will maintain on a daily basis a
separate account consisting of cash or liquid debt securities with a value at
least equal to the amount of the Fund's commitments to purchase "when-issued"
obligations.

Obligations purchased on a "when-issued" basis or held in the Fund's
portfolio are subject to changes in market value based not only upon the
public's perception of the creditworthiness of the issuer, but also upon
changes in the level of interest rates. In the absence of a change in credit
characteristics, which would likely cause changes in value, the value of
portfolio investments can be expected to decline in periods of rising interest
rates and to increase in periods of declining interest rates.

When payment is made for "when-issued" securities, the Fund will meet its
obligation from its then available cash flow, sale

<PAGE> 43

of securities held in the separate account, sale of other securities or,
although it would normally not expect to do so, from sale of the "when-issued"
securities themselves (which may have a market value greater or lesser than the
Fund's obligation). Sale of securities to meet such obligations would involve
a greater potential for the realization of capital gains, which could cause the
Fund to realize income not exempt from federal and Wisconsin personal income
tax.

TAXABLE OBLIGATIONS

As set forth in the Prospectus, under certain circumstances and subject to
certain limitations, the Fund may invest in obligations and instruments, the
interest on which is includable in gross income for purposes of federal and
state income taxation.

Government Obligations. The Fund may invest in securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities. These
securities include a variety of Treasury securities, which differ in their
interest rates, maturities and times of issuance. Treasury Bills generally
have maturities of one year or less; Treasury Notes generally have maturities
of one to ten years; and Treasury Bonds generally have maturities of greater
than ten years. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, such as Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury; other obligations, such as those of the Federal
Home Loan Banks, are secured by the right of the issuer to borrow from the
Treasury; other obligations, such as those issued by the Federal National
Mortgage Association, are supported by the discretionary authority of the U.S.
Government to purchase certain obligations of the agency or instrumentality;
and other obligations, such as those issued by the Student Loan Marketing
Association, are supported only by the credit of the instrumentality itself.
Although the U.S. Government provides financial support to such U.S.
Government-sponsored agencies or instrumentalities, no assurance can be given
that it will always do so, since it is not so obligated by law. The Fund will
invest in such securities only when Heartland Advisors is satisfied that the
credit risk with respect to the issuer is minimal.

<PAGE> 44

Repurchase Agreements. The Fund may invest in repurchase agreements. The
Custodian will hold the securities underlying any repurchase agreement or such
securities will be part of the Federal Reserve Book Entry System. The market
value of the collateral underlying the repurchase agreement will be determined
on each business day. If at any time the market value of the collateral falls
below the repurchase price of the repurchase agreement (including any accrued
interest), the obligor under the agreement will promptly furnish additional
collateral to the Custodian (so the total collateral is an amount at least
equal to the repurchase price plus accrued interest).

Other Taxable Investments. As noted in the Prospectus, the Fund also may
invest temporarily in certificates of deposit, bankers' acceptances and other
time deposits.

OPTIONS, FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

Writing Covered Call Options. The Fund may write covered call options on
securities related to its investments (such as U.S. Government securities) and
enter into closing transactions with respect to such options. In writing
covered call options, the Fund expects to generate additional premium income
which should serve to enhance the Fund's total return and reduce the effect of
any decline in the market price of the securities in the Fund's portfolio.

A call option gives the holder (buyer) the right to purchase a specified
security at a stated price (the exercise price) at any time before a specified
date (the expiration date). The term "covered" call option means that the Fund
will own the securities subject to the option or have an unconditional right to
purchase the same underlying security at a price equal to or less than the
exercise price of the "covered" option, or will establish and maintain with its
Custodian, for the term of the option, an account consisting of cash, U.S.
Government securities or other liquid high-grade debt obligations having a
value equal to the fluctuating market value of the optioned securities.

<PAGE> 45

value is greater, a call writer gives up some ability to participate in the
underlying price increases. If a call option which the Fund has written
expires, the Fund will realize a gain in the amount of the premium; however,
such gain may be offset by a decline in the market value of the underlying
security during the option period. If the call option is exercised, the Fund
will realize a gain or loss from the sale of the underlying security.

The premium received is the market value of an option. The premium the
Fund receives from writing a call option reflects, among other things, the
current market price of the underlying security, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying security and the length of the option period. The premium received
by the Fund for writing covered call options will be recorded as a cash asset
and a liability of the Fund. The liability will be adjusted daily with a
corresponding adjustment to the Fund's total assets, to reflect the option's
current market value, which will be the latest sale price at the time at which
the net asset value per share of the Fund is computed (close of regular trading
on the New York Stock Exchange), or, in the absence of such sale, the latest
asked price. The liability will be extinguished and the net gain or loss on
the option realized upon expiration of the option, the purchase of an identical
option in a closing transaction, or delivery of the underlying security upon
the exercise of the option. The Fund does not consider a security covered by a
call to be "pledged" as that term is used in the Fund's policy limiting the
pledging of its assets.

Closing transactions may be effected by purchasing a call option in order
to realize a profit on an outstanding call option, to prevent an underlying
security from being called, or to permit the sale of the underlying security.
Furthermore, effecting a closing transaction may permit the Fund to write
another call option on the underlying security with either a different exercise
price or expiration date or both. If the Fund desires to sell a particular
security from its portfolio on which it has written a call option, it will seek
to effect a closing transaction prior to, or concurrently with, the sale of the
security. There is, of course, no assurance that the Fund will be able to
effect such closing transactions at a favorable price. The Fund may pay
transaction costs in connection with the writing or purchase of options to
close out previously written options, which costs are

<PAGE> 46

normally higher than the transaction costs applicable to purchases and sales of
portfolio securities.

Writing Covered Put Options. The Fund may write covered put options on
securities related to its investments, and may purchase options to close out
options previously written by the Fund. As the writer (seller) of a put
option, the Fund has the obligation to buy from the purchaser the underlying
security at the exercise price during the option period. In return for receipt
of the premium, the Fund assumes the obligation to pay the exercise price for
the option's underlying security if the other party to the option chooses to
exercise it. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.

The Fund will write put options only on a covered basis, which means that
the Fund will maintain a segregated account consisting of cash, U.S. Government
securities or other liquid high-grade debt obligations in an amount not less
than the exercise price of the option, or the Fund will own an option to sell
the underlying security subject to the option having an exercise price equal to
or greater than the exercise price of "covered" options at all times while the
put option is outstanding. The Fund may seek to terminate its position in a
put option it writes before exercise by closing out the option in the secondary
market at its current price. If the secondary market is not liquid for a put
option the Fund has written, however, the Fund must continue to be prepared to
pay the exercise price while the option is outstanding, regardless of price
changes, and must continue to segregate assets to cover its position.

If the price of the underlying security rises, a put writer would
generally expect to profit, although its gain would be limited to the amount of
the premium it received for writing the put because it did not own the
underlying security and therefore would not benefit from the appreciation in
price. If the price of the underlying security falls, the put writer would
expect to suffer a loss, which loss could be substantial. However, the loss
should be less than the loss experienced if the Fund had purchased the
underlying security directly because the premium received for writing the
option will mitigate the effects of the decline.

<PAGE> 47

Purchasing Put Options. The Fund may purchase put options on securities
related to its investments (such as U.S. Government securities). As the holder
of a put option, the Fund has the right to sell the underlying security at the
exercise price at any time during the option period. The Fund may also enter
into closing transactions with respect to such options, exercise them or permit
them to expire. The Fund may purchase a put option on a security related to
its investments as a defensive technique in order to protect against an
anticipated decline in the value of the security. Such hedge protection is
provided only during the life of the put option when the Fund, as holder of the
put option, is able to sell the underlying security at the put exercise price
regardless of any decline in the underlying security's market price. The
premium paid for the put option and any transaction costs would reduce any gain
otherwise available for distribution when the security is eventually sold.

The premium paid by the Fund when purchasing a put option will be recorded
as an asset of the Fund. This asset will be adjusted daily to the option's
current market value, which will be the latest sale price at the time at which
the net asset value per share of the Fund is computed (close of regular trading
on the New York Stock Exchange), or, in the absence of such sale, the latest
bid price. This asset will be extinguished upon expiration of the option, the
selling (writing) of an identical option in a closing transaction, or the
delivery of the underlying security upon the exercise of the option.

Purchasing Call Options. The Fund may purchase call options on securities
related to its investments. As the holder of a call option, the Fund has the
right to purchase the underlying security at the exercise price at any time
during the option period. The Fund may enter into closing sale transactions
with respect to such options, exercise them or permit them to expire. A call
buyer typically attempts to participate in potential price increases of the
underlying security with risk limited to the cost of the option if security
prices fall. At the same time, the buyer can expect to suffer a loss if
security prices do not rise sufficiently to offset the cost of the option.

Index Options. The Fund may buy and sell options on indices related to
its investments (such as municipal bond or U.S. Treasury securities indices),
and may enter into closing trans-

<PAGE> 48

actions with respect to such options. Options on indices would be used in a
manner similar to the use of options on securities; however, upon the exercise
of an index option, settlement occurs in cash rather than by delivery of an
underlying security, with the exercising option holder receiving the difference
between the closing level of the index upon which the option is based and the
exercise price of the option. Unlike options on specific debt instruments,
gain or loss on an index option depends on the price movements in the
instruments underlying the index rather than price movements in individual debt
instruments.

Options on Futures Contracts. The Fund may buy and sell options on
futures contracts and enter into closing transactions with respect to such
options. Options on futures contracts would be used in a manner similar to the
use of options on securities. An option on a futures contract gives the
purchaser the right, in return for the premium paid, to assume a position in a
futures contract (a long position if the option is a call, and a short position
if the option is a put) at a specified exercise price at any time during the
option exercise. The writer of the option is required upon exercise to assume
an offsetting futures position at a specified exercise price at any time during
the period of the option. When writing an option on a futures contract the
Fund will be required to make margin payments as described below for futures
contracts.

Futures Contracts. The Fund may purchase and sell futures contracts,
including interest rate and securities index futures contracts, that are traded
on a recognized U.S. exchange, board of trade or similar entity, or quoted on
an automated quotation system.

<PAGE> 49

in a segregated account in the name of the executing futures commission
merchant when the contract is entered into. The margin required for a
particular futures contract is set by the exchange on which the contract is
traded and may be significantly modified from time to time by the exchange
during the term of the contract. Futures contracts are customarily purchased
and sold on margins that may range upward from less than 5% of the value of the
contract being traded.

If the price of an open futures contract changes (by increase in the case
of a sale or by decrease in the case of a purchase) so that the loss of the
futures contract reaches a point at which the margin on deposit does not
satisfy margin requirements, the broker will require the payment of "variation
margin" to settle the change in value on a daily basis. If the value of a
position increases because of favorable price changes in the futures contract
so that the margin deposit exceeds the required margin, the broker will pay the
excess to the Fund. In computing daily net asset value, the Fund marks to
market the current value of its open futures contracts. The Fund expects to
earn interest income on its margin deposits.

Futures contracts can be held until their delivery dates, or can be closed
out before then if a liquid secondary market is available. Closing out an open
futures contract purchase or sale is effected by entering into an offsetting
futures contract sale or purchase, respectively, for the same aggregate amount
of the identical securities and the same delivery date. If the Fund closes out
an open futures contract by entering into an offsetting futures contract, and
the offsetting purchase price is less than the original sale price, the Fund
realizes a gain; if it is more, the Fund realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Fund
realizes a gain; if it is less, the Fund realizes a loss. The transaction
costs must also be included in these calculations. There can be no assurance
that the Fund will be able to enter into an offsetting transaction with respect
to a particular futures contract at a particular time. If the Fund is not able
to enter into an offsetting transaction, the Fund will continue to be required
to maintain the margin deposits on the futures contract.

The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument.

<PAGE> 50

Therefore, purchasing futures contracts will tend to increase the Fund's
exposure to positive and negative price fluctuations in the underlying
instrument, much as if it had purchased the underlying instrument directly.
When the Fund sells a futures contract, by contrast, the value of its futures
position will tend to move in a direction contrary to the market. Selling
futures contracts, therefore, will tend to offset both positive and negative
market price changes, much as if the underlying instrument had been sold.

A public market exists in futures contracts covering various fixed income
securities (including long-term U.S. Treasury Bonds, 10-year U.S. Treasury
Notes, Government National Mortgage Association modified pass-through
mortgage-backed certificates, three-month U.S. Treasury Bills, and 90-day
commercial paper), as well as municipal bonds and related indices. The Fund
reserves the right to effect transactions in other securities and indices which
may be developed in the future.

LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS

The Fund will engage in transactions in options, futures contracts and
options thereon only for bona fide hedging and risk management purposes, in
each case in accordance with the rules and regulations of the Commodity Futures
Trading Commission, and not for speculation.

<PAGE> 51

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); (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; or (c) the aggregate
market value of all portfolio securities covering call options written by the
Fund would exceed 20% of the Fund's total assets. The above limitations on the
Fund's investments in futures contracts and options and the policies regarding
futures contracts and options discussed elsewhere in this Statement of
Additional Information are not fundamental policies of the Fund and may be
changed by Heartland's Board of Directors as permitted by applicable regulatory
authority.

Combined Positions. The Fund may purchase and write options in
combination with each other, or in combination with futures contracts, to
adjust the risk and return characteristics of the overall position. For
example, the Fund may purchase a put option and write a call option on the same
underlying instrument in order to construct a combined position whose risk and
return characteristics are similar to selling a futures contract. Another
possible combined position would involve writing a call option at one exercise
price and buying a call option at a lower price, in order to reduce the risks
of the written call option in the event of a substantial price increase.
Because combined positions involve multiple trades, they may result in higher
transaction costs and may be more difficult to open and close out.

RISKS IN OPTIONS AND FUTURES TRANSACTIONS

<PAGE> 52

in volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same way.
Imperfect correlation may also result from different levels of demand in the
options and futures markets and the securities markets, from structural
differences in how options and futures and securities are traded, or from
imposition of daily price fluctuation limits or trading halts by an exchange.
If price changes in the Fund's options or futures 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.

The risks of poor correlation may be increased for the Fund because
available exchange-traded options and standardized futures contracts will not
match the Fund's current or anticipated investments exactly. For example, even
the use of an option or a futures contract on a municipal bond index may result
in an imperfect correlation since the index generally will be composed of a
much broader range of municipal securities then the Tax Exempt Obligations in
which the Fund will be invested, which are limited to securities exempt from
federal income tax and Wisconsin personal income tax. To the extent that the
Fund's hedging vehicles do not match its current or anticipated investments,
there is an increased risk that the options or futures positions will not track
the performance of the Fund's other investments.

Because of the low margin deposits required, futures trading involves a
high degree of leverage. A relatively small price movement in futures
contracts could result in an immediate and substantial gain or loss to the
Fund. Therefore, a purchase or sale of a futures contract may result in losses
in excess of the amount invested in the futures contract by the Fund.

There can be no assurance that a liquid secondary market will exist for
any particular options or futures contracts at any particular time. On
volatile trading days when the price fluctuation limit is reached or a trading
halt is imposed, it may be impossible for the Fund to enter into new positions
or close out existing positions. If the secondary market for a futures
contract is not liquid because of price fluctuation limits or otherwise, it
could prevent prompt liquidation of unfavorable positions, and potentially
require the Fund to continue to hold the position until delivery or expiration
regardless of changes in its

<PAGE> 53

value. As a result, the Fund's access to other assets held to cover its
options or futures positions could also be impaired.

DIVERSIFICATION

The number of issues of securities which meet the Fund's investment
objective and criteria may be somewhat limited. As a result, a relatively high
percentage of the Fund's assets may be invested from time to time in the
obligations of a limited number of issuers, some of which may be subject to the
same economic trends and/or be located in the same geographic area. The Fund's
portfolio securities may therefore be more susceptible to any single economic,
political or regulatory occurrence than the portfolio securities of diversified
investment companies.

The Fund will operate as a non-diversified management investment company
under the 1940 Act, but intends to comply with the diversification requirements
contained in the Internal Revenue Code of 1986. These provisions of the
Internal Revenue Code presently require that, at the end of each quarter of the
Fund's taxable year: (i) at least 50% of the market value of the Fund's assets
must be invested in cash, government securities, the securities of other
regulated investment companies and other securities, with such other securities
of any one issuer limited for the purposes of this calculation to an amount not
greater than 5% of the value of the Fund's total assets; and (ii) not more than
25% of the value of the Fund's total assets can be invested in the securities
of any one issuer (other than government securities or the securities of other
regulated investment companies).

