HEARTLAND GROUP INC, 485BPOS, 1996-09-27

HEARTLAND GROUP INC
485BPOS, 1996-09-27

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<PAGE> 1

As filed with the Securities and Exchange Commission on September 27, 1996
Registration Nos. 33-11371
811-4982
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
---------
Post-Effective Amendment No. 27 [x]
---------
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 29 [x]
---------
(Check Appropriate box or boxes)

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

HEARTLAND GROUP, INC.
(Exact name of registrant as specified in charter)

790 NORTH MILWAUKEE STREET
MILWAUKEE, WISCONSIN 53202
(Address of Principal Offices) (Zip Code)

Registrant's Telephone Number, including Area Code (414) 347-7777

WILLIAM J. NASGOVITZ, President
790 NORTH MILWAUKEE STREET
MILWAUKEE, WISCONSIN 53202
(name and Address of Agent for Service)

Copy to:
CONRAD G. GOODKIND, ESQ.
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, WI 53202

It is proposed that this filing will become effective (check
appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[x] on October 11, 1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
[ ] on October 11, 1996 pursuant to paragraph (a)(2) of rule 485

If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment

*Registrant has elected to register an indefinite number of shares of Common
Stock, $0.01 par value, pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The Registrant's 24f-2 Notice for the year ended December 31, 1995
was filed on February 28, 1996.

===============
<PAGE> 2

HEARTLAND GROUP, INC.

FORM N-1A

CROSS-REFERENCE SHEET

TO POST-EFFECTIVE AMENDMENT NO. 27

Form N-1A
Item No. Prospectus Heading
- --------- -------------------
<S> <C> <C>
PART A

1. Cover Page . . . . . . . . . . . . . . . . . . . . Cover Page

2. Synopsis . . . . . . . . . . . . . . . . . . . . . Fund Expenses

3. Condensed Financial
Information . . . . . . . . . . . . . . . . . Financial Highlights

4. General Description of
Registrant . . . . . . . . . . . . . . . . . . . . Description of Fund Shares; Investment Objectives and Policies

5. Management of the Fund . . . . . . . . . . . . . . The Fund and the Heartland Organization; How to Buy Shares; Net
Asset Value Calculation; Portfolio Transactions

5A. Management's Discussion
of Fund Performance . . . . . . . . . . . . . Not applicable. See Annual Report

6. Capital Stock and Other
Securities . . . . . . . . . . . . . . . . . . . . Description of Fund Shares; Dividends, Distributions and Taxes;
Shareholder Services

7. Purchase of Securities Being
Offered . . . . . . . . . . . . . . . . . . . . . How to Buy Shares; Net Asset Value Calculation; How to Redeem
Shares

8. Redemption or Repurchase . . . . . . . . . . . . . How to Redeem Shares

9. Pending Legal Proceedings . . . . . . . . . . . . None

</TABLE>
<PAGE> 3

<TABLE>

PART B
<S> <C> <C>
10. Cover Page . . . . . . . . . . . . . . . . . . . . Cover Page

11. Table of Contents . . . . . . . . . . . . . . . . Cover Page

12. General Information and
History . . . . . . . . . . . . . . . . . . . . . Introduction to the Heartland Funds

13. Investment Objectives and
Policies . . . . . . . . . . . . . . . . . . . . . Investment Objective and Policies; Investment Restrictions;
Appendix A - Securities Ratings

14. Management of the Fund . . . . . . . . . . . . . . Management

15. Control Persons and Principal
Holders of Securities . . . . . . . . . . . . . . Control Persons and Principal Holders of Securities

16. Investment Advisory and
Other Services . . . . . . . . . . . . . . . . . . The Investment Advisor

17. Brokerage Allocation . . . . . . . . . . . . . . . Portfolio Transactions

18. Capital Stock and Other
Securities . . . . . . . . . . . . . . . . . . . . Description of Shares

19. Purchase, Redemption and
Pricing of Securities
Being Offered . . . . . . . . . . . . . . . . . Determination of Net Asset Value Per Share

20. Tax Status . . . . . . . . . . . . . . . . . . . . Tax Status

21. Underwriters . . . . . . . . . . . . . . . . . . . Distribution of Shares

22. Calculation of Performance
Data . . . . . . . . . . . . . . . . . . . . . . . Performance Information

23. Financial Statements . . . . . . . . . . . . . . . Financial Statements
</TABLE>

-3-
<PAGE> 4

HEARTLAND SMALL CAP CONTRARIAN FUND
HEARTLAND VALUE FUND
HEARTLAND MID CAP VALUE FUND
HEARTLAND LARGE CAP VALUE FUND
HEARTLAND VALUE PLUS FUND
HEARTLAND U.S. GOVERNMENT SECURITIES FUND

Prospectus
October _______, 1996

The Heartland Small Cap Contrarian Fund, the Heartland Value Fund, the
Heartland Mid Cap Value Fund, the Heartland Large Cap Value Fund, the Heartland
Value Plus Fund, and the Heartland U.S. Government Securities Fund
(collectively, the "Funds") are separate mutual fund portfolios of Heartland
Group, Inc. ("Heartland"). This Prospectus contains information you should
know about the Funds before you invest. Please keep it for reference. A
Statement of Additional Information for the Funds (dated October _____, 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
Funds' 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.

SHARES OF THE FUNDS 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> 5

INVESTMENT SUMMARY

HEARTLAND SMALL CAP CONTRARIAN FUND'S investment objective is maximum long-term
growth. The Fund seeks to achieve its objective through aggressive, yet
flexible, value investing in small company stocks.

HEARTLAND VALUE FUND'S investment objective is long-term capital appreciation.
The Fund seeks to achieve its objective through investment in small company
stocks selected on a value basis. The Value Fund closed to new investors
effective July 1, 1995.

HEARTLAND MID CAP VALUE FUND'S investment objective is long-term capital
appreciation. The Fund seeks to achieve its objective through value investing
in mid-cap stocks, those of companies with market capitalizations between $500
million and $2.5 billion.

HEARTLAND LARGE CAP VALUE FUND'S investment objective is long-term capital
appreciation. The Fund seeks to achieve its objective through value investing
in large cap stocks, those of companies with market capitalizations over $1
billion.

HEARTLAND VALUE PLUS FUND'S investment objectives are capital appreciation and
current income. The Fund seeks to achieve its objectives primarily through
investment in income-producing equity securities of smaller companies selected
on a value basis, and the Fund may also invest in debt securities. (This Fund
was formerly known as the Heartland Value & Income Fund.)

HEARTLAND U.S. GOVERNMENT SECURITIES FUND'S investment objectives are a high
level of current income, liquidity and safety of principal.

<PAGE> 6

TABLE OF CONTENTS

Fund Expenses 4

Financial Highlights 5

Investment Objectives and Policies 9

How to Buy Shares 21

How to Redeem Shares 23

Shareholder Services 27

Dividends, Capital Gains Distributions and Taxes 30

The Funds and the Heartland Organization 31

The Distribution Plan 33

Net Asset Value Calculation 33

Description of Fund Shares 33

Portfolio Transactions 34

Performance Information 35

<PAGE> 7

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 each
Fund's investment objective and performance.

<TABLE>
<CAPTION>
SMALL CAP MID CAP LARGE CAP VALUE U.S.
CONTRARIAN VALUE VALUE VALUE PLUS GOVERNMENT
FUND FUND FUND FUND FUND SECURITIES FUND
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales load on purchases None None None None None None
Sales load on reinvested dividends None None None None None None
Exchange fees None None None None None None
Redemption fees (1) None None None None None None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)

Management fees (2) (after fee
waivers) .75% .75% .75% .75% .70% .50%
Rule 12b-1 fees .25% .25% .25% .25% .25% .25%
Other expenses (3) .44% .29% .45% .45% .59% .32%
TOTAL FUND OPERATING EXPENSES 1.44% 1.29% 1.45% 1.45% 1.54% 1.07%
</TABLE>

(1) The Agent charges a wire fee for the return of redemption proceeds
requested by wire transfer. The fee is currently $10.00. Shares of the Funds
purchased between February 12, 1993 and June 1, 1994 subject to a contingent
deferred sales charge remain subject to such charge upon redemption of the
shares. See "HOW TO REDEEM SHARES."

(2) The management fee shown in the table applicable to the U.S. Government
Securities Fund gives effect to the voluntary waiver by Heartland Advisors of
0.15 of 1% of the management fee. Without such waiver, the Management fees and
Total Fund Operating Expenses would have been .65% and 1.22% of average net
assets, respectively. Heartland Advisors expects to continue the waiver for
the current fiscal year; however, it may reinstate an additional portion or all
of the fee at any time.

(3) Other expenses set forth in the table for the Small Cap Contrarian, Mid
Cap Value and Large Cap Value Funds are based on management's estimates for the
current fiscal year.

<PAGE> 8

EXAMPLE

You would pay the following expenses on a $1,000 investment, assuming:

(1) 5% annual return and (2) redemption at the end of each time period:

<TABLE>
<CAPTION>
SMALL CAP VALUE FUND MID CAP LARGE CAP VALUE U.S.
CONTRARIAN VALUE FUND VALUE FUND PLUS GOVERNMENT
FUND FUND SECURITIES FUND
<S> <C> <C> <C> <C> <C> <C>
One year $15 $13 $15 $15 $16 $11
Three years $46 $41 $46 $46 $49 $34
Five years N/A $71 N/A N/A $84 $59
Ten years N/A $156 N/A N/A $183 $131
</TABLE>

The purpose of this expense information is to assist in understanding the
various costs and expenses an investor will bear directly or indirectly in each
of the Funds. More detailed information concerning these expenses is set forth
in the sections of this Prospectus entitled "How To Buy Shares," "The
Distribution Plan" and "The Funds and the Heartland Organization." THE ABOVE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

FINANCIAL HIGHLIGHTS

Except as indicated below, the following Financial Highlights table has been
examined by Arthur Andersen LLP, independent public accountants, whose reports
on the financial statements of the Value, Value Plus and U.S. Government
Securities Funds for the fiscal year ended December 31, 1995 and the Small Cap
Contrarian Fund for the period from April 27, 1995 through December 31, 1995,
are included in the Funds' Annual Report to Shareholders for such periods, and
incorporated by reference into the Statement of Additional Information. The
information presented in the table for the six month period ending June 30,
1995 is unaudited. The table should be read in conjunction with the audited
financial statements and related notes appearing in the Funds' Annual Report
and the unaudited financial statements and related notes included in the Funds'
Semi-Annual Report to Shareholders for the six months ending June 30, 1995,
which are incorporated by reference into the Statement of Additional
Information. Additional information about the Funds' performance is contained
in the Annual and Semi-Annual Reports, which may be obtained without charge by
writing or calling Heartland Advisors. Financial information is not available
for the Mid Cap Value and Large Cap Value Funds as their shares are being
offered for the first time in this Prospectus.

<PAGE> 9

FINANCIAL HIGHLIGHTS

INCOME FROM INVESTMENT LESS DISTRIBUTIONS
OPERATIONS

Fiscal Net Asset Net Net Realized Total from Dividends Distributions Total
Year Value, Investment and Investment from Net from Capital Distributions
Ended Beginning Income Unrealized Operations Investment Gains
December of Period (Loss) Gain/(Loss) Income
on Securities
HEARTLAND SMALL CAP CONTRARIAN FUND
<S> <C> <C> <C> <C> <C> <C> <C>
4/27/95(1) to
12/31/95 $10.00 $0.03 $2.05 $2.08 $(0.03) $(0.26) $(0.29)
====== ===== ===== ===== ====== ====== ======
1/1/96 to
6/30/96(2) 11.79 (0.01) 2.17 2.16 - - -
====== ===== ===== ===== ====== ====== ======
<CAPTION>

HEARTLAND VALUE FUND
<S> <C> <C> <C> <C> <C> <C> <C>
1986 $13.46 $0.08 $1.39 $1.47 $(0.02) $(0.90) $(0.92)
1987 14.01 0.06 (1.16) (1.10) (0.14) (1.03) (1.17)
1988 11.74 0.13 3.04 3.17 (0.13) (0.43) (0.56)
1989 14.35 0.13 0.81 0.94 (0.13) (1.34) (1.47)
1990 13.82 0.02 (2.38) (2.36) (0.02) (0.12) (0.14)
1991 11.32 (0.08) 5.66 5.58 - (0.84) (0.84)
1992 16.06 (0.09) 6.91 6.82 - (2.47) (2.47)
1993 20.41 (0.12) 3.95 3.83 - (1.02) (1.02)
1994 23.22 (0.09) 0.47 0.38 - (0.88) (0.88)
1995 22.72 0.13 6.63 6.76 (0.13) (1.40) (1.53)
1/1/96 to
6/30/96(2) 27.95 0.04 3.70 3.74 - - -
====== ===== ===== ===== ====== ====== ======
<CAPTION>

HEARTLAND VALUE PLUS FUND
<S> <C> <C> <C> <C> <C> <C> <C>
10/26/93(1) to
12/31/93 $10.00 $0.07 $0.45 $0.52 $(0.07) $ - $(0.07)
====== ===== ===== ===== ====== ====== ======
1994 10.45 0.41 (0.92) (0.51) (0.41) - (0.41)
====== ===== ===== ===== ====== ====== ======
1995 9.53 0.41 1.89 2.30 (0.41) (0.25) (0.66)
1/1/96 to
6/30/96(2) 11.17 0.22 1.51 1.73 (0.22) - (0.22)
====== ===== ===== ===== ====== ====== ======
<CAPTION>

HEARTLAND U.S. GOVERNMENT SECURITIES FUND
<S> <C> <C> <C> <C> <C> <C> <C>
4/9/87(1) to
12/31/87 $9.55 $0.50 $(0.33) $0.17 $(0.50) $ - $(0.50)
====== ===== ===== ===== ====== ====== ======
</TABLE>

<PAGE> 10

<PAGE> 11

<TABLE>
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA

Ratio of Net
Ratio of Net Investment
Net Asset Value, Net Assets, Expenses to Income/(Loss) Portfolio Turnover
End of Period Total Return End of Period Average Net to Average Net Ratio
Assets Assets

HEARTLAND SMALL CAP CONTRARIAN FUND
<S> <C> <C> <C> <C> <C>
$11.79 20.8%(4) $85,548,571 1.44%(3) 1.01%(3) 45%
13.95 18.3%(4) 222,013,026 1.46%(3) (0.27)%(3) 30%
====== ===== =========== ==== ===== ==
<CAPTION>

HEARTLAND VALUE FUND
<S> <C> <C> <C> <C> <C>
$14.01 11.0%(2) $28,146,987 1.66% 0.71% 89%
11.74 (8.4)%(2) 27,536,584 1.51% 0.43% 78%
14.35 27.1% 28,499,177 1.71% 0.85% 50%
13.82 6.6% 30,797,831 1.65% 0.86% 88%
11.32 (17.1)% 19,942,598 1.74% 0.14% 76%
16.06 49.4% 29,879,996 1.69% (0.54)% 79%
20.41 42.5% 48,391,112 1.48% (0.49)% 76%
23.22 18.8% 186,518,201 1.51% (0.71)% 51%
22.72 1.7% 339,364,388 1.39% (0.52)% 35%
27.95 29.8% 1,190,926,008 1.29% 0.61% 31%
31.69 13.4%(4) 1,511,896,154 1.29%(3) 0.29%(3) 15%
====== ===== =========== ==== ===== ==

HEARTLAND VALUE PLUS FUND
<S> <C> <C> <C> <C> <C>
$10.45 5.2%(4) $5,810,983 1.30%(3) 6.52%(3) 6%
9.53 (4.9)% 9,884,142 1.80% 4.39% 127%
11.17 24.4% 19,122,694 1.54% 3.90% 150%
12.68 15.5%(4) 27,560,218 1.58%(3) 3.79%(3) 47%
====== ===== =========== ==== ===== ==

HEARTLAND U.S. GOVERNMENT SECURITIES FUND
<S> <C> <C> <C> <C> <C>
$9.22 1.9%(2) $12,610,076 1.04%(3) 7.16%(3) 64%
9.04 6.4% 12,414,180 0.95%(5) 8.25% 136%
9.25 11.3% 11,594,574 0.89%(5) 8.45% 142%
9.39 10.0% 16,423,750 0.86%(5) 7.98% 127%
9.97 17.0% 29,101,367 0.92%(5) 7.06% 185%
9.93 10.1% 28,377,978 0.92%(5) 6.71% 149%
10.50 17.8% 66,788,763 1.06%(5) 5.09% 200%
8.91 (9.6)% 64,807,074 1.07%(5) 6.30% 95%
9.96 19.0% 66,260,798 1.07%(5) 6.31% 97%
</TABLE>

<PAGE> 12

9.22 (4.5)%(4) 57,623,497 1.08%(3) 6.22%(3) 14%

(1) Commencement of operations
(2) Unaudited
(3) Annualized
(4) Not Annualized
(5) Heartland Advisors voluntarily waived the management fee in its entirety
from May 7, 1988 through November 30, 1990. Effective December 1, 1990,
Heartland Advisors partially reinstated a portion of the fee at the rate of
.25 of 1% of average net assets and, effective January 20, 1992 and January 1,
1993, respectively, reinstated additional portions of the fee resulting in a
rate of .35 of 1% and .50 of 1% of average daily net assets, respectively.
* Contingent deferred and initial sales charges in effect for the Funds
prior to June 1, 1994 are not reflected in Total Return as set forth in the
table.

<PAGE> 13

INVESTMENT OBJECTIVES AND POLICIES

INVESTMENT OBJECTIVES. The investment objectives of each of the Funds are
fundamental and may not be changed without shareholder approval. The investment
policies of the Funds, unless otherwise specified, are not fundamental
policies, and therefore may be changed by the affirmative vote of a majority of
the directors of Heartland. In view of the risks inherent in all investments in
securities, there is no assurance that the investment objectives of the Funds
will be achieved.

The SMALL CAP CONTRARIAN FUND'S investment objective is maximum long-term
growth. The Fund seeks to take advantage of both rising and, to a lesser
degree, declining markets.

The VALUE FUND seeks long-term capital appreciation through value investing in
small companies.

