HEARTLAND GROUP INC, 485APOS, 1996-03-01

HEARTLAND GROUP INC
485APOS, 1996-03-01

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<PAGE> 1

As filed with the Securities and Exchange Commission on March 1, 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. 22 /x/

and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /

Amendment No. 24 /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)
/ / on (date) pursuant to paragraph (b)
/X/ 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 (date) 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. 22
_________________________________________

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

PART B

10. Cover Page .................................... Cover Page

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

</TABLE>

<PAGE> 3

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

<PAGE> 4

HEARTLAND WISCONSIN TAX FREE FUND

Prospectus

April 30, 1996

TABLE OF CONTENTS

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

Financial Highlights .................................................... 3

Investment Objective and Policies ....................................... 4

How to Buy Shares ....................................................... 13

Shareholder Services .................................................... 17

Dividends, Distributions and Taxes ...................................... 19

The Fund and the Heartland Organization ................................. 20

Net Asset Value Calculation ............................................. 21

Description of Fund Shares .............................................. 22

Portfolio Transactions .................................................. 23

Performance Information ................................................. 24

How to Redeem Shares ................................................... 25

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

<PAGE> 5

INVESTMENT SUMMARY

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

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

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.

PROSPECTUS
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<PAGE> 6

FUND EXPENSES

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

SHAREHOLDER TRANSACTION EXPENSES

Maximum sales load imposed on purchases None
Sales load imposed on reinvested dividends None
Redemption fees None(1)
Exchange fees None

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management fees .65%
Rule 12b-1 distribution plan fees None
Other expenses .19%

TOTAL FUND OPERATING EXPENSES .84%

(1) The Agent charges a wire fee for the return of redemption proceeds
requested by wire transfer. The fee is currently $7.50.

EXAMPLE

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

One year $ 9
Three years $ 27
Five years $ 47

Ten years $104

PROSPECTUS
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<PAGE> 7

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

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

PROSPECTUS
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<PAGE> 8
FINANCIAL HIGHLIGHTS

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

<TABLE>
<CAPTION>
Fiscal year ended December 31
4/3/92(1)
1995 1994 1993 to 12/31/92
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net Asset Value, Beginning of Period $9.21 $10.38 $9.85 $9.70
Income from Investment Operations
Net investment income .51 .51 .49 .37
Net realized and unrealized gains
on securities 1.09 (1.17) .55 .15
Total from investment operations 1.60 (.66) 1.04 .52

PROSPECTUS
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<PAGE> 9
Less Distributions:
Dividends from net investment income (.51) (.51) (.49) (.37)
Distributions from net realized gains - - (.02) -
Total distributions (.51) (.51) (.51) (.37)
Net asset value, end of period $10.30 $9.21 $10.38 $9.85
Total Return(2) 17.78% (6.49%) 10.80% 7.32%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $118,513,120 $101,748,818 $99,349,617 $36,304,163
Ratio of total expenses to
average net assets 0.84% 0.85% 0.84% 0.82%(3)
Ratio of net investment income to
average net assets 5.23% 5.28% 4.81% 4.87%(3)
Portfolio turnover rate 10.84% 21.50% 6.29% 6.77%
</TABLE>

(1) Commencement of operations.

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

(3) Annualized.

PROSPECTUS
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<PAGE> 10

INVESTMENT OBJECTIVE AND POLICIES

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

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

PROSPECTUS
_______

<PAGE> 11

INVESTMENT POLICIES OF THE FUND

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

Also as a matter of fundamental policy, the Fund will seek to invest its assets
so that at least 80% are invested so as to be exempt from the federal
alternative minimum tax. However, under abnormal conditions the Fund may
invest as much as 100% of its assets in municipal securities issued to finance
private activities whose interest is a "tax preference item" for purposes of
the federal alternative minimum tax. If you are subject to the alternative
minimum tax, a portion of your income may not be exempt from federal income
tax. Income distributions that are a tax preference item for purposes of the
federal alternative minimum tax are considered to be exempt from federal
income tax for purposes of the Fund's objective. See Dividends, Distributions
and Taxes."

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

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

The Fund may invest in municipal lease obligations,

PROSPECTUS
_______

<PAGE> 12

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

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

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

INVESTMENT QUALITY

The Fund invests primarily in municipal bonds judged by Heartland Advisors to
be of investment grade quality. Such securities are considered by Heartland
Advisors to include securities rated at the time of purchase within the four
highest rating categories assigned by Moody's, S&P, or Fitch, or securities
which are unrated, provided that such securities are judged by Heartland
Advisors, at the time of purchase, to be of comparable quality to securities
rated within such four highest categories. A description of the ratings
assigned by Moody's, S&P and Fitch is contained in the Statement of Additional
Information. Investment grade bonds have adequate to strong protection of
principal and

PROSPECTUS
_______

<PAGE> 13

interest payments. The investment grade rating of some bonds may result from
various enhancements, such as insurance or letters of credit, rather than the
credit of the issuer. Bonds rated in the fourth highest rating category are
more sensitive to economic changes than are bonds rated in one of the top three
categories, and such bonds have speculative characteristics.