<PAGE> 54

be the sole issuer of the security. Moreover, if the security is backed only
by revenues of an enterprise or specific projects of the state, territory or
District, or a political subdivision or agency, authority or instrumentality
thereof, such as utility revenue bonds, and the full faith and credit of the
governmental unit is not pledged to the payment of principal and interest on
the obligation, such enterprise or specific project is deemed the sole issuer.
Similarly, in the case of an industrial development bond, if that bond is
backed only by certain revenues to be received from the non-governmental user
of the project financed by the bond, then such non-governmental user is deemed
to be the sole issuer. If, however, in any of the above cases, a state,
territory or the District, or a political subdivision of any of them, or some
other entity, guarantees a security and the value of all securities issued or
guaranteed by the guarantor and owned by the Fund exceeds 10% of the value of
the Fund's total assets, the guarantee is considered a separate security and is
treated as an issue of the guarantor.

Health Care Obligations. The Fund may invest, from time to time, 25% or
more of its total assets in obligations issued by public bodies, including
state and municipal authorities, to finance hospital or health care facilities
or equipment. The ability of any subject health care entity or hospital to
make payments in amounts sufficient to pay maturing principal and interest
obligations is dependent, among other things, upon the revenues, costs and
occupancy levels of the subject health care entity or hospital. Revenues and
expenses of hospitals and health care facilities will be affected by future
events and conditions relating generally to, among other things, demand for
health care services at the particular type of facility, increasing costs of
medical technology, utilization practices of physicians, the ability of the
facilities to provide the services required by patients, employee strikes and
other adverse labor actions, economic developments in the service area,
demographic changes, greater longevity and the higher medical expenses of
treating the elderly, increased competition from other health care providers
and rates that can be charged for the services provided. Additionally, a major
portion of hospital revenues typically is derived from federal or state
programs such as Medicare and Medicaid and from other insurers. The future
solvency of the Medicare trust fund is periodically subject to question.
Changes in the compensation and reimbursement formulas of these

<PAGE> 55

governmental programs or in the rates of insurers may reduce revenues available
for the payment of principal of or interest on hospital revenue bonds.
Governmental legislation or regulations and other factors, such as the
inability to obtain sufficient malpractice insurance, may also adversely impact
upon the revenues or costs of hospitals. Future actions by the federal
government with respect to Medicare and by the federal and state governments
with respect to Medicaid, reducing the total amount of funds available for
either or both of these programs or changing the reimbursement regulations or
their interpretation, could adversely affect the amount of reimbursement
available to hospital facilities. A number of additional legislative proposals
concerning health care are typically under review by the United States Congress
at any given time. These proposals span a wide range of topics, including cost
controls, national health insurance, incentives for competition in the
provision of health care services, tax incentives and penalties related to
health care insurance premiums and promotion of prepaid health care plans.

GEOGRAPHIC CONCENTRATIONS

The following information is a brief summary of factors affecting
Wisconsin and Puerto Rico (certain jurisdictions in which the Fund invests) and
does not purport to be a complete description of such factors.

Factors Affecting Wisconsin. Wisconsin's economy, although fairly
diverse, is primarily concentrated in the services industry (accounting for
approximately 25% of total non-farm employment) and secondarily in the
manufacture of durable goods and retail. Federal, state and local government
in Wisconsin is also a major employer. The top five products made in Wisconsin
are dairy products, motor vehicles, paper, meat products and small engines.

Wisconsin continues to outperform the national economy. Wisconsin's
unemployment rate has been below the national average for the past eight years.
In November 1995, the state's unemployment rate was 3.9%, compared to a
national unemployment rate of approximately 6%. The state is highly ranked in
terms of job creation, especially in the creation of manufacturing jobs. Since
1987, the state's personal income tax rate has been reduced from 7.9% to 6.93%,
and the current Governor, Tommy G. Thompson, has expressed his desire to
implement further reductions. At the

<PAGE> 56

same time, state spending has been controlled, with balanced budgets
experienced in each of the last eight years. Personal income in Wisconsin
continues to increase at a rate above that of the national average.

It is anticipated that the Wisconsin economy will expand in 1996 and 1997
at a somewhat slower pace than in recent years, with the state's labor market
expected to remain tight during those years.

Wisconsin has an extremely diverse revenue-raising structure. More than
one-third of its total revenue is derived from the various taxes levied by the
State. The remainder comes from the federal government and from various kinds
of fees, licenses, permits and service charges paid by users of specific
services, privileges or facilities. Wisconsin's tax structure has a diverse
underlying base consisting of income, general and special product sales,
transfer of wealth and property value. About one-third of all taxes collected
by the State of Wisconsin is returned to local units of government. The
remaining funds are used for state operations and aid to individuals and
organizations. The combined operations of three state agencies (Department of
Health and Social Services, Department of Public Instruction and the University
of Wisconsin System) account for more than 50% of total state expenditures.

Wisconsin has the authority to increase appropriations from or reduce
taxes below levels established in its budget. In recent years, Wisconsin has
adopted appropriation measures subsequent to passage of its budget act.
However, it has been the State's policy that supplemental appropriations
adopted by the State Legislature must be within revenue projections for the
relevant fiscal period or balanced by reductions in other appropriations. The
spending from additional appropriations historically has been matched by
reduced disbursements, increased revenues or a combination of the two.

Wisconsin has experienced and anticipates it will continue to experience
certain periods when its general fund is in a negative cash position. State
statutes provide certain administrative remedies to deal with these periods.
The Secretary of Administration may temporarily reallocate up to $400 million
of available cash in other funds to the general fund. The Secretary

<PAGE> 57

of Administration may set priorities for payments from the general fund as well
as pro rate certain payments. State statutes mandate that all payments must be
in accordance with the following order of preference: (a) all direct and
indirect payments of principal and interest on Wisconsin general obligation
debt must have first priority and may not be pro rated or reduced; (b) all
direct and indirect payments of principal and interest on operating notes must
take second priority and may not be pro rated or reduced; (c) all Wisconsin
employee payrolls must take third priority, but may be pro rated or reduced;
and (d) all other payments are paid in a priority determined by the Secretary
of Administration and may be pro rated or reduced.

Governor Thompson's 1995-97 budget is expected to decrease local property
taxes by approximately $1.2 billion, provided his assumptions are correct. It
is not clear what effect, if any, such property tax relief will have on the
Fund's investments or prospects.

Factors Affecting Puerto Rico. The Fund may invest in obligations of the
Commonwealth of Puerto Rico and its political subdivisions, agencies and
instrumentalities, that qualify as Tax Exempt Obligations. The majority of
Puerto Rico's debt is issued by 10 of the major public agencies that are
responsible for many of its public functions, such as water, wastewater,
highways, telecommunications, education and public construction.

The Puerto Rico economy generally parallels the economic cycles of the
United States, as most goods are imported from the U.S. Interest rates also
generally mirror those of the United States. The Puerto Rico economy over the
past few decades has been dominated by capital-intensive manufacturing
industries such as pharmaceuticals and chemicals, instruments, electronics,
apparel, food products and machinery. Additional major economic sectors
include government, trade and services. Industrial production in Puerto Rico
has risen by 5% during the past two years, although slower increases are
expected over the next few years as a result of growing uncertainty over the
continuation of the Section 936 tax credits applicable to income earned in
Puerto Rico. High-tech economic sectors have shown steady growth, while
labor-intensive industries are generally declining. The unemployment rate has
remained at approximately 14% to 16% during

<PAGE> 58

the past few years, and is expected to remain at such levels over the
short-term.

The Puerto Rico economy remains vulnerable to changes in world oil prices
(98% of Puerto Rico's oil needs are supplied by imports), American trade,
foreign policy and levels of federal assistance. Per capita income levels,
while the highest in the Caribbean at slightly more than $7,000, lag far behind
the United States.

Puerto Rico's real gross national product grew 3.3% in fiscal year 1995
from 2.9% in 1994. The Commonwealth's GNP is expected to grow by about 2.6% in
1996. Economic expansion has been dampened by uncertainty over Section 936 tax
credits and the plebescite regarding statehood, as well as a sluggish U.S.
economy. Strong growth in tourism, car sales and shopping center development
has been offset by weakness in the manufacturing, insurance and government
sectors. Construction activity has grown in recent years, as the government
has increased its spending on public works and infrastructure improvements.

Puerto Rico's central government budget is expected to be $15.6 billion
for fiscal 1996, representing a 1.9% decrease from 1995 due in part to domestic
tax reform measures. Future spending will be limited by a lack of new revenue
sources, but budgetary demands are expected to increase due to a poor
infrastructure, especially in power generation, waste disposal, roads and water
and facilities. Debt ratios for Puerto Rico are high as it assumes much of the
responsibility for the local infrastructure. The Commonwealth's general
obligation debt is secured by a first lien on all available revenues. Debt
policy has sought to keep the rate of growth of debt at or below that of the
gross domestic product, although recent substantial borrowings and general
economic conditions mark a departure from this policy. The per capita
guaranteed debt burden is high at over $1,000, of which guaranteed and
tax-supported debt likely will exceed $2,000. Debt service is more manageable
relative to total expenditures at roughly 12% of combined general and debt
service fund expenditures.

<PAGE> 59

Before the enactment of the Omnibus Budget Reconciliation Act of 1993
("OBRA"), under Section 936 of the Internal Revenue Code, domestic corporations
with a substantial amount of their business operations in Puerto Rico could
elect to claim a tax credit under Section 936 that effectively eliminated their
U.S. income tax on income from business operations conducted in Puerto Rico.
OBRA has now limited the amount of the Section 936 credit available to
corporations. Generally, a corporation may elect between two alternative
limitations on the amount of the credit. The first limitation is based on the
amount of the economic activity it conducts in Puerto Rico (measured by
compensation paid there and depreciation claimed on property located and used
in a trade or business there); the second is based on an applicable percentage
(40%, once the limitation is fully-phased in by 1998) of the amount of the
credit that would have been available to the corporation under pre-OBRA law.
It is impossible to predict with certainty whether, or to what extent, these
limitations on the Section 936 credit will result in a decrease in the business
operations of U.S. corporations in Puerto Rico. Moreover, proposals under
consideration by the U.S. Congress would, if adopted, eliminate Section 936 tax
benefits for new investment and phase out such benefits for existing investment
over 6-10 years. Further weakening or elimination of the Section 936 tax
benefits would likely erode Puerto Rico's competitive advantage. The North
American Free Trade Agreement may also cause companies to transfer their
operations from Puerto Rico to Mexico with its lower wages and transportation
costs.

In August 1983, the United States enacted legislation widely known as the
Caribbean Basin Initiative ("CBI"). CBI, which is designed to encourage
economic development in the Caribbean and Central America, provides for: (a)
unilateral, duty-free access to a United States market for Caribbean Basin
products, except for a few selected commodities, for a period of 12 years; (b)
tax deductions for conventions held in the Caribbean; and (c) direct economic
assistance payments by the United States. CBI contains a number of measures
designed to maintain the competitive position of Puerto Rico and U.S. insular
possessions. Such measures include, among others, the inclusion in free trade
benefits of products that are processed in part in Puerto Rico, rebates to
Puerto Rico of excise taxes collected on rum imports and the exclusion of
processed tuna from duty-free treatment. The government of Puerto Rico
strongly supports the island's

<PAGE> 60

involvement in the CBI, particularly in relation to the development of twin
plants, or complementary projects. Under this program, the labor-intensive
phase of production generally occurs in a Caribbean or Central American
country, while the more sophisticated, higher technology phases take place in
Puerto Rico.

Puerto Rico has been a commonwealth of the United States since 1952. In a
plebiscite held in November 1993, 48% of Puerto Rico voters confirmed their
preference for commonwealth status, narrowly defeating the 46% who voted for
statehood. Only 4% voted for independence. Another vote on statehood is not
expected over the next several years. However, any vote on a change in Puerto
Rico's status requires the approval of the U.S. Congress. The effects of a
future decision to grant statehood or independence to Puerto Rico are
uncertain, although such a decision could result in economic instability,
volatility in the price and market for securities, and elimination or phase-out
of the Section 936 tax credit.

LIMITATION ON SIZE OF THE FUND

The Fund may impose a limit on its size, which would have the effect of
limiting purchases by persons other than existing shareholders. Such a
limitation would not affect dividend reinvestments and purchases of additional
shares by persons who are already shareholders of the Fund when the limit is
imposed. Such a limitation may be imposed if Heartland Advisors, as investment
advisor, believes that the available supply of securities suitable for the
Fund's portfolio is limited or for other reasons.

As the Fund's net assets approached $50 million, Heartland's Board of
Directors determined that an adequate supply of suitable securities existed to
permit the Fund to continue accepting purchases by new shareholders. The
Fund's net assets are currently in excess of $100 million and the Board will
continue to monitor the size of the Fund. Factors that the Board will consider
in determining whether to continue to accept purchases from new shareholders of
the Fund include the availability of an adequate supply of securities of
suitable quality for the Fund's portfolio, adequate diversification of
portfolio holdings, and the liquidity of the portfolio's holdings.

<PAGE> 61

If the Board determines to discontinue accepting purchases of the Fund's
shares from persons other than existing shareholders, the Fund will mail a
written notice of that fact to its existing shareholders at least ten (10) days
prior to the effective date of the limitation. When the Board determines to
again accept purchases from new shareholders, it will mail written notice of
that fact to the Fund's existing shareholders no later than the first day it
again commences accepting such purchases. If the Fund were to close to new
investors and the amount of new money flowing into the Fund were to decrease,
there is a risk that redemptions by existing shareholders might require the
Fund to liquidate a portfolio position at an inopportune time in order to
effect the redemption.

PORTFOLIO TURNOVER

Portfolio turnover for the Fund is the ratio of the lesser of annual
purchases or sales of portfolio securities by the Fund to the average monthly
value of portfolio securities owned by the Fund, not including securities
maturing in less than 12 months. A 100% portfolio turnover rate would occur,
for example, if the lesser of the value of purchases or sales of the Fund's
portfolio securities for a particular year were equal to the average monthly
value of the portfolio securities owned by the Fund during the year. The
portfolio turnover rate for the Fund for each of the fiscal years ended
December 31, 1995 and 1994 was 10.8% and 21.5%, respectively.

INVESTMENT RESTRICTIONS

The Fund has adopted the following investment restrictions, which are
fundamental policies that cannot be changed without the approval of the holders
of the lesser of: (i) a majority of the outstanding shares of the Fund; or
(ii) 67% of the shares represented at a meeting of shareholders at which the
holders of 50% or more of the outstanding shares of the Fund are represented.
Any investment restriction which involves a maximum percentage of securities or
assets will not be considered to be violated unless an excess over the
percentage occurs immediately after, and is caused by, an acquisition of
securities or assets of, or borrowing by, the Fund. The Fund may not:

<PAGE> 62

(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.

<PAGE> 63

(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).

In addition to the foregoing fundamental restrictions, Heartland's Board
of Directors has adopted the following restrictions for the Fund, which may be
changed without shareholder approval, in order to comply with the securities
laws of various states. The Fund may not:

(a) 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.

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

<PAGE> 64

(c) Except with respect to investments in repurchase agreements, purchase
securities with legal or contractual restrictions on resale if, as a result of
such purchase, such investments would exceed 5% of the value of the Fund's net
assets.

(d) Purchase securities on margin or effect short sales of securities,
except as required in connection with permissible options and futures
activities as described elsewhere in the Prospectus and Statement of Additional
Information.

(e) 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.

For the Fund's limitations on futures and options transactions, see
"Investment Objective and Policies - Limitations on Futures and Options
Transactions."

MANAGEMENT

The Board of Directors of Heartland provides broad supervision over the
affairs of the Fund, and the officers are responsible for its operations. The
Directors and officers are listed below, together with their principal
occupations during the past five years. Subject to the direction of the Board
of Directors, Heartland Advisors is responsible for investment management of
the assets of the Fund.

<PAGE> 65

<TABLE>
<CAPTION>
Principal
Occupation
Position with During Past Five
Name and Address Heartland Years
- ---------------- -------------------- --------------------
<S> <C> <C>
William J. Nasgovitz President and
790 N. Milwaukee St. President and Director, Heartland
Milwaukee, WI 53201 Director* Advisors, Inc., since
1982; Senior Vice
President-
Investments, Dain
Bosworth Incorporated
from 1988 to June
1992; Director of
Capital Investments,
Inc., since 1989
(closed-end investment
company).

Willard H. Davidson Director Financial and business
3726 N. Lake Drive consultant since 1984;
Milwaukee, WI 53211 prior thereto,
Chairman and a
Director, Marine
Corporation (a bank
holding company) and
Marine Bank, N.A.

Hugh F. Denison Director* Vice President and a
790 N. Milwaukee St. Director, Heartland
Milwaukee, WI 53201 Advisors, Inc. since
1988.

Jon D. Hammes Director President, Great Lakes
325 N. Corporate Drive Partners, since 1991;
Suite 115 prior thereto,
Brookfield, WI 53045 Managing Partner,
Trammel, Crow Co.
</TABLE>

<PAGE> 66

<TABLE>
<S> <C> <C>
Patrick J. Retzer Vice Vice President and
790 N. Milwaukee St. President, Treasurer, Heartland
Milwaukee, WI 53201 Treasurer and Advisors, Inc. since
Director* 1987; Director of
Heartland Advisors,
Inc. since 1988.