The MID CAP VALUE FUND seeks long-term capital appreciation through value
investing in mid-size companies.

The LARGE CAP VALUE FUND seeks long-term capital appreciation through value
investing in large companies.

The VALUE PLUS FUND'S investment objectives are capital appreciation and
current income. In pursuit of its objectives, the Fund seeks a yield that
exceeds the yield of securities comprising the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500").

The U.S. GOVERNMENT SECURITIES FUND'S investment objectives are a high level of
current income, liquidity and safety of principal.

HEARTLAND'S VALUE CRITERIA FOR INVESTING IN STOCKS

In selecting equity securities for the Small Cap Contrarian, Value, Mid Cap
Value, Large Cap Value and Value Plus Funds, Heartland Advisors considers
whether the security is undervalued relative to a set of factors, including:

- - price/earnings ratio - management capabilities
- - market price to book value - undervalued assets
- - price/cash flow ratio - potential for favorable developments
- - earnings growth - insider and institutional ownership
- - long-term debt/capital - technical analysis

WHAT IS MEANT BY MARKET CAP?

"Market Cap" (market capitalization) is a measure of the value of a company's
equity as determined by multiplying the company's current stock price by the
number of shares it has outstanding. While every equity investment involves
some degree of risk, in general, companies with larger market capitalizations
tend to be more established and their securities may have greater liquidity and
may be subject to lower volatility than those of smaller companies.

Investments in equity securities of companies with smaller market
capitalizations may involve a higher degree of risk than investments in the
general equity markets. However, Heartland Advisors believes that the relative
lack of attention from investment analysts and institutional investors to small
and mid-cap companies may result in opportunitites to purchase the securities
of

<PAGE> 14

those companies at attractive valuations. In general, the prices of small and
mid-cap companies may be more volatile than those of larger companies, the
securities of smaller companies may have less market liquidity, and smaller
companies may be more likely to be adversely affected by poor economic or
market conditions.

It is anticipated that certain of the portfolio securities held by the Small
Cap Contrarian Fund, the Value Fund and, to a more limited extent, the Mid Cap
Value Fund may not be widely traded and that a Fund's position in such
securities may be substantial in relation to the market for such securities.
Accordingly, it may be difficult at times for the Fund to dispose of such
securities at prevailing market prices in order to meet redemptions or other
cash needs.

SMALL CAP CONTRARIAN FUND

The Small Cap Contrarian Fund seeks to achieve maximum long-term growth by
aggressive, yet flexible, value investing in smaller companies that are
attractively priced. The Fund seeks to take advantage of both rising and, to a
lesser degree, declining markets. Under normal market conditions, at least 65%
of the Fund's total assets will be invested in equity securities of smaller
companies with market capitalizations of less than $500 million.

The Small Cap Contrarian Fund takes an aggressive investment approach and may
be appropriate for investors who seek potentially high long-term returns, have
an investment horizon of at least three years, and are willing to accept
certain risks, including risks of short selling, futures and options, foreign
securities, leverage and potentially significant short-term fluctuations in the
Fund's share price. See "Other Investment Policies, Practices and Risk Factors
of the Funds."

The Fund focuses its investments primarily on equity securities of smaller
companies whose potential values generally have been overlooked by other
investors. Such companies include attractively priced, viable businesses that
have not yet been discovered or become popular, previously unpopular companies
having appreciation potential due to changed circumstances, companies that have
declined in value and no longer command an investor following, and previously
popular companies temporarily out of favor due to short-term factors. Heartland
Advisors will consider the factors listed under "Heartland's Value Criteria for
Investing in Stocks" when selecting companies for the Fund's portfolio. As of
March 31, 1996, the median market capitalization of the companies in which the
Fund had a long position was approximately $44 million, with a weighted average
market capitalization of about $164 million.

Equity securities in which the Fund may invest include common stock,
convertible debt, preferred stock, warrants or other securities exchangeable
for shares of common stock, and other equity securities, including real estate
investment trusts. The Small Cap Contrarian Fund may invest up to, but less
than, 35% of its total assets in debt securities, including lower-quality,
high-yielding debt securities. The Fund may buy debt securities of all types
and qualities issued by both domestic and foreign issuers. For information
regarding the risks associated with investing in lower-quality securities, see
"Investment Quality."

As a matter of fundamental policy, the Small Cap Contrarian Fund will not
purchase the securities of any issuer if, as a result: (i) with respect to 75%
of the Fund's total assets, more than 5% of its total assets would be invested
in such issuer or the Fund would own more than 10% of the outstanding voting
securities of such issuer; or (ii) more than 25% of its assets would be
concentrated in any one industry. These limitations do not apply to U.S.
government securities. The aggressive investment techniques in which the Small
Cap Contrarian Fund may engage may

<PAGE> 15

entail risks not encountered by the average mutual fund. Some techniques, such
as short sales, the use of put and call options and futures, investments in
foreign securities, leverage and short-term trading, may be considered
speculative and may also result in higher operating expenses. See "Other
Investment Policies and Practices of the Funds."

VALUE FUND

Effective July 1, 1995, the Value Fund closed to new investors. Investors who
were shareholders of the Value Fund on July 1, 1995, certain employee benefit
plans and certain financial advisers and planners may continue to add to an
existing account or open new accounts. See "How to Buy Shares." The Fund may
resume sales to new investors at some future date, but it has no present
intention to do so.

To achieve long-term capital appreciation, the Value Fund invests primarily in
equity securities of small companies with market capitalizations of less than
$300 million selected on a value basis. The Value Fund will invest at least 65%
of its total assets in equity securities of value companies as determined by
Heartland Advisors in accordance with the factors listed above.

While the Value Fund may invest in securities of companies with market
capitalizations in excess of $300 million, a majority of the Fund's investments
will be in stocks with smaller market capitalizations. As of March 31, 1996,
the median market capitalization of the companies in the Value Fund's portfolio
was approximately $59 million, with a weighted average market capitalization
for the Fund's portfolio of approximately $211 million. The Value Fund may also
invest in convertible securities and debt securities rated B or above, and
warrants, each up to 5% of the Fund's net assets.

As a matter of fundamental policy, the Value Fund will not purchase the
securities of any company if, as a result: (i) it would own more than 10% of
the outstanding voting securities of such company; (ii) such holdings would
amount to more than 5% of the Value Fund's total assets; or (iii) more than 25%
of its assets would be concentrated in any one industry. These limitations do
not apply to U.S. government securities. The Value Fund may, from time to time
purchase securities issued by broker-dealers that sell or distribute its shares
or that execute portfolio brokerage transactions for the Value Fund; provided
that any such purchases will only be made in accordance with the limitations
imposed on such purchases by the Securities and Exchange Commission. The Value
Fund will not invest in securities issued by Heartland Advisors or any
affiliate of Heartland Advisors.

MID CAP VALUE FUND

The Mid Cap Value Fund seeks to achieve long-term capital appreciation through
investing in mid-size companies that are attractively priced. Under normal
market conditions, the Fund will invest at least 65% of its total assets in
equity securities of companies with market capitalizations between $500 million
and $2.5 billion selected on a value basis. Heartland Advisors' value criteria
for investing in stocks are discussed above. In addition, Heartland Advisors
will consider a relatively higher dividend yield as a favorable factor in
selecting equity securities for the Mid Cap Value Fund.

<PAGE> 16

invest up to 35% of its total assets in debt securities, including up to 15% of
its total assets which may be invested in non-investment grade debt securities,
provided the Fund may not invest in securities rated below B, or judged by
Heartland Advisors to be of comparable quality, at the time of purchase. For
information regarding non-investment grade securities, see "Investment
Quality."

As a matter of fundamental policy, the Mid Cap Value Fund will not purchase the
securities of any issuer if, as a result: (i) with respect to 75% of the
Fund's total assets, more than 5% of its total assets would be invested in such
issuer or the Fund would own more than 10% of the outstanding voting securities
of such issuer; or (ii) more than 25% of its assets would be concentrated in
any one industry. These limitations do not apply to U.S. government
securities.

LARGE CAP VALUE FUND

The Large Cap Value Fund seeks to achieve long-term capital appreciation by
investing in attractively priced companies with market capitalizations over $1
billion. Under normal market conditions, the Fund will invest at least 65% of
its total assets in equity securities of companies with market capitalizations
in excess of $1 billion selected on a value basis. Heartland Advisors' value
parameters for investing in stocks are discussed above. While the Fund will
also invest in securities that do not produce income, Heartland Advisors
generally will look for securities with relatively higher dividend yields when
selecting securities it considers undervalued for the Large Cap Value Fund.

Equity securities in which the Fund may invest include common stock, preferred
stock, convertible debt, warrants or other securities exchangeable for shares
of common stock, and other equity securities, including real estate investment
trusts. The Large Cap Value Fund may also invest up to 35% of its total assets
in debt securities, including up to 15% of its total assets which may be
invested in non-investment grade debt securities, provided the Fund may not
invest in securities rated below B, or judged by Heartland Advisors to be of
comparable quality, at the time of purchase. For information regarding
non-investment grade securities, see "Investment Quality."

As a matter of fundamental policy, the Large Cap Value Fund will not purchase
the securities of any issuer if, as a result: (i) with respect to 75% of the
Fund's total assets, more than 5% of its total assets would be invested in such
issuer or the Fund would own more than 10% of the outstanding voting securities
of such issuer; or (ii) more than 25% of its assets would be concentrated in
any one industry. These limitations do not apply to U.S. government
securities.

VALUE PLUS FUND

To achieve its objectives, the Value Plus Fund primarily invests in
income-producing equity securities of smaller companies, those with market
capitalizations of less than $750 million. The Fund seeks a yield that is
greater than the yield of the S&P 500. The Fund expects to realize income from
dividends earned on equity investments and interest earned on debt securities.

Under normal market conditions, the Value Plus Fund will invest at least
65% of its total assets in equity securities of value companies selected by
Heartland Advisors in accordance with the factors listed under "Heartland's
Value Criteria for Investing in Stocks" above.

<PAGE> 17

Equity securities in which the Fund may invest include common stock,
convertible debt, preferred stock, warrants or other securities exchangeable
for shares of common stock, and other equity securities, including real estate
investment trusts. Heartland Advisors attempts to reduce the volatility of the
Fund relative to the S&P 500 through the income-producing features of the Fund;
however, there is no assurance the Fund will achieve this goal.

The Value Plus Fund may invest up to 35% of its total assets in debt
securities, including up to 25% of its assets in non-investment grade debt
securities, provided that the Fund may not invest in securities rated below B,
or judged by Heartland Advisors to be of comparable quality, at the time of
purchase. See "Investment Quality." While Heartland Advisors will look to the
conversion feature of convertible debt securities and consider them as "equity
securities," those securities will be subject to the above 25% limitation on
investments in non-investment grade securities.

As a matter of fundamental policy, the Value Plus Fund will not purchase the
securities of any issuer if, as a result: (i) the Fund would own more than 10%
of the outstanding voting securities of such issuer; (ii) with respect to 75%
of the Fund's total assets, more than 5% of its total assets would be invested
in such issuer; (iii) with respect to its total portfolio, more than 10% of the
total assets would be invested in such issuer; or (iv) more than 25% of its
assets would be concentrated in any one industry. These limitations do not
apply to U.S. government securities.

U.S. GOVERNMENT SECURITIES FUND

As a fundamental policy, the U.S. Government Securities Fund will invest at
least 65% of its total assets in obligations issued or guaranteed by the U.S.
government or by its agencies or instrumentalities. The government obligations
in which the Fund may invest may be either direct obligations of the Treasury
or securities issued or guaranteed by government agencies or instrumentalities.
Of the obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, some are backed by the full faith and credit of the U.S.
government and others are backed only by the rights of the issuer to borrow
from the U.S. Treasury (such as Federal Home Loan Bank bonds and Federal
National Mortgage Association securities). Investments in this latter category
of obligations are subject to risk based on the creditworthiness of the issuing
agency or instrumentality, and there is no assurance that the U.S. government
will provide financial support for such agencies or instrumentalities.

Heartland Advisors buys and sells securities after considering economic
conditions, liquidity factors and interest rate trends. Heartland Advisors
also considers certain factors, including sector rotation, security selection
and maturity management in its value-based investment process for the Fund.
Increases in interest rates may decrease the value of the U.S. Government
Securities Fund's portfolio and decreases in interest rates may increase the
value of its portfolio. The U.S. Government Securities Fund's return will also
vary from time to time depending on fluctuation in market interest rates. The
average maturity within the portfolio will be shifted in response to
anticipated changes in interest rates. The average maturity will be shortened
when Heartland Advisors expects interest rates to rise, and will be lengthened
when lower rates are anticipated.

The U.S. Government Securities Fund may invest up to 35% of its total assets in
corporate debt securities and convertible debt securities, including investment
of up to 25% of its total assets in non-investment grade debt securities and
convertible debt securities, provided that the Fund may not invest in
securities rated below B by Moody's Investors Service, Inc. ("Moody's"), or
Standard & Poor's Corporation ("S&P"), or unrated securities judged by
Heartland Advisors to be of comparable quality, at the time of purchase. See
"Investment Quality."

<PAGE> 18

INVESTMENT QUALITY

INVESTMENT GRADE SECURITIES. Investment grade debt securities in which the
Funds may invest are considered by Heartland Advisors to include securities
rated at the time of purchase within the four highest rating categories
assigned by Moody's or S&P, 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.
Securities rated in the fourth highest rating category are more sensitive to
economic changes than are securities rated in a higher category and such
securities have speculative characteristics.

HIGH YIELD SECURITIES. Non-investment grade securities (commonly known as "junk
bonds") in which the Funds may invest may be 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. 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 respective 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 Policies and Methods - Non-Investment Grade Securities" in the
Statement of Additional Information. Debt securities rated B, the lowest
category in which the Value, Mid Cap Value, Large Cap Value, Value Plus and
U.S. Government Securities Funds may invest, are regarded by S&P as having a
greater vulnerability to default but having the ability, at the time they are
rated, to meet scheduled interest and principal payments. Moody's notes that
the assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small. The Small Cap
Contrarian Fund may invest in debt securities rated as low as the lowest rating
category assigned by Moody's or S&P, which securities may be even more
speculative than B rated debt. A description of the ratings assigned by Moody's
and S&P is contained in the Statement of Additional Information.

ASSET COMPOSITION

The following table provides a summary of the Value Plus Fund's and U.S.
Government Securities Fund's respective debt holdings as rated by Moody's or,
in the case of unrated securities, as determined by Heartland Advisors. These
figures are dollar-weighted averages of month-end portfolio holdings during the
year ended December 31, 1995, presented as a percentage of total portfolio
holdings. For the period since inception through December 31, 1995, the Small
Cap Contrarian Fund was not invested in long-term debt securities. These
percentages are historical and are not necessarily indicative of the quality of
current or future Fund holdings, which may vary.

<PAGE> 19

MOODY'S RATING VALUE PLUS U.S. GOVERNMENT SECURITIES
OR EQUIVALENT FUND AVERAGE FUND AVERAGE

Aaa 0% 71.7%
Aa 0% 0%
A 0% 0%
Baa 5.2% 2.9%
Ba 5.3% 17.6%
B 16.0% 1.6%

The dollar-weighted average of debt securities included in these figures and
not rated by Moody's amounted to 8.7% and 1.3% of the Value Plus Fund's and
U.S. Government Securities Fund's total portfolios, respectively. This may
include securities rated by other nationally recognized rating organizations,
as well as unrated securities. Unrated securities are not necessarily lower
quality securities. Please refer to the Statement of Additional Information for
a more complete discussion of these ratings.

OTHER INVESTMENT POLICIES, PRACTICES AND RISK FACTORS OF THE FUNDS

In addition to the investments described above for each Fund, the Funds may
invest in securities and employ investment techniques that may present special
risks as described below. Although there is no uniform definition of
"derivative securities," certain instruments in which the Funds may invest may
be considered derivative because the value of the instrument fluctuates
depending upon the value of another security, index, reference interest rate,
or currency. These instruments may include options, futures, options on
futures, forward foreign currency contracts, indexed securities, and certain
stripped obligations and mortgage-backed securities. A more complete discussion
of the Funds' securities and investment techniques and their associated risks,
as well as further investment restrictions to which the Funds may be subject,
is contained in the Statement of Additional Information.

OPTIONS, FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. Each Fund may
engage in transactions in options, futures contracts, and options on futures
contracts to hedge protectively 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 or, with respect to each Fund other than the U.S. Government Securities
Fund, as a hedge against changes in prevailing levels of currency exchange
rates. The Funds will not use these instruments for speculation. Some options
and futures strategies, including selling futures, buying puts and writing
calls, tend to hedge a 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
or with forward contracts in order to adjust the risk and return
characteristics of the Fund's overall strategy.

The Value, Mid Cap Value, Large Cap Value, Value Plus and U.S. Government
Securities Funds each may write covered call options and purchase put options
that are traded on recognized U.S. exchanges with respect to specific
securities and enter into closing transactions with respect to such options.
The Value and Value Plus Funds also may sell covered call options and purchase
put options on foreign currencies and on stock indices composed of securities
of the same general character as each Fund's portfolio and may enter into
closing transactions with respect to such options. The Mid Cap Value and Large
Cap Value Funds may also purchase call options on any type of security related
to their respective investments.

<PAGE> 20

The Value, Value Plus and U.S. Government Securities Funds each may purchase
and sell futures contracts, including interest rate futures, index futures and,
with respect to the Value Fund and the Value Plus Fund, currency futures, that
are traded on a recognized U.S. exchange, board of trade or similar entity, or
quoted on an automated quotation system. Each of those Funds may also write
covered call options and purchase put options on futures contracts and enter
into closing transactions with respect to such options. The Mid Cap Value and
Large Cap Value Funds each may buy and sell exchange-traded futures and options
on futures based on any type of security, index or currency related to its
investments, including futures and options on futures traded on foreign
exchanges.

The Small Cap Contrarian Fund may buy and sell options and futures, including
purchasing and writing put and call options and options on futures, based on
any type of security, index, or currency related to its investments, including
options and futures traded on foreign exchanges and options not traded on
exchanges. Over-the-counter options generally involve greater credit and
liquidity risks than exchange-traded options.