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

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

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

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

PROSPECTUS
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<PAGE> 14

ASSET COMPOSITION

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

<TABLE>
<CAPTION>
S&P RATING FUND
OR EQUIVALENT AVERAGE
<S> <C>

AAA 24.7%
AA 2.7%
A 60.8%
BBB 11.8%
BB 0%
B 0%
</TABLE>

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

PROSPECTUS
_______

<PAGE> 15

OTHER INVESTMENT PRACTICES

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

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

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

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

Options and futures can be highly volatile investments and involve certain
risks. Successful hedging strategies require the ability to predict future
movements in securities prices, interest rates and other economic factors.
Heartland Advisors' attempts to use such investments for

PROSPECTUS
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<PAGE> 16

hedging purposes may not be successful and could result in reduction of the
Fund's total return. The Fund's potential losses from the use of futures
extends beyond its initial investment in such contracts.

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

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

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

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

PORTFOLIO TURNOVER AND MATURITY

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

PROSPECTUS
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<PAGE> 17

1995 was 10.84%. The Fund is not restricted as to the average maturity of its
Portfolio.

INVESTMENT LIMITATIONS

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

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

2. The Fund will seek to invest its assets so that at least 80% are invested
so as to be exempt from the federal alternative minimum tax.

3. The Fund will not purchase a security if, as a result thereof, (i) more
than 25% of its total assets would be invested in a single issuer, other
than securities issued or guaranteed by the United States government, or a
state or territory of the United States, or the District of Columbia, or
their agencies, instrumentalities, municipalities or political
subdivisions or (ii) more than 10% of its net assets would be invested in
illiquid securities.

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

PROSPECTUS
_______

<PAGE> 18

RISK FACTORS

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

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

CREDIT RISK

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

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

PROSPECTUS
_______

<PAGE> 19

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

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

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

The Fund historically has invested a substantial portion of its assets in
housing authority obligations. Since housing authority obligations may be
supported to a large extent by federal housing subsidy programs, the failure of
a housing authority to meet the qualifica-

PROSPECTUS
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<PAGE> 20
tions required for coverage under the federal programs could result in a
decrease or elimination of subsidies available for payment of principal and
interest on the housing authority's obligations. Economic developments,
including fluctuations in interest rates, failure or inability to increase
rentals and increasing construction and operating costs may adversely impact
the revenues of housing authorities, and adverse economic conditions may result
in an increasing rate of default by mortgagors on the underlying mortgage
loans. For some housing authorities, inability to obtain additional financing
could also reduce revenues available to pay existing obligations. In addition,
certain housing authority obligations may be subject to early redemption at par
based on unused proceeds from the issue and/or prepayment of underlying
mortgage obligations.

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

HOW TO BUY SHARES

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

<TABLE>
<S> <C>
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
</TABLE>

To Open an Account

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

PROSPECTUS
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<PAGE> 21

To Add to an Account:

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

BY WIRE:

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

To Open an Account
Call the Agent at 1-800-248-1162 for an account number prior to sending the
wire. Specify Fund name, include your name, and your new account number, 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

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."

PROSPECTUS
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<PAGE> 22

To Add to an Account:

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 to add it.

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:

CONDITIONS OF YOUR PURCHASE.

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

OTHER CONDITIONS. All purchases must be made in U.S. dollars and checks must
be drawn on U.S. banks. Cash will not be accepted for the purchase of shares.
If a check fails to clear, the purchase to which the check relates will be
canceled and the prospective investor will be liable for any losses or fees
incurred by the Fund or the

PROSPECTUS
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<PAGE> 23

Fund's Agent, including without limitation a $15 fee to cover bank handling
charges for returning checks due to insufficient funds. When purchases are
made by check, the Fund can hold payment on redemption of shares so purchased
until it is reasonably satisfied that the check has cleared. To avoid such a
delay, an investor can wire federal funds as described above from a bank, which
may charge a fee for that service. Wiring federal funds means that the bank
sends money to a bank account maintained by the Fund through the Federal
Reserve System.

PROSPECTUS
_______

<PAGE> 24

SHAREHOLDER SERVICES

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

AUTOMATIC DIVIDEND REINVESTMENT. You may automatically reinvest all dividends
and distributions or elect to receive them in the form of a check. If your
dividends and distributions are reinvested, they will automatically purchase
additional shares of the Fund 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 Heartland Advisors. Heartland Advisors
must receive any change seven days prior to a payment date for it to be
effective for that payment.

AUTOMATIC INVESTMENT PLAN. The automatic investment plan of the Fund offers a
simple way to maintain a regular investment program. By completing the
automatic investment portion of the account application attached to this
Prospectus, you may arrange automatic transfers (minimum $50 per transaction)
from your checking account to your account in the Fund on a monthly or
twice-monthly basis. The application must be accompanied by a "voided" check,
and be received at least 14 business days prior to the initial transaction.
Once enrolled in the automatic investment plan, you may change the monthly
amount or terminate your participation at any time by writing the Agent. Allow
five business days for a change to become effective. Your bank must be a
member of Automated Clearing House. If the automatic purchase cannot be made
due to insufficient funds or a stop payment, a $15 service fee will be
assessed. If you stop making automatic investments when your aggregate
investment in the Fund is less than $500, the Fund reserves the right to redeem
your account after giving 60 days notice, unless you make additional
investments to bring your account value to $1,000. The program will
automatically be terminated upon redemption of all shares, including an
exchange of all shares to another fund. You will receive a confirmation of
each transaction from the Agent and your regular bank account statement will
show the debit transaction each month.

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

PROSPECTUS
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<PAGE> 25

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

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

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

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

Tax and Other Considerations. An exchange between funds is treated as a sale
for federal income tax purposes and, depending upon the circumstances, a short
or long-term capital gain or loss may be realized. If you have questions as to
the tax consequences of an exchange, you should consult your tax advisor. The
exchange privilege may be modified or

PROSPECTUS
_______

<PAGE> 26

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.