A. Gary Shilling Director President, A. Gary
500 Morris Avenue Shilling & Company,
Springfield, NJ 07081 Inc. (economic
consultants and
investment advisors),
since 1978.

Linda F. Stephenson Director President and Chief
100 E. Wisconsin Avenue Executive Officer,
Milwaukee, WI 53202 Zigman Joseph
Stephenson (a public
relations and
marketing
communications firm),
since 1989.

Lois Schmatzhagen Secretary Secretary, Heartland
790 N. Milwaukee St. Advisors, Inc. since
Milwaukee, WI 53201 1988.
</TABLE>

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

*Directors who are "Interested Persons" (as defined in the Investment
Company Act of 1940) of Heartland Advisors.

<PAGE> 67

Heartland pays the compensation of the four Directors who are not
officers, directors or employees of Heartland Advisors. The following
compensation was paid to those Directors for their services during the fiscal
year ended December 31, 1995:

<TABLE>
<CAPTION> TOTAL
AGGREGATE PENSION OR ESTIMATED ACTUAL COMPENSATION
COMPENSATION RETIREMENT BENEFITS UPON FROM HEARTLAND
DIRECTOR FROM HEARTLAND BENEFITS RETIREMENT AND FUND COMPLEX
- ------------------- -------------------- ---------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Willard H. Davidson $3,500 None None $3,500

Jon D. Hammes $2,000 None None $2,000

A. Gary Shilling $3,000 None None $3,000

Linda F. Stephenson $3,500 None None $3,500
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of January 31, 1996, the directors and officers of Heartland, as a
group (8 persons), owned beneficially less than 1% of the shares of the Fund.
As of that date, no person was known to own, of record or beneficially, as much
as five percent (5%) of the outstanding shares of the Fund.

THE INVESTMENT ADVISOR

The Fund is managed by Heartland Advisors pursuant to an Investment
Advisory Agreement (the "Agreement"). The Agreement was approved most recently
on behalf of the Fund by the Board of Directors, including a majority of the
Directors who are not interested persons of the Fund or of Heartland Advisors,
on July 27, 1995. Heartland Advisors also serves as distributor for the Fund.

Heartland Advisors is controlled by William J. Nasgovitz, the President
and a Director of Heartland, by virtue of his ownership of a majority of its
outstanding capital stock. Heartland Advisors, founded in 1982, serves as the
investment advisor for the Heartland Nebraska Tax Free, Value, Small Cap
Contrarian, Value & Income and U.S. Government Securities Funds,

<PAGE> 68

five additional series of Heartland, and also provides investment management
services for individuals, and institutional accounts, such as pension funds and
profit-sharing plans. As of March 31, 1996, Heartland Advisors had
approximately $2.2 billion in assets under management. Mr. Nasgovitz intends
to retain control of Heartland Advisors through the continued ownership of a
majority of its outstanding voting stock.

Pursuant to the Agreement, Heartland Advisors provides each Fund with
overall investment advisory and administrative services. Subject to such
policies as the Board of Directors of Heartland may determine, Heartland
Advisors makes investment decisions on behalf of the Fund, makes available
research and statistical data in connection therewith, and supervises the
acquisition and disposition of investments by the Fund, including the selection
of broker-dealers to carry out portfolio transactions. Heartland Advisors will
permit any of its officers or employees to serve without compensation from the
Fund as directors or officers of Heartland if elected to such positions.

Heartland Advisors bears all of its own expenses in providing services
under the Agreement and pays all salaries, fees and expenses of the officers
and directors of the Fund who are affiliated with Heartland Advisors. The Fund
bears all its other expenses including, but not limited to, necessary office
space, telephone and other communications facilities and personnel competent to
perform administrative, clerical and shareholder relations functions; a pro
rata portion of salary, fees and expenses (including legal fees) of those
directors, officers and employees of Heartland who are not officers, directors
or employees of Heartland Advisors; interest expenses; fees and expenses of the
Custodian, Agent and Dividend Disbursing Agent; taxes and governmental fees;
brokerage commissions and other expenses incurred in acquiring or disposing of
portfolio securities; expenses of registering and qualifying shares for sale
with the Securities and Exchange Commission and state securities commissions;
accounting and legal costs; insurance premiums; expenses of maintaining the
Fund's legal existence and of shareholders' meetings; expenses of preparation
and distribution to existing shareholders of reports, proxies and prospectuses;
and fees and expenses of membership in industry organizations.

<PAGE> 69

The Agreement provides that Heartland Advisors' fee will be reduced, or
that Heartland Advisors will reimburse the Fund (up to the amount of its fee),
by an amount necessary to prevent the total expenses of the Fund (excluding
taxes, interests, brokerage commissions or transactions costs, distribution
fees and extraordinary expenses) from exceeding limits applicable to the Fund
in any state in which its shares are then qualified for sale. None of the
states in which shares of the Fund are qualified for sale has such an expense
limitation.

The Agreement will continue in effect from year to year, as long as it is
approved at least annually by Heartland's Board of Directors or by a vote of
the outstanding voting securities of the Fund, and in either case by a majority
of the Directors who are not parties to the Agreement or interested persons of
any such party. The Agreement terminates automatically if it is assigned and
may be terminated without penalty by either party on not more than 60 nor less
than 30 days' notice. The Agreement provides that neither Heartland Advisors
nor its personnel shall be liable for any error of judgment or mistake of law
or for any loss arising out of any investment or for any act or omission in the
execution and management of the Fund, except for willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties under the Agreement.

<PAGE> 70

PERFORMANCE INFORMATION

General.

From time to time the Fund may advertise "yield," "taxable equivalent
yield," "average annual total return" and "cumulative total return." Yield is
based on historical earnings and total return is based on historical
distributions; neither is intended to indicate future performance. The "yield"
of the Fund refers to the income generated by an investment in the Fund over a
one-month period (which period will be stated in the advertisement). This
income is then "annualized." That is, the amount of income generated by the
investment during the month is assumed to be generated each month over a
twelve-month period and is shown as a percentage of the investment. "Total
return" of the Fund refers to the annual average return for 1, 5 and 10-year
periods (or the portion thereof during which the Fund has been in existence).
Total return is the change in redemption value of shares purchased with an
initial $1,000 investment, assuming the reinvestment of dividends and capital
gain distributions, after giving effect to the maximum applicable sales charge.

Performance information should be considered in light of the Fund's
investment objective and policies, characteristics and quality of its portfolio
securities and the market conditions during the applicable period, and should
not be considered as a representation of what may be achieved in the future.
Investors should consider these factors and possible differences in the methods
used in calculating performance information when comparing the Fund's
performance to performance figures published for other investment vehicles.

Yield.

Yield quotations are based on a 30-day (or one-month) period, and are
computed by dividing the net investment income per share earned during the
period by the maximum offering price per share on the last day of the period,
according to the following formula:

<PAGE> 71

6
Yield = 2[(a-b + 1) - 1]
---
cd

Where:

a = dividends and interest earned during the period;

b = expenses accrued for the period (net of reimbursements);

c = the average daily number of shares outstanding during the period
that were entitled to receive dividends; and

d = the maximum offering price per share on the last day of the period.

The yield for the Fund for the month ended December 31, 1995 was 5.17%.
When advertising yield, the Fund will not advertise a one-month or a 30-day
period which ends more than 45 days before the date on which the advertisement
is published.

Taxable Equivalent Yield.

Taxable equivalent yield is computed by dividing that portion of the yield
of the Fund (as computed above) which is tax-exempt by one minus a stated
income tax rate and adding the product to that portion, if any, of the yield of
such Fund that is not tax-exempt. Assuming an income tax rate of 31%, the
taxable equivalent yield for the Fund for the month ended December 31, 1995 was
8.24%.

Total Return.

Average annual total return is computed by finding the average annual
compounded rates of return over the 1, 5 and 10-year periods (or the portion
thereof during which the Fund has been in operation) ended on the date of the
Fund's balance sheet that would equate the initial amount invested to the
ending redeemable value, according to the following formula:

n
P(1 + T) = ERV

<PAGE> 72

Where:
P = a hypothetical initial payment of $1,000;

T = average annual total return;

n = number of years; and

ERV = ending redeemable value for a hypothetical $1,000 payment made at
the beginning of the 1, 5 and 10-year periods at the end of the 1, 5
and 10-year period (or fractional portion thereof).

This calculation assumes all dividends and capital gain distributions are
reinvested at net asset value on the appropriate reinvestment dates as
described in the Prospectus, and includes all recurring fees, such as
investment advisory and management fees, charged as expenses to all shareholder
accounts. A sales load of 3% was charged with respect to purchases of shares
of the Fund prior to June 1, 1994, which is not reflected in the total return
figures.

The average annual total return for the Fund for the one-year period
ending December 31, 1995 was 17.78%, and for the period from April 3, 1992
(commencement of operations) to December 31, 1995 was 6.97%.

<PAGE> 73

Cumulative Total Return.

Cumulative total return is computed by finding the cumulative compounded
rate of return over the period indicated in the advertisement that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:

CTR=(ERV-P) 100
-----
P

Where:

CTR = Cumulative Total Return;

ERV = Ending redeemable value at the end of the
period of a hypothetical $1,000 payment made
at the beginning of the period;

P = Initial payment of $1,000.

The cumulative total return for the Fund for the one-year period ending
December 31, 1995 was 17.78% and for the period from April 3, 1992
(commencement of operations) to December 31, 1995 was 28.69%.

DETERMINATION OF NET ASSET VALUE PER SHARE

The Fund's shares are sold at their next determined net asset value per
share. The Fund determines the net asset value per share by subtracting its
liabilities (including accrued expenses and dividends payable) from its total
assets (the value of the securities the Fund holds plus cash or other assets,

<PAGE> 74

including interest accrued but not yet received) and dividing the result by the
total number of shares outstanding.

The next determined net asset value per share will be calculated for the
Funds as of the close of the New York Stock Exchange regular trading (generally
4:00 p.m. New York time) at least once every weekday, Monday through Friday,
except on: (i) customary national business holidays which result in the
closing of the New York Stock Exchange, which are New Year's Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
and Christmas; (ii) days when no security is tendered for redemption and no
customer order is received; or (iii) days when changes in the value of the
investment company's portfolio securities do not affect the current net asset
value of the Fund's redeemable securities. Portfolio securities will be valued
as described in the Prospectus for the purpose of calculating net asset value
on any day.

DISTRIBUTION OF SHARES

Heartland Advisors, the Fund's investment advisor, also acts as the
distributor of the shares of all of the Heartland funds, including the Fund.
Heartland Advisors has agreed to use its "best efforts" to distribute the
Fund's shares, but has not committed to purchase or sell any specific number of
shares. The Distribution Agreement for the Fund is renewable annually by the
vote of the Directors at a meeting called for such purpose and may be
terminated upon 60 days written notice by either party. The Distribution
Agreement will automatically terminate in the event of its assignment. Under
the Distribution Agreement, Heartland Advisors, as distributor, will pay for
the costs and expenses of preparing, printing and distributing materials not
prepared by the Fund and used by Heartland Advisors in connection with its
offering of shares for sale to the public, including the additional costs of
printing copies of the prospectus and of annual and interim reports to
shareholders other than copies required for distribution to shareholders or for
filing under the federal securities laws, and any expenses of advertising
incurred by Heartland Advisors in connection with the offering of the shares.

<PAGE> 75

For the fiscal years ended December 31, 1995, 1994 and 1993, the aggregate
amount of underwriting commissions paid with respect to the Wisconsin Fund were
$0, $403,694 and $1,365,696, respectively, of which Heartland Advisors retained
$0, $104,505 and $316,819, respectively.

TAX STATUS

The information in this section supplements the discussion of applicable
taxes found in the Prospectus (see "DIVIDENDS, DISTRIBUTIONS AND TAXES").

Each series of a series company, such as Heartland, is treated as a single
entity for federal income tax purposes, so that the net realized capital gains
and losses of one series are not combined with those of another series in the
same company.

Gain or loss on the sale of securities held by the Fund for more than one
year will generally be long-term capital gain or loss. Gain or loss on the
sale of securities held for one year or less will be short-term capital gain or
loss.

If a shareholder exchanges shares of one Heartland fund for shares of
another Heartland fund, the shareholder will recognize gain or loss for federal
income tax purposes. That gain or loss will be measured by the difference
between the shareholder's basis in the shares exchanged and the value of the
shares acquired.

It is possible that the Fund's income dividends may, to the extent such
dividends consist of interest from obligations of the U.S. Government and
certain of its agencies and instrumentalities, be exempt from all state and
local income taxes, although subject to federal tax. The Fund intends to
advise shareholders of the proportion of its dividends which consist of such
interest. Shareholders are urged to consult their tax advisers regarding the
possible exclusion of such portion of their dividends for state and local
income tax purposes.

The Fund may enter into certain options and futures contracts which will
be treated as Section 1256 contracts or straddles under the Internal Revenue
Code. Transactions which

<PAGE> 76

are considered Section 1256 contracts will be considered to have been closed at
the end of the Fund's fiscal year and any gains or losses will be recognized
for tax purposes at that time. Such gains or losses and gains or losses from
the normal closing or settlement of such transactions will be characterized as
60% long-term capital gain or loss and 40% short-term capital gain or loss
regardless of the holding period of the instrument. The Fund will be required
to distribute net gains on such transactions to shareholders even though it may
not have closed the transaction and received cash to pay such distribution.

An option or future may be considered a position in a straddle for tax
purposes, in which case a loss on any position in the straddle may be subject
to deferral to the extent of unrealized gain in an offsetting position.

In order for the Fund to continue to qualify for federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income (i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities). Gains realized on the sale or other disposition of securities,
including options and futures contracts on securities or indices, held for less
than three months, must be limited to less than 30% of the Fund's annual gross
income. In order to avoid realizing excessive gains on securities or
currencies held less than three months, the Fund may be required to defer the
closing out of option or futures contracts beyond the time when it would
otherwise be advantageous to do so. It is anticipated that unrealized gains on
Section 1256 options and futures contracts, which have been open for less than
three months, as of the end of the Fund's fiscal year and which are recognized
for tax purposes, will not be considered gains on securities held less than
three months for purposes of the 30% test.

<PAGE> 77

DESCRIPTION OF SHARES

In the interest of economy and convenience, certificates representing
shares purchased are not ordinarily issued. However, such purchases are
confirmed to the investor and credited to their accounts on the books
maintained by Firstar Trust Company (the "Agent"), Milwaukee, Wisconsin. The
investor will have the same rights of ownership with respect to such shares as
if certificates had been issued. Investors may receive a certificate
representing whole shares by specifically requesting one by letter to the
Agent. If a stock certificate is requested, it will not be sent for at least
14 days. The Directors require payment of any lost instrument bond premiums or
federal and state taxes due in connection with the replacement of certificates
and may require a fee for each new stock certificate that is issued by the Fund
not connected with the purchase of new shares.

Shareholders have the right to vote on the election of Directors at each
meeting of shareholders at which Directors are to be elected and on other
matters as provided by law or the Articles of Incorporation or Bylaws of
Heartland. Heartland's Bylaws do not require that meetings of shareholders be
held annually. However, special meetings of shareholders may be called for
purposes such as electing or removing Directors, changing fundamental policies
or approving investment advisory contracts. Shareholders of each series of a
series company, such as Heartland, vote together with each share of each series
in the company on matters affecting all series (such as election of Directors),
with each share entitled to a single vote. On matters affecting only one
series (such as an increase in that series' investment advisory fees or a
change in its fundamental investment restrictions), only the shareholders of
that series are entitled to vote. On matters relating to all the series but
affecting the series differently (such as a new Investment Advisory Agreement),
separate votes by series are required.

<PAGE> 78

PORTFOLIO TRANSACTIONS

The information in this section supplements the information in the
Prospectus under "PORTFOLIO TRANSACTIONS."

Allocation of the portfolio brokerage transactions, including their
frequency, to various dealers is determined by Heartland Advisors, as
investment advisor, in its best judgment and in a manner deemed fair and
reasonable to shareholders. The primary consideration is prompt and efficient
execution of orders in an effective manner at the most favorable price.
Subject to this consideration, brokers who provide supplemental investment
research, statistical or other services to Heartland Advisors may receive
orders for transactions by the Fund. Information so received will enable
Heartland Advisors to supplement its own research and analysis with the views
and information of other securities firms, and may be used for the benefit of
clients of Heartland Advisors other than the Fund. Research services may
include advice as to the value of securities; the advisability of investing in,
purchasing or selling securities; the availability of securities or purchasers
or sellers of securities; furnishing analyses and reports concerning issues,
industries, securities, economic factors and trends, portfolio strategy and
performance of accounts; and effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement). Some
broker-dealers may indicate that the provision of research services is
dependent upon the generation of certain specified levels of commissions by
Heartland Advisors' clients. In addition, some broker-dealers may supply
research from third party service providers in consideration of their receipt
of brokerage commissions from transactions allocated by Heartland Advisors. The
Fund may also consider sales of its own shares or the shares of the other
Heartland funds, or both, as a factor in the selection of broker-dealers to
execute portfolio transactions, subject to the policy of obtaining best price
and execution.