Each 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 25% 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 25% 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 portfolio.
Consequently, a 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 a Fund's total return. A
Fund's potential losses from the use of futures extend beyond its initial
investment in such contracts. Each 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. Options and futures traded on
foreign exchanges in which the Small Cap Contrarian, Mid Cap Value and Large
Cap Value Funds may invest generally are not regulated by U.S. authorities, and
may offer less liquidity and less protection to the Fund if the other party to
the contract defaults.

SHORT SALES. If the Small Cap Contrarian Fund anticipates that the price of a
security will decline, it may sell the security short (sell a security which
the Fund does not then own for delivery at a future date) and borrow the same
security from a broker or other institution to complete the sale. The Fund may
make a profit or loss depending upon whether the market price of the security
decreases or increases between the date of the short sale and the date on which
the Fund must replace the borrowed security. The Fund will maintain a
segregated account with cash or liquid assets to cover its open short
positions.

The Small Cap Contrarian, Value, Mid Cap Value, Large Cap Value and Value Plus
Funds may each engage in "short sales against the box," a less aggressive short
selling technique which involves selling a security that the Fund owns (or has
an unconditional right to purchase) for delivery at a specified date in the
future, to hedge protectively against anticipated declines in the

<PAGE> 21

market price of its portfolio's securities or to defer an unrealized gain. If
the value of the securities sold short increases prior to the scheduled
delivery date, the Fund loses the opportunity to participate in the gain. Those
Funds may also engage in short sales of securities of an issuer ("acquiror")
that has publicly announced a proposed or a pending transaction in which a
portfolio security of the Fund will be converted into securities of the
acquiror. Each Fund will maintain a segregated collateral account with its
custodian to cover open short positions in acquiror securities. If the value of
an acquiror's security sold short were to increase relative to the segregated
collateral, the Fund would lose the opportunity to participate in the
appreciation and may also be required to purchase additional shares of the
shorted security to close out the position or settle the position in cash.

The Small Cap Contrarian Fund will not sell short securities whose underlying
value exceeds 25% of its total assets and the Fund will limit short sales,
other than short sales against the box or of acquiror securities, of any one
issuer's securities to 2% of the Fund's total assets and to 2% of any one class
of the issuer's securities. The Value, Mid Cap Value, Large Cap Value and Value
Plus Funds will each limit short sales against the box and of acquiror
securities so that: (i) no more than 5% of its total assets would be subject to
open short positions; and (ii) no more than 10% of the Fund's net assets would
be held as collateral for such positions.

FOREIGN SECURITIES. The Value and Value Plus Funds may invest up to 15% of
their respective assets directly in the securities of foreign issuers. The
Small Cap Contrarian, Mid Cap Value and Large Cap Value Funds may invest up to
25% of their respective assets in foreign securities or, with respect to the
Small Cap Contrarian Fund, in any one currency. Each Fund other than the U.S.
Government Securities Fund may also invest in foreign securities in domestic
markets through depository receipts and securities of foreign issuers that are
traded on a registered American stock exchange or the NASDAQ National Market
System without regard to the above limitations. While investment in foreign
securities is intended to reduce risk by providing further diversification,
such investments involve certain risks in addition to the credit and market
risks normally associated with domestic securities. Such risks include: adverse
political and economic developments or social instability; the imposition of
foreign withholding taxes or exchange controls; expropriation or
nationalization; currency blockage (which could prevent cash from being brought
back to the United States); the impact of exchange rate and foreign currency
fluctuations on the market value of foreign securities; more limited
availability of public information regarding security issuers; the degree of
governmental supervision regarding securities markets; different accounting,
auditing and financial standards; difficulties in enforcing legal rights; and
the potential for less liquidity and more volatility of foreign securities
markets.

Brokerage commissions, fees for custodial services, and other costs relating to
foreign investments generally are greater than in the U.S. Such markets may
have different clearance and settlement procedures, and in certain markets
there have been times when settlements have been unable to keep pace with the
volume of securities transactions, making it difficult to settle certain
transactions. Inability to sell a portfolio security due to settlement problems
could result either in a loss to the Fund if the value of the portfolio
security subsequently declined, or, if the Fund had entered into a contract to
sell the security, could result in possible claims against the Fund.

FOREIGN CURRENCY TRANSACTIONS. Foreign securities are subject to currency risk,
that is, the risk that the U.S. dollar value of these securities may be
affected favorably or unfavorably by changes in foreign currency exchange rates
and exchange control regulations. To manage this risk and facilitate the
purchase and sale of foreign securities, each Fund other than the U.S.
Government Securities Fund may engage in foreign currency transactions
involving the purchase and sale of

<PAGE> 22

forward foreign currency exchange contracts (agreements to exchange one
currency for another at a future date), or they may engage in transactions in
options on foreign currencies, currency futures contracts, or options on
currency futures contracts. Although foreign currency transactions will be used
to protect such Funds from adverse currency movements, they involve the risk
that anticipated currency movements will not be accurately predicted and a
Fund's total return could be adversely affected as a result.

MORTGAGE-BACKED SECURITIES. The U.S. Government Securities Fund may invest a
substantial portion of its assets in mortgage-backed securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities. These
securities represent interests in pools of mortgages, and may include stripped
mortgage-backed securities. Mortgage-backed securities may be guaranteed by the
issuing governmental agency and, as is the case with GNMA certificates, may
also be backed by the full faith and credit of the U.S. government. In general,
most mortgage-backed securities pass through to the holders of the securities
the monthly interest and principal payments made by the borrowers on the
underlying mortgage loans, after deduction of servicing fees. Collateralized
Mortgage Obligations ("CMOs") issued or guaranteed by the U.S. government, its
agencies or instrumentalities are hybrid mortgage-related instruments typically
collateralized by portfolios of mortgage-backed securities. CMOs may be
structured into multiple classes, with each class bearing a different effective
maturity and entitled to a different schedule for payments of principal and
interest, including prepayments. Mortgage-backed securities are subject to
prepayment risk, that is, the possibility that prepayments on the underlying
mortgages will cause the principal and interest on the mortgage-backed
securities to be paid prior to their maturities, and the value of these
securities may be significantly affected by changes in interest rates.
Prepayments during a period of declining interest rates may result in the Fund
having to invest the unanticipated proceeds in lower-yielding securities.
During periods of rising interest rates, prepayments may occur at a slower rate
than anticipated, resulting in volatility in the value of the mortgage-backed
security due to changes in its estimated average life.

ZERO COUPON BONDS AND STRIPPED SECURITIES. Each Fund other than the Value Fund
may invest in zero coupon bonds, which do not pay current interest, but are
purchased at a discount from their face value with principal and accrued
interest paid at maturity. Those Funds may also invest in stripped obligations,
which are the separate income or principal components of a debt instrument,
issued by the U.S. government or its agencies and instrumentalities. The market
value of zero coupon bonds and stripped obligations may be subject to greater
volatility in response to changes in interest rates than other debt securities.

INDEXED SECURITIES. Each Fund other than the Value Fund may invest in indexed
securities whose value is linked to currencies, interest rates, commodities,
indices, or other financial indicators. Most indexed securities are short to
intermediate term fixed-income securities whose values at maturity, or interest
rates, rise or fall according to the change in one or more specified underlying
instruments. Indexed securities may be positively or negatively indexed (i.e.,
their value may increase or decrease if the underlying instrument appreciates)
and may have return characteristics similar to direct investments in the
underlying instrument or to one or more options on the underlying instrument.
Indexed securities may be more volatile than the underlying instrument itself
and the market for indexed securities may be thinner than the market for
securities in general, which can adversely affect the availability of market
quotations and the prices at which indexed securities are sold.

REAL ESTATE INVESTMENT TRUSTS. The Small Cap Contrarian, Mid Cap Value, Large
Cap Value, and Value Plus Funds may invest up to 10% of their respective total
assets in real estate

<PAGE> 23

investment trusts ("REITs"). REITs are subject to volatility from risks
associated with investments in real estate and investments dependent on income
from real estate, such as fluctuating demand for real estate and sensitivity to
adverse economic conditions. In addition, the failure of a REIT in which the
Fund has invested to continue to qualify as a REIT for tax purposes would have
an adverse impact on the value of the Fund's investment.

LENDING PORTFOLIO SECURITIES. Each Fund may lend its portfolio securities to
institutional investors or broker-dealers to a maximum of 30% of its assets,
where such loans are callable at any time and are continuously secured by
collateral consisting of cash or liquid assets at least equal to the value of
the security loaned. The collateral received by a Fund will be invested in
short-term debt instruments. The respective Fund receives amounts equal to
earned income for having made the loans. The respective Fund is the beneficial
owner of the loaned securities in that any gain or loss in the market price
during the loan period inures to the Fund. Thus, when the loan is terminated,
the value of the securities may be more or less than their value at the
beginning of the loan. In determining whether to lend its portfolio securities,
each Fund takes into account the creditworthiness of the borrower since the
Fund could experience costs and delays in recovering loaned securities or
exercising its rights to the collateral in the event of bankruptcy of the
borrower. Each Fund may pay a fee to placing brokers in connection with loans
of its portfolio securities.

REPURCHASE AGREEMENTS. Each Fund other than the Value Fund may enter into
repurchase agreements with banks and broker-dealers, under which the Fund
purchases securities and agrees to sell them back at a specified time and
price. The difference between the amount the Fund pays for the securities and
the amount it receives upon resale is accrued as interest and reflected in its
net income. In the event of a bankruptcy or default of certain sellers of
repurchase agreements, the Fund could experience costs and delays in
liquidating the underlying security, which is held as collateral, and the Fund
might incur a loss if the value of the collateral held declines during this
period. In determining whether to enter into a repurchase agreement, the
respective Fund will take into account the creditworthiness of the
counterparty. Those Funds will use repurchase agreements as a means of making
short-term investments, and will invest in repurchase agreements of a duration
of seven days or less in an amount not exceeding 25% of their respective net
assets. Each Fund's ability to invest in repurchase agreements that mature in
more than seven days is subject to an investment restriction that limits
investment in "illiquid" securities, including such repurchase agreements, to
10% of net assets.

REVERSE REPURCHASE AGREEMENTS. The Small Cap Contrarian, Mid Cap Value and
Large Cap Value Funds may enter into reverse repurchase agreements with banks
and broker-dealers, under which the Fund sells a portfolio security to such
party in return for cash and the Fund agrees to repurchase the instrument at a
particular price and time. While a reverse repurchase agreement is outstanding,
the Fund will maintain appropriate liquid assets in a segregated custodial
account to cover its obligations under the agreement. To the extent that the
value of the security the Fund agrees to repurchase declines, the Fund may
experience a loss. Reverse repurchase transactions may increase fluctuations in
the market value of the Fund's assets and may be viewed as a form of leverage.
In determining whether to enter into a reverse repurchase agreement, the Fund
will take into account the creditworthiness of the counterparty.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. Each Fund other than the Value
Fund may purchase and sell securities on a "when-issued" and "delayed delivery"
basis, i.e., obligate themselves 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

<PAGE> 24

obligation. The market value of a security may increase or decrease between the
time that the Fund makes its commitment and the time the security is delivered.
Each 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 a 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. There are no limitations on
the percentage of the Fund's assets which may be invested in such securities;
however, it is not expected that at any one time more than 25% of its assets
would be so invested.

SHORT-TERM INVESTMENTS. Each Fund may invest a portion of its portfolio in
liquid reserves to meet its cash flow requirements. Under normal conditions,
none of the Funds anticipates that such reserves will exceed 15% of its assets.
Such reserves may be increased to enable a Fund to take advantage of buying
opportunities or may be increased up to 100% of a Fund's assets for temporary
defensive purposes. Such reserves will be invested in money market instruments,
including certificates of deposit, commercial paper, short-term corporate debt
securities, and U.S. government securities.

BORROWINGS AND LEVERAGE. As a fundamental policy, the Value, Mid Cap Value,
Large Cap Value, Value Plus and U.S. Government Securities Funds will not
borrow money or property except for temporary or emergency purposes. If one of
those Funds 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). None of those Funds will pledge more than 15% of its net
assets to secure such borrowings. In the event one of such Funds' borrowings
exceeds 5% of the market value of its total assets, the Fund will not invest in
any additional portfolio securities until its borrowings are reduced to below
5% of its total assets. For purposes of these restrictions, collateral
arrangements for premium and margin payments in connection with a Fund's
hedging activities are not deemed to be a pledge of assets.

ILLIQUID INVESTMENTS. Under the supervision of, and pursuant to the guidelines
adopted by, the Board of Directors, Heartland Advisors determines which of a
Fund's investments are classified as illiquid. The absence of a trading market
can make it difficult to ascertain a market value for illiquid investments.
Disposing of illiquid investments may involve time-consuming negotiation and
legal expenses, and it may be difficult or impossible for a Fund to sell such
an investment promptly at an acceptable price. None of the Funds may invest
more than 10% of their respective net assets in illiquid investments.

PORTFOLIO TURNOVER. The Value Fund, Mid Cap Value, Large Cap Value and Value
Plus Funds will not trade portfolio securities for short-term profits, but when
circumstances warrant, securities may be sold without regard to their holding
period. During the fiscal years ended December 31, 1995 and 1994, the portfolio
turnover rates for the Value Fund were 31% and 35%, respectively, for the Value
Plus Fund were 150% and 127%, respectively, and for the U.S. Government

<PAGE> 25

Securities Fund were 97% and 95%, respectively. The portfolio turnover rate for
the Small Cap Contrarian Fund for the period from April 27, 1995 (commencement
of operations) to December 31, 1995 was 45%. Annual portfolio turnover rates
for the Mid Cap Value and Large Cap Value Funds are expected to be less than
100%. A high turnover rate may increase transaction costs and may affect taxes
paid by shareholders to the extent short-term gains are distributed.

HOW TO BUY SHARES

SHARE PRICE

The Funds' shares are sold without a sales charge. Each 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 Funds' 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 either
Heartland Small Cap Contrarian Fund, Heartland Value Fund, Heartland Mid Cap
Value Fund, Heartland Large Cap Value Fund, Heartland Value Plus Fund or
Heartland U.S. Government Securities Fund and mail to one of the addresses
above.

If you are investing through a tax-sheltered retirement plan, such as an IRA,
you will need to use a special application.

To Add to an Account:
Make your check payable to the Fund you are invested in, 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: (NOT AVAILABLE FOR INVESTMENTS IN RETIREMENT PLANS)
Firstar National Bank
ABA #0750-00022
Firstar Trust MFS A/C #112-952-137
777 East Wisconsin Avenue, Milwaukee, WI 53202
CREDIT TO: Heartland (name of 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

<PAGE> 26

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.

______________________________________________________________________________

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.

CONDITIONS OF YOUR PURCHASE.

MINIMUM INVESTMENTS. The minimum initial investment for each Fund is $1,000,
except in the case of retirement plan investors and investors who elect to
invest through the automatic investment plan (see "SHAREHOLDER SERVICES"). The
minimum additional investment,

<PAGE> 27

except for reinvestments of distributions and investments under the automatic
investment plan, is $100.

PURCHASES THROUGH SERVICE PROVIDERS. If you purchase shares through a program
of services offered or administered by a broker-dealer, financial institution,
or other service provider, you should read the program materials provided by
the service provider, including information relating to fees, in conjunction
with this Prospectus. Certain features of a Fund may not be available or may be
modified in connection with the program of services provided. When shares are
purchased this way, the service provider, rather than its customer, may be the
shareholder of record of the shares. Certain service providers may receive
compensation from the Funds or Heartland Advisors for providing such services.

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 cancelled
and the prospective investor will be liable for any losses or fees incurred by
the Funds or the Funds' 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, a Fund can hold payment on redemption of shares so
purchased until the Fund 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 a Fund through the
Federal Reserve System.

VALUE FUND CLOSED TO NEW INVESTORS

Effective July 1, 1995, the Value Fund closed to new investors, except as
described below. Investors who held shares of the Value Fund, either in their
own name or through a service provider, on July 1, 1995, may continue to add to
an existing account or may open a new Value Fund account (i) through the
purchase of additional Value Fund shares, (ii) through the reinvestment of
dividends and cash distributions on any Value Fund shares owned, and (iii)
through exchanges from other Heartland Fund accounts or a Portico Money Market
Fund account. Shareholders of other Heartland Funds who are not also
shareholders of the Value Fund will not be able to exchange into the Value
Fund. New accounts which a Value Fund investor may open include accounts where
the shareholder is the owner, a joint owner, or a custodian for a minor child.
Employee benefit plans that became shareholders before the July 1, 1995 closing
date may continue to purchase Fund shares in the course of their normal
operations. Employee benefit plans that purchase shares through Heartland
Advisors, or through a program of services offered or administered by a service
provider that had an existing service agreement with the Value Fund or
Heartland Advisors on July 1, 1995, may also purchase Value Fund shares after
the closing date. Financial advisers or planners with at least $3 million of
clients' assets invested in the Value Fund as of July 1, 1995 may also continue
to purchase shares of the Fund on behalf of new or existing clients. The
discussion elsewhere in this Prospectus regarding the purchase of shares of the
Value Fund is qualified by this limitation. The Value Fund may resume sales to
new investors at some future date, but it has no present intention to do so.

HOW TO REDEEM SHARES

Shareholders may have any or all of their shares redeemed as described below on
any day the Funds are open for business at the next determined net asset value
(see "Net Asset Value

<PAGE> 28

Calculation"). Shares of the Funds purchased between February 12, 1993 and June
1, 1994 subject to a contingent deferred sales charge remain subject to such
charge upon redemption of shares.

BY TELEPHONE:

1-800-432-7856 You may redeem by calling Heartland
or Advisors, unless you elected not to
(414) 289-7000 have 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
Mutual Fund Services of the Mutual Mutual Fund Services Fund,
3rd Floor the number of shares to be redeemed, your
P.O. Box 701 name, account number, and any additional
Milwaukee, WI 53201-0701 documents listed below that apply to your
particular account. The Agent cannot accept
requests submitted by fax or requests
specifying a particular date for
BY OVERNIGHT redemption or other special conditions. A
DELIVERY TO: signature guarantee is required for certain
Firstar Trust Company redemptions, including written redemptions
Mutual Fund Services over $25,000. For further information, see
615 E. Michigan St., 3rd Fl. "Signature Guarantees."
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,
Custodial, General Partners exactly as it is registered, 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.)