DIVIDENDS, DISTRIBUTIONS AND TAXES

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

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

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

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

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

PROSPECTUS
_______

<PAGE> 27

alternative minimum tax with certain modifications. Distributions from
short-term and long-term capital gains will be taxable as dividends and as
capital gains, respectively, for state tax purposes.

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

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

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

THE FUND AND THE HEARTLAND ORGANIZATION

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

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

Heartland Advisors, founded in 1982, serves as the investment advisor for the
Heartland Value Fund, Small Cap Contrarian Fund, Value & Income Fund, Nebraska
Tax Free Fund, and U.S. Government Securities Fund, five additional series of
Heartland, and also provides investment management services for individuals,
and institutional accounts, such as pension funds and profit-sharing plans. As
of January 31, 1996, Heartland Advisors

PROSPECTUS
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<PAGE> 28

had approximately $2.0 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. Patrick J.
Retzer is also a Director of Heartland and an officer and Director of Heartland
Advisors.

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

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

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

NET ASSET VALUE CALCULATION

PROSPECTUS
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<PAGE> 29

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

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

DESCRIPTION OF FUND SHARES

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

<TABLE>
<CAPTION>
COMMENCED AUTHORIZED
FUND OPERATIONS SHARES
<S> <C> <C>

Value Fund 12/28/84 100,000,000

Small Cap Contrarian Fund 4/27/95 100,000,000

Value & Income Fund 10/26/93 100,000,000

U.S. Government Securities Fund 4/9/87 100,000,000

Wisconsin Tax Free Fund 4/3/92 100,000,000

Nebraska Tax Free Fund 9/27/93 100,000,000
</TABLE>

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

PROSPECTUS
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<PAGE> 30

fund (such as approval of advisory contracts and changes in fundamental policy
of a fund) a separate vote of the shares of that fund is required. Shares of a
fund are not entitled to vote on any matter not affecting that fund. All
shares of each Heartland fund vote together in the election of Directors at
each meeting of shareholders at which directors are to be elected and on other
matters as provided by law, or Heartland's Articles of Incorporation or Bylaws.
Heartland's Bylaws do not require that meetings of shareholders be held
annually. However, special meetings of shareholders may be called for
purposes such as electing or removing Directors, changing fundamental policies
or approving investment advisory contracts.

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

PORTFOLIO TRANSACTIONS

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

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

PROSPECTUS
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<PAGE> 31

purchase, and require a review by the Board of Directors of any such
transactions at least quarterly.

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

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

PERFORMANCE INFORMATION

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

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

PROSPECTUS
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<PAGE> 32

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

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

HOW TO REDEEM SHARES

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

BY TELEPHONE:

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

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.

PROSPECTUS
_______

<PAGE> 33

BY MAIL TO:

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

BY OVERNIGHT DELIVERY TO:

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

Send a written request specifying the name of the Fund, the number of shares to
be redeemed, your name, your account number, and any additional documents
listed below that apply to your particular account. The Agent cannot accept
requests specifying a particular date for redemption or other special
conditions.

<TABLE>
<CAPTION>
TYPE OF REGISTRATION REQUIREMENTS
<S> <C>
Individual, Joint Tenants, Letter of instruction signed by all persons
Sole Proprietorship, Custodial, authorized to sign for the account, exactly
General Partners 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.)
</TABLE>

PROSPECTUS
_______

<PAGE> 34

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

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

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

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

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

PROSPECTUS
_______

<PAGE> 35

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

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

By Wire. The Agent will normally wire redemption proceeds to your bank the
next business day after receiving the redemption request and all necessary
documents. The signatures on any written request for a wire redemption must
be guaranteed. The Agent currently deducts a $7.50 wire charge from the
redemption proceeds. This charge is subject to change. You will be
responsible for any charges which your bank may make for receiving wires.

CERTAIN CONDITIONS. If, due to redemptions, exchanges or other transfers, a
shareholder's account drops below $500 for three months or more, the Fund has
the right to redeem the shareholder's account, after giving 60 days notice,
unless the shareholder makes additional investments to bring the account value
to $1,000.

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

PROSPECTUS
_______

<PAGE> 36

HEARTLAND FUNDS

1-800-432-7856

(1-800-HEARTLN)

(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

COUNSEL

Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

AUDITOR

Arthur Andersen LLP

100 East Wisconsin Avenue

Milwaukee, Wisconsin 53202

PROSPECTUS
_______

<PAGE> 37
[HEARTLAND FUNDS LOGO]

ACCOUNT APPLICATION
Wisconsin Tax Free Fund

OVERNIGHT MAIL TO: REGULAR MAIL TO:
FIRSTAR TRUST COMPANY FIRSTAR TRUST COMPANY
615 E. MICHIGAN P.O. BOX 701
MILWAUKEE, WI 53202 MILWAUKEE, WI 53201-0701
- --------------------------------------------------------------------
ACCOUNT/PRICE INFORMATION: 1-800-248-1162 (24 HRS. OR (414) 287-3702
GENERAL INFORMATION: 1-800-HEARTLN OR (414) 347-7777
- --------------------------------------------------------------------

- --------------------------------------------------------
1a. INDIVIDUAL AND JOINT ACCOUNTS
- --------------------------------------------------------
Individual Account: Use Lines 1 & 3
Joint Account: Use Lines 1, 2, & 3

1. _____________________________________________________
First name Initial Last name

2. _____________________________________________________
Joint tenant Initial Last name

SOCIAL SECURITY NUMBER
3. _____________________________________________________
Social Security Number of Individual on Line 1