For particular transactions, the Fund may pay higher commissions to
brokers (other than to Heartland Advisors or its affiliates) than might be
charged if a different broker had been selected, if, in Heartland Advisors'
opinion, this policy furthers the objective of obtaining best price and
execution.

<PAGE> 79

The allocation of orders among brokers and the commission rates paid will be
reviewed periodically by Heartland's Board of Directors.

Subject to the above considerations, Heartland Advisors may itself
occasionally effect portfolio transactions as a broker for the Fund. The
commissions, fees or other remuneration received by Heartland Advisors must be
reasonable and fair compared to the commissions, fees or other remuneration
paid to other brokers in connection with comparable transactions involving
similar securities being purchased or sold on a securities exchange or on the
National Association of Securities Dealers Automated Quotation System during a
comparable period of time. This standard would allow Heartland Advisors to
receive no more than the remuneration which would be expected to be received by
an unaffiliated broker in a commensurate arms' length transaction.
Furthermore, the Board of Directors of Heartland, including a majority of the
directors who are not interested persons, have adopted procedures which are
reasonably designed to provide that any commissions, fees or other remuneration
paid to Heartland Advisors are consistent with the foregoing standard.
Brokerage transactions with Heartland Advisors are also subject to such
fiduciary standards as may be imposed upon Heartland Advisors by applicable
law.

For the fiscal years ended December 31, 1995, 1994 and 1993, the Wisconsin
Fund paid $0, $70 and $70, respectively, in brokerage commissions, all of which
were paid to Heartland Advisors.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Firstar Trust Company acts as Custodian of the Fund's investments and acts
as Transfer and Dividend Disbursing Agent. Its address is Firstar Trust
Company, Mutual Funds Services, 3rd Floor, P.O. Box 701, Milwaukee, Wisconsin
53201-0701.

<PAGE> 80

COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS

Quarles & Brady serves as legal counsel for the Fund. Arthur Andersen
LLP, independent public accountants, are auditors of the Fund.

FINANCIAL STATEMENTS

The financial statements and related report of Arthur Andersen LLP,
independent public accountants, contained in the Annual Report to Shareholders
of the Fund for the fiscal year ended December 31, 1995 are hereby incorporated
by reference. Copies of the Annual Report may be obtained without charge by
writing to Heartland Advisors, Inc., 790 North Milwaukee Street, Milwaukee,
Wisconsin 53202, or by calling 1-800-432-7856 or (414) 289-7000.

<PAGE> 81

APPENDIX A

SECURITIES RATINGS

GENERAL

A rating of a rating service represents the service's opinion as to the
credit quality of the security being rated. However, the ratings are general
and are not absolute standards as to the creditworthiness of an issuer.
Consequently, Heartland Advisors believes that the quality of debt securities
in which the Funds invest should be continuously reviewed and that individual
analysts give different weightings to the various factors involved in credit
analysis. A rating is not a recommendation to purchase, sell or hold a
security, because it does not take into account market value or suitability for
a particular investor. When a security has received a rating from more than
one service, each rating should be evaluated independently. Ratings are based
on current information furnished by the issuer or obtained by the rating
services from other sources which they consider reliable. Ratings may be
changed, suspended or withdrawn as a result of changes in or unavailability of
such information, or for other reasons.

The following is a description of the characteristics of ratings used by
Moody's Investors Service, Inc., Standard & Poor's Corporation and Fitch
Investors Service, Inc.

CORPORATE AND MUNICIPAL BOND RATINGS

RATINGS BY MOODY'S

Aaa -- Bonds which are rated in category Aaa are judged to be of the best
quality and carry the smallest degree of investment risk. Interest payments
are protected by a large or by an exceptionally stable margin, and principal is
secure. While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.

A-1

<PAGE> 82

Aa -- Bonds which are rated in category Aa are judged to be of high
quality by all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long term risks appear somewhat larger
than in Aaa securities.

A -- Bonds which are rated in category A are judged to possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
impairment sometime in the future.

Baa -- Bonds rated in category Baa are considered medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact may have speculative characteristics as
well.

Ba -- Bonds which are rated Ba are judged to have speculative elements;
their futures cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during other good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of contract over any long period of time may be
small.

Moody's applies numerical modifiers "1", "2" and "3" to the Aa through B
rating classifications. The modifier "1" indicates that the security ranks in
the higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.

A-2

<PAGE> 83

RATINGS BY STANDARD & POOR'S

AAA -- This is the highest rating category assigned by Standard & Poor's
to a debt obligation and indicates an extremely strong capacity to pay
principal and interest.

AA -- Debt rated AA has a very strong capacity to pay principal and
interest and differs from AAA issues only in small degree.

A -- Debt rated A has a strong capacity to pay principal and interest,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
principal and interest. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for debt in
this category than for bonds in higher rated categories.

BB -- Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.

B -- Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.

Standard & Poor's ratings, other than AAA, may be modified by the addition
of a plus or minus sign to show relative standing in the major categories.

A-3

<PAGE> 84

RATINGS BY FITCH

AAA -- Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.

AA -- Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds rated
in the AAA and AA categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated F-1+.

A -- Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.

BBB -- Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.

BB -- Bonds considered speculative. The obligor's ability to pay interest
and repay principal may be affected over time by adverse economic changes.
However, business and financial alternatives can be identified which could
assist the obligor in satisfying its debt service requirements.

B -- Bonds are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited margin
of safety and the need for reasonable business and economic activity throughout
the life of the issue.

A-4

<PAGE> 85

Fitch applies modifiers "Plus(+)" or "Minus(-)" to the AA, A, BBB, BB and
B rating classifications. These modifiers are used to indicate the relative
position of a credit within a rating category.

MUNICIPAL NOTE RATINGS

RATINGS BY MOODY'S

MIG 1. This designation category denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.

MIG 2. This designation category denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

MIG 3. This designation category denotes favorable quality. All security
elements are accounted for but there is lacking the undeniable strength of the
preceding grades. Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.

RATINGS BY S & P

SP-1. Notes rated SP-1 have very strong or strong capacity to pay
principal and interest. Those issues determined to possess overwhelming safety
characteristics are designated as SP-1+.

SP-2. Notes rated SP-2 have satisfactory capacity to pay principal and
interest.

Notes due in three years or less normally receive a note rating. Notes
maturing beyond three years normally receive a bond rating, although the
following criteria are used in making that assessment.

-Amortization schedule (the larger the final maturity relative to other
maturities, the more likely the issue will be rated as a note.)

A-5

<PAGE> 86

-Source of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be rated as a note.)

RATINGS BY FITCH

Fitch short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.

F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1 Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."

F-2 Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as for issues assigned "F-1+" and "F-1" ratings.

F-3 Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate;
however, near-term adverse changes could cause these securities to be rated
below investment grade.

Fitch also uses the symbol "LOC" which indicates that the rating is based
on a letter of credit issued by a commercial bank.

A-6

<PAGE> 87

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Introduction to the Heartland Funds.......................... 2
Investment Objective and Policies............................ 2
Investment Restrictions...................................... 22
Management................................................... 30
Control Persons and Principal Holders of Securities.......... 33
The Investment Advisor....................................... 33
Performance Information...................................... 36
Determination of Net Asset Value per Share................... 39
Distribution of Shares....................................... 40
Tax Status................................................... 41
Description of Shares........................................ 43
Portfolio Transactions....................................... 44
Custodian and Transfer and Dividend Disbursing Agent......... 45
Counsel and Independent Public Accountants................... 46
Financial Statements......................................... 46
</TABLE>

A-7

<PAGE> 88

HEARTLAND WISCONSIN TAX FREE FUND
790 North Milwaukee Street
Milwaukee, Wisconsin 53202

Investment Advisor and Distributor

Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, Wisconsin 53202

Custodian, Transfer and Dividend Disbursing Agent

Firstar Trust Company
Mutual Funds Services, Third Floor
P.O. Box 701
Milwaukee, Wisconsin 53201-0701

Counsel

Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

Auditor

Arthur Andersen LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

A-8

<PAGE> 89
Rule 497(c)
Reg. No.: 33-11371
File No.: 811-4982

PROSPECTUS 1p

HEARTLAND NEBRASKA TAX FREE FUND

Prospectus

April 30, 1996

________________________________________________________________________________
INVESTMENT SUMMARY

The Heartland Nebraska Tax Free Fund's investment objective is to provide
investors with a high level of current income that is exempt from federal
income tax and Nebraska personal income tax.

The Heartland Nebraska Tax Free Fund (the "Fund") is a separate non-diversified
mutual fund portfolio of Heartland Group, Inc. ("Heartland"). This Prospectus
contains information you should know about the Fund before you invest. Please
keep it for reference. A Statement of Additional Information for the Fund
(dated April 30, 1996) has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus. It is
available at no charge by calling the Fund's investment advisor and
distributor, Heartland Advisors, Inc. ("Heartland Advisors"), at 1-800-432-7856
or (414)289-7000.

________________________________________________________________________________
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
________________________________________________________________________________

<PAGE> 90

2p PROSPECTUS

________________________________________________________________________________
TABLE OF CONTENTS

Fund Expenses .......................................... 3
Financial Highlights ................................... 4
Investment Objective and Policies ...................... 6
How to Buy Shares ...................................... 15
Shareholder Services ................................... 17
Dividends, Distributions and Taxes ..................... 20
The Fund and the Heartland Organization ................ 21
Net Asset Value Calculation ............................ 23
Description of Fund Shares ............................. 24
Portfolio Transactions ................................. 25
Performance Information ................................ 26
How to Redeem Shares ................................... 27

<PAGE> 91
PROSPECTUS 3p

________________________________________________________________________________
FUND EXPENSES

________________________________________________________________________________
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases None
Sales load imposed on reinvested dividends None
Redemption fees None (1)
Exchange fees None

________________________________________________________________________________
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management fees (after fee waivers) .33% (2)
Rule 12b-1 distribution plan fees None
Other expenses .43%

________________________________________________________________________________
TOTAL FUND OPERATING EXPENSES .76% (2)
================================================================================

</TABLE>

(1) The Agent charges a wire fee for the return of redemption proceeds
requested by wire transfer. The fee is currently $10.

(2) Management Fee gives effect to the voluntary waiver by Heartland Advisors
of one-half of its management fee. Without such waiver, the Management Fees
and Total Fund Operating Expenses would have been .65% and 1.08% of the
average net assets, respectively. Heartland Advisors may reinstate an
additional portion or all of the fee at any time.

<PAGE> 92

4p PROSPECTUS

Example

You would pay the following expenses on a $1,000 investment, assuming: (1) 5%
annual rate of return; and (2) redemption at the end of each time period in the
Fund:
________________________________________________________________________________

<TABLE>

<S> <C>
One year $ 8
Three years $24
Five years $42
Ten years $94
</TABLE>

________________________________________________________________________________
The purpose of this expense information is to assist you in understanding the
various costs and expenses that you would bear directly or indirectly as an
investor in the Fund. More detailed information concerning these expenses is
set forth in the sections of this Prospectus entitled "How To Buy Shares" and
"The Fund and The Heartland Organization."

THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

________________________________________________________________________________
FINANCIAL HIGHLIGHTS

<PAGE> 93
PROSPECTUS 5p

<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31
9/27/93 (1)
TO FINANCIAL
1995 1994 12/31/93 HIGHLIGHTS
________________________________________________________________________________
<S> <C> <C> <C> <C>
PER SHARE DATA: (1) Commencement
of operations.
Net Asset Value, $8.23 $9.56 $9.70
Beginning of Period (2) The front-end sales
charge in effect for the
________________________________________________________________________________ Fund prior to June 1, 1994
Income from Investment Operations: is not reflected
in Total Return as
Net investment income .45 .45 .11 set forth in the table.

(3) Not Annualized.
Net Realized and Unrealized
Gains (Losses) on Securities 1.14 (1.33) (.14) (4) Heartland Advisors
---- ---- ---- waived the Management
Total from 1.59 (.88) (.03) Fee for the Fund in its
Investment Operations entirety from September 27, 1993
________________________________________________________________________________ through December 31, 1993.
Less Distributions: Effective January 1, 1994,
Dividends from net investment income (.45) (.45) (.11) Heartland Advisors partially
Distributions from net realized gains - - - reinstated a portion
Total distributions (.45) (.45) (.11) of the fee at the
Net asset value, end of period $9.37 $8.23 $9.56 rate of .325 of 1%
Total Return(2) 19.70% (9.33)% (.29)%(3) of average daily net assets.

________________________________________________________________________________ (5) Annualized.
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $13,297,168 $12,526,287 $8,998,266

Ratio of total expenses to
average net assets(4) 0.76% 0.81% 0.13%(5)

Ratio of net investment income
to average net assets 5.06% 5.23% 4.65%(5)

Portfolio turnover rate 5.10% 32.69% 2.56%
</TABLE>

<PAGE> 94

6p PROSPECTUS

________________________________________________________________________________
INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to provide investors with a high level
of current income that is exempt from federal and Nebraska personal income
taxes. The Fund invests primarily in municipal securities that are exempt from
personal income tax in Nebraska and under federal law, including certain
Nebraska municipal securities and securities of other entities meeting such
criteria.

Only limited categories of municipal securities are exempt from Nebraska
personal income taxes. These include bonds issued by Nebraska state and local
government subdivisions, including Nebraska municipal water bonds, Nebraska
Public Power District bonds, Nebraska Investment Finance Authority bonds, local
school district bond obligations, and certain general obligation bonds issued
by Puerto Rico, the Virgin Islands and Guam. Due to the limited availability
and liquidity of such securities issued within Nebraska, it is possible that
the Fund may invest a significant portion of its assets in obligations issued
by territories and possessions of the United States, their agencies or
instrumentalities. The Fund may invest up to 100% of its assets in tax-exempt
securities of issuers outside of Nebraska if such securities bear interest
which is exempt from federal and Nebraska personal income taxes.

INVESTMENT POLICIES OF THE FUND

TAX-FREE INCOME. As a matter of fundamental policy, the Fund will seek to
invest at least 80% of its assets so that the income earned thereon will be
exempt from federal and Nebraska personal income taxes. In practice, under
normal market conditions, the Fund will seek to invest all of its assets so
that income therefrom will be exempt from federal and Nebraska personal income
tax, other than assets invested for hedging purposes. There can be no
assurance that the Fund will be successful in this investment policy or that it
will achieve its investment objective.

<PAGE> 95

PROSPECTUS 7p

TAX-FREE INVESTMENTS. The term "municipal securities," as used in this
Prospectus, means debt obligations issued by or on behalf of states,
territories or possessions of the United States, and their political
subdivisions, agencies, and instrumentalities, the interest on which is
generally exempt from federal income tax.

<PAGE> 96

8p PROSPECTUS

debt securities rated in the highest three categories by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"), or Fitch
Investors Service, Inc. ("Fitch"); commercial paper rated in the highest
category by S&P or Moody's; unrated variable rate demand notes which Heartland
Advisors believes have investment characteristics comparable to debt securities
rated in one of the top three rating categories by Moody's, S&P or Fitch; or
certificates of deposit of the 100 largest domestic banks in terms of assets
which are subject to federal or state regulatory supervision.

INVESTMENT QUALITY

<PAGE> 97

PROSPECTUS 9p

Finally, the secondary trading market for higher yielding bonds may not be as
active as for lower yielding bonds. As a result, it may be difficult to
accurately assess the value of such bonds (and therefore the Fund's
securities portfolio), and the Fund's ability to dispose of such bonds may be
limited. For a more detailed discussion of the risks associated with investing
in lower rated securities, see "Investment Objective and Policies - Tax-Exempt
Obligations - Non-Investment Grade Bonds" in the Statement of Additional
Information.

ASSET COMPOSITION

<TABLE>
<CAPTION>
________________________________________________________________________________

S&P RATING FUND
OR EQUIVALENT AVERAGE
________________________________________________________________________________
<S> <C>
AAA 19.7%
AA 24.6%
A 53.9%
BBB 1.8%
BB 0%
B 0%
</TABLE>

<PAGE> 98

10p PROSPECTUS

The dollar-weighted average of debt securities included in these figures and
not rated by S&P amounted to 37.5% for the Fund. This may include securities
rated by other nationally recognized rating organizations, as well as unrated.
Unrated securities are not necessarily lower-quality securities. Issuers of
municipal securities frequently choose not to incur the expense of obtaining a
rating. Please refer to the Statement of Additional Information for a more
complete discussion of these ratings.