<PAGE> 29

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 to Heartland
Advisors, 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 Funds, Heartland Advisors or any of their employees fails to abide
by these procedures, the Funds 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 Funds, 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 Funds 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 Funds 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 Funds 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 Funds 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> 30

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 redemption or transfer, a shareholder's account
drops below $500 for three months or more, the Funds have 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. No
contingent deferred sales charge will be imposed on any involuntary redemption.
Alternatively, the Funds may, after giving notice, impose a fee on accounts
maintained below the minimum investment level without an active automatic
investment plan.

A 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.

CONTINGENT DEFERRED SALES CHARGE

The following information regarding redemptions of shares subject to contingent
deferred sales charges applies only to shares of the Funds that were purchased
between February 12, 1993 and June 1, 1994 subject to a contingent deferred
sales charge and does not apply to shares of the Funds purchased on or after
June 1, 1994.

REDEMPTION PRICE. Shares of the Value Fund, Value Plus Fund and U.S. Government
Securities Fund that were purchased between February 12, 1993 and June 1, 1994,
and are redeemed within three years of purchase may be subject to a contingent
deferred sales charge at the rates set forth below. The charge will be assessed
on an amount equal to the lesser of the cost of the shares being redeemed or
their net asset value at the time of redemption. Accordingly, no sales charge
will be imposed on increases in net asset value above the initial purchase
price. In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.

The amount of the contingent deferred sales charge, if any, will vary depending
on the number of years from the time of payment for the purchase of the shares
until the time of redemption of such shares. The following table sets forth
rates of the contingent deferred sales charge for the Funds:

CONTINGENT DEFERRED
SALES CHARGE AS A %
YEAR SINCE PURCHASE OF DOLLAR AMOUNT
PAYMENT MADE SUBJECT TO CHARGE

First 3.0%
Second 2.0%
Third 1.0%
Fourth and thereafter None

<PAGE> 31

In determining whether a contingent deferred sales charge is applicable to a
redemption, the calculation will be made in the manner that results in the
lowest possible rate being charged. Therefore, it will be assumed that the
redemption is first of shares purchased prior to the adoption of a contingent
deferred sales charge, then of shares held for over three years or shares
acquired pursuant to reinvestment of dividends or distributions and then of
shares held longest during the three-year period. The charge will not be
applied to dollar amounts representing an increase in the net asset value since
the time of purchase.

AN EXAMPLE. Assume an investor purchased one hundred shares at $10 per share
(at a cost of $1,000), and in the second year after purchase, the net asset
value per share is $12 and, during such time, the investor has acquired 10
additional shares through dividend reinvestment. If at such time the investor
makes his or her first redemption of 50 shares (proceeds of $600), 10 shares
will not be subject to the charge because of dividend reinvestment. With
respect to the remaining 40 shares, the charge is applied only to the original
cost of $10 per share and not to the increase in net asset value of $2 per
share. Therefore, $400 of the $600 redemption proceeds will be charged at a
rate of 2.0% (the applicable rate in the second year after purchase).

REDEMPTIONS AT NET ASSET VALUE. The contingent deferred sales charge is waived
with respect to the following limited classes of redemptions: (i) redemptions
following the death or disability (as defined in the Internal Revenue Code of
1986) of a shareholder if the Fund is notified of the death or disability at
the time redemption is requested and such request is made within one year after
such death or disability; (ii) redemptions in connection with retirement plan
distributions (a) resulting from the death or disability of the employee or the
tax-free return of an excess contribution or (b) to the extent that the
redemption represents a minimum required distribution to a shareholder who has
attained the age at which distributions are required to commence; (iii)
redemptions by current or retired directors and officers of Heartland and
Heartland Advisors, full-time employees of Heartland Advisors and retirement
plans for such employees, and registered representatives of broker-dealers who
have signed dealer agreements with Heartland Advisors for their personal
accounts; (iv) redemptions by managed accounts of Heartland Advisors or an
affiliated company or redemptions by companies affiliated with Heartland; (v)
redemptions by any tax-exempt employee benefit plan for which continuation of
its investment in a Fund would be improper under applicable law or regulation,
subject to the Fund's right to require an opinion of counsel to that effect;
and (vi) redemptions by registered investment companies or their shareholders
resulting from reorganization transactions with a Fund. The term "employee"
includes an employee's spouse (including the surviving spouse of a deceased
employee) and children under 21 and retired employees. The contingent deferred
sales charge is also waived in limited circumstances in conjunction with
certain shareholder services. (See "Shareholder Services.") The shareholder
must certify to the Fund, at the time of redemption, that certain
qualifications are met and that the shareholder is entitled to waiver of the
contingent deferred sales charge. The waiver will be granted subject to
confirmation of the investor's entitlement.

SHAREHOLDER SERVICES

Each 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 Funds
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 your current Fund, or shares

<PAGE> 32

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.

TAX-SHELTERED RETIREMENT PLANS. Shares of each Fund are available for purchase
in connection with the following tax-sheltered retirement plans: (i) Keogh
Plans (H.R. 10) for self-employed individuals; (ii) Qualified Corporate Pension
and Profit-Sharing Plans for employees; (iii) Individual Retirement Accounts
and Simplified Employee Pension Plans for individuals and employers; and (iv)
403(b) Plans for employees of most non-profit organizations.

The minimum initial retirement plan investment in any Fund is $500 ($250 in the
case of a spousal IRA). Firstar Trust Company, as the trustee of the Individual
Retirement Account plan, charges a $12.50 annual maintenance fee with a $25
maximum for multiple accounts with the same social security number (subject to
change by the trustee) for each Individual Retirement Account. For other
tax-sheltered retirement plans, the individual investor must employ a
self-directed plan. Detailed information concerning these plans and copies of
plans are available from Heartland Advisors. This information should be read
carefully and consultation with an attorney or tax advisor may be advisable.

AUTOMATIC INVESTMENT PLAN. The automatic investment plan of each 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 one of the Funds on a
monthly or twice-monthly basis. IRA contributions through the automatic
investment plan apply as a current year purchase and may not be applied as
prior year contributions unless the Fund receives written instructions to that
effect on or before April 15th. 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 phoning or
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 a 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 but no more than 2%, 6%, 12% or 24% of your initial account
balance each monthly, quarterly, semi-annual or annual payment, respectively.
Shares redeemed under the plan will be redeemed at their net asset value. 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 Funds at any time by written notice.

<PAGE> 33

EXCHANGE PRIVILEGE. Shares of a 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
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.

Exchanges with Portico. Shareholders may exchange all or a portion of their
shares in the Funds 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 broker-dealer or financial institution
(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.

Exchanges of Shares Subject to a Contingent Deferred Sales Charge. Shares of
the Funds that were purchased between February 12, 1993 and June 1, 1994
subject to a contingent deferred sales charge that are exchanged for shares of
any other Heartland fund or shares of the Portico Money Market Fund will remain
subject to the contingent deferred sales charge schedule of the original
shares, payable upon ultimate redemption of the new shares. For purposes of
computing the sales charge payable upon redemption of the new shares, the
holding period for the original shares is added to the holding period of the
new shares.

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> 34

REINVESTMENT PRIVILEGE. If you redeem shares of the Funds that were purchased
between February 12, 1993 and June 1, 1994 subject to a contingent deferred
sales charge, and then reinvest all or part of the redemption proceeds in any
Heartland Fund, you will receive a pro rata credit from Heartland Advisors
based on the amount of any contingent deferred sales charge paid relative to
the number of shares reinvested. In order to exercise the reinvestment
privilege, you must send written notice of your reinvestment to the Fund or the
Agent not more than 30 days after the shares are redeemed. Redemption proceeds
will be reinvested on the basis of net asset value of the shares in effect
immediately after receipt of the written request and the shares will continue
to be subject to the contingent deferred sales charge as if redemption had not
occurred. Any capital gains tax incurred on redemption of shares of a Fund is
not altered by the subsequent exercise of this privilege. If redemption
resulted in a loss and reinvestment is made in shares of a Fund, the loss will
not be recognized.

DIVIDENDS, CAPITAL GAINS, DISTRIBUTIONS AND TAXES

DIVIDENDS. Substantially all of the Small Cap Contrarian Fund's, Value Fund's,
Mid Cap Value Fund's, and Large Cap Value Fund's net investment income will be
paid to shareholders annually as a dividend. With respect to the Value Plus
Fund, dividends will be paid to shareholders quarterly. In the U.S. Government
Securities Fund, dividends will be declared daily and paid monthly. Dividends
may be taken in cash or additional shares at net asset value. Dividends and
capital gain distributions will be automatically reinvested in additional
shares of the same Fund or another Fund, unless a shareholder has notified
Heartland Advisors by telephone or in writing that he or she elects to receive
dividends and capital gain distributions in cash.

DISTRIBUTIONS. Capital gains distributions for each Fund, if any, will normally
be paid within 30 days after the end of the fiscal year.

TAXES. Each Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code (the "Code") and, if so qualified,
will not be subject to federal income taxes to the extent its earnings are
timely distributed. Each Fund also intends to make distributions as required by
the Code to avoid the imposition of a 4% excise tax.

Each Fund will distribute substantially all of its net investment income and
net capital gains to investors. Distributions from a Fund's income and
short-term capital gains are taxed as dividends, and long-term capital gain
distributions are taxed 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. A portion of each
Fund's dividends may qualify for the dividends received deduction for
corporations. The Funds' distributions are taxable when they are paid, whether
a shareholder takes them in cash or reinvests them in additional shares, except
that distributions declared in December and paid in January are taxable as if
paid on December 31. The federal income tax status of all distributions will be
reported to shareholders annually.

"BUYING A DIVIDEND." On the record date for a distribution by a 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 shareholders 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

<PAGE> 35

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 tax discussion is general in nature and each investor is advised
to consult his or her tax advisor for additional information.

THE FUNDS AND THE HEARTLAND ORGANIZATION

The Board of Directors provides broad supervision over the affairs of each
Fund, and the officers are responsible for its operations.

HEARTLAND ADVISORS

Heartland Advisors provides the Funds 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 each Fund, makes available
research and statistical data, and supervises the acquisition and disposition
of investments by each Fund. Heartland Advisors is also the distributor for
each Fund.

Heartland Advisors, founded in 1982, serves as the investment advisor for the
Heartland Wisconsin Tax Free and Nebraska Tax Free Funds, two 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 August 31, 1996, Heartland Advisors had approximately $2.6 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.
Each 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 period since its inception on April 27, 1995 to December 31, 1995, the
Small Cap Contrarian Fund paid advisory fees of $172,583, or approximately an
annual rate of 0.75 of 1% of the Fund's average daily net assets. For the
fiscal year ended December 31, 1995, the Value Fund paid advisory fees of
$6,452,487, or approximately 0.75 of 1% of average daily net assets during

<PAGE> 36

that year. The Mid Cap Value Fund and Large Cap Value Fund each pay Heartland
Advisors an annual fee for advisory services at the rate of 0.75 of 1% of the
respective average daily net assets of the Fund. While the advisory fees paid
by these Funds are larger than the fees paid by most mutual funds, the Board of
Directors believes they are consistent with the fees paid by many funds with
similar investment characteristics and objectives. For the fiscal year ended
December 31, 1995, the Value Plus Fund paid advisory fees of $102,311 or
approximately 0.70 of 1% of the Fund's average daily net assets.

For the fiscal year ended December 31, 1995, the U.S. Government Securities
Fund paid advisory fees of $325,124, or approximately .50 of 1% of average net
assets. Heartland Advisors voluntarily waived a portion of its fee during that
year; had no fee waiver been in effect, the U.S. Government Securities Fund
would have paid $422,661 in advisory fees, or 0.65 of 1% of average net assets
for the year. At present, Heartland Advisors is voluntarily waiving 0.15 of 1%
of its investment advisory fee for the U.S. Government Securities Fund,
resulting in a currently effective annual rate of 0.5 of 1% of average daily
net assets. Heartland Advisors may reinstate an additional portion or all of
the fee at any time.

PORTFOLIO MANAGERS. William J. Nasgovitz serves as portfolio manager for the
Value Fund and has managed or co-managed the Fund since commencement of its
operations. Mr. Nasgovitz also serves as portfolio manager for the Small Cap
Contrarian Fund and as co-manager of the Value Plus Fund, and has managed or
co-managed those Funds since commencement of their respective operations. Mr.
Nasgovitz has been President and a Director of Heartland Advisors and Heartland
since 1982 and was Senior Vice President-Investments with Dain Bosworth
Incorporated from 1988 to June of 1992.

Michael A. Berry, Ph. D., serves as portfolio manager for the Mid Cap Value
Fund and has managed the Fund since its inception. Prior to joining Heartland
Advisors in July, 1996, Dr. Berry had been the portfolio manager of the
Kemper-Dreman Small Cap Value Fund, a Managing Director of Dreman Value
Advisors, Inc. and Chief Equity Strategist for Zurich Kemper Investments since
September, 1995. Dr. Berry had been associated with Dreman Value Advisors'
predecessor since 1984 and also served as a Professor in Finance at James
Madison University and at the University of Virginia.

James P. Holmes, CFA, serves as portfolio manager for the Large Cap Value Fund
and has managed the Fund since its inception. Prior to joining Heartland
Advisors in July, 1996, Mr. Holmes had been a Managing Director of Dreman Value
Advisors, Inc. and its predecessor since 1986, with responsibility for
portfolio management of institutional accounts.

Ronald B. Saba, CFA, serves as co-portfolio manager of the Value Plus Fund with
Mr. Nasgovitz, and has been in that position since August, 1996. Mr. Saba has
been with Heartland Advisors as Vice President/Research and a portfolio manager
for advisory clients since March, 1994. Prior to joining Heartland Advisors,
Mr. Saba was a Portfolio Manager and Senior Analyst with Household Commercial
Financial Services.

Patrick J. Retzer and Douglas S. Rogers, CFA, serve as co-portfolio managers of
the U.S. Government Securities Fund. Mr. Retzer has managed or co-managed the
Fund since October of 1988 and 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. Mr. Rogers has co-managed
the Fund since May 1, 1996. Prior to joining Heartland Advisors in October

<PAGE> 37

1995, Mr. Rogers was with Sit Investment Fixed Income Advisors, Inc., where he
was a member of the Fixed Income Policy Committee and responsible for taxable
bond portfolio management.

THE DISTRIBUTION PLAN

Each Fund has adopted a Distribution Plan which, among other things, requires
it to pay Heartland Advisors, as distributor, a quarterly distribution fee of
up to 0.25 of 1% of its average daily net assets computed on an annual basis.
Under each Plan, the Fund is obligated to pay distribution fees only to the
extent of expenses actually incurred by Heartland Advisors, as distributor, for
the current year, and thus there will be no carry-over expenses from previous
years. These expenses may include expenses incurred for media advertising, the
printing and mailing of prospectuses to persons other than shareholders, the
printing and mailing of sales literature, answering routine questions relating
to a Fund, and payments to selling representatives, authorized securities
dealers, financial institutions, or other service providers for providing
services in assisting investors with their investments and/or for providing
administrative, accounting and other services with respect to a Fund's
shareholders. No fee paid by a Fund under the Plans may be used to reimburse
Heartland Advisors for expenses incurred in connection with another Fund. Each
Distribution Plan will continue in effect, if not sooner terminated in
accordance with its terms, for successive one-year periods, provided that each
such continuance is specifically approved by the vote of the Directors,
including a majority of the Directors who are not interested persons, of
Heartland. For further information regarding the Distribution Plans, see the
Statement of Additional Information.

NET ASSET VALUE CALCULATION

Each Fund's share price or 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 Funds are valued on the basis of market quotations or
at their fair value. Fair value of any of the Funds' debt securities for which
market quotations are not readily available will be 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.

Foreign securities are valued on the basis of quotations from the primary
market in which they are traded, and are translated from the local currency
into U.S. dollars using current exchange rates. Fluctuations in the value of
such currencies in relation to the U.S. dollar may affect the net asset value
of Fund shares even if there has not been any change in the foreign currency
denominated values of such securities.

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.

<PAGE> 38

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 Funds are each a separate diversified mutual fund series of
Heartland. Currently, the Heartland family of funds consists of the following
series:

COMMENCED AUTHORIZED
FUND OPERATIONS SHARES
Small Cap Contrarian Fund 4/27/95 100,000,000
Value Fund 12/28/84 100,000,000
Mid Cap Value Fund 10/11/96 100,000,000
Large Cap Value Fund 10/11/96 100,000,000
Value Plus 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

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
Funds 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 each Fund's portfolio decisions and the placing of portfolio
transactions. Purchase and sale orders for a 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 each 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 operational 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 companies in which the
Value Fund and the Small Cap Contrarian Fund invest may involve specialized
services on the part of the broker and thereby entail higher commissions or
spreads than would be paid in transactions involving more widely traded
securities.

<PAGE> 39

The Funds 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 a Fund in over-the-counter transactions conducted on an agency
basis. Pursuant to plans adopted by Heartland's Board of Directors for each of
the Funds under, and subject to, the provisions of Rule 10f-3 under the
Investment Company Act of 1940, the Funds 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.

Heartland Advisors may serve as a broker for any Heartland fund; however, in
order for Heartland Advisors to effect any portfolio transactions for the
funds, 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 on a securities exchange or on NASDAQ during a comparable
period of time.

Allocation of transactions, including their frequency, to various dealers is
determined by Heartland Advisors 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 any or all of the Heartland funds as factors in the selection of
broker-dealers to execute portfolio transactions.

PERFORMANCE INFORMATION

From time to time each 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 a Fund refers to the income generated by an investment in that 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.

"Total return" of a Fund refers to the average annual total return for one,
five and ten-year periods (or the portion thereof during which a 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. Prior to June 1, 1994, shares of the Funds had been sold
subject to a contingent deferred sales charge and prior to February 12, 1993,
shares of the Value and U.S. Government Securities Funds had been sold subject
to an initial sales charge, neither of which are reflected in the total return
figures, rather the figures reflect the current no-load sales structure.
Performance information should be considered in light of the particular Fund's
investment objectives 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. Further information is contained in the Statement of Additional
Information.