- --------------------------------------------------------
1b. UNIFORM GIFT TO MINOR ACCOUNT (UGMA)
- --------------------------------------------------------

4. _____________________________________________________
Custodian's Name

5. _____________________________________________________
Minor's Name Minor's Social Security Number

- --------------------------------------------------------
1c. CORPORATE PARTNERSHIPS, TRUSTS & OTHER
- --------------------------------------------------------

6. _____________________________________________________
Name of Corporation or Entity Tax ID Number

7. REGISTRATION TYPE: / / Unincorporated Association

/ / Corporation / / Partnership / / Trust

- --------------------------------------------------------
2. MAILING ADDRESS
- --------------------------------------------------------

8. _____________________________________________________
Street or P.O. Box

_____________________________________________________
City/State/Zip

_____________________________________________________
Home Phone (area code + number) Work Phone

- --------------------------------------------------------
3. EMPLOYER INFORMATION (REQUIRED BY THE NASD)
- --------------------------------------------------------

9. _____________________________________________________
Employer Name

_____________________________________________________
Occupation

_____________________________________________________
Street or P.O. Box

_____________________________________________________
City/State/Zip

/ / Yes / / No I am an associated person of a NASD
Member Firm, other than Heartland Advisors, Inc.
If yes, name of NASD Member Firm_______________

- --------------------------------------------------------
4. INVESTMENT
- --------------------------------------------------------

I wish to open a Heartland account in the indicated
amount (minimum initial investment of $1,000, or $50
minimum investment with the Automatic Investment Plan):

Amount

Heartland Wisconsin Tax Free Fund $____________

- -------------------------------------------------------------------------------
5. AUTOMATIC MONTHLY INVESTMENT PLAN
- -------------------------------------------------------------------------------

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

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

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

_________________________________________________________
Bank Name

_________________________________________________________
Name(s) on your Bank Account

_________________________________________________________
Bank Address

_________________________________________________________
Account Number

_________________________________________________________
City/State/Zip

_________________________________________________________
Signature of Owner(s)- Required for Automatic Investing
<PAGE> 38
BE SURE TO COMPLETE ALL APPLICABLE SECTIONS AND SIGN!
- ----------------------------------------------------------------
6. DIVIDENDS AND CAPITAL GAINS
- ----------------------------------------------------------------

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

/ / Pay dividends and capital gains distributions in cash.

- ----------------------------------------------------------------
7. TELEPHONE PRIVILEGES
- ----------------------------------------------------------------

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

TO WITHHOLD SUCH AUTHORIZATION, YOU MUST CHECK THE APPROPRIATE BOX BELOW.
Telephone EXCHANGE Privilege

/ / NO telephone exchange privilege for me or my Advisor.

Telephone REDEMPTION Privilege
/ / NO telephone redemption privilege for me or my Advisor.

- ----------------------------------------------------------------
8. OPTIONAL INFORMATION
- ----------------------------------------------------------------

$_______________________ $__________________________
Annual Income Liquid Net Worth

- ----------------------------------------------------------------
9. OTHER FUNDS
- ----------------------------------------------------------------
/ / Please send a prospectus and application for other Funds
Heartland offers.

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

- ----------------------------------------------------------------
10. DUPLICATE STATEMENT FOR ADVISOR/PLANNER
- ----------------------------------------------------------------

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

___________________________________________________________
Name of Advisor/Planner/Dealer

___________________________________________________________
Company Name

___________________________________________________________
Address

___________________________________________________________
City/State/Zip

___________________________________________________________
Advisor/Planner/Dealer No.

_X_________________________________________________________
Customer Signature (authorizes duplicate statements)

- -------------------------------------------------------------------------------
11. SHAREHOLDER SIGNATURE(S)
- -------------------------------------------------------------------------------

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

1. that the social security or other taxpayer identification
number is correct, and (strike if not true)
2. that I am not subject to withholding either because I have
not been notified that I am subject to withholding as a
result of a failure to report all interest or dividends, or
I was subject to withholding and the Internal Revenue Service
has notified me that I am no longer subject to withholding.

The Internal Revenue Service does not require your consent to any
provision of this document other than the certifications required
to avoid backup withholding.

_X_____________________________________________________
Signature of Shareholder Date

_X_____________________________________________________
Signature of Co-Owner (if any) Date

SIGN HERE IF APPLICABLE TO YOUR ACCOUNT:

_______________________________________________________
Corporate Officer/Partner/Trustee Title

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

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

I (We) agree that your treatment of each entry, and your rights to respect it,
shall be the same as if it were signed personally by me (or either or both of
us as appropriate). I (We) further agree that if any such entries are
dishonored with good and sufficient cause, you shall be under no liability
whatsoever.
<PAGE> 39
HEARTLAND WISCONSIN TAX FREE FUND

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

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

Statement of Additional Information

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

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Introduction to the Heartland Funds . . . . . . . . . . . . . . . . . . . 2
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . 2
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . 22
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Control Persons and Principal Holders of Securities . . . . . . . . . . . 26
The Investment Advisor . . . . . . . . . . . . . . . . . . . . . . . . . 27
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . 28
Determination of Net Asset Value per Share . . . . . . . . . . . . . . . 31
Distribution of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 31
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Description of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 34
Custodian and Transfer and Dividend Disbursing Agent . . . . . . . . . . 35
Counsel and Independent Public Accountants . . . . . . . . . . . . . . . 35
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 35