OTHER INVESTMENT PRACTICES

OPTIONS, FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Fund may
engage in transactions in options, futures contracts, and options on futures
contracts to hedge against anticipated declines in the market value of its
portfolio securities, or against increases in the market values of securities
it intends to purchase, or to manage exposure to changing interest rates. The
Fund will not use these instruments for speculation. Some options and futures
strategies, including selling futures, buying puts and writing calls, tend to
hedge the Fund's investments against price fluctuations. Other strategies,
including buying futures, writing puts, and buying calls, tend to increase
market exposure. Options and futures may be combined with each other in order
to adjust the risk and return characteristics of the Fund's overall strategy.

<PAGE> 99

PROSPECTUS 11p

to premiums paid for options; and (iv) no more than 20% of the Fund's total
assets would be subject to options. Each of these limitations applies
immediately after a purchase. A subsequent change in the applicable
percentage resulting from market fluctuations does not require elimination of
any security, option or future from the Fund's portfolio. Consequently, the
Fund's assets could be hedged in excess of the above percentages at a date
subsequent to the hedging transaction.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis, i.e., obligate itself to purchase
or sell securities with delivery and payment to occur at a later date in order
to secure what is considered to be an advantageous price and yield at the time
of entering into the obligation. The Fund will make such commitments only with
the intention of actually acquiring the securities, but may sell the securities
before settlement date if it is deemed advisable for investment reasons. At
the time the Fund makes a commitment to purchase an obligation, it will record
the transaction and reflect the value of the obligation in determining its net
asset value. The Custodian will maintain on a daily basis a separate account
consisting of cash or liquid securities with a value at least equal to the
amount of the Fund's commitments to purchase when-issued obligations.

<PAGE> 100
12p PROSPECTUS

BORROWING. The Fund may borrow from banks for temporary or emergency purposes
up to 10% of its total assets and pledge up to 10% of its total assets in
connection therewith.

PORTFOLIO TURNOVER AND MATURITY

While it is not the policy of the Fund to trade actively for short-term
profits, it will dispose of securities without regard to the time they have
been held when such action appears advisable to Heartland Advisors. Frequent
portfolio trades may result in higher transaction and other costs. The Fund's
portfolio turnover rate for the fiscal year ended December 31, 1995 was 5.1%.
The Fund is not restricted as to the average maturity of its portfolio.

INVESTMENT LIMITATIONS

The Fund's investment policies discussed above are subject to further
restrictions which are described in the Statement of Additional Information.
Three principal investment limitations are that:

1. Under normal market conditions, the Fund will seek to invest at least 80% of
its assets so that the income earned thereon will be exempt from federal and
Nebraska personal income taxes.

2. 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.

3. The Fund will not purchase a security if, as a result thereof, (i) more than
25% of its 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 their agencies, instrumentalities,
municipalities or political subdivisions or (ii) more than 10% of its net
assets would be invested in illiquid securities.

<PAGE> 101

PROSPECTUS 13p

RISK FACTORS

MARKET RISK. The principal value of the Fund's assets would be expected to vary
with changes in interest rates. It may be expected that a decline in
prevailing levels of interest rates generally will increase the value of
securities held by the Fund, and an increase in rates will generally have the
opposite effect. The Fund may employ hedging techniques to reduce the effects
of interest rate fluctuations; however, there can be no assurance that such
techniques will be successful. Thus, interest rate fluctuations will affect
the Fund's net asset value per share, but not the income received by it from
its existing portfolio securities. Because yields on securities available for
purchase by the Fund will vary over time, no specific yield on the Fund's
portfolio can be assured.

CREDIT RISK

GEOGRAPHIC CONCENTRATION. Ordinarily, an investment company concentrating its
investments in limited geographic areas, such as the Fund, would be exposed to
greater credit risks than an investment company investing in a nationally
diversified portfolio of municipal securities. The value of municipal
securities may be closely tied to local, political, and economic conditions and
developments within Nebraska. Other risks include possible tax changes,
legislative or judicial action, environmental concerns, and differing levels of
supply and demand for debt obligations exempt from federal and Nebraska
personal income taxes.

The Fund's policies and programs seek to minimize this geographic concentration
risk in a number of ways. First, the Fund intends to comply with the
provisions of Subchapter M of the Internal Revenue Code which, in part, require
that, at the close of each quarter of the taxable year, those issues which
represent more than 5% of the Fund's total assets be limited in the aggregate
to 50% of the Fund's total assets, and that no single issue exceed 25% of the
Fund's total assets. Moreover, since the Fund's policies and programs permit
it to purchase securities issued by territories or possessions of the United
States, including Puerto Rico, the Virgin Islands and Guam, which are exempt
from federal and Nebraska personal income taxes, the geographic concentration
is less than if the Fund was limited solely to investments in one state.

<PAGE> 102

14p PROSPECTUS

Nebraska Economy. Nebraska's economy is fairly diverse with concentrations in
agriculture, trade and service industries. The state's economy has fared well
in recent years, and overall, job, income, business, and construction growth
has been positive. The state's unemployment rate has been among the lowest in
the nation throughout the 1990's. Nebraska's economy remains agriculturally
based and could be significantly impacted by factors affecting that sector,
such as downward trends in the commodities markets, severe weather conditions,
or reductions in federal agricultural programs.

Puerto Rico Economy. The Fund may invest in municipal securities issued by or
on behalf of Puerto Rico, its agencies or instrumentalities. Since the early
1970s, manufacturing has been the primary force in Puerto Rican development.
Other major sectors of Puerto Rico's economy include government, trade and
services. Puerto Rico's unemployment rate remains relatively high at
approximately 14-16% and per capita income is less than half of the U.S.
average. Debt ratios for the Commonwealth are high as it assumes much of the
responsibility for financing improvements in the local infrastructure. Puerto
Rico's economic base remains centered around tax advantages offered to U.S.
manufacturing firms. Legislation or other action that would eliminate or reduce
such tax incentives might give rise to economic instability and volatility in
the market for the securities.

<PAGE> 103

PROSPECTUS 15p

________________________________________________________________________________
HOW TO BUY SHARES

SHARE PRICE

The Fund's shares are sold without a sales charge. The Fund's share price is
the net asset value per share next determined following receipt of an order in
proper form, or receipt of funds by the Agent if purchase is made by wire, by
the Fund or its authorized service agent or sub-agent. Net asset value is
calculated daily as described under "Net Asset Value Calculation." Firstar
Trust Company serves as the Fund's transfer and dividend disbursing agent (the
"Agent").

OPENING AN ACCOUNT AND PURCHASING SHARES

To Open an Account:

Complete and sign the Account Application. Make your check payable to the
Heartland Nebraska Tax Free Fund and mail to one of the addresses above.

To Add to an Account:

Make your check payable to the Fund, indicate your Fund account number on your
check, and mail to one of the addresses above. You may also include an
"Additional Investment Form" from a prior account statement with your check.

________________________________________________________________________________
BY WIRE:

Firstar National Bank
ABA #0750-00022
Firstar Trust MFS A/C #112-952-137
777 East Wisconsin Avenue, Milwaukee, WI 53202
CREDIT TO: Heartland Nebraska Tax Free Fund, (your account number and the title
of the account)

To Open an Account:

Call the Agent at 1-800-443-2862 prior to sending the wire. Specify Fund name,
include your name, and wire as described above. Then complete, sign and mail
the Account Application to one of the addresses above for mail or overnight
mail.

To Add to an Account:
Specify Fund name, include your name and account number, and wire as described
above.

<PAGE> 104

16p PROSPECTUS

BY TELEPHONE:
1-800-432-7856 or 414-289-7000

To Open an Account:

Unless you have elected not to have this privilege on the Account Application,
you may call to exchange from another Heartland fund account with the same
registration, including name, address and taxpayer ID number. See "Shareholder
Services-Exchange Privilege."

To Add to an Account:
Unless you have elected not to have this privilege on the Account Application,
you may call to exchange from another Heartland fund account with the same
registration, including name, address and taxpayer ID. See "Shareholder
Services-Exchange Privilege."

________________________________________________________________________________
AUTOMATICALLY:

To Open an Account:
Not available.

To Add to an Account:

Use Heartland's automatic investment plan. Sign up for this service on your
Account Application, or call 1-800-432-7856 for information on how to add this
service.

________________________________________________________________________________
THROUGH SECURITIES REPRESENTATIVES:

To Open an Account:

You may purchase shares through a broker-dealer or financial institution which
must promptly forward the order, together with payment, to the Agent. The
broker-dealer or financial institution may charge a fee for such
services.

To Add to an Account:
You may purchase shares through a broker-dealer or financial institution which
must promptly forward the order, together with payment, to the Agent. The broker
dealer or financial institution may charge a fee for such services.

<PAGE> 105
PROSPECTUS 17p

CONDITIONS OF YOUR PURCHASE

MINIMUM INVESTMENTS. The minimum initial investment for the Fund is $10,000.
The minimum additional investment, except for reinvestments of distributions
and investments under the automatic investment plan, is $1,000.

OTHER CONDITIONS. All purchases must be made in U.S. dollars and checks must be
drawn on U.S. banks. Cash will not be accepted for the purchase of shares. If a
check fails to clear, the purchase to which the check relates will be canceled
and the prospective investor will be liable for any losses or fees incurred by
the Fund or the Fund's Agent, including without limitation a $20 fee to cover
bank handling charges for returning checks due to insufficient funds. When
purchases are made by check, the Fund can hold payment on redemption of shares
so purchased until it is reasonably satisfied that the check has cleared. To
avoid such a delay, an investor can wire federal funds as described above from
a bank, which may charge a fee for that service. Wiring federal funds means
that the bank sends money to a bank account maintained by the Fund through the
Federal Reserve System.

________________________________________________________________________________
SHAREHOLDER SERVICES

The Fund offers a number of shareholder services designed to facilitate
investment in its shares. Full details of each of the services and instructions
as to how to participate in the various services can be obtained from the Fund
or Heartland Advisors.

AUTOMATIC DIVIDEND REINVESTMENT. You may automatically reinvest all dividends
and distributions or elect to receive them in the form of a check. If your
dividends and distributions are reinvested, they will automatically purchase
additional shares of the Fund, or shares of another Heartland fund, as
indicated on your account application, at the net asset value determined on the
dividend or distribution payment date, without any sales charge or fees. You
may change your election at any time by writing or calling Heartland Advisors.
Heartland Advisors must receive any change seven days prior to a payment date
for it to be effective for that payment.

<PAGE> 106

18p PROSPECTUS

arrange automatic transfers (minimum $100 per transaction) from your checking or
savings account to your account in the Fund on a monthly or twice-monthly basis.
The application must be accompanied by a "voided" check, and be received at
least 14 business days prior to the initial transaction. Once enrolled in the
automatic investment plan, you may change the monthly amount or terminate your
participation at any time by writing the Agent. Allow five business days for a
change to become effective. Your bank must be a member of Automated Clearing
House. If the automatic purchase cannot be made due to insufficient funds or a
stop payment, a $20 service fee will be assessed. If you stop making automatic
investments when your aggregate investment in the Fund is less than $10,000, the
Fund reserves the right to redeem your account after giving 60 days notice,
unless you make additional investments to bring your account value to $10,000.
The program will automatically be terminated upon redemption of all shares,
including an exchange of all shares to another fund. You will receive quarterly
confirmations of your transactions from the Agent and your regular bank account
statement will show the debit transaction each month.

SYSTEMATIC WITHDRAWAL PLAN. You can set up automatic withdrawals from your
account at monthly, quarterly, or annual intervals. To begin distributions,
you must have an initial balance of $25,000 in your account and withdraw at
least $100 per payment. To establish the systematic withdrawal plan, request a
form by calling 1-800-432-7856. The systematic withdrawal plan may be
terminated by you or by the Fund at any time by written notice.

Exchanges Among Heartland Funds. Under the exchange privilege, each Heartland
fund offers to exchange its shares for shares of another Heartland fund on the
basis of relative net asset value per share, without the payment of any fees or
charges. In order to qualify for the exchange privilege without further
approval of the fund, it is required that the shares being exchanged have a net
asset value of at least $1,000,

<PAGE> 107

PROSPECTUS 19p

but not more than $500,000. In addition, if you have certificates for any
shares being exchanged, you must surrender such certificates in the same manner
as in redemption of shares. Shares of the Fund acquired in exchange for shares
of another Heartland fund that was purchased between February 12, 1993 and
June 1, 1994 subject to a contingent deferred sales charge will remain subject
to any such charge applicable upon ultimate redemption of the shares.

Exchanges with Portico. Shareholders may exchange all or a portion of their
shares in the Fund for shares of the Portico Money Market Fund at their
relative net asset values and may also exchange back into a Heartland fund
without the imposition of any charges or fees. These exchanges are subject to
the minimum purchase and redemption amounts set forth in the prospectus for the
Portico Money Market. No charge to shareholders is imposed in connection with
this exchange; however, Heartland Advisors, as distributor, is entitled to
receive a fee from the Portico Money Market Fund for certain distribution and
support services at the annual rate of .20 of 1% of the average daily net asset
value of the shares for which it is the holder or dealer of record.

<PAGE> 108

20p PROSPECTUS
________________________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES

STATE TAXES. To the extent that the Fund's distributions are derived from
obligations whose interest is tax-free under Nebraska law, its dividends paid
from tax-exempt interest will be exempt from Nebraska personal income tax.
Nebraska also imposes a state alternative minimum tax dependent upon an
investor's individual tax circum-

<PAGE> 109

PROSPECTUS 21p

stances, which is based on federal alternative minimum tax with certain
modifications and which is an additional rather than an alternative tax.
Distributions from short-term and long-term capital gains will be taxable as
dividends and as capital gains, respectively, for state tax purposes.

The foregoing discussion relates to federal and Nebraska taxation as of the
date of this Prospectus and is general in nature; each investor is advised to
consult his or her tax advisor for additional information. Distributions from
the Fund, including exempt-interest dividends, may be subject to tax in other
states.

________________________________________________________________________________
THE FUND AND THE HEARTLAND ORGANIZATION

Heartland's Board of Directors provides broad supervision over the affairs of
the Fund, and the officers are responsible for its operations.

HEARTLAND ADVISORS

<PAGE> 110

22p PROSPECTUS

Heartland Advisors, founded in 1982, serves as the investment advisor for the
Heartland Value Fund, Small Cap Contrarian Fund, Value & Income Fund, U.S.
Government Securities Fund and Wisconsin Tax Free Fund, five additional series
of Heartland, and also provides investment management services for individuals,
and institutional accounts, such as pension funds and profit-sharing plans. As
of March 31, 1996, Heartland Advisors had approximately $2.2 billion in assets
under management. Heartland Advisors' principal mailing address is 790 North
Milwaukee Street, Milwaukee, Wisconsin 53202. William J. Nasgovitz, a Director
and President of Heartland and Heartland Advisors, is a controlling person of
Heartland Advisors through his ownership of a majority of its voting common
stock.

For the fiscal year ended December 31, 1995, the Fund paid advisory fees of
$43,065. or approximately 0.325 of 1% of average net assets. At present,
Heartland Advisors is voluntarily waiving 0.325 of 1% of its investment
advisory fee for the Fund; had no fee waiver been in effect, the Fund would
have paid $86,128 in advisory fees, or .065 of 1% of average daily net assets
for the period. Heartland Advisors may reinstate an additional portion or all
of the fee at any time.

<PAGE> 111
PROSPECTUS 23p

PORTFOLIO MANAGER. Patrick J. Retzer has served as portfolio manager for the
Fund since commencement of its operations. Mr. Retzer is also portfolio
manager of the Heartland Wisconsin Tax Free Fund and co-manager of the
Heartland U.S. Government Securities Fund. Mr. Retzer has been Vice President
and Treasurer of Heartland Advisors and Heartland since 1987, a Director of
Heartland Advisors since 1988 and a Director of Heartland since 1993.