Each 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

<PAGE> 40

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 Funds against all funds over
specified periods and in specified categories. In general, the Small Cap
Contrarian Fund and the Value Fund would appear in the Small Company Growth or
Capital Appreciation categories, the Mid Cap Value Fund would appear in the
General Equity category, and the Large Cap Value Fund would appear in the
General Equity category. The Value Plus Fund would appear in the Equity Income
category and the U.S. Government Securities Fund would appear in the Fixed
Income or U.S. Government Bond categories. Each Fund may also compare its
performance to recognized stock and bond market indices, including the S&P 500,
the Standard & Poor's Mid-Cap Index, the Russell 2000 Stock Index, the Lehman
Intermediate and Long-Term Corporate Bond Indices, and the Lehman Intermediate
and Long-Term Government Bond Indices.

37
<PAGE> 41

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> 42

HEARTLAND SMALL CAP CONTRARIAN FUND

HEARTLAND VALUE FUND

HEARTLAND MID CAP VALUE FUND

HEARTLAND LARGE CAP VALUE FUND

HEARTLAND VALUE PLUS FUND

HEARTLAND U.S. GOVERNMENT SECURITIES FUND

Each 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 October ___, 1996. A
copy of the Prospectus may be obtained without charge by telephone or written
request to the distributor, Heartland Advisors, Inc. ("Heartland Advisors").
Shareholder inquiries should be directed to the Funds 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 broker-dealers or financial institutions, which may charge a
fee for such service.

THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS OCTOBER ___,
1996.

<PAGE> 43

INTRODUCTION TO THE FUNDS

The Heartland family of funds consists of separate series of Heartland
Group, Inc. ("Heartland"), a Maryland corporation registered as a diversified
open-end management investment company. This Statement of Additional
Information relates only to the Heartland Small Cap Contrarian Fund, the
Heartland Value Fund, the Heartland Mid Cap Value Fund, the Heartland Large Cap
Value Fund, the Heartland Value Plus Fund, and the Heartland U.S. Government
Securities Fund, (the "Small Cap Contrarian Fund," the "Value Fund," the "Mid
Cap Value Fund," the "Large Cap Value Fund," the "Value Plus Fund," and the
"U.S. Government Securities Fund," respectively, collectively referred to
herein as the "Funds"), each of which is a diversified Fund with distinct
investment objectives and programs. A separate Prospectus and related
Statement of Additional Information for the other Heartland funds are available
from Heartland Advisors.

INVESTMENT POLICIES AND METHODS

GENERAL

The following information supplements the discussion of each Fund's
investment objectives and policies discussed in the Prospectus. Unless
otherwise specified, the investment policies and restrictions of each Fund are
not fundamental policies 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 policy or restriction.
The fundamental policies of a Fund 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.

OPTIONS, FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

WRITING COVERED CALL OPTIONS. Each Fund may write covered call
options on its portfolio securities and enter into closing transactions with
respect to such options. In addition, the Small Cap Contrarian Fund may write
covered call options on any type of security related to its investments,
including options traded on foreign exchanges. In writing covered call
options, each 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 security involved in the option.

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, or other liquid assets 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 a 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 a
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 a Fund for writing covered call options will be recorded as a cash asset

2
<PAGE> 44

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 Funds do not consider a security covered by a
call to be "pledged" as that term is used in the respective 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 a Fund to
write another call option on the underlying security with either a different
exercise price or expiration date or both. If a 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 a Fund will
be able to effect such closing transactions at a favorable price. A Fund may
pay transaction costs in connection with the writing or purchase of options to
close out previously written options, which costs are normally higher than the
transaction costs applicable to purchases and sales of portfolio securities.

WRITING COVERED PUT OPTIONS. The Small Cap Contrarian Fund may write
covered put options on any type of security related to its investments,
including options traded on foreign exchanges, 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, or other
liquid assets 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.

PURCHASING PUT OPTIONS. Each Fund may purchase put options with
respect to its portfolio securities. In addition, the Small Cap Contrarian
Fund may purchase put options on any type of security related to its
investments, including options traded on foreign exchanges. 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. A Fund may enter into
closing transactions with respect to such options, exercise them or permit them
to expire. A Fund may purchase a put option on an underlying security owned by
the Fund 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.

3
<PAGE> 45

The premium paid by a 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 Small Cap Contrarian Fund, the Mid Cap
Value Fund, and the Large Cap Fund may purchase call options on any type of
security related to their respective investments, including options traded on
foreign exchanges. As the holder of a call option, a Fund has the right to
purchase the underlying security at the exercise price at any time during the
option period. A 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 Value Fund, the Mid Cap Value Fund, the Large Cap
Value Fund, and the Value Plus Fund may sell covered call options and purchase
put options on stock indices composed of securities of the same general
character as each Fund's portfolio and may enter into closing transactions with
respect to such options. The Small Cap Contrarian Fund may buy and sell
options based on any type of index related to its investments. 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.

OPTIONS ON FUTURES CONTRACTS. The Value Fund, the Value Plus Fund,
and the U.S. Government Securities Fund may each write covered call options and
purchase put options on futures contracts and enter into closing transactions
with respect to such options. The Small Cap Contrarian Fund, the Mid Cap Value
Fund, and the Large Cap Value Fund may buy and sell options on futures based on
any type of security, index, or currency related to their respective
investments. Options on futures 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 a Fund
will be required to make margin payments as described below for futures
contracts.

FUTURES CONTRACTS. Each Fund may purchase and sell futures contracts,
including interest rate and 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. In addition, the Small Cap Contrarian Fund, the
Mid Cap Value Fund, and the Large Cap Value Fund may purchase and sell futures
contracts based on any type of security, index, or currency related to their
respective investments, including futures traded on foreign exchanges. Each
Fund will engage in transactions in futures contracts solely for bona fide
hedging purposes.

When a Fund purchases a futures contract, it agrees to purchase a
specified underlying instrument at a specified future date. When a 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, a 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

4
<PAGE> 46

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, a Fund marks to market
the current value of its open futures contracts. The Funds expect to earn
interest income on their 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. If a 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, a Fund realizes a gain; if it is more, a 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, however, that a Fund will be able to enter into an offsetting
transaction with respect to a particular futures contract at a particular time.
If a 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. Therefore, purchasing
futures contracts will tend to increase a Fund's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a 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.

OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options ("OTC options," i.e.,
options not traded on exchanges) in which the Small Cap Contrarian Fund may
invest generally are established through negotiation with the other party to
the option contract. While this type of arrangement allows the Fund greater
flexibility to tailor an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed by the
clearing organization of the exchanges where they are traded. The risk of
illiquidity is also greater with OTC options, since these options generally can
be closed out only by negotiation with the other party to the option. The
Small Cap Contrarian Fund will generally consider OTC options to be illiquid.
In determining whether to enter into an OTC option transaction, the Small Cap
Contrarian Fund will take into account the creditworthiness of the other party
to the contract.

LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS

Each Fund will engage in transactions in 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.

A 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. The Value Fund and the U.S. Government Securities Fund will
also be subject to their fundamental investment restrictions regarding
commodities, futures, and options discussed herein.

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<PAGE> 47

In addition to the above limitations, the Small Cap Contrarian Fund,
the Mid Cap Value Fund, the Large Cap Value Fund, and the Value Plus 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 25% of the respective 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 and call 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 put and call options written by the Fund would
exceed 25% of the Fund's total assets. The above limitations on the Small Cap
Contrarian Fund's, the Mid Cap Value Fund's, the Large Cap Value Fund's, and
the Value Plus Fund's investments in futures contracts and options and the
respective Fund's policies regarding futures contracts and options discussed
elsewhere in this Statement of Additional Information are not fundamental
policies of the Funds and may be changed by Heartland's Board of Directors as
permitted by applicable regulatory authority.

COMBINED POSITIONS. The Funds may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, a 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 hedging vehicles and in the
underlying instruments 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 prices of the
underlying instruments the same way. Imperfect correlation may also result
from different levels of demand in the options and futures markets and the
markets for the underlying instruments, 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
a 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.

Because there are a limited number of types of exchange-traded options
and futures contracts, it is likely that the standardized contracts available
will not match a Fund's current or anticipated investments exactly. The Fund
may invest in options and futures contracts based on securities with different
issuers, maturities, or other characteristics from the securities in which it
typically invests, which involves a risk that the options or futures positions
will not track the performance of the Fund's other investments. The Funds may
purchase or sell options and futures contracts with a greater or lesser value
than the securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the contract and
the securities, although this may not be successful in all cases.

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 a 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.

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<PAGE> 48

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 a 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 a
Fund to continue to hold the position until delivery or expiration regardless
of changes in its value. As a result, a Fund's access to other assets held to
cover its options or futures positions could also be impaired.

As discussed above, OTC options in which the Small Cap Contrarian Fund
may invest are subject to risks in addition to the risks related to
exchange-traded options. The Small Cap Contrarian Fund currently intends to
treat the value of any OTC option it purchases as illiquid for the purposes of
its investment limitations. Similarly, for any OTC option it writes, the Fund
will treat as illiquid the value of the option's underlying instrument;
however, if the Fund has a guaranteed right to close out the option with a
primary U.S. government securities dealer, only the maximum price of the
closing transaction less the amount the option is in-the-money will be
considered illiquid. The Small Cap Contrarian Fund may also buy and sell
options and futures based on any type of security, index, or currency related
to its investments, including options and futures traded on foreign exchanges.
Investments in foreign securities are subject to additional risks as described
below.

FOREIGN INVESTMENTS

The Value Fund and the Value Plus Fund may invest up to 15% of their
respective assets directly in the securities of foreign issuers. The Small Cap
Contrarian Fund, the Mid Cap Value Fund, and the Large Cap Value Fund may
invest up to 25% of their respective assets in foreign securities and options
on futures and futures, and, with respect to the Small Cap Contrarian Fund, any
options, traded on foreign exchanges. The value of securities denominated in
or indexed to foreign currencies, and of dividends and interest from such
securities, can change significantly when foreign currencies strengthen or
weaken relative to the U.S. dollar. Foreign securities markets generally have
lower trading volume and less liquidity than U.S. markets, and prices on some
foreign markets can be highly volatile. Many foreign countries lack uniform
accounting and disclosure standards comparable to those applicable to U.S.
companies, and it may be more difficult to obtain reliable information
regarding an issuer's financial condition and operations. In addition, the
costs of foreign investing, including withholding taxes, brokerage commissions,
and custodial costs, are generally higher than for U.S. investments.

Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers, brokers, and securities markets may be subject to
less government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It also may be difficult to
enforce legal rights in foreign countries.

Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse
to the interests of U.S. investors, including the possibility of expropriation
or nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility
of default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic or social instability, military action or unrest, or adverse
diplomatic developments. There is no assurance that Heartland Advisors will be
able to anticipate these political events or counter their effects.

The considerations noted above generally are intensified for
investments in developing countries. Developing countries may have relatively
unstable governments, economies based on only a few industries, and securities
markets that trade a small number of securities. The above considerations may
also be intensified for investments and equity securities of foreign smaller
companies in which the Funds may invest. Equity securities of foreign
companies with smaller market capitalizations may involve a higher degree of
risk than investments in the general foreign equity markets and such securities
may be subject to even greater price volatility and may have less market
liquidity than equity securities of foreign issuers with larger market
capitalizations.

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The Small Cap Contrarian Fund, the Value Fund, the Mid Cap Value Fund,
the Large Cap Value Fund, and the Value Plus Fund each may invest in foreign
securities that impose restrictions on transfer within the U.S. or to U.S.
persons. Although securities subject to transfer restrictions may be
marketable abroad, they may be less liquid than foreign securities of the same
class that are not subject to such restrictions.

American Depository Receipts and Global Depository Receipts ("ADRs"
and "GDRs") are certificates evidencing ownership of shares of a foreign-based
issuer held by a bank or similar financial institution as depository. Designed
for use in U.S. and global securities markets, respectively, ADRs and GDRs are
alternatives to the direct purchase of the underlying securities in their
national markets and currencies. The limitations as to a respective Fund's
investments in foreign securities do not apply to investments in ADRs and GDRs
or to securities of foreign issuers that are traded on a registered U.S. stock
exchange or the NASDAQ National Market System.

FOREIGN CURRENCY TRANSACTIONS

FORWARD FOREIGN CURRENCY CONTRACTS. To manage the currency risk
accompanying investments in foreign securities and to facilitate the purchase
and sale of foreign securities, the Small Cap Contrarian Fund, the Value Fund,
the Mid Cap Value Fund, the Large Cap Value Fund, and the Value Plus Fund may
engage in foreign currency transactions on a spot (cash) basis at the spot rate
prevailing in the foreign currency exchange market or through entering into
contracts to purchase or sell foreign currencies at a future date ("forward
foreign currency" contracts or "forward" contracts).

A forward foreign currency contract involves an obligation to purchase
or sell a specific currency at a future date, which may be any fixed number of
days from the date of the contract agreed upon by the parties, at a price set
at the time of the contract. These contracts are principally traded in the
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. A forward contract generally has no
deposit requirement and no commissions are charged at any stage for trades.

When a Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may desire to "lock in" the U.S.
dollar price of the security. By entering into a forward contract for the
purchase or sale, for a fixed amount of U.S. dollars, of the amount of foreign
currency involved in the underlying security transaction, the Fund will be able
to protect itself against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the subject foreign currency
during the period between the date the security is purchased or sold and the
date on which payment is made or received. This technique is sometimes
referred to as a "settlement hedge" or "transaction hedge." Heartland Advisors
may enter into settlement hedges in the normal course of managing a Fund's
foreign investments.

When Heartland Advisors believes that the currency of a particular
foreign country may suffer a substantial decline against the U.S. dollar, it
may enter into a forward contract to sell for a fixed amount of U.S. dollars,
the amount of the foreign currency approximating the value of some or all of
the respective Fund's portfolio securities denominated in such foreign
currency. Such a hedge, sometimes referred to as a "position hedge," would
tend to offset both positive and negative currency fluctuations, but would not
offset changes in security values caused by other factors. The Value Fund, the
Mid Cap Value Fund, the Large Cap Value Fund, and the Value Plus Fund will not
enter into such forward contracts or maintain a net exposure to such contracts
where the consummation of the contracts would obligate the Fund to deliver an
amount of foreign currency in excess of the value of the respective Fund's
securities or other assets denominated in that currency. The Small Cap
Contrarian Fund could also hedge a position by selling another currency
expected to perform similarly to the currency in which the Fund's securities
are denominated. This type of hedge, sometimes referred to as a "proxy hedge,"
could offer advantages in terms of cost, yield or efficiency, but generally
would not hedge currency exposure as effectively as a simple hedge into U.S.
dollars. Proxy hedges may result in losses if the currency used to hedge does
not perform similarly to the currency in which the hedged securities are
denominated.

The precise matching of the forward contract amounts and the value of
the securities involved will not generally be possible since the future value
of such securities in foreign currencies will change as a consequence of

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<PAGE> 50

market movements in the value of those securities between the date the forward
contract is entered into and the date it matures. The projection of short-term
currency market movement is extremely difficult and the successful execution of
a short-term hedging strategy is highly uncertain. Under normal circumstances,
consideration of the prospect for currency parities will be incorporated into
the longer-term investment decisions made with regard to overall
diversification strategies. However, Heartland Advisors believes that it is
important to have the flexibility to enter into such forward contracts when it
determines that the best interests of a Fund will be served.

At the maturity of a forward contract, a Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.

If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. If a Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
foreign currency. Should forward prices decline during the period between the
Fund's entering into a forward contract for the sale of a foreign currency and
the date it enters into an offsetting contract for the purchase of the foreign
currency, the Fund will realize a gain to the extent the price of the currency
it has agreed to sell exceeds the price of the currency it has agreed to
purchase. Should forward prices increase, the Fund will suffer a loss to the
extent that the price of the currency it has agreed to purchase exceeds the
price of the currency it has agreed to sell.

It is impossible to forecast with precision the market value of
securities at the expiration of a forward contract. Accordingly, it may be
necessary for a Fund to purchase additional foreign currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of foreign currency the Fund is obligated to deliver and
if a decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio security if its
market value exceeds the amount of foreign currency the Fund is obligated to
deliver.

The Small Cap Contrarian Fund's, the Value Fund's, the Mid Cap Value
Fund's, the Large Cap Value Fund's, and the Value Plus Fund's dealings in
forward foreign currency exchange contracts will be limited to the transactions
described above. Of course, the Funds are not required to enter into such
transactions with regard to their foreign currency-denominated securities and
will not do so unless deemed appropriate by Heartland Advisors. This method of
hedging against a decline in the value of a currency does not eliminate
fluctuations in the underlying prices of the securities. It simply establishes
a rate of exchange which one can achieve at some future point in time.
Additionally, although such contracts tend to minimize the risk of loss due to
a decline in the value of the hedged currency, at the same time, they tend to
limit any potential gain which might result should the value of such currency
increase. Successful use of forward currency contracts will depend on
Heartland Advisors' skill in analyzing and predicting currency values. Forward
contracts may substantially change a Fund's investment exposure to changes in
currency exchange rates, and could result in losses to the Fund if currencies
do not perform as Heartland Advisors anticipates. For example, if a currency's
value rose at a time when Heartland Advisors had hedged a Fund by selling that
currency in exchange for U.S. dollars, the Fund would be unable to participate
in the currency's appreciation. If Heartland Advisors hedges a currency
exposure for the Small Cap Contrarian Fund through proxy hedges, the Fund could
realize currency losses from the hedge and the security position at the same
time if the two currencies do not move in tandem. Similarly, if Heartland
Advisors increases a Fund's exposure to a foreign currency, and that currency's
value declines, the Fund will realize a loss. There is no assurance that
Heartland Advisors' use of forward currency contracts will be advantageous to a
Fund or that it will hedge at an appropriate time.