</TABLE>

2
<PAGE> 40
INTRODUCTION TO THE HEARTLAND FUNDS

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

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

INVESTMENT OBJECTIVE AND POLICIES

GENERAL

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

TAX EXEMPT OBLIGATIONS

General. The term "Tax Exempt Obligations" as used herein refers to
debt obligations issued by or on behalf of states, territories or possessions
of the United States or the District of Columbia, or their agencies,
instrumentalities, municipalities and political subdivisions, the interest
payable on which is, in the opinion of bond counsel, excludable from gross
income both for purposes of federal income taxation (except, in certain
instances, the alternative minimum tax, depending upon the shareholder's tax
status) and

3
<PAGE> 41

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

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

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

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

As noted in the Prospectus, the Fund invests primarily in municipal
bonds judged by Heartland Advisors, the Fund's investment advisor, to be of
investment grade quality. Heartland Advisors considers Tax Exempt Obligations
to be investment grade if rated by Moody's, S&P or Fitch within their

4
<PAGE> 42
four highest rating categories for municipal securities, or securities which
are unrated, provided that such securities are judged by Heartland Advisors, at
the time of purchase, to be of comparable quality to securities rated within
such four highest categories. A description of the rating categories is
contained in Appendix A attached to this Statement of Additional Information.
Bonds rated in the fourth highest rating category are generally more sensitive
to economic changes than are those rated in one of the top three categories,
and these bonds generally have speculative characteristics.

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

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

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

5
<PAGE> 43
interest rates. Yields on junk bonds will fluctuate over time, and are
generally more volatile than yields on investment grade bonds.

The secondary trading market for junk bonds may be less well
established than for investment grade bonds, and such bonds may therefore be
only thinly traded. As a result, there may be no readily ascertainable market
value of such securities, in which case it will be more difficult for
Heartland's Board of Directors to value accurately the securities, and
consequently the investment portfolio. Under such circumstances, the Board's
subjective judgment will play a greater role in the valuation. Additionally,
adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidities of junk bonds, especially in
a thinly traded market. To the extent such securities are or become "illiquid"
in the judgment of Heartland's Board of Directors, the Fund's ability to
purchase and hold such securities will be subject to its investment restriction
limiting its investment in illiquid securities to 10% of its net assets. See
"Investment Restrictions."

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

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

6
<PAGE> 44

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

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

The constitution and statutes of many states contain requirements with
which the state and municipalities must comply whenever incurring debt.
Depending on the circumstances, these requirements may include approving voter
referenda, debt limits, interest rate limits and public sale requirements.
Leases have evolved as a means for public bodies to acquire property and
equipment without needing to comply with all of the constitutional and
statutory requirements for the issuance of debt. The debt-issuance limitations
may be inapplicable for one or more of the following reasons: (i) the
inclusion in many leases or contracts of "nonappropriation" clauses that
provide that the public body has no obligation to make future payments under
the lease or contract unless money is appropriated for such purpose by the
appropriate legislative body on a yearly or other periodic basis (the
"nonappropriation" clause); (ii) the exclusion of a lease or conditional sales
contract from the definition of indebtedness under relevant state law; or (iii)
the lease provides for termination at the option of the public body at the end
of each fiscal year for any reason or, in some cases, automatically if not
affirmatively renewed.

7
<PAGE> 45

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

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

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

When payment is made for "when-issued" securities, the Fund will meet
its obligation from its then available cash flow, sale of securities held in
the separate account, sale of other securities or, although it would normally
not expect to do so, from sale of the "when-issued" securities themselves
(which may have a market value greater or lesser than the Fund's obligation).
Sale

8
<PAGE> 46

of securities to meet such obligations would involve a greater potential for
the realization of capital gains, which could cause the Fund to realize income
not exempt from federal and Wisconsin personal income tax.

TAXABLE OBLIGATIONS

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

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

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

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

9
<PAGE> 47
OPTIONS, FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

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

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

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

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

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<PAGE> 48

a call to be "pledged" as that term is used in the Fund's policy limiting the
pledging of its assets.

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

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

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

If the price of the underlying security rises, a put writer would
generally expect to profit, although its gain would be limited to the amount of
the premium it received for writing the put because it did not own the
underlying security and therefore would not benefit from the appreciation in
price. If the price of

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<PAGE> 49

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

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

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

Index Options. The Fund may buy and sell options on indices related
to its investments (such as municipal bond or U.S. Treasury securities
indices), and may enter into closing transactions with respect to such options.
Options on indices would be used in a manner similar to the use of options on
securities; however, upon the exercise of an index option, settlement occurs in

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<PAGE> 50
cash rather than by delivery of an underlying security, with the exercising
option holder receiving the difference between the closing level of the index
upon which the option is based and the exercise price of the option. Unlike
options on specific debt instruments, gain or loss on an index option depends
on the price movements in the instruments underlying the index rather than
price movements in individual debt instruments.

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

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

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

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

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<PAGE> 51

in value on a daily basis. If the value of a position increases because of
favorable price changes in the futures contract so that the margin deposit
exceeds the required margin, the broker will pay the excess to the Fund. In
computing daily net asset value, the Fund marks to market the current value of
its open futures contracts. The Fund expects to earn interest income on its
margin deposits.