________________________________________________________________________________
NET ASSET VALUE CALCULATION

<PAGE> 112

24p PROSPECTUS

________________________________________________________________________________
DESCRIPTION OF FUND SHARES

Heartland is a diversified open-end management investment company registered
under the Investment Company Act of 1940, which was organized in 1986 as a
Maryland corporation. The authorized common stock of Heartland consists of one
billion shares, $0.001 par value per share. Heartland is a series company,
which means the Board of Directors may establish additional series, and may
increase or decrease the number of shares in each series. The Fund is a
separate non-diversified mutual fund series of Heartland. Currently, the
Heartland family of funds consists of the following series:

<TABLE>
<CAPTION>
________________________________________________________________________________

COMMENCED AUTHORIZED
FUND OPERATIONS SHARES
________________________________________________________________________________
<S> <C> <C>
Value Fund 12/28/84 100,000,000
Small Cap Contrarian Fund 4/27/95 100,000,000
Value & Income Fund 10/26/93 100,000,000
U.S. Government Securities Fund 4/9/87 100,000,000
Wisconsin Tax Free Fund 4/3/92 100,000,000
Nebraska Tax Free Fund 9/27/93 100,000,000
________________________________________________________________________________
</TABLE>

Shares of stock are redeemable at net asset value, less any applicable
contingent deferred sales charge, at the option of the shareholder. Shares
have no preemptive,

<PAGE> 113

PROSPECTUS 25p

cumulative voting, subscription or conversion rights and are freely
transferable. Shares can be issued as full shares or fractions of shares.
A fraction of a share has the same kind of rights and privileges as a full share
on a pro rata basis. Shareholder inquiries should be directed to the Fund at
the address shown on the back cover of the Prospectus.

________________________________________________________________________________
PORTFOLIO TRANSACTIONS

Although Heartland Advisors may serve as a broker for the Fund, such
transactions are expected to be infrequent because the Fund will generally
effect transactions

<PAGE> 114

26p PROSPECTUS

only with dealers acting as principal. In order for Heartland Advisors to
effect any portfolio transactions for the Fund, the commissions, fees or other
remuneration received by Heartland Advisors must be reasonable and fair
compared to, and will not ordinarily be larger than, the commissions, fees or
other remuneration paid to other brokers in connection with comparable
transactions involving similar securities being purchased or sold in similar
markets during a comparable period of time.

Allocation of transactions, including their frequency, to various
dealers is determined by Heartland Advisors, as the Fund's advisor, in its best
judgment and in a manner deemed fair and reasonable to shareholders. The
primary consideration is prompt and efficient execution of orders in an
effective manner at the most favorable price. Subject to this primary
consideration, Heartland Advisors may also consider the provision of
supplemental research services and sales of the shares of Heartland funds as
factors in the selection of broker-dealers to execute portfolio transactions.

________________________________________________________________________________
PERFORMANCE INFORMATION

<PAGE> 115

PROSPECTUS 27p

In connection with the standardized yield and total return quotations described
above, the Fund may also advertise a standardized tax equivalent yield which
illustrates the yield that would be required on a fully taxable investment to
result in the same net income to an investor in the Fund, after payment of
federal and Nebraska taxes at the stated rate. The yield is computed by
dividing that portion of the Fund's current yield which is tax-exempt by one
minus a stated federal and Nebraska income tax rate, and then adding the
product to the value of any yield of the Fund which is not tax-exempt.

The Fund may, from time to time, compare its performance to other mutual funds
with similar investment objectives and to the industry as a whole, as quoted by
ranking services and publications, such as Lipper Analytical Services, Inc.,
Morningstar, Inc., CDA Technologies, Forbes, Fortune, Money and Business Week.
These rating services and magazines rank the performance of the Fund against
all funds over specified periods and in specified categories. The Fund may also
compare its performance to recognized bond market indices, such as the Lehman
Brothers Municipal Bond Index. Further information is contained in the
Statement of Additional Information.

________________________________________________________________________________
HOW TO REDEEM SHARES

________________________________________________________________________________
<TABLE>
<S> <C>
BY TELEPHONE:
1-800-432-7856 You may redeem by calling Heartland Advisors
or unless you elected not to have this privilege
(414) 289-7000 on your account application.
</TABLE>

________________________________________________________________________________
THROUGH SECURITIES REPRESENTATIVES:

<PAGE> 116
28p PROSPECTUS

BY MAIL TO:

Firstar Trust Company Send a written request specifying the name of the
Mutual Fund Services, Fund, the number of shares to be redeemed, your
3rd Floor name, your account number, and any additional
P.O. Box 701 documents listed below that apply to your
Milwaukee, WI 53201-0701 particular account. The Agent cannot accept
requests specifying a particular date for
redemption or special conditions. A signature
guarantee is required for certain redemptions,
including written redemptions over $25,000. For
further information, see "Signature Guarantees."
BY OVERNIGHT
DELIVERY TO:

Firstar Trust Company
Mutual Fund Services,
3rd Floor
615 East Michigan St.
Milwaukee, WI 53202

________________________________________________________________________________
TYPE OF
REGISTRATION REQUIREMENTS

Individual, Joint Tenants, Letter of instruction signed by all persons,
Sole Proprietorship, authorized to sign for the account, exactly as it
Custodial, General is registered, accompanied by signature guarantee(s)
Partners. if required.

Corporations, Associations, Letter of instruction accompanied by a corporate
resolution. The letter must be signed by at least
individual authorized (via corporate resolution)
to act on the account. The corporate resolution
must include a corporate seal or signature
guarantee.

Trusts Letter of instruction signed by the Trustee(s) (as
Trustee(s), with signature guarantee(s). (If the
Trustee's name is not registered on the account,
provide a copy of the trust document, certified
within the last 60 days.)

If you do not fall into any of these registration categories (i.e., executors,
administrators, conservators, or guardians), please call Heartland Advisors for
further instructions.

<PAGE> 117

PROSPECTUS 29p

TELEPHONE REDEMPTIONS. Shares may be redeemed by telephone, unless the
shareholder elects not to have this privilege on the account application. By
establishing the telephone redemption service, the shareholder assumes some
risks for unauthorized transactions. Heartland Advisors has implemented
procedures designed to reasonably assure that telephone instructions are
genuine. These procedures include recording telephone conversations, requesting
verification of various pieces of personal information and providing written
confirmation of such transactions. If the Agent, the Fund, Heartland Advisors
or any of their employees fails to abide by these procedures, the Fund may be
liable to a shareholder for losses he or she suffers from any resulting
unauthorized transaction(s). However, none of the Agent, the Custodian, the
Fund, Heartland Advisors or any of their employees will be liable for losses
suffered by a shareholder which result from following telephone instructions
reasonably believed to be genuine after verification pursuant to these
procedures.

There is currently no charge for telephone redemptions, although a charge may
be imposed in the future. Subject to waiver by the Fund in certain instances,
the minimum amount that may be redeemed by telephone is $1,000; all other
redemptions may be done in writing. During periods of substantial economic or
market changes, telephone redemptions may be difficult to implement. If a
shareholder is unable to contact Heartland Advisors or the Agent by telephone,
shares may also be redeemed by delivering the redemption request to the Agent
in person or by mail as described above. The Agent and the Fund reserve the
right to change, modify or terminate this telephone redemption service at any
time.

<PAGE> 118

30p PROSPECUTS

SENDING REDEMPTION PROCEEDS. The Agent will not send redemption proceeds until
all payments for the shares being redeemed have cleared, which may take up to
15 days from the purchase date.

By Mail. The Agent mails checks for redemption proceeds typically within one or
two days, but not later than seven days, after it receives the request and all
necessary documents. The Agent will send redemption proceeds in accordance with
your instructions.

By Wire. The Agent will normally wire redemption proceeds to your bank the next
business day after receiving the redemption request and all necessary
documents. The signatures on any written request for a wire redemption must be
guaranteed. The Agent currently deducts a $10 wire charge from the redemption
proceeds. This charge is subject to change. You will be responsible for any
charges which your bank may make for receiving wires.

CERTAIN CONDITIONS. If, due to redemptions, exchanges or other transfers, a
shareholder's account drops below $10,000 for three months or more, the Fund
has the right to redeem the shareholder's account, after giving 60 days notice,
unless the shareholder makes additional investments to bring the account value
to $10,000. Alternatively, the Fund may, after giving notice, impose a fee on
accounts maintained below the minimum investment level without an active
automatic investment plan.

The Fund may suspend the right to redeem shares for any period during which (a)
the New York Stock Exchange is closed or the Securities and Exchange Commission
determines that trading on the Exchange is restricted; (b) there is an
emergency as a result of which it is not reasonably practicable for the Fund to
sell its portfolio securities or to calculate the fair value of its net assets;
or (c) the Securities and Exchange Commission may permit for the protection of
shareholders.

<PAGE> 119

PROSPECTUS 31p

________________________________________________________________________________

HEARTLAND FUNDS

General Information and Account/Price Information (24hrs.):
1-800-432-7856 or (414) 289-7000

________________________________________________________________________________
HEARTLAND FUNDS

790 North Milwaukee Street
Milwaukee, Wisconsin 53202

INVESTMENT ADVISOR AND DISTRIBUTOR

Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, Wisconsin 53202

CUSTODIAN, TRANSFER AND
DIVIDEND DISBURSING AGENT

Firstar Trust Company
Mutual Fund Services, 3rd Floor
P. O. Box 701
Milwaukee, Wisconsin 53201-0701

AUDITOR

Arthur Andersen LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

COUNSEL

Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

<PAGE> 120

NOTES

<PAGE> 121
<TABLE>
<S><C>
OVERNIGHT MAIL TO: REGULAR MAIL TO:
Firstar Trust Company Firstar Trust Company
HEARTLAND FUNDS 615 E. Michigan P.O. Box 701
Milwaukee, WI 53202 Milwaukee, WI 53201-0701
AMERICA'S VALUE INVESTOR --------------------------------------------------------
ACCOUNT APPLICATION Shareholder Services: 1-800-432-7856 or (414)289-7000
Nebraska Tax Free Fund Current Prices, Account Information and Market Updates
--------------------------------------------------------
</TABLE>

1a. INDIVIDUAL AND JOINT ACCOUNTS

Individual Account: Use Lines 1 & 3
Joint Account: Use Lines 1, 2 & 3

1. ____________________________________________________________
FIRST NAME INITIAL LAST NAME

2. ____________________________________________________________
JOINT TENANT INITIAL LAST NAME

SOCIAL SECURITY NUMBER

3. ____________________________________________________________
SOCIAL SECURITY NUMBER OF INDIVIDUAL ON LINE 1

1b. UNIFORM GIFT TO MINOR ACCOUNT (UGMA)

4. ____________________________________________________________
CUSTODIAN'S NAME

5. ____________________________________________________________
MINOR'S NAME MINOR'S SOCIAL SECURITY NUMBER

1c. CORPORATE PARTNERSHIPS, TRUSTS & OTHER

6. ____________________________________________________________
NAME OF CORPORATION OR ENTITY

____________________________________________________________
TAX ID NUMBER

7. REGISTRATION TYPE: / / Unincorporated Association
/ / Corporation / / Partnership / / Trust

2. MAILING ADDRESS

8. ____________________________________________________________
STREET OR P.O. BOX

____________________________________________________________
CITY / STATE / ZIP

____________________________________________________________
HOME PHONE (AREA CODE + NUMBER) WORK PHONE

3. EMPLOYER INFORMATION (required by the NASD)

9. ____________________________________________________________
EMPLOYER NAME

____________________________________________________________
OCCUPATION

____________________________________________________________
STREET OR P.O. BOX

____________________________________________________________
CITY / STATE / ZIP

4. INVESTMENT

I wish to open a Heartland account in the indicated amount
(minimum initial investment of $10,000, or no minimum
initial investment with the Automatic Investment Plan):

PLEASE MAKE CHECK PAYABLE TO: AMOUNT

Heartland Nebraska Tax Free Fund $________________

5. AUTOMATIC MONTHLY INVESTMENT PLAN

Each month on the / / 5th, / / 20th or / / 5th and 20th, please withdraw
from my checking account in the amount of $_____________ and invest in my
Nebraska Tax Free Fund ($100 minimum).

I (We) have read and understand the conditions of Heartland Funds Automatic
Investment Plan. I (We) also understand that the Plan may be terminated or
modified at any time without notice by Heartland Funds or Firstar Trust

Company.

AUTHORIZATION TO MY BANK- PLEASE ATTACH VOIDED CHECK -
(Conditions on reverse side.)

<PAGE> 122

BE SURE TO COMPLETE ALL APPLICABLE SECTIONS AND SIGN!

6. DIVIDENDS AND CAPITAL GAINS

All dividends and capital gains distributions will be reinvested in the same
Heartland Fund UNLESS the box below is checked.

/ / Pay dividends and capital gains distributions in cash.
/ / I would like to diversify my portfolio by investing my
distributions in another Heartland Fund - A/C#_________________

7. TELEPHONE PRIVILEGES

TO WITHHOLD SUCH AUTHORIZATION, YOU MUST CHECK THE APPROPRIATE BOX BELOW:

Telephone EXCHANGE Privilege

/ / NO TELEPHONE EXCHANGE PRIVILEGE FOR ME OR MY ADVISOR.

Telephone REDEMPTION Privilege

/ / NO TELEPHONE REDEMPTION PRIVILEGE FOR ME OR MY ADVISOR.

8. OPTIONAL INFORMATION

$________________________ $_______________________
ANNUAL INCOME NET WORTH

9. OTHER FUNDS

/ / Please send a prospectus and application for other Heartland Funds.

/ / Please send a prospectus for the Portico Money Market Fund.

10. DUPLICATE STATEMENT FOR ADVISOR/PLANNER

Please send duplicate confirmation statements to the Financial Advisor,
Planner or other interested party as listed below:

X
____________________________________________________________
CUSTOMER SIGNATURE (AUTHORIZES DUPLICATE STATEMENTS)

11. SHAREHOLDER SIGNATURE(S)

I (We) am (are) of legal age to have received and read the Prospectus and
agree to its terms. I (We) authorize any instruction contained herein.

I CERTIFY, UNDER PENALTY OF PERJURY:

1. THAT THE SOCIAL SECURITY OR OTHER TAXPAYER IDENTIFICATION
NUMBER IS CORRECT, AND (STRIKE IF NOT TRUE)

THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER
THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.

X
____________________________________________________________
SIGNATURE OF SHAREHOLDER DATE

X
____________________________________________________________
SIGNATURE OF CO-OWNER (IF ANY) DATE

SIGN HERE IF APPLICABLE TO YOUR ACCOUNT:

____________________________________________________________

CORPORATE OFFICER / PARTNER / TRUSTEE TITLE

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

________________________________________________________________________________

AUTOMATIC INVESTING - AUTHORIZATION TO MY BANK
(continued from reverse side)

P L E A S E A T T A C H A V O I D E D C H E C K H E R E

<PAGE> 123

RULE 497 (c)
REG. NO. 33-11371
FILE NO. 811-4982

HEARTLAND NEBRASKA TAX FREE FUND

The Fund's address is 790 North Milwaukee Street, Milwaukee, Wisconsin
53202, and its telephone number is 414-289-7000 or 1-800-432-7856.

================================================================================

Statement of Additional Information

================================================================================

THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS APRIL 30, 1996.

<PAGE> 124

INTRODUCTION TO THE HEARTLAND FUNDS

The Heartland family of funds consists of separate series of Heartland
Group, Inc. ("Heartland"), a Maryland corporation registered as an open-end
management investment company. This Statement of Additional Information
relates only to the Heartland Nebraska Tax Free Fund (the "Fund") which is a
non-diversified fund with a distinct investment objective and program. A
separate Prospectus and related Statement of Additional Information for the
other Heartland funds are available from Heartland Advisors.

Heartland Nebraska Tax Free Fund is the only double tax-free fund that is
100% no-load to all investors in Nebraska.

INVESTMENT OBJECTIVE AND POLICIES

GENERAL

TAX EXEMPT OBLIGATIONS

General. The term "Tax Exempt Obligations" as used herein refers to debt
obligations issued by or on behalf of states, territories or possessions of the
United States or their agencies, instrumentalities, municipalities and
political subdivisions, the interest payable on which is, in the opinion of
bond counsel,

<PAGE> 125

excludable from gross income both for purposes of federal income taxation
(except, in certain instances, the alternative minimum tax, depending upon the
shareholder's tax status) and Nebraska personal income tax. Tax Exempt
Obligations are generally issued to obtain funds for various public purposes,
including the construction or improvement of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass transportation,
schools, streets and water and sewer works. Other public purposes for which
Tax Exempt Obligations may be issued include refunding outstanding obligations,
obtaining funds for general operating expenses and lending such funds to other
public institutions and facilities. In addition, Tax Exempt Obligations may be
issued by or on behalf of public bodies to obtain funds to provide for the
construction, equipping, repair or improvement of housing facilities,
convention or trade show facilities, airport, mass transit, industrial, port or
parking facilities and certain local facilities for water supply, gas,
electricity, sewage or solid waste disposal.

From time to time, legislation has been introduced in Congress for the
purpose of restricting the availability of or

<PAGE> 126

eliminating the federal income tax exemption for interest on Tax Exempt
Obligations, some of which have been enacted. Additional proposals may be
introduced in the future which, if enacted, could affect the availability of
Tax Exempt Obligations for investment by the Fund and the value of the Fund's
portfolio. In such event, management of the Fund may discontinue the issuance
of shares to new investors and may re-evaluate the Fund's investment objective
and policies and adopt and implement possible changes to them and the
investment program of the Fund.