Although each of the Small Cap Contrarian Fund, the Value Fund, the
Mid Cap Value Fund, the Large Cap Value Fund, and the Value Plus Fund values
its assets daily in terms of U.S. dollars, it does not intend to convert its
holdings of foreign currencies into U.S. dollars on a daily basis. It will do
so from time to time and investors should be aware of the costs of currency
conversion. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are

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<PAGE> 51

buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to a Fund at one rate, while offering a lesser rate of
exchange should the Fund desire to resell that currency to the dealer. The
policies described in this section regarding forward foreign currency contracts
and the respective Fund's policies regarding foreign currency transactions
discussed elsewhere in this Statement of Additional Information are not
fundamental policies of the Funds and may be changed by Heartland's Board of
Directors as permitted by applicable regulatory authority.

OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward foreign currency contracts, except that they
are traded on exchanges (and have margin requirements) and are standardized as
to contract size and delivery date. Most currency futures contracts call for
payment or delivery in U.S. dollars. The underlying instrument of a currency
option may be a foreign currency, which generally is purchased or delivered in
exchange for U.S. dollars, or may be a futures contract. The purchaser of a
currency call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying currency.

The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed above.
Each of the Small Cap Contrarian Fund, the Value Fund, the Mid Cap Value Fund,
the Large Cap Value Fund, and the Value Plus Fund may purchase and sell
currency futures and may purchase and write currency options to increase or
decrease its exposure to different foreign currencies. The Small Cap
Contrarian Fund, the Value Fund, the Mid Cap Value Fund, the Large Cap Value
Fund, and the Value Plus Fund may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with exchange
rates, but may not reflect other factors that affect the value of the
respective Fund's investments. A currency hedge, for example, should protect a
Yen-denominated security from a decline in the Yen, but will not protect the
respective Fund against a price decline resulting from deterioration in the
issuer's creditworthiness. Because the value of the respective Fund's
foreign-denominated investments changes in response to many factors other than
exchange rates, it may not be possible to match the amount of currency options
and futures to the value of the respective Fund's investments exactly over
time.

FEDERAL TAX TREATMENT OF OPTIONS, FUTURES CONTRACTS, AND FORWARD FOREIGN
EXCHANGE CONTRACTS

The Funds may enter into certain option, futures, and, with respect to
the Small Cap Contrarian Fund, the Value Fund, the Mid Cap Value Fund, the
Large Cap Value Fund, and the Value Plus Fund, forward foreign exchange
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 a 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.

Options, futures, and forward foreign exchange contracts which offset
a foreign dollar denominated bond or currency position may be considered
straddles for tax purposes in which case a loss on any position in a straddle
will be subject to deferral to the extent of unrealized gain in an offsetting
position.

In order for a 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 or currencies). Pending tax regulations could limit the extent that
net gains realized from options, futures, or foreign forward exchange contracts
on currencies are qualifying income for purposes of the 90% requirement. In
addition, gains realized on the sale or other disposition of securities,
including options, futures, or foreign forward exchange contracts on securities
or securities indices and, in some cases, currencies, held for less than three
months, must be limited to less than 30%

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<PAGE> 52

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 options, futures, or foreign forward
exchange contracts beyond the time when it would otherwise be advantageous to
do so. It is anticipated that unrealized gains on Section 1256 options,
futures, and foreign forward exchange 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 or
currencies held less than three months for purposes of the 30% test.

NON-INVESTMENT GRADE SECURITIES

Non-investment grade debt securities (those rated below the four
highest categories by Moody's Investors Service, Inc. ("Moody's") or Standard &
Poor's Corporation ("S&P") or, if unrated, judged by Heartland Advisors to be
of comparable quality, commonly known as "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 securities typically offer higher rates of return than
investment grade securities, they also involve greater risk, including greater
risk of default. An economic downturn could severely disrupt the market for
such high yield securities and adversely affect their value and the ability of
the issuers to repay principal and interest. The rate of incidence of default
of non-investment grade securities is likely to increase during times of
economic downturns and extended periods of increased interest rates. Yields on
non-investment grade securities will fluctuate over time, and are generally
more volatile than yields on investment grade securities.

The secondary trading market for non-investment grade securities may
be less well-established than for investment grade securities, and such
securities may therefore be only thinly traded. As a result, there may be no
readily ascertainable market value for such securities, in which case it will
be more difficult for the Funds to value accurately the securities, and
consequently the investment portfolio. Under such circumstances, the
subjective judgment of the Board of Directors 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 non-investment grade securities, especially in a thinly traded market.

The Value Fund, the Value Plus Fund and the U.S. Government Securities
Fund will not invest in securities that are rated below the fifth or sixth
rating categories by Moody's or S&P (Ba and B for Moody's and BB and B for S&P)
or, if unrated, judged comparable by Heartland Advisors. Securities rated in
the higher 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
securities can generally be identified which could assist them in satisfying
their debt service requirements. Securities rated in the lower of these two
categories are considered highly speculative. While the issuers of such
securities currently must be meeting debt service requirements in order to
achieve this rating, adverse business, financial, or economic conditions likely
could impair the issuer's capacity or willingness to pay interest and repay
principal.

The Small Cap Contrarian Fund may invest in debt securities rated as
low as the lowest rating category assigned by Moody's or S&P (C for Moody's and
D for S&P). Debt securities rated below B may be even more speculative than B
rated bonds and may either be currently vulnerable to default or may be in
default. A detailed description of the characteristics associated with the
various debt credit ratings established by Moody's and S&P is set forth in
Appendix A to this Statement of Additional Information.

While rating categories help identify credit risks associated with
debt securities, they do not evaluate the market value risk of non- investment
grade securities. 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 non-investment grade securities held in each Fund's portfolio.
Since the risk of default is higher for non-investment grade debt securities,
Heartland Advisors' research and credit analysis are an especially important
part of managing securities of this type held by a Fund. In considering
investments for the Fund, Heartland Advisors will attempt to identify those
issuers of non-investment grade securities whose financial

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condition is adequate to meet future obligations, has improved, or is expected
to improve in the future. Heartland Advisors' analysis focuses on relative
values based on such factors as interest or dividend coverage, asset coverage,
earnings prospects, and the experience and managerial strength of the issuer.

A Fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise to exercise its rights as a security holder to
seek to protect the interests of security holders if it determines this to be
in the best interests of the Fund's shareholders.

INDEXED SECURITIES

The Small Cap Contrarian Fund, the Mid Cap Value Fund, the Large Cap
Value Fund, the Value Plus Fund, and the U.S. Government Securities Fund may
purchase securities whose prices are indexed to the prices of other securities,
securities indices, currencies, precious metals or other commodities, or other
financial indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is determined by
reference to a specific instrument or statistic. For example, certain debt
securities in which the Funds may invest may include securities whose interest
rates are determined by reference to one or more specific financial indicators,
such as LIBOR, resulting in a security whose interest payments tend to rise and
fall together with the financial indicator. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price of
gold, resulting in a security whose price tends to rise and fall together with
gold prices. Currency-indexed securities typically are short-term to
intermediate-term debt securities whose maturity values or interest rates are
determined by reference to the values of one or more specified foreign
currencies, and may offer higher yields than U.S. dollar-denominated securities
of equivalent issuers. Currency-indexed securities may also have prices that
depend on the values of a number of different foreign currencies relative to
each other. Indexed securities may be positively or negatively indexed; that
is, their maturity value may increase when the specified underlying
instrument's value increases, resulting in a security that performs similarly
to the underlying instrument, or their maturity value may decline when the
underlying instrument increases, resulting in a security whose price
characteristics are similar to a put on the underlying instrument.

The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the U.S. and
abroad. At the same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations, and certain U.S.
government agencies.

The market for indexed securities may be thinner and less active than
the market for securities in general, which can adversely affect the prices at
which indexed securities are sold. If market quotations are not available,
indexed securities will be valued in accordance with procedures established by
the Board of Directors of Heartland, including the use of outside pricing
services. Judgment plays a greater role in valuing certain indexed securities
than is the case for securities for which more external sources for quotations
and last-sale information are available. Adverse publicity and changing
investor perceptions may affect the ability of outside pricing services to
value indexed securities and the Fund's ability to dispose of these securities.

RESTRICTED SECURITIES

Restricted securities generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the Securities
Act of 1933, or in a registered public offering. Where registration is
required, a Fund may be obligated to pay all or part of the registration
expense and a considerable period may elapse between the time it decides to
seek registration and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to seek registration of the security. The Small
Cap Contrarian, Mid Cap Value, and Large Cap Value Funds may invest without
limitation in restricted securities that are eligible for resale to qualified
institutional buyers pursuant to Rule 144A under the Securities Act of 1933,
provided that such securities have been determined to be liquid pursuant to the
guidelines adopted by the Board of Directors.

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<PAGE> 54

VALUE FUND - DEBT SECURITIES

The Value Fund may invest up to 5% of its net assets in debt
securities rated at least B by Moody's or S&P, or, if unrated, judged
comparable by Heartland Advisors. See "Non-Investment Grade Securities" above.
Debt securities in which the Value Fund may invest include corporate debt
securities, securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, and money market instruments, such as
certificates of deposit and commercial paper.

U.S. GOVERNMENT SECURITIES FUND - MORTGAGE-BACKED SECURITIES

Depending on market conditions, the U.S. Government Securities Fund
may invest a substantial portion of its assets in mortgage-backed securities
issued or guaranteed by the U.S. government, its agencies or instrumentalities.
These are debt securities that represent interests in pools of mortgages, and
may include stripped mortgage-backed obligations. Mortgage-backed securities
in which the Fund may invest, may be guaranteed by the issuing governmental
agency and, therefore, subject to risk based on the credit-worthiness of the
issuing agency or instrumentality. One type of mortgage-backed security in
which the Fund may invest are Government National Mortgage Association ("GNMA")
Certificates of the modified pass-through type, which represent interests in
pools of mortgages insured by the Federal Housing Administration ("FHA") or the
Farmers Home Administration ("FMHA") or guaranteed by the Veterans
Administration ("VA"). GNMA guarantees the timely payment of monthly
installments of principal and interest on such Certificates. The GNMA
guarantees are backed by the full faith and credit of the U.S. Government.

The average life of a mortgage-backed security is likely to be
substantially less than the original maturity of the mortgage pools underlying
the securities. Prepayments of principal by mortgagors and mortgage
foreclosures will generally result in the return of the greater part of the
principal invested long before the maturity of the mortgage in the pool.
Foreclosures impose limited risk to principal investments to the extent of the
governmental agency or GNMA guarantee.

As prepayment rates of individual mortgage pools will vary widely, it
is not possible to accurately predict the average life of a particular issue of
mortgage-backed securities. However, historical statistics may be used as an
indicator of the expected average life of the security. To the extent the U.S.
Government Securities Fund buys mortgage-backed securities at a premium,
mortgage foreclosures and prepayments of principal by mortgagors may result in
some loss of the Fund's principal investment to the extent of the premium paid.
To avoid loss of this premium and of any gain in value of its mortgage-backed
securities resulting from a decrease in interest rates generally, the U.S.
Government Fund may sell such securities that are trading at a substantial
premium.

Collateralized Mortgage Obligations ("CMOs") issued by the U.S.
Government, its agencies or instrumentalities are hybrid mortgage-related
instruments typically collateralized by whole loan mortgages, mortgage
pass-through securities, or stripped mortgage-backed securities. Typically,
CMOs use cash flows of long-maturity, monthly pay collateral to create multiple
classes with different effective maturities or expected average lives. In
general, investors in traditional pass-through securities would receive a pro
rata distribution of any principal and interest, whereas with a CMO, principal
and interest payments are typically paid monthly according to the schedule for
payments of principal and interest, including prepayments, established for the
class ("tranche") of the CMO.

SMALL CAP CONTRARIAN FUND - SHORT SALES

The Small Cap Contrarian Fund may seek to hedge investments or realize
additional gains through short sales. Short sales are transactions in which
the Fund sells a security it does not own in anticipation of a decline in the
market value of that security. To complete such a transaction, the Fund must
borrow the security to make delivery to the buyer. The Fund then is obligated
to replace the security borrowed by purchasing it at the market price at or
prior to the time of replacement. The price at such time may be more or less
than the price at which the security was sold by the Fund. Until the security
is replaced, the Fund is required to repay the lender any dividends or interest
that accrued during the period of the loan. To borrow the security, the Fund
also may be required to pay

13
<PAGE> 55

a premium, which would increase the cost of the security sold. The net
proceeds of the short sale will be retained by the broker (or by the Fund's
custodian), to the extent necessary to meet margin requirements, until the
short position is closed out. The Fund may also incur transaction costs in
effecting short sales.

The Fund will incur a loss as a result of the short sale if the price
of the security increases between the date of the short sale and the date on
which the Fund replaces the borrowed security. The Fund will realize a gain if
the security declines in price between those dates. The amount of any gain
will be decreased, and the amount of any loss increased, by the amount of the
premium, dividends, interest or expenses a Fund may be required to pay in
connection with a short sale.

Whenever the Small Cap Contrarian Fund engages in a short sale, it
will maintain a segregated collateral account with its custodian consisting of
an amount of cash or liquid assets equal to the difference between (a) the
market value of the securities sold short at the time they were sold short and
(b) any cash or U.S. government securities required to be deposited as
collateral with the broker in connection with the short sale (not including the
proceeds from the short sale). The Fund will maintain the account on a daily
basis so that the amount deposited with the custodian plus the amount deposited
with the broker as collateral will equal the current market value of the
securities sold short; provided, that at no time will the amount segregated in
the account plus the amount deposited with the broker be less than the market
value of the securities at the time they were sold short.

SMALL CAP CONTRARIAN FUND - LEVERAGE

The Small Cap Contrarian Fund may borrow from banks up to one-third of
its total assets, and may pledge its assets in connection with such borrowings.
If the Small Cap Contrarian Fund makes additional investments while borrowings
are outstanding, this may be construed as a form of leverage. Leveraging the
Small Cap Contrarian Fund may create an opportunity for increased net income;
however, it may also give rise to special risk considerations. For example,
leveraging may exaggerate changes in the net asset value of the Fund's shares
and in the gains and losses on the Fund's investments. Leveraging will create
interest expenses for the Fund that may exceed the return on investments made
with the borrowings. To the extent the income derived from securities
purchased with borrowed funds exceeds the Fund's costs of borrowing, the Fund's
net income may be greater than if leveraging were not used. Conversely, if the
income from the investments made with the borrowed funds is not sufficient to
cover the cost of leveraging, the net income of the Fund will be less than if
leveraging were not used and the value of the Fund's shares may be adversely
affected. Reverse repurchase agreements that are not fully collateralized
create leverage, a speculative factor, and will be considered as borrowings for
purposes of the Fund's investment limitations.

PORTFOLIO TURNOVER

Portfolio turnover for each 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 twelve months. A 100% portfolio turnover rate would
occur, for example, if the lesser of the value of purchases or sales of a
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.
For the fiscal years ended December 31, 1995 and 1994, the portfolio turnover
rates for the Value Fund were 31% and 35%, respectively, for the Value Plus
Fund were 150% and 127%, respectively, and for the U.S. Government Securities
Fund were 97% and 95%, respectively. The turnover rate for the Value Plus Fund
was relatively high in 1995, in part due to a somewhat defensive reallocation
of assets in the portfolio from common stock investments to convertible bonds
and cash and cash equivalents. The Fund took losses in several stocks where
the fundamentals had deteriorated and realized profits in many of its equity
positions that had experienced significant appreciation. In addition to normal
portfolio activity, the Fund had several companies in the portfolio that were
the subject of takeovers during 1995, thereby increasing portfolio turnover.
The portfolio turnover rate for the Small Cap Contrarian Fund for the period
from April 27, 1995 (commencement of operations) to December 31, 1995 was 45%.
Annual portfolio turnover for the Small Cap Contrarian Fund is expected to be
less than 200%. It is expected that the annual portfolio turnover for the Mid
Cap Value Fund and the Large Cap Value Fund will not exceed 100%.

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<PAGE> 56

INVESTMENT RESTRICTIONS

Each Fund has adopted investment restrictions and fundamental policies
which 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. Operating policies are
subject to change by the Board of Directors without shareholder approval.
However, no Fund will change materially any operating policy without notice to
shareholders. 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, a Fund.

SMALL CAP CONTRARIAN FUND

The fundamental investment restrictions and policies of the Small Cap
Contrarian Fund provide that such Fund may not:

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

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

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

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

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

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

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

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

15
<PAGE> 57

of 1933, as amended, upon disposition; and (b) repurchase agreements which do
not provide for payment within 7 days.

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

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

In accordance with the following non-fundamental policies, which may
be changed without shareholder approval, the Small Cap Contrarian Fund may not:

(1) 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.

(2) Invest in securities of other investment companies except as
permitted by the 1940 Act or as part of a merger, consolidation, acquisition of
assets, or similar reorganization transaction.

(3) Purchase warrants (other than those that have been acquired in
units or attached to other securities), except that the Fund may purchase
warrants which, when valued at lower of cost or market, do not exceed 5% of the
value of the Fund's net assets; included within the 5%, but not in excess of 2%
of the Fund's net assets, may be warrants which are not listed on the New York
or American Stock Exchanges.

(4) Purchase or retain the securities of any issuer if the
officers, directors, advisors or managers of the Fund owning beneficially more
than 0.5% 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.

(5) Purchase securities on margin or effect short sales of
securities, except that the Fund may obtain short-term credit necessary for the
clearance of purchases and sales of its portfolio securities, and except as
required in connection with permissible options, futures, short selling and
leverage activities as described elsewhere in the Prospectus and Statement of
Additional Information.

(6) Invest more than 10% of its total assets in real estate
investment trusts.

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

VALUE FUND AND U.S. GOVERNMENT SECURITIES FUND

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

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

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

16
<PAGE> 58

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

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

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

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

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

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

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

(11) Issue senior securities.

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

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

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<PAGE> 59

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

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

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

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

MID CAP VALUE FUND AND LARGE CAP VALUE FUND

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

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

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

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

18
<PAGE> 60

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

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

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

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

In accordance with the following non-fundamental policies, which may
be changed without shareholder approval, the Mid Cap Value Fund and the Large
Cap Value Fund each may not:

(1) 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.

(2) Invest in securities of other investment companies except as
permitted by the 1940 Act or as part of a merger, consolidation, acquisition of
assets, or similar reorganization transaction.

(6) Invest more than 10% of its total assets in real estate
investment trusts.