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

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

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

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<PAGE> 52
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS

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

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

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

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<PAGE> 53
RISKS IN OPTIONS AND FUTURES TRANSACTIONS

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

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

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

There can be no assurance that a liquid secondary market will exist
for any particular options or futures contracts at any particular time. On
volatile trading days when the price fluctuation limit is reached or a trading
halt is imposed, it may be impossible for the Fund to enter into new positions
or close out existing positions. If the secondary market for a futures
contract

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<PAGE> 54

is not liquid because of price fluctuation limits or otherwise, it could
prevent prompt liquidation of unfavorable positions, and potentially require
the Fund to continue to hold the position until delivery or expiration
regardless of changes in its value. As a result, the Fund's access to other
assets held to cover its options or futures positions could also be impaired.

DIVERSIFICATION

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

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

For purposes of such diversification, the identification of the issuer
of Tax Exempt Obligations depends on the terms and conditions of the security.
If a state or territory of the United States or the District of Columbia, or a
political subdivision of any of them, as the case may be, pledges its full
faith and credit to payment of a security, the guarantor is deemed the sole
issuer of the security. If the assets and revenues of an agency, authority or
instrumentality of a state or territory of the United States or the District of
Columbia, or a political subdivision of any of them, are separate from those of
the state, territory, District or political subdivision, and the security is
backed only by the assets and revenues of the agency, authority or
instrumentality, such agency, authority or instrumentality is deemed to be the
sole issuer of the security. Moreover, if the security is backed only by
revenues of an enterprise or specific projects of the state, territory or
District, or a political subdivision or agency, authority or instrumentality
thereof, such as utility

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<PAGE> 55

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

Health Care Obligations. The Fund may invest, from time to time, 25%
or more of its total assets in obligations issued by public bodies, including
state and municipal authorities, to finance hospital or health care facilities
or equipment. The ability of any subject health care entity or hospital to
make payments in amounts sufficient to pay maturing principal and interest
obligations is dependent, among other things, upon the revenues, costs and
occupancy levels of the subject health care entity or hospital. Revenues and
expenses of hospitals and health care facilities will be affected by future
events and conditions relating generally to, among other things, demand for
health care services at the particular type of facility, increasing costs of
medical technology, utilization practices of physicians, the ability of the
facilities to provide the services required by patients, employee strikes and
other adverse labor actions, economic developments in the service area,
demographic changes, greater longevity and the higher medical expenses of
treating the elderly, increased competition from other health care providers
and rates that can be charged for the services provided. Additionally, a major
portion of hospital revenues typically is derived from federal or state
programs such as Medicare and Medicaid and from other insurers. The future
solvency of the Medicare trust fund is periodically subject to question.
Changes in the compensation and reimbursement formulas of these governmental
programs or in the rates of insurers may reduce revenues available for the
payment of principal of or interest on hospital revenue bonds. Governmental
legislation or regulations and other factors, such as the inability to obtain
sufficient malpractice insurance, may also adversely impact upon the revenues
or costs of hospitals. Future actions by the federal government with respect
to Medicare and by the federal and state governments with respect to Medicaid,
reducing the total amount of funds available for either or both of these
programs or changing the reimbursement regulations or their interpretation,
could adversely affect the amount of reimbursement available to hospital
facilities. A number of additional legislative proposals concerning health
care are typically under review by the United States Congress at any given
time. These proposals span a wide range of topics, including cost controls,
national health

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<PAGE> 56
insurance, incentives for competition in the provision of health care services,
tax incentives and penalties related to health care insurance premiums and
promotion of prepaid health care plans.

GEOGRAPHIC CONCENTRATIONS

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

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

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

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

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

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<PAGE> 57

Services, Department of Public Instruction and the University of Wisconsin
System) account for more than 50% of total state expenditures.

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

Wisconsin has experienced and anticipates it will continue to
experience certain periods when its general fund is in a negative cash
position. State statutes provide certain administrative remedies to deal with
these periods. The Secretary of Administration may temporarily reallocate up
to $400 million of available cash in other funds to the general fund. The
Secretary of Administration may set priorities for payments from the general
fund as well as pro rate certain payments. State statutes mandate that all
payments must be in accordance with the following order of preference: (a) all
direct and indirect payments of principal and interest on Wisconsin general
obligation debt must have first priority and may not be pro rated or reduced;
(b) all direct and indirect payments of principal and interest on operating
notes must take second priority and may not be pro rated or reduced; (c) all
Wisconsin employee payrolls must take third priority, but may be pro rated or
reduced; and (d) all other payments are paid in a priority determined by the
Secretary of Administration and may be pro rated or reduced.

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

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<PAGE> 58

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

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

21
<PAGE> 59

is expected to remain at such levels over the short-term.

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

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

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

Before the enactment of the Omnibus Budget Reconciliation Act of 1993
("OBRA"), under Section 936 of the Internal Revenue Code, domestic corporations
with a substantial amount of their business operations in Puerto Rico could
elect to claim a tax credit under Section 936 that effectively eliminated their
U.S. income tax on income from business operations conducted in Puerto Rico.
OBRA has now limited the amount of the Section 936 credit available to
corporations. Generally, a corporation may elect between two alternative
limitations on the amount of the credit. The first limitation is based on the
amount of the economic activity it conducts in Puerto Rico (measured by
compensation paid there and

22
<PAGE> 60

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

In August 1983, the United States enacted legislation widely known as
the Caribbean Basin Initiative ("CBI"). CBI, which is designed to encourage
economic development in the Caribbean and Central America, provides for: (a)
unilateral, duty-free access to a United States market for Caribbean Basin
products, except for a few selected commodities, for a period of 12 years; (b)
tax deductions for conventions held in the Caribbean; and (c) direct economic
assistance payments by the United States. CBI contains a number of measures
designed to maintain the competitive position of Puerto Rico and U.S. insular
possessions. Such measures include, among others, the inclusion in free trade
benefits of products that are processed in part in Puerto Rico, rebates to
Puerto Rico of excise taxes collected on rum imports and the exclusion of
processed tuna from duty-free treatment. The government of Puerto Rico
strongly supports the island's involvement in the CBI, particularly in relation
to the development of twin plants, or complementary projects. Under this
program, the labor-intensive phase of production generally occurs in a
Caribbean or Central American country, while the more sophisticated, higher
technology phases take place in Puerto Rico.