The ratings of Moody's, S&P and Fitch represent their opinions as to the
quality of the Tax Exempt Obligations which

<PAGE> 127

they undertake to rate. Investors should bear in mind, however, that ratings
are relative and subjective and are not absolute standards of quality.
Although these ratings are an initial consideration for selection of portfolio
investments, Heartland Advisors will subject these securities to other
evaluative criteria prior to investing in such securities, and may invest in
unrated securities which it believes, based on information available to it and
its own analysis, are of comparable quality to those securities that are rated
in the top four categories.

The secondary trading market for junk bonds may be less well established
than for investment grade bonds, and such bonds may therefore be only thinly
traded. As a result, there may be no readily ascertainable market value of
such securities, in which case it will be more difficult for the Board of
Directors of the Fund to value accurately the securities, and consequently the
investment portfolio. Under such circumstances, the Board's subjective
judgment will play a greater role in the valuation. Additionally, adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidities of junk bonds, especially in
a thinly traded market.

<PAGE> 128

To the extent such securities are or become "illiquid" in the judgment of the
Board of Directors, the Fund's ability to purchase and hold such securities
will be subject to its investment restriction limiting its investment in
illiquid securities to 10% of its net assets. See "Investment Restrictions."

Floating and Variable Rate Demand Notes. The Fund may purchase floating
and variable rate demand notes. Generally, such

<PAGE> 129

notes are secured by letters of credit or other credit support arrangements
provided by banks. Such notes normally have a stated long-term maturity but
permit the holder to tender the note for purchase and payment of principal and
accrued interest upon a specified number of days notice. The issuer of
floating and variable rate demand notes normally has a corresponding right,
after a given period, to prepay in its discretion the outstanding principal
amount of the note plus accrued interest upon a specified number of days notice
to the noteholders. The interest rate on a floating rate demand note is based
on a specified interest index, such as a bank's prime rate, and is adjusted
automatically with changes in the index. The interest rate on a variable rate
demand note is adjusted at specified intervals, based upon current market
conditions. Heartland Advisors monitors the creditworthiness of issuers of
floating and variable rate demand notes in the Fund's portfolio.

<PAGE> 130

contract unless money is appropriated for such purpose by the appropriate
legislative body on a yearly or other periodic basis (the "nonappropriation"
clause); (ii) the exclusion of a lease or conditional sales contract from the
definition of indebtedness under relevant state law; or (iii) the lease
provides for termination at the option of the public body at the end of each
fiscal year for any reason or, in some cases, automatically if not
affirmatively renewed.

Obligations purchased on a "when-issued" basis or held in the Fund's
portfolio are subject to changes in market value based not only upon the
public's perception of the creditworthiness of the

<PAGE> 131

issuer, but also upon changes in the level of interest rates. In the absence
of a change in credit characteristics, which would likely cause changes in
value, the value of portfolio investments can be expected to decline in periods
of rising interest rates and to increase in periods of declining interest
rates.

When payment is made for "when-issued" securities, the Fund will meet its
obligation from its then available cash flow, sale of securities held in the
separate account, sale of other securities or, although it would normally not
expect to do so, from sale of the "when-issued" securities themselves (which
may have a market value greater or lesser than the Fund's obligation). Sale of
securities to meet such obligations would involve a greater potential for the
realization of capital gains, which could cause the Fund to realize income not
exempt from federal and Nebraska personal income tax.

TAXABLE OBLIGATIONS

<PAGE> 132

issued by the Student Loan Marketing Association, are supported only by the
credit of the instrumentality itself. Although the U.S. Government provides
financial support to such U.S. Government-sponsored agencies or
instrumentalities, no assurance can be given that it will always do so, since
it is not so obligated by law. The Fund will invest in such securities only
when Heartland Advisors is satisfied that the credit risk with respect to the
issuer is minimal.

Other Taxable Investments. As noted in the Prospectus, the Fund also may
invest temporarily in certificates of deposit, bankers' acceptances and other
time deposits.

OPTIONS, FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

<PAGE> 133

the same underlying security at a price equal to or less than the exercise
price of the "covered" option, or will establish and maintain with its
Custodian, for the term of the option, an account consisting of cash, U.S.
Government securities or other liquid high-grade debt obligations having a
value equal to the fluctuating market value of the optioned securities.

Through receipt of the option premium, a call writer mitigates the effects
of a price decline. At the same time, because a call writer must be prepared
to deliver the underlying security in return for the exercise price, even if
its current value is greater, a call writer gives up some ability to
participate in the underlying price increases. If a call option which the Fund
has written expires, the Fund will realize a gain in the amount of the premium;
however, such gain may be offset by a decline in the market value of the
underlying security during the option period. If the call option is exercised,
the Fund will realize a gain or loss from the sale of the underlying security.

<PAGE> 134

<PAGE> 135

Fund must continue to be prepared to pay the exercise price while the option is
outstanding, regardless of price changes, and must continue to segregate assets
to cover its position.

<PAGE> 136

transaction, or the delivery of the underlying security upon the exercise of
the option.

Index Options. The Fund may buy and sell options on indices related to
its investments (such as municipal bond or U.S. Treasury securities indices),
and may enter into closing transactions with respect to such options. Options
on indices would be used in a manner similar to the use of options on
securities; however, upon the exercise of an index option, settlement occurs in
cash rather than by delivery of an underlying security, with the exercising
option holder receiving the difference between the closing level of the index
upon which the option is based and the exercise price of the option. Unlike
options on specific debt instruments, gain or loss on an index option depends
on the price movements in the instruments underlying the index rather than
price movements in individual debt instruments.

<PAGE> 137

will be required to make margin payments as described below for futures
contracts.

When the Fund purchases a futures contract, it agrees to purchase a
specified underlying instrument at a specified future date. When the Fund
sells a futures contract, it agrees to sell the underlying instrument at a
specified future date. The price at which the purchase and sale will take
place is fixed when the Fund enters into the contract. The purchaser or seller
of a futures contract is not required to deliver or pay for the underlying
instrument unless the contract is held until the delivery date. However, upon
entering into a futures contract, and to maintain an open position in futures
contracts, the Fund would be required to deposit "initial margin" with its
Custodian in a segregated account in the name of the executing futures
commission merchant when the contract is entered into. The margin required for
a particular futures contract is set by the exchange on which the contract is
traded and may be significantly modified from time to time by the exchange
during the term of the contract. Futures contracts are customarily purchased
and sold on margins that may range upward from less than 5% of the value of the
contract being traded.

<PAGE> 138

The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the Fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had purchased
the underlying instrument directly. When the Fund sells a futures contract, by
contrast, the value of its futures position will tend to move in a direction
contrary to the market. Selling futures contracts, therefore, will tend to
offset both positive and negative market price changes, much as if the
underlying instrument had been sold.

<PAGE> 139

LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS

The Fund will not enter into any futures contract or option on a futures
contract if, as a result, the sum of initial margin deposits on futures
contracts and related options and premiums paid for options on futures
contracts the Fund has purchased, after taking into account unrealized profits
and unrealized losses on such contracts, would exceed 5% of the Fund's total
assets; provided, however, that in the case of an option which is in-the-money
at the time of purchase, the in-the-money amount may be excluded in calculating
the 5% limitation. In addition to the above limitations, the Fund will not:
(a) purchase or sell futures and options on futures or enter into closing
transactions with respect thereto if, as a result thereof, 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 20% 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); (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; or (c) the aggregate market value of all portfolio securities
covering call options written by the Fund would exceed 20% of the Fund's total
assets. The above limitations on the Fund's investments in futures contracts
and options and the policies regarding futures contracts and options discussed
elsewhere in this Statement of Additional Information are not fundamental
policies of the Fund and may be changed by Heartland's Board of Directors as
permitted by applicable regulatory authority.

Combined Positions. The Fund may purchase and write options in
combination with each other, or in combination with futures

<PAGE> 140

contracts, to adjust the risk and return characteristics of the overall
position. For example, the Fund may purchase a put option and write a call
option on the same underlying instrument in order to construct a combined
position whose risk and return characteristics are similar to selling a futures
contract. Another possible combined position would involve writing a call
option at one exercise price and buying a call option at a lower price, in
order to reduce the risks of the written call option in the event of a
substantial price increase. Because combined positions involve multiple
trades, they may result in higher transaction costs and may be more difficult
to open and close out.

RISKS IN OPTIONS AND FUTURES TRANSACTIONS

Options and futures can be highly volatile investments and involve certain
risks. A decision of whether, when, and how to hedge involves skill and
judgment, and even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior, or market or interest rate trends.
Successful hedging strategies require the ability to predict future movements
in securities prices, interest rates and other economic factors. There can be
no assurance that price movements in a hedging vehicle and in the underlying
securities will be directly correlated. Options and futures prices are
affected by such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instrument, and the time remaining
until expiration of the contract, which may not affect security prices the same
way. Imperfect correlation may also result from different levels of demand in
the options and futures markets and the securities markets, from structural
differences in how options and futures and securities are traded, or from
imposition of daily price fluctuation limits or trading halts by an exchange.
If price changes in the Fund's options or futures 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.

The risks of poor correlation may be increased for the Fund because
available exchange-traded options and standardized futures contracts will not
match the Fund's current or anticipated

<PAGE> 141

investments exactly. For example, even the use of an option or a futures
contract on a municipal bond index may result in an imperfect correlation since
the index generally will be composed of a much broader range of municipal
securities then the Tax Exempt Obligations in which the Fund will be invested,
which are limited to securities exempt from federal income tax and Nebraska
personal income tax. To the extent that the Fund's hedging vehicles do not
match its current or anticipated investments, there is an increased risk that
the options or futures positions will not track the performance of the Fund's
other investments.

DIVERSIFICATION

<PAGE> 142

single economic, political or regulatory occurrence than the portfolio
securities of diversified investment companies.

For purposes of such diversification, the identification of the issuer of
Tax Exempt Obligations depends on the terms and conditions of the security. If
a state or territory of the United States, or a political subdivision of any of
them, as the case may be, pledges its full faith and credit to payment of a
security, the guarantor is deemed the sole issuer of the security. If the
assets and revenues of an agency, authority or instrumentality of a state or
territory of the United States, or a political subdivision of any of them, are
separate from those of the state or territory, or political subdivision, and
the security is backed only by the assets and revenues of the agency, authority
or instrumentality, such agency, authority or instrumentality is deemed to be
the sole issuer of the security. Moreover, if the security is backed only by
revenues of an enterprise or specific projects of the state or territory, or a
political subdivision or agency, authority or instrumentality thereof, such as
utility revenue bonds, and the full faith and credit of the governmental unit
is not pledged to the payment of principal and interest on the obligation, such
enterprise or specific project is deemed the sole issuer. Similarly, in the
case of an industrial development bond, if that bond is backed only by certain
revenues to be received from the non-governmental user of the project financed
by the bond, then such non-governmental user is deemed to be the sole

<PAGE> 143

issuer. If, however, in any of the above cases, a state, territory or the
District, or a political subdivision of any of them, or some other entity,
guarantees a security and the value of all securities issued or guaranteed by
the guarantor and owned by the Fund exceeds 10% of the value of the Fund's
total assets, the guarantee is considered a separate security and is treated as
an issue of the guarantor.

<PAGE> 144

reimbursement regulations or their interpretation, could adversely affect the
amount of reimbursement available to hospital facilities. A number of
additional legislative proposals concerning health care are typically under
review by the United States Congress at any given time. These proposals span a
wide range of topics, including cost controls, national health insurance,
incentives for competition in the provision of health care services, tax
incentives and penalties related to health care insurance premiums and
promotion of prepaid health care plans.

GEOGRAPHIC CONCENTRATIONS

The following information is a brief summary of factors affecting Nebraska
and Puerto Rico (certain jurisdictions in which the Fund may invest) and does
not purport to be a complete description of such factors.

Factors Affecting Nebraska. The economy of Nebraska in recent years has
demonstrated strong performance, with total personal income increasing 4.8% in
1994 over 1993, following an increase of 326% from 1983 to 1993. State per
capita income of about $20,500, although slightly less than the national
average, is above the average per capita income for the other states in the
plains region. The state unemployment rate remains at less than 3%, which is
considerably less than the national average (approximately 6%). The state's
population has increased to 1,622,858 in 1994, from 1,578,385 in 1990.
Approximately 40% of the Nebraska population is concentrated in the three
metropolitan areas of Lincoln, Omaha and South Sioux City. Nebraska's economic
growth generally mirrors growth in the U.S. economy, although the state economy
tends to be less cyclical than the national economy.

Nebraska has a fairly diverse economy, with agriculture, trade and the
services industry (including health, personal and business services) dominant.
The trade (both wholesale and retail) sector accounts for approximately 25% of
total non-farm employment, with the service sector and the government sector
accounting for approximately 25% and 19%, respectively. Because Nebraska has
no private power companies, utilities jobs are counted in the government
sector. The manufacturing (including durable and non-durable goods) sector
accounted for approximately

<PAGE> 145

14% of total non-farm employment. Construction activity has been high during
the 1990s, and is expected to continue for the next several years at least with
respect to highway-related construction. The state's business failure rate
decreased 21.4% in 1994 from 1993. Overall, the state economy is expected to
grow at a slightly lower rate during the next few years than it has in the
recent past.

Agriculture traditionally has been the backbone of Nebraska's economy,
although its strength has diminished in the last two decades compared to other
sectors. However, the continued importance of agriculture to the state's
economy was clearly demonstrated in recent years, when increasing farm credit
problems and adverse weather conditions affected other sectors interacting with
agriculture. These sectors include manufacturers of farm equipment and
supplies; feed, seed and other farm supply retailers; truckers transporting
farm products; and banks providing loans for farm operating capital. Downward
trends in the commodity markets and cutbacks in federal agricultural programs
could also significantly impact the state economy.

Although Nebraska did not experience severe symptoms of the national
recession and weakened economy during the early 1990s, the state has faced
budget crises in recent years due in part to increased spending relating to
increased Medicaid costs and the results of a 1992 state supreme court decision
which decreased revenue. The decision declared unconstitutional a legislative
bill which exempted personal property from taxation, on the basis that the bill
improperly shifted the property tax burden to owners of real property. Many
local Nebraska governments are also suffering from fiscal stress and general
declines in financial performance. Recessionary impacts have resulted in
downturns in real estate related receipts, declines in the growth of income tax
revenues, lower cash positions and reduced interest income. Nebraska
municipalities and political subdivisions are also not immune to budget
shortfalls caused by cutbacks in state assistance. Property and other taxes
have been increased, programs have been cut and pay raises have been curtailed
to assist in controlling expenses. Recent decisions of the Nebraska Supreme
Court, the passage of certain legislation relating to personal property taxes
by the Nebraska Legislature, and a recent

<PAGE> 146

challenge of the current taxation system make it difficult to predict the
effects, if any, on the ability of political subdivisions of the state to levy
and collect ad valorem taxes to support their governmental operations. The
state of Nebraska anticipates future budget deficits over the next few years,
given current revenue projections.

The Puerto Rico economy generally parallels the economic cycles of the
United States, as most goods are imported from the U.S. Interest rates also
generally mirror those of the United States. The Puerto Rico economy over the
past few decades has been dominated by capital-intensive manufacturing
industries such as pharmaceuticals and chemicals, instruments, electronics,
apparel, food products and machinery. Additional major economic sectors
include government, trade and services. Industrial production in Puerto Rico
rose by approximately 5% during the past two years, although slower increases
are expected over the next few years as a result of growing uncertainty over
the continuation of the Section 936 tax credit applicable to income earned in
Puerto Rico. High-tech economic sectors have shown steady growth, while
labor-intensive industries are generally declining. The unemployment rate has
remained at approximately 14% to 16% during the past few years, and is expected
to remain at such levels over the short-term.

<PAGE> 147

Puerto Rico's real gross national product grew 3.3% in fiscal 1995 from
2.9% in 1994. The Commonwealth's GNP is expected to grow by about 2.6% in
1996. Economic expansion has been dampened by uncertainty over Section 936 tax
credits and the plebescite regarding statehood, as well as a sluggish U.S.
economy. Strong growth in tourism, car sales and shopping center development
has been offset by weakness in the manufacturing, insurance and government
sectors. Construction activity has grown in recent years, as the government
has increased its spending on public works and infrastructure improvements.

<PAGE> 148

depreciation claimed on property located and used in a trade orbusiness there);
the second is based on an applicable percentage (40%, once the limitation is
fully-phased in by 1998) of the amount of the credit that would have been
available to the corporation under pre-OBRA law. It is impossible to predict
with certainty whether, or to what extent, these limitations on the Section 936
credit will result in a decrease in the business operations of U.S.
corporations in Puerto Rico. Moreover, proposals under consideration by the
U.S. Congress would, if adopted, eliminate Section 936 tax benefits for new
investment and phase out such benefits for existing investment over 6-10 years.
Further weakening or elimination of the Section 936 tax benefits would likely
erode Puerto Rico's competitive advantage. The North American Free Trade
Agreement may also cause companies to transfer their operations from Puerto
Rico to Mexico with its lower wages and transportation costs.