For the Mid Cap Value Fund's and Large Cap Value Fund's limitations on
futures and options transactions, see "Investment Policies and Methods -
Limitations on Futures and Options Transactions."

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<PAGE> 61

VALUE PLUS FUND

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

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

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

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

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

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

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

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

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

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

(10) Issue senior securities.

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

In accordance with the following non-fundamental policies, which may
be changed without shareholder approval, the Value Plus Fund may not:

(1) 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.

20
<PAGE> 62

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

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

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

(6) Invest more than 10% of its total assets in real estate
investment trusts.

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

MANAGEMENT

The Board of Directors of Heartland provides broad supervision over
the affairs of each 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 each Fund. Although each Fund is offering only its own shares,
it is possible that one Fund might become liable for any misstatement in the
Prospectus about another Fund. The Board of Directors has considered this
factor in approving the use of a single combined prospectus.

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

William J. Nasgovitz President and Director* President and Director Heartland
790 North Milwaukee Street Advisors, Inc., since 1982; Senior
Milwaukee, WI 53201 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 consultant
3726 North Lake Drive since 1984; prior thereto, Chairman
Milwaukee, WI 53211 and a Director, Marine Corporation
(a bank holding company) and Marine
Bank, N.A.

</TABLE>

<PAGE> 63

<TABLE>
<CAPTION>
Principal Occupation
Name and Address Position with Heartland During Past Five Years
- ---------------- ----------------------- ----------------------
<S> <C> <C>
Hugh F. Denison Vice President and Director* Vice President, Heartland Advisors,
790 North Milwaukee Street Inc. since 1988; Director, Heartland
Milwaukee, WI 53201 Advisors, Inc., 1988 through 1996.

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

Patrick J. Retzer Vice President, Treasurer and Vice President and Treasurer,
790 North Milwaukee Street Director* Heartland Advisors, Inc. since 1987;
Milwaukee, WI 53201 Director of Heartland Advisors, Inc.
since 1988.

A. Gary Shilling Director President, A. Gary Shilling &
500 Morris Avenue Company, Inc. (economic consultants
Springfield, NJ 07081-1020 and investment advisors), since
1978.
Linda F. Stephenson Director President and Chief Executive
100 East Wisconsin Avenue Officer, Zigman Joseph Stephenson (a
Milwaukee, WI 53202 public relations and marketing
communications firm) since 1989.

Lois Schmatzhagen Secretary Secretary, Heartland Advisors, Inc.
790 North Milwaukee Street since 1988.
Milwaukee, WI 53201
- -------------------
</TABLE>

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

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 COMPENSATION FROM
COMPENSATION RETIREMENT ACTUAL BENEFITS HEARTLAND AND
DIRECTOR FROM HEARTLAND BENEFITS UPON 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>

<PAGE> 64

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of August 30, 1996, the Directors and officers of Heartland Group,
Inc. as a group (8 persons) owned less than 1% of the outstanding shares of the
Small Cap Contrarian Fund, the Value Fund and the U.S. Government Securities
Fund, and owned 1.03% of the Value Plus Fund. As of such date, no person was
known to management to own, beneficially or of record, 5% or more, of the
outstanding shares of any of the Funds, except that Charles Schwab & Co., Inc.,
ATTN: Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104-4122 held
of record 9,849,082 shares (or 20.5%) of the Value Fund, 462,120 shares (or
19.5%) of the Value Plus Fund, and 5,231,322 shares (or 30.2%) of the Small Cap
Contrarian Fund.

THE INVESTMENT ADVISOR

Each Fund is managed by Heartland Advisors, pursuant to an Investment
Advisory Agreement with respect to the Value Fund and a separate Investment
Advisory Agreement with respect to the Small Cap Contrarian Fund, the Mid Cap
Value Fund, the Large Cap Value Fund, the Value Plus Fund, and the U.S.
Government Securities Fund (the "Agreements"). The Agreements, with respect to
the Small Cap Contrarian Fund, the Value Plus Fund, the U.S. Government
Securities Fund, and the Value Fund, were most recently approved 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 31, 1996. The
Agreements, with respect to the Mid Cap Value Fund and the Large Cap Value
Fund, were approved by the Board of Directors on July 31, 1996.

Heartland Advisors is controlled by William J. Nasgovitz, a Director
and the President of Heartland, by virtue of his ownership of a majority of its
outstanding capital stock. In addition to serving as investment advisor,
Heartland Advisors also serves as the distributor for the shares of each Fund.
Heartland Advisors, founded in 1982, serves as the investment adviser for the
Heartland Wisconsin Tax Free and Nebraska Tax Free Funds, two 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 August 30, 1996, Heartland Advisors had approximately $2.6 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 provides each Fund with overall investment advisory
and administrative services. Subject to such policies as the Board of
Directors may determine, Heartland Advisors makes investment decisions on
behalf of each Fund, makes available research and statistical data in
connection therewith, and supervises the acquisition and disposition of
investments by each Fund, including the selection of broker-dealers to carry
out portfolio and hedging transactions. Heartland Advisors will permit any of
its officers or employees to serve without compensation from the Funds as
directors or officers of Heartland if elected to such positions.

Heartland Advisors bears all of its own expenses in providing services
under the Agreements and pays all salaries, fees, and expenses of the officers
and directors of Heartland who are affiliated with Heartland Advisors. Each
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 with
various 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.

23
<PAGE> 65

Each of the Small Cap Contrarian Fund, the Value Fund, the Mid Cap
Value Fund, and the Large Cap Value Fund pays Heartland Advisors an annual fee
for its services at the rate of 0.75 of 1% of the respective Fund's average
daily net assets. While the advisory fee is larger than the fee paid by most
mutual funds, it is consistent with the fee paid by funds with investment
characteristics and objectives similar to that of the referenced Funds. The
Value Plus Fund pays Heartland Advisors an annual fee for its advisory services
at the rate of 0.70 of 1% of the Fund's average daily net assets. The advisory
fee for the U.S. Government Securities Fund is 0.65 of 1% of the first $100
million of the Fund's average daily net assets, 0.50 of 1% of the next $400
million of assets, and 0.40 of 1% on assets in excess of $500 million. The
advisory fees for the Funds are payable in monthly installments.

For the fiscal years ended December 31, 1993, 1994, and 1995, the
Value Fund paid advisory fees of $990,902, $1,985,370, and $6,452,487,
respectively. For the period from April 27, 1995 (commencement of operations)
to December 31, 1995, the Small Cap Contrarian Fund paid advisory fees of
$172,583. For the fiscal years ended December 31, 1994 and 1995, the Value
Plus Fund paid advisory fees of $63,697 and $102,311, respectively, and for the
period from October 26, 1993 (commencement of operations) to December 31, 1993,
the Value Plus Fund paid advisory fees of $3,186. For the years ended December
31, 1993, 1994, and 1995, the U.S. Government Securities Fund paid advisory
fees of $232,062, $361,242, and $325,124, respectively. During those periods,
advisory fees provided under the U.S. Government Securities Fund's Agreement
totaled $316,429, $469,614, and $422,661, respectively, but Heartland Advisors
voluntarily waived $84,367, $108,372, and $97,537, of the fees during those
respective periods.

The Agreements provide that Heartland Advisors' fee will be reduced,
or Heartland Advisors will reimburse a Fund (up to the amount of its fee), by
an amount necessary to prevent the total expenses of a 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. Presently the most
restrictive expense ratio limitation imposed by any state is 2-1/2% of the
first $30 million of a Fund's average net assets, 2% of the next $70 million
and 1-1/2% of the remaining assets. For the purposes of these tests, average
net assets will be computed in the same manner as average daily net assets are
computed in determining the investment advisory fee. Such reimbursements would
be made monthly, subject to annual adjustment.

Each of the Agreements will continue in effect from year to year, as
long as it is approved at least annually by the Board of Directors or by a vote
of the outstanding voting securities of the appropriate 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. Each 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. Each 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.

PERFORMANCE INFORMATION

From time to time the Funds may advertise their "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 a Fund refers to the income generated by an investment in that
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 Funds refers to the annual average return
for 1, 5, and 10-year periods (or the portion thereof during which a 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. Prior to June 1, 1994, shares of the Funds had been
sold subject to a contingent deferred sales charge and prior to February 12,
1993,

24
<PAGE> 66

shares of the Value and U.S. Government Securities Funds had been sold subject
to an initial sales charge, neither of which is reflected in the total return
figures, rather the figures reflect the current no-load sales structure.

Performance information should be considered in light of the
particular Fund's investment objectives 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 a Fund's performance to performance figures published for other
investment vehicles.

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 a Fund has been in existence) ended on the date of the
respective 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

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).

In some circumstances a Fund may advertise its total return for a 1,
2, or 3-year period, or the total return since the Fund commenced operations.
In such circumstances the Fund will adjust the values used in computing return
to correspond to the length of the period for which the information is
provided.

The average annual total return for the Funds for the one, five, and
ten-year periods or, if less, from commencement of operations through June 30,
1996 are as follows:

<TABLE>
<CAPTION>
10 Years
or, if Less,
From
Commencement
1 Year 5 Years of Operations
------ ------- -------------

<S> <C> <C> <C>
Heartland Value Fund . . . . . . . . . . . . . . . . . . 23.34% 24.07% 13.61%
Heartland Small Cap Contrarian Fund (4/27/95) . . . . . . 27.42% N/A 35.47%
Heartland Value Plus Fund (10/26/93) . . . . . . . . . . 21.88% N/A 14.53%
Heartland U.S. Government Securities Fund (4/9/87) . . . 2.58% 8.52% 8.19%
</TABLE>

<PAGE> 67

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:

a-b 6
Yield=2[( --- +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.

Since the Value Fund's, the Mid Cap Value Fund's, and the Large Cap
Value Fund's investment objective is long-term capital appreciation, these
Funds will typically not calculate or advertise their yield. Similarly, the
Small Cap Contrarian Fund will not typically calculate its yield. The yield
for the Value Plus Fund for the thirty days commencing June 1, 1996 was 3.36%.
The yield for the U.S. Government Securities Fund for the thirty days
commencing June 1, 1996 was 6.73%. When advertising yield, a 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.

DETERMINATION OF NET ASSET VALUE PER SHARE

Each Fund's shares are sold at their next determined net asset value
per share. Each Fund determines the net asset value per share by subtracting
the Fund's liabilities (including accrued expenses and dividends payable) from
the Fund's total assets (the value of the securities a 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.

The next determined net asset value per share will be calculated as of
the close of regular trading on the New York Stock Exchange 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 which are traded on stock exchanges are valued at the last
sale price as of the close of business on the day the securities are being
valued, or, lacking any sales, at the mean between closing bid and asked
prices. Each over-the-counter security for which the last sale price on the
day of valuation is available from NASDAQ and falls within the range of the
latest bid and asked quotations is valued at that price. All other securities
traded in the over-the-counter market are valued at the most recent bid prices
as obtained from one or more dealers that make markets in the securities.
Portfolio securities which are traded both in the over-the-counter market and
on a stock exchange are valued according to the broadest and most
representative market.

Foreign securities are valued at the last sale price in the principal
market where they are traded, or, if last sale prices are unavailable, at the
last bid price available prior to the time the Fund's net asset value is
determined.

<PAGE> 68

Foreign securities prices may be furnished by quotation services who express the
value of securities in their local currency. Heartland Advisors translates the
value of foreign securities from the local currency into U.S. dollars at current
exchange rates. Any changes in the value of forward contracts due to exchange
rate fluctuations are included in the determination of net asset value.
Because foreign securities markets may close prior to the time a Fund determines
its net asset value, events affecting the value of portfolio securities
occurring between the time securities prices are determined and the time the
Fund calculates its net asset value may not be reflected in the Fund's
calculation.

Securities and other assets for which quotations are not readily
available will be valued at their fair value as determined by the Board of
Directors.

DISTRIBUTION OF SHARES

Heartland Advisors, each Fund's investment advisor, also acts as the
distributor of the shares of each Fund. Heartland Advisors has agreed to use
its "best-efforts" to distribute each Fund's shares, but has not committed to
purchase or sell any specific number of shares. The Distribution Agreement for
the Funds 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 Agreement, Heartland Advisors 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.

For the fiscal year ended December 31, 1995, Heartland Advisors
received contingent deferred sales charges with respect to redemptions of
shares of the Value Fund, the Value Plus Fund, and the U.S. Government
Securities Fund in the amounts of $205,943, $12,134, and $82,882, respectively.
For the fiscal year ended December 31, 1994, Heartland Advisors received
contingent deferred sales charges with respect to redemptions of shares of the
Value Fund, the Value Plus Fund, and the U.S. Government Securities Fund in the
amounts of $239,548, $13,392, and $118,949, respectively. For the fiscal year
ended December 31, 1993, Heartland Advisors received contingent deferred sales
charges with respect to redemptions of shares of the Value Fund and U.S.
Government Securities Fund in the amounts of $139,549 and $14,060,
respectively. For the period from October 26, 1993 through December 31, 1993,
Heartland Advisors received contingent deferred sales charges with respect to
redemptions of shares of the Value Plus Fund in the amount of $69.

DISTRIBUTION PLAN

Each Fund has adopted a Distribution Plan, which is described in the
Prospectus (see "The Distribution Plan"). Under each Plan, Heartland Advisors
provides the Directors for their review promptly after the end of each quarter
a written report setting forth all amounts expended under the Plan, including
all amounts paid to dealers as distribution or service fees. In approving the
Plan in accordance with the requirements of Rule 12b-1, the Directors
considered various factors, including the amount of the distribution fee. The
Directors determined that there is a reasonable likelihood that the Plan of
each respective Fund will benefit the Fund and the shareholders of the Fund.

Each Plan may be terminated by vote of a majority of the Directors who
are not interested persons, or by vote of a majority of the outstanding voting
securities of the Fund. Any change in the Plan that would materially increase
the distribution cost to the Fund requires shareholder approval; otherwise, it
may be amended by the Directors, including a majority of the Directors who are
not interested persons, by vote cast in person at a meeting called for the
purpose of voting upon such amendment. So long as a Distribution Plan is in
effect, the selection or nomination of the Directors who are not interested
persons is committed to the discretion of such Directors.

<PAGE> 69

The Distribution Plan of a Fund may be terminated by the Directors at
any time on 60 days written notice without payment of any penalty by Heartland
Advisors, by vote of a majority of the outstanding voting securities of the
Fund, or by vote of a majority of the Directors who are not interested persons.

Each Distribution Plan will continue in effect for successive one-year
periods, if not sooner terminated in accordance with its terms, provided that
each such continuance is specifically approved by the vote of the Directors,
including a majority of the Directors who are not interested persons.

During the fiscal year ended December 31, 1995, the Value Fund paid
$2,150,829 under its Plan, of which $2,107,107 was spent on compensation to
dealers, financial institutions, and other service providers, and $43,722 was
spent on printing and mailing prospectuses and sales literature to other than
current shareholders. During the period from April 27, 1995 (commencement of
operations) to December 31, 1995, the Small Cap Contrarian Fund paid $57,402
under its Plan, of which $57,387 was spent on compensation to dealers,
financial institutions, and other service providers and $15 was spent on
printing and mailing prospectuses and sales literature to other than current
shareholders. During the fiscal year ended December 31, 1995, the Value Plus
Fund paid $36,684 under its Plan, of which $35,239 was spent on compensation to
dealers, financial institutions, and other service providers, and $1,445 was
spent on printing and mailing prospectuses and sales literature to other than
current shareholders. During the fiscal year ended December 31, 1995, the U.S.
Government Securities Fund paid $162,562 under its Plan, of which $158,549 was
spent on compensation to dealers, financial institutions, and other service
providers, and $4,013 was spent on printing and mailing prospectuses and sales
literature to other than current shareholders.

TAX STATUS

The information in this section supplements that in the Prospectus
(see "Dividends, Capital Gains 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 a 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 Fund for shares of another
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 each 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. Each 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.

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,

<PAGE> 70

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 a change in that series' 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.

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 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,
dealers who provide supplemental investment research, statistical or other
services to Heartland Advisors may receive orders for transactions by the
Funds. 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 one of the Funds. 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, including the Funds. 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.
Each Fund may also consider sales of its own shares or the shares of 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 Funds may pay higher commissions to
brokers (other than Heartland Advisors or its affiliates) than might be charged
if a different broker had been selected, if, in Heartland Advisor's 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.

Subject to the above considerations, Heartland Advisors may itself
effect portfolio transactions as a broker for the Funds. 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 or commodities 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, 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

<PAGE> 71

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.

During the fiscal year ended December 31, 1993, the Value Fund and the
U.S. Government Securities Fund paid $589,478 and $8,607, respectively, in
aggregate brokerage commissions on portfolio transactions. Of such brokerage
commissions, $198,964 and $0, respectively, were paid to Heartland Advisors.
For the period from October 26, 1993 (commencement of operations) to December
31, 1993, the Value Plus Fund paid a total of $5,914 in aggregate brokerage
commissions on portfolio transactions, of which $3,587 were paid to Heartland
Advisors.

During the fiscal year ended December 31, 1994, the aggregate
brokerage commissions on portfolio transactions paid by the Funds were as
follows: the Value Fund paid $833,464; the Value Plus Fund paid $36,958; and
the U.S. Government Securities Fund paid $10,751. Of such brokerage
commissions, amounts paid to Heartland Advisors as broker were: $235,899 for
the Value Fund; $12,195 for the Value Plus Fund; and $0 for the U.S. Government
Securities Fund.