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

LIMITATION ON SIZE OF THE FUND

23
<PAGE> 61

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

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

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

PORTFOLIO TURNOVER

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

24
<PAGE> 62

INVESTMENT RESTRICTIONS

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

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

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

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

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

(5) Make loans, except that the Fund may: (i) acquire publicly
distributed bonds, debentures, notes and other debt securities in which the
Fund may invest consistent with its

25
<PAGE> 63
investment policies described in the Prospectus; (ii) lend portfolio
securities, provided that no such loan may be made if as a result the aggregate
of such loans would exceed 30% of the value of the Fund's total assets; and
(iii) through repurchase agreements.

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

(7) Issue senior securities.

(8) Buy or sell real estate.

(9) Buy or sell commodities.

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

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

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

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

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

26
<PAGE> 64
tions on resale if, as a result of such purchase, such investments would exceed
5% of the value of the Fund's net assets.

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

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

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

MANAGEMENT

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

27
<PAGE> 65

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

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

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

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

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

28
<PAGE> 66

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

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

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

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

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

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:

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

29
<PAGE> 67

<TABLE>
<S> <C> <C> <C> <C>
A. Gary Shilling $3,000 None None $3,000

Linda F. Stephenson $3,500 None None $3,500

</TABLE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

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

THE INVESTMENT ADVISOR

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

Heartland Advisors is controlled by William J. Nasgovitz, the
President and a Director of Heartland, by virtue of his ownership of a majority
of its outstanding capital stock. Heartland Advisors, founded in 1982, serves
as the investment advisor for the Heartland Nebraska Tax Free, Value, Small Cap
Contrarian, Value & Income and U.S. Government Securities Funds, five
additional series of Heartland, and also provides investment management
services for individuals, and institutional accounts, such as pension funds and
profit-sharing plans. As of January 31, 1996, Heartland Advisors had
approximately $2.0 billion in assets under management. Mr. Nasgovitz intends
to retain control of Heartland Advisors through the continued ownership of a
majority of its outstanding voting stock.

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

30
<PAGE> 68

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

The Fund pays Heartland Advisors an annual fee (payable in monthly
installments) for its services at the rate of 0.65 of 1% of the Fund's average
daily net assets. For the fiscal years ended December 31, 1995, 1994 and 1993,
the Wisconsin Fund paid advisory fees of $728,848, $704,918 and $442,454,
respectively.

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

The Agreement will continue in effect from year to year, as long as it
is approved at least annually by Heartland's Board of Directors or by a vote of
the outstanding voting securities of the

31
<PAGE> 69
Fund, and in either case by a majority of the Directors who are not parties to
the Agreement or interested persons of any such party. The Agreement
terminates automatically if it is assigned and may be terminated without
penalty by either party on not more than 60 nor less than 30 days' notice. The
Agreement provides that neither Heartland Advisors nor its personnel shall be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution and management of
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties under the Agreement.

PERFORMANCE INFORMATION

General.

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

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

Yield.

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

32
<PAGE> 70
Yield = 2[(a-b + 1)6 - 1]
---
cd

Where:

a = dividends and interest earned during the period;

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

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

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

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

Taxable Equivalent Yield.

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

Total Return.

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

n
P(1 + T) = ERV

Where:

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

T = average annual total return;

n = number of years; and

33
<PAGE> 71
ERV = ending redeemable value for a hypothetical $1,000 payment made
at the beginning of the 1, 5 and 10-year periods at the end of
the 1, 5 and 10-year period (or fractional portion thereof).

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

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

Cumulative Total Return.

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

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

Where:

CTR = Cumulative Total Return;

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

P = Initial payment of $1,000.

34
<PAGE> 72

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

DETERMINATION OF NET ASSET VALUE PER SHARE

The Fund's shares are sold at their next determined net asset value
per share. The Fund determines the net asset value per share by subtracting
its liabilities (including accrued expenses and dividends payable) from its
total assets (the value of the securities the Fund holds plus cash or other
assets, including interest accrued but not yet received) and dividing the
result by the total number of shares outstanding.

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

DISTRIBUTION OF SHARES

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

35
<PAGE> 73
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 years ended December 31, 1995, 1994 and 1993, the
aggregate amount of underwriting commissions paid with respect to the Wisconsin
Fund were $0, $403,694 and $1,365,696, respectively, of which Heartland
Advisors retained $0, $104,505 and $316,819, respectively.

TAX STATUS

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

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

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

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

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

The Fund may enter into certain options and futures contracts which
will be treated as Section 1256 contracts or

36
<PAGE> 74

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

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

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

DESCRIPTION OF SHARES

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

37
<PAGE> 75

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

PORTFOLIO TRANSACTIONS

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

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

For particular transactions, the Fund may pay higher commissions to
brokers (other than to Heartland Advisors or its

38
<PAGE> 76
affiliates) than might be charged if a different broker had been selected, if,
in Heartland Advisors' opinion, this policy furthers the objective of obtaining
best price and execution. The allocation of orders among brokers and the
commission rates paid will be reviewed periodically by Heartland's Board of
Directors.