Puerto Rico has been a commonwealth of the United States since 1952. In a
plebiscite held in November 1993, 48% of Puerto Rico voters confirmed their
preference for commonwealth status,

<PAGE> 149

narrowly defeating the 46% who voted for statehood. Only 4% voted for
independence. Another vote on statehood is not expected over the next several
years. However, any vote on a change in Puerto Rico's status requires the
approval of the U.S. Congress. The effects of a future decision to grant
statehood or independence to Puerto Rico are uncertain, although such a
decision could result in economic instability, volatility in the price and
market for securities, and elimination or phase-out of the Section 936 tax
credit.

LIMITATION ON SIZE OF THE FUND

Heartland's Board of Directors has determined that no such limitation will
be imposed with respect to the Fund prior to such time as its net asset value
reaches $50 million. Factors that the Board will consider in determining
whether to continue to accept purchases from new shareholders of the Fund
include the availability of an adequate supply of securities of suitable
quality for the Fund's portfolio, adequate diversification of portfolio
holdings, and the liquidity of the portfolio's holdings.

<PAGE> 150

flowing into the Fund were to decrease, there is a risk that redemptions by
existing shareholders might require the Fund to liquidate a portfolio position
at an inopportune time in order to effect the redemption.

PORTFOLIO TURNOVER

INVESTMENT RESTRICTIONS

(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

<PAGE> 151

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.

(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.

<PAGE> 152

(8) Buy or sell real estate.

(9) Buy or sell commodities.

(a) 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.

<PAGE> 153

tions on resale if, as a result of such purchase, such investments would exceed
5% of the value of the Fund's net assets.

For the Fund's limitations on futures and options transactions, see
"Investment Objective and Policies - Limitations on Futures and Options
Transactions."

MANAGEMENT

<PAGE> 154

Principal
Occupation
Position with During Past Five
Name and Address Heartland Years
- ---------------- -------------------- -----
<S> <C> <C>

William J. Nasgovitz President and President and
790 N. Milwaukee St. Director* Director, Heartland
Milwaukee, WI 53201 Advisors, Inc.,
since 1982; Senior
Vice President-
Investments, Dain
Bosworth
Incorporated from
1988 to June 1992;
Director of Capital
Investments, Inc.,
since 1989
(closed-end
investment
company).

Willard H. Davidson Director Financial and
3726 N. Lake Drive business consultant
Milwaukee, WI 53211 since 1984; prior
thereto, Chairman
and a Director,
Marine Corporation
(a bank holding
company) and Marine
Bank, N.A.

Hugh F. Denison Director* Vice President and
790 N. Milwaukee St. a Director,
Milwaukee, WI 53201 Heartland Advisors,
Inc. since 1988.

Jon D. Hammes Director President, Great
325 N. Corporate Drive Lakes Partners,
Suite 115 since 1991; prior
Brookfield, WI 53045 thereto, Managing
Partner, Trammel,
Crow Co.

Patrick J. Retzer Vice President, Vice President and
790 N. Milwaukee St. Treasurer, Heartland
</TABLE>

<PAGE> 155
<TABLE>
<S> <C> <C>
Milwaukee, WI 53201 Treasurer and Advisors,
Director* Inc. since 1987;
Director of
Heartland Advisors,
Inc. since 1988.

A. Gary Shilling Director President, A. Gary
500 Morris Avenue Shilling & Company,
Springfield, NJ 07081 Inc. (economic
consultants and
investment advisors),
since 1978

Linda F. Stephenson Director President and Chief
100 E. Wisconsin Avenue Executive Officer,
Milwaukee, WI 53202 Zigman Joseph
Stephenson (a
public relations
and marketing
communications
firm), since 1989.

Lois Schmatzhagen Secretary Secretary, Heartland
790 N. Milwaukee St. Advisors, Inc. since
Milwaukee, WI 53201 1988.

</TABLE>

- ---------------
*Directors who are "Interested Persons" (as defined in the Investment
Company Act of 1940) of Heartland Advisors.

<PAGE> 156

<TABLE>
<CAPTION>
AGGREGATE ESTIMATED ACTUAL TOTAL COMPENSATION
COMPENSATION FROM PENSION OR BENEFITS UPON FROM HEARTLAND AND
DIRECTOR HEARTLAND RETIREMENT BENEFITS RETIREMENT FUND COMPLEX
- ------------------- ----------------- ------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Willard H. Davidson $3,500 None None $3,500
Jon D. Hammes $2,000 None None $2,000
A. Gary Shilling $3,000 None None $3,000
Linda F. Stephenson $3,500 None None $3,500
</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

THE INVESTMENT ADVISOR

The Fund is managed by Heartland Advisors pursuant to an Investment
Advisory Agreement (the "Agreement"). The Agreement was approved most recently
on behalf of the Fund by the Board of Directors, including a majority of the
Directors who are not interested persons of the Funds or of Heartland Advisors,
on July 27, 1995. Heartland Advisors also serves as distributor for the Fund.

Heartland Advisors is controlled by William J. Nasgovitz, the President
and a Director of Heartland, by virtue of his ownership of a majority of its
outstanding capital stock.

<PAGE> 157

Heartland Advisors, founded in 1982, serves as the investment advisor for
the Heartland Wisconsin Tax Free, Value, Small Cap Contrarian, Value & Income
and U.S. Government Securities Funds, five additional series of Heartland, and
also provides investment management services for individuals, and institutional
accounts, such as pension funds and profit-sharing plans. As of March 31,
1996, Heartland Advisors had approximately $2.2 billion in assets under
management. Mr. Nasgovitz intends to retain control of Heartland Advisors
through the continued ownership of a majority of its outstanding voting stock.

Heartland Advisors bears all of its own expenses in providing services
under the Agreement and pays all salaries, fees and expenses of the officers
and directors of the Funds who are affiliated with Heartland Advisors. The
Fund bears all its other expenses including, but not limited to, necessary
office space, telephone and other communications facilities and personnel
competent to perform administrative, clerical and shareholder relations
functions; a pro rata portion of salary, fees and expenses (including legal
fees) of those directors, officers and employees of Heartland who are not
officers, directors or employees of Heartland Advisors; interest expenses; fees
and expenses of the Custodian, Agent and Dividend Disbursing Agent; taxes and
governmental fees; brokerage commissions and other expenses incurred in
acquiring or disposing of portfolio securities; expenses of registering and
qualifying shares for sale with the Securities and Exchange Commission and
state securities commissions; accounting and legal costs; insurance premiums;
expenses of maintaining the Fund's legal existence and

<PAGE> 158

of shareholders' meetings; expenses of preparation and distribution to existing
shareholders of reports, proxies and prospectuses; and fees and expenses of
membership in industry organizations.

The Fund pays Heartland Advisors an annual fee (payable in monthly
installments) for its services at the rate of 0.65 of 1% of the Fund's average
daily net assets. For the fiscal years ended December 31, 1995 and 1994, the
Fund paid advisory fees of $43,065 and $40,930, respectively. During those
periods, the advisory fee provided under the Fund's Agreement totalled $86,128
and $81,861 respectively, but Heartland Advisors voluntarily waived one-half of
such fees. For the period from September 27, 1993 (commencement of operations)
through December 31, 1993, the Fund paid no advisory fees; during that period
the advisory fee provided under the Fund's Agreement totalled $8,548, but
Heartland Advisors voluntarily waived all such fees.

<PAGE> 159

its duties or by reason of reckless disregard of its obligations and duties
under the Agreement.

PERFORMANCE INFORMATION

General.

Yield.

Yield quotations are based on a 30-day (or one-month) period, and are
computed by dividing the net investment income per share earned during the
period by the maximum offering price

<PAGE> 160

per share on the last day of the period, according to the following formula:

Yield = 2[(a-b + 1)6 - 1]
---
cd
Where:
a = dividends and interest earned during the period;

b = expenses accrued for the period (net of reimbursements);

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends; and

d = the maximum offering price per share on the last day of the
period.

The yield for the Fund for the month ended December 31, 1995 was 4.99%.
When advertising yield, the Fund will not advertise a one-month or a 30-day
period which ends more than 45 days before the date on which the advertisement
is published.

Taxable Equivalent Yield.

<PAGE> 161

Total Return.

P(1 + T)n = ERV

Where:

P = a hypothetical initial payment of $1,000;

T = average annual total return;

n = number of years; and

ERV = ending redeemable value for a hypothetical $1,000 payment made
at the beginning of the 1, 5 and 10-year periods at the end of
the 1, 5 and 10-year period (or fractional portion thereof).

The average annual total return for the Fund for the one-year period
ending December 31, 1995 was 19.70% and for the period from September 27, 1993
(commencement of operations) through December 31, 1995 was 3.56%.

<PAGE> 162

Cumulative Total Return.

CTR=(ERV-P) 100
-----
P

Where:

CTR = Cumulative Total Return;

ERV = Ending redeemable value at the end of the
period of a hypothetical $1,000 payment made
at the beginning of the period;

P = Initial payment of $1,000.

This calculation assumes all dividends and capital gain distributions are
reinvested at net asset value on the appropriate reinvestment dates as
described in the Prospectus, and includes all recurring fees, such as
investment advisory and management fees, charged as expenses to all shareholder
accounts. A sales load of 3% was charged with respect to purchases of shares
of the Funds prior to June 1, 1994, which is not reflected in the total return
figures.

The cumulative total return for the Fund for the one-year period ending
December 31, 1995 was 19.70% and for the period from September 27, 1993
(commencement of operations) through December 31, 1995 was 8.21%.

DETERMINATION OF NET ASSET VALUE PER SHARE

The Fund's shares are sold at their next determined net asset value per
share. The Fund determines the net asset value per share by subtracting its
liabilities (including accrued

<PAGE> 163

expenses and dividends payable) from its total assets (the value of the
securities the Fund holds plus cash or other assets, including interest accrued
but not yet received) and dividing the result by the total number of shares
outstanding.

DISTRIBUTION OF SHARES

<PAGE> 164

federal securities laws, and any expenses of advertising incurred by Heartland
Advisors in connection with the offering of the shares.

For the fiscal years ended December 31, 1995 and 1994 and for the period
from September 27, 1993 (commencement of operations) to December 31, 1993, the
aggregate amount of underwriting commissions paid with respect to the Fund was
$0, $120,141 and $194,193, respectively, of which Heartland Advisors retained
$0, $19,989 and $27,748, respectively.

TAX STATUS

The information in this section supplements the discussion of applicable
taxes found in the Prospectus (see "DIVIDENDS, DISTRIBUTIONS AND TAXES").

<PAGE> 165

est. Shareholders are urged to consult their tax advisers regarding the
possible exclusion of such portion of their dividends for state and local
income tax purposes.

The Fund may enter into certain options and futures contracts which will
be treated as Section 1256 contracts or straddles under the Internal Revenue
Code. Transactions which are considered Section 1256 contracts will be
considered to have been closed at the end of the Fund's fiscal year and any
gains or losses will be recognized for tax purposes at that time. Such gains
or losses and gains or losses from the normal closing or settlement of such
transactions will be characterized as 60% long-term capital gain or loss and
40% short-term capital gain or loss regardless of the holding period of the
instrument. The Fund will be required to distribute net gains on such
transactions to shareholders even though it may not have closed the transaction
and received cash to pay such distribution.

<PAGE> 166
DESCRIPTION OF SHARES

Shareholders have the right to vote on the election of directors at each
meeting of shareholders at which Directors are to be elected and on other
matters as provided by law or the Articles of Incorporation or Bylaws of
Heartland. Heartland's Bylaws do not require that meetings of shareholders be
held annually. However, special meetings of shareholders may be called for
purposes such as electing or removing Directors, changing fundamental policies
or approving investment advisory contracts. Shareholders of each series of a
series company, such as Heartland, vote together with each share of each series
in the company on matters affecting all series (such as election of Directors),
with each share entitled to a single vote. On matters affecting only one
series (such as an increase in that series' investment advisory fees or a
change in its fundamental investment restrictions), only the shareholders of
that series are entitled to vote. On matters relating to all the series but
affecting the series differently (such as a new Investment Advisory Agreement),
separate votes by series are required.

<PAGE> 167
PORTFOLIO TRANSACTIONS

The information in this section supplements the information in the
Prospectus under "PORTFOLIO TRANSACTIONS."

For particular transactions, the Fund may pay higher commissions to
brokers (other than to Heartland Advisors or its affiliates) than might be
charged if a different broker had been

<PAGE> 168

selected, if, in Heartland Advisors' opinion, this policy furthers the
objective of obtaining best price and execution. The allocation of orders
among brokers and the commission rates paid will be reviewed periodically by
Heartland's Board of Directors.

For the fiscal years ended December 31, 1995 and 1994, the Fund paid $0
and $70 in brokerage commissions, all of which were paid to Heartland Advisors,
and for the period from September 27, 1993 (commencement of operations) through
December 31, 1993, the Fund paid no brokerage commissions.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

<PAGE> 169

COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS

Quarles & Brady serves as legal counsel for the Fund. Arthur Andersen
LLP, independent public accountants, are auditors of the Fund.

FINANCIAL STATEMENTS

<PAGE> 170

APPENDIX A

SECURITIES RATINGS

GENERAL

The following is a description of the characteristics of ratings used by
Moody's Investors Service, Inc., Standard & Poor's Corporation and Fitch
Investors Service, Inc.

CORPORATE AND MUNICIPAL BOND RATINGS

RATINGS BY MOODY'S

A-1

<PAGE> 171

A-2

<PAGE> 172

RATINGS BY STANDARD & POOR'S

AAA -- This is the highest rating category assigned by Standard & Poor's
to a debt obligation and indicates an extremely strong capacity to pay
principal and interest.

AA -- Debt rated AA has a very strong capacity to pay principal and
interest and differs from AAA issues only in small degree.

A-3

<PAGE> 173
BB -- Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.

Standard & Poor's ratings, other than AAA, may be modified by the addition
of a plus or minus sign to show relative standing in the major categories.

RATINGS BY FITCH

BBB -- Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest

A-4

<PAGE> 174
and repay principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse impact
on these bonds and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.

Fitch applies modifiers "Plus(+)" or "Minus(-)" to the AA, A, BBB, BB and
B rating classifications. These modifiers are used to indicate the relative
position of a credit within a rating category.

MUNICIPAL NOTE RATINGS

RATINGS BY MOODY'S

MIG 2. This designation category denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

A-5

<PAGE> 175

RATINGS BY S & P

SP-1. Notes rated SP-1 have very strong or strong capacity to pay
principal and interest. Those issues determined to possess overwhelming safety
characteristics are designated as SP-1+.

SP-2. Notes rated SP-2 have satisfactory capacity to pay principal and
interest.

Notes due in three years or less normally receive a note rating. Notes
maturing beyond three years normally receive a bond rating, although the
following criteria are used in making that assessment.

-Amortization schedule (the larger the final maturity relative to other
maturities, the more likely the issue will be rated as a note.)

-Source of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be rated as a note.)

RATINGS BY FITCH

F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1 Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."

A-6

<PAGE> 176
F-3 Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate;
however, near-term adverse changes could cause these securities to be rated
below investment grade.

Fitch also uses the symbol "LOC" which indicates that the rating is based
on a letter of credit issued by a commercial bank.

A-7

<PAGE> 177

TABLE OF CONTENTS
PAGE
----

Introduction to the Heartland Funds ..................................... 2
Investment Objective and Policies ....................................... 2
Investment Restrictions ................................................. 28
Management .............................................................. 31
Control Persons and Principal Holders of Securities ..................... 34
The Investment Advisor .................................................. 34
Performance Information ................................................. 37
Determination of Net Asset Value per Share .............................. 40
Distribution of Shares .................................................. 41
Tax Status .............................................................. 42
Description of Shares ................................................... 44
Portfolio Transactions .................................................. 45
Custodian and Transfer and Dividend Disbursing Agent .................... 46
Counsel and Independent Public Accountants .............................. 47
Financial Statements .................................................... 47

<PAGE> 178

HEARTLAND NEBRASKA TAX FREE FUND
790 North Milwaukee Street
Milwaukee, Wisconsin 53202

Investment Advisor and Distributor
- ----------------------------------
Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, Wisconsin 53202

Custodian, Transfer and Dividend Disbursing Agent
- -------------------------------------------------
Firstar Trust Company
Mutual Funds Services, Third Floor
P.O. Box 701
Milwaukee, Wisconsin 53201-0701

Counsel
- -------
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

Auditor
- -------
Arthur Andersen LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202