During the fiscal year ended December 31, 1995, the aggregate
brokerage commissions paid by the Funds, and the total dollar value of
portfolio transactions on which a brokerage commission was paid, were as
follows: the Value Fund paid $2,619,410 on portfolio transactions of
$375,284,546; the Value Plus Fund paid $140,980 on portfolio transactions of
$34,582,469; and the U.S. Government Securities Fund paid $676 on portfolio
transactions of $812,098. Of such brokerage commissions, amounts paid to
Heartland Advisors as broker were: $438,094 in commissions (or 16.7% of total
commissions) on $76,901,148 of transactions (or 20.5% of total transactions)
for the Value Fund; $29,768 in commissions (or 21.1% of total commissions) on
$8,665,208 of transactions (or 25.1% of total transactions) for the Value Plus
Fund; and $0 for the U.S. Government Securities Fund. For the period from
April 27, 1995 (commencement of operations) to December 31, 1995, the Small Cap
Contrarian Fund paid aggregate brokerage commissions of $246,960 on portfolio
transactions of $40,048,920. Of such brokerage commissions, amounts paid to
Heartland Advisors as broker by the Fund were $43,741 (or 17.7% of total
commissions) on $2,151,093 of portfolio transactions (or 5.4% of total
transactions). Heartland Advisors effected multiple purchases of a New York
Stock Exchange listed security with a low dollar value as broker for the Fund,
which resulted in a higher percentage of brokerage commissions paid to
Heartland Advisors than the relative dollar value of portfolio transactions
effected by Heartland Advisors for the period. Such transactions were effected
in accordance with the procedures adopted by the Board with respect to
commissions paid to Heartland Advisors.

Under the Investment Company Act of 1940, Stifel Financial Corporation
("Stifel") may be deemed an affiliated person of Heartland Advisors since
Heartland Advisors may be deemed to hold or control more than 5% of the
outstanding voting securities of Stifel in Heartland Advisors' capacity as
investment advisor to the Funds and other investment advisory accounts. During
the fiscal year ended December 31, 1995, the Value Fund paid $38,996 in
brokerage commissions (or 1.5% of total commissions paid) to Stifel for
effecting $5,930,376 of transactions, or approximately 1.6% of the dollar value
of portfolio transactions for which a brokerage commission was paid. During
the fiscal year ended December 31, 1995, the Value Plus Fund paid $1,050 in
brokerage commissions (or 0.7% of total commissions paid) to Stifel for
effecting $1,175,390 of transactions, or approximately 3.4% of the dollar value
of portfolio transactions for which a brokerage commission was paid.

The portfolio holdings of the Funds may include the securities of
certain publicly traded brokerage firms. At December 31, 1995, the Value Fund
held 222,704 shares, with a market value of $807,302, of Kinnard Investments,
Inc., the parent corporation of John G. Kinnard and Company, Incorporated,
which was among the Fund's regular brokers or dealers for 1995 as defined in
Rule 10b-1 under the Investment Company Act of 1940.

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

30
<PAGE> 72

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

<PAGE> 73

COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS

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

FINANCIAL STATEMENTS

The financial statements, related notes and related reports of Arthur
Andersen LLP, independent public accountants, contained in the Annual Report to
Shareholders of the Value Fund, Small Cap Contrarian Fund, Value Plus Fund and
U.S. Government Securities Fund as of December 31, 1995 and for the fiscal year
or period then ended, together with the unaudited financial statements and
related notes contained in the Semi-Annual Report to Shareholders of those
Funds as of June 30, 1996 and for the six months then ended, are hereby
incorporated by reference. Copies of the Annual Report and Semi-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> 74

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 bond ratings
used by Moody's Investors Service, Inc. and Standard & Poor's Corporation.

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.

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
fluctuations 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 which are rated Baa are considered as 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
unrealizable 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 future 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.

A-1

<PAGE> 75

Caa -- Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.

Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.

C -- Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

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.

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
interest and repay principal.

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

A -- Debt rated A has a strong capacity to pay interest and repay
principal, 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 interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than for debt 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.

CCC -- Debt rated CCC has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial, or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The CCC
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied B or B- rating.

CC -- The rating CC is typically applied to debt subordinated to
senior debt that is assigned an actual or implied CCC rating.

A-2

<PAGE> 76

C -- The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.

CI -- The rating CI is reserved for income bonds on which no interest
is being paid.

D -- Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on the date due
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

Standard & Poor's ratings, from AA to CCC, may be modified by the
addition of a plus or minus sign to show relative standing within the major
categories.

A-3
<PAGE> 77

TABLE OF CONTENTS

INTRODUCTION TO THE FUNDS 2
INVESTMENT POLICIES AND METHODS 2
INVESTMENT RESTRICTIONS 15
MANAGEMENT 21
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES 23
THE INVESTMENT ADVISOR 23
PERFORMANCE INFORMATION 24
DETERMINATION OF NET ASSET VALUE PER SHARE 26
DISTRIBUTION OF SHARES 27
DISTRIBUTION PLAN 27
TAX STATUS 28
DESCRIPTION OF SHARES 28
PORTFOLIO TRANSACTIONS 29
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT 30
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS 31
FINANCIAL STATEMENTS 31

</TABLE>

Heartland Small Cap Contrarian Fund
Heartland Value Fund
Heartland Mid Cap Value Fund
Heartland Large Cap Value Fund
Heartland Value Plus Fund
Heartland U.S. Government Securities 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
<PAGE> 78

Part C. Other Information.

Item 24. Financial Statements and Exhibits

(a) Financial Statements and related footnotes for the
Funds (except for the Mid Cap Value Fund and the
Large Cap Value Fund) included or incorporated by
reference in Part B are:

(1) Reports of Independent Public Accountants
(2) Statement of Net Assets
(3) Statement of Changes in Net Assets
(4) Statement of Operations

(b) Exhibits:

See Exhibit Index following the signature page of
this registration statement, which index is
incorporated herein by this reference.

Item 25. Persons Controlled by or under Common Control with Registrant

Not Applicable. See "Control Persons and Principal Holders of
Securities" in Part B.

Item 26. Number of Holders of Securities

On June 30, 1996, the number of record holders of each class
of securities of the Registrant was:

Number of Holders of
Fund Record of Common Stock
- ---------------------------------------- ----------------------

<S> <C>

Heartland Small Cap Contrarian Fund 13,594

Heartland Value Fund 72,504

Heartland Mid Cap Value Fund 0

Heartland Large Cap Value Fund 0

Heartland Value Plus Fund 2,085

Heartland U.S. Government Securities Fund 3,190

Heartland Wisconsin Tax Free Fund 3,639

Heartland Nebraska Tax Free Fund 552

</TABLE>
<PAGE> 79

Item 27. Indemnification

Reference is made to Article IX of the Registrant's Bylaws
filed as Exhibit No. 2 to Registrant's Registration Statement
with respect to the indemnification of Registrant's directors
and officers, which is set forth below: Section 9.1.
Indemnification of Officers, Directors, Employees and Agents.
The Corporation shall indemnify each person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative
("Proceeding"), by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a
Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such Proceeding to the fullest extent
permitted by law; provided that:

(a) whether or not there is an adjudication of
liability in such Proceeding, the Corporation
shall not indemnify any person for any
liability arising by reason of such person's
willful misfeasance, bad faith, gross
negligence, or reckless disregard of the
duties involved in the conduct of his office
or under any contract or agreement with the
Corporation ("disabling conduct"); and

(b) the Corporation shall not indemnify any
person unless:

(1) the court or other body before which
the Proceeding was brought (i) dismisses the
Proceeding for insufficiency of evidence of
any disabling conduct, or (ii) reaches a
final decision on the merits that such person
was not liable by reason of disabling
conduct; or

(2) absent such a decision, a reasonable
determination is made, based upon a review of
the facts, by (i) the vote of a majority of a
quorum of the Directors of the Corporation
who are neither interested persons of the
Corporation as defined in the Investment

C-2
<PAGE> 80

Company Act of 1940 nor parties to the
Proceeding, or (ii) if such quorum is not
obtainable, or even if obtainable, if a
majority of a quorum of Directors described
in paragraph (b)(2)(i) above so directs, by
independent legal counsel in a written
opinion, that such person was not liable by
reason of disabling conduct.

Expenses (including attorneys' fees) incurred
in defending a Proceeding will be paid by the
Corporation in advance of the final
disposition thereof upon an undertaking by
such person to repay such expenses (unless it
is ultimately determined that he is entitled
to indemnification),

(1) such person shall provide adequate
security for his undertaking;

(2) the Corporation shall be insured
against losses arising by reason of such
advance; or

(3) a majority of a quorum of the
Directors of the Corporation who are neither
interested persons of the Corporation as
defined in the Investment Company Act of 1940
nor parties to the Proceeding, or independent
legal counsel in a written opinion, shall
determine, based on a review of readily
available facts, that there is reason to
believe that such person will be found to be
entitled to indemnification.

Section 9.2. Insurance of Officers, Directors, Employees and Agents.
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as
a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in or arising out
of his position. However, in no event will the Corporation purchase
insurance to indemnify any such person for any act for which the
Corporation itself is not permitted to indemnify him.

C-3
<PAGE> 81

Registrant undertakes that insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted
to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.

Item 28. Business and Other Connections of Investment Advisor

(a) Heartland Advisors, Inc.

Heartland Advisors, Inc. acts as the Investment Advisor and
Distributor to each of the Heartland Funds. William J.
Nasgovitz, a director and President of Heartland Group, Inc.,
is a controlling person of Heartland Advisors through his
ownership of a majority of its voting common stock. Mr.
Nasgovitz has indicated he intends to retain control of the
Advisor through continued ownership of a majority of its
outstanding voting stock.

Set forth below is a list of the executive officers and
directors of Heartland Advisors, Inc. as of June 30, 1996,
together with information as to any other business,
profession, vocation or employment of a substantial nature of
those officers and directors during the past two years:

C-4
<PAGE> 82

Position
With Heartland
Name Advisors, Inc. Other
- ---- ------------------------ -----
<S> <C> <C>
William J. President and Director President and
Nasgovitz Director, Heartland
Group, Inc.

Patrick J. Director and Vice Vice President,
Retzer President, Treasurer Treasurer, and
Director, Heartland Group, Inc.

Hugh F. Vice President Director, Heartland Group, Inc.
Denison

Kevin D. Vice President, Trading None
Clark

Mitchell L. Chief Operating Officer Communications
Kohls Manager, GE Medical Systems (General Electric) (8/88
to 6/95)

Kenneth J. Chief Financial Officer None
Della

Lorraine J. Vice President and Attorney, Quarles &
Koeper General Counsel and Brady (9/92 to 7/95)
Director

Lois J. Secretary Secretary, Heartland
Schmatzhagen Group, Inc.
</TABLE>

Item 29. Principal Underwriters

(a) Heartland Advisors, Inc. acts as the Distributor of
each of the Heartland funds shares. Heartland
Advisors, Inc. does not act as the principal
underwriter or distributor for any open-end mutual
funds other than the Heartland funds.

(b) See response to item 28(a) above.

C-5
<PAGE> 83

Item 30. Location of Accounts and Records

(a) Heartland Group, Inc.
790 North Milwaukee Street
Milwaukee, Wisconsin 53202

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

Item 31. Management Services

Not applicable

Item 32. Undertakings

The Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered a copy of the Registrant's
latest annual report to shareholders, upon request and without
charge.

The Registrant undertakes to file a post-effective amendment,
using financial statements which need not be certified, for
the Mid Cap Value Fund and the Large Cap Value Fund, within
four to six months from the effective date of this
Post-Effective Amendment.

C-6
<PAGE> 84

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Milwaukee, and State of Wisconsin, on
the 25th day of September, 1996.

HEARTLAND GROUP, INC.

By: /s/ William J. Nasgovitz
------------------------------
WILLIAM J. NASGOVITZ
President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed on this 25th day of
September, 1996, by or on behalf of the following persons in the capacities
indicated.

SIGNATURE TITLE

<S> <C>
/s/ William J. Nasgovitz Director and President (Chief Executive Officer)
- ----------------------------------------
WILLIAM J. NASGOVITZ

/s/ Patrick J. Retzer
- ---------------------------------------- Director, Vice President and Treasurer (Chief Financial and
PATRICK J. RETZER Accounting Officer)

Hugh F. Denison * Director
- ----------------------------------------
HUGH F. DENISON

A. Gary Shilling * Director
- ----------------------------------------
A. GARY SHILLING

Willard H. Davidson * Director
- ----------------------------------------
WILLARD H. DAVIDSON

Jon D. Hammes * Director
- ----------------------------------------
JON D. HAMMES

Linda F. Stephenson * Director
- ----------------------------------------
LINDA F. STEPHENSON

* By: /s/ William J. Nasgovitz
---------------------------------------
WILLIAM J. NASGOVITZ
Pursuant to Power of Attorney dated April 27, 1995
</TABLE>

C-7
<PAGE> 85

EXHIBIT INDEX
-------------
Exhibit Numbered
Number Description Page
- ------- ----------- --------

1(a) Articles of Incorporation*

(b) Articles Supplementary to Articles of
Incorporation as filed with Maryland
Department of Assessments and Taxation to
create the series known as the Heartland
Wisconsin Tax Free Fund*

(c) Articles Supplementary to Articles of
Incorporation as filed with Maryland
Department of Assessments and Taxation to
create two series known as Heartland
Nebraska Tax Free Fund and Heartland Value
Plus Fund, respectively*

(d) Articles Supplementary to Articles of
Incorporation as filed with Maryland
Department of Assessments and Taxation to
redesignate the name of the Heartland U.S.
Government Fund to the Heartland U.S.
Government Securities Fund*

(e) Articles Supplementary to Articles of
Incorporation as filed with Maryland
Department of Assessments and Taxation
to create the series known as the
Heartland Small Cap Contrarian Fund*

(f) Form of Articles Supplementary to Articles
of Incorporation to be filed with Maryland
Department of Assessments and Taxation to
create two series known as the Heartland
Mid Cap Value Fund and the Heartland Large
Cap Value Fund*

2 Amended and Restated By-Laws*

4(a) Form of specimen security for Heartland
Wisconsin Tax Free Fund*

(b) Form of specimen security for Heartland
Value Fund*

5(a) Investment Advisory Agreement for Heartland
Value Fund*

5(b) Investment Advisory Agreement for Heartland
U.S. Government, Wisconsin Tax Free,
Nebraska Tax Free, Value Plus, Small Cap

C-8
<PAGE> 86

Contrarian, Mid Cap Value and Large Cap Value Funds*

6(a)(i) Distribution Agreement between Heartland
Group, Inc. and Heartland Advisors, Inc.*

(a)(ii) Amendment No. 1 to Distribution Agreement between
Heartland Group, Inc. and Heartland Advisors, Inc.*

(b) Form of Selected Dealer Agreements*

8(a) Custodian Agreement*

(b) Transfer Agent/Dividend Disbursing Agent Agreement*

9(a) Heartland Group, Inc.'s Rule 10f-3 Plan*

(b) Heartland Value Fund, Inc.'s Rule 10f-3 Plan*

10 Opinion of Quarles & Brady*

11(a) Consent of Arthur Andersen LLP

(b) Consent of Quarles & Brady*

13 Subscription Agreements*

14(a) Form of Model Retirement Plans*

(b) Form of Heartland Funds Individual Retirement
Account Agreement and Forms*

15(a) The Value Fund's Rule 12b-1 Plan*

(b) Heartland Group Inc.'s Amended and Restated
Rule 12b-1 Plan*

16(a) Schedules for Computation of Performance
Information for the Heartland Value Fund
and the Heartland U.S. Government Fund*

(b) Schedules for Computation of Performance
Information for the Heartland Wisconsin Tax
Free Fund*

C-9
<PAGE> 87

(d) Schedules for Computation of Performance Information for
the Heartland Value Plus Fund*

(e) Schedules for Computation Performance Information for the
Heartland Small Cap Contrarian Fund*

17 Financial Data Schedules (See Exhibit 27)

27.1 Financial Data Schedule for the Heartland Value Fund

27.2 Financial Data Schedule for the Heartland U.S.
Government Securities Fund

27.5 Financial Data Schedule for the Heartland
Value Plus Fund

27.6 Financial Data Schedule for the Heartland Small
Cap Contrarian Fund

- ------------------
*Previously filed and incorporated herein by reference.

C-10

<PAGE> 1

EXHIBIT 11(a)

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation in
this Registration Statement of our report, dated February 9, 1996, on the
financial statements and related notes of Heartlan Value Fund, Heartland Small
Cap Contrarian Fund, Heartland Value & Income Fund, and Heartland U.S.
Government Securities Fund appearing in the Funds' December 31, 1995 Annual
Report to Shareholders, and to all references to our Firm included in or made a
part of Post-Effective Amendment No. 27 to Heartland Group, Inc.'s Registration
Statement on Form N-1A.

ARTHUR ANDERSEN LLP

Milwaukee, Wisconsin
September 23, 1996

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEMI-ANNUAL REPORT TO SHAREHOLDERS FOR THE PERIOD ENDED JUNE 30, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> HEARTLAND VALUE FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 1,296,778,527
<INVESTMENTS-AT-VALUE> 1,520,345,159
<RECEIVABLES> 4,053,073
<ASSETS-OTHER> 184,082
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,524,582,314
<PAYABLE-FOR-SECURITIES> 9,704,679
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,981,481
<TOTAL-LIABILITIES> 12,686,160
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,193,772,911
<SHARES-COMMON-STOCK> 47,713,214
<SHARES-COMMON-PRIOR> 42,613,011
<ACCUMULATED-NII-CURRENT> 1,967,544
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 92,722,211
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 223,433,488
<NET-ASSETS> 1,511,896,154
<DIVIDEND-INCOME> 3,289,018
<INTEREST-INCOME> 7,453,006
<OTHER-INCOME> 0
<EXPENSES-NET> 8,774,480
<NET-INVESTMENT-INCOME> 1,967,544
<REALIZED-GAINS-CURRENT> 92,722,211
<APPREC-INCREASE-CURRENT> 73,419,688
<NET-CHANGE-FROM-OPS> 168,109,443
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,651,037
<NUMBER-OF-SHARES-REDEEMED> 4,550,834
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 320,970,146
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,057,240
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,774,480
<AVERAGE-NET-ASSETS> 1,356,961,645
<PER-SHARE-NAV-BEGIN> 27.95
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 3.70
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 31.69
<EXPENSE-RATIO> 1.29
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 58,258,683
<INVESTMENTS-AT-VALUE> 56,332,625
<RECEIVABLES> 2,042,227
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 58,374,852
<PAYABLE-FOR-SECURITIES> 501,911
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 249,444
<TOTAL-LIABILITIES> 751,355
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 65,501,036
<SHARES-COMMON-STOCK> 6,248,456
<SHARES-COMMON-PRIOR> 6,650,557
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,951,483)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,926,056)
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