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

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

CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

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

COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS

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

39
<PAGE> 77

FINANCIAL STATEMENTS

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

40
<PAGE> 78

APPENDIX A

SECURITIES RATINGS

GENERAL

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

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

CORPORATE AND MUNICIPAL BOND RATINGS

RATINGS BY MOODY'S

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

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

A -- Bonds which are rated in category A are judged to possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to

A-1
<PAGE> 79

principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

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

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

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

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

RATINGS BY STANDARD & POOR'S

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

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

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

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

A-2
<PAGE> 80

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

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

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

RATINGS BY FITCH

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

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

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

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

BB -- Bonds considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alterna-

A-3
<PAGE> 81

tives can be identified which could assist the obligor in satisfying its debt
service requirements.

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

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

MUNICIPAL NOTE RATINGS

RATINGS BY MOODY'S

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

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

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

RATINGS BY S & P

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

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

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

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

A-4
<PAGE> 82

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

RATINGS BY FITCH

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

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

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

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

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

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

A-5
<PAGE> 83
HEARTLAND WISCONSIN TAX FREE FUND

790 North Milwaukee Street
Milwaukee, Wisconsin 53202

Investment Advisor and Distributor

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

Custodian, Transfer and Dividend Disbursing Agent

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

Counsel

Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

Auditor

Arthur Andersen LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

<PAGE> 84
Part C. Other Information.

Item 24. Financial Statements and Exhibits

(a) Financial Statements and related footnotes for the
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 January 31, 1996, the number of record holders of each
class of securities of the Registrant was:

<TABLE>
<CAPTION>
Number of Holders of
Fund Record of Common Stock
- ------------------------------------------------------ ----------------------
<S> <C>
Heartland Value Fund 74,659

Heartland Small Cap Contrarian Fund 8,433

Heartland Value & Income Fund 1,801

Heartland U.S. Government Securities Fund 3,434

Heartland Wisconsin Tax Free Fund 3,425

Heartland Nebraska Tax Free Fund 577
</TABLE>

Item 27. Indemnification

Reference is made to Article IX of the Registrant's Bylaws
filed as Exhibit No. 2 to Registrant's Registration

C-1
<PAGE> 85

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
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.

C-2
<PAGE> 86

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.

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

C-3
<PAGE> 87
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 January 31, 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> 88

<TABLE>
<CAPTION>
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. Director and Director Director, Heartland
Denison of Research Group, Inc.

Mitchell F. 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 Brady (9/92 to 7/95)

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.

Item 30. Location of Accounts and Records

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

C-5
<PAGE> 89

(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.

C-6
<PAGE> 90
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 29th day of February, 1996.

HEARTLAND GROUP, INC.

By: 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 29th day of
February, 1996, by or on behalf of the following persons in the capacities
indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
WILLIAM J. NASGOVITZ Director and President (Chief Executive Officer)
----------------------------------------
WILLIAM J. NASGOVITZ

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

HUGH F. DENISON
----------------------------------------
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
</TABLE>

* By: WILLIAM J. NASGOVITZ
---------------------------------------------------
WILLIAM J. NASGOVITZ
Pursuant to Power of Attorney dated April 27, 1995.

C-7
<PAGE> 91

<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
Exhibit Numbered
Number Description Page
- ------- ----------- --------
<S> <C>
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 & Income 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*

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 & Income and Small Cap Contrarian Funds*
</TABLE>

C-8
<PAGE> 92

<TABLE>
<S> <C>
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*
</TABLE>

C-9
<PAGE> 93

<TABLE>
<S> <C>
(c) Schedules for Computation of Performance Information for the Heartland Nebraska Tax Free Fund*

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

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

27 Financial Data Schedule for the Heartland Wisconsin Tax Free Fund
</TABLE>

__________________

*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 Heartland Wisconsin
Tax Free Fund appearing in the Fund's 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. 22 to Heartland Group, Inc.'s Registration
Statement on Form N-1A.

ARTHUR ANDERSEN LLP

Milwaukee, Wisconsin
February 29, 1996

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT TO SHAREHOLDERS FOR THE PERIOD ENDED DECEMBER 31, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> HEARTLAND WISCONSIN TAX FREE FUND

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 113,562,632
<INVESTMENTS-AT-VALUE> 116,960,591
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 118,913,626
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 400,506
<TOTAL-LIABILITIES> 400,506
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 116,020,587
<SHARES-COMMON-STOCK> 11,504,660
<SHARES-COMMON-PRIOR> 11,042,102
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (905,426)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,397,959
<NET-ASSETS> 118,513,120
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,781,914
<OTHER-INCOME> 0
<EXPENSES-NET> 941,687
<NET-INVESTMENT-INCOME> 5,840,227
<REALIZED-GAINS-CURRENT> (526,526)
<APPREC-INCREASE-CURRENT> 12,775,102
<NET-CHANGE-FROM-OPS> 18,088,803
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,840,227
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,676,647
<NUMBER-OF-SHARES-REDEEMED> 1,621,142
<SHARES-REINVESTED> 407,053
<NET-CHANGE-IN-ASSETS> 16,764,302
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 728,848
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 941,687
<AVERAGE-NET-ASSETS> 111,740,478
<PER-SHARE-NAV-BEGIN> 9.21
<PER-SHARE-NII> .51
<PER-SHARE-GAIN-APPREC> 1.09
<PER-SHARE-DIVIDEND> .51
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.30
<EXPENSE-RATIO> .84